SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2014 |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUTING POLICIES [Text Block] | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: |
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Principles of Consolidation |
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The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries after elimination of all intercompany transactions and balances. |
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Estimates |
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The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition and allowances for receivables and inventories. These estimates are based on historical facts and various other factors, which the Company believes to be reasonable at the time the estimates are made. However, as the effects of future events cannot be determined with precision, actual results could differ significantly from management's estimates. |
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Cash and Cash Equivalents |
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The Company considers cash invested in highly liquid financial instruments with maturities of three months or less at the date of purchase to be cash equivalents. |
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Marketable Securities |
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The Company generally holds securities until maturity; however, they may be sold under certain circumstances including, but not limited to, when necessary for the funding of acquisitions and other strategic investments. As a result the Company classifies its investment portfolio as available-for-sale. The Company classifies all investments with an original maturity date greater than three months as short-term marketable securities in its Consolidated Balance Sheet. As of December 31, 2014, and December 31, 2013, the Company's marketable securities consisted primarily of corporate bonds and other high-quality commercial securities. The weighted average interest rate of investments at December 31, 2014 and 2013, was approximately 0.76% and 0.74%, respectively. |
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Amortized cost and estimated fair market value of investments classified as available-for-sale at December 31, 2014, were as follows (in thousands): |
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| | | Gross Unrealized | | Estimated Fair | |
| Amortized Cost | | Gains | Losses | | Market Value | |
Investments due in 4-12 months: | | | | | | | |
Corporate securities | $ | 30,233 | | | $ | 36 | | $ | — | | | $ | 30,269 | | |
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Total | 30,233 | | | 36 | | — | | | 30,269 | | |
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Investments due between 12 months and 5-years: | | | | | | | |
Corporate securities | 84,259 | | | 92 | | (45 | ) | | 84,306 | | |
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Total | 84,259 | | | 92 | | (45 | ) | | 84,306 | | |
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Total investment securities | $ | 114,492 | | | $ | 128 | | $ | (45 | ) | | $ | 114,575 | | |
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Amortized cost and estimated fair market value of investments classified as available-for-sale at December 31, 2013, were as follows (in thousands): |
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| | | Gross Unrealized | | Estimated Fair | |
| Amortized Cost | | Gains | Losses | | Market Value | |
Investments due in less than 3 months: | | | | | | | |
Commercial paper | $ | 3,098 | | | $ | 1 | | $ | — | | | $ | 3,099 | | |
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Total | 3,098 | | | 1 | | — | | | 3,099 | | |
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Investments due in 4-12 months: | | | | | | | |
Corporate securities | 6,007 | | | 33 | | — | | | 6,040 | | |
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Total | 6,007 | | | 33 | | — | | | 6,040 | | |
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Investments due between 12 months and 5-years: | | | | | | | |
Corporate securities | 102,963 | | | 202 | | (26 | ) | | 103,139 | | |
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Total | 102,963 | | | 202 | | (26 | ) | | 103,139 | | |
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Total investment securities | $ | 112,068 | | | $ | 236 | | $ | (26 | ) | | $ | 112,278 | | |
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As of December 31, 2014, and 2013, there were no individual securities that had been in a continuous loss position for 12 months or longer. |
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Inventories |
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Inventories (which consist of costs associated with the purchases of wafers from domestic and offshore foundries and of packaged components from offshore assembly manufacturers, as well as internal labor and overhead associated with the testing of both wafers and packaged components) are stated at the lower of cost (first-in, first-out) or market. Provisions, when required, are made to reduce excess and obsolete inventories to their estimated net realizable values. Inventories consist of the following (in thousands): |
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| December 31, | | December 31, | | | | | | | | |
2014 | 2013 | | | | | | | | |
Raw materials | $ | 21,127 | | | $ | 8,221 | | | | | | | | | |
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Work-in-process | 14,643 | | | 13,216 | | | | | | | | | |
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Finished goods | 28,255 | | | 20,798 | | | | | | | | | |
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Total | $ | 64,025 | | | $ | 42,235 | | | | | | | | | |
