Document
237800049980000.30false--12-31Q220190001097149Large Accelerated FilerNASDAQ150000030000000.00010.0001200000000200000000797780007986500079778000798650000.00010.00015000000500000000P1Y 0001097149 2019-01-01 2019-06-30 0001097149 2019-07-26 0001097149 2018-04-01 2018-06-30 0001097149 2018-01-01 2018-06-30 0001097149 2019-04-01 2019-06-30 0001097149 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001097149 2019-06-30 0001097149 2018-12-31 0001097149 us-gaap:RetainedEarningsMember 2018-03-31 0001097149 2018-03-31 0001097149 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0001097149 us-gaap:CommonStockMember 2018-06-30 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0001097149 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0001097149 us-gaap:CommonStockMember 2018-03-31 0001097149 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001097149 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001097149 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001097149 us-gaap:RetainedEarningsMember 2018-06-30 0001097149 2018-06-30 0001097149 us-gaap:RetainedEarningsMember 2019-01-01 2019-06-30 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0001097149 us-gaap:CommonStockMember 2018-12-31 0001097149 us-gaap:RetainedEarningsMember 2019-06-30 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001097149 us-gaap:CommonStockMember 2019-06-30 0001097149 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-06-30 0001097149 us-gaap:CommonStockMember 2019-01-01 2019-06-30 0001097149 us-gaap:RetainedEarningsMember 2018-12-31 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001097149 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001097149 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001097149 us-gaap:RetainedEarningsMember 2018-01-01 2018-06-30 0001097149 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-06-30 0001097149 us-gaap:CommonStockMember 2018-01-01 2018-06-30 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-06-30 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001097149 us-gaap:CommonStockMember 2017-12-31 0001097149 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001097149 2017-12-31 0001097149 us-gaap:RetainedEarningsMember 2017-12-31 0001097149 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001097149 us-gaap:CommonStockMember 2019-03-31 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001097149 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001097149 us-gaap:RetainedEarningsMember 2019-03-31 0001097149 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001097149 2019-03-31 0001097149 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:USTreasuryAndGovernmentMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:MoneyMarketFundsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CorporateBondSecuritiesMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CommercialPaperMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CorporateBondSecuritiesMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:MoneyMarketFundsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CommercialPaperMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CorporateBondSecuritiesMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:USTreasuryAndGovernmentMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:MoneyMarketFundsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CommercialPaperMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:USTreasuryAndGovernmentMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember algn:CorporateBondsMember algn:LongTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember algn:LongTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember algn:LongTermInvestmentsMember 2019-06-30 0001097149 currency:JPY us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:GBP us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:MXN us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:AUD us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:CNY us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:ILS us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:CAD us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:BRL us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:EUR us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0001097149 currency:EUR us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001097149 currency:JPY us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001097149 currency:BRL us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001097149 currency:AUD us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001097149 currency:CAD us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001097149 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001097149 currency:GBP us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001097149 currency:CNY us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember algn:LongTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CorporateBondSecuritiesMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CommercialPaperMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember algn:LongTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:USTreasuryAndGovernmentMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CorporateBondSecuritiesMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:MoneyMarketFundsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:USTreasuryAndGovernmentMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:MoneyMarketFundsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember algn:LongTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CommercialPaperMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CommercialPaperMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:USTreasuryAndGovernmentMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateBondSecuritiesMember algn:LongTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember algn:LongTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:CorporateBondSecuritiesMember 2019-06-30 0001097149 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember us-gaap:MoneyMarketFundsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember algn:CorporateBondsMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ShortTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 us-gaap:FairValueMeasurementsRecurringMember algn:CorporateBondsMember algn:LongTermInvestmentsMember 2018-12-31 0001097149 2018-12-31 2018-12-31 0001097149 2019-06-30 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 us-gaap:FairValueMeasurementsRecurringMember algn:CorporateBondsMember us-gaap:ShortTermInvestmentsMember 2019-06-30 0001097149 srt:MaximumMember 2019-06-30 0001097149 algn:DeferredRevenueMember 2017-12-31 2017-12-31 0001097149 algn:DeferredRevenueMember 2018-12-31 2018-12-31 0001097149 2017-12-31 2017-12-31 0001097149 algn:StraumannGroupMember us-gaap:SubsequentEventMember 2019-07-01 2019-07-31 0001097149 srt:MinimumMember 2019-06-30 0001097149 algn:SDCMember 2017-07-24 0001097149 algn:SDCMember 2017-07-24 2017-07-24 0001097149 algn:SDCMember 2018-02-07 2018-02-07 0001097149 algn:SDCMember us-gaap:NotesReceivableMember 2019-04-30 0001097149 algn:SDCMember 2016-07-25 0001097149 algn:SDCMember 2019-04-30 0001097149 algn:SDCMember srt:MaximumMember 2017-07-24 2017-07-24 0001097149 algn:SDCMember 2016-07-25 2016-07-25 0001097149 us-gaap:DistributionRightsMember 2019-06-30 0001097149 algn:ExistingTechnologyMember 2019-06-30 0001097149 us-gaap:CustomerRelationshipsMember 2019-06-30 0001097149 us-gaap:PatentsMember 2019-06-30 0001097149 us-gaap:DistributionRightsMember 2019-01-01 2019-06-30 0001097149 us-gaap:CustomerRelationshipsMember 2019-01-01 2019-06-30 0001097149 us-gaap:OtherIntangibleAssetsMember 2019-06-30 0001097149 us-gaap:TrademarksMember 2019-06-30 0001097149 us-gaap:PatentsMember 2019-01-01 2019-06-30 0001097149 us-gaap:OtherIntangibleAssetsMember 2019-01-01 2019-06-30 0001097149 us-gaap:TrademarksMember 2019-01-01 2019-06-30 0001097149 algn:ExistingTechnologyMember 2019-01-01 2019-06-30 0001097149 algn:ClearAlignerMember 2019-01-01 2019-06-30 0001097149 algn:ClearAlignerMember 2018-12-31 0001097149 algn:ClearAlignerMember 2019-06-30 0001097149 2018-10-01 2018-12-31 0001097149 us-gaap:CustomerRelationshipsMember 2018-01-01 2018-12-31 0001097149 us-gaap:OtherIntangibleAssetsMember 2018-12-31 0001097149 us-gaap:PatentsMember 2018-01-01 2018-12-31 0001097149 us-gaap:OtherIntangibleAssetsMember 2018-01-01 2018-12-31 0001097149 us-gaap:PatentsMember 2018-12-31 0001097149 us-gaap:CustomerRelationshipsMember 2018-12-31 0001097149 algn:ExistingTechnologyMember 2018-01-01 2018-12-31 0001097149 us-gaap:TrademarksMember 2018-12-31 0001097149 algn:ExistingTechnologyMember 2018-12-31 0001097149 us-gaap:DistributionRightsMember 2018-12-31 0001097149 us-gaap:DistributionRightsMember 2018-01-01 2018-12-31 0001097149 us-gaap:TrademarksMember 2018-01-01 2018-12-31 0001097149 us-gaap:BaseRateMember 2018-02-27 2018-02-27 0001097149 srt:MaximumMember us-gaap:BaseRateMember 2018-02-27 2018-02-27 0001097149 2018-02-27 0001097149 srt:MinimumMember us-gaap:BaseRateMember 2018-02-27 2018-02-27 0001097149 us-gaap:LondonInterbankOfferedRateLIBORMember 2018-02-27 2018-02-27 0001097149 srt:MaximumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-02-27 2018-02-27 0001097149 srt:MinimumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-02-27 2018-02-27 0001097149 2019-03-05 2019-03-05 0001097149 algn:Lawsuitagainst3ShapeASMember 2018-12-10 2018-12-10 0001097149 algn:PatentInfringementby3ShapeMember 2017-11-14 2017-11-14 0001097149 algn:PatentInfringementby3ShapeMember 2018-12-11 2018-12-11 0001097149 algn:StraumannGroupMember 2019-03-29 2019-03-29 0001097149 algn:StraumannGroupMember algn:ITeroElementScannersMember 2019-01-01 2019-06-30 0001097149 algn:StraumannGroupMember 2019-06-30 0001097149 algn:ViolationofTradeLaws3ShapeMember 2017-11-14 2017-11-14 0001097149 algn:Lawsuitagainst3ShapeASMember 2017-11-14 2017-11-14 0001097149 algn:StraumannGroupMember 2019-01-01 2019-06-30 0001097149 2019-01-29 2019-01-29 0001097149 2019-01-15 2019-01-15 0001097149 us-gaap:ResearchAndDevelopmentExpenseMember 