Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 09, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | Mellanox Technologies, Ltd. | ||
Trading Symbol | MLNX | ||
Entity Central Index Key | 1,356,104 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2.2 | ||
Entity Common Stock, Shares Outstanding | 51,781,340 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 62,473 | $ 56,780 |
Short-term investments | 211,281 | 271,661 |
Accounts receivable, net | 154,213 | 141,768 |
Inventories | 64,657 | 65,523 |
Other current assets | 14,295 | 17,346 |
Total current assets | 506,919 | 553,078 |
Property and equipment, net | 109,919 | 118,585 |
Severance assets | 18,302 | 15,870 |
Intangible assets, net | 228,195 | 278,031 |
Goodwill | 472,437 | 471,228 |
Deferred taxes and other long-term assets | 66,162 | 36,713 |
Total assets | 1,401,934 | 1,473,505 |
Current liabilities: | ||
Accounts payable | 59,090 | 59,533 |
Accrued liabilities | 114,058 | 105,042 |
Deferred revenue | 23,485 | 24,364 |
Current portion of term debt | 0 | 23,628 |
Total current liabilities | 196,633 | 212,567 |
Accrued severance | 23,205 | 19,874 |
Deferred revenue | 17,820 | 15,968 |
Term debt | 72,761 | 218,786 |
Other long-term liabilities | 34,067 | 30,580 |
Total liabilities | 344,486 | 497,775 |
Commitments and contingencies | ||
Shareholders’ equity | ||
Ordinary shares (in shares) | 221 | 209 |
Additional paid-in capital | 873,979 | 774,605 |
Accumulated other comprehensive income (loss) | 1,618 | (928) |
Retained earnings | 181,630 | 201,844 |
Total shareholders’ equity | 1,057,448 | 975,730 |
Total liabilities and shareholders' equity | $ 1,401,934 | $ 1,473,505 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) | Dec. 31, 2017₪ / shares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016₪ / shares | Dec. 31, 2016USD ($)shares |
Statement of Financial Position [Abstract] | ||||
Common stock, par value (in NIS per share) | ₪ / shares | ₪ 0.0175 | ₪ 0.0175 | ||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | ||
Common stock, shares issued (in shares) | 51,488,000 | 49,076,000 | ||
Common stock, shares outstanding (in shares) | 51,488,000 | 49,076,000 | ||
Commitments and Contingencies (Note 9) | $ |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Total revenues | $ 863,893 | $ 857,498 | $ 658,140 |
Cost of revenues | 300,450 | 301,986 | 189,209 |
Gross profit | 563,443 | 555,512 | 468,931 |
Operating expenses: | |||
Research and development | 365,878 | 322,620 | 252,175 |
Sales and marketing | 150,457 | 133,780 | 97,438 |
General and administrative | 52,170 | 68,522 | 44,212 |
Impairment of long-lived assets | 12,019 | 0 | 0 |
Total operating expenses | 580,524 | 524,922 | 393,825 |
Income (loss) from operations | (17,081) | 30,590 | 75,106 |
Interest expense | (7,937) | (7,352) | 0 |
Other income (loss), net | 3,115 | 1,090 | (524) |
Interest and other, net | (4,822) | (6,262) | (524) |
Income (loss) before taxes on income | (21,903) | 24,328 | 74,582 |
Provision for (benefit from) taxes on income | (2,478) | 5,810 | (18,312) |
Net income (loss) | $ (19,425) | $ 18,518 | $ 92,894 |
Net income (loss) per share - basic (in USD per share) | $ (0.39) | $ 0.38 | $ 2 |
Net income (loss) per share - diluted (in USD per share) | $ (0.39) | $ 0.37 | $ 1.94 |
Shares used in computing net income (loss) per share: | |||
Basic (in shares) | 50,310 | 48,145 | 46,365 |
Diluted (in shares) | 50,310 | 49,526 | 47,778 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (19,425) | $ 18,518 | $ 92,894 |
Other comprehensive income, net of tax: | |||
Change in unrealized gains/losses on available-for-sale securities, net | 929 | 342 | (204) |
Change in unrealized gains/losses on derivative contracts, net (net of tax effect of $105, $47, and $97) | 1,617 | 399 | 2,555 |
Other comprehensive income | 2,546 | 741 | 2,351 |
Total comprehensive income (loss), net of tax | $ (16,879) | $ 19,259 | $ 95,245 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Change in unrealized gains/losses on derivative contracts, tax effect | $ 105 | $ 47 | $ 97 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Ordinary Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2014 | 45,487,764 | ||||
Common stock, amount outstanding, beginning balance at Dec. 31, 2014 | $ 192 | ||||
Beginning balance, value at Dec. 31, 2014 | $ 701,752 | $ 615,148 | $ (4,020) | $ 90,432 | |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 92,894 | 92,894 | |||
Unrealized losses on available-for-sale securities, net of taxes | (204) | (204) | |||
Unrealized gain on derivative contracts, net of taxes | 2,555 | 2,555 | |||
Share-based compensation | 50,764 | 50,764 | |||
Issuance of shares through employee equity incentive plans (in shares) | 1,267,244 | ||||
Issuances of shares through employee equity incentive plans | 6,049 | $ 6 | 6,043 | ||
Issuance of shares through employee share purchase plan (in shares) | 364,746 | ||||
Issuance of shares through employee share purchase plan | 12,818 | $ 2 | 12,816 | ||
Income tax benefit from share options exercised | 53 | 53 | |||
Ending balance (in shares) at Dec. 31, 2015 | 47,119,754 | ||||
Common stock, amount outstanding, ending balance at Dec. 31, 2015 | $ 200 | ||||
Ending balance, value at Dec. 31, 2015 | 866,681 | 684,824 | (1,669) | 183,326 | |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 18,518 | 18,518 | |||
Unrealized losses on available-for-sale securities, net of taxes | 342 | 342 | |||
Unrealized gain on derivative contracts, net of taxes | 399 | 399 | |||
Share-based compensation | 66,309 | 66,309 | |||
Issuance of shares through employee equity incentive plans (in shares) | 1,463,884 | ||||
Issuances of shares through employee equity incentive plans | 5,090 | $ 7 | 5,083 | ||
Issuance of shares through employee share purchase plan (in shares) | 491,968 | ||||
Issuance of shares through employee share purchase plan | 17,465 | $ 2 | 17,463 | ||
Income tax benefit from share options exercised | (46) | (46) | |||
Fair value of awards attributable to pre-acquisition services | 972 | 972 | |||
Ending balance (in shares) at Dec. 31, 2016 | 49,075,606 | ||||
Common stock, amount outstanding, ending balance at Dec. 31, 2016 | $ 209 | ||||
Ending balance, value at Dec. 31, 2016 | 975,730 | 774,605 | (928) | 201,844 | |
Increase (Decrease) in Stockholders' Equity | |||||
Effect of adopting ASU 2016-09: Improvements to Employee Share-Based Payment Accounting | 0 | 789 | (789) | ||
Effect of adopting ASU 2016-09: Improvements to Employee Share-Based Payment Accounting | Accounting Standards Update 2016-09 | 800 | ||||
Net income | (19,425) | (19,425) | |||
Unrealized losses on available-for-sale securities, net of taxes | 929 | 929 | |||
Unrealized gain on derivative contracts, net of taxes | 1,617 | 1,617 | |||
Share-based compensation | 68,864 | 68,864 | |||
Issuance of shares through employee equity incentive plans (in shares) | 1,843,168 | ||||
Issuances of shares through employee equity incentive plans | 7,642 | $ 9 | 7,633 | ||
Issuance of shares through employee share purchase plan (in shares) | 568,876 | ||||
Issuance of shares through employee share purchase plan | 22,091 | $ 3 | 22,088 | ||
Ending balance (in shares) at Dec. 31, 2017 | 51,487,650 | ||||
Common stock, amount outstanding, ending balance at Dec. 31, 2017 | $ 221 | ||||
Ending balance, value at Dec. 31, 2017 | $ 1,057,448 | $ 873,979 | $ 1,618 | 181,630 | |
Increase (Decrease) in Stockholders' Equity | |||||
Effect of adopting ASU 2016-09: Improvements to Employee Share-Based Payment Accounting | Accounting Standards Update 2016-09 | $ 800 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (19,425) | $ 18,518 | $ 92,894 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 103,821 | 97,731 | 41,372 |
Deferred income taxes | (2,150) | 809 | (22,607) |
Share-based compensation | 68,864 | 66,309 | 50,764 |
Gains on short-term investments, net | (3,460) | (1,774) | (3,000) |
Impairment of long-lived assets | 12,019 | 0 | 3,189 |
Changes in assets and liabilities, net of effect of acquisitions: | |||
Accounts receivable, net | (12,175) | (41,331) | (19,351) |
Inventories | (887) | 8,263 | (24,735) |
Prepaid expenses and other assets | (681) | 6,948 | (2,619) |
Accounts payable | 170 | 13,330 | 3,750 |
Accrued liabilities and other liabilities | 15,216 | 27,261 | 30,884 |
Net cash provided by operating activities | 161,312 | 196,064 | 150,541 |
Cash flows from investing activities: | |||
Purchase of severance-related insurance policies | (1,312) | (1,172) | (743) |
Purchase of short-term investments | (188,745) | (300,858) | (219,459) |
Proceeds from sales of short-term investments | 193,082 | 237,764 | 179,700 |
Proceeds from maturities of short-term investments | 59,129 | 149,725 | 129,279 |
Purchase of property and equipment | (41,376) | (42,976) | (48,601) |
Purchase of intangible assets | (2,843) | (7,962) | (210) |
Purchase of investments in privately-held companies | (15,021) | (4,982) | 0 |
Acquisitions, net of cash acquired | (872) | (693,692) | 0 |
Net cash provided by (used in) investing activities | 2,042 | (664,153) | 39,966 |
Cash flows from financing activities: | |||
Proceeds from term debt | 0 | 280,000 | 0 |
Principal payments on term debt | (172,000) | (34,000) | 0 |
Term debt issuance costs | 0 | (5,521) | 0 |
Principal payments on capital lease and intangible assets obligations | (7,369) | (1,364) | (1,105) |
Proceeds from issuances of ordinary shares through employee equity incentive plans | 29,733 | 22,555 | 18,867 |
Net cash provided by (used in) financing activities | (149,636) | 261,670 | 17,762 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 13,718 | (206,419) | 208,269 |
Cash, cash equivalents, and restricted cash at beginning of period | 56,780 | 263,199 | 54,930 |
Cash, cash equivalents, and restricted cash at end of period | 70,498 | 56,780 | 263,199 |
Supplemental disclosures of cash flow information | |||
Interest paid | 5,384 | 5,335 | 27 |
Income taxes paid | 1,218 | 835 | 1,114 |
Supplemental disclosure of non-cash investing and financing activities | |||
Intangible assets financed with debt | 12,981 | 8,834 | 0 |
Unpaid property and equipment | 3,962 | 5,425 | 2,228 |
Transfer from inventory to property and equipment | $ 1,753 | $ 3,814 | $ 6,732 |
THE COMPANY AND SUMMARY OF SIGN
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Company Mellanox Technologies, Ltd., an Israeli corporation (the "Company" or "Mellanox"), was incorporated and commenced operations in March 1999. Mellanox is a supplier of high-performance interconnect products for computing, storage and communications applications. Principles of presentation The consolidated financial statements include the Company's accounts as well as those of its wholly owned subsidiaries after the elimination of all intercompany balances and transactions. On February 23, 2016, the Company completed its acquisition of EZchip Semiconductor, Ltd. ("EZchip"), a public company formed under the laws of the State of Israel and specializing in network-processing semiconductors. Upon the consummation of the acquisition, EZchip became a wholly owned subsidiary of the Company. The consolidated financial statements include the results of operations of EZchip commencing as of the acquisition date. Certain prior year amounts have been reclassified to conform to the 2017 presentation. 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 material 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, allowances for price adjustments, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, useful lives of property, equipment, and intangibles, accounting for business combinations, goodwill and purchased intangible asset valuation, investments in privately-held companies, accounting and fair value of financial instruments and derivatives, deferred income tax asset valuation, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results that the Company experiences may differ materially and adversely from the Company's original estimates. To the extent there are material differences between the estimates and actual results, the Company's future results of operations will be affected. Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. Restricted cash The Company maintains certain cash amounts that are restricted as to withdrawal or use over the long-term. The cash is securing bank guarantees primarily issued against long-term tenancy agreements. The long-term restricted cash balance of $8.0 million was reported in other long-term assets on the balance sheet as of December 31, 2017 , and was included in the ending balance of cash, cash equivalents and restricted cash in the statement of cash flows for the year ended December 31, 2017 . There was no restricted cash as of December 31, 2016 and 2015 . The following table provides a reconciliation of the cash and cash equivalents balances reported on the balance sheets and the cash, cash equivalents and restricted cash balances reported in the statements of cash flows: December 31, 2017 2016 2015 (In thousands) Cash and cash equivalents, as reported on the balance sheets $ 62,473 $ 56,780 $ 263,199 Restricted cash in other long-term assets, as reported on the balance sheets 8,025 — — Cash, cash equivalents, and restricted cash, as reported in the statements of cash flows $ 70,498 $ 56,780 $ 263,199 Short-term investments The Company's short-term investments are classified as available-for-sale securities and are reported at fair value. Unrealized gains or losses are recorded in shareholders' equity and included in other comprehensive income ("OCI"). The Company views its available-for-sale portfolio as available for use in its current operations. Accordingly, the Company has classified all investments in available for sale securities with readily available markets as short-term, even though the stated maturity date may be one year or more beyond the current balance sheet date, because of the intent and ability to sell these securities prior to maturity to meet liquidity needs or as part of a risk management program. The Company regularly reviews its investment portfolio and charges unrealized losses against net income when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (1) the length of time a security is in an unrealized loss position, (2) the extent to which fair value is less than cost, (3) the financial condition and near term prospects of the issuer and (4) our intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. Fair value of financial instruments The Company's financial instruments consist of cash equivalents, restricted cash, short-term investments and foreign currency derivative contracts. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. When there is no readily available market data, fair value estimates may be made by the Company, which may not necessarily represent the amounts that could be realized in a current or future sale of these assets. Derivatives The Company enters into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks, mainly the exposure to changes in the exchange rate of the NIS against the U.S. dollar that are associated with forecasted future cash flows and existing assets and liabilities. The Company's primary objective in entering into these arrangements is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The program is not designated for trading or speculative purposes. The Company's derivative instruments expose the Company to credit risk to the extent that the counter-parties may be unable to meet the terms of the agreement. The Company seeks to mitigate such risk by limiting its counter-parties to major financial institutions and by spreading the risk across a number of major financial institutions. In addition, the potential risk of loss with any one counter-party resulting from this type of credit risk is monitored on an ongoing basis. The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the unrealized gains or losses on the derivative instruments is reported as a component of accumulated other comprehensive income ("AOCI") in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gains or losses on the derivative instruments, if any, is recognized in earnings in the current period. The derivative instruments that hedge the exposure to variability in the fair value of assets or liabilities are not currently designated as hedges for financial reporting purposes, and thus the gains or losses on such derivative instruments are recognized in earnings in the current period. Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, restricted cash, short-term investments and accounts receivable. Cash, cash equivalents, restricted cash and short-term investment balances are maintained with high quality financial institutions, the composition and maturities of which are regularly monitored by management. The Company's accounts receivable are derived from revenue earned from customers primarily located in North America, Europe and Asia. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its customers. The Company maintains an allowance for doubtful accounts receivable based upon the expected collectability of accounts receivable. The Company reviews its allowance for doubtful accounts quarterly by assessing individual accounts receivable over a specific aging and amount, and all other balances based on historical collection experience and an economic risk assessment. If the Company determines that a specific customer is unable to meet its financial obligations to the Company, the Company provides an allowance for credit losses to reduce the receivable to the amount management reasonably believes will be collected. The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: Year Ended December 31, 2017 2016 2015 HPE 13 % 16 % 14 % Dell 11 % * * ____________________ * Less than 10% The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable: December 31, 2017 December 31, 2016 HPE 13 % 11 % Inventory Inventory includes finished goods, work-in-process and raw materials. Inventory is stated at the lower of cost (principally standard cost which approximates actual cost on a first-in, first-out basis) or net realizable value. Reserves for potentially excess and obsolete inventory are made based on management's analysis of inventory levels, future sales forecasts and market conditions. Once established, the original cost of the Company's inventory less the related inventory reserve represents the new cost basis of such products. Property and equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the related assets, which is three years for computer equipment and software, seven years for lab equipment, and seven years for office furniture and fixtures. Leasehold improvements and assets acquired under capital leases are amortized on a straight-line basis over the term of the lease, or the useful lives of the assets, whichever is shorter. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in the results of operations in the period realized. During the fourth quarter of 2017, the Company retired fully depreciated assets that were no longer in use. As a result, $72.8 million of cost and accumulated depreciation was removed from the accounts. No gain or loss was recognized. The Company capitalizes certain costs incurred in connection with internal use of inventory items in the Company's data centers and laboratories. Capitalized inventory costs are included in Property and equipment, net and amortized on a straight-line basis over the estimated useful life of the asset. Business combinations The Company accounts for business combinations using the acquisition method of accounting. The Company determines the recognition of intangible assets based on the following criteria: (i) the intangible asset arises from contractual or other rights; or (ii) the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged. The Company allocates the purchase price of business combinations to the tangible assets, liabilities and intangible assets acquired, including in-process research and development ("IPR&D"), based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The process of estimating the fair values requires significant estimates, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer contracts, customer lists and distribution agreements, acquired developed technologies, expected costs to develop IPR&D into commercially viable products, estimated cash flows from projects when completed and discount rates. The Company estimates fair value based upon assumptions that are believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Goodwill and intangible assets Goodwill represents the excess of the cost of acquired businesses over the fair market value of their identifiable net assets. The Company conducts a goodwill impairment qualitative assessment during the fourth quarter of each fiscal year or more frequently if facts and circumstances indicate that goodwill may be impaired. The goodwill impairment qualitative assessment requires the Company to perform an assessment to determine if it is more likely than not that the fair value of the business is less than its carrying amount. The qualitative assessment considers various factors, including the macroeconomic environment, industry and market specific conditions, market capitalization, stock price, financial performance, earnings multiples, budgeted-to-actual revenue performance from prior year, gross margin and cash flow from operating activities and issues or events specific to the business. If adverse qualitative trends are identified that could negatively impact the fair value of the business, the Company performs a "two step" goodwill impairment test. "Step one" is the identification of potential impairment. This involves comparing the fair value of each reporting unit, which the Company has determined to be the entity itself, with its carrying amount including goodwill. If the fair value of a reporting unit exceeds its carrying amount, the goodwill of the reporting unit is considered not impaired and "Step two" of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, "Step two" is performed. This involves comparing the carrying amount of goodwill to its implied fair value, which is determined to be the excess of the reporting unit's fair value over the fair value of its identifiable net assets other than goodwill. If the carrying amount of goodwill exceeds its implied fair value, an impairment exists and is recorded. As of December 31, 2017 , the Company's qualitative assessment of goodwill impairment indicated that goodwill was not impaired. Intangible assets represent acquired intangible assets including developed technology, customer relationships and IPR&D, as well as licensed technology. The Company amortizes its finite lived intangible assets over their useful lives using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used, or, if that pattern cannot be reliably determined, using a straight-line amortization method. The Company capitalizes IPR&D projects acquired as part of a business combination as intangible assets with indefinite lives. On completion of each project, IPR&D assets are reclassified to developed technology and amortized over their estimated useful lives. If any of the IPR&D projects are abandoned, the Company would impair the related IPR&D asset. Indefinite-lived intangible assets are tested for impairment annually or more frequently when indicators of impairment exist. The Company first assesses qualitative factors to determine if it is more likely than not that an indefinite-lived intangible asset is impaired and whether it is necessary to perform a quantitative impairment test. The qualitative assessment considers various factors, including reductions in demand, the abandonment of IPR&D projects or significant economic slowdowns in the semiconductor industry and macroeconomic environment. If adverse qualitative trends are identified that could negatively impact the fair value of the asset, then quantitative impairment tests are performed to compare the carrying value of the asset to its undiscounted expected future cash flows. If this test indicates that there is impairment, the impaired asset is written down to fair value, which is typically calculated using: (i) quoted market prices or (ii) discounted expected future cash flows utilizing an appropriate discount rate. Impairment is based on the excess of the carrying amount over the fair value of those assets. The Company performed an impairment test on the IPR&D during the fourth quarter of 2017 when the project reached technological feasibility and was transferred to developed technology, and concluded that the asset was not impaired. Intangible assets with finite lives are tested for impairment in accordance with our policy for long-lived assets. Equity investments in privately-held companies The Company has equity investments in privately-held companies. These investments are recorded at cost reduced by any impairment write-downs because the Company does not have the ability to exercise significant influence over the operating and financial policies of the company. The investments are included in other long-term assets on the accompanying balance sheets. The Company monitors the investments and if facts and circumstances indicate an investment may be impaired, then it conducts an impairment test of its investment. To determine if the investment is recoverable, it reviews the privately-held company's revenue and earnings trends relative to pre-defined milestones and overall business prospects, the general market conditions in its industry and other factors related to its ability to remain in business, such as liquidity and receipt of additional funding. Impairment of long-lived assets Long-lived assets include equipment and furniture and fixtures and finite-lived intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. If the sum of the expected future cash flows (undiscounted and without interest charges) from the long-lived assets is less than the carrying amount of such assets, an impairment loss would be recognized, and the assets would be written down to their estimated fair values. The Company reviews for possible impairment on a regular basis. While performing the review for impairment for the fourth quarter of 2017, the Company noted an impairment indicator associated with the potential sale or discontinuation of the 1550nm silicon photonics line of business. As a result, the Company recorded impairment charges totaling $12.0 million in the fourth quarter of 2017, of which $7.7 million were related to property and equipment and $4.3 million were related to intangible assets. See Note 16 for more details about the impairment charges. Revenue recognition The Company recognizes revenue from the sales of products when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the price is fixed or determinable; and (4) collection is reasonably assured. The Company uses a binding purchase order or a signed agreement as evidence of an arrangement. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer. The Company's standard arrangement with its customers typically includes freight-on-board shipping point, no right of return and no customer acceptance provisions. The revenues from fixed-price support or maintenance contracts, including extended warranty contracts and software post-contract customer support agreements, are recognized ratably over the contract period and the costs associated with these contracts are recognized as incurred. The customer's obligation to pay and the payment terms are set at the time of shipment and are not dependent on the subsequent resale of the product. The Company determines whether collectability is reasonably assured on a customer-by-customer basis. When assessing the probability of collection, the Company considers the number of years the customer has been in business and the history of the Company's collections. Customers are subject to a credit review process that evaluates the customers' financial positions and ultimately their ability to pay. If it is determined at the outset of an arrangement that collection is not reasonably assured, no product is shipped and no revenue is recognized unless cash is received in advance. The Company maintains inventory, or hub arrangements with certain customers. Pursuant to these arrangements the Company delivers products to a customer or a designated third party warehouse based upon the customer's projected needs, but does not recognize product revenue unless and until the customer reports it has removed the Company's product from the warehouse to be incorporated into its end products. Multiple Element Arrangements For revenue arrangements that contain multiple deliverables, judgment is required to properly identify the accounting units of the transactions and to determine the manner in which revenue should be allocated among the accounting units. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria of revenue recognition have been met for each deliverable in order for revenue recognition to occur in the appropriate accounting period. While changes in the allocation of the arrangement consideration between the units of accounting will not affect the amount of total revenue recognized for a particular sales arrangement, any material changes in these allocations could impact the timing of revenue recognition, which could affect our results of operations. For multiple element arrangements that include a combination of hardware, services, such as post-contract customer support, and software, the arrangement consideration is first allocated among the accounting units before revenue recognition criteria are applied. The allocation is derived based on vendor specific objective evidence ("VSOE"). When VSOE or third party evidence is unavailable, we use management's best estimate of selling price. Distributor Revenue A portion of the Company's sales are made to distributors under agreements which contain price protection provisions. Currently, the Company recognizes revenues from sales to distributors based on the sell-through method using inventory and point of sale information provided by the distributors, net of estimated allowances for price adjustments. Upon the adoption of the new revenue standards effective January 1, 2018, the Company will recognize revenues from sales to distributors upon shipment and transfer of control (known as “sell-in” revenue recognition), net of the estimated allowances for price adjustments. Deferred Revenue and Income The Company defers revenue and income when advance payments are received from customers before performance obligations have been completed and/or services have been performed. Shipping and Handling Costs incurred for shipping and handling expenses to customers are recorded as cost of revenues. To the extent these amounts are billed to the customer in a sales transaction, the Company records the shipping and handling fees as revenue. Product warranty The Company typically offers a limited warranty for its products for periods up to three years . The Company accrues for estimated returns of defective products at the time revenue is recognized based on historical activity. The determination of these accruals requires the Company to make estimates of the frequency and extent of warranty activity and estimated future costs to either replace or repair the products under warranty. If the actual warranty activity and/or repair and replacement costs differ significantly from these estimates, adjustments to record additional cost of revenues may be required in future periods. Changes in the Company's liability for product warranty were as follows: Year Ended December 31, 2017 2016 (In thousands) Balance, beginning of the period $ 1,474 $ 1,641 Assumed warranty liability from acquisition — 290 New warranties issued during the period 1,459 1,727 Reversal of warranty reserves (565 ) (856 ) Settlements during the period (1,479 ) (1,328 ) Balance, end of the period 889 1,474 Less: long-term portion of product warranty liability (183 ) (211 ) Balance, end of the period $ 706 $ 1,263 Research and development Costs incurred in research and development are charged to operations as incurred. The Company expenses all costs for internally developed patents as incurred. Advertising Costs related to advertising and promotion of products are charged to sales and marketing expense as incurred. Advertising expense was approximately $2.9 million , $2.1 million and $2.0 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. Share-based compensation The Company accounts for share-based compensation expense based on the estimated fair value of the equity awards as of the grant dates. The fair value of restricted stock units ("RSUs"), is based on the closing market price of our ordinary shares on the date of grant. The Company estimates the fair value of share options and the Employee Share Purchase Plan ("ESPP") using the Black-Scholes option valuation model, which requires the input of subjective assumptions including the expected share price volatility and the calculation of expected term, as well as the fair value of the underlying ordinary share on the date of grant, among other inputs. The Company bases its estimate of expected volatility on the historical volatility of the Company's shares. The Company did not grant share options in 2017 , 2016 , and 2015 . Share-based compensation expense is recognized on a straight-line basis over each recipient's requisite service period, which is generally the vesting period. Share-based compensation expense is recorded in full during the vesting period, and the effect of forfeitures will be recorded as they actually occur. Comprehensive income (loss) Accumulated other comprehensive income (loss), net of tax on the consolidated balance sheets at December 31, 2017 and 2016 , represents the accumulated unrealized gains (losses) on available-for-sale securities, and the accumulated unrealized gains (losses) related to derivative instruments accounted for as cash flow hedges. The amount of income tax expense allocated to unrealized gains (losses) on available-for-sale securities and derivative instruments was immaterial at December 31, 2017 and 2016 . Foreign currency translation and remeasurement The Company uses the U.S. dollar as its functional currency. Foreign currency assets and liabilities are remeasured into U.S. dollars at the end-of-period exchange rates except for non-monetary assets and liabilities, which are remeasured at historical exchange rates. The Company derives all revenues in U.S. dollars. Expenses are remeasured at the exchange rate in effect on the day the transaction occurred, except for those expenses related to non-monetary assets and liabilities, which are remeasured at historical exchange rates. Gains or losses from foreign currency transactions are included in the Consolidated Statements of Operations as part of "Other income (loss), net." Net income (loss) per share Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of ordinary shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of ordinary shares outstanding during the period increased to include the number of additional shares that would have been outstanding if the potentially dilutive shares had been issued. Potentially dilutive shares include unvested RSUs, outstanding stock options, and shares to be purchased by employees under the Company’s employee stock purchase plan. The dilutive effect of potentially dilutive shares is reflected in diluted net income (loss) per share by application of the treasury stock method. The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated: Year Ended December 31, 2017 2016 2015 (In thousands, except per share data) Net income (loss) $ (19,425 ) $ 18,518 $ 92,894 Basic and diluted shares: Weighted average ordinary shares outstanding 50,310 48,145 46,365 Effect of dilutive shares — 1,381 1,413 Shares used to compute diluted net income (loss) per share 50,310 49,526 47,778 Net income (loss) per share—basic $ (0.39 ) $ 0.38 $ 2.00 Net income (loss) per share—diluted $ (0.39 ) $ 0.37 $ 1.94 The Company excluded 4.5 million potentially dilutive share options and RSUs from the computation of diluted net loss per share for the year ended December 31, 2017 , 0.5 million and 0.5 million potentially dilutive shares from the computation of diluted net income per share for the years ended December 31, 2016 and 2015 , respectively, because including them would have had an anti-dilutive effect. Segment reporting The Company has one reportable segment: the development, manufacturing, marketing and sales of interconnect products. Income taxes To prepare the Company's consolidated financial statements, the Company estimates its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company's actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are calculated using tax rates expected to be in effect during the period these temporary differences would reverse, and are included within the Company's consolidated balance sheet. The Company must also make judgments regarding the realizability of deferred tax assets. The carrying value of the Company's net deferred tax assets is based on its belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. A valuation allowance has been established for deferred tax assets which the Company does not believe meet the "more likely than not" criteria. The Company's judgments regarding future taxable income may change due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If the Company's assumptions and consequently its estimate |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS: December 31, 2017 December 31, 2016 (In thousands) Accounts receivable, net: Accounts receivable $ 154,845 $ 142,400 Less: allowance for doubtful accounts (632 ) (632 ) $ 154,213 $ 141,768 Inventories: Raw materials $ 12,656 $ 8,243 Work-in-process 22,769 26,118 Finished goods 29,232 31,162 $ 64,657 $ 65,523 Other current assets: Prepaid expenses $ 7,518 $ 9,053 Derivative contracts receivable 982 257 VAT receivable 2,259 6,093 Other 3,536 1,943 $ 14,295 $ 17,346 Property and equipment, net: Computer, equipment, and software $ 164,707 $ 214,719 Furniture and fixtures 3,198 5,210 Leasehold improvements 47,262 46,693 215,167 266,622 Less: Accumulated depreciation and amortization (105,248 ) (148,037 ) $ 109,919 $ 118,585 Deferred taxes and other long-term assets: Equity investments in privately-held companies $ 29,255 $ 12,720 Deferred taxes 24,563 22,413 Long-term restricted cash 8,025 — Other assets 4,319 1,580 $ 66,162 $ 36,713 Accrued liabilities: Payroll and related expenses $ 71,868 $ 62,969 Accrued expenses 31,951 33,125 Derivative contracts payable 17 1,006 Product warranty liability 706 1,263 Other 9,516 6,679 $ 114,058 $ 105,042 Other long-term liabilities: Income tax payable $ 24,425 $ 24,184 Deferred rent 2,220 2,504 Other 7,422 3,892 $ 34,067 $ 30,580 |
BUSINESS COMBINATION
BUSINESS COMBINATION | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | BUSINESS COMBINATION: On February 23, 2016 , the Company completed its acquisition of EZchip Semiconductor Ltd. ("EZchip"). Under the terms of the Agreement of Merger dated as of September 30, 2015 (as amended on November 17, 2015 ), by and among the Company, Mondial Europe Sub Ltd. and EZchip (the "Merger Agreement"), the total consideration was $782.2 million , including $1.0 million attributable to assumed RSUs. The net cash purchase price of $693.7 million consisted of a $781.2 million cash payment for all outstanding common shares of EZchip at the price of $25.50 per share and net of $87.5 million cash acquired. The Company also assumed 891,822 EZchip RSUs and converted them to 499,894 equivalent Company RSU awards. The fair value of the converted RSUs was determined based on the per share value of the underlying Mellanox ordinary shares of $46.40 per share as of the acquisition date. The 499,894 RSUs had a total aggregate value of $23.2 million , of which $1.0 million was recorded as a component of the purchase price for service rendered prior to the acquisition date and $22.2 million will be recognized as share-based compensation expense over the remaining required service period of up to 2.25 years from the acquisition date. In connection with the acquisition, the Company entered into a $280.0 million variable interest rate Term Debt maturing February 21, 2019 . See Note 15 for additional information. The Company accounted for the transaction using the acquisition method, which requires, among other things, that the assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The following summarizes consideration paid for EZchip at the acquisition date: (in thousands) Consideration: Cash payment for all outstanding common shares of EZchip at $25.50 per share $ 781,237 Fair value of awards attributable to pre-acquisition services 972 Total consideration: 782,209 Less: cash acquired 87,545 Fair value of total consideration transferred, net of cash acquired $ 694,664 The following summarizes the Company's allocation of the total purchase price, net of cash acquired for the EZchip acquisition after consultation with third party valuation specialists: (in thousands) Short-term investments $ 108,862 Other current assets 34,114 Other long-term assets 9,638 Intangible assets 288,246 Goodwill 270,485 Total assets 711,345 Current liabilities (10,253 ) Long-term liabilities (6,428 ) Total liabilities (16,681 ) Total purchase price allocation $ 694,664 Acquisition-related expenses for the EZchip acquisition for the year ended December 31, 2017 were $0.3 million and primarily consisted of employee-related expenses. Acquisition-related expenses for the EZchip acquisition for the year ended December 31, 2016 were $8.3 million and primarily consisted of investment banking, consulting, and other professional fees. Identifiable finite-lived intangible assets Fair value Weighted Average Useful Life (in thousands) (in years) Purchased intangible assets: Trade names $ 5,600 3 Customer relationships 56,400 9 Backlog 11,300 1 Developed technology 181,246 4 - 6 In-process research and development (1) 33,700 - Total purchased intangible assets $ 288,246 (1) IPR&D will not be amortized until the underlying products reach technological feasibility. Upon completion, each IPR&D project will be amortized over its useful life. Trade name represents the fair values of brand and name recognition associated with the marketing of EZchip’s products and services. The Company used the income approach and utilized a discount rate of 10.0% to determine the fair value of trade name assets. Customer relationships represent the fair value of future projected revenues that will be derived from the sale of products to existing customers of EZchip. The Company used the comparative method ("with/without") of the income approach to determine the fair value of this intangible asset and utilized a discount rate of 10.0% . Backlog represents the fair value of sales order backlog as of the valuation date. The Company used the income approach to determine the fair value of this intangible asset and utilized a discount rate of 8.0% . Developed technology represents completed technology that has passed technological feasibility and/or is currently offered for sale to customers. The Company used the income approach to value the developed technology. Under the income approach, the expected future cash flows from each technology are estimated and discounted to their net present values at an appropriate risk-adjusted rate of return. Significant factors considered in the calculation of the rate of return are the weighted average cost of capital and the return on assets. The Company applied a discount rate of 9.0% to value the developed technology assets taking into consideration market rates of return on debt and equity capital and the risk associated with achieving forecasted revenues related to these assets. The IPR&D intangible asset represents the value assigned to an acquired research and development project that, as of the acquisition date, had not established technological feasibility. The fair value of IPR&D was determined using a discount rate of 12.0% . This intangible asset will be capitalized on the balance sheet and evaluated periodically for impairment until the project is completed, at which time it will be transferred to developed technology and become subject to amortization over its useful life. IPR&D consists of one project related to the development of two network processors. The estimated remaining costs to complete the IPR&D project was $22.3 million as of the acquisition date, which will be charged to operating expense in the condensed consolidated statements of operations as incurred. During the three months ended September 30, 2016, one component of the IPR&D project reached technological feasibility and $4.2 million was transferred to developed technology. During the three months ended December 31, 2017 , the remaining IPR&D project reached technological feasibility and $29.5 million was transferred to developed technology. The total developed technology balance at December 31, 2017 will be amortized over seven years . Goodwill Goodwill arising from the acquisition represents the value of the skilled assembled workforce and projected growth in overall revenues. The EZchip acquisition is a step in the Company's strategy to become a leading broad-line supplier of intelligent interconnect solutions for data centers. The addition of EZchip’s products and expertise in network processing is expected to enhance the Company's leadership position, and ability to deliver complete end-to-end, intelligent interconnect and processing solutions for advanced data center and edge platforms. The combined company has diverse and robust solutions to enable customers to meet the growing demands of data-intensive applications used in high-performance computing, Web 2.0, cloud, secure data center, enterprise, telecom, database, financial services, and storage environments. These significant factors were the basis for the recognition of goodwill. Goodwill is not expected to be deductible for tax purposes. Goodwill will not be amortized but instead will be tested for impairment annually or more frequently if certain indicators are present. Supplemental pro forma data The following unaudited pro forma data have been prepared as if the EZchip acquisition had occurred on January 1, 2015, and include adjustments for amortization of intangible assets acquired, the effect of purchase accounting adjustments including the step-up of inventory, share-based compensation expense, and interest on the Term Debt incurred to partially finance the acquisition. Pro forma results are not indicative of what would have occurred had the acquisition occurred as of January 1, 2015 or of results that may occur in the future. Year Ended December 31, 2016 2015 (in thousands, except per share amounts) Revenues $ 867,422 $ 769,290 Net income $ 40,288 $ 36,130 Net income per share — basic $ 0.82 $ 0.77 Net income per share — diluted $ 0.80 $ 0.74 Material non-recurring adjustments included in the unaudited pro forma net income for the year ended December 31, 2016 for the effect of purchase accounting adjustments include: a reduction of acquisition-related costs of $15.3 million , composed of acquisition cost of $8.3 million incurred by the Company and $7.0 million incurred by EZchip; a reduction of amortization expense related to the acquired intangible assets and the step-up of inventory of $13.0 million ; and a reduction of the share-based compensation expense related to accelerated RSUs of $4.8 million . Material non-recurring adjustments included in the unaudited pro forma net income for the year ended December 31, 2015 for the effect of purchase accounting adjustments include: additional amortization expense related to the acquired intangible assets and the step-up of inventory of $56.2 million ; an increase of acquisition-related costs of $15.3 million ; and the interest expense of term debt, including the amortization of issuance costs, of $7.6 million . The Company immediately integrated EZchip into its ongoing operations. As a result, it is impracticable to determine EZchip's effect on revenue and earnings in the consolidated statement of operations for the reporting period. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS: Fair value hierarchy: The Company measures its cash equivalents, restricted cash, and marketable securities at fair value. The Company’s cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. The Company's restricted cash and investments in debt securities and certificates of deposits are classified within Level 2 as the market inputs to value these instruments consist of market yields, reported trades and broker/dealer quotes. In addition, foreign currency contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. The Level 3 valuation inputs include the Company's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. As of December 31, 2017 and December 31, 2016 , the Company did not have any assets or liabilities valued based on Level 3 valuations. Financial Liabilities Measured at Fair Value on a Nonrecurring Basis: As of December 31, 2017 , the remaining principal of $74.0 million on the Company's $280.0 million Term Debt is classified as a Level 2 fair value measurement in the fair value hierarchy. The Company calculated a fair value amount of $74.9 million at December 31, 2017 based on a discounted cash flow model using observable market inputs and taking into consideration variables such as interest rate changes, comparable instruments, and long-term credit ratings. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis: The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 . Level 1 Level 2 Total (in thousands) Money market funds $ 1,857 $ — $ 1,857 Certificates of deposit — 58,003 58,003 U.S. Government and agency securities — 43,872 43,872 Commercial paper — 27,029 27,029 Corporate bonds — 54,447 54,447 Municipal bonds — 15,169 15,169 Foreign government bonds — 12,761 12,761 1,857 211,281 213,138 Long-term restricted cash — 8,025 8,025 Derivative contracts — 982 982 Total financial assets $ 1,857 $ 220,288 $ 222,145 Derivative contracts $ — $ 17 $ 17 Total financial liabilities $ — $ 17 $ 17 The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 . Level 1 Level 2 Total (in thousands) Money market funds $ 1,833 $ — $ 1,833 Certificates of deposit — 78,643 78,643 U.S. Government and agency securities — 56,347 56,347 Commercial paper — 29,483 29,483 Corporate bonds — 94,162 94,162 Municipal bonds — 7,706 7,706 Foreign government bonds — 5,320 5,320 1,833 271,661 273,494 Derivative contracts — 257 257 Total financial assets $ 1,833 $ 271,918 $ 273,751 Derivative contracts $ — $ 1,006 $ 1,006 Total financial liabilities $ — $ 1,006 $ 1,006 There were no transfers between Level 1 and Level 2 securities during the years ended December 31, 2017 and 2016 . |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS: Cash, cash equivalents and short-term investments: At December 31, 2017 and 2016 , the Company held cash, cash equivalents and short-term investments classified as available-for-sale securities as follows: December 31, 2017 Amortized Unrealized Unrealized Estimated (in thousands) Cash $ 60,616 $ — $ — $ 60,616 Money market funds 1,857 — — 1,857 Certificates of deposit 58,039 — (36 ) 58,003 U.S. Government and agency securities 44,070 — (198 ) 43,872 Commercial paper 27,073 1 (45 ) 27,029 Corporate bonds 54,673 — (226 ) 54,447 Municipal bonds 15,227 — (58 ) 15,169 Foreign government bonds 12,809 — (48 ) 12,761 Total 274,364 1 (611 ) 273,754 Less amounts classified as cash and cash equivalents (62,473 ) — — (62,473 ) Short-term investments $ 211,891 $ 1 $ (611 ) $ 211,281 December 31, 2016 Amortized Unrealized Unrealized Estimated (in thousands) Cash $ 54,947 $ — $ — $ 54,947 Money market funds 1,833 — — 1,833 Certificates of deposit 78,643 — — 78,643 U.S. Government and agency securities 56,431 2 (86 ) 56,347 Commercial paper 29,486 — (3 ) 29,483 Corporate bonds 94,292 37 (167 ) 94,162 Municipal bonds 7,718 — (12 ) 7,706 Foreign government bonds 5,327 — (7 ) 5,320 Total 328,677 39 (275 ) 328,441 Less amounts classified as cash and cash equivalents (56,780 ) — — (56,780 ) Short-term investments $ 271,897 $ 39 $ (275 ) $ 271,661 Interest income and gains (losses) on short-term investments, net were $3.7 million and $2.2 million for the years ended December 31, 2017 and 2016 , respectively. At December 31, 2017 , gross unrealized losses on investments that were in a gross unrealized loss position for greater than 12 months were immaterial. These investments were not deemed to be other-than-temporarily impaired and the gross unrealized losses were recorded in OCI. The contractual maturities of short-term investments at December 31, 2017 and 2016 were as follows: December 31, 2017 December 31, 2016 Amortized Estimated Amortized Estimated (in thousands) Due in less than one year $ 148,232 $ 147,921 $ 157,270 $ 157,163 Due in one to three years 63,659 63,360 114,627 114,498 $ 211,891 $ 211,281 $ 271,897 $ 271,661 Equity investments in privately-held companies: As of December 31, 2017 and 2016 , the Company held a total of $29.3 million and $12.7 million in equity investments in privately-held companies, which were reported using the cost method. On April 27, 2015, the Company was informed that one of the privately-held companies intended to discontinue its operations. As a result, the Company concluded that its investment of $3.2 million in this privately-held company was fully impaired and the impairment of this investment was other than temporary. The impairment loss was included in other loss, net, on the consolidated statements of operations for the year ended December 31, 2015. During the years ended December 31, 2017 and 2016 , there was no impairment of equity investments in privately-held companies. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS: The following table represents changes in the carrying amount of goodwill: (in thousands) Carrying amount of goodwill at December 31, 2016 $ 471,228 Acquisitions 1,209 Adjustments — Balance as of December 31, 2017 $ 472,437 The carrying amounts of intangible assets as of December 31, 2017 were as follows: Gross Accumulated Net Useful Life (in thousands) (in years) Licensed technology $ 40,407 $ (16,478 ) $ 23,929 1-8 Developed technology 279,543 (122,414 ) 157,129 4-7 Customer relationships 69,776 (24,783 ) 44,993 4-9 Trade names 5,600 (3,456 ) 2,144 3 Total intangible assets $ 395,326 $ (167,131 ) $ 228,195 The carrying amounts of intangible assets as of December 31, 2016 were as follows: Gross Accumulated Net Useful Life (in thousands) (in years) Licensed technology $ 24,583 $ (6,559 ) $ 18,024 1-8 Developed technology 250,043 (75,591 ) 174,452 4-7 Customer relationships 69,776 (17,731 ) 52,045 4-9 Backlog 11,300 (11,300 ) — 1 Trade names 5,600 (1,590 ) 4,010 3 Total finite-lived amortizable intangible assets 361,302 (112,771 ) 248,531 In-process research and development 29,500 — 29,500 - Total intangible assets $ 390,802 $ (112,771 ) $ 278,031 Amortization expense of intangible assets totaled approximately $61.3 million , $59.2 million and $10.1 million for the years ended December 31, 2017, 2016 and 2015 , respectively. An impairment charge of $4.3 million was recorded in the fourth quarter of 2017 to write-off the intangible assets related to the 1550nm silicon photonics development activities. See Note 16 for more details about the impairment charge. The estimated future amortization expense from amortizable intangible assets is as follows: (in thousands) 2018 $ 66,718 2019 59,344 2020 47,311 2021 30,919 2022 10,355 Thereafter 13,548 Total $ 228,195 |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES AND HEDGING ACTIVITIES | DERIVATIVES AND HEDGING ACTIVITIES: Fair Value of Derivative Contracts The fair value of derivative contracts as of December 31, 2017 and 2016 was as follows: Other current assets Other accrued liabilities Other current assets Other accrued liabilities December 31, 2017 December 31, 2016 (in thousands) Derivatives designated as hedging instruments Currency forward and option contracts $ 980 $ — $ 257 $ 999 Derivatives not designated as hedging instruments Currency forward and option contracts 2 17 — 7 Total derivatives $ 982 $ 17 $ 257 $ 1,006 The gross notional amounts of derivative contracts were NIS denominated. The notional amounts of outstanding derivative contracts in U.S. dollar at December 31, 2017 and 2016 were as follows: December 31, December 31, 2017 2016 (in thousands) Derivatives designated as hedging instruments Currency forward and option contracts $ 52,380 $ 105,730 Derivatives not designated as hedging instruments Currency forward and option contracts $ 47,015 $ 34,330 Effect of Derivatives Designated as Hedging Instruments on Accumulated Other Comprehensive Income (Loss) The following table represents the unrealized gains of derivatives designated as hedging instruments, net of tax effects, that were recorded in accumulated other comprehensive income (loss) as of December 31, 2017 and 2016 , and their effect on OCI for the year ended December 31, 2017 (in thousands): December 31, 2016 $ (692 ) Amount of gains recognized in OCI (effective portion) 8,651 Amount of gains reclassified from OCI to income (effective portion) (7,034 ) December 31, 2017 $ 925 Foreign exchange contracts designated as hedging instruments primarily relate to operating expenses and the associated gains and losses are expected to be recorded in operating expenses when reclassified out of OCI. See Note 11 for the amounts recorded in each operating expense account. The Company expects to realize the accumulated OCI balance related to foreign exchange contracts within the next twelve months . Effect of Derivative Contracts on the Consolidated Statement of Operations The effect of derivative contracts on the consolidated statement of operations in the years ended December 31, 2017 , 2016 , and 2015 was as follows: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Year Ended December 31, Year Ended December 31, 2017 2016 2015 2017 2016 2015 (in thousands) Operating income (expenses) $ 7,034 $ 623 $ (3,630 ) $ — $ — $ — Other income $ — $ — $ — $ 3,248 $ 384 $ — |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS: The Company has established a pretax savings plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan allows eligible employees in the United States to voluntarily contribute a portion of their pre-tax or after-tax salary, subject to a maximum limit specified in the Internal Revenue Code. The Company matches employee contributions of up to 4% of their annual base salaries. The total expenses for these contributions were $2.2 million , $1.9 million and $1.2 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. Under Israeli law, the Company is required to make severance payments to certain of its retired or dismissed Israeli employees. For employees hired prior to January 1, 2007 the severance pay liability is calculated based on the last monthly salary of each employee multiplied by the number of years of such employee's employment and is presented in the Company's balance sheet in long-term liabilities, as if it was payable at each balance sheet date on an undiscounted basis. This liability is partially funded by the purchase of insurance policies or pension funds in the name of the employees. The surrender value of the insurance policies or pension funds is presented in long-term assets. The severance pay detail is as follows: December 31, 2017 2016 (in thousands) Accrued severance liability $ 23,205 $ 19,874 Severance assets 18,302 15,870 Unfunded portion $ 4,903 $ 4,004 For other Israeli employees, the Company's contributions for severance pay replace its severance obligation. When the Company makes the monthly contribution equal to 8.3% of the employee's monthly salary to an insurance policy or pension fund, no additional calculations shall be conducted between the parties regarding the matter of severance pay and no additional payments will be made by the Company to the employee. Further, the related obligation and amounts deposited on behalf of the employee for such obligation are not stated on the balance sheet, as the Company is legally released from the obligation to employees once the deposit amounts have been paid. Severance expenses for the years ended December 31, 2017 , 2016 and 2015 were $12.6 million , $11.0 million and $7.6 million , respectively. In addition, the Company has established a pension contribution plan with respect to its employees in Israel. Under the plan, for the period from January 1 to June 30, 2016, the Company contributed up to 6.0% of employee monthly salary toward the plan. Effective July 1, 2016 the contribution percentage was increased to 6.25% , and was further increased to 6.5% effective January 1, 2017. Employees are entitled to amounts accumulated in the plan upon reaching retirement age, subject to any applicable law. Defined contribution pension plan expenses were $10.4 million , $8.0 million and $5.7 million in the years ended December 31, 2017 , 2016 and 2015 , respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES: Leases The Company leases office space and motor vehicles under operating leases with various expiration dates through 2026 . Expenses related to office space and motor vehicle leases were approximately $21.3 million , $18.9 million and $14.3 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. The terms of the facility leases provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid. At December 31, 2017 , future minimum payments under non-cancelable operating leases are as follows: Year Ended December 31, Operating (in thousands) 2018 $ 23,028 2019 18,453 2020 14,740 2021 12,950 2022 9,648 Thereafter 60,091 Total minimum lease payments $ 138,910 Purchase commitments At December 31, 2017 , the Company had the following non-cancelable purchase commitments: Year Ended December 31, Purchase Commitments (in thousands) 2018 $ 153,358 2019 2,447 2020 544 2021 542 2022 536 Thereafter — Total purchase commitments $ 157,427 Term Debt See Note 15 for more information about the Term Debt. Other Commitments Operating lease On May 3, 2016, the Company entered into a lease agreement for additional office space expected to be built in Yokneam, Israel. The Company is not involved in the construction, and will not be exposed to any risk during the construction period. The lease term expires 10 years after lease inception with no options to extend the lease term. The Company's occupancy of the additional office space and its obligation under the lease agreement are contingent on the lessor's attainment of stated milestones in the lease agreement. As such, the Company cannot make a reliable estimate as to the timing of cash payments under the lease. At December 31, 2017 , the estimated total future lease obligation is approximately $30.7 million . Over a twelve month period, the estimated rental expense will be approximately $3.1 million . Royalty-bearing grants We are obliged to pay royalties to the Israeli National Authority for Technological Innovation or the OCS for research and development efforts partially funded through grants from the OCS and under approved plans in accordance with the Israeli Law for Encouragement of Research and Development in the Industry, 1984 (the "R&D Law"). Royalties are payable to the Israeli government at the rate of 4.5% on the revenues of the Company's products incorporating OCS funded know-hows, and up to the amount of the grants received. The Company's obligation to pay these royalties is contingent on actual sales of the products, at which time a liability is recorded. In the absence of such sales, we cannot make a reliable estimate as to the timing of cash settlement of the royalties. At December 31, 2017 , the Company estimated a total future royalty obligation of approximately $36.4 million , and if recognized, would increase the Company's cost of revenues in its consolidated statement of operations. Unrecognized tax benefits Due to the inherent uncertainty with respect to the timing of future cash outflows associated with the Company's unrecognized tax benefits, it is unable to reliably estimate the timing of cash settlement with the respective taxing authorities. As of December 31, 2017 , the Company's unrecognized tax benefits totaled $45.2 million , out of which an amount of $24.6 million would reduce the Company's income tax expense and effective tax rate, if recognized. Contingencies Legal proceedings The Company is involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of its business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, securities, personal injuries and other matters. The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on the Company’s condensed consolidated financial position or results of operations. The Company records a liability when it believes that it is both probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount of a loss or potential loss. The Company may be unable to reasonably estimate the reasonably possible loss or range of loss for a particular legal contingency for various reasons, including, among others: (i) if the damages sought are indeterminate; (ii) if proceedings are in the early stages; (iii) if there is uncertainty as to the outcome of pending proceedings (including motions and appeals); (iv) if there is uncertainty as to the likelihood of settlement and the outcome of any negotiations with respect thereto; (v) if there are significant factual issues to be determined or resolved; (vi) if the proceedings involve a large number of parties; (vii) if relevant law is unsettled or novel or untested legal theories are presented; or (viii) if the proceedings are taking place in jurisdictions where the laws are complex or unclear. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. |
SHARE INCENTIVE PLANS
SHARE INCENTIVE PLANS | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE INCENTIVE PLANS | SHARE INCENTIVE PLANS: Stock option plans During the 2016 annual shareholder meeting, the Company's shareholders approved the Mellanox Technologies, Ltd. Amended and Restated Global Share Incentive Plan (2006) (the "First Restated 2006 Plan"), which constitutes an amendment and restatement of the Mellanox Technologies, Ltd. Global Share Incentive Plan (2006) and its appendices (the "2006 Plan"). The Restated 2006 Plan became effective on March 14, 2016 ("Effective Date"). The approval of the First Restated 2006 Plan extended the term to February 2026. The First Restated 2006 Plan reserves 750,000 ordinary shares for issuance under new equity awards and reduces to zero the shares available for issuance under all of the Company's other equity incentive plans in effect, including the Voltaire Ltd. 2007 Incentive Compensation Plan, the Voltaire Ltd. 2003 Section 102 Stock Option/Stock Purchase Plan, the Voltaire Ltd. 2001 Section 102 Stock Option/Stock Purchase Plan, the Voltaire Ltd. 2001 Stock Option Plan, the Kotura, Inc. Second Amended and Restated 2003 Stock Plan, the IPtronics, Inc. 2013 Restricted Stock Unit Plan, the Global Share Incentive Assumption Plan (2010), the EZchip Semiconductor Ltd. 2003 Amended and Restated Equity Incentive Plan, the EZchip Semiconductor Ltd. 2007 U.S. Equity Incentive Plan, and the Amended and Restated EZchip Semiconductor Ltd. 2009 Equity Incentive Plan (collectively, the "Prior Plans"). As of the Effective Date of the First Restated 2006 Plan, the Company ceased granting awards under the Prior Plans, and will grant new awards only from the First Restated 2006 Plan. Any shares subject to issued and outstanding awards under the Prior Plans that expire, are canceled or otherwise terminate after the Effective Date of the First Restated 2006 Plan will be added back to share reserves under the First Restated 2006 Plan. The share reserve of the 2006 Plan will no longer be available for issuance under the First Restated 2006 Plan. In addition, the First Restated 2006 Plan implements additional amendments to reflect compensation and governance best practices. On April 25, 2017, the Company's shareholders approved the Mellanox Technologies, Ltd. Second Amended and Restated Global Share Incentive Plan (2006) (the “Second Restated 2006 Plan”), which constitutes a second amendment and restatement of the 2006 Plan, as amended and restated by the First Restated 2006 Plan. The Second Restated 2006 Plan became effective on February 14, 2017. The Second Restated 2006 Plan increases the ordinary shares reserved for issuance under the First Restated 2006 Plan by 1,640,000 shares to 2,390,000 shares plus any shares subject to issued and outstanding awards under the other equity incentive plans that existed prior to the First Restated 2006 Plan that expire, are cancelled or otherwise terminated after the effective date of the First Restated 2006 Plan. The Second Restated Plan also extends the term of the First Restated 2006 Plan to February 14, 2027. In addition, the Second Restated Plan implements additional amendments to reflect compensation and governance best practices. Assumed EZchip restricted stock units In connection with the acquisition of EZchip, the Company assumed 891,822 unvested EZchip RSUs and converted them into 499,894 Mellanox RSUs using an exchange ratio of 0.56 . The aggregate value of the 499,894 Mellanox RSUs was $23.2 million of which $1.0 million related to service prior to the acquisition date and was included in the EZchip purchase price consideration. The remaining fair value of $22.2 million represents post-acquisition share-based compensation expense that will be recognized over the requisite service period of approximately 2.25 years from the date of acquisition. The assumed RSUs retained all applicable terms and vesting periods. Share option activity The following table summarizes the share option activity under all equity incentive plans: Options Outstanding Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2015 2,028,595 $ 30.81 Options exercised (349,131 ) $ 14.58 Options canceled (44,979 ) $ 84.57 Outstanding at December 31, 2016 1,634,485 $ 32.79 Options exercised (479,105 ) $ 15.95 Options canceled (45,319 ) $ 74.59 Outstanding at December 31, 2017 1,110,061 $ 38.35 There were no options granted in 2017, 2016 and 2015. The total pretax intrinsic value of options exercised in 2017 was $16.9 million . This intrinsic value represents the difference between the fair market value of the Company's ordinary shares on the date of exercise and the exercise price of each option. Based on the most recently available closing price of the Company's ordinary shares of $64.70 prior to December 31, 2017 , the total pretax intrinsic value of all outstanding options was $35.5 million . The total pretax intrinsic value of exercisable options at December 31, 2017 was $35.4 million . The total pretax intrinsic value of options exercised in 2016 was $11.1 million . Based on the most recently available closing price of the Company's ordinary shares of $40.90 prior to December 31, 2016 , the total pretax intrinsic value of all outstanding options was $29.0 million . The total pretax intrinsic value of exercisable options at December 31, 2016 was $28.9 million . The weighted average remaining contractual life of options outstanding at December 31, 2017 was 3.0 years. There were 1,107,712 options exercisable at December 31, 2017 with a weighted average exercise price $38.36 per share. Restricted share unit activity The following table summarizes the restricted share unit activity under all equity incentive plans: Restricted Share Units Outstanding Number of Shares Weighted Average Grant Date Fair Value Non-vested restricted share units at December 31, 2015 2,205,083 $ 44.39 Assumed restricted share units from the EZchip acquisition 499,894 $ 46.40 Restricted share units granted 2,056,902 $ 48.39 Restricted share units vested (1,114,753 ) $ 45.32 Restricted share units canceled (322,607 ) $ 46.26 Non-vested restricted share units at December 31, 2016 3,324,519 $ 46.67 Restricted share units granted 1,844,350 $ 49.88 Restricted share units vested (1,364,063 ) $ 46.25 Restricted share units canceled (390,101 ) $ 47.79 Non-vested restricted share units at December 31, 2017 3,414,705 $ 48.45 The weighted average fair value of restricted share units granted was $49.88 , $48.39 and $45.98 for the years ended December 31, 2017, 2016 and 2015 , respectively. The total intrinsic value of all outstanding restricted share units was $220.9 million as of December 31, 2017 . Employee stock purchase plan activity The ESPP is designed to allow eligible employees to purchase the Company's ordinary shares, at semi-annual intervals, with their accumulated payroll deductions. A participant may contribute up to 15% of his or her base compensation through payroll deductions, and the accumulated deductions will be applied to the purchase of shares on the purchase date, which is the last trading day of the offering period. The purchase price per share will be equal to 85% of the fair market value per share on the start date of the offering period in which the participant is enrolled or, if lower, 85% of the fair market value per share on the purchase date. In May 2016 the shareholders approved an increase of 4,000,000 additional shares under the ESPP for a total of 6,585,712 shares reserved for issuance. No participant in the ESPP may be issued or transferred more than $25,000 worth of ordinary shares pursuant to purchase rights under the ESPP per calendar year. During the years ended December 31, 2017 , 2016 and 2015, 568,876 , 491,968 , and 364,746 shares, respectively, were issued under the ESPP at weighted average per share prices of $38.83 , $35.50 and $35.15 , respectively. Shares reserved for future issuance The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of December 31, 2017 : Number of Share options outstanding 1,110,061 Restricted share units outstanding 3,414,705 Shares authorized for future issuance 757,786 ESPP shares available for future issuance 3,425,469 Total shares reserved for future issuance as of December 31, 2017 8,708,021 Share-based compensation The Company accounts for share-based compensation expense for share option awards and ESPP based on the estimated fair value of the instruments as of the grant dates. There were no employee share options granted in 2017 , 2016 and 2015 . The following weighted average assumptions were used in the valuation of the ESPP for the years ended December 31, 2017 , 2016 and 2015 : Employee Share Purchase Plan Year ended December 31, 2017 2016 2015 Dividend yield, % — — — Expected volatility 24.6 % 35.8 % 33.7 % Risk free interest rate 1.20 % 0.45 % 0.10 % Expected life, years 0.50 0.50 0.50 The following table summarizes the distribution of total share-based compensation expense in the Consolidated Statements of Operations: Year ended December 31, 2017 2016 2015 (in thousands) Share-based compensation expense by caption: Cost of goods sold $ 2,000 $ 2,375 $ 2,366 Research and development 40,278 40,475 28,821 Sales and marketing 15,693 15,183 10,309 General and administrative 10,893 13,085 9,268 Total share-based compensation expense $ 68,864 $ 71,118 $ 50,764 Share-based compensation expense by type of award: Share options $ 115 $ 2,711 $ 6,680 ESPP 6,232 6,394 4,007 RSU 62,517 62,013 40,077 Total share-based compensation expense $ 68,864 $ 71,118 $ 50,764 Share-based compensation expense during the year ended December 31, 2016 included cash payments of $4.8 million for the settlement of accelerated RSUs for individuals terminated on the Closing Date of the EZchip acquisition. At December 31, 2017 , there was $142.2 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 2.7 years . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): The following table summarizes the changes in accumulated other comprehensive income (loss) for the years ended December 31, 2017 and 2016 : Unrealized Gains (Losses) on Available-for-Sale Securities Unrealized Gains (Losses) on Derivatives Designated as Hedging Instruments Total (in thousands) Balance at December 31, 2016 $ (236 ) $ (692 ) $ (928 ) Other comprehensive income before reclassifications, net of taxes 918 8,651 9,569 Realized (gains)/losses reclassified from accumulated other comprehensive income 11 (7,034 ) (7,023 ) Net current-period other comprehensive income, net of taxes 929 1,617 2,546 Balance at December 31, 2017 $ 693 $ 925 $ 1,618 Balance at December 31, 2015 $ (578 ) $ (1,091 ) $ (1,669 ) Other comprehensive income/(loss) before reclassifications, net of taxes (144 ) 1,022 878 Realized (gains)/losses reclassified from accumulated other comprehensive income 486 (623 ) (137 ) Net current-period other comprehensive income, net of taxes 342 399 741 Balance at December 31, 2016 $ (236 ) $ (692 ) $ (928 ) The following table provides details about the realized (gains)/losses reclassified from accumulated other comprehensive income for the years ended December 31, 2017 and 2016 : Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement of Operations Year ended December 31, 2017 2016 (in thousands) Realized (gains) on derivatives designated as hedging instruments $ (7,034 ) $ (623 ) Cost of revenues and Operating expenses: (347 ) (18 ) Cost of revenues (635 ) (36 ) General and administrative (628 ) (25 ) Sales and marketing (5,424 ) (544 ) Research and development Realized losses on available-for-sale securities 11 486 Other income, net Total reclassifications for the period $ (7,023 ) $ (137 ) Total |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES: The components of income (loss) before taxes on income are as follows: Year ended December 31, 2017 2016 2015 (in thousands) United States $ (21,528 ) $ (17,969 ) $ (12,539 ) Foreign (375 ) 42,297 87,121 Income (loss) before taxes on income $ (21,903 ) $ 24,328 $ 74,582 The components of the provision for (benefit from) income taxes are as follows: Year ended December 31, 2017 2016 2015 (in thousands) Current: U.S. federal $ (617 ) $ (1,333 ) $ (1,578 ) State and local 632 220 284 Foreign (261 ) 6,161 5,737 Total current (246 ) 5,048 4,443 Deferred: Foreign (2,232 ) 762 (22,755 ) Total deferred (2,232 ) 762 (22,755 ) Provision for (benefit from) taxes on income $ (2,478 ) $ 5,810 $ (18,312 ) At December 31, 2017 and 2016 , significant deferred tax assets and liabilities are as follows: December 31, 2017 2016 (in thousands) Deferred tax assets: Net operating loss and credit carryforwards $ 42,820 $ 75,350 Reserves and accruals 11,305 13,841 Depreciation and amortization 2,393 358 Other 6,645 7,128 Gross deferred tax assets 63,163 96,677 Valuation allowance (31,648 ) (55,827 ) Total deferred tax assets 31,515 40,850 Intangible assets (6,952 ) (18,437 ) Total deferred tax liabilities (6,952 ) (18,437 ) Net deferred tax assets $ 24,563 $ 22,413 The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. As of each reporting date, management considers new evidence, both positive and negative, that could impact management’s view with regards to the future realization of deferred tax assets for each jurisdiction. As of December 31, 2015, management determined that sufficient positive evidence existed to conclude that it was more likely than not that $22.4 million of deferred tax assets of one of the Company’s Israeli subsidiaries were realizable, and therefore, reduced the valuation allowance accordingly. After weighing all positive and negative evidence, including historical results and projections of future taxable income, the Company determined that it remained more likely than not that $24.6 million and $22.4 million of deferred tax assets would be realized as of December 31, 2017 and 2016 , respectively. The Company continued to provide valuation allowances against a significant portion of the remaining deferred tax assets on the consolidated balance sheet as of December 31, 2017 due to uncertainty concerning realization of these deferred tax assets. On December 22, 2017, the Tax Cuts and Jobs Acts was enacted into law. The new legislation contains several key tax provisions that will impact the Company. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, a one-time repatriation tax on accumulated foreign earnings, a limitation on the tax deductibility of interest expense, an acceleration of business asset expensing, and a reduction in the amount of executive pay that could qualify as a tax deduction. The lower corporate income tax rate will require the Company to remeasure its U.S. deferred tax assets and liabilities as well as reassess the realizability of its deferred tax assets and liabilities. ASC 740 requires the Company to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff has issued SAB 118 which will allow the Company to record provisional amounts during a measurement period. The Company has concluded that a reasonable estimate could be developed for the effects of the tax reform. However, due to the short time frame between the enactment of the reform and the year end, its fundamental changes, the accounting complexity, and the expected ongoing guidance and accounting interpretations over the next 12 months, the Company considers the accounting of the deferred tax remeasurement and other items to be incomplete. These effects have been included in the consolidated financial statements for the year ended December 31, 2017 as provisional amounts, which had no effect on the benefit from taxes on income due to the valuation allowance. During the measurement period, the Company might need to reflect adjustments to the provisional amounts upon obtaining, preparing, or analyzing additional information about facts and circumstances that existed as of the enactment date that, if known, would have affected the income tax effects initially reported as provisional amounts. The measurement period will end when the Company obtains, prepares, and analyzes the information needed in order to complete the accounting requirements under ASC Topic 740 or on December 22, 2018, whichever is earlier. The Company expects to complete its analysis within the measurement period in accordance with SAB 118. On January 4, 2016, the Israeli Government legislated a reduction in corporate income tax rates from 26.5% to 25.0% , effective in 2016. Deferred tax assets and liabilities at December 31, 2015 were measured using the 26.5% tax rate. Deferred tax assets and liabilities as of January 1, 2016 were remeasured using the 25.0% tax rate. The change in the corporate income tax rate from 26.5% to 25.0% resulted in a reduction of approximately $1.3 million to the Company's deferred tax assets and a corresponding increase in the Company's income tax expense during the first quarter of 2016. On December 29, 2016, the Israeli Government legislated a reduction in corporate income tax rates from 25.0% to 24.0% in 2017 and to 23.0% in 2018 and thereafter. This change in the corporate income tax rates from 25.0% to 24.0% and 23.0% resulted in a reduction of approximately $1.4 million to the Company's deferred tax assets as of December 31, 2016, and a corresponding increase in the Company's income tax expense during the fourth quarter of 2016. At December 31, 2017 , the Company had net operating loss carryforwards ("NOLs") of approximately $168.9 million in Israel, $86.2 million in the United States ("U.S.") for federal tax purposes, $37.2 million in the U.S. for state tax purposes and $7.2 million in Denmark. The U.S. NOLs for federal tax purposes will expire from 2024 to 2027, and the U.S. NOLs for state tax purposes will expire from 2018 to 2037. The non-U.S. NOLs have no expiration date. The Company has not provided for Israeli income and foreign withholding taxes on $2.6 million of its non-Israeli subsidiaries' undistributed earnings as of December 31, 2017 . The Company currently has no plans to repatriate those funds and intends to indefinitely reinvest them in its non-Israeli operations. The amount of the unrecognized deferred tax liability for temporary differences related to investments in non-Israeli subsidiaries that were essentially permanent in duration as of December 31, 2017 was less than $1 million . The reconciliation of the statutory federal income tax rate to the Company's effective tax rate is as follows: December 31, 2017 2016 2015 Tax at statutory rate 35.0 % 35.0 % 35.0 % Tax at rates other than the statutory rate (4.8 ) (84.5 ) (42.5 ) Valuation allowance 47.3 40.8 (22.0 ) Net change in tax reserves 8.0 17.1 6.0 Adjustment of deferred tax balances following changes in tax rates (71.8 ) 10.9 — Other, net (2.4 ) 4.6 (1.1 ) Provision for (benefit from) taxes on income 11.3 % 23.9 % (24.6 )% The Company's operations in Israel were granted "Approved Enterprise" status by the Investment Center in the Israeli Ministry of Economy and Industry (formerly, the Ministry of Industry Trade and Labor) and "Beneficiary Enterprise" status from the Israeli Income Tax Authority, which makes the Company eligible for tax benefits under the Israeli Law for Encouragement of Capital Investments, 1959. Under the terms of the Approved and Beneficiary Enterprise programs, income that is attributable to the Company's operations in Yokneam, Israel, is exempt from income tax commencing fiscal year 2011 through 2021 . Income that is attributable to the Company's operations in Tel Aviv, Israel is subject to a reduced income tax rate (generally between 10% and the current corporate tax rate, depending on the percentage of foreign investment in the Company) commencing fiscal year 2013 through 2021 . The tax holiday has resulted in a cash tax savings of approximately $11.6 million , $37.3 million and $33.0 million in 2017 , 2016 , and 2015 , respectively, increasing diluted earnings per share by approximately $0.23 , $0.75 and $0.69 in the years ended December 31, 2017 , 2016 , and 2015 , respectively. The following summarizes the activity related to the Company's unrecognized tax benefits: December 31, 2017 2016 2015 (in thousands) Gross unrecognized tax benefits, beginning of the period $ 41,460 $ 25,382 $ 18,037 Increases in tax positions for prior years 3,655 252 1,153 Decreases in tax positions for prior years — — (131 ) Increases in tax positions for current year 8,090 8,131 7,908 Increases in tax positions acquired or assumed in a business combination — 8,990 — Decreases due to lapses of statutes of limitations (8,051 ) (1,295 ) (1,585 ) Gross unrecognized tax benefits, end of the period $ 45,154 $ 41,460 $ 25,382 As of December 31, 2017 , 2016 and 2015 , the total amount of gross unrecognized tax benefits was $45.2 million , $41.5 million , and $25.4 million , respectively. Of these amounts as of December 31, 2017 , 2016 and 2015 , $24.6 million , $23.4 million , and $18.9 million , respectively, would reduce our income tax expense and effective tax rate, if recognized. On June 14, 2017, the Israeli government legislated new regulations regarding the "Preferred Technological Enterprise" regime, under which a company that complies with the terms may be entitled to certain tax benefits. The Company expects that its operation in Israel will comply with the terms of the Preferred Technological Enterprise regime. Therefore, the Company may utilize the tax benefits under this regime after the end of the benefit period of its Approved and Beneficiary Enterprise statuses (i.e., from fiscal year 2022 onwards). Under the new legislation, the majority of the Company’s income from its operations in Yokneam, Israel, will be subject to a corporate rate of 7.5% , while the majority of the income from its operations in Tel-Aviv, Israel, will be subject to a corporate rate of 12% . As a result of the lower tax rates mentioned above, the Company recorded a decrease of approximately $0.2 million in deferred tax assets and a corresponding increase in tax expense during the second quarter of 2017. It is the Company's policy to classify accrued interest and penalties as part of the accrued unrecognized tax benefits liability and record the expense in the provision for income taxes. As of December 31, 2017 , 2016 and 2015 , the amount of accrued interest and penalties related to unrecognized tax benefits totaled $2.9 million , $1.8 million , and $1.2 million , respectively. For unrecognized tax benefits that existed at December 31, 2017 , the Company does not anticipate any significant changes within the next twelve months. As a multinational corporation, the Company conducts business in many countries and is subject to taxation in many jurisdictions. The taxation of the Company's business is subject to the application of multiple and sometimes conflicting tax laws and regulations as well as multinational tax conventions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation and the evolution of regulations and court rulings. Consequently, taxing authorities may impose tax assessments or judgments against the Company that could materially impact its tax liability and/or its effective income tax rate. As of December 31, 2017 , the 2014 through 2016 tax years are open and may be subject to potential examinations in the United States. The Company has net operating losses in the United States from prior tax periods beginning in 2003 which may be subject to examination upon utilization in future tax periods. As of December 31, 2017 , the 2013 through 2016 tax years are open and may be subject to potential examinations in Denmark and Israel. As of December 31, 2017 the income tax returns of the Company and one of its subsidiaries in Israel are under examination by the Israeli Tax Authority for certain years from 2013 to 2015 . |
GEOGRAPHIC INFORMATION AND REVE
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP | GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP: The Company operates in one reportable segment, the development, manufacturing, marketing and sales of interconnect products. The Company's chief operating decision maker is the chief executive officer. Since the Company operates in one segment, all financial segment information can be found in the accompanying Consolidated Financial Statements. Revenues by geographic region are as follows: Year ended December 31, 2017 2016 2015 (in thousands) United States $ 327,528 $ 386,360 $ 300,674 China 172,405 192,581 152,739 Europe 176,937 149,855 93,666 Other Americas 92,449 52,447 24,692 Other Asia 94,574 76,255 86,369 Total revenue $ 863,893 $ 857,498 $ 658,140 Revenues are attributed to countries based on the geographic location of the customers. Intercompany sales between geographic areas have been eliminated. Property and equipment, net by geographic location are as follows: December 31, 2017 2016 (in thousands) Israel $ 99,752 $ 101,001 United States 7,017 14,246 Other 3,150 3,338 Total property and equipment, net $ 109,919 $ 118,585 Property and equipment, net is attributed to the geographic location in which it is located. Revenues by product type and interconnect protocol are as follows: Year ended December 31, 2017 2016 2015 (in thousands) ICs $ 161,216 $ 170,641 $ 92,214 Boards 325,845 337,304 265,249 Switch systems 222,836 204,083 179,977 Cables, accessories and other 153,996 145,470 120,700 Total revenue $ 863,893 $ 857,498 $ 658,140 Year ended December 31, 2017 2016 2015 (in thousands) InfiniBand: EDR $ 194,261 $ 125,249 $ 39,009 FDR 181,465 302,093 347,760 QDR/DDR/SDR 31,599 49,987 63,745 Total 407,325 477,329 450,514 Ethernet 401,005 317,241 155,221 Other 55,563 62,928 52,405 Total revenue $ 863,893 $ 857,498 $ 658,140 |
OTHER INCOME (LOSS), NET
OTHER INCOME (LOSS), NET | 12 Months Ended |
Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |
OTHER INCOME (LOSS), NET | OTHER INCOME (LOSS), NET: Other income (loss), net, is summarized in the following table: Year ended December 31, 2017 2016 2015 (in thousands) Interest income and gains (losses) on short-term investments, net $ 3,748 $ 2,244 $ 2,998 Foreign exchange loss, net (596 ) (840 ) (186 ) Impairment of investment in a privately-held company — — (3,189 ) Other (37 ) (314 ) (147 ) Total other income (loss), net $ 3,115 $ 1,090 $ (524 ) |
TERM DEBT
TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
TERM DEBT | TERM DEBT: In connection with the Company’s acquisition of EZchip, on February 22, 2016 , the Company and its wholly owned subsidiary, Mellanox Technologies, Inc., entered into a $280.0 million variable interest rate Term Debt note maturing February 21, 2019 . Debt issuance costs of $5.5 million on the Term Debt are being amortized to interest expense at the effective interest rate over the contractual term of the Term Debt. The Term Debt provides for an additional term loan borrowing under certain conditions. The following table presents the Term Debt at December 31, 2017 : (in thousands) Term Debt, principal amount $ 74,000 Less unamortized debt issuance costs 1,239 Term Debt, principal net of unamortized debt issuance costs $ 72,761 Effective interest rate 3.8 % Principal on the Term Debt is paid in quarterly installments. Principal payments are made at a rate of (i) 2.50% of the original principal amount beginning on June 30, 2016 and ending on March 31, 2017 , (ii) 3.75% of the original principal amount beginning on June 30, 2017 and ending on March 31, 2018 and (iii) 6.25% of the original principal amount beginning on June 30, 2018 and ending on December 31, 2018 , with the balance due on February 21, 2019 . During the year ended December 31, 2017 , the Company made principal payments of $172.0 million , including prepayments of $146.5 million which were applied to future payment requirements. The Company is also required to make mandatory prepayments of loans under the Term Debt, subject to specified exceptions, with the proceeds of asset sales, debt issuances and specified other events. At December 31, 2017 , future scheduled principal payments on the Company's Term Debt are summarized as follows: (in thousands) 2018 $ — 2019 74,000 $ 74,000 The Term Debt bears interest through maturity at a variable rate based upon, at the Company’s option, either (a) the LIBOR rate for Eurocurrency borrowing or (b) an Alternate Base Rate (“ABR”), which is the highest of (i) the administrative agent’s prime rate, (ii) one-half of 1.00% in excess of the overnight U.S. Federal Funds rate, and (iii) 1.00% in excess of the one-month LIBOR ), plus in each case, an applicable margin. The applicable margin for Eurocurrency loans ranges, based on the applicable total net leverage ratio, from 1.25% to 2.00% per annum and the applicable margin for ABR loans ranges, based on the applicable total net leverage ratio, from 0.25% to 1.00% per annum. The Company’s obligations under the Term Debt are guaranteed by all of its domestic and foreign subsidiaries, subject to certain agreed upon exceptions. The obligations under the Term Debt are also, subject to certain agreed upon exceptions, secured by a lien on substantially all of the Company's and certain of its subsidiaries tangible and intangible property, including 100% of the Company's and certain of its subsidiaries’ equity interests in shares of its domestic and certain foreign subsidiaries. The Term Debt contains a number of covenants and restrictions that among other things, and subject to certain agreed upon exceptions, require the Company and its subsidiaries to satisfy certain financial covenants and restricts the ability of the Company and its subsidiaries to incur liens, incur additional indebtedness, make loans and investments, engage in mergers and acquisitions, engage in asset sales, declare dividends or redeem or repurchase capital stock, prepay, redeem or purchase subordinated debt and amend or otherwise alter debt agreements, in each case, subject to certain agreed upon exceptions. A failure to comply with these covenants could permit the lenders under the Term Debt to declare all amounts borrowed under the Term Debt, together with accrued interest and fees, to be immediately due and payable. At December 31, 2017 , the Company was in compliance with the covenants for the Term Debt. |
IMPAIRMENT OF LONG-LIVED ASSETS
IMPAIRMENT OF LONG-LIVED ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS: While performing the review for impairment for the fourth quarter of 2017, the Company noted an impairment indicator associated with the potential sale or discontinuation of the 1550nm silicon photonics line of business. As a result, the Company recorded impairment charges totaling $12.0 million in the fourth quarter of 2017, of which $7.7 million were related to property and equipment and $4.3 million were related to intangible assets. The impairment charges were calculated based on the differences between the net book values of the related assets and their estimated fair values. The Company primarily used the market approach to determine the estimated fair values of the property and equipment. Under this approach we considered various factors, including secondary market comparables, replacement costs, age and condition of the assets and estimated selling costs. The impaired intangible assets represent obsolete technologies that were deemed to have no value, and therefore were fully written off. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT: On January 9, 2018, the Company announced that it discontinued its 1550nm silicon photonics development activities. The discontinuation of the 1550nm silicon photonics development activities is expected to result in restructuring charges of approximately $9.0 million to $12.0 million primarily related to employee termination and severance costs, facility related costs and contract cancellation charges. The Company expects to recognize most of the restructuring charges in the first quarter of 2018. |
SCHEDULE II - CONSOLIDATED VALU
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | Description: Balance at Beginning of Year Charged to Costs and Expenses Deductions Balance at End of Year (in thousands) Year ended December 31, 2017 Deducted from asset accounts: Allowance for doubtful accounts $ 632 $ — $ — $ 632 Allowance for sales returns and adjustments — — — — Income tax valuation allowance 55,827 — (24,179 ) 31,648 Total $ 56,459 $ — $ (24,179 ) $ 32,280 Year ended December 31, 2016 Deducted from asset accounts: Allowance for doubtful accounts $ 621 $ 11 $ — $ 632 Allowance for sales returns and adjustments — — — Income tax valuation allowance 28,999 26,828 — 55,827 Total $ 29,620 $ 26,839 $ — $ 56,459 Year ended December 31, 2015 Deducted from asset accounts: Allowance for doubtful accounts $ 672 $ — $ (51 ) $ 621 Allowance for sales returns and adjustments — — — Income tax valuation allowance 46,220 — (17,221 ) 28,999 Total $ 46,892 $ — $ (17,272 ) $ 29,620 |
THE COMPANY AND SUMMARY OF SI27
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of presentation | Principles of presentation The consolidated financial statements include the Company's accounts as well as those of its wholly owned subsidiaries after the elimination of all intercompany balances and transactions. On February 23, 2016, the Company completed its acquisition of EZchip Semiconductor, Ltd. ("EZchip"), a public company formed under the laws of the State of Israel and specializing in network-processing semiconductors. Upon the consummation of the acquisition, EZchip became a wholly owned subsidiary of the Company. The consolidated financial statements include the results of operations of EZchip commencing as of the acquisition date. Certain prior year amounts have been reclassified to conform to the 2017 presentation. |
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 material 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, allowances for price adjustments, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, useful lives of property, equipment, and intangibles, accounting for business combinations, goodwill and purchased intangible asset valuation, investments in privately-held companies, accounting and fair value of financial instruments and derivatives, deferred income tax asset valuation, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results that the Company experiences may differ materially and adversely from the Company's original estimates. To the extent there are material differences between the estimates and actual results, the Company's future results of operations will be affected. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. |
Short-term investments | Short-term investments The Company's short-term investments are classified as available-for-sale securities and are reported at fair value. Unrealized gains or losses are recorded in shareholders' equity and included in other comprehensive income ("OCI"). The Company views its available-for-sale portfolio as available for use in its current operations. Accordingly, the Company has classified all investments in available for sale securities with readily available markets as short-term, even though the stated maturity date may be one year or more beyond the current balance sheet date, because of the intent and ability to sell these securities prior to maturity to meet liquidity needs or as part of a risk management program. |
Fair value of financial instruments | Fair value of financial instruments The Company's financial instruments consist of cash equivalents, restricted cash, short-term investments and foreign currency derivative contracts. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. When there is no readily available market data, fair value estimates may be made by the Company, which may not necessarily represent the amounts that could be realized in a current or future sale of these assets. |