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Additional Components of the Company's Consolidated Balance Sheet |
Accounts Receivable (in thousands): |
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| December 31, | | December 31, | | | | | | | | |
2014 | 2013 | | | | | | | | |
Accounts receivable trade | $ | 38,344 | | | $ | 42,410 | | | | | | | | | |
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Accrued ship and debit and rebate claims | (27,967 | ) | | (29,901 | ) | | | | | | | | |
Allowance for doubtful accounts | (191 | ) | | (120 | ) | | | | | | | | |
Total | $ | 10,186 | | | $ | 12,389 | | | | | | | | | |
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Prepaid Expenses and Other Current Assets (in thousands): |
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| December 31, | | December 31, | | | | | | | | |
2014 | 2013 | | | | | | | | |
Prepaid legal fees | $ | 1,506 | | | $ | 6,267 | | | | | | | | | |
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Loan to Cambridge Semiconductor (Note 11) | 6,600 | | | — | | | | | | | | | |
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Advance to suppliers | 800 | | | 757 | | | | | | | | | |
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Prepaid income tax | 3,208 | | | 7,521 | | | | | | | | | |
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Prepaid maintenance agreements | 1,023 | | | 947 | | | | | | | | | |
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Interest receivable | 664 | | | 519 | | | | | | | | | |
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Other | 2,578 | | | 2,621 | | | | | | | | | |
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Total | $ | 16,379 | | | $ | 18,632 | | | | | | | | | |
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Property and Equipment |
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Property and equipment consist of the following (in thousands): |
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| December 31, 2014 | | December 31, 2013 | | | | | | | | |
Land | $ | 16,754 | | | $ | 16,754 | | | | | | | | | |
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Construction-in-progress | 8,068 | | | 8,003 | | | | | | | | | |
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Building and improvements | 44,794 | | | 43,641 | | | | | | | | | |
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Machinery and equipment | 124,138 | | | 111,314 | | | | | | | | | |
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Computer software and hardware and office furniture and fixtures | 37,867 | | | 34,327 | | | | | | | | | |
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| 231,621 | | | 214,039 | | | | | | | | | |
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Accumulated depreciation | (135,798 | ) | | (123,898 | ) | | | | | | | | |
Total | $ | 95,823 | | | $ | 90,141 | | | | | | | | | |
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Depreciation expense for property and equipment for fiscal years ended December 31, 2014, 2013 and 2012, was approximately $15.9 million, $16.1 million and $15.3 million, respectively, and was determined using the straight-line method over the following useful lives: |
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Building and improvements | 4-40 years | | | | | | | | | | | | | | |
Machinery and equipment | 2-8 years | | | | | | | | | | | | | | |
Computer software and hardware and office furniture and fixtures | 4-5 years | | | | | | | | | | | | | | |
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Total property and equipment located in the United States at December 31, 2014, 2013 and 2012, was approximately $140 million, $134 million and $126 million, respectively. In 2014 13% of total property and equipment was held in Thailand by one of the Company's sub-contractors. In 2013 and 2012, no more than 10% of total property and equipment was held in any foreign country. |
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Accumulated Other Comprehensive Income |
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Changes in accumulated other comprehensive income (loss) for three years ended December 31, 2014 (in thousands): |
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| Unrealized Gains and Losses on Available-for-Sale Securities | | Defined Benefit Pension Items | | Foreign Currency Items | | Total |
Balance at January 1, 2012 | $ | — | | | $ | — | | | $ | 50 | | | $ | 50 | |
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Other comprehensive income (loss) before reclassifications | 138 | | | (560 | ) | | 79 | | | (343 | ) |
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Amounts reclassified from accumulated other comprehensive income (loss) | — | | | — | | | — | | | — | |
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Other comprehensive income (loss) | 138 | | | (560 | ) | | 79 | | | (343 | ) |
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Balance at December 31, 2012 | 138 | | | (560 | ) | | 129 | | | (293 | ) |
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Other comprehensive income (loss) before reclassifications | 72 | | | (277 | ) | | (29 | ) | | (234 | ) |
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Amounts reclassified from accumulated other comprehensive income (loss) | — | | | 57 | | -1 | — | | | 57 | |
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Other comprehensive income (loss) | 72 | | | (220 | ) | | (29 | ) | | (177 | ) |
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Balance at December 31, 2013 | 210 | | | (780 | ) | | 100 | | | (470 | ) |
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Other comprehensive income (loss) before reclassifications | (127 | ) | | (538 | ) | | (79 | ) | | (744 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) | — | | | 78 | | -1 | — | | | 78 | |
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Other comprehensive income (loss) | (127 | ) | | (460 | ) | | (79 | ) | | (666 | ) |
