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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Jan. 02, 2021

Accounting Policies [Abstract]

Fair Value Measurements, Recurring and Nonrecurring

The following table represents the Company’s financial assets (in thousands), measured at fair value on a recurring basis as of January 2, 2021:

																											Reported as
			Adjusted Basis Cost						Gross Unrealized Gains						Gross Unrealized (Losses)						Estimated Fair Value						Cash and Cash Equivalents						Short-Term Investments
Cash			$	641,447					$	—					$	—					$	641,447					$	641,447					$	—
Level 1:
None			—						—						—						—						—						—
Level 2:
None			—						—						—						—						—						—
Level 3:
None			—						—						—						—						—						—
Total assets measured at fair value			$	641,447					$	—					$	—					$	641,447					$	641,447					$	—

The following table represents the Company’s financial assets (in thousands), measured at fair value on a recurring basis as of December 28, 2019.

																											Reported as
			Adjusted Basis Cost						Gross Unrealized Gains						Gross Unrealized (Losses)						Estimated Fair Value						Cash and Cash Equivalents						Short-Term Investments
Cash			$	567,687					$	—					$	—					$	567,687					$	567,687					$	—
Level 1:
Certificates of deposit			120,000						—						—						120,000						—						120,000
Subtotal			120,000						—						—						120,000						—						120,000
Level 2:
None			—						—						—						—						—						—
Level 3:
None			—						—						—						—						—						—
Total assets measured at fair value			$	687,687					$	—					$	—					$	687,687					$	567,687					$	120,000

Property, Plant and Equipment

Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows:

			Useful Lives
Aircraft and components			4 to 20 years
Buildings			39 years
Building improvements			7 to 15 years
Computer equipment and software			2 to 12 years
Demonstration units			3 years
Furniture and office equipment			2 to 6 years
Leasehold improvements			Lesser of useful life or term of lease
Machinery and equipment			5 to 10 years
Tooling			3 years
Vehicles			5 years

Property and equipment, net, consists of the following (in thousands):

			January 2, 2021						December 28, 2019
Building and building improvements			$	122,310					$	101,731
Machinery and equipment			72,610						58,864
Land			57,151						40,216
Aircraft and vehicles			33,175						29,934
Computer equipment and software			24,693						19,650
Leasehold improvements			19,295						15,921
Tooling			18,233						15,346
Furniture and office equipment			13,567						11,049
Demonstration units			1,024						836
Construction-in-progress (CIP)			44,589						39,107
Total property and equipment			406,647						332,654
Accumulated depreciation			(134,136)						(113,102)
Property and equipment, net			$	272,511					$	219,552

Changes in Product Warranty Accrual

Changes in the product warranty accrual were as follows (in thousands):

			Year Ended
			January 2, 2021						December 28, 2019						December 29, 2018
Warranty accrual, beginning of period			$	3,395					$	1,910					$	1,149
Accrual for warranties issued			832						1,715						1,549
Changes in pre-existing warranties (including changes in estimates)(1)			196						1,130						551
Settlements made			(1,683)						(1,360)						(1,339)
Warranty accrual, end of period			$	2,740					$	3,395					$	1,910

______________

(1)     In connection with its adoption of ASC 842 on December 30, 2018, the Company recorded an adjustment to pre-existing warranties of $2.5 million related to equipment previously capitalized under its deferred equipment agreements where the embedded leases were treated as operating leases under prior guidance. See “Recently Adopted Accounting Pronouncements” in Note 2 to these consolidated financial statements for additional information related to the Company’s adoption of ASC 842.

Reconciliation of Basic Diluted Net Income Per Share

A computation of basic and diluted net income per share is as follows (in thousands, except per share data):

			Year Ended
			January 2, 2021						December 28, 2019						December 29, 2018
Net income attributable to Masimo Corporation stockholders:			$	240,282					$	196,216					$	193,543
Net loss attributable to noncontrolling interest			20						—						—
Net income attributable to Masimo Corporation stockholders			$	240,302					$	196,216					$	193,543
Basic net income per share attributable to Masimo Corporation stockholders:
Net income attributable to Masimo Corporation stockholders			$	240,302					$	196,216					$	193,543
Weighted-average shares outstanding - basic			54,700						53,434						52,296
Net income per basic share attributable to Masimo Corporation stockholders			$	4.39					$	3.67					$	3.70
Diluted net income per share attributable to Masimo Corporation stockholders:
Weighted-average shares outstanding - basic			54,700						53,434						52,296
Diluted share equivalents: stock options, RSUs and PSUs			3,337						3,666						3,743
Weighted-average shares outstanding - diluted			58,037						57,100						56,039
Net income per diluted share attributable to Masimo Corporation stockholders			$	4.14					$	3.44					$	3.45

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