Derivatives | Derivatives The Company enters into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks, mainly the exposure to changes in the exchange rate of the NIS against the U.S. dollar that are associated with forecasted future cash flows and existing assets and liabilities. The Company's primary objective in entering into these arrangements is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The program is not designated for trading or speculative purposes. The Company's derivative instruments expose the Company to credit risk to the extent that the counter-parties may be unable to meet the terms of the agreement. The Company seeks to mitigate such risk by limiting its counter-parties to major financial institutions and by spreading the risk across a number of major financial institutions. In addition, the potential risk of loss with any one counter-party resulting from this type of credit risk is monitored on an ongoing basis. The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the unrealized gains or losses on the derivative instruments is reported as a component of accumulated other comprehensive income ("AOCI") in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gains or losses on the derivative instruments, if any, is recognized in earnings in the current period. The derivative instruments that hedge the exposure to variability in the fair value of assets or liabilities are not currently designated as hedges for financial reporting purposes, and thus the gains or losses on such derivative instruments are recognized in earnings in the current period. |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, restricted cash, short-term investments and accounts receivable. Cash, cash equivalents, restricted cash and short-term investment balances are maintained with high quality financial institutions, the composition and maturities of which are regularly monitored by management. The Company's accounts receivable are derived from revenue earned from customers primarily located in North America, Europe and Asia. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its customers. The Company maintains an allowance for doubtful accounts receivable based upon the expected collectability of accounts receivable. The Company reviews its allowance for doubtful accounts quarterly by assessing individual accounts receivable over a specific aging and amount, and all other balances based on historical collection experience and an economic risk assessment. If the Company determines that a specific customer is unable to meet its financial obligations to the Company, the Company provides an allowance for credit losses to reduce the receivable to the amount management reasonably believes will be collected. |
Inventory | Inventory Inventory includes finished goods, work-in-process and raw materials. Inventory is stated at the lower of cost (principally standard cost which approximates actual cost on a first-in, first-out basis) or net realizable value. Reserves for potentially excess and obsolete inventory are made based on management's analysis of inventory levels, future sales forecasts and market conditions. Once established, the original cost of the Company's inventory less the related inventory reserve represents the new cost basis of such products. |
Property and equipment | Property and equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the related assets, which is three years for computer equipment and software, seven years for lab equipment, and seven years for office furniture and fixtures. Leasehold improvements and assets acquired under capital leases are amortized on a straight-line basis over the term of the lease, or the useful lives of the assets, whichever is shorter. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in the results of operations in the period realized. During the fourth quarter of 2017, the Company retired fully depreciated assets that were no longer in use. As a result, $72.8 million of cost and accumulated depreciation was removed from the accounts. No gain or loss was recognized. The Company capitalizes certain costs incurred in connection with internal use of inventory items in the Company's data centers and laboratories. Capitalized inventory costs are included in Property and equipment, net and amortized on a straight-line basis over the estimated useful life of the asset. |
Business combinations | Business combinations The Company accounts for business combinations using the acquisition method of accounting. The Company determines the recognition of intangible assets based on the following criteria: (i) the intangible asset arises from contractual or other rights; or (ii) the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged. The Company allocates the purchase price of business combinations to the tangible assets, liabilities and intangible assets acquired, including in-process research and development ("IPR&D"), based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The process of estimating the fair values requires significant estimates, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer contracts, customer lists and distribution agreements, acquired developed technologies, expected costs to develop IPR&D into commercially viable products, estimated cash flows from projects when completed and discount rates. The Company estimates fair value based upon assumptions that are believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. |
Goodwill and intangible assets | Goodwill and intangible assets Goodwill represents the excess of the cost of acquired businesses over the fair market value of their identifiable net assets. The Company conducts a goodwill impairment qualitative assessment during the fourth quarter of each fiscal year or more frequently if facts and circumstances indicate that goodwill may be impaired. The goodwill impairment qualitative assessment requires the Company to perform an assessment to determine if it is more likely than not that the fair value of the business is less than its carrying amount. The qualitative assessment considers various factors, including the macroeconomic environment, industry and market specific conditions, market capitalization, stock price, financial performance, earnings multiples, budgeted-to-actual revenue performance from prior year, gross margin and cash flow from operating activities and issues or events specific to the business. If adverse qualitative trends are identified that could negatively impact the fair value of the business, the Company performs a "two step" goodwill impairment test. "Step one" is the identification of potential impairment. This involves comparing the fair value of each reporting unit, which the Company has determined to be the entity itself, with its carrying amount including goodwill. If the fair value of a reporting unit exceeds its carrying amount, the goodwill of the reporting unit is considered not impaired and "Step two" of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, "Step two" is performed. This involves comparing the carrying amount of goodwill to its implied fair value, which is determined to be the excess of the reporting unit's fair value over the fair value of its identifiable net assets other than goodwill. If the carrying amount of goodwill exceeds its implied fair value, an impairment exists and is recorded. As of December 31, 2017 , the Company's qualitative assessment of goodwill impairment indicated that goodwill was not impaired. Intangible assets represent acquired intangible assets including developed technology, customer relationships and IPR&D, as well as licensed technology. The Company amortizes its finite lived intangible assets over their useful lives using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used, or, if that pattern cannot be reliably determined, using a straight-line amortization method. The Company capitalizes IPR&D projects acquired as part of a business combination as intangible assets with indefinite lives. On completion of each project, IPR&D assets are reclassified to developed technology and amortized over their estimated useful lives. If any of the IPR&D projects are abandoned, the Company would impair the related IPR&D asset. Indefinite-lived intangible assets are tested for impairment annually or more frequently when indicators of impairment exist. The Company first assesses qualitative factors to determine if it is more likely than not that an indefinite-lived intangible asset is impaired and whether it is necessary to perform a quantitative impairment test. The qualitative assessment considers various factors, including reductions in demand, the abandonment of IPR&D projects or significant economic slowdowns in the semiconductor industry and macroeconomic environment. If adverse qualitative trends are identified that could negatively impact the fair value of the asset, then quantitative impairment tests are performed to compare the carrying value of the asset to its undiscounted expected future cash flows. If this test indicates that there is impairment, the impaired asset is written down to fair value, which is typically calculated using: (i) quoted market prices or (ii) discounted expected future cash flows utilizing an appropriate discount rate. Impairment is based on the excess of the carrying amount over the fair value of those assets. The Company performed an impairment test on the IPR&D during the fourth quarter of 2017 when the project reached technological feasibility and was transferred to developed technology, and concluded that the asset was not impaired. Intangible assets with finite lives are tested for impairment in accordance with our policy for long-lived assets. |
Equity investments in privately-held companies | Equity investments in privately-held companies The Company has equity investments in privately-held companies. These investments are recorded at cost reduced by any impairment write-downs because the Company does not have the ability to exercise significant influence over the operating and financial policies of the company. The investments are included in other long-term assets on the accompanying balance sheets. The Company monitors the investments and if facts and circumstances indicate an investment may be impaired, then it conducts an impairment test of its investment. To determine if the investment is recoverable, it reviews the privately-held company's revenue and earnings trends relative to pre-defined milestones and overall business prospects, the general market conditions in its industry and other factors related to its ability to remain in business, such as liquidity and receipt of additional funding. |
Impairment of long-lived assets | Impairment of long-lived assets Long-lived assets include equipment and furniture and fixtures and finite-lived intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. If the sum of the expected future cash flows (undiscounted and without interest charges) from the long-lived assets is less than the carrying amount of such assets, an impairment loss would be recognized, and the assets would be written down to their estimated fair values. The Company reviews for possible impairment on a regular basis. |
Revenue recognition | Revenue recognition The Company recognizes revenue from the sales of products when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the price is fixed or determinable; and (4) collection is reasonably assured. The Company uses a binding purchase order or a signed agreement as evidence of an arrangement. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer. The Company's standard arrangement with its customers typically includes freight-on-board shipping point, no right of return and no customer acceptance provisions. The revenues from fixed-price support or maintenance contracts, including extended warranty contracts and software post-contract customer support agreements, are recognized ratably over the contract period and the costs associated with these contracts are recognized as incurred. The customer's obligation to pay and the payment terms are set at the time of shipment and are not dependent on the subsequent resale of the product. The Company determines whether collectability is reasonably assured on a customer-by-customer basis. When assessing the probability of collection, the Company considers the number of years the customer has been in business and the history of the Company's collections. Customers are subject to a credit review process that evaluates the customers' financial positions and ultimately their ability to pay. If it is determined at the outset of an arrangement that collection is not reasonably assured, no product is shipped and no revenue is recognized unless cash is received in advance. The Company maintains inventory, or hub arrangements with certain customers. Pursuant to these arrangements the Company delivers products to a customer or a designated third party warehouse based upon the customer's projected needs, but does not recognize product revenue unless and until the customer reports it has removed the Company's product from the warehouse to be incorporated into its end products. Multiple Element Arrangements For revenue arrangements that contain multiple deliverables, judgment is required to properly identify the accounting units of the transactions and to determine the manner in which revenue should be allocated among the accounting units. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria of revenue recognition have been met for each deliverable in order for revenue recognition to occur in the appropriate accounting period. While changes in the allocation of the arrangement consideration between the units of accounting will not affect the amount of total revenue recognized for a particular sales arrangement, any material changes in these allocations could impact the timing of revenue recognition, which could affect our results of operations. For multiple element arrangements that include a combination of hardware, services, such as post-contract customer support, and software, the arrangement consideration is first allocated among the accounting units before revenue recognition criteria are applied. The allocation is derived based on vendor specific objective evidence ("VSOE"). When VSOE or third party evidence is unavailable, we use management's best estimate of selling price. Distributor Revenue A portion of the Company's sales are made to distributors under agreements which contain price protection provisions. Currently, the Company recognizes revenues from sales to distributors based on the sell-through method using inventory and point of sale information provided by the distributors, net of estimated allowances for price adjustments. Upon the adoption of the new revenue standards effective January 1, 2018, the Company will recognize revenues from sales to distributors upon shipment and transfer of control (known as “sell-in” revenue recognition), net of the estimated allowances for price adjustments. Deferred Revenue and Income The Company defers revenue and income when advance payments are received from customers before performance obligations have been completed and/or services have been performed. Shipping and Handling Costs incurred for shipping and handling expenses to customers are recorded as cost of revenues. To the extent these amounts are billed to the customer in a sales transaction, the Company records the shipping and handling fees as revenue. |
Product warranty | Product warranty The Company typically offers a limited warranty for its products for periods up to three years . The Company accrues for estimated returns of defective products at the time revenue is recognized based on historical activity. The determination of these accruals requires the Company to make estimates of the frequency and extent of warranty activity and estimated future costs to either replace or repair the products under warranty. If the actual warranty activity and/or repair and replacement costs differ significantly from these estimates, adjustments to record additional cost of revenues may be required in future periods. |
Research and development | Research and development Costs incurred in research and development are charged to operations as incurred. The Company expenses all costs for internally developed patents as incurred. |
Advertising | Advertising Costs related to advertising and promotion of products are charged to sales and marketing expense as incurred. |
Share-based compensation | Share-based compensation The Company accounts for share-based compensation expense based on the estimated fair value of the equity awards as of the grant dates. The fair value of restricted stock units ("RSUs"), is based on the closing market price of our ordinary shares on the date of grant. The Company estimates the fair value of share options and the Employee Share Purchase Plan ("ESPP") using the Black-Scholes option valuation model, which requires the input of subjective assumptions including the expected share price volatility and the calculation of expected term, as well as the fair value of the underlying ordinary share on the date of grant, among other inputs. The Company bases its estimate of expected volatility on the historical volatility of the Company's shares. The Company did not grant share options in 2017 , 2016 , and 2015 . Share-based compensation expense is recognized on a straight-line basis over each recipient's requisite service period, which is generally the vesting period. Share-based compensation expense is recorded in full during the vesting period, and the effect of forfeitures will be recorded as they actually occur. |
Comprehensive income (loss) | Comprehensive income (loss) Accumulated other comprehensive income (loss), net of tax on the consolidated balance sheets at December 31, 2017 and 2016 , represents the accumulated unrealized gains (losses) on available-for-sale securities, and the accumulated unrealized gains (losses) related to derivative instruments accounted for as cash flow hedges. |
Foreign currency translation and remeasurement | Foreign currency translation and remeasurement The Company uses the U.S. dollar as its functional currency. Foreign currency assets and liabilities are remeasured into U.S. dollars at the end-of-period exchange rates except for non-monetary assets and liabilities, which are remeasured at historical exchange rates. The Company derives all revenues in U.S. dollars. Expenses are remeasured at the exchange rate in effect on the day the transaction occurred, except for those expenses related to non-monetary assets and liabilities, which are remeasured at historical exchange rates. Gains or losses from foreign currency transactions are included in the Consolidated Statements of Operations as part of "Other income (loss), net." |
Net income (loss) per share | Net income (loss) per share Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of ordinary shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of ordinary shares outstanding during the period increased to include the number of additional shares that would have been outstanding if the potentially dilutive shares had been issued. Potentially dilutive shares include unvested RSUs, outstanding stock options, and shares to be purchased by employees under the Company’s employee stock purchase plan. The dilutive effect of potentially dilutive shares is reflected in diluted net income (loss) per share by application of the treasury stock method. |
Segment reporting | Segment reporting The Company has one reportable segment: the development, manufacturing, marketing and sales of interconnect products. |
Income taxes | Income taxes To prepare the Company's consolidated financial statements, the Company estimates its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company's actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are calculated using tax rates expected to be in effect during the period these temporary differences would reverse, and are included within the Company's consolidated balance sheet. The Company must also make judgments regarding the realizability of deferred tax assets. The carrying value of the Company's net deferred tax assets is based on its belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. A valuation allowance has been established for deferred tax assets which the Company does not believe meet the "more likely than not" criteria. The Company's judgments regarding future taxable income may change due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If the Company's assumptions and consequently its estimates change in the future, the valuation allowances it has established may be increased or decreased, resulting in a respective increase or decrease in income tax expense. The Company's effective tax rate is highly dependent upon the geographic distribution of its worldwide earnings or losses, the tax regulations and tax holidays in each geographic region, the availability of tax credits and carryforwards, and the effectiveness of its tax planning strategies. The Company uses a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with the guidance on judgments regarding the realizability of deferred taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within the consolidated statements of income as income tax expense. |
Recent accounting pronouncements | Adoption of new accounting principles In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718); Improvements to Employee Share-Based Payment Accounting . The Company adopted ASU No. 2016-09 during the quarter ended March 31, 2017. The standard requires, among other things, excess tax benefits to be recognized in the statement of operations as an income tax benefit as opposed to additional paid-in capital. This change was adopted prospectively and did not have a material effect on the Company's condensed consolidated financial statements. The standard also requires, among other things, excess tax benefits to be included in operating activities in the statement of cash flows as opposed to in financing activities. This change was adopted retrospectively and did not have a material effect on the Company's condensed consolidated financial statements. The standard further requires excess tax benefits to be recognized when they arise, instead of when they actually reduce taxes payable under the prior guidance. This change was adopted using a modified retrospective method through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The impact of the adoption was to increase deferred tax assets by $4.6 million , which in turn was offset by an increase in the valuation allowance in the same amount, resulting in no change in net deferred tax assets and retained earnings as of January 1, 2017. The standard also establishes an alternative practical expedient for estimating the effects of forfeitures of an award by recognizing such effects in compensation cost when the forfeitures occur. Adoption of the alternative practical expedient was applied using a modified retrospective method through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The impact of the adoption was to reduce retained earnings and to increase additional paid-in capital by $0.8 million as of January 1, 2017. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash , which requires, among other things, an explanation of the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The standard is effective for fiscal years beginning after December 15, 2017. We early adopted ASU 2016-18 retrospectively during the fourth quarter of 2017. The Company has long-term restricted cash in the amount of $8.0 million as of December 31, 2017 . This amount was reported in other long-term assets in the balance sheet as of December 31, 2017 , and was included in the ending balance of cash, cash equivalents and restricted cash in the statement of cash flows for the year ended December 31, 2017 . There was no restricted cash as of December 31, 2016 and 2015 . Recent accounting pronouncements In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities , which expands the activities that qualify for hedge accounting and simplifies the rules for reporting hedging transactions. The standard is effective for the Company beginning January 1, 2019. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The standard requires lessees to recognize almost all leases on the balance sheet as a right-of-use asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard becomes effective for the Company beginning January 1, 2019. Early adoption of the standard is allowed. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 amends various aspects of the recognition, measurement, presentation, and disclosure of financial instruments, and is effective for the Company beginning January 1, 2018. One aspect that may have a material impact on the Company's consolidated financial statements relates to the measurement of its equity investments in privately-held companies whose fair values are not readily determinable. With the election to use the measurement alternative (as opposed to fair value), these equity investments will be measured at cost, less impairments, adjusted by observable price changes. The Company believes that the adoption of ASU 2016-01 may increase the volatility of its other income (expense), net, as a result of the remeasurement of its equity investments in privately-held companies upon the occurrence of observable price changes and impairments. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and may be applied retrospectively to each prior period presented, or applied using a modified retrospective method with the cumulative effect recognized in the beginning retained earnings during the period of initial application. Subsequently, the FASB has issued several additional ASUs related to ASU No. 2014-09, collectively they are referred to as the “new revenue standards,” which become effective for the Company beginning January 1, 2018. The Company expects to adopt the new revenue standards using the modified retrospective method. Under the current guidance, the Company defers the recognition of revenue and the cost of revenue from distributor sales until the distributors report that they have sold the products to their customers (known as “sell-through” revenue recognition). Upon the adoption of the new revenue standards, the Company will recognize revenue on sales to distributors upon shipment and transfer of control (known as “sell-in” revenue recognition), net of the estimated allowances for price adjustments. The deferred “sell-through” revenue, net of the deferred cost of revenue, was approximately $4.5 million as of December 31, 2017 , which will be recognized and recorded as an increase to beginning retained earnings during the first quarter of 2018. The Company does not expect any other material effects on its consolidated financial statements. |
