10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2013

OR

[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________

Commission File Number 000-31523

IXIA 

(Exact name of Registrant as specified in its charter) 

California	95-4635982
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

26601 West Agoura Road, Calabasas, CA 91302 

(Address of principal executive offices, including zip code) 

(818) 871-1800 

(Registrant’s telephone number, including area code) 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):          

Large accelerated filer	[  ]		Accelerated filer	[X]
Non-accelerated filer	[  ]	(Do not check if a smaller reporting company)	Smaller reporting company	[  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes [  ]      No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock	75,927,530
(Class of Common Stock)	(Outstanding at July 30, 2013)

1

IXIA

TABLE OF CONTENTS

			Page Number
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	3
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012	4
		Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and 2012	5
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
	Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	34
	Item 1A.	Risk Factors	34
	Item 5.	Other Information	34
	Item 6.	Exhibits	34
SIGNATURES			35

2

PART I.     FINANCIAL INFORMATION

ITEM 1.     Financial Statements (unaudited)

IXIA

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

	June 30, 2013		December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	55,690	$	47,508
Short-term investments in marketable securities		178,042		126,851
Accounts receivable, net		91,378		103,523
Inventories		36,381		37,220
Prepaid expenses and other current assets		46,657		42,942
Total current assets		408,148		358,044
Investments in marketable securities		370		3,119
Property and equipment, net		32,741		28,763
Intangible assets, net		137,263		157,003
Goodwill		260,032		260,457
Other assets		10,221		11,863
Total assets	$	848,775	$	819,249
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	15,452	$	12,114
Accrued expenses and other		39,373		52,525
Deferred revenues		67,195		66,096
Total current liabilities		122,020		130,735
Deferred revenues		10,295		8,695
Other liabilities		32,353		32,321
Convertible senior notes		200,000		200,000
Total liabilities		364,668		371,751
Shareholders’ equity:
Common stock, without par value; 200,000 shares authorized at June 30, 2013 and December 31, 2012; 75,922 and 74,126 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively		172,293		158,933
Additional paid-in capital		182,434		168,980
Retained earnings		129,164		117,296
Accumulated other comprehensive income		216		2,289
Total shareholders’ equity		484,107		447,498
Total liabilities and shareholders’ equity	$	848,775	$	819,249

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

IXIA

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Revenues:
Products	$	87,818		$	73,288		$	184,454		$	142,895
Services		28,077			17,414			54,224			34,465
Total revenues		115,895			90,702			238,678			177,360
Costs and operating expenses:(1)
Cost of revenues – products(2)		21,088			14,220			42,475			29,002
Cost of revenues – services		3,311			2,730			6,336			4,860
Research and development		29,539			22,546			59,251			43,397
Sales and marketing		33,191			24,556			68,232			49,163
General and administrative		12,027			11,090			24,085			22,606
Amortization of intangible assets		10,055			5,358			20,193			9,403
Acquisition and other related		1,093			3,739			2,365			4,164
Restructuring		—			—			58			—
Total costs and operating expenses		110,304			84,239			222,995			162,595
Income from operations		5,591			6,463			15,683			14,765
Interest income and other, net		3,431			602			3,638			712
Interest expense		(1,943	)		(1,800	)		(3,886	)		(3,600	)
Income before income taxes		7,079			5,265			15,435			11,877
Income tax expense (benefit)		3,316			(20,431	)		3,567			(18,986	)
Net income	$	3,763		$	25,696		$	11,868		$	30,863
Earnings per share:
Basic	$	0.05		$	0.36		$	0.16		$	0.43
Diluted	$	0.05		$	0.32		$	0.15		$	0.40
Weighted average number of common and common equivalent shares outstanding:
Basic		75,667			71,579			75,194			71,079
Diluted		77,245			83,803			77,046			83,508

(1)    Stock-based compensation included in:
Cost of revenues - products	$	128	$	75	$	281	$	171
Cost of revenues - services		49		29		107		66
Research and development		2,049		945		4,497		2,224
Sales and marketing		1,836		911		3,851		1,934
General and administrative		1,679		1,809		3,884		3,475
(2)    Cost of revenues - products exclude amortization of intangibles, which is shown separately.

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

IXIA

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Net income	$	3,763		$	25,696		$	11,868		$	30,863
Other comprehensive (loss) income, net of tax:
Net change in unrealized gains and losses on investments		(1,708	)		(625	)		(1,564	)		459
Cumulative translation adjustment		(186	)		132			(509	)		(165	)
Total other comprehensive (loss) income, net of tax		(1,894	)		(493	)		(2,073	)		294
Comprehensive income	$	1,869		$	25,203		$	9,795		$	31,157

 The accompanying notes are an integral part of these condensed consolidated financial statements.

5

IXIA

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six months ended June 30,
	2013			2012
				(Restated)
Cash flows from operating activities:
Net income	$	11,868		$	30,863
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		7,636			7,505
Amortization of intangible assets		20,193			9,403
Realized gain on sale of available-for-sale securities		(3,169	)		—
Stock-based compensation		12,621			7,870
Deferred income taxes		(1,649	)		(23,363	)
Tax benefit from stock option transactions		833			811
Excess tax benefits from stock-based compensation		(923	)		(798	)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		12,375			5,679
Inventories		839			(1,534	)
Prepaid expenses and other current assets		(4,172	)		1,495
Other assets		(282	)		(170	)
Accounts payable		2,003			3,013
Accrued expenses and other		(14,415	)		1,125
Deferred revenues		2,699			5,097
Other liabilities		4,708			3
Net cash provided by operating activities		51,165			46,999
Cash flows from investing activities:
Purchases of property and equipment		(9,352	)		(8,322	)
Purchases of available-for-sale securities		(110,037	)		(110,552	)
Proceeds from available-for-sale securities		62,175			211,921
Purchases of other intangible assets		(453	)		(504	)
Proceeds (payments) in connection with acquisitions, net of cash acquired		401			(148,257	)
Net cash used in investing activities		(57,266	)		(55,714	)
Cash flows from financing activities:
Proceeds from exercise of stock options		13,360			10,584
Excess tax benefits from stock-based compensation		923			798
Net cash provided by financing activities		14,283			11,382
Net increase in cash and cash equivalents		8,182			2,667
Cash and cash equivalents at beginning of period		47,508			42,729
Cash and cash equivalents at end of period	$	55,690		$	45,396
Supplemental disclosure of non-cash investing activities:
Purchased and unpaid property and equipment	$	2,768		$	-—

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

IXIA

Notes to Condensed Consolidated Financial Statements

(unaudited)

1.     Business

Ixia was incorporated on May 27, 1997 as a California corporation. We are a leading provider of converged Internet Protocol (IP) network validation and network visibility solutions. Equipment manufacturers, service providers, enterprises, and government agencies use our solutions to design, verify, and monitor a broad range of Ethernet, Wi-Fi, and 3G/LTE equipment and networks. Our product solutions consist of our hardware platforms, such as our chassis, interface cards and appliances, software application tools, and services, including our warranty and maintenance offerings and professional services.

2.     Basis of Presentation and Recent Accounting Pronouncements

Basis of Presentation

The accompanying condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012, are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of our financial position, operating results, and cash flows for the interim periods presented. The results of operations for the current interim periods presented are not necessarily indicative of results to be expected for the full year ending December 31, 2013 or any other future period.

These condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of December 31, 2012 has been derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities Exchange Commission on April 4, 2013 (the “2012 Form 10-K”), but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our 2012 Form 10-K.

Reclassifications

Certain reclassifications have been made to prior period consolidated financial statements to conform to the current presentation. Income taxes payable is now presented within Accrued expenses and other on our consolidated balance sheets and consolidated statements of cash flows.

Restatement

The Company has restated in the 2012 Form 10-K its unaudited interim consolidated financial statements for the three and six months ended June 30, 2012. See Note 14 below and our 2012 Form 10-K, including Note 15 to the audited consolidated financial statements included therein, for additional information.

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Recent Accounting Pronouncements

In June 2011, the FASB issued disclosure guidance related to the presentation of the Statement of Comprehensive Income. This guidance eliminated the then current option to report other comprehensive income and its components in the statement of changes in equity. Under this guidance, we are required to present either a single continuous statement of comprehensive income or a consolidated statement of operations immediately followed by a statement of comprehensive income. Although this guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under the previous guidance. We adopted this guidance in the first quarter of 2012 on a retrospective basis. There was no impact to our consolidated financial results as the adoption of this guidance related only to changes in financial statement presentation. In February 2013, FASB issued finalized disclosure guidance related to the amounts reclassified from accumulated other comprehensive income. Under this guidance, we are required to show reclassifications from accumulated other comprehensive income either in a single note or parenthetically on the face of the statement of operations provided that all of the required information is presented in a single location with the effect of significant amounts reclassified by component and the statement of operations line items affected by the reclassification. The effective date for this disclosure guidance is for fiscal years beginning after December 15, 2012. We adopted this new guidance on January 1, 2013. The adoption of this new guidance did not have a material impact on our consolidated financial position, results of operations and cash flows.

3.      Acquisitions

Anue Systems, Inc.

On June 1, 2012, we completed our acquisition of all of the outstanding shares of common stock of Anue Systems, Inc. (“Anue”).  Anue provides solutions to monitor and test complex networks, including Anue’s Net Tool Optimizer solution that efficiently aggregates and filters network traffic to help optimize network monitoring tool usage.  With this acquisition, we have expanded our addressable market, broadened our product portfolio and grown our customer base.  In addition, we expect to continue to leverage Anue’s sales channels and assembled workforce, including its experienced development team.  These factors, among others, contributed to a purchase price in excess of the estimated fair value of Anue’s net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.  

In the second quarter of 2013, we finalized our purchase price allocation. The aggregate cash consideration paid totaled $152.4 million, and was funded from our existing cash and investments.

Acquisition and other related costs, including integration activities, approximated $46,000 and $269,000 for the three and six months ended June 30, 2013, respectively, and $2.6 million and $3.0 million for the three and six months ended June 30, 2012, respectively.  These acquisition and other related costs have been expensed as incurred and have been included within the Acquisition and other related line item on our condensed consolidated statements of operations.

8

The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash and cash equivalents	$	3,659
Accounts receivable		12,016
Inventories		4,380
Prepaid and other assets		2,980
Fixed assets, net		1,600
Identifiable intangible assets		74,700
Goodwill		91,008
Total assets acquired		190,343
Accounts payable, accrued expenses and other liabilities		(7,942	)
Deferred revenues		(6,997	)
Deferred tax liability, net		(22,964	)
Net assets acquired	$	152,440

During the second quarter of 2013, we updated the allocation of our purchase price to increase the value of our accounts receivable balance by $173,000, decrease accounts payable, accrued expenses and other liabilities by $173,000, and decrease our deferred tax liability, net by $22,000, resulting in a net decrease in goodwill of $368,000. As these changes were not material, we did not recast our prior period financial statements for such changes. The above table reflects these changes.

The identifiable intangible assets of $74.7 million consist of $45.0 million of acquired technology, $21.9 million of customer relationships, $4.0 million for the trade name, $2.1 million related to non-compete agreements and $1.7 million of other identifiable intangible assets. The fair values of the identifiable intangible assets have been estimated using the income approach. These intangible assets will be amortized using a straight-line method over their expected useful lives ranging from six months to six years.  The goodwill recorded in connection with this transaction is not deductible for U.S. income tax purposes.

BreakingPoint Systems, Inc.

On August 24, 2012, we completed our acquisition of all of the outstanding shares of common stock of BreakingPoint Systems, Inc. (“BreakingPoint”).  BreakingPoint is a leader in security testing, and its solutions provide global visibility into emerging threats and applications, along with advance insight into the resiliency of an organization’s information technology infrastructure under operationally relevant conditions and malicious attacks. With this acquisition, we have expanded our addressable market, broadened our product portfolio and grown our customer base. In addition, we expect to continue to leverage BreakingPoint’s sales channels and assembled workforce, including its experienced product development and sales teams. These factors, among others, contributed to a purchase price in excess of the estimated fair value of BreakingPoint’s net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.  

The aggregate cash consideration paid totaled $163.7 million and was funded from our existing cash and investments.

Acquisition and other related costs, including integration activities, approximated $1.0 million and $2.1 million for the three and six months ended June 30, 2013, respectively. These acquisition and other related costs have been expensed as incurred, and have been included within the Acquisition and other related line item on our condensed consolidated statements of operations.  

In connection with the acquisition, we may be obligated to pay up to $3.8 million to certain pre-acquisition employees of BreakingPoint over a weighted average period of less than two years provided they remain employees of Ixia. Related to this obligation, for the three and six months ended June 30, 2013, $474,000 and $1.1 million, respectively, has been recorded within the Acquisition and other related line item on our condensed consolidated statements of operations. As of June 30, 2013, $1.7 million of payments have been made.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash and cash equivalents	$	13,417
Accounts receivable		4,610
Inventories		3,156
Prepaid and other assets		796
Fixed assets, net		936
Identifiable intangible assets		65,600
Goodwill		102,594
Total assets acquired		191,109
Accounts payable, accrued expenses and other liabilities		(6,889	)
Deferred revenues		(6,387	)
Deferred tax liability, net		(14,146	)
Net assets acquired	$	163,687

9

During the second quarter of 2013, we also updated the preliminary allocation of our purchase price to increase the value of our accounts receivable balance by $58,000 and a resulting decrease in goodwill of $58,000. As this change was not material, we did not recast our prior period financial statements for such changes. The above table reflects the change.

The preliminary purchase price allocation is pending the completion of certain items, such as the final tax attributes that will be determined upon the filing of certain pre-acquisition tax returns.

The identifiable intangible assets of $65.6 million consist of $22.7 million of acquired technology, $20.6 million of customer relationships, $16.6 million of service agreements, $2.9 million for the trade name, $2.2 million related to non-compete agreements and $600,000 of other identifiable intangible assets. The fair values of the identifiable intangible assets have been estimated using the income approach. These intangible assets will be amortized using a straight-line method over their expected useful lives ranging from two weeks to six years.  The goodwill recorded in connection with this transaction is not deductible for U.S. income tax purposes.

Pro Forma and Post-Acquisition Results (Unaudited)

The following table summarizes the unaudited pro forma total revenues and net income of the combined entities, including Ixia, had the acquisitions of Anue and BreakingPoint occurred on January 1, 2011 (in thousands):

	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Total revenues	$	116,629	$	225,458
Net income		5,586		6,839

The pro forma combined results in the table above have been prepared for comparative purposes only and include acquisition-related adjustments for, among others items, reductions in revenues related to the estimated fair value adjustment to deferred revenues, certain acquisition related costs, amortization of identifiable intangible assets, and the related income tax effects for these adjustments. The pro forma combined results, as well as those of Anue and BreakingPoint included in the Company’s results subsequent to the acquisition date, do not purport to be indicative of the results of operations which would have resulted had the acquisition been effective at the beginning of the applicable periods noted above, or of the future results of operations of the combined entity.

4.             Restructuring

During the third quarter of 2012, our management approved, committed to and initiated a plan to restructure our operations following our 2012 acquisition of BreakingPoint Systems, Inc. (“BreakingPoint”). The BreakingPoint restructuring included a net reduction in force of approximately 29 positions (primarily impacting our research and development team in Melbourne, Australia). The payments related to the lease costs are expected to be paid by the end of the second quarter of 2015.

Activity related to our restructuring plan is as follows (in thousands):

Accrual at December 31, 2012	$	1,026
Charges		58
Payments		(310	)
Other or non-cash items		(124	)
Accrual at March 31, 2013	$	650
Charges		—
Payments		(81	)
Other or non-cash items		22
Accrual at June 30, 2013	$	591

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5.             Convertible Senior Notes

On December 7, 2010, we issued $200.0 million in aggregate principal amount of 3.00% Convertible Senior Notes due December 15, 2015 unless earlier repurchased or converted (the “Notes”). The interest is payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2011.

As of June 30, 2013, the estimated fair value of our Notes was approximately $241.4 million. The fair values of the Notes were estimated using market prices of the Notes, which are based on Level 2 inputs (i.e. inputs, other than the quoted prices in active markets that are observable either directly or indirectly).

6.             Selected Balance Sheet Data

Investments in Marketable Securities

Investments in marketable securities as of June 30, 2013 consisted of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale – short-term:
U.S. government and agency debt securities	$	86,606	$	21	$	(46	)	$	86,581
Corporate debt securities		90,638		1,056		(233	)		91,461
		177,244		1,077		(279	)		178,042
Available-for-sale – long-term:
Auction rate securities		369		1		—			370
		369		1		—			370
Total	$	177,613	$	1,078	$	(279	)	$	178,412

Investments in marketable securities as of December 31, 2012 consisted of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale – short-term:
U.S. government and agency debt securities	$	77,823	$	48	$	(1	)	$	77,870
Corporate debt securities		47,933		1,068		(20	)		48,981
		125,756		1,116		(21	)		126,851
Available-for-sale – long-term:
Auction rate securities		820		2,301		(2	)		3,119
		820		2,301		(2	)		3,119
Total	$	126,576	$	3,417	$	(23	)	$	129,970

As of June 30, 2013 and December 31, 2012, our available-for-sale securities had a weighted remaining contractual maturity of 1.56 and 1.36 years, respectively. For the three and six months ended June 30, 2013, gross realized gains and gross realized losses were $3.2 million and $0, respectively. For the three and six months ended June 30, 2012, gross realized gains and gross realized losses were not significant. As of June 30, 2013, our gross unrealized losses of $279,000 were in an unrealized loss position for less than 12 months.

