Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 01, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | CAVM | |
Entity Registrant Name | CAVIUM, INC. | |
Entity Central Index Key | 1,175,609 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 69,135,991 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 152,654 | $ 221,439 |
Accounts receivable, net of allowances of $2,884 and $4,130, respectively | 186,447 | 125,728 |
Inventories | 94,879 | 119,692 |
Prepaid expenses and other current assets | 23,510 | 22,259 |
Total current assets | 457,490 | 489,118 |
Property and equipment, net | 169,747 | 150,862 |
Intangible assets, net | 692,994 | 764,885 |
Goodwill | 237,692 | 241,067 |
Other assets | 5,757 | 4,599 |
Total assets | 1,563,680 | 1,650,531 |
Current liabilities: | ||
Accounts payable | 74,207 | 65,456 |
Accrued expenses and other current liabilities | 44,898 | 64,967 |
Deferred revenue | 9,501 | 8,412 |
Current portion of long-term debt | 3,270 | 3,865 |
Capital lease and technology license obligations | 27,803 | 25,535 |
Total current liabilities | 159,679 | 168,235 |
Long-term debt | 593,770 | 675,414 |
Capital lease and technology license obligations, net of current portion | 15,025 | 27,878 |
Deferred tax liability | 16,824 | 18,774 |
Other non-current liabilities | 25,436 | 18,386 |
Total liabilities | 810,734 | 908,687 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity | ||
Common stock, par value $0.001: 200,000,000 shares authorized; 68,818,315 and 67,181,634 shares issued and outstanding, respectively | 69 | 67 |
Additional paid-in capital | 1,157,386 | 1,079,043 |
Accumulated deficit | (405,302) | (336,621) |
Accumulated other comprehensive income (loss) | 793 | (645) |
Total stockholders' equity | 752,946 | 741,844 |
Total liabilities and stockholders' equity | $ 1,563,680 | $ 1,650,531 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 2,884 | $ 4,130 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 68,818,315 | 67,181,634 |
Common stock, shares outstanding | 68,818,315 | 67,181,634 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Net revenue | $ 251,987 | $ 168,123 | $ 723,657 | $ 377,163 |
Cost of revenue | 114,455 | 120,709 | 364,513 | 190,074 |
Gross profit | 137,532 | 47,414 | 359,144 | 187,089 |
Operating expenses: | ||||
Research and development | 93,860 | 67,752 | 279,331 | 170,785 |
Sales, general and administrative | 43,184 | 73,904 | 124,372 | 120,711 |
Total operating expenses | 137,044 | 141,656 | 403,703 | 291,496 |
Income (loss) from operations | 488 | (94,242) | (44,559) | (104,407) |
Other income (expense), net: | ||||
Interest expense | (6,493) | (4,268) | (22,679) | (4,661) |
Other, net | 277 | 54 | 145 | (83) |
Total other expense, net | (6,216) | (4,214) | (22,534) | (4,744) |
Loss before income taxes | (5,728) | (98,456) | (67,093) | (109,151) |
Provision for (benefit from) income taxes | 486 | (84,090) | 716 | (83,542) |
Net loss | $ (6,214) | $ (14,366) | $ (67,809) | $ (25,609) |
Earnings per share: | ||||
Net loss per common share, basic | $ (0.09) | $ (0.23) | $ (0.99) | $ (0.44) |
Shares used in computing basic net loss per common share | 68,675 | 62,055 | 68,175 | 58,840 |
Net loss per common share, diluted | $ (0.09) | $ (0.23) | $ (0.99) | $ (0.44) |
Shares used in computing diluted net loss per common share | 68,675 | 62,055 | 68,175 | 58,840 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (6,214) | $ (14,366) | $ (67,809) | $ (25,609) |
Foreign currency translation adjustments | 1 | 43 | 1,438 | 43 |
Comprehensive loss | $ (6,213) | $ (14,323) | $ (66,371) | $ (25,566) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (67,809) | $ (25,609) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Stock-based compensation expense | 77,028 | 63,395 |
Depreciation and amortization | 153,069 | 51,283 |
Deferred income taxes | (1,698) | (82,444) |
Amortization of deferred debt financing costs | 5,291 | 748 |
Loss on disposal of property and equipment | 694 | 4,824 |
Changes in assets and liabilities: | ||
Accounts receivable, net | (60,719) | (10,585) |
Inventories | 25,156 | (9,173) |
Prepaid expenses, other current and non-current assets | (958) | (2,122) |
Accounts payable | 3,418 | (12,909) |
Deferred revenue | 1,090 | 2,479 |
Accrued expenses, other current and non-current liabilities | (10,521) | 9,255 |
Net cash provided by (used in) operating activities | 124,041 | (10,858) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (68,821) | (26,401) |
Purchases of intangible assets | (14,591) | (48,265) |
Cash payment for acquisitions, net of cash and cash equivalents acquired | (573,830) | |
Proceeds from the sale of available-for-sale securities | 375 | |
Net cash used in investing activities | (83,412) | (648,121) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock upon exercise of options | 5,817 | 7,230 |
Payment of taxes withheld on net settled vesting of restricted stock units | (5,714) | (1,883) |
Principal payment of capital lease and technology license obligations | (21,986) | (18,035) |
Proceeds from issuance of debt | 750,000 | |
Debt financing costs | (20,601) | |
Principal payment of debt | (87,531) | |
Net cash provided by (used in) financing activities | (109,414) | 716,711 |
Net increase (decrease) in cash and cash equivalents | (68,785) | 57,732 |
Cash and cash equivalents, beginning of period | 221,439 | 134,646 |
Cash and cash equivalents, end of period | 152,654 | 192,378 |
Supplemental disclosure of cash flows from financing activities: | ||
Issuance of common stock in connection with the QLogic acquisition | 431,165 | |
Unpaid capital expenditures included in accounts payable | ||
Supplemental disclosure of cash flows from investing activities: | ||
Additions to property and equipment and intangible assets included in accounts payable | $ 11,311 | $ 3,419 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation Organization Cavium, Inc., (the “Company”), was incorporated in the state of California in November 2000 and was reincorporated in the state of Delaware in February 2007. The Company designs, develops and markets semiconductor processors that enable intelligent processing for wired and wireless infrastructure and cloud for networking, communications, storage and security applications. On August 16, 2016, the Company completed the acquisition of QLogic Corporation (“QLogic”). The QLogic products consist primarily of connectivity products including adapters and application-specific integrated circuits (ASICs) that facilitate the rapid transfer of data and enable efficient resource sharing between servers, networks and storage. The QLogic products are based primarily on Fibre Channel and Ethernet technologies and are used in conjunction with storage networks, data networks and converged networks. See Note 2 for further discussion regarding the Company’s acquisition of QLogic. Basis of Presentation The condensed consolidated financial statements include the accounts of Cavium, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America, or US GAAP, and pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements. For further information, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K (File No. 001-33435) for the year ended December 31, 2016 filed with the SEC on February 28, 2017. The condensed consolidated financial statements contain all normal recurring adjustments that, in the opinion of management, are necessary to state fairly the Company’s condensed consolidated financial position as of September 30, 2017, and the condensed consolidated results of its operations for the three and nine months ended September 30, 2017 and 2016, and condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by US GAAP. Significant Accounting Policies The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There had been no changes to these accounting policies except for the recently adopted accounting guidance on stock-based compensation as discussed below. Recently Adopted Accounting Standard Effective January 1, 2017, the Company adopted the updated guidance on stock-based compensation issued by the Financial Accounting Standards Board, or FASB, in March 2016. Under the new guidance, all excess tax benefits and tax deficiencies will be recognized in the income statement as they occur. This replaced the previous guidance, which requires tax benefits that exceed compensation cost (windfalls) to be recognized in equity. It also eliminates the need to maintain a “windfall pool,” and removes the requirement to delay recognizing a windfall until it reduces current taxes payable. Upon adoption of this new guidance, in the first quarter of 2017, the Company recognized deferred tax assets of $101.7 million for the excess tax benefits that arose directly from tax deductions related to equity compensation greater than the amounts recognized for financial reporting and also recognized an increase of an equal amount in the valuation allowance against those deferred tax assets. Under the amended guidance, companies will be able to make an accounting policy election to either continue to estimate forfeitures or account for forfeitures as they occur. Upon adoption, the Company elected to account for forfeitures when they occur, on a modified retrospective basis. The new guidance also changed the cash flow presentation of excess tax benefits, classifying them as operating inflows, consistent with other cash flows related to income taxes. Further, following the adoption of this updated guidance, there will be additional dilutive effects in earnings per share calculations because there will no longer be excess tax benefits recognized in additional paid in capital. The adoption of this updated guidance did not have a material impact on the Company’s consolidated financial statements. Update to Recently Issued Accounting Standards Not Yet Effective The FASB issued accounting standard updates that create a single source of revenue guidance under US GAAP for all companies, in all industries, effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company intends to adopt this standard on January 1, 2018, with a cumulative effect adjustment to opening retained earnings, if necessary, under the modified retrospective approach. The Company’s assessment process consisted of reviewing its current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to its revenue contracts and identifying appropriate changes to its business processes, systems and controls to support revenue recognition and disclosure requirements under the new standard. The Company’s evaluation of its revenue sources and their treatment under the new standard is progressing. The Company expects the unit of accounting will be consistent with the current revenue guidance. Although the implementation is not complete, the Company believes that the new standard and related new revenue recognition policies will not result in a significant change to the timing of recognition of revenue for the sale of its semiconductor products, which represent the substantial majority of the Company’s consolidated revenue. In May 2017, the FASB issued an update to the guidance on stock-based compensation which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Under this updated standard, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, and will be applied prospectively to awards modified on or after the adoption date. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance on its financial statements but does not expect it to have a material impact. In January 2017, the FASB issued an update to the guidance to simplify the measurement of goodwill by eliminating the Step 2 impairment test. The update is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, though early adoption is permitted. The Company is currently assessing the impact of this new guidance but does not expect it to have a material impact. In November 2016, the FASB issued an update to the guidance on statement of cash flows - restricted cash presentation. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. The new standard must be adopted retrospectively. The Company does not have restricted cash in the periods presented, but if applicable following the adoption, the Company will present its statement of cash flows in accordance with this updated guidance. In October 2016, the FASB issued an update to the guidance on income taxes. This new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued or made available for issuance. The Company is currently assessing the impact of this new guidance but does not expect it to have a material impact . In August 2016, the FASB issued new guidance on cash flow classification of certain cash receipts and cash payments. This new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods during the annual period and require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. Early adoption is permitted. The Company will present its statement of cash flows in accordance with this new guidance subsequent to adoption. In February 2016, the FASB issued updated guidance on leases which requires a lessee to recognize the assets and lease liabilities on the balance sheet for certain leases classified as operating leases under previous GAAP. In September 2017, the FASB provided additional clarification and implementation guidance on leases. This updated guidance is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. Although the Company is currently evaluating the impact this new guidance will have on its consolidated financial statements and related disclosures, the Company expects that most of its operating lease commitments will be subject to the new standard and will be recognized as operating lease liabilities and right-of-use assets upon adoption. In January 2016, the FASB issued updated guidance on Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this updated guidance are effective for annual and interim periods beginning after December 15, 2017. Early adoption is not permitted. The adoption of this updated guidance is not expected to have a material effect on the Company’s consolidated financial statements and related disclosures. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Business Combination | 2. Business Combination QLogic Corporation On August 16, 2016, pursuant to the terms of an Agreement and Plan of Merger dated June 15, 2016, by and among the Company, Quasar Acquisition Corp. (a wholly owned subsidiary of the Company) and QLogic (the “QLogic merger agreement”), the Company acquired all outstanding shares of common stock of QLogic (the “QLogic shares”) pursuant to an exchange offer for a total acquisition consideration of $1,379.5 million consisting of $938.9 million in cash and $440.6 million in equity, followed by a merger. The Company allocated the acquisition consideration to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The allocation is as follows: Amounts Previously Recognized as of Acquisition Date (Provisional) Measurement Period Adjustments Amounts Recognized as of Acquisition Date (Final Allocation) (amounts in thousands) Cash and cash equivalents $ 365,065 $ - $ 365,065 Marketable securities 375 - 375 Accounts receivable 65,576 - 65,576 Inventories 63,300 - 63,300 Prepaid expense and other current assets 8,274 3,121 11,395 Property and equipment 81,890 - 81,890 Intangible assets 721,700 - 721,700 Other assets 1,559 - 1,559 Goodwill 169,589 (3,375 ) 166,214 Accounts payable (41,776 ) - (41,776 ) Accrued expense and other current liabilities (21,884 ) - (21,884 ) Deferred revenue (603 ) - (603 ) Deferred tax liability (17,237 ) - (17,237 ) Other non-current liabilities (16,335 ) 254 (16,081 ) Total acquisition consideration $ 1,379,493 $ - $ 1,379,493 The provisional amounts presented in the table above pertained to the preliminary purchase price allocation reported in the Company’s December 31, 2016 Annual Report on Form 10-K. The measurement period adjustments were primarily related to the completion of the final QLogic income tax returns. The Company does not believe that the measurement period adjustments had a material impact on its consolidated statements of operations, balance sheets or cash flows in any periods previously reported. The valuation of identifiable intangible assets and their estimated useful lives are as follows: Estimated Asset Fair Value Weighted Average Useful Life (Years) (in thousands, except for useful life) Existing and core technology $ 578,400 6 In process research and development (IPRD) 78,900 n/a Customer relationships 51,100 10 Tradename and trademark 13,300 5 $ 721,700 The IPRD consists of two projects relating to the development of process technologies to manufacture next generation Fibre Channel and Ethernet products. The IPRD are accounted for as an indefinite-lived intangible asset until the underlying projects are completed or abandoned. The IPRD will not be amortized until the completion of the related products which is determined by when the underlying projects reached technological feasibility. Upon completion, the IPRD will be amortized over its estimated useful life; useful lives for IPRD are expected to range between 5 to 6 years. Goodwill recorded in the QLogic acquisition is not expected to be deductible for tax purposes. Supplemental Pro Forma Information The supplemental pro forma financial information presented below is for illustrative purposes only and is not necessarily indicative of the financial operations or results of operations that would have been realized if the acquisition had been completed on the date indicated, does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position. The pro forma adjustments are based upon currently available information and certain assumptions the Company believe are reasonable under the circumstances. The following supplemental pro forma financial information summarizes the results of operations for the period presented, as if the acquisition was completed on January 1, 2015. The supplemental pro forma information reports actual operating results, adjusted to include the pro forma effect of certain fair value adjustments for acquired items, such as the amortization of identifiable intangible assets and depreciation of property and equipment. It also includes pro forma adjustments for share-based compensation expense related to replacement equity awards, interest expense on debt and amortization of deferred financing costs. The supplemental pro forma net loss and pro forma net loss per share for the three and nine months ended September 30, 2016 presented below excluded the benefit from income taxes resulting from the partial release of the net deferred tax assets valuation allowance as a result of the recognition of net deferred tax liability due to the acquisition of QLogic. See Note 8 of Notes to Condensed Consolidated Financial Statements for related discussions. The supplemental pro forma financial information for the periods presented is as follows: Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 (in thousands, except per share data) Pro forma net revenue $ 210,479 $ 655,347 Pro forma net loss (86,527 ) (112,580 ) Pro forma net loss per share, basic $ (1.31 ) $ (1.71 ) Pro forma net loss per share, diluted (1.31 ) (1.71 ) |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | 3. Net Loss Per Common Share The following outstanding options and restricted stock units were excluded from the computation of diluted net loss per common share for the periods presented because including them would have had an anti-dilutive effect: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Options to purchase common stock 1,149 1,366 1,207 1,366 Restricted stock units 4,026 3,504 4,412 3,504 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements As of September 30, 2017 and December 31, 2016, the Company’s cash equivalents consisted of an investment in a money market fund. In accordance with the guidance for fair value measurements and disclosures, the Company determined the fair value hierarchy of its money market fund as Level 1, which approximated $13.2 million and $61.4 million as of September 30, 2017 and December 31, 2016, respectively. The carrying amount of the Company’s accounts receivable, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short term maturities. There are no other financial assets and liabilities, except those disclosed in Note 10 of Notes to Condensed Consolidated Financial Statements that require Level 2 or Level 3 fair value hierarchy measurements and disclosures. |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Components | 5. Balance Sheet Components Inventories As of September 30, 2017 As of December 31, 2016 (in thousands) Work-in-process $ 56,429 $ 61,363 Finished goods 38,450 58,329 $ 94,879 $ 119,692 Property and equipment, net As of September 30, 2017 As of December 31, 2016 (in thousands) Test equipment and mask costs $ 163,992 $ 138,633 Software, design tools, computer and other equipment 100,610 87,648 Furniture, office equipment and leasehold improvements 24,043 12,927 Construction in progress 30,105 4,767 318,750 243,975 Less: accumulated depreciation and amortization (149,003 ) (93,113 ) $ 169,747 $ 150,862 Depreciation and amortization expense was $18.6 million and $12.1 million for the three months ended September 30, 2017 and 2016, respectively, and $56.9 million and $30.3 million for the nine months ended September 30, 2017 and 2016, respectively. The Company leases certain design tools under financing arrangements which are included in property and equipment. The total cost, net of accumulated amortization amounted to $33.3 million and $46.3 million at September 30, 2017 and December 31, 2016, respectively. Amortization expense related to assets recorded under financing arrangements was $4.4 million and $4.2 million for the three months ended September 30, 2017 and 2016, respectively, and $13.1 million and $15.4 million for the nine months ended September 30, 2017 and 2016, respectively. Accrued expenses and other current liabilities As of September 30, 2017 As of December 31, 2016 (in thousands) Accrued compensation and related benefits $ 21,808 $ 18,197 Deferred research and development costs 5,282 25,370 Other 17,808 21,400 $ 44,898 $ 64,967 Restructuring Accrual The Company recorded employee severance of $12.0 million within sales, general and administrative expenses in the condensed consolidated statement of operations for the three and nine months ended September 30, 2016 related to actions following the acquisition of QLogic and integration of QLogic with the Company, which had been substantially paid as of December 31, 2016. Further, the Company assumed outstanding liabilities from the restructuring initiatives undertaken by QLogic prior to the acquisition. This restructuring initiative included an excess facility which is expected to be settled over the term of the lease through April 2018. Total restructuring liability included within accrued expenses and other current liabilities in the Company’s condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 amounted to $1.7 million and $4.3 million, respectively. Assets written-down The Company decided to rationalize certain product lines in March 2017. As a result, the Company wrote-down certain assets during the first quarter of 2017 totaling $21.5 million which was recorded in the condensed consolidated statements of operations within cost of revenue of $20.5 million, research and development expense of $0.4 million and sales, general and administrative expense of $0.6 million. The assets written-down included inventories of $16.4 million, property and equipment of $4.5 million, and intangibles and other assets of $0.6 million. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets Net Excluding Goodwill [Abstract] | |
Intangible Assets, Net | 6. Intangible Assets, Net As of September 30, 2017 Gross Accumulated Amortization Net Weighted average remaining amortization period (years) (in thousands) Existing and core technology - product $ 638,738 $ (151,373 ) $ 487,365 4.92 Technology licenses 154,920 (65,225 ) 89,695 4.23 Customer contracts and relationships 53,288 (7,961 ) 45,327 8.87 Trade name 15,596 (5,289 ) 10,307 3.88 Total amortizable intangible assets $ 862,542 $ (229,848 ) $ 632,694 4.64 IPRD 60,300 - 60,300 Total intangible assets $ 922,842 $ (229,848 ) $ 692,994 As of December 31, 2016 Gross Accumulated Amortization Net Weighted average remaining amortization period (years) (in thousands) Existing and core technology - product $ 620,110 $ (78,017 ) $ 542,093 5.63 Technology licenses 130,676 (48,225 ) 82,451 4.68 Customer contracts and relationships 53,315 (4,161 ) 49,154 9.62 Trade name 15,596 (3,309 ) 12,287 4.63 Total amortizable intangible assets $ 819,697 $ (133,712 ) $ 685,985 5.18 IPRD 78,900 - 78,900 Total intangible assets $ 898,597 $ (133,712 ) $ 764,885 Amortization expense was $32.8 million and $16.2 million for the three months ended September 30, 2017 and 2016, respectively, and $96.1 million and $21.1 million for the nine months ended September 30, 2017 and 2016, respectively. The following table presents the estimated future amortization expense of amortizable intangible assets as of September 30, 2017 (in thousands): Remainder of 2017 $ 33,115 2018 131,646 2019 129,155 2020 124,529 2021 116,676 2022 and thereafter 97,573 $ 632,694 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders Equity Note [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity Equity Incentive Plans The following table summarizes the stock option activity for the nine months ended September 30, 2017: Number of Options Outstanding Weighted Average Exercise Price Per Share Balance as of December 31, 2016 1,193,989 $ 39.68 Options granted 145,574 65.82 Options exercised (186,808 ) 31.14 Options cancelled and forfeited (4,012 ) 8.60 Balance as of September 30, 2017 1,148,743 44.49 The estimated weighted-average grant date fair value of options granted for the nine months ended September 30, 2017 and 2016 was $25.92 per share and $18.65 per share, respectively. There were no stock options granted during the three months ended September 30, 2017 and 2016. The fair value of each option grant for the nine months ended September 30, 2017 and 2016 were estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions below. Nine Months Ended September 30, 2017 2016 Risk-free interest rate 1.89% 1.11% Expected life 5.31 years 4.96 years Dividend yield 0% 0% Volatility 40.84% 42.51% As of September 30, 2017, there was $5.9 million of unrecognized compensation costs related to stock options granted. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.66 years. The following table summarizes the restricted stock unit award, or RSU, activity for the nine months ended September 30, 2017: Number of Shares Weighted- Average Grant Date Fair Value Per Share Balance as of December 31, 2016 4,119,319 $ 51.98 Granted 1,666,748 67.44 Vested (1,528,637 ) 51.71 Cancelled and forfeited (231,760 ) 58.46 Balance as of September 30, 2017 4,025,670 58.12 For the nine months ended September 30, 2017, the Company issued 1,449,872 shares of common stock in connection with the vesting of RSUs. The difference between the number of RSUs vested and the shares of common stock issued is the result of RSUs withheld in satisfaction of minimum tax withholding obligations associated with the vesting. Included in the RSU grants in the table above was one-year performance-based RSUs granted in February 2017. The Company determined that the fair value of these performance-based RSUs was $3.6 million. The Company recorded the related stock-based compensation expense based on its evaluation of the probability of achieving the milestones of all of the outstanding performance-based RSUs as of September 30, 2017. At each reporting period, the Company evaluates the probability of achieving the milestone of each of the outstanding performance-based RSUs and updates the recognition of related stock-based compensation expense. The Company also granted a three-year vesting market-based RSU in February 2017 with grant date fair value of $3.1 million. This market-based RSU will vest if: (i) during the performance period, the Company’s total stockholder return is equal to or greater than that of the industry index set by the Compensation Committee of the Board of Directors; and (ii) the recipient remains in continuous service with the Company through such vesting period. The fair value of the market-based RSU was determined by management using the Monte Carlo simulation method which takes into account multiple input variables that determine the probability of satisfying the market conditions stipulated in the award. This method requires the input of assumptions, including the expected volatility of the Company’s common stock, and a risk-free interest rate, similar to assumptions used in determining the fair value of the stock option grants discussed above. As of September 30, 2017, there was $207.2 million of unrecognized compensation costs related to RSUs granted. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.43 years. Stock-Based Compensation The following table presents the detail of stock-based compensation expense amounts included in the condensed consolidated statement of operations for each of the periods presented: Three September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Cost of revenue $ 834 $ 396 $ 2,168 $ 821 Research and development 17,022 11,696 49,278 28,274 Sales, general and administrative 8,700 23,986 25,582 34,300 $ 26,556 $ 36,078 $ 77,028 $ 63,395 The total stock-based compensation cost capitalized as part of inventory as of September 30, 2017 and December 31, 2016 was not material. Stock-based compensation decreased in the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016 partly due to the timing of recognition of incremental expense from the assumed QLogic awards. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The quarterly provision for (benefit from) income taxes is based on applying the estimated annual effective tax rate to the year to date pre-tax income (loss), plus any discrete items. The Company updates its estimate of its annual effective tax rate at the end of each quarterly period. The estimate takes into account annual forecasted income (loss) before income taxes, the geographic mix of income (loss) before income taxes and any significant permanent tax items. The following table presents the provision for or benefit from income taxes and the effective tax rates for the three and nine months ended September 30, 2017 and 2016: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Loss before income taxes $ (5,728 ) $ (98,456 ) $ (67,093 ) $ (109,151 ) Provision for (benefit from) income taxes 486 (84,090 ) 716 (83,542 ) Effective tax rate (8.5 )% 85.4 % (1.1 )% 76.5 % The provision for income taxes for the three and nine months ended September 30, 2017 were primarily related to earnings in foreign jurisdictions. The tax provision for the nine months ended September 30, 2017 was partially offset by a tax benefit of $2.4 million due to the partial release of the valuation allowance on net deferred tax assets during the second quarter of 2017. During the second quarter of 2017, an intangible asset was reclassified from indefinite-lived to finite-lived intangible asset. Accordingly, the deferred tax liability related to this intangible asset was treated as a source of taxable income which resulted in the partial release of the valuation allowance. The benefit from income taxes in the three and nine months ended September 30, 2016 were primarily related to the partial release of the valuation allowance on net deferred tax assets of $82.9 million recognized during the third quarter of 