Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 27, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Mellanox Technologies, Ltd. | |
Entity Central Index Key | 1,356,104 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
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 | 46,397,840 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 68,203 | $ 51,326 |
Short-term investments | 395,344 | 334,038 |
Restricted cash | 3,604 | 3,604 |
Accounts receivable, net | 61,004 | 64,922 |
Inventories | 62,805 | 44,470 |
Deferred taxes and other current assets | 21,880 | 18,147 |
Total current assets | 612,840 | 516,507 |
Property and equipment, net | 92,260 | 78,827 |
Severance assets | 10,002 | 9,474 |
Intangible assets, net | 37,340 | 42,067 |
Goodwill | 200,743 | 200,743 |
Deferred taxes and other long-term assets | 9,813 | 15,600 |
Total assets | 962,998 | 863,218 |
Current liabilities: | ||
Accounts payable | 50,241 | 39,811 |
Accrued liabilities | 73,447 | 61,974 |
Deferred revenue | 16,186 | 14,758 |
Capital lease liabilities, current | 1,040 | 1,102 |
Total current liabilities | 140,914 | 117,645 |
Accrued severance | 13,087 | 11,850 |
Deferred revenue | 10,348 | 8,942 |
Capital lease liabilities | 494 | |
Other long-term liabilities | 26,276 | 22,535 |
Total liabilities | $ 190,625 | $ 161,466 |
Commitments and Contingencies (Note 7) | ||
Shareholders' equity | ||
Ordinary shares | $ 197 | $ 192 |
Additional paid-in capital | 649,976 | 615,148 |
Accumulated other comprehensive income (loss) | 2,024 | (4,020) |
Retained earnings | 120,176 | 90,432 |
Total shareholders' equity | 772,373 | 701,752 |
Total liabilities and shareholders' equity | $ 962,998 | $ 863,218 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Total revenues | $ 163,148 | $ 102,823 | $ 309,823 | $ 201,825 |
Cost of revenues | 47,178 | 34,433 | 88,265 | 68,164 |
Gross profit | 115,970 | 68,390 | 221,558 | 133,661 |
Operating expenses: | ||||
Research and development | 62,576 | 49,506 | 120,694 | 97,843 |
Sales and marketing | 23,366 | 18,723 | 45,924 | 38,002 |
General and administrative | 10,670 | 9,461 | 20,371 | 17,676 |
Total operating expenses | 96,612 | 77,690 | 186,989 | 153,521 |
Income (loss) from operations | 19,358 | (9,300) | 34,569 | (19,860) |
Other income (loss), net (Note 11) | 912 | 357 | (1,557) | 591 |
Income (loss) before taxes | 20,270 | (8,943) | 33,012 | (19,269) |
Provision for taxes on income | (1,022) | 76 | (3,268) | (578) |
Net income (loss) | $ 19,248 | $ (8,867) | $ 29,744 | $ (19,847) |
Net income (loss) per share - basic (in dollars per share) | $ 0.42 | $ (0.20) | $ 0.65 | $ (0.45) |
Net income (loss) per share - diluted (in dollars per share) | $ 0.40 | $ (0.20) | $ 0.63 | $ (0.45) |
Shares used in per share calculation: | ||||
Basic (in shares) | 46,191 | 44,671 | 45,943 | 44,475 |
Diluted (in shares) | 47,568 | 44,671 | 47,341 | 44,475 |
As revised | ||||
Total revenues | $ 102,823 | $ 201,825 | ||
Cost of revenues | 34,433 | 68,164 | ||
Gross profit | 68,390 | 133,661 | ||
Operating expenses: | ||||
Research and development | 49,506 | 97,843 | ||
Sales and marketing | 18,723 | 38,002 | ||
General and administrative | 9,461 | 17,676 | ||
Total operating expenses | 77,690 | 153,521 | ||
Income (loss) from operations | (9,300) | (19,860) | ||
Other income (loss), net (Note 11) | 357 | 591 | ||
Income (loss) before taxes | (8,943) | (19,269) | ||
Provision for taxes on income | (76) | 578 | ||
Net income (loss) | $ (8,867) | $ (19,847) | ||
Net income (loss) per share - basic (in dollars per share) | $ (0.20) | $ (0.45) | ||
Net income (loss) per share - diluted (in dollars per share) | $ (0.20) | $ (0.45) |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net income (loss) | $ 19,248 | $ (8,867) | $ 29,744 | $ (19,847) |
Other comprehensive income (loss), net of tax: | ||||
Change in unrealized gains/(losses) on available-for-sale securities, net of tax | (237) | 8 | 212 | 16 |
Change in unrealized gains/(losses) on derivative contracts, net of tax | 5,456 | 43 | 5,832 | (685) |
Net change in other comprehensive income (loss), net of tax | 5,219 | 51 | 6,044 | (669) |
Total comprehensive income (loss), net of tax | $ 24,467 | (8,816) | $ 35,788 | (20,516) |
As revised | ||||
Net income (loss) | (8,867) | (19,847) | ||
Other comprehensive income (loss), net of tax: | ||||
Total comprehensive income (loss), net of tax | $ (8,816) | $ (20,516) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 29,744 | $ (19,847) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 19,775 | 19,446 |
Deferred income taxes | 134 | 807 |
Share-based compensation expense | 25,004 | 23,585 |
Gain on investments | (2,388) | (1,200) |
Impairment loss on equity investment of private company | 3,189 | |
Changes in assets and liabilities: | ||
Accounts receivable, net | 3,918 | 520 |
Inventories | (22,513) | (1,150) |
Prepaid expenses and other assets | 419 | (4,710) |
Accounts payable | 8,755 | 594 |
Accrued liabilities and other payables | 21,063 | (91) |
Net cash provided by operating activities | 87,100 | 17,954 |
Cash flows from investing activities: | ||
Purchase of severance-related insurance policies | (381) | (409) |
Purchase of short-term investments | (188,161) | (159,388) |
Proceeds from sales of short-term investments | 98,742 | 90,321 |
Proceeds from maturities of short-term investments | 30,717 | 37,760 |
Restricted cash deposit | (103) | |
Purchase of property and equipment | (20,413) | (10,265) |
Purchase of equity investment in a private company | (1,438) | |
Net cash used in investing activities | (79,496) | (43,522) |
Cash flows from financing activities: | ||
Principal payments on capital lease obligations | (556) | (683) |
Proceeds from exercise of share awards | 9,829 | 7,109 |
Net cash provided by financing activities | 9,273 | 6,426 |
Increase (decrease) in cash and cash equivalents | 16,877 | (19,142) |
Cash and cash equivalents at beginning of period | 51,326 | 63,164 |
Cash and cash equivalents at end of period | $ 68,203 | 44,022 |
As revised | ||
Cash flows from operating activities: | ||
Net income (loss) | (19,847) | |
Changes in assets and liabilities: | ||
Net cash provided by operating activities | 17,954 | |
Cash flows from financing activities: | ||
Net cash provided by financing activities | $ 6,426 |
THE COMPANY AND SUMMARY OF SIGN
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 6 Months Ended |
Jun. 30, 2015 | |
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 were derived from audited financial statements, but do 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, 2014, filed with the SEC on March 2, 2015. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2015 or thereafter. Certain prior year amounts have been reclassified to conform to 2015 presentation. These changes and reclassifications did not impact net or comprehensive income. The Company has evaluated subsequent events through the date that the financial statements were issued. Revision to Prior Period Financial Statements During the year ended December 31, 2014, the Company became aware of and corrected immaterial errors primarily related to the accounting for liabilities for warranty, certain purchase orders, distributor price adjustment claims and purchase price allocation for the acquisitions of Kotura and IPtronics. 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 this revision for periods presented within this quarterly report on Form 10-Q is shown in the tables below: Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 As reported Adjustments As revised As reported Adjustments As revised (in thousands, except per share data) (in thousands, except per share data) Statement of operations: Total revenues $ $ $ $ $ $ Cost of revenues Gross profit Operating expenses: Research and development — — Sales and marketing — — General and administrative — — Total operating expenses — — Loss from operations ) ) ) ) Other income, net — — Loss before taxes on income ) ) ) ) (Provision for) benefit from taxes on income — ) — ) Net loss $ ) $ $ ) $ ) $ $ ) Net loss per share — basic $ ) — $ ) $ ) $ $ ) Net loss per share — diluted $ ) — $ ) $ ) $ $ ) Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 As reported Adjustments As revised As reported Adjustments As revised (in thousands) (in thousands) Statement of comprehensive loss: Net loss $ ) $ $ ) $ ) $ $ ) Total comprehensive loss, net of tax ) ) ) ) Six Months Ended June 30, 2014 As reported Adjustments As revised (in thousands) Statement of cash flows: Net cash provided by operating activities $ $ $ Net cash provided by financing activities ) Risks and uncertainties The Company is subject to all of the risks inherent in a company which operates in the dynamic and competitive semiconductor industry. Significant changes in any of the following areas could have a materially adverse impact on the Company’s financial position and results of operations: unpredictable volume or timing of customer orders; ordered product mix; the sales outlook and purchasing patterns of the Company’s customers based on consumer demands and general economic conditions; loss of one or more of the Company’s customers; decreases in the average selling prices of products or increases in the average cost of finished goods; the availability, pricing and timeliness of delivery of components used in the Company’s products; reliance on a limited number of subcontractors to manufacture, assemble, package and production test the Company’s products; the Company’s ability to successfully develop, introduce and sell new or enhanced products in a timely manner; product obsolescence and the Company’s ability to manage product transitions; the timing of announcements or introductions of new products by the Company’s competitors; and the Company’s ability to successfully integrate acquired businesses. Use of estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns and allowances, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, goodwill and purchased intangible asset valuation, hedge effectiveness, deferred income tax asset valuation, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. 