Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Billions, except Share data, unless otherwise specified | Dec. 31, 2014 | Feb. 20, 2015 | Jun. 30, 2014 |
Document and Entity Information | |||
Entity Registrant Name | Mellanox Technologies, Ltd. | ||
Entity Central Index Key | 1356104 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1.50 | ||
Entity Common Stock, Shares Outstanding | 45,706,062 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $51,326 | $63,164 |
Short-term investments | 334,038 | 263,528 |
Restricted cash | 3,604 | |
Accounts receivable, net | 64,922 | 69,480 |
Inventories | 44,470 | 36,470 |
Deferred taxes and other current assets | 18,147 | 17,581 |
Total current assets | 516,507 | 450,223 |
Property and equipment, net | 78,827 | 71,915 |
Severance assets | 9,474 | 10,630 |
Intangible assets, net | 42,067 | 54,249 |
Goodwill | 200,743 | 199,196 |
Deferred taxes and other long-term assets | 15,600 | 20,613 |
Total assets | 863,218 | 806,826 |
Current liabilities: | ||
Accounts payable | 39,811 | 29,964 |
Accrued liabilities | 61,974 | 51,011 |
Deferred revenue | 14,758 | 15,710 |
Capital lease liabilities, current | 1,102 | 1,377 |
Total current liabilities | 117,645 | 98,062 |
Accrued severance | 11,850 | 13,418 |
Deferred revenue | 8,942 | 9,045 |
Capital lease liabilities | 494 | 1,600 |
Other long-term liabilities | 22,535 | 17,890 |
Total liabilities | 161,466 | 140,015 |
Commitments and Contingencies (Note 9) | ||
Shareholders' equity | ||
Ordinary shares: NIS 0.0175 par value, 137,143 shares authorized, 0 and 43,999 shares issued and outstanding at December 31, 2014 and 2013, respectively | 192 | 185 |
Additional paid-in capital | 615,148 | 550,795 |
Accumulated other comprehensive income | -4,020 | 1,390 |
Retained earnings | 90,432 | 114,441 |
Total shareholders' equity | 701,752 | 666,811 |
Total liabilities and shareholders' equity | $863,218 | $806,826 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (ILS) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ||
Ordinary shares, par value (in NIS per share) | 0.0175 | 0.0175 |
Ordinary shares, shares authorized | 137,143 | 137,143 |
Ordinary shares, shares issued | 45,488 | 43,999 |
Ordinary shares, shares outstanding | 45,488 | 43,999 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Total revenues | $463,649 | $390,436 | $500,275 |
Cost of revenues | 148,672 | 134,282 | 157,736 |
Gross profit | 314,977 | 256,154 | 342,539 |
Operating expenses: | |||
Research and development | 208,877 | 169,382 | 138,310 |
Sales and marketing | 76,860 | 70,544 | 60,894 |
General and administrative | 36,431 | 37,046 | 24,456 |
Total operating expenses | 322,168 | 276,972 | 223,660 |
Income (loss) from operations | -7,191 | -20,818 | 118,879 |
Other income, net | 1,449 | 1,228 | 1,259 |
Income (loss) before taxes on income | -5,742 | -19,590 | 120,138 |
Provision for taxes on income | -18,267 | -3,752 | -8,187 |
Net income (loss) | ($24,009) | ($23,342) | $111,951 |
Net income (loss) per share - basic (in dollars per share) | ($0.54) | ($0.54) | $2.71 |
Net income (loss) per share - diluted (in dollars per share) | ($0.54) | ($0.54) | $2.55 |
Shares used in computing income (loss) per share: | |||
Basic (in shares) | 44,831 | 43,421 | 41,308 |
Diluted (in shares) | 44,831 | 43,421 | 43,901 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | ($24,009) | ($23,342) | $111,951 |
Other comprehensive income (loss), net of tax: | |||
Change in unrealized gains/losses on available-for-sale securities, net (net of tax effect of $138,2, and $0 | -368 | 142 | -133 |
Change in unrealized gains/losses on derivative contracts, net (net of tax effect of $0, $28, $0) | -5,042 | -1,546 | 4,091 |
Other comprehensive income (loss) | -5,410 | -1,404 | 3,958 |
Total comprehensive income (loss), net of tax | ($29,419) | ($24,746) | $115,909 |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Change in unrealized gains/losses on available-for-sale securities, tax effect | $138 | $2 | |
Change in unrealized gains/losses on derivative contracts, tax effect | $0 | $28 | $0 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | Ordinary Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total |
In Thousands, except Share data, unless otherwise specified | |||||
Balance at Dec. 31, 2011 | $165 | $418,255 | ($1,164) | $25,832 | $443,088 |
Balance (in shares) at Dec. 31, 2011 | 39,735,042 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 111,951 | 111,951 | |||
Unrealized gains (losses) on available-for-sale securities, net of taxes | -133 | -133 | |||
Unrealized gains (losses) on derivative contracts, net of taxes | 4,091 | 4,091 | |||
Total comprehensive income (loss), net of tax | 115,909 | ||||
Share-based compensation | 35,019 | 35,019 | |||
Exercise of share awards | 12 | 23,676 | 23,688 | ||
Exercise of share awards (in shares) | 2,641,607 | ||||
Issuance of shares pursuant to employee share purchase plan | 1 | 6,274 | 6,275 | ||
Issuance of shares pursuant to employee share purchase plan (in shares) | 219,613 | ||||
Income tax benefit from share options exercised | 5,141 | 5,141 | |||
Balance at Dec. 31, 2012 | 178 | 488,365 | 2,794 | 137,783 | 629,120 |
Balance (in shares) at Dec. 31, 2012 | 42,596,262 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | -23,342 | -23,342 | |||
Unrealized gains (losses) on available-for-sale securities, net of taxes | 142 | 142 | |||
Unrealized gains (losses) on derivative contracts, net of taxes | -1,546 | -1,546 | |||
Total comprehensive income (loss), net of tax | -24,746 | ||||
Share-based compensation | 45,138 | 45,138 | |||
Exercise of share awards | 5 | 5,299 | 5,304 | ||
Exercise of share awards (in shares) | 1,154,672 | ||||
Issuance of shares pursuant to employee share purchase plan | 2 | 9,331 | 9,333 | ||
Issuance of shares pursuant to employee share purchase plan (in shares) | 248,486 | ||||
Income tax benefit from share options exercised | 2,662 | 2,662 | |||
Balance at Dec. 31, 2013 | 185 | 550,795 | 1,390 | 114,441 | 666,811 |
Balance (in shares) at Dec. 31, 2013 | 43,999,420 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | -24,009 | -24,009 | |||
Unrealized gains (losses) on available-for-sale securities, net of taxes | -368 | -368 | |||
Unrealized gains (losses) on derivative contracts, net of taxes | -5,042 | -5,042 | |||
Total comprehensive income (loss), net of tax | -29,419 | ||||
Share-based compensation | 47,235 | 47,235 | |||
Exercise of share awards | 5 | 4,842 | 4,847 | ||
Exercise of share awards (in shares) | 1,093,429 | ||||
Issuance of shares pursuant to employee share purchase plan | 2 | 11,934 | 11,936 | ||
Issuance of shares pursuant to employee share purchase plan (in shares) | 394,915 | ||||
Income tax benefit from share options exercised | 342 | 342 | |||
Balance at Dec. 31, 2014 | $192 | $615,148 | ($4,020) | $90,432 | $701,752 |
Balance (in shares) at Dec. 31, 2014 | 45,487,764 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | |||
Net income (loss) | ($24,009) | ($23,342) | $111,951 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 38,671 | 35,646 | 23,868 |
Deferred income taxes | 13,832 | -1,240 | -3,454 |
Share-based compensation | 47,235 | 45,138 | 35,019 |
(Gain) loss on investments, net | 425 | -1,219 | -896 |
Excess tax benefit from share-based compensation | -342 | -2,662 | -5,141 |
Changes in assets and liabilities, net of effect of acquisitions: | |||
Accounts receivable | 5,421 | -9,500 | -8,585 |
Inventories | -9,624 | 9,472 | -19,436 |
Prepaid expenses and other assets | -7,687 | 1,414 | -3,239 |
Accounts payable | 9,659 | -4,447 | 3,430 |
Accrued liabilities and other liabilities | 6,549 | 2,610 | 48,972 |
Net cash provided by operating activities | 80,130 | 51,870 | 182,489 |
Cash flows from investing activities: | |||
Purchase of severance-related insurance policies | -777 | -849 | -783 |
Purchase of short-term investments | -307,924 | -200,377 | -328,998 |
Proceeds from sales of short-term investments | 158,054 | 122,997 | 14,860 |
Proceeds from maturities of short-term investments | 78,567 | 117,806 | 64,683 |
Purchase of property and equipment | -29,924 | -30,911 | -30,544 |
Decrease in restricted cash deposit | 3,468 | 1,327 | |
Purchase of intangible assets | -7,440 | ||
Purchase of equity investments in private companies | -3,455 | -3,123 | -1,424 |
Net cash used in investing activities | -107,712 | -121,948 | -280,879 |
Cash flows from financing activities: | |||
Principal payments on capital lease obligations | -1,381 | -1,111 | -918 |
Proceeds from exercise of share awards | 16,783 | 14,637 | 29,963 |
Excess tax benefit from share-based compensation | 342 | 2,662 | 5,141 |
Net cash provided by financing activities | 15,744 | 16,188 | 34,186 |
Net decrease in cash and cash equivalents | -11,838 | -53,890 | -64,204 |
Cash and cash equivalents at beginning of period | 63,164 | 117,054 | 181,258 |
Cash and cash equivalents at end of period | 51,326 | 63,164 | 117,054 |
Supplemental disclosures of cash flow information | |||
Interest paid | 31 | 57 | |
Income taxes paid | 913 | 1,305 | 852 |
Supplemental disclosure of noncash investing and financing activities | |||
Software acquired under capital leases | 4,428 | ||
Unpaid property and equipment | 5,121 | 3,326 | 3,869 |
Transfer from inventory to property and equipment | $1,624 | $1,837 | $1,073 |
CONSOLIDATED_STATEMENTS_OF_CAS1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Cash acquired | $2,464 | $2,464 |
THE_COMPANY_AND_SUMMARY_OF_SIG
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |||||||||||
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ||||||||||
Company | |||||||||||
Mellanox Technologies, Ltd., an Israeli corporation, (the "Company" or "Mellanox") was incorporated and commenced operations in March 1999. Mellanox is a supplier of high-performance interconnect products for computing, storage and communications applications. | |||||||||||
Principles of presentation | |||||||||||
The consolidated financial statements include the Company's accounts as well as those of its wholly owned subsidiaries after the elimination of all significant intercompany balances and transactions. | |||||||||||
On July 1, 2014, the Company completed its acquisition of Integrity Project, Ltd. ("Integrity"), a privately held company. The consolidated financial statements include the results of operations of Integrity commencing as of the acquisition date. | |||||||||||
On July 1, 2013, the Company completed its acquisition of a privately held company, IPtronics A/S ("IPtronics"), and on August 15, 2013, the Company completed its acquisition of a privately held company, Kotura, Inc. ("Kotura"). The consolidated financial statements include the results of operations of IPtronics and Kotura commencing as of the their respective acquisition dates. | |||||||||||
Certain prior year amounts have been reclassified to conform to 2014 presentation. These changes and reclassifications did not impact net or comprehensive income. | |||||||||||
Risks and uncertainties | |||||||||||
The Company is subject to all of the risks inherent in a company which operates in the dynamic and competitive semiconductor industry. Significant changes in any of the following areas could have a materially adverse impact on the Company's financial position and results of operations; unpredictable volume or timing of customer orders; ordered product mix; the sales outlook and purchasing patterns of the Company's customers based on consumer demands and general economic conditions; loss of one or more of the Company's customers; decreases in the average selling prices of products or increases in the average cost of finished goods; the availability, pricing and timeliness of delivery of components used in the Company's products; reliance on a limited number of subcontractors to manufacture, assemble, package and production test the Company's products; the Company's ability to successfully develop, introduce and sell new or enhanced products in a timely manner; product obsolescence and the Company's ability to manage product transitions; the timing of announcements or introductions of new products by the Company's competitors, and the Company's ability to successfully integrate acquired businesses. | |||||||||||
Use of estimates | |||||||||||
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns and allowances, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, goodwill and purchased intangible asset valuation, hedge effectiveness, deferred income tax asset valuation, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results that the Company experiences may differ materially and adversely from the Company's original estimates. To the extent there are material differences between the estimates and actual results, the Company's future results of operations will be affected. | |||||||||||
Cash and cash equivalents | |||||||||||
The Company considers all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks, money market funds, U.S. government agency discount notes, municipal bonds, foreign government bonds, corporate bonds and commercial paper. | |||||||||||
Short-term investments | |||||||||||
The Company's short-term investments are classified as available-for-sale securities and are reported at fair value. Unrealized gains or losses are recorded in shareholders' equity and included in other comprehensive income ("OCI"). The Company views its available-for-sale portfolio as available for use in its current operations. Accordingly, the Company has classified all investments in available for sale securities with readily available markets as short-term, even though the stated maturity date may be one year or more beyond the current balance sheet date, because of the intent and ability to sell these securities prior to maturity to meet liquidity needs or as part of a risk management program. | |||||||||||
Restricted cash and deposits | |||||||||||
The Company maintains certain cash amounts restricted as to withdrawal or use. It maintained a balance of $3.6 million at December 31, 2014, designated for contingent payments related to acquisitions. At December 31, 2013, the restricted cash balance was $3.5 million and was classified as other long-term assets. | |||||||||||
Fair value of financial instruments | |||||||||||
The Company's financial instruments consist of cash equivalents, short-term investments and foreign currency derivative contracts. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. The Company believes that the carrying amounts of the financial instruments approximate their respective fair values. The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the issuer; and whether it is more likely than not that the Company will be required to sell the security prior to any anticipated recovery in fair value. When there is no readily available market data, fair value estimates may be made by the Company, which may not necessarily represent the amounts that could be realized in a current or future sale of these assets. | |||||||||||
Derivatives | |||||||||||
The Company recognizes derivative instruments as either assets or liabilities and measures those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. The Company enters into derivative instruments designated as cash flow hedges. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of accumulated OCI, and subsequently reclassified into earnings when the hedged exposure affects earnings. Any gain or loss after a hedge is de-designated because it is no longer probable of occurring or related to an ineffective portion of a hedge, as well as any amount excluded from the Company's hedge effectiveness, is recognized as other income, net immediately. | |||||||||||
The Company uses derivative instruments primarily to manage exposures to foreign currency. The Company enters into derivative contracts to manage its exposure to changes in the exchange rate of the NIS against the U.S. dollar. The Company's primary objective in entering these arrangements is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The program is not designated for trading or speculative purposes. The Company's derivative instruments expose the Company to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company seeks to mitigate such risk by limiting its counterparties to major financial institutions and by spreading the risk across a number of major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. | |||||||||||
Concentration of credit risk | |||||||||||
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, short-term investments and accounts receivable. Cash equivalents and short-term investments balances are maintained with high quality financial institutions, the composition and maturities of which are regularly monitored by management. The Company's accounts receivable are derived from revenue earned from customers located in North America, Europe and Asia. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its customers. The Company maintains an allowance for doubtful accounts receivable based upon the expected collectibility of accounts receivable. The Company reviews its allowance for doubtful accounts quarterly by assessing individual accounts receivable over a specific aging and amount, and all other balances based on historical collection experience and an economic risk assessment. If the Company determines that a specific customer is unable to meet its financial obligations to the Company, the Company provides an allowance for credit losses to reduce the receivable to the amount management reasonably believes will be collected. | |||||||||||
The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: | |||||||||||
Year Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Hewlett-Packard | 11 | % | 13 | % | 20 | % | |||||
Dell | 11 | % | * | * | |||||||
IBM | 10 | % | 17 | % | 19 | % | |||||
* | Less than 10% | ||||||||||
The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable: | |||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Hewlett Packard | 17 | % | 12 | % | |||||||
IBM | 11 | % | 11 | % | |||||||
Ingram Micro | 10 | % | * | ||||||||
* | Less than 10% | ||||||||||
Inventory | |||||||||||
Inventory includes finished goods, work-in-process and raw materials. Inventory is stated at the lower of cost (principally standard cost which approximates actual cost on a first-in, first-out basis) or market value. Reserves for potentially excess and obsolete inventory are made based on management's analysis of inventory levels, future sales forecasts and market conditions. Once established, the original cost of the Company's inventory less the related inventory reserve represents the new cost basis of such products. | |||||||||||
Property and equipment | |||||||||||
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the related assets, which is three to five years for computers, software license rights and other electronic equipment, and seven to fifteen years for office furniture and equipment. Leasehold improvements and assets acquired under capital leases are amortized on a straight-line basis over the term of the lease, or the useful lives of the assets, whichever is shorter. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in the results of operations in the period realized. | |||||||||||
The Company incurs costs for the fabrication of masks used by its contract manufacturers to manufacture wafers that incorporate its products. The Company capitalizes the costs of fabrication masks that are reasonably expected to be used during production manufacturing. These amounts are included within property and equipment and are generally depreciated over a period of 12 months to cost of revenue. If it does not reasonably expect to use the fabrication mask during production manufacturing, it expenses the related mask costs to research and development in the period in which the costs are incurred. | |||||||||||
Business combinations | |||||||||||
The Company accounts for business combinations using the acquisition method of accounting. The Company determines the recognition of intangible assets based on the following criteria: (i) the intangible asset arises from contractual or other rights; or (ii) the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged. The Company allocates the purchase price of business combinations to the tangible assets, liabilities and intangible assets acquired, including in-process research and development ("IPR&D"), based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The process of estimating the fair values requires significant estimates, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer contracts, customer lists and distribution agreements, acquired developed technologies, expected costs to develop IPR&D into commercially viable products, estimated cash flows from projects when completed and discount rates. The Company estimates fair value based upon assumptions that are believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. | |||||||||||
Goodwill and intangible assets | |||||||||||
Goodwill represents the excess of the cost of acquired businesses over the fair market value of their identifiable net assets. The Company conducts a goodwill impairment qualitative assessment during the fourth quarter of each fiscal year or more frequently if facts and circumstances indicate that goodwill may be impaired. The goodwill impairment qualitative assessment requires the Company to perform an assessment to determine if it is more likely than not that the fair value of the business is less than its carrying amount. The qualitative assessment considers various factors, including the macroeconomic environment, industry and market specific conditions, market capitalization, stock price, financial performance, earnings multiples, budgeted-to-actual revenue performance from prior year, gross margin and cash flow from operating activities and issues or events specific to the business. If adverse qualitative trends are identified that could negatively impact the fair value of the business, the Company performs a "two step" goodwill impairment test. "Step one" of the goodwill impairment test requires the Company to estimate the fair value of the reporting unit "Step two" of the test is only performed if a potential impairment exists in "step one" and involves determining the difference between the fair value of the reporting unit's net assets other than goodwill to the fair value of the reporting unit. If the difference is less than the net book value of goodwill, an impairment exists and is recorded. As of December 31, 2014, the Company's qualitative assessment of goodwill impairment indicated that goodwill was not impaired. | |||||||||||
Intangible assets primarily represent acquired intangible assets including developed technology, customer relationships and IPR&D. The Company amortizes its finite lived intangible assets over their useful lives using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used, or, if that pattern cannot be reliably determined, using a straight-line amortization method. The Company capitalizes IPR&D projects acquired as part of a business combination as intangible assets with indefinite lives. On completion of each project, IPR&D assets are reclassified to developed technology and amortized over their estimated useful lives. If any of the IPR&D projects are abandoned, the Company would impair the related IPR&D asset. | |||||||||||
Indefinite-lived intangible assets are tested for impairment annually or more frequently when indicators of impairment exist. The Company first assesses qualitative factors to determine if it is more likely than not that an indefinite-lived intangible asset is impaired and whether it is necessary to perform a quantitative impairment test. The qualitative assessment considers various factors, including reductions in demand, the abandonment of IPR&D projects or significant economic slowdowns in the semiconductor industry and macroeconomic environment. If adverse qualitative trends are identified that could negatively impact the fair value of the asset, then quantitative impairment tests are performed to compare the carrying value of the asset to its undiscounted expected future cash flows. If this test indicates that there is impairment, the impaired asset is written down to fair value, which is typically calculated using: (i) quoted market prices or (ii) discounted expected future cash flows utilizing an appropriate discount rate. Impairment is based on the excess of the carrying amount over the fair value of those assets. As of December 31, 2014, there were no indicators that impairment existed or assets were not recoverable. Intangible assets with finite lives are tested for impairment in accordance with our policy for long-lived assets. | |||||||||||
Investments | |||||||||||
The Company has equity investments in privately-held companies. These investments are recorded at cost reduced by any impairment write-downs because the Company does not have the ability to exercise significant influence over the operating and financial policies of the company. The investments are included in other long-term assets on the accompanying balance sheets. The Company monitors the investments and if facts and circumstances indicate an investment may be impaired, then it conducts an impairment test of its investment. To determine if the investment is recoverable, it reviews the privately-held company's revenue and earnings trends relative to pre-defined milestones and overall business prospects, the general market conditions in its industry and other factors related to its ability to remain in business, such as liquidity and receipt of additional funding. | |||||||||||
Impairment of long-lived assets | |||||||||||
Long-lived assets include equipment and furniture and fixtures and finite-lived intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. If the sum of the expected future cash flows (undiscounted and without interest charges) from the long-lived assets is less than the carrying amount of such assets, an impairment loss would be recognized, and the assets would be written down to their estimated fair values. The Company reviews for possible impairment on a regular basis. | |||||||||||
Revenue recognition | |||||||||||
The Company recognizes revenue from the sales of products when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the price is fixed or determinable; and (4) collection is reasonably assured. The Company uses a binding purchase order or a signed agreement as evidence of an arrangement. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer. The Company's standard arrangement with its customers typically includes freight-on-board shipping point, no right of return and no customer acceptance provisions. The customer's obligation to pay and the payment terms are set at the time of shipment and are not dependent on the subsequent resale of the product. The Company determines whether collectibility is probable on a customer-by-customer basis. When assessing the probability of collection, the Company considers the number of years the customer has been in business and the history of the Company's collections. Customers are subject to a credit review process that evaluates the customers' financial positions and ultimately their ability to pay. If it is determined at the outset of an arrangement that collection is not probable, no product is shipped and no revenue is recognized unless cash is received in advance. | |||||||||||
The Company maintains inventory, or hub arrangements with certain customers. Pursuant to these arrangements the Company delivers products to a customer or a designated third party warehouse based upon the customer's projected needs, but does not recognize product revenue unless and until the customer reports it has removed the Company's product from the warehouse to be incorporated into its end products. | |||||||||||
Multiple Element Arrangements Excluding Software | |||||||||||
For revenue arrangements that contain multiple deliverables, judgment is required to properly identify the accounting units of the transactions and to determine the manner in which revenue should be allocated among the accounting units. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria of revenue recognition have been met for each deliverable in order for revenue recognition to occur in the appropriate accounting period. While changes in the allocation of the arrangement consideration between the units of accounting will not affect the amount of total revenue recognized for a particular sales arrangement, any material changes in these allocations could impact the timing of revenue recognition, which could affect its results of operations. When the Company enters into an arrangement that includes multiple elements, the allocation of value to each element is derived based on management's best estimate of selling price when vendor specific evidence or third party evidence is unavailable. | |||||||||||