Accounts receivable, net

Accounts receivable, net included an allowance for doubtful accounts of $1.3 million and $1.4 million as of June 30, 2013 and December 31, 2012, respectively.

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Inventories

Inventories consist of the following (in thousands):

	June 30, 2013		December 31, 2012
Raw materials	$	2,909	$	4,530
Work in process		18,143		14,144
Finished goods		15,329		18,546
	$	36,381	$	37,220

Accrued expenses and other

As of June 30, 2013 and December 31, 2012, accrued vacation totaled $8.3 million and $7.6 million respectively.

7.             Goodwill and Other Intangible Assets

The following table presents the 2013 actvity for our goodwill (in thousands):

Balance at January 1, 2013:	$	260,457
Adjustments:
Anue Acquisition		(367	)
BreakingPoint Acquisition		(58	)
Balance at June 30, 2013	$	260,032

The following table presents our purchased intangible assets (in thousands) as of June 30, 2013:

	Weighted Average Useful Life		Gross		Accumulated Amortization			Net
	(in years)
Other intangible assets:
Technology		5.4	$	141,215	$	(77,655	)	$	63,560
Customer relationships		5.8		70,376		(24,071	)		46,305
Service agreements		5.7		22,700		(7,265	)		15,435
Non-compete		4.0		5,700		(2,207	)		3,493
Trademark		5.3		8,976		(3,016	)		5,960
Other		4.0		3,868		(1,358	)		2,510
			$	252,835	$	(115,572	)	$	137,263

The following table presents our purchased intangible assets (in thousands) as of December 31, 2012:

	Weighted Average Useful Life		Gross		Accumulated Amortization			Net
	(in years)
Other intangible assets:
Technology		5.4	$	141,215	$	(66,704	)	$	74,511
Customer relationships		6.0		70,376		(18,289	)		52,087
Service agreements		5.7		22,700		(5,272	)		17,428
Non-compete		4.2		5,700		(1,520	)		4,180
Trademark		5.3		8,976		(2,333	)		6,643
Other		3.8		3,416		(1,262	)		2,154
			$	252,383	$	(95,380	)	$	157,003

The estimated future amortization expense of purchased intangible assets as of June 30, 2013 is as follows (in thousands):

2013	$	19,668
2014		33,928
2015		29,251
2016		25,898
2017		18,853
Thereafter		9,665
	$	137,263

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8.             Shareholders’ Equity

Accumulated Other Comprehensive Income

We sold available-for-sale securities in the three and six months ended June 30, 2013, which resulted in a gross reclassification from accumulated other comprehensive income for realized gains of $3.1 million and $3.2 million, respectively, which were included within our interest income and other, net line item on our condensed consolidated statements of operations These realized gains, along with the related tax impact of $1.2 million, for both the three and six months ended June 30, 2013, were reclassified from accumulated other comprehensive income. The reclassification amounts for the three and six months ended June 30, 2012 were not significant. Excluding the reclassification for the sale of available-for-sale securities, we had a net unrealized gain during the periods of $286,000 and $517,000 for the three and six months ended June 30, 2013, respectively. The tax impact for these unrealized gains and losses was a benefit of $80,000 and $145,000 for the three and six months ended June 30, 2013, respectively.

Stock Buyback Program

On October 22, 2012, our Board of Directors authorized the repurchase of up to $25 million of our common stock from time to time during the 12 months thereafter on the open market or in privately negotiated transactions. The timing of repurchases and the actual number of shares repurchased will depend on a variety of factors, including our stock price, regulatory requirements, and market conditions. We may terminate this repurchase program at any time. As of June 30, 2013, no shares of our common stock had been repurchased under this program.

Stock Award Plans

In June 2013, our shareholders approved our Second Amended and Restated Ixia 2008 Equity Incentive Plan (the “Plan”), which resulted in amendments to the Company’s Amended and Restated 2008 Ixia Equity Incentive Plan, as amended, that include the following:

● Increase in Share Reserve. Increased the total number of shares of our common stock available for future grants by 9.8 million shares for a total of 29.0 million shares of our common stock authorized and reserved over the term of the Plan, of which 13.3 million shares were available for future grant as of such date.

●  Types of Awards. Added cash awards to the types of awards that may be granted under the Plan, including performance-based incentives that are intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

●  Award Limits. Added (i) a limit on the total number of shares (i.e., 1,000,000) subject to options and share appreciation rights granted to an eligible participant in any calendar year, (ii) with respect to performance-based awards that are intended to comply with the exception under Section 162(m) of the Code, limits on the total number of shares (i.e., 1,000,000) subject to restricted stock unit and restricted stock awards that an individual may earn over a 12-month period and on the total dollar amount (i.e., $2,000,000) subject to cash awards that an individual may earn over a 12-month period, and (iii) a limit (i.e., $500,000) on the total dollar value of equity and cash awards that may be granted to a non-employee director in any calendar year.

The Plan also provides for the following:

●  Shares Not Available for Awards. None of the following will be added to the shares available for awards under the Plan: (i) shares tendered by a participant or withheld by the Company in payment of the exercise price of an option, or to satisfy any tax withholding obligation with respect to options, and (ii) shares reacquired by the Company on the open market using cash proceeds from the exercise of options.

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● Acquisitions and Combinations. In connection with acquisitions and combinations by us, we may grant under the Plan awards in substitution or exchange for awards or rights to future awards previously granted by the acquired or combined company without reducing the shares available under the Plan. Any shares subject to but not issued under any such substitute awards would not become available for other awards granted under the Plan. Also, in the event that a company acquired by us or with which we combine has a pre-existing plan approved by its shareholders that was not adopted in contemplation of the acquisition or combination, available shares under that plan may be used for Plan awards without reducing the shares available under the Plan. Any such awards may only be made to persons who were not eligible to receive awards under the Plan prior to the acquisition or combination and may not be made after the date that awards could have been made under the terms of the pre-existing plan.

Employee Stock Purchase Plan

In June 2013, our shareholders approved a 2,000,000-share increase in the number of shares of our common stock authorized and reserved for issuance under the Company’s 2010 Employee Stock Purchase Plan, as amended (the “Purchase Plan”). During the second quarter of 2013, the number of shares authorized and reserved for issuance under the Purchase Plan was also increased by an additional 500,000 shares pursuant to the automatic annual increase provision of the Purchase Plan.

9.           Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three months and six months ended June 30, 2013 and 2012 (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
			(Restated)				(Restated)
Basic presentation:
Numerator for basic earnings per share:
Net income	$	3,763	$	25,696	$	11,868	$	30,863
Denominator for basic earnings per share:
Weighted average common shares outstanding		75,667		71,579		75,194		71,079
Basic earnings per share	$	0.05	$	0.36	$	0.16	$	0.43
Diluted presentation:
Numerator for diluted earnings per share:
Net income	$	3,763	$	25,696	$	11,868	$	30,863
Interest expense on convertible senior notes, net of tax		—		1,100		—		2,200
Net income used for diluted earnings per share	$	3,763	$	26,796	$	11,868	$	33,063
Denominator for dilutive earnings per share:
Weighted average common shares outstanding		75,667		71,579		75,194		71,079
Effect of dilutive securities:
Stock options and other share-based awards		1,578		1,934		1,852		2,139
Convertible senior notes		—		10,290		—		10,290
Dilutive potential common shares		77,245		83,803		77,046		83,508
Diluted earnings per share	$	0.05	$	0.32	$	0.15	$	0.40

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The diluted earnings per share computation for the three and six months ended June 30, 2013 excludes (i) the weighted average number of shares underlying our outstanding convertible senior notes of 10.3 million shares as such shares are considered anti-dilutive because the related interest expense on a per common share “if converted” basis exceeds basic earnings per share and (ii) the weighted average number of shares underlying our employee stock options and other share-based awards of 2.2 million shares and 1.3 million shares, respectively, which were anti-dilutive because, in general, the exercise price of these awards exceeded the average closing sales price per share of our common stock during the applicable period.

The diluted earnings per share computation for the three and six months ended June 30, 2012 excludes the weighted average number of shares underlying our employee stock options and other share-based awards of 1.7 million shares and 1.6 million shares, respectively, which were anti-dilutive because, in general, the exercise price of these awards exceeded the average closing sales price per share of our common stock during the applicable period.

10.             Concentrations

Significant Customers

The following customers accounted for more than 10% of total revenue for the three and six months ended June 30, 2013, in the case of Customer A, and for the three and six months ended June 30, 2013 and 2012, in the case of Customer B (in thousands, except percentages):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Customer A
Amount of total revenues	$	17,482		$	1,690		$	40,447		$	2,938
As a percentage of total revenues		15.1	%		1.9	%		16.9	%		1.7	%
Customer B
Amount of total revenues	$	12,326		$	13,499		$	26,357		$	28,439
As a percentage of total revenues		10.6	%		14.9	%		11.0	%		16.0	%

As of June 30, 2013 and December 31, 2012, Customers A and B above had receivable balances as follows (in thousands, except percentages):

	June 30,			December 31,
	2013			2012
Customer A
Amount of total receivables	$	9,151		$	4,748
As a percentage of total receivables		10.0	%		4.6	%
Customer B
Amount of total receivables	$	9,707		$	8,998
As a percentage of total receivables		10.6	%		8.7	%

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International Data

For the three and six months ended June 30, 2013 and 2012, total international revenues based on customer location consisted of the following (in thousands, except percentages):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Amount of total international revenues	$	39,272		$	40,323		$	85,807		$	82,870
As a percentage of total revenues		33.9	%		44.5	%		36.0	%		46.7	%

Within international revenues disclosed above, total revenues from product shipments to Japan for the three and six months ended June 30, 2013 and 2012 were as follows (in thousands, except percentages):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Amount of total revenues	$	5,769		$	13,021		$	20,849		$	25,113
As a percentage of total revenues		5.0	%		14.4	%		8.7	%		14.2	%

11.          Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date.  The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1.	Observable inputs such as quoted prices in active markets;
Level 2.	Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3.	Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

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Financial assets carried at fair value as of June 30, 2013 and December 31, 2012 are classified in the table below in one of the three categories described above (in thousands):

	June 30, 2013								December 31, 2012
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents:
Money market funds	$	251	$	251	$	—	$	—	$	185	$	185	$	—	$	—
Corporate debt securities		29,139		—		29,139		—		—		—		—		—
Short-term investments:
U.S. Treasury, government and agency debt securities		86,581		—		86,581		—		77,870		—		77,870		—
Corporate debt securities		91,461		—		91,461		—		48,981		—		48,981		—
Long-term investments:
Auction rate securities		370		—		—		370		3,119		—		—		3,119
Total financial assets	$	207,802	$	251	$	207,181	$	370	$	130,155	$	185	$	126,851	$	3,119

To estimate the fair value of our money market funds, U.S. treasury, government and agency debt securities, corporate debt securities and auction rate securities, we use the estimated fair value per our investment brokerage/custodial statements. To the extent deemed necessary, we may also obtain non-binding market quotes to corroborate the estimated fair values reflected in our investment brokerage/custodial statements.

During the second quarter of 2013, we sold an auction rate security that was classified as a Level 3 financial asset.  This auction rate security had a par value of $4.0 million and the sale resulted in a realized gain of $2.9 million (included within our Interest income and other, net line item on our condensed consolidated statements of operations.)

There were no transfers of assets between levels within the fair value hierarchy for the three-month period ended June 30, 2013. 

The following table summarizes the activity for the three and six months ended June 30, 2013 and 2012 for our auction rate securities where fair value measurements are estimated utilizing Level 3 inputs (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Beginning balance	$	3,167		$	2,954		$	3,119		$	2,774
Unrealized (loss) gain reclassified from/recorded in other comprehensive income		(2,346	)		(119	)		(2,298	)		61
Realized gain recorded in earnings		2,869			—			2,869			—
Sales		(3,320	)		—			(3,320	)		—
Ending balance	$	370		$	2,835		$	370		$	2,835

There were no unrealized losses recorded in earnings for Level 3 assets still held at June 30, 2013.

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12.           Commitments and Contingencies

Litigation

On June 15, 2012, Catapult, our wholly owned subsidiary, issued a demand for indemnification to Tekelec pursuant to the Asset Purchase Agreement between Tekelec and Catapult dated July 15, 2002 (the "APA") which under Catapult had succeeded to Tekelec's relationship with Tucana, a former distributor of Catapult.  Catapult demanded indemnification for the full amount of Catapult's costs, including attorneys' fees and expenses, incurred in defending against and resolving Tucana's claims.

Because Catapult’s demand for indemnification was not resolved within the 30-day period provided for by the APA, on July 16, 2012, Catapult demanded arbitration of its indemnification claim against Tekelec. The arbitration hearing took place before three arbitrators in January 2013.  The arbitrators issued their final award on January 31, 2013 granting Catapult its full indemnity claim against Tekelec in the amount of approximately $1.2 million.

We are not aware of any pending legal proceedings that, individually or in the aggregate, could have a material adverse effect on our business, results of operations, cash flows or financial position. We may in the future be a party to litigation arising in the ordinary course of business, including claims that we allegedly infringe upon third party patents or other intellectual property rights. Such claims, even if without merit, could result in the expenditure of significant financial and managerial resources.

13.           Income Taxes

As of June 30, 2013 and December 31, 2012, current deferred tax assets totaled $24.1 million and $24.2 million, respectively, and were included within the Prepaid Expenses & Other Current Assets line item in our condensed consolidated balance sheets.

14.           Restatement

In our 2012 Form 10-K, we restated, among other previously issued financial statements, our unaudited consolidated financial statements for the three and six months ended June 30, 2012 to reflect certain corrections in the manner in which we recognize revenue related to our warranty and software maintenance contracts, including a previous implied warranty and software maintenance arrangement with one of our customers. Specifically, we made the following two corrections to our revenue recognition practices to properly report revenue in prior periods:

● Accounting Practice Error - We now recognize revenue related to our warranty and software maintenance contracts on the effective date of each such contract rather than in the first calendar month following the effective date of the contract as though the warranty and maintenance period commenced on the first day of such month. We also now recognize revenue related to back maintenance fees when evidence of an arrangement exists rather than commencing in the first calendar month following the effective date of the contract as though the warranty and maintenance period commenced on the first day of such month.

● Implied Arrangement Error - We now cease to defer revenue for any implied warranty and software maintenance arrangement upon the receipt from the applicable customer of the first substantive contract for extended warranty and software maintenance services, and we will recognize the applicable previously deferred revenue related to the implied arrangement, provided all other revenue recognition criteria have been met. The Company’s historical practice was to continue to defer revenue for implied warranty and software maintenance arrangements (despite the receipt of an initial substantive extended warranty and software maintenance contract) until we could establish a pattern that we were able to enforce our warranty and software maintenance contracts as evidenced by, among other items, (i) the consistent receipt of extended renewal orders from the specific customer for warranty and software maintenance services and (ii) senior management’s assertion that warranty and software maintenance services would not be provided to the customer if existing contracts were canceled or were not renewed.

These changes in our revenue recognition practices resulted in a shift of revenue between accounting periods, and do not have any impact on the total revenue recognized over the life of a warranty and software maintenance contract or arrangement, although the timing of the recognition of such revenue commences earlier and ends earlier than would be the case under the Company’s previously used accounting treatment.

See our 2012 Form 10-K for additional information regarding the restatement of our unaudited consolidated financial statements for the quarter ended June 30, 2012, and for information regarding the restatement in the 2012 Form 10-K of our audited consolidated financial statements for the years ended December 31, 2011 and 2010 and of our unaudited consolidated financial statements for each of the quarters in the year ended December 31, 2011 and for the quarters ended March 31, 2012 and September 30, 2012.

This Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (this “Form 10-Q”) reflects the impact of the restatement on the applicable unaudited quarterly financial information for the three and six months ended June 30, 2012.

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Our previously filed Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 has not been and will not be amended.

The combined impact of the adjustments to specified line items included in this Form 10-Q have been restated to reflect the corrections of the above errors, which impact revenues from products, revenues from services and deferred revenues (current and non-current). All other adjustments relate to the applicable income tax effects of these errors. The following schedules reconcile the amounts as originally reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 to the corresponding restated amounts as reported herein and in our 2012 Form 10-K.