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, 2014. See our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 2, 2015, 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 for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Hewlett Packard % * % * IBM * % * % Dell * * * % * Less than 10% The following table summarizes the accounts receivable balance in excess of 10% of the total accounts receivable for the periods indicated: June 30, 2015 December 31, 2014 Hewlett Packard % % Hon Hai Precision Ind., Co. Ltd. % * IBM * % Ingram Micro * % * Less than 10% Product warranty The following table provides the changes in the product warranty accrual for the six months ended June 30, 2015 and 2014: Six Months Ended June 30, 2015 2014 (in thousands) Balance, beginning of the period $ $ New warranties issued during the period Reversal of warranty reserves ) ) Settlements during the period ) ) Balance, end of the period $ $ Less: long-term portion of product warranty liability ) ) Balance, current portion of product warranty liability at end of the period $ $ Net income per share The following table sets forth the computation of basic and diluted net loss per share for the three and six months ended June 30, 2015 and 2014: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands except per share data) Net income (loss) $ $ ) $ $ ) Basic and diluted shares: Weighted average ordinary shares Dilutive effect of employee stock option — — Shares used to compute diluted net income Net income (loss) per share — basic $ $ ) $ $ ) Net income (loss) per share — diluted $ $ ) $ $ ) The Company excluded 508,326 and 517,409 outstanding shares for the three and six months ended June 30, 2015, 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 1,372,376 and 839,133 outstanding shares for the three and six months ended June 30, 2014, respectively, from the computation of diluted net loss per ordinary share, because including these outstanding shares would have had an anti-dilutive effect. Recent accounting pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued guidance applying to inventory measured using any other method other than last-in, last-out method. Under this guidance inventory is measured at the lower of cost and net realizable value. The net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is applied prospectively and is effective for the Company in its first fiscal quarter 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 and related disclosures. In May 2015, the FASB issued guidance eliminating the requirement to categorize within the fair value hierarchy investments whose fair values are measured at net asset value (“NAV”). Entities will be required to disclose the fair values of investments measured at NAV and provide a general description of redemption terms and conditions including the probability these investments will be sold at amounts other than NAV. The guidance is applied retrospectively and is effective for the Company in its first fiscal quarter beginning January 1, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial statements and related disclosures. In May 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. In July 2015, the FASB deferred the effective date of this guidance by one year. This guidance will be effective for the Company in its first fiscal quarter beginning January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment at the date of adoption. The guidance may be adopted as early as the Company’s first fiscal quarter beginning January 1, 2017, the effective date of the original guidance. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. 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 in its first fiscal quarter 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 and related disclosures. |
BALANCE SHEET COMPONENTS_
BALANCE SHEET COMPONENTS: | 6 Months Ended |
Jun. 30, 2015 | |
BALANCE SHEET COMPONENTS: | |
BALANCE SHEET COMPONENTS: | NOTE 2 — BALANCE SHEET COMPONENTS: June 30, 2015 December 31, 2014 (In thousands) Accounts receivable, net: Accounts receivable $ $ Less: allowance for doubtful accounts ) ) $ $ Inventories: Raw materials $ $ Work-in-process Finished goods $ $ Deferred taxes and other current assets: Prepaid expenses $ $ Derivative contracts receivable — Deferred taxes VAT receivable Other $ $ Property and equipment, net: Computer equipment and software $ $ Furniture and fixtures Leasehold improvements Less: Accumulated depreciation and amortization ) ) $ $ Deferred taxes and other long-term assets: Equity investments in private companies $ $ Deferred taxes Other assets $ $ Accrued liabilities: Payroll and related expenses $ $ Accrued expenses Derivative contracts payable — Product warranty liability Other $ $ Other long-term liabilities: Income tax payable $ $ Deferred rent Other $ $ |
FAIR VALUE MEASUREMENTS_
FAIR VALUE MEASUREMENTS: | 6 Months Ended |
Jun. 30, 2015 | |
FAIR VALUE MEASUREMENTS: | |
FAIR VALUE MEASUREMENTS: | NOTE 3 — FAIR VALUE MEASUREMENTS: Fair value hierarchy The Company measures its financial instruments 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. At June 30, 2015 and December 31, 2014, the Company did not have any financial instruments valued based on Level 3 valuations. The following table represents the fair value hierarchy of the Company’s financial assets measured at fair value at June 30, 2015. Level 1 Level 2 Total (in thousands) Money market funds $ $ — $ Certificates of deposit — U.S. Government and agency securities — Commercial paper — Corporate bonds — Municipal bonds — Foreign government bonds — Derivative contracts — Total financial assets $ $ $ The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value at December 31, 2014. Level 1 Level 2 Total (in thousands) Money market funds $ $ — $ Certificates of deposit — U.S. Government and agency securities — Commercial paper — Corporate bonds — Municipal bonds — Foreign government bonds — Total financial assets $ $ $ Derivative contracts — Total financial liabilities $ — $ $ The Company had no financial liabilities measured at fair value at June 30, 2015. There were no transfers between Level 1 and Level 2 securities during the six months ended June 30, 2015 or during the year ended December 31, 2014. |
INVESTMENTS_
INVESTMENTS: | 6 Months Ended |
Jun. 30, 2015 | |
INVESTMENTS: | |
INVESTMENTS: | NOTE 4 — 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 June 30, 2015 and December 31, 2014 were as follows: June 30, 2015 Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (in thousands) Cash $ $ — $ — $ Money market funds — — Certificates of deposit ) U.S. Government and agency securities ) Commercial paper ) Corporate bonds ) Municipal bonds ) Foreign government bonds ) Total $ $ $ ) $ Less amounts classified as cash and cash equivalents ) — — ) $ $ $ ) $ December 31, 2014 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value (in thousands) Cash $ $ — $ — $ Money market funds — — Certificates of deposit ) U.S. Government and agency securities ) Commercial paper ) Corporate bonds ) Municipal bonds — ) Foreign government bonds — ) Total $ $ $ ) $ Less amounts classified as cash and cash equivalents ) — — ) $ $ $ ) $ Realized gains net of losses upon the sale of marketable securities were $2.1 million and $0.5 million for the three months ended June 30, 2015 and 2014, respectively. Realized gains net of losses upon the sale of marketable securities were $2.4 million and $0.9 million for the six months ended June 30, 2015 and 2014, respectively. At June 30, 2015, investments with unrealized losses were not deemed to be other-than-temporarily impaired and the gross unrealized losses were recorded in other comprehensive income, (“OCI”). The gross unrealized losses on investments that were in a gross unrealized loss position for greater than 12 months were immaterial. The contractual maturities of short-term investments at June 30, 2015 and December 31, 2014 were as follows: June 30, 2015 December 31, 2014 Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value (in thousands) Due in less than one year $ $ $ $ Due in one to three years $ $ $ $ Restricted cash and deposits The Company maintains certain cash amounts restricted as to withdrawal or use. It maintained a balance of $3.6 million at June 30, 2015 and December 31, 2014, which were designated for contingent payments related to acquisitions. The Company anticipates releasing the balance of restricted cash during its third quarter ending September 30, 2015. Investments in privately-held companies The carrying value of the Company’s investments in privately held companies that were accounted for under the cost method was $7.7 million and $10.7 million as of June 30, 2015 and December 31, 2014, respectively. These assets are measured at fair value if the company identifies events or circumstances that have significant impact on the cost basis of the investments. To arrive at the valuation of these assets, the Company considers any significant changes in the financial metrics and economic variables and also uses third-party valuation reports to assist in the valuation as necessary. The fair value measurement of investments in privately held companies was classified as Level 3 because significant unobservable inputs were used in the valuation due to the absence of quoted market prices and inherent lack of liquidity. Significant unobservable inputs, which included the financial condition and near-term prospects of the investees, recent financing activities of the investees, and the investees’ capital structure as well as other economic variables, reflected the assumptions market participants would use in pricing these assets. On April 27, 2015, the Company was informed that one of the privately-held companies intends to discontinue its operations. As a result, the Company concluded that its investment of $3.2 million in this privately-held company was impaired and the impairment of this investment was other than temporary. The impairment loss was included in other loss, net, on the unaudited condensed consolidated statements of operations for the three months ended March 31, 2015 and the six months ended June 30, 2015. Prior to the impairment, the carrying value of the Company’s investment was $3.2 million of which $0.2 million was classified within other current assets and $3.0 million was classified within other long-term assets. |
GOODWILL AND INTANGIBLE ASSETS_
GOODWILL AND INTANGIBLE ASSETS: | 6 Months Ended |
Jun. 30, 2015 | |
GOODWILL AND INTANGIBLE ASSETS: | |
GOODWILL AND INTANGIBLE ASSETS: | NOTE 5 — GOODWILL AND INTANGIBLE ASSETS: The following table presents changes in the carrying amount of goodwill (in thousands): Balance at December 31, 2014 $ Adjustments — Balance at June 30, 2015 $ The carrying amounts of intangible assets at June 30, 2015 were as follows: Gross Carrying Value Accumulated Amortization Net Carrying Value (in thousands) Licensed technology $ $ ) $ Developed technology ) Customer relationships ) Total intangible assets $ $ ) $ The carrying amounts of intangible assets at December 31, 2014 were as follows: Gross Carrying Value Accumulated Amortization Net Carrying Value (in thousands) Licensed technology $ $ ) $ Developed technology ) Customer relationships ) Total amortizable intangible assets $ $ ) $ IPR&D — Total intangible assets $ $ ) $ Amortization expense of intangible assets was $2.6 million and $2.9 million for the three months ended June 30, 2015 and 2014, respectively. Amortization expense of intangible assets was $4.9 million and $6.5 million for the six months ended June 30, 2015 and 2014, respectively. The estimated future amortization expenses from amortizable intangible assets are as follows (in thousands): Remaining six months of 2015 $ 2016 2017 2018 2019 2020 and thereafter $ |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES: | 6 Months Ended |
Jun. 30, 2015 | |
DERIVATIVES AND HEDGING ACTIVITIES: | |
DERIVATIVES AND HEDGING ACTIVITIES: | NOTE 6 — DERIVATIVES AND HEDGING ACTIVITIES: At June 30, 2015, the Company had derivative contracts in place that hedged future flows from operating expenses. The Company does not use derivative financial instruments for purposes other than cash flow hedges. Notional value of derivative contracts The notional amounts of outstanding forward contracts at June 30, 2015 and December 31, 2014 were as follows: Buy Contracts June 30, 2015 December 31, 2014 (in thousands) Israeli shekel $ $ Fair value of derivative contracts The fair value of derivative contracts at June 30, 2015 and December 31, 2014 were as follows: Derivative Assets Reported in Other Current Assets Derivative Liabilities Reported in Other Current Liabilities June 30, 2015 December 31, 2014 June 30, 2015 December 31, 2014 (in thousands) Foreign exchange contracts designated as cash flow hedges $ $ — $ — $ Total derivatives designated as hedging instruments $ $ — $ — $ Effect of designated derivative contracts on accumulated other comprehensive income The following table presents the balance of designated derivative contracts as cash flow hedges at June 30, 2015 and December 31, 2014, and their impact on OCI for the six months ended June 30, 2015 (in thousands): December 31, 2014 $ ) Amount of gain recognized in OCI (effective portion) Amount of gain reclassified from OCI to income (effective portion) June 30, 2015 $ 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 12 months. Effect of derivative contracts on the condensed consolidated statement of operations The impact of derivative contracts on total operating expenses for the three and six months ended June 30, 2015 and 2014 was as follows: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (in thousands) (Loss) gain on foreign exchange contracts designated as cash flow hedges $ ) $ $ ) $ The net gains or losses relating to the ineffective portion of derivative contracts were not material in the three and six months ended June 30, 2015 and 2014. |