Multiple Element Arrangements Including Software | |||||||||||
For multiple element arrangements that include a combination of hardware, software and services, such as post-contract customer support, the arrangement consideration is first allocated among the accounting units before revenue recognition criteria are applied. If an arrangement includes undelivered elements that are not essential to the functionality of the delivered elements, the Company defers revenue for the undelivered elements based on their fair value. The fair value for undelivered software elements is based on vendor specific evidence. If the undelivered elements are essential to the functionality of the delivered elements, no revenue is recognized. The revenues from fixed-price support or maintenance contracts, including extended warranty contracts and software post-contract customer support agreements are recognized ratably over the contract period and the costs associated with these contracts are recognized as incurred. | |||||||||||
Distributor Revenue | |||||||||||
A portion of the Company's sales are made to distributors under agreements which contain a limited right to return unsold product and price protection provisions. The Company recognizes revenue from these distributors based on the sell-through method using inventory and point of sale information provided by the distributor. Additionally, the Company maintains accruals and allowances for price protection and cooperative marketing programs. The Company classifies the costs of cooperative marketing programs based on the identifiable benefit received as either a reduction of revenue, a cost of revenues or an operating expense. | |||||||||||
Deferred Revenue and Income | |||||||||||
The Company defers revenue and income when advance payments are received from customers before performance obligations have been completed and/or services have been performed. | |||||||||||
Shipping and Handling | |||||||||||
Costs incurred for shipping and handling expenses to customers are recorded as cost of revenues. To the extent these amounts are billed to the customer in a sales transaction, the Company records the shipping and handling fees as revenue. | |||||||||||
Product warranty | |||||||||||
The Company typically offers a limited warranty for its products for periods up to three years. The Company accrues for estimated returns of defective products at the time revenue is recognized based on historical activity. The determination of these accruals requires the Company to make estimates of the frequency and extent of warranty activity and estimated future costs to either replace or repair the products under warranty. If the actual warranty activity and/or repair and replacement costs differ significantly from these estimates, adjustments to record additional cost of revenues may be required in future periods. Changes in the Company's liability for product warranty during the years ended December 31, 2014 and 2013 are as follows: | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(In thousands) | |||||||||||
Balance, beginning of the period | $ | 3,633 | $ | 4,318 | |||||||
New warranties issued during the period | 3,072 | 8,584 | |||||||||
Reversal of warranty reserves | (197 | ) | — | ||||||||
Settlements during the period | (4,576 | ) | (9,269 | ) | |||||||
| | | | | | | | ||||
Balance, end of the period | $ | 1,932 | $ | 3,633 | |||||||
| | | | | | | | ||||
Less: long term portion of product warranty liability | (424 | ) | (424 | ) | |||||||
| | | | | | | | ||||
Balance, end of the period | $ | 1,508 | $ | 3,209 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Research and development | |||||||||||
Costs incurred in research and development are charged to operations as incurred. The Company expenses all costs for internally developed patents as incurred. | |||||||||||
Advertising | |||||||||||
Costs related to advertising and promotion of products are charged to sales and marketing expense as incurred. Advertising expense was approximately $0.7 million, $0.9 million and $1.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||
Share-based compensation | |||||||||||
The Company accounts for share-based compensation expense based on the estimated fair value of the equity awards as of the grant dates. The fair value of RSUs is based on the closing market price of our ordinary shares on the date of grant. The Company estimates the fair value of share option awards using the Black-Scholes option valuation model, which requires the input of subjective assumptions including the expected share price volatility and the calculation of expected term, as well as the fair value of the underlying ordinary share on the date of grant, among other inputs. | |||||||||||
The Company bases its estimate of expected volatility on the of historical volatility of the Company's shares. The Company calculates the expected term of its option awards using the simplified method as prescribed by the authoritative guidance. The expected term for newly granted option awards in 2014 was approximately 5.77 years. | |||||||||||
Share compensation expense is recognized on a straight-line basis over each recipient's requisite service period, which is generally the vesting period. Share-based compensation expense is recorded net of estimated forfeitures. Forfeitures are estimated at the time of grant and this estimate is revised, if necessary, in subsequent periods. If the actual number of forfeitures differs from the estimate, adjustments may be required to share-based compensation expense in future periods. | |||||||||||
Comprehensive income (loss) | |||||||||||
Accumulated other comprehensive income (loss), net of tax on the consolidated balance sheets at December 31, 2014 and 2013, represents the accumulated unrealized gains (losses) on available-for-sale securities, and the accumulated unrealized gains (losses) related to derivative instruments accounted for as cash flow hedges. The amount of income tax expense allocated to unrealized gains (losses) on available-for-sale securities and derivative instruments was $0.1 million at December 31, 2014 and was immaterial for 2013. | |||||||||||
Foreign currency translation | |||||||||||
The Company uses the U.S. dollar as its functional currency. Foreign currency assets and liabilities are remeasured into U.S. dollars at the end-of-period exchange rates except for non-monetary assets and liabilities, which are remeasured at historical exchange rates. Revenue and expenses are remeasured each day at the exchange rate in effect on the day the transaction occurred, except for those expenses related to balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency transactions are included in the Consolidated Statements of Operations as part of "Other income (loss), net." | |||||||||||
Net income per share | |||||||||||
Basic and diluted net income per share are computed by dividing the net income for the period by the weighted average number of ordinary shares outstanding during the period. The calculation of diluted net income per share excludes potential ordinary shares if the effect is anti-dilutive. Potential ordinary shares are comprised of incremental ordinary shares issuable upon the exercise of share options. | |||||||||||
The following table sets forth the computation of basic and diluted net income per share for the periods indicated: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(In thousands, except per share | |||||||||||
data) | |||||||||||
Net income (loss) | $ | (24,009 | ) | $ | (23,342 | ) | $ | 111,951 | |||
Basic and diluted shares: | |||||||||||
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 44,831 | 43,421 | 41,308 | ||||||||
Dilutive effect of employee share option and purchase plan | — | — | 2,593 | ||||||||
| | | | | | | | | | | |
Shares used to compute diluted net income (loss) per share | 44,831 | 43,421 | 43,901 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income (loss) per share—basic | $ | (0.54 | ) | $ | (0.54 | ) | $ | 2.71 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income (loss) per share—diluted | $ | (0.54 | ) | $ | (0.54 | ) | $ | 2.55 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
The Company excluded 0.7 million, 0.8 million and 0.3 million outstanding shares for the years ended December 31, 2014, 2013 and 2012, respectively, from the computation of diluted net income per share because including them would have had an anti-dilutive effect. | |||||||||||
Segment reporting | |||||||||||
The Company has one reportable segment: the development, manufacturing, marketing and sales of interconnect products. | |||||||||||
Income taxes | |||||||||||
To prepare the Company's consolidated financial statements, the Company estimates its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company's actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the Company's consolidated balance sheet. | |||||||||||
The Company must also make judgments regarding the realizability of deferred tax assets. The carrying value of the Company's net deferred tax assets is based on its belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. A valuation allowance has been established for deferred tax assets which the Company does not believe meet the "more likely than not" criteria. The Company's judgments regarding future taxable income may change due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If the Company's assumptions and consequently its estimates change in the future, the valuation allowances it has established may be increased or decreased, resulting in a respective increase or decrease in income tax expense. The Company's effective tax rate is highly dependent upon the geographic distribution of its worldwide earnings or losses, the tax regulations and tax holidays in each geographic region, the availability of tax credits and carryforwards, and the effectiveness of its tax planning strategies. | |||||||||||
Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within the consolidated statements of income as income tax expense. | |||||||||||
Recent accounting pronouncements | |||||||||||
Effective January 1, 2014, the Company adopted the authoritative guidance, issued by the Financial Accounting Standards Board ("FASB") in July 2013, which requires that an unrecognized tax benefit, or portion of an unrecognized tax benefit, be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward. If an applicable deferred tax asset is not available or a company does not expect to use the applicable deferred tax asset, the unrecognized tax benefit should be presented as a liability in the financial statements and should not be combined with an unrelated deferred tax asset. The adoption of this guidance had no significant impact on the Company's consolidated financial statements. | |||||||||||
On May 28, 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. This guidance will be effective for the Company for the fiscal year beginning January 1, 2017 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. Early adoption is not permitted. The Company is currently evaluating the impact of adopting this new accounting standard on its consolidated financial statements. | |||||||||||
In August 2014, the FASB issued new guidance related to the disclosures around going concern. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard will be effective for the Company for the fiscal year ending December 31, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements. | |||||||||||
BALANCE_SHEET_COMPONENTS
BALANCE SHEET COMPONENTS: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
BALANCE SHEET COMPONENTS: | ||||||||
BALANCE SHEET COMPONENTS: | NOTE 2—BALANCE SHEET COMPONENTS: | |||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
(In thousands) | ||||||||
Accounts receivable, net: | ||||||||
Accounts receivable | $ | 65,594 | $ | 70,119 | ||||
Less: allowance for doubtful accounts | (672 | ) | (639 | ) | ||||
| | | | | | | | |
$ | 64,922 | $ | 69,480 | |||||
| | | | | | | | |
| | | | | | | | |
Inventories: | ||||||||
Raw materials | $ | 5,725 | $ | 4,385 | ||||
Work-in-process | 13,874 | 12,694 | ||||||
Finished goods | 24,871 | 19,391 | ||||||
| | | | | | | | |
$ | 44,470 | $ | 36,470 | |||||
| | | | | | | | |
| | | | | | | | |
Deferred taxes and other current assets: | ||||||||
Prepaid expenses | $ | 8,040 | $ | 5,929 | ||||
Derivative contracts receivable | — | 1,396 | ||||||
Deferred taxes | 2,271 | 7,336 | ||||||
VAT receivable | 6,117 | 1,900 | ||||||
Other | 1,719 | 1,020 | ||||||
| | | | | | | | |
$ | 18,147 | $ | 17,581 | |||||
| | | | | | | | |
| | | | | | | | |
Property and equipment, net: | ||||||||
Computer equipment and software | $ | 124,370 | $ | 92,468 | ||||
Furniture and fixtures | 3,256 | 3,809 | ||||||
Leasehold improvements | 33,295 | 31,608 | ||||||
| | | | | | | | |
160,921 | 127,885 | |||||||
Less: Accumulated depreciation and amortization | (82,094 | ) | (55,970 | ) | ||||
| | | | | | | | |
$ | 78,827 | $ | 71,915 | |||||
| | | | | | | | |
| | | | | | | | |
Deferred taxes and other long-term assets: | ||||||||
Equity investments in private companies | $ | 10,736 | $ | 7,548 | ||||
Deferred taxes | 389 | 7,155 | ||||||
Restricted cash | — | 3,514 | ||||||
Other assets | 4,475 | 2,396 | ||||||
| | | | | | | | |
$ | 15,600 | $ | 20,613 | |||||
| | | | | | | | |
| | | | | | | | |
Accrued liabilities: | ||||||||
Payroll and related expenses | $ | 31,254 | $ | 27,822 | ||||
Accrued expenses | 21,171 | 16,106 | ||||||
Derivative contracts payable | 3,562 | — | ||||||
Product warranty liability | 1,508 | 3,209 | ||||||
Other | 4,479 | 3,874 | ||||||
| | | | | | | | |
$ | 61,974 | $ | 51,011 | |||||
| | | | | | | | |
| | | | | | | | |
Other long-term liabilities: | ||||||||
Income tax payable | $ | 18,174 | $ | 13,026 | ||||
Deferred rent | 2,337 | 3,072 | ||||||
Other | 2,024 | 1,792 | ||||||
| | | | | | | | |
$ | 22,535 | $ | 17,890 | |||||
| | | | | | | | |
| | | | | | | | |
BUSINESS_COMBINATION
BUSINESS COMBINATION: | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
BUSINESS COMBINATION: | ||||||||||||||||
BUSINESS COMBINATION: | NOTE 3—BUSINESS COMBINATION: | |||||||||||||||
On July 1, 2014, Mellanox completed its acquisition of Integrity Project, Ltd. ("Integrity"), a privately held company. Based in Ramat-Gan, Israel, Integrity specializes in the fields of connectivity, low-level development, real-time applications, and security. The Company's primary reason for the Integrity acquisition was for Integrity's software expertise, which further enhances the Company's commitment to provide superior solutions. The acquisition positions the Company to broaden its customer base by adding software solutions designed to enable customers to achieve optimal performance from all interconnect components. | ||||||||||||||||
The Company accounted for this transaction using the acquisition method, and accordingly, the consideration has been allocated to tangible and intangible assets acquired and liabilities assumed on the basis of their respective estimated fair values on the acquisition date. The purchase consideration paid, assets acquired and liabilities assumed were immaterial to the Company's financial statements. There were no intangible assets identified in this transaction other than goodwill. The goodwill arising from this acquisition was primarily attributable to the assembled workforce. Goodwill is not deductible for tax purposes. Goodwill is not being amortized but is reviewed annually for impairment or more frequently if impairment indicators arise, in accordance with authoritative accounting guidance | ||||||||||||||||
On July 1, 2013, the Company completed its acquisition of a privately held company, IPtronics A/S. On August 15, 2013, the Company completed its acquisition of a privately held company, Kotura, Inc. The Company's primary reasons for the IPtronics and Kotura acquisitions was to enhance its ability to deliver cost-effective, high-speed networks with next generation optical connectivity at 100Gb/s and beyond. The acquisitions also enhanced the Company's engineering team and added a strong patent portfolio in the field of silicon photonics. | ||||||||||||||||
The following table presents details of the purchase consideration related to each acquisition: | ||||||||||||||||
Company Acquired | Cash | Cash Assumed | Net Cash Paid | |||||||||||||
Consideration | ||||||||||||||||
Paid | ||||||||||||||||
(in thousands) | ||||||||||||||||
IPtronics | $ | 44,925 | $ | 2,077 | $ | 42,848 | ||||||||||
Kotura. | 80,772 | 101 | 80,671 | |||||||||||||
| | | | | | | | | | | ||||||
Total | $ | 125,697 | $ | 2,178 | $ | 123,519 | ||||||||||
| | | | | | | | | | | ||||||
| | | | | | | | | | | ||||||
In conjunction with the IPtronics acquisition, the Company issued 60,508 restricted stock units ("RSUs") of the Company's ordinary shares with an aggregate value of $3.0 million in exchange for RSUs of IPtronics. The fair value of the RSUs is based on the closing price of the Company's ordinary shares on July 1, 2013 of $49.92. The RSU grants will result in compensation expense of $3.0 million which will be recognized over the vesting period of four years beginning from the acquisition date of July 1, 2013. | ||||||||||||||||
In conjunction with the Kotura acquisition, the Company issued options to purchase 31,653 shares of the Company's ordinary shares and 145,425 RSUs of the Company's ordinary shares with an aggregate value of $6.4 million, in exchange for options to purchase shares and RSUs of Kotura. This grant will result in compensation expense of $6.4 million which will be recognized over the remaining vesting period of these equity awards, which ranges from one day to four years from the acquisition date of August 15, 2013. | ||||||||||||||||
The fair value of the exchanged options was determined using a Black-Scholes valuation model with the following weighted-average assumptions: expected life of 4.72 years, volatility of 57.5%, risk-free interest rate of 1.54%, and dividend yield of zero. The fair value of the exchanged RSUs was determined based on the per share value of the underlying Company ordinary shares of $42.19 per share at August 15, 2013. | ||||||||||||||||
The Company accounted for both transactions using the acquisition method, and accordingly, the consideration has been allocated to tangible and intangible assets acquired and liabilities assumed on the basis of their respective estimated fair values on the respective acquisition date. The Company's allocation of the total purchase price for each transaction is summarized below: | ||||||||||||||||
IPtronics | Kotura | Total | ||||||||||||||
(in thousands) | ||||||||||||||||
Current assets, net of cash | $ | 2,534 | $ | 5,606 | $ | 8,140 | ||||||||||
Other long-term assets | 974 | 10,603 | 11,577 | |||||||||||||
Intangible assets | 17,229 | 27,517 | 44,746 | |||||||||||||
Goodwill | 25,630 | 40,681 | 66,311 | |||||||||||||
| | | | | | | | | | | ||||||
Total assets | 46,367 | 84,407 | 130,774 | |||||||||||||
Current liabilities | (2,668 | ) | (3,357 | ) | (6,025 | ) | ||||||||||
Long-term liabilities | (851 | ) | (379 | ) | (1,230 | ) | ||||||||||
| | | | | | | | | | | ||||||
Total liabilities | (3,519 | ) | (3,736 | ) | (7,255 | ) | ||||||||||
| | | | | | | | | | | ||||||
Total purchase price allocation | $ | 42,848 | $ | 80,671 | $ | 123,519 | ||||||||||
| | | | | | | | | | | ||||||
| | | | | | | | | | | ||||||
Identifiable intangible assets | ||||||||||||||||
Intangible assets acquired and their respective estimated remaining useful lives over which each asset will be amortized are: | ||||||||||||||||
Purchased intangible assets: | Fair value | Weighted | ||||||||||||||
Average | ||||||||||||||||
Useful life | ||||||||||||||||
(in thousands) | (in years) | |||||||||||||||
Licensed technology | $ | 135 | 6 | |||||||||||||
Developed technology | 27,701 | 5 | ||||||||||||||
In-process research and development | 13,764 | — | ||||||||||||||
Customer relationship | 2,420 | 2-Jan | ||||||||||||||
Backlog | 726 | Less than 1 | ||||||||||||||
| | | | | | |||||||||||
Total purchased intangible assets | $ | 44,746 | ||||||||||||||
| | | | | | |||||||||||
| | | | | | |||||||||||
Developed technology represents completed technology that has reached technological feasibility and/or is currently offered for sale to customers. The Company used the income approach to value the developed technology. Under the income approach, the expected future cash flows from each technology are estimated and discounted to their net present values at an appropriate risk-adjusted rate of return. Significant factors considered in the calculation of the rate of return are the weighted average cost of capital and the return on assets. The Company applied a discount rate of 17.5% for IPtronics and 15.5% for Kotura to value the developed technology assets taking into consideration market rates of return on debt and equity capital and the risk associated with achieving forecasted revenues related to these assets. | ||||||||||||||||
IPR&D represents projects that have not yet reached technological feasibility. Technological feasibility is defined as being equivalent to completion of a beta-phase working prototype in which there is no remaining risk relating to the development. As of the acquisition date, IPtronics was involved in research and development projects related to its laser-drivers, modulator-drivers, and trans-impedance-amplifier for 25Gb/s, enabling fast communication at 4x25Gb/s for interconnect solutions. Each of these projects is focused on developing and later on integrating new technologies while broadening features and functionalities. There is a risk that these development efforts and enhancements will not be competitive with other products on cost and functionality. | ||||||||||||||||
As of the acquisition date, Kotura was involved in research and development projects related to its silicon photonics modulator for 25Gb/s, enabling fast communication at 4x25Gb/s and wavelength-division multiplexing "WDM" for interconnect products. Each of these projects is focused on developing and later on integrating new technologies and broadening features and functionalities. There is a risk that these development efforts and enhancements will not be competitive with other products using alternative technologies that offer comparable functionality. | ||||||||||||||||
Upon successful completion of the development process for the acquired IPR&D projects, the assets will then be considered finite-lived intangible assets and amortization of the assets will commence. None of the projects has been completed as of December 31, 2014 and both have progressed as previously estimated. | ||||||||||||||||
The following table summarizes the significant assumptions underlying the valuations of IPR&D at acquisition: | ||||||||||||||||
Company | Development Projects | Average | Estimated | Risk | Fair value | |||||||||||
Estimated | cost | Adjusted | ||||||||||||||
time | to complete | Discount | ||||||||||||||
to complete | Rate | |||||||||||||||
(in months) | (in thousands) | (%) | (in thousands) | |||||||||||||
IPtronics | Modulator drivers—4x25Gb/s | 18 | $ | 9,549 | 19.5 | % | $ | 4,121 | ||||||||
Kotura | Silicon photonics modulator—4x25Gb/s | 18 | 17,210 | 16.5 | % | 9,643 | ||||||||||
| | | | | | | | | | | | | | | | |
$ | 26,759 | $ | 13,764 | |||||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Customer relationships represent the fair value of future projected revenues that will be derived from the sale of products to existing customers of the acquired company. The Company used the comparative method ("with/without") of the income approach to determine the fair value of this intangible asset and utilized a discount rate of 15.5%. | ||||||||||||||||
Backlog represents the fair value of sales order backlog as of the valuation date. The Company used the income approach to determine the fair value of this intangible asset. | ||||||||||||||||
The goodwill arising from these acquisitions is primarily attributed to sales of future products and the assembled workforce. Goodwill is not deductible for tax purposes. Goodwill is not being amortized but is reviewed annually for impairment or more frequently if impairment indicators arise, in accordance with authoritative guidance. | ||||||||||||||||
The following table presents certain unaudited pro forma information for illustrative purposes only, for fiscal 2013 and fiscal 2012 as if IPtronics and Kotura had been acquired on January 1, 2012. The unaudited estimated pro forma information combines the historical results of IPtronics and Kotura with the Company's consolidated historical results and includes certain adjustments reflecting the estimated impact of fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisitions taken place on January 1, 2012. Additionally, the pro forma financial information does not include the impact of possible business model changes between IPtronics, Kotura and the Company. The Company expects to achieve further business synergies, as a result of the acquisitions that are not reflected in the pro forma amounts that follow. As a result, actual results will differ from the unaudited pro forma information presented (in thousands, except per share data): | ||||||||||||||||
Year Ended | ||||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Pro forma net revenue | $ | 402,107 | $ | 521,780 | ||||||||||||
Pro forma net income (loss) | $ | (30,613 | ) | $ | 100,748 | |||||||||||
Pro forma net income (loss) per share basic | $ | (0.71 | ) | $ | 2.44 | |||||||||||
Pro forma net income (loss) per share diluted | $ | (0.71 | ) | $ | 2.29 | |||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
FAIR VALUE MEASUREMENTS: | |||||||||||
FAIR VALUE MEASUREMENTS: | NOTE 4—FAIR VALUE MEASUREMENTS: | ||||||||||
Fair value hierarchy: | |||||||||||
The Company measures its cash equivalents and marketable securities at fair value. The Company's cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. The Company's investments in debt securities and certificates of deposits are classified within Level 2 as the market inputs to value these instruments consist of market yields, reported trades and broker/dealer quotes. In addition, foreign currency contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. The Level 3 valuation inputs include the Company's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. As of December 31, 2014 and December 31, 2013, the Company did not have any assets or liabilities valued based on Level 3 valuations. | |||||||||||
The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value as of December 31, 2014. | |||||||||||
Level 1 | Level 2 | Total | |||||||||
(in thousands) | |||||||||||
Money market funds | $ | 4,426 | $ | — | $ | 4,426 | |||||
Certificates of deposit | — | 80,275 | 80,275 | ||||||||
U.S. Government and agency securities | — | 99,114 | 99,114 | ||||||||
Commercial paper | — | 23,019 | 23,019 | ||||||||
Corporate bonds | — | 111,736 | 111,736 | ||||||||
Municipal bonds | — | 13,104 | 13,104 | ||||||||
Foreign government bonds | — | 6,790 | 6,790 | ||||||||
| | | | | | | | | | | |
Total financial assets | $ | 4,426 | $ | 334,038 | $ | 338,464 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Derivative contracts | — | 3,562 | 3,562 | ||||||||
| | | | | | | | | | | |
Total financial liabilities | $ | — | $ | 3,562 | $ | 3,562 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value as of December 31, 2013. | |||||||||||
Level 1 | Level 2 | Total | |||||||||
(in thousands) | |||||||||||
Money market funds | $ | 20,000 | $ | — | $ | 20,000 | |||||
Certificates of deposit | — | 67,769 | 67,769 | ||||||||
U.S. Government and agency securities | — | 69,879 | 69,879 | ||||||||
Commercial paper | — | 33,606 | 33,606 | ||||||||
Corporate bonds | — | 92,274 | 92,274 | ||||||||
Derivative contracts | — | 1,396 | 1,396 | ||||||||
| | | | | | | | | | | |
Total financial assets | $ | 20,000 | $ | 264,924 | $ | 284,924 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
There were no transfers between Level 1 and Level 2 securities during the years ended December 31, 2014 and 2013. | |||||||||||
INVESTMENTS
INVESTMENTS: | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
INVESTMENTS: | ||||||||||||||
INVESTMENTS: | NOTE 5—INVESTMENTS: | |||||||||||||
Cash, cash equivalents and short-term investments: | ||||||||||||||
At December 31, 2014 and 2013, the Company held cash and short-term investments classified as available-for-sale securities as follows: | ||||||||||||||