2018-04-01 2018-06-30 0001097149 us-gaap:ResearchAndDevelopmentExpenseMember 2019-01-01 2019-06-30 0001097149 us-gaap:ResearchAndDevelopmentExpenseMember 2018-01-01 2018-06-30 0001097149 us-gaap:ResearchAndDevelopmentExpenseMember 2019-04-01 2019-06-30 0001097149 us-gaap:SellingAndMarketingExpenseMember 2018-01-01 2018-06-30 0001097149 us-gaap:CostOfSalesMember 2018-04-01 2018-06-30 0001097149 us-gaap:SellingAndMarketingExpenseMember 2019-01-01 2019-06-30 0001097149 us-gaap:CostOfSalesMember 2018-01-01 2018-06-30 0001097149 us-gaap:SellingAndMarketingExpenseMember 2019-04-01 2019-06-30 0001097149 us-gaap:SellingAndMarketingExpenseMember 2018-04-01 2018-06-30 0001097149 us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0001097149 us-gaap:CostOfSalesMember 2019-01-01 2019-06-30 0001097149 algn:MarketPerformanceBasedRestrictedStockUnitsMember 2018-12-31 0001097149 algn:MarketPerformanceBasedRestrictedStockUnitsMember 2019-01-01 2019-06-30 0001097149 algn:MarketPerformanceBasedRestrictedStockUnitsMember 2019-06-30 0001097149 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-06-30 0001097149 algn:StockIncentivePlan2005Member 2019-06-30 0001097149 algn:EmployeeStockPurchasePlan2010Member 2019-06-30 0001097149 algn:EmployeeStockPurchasePlan2010Member 2019-01-01 2019-06-30 0001097149 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-06-30 0001097149 algn:EmployeeStockPurchasePlanMember 2019-06-30 0001097149 algn:EmployeeStockPurchasePlanMember 2019-01-01 2019-06-30 0001097149 us-gaap:RestrictedStockUnitsRSUMember 2019-06-30 0001097149 srt:MaximumMember algn:MarketPerformanceBasedRestrictedStockUnitsMember 2019-01-01 2019-06-30 0001097149 us-gaap:RestrictedStockUnitsRSUMember 2018-12-31 0001097149 algn:May2018RepurchaseMember 2019-06-30 0001097149 algn:May2018RepurchaseMember 2019-05-01 2019-05-31 0001097149 algn:May2018RepurchaseMember 2018-01-01 2018-12-31 0001097149 algn:A2018ASRMember 2018-01-01 2018-12-31 0001097149 algn:May2018RepurchaseMember 2019-02-01 2019-02-28 0001097149 algn:April2016RepurchaseMember 2016-04-30 0001097149 algn:April2016RepurchaseMember 2018-01-01 2018-12-31 0001097149 algn:A2017StockRepurchaseProgramMember 2017-01-01 2017-12-31 0001097149 algn:April2016RepurchaseMember 2017-01-01 2017-12-31 0001097149 algn:AcceleratedStockRepurchaseAgreement2019ASRMember us-gaap:SubsequentEventMember 2019-07-30 0001097149 algn:AcceleratedStockRepurchaseAgreement2019ASRMember us-gaap:SubsequentEventMember 2019-07-31 2019-07-31 0001097149 algn:May2018RepurchaseMember 2018-05-31 0001097149 us-gaap:ScenarioForecastMember us-gaap:SubsequentEventMember 2019-01-01 2019-12-31 0001097149 2018-01-01 2018-12-31 0001097149 algn:ScannersAndServicesMember 2019-04-01 2019-06-30 0001097149 algn:ScannersAndServicesMember 2018-04-01 2018-06-30 0001097149 algn:ScannersAndServicesMember 2019-01-01 2019-06-30 0001097149 algn:ClearAlignerMember 2018-01-01 2018-06-30 0001097149 us-gaap:CorporateAndOtherMember 2019-04-01 2019-06-30 0001097149 us-gaap:CorporateAndOtherMember 2018-04-01 2018-06-30 0001097149 us-gaap:CorporateAndOtherMember 2019-01-01 2019-06-30 0001097149 algn:ScannersAndServicesMember 2018-01-01 2018-06-30 0001097149 algn:ClearAlignerMember 2018-04-01 2018-06-30 0001097149 us-gaap:CorporateAndOtherMember 2018-01-01 2018-06-30 0001097149 algn:ClearAlignerMember 2019-04-01 2019-06-30 0001097149 us-gaap:AllOtherSegmentsMember 2018-04-01 2018-06-30 0001097149 us-gaap:AllOtherSegmentsMember 2019-01-01 2019-06-30 0001097149 us-gaap:AllOtherSegmentsMember 2019-04-01 2019-06-30 0001097149 us-gaap:AllOtherSegmentsMember 2018-01-01 2018-06-30 0001097149 country:US 2018-01-01 2018-06-30 0001097149 algn:OtherInternationalMember 2019-04-01 2019-06-30 0001097149 country:NL 2019-01-01 2019-06-30 0001097149 country:CN 2019-04-01 2019-06-30 0001097149 country:NL 2018-04-01 2018-06-30 0001097149 country:US 2019-01-01 2019-06-30 0001097149 country:US 2019-04-01 2019-06-30 0001097149 country:US 2018-04-01 2018-06-30 0001097149 country:CN 2019-01-01 2019-06-30 0001097149 country:NL 2018-01-01 2018-06-30 0001097149 algn:OtherInternationalMember 2019-01-01 2019-06-30 0001097149 algn:OtherInternationalMember 2018-01-01 2018-06-30 0001097149 algn:OtherInternationalMember 2018-04-01 2018-06-30 0001097149 country:CN 2018-01-01 2018-06-30 0001097149 country:NL 2019-04-01 2019-06-30 0001097149 country:CN 2018-04-01 2018-06-30 0001097149 algn:OtherInternationalMember 2018-12-31 0001097149 country:NL 2019-06-30 0001097149 country:US 2018-12-31 0001097149 country:CR 2018-12-31 0001097149 algn:OtherInternationalMember 2019-06-30 0001097149 country:MX 2019-06-30 0001097149 country:CR 2019-06-30 0001097149 country:MX 2018-12-31 0001097149 country:NL 2018-12-31 0001097149 country:CN 2018-12-31 0001097149 country:US 2019-06-30 0001097149 country:CN 2019-06-30 iso4217:JPY xbrli:pure iso4217:CNY iso4217:USD xbrli:shares iso4217:USD iso4217:EUR iso4217:AUD iso4217:BRL iso4217:CAD iso4217:ILS iso4217:MXN iso4217:GBP xbrli:shares algn:segment algn:Lawsuit algn:Unit algn:patent algn:Payment algn:floor
Table of Contents