COMMITMENTS AND CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: | 6 Months Ended |
Jun. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES: | |
COMMITMENTS AND CONTINGENCIES: | NOTE 7— COMMITMENTS AND CONTINGENCIES: Leases At June 30, 2015, future minimum lease payments under non-cancelable operating and capital leases were as follows: Year Ended December 31, Capital Leases Operating Leases (in thousands) Remaining six months of 2015 $ $ 2016 2017 — 2018 — 2019 — 2020 and beyond — Total minimum lease payments $ $ Less: Amount representing interest ) Present value of capital lease obligations $ Purchase commitments At June 30, 2015, the Company had non-cancelable purchase commitments of $77.9 million, of which $76.3 million is expected to be paid in 2015 and $1.6 million in 2016 and beyond. The purchase orders are based on the Company’s current manufacturing needs. The Company does not have significant agreements for the purchase of raw materials or other goods specifying minimum quantities or set prices that exceed its expected requirements. 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, determine that an unfavorable outcome is probable or reasonably possible, or determine that the amount or range of any possible loss is reasonably estimable. 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 June 30, 2015 were as follows: Avago Technologies Fiber (IP) Singapore Pte. Ltd. vs. IPtronics, Inc. and IPtronics A/S. On September 29, 2010, Avago Technologies Fiber (IP) Singapore Pte. Ltd. (“Avago IP”) filed a complaint for patent infringement against IPtronics, Inc. and IPtronics A/S (now Mellanox Technologies Denmark Aps) (collectively, “IPtronics”) now pending in the United States District Court, Northern District of California, San Jose Division (Case No.: 5:10-cv-02863 EJD), asserting infringement of U.S. Patents Number 5,596,456 and 5,359,447. On September 11, 2012, Avago IP along with additional subsidiaries of Avago Technologies Limited (collectively, “Avago”) filed a second amended and supplemental complaint against IPtronics adding allegations that IPtronics 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. A motion to file a third amended complaint was filed but never granted. Avago’s motion to file a Fourth Amended and Supplemental Complaint (the “Complaint”) to add the Company and a new claim for interference with prospective economic advantage against IPtronics was granted. The Company and IPtronics have answered the new complaint and the case is set for trial in May-June, 2016. IPtronics’ motion to add an antitrust counterclaim against Avago for pursuing a sham action was denied and, as explained below, that claim is being pursued in a separate action. Pursuant to the Complaint, Avago seeks unspecified damages, treble damages, injunctive relief and any other relief deemed just and proper by the court. Neither the outcome of the proceeding nor the amount and range of potential damages or exposure associated with the proceeding can be assessed with certainty. In the event the Defendants are not successful in defending against the Complaint, the Company could be forced to license technology from Avago and be prevented from importing, selling, offering for sale, advertising, soliciting, using and/or warehousing for distribution the allegedly infringing products. Based on currently available information, the Company believes that the resolution of this proceeding is not likely to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows. IPtronics, Inc. and Mellanox Technologies Denmark ApS vs. Avago Technologies, Inc., et al . IPtronics has filed an antitrust Complaint in the United States District Court, Northern District of California, San Jose Division (Case No.: 5:14-cv-05647-BLF (PSG)), against the US and foreign Avago entities (collectively “Avago”) for pursuing what the Company believes to be a baseless ITC action against IPtronics. The Complaint seeks unspecified damages in an amount to compensate IPtronics for the damages resulting from the Avago Entities’ illegal conduct. In response to the Complaint Avago filed a motion to dismiss which was heard on June 11, 2015. No case schedule has been set yet. Infinite Data Case. On February 19, 2013, Infinite Data LLC, a Delaware limited liability company (“Infinite Data”) and a non-practicing entity and exclusive licensee of U.S. patent number 5,790,530 (the “Patent”), filed suit against approximately 25 of the Company’s end users and direct customers of its InfiniBand products in the United States District Court in Delaware. All actions included the same allegation of infringement regarding the Patent and seek the payment of damages, costs, expenses and injunctive relief. Several of the end users and direct customers sued by Infinite Data tendered indemnification requests to the Company on the basis of existing contractual or asserted statutory obligations imposed on the Company to provide such indemnification. All of these cases were stayed pending the outcome of the declaratory judgment action filed by the Company. In response to these filings and accusations of infringement of the Company’s products, on May 21, 2013, the Company filed a declaratory judgment complaint against Infinite Data asking for a declaration that the Patent is invalid and that the Company’s products do not infringe. On November 14, 2013, Infinite Data filed its answer denying that the Patent was invalid and counterclaimed that the Company’s products infringe. Pursuant to the Counterclaims, Infinite Data seeks unspecified damages, treble damages, injunctive relief and any other relief deemed just and proper by the court. Infinite Data, the Company and Mellanox Technologies, Inc. each entered into settlement agreements in which Infinite Data agreed to dismiss the Company with no liability or payment made by the Company and to dismiss Mellanox Technologies, Inc. in exchange for a payment of $1.25 million. The case against the Company was dismissed with prejudice on December 3, 2014 and the case against Mellanox Technologies, Inc. was dismissed with prejudice on January 5, 2015. In accordance with the terms of the settlement agreement, Infinite Data has dismissed with prejudice its complaints against all of Mellanox Technologies, Inc.’s direct and indirect customers. |
SHARE INCENTIVE PLANS_
SHARE INCENTIVE PLANS: | 6 Months Ended |
Jun. 30, 2015 | |
SHARE INCENTIVE PLANS: | |
SHARE INCENTIVE PLANS: | NOTE 8 — 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 six months ended June 30, 2015: Options Outstanding Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2014 $ Options exercised ) Options cancelled ) Outstanding at June 30, 2015 $ The Company did not grant options during the six month period ended June 30, 2015. The total pretax intrinsic value of options exercised in the six months ended June 30, 2015 and 2014 was $8.6 million and $1.9 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 $48.59 on June 30, 2015, the total pretax intrinsic value of all outstanding options was $54.2 million. The total pretax intrinsic value of exercisable options at June 30, 2015 was $53.2 million. The total pretax intrinsic value of exercisable options at December 31, 2014 was $50.1 million. Restricted share units (“RSUs”) activity under the Company’s equity incentive plans for the six months ended June 30, 2015 is set forth below: Restricted Share Units Outstanding Number of Shares Weighted Average Grant Date Fair Value Non vested restricted share units at December 31, 2014 $ Restricted share units granted Restricted share units vested ) Restricted share units canceled ) Non vested restricted share units at June 30, 2015 $ The weighted average fair value of RSUs granted in the six months ended June 30, 2015 and 2014 was $46.15 and $33.22, respectively. The total intrinsic value of all outstanding restricted share units was $118.3 million at June 30, 2015 and $81.7 million at December 31, 2014. The Company had the following ordinary shares reserved for future issuance under its equity incentive plans at June 30, 2015: Number of Shares Share options outstanding Restricted share units outstanding Shares authorized for future issuance ESPP shares available for future issuance Total shares reserved for future issuance at June 30, 2015 Share-based compensation The following weighted average assumptions are used to value share options and ESPP shares issued pursuant to the Company’s equity incentive plans for the six months ended June 30, 2015 and 2014: Employee Share Options Employee Share Purchase Plan Six Months Ended June 30, Six Months Ended June 30, 2015 * 2014 2015 2014 Dividend yield, % — — — — Expected volatility, % — Risk free interest rate, % — Expected life, years — Estimated forfeiture rate, % — — — * No options were granted in the six months ended June 30, 2015. The following table summarizes the distribution of total share-based compensation expense in the unaudited condensed consolidated statements of operations: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (In thousands) Cost of goods sold $ $ $ $ Research and development Sales and marketing General and administrative Total share-based compensation expense $ $ $ $ At June 30, 2015, there was $94.1 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 2.02 years. At December 31, 2014, there was $74.5 million of total unrecognized share-based compensation costs related to non-vested share-based compensation arrangements. The costs are expected to be recognized over a weighted average period of approximately 1.97 years. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | 6 Months Ended |
Jun. 30, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | NOTE 9 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2015 and 2014: Unrealized Gains (Losses) on Available-for- Sale Securities Unrealized Gains (Losses) on Derivatives Total (in thousands) Balance at December 31, 2014 $ ) $ ) $ ) Other comprehensive income/loss before reclassifications Amounts reclassified from accumulated other comprehensive income/loss Net current-period other comprehensive income/loss, net of taxes Balance at June 30, 2015 $ ) $ Balance at December 31, 2013 $ ) $ $ Other comprehensive income/loss before reclassifications Amounts reclassified from accumulated other comprehensive income/loss ) ) Net current-period other comprehensive income/loss, net of taxes ) ) Balance at June 30, 2014 $ $ $ The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2015 and 2014: Amount Reclassified from Other Comprehensive Income (Loss) Details about Six Months Ended Accumulated Other Comprehensive Income (Loss) June 30, Affected Line Item in the Components 2015 2014 Statement of Operations (in thousands) Unrealized gains (losses) on Derivatives $ ) $ Cost of revenues and Operating expenses: ) Cost of revenues ) Research and development ) Sales and marketing ) General and administrative ) Unrealized losses on Available-for-Sale Securities ) ) Other income, net Total reclassifications for the period $ ) $ Total |