December 31, 2014 | ||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Cash | $ | 46,900 | $ | — | $ | — | $ | 46,900 | ||||||
Money market funds | 4,426 | — | — | 4,426 | ||||||||||
Certificates of deposit | 80,304 | 1 | (30 | ) | 80,275 | |||||||||
U.S. Government and agency securities | 99,236 | 9 | (131 | ) | 99,114 | |||||||||
Commercial paper | 23,017 | 3 | (1 | ) | 23,019 | |||||||||
Corporate bonds | 112,033 | 16 | (313 | ) | 111,736 | |||||||||
Municipal bonds | 13,151 | — | (47 | ) | 13,104 | |||||||||
Foreign government bonds | 6,809 | — | (19 | ) | 6,790 | |||||||||
| | | | | | | | | | | | | | |
Total | $ | 385,876 | $ | 29 | $ | (541 | ) | $ | 385,364 | |||||
Less amounts classified as cash and cash equivalents | (51,326 | ) | — | — | (51,326 | ) | ||||||||
| | | | | | | | | | | | | | |
$ | 334,550 | $ | 29 | $ | (541 | ) | $ | 334,038 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Cash | $ | 43,164 | $ | — | $ | — | $ | 43,164 | ||||||
Money market funds | 20,000 | — | — | 20,000 | ||||||||||
Certificates of deposit | 67,775 | 1 | (7 | ) | 67,769 | |||||||||
U.S. Government and agency securities | 69,859 | 22 | (2 | ) | 69,879 | |||||||||
Commercial paper | 33,602 | 9 | (5 | ) | 33,606 | |||||||||
Corporate bonds | 92,298 | 16 | (40 | ) | 92,274 | |||||||||
| | | | | | | | | | | | | | |
Total | $ | 326,698 | $ | 48 | $ | (54 | ) | $ | 326,692 | |||||
Less amounts classified as cash and cash equivalents | (63,164 | ) | — | — | (63,164 | ) | ||||||||
| | | | | | | | | | | | | | |
$ | 263,534 | $ | 48 | $ | (54 | ) | $ | 263,528 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Realized gains (losses), net upon the sale of marketable securities were $(0.4) million and $1.2 million for the years ended December 31, 2014 and December 31, 2013, respectively. At December 31, 2014, gross unrealized losses on investments that were in a gross unrealized loss position for greater than 12 months were immaterial. These investments were not deemed to be other-than-temporarily impaired and the gross unrealized losses were recorded in OCI. | ||||||||||||||
The contractual maturities of short-term investments at December 31, 2014 and December 31, 2013 were as follows: | ||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||
Amortized | Estimated | Amortized | Estimated | |||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Due in less than one year | $ | 129,150 | $ | 129,155 | $ | 190,172 | $ | 190,189 | ||||||
Due in one to three years | 205,400 | 204,883 | 73,362 | 73,339 | ||||||||||
| | | | | | | | | | | | | | |
$ | 334,550 | $ | 334,038 | $ | 263,534 | $ | 263,528 | |||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Investments in privately-held companies: | ||||||||||||||
As of December 31, 2014, the Company held a total of $10.7 million investments in three privately-held companies and as of December 31, 2013, the Company held a total of $7.5 million investments in two privately-held companies. | ||||||||||||||
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
GOODWILL AND INTANGIBLE ASSETS: | |||||||||||
GOODWILL AND INTANGIBLE ASSETS: | NOTE 6—GOODWILL AND INTANGIBLE ASSETS: | ||||||||||
The following table represents changes in the carrying amount of goodwill (in thousands): | |||||||||||
Balance as of December 31, 2013 | $ | 199,196 | |||||||||
Goodwill from Integrity acquisition | 1,547 | ||||||||||
Adjustments | — | ||||||||||
| | | | | |||||||
Balance as of December 31, 2014 | $ | 200,743 | |||||||||
| | | | | |||||||
| | | | | |||||||
The carrying amounts of intangible assets as of December 31, 2014 were as follows: | |||||||||||
Gross | Accumulated | Net | |||||||||
Carrying | Amortization | Carrying | |||||||||
Value | Value | ||||||||||
(in thousands) | |||||||||||
Licensed technology | $ | 2,344 | $ | (917 | ) | $ | 1,427 | ||||
Developed technology | 56,064 | (32,130 | ) | 23,934 | |||||||
Customer relationships | 13,376 | (10,434 | ) | 2,942 | |||||||
| | | | | | | | | | | |
Total amortizable intangible assets | $ | 71,784 | $ | (43,481 | ) | $ | 28,303 | ||||
IPR&D | 13,764 | — | 13,764 | ||||||||
| | | | | | | | | | | |
Total intangible assets | $ | 85,548 | $ | (43,481 | ) | $ | 42,067 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The carrying amounts of intangible assets as of December 31, 2013 were as follows: | |||||||||||
Gross | Accumulated | Net | |||||||||
Carrying | Amortization | Carrying | |||||||||
Value | Value | ||||||||||
(in thousands) | |||||||||||
Licensed technology | $ | 2,344 | $ | (366 | ) | $ | 1,978 | ||||
Developed technology | 56,064 | (24,654 | ) | 31,410 | |||||||
Customer relationships | 13,376 | (6,279 | ) | 7,097 | |||||||
Customer contract | 1,529 | (1,529 | ) | — | |||||||
Backlog | 726 | (726 | ) | — | |||||||
| | | | | | | | | | | |
Total amortizable intangible assets | $ | 74,039 | $ | (33,554 | ) | $ | 40,485 | ||||
IPR&D | 13,764 | — | 13,764 | ||||||||
| | | | | | | | | | | |
Total intangible assets | $ | 87,803 | $ | (33,554 | ) | $ | 54,249 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Amortization expense of intangible assets totaled approximately $12.2 million, $14.0 million and $9.3 million for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||
The estimated future amortization expense from amortizable intangible assets is as follows (in thousands): | |||||||||||
2015 | $ | 8,007 | |||||||||
2016 | 7,194 | ||||||||||
2017 | 7,128 | ||||||||||
2018 | 4,148 | ||||||||||
2019 | 779 | ||||||||||
2020 and thereafter | 1,047 | ||||||||||
| | | | | |||||||
$ | 28,303 | ||||||||||
| | | | | |||||||
| | | | | |||||||
DERIVATIVES_AND_HEDGING_ACTIVI
DERIVATIVES AND HEDGING ACTIVITIES: | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES: | ||||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES: | NOTE 7—DERIVATIVES AND HEDGING ACTIVITIES: | |||||||||||||
As of December 31, 2014, the Company had derivative contracts in place that hedged future operating expenses of approximately 344.3 million NIS, or approximately $88.5 million based upon the exchange rate as of December 31, 2014. The derivative contracts cover future NIS denominated operating expenses expected to occur over the next twelve months. As of December 31, 2013, the Company had derivative contracts in place that hedged future operating expenses of approximately 108.8 million NIS, or approximately $31.3 million based upon the exchange rate as of December 31, 2013. | ||||||||||||||
The Company does not use derivative financial instruments for purposes other than cash flow hedges. | ||||||||||||||
Fair Value of Derivative Contracts | ||||||||||||||
The fair value of derivative contracts as of December 31, 2014 and December 31, 2013 was as follows: | ||||||||||||||
Derivative | Derivative | |||||||||||||
Assets | Liabilities | |||||||||||||
Reported in | Reported in | |||||||||||||
Other | Other | |||||||||||||
Current Assets | Current | |||||||||||||
Liabilities | ||||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(in thousands) | ||||||||||||||
Foreign exchange contracts designated as cash flow hedges | $ | — | $ | 1,396 | $ | 3,562 | $ | — | ||||||
| | | | | | | | | | | | | | |
Total derivatives designated as hedging instruments | $ | — | $ | 1,396 | $ | 3,562 | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Effect of Designated Derivative Contracts on Accumulated Other Comprehensive Income | ||||||||||||||
The following table represents the balance of derivative contracts designated as cash flow hedges as of December 31, 2014 and 2013, and their impact on OCI for the year ended December 31, 2014 (in thousands): | ||||||||||||||
December 31, 2013 | $ | 1,396 | ||||||||||||
Amount of loss recognized in OCI (effective portion) | (6,281 | ) | ||||||||||||
Amount of loss reclassified from OCI to income (effective portion) | 1,239 | |||||||||||||
| | | | | ||||||||||
December 31, 2014 | $ | (3,646 | ) | |||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
Foreign exchange contracts designated as cash flow hedges relate primarily to operating expenses and the associated gains and losses are expected to be recorded in operating expenses when reclassed out of OCI. The Company expects to realize the accumulated OCI balance related to foreign exchange contracts within the next twelve months. | ||||||||||||||
Effect of Derivative Contracts on the Condensed Consolidated Statement of Operations | ||||||||||||||
The impact of derivative contracts on total operating expenses in the years ended December 31, 2014, 2013 and 2012 was: | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Gain (loss) on foreign exchange contracts designated as cash flow hedges | $ | (1,239 | ) | $ | 6,027 | $ | (893 | ) | ||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
The net gains or losses relating to the ineffective portion of derivative contracts were not material in the years ended December 31, 2014, 2013 and 2012. | ||||||||||||||
EMPLOYEE_BENEFIT_PLANS
EMPLOYEE BENEFIT PLANS: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
EMPLOYEE BENEFIT PLANS: | ||||||||
EMPLOYEE BENEFIT PLANS: | NOTE 8—EMPLOYEE BENEFIT PLANS: | |||||||
The Company has established a pretax savings plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan allows eligible employees in the United States to voluntarily contribute a portion of their pre-tax salary, subject to a maximum limit specified in the Internal Revenue Code. The Company matches employee contributions of up to 4% of their annual base salaries. The total expenses for these contributions were $0.9 million, $0.8 million and $0.5 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||
Under Israeli law, the Company is required to make severance payments to certain of its retired or dismissed Israeli employees. For employees hired prior to January 1, 2007 the severance pay liability is calculated based on the last monthly salary of each employee multiplied by the number of years of such employee's employment and is presented in the Company's balance sheet in long-term liabilities, as if it was payable at each balance sheet date on an undiscounted basis. This liability is partially funded by the purchase of insurance policies or pension funds in the name of the employees. The surrender value of the insurance policies or pension funds is presented in long-term assets. | ||||||||
The severance pay detail is as follows: | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
(in thousands) | ||||||||
Accrued severance liability | $ | 11,850 | $ | 13,418 | ||||
Severance assets | 9,474 | 10,630 | ||||||
| | | | | | | | |
Unfunded portion | $ | 2,376 | $ | 2,788 | ||||
| | | | | | | | |
| | | | | | | | |
For other Israeli employees, the Company's contributions for severance pay will replace its severance obligation. Upon a monthly contribution equal to 8.33% of the employee's monthly salary to an insurance policy or pension fund no additional calculations shall be conducted between the parties regarding the matter of severance pay and no additional payments will be made by the Company to the employee. Further, the related obligation and amounts deposited on behalf of the employee for such obligation are not stated on the balance sheet, as the Company is legally released from the obligation to employees once the deposit amounts have been paid. | ||||||||
Severance expenses for the years ended December 31, 2014, 2013 and 2012 were $6.8 million, $6.1 million and $4.3 million, respectively. | ||||||||
In addition, the Company has established a pension contribution plan with respect to its employees in Israel. Under the plan, the Company contributes up to 6% of employee monthly salary toward the plan. Employees are entitled to amounts accumulated in the plan upon reaching retirement age, subject to any applicable law. Defined pension contribution plan expenses were $4.9 million, $4.5 million and $3.2 million in the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
COMMITMENTS AND CONTINGENCIES: | ||||||||
COMMITMENTS AND CONTINGENCIES: | NOTE 9—COMMITMENTS AND CONTINGENCIES: | |||||||
Leases | ||||||||
The Company leases office space and motor vehicles under operating leases with various expiration dates through 2021. Rent expense was approximately $9.9 million, $8.9 million and $6.8 million for the years ended December 31, 2014, 2013 and 2012, respectively. The terms of the facility lease provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid. | ||||||||
The Company has entered into capital lease agreements for electronic design automation software. The total amount of assets under capital lease agreements within "Property and equipment, net" was approximately $1.6 million and $2.8 million for the years ended December 31, 2014 and 2013, respectively. | ||||||||
At December 31, 2014, future minimum payments under non-cancelable operating and capital leases are as follows: | ||||||||
Year Ended December 31, | Capital | Operating | ||||||
Leases | Leases | |||||||
(in thousands) | ||||||||
2015 | $ | 1,115 | $ | 15,253 | ||||
2016 | 512 | 9,730 | ||||||
2017 | — | 6,687 | ||||||
2018 | — | 4,398 | ||||||
2019 and beyond | — | 8,202 | ||||||
| | | | | | | | |
Total minimum lease payments | $ | 1,627 | $ | 44,270 | ||||
| | | | | | | | |
| | | | | | | | |
Less: Amount representing interest | (31 | ) | ||||||
| | | | | | | | |
Present value of capital lease obligations | 1,596 | |||||||
Less: Current portion | (1,102 | ) | ||||||
| | | | | | | | |
Long-term portion of capital lease obligations | $ | 494 | ||||||
| | | | | | | | |
| | | | | | | | |
Purchase commitments | ||||||||
At December 31, 2014, the Company had non-cancelable purchase commitments of $67.9 million, $67.7 million of which is expected to be paid in 2015 and $0.2 million in 2016 and beyond. | ||||||||
Legal proceedings | ||||||||
The Company considers all legal claims on a quarterly basis in accordance with GAAP and, based on known facts, assesses whether potential losses are considered reasonably possible, probable and estimable. | ||||||||
The Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Unless otherwise specifically disclosed in this note, the Company has determined that no provision for liability nor disclosure is required related to any claim against us because: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial. All legal costs associated with litigation are expensed as incurred. | ||||||||
Litigation is inherently unpredictable. However, the Company believes that it has valid defenses with respect to the pending legal matters. It is possible, nevertheless, that the consolidated financial position, cash flows or results of operations could be negatively affected by an unfavorable resolution of one or more of such proceedings, claims or investigations. | ||||||||
Pending legal proceedings as of December 31, 2014 were as follows: | ||||||||
Avago Technologies Fiber (IP) Singapore Pte. Ltd.vs. IPtronics, Inc. and IPtronics A/S | ||||||||
On September 29, 2010, Avago Technologies Fiber (IP) Singapore Pte. Ltd. ("Avago IP") filed a complaint for patent infringement against IPtronics, Inc. and IPtronics A/S (now Mellanox Technologies Denmark Aps) (collectively, "IPtronics") in the United States District Court, Northern District of California, San Francisco Division (Case No.: CV- 0-2863), asserting infringement of the 456 patent and U.S. Patent No. 5,359,447 (the "447 patent"). On September 11, 2012, Avago IP along with additional subsidiaries of Avago Technologies Limited (collectively, "Avago") filed a second amended and supplemental complaint (the "Complaint") against the Respondents in the United States District Court, Northern District of California, San Jose Division (Case No.: 5:10-CV-02863-EJD (PSG)). The Complaint amends and supplements all complaints previously filed by Avago IP in this case and alleges that the Defendants: infringed the 456 patent and 447 patents; engaged in violations of the Lanham Act, Section 43 (A); misappropriated Avago's trade secrets; engaged in unfair competition against Avago; intentionally interfered with Avago's contractual relations; and were unjustly enriched by and through the conduct complained of by Avago in the Complaint. A motion to file a third amended complaint was filed but never granted. | ||||||||
Avago's motion to file a Fourth Amended and Supplemental Complaint to add the Company and a new claim for interference with prospective economic advantage against IPtronics was granted. The Company and IPtronics have answered the new complaint and the new schedule for the case is expected to set trial in 2016. IPtronics' motion to add an antitrust counterclaim against Avago for pursuing an action was denied and, as explained below, that claim is being pursued in a separate action. | ||||||||
Pursuant to the Complaint, Avago seeks unspecified damages, treble damages, injunctive relief and any other relief deemed just and proper by the court. Neither the outcome of the proceeding nor the amount and range of potential damages or exposure associated with the proceeding can be assessed with certainty. In the event the Defendants are not successful in defending the Complaint, the Company could be forced to license technology from Avago and be prevented from importing, selling, offering for sale, advertising, soliciting, using and/or warehousing for distribution the allegedly infringing products. Based on currently available information, the Company believes that the resolution of this proceeding is not likely to have a material adverse effect on the Company's business, financial position, results of operations or cash flows. | ||||||||
IPtronics Inc. and Mellanox Technologies Denmark ApS vs. Avago Technologies Inc., et al. | ||||||||
IPtronics has filed an antitrust Complaint against the US and foreign Avago entities for pursuing what the Company believes to be a baseless ITC action against IPtronics. The Complaint seeks unspecified damages in an amount to compensate IPtronics for the damages resulting from the Avago Entities' illegal conduct. The U.S. Avago Entity has been served and the foreign Avago Entities are in the process of being served. No case schedule has been set. | ||||||||
In re Mellanox Technologies, Ltd. Securities Litigation | ||||||||
On February 7, February 14 and February 22, 2013, Mellanox Technologies, Ltd., the Company's President and CEO, former CFO and CFO were sued in three separate putative class action complaints filed in the United States District Court for the Southern District of New York alleging purported violations of the securities laws. On May 14, 2013, the court consolidated the complaints and appointed lead plaintiffs and lead counsel. On July 12, 2013, lead plaintiffs filed an Amended Consolidated Complaint against the same defendants. On October 11, 2013, the United States District Court for the Southern District of New York transferred the consolidated action to the United States District Court for Northern California ("the Court"). On March 31, 2014, the Court dismissed the Amended Consolidated Complaint for its failure to allege adequately falsity or scienter. | ||||||||
On May 19, 2014, lead plaintiffs filed a Second Amended Consolidated Complaint. The Second Amended Consolidated Complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), and Rule 10b-5 thereunder, violations of Section 20(a) of the Exchange Act, and violations of Israel Securities Law, 1968. It alleges that defendants made false or misleading statements (or failed to disclose certain facts) regarding the Company's business and outlook and seeks unspecified damages, an award of reasonable costs and expenses, including reasonable attorney's fees, and any other relief deemed just and proper. On July 7, 2014, defendants moved to dismiss the Second Amended Consolidated Complaint. The Court heard oral argument on August 20, 2014 and on December 17, 2014 dismissed the Second Amended Consolidated Complaint with prejudice. The matter was captioned, In re Mellanox Technologies, Ltd. Securities Litigation, Case No. 3:13-cv-04909-JD. | ||||||||
Weinberger Case | ||||||||
On February 20, 2013, a request for approval of a class action was filed in the Economic Division of the District Court of Tel Aviv-Jaffa against Mellanox Technologies, Ltd., the Company's President and CEO, former CFO, CFO and each of the members of the Company's board of directors (the "Israeli Claim"). The Israeli Claim was filed by Mr. Avigdor Weinberger (the "Claimant"). The Israeli Claim alleges that the Company, the board members, the Company's President and CEO, its former CFO and its current CFO are responsible for making misleading statements (or failing to disclose certain facts) and filings to the public, as a result of which the shares of the Company were allegedly traded at a higher price than their true value during a period commencing on April 19, 2012 and ending January 2, 2013 and, therefore, these parties are responsible for damages caused to the purchasers of the Company's shares on the Tel Aviv Stock Exchange during this time. The Claimant seeks an award of compensation to the relevant shareholders for all damages caused to them, including attorney fees and Claimant's fee and any other relief deemed just and proper by the court. On April 24, 2013, the Claimant and the Company filed a procedural agreement with the court to stay the Israeli Claim pending the completion of the In re Mellanox Technologies, Ltd. Securities Litigation disclosed herein. On April 24, 2013, the Israeli court approved this procedural agreement and stayed the Israeli proceedings. | ||||||||
On January 7, 2015 the plaintiff, with the consent of the Company, filed a request to withdraw the Israeli Claim (and related class action claim) against the Company and the Board (the "Withdrawal Petition") after the plaintiff, in view of the decision to dismiss the U. S. Class Action (In re Mellanox Technologies, Ltd. Securities Litigation disclosed herein), reached the conclusion that it would be difficult for the plaintiff to prove the Israeli Claim and have the complaint approved as a class action. Neither the plaintiff nor its attorneys received or will receive any benefit in return for their withdrawal. | ||||||||
On January 8, 2015, the Israeli Court approved the Withdrawal Petition and dismissed the Israeli Claim. | ||||||||
Infinite Data Case | ||||||||
On February 19, 2013, Infinite Data LLC, a Delaware limited liability company ("Infinite Data") and a non-practicing entity and exclusive licensee of U.S. patent number 5,790,530 (the "Patent"), filed suit against approximately 25 of the Company's end users and direct customers of its InfiniBand products in the United States District Court in Delaware. All actions included the same allegation of infringement regarding the Patent and seek the payment of damages, costs, expenses and injunctive relief. Several of the end users and direct customers sued by Infinite Data tendered indemnification requests to the Company on the basis of existing contractual or asserted statutory obligations imposed on the Company to provide such indemnification. All of these cases were stayed pending the outcome of the declaratory judgment action filed by Mellanox. Based on currently available information, the Company believes that the resolution of these proceedings is not likely to have a material adverse effect on the Company's business, financial position, results of operations or cash flows. | ||||||||
In response to these filings and accusations of infringement of Mellanox's products, on May 21, 2013, Mellanox filed a declaratory judgment complaint against Infinite Data asking for a declaration that the Patent is invalid and that the Company's products do not infringe. On November 14, 2013, Infinite Data filed its answer denying that the Patent was invalid and counterclaimed that the Company's products infringe. Pursuant to the Counterclaims, Infinite Data seeks unspecified damages, treble damages, injunctive relief and any other relief deemed just and proper by the court. | ||||||||
Infinite Data, Mellanox Technologies, Ltd. and Mellanox Technologies, Inc. each entered into settlement agreements in which Infinite Data agreed to dismiss Mellanox Technologies, Ltd., with no liability or payment made by Mellanox Technologies, Ltd. and to dismiss Mellanox Technologies, Inc. in exchange for a payment of $1.3M. The case against Mellanox Technologies, Ltd. was dismissed with prejudice on December 3, 2014 and the case against Mellanox Technologies, Inc. was dismissed with prejudice on January 5, 2015. In accordance with the terms of the settlement agreement, Infinite Data is dismissing with prejudice its complaints against Mellanox Technologies, Inc.'s direct and indirect customers. | ||||||||
SHARE_INCENTIVE_PLANS
SHARE INCENTIVE PLANS: | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
SHARE INCENTIVE PLANS: | ||||||||||||||||||||
SHARE INCENTIVE PLANS: | NOTE 10—SHARE INCENTIVE PLANS: | |||||||||||||||||||
The Company has seven option plans: the 1999 United States Equity Incentive Plan, 1999 Israeli Share Option Plan, 2003 Israeli Share Option Plan (collectively, the "Prior Plans"), the 2006 Global Share Incentive Plan (the "Global Plan"), the Global Share Incentive Assumption Plan 2010 (the "Assumption Plan"), the Kotura, Inc. Second Amended and Restated 2003 Stock Plan (the "Kotura Plan") and the IPtronics, Inc. 2013 Restricted Stock Unit Plan (the "IPtronics Plan"). | ||||||||||||||||||||
The number of ordinary shares reserved for issuance under the Company's Global Plan will increase automatically on the first day of each fiscal year, by a number of ordinary shares equal to the lower of: (i) 2% of total number of ordinary shares outstanding on a fully diluted basis on the date of the increase, (ii) 685,714 ordinary shares, or (iii) a smaller number determined by the board of directors. In any event, the maximum aggregate number of ordinary shares that may be issued or transferred under the Global Plan during the term of the Global Plan may in no event exceed 15,474,018 ordinary shares. The Global Plan was automatically increased by 685,714 ordinary shares on January 1, 2015, 2014 and 2013, respectively. | ||||||||||||||||||||
The number of ordinary shares reserved for issuance under the Company's Assumption Plan will increase automatically on the first day of each fiscal year, by a number of ordinary shares equal to the lower of: (i) 281,625 ordinary shares or (ii) an amount determined by the Board. The Assumption Plan was automatically increased by 281,625 ordinary shares on January 1, 2015, 2014 and 2013, respectively. There were no ordinary shares reserved for future issuance under any of the other plans. | ||||||||||||||||||||
The following table summarizes the share option awards activity under all equity incentive plans: | ||||||||||||||||||||
Options Outstanding | ||||||||||||||||||||
Number | Weighted | |||||||||||||||||||
of Shares | Average | |||||||||||||||||||
Exercise | ||||||||||||||||||||
Price | ||||||||||||||||||||
Outstanding at December 31, 2012 | 3,285,922 | $ | 29.74 | |||||||||||||||||
Options granted | 31,653 | $ | 18.3 | |||||||||||||||||
Options exercised | (376,588 | ) | $ | 14.08 | ||||||||||||||||
Options canceled | (134,763 | ) | $ | 62.47 | ||||||||||||||||
| | | | | | | | |||||||||||||
Outstanding at December 31, 2013 | 2,806,224 | $ | 30.14 | |||||||||||||||||
Options granted | 50,000 | $ | 32.64 | |||||||||||||||||
Options exercised | (265,990 | ) | $ | 18.23 | ||||||||||||||||
Options canceled | (122,711 | ) | $ | 69.01 | ||||||||||||||||
| | | | | | | | |||||||||||||
Outstanding at December 31, 2014 | 2,467,523 | $ | 29.55 | |||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
The weighted average fair value of options granted was approximately $17.22, $8.91 and $38.66 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||||||||||
The total pretax intrinsic value of options exercised in 2014 was $6.0 million. This intrinsic value represents the difference between the fair market value of the Company's ordinary shares on the date of exercise and the exercise price of each option. Based on the closing price of the Company's ordinary shares of $42.73 on December 31, 2014, the total pretax intrinsic value of all outstanding options awards was $51.4 million. The total pretax intrinsic value of exercisable options at December 31, 2014 was $50.1 million. | ||||||||||||||||||||
The total pretax intrinsic value of options exercised in 2013 was $12.9 million. Based on the closing price of the Company's ordinary shares of $39.97 on December 31, 2013, the total pretax intrinsic value of all outstanding options awards was $51.8 million. The total pretax intrinsic value of exercisable options at December 31, 2013 was $48.6 million. | ||||||||||||||||||||