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________ 
FORM 10-Q
____________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to
Commission file number: 000-32259
____________________________
ALIGN TECHNOLOGY INC
(Exact name of registrant as specified in its charter)
____________________________ 
Delaware
94-3267295
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
2820 Orchard Parkway
San Jose, California 95134
(Address of principal executive offices)
(408) 470-1000
(Registrant’s telephone number, including area code)
 ____________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.0001 par value
ALGN
The NASDAQ Stock Market LLC
 
 
(NASDAQ Global Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No 
The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value, as of July 26, 2019 was 79,870,881.

 

1

Table of Contents


ALIGN TECHNOLOGY, INC.
INDEX
 
 
 
 
PART I
ITEM 1.
 
 
 
 
 
 
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.

Invisalign, Align, the Invisalign logo, ClinCheck, Made to Move, Invisalign Assist, Invisalign Teen, Invisalign Go, Vivera, SmartForce, SmartTrack, SmartStage, SmileView, iTero, iTero Element, Orthocad, iCast and iRecord, among others, are trademarks and/or service marks of Align Technology, Inc. or one of its subsidiaries or affiliated companies and may be registered in the United States and/or other countries.




2

Table of Contents


PART I—FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
         
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net revenues
 
$
600,697

 
$
490,259

 
$
1,149,668

 
$
927,183

Cost of net revenues
 
168,408

 
124,677

 
315,283

 
234,193

Gross profit
 
432,289

 
365,582

 
834,385

 
692,990

Operating expenses:
 
 
 
 
 
 
 
 
Selling, general and administrative
 
267,948

 
212,087

 
515,058

 
411,712

Research and development
 
38,851

 
30,804

 
76,354

 
60,395

Impairments and other charges
 

 

 
29,782

 

Litigation settlement gain
 
(51,000
)
 

 
(51,000
)
 

Total operating expenses
 
255,799

 
242,891

 
570,194

 
472,107

Income from operations
 
176,490

 
122,691

 
264,191

 
220,883

Interest income
 
3,465

 
1,917

 
6,098

 
4,093

Other income (expense), net
 
13,892

 
(7,099
)
 
8,146

 
(6,922
)
Net income before provision for income taxes and equity in losses of investee
 
193,847

 
117,509

 
278,435

 
218,054

Provision for income taxes
 
43,121

 
7,703

 
51,917

 
10,605

Equity in losses of investee, net of tax
 
3,584

 
3,701

 
7,528

 
5,478

Net income
 
$
147,142

 
$
106,105

 
$
218,990

 
$
201,971

 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 
Basic
 
$
1.84

 
$
1.32

 
$
2.74

 
$
2.52

Diluted
 
$
1.83

 
$
1.30

 
$
2.71

 
$
2.48

Shares used in computing net income per share:
 
 
 
 
 
 
 