2016, partially offset by the tax provision related to earnings in foreign jurisdictions. As a result of the QLogic acquisition, the Company recognized a net deferred tax liability mainly related to book-tax basis difference on purchased intangible assets. This net deferred tax liability was treated as a source of taxable income to support the realizability of the Company’s pre-existing deferred tax assets. As a result, the Company recorded a partial release of its valuation allowance. However, during the fourth quarter of 2016, the Company was able to assess and measure an additional deferred tax asset that existed as of the acquisition date of QLogic. Due to the identification of this additional deferred tax asset, the Company made adjustments in the fourth quarter of 2016 to certain tax balances including the reversal of the partial release of the valuation allowance recorded in the third quarter of 2016. The Company’s net deferred tax assets relate predominantly to its United States tax jurisdiction. A full valuation allowance against the Company’s federal and state net deferred tax assets has been in place since 2012. The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative. The realization of net deferred tax assets is dependent on the Company's ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. The Company weighed both positive and negative evidence and determined that there is a continued need for a valuation allowance on its federal and state deferred tax assets as of September 30, 2017. The Company continues to repatriate cash from certain offshore operations in accordance with management’s review of the Company’s cash position and anticipated cash needs for investment in the Company’s core business, including interest charges and principal prepayments to the Company’s outstanding Term Loan Facility. The Company has changed its assertion regarding the repatriation of cash during the second quarter of 2017 in that the current and future earnings of certain foreign entities will no longer be indefinitely reinvested, and that the Company provides deferred taxes for the anticipated income taxes. However, given the full valuation allowance and the net operating losses in the United States, the impact to the Company’s consolidated financial statements and cash taxes is expected to be zero. During the quarter ended September 30, 2017, the Company filed the final pre-acquisition of QLogic US federal income tax return and made measurement period adjustments to the acquired tax accounts of QLogic. As a result, the Company’s gross unrecognized tax benefits decreased from $202.4 million as of December 31, 2016 to $121.5 million as of September 30, 2017. The change had no income statement impact due to the full valuation allowance against the Company’s federal and state net deferred tax assets. |
Segment and Geographic Informat
Segment and Geographic Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | 9. Segment and Geographic Information The Company manages and operates as one reportable segment. The Company categorizes its net revenue in the following different markets: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Enterprise, service provider, broadband and consumer markets $ 194,712 $ 125,047 $ 560,112 $ 285,691 Datacenter market 57,275 43,076 163,545 91,472 $ 251,987 $ 168,123 $ 723,657 $ 377,163 Revenues by geographic area are presented based upon the ship-to location of the original equipment manufacturers, the contract manufacturers or the distributors who purchased the Company’s products. For sales to the distributors, their geographic location may be different from the geographic locations of the ultimate end customers. Net revenues by geographic area are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) United States $ 70,851 $ 54,097 $ 204,647 $ 124,707 China 62,473 40,245 170,205 90,794 Korea 23,390 18,962 66,520 27,114 Finland 16,859 6,870 49,172 35,248 Taiwan 15,208 11,105 42,141 31,198 Other countries 63,206 36,844 190,972 68,102 Total $ 251,987 $ 168,123 $ 723,657 $ 377,163 The following table sets forth tangible long lived assets, which consist of property and equipment, net by geographic regions: As of September 30, 2017 As of December 31, 2016 (in thousands) United States $ 140,172 $ 115,328 All other countries 29,575 35,534 Total $ 169,747 $ 150,862 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 10. Debt On August 16, 2016, the Company entered into a Credit Agreement with JPMorgan Chase Bank, N.A. (“JPMCB”), as administrative agent and collateral agent, the other agents party thereto and the lenders referred to therein (collectively, the “Lenders”). The Lenders provided (i) a $700.0 million six year term B loan facility (the “Initial Term B Loan Facility”) and (ii) a $50.0 million interim term loan facility (the “Interim Term Loan Facility”, (i) and (ii) together, the “Term Facility”) to finance the acquisition of QLogic and pay fees and expenses of such acquisition. The outstanding debt under the Term Facility are collateralized by a lien on substantially all of the Company’s assets. The Initial Term B Loan Facility will mature on August 16, 2022 and requires quarterly principal payments commencing on December 31, 2016 equal to 0.25% of the aggregate original principal amount, with the balance payable at maturity (in each case subject to adjustment for prepayments). In January 2017, the Company made payments totaling $86.0 million towards the outstanding principal balance of the Initial Term B Loan Facility and recorded $2.5 million of amortization of the debt financing costs associated with these principal payments in the first quarter of 2017. On March 20, 2017, the Company entered into an amendment to its Credit Agreement. The amendment provides for among other things, a reduction of the interest rate margin on the Company’s outstanding Initial Term B Loan Facility by 0.75% per annum, substantially all of which was treated as a debt modification. As such, the Company wrote-off an immaterial amount of the deferred financing costs associated with the extinguished portion of the debt in the first quarter of 2017 and continues to amortize the remaining unamortized deferred financing costs over the remaining term of the Initial Term B Loan Facility. As of September 30, 2017 and December 31, 2016, the carrying value of the Term Facility approximates the fair value. The Company classified this under Level 2 fair value measurement hierarchy as the borrowings are not actively traded and have variable interest structure based upon market rates currently available to the Company for debt with similar terms and maturities. The following table summarizes the outstanding borrowings from the Initial Term B Loan Facility as of the periods presented: As of September 30, 2017 As of December 31, 2016 (in thousands) Principal outstanding $ 610,719 $ 698,250 Unamortized deferred financing costs (13,679 ) (18,971 ) Principal outstanding, net of unamortized deferred financing costs $ 597,040 $ 679,279 Current portion of long-term debt $ 3,270 $ 3,865 Long-term debt $ 593,770 $ 675,414 T he Company recognized contractual interest expense of $5.4 million and $3.4 million in the three months ended September 30, 2017 and 2016, respectively, and $16.4 million and $3.4 million in the nine months ended September 30, 2017 and 2016, respectively. Amortization of deferred financing costs was $0.7 million and $0.7 million in the three months ended September 30, 2017 and 2016, respectively, and $5.3 million and $0.7 million in the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, the Company is in compliance with the covenants specified in the Credit Agreement. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies The Company is not currently a party to any legal proceedings, the outcome of which, if determined adversely to the Company, would have a material adverse effect on the condensed consolidated financial position, condensed results of operations or condensed cash flows of the Company. The Company leases its facilities under non-cancelable operating leases, which contain renewal options and escalation clauses, and expire on various dates ending in October 2027. On January 31, 2017, the Company entered into a lease agreement to lease approximately 116,000 sq. ft. in a building located adjacent to the Company’s corporate headquarter in San Jose, California. The lease term is through July 2027 and the Company expects to occupy the building beginning December 2017. On March 24, 2017, the Company entered into an amendment to the lease agreement dated November 18, 2016 for a building located in Irvine, California to extend the lease term through October 2027. Rent expense incurred under operating leases was $6.4 million and $3.0 million for the three months ended September 30, 2017 and 2016 The Company also has non-cancellable software and maintenance commitments which are generally billed on a quarterly basis. These commitments are included in the operating leases. Minimum commitments under non-cancelable operating and capital lease agreements as of September 30, 2017 are as follows: Capital lease and technology license obligations Operating leases Total (in thousands) Remainder of 2017 $ 9,371 $ 3,814 $ 13,185 2018 23,657 18,057 41,714 2019 10,941 19,526 30,467 2020 - 18,685 18,685 2021 - 18,257 18,257 2022 thereafter - 56,873 56,873 $ 43,969 $ 135,212 $ 179,181 Less: Interest component (3.75% annual rate) 1,141 Present value of minimum lease payment 42,828 Current portion of the obligations $ 27,803 Long-term portion of obligations $ 15,025 QLogic Manufacturing Rights Buy-outs Following the closing of the acquisition of QLogic, the Company exercised non-cancellable options to purchase the manufacturing rights from a QLogic application specific integrated circuit, or ASIC, vendor effective at the closing of the acquisition of QLogic for certain QLogic ASIC products. In consideration for the exercise of the manufacturing rights, in September 2016, the Company paid an aggregate of $55.0 million manufacturing buy-out consideration and a one-time royalty buy-out fee of $10.0 million for certain QLogic ASIC products. Further, in September 2016, the Company entered into an ownership transfer and manufacturing rights agreement with another QLogic third party ASIC vendor to acquire manufacturing rights and relieve the Company from future royalty obligations related to certain ASIC products for a total consideration of $10.0 million. The Company determined that the total consideration of $75.0 million discussed above pertained to the use of technologies and the cost to cancel the exclusive rights to manufacture the related products. The Company estimated the components of the total consideration attributable to the use of technologies and the cost to cancel the exclusive manufacturing rights using market-based fair value estimation. The fair value estimation was determined based on inputs that are unobservable and significant to the overall fair value measurement. It was also based on estimates and assumptions made by management. As such this was classified as Level 3 fair value hierarchy measurements and disclosures. Based on the analysis, the Company attributed $42.8 million of the total consideration to the use of the related technologies in future periods and recorded this amount as intangible assets in the condensed consolidated balance sheets. The remaining balance of $32.2 million was attributed to cost to cancel the exclusive rights to manufacture the related products and was recorded as cost of revenue in the condensed consolidated statements of operations in the three and nine months ended September 30, 2016. |
Organization and Basis of Pre18
Organization and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization | Organization Cavium, Inc., (the “Company”), was incorporated in the state of California in November 2000 and was reincorporated in the state of Delaware in February 2007. The Company designs, develops and markets semiconductor processors that enable intelligent processing for wired and wireless infrastructure and cloud for networking, communications, storage and security applications. On August 16, 2016, the Company completed the acquisition of QLogic Corporation (“QLogic”). The QLogic products consist primarily of connectivity products including adapters and application-specific integrated circuits (ASICs) that facilitate the rapid transfer of data and enable efficient resource sharing between servers, networks and storage. The QLogic products are based primarily on Fibre Channel and Ethernet technologies and are used in conjunction with storage networks, data networks and converged networks. See Note 2 for further discussion regarding the Company’s acquisition of QLogic. |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements include the accounts of Cavium, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America, or US GAAP, and pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements. For further information, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K (File No. 001-33435) for the year ended December 31, 2016 filed with the SEC on February 28, 2017. The condensed consolidated financial statements contain all normal recurring adjustments that, in the opinion of management, are necessary to state fairly the Company’s condensed consolidated financial position as of September 30, 2017, and the condensed consolidated results of its operations for the three and nine months ended September 30, 2017 and 2016, and condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by US GAAP. |
Significant Accounting Policies | Significant Accounting Policies The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There had been no changes to these accounting policies except for the recently adopted accounting guidance on stock-based compensation as discussed below. |
Recently Adopted Accounting Standard | Recently Adopted Accounting Standard Effective January 1, 2017, the Company adopted the updated guidance on stock-based compensation issued by the Financial Accounting Standards Board, or FASB, in March 2016. Under the new guidance, all excess tax benefits and tax deficiencies will be recognized in the income statement as they occur. This replaced the previous guidance, which requires tax benefits that exceed compensation cost (windfalls) to be recognized in equity. It also eliminates the need to maintain a “windfall pool,” and removes the requirement to delay recognizing a windfall until it reduces current taxes payable. Upon adoption of this new guidance, in the first quarter of 2017, the Company recognized deferred tax assets of $101.7 million for the excess tax benefits that arose directly from tax deductions related to equity compensation greater than the amounts recognized for financial reporting and also recognized an increase of an equal amount in the valuation allowance against those deferred tax assets. Under the amended guidance, companies will be able to make an accounting policy election to either continue to estimate forfeitures or account for forfeitures as they occur. Upon adoption, the Company elected to account for forfeitures when they occur, on a modified retrospective basis. The new guidance also changed the cash flow presentation of excess tax benefits, classifying them as operating inflows, consistent with other cash flows related to income taxes. Further, following the adoption of this updated guidance, there will be additional dilutive effects in earnings per share calculations because there will no longer be excess tax benefits recognized in additional paid in capital. The adoption of this updated guidance did not have a material impact on the Company’s consolidated financial statements. |
Update to Recently Issued Accounting Standards Not Yet Effective | Update to Recently Issued Accounting Standards Not Yet Effective The FASB issued accounting standard updates that create a single source of revenue guidance under US GAAP for all companies, in all industries, effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company intends to adopt this standard on January 1, 2018, with a cumulative effect adjustment to opening retained earnings, if necessary, under the modified retrospective approach. The Company’s assessment process consisted of reviewing its current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to its revenue contracts and identifying appropriate changes to its business processes, systems and controls to support revenue recognition and disclosure requirements under the new standard. The Company’s evaluation of its revenue sources and their treatment under the new standard is progressing. The Company expects the unit of accounting will be consistent with the current revenue guidance. Although the implementation is not complete, the Company believes that the new standard and related new revenue recognition policies will not result in a significant change to the timing of recognition of revenue for the sale of its semiconductor products, which represent the substantial majority of the Company’s consolidated revenue. In May 2017, the FASB issued an update to the guidance on stock-based compensation which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Under this updated standard, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, and will be applied prospectively to awards modified on or after the adoption date. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance on its financial statements but does not expect it to have a material impact. In January 2017, the FASB issued an update to the guidance to simplify the measurement of goodwill by eliminating the Step 2 impairment test. The update is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, though early adoption is permitted. The Company is currently assessing the impact of this new guidance but does not expect it to have a material impact. In November 2016, the FASB issued an update to the guidance on statement of cash flows - restricted cash presentation. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. The new standard must be adopted retrospectively. The Company does not have restricted cash in the periods presented, but if applicable following the adoption, the Company will present its statement of cash flows in accordance with this updated guidance. In October 2016, the FASB issued an update to the guidance on income taxes. This new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued or made available for issuance. The Company is currently assessing the impact of this new guidance but does not expect it to have a material impact . In August 2016, the FASB issued new guidance on cash flow classification of certain cash receipts and cash payments. This new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods during the annual period and require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. Early adoption is permitted. The Company will present its statement of cash flows in accordance with this new guidance subsequent to adoption. In February 2016, the FASB issued updated guidance on leases which requires a lessee to recognize the assets and lease liabilities on the balance sheet for certain leases classified as operating leases under previous GAAP. In September 2017, the FASB provided additional clarification and implementation guidance on leases. This updated guidance is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. Although the Company is currently evaluating the impact this new guidance will have on its consolidated financial statements and related disclosures, the Company expects that most of its operating lease commitments will be subject to the new standard and will be recognized as operating lease liabilities and right-of-use assets upon adoption. In January 2016, the FASB issued updated guidance on Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this updated guidance are effective for annual and interim periods beginning after December 15, 2017. Early adoption is not permitted. The adoption of this updated guidance is not expected to have a material effect on the Company’s consolidated financial statements and related disclosures. |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Summary of Purchase Price Allocation | The Company allocated the acquisition consideration to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The allocation is as follows: Amounts Previously Recognized as of Acquisition Date (Provisional) Measurement Period Adjustments Amounts Recognized as of Acquisition Date (Final Allocation) (amounts in thousands) Cash and cash equivalents $ 365,065 $ - $ 365,065 Marketable securities 375 - 375 Accounts receivable 65,576 - 65,576 Inventories 63,300 - 63,300 Prepaid expense and other current assets 8,274 3,121 11,395 Property and equipment 81,890 - 81,890 Intangible assets 721,700 - 721,700 Other assets 1,559 - 1,559 Goodwill 169,589 (3,375 ) 166,214 Accounts payable (41,776 ) - (41,776 ) Accrued expense and other current liabilities (21,884 ) - (21,884 ) Deferred revenue (603 ) - (603 ) Deferred tax liability (17,237 ) - (17,237 ) Other non-current liabilities (16,335 ) 254 (16,081 ) Total acquisition consideration $ 1,379,493 $ - $ 1,379,493 |
Valuation of Identifiable Intangible Assets and Estimated Useful Lives | The valuation of identifiable intangible assets and their estimated useful lives are as follows: Estimated Asset Fair Value Weighted Average Useful Life (Years) (in thousands, except for useful life) Existing and core technology $ 578,400 6 In process research and development (IPRD) 78,900 n/a Customer relationships 51,100 10 Tradename and trademark 13,300 5 $ 721,700 |
Supplemental Pro forma Financial Information | The supplemental pro forma financial information for the periods presented is as follows: Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 (in thousands, except per share data) Pro forma net revenue $ 210,479 $ 655,347 Pro forma net loss (86,527 ) (112,580 ) Pro forma net loss per share, basic $ (1.31 ) $ (1.71 ) Pro forma net loss per share, diluted (1.31 ) (1.71 ) |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Summary of Outstanding Options and Restricted Stock Units Excluded from Computation of Diluted Net Loss Per Common Share | The following outstanding options and restricted stock units were excluded from the computation of diluted net loss per common share for the periods presented because including them would have had an anti-dilutive effect: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Options to purchase common stock 1,149 1,366 1,207 1,366 Restricted stock units 4,026 3,504 4,412 3,504 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Inventories | Inventories As of September 30, 2017 As of December 31, 2016 (in thousands) Work-in-process $ 56,429 $ 61,363 Finished goods 38,450 58,329 $ 94,879 $ 119,692 |
Property and Equipment, Net | Property and equipment, net As of September 30, 2017 As of December 31, 2016 (in thousands) Test equipment and mask costs $ 163,992 $ 138,633 Software, design tools, computer and other equipment 100,610 87,648 Furniture, office equipment and leasehold improvements 24,043 12,927 Construction in progress 30,105 4,767 318,750 243,975 Less: accumulated depreciation and amortization (149,003 ) (93,113 ) $ 169,747 $ 150,862 |
Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities As of September 30, 2017 As of December 31, 2016 (in thousands) Accrued compensation and related benefits $ 21,808 $ 18,197 Deferred research and development costs 5,282 25,370 Other 17,808 21,400 $ 44,898 $ 64,967 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets Net Excluding Goodwill [Abstract] | |
Intangible Assets, Net | As of September 30, 2017 Gross Accumulated Amortization Net Weighted average remaining amortization period (years) (in thousands) Existing and core technology - product $ 638,738 $ (151,373 ) $ 487,365 4.92 Technology licenses 154,920 (65,225 ) 89,695 4.23 Customer contracts and relationships 53,288 (7,961 ) 45,327 8.87 Trade name 15,596 (5,289 ) 10,307 3.88 Total amortizable intangible assets $ 862,542 $ (229,848 ) $ 632,694 4.64 IPRD 60,300 - 60,300 Total intangible assets $ 922,842 $ (229,848 ) $ 692,994 As of December 31, 2016 Gross Accumulated Amortization Net Weighted average remaining amortization period (years) (in thousands) Existing and core technology - product $ 620,110 $ (78,017 ) $ 542,093 5.63 Technology licenses 130,676 (48,225 ) 82,451 4.68 Customer contracts and relationships 53,315 (4,161 ) 49,154 9.62 Trade name 15,596 (3,309 ) 12,287 4.63 Total amortizable intangible assets $ 819,697 $ (133,712 ) $ 685,985 5.18 IPRD 78,900 - 78,900 Total intangible assets $ 898,597 $ (133,712 ) $ 764,885 |
Estimated Future Amortization Expense of Amortizable Intangible Assets | The following table presents the estimated future amortization expense of amortizable intangible assets as of September 30, 2017 (in thousands): Remainder of 2017 $ 33,115 2018 131,646 2019 129,155 2020 124,529 2021 116,676 2022 and thereafter 97,573 $ 632,694 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders Equity Note [Abstract] | |
Summary of Stock Option Activity | The following table summarizes the stock option activity for the nine months ended September 30, 2017: Number of Options Outstanding Weighted Average Exercise Price Per Share Balance as of December 31, 2016 1,193,989 $ 39.68 Options granted 145,574 65.82 Options exercised (186,808 ) 31.14 Options cancelled and forfeited (4,012 ) 8.60 Balance as of September 30, 2017 1,148,743 44.49 |
Assumptions Of Fair Value Of Employee Option Grant Using Black-Scholes Option - Pricing Model | The fair value of each option grant for the nine months ended September 30, 2017 and 2016 were estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions below. Nine Months Ended September 30, 2017 2016 Risk-free interest rate 1.89% 1.11% Expected life 5.31 years 4.96 years Dividend yield 0% 0% Volatility 40.84% 42.51% |
Summary of Restricted Stock Unit Award or RSU Activity | The following table summarizes the restricted stock unit award, or RSU, activity for the nine months ended September 30, 2017: Number of Shares Weighted- Average Grant Date Fair Value Per Share Balance as of December 31, 2016 4,119,319 $ 51.98 Granted 1,666,748 67.44 Vested (1,528,637 ) 51.71 Cancelled and forfeited (231,760 ) 58.46 Balance as of September 30, 2017 4,025,670 58.12 |
Detail of Stock-Based Compensation Expense | The following table presents the detail of stock-based compensation expense amounts included in the condensed consolidated statement of operations for each of the periods presented: Three September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Cost of revenue $ 834 $ 396 $ 2,168 $ 821 Research and development 17,022 11,696 49,278 28,274 Sales, general and administrative 8,700 23,986 25,582 34,300 $ 26,556 $ 36,078 $ 77,028 $ 63,395 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Provision for (Benefit from) Income Taxes and Effective Tax Rates | The following table presents the provision for or benefit from income taxes and the effective tax rates for the three and nine months ended September 30, 2017 and 2016: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Loss before income taxes $ (5,728 ) $ (98,456 ) $ (67,093 ) $ (109,151 ) Provision for (benefit from) income taxes 486 (84,090 ) 716 (83,542 ) Effective tax rate (8.5 )% 85.4 % (1.1 )% 76.5 % |
Segment and Geographic Inform25
Segment and Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Net Revenue in Two Different Markets | The Company categorizes its net revenue in the following different markets: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Enterprise, service provider, broadband and consumer markets $ 194,712 $ 125,047 $ 560,112 $ 285,691 Datacenter market 57,275 43,076 163,545 91,472 $ 251,987 $ 168,123 $ 723,657 $ 377,163 |
Net Revenues by Geographic Area | Net revenues by geographic area are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) United States $ 70,851 $ 54,097 $ 204,647 $ 124,707 China 62,473 40,245 170,205 90,794 Korea 23,390 18,962 66,520 27,114 Finland 16,859 6,870 49,172 35,248 Taiwan 15,208 11,105 42,141 31,198 Other countries 63,206 36,844 190,972 68,102 Total $ 251,987 $ 168,123 $ 723,657 $ 377,163 |
Tangible Long Lived Assets | The following table sets forth tangible long lived assets, which consist of property and equipment, net by geographic regions: As of September 30, 2017 As of December 31, 2016 (in thousands) United States $ 140,172 $ 115,328 All other countries 29,575 35,534 Total $ 169,747 $ 150,862 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Summary of Outstanding Borrowings from Initial Term B Loan Facility | The following table summarizes the outstanding borrowings from the Initial Term B Loan Facility as of the periods presented: As of September 30, 2017 As of December 31, 2016 (in thousands) Principal outstanding $ 610,719 $ 698,250 Unamortized deferred financing costs (13,679 ) (18,971 ) Principal outstanding, net of unamortized deferred financing costs $ 597,040 $ 679,279 Current portion of long-term debt $ 3,270 $ 3,865 Long-term debt $ 593,770 $ 675,414 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Minimum Commitments Under Non-Cancelable Operating and Capital Lease Agreements | Minimum commitments under non-cancelable operating and capital lease agreements as of September 30, 2017 are as follows: Capital lease and technology license obligations Operating leases Total (in thousands) Remainder of 2017 $ 9,371 $ 3,814 $ 13,185 2018 23,657 18,057 41,714 2019 10,941 19,526 30,467 2020 - 18,685 18,685 2021 - 18,257 18,257 2022 thereafter - 56,873 56,873 $ 43,969 $ 135,212 $ 179,181 Less: Interest component (3.75% annual rate) 1,141 Present value of minimum lease payment 42,828 Current portion of the obligations $ 27,803 Long-term portion of obligations $ 15,025 |
Organization and Basis of Pre28
Organization and Basis of Presentation (Narrative) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Mar. 31, 2017 | Sep. 30, 2017 | |
Accounting Standards Update 2016-09 | ||
Organization And Basis Of Presentation [Line Items] | ||
Excess tax benefit from share based compensation | $ 101.7 | |
QLogic Corporation | ||
Organization And Basis Of Presentation [Line Items] | ||
Business combination completion date | Aug. 16, 2016 |
Business Combination (Narrative
Business Combination (Narrative) (Detail) - QLogic Corporation $ in Millions | Aug. 16, 2016USD ($)Project | Jun. 30, 2017USD ($) | Sep. 30, 2017 |
Business Acquisition [Line Items] | |||
Business combination agreement date | Jun. 15, 2016 | ||
Total acquisition consideration | $ 1,379.5 | ||
Cash consideration | 938.9 | ||
Equity consideration | $ 440.6 | ||
Number of IPRD projects acquired | Project | 2 | ||
IPRD reclassified to existing and core technology | $ 18.6 | ||
Fibre Channel Products | |||
Business Acquisition [Line Items] | |||
IPRD projects estimated to be completed, fiscal year | 2,019 | ||
Minimum | IPRD | |||
Business Acquisition [Line Items] | |||
Estimated useful life (years) upon completion of IPRD projects | 5 years | ||
Maximum | IPRD | |||
Business Acquisition [Line Items] | |||
Estimated useful life (years) upon completion of IPRD projects | 6 years |
Business Combination (Summary o
Business Combination (Summary of Purchase Price Allocation) (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Aug. 16, 2016 |
Business Acquisition [Line Items] | |||
Goodwill | $ 237,692 | $ 241,067 | |
QLogic Corporation | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 365,065 | ||
Marketable securities | 375 | ||
Accounts receivable | 65,576 | ||
Inventories | 63,300 | ||
Prepaid expense and other current assets | 11,395 | ||