Restated consolidated statement of operations amounts (unaudited)

	For the Three Months Ended June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands, except per share data)
Revenues:
Products
Implied arrangement error	$	—		$	(2,650	)	$	—
		75,938			(2,650	)		73,288
Services
Accounting practice error		—			340			—
Implied arrangement error		—			669			—
		16,405			1,009			17,414
Total revenues		92,343			(1,641	)		90,702
Income from operations		8,104			(1,641	)		6,463
Income before income taxes		6,906			(1,641	)		5,265
Income tax benefit		(19,944	)		(487	)		(20,431	)
Net income		26,850			(1,154	)		25,696
Earnings per share:
Basic	$	0.38		$	(0.02	)	$	0.36
Diluted	$	0.33		$	(0.01	)	$	0.32

	For the Six Months Ended June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands, except per share data)
Revenues:
Products
Implied arrangement error	$	—		$	(2,086	)	$	—
		144,981			(2,086	)		142,895
Services
Accounting practice error		—			1,028			—
Implied arrangement error		—			432			—
		33,005			1,460			34,465
Total revenues		177,986			(626	)		177,360
Income from operations		15,391			(626	)		14,765
Income before income taxes		12,503			(626	)		11,877
Income tax benefit		(18,729	)		(257	)		(18,986	)
Net income		31,232			(369	)		30,863
Earnings per share:
Basic	$	0.44		$	(0.01	)	$	0.43
Diluted	$	0.40		$	—		$	0.40

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Restated consolidated statements of comprehensive income amounts (unaudited)

	For the Three Months Ended
	June 30, 2012
	As Previously Reported		Restatement Adjustments			Restated
	(in thousands)
Net income	$	26,850	$	(1,154	)	$	25,696
Comprehensive income	$	26,357	$	(1,154	)	$	25,203

	For the Six Months Ended
	June 30, 2012
	As Previously Reported		Restatement Adjustments			Restated
	(in thousands)
Net income	$	31,232	$	(369	)	$	30,863
Comprehensive income	$	31,526	$	(369	)	$	31,157

Restated consolidated statements of cash flows amounts (unaudited)

The correction of the errors described above did not impact our total cash flows from operating activities, investing activities or financing activities within our consolidated statements of cash flows.

	For the Six Months Ended
	June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands)
Net income	$	31,232		$	(369	)	$	30,863
Deferred income taxes		(23,363	)		—			(23,363	)
Accrued expenses and other		1,382			(257	)		1,125
Deferred revenues		4,471			626			5,097
Net cash provided by operating activities	$	46,999		$	—		$	46,999

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ITEM 2          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2013, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of this Form 10-Q and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”), including the “Risk Factors” section and the consolidated financial statements and notes included therein.

Restatement of Previously Issued Financial Statements. As discussed further in Note 14 to the condensed consolidated financial statements” contained in this Form 10-Q, in the 2012 Form 10-K, we restated our consolidated financial statements for, among other prior periods, the quarter ended June 30, 2012. Specifically, we have restated our consolidated financial statements for such quarter and other periods as the result of certain errors that existed in our previously filed financial statements related to the manner in which we had historically recorded revenues related to our warranty and software maintenance contracts, including a previous implied warranty and software maintenance arrangement with a certain customer. During the first quarter of 2013, we corrected the manner in which we record revenue for our warranty and software maintenance contracts and arrangements, and we are also continuing to enhance our documentation related to our revenue recognition policies and practices. See our 2012 Form 10-K for additional information regarding the restatement of our unaudited consolidated financial statements for the quarter ended June 30, 2012, and for information regarding the restatement in the 2012 Form 10-K of our audited consolidated financial statements for the years ended December 31, 2011 and 2010 and of our unaudited consolidated financial statements for each of the quarters in the year ended December 31, 2011 and for the quarters ended March 31, 2012 and September 30, 2012.

The impact of the correction of these errors on the applicable line items in the condensed consolidated financial statements for the three and six months ended June 30, 2012 resulting from the restatement is set forth in Note 14 to the condensed consolidated financial statements, included in this Form 10-Q.

BUSINESS OVERVIEW

We are a leading provider of converged Internet Protocol (IP) network validation and network visibility solutions. Equipment manufacturers, service providers, enterprises, and government agencies use our solutions to design, verify, and monitor a broad range of Ethernet, Wi-Fi, and 3G/LTE equipment and networks.  Our product solutions consist of our hardware platforms, such as our chassis, interface cards and appliances, software application tools, and services, including our warranty and maintenance offerings and professional services.

During the 2013 second quarter, our cash, cash equivalents and investments in the aggregate increased by $25.8 million to $234.1 million from the $208.3 million reported three months earlier at March 31, 2013, and by $56.6 million from the $177.5 million reported six months earlier at December 31, 2012. Total revenues increased 27.8% to $115.9 million during the 2013 second quarter from $90.7 million during the 2012 second quarter due to the completion of two significant acquisitions in June and August of 2012. However, during the second quarter of 2013, our revenues came in below our expectations due, in part, to delays in spending at certain customers. We remain confident in our competitive position and our opportunities for long-term growth as our customers continue to transition to mobile networks, virtual data centers and hybrid cloud environments to deliver next generation applications. However, we believe that there continues to be some concerns that are creating uncertainty in the market, such as the Federal sequestration in the United States and the capital spending plans of large service providers and equipment manufacturers. This uncertainty may adversely impact our sales, results of operations and financial position over the near term.

Acquisition of BreakingPoint Systems, Inc. On August 24, 2012, we completed our acquisition of all of the outstanding shares of common stock of BreakingPoint Systems, Inc. (“BreakingPoint”). The aggregate cash consideration paid totaled $163.7 million, or $150.3 million net of BreakingPoint’s existing cash and investment balances at the time of the acquisition. The acquisition was funded from our existing cash and investments. BreakingPoint is a leader in security testing, and its solutions provide global visibility into emerging threats and applications, along with advance insight into the resiliency of an organization’s information technology infrastructure under operationally relevant conditions and malicious attacks. With this acquisition, we have expanded our addressable market, broadened our product portfolio and grown our customer base. In addition, we expect to leverage BreakingPoint’s existing sales channels and assembled workforce, including its experienced product development and sales teams. The results of operations of BreakingPoint have been included in our consolidated statements of operations and cash flows since the date of the acquisition. See Note 3 to the condensed consolidated financial statements included in this Form 10-Q for additional information regarding the BreakingPoint acquisition.

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Acquisition of Anue Systems, Inc. On June 1, 2012, we completed our acquisition of all of the outstanding shares of common stock of Anue Systems, Inc. (“Anue”). The aggregate consideration paid totaled $152.4 million, or $148.7 million net of Anue’s existing cash and investment balances at the time of the acquisition. The acquisition was funded from our existing cash and investments. Anue provides solutions to monitor and test complicated networks, including Anue’s Net Tool Optimizer solution that efficiently aggregates and filters network traffic to help optimize network monitoring tool usage. With this acquisition, we have expanded our addressable market, broadened our product portfolio and grown our customer base. In addition, we expect to leverage Anue’s existing sales channels and assembled workforce, including its experienced product development team. The results of operations of Anue have been included in our condensed consolidated statements of operations and cash flows since the date of the acquisition. See Note 3 to the condensed consolidated financial statements included in this Form 10-Q for additional information regarding the Anue acquisition.

Revenues. Our revenues are principally derived from the sale and support of our test and visibility solutions.

Sales of our network test hardware products primarily consist of traffic generation and analysis hardware platforms containing multi-slot chassis and interface cards.  Our primary network test hardware platform is enabled by our operating system software that is essential to the functionality of the hardware platform. Sales of our network visibility hardware products typically include an integrated, purpose-built hardware appliance with essential, proprietary software.  Our software products consist of a comprehensive suite of technology-specific applications for certain of our network test hardware platforms.  Our software products are typically installed on and work with these hardware products to further enhance the core functionality of the overall network test system, although some of our software products can be operated independently from our network test platforms.

Our service revenues primarily consist of technical support, warranty and software maintenance services revenues related to our network test and visibility hardware and software products. Most of our products include up to one year of these services with the initial product purchase, and our customers may separately purchase extended services for annual or multi-year periods. Our technical support, warranty and software maintenance services include assistance with the set-up, configuration and operation of our products, repair or replacement of defective products, bug fixes, and unspecified when and if available software upgrades. For certain network test products, our technical support and software maintenance service revenues also include our Application and Threat Intelligence (ATI) service, which provides a comprehensive suite of application protocols, software updates and technical support. The ATI service provides full access to the latest security attacks and application updates for use in real-world test and assessment scenarios. Our customers may purchase the ATI service for annual or multi-year periods. Service revenues also include training and other professional services revenues.

Sales to AT&T were approximately $17.5 million, or 15.1%, and $40.4 million, or 16.9%, of our total revenues for the three and six months ended June 30, 2013, respectively, and $1.7 million, or 1.9%, and $2.9 million, or 1.7%, of our total revenues for the three and six months ended June 30, 2012, respectively. Sales to Cisco Systems were approximately $12.3 million, or 10.6%, and $26.4 million, or 11.0%, of our total revenues for the three and six months ended June 30, 2013, respectively, and $13.5 million, or 14.9%, and $28.4 million, or 16.0%, of our total revenues for the three and six months ended June 30, 2012, respectively. To date, we have generated the majority of our revenues from sales to network equipment manufacturers, but this percentage has been declining over the past several years. While we expect that we will continue to have some customer concentration with network equipment manufacturers for the foreseeable future, we expect to continue to see some declines in revenues from such customers as a percentage of total revenues as we continue to sell our products to a wider variety and increasing number of service provider, enterprise and government customers. To the extent that we develop a broader and more diverse customer base, our reliance on any one customer or customer type should diminish. We also expect that our 2012 acquisitions of Anue and BreakingPoint (the “2012 Acquisitions”) and the growth of their businesses will continue to further diversify our customer base.

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From a geographic perspective, we generated revenues from shipments to international locations of $39.3 million, or 33.9%, and $85.8 million, or 36.0%, of our total revenues for the three and six months ended June 30, 2013, respectively, and $40.3 million, or 44.5%, and $82.9 million, or 46.7%, of our total revenues for the three and six months ended June 30, 2012, respectively. The decline in the percentage of our revenue from shipments to international locations was primarily due to our 2012 Acquisitions, which have a higher concentration of revenue from customers in the United States. Over the next 12 months, we expect to leverage and expand our international sales force to sell our Anue and BreakingPoint products to a larger global customer base, and as a result, we expect to increase our percentage of revenues from shipments to international locations.

Stock-Based Compensation. For the three and six months ended June 30, 2013, stock-based compensation expense was $5.7 million and $12.6 million, respectively. For the three and six months ended June 30, 2012, stock-based compensation expense was $3.8 million and $7.9 million, respectively. The increase in stock-based compensation expense in the three and six months ended June 30, 2013 as compared to the same periods in 2012 was primarily due to (i) the incremental impact of the share-based awards granted to the Anue and BreakingPoint employees related to our 2012 Acquisitions and (ii) an increase in the number of participants in our employee stock purchase plan. The aggregate amount of gross unrecognized stock-based compensation to be expensed in the years 2013 through 2017 related to unvested share-based awards as of June 30, 2013 was approximately $31.4 million. To the extent that we grant additional share-based awards, future expense may increase by the additional unearned compensation resulting from those grants. We anticipate that we will continue to grant additional share-based awards in the future as part of our long-term incentive compensation programs. The impact of future grants cannot be estimated at this time because it will depend on a number of factors, including the amount of share-based awards granted and the then current fair values of such awards for accounting purposes.

Cost of Revenues. Our cost of revenues related to the sale of our hardware and software products includes materials, payments to third-party contract manufacturers, royalties, and salaries and other expenses related to our manufacturing and supply operations, technical support and professional service personnel. We outsource the majority of our manufacturing operations, and we conduct supply chain management, quality assurance, documentation control, shipping and some final assembly and testing at our facilities in Calabasas, California, Austin, Texas and Penang, Malaysia. Accordingly, a significant portion of our cost of revenues related to our products consists of payments to our contract manufacturers. Cost of revenues related to the provision of services includes salaries and other expenses associated with technical support services, professional services and the warranty cost of hardware that is replaced or repaired during the warranty coverage period. Cost of revenues does not include the amortization of purchased technology related to our acquisitions of certain businesses, product lines and technologies of $6.4 million and $12.9 million for the three and six months ended June 30, 2013, respectively, and $3.6 million and $6.3 million for the three and six months ended June 30, 2012, respectively, which are included within our Amortization of Intangible Assets line item on our condensed consolidated statements of operations included in this Form 10-Q.

Our cost of revenues as a percentage of total revenues is primarily affected by the following factors:

●     our pricing policies and those of our competitors;

●     the pricing we are able to obtain from our component suppliers and contract manufacturers;

●     the mix of customers and sales channels through which our products are sold;

●     the mix of our products sold, such as the mix of software versus hardware product sales;

●     new product introductions by us and by our competitors;

●     demand for and quality of our products; and

●     shipment volume.

In the near term, although we anticipate that our cost of revenues as a percentage of total revenues will remain relatively flat, we expect to continue to experience pricing pressure on larger transactions and from larger customers as a result of competition.

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Operating Expenses. Our operating expenses are generally recognized when incurred and consist of research and development, sales and marketing, general and administrative, amortization of intangible assets, acquisition and other related costs and restructuring expenses. In dollar terms, we expect total operating expenses, excluding stock-based compensation expense discussed above and amortization of intangible assets, acquisition and other related costs and restructuring expenses discussed below, to increase modestly for the remainder of 2013 due primarily the expansion of our sales force and investments in certain product initiatives.

● Research and development expenses consist primarily of salaries and other personnel costs related to the design, development, testing and enhancement of our products. We expense our research and development costs as they are incurred. We also capitalize and depreciate over a five-year period costs of our products used for internal purposes.

● Sales and marketing expenses consist primarily of compensation and related costs for personnel engaged in direct sales, sales support and marketing functions, as well as promotional and advertising expenditures. We also capitalize and depreciate over a two-year period costs of our products used for sales and marketing activities, including product demonstrations for potential customers.

● General and administrative expenses consist primarily of salaries and related expenses for certain executive, finance, legal, human resources, information technology and administrative personnel, as well as professional fees (e.g., legal and accounting), facility costs related to our corporate headquarters, insurance costs and other general corporate expenses.

● Amortization of intangible assets consists of the recognition of the purchase price of various intangible assets over their estimated useful lives. We evaluate our identifiable definite-lived intangible assets and other long-lived assets for impairment when events or changes in circumstances indicate that a potential impairment may exist. An impairment charge would be recorded to the extent that the carrying value of the intangible asset exceeds its undiscounted cash flows and its estimated fair value in the period that the impairment circumstances occurred. We also evaluate the recoverability of our goodwill on an annual basis or if events or changes in circumstances indicate that an impairment in the value of goodwill recorded on our balance sheet may exist. Impairment losses are recorded to the extent that the carrying value of the goodwill exceeds its estimated fair value. The future amortization expense of acquired intangible assets depends on a number of factors, including the extent to which we acquire additional businesses, technologies or product lines or are required to record impairment charges related to our acquired intangible assets.

● Acquisition and other related costs are expensed as incurred and consist primarily of transaction and integration related costs such as success-based banking fees, professional fees for legal, accounting, tax, due diligence, valuation and other related services, change in control payments, amortization of deferred consideration, consulting fees, required regulatory costs, certain employee, facility and infrastructure transition costs, and other related expenses. We expect our acquisition and other related expenses to fluctuate over time based on the timing of our acquisitions and related integration activities.

● Restructuring expenses consist primarily of employee severance costs and other related charges, as well as facility-related charges to exit certain locations. See Note 4 to the condensed consolidated financial statements included in this Form 10-Q.

Interest Income and Other, Net represents interest on cash and a variety of securities, including money market funds, U.S. government and government agency debt securities, corporate debt securities and auction rate securities, realized gains/losses on the sale of investment securities, certain foreign currency gains and losses, and other non-operating items.

Interest Expense consists of interest due to the holders of our 3.00% convertible senior notes issued in December 2010 and interest expense and fees pertaining to our credit facility established in December 2012, as well as the amortization of the associated debt issuance costs. See Note 5 to the condensed consolidated financial statements included in this Form 10-Q.

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Income tax is determined based on the amount of earnings and enacted federal, state and foreign tax rates, adjusted for allowable credits and deductions, and for other effects of equity compensation plans. Our income tax provision may be significantly affected by changes to our estimates for tax in jurisdictions in which we operate and other estimates utilized in determining the global effective tax rate. Actual results may also differ from our estimates based on changes in economic conditions. Such changes could have a substantial impact on the income tax provision. Our income tax provision could also be significantly impacted by estimates surrounding our uncertain tax positions and changes to valuation allowance set against certain deferred tax assets. We reevaluate the judgments surrounding our estimates and make adjustments as appropriate each reporting period.

Our effective tax rate differs from the federal statutory rate of 35% due to benefits associated with the differential in tax rates for certain foreign operations, state taxes and significant permanent differences.  Significant permanent differences arise primarily due to research and development credits and certain stock-based compensation expenses that are not expected to generate a tax deduction, such as stock-based compensation expense on grants to foreign employees, offset by tax benefits from disqualifying dispositions. Federal research credits were not available to be recorded in our 2012 financial statements. During the 2013 first quarter, the federal research credit was retroactively renewed for 2012, and such benefits were recorded at that time. 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis of financial condition and results of operations is based upon our Consolidated Financial Statements included in this Form 10-Q which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, allowance for doubtful accounts, write-downs for obsolete inventory, income taxes, acquisition purchase price allocation, impairments of long-lived assets and marketable securities, stock-based compensation, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. None of these accounting policies and estimates have significantly changed since our Annual Report on Form 10-K for the year ended December 31, 2012. Critical accounting policies and estimates are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2012 Form 10-K. Actual results may differ from these estimates under different assumptions or conditions.

