Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 25, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Mellanox Technologies, Ltd. | |
Trading Symbol | MLNX | |
Entity Central Index Key | 1,356,104 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,104,259 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 63,501 | $ 263,199 |
Short-term investments | 212,954 | 247,314 |
Accounts receivable, net | 117,323 | 84,273 |
Inventories | 64,651 | 62,473 |
Other current assets | 20,498 | 19,979 |
Total current assets | 478,927 | 677,238 |
Property and equipment, net | 112,264 | 100,018 |
Severance assets | 15,846 | 9,514 |
Intangible assets, net | 292,758 | 32,154 |
Goodwill | 476,037 | 200,743 |
Deferred taxes and other long-term assets | 31,759 | 33,715 |
Total assets | 1,407,591 | 1,053,382 |
Current liabilities: | ||
Accounts payable | 55,217 | 44,600 |
Accrued liabilities | 87,605 | 74,296 |
Deferred revenue | 21,829 | 17,743 |
Capital lease liabilities, current | 0 | 491 |
Current portion of term debt | 29,471 | 0 |
Total current liabilities | 194,122 | 137,130 |
Accrued severance | 20,219 | 12,464 |
Deferred revenue | 14,195 | 12,439 |
Term debt | 238,904 | 0 |
Other long-term liabilities | 26,217 | 24,668 |
Total liabilities | 493,657 | 186,701 |
Shareholders’ equity | ||
Ordinary shares | 204 | 200 |
Additional paid-in capital | 732,590 | 684,824 |
Accumulated other comprehensive income (loss) | 328 | (1,669) |
Retained earnings | 180,812 | 183,326 |
Total shareholders’ equity | 913,934 | 866,681 |
Total liabilities and shareholders' equity | $ 1,407,591 | $ 1,053,382 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Total revenues | $ 214,801 | $ 163,148 | $ 411,611 | $ 309,823 |
Cost of revenues | 79,807 | 47,178 | 150,288 | 88,265 |
Gross profit | 134,994 | 115,970 | 261,323 | 221,558 |
Operating expenses: | ||||
Research and development | 82,324 | 62,576 | 153,358 | 120,694 |
Sales and marketing | 32,576 | 23,366 | 63,804 | 45,924 |
General and administrative | 13,494 | 10,670 | 41,432 | 20,371 |
Total operating expenses | 128,394 | 96,612 | 258,594 | 186,989 |
Income from operations | 6,600 | 19,358 | 2,729 | 34,569 |
Interest expense | (2,215) | 0 | (3,213) | 0 |
Other income (loss) | 315 | 912 | 376 | (1,557) |
Other income (loss), net | (1,900) | 912 | (2,837) | (1,557) |
Income (loss) before taxes on income | 4,700 | 20,270 | (108) | 33,012 |
Provision for taxes on income | 46 | 1,022 | 2,406 | 3,268 |
Net income (loss) | $ 4,654 | $ 19,248 | $ (2,514) | $ 29,744 |
Net income (loss) per share - basic (in USD per share) | $ 0.10 | $ 0.42 | $ (0.05) | $ 0.65 |
Net income (loss) per share - diluted (in USD per share) | $ 0.09 | $ 0.40 | $ (0.05) | $ 0.63 |
Shares used in computing income (loss) per share: | ||||
Basic (in shares) | 47,900 | 46,191 | 47,629 | 45,943 |
Diluted (in shares) | 49,194 | 47,568 | 47,629 | 47,341 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 4,654 | $ 19,248 | $ (2,514) | $ 29,744 |
Other comprehensive income (loss), net of tax: | ||||
Change in unrealized gains/losses on available-for-sale securities, net of tax | 48 | (237) | 648 | 212 |
Change in unrealized gains/losses on derivative contracts, net of tax | (2,143) | 5,456 | 1,349 | 5,832 |
Other comprehensive income (loss) | (2,095) | 5,219 | 1,997 | 6,044 |
Total comprehensive income (loss), net of tax | $ 2,559 | $ 24,467 | $ (517) | $ 35,788 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (2,514) | $ 29,744 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 46,231 | 19,775 |
Deferred income taxes | 1,266 | 134 |
Share-based compensation | 36,360 | 25,004 |
Gain on investments, net | (489) | (2,388) |
Impairment loss on equity investment in a private company | 0 | 3,189 |
Changes in assets and liabilities, net of effect of acquisition: | ||
Accounts receivable | (16,886) | 3,918 |
Inventories | 10,598 | (22,513) |
Prepaid expenses and other assets | 3,598 | 419 |
Accounts payable | 9,679 | 8,755 |
Accrued liabilities and other liabilities | 5,583 | 21,063 |
Net cash provided by operating activities | 93,426 | 87,100 |
Cash flows from investing activities: | ||
Purchase of severance-related insurance policies | (546) | (381) |
Purchase of short-term investments | (153,486) | (188,161) |
Proceeds from sales of short-term investments | 200,457 | 98,742 |
Proceeds from maturities of short-term investments | 97,388 | 30,717 |
Purchase of property and equipment | (15,755) | (20,413) |
Purchase of equity investments in private companies | (107) | 0 |
Acquisition net of cash acquired of $87.5 million | (698,501) | 0 |
Net cash used in investing activities | (570,550) | (79,496) |
Cash flows from financing activities: | ||
Proceeds from term debt | 280,000 | 0 |
Principal payments on term debt | (7,000) | 0 |
Term debt issuance costs | (5,521) | 0 |
Principal payments on capital lease obligations | (491) | (556) |
Proceeds from exercise of share awards | 10,438 | 9,829 |
Net cash provided by financing activities | 277,426 | 9,273 |
Net (decrease) increase in cash and cash equivalents | (199,698) | 16,877 |
Cash and cash equivalents at beginning of period | 263,199 | 51,326 |
Cash and cash equivalents at end of period | $ 63,501 | $ 68,203 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) PARENTHETICAL - USD ($) $ in Millions | Jun. 30, 2016 | Feb. 23, 2016 |
Statement of Cash Flows [Abstract] | ||
Cash acquired | $ 87.5 | $ 87.5 |
THE COMPANY AND SUMMARY OF SIGN
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 6 Months Ended |
Jun. 30, 2016 | |
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 unaudited condensed consolidated financial statements include the Company's accounts as well as those of its wholly owned subsidiaries after the elimination of all intercompany balances and transactions. 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 unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q include the results of operations of EZchip commencing as of the acquisition date. The unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The year-end balance sheet data was derived from audited consolidated financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 26, 2016. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2016 or thereafter. Risks and uncertainties The Company is subject to all of the risks inherent in a company which operates in the dynamic and competitive semiconductor industry. Significant changes in any of the following areas could have a materially adverse impact on the Company's financial position and results of operations: unpredictable volume or timing of customer orders; ordered product mix; the sales outlook and purchasing patterns of the Company's customers based on consumer demands and general economic conditions; loss of one or more of the Company's customers; decreases in the average selling prices of products or increases in the average cost of finished goods; the availability, pricing and timeliness of delivery of components used in the Company's products; reliance on a limited number of subcontractors to manufacture, assemble, package and production test the Company's products; the Company's ability to successfully develop, introduce and sell new or enhanced products in a timely manner; product obsolescence and the Company's ability to manage product transitions; the timing of announcements or introductions of new products by the Company's competitors; and the Company's ability to successfully integrate acquired businesses. Use of estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns and allowances, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, goodwill and purchased intangible asset valuation, hedge effectiveness, deferred income tax asset valuation, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results that the Company experiences may differ materially and adversely from the Company's original estimates. To the extent there are material differences between the estimates and actual results, the Company's future results of operations will be affected. Significant accounting policies There have been no changes in the Company’s significant accounting policies that were disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015. See our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 26, 2016, for a discussion of significant accounting policies and estimates. Concentration of credit risk The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Hewlett-Packard 12 % 15 % 16 % 14 % The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable: June 30, 2016 December 31, 2015 Hewlett Packard 11 % 16 % Hon Hai Precision Ind. Co. Ltd. * 11 % Ingram Micro * 15 % ____________________ * Less than 10% Product warranty The following table provides changes in the product warranty accrual for the six months ended June 30, 2016 and 2015 : Six Months Ended June 30, 2016 2015 (In thousands) Balance, beginning of the period $ 1,642 $ 1,932 Assumed warranty liability from acquisition 290 — New warranties issued during the period 683 1,514 Reversal of warranty reserves (358 ) (67 ) Settlements during the period (532 ) (1,572 ) Balance, end of the period 1,725 1,807 Less: long term portion of product warranty liability (360 ) (450 ) Balance, end of the period $ 1,365 $ 1,357 Net income (loss) per share The following table sets forth the computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2016 and 2015 : Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (In thousands, except per share data) Net income (loss) $ 4,654 $ 19,248 $ (2,514 ) $ 29,744 Basic and diluted shares: Weighted average ordinary shares 47,900 46,191 47,629 45,943 Dilutive effect of employee share options and restricted stock units ("RSUs") 1,294 1,377 — 1,398 Shares used to compute diluted net income (loss) per share 49,194 47,568 47,629 47,341 Net income (loss) per share — basic $ 0.10 $ 0.42 $ (0.05 ) $ 0.65 Net income (loss) per share — diluted $ 0.09 $ 0.40 $ (0.05 ) $ 0.63 The Company excluded 502,921 and 1,328,654 anti-dilutive employee share-based awards for the three and six months ended June 30, 2016 , respectively, and 508,326 and 1,372,376 anti-dilutive employee share-based awards for the three and six months ended June 30, 2015, respectively, from the computation of diluted net income (loss) per share. Recent accounting pronouncements In June 2016, the Financial Accounting Standards Board, "FASB", issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Assumptions, models, and methods used in estimating an allowance for loan and lease losses are required disclosures under the standard. A cumulative-effect adjustment to retained earnings is recorded in the period of adoption and a prospective transition approach is applied for certain assets. The standard becomes effective for the Company beginning January 1, 2020. Early application is permitted beginning January 1, 2019. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718); Improvements to Employee Share-Based Payment Accounting . The standard requires excess tax benefits to be recognized in the statement of operations as an income tax expense and is applied prospectively by means of a cumulative-effect adjustment of excess tax benefits from equity in the period of adoption. The standard establishes an alternative practical expedient for estimating the expected term of an award by recognizing the effects of forfeitures in compensation cost when the forfeitures occur. Adoption of the alternative practical expedient is applied prospectively on an entity-wide basis. The standard requires that amounts paid to a taxing authority on the employee’s behalf as a result of directly withholding shares for tax-withholding purposes are to be presented on a retrospective basis as a financing activity on the statement of cash flows. The standard becomes effective for the Company beginning January 1, 2017. The Company is currently evaluating the effect that the standard will have 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. Early adoption of the standard is allowed. The standard becomes effective for the Company beginning January 1, 2019. 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 No. 2016-01, Financial Instruments-Overall (Subtopic 825-10) . The standard requires entities to carry all investments in equity securities, with certain exceptions, at fair value with adjustment recorded through net income ("FVTNI"). The standard eliminates the requirement of recognizing unrealized gains or losses in other comprehensive income for trading or available-for-sale marketable equity securities. The standard requires the total fair value change attributable to instrument-specific credit risk, excluding derivative liability instruments, to be reflected in other comprehensive income. The standard requires an evaluation for the need of a valuation allowance for deferred tax assets related to debt securities classified as available-for-sale in combination with the Company's other deferred tax assets. The standard becomes effective for the Company beginning January 1, 2018 and early adoption is allowed. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. 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 permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued an update to defer the effective date of this update by one year. The standard becomes effective for the Company beginning January 1, 2018, but allows the Company to adopt the standard one year earlier if it so chooses. The Company has not yet selected a transition method and is currently evaluating the effect that the standard and subsequent updates (see below) will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which requires an entity to determine whether the nature of its promise is to provide a good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the entity is an agent). In April, 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarifies the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. In May, 2016, the FASB issued ASU No. 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients , which clarifies guidance in certain narrow areas and adds some practical expedients. The above updates do not change the core principles of the guidance in ASU 2014-09. |