INCOME TAXES_
INCOME TAXES: | 6 Months Ended |
Jun. 30, 2015 | |
INCOME TAXES: | |
INCOME TAXES: | NOTE 10 — INCOME TAXES: As of June 30, 2015 and December 31, 2014, the Company had gross unrecognized tax benefits of $21.7 million and $18.0 million, respectively. It is the Company’s policy to classify accrued interest and penalties as part of the unrecognized tax benefits and record the expense in the provision for income taxes. As of June 30, 2015 and December 31, 2014, the amount of accrued interest and penalties totaled $1.3 million and $1.0 million, respectively. As of June 30, 2015, calendar years 2009 and thereafter are open and subject to potential examination in one or more jurisdictions. 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 $13.0 million and $0.1 million in the six months ended June 30, 2015 and June 30, 2014, respectively and increased diluted earnings per share by approximately $0.27 and $0 in the six months ended June 30, 2015 and 2014 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 5.0% and 0.8% for the three months ended June 30, 2015 and 2014, respectively. The Company’s effective tax rates were 9.9% and (3.0)% for the six months ended June 30, 2015 and 2014, respectively. The difference between the Company’s effective tax rates and the 35% federal statutory rate resulted primarily from the tax holiday in Israel and foreign earnings taxed at rates lower than the federal statutory rates, partially offset by the accrual of unrecognized tax benefits, interest and penalties associated with unrecognized tax positions, non-tax-deductible expenses such as share-based compensation and losses generated from subsidiaries without tax benefit. 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 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. Previously established valuation allowances may also be released in the event it is deemed to be more-likely-than-not that the deferred tax asset can be realized. Any release of valuation allowance will be recorded as a tax benefit which will positively impact the Company’s operating results. The Company believes, based on the quarterly assessment performed as of June 30, 2015, that it is possible that a valuation allowance may be released in the future if sustained levels of profitability are achieved. |
OTHER INCOME (LOSS), NET_
OTHER INCOME (LOSS), NET: | 6 Months Ended |
Jun. 30, 2015 | |
OTHER INCOME (LOSS), NET: | |
OTHER INCOME (LOSS), NET: | NOTE 11 — OTHER INCOME (LOSS), NET: Other income (loss), net, is summarized in the following table: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (In thousands) Interest income and gain on sale of investments, net $ $ $ $ Impairment loss on equity investment in a private company — — ) — Foreign exchange gain (loss) ) ) Total other income (loss), net $ $ $ ) $ |
THE COMPANY AND SUMMARY OF SI17
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
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 were derived from audited financial statements, but do 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, 2014, filed with the SEC on March 2, 2015. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2015 or thereafter. Certain prior year amounts have been reclassified to conform to 2015 presentation. These changes and reclassifications did not impact net or comprehensive income. The Company has evaluated subsequent events through the date that the financial statements were issued. |
Revision to Prior Period Financial Statements | Revision to Prior Period Financial Statements During the year ended December 31, 2014, the Company became aware of and corrected immaterial errors primarily related to the accounting for liabilities for warranty, certain purchase orders, distributor price adjustment claims and purchase price allocation for the acquisitions of Kotura and IPtronics. 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 this revision for periods presented within this quarterly report on Form 10-Q is shown in the tables below: Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 As reported Adjustments As revised As reported Adjustments As revised (in thousands, except per share data) (in thousands, except per share data) Statement of operations: Total revenues $ $ $ $ $ $ Cost of revenues Gross profit Operating expenses: Research and development — — Sales and marketing — — General and administrative — — Total operating expenses — — Loss from operations ) ) ) ) Other income, net — — Loss before taxes on income ) ) ) ) (Provision for) benefit from taxes on income — ) — ) Net loss $ ) $ $ ) $ ) $ $ ) Net loss per share — basic $ ) — $ ) $ ) $ $ ) Net loss per share — diluted $ ) — $ ) $ ) $ $ ) Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 As reported Adjustments As revised As reported Adjustments As revised (in thousands) (in thousands) Statement of comprehensive loss: Net loss $ ) $ $ ) $ ) $ $ ) Total comprehensive loss, net of tax ) ) ) ) Six Months Ended June 30, 2014 As reported Adjustments As revised (in thousands) Statement of cash flows: Net cash provided by operating activities $ $ $ Net cash provided by financing activities ) |
Risks and uncertainties | Risks and uncertainties The Company is subject to all of the risks inherent in a company which operates in the dynamic and competitive semiconductor industry. Significant changes in any of the following areas could have a materially adverse impact on the Company’s financial position and results of operations: unpredictable volume or timing of customer orders; ordered product mix; the sales outlook and purchasing patterns of the Company’s customers based on consumer demands and general economic conditions; loss of one or more of the Company’s customers; decreases in the average selling prices of products or increases in the average cost of finished goods; the availability, pricing and timeliness of delivery of components used in the Company’s products; reliance on a limited number of subcontractors to manufacture, assemble, package and production test the Company’s products; the Company’s ability to successfully develop, introduce and sell new or enhanced products in a timely manner; product obsolescence and the Company’s ability to manage product transitions; the timing of announcements or introductions of new products by the Company’s competitors; and the Company’s ability to successfully integrate acquired businesses. |
Use of estimates | Use of estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns and allowances, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, goodwill and purchased intangible asset valuation, hedge effectiveness, deferred income tax asset valuation, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. 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 for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Hewlett Packard % * % * IBM * % * % Dell * * * % * Less than 10% The following table summarizes the accounts receivable balance in excess of 10% of the total accounts receivable for the periods indicated: June 30, 2015 December 31, 2014 Hewlett Packard % % Hon Hai Precision Ind., Co. Ltd. % * IBM * % Ingram Micro * % * Less than 10% |
Product warranty | Product warranty The following table provides the changes in the product warranty accrual for the six months ended June 30, 2015 and 2014: Six Months Ended June 30, 2015 2014 (in thousands) Balance, beginning of the period $ $ New warranties issued during the period Reversal of warranty reserves ) ) Settlements during the period ) ) Balance, end of the period $ $ Less: long-term portion of product warranty liability ) ) Balance, current portion of product warranty liability at end of the period $ $ |
Net income per share | Net income per share The following table sets forth the computation of basic and diluted net loss per share for the three and six months ended June 30, 2015 and 2014: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands except per share data) Net income (loss) $ $ ) $ $ ) Basic and diluted shares: Weighted average ordinary shares Dilutive effect of employee stock option — — Shares used to compute diluted net income Net income (loss) per share — basic $ $ ) $ $ ) Net income (loss) per share — diluted $ $ ) $ $ ) The Company excluded 508,326 and 517,409 outstanding shares for the three and six months ended June 30, 2015, 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 1,372,376 and 839,133 outstanding shares for the three and six months ended June 30, 2014, respectively, from the computation of diluted net loss per ordinary share, because including these outstanding shares would have had an anti-dilutive effect. |
Recent accounting pronouncements | Recent accounting pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued guidance applying to inventory measured using any other method other than last-in, last-out method. Under this guidance inventory is measured at the lower of cost and net realizable value. The net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is applied prospectively and is effective for the Company in its first fiscal quarter 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 and related disclosures. In May 2015, the FASB issued guidance eliminating the requirement to categorize within the fair value hierarchy investments whose fair values are measured at net asset value (“NAV”). Entities will be required to disclose the fair values of investments measured at NAV and provide a general description of redemption terms and conditions including the probability these investments will be sold at amounts other than NAV. The guidance is applied retrospectively and is effective for the Company in its first fiscal quarter beginning January 1, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial statements and related disclosures. In May 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. In July 2015, the FASB deferred the effective date of this guidance by one year. This guidance will be effective for the Company in its first fiscal quarter beginning January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment at the date of adoption. The guidance may be adopted as early as the Company’s first fiscal quarter beginning January 1, 2017, the effective date of the original guidance. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. 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 in its first fiscal quarter 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 and related disclosures. |
Fair value of financial instruments | Fair value hierarchy The Company measures its financial instruments 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. At June 30, 2015 and December 31, 2014, the Company did not have any financial instruments valued based on Level 3 valuations. |
Cash, cash equivalents and short-term investments | Cash, Cash equivalents and Short-term investments The short-term investments are classified as available-for-sale securities. |
Restricted cash and deposits | Restricted cash and deposits The Company maintains certain cash amounts restricted as to withdrawal or use. It maintained a balance of $3.6 million at June 30, 2015 and December 31, 2014, which were designated for contingent payments related to acquisitions. The Company anticipates releasing the balance of restricted cash during its third quarter ending September 30, 2015. |