Balance at December 31, 2014 | $ | 83 | | | $ | (1,240 | ) | | $ | 21 | | | $ | (1,136 | ) |
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(1) This component of accumulated other comprehensive income is included in the computation of net periodic pension cost for the years ended December 31, 2014 and December 31, 2013. |
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Business Combinations |
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The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management. The Company adjusts the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as it obtains more information as to facts and circumstances existing at the acquisition date impacting asset valuations and liabilities assumed. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. |
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Goodwill and Intangible Assets |
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Goodwill and the Company's domain name are evaluated in accordance with Accounting Standards Codification, or ASC, 350-10, Goodwill and Other Intangible Assets, and an impairment analysis is conducted on an annual basis, or sooner if indicators exist for a potential impairment. |
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In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. |
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Employee Benefits Plan |
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The Company sponsors a 401(k) tax-deferred savings plan for all employees in the United States who meet certain eligibility requirements. Participants may contribute up to the amount allowable as a deduction for federal income tax purposes. The Company is not required to contribute; however, from time-to-time the Company will contribute a certain percentage of employee annual salaries on a discretionary basis, not to exceed an established threshold. In 2014 and 2013 the Company provided for a contribution of approximately $1.1 million and $1.1 million, respectively. No employee 401(k) contribution was provided for in 2012. |
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Retirement Benefit Obligations (Pension) |
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The Company recognizes the overfunded or underfunded status of a defined benefit pension or postretirement plan as an asset or liability in the accompanying consolidated balance sheets. Actuarial gains and losses are recorded in accumulated other comprehensive income (loss), a component of stockholders’ equity, and are amortized as a component of net periodic cost over the remaining estimated service period of participants. |
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Revenue Recognition |
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Product revenues consist of sales to original equipment manufacturers (“OEMs”), merchant power supply manufacturers and distributors. Approximately 75% of the Company's net product sales were made to distributors in 2014. The Company applies the provisions of Accounting Standard Codification (“ASC”) 605-10 (“ASC 605-10”) and all related appropriate guidance. Revenue is recognized when all of the following criteria have been met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the price is fixed or determinable, and (4) collectability is reasonably assured. Customer purchase orders are generally used to determine the existence of an arrangement. Delivery is considered to have occurred when title and risk of loss have transferred to the Company's customer. The Company evaluates whether the price is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. With respect to collectability, the Company performs credit checks for new customers and performs ongoing evaluations of its existing customers' financial condition and requires letters of credit whenever deemed necessary. |
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Sales to international OEMs and merchant power supply manufacturers for shipments from the Company's facility outside of the United States are pursuant to “EX Works” ("EXW") shipping terms, meaning that title to the product transfers to the customer upon shipment from the Company's foreign warehouse. Sales to international OEM customers and merchant power supply manufacturers that are shipped from the Company's facility in California are pursuant to “delivered at frontier” (“DAF”) shipping terms. As such, title to the product passes to the customer when the shipment reaches the destination country and revenue is recognized upon the arrival of the product in that country. Shipments to OEMs and merchant power supply manufacturers in the Americas are pursuant to “free on board” (“FOB”) point of origin shipping terms meaning that title is passed to the customer upon shipment. Revenue is recognized upon title transfer for sales to OEMs and merchant power supply manufacturers, assuming all other criteria for revenue recognition are met. |
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Sales to most of the Company's distributors are made under terms allowing certain price adjustments and rights of return on the Company's products held by its distributors. As a result of these rights, the Company defers the recognition of revenue and the costs of revenues derived from these sales until the Company's distributors report that they have sold the Company's products to their customers. The Company's recognition of such distributor revenue is based on point of sale reports received from the distributors, at which time the price is no longer subject to adjustment and is fixed, and the products are no longer subject to return to the Company except pursuant to warranty terms. The gross profit that is deferred as a result of this policy is reflected as “deferred income on sales to distributors” in the accompanying consolidated balance sheets. The total deferred revenue as of December 31, 2014, and December 31, 2013, was approximately $25.0 million and $25.5 million, respectively. The total deferred cost as of December 31, 2014, and December 31, 2013, was approximately $9.8 million and $9.8 million, respectively. |
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Frequently, distributors need to sell at a price lower than the standard distribution price in order to win business. At or soon after the distributor invoices its customer, the distributor submits a “ship and debit” price adjustment claim to the Company to adjust the distributor's cost from the standard price to the pre-approved lower price. After verification by the Company, a credit memo is issued to the distributor for the ship and debit claim. The Company maintains a reserve for unprocessed claims and future ship and debit price adjustments. The reserves appear as a reduction to accounts receivable and deferred income on sales to distributors in the Company's accompanying consolidated balance sheets. To the extent future ship and debit claims significantly exceed amounts estimated, there could be a material impact on the deferred revenue and deferred margin ultimately recognized. To evaluate the adequacy of its reserves, the Company analyzes historical ship and debit payments and levels of inventory in the distributor channels. |
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Sales to certain distributors of the Company are made under terms that do not include rights of return or price concessions after the product is shipped to the distributor. Accordingly, product revenue is recognized upon shipment and title transfer assuming all other revenue recognition criteria are met. |
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Foreign Currency Risk and Foreign Currency Translation |
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As of December 31, 2014, the Company's primary transactional currency was in U.S. dollars; in addition, the Company holds cash in Swiss francs and Euros as a result of its acquisition of Concept. The Company completed the acquisition of Concept, which is located in Biel, Switzerland, in the second quarter of 2012. Included in the assets acquired was cash denominated in Swiss francs and Euros, which will be used to fund operations of the Company's Swiss subsidiary. The functional currency of the Company's Swiss subsidiary is the U.S. dollar. |
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Gains and losses arising from the remeasurement of non-functional currency balances are recorded in ''other income (expense)'' in the accompanying consolidated statements of income (loss). For the years ended December 31, 2014, 2013 and 2012 the Company realized foreign exchange transaction gains (losses) of $0.1 million, $(0.1) million and $(0.6) million, respectively. |
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The functional currencies of the Company's other subsidiaries are the local currencies. Accordingly, all assets and liabilities are translated into U.S. dollars at the current exchange rates as of the applicable balance sheet date. Revenues and expenses are translated at the average exchange rate prevailing during the period. Cumulative gains and losses from the translation of the foreign subsidiaries' financial statements have been included in stockholders' equity. |
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Warranty |
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The Company generally warrants that its products will substantially conform to the published specifications for 12 months from the date of shipment. The Company's liability is limited to either a credit equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial, and as a result, the Company does not record a specific warranty reserve. |
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Advertising |
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Advertising costs are expensed as incurred. Advertising costs amounted to $1.5 million, $1.4 million, and $1.1 million, in 2014, 2013 and 2012, respectively. |
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Research and Development |
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Research and development costs are expensed as incurred. |
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Income Taxes |
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Income tax expense is an estimate of current income taxes payable or refundable in the current fiscal year based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences and carry-forwards that are recognized for financial reporting and income tax purposes. |
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The Company accounts for income taxes under the provisions of ASC 740. Under the provisions of ASC 740, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, utilizing the tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company recognizes valuation allowances to reduce any deferred tax assets to the amount that it estimates will more likely than not be realized based on available evidence and management's judgment. The Company limits the deferred tax assets recognized related to certain officers' compensation to amounts that it estimates will be deductible in future periods based upon Internal Revenue Code Section 162(m). In the event that the Company determines, based on available evidence and management judgment, that all or part of the net deferred tax assets will not be realized in the future, it would record a valuation allowance in the period the determination is made. In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with the Company's expectations could have a material impact on the Company's results of operations and financial position. |