BALANCE SHEET COMPONENTS_
BALANCE SHEET COMPONENTS: | 6 Months Ended |
Jun. 30, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
BALANCE SHEET COMPONENTS: | BALANCE SHEET COMPONENTS: June 30, 2016 December 31, 2015 (In thousands) Accounts receivable, net: Accounts receivable $ 117,955 $ 84,894 Less: allowance for doubtful accounts (632 ) (621 ) $ 117,323 $ 84,273 Inventories: Raw materials $ 8,878 $ 8,304 Work-in-process 28,038 25,716 Finished goods 27,735 28,453 $ 64,651 $ 62,473 Other current assets: Prepaid expenses $ 10,212 $ 9,948 Derivative contracts receivable 630 — VAT receivable 5,734 7,946 Other 3,922 2,085 $ 20,498 $ 19,979 Property and equipment, net: Computer equipment and software $ 198,980 $ 172,176 Furniture and fixtures 4,119 3,886 Leasehold improvements 39,062 36,121 242,161 212,183 Less: Accumulated depreciation and amortization (129,897 ) (112,165 ) $ 112,264 $ 100,018 Deferred taxes and other long-term assets: Equity investments in private companies $ 7,846 $ 7,739 Deferred taxes 21,956 23,222 Other assets 1,957 2,754 $ 31,759 $ 33,715 Accrued liabilities: Payroll and related expenses $ 50,992 $ 43,041 Accrued expenses 32,359 26,431 Derivative contracts payable 524 1,157 Product warranty liability 1,365 1,206 Other 2,365 2,461 $ 87,605 $ 74,296 Other long-term liabilities: Income tax payable $ 21,282 $ 20,023 Deferred rent 2,000 1,950 Other 2,935 2,695 $ 26,217 $ 24,668 |
BUSINESS COMBINATION_
BUSINESS COMBINATION: | 6 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION: | BUSINESS COMBINATION: On February 23, 2016 , the Company completed its acquisition of 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 Semiconductor Ltd. (the "Merger Agreement") the total consideration was $ 787.0 million including $1.0 million attributable to assumed RSUs. The net cash purchase price of $698.5 million consisted of a $786.0 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. In connection with the acquisition, the Company received cash representing the withholding taxes owed related to RSUs from the EZchip acquisition of $17.3 million which it remitted to taxing authorities during the quarter ended June 30, 2016. 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. In connection with the acquisition, the Company entered into a $280.0 million variable interest rate Term Debt maturing February 21, 2019 . For additional information on the Term Debt, see Note 13 in the notes to the unaudited condensed consolidated financial statements. 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 amount of recognized identifiable acquired assets and liabilities assumed are primarily based on provisional fair values and are subject to revision as the Company finalizes its analysis. Final determination of fair values may result in further adjustments to the values presented below. 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 $ 786,046 Fair value of awards attributable to pre-acquisition services 972 Total consideration: 787,018 Less: cash acquired 87,545 Fair value of total consideration transferred, net of cash acquired $ 699,473 The following summarizes the Company's preliminary 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 275,294 Total assets 716,154 Current liabilities (10,253 ) Long-term liabilities (6,428 ) Total liabilities (16,681 ) Total preliminary purchase price allocation $ 699,473 Acquisition-related expenses for the EZchip acquisition for the three and six months ended June 30, 2016 were $0.5 million and $7.2 million , respectively 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) In-process research and development ("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 in-process research and development ("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 become subject to amortization over its useful life. IPR&D consists of one project related to the development of network processors. The project is expected to be completed over the next two years. 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 consolidated statements of operations as incurred. 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 10, 25, 40, 50, and 100Gb/s interconnect and processing solutions for advanced data center and edge platforms. The combined company will have 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 includes 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. Six Months Ended June 30, 2016 2015 Revenues $ 421,535 $ 364,993 Net income (loss) $ 17,451 $ (17,665 ) Net income (loss) per share — basic $ 0.37 $ (0.38 ) Net income (loss) per share — diluted $ 0.36 $ (0.38 ) Material non-recurring adjustments included in the unaudited pro forma net income for the six months ended June 30, 2016 for the effect of purchase accounting adjustments includes acquisition-related costs of $14.2 million , composed of acquisition cost of $7.2 million incurred by the Company and $ 7.0 million incurred by EZchip, the stock-based compensation expense related to accelerated RSUs from the acquisition of $ 4.8 million and the effects related to the step-up of inventory of $7.5 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 condensed consolidated statement of operations for the reporting period. |
FAIR VALUE MEASUREMENTS_
FAIR VALUE MEASUREMENTS: | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS: | FAIR VALUE MEASUREMENTS: Fair value hierarchy: The Company measures its cash equivalents and marketable securities at fair value. The Company’s cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. The Company's investments in debt securities and certificates of deposits are classified within Level 2 as the market inputs to value these instruments consist of market yields, reported trades and broker/dealer quotes. In addition, foreign currency contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. The Level 3 valuation inputs include the Company's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. As of June 30, 2016 and December 31, 2015 , 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 June 30, 2016 , the remaining principal of $ 273.0 million on the Company's $280.0 million Term Debt is classified as a Level 2 fair value measurement on a nonrecurring basis in the fair value hierarchy. The Company calculated a fair value amount of $271.6 million at June 30, 2016 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 June 30, 2016 : Level 1 Level 2 Total (in thousands) Money market funds $ 4,985 — $ 4,985 Certificates of deposit — 57,486 57,486 U.S. Government and agency securities — 43,908 43,908 Commercial paper — 28,363 28,363 Corporate bonds — 74,638 74,638 Municipal bonds — 3,441 3,441 Foreign government bonds — 5,118 5,118 4,985 212,954 217,939 Derivative contracts — 630 630 Total financial assets $ 4,985 $ 213,584 $ 218,569 Derivative contracts $ — $ 524 $ 524 Total financial liabilities $ — $ 524 $ 524 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, 2015 : Level 1 Level 2 Total (in thousands) Certificates of deposit $ — $ 110,423 $ 110,423 U.S. Government and agency securities — 131,722 131,722 Commercial paper — 57,214 57,214 Corporate bonds — 105,482 105,482 Municipal bonds — 26,208 26,208 Foreign government bonds — 13,940 13,940 Total financial assets $ — $ 444,989 $ 444,989 Derivative contracts $ — $ 1,157 $ 1,157 Total financial liabilities $ — $ 1,157 $ 1,157 There were no transfers between Level 1 and Level 2 securities during the six months ended June 30, 2016 and the year ended December 31, 2015 . |
INVESTMENTS_
INVESTMENTS: | 6 Months Ended |
Jun. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS: | INVESTMENTS: Cash, cash equivalents and short-term investments: The short-term investments are classified as available-for-sale securities. The cash, cash equivalents and short-term investments at June 30, 2016 and December 31, 2015 were as follows: June 30, 2016 Amortized Unrealized Unrealized Estimated (in thousands) Cash $ 58,516 $ — $ — $ 58,516 Money market funds 4,985 — — 4,985 Certificates of deposit 57,486 — — 57,486 U.S. Government and agency securities 43,873 35 — 43,908 Commercial paper 28,363 — — 28,363 Corporate bonds 74,608 73 (43 ) 74,638 Municipal bonds 3,441 1 (1 ) 3,441 Foreign government bonds 5,113 5 — 5,118 Total 276,385 114 (44 ) 276,455 Less amounts classified as cash and cash equivalents (63,501 ) (63,501 ) $ 212,884 $ 114 $ (44 ) $ 212,954 December 31, 2015 Amortized Unrealized Unrealized Estimated (in thousands) Cash $ 65,524 $ — $ — $ 65,524 Certificates of deposit 110,427 3 (7 ) 110,423 U.S. Government and agency securities 131,755 5 (38 ) 131,722 Commercial paper 57,214 4 (4 ) 57,214 Corporate bonds 105,900 2 (420 ) 105,482 Municipal bonds 26,283 — (75 ) 26,208 Foreign government bonds 13,988 — (48 ) 13,940 Total 511,091 14 (592 ) 510,513 Less amounts classified as cash and cash equivalents (263,196 ) (5 ) 2 (263,199 ) $ 247,895 $ 9 $ (590 ) $ 247,314 Realized gains upon the sale of marketable securities were $0.6 million and $2.1 million for the three months ended June 30, 2016 and 2015 , respectively. Realized gains upon the sale of marketable securities were $0.5 million and $2.4 million for the six months ended June 30, 2016 and 2015 , respectively. At June 30, 2016 , 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 other comprehensive income (loss) ("OCI"). NOTE 5—INVESTMENTS (Continued) The contractual maturities of short-term investments at June 30, 2016 and December 31, 2015 were as follows: June 30, 2016 December 31, 2015 Amortized Estimated Amortized Estimated (in thousands) Due in less than one year $ 133,643 $ 133,686 $ 148,041 $ 147,914 Due in one to three years 79,241 79,268 99,854 99,400 $ 212,884 $ 212,954 $ 247,895 $ 247,314 Investments in privately-held companies: As of June 30, 2016 and December 31, 2015 , the Company held a total of $7.8 million and $7.7 million in investments in privately-held companies. |
GOODWILL AND INTANGIBLE ASSETS_
GOODWILL AND INTANGIBLE ASSETS: | 6 Months Ended |
Jun. 30, 2016 | |
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, 2015 $ 200,743 Acquisitions 275,294 Adjustments — Balance as of June 30, 2016 $ 476,037 The carrying amounts of intangible assets as of June 30, 2016 were as follows: Gross Accumulated Net (in thousands) Licensed technology $ 2,638 $ (1,771 ) $ 867 Developed technology 251,074 (56,298 ) 194,776 Customer relationships 69,776 (14,205 ) 55,571 Backlog 11,300 (8,399 ) 2,901 Trade names 5,600 (657 ) 4,943 Total finite-lived amortizable intangible assets 340,388 (81,330 ) 259,058 In-process research and development 33,700 — 33,700 Total intangible assets $ 374,088 $ (81,330 ) $ 292,758 The carrying amounts of intangible assets as of December 31, 2015 were as follows: Gross Accumulated Net (in thousands) Licensed technology $ 2,554 $ (1,589 ) $ 965 Developed technology 69,828 (40,408 ) 29,420 Customer relationships 13,376 (11,607 ) 1,769 Total intangible assets $ 85,758 $ (53,604 ) $ 32,154 Amortization expense of intangible assets totaled approximately $ 16.0 million and $ 2.6 million for the three months ended June 30, 2016 and 2015 , respectively. Amortization expense of intangible assets totaled approximately $27.7 million and $ 4.9 million for the six months ended June 30, 2016 and 2015 , respectively. The estimated future amortization expense from amortizable intangible assets is as follows: (in thousands) 2016 (remaining six months) $ 27,765 2017 49,722 2018 46,736 2019 41,589 2020 and thereafter 93,246 Total $ 259,058 |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES: | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES AND HEDGING ACTIVITIES: | DERIVATIVES AND HEDGING ACTIVITIES: As of June 30, 2016 , the Company had derivative contracts in place hedging future Israeli New Shekel ("NIS") denominated operating expenses that the Company expects to incur over the next twelve months. In addition, the Company had derivative contracts in place that hedge the fair value of NIS denominated net assets. The Company recorded gains and losses on both the net assets and the derivative contracts designated as fair value hedges in the consolidated statements of operations as a component of other (loss) income. Foreign exchange contracts designated as cash flow hedges relate primarily to operating expenses and the associated gains and losses are expected to be recorded in operating expenses when reclassified out of OCI. The Company expects to realize the accumulated OCI balance related to cash flow hedge contracts within the next 12 months . Fair Value of Derivative Contracts The fair value of derivatives in the unaudited condensed consolidated balance at June 30, 2016 and December 31, 2015 were as follows: Other current assets Other accrued liabilities Other accrued liabilities June 30, 2016 December 31, 2015 (in thousands) Derivatives designated as hedging instruments Currency forward contracts $ 630 $ 524 $ 1,157 Total derivatives $ 630 $ 524 $ 1,157 The gross notional amounts of derivative contracts were NIS denominated. The notional amounts of outstanding derivative contracts at June 30, 2016 and December 31, 2015 were as follows: June 30, 2016 December 31, 2015 (in thousands) Derivatives designated as hedging instruments Currency forward contracts $ 93,420 $ 98,744 Derivatives not designated as hedging instruments Currency forward contracts $ 26,019 $ — Effect of Designated Derivative Contracts on Accumulated Other Comprehensive Income The following table represents the balance of derivative contracts designated as cash flow hedges as of June 30, 2016 and December 31, 2015 and their impact on OCI for the six months ended June 30, 2016 : (in thousands) December 31, 2015 $ (1,091 ) Amount of gain recognized in OCI (effective portion) 1,510 Amount of gain reclassified from OCI to income (effective portion) (161 ) June 30, 2016 $ 258 Effect of Derivative Contracts on the Unaudited Condensed Consolidated Statement of Operations The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the three months ended June 30, 2016 and 2015 was: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Three Months Ended June 30, Three Months Ended June 30, Location of gains (losses) 2016 2015 2016 2015 (in thousands) Operating expenses $ 23 $ (737 ) $ — $ — Other (loss) income $ — $ — $ (271 ) $ — The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the six months ended June 30, 2016 and 2015 was: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Six Months Ended June 30, Six Months Ended June 30, Location of gains (losses) 2016 2015 2016 2015 (in thousands) Operating expenses $ 161 $ (3,010 ) $ — $ — Other (loss) income $ — $ — $ (543 ) $ — The net gains or losses relating to the ineffective portion of derivative contracts designed as hedging instruments were not material in the three and six months ended June 30, 2016 and 2015 . |
COMMITMENTS AND CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES: | COMMITMENTS AND CONTINGENCIES: Commitments Leases At June 30, 2016 , future minimum payments under non-cancelable operating leases are as follows: (in thousands) 2016 due in remaining six months $ 10,679 2017 18,299 2018 14,477 2019 11,046 2020 and thereafter 11,176 Total minimum lease payments $ 65,677 Purchase commitments At June 30, 2016 , the Company had the following non-cancelable purchase commitments: (in thousands) 2016 due in remaining six months $ 100,446 2017 9,230 2018 3,836 2019 and thereafter 25 $ 113,537 Term Debt For information about the Company's Term Debt, see note 13 to the notes to the condensed consolidated financial statements. 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 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 is 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 June 30, 2016 , the estimated total future lease obligation is approximately $28.7 million . Over a twelve month period an estimated rental expense is approximately $2.9 million , and if recognized, would increase the Company's operating expenses in its consolidated statement of operations. Royalty-bearing grants We are obliged to pay royalties to the Office of the Israeli National Authority for Technological Innovation or the Office of the Chief Scientist of the Ministry of Economy and Industry of Israel (formerly, the Ministry of Industry, Trade and Labor) (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 on the revenues derived from sales of the Company's products incorporating OCS funded know-how are payable to the Israeli government at the rate up to 4.5% of the amount of the received grants. 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 June 30, 2016 , the Company estimated a total future royalty obligation of approximately $23.3 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 respective taxing authorities. As of June 30, 2016 , the Company's unrecognized tax benefits totaled $37.4 million , which would reduce the Company's income tax expense and effective tax rate, if recognized. Contingencies Legal proceedings Settled legal proceedings Avago Technologies Fiber (IP) Singapore Pte. Ltd. vs. IPtronics, Inc. and IPtronics A/S (the "Parties"). On September 29, 2010, Avago Technologies Fiber (IP) Singapore Pte. Ltd. (“Avago IP”) filed a complaint for patent infringement against IPtronics, Inc. and IPtronics A/S (now Mellanox Technologies Denmark Aps) (collectively, “IPtronics”) in the United States District Court, Northern District of California, San Jose Division (Case No.: 5:10-cv-02863 EJD), asserting infringement of U.S. Patents Number 5,596,456 and 5,359,447. On September 11, 2012, Avago IP along with additional subsidiaries of Avago Technologies Limited (collectively, “Avago”) filed a Second Amended and Supplemental Complaint against IPtronics adding allegations that IPtronics engaged in violations of the Lanham Act, Section 43 (A); misappropriated Avago’s trade secrets; engaged in unfair competition against Avago; intentionally interfered with Avago’s contractual relations; and were unjustly enriched by and through the conduct complained of by Avago. Avago’s motion to file a Fourth Amended and Supplemental Complaint (the “Complaint”) to add the Company and a new claim for interference with prospective economic advantage against IPtronics was granted. The Company and IPtronics answered the new complaint. Pursuant to a Settlement and Patent License Agreement (the "Settlement") dated March 7, 2016, on March 8, 2016 the Parties jointly filed a Stipulation of Dismissal with Prejudice Pursuant to Fed.R.Civ.P. 41(a)(1)(A)(ii), in which the parties stipulated to the dismissal with prejudice of this action, including all claims alleged in the Fourth Amended and Supplemental Complaint and all counterclaims alleged in the answers thereto, with each party to bear its own costs and attorneys’ fees. IPtronics, Inc. and Mellanox Technologies Denmark ApS vs. Avago Technologies, Inc., et al . IPtronics filed an antitrust Complaint in the United States District Court, Northern District of California, San Jose Division (Case No.: 5:14-cv-05647-BLF (PSG)), against Avago for pursuing what the Company believed to be a baseless ITC action against IPtronics. Pursuant to the Settlement, the Parties filed a Joint Stipulation of Dismissal with Prejudice Pursuant to Fed.R.Civ.P. 41(a)(1)(A)(ii), in which the parties stipulated to the dismissal of this action with prejudice, with each party to bear its own costs and attorneys’ fees. Under the settlement, the Company and Avago agreed not to sue each other for a period of 5 years . The contractual patent rights conveyed by the settlement were deemed not contributory to the Company's operations or products sold. As a result, the Company recorded settlement expense in its operating expenses in the amount of $ 5.1 million during its first quarter ended March 31, 2016. Pending legal proceedings Mellanox Technologies, Ltd. v. Methode Electronics, Inc. On August 16, 2015, Mellanox filed this action for patent infringement in the federal court for the Northern District of California (Civil Action No. 15-cv-03730-PJH) naming Methode Electronics, Inc. as defendant on claims for infringement of U.S. Patent No. 8,419,444 and U.S. Patent No. 7,934,959. On December 3, 2015, Mellanox filed an Amended Complaint asserting infringement of the 959 patent. Methode moved to dismiss the First Amended Complaint. The court granted in part and denied in part that motion with leave to amend, as confirmed in an Order dated March 4, 2016. On March 17, 2016, Mellanox filed a Second Amended Complaint alleging infringement of the 959 patent and seeking unspecified damages and injunctive relief against Methode. On April 7, 2016 Methode served an Answer and Counterclaims seeking declaratory judgment that the 959 patent is invalid and not infringed. On June 13, 2016, Methode filed a motion for leave to amend its Answer to add additional defenses and counterclaims including alleged unenforceability of the 959 patent in suit. This motion has been briefed and was heard on July 20, 2016. The court denied Methode’s motion to the extent it concerned an alleged failure to state a claim but allowed Methode to add defenses and counterclaims concerning a standards setting body and inventorship. Discovery is proceeding. The parties have exchanged proposed terms for claim construction. |
SHARE INCENTIVE PLANS_
SHARE INCENTIVE PLANS: | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE INCENTIVE PLANS: | SHARE INCENTIVE PLANS Stock Option Plans The Company has ten option plans. In connection with the EZchip acquisition, the Company assumed the following EZchip plans: 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. The Company's other option plans include the 1999 United States Equity Incentive Plan, 1999 Israeli Share Option Plan, 2003 Israeli Share Option Plan (collectively, the "Prior Plans"), the Amended and Restated Global Share (2006) Incentive Plan (the "Global Plan"), the Global Share Incentive Assumption Plan 2010 (the "Assumption Plan"), the Kotura, Inc. Second Amended and Restated 2003 Stock Plan (the "Kotura Plan"), and the IPtronics, Inc. 2013 Restricted Stock Unit Plan (the "IPtronics Plan"). 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 Share option activity under the Company's equity incentive plans in the six months ended June 30, 2016 is set forth below: Options Outstanding Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2015 2,028,595 $ 30.81 Options exercised (198,808 ) $ 15.83 Options canceled (30,982 ) $ 83.46 Outstanding at June 30, 2016 1,798,805 $ 31.55 The total pretax intrinsic value of options exercised in the six months ended June 30, 2016 and 2015 was $6.5 million and $8.6 million . This intrinsic value represents the difference between the fair market value of the Company's ordinary shares on the date of exercise and the exercise price of each option. Based on the closing price of the Company's ordinary shares of $47.96 on June 30, 2016 , the total pretax intrinsic value of options outstanding at June 30, 2016 and December 31, 2015 was $42.9 million and $40.2 million , respectively. The total pretax intrinsic value of exercisable options at June 30, 2016 , was $42.7 million . The total pretax intrinsic value of exercisable options at December 31, 2015 was $39.9 million . Restricted share unit activity RSU activity under the Company's equity incentive plans in the six months ended June 30, 2016 is set forth below: Restricted Share Units Outstanding Number of Shares Weighted Average Grant Date Fair Value Non-vested restricted share units at December 31, 2015 2,205,083 $ 44.39 Assumed restricted share units from acquisition 499,894 $ 46.40 Restricted share units granted 1,784,626 $ 48.75 Restricted share units vested (559,048 ) $ 45.07 Restricted share units canceled (151,259 ) $ 45.14 Non-vested restricted share units at June 30, 2016 3,779,296 $ 46.58 The weighted average fair value of RSUs granted in the six months ended June 30, 2016 and 2015 was $48.75 and $46.15 , respectively. The total intrinsic value of all outstanding restricted share units as of June 30, 2016 and December 31, 2015 was $181.3 million and $92.9 million , respectively. Shares reserved for future issuance The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of June 30, 2016 : Number of Share options outstanding 1,798,805 Restricted share units outstanding 3,779,296 Shares authorized for future issuance 613,647 ESPP shares available for future issuance 4,267,370 Total shares reserved for future issuance as of June 30, 2016 10,459,118 Share-based compensation The Company accounts for share-based compensation expense based on the estimated fair value of the share equity awards as of the grant dates. The following weighted average assumptions were used to value ESPP shares issued pursuant to the Company's share incentive plans for the six months ended June 30, 2016 and 2015 : Six Months Ended June 30, 2016 2015 Dividend yield — % — % Expected volatility 37.6 % 38.1 % Risk free interest rate 0.50 % 0.09 % Expected life, years 0.5 0.5 The following table summarizes the distribution of total share-based compensation expense in the unaudited condensed consolidated statements of operations: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (in thousands) Cost of goods sold $ 671 $ 610 $ 1,146 $ 1,157 Research and development 10,770 7,553 19,922 14,321 Sales and marketing 3,889 2,750 7,537 5,144 General and administrative 2,764 2,373 7,755 4,382 Total share-based compensation expense $ 18,094 $ 13,286 $ 36,360 $ 25,004 At June 30, 2016 there was $143.5 million of total unrecognized share-based compensation costs related to non-vested share-based compensation arrangements. The costs are expected to be recognized over a weighted average period of approximately 2.4 years . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | 6 Months Ended |
Jun. 30, 2016 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2016 and 2015 : Unrealized Gains / Losses on Available-for- Sale Securities Gains / Losses on Derivatives Total (in thousands) Balance at December 31, 2015 $ (578 ) $ (1,091 ) $ (1,669 ) Other comprehensive income/loss before reclassifications 166 1,510 1,676 Amounts reclassified from accumulated other comprehensive income/loss 482 (161 ) 321 Net current-period other comprehensive income/loss, net of taxes 648 1,349 1,997 Balance at June 30, 2016 $ 70 $ 258 $ 328 Balance at December 31, 2014 $ (374 ) $ (3,646 ) $ (4,020 ) Other comprehensive income/loss before reclassifications 195 2,822 3,017 Amounts reclassified from accumulated other comprehensive income/loss 17 3,010 3,027 Net current-period other comprehensive income/loss, net of taxes 212 5,832 6,044 Balance at June 30, 2015 $ (162 ) $ 2,186 $ 2,024 The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2016 and 2015: Details about Accumulated Other Comprehensive Income / Loss Components Amount Reclassified from Other Comprehensive Income / Loss Affected Line Item in the Statement of Operations Six Months Ended June 30, 2016 2015 (in thousands) Gains/losses on Derivatives $ 161 $ (3,010 ) Cost of revenues and Operating expenses 10 (205 ) Cost of revenues 112 (2,251 ) Research and development 17 (234 ) Sales and marketing 22 (320 ) General and administrative Gains/losses on Available-for-Sale Securities (482 ) (17 ) Other income, net Total reclassifications for the period $ (321 ) $ (3,027 ) Total |
INCOME TAXES_