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RESULTS OF OPERATIONS

The following table sets forth certain statement of operations data as a percentage of total revenues for the periods indicated and reflects the impact of the restatement of the prior period consolidated financial statements as described in “Restatement of Previously Issued Financial Statements” above and Note 14 to the condensed consolidated financial statements included in this Form 10-Q:

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Revenues:
Products		75.8	%		80.8	%		77.3	%		80.6	%
Services		24.2			19.2			22.7			19.4
Total revenues		100.0			100.0			100.0			100.0
Costs and operating expenses:(1)
Cost of revenues - products(2)		18.2			15.7			17.8			16.4
Cost of revenues - services		2.9			3.0			2.7			2.7
Research and development		25.5			24.9			24.8			24.5
Sales and marketing		28.6			27.1			28.6			27.7
General and administrative		10.4			12.2			10.1			12.7
Amortization of intangible assets		8.7			5.9			8.5			5.3
Acquisition and other related		0.9			4.1			0.9			2.3
Restructuring		—			—			0.0			—
Total costs and operating expenses		95.2			92.9			93.4			91.7
Income from operations		4.8			7.1			6.6			8.3
Interest income and other, net		3.0			0.7			1.5			0.4
Interest expense		(1.7	)		(2.0	)		(1.6	)		(2.0	)
Income before income taxes		6.1			5.8			6.5			6.7
Income tax (benefit) expense		2.9			(22.5	)		1.5			(10.7	)
Net income		3.2	%		28.3	%		5.0	%		17.4	%
(1) Stock-based compensation included in:
Cost of revenues - products		0.1	%		0.1	%		0.1	%		0.1	%
Cost of revenues - services		0.0			0.0			0.0			0.0
Research and development		1.8			1.0			1.9			1.3
Sales and marketing		1.6			1.0			1.6			1.1
General and administrative		1.4			2.0			1.6			2.0

 

⁽²⁾Cost of revenues – products excludes amortization of intangibles, which is shown separately.

Comparison of Three and Six Months Ended June 30, 2013 and 2012

As a result of our acquisitions of Anue on June 1, 2012 and BreakingPoint on August 24, 2012 (the “2012 Acquisitions”), our 2013 consolidated results of operations include the financial results of these acquisitions from their respective acquisition dates. To assist the readers of our financial statements in reviewing our year-over-year consolidated operating results, we have estimated the impacts of these acquisitions for the applicable periods in the related statement of operations sections below. Results for the three and six months ended June 30, 2012 do not include any results of BreakingPoint, which was not acquired until the third quarter of 2012.

Revenues. In the second quarter of 2013, total revenues increased 27.8% to $115.9 million from the $90.7 million recorded in the second quarter of 2012. The year over year increase was primarily due to the impact of our 2012 Acquisitions. The second quarters of 2013 and 2012 included revenues of $33.2 million and $3.9 million, respectively, related to the 2012 Acquisitions. Excluding the revenues from our 2012 Acquisitions, revenues decreased by $4.1 million, or 4.7%, to $82.7 million in the second quarter of 2013 as compared to the same period in 2012.

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In the first six months of 2013, total revenues increased 34.6% to $238.7 million from $177.3 million recorded in the same period of 2012. The year over year increase was primarily due to the impact of our 2012 Acquisitions. The first six months of 2013 and 2012 included revenues of $71.5 million and $3.9 million, respectively, related to the 2012 Acquisitions. Excluding the revenues from our 2012 Acquisitions, revenues decreased by $6.3 million, or 3.7%, to $167.1 million in the first six months of 2013 as compared to the same period in 2012.

Cost of Revenues. As a percentage of total revenues, our total cost of revenues increased to 21.1% in the 2013 second quarter from 18.7% in the 2012 second quarter. As a percentage of total revenues, our total cost of revenues increased to 20.5% in the first six months of 2013 from 19.1% in the first six months of 2012. These increases in cost of revenues as a percentage of total revenues were primarily due to lower sales prices on certain of our Ethernet interface cards in 2013 when compared to their sales prices for the same periods in 2012, without a similar reduction in the materials costs of the interface cards.

Research and Development Expenses. In the second quarter of 2013, research and development expenses increased 31.0% to $29.5 million from $22.5 million in the second quarter of 2012. As a result of our 2012 Acquisitions, our research and development expenditures in the second quarter of 2013 and 2012 included approximately $7.5 million and $893,000, respectively, related to the research and development activities of the acquired operations. Excluding the incremental research and development costs related to the 2012 Acquisitions, research and development expenses in the second quarter of 2013 were $22.1 million compared to $21.7 million in the second quarter of 2012. This increase was primarily due to an increase in stock-based compensation expense of $1.1 million, partially offset by a decrease in compensation and other related costs of $741,000. The net decrease in compensation and related employee costs was primarily due to lower bonus expense as we expect our 2013 performance to be below our applicable annual company-wide objectives and targets.

Research and development expenses for the first six months of 2013 increased 36.5% to $59.3 million from $43.4 million in the same period of 2012. Excluding the incremental research and development costs related to the 2012 Acquisitions, of $14.4 million and $893,000 in the first six months of 2013 and 2012, respectively, our research and development expenses were $44.9 million in the first six months of 2013 compared to $42.5 million in the same period of 2012. This increase was primarily due to an increase in stock-based compensation expense of $2.3 million and higher spending on new product initiatives of $864,000, partially offset by a decrease in compensation and other related costs of $680,000.

Sales and Marketing Expenses. In the second quarter of 2013, sales and marketing expenses increased 35.2% to $33.2 million from $24.6 million in the second quarter of 2012. As a result of our 2012 Acquisitions, our sales and marketing expenditures in the second quarter of 2013 and 2012 included approximately $8.5 million and $1.4 million related to the sales and marketing activities of Anue and BreakingPoint. Excluding the incremental sales and marketing costs related to the 2012 Acquisitions, sales and marketing expenses in the second quarter of 2013 were $24.7 million compared to $23.2 million in the second quarter of 2012. This increase was primarily due to an increase in stock-based compensation expense of $924,000 and higher marketing events and activities related costs (e.g., trade shows) of $685,000.

Sales and marketing expenses for the first six months of 2013 increased 38.8% to $68.2 million from $49.2 million in the same period of 2012. Excluding the incremental sales and marketing costs related to the 2012 Acquisitions of $18.0 million and $1.4 million, in the first six months of 2013 and 2012, respectively, sales and marketing expenses in the first six months of 2013 were $50.2 million compared to $47.8 million in the same period of 2012. This increase was primarily due to an increase in stock-based compensation expense of $1.9 million and higher marketing events and activities related costs (e.g., trade shows) of $1.3 million, partially offset by a net decrease in compensation and other related costs of $849,000.

General and Administrative Expenses. In the second quarter of 2013, general and administrative expenses increased 8.4% to $12.0 million from $11.1 million in the second quarter of 2012. As a result of our 2012 Acquisitions, our general and administrative expenses in the second quarters of 2013 and 2012 included approximately $868,000 and $340,000, respectively, related to the general and administrative activities of Anue and BreakingPoint. Our general and administrative expenditures in the second quarter of 2013 also included one-time items including $156,000 of costs incurred in the second quarter of 2013 related to the restatement of certain of our previously issued financial statements (See Note 14 to the condensed consolidated financial statements included in this Form 10-Q). Excluding these one-time items and the incremental general and administrative costs related to the 2012 Acquisitions, general and administrative expenses in the second quarter of 2013 were $11.0 million compared to $10.3 million in the second quarter of 2012.

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For the first six months of 2013, general and administrative expenses increased 6.5% to $24.1 million from $22.6 million in the same period of 2012. Our general and administrative expenditures in the first six months of 2013 included $1.7 million of costs related to the general and administrative activities of Anue and BreakingPoint and $1.0 million of costs incurred related to the restatement of certain of our previously filed financial statements, partially offset by $1.2 million of proceeds from the settlement of a previous legal matter in the first quarter of 2013. Our general and administrative expenditures in the first six months of 2012 included one-time charges of $1.7 million in connection with the departure of our former CEO, $401,000 incurred in the second quarter of 2012 to settle a legal matter, and $340,000 related to the Anue acquisition. Excluding these one-time items, and the incremental general and administrative costs related to the 2012 Acquisitions, general and administrative expenses in the first six months of 2013 were $22.5 million compared to $20.2 million in the first six months of 2012. This increase was primarily due to an increase in compensation and other related costs of $755,000, an increase in professional services fees of $674,000, and an increase in stock-based compensation expense of $410,000.

Amortization of Intangible Assets. In the second quarter of 2013, amortization of intangible assets increased to $10.1 million from $5.4 million in the second quarter of 2012. In the first six months of 2013, amortization of intangible assets increased to $20.2 million from the $9.4 million recorded in the first six months of 2012. These increases were primarily due to the incremental amortization of intangibles related to our acquisitions of Anue in June 2012 and BreakingPoint in August 2012.

Acquisition and Other Related Expenses. Acquisition and other related expenses for the three and six months ended June 30, 2013 were $1.1 million and $2.4 million, respectively, and related to our acquisitions of Anue and BreakingPoint. Acquisition and other related expenses for the three and six months ended June 30, 2012 were $3.7 million and $4.2 million, respectively, and related to our acquisition of Anue. Acquisition and other related costs primarily consisted of transaction and integration related costs such as professional fees for legal, accounting and tax services, integration related consulting fees, amortization of deferred consideration payable to certain pre-acquisition employees of BreakingPoint, certain employee, facility and infrastructure costs, and other acquisition-related costs.

Restructuring. There were no restructuring expenses incurred in the first six months of 2012. There were no restructuring expenses incurred in the second quarter of 2013. Restructuring expenses for the first six months of 2013 were $58,000. See Note 4 to the condensed consolidated financial statements included in this Form 10-Q.

Interest Income and Other, Net. Interest income and other, net increased to $3.4 million in the second quarter of 2013 from the $602,000 recorded in the second quarter of 2012. Interest income and other, net increased to $3.6 million in the first six months of 2013 from the $712,000 recorded in the first six months of 2012. These increases were primarily due to a $2.9 million realized gain recorded during the second quarter of 2013 for the sale of certain of our auction rate securities that were previously written-down.

Interest Expense. Interest expense, including the amortization of debt issuance costs, was $1.9 million for the second quarter of 2013 and $1.8 million for the second quarter of 2012. Interest expense, including the amortization of debt issuance costs, was $3.9 million for the first six months of 2013 and $3.6 million for the first six months of 2012. Interest expense relates to our convertible senior notes, which were issued in December 2010, as well as the amortization of deferred issuance costs and commitment fees related to our credit facility which we established in December 2012.

Income Tax. Income tax expense was $3.3 million, or an effective rate of 46.8% for the second quarter of 2013 as compared to an income tax benefit of $20.4 million, or an effective rate of (388.1%), for the second quarter of 2012. Income tax expense was $3.6 million, or an effective rate of 23.1%, for the first six months of 2013 as compared to an income tax benefit of $19.0 million, or an effective rate of (159.9%), for the first six months of 2012. The lower effective tax rate for the three and six months ended June 30, 2012 when compared to the same periods in 2013, was primarily due to the tax benefit realized in the 2012 second quarter from the $22.6 million partial reversal of our valuation allowance resulting from the net deferred tax liabilities recorded as part of the Anue Acquisition

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Realization of our deferred tax assets is dependent primarily on the generation of future taxable income. In considering the need for a valuation allowance we consider our historical, as well as future, projected taxable income along with other objectively verifiable evidence.  Management has concluded it is more likely than not that all of its U.S. deferred tax assets, with the exception of its deferred tax assets for capital loss carryforwards, will be realized.  Any reversal of our valuation allowance will favorably impact our results of operations in the period of the reversal. 

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LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations with our cash balances generated primarily from operations and proceeds from our October 2000 initial public offering (“IPO”), our December 2010 convertible debt offering and exercises of share-based awards. Our cash, cash equivalents and short- and long-term investments, when viewed as a whole, increased to $234.1 million as of June 30, 2013 from $177.5 million as of December 31, 2012, primarily due to $51.2 million in net cash provided by our operating activities, and $13.4 million of cash generated from exercises of share-based awards, partially offset by capital expenditures of $9.4 million.

Of our total cash, cash equivalents and short- and long-term investments, $19.9 million and $22.5 million were held outside of the United States in various foreign subsidiaries as of June 30, 2013 and December 31, 2012, respectively. Under current tax laws and regulations, if our cash, cash equivalents or investments associated with the subsidiaries’ undistributed earnings were to be repatriated in the form of dividends or deemed distributions, we would be subject to additional U.S. income taxes and foreign withholding taxes. We consider these funds to be indefinitely reinvested in our foreign operations and do not intend to repatriate them. We had no exposure to European sovereign debt as of June 30, 2013.

The following table sets forth our summary cash flows for the six months ended June 30, 2013 and 2012 (in thousands):

	Six Months Ended June 30,
	2013			2012
				(Restated)
Net cash provided by operating activities	$	51,165		$	46,999
Net cash used in investing activities		(57,266	)		(55,714	)
Net cash provided by financing activities		14,283			11,382

Cash Flows from Operating Activities

Net cash provided by operating activities was $51.2 million in the first six months of 2013 and $47.0 million in the same period of 2012. This increase in cash flow generated from operations was primarily due to growth in operating profit, principally driven by higher revenues, partially offset by the increase in operating expenses.

Cash Flows from Investing Activities

Net cash used in investing activities was $57.3 million and $55.7 million for the first six months of 2013 and 2012, respectively. Excluding marketable securities purchases and proceeds, net cash used in investing activities was $9.4 million and $157.1 million for the first six months of 2013 and 2012, respectively. The net cash used in the first six months of 2013 primarily related to capital expenditures. The decrease in net cash used in the first six months of 2013 was primarily due to the acquisition of Anue in the second quarter of 2012.

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Cash Flows from Financing Activities

Net cash provided by financing activities was $14.3 million and $11.4 million for the first six months of 2013 and 2012, respectively. This increase in cash provided by financing activities was primarily due to a $2.9 million increase in proceeds from the exercises of share-based awards for the first six months of 2013 as compared to the same period in 2012.

We believe that our existing balances of cash and cash equivalents, investments and cash flows expected to be generated from our operations, and borrowings available under our $150 million credit facility established in December 2012, will be sufficient to satisfy our operating requirements for at least the next 12 months. Nonetheless, we may seek additional sources of capital as necessary or appropriate to fund acquisitions or to otherwise finance our growth or operations; however, there can be no assurance that such funds, if needed, will be available on favorable terms, if at all. Our access to the capital markets to raise funds, through the sale of equity or debt securities, is subject to various factors, including the conditions in the U.S. capital markets and the timely filing of our periodic reports with the Commission. Our failure to timely file our 2012 Form 10-K with the Securities and Exchange Commission may currently limit our ability to access the capital markets using short form registration. In addition, our $200 million convertible senior notes have various default provisions, which could accelerate repayment and adversely impact our liquidity.

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Safe Harbor Under the Private Securities Litigation Reform Act of 1995

Statements that are not historical facts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form 10-Q may be deemed to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the safe harbor created by that Section. Words such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "project," "predict," "potential," and variations of these words and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. These risks, uncertainties and other factors may cause our future results, performances or achievements to be materially different from those expressed or implied by our forward-looking statements and include, among other things: anticipated benefits and synergies of our 2012 acquisitions of Anue and BreakingPoint will not be realized, changes in the global economy, competition, consistency of orders from significant customers, our success in developing and producing new products, our success in developing new sales channels and customers, market acceptance of our products, war, terrorism, political unrest, natural disasters and other circumstances that could, among other consequences, reduce the demand for our products, disrupt our supply chain and/or impact the delivery of our products. The factors that may cause future results to differ materially from our current expectations also include, without limitation, the risks identified in our 2012 Form 10-K, and in our other filings with the Securities and Exchange Commission.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk, see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” included in our 2012 Form 10-K. Our exposures to market risk have not changed materially since December 31, 2012. See also Note 11 to the condensed consolidated financial statements included in this Form 10-Q.

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ITEM 4.      CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we have carried out an evaluation, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness, as of the end of the period covered by this report (i.e., as of June 30, 2013), of the design and operation of our “disclosure controls and procedures” as defined in Rule 13a-15(e) promulgated by the Commission under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of such period, were adequate and effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors and all fraud. Any control, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control will be met. The design of controls must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all controls, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected or will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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PART II.     OTHER INFORMATION

ITEM 1.       Legal Proceedings

Discussion of legal matters is incorporated by reference from Part  I, Item 1, Note 12 to the condensed consolidated financial statements included in this Form 10-Q, and should be considered an integral part of this Part  II, Item 1, “Legal Proceedings.”

ITEM 1A.     Risk Factors

Information regarding risk factors appears in Part I, “Item 1A. Risk Factors,” in our 2012 Form 10-K and in certain of our other filings with the Securities and Exchange Commission. There have been no material changes to our risk factors previously disclosed in the 2012 Form 10-K.

ITEM 5.       Other Information

Our policy governing transactions in our securities by our directors, officers and employees permits such persons to adopt stock trading plans pursuant to Rule 10b5-1 promulgated by the Securities and Exchange Commission under the Exchange Act. Our directors, officers and employees may from time to time establish such stock trading plans. We do not undertake any obligation to disclose, or to update or revise any disclosure regarding, any such plans and specifically do not undertake to disclose the adoption, amendment, termination or expiration of any such plans.