The following tables provide additional information about all options outstanding and exercisable at December 31, 2014: | ||||||||||||||||||||
Options Outstanding at | Options Exercisable at | |||||||||||||||||||
December 31, 2014 | December 31, 2014 | |||||||||||||||||||
Range of Exercise Price | Number | Weighted | Weighted | Number | Weighted | |||||||||||||||
Outstanding | Average | Average | Exercisable | Average | ||||||||||||||||
Remaining | Exercise | Exercise | ||||||||||||||||||
Contractual | Price | Price | ||||||||||||||||||
Life (Years) | ||||||||||||||||||||
$3.13 - $8.23 | 287,784 | 3.56 | $ | 7.96 | 287,784 | $ | 7.96 | |||||||||||||
$8.45 - $9.19 | 271,468 | 2.44 | $ | 9.06 | 271,468 | $ | 9.06 | |||||||||||||
$10.23 - $10.23 | 504,293 | 4.29 | $ | 10.23 | 504,293 | $ | 10.23 | |||||||||||||
$10.50 - $18.87 | 249,923 | 4.50 | $ | 14.37 | 246,273 | $ | 14.33 | |||||||||||||
$18.97 - $29.03 | 287,210 | 5.54 | $ | 24.38 | 279,027 | $ | 24.28 | |||||||||||||
$29.58 - $35.12 | 312,872 | 7.11 | $ | 32.66 | 214,539 | $ | 32.63 | |||||||||||||
$35.60 - $57.41 | 170,860 | 7.17 | $ | 51.14 | 116,225 | $ | 51.08 | |||||||||||||
$66.07 - $66.07 | 141,478 | 7.34 | $ | 66.07 | 89,004 | $ | 66.07 | |||||||||||||
$79.38 - $79.38 | 17,700 | 7.83 | $ | 79.38 | 9,334 | $ | 79.38 | |||||||||||||
$101.37 - $101.37 | 223,935 | 7.37 | $ | 101.37 | 132,968 | $ | 101.37 | |||||||||||||
| | | | | | | | | | | | | | | | | ||||
$3.13 - $101.37 | 2,467,523 | 5.20 | $ | 29.55 | 2,150,915 | $ | 24.76 | |||||||||||||
| | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | ||||
The following table summarizes the restricted share unit activity under all equity incentive plans: | ||||||||||||||||||||
Restricted Share | ||||||||||||||||||||
Units Outstanding | ||||||||||||||||||||
Number of | Weighted | |||||||||||||||||||
Shares | Average | |||||||||||||||||||
Grant Date | ||||||||||||||||||||
Fair Value | ||||||||||||||||||||
Non-vested restricted share units at December 31, 2012 | 1,763,160 | $ | 36.29 | |||||||||||||||||
Restricted share units granted | 1,162,133 | 49.05 | ||||||||||||||||||
Restricted share units vested | (778,084 | ) | 31.16 | |||||||||||||||||
Restricted share units canceled | (172,755 | ) | 42.49 | |||||||||||||||||
| | | | | | | | |||||||||||||
Non-vested restricted share units at December 31, 2013 | 1,974,454 | $ | 43.81 | |||||||||||||||||
| | | | | | | | |||||||||||||
Restricted share units granted | 970,970 | 37.35 | ||||||||||||||||||
Restricted share units vested | (827,396 | ) | 42.03 | |||||||||||||||||
Restricted share units canceled | (206,862 | ) | 40.91 | |||||||||||||||||
| | | | | | | | |||||||||||||
Non-vested restricted share units at December 31, 2014 | 1,911,166 | $ | 41.61 | |||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
The weighted average fair value of restricted share units granted was $37.35, $49.05 and $42.88 for the years ended December 31, 2014, 2013 and 2012, respectively. The total intrinsic value of all outstanding restricted share units was $81.7 million as of December 31, 2014. | ||||||||||||||||||||
The Employee Share Purchase Plan, ("ESPP"), is designed to allow eligible employees to purchase the Company's ordinary shares, at semi-annual intervals, with their accumulated payroll deductions. A participant may contribute up to 15% of his or her base compensation through payroll deductions, and the accumulated deductions will be applied to the purchase of shares on the purchase date, which is the last trading day of the offering period. The purchase price per share will be equal to 85% of the fair market value per share on the start date of the offering period in which the participant is enrolled or, if lower, 85% of the fair market value per share on the purchase date. In any event, the maximum aggregate number of ordinary shares that may be issued over the term of the ESPP may in no event exceed 2,585,712 shares. 1,085,712 shares were initially reserved for issuance pursuant to purchase rights under the ESPP. In August 2012, the Company reserved for issuance 1,500,000 additional shares under the ESPP. No participant in the ESPP may be issued or transferred more than $25,000 worth of ordinary shares pursuant to purchase rights under the ESPP per calendar year. During the years ended December 31, 2014 and 2013, 394,915 and 248,486 shares, respectively, were issued under the ESPP at weighted average per share prices of $30.22 and $37.56, respectively. | ||||||||||||||||||||
The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of December 31, 2014: | ||||||||||||||||||||
Number of | ||||||||||||||||||||
Shares | ||||||||||||||||||||
Share options outstanding | 2,467,523 | |||||||||||||||||||
Restricted share units outstanding | 1,911,166 | |||||||||||||||||||
Shares authorized for future issuance | 1,510,930 | |||||||||||||||||||
ESPP shares available for future issuance | 851,059 | |||||||||||||||||||
| | | | | ||||||||||||||||
Total shares reserved for future issuance as of December 31, 2014 | 6,740,678 | |||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
Share-based compensation | ||||||||||||||||||||
The Company accounts for share-based compensation expense based on the estimated fair value of the share option awards as of the grant dates. | ||||||||||||||||||||
The following weighted average assumptions are used to value share options granted in connection with the Company's share incentive plans for the years ended December 31, 2014, 2013 and 2012: | ||||||||||||||||||||
Employee Share | Employee Share | |||||||||||||||||||
Options | Purchase Plan | |||||||||||||||||||
Year Ended | Year Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||
Dividend yield, % | — | — | — | — | — | — | ||||||||||||||
Expected volatility, % | 56.07 | 57.5 | 56.6 | 46.63 | 56.18 | 68.05 | ||||||||||||||
Risk free interest rate, % | 1.98 | 1.54 | 1.02 | 0.05 | 0.07 | 0.12 | ||||||||||||||
Expected life, years | 5.77 | 4.72 | 6.25 | 0.50 | 0.53 | 0.53 | ||||||||||||||
The following table summarizes the distribution of total share-based compensation expense in the Consolidated Statements of Operations: | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Share-based compensation expense by caption: | ||||||||||||||||||||
Cost of goods sold | $ | 2,162 | $ | 1,828 | $ | 1,621 | ||||||||||||||
Research and development | 26,979 | 25,956 | 19,356 | |||||||||||||||||
Sales and marketing | 9,755 | 9,198 | 8,055 | |||||||||||||||||
General and administrative | 8,339 | 8,156 | 5,987 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total share-based compensation expense | $ | 47,235 | $ | 45,138 | $ | 35,019 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Share-based compensation expense by type of award: | ||||||||||||||||||||
Share options | $ | 8,974 | $ | 12,460 | $ | 14,104 | ||||||||||||||
ESPP | 3,976 | 3,938 | 2,851 | |||||||||||||||||
RSU | 34,285 | 28,740 | 18,064 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total share-based compensation expense | $ | 47,235 | $ | 45,138 | $ | 35,019 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
At December 31, 2014, there was $74.5 million of total unrecognized share-based compensation costs related to non-vested share-based compensation arrangements. The costs are expected to be recognized over a weighted average period of approximately 1.97 years. | ||||||||||||||||||||
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | |||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | NOTE 11—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the years ended December 31, 2014 and 2013: | |||||||||||
Unrealized | Gains / Losses | Total | |||||||||
Gains / Losses on | on Derivatives | ||||||||||
Available-for- | |||||||||||
Sale Securities | |||||||||||
(in thousands) | |||||||||||
Balance at December 31, 2013 | $ | (6 | ) | $ | 1,396 | $ | 1,390 | ||||
Other comprehensive income/loss before reclassifications | (378 | ) | (6,281 | ) | (6,659 | ) | |||||
Amounts reclassified from accumulated other comprehensive income/loss | 10 | 1,239 | 1,249 | ||||||||
| | | | | | | | | | | |
Net current-period other comprehensive income/loss, net of taxes | (368 | ) | (5,042 | ) | (5,410 | ) | |||||
| | | | | | | | | | | |
Balance at December 31, 2014 | $ | (374 | ) | $ | (3,646 | ) | $ | (4,020 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
Balance at December 31, 2012 | $ | (148 | ) | $ | 2,942 | $ | 2,794 | ||||
Other comprehensive income/loss before reclassifications | 148 | 4,481 | 4,629 | ||||||||
Amounts reclassified from accumulated other comprehensive income/loss | (6 | ) | (6,027 | ) | (6,033 | ) | |||||
| | | | | | | | | | | |
Net current-period other comprehensive income/loss, net of taxes | 142 | (1,546 | ) | (1,404 | ) | ||||||
| | | | | | | | | | | |
Balance at December 31, 2013 | $ | (6 | ) | $ | 1,396 | $ | 1,390 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2014: | |||||||||||
Details about Accumulated Other | Amount | Affected Line Item in the | |||||||||
Comprehensive Income / Loss Components | Reclassified | Statement of Operations | |||||||||
from Other | |||||||||||
Comprehensive | |||||||||||
Income / Loss | |||||||||||
(in thousands) | |||||||||||
Losses on Derivatives | $ | 1,239 | Cost of revenues and Operating expenses | ||||||||
| | | | | | ||||||
87 | Cost of revenues | ||||||||||
969 | Research and development | ||||||||||
92 | Sales and marketing | ||||||||||
91 | General and administrative | ||||||||||
Unrealized gains (losses) on Available-for-Sale Securities | 10 | Other income, net | |||||||||
| | | | | | ||||||
Total reclassifications for the period | $ | 1,249 | Total | ||||||||
| | | | | | ||||||
| | | | | | ||||||
The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2013: | |||||||||||
Details about Accumulated Other | Amount | Affected Line Item in the | |||||||||
Comprehensive Income / Loss Components | Reclassified | Statement of Operations | |||||||||
from Other | |||||||||||
Comprehensive | |||||||||||
Income / Loss | |||||||||||
(in thousands) | |||||||||||
Gains on Derivatives | $ | 6,027 | Cost of revenues and Operating expenses | ||||||||
| | | | | | ||||||
363 | Cost of revenues | ||||||||||
4,653 | Research and development | ||||||||||
508 | Sales and marketing | ||||||||||
503 | General and administrative | ||||||||||
| | | | | | ||||||
6,027 | |||||||||||
Unrealized gains (losses) on Available-for-Sale Securities | 6 | Other income, net | |||||||||
| | | | | | ||||||
Total reclassifications for the period | $ | 6,033 | Total | ||||||||
| | | | | | ||||||
| | | | | | ||||||
INCOME_TAXES
INCOME TAXES: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
INCOME TAXES: | |||||||||||
INCOME TAXES: | NOTE 12—INCOME TAXES: | ||||||||||
The components of income (loss) before income taxes are as follows: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
United States | $ | (10,260 | ) | $ | (2,463 | ) | $ | 6,343 | |||
Foreign | 4,518 | (17,127 | ) | 113,795 | |||||||
| | | | | | | | | | | |
Income (loss) before income taxes | $ | (5,742 | ) | $ | (19,590 | ) | $ | 120,138 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
The components of the provision for income taxes are as follows: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Current: | |||||||||||
U.S. federal | $ | 162 | $ | 1,989 | $ | 6,178 | |||||
State and local | 163 | 508 | 890 | ||||||||
Foreign | 4,683 | 3,110 | 4,573 | ||||||||
| | | | | | | | | | | |
5,008 | 5,607 | 11,641 | |||||||||
| | | | | | | | | | | |
Deferred: | |||||||||||
U.S. federal | $ | 12,140 | $ | (1,174 | ) | $ | (2,805 | ) | |||
State and local | 1,539 | (219 | ) | (226 | ) | ||||||
Foreign | (420 | ) | (462 | ) | (423 | ) | |||||
| | | | | | | | | | | |
13,259 | (1,855 | ) | (3,454 | ) | |||||||
| | | | | | | | | | | |
Provision for taxes on income | $ | 18,267 | $ | 3,752 | $ | 8,187 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
At December 31, 2014 and 2013, significant deferred tax assets and liabilities are as follows: | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(in thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Net operating loss and credit carryforwards | $ | 25,614 | $ | 44,706 | |||||||
Reserves and accruals | 7,633 | 8,961 | |||||||||
Depreciation and amortization | 16,487 | 942 | |||||||||
Other | 8,555 | 2,285 | |||||||||
| | | | | | | | ||||
Gross deferred tax assets | 58,289 | 56,894 | |||||||||
Valuation allowance | (46,220 | ) | (27,365 | ) | |||||||
| | | | | | | | ||||
Total deferred tax assets | 12,069 | 29,529 | |||||||||
| | | | | | | | ||||
Intangible assets | (11,551 | ) | (15,038 | ) | |||||||
| | | | | | | | ||||
Total deferred tax liabilities | (11,551 | ) | (15,038 | ) | |||||||
| | | | | | | | ||||
Net deferred tax assets | $ | 518 | $ | 14,491 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. The Company has established a valuation allowance of $17.2 million against deferred tax assets in U.S. income tax jurisdictions in the fourth quarter of 2014 as it is believed these assets are not more likely than not to be realized based upon consideration of the available positive and negative evidence. In reaching this conclusion, objective and verifiable negative evidence related to current and historical cumulative losses in U.S. income tax jurisdictions outweighed available positive evidence in the Company's consideration of the realizability of the related deferred tax assets. | |||||||||||
At December 31, 2014, the Company had net operating loss carryforwards ("NOLs") of approximately $65.5 million in Israel, $58.6 million in the United States ("U.S.") for federal tax purposes, $28.7 million in the U.S. for state tax purposes and $13.3 million in Denmark. The US net operating losses begin to expire in 2017 and the non-U.S. net operating losses have no expiration date. | |||||||||||
Included in the U.S. federal and state NOLs are $19.4 million of NOLs which have not been recognized for financial reporting purposes due to unrecognized tax benefits and excess tax benefits related to stock-based compensation. Excess tax benefits related to option exercises cannot be recognized until realized through a reduction of current taxes payable. | |||||||||||
Utilization of U.S. federal and state net operating losses and tax credit carryforwards may be limited by "ownership change" rules, as defined in Section 382 of the Internal Revenue Code. Similar rules may apply under state tax laws. The Company has assessed the application of Internal Revenue Code Section 382 and has reflected the impact of such limitations in the related deferred tax assets recorded related to net operating losses and tax credit carryforwards. | |||||||||||
The Company has not provided for Israeli income and foreign withholding taxes on $1.3 million of its non-Israeli subsidiaries' undistributed earnings as of December 31, 2014. The Company currently has no plans to repatriate those funds and intends to indefinitely reinvest them in its non-Israeli operations. The Company cannot determine the impact of local taxes, withholding taxes and foreign tax credits associated with future repatriation of such earnings because the time or manner of the repatriation is uncertain and therefore, quantification of the related tax liability is impracticable. | |||||||||||
The reconciliation of the statutory federal income tax rate to the Company's effective tax rate is as follows: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Tax at statutory rate | 35 | % | 35 | % | 35 | % | |||||
State, net of federal benefit | (28.6 | ) | 2.9 | 0.5 | |||||||
Meals and entertainment | (1.3 | ) | (0.4 | ) | 0.1 | ||||||
Tax at rates other than the statutory rate | 56.1 | (35.7 | ) | (32.9 | ) | ||||||
Valuation allowance | (280.6 | ) | — | — | |||||||
Share-based compensation | (4.0 | ) | (4.6 | ) | (0.1 | ) | |||||
Net change in tax reserves | (87.4 | ) | (15.9 | ) | 4.8 | ||||||
Other, net | (7.3 | ) | (0.5 | ) | (0.6 | ) | |||||
| | | | | | | | | | | |
Provision for taxes | (318.1 | )% | (19.2 | )% | 6.8 | % | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The Company calculates the pool of excess tax benefits resulting from share based compensation available to absorb tax deficiencies recognized using the method under which each award grant is tracked on an employee-by-employee basis and grant-by-grant basis to determine if there is a tax benefit situation or tax deficiency situation for such award. The Company then compares the fair value expense to the tax deduction received for each grant and aggregates the benefits and deficiencies to determine whether there is a hypothetical additional paid in capital ("APIC") pool. For the years ended December 31, 2014 and 2013, the Company recognized a tax benefit to APIC of $0.3 million and $2.7 million, respectively. | |||||||||||
The Company's operations in Israel were granted "Approved Enterprise" status by the Investment Center in the Israeli Ministry of Economy (formerly, the Ministry of Industry Trade and Labor) and "Beneficiary Enterprise" status from the Israeli Income Tax Authority, which makes the Company eligible for tax benefits under the Israeli Law for Encouragement of Capital Investments, 1959. Under the terms of the Beneficiary Enterprise program, income that is attributable to the Company's operations in Yokneam, Israel, will be exempt from income tax for a period of ten years commencing 2011. Income that is attributable to the Company's operations in Tel Aviv, Israel, was exempted from income tax for a period of two years commencing 2011, and will be subject to a reduced income tax rate (generally between 10% and the current corporate tax rate, depending on the percentage of foreign investment in the Company) for five to eight years beginning fiscal year 2013. The corporate tax rate increased to 26.5% in 2014. The tax holiday for the Company's Yokneam operations will expire in 2020 and the tax holiday for the Company's Tel-Aviv operations will expire between the years 2017 and 2020. The tax holiday has resulted in a cash tax savings of $6.9 million, $6.4 million and $33.2 million in 2014, 2013 and 2012 respectively, increasing diluted earnings per share by approximately $0.15, $0.15 and $0.76 in the years ended December 31, 2014, 2013, 2012, respectively. | |||||||||||
As a multinational corporation, the Company conducts business in many countries and is subject to taxation in many jurisdictions. The taxation of the Company's business is subject to the application of multiple and sometimes conflicting tax laws and regulations as well as multinational tax conventions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation and the evolution of regulations and court rulings. Consequently, taxing authorities may impose tax assessments or judgments against the Company that could materially impact its tax liability and/or its effective income tax rate. | |||||||||||
As of December 31, 2014, the income tax returns of the Company and one of its subsidiaries in Israel are under examination by the Israeli Tax Authority for certain years from 2009 to 2012. | |||||||||||
The Company accounts for uncertainty in income taxes following a two-step approach for recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether the weight of available evidence indicates that it is more likely than not that, based on the technical merits, the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. | |||||||||||
The following summarizes the activity related to the Company's unrecognized tax benefits: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Gross unrecognized tax benefits, beginning of the period | $ | 23,585 | $ | 9,716 | $ | 4,063 | |||||
Increases in tax positions for prior years | 299 | 444 | 120 | ||||||||
Decreases in tax positions for prior years | (10,339 | ) | (11 | ) | — | ||||||
Increases in tax positions for current year | 5,170 | 3,029 | 5,533 | ||||||||
Increases in tax positions acquired or assumed in a business combination | — | 11,037 | — | ||||||||
Decreases due to statute of limitations | (678 | ) | (630 | ) | — | ||||||
| | | | | | | | | | | |
Gross unrecognized tax benefits, end of the period | $ | 18,037 | $ | 23,585 | $ | 9,716 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
As of December 31, 2014, 2013 and 2012, the total amount of gross unrecognized tax benefits was $18.0 million, $23.6 million and $9.7 million, respectively. Of these amounts as of December 31, 2014, 2013 and 2012, $15.3 million, $12.5 and $9.7, respectively would impact the effective tax rate if recognized. The remaining unrecognized tax benefits are associated with deferred tax assets subject to a full valuation allowance. | |||||||||||
It is the Company's policy to classify accrued interest and penalties as part of the accrued unrecognized tax benefits liability and record the expense in the provision for income taxes. For the years ended December 31, 2014, 2013 and 2012, the amount of accrued interest or penalties related to unrecognized tax benefit totaled $1.0 million, $0.6 million and $0.4 million, respectively. For unrecognized tax benefits that existed at December 31, 2014, the Company does not anticipate any significant changes within the next twelve months. | |||||||||||
The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. As of December 31, 2014, the 2009 through 2014 tax years are open and may be subject to potential examinations in Israel, the United States and Denmark. | |||||||||||
GEOGRAPHIC_INFORMATION_AND_REV
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: | |||||||||||
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: | NOTE 13—GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: | ||||||||||
The Company operates in one reportable segment, the development, manufacturing, marketing and sales of interconnect products. The Company's chief operating decision maker is the chief executive officer. Since the Company operates in one segment, all financial segment information can be found in the accompanying Consolidated Financial Statements. | |||||||||||
Revenues by geographic region are as follows: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
United States | $ | 202,921 | $ | 175,491 | $ | 220,157 | |||||
China | 65,204 | 67,517 | 102,957 | ||||||||
Europe | 72,181 | 51,973 | 62,788 | ||||||||
Other Americas | 19,760 | 16,869 | 26,000 | ||||||||
Other Asia | 103,583 | 78,586 | 88,373 | ||||||||
| | | | | | | | | | | |
Total revenue | $ | 463,649 | $ | 390,436 | $ | 500,275 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Revenues are attributed to countries based on the geographic location of the customers. Intercompany sales between geographic areas have been eliminated. | |||||||||||
Property and equipment, net by geographic location are as follows: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | ||||||||||
(in thousands) | |||||||||||
Israel | $ | 69,004 | $ | 66,983 | |||||||
United States | 7,849 | 3,094 | |||||||||
Other | 1,974 | 1,838 | |||||||||
| | | | | | | | ||||
Total property and equipment, net | $ | 78,827 | $ | 71,915 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Property and equipment, net is attributed to the geographic location in which it is located. | |||||||||||
Revenues by product type and interconnect protocol are as follows: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
ICs | $ | 70,840 | $ | 56,817 | $ | 95,103 | |||||
Boards | 147,738 | 119,399 | 155,670 | ||||||||
Switch systems | 147,403 | 145,184 | 168,231 | ||||||||
Cables, accessories and other | 97,668 | 69,036 | 81,271 | ||||||||
| | | | | | | | | | | |
Total revenue | $ | 463,649 | $ | 390,436 | $ | 500,275 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
InfiniBand: | |||||||||||
FDR | $ | 264,785 | $ | 200,300 | $ | 236,728 | |||||
QDR | 56,711 | 86,784 | 175,650 | ||||||||
DDR/SDR | 16,179 | 21,211 | 33,457 | ||||||||
| | | | | | | | | | | |
Total | 337,675 | 308,295 | 445,835 | ||||||||
Ethernet | 83,470 | 52,908 | 42,523 | ||||||||
Other | 42,504 | 29,233 | 11,917 | ||||||||
| | | | | | | | | | | |
Total revenue | $ | 463,649 | $ | 390,436 | $ | 500,275 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
OTHER_INCOME_NET
OTHER INCOME, NET: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
OTHER INCOME, NET: | |||||||||||
OTHER INCOME, NET: | NOTE 14—OTHER INCOME, NET: | ||||||||||
Other income, net, is summarized in the following table: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Interest income and gain on sale of investments, net | $ | 1,952 | $ | 1,738 | $ | 1,699 | |||||
Foreign exchange gain (loss) | (245 | ) | (309 | ) | (294 | ) | |||||
Other | (258 | ) | (201 | ) | (146 | ) | |||||
| | | | | | | | | | | |
Total other income, net | $ | 1,449 | $ | 1,228 | $ | 1,259 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
SCHEDULE_II_CONSOLIDATED_VALUA
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II—CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | |||||||||||||
MELLANOX TECHNOLOGIES, LTD. | ||||||||||||||
Description: | Balance at | Charged (Credited) | Deductions | Balance at | ||||||||||
Beginning of | to Costs | (Recovery) | End of Year | |||||||||||
Year | and Expenses | |||||||||||||
(in thousands) | ||||||||||||||
Year ended December 31, 2014: | ||||||||||||||
Deducted from asset accounts: | ||||||||||||||
Allowance for doubtful accounts | $ | 639 | $ | 33 | $ | — | $ | 672 | ||||||
Allowance for sales returns and adjustments | — | — | — | — | ||||||||||
Income tax valuation allowance | 27,365 | 18,855 | — | 46,220 | ||||||||||
| | | | | | | | | | | | | | |
Total | $ | 28,004 | $ | 18,888 | $ | — | $ | 46,892 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Year ended December 31, 2013: | ||||||||||||||
Deducted from asset accounts: | ||||||||||||||
Allowance for doubtful accounts | $ | 639 | $ | — | $ | — | $ | 639 | ||||||
Allowance for sales returns and adjustments | 79 | (79 | ) | — | — | |||||||||
Income tax valuation allowance | 28,039 | — | (674 | ) | 27,365 | |||||||||
| | | | | | | | | | | | | | |
Total | $ | 28,757 | $ | (79 | ) | $ | (674 | ) | $ | 28,004 | ||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Year ended December 31, 2012: | ||||||||||||||
Deducted from asset accounts: | ||||||||||||||
Allowance for doubtful accounts | $ | 557 | $ | 82 | $ | — | $ | 639 | ||||||
Allowance for sales returns and adjustments | 337 | (258 | ) | — | 79 | |||||||||
Income tax valuation allowance | 22,095 | 5,944 | — | 28,039 | ||||||||||
| | | | | | | | | | | | | | |
Total | $ | 22,989 | $ | 5,768 | $ | — | $ | 28,757 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
THE_COMPANY_AND_SUMMARY_OF_SIG1
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |||||||||||
Principles of presentation | Principles of presentation | ||||||||||
The consolidated financial statements include the Company's accounts as well as those of its wholly owned subsidiaries after the elimination of all significant intercompany balances and transactions. | |||||||||||
On July 1, 2014, the Company completed its acquisition of Integrity Project, Ltd. ("Integrity"), a privately held company. The consolidated financial statements include the results of operations of Integrity commencing as of the acquisition date. | |||||||||||
On July 1, 2013, the Company completed its acquisition of a privately held company, IPtronics A/S ("IPtronics"), and on August 15, 2013, the Company completed its acquisition of a privately held company, Kotura, Inc. ("Kotura"). The consolidated financial statements include the results of operations of IPtronics and Kotura commencing as of the their respective acquisition dates. | |||||||||||
Certain prior year amounts have been reclassified to conform to 2014 presentation. These changes and reclassifications did not impact net or comprehensive income. | |||||||||||
Risks and uncertainties | Risks and uncertainties | ||||||||||
The Company is subject to all of the risks inherent in a company which operates in the dynamic and competitive semiconductor industry. Significant changes in any of the following areas could have a materially adverse impact on the Company's financial position and results of operations; unpredictable volume or timing of customer orders; ordered product mix; the sales outlook and purchasing patterns of the Company's customers based on consumer demands and general economic conditions; loss of one or more of the Company's customers; decreases in the average selling prices of products or increases in the average cost of finished goods; the availability, pricing and timeliness of delivery of components used in the Company's products; reliance on a limited number of subcontractors to manufacture, assemble, package and production test the Company's products; the Company's ability to successfully develop, introduce and sell new or enhanced products in a timely manner; product obsolescence and the Company's ability to manage product transitions; the timing of announcements or introductions of new products by the Company's competitors, and the Company's ability to successfully integrate acquired businesses. | |||||||||||