INCOME TAXES: | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES: | INCOME TAXES: As of June 30, 2016 and December 31, 2015 , the Company had gross unrecognized tax benefits of $37.4 million and $25.4 million , respectively. It is the Company’s policy to classify accrued interest and penalties as part of the unrecognized tax benefits and record the expense in the provision for income taxes. The amount of accrued interest and penalties related to unrecognized tax benefits totaled $ 1.5 million at June 30, 2016 and $1.2 million at December 31, 2015 . 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. In 2016, the Company measured deferred tax assets and liabilities using the 25.0% tax rate. The immediate change in the corporate income tax rates from 26.5% to 25.0% resulted in a reduction of $ 1.3 million to the Company's deferred tax assets and a corresponding increase in the Company's income tax expense for the six months ended June 30, 2016 . As of June 30, 2016 , the 2012 through 2015 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 2002 which may be subject to examination upon utilization in future tax periods. As of June 30, 2016 , the 2011 through 2015 tax years are open and may be subject to potential examinations in Israel. As of June 30, 2016 , 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 2011 to 2014 . As of June 30, 2016, the 2011 through 2015 tax years are open and may be subject to potential examinations in Denmark. The Beneficiary Enterprise and Approved Enterprise tax holiday associated with the Company's Yokneam and Tel Aviv operations began in 2011 . The tax holiday for the Company's Yokneam operations will expire in 2021 and the tax holiday for the Company's Tel Aviv operation will expire between the years 2017 and 2021 . The tax holiday has resulted in a cash tax savings of $ 21.0 million and $13.0 million for the six months ended June 30, 2016 and 2015 , respectively, increasing diluted earnings per share by approximately $0.44 and $ 0.27 in the six months ended June 30, 2016 and 2015 , respectively. The Company’s effective tax rate is highly dependent upon the geographic distribution of its worldwide earnings or losses, tax regulations and tax holiday benefits in Israel, and the effectiveness of the Company’s tax planning strategies. The Company’s effective tax rates were 1.0% and 5.0% for the three months ended June 30, 2016 and 2015 , respectively. The Company’s effective tax rates were ( 2,227.8% ) and 9.9% for the six months ended June 30, 2016 and 2015 , respectively. During the six months ended June 30, 2016, the ( 2,227.8% ) effective tax rate is due to a loss before taxes on income that is near break-even. The difference between the Company’s effective tax rates and the 35% federal statutory rate for the six months ended June 30, 2016 resulted primarily from the reduction of deferred tax assets resulting from the reduction in the Israeli corporate income tax as discussed above, the accrual of unrecognized tax benefits, interest and penalties associated with unrecognized tax positions, non-tax-deductible expenses such as share-based compensation expense and losses generated from subsidiaries without tax benefits, partially offset by the tax holiday in Israel and foreign earnings taxed at rates lower than the federal statutory rates. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous, and the Company is required to make many subjective assumptions and judgments regarding its income tax exposures. In addition, interpretations of and guidance surrounding income tax laws and regulations are subject to change over time. Any changes in the Company’s subjective assumptions and judgments could materially affect amounts recognized in its consolidated balance sheets and statements of operations. The Company has maintained a valuation allowance against deferred tax assets of certain subsidiaries. The Company assesses its ability to recover its deferred tax assets on an ongoing basis. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. In evaluating the ability to recover deferred tax assets, the Company considers available positive and negative evidence including its recent cumulative losses, its ability to carry-back losses against prior taxable income and its projected financial results. The Company also considers, commensurate with its objective verifiability, the forecast of future taxable income including the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. A valuation allowance may be recorded in the event it is deemed to be more-likely-than-not that the deferred tax asset cannot be realized. Previously established valuation allowances may also be released in the event it is deemed to be more-likely-than-not that the deferred tax asset can be realized. Any release of valuation allowance will be recorded as a tax benefit which will positively impact the Company’s operating results. Management has determined on the basis of the quarterly assessment performed at June 30, 2016, that these deferred tax assets are not more likely than not to be realized. |
OTHER INCOME(LOSS)_
OTHER INCOME(LOSS): | 6 Months Ended |
Jun. 30, 2016 | |
Other Income and Expenses [Abstract] | |
OTHER INCOME (LOSS): | OTHER INCOME (LOSS): Other income (loss) is summarized in the following table: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (in thousands) Interest income and gains (losses) on sale of investments, net $ 674 $ 817 $ 744 $ 1,480 Impairment loss on equity investment in a private company — — — (3,189 ) Foreign exchange gain (loss) (359 ) 95 (368 ) 152 Other income (loss) $ 315 $ 912 $ 376 $ (1,557 ) |
TERM DEBT_
TERM DEBT: | 6 Months Ended |
Jun. 30, 2016 | |
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 on the Term Debt are being amortized to interest expense at the effective interest rate over the contractual term of the Term Debt. The following table presents the Term Debt at June 30, 2016 : (in thousands) Term Debt, principal amount $ 273,000 Less unamortized debt issuance costs $ (4,625 ) Term Debt, principal net of unamortized debt issuance costs $ 277,625 Effective interest rate 3.1 % 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 . 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. NOTE 13—TERM DEBT (Continued) At June 30, 2016 , future scheduled principal payments on the Company's Term Debt is summarized as follows: (in thousands) 2016 due in remaining six months $ 14,000 2017 38,500 2018 63,000 2019 157,500 $ 273,000 The Term Debt was issued with $ 5.5 million in debt issuance costs and bears interest through maturity at a variable rate based upon, at the Company’s option, either the Eurodollar rate or the base rate (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 Eurodollar rate ), plus in each case, an applicable margin. The applicable margin for Eurodollar rate loans ranges, based on the applicable total net leverage ratio, from 1.25% to 2.00% per annum and the applicable margin for base rate 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 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 June 30, 2016 , the Company was in compliance with the covenants for the Term Debt. |
THE COMPANY AND SUMMARY OF SI20
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of presentation | Principles of presentation The unaudited condensed consolidated financial statements include the Company's accounts as well as those of its wholly owned subsidiaries after the elimination of all intercompany balances and transactions. 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 unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q include the results of operations of EZchip commencing as of the acquisition date. The unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The year-end balance sheet data was derived from audited consolidated financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 26, 2016. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2016 or thereafter. |
Risks and uncertainties | Risks and uncertainties The Company is subject to all of the risks inherent in a company which operates in the dynamic and competitive semiconductor industry. Significant changes in any of the following areas could have a materially adverse impact on the Company's financial position and results of operations: unpredictable volume or timing of customer orders; ordered product mix; the sales outlook and purchasing patterns of the Company's customers based on consumer demands and general economic conditions; loss of one or more of the Company's customers; decreases in the average selling prices of products or increases in the average cost of finished goods; the availability, pricing and timeliness of delivery of components used in the Company's products; reliance on a limited number of subcontractors to manufacture, assemble, package and production test the Company's products; the Company's ability to successfully develop, introduce and sell new or enhanced products in a timely manner; product obsolescence and the Company's ability to manage product transitions; the timing of announcements or introductions of new products by the Company's competitors; and the Company's ability to successfully integrate acquired businesses. |
Use of estimates | Use of estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns and allowances, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, goodwill and purchased intangible asset valuation, hedge effectiveness, deferred income tax asset valuation, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results that the Company experiences may differ materially and adversely from the Company's original estimates. To the extent there are material differences between the estimates and actual results, the Company's future results of operations will be affected. |
Recent accounting pronouncements | Recent accounting pronouncements In June 2016, the Financial Accounting Standards Board, "FASB", issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Assumptions, models, and methods used in estimating an allowance for loan and lease losses are required disclosures under the standard. A cumulative-effect adjustment to retained earnings is recorded in the period of adoption and a prospective transition approach is applied for certain assets. The standard becomes effective for the Company beginning January 1, 2020. Early application is permitted beginning January 1, 2019. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718); Improvements to Employee Share-Based Payment Accounting . The standard requires excess tax benefits to be recognized in the statement of operations as an income tax expense and is applied prospectively by means of a cumulative-effect adjustment of excess tax benefits from equity in the period of adoption. The standard establishes an alternative practical expedient for estimating the expected term of an award by recognizing the effects of forfeitures in compensation cost when the forfeitures occur. Adoption of the alternative practical expedient is applied prospectively on an entity-wide basis. The standard requires that amounts paid to a taxing authority on the employee’s behalf as a result of directly withholding shares for tax-withholding purposes are to be presented on a retrospective basis as a financing activity on the statement of cash flows. The standard becomes effective for the Company beginning January 1, 2017. The Company is currently evaluating the effect that the standard will have 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. Early adoption of the standard is allowed. The standard becomes effective for the Company beginning January 1, 2019. 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 No. 2016-01, Financial Instruments-Overall (Subtopic 825-10) . The standard requires entities to carry all investments in equity securities, with certain exceptions, at fair value with adjustment recorded through net income ("FVTNI"). The standard eliminates the requirement of recognizing unrealized gains or losses in other comprehensive income for trading or available-for-sale marketable equity securities. The standard requires the total fair value change attributable to instrument-specific credit risk, excluding derivative liability instruments, to be reflected in other comprehensive income. The standard requires an evaluation for the need of a valuation allowance for deferred tax assets related to debt securities classified as available-for-sale in combination with the Company's other deferred tax assets. The standard becomes effective for the Company beginning January 1, 2018 and early adoption is allowed. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. |
THE COMPANY AND SUMMARY OF SI21
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of revenues and accounts receivable from customers | The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Hewlett-Packard 12 % 15 % 16 % 14 % The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable: June 30, 2016 December 31, 2015 Hewlett Packard 11 % 16 % Hon Hai Precision Ind. Co. Ltd. * 11 % Ingram Micro * 15 % ____________________ * Less than 10% |
Schedule of changes in the entity's liability for product warranty | The following table provides changes in the product warranty accrual for the six months ended June 30, 2016 and 2015 : Six Months Ended June 30, 2016 2015 (In thousands) Balance, beginning of the period $ 1,642 $ 1,932 Assumed warranty liability from acquisition 290 — New warranties issued during the period 683 1,514 Reversal of warranty reserves (358 ) (67 ) Settlements during the period (532 ) (1,572 ) Balance, end of the period 1,725 1,807 Less: long term portion of product warranty liability (360 ) (450 ) Balance, end of the period $ 1,365 $ 1,357 |
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 three and six months ended June 30, 2016 and 2015 : Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (In thousands, except per share data) Net income (loss) $ 4,654 $ 19,248 $ (2,514 ) $ 29,744 Basic and diluted shares: Weighted average ordinary shares 47,900 46,191 47,629 45,943 Dilutive effect of employee share options and restricted stock units ("RSUs") 1,294 1,377 — 1,398 Shares used to compute diluted net income (loss) per share 49,194 47,568 47,629 47,341 Net income (loss) per share — basic $ 0.10 $ 0.42 $ (0.05 ) $ 0.65 Net income (loss) per share — diluted $ 0.09 $ 0.40 $ (0.05 ) $ 0.63 |
BALANCE SHEET COMPONENTS_ - (Ta