THE COMPANY AND SUMMARY OF SI28
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of the cash and cash equivalents balances reported on the balance sheets and the cash, cash equivalents and restricted cash balances reported in the statements of cash flows: December 31, 2017 2016 2015 (In thousands) Cash and cash equivalents, as reported on the balance sheets $ 62,473 $ 56,780 $ 263,199 Restricted cash in other long-term assets, as reported on the balance sheets 8,025 — — Cash, cash equivalents, and restricted cash, as reported in the statements of cash flows $ 70,498 $ 56,780 $ 263,199 |
Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of the cash and cash equivalents balances reported on the balance sheets and the cash, cash equivalents and restricted cash balances reported in the statements of cash flows: December 31, 2017 2016 2015 (In thousands) Cash and cash equivalents, as reported on the balance sheets $ 62,473 $ 56,780 $ 263,199 Restricted cash in other long-term assets, as reported on the balance sheets 8,025 — — Cash, cash equivalents, and restricted cash, as reported in the statements of cash flows $ 70,498 $ 56,780 $ 263,199 |
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: Year Ended December 31, 2017 2016 2015 HPE 13 % 16 % 14 % Dell 11 % * * ____________________ * Less than 10% The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable: December 31, 2017 December 31, 2016 HPE 13 % 11 % |
Schedule of changes in the entity's liability for product warranty | Changes in the Company's liability for product warranty were as follows: Year Ended December 31, 2017 2016 (In thousands) Balance, beginning of the period $ 1,474 $ 1,641 Assumed warranty liability from acquisition — 290 New warranties issued during the period 1,459 1,727 Reversal of warranty reserves (565 ) (856 ) Settlements during the period (1,479 ) (1,328 ) Balance, end of the period 889 1,474 Less: long-term portion of product warranty liability (183 ) (211 ) Balance, end of the period $ 706 $ 1,263 |
Schedule of computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated: Year Ended December 31, 2017 2016 2015 (In thousands, except per share data) Net income (loss) $ (19,425 ) $ 18,518 $ 92,894 Basic and diluted shares: Weighted average ordinary shares outstanding 50,310 48,145 46,365 Effect of dilutive shares — 1,381 1,413 Shares used to compute diluted net income (loss) per share 50,310 49,526 47,778 Net income (loss) per share—basic $ (0.39 ) $ 0.38 $ 2.00 Net income (loss) per share—diluted $ (0.39 ) $ 0.37 $ 1.94 |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of balance sheet components | December 31, 2017 December 31, 2016 (In thousands) Accounts receivable, net: Accounts receivable $ 154,845 $ 142,400 Less: allowance for doubtful accounts (632 ) (632 ) $ 154,213 $ 141,768 Inventories: Raw materials $ 12,656 $ 8,243 Work-in-process 22,769 26,118 Finished goods 29,232 31,162 $ 64,657 $ 65,523 Other current assets: Prepaid expenses $ 7,518 $ 9,053 Derivative contracts receivable 982 257 VAT receivable 2,259 6,093 Other 3,536 1,943 $ 14,295 $ 17,346 Property and equipment, net: Computer, equipment, and software $ 164,707 $ 214,719 Furniture and fixtures 3,198 5,210 Leasehold improvements 47,262 46,693 215,167 266,622 Less: Accumulated depreciation and amortization (105,248 ) (148,037 ) $ 109,919 $ 118,585 Deferred taxes and other long-term assets: Equity investments in privately-held companies $ 29,255 $ 12,720 Deferred taxes 24,563 22,413 Long-term restricted cash 8,025 — Other assets 4,319 1,580 $ 66,162 $ 36,713 Accrued liabilities: Payroll and related expenses $ 71,868 $ 62,969 Accrued expenses 31,951 33,125 Derivative contracts payable 17 1,006 Product warranty liability 706 1,263 Other 9,516 6,679 $ 114,058 $ 105,042 Other long-term liabilities: Income tax payable $ 24,425 $ 24,184 Deferred rent 2,220 2,504 Other 7,422 3,892 $ 34,067 $ 30,580 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Business Combination Consideration Transferred | The following summarizes consideration paid for EZchip at the acquisition date: (in thousands) Consideration: Cash payment for all outstanding common shares of EZchip at $25.50 per share $ 781,237 Fair value of awards attributable to pre-acquisition services 972 Total consideration: 782,209 Less: cash acquired 87,545 Fair value of total consideration transferred, net of cash acquired $ 694,664 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following summarizes the Company's allocation of the total purchase price, net of cash acquired for the EZchip acquisition after consultation with third party valuation specialists: (in thousands) Short-term investments $ 108,862 Other current assets 34,114 Other long-term assets 9,638 Intangible assets 288,246 Goodwill 270,485 Total assets 711,345 Current liabilities (10,253 ) Long-term liabilities (6,428 ) Total liabilities (16,681 ) Total purchase price allocation $ 694,664 |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | Identifiable finite-lived intangible assets Fair value Weighted Average Useful Life (in thousands) (in years) Purchased intangible assets: Trade names $ 5,600 3 Customer relationships 56,400 9 Backlog 11,300 1 Developed technology 181,246 4 - 6 In-process research and development (1) 33,700 - Total purchased intangible assets $ 288,246 (1) IPR&D will not be amortized until the underlying products reach technological feasibility. Upon completion, each IPR&D project will be amortized over its useful life. |
Business Acquisition, Pro Forma Information | Pro forma results are not indicative of what would have occurred had the acquisition occurred as of January 1, 2015 or of results that may occur in the future. Year Ended December 31, 2016 2015 (in thousands, except per share amounts) Revenues $ 867,422 $ 769,290 Net income $ 40,288 $ 36,130 Net income per share — basic $ 0.82 $ 0.77 Net income per share — diluted $ 0.80 $ 0.74 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
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 and liabilities measured at fair value on a recurring basis as of December 31, 2017 . Level 1 Level 2 Total (in thousands) Money market funds $ 1,857 $ — $ 1,857 Certificates of deposit — 58,003 58,003 U.S. Government and agency securities — 43,872 43,872 Commercial paper — 27,029 27,029 Corporate bonds — 54,447 54,447 Municipal bonds — 15,169 15,169 Foreign government bonds — 12,761 12,761 1,857 211,281 213,138 Long-term restricted cash — 8,025 8,025 Derivative contracts — 982 982 Total financial assets $ 1,857 $ 220,288 $ 222,145 Derivative contracts $ — $ 17 $ 17 Total financial liabilities $ — $ 17 $ 17 The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 . Level 1 Level 2 Total (in thousands) Money market funds $ 1,833 $ — $ 1,833 Certificates of deposit — 78,643 78,643 U.S. Government and agency securities — 56,347 56,347 Commercial paper — 29,483 29,483 Corporate bonds — 94,162 94,162 Municipal bonds — 7,706 7,706 Foreign government bonds — 5,320 5,320 1,833 271,661 273,494 Derivative contracts — 257 257 Total financial assets $ 1,833 $ 271,918 $ 273,751 Derivative contracts $ — $ 1,006 $ 1,006 Total financial liabilities $ — $ 1,006 $ 1,006 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of cash, cash equivalents and short-term investments | At December 31, 2017 and 2016 , the Company held cash, cash equivalents and short-term investments classified as available-for-sale securities as follows: December 31, 2017 Amortized Unrealized Unrealized Estimated (in thousands) Cash $ 60,616 $ — $ — $ 60,616 Money market funds 1,857 — — 1,857 Certificates of deposit 58,039 — (36 ) 58,003 U.S. Government and agency securities 44,070 — (198 ) 43,872 Commercial paper 27,073 1 (45 ) 27,029 Corporate bonds 54,673 — (226 ) 54,447 Municipal bonds 15,227 — (58 ) 15,169 Foreign government bonds 12,809 — (48 ) 12,761 Total 274,364 1 (611 ) 273,754 Less amounts classified as cash and cash equivalents (62,473 ) — — (62,473 ) Short-term investments $ 211,891 $ 1 $ (611 ) $ 211,281 December 31, 2016 Amortized Unrealized Unrealized Estimated (in thousands) Cash $ 54,947 $ — $ — $ 54,947 Money market funds 1,833 — — 1,833 Certificates of deposit 78,643 — — 78,643 U.S. Government and agency securities 56,431 2 (86 ) 56,347 Commercial paper 29,486 — (3 ) 29,483 Corporate bonds 94,292 37 (167 ) 94,162 Municipal bonds 7,718 — (12 ) 7,706 Foreign government bonds 5,327 — (7 ) 5,320 Total 328,677 39 (275 ) 328,441 Less amounts classified as cash and cash equivalents (56,780 ) — — (56,780 ) Short-term investments $ 271,897 $ 39 $ (275 ) $ 271,661 |
Schedule of contractual maturities of short-term investments | The contractual maturities of short-term investments at December 31, 2017 and 2016 were as follows: December 31, 2017 December 31, 2016 Amortized Estimated Amortized Estimated (in thousands) Due in less than one year $ 148,232 $ 147,921 $ 157,270 $ 157,163 Due in one to three years 63,659 63,360 114,627 114,498 $ 211,891 $ 211,281 $ 271,897 $ 271,661 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table represents changes in the carrying amount of goodwill: (in thousands) Carrying amount of goodwill at December 31, 2016 $ 471,228 Acquisitions 1,209 Adjustments — Balance as of December 31, 2017 $ 472,437 |
Schedule of carrying amount of intangible assets | The carrying amounts of intangible assets as of December 31, 2017 were as follows: Gross Accumulated Net Useful Life (in thousands) (in years) Licensed technology $ 40,407 $ (16,478 ) $ 23,929 1-8 Developed technology 279,543 (122,414 ) 157,129 4-7 Customer relationships 69,776 (24,783 ) 44,993 4-9 Trade names 5,600 (3,456 ) 2,144 3 Total intangible assets $ 395,326 $ (167,131 ) $ 228,195 The carrying amounts of intangible assets as of December 31, 2016 were as follows: Gross Accumulated Net Useful Life (in thousands) (in years) Licensed technology $ 24,583 $ (6,559 ) $ 18,024 1-8 Developed technology 250,043 (75,591 ) 174,452 4-7 Customer relationships 69,776 (17,731 ) 52,045 4-9 Backlog 11,300 (11,300 ) — 1 Trade names 5,600 (1,590 ) 4,010 3 Total finite-lived amortizable intangible assets 361,302 (112,771 ) 248,531 In-process research and development 29,500 — 29,500 - Total intangible assets $ 390,802 $ (112,771 ) $ 278,031 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization expense from amortizable intangible assets is as follows: (in thousands) 2018 $ 66,718 2019 59,344 2020 47,311 2021 30,919 2022 10,355 Thereafter 13,548 Total $ 228,195 |
DERIVATIVES AND HEDGING ACTIV34
DERIVATIVES AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of derivative contracts | The fair value of derivative contracts as of December 31, 2017 and 2016 was as follows: Other current assets Other accrued liabilities Other current assets Other accrued liabilities December 31, 2017 December 31, 2016 (in thousands) Derivatives designated as hedging instruments Currency forward and option contracts $ 980 $ — $ 257 $ 999 Derivatives not designated as hedging instruments Currency forward and option contracts 2 17 — 7 Total derivatives $ 982 $ 17 $ 257 $ 1,006 |
Schedule of notional amounts of outstanding derivative positions | The gross notional amounts of derivative contracts were NIS denominated. The notional amounts of outstanding derivative contracts in U.S. dollar at December 31, 2017 and 2016 were as follows: December 31, December 31, 2017 2016 (in thousands) Derivatives designated as hedging instruments Currency forward and option contracts $ 52,380 $ 105,730 Derivatives not designated as hedging instruments Currency forward and option contracts $ 47,015 $ 34,330 |
Schedule of designated derivative contracts as cash flow hedges and their impact on OCI | The following table represents the unrealized gains of derivatives designated as hedging instruments, net of tax effects, that were recorded in accumulated other comprehensive income (loss) as of December 31, 2017 and 2016 , and their effect on OCI for the year ended December 31, 2017 (in thousands): December 31, 2016 $ (692 ) Amount of gains recognized in OCI (effective portion) 8,651 Amount of gains reclassified from OCI to income (effective portion) (7,034 ) December 31, 2017 $ 925 |
Effect of derivative contracts on the condensed consolidated statement of operations | The effect of derivative contracts on the consolidated statement of operations in the years ended December 31, 2017 , 2016 , and 2015 was as follows: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Year Ended December 31, Year Ended December 31, 2017 2016 2015 2017 2016 2015 (in thousands) Operating income (expenses) $ 7,034 $ 623 $ (3,630 ) $ — $ — $ — Other income $ — $ — $ — $ 3,248 $ 384 $ — |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Schedule of severance pay details | The severance pay detail is as follows: December 31, 2017 2016 (in thousands) Accrued severance liability $ 23,205 $ 19,874 Severance assets 18,302 15,870 Unfunded portion $ 4,903 $ 4,004 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum payments under non-cancelable operating and capital leases | At December 31, 2017 , future minimum payments under non-cancelable operating leases are as follows: Year Ended December 31, Operating (in thousands) 2018 $ 23,028 2019 18,453 2020 14,740 2021 12,950 2022 9,648 Thereafter 60,091 Total minimum lease payments $ 138,910 |
Purchase commitment, excluding long-term commitment | At December 31, 2017 , the Company had the following non-cancelable purchase commitments: Year Ended December 31, Purchase Commitments (in thousands) 2018 $ 153,358 2019 2,447 2020 544 2021 542 2022 536 Thereafter — Total purchase commitments $ 157,427 |
SHARE INCENTIVE PLANS (Tables)
SHARE INCENTIVE PLANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of share option awards activity under equity incentive plans | The following table summarizes the share option activity under all equity incentive plans: Options Outstanding Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2015 2,028,595 $ 30.81 Options exercised (349,131 ) $ 14.58 Options canceled (44,979 ) $ 84.57 Outstanding at December 31, 2016 1,634,485 $ 32.79 Options exercised (479,105 ) $ 15.95 Options canceled (45,319 ) $ 74.59 Outstanding at December 31, 2017 1,110,061 $ 38.35 |
Summary of restricted share units activity | The following table summarizes the restricted share unit activity under all equity incentive plans: Restricted Share Units Outstanding Number of Shares Weighted Average Grant Date Fair Value Non-vested restricted share units at December 31, 2015 2,205,083 $ 44.39 Assumed restricted share units from the EZchip acquisition 499,894 $ 46.40 Restricted share units granted 2,056,902 $ 48.39 Restricted share units vested (1,114,753 ) $ 45.32 Restricted share units canceled (322,607 ) $ 46.26 Non-vested restricted share units at December 31, 2016 3,324,519 $ 46.67 Restricted share units granted 1,844,350 $ 49.88 Restricted share units vested (1,364,063 ) $ 46.25 Restricted share units canceled (390,101 ) $ 47.79 Non-vested restricted share units at December 31, 2017 3,414,705 $ 48.45 |
Summary of ordinary shares reserved for future issuance under equity incentive plans | The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of December 31, 2017 : Number of Share options outstanding 1,110,061 Restricted share units outstanding 3,414,705 Shares authorized for future issuance 757,786 ESPP shares available for future issuance 3,425,469 Total shares reserved for future issuance as of December 31, 2017 8,708,021 |
Schedule of weighted average assumptions used to value share options granted | The following weighted average assumptions were used in the valuation of the ESPP for the years ended December 31, 2017 , 2016 and 2015 : Employee Share Purchase Plan Year ended December 31, 2017 2016 2015 Dividend yield, % — — — Expected volatility 24.6 % 35.8 % 33.7 % Risk free interest rate 1.20 % 0.45 % 0.10 % Expected life, years 0.50 0.50 0.50 |
Summary of the distribution of total share-based compensation expense | The following table summarizes the distribution of total share-based compensation expense in the Consolidated Statements of Operations: Year ended December 31, 2017 2016 2015 (in thousands) Share-based compensation expense by caption: Cost of goods sold $ 2,000 $ 2,375 $ 2,366 Research and development 40,278 40,475 28,821 Sales and marketing 15,693 15,183 10,309 General and administrative 10,893 13,085 9,268 Total share-based compensation expense $ 68,864 $ 71,118 $ 50,764 Share-based compensation expense by type of award: Share options $ 115 $ 2,711 $ 6,680 ESPP 6,232 6,394 4,007 RSU 62,517 62,013 40,077 Total share-based compensation expense $ 68,864 $ 71,118 $ 50,764 |
ACCUMULATED OTHER COMPREHENSI38
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Summary of the changes in accumulated balances of other comprehensive income (loss) | The following table summarizes the changes in accumulated other comprehensive income (loss) for the years ended December 31, 2017 and 2016 : Unrealized Gains (Losses) on Available-for-Sale Securities Unrealized Gains (Losses) on Derivatives Designated as Hedging Instruments Total (in thousands) Balance at December 31, 2016 $ (236 ) $ (692 ) $ (928 ) Other comprehensive income before reclassifications, net of taxes 918 8,651 9,569 Realized (gains)/losses reclassified from accumulated other comprehensive income 11 (7,034 ) (7,023 ) Net current-period other comprehensive income, net of taxes 929 1,617 2,546 Balance at December 31, 2017 $ 693 $ 925 $ 1,618 Balance at December 31, 2015 $ (578 ) $ (1,091 ) $ (1,669 ) Other comprehensive income/(loss) before reclassifications, net of taxes (144 ) 1,022 878 Realized (gains)/losses reclassified from accumulated other comprehensive income 486 (623 ) (137 ) Net current-period other comprehensive income, net of taxes 342 399 741 Balance at December 31, 2016 $ (236 ) $ (692 ) $ (928 ) |
Reclassification out of accumulated other comprehensive income | The following table provides details about the realized (gains)/losses reclassified from accumulated other comprehensive income for the years ended December 31, 2017 and 2016 : Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement of Operations Year ended December 31, 2017 2016 (in thousands) Realized (gains) on derivatives designated as hedging instruments $ (7,034 ) $ (623 ) Cost of revenues and Operating expenses: (347 ) (18 ) Cost of revenues (635 ) (36 ) General and administrative (628 ) (25 ) Sales and marketing (5,424 ) (544 ) Research and development Realized losses on available-for-sale securities 11 486 Other income, net Total reclassifications for the period $ (7,023 ) $ (137 ) Total |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of income (loss) before income taxes | The components of income (loss) before taxes on income are as follows: Year ended December 31, 2017 2016 2015 (in thousands) United States $ (21,528 ) $ (17,969 ) $ (12,539 ) Foreign (375 ) 42,297 87,121 Income (loss) before taxes on income $ (21,903 ) $ 24,328 $ 74,582 |
Schedule of the components of the provision for income taxes | The components of the provision for (benefit from) income taxes are as follows: Year ended December 31, 2017 2016 2015 (in thousands) Current: U.S. federal $ (617 ) $ (1,333 ) $ (1,578 ) State and local 632 220 284 Foreign (261 ) 6,161 5,737 Total current (246 ) 5,048 4,443 Deferred: Foreign (2,232 ) 762 (22,755 ) Total deferred (2,232 ) 762 (22,755 ) Provision for (benefit from) taxes on income $ (2,478 ) $ 5,810 $ (18,312 ) |
Schedule of significant deferred tax assets and liabilities | At December 31, 2017 and 2016 , significant deferred tax assets and liabilities are as follows: December 31, 2017 2016 (in thousands) Deferred tax assets: Net operating loss and credit carryforwards $ 42,820 $ 75,350 Reserves and accruals 11,305 13,841 Depreciation and amortization 2,393 358 Other 6,645 7,128 Gross deferred tax assets 63,163 96,677 Valuation allowance (31,648 ) (55,827 ) Total deferred tax assets 31,515 40,850 Intangible assets (6,952 ) (18,437 ) Total deferred tax liabilities (6,952 ) (18,437 ) Net deferred tax assets $ 24,563 $ 22,413 |
Schedule of reconciliation of the statutory federal income tax rate to the Company's effective tax rate | The reconciliation of the statutory federal income tax rate to the Company's effective tax rate is as follows: December 31, 2017 2016 2015 Tax at statutory rate 35.0 % 35.0 % 35.0 % Tax at rates other than the statutory rate (4.8 ) (84.5 ) (42.5 ) Valuation allowance 47.3 40.8 (22.0 ) Net change in tax reserves 8.0 17.1 6.0 Adjustment of deferred tax balances following changes in tax rates (71.8 ) 10.9 — Other, net (2.4 ) 4.6 (1.1 ) Provision for (benefit from) taxes on income 11.3 % 23.9 % (24.6 )% |
Schedule of reconciliation of unrecognized tax benefits, excluding penalties and interest | The following summarizes the activity related to the Company's unrecognized tax benefits: December 31, 2017 2016 2015 (in thousands) Gross unrecognized tax benefits, beginning of the period $ 41,460 $ 25,382 $ 18,037 Increases in tax positions for prior years 3,655 252 1,153 Decreases in tax positions for prior years — — (131 ) Increases in tax positions for current year 8,090 8,131 7,908 Increases in tax positions acquired or assumed in a business combination — 8,990 — Decreases due to lapses of statutes of limitations (8,051 ) (1,295 ) (1,585 ) Gross unrecognized tax benefits, end of the period $ 45,154 $ 41,460 $ 25,382 |
GEOGRAPHIC INFORMATION AND RE40
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of revenues by geographic region | Revenues by geographic region are as follows: Year ended December 31, 2017 2016 2015 (in thousands) United States $ 327,528 $ 386,360 $ 300,674 China 172,405 192,581 152,739 Europe 176,937 149,855 93,666 Other Americas 92,449 52,447 24,692 Other Asia 94,574 76,255 86,369 Total revenue $ 863,893 $ 857,498 $ 658,140 |
Schedule of property and equipment, net by geographic location | Property and equipment, net by geographic location are as follows: December 31, 2017 2016 (in thousands) Israel $ 99,752 $ 101,001 United States 7,017 14,246 Other 3,150 3,338 Total property and equipment, net $ 109,919 $ 118,585 |
Schedule of revenues by product group and interconnect protocol | Revenues by product type and interconnect protocol are as follows: Year ended December 31, 2017 2016 2015 (in thousands) ICs $ 161,216 $ 170,641 $ 92,214 Boards 325,845 337,304 265,249 Switch systems 222,836 204,083 179,977 Cables, accessories and other 153,996 145,470 120,700 Total revenue $ 863,893 $ 857,498 $ 658,140 Year ended December 31, 2017 2016 2015 (in thousands) InfiniBand: EDR $ 194,261 $ 125,249 $ 39,009 FDR 181,465 302,093 347,760 QDR/DDR/SDR 31,599 49,987 63,745 Total 407,325 477,329 450,514 Ethernet 401,005 317,241 155,221 Other 55,563 62,928 52,405 Total revenue $ 863,893 $ 857,498 $ 658,140 |
OTHER INCOME (LOSS), NET (Table
OTHER INCOME (LOSS), NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |
Schedule of other income, net | Other income (loss), net, is summarized in the following table: Year ended December 31, 2017 2016 2015 (in thousands) Interest income and gains (losses) on short-term investments, net $ 3,748 $ 2,244 $ 2,998 Foreign exchange loss, net (596 ) (840 ) (186 ) Impairment of investment in a privately-held company — — (3,189 ) Other (37 ) (314 ) (147 ) Total other income (loss), net $ 3,115 $ 1,090 $ (524 ) |
TERM DEBT (Tables)
TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Term debt | The following table presents the Term Debt at December 31, 2017 : (in thousands) Term Debt, principal amount $ 74,000 Less unamortized debt issuance costs 1,239 Term Debt, principal net of unamortized debt issuance costs $ 72,761 Effective interest rate 3.8 % |
Schedule of future scheduled principal payments | At December 31, 2017 , future scheduled principal payments on the Company's Term Debt are summarized as follows: (in thousands) 2018 $ — 2019 74,000 $ 74,000 |
THE COMPANY AND SUMMARY OF SI43
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Short-term investments, Restricted cash, Concentration of credit risk (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Concentration of credit risk | ||||
Cash and cash equivalents, as reported on the balance sheets | $ 62,473,000 | $ 56,780,000 | $ 263,199,000 | |
Long-term restricted cash | 8,025,000 | 0 | 0 | |
Cash, cash equivalents, and restricted cash, as reported in the statements of cash flows | 70,498,000 | 56,780,000 | 263,199,000 | $ 54,930,000 |
Impairment of long-lived assets | $ 12,019,000 | $ 0 | $ 3,189,000 | |