ITEM 6.       Exhibits

See the Exhibit Index following the signature page to this Form 10-Q for a list of exhibits filed or furnished with or incorporated by reference as part of this report, which Exhibit Index is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			IXIA
Date:	August 9, 2013	By:	/s/ Victor Alston
			Victor Alston
			President and Chief Executive Officer
Date:	August 9, 2013	By:	/s/ Thomas B. Miller
			Thomas B. Miller
			Chief Financial Officer

35

EXHIBIT INDEX

Exhibit No.	Description
10.1*	Sixth Amendment to Office Lease entered into as of June 18, 2013 between MS LPC Malibu Property Holdings, LLC and the Company
10.2	Amendment No. 2 to Ixia 2010 Employee Stock Purchase Plan, as amended(1)
10.3	Amendment No. 3 to Ixia 2010 Employee Stock Purchase Plan, as amended(2)
10.4	Ixia 2013 Senior Officer Bonus Plan(3)
10.5	Second Amended and Restated Ixia 2008 Equity Incentive Plan(4)
31.1*	Certification of Chief Executive Officer of Ixia pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer of Ixia pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer of Ixia pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Document
101.LAB**	XBRL Taxonomy Label Linkbase Document
101.PRE**	XBRL Taxonomy Presentation Linkbase Document

*	Filed herewith.
**	The following financial information in the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, is formatted in Extensible Business Reporting Language (XBRL) and electronically submitted herewith: (i) unaudited condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012, (ii) unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2013 and 2012, (iii) unaudited condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2013 and 2012, (iv) unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2013 and 2012, and (v) notes to unaudited condensed consolidated financial statements. In accordance with Rule 406T of Regulation S-T, such electronically submitted information shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
(1)	Incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (Reg. No. 333-188689) filed with the Commission on May 17, 2013.
(2)	Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the Commission on June 25, 2013.
(3)	Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the Commission on June 25, 2013.
(4)	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the Commission on June 25, 2013.

36

EX-10

Exhibit 10.1

SIXTH AMENDMENT TO OFFICE LEASE

This SIXTH AMENDMENT TO OFFICE LEASE (“Sixth Amendment”) is made and entered into as of the 18 day of June, 2013, by and between MS LPC MALIBU PROPERTY HOLDINGS, LLC, a Delaware limited liability company ("Landlord"), and IXIA, a California corporation (“Tenant”).

RECITALS:

A.     Landlord and Tenant entered into that certain Office Lease dated September 14, 2007 (the “Original Lease”), as amended by that certain Amendment to Office Lease dated February 11, 2010 ("First Amendment"), that certain Second Amendment to Office Lease dated November 15, 2010 (the "Second Amendment"), that certain Third Amendment to Office Lease dated January 10, 2012 (the "Third Amendment"), that certain Fourth Amendment to Office Lease dated June 1, 2012 (the "Fourth Amendment"), and that certain Fifth Amendment to Office Lease dated November 1, 2012 (the "Fifth Amendment") (the Original Lease, First Amendment, Second Amendment, Third Amendment, Fourth Amendment, and Fifth Amendment shall hereinafter be referred to, collectively, as the "Lease"), whereby Landlord leases to Tenant and Tenant leases from Landlord those certain premises consisting of a total of approximately 115,875 (108,266 usable) rentable square feet of space, consisting of (i) 50,000 rentable (48,809 usable) square feet of space comprising the entire rentable area of that certain building located at 26601 West Agoura Road, Calabasas, CA ("Building F" and the "Building F Premises"); (ii) 21,612 (19,823 usable) rentable square feet of space comprising the entire rentable area of that certain building located at 26701 West Agoura Road, Calabasas, CA ("Building A" and the "Building A Premises"); (iii) 30,529 rentable (27,035 usable) square feet of space, commonly known as Suites 110 and 200, and located on the first and second floors of that certain building located at 26651 West Agoura Road, Calabasas, CA ("Building D" and the applicable portion of Building D which is part of the Premises, the "Building D Premises"), and (iv) 13,734 rentable (12,599 usable) square feet of space, commonly known as Suite B100, and located on the first floor of that certain building located at 26707 West Agoura Road, Calabasas, CA ("Building B" and the applicable portion of Building B which is part of the Premises, the "Building B Premises") (the Building F Premises, Building A Premises, Building D Premises, and Building B Premises shall hereinafter be referred to, collectively, as the "Premises"), all as more particularly set forth in the Lease.

B.     Landlord and Tenant desire to set forth the agreed upon measurement of the Building B Premises and the Building D Premises, and to make other modifications to the Lease, and in connection therewith, Landlord and Tenant desire to amend the Lease as hereinafter provided.

/710471.01/WLA 225903-00017/6-10-13/jey/jey -1- CORPORATE CENTER - CALABASAS [Sixth Amendment] [Ixia]

AGREEMENT :

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.     Capitalized Terms. All capitalized terms when used herein shall have the same meaning as is given such terms in the Lease unless expressly superseded by the terms of this Sixth Amendment.

2.     Measurement the Premises. Landlord and Tenant hereby stipulate and agree that the rentable area of the Building B Premises shall be 13,543 rentable (12,424 usable) square feet of space and the rentable area of the Building D Premises shall be 30,375 rentable (26,954 usable) square feet of space. Landlord and Tenant hereby agree that, retroactively, as of June 1, 2013, the Premises shall be deemed to contain a total of 115,530 rentable square feet of space.

3.     Base Rent.

Base Rent Schedule.

Lease Year	Annual Base Rent	Monthly Installment of Base Rent	Approximate Monthly Rental Rate per Rentable Square Foot*
June 1, 2013 – May 31, 2014*	$2,149,974.00**	$179,071.50**	$1.550**
June 1, 2014 – May 31, 2015	$2,214,473.28**	$184,443.65**	$1.597**
June 1, 2015 – May 31, 2016	$2,280,907.44**	$189,976.95**	$1.644**
June 1, 2016 – May 31, 2017	$2,349,334.68	$195,676.26	$1.694
June 1, 2017 – May 31, 2018	$2,419,814.64	$201,546.55	$1.745
June 1, 2018 – May 31, 2019	$2,492,409.12	$207,592.95	$1.797
June 1, 2019 – May 31, 2020	$2,567,181.36	$213,820.74	$1.851
June 1, 2020– May 31, 2021	$2,644,196.88	$220,235.36	$1.906
June 1, 2021 – May 31, 2022	$2,723,522.76	$226,842.42	$1.963
June 1, 2022 – May 31, 2023	$2,805,228.48	$233,647.69	$2.022
* - The Annual Base Rent (and Monthly Installment of Base Rent) applicable during the first (1st) Lease Year was calculated by multiplying the Monthly Rental Rate per Rentable Square Foot by the number of rentable square feet of space in the Premises. Thereafter, the calculation of Annual Base Rent (and Monthly Installment of Base Rent) reflects an annual increase of 3%. Accordingly, the Monthly Rental Rate per Rentable Square Foot for Lease Years 2 –10 are only an approximation for reference purposes only. ** - Tenant’s obligation to pay Monthly Installments of Base Rent shall be subject to the terms of Section 3.2 below

/710471.01/WLA 225903-00017/6-10-13/jey/jey -2- CORPORATE CENTER - CALABASAS [Sixth Amendment] [Ixia]

3.1.     Abated Base Rent. The Rent Abatement, as set forth in Section 5.3 of the Fourth Amendment, as amended by Section 3.2 of the Fifth Amendment, shall continue to apply to Tenant's obligation to pay Base Rent under the Lease, as amended.

3.2.     Tenant’s Share of Direct Expenses. Based upon the exact measurement set forth in Section 2 above, Tenant’s Share with respect to Building B shall retroactively, as of June 1, 2013, be 19.429% and Tenant's Share with respect to Building D shall retroactively, as of June 1, 2013, be 79.850%.

4.     Substitute Premises Tenant Improvement Allowance Modification. Tenant hereby acknowledges and agrees that based upon the new measurement of the Building D Premises and Building B Premises, Section 4 of the Fifth Amendment is hereby deleted and replaced with this Section 4. Pursuant to the terms of Section 2.1 of the Tenant Work Letter attached to the Fourth Amendment as Exhibit B, and based upon the exact measurement set forth in Section 2 above, Tenant shall be entitled to a one-time tenant improvement allowance in the amount Two Hundred Nineteen Thousand Five Hundred Ninety and No/100 Dollars ($219,590.00) (the "Tenant Improvement Allowance") (i.e., Five Dollars ($5.00) per rentable square foot of the Premises multiplied by 43,918 rentable square feet of the Building D Premises and the Building B Premises), which shall represent the total tenant improvement allowance Tenant is entitled to with respect to the Building D Premises and Building B Premises, notwithstanding anything to the contrary in the Lease. Tenant’s use of the Tenant Improvement Allowance shall be subject to the terms of Exhibit B to the Fourth Amendment.

5.     Maintenance of Building D Common Area. Notwithstanding anything to the contrary in the Lease, Tenant shall, at Tenant's sole cost and expense, without any expectation of reimbursement from the Landlord, maintain the corridors and restrooms located in the Common Areas of Building D. In consideration of the foregoing, Tenant’s Share of the Operating Expenses with respect to Building D shall exclude the cost of janitorial services for Building D.

6.     No Further Modification. Except as set forth in this Sixth Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect. In the event of any conflicts between the terms and conditions of the Lease and the terms and conditions of this Sixth Amendment, the terms and conditions of this Sixth Amendment shall prevail.

/710471.01/WLA 225903-00017/6-10-13/jey/jey -3- CORPORATE CENTER - CALABASAS [Sixth Amendment] [Ixia]

IN WITNESS WHEREOF, this Sixth Amendment has been executed as of the day and year first above written.

“LANDLORD”	“TENANT”
MS LPC MALIBU PROPERTY HOLDINGS, LLC, a Delaware limited liability company By:          /s/ David Binswanger                  Its:      Vice President                           By:                                                                  Its:	IXIA, a California corporation By:            /s/ Ronald W. Buckly          Its: Sr. V.P. and General Counsel By:            /s/ Thomas B. Miller            Its:     Chief Financial Officer

/710471.01/WLA 225903-00017/6-10-13/jey/jey -4- CORPORATE CENTER - CALABASAS [Sixth Amendment] [Ixia]

EX-31

Exhibit 31.1

Certification of Chief Executive Officer of Ixia pursuant to

Rule 13a-14(a) under the Exchange Act,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Victor Alston, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ixia;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2013	/s/ Victor Alston
	Victor Alston
	President and Chief Executive Officer

EX-31

Exhibit 31.2

Certification of Chief Financial Officer of Ixia pursuant to

Rule 13a-14(a) under the Exchange Act,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas B. Miller, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ixia;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2013	/s/ Thomas B. Miller
	Thomas B. Miller
	Chief Financial Officer

EX-32

Exhibit 32.1

Certifications of Chief Executive Officer and Chief Financial Officer of Ixia Pursuant to

Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Ixia (the “Company”) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Victor Alston, President and Chief Executive Officer of the Company, and Thomas B. Miller, Chief Financial Officer of the Company, certify, to the best of our knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 9, 2013	/s/ Victor Alston
		Victor Alston
		President and Chief Executive Officer

Date:	August 9, 2013	/s/ Thomas B. Miller
		Thomas B. Miller
		Chief Financial Officer

XML

Note 10 - Concentrations

6 Months Ended

Jun. 30, 2013

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

10.             Concentrations

Significant Customers

The following customers accounted for more than 10% of total revenue for the three and six months ended June 30, 2013, in the case of Customer A, and for the three and six months ended June 30, 2013 and 2012, in the case of Customer B (in thousands, except percentages):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Customer A
Amount of total revenues	$	17,482		$	1,690		$	40,447		$	2,938
As a percentage of total revenues		15.1	%		1.9	%		16.9	%		1.7	%
Customer B
Amount of total revenues	$	12,326		$	13,499		$	26,357		$	28,439
As a percentage of total revenues		10.6	%		14.9	%		11.0	%		16.0	%

As of June 30, 2013 and December 31, 2012, Customers A and B above had receivable balances as follows (in thousands, except percentages):

	June 30,			December 31,
	2013			2012
Customer A
Amount of total receivables	$	9,151		$	4,748
As a percentage of total receivables		10.0	%		4.6	%
Customer B
Amount of total receivables	$	9,707		$	8,998
As a percentage of total receivables		10.6	%		8.7	%

International Data

For the three and six months ended June 30, 2013 and 2012, total international revenues based on customer location consisted of the following (in thousands, except percentages):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Amount of total international revenues	$	39,272		$	40,323		$	85,807		$	82,870
As a percentage of total revenues		33.9	%		44.5	%		36.0	%		46.7	%

Within international revenues disclosed above, total revenues from product shipments to Japan for the three and six months ended June 30, 2013 and 2012 were as follows (in thousands, except percentages):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Amount of total revenues	$	5,769		$	13,021		$	20,849		$	25,113
As a percentage of total revenues		5.0	%		14.4	%		8.7	%		14.2	%

XML

Note 13 - Income Taxes (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Deferred Tax Assets, Net of Valuation Allowance, Current	$ 24.1	$ 24.2

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Revenues:
Products	$ 87,818		$ 73,288		$ 184,454		$ 142,895
Services	28,077		17,414		54,224		34,465
Total revenues	115,895		90,702		238,678		177,360
Costs and operating expenses:(1)
Cost of revenues – products(2)	21,088	[1]	14,220	[1]	42,475	[1]	29,002	[1]
Cost of revenues – services	3,311		2,730		6,336		4,860
Research and development	29,539		22,546		59,251		43,397
Sales and marketing	33,191		24,556		68,232		49,163
General and administrative	12,027		11,090		24,085		22,606
Amortization of intangible assets	10,055		5,358		20,193		9,403
Acquisition and other related	1,093		3,739		2,365		4,164
Restructuring					58
Total costs and operating expenses	110,304		84,239		222,995		162,595
Income from operations	5,591		6,463		15,683		14,765
Interest income and other, net	3,431		602		3,638		712
Interest expense	(1,943)		(1,800)		(3,886)		(3,600)
Income before income taxes	7,079		5,265		15,435		11,877
Income tax expense (benefit)	3,316		(20,431)		3,567		(18,986)
Net income	$ 3,763		$ 25,696		$ 11,868		$ 30,863
Earnings per share:
Basic (in Dollars per share)	$ 0.05		$ 0.36		$ 0.16		$ 0.43
Diluted (in Dollars per share)	$ 0.05		$ 0.32		$ 0.15		$ 0.40
Weighted average number of common and common equivalent shares outstanding:
Basic (in Shares)	75,667		71,579		75,194		71,079
Diluted (in Shares)	77,245		83,803		77,046		83,508

[1] Cost of revenues - products exclude amortization of intangibles, which is shown separately.

XML

Note 3 - Acquisitions

6 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

3.      Acquisitions

Anue Systems, Inc.

On June 1, 2012, we completed our acquisition of all of the outstanding shares of common stock of Anue Systems, Inc. (“Anue”).  Anue provides solutions to monitor and test complex networks, including Anue’s Net Tool Optimizer solution that efficiently aggregates and filters network traffic to help optimize network monitoring tool usage.  With this acquisition, we have expanded our addressable market, broadened our product portfolio and grown our customer base.  In addition, we expect to continue to leverage Anue’s sales channels and assembled workforce, including its experienced development team.  These factors, among others, contributed to a purchase price in excess of the estimated fair value of Anue’s net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.  

In the second quarter of 2013, we finalized our purchase price allocation. The aggregate cash consideration paid totaled $152.4 million, and was funded from our existing cash and investments.

Acquisition and other related costs, including integration activities, approximated $46,000 and $269,000 for the three and six months ended June 30, 2013, respectively, and $2.6 million and $3.0 million for the three and six months ended June 30, 2012, respectively.  These acquisition and other related costs have been expensed as incurred and have been included within the Acquisition and other related line item on our condensed consolidated statements of operations.

The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash and cash equivalents	$	3,659
Accounts receivable		12,016
Inventories		4,380
Prepaid and other assets		2,980
Fixed assets, net		1,600
Identifiable intangible assets		74,700
Goodwill		91,008
Total assets acquired		190,343
Accounts payable, accrued expenses and other liabilities		(7,942	)
Deferred revenues		(6,997	)
Deferred tax liability, net		(22,964	)
Net assets acquired	$	152,440

During the second quarter of 2013, we updated the allocation of our purchase price to increase the value of our accounts receivable balance by $173,000, decrease accounts payable, accrued expenses and other liabilities by $173,000, and decrease our deferred tax liability, net by $22,000, resulting in a net decrease in goodwill of $368,000. As these changes were not material, we did not recast our prior period financial statements for such changes. The above table reflects these changes.

The identifiable intangible assets of $74.7 million consist of $45.0 million of acquired technology, $21.9 million of customer relationships, $4.0 million for the trade name, $2.1 million related to non-compete agreements and $1.7 million of other identifiable intangible assets. The fair values of the identifiable intangible assets have been estimated using the income approach. These intangible assets will be amortized using a straight-line method over their expected useful lives ranging from six months to six years.  The goodwill recorded in connection with this transaction is not deductible for U.S. income tax purposes.