 
Basic
 
79,943

 
80,216

 
79,901

 
80,127

Diluted
 
80,590

 
81,471

 
80,665

 
81,575

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Table of Contents



ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net income
 
$
147,142

 
$
106,105

 
$
218,990

 
$
201,971

Net change in foreign currency translation adjustment
 
213

 
(759
)
 
622

 
283

Change in unrealized gains (losses) on investments, net of tax
 
192

 
186

 
276

 
57

Other comprehensive income (loss)
 
405

 
(573
)
 
898

 
340

Comprehensive income
 
$
147,547

 
$
105,532

 
$
219,888

 
$
202,311

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Table of Contents


 
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

 
 
June 30,
2019
 
December 31,
2018
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
423,500

 
$
636,899

Marketable securities, short-term
 
297,422

 
98,460

Accounts receivable, net of allowance for doubtful accounts of $4,998 and $2,378, respectively
 
520,094

 
439,009

Inventories
 
81,124

 
55,641

Prepaid expenses and other current assets
 
135,234

 
72,470

Total current assets
 
1,457,374

 
1,302,479

Marketable securities, long-term
 
44,969

 
9,112

Property, plant and equipment, net
 
599,611

 
521,329

Operating lease right-of-use assets
 
57,269

 

Equity method investments
 

 
45,913

Goodwill and intangible assets, net
 
78,852

 
81,949

Deferred tax assets
 
59,050

 
64,689

Other assets
 
48,892

 
26,987

Total assets
 
$
2,346,017

 
$
2,052,458

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
61,950

 
$
64,256

Accrued liabilities
 
245,634

 
234,679

Deferred revenues
 
481,462

 
393,138

Total current liabilities
 
789,046

 
692,073

Income tax payable
 
98,182

 
78,008

Operating lease liabilities
 
59,140

 

Other long-term liabilities
 
25,967

 
29,486

Total liabilities
 
972,335

 
799,567

Commitments and contingencies (Notes 9 and 10)
 

 

Stockholders’ equity:
 
 
 
 
Preferred stock, $0.0001 par value (5,000 shares authorized; none issued)
 

 

Common stock, $0.0001 par value (200,000 shares authorized; 79,865 and 79,778 issued and outstanding, respectively)
 
8

 
8

Additional paid-in capital
 
874,275

 
877,514

Accumulated other comprehensive income (loss), net
 
(1,876
)
 
(2,774
)
Retained earnings
 
501,275

 
378,143

Total stockholders’ equity
 
1,373,682

 
1,252,891

Total liabilities and stockholders’ equity
 
$
2,346,017

 
$
2,052,458

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Table of Contents


ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income (Loss), Net
 
Retained Earnings
 
Total
Three Months Ended June 30, 2019
 
Shares
 
Amount
 
Balance as of March 31, 2019
 
80,000

 
$
8

 
$
855,956

 
$
(2,281
)
 
$
402,021

 
$
1,255,704

Net income
 

 

 

 

 
147,142

 
147,142

Net change in unrealized gains (losses) from investments
 

 

 

 
192

 

 
192

Net change in foreign currency translation adjustment
 
 

 

 

 
213

 

 
213

Issuance of common stock relating to employee equity compensation plans
 
26

 

 
5

 

 

 
5

Tax withholdings related to net share settlements of restricted stock units
 

 

 
(2,537
)
 

 

 
(2,537
)
Common stock repurchased and retired
 
(161
)
 

 
(1,616
)
 

 
(47,888
)
 
(49,504
)
Stock-based compensation
 

 

 
22,467

 

 

 
22,467

Balance as of June 30, 2019
 
79,865

 
$
8

 
$
874,275

 
$
(1,876
)
 
$
501,275

 
$
1,373,682



 
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income (Loss), Net
 
Retained Earnings
 
Total
Six Months Ended June 30, 2019
 
Shares
 
Amount
 
Balance as of December 31, 2018
 
79,778

 
$
8

 
$
877,514

 
$
(2,774
)
 
$
378,143

 
$
1,252,891

Net income
 

 

 

 

 
218,990

 
218,990

Net change in unrealized gains (losses) from investments
 

 

 

 
276

 

 
276

Net change in foreign currency translation adjustment
 
 

 

 

 
622

 

 
622

Issuance of common stock relating to employee equity compensation plans
 
453

 

 
9,614

 

 

 
9,614

Tax withholdings related to net share settlements of restricted stock units
 

 

 
(52,718
)
 

 

 
(52,718
)
Common stock repurchased and retired
 
(366
)
 

 
(3,646
)
 

 
(95,858
)
 
(99,504
)
Stock-based compensation
 

 

 
43,511

 

 

 
43,511

Balance as of June 30, 2019
 
79,865

 
$
8

 
$
874,275

 
$
(1,876
)
 
$
501,275

 
$
1,373,682

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.