Use of estimates | Use of estimates | ||||||||||
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns and allowances, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, goodwill and purchased intangible asset valuation, hedge effectiveness, deferred income tax asset valuation, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results that the Company experiences may differ materially and adversely from the Company's original estimates. To the extent there are material differences between the estimates and actual results, the Company's future results of operations will be affected. | |||||||||||
Cash and cash equivalents | Cash and cash equivalents | ||||||||||
The Company considers all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks, money market funds, U.S. government agency discount notes, municipal bonds, foreign government bonds, corporate bonds and commercial paper. | |||||||||||
Short-term investments | Short-term investments | ||||||||||
The Company's short-term investments are classified as available-for-sale securities and are reported at fair value. Unrealized gains or losses are recorded in shareholders' equity and included in other comprehensive income ("OCI"). The Company views its available-for-sale portfolio as available for use in its current operations. Accordingly, the Company has classified all investments in available for sale securities with readily available markets as short-term, even though the stated maturity date may be one year or more beyond the current balance sheet date, because of the intent and ability to sell these securities prior to maturity to meet liquidity needs or as part of a risk management program. | |||||||||||
Restricted cash and deposits | Restricted cash and deposits | ||||||||||
The Company maintains certain cash amounts restricted as to withdrawal or use. It maintained a balance of $3.6 million at December 31, 2014, designated for contingent payments related to acquisitions. At December 31, 2013, the restricted cash balance was $3.5 million and was classified as other long-term assets. | |||||||||||
Fair value of financial instruments | Fair value of financial instruments | ||||||||||
The Company's financial instruments consist of cash equivalents, short-term investments and foreign currency derivative contracts. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. The Company believes that the carrying amounts of the financial instruments approximate their respective fair values. The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the issuer; and whether it is more likely than not that the Company will be required to sell the security prior to any anticipated recovery in fair value. When there is no readily available market data, fair value estimates may be made by the Company, which may not necessarily represent the amounts that could be realized in a current or future sale of these assets. | |||||||||||
Derivatives | Derivatives | ||||||||||
The Company recognizes derivative instruments as either assets or liabilities and measures those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. The Company enters into derivative instruments designated as cash flow hedges. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of accumulated OCI, and subsequently reclassified into earnings when the hedged exposure affects earnings. Any gain or loss after a hedge is de-designated because it is no longer probable of occurring or related to an ineffective portion of a hedge, as well as any amount excluded from the Company's hedge effectiveness, is recognized as other income, net immediately. | |||||||||||
The Company uses derivative instruments primarily to manage exposures to foreign currency. The Company enters into derivative contracts to manage its exposure to changes in the exchange rate of the NIS against the U.S. dollar. The Company's primary objective in entering these arrangements is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The program is not designated for trading or speculative purposes. The Company's derivative instruments expose the Company to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company seeks to mitigate such risk by limiting its counterparties to major financial institutions and by spreading the risk across a number of major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. | |||||||||||
Concentration of credit risk | Concentration of credit risk | ||||||||||
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, short-term investments and accounts receivable. Cash equivalents and short-term investments balances are maintained with high quality financial institutions, the composition and maturities of which are regularly monitored by management. The Company's accounts receivable are derived from revenue earned from customers located in North America, Europe and Asia. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its customers. The Company maintains an allowance for doubtful accounts receivable based upon the expected collectibility of accounts receivable. The Company reviews its allowance for doubtful accounts quarterly by assessing individual accounts receivable over a specific aging and amount, and all other balances based on historical collection experience and an economic risk assessment. If the Company determines that a specific customer is unable to meet its financial obligations to the Company, the Company provides an allowance for credit losses to reduce the receivable to the amount management reasonably believes will be collected. | |||||||||||
The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: | |||||||||||
Year Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Hewlett-Packard | 11 | % | 13 | % | 20 | % | |||||
Dell | 11 | % | * | * | |||||||
IBM | 10 | % | 17 | % | 19 | % | |||||
* | Less than 10% | ||||||||||
The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable: | |||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Hewlett Packard | 17 | % | 12 | % | |||||||
IBM | 11 | % | 11 | % | |||||||
Ingram Micro | 10 | % | * | ||||||||
* | Less than 10% | ||||||||||
Inventory | Inventory | ||||||||||
Inventory includes finished goods, work-in-process and raw materials. Inventory is stated at the lower of cost (principally standard cost which approximates actual cost on a first-in, first-out basis) or market value. Reserves for potentially excess and obsolete inventory are made based on management's analysis of inventory levels, future sales forecasts and market conditions. Once established, the original cost of the Company's inventory less the related inventory reserve represents the new cost basis of such products. | |||||||||||
Property and equipment | Property and equipment | ||||||||||
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the related assets, which is three to five years for computers, software license rights and other electronic equipment, and seven to fifteen years for office furniture and equipment. Leasehold improvements and assets acquired under capital leases are amortized on a straight-line basis over the term of the lease, or the useful lives of the assets, whichever is shorter. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in the results of operations in the period realized. | |||||||||||
The Company incurs costs for the fabrication of masks used by its contract manufacturers to manufacture wafers that incorporate its products. The Company capitalizes the costs of fabrication masks that are reasonably expected to be used during production manufacturing. These amounts are included within property and equipment and are generally depreciated over a period of 12 months to cost of revenue. If it does not reasonably expect to use the fabrication mask during production manufacturing, it expenses the related mask costs to research and development in the period in which the costs are incurred. | |||||||||||
Business combinations | Business combinations | ||||||||||
The Company accounts for business combinations using the acquisition method of accounting. The Company determines the recognition of intangible assets based on the following criteria: (i) the intangible asset arises from contractual or other rights; or (ii) the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged. The Company allocates the purchase price of business combinations to the tangible assets, liabilities and intangible assets acquired, including in-process research and development ("IPR&D"), based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The process of estimating the fair values requires significant estimates, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer contracts, customer lists and distribution agreements, acquired developed technologies, expected costs to develop IPR&D into commercially viable products, estimated cash flows from projects when completed and discount rates. The Company estimates fair value based upon assumptions that are believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. | |||||||||||
Goodwill and intangible assets | Goodwill and intangible assets | ||||||||||
Goodwill represents the excess of the cost of acquired businesses over the fair market value of their identifiable net assets. The Company conducts a goodwill impairment qualitative assessment during the fourth quarter of each fiscal year or more frequently if facts and circumstances indicate that goodwill may be impaired. The goodwill impairment qualitative assessment requires the Company to perform an assessment to determine if it is more likely than not that the fair value of the business is less than its carrying amount. The qualitative assessment considers various factors, including the macroeconomic environment, industry and market specific conditions, market capitalization, stock price, financial performance, earnings multiples, budgeted-to-actual revenue performance from prior year, gross margin and cash flow from operating activities and issues or events specific to the business. If adverse qualitative trends are identified that could negatively impact the fair value of the business, the Company performs a "two step" goodwill impairment test. "Step one" of the goodwill impairment test requires the Company to estimate the fair value of the reporting unit "Step two" of the test is only performed if a potential impairment exists in "step one" and involves determining the difference between the fair value of the reporting unit's net assets other than goodwill to the fair value of the reporting unit. If the difference is less than the net book value of goodwill, an impairment exists and is recorded. As of December 31, 2014, the Company's qualitative assessment of goodwill impairment indicated that goodwill was not impaired. | |||||||||||
Intangible assets primarily represent acquired intangible assets including developed technology, customer relationships and IPR&D. The Company amortizes its finite lived intangible assets over their useful lives using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used, or, if that pattern cannot be reliably determined, using a straight-line amortization method. The Company capitalizes IPR&D projects acquired as part of a business combination as intangible assets with indefinite lives. On completion of each project, IPR&D assets are reclassified to developed technology and amortized over their estimated useful lives. If any of the IPR&D projects are abandoned, the Company would impair the related IPR&D asset. | |||||||||||
Indefinite-lived intangible assets are tested for impairment annually or more frequently when indicators of impairment exist. The Company first assesses qualitative factors to determine if it is more likely than not that an indefinite-lived intangible asset is impaired and whether it is necessary to perform a quantitative impairment test. The qualitative assessment considers various factors, including reductions in demand, the abandonment of IPR&D projects or significant economic slowdowns in the semiconductor industry and macroeconomic environment. If adverse qualitative trends are identified that could negatively impact the fair value of the asset, then quantitative impairment tests are performed to compare the carrying value of the asset to its undiscounted expected future cash flows. If this test indicates that there is impairment, the impaired asset is written down to fair value, which is typically calculated using: (i) quoted market prices or (ii) discounted expected future cash flows utilizing an appropriate discount rate. Impairment is based on the excess of the carrying amount over the fair value of those assets. As of December 31, 2014, there were no indicators that impairment existed or assets were not recoverable. Intangible assets with finite lives are tested for impairment in accordance with our policy for long-lived assets. | |||||||||||
Investments | Investments | ||||||||||
The Company has equity investments in privately-held companies. These investments are recorded at cost reduced by any impairment write-downs because the Company does not have the ability to exercise significant influence over the operating and financial policies of the company. The investments are included in other long-term assets on the accompanying balance sheets. The Company monitors the investments and if facts and circumstances indicate an investment may be impaired, then it conducts an impairment test of its investment. To determine if the investment is recoverable, it reviews the privately-held company's revenue and earnings trends relative to pre-defined milestones and overall business prospects, the general market conditions in its industry and other factors related to its ability to remain in business, such as liquidity and receipt of additional funding. | |||||||||||
Impairment of long-lived assets | Impairment of long-lived assets | ||||||||||
Long-lived assets include equipment and furniture and fixtures and finite-lived intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. If the sum of the expected future cash flows (undiscounted and without interest charges) from the long-lived assets is less than the carrying amount of such assets, an impairment loss would be recognized, and the assets would be written down to their estimated fair values. The Company reviews for possible impairment on a regular basis. | |||||||||||
Revenue recognition | Revenue recognition | ||||||||||
The Company recognizes revenue from the sales of products when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the price is fixed or determinable; and (4) collection is reasonably assured. The Company uses a binding purchase order or a signed agreement as evidence of an arrangement. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer. The Company's standard arrangement with its customers typically includes freight-on-board shipping point, no right of return and no customer acceptance provisions. The customer's obligation to pay and the payment terms are set at the time of shipment and are not dependent on the subsequent resale of the product. The Company determines whether collectibility is probable on a customer-by-customer basis. When assessing the probability of collection, the Company considers the number of years the customer has been in business and the history of the Company's collections. Customers are subject to a credit review process that evaluates the customers' financial positions and ultimately their ability to pay. If it is determined at the outset of an arrangement that collection is not probable, no product is shipped and no revenue is recognized unless cash is received in advance. | |||||||||||
The Company maintains inventory, or hub arrangements with certain customers. Pursuant to these arrangements the Company delivers products to a customer or a designated third party warehouse based upon the customer's projected needs, but does not recognize product revenue unless and until the customer reports it has removed the Company's product from the warehouse to be incorporated into its end products. | |||||||||||
Multiple Element Arrangements Excluding Software | |||||||||||
For revenue arrangements that contain multiple deliverables, judgment is required to properly identify the accounting units of the transactions and to determine the manner in which revenue should be allocated among the accounting units. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria of revenue recognition have been met for each deliverable in order for revenue recognition to occur in the appropriate accounting period. While changes in the allocation of the arrangement consideration between the units of accounting will not affect the amount of total revenue recognized for a particular sales arrangement, any material changes in these allocations could impact the timing of revenue recognition, which could affect its results of operations. When the Company enters into an arrangement that includes multiple elements, the allocation of value to each element is derived based on management's best estimate of selling price when vendor specific evidence or third party evidence is unavailable. | |||||||||||
Multiple Element Arrangements Including Software | |||||||||||
For multiple element arrangements that include a combination of hardware, software and services, such as post-contract customer support, the arrangement consideration is first allocated among the accounting units before revenue recognition criteria are applied. If an arrangement includes undelivered elements that are not essential to the functionality of the delivered elements, the Company defers revenue for the undelivered elements based on their fair value. The fair value for undelivered software elements is based on vendor specific evidence. If the undelivered elements are essential to the functionality of the delivered elements, no revenue is recognized. The revenues from fixed-price support or maintenance contracts, including extended warranty contracts and software post-contract customer support agreements are recognized ratably over the contract period and the costs associated with these contracts are recognized as incurred. | |||||||||||
Distributor Revenue | |||||||||||
A portion of the Company's sales are made to distributors under agreements which contain a limited right to return unsold product and price protection provisions. The Company recognizes revenue from these distributors based on the sell-through method using inventory and point of sale information provided by the distributor. Additionally, the Company maintains accruals and allowances for price protection and cooperative marketing programs. The Company classifies the costs of cooperative marketing programs based on the identifiable benefit received as either a reduction of revenue, a cost of revenues or an operating expense. | |||||||||||
Deferred Revenue and Income | |||||||||||
The Company defers revenue and income when advance payments are received from customers before performance obligations have been completed and/or services have been performed. | |||||||||||
Shipping and Handling | |||||||||||
Costs incurred for shipping and handling expenses to customers are recorded as cost of revenues. To the extent these amounts are billed to the customer in a sales transaction, the Company records the shipping and handling fees as revenue. | |||||||||||
Product warranty | Product warranty | ||||||||||
The Company typically offers a limited warranty for its products for periods up to three years. The Company accrues for estimated returns of defective products at the time revenue is recognized based on historical activity. The determination of these accruals requires the Company to make estimates of the frequency and extent of warranty activity and estimated future costs to either replace or repair the products under warranty. If the actual warranty activity and/or repair and replacement costs differ significantly from these estimates, adjustments to record additional cost of revenues may be required in future periods. Changes in the Company's liability for product warranty during the years ended December 31, 2014 and 2013 are as follows: | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(In thousands) | |||||||||||
Balance, beginning of the period | $ | 3,633 | $ | 4,318 | |||||||
New warranties issued during the period | 3,072 | 8,584 | |||||||||
Reversal of warranty reserves | (197 | ) | — | ||||||||
Settlements during the period | (4,576 | ) | (9,269 | ) | |||||||
| | | | | | | | ||||
Balance, end of the period | $ | 1,932 | $ | 3,633 | |||||||
| | | | | | | | ||||
Less: long term portion of product warranty liability | (424 | ) | (424 | ) | |||||||
| | | | | | | | ||||
Balance, end of the period | $ | 1,508 | $ | 3,209 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Research and development | Research and development | ||||||||||
Costs incurred in research and development are charged to operations as incurred. The Company expenses all costs for internally developed patents as incurred. | |||||||||||
Advertising | Advertising | ||||||||||
Costs related to advertising and promotion of products are charged to sales and marketing expense as incurred. Advertising expense was approximately $0.7 million, $0.9 million and $1.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||
Share-based compensation | Share-based compensation | ||||||||||
The Company accounts for share-based compensation expense based on the estimated fair value of the equity awards as of the grant dates. The fair value of RSUs is based on the closing market price of our ordinary shares on the date of grant. The Company estimates the fair value of share option awards using the Black-Scholes option valuation model, which requires the input of subjective assumptions including the expected share price volatility and the calculation of expected term, as well as the fair value of the underlying ordinary share on the date of grant, among other inputs. | |||||||||||
The Company bases its estimate of expected volatility on the of historical volatility of the Company's shares. The Company calculates the expected term of its option awards using the simplified method as prescribed by the authoritative guidance. The expected term for newly granted option awards in 2014 was approximately 5.77 years. | |||||||||||
Share compensation expense is recognized on a straight-line basis over each recipient's requisite service period, which is generally the vesting period. Share-based compensation expense is recorded net of estimated forfeitures. Forfeitures are estimated at the time of grant and this estimate is revised, if necessary, in subsequent periods. If the actual number of forfeitures differs from the estimate, adjustments may be required to share-based compensation expense in future periods. | |||||||||||
Comprehensive income (loss) | Comprehensive income (loss) | ||||||||||
Accumulated other comprehensive income (loss), net of tax on the consolidated balance sheets at December 31, 2014 and 2013, represents the accumulated unrealized gains (losses) on available-for-sale securities, and the accumulated unrealized gains (losses) related to derivative instruments accounted for as cash flow hedges. The amount of income tax expense allocated to unrealized gains (losses) on available-for-sale securities and derivative instruments was $0.1 million at December 31, 2014 and was immaterial for 2013. | |||||||||||
Foreign currency translation | Foreign currency translation | ||||||||||
The Company uses the U.S. dollar as its functional currency. Foreign currency assets and liabilities are remeasured into U.S. dollars at the end-of-period exchange rates except for non-monetary assets and liabilities, which are remeasured at historical exchange rates. Revenue and expenses are remeasured each day at the exchange rate in effect on the day the transaction occurred, except for those expenses related to balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency transactions are included in the Consolidated Statements of Operations as part of "Other income (loss), net." | |||||||||||
Net income per share | Net income per share | ||||||||||
Basic and diluted net income per share are computed by dividing the net income for the period by the weighted average number of ordinary shares outstanding during the period. The calculation of diluted net income per share excludes potential ordinary shares if the effect is anti-dilutive. Potential ordinary shares are comprised of incremental ordinary shares issuable upon the exercise of share options. | |||||||||||
The following table sets forth the computation of basic and diluted net income per share for the periods indicated: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(In thousands, except per share | |||||||||||
data) | |||||||||||
Net income (loss) | $ | (24,009 | ) | $ | (23,342 | ) | $ | 111,951 | |||
Basic and diluted shares: | |||||||||||
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 44,831 | 43,421 | 41,308 | ||||||||
Dilutive effect of employee share option and purchase plan | — | — | 2,593 | ||||||||
| | | | | | | | | | | |
Shares used to compute diluted net income (loss) per share | 44,831 | 43,421 | 43,901 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income (loss) per share—basic | $ | (0.54 | ) | $ | (0.54 | ) | $ | 2.71 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income (loss) per share—diluted | $ | (0.54 | ) | $ | (0.54 | ) | $ | 2.55 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
The Company excluded 0.7 million, 0.8 million and 0.3 million outstanding shares for the years ended December 31, 2014, 2013 and 2012, respectively, from the computation of diluted net income per share because including them would have had an anti-dilutive effect. | |||||||||||
Segment reporting | Segment reporting | ||||||||||
The Company has one reportable segment: the development, manufacturing, marketing and sales of interconnect products. | |||||||||||
Income taxes | Income taxes | ||||||||||
To prepare the Company's consolidated financial statements, the Company estimates its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company's actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the Company's consolidated balance sheet. | |||||||||||
The Company must also make judgments regarding the realizability of deferred tax assets. The carrying value of the Company's net deferred tax assets is based on its belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. A valuation allowance has been established for deferred tax assets which the Company does not believe meet the "more likely than not" criteria. The Company's judgments regarding future taxable income may change due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If the Company's assumptions and consequently its estimates change in the future, the valuation allowances it has established may be increased or decreased, resulting in a respective increase or decrease in income tax expense. The Company's effective tax rate is highly dependent upon the geographic distribution of its worldwide earnings or losses, the tax regulations and tax holidays in each geographic region, the availability of tax credits and carryforwards, and the effectiveness of its tax planning strategies. | |||||||||||
Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within the consolidated statements of income as income tax expense. | |||||||||||
Recent accounting pronouncements | Recent accounting pronouncements | ||||||||||
Effective January 1, 2014, the Company adopted the authoritative guidance, issued by the Financial Accounting Standards Board ("FASB") in July 2013, which requires that an unrecognized tax benefit, or portion of an unrecognized tax benefit, be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward. If an applicable deferred tax asset is not available or a company does not expect to use the applicable deferred tax asset, the unrecognized tax benefit should be presented as a liability in the financial statements and should not be combined with an unrelated deferred tax asset. The adoption of this guidance had no significant impact on the Company's consolidated financial statements. | |||||||||||
On May 28, 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. This guidance will be effective for the Company for the fiscal year beginning January 1, 2017 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. Early adoption is not permitted. The Company is currently evaluating the impact of adopting this new accounting standard on its consolidated financial statements. | |||||||||||