BreakingPoint Systems, Inc.

On August 24, 2012, we completed our acquisition of all of the outstanding shares of common stock of BreakingPoint Systems, Inc. (“BreakingPoint”).  BreakingPoint is a leader in security testing, and its solutions provide global visibility into emerging threats and applications, along with advance insight into the resiliency of an organization’s information technology infrastructure under operationally relevant conditions and malicious attacks. With this acquisition, we have expanded our addressable market, broadened our product portfolio and grown our customer base. In addition, we expect to continue to leverage BreakingPoint’s sales channels and assembled workforce, including its experienced product development and sales teams. These factors, among others, contributed to a purchase price in excess of the estimated fair value of BreakingPoint’s net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.  

The aggregate cash consideration paid totaled $163.7 million and was funded from our existing cash and investments.

Acquisition and other related costs, including integration activities, approximated $1.0 million and $2.1 million for the three and six months ended June 30, 2013, respectively. These acquisition and other related costs have been expensed as incurred, and have been included within the Acquisition and other related line item on our condensed consolidated statements of operations.  

In connection with the acquisition, we may be obligated to pay up to $3.8 million to certain pre-acquisition employees of BreakingPoint over a weighted average period of less than two years provided they remain employees of Ixia. Related to this obligation, for the three and six months ended June 30, 2013, $474,000 and $1.1 million, respectively, has been recorded within the Acquisition and other related line item on our condensed consolidated statements of operations. As of June 30, 2013, $1.7 million of payments have been made.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash and cash equivalents	$	13,417
Accounts receivable		4,610
Inventories		3,156
Prepaid and other assets		796
Fixed assets, net		936
Identifiable intangible assets		65,600
Goodwill		102,594
Total assets acquired		191,109
Accounts payable, accrued expenses and other liabilities		(6,889	)
Deferred revenues		(6,387	)
Deferred tax liability, net		(14,146	)
Net assets acquired	$	163,687

During the second quarter of 2013, we also updated the preliminary allocation of our purchase price to increase the value of our accounts receivable balance by $58,000 and a resulting decrease in goodwill of $58,000. As this change was not material, we did not recast our prior period financial statements for such changes. The above table reflects the change.

The preliminary purchase price allocation is pending the completion of certain items, such as the final tax attributes that will be determined upon the filing of certain pre-acquisition tax returns.

The identifiable intangible assets of $65.6 million consist of $22.7 million of acquired technology, $20.6 million of customer relationships, $16.6 million of service agreements, $2.9 million for the trade name, $2.2 million related to non-compete agreements and $600,000 of other identifiable intangible assets. The fair values of the identifiable intangible assets have been estimated using the income approach. These intangible assets will be amortized using a straight-line method over their expected useful lives ranging from two weeks to six years.  The goodwill recorded in connection with this transaction is not deductible for U.S. income tax purposes.

Pro Forma and Post-Acquisition Results (Unaudited)

The following table summarizes the unaudited pro forma total revenues and net income of the combined entities, including Ixia, had the acquisitions of Anue and BreakingPoint occurred on January 1, 2011 (in thousands):

	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Total revenues	$	116,629	$	225,458
Net income		5,586		6,839

The pro forma combined results in the table above have been prepared for comparative purposes only and include acquisition-related adjustments for, among others items, reductions in revenues related to the estimated fair value adjustment to deferred revenues, certain acquisition related costs, amortization of identifiable intangible assets, and the related income tax effects for these adjustments. The pro forma combined results, as well as those of Anue and BreakingPoint included in the Company’s results subsequent to the acquisition date, do not purport to be indicative of the results of operations which would have resulted had the acquisition been effective at the beginning of the applicable periods noted above, or of the future results of operations of the combined entity.

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Note 6 - Selected Balance Sheet Data (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure Text Block Supplement [Abstract]

Available-for-sale Securities [Table Text Block]

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale – short-term:
U.S. government and agency debt securities	$	86,606	$	21	$	(46	)	$	86,581
Corporate debt securities		90,638		1,056		(233	)		91,461
		177,244		1,077		(279	)		178,042
Available-for-sale – long-term:
Auction rate securities		369		1		—			370
		369		1		—			370
Total	$	177,613	$	1,078	$	(279	)	$	178,412

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale – short-term:
U.S. government and agency debt securities	$	77,823	$	48	$	(1	)	$	77,870
Corporate debt securities		47,933		1,068		(20	)		48,981
		125,756		1,116		(21	)		126,851
Available-for-sale – long-term:
Auction rate securities		820		2,301		(2	)		3,119
		820		2,301		(2	)		3,119
Total	$	126,576	$	3,417	$	(23	)	$	129,970

Schedule of Inventory, Current [Table Text Block]

	June 30, 2013		December 31, 2012
Raw materials	$	2,909	$	4,530
Work in process		18,143		14,144
Finished goods		15,329		18,546
	$	36,381	$	37,220

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Note 14 - Restatement (Details) - Restated Consolidated Statements of Cash Flows Amounts (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net income	$ 25,696	$ 11,868	$ 30,863
Deferred income taxes		(1,649)	(23,363)
Accrued expenses and other		(14,415)	1,125
Deferred revenues		2,699	5,097
Net cash provided by operating activities		51,165	46,999
Scenario, Previously Reported [Member]
Net income	26,850		31,232
Deferred income taxes			(23,363)
Accrued expenses and other			1,382
Deferred revenues			4,471
Net cash provided by operating activities			46,999
Scenario, Adjustment [Member]
Net income	(1,154)		(369)
Accrued expenses and other			(257)
Deferred revenues			$ 626

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Note 11 - Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

11.          Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date.  The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1.	Observable inputs such as quoted prices in active markets;
Level 2.	Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3.	Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial assets carried at fair value as of June 30, 2013 and December 31, 2012 are classified in the table below in one of the three categories described above (in thousands):

	June 30, 2013								December 31, 2012
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents:
Money market funds	$	251	$	251	$	—	$	—	$	185	$	185	$	—	$	—
Corporate debt securities		29,139		—		29,139		—		—		—		—		—
Short-term investments:
U.S. Treasury, government and agency debt securities		86,581		—		86,581		—		77,870		—		77,870		—
Corporate debt securities		91,461		—		91,461		—		48,981		—		48,981		—
Long-term investments:
Auction rate securities		370		—		—		370		3,119		—		—		3,119
Total financial assets	$	207,802	$	251	$	207,181	$	370	$	130,155	$	185	$	126,851	$	3,119

To estimate the fair value of our money market funds, U.S. treasury, government and agency debt securities, corporate debt securities and auction rate securities, we use the estimated fair value per our investment brokerage/custodial statements. To the extent deemed necessary, we may also obtain non-binding market quotes to corroborate the estimated fair values reflected in our investment brokerage/custodial statements.

During the second quarter of 2013, we sold an auction rate security that was classified as a Level 3 financial asset.  This auction rate security had a par value of $4.0 million and the sale resulted in a realized gain of $2.9 million (included within our Interest income and other, net line item on our condensed consolidated statements of operations.)

There were no transfers of assets between levels within the fair value hierarchy for the three-month period ended June 30, 2013. 

The following table summarizes the activity for the three and six months ended June 30, 2013 and 2012 for our auction rate securities where fair value measurements are estimated utilizing Level 3 inputs (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Beginning balance	$	3,167		$	2,954		$	3,119		$	2,774
Unrealized (loss) gain reclassified from/recorded in other comprehensive income		(2,346	)		(119	)		(2,298	)		61
Realized gain recorded in earnings		2,869			—			2,869			—
Sales		(3,320	)		—			(3,320	)		—
Ending balance	$	370		$	2,835		$	370		$	2,835

There were no unrealized losses recorded in earnings for Level 3 assets still held at June 30, 2013.

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Note 10 - Concentrations (Details) - Accounts Receivable Concentrations (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Concentration Risk [Line Items]
Amount of total receivables (in Dollars)	$ 91,378	$ 103,523
Customer A [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Amount of total receivables (in Dollars)	9,151	4,748
As a percentage of total receivables	10.00%	4.60%
Customer B [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Amount of total receivables (in Dollars)	$ 9,707	$ 8,998
As a percentage of total receivables	10.60%	8.70%

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Note 6 - Selected Balance Sheet Data (Details) - Investments in Marketable Securities (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 177,613	$ 126,576
Gross Unrealized Gains	1,078	3,417
Gross Unrealized Losses	(279)	(23)
Fair Value	178,412	129,970
US Treasury and Government [Member] | Short-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	86,606	77,823
Gross Unrealized Gains	21	48
Gross Unrealized Losses	(46)	(1)
Fair Value	86,581	77,870
US Treasury and Government [Member] | Long-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value	86,581	77,870
Corporate Debt Securities [Member] | Short-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	90,638	47,933
Gross Unrealized Gains	1,056	1,068
Gross Unrealized Losses	(233)	(20)
Fair Value	91,461	48,981
Corporate Debt Securities [Member] | Long-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value	91,461	48,981
Auction Rate Securities [Member] | Long-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	369	820
Gross Unrealized Gains	1	2,301
Gross Unrealized Losses		(2)
Fair Value	370	3,119
Short-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	177,244	125,756
Gross Unrealized Gains	1,077	1,116
Gross Unrealized Losses	(279)	(21)
Fair Value	178,042	126,851
Long-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	369	820
Gross Unrealized Gains	1	2,301
Gross Unrealized Losses		(2)
Fair Value	$ 370	$ 3,119

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Note 10 - Concentrations (Tables)

6 Months Ended

Jun. 30, 2013

Sales Revenue, Goods, Net [Member]

Note 10 - Concentrations (Tables) [Line Items]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Customer A
Amount of total revenues	$	17,482		$	1,690		$	40,447		$	2,938
As a percentage of total revenues		15.1	%		1.9	%		16.9	%		1.7	%
Customer B
Amount of total revenues	$	12,326		$	13,499		$	26,357		$	28,439
As a percentage of total revenues		10.6	%		14.9	%		11.0	%		16.0	%

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Amount of total international revenues	$	39,272		$	40,323		$	85,807		$	82,870
As a percentage of total revenues		33.9	%		44.5	%		36.0	%		46.7	%

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Amount of total revenues	$	5,769		$	13,021		$	20,849		$	25,113
As a percentage of total revenues		5.0	%		14.4	%		8.7	%		14.2	%

Accounts Receivable [Member]

Note 10 - Concentrations (Tables) [Line Items]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	June 30,			December 31,
	2013			2012
Customer A
Amount of total receivables	$	9,151		$	4,748
As a percentage of total receivables		10.0	%		4.6	%
Customer B
Amount of total receivables	$	9,707		$	8,998
As a percentage of total receivables		10.6	%		8.7	%

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Note 9 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings per share: [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
			(Restated)				(Restated)
Basic presentation:
Numerator for basic earnings per share:
Net income	$	3,763	$	25,696	$	11,868	$	30,863
Denominator for basic earnings per share:
Weighted average common shares outstanding		75,667		71,579		75,194		71,079
Basic earnings per share	$	0.05	$	0.36	$	0.16	$	0.43
Diluted presentation:
Numerator for diluted earnings per share:
Net income	$	3,763	$	25,696	$	11,868	$	30,863
Interest expense on convertible senior notes, net of tax		—		1,100		—		2,200
Net income used for diluted earnings per share	$	3,763	$	26,796	$	11,868	$	33,063
Denominator for dilutive earnings per share:
Weighted average common shares outstanding		75,667		71,579		75,194		71,079
Effect of dilutive securities:
Stock options and other share-based awards		1,578		1,934		1,852		2,139
Convertible senior notes		—		10,290		—		10,290
Dilutive potential common shares		77,245		83,803		77,046		83,508
Diluted earnings per share	$	0.05	$	0.32	$	0.15	$	0.40

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Note 10 - Concentrations (Details)	Jun. 30, 2013
Risks and Uncertainties [Abstract]
Revenue Concentration Benchmark	10.00%

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Note 4 - Restructuring (Details)	3 Months Ended
	Sep. 30, 2012
Restructuring and Related Activities [Abstract]
Restructuring and Related Cost, Number of Positions Eliminated	29

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Note 7 - Goodwill and Other Intangible Assets (Details) - Activity for Goodwill (USD $) In Thousands, unless otherwise specified			6 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Anue Systems, Inc. [Member]	Jun. 01, 2012 Anue Systems, Inc. [Member]	Jun. 30, 2013 BreakingPoint Systems, Inc. [Member]	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member]
Goodwill [Line Items]
Balance	$ 260,032	$ 260,457		$ 91,008		$ 102,594
Goodwill acquired			(367)		(58)
Balance	$ 260,032	$ 260,457		$ 91,008		$ 102,594

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Note 11 - Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended		3 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Auction Rate Securities [Member] Fair Value, Inputs, Level 3 [Member] Long-term Investments [Member]	Mar. 31, 2013 Auction Rate Securities [Member] Fair Value, Inputs, Level 3 [Member] Long-term Investments [Member]	Dec. 31, 2012 Auction Rate Securities [Member] Fair Value, Inputs, Level 3 [Member] Long-term Investments [Member]	Jun. 30, 2013 Auction Rate Securities [Member] Long-term Investments [Member]	Dec. 31, 2012 Auction Rate Securities [Member] Long-term Investments [Member]	Jun. 30, 2013 Long-term Investments [Member]	Dec. 31, 2012 Long-term Investments [Member]
Note 11 - Fair Value Measurements (Details) [Line Items]
Available-for-sale Securities	$ 178,412	$ 178,412	$ 129,970	$ 370	$ 4,000	$ 3,119	$ 370	$ 3,119	$ 370	$ 3,119
Available-for-sale Securities, Gross Realized Gain (Loss)	$ 3,200	$ 3,169		$ 2,900

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Note 3 - Acquisitions (Details) - Preliminary Allocation of Purchase Price - Anue Systems, Inc. (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 01, 2012 Anue Systems, Inc. [Member]
Note 3 - Acquisitions (Details) - Preliminary Allocation of Purchase Price - Anue Systems, Inc. [Line Items]
Cash and cash equivalents			$ 3,659
Accounts receivable			12,016
Inventories			4,380
Prepaid and other assets			2,980
Fixed assets, net			1,600
Identifiable intangible assets			74,700
Goodwill	260,032	260,457	91,008
Total assets acquired			190,343
Accounts payable, accrued expenses and other liabilities			(7,942)
Deferred revenues			(6,997)
Deferred tax liability, net			(22,964)
Net assets acquired			$ 152,440

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Note 8 - Shareholders' Equity (Details) (USD $)	3 Months Ended	6 Months Ended	12 Months Ended					1 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Oct. 22, 2013 Scenario, Forecast [Member]	Jun. 30, 2013 Subject to Options and Share Appreciation Rights [Member] Amended and Restated 2008 Equity Incentive Plan [Member]	Jun. 30, 2013 Subject to Restricted Stock Unit and Restricted Stock Awards [Member] Amended and Restated 2008 Equity Incentive Plan [Member]	Jun. 30, 2013 Subject to Cash Awards [Member] Amended and Restated 2008 Equity Incentive Plan [Member]	Jun. 30, 2013 Amended and Restated 2008 Equity Incentive Plan [Member] Non-Employee Director [Member]	Jun. 30, 2013 Amended and Restated 2008 Equity Incentive Plan [Member]	Jun. 30, 2013 The 2010 Employee Stock Purchase Plan [Member]	Jun. 30, 2013 The 2010 Employee Stock Purchase Plan [Member]	Jun. 30, 2013 Tax on Realized Gains on Sale of Available-for-sale Securities [Member]	Jun. 30, 2013 Tax on Realized Gains on Sale of Available-for-sale Securities [Member]
Note 8 - Shareholders' Equity (Details) [Line Items]
Available-for-sale Securities, Gross Realized Gains	$ 3,100,000	$ 3,200,000
Other Tax Expense (Benefit)											1,200,000	1,200,000
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, before Reclassification Adjustments and Tax	286,000	517,000
Available-for-sale Securities, Income Tax Expense on Change in Unrealized Holding Gain (Loss)	80,000	145,000
Stock Repurchase Program, Authorized Amount			25,000,000
Increase in Number of Shares of Common Stock Available for Future Grants (in Shares)								9,800,000	2,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)								29,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)								13,300,000
Award Limits, Share Limit on an Eligible Participant in a Calendar Year (in Shares)				1,000,000	1,000,000
Award Limits, Value Limit on an Eligible Participant in a Calendar Year						$ 2,000,000	$ 500,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in Shares)										500,000

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Note 7 - Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

Balance at January 1, 2013:	$	260,457
Adjustments:
Anue Acquisition		(367	)
BreakingPoint Acquisition		(58	)
Balance at June 30, 2013	$	260,032

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	Weighted Average Useful Life		Gross		Accumulated Amortization			Net
	(in years)
Other intangible assets:
Technology		5.4	$	141,215	$	(77,655	)	$	63,560
Customer relationships		5.8		70,376		(24,071	)		46,305
Service agreements		5.7		22,700		(7,265	)		15,435
Non-compete		4.0		5,700		(2,207	)		3,493
Trademark		5.3		8,976		(3,016	)		5,960
Other		4.0		3,868		(1,358	)		2,510
			$	252,835	$	(115,572	)	$	137,263

	Weighted Average Useful Life		Gross		Accumulated Amortization			Net
	(in years)
Other intangible assets:
Technology		5.4	$	141,215	$	(66,704	)	$	74,511
Customer relationships		6.0		70,376		(18,289	)		52,087
Service agreements		5.7		22,700		(5,272	)		17,428
Non-compete		4.2		5,700		(1,520	)		4,180
Trademark		5.3		8,976		(2,333	)		6,643
Other		3.8		3,416		(1,262	)		2,154
			$	252,383	$	(95,380	)	$	157,003

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2013	$	19,668
2014		33,928
2015		29,251
2016		25,898
2017		18,853
Thereafter		9,665
	$	137,263

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net income	$ 3,763	$ 25,696	$ 11,868	$ 30,863
Other comprehensive (loss) income, net of tax:
Net change in unrealized gains and losses on investments	(1,708)	(625)	(1,564)	459
Cumulative translation adjustment	(186)	132	(509)	(165)
Total other comprehensive (loss) income, net of tax	(1,894)	(493)	(2,073)	294
Comprehensive income	$ 1,869	$ 25,203	$ 9,795	$ 31,157

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Note 1 - Business

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

Nature of Operations [Text Block]

1.     Business

Ixia was incorporated on May 27, 1997 as a California corporation. We are a leading provider of converged Internet Protocol (IP) network validation and network visibility solutions. Equipment manufacturers, service providers, enterprises, and government agencies use our solutions to design, verify, and monitor a broad range of Ethernet, Wi-Fi, and 3G/LTE equipment and networks. Our product solutions consist of our hardware platforms, such as our chassis, interface cards and appliances, software application tools, and services, including our warranty and maintenance offerings and professional services.

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Note 4 - Restructuring

6 Months Ended

Jun. 30, 2013

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

4.             Restructuring

During the third quarter of 2012, our management approved, committed to and initiated a plan to restructure our operations following our 2012 acquisition of BreakingPoint Systems, Inc. (“BreakingPoint”). The BreakingPoint restructuring included a net reduction in force of approximately 29 positions (primarily impacting our research and development team in Melbourne, Australia). The payments related to the lease costs are expected to be paid by the end of the second quarter of 2015.

Activity related to our restructuring plan is as follows (in thousands):

Accrual at December 31, 2012	$	1,026
Charges		58
Payments		(310	)
Other or non-cash items		(124	)
Accrual at March 31, 2013	$	650
Charges		—
Payments		(81	)
Other or non-cash items		22
Accrual at June 30, 2013	$	591

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Note 2 - Basis of Presentation and Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

2.     Basis of Presentation and Recent Accounting Pronouncements

Basis of Presentation

The accompanying condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012, are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of our financial position, operating results, and cash flows for the interim periods presented. The results of operations for the current interim periods presented are not necessarily indicative of results to be expected for the full year ending December 31, 2013 or any other future period.

These condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of December 31, 2012 has been derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities Exchange Commission on April 4, 2013 (the “2012 Form 10-K”), but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our 2012 Form 10-K.

Reclassifications

Certain reclassifications have been made to prior period consolidated financial statements to conform to the current presentation. Income taxes payable is now presented within Accrued expenses and other on our consolidated balance sheets and consolidated statements of cash flows.

Restatement

The Company has restated in the 2012 Form 10-K its unaudited interim consolidated financial statements for the three and six months ended June 30, 2012. See Note 14 below and our 2012 Form 10-K, including Note 15 to the audited consolidated financial statements included therein, for additional information.

Recent Accounting Pronouncements

In June 2011, the FASB issued disclosure guidance related to the presentation of the Statement of Comprehensive Income. This guidance eliminated the then current option to report other comprehensive income and its components in the statement of changes in equity. Under this guidance, we are required to present either a single continuous statement of comprehensive income or a consolidated statement of operations immediately followed by a statement of comprehensive income. Although this guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under the previous guidance. We adopted this guidance in the first quarter of 2012 on a retrospective basis. There was no impact to our consolidated financial results as the adoption of this guidance related only to changes in financial statement presentation. In February 2013, FASB issued finalized disclosure guidance related to the amounts reclassified from accumulated other comprehensive income. Under this guidance, we are required to show reclassifications from accumulated other comprehensive income either in a single note or parenthetically on the face of the statement of operations provided that all of the required information is presented in a single location with the effect of significant amounts reclassified by component and the statement of operations line items affected by the reclassification. The effective date for this disclosure guidance is for fiscal years beginning after December 15, 2012. We adopted this new guidance on January 1, 2013. The adoption of this new guidance did not have a material impact on our consolidated financial position, results of operations and cash flows.

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Note 7 - Goodwill and Other Intangible Assets (Details) - Purchased Intangible Assets (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Gross	$ 252,835	$ 252,383
Accumulated Amortization	(115,572)	(95,380)
Net	137,263	157,003
Technology-Based Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	5 years 146 days	5 years 146 days
Gross	141,215	141,215
Accumulated Amortization	(77,655)	(66,704)
Net	63,560	74,511
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	5 years 292 days	6 years
Gross	70,376	70,376
Accumulated Amortization	(24,071)	(18,289)
Net	46,305	52,087
Service Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	5 years 255 days	5 years 255 days
Gross	22,700	22,700
Accumulated Amortization	(7,265)	(5,272)
Net	15,435	17,428
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	4 years	4 years 73 days
Gross	5,700	5,700
Accumulated Amortization	(2,207)	(1,520)
Net	3,493	4,180
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	5 years 109 days	5 years 109 days
Gross	8,976	8,976
Accumulated Amortization	(3,016)	(2,333)
Net	5,960	6,643
Other Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	4 years	3 years 292 days
Gross	3,868	3,416
Accumulated Amortization	(1,358)	(1,262)
Net	$ 2,510	$ 2,154

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Note 11 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	June 30, 2013								December 31, 2012
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents:
Money market funds	$	251	$	251	$	—	$	—	$	185	$	185	$	—	$	—
Corporate debt securities		29,139		—		29,139		—		—		—		—		—
Short-term investments:
U.S. Treasury, government and agency debt securities		86,581		—		86,581		—		77,870		—		77,870		—
Corporate debt securities		91,461		—		91,461		—		48,981		—		48,981		—
Long-term investments:
Auction rate securities		370		—		—		370		3,119		—		—		3,119
Total financial assets	$	207,802	$	251	$	207,181	$	370	$	130,155	$	185	$	126,851	$	3,119

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Beginning balance	$	3,167		$	2,954		$	3,119		$	2,774
Unrealized (loss) gain reclassified from/recorded in other comprehensive income		(2,346	)		(119	)		(2,298	)		61
Realized gain recorded in earnings		2,869			—			2,869			—
Sales		(3,320	)		—			(3,320	)		—
Ending balance	$	370		$	2,835		$	370		$	2,835

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Note 3 - Acquisitions (Details) - Preliminary Allocation of Purchase Price - BreakingPoint Systems, Inc. (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member]
Note 3 - Acquisitions (Details) - Preliminary Allocation of Purchase Price - BreakingPoint Systems, Inc. [Line Items]
Cash and cash equivalents			$ 13,417
Accounts receivable			4,610
Inventories			3,156
Prepaid and other assets			796
Fixed assets, net			936
Identifiable intangible assets			65,600
Goodwill	260,032	260,457	102,594
Total assets acquired			191,109
Accounts payable, accrued expenses and other liabilities			(6,889)
Deferred revenues			(6,387)
Deferred tax liability, net			(14,146)
Net assets acquired			$ 163,687

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Note 6 - Selected Balance Sheet Data (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Disclosure Text Block Supplement [Abstract]
Available-for-sale Securities, Weighted Remaining Contractual Maturity	1 year 204 days	1 year 204 days	1 year 131 days
Available-for-sale Securities, Gross Realized Gain (Loss)	$ 3,200,000	$ 3,169,000
Available-for-sale Securities, Gross Realized Losses		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	279,000	279,000
Allowance for Doubtful Other Receivables, Current	1,300,000	1,300,000	1,400,000
Accrued Vacation	$ 8,300,000	$ 8,300,000	$ 7,600,000

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Note 14 - Restatement (Details) - Restated Consolidated Statements of Comprehensive Income Amounts (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net income	$ 3,763	$ 25,696	$ 11,868	$ 30,863
Comprehensive income	1,869	25,203	9,795	31,157
Scenario, Previously Reported [Member]
Net income		26,850		31,232
Comprehensive income		26,357		31,526
Scenario, Adjustment [Member]
Net income		(1,154)		(369)
Comprehensive income		$ (1,154)		$ (369)

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Note 11 - Fair Value Measurements (Details) - Financial Assets Carried at Fair Value (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Short-term investments:
Investments	$ 178,412		$ 129,970
Total financial assets	207,802		130,155
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Cash Equivalents [Member]
Cash equivalents:
Cash equivalents	251		185
Money Market Funds [Member] | Cash Equivalents [Member]
Cash equivalents:
Cash equivalents	251		185
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Cash Equivalents [Member]
Cash equivalents:
Cash equivalents	29,139
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Long-term Investments [Member]
Short-term investments:
Investments	91,461		48,981
Corporate Debt Securities [Member] | Cash Equivalents [Member]
Cash equivalents:
Cash equivalents	29,139
Corporate Debt Securities [Member] | Long-term Investments [Member]
Short-term investments:
Investments	91,461		48,981
US Treasury and Government [Member] | Fair Value, Inputs, Level 2 [Member] | Long-term Investments [Member]
Short-term investments:
Investments	86,581		77,870
US Treasury and Government [Member] | Long-term Investments [Member]
Short-term investments:
Investments	86,581		77,870
Auction Rate Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Long-term Investments [Member]
Short-term investments:
Investments	370	4,000	3,119
Auction Rate Securities [Member] | Long-term Investments [Member]
Short-term investments:
Investments	370		3,119
Fair Value, Inputs, Level 1 [Member]
Short-term investments:
Total financial assets	251		185
Fair Value, Inputs, Level 2 [Member]
Short-term investments:
Total financial assets	207,181		126,851
Fair Value, Inputs, Level 3 [Member]
Short-term investments:
Total financial assets	370		3,119
Long-term Investments [Member]
Short-term investments:
Investments	$ 370		$ 3,119

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Note 9 - Earnings Per Share (Details) - Computation of Basic and Diluted Earnings Per Share (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Computation of Basic and Diluted Earnings Per Share [Abstract]
Net income (in Dollars)	$ 3,763	$ 25,696	$ 11,868	$ 30,863
Interest expense on convertible senior notes, net of tax (in Dollars)		1,100		2,200
Net income used for diluted earnings per share (in Dollars)	$ 3,763	$ 26,796	$ 11,868	$ 33,063
Weighted average common shares outstanding	75,667	71,579	75,194	71,079
Stock options and other share-based awards	1,578	1,934	1,852	2,139
Convertible senior notes		10,290		10,290
Dilutive potential common shares	77,245	83,803	77,046	83,508
Diluted earnings per share (in Dollars per share)	$ 0.05	$ 0.32	$ 0.15	$ 0.40
Basic earnings per share (in Dollars per share)	$ 0.05	$ 0.36	$ 0.16	$ 0.43

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Common stock, shares authorized (in Shares)	200,000	200,000
Common stock, shares issued (in Shares)	75,922	74,126
Common stock, shares outstanding (in Shares)	75,922	74,126
Common stock, without par value (in Dollars per share)

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Note 7 - Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

7.             Goodwill and Other Intangible Assets

The following table presents the 2013 actvity for our goodwill (in thousands):

Balance at January 1, 2013:	$	260,457
Adjustments:
Anue Acquisition		(367	)
BreakingPoint Acquisition		(58	)
Balance at June 30, 2013	$	260,032

The following table presents our purchased intangible assets (in thousands) as of June 30, 2013:

	Weighted Average Useful Life		Gross		Accumulated Amortization			Net
	(in years)
Other intangible assets:
Technology		5.4	$	141,215	$	(77,655	)	$	63,560
Customer relationships		5.8		70,376		(24,071	)		46,305
Service agreements		5.7		22,700		(7,265	)		15,435
Non-compete		4.0		5,700		(2,207	)		3,493
Trademark		5.3		8,976		(3,016	)		5,960
Other		4.0		3,868		(1,358	)		2,510
			$	252,835	$	(115,572	)	$	137,263

The following table presents our purchased intangible assets (in thousands) as of December 31, 2012:

	Weighted Average Useful Life		Gross		Accumulated Amortization			Net
	(in years)
Other intangible assets:
Technology		5.4	$	141,215	$	(66,704	)	$	74,511
Customer relationships		6.0		70,376		(18,289	)		52,087
Service agreements		5.7		22,700		(5,272	)		17,428
Non-compete		4.2		5,700		(1,520	)		4,180
Trademark		5.3		8,976		(2,333	)		6,643
Other		3.8		3,416		(1,262	)		2,154
			$	252,383	$	(95,380	)	$	157,003

The estimated future amortization expense of purchased intangible assets as of June 30, 2013 is as follows (in thousands):

2013	$	19,668
2014		33,928
2015		29,251
2016		25,898
2017		18,853
Thereafter		9,665
	$	137,263

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Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Cost of Revenues - Products [Member]
Stock-based compensation (in Dollars)	$ 128	$ 75	$ 281	$ 171
Cost of Revenues - Services [Member]
Stock-based compensation (in Dollars)	49	29	107	66
Research and Development Expense [Member]
Stock-based compensation (in Dollars)	2,049	945	4,498	2,224
Selling and Marketing Expense [Member]
Stock-based compensation (in Dollars)	1,836	911	3,851	1,934
General and Administrative Expense [Member]
Stock-based compensation (in Dollars)	$ 1,679	$ 1,809	$ 3,884	$ 3,475

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 55,690	$ 47,508
Short-term investments in marketable securities	178,042	126,851
Accounts receivable, net	91,378	103,523
Inventories	36,381	37,220
Prepaid expenses and other current assets	46,657	42,942
Total current assets	408,148	358,044
Investments in marketable securities	370	3,119
Property and equipment, net	32,741	28,763
Intangible assets, net	137,263	157,003
Goodwill	260,032	260,457
Other assets	10,221	11,863
Total assets	848,775	819,249
Current liabilities:
Accounts payable	15,452	12,114
Accrued expenses and other	39,373	52,525
Deferred revenues	67,195	66,096
Total current liabilities	122,020	130,735
Deferred revenues	10,295	8,695
Other liabilities	32,353	32,321
Convertible senior notes	200,000	200,000
Total liabilities	364,668	371,751
Shareholders’ equity:
Common stock, without par value; 200,000 shares authorized at June 30, 2013 and December 31, 2012; 75,922 and 74,126 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively	172,293	158,933
Additional paid-in capital	182,434	168,980
Retained earnings	129,164	117,296
Accumulated other comprehensive income	216	2,289
Total shareholders’ equity	484,107	447,498
Total liabilities and shareholders’ equity	$ 848,775	$ 819,249

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Note 11 - Fair Value Measurements (Details) - Summary of Activity for Auction Rate Securities (Auction Rate Securities [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Auction Rate Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 3,167	$ 2,954	$ 3,119	$ 2,774
Unrealized (loss) gain reclassified from/recorded in other comprehensive income	(2,346)	(119)	(2,298)	61
Realized gain recorded in earnings	2,869		2,869
Sales	(3,320)		(3,320)
Ending balance	$ 370	$ 2,835	$ 370	$ 2,835

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Note 14 - Restatement (Tables)

6 Months Ended

Jun. 30, 2013

Consolidated Statement of Operations [Member]

Note 14 - Restatement (Tables) [Line Items]

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

	For the Three Months Ended June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands, except per share data)
Revenues:
Products
Implied arrangement error	$	—		$	(2,650	)	$	—
		75,938			(2,650	)		73,288
Services
Accounting practice error		—			340			—
Implied arrangement error		—			669			—
		16,405			1,009			17,414
Total revenues		92,343			(1,641	)		90,702
Income from operations		8,104			(1,641	)		6,463
Income before income taxes		6,906			(1,641	)		5,265
Income tax benefit		(19,944	)		(487	)		(20,431	)
Net income		26,850			(1,154	)		25,696
Earnings per share:
Basic	$	0.38		$	(0.02	)	$	0.36
Diluted	$	0.33		$	(0.01	)	$	0.32

	For the Six Months Ended June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands, except per share data)
Revenues:
Products
Implied arrangement error	$	—		$	(2,086	)	$	—
		144,981			(2,086	)		142,895
Services
Accounting practice error		—			1,028			—
Implied arrangement error		—			432			—
		33,005			1,460			34,465
Total revenues		177,986			(626	)		177,360
Income from operations		15,391			(626	)		14,765
Income before income taxes		12,503			(626	)		11,877
Income tax benefit		(18,729	)		(257	)		(18,986	)
Net income		31,232			(369	)		30,863
Earnings per share:
Basic	$	0.44		$	(0.01	)	$	0.43
Diluted	$	0.40		$	—		$	0.40

Consolidated Statements of Comprehensive Income [Member]

Note 14 - Restatement (Tables) [Line Items]

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

	For the Three Months Ended
	June 30, 2012
	As Previously Reported		Restatement Adjustments			Restated
	(in thousands)
Net income	$	26,850	$	(1,154	)	$	25,696
Comprehensive income	$	26,357	$	(1,154	)	$	25,203