6

Table of Contents



ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)
(in thousands)
(unaudited)
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income (Loss), Net
 
Retained Earnings
 
Total
Three Months Ended June 30, 2018
 
Shares
 
Amount
 
Balance as of March 31, 2018
 
80,144

 
$
8

 
$
858,632

 
$
1,484

 
$
267,336

 
$
1,127,460

Net income
 

 

 

 

 
106,105

 
106,105

Net change in unrealized gains (losses) from investments
 

 

 

 
186

 

 
186

Net change in foreign currency translation adjustment
 
 

 

 

 
(759
)
 

 
(759
)
Issuance of common stock relating to employee equity compensation plans
 
169

 

 
565

 

 

 
565

Tax withholdings related to net share settlements of restricted stock units
 

 

 
(31,488
)
 

 

 
(31,488
)
Stock-based compensation
 

 

 
16,890

 

 

 
16,890

Balance as of June 30, 2018
 
80,313

 
$
8

 
$
844,599

 
$
911

 
$
373,441

 
$
1,218,959


 
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income (Loss), Net
 
Retained Earnings
 
Total
Six Months Ended June 30, 2018
 
Shares
 
Amount
 
Balance as of December 31, 2017
 
80,040

 
$
8

 
$
886,435

 
$
571

 
$
267,274

 
$
1,154,288

Net income
 

 

 

 

 
201,971

 
201,971

Net change in unrealized gains (losses) from investments
 

 

 

 
57

 

 
57

Net change in foreign currency translation adjustment
 
 

 

 

 
283

 

 
283

Issuance of common stock relating to employee equity compensation plans
 
669

 

 
8,585

 

 

 
8,585

Tax withholdings related to net share settlements of restricted stock units
 

 

 
(79,330
)
 

 

 
(79,330
)
Common stock repurchased and retired
 
(396
)
 

 
(3,811
)
 

 
(96,189
)
 
(100,000
)
Stock-based compensation
 

 

 
32,720

 

 

 
32,720

Other
 

 

 

 

 
385

 
385

Balance as of June 30, 2018
 
80,313

 
$
8

 
$
844,599

 
$
911

 
$
373,441

 
$
1,218,959

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


7

Table of Contents


ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
Six Months Ended
June 30,
 
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net income
 
$
218,990

 
$
201,971

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Deferred taxes
 
5,606

 
3,667

Depreciation and amortization
 
46,169

 
24,066

Impairments on long-lived assets
 
28,498

 

Impairment on equity investment

 
3,975

 

Gain from sale of equity method investment
 
(15,769
)
 

Stock-based compensation
 
43,511

 
32,720

Equity in losses of investee
 
7,528

 
5,478

Other non-cash operating activities
 
12,788

 
4,543

Changes in assets and liabilities:
 
 
 
 
Accounts receivable
 
(89,055
)
 
(44,266
)
Inventories
 
(26,681
)
 
(15,586
)
Prepaid expenses and other assets
 
(48,949
)
 
(9,366
)
Accounts payable
 
1,847

 
10,743

Accrued and other long-term liabilities
 
1,321

 
(53,442
)
Long-term income tax payable
 
9,608

 
1,610

Deferred revenues
 
95,174

 
54,983

Net cash provided by operating activities
 
294,561

 
217,121

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Purchase of property, plant and equipment
 
(80,598
)
 
(115,295
)
Purchase of marketable securities
 
(353,995
)
 
(78,405
)
Proceeds from maturities of marketable securities
 
107,021

 
207,475

Proceeds from sales of marketable securities
 
14,456

 
9,560

Note repayment from privately held company
 
6,598

 

Loan repayment from equity investee
 

 
30,000

Other investing activities
 
(14,502
)
 
668

Net cash (used in) provided by investing activities
 
(321,020
)
 
54,003

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Proceeds from issuance of common stock
 
9,614

 
8,585

Common stock repurchases
 
(99,504
)
 
(100,000
)
Employees’ taxes paid upon the vesting of restricted stock units
 
(52,718
)
 
(79,330
)
Purchase of finance lease
 
(45,773
)
 

Net cash used in financing activities
 
(188,381
)
 
(170,745
)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash
 
1,467

 
(1,923
)
Net (decrease) increase in cash, cash equivalents, and restricted cash
 
(213,373
)
 
98,456

Cash, cash equivalents, and restricted cash at beginning of the period
 
637,566

 
450,125

Cash, cash equivalents, and restricted cash at end of the period
 
$
424,193

 
$
548,581


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

Table of Contents



ALIGN TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. (“we”, “our”, or “Align”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and contains all adjustments, including normal recurring adjustments, necessary to state fairly our results of operations for the three and six months ended June 30, 2019 and 2018, our comprehensive income for the three and six months ended June 30, 2019 and 2018, our financial position as of June 30, 2019, our stockholders’ equity for the three and six months ended June 30, 2019 and 2018, and our cash flows for the six months ended June 30, 2019 and 2018. The Condensed Consolidated Balance Sheet as of December 31, 2018 was derived from the December 31, 2018 audited financial statements. It does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.”).