Customer Concentration Risk | Net sales revenue | HPE | ||||
Concentration of credit risk | ||||
Concentration risk | 13.00% | 16.00% | 14.00% | |
Customer Concentration Risk | Net sales revenue | Dell | ||||
Concentration of credit risk | ||||
Concentration risk | 11.00% | |||
Customer Concentration Risk | Accounts receivable | HPE | ||||
Concentration of credit risk | ||||
Concentration risk | 13.00% | 11.00% |
THE COMPANY AND SUMMARY OF SI44
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Property and equipment, net: | |
Cost and accumulated depreciation, period increase (decrease) | $ 72.8 |
Computer, equipment, and software | |
Property and equipment, net: | |
Property, plant and equipment, useful life | 3 years |
Lab equipment | |
Property and equipment, net: | |
Property, plant and equipment, useful life | 7 years |
Office furnitures and fixtures | |
Property and equipment, net: | |
Property, plant and equipment, useful life | 7 years |
THE COMPANY AND SUMMARY OF SI45
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Impairment of long-lived assets | $ 12,019 | $ 0 | $ 0 | |
Impairment of long-lived assets | 12,019 | $ 0 | $ 3,189 | |
Tangible asset impairment charges | $ 7,700 | |||
Impairment of intangible assets | $ 4,300 |
THE COMPANY AND SUMMARY OF SI46
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Product warranty, Advertising, AOCI, ESPP (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Product warranty | |||
Warranty period | 3 years | ||
Changes in the entity's liability for product warranty | |||
Balance at the beginning, product warranty accrual | $ 1,474 | $ 1,641 | |
Assumed warranty liability from acquisition | 0 | 290 | |
New warranties issued during the period | 1,459 | 1,727 | |
Reversal of warranty reserves | (565) | (856) | |
Settlements during the period | (1,479) | (1,328) | |
Balance at the end, product warranty accrual | 889 | 1,474 | $ 1,641 |
Less: long-term portion of product warranty liability | (183) | (211) | |
Product warranty liability | 706 | 1,263 | |
Advertising | |||
Advertising expense | $ 2,900 | $ 2,100 | $ 2,000 |
THE COMPANY AND SUMMARY OF SI47
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basic and diluted earnings per share (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)segment$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net income (loss) | $ | $ (19,425) | $ 18,518 | $ 92,894 |
Basic and diluted shares: | |||
Weighted average ordinary shares outstanding (in shares) | 50,310 | 48,145 | 46,365 |
Effect of dilutive shares (in shares) | 0 | 1,381 | 1,413 |
Shares used to compute diluted net income (loss) per share (in shares) | 50,310 | 49,526 | 47,778 |
Net income (loss) per share - basic (in USD per share) | $ / shares | $ (0.39) | $ 0.38 | $ 2 |
Net income (loss) per share - diluted (in USD per share) | $ / shares | $ (0.39) | $ 0.37 | $ 1.94 |
Segment reporting | |||
Number of reportable segments | segment | 1 | ||
Share options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share, amount | 4,500 | 500 | 500 |
THE COMPANY AND SUMMARY OF SI48
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Adoption of New Accoutning Principles (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Recognition of deferred revenue | $ 4,500,000 | ||
Deferred taxes | 24,563,000 | $ 22,413,000 | |
Cumulative effect of new accounting principle | 0 | ||
Restricted cash in other long-term assets, as reported on the balance sheets | 8,025,000 | 0 | $ 0 |
Additional Paid-in Capital | |||
Cumulative effect of new accounting principle | 789,000 | ||
Retained Earnings | |||
Cumulative effect of new accounting principle | (789,000) | ||
Accounting Standards Update 2016-09 | |||
Deferred taxes | 4,600,000 | ||
Accounting Standards Update 2016-09 | Additional Paid-in Capital | |||
Cumulative effect of new accounting principle | $ 800,000 | ||
Accounting Standards Update 2016-09 | Retained Earnings | |||
Cumulative effect of new accounting principle | $ 800,000 |
BALANCE SHEET COMPONENTS - Narr
BALANCE SHEET COMPONENTS - Narrative (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts receivable, net: | |||
Accounts receivable | $ 154,845,000 | $ 142,400,000 | |
Less: allowance for doubtful accounts | (632,000) | (632,000) | |
Accounts receivable, net | 154,213,000 | 141,768,000 | |
Inventories: | |||
Raw materials | 12,656,000 | 8,243,000 | |
Work-in-process | 22,769,000 | 26,118,000 | |
Finished goods | 29,232,000 | 31,162,000 | |
Inventories | 64,657,000 | 65,523,000 | |
Other current assets: | |||
Prepaid expenses | 7,518,000 | 9,053,000 | |
Derivative contracts receivable | 982,000 | 257,000 | |
VAT receivable | 2,259,000 | 6,093,000 | |
Other | 3,536,000 | 1,943,000 | |
Other | 14,295,000 | 17,346,000 | |
Property and equipment, net: | |||
Property and equipment, gross | 215,167,000 | 266,622,000 | |
Less: Accumulated depreciation and amortization | (105,248,000) | (148,037,000) | |
Property and equipment, net | 109,919,000 | 118,585,000 | |
Deferred taxes and other long-term assets: | |||
Equity investments in privately-held companies | 29,255,000 | 12,720,000 | |
Deferred taxes | 24,563,000 | 22,413,000 | |
Long-term restricted cash | 8,025,000 | 0 | $ 0 |
Other assets | 4,319,000 | 1,580,000 | |
Deferred taxes and other long-term assets | 66,162,000 | 36,713,000 | |
Accrued liabilities: | |||
Payroll and related expenses | 71,868,000 | 62,969,000 | |
Accrued expenses | 31,951,000 | 33,125,000 | |
Derivative contracts payable | 17,000 | 1,006,000 | |
Product warranty liability | 706,000 | 1,263,000 | |
Other | 9,516,000 | 6,679,000 | |
Accrued liabilities | 114,058,000 | 105,042,000 | |
Other long-term liabilities: | |||
Income tax payable | 24,425,000 | 24,184,000 | |
Deferred rent | 2,220,000 | 2,504,000 | |
Other | 7,422,000 | 3,892,000 | |
Other long-term liabilities | 34,067,000 | 30,580,000 | |
Computer, equipment, and software | |||
Property and equipment, net: | |||
Property and equipment, gross | 164,707,000 | 214,719,000 | |
Furniture and fixtures | |||
Property and equipment, net: | |||
Property and equipment, gross | 3,198,000 | 5,210,000 | |
Leasehold improvements | |||
Property and equipment, net: | |||
Property and equipment, gross | $ 47,262,000 | $ 46,693,000 |
BUSINESS COMBINATION - Narrativ
BUSINESS COMBINATION - Narrative (Details) - USD ($) | Feb. 23, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Share-based compensation, nonvested awards, compensation not yet recognized | $ 22,200,000 | ||
Share-based payment award, award requisite service period | 2 years 3 months 1 day | ||
Debt instrument, face amount | $ 280,000,000 | ||
EZchip | |||
Business Acquisition [Line Items] | |||
Total consideration | 782,209,000 | ||
Fair value of total consideration transferred, net of cash acquired | 693,700,000 | ||
Cash payment for all outstanding common shares of EZchip at $25.50 per share | $ 781,237,000 | ||
Share price (in USD per share) | $ 25.50 | ||
Cash acquired | $ 87,545,000 | ||
Share-based compensation, nonvested awards, compensation not yet recognized | $ 22,200,000 | ||
Share-based payment award, award requisite service period | 2 years 3 months 1 day | ||
Restricted Stock Units (RSUs) | EZchip | |||
Business Acquisition [Line Items] | |||
Consideration transferred, equity interests issued and issuable | $ 1,000,000 | ||
Conversion of stock, shares converted (in shares) | 891,822 | ||
Acquisition-related EZchip | EZchip | |||
Business Acquisition [Line Items] | |||
Equity interest issued or issuable (in shares) | 499,894 | 499,894 | |
Employee Share Options | |||
Business Acquisition [Line Items] | |||
Share value (in USD per share) | $ 46.40 | $ 64.7 | $ 40.90 |
Equity Issued in Business Combination | Acquisition-related EZchip | EZchip | |||
Business Acquisition [Line Items] | |||
Equity interest issued or issuable, value assigned | $ 23,200,000 | $ 23,200,000 |
BUSINESS COMBINATION - Fair val
BUSINESS COMBINATION - Fair value of total consideration transferred (Details) - EZchip $ in Thousands | Feb. 23, 2016USD ($) |
Business Acquisition [Line Items] | |
Cash payment for all outstanding common shares of EZchip at $25.50 per share | $ 781,237 |
Total consideration: | 782,209 |
Cash acquired | 87,545 |
Fair value of total consideration transferred, net of cash acquired | 694,664 |
Restricted Stock Units (RSUs) | |
Business Acquisition [Line Items] | |
Fair value of awards attributable to pre-acquisition services | $ 972 |
BUSINESS COMBINATION - Allocati
BUSINESS COMBINATION - Allocation of total purchase price, net of cash acquired (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Feb. 23, 2016 | |
Business Acquisition [Line Items] | |||
Intangible assets | $ 288,246 | ||
Goodwill | $ 472,437 | $ 471,228 | |
EZchip | |||
Business Acquisition [Line Items] | |||
Short-term investments | 108,862 | ||
Other current assets | 34,114 | ||
Other long-term assets | 9,638 | ||
Intangible assets | 288,246 | ||
Goodwill | 270,485 | ||
Total assets | 711,345 | ||
Current liabilities | (10,253) | ||
Long-term liabilities | (6,428) | ||
Total liabilities | 16,681 | ||
Total purchase price allocation | $ 694,664 | ||
Acquisition related costs | $ 300 | $ 8,300 |
BUSINESS COMBINATION - Intangib
BUSINESS COMBINATION - Intangible assets acquired (Details) - USD ($) $ in Thousands | Feb. 23, 2016 | Dec. 31, 2017 | Sep. 30, 2016 |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Identifiable indefinite lived intangible assets | $ 33,700 | ||
Total purchased intangible assets | $ 288,246 | ||
In-process research and development | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Fair value inputs, discount rate | 12.00% | ||
Estimated cost to complete in process research and development | $ 22,300 | ||
Trade names | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Identifiable finite lived intangible assets | $ 5,600 | ||
Fair value inputs, discount rate | 10.00% | ||
Finite-lived intangible asset, useful life | 3 years | 3 years | |
Customer relationships | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Identifiable finite lived intangible assets | $ 56,400 | ||
Fair value inputs, discount rate | 10.00% | ||
Finite-lived intangible asset, useful life | 9 years | ||
Customer relationships | Minimum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible asset, useful life | 4 years | ||
Customer relationships | Maximum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible asset, useful life | 9 years | ||
Backlog | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Identifiable finite lived intangible assets | $ 11,300 | ||
Fair value inputs, discount rate | 8.00% | ||
Finite-lived intangible asset, useful life | 1 year | 1 year | |
Developed technology | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Identifiable finite lived intangible assets | $ 181,246 | $ 29,500 | $ 4,200 |
Fair value inputs, discount rate | 9.00% | ||
Finite-lived intangible asset, useful life | 7 years | ||
Developed technology | Minimum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible asset, useful life | 4 years | ||
Developed technology | Maximum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible asset, useful life | 6 years |
BUSINESS COMBINATION - Pro form
BUSINESS COMBINATION - Pro forma disclosure (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
EZchip | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Revenues | $ 867,422 | $ 769,290 |
Net income | $ 40,288 | $ 36,130 |
Net income per share — basic (in USD per share) | $ 0.82 | $ 0.77 |
Net income per share — diluted (in USD per share) | $ 0.80 | $ 0.74 |
Acquisition-related Costs | Mellanox Technologies, LTD. | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Net income (loss) | $ 8,300 | |
Acquisition-related Costs | EZchip | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Net income (loss) | 7,000 | |
Acquisition-related Costs | EZchip | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Net income (loss) | 15,300 | $ (15,300) |
Fair Value Adjustment to Inventory | EZchip | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Net income (loss) | 13,000 | (56,200) |
Deferred Compensation, Share-based Payments | EZchip | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Net income (loss) | $ 4,800 | |
Interest Expense | EZchip | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Net income (loss) | $ (7,600) |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 23, 2016 | Dec. 31, 2015 |
Financial assets measured at fair value | ||||
Term Debt, principal amount | $ 74,000,000 | |||
Debt instrument, face amount | $ 280,000,000 | |||
Fair value of long-term debt | 74,900,000 | |||
Fair value, measurements, recurring basis | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 213,138,000 | $ 273,494,000 | ||
Long-term restricted cash | 8,025,000 | |||
Financial assets | 222,145,000 | 273,751,000 | ||
Financial liabilities | 17,000 | 1,006,000 | ||
Fair value, measurements, recurring basis | Money market funds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 1,857,000 | $ 1,833,000 | ||
Fair value, measurements, recurring basis | Certificates of deposit | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 58,003,000 | 78,643,000 | ||
Fair value, measurements, recurring basis | U.S. Government and agency securities | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 43,872,000 | 56,347,000 | ||
Fair value, measurements, recurring basis | Commercial paper | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 27,029,000 | 29,483,000 | ||
Fair value, measurements, recurring basis | Corporate bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 54,447,000 | 94,162,000 | ||
Fair value, measurements, recurring basis | Municipal bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 15,169,000 | 7,706,000 | ||
Fair value, measurements, recurring basis | Foreign government bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 12,761,000 | 5,320,000 | ||
Fair value, measurements, recurring basis | Derivative contracts | ||||
Financial assets measured at fair value | ||||
Financial assets | 982,000 | 257,000 | ||
Financial liabilities | 17,000 | 1,006,000 | ||
Fair value, measurements, recurring basis | Level 1 | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 1,857,000 | 1,833,000 | ||
Long-term restricted cash | 0 | |||
Financial assets | 1,857,000 | 1,833,000 | ||
Financial liabilities | 0 | 0 | ||
Fair value, measurements, recurring basis | Level 1 | Money market funds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 1,857,000 | 1,833,000 | ||
Fair value, measurements, recurring basis | Level 1 | Certificates of deposit | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 0 | 0 | ||
Fair value, measurements, recurring basis | Level 1 | U.S. Government and agency securities | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 0 | 0 | ||
Fair value, measurements, recurring basis | Level 1 | Commercial paper | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 0 | 0 | ||
Fair value, measurements, recurring basis | Level 1 | Corporate bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 0 | 0 | ||
Fair value, measurements, recurring basis | Level 1 | Municipal bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 0 | 0 | ||
Fair value, measurements, recurring basis | Level 1 | Foreign government bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 0 | 0 | ||
Fair value, measurements, recurring basis | Level 1 | Derivative contracts | ||||
Financial assets measured at fair value | ||||
Financial assets | 0 | 0 | ||
Financial liabilities | 0 | 0 | ||
Fair value, measurements, recurring basis | Level 2 | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 211,281,000 | 271,661,000 | ||
Long-term restricted cash | 8,025,000 | |||
Financial assets | 220,288,000 | 271,918,000 | ||
Financial liabilities | 17,000 | 1,006,000 | ||
Fair value, measurements, recurring basis | Level 2 | Money market funds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 0 | $ 0 | ||
Fair value, measurements, recurring basis | Level 2 | Certificates of deposit | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 58,003,000 | 78,643,000 | ||
Fair value, measurements, recurring basis | Level 2 | U.S. Government and agency securities | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 43,872,000 | 56,347,000 | ||
Fair value, measurements, recurring basis | Level 2 | Commercial paper | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 27,029,000 | 29,483,000 | ||
Fair value, measurements, recurring basis | Level 2 | Corporate bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 54,447,000 | 94,162,000 | ||
Fair value, measurements, recurring basis | Level 2 | Municipal bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 15,169,000 | 7,706,000 | ||
Fair value, measurements, recurring basis | Level 2 | Foreign government bonds | ||||
Financial assets measured at fair value | ||||
Investments at fair value | 12,761,000 | 5,320,000 | ||
Fair value, measurements, recurring basis | Level 2 | Derivative contracts | ||||
Financial assets measured at fair value | ||||
Financial assets | 982,000 | 257,000 | ||
Financial liabilities | $ 17,000 | $ 1,006,000 |
INVESTMENTS - Schedule of cash,
INVESTMENTS - Schedule of cash, cash equivalents and short-term investments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Amortized Cost | ||
Amortized Cost | $ 274,364 | $ 328,677 |
Short-term investments | 211,891 | 271,897 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 1 | 39 |
Short-term investments | 1 | 39 |
Unrealized Losses | (611) | (275) |
Short-term investments | (611) | (275) |
Estimated Fair Value | ||
Short term investments, fair value | 273,754 | 328,441 |
Short-term investments | 211,281 | 271,661 |
Gains/losses on short-term investments | 3,700 | 2,200 |
Cash and Cash Equivalents [Member] | ||
Amortized Cost | ||
Amortized Cost | 62,473 | 56,780 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | ||
Short term investments, fair value | 62,473 | 56,780 |
Cash | ||
Amortized Cost | ||
Amortized Cost | 60,616 | 54,947 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | ||
Short term investments, fair value | 60,616 | 54,947 |
Money market funds | ||
Amortized Cost | ||
Amortized Cost | 1,857 | 1,833 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | ||
Short term investments, fair value | 1,857 | 1,833 |
Certificates of deposit | ||
Amortized Cost | ||
Amortized Cost | 58,039 | 78,643 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 0 | 0 |
Unrealized Losses | (36) | 0 |
Estimated Fair Value | ||
Short term investments, fair value | 58,003 | 78,643 |
U.S. Government and agency securities | ||
Amortized Cost | ||
Amortized Cost | 44,070 | 56,431 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 0 | 2 |
Unrealized Losses | (198) | (86) |
Estimated Fair Value | ||
Short term investments, fair value | 43,872 | 56,347 |
Commercial paper | ||
Amortized Cost | ||
Amortized Cost | 27,073 | 29,486 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 1 | 0 |
Unrealized Losses | (45) | (3) |
Estimated Fair Value | ||
Short term investments, fair value | 27,029 | 29,483 |
Corporate bonds | ||
Amortized Cost | ||
Amortized Cost | 54,673 | 94,292 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 0 | 37 |
Unrealized Losses | (226) | (167) |
Estimated Fair Value | ||
Short term investments, fair value | 54,447 | 94,162 |
Municipal bonds | ||
Amortized Cost | ||
Amortized Cost | 15,227 | 7,718 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 0 | 0 |
Unrealized Losses | (58) | (12) |
Estimated Fair Value | ||
Short term investments, fair value | 15,169 | 7,706 |
Foreign government bonds | ||
Amortized Cost | ||
Amortized Cost | 12,809 | 5,327 |
Unrealized Gain (Loss) | ||
Unrealized Gains | 0 | 0 |
Unrealized Losses | (48) | (7) |
Estimated Fair Value | ||
Short term investments, fair value | $ 12,761 | $ 5,320 |
INVESTMENTS - Contractual matur
INVESTMENTS - Contractual maturities of short-term investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Amortized Cost | |||
Due in less than one year | $ 148,232 | $ 157,270 | |
Due in one to three years | 63,659 | 114,627 | |
Amortized Cost | 211,891 | 271,897 | |
Estimated Fair Value | |||
Due in less than one year | 147,921 | 157,163 | |
Due in one to three years | 63,360 | 114,498 | |
Estimated fair value | 211,281 | 271,661 | |
Total Investment in privately-held companies | 29,300 | 12,700 | |
Impairment of investment in a privately-held company | $ 0 | $ 0 | $ 3,189 |
GOODWILL AND INTANGIBLE ASSET58
GOODWILL AND INTANGIBLE ASSETS - Schedule of Goodwill (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Changes in the carrying amount of goodwill | |
Goodwill, beginning balance | $ 471,228 |
Acquisitions | 1,209 |
Adjustments | 0 |
Goodwill, ending balance | $ 472,437 |
GOODWILL AND INTANGIBLE ASSET59
GOODWILL AND INTANGIBLE ASSETS - Schedule of carrying amount of intangible assets (Details) - USD ($) $ in Thousands | Feb. 23, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Value | $ 361,302 | |||
Accumulated Amortization | $ (167,131) | (112,771) | ||
Total | 228,195 | 248,531 | ||
Indefinite-lived intangible assets | 29,500 | |||
Intangible assets, Gross Carrying Value | 395,326 | 390,802 | ||
Intangible assets, Net Carrying Value | 228,195 | 278,031 | ||
Amortization expense of intangible assets | 61,300 | 59,200 | $ 10,100 | |
Impairment of intangible assets | 4,300 | |||
Licensed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Value | 40,407 | 24,583 | ||
Accumulated Amortization | (16,478) | (6,559) | ||
Total | 23,929 | 18,024 | ||
Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Value | 279,543 | 250,043 | ||
Accumulated Amortization | (122,414) | (75,591) | ||
Total | 157,129 | 174,452 | ||
Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 9 years | |||
Gross Carrying Value | 69,776 | 69,776 | ||
Accumulated Amortization | (24,783) | (17,731) | ||
Total | $ 44,993 | 52,045 | ||
Backlog | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 1 year | 1 year | ||
Gross Carrying Value | 11,300 | |||
Accumulated Amortization | (11,300) | |||
Total | 0 | |||
Trade names | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 3 years | 3 years | ||
Gross Carrying Value | $ 5,600 | 5,600 | ||
Accumulated Amortization | (3,456) | (1,590) | ||
Total | $ 2,144 | $ 4,010 | ||
Minimum | Licensed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 1 year | |||
Minimum | Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 4 years | |||
Minimum | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 4 years | |||
Maximum | Licensed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 8 years | |||
Maximum | Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 7 years | |||
Maximum | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 9 years |
GOODWILL AND INTANGIBLE ASSET60
GOODWILL AND INTANGIBLE ASSETS - Finite-lived intangible assets maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
2,018 | $ 66,718 | |
2,019 | 59,344 | |
2,020 | 47,311 | |
2,021 | 30,919 | |
2,022 | 10,355 | |
Thereafter | 13,548 | |
Total | $ 228,195 | $ 248,531 |
DERIVATIVES AND HEDGING ACTIV61
DERIVATIVES AND HEDGING ACTIVITIES - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Derivatives designated as hedging instruments | |||
Buy Contracts | |||
Notional amounts | $ 52,380 | $ 105,730 | |
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | |||
Balance at the beginning of the period | (692) | ||
Amount of gains recognized in OCI (effective portion) | 8,651 | ||
Amount of gains reclassified from OCI to income (effective portion) | (7,034) | ||
Balance at the end of the period | 925 | (692) | |
Derivatives designated as hedging instruments | Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | Operating income (expenses) | |||
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | |||
Derivative gain/loss on derivative | 7,034 | 623 | $ (3,630) |
Derivatives designated as hedging instruments | Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | Other income | |||
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | |||
Derivative gain/loss on derivative | 0 | 0 | 0 |
Derivatives not designated as hedging instruments | |||
Buy Contracts | |||
Notional amounts | 47,015 | 34,330 | |
Derivatives not designated as hedging instruments | Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | Operating income (expenses) | |||
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | |||
Derivative gain/loss on derivative | 0 | 0 | 0 |
Derivatives not designated as hedging instruments | Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | Other income | |||
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | |||
Derivative gain/loss on derivative | 3,248 | 384 | $ 0 |
Other current assets | Currency forward and option contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative asset | 982 | 257 | |
Other current assets | Derivatives designated as hedging instruments | Currency forward and option contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative asset | 980 | 257 | |
Other current assets | Derivatives not designated as hedging instruments | Currency forward and option contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative asset | 2 | 0 | |
Other accrued liabilities | Currency forward and option contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative liability | 17 | 1,006 | |
Other accrued liabilities | Derivatives designated as hedging instruments | Currency forward and option contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative liability | 0 | 999 | |