BALANCE SHEET COMPONENTS: - (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Balance Sheet Components | June 30, 2016 December 31, 2015 (In thousands) Accounts receivable, net: Accounts receivable $ 117,955 $ 84,894 Less: allowance for doubtful accounts (632 ) (621 ) $ 117,323 $ 84,273 Inventories: Raw materials $ 8,878 $ 8,304 Work-in-process 28,038 25,716 Finished goods 27,735 28,453 $ 64,651 $ 62,473 Other current assets: Prepaid expenses $ 10,212 $ 9,948 Derivative contracts receivable 630 — VAT receivable 5,734 7,946 Other 3,922 2,085 $ 20,498 $ 19,979 Property and equipment, net: Computer equipment and software $ 198,980 $ 172,176 Furniture and fixtures 4,119 3,886 Leasehold improvements 39,062 36,121 242,161 212,183 Less: Accumulated depreciation and amortization (129,897 ) (112,165 ) $ 112,264 $ 100,018 Deferred taxes and other long-term assets: Equity investments in private companies $ 7,846 $ 7,739 Deferred taxes 21,956 23,222 Other assets 1,957 2,754 $ 31,759 $ 33,715 Accrued liabilities: Payroll and related expenses $ 50,992 $ 43,041 Accrued expenses 32,359 26,431 Derivative contracts payable 524 1,157 Product warranty liability 1,365 1,206 Other 2,365 2,461 $ 87,605 $ 74,296 Other long-term liabilities: Income tax payable $ 21,282 $ 20,023 Deferred rent 2,000 1,950 Other 2,935 2,695 $ 26,217 $ 24,668 |
BUSINESS COMBINATION_ (Tables)
BUSINESS COMBINATION: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 $ 786,046 Fair value of awards attributable to pre-acquisition services 972 Total consideration: 787,018 Less: cash acquired 87,545 Fair value of total consideration transferred, net of cash acquired $ 699,473 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following summarizes the Company's preliminary 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 275,294 Total assets 716,154 Current liabilities (10,253 ) Long-term liabilities (6,428 ) Total liabilities (16,681 ) Total preliminary purchase price allocation $ 699,473 |
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) In-process research and development ("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. Six Months Ended June 30, 2016 2015 Revenues $ 421,535 $ 364,993 Net income (loss) $ 17,451 $ (17,665 ) Net income (loss) per share — basic $ 0.37 $ (0.38 ) Net income (loss) per share — diluted $ 0.36 $ (0.38 ) |
FAIR VALUE MEASUREMENTS_ (Table
FAIR VALUE MEASUREMENTS: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 : Level 1 Level 2 Total (in thousands) Money market funds $ 4,985 — $ 4,985 Certificates of deposit — 57,486 57,486 U.S. Government and agency securities — 43,908 43,908 Commercial paper — 28,363 28,363 Corporate bonds — 74,638 74,638 Municipal bonds — 3,441 3,441 Foreign government bonds — 5,118 5,118 4,985 212,954 217,939 Derivative contracts — 630 630 Total financial assets $ 4,985 $ 213,584 $ 218,569 Derivative contracts $ — $ 524 $ 524 Total financial liabilities $ — $ 524 $ 524 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, 2015 : Level 1 Level 2 Total (in thousands) Certificates of deposit $ — $ 110,423 $ 110,423 U.S. Government and agency securities — 131,722 131,722 Commercial paper — 57,214 57,214 Corporate bonds — 105,482 105,482 Municipal bonds — 26,208 26,208 Foreign government bonds — 13,940 13,940 Total financial assets $ — $ 444,989 $ 444,989 Derivative contracts $ — $ 1,157 $ 1,157 Total financial liabilities $ — $ 1,157 $ 1,157 Company calculated a fair value amount of $271.6 million at June 30, 2016 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. |
INVESTMENTS_ (Tables)
INVESTMENTS: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of cash, cash equivalents and short-term investments | The short-term investments are classified as available-for-sale securities. The cash, cash equivalents and short-term investments at June 30, 2016 and December 31, 2015 were as follows: June 30, 2016 Amortized Unrealized Unrealized Estimated (in thousands) Cash $ 58,516 $ — $ — $ 58,516 Money market funds 4,985 — — 4,985 Certificates of deposit 57,486 — — 57,486 U.S. Government and agency securities 43,873 35 — 43,908 Commercial paper 28,363 — — 28,363 Corporate bonds 74,608 73 (43 ) 74,638 Municipal bonds 3,441 1 (1 ) 3,441 Foreign government bonds 5,113 5 — 5,118 Total 276,385 114 (44 ) 276,455 Less amounts classified as cash and cash equivalents (63,501 ) (63,501 ) $ 212,884 $ 114 $ (44 ) $ 212,954 December 31, 2015 Amortized Unrealized Unrealized Estimated (in thousands) Cash $ 65,524 $ — $ — $ 65,524 Certificates of deposit 110,427 3 (7 ) 110,423 U.S. Government and agency securities 131,755 5 (38 ) 131,722 Commercial paper 57,214 4 (4 ) 57,214 Corporate bonds 105,900 2 (420 ) 105,482 Municipal bonds 26,283 — (75 ) 26,208 Foreign government bonds 13,988 — (48 ) 13,940 Total 511,091 14 (592 ) 510,513 Less amounts classified as cash and cash equivalents (263,196 ) (5 ) 2 (263,199 ) $ 247,895 $ 9 $ (590 ) $ 247,314 |
Schedule of contractual maturities of short-term investments | The contractual maturities of short-term investments at June 30, 2016 and December 31, 2015 were as follows: June 30, 2016 December 31, 2015 Amortized Estimated Amortized Estimated (in thousands) Due in less than one year $ 133,643 $ 133,686 $ 148,041 $ 147,914 Due in one to three years 79,241 79,268 99,854 99,400 $ 212,884 $ 212,954 $ 247,895 $ 247,314 |
GOODWILL AND INTANGIBLE ASSET26
GOODWILL AND INTANGIBLE ASSETS: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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, 2015 $ 200,743 Acquisitions 275,294 Adjustments — Balance as of June 30, 2016 $ 476,037 |
Schedule of carrying amounts of intangible assets | The carrying amounts of intangible assets as of June 30, 2016 were as follows: Gross Accumulated Net (in thousands) Licensed technology $ 2,638 $ (1,771 ) $ 867 Developed technology 251,074 (56,298 ) 194,776 Customer relationships 69,776 (14,205 ) 55,571 Backlog 11,300 (8,399 ) 2,901 Trade names 5,600 (657 ) 4,943 Total finite-lived amortizable intangible assets 340,388 (81,330 ) 259,058 In-process research and development 33,700 — 33,700 Total intangible assets $ 374,088 $ (81,330 ) $ 292,758 The carrying amounts of intangible assets as of December 31, 2015 were as follows: Gross Accumulated Net (in thousands) Licensed technology $ 2,554 $ (1,589 ) $ 965 Developed technology 69,828 (40,408 ) 29,420 Customer relationships 13,376 (11,607 ) 1,769 Total intangible assets $ 85,758 $ (53,604 ) $ 32,154 |
Schedule of estimated future amortization expense from amortizable intangible assets | The estimated future amortization expense from amortizable intangible assets is as follows: (in thousands) 2016 (remaining six months) $ 27,765 2017 49,722 2018 46,736 2019 41,589 2020 and thereafter 93,246 Total $ 259,058 |
DERIVATIVES AND HEDGING ACTIV27
DERIVATIVES AND HEDGING ACTIVITIES: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of derivative contracts | The fair value of derivatives in the unaudited condensed consolidated balance at June 30, 2016 and December 31, 2015 were as follows: Other current assets Other accrued liabilities Other accrued liabilities June 30, 2016 December 31, 2015 (in thousands) Derivatives designated as hedging instruments Currency forward contracts $ 630 $ 524 $ 1,157 Total derivatives $ 630 $ 524 $ 1,157 |
Schedule of notional amounts of outstanding derivative positions | The notional amounts of outstanding derivative contracts at June 30, 2016 and December 31, 2015 were as follows: June 30, 2016 December 31, 2015 (in thousands) Derivatives designated as hedging instruments Currency forward contracts $ 93,420 $ 98,744 Derivatives not designated as hedging instruments Currency forward contracts $ 26,019 $ — |
Schedule of designated derivative contracts as cash flow hedges and their impact on OCI | The following table represents the balance of derivative contracts designated as cash flow hedges as of June 30, 2016 and December 31, 2015 and their impact on OCI for the six months ended June 30, 2016 : (in thousands) December 31, 2015 $ (1,091 ) Amount of gain recognized in OCI (effective portion) 1,510 Amount of gain reclassified from OCI to income (effective portion) (161 ) June 30, 2016 $ 258 |
Effect of derivative contracts on the condensed consolidated statement of operations | The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the three months ended June 30, 2016 and 2015 was: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Three Months Ended June 30, Three Months Ended June 30, Location of gains (losses) 2016 2015 2016 2015 (in thousands) Operating expenses $ 23 $ (737 ) $ — $ — Other (loss) income $ — $ — $ (271 ) $ — The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the six months ended June 30, 2016 and 2015 was: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Six Months Ended June 30, Six Months Ended June 30, Location of gains (losses) 2016 2015 2016 2015 (in thousands) Operating expenses $ 161 $ (3,010 ) $ — $ — Other (loss) income $ — $ — $ (543 ) $ — |
COMMITMENTS AND CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum payments under non-cancelable operating and capital leases | At June 30, 2016 , future minimum payments under non-cancelable operating leases are as follows: (in thousands) 2016 due in remaining six months $ 10,679 2017 18,299 2018 14,477 2019 11,046 2020 and thereafter 11,176 Total minimum lease payments $ 65,677 |
Purchase Commitment, Excluding Long-term Commitment | At June 30, 2016 , the Company had the following non-cancelable purchase commitments: (in thousands) 2016 due in remaining six months $ 100,446 2017 9,230 2018 3,836 2019 and thereafter 25 $ 113,537 |
SHARE INCENTIVE PLANS_ (Tables)
SHARE INCENTIVE PLANS: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of share option awards activity under equity incentive plans | Share option activity under the Company's equity incentive plans in the six months ended June 30, 2016 is set forth below: Options Outstanding Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2015 2,028,595 $ 30.81 Options exercised (198,808 ) $ 15.83 Options canceled (30,982 ) $ 83.46 Outstanding at June 30, 2016 1,798,805 $ 31.55 |
Summary of restricted share units activity | RSU activity under the Company's equity incentive plans in the six months ended June 30, 2016 is set forth below: Restricted Share Units Outstanding Number of Shares Weighted Average Grant Date Fair Value Non-vested restricted share units at December 31, 2015 2,205,083 $ 44.39 Assumed restricted share units from acquisition 499,894 $ 46.40 Restricted share units granted 1,784,626 $ 48.75 Restricted share units vested (559,048 ) $ 45.07 Restricted share units canceled (151,259 ) $ 45.14 Non-vested restricted share units at June 30, 2016 3,779,296 $ 46.58 |
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 June 30, 2016 : Number of Share options outstanding 1,798,805 Restricted share units outstanding 3,779,296 Shares authorized for future issuance 613,647 ESPP shares available for future issuance 4,267,370 Total shares reserved for future issuance as of June 30, 2016 10,459,118 |
Schedule of weighted average assumptions used to value share options granted | The following weighted average assumptions were used to value ESPP shares issued pursuant to the Company's share incentive plans for the six months ended June 30, 2016 and 2015 : Six Months Ended June 30, 2016 2015 Dividend yield — % — % Expected volatility 37.6 % 38.1 % Risk free interest rate 0.50 % 0.09 % Expected life, years 0.5 0.5 |
Summary of the distribution of total share-based compensation expense | The following table summarizes the distribution of total share-based compensation expense in the unaudited condensed consolidated statements of operations: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (in thousands) Cost of goods sold $ 671 $ 610 $ 1,146 $ 1,157 Research and development 10,770 7,553 19,922 14,321 Sales and marketing 3,889 2,750 7,537 5,144 General and administrative 2,764 2,373 7,755 4,382 Total share-based compensation expense $ 18,094 $ 13,286 $ 36,360 $ 25,004 |
ACCUMULATED OTHER COMPREHENSI30
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 balances of other comprehensive income (loss) for the six months ended June 30, 2016 and 2015 : Unrealized Gains / Losses on Available-for- Sale Securities Gains / Losses on Derivatives Total (in thousands) Balance at December 31, 2015 $ (578 ) $ (1,091 ) $ (1,669 ) Other comprehensive income/loss before reclassifications 166 1,510 1,676 Amounts reclassified from accumulated other comprehensive income/loss 482 (161 ) 321 Net current-period other comprehensive income/loss, net of taxes 648 1,349 1,997 Balance at June 30, 2016 $ 70 $ 258 $ 328 Balance at December 31, 2014 $ (374 ) $ (3,646 ) $ (4,020 ) Other comprehensive income/loss before reclassifications 195 2,822 3,017 Amounts reclassified from accumulated other comprehensive income/loss 17 3,010 3,027 Net current-period other comprehensive income/loss, net of taxes 212 5,832 6,044 Balance at June 30, 2015 $ (162 ) $ 2,186 $ 2,024 |
Reclassification out of accumulated other comprehensive income | The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2016 and 2015: Details about Accumulated Other Comprehensive Income / Loss Components Amount Reclassified from Other Comprehensive Income / Loss Affected Line Item in the Statement of Operations Six Months Ended June 30, 2016 2015 (in thousands) Gains/losses on Derivatives $ 161 $ (3,010 ) Cost of revenues and Operating expenses 10 (205 ) Cost of revenues 112 (2,251 ) Research and development 17 (234 ) Sales and marketing 22 (320 ) General and administrative Gains/losses on Available-for-Sale Securities (482 ) (17 ) Other income, net Total reclassifications for the period $ (321 ) $ (3,027 ) Total |
OTHER INCOME (LOSS)_ (Tables)
OTHER INCOME (LOSS): (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Other Income and Expenses [Abstract] | |
Schedule of other income, net | Other income (loss) is summarized in the following table: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (in thousands) Interest income and gains (losses) on sale of investments, net $ 674 $ 817 $ 744 $ 1,480 Impairment loss on equity investment in a private company — — — (3,189 ) Foreign exchange gain (loss) (359 ) 95 (368 ) 152 Other income (loss) $ 315 $ 912 $ 376 $ (1,557 ) |
TERM DEBT_ (Tables)
TERM DEBT: (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following table presents the Term Debt at June 30, 2016 : (in thousands) Term Debt, principal amount $ 273,000 Less unamortized debt issuance costs $ (4,625 ) Term Debt, principal net of unamortized debt issuance costs $ 277,625 Effective interest rate 3.1 % |