Investments in privately-held companies | Investments in privately-held companies The carrying value of the Company’s investments in privately held companies that were accounted for under the cost method was $7.7 million and $10.7 million as of June 30, 2015 and December 31, 2014, respectively. These assets are measured at fair value if the company identifies events or circumstances that have significant impact on the cost basis of the investments. To arrive at the valuation of these assets, the Company considers any significant changes in the financial metrics and economic variables and also uses third-party valuation reports to assist in the valuation as necessary. The fair value measurement of investments in privately held companies was classified as Level 3 because significant unobservable inputs were used in the valuation due to the absence of quoted market prices and inherent lack of liquidity. Significant unobservable inputs, which included the financial condition and near-term prospects of the investees, recent financing activities of the investees, and the investees’ capital structure as well as other economic variables, reflected the assumptions market participants would use in pricing these assets. |
Legal proceedings | 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, determine that an unfavorable outcome is probable or reasonably possible, or determine that the amount or range of any possible loss is reasonably estimable. 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 June 30, 2015 were as follows: |
Income taxes | NOTE 10 — INCOME TAXES: As of June 30, 2015 and December 31, 2014, the Company had gross unrecognized tax benefits of $21.7 million and $18.0 million, respectively. It is the Company’s policy to classify accrued interest and penalties as part of the unrecognized tax benefits and record the expense in the provision for income taxes. As of June 30, 2015 and December 31, 2014, the amount of accrued interest and penalties totaled $1.3 million and $1.0 million, respectively. As of June 30, 2015, calendar years 2009 and thereafter are open and subject to potential examination in one or more jurisdictions. 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 $13.0 million and $0.1 million in the six months ended June 30, 2015 and June 30, 2014, respectively and increased diluted earnings per share by approximately $0.27 and $0 in the six months ended June 30, 2015 and 2014 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 5.0% and 0.8% for the three months ended June 30, 2015 and 2014, respectively. The Company’s effective tax rates were 9.9% and 3.0% for the six months ended June 30, 2015 and 2014, respectively. The difference between the Company’s effective tax rates and the 35% federal statutory rate resulted primarily from the tax holiday in Israel and foreign earnings taxed at rates lower than the federal statutory rates, partially offset by the accrual of unrecognized tax benefits, interest and penalties associated with unrecognized tax positions, non-tax-deductible expenses such as share-based compensation and losses generated from subsidiaries without tax benefit. 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 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. Previously established valuation allowances may also be released in the event it is deemed to be more-likely-than-not that the deferred tax asset can be realized. Any release of valuation allowance will be recorded as a tax benefit which will positively impact the Company’s operating results. The Company believes, based on the quarterly assessment performed as of June 30, 2015, that it is possible that a valuation allowance may be released in the future if sustained levels of profitability are achieved. |
THE COMPANY AND SUMMARY OF SI18
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
Schedule of revision to prior period financial statements | Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 As reported Adjustments As revised As reported Adjustments As revised (in thousands, except per share data) (in thousands, except per share data) Statement of operations: Total revenues $ $ $ $ $ $ Cost of revenues Gross profit Operating expenses: Research and development — — Sales and marketing — — General and administrative — — Total operating expenses — — Loss from operations ) ) ) ) Other income, net — — Loss before taxes on income ) ) ) ) (Provision for) benefit from taxes on income — ) — ) Net loss $ ) $ $ ) $ ) $ $ ) Net loss per share — basic $ ) — $ ) $ ) $ $ ) Net loss per share — diluted $ ) — $ ) $ ) $ $ ) Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 As reported Adjustments As revised As reported Adjustments As revised (in thousands) (in thousands) Statement of comprehensive loss: Net loss $ ) $ $ ) $ ) $ $ ) Total comprehensive loss, net of tax ) ) ) ) Six Months Ended June 30, 2014 As reported Adjustments As revised (in thousands) Statement of cash flows: Net cash provided by operating activities $ $ $ Net cash provided by financing activities ) |
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 for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Hewlett Packard % * % * IBM * % * % Dell * * * % * Less than 10% The following table summarizes the accounts receivable balance in excess of 10% of the total accounts receivable for the periods indicated: June 30, 2015 December 31, 2014 Hewlett Packard % % Hon Hai Precision Ind., Co. Ltd. % * IBM * % Ingram Micro * % * Less than 10% |
Schedule of changes in the entity's liability for product warranty | Six Months Ended June 30, 2015 2014 (in thousands) Balance, beginning of the period $ $ New warranties issued during the period Reversal of warranty reserves ) ) Settlements during the period ) ) Balance, end of the period $ $ Less: long-term portion of product warranty liability ) ) Balance, current portion of product warranty liability at end of the period $ $ |
Schedule of computation of basic and diluted net income per share | Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands except per share data) Net income (loss) $ $ ) $ $ ) Basic and diluted shares: Weighted average ordinary shares Dilutive effect of employee stock option — — Shares used to compute diluted net income Net income (loss) per share — basic $ $ ) $ $ ) Net income (loss) per share — diluted $ $ ) $ $ ) |
BALANCE SHEET COMPONENTS_ (Tabl
BALANCE SHEET COMPONENTS: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
BALANCE SHEET COMPONENTS: | |
Schedule of balance sheet components | June 30, 2015 December 31, 2014 (In thousands) Accounts receivable, net: Accounts receivable $ $ Less: allowance for doubtful accounts ) ) $ $ Inventories: Raw materials $ $ Work-in-process Finished goods $ $ Deferred taxes and other current assets: Prepaid expenses $ $ Derivative contracts receivable — Deferred taxes VAT receivable Other $ $ Property and equipment, net: Computer equipment and software $ $ Furniture and fixtures Leasehold improvements Less: Accumulated depreciation and amortization ) ) $ $ Deferred taxes and other long-term assets: Equity investments in private companies $ $ Deferred taxes Other assets $ $ Accrued liabilities: Payroll and related expenses $ $ Accrued expenses Derivative contracts payable — Product warranty liability Other $ $ Other long-term liabilities: Income tax payable $ $ Deferred rent Other $ $ |
FAIR VALUE MEASUREMENTS_ (Table
FAIR VALUE MEASUREMENTS: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
FAIR VALUE MEASUREMENTS: | |
Schedule of the fair value hierarchy of the Company's financial assets and liabilities measured at fair value | The following table represents the fair value hierarchy of the Company’s financial assets measured at fair value at June 30, 2015. Level 1 Level 2 Total (in thousands) Money market funds $ $ — $ Certificates of deposit — U.S. Government and agency securities — Commercial paper — Corporate bonds — Municipal bonds — Foreign government bonds — Derivative contracts — Total financial assets $ $ $ The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value at December 31, 2014. Level 1 Level 2 Total (in thousands) Money market funds $ $ — $ Certificates of deposit — U.S. Government and agency securities — Commercial paper — Corporate bonds — Municipal bonds — Foreign government bonds — Total financial assets $ $ $ Derivative contracts — Total financial liabilities $ — $ $ |
INVESTMENTS_ (Tables)
INVESTMENTS: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
INVESTMENTS: | |
Schedule of cash, cash equivalents and short-term investments | June 30, 2015 Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (in thousands) Cash $ $ — $ — $ Money market funds — — Certificates of deposit ) U.S. Government and agency securities ) Commercial paper ) Corporate bonds ) Municipal bonds ) Foreign government bonds ) Total $ $ $ ) $ Less amounts classified as cash and cash equivalents ) — — ) $ $ $ ) $ December 31, 2014 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value (in thousands) Cash $ $ — $ — $ Money market funds — — Certificates of deposit ) U.S. Government and agency securities ) Commercial paper ) Corporate bonds ) Municipal bonds — ) Foreign government bonds — ) Total $ $ $ ) $ Less amounts classified as cash and cash equivalents ) — — ) $ $ $ ) $ |
Schedule of contractual maturities of short-term investments | June 30, 2015 December 31, 2014 Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value (in thousands) Due in less than one year $ $ $ $ Due in one to three years $ $ $ $ |
GOODWILL AND INTANGIBLE ASSET22
GOODWILL AND INTANGIBLE ASSETS: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 at December 31, 2014 $ Adjustments — Balance at June 30, 2015 $ |
Schedule of carrying amounts of intangible assets | The carrying amounts of intangible assets at June 30, 2015 were as follows: Gross Carrying Value Accumulated Amortization Net Carrying Value (in thousands) Licensed technology $ $ ) $ Developed technology ) Customer relationships ) Total intangible assets $ $ ) $ The carrying amounts of intangible assets at December 31, 2014 were as follows: Gross Carrying Value Accumulated Amortization Net Carrying Value (in thousands) Licensed technology $ $ ) $ Developed technology ) Customer relationships ) Total amortizable intangible assets $ $ ) $ IPR&D — Total intangible assets $ $ ) $ |
Schedule of estimated future amortization expense from amortizable intangible assets | The estimated future amortization expenses from amortizable intangible assets are as follows (in thousands): Remaining six months of 2015 $ 2016 2017 2018 2019 2020 and thereafter $ |
DERIVATIVES AND HEDGING ACTIV23
DERIVATIVES AND HEDGING ACTIVITIES: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
DERIVATIVES AND HEDGING ACTIVITIES: | |
Schedule of notional amounts of outstanding forward contracts | Buy Contracts June 30, 2015 December 31, 2014 (in thousands) Israeli shekel $ $ |
Schedule of fair value of derivative contracts | Derivative Assets Reported in Other Current Assets Derivative Liabilities Reported in Other Current Liabilities June 30, 2015 December 31, 2014 June 30, 2015 December 31, 2014 (in thousands) Foreign exchange contracts designated as cash flow hedges $ $ — $ — $ Total derivatives designated as hedging instruments $ $ — $ — $ |
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 at June 30, 2015 and December 31, 2014, and their impact on OCI for the six months ended June 30, 2015 (in thousands): December 31, 2014 $ ) Amount of gain recognized in OCI (effective portion) Amount of gain reclassified from OCI to income (effective portion) June 30, 2015 $ |