Other accrued liabilities | Derivatives not designated as hedging instruments | Currency forward and option contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative liability | $ 17 | $ 7 |
EMPLOYEE BENEFIT PLANS - Narrat
EMPLOYEE BENEFIT PLANS - Narrative (Details) - USD ($) $ in Thousands | Jul. 01, 2016 | Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Severance pay details | |||||
Accrued severance liability | $ 23,205 | $ 19,874 | |||
Severance assets | 18,302 | 15,870 | |||
Unfunded portion | $ 4,903 | 4,004 | |||
Israel | Pension plan | |||||
Defined Benefit Plan Disclosures [Line Items] | |||||
Company's contribution as a percentage of employee monthly salary to insurance policy or pension fund | 8.30% | ||||
Defined pension contribution plan expenses | $ 10,400 | 8,000 | $ 5,700 | ||
Severance pay details | |||||
Severance pay expenses | $ 12,600 | 11,000 | 7,600 | ||
Employer contribution limit per calendar year | 6.25% | 6.00% | 6.50% | ||
Section 401 K Savings Plan | |||||
Defined Benefit Plan Disclosures [Line Items] | |||||
Defined pension contribution plan expenses | $ 2,200 | $ 1,900 | $ 1,200 | ||
Severance pay details | |||||
Employer contribution limit per calendar year | 4.00% |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Leases | ||||
Expenses related to office space and motor vehicle leases | $ 21,300 | $ 18,900 | $ 14,300 | |
Future minimum payments under non-cancelable operating leases | ||||
2,018 | 23,028 | |||
2,019 | 18,453 | |||
2,020 | 14,740 | |||
2,021 | 12,950 | |||
2,022 | 9,648 | |||
Thereafter | 60,091 | |||
Total minimum lease payments | 138,910 | |||
Purchase commitments | ||||
2,018 | 153,358 | |||
2,019 | 2,447 | |||
2,020 | 544 | |||
2,021 | 542 | |||
2,022 | 536 | |||
Thereafter | 0 | |||
Total purchase commitments | $ 157,427 | |||
Loss Contingencies [Line Items] | ||||
Royalties payable, percentage | 4.50% | |||
Royalty guarantees, commitments, amount | $ 36,400 | |||
Unrecognized tax benefits | 45,154 | 41,460 | 25,382 | $ 18,037 |
Unrecognized tax benefits that would impact effective tax rate | $ 24,600 | $ 23,400 | $ 18,900 | |
Yokneam | ||||
Loss Contingencies [Line Items] | ||||
Operating lease term | 10 years | |||
Estimated future lease obligation | $ 30,700 | |||
Rental expense | $ 3,100 |
SHARE INCENTIVE PLANS - Acquisi
SHARE INCENTIVE PLANS - Acquisition Information (Details) - USD ($) $ in Millions | Feb. 14, 2017 | Feb. 23, 2016 | Dec. 31, 2017 | Mar. 14, 2016 |
Share-based compensation | ||||
Total shares reserved for future issuance (in shares) | 8,708,021 | 0 | ||
Business acquisition unvested employee RSU conversion ratio | 56.00% | |||
Post-acquisition share-based compensation expense | $ 22.2 | |||
Requisite service period | 2 years 3 months 1 day | |||
EZchip | ||||
Share-based compensation | ||||
Post-acquisition share-based compensation expense | $ 22.2 | |||
Requisite service period | 2 years 3 months 1 day | |||
EZchip | Restricted Stock Units (RSUs) | ||||
Share-based compensation | ||||
Conversion of stock, shares converted (in shares) | 891,822 | |||
Consideration transferred, equity interests issued and issuable | $ 1 | |||
EZchip | Acquisition-related EZchip | ||||
Share-based compensation | ||||
Equity interest issued or issuable (in shares) | 499,894 | 499,894 | ||
EZchip | Equity Issued in Business Combination | Acquisition-related EZchip | ||||
Share-based compensation | ||||
Equity interest issued or issuable, value assigned | $ 23.2 | $ 23.2 | ||
All other stock option plans | ||||
Share-based compensation | ||||
Total shares reserved for future issuance (in shares) | 750,000 | |||
Second Restated Plan | ||||
Share-based compensation | ||||
Total shares reserved for future issuance (in shares) | 2,390,000 | |||
Shares reserved for future issuance, increase (decease) | 1,640,000 |
SHARE INCENTIVE PLANS - Summary
SHARE INCENTIVE PLANS - Summary of share option activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Feb. 23, 2016 | |
Weighted Average Exercise Price | |||
Weighted average remaining contractual life | 3 years | ||
Share options | |||
Number of Shares | |||
Options outstanding at the beginning of the period (in shares) | 1,634,485 | 2,028,595 | |
Options exercised (in shares) | (479,105) | (349,131) | |
Options canceled (in shares) | (45,319) | (44,979) | |
Options outstanding at the end of the period (in shares) | 1,110,061 | 1,634,485 | |
Weighted Average Exercise Price | |||
Options outstanding at the beginning of the period (in USD per share) | $ 32.79 | $ 30.81 | |
Options exercised (in USD per share) | 15.95 | 14.58 | |
Options canceled (in USD per share) | 74.59 | 84.57 | |
Options outstanding at the end of the period (in USD per share) | $ 38.35 | $ 32.79 | |
Total pretax intrinsic value of options exercised (in USD per share) | $ 16.9 | $ 11.1 | |
Share value (in USD per share) | $ 64.7 | $ 40.90 | $ 46.40 |
Total pretax intrinsic value of all outstanding options | $ 35.5 | $ 29 | |
Total pretax intrinsic value of all exercisable options | $ 35.4 | $ 28.9 | |
Number of exercisable options outstanding (in shares) | 1,107,712 | ||
Weighted average exercise price, options exercisable (in USD per share) | $ 38.36 |
SHARE INCENTIVE PLANS - Restric
SHARE INCENTIVE PLANS - Restricted share unit activity (Details) - Restricted Stock Units (RSUs) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Shares | |||
Non vested restricted share units at the beginning of the period (in shares) | 3,324,519 | 2,205,083 | |
Assumed restricted share units from acquisition (in shares) | 499,894 | ||
Restricted share units granted (in shares) | 1,844,350 | 2,056,902 | |
Restricted share units vested (in shares) | (1,364,063) | (1,114,753) | |
Restricted share units canceled (in shares) | (390,101) | (322,607) | |
Non vested restricted share units at the end of the period (in shares) | 3,414,705 | 3,324,519 | 2,205,083 |
Weighted Average Grant Date Fair Value | |||
Non vested restricted share units at the beginning of the period (in USD per share) | $ 46.67 | $ 44.39 | |
Assumed restricted share units from acquisition, weighted average (in USD per share) | 46.40 | ||
Restricted share units granted (in USD per share) | 49.88 | 48.39 | $ 45.98 |
Restricted share units vested (in USD per share) | 46.25 | 45.32 | |
Restricted share units cancelled (in USD per share) | 47.79 | 46.26 | |
Non vested restricted share units at the end of the period (in USD per share) | $ 48.45 | $ 46.67 | $ 44.39 |
Total intrinsic value of all outstanding restricted share units | $ 220.9 |
SHARE INCENTIVE PLANS - Employe
SHARE INCENTIVE PLANS - Employee stock purchase plan activity (Details) - ESPP - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | May 31, 2016 | |
Share-based compensation | ||||
Maximum employee base compensation contribution | 15.00% | |||
ESPP purchase price percentage of market price | 85.00% | |||
Shares reserved for issuance pursuant to purchase rights under the ESPP | 6,585,712 | 4,000,000 | ||
Maximum value of ordinary shares issued per employee pursuant to purchase rights under the ESPP per calendar year | $ 25,000 | |||
Shares issued in period | 568,876 | 491,968 | 364,746 | |
Weighted-average exercise price, options granted (in USD per share) | $ 38.83 | $ 35.50 | $ 35.15 |
SHARE INCENTIVE PLANS - Shares
SHARE INCENTIVE PLANS - Shares reserved for future issuance (Details) - shares | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 14, 2016 | Dec. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share options outstanding (in shares) | 1,110,061 | |||
Total shares reserved for future issuance (in shares) | 8,708,021 | 0 | ||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted share units outstanding (in shares) | 3,414,705 | 3,324,519 | 2,205,083 | |
ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available for future issuance (in shares) | 3,425,469 | |||
Global Share Incentive Plan 2006 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available for future issuance (in shares) | 757,786 |
SHARE INCENTIVE PLANS - Weighte
SHARE INCENTIVE PLANS - Weighted average assumptions used (Details) - Employee Share Purchase Plan | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Weighted average assumptions | |||
Dividend yield, % | 0.00% | 0.00% | 0.00% |
Expected volatility | 24.60% | 35.80% | 33.70% |
Risk free interest rate | 1.20% | 0.45% | 0.10% |
Expected life, years | 6 months | 6 months | 6 months |
SHARE INCENTIVE PLANS - Share b
SHARE INCENTIVE PLANS - Share based compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based compensation expense | |||
Total share-based compensation expense | $ 68,864 | $ 71,118 | $ 50,764 |
Total unrecognized share-based compensation costs related to non-vested awards | $ 142,200 | ||
Weighted average period for recognition of unrecognized share-based compensation costs (in years) | 2 years 8 months 19 days | ||
Share options | |||
Share-based compensation expense | |||
Total share-based compensation expense | $ 115 | 2,711 | 6,680 |
ESPP | |||
Share-based compensation expense | |||
Total share-based compensation expense | 6,232 | 6,394 | 4,007 |
RSU | |||
Share-based compensation expense | |||
Total share-based compensation expense | 62,517 | 62,013 | 40,077 |
Cost of goods sold | |||
Share-based compensation expense | |||
Total share-based compensation expense | 2,000 | 2,375 | 2,366 |
Research and development | |||
Share-based compensation expense | |||
Total share-based compensation expense | 40,278 | 40,475 | 28,821 |
Sales and marketing | |||
Share-based compensation expense | |||
Total share-based compensation expense | 15,693 | 15,183 | 10,309 |
General and administrative | |||
Share-based compensation expense | |||
Total share-based compensation expense | $ 10,893 | 13,085 | $ 9,268 |
EZchip | |||
Share-based compensation expense | |||
Share-based compensation | $ 4,800 |
ACCUMULATED OTHER COMPREHENSI71
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Changes in AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance, value | $ 975,730 | $ 866,681 |
Other comprehensive income before reclassifications, net of taxes | 9,569 | 878 |
Realized (gains)/losses reclassified from accumulated other comprehensive income | (7,023) | (137) |
Net current-period other comprehensive income, net of taxes | 2,546 | 741 |
Ending balance, value | 1,057,448 | 975,730 |
Unrealized Gains (Losses) on Available-for-Sale Securities | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance, value | (236) | (578) |
Other comprehensive income before reclassifications, net of taxes | 918 | (144) |
Realized (gains)/losses reclassified from accumulated other comprehensive income | 11 | 486 |
Net current-period other comprehensive income, net of taxes | 929 | 342 |
Ending balance, value | 693 | (236) |
Unrealized Gains (Losses) on Derivatives Designated as Hedging Instruments | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance, value | (692) | (1,091) |
Other comprehensive income before reclassifications, net of taxes | 8,651 | 1,022 |
Realized (gains)/losses reclassified from accumulated other comprehensive income | (7,034) | (623) |
Net current-period other comprehensive income, net of taxes | 1,617 | 399 |
Ending balance, value | 925 | (692) |
Total | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance, value | (928) | (1,669) |
Ending balance, value | $ 1,618 | $ (928) |
ACCUMULATED OTHER COMPREHENSI72
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Realized gain/losses reclassified from AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | |||
Cost of revenues | $ (300,450) | $ (301,986) | $ (189,209) |
General and administrative | (52,170) | (68,522) | (44,212) |
Sales and marketing | (150,457) | (133,780) | (97,438) |
Research and development | (365,878) | (322,620) | (252,175) |
Other income, net | 3,115 | 1,090 | $ (524) |
Realized (gains)/losses reclassified from accumulated other comprehensive income | (7,023) | (137) | |
Realized (gains) on derivatives designated as hedging instruments | |||
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | |||
Realized (gains)/losses reclassified from accumulated other comprehensive income | (7,034) | (623) | |
Realized losses on available-for-sale securities | |||
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | |||
Realized (gains)/losses reclassified from accumulated other comprehensive income | 11 | 486 | |
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | Realized (gains) on derivatives designated as hedging instruments | |||
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | |||
Operating Costs and Expenses | (7,034) | (623) | |
Cost of revenues | (347) | (18) | |
General and administrative | (635) | (36) | |
Sales and marketing | (628) | (25) | |
Research and development | (5,424) | (544) | |
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | Realized losses on available-for-sale securities | |||
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income | |||
Other income, net | $ 11 | $ 486 |
INCOME TAXES - INCOME (LOSS) BE
INCOME TAXES - INCOME (LOSS) BEFORE INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (21,528) | $ (17,969) | $ (12,539) |
Foreign | (375) | 42,297 | 87,121 |
Income (loss) before taxes on income | $ (21,903) | $ 24,328 | $ 74,582 |
INCOME TAXES - PROVISION FOR IN
INCOME TAXES - PROVISION FOR INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
U.S. federal | $ (617) | $ (1,333) | $ (1,578) |
State and local | 632 | 220 | 284 |
Foreign | (261) | 6,161 | 5,737 |
Total current | (246) | 5,048 | 4,443 |
Deferred: | |||
Foreign | (2,232) | 762 | (22,755) |
Total deferred | (2,232) | 762 | (22,755) |
Provision for (benefit from) taxes on income | $ (2,478) | $ 5,810 | $ (18,312) |
INCOME TAXES - DEFERRED TAXES A
INCOME TAXES - DEFERRED TAXES AND LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss and credit carryforwards | $ 42,820 | $ 75,350 |
Reserves and accruals | 11,305 | 13,841 |
Depreciation and amortization | 2,393 | 358 |
Other | 6,645 | 7,128 |
Gross deferred tax assets | 63,163 | 96,677 |
Valuation allowance | (31,648) | (55,827) |
Total deferred tax assets | 31,515 | 40,850 |
Intangible assets | (6,952) | (18,437) |
Total deferred tax liabilities | (6,952) | (18,437) |
Net deferred tax assets | $ 24,563 | $ 22,413 |
INCOME TAXES - ADDITIONAL INFOR
INCOME TAXES - ADDITIONAL INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Jun. 30, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | |||||||
Deferred taxes | $ 22,413 | $ 24,563 | $ 22,413 | ||||
Valuation allowance | 55,827 | 31,648 | 55,827 | ||||
Change in enacted tax rate, amount | $ (200) | ||||||
Undistributed earnings of foreign subsidiaries | 2,600 | ||||||
Amount of unrecognized deferred tax liability, undistributed earnings of foreign subsidiaries | 1,000 | ||||||
Israel Tax Authority | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Deferred taxes | 22,413 | 24,563 | $ 22,413 | ||||
Domestic Tax Authority | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Operating loss carryforwards | 86,200 | ||||||
State and Local Jurisdiction | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Operating loss carryforwards | $ 37,200 | ||||||
Unfavorable regulatory action | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Change in enacted tax rate, amount | $ 1,400 | $ 1,300 | |||||
Israel Tax Authority | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Decrease in valuation allowance | $ 22,400 | ||||||
Corporate income tax rate | 24.00% | 25.00% | 26.50% | ||||
Operating loss carryforwards | $ 168,900 | ||||||
Israel Tax Authority | Subsequent Event | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Corporate income tax rate | 23.00% | ||||||
Denmark | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Operating loss carryforwards | $ 7,200 |
INCOME TAXES - EFFECTIVE RATE R
INCOME TAXES - EFFECTIVE RATE RECONCILIATION (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Tax at statutory rate | 35.00% | 35.00% | 35.00% |
Tax at rates other than the statutory rate | (4.80%) | (84.50%) | (42.50%) |
Valuation allowance | 47.30% | 40.80% | (22.00%) |
Net change in tax reserves | 8.00% | 17.10% | 6.00% |
Adjustment of deferred tax balances following changes in tax rates | (71.80%) | 10.90% | 0.00% |
Other, net | (2.40%) | 4.60% | (1.10%) |
Provision for (benefit from) taxes on income | 11.30% | 23.90% | (24.60%) |
INCOME TAXES - TAX HOLIDAY (Det
INCOME TAXES - TAX HOLIDAY (Details) - Israel Tax Authority - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | |||
Income tax holiday, aggregate dollar amount | $ 11.6 | $ 37.3 | $ 33 |
Income tax holiday, income tax benefits per share (in USD per share) | $ 0.23 | $ 0.75 | $ 0.69 |
Yokneam | |||
Operating Loss Carryforwards [Line Items] | |||
Tax holiday inception date | 2,011 | ||
Tel Aviv | |||
Operating Loss Carryforwards [Line Items] | |||
Tax holiday inception date | 2,013 | ||
Income tax holiday reduced income tax rate after second year of tax holiday | 10.00% | ||
Tel Aviv | Maximum | |||
Operating Loss Carryforwards [Line Items] | |||
Income tax holiday, termination date | 2,021 |
INCOME TAXES - UNRECOGNIZED TAX
INCOME TAXES - UNRECOGNIZED TAX BENEFITS (Details) - USD ($) $ in Thousands | Jun. 14, 2017 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Operating Loss Carryforwards [Line Items] | |||||
Effective income tax rate reconciliation, percent | 11.30% | 23.90% | (24.60%) | ||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||||
Gross unrecognized tax benefits, beginning of the period | $ 41,460 | $ 25,382 | $ 18,037 | ||
Increases in tax positions for prior years | 3,655 | 252 | 1,153 | ||
Decreases in tax positions for prior years | 0 | 0 | (131) | ||
Increases in tax positions for current year | 8,090 | 8,131 | 7,908 | ||
Increases in tax positions acquired or assumed in a business combination | 0 | 8,990 | 0 | ||
Decreases due to lapses of statutes of limitations | (8,051) | (1,295) | (1,585) | ||
Gross unrecognized tax benefits, end of the period | 45,154 | 41,460 | 25,382 | ||
Unrecognized tax benefits that would impact effective tax rate | 24,600 | 23,400 | 18,900 | ||
Effective income tax rate reconciliation, change in enacted tax rate, amount | $ 200 | ||||
Unrecognized tax benefits, income tax penalties and interest accrued | $ 2,900 | $ 1,800 | $ 1,200 | ||
Yokneam | Israel Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Effective income tax rate reconciliation, percent | 7.50% | ||||
Tel Aviv | Israel Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Effective income tax rate reconciliation, percent | 12.00% |
GEOGRAPHIC INFORMATION AND RE80
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP - Revenue by geographic region (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)segment | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Segment Reporting [Abstract] | |||
Number of reportable segments | segment | 1 | ||
Revenues by geographic region | |||
Total revenue | $ 863,893 | $ 857,498 | $ 658,140 |
United States | |||
Revenues by geographic region | |||
Total revenue | 327,528 | 386,360 | 300,674 |
China | |||
Revenues by geographic region | |||
Total revenue | 172,405 | 192,581 | 152,739 |
Europe | |||
Revenues by geographic region | |||
Total revenue | 176,937 | 149,855 | 93,666 |
Other Americas | |||
Revenues by geographic region | |||
Total revenue | 92,449 | 52,447 | 24,692 |
Other Asia | |||
Revenues by geographic region | |||
Total revenue | $ 94,574 | $ 76,255 | $ 86,369 |
GEOGRAPHIC INFORMATION AND RE81
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP - Property and equipment, net by geogaphic location (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property and equipment, net by geographic location | ||
Total property and equipment, net | $ 109,919 | $ 118,585 |
Israel | ||
Property and equipment, net by geographic location | ||
Total property and equipment, net | 99,752 | 101,001 |
United States | ||
Property and equipment, net by geographic location | ||
Total property and equipment, net | 7,017 | 14,246 |
Other | ||
Property and equipment, net by geographic location | ||
Total property and equipment, net | $ 3,150 | $ 3,338 |
GEOGRAPHIC INFORMATION AND RE82
GEOGRAPHIC INFORMATION AND REVENUES BY PRODUCT GROUP - Revenues by product type and interconnect protocol (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues by product group | |||
Total revenue | $ 863,893 | $ 857,498 | $ 658,140 |
ICs | |||
Revenues by product group | |||
Total revenue | 161,216 | 170,641 | 92,214 |
Boards | |||
Revenues by product group | |||
Total revenue | 325,845 | 337,304 | 265,249 |
Switch systems | |||
Revenues by product group | |||
Total revenue | 222,836 | 204,083 | 179,977 |
Cables, accessories and other | |||
Revenues by product group | |||
Total revenue | 153,996 | 145,470 | 120,700 |
InfiniBand: | |||
Revenues by product group | |||
Total revenue | 407,325 | 477,329 | 450,514 |
EDR | |||
Revenues by product group | |||
Total revenue | 194,261 | 125,249 | 39,009 |
FDR | |||
Revenues by product group | |||
Total revenue | 181,465 | 302,093 | 347,760 |
QDR/DDR/SDR | |||
Revenues by product group | |||
Total revenue | 31,599 | 49,987 | 63,745 |
Ethernet | |||
Revenues by product group | |||
Total revenue | 401,005 | 317,241 | 155,221 |
Other | |||
Revenues by product group | |||
Total revenue | $ 55,563 | $ 62,928 | $ 52,405 |
OTHER INCOME (LOSS), NET - Narr
OTHER INCOME (LOSS), NET - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other income, net | |||
Interest income and gains (losses) on short-term investments, net | $ 3,748 | $ 2,244 | $ 2,998 |
Foreign exchange loss, net | (596) | (840) | (186) |
Impairment of investment in a privately-held company | 0 | 0 | (3,189) |
Other | (37) | (314) | (147) |
Total other income (loss), net | $ 3,115 | $ 1,090 | $ (524) |
TERM DEBT - Narrative (Details)
TERM DEBT - Narrative (Details) | Feb. 23, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | ||||
Debt instrument, issuance date | Feb. 22, 2016 | |||
Debt instrument, face amount | $ 280,000,000 | |||
Debt instrument, maturity date | Feb. 21, 2019 | |||
Debt issuance costs, gross | $ 5,500,000 | |||
Maturity date range, end | Feb. 21, 2019 | |||
Repayments of secured debt | $ 172,000,000 | $ 34,000,000 | $ 0 | |
Prepayment of debt | $ 146,500,000 | |||
Collateral, percentage equity interest | 1 | |||
Eurodollar | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 1.00% | |||
Description of variable rate basis | one-month LIBOR | |||
Eurodollar | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.25% | |||
Eurodollar | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.00% | |||
Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.25% | |||
Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
June 2016 To March 2017 | ||||
Debt Instrument [Line Items] | ||||
Periodic payment, principal, rate | 0.025 | |||
Maturity date range, start | Jun. 30, 2016 | |||
Maturity date range, end | Mar. 31, 2017 | |||
June 2017 To March 2018 | ||||
Debt Instrument [Line Items] | ||||
Periodic payment, principal, rate | 0.0375 | |||
Maturity date range, start | Jun. 30, 2017 | |||
Maturity date range, end | Mar. 31, 2018 | |||
June 2018 To December 2018 | ||||
Debt Instrument [Line Items] | ||||
Periodic payment, principal, rate | 0.0625 | |||
Maturity date range, start | Jun. 30, 2018 | |||
Maturity date range, end | Dec. 31, 2018 |
TERM DEBT - Schedule of Debt (D
TERM DEBT - Schedule of Debt (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Debt Disclosure [Abstract] | |
Term Debt, principal amount | $ 74,000 |
Less unamortized debt issuance costs | 1,239 |
Term Debt, principal net of unamortized debt issuance costs | $ 72,761 |
Effective interest rate | 3.80% |
TERM DEBT - Fiscal Year Maturit
TERM DEBT - Fiscal Year Maturity Schedule (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 0 |
2,019 | 74,000 |
Total | $ 74,000 |
IMPAIRMENT OF LONG-LIVED ASSE87
IMPAIRMENT OF LONG-LIVED ASSETS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||||
Impairment of long-lived assets | $ 12,019 | $ 0 | $ 0 | |
Tangible asset impairment charges | $ 7,700 | |||
Impairment of intangible assets | $ 4,300 |
SUBSEQUENT EVENT - Narrative (D
SUBSEQUENT EVENT - Narrative (Details) - Scenario, Forecast - Subsequent Event $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Minimum | |
Subsequent Event [Line Items] | |
Restructuring charges | $ 9 |
Maximum | |
Subsequent Event [Line Items] | |
Restructuring charges | $ 12 |
SCHEDULE II - CONSOLIDATED VA89
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Activity in valuation and qualifying accounts | |||
Balance at Beginning of Year | $ 56,459 | $ 29,620 | $ 46,892 |
Charged to Costs and Expenses | 0 | 26,839 | 0 |
Deductions | (24,179) | 0 | (17,272) |
Balance at End of Year | 32,280 | 56,459 | 29,620 |
Allowance for doubtful accounts | |||
Activity in valuation and qualifying accounts | |||
Balance at Beginning of Year | 632 | 621 | 672 |
Charged to Costs and Expenses | 0 | 11 | 0 |
Deductions | 0 | 0 | (51) |
Balance at End of Year | 632 | 632 | 621 |
Allowance for sales returns and adjustments | |||
Activity in valuation and qualifying accounts | |||
Balance at Beginning of Year | 0 | 0 | 0 |
Charged to Costs and Expenses | 0 | ||
Deductions | 0 | 0 | 0 |
Balance at End of Year | 0 | 0 | 0 |
Income tax valuation allowance | |||
Activity in valuation and qualifying accounts | |||
Balance at Beginning of Year | 55,827 | 28,999 | 46,220 |
Charged to Costs and Expenses | 0 | 26,828 | 0 |
Deductions | (24,179) | 0 | (17,221) |
Balance at End of Year | $ 31,648 | $ 55,827 | $ 28,999 |