Contractual Obligation, Fiscal Year Maturity Schedule | At June 30, 2016 , future scheduled principal payments on the Company's Term Debt is summarized as follows: (in thousands) 2016 due in remaining six months $ 14,000 2017 38,500 2018 63,000 2019 157,500 $ 273,000 |
THE COMPANY AND SUMMARY OF SI33
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Concentration of credit risk) (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Hewlett Packard [Member] | Net sales revenue [Member] | |||||
Concentration of credit risk | |||||
Percentage of consolidated revenue by major customer | 12.00% | 15.00% | 16.00% | 14.00% | |
Hewlett Packard [Member] | Accounts receivable [Member] | |||||
Concentration of credit risk | |||||
Percentage of consolidated revenue by major customer | 11.00% | 16.00% | |||
Hon Hai Precision Ind. Co. Ltd. [Member] | Accounts receivable [Member] | |||||
Concentration of credit risk | |||||
Percentage of consolidated revenue by major customer | 11.00% | ||||
Ingram Micro [Member] | Accounts receivable [Member] | |||||
Concentration of credit risk | |||||
Percentage of consolidated revenue by major customer | 15.00% |
THE COMPANY AND SUMMARY OF SI34
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Product warranty) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Changes in the entity's liability for product warranty | |||
Product warranty liability | $ 1,642 | $ 1,932 | |
Assumed warranty liability from acquisition | 290 | ||
New warranties issued during the period | 683 | 1,514 | |
Reversal of warranty reserves | (358) | (67) | |
Settlements during the period | (532) | (1,572) | |
Product warranty liability | 1,725 | 1,807 | |
Less: long term portion of product warranty liability | (360) | (450) | |
Balance, end of the period | $ 1,365 | $ 1,357 | $ 1,206 |
THE COMPANY AND SUMMARY OF SI35
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Basic and diluted earnings per share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net income (loss) | $ 4,654 | $ 19,248 | $ (2,514) | $ 29,744 |
Basic and diluted shares: | ||||
Weighted average ordinary shares (in shares) | 47,900,000 | 46,191,000 | 47,629,000 | 45,943,000 |
Dilutive effect of employee share options and restricted stock units (RSUs) (in shares) | 1,294,000 | 1,377,000 | 0 | 1,398,000 |
Shares used to compute diluted net income (loss) per share (in shares) | 49,194,000 | 47,568,000 | 47,629,000 | 47,341,000 |
Net income (loss) per share - basic (in USD per share) | $ 0.10 | $ 0.42 | $ (0.05) | $ 0.65 |
Net income (loss) per share - diluted (in USD per share) | $ 0.09 | $ 0.40 | $ (0.05) | $ 0.63 |
Employee stock option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 502,921 | 508,326 | 1,328,654 | 1,372,376 |
BALANCE SHEET COMPONENTS_ (Deta
BALANCE SHEET COMPONENTS: (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 |
Accounts receivable, net: | |||
Accounts receivable | $ 117,955 | $ 84,894 | |
Less: allowance for doubtful accounts | (632) | (621) | |
Accounts receivable, net | 117,323 | 84,273 | |
Inventories: | |||
Raw materials | 8,878 | 8,304 | |
Work-in-process | 28,038 | 25,716 | |
Finished goods | 27,735 | 28,453 | |
Inventories | 64,651 | 62,473 | |
Other current assets: | |||
Prepaid expenses | 10,212 | 9,948 | |
Derivative contracts receivable | 630 | 0 | |
VAT receivable | 5,734 | 7,946 | |
Other | 3,922 | 2,085 | |
Other current assets | 20,498 | 19,979 | |
Property and equipment, net: | |||
Property and equipment, net | 242,161 | 212,183 | |
Less: Accumulated depreciation and amortization | (129,897) | (112,165) | |
Property and equipment, net | 112,264 | 100,018 | |
Deferred taxes and other long-term assets: | |||
Equity investments in private companies | 7,846 | 7,739 | |
Deferred taxes | 21,956 | 23,222 | |
Other assets | 1,957 | 2,754 | |
Deferred taxes and other long-term assets | 31,759 | 33,715 | |
Accrued liabilities: | |||
Payroll and related expenses | 50,992 | 43,041 | |
Accrued expenses | 32,359 | 26,431 | |
Derivative contracts payable | 524 | 1,157 | |
Balance, end of the period | 1,365 | 1,206 | $ 1,357 |
Other | 2,365 | 2,461 | |
Accrued liabilities | 87,605 | 74,296 | |
Other long-term liabilities: | |||
Income tax payable | 21,282 | 20,023 | |
Deferred rent | 2,000 | 1,950 | |
Other | 2,935 | 2,695 | |
Other long-term liabilities | 26,217 | 24,668 | |
Computers, software license rights and other electronic equipments [Member] | |||
Property and equipment, net: | |||
Property and equipment, net | 198,980 | 172,176 | |
Furniture and fixtures {Member] | |||
Property and equipment, net: | |||
Property and equipment, net | 4,119 | 3,886 | |
Leasehold improvements [Member] | |||
Property and equipment, net: | |||
Property and equipment, net | $ 39,062 | $ 36,121 |
BUSINESS COMBINATION_ (Details)
BUSINESS COMBINATION: (Details) - USD ($) | Feb. 23, 2016 | Nov. 17, 2015 | Sep. 30, 2015 | Jun. 30, 2016 |
Business Acquisition [Line Items] | ||||
Effective date of acquisition | Feb. 23, 2016 | |||
Name of acquired entity | EZchip | |||
Date of acquisition agreement | Nov. 17, 2015 | Sep. 30, 2015 | ||
Cash payment for all outstanding common stock of EZchip at $25.50 per share | $ 787,018,000 | |||
Consideration transferred | $ 698,500,000 | |||
EZchip purchase price (in USD per share) | $ 25.50 | |||
Cash acquired | $ 87,500,000 | $ 87,500,000 | ||
Current liabilities | 10,253,000 | |||
Compensation not yet recognized, stock options | $ 22,200,000 | |||
Service period (in years) | 2 years 2 months 29 days | 2 years 4 months 24 days | ||
Debt instrument, face amount | $ 280,000,000 | $ 273,000,000 | ||
Debt instrument, maturity date | Feb. 21, 2019 | |||
Restricted Stock Units (RSUs) [Member] | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 1,000,000 | |||
Conversion of stock, shares converted | 499,894 | |||
Employee Stock Option [Member] | ||||
Business Acquisition [Line Items] | ||||
Share price (in USD per share) | $ 46.40 | $ 47.96 | ||
Accounts Payable and Accrued Liabilities [Member] | ||||
Business Acquisition [Line Items] | ||||
Current liabilities | $ 17,300,000 | |||
EZchip [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash payment for all outstanding common stock of EZchip at $25.50 per share | 786,046,000 | |||
Aggregate intrinsic value, nonvested shares | $ 23,200,000 | |||
EZchip [Member] | Restricted Stock Units (RSUs) [Member] | ||||
Business Acquisition [Line Items] | ||||
Conversion of stock, shares converted | 891,822 |
BUSINESS COMBINATION_ CONSIDERA
BUSINESS COMBINATION: CONSIDERATION (Details) $ in Thousands | Feb. 23, 2016USD ($) |
Business Acquisition [Line Items] | |
Cash payment for all outstanding common stock of EZchip at $25.50 per share | $ 787,018 |
EZchip [Member] | |
Business Acquisition [Line Items] | |
Cash payment for all outstanding common stock of EZchip at $25.50 per share | 786,046 |
Fair value of awards attributable to pre-acquisition services | 972 |
Less: cash acquired | 87,545 |
Fair value of total consideration transferred, net of cash acquired | $ 699,473 |
BUSINESS COMBINATION_ ASSETS AN
BUSINESS COMBINATION: ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2016 | Feb. 23, 2016 | Dec. 31, 2015 | |
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 | $ 476,037 | $ 476,037 | 275,294 | $ 200,743 |
Total assets | 716,154 | |||
Current liabilities | (10,253) | |||
Long-term liabilities | (6,428) | |||
Total liabilities | (16,681) | |||
Total preliminary purchase price allocation | $ 699,473 | |||
Business combination, acquisition related costs | 7,200 | |||
EZchip [Member] | ||||
Business Acquisition [Line Items] | ||||
Business combination, acquisition related costs | 7,000 | |||
Material business combination EZchip [Member] | ||||
Business Acquisition [Line Items] | ||||
Business combination, acquisition related costs | $ 500 | $ 7,200 |
BUSINESS COMBINATION_ INTANGIBL
BUSINESS COMBINATION: INTANGIBLE ASSETS (Details) $ in Thousands | Feb. 23, 2016USD ($) | Jun. 30, 2016 |
Business Acquisition [Line Items] | ||
Intangible assets | $ 288,246 | |
Trade Names [Member] | ||
Business Acquisition [Line Items] | ||
Recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 5,600 | |
Fair value inputs, discount rate | 10.00% | |
Finite-lived intangible asset, useful life (in years) | 3 years | |
Customer Relationships [Member] | ||
Business Acquisition [Line Items] | ||
Recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 56,400 | |
Fair value inputs, discount rate | 10.00% | |
Finite-lived intangible asset, useful life (in years) | 9 years | |
Order or Production Backlog [Member] | ||
Business Acquisition [Line Items] | ||
Recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 11,300 | |
Fair value inputs, discount rate | 8.00% | |
Finite-lived intangible asset, useful life (in years) | 1 year | |
Technology-Based Intangible Assets [Member] | ||
Business Acquisition [Line Items] | ||
Recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 181,246 | |
Fair value inputs, discount rate | 9.00% | |
In Process Research and Development [Member] | ||
Business Acquisition [Line Items] | ||
Recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 33,700 | |
Fair value inputs, discount rate | 12.00% | |
IPR&D projects | 1 | |
Estimate time to complete IPRD (in years) | 2 years | |
Estimated cost to complete in process research and development | $ 22,300 | |
Minimum [Member] | Technology-Based Intangible Assets [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible asset, useful life (in years) | 4 years | |
Maximum [Member] | Technology-Based Intangible Assets [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible asset, useful life (in years) | 6 years |
BUSINESS COMBINATION_ PRO FORMA
BUSINESS COMBINATION: PRO FORMA (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Business Acquisition [Line Items] | |||
Business acquisition, separately recognized transactions, additional disclosures, acquisition cost expensed | $ 14,200 | ||
Business combination, acquisition related costs | $ 7,200 | ||
EZchip [Member] | |||
Business Acquisition [Line Items] | |||
Business acquisition, pro forma revenue | 421,535 | $ 364,993 | |
Business acquisition, pro forma net income (loss) | $ 17,451 | $ (17,665) | |
Business acquisition, pro forma earnings per share, basic (in USD per share) | $ 0.37 | $ (0.38) | |
Business acquisition, pro forma earnings per share, diluted (in USD per share) | $ 0.36 | $ (0.38) | |
Business combination, acquisition related costs | $ 7,000 | ||
Pro forma disclosure, inventory | 7,500 | ||
Material business combination EZchip [Member] | |||
Business Acquisition [Line Items] | |||
Business combination, acquisition related costs | $ 500 | 7,200 | |
Restricted Stock Units (RSUs) [Member] | EZchip [Member] | |||
Business Acquisition [Line Items] | |||
Pro forma disclosure, equity interest | $ 4,800 |
FAIR VALUE MEASUREMENTS_ (Detai
FAIR VALUE MEASUREMENTS: (Details) - USD ($) | Jun. 30, 2016 | Feb. 23, 2016 | Dec. 31, 2015 |
Financial assets measured at fair value | |||
Principal Due on Term Debt | $ 273,000,000 | ||
Debt Instrument, Fair Value Disclosure | 271,600,000 | ||
Fair value, assets, level 1 to level 2 transfers, amount | 0 | $ 0 | |
Debt instrument, face amount | 273,000,000 | $ 280,000,000 | |
Fair value, measurements, recurring basis [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 218,569,000 | 444,989,000 | |
Investments, fair value disclosure | 217,939,000 | ||
Fair value, measurements, recurring basis [Member] | Money market funds [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 4,985,000 | ||
Fair value, measurements, recurring basis [Member] | Certificates of deposits [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 57,486,000 | 110,423,000 | |
Fair value, measurements, recurring basis [Member] | U.S. Government and agency securities [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 43,908,000 | 131,722,000 | |
Fair value, measurements, recurring basis [Member] | Commercial paper [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 28,363,000 | 57,214,000 | |
Fair value, measurements, recurring basis [Member] | Corporate bonds [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 74,638,000 | 105,482,000 | |
Fair value, measurements, recurring basis [Member] | Municipal bonds [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 3,441,000 | 26,208,000 | |
Fair value, measurements, recurring basis [Member] | Foreign government bonds [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 5,118,000 | 13,940,000 | |
Fair value, measurements, recurring basis [Member] | Level 1 [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 4,985,000 | 0 | |
Investments, fair value disclosure | 4,985,000 | ||
Fair value, measurements, recurring basis [Member] | Level 1 [Member] | Money market funds [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 4,985,000 | ||
Fair value, measurements, recurring basis [Member] | Level 2 [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 213,584,000 | 444,989,000 | |
Investments, fair value disclosure | 212,954,000 | ||
Fair value, measurements, recurring basis [Member] | Level 2 [Member] | Certificates of deposits [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 57,486,000 | 110,423,000 | |
Fair value, measurements, recurring basis [Member] | Level 2 [Member] | U.S. Government and agency securities [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 43,908,000 | 131,722,000 | |
Fair value, measurements, recurring basis [Member] | Level 2 [Member] | Commercial paper [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 28,363,000 | 57,214,000 | |
Fair value, measurements, recurring basis [Member] | Level 2 [Member] | Corporate bonds [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 74,638,000 | 105,482,000 | |
Fair value, measurements, recurring basis [Member] | Level 2 [Member] | Municipal bonds [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 3,441,000 | 26,208,000 | |
Fair value, measurements, recurring basis [Member] | Level 2 [Member] | Foreign government bonds [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 5,118,000 | 13,940,000 | |