We adopted Accounting Standards Update (“ASU”) 2016-02, “Leases” (Topic 842) in the first quarter of fiscal year 2019 by electing the transition method issued in ASU 2018-11 and the package of practical expedients available in the standard. The standard had a material impact on our Condensed Consolidated Balance Sheet as we recognized assets and liabilities related to our leases. The adoption did not have an impact to prior periods.

The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other future period, and we make no representations related thereto. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and the Consolidated Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, in our Annual Report on Form 10-K for the year ended December 31, 2018.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the U.S. requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates, including those related to the fair values of financial instruments, valuation of investments in privately held companies, useful lives of intangible assets and property and equipment, revenue recognition, stock-based compensation, long-lived assets and goodwill, income taxes and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Significant Accounting Policies

Our significant accounting policies are described in Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K. Significant changes to the Lease policy is discussed below:

Lease

We lease office and retail spaces, vehicles and office equipment with original lease periods of up to 10 years. We determine if an arrangement is a lease at inception under ASC 842. Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. If a lease arrangement does not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease which we include in our lease term when it is reasonably certain that we will exercise that option. We have lease agreements with lease and non-lease components which are accounted for as a single lease component. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

9

Table of Contents



Recent Accounting Pronouncements

(i) New Accounting Updates Recently Adopted

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases” (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, “Leases-Targeted Improvements,” which provides an additional transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. We adopted the guidance in the first quarter of fiscal year 2019 by electing the transition method issued in ASU 2018-11 and the package of practical expedients available in the standard. The standard had a material impact on our Condensed Consolidated Balance Sheet as we recognized assets and liabilities related to our leases. The adoption did not have an impact to prior periods.

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify to retained earnings the tax effects resulting from the U.S. Tax Cuts and Jobs Act (the “TCJA”) related to items in accumulated other comprehensive income. The amendments are effective for fiscal years and interim periods within those years beginning after December 15, 2018 on a retrospective basis and early adoption is permitted. We adopted the standard in the first quarter of fiscal year 2019 which did not have a material impact on our consolidated financial statements and related disclosures. The TCJA did not affect our accumulated other comprehensive income (loss), net, and therefore we did not reclassify any income tax effects from accumulated other comprehensive income (loss), net to our retained earnings.

(ii) Recent Accounting Updates Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses” (Topic 326) to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the existing guidance of incurred loss impairment methodology with an approach that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” which clarifies the scope of guidance in the ASU 2016-13. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” to simplify the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. Under the amendments in this update, an entity will recognize an impairment charge for the amount by which the carrying value exceeds the fair value. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 on a prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 on a prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our related disclosures.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” to clarify the guidance on the costs of implementing a cloud computing hosting arrangement that is a service contract. Under the amendments in this update, the entity is required to follow the guidance in Subtopic 350-40, Internal-Use Software, to determine which implementation costs under the service contract to be capitalized as an asset and which costs to expense. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 either on a retrospective or prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.


10

Table of Contents


Note 2. Investments and Fair Value Measurements

Marketable Securities

As of June 30, 2019 and December 31, 2018, the estimated fair value of our short-term and long-term marketable securities, classified as available for sale, are as follows (in thousands):

Short-term
June 30, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Commercial paper
 
$
29,556

 
$

 
$

 
$
29,556

Corporate bonds
 
125,299

 
74

 
(8
)
 
125,365

U.S. government agency bonds
 
20,507

 
2

 
(13
)
 
20,496

U.S. government treasury bonds
 
108,945

 
56

 
(6
)
 
108,995

Foreign bonds
 
12,976

 
14

 

 
12,990

Certificates of deposit
 
20

 

 

 
20

Total marketable securities, short-term
 
$
297,303

 
$
146

 
$
(27
)
 
$
297,422


Long-term
June 30, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Corporate bonds
 
$
23,879

 
$
40

 
$
(1
)
 
$
23,918

U.S. government treasury bonds
 
21,038

 
16

 
(3
)
 
21,051

Total marketable securities, long-term
 
$
44,917

 
$
56

 
$
(4
)
 