Effect of derivative contracts on the condensed consolidated statement of operations | Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (in thousands) (Loss) gain on foreign exchange contracts designated as cash flow hedges $ ) $ $ ) $ |
COMMITMENTS AND CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES: | |
Schedule of future minimum payments under non-cancelable operating and capital leases | At June 30, 2015, future minimum lease payments under non-cancelable operating and capital leases were as follows: Year Ended December 31, Capital Leases Operating Leases (in thousands) Remaining six months of 2015 $ $ 2016 2017 — 2018 — 2019 — 2020 and beyond — Total minimum lease payments $ $ Less: Amount representing interest ) Present value of capital lease obligations $ |
SHARE INCENTIVE PLANS_ (Tables)
SHARE INCENTIVE PLANS: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
SHARE INCENTIVE PLANS: | |
Summary of share option awards activity under equity incentive plans | Options Outstanding Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2014 $ Options exercised ) Options cancelled ) Outstanding at June 30, 2015 $ |
Summary of restricted share units activity | Restricted Share Units Outstanding Number of Shares Weighted Average Grant Date Fair Value Non vested restricted share units at December 31, 2014 $ Restricted share units granted Restricted share units vested ) Restricted share units canceled ) Non vested restricted share units at June 30, 2015 $ |
Summary of ordinary shares reserved for future issuance under equity incentive plans | Number of Shares Share options outstanding Restricted share units outstanding Shares authorized for future issuance ESPP shares available for future issuance Total shares reserved for future issuance at June 30, 2015 |
Schedule of weighted average assumptions used to value share options granted | Employee Share Options Employee Share Purchase Plan Six Months Ended June 30, Six Months Ended June 30, 2015 * 2014 2015 2014 Dividend yield, % — — — — Expected volatility, % — Risk free interest rate, % — Expected life, years — Estimated forfeiture rate, % — — — * No options were granted in the six months ended June 30, 2015. |
Summary of the distribution of total share-based compensation expense | Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (In thousands) Cost of goods sold $ $ $ $ Research and development Sales and marketing General and administrative Total share-based compensation expense $ $ $ $ |
ACCUMULATED OTHER COMPREHENSI26
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | |
Summary of the changes in accumulated balances of other comprehensive income (loss) | Unrealized Gains (Losses) on Available-for- Sale Securities Unrealized Gains (Losses) on Derivatives Total (in thousands) Balance at December 31, 2014 $ ) $ ) $ ) Other comprehensive income/loss before reclassifications Amounts reclassified from accumulated other comprehensive income/loss Net current-period other comprehensive income/loss, net of taxes Balance at June 30, 2015 $ ) $ Balance at December 31, 2013 $ ) $ $ Other comprehensive income/loss before reclassifications Amounts reclassified from accumulated other comprehensive income/loss ) ) Net current-period other comprehensive income/loss, net of taxes ) ) Balance at June 30, 2014 $ $ $ |
Schedule of reclassifications out of accumulated other comprehensive income (loss) | Amount Reclassified from Other Comprehensive Income (Loss) Details about Six Months Ended Accumulated Other Comprehensive Income (Loss) June 30, Affected Line Item in the Components 2015 2014 Statement of Operations (in thousands) Unrealized gains (losses) on Derivatives $ ) $ Cost of revenues and Operating expenses: ) Cost of revenues ) Research and development ) Sales and marketing ) General and administrative ) Unrealized losses on Available-for-Sale Securities ) ) Other income, net Total reclassifications for the period $ ) $ Total |
OTHER INCOME, NET_ (Tables)
OTHER INCOME, NET: (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
OTHER INCOME (LOSS), NET: | |
Schedule of other income (Loss), net | Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (In thousands) Interest income and gain on sale of investments, net $ $ $ $ Impairment loss on equity investment in a private company — — ) — Foreign exchange gain (loss) ) ) Total other income (loss), net $ $ $ ) $ |
THE COMPANY AND SUMMARY OF SI28
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Total revenues | $ 163,148 | $ 102,823 | $ 309,823 | $ 201,825 |
Cost of revenues | 47,178 | 34,433 | 88,265 | 68,164 |
Gross profit | 115,970 | 68,390 | 221,558 | 133,661 |
Operating expenses: | ||||
Research and development | 62,576 | 49,506 | 120,694 | 97,843 |
Sales and marketing | 23,366 | 18,723 | 45,924 | 38,002 |
General and administrative | 10,670 | 9,461 | 20,371 | 17,676 |
Total operating expense | 96,612 | 77,690 | 186,989 | 153,521 |
Loss from operations | 19,358 | (9,300) | 34,569 | (19,860) |
Other income (loss), net (Note 11) | 912 | 357 | (1,557) | 591 |
Income (loss) before taxes on income | 20,270 | (8,943) | 33,012 | (19,269) |
(Provision for) benefit from taxes on income | 1,022 | (76) | 3,268 | 578 |
Net income (loss) | $ 19,248 | $ (8,867) | $ 29,744 | $ (19,847) |
Net income (loss) per share - basic (in dollars per share) | $ 0.42 | $ (0.20) | $ 0.65 | $ (0.45) |
Net income (loss) per share - diluted (in dollars per share) | $ 0.40 | $ (0.20) | $ 0.63 | $ (0.45) |
Statement of comprehensive loss: | ||||
Net income (loss) | $ 19,248 | $ (8,867) | $ 29,744 | $ (19,847) |
Total comprehensive income (loss), net of tax | 24,467 | (8,816) | 35,788 | (20,516) |
Statement of cash flows: | ||||
Net income (loss) | $ 19,248 | (8,867) | 29,744 | (19,847) |
Net cash provided by operating activities | 87,100 | 17,954 | ||
Net cash provided by financing activities | $ 9,273 | 6,426 | ||
As reported | ||||
Total revenues | 102,574 | 201,279 | ||
Cost of revenues | 34,292 | 68,111 | ||
Gross profit | 68,282 | 133,168 | ||
Operating expenses: | ||||
Research and development | 49,506 | 97,843 | ||
Sales and marketing | 18,723 | 38,002 | ||
General and administrative | 9,461 | 17,676 | ||
Total operating expense | 77,690 | 153,521 | ||
Loss from operations | (9,408) | (20,353) | ||
Other income (loss), net (Note 11) | 357 | 591 | ||
Income (loss) before taxes on income | (9,051) | (19,762) | ||
(Provision for) benefit from taxes on income | 76 | (578) | ||
Net income (loss) | $ (8,975) | $ (20,340) | ||
Net income (loss) per share - basic (in dollars per share) | $ (0.20) | $ (0.46) | ||
Net income (loss) per share - diluted (in dollars per share) | $ (0.20) | $ (0.46) | ||
Statement of comprehensive loss: | ||||
Net income (loss) | $ (8,975) | $ (20,340) | ||
Total comprehensive income (loss), net of tax | (8,924) | (21,009) | ||
Statement of cash flows: | ||||
Net income (loss) | (8,975) | (20,340) | ||
Net cash provided by operating activities | 17,832 | |||
Net cash provided by financing activities | 6,548 | |||
Adjustments | ||||
Total revenues | 249 | 546 | ||
Cost of revenues | 141 | 53 | ||
Gross profit | 108 | 493 | ||
Operating expenses: | ||||
Loss from operations | 108 | 493 | ||
Income (loss) before taxes on income | 108 | 493 | ||
Net income (loss) | 108 | $ 493 | ||
Net income (loss) per share - basic (in dollars per share) | $ 0.01 | |||
Net income (loss) per share - diluted (in dollars per share) | $ 0.01 | |||
Statement of comprehensive loss: | ||||
Net income (loss) | 108 | $ 493 | ||
Total comprehensive income (loss), net of tax | 108 | 493 | ||
Statement of cash flows: | ||||
Net income (loss) | 108 | 493 | ||
Net cash provided by operating activities | 122 | |||
Net cash provided by financing activities | (122) | |||
As revised | ||||
Total revenues | 102,823 | 201,825 | ||
Cost of revenues | 34,433 | 68,164 | ||
Gross profit | 68,390 | 133,661 | ||
Operating expenses: | ||||
Research and development | 49,506 | 97,843 | ||
Sales and marketing | 18,723 | 38,002 | ||
General and administrative | 9,461 | 17,676 | ||
Total operating expense | 77,690 | 153,521 | ||
Loss from operations | (9,300) | (19,860) | ||
Other income (loss), net (Note 11) | 357 | 591 | ||
Income (loss) before taxes on income | (8,943) | (19,269) | ||
(Provision for) benefit from taxes on income | 76 | (578) | ||
Net income (loss) | $ (8,867) | $ (19,847) | ||
Net income (loss) per share - basic (in dollars per share) | $ (0.20) | $ (0.45) | ||
Net income (loss) per share - diluted (in dollars per share) | $ (0.20) | $ (0.45) | ||
Statement of comprehensive loss: | ||||
Net income (loss) | $ (8,867) | $ (19,847) | ||
Total comprehensive income (loss), net of tax | (8,816) | (20,516) | ||
Statement of cash flows: | ||||
Net income (loss) | $ (8,867) | (19,847) | ||
Net cash provided by operating activities | 17,954 | |||
Net cash provided by financing activities | $ 6,426 |
THE COMPANY AND SUMMARY OF SI29
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 2) - Consolidated revenue | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Revenues | Hewlett Packard | |||||
Concentration of credit risk | |||||
Percentage of consolidation by major customer | 15.00% | 14.00% | |||
Revenues | IBM | |||||
Concentration of credit risk | |||||
Percentage of consolidation by major customer | 11.00% | 10.00% | |||
Revenues | Dell | |||||
Concentration of credit risk | |||||
Percentage of consolidation by major customer | 11.00% | ||||
Accounts receivable | Hewlett Packard | |||||
Concentration of credit risk | |||||
Percentage of consolidation by major customer | 18.00% | 17.00% | |||
Accounts receivable | IBM | |||||
Concentration of credit risk | |||||
Percentage of consolidation by major customer | 11.00% | ||||
Accounts receivable | Ingram Micro | |||||
Concentration of credit risk | |||||
Percentage of consolidation by major customer | 10.00% | ||||
Accounts receivable | Hon Hai Precision Ind., Co. Ltd. | |||||
Concentration of credit risk | |||||
Percentage of consolidation by major customer | 11.00% |
THE COMPANY AND SUMMARY OF SI30
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Changes in the entity's liability for product warranty | |||
Balance, beginning of the period | $ 1,932 | $ 4,198 | |
New warranties issued during the period | 1,514 | 2,950 | |
Reversal of warranty reserves | (67) | (803) | |
Settlements during the period | (1,572) | (2,490) | |
Balance, end of the period | 1,807 | 3,855 | |
Less: long term portion of product warranty liability | (450) | (400) | |
Balance, current portion of product warranty liability at end of the period | $ 1,357 | $ 3,455 | $ 1,508 |
THE COMPANY AND SUMMARY OF SI31
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 4) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net income per share | ||||
Net income (loss) | $ 19,248 | $ (8,867) | $ 29,744 | $ (19,847) |
Basic and diluted shares: | ||||
Weighted average ordinary shares outstanding used to compute basic net income (loss) per share | 46,191,000 | 44,671,000 | 45,943,000 | 44,475,000 |
Dilutive effect of employee share option and purchase plan (in shares) | 1,377,000 | 1,398,000 | ||
Shares used to compute diluted net income (loss) per share | 47,568,000 | 44,671,000 | 47,341,000 | 44,475,000 |
Net income (loss) per share - basic (in dollars per share) | $ 0.42 | $ (0.20) | $ 0.65 | $ (0.45) |
Net income (loss) per share - diluted (in dollars per share) | $ 0.40 | $ (0.20) | $ 0.63 | $ (0.45) |
Net income per share | ||||
Outstanding shares excluded from the computation of diluted net income (loss) per ordinary share | 1,372,376 | 839,133 | ||
Share options | ||||
Net income per share | ||||
Outstanding shares excluded from the computation of diluted net income (loss) per ordinary share | 508,326 | 517,409 |
BALANCE SHEET COMPONENTS_ (Deta
BALANCE SHEET COMPONENTS: (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Accounts receivable, net: | |||
Accounts receivable | $ 61,640 | $ 65,594 | |
Less: allowance for doubtful accounts | (636) | (672) | |
Accounts receivable, net | 61,004 | 64,922 | |
Inventories: | |||
Raw materials | 9,030 | 5,725 | |
Work-in-process | 22,733 | 13,874 | |
Finished goods | 31,042 | 24,871 | |
Inventories | 62,805 | 44,470 | |
Deferred taxes and other current assets: | |||
Prepaid expenses | 7,818 | 8,040 | |
Derivative contracts receivable | 2,186 | ||
Deferred taxes | 2,271 | 2,271 | |
VAT receivable | 5,520 | 6,117 | |
Other | 4,085 | 1,719 | |
Deferred taxes and other current assets | 21,880 | 18,147 | |
Property and equipment, net: | |||
Property and equipment, gross | 188,513 | 160,921 | |
Less: Accumulated depreciation and amortization | (96,253) | (82,094) | |
Property and equipment, net | 92,260 | 78,827 | |
Deferred taxes and other long-term assets: | |||
Equity investments in private companies | 7,739 | 10,736 | |
Deferred taxes | 255 | 389 | |
Other assets | 1,819 | 4,475 | |
Deferred taxes and other long-term assets | 9,813 | 15,600 | |
Accrued liabilities: | |||
Payroll and related expenses | 41,092 | 31,254 | |
Accrued expenses | 27,425 | 21,171 | |
Derivative contracts payable | 3,562 | ||
Product warranty liability | 1,357 | 1,508 | $ 3,455 |
Other | 3,573 | 4,479 | |
Accrued liabilities | 73,447 | 61,974 | |
Other long-term liabilities: | |||
Income tax payable | 21,593 | 18,174 | |
Deferred rent | 1,989 | 2,337 | |
Other | 2,694 | 2,024 | |
Other long-term liabilities | 26,276 | 22,535 | |
Computer equipment and software | |||
Property and equipment, net: | |||
Property and equipment, gross | 151,188 | 124,370 | |
Furniture and fixtures | |||
Property and equipment, net: | |||
Property and equipment, gross | 3,323 | 3,256 | |
Leasehold improvements | |||
Property and equipment, net: | |||
Property and equipment, gross | $ 34,002 | $ 33,295 |
FAIR VALUE MEASUREMENTS_ (Detai
FAIR VALUE MEASUREMENTS: (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
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 | 6,623 | 4,426 |
Fair Value, Measurements, Recurring Basis | Level 1 | Money market funds | ||
Financial assets measured at fair value | ||
Financial assets | 6,623 | 4,426 |
Fair Value, Measurements, Recurring Basis | Level 2 | ||
Financial assets measured at fair value | ||
Financial assets | 397,530 | 334,038 |
Financial liabilities | 3,562 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Certificates of deposits | ||
Financial assets measured at fair value | ||
Financial assets | 103,895 | 80,275 |
Fair Value, Measurements, Recurring Basis | Level 2 | U.S. Government and agency securities | ||
Financial assets measured at fair value | ||
Financial assets | 62,610 | 99,114 |
Fair Value, Measurements, Recurring Basis | Level 2 | Commercial paper | ||
Financial assets measured at fair value | ||
Financial assets | 59,635 | 23,019 |
Fair Value, Measurements, Recurring Basis | Level 2 | Corporate bonds | ||
Financial assets measured at fair value | ||
Financial assets | 127,018 | 111,736 |
Fair Value, Measurements, Recurring Basis | Level 2 | Municipal bonds | ||
Financial assets measured at fair value | ||
Financial assets | 28,090 | 13,104 |
Fair Value, Measurements, Recurring Basis | Level 2 | Derivative contracts | ||
Financial assets measured at fair value | ||
Financial assets | 2,186 | |
Financial liabilities | 3,562 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Foreign government bonds | ||
Financial assets measured at fair value | ||
Financial assets | 14,096 | 6,790 |
Fair Value, Measurements, Recurring Basis | Total | ||
Financial assets measured at fair value | ||
Financial assets | 404,153 | 338,464 |
Financial liabilities | 3,562 | |
Fair Value, Measurements, Recurring Basis | Total | Money market funds | ||
Financial assets measured at fair value | ||
Financial assets | 6,623 | 4,426 |
Fair Value, Measurements, Recurring Basis | Total | Certificates of deposits | ||
Financial assets measured at fair value | ||
Financial assets | 103,895 | 80,275 |
Fair Value, Measurements, Recurring Basis | Total | U.S. Government and agency securities | ||
Financial assets measured at fair value | ||
Financial assets | 62,610 | 99,114 |
Fair Value, Measurements, Recurring Basis | Total | Commercial paper | ||
Financial assets measured at fair value | ||
Financial assets | 59,635 | 23,019 |
Fair Value, Measurements, Recurring Basis | Total | Corporate bonds | ||
Financial assets measured at fair value | ||
Financial assets | 127,018 | 111,736 |
Fair Value, Measurements, Recurring Basis | Total | Municipal bonds | ||
Financial assets measured at fair value | ||
Financial assets | 28,090 | 13,104 |
Fair Value, Measurements, Recurring Basis | Total | Derivative contracts | ||
Financial assets measured at fair value | ||
Financial assets | 2,186 | |
Financial liabilities | 3,562 | |
Fair Value, Measurements, Recurring Basis | Total | Foreign government bonds | ||
Financial assets measured at fair value | ||
Financial assets | $ 14,096 | $ 6,790 |
INVESTMENTS_ (Details)
INVESTMENTS: (Details) $ in Thousands | Apr. 27, 2015item | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) |
Amortized Cost | ||||||
Total | $ 463,709 | $ 463,709 | $ 385,876 | |||
Less amounts classified as cash and cash equivalents | (68,203) | (68,203) | (51,326) | |||
Short term investments, amortized cost | 395,506 | 395,506 | 334,550 | |||
Unrealized Gains (Losses) | ||||||
Total unrealized gains | 107 | 29 | ||||
Total unrealized losses | (269) | (541) | ||||
Estimated Fair Value | ||||||
Total | 463,547 | 463,547 | 385,364 | |||
Less amounts classified as cash and cash equivalents | (68,203) | (68,203) | (51,326) | |||
Short-term investments classified as available-for-sale securities | 395,344 | 395,344 | 334,038 | |||
Realized gains (losses), net upon the sale of marketable securities | 2,100 | $ 500 | 2,400 | $ 900 | ||
Amortized cost | ||||||
Due in less than one year | 190,743 | 190,743 | 129,150 | |||
Due in one to three years | 204,759 | 204,759 | 205,400 | |||
Amortized cost | 395,502 | 395,502 | 334,550 | |||
Estimated fair value | ||||||
Due in less than one year | 190,745 | 190,745 | 129,155 | |||
Due in one to three years | 204,599 | 204,599 | 204,883 | |||
Estimated fair value | 395,344 | 395,344 | 334,038 | |||
Restricted cash and deposits | ||||||
Restricted cash | 3,604 | 3,604 | 3,604 | |||
Investment in a privately-held companies accounted for under the cost method | 7,700 | 7,700 | 10,700 | |||
Number of privately-held companies impaired | item | 1 | |||||
Investment in privately-held company was impaired and the impairment of this investment was other than temporary | 3,189 | |||||
Other current assets | ||||||
Restricted cash and deposits | ||||||
Carrying value of privately-held company with discontinued operations | 200 | |||||
Other long term assets | ||||||
Restricted cash and deposits | ||||||
Carrying value of privately-held company with discontinued operations | 3,000 | |||||
Cash | ||||||
Amortized Cost | ||||||
Total | 61,580 | 61,580 | 46,900 | |||
Estimated Fair Value | ||||||
Total | 61,580 | 61,580 | 46,900 | |||
Money market funds | ||||||
Amortized Cost | ||||||
Total | 6,623 | 6,623 | 4,426 | |||
Estimated Fair Value | ||||||
Total | 6,623 | 6,623 | 4,426 | |||
Certificates of deposits | ||||||
Amortized Cost | ||||||
Total | 103,884 | 103,884 | 80,304 | |||
Unrealized Gains (Losses) | ||||||
Unrealized Gains | 12 | 12 | 1 | |||
Unrealized Losses | (1) | (1) | (30) | |||
Estimated Fair Value | ||||||
Total | 103,895 | 103,895 | 80,275 | |||
U.S. Government and agency securities | ||||||
Amortized Cost | ||||||
Total | 62,588 | 62,588 | 99,236 | |||
Unrealized Gains (Losses) | ||||||
Unrealized Gains | 34 | 34 | 9 | |||
Unrealized Losses | (12) | (12) | (131) | |||
Estimated Fair Value | ||||||
Total | 62,610 | 62,610 | 99,114 | |||
Commercial paper | ||||||
Amortized Cost | ||||||
Total | 59,620 | 59,620 | 23,017 | |||
Unrealized Gains (Losses) | ||||||
Unrealized Gains | 17 | 17 | 3 | |||
Unrealized Losses | (2) | (2) | (1) | |||
Estimated Fair Value | ||||||
Total | 59,635 | 59,635 | 23,019 | |||
Corporate bonds | ||||||
Amortized Cost | ||||||
Total | 127,156 | 127,156 | 112,033 | |||
Unrealized Gains (Losses) | ||||||
Unrealized Gains | 36 | 36 | 16 | |||
Unrealized Losses | (174) | (174) | (313) | |||
Estimated Fair Value | ||||||
Total | 127,018 | 127,018 | 111,736 | |||
Municipal bonds | ||||||
Amortized Cost | ||||||
Total | 28,137 | 28,137 | 13,151 | |||
Unrealized Gains (Losses) | ||||||
Unrealized Gains | 6 | 6 | ||||
Unrealized Losses | (53) | (53) | (47) | |||
Estimated Fair Value | ||||||
Total | 28,090 | 28,090 | 13,104 | |||
Foreign government bonds | ||||||
Amortized Cost | ||||||
Total | 14,121 | 14,121 | 6,809 | |||
Unrealized Gains (Losses) | ||||||
Unrealized Gains | 2 | 2 | ||||
Unrealized Losses | (27) | (27) | (19) | |||
Estimated Fair Value | ||||||
Total | $ 14,096 | $ 14,096 | $ 6,790 |
GOODWILL AND INTANGIBLE ASSET35
GOODWILL AND INTANGIBLE ASSETS: (Details) $ in Thousands | Jun. 30, 2015USD ($) |
Changes in the carrying amount of goodwill | |
Balance at the beginning of the period | $ 200,743 |
Balance at the end of the period | $ 200,743 |
GOODWILL AND INTANGIBLE ASSET36
GOODWILL AND INTANGIBLE ASSETS: (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Intangible assets | |||||
Gross carrying value of amortizable intangible assets | $ 85,760 | $ 85,760 | $ 85,548 | ||
Accumulated Amortization | (48,420) | (48,420) | (43,481) | ||
Net carrying value of amortizable intangible assets | 37,340 | 37,340 | 42,067 | ||
Amortization expense of intangible assets | 2,600 | $ 2,900 | 4,900 | $ 6,500 | |
Total amortizable intangible assets, excluding IPR&D | |||||
Intangible assets | |||||
Gross carrying value of amortizable intangible assets | 71,784 | ||||
Accumulated Amortization | (43,481) | ||||
Net carrying value of amortizable intangible assets | 37,340 | 37,340 | 28,303 | ||
Licensed technology | |||||
Intangible assets | |||||
Gross carrying value of amortizable intangible assets | 2,554 | 2,554 | 2,344 | ||
Accumulated Amortization | (1,199) | (1,199) | (917) | ||
Net carrying value of amortizable intangible assets | 1,355 | 1,355 | 1,427 | ||
Developed technology | |||||
Intangible assets | |||||
Gross carrying value of amortizable intangible assets | 69,830 | 69,830 | 56,064 | ||
Accumulated Amortization | (36,006) | (36,006) | (32,130) | ||
Net carrying value of amortizable intangible assets | 33,824 | 33,824 | 23,934 | ||
Customer relationship | |||||
Intangible assets | |||||
Gross carrying value of amortizable intangible assets | 13,376 | 13,376 | 13,376 | ||
Accumulated Amortization | (11,215) | (11,215) | (10,434) | ||
Net carrying value of amortizable intangible assets | $ 2,161 | $ 2,161 | 2,942 | ||
In-process research and development | |||||
Intangible assets | |||||
Gross carrying value of amortizable intangible assets | 13,764 | ||||
Net carrying value of amortizable intangible assets | $ 13,764 |
GOODWILL AND INTANGIBLE ASSET37
GOODWILL AND INTANGIBLE ASSETS: (Details 3) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Estimated future amortization expenses from amortizable intangible assets | ||
Net carrying value of amortizable intangible assets | $ 37,340 | $ 42,067 |
Total amortizable intangible assets, excluding IPR&D | ||
Estimated future amortization expenses from amortizable intangible assets | ||
Remaining months in Company's fiscal year | 5,178 | |
2,016 | 10,011 | |
2,017 | 9,951 | |
2,018 | 6,923 | |
2,019 | 3,541 | |
2020 and thereafter | 1,736 | |
Net carrying value of amortizable intangible assets | $ 37,340 | $ 28,303 |
DERIVATIVES AND HEDGING ACTIV38
DERIVATIVES AND HEDGING ACTIVITIES: (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Derivative Liabilities Reported in Other Current Liabilities | |||||
Total derivatives designated as hedging instruments | $ 3,562 | ||||
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | |||||
Balance at the beginning of the period | $ (3,646) | ||||
Amount of gain recognized in OCI (effective portion) | 2,822 | ||||
Amount of gain reclassified from OCI to income (effective portion) | 3,010 | ||||
Balance at the end of the period | $ 2,186 | 2,186 | |||
Foreign currency forward contract | |||||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral [Abstract] | |||||
Foreign exchange contracts designated as cash flow hedges | 2,186 | $ 2,186 | |||
Derivative Liabilities Reported in Other Current Liabilities | |||||
Foreign exchange contracts designated as cash flow hedges | 3,562 | ||||
Notional Disclosures [Abstract] | |||||
Expected time to realize the accumulated OCI balance related to foreign exchange contracts | 12 months | ||||
Foreign currency forward contract | Amount Reclassified from Other Comprehensive Income / Loss | Gains / Losses on Derivatives | |||||
Notional Disclosures [Abstract] | |||||
(Loss) gain on foreign exchange contracts designated as cash flow hedges | (737) | $ 579 | $ (3,010) | $ 1,278 | |
Israeli shekel | Foreign currency forward contract | Long | Designated as Hedging Instrument | |||||
Notional Disclosures [Abstract] | |||||
Notional value of derivative contracts | $ 82,223 | $ 82,223 | $ 88,532 |
COMMITMENTS AND CONTINGENCIES39
COMMITMENTS AND CONTINGENCIES: (Details) - USD ($) $ in Thousands | Jan. 05, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Future minimum payments under non-cancelable capital leases | |||
Remaining six months of 2015 | $ 549 | ||
2,016 | 513 | ||
Total minimum lease payments | 1,062 | ||
Less: Amount representing interest | (22) | ||
Present value of capital lease obligations | 1,040 | ||
Future minimum payments under non-cancelable operating leases | |||
Remaining six months of 2015 | 10,204 | ||
2,016 | 11,979 | ||
2,017 | 8,739 | ||
2,018 | 5,244 | ||
2,019 | 3,578 | ||
2020 and beyond | 4,420 | ||
Total minimum lease payments | 44,164 | ||
Purchase commitments | |||
Amount of non-cancelable purchase commitments | 77,900 | ||
Amount of non-cancelable purchase commitments expected to be paid within one year | 76,300 | ||
Amount of non-cancelable purchase commitments expected to be paid within two years and beyond | $ 1,600 | ||
Infinite Data path Case | |||
Legal proceedings | |||
Provision for liability | $ 0 | ||
Payment to dismiss the case | $ 1,250 |
SHARE INCENTIVE PLANS_ (Details
SHARE INCENTIVE PLANS: (Details) - Share options - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Stock option activity under equity incentive plans | |||
Options outstanding at the beginning of the period (in shares) | 2,467,523 | ||
Options exercised (in shares) | (256,675) | ||
Options cancelled (in shares) | (32,981) | ||
Options outstanding at the end of the period (in shares) | 2,177,867 | ||
Weighted average exercise price of options outstanding | |||
Options outstanding at the beginning of the period (in dollars per share) | $ 29.55 | ||
Options exercised (in dollars per share) | 15.15 | ||
Options cancelled (in dollars per share) | 74.52 | ||
Options outstanding at the end of the period (in dollars per share) | $ 30.56 | ||
Total pretax intrinsic value of options exercised | $ 8.6 | $ 1.9 | |
Closing price of ordinary shares (in dollars per share) | $ 48.59 | ||
Total pretax intrinsic value of all outstanding options | $ 54.2 | ||
Total pretax intrinsic value of all exercisable options | $ 53.2 | $ 50.1 |
SHARE INCENTIVE PLANS_ (Detai41
SHARE INCENTIVE PLANS: (Details 2) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Dec. 31, 2014 | |
Ordinary shares reserved for future issuance under equity incentive plans | ||||
Total shares reserved for future issuance (in shares) | 6,800,963 | |||
Ordinary Shares | ||||
Ordinary shares reserved for future issuance under equity incentive plans | ||||
Shares authorized for future issuance (in shares) | 1,501,217 | |||
RSUs | ||||
Activity in nonvested restricted share units outstanding | ||||
Non vested restricted share units at the beginning of the period (in shares) | 1,911,166 | |||
Restricted share units granted (in shares) | 1,072,355 | |||
Restricted share units vested (in shares) | (485,806) | |||
Restricted share units cancelled (in shares) | (62,322) | |||
Non vested restricted share units at the end of the period (in shares) | 2,435,393 | |||
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) | $ 41.61 | |||
Restricted share units granted (in dollars per share) | 46.15 | $ 33.22 | ||
Restricted share units vested (in dollars per share) | 46.35 | |||
Restricted share units cancelled (in dollars per share) | 42.12 | |||
Non vested restricted share units at the end of the period (in dollars per share) | $ 44.09 | |||
Total intrinsic value of all outstanding restricted share units | $ 118.3 | $ 81.7 | ||
Ordinary shares reserved for future issuance under equity incentive plans | ||||
Restricted share units outstanding | 1,911,166 | 2,435,393 | 1,911,166 | |
Share options | ||||
Ordinary shares reserved for future issuance under equity incentive plans | ||||
Shares outstanding | 2,177,867 | |||
Employee Share Purchase Plan | ||||
Ordinary shares reserved for future issuance under equity incentive plans | ||||
Shares authorized for future issuance (in shares) | 686,486 |
SHARE INCENTIVE PLANS_ (Detai42
SHARE INCENTIVE PLANS: (Details 3) - shares | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Employee Share Purchase Plan | ||
Weighted average assumptions | ||
Expected volatility (as a percent) | 38.10% | 45.10% |
Risk-free interest rate (as a percent) | 0.09% | 0.06% |
Expected life, years | 6 months | 6 months |
Share options | ||
Weighted average assumptions | ||
Expected volatility (as a percent) | 56.10% | |
Risk-free interest rate (as a percent) | 1.98% | |
Expected life, years | 5 years 9 months 7 days | |
Estimated forfeiture rate (as a percent) | 6.73% | |
Options Granted (in shares) | 0 |
SHARE INCENTIVE PLANS_ (Detai43
SHARE INCENTIVE PLANS: (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Share-based compensation expense | |||||
Total share-based compensation expense | $ 13,286 | $ 11,947 | $ 25,004 | $ 23,585 | |
Total unrecognized share-based compensation costs related to non-vested awards | 94,100 | $ 94,100 | $ 74,500 | ||
Weighted average period for recognition of unrecognized share-based compensation costs | 2 years 7 days | 1 year 11 months 19 days | |||
Cost of goods sold | |||||
Share-based compensation expense | |||||
Total share-based compensation expense | 610 | 532 | $ 1,157 | 1,054 | |
Research and development | |||||
Share-based compensation expense | |||||
Total share-based compensation expense | 7,553 | 6,753 | 14,321 | 13,431 | |
Sales and marketing | |||||
Share-based compensation expense | |||||
Total share-based compensation expense | 2,750 | 2,479 | 5,144 | 4,912 | |
General and administrative | |||||
Share-based compensation expense | |||||
Total share-based compensation expense | $ 2,373 | $ 2,183 | $ 4,382 | $ 4,188 |
ACCUMULATED OTHER COMPREHENSI44
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated other comprehensive income (loss) | ||||
Balance at the beginning of the period | $ (4,020) | $ 1,390 | ||
Other comprehensive income/loss before reclassifications | 3,017 | 599 | ||
Amounts reclassified from accumulated other comprehensive income/loss | 3,027 | (1,268) | ||
Net current-period other comprehensive income/loss, net of taxes | $ 5,219 | $ 51 | 6,044 | (669) |
Balance at the end of the period | 2,024 | 721 | 2,024 | 721 |
Unrealized Gains / Losses on Available-for-Sale Securities | ||||
Accumulated other comprehensive income (loss) | ||||
Balance at the beginning of the period | (374) | (6) | ||
Other comprehensive income/loss before reclassifications | 195 | 6 | ||
Amounts reclassified from accumulated other comprehensive income/loss | 17 | 10 | ||
Net current-period other comprehensive income/loss, net of taxes | 212 | 16 | ||
Balance at the end of the period | (162) | 10 | (162) | 10 |
Gains / Losses on Derivatives | ||||
Accumulated other comprehensive income (loss) | ||||
Balance at the beginning of the period | (3,646) | 1,396 | ||
Other comprehensive income/loss before reclassifications | 2,822 | 593 | ||
Amounts reclassified from accumulated other comprehensive income/loss | 3,010 | (1,278) | ||
Net current-period other comprehensive income/loss, net of taxes | 5,832 | (685) | ||
Balance at the end of the period | $ 2,186 | $ 711 | $ 2,186 | $ 711 |
ACCUMULATED OTHER COMPREHENSI45
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Reclassifications out of accumulated other comprehensive income | ||||
Cost of revenues | $ (47,178) | $ (34,433) | $ (88,265) | $ (68,164) |
Research and development | (62,576) | (49,506) | (120,694) | (97,843) |
Sales and marketing | (23,366) | (18,723) | (45,924) | (38,002) |
General and administrative | (10,670) | (9,461) | (20,371) | (17,676) |
Other income (loss), net (Note 11) | 912 | 357 | (1,557) | 591 |
Net income (loss) | $ 19,248 | $ (8,867) | 29,744 | (19,847) |
Amount Reclassified from Other Comprehensive Income / Loss | ||||
Reclassifications out of accumulated other comprehensive income | ||||
Net income (loss) | (3,027) | 1,268 | ||
Gains / Losses on Derivatives | Amount Reclassified from Other Comprehensive Income / Loss | ||||
Reclassifications out of accumulated other comprehensive income | ||||
Cost of revenues | (205) | 78 | ||
Research and development | (2,251) | 969 | ||
Sales and marketing | (234) | 114 | ||
General and administrative | (320) | 117 | ||
Cost of revenues and Operating expenses | (3,010) | 1,278 | ||
Net income (loss) | (3,010) | 1,278 | ||
Unrealized Gains / Losses on Available-for-Sale Securities | Amount Reclassified from Other Comprehensive Income / Loss | ||||
Reclassifications out of accumulated other comprehensive income | ||||
Other income (loss), net (Note 11) | $ (17) | $ (10) |
INCOME TAXES_ (Details)
INCOME TAXES: (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
INCOME TAXES: | |||||
Unrecognized tax benefits | $ 21.7 | $ 21.7 | $ 18 | ||
Total amount of accrued interest or penalties related to unrecognized tax benefit or tax contingencies | $ 1.3 | $ 1.3 | $ 1 | ||
Effective tax rate (as a percent) | 5.00% | 0.80% | 9.90% | (3.00%) | |
Tax at statutory rate (as a percent) | 35.00% | ||||
Cash tax savings due to tax holiday | $ 13 | $ 0.1 | |||
Increase in diluted earnings per share | $ 0.27 | $ 0 |
OTHER INCOME (LOSS), NET_ (Deta
OTHER INCOME (LOSS), NET: (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Other income, net | ||||
Interest income and gain on sale of investments, net | $ 817 | $ 401 | $ 1,480 | $ 734 |
Impairment loss on equity investment in a private company | (3,189) | |||
Foreign exchange gain (loss) | 95 | (44) | 152 | (143) |
Total other income, net | $ 912 | $ 357 | $ (1,557) | $ 591 |