Derivative financial instruments, assets [Member] | Fair value, measurements, recurring basis [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 630,000 | ||
Derivative financial instruments, assets [Member] | Fair value, measurements, recurring basis [Member] | Level 2 [Member] | |||
Financial assets measured at fair value | |||
Financial assets | 630,000 | ||
Derivative financial instruments, liabilities [Member] | Fair value, measurements, recurring basis [Member] | |||
Financial assets measured at fair value | |||
Financial and nonfinancial liabilities, fair value disclosure | 524,000 | 1,157,000 | |
Derivative financial instruments, liabilities [Member] | Fair value, measurements, recurring basis [Member] | Level 1 [Member] | |||
Financial assets measured at fair value | |||
Financial and nonfinancial liabilities, fair value disclosure | 0 | ||
Derivative financial instruments, liabilities [Member] | Fair value, measurements, recurring basis [Member] | Level 2 [Member] | |||
Financial assets measured at fair value | |||
Financial and nonfinancial liabilities, fair value disclosure | $ 524,000 | $ 1,157,000 |
INVESTMENTS_ (Details)
INVESTMENTS: (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Amortized Cost | |||||
Amortized cost | $ 276,385 | $ 276,385 | $ 511,091 | ||
Less amounts classified as cash and cash equivalents | (63,501) | (63,501) | (263,199) | ||
Available-for-sale securities, amortized cost basis | 212,884 | 212,884 | 247,895 | ||
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract] | |||||
Unrealized gains | 114 | 114 | 14 | ||
Available for sale securities accumulated gross unrealized gain before tax less cash and cash equivalents | 114 | 114 | 9 | ||
Unrealized losses | (44) | (44) | (592) | ||
Available for sale securities accumulated gross unrealized loss before tax less cash and cash equivalents | (44) | (44) | (590) | ||
Estimated Fair Value | |||||
Short term investments, fair value | 276,455 | 276,455 | 510,513 | ||
Available-for-sale securities | 212,954 | 212,954 | 247,314 | ||
Realized gains (losses) on the sale of marketable securities | 600 | $ 2,100 | 500 | $ 2,400 | |
Cash [Member] | |||||
Amortized Cost | |||||
Amortized cost | 58,516 | 58,516 | 65,524 | ||
Estimated Fair Value | |||||
Short term investments, fair value | 58,516 | 58,516 | 65,524 | ||
Money market funds [Member] | |||||
Amortized Cost | |||||
Amortized cost | 4,985 | 4,985 | |||
Estimated Fair Value | |||||
Short term investments, fair value | 4,985 | 4,985 | |||
Certificates of deposits [Member] | |||||
Amortized Cost | |||||
Amortized cost | 57,486 | 57,486 | 110,427 | ||
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract] | |||||
Unrealized gains | 0 | 0 | 3 | ||
Unrealized losses | 0 | 0 | (7) | ||
Estimated Fair Value | |||||
Short term investments, fair value | 57,486 | 57,486 | 110,423 | ||
U.S. Government and agency securities [Member] | |||||
Amortized Cost | |||||
Amortized cost | 43,873 | 43,873 | 131,755 | ||
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract] | |||||
Unrealized gains | 35 | 35 | 5 | ||
Unrealized losses | 0 | 0 | (38) | ||
Estimated Fair Value | |||||
Short term investments, fair value | 43,908 | 43,908 | 131,722 | ||
Commercial paper [Member] | |||||
Amortized Cost | |||||
Amortized cost | 28,363 | 28,363 | 57,214 | ||
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract] | |||||
Unrealized gains | 0 | 0 | 4 | ||
Unrealized losses | 0 | 0 | (4) | ||
Estimated Fair Value | |||||
Short term investments, fair value | 28,363 | 28,363 | 57,214 | ||
Corporate bonds [Member] | |||||
Amortized Cost | |||||
Amortized cost | 74,608 | 74,608 | 105,900 | ||
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract] | |||||
Unrealized gains | 73 | 73 | 2 | ||
Unrealized losses | (43) | (43) | (420) | ||
Estimated Fair Value | |||||
Short term investments, fair value | 74,638 | 74,638 | 105,482 | ||
Municipal bonds [Member] | |||||
Amortized Cost | |||||
Amortized cost | 3,441 | 3,441 | 26,283 | ||
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract] | |||||
Unrealized gains | 1 | 1 | 0 | ||
Unrealized losses | (1) | (1) | (75) | ||
Estimated Fair Value | |||||
Short term investments, fair value | 3,441 | 3,441 | 26,208 | ||
Foreign government bonds [Member] | |||||
Amortized Cost | |||||
Amortized cost | 5,113 | 5,113 | 13,988 | ||
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract] | |||||
Unrealized gains | 5 | 5 | 0 | ||
Unrealized losses | 0 | 0 | (48) | ||
Estimated Fair Value | |||||
Short term investments, fair value | 5,118 | 5,118 | 13,940 | ||
Cash and cash equivalents [Member] | |||||
Amortized Cost | |||||
Less amounts classified as cash and cash equivalents | (63,501) | (63,501) | (263,196) | ||
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract] | |||||
Unrealized gains | 5 | ||||
Unrealized losses | $ (2) |
INVESTMENTS_ (Fair value due by
INVESTMENTS: (Fair value due by period) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Amortized Cost | ||
Due in less than one year | $ 133,643 | $ 148,041 |
Due in one to three years | 79,241 | 99,854 |
Estimated Fair Value | ||
Due in less than one year | 133,686 | 147,914 |
Due in one to three years | 79,268 | 99,400 |
Available-for-sale securities, amortized cost basis | 212,884 | 247,895 |
Estimated fair value | 212,954 | 247,314 |
Investment in a privately-held companies accounted for under the cost method | $ 7,800 | $ 7,700 |
GOODWILL (Details)
GOODWILL (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Changes in the carrying amount of goodwill | |
Goodwill | $ 200,743 |
Acquisitions | 275,294 |
Adjustments | 0 |
Goodwill | $ 476,037 |
INTANGIBLE ASSETS_ (Gross, Accu
INTANGIBLE ASSETS: (Gross, Accumulated Amortization, Net) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Gross carrying value of amortizable intangible assets | $ 374,088 | $ 374,088 | $ 85,758 | ||
Accumulated amortization | (81,330) | (81,330) | (53,604) | ||
Net carrying value of amortizable intangible assets | 292,758 | 292,758 | 32,154 | ||
Amortization of intangible assets | 16,000 | $ 2,600 | 27,700 | $ 4,900 | |
Licensing agreements [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross carrying value of amortizable intangible assets | 2,638 | 2,638 | 2,554 | ||
Accumulated amortization | (1,771) | (1,771) | (1,589) | ||
Net carrying value of amortizable intangible assets | 867 | 867 | 965 | ||
Developed Technology Rights [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross carrying value of amortizable intangible assets | 251,074 | 251,074 | 69,828 | ||
Accumulated amortization | (56,298) | (56,298) | (40,408) | ||
Net carrying value of amortizable intangible assets | 194,776 | 194,776 | 29,420 | ||
Customer Relationships [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross carrying value of amortizable intangible assets | 69,776 | 69,776 | 13,376 | ||
Accumulated amortization | (14,205) | (14,205) | (11,607) | ||
Net carrying value of amortizable intangible assets | 55,571 | 55,571 | $ 1,769 | ||
Order or Production Backlog [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross carrying value of amortizable intangible assets | 11,300 | 11,300 | |||
Accumulated amortization | (8,399) | (8,399) | |||
Net carrying value of amortizable intangible assets | 2,901 | 2,901 | |||
Trade Names [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross carrying value of amortizable intangible assets | 5,600 | 5,600 | |||
Accumulated amortization | (657) | (657) | |||
Net carrying value of amortizable intangible assets | 4,943 | 4,943 | |||
Finite Lived Intangible Assets Excluding In Process Research And Development [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross carrying value of amortizable intangible assets | 340,388 | 340,388 | |||
Accumulated amortization | (81,330) | (81,330) | |||
Net carrying value of amortizable intangible assets | 259,058 | 259,058 | |||
In Process Research and Development [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross carrying value of amortizable intangible assets | 33,700 | 33,700 | |||
Accumulated amortization | 0 | 0 | |||
Net carrying value of amortizable intangible assets | $ 33,700 | $ 33,700 |
INTANGIBLE ASSETS_ (By maturity
INTANGIBLE ASSETS: (By maturity date) (Details) $ in Thousands | Jun. 30, 2016USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
2016 (remaining six months) | $ 27,765 |
2,017 | 49,722 |
2,018 | 46,736 |
2,019 | 41,589 |
2020 and thereafter | 93,246 |
Total | $ 259,058 |
DERIVATIVES AND HEDGING ACTIV48
DERIVATIVES AND HEDGING ACTIVITIES: (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Designated as Hedging Instrument [Member] | |||||
Notional Disclosures [Abstract] | |||||
Currency forward contracts | $ 93,420 | $ 93,420 | $ 98,744 | ||
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | |||||
Balance at the beginning of the period | (1,091) | ||||
Amount of gain recognized in OCI (effective portion) | 1,510 | ||||
Amount of gain reclassified from OCI to income (effective portion) | (161) | ||||
Balance at the end of the period | 258 | 258 | |||
Not Designated as Hedging Instrument [Member] | |||||
Notional Disclosures [Abstract] | |||||
Currency forward contracts | 26,019 | $ 26,019 | |||
Foreign Exchange Forward [Member] | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Expected time to realize the accumulated OCI balance related to foreign exchange contracts | 12 months | ||||
Foreign Exchange Forward [Member] | Other Current Assets [Member] | |||||
Derivative, Fair Value, Net [Abstract] | |||||
Currency forward contracts, assets | 630 | $ 630 | |||
Foreign Exchange Forward [Member] | Other Current Assets [Member] | Designated as Hedging Instrument [Member] | |||||
Derivative, Fair Value, Net [Abstract] | |||||
Currency forward contracts, assets | 630 | 630 | |||
Foreign Exchange Forward [Member] | Other Current Liabilities [Member] | |||||
Derivative, Fair Value, Net [Abstract] | |||||
Currency forward contracts, liabilities | 524 | 524 | 1,157 | ||
Foreign Exchange Forward [Member] | Other Current Liabilities [Member] | Designated as Hedging Instrument [Member] | |||||
Derivative, Fair Value, Net [Abstract] | |||||
Currency forward contracts, liabilities | 524 | 524 | $ 1,157 | ||
Operating Expense [Member] | Designated as Hedging Instrument [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | |||||
Summary of Derivative Instruments Impact on Results of Operations [Abstract] | |||||
Other (loss) income | 23 | $ (737) | $ 161 | $ (3,010) | |
Nonoperating Income (Expense) [Member] | Not Designated as Hedging Instrument [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | |||||
Summary of Derivative Instruments Impact on Results of Operations [Abstract] | |||||
Other (loss) income | $ (271) | $ (543) |
COMMITMENTS AND CONTINGENCIES49
COMMITMENTS AND CONTINGENCIES: (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
Future minimum payments under non-cancelable operating leases | ||||
2016 due in remaining six months | $ 10,679 | $ 10,679 | ||
2,017 | 18,299 | 18,299 | ||
2,018 | 14,477 | 14,477 | ||
2,019 | 11,046 | 11,046 | ||
2020 and thereafter | 11,176 | 11,176 | ||
Total minimum lease payments | 65,677 | 65,677 | ||
Purchase commitments | ||||
2016 due in remaining six months | 100,446 | 100,446 | ||
2,017 | 9,230 | 9,230 | ||
2,018 | 3,836 | 3,836 | ||
2019 and thereafter | 25 | 25 | ||
Amount of non-cancelable purchase commitments | 113,537 | 113,537 | ||
Loss Contingencies [Line Items] | ||||
Total minimum lease payments | 65,677 | $ 65,677 | ||
Royalties payable, percentage | 4.50% | |||
Accrued royalties | 23,300 | $ 23,300 | ||
Unrecognized tax benefits | 37,400 | 37,400 | $ 25,400 | |
Yokneam [Member] | ||||
Future minimum payments under non-cancelable operating leases | ||||
Total minimum lease payments | 2,900 | $ 2,900 | ||
Loss Contingencies [Line Items] | ||||
Length of operating lease term | 10 years | |||
Present value of capital lease obligations | 28,700 | $ 28,700 | ||
Total minimum lease payments | $ 2,900 | $ 2,900 | ||
Avago [Member] | Settled Litigation [Member] | ||||
Loss Contingencies [Line Items] | ||||
Period of agreement not to file lawsuits | 5 years | |||
Loss contingency, amount paid | $ 5,100 |
SHARE INCENTIVE PLANS_ (Plans,
SHARE INCENTIVE PLANS: (Plans, Acquisition Information) (Details) $ in Millions | Feb. 23, 2016USD ($)shares | Jun. 30, 2016planshares | Dec. 31, 2015shares |
Share incentive plans | |||
Number of plans | plan | 10 | ||
Common stock, capital shares reserved for future issuance | 10,459,118 | ||
Business acquisition unvested employee RSU conversion ratio | 0.56% | ||
Acquisition-related EZchip [Member] | |||
Share incentive plans | |||
Restricted share units outstanding | 1 | ||
Restricted Stock Units (RSUs) [Member] | |||
Share incentive plans | |||
Conversion of stock, shares converted | 499,894 | ||
Restricted share units outstanding | 3,779,296 | 2,205,083 | |
EZchip [Member] | |||
Share incentive plans | |||
Aggregate intrinsic value, nonvested shares | $ | $ 23.2 | ||
EZchip [Member] | Acquisition-related EZchip [Member] | |||
Share incentive plans | |||
Number of shares | 499,894 | ||
Aggregate intrinsic value, nonvested shares | $ | $ 23.2 | ||
EZchip [Member] | Restricted Stock Units (RSUs) [Member] | |||
Share incentive plans | |||
Conversion of stock, shares converted | 891,822 | ||
EZchip [Member] | Equity Issued in Business Combination [Member] | Acquisition-related EZchip [Member] | |||
Share incentive plans | |||
Business acquisition, equity interest issued or issuable, value assigned | $ | $ 1 | ||
EZchip [Member] | Stock Compensation Plan [Member] | Acquisition-related EZchip [Member] | |||
Share incentive plans | |||
Business acquisition, equity interest issued or issuable, value assigned | $ | $ 22.2 | ||
Award requisite service period (in years) | 2 years 2 months 29 days |
SHARE INCENTIVE PLANS_ (Stock o
SHARE INCENTIVE PLANS: (Stock option rollforward) (Details) - Employee stock option [Member] - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Feb. 23, 2016 | Dec. 31, 2015 | |