In August 2014, the FASB issued new guidance related to the disclosures around going concern. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard will be effective for the Company for the fiscal year ending December 31, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements. | |||||||||||
THE_COMPANY_AND_SUMMARY_OF_SIG2
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |||||||||||
Schedule of revenues and accounts receivable from customers | |||||||||||
Year Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Hewlett-Packard | 11 | % | 13 | % | 20 | % | |||||
Dell | 11 | % | * | * | |||||||
IBM | 10 | % | 17 | % | 19 | % | |||||
* | Less than 10% | ||||||||||
The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable: | |||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Hewlett Packard | 17 | % | 12 | % | |||||||
IBM | 11 | % | 11 | % | |||||||
Ingram Micro | 10 | % | * | ||||||||
* | Less than 10% | ||||||||||
Schedule of changes in the entity's liability for product warranty | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(In thousands) | |||||||||||
Balance, beginning of the period | $ | 3,633 | $ | 4,318 | |||||||
New warranties issued during the period | 3,072 | 8,584 | |||||||||
Reversal of warranty reserves | (197 | ) | — | ||||||||
Settlements during the period | (4,576 | ) | (9,269 | ) | |||||||
| | | | | | | | ||||
Balance, end of the period | $ | 1,932 | $ | 3,633 | |||||||
| | | | | | | | ||||
Less: long term portion of product warranty liability | (424 | ) | (424 | ) | |||||||
| | | | | | | | ||||
Balance, end of the period | $ | 1,508 | $ | 3,209 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of computation of basic and diluted net income per share | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(In thousands, except per share | |||||||||||
data) | |||||||||||
Net income (loss) | $ | (24,009 | ) | $ | (23,342 | ) | $ | 111,951 | |||
Basic and diluted shares: | |||||||||||
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 44,831 | 43,421 | 41,308 | ||||||||
Dilutive effect of employee share option and purchase plan | — | — | 2,593 | ||||||||
| | | | | | | | | | | |
Shares used to compute diluted net income (loss) per share | 44,831 | 43,421 | 43,901 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income (loss) per share—basic | $ | (0.54 | ) | $ | (0.54 | ) | $ | 2.71 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income (loss) per share—diluted | $ | (0.54 | ) | $ | (0.54 | ) | $ | 2.55 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
BALANCE_SHEET_COMPONENTS_Table
BALANCE SHEET COMPONENTS: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
BALANCE SHEET COMPONENTS: | ||||||||
Schedule of balance sheet components | ||||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
(In thousands) | ||||||||
Accounts receivable, net: | ||||||||
Accounts receivable | $ | 65,594 | $ | 70,119 | ||||
Less: allowance for doubtful accounts | (672 | ) | (639 | ) | ||||
| | | | | | | | |
$ | 64,922 | $ | 69,480 | |||||
| | | | | | | | |
| | | | | | | | |
Inventories: | ||||||||
Raw materials | $ | 5,725 | $ | 4,385 | ||||
Work-in-process | 13,874 | 12,694 | ||||||
Finished goods | 24,871 | 19,391 | ||||||
| | | | | | | | |
$ | 44,470 | $ | 36,470 | |||||
| | | | | | | | |
| | | | | | | | |
Deferred taxes and other current assets: | ||||||||
Prepaid expenses | $ | 8,040 | $ | 5,929 | ||||
Derivative contracts receivable | — | 1,396 | ||||||
Deferred taxes | 2,271 | 7,336 | ||||||
VAT receivable | 6,117 | 1,900 | ||||||
Other | 1,719 | 1,020 | ||||||
| | | | | | | | |
$ | 18,147 | $ | 17,581 | |||||
| | | | | | | | |
| | | | | | | | |
Property and equipment, net: | ||||||||
Computer equipment and software | $ | 124,370 | $ | 92,468 | ||||
Furniture and fixtures | 3,256 | 3,809 | ||||||
Leasehold improvements | 33,295 | 31,608 | ||||||
| | | | | | | | |
160,921 | 127,885 | |||||||
Less: Accumulated depreciation and amortization | (82,094 | ) | (55,970 | ) | ||||
| | | | | | | | |
$ | 78,827 | $ | 71,915 | |||||
| | | | | | | | |
| | | | | | | | |
Deferred taxes and other long-term assets: | ||||||||
Equity investments in private companies | $ | 10,736 | $ | 7,548 | ||||
Deferred taxes | 389 | 7,155 | ||||||
Restricted cash | — | 3,514 | ||||||
Other assets | 4,475 | 2,396 | ||||||
| | | | | | | | |
$ | 15,600 | $ | 20,613 | |||||
| | | | | | | | |
| | | | | | | | |
Accrued liabilities: | ||||||||
Payroll and related expenses | $ | 31,254 | $ | 27,822 | ||||
Accrued expenses | 21,171 | 16,106 | ||||||
Derivative contracts payable | 3,562 | — | ||||||
Product warranty liability | 1,508 | 3,209 | ||||||
Other | 4,479 | 3,874 | ||||||
| | | | | | | | |
$ | 61,974 | $ | 51,011 | |||||
| | | | | | | | |
| | | | | | | | |
Other long-term liabilities: | ||||||||
Income tax payable | $ | 18,174 | $ | 13,026 | ||||
Deferred rent | 2,337 | 3,072 | ||||||
Other | 2,024 | 1,792 | ||||||
| | | | | | | | |
$ | 22,535 | $ | 17,890 | |||||
| | | | | | | | |
| | | | | | | | |
BUSINESS_COMBINATION_Tables
BUSINESS COMBINATION: (Tables) (IPtronics and Kotura) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
IPtronics and Kotura | ||||||||||||||||
BUSINESS COMBINATION | ||||||||||||||||
Schedule of purchase consideration related to each acquisition | ||||||||||||||||
Company Acquired | Cash | Cash Assumed | Net Cash Paid | |||||||||||||
Consideration | ||||||||||||||||
Paid | ||||||||||||||||
(in thousands) | ||||||||||||||||
IPtronics | $ | 44,925 | $ | 2,077 | $ | 42,848 | ||||||||||
Kotura. | 80,772 | 101 | 80,671 | |||||||||||||
| | | | | | | | | | | ||||||
Total | $ | 125,697 | $ | 2,178 | $ | 123,519 | ||||||||||
| | | | | | | | | | | ||||||
| | | | | | | | | | | ||||||
Summary of allocation of the total purchase price | ||||||||||||||||
IPtronics | Kotura | Total | ||||||||||||||
(in thousands) | ||||||||||||||||
Current assets, net of cash | $ | 2,534 | $ | 5,606 | $ | 8,140 | ||||||||||
Other long-term assets | 974 | 10,603 | 11,577 | |||||||||||||
Intangible assets | 17,229 | 27,517 | 44,746 | |||||||||||||
Goodwill | 25,630 | 40,681 | 66,311 | |||||||||||||
| | | | | | | | | | | ||||||
Total assets | 46,367 | 84,407 | 130,774 | |||||||||||||
Current liabilities | (2,668 | ) | (3,357 | ) | (6,025 | ) | ||||||||||
Long-term liabilities | (851 | ) | (379 | ) | (1,230 | ) | ||||||||||
| | | | | | | | | | | ||||||
Total liabilities | (3,519 | ) | (3,736 | ) | (7,255 | ) | ||||||||||
| | | | | | | | | | | ||||||
Total purchase price allocation | $ | 42,848 | $ | 80,671 | $ | 123,519 | ||||||||||
| | | | | | | | | | | ||||||
| | | | | | | | | | | ||||||
Schedule of intangible assets acquired and their respective estimated remaining useful life | ||||||||||||||||
Purchased intangible assets: | Fair value | Weighted | ||||||||||||||
Average | ||||||||||||||||
Useful life | ||||||||||||||||
(in thousands) | (in years) | |||||||||||||||
Licensed technology | $ | 135 | 6 | |||||||||||||
Developed technology | 27,701 | 5 | ||||||||||||||
In-process research and development | 13,764 | — | ||||||||||||||
Customer relationship | 2,420 | 2-Jan | ||||||||||||||
Backlog | 726 | Less than 1 | ||||||||||||||
| | | | | | |||||||||||
Total purchased intangible assets | $ | 44,746 | ||||||||||||||
| | | | | | |||||||||||
| | | | | | |||||||||||
Summary of significant assumptions underlying the valuations of IPR&D at acquisition | ||||||||||||||||
Company | Development Projects | Average | Estimated | Risk | Fair value | |||||||||||
Estimated | cost | Adjusted | ||||||||||||||
time | to complete | Discount | ||||||||||||||
to complete | Rate | |||||||||||||||
(in months) | (in thousands) | (%) | (in thousands) | |||||||||||||
IPtronics | Modulator drivers—4x25Gb/s | 18 | $ | 9,549 | 19.5 | % | $ | 4,121 | ||||||||
Kotura | Silicon photonics modulator—4x25Gb/s | 18 | 17,210 | 16.5 | % | 9,643 | ||||||||||
| | | | | | | | | | | | | | | | |
$ | 26,759 | $ | 13,764 | |||||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Schedule of unaudited pro forma information | ||||||||||||||||
Year Ended | ||||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Pro forma net revenue | $ | 402,107 | $ | 521,780 | ||||||||||||
Pro forma net income (loss) | $ | (30,613 | ) | $ | 100,748 | |||||||||||
Pro forma net income (loss) per share basic | $ | (0.71 | ) | $ | 2.44 | |||||||||||
Pro forma net income (loss) per share diluted | $ | (0.71 | ) | $ | 2.29 | |||||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
FAIR VALUE MEASUREMENTS: | |||||||||||
Schedule of the fair value hierarchy of the Company's financial assets and liabilities measured at fair value | |||||||||||
Level 1 | Level 2 | Total | |||||||||
(in thousands) | |||||||||||
Money market funds | $ | 4,426 | $ | — | $ | 4,426 | |||||
Certificates of deposit | — | 80,275 | 80,275 | ||||||||
U.S. Government and agency securities | — | 99,114 | 99,114 | ||||||||
Commercial paper | — | 23,019 | 23,019 | ||||||||
Corporate bonds | — | 111,736 | 111,736 | ||||||||
Municipal bonds | — | 13,104 | 13,104 | ||||||||
Foreign government bonds | — | 6,790 | 6,790 | ||||||||
| | | | | | | | | | | |
Total financial assets | $ | 4,426 | $ | 334,038 | $ | 338,464 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Derivative contracts | — | 3,562 | 3,562 | ||||||||
| | | | | | | | | | | |
Total financial liabilities | $ | — | $ | 3,562 | $ | 3,562 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value as of December 31, 2013. | |||||||||||
Level 1 | Level 2 | Total | |||||||||
(in thousands) | |||||||||||
Money market funds | $ | 20,000 | $ | — | $ | 20,000 | |||||
Certificates of deposit | — | 67,769 | 67,769 | ||||||||
U.S. Government and agency securities | — | 69,879 | 69,879 | ||||||||
Commercial paper | — | 33,606 | 33,606 | ||||||||
Corporate bonds | — | 92,274 | 92,274 | ||||||||
Derivative contracts | — | 1,396 | 1,396 | ||||||||
| | | | | | | | | | | |
Total financial assets | $ | 20,000 | $ | 264,924 | $ | 284,924 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
INVESTMENTS_Tables
INVESTMENTS: (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
INVESTMENTS: | ||||||||||||||
Schedule of cash, cash equivalents and short-term investments | ||||||||||||||
December 31, 2014 | ||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Cash | $ | 46,900 | $ | — | $ | — | $ | 46,900 | ||||||
Money market funds | 4,426 | — | — | 4,426 | ||||||||||
Certificates of deposit | 80,304 | 1 | (30 | ) | 80,275 | |||||||||
U.S. Government and agency securities | 99,236 | 9 | (131 | ) | 99,114 | |||||||||
Commercial paper | 23,017 | 3 | (1 | ) | 23,019 | |||||||||
Corporate bonds | 112,033 | 16 | (313 | ) | 111,736 | |||||||||
Municipal bonds | 13,151 | — | (47 | ) | 13,104 | |||||||||
Foreign government bonds | 6,809 | — | (19 | ) | 6,790 | |||||||||
| | | | | | | | | | | | | | |
Total | $ | 385,876 | $ | 29 | $ | (541 | ) | $ | 385,364 | |||||
Less amounts classified as cash and cash equivalents | (51,326 | ) | — | — | (51,326 | ) | ||||||||
| | | | | | | | | | | | | | |
$ | 334,550 | $ | 29 | $ | (541 | ) | $ | 334,038 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Cash | $ | 43,164 | $ | — | $ | — | $ | 43,164 | ||||||
Money market funds | 20,000 | — | — | 20,000 | ||||||||||
Certificates of deposit | 67,775 | 1 | (7 | ) | 67,769 | |||||||||
U.S. Government and agency securities | 69,859 | 22 | (2 | ) | 69,879 | |||||||||
Commercial paper | 33,602 | 9 | (5 | ) | 33,606 | |||||||||
Corporate bonds | 92,298 | 16 | (40 | ) | 92,274 | |||||||||
| | | | | | | | | | | | | | |
Total | $ | 326,698 | $ | 48 | $ | (54 | ) | $ | 326,692 | |||||
Less amounts classified as cash and cash equivalents | (63,164 | ) | — | — | (63,164 | ) | ||||||||
| | | | | | | | | | | | | | |
$ | 263,534 | $ | 48 | $ | (54 | ) | $ | 263,528 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of contractual maturities of short-term investments | ||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||
Amortized | Estimated | Amortized | Estimated | |||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Due in less than one year | $ | 129,150 | $ | 129,155 | $ | 190,172 | $ | 190,189 | ||||||
Due in one to three years | 205,400 | 204,883 | 73,362 | 73,339 | ||||||||||
| | | | | | | | | | | | | | |
$ | 334,550 | $ | 334,038 | $ | 263,534 | $ | 263,528 | |||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
GOODWILL AND INTANGIBLE ASSETS: | |||||||||||
Schedule of changes in the carrying amount of goodwill | |||||||||||
The following table represents changes in the carrying amount of goodwill (in thousands): | |||||||||||
Balance as of December 31, 2013 | $ | 199,196 | |||||||||
Goodwill from Integrity acquisition | 1,547 | ||||||||||
Adjustments | — | ||||||||||
| | | | | |||||||
Balance as of December 31, 2014 | $ | 200,743 | |||||||||
| | | | | |||||||
| | | | | |||||||
Schedule of carrying amounts of intangible assets | |||||||||||
The carrying amounts of intangible assets as of December 31, 2014 were as follows: | |||||||||||
Gross | Accumulated | Net | |||||||||
Carrying | Amortization | Carrying | |||||||||
Value | Value | ||||||||||
(in thousands) | |||||||||||
Licensed technology | $ | 2,344 | $ | (917 | ) | $ | 1,427 | ||||
Developed technology | 56,064 | (32,130 | ) | 23,934 | |||||||
Customer relationships | 13,376 | (10,434 | ) | 2,942 | |||||||
| | | | | | | | | | | |
Total amortizable intangible assets | $ | 71,784 | $ | (43,481 | ) | $ | 28,303 | ||||
IPR&D | 13,764 | — | 13,764 | ||||||||
| | | | | | | | | | | |
Total intangible assets | $ | 85,548 | $ | (43,481 | ) | $ | 42,067 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The carrying amounts of intangible assets as of December 31, 2013 were as follows: | |||||||||||
Gross | Accumulated | Net | |||||||||
Carrying | Amortization | Carrying | |||||||||
Value | Value | ||||||||||
(in thousands) | |||||||||||
Licensed technology | $ | 2,344 | $ | (366 | ) | $ | 1,978 | ||||
Developed technology | 56,064 | (24,654 | ) | 31,410 | |||||||
Customer relationships | 13,376 | (6,279 | ) | 7,097 | |||||||
Customer contract | 1,529 | (1,529 | ) | — | |||||||
Backlog | 726 | (726 | ) | — | |||||||
| | | | | | | | | | | |
Total amortizable intangible assets | $ | 74,039 | $ | (33,554 | ) | $ | 40,485 | ||||
IPR&D | 13,764 | — | 13,764 | ||||||||
| | | | | | | | | | | |
Total intangible assets | $ | 87,803 | $ | (33,554 | ) | $ | 54,249 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of estimated future amortization expense from amortizable intangible assets | |||||||||||
The estimated future amortization expense from amortizable intangible assets is as follows (in thousands): | |||||||||||
2015 | $ | 8,007 | |||||||||
2016 | 7,194 | ||||||||||
2017 | 7,128 | ||||||||||
2018 | 4,148 | ||||||||||
2019 | 779 | ||||||||||
2020 and thereafter | 1,047 | ||||||||||
| | | | | |||||||
$ | 28,303 | ||||||||||
| | | | | |||||||
| | | | | |||||||
DERIVATIVES_AND_HEDGING_ACTIVI1
DERIVATIVES AND HEDGING ACTIVITIES: (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES: | ||||||||||||||
Schedule of fair value of derivative contracts | ||||||||||||||
Derivative | Derivative | |||||||||||||
Assets | Liabilities | |||||||||||||
Reported in | Reported in | |||||||||||||
Other | Other | |||||||||||||
Current Assets | Current | |||||||||||||
Liabilities | ||||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(in thousands) | ||||||||||||||
Foreign exchange contracts designated as cash flow hedges | $ | — | $ | 1,396 | $ | 3,562 | $ | — | ||||||
| | | | | | | | | | | | | | |
Total derivatives designated as hedging instruments | $ | — | $ | 1,396 | $ | 3,562 | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of designated derivative contracts as cash flow hedges and their impact on OCI | ||||||||||||||
The following table represents the balance of derivative contracts designated as cash flow hedges as of December 31, 2014 and 2013, and their impact on OCI for the year ended December 31, 2014 (in thousands): | ||||||||||||||
December 31, 2013 | $ | 1,396 | ||||||||||||
Amount of loss recognized in OCI (effective portion) | (6,281 | ) | ||||||||||||
Amount of loss reclassified from OCI to income (effective portion) | 1,239 | |||||||||||||
| | | | | ||||||||||
December 31, 2014 | $ | (3,646 | ) | |||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
Effect of derivative contracts on the condensed consolidated statement of operations | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Gain (loss) on foreign exchange contracts designated as cash flow hedges | $ | (1,239 | ) | $ | 6,027 | $ | (893 | ) | ||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
EMPLOYEE_BENEFIT_PLANS_Tables
EMPLOYEE BENEFIT PLANS: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
EMPLOYEE BENEFIT PLANS: | ||||||||
Schedule of severance pay details | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
(in thousands) | ||||||||
Accrued severance liability | $ | 11,850 | $ | 13,418 | ||||
Severance assets | 9,474 | 10,630 | ||||||
| | | | | | | | |
Unfunded portion | $ | 2,376 | $ | 2,788 | ||||
| | | | | | | | |
| | | | | | | | |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
COMMITMENTS AND CONTINGENCIES: | ||||||||
Schedule of future minimum payments under non-cancelable operating and capital leases | ||||||||
Year Ended December 31, | Capital | Operating | ||||||
Leases | Leases | |||||||
(in thousands) | ||||||||
2015 | $ | 1,115 | $ | 15,253 | ||||
2016 | 512 | 9,730 | ||||||
2017 | — | 6,687 | ||||||
2018 | — | 4,398 | ||||||
2019 and beyond | — | 8,202 | ||||||
| | | | | | | | |
Total minimum lease payments | $ | 1,627 | $ | 44,270 | ||||
| | | | | | | | |
| | | | | | | | |
Less: Amount representing interest | (31 | ) | ||||||
| | | | | | | | |
Present value of capital lease obligations | 1,596 | |||||||
Less: Current portion | (1,102 | ) | ||||||
| | | | | | | | |
Long-term portion of capital lease obligations | $ | 494 | ||||||
| | | | | | | | |
| | | | | | | | |
SHARE_INCENTIVE_PLANS_Tables
SHARE INCENTIVE PLANS: (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
SHARE INCENTIVE PLANS: | ||||||||||||||||||||
Summary of share option awards activity under equity incentive plans | ||||||||||||||||||||
Options Outstanding | ||||||||||||||||||||
Number | Weighted | |||||||||||||||||||
of Shares | Average | |||||||||||||||||||
Exercise | ||||||||||||||||||||
Price | ||||||||||||||||||||
Outstanding at December 31, 2012 | 3,285,922 | $ | 29.74 | |||||||||||||||||
Options granted | 31,653 | $ | 18.3 | |||||||||||||||||
Options exercised | (376,588 | ) | $ | 14.08 | ||||||||||||||||
Options canceled | (134,763 | ) | $ | 62.47 | ||||||||||||||||
| | | | | | | | |||||||||||||
Outstanding at December 31, 2013 | 2,806,224 | $ | 30.14 | |||||||||||||||||
Options granted | 50,000 | $ | 32.64 | |||||||||||||||||
Options exercised | (265,990 | ) | $ | 18.23 | ||||||||||||||||
Options canceled | (122,711 | ) | $ | 69.01 | ||||||||||||||||
| | | | | | | | |||||||||||||
Outstanding at December 31, 2014 | 2,467,523 | $ | 29.55 | |||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
Schedule of options outstanding and exercisable by exercise price range | ||||||||||||||||||||
Options Outstanding at | Options Exercisable at | |||||||||||||||||||
December 31, 2014 | December 31, 2014 | |||||||||||||||||||
Range of Exercise Price | Number | Weighted | Weighted | Number | Weighted | |||||||||||||||
Outstanding | Average | Average | Exercisable | Average | ||||||||||||||||
Remaining | Exercise | Exercise | ||||||||||||||||||
Contractual | Price | Price | ||||||||||||||||||
Life (Years) | ||||||||||||||||||||
$3.13 - $8.23 | 287,784 | 3.56 | $ | 7.96 | 287,784 | $ | 7.96 | |||||||||||||
$8.45 - $9.19 | 271,468 | 2.44 | $ | 9.06 | 271,468 | $ | 9.06 | |||||||||||||
$10.23 - $10.23 | 504,293 | 4.29 | $ | 10.23 | 504,293 | $ | 10.23 | |||||||||||||
$10.50 - $18.87 | 249,923 | 4.50 | $ | 14.37 | 246,273 | $ | 14.33 | |||||||||||||
$18.97 - $29.03 | 287,210 | 5.54 | $ | 24.38 | 279,027 | $ | 24.28 | |||||||||||||
$29.58 - $35.12 | 312,872 | 7.11 | $ | 32.66 | 214,539 | $ | 32.63 | |||||||||||||
$35.60 - $57.41 | 170,860 | 7.17 | $ | 51.14 | 116,225 | $ | 51.08 | |||||||||||||
$66.07 - $66.07 | 141,478 | 7.34 | $ | 66.07 | 89,004 | $ | 66.07 | |||||||||||||
$79.38 - $79.38 | 17,700 | 7.83 | $ | 79.38 | 9,334 | $ | 79.38 | |||||||||||||
$101.37 - $101.37 | 223,935 | 7.37 | $ | 101.37 | 132,968 | $ | 101.37 | |||||||||||||
| | | | | | | | | | | | | | | | | ||||
$3.13 - $101.37 | 2,467,523 | 5.20 | $ | 29.55 | 2,150,915 | $ | 24.76 | |||||||||||||
| | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | ||||
Summary of restricted share units activity | ||||||||||||||||||||
Restricted Share | ||||||||||||||||||||
Units Outstanding | ||||||||||||||||||||
Number of | Weighted | |||||||||||||||||||
Shares | Average | |||||||||||||||||||
Grant Date | ||||||||||||||||||||
Fair Value | ||||||||||||||||||||
Non-vested restricted share units at December 31, 2012 | 1,763,160 | $ | 36.29 | |||||||||||||||||
Restricted share units granted | 1,162,133 | 49.05 | ||||||||||||||||||
Restricted share units vested | (778,084 | ) | 31.16 | |||||||||||||||||
Restricted share units canceled | (172,755 | ) | 42.49 | |||||||||||||||||
| | | | | | | | |||||||||||||
Non-vested restricted share units at December 31, 2013 | 1,974,454 | $ | 43.81 | |||||||||||||||||
| | | | | | | | |||||||||||||
Restricted share units granted | 970,970 | 37.35 | ||||||||||||||||||
Restricted share units vested | (827,396 | ) | 42.03 | |||||||||||||||||
Restricted share units canceled | (206,862 | ) | 40.91 | |||||||||||||||||
| | | | | | | | |||||||||||||
Non-vested restricted share units at December 31, 2014 | 1,911,166 | $ | 41.61 | |||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
Summary of ordinary shares reserved for future issuance under equity incentive plans | ||||||||||||||||||||
Number of | ||||||||||||||||||||
Shares | ||||||||||||||||||||
Share options outstanding | 2,467,523 | |||||||||||||||||||
Restricted share units outstanding | 1,911,166 | |||||||||||||||||||
Shares authorized for future issuance | 1,510,930 | |||||||||||||||||||
ESPP shares available for future issuance | 851,059 | |||||||||||||||||||
| | | | | ||||||||||||||||
Total shares reserved for future issuance as of December 31, 2014 | 6,740,678 | |||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
Schedule of weighted average assumptions used to value share options granted | ||||||||||||||||||||
Employee Share | Employee Share | |||||||||||||||||||
Options | Purchase Plan | |||||||||||||||||||
Year Ended | Year Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||
Dividend yield, % | — | — | — | — | — | — | ||||||||||||||
Expected volatility, % | 56.07 | 57.5 | 56.6 | 46.63 | 56.18 | 68.05 | ||||||||||||||
Risk free interest rate, % | 1.98 | 1.54 | 1.02 | 0.05 | 0.07 | 0.12 | ||||||||||||||
Expected life, years | 5.77 | 4.72 | 6.25 | 0.50 | 0.53 | 0.53 | ||||||||||||||
Summary of the distribution of total share-based compensation expense | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Share-based compensation expense by caption: | ||||||||||||||||||||
Cost of goods sold | $ | 2,162 | $ | 1,828 | $ | 1,621 | ||||||||||||||
Research and development | 26,979 | 25,956 | 19,356 | |||||||||||||||||
Sales and marketing | 9,755 | 9,198 | 8,055 | |||||||||||||||||
General and administrative | 8,339 | 8,156 | 5,987 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total share-based compensation expense | $ | 47,235 | $ | 45,138 | $ | 35,019 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Share-based compensation expense by type of award: | ||||||||||||||||||||
Share options | $ | 8,974 | $ | 12,460 | $ | 14,104 | ||||||||||||||
ESPP | 3,976 | 3,938 | 2,851 | |||||||||||||||||
RSU | 34,285 | 28,740 | 18,064 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total share-based compensation expense | $ | 47,235 | $ | 45,138 | $ | 35,019 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | |||||||||||
Summary of the changes in accumulated balances of other comprehensive income (loss) | |||||||||||
Unrealized | Gains / Losses | Total | |||||||||
Gains / Losses on | on Derivatives | ||||||||||
Available-for- | |||||||||||
Sale Securities | |||||||||||
(in thousands) | |||||||||||
Balance at December 31, 2013 | $ | (6 | ) | $ | 1,396 | $ | 1,390 | ||||
Other comprehensive income/loss before reclassifications | (378 | ) | (6,281 | ) | (6,659 | ) | |||||
Amounts reclassified from accumulated other comprehensive income/loss | 10 | 1,239 | 1,249 | ||||||||
| | | | | | | | | | | |
Net current-period other comprehensive income/loss, net of taxes | (368 | ) | (5,042 | ) | (5,410 | ) | |||||
| | | | | | | | | | | |
Balance at December 31, 2014 | $ | (374 | ) | $ | (3,646 | ) | $ | (4,020 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
Balance at December 31, 2012 | $ | (148 | ) | $ | 2,942 | $ | 2,794 | ||||
Other comprehensive income/loss before reclassifications | 148 | 4,481 | 4,629 | ||||||||
Amounts reclassified from accumulated other comprehensive income/loss | (6 | ) | (6,027 | ) | (6,033 | ) | |||||
| | | | | | | | | | | |
Net current-period other comprehensive income/loss, net of taxes | 142 | (1,546 | ) | (1,404 | ) | ||||||
| | | | | | | | | | | |
Balance at December 31, 2013 | $ | (6 | ) | $ | 1,396 | $ | 1,390 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of reclassifications out of accumulated other comprehensive income (loss) | |||||||||||
The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2014: | |||||||||||
Details about Accumulated Other | Amount | Affected Line Item in the | |||||||||
Comprehensive Income / Loss Components | Reclassified | Statement of Operations | |||||||||
from Other | |||||||||||
Comprehensive | |||||||||||
Income / Loss | |||||||||||
(in thousands) | |||||||||||
Losses on Derivatives | $ | 1,239 | Cost of revenues and Operating expenses | ||||||||
| | | | | | ||||||
87 | Cost of revenues | ||||||||||
969 | Research and development | ||||||||||
92 | Sales and marketing | ||||||||||
91 | General and administrative | ||||||||||
Unrealized gains (losses) on Available-for-Sale Securities | 10 | Other income, net | |||||||||
| | | | | | ||||||
Total reclassifications for the period | $ | 1,249 | Total | ||||||||
| | | | | | ||||||
| | | | | | ||||||
The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2013: | |||||||||||
Details about Accumulated Other | Amount | Affected Line Item in the | |||||||||
Comprehensive Income / Loss Components | Reclassified | Statement of Operations | |||||||||
from Other | |||||||||||
Comprehensive | |||||||||||
Income / Loss | |||||||||||
(in thousands) | |||||||||||
Gains on Derivatives | $ | 6,027 | Cost of revenues and Operating expenses | ||||||||
| | | | | | ||||||
363 | Cost of revenues | ||||||||||
4,653 | Research and development | ||||||||||
508 | Sales and marketing | ||||||||||
503 | General and administrative | ||||||||||
| | | | | | ||||||
6,027 | |||||||||||
Unrealized gains (losses) on Available-for-Sale Securities | 6 | Other income, net | |||||||||
| | | | | | ||||||
Total reclassifications for the period | $ | 6,033 | Total | ||||||||
| | | | | | ||||||
| | | | | | ||||||
INCOME_TAXES_Tables
INCOME TAXES: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
INCOME TAXES: | |||||||||||
Components of income (loss) before income taxes | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
United States | $ | (10,260 | ) | $ | (2,463 | ) | $ | 6,343 | |||
Foreign | 4,518 | (17,127 | ) | 113,795 | |||||||
| | | | | | | | | | | |
Income (loss) before income taxes | $ | (5,742 | ) | $ | (19,590 | ) | $ | 120,138 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of the components of the provision for income taxes | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Current: | |||||||||||
U.S. federal | $ | 162 | $ | 1,989 | $ | 6,178 | |||||
State and local | 163 | 508 | 890 | ||||||||
Foreign | 4,683 | 3,110 | 4,573 | ||||||||
| | | | | | | | | | | |
5,008 | 5,607 | 11,641 | |||||||||
| | | | | | | | | | | |
Deferred: | |||||||||||
U.S. federal | $ | 12,140 | $ | (1,174 | ) | $ | (2,805 | ) | |||
State and local | 1,539 | (219 | ) | (226 | ) | ||||||
Foreign | (420 | ) | (462 | ) | (423 | ) | |||||
| | | | | | | | | | | |
13,259 | (1,855 | ) | (3,454 | ) | |||||||
| | | | | | | | | | | |
Provision for taxes on income | $ | 18,267 | $ | 3,752 | $ | 8,187 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of significant deferred tax assets and liabilities | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(in thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Net operating loss and credit carryforwards | $ | 25,614 | $ | 44,706 | |||||||