$
44,969


Short-term
December 31, 2018
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Commercial paper
 
$
17,793

 
$

 
$

 
$
17,793

Corporate bonds
 
45,100

 

 
(48
)
 
45,052

U.S. government agency bonds
 
19,981

 

 
(77
)
 
19,904

U.S. government treasury bonds
 
15,292

 

 
(1
)
 
15,291

Certificates of deposit
 
420

 
1

 
(1
)
 
420

Total marketable securities, short-term
 
$
98,586

 
$
1

 
$
(127
)
 
$
98,460


Long-term 
December 31, 2018
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Corporate bonds
 
$
4,957

 
$
5

 
$
(2
)
 
$
4,960

U.S. government agency bonds
 
1,399

 
8

 

 
1,407

U.S. government treasury bonds
 
2,235

 
9

 

 
2,244

Certificates of deposit
 
500

 
1

 

 
501

Total marketable securities, long-term
 
$
9,091

 
$
23

 
$
(2
)
 
$
9,112


Cash equivalents are not included in the tables above as the gross unrealized gains and losses are not material. We have no short-term or long-term investments that have been in a continuous material unrealized loss position for greater than twelve months as of June 30, 2019 and December 31, 2018. Amounts reclassified to earnings from accumulated other comprehensive income (loss), net related to unrealized gains or losses were not material for the three and six months ended June 30, 2019 and 2018. For the three and six months ended June 30, 2019 and 2018, realized gains or losses were not material.


11

Table of Contents


Our fixed-income securities investment portfolio consists of investments that can have a maximum effective maturity of up to 40 months on any individual security. The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. The unrealized losses are primarily due to changes in interest rates and credit spreads. We expect to realize the full value of all these investments upon maturity or sale. The weighted average remaining duration of these securities was approximately seven months and four months as of June 30, 2019 and December 31, 2018, respectively.

As the carrying value approximates the fair value for our short-term and long-term marketable securities shown in the tables above, the following table summarizes the fair value of our short-term and long-term marketable securities classified by contractual maturity as of June 30, 2019 and December 31, 2018 (in thousands):
 
June 30,
2019
 
December 31,
2018
One year or less
$
297,422

 
$
98,460

Due in greater than one year
44,969

 
9,112

Total available for sale short-term and long-term marketable securities
$
342,391

 
$
107,572



Investments in Privately Held Companies

Our investments in privately held companies as of June 30, 2019 and December 31, 2018 are as follows (in thousands):
 
June 30,
2019
 
December 31,
2018
Equity securities under the equity method investment 1
$

 
$
45,913

Equity securities without readily determinable fair values 2
$
5,887

 
$
9,862


1 
Refer to Note 5 “Equity Method Investments” of the Notes to Condensed Consolidated Financial Statements for more information.
2  
The equity securities are reported as a nonrecurring investment within other assets in our Condensed Consolidated Balance Sheet. During the six months ended June 30, 2019, there was approximately $4.0 million of impairment resulting from an observable price change.

Fair Value Measurements

We measure the fair value of financial assets as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. We obtain fair values for our Level 2 investments. Our custody bank and asset managers independently use professional pricing services to gather pricing data which may include quoted market prices for identical or comparable financial instruments, or inputs other than quoted prices that are observable either directly or indirectly, and we are ultimately responsible for these underlying estimates.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.


12

Table of Contents


The following tables summarize our financial assets measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018 (in thousands):
Description
 
Balance as of
June 30, 2019
 
Level 1
 

Level 2
Cash equivalents:
 
 
 
 
 
 
Money market funds
 
$
193,390

 
$
193,390

 
$

Commercial paper
 
15,993

 

 
15,993

Corporate bonds
 
3,716

 

 
3,716

U.S. government treasury bonds
 
8,505

 
8,505

 

Short-term investments:
 
 
 
 
 
 
Commercial paper
 
29,556

 

 
29,556

Corporate bonds
 
125,365

 

 
125,365

U.S. government agency bonds
 
20,496

 

 
20,496

U.S. government treasury bonds
 
108,995

 
108,995

 

Foreign bonds
 
12,990

 

 
12,990

Certificates of deposit
 
20

 

 
20

Long-term investments:
 
 
 
 
 
 
Corporate bonds
 
23,918

 

 
23,918

U.S. government treasury bonds
 
21,051

 
21,051

 

Prepaid expenses and other current assets:
 
 
 
 
 
 
Israeli funds
 
2,983

 

 
2,983

 
 
$
566,978

 
$
331,941

 
$
235,037


 
Description
 
Balance as of December 31, 2018
 
Level 1
 
Level 2
Cash equivalents: