Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 31, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Mellanox Technologies, Ltd. | ' |
Entity Central Index Key | '0001356104 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 45,242,320 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $54,852 | $63,164 |
Short-term investments | 295,795 | 263,528 |
Restricted cash | 3,604 | ' |
Accounts receivable, net | 72,959 | 70,566 |
Inventories | 39,326 | 35,963 |
Deferred taxes and other current assets | 24,511 | 17,581 |
Total current assets | 491,047 | 450,802 |
Property and equipment, net | 73,954 | 70,815 |
Severance assets | 9,814 | 10,630 |
Intangible assets, net | 44,975 | 54,362 |
Goodwill | 201,105 | 199,558 |
Deferred taxes and other long-term assets | 21,327 | 20,613 |
Total assets | 842,222 | 806,780 |
Current liabilities: | ' | ' |
Accounts payable | 37,245 | 29,964 |
Accrued liabilities | 57,894 | 51,251 |
Deferred revenue | 14,539 | 15,849 |
Capital lease liabilities, current | 1,101 | 1,245 |
Total current liabilities | 110,779 | 98,309 |
Accrued severance | 12,401 | 13,418 |
Deferred revenue | 8,669 | 9,045 |
Capital lease liabilities | 768 | 1,600 |
Other long-term liabilities | 14,889 | 17,091 |
Total liabilities | 147,506 | 139,463 |
Commitments and Contingencies (Note 8) | ' | ' |
Shareholders' equity: | ' | ' |
Ordinary shares | 191 | 185 |
Additional paid-in capital | 601,840 | 550,795 |
Accumulated other comprehensive income (loss) | -2,213 | 1,390 |
Retained earnings | 94,898 | 114,947 |
Total shareholders' equity | 694,716 | 667,317 |
Total liabilities and shareholders' equity | $842,222 | $806,780 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' | ' | ' |
Total revenues | $120,708 | $104,067 | $321,987 | $285,315 |
Cost of revenues | 39,540 | 36,869 | 107,788 | 97,974 |
Gross profit | 81,168 | 67,198 | 214,199 | 187,341 |
Operating expenses: | ' | ' | ' | ' |
Research and development | 54,220 | 44,607 | 152,063 | 121,498 |
Sales and marketing | 18,864 | 18,204 | 56,865 | 51,389 |
General and administrative | 9,184 | 9,674 | 26,861 | 27,193 |
Total operating expenses | 82,268 | 72,485 | 235,789 | 200,080 |
Loss from operations | -1,100 | -5,287 | -21,590 | -12,739 |
Other income, net | 361 | 482 | 952 | 927 |
Loss before taxes on income | -739 | -4,805 | -20,638 | -11,812 |
Benefit (provision) for taxes on income | 1,167 | -1,080 | 589 | -4,092 |
Net income (loss) | $428 | ($5,885) | ($20,049) | ($15,904) |
Net income (loss) per share - basic (in dollars per share) | $0.01 | ($0.14) | ($0.45) | ($0.37) |
Net income (loss) per share - diluted (in dollars per share) | $0.01 | ($0.14) | ($0.45) | ($0.37) |
Shares used in per share calculation: | ' | ' | ' | ' |
Basic (in shares) | 44,984 | 43,579 | 44,646 | 43,257 |
Diluted (in shares) | 46,229 | 43,579 | 44,646 | 43,257 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ' | ' | ' | ' |
Net income (loss) | $428 | ($5,885) | ($20,049) | ($15,904) |
Other comprehensive loss, net of tax: | ' | ' | ' | ' |
Change in unrealized gains/losses on available-for-sale securities, net | -208 | 223 | -192 | 216 |
Change in unrealized gains/losses on derivative contracts, net | -2,726 | -565 | -3,411 | -1,187 |
Total comprehensive loss, net of tax | ($2,506) | ($6,227) | ($23,652) | ($16,875) |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income (loss) | ($20,049) | ($15,904) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 28,999 | 25,439 |
Deferred income taxes | -202 | -2,403 |
Share-based compensation | 35,434 | 33,472 |
Gain on investments | -94 | -710 |
Excess tax benefits from share-based compensation | -346 | -2,796 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | -1,530 | -12,137 |
Inventories | -4,239 | 12,942 |
Prepaid expenses and other assets | -10,040 | 699 |
Accounts payable | 6,692 | -8,896 |
Accrued liabilities and other payables | 406 | -8,429 |
Net cash provided by operating activities | 35,031 | 21,277 |
Cash flows from investing activities: | ' | ' |
Purchase of severance-related insurance policies | -597 | -632 |
Purchases of short-term investments | -202,818 | -151,535 |
Proceeds from sales of short-term investments | 130,652 | 133,435 |
Proceeds from maturities of short-term investments | 39,801 | 63,947 |
Increase in restricted cash deposits | -103 | -3,943 |
Purchase of property and equipment | -21,228 | -24,050 |
Purchase of intangibles assets | ' | -6,440 |
Purchase of equity investment in a private company | -3,691 | -3,123 |
Net cash used in investing activities | -57,984 | -115,860 |
Cash flows from financing activities: | ' | ' |
Principal payments on capital lease obligations | -976 | -960 |
Proceeds from exercise of share awards | 15,271 | 13,571 |
Excess tax benefit from share-based compensation | 346 | 2,796 |
Net cash provided by financing activities | 14,641 | 15,407 |
Net decrease in cash and cash equivalents | -8,312 | -79,176 |
Cash and cash equivalents at beginning of period | 63,164 | 117,054 |
Cash and cash equivalents at end of period | $54,852 | $37,878 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Aug. 15, 2013 | Sep. 30, 2013 | Jul. 02, 2013 | Sep. 30, 2013 |
Kotura | Kotura | IPtronics | IPtronics | |
Cash Assumed | $101 | $101 | $2,077 | $2,077 |
THE_COMPANY_AND_SUMMARY_OF_SIG
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 9 Months Ended | |||||||||||||
Sep. 30, 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. (the “Company” or “Mellanox”) was incorporated in Israel 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 unaudited condensed consolidated financial statements include the Company’s accounts as well as those of its wholly owned subsidiaries after the elimination of all intercompany balances and transactions. | ||||||||||||||
The unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The year-end unaudited condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on February 28, 2014. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2014 or thereafter. | ||||||||||||||
Certain prior year amounts have been reclassified to conform to 2014 presentation. These changes and reclassifications did not impact net or comprehensive income. | ||||||||||||||
Revision to Prior Period Financial Statements | ||||||||||||||
During the quarter ended September 30, 2014, the Company identified and corrected an error in accounting for liabilities for charitable contributions. The error had accumulated over a number of years, resulting in a $0.6 million cumulative overstatement of the liability as of September 30, 2014. The Company also identified and corrected an overstatement of liabilities in the amount of $0.7 million related to certain purchase orders as of September 30, 2014. The Company’s prior period financial statements should not have reflected these obligations as liabilities in the respective periods. The Company evaluated these errors and determined that the impact of the errors was not material to its results of operations, financial position or cash flows in previously issued financial statements. The Company has retrospectively revised financial information for all prior periods presented to reflect this correction. The impact of the correction of these errors will increase net income by $0.3 million and $0.9 million in fiscal years 2011 and 2012, respectively. The impact of this revision for periods presented within this quarterly report on Form 10-Q are shown in the tables below: | ||||||||||||||
Three Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands, except per share data) | ||||||||||||||
Statement of operations: | ||||||||||||||
Cost of revenues | $ | 37,027 | $ | (158 | ) | $ | 36,869 | |||||||
Gross Profit | 67,040 | 158 | 67,198 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 44,185 | 422 | 44,607 | |||||||||||
Sales and marketing | 18,071 | 133 | 18,204 | |||||||||||
General and administrative | 9,600 | 74 | 9,674 | |||||||||||
Total operating expenses | 71,856 | 629 | 72,485 | |||||||||||
Loss from operations | (4,816 | ) | (471 | ) | (5,287 | ) | ||||||||
Loss before taxes on income | (4,334 | ) | (471 | ) | (4,805 | ) | ||||||||
Net loss | (5,414 | ) | (471 | ) | (5,885 | ) | ||||||||
Net loss per share — basic | (0.12 | ) | (0.02 | ) | (0.14 | ) | ||||||||
Net loss per share — diluted | (0.12 | ) | (0.02 | ) | (0.14 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands, except per share data) | ||||||||||||||
Statement of operations: | ||||||||||||||
Cost of revenues | $ | 98,143 | $ | (169 | ) | $ | 97,974 | |||||||
Gross Profit | 187,172 | 169 | 187,341 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 121,203 | 295 | 121,498 | |||||||||||
Sales and marketing | 51,282 | 107 | 51,389 | |||||||||||
General and administrative | 27,132 | 61 | 27,193 | |||||||||||
Total operating expenses | 199,617 | 463 | 200,080 | |||||||||||
Loss from operations | (12,445 | ) | (294 | ) | (12,739 | ) | ||||||||
Loss before taxes on income | (11,518 | ) | (294 | ) | (11,812 | ) | ||||||||
Net loss | (15,610 | ) | (294 | ) | (15,904 | ) | ||||||||
Net loss per share — basic | (0.36 | ) | (0.01 | ) | (0.37 | ) | ||||||||
Net loss per share — diluted | (0.36 | ) | (0.01 | ) | (0.37 | ) | ||||||||
December 31, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Balance sheet: | ||||||||||||||
Accrued liabilities | $ | 52,588 | $ | (1,337 | ) | $ | 51,251 | |||||||
Total current liabilities | 99,646 | (1,337 | ) | 98,309 | ||||||||||
Total liabilities | 140,800 | (1,337 | ) | 139,463 | ||||||||||
Retained earnings | 113,610 | 1,337 | 114,947 | |||||||||||
Total shareholders’ equity | 665,980 | 1,337 | 667,317 | |||||||||||
Three Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Statement of comprehensive loss: | ||||||||||||||
Net loss | $ | (5,414 | ) | $ | (471 | ) | $ | (5,885 | ) | |||||
Total comprehensive loss, net of tax | (5,756 | ) | (471 | ) | (6,227 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Statement of comprehensive loss: | ||||||||||||||
Net loss | $ | (15,610 | ) | $ | (294 | ) | $ | (15,904 | ) | |||||
Total comprehensive loss, net of tax | (16,581 | ) | (294 | ) | (16,875 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Cash flow statement: | ||||||||||||||
Net loss | $ | (15,610 | ) | $ | (294 | ) | $ | (15,904 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||
Accrued liabilities and other payables | (8,723 | ) | 294 | (8,429 | ) | |||||||||
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. | ||||||||||||||
Additionally, the Company has a significant presence in Israel, including research and development activities, corporate facilities and sales support operations. Uncertainty surrounding the political, economic and military conditions in Israel may directly impact the Company’s financial results. | ||||||||||||||
Use of estimates | ||||||||||||||
The preparation of financial statements in accordance with 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. | ||||||||||||||
Significant accounting policies | ||||||||||||||
There have been no changes in the Company’s significant accounting policies that were disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2013. See its Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 28, 2014, for a discussion of significant accounting policies and estimates. | ||||||||||||||
Concentration of credit risk | ||||||||||||||
The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Hewlett Packard | 15 | % | 12 | % | 11 | % | 13 | % | ||||||
IBM | 11 | % | 17 | % | 11 | % | 19 | % | ||||||
Dell | 11 | % | * | 11 | % | * | ||||||||
* Less than 10% | ||||||||||||||
The following table summarizes the accounts receivable balance in excess of 10% of the total accounts receivable: | ||||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
Hewlett Packard | 20 | % | 11 | % | ||||||||||
IBM | 13 | % | 10 | % | ||||||||||
Product warranty | ||||||||||||||
The following table provides the changes in the product warranty accrual for the nine months ended September 30, 2014 and September 30, 2013: | ||||||||||||||
Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Balance, beginning of the period | $ | 4,198 | $ | 4,447 | ||||||||||
Warranties issued during the period | 4,611 | 6,640 | ||||||||||||
Reversal of warranty reserves | (1,534 | ) | (1,332 | ) | ||||||||||
Settlements during the period | (3,672 | ) | (7,226 | ) | ||||||||||
Balance, end of the period | $ | 3,603 | $ | 2,529 | ||||||||||
Net income (loss) per share | ||||||||||||||
The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(in thousands except per share data) | ||||||||||||||
Net income (loss) | $ | 428 | $ | (5,885 | ) | $ | (20,049 | ) | $ | (15,904 | ) | |||
Basic and diluted shares: | ||||||||||||||
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 44,984 | 43,579 | 44,646 | 43,257 | ||||||||||
Dilutive effect of employee stock option plans | 1,245 | — | — | — | ||||||||||
Shares used to compute diluted net income (loss) per share | 46,229 | 43,579 | 44,646 | 43,257 | ||||||||||
Net income (loss) per share — basic | $ | 0.01 | $ | (0.14 | ) | $ | (0.45 | ) | $ | (0.37 | ) | |||
Net income (loss) per share — diluted | $ | 0.01 | $ | (0.14 | ) | $ | (0.45 | ) | $ | (0.37 | ) | |||
The Company excluded 1,120,074 and 741,819 outstanding shares for the three and nine months ended September 30, 2014, respectively, from the computation of diluted net income per ordinary share, because including these outstanding shares would have had an anti-dilutive effect. | ||||||||||||||
The Company excluded 1,066,286 and 772,885 outstanding shares for the three and nine months ended September 30, 2013, respectively, from the computation of diluted net income per ordinary share, because including these outstanding shares would have had an anti-dilutive effect. | ||||||||||||||
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 fiscal year beginning January 1, 2017. 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: | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
BALANCE SHEET COMPONENTS: | ' | |||||||
BALANCE SHEET COMPONENTS: | ' | |||||||
NOTE 2 — BALANCE SHEET COMPONENTS: | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
(In thousands) | ||||||||
Accounts receivable, net: | ||||||||
Accounts receivable | $ | 73,631 | $ | 71,205 | ||||
Less: allowance for doubtful accounts | (672 | ) | (639 | ) | ||||
$ | 72,959 | $ | 70,566 | |||||
Inventories: | ||||||||
Raw materials | $ | 6,156 | $ | 4,385 | ||||
Work-in-process | 13,555 | 12,187 | ||||||
Finished goods | 19,615 | 19,391 | ||||||
$ | 39,326 | $ | 35,963 | |||||
Deferred taxes and other current assets: | ||||||||
Prepaid expenses | $ | 8,198 | $ | 5,929 | ||||
Derivative contracts receivable | — | 1,396 | ||||||
Deferred taxes | 7,830 | 7,336 | ||||||
VAT receivable | 6,413 | 1,900 | ||||||
Other | 2,070 | 1,020 | ||||||
$ | 24,511 | $ | 17,581 | |||||
Property and equipment, net: | ||||||||
Computer equipment and software | $ | 113,041 | $ | 91,368 | ||||
Furniture and fixtures | 3,246 | 3,809 | ||||||
Leasehold improvements | 32,913 | 31,608 | ||||||
149,200 | 126,785 | |||||||
Less: Accumulated depreciation and amortization | (75,246 | ) | (55,970 | ) | ||||
$ | 73,954 | $ | 70,815 | |||||
Deferred taxes and other long-term assets: | ||||||||
Equity investments in private companies | $ | 10,486 | $ | 7,548 | ||||
Deferred taxes | 7,311 | 7,155 | ||||||
Restricted cash | 13 | 3,514 | ||||||
Other assets | 3,517 | 2,396 | ||||||
$ | 21,327 | $ | 20,613 | |||||
Accrued liabilities: | ||||||||
Payroll and related expenses | $ | 24,450 | $ | 28,712 | ||||
Accrued expenses | 20,109 | 14,335 | ||||||
Product warranty liability | 3,603 | 4,198 | ||||||
Derivative contracts payable | 2,015 | — | ||||||
Other | 7,717 | 4,006 | ||||||
$ | 57,894 | $ | 51,251 | |||||
Other long-term liabilities: | ||||||||
Deferred tax liability and income tax payable | $ | 11,298 | $ | 13,026 | ||||
Deferred rent | 2,596 | 3,072 | ||||||
Other | 995 | 993 | ||||||
$ | 14,889 | $ | 17,091 |
BUSINESS_COMBINATION
BUSINESS COMBINATION: | 9 Months Ended | |||||||||||||
Sep. 30, 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 assets acquired and liabilities assumed were immaterial to the Company’s unaudited condensed 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 (“IPtronics”). On August 15, 2013, the Company completed its acquisition of a privately held company, Kotura, Inc (“Kotura”). The Company’s primary reason 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 share 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. | ||||||||||||||
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. | ||||||||||||||
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 value 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 | $ | 2,173 | $ | 5,252 | $ | 7,425 | ||||||||
Other long-term assets | 974 | 10,603 | 11,577 | |||||||||||
Intangible assets | 17,495 | 27,604 | 45,099 | |||||||||||
Goodwill | 25,725 | 40,948 | 66,673 | |||||||||||
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 | 27,827 | 5 | ||||||||||||
In-process research and development | 13,764 | — | ||||||||||||
Customer relationship | 2,420 | 2-Jan | ||||||||||||
Backlog | 953 | Less than 1 | ||||||||||||
Total purchased intangible assets | $ | 45,099 | ||||||||||||
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. | ||||||||||||||
In-process research and development (“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 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 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. As of September 30, 2014, none of the projects has been completed and both have progressed as previously estimated. | ||||||||||||||
The following table summarizes the significant assumptions underlying the valuations of IPR&D at acquisition: | ||||||||||||||
Company | Development | Average | Estimated | Risk | Fair value | |||||||||
Projects | Estimated | cost | Adjusted | |||||||||||
time | to complete | Discount Rate | ||||||||||||
to complete | ||||||||||||||
(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 the nine months ended September 30, 2013 for illustrative purposes only, as if IPtronics and Kotura had been acquired on January 1, 2013. 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, 2013. 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: | ||||||||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
(in thousands, except | ||||||||||||||
per share data) | ||||||||||||||
Pro forma net revenue | $ | 296,986 | ||||||||||||
Pro forma net loss | $ | (23,175 | ) | |||||||||||
Pro forma net loss per share basic | $ | (0.54 | ) | |||||||||||
Pro forma net loss per share diluted | $ | (0.54 | ) | |||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS: | 9 Months Ended | ||||||||||
Sep. 30, 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 September 30, 2014 and December 31, 2013, the Company did not have any financial assets or liabilities valued based on Level 3 valuations. | |||||||||||
The following table presents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value as of September 30, 2014. | |||||||||||
Level 1 | Level 2 | Total | |||||||||
(in thousands) | |||||||||||
Money market funds | $ | 1,683 | $ | — | $ | 1,683 | |||||
Certificates of deposits | — | 73,892 | 73,892 | ||||||||
U.S. Government and agency securities | — | 78,281 | 78,281 | ||||||||
Commercial paper | — | 25,933 | 25,933 | ||||||||
Corporate bonds | — | 98,192 | 98,192 | ||||||||
Municipal bonds | — | 12,718 | 12,718 | ||||||||
Foreign government bonds | — | 6,779 | 6,779 | ||||||||
Total financial assets | $ | 1,683 | $ | 295,795 | $ | 297,478 | |||||
Derivative contracts | — | 2,015 | 2,015 | ||||||||
Total financial liabilities | $ | — | $ | 2,015 | $ | 2,015 | |||||
The following table represents the fair value hierarchy of the Company’s financial assets measured at fair value as of December 31, 2013. There were no financial liabilities 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 three and nine months ended September 30, 2014. |
INVESTMENTS
INVESTMENTS: | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
INVESTMENTS: | ' | |||||||||||||
INVESTMENTS: | ' | |||||||||||||
NOTE 5 — INVESTMENTS: | ||||||||||||||
Cash, Cash equivalents and Short-term investments | ||||||||||||||
The short-term investments are classified as available-for-sale securities. The cash, cash equivalents and short-term investments at September 30, 2014 and December 31, 2013 were as follows: | ||||||||||||||
September 30, 2014 | ||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Cash | $ | 53,169 | $ | — | $ | — | $ | 53,169 | ||||||
Money market funds | 1,683 | — | — | 1,683 | ||||||||||
Certificates of deposits | 73,902 | 2 | (12 | ) | 73,892 | |||||||||
U.S. Government and agency securities | 78,364 | 26 | (109 | ) | 78,281 | |||||||||
Commercial paper | 25,919 | 14 | — | 25,933 | ||||||||||
Corporate bonds | 98,309 | 33 | (150 | ) | 98,192 | |||||||||
Municipal bonds | 12,774 | — | (56 | ) | 12,718 | |||||||||
Foreign government bonds | 6,800 | — | (21 | ) | 6,779 | |||||||||
Total | $ | 350,920 | $ | 75 | $ | (348 | ) | $ | 350,647 | |||||
Less amounts classified as cash and cash equivalents | (54,852 | ) | — | — | (54,852 | ) | ||||||||
$ | 296,068 | $ | 75 | $ | (348 | ) | $ | 295,795 | ||||||
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 $(1.1) million and $0.1 million for the three months ended September 30, 2014 and September 30, 2013, respectively. Realized gains, net upon the sale of marketable securities were $0.1 million and $0.4 million for the nine months ended September 30, 2014 and September 30, 2013, respectively. At September 30, 2014, the investments with gross unrealized losses were not deemed to be other-than-temporarily impaired and the unrealized losses were recorded in OCI. | ||||||||||||||
The contractual maturities of available-for-sale securities at September 30, 2014 and December 31, 2013 were as follows: | ||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Amortized | Estimated Fair | Amortized | Estimated Fair | |||||||||||
Cost | Value | Cost | Value | |||||||||||
(in thousands) | ||||||||||||||
Due in less than one year | $ | 143,767 | $ | 143,818 | $ | 190,172 | $ | 190,189 | ||||||
Due in one to three years | 152,301 | 151,977 | 73,362 | 73,339 | ||||||||||
$ | 296,068 | $ | 295,795 | $ | 263,534 | $ | 263,528 | |||||||
Restricted cash and deposits | ||||||||||||||
The Company maintained certain cash amounts restricted as to withdrawal or use. It maintained a balance of $3.6 million at September 30, 2014, for contingent payments related to acquisitions. | ||||||||||||||
The Company also maintained certain long-term restricted cash amounts restricted as to withdrawal or use. It maintained a balance of less than $0.1 million and $3.5 million at September 30, 2014 and December 31, 2013, respectively, which were classified as other long-term assets, for contingent payments related to acquisitions. | ||||||||||||||
Investments in privately-held companies | ||||||||||||||
As of September 30, 2014 and December 31, 2013, respectively, the Company held a total of $10.5 million and $7.5 million of investments in privately-held companies. |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS: | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
GOODWILL AND INTANGIBLE ASSETS: | ' | ||||||||||
GOODWILL AND INTANGIBLE ASSETS: | ' | ||||||||||
NOTE 6 — GOODWILL AND INTANGIBLE ASSETS: | |||||||||||
The following table presents changes in the carrying amount of goodwill (in thousands): | |||||||||||
Balance as of December 31, 2013 | $ | 199,558 | |||||||||
Goodwill from Integrity acquisition | 1,547 | ||||||||||
Adjustments | — | ||||||||||
Balance as of September 30, 2014 | $ | 201,105 | |||||||||
The carrying amounts of intangible assets as of September 30, 2014 were as follows: | |||||||||||
Gross | Accumulated | Net | |||||||||
Carrying | Amortization | Carrying | |||||||||
Value | Value | ||||||||||
(in thousands) | |||||||||||
Licensed technology | $ | 2,344 | $ | (779 | ) | $ | 1,565 | ||||
Developed technology | 56,190 | (30,525 | ) | 25,665 | |||||||
Customer relationships | 13,376 | (9,395 | ) | 3,981 | |||||||
Total amortizable intangible assets | $ | 71,910 | $ | (40,699 | ) | $ | 31,211 | ||||
IPR&D | 13,764 | — | 13,764 | ||||||||
Total intangible assets | $ | 85,674 | $ | (40,699 | ) | $ | 44,975 | ||||
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 | 56,190 | (24,667 | ) | 31,523 | |||||||
Customer relationships | 13,376 | (6,279 | ) | 7,097 | |||||||
Total amortizable intangible assets | $ | 71,910 | $ | (31,312 | ) | $ | 40,598 | ||||
IPR&D | 13,764 | — | 13,764 | ||||||||
Total intangible assets | $ | 85,674 | $ | (31,312 | ) | $ | 54,362 | ||||
Amortization expense of intangible assets was $2.9 million and $4.7 million for the three months ended September 30, 2014 and September 30, 2013, respectively. Amortization expense of intangible assets was $9.4 million and $9.7 million for the nine months ended September 30, 2014 and September 30, 2013, respectively. | |||||||||||
The estimated future amortization expenses from amortizable intangible assets were as follows (in thousands): | |||||||||||
Remainder of 2014 | $ | 3,507 | |||||||||
2015 | 10,786 | ||||||||||
2016 | 9,970 | ||||||||||
2017 | 9,907 | ||||||||||
2018 and thereafter | 10,805 | ||||||||||
$ | 44,975 | ||||||||||
DERIVATIVES_AND_HEDGING_ACTIVI
DERIVATIVES AND HEDGING ACTIVITIES: | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES: | ' | |||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES: | ' | |||||||||||||
NOTE 7 — DERIVATIVES AND HEDGING ACTIVITIES: | ||||||||||||||
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 New Israeli Shekel (“NIS”) against the U.S. dollar. The Company uses derivative contracts designated as cash flow hedges to hedge a substantial portion of future forecasted operating expenses in NIS. The Company’s primary objective in entering into 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 contracts 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. | ||||||||||||||
The gain or loss on the effective portion of a cash flow hedge is initially reported as a component of accumulated other comprehensive income (loss) (“OCI”), and subsequently reclassified into operating expenses in the same period in which the hedged operating expenses are recognized, or reclassified into other income, net, if the hedged transaction becomes probable of not occurring. 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 (expense) immediately. | ||||||||||||||
As of September 30, 2014, the Company had derivative contracts in place that hedged future operating expenses of approximately 183.3 million NIS, or approximately $49.6 million based upon the exchange rate as of September 30, 2014. The derivative contracts cover a substantial portion of future NIS denominated operating expenses that the Company expects to incur over the next twelve months. | ||||||||||||||
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 September 30, 2014 and December 31, 2013 was as follows: | ||||||||||||||
Derivative Assets Reported in | Derivative Liabilities Reported in | |||||||||||||
Other Current Assets | Other Current Liabilities | |||||||||||||
September 30, | December 31, | September 30, | December 31, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(in thousands) | ||||||||||||||
Foreign exchange contracts designated as cash flow hedges | $ | — | $ | 1,396 | $ | 2,015 | $ | — | ||||||
Total derivatives designated as hedging instruments | $ | — | $ | 1,396 | $ | 2,015 | $ | — | ||||||
Effect of designated derivative contracts on accumulated other comprehensive income | ||||||||||||||
The following table presents the balance of designated derivative contracts as cash flow hedges as of September 30, 2014 and December 31, 2013, and their impact on OCI for the nine months ended September 30, 2014 (in thousands): | ||||||||||||||
December 31, 2013 | $ | 1,396 | ||||||||||||
Amount of loss recognized in OCI (effective portion) | (2,712 | ) | ||||||||||||
Amount of gain reclassified from OCI to income (effective portion) | (699 | ) | ||||||||||||
September 30, 2014 | $ | (2,015 | ) | |||||||||||
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 reclassified 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 three and nine months ended September 30, 2014 and September 30, 2013 was as follows: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Gain (loss) on foreign exchange contracts designated as cash flow hedges | $ | (579 | ) | $ | 1,737 | $ | 699 | $ | 4,718 | |||||
The net gains or losses relating to the ineffective portion of derivative contracts were not material in the three and nine months ended September 30, 2014 and September 30, 2013. | ||||||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES: | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
COMMITMENTS AND CONTINGENCIES: | ' | |||||||
COMMITMENTS AND CONTINGENCIES: | ' | |||||||
NOTE 8— COMMITMENTS AND CONTINGENCIES: | ||||||||
Leases | ||||||||
As of September 30, 2014, future minimum lease payments under non-cancelable operating and capital leases were as follows: | ||||||||
Year Ended December 31, | Capital | Operating | ||||||
Leases | Leases | |||||||
(in thousands) | ||||||||
2014 | $ | 308 | $ | 6,696 | ||||
2015 | 1,099 | 15,259 | ||||||
2016 | 496 | 8,800 | ||||||
2017 | — | 6,470 | ||||||
2018 and beyond | — | 12,917 | ||||||
Total minimum lease payments | $ | 1,903 | $ | 50,142 | ||||
Less: Amount representing interest | (34 | ) | ||||||
Present value of capital lease obligations | 1,869 | |||||||
Less: Current portion | (1,101 | ) | ||||||
Long-term portion of capital lease obligations | $ | 768 | ||||||
Purchase commitments | ||||||||
At September 30, 2014, the Company had non-cancelable purchase commitments of $61.1 million, of which $58.9 million is expected to be paid in the remainder of 2014 and $2.2 million in 2015 and beyond. | ||||||||
Legal proceedings | ||||||||
The Company is currently involved in various legal proceedings. Unless otherwise noted below, during the periods presented the Company did not record any accrual for loss contingencies associated with such legal proceedings, determined that an unfavorable outcome is probable or reasonably possible, or determined that the amount or range of any possible loss is reasonably estimable. | ||||||||
From time to time, we may enter into confidential discussions regarding the potential settlement of pending intellectual property or other proceedings, claims or litigation. However, there can be no assurance that any such discussions will occur or will result in a settlement. In the course of such settlement discussions, if we conclude that a settlement loss is probable and the amount is reasonably estimable we may record settlement costs, notwithstanding not having reached a final settlement agreement. | ||||||||
The Company is engaged in other legal actions not described below arising in the ordinary course of its business and, while there can be no assurance, it believes that the ultimate outcome of these actions will not have a material adverse effect on its operating results, liquidity or financial position. | ||||||||
Pending legal proceedings as of September 30, 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 (collectively, “Respondents”) 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 US 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. | ||||||||
Avago IP has moved to add the Company and a new claim for interference with prospective economic advantage against IPtronics. IPtronics has moved to add an antitrust counterclaim for Avago IP pursuing an action which we believe has no merit. An oral hearing is set for November 21, 2014 on these motions. | ||||||||
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. | ||||||||
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. Lead plaintiffs seek to represent themselves, and all persons purchasing the Company’s common stock between July 19, 2012 and January 2, 2013. On July 7, 2014, defendants moved to dismiss the Second Amended Consolidated Complaint. The Court heard oral argument on August 20, 2014. Defendants’ motion is currently pending. The matter is captioned, In re Mellanox Technologies, Ltd. Securities Litigation, Case No. 3:13-cv-04909-JD. | ||||||||
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. | ||||||||
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. 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. | ||||||||
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 include 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 have 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 have been 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. | ||||||||
However, 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 Company is not successful in defending the Counterclaims, the Company could be forced to license technology from Infinite Data 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. | ||||||||
Infinite Data and Mellanox have reached a settlement in principle and are negotiating the various final agreements. | ||||||||
SHARE_INCENTIVE_PLANS
SHARE INCENTIVE PLANS: | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SHARE INCENTIVE PLANS: | ' | |||||||||||||
SHARE INCENTIVE PLANS: | ' | |||||||||||||
NOTE 9 — SHARE INCENTIVE PLANS: | ||||||||||||||
Share option and restricted share units activity | ||||||||||||||
The following table summarizes the share option activity under the Company’s equity incentive plans during the nine months ended September 30, 2014: | ||||||||||||||
Options Outstanding | ||||||||||||||
Number | Weighted | |||||||||||||
of | Average | |||||||||||||
Shares | Exercise | |||||||||||||
Price | ||||||||||||||
Outstanding at December 31, 2013 | 2,806,224 | $ | 30.14 | |||||||||||
Options granted | 50,000 | 32.64 | ||||||||||||
Options exercised | (189,059 | ) | 17.65 | |||||||||||
Options cancelled | (107,733 | ) | 68.4 | |||||||||||
Outstanding at September 30, 2014 | 2,559,432 | $ | 29.51 | |||||||||||
There were no share options granted in the three months ended September 30, 2014. The weighted average fair value of options granted in the nine months ended September 30, 2014 was $32.64.The total pretax intrinsic value of options exercised in the nine months ended September 30, 2014 and September 30, 2013 was $4.1 million and $11.3 million, respectively. 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 $44.87 on September 30, 2014, the total pretax intrinsic value of all outstanding options was $57.6 million. | ||||||||||||||
The total pretax intrinsic value of exercisable options at September 30, 2014 was $55.5 million. The total pretax intrinsic value of exercisable options at December 31, 2013 was $48.6 million. | ||||||||||||||
Restricted share units activity under the Company’s equity incentive plans in the nine months ended September 30, 2014 is set forth below: | ||||||||||||||
Restricted Share Units Outstanding | ||||||||||||||
Number | Weighted | |||||||||||||
of | Average | |||||||||||||
Shares | Grant Date | |||||||||||||
Fair Value | ||||||||||||||
Non vested restricted share units at December 31, 2013 | 1,974,454 | $ | 43.81 | |||||||||||
Restricted share units granted | 913,310 | 36.9 | ||||||||||||
Restricted share units vested | (648,331 | ) | 42.45 | |||||||||||
Restricted share units canceled | (163,933 | ) | 41.07 | |||||||||||
Non vested restricted share units at September 30, 2014 | 2,075,500 | $ | 41.41 | |||||||||||
The weighted average fair value of restricted share units granted in the three and nine months ended September 30, 2014 was $40.58 and $36.90, respectively. The weighted average fair value of restricted share units granted in the three and nine months ended September 30, 2013 was $44.85 and $50.15, respectively. | ||||||||||||||
The total intrinsic value of all outstanding restricted share units was $93.1 million as of September 30, 2014 and $78.9 million as of December 31, 2013. | ||||||||||||||
The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of September 30, 2014: | ||||||||||||||
Number | ||||||||||||||
of | ||||||||||||||
Shares | ||||||||||||||
Share options outstanding | 2,559,432 | |||||||||||||
Restricted share units outstanding | 2,075,500 | |||||||||||||
Shares authorized for future issuance | 1,510,683 | |||||||||||||
ESPP shares available for future issuance | 851,059 | |||||||||||||
Total shares reserved for future issuance as of September 30, 2014 | 6,996,674 | |||||||||||||
Share-based compensation | ||||||||||||||
The following weighted average assumptions were used to value share options and ESPP shares issued pursuant to the Company’s equity incentive plans for the nine months ended September 30, 2014 and September 30, 2013: | ||||||||||||||
Employee Share | Employee Share | |||||||||||||
Options | Purchase Plan | |||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Dividend yield, % | — | — | — | — | ||||||||||
Expected volatility, % | 56.1 | 57.5 | 48.1 | 51.6 | ||||||||||
Risk free interest rate, % | 1.98 | 1.54 | 0.07 | 0.04 | ||||||||||
Expected life, years | 5.77 | 4.72 | 0.5 | 0.53 | ||||||||||
Estimated forfeiture rate, % | 6.73 | 6.68 | — | — | ||||||||||
The following table summarizes the distribution of total share-based compensation expense in the unaudited condensed consolidated statements of operations: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Cost of goods sold | $ | 532 | $ | 461 | $ | 1,586 | $ | 1,359 | ||||||
Research and development | 6,756 | 6,898 | 20,187 | 19,148 | ||||||||||
Sales and marketing | 2,473 | 2,407 | 7,385 | 6,873 | ||||||||||
General and administrative | 2,088 | 2,166 | 6,276 | 6,092 | ||||||||||
Total share-based compensation expense | $ | 11,849 | $ | 11,932 | $ | 35,434 | $ | 33,472 | ||||||
At September 30, 2014, there was $84.6 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 2.14 years. | ||||||||||||||
At December 31, 2013, there was $89.8 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 2.32 years. |
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | ' | ||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | ' | ||||||||||
NOTE 10 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | |||||||||||
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended September 30, 2014 and September 30, 2013: | |||||||||||
Unrealized Gains / | Gains / Losses | Total | |||||||||
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 | (182 | ) | (2,712 | ) | (2,894 | ) | |||||
Amounts reclassified from accumulated other comprehensive income/loss | (10 | ) | (699 | ) | (709 | ) | |||||
Net current-period other comprehensive income/loss, net of taxes | (192 | ) | (3,411 | ) | (3,603 | ) | |||||
Balance at September 30, 2014 | $ | (198 | ) | $ | (2,015 | ) | $ | (2,213 | ) | ||
Balance at December 31, 2012 | $ | (148 | ) | $ | 2,942 | $ | 2,794 | ||||
Other comprehensive income/loss before reclassifications | 221 | 3,531 | 3,752 | ||||||||
Amounts reclassified from accumulated other comprehensive income/loss | (5 | ) | (4,718 | ) | (4,723 | ) | |||||
Net current-period other comprehensive income/loss, net of taxes | 216 | (1,187 | ) | (971 | ) | ||||||
Balance at September 30, 2013 | $ | 68 | $ | 1,755 | $ | 1,823 | |||||
The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2014: | |||||||||||
Details about Accumulated Other Comprehensive Income / Loss Components | Amount Reclassified from | Affected Line Item in the | |||||||||
Other Comprehensive | Statement of Operations | ||||||||||
Income / Loss | |||||||||||
(in thousands) | |||||||||||
Gain on Derivatives | $ | 699 | Cost of revenues and Operating expenses | ||||||||
38 | Cost of revenues | ||||||||||
535 | Research and development | ||||||||||
62 | Sales and marketing | ||||||||||
64 | General and administrative | ||||||||||
699 | |||||||||||
Unrealized gains (losses) on Available-for-Sale Securities | 10 | Other income, net | |||||||||
Total reclassifications for the period | $ | 709 | Total | ||||||||
INCOME_TAXES
INCOME TAXES: | 9 Months Ended |
Sep. 30, 2014 | |
INCOME TAXES: | ' |
INCOME TAXES: | ' |
NOTE 11 — INCOME TAXES: | |
As of September 30, 2014 and December 31, 2013, the Company had unrecognized tax benefits of $22.6 million and $23.6 million, respectively. It is the Company’s policy to classify accrued interest and penalties as part of the unrecognized tax benefits, or tax contingencies, and record the expense in the provision for income taxes. As of September 30, 2014 and December 31, 2013, the amount of accrued interest and penalties totaled $0.8 million and $0.6 million, respectively. As of September 30, 2014, calendar years 2010 through 2013 were open and subject to potential examination in one or more jurisdictions. The income tax returns for 2009 to 2012 tax years for Mellanox Technologies Ltd. are currently under examination by the Israeli Tax Authority and the income tax returns for 2010 to 2012 tax years for Mellanox Technologies TLV Ltd. are currently under examination by the Israeli Tax Authority The Beneficiary Enterprise tax holiday associated with the Company’s Yokneam and Tel Aviv operations began in 2011. 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 $2.5 million and $5.2 million in the nine months ended September 30, 2014 and September 30, 2013 respectively, increasing diluted earnings per share by approximately $0.06 and $0.12 in the nine months ended September 30, 2014 and September 30, 2013 respectively. | |
The Company’s effective tax rate is highly dependent upon the geographic distribution of its worldwide earnings or losses, tax regulations and tax holiday benefits in Israel, and the effectiveness of the Company’s tax planning strategies. The Company’s effective tax rates were 157.9% and 2.9% for the three and nine months ended September 30, 2014, respectively. The Company’s effective tax rates were (22.5)% and (34.6)% for the three and nine months ended September 30, 2013, respectively. The difference between the Company’s effective tax rates for the three and nine months ended September 30, 2014 and the 35% federal statutory rate resulted primarily from losses generated from non-US subsidiaries without tax benefit, along with non-tax-deductible expenses such as share-based compensation expense and the accrual of unrecognized tax benefits, and interest and penalties associated with unrecognized tax positions, partially offset by foreign earnings taxed at rates lower than the federal statutory rates as well as the release of unrecognized tax benefits due to a lapse in the applicable statute of limitations. | |
At September 30, 2014, the Company recorded a deferred tax asset of $15.1 million reflecting mainly the benefit from loss carryforwards. The Company assesses its ability to recover its deferred tax assets on an ongoing basis. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. In evaluating the ability to recover deferred tax assets, the Company considers available positive and negative evidence including its recent cumulative losses, its ability to carry-back losses against prior taxable income and its projected financial results. The Company also considers, commensurate with its objective verifiability, the forecast of future taxable income including the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. A valuation allowance may be recorded in the event it is deemed to be more-likely-than-not that the deferred tax asset cannot be realized. The Company believes, based on the quarterly assessment performed at September 30, 2014, that it is possible that a valuation allowance may be required in the future if income by jurisdiction is less than what is currently projected. If so, this would have an adverse impact on the Company’s operating results. | |
The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous, and the Company is required to make many subjective assumptions and judgments regarding its income tax exposures. In addition, interpretations of and guidance surrounding income tax laws and regulations are subject to change over time. Any changes in the Company’s subjective assumptions and judgments could materially affect amounts recognized in its consolidated balance sheets and statements of income. |
THE_COMPANY_AND_SUMMARY_OF_SIG1
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' | |||||||||||||
Principles of presentation | ' | |||||||||||||
Principles of presentation | ||||||||||||||
The unaudited condensed consolidated financial statements include the Company’s accounts as well as those of its wholly owned subsidiaries after the elimination of all intercompany balances and transactions. | ||||||||||||||
The unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The year-end unaudited condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on February 28, 2014. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2014 or thereafter. | ||||||||||||||
Certain prior year amounts have been reclassified to conform to 2014 presentation. These changes and reclassifications did not impact net or comprehensive income. | ||||||||||||||
Revision to Prior Period Financial Statements | ' | |||||||||||||
Revision to Prior Period Financial Statements | ||||||||||||||
During the quarter ended September 30, 2014, the Company identified and corrected an error in accounting for liabilities for charitable contributions. The error had accumulated over a number of years, resulting in a $0.6 million cumulative overstatement of the liability as of September 30, 2014. The Company also identified and corrected an overstatement of liabilities in the amount of $0.7 million related to certain purchase orders as of September 30, 2014. The Company’s prior period financial statements should not have reflected these obligations as liabilities in the respective periods. The Company evaluated these errors and determined that the impact of the errors was not material to its results of operations, financial position or cash flows in previously issued financial statements. The Company has retrospectively revised financial information for all prior periods presented to reflect this correction. The impact of the correction of these errors will increase net income by $0.3 million and $0.9 million in fiscal years 2011 and 2012, respectively. The impact of this revision for periods presented within this quarterly report on Form 10-Q are shown in the tables below: | ||||||||||||||
Three Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands, except per share data) | ||||||||||||||
Statement of operations: | ||||||||||||||
Cost of revenues | $ | 37,027 | $ | (158 | ) | $ | 36,869 | |||||||
Gross Profit | 67,040 | 158 | 67,198 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 44,185 | 422 | 44,607 | |||||||||||
Sales and marketing | 18,071 | 133 | 18,204 | |||||||||||
General and administrative | 9,600 | 74 | 9,674 | |||||||||||
Total operating expenses | 71,856 | 629 | 72,485 | |||||||||||
Loss from operations | (4,816 | ) | (471 | ) | (5,287 | ) | ||||||||
Loss before taxes on income | (4,334 | ) | (471 | ) | (4,805 | ) | ||||||||
Net loss | (5,414 | ) | (471 | ) | (5,885 | ) | ||||||||
Net loss per share — basic | (0.12 | ) | (0.02 | ) | (0.14 | ) | ||||||||
Net loss per share — diluted | (0.12 | ) | (0.02 | ) | (0.14 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands, except per share data) | ||||||||||||||
Statement of operations: | ||||||||||||||
Cost of revenues | $ | 98,143 | $ | (169 | ) | $ | 97,974 | |||||||
Gross Profit | 187,172 | 169 | 187,341 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 121,203 | 295 | 121,498 | |||||||||||
Sales and marketing | 51,282 | 107 | 51,389 | |||||||||||
General and administrative | 27,132 | 61 | 27,193 | |||||||||||
Total operating expenses | 199,617 | 463 | 200,080 | |||||||||||
Loss from operations | (12,445 | ) | (294 | ) | (12,739 | ) | ||||||||
Loss before taxes on income | (11,518 | ) | (294 | ) | (11,812 | ) | ||||||||
Net loss | (15,610 | ) | (294 | ) | (15,904 | ) | ||||||||
Net loss per share — basic | (0.36 | ) | (0.01 | ) | (0.37 | ) | ||||||||
Net loss per share — diluted | (0.36 | ) | (0.01 | ) | (0.37 | ) | ||||||||
December 31, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Balance sheet: | ||||||||||||||
Accrued liabilities | $ | 52,588 | $ | (1,337 | ) | $ | 51,251 | |||||||
Total current liabilities | 99,646 | (1,337 | ) | 98,309 | ||||||||||
Total liabilities | 140,800 | (1,337 | ) | 139,463 | ||||||||||
Retained earnings | 113,610 | 1,337 | 114,947 | |||||||||||
Total shareholders’ equity | 665,980 | 1,337 | 667,317 | |||||||||||
Three Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Statement of comprehensive loss: | ||||||||||||||
Net loss | $ | (5,414 | ) | $ | (471 | ) | $ | (5,885 | ) | |||||
Total comprehensive loss, net of tax | (5,756 | ) | (471 | ) | (6,227 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Statement of comprehensive loss: | ||||||||||||||
Net loss | $ | (15,610 | ) | $ | (294 | ) | $ | (15,904 | ) | |||||
Total comprehensive loss, net of tax | (16,581 | ) | (294 | ) | (16,875 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Cash flow statement: | ||||||||||||||
Net loss | $ | (15,610 | ) | $ | (294 | ) | $ | (15,904 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||
Accrued liabilities and other payables | (8,723 | ) | 294 | (8,429 | ) | |||||||||
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. | ||||||||||||||
Additionally, the Company has a significant presence in Israel, including research and development activities, corporate facilities and sales support operations. Uncertainty surrounding the political, economic and military conditions in Israel may directly impact the Company’s financial results. | ||||||||||||||
Use of estimates | ' | |||||||||||||
Use of estimates | ||||||||||||||
The preparation of financial statements in accordance with 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. | ||||||||||||||
Concentration of credit risk | ' | |||||||||||||
Concentration of credit risk | ||||||||||||||
The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Hewlett Packard | 15 | % | 12 | % | 11 | % | 13 | % | ||||||
IBM | 11 | % | 17 | % | 11 | % | 19 | % | ||||||
Dell | 11 | % | * | 11 | % | * | ||||||||
* Less than 10% | ||||||||||||||
The following table summarizes the accounts receivable balance in excess of 10% of the total accounts receivable: | ||||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
Hewlett Packard | 20 | % | 11 | % | ||||||||||
IBM | 13 | % | 10 | % | ||||||||||
Product warranty | ' | |||||||||||||
Product warranty | ||||||||||||||
The following table provides the changes in the product warranty accrual for the nine months ended September 30, 2014 and September 30, 2013: | ||||||||||||||
Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Balance, beginning of the period | $ | 4,198 | $ | 4,447 | ||||||||||
Warranties issued during the period | 4,611 | 6,640 | ||||||||||||
Reversal of warranty reserves | (1,534 | ) | (1,332 | ) | ||||||||||
Settlements during the period | (3,672 | ) | (7,226 | ) | ||||||||||
Balance, end of the period | $ | 3,603 | $ | 2,529 | ||||||||||
Net income (loss) per share | ' | |||||||||||||
Net income (loss) per share | ||||||||||||||
The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(in thousands except per share data) | ||||||||||||||
Net income (loss) | $ | 428 | $ | (5,885 | ) | $ | (20,049 | ) | $ | (15,904 | ) | |||
Basic and diluted shares: | ||||||||||||||
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 44,984 | 43,579 | 44,646 | 43,257 | ||||||||||
Dilutive effect of employee stock option plans | 1,245 | — | — | — | ||||||||||
Shares used to compute diluted net income (loss) per share | 46,229 | 43,579 | 44,646 | 43,257 | ||||||||||
Net income (loss) per share — basic | $ | 0.01 | $ | (0.14 | ) | $ | (0.45 | ) | $ | (0.37 | ) | |||
Net income (loss) per share — diluted | $ | 0.01 | $ | (0.14 | ) | $ | (0.45 | ) | $ | (0.37 | ) | |||
The Company excluded 1,120,074 and 741,819 outstanding shares for the three and nine months ended September 30, 2014, respectively, from the computation of diluted net income per ordinary share, because including these outstanding shares would have had an anti-dilutive effect. | ||||||||||||||
The Company excluded 1,066,286 and 772,885 outstanding shares for the three and nine months ended September 30, 2013, respectively, from the computation of diluted net income per ordinary share, because including these outstanding shares would have had an anti-dilutive effect. | ||||||||||||||
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 fiscal year beginning January 1, 2017. 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) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' | |||||||||||||
Schedule of selected line items from the Condensed Consolidated Financial Statements illustrating the effect of corrections and the correction of other immaterial errors | ' | |||||||||||||
Three Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands, except per share data) | ||||||||||||||
Statement of operations: | ||||||||||||||
Cost of revenues | $ | 37,027 | $ | (158 | ) | $ | 36,869 | |||||||
Gross Profit | 67,040 | 158 | 67,198 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 44,185 | 422 | 44,607 | |||||||||||
Sales and marketing | 18,071 | 133 | 18,204 | |||||||||||
General and administrative | 9,600 | 74 | 9,674 | |||||||||||
Total operating expenses | 71,856 | 629 | 72,485 | |||||||||||
Loss from operations | (4,816 | ) | (471 | ) | (5,287 | ) | ||||||||
Loss before taxes on income | (4,334 | ) | (471 | ) | (4,805 | ) | ||||||||
Net loss | (5,414 | ) | (471 | ) | (5,885 | ) | ||||||||
Net loss per share — basic | (0.12 | ) | (0.02 | ) | (0.14 | ) | ||||||||
Net loss per share — diluted | (0.12 | ) | (0.02 | ) | (0.14 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands, except per share data) | ||||||||||||||
Statement of operations: | ||||||||||||||
Cost of revenues | $ | 98,143 | $ | (169 | ) | $ | 97,974 | |||||||
Gross Profit | 187,172 | 169 | 187,341 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 121,203 | 295 | 121,498 | |||||||||||
Sales and marketing | 51,282 | 107 | 51,389 | |||||||||||
General and administrative | 27,132 | 61 | 27,193 | |||||||||||
Total operating expenses | 199,617 | 463 | 200,080 | |||||||||||
Loss from operations | (12,445 | ) | (294 | ) | (12,739 | ) | ||||||||
Loss before taxes on income | (11,518 | ) | (294 | ) | (11,812 | ) | ||||||||
Net loss | (15,610 | ) | (294 | ) | (15,904 | ) | ||||||||
Net loss per share — basic | (0.36 | ) | (0.01 | ) | (0.37 | ) | ||||||||
Net loss per share — diluted | (0.36 | ) | (0.01 | ) | (0.37 | ) | ||||||||
December 31, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Balance sheet: | ||||||||||||||
Accrued liabilities | $ | 52,588 | $ | (1,337 | ) | $ | 51,251 | |||||||
Total current liabilities | 99,646 | (1,337 | ) | 98,309 | ||||||||||
Total liabilities | 140,800 | (1,337 | ) | 139,463 | ||||||||||
Retained earnings | 113,610 | 1,337 | 114,947 | |||||||||||
Total shareholders’ equity | 665,980 | 1,337 | 667,317 | |||||||||||
Three Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Statement of comprehensive loss: | ||||||||||||||
Net loss | $ | (5,414 | ) | $ | (471 | ) | $ | (5,885 | ) | |||||
Total comprehensive loss, net of tax | (5,756 | ) | (471 | ) | (6,227 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Statement of comprehensive loss: | ||||||||||||||
Net loss | $ | (15,610 | ) | $ | (294 | ) | $ | (15,904 | ) | |||||
Total comprehensive loss, net of tax | (16,581 | ) | (294 | ) | (16,875 | ) | ||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
As reported | Adjustments | As revised | ||||||||||||
(in thousands) | ||||||||||||||
Cash flow statement: | ||||||||||||||
Net loss | $ | (15,610 | ) | $ | (294 | ) | $ | (15,904 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||
Accrued liabilities and other payables | (8,723 | ) | 294 | (8,429 | ) | |||||||||
Schedule of revenues and accounts receivable from customers | ' | |||||||||||||
The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Hewlett Packard | 15 | % | 12 | % | 11 | % | 13 | % | ||||||
IBM | 11 | % | 17 | % | 11 | % | 19 | % | ||||||
Dell | 11 | % | * | 11 | % | * | ||||||||
* Less than 10% | ||||||||||||||
The following table summarizes the accounts receivable balance in excess of 10% of the total accounts receivable: | ||||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
Hewlett Packard | 20 | % | 11 | % | ||||||||||
IBM | 13 | % | 10 | % | ||||||||||
Schedule of changes in the product warranty accrual | ' | |||||||||||||
Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Balance, beginning of the period | $ | 4,198 | $ | 4,447 | ||||||||||
Warranties issued during the period | 4,611 | 6,640 | ||||||||||||
Reversal of warranty reserves | (1,534 | ) | (1,332 | ) | ||||||||||
Settlements during the period | (3,672 | ) | (7,226 | ) | ||||||||||
Balance, end of the period | $ | 3,603 | $ | 2,529 | ||||||||||
Schedule of computation of basic and diluted net income (loss) per share | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(in thousands except per share data) | ||||||||||||||
Net income (loss) | $ | 428 | $ | (5,885 | ) | $ | (20,049 | ) | $ | (15,904 | ) | |||
Basic and diluted shares: | ||||||||||||||
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 44,984 | 43,579 | 44,646 | 43,257 | ||||||||||
Dilutive effect of employee stock option plans | 1,245 | — | — | — | ||||||||||
Shares used to compute diluted net income (loss) per share | 46,229 | 43,579 | 44,646 | 43,257 | ||||||||||
Net income (loss) per share — basic | $ | 0.01 | $ | (0.14 | ) | $ | (0.45 | ) | $ | (0.37 | ) | |||
Net income (loss) per share — diluted | $ | 0.01 | $ | (0.14 | ) | $ | (0.45 | ) | $ | (0.37 | ) | |||
BALANCE_SHEET_COMPONENTS_Table
BALANCE SHEET COMPONENTS: (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
BALANCE SHEET COMPONENTS: | ' | |||||||
Schedule of balance sheet components | ' | |||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
(In thousands) | ||||||||
Accounts receivable, net: | ||||||||
Accounts receivable | $ | 73,631 | $ | 71,205 | ||||
Less: allowance for doubtful accounts | (672 | ) | (639 | ) | ||||
$ | 72,959 | $ | 70,566 | |||||
Inventories: | ||||||||
Raw materials | $ | 6,156 | $ | 4,385 | ||||
Work-in-process | 13,555 | 12,187 | ||||||
Finished goods | 19,615 | 19,391 | ||||||
$ | 39,326 | $ | 35,963 | |||||
Deferred taxes and other current assets: | ||||||||
Prepaid expenses | $ | 8,198 | $ | 5,929 | ||||
Derivative contracts receivable | — | 1,396 | ||||||
Deferred taxes | 7,830 | 7,336 | ||||||
VAT receivable | 6,413 | 1,900 | ||||||
Other | 2,070 | 1,020 | ||||||
$ | 24,511 | $ | 17,581 | |||||
Property and equipment, net: | ||||||||
Computer equipment and software | $ | 113,041 | $ | 91,368 | ||||
Furniture and fixtures | 3,246 | 3,809 | ||||||
Leasehold improvements | 32,913 | 31,608 | ||||||
149,200 | 126,785 | |||||||
Less: Accumulated depreciation and amortization | (75,246 | ) | (55,970 | ) | ||||
$ | 73,954 | $ | 70,815 | |||||
Deferred taxes and other long-term assets: | ||||||||
Equity investments in private companies | $ | 10,486 | $ | 7,548 | ||||
Deferred taxes | 7,311 | 7,155 | ||||||
Restricted cash | 13 | 3,514 | ||||||
Other assets | 3,517 | 2,396 | ||||||
$ | 21,327 | $ | 20,613 | |||||
Accrued liabilities: | ||||||||
Payroll and related expenses | $ | 24,450 | $ | 28,712 | ||||
Accrued expenses | 20,109 | 14,335 | ||||||
Product warranty liability | 3,603 | 4,198 | ||||||
Derivative contracts payable | 2,015 | — | ||||||
Other | 7,717 | 4,006 | ||||||
$ | 57,894 | $ | 51,251 | |||||
Other long-term liabilities: | ||||||||
Deferred tax liability and income tax payable | $ | 11,298 | $ | 13,026 | ||||
Deferred rent | 2,596 | 3,072 | ||||||
Other | 995 | 993 | ||||||
$ | 14,889 | $ | 17,091 |
BUSINESS_COMBINATION_Tables
BUSINESS COMBINATION: (Tables) (IPtronics and Kotura) | 9 Months Ended | |||||||||||||
Sep. 30, 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 | $ | 2,173 | $ | 5,252 | $ | 7,425 | ||||||||
Other long-term assets | 974 | 10,603 | 11,577 | |||||||||||
Intangible assets | 17,495 | 27,604 | 45,099 | |||||||||||
Goodwill | 25,725 | 40,948 | 66,673 | |||||||||||
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 | 27,827 | 5 | ||||||||||||
In-process research and development | 13,764 | — | ||||||||||||
Customer relationship | 2,420 | 2-Jan | ||||||||||||
Backlog | 953 | Less than 1 | ||||||||||||
Total purchased intangible assets | $ | 45,099 | ||||||||||||
Summary of significant assumptions underlying the valuations of IPR&D at acquisition | ' | |||||||||||||
Company | Development | Average | Estimated | Risk | Fair value | |||||||||
Projects | Estimated | cost | Adjusted | |||||||||||
time | to complete | Discount Rate | ||||||||||||
to complete | ||||||||||||||
(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 | ' | |||||||||||||
Nine Months Ended | ||||||||||||||
September 30, 2013 | ||||||||||||||
(in thousands, except | ||||||||||||||
per share data) | ||||||||||||||
Pro forma net revenue | $ | 296,986 | ||||||||||||
Pro forma net loss | $ | (23,175 | ) | |||||||||||
Pro forma net loss per share basic | $ | (0.54 | ) | |||||||||||
Pro forma net loss per share diluted | $ | (0.54 | ) | |||||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS: (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
FAIR VALUE MEASUREMENTS: | ' | ||||||||||
Schedule of the fair value hierarchy of the Company's financial assets and liabilities measured at fair value | ' | ||||||||||
The following table presents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value as of September 30, 2014. | |||||||||||
Level 1 | Level 2 | Total | |||||||||
(in thousands) | |||||||||||
Money market funds | $ | 1,683 | $ | — | $ | 1,683 | |||||
Certificates of deposits | — | 73,892 | 73,892 | ||||||||
U.S. Government and agency securities | — | 78,281 | 78,281 | ||||||||
Commercial paper | — | 25,933 | 25,933 | ||||||||
Corporate bonds | — | 98,192 | 98,192 | ||||||||
Municipal bonds | — | 12,718 | 12,718 | ||||||||
Foreign government bonds | — | 6,779 | 6,779 | ||||||||
Total financial assets | $ | 1,683 | $ | 295,795 | $ | 297,478 | |||||
Derivative contracts | — | 2,015 | 2,015 | ||||||||
Total financial liabilities | $ | — | $ | 2,015 | $ | 2,015 | |||||
The following table represents the fair value hierarchy of the Company’s financial assets measured at fair value as of December 31, 2013. There were no financial liabilities 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) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
INVESTMENTS: | ' | |||||||||||||
Schedule of cash, cash equivalents and short-term investments | ' | |||||||||||||
September 30, 2014 | ||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Cash | $ | 53,169 | $ | — | $ | — | $ | 53,169 | ||||||
Money market funds | 1,683 | — | — | 1,683 | ||||||||||
Certificates of deposits | 73,902 | 2 | (12 | ) | 73,892 | |||||||||
U.S. Government and agency securities | 78,364 | 26 | (109 | ) | 78,281 | |||||||||
Commercial paper | 25,919 | 14 | — | 25,933 | ||||||||||
Corporate bonds | 98,309 | 33 | (150 | ) | 98,192 | |||||||||
Municipal bonds | 12,774 | — | (56 | ) | 12,718 | |||||||||
Foreign government bonds | 6,800 | — | (21 | ) | 6,779 | |||||||||
Total | $ | 350,920 | $ | 75 | $ | (348 | ) | $ | 350,647 | |||||
Less amounts classified as cash and cash equivalents | (54,852 | ) | — | — | (54,852 | ) | ||||||||
$ | 296,068 | $ | 75 | $ | (348 | ) | $ | 295,795 | ||||||
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 available-for-sale securities | ' | |||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Amortized | Estimated Fair | Amortized | Estimated Fair | |||||||||||
Cost | Value | Cost | Value | |||||||||||
(in thousands) | ||||||||||||||
Due in less than one year | $ | 143,767 | $ | 143,818 | $ | 190,172 | $ | 190,189 | ||||||
Due in one to three years | 152,301 | 151,977 | 73,362 | 73,339 | ||||||||||
$ | 296,068 | $ | 295,795 | $ | 263,534 | $ | 263,528 | |||||||
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS: (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
GOODWILL AND INTANGIBLE ASSETS: | ' | ||||||||||
Schedule of changes in the carrying amount of goodwill | ' | ||||||||||
The following table presents changes in the carrying amount of goodwill (in thousands): | |||||||||||
Balance as of December 31, 2013 | $ | 199,558 | |||||||||
Goodwill from Integrity acquisition | 1,547 | ||||||||||
Adjustments | — | ||||||||||
Balance as of September 30, 2014 | $ | 201,105 | |||||||||
Schedule of carrying amounts of intangible assets | ' | ||||||||||
The carrying amounts of intangible assets as of September 30, 2014 were as follows: | |||||||||||
Gross | Accumulated | Net | |||||||||
Carrying | Amortization | Carrying | |||||||||
Value | Value | ||||||||||
(in thousands) | |||||||||||
Licensed technology | $ | 2,344 | $ | (779 | ) | $ | 1,565 | ||||
Developed technology | 56,190 | (30,525 | ) | 25,665 | |||||||
Customer relationships | 13,376 | (9,395 | ) | 3,981 | |||||||
Total amortizable intangible assets | $ | 71,910 | $ | (40,699 | ) | $ | 31,211 | ||||
IPR&D | 13,764 | — | 13,764 | ||||||||
Total intangible assets | $ | 85,674 | $ | (40,699 | ) | $ | 44,975 | ||||
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 | 56,190 | (24,667 | ) | 31,523 | |||||||
Customer relationships | 13,376 | (6,279 | ) | 7,097 | |||||||
Total amortizable intangible assets | $ | 71,910 | $ | (31,312 | ) | $ | 40,598 | ||||
IPR&D | 13,764 | — | 13,764 | ||||||||
Total intangible assets | $ | 85,674 | $ | (31,312 | ) | $ | 54,362 | ||||
Schedule of estimated future amortization expenses from amortizable intangible assets | ' | ||||||||||
The estimated future amortization expenses from amortizable intangible assets were as follows (in thousands): | |||||||||||
Remainder of 2014 | $ | 3,507 | |||||||||
2015 | 10,786 | ||||||||||
2016 | 9,970 | ||||||||||
2017 | 9,907 | ||||||||||
2018 and thereafter | 10,805 | ||||||||||
$ | 44,975 |
DERIVATIVES_AND_HEDGING_ACTIVI1
DERIVATIVES AND HEDGING ACTIVITIES: (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES: | ' | |||||||||||||
Schedule of fair value of derivative contracts | ' | |||||||||||||
Derivative Assets Reported in | Derivative Liabilities Reported in | |||||||||||||
Other Current Assets | Other Current Liabilities | |||||||||||||
September 30, | December 31, | September 30, | December 31, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(in thousands) | ||||||||||||||
Foreign exchange contracts designated as cash flow hedges | $ | — | $ | 1,396 | $ | 2,015 | $ | — | ||||||
Total derivatives designated as hedging instruments | $ | — | $ | 1,396 | $ | 2,015 | $ | — | ||||||
Schedule of designated derivative contracts as cash flow hedges and their impact on OCI | ' | |||||||||||||
The following table presents the balance of designated derivative contracts as cash flow hedges as of September 30, 2014 and December 31, 2013, and their impact on OCI for the nine months ended September 30, 2014 (in thousands): | ||||||||||||||
December 31, 2013 | $ | 1,396 | ||||||||||||
Amount of loss recognized in OCI (effective portion) | (2,712 | ) | ||||||||||||
Amount of gain reclassified from OCI to income (effective portion) | (699 | ) | ||||||||||||
September 30, 2014 | $ | (2,015 | ) | |||||||||||
Effect of derivative contracts on the condensed consolidated statement of operations | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Gain (loss) on foreign exchange contracts designated as cash flow hedges | $ | (579 | ) | $ | 1,737 | $ | 699 | $ | 4,718 | |||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
COMMITMENTS AND CONTINGENCIES: | ' | |||||||
Schedule of future minimum lease payments under non-cancelable operating and capital leases | ' | |||||||
As of September 30, 2014, future minimum lease payments under non-cancelable operating and capital leases were as follows: | ||||||||
Year Ended December 31, | Capital | Operating | ||||||
Leases | Leases | |||||||
(in thousands) | ||||||||
2014 | $ | 308 | $ | 6,696 | ||||
2015 | 1,099 | 15,259 | ||||||
2016 | 496 | 8,800 | ||||||
2017 | — | 6,470 | ||||||
2018 and beyond | — | 12,917 | ||||||
Total minimum lease payments | $ | 1,903 | $ | 50,142 | ||||
Less: Amount representing interest | (34 | ) | ||||||
Present value of capital lease obligations | 1,869 | |||||||
Less: Current portion | (1,101 | ) | ||||||
Long-term portion of capital lease obligations | $ | 768 |
SHARE_INCENTIVE_PLANS_Tables
SHARE INCENTIVE PLANS: (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SHARE INCENTIVE PLANS: | ' | |||||||||||||
Summary of share option awards activity under equity incentive plans | ' | |||||||||||||
Options Outstanding | ||||||||||||||
Number | Weighted | |||||||||||||
of | Average | |||||||||||||
Shares | Exercise | |||||||||||||
Price | ||||||||||||||
Outstanding at December 31, 2013 | 2,806,224 | $ | 30.14 | |||||||||||
Options granted | 50,000 | 32.64 | ||||||||||||
Options exercised | (189,059 | ) | 17.65 | |||||||||||
Options cancelled | (107,733 | ) | 68.4 | |||||||||||
Outstanding at September 30, 2014 | 2,559,432 | $ | 29.51 | |||||||||||
Summary of restricted share units activity | ' | |||||||||||||
Restricted Share Units Outstanding | ||||||||||||||
Number | Weighted | |||||||||||||
of | Average | |||||||||||||
Shares | Grant Date | |||||||||||||
Fair Value | ||||||||||||||
Non vested restricted share units at December 31, 2013 | 1,974,454 | $ | 43.81 | |||||||||||
Restricted share units granted | 913,310 | 36.9 | ||||||||||||
Restricted share units vested | (648,331 | ) | 42.45 | |||||||||||
Restricted share units canceled | (163,933 | ) | 41.07 | |||||||||||