Property and equipment | 81,890 | ||
Intangible assets | 721,700 | ||
Other assets | 1,559 | ||
Goodwill | 166,214 | ||
Accounts payable | (41,776) | ||
Accrued expense and other current liabilities | (21,884) | ||
Deferred revenue | (603) | ||
Deferred tax liability | (17,237) | ||
Other non-current liabilities | (16,081) | ||
Total acquisition consideration | 1,379,493 | ||
QLogic Corporation | Amounts Previously Recognized as of Acquisition Date (Provisional) | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | 365,065 | ||
Marketable securities | 375 | ||
Accounts receivable | 65,576 | ||
Inventories | 63,300 | ||
Prepaid expense and other current assets | 8,274 | ||
Property and equipment | 81,890 | ||
Intangible assets | 721,700 | ||
Other assets | 1,559 | ||
Goodwill | 169,589 | ||
Accounts payable | (41,776) | ||
Accrued expense and other current liabilities | (21,884) | ||
Deferred revenue | (603) | ||
Deferred tax liability | (17,237) | ||
Other non-current liabilities | (16,335) | ||
Total acquisition consideration | 1,379,493 | ||
QLogic Corporation | Measurement Period Adjustments | |||
Business Acquisition [Line Items] | |||
Prepaid expense and other current assets | 3,121 | ||
Goodwill | (3,375) | ||
Other non-current liabilities | $ 254 |
Business Combination (Valuation
Business Combination (Valuation of Identifiable Intangible Assets and Estimated Useful Lives) (Detail) - QLogic Corporation $ in Thousands | Aug. 16, 2016USD ($) |
Finite And Indefinite Lived Intangible Assets Acquired Through Business Combination [Line Items] | |
Estimated Asset Fair Value | $ 721,700 |
Existing and Core Technology | |
Finite And Indefinite Lived Intangible Assets Acquired Through Business Combination [Line Items] | |
Estimated Asset Fair Value | $ 578,400 |
Weighted Average Useful Life (Years) | 6 years |
Customer Relationships | |
Finite And Indefinite Lived Intangible Assets Acquired Through Business Combination [Line Items] | |
Estimated Asset Fair Value | $ 51,100 |
Weighted Average Useful Life (Years) | 10 years |
Tradename and Trademark | |
Finite And Indefinite Lived Intangible Assets Acquired Through Business Combination [Line Items] | |
Estimated Asset Fair Value | $ 13,300 |
Weighted Average Useful Life (Years) | 5 years |
In Process Research and Development ("IPRD") | |
Finite And Indefinite Lived Intangible Assets Acquired Through Business Combination [Line Items] | |
Estimated Asset Fair Value | $ 78,900 |
Business Combination (Supplemen
Business Combination (Supplemental Pro forma Financial Information) (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Business Acquisition Pro Forma Information [Abstract] | ||
Pro forma net revenue | $ 210,479 | $ 655,347 |
Pro forma net loss | $ (86,527) | $ (112,580) |
Pro forma net loss per share, basic | $ (1.31) | $ (1.71) |
Pro forma net loss per share, diluted | $ (1.31) | $ (1.71) |
Net Loss Per Common Share (Summ
Net Loss Per Common Share (Summary of Outstanding Options and Restricted Stock Units Excluded from Computation of Diluted Net Loss Per Common Share) (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Options To Purchase Common Stock | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from the computation of diluted net income (loss) per common share | 1,149 | 1,366 | 1,207 | 1,366 |
Restricted Stock Units | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from the computation of diluted net income (loss) per common share | 4,026 | 3,504 | 4,412 | 3,504 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Money Market Funds | Fair Value, Inputs, Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 13.2 | $ 61.4 |
Balance Sheet Components (Inven
Balance Sheet Components (Inventories) (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Net [Abstract] | ||
Work-in-process | $ 56,429 | $ 61,363 |
Finished goods | 38,450 | 58,329 |
Inventories | $ 94,879 | $ 119,692 |
Balance Sheet Components (Prope
Balance Sheet Components (Property and Equipment, Net) (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 318,750 | $ 243,975 |
Less: accumulated depreciation and amortization | (149,003) | (93,113) |
Property and equipment, net | 169,747 | 150,862 |
Test Equipment and Mask Costs | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 163,992 | 138,633 |
Software, Design Tools, Computer and Other Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 100,610 | 87,648 |
Furniture, Office Equipment and Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 24,043 | 12,927 |
Construction in Progress | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 30,105 | $ 4,767 |
Balance Sheet Components (Narra
Balance Sheet Components (Narrative) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Balance Sheet Components [Line Items] | ||||||
Depreciation and amortization expense | $ 18.6 | $ 12.1 | $ 56.9 | $ 30.3 | ||
Total restructuring liability | 1.7 | $ 1.7 | $ 4.3 | |||
Assets written-down | $ 21.5 | |||||
Inventories written-down | 16.4 | |||||
Property and equipment written-down | 4.5 | |||||
Intangibles and other assets written-down | 0.6 | |||||
Cost of revenue | ||||||
Balance Sheet Components [Line Items] | ||||||
Assets written-down | 20.5 | |||||
Research and development | ||||||
Balance Sheet Components [Line Items] | ||||||
Assets written-down | 0.4 | |||||
Sales, general and administrative | ||||||
Balance Sheet Components [Line Items] | ||||||
Assets written-down | $ 0.6 | |||||
Severance And Other Benefits | ||||||
Balance Sheet Components [Line Items] | ||||||
Additional restructuring accrual | 12 | 12 | ||||
QLogic Corporation | ||||||
Balance Sheet Components [Line Items] | ||||||
Restructuring and term of lease | 2018-04 | |||||
Property and Equipment Under Financing Arrangements | ||||||
Balance Sheet Components [Line Items] | ||||||
Leases under financing arrangements | 33.3 | $ 33.3 | $ 46.3 | |||
Amortization expense related to assets under financing arrangements | $ 4.4 | $ 4.2 | $ 13.1 | $ 15.4 |
Balance Sheet Components (Accru
Balance Sheet Components (Accrued Expenses and Other Current Liabilities) (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued compensation and related benefits | $ 21,808 | $ 18,197 |
Deferred research and development costs | 5,282 | 25,370 |
Other | 17,808 | 21,400 |
Accrued expenses and other current liabilities | $ 44,898 | $ 64,967 |
Intangible Assets, Net (Intangi
Intangible Assets, Net (Intangible Assets, Net) (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, Gross | $ 862,542 | $ 819,697 |
Finite-lived intangible assets, Accumulated Amortization | (229,848) | (133,712) |
Finite-lived intangible assets, Net | $ 632,694 | $ 685,985 |
Weighted average remaining amortization period (years) | 4 years 7 months 21 days | 5 years 2 months 5 days |
Intangible assets, Gross | $ 922,842 | $ 898,597 |
Intangible assets, Net | 692,994 | 764,885 |
IPRD | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 60,300 | 78,900 |
Existing and core technology - product | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, Gross | 638,738 | 620,110 |
Finite-lived intangible assets, Accumulated Amortization | (151,373) | (78,017) |
Finite-lived intangible assets, Net | $ 487,365 | $ 542,093 |
Weighted average remaining amortization period (years) | 4 years 11 months 1 day | 5 years 7 months 17 days |
Technology licenses | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, Gross | $ 154,920 | $ 130,676 |
Finite-lived intangible assets, Accumulated Amortization | (65,225) | (48,225) |
Finite-lived intangible assets, Net | $ 89,695 | $ 82,451 |
Weighted average remaining amortization period (years) | 4 years 2 months 23 days | 4 years 8 months 5 days |
Customer contracts and relationships | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, Gross | $ 53,288 | $ 53,315 |
Finite-lived intangible assets, Accumulated Amortization | (7,961) | (4,161) |
Finite-lived intangible assets, Net | $ 45,327 | $ 49,154 |
Weighted average remaining amortization period (years) | 8 years 10 months 14 days | 9 years 7 months 13 days |
Trade name | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, Gross | $ 15,596 | $ 15,596 |
Finite-lived intangible assets, Accumulated Amortization | (5,289) | (3,309) |
Finite-lived intangible assets, Net | $ 10,307 | $ 12,287 |
Weighted average remaining amortization period (years) | 3 years 10 months 17 days | 4 years 7 months 17 days |
Intangible Assets, Net (Narrati
Intangible Assets, Net (Narrative) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Intangible Assets Net Excluding Goodwill [Abstract] | ||||
Amortization expense | $ 32.8 | $ 16.2 | $ 96.1 | $ 21.1 |
Intangible Assets, Net (Estimat
Intangible Assets, Net (Estimated Future Amortization Expense of Amortizable Intangible Assets) (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Intangible Assets Net Excluding Goodwill [Abstract] | ||
Remainder of 2017 | $ 33,115 | |
2,018 | 131,646 | |
2,019 | 129,155 | |
2,020 | 124,529 | |
2,021 | 116,676 | |
2022 and thereafter | 97,573 | |
Finite-lived intangible assets, Net | $ 632,694 | $ 685,985 |
Stockholders' Equity (Summary o
Stockholders' Equity (Summary of Stock Option Activity) (Detail) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Number of Options Outstanding, Beginning balance | shares | 1,193,989 |
Number of Options Outstanding, Options granted | shares | 145,574 |
Number of Options Outstanding, Options exercised | shares | (186,808) |
Number of Options Outstanding, Options cancelled and forfeited | shares | (4,012) |
Number of Options Outstanding, Ending balance | shares | 1,148,743 |
Weighted Average Exercise Price Per Share, Beginning balance | $ / shares | $ 39.68 |
Weighted Average Exercise Price Per Share, Options granted | $ / shares | 65.82 |
Weighted Average Exercise Price Per Share, Options exercised | $ / shares | 31.14 |
Weighted Average Exercise Price Per Share, Options cancelled and forfeited | $ / shares | 8.60 |
Weighted Average Exercise Price Per Share, Ending balance | $ / shares | $ 44.49 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Number of stock options granted | 0 | 0 | ||
Employee Stock Option | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Estimated weighted-average grant date fair value of options granted | $ 25.92 | $ 18.65 | ||
Unrecognized compensation cost | $ 5.9 | $ 5.9 | ||
Unrecognized compensation cost expected to be recognized over weighted average period (in years) | 2 years 7 months 28 days | |||
Restricted Stock Units (RSUs) | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Unrecognized compensation cost | $ 207.2 | $ 207.2 | ||