Reserves and accruals | 7,633 | 8,961 | |||||||||
Depreciation and amortization | 16,487 | 942 | |||||||||
Other | 8,555 | 2,285 | |||||||||
| | | | | | | | ||||
Gross deferred tax assets | 58,289 | 56,894 | |||||||||
Valuation allowance | (46,220 | ) | (27,365 | ) | |||||||
| | | | | | | | ||||
Total deferred tax assets | 12,069 | 29,529 | |||||||||
| | | | | | | | ||||
Intangible assets | (11,551 | ) | (15,038 | ) | |||||||
| | | | | | | | ||||
Total deferred tax liabilities | (11,551 | ) | (15,038 | ) | |||||||
| | | | | | | | ||||
Net deferred tax assets | $ | 518 | $ | 14,491 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Tax at statutory rate | 35 | % | 35 | % | 35 | % | |||||
State, net of federal benefit | (28.6 | ) | 2.9 | 0.5 | |||||||
Meals and entertainment | (1.3 | ) | (0.4 | ) | 0.1 | ||||||
Tax at rates other than the statutory rate | 56.1 | (35.7 | ) | (32.9 | ) | ||||||
Valuation allowance | (280.6 | ) | — | — | |||||||
Share-based compensation | (4.0 | ) | (4.6 | ) | (0.1 | ) | |||||
Net change in tax reserves | (87.4 | ) | (15.9 | ) | 4.8 | ||||||
Other, net | (7.3 | ) | (0.5 | ) | (0.6 | ) | |||||
| | | | | | | | | | | |
Provision for taxes | (318.1 | )% | (19.2 | )% | 6.8 | % | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of reconciliation of unrecognized tax benefits, excluding penalties and interest | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Gross unrecognized tax benefits, beginning of the period | $ | 23,585 | $ | 9,716 | $ | 4,063 | |||||
Increases in tax positions for prior years | 299 | 444 | 120 | ||||||||
Decreases in tax positions for prior years | (10,339 | ) | (11 | ) | — | ||||||
Increases in tax positions for current year | 5,170 | 3,029 | 5,533 | ||||||||
Increases in tax positions acquired or assumed in a business combination | — | 11,037 | — | ||||||||
Decreases due to statute of limitations | (678 | ) | (630 | ) | — | ||||||
| | | | | | | | | | | |
Gross unrecognized tax benefits, end of the period | $ | 18,037 | $ | 23,585 | $ | 9,716 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
GEOGRAPHIC_INFORMATION_AND_REV1
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: | |||||||||||
Schedule of revenues by geographic region | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
United States | $ | 202,921 | $ | 175,491 | $ | 220,157 | |||||
China | 65,204 | 67,517 | 102,957 | ||||||||
Europe | 72,181 | 51,973 | 62,788 | ||||||||
Other Americas | 19,760 | 16,869 | 26,000 | ||||||||
Other Asia | 103,583 | 78,586 | 88,373 | ||||||||
| | | | | | | | | | | |
Total revenue | $ | 463,649 | $ | 390,436 | $ | 500,275 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of property and equipment, net by geographic location | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | ||||||||||
(in thousands) | |||||||||||
Israel | $ | 69,004 | $ | 66,983 | |||||||
United States | 7,849 | 3,094 | |||||||||
Other | 1,974 | 1,838 | |||||||||
| | | | | | | | ||||
Total property and equipment, net | $ | 78,827 | $ | 71,915 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of revenues by product group and interconnect protocol | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
ICs | $ | 70,840 | $ | 56,817 | $ | 95,103 | |||||
Boards | 147,738 | 119,399 | 155,670 | ||||||||
Switch systems | 147,403 | 145,184 | 168,231 | ||||||||
Cables, accessories and other | 97,668 | 69,036 | 81,271 | ||||||||
| | | | | | | | | | | |
Total revenue | $ | 463,649 | $ | 390,436 | $ | 500,275 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
InfiniBand: | |||||||||||
FDR | $ | 264,785 | $ | 200,300 | $ | 236,728 | |||||
QDR | 56,711 | 86,784 | 175,650 | ||||||||
DDR/SDR | 16,179 | 21,211 | 33,457 | ||||||||
| | | | | | | | | | | |
Total | 337,675 | 308,295 | 445,835 | ||||||||
Ethernet | 83,470 | 52,908 | 42,523 | ||||||||
Other | 42,504 | 29,233 | 11,917 | ||||||||
| | | | | | | | | | | |
Total revenue | $ | 463,649 | $ | 390,436 | $ | 500,275 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
OTHER_INCOME_NET_Tables
OTHER INCOME, NET: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
OTHER INCOME, NET: | |||||||||||
Schedule of other income, net | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Interest income and gain on sale of investments, net | $ | 1,952 | $ | 1,738 | $ | 1,699 | |||||
Foreign exchange gain (loss) | (245 | ) | (309 | ) | (294 | ) | |||||
Other | (258 | ) | (201 | ) | (146 | ) | |||||
| | | | | | | | | | | |
Total other income, net | $ | 1,449 | $ | 1,228 | $ | 1,259 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
THE_COMPANY_AND_SUMMARY_OF_SIG3
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Short-term investments | |||
Minimum stated maturity period | 1 year | ||
Restricted cash and deposits | |||
ST Restricted Cash deposits | 3,600,000 | ||
LT Restricted Cash deposits in banks | 3,500,000 | ||
Long-term restricted cash | 3,514,000 | ||
Revenues | Consolidated revenue | IBM | |||
Concentration of credit risk | |||
Percentage of consolidated revenue by major customer | 10.00% | 17.00% | 19.00% |
Revenues | Consolidated revenue | Dell | |||
Concentration of credit risk | |||
Percentage of consolidated revenue by major customer | 11.00% | ||
Revenues | Consolidated revenue | Dell | Maximum | |||
Concentration of credit risk | |||
Percentage of consolidated revenue by major customer | 10.00% | 10.00% | |
Revenues | Consolidated revenue | Hewlett Packard | |||
Concentration of credit risk | |||
Percentage of consolidated revenue by major customer | 11.00% | 13.00% | 20.00% |
Accounts receivable | Consolidated revenue | IBM | |||
Concentration of credit risk | |||
Percentage of consolidated revenue by major customer | 11.00% | 11.00% | |
Accounts receivable | Consolidated revenue | Hewlett Packard | |||
Concentration of credit risk | |||
Percentage of consolidated revenue by major customer | 17.00% | 12.00% | |
Accounts receivable | Consolidated revenue | Ingram Micro | |||
Concentration of credit risk | |||
Percentage of consolidated revenue by major customer | 10.00% | ||
Accounts receivable | Consolidated revenue | Ingram Micro | Maximum | |||
Concentration of credit risk | |||
Percentage of consolidated revenue by major customer | 10.00% |
THE_COMPANY_AND_SUMMARY_OF_SIG4
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 2) | 12 Months Ended |
Dec. 31, 2014 | |
Computers, software license rights and other electronic equipments | Minimum | |
Property and equipment, net: | |
Estimated useful lives | 3 years |
Computers, software license rights and other electronic equipments | Maximum | |
Property and equipment, net: | |
Estimated useful lives | 5 years |
Office furniture and equipment | Minimum | |
Property and equipment, net: | |
Estimated useful lives | 7 years |
Office furniture and equipment | Maximum | |
Property and equipment, net: | |
Estimated useful lives | 15 years |
Capitalized costs of fabrication masks | |
Property and equipment, net: | |
Estimated useful lives | 12 months |
THE_COMPANY_AND_SUMMARY_OF_SIG5
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Product warranty | |||
Maximum warranty period | 3 years | ||
Changes in the entity's liability for product warranty | |||
Balance, beginning of the period | $3,209,000 | $4,318,000 | |
New warranties issued during the period | 3,072,000 | 8,584,000 | |
Reversal of warranty reserves | -197,000 | ||
Settlements during the period | -4,576,000 | -9,269,000 | |
Less: long term portion of product warranty liability | -424,000 | -424,000 | |
Balance, end of the period | 1,508,000 | 3,209,000 | 4,318,000 |
Balance, end of the period | 1,508,000 | 3,209,000 | |
Research and development | |||
Research and development | 208,877,000 | 169,382,000 | 138,310,000 |
Advertising | |||
Advertising expense | 700,000 | 900,000 | 1,100,000 |
Share-based compensation | |||
Income tax expense allocated | $100,000 | ||
Share options | |||
Share-based compensation | |||
Expected life | 5 years 9 months 7 days | 4 years 8 months 19 days | 6 years 3 months |
THE_COMPANY_AND_SUMMARY_OF_SIG6
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
item | |||
Net income per share | |||
Net income (loss) | ($24,009) | ($23,342) | $111,951 |
Basic and diluted shares: | |||
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 44,831,000 | 43,421,000 | 41,308,000 |
Dilutive effect of employee share option and purchase plan (in shares) | 0 | 2,593,000 | |
Shares used to compute diluted net income (loss) per share | 44,831,000 | 43,421,000 | 43,901,000 |
Net income (loss) per share - basic (in dollars per share) | ($0.54) | ($0.54) | $2.71 |
Net income (loss) per share - diluted (in dollars per share) | ($0.54) | ($0.54) | $2.55 |
Segment reporting | |||
Number of reportable segments | 1 | ||
Share options | |||
Net income per share | |||
Outstanding shares excluded from the computation of diluted net income per ordinary share | 700,000 | 800,000 | 300,000 |
BALANCE_SHEET_COMPONENTS_Detai
BALANCE SHEET COMPONENTS: (Details) (USD $) | Dec. 31, 2014 | Jan. 01, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Accounts receivable, net: | ||||
Accounts receivable | $65,594 | $70,119 | ||
Less: allowance for doubtful accounts | -672 | -639 | ||
Accounts receivable, net | 64,922 | 69,480 | ||
Inventories: | ||||
Raw materials | 5,725 | 4,385 | ||
Work-in-process | 13,874 | 12,694 | ||
Finished goods | 24,871 | 19,391 | ||
Inventories | 44,470 | 36,470 | ||
Deferred taxes and other current assets: | ||||
Prepaid expenses | 8,040 | 5,929 | ||
Derivative contracts receivable | 1,396 | |||
Deferred taxes | 2,271 | 7,336 | ||
VAT receivable | 6,117 | 1,900 | ||
Other | 1,719 | 1,020 | ||
Deferred taxes and other current assets | 18,147 | 17,581 | ||
Property and equipment, net: | ||||
Property and equipment, gross | 160,921 | 127,885 | ||
Less: Accumulated depreciation and amortization | -82,094 | -55,970 | ||
Property and equipment, net | 78,827 | 71,915 | ||
Deferred taxes and other long-term assets: | ||||
Equity investments in private companies | 10,736 | 7,548 | ||
Deferred taxes | 389 | 7,155 | ||
Restricted cash | 3,514 | |||
Other assets | 4,475 | 2,396 | ||
Deferred taxes and other long-term assets | 15,600 | 20,613 | ||
Accrued liabilities: | ||||
Payroll and related expenses | 31,254 | 27,822 | ||
Accrued expenses | 21,171 | 16,106 | ||
Product warranty liability | 1,508 | 3,633 | 3,209 | 4,318 |
Derivative contracts payable | 3,562 | |||
Other | 4,479 | 3,874 | ||
Accrued liabilities | 61,974 | 51,011 | ||
Other long-term liabilities: | ||||
Income tax payable | 18,174 | 13,026 | ||
Deferred rent | 2,337 | 3,072 | ||
Other | 2,024 | 1,792 | ||
Other long-term liabilities | 22,535 | 17,890 | ||
Computer equipment and software | ||||
Property and equipment, net: | ||||
Property and equipment, gross | 124,370 | 92,468 | ||
Furniture and fixtures | ||||
Property and equipment, net: | ||||
Property and equipment, gross | 3,256 | 3,809 | ||
Leasehold improvements | ||||
Property and equipment, net: | ||||
Property and equipment, gross | $33,295 | $31,608 |
BUSINESS_COMBINATION_Details
BUSINESS COMBINATION: (Details) (USD $) | 12 Months Ended | 1 Months Ended | 0 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 15, 2013 | Jul. 02, 2013 | Aug. 15, 2013 | |
Details of purchase consideration | ||||||
Cash Assumed | $2,464,000 | $2,464,000 | ||||
Compensation expense | 47,235,000 | 45,138,000 | 35,019,000 | |||
Compensation expenses recognition period | 1 year 11 months 19 days | |||||
Purchase price allocation: | ||||||
Intangible assets | 44,746,000 | |||||
Goodwill | 200,743,000 | 199,196,000 | ||||
RSUs | ||||||
Details of purchase consideration | ||||||
Units issued (in shares) | 970,970 | 1,162,133 | ||||
Compensation expense | 34,285,000 | 28,740,000 | 18,064,000 | |||
Share options | ||||||
Details of purchase consideration | ||||||
Fair value (in dollars per share) | $42.73 | $39.97 | ||||
Compensation expense | 8,974,000 | 12,460,000 | 14,104,000 | |||
Weighted average assumptions | ||||||
Expected life | 5 years 9 months 7 days | 4 years 8 months 19 days | 6 years 3 months | |||
Volatility (as a percent) | 56.07% | 57.50% | 56.60% | |||
Risk-free interest rate (as a percent) | 1.98% | 1.54% | 1.02% | |||
Share value (in dollars per share) | $42.73 | $39.97 | ||||
IPtronics and Kotura | ||||||
Details of purchase consideration | ||||||
Cash Consideration Paid | 125,697,000 | |||||
Cash Assumed | 2,178,000 | |||||
Net Cash Paid | 123,519,000 | |||||
Purchase price allocation: | ||||||
Current assets, net of cash | 8,140,000 | |||||
Other long-term assets | 11,577,000 | |||||
Intangible assets | 44,746,000 | |||||
Goodwill | 66,311,000 | |||||
Total assets | 130,774,000 | |||||
Current liabilities | -6,025,000 | |||||
Long-term liabilities | -1,230,000 | |||||
Total liabilities | -7,255,000 | |||||
Total preliminary purchase price allocation | 123,519,000 | |||||
IPtronics A/S | ||||||
Details of purchase consideration | ||||||
Cash Consideration Paid | 44,925,000 | |||||
Cash Assumed | 2,077,000 | |||||
Net Cash Paid | 42,848,000 | |||||
Purchase price allocation: | ||||||
Current assets, net of cash | 2,534,000 | |||||
Other long-term assets | 974,000 | |||||
Intangible assets | 17,229,000 | |||||
Goodwill | 25,630,000 | |||||
Total assets | 46,367,000 | |||||
Current liabilities | -2,668,000 | |||||
Long-term liabilities | -851,000 | |||||
Total liabilities | -3,519,000 | |||||
Total preliminary purchase price allocation | 42,848,000 | |||||
IPtronics A/S | RSUs | ||||||
Details of purchase consideration | ||||||
Units issued (in shares) | 60,508 | |||||
Aggregate value | 3,000,000 | |||||
Fair value (in dollars per share) | $49.92 | |||||
Compensation expense | 3,000,000 | |||||
Vesting period | 4 years | |||||
Weighted average assumptions | ||||||
Share value (in dollars per share) | $49.92 | |||||
Kotura, Inc. | ||||||
Details of purchase consideration | ||||||
Cash Consideration Paid | 80,772,000 | |||||
Cash Assumed | 101,000 | |||||
Net Cash Paid | 2,253,000 | 123,519,000 | 80,671,000 | |||
Purchase price allocation: | ||||||
Current assets, net of cash | 5,606,000 | 5,606,000 | ||||
Other long-term assets | 10,603,000 | 10,603,000 | ||||
Intangible assets | 27,517,000 | 27,517,000 | ||||
Goodwill | 40,681,000 | 40,681,000 | ||||
Total assets | 84,407,000 | 84,407,000 | ||||
Current liabilities | -3,357,000 | -3,357,000 | ||||
Long-term liabilities | -379,000 | -379,000 | ||||
Total liabilities | -3,736,000 | -3,736,000 | ||||
Total preliminary purchase price allocation | 80,671,000 | 80,671,000 | ||||
Kotura, Inc. | RSUs and options | ||||||
Details of purchase consideration | ||||||
Aggregate value | 6,400,000 | |||||
Compensation expense | $6,400,000 | |||||
Kotura, Inc. | RSUs and options | Minimum | ||||||
Details of purchase consideration | ||||||
Compensation expenses recognition period | 1 day | |||||
Kotura, Inc. | RSUs and options | Maximum | ||||||
Details of purchase consideration | ||||||
Compensation expenses recognition period | 4 years | |||||
Kotura, Inc. | RSUs | ||||||
Details of purchase consideration | ||||||
Units issued (in shares) | 145,425 | |||||
Fair value (in dollars per share) | $42.19 | $42.19 | ||||
Weighted average assumptions | ||||||
Share value (in dollars per share) | $42.19 | $42.19 | ||||
Kotura, Inc. | Share options | ||||||
Details of purchase consideration | ||||||
Options issues (in shares) | 31,653 | |||||
Weighted average assumptions | ||||||
Expected life | 4 years 8 months 19 days | |||||
Volatility (as a percent) | 57.50% | |||||
Risk-free interest rate (as a percent) | 1.54% | |||||
Dividend yield (as a percent) | 0.00% |
BUSINESS_COMBINATION_Details_2
BUSINESS COMBINATION: (Details 2) (USD $) | 1 Months Ended | 12 Months Ended | 0 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Aug. 15, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jul. 02, 2013 | Aug. 15, 2013 |
Identifiable intangible assets | ||||||
Purchased intangible assets | $44,746 | |||||
IPtronics and Kotura | ||||||
Identifiable intangible assets | ||||||
Purchased intangible assets | 44,746 | |||||
Valuations of IPR&D at acquisition | ||||||
Estimated cost to complete | 26,759 | |||||
Fair value | 13,764 | 13,764 | ||||
Unaudited pro forma information | ||||||
Pro forma net revenue | 402,107 | 521,780 | ||||
Pro forma net income (loss) | -30,613 | 100,748 | ||||
Pro forma net income (loss) per share basic (in dollars per share) | ($0.71) | $2.44 | ||||
Pro forma net income (loss) per share diluted (in dollars per share) | ($0.71) | $2.29 | ||||
IPtronics A/S | ||||||
Identifiable intangible assets | ||||||
Purchased intangible assets | 17,229 | |||||
Kotura, Inc. | ||||||
Identifiable intangible assets | ||||||
Purchased intangible assets | 27,517 | 27,517 | ||||
Licensed technology | IPtronics and Kotura | ||||||
Identifiable intangible assets | ||||||
Purchased intangible assets | 135 | |||||
Weighted average useful life | 6 years | |||||
Developed technology | IPtronics and Kotura | ||||||
Identifiable intangible assets | ||||||
Purchased intangible assets | 27,701 | |||||
Weighted average useful life | 5 years | |||||
Developed technology | IPtronics A/S | ||||||
Identifiable intangible assets | ||||||
Risk Adjusted Discount Rate (as a percent) | 17.50% | |||||
Developed technology | Kotura, Inc. | ||||||
Identifiable intangible assets | ||||||
Risk Adjusted Discount Rate (as a percent) | 15.50% | |||||
In-process research and development | IPtronics and Kotura | ||||||
Identifiable intangible assets | ||||||
Purchased intangible assets | 13,764 | |||||
Number of projects completed | 0 | |||||
In-process research and development | IPtronics A/S | Modulator drivers - 4x25Gb/s | ||||||
Identifiable intangible assets | ||||||
Risk Adjusted Discount Rate (as a percent) | 19.50% | |||||
Valuations of IPR&D at acquisition | ||||||
Average Estimated time to complete | 18 months | |||||
Estimated cost to complete | 9,549 | |||||
Fair value | 4,121 | |||||
In-process research and development | Kotura, Inc. | Silicon photonics modulator - 4x25Gb/s | ||||||
Identifiable intangible assets | ||||||
Risk Adjusted Discount Rate (as a percent) | 16.50% | |||||
Valuations of IPR&D at acquisition | ||||||
Average Estimated time to complete | 18 months | |||||
Estimated cost to complete | 17,210 | |||||
Fair value | 9,643 | 9,643 | ||||
Customer relationship | IPtronics and Kotura | ||||||
Identifiable intangible assets | ||||||
Purchased intangible assets | 2,420 | |||||
Risk Adjusted Discount Rate (as a percent) | 15.50% | |||||
Customer relationship | IPtronics and Kotura | Minimum | ||||||
Identifiable intangible assets | ||||||
Weighted average useful life | 1 year | |||||
Customer relationship | IPtronics and Kotura | Maximum | ||||||
Identifiable intangible assets | ||||||
Weighted average useful life | 2 years | |||||
Backlog | IPtronics and Kotura | ||||||
Identifiable intangible assets | ||||||
Purchased intangible assets | $726 | |||||
Backlog | IPtronics and Kotura | Maximum | ||||||
Identifiable intangible assets | ||||||
Weighted average useful life | 1 year |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS: (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Financial assets measured at fair value | ||
Transfers between Level 1 and Level 2 | $0 | $0 |
Fair Value, Measurements, Recurring Basis | Level 1 | ||
Financial assets measured at fair value | ||
Financial assets | 4,426,000 | 20,000,000 |
Fair Value, Measurements, Recurring Basis | Level 1 | Money market funds | ||
Financial assets measured at fair value | ||
Financial assets | 4,426,000 | 20,000,000 |
Fair Value, Measurements, Recurring Basis | Level 2 | ||
Financial assets measured at fair value | ||
Financial assets | 334,038,000 | 264,924,000 |
Financial liabilities | 3,562,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Certificates of deposits | ||
Financial assets measured at fair value | ||
Financial assets | 80,275,000 | 67,769,000 |
Fair Value, Measurements, Recurring Basis | Level 2 | U.S. Government and agency securities | ||
Financial assets measured at fair value | ||
Financial assets | 99,114,000 | 69,879,000 |
Fair Value, Measurements, Recurring Basis | Level 2 | Commercial paper | ||
Financial assets measured at fair value | ||
Financial assets | 23,019,000 | 33,606,000 |
Fair Value, Measurements, Recurring Basis | Level 2 | Corporate bonds | ||
Financial assets measured at fair value | ||
Financial assets | 111,736,000 | 92,274,000 |
Fair Value, Measurements, Recurring Basis | Level 2 | Municipal Bonds | ||
Financial assets measured at fair value | ||
Financial assets | 13,104,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Foreign government bonds | ||
Financial assets measured at fair value | ||
Financial assets | 6,790,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Derivative contracts | ||
Financial assets measured at fair value | ||
Financial assets | 1,396,000 | |
Financial liabilities | 3,562,000 | |
Fair Value, Measurements, Recurring Basis | Total | ||
Financial assets measured at fair value | ||
Financial assets | 338,464,000 | 284,924,000 |
Financial liabilities | 3,562,000 | |
Fair Value, Measurements, Recurring Basis | Total | Money market funds | ||
Financial assets measured at fair value | ||
Financial assets | 4,426,000 | 20,000,000 |
Fair Value, Measurements, Recurring Basis | Total | Certificates of deposits | ||
Financial assets measured at fair value | ||
Financial assets | 80,275,000 | 67,769,000 |
Fair Value, Measurements, Recurring Basis | Total | U.S. Government and agency securities | ||
Financial assets measured at fair value | ||
Financial assets | 99,114,000 | 69,879,000 |
Fair Value, Measurements, Recurring Basis | Total | Commercial paper | ||
Financial assets measured at fair value | ||
Financial assets | 23,019,000 | 33,606,000 |
Fair Value, Measurements, Recurring Basis | Total | Corporate bonds | ||
Financial assets measured at fair value | ||
Financial assets | 111,736,000 | 92,274,000 |
Fair Value, Measurements, Recurring Basis | Total | Municipal Bonds | ||
Financial assets measured at fair value | ||
Financial assets | 13,104,000 | |
Fair Value, Measurements, Recurring Basis | Total | Foreign government bonds | ||
Financial assets measured at fair value | ||
Financial assets | 6,790,000 | |
Fair Value, Measurements, Recurring Basis | Total | Derivative contracts | ||
Financial assets measured at fair value | ||
Financial assets | 1,396,000 | |
Financial liabilities | $3,562,000 |
INVESTMENTS_Details
INVESTMENTS: (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
item | ||
Amortized Cost | ||
Total | $385,876,000 | $326,698,000 |
Less amounts classified as cash and cash equivalents | -51,326,000 | -63,164,000 |
Short term investments, amortized cost | 334,550,000 | 263,534,000 |
Unrealized Gains (Losses) | ||
Unrealized Gains | 29,000 | 48,000 |
Unrealized Losses | -541,000 | -54,000 |
Estimated Fair Value | ||
Short term investments, fair value | 385,364,000 | 326,692,000 |
Less amounts classified as cash and cash equivalents | -51,326,000 | -63,164,000 |
Short-term investments classified as available-for-sale securities | 334,038,000 | 263,528,000 |
Realized gains (losses), net upon the sale of marketable securities | -400,000 | 1,200,000 |
Amortized cost | ||
Due in less than one year | 129,150,000 | 190,172,000 |
Due in one to three years | 205,400,000 | 73,362,000 |
Amortized cost | 334,550,000 | 263,534,000 |
Estimated fair value | ||
Due in less than one year | 129,155,000 | 190,189,000 |
Due in one to three years | 204,883,000 | 73,339,000 |
Estimated fair value | 334,038,000 | 263,528,000 |
Investment in a privately-held companies accounted for under the cost method | 10,700,000 | 7,500,000 |
Number of privately-held companies in which the entity held investments | 3 | |
Cash | ||
Amortized Cost | ||
Total | 46,900,000 | 43,164,000 |
Estimated Fair Value | ||
Short term investments, fair value | 46,900,000 | 43,164,000 |
Money market funds | ||
Amortized Cost | ||
Total | 4,426,000 | 20,000,000 |
Estimated Fair Value | ||
Short term investments, fair value | 4,426,000 | 20,000,000 |
Certificates of deposits | ||
Amortized Cost | ||
Total | 80,304,000 | 67,775,000 |
Unrealized Gains (Losses) | ||
Unrealized Gains | 1,000 | 1,000 |
Unrealized Losses | -30,000 | -7,000 |
Estimated Fair Value | ||
Short term investments, fair value | 80,275,000 | 67,769,000 |
U.S. Government and agency securities | ||
Amortized Cost | ||
Total | 99,236,000 | 69,859,000 |
Unrealized Gains (Losses) | ||
Unrealized Gains | 9,000 | 22,000 |
Unrealized Losses | -131,000 | -2,000 |
Estimated Fair Value | ||
Short term investments, fair value | 99,114,000 | 69,879,000 |
Commercial paper | ||
Amortized Cost | ||
Total | 23,017,000 | 33,602,000 |
Unrealized Gains (Losses) | ||
Unrealized Gains | 3,000 | 9,000 |
Unrealized Losses | -1,000 | -5,000 |
Estimated Fair Value | ||
Short term investments, fair value | 23,019,000 | 33,606,000 |
Corporate bonds | ||
Amortized Cost | ||
Total | 112,033,000 | 92,298,000 |
Unrealized Gains (Losses) | ||
Unrealized Gains | 16,000 | 16,000 |
Unrealized Losses | -313,000 | -40,000 |
Estimated Fair Value | ||
Short term investments, fair value | 111,736,000 | 92,274,000 |
Municipal Bonds | ||
Amortized Cost | ||
Total | 13,151,000 | |
Unrealized Gains (Losses) | ||
Unrealized Losses | -47,000 | |
Estimated Fair Value | ||
Short term investments, fair value | -13,104,000 | |
Foreign government bonds | ||
Amortized Cost | ||
Total | 6,809,000 | |
Unrealized Gains (Losses) | ||
Unrealized Losses | -19,000 | |
Estimated Fair Value | ||
Short term investments, fair value | $6,790,000 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS: (Details) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Changes in the carrying amount of goodwill | |
Balance at the beginning of the period | $199,196 |
Goodwill from Integrity acquisition | 1,547 |
Balance at the end of the period | $200,743 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS: (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Intangible assets | |||
Gross carrying value of amortizable intangible assets | $85,548,000 | $87,803,000 | |
Accumulated Amortization | -43,481,000 | -33,554,000 | |
Net carrying value of amortizable intangible assets | 42,067,000 | 54,249,000 | |
Amortization expense of intangible assets | 12,200,000 | 14,000,000 | 9,300,000 |
Total amortizable intangible assets, excluding IPR&D | |||
Intangible assets | |||
Gross carrying value of amortizable intangible assets | 71,784,000 | 74,039,000 | |
Accumulated Amortization | -43,481,000 | -33,554,000 | |
Net carrying value of amortizable intangible assets | 28,303,000 | 40,485,000 | |
Licensed technology | |||
Intangible assets | |||
Gross carrying value of amortizable intangible assets | 2,344,000 | 2,344,000 | |
Accumulated Amortization | -917,000 | -366,000 | |
Net carrying value of amortizable intangible assets | 1,427,000 | 1,978,000 | |
Developed technology | |||
Intangible assets | |||
Gross carrying value of amortizable intangible assets | 56,064,000 | 56,064,000 | |
Accumulated Amortization | -32,130,000 | -24,654,000 | |
Net carrying value of amortizable intangible assets | 23,934,000 | 31,410,000 | |
Customer relationship | |||
Intangible assets | |||
Gross carrying value of amortizable intangible assets | 13,376,000 | 13,376,000 | |
Accumulated Amortization | -10,434,000 | -6,279,000 | |
Net carrying value of amortizable intangible assets | 2,942,000 | 7,097,000 | |
Customer contract | |||
Intangible assets | |||
Gross carrying value of amortizable intangible assets | 1,529,000 | ||
Accumulated Amortization | -1,529,000 | ||
Backlog | |||
Intangible assets | |||
Gross carrying value of amortizable intangible assets | 726,000 | ||
Accumulated Amortization | -726,000 | ||
In-process research and development | |||
Intangible assets | |||
Gross carrying value of amortizable intangible assets | 13,764,000 | 13,764,000 | |
Net carrying value of amortizable intangible assets | $13,764,000 | $13,764,000 |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS: (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Estimated future amortization expenses from amortizable intangible assets | ||
2015 | $8,007 | |
2016 | 7,194 | |
2017 | 7,128 | |
2018 | 4,148 | |
2019 | 779 | |
2020 and thereafter | 1,047 | |
Net carrying value of amortizable intangible assets | $42,067 | $54,249 |
DERIVATIVES_AND_HEDGING_ACTIVI2
DERIVATIVES AND HEDGING ACTIVITIES: (Details) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
USD ($) | USD ($) | Foreign currency forward contract | Foreign currency forward contract | Foreign currency forward contract | Foreign currency forward contract | Foreign currency forward contract | Foreign currency forward contract | Foreign currency forward contract | |