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The Company engages in qualifying activities for R&D credit purposes. The Tax Increase Prevention Act of 2014 was signed into law on December 19, 2014, to extend the federal research and development credit for 2014. |
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During 2014, the Company settled with the IRS and closed out the examination of its income tax returns for the years 2007 through 2009. The resolution of the audit resulted in a federal tax benefit to the Company of $2.8 million; the Company also recorded a state tax benefit of approximately $0.5 million. The agreement with IRS also allowed the Company to repatriate $5.0 million from its foreign subsidiary without incurring additional U.S. income taxes. |
Common Stock Repurchases and Common Stock Dividend |
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In October 2012, the Company's board of directors authorized the use of $50.0 million for the repurchase of its common stock, with repurchases to be executed according to certain pre-defined price/volume guidelines set by the board of directors. As of December 31, 2012, the Company purchased 0.7 million shares for approximately $20.5 million. No shares were purchased during the twelve months ended December 31, 2013, as the stock price levels exceeded the pre-defined price guidelines mentioned above. In 2014 the Company's board of directors authorized the use of an additional $75.0 million for this purpose. In the twelve months ended December 31, 2014, the Company purchased 1.6 million shares for $80.8 million. As of December 31, 2014, the Company had $23.7 million available for future stock repurchases. Authorization of future stock repurchase programs is at the discretion of the board of directors and will depend on the Company's financial condition, results of operations, capital requirements, business conditions as well as other factors. |
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In January 2012, the Company's board of directors declared four quarterly cash dividends in the amount of $0.05 per share to be paid to stockholders of record at the end of each quarter in 2012. The quarterly dividend payments were each in the aggregate amount of approximately $1.4 million to stockholders of record. In January 2013, the Company's board of directors declared four quarterly cash dividends in the amount of $0.08 per share paid to stockholders of record at the end of each quarter in 2013. Payouts of approximately $2.3 million each were paid on March 29, 2013, and June 28, 2013, and approximately $2.4 million was paid on September 30, 2013, and December 31, 2013, respectively. |
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In October 2013, the Company's board of directors declared four quarterly cash dividends in the amount of $0.10 per share to be paid to stockholders of record at the end of each quarter in 2014. Dividend payouts totaling approximately $3.0 million each were paid on March 31, 2014, and June 30, 2014. In April 2014, the Company's board of directors increased the quarterly dividends for the third and fourth quarters of 2014 to $0.12 per share. Dividend payouts totaling approximately $3.6 million and $3.5 million were paid on September 30, 2014, and December 31, 2014, respectively. |
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In January 2015, the Company's board of directors extended the $0.12 quarterly dividend through each quarter in 2015. The declaration of any future cash dividend is at the discretion of the board of directors and will depend on the Company's financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interest of the Company's stockholders. |
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Indemnifications |
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The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales Agreements (“DSA”). Each DSA contains the relevant terms of the contractual arrangement with the distributor, and generally includes certain provisions for indemnifying the distributor against losses, expenses, and liabilities from damages that may be awarded against the distributor in the event the Company's products are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party (“Customer Indemnification”). The DSA generally limits the scope of and remedies for the Customer Indemnification obligations in a variety of industry-standard respects, including, but not limited to, limitations based on time and geography, and a right to replace an infringing product. The Company also, from time to time, has granted a specific indemnification right to individual customers. |
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The Company believes its internal development processes and other policies and practices limit its exposure related to such indemnifications. In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which assigns the rights to its employees' development work to the Company. To date, the Company has not had to reimburse any of its distributors or customers for any losses related to these indemnifications and no material claims were outstanding as of December 31, 2014. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases, the Company cannot determine the maximum amount of potential future payments, if any, related to such indemnifications. |
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Recently Issued Accounting Pronouncements |
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In May 2014, the Financial Accounting Standards Board ("FASB") amended the existing accounting standards for revenue recognition, ASU 2014-09, Revenue from Contracts with Customers. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is required to adopt the amendments in the first quarter of 2017. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the impact of these amendments and the transition alternatives on its consolidated financial statements. |