Unrecognized compensation cost expected to be recognized over weighted average period (in years) | 2 years 5 months 5 days | |||
Common stock issued in connection with the vesting of RSUs | 1,449,872 | |||
Restricted Stock Units (RSUs) | One-Year Performance Officers | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
RSU's granted | $ 3.6 | |||
Compensation expense vesting period (in years) | 1 year | |||
Market-Performance Based RSU's | Three-Year Performance | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
RSU's granted | $ 3.1 | |||
Compensation expense vesting period (in years) | 3 years |
Stockholders' Equity (Assumptio
Stockholders' Equity (Assumptions Of Fair Value Of Employee Option Grant Using Black-Scholes Option - Pricing Model) (Detail) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Risk-free interest rate | 1.89% | 1.11% |
Expected life | 5 years 3 months 22 days | 4 years 11 months 16 days |
Dividend yield | 0.00% | 0.00% |
Volatility | 40.84% | 42.51% |
Stockholders' Equity (Summary45
Stockholders' Equity (Summary of Restricted Stock Unit Award or RSU Activity) (Detail) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Number of Shares, Beginning balance | shares | 4,119,319 |
Number of Shares, Granted | shares | 1,666,748 |
Number of Shares, Vested | shares | (1,528,637) |
Number of Shares, Cancelled and forfeited | shares | (231,760) |
Number of Shares, Ending balance | shares | 4,025,670 |
Weighted-Average Grant Date Fair Value Per Share, Beginning balance | $ / shares | $ 51.98 |
Weighted-Average Grant Date Fair Value Per Share, Granted | $ / shares | 67.44 |
Weighted-Average Grant Date Fair Value Per Share, Vested | $ / shares | 51.71 |
Weighted-Average Grant Date Fair Value Per Share, Cancelled and forfeited | $ / shares | 58.46 |
Weighted-Average Grant Date Fair Value Per Share, Ending balance | $ / shares | $ 58.12 |
Stockholders' Equity (Detail of
Stockholders' Equity (Detail of Stock-Based Compensation Expense) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 26,556 | $ 36,078 | $ 77,028 | $ 63,395 |
Cost of revenue | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 834 | 396 | 2,168 | 821 |
Research and development | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 17,022 | 11,696 | 49,278 | 28,274 |
Sales, general and administrative | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 8,700 | $ 23,986 | $ 25,582 | $ 34,300 |
Income Taxes (Provision for (Be
Income Taxes (Provision for (Benefit from) Income Taxes and Effective Tax Rates) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Loss before income taxes | $ (5,728) | $ (98,456) | $ (67,093) | $ (109,151) |
Provision for (benefit from) income taxes | $ 486 | $ (84,090) | $ 716 | $ (83,542) |
Effective tax rate | (8.50%) | 85.40% | (1.10%) | 76.50% |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Partial release of valuation allowance on deferred tax assets | $ 82,900,000 | $ 2,400,000 | $ 82,900,000 | |
Expected cash taxes | 0 | |||
Unrecognized tax benefits, gross | $ 121,500,000 | $ 202,400,000 |
Segment and Geographic Inform49
Segment and Geographic Information - (Narrative) (Detail) | 9 Months Ended |
Sep. 30, 2017Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Segment and Geographic Inform50
Segment and Geographic Information (Net Revenue in Two Different Markets) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 251,987 | $ 168,123 | $ 723,657 | $ 377,163 |
Enterprise, Service Provider, Broadband and Consumer Markets | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 194,712 | 125,047 | 560,112 | 285,691 |
Datacenter Market | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 57,275 | $ 43,076 | $ 163,545 | $ 91,472 |
Segment and Geographic Inform51
Segment and Geographic Information (Net Revenues by Geographic Area) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Net revenues | $ 251,987 | $ 168,123 | $ 723,657 | $ 377,163 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 70,851 | 54,097 | 204,647 | 124,707 |
China | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 62,473 | 40,245 | 170,205 | 90,794 |
Korea | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 23,390 | 18,962 | 66,520 | 27,114 |
Finland | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 16,859 | 6,870 | 49,172 | 35,248 |
Taiwan | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 15,208 | 11,105 | 42,141 | 31,198 |
Other Countries | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | $ 63,206 | $ 36,844 | $ 190,972 | $ 68,102 |
Segment and Geographic Inform52
Segment and Geographic Information (Tangible Long Lived Assets) (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 169,747 | $ 150,862 |
United States | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 140,172 | 115,328 |
All Other Countries | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 29,575 | $ 35,534 |
Debt (Narrative) (Detail)
Debt (Narrative) (Detail) - USD ($) $ in Thousands | Mar. 20, 2017 | Jan. 31, 2017 | Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Aug. 16, 2016 |
Debt Instrument [Line Items] | |||||||||
Amortization of deferred debt financing costs | $ 5,291 | $ 748 | |||||||
Debt instrument, covenant compliance | As of September 30, 2017, the Company is in compliance with the covenants specified in the Credit Agreement. | ||||||||
Initial Term B Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Term of loan facility | 6 years | ||||||||
Outstanding debt under term facility | $ 610,719 | $ 610,719 | $ 698,250 | ||||||
Convertible notes receivable maturity date | Aug. 16, 2022 | ||||||||
Principal payment commencing date | Dec. 31, 2016 | ||||||||
The minimum percentage quarterly principal payments | 0.25% | ||||||||
Debt instrument, frequency of principal payment | Quarterly | ||||||||
Debt instrument, payment of outstanding principal balance | $ 86,000 | ||||||||
Amortization of deferred debt financing costs | $ 2,500 | ||||||||
Debt instrument, reduction of interest on margin rate | 0.75% | ||||||||
Term Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Amortization of deferred debt financing costs | 700 | $ 700 | $ 5,300 | 700 | |||||
Contractual interest expense | $ 5,400 | $ 3,400 | $ 16,400 | $ 3,400 | |||||
JPMorgan Chase Bank, N.A. | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of Credit Facility, initiation date | Aug. 16, 2016 | ||||||||
JPMorgan Chase Bank, N.A. | Initial Term B Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Outstanding debt under term facility | $ 700,000 | ||||||||
JPMorgan Chase Bank, N.A. | Interim Term Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Outstanding debt under term facility | $ 50,000 |
Debt (Summary of Outstanding Bo
Debt (Summary of Outstanding Borrowings from Initial Term B Loan Facility) (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Current portion of long-term debt | $ 3,270 | $ 3,865 |
Long-term debt | 593,770 | 675,414 |
Initial Term B Loan Facility | ||
Debt Instrument [Line Items] | ||
Principal outstanding | 610,719 | 698,250 |
Unamortized deferred financing costs | (13,679) | (18,971) |
Principal outstanding, net of unamortized deferred financing costs | 597,040 | 679,279 |
Current portion of long-term debt | 3,270 | 3,865 |
Long-term debt | $ 593,770 | $ 675,414 |
Commitments and Contingencies55
Commitments and Contingencies (Narrative) (Detail) $ in Thousands | Mar. 24, 2017 | Jan. 31, 2017ft² | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Disclosure Commitments And Contingencies Narrative Detail [Line Items] | ||||||||
Lease expiration period | Oct. 31, 2027 | |||||||
Operating leases, rent expense | $ 6,400 | $ 3,000 | $ 15,600 | $ 7,800 | ||||
Intangible assets, net | $ 692,994 | $ 692,994 | $ 764,885 | |||||
QLogic Corporation | ||||||||
Disclosure Commitments And Contingencies Narrative Detail [Line Items] | ||||||||
Manufacturing rights buy-out consideration | $ 75,000 | |||||||
Intangible assets, net | 42,800 | 42,800 | 42,800 | |||||
QLogic Corporation | Cost of revenue | ||||||||
Disclosure Commitments And Contingencies Narrative Detail [Line Items] | ||||||||
Manufacturing rights buy-out consideration | $ 32,200 | $ 32,200 | ||||||
QLogic Corporation | Manufacturing buy-out - Third Party ASIC Vendor A | ||||||||
Disclosure Commitments And Contingencies Narrative Detail [Line Items] | ||||||||
Payment for manufacturing buy-out consideration | 55,000 | |||||||
Payment for royalty buy-out fee | 10,000 | |||||||
QLogic Corporation | Manufacturing buy-out - Third Party ASIC Vendor B | ||||||||
Disclosure Commitments And Contingencies Narrative Detail [Line Items] | ||||||||
Manufacturing rights buy-out consideration | $ 10,000 | |||||||
San Jose, California | ||||||||
Disclosure Commitments And Contingencies Narrative Detail [Line Items] | ||||||||
Lease expiration period | Jul. 31, 2027 | |||||||
Leased area | ft² | 116,000 | |||||||
Lease agreement commencement date | Dec. 31, 2017 | |||||||
Irvine, California | ||||||||
Disclosure Commitments And Contingencies Narrative Detail [Line Items] | ||||||||
Lease expiration period | Oct. 31, 2027 | |||||||
Lease agreement commencement date | Nov. 18, 2016 |
Commitments and Contingencies56
Commitments and Contingencies (Minimum Commitments Under Non-Cancelable Operating and Capital Lease Agreements) (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Total capital lease, technology license and operating lease obligations | ||
Current portion of the obligations | $ 27,803 | $ 25,535 |
Long-term portion of obligations | 15,025 | $ 27,878 |
Remainder of 2017 | 13,185 | |
2,018 | 41,714 | |
2,019 | 30,467 | |
2,020 | 18,685 | |
2,021 | 18,257 | |
2022 thereafter | 56,873 | |
Total | 179,181 | |
Capital Lease and Technology License Obligations | ||
Total capital lease, technology license and operating lease obligations | ||
Remainder of 2017 | 9,371 | |
2,018 | 23,657 | |
2,019 | 10,941 | |
Total | 43,969 | |
Less: Interest component (3.75% annual rate) | 1,141 | |
Present value of minimum lease payment | 42,828 | |
Operating Leases | ||
Total capital lease, technology license and operating lease obligations | ||
Remainder of 2017 | 3,814 | |
2,018 | 18,057 | |
2,019 | 19,526 | |
2,020 | 18,685 | |
2,021 | 18,257 | |
2022 thereafter | 56,873 | |
Total | $ 135,212 |
Commitments and Contingencies57
Commitments and Contingencies (Minimum Commitments Under Non-Cancelable Operating and Capital Lease Agreements) (Parenthetical) (Detail) | 9 Months Ended |
Sep. 30, 2017 | |
Capital Lease and Technology License Obligations | |
Total capital lease, technology license and operating lease obligations | |
Interest rate | 3.75% |