USD ($) | ILS | USD ($) | ILS | Amount Reclassified from Other Comprehensive Income / Loss | Amount Reclassified from Other Comprehensive Income / Loss | Amount Reclassified from Other Comprehensive Income / Loss | |||
Gains / Losses on Derivatives | Gains / Losses on Derivatives | Gains / Losses on Derivatives | |||||||
USD ($) | USD ($) | USD ($) | |||||||
Derivatives and Hedging Activities | |||||||||
Future operating expenses hedged | $88,500,000 | 344,300,000 | $31,300,000 | 108,800,000 | |||||
Period over which operating expenses hedged will be expensed | 12 months | ||||||||
Derivative Assets Reported in Other Current Assets | |||||||||
Foreign exchange contracts designated as cash flow hedges | 1,396,000 | ||||||||
Total derivatives designated as hedging instruments | 3,562,000 | 1,396,000 | |||||||
Derivative Liabilities Reported in Other Current Liabilities | |||||||||
Foreign exchange contracts designated as cash flow hedges | 3,562,000 | ||||||||
Total derivatives designated as hedging instruments | 3,562,000 | 1,396,000 | |||||||
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | |||||||||
Balance at the beginning of the period | 1,396,000 | ||||||||
Amount of loss recognized in OCI (effective portion) | -6,281,000 | ||||||||
Amount of loss reclassified from OCI to income (effective portion) | 1,239,000 | ||||||||
Balance at the end of the period | -3,646,000 | ||||||||
Expected time to realize the accumulated OCI balance related to foreign exchange contracts | 12 months | ||||||||
Gain (loss) on foreign exchange contracts designated as cash flow hedges | ($1,239,000) | $6,027,000 | ($893,000) |
EMPLOYEE_BENEFIT_PLANS_Details
EMPLOYEE BENEFIT PLANS: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Severance pay details | |||
Accrued severance liability | $11,850,000 | $13,418,000 | |
Severance assets | 9,474,000 | 10,630,000 | |
Pretax savings plan under 401 (k) of the Internal Revenue Code | |||
Severance payments | |||
Employer contribution limit per calendar year (as a percent of base salary) | 4.00% | ||
Severance pay details | |||
Defined pension contribution plan expenses | 900,000 | 800,000 | 500,000 |
Israeli postemployment benefit plan | |||
Severance pay details | |||
Accrued severance liability | 11,850,000 | 13,418,000 | |
Severance assets | 9,474,000 | 10,630,000 | |
Unfunded portion | 2,376,000 | 2,788,000 | |
Company's contribution as a percentage of employee monthly salary to insurance policy or pension fund | 8.33% | ||
Company's contribution as a percentage of employee monthly salary to pension contribution plan | 6.00% | ||
Additional severance payments to employee | 0 | ||
Severance pay expenses | 6,800,000 | 6,100,000 | 4,300,000 |
Defined pension contribution plan expenses | $4,900,000 | $4,500,000 | $3,200,000 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES: (Details) (USD $) | 12 Months Ended | 0 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 19, 2013 | Feb. 22, 2013 | |
item | item | ||||
Leases | |||||
Rent expense of office space and motor vehicles under operating leases | $9,900,000 | $8,900,000 | $6,800,000 | ||
Property and equipment, gross under capital lease agreements | 1,600,000 | 2,800,000 | |||
Future minimum payments under non-cancelable capital leases | |||||
2015 | 1,115,000 | ||||
2016 | 512,000 | ||||
Total minimum lease payments | 1,627,000 | ||||
Less: Amount representing interest | -31,000 | ||||
Present value of capital lease obligations | 1,596,000 | ||||
Less: Current portion | -1,102,000 | -1,377,000 | |||
Long-term portion of capital lease obligations | 494,000 | 1,600,000 | |||
Future minimum payments under non-cancelable operating leases | |||||
2015 | 15,253,000 | ||||
2016 | 9,730,000 | ||||
2017 | 6,687,000 | ||||
2018 | 4,398,000 | ||||
2019 and beyond | 8,202,000 | ||||
Total minimum lease payments | 44,270,000 | ||||
Purchase commitments | |||||
Amount of non-cancelable purchase commitments | 67,900,000 | ||||
Amount of non-cancelable purchase commitments expected to be paid within one year | 67,700,000 | ||||
Amount of non-cancelable purchase commitments expected to be paid within two years and beyond | 200,000 | ||||
Legal proceedings | |||||
Provision for liability | 0 | ||||
Infinite Data path Case | |||||
Legal proceedings | |||||
Number of end users and direct customers sued under Infinite Data path Case | 25 | ||||
Legal proceedings | |||||
Payment to dismiss the case | $1,300,000 | ||||
In re Mellanox Technologies, Ltd. Securities Litigation | |||||
Legal proceedings | |||||
Number of legal complaints filed against the Company, the Company's President and CEO, former CFO and CFO | 3 |
SHARE_INCENTIVE_PLANS_Details
SHARE INCENTIVE PLANS: (Details) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 02, 2015 | Jan. 02, 2014 | Jan. 02, 2013 | Jan. 01, 2014 | Jan. 01, 2013 | Dec. 31, 2011 |
item | |||||||||
SHARE INCENTIVE PLANS: | |||||||||
Number of share option plans | 7 | ||||||||
Share options | |||||||||
Stock option activity under equity incentive plans | |||||||||
Options outstanding at the beginning of the period (in shares) | 2,806,224 | 3,285,922 | 2,806,224 | 3,285,922 | |||||
Options Granted (in shares) | 50,000 | 31,653 | |||||||
Options exercised (in shares) | -265,990 | -376,588 | |||||||
Options cancelled (in shares) | -122,711 | -134,763 | |||||||
Options outstanding at the end of the period (in shares) | 2,467,523 | 2,806,224 | 3,285,922 | ||||||
Weighted average exercise price of options outstanding | |||||||||
Options outstanding at the beginning of the period (in dollars per share) | 30.14 | $29.74 | 30.14 | 29.74 | |||||
Options granted (in dollars per share) | 32.64 | $18.30 | |||||||
Options exercised (in dollars per share) | 18.23 | $14.08 | |||||||
Options cancelled (in dollars per share) | 69.01 | $62.47 | |||||||
Options outstanding at the end of the period (in dollars per share) | 29.55 | $30.14 | $29.74 | ||||||
Weighted average fair value of options granted (in dollars per share) | 17.22 | $8.91 | $38.66 | ||||||
Total pretax intrinsic value of options exercised | 6 | $12.90 | |||||||
Closing price of ordinary shares (in dollars per share) | 42.73 | $39.97 | |||||||
Total pretax intrinsic value of all outstanding options | 51.4 | 51.8 | |||||||
Total pretax intrinsic value of all exercisable options | 50.1 | $48.60 | |||||||
Global Plan | |||||||||
Share option plans | |||||||||
Maximum annual percentage increase in ordinary shares reserved for issuance | 2.00% | ||||||||
Maximum annual increase in ordinary shares reserved for issuance | 685,714 | ||||||||
Maximum shares that can be issued and transferred | 15,474,018 | ||||||||
Increase in shares reserved for issuance | 685,714 | 685,714 | 685,714 | ||||||
Assumption Plan | |||||||||
Share option plans | |||||||||
Maximum annual increase in ordinary shares reserved for issuance | 281,625 | ||||||||
Increase in shares reserved for issuance | 281,625 | 281,625 |
SHARE_INCENTIVE_PLANS_Details_
SHARE INCENTIVE PLANS: (Details 2) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Exercise prices range from $ 3.13 to $ 8.23 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $3.13 |
Exercise price, high end of range (in dollars per share) | $8.23 |
Number of options outstanding (in shares) | 287,784 |
Weighted Average Remaining Contractual Life, Options Outstanding | 3 years 6 months 22 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $7.96 |
Number of exercisable options outstanding (in shares) | 287,784 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $7.96 |
Exercise prices range from $ 8.45 to $ 9.19 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $8.45 |
Exercise price, high end of range (in dollars per share) | $9.19 |
Number of options outstanding (in shares) | 271,468 |
Weighted Average Remaining Contractual Life, Options Outstanding | 2 years 5 months 9 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $9.06 |
Number of exercisable options outstanding (in shares) | 271,468 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $9.06 |
Exercise prices range from $ 10.23 to $ 10.23 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $10.23 |
Exercise price, high end of range (in dollars per share) | $10.23 |
Number of options outstanding (in shares) | 504,293 |
Weighted Average Remaining Contractual Life, Options Outstanding | 4 years 3 months 15 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $10.23 |
Number of exercisable options outstanding (in shares) | 504,293 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $10.23 |
Exercise prices range from $ 10.50 to $ 18.87 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $10.50 |
Exercise price, high end of range (in dollars per share) | $18.87 |
Number of options outstanding (in shares) | 249,923 |
Weighted Average Remaining Contractual Life, Options Outstanding | 4 years 6 months |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $14.37 |
Number of exercisable options outstanding (in shares) | 246,273 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $14.33 |
Exercise prices range from $ 18.97 to $ 27.72 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $18.97 |
Exercise price, high end of range (in dollars per share) | $29.03 |
Number of options outstanding (in shares) | 287,210 |
Weighted Average Remaining Contractual Life, Options Outstanding | 5 years 6 months 15 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $24.38 |
Number of exercisable options outstanding (in shares) | 279,027 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $24.28 |
Exercise prices range from $ 29.03 to $ 34.00 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $29.58 |
Exercise price, high end of range (in dollars per share) | $35.12 |
Number of options outstanding (in shares) | 312,872 |
Weighted Average Remaining Contractual Life, Options Outstanding | 7 years 1 month 10 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $32.66 |
Number of exercisable options outstanding (in shares) | 214,539 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $32.63 |
Exercise prices range from $ 35.12 to $ 57.41 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $35.60 |
Exercise price, high end of range (in dollars per share) | $57.41 |
Number of options outstanding (in shares) | 170,860 |
Weighted Average Remaining Contractual Life, Options Outstanding | 7 years 2 months 1 day |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $51.14 |
Number of exercisable options outstanding (in shares) | 116,225 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $51.08 |
Exercise prices range from $ 66.07 to $ 66.07 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $66.07 |
Exercise price, high end of range (in dollars per share) | $66.07 |
Number of options outstanding (in shares) | 141,478 |
Weighted Average Remaining Contractual Life, Options Outstanding | 7 years 4 months 2 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $66.07 |
Number of exercisable options outstanding (in shares) | 89,004 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $66.07 |
Exercise prices range from $ 79.38 to $ 79.38 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $79.38 |
Exercise price, high end of range (in dollars per share) | $79.38 |
Number of options outstanding (in shares) | 17,700 |
Weighted Average Remaining Contractual Life, Options Outstanding | 7 years 9 months 29 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $79.38 |
Number of exercisable options outstanding (in shares) | 9,334 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $79.38 |
Exercise prices range from $ 101.37 to $ 101.37 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $101.37 |
Exercise price, high end of range (in dollars per share) | $101.37 |
Number of options outstanding (in shares) | 223,935 |
Weighted Average Remaining Contractual Life, Options Outstanding | 7 years 4 months 13 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $101.37 |
Number of exercisable options outstanding (in shares) | 132,968 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $101.37 |
Exercise prices range from $ 3.13 to $ 101.37 | |
Additional information about options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $3.13 |
Exercise price, high end of range (in dollars per share) | $101.37 |
Number of options outstanding (in shares) | 2,467,523 |
Weighted Average Remaining Contractual Life, Options Outstanding | 5 years 2 months 12 days |
Weighted Average Exercise Price, Options Outstanding (in dollars per share) | $29.55 |
Number of exercisable options outstanding (in shares) | 2,150,915 |
Weighted Average Exercise Price, Options Exercisable (in dollars per share) | $24.76 |
SHARE_INCENTIVE_PLANS_Details_1
SHARE INCENTIVE PLANS: (Details 3) (USD $) | 12 Months Ended | |
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Ordinary shares reserved for future issuance under equity incentive plans | ||
Total shares reserved for future issuance (in shares) | 6,740,678 | |
RSUs | ||
Activity in nonvested restricted share units outstanding | ||
Non vested restricted share units at the beginning of the period (in shares) | 1,974,454 | 1,763,160 |
Restricted share units granted (in shares) | 970,970 | 1,162,133 |
Restricted share units vested (in shares) | -827,396 | -778,084 |
Restricted share units cancelled (in shares) | -206,862 | -172,755 |
Non vested restricted share units at the end of the period (in shares) | 1,911,166 | 1,974,454 |
Weighted Average Grant Date Fair Value, Restricted Share Units Outstanding | ||
Non vested restricted share units at the beginning of the period (in dollars per share) | $43.81 | $36.29 |
Restricted share units granted (in dollars per share) | $37.35 | $49.05 |
Restricted share units vested (in dollars per share) | $42.03 | $31.16 |
Restricted share units cancelled (in dollars per share) | $40.91 | $42.49 |
Non vested restricted share units at the end of the period (in dollars per share) | $41.61 | $43.81 |
Total intrinsic value of all outstanding restricted share units | $81.70 | |
Ordinary shares reserved for future issuance under equity incentive plans | ||
Restricted share units outstanding | 1,911,166 | 1,974,454 |
Share options | ||
Ordinary shares reserved for future issuance under equity incentive plans | ||
Shares outstanding | 2,467,523 | |
Global Plan | ||
Ordinary shares reserved for future issuance under equity incentive plans | ||
Shares authorized for future issuance (in shares) | 1,510,930 | |
Employee Share Purchase Plan | ||
Ordinary shares reserved for future issuance under equity incentive plans | ||
Shares authorized for future issuance (in shares) | 851,059 |
SHARE_INCENTIVE_PLANS_Details_2
SHARE INCENTIVE PLANS: (Details 4) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 31, 2012 | |
Employee Share Purchase Plan | ||||
Share-based compensation | ||||
Maximum employee gross compensation percentage for ESPP participation | 15.00% | |||
ESPP purchase price percentage of market price | 85.00% | |||
Maximum shares that can be issued and transferred | 2,585,712 | |||
Shares reserved for issuance pursuant to purchase rights under the ESPP | 1,085,712 | 1,500,000 | ||
Maximum value of ordinary shares issued per employee pursuant to purchase rights under the ESPP per calendar year | $25,000 | |||
Shares issued under share-based compensation plan (in shares) | 394,915 | 248,486 | ||
Weighted average price of shares issued (in dollars per share) | $30.22 | $37.56 | ||
Weighted average assumptions | ||||
Expected volatility (as a percent) | 46.63% | 56.18% | 68.05% | |
Risk-free interest rate (as a percent) | 0.05% | 0.07% | 0.12% | |
Expected life | 6 months | 6 months 11 days | 6 months 11 days | |
Share options | ||||
Weighted average assumptions | ||||
Expected volatility (as a percent) | 56.07% | 57.50% | 56.60% | |
Risk-free interest rate (as a percent) | 1.98% | 1.54% | 1.02% | |
Expected life | 5 years 9 months 7 days | 4 years 8 months 19 days | 6 years 3 months |
SHARE_INCENTIVE_PLANS_Details_3
SHARE INCENTIVE PLANS: (Details 5) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based compensation expense | |||
Total share-based compensation expense | $47,235,000 | $45,138,000 | $35,019,000 |
Total unrecognized share-based compensation costs related to non-vested awards | 74,500,000 | ||
Weighted average period for recognition of unrecognized share-based compensation costs | 1 year 11 months 19 days | ||
Share options | |||
Share-based compensation expense | |||
Total share-based compensation expense | 8,974,000 | 12,460,000 | 14,104,000 |
Employee Share Purchase Plan | |||
Share-based compensation expense | |||
Total share-based compensation expense | 3,976,000 | 3,938,000 | 2,851,000 |
RSUs | |||
Share-based compensation expense | |||
Total share-based compensation expense | 34,285,000 | 28,740,000 | 18,064,000 |
Cost of goods sold | |||
Share-based compensation expense | |||
Total share-based compensation expense | 2,162,000 | 1,828,000 | 1,621,000 |
Research and development | |||
Share-based compensation expense | |||
Total share-based compensation expense | 26,979,000 | 25,956,000 | 19,356,000 |
Sales and marketing | |||
Share-based compensation expense | |||
Total share-based compensation expense | 9,755,000 | 9,198,000 | 8,055,000 |
General and administrative | |||
Share-based compensation expense | |||
Total share-based compensation expense | $8,339,000 | $8,156,000 | $5,987,000 |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | $1,390 | $2,794 | |
Other comprehensive income/loss before reclassifications | -6,659 | 4,629 | |
Amounts reclassified from accumulated other comprehensive income/loss | 1,249 | -6,033 | |
Net current-period other comprehensive income/loss, net of taxes | -5,410 | -1,404 | 3,958 |
Balance at the end of the period | -4,020 | 1,390 | 2,794 |
Unrealized Gains / Losses on Available-for-Sale Securities | |||
Accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | -6 | -148 | |
Other comprehensive income/loss before reclassifications | -378 | 148 | |
Amounts reclassified from accumulated other comprehensive income/loss | 10 | -6 | |
Net current-period other comprehensive income/loss, net of taxes | -368 | 142 | |
Balance at the end of the period | -374 | -6 | |
Gains / Losses on Derivatives | |||
Accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | 1,396 | 2,942 | |
Other comprehensive income/loss before reclassifications | -6,281 | 4,481 | |
Amounts reclassified from accumulated other comprehensive income/loss | 1,239 | -6,027 | |
Net current-period other comprehensive income/loss, net of taxes | -5,042 | -1,546 | |
Balance at the end of the period | ($3,646) | $1,396 |
ACCUMULATED_OTHER_COMPREHENSIV3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reclassifications out of accumulated other comprehensive income | |||
Cost of revenues | ($148,672) | ($134,282) | ($157,736) |
Research and development | -208,877 | -169,382 | -138,310 |
Sales and marketing | -76,860 | -70,544 | -60,894 |
General and administrative | -36,431 | -37,046 | -24,456 |
Cost of revenues and Operating expenses | -7,191 | -20,818 | 118,879 |
Other income, net | 1,449 | 1,228 | 1,259 |
Net income (loss) | -24,009 | -23,342 | 111,951 |
Amount Reclassified from Other Comprehensive Income / Loss | |||
Reclassifications out of accumulated other comprehensive income | |||
Net income (loss) | 1,249 | 6,033 | |
Gains / Losses on Derivatives | Amount Reclassified from Other Comprehensive Income / Loss | |||
Reclassifications out of accumulated other comprehensive income | |||
Cost of revenues | 87 | 363 | |
Research and development | 969 | 4,653 | |
Sales and marketing | 92 | 508 | |
General and administrative | 91 | 503 | |
Cost of revenues and Operating expenses | 1,239 | 6,027 | |
Unrealized Gains / Losses on Available-for-Sale Securities | Amount Reclassified from Other Comprehensive Income / Loss | |||
Reclassifications out of accumulated other comprehensive income | |||
Other income, net | $10 | $6 |
INCOME_TAXES_Details
INCOME TAXES: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Components of income (loss) before income taxes | |||
United States | ($10,260,000) | ($2,463,000) | $6,343,000 |
Foreign | 4,518,000 | -17,127,000 | 113,795,000 |
Income (loss) before taxes on income | -5,742,000 | -19,590,000 | 120,138,000 |
Current: | |||
U.S. federal | 162,000 | 1,989,000 | 6,178,000 |
State and local | 163,000 | 508,000 | 890,000 |
Foreign | 4,683,000 | 3,110,000 | 4,573,000 |
Total current | 5,008,000 | 5,607,000 | 11,641,000 |
Deferred: | |||
U.S. federal | 12,140,000 | -1,174,000 | -2,805,000 |
State and local | 1,539,000 | -219,000 | -226,000 |
Foreign | -420,000 | -462,000 | -423,000 |
Total deferred | 13,832,000 | -1,240,000 | -3,454,000 |
Provision for taxes on income | 18,267,000 | 3,752,000 | 8,187,000 |
Deferred tax assets: | |||
Net operating loss and credit carryforwards | 25,614,000 | 44,706,000 | |
Reserves and accruals | 7,633,000 | 8,961,000 | |
Depreciation and amortization | 16,487,000 | 942,000 | |
Other | 8,555,000 | 2,285,000 | |
Gross deferred tax assets | 58,289,000 | 56,894,000 | |
Valuation allowance | -46,220,000 | -27,365,000 | |
Total deferred tax assets | 12,069,000 | 29,529,000 | |
Intangible assets | -11,551,000 | -15,038,000 | |
Total deferred tax liabilities | -11,551,000 | -15,038,000 | |
Net deferred tax assets | 518,000 | 14,491,000 | |
Non-Israeli subsidiaries' undistributed earnings | 1,300,000 | ||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Tax at statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
State, net of federal benefit (as a percent) | -28.60% | 2.90% | 0.50% |
Meals and entertainment (as a percent) | -1.30% | -0.40% | 0.10% |
Tax at rates other than the statutory rate (as a percent) | 56.10% | -35.70% | -32.90% |
Valuation allowance | -280.60% | ||
Share-based compensation (as a percent) | -4.00% | -4.60% | -0.10% |
Net change in tax reserves (as a percent) | -87.40% | -15.90% | 4.80% |
Other, net (as a percent) | -7.30% | -0.50% | -0.60% |
Provision for taxes (as a percent) | -318.10% | -19.20% | 6.80% |
Tax benefits recognized to additional paid in capital (APIC) pool | 300,000 | 2,700,000 | |
NOLs which have not been recognized | 19,400,000 | ||
Corporate tax rate in 2014 (as a percent) | 26.50% | ||
Cash tax savings due to tax holiday | 33,200,000 | ||
Summary of the activity related to the Company's unrecognized tax benefits | |||
Gross unrecognized tax benefits, beginning of the period | 23,585,000 | 9,716,000 | 4,063,000 |
Increases in tax positions for prior years | 299,000 | 444,000 | 120,000 |
Decreases in tax positions for prior years | -10,339,000 | -11,000 | |
Increases in tax positions for current year | 5,170,000 | 3,029,000 | 5,533,000 |
Increase in tax positions acquired or assumed in a business combination | 11,037,000 | ||
Decreases in tax positions for current year | -678,000 | -630,000 | |
Gross unrecognized tax benefits, end of the period | 18,037,000 | 23,585,000 | 9,716,000 |
Unrecognized tax benefits which would reduce the Company's income tax expense and effective tax rate, if recognized | 15,300,000 | 12,500,000 | 9,700,000 |
Total amount of accrued interest or penalties related to unrecognized tax benefit or tax contingencies | 1,000,000 | 600,000 | 400,000 |
Ministry of Industry Trade and Labor | |||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Cash tax savings due to tax holiday | 6,900,000 | 6,400,000 | |
Increase in diluted earnings per share | $0.15 | $0.15 | $0.76 |
Ministry of Industry Trade and Labor | Yokneam | |||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Period of tax holiday | 10 years | ||
Ministry of Industry Trade and Labor | Tel-Aviv | |||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Period of tax holiday | 2 years | ||
Reduced income tax rate after second year of tax holiday (as a percent) | 10.00% | ||
Ministry of Industry Trade and Labor | Tel-Aviv | Minimum | |||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Period for which reduced income tax rates are applicable beginning from fiscal year 2013 | 5 years | ||
Ministry of Industry Trade and Labor | Tel-Aviv | Maximum | |||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Period for which reduced income tax rates are applicable beginning from fiscal year 2013 | 8 years | ||
State and Local Jurisdiction [Member] | |||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Net operating loss carryforwards | 28,700,000 | ||
Israel | |||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Net operating loss carryforwards | 65,500,000 | ||
United States | |||
Deferred tax assets: | |||
Valuation allowance | -17,200,000 | ||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Net operating loss carryforwards | 58,600,000 | ||
Denmark | |||
Reconciliation of the statutory federal income tax rate to the Company's effective tax rate | |||
Net operating loss carryforwards | $13,300,000 |
GEOGRAPHIC_INFORMATION_AND_REV2
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
item | |||
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: | |||
Number of reportable segments | 1 | ||
Revenues by geographic region | |||
Total revenue | $463,649 | $390,436 | $500,275 |
United States | |||
Revenues by geographic region | |||
Total revenue | 202,921 | 175,491 | 220,157 |
China | |||
Revenues by geographic region | |||
Total revenue | 65,204 | 67,517 | 102,957 |
Europe | |||
Revenues by geographic region | |||
Total revenue | 72,181 | 51,973 | 62,788 |
Other Americas | |||
Revenues by geographic region | |||
Total revenue | 19,760 | 16,869 | 26,000 |
Other Asia | |||
Revenues by geographic region | |||
Total revenue | $103,583 | $78,586 | $88,373 |
GEOGRAPHIC_INFORMATION_AND_REV3
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property and equipment, net by geographic location | ||
Total property and equipment, net | $78,827 | $71,915 |
Israel | ||
Property and equipment, net by geographic location | ||
Total property and equipment, net | 69,004 | 66,983 |
United States | ||
Property and equipment, net by geographic location | ||
Total property and equipment, net | 7,849 | 3,094 |
Other | ||
Property and equipment, net by geographic location | ||
Total property and equipment, net | $1,974 | $1,838 |
GEOGRAPHIC_INFORMATION_AND_REV4
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues by product group | |||
Total revenue | $463,649 | $390,436 | $500,275 |
ICs | |||
Revenues by product group | |||
Total revenue | 70,840 | 56,817 | 95,103 |
Boards | |||
Revenues by product group | |||
Total revenue | 147,738 | 119,399 | 155,670 |
Switch systems | |||
Revenues by product group | |||
Total revenue | 147,403 | 145,184 | 168,231 |
Cables, accessories and other | |||
Revenues by product group | |||
Total revenue | 97,668 | 69,036 | 81,271 |
InfiniBand | |||
Revenues by product group | |||
Total revenue | 337,675 | 308,295 | 445,835 |
FDR | |||
Revenues by product group | |||
Total revenue | 264,785 | 200,300 | 236,728 |
QDR | |||
Revenues by product group | |||
Total revenue | 56,711 | 86,784 | 175,650 |
DDR/SDR | |||
Revenues by product group | |||
Total revenue | 16,179 | 21,211 | 33,457 |
Ethernet | |||
Revenues by product group | |||
Total revenue | 83,470 | 52,908 | 42,523 |
Other | |||
Revenues by product group | |||
Total revenue | $42,504 | $29,233 | $11,917 |
OTHER_INCOME_NET_Details
OTHER INCOME, NET: (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Other income, net | |||
Interest income and gain on sale of investments, net | $1,952 | $1,738 | $1,699 |
Foreign exchange gain (loss) | -245 | -309 | -294 |
Other | -258 | -201 | -146 |
Total other income, net | $1,449 | $1,228 | $1,259 |
SCHEDULE_II_CONSOLIDATED_VALUA1
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Activity in valuation and qualifying accounts | |||
Balance at Beginning of Year | $28,004 | $28,757 | $22,989 |
Charged (Credited) to Costs and Expenses | 18,888 | -79 | 5,768 |
Deductions (Recovery) | -674 | ||
Balance at End of Year | 46,892 | 28,004 | 28,757 |
Allowance for doubtful accounts | |||
Activity in valuation and qualifying accounts | |||
Balance at Beginning of Year | 639 | 557 | |
Charged (Credited) to Costs and Expenses | 33 | 82 | |
Balance at End of Year | 672 | 639 | |
Allowance for sales returns and adjustments | |||
Activity in valuation and qualifying accounts | |||
Balance at Beginning of Year | 79 | 337 | |
Charged (Credited) to Costs and Expenses | -79 | -258 | |
Balance at End of Year | 79 | ||
Income tax valuation allowance | |||
Activity in valuation and qualifying accounts | |||
Balance at Beginning of Year | 27,365 | 28,039 | 22,095 |
Charged (Credited) to Costs and Expenses | 18,855 | 5,944 | |
Deductions (Recovery) | -674 | ||
Balance at End of Year | $46,220 | $27,365 | $28,039 |