Number of Shares | ||||
Options outstanding at the beginning of the period (in shares) | 2,028,595 | |||
Options exercised (in shares) | (198,808) | |||
Options canceled (in shares) | (30,982) | |||
Options outstanding at the end of the period (in shares) | 1,798,805 | |||
Weighted Average Exercise Price | ||||
Weighted-average exercise price, options outstanding at the beginning of the period (in USD per share) | $ 30.81 | |||
Weighted-average exercise price, options exercised (in USD per share) | 15.83 | |||
Weighted-average exercise price, options canceled (in USD per share) | 83.46 | |||
Weighted-average exercise price, options outstanding at the end of the period (in USD per share) | $ 31.55 | |||
Pretax intrinsic value of options exercised | $ 6.5 | $ 8.6 | ||
Share price (in USD per share) | $ 47.96 | $ 46.40 | ||
Pretax intrinsic value of options outstanding | $ 42.9 | $ 40.2 | ||
Pretax intrinsic value of exercisable options | $ 42.7 | $ 39.9 |
SHARE INCENTIVE PLANS_ (RSU rol
SHARE INCENTIVE PLANS: (RSU rollforward) (Details) - Restricted Stock Units (RSUs) [Member] - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Dec. 31, 2015 | |
Number of Shares | ||||
Restricted share units outstanding | 3,779,296 | 3,779,296 | 2,205,083 | |
Restricted share units granted (in shares) | 1,784,626 | |||
Restricted share units vested (in shares) | (559,048) | |||
Restricted share units canceled (in shares) | (151,259) | |||
Non vested restricted share units at the end of the period (in shares) | 3,779,296 | |||
Weighted Average Grant Date Fair Value | ||||
Non vested restricted share units at the beginning of the period (in USD per share) | $ 44.39 | |||
Restricted share units granted (in USD per share) | 48.75 | $ 46.15 | ||
Restricted share units vested (in USD per share) | 45.07 | |||
Restricted share units cancelled (in USD per share) | 45.14 | |||
Non vested restricted share units at the end of the period (in USD per share) | $ 46.58 | |||
Total intrinsic value of all outstanding restricted share units | $ 181.3 | $ 92.9 | ||
EZchip [Member] | ||||
Number of Shares | ||||
Assumed restricted share units from acquisition (in shares) | 499,894 | |||
Weighted Average Grant Date Fair Value | ||||
Restricted share units granted (in USD per share) | $ 46.40 |
SHARE INCENTIVE PLANS_ (Shares
SHARE INCENTIVE PLANS: (Shares reserved, ESPP assumptions) (Details) - shares | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Ordinary shares reserved for future issuance under equity incentive plans | |||
Shares outstanding | 1,798,805 | ||
Common stock, capital shares reserved for future issuance | 10,459,118 | ||
Restricted Stock Units (RSUs) [Member] | |||
Ordinary shares reserved for future issuance under equity incentive plans | |||
Restricted share units outstanding | 3,779,296 | 2,205,083 | |
Employee Stock [Member] | |||
Ordinary shares reserved for future issuance under equity incentive plans | |||
Shares authorized for future issuance | 4,267,370 | ||
Weighted average assumptions | |||
Dividend yield (as a percent) | 0.00% | 0.00% | |
Expected volatility (as a percent) | 37.60% | 38.10% | |
Risk-free interest rate (as a percent) | 0.50% | 0.09% | |
Expected life (in years) | 6 months | 6 months | |
Global plan [Member] | |||
Ordinary shares reserved for future issuance under equity incentive plans | |||
Shares authorized for future issuance | 613,647 |
SHARE INCENTIVE PLANS_ (Share-b
SHARE INCENTIVE PLANS: (Share-based compensation) (Details) - USD ($) $ in Thousands | Feb. 23, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Share-based compensation expense | |||||
Allocated share-based compensation expense | $ 18,094 | $ 13,286 | $ 36,360 | $ 25,004 | |
Total unrecognized share-based compensation costs related to non-vested awards | 143,500 | $ 143,500 | |||
Weighted average period for recognition of unrecognized share-based compensation costs (in years) | 2 years 2 months 29 days | 2 years 4 months 24 days | |||
Cost of sales [Member] | |||||
Share-based compensation expense | |||||
Allocated share-based compensation expense | 671 | 610 | $ 1,146 | 1,157 | |
Research and development expense [Member] | |||||
Share-based compensation expense | |||||
Allocated share-based compensation expense | 10,770 | 7,553 | 19,922 | 14,321 | |
Sales and marketing [Member] | |||||
Share-based compensation expense | |||||
Allocated share-based compensation expense | 3,889 | 2,750 | 7,537 | 5,144 | |
General and administrative expense [Member] | |||||
Share-based compensation expense | |||||
Allocated share-based compensation expense | $ 2,764 | $ 2,373 | $ 7,755 | $ 4,382 |
ACCUMULATED OTHER COMPREHENSI55
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (AOCI rollforward) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at the beginning of the period | $ (1,669) | |||
Amounts reclassified from accumulated other comprehensive income/loss | 321 | $ 3,027 | ||
Net current-period other comprehensive income/loss, net of taxes | $ (2,095) | $ 5,219 | 1,997 | 6,044 |
Balance at the end of the period | 328 | 328 | ||
Unrealized gains / losses on available-for-sale securities [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at the beginning of the period | (578) | (374) | ||
Other comprehensive income/loss before reclassifications | 166 | 195 | ||
Amounts reclassified from accumulated other comprehensive income/loss | 482 | 17 | ||
Net current-period other comprehensive income/loss, net of taxes | 648 | 212 | ||
Balance at the end of the period | 70 | (162) | 70 | (162) |
Gains/losses on derivatives [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at the beginning of the period | (1,091) | (3,646) | ||
Other comprehensive income/loss before reclassifications | 1,510 | 2,822 | ||
Amounts reclassified from accumulated other comprehensive income/loss | (161) | 3,010 | ||
Net current-period other comprehensive income/loss, net of taxes | 1,349 | 5,832 | ||
Balance at the end of the period | 258 | 2,186 | 258 | 2,186 |
Total [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at the beginning of the period | (1,669) | (4,020) | ||
Other comprehensive income/loss before reclassifications | 1,676 | 3,017 | ||
Amounts reclassified from accumulated other comprehensive income/loss | 321 | 3,027 | ||
Net current-period other comprehensive income/loss, net of taxes | 1,997 | 6,044 | ||
Balance at the end of the period | $ 328 | $ 2,024 | $ 328 | $ 2,024 |
ACCUMULATED OTHER COMPREHENSI56
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): (AOCI reclassifcation in earnings) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Reclassifications out of accumulated other comprehensive income | ||
Amounts reclassified from accumulated other comprehensive income/loss | $ (321) | $ (3,027) |
Cost of revenues and operating expenses [Member] | ||
Reclassifications out of accumulated other comprehensive income | ||
Gains/losses on derivatives | 161 | (3,010) |
Cost of revenues [Member] | ||
Reclassifications out of accumulated other comprehensive income | ||
Gains/losses on derivatives | 10 | (205) |
Research and development expense [Member] | ||
Reclassifications out of accumulated other comprehensive income | ||
Gains/losses on derivatives | 112 | (2,251) |
Sales and marketing [Member] | ||
Reclassifications out of accumulated other comprehensive income | ||
Gains/losses on derivatives | 17 | (234) |
General and administrative expense [Member] | ||
Reclassifications out of accumulated other comprehensive income | ||
Gains/losses on derivatives | 22 | (320) |
Other nonoperating income (expense) [Member] | ||
Reclassifications out of accumulated other comprehensive income | ||
Gains/losses on Available-for-Sale Securities | $ (482) | $ (17) |
INCOME TAXES_ ADDITIONAL INFORM
INCOME TAXES: ADDITIONAL INFORMATION (Details) $ / shares in Units, $ in Millions | Jan. 04, 2016 | Jan. 03, 2016 | Dec. 31, 2015USD ($) | Jun. 30, 2016USD ($)subsidiary | Jun. 30, 2015 | Jun. 30, 2016USD ($)subsidiary$ / shares | Jun. 30, 2015USD ($)$ / shares |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract] | |||||||
Unrecognized tax benefits | $ 25.4 | $ 37.4 | $ 37.4 | ||||
Unrecognized tax benefits, income tax penalties and interest accrued | $ 1.2 | $ 1.5 | 1.5 | ||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Effective income tax rate reconciliation, change in enacted tax rate, amount | $ 1.3 | ||||||
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||||||
Effective income tax rate reconciliation, percent | 1.00% | 5.00% | 2227.80% | 9.90% | |||
Effective income tax rate reconciliation, at federal statutory income tax rate, percent | 35.00% | ||||||
Israel Tax Authority [Member] | |||||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract] | |||||||
Tax holiday inception date | 2,011 | ||||||
Effective income tax rate reconciliation corporate income tax rate | 25.00% | 26.50% | 26.50% | 25.00% | |||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Income tax holiday, aggregate dollar amount | $ 21 | $ 13 | |||||
Income tax holiday, income tax benefits per share ( in USD per share) | $ / shares | $ 0.44 | $ 0.27 | |||||
Minimum [Member] | DENMARK [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Open tax year | 2,011 | ||||||
Maximum [Member] | DENMARK [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Open tax year | 2,015 | ||||||
Yokneam [Member] | Israel Tax Authority [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Income tax holiday, termination date | 2,021 | ||||||
Tel Aviv [Member] | Minimum [Member] | Israel Tax Authority [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Income tax holiday, termination date | 2,017 | ||||||
Tel Aviv [Member] | Maximum [Member] | Israel Tax Authority [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Income tax holiday, termination date | 2,021 | ||||||
Israel Tax Authority [Member] | Israel Tax Authority [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Number of subsidiaries | subsidiary | 1 | 1 | |||||
Israel Tax Authority [Member] | Minimum [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Open tax year | 2,011 | ||||||
Israel Tax Authority [Member] | Maximum [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Open tax year | 2,014 | ||||||
Tax Authority Foreign and Domestic [Member] | Minimum [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Open tax year | 2,012 | ||||||
Tax Authority Foreign and Domestic [Member] | Maximum [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Open tax year | 2,015 | ||||||
Domestic Tax Authority [Member] | Minimum [Member] | |||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||||
Open tax year | 2,002 |
OTHER INCOME (LOSS)_ (Details)
OTHER INCOME (LOSS): (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Other Income and Expenses [Abstract] | ||||
Effective income tax rate reconciliation, percent | 1.00% | 5.00% | 2227.80% | 9.90% |
Other Nonoperating Income (Expense) [Abstract] | ||||
Interest income and gains (losses) on sale of investments, net | $ 674 | $ 817 | $ 744 | $ 1,480 |
Impairment loss on equity investment in a private company | 0 | 0 | 0 | (3,189) |
Foreign exchange gain (loss) | (359) | 95 | (368) | 152 |
Other income (loss) | $ 315 | $ 912 | $ 376 | $ (1,557) |
TERM DEBT_ (Details)
TERM DEBT: (Details) | Feb. 23, 2016USD ($) | Jun. 30, 2016USD ($) |
Debt Instrument [Line Items] | ||
Debt instrument, issuance date | Feb. 22, 2016 | |
Debt instrument, face amount | $ 280,000,000 | $ 273,000,000 |
Debt instrument, maturity date | Feb. 21, 2019 | |
Debt instrument, unamortized discount | (4,625,000) | |
Notes payable | $ 277,625,000 | |
Interest rate, effective percentage | 3.10% | |
Frequency of periodic payment | quarterly | |
Maturity date range, end | Feb. 21, 2019 | |
2016 due in remaining six months | $ 14,000,000 | |
2,017 | 38,500,000 | |
2,018 | 63,000,000 | |
2,019 | 157,500,000 | |
Debt, long-term and short-term, combined amount | $ 273,000,000 | |
Debt issuance costs | $ 5,500,000 | |
Pledge, percentage equity interest | 1 | |
Repayment terms | Quarterly amortization payments on the term loans of: (i) 2.50% of the original principal amount for the four fiscal quarters beginning on June 2016 and ending on March 2017, (ii)3.75% of the original principal amount for the four fiscal quarters beginning on June 2017 and ending on March 2018 and (iii) 6.25% of the original principal amount for the three fiscal quarters beginning on June 2018 and ending on December 2018. On the maturity date, the Company will be required to pay all remaining outstanding amounts under the term loans. | |
Eurodollar [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate, stated percentage | 1.00% | |
Description of variable rate basis | one-month Eurodollar rate | |
Base Rate [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Description of variable rate basis | Base rate (which is the highest of (i) the administrative agent’s prime rate, (ii) one-half of 1.00% in excess of the overnight federal funds rate, and (iii) 1.00% in excess of the one-month Eurodollar rate), plus an applicable margin | |
Minimum [Member] | Eurodollar [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.25% | |
Minimum [Member] | Base Rate [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.25% | |
Maximum [Member] | Eurodollar [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.00% | |
Maximum [Member] | Base Rate [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.00% | |
June 2016 To March 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Periodic quarterly principal payment rate | 2.50 | |
Maturity date range, start | Jun. 30, 2016 | |
Maturity date range, end | Mar. 31, 2017 | |
June 2017 To March 2018 [Member] | ||
Debt Instrument [Line Items] | ||
Periodic quarterly principal payment rate | 3.75 | |
Maturity date range, start | Jun. 30, 2017 | |
Maturity date range, end | Mar. 31, 2018 | |
June 2018 To December 2018 [Member] | ||
Debt Instrument [Line Items] | ||
Periodic quarterly principal payment rate | 6.25 | |
Maturity date range, start | Jun. 30, 2018 | |
Maturity date range, end | Dec. 31, 2018 |