Non vested restricted share units at September 30, 2014 | 2,075,500 | $ | 41.41 | |||||||||||
Summary of ordinary shares reserved for future issuance under equity incentive plans | ' | |||||||||||||
Number | ||||||||||||||
of | ||||||||||||||
Shares | ||||||||||||||
Share options outstanding | 2,559,432 | |||||||||||||
Restricted share units outstanding | 2,075,500 | |||||||||||||
Shares authorized for future issuance | 1,510,683 | |||||||||||||
ESPP shares available for future issuance | 851,059 | |||||||||||||
Total shares reserved for future issuance as of September 30, 2014 | 6,996,674 | |||||||||||||
Schedule of weighted average assumptions used to value share options and ESPP shares issued | ' | |||||||||||||
Employee Share | Employee Share | |||||||||||||
Options | Purchase Plan | |||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Dividend yield, % | — | — | — | — | ||||||||||
Expected volatility, % | 56.1 | 57.5 | 48.1 | 51.6 | ||||||||||
Risk free interest rate, % | 1.98 | 1.54 | 0.07 | 0.04 | ||||||||||
Expected life, years | 5.77 | 4.72 | 0.5 | 0.53 | ||||||||||
Estimated forfeiture rate, % | 6.73 | 6.68 | — | — | ||||||||||
Summary of the distribution of total share-based compensation expense | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Cost of goods sold | $ | 532 | $ | 461 | $ | 1,586 | $ | 1,359 | ||||||
Research and development | 6,756 | 6,898 | 20,187 | 19,148 | ||||||||||
Sales and marketing | 2,473 | 2,407 | 7,385 | 6,873 | ||||||||||
General and administrative | 2,088 | 2,166 | 6,276 | 6,092 | ||||||||||
Total share-based compensation expense | $ | 11,849 | $ | 11,932 | $ | 35,434 | $ | 33,472 | ||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | ' | ||||||||||
Summary of the changes in accumulated balances of other comprehensive income (loss) | ' | ||||||||||
Unrealized Gains / | Gains / Losses | Total | |||||||||
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 | (182 | ) | (2,712 | ) | (2,894 | ) | |||||
Amounts reclassified from accumulated other comprehensive income/loss | (10 | ) | (699 | ) | (709 | ) | |||||
Net current-period other comprehensive income/loss, net of taxes | (192 | ) | (3,411 | ) | (3,603 | ) | |||||
Balance at September 30, 2014 | $ | (198 | ) | $ | (2,015 | ) | $ | (2,213 | ) | ||
Balance at December 31, 2012 | $ | (148 | ) | $ | 2,942 | $ | 2,794 | ||||
Other comprehensive income/loss before reclassifications | 221 | 3,531 | 3,752 | ||||||||
Amounts reclassified from accumulated other comprehensive income/loss | (5 | ) | (4,718 | ) | (4,723 | ) | |||||
Net current-period other comprehensive income/loss, net of taxes | 216 | (1,187 | ) | (971 | ) | ||||||
Balance at September 30, 2013 | $ | 68 | $ | 1,755 | $ | 1,823 | |||||
Schedule of reclassifications out of accumulated other comprehensive income (loss) | ' | ||||||||||
Details about Accumulated Other Comprehensive Income / Loss Components | Amount Reclassified from | Affected Line Item in the | |||||||||
Other Comprehensive | Statement of Operations | ||||||||||
Income / Loss | |||||||||||
(in thousands) | |||||||||||
Gain on Derivatives | $ | 699 | Cost of revenues and Operating expenses | ||||||||
38 | Cost of revenues | ||||||||||
535 | Research and development | ||||||||||
62 | Sales and marketing | ||||||||||
64 | General and administrative | ||||||||||
699 | |||||||||||
Unrealized gains (losses) on Available-for-Sale Securities | 10 | Other income, net | |||||||||
Total reclassifications for the period | $ | 709 | Total | ||||||||
THE_COMPANY_AND_SUMMARY_OF_SIG3
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 |
As reported | As reported | As reported | Amounts not properly stated for accruals related to charitable contributions and accruals related to certain purchase orders | Amounts not properly stated for accruals related to charitable contributions and accruals related to certain purchase orders | Amounts not properly stated for accruals related to charitable contributions and accruals related to certain purchase orders | Amounts not properly stated for accruals related to charitable contributions and accruals related to certain purchase orders | Amounts not properly stated for accruals related to charitable contributions and accruals related to certain purchase orders | Amounts not properly stated for accruals related to charitable contributions | Amounts not properly stated for accruals related to certain purchase orders | ||||||
Adjustments | Adjustments | Adjustments | |||||||||||||
Statement of operations: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of revenues | $39,540 | $36,869 | $107,788 | $97,974 | ' | $37,027 | $98,143 | ' | ' | ' | ($158) | ($169) | ' | ' | ' |
Gross Profit | 81,168 | 67,198 | 214,199 | 187,341 | ' | 67,040 | 187,172 | ' | ' | ' | 158 | 169 | ' | ' | ' |
Operating expenses: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Research and development | 54,220 | 44,607 | 152,063 | 121,498 | ' | 44,185 | 121,203 | ' | ' | ' | 422 | 295 | ' | ' | ' |
Sales and marketing | 18,864 | 18,204 | 56,865 | 51,389 | ' | 18,071 | 51,282 | ' | ' | ' | 133 | 107 | ' | ' | ' |
General and administrative | 9,184 | 9,674 | 26,861 | 27,193 | ' | 9,600 | 27,132 | ' | ' | ' | 74 | 61 | ' | ' | ' |
Total operating expenses | 82,268 | 72,485 | 235,789 | 200,080 | ' | 71,856 | 199,617 | ' | ' | ' | 629 | 463 | ' | ' | ' |
Loss from operations | -1,100 | -5,287 | -21,590 | -12,739 | ' | -4,816 | -12,445 | ' | ' | ' | -471 | -294 | ' | ' | ' |
Loss before taxes on income | -739 | -4,805 | -20,638 | -11,812 | ' | -4,334 | -11,518 | ' | ' | ' | -471 | -294 | ' | ' | ' |
Net income (loss) | 428 | -5,885 | -20,049 | -15,904 | ' | -5,414 | -15,610 | ' | 900 | 300 | -471 | -294 | ' | ' | ' |
Net loss per share - basic (in dollars per share) | $0.01 | ($0.14) | ($0.45) | ($0.37) | ' | ($0.12) | ($0.36) | ' | ' | ' | ($0.02) | ($0.01) | ' | ' | ' |
Net loss per share - diluted (in dollars per share) | $0.01 | ($0.14) | ($0.45) | ($0.37) | ' | ($0.12) | ($0.36) | ' | ' | ' | ($0.02) | ($0.01) | ' | ' | ' |
Balance sheet: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued liabilities | 57,894 | ' | 57,894 | ' | 51,251 | ' | ' | 52,588 | ' | ' | ' | ' | -1,337 | ' | ' |
Total current liabilities | 110,779 | ' | 110,779 | ' | 98,309 | ' | ' | 99,646 | ' | ' | ' | ' | -1,337 | ' | ' |
Total liabilities | 147,506 | ' | 147,506 | ' | 139,463 | ' | ' | 140,800 | ' | ' | ' | ' | -1,337 | 600 | 700 |
Retained earnings | 94,898 | ' | 94,898 | ' | 114,947 | ' | ' | 113,610 | ' | ' | ' | ' | 1,337 | ' | ' |
Total shareholders' equity | 694,716 | ' | 694,716 | ' | 667,317 | ' | ' | 665,980 | ' | ' | ' | ' | 1,337 | ' | ' |
Statement of comprehensive loss: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | 428 | -5,885 | -20,049 | -15,904 | ' | -5,414 | -15,610 | ' | 900 | 300 | -471 | -294 | ' | ' | ' |
Total comprehensive loss, net of tax | -2,506 | -6,227 | -23,652 | -16,875 | ' | -5,756 | -16,581 | ' | ' | ' | -471 | -294 | ' | ' | ' |
Cash flow statement: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | 428 | -5,885 | -20,049 | -15,904 | ' | -5,414 | -15,610 | ' | 900 | 300 | -471 | -294 | ' | ' | ' |
Adjustments to reconcile net loss to net cash provided by operating activities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued liabilities and other payables | ' | ' | $406 | ($8,429) | ' | ' | ($8,723) | ' | ' | ' | ' | $294 | ' | ' | ' |
THE_COMPANY_AND_SUMMARY_OF_SIG4
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 2) (Consolidated revenue) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Revenues | Revenues | Revenues | Revenues | Revenues | Revenues | Revenues | Revenues | Revenues | Revenues | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | |
IBM | IBM | IBM | IBM | Hewlett Packard | Hewlett Packard | Hewlett Packard | Hewlett Packard | Dell | Dell | IBM | IBM | Hewlett Packard | Hewlett Packard | |
Concentration of credit risk | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of consolidated revenue by major customer | 11.00% | 17.00% | 11.00% | 19.00% | 15.00% | 12.00% | 11.00% | 13.00% | 11.00% | 11.00% | 13.00% | 10.00% | 20.00% | 11.00% |
THE_COMPANY_AND_SUMMARY_OF_SIG5
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 3) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Changes in the product warranty accrual | ' | ' |
Balance, beginning of the period | $4,198 | $4,447 |
Warranties issued during the period | 4,611 | 6,640 |
Reversal of warranty reserves | -1,534 | -1,332 |
Settlements during the period | -3,672 | -7,226 |
Balance, end of the period | $3,603 | $2,529 |
THE_COMPANY_AND_SUMMARY_OF_SIG6
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 4) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Net income (loss) per share | ' | ' | ' | ' |
Net income (loss) | $428 | ($5,885) | ($20,049) | ($15,904) |
Basic and diluted shares: | ' | ' | ' | ' |
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 44,984,000 | 43,579,000 | 44,646,000 | 43,257,000 |
Dilutive effect of employee stock option plans | 1,245,000 | ' | ' | ' |
Shares used to compute diluted net income (loss) per share | 46,229,000 | 43,579,000 | 44,646,000 | 43,257,000 |
Net income (loss) per share - basic (in dollars per share) | $0.01 | ($0.14) | ($0.45) | ($0.37) |
Net income (loss) per share - diluted (in dollars per share) | $0.01 | ($0.14) | ($0.45) | ($0.37) |
Employee Share Options | ' | ' | ' | ' |
Net income (loss) per share | ' | ' | ' | ' |
Outstanding shares excluded from the computation of diluted net income per ordinary share | 1,120,074 | 1,066,286 | 741,819 | 772,885 |
BALANCE_SHEET_COMPONENTS_Detai
BALANCE SHEET COMPONENTS: (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Accounts receivable, net: | ' | ' | ' | ' |
Accounts receivable | $73,631 | $71,205 | ' | ' |
Less: allowance for doubtful accounts | -672 | -639 | ' | ' |
Accounts receivable, net | 72,959 | 70,566 | ' | ' |
Inventories: | ' | ' | ' | ' |
Raw materials | 6,156 | 4,385 | ' | ' |
Work-in-process | 13,555 | 12,187 | ' | ' |
Finished goods | 19,615 | 19,391 | ' | ' |
Inventories | 39,326 | 35,963 | ' | ' |
Deferred taxes and other current assets: | ' | ' | ' | ' |
Prepaid expenses | 8,198 | 5,929 | ' | ' |
Derivative contracts receivable | ' | 1,396 | ' | ' |
Deferred taxes | 7,830 | 7,336 | ' | ' |
VAT receivable | 6,413 | 1,900 | ' | ' |
Other | 2,070 | 1,020 | ' | ' |
Deferred taxes and other current assets | 24,511 | 17,581 | ' | ' |
Property and equipment, net: | ' | ' | ' | ' |
Property and equipment, gross | 149,200 | 126,785 | ' | ' |
Less: Accumulated depreciation and amortization | -75,246 | -55,970 | ' | ' |
Property and equipment, net | 73,954 | 70,815 | ' | ' |
Deferred taxes and other long-term assets: | ' | ' | ' | ' |
Equity investments in private companies | 10,486 | 7,548 | ' | ' |
Deferred taxes | 7,311 | 7,155 | ' | ' |
Restricted cash | 13 | 3,514 | ' | ' |
Other assets | 3,517 | 2,396 | ' | ' |
Deferred taxes and other long-term assets | 21,327 | 20,613 | ' | ' |
Accrued liabilities: | ' | ' | ' | ' |
Payroll and related expenses | 24,450 | 28,712 | ' | ' |
Accrued expenses | 20,109 | 14,335 | ' | ' |
Product warranty liability | 3,603 | 4,198 | 2,529 | 4,447 |
Derivative contracts payable | 2,015 | ' | ' | ' |
Other | 7,717 | 4,006 | ' | ' |
Accrued liabilities | 57,894 | 51,251 | ' | ' |
Other long-term liabilities: | ' | ' | ' | ' |
Deferred tax liability and income tax payable | 11,298 | 13,026 | ' | ' |
Deferred rent | 2,596 | 3,072 | ' | ' |
Other | 995 | 993 | ' | ' |
Other long-term liabilities | 14,889 | 17,091 | ' | ' |
Computer equipment and software | ' | ' | ' | ' |
Property and equipment, net: | ' | ' | ' | ' |
Property and equipment, gross | 113,041 | 91,368 | ' | ' |
Furniture and fixtures | ' | ' | ' | ' |
Property and equipment, net: | ' | ' | ' | ' |
Property and equipment, gross | 3,246 | 3,809 | ' | ' |
Leasehold improvements | ' | ' | ' | ' |
Property and equipment, net: | ' | ' | ' | ' |
Property and equipment, gross | $32,913 | $31,608 | ' | ' |
BUSINESS_COMBINATION_Details
BUSINESS COMBINATION: (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 1 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | ||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Aug. 15, 2013 | Sep. 30, 2014 | Jul. 02, 2013 | Sep. 30, 2013 | Jul. 02, 2013 | Aug. 15, 2013 | Sep. 30, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | |
Restricted share units | Employee Share Options | Employee Share Options | IPtronics and Kotura | IPtronics and Kotura | IPtronics | IPtronics | IPtronics | Kotura | Kotura | Kotura | Kotura | Kotura | Kotura | Kotura | ||||||
Restricted share units | RSUs and options | RSUs and options | RSUs and options | Restricted share units | Employee Share Options | |||||||||||||||
Minimum | Maximum | |||||||||||||||||||
Details of purchase consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash Consideration Paid | ' | ' | ' | ' | ' | ' | ' | ' | $125,697,000 | ' | $44,925,000 | ' | ' | $80,772,000 | ' | ' | ' | ' | ' | ' |
Cash Assumed | ' | ' | ' | ' | ' | ' | ' | ' | 2,178,000 | ' | 2,077,000 | 2,077,000 | ' | 101,000 | 101,000 | ' | ' | ' | ' | ' |
Net Cash Paid | ' | ' | ' | ' | ' | ' | ' | ' | 123,519,000 | ' | 42,848,000 | 42,848,000 | ' | 80,671,000 | 80,671,000 | ' | ' | ' | ' | ' |
Units issued (in shares) | ' | ' | ' | ' | ' | 913,310 | ' | ' | ' | ' | ' | ' | 60,508 | ' | ' | ' | ' | ' | 145,425 | ' |
Aggregate value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | 6,400,000 | ' | ' | ' | ' |
Fair value (in dollars per share) | ' | ' | ' | ' | ' | ' | $44.87 | ' | ' | ' | ' | ' | $49.92 | ' | ' | ' | ' | ' | $42.19 | ' |
Compensation expense | 11,849,000 | 11,932,000 | 35,434,000 | 33,472,000 | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | 6,400,000 | ' | ' | ' | ' |
Vesting period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '4 years | ' | ' | ' | ' | ' | ' | ' |
Options issues (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31,653 |
Compensation expenses recognition period | ' | ' | '2 years 1 month 20 days | ' | '2 years 3 months 25 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '1 day | '4 years | ' | ' |
Weighted average assumptions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected life | ' | ' | ' | ' | ' | ' | '5 years 9 months 7 days | '4 years 8 months 19 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '4 years 8 months 19 days |
Volatility (as a percent) | ' | ' | ' | ' | ' | ' | 56.10% | 57.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 57.50% |
Risk-free interest rate (as a percent) | ' | ' | ' | ' | ' | ' | 1.98% | 1.54% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.54% |
Dividend yield (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% |
Purchase price allocation: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current assets, net of cash | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,425,000 | 2,173,000 | ' | ' | 5,252,000 | ' | ' | ' | ' | ' | ' |
Other long-term assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,577,000 | 974,000 | ' | ' | 10,603,000 | ' | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | 45,099,000 | 17,495,000 | ' | ' | 27,604,000 | ' | ' | ' | ' | ' | ' |
Goodwill | 201,105,000 | ' | 201,105,000 | ' | 199,558,000 | ' | ' | ' | ' | 66,673,000 | 25,725,000 | ' | ' | 40,948,000 | ' | ' | ' | ' | ' | ' |
Total assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | 130,774,000 | 46,367,000 | ' | ' | 84,407,000 | ' | ' | ' | ' | ' | ' |
Current liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | -6,025,000 | -2,668,000 | ' | ' | -3,357,000 | ' | ' | ' | ' | ' | ' |
Long-term liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1,230,000 | -851,000 | ' | ' | -379,000 | ' | ' | ' | ' | ' | ' |
Total liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | -7,255,000 | -3,519,000 | ' | ' | -3,736,000 | ' | ' | ' | ' | ' | ' |
Total purchase price allocation | ' | ' | ' | ' | ' | ' | ' | ' | ' | $123,519,000 | $42,848,000 | ' | ' | $80,671,000 | ' | ' | ' | ' | ' | ' |
BUSINESS_COMBINATION_Details_2
BUSINESS COMBINATION: (Details 2) (USD $) | 1 Months Ended | 9 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 9 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Aug. 15, 2013 | Sep. 30, 2013 | Sep. 30, 2014 | Jul. 02, 2013 | Aug. 15, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Jul. 02, 2013 | Aug. 15, 2013 | Sep. 30, 2014 | Jul. 02, 2013 | Aug. 15, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
IPtronics and Kotura | IPtronics and Kotura | IPtronics and Kotura | IPtronics | Kotura | Licensed technology | Developed technology | Developed technology | Developed technology | In-process research and development | In-process research and development | In-process research and development | Customer relationship | Customer relationship | Customer relationship | Backlog | Backlog | |
IPtronics and Kotura | IPtronics and Kotura | IPtronics | Kotura | IPtronics and Kotura | IPtronics | Kotura | IPtronics and Kotura | IPtronics and Kotura | IPtronics and Kotura | IPtronics and Kotura | IPtronics and Kotura | ||||||
item | Modulator drivers - 4x25Gb/s | Silicon photonics modulator - 4x25Gb/s | Minimum | Maximum | Maximum | ||||||||||||
Identifiable intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchased intangible assets | ' | ' | $45,099 | $17,495 | $27,604 | $135 | $27,827 | ' | ' | $13,764 | ' | ' | $2,420 | ' | ' | $953 | ' |
Weighted average useful life | ' | ' | ' | ' | ' | '6 years | '5 years | ' | ' | ' | ' | ' | ' | '1 year | '2 years | ' | '1 year |
Number of projects completed and progressed as previously estimated at acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' |
Risk Adjusted Discount Rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | 17.50% | 15.50% | ' | 19.50% | 16.50% | 15.50% | ' | ' | ' | ' |
Valuations of IPR&D at acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average Estimated time to complete | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '18 months | '18 months | ' | ' | ' | ' | ' |
Estimated cost to complete | 26,759 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,549 | 17,210 | ' | ' | ' | ' | ' |
Fair value | 13,764 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,121 | 9,643 | ' | ' | ' | ' | ' |
Unaudited pro forma information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma net revenue | ' | 296,986 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma net loss | ' | ($23,175) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma net loss per share basic (in dollars per share) | ' | ($0.54) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma net loss per share diluted (in dollars per share) | ' | ($0.54) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS: (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
Financial assets measured at fair value | ' | ' | ' |
Financial liabilities | ' | ' | $0 |
Transfers between Level 1 and Level 2 | 0 | 0 | ' |
Fair Value, Measurements, Recurring Basis | Level 1 | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 1,683 | 1,683 | 20,000 |
Fair Value, Measurements, Recurring Basis | Level 1 | Money market funds | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 1,683 | 1,683 | 20,000 |
Fair Value, Measurements, Recurring Basis | Level 2 | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 295,795 | 295,795 | 264,924 |
Financial liabilities | 2,015 | 2,015 | ' |
Fair Value, Measurements, Recurring Basis | Level 2 | Certificates of deposits | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 73,892 | 73,892 | 67,769 |
Fair Value, Measurements, Recurring Basis | Level 2 | U.S. Government and agency securities | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 78,281 | 78,281 | 69,879 |
Fair Value, Measurements, Recurring Basis | Level 2 | Commercial paper | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 25,933 | 25,933 | 33,606 |
Fair Value, Measurements, Recurring Basis | Level 2 | Corporate bonds | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 98,192 | 98,192 | 92,274 |
Fair Value, Measurements, Recurring Basis | Level 2 | Municipal bonds | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 12,718 | 12,718 | ' |
Fair Value, Measurements, Recurring Basis | Level 2 | Foreign government bonds | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 6,779 | 6,779 | ' |
Fair Value, Measurements, Recurring Basis | Level 2 | Derivative contracts | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial liabilities | 2,015 | 2,015 | ' |
Fair Value, Measurements, Recurring Basis | Level 2 | Derivative contracts | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | ' | ' | 1,396 |
Fair Value, Measurements, Recurring Basis | Total | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 297,478 | 297,478 | 284,924 |
Financial liabilities | 2,015 | 2,015 | ' |
Fair Value, Measurements, Recurring Basis | Total | Money market funds | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 1,683 | 1,683 | 20,000 |
Fair Value, Measurements, Recurring Basis | Total | Certificates of deposits | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 73,892 | 73,892 | 67,769 |
Fair Value, Measurements, Recurring Basis | Total | U.S. Government and agency securities | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 78,281 | 78,281 | 69,879 |
Fair Value, Measurements, Recurring Basis | Total | Commercial paper | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 25,933 | 25,933 | 33,606 |
Fair Value, Measurements, Recurring Basis | Total | Corporate bonds | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 98,192 | 98,192 | 92,274 |
Fair Value, Measurements, Recurring Basis | Total | Municipal bonds | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 12,718 | 12,718 | ' |
Fair Value, Measurements, Recurring Basis | Total | Foreign government bonds | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | 6,779 | 6,779 | ' |
Fair Value, Measurements, Recurring Basis | Total | Derivative contracts | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial liabilities | 2,015 | 2,015 | ' |
Fair Value, Measurements, Recurring Basis | Total | Derivative contracts | ' | ' | ' |
Financial assets measured at fair value | ' | ' | ' |
Financial assets | ' | ' | $1,396 |
INVESTMENTS_Details
INVESTMENTS: (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Amortized Cost | ' | ' | ' | ' | ' |
Total | $350,920,000 | ' | $350,920,000 | ' | $326,698,000 |
Less amounts classified as cash and cash equivalents | -54,852,000 | ' | -54,852,000 | ' | -63,164,000 |
Short term investments, amortized cost | 296,068,000 | ' | 296,068,000 | ' | 263,534,000 |
Unrealized Gains (Losses) | ' | ' | ' | ' | ' |
Unrealized Gains | 75,000 | ' | 75,000 | ' | 48,000 |
Unrealized Losses | -348,000 | ' | -348,000 | ' | -54,000 |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | 350,647,000 | ' | 350,647,000 | ' | 326,692,000 |
Less amounts classified as cash and cash equivalents | -54,852,000 | ' | -54,852,000 | ' | -63,164,000 |
Short-term investments classified as available-for-sale securities | 295,795,000 | ' | 295,795,000 | ' | 263,528,000 |
Realized gains (losses), net upon the sale of marketable securities | -1,100,000 | 100,000 | 100,000 | 400,000 | ' |
Amortized cost | ' | ' | ' | ' | ' |
Due in less than one year | 143,767,000 | ' | 143,767,000 | ' | 190,172,000 |
Due in one to three years | 152,301,000 | ' | 152,301,000 | ' | 73,362,000 |
Amortized cost | 296,068,000 | ' | 296,068,000 | ' | 263,534,000 |
Estimated fair value | ' | ' | ' | ' | ' |
Due in less than one year | 143,818,000 | ' | 143,818,000 | ' | 190,189,000 |
Due in one to three years | 151,977,000 | ' | 151,977,000 | ' | 73,339,000 |
Estimated fair value | 295,795,000 | ' | 295,795,000 | ' | 263,528,000 |
Restricted cash and deposits | ' | ' | ' | ' | ' |
Restricted cash | 3,604,000 | ' | 3,604,000 | ' | ' |
Long-term restricted cash | 13,000 | ' | 13,000 | ' | 3,514,000 |
Investment in a privately-held companies accounted for under the cost method | 10,500,000 | ' | 10,500,000 | ' | 7,500,000 |
Maximum | ' | ' | ' | ' | ' |
Restricted cash and deposits | ' | ' | ' | ' | ' |
Long-term restricted cash | 100,000 | ' | 100,000 | ' | ' |
Cash | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | ' |
Total | 53,169,000 | ' | 53,169,000 | ' | 43,164,000 |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | 53,169,000 | ' | 53,169,000 | ' | 43,164,000 |
Money market funds | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | ' |
Total | 1,683,000 | ' | 1,683,000 | ' | 20,000,000 |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | 1,683,000 | ' | 1,683,000 | ' | 20,000,000 |
Certificates of deposits | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | ' |
Total | 73,902,000 | ' | 73,902,000 | ' | 67,775,000 |
Unrealized Gains (Losses) | ' | ' | ' | ' | ' |
Unrealized Gains | 2,000 | ' | 2,000 | ' | 1,000 |
Unrealized Losses | -12,000 | ' | -12,000 | ' | -7,000 |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | 73,892,000 | ' | 73,892,000 | ' | 67,769,000 |
U.S. Government and agency securities | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | ' |
Total | 78,364,000 | ' | 78,364,000 | ' | 69,859,000 |
Unrealized Gains (Losses) | ' | ' | ' | ' | ' |
Unrealized Gains | 26,000 | ' | 26,000 | ' | 22,000 |
Unrealized Losses | -109,000 | ' | -109,000 | ' | -2,000 |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | 78,281,000 | ' | 78,281,000 | ' | 69,879,000 |
Commercial paper | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | ' |
Total | 25,919,000 | ' | 25,919,000 | ' | 33,602,000 |
Unrealized Gains (Losses) | ' | ' | ' | ' | ' |
Unrealized Gains | 14,000 | ' | 14,000 | ' | 9,000 |
Unrealized Losses | ' | ' | ' | ' | -5,000 |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | 25,933,000 | ' | 25,933,000 | ' | 33,606,000 |
Corporate bonds | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | ' |
Total | 98,309,000 | ' | 98,309,000 | ' | 92,298,000 |
Unrealized Gains (Losses) | ' | ' | ' | ' | ' |
Unrealized Gains | 33,000 | ' | 33,000 | ' | 16,000 |
Unrealized Losses | -150,000 | ' | -150,000 | ' | -40,000 |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | 98,192,000 | ' | 98,192,000 | ' | 92,274,000 |
Municipal bonds | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | ' |
Total | 12,774,000 | ' | 12,774,000 | ' | ' |
Unrealized Gains (Losses) | ' | ' | ' | ' | ' |
Unrealized Losses | -56,000 | ' | -56,000 | ' | ' |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | 12,718,000 | ' | 12,718,000 | ' | ' |
Foreign government bonds | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | ' |
Total | 6,800,000 | ' | 6,800,000 | ' | ' |
Unrealized Gains (Losses) | ' | ' | ' | ' | ' |
Unrealized Losses | -21,000 | ' | -21,000 | ' | ' |
Estimated Fair Value | ' | ' | ' | ' | ' |
Short term investments, fair value | $6,779,000 | ' | $6,779,000 | ' | ' |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS: (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Changes in the carrying amount of goodwill | ' |
Balance at the beginning of the period | $199,558 |
Goodwill from Integrity acquisition | 1,547 |
Balance at the end of the period | $201,105 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS: (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Intangible assets | ' | ' | ' | ' | ' |
Gross carrying value of amortizable intangible assets | $85,674,000 | ' | $85,674,000 | ' | $85,674,000 |
Accumulated Amortization | -40,699,000 | ' | -40,699,000 | ' | -31,312,000 |
Net carrying value of amortizable intangible assets | 44,975,000 | ' | 44,975,000 | ' | 54,362,000 |
Amortization expense of intangible assets | 2,900,000 | 4,700,000 | 9,400,000 | 9,700,000 | ' |
Total amortizable intangible assets, excluding IPR&D | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' |
Gross carrying value of amortizable intangible assets | 71,910,000 | ' | 71,910,000 | ' | 71,910,000 |
Accumulated Amortization | -40,699,000 | ' | -40,699,000 | ' | -31,312,000 |
Net carrying value of amortizable intangible assets | 31,211,000 | ' | 31,211,000 | ' | 40,598,000 |
Licensed technology | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' |
Gross carrying value of amortizable intangible assets | 2,344,000 | ' | 2,344,000 | ' | 2,344,000 |
Accumulated Amortization | -779,000 | ' | -779,000 | ' | -366,000 |
Net carrying value of amortizable intangible assets | 1,565,000 | ' | 1,565,000 | ' | 1,978,000 |
Developed technology | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' |
Gross carrying value of amortizable intangible assets | 56,190,000 | ' | 56,190,000 | ' | 56,190,000 |
Accumulated Amortization | -30,525,000 | ' | -30,525,000 | ' | -24,667,000 |
Net carrying value of amortizable intangible assets | 25,665,000 | ' | 25,665,000 | ' | 31,523,000 |
Customer relationships | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' |
Gross carrying value of amortizable intangible assets | 13,376,000 | ' | 13,376,000 | ' | 13,376,000 |
Accumulated Amortization | -9,395,000 | ' | -9,395,000 | ' | -6,279,000 |
Net carrying value of amortizable intangible assets | 3,981,000 | ' | 3,981,000 | ' | 7,097,000 |
IPR&D | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' |
Gross carrying value of amortizable intangible assets | 13,764,000 | ' | 13,764,000 | ' | 13,764,000 |
Net carrying value of amortizable intangible assets | $13,764,000 | ' | $13,764,000 | ' | $13,764,000 |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS: (Details 3) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Estimated future amortization expenses from amortizable intangible assets | ' | ' |
Remainder of 2014 | $3,507 | ' |
2015 | 10,786 | ' |
2016 | 9,970 | ' |
2017 | 9,907 | ' |
2018 and thereafter | 10,805 | ' |
Net carrying value of amortizable intangible assets | $44,975 | $54,362 |
DERIVATIVES_AND_HEDGING_ACTIVI2
DERIVATIVES AND HEDGING ACTIVITIES: (Details) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
USD ($) | 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 ($) | Amount Reclassified from Other Comprehensive Income / Loss | Amount Reclassified from Other Comprehensive Income / Loss | Amount Reclassified from Other Comprehensive Income / Loss | Amount Reclassified from Other Comprehensive Income / Loss | |||
Gains / Losses on Derivatives | Gains / Losses on Derivatives | Gains / Losses on Derivatives | Gains / Losses on Derivatives | ||||||
USD ($) | USD ($) | USD ($) | USD ($) | ||||||
Derivatives and Hedging Activities | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Future operating expenses hedged | ' | ' | $49,600,000 | 183,300,000 | ' | ' | ' | ' | ' |
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 | 2,015,000 | 1,396,000 | ' | ' | ' | ' | ' | ' | ' |
Derivative Liabilities Reported in Other Current Liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Foreign exchange contracts designated as cash flow hedges | ' | ' | 2,015,000 | ' | ' | ' | ' | ' | ' |
Total derivatives designated as hedging instruments | 2,015,000 | 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) | ' | ' | -2,712,000 | ' | ' | ' | ' | ' | ' |
Amount of gain reclassified from OCI to income (effective portion) | ' | ' | -699,000 | ' | ' | ' | ' | ' | ' |
Balance at the end of the period | ' | ' | -2,015,000 | ' | ' | ' | ' | ' | ' |
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 | ' | ' | ' | ' | ' | ($579,000) | $1,737,000 | $699,000 | $4,718,000 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES: (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Feb. 19, 2013 | Feb. 22, 2013 |
Infinite Data path Case | In re Mellanox Technologies, Ltd. Securities Litigation | |||
item | item | |||
Future minimum payments under non-cancelable capital leases | ' | ' | ' | ' |
2014 | $308,000 | ' | ' | ' |
2015 | 1,099,000 | ' | ' | ' |
2016 | 496,000 | ' | ' | ' |
Total minimum lease payments | 1,903,000 | ' | ' | ' |
Less: Amount representing interest | -34,000 | ' | ' | ' |
Present value of capital lease obligations | 1,869,000 | ' | ' | ' |
Less: Current portion | -1,101,000 | -1,245,000 | ' | ' |
Long-term portion of capital lease obligations | 768,000 | 1,600,000 | ' | ' |
Future minimum payments under non-cancelable operating leases | ' | ' | ' | ' |
2014 | 6,696,000 | ' | ' | ' |
2015 | 15,259,000 | ' | ' | ' |
2016 | 8,800,000 | ' | ' | ' |
2017 | 6,470,000 | ' | ' | ' |
2018 and beyond | 12,917,000 | ' | ' | ' |
Total minimum lease payments | 50,142,000 | ' | ' | ' |
Purchase commitments | ' | ' | ' | ' |
Amount of non-cancelable purchase commitments | 61,100,000 | ' | ' | ' |
Amount of non-cancelable purchase commitments expected to be paid within one year | 58,900,000 | ' | ' | ' |
Amount of non-cancelable purchase commitments expected to be paid within two years and beyond | $2,200,000 | ' | ' | ' |
Legal proceedings | ' | ' | ' | ' |
Number of legal complaints filed against the Company, the Company's President and CEO, former CFO and CFO | ' | ' | ' | 3 |
Number of end users and direct customers sued under Infinite Data path Case | ' | ' | 25 | ' |
SHARE_INCENTIVE_PLANS_Details
SHARE INCENTIVE PLANS: (Details) (Stock options, USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Stock options | ' | ' | ' | ' |
Stock option activity under equity incentive plans | ' | ' | ' | ' |
Options outstanding at the beginning of the period (in shares) | ' | 2,806,224 | ' | ' |
Options Granted (in shares) | 0 | 50,000 | ' | ' |
Options exercised (in shares) | ' | -189,059 | ' | ' |
Options cancelled (in shares) | ' | -107,733 | ' | ' |
Options outstanding at the end of the period (in shares) | 2,559,432 | 2,559,432 | ' | ' |
Weighted average exercise price of options outstanding | ' | ' | ' | ' |
Options outstanding at the beginning of the period (in dollars per share) | ' | $30.14 | ' | ' |
Options granted (in dollars per share) | ' | $32.64 | ' | ' |
Options exercised (in dollars per share) | ' | $17.65 | ' | ' |
Options cancelled (in dollars per share) | ' | $68.40 | ' | ' |
Options outstanding at the end of the period (in dollars per share) | $29.51 | $29.51 | ' | ' |
Weighted average fair value of options granted (in dollars per share) | $32.64 | $32.64 | ' | ' |
Total pretax intrinsic value of options exercised | ' | $4.10 | $11.30 | ' |
Closing price of ordinary shares (in dollars per share) | $44.87 | $44.87 | ' | ' |
Total pretax intrinsic value of all outstanding options | 57.6 | 57.6 | ' | ' |
Total pretax intrinsic value of all exercisable options | $55.50 | $55.50 | ' | $48.60 |
SHARE_INCENTIVE_PLANS_Details_
SHARE INCENTIVE PLANS: (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Ordinary shares reserved for future issuance under equity incentive plans | ' | ' | ' | ' | ' |
Total shares reserved for future issuance (in shares) | 6,996,674 | ' | 6,996,674 | ' | ' |
Common stock | ' | ' | ' | ' | ' |
Ordinary shares reserved for future issuance under equity incentive plans | ' | ' | ' | ' | ' |
Share authorized for future issuance (in shares) | 1,510,683 | ' | 1,510,683 | ' | ' |
Restricted share units | ' | ' | ' | ' | ' |
Activity in nonvested restricted share units outstanding | ' | ' | ' | ' | ' |
Non vested restricted share units at the beginning of the period (in shares) | ' | ' | 1,974,454 | ' | ' |
Restricted share units granted (in shares) | ' | ' | 913,310 | ' | ' |
Restricted share units vested (in shares) | ' | ' | -648,331 | ' | ' |
Restricted share units cancelled (in shares) | ' | ' | -163,933 | ' | ' |
Non vested restricted share units at the end of the period (in shares) | 2,075,500 | ' | 2,075,500 | ' | ' |
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 | ' | ' |
Restricted share units granted (in dollars per share) | $40.58 | $44.85 | $36.90 | $50.15 | ' |
Restricted share units vested (in dollars per share) | ' | ' | $42.45 | ' | ' |
Restricted share units cancelled (in dollars per share) | ' | ' | $41.07 | ' | ' |
Non vested restricted share units at the end of the period (in dollars per share) | $41.41 | ' | $41.41 | ' | ' |
Total intrinsic value of all outstanding restricted share units | $93.10 | ' | $93.10 | ' | $78.90 |
Ordinary shares reserved for future issuance under equity incentive plans | ' | ' | ' | ' | ' |
Restricted share units outstanding | 2,075,500 | ' | 2,075,500 | ' | ' |
Stock options | ' | ' | ' | ' | ' |
Weighted Average Grant Date Fair Value, Restricted Share Units Outstanding | ' | ' | ' | ' | ' |
Restricted share units granted of a single share (in dollars per share) | $44.87 | ' | $44.87 | ' | ' |
Ordinary shares reserved for future issuance under equity incentive plans | ' | ' | ' | ' | ' |
Shares outstanding | 2,559,432 | ' | 2,559,432 | ' | ' |
Employee Share Purchase Plan | ' | ' | ' | ' | ' |
Ordinary shares reserved for future issuance under equity incentive plans | ' | ' | ' | ' | ' |
Share authorized for future issuance (in shares) | 851,059 | ' | 851,059 | ' | ' |
SHARE_INCENTIVE_PLANS_Details_1
SHARE INCENTIVE PLANS: (Details 3) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Employee Share Purchase Plan | ' | ' |
Weighted average assumptions | ' | ' |
Expected volatility (as a percent) | 48.10% | 51.60% |
Risk-free interest rate (as a percent) | 0.07% | 0.04% |
Expected life | '6 months | '6 months 11 days |
Employee Share Options | ' | ' |
Weighted average assumptions | ' | ' |
Expected volatility (as a percent) | 56.10% | 57.50% |
Risk-free interest rate (as a percent) | 1.98% | 1.54% |
Expected life | '5 years 9 months 7 days | '4 years 8 months 19 days |
Estimated forfeiture rate (as a percent) | 6.73% | 6.68% |
SHARE_INCENTIVE_PLANS_Details_2
SHARE INCENTIVE PLANS: (Details 4) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Share-based compensation expense | ' | ' | ' | ' | ' |
Total share-based compensation expense | $11,849,000 | $11,932,000 | $35,434,000 | $33,472,000 | ' |
Total unrecognized share-based compensation costs related to non-vested awards | 84,600,000 | ' | 84,600,000 | ' | 89,800,000 |
Weighted average period for recognition of unrecognized share-based compensation costs | ' | ' | '2 years 1 month 20 days | ' | '2 years 3 months 25 days |
Cost of goods sold | ' | ' | ' | ' | ' |
Share-based compensation expense | ' | ' | ' | ' | ' |
Total share-based compensation expense | 532,000 | 461,000 | 1,586,000 | 1,359,000 | ' |
Research and development | ' | ' | ' | ' | ' |
Share-based compensation expense | ' | ' | ' | ' | ' |
Total share-based compensation expense | 6,756,000 | 6,898,000 | 20,187,000 | 19,148,000 | ' |
Sales and marketing | ' | ' | ' | ' | ' |
Share-based compensation expense | ' | ' | ' | ' | ' |
Total share-based compensation expense | 2,473,000 | 2,407,000 | 7,385,000 | 6,873,000 | ' |
General and administrative | ' | ' | ' | ' | ' |
Share-based compensation expense | ' | ' | ' | ' | ' |
Total share-based compensation expense | $2,088,000 | $2,166,000 | $6,276,000 | $6,092,000 | ' |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Accumulated other comprehensive income (loss) | ' | ' |
Balance at the beginning of the period | $1,390 | $2,794 |
Other comprehensive income/loss before reclassifications | -2,894 | 3,752 |
Amounts reclassified from accumulated other comprehensive income/loss | -709 | -4,723 |
Net current-period other comprehensive income/loss, net of taxes | -3,603 | -971 |
Balance at the end of the period | -2,213 | 1,823 |
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 | -182 | 221 |
Amounts reclassified from accumulated other comprehensive income/loss | -10 | -5 |
Net current-period other comprehensive income/loss, net of taxes | -192 | 216 |
Balance at the end of the period | -198 | 68 |
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 | -2,712 | 3,531 |
Amounts reclassified from accumulated other comprehensive income/loss | -699 | -4,718 |
Net current-period other comprehensive income/loss, net of taxes | -3,411 | -1,187 |
Balance at the end of the period | ($2,015) | $1,755 |
ACCUMULATED_OTHER_COMPREHENSIV3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Reclassifications out of accumulated other comprehensive income | ' | ' | ' | ' |
Cost of revenues | ($39,540) | ($36,869) | ($107,788) | ($97,974) |
Research and development | -54,220 | -44,607 | -152,063 | -121,498 |
Sales and marketing | -18,864 | -18,204 | -56,865 | -51,389 |
General and administrative | -9,184 | -9,674 | -26,861 | -27,193 |
Cost of revenues and Operating expenses | -1,100 | -5,287 | -21,590 | -12,739 |
Other income, net | 361 | 482 | 952 | 927 |
Net income (loss) | 428 | -5,885 | -20,049 | -15,904 |
Amount Reclassified from Other Comprehensive Income (loss) | ' | ' | ' | ' |
Reclassifications out of accumulated other comprehensive income | ' | ' | ' | ' |
Net income (loss) | ' | ' | 709 | ' |
Gain on Derivatives | Amount Reclassified from Other Comprehensive Income (loss) | ' | ' | ' | ' |
Reclassifications out of accumulated other comprehensive income | ' | ' | ' | ' |
Cost of revenues | ' | ' | 38 | ' |
Research and development | ' | ' | 535 | ' |
Sales and marketing | ' | ' | 62 | ' |
General and administrative | ' | ' | 64 | ' |
Cost of revenues and Operating expenses | ' | ' | 699 | ' |
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 | ' |
INCOME_TAXES_Details
INCOME TAXES: (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
INCOME TAXES: | ' | ' | ' | ' | ' |
Unrecognized tax benefits | $22.60 | ' | $22.60 | ' | $23.60 |
Total amount of accrued interest or penalties related to unrecognized tax benefit or tax contingencies | 0.8 | ' | 0.8 | ' | 0.6 |
Effective tax rate (as a percent) | 157.90% | -22.50% | 2.90% | -34.60% | ' |
Tax at statutory rate (as a percent) | 35.00% | ' | 35.00% | ' | ' |
Deferred tax assets | 15.1 | ' | 15.1 | ' | ' |
Ministry of Industry Trade and Labor | ' | ' | ' | ' | ' |
Income tax holiday | ' | ' | ' | ' | ' |
Cash tax savings due to tax holiday | ' | ' | $2.50 | 5.2 | ' |
Increase in diluted earnings per share | ' | ' | $0.06 | 0.12 | ' |