	For the Six Months Ended
	June 30, 2012
	As Previously Reported		Restatement Adjustments			Restated
	(in thousands)
Net income	$	31,232	$	(369	)	$	30,863
Comprehensive income	$	31,526	$	(369	)	$	31,157

Consolidated Statements of Cash Flows [Member]

Note 14 - Restatement (Tables) [Line Items]

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

	For the Six Months Ended
	June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands)
Net income	$	31,232		$	(369	)	$	30,863
Deferred income taxes		(23,363	)		—			(23,363	)
Accrued expenses and other		1,382			(257	)		1,125
Deferred revenues		4,471			626			5,097
Net cash provided by operating activities	$	46,999		$	—		$	46,999

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Note 4 - Restructuring (Tables)

6 Months Ended

Jun. 30, 2013

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs [Table Text Block]

Accrual at December 31, 2012	$	1,026
Charges		58
Payments		(310	)
Other or non-cash items		(124	)
Accrual at March 31, 2013	$	650
Charges		—
Payments		(81	)
Other or non-cash items		22
Accrual at June 30, 2013	$	591

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Note 9 - Earnings Per Share (Details) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2012 Stock Opions and Other Share Based Awards [Member]	Jun. 30, 2012 Stock Opions and Other Share Based Awards [Member]	Jun. 30, 2013 Convertible Debt Securities [Member]	Jun. 30, 2013 Convertible Debt Securities [Member]	Jun. 30, 2013 Stock Opions and Other Share Based Awards [Member]	Jun. 30, 2013 Stock Opions and Other Share Based Awards [Member]
Note 9 - Earnings Per Share (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1.7	1.6	10.3	10.3	2.2	1.3

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Note 14 - Restatement (Details) - Restated Consolidated Statement of Operations Amounts (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Products
Revenues - Products	$ 87,818	$ 73,288	$ 184,454	$ 142,895
Services
Revenues - Services	28,077	17,414	54,224	34,465
Total revenues	115,895	90,702	238,678	177,360
Income from operations	5,591	6,463	15,683	14,765
Income before income taxes	7,079	5,265	15,435	11,877
Income tax expense	3,316	(20,431)	3,567	(18,986)
Net income	3,763	25,696	11,868	30,863
Earnings per share:
Basic (in Dollars per share)	$ 0.05	$ 0.36	$ 0.16	$ 0.43
Diluted (in Dollars per share)	$ 0.05	$ 0.32	$ 0.15	$ 0.40
Scenario, Previously Reported [Member]
Products
Revenues - Products		75,938		144,981
Services
Revenues - Services		16,405		33,005
Total revenues		92,343		177,986
Income from operations		8,104		15,391
Income before income taxes		6,906		12,503
Income tax expense		(19,944)		(18,729)
Net income		26,850		31,232
Earnings per share:
Basic (in Dollars per share)		$ 0.38		$ 0.44
Diluted (in Dollars per share)		$ 0.33		$ 0.40
Scenario, Adjustment [Member] | Implied Arrangement Error [Member]
Products
Revenues - Products		(2,650)		(2,086)
Services
Revenues - Services		669		432
Scenario, Adjustment [Member] | Accounting Practice Error [Member]
Services
Revenues - Services		340		1,028
Scenario, Adjustment [Member]
Products
Revenues - Products		(2,650)		(2,086)
Services
Revenues - Services		1,009		1,460
Total revenues		(1,641)		(626)
Income from operations		(1,641)		(626)
Income before income taxes		(1,641)		(626)
Income tax expense		(487)		(257)
Net income		$ (1,154)		$ (369)
Earnings per share:
Basic (in Dollars per share)		$ (0.02)		$ (0.01)
Diluted (in Dollars per share)		$ (0.01)

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Note 6 - Selected Balance Sheet Data (Details) - Inventories (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Inventories [Abstract]
Raw materials	$ 2,909	$ 4,530
Work in process	18,143	14,144
Finished goods	15,329	18,546
	$ 36,381	$ 37,220

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Note 4 - Restructuring (Details) - Activity Related to Restructuring Plan (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2013
Activity Related to Restructuring Plan [Abstract]
Accrual	$ 650	$ 1,026	$ 1,026
Charges		58	58
Payments	(81)	(310)
Other or non-cash items	22	(124)
Accrual	$ 591	$ 650	$ 591

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Note 5 - Convertible Senior Notes (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012	Dec. 07, 2010
Note 5 - Convertible Senior Notes (Details) [Line Items]
Convertible Notes Payable, Noncurrent	$ 200,000,000	$ 200,000,000	$ 200,000,000
Debt Instrument, Interest Rate, Stated Percentage			3.00%
Fair Value, Inputs, Level 2 [Member]
Note 5 - Convertible Senior Notes (Details) [Line Items]
Convertible Debt, Fair Value Disclosures	$ 241,400,000

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Note 6 - Selected Balance Sheet Data

6 Months Ended

Jun. 30, 2013

Disclosure Text Block Supplement [Abstract]

Supplemental Balance Sheet Disclosures [Text Block]

6.             Selected Balance Sheet Data

Investments in Marketable Securities

Investments in marketable securities as of June 30, 2013 consisted of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale – short-term:
U.S. government and agency debt securities	$	86,606	$	21	$	(46	)	$	86,581
Corporate debt securities		90,638		1,056		(233	)		91,461
		177,244		1,077		(279	)		178,042
Available-for-sale – long-term:
Auction rate securities		369		1		—			370
		369		1		—			370
Total	$	177,613	$	1,078	$	(279	)	$	178,412

Investments in marketable securities as of December 31, 2012 consisted of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale – short-term:
U.S. government and agency debt securities	$	77,823	$	48	$	(1	)	$	77,870
Corporate debt securities		47,933		1,068		(20	)		48,981
		125,756		1,116		(21	)		126,851
Available-for-sale – long-term:
Auction rate securities		820		2,301		(2	)		3,119
		820		2,301		(2	)		3,119
Total	$	126,576	$	3,417	$	(23	)	$	129,970

As of June 30, 2013 and December 31, 2012, our available-for-sale securities had a weighted remaining contractual maturity of 1.56 and 1.36 years, respectively. For the three and six months ended June 30, 2013, gross realized gains and gross realized losses were $3.2 million and $0, respectively. For the three and six months ended June 30, 2012, gross realized gains and gross realized losses were not significant. As of June 30, 2013, our gross unrealized losses of $279,000 were in an unrealized loss position for less than 12 months.

Accounts receivable, net

Accounts receivable, net included an allowance for doubtful accounts of $1.3 million and $1.4 million as of June 30, 2013 and December 31, 2012, respectively.

Inventories

Inventories consist of the following (in thousands):

	June 30, 2013		December 31, 2012
Raw materials	$	2,909	$	4,530
Work in process		18,143		14,144
Finished goods		15,329		18,546
	$	36,381	$	37,220

Accrued expenses and other

As of June 30, 2013 and December 31, 2012, accrued vacation totaled $8.3 million and $7.6 million respectively.

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Note 3 - Acquisitions (Details) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended	0 Months Ended						3 Months Ended		6 Months Ended		0 Months Ended							3 Months Ended	6 Months Ended	0 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Payments to Pre-Acquisition Employees of BreakingPoint [Member] BreakingPoint Systems, Inc. [Member]	Jun. 30, 2013 Payments to Pre-Acquisition Employees of BreakingPoint [Member] BreakingPoint Systems, Inc. [Member]	Jun. 01, 2012 Anue Systems, Inc. [Member] Developed Technology Rights [Member]	Jun. 01, 2012 Anue Systems, Inc. [Member] Customer Relationships [Member]	Jun. 01, 2012 Anue Systems, Inc. [Member] Trade Names [Member]	Jun. 01, 2012 Anue Systems, Inc. [Member] Noncompete Agreements [Member]	Jun. 01, 2012 Anue Systems, Inc. [Member] Other Intangible Assets [Member]	Jun. 01, 2012 Anue Systems, Inc. [Member]	Jun. 30, 2013 Anue Systems, Inc. [Member]	Jun. 30, 2012 Anue Systems, Inc. [Member]	Jun. 30, 2013 Anue Systems, Inc. [Member]	Jun. 30, 2012 Anue Systems, Inc. [Member]	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member] Developed Technology Rights [Member]	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member] Customer Relationships [Member]	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member] Trade Names [Member]	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member] Noncompete Agreements [Member]	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member] Other Intangible Assets [Member]	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member] Service Agreements [Member]	Aug. 24, 2012 BreakingPoint Systems, Inc. [Member]	Jun. 30, 2013 BreakingPoint Systems, Inc. [Member]	Jun. 30, 2013 BreakingPoint Systems, Inc. [Member]	Jun. 01, 2012 Minimum [Member] Anue Systems, Inc. [Member]	Aug. 24, 2012 Minimum [Member] BreakingPoint Systems, Inc. [Member]	Jun. 01, 2012 Maximum [Member] Anue Systems, Inc. [Member]	Aug. 24, 2012 Maximum [Member] BreakingPoint Systems, Inc. [Member]
Note 3 - Acquisitions (Details) [Line Items]
Payments to Acquire Businesses, Gross													$ 152,400,000										$ 163,700,000
Business Combination, Acquisition Related Costs	1,093,000	3,739,000	2,365,000	4,164,000	474,000	1,100,000							46,000	2,600,000	269,000	3,000,000								1,000,000	2,100,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables, Increase (Decrease) in Value													173,000											58,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable, Accrued Expenses and Other Liabilities, Increase (Decrease) in Value													(173,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent, Increase (Decrease) in Value													(22,000)
Goodwill, Other Changes													368,000											58,000
Finite-lived Intangible Assets Acquired							45,000,000	21,900,000	4,000,000	2,100,000	1,700,000	74,700,000					22,700,000	20,600,000	2,900,000	2,200,000	600,000	16,600,000	65,600,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life																										6 months	14 days	6 years	6 years
Business Acquisition, Potential Cash Payment																							3,800,000
Business Acquisition, Potential Cash Payment, Payment Period																													2 years
Payments to Certain Pre-acquisition Employees																									$ 1,700,000

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Note 7 - Goodwill and Other Intangible Assets (Details) - Estimated Future Amortization Expense of Purchased Intangible Assets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Estimated Future Amortization Expense of Purchased Intangible Assets [Abstract]
2013	$ 19,668
2014	33,928
2015	29,251
2016	25,898
2017	18,853
Thereafter	9,665
	$ 137,263

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Note 9 - Earnings Per Share

6 Months Ended

Jun. 30, 2013

Earnings per share: [Abstract]

Earnings Per Share [Text Block]

9.           Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three months and six months ended June 30, 2013 and 2012 (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
			(Restated)				(Restated)
Basic presentation:
Numerator for basic earnings per share:
Net income	$	3,763	$	25,696	$	11,868	$	30,863
Denominator for basic earnings per share:
Weighted average common shares outstanding		75,667		71,579		75,194		71,079
Basic earnings per share	$	0.05	$	0.36	$	0.16	$	0.43
Diluted presentation:
Numerator for diluted earnings per share:
Net income	$	3,763	$	25,696	$	11,868	$	30,863
Interest expense on convertible senior notes, net of tax		—		1,100		—		2,200
Net income used for diluted earnings per share	$	3,763	$	26,796	$	11,868	$	33,063
Denominator for dilutive earnings per share:
Weighted average common shares outstanding		75,667		71,579		75,194		71,079
Effect of dilutive securities:
Stock options and other share-based awards		1,578		1,934		1,852		2,139
Convertible senior notes		—		10,290		—		10,290
Dilutive potential common shares		77,245		83,803		77,046		83,508
Diluted earnings per share	$	0.05	$	0.32	$	0.15	$	0.40

The diluted earnings per share computation for the three and six months ended June 30, 2013 excludes (i) the weighted average number of shares underlying our outstanding convertible senior notes of 10.3 million shares as such shares are considered anti-dilutive because the related interest expense on a per common share “if converted” basis exceeds basic earnings per share and (ii) the weighted average number of shares underlying our employee stock options and other share-based awards of 2.2 million shares and 1.3 million shares, respectively, which were anti-dilutive because, in general, the exercise price of these awards exceeded the average closing sales price per share of our common stock during the applicable period.

The diluted earnings per share computation for the three and six months ended June 30, 2012 excludes the weighted average number of shares underlying our employee stock options and other share-based awards of 1.7 million shares and 1.6 million shares, respectively, which were anti-dilutive because, in general, the exercise price of these awards exceeded the average closing sales price per share of our common stock during the applicable period.

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Note 5 - Convertible Senior Notes

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

Long-term Debt [Text Block]

5.             Convertible Senior Notes

On December 7, 2010, we issued $200.0 million in aggregate principal amount of 3.00% Convertible Senior Notes due December 15, 2015 unless earlier repurchased or converted (the “Notes”). The interest is payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2011.

As of June 30, 2013, the estimated fair value of our Notes was approximately $241.4 million. The fair values of the Notes were estimated using market prices of the Notes, which are based on Level 2 inputs (i.e. inputs, other than the quoted prices in active markets that are observable either directly or indirectly).

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income	$ 11,868	$ 30,863
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	7,636	7,505
Amortization of intangible assets	20,193	9,403
Realized gain on sale of available-for-sale securities	(3,169)
Stock-based compensation	12,621	7,870
Deferred income taxes	(1,649)	(23,363)
Tax benefit from stock option transactions	833	811
Excess tax benefits from stock-based compensation	(923)	(798)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	12,375	5,679
Inventories	839	(1,534)
Prepaid expenses and other current assets	(4,172)	1,495
Other assets	(282)	(170)
Accounts payable	2,003	3,013
Accrued expenses and other	(14,415)	1,125
Deferred revenues	2,699	5,097
Other liabilities	4,708	3
Net cash provided by operating activities	51,165	46,999
Cash flows from investing activities:
Purchases of property and equipment	(9,352)	(8,322)
Purchases of available-for-sale securities	(110,037)	(110,552)
Proceeds from available-for-sale securities	62,175	211,921
Purchases of other intangible assets	(453)	(504)
Proceeds (payments) in connection with acquisitions, net of cash acquired	401	(148,257)
Net cash used in investing activities	(57,266)	(55,714)
Cash flows from financing activities:
Proceeds from exercise of stock options	13,360	10,584
Excess tax benefits from stock-based compensation	923	798
Net cash provided by financing activities	14,283	11,382
Net increase in cash and cash equivalents	8,182	2,667
Cash and cash equivalents at beginning of period	47,508	42,729
Cash and cash equivalents at end of period	55,690	45,396
Supplemental disclosure of non-cash investing activities:
Purchased and unpaid property and equipment	$ 2,768

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Note 12 - Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Jan. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Litigation Settlement, Amount	$ 1.2

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Note 10 - Concentrations (Details) - Revenue Concentrations (Sales [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Customer A [Member]
Concentration Risk [Line Items]
Amount of total revenues (in Dollars)	$ 17,482	$ 1,690	$ 40,447	$ 2,938
As a percentage of total revenues	15.10%	1.90%	16.90%	1.70%
Customer B [Member]
Concentration Risk [Line Items]
Amount of total revenues (in Dollars)	12,326	13,499	26,357	28,439
As a percentage of total revenues	10.60%	14.90%	11.00%	16.00%
Geographic Concentration Risk [Member]
Concentration Risk [Line Items]
Amount of total revenues (in Dollars)	39,272	40,323	85,807	82,870
As a percentage of total revenues	33.90%	44.50%	36.00%	46.70%
JAPAN
Concentration Risk [Line Items]
Amount of total revenues (in Dollars)	$ 5,769	$ 13,021	$ 20,849	$ 25,113
As a percentage of total revenues	5.00%	14.40%	8.70%	14.20%

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Note 3 - Acquisitions (Details) - Pro Forma Revenues and Net Income of the Combined Entity (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Pro Forma Revenues and Net Income of the Combined Entity [Abstract]
Total revenues	$ 116,629	$ 225,458
Net income	$ 5,586	$ 6,839

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Note 12 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

12.           Commitments and Contingencies

Litigation

On June 15, 2012, Catapult, our wholly owned subsidiary, issued a demand for indemnification to Tekelec pursuant to the Asset Purchase Agreement between Tekelec and Catapult dated July 15, 2002 (the "APA") which under Catapult had succeeded to Tekelec's relationship with Tucana, a former distributor of Catapult.  Catapult demanded indemnification for the full amount of Catapult's costs, including attorneys' fees and expenses, incurred in defending against and resolving Tucana's claims.

Because Catapult’s demand for indemnification was not resolved within the 30-day period provided for by the APA, on July 16, 2012, Catapult demanded arbitration of its indemnification claim against Tekelec. The arbitration hearing took place before three arbitrators in January 2013.  The arbitrators issued their final award on January 31, 2013 granting Catapult its full indemnity claim against Tekelec in the amount of approximately $1.2 million.

We are not aware of any pending legal proceedings that, individually or in the aggregate, could have a material adverse effect on our business, results of operations, cash flows or financial position. We may in the future be a party to litigation arising in the ordinary course of business, including claims that we allegedly infringe upon third party patents or other intellectual property rights. Such claims, even if without merit, could result in the expenditure of significant financial and managerial resources.

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Note 8 - Shareholders' Equity

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

8.             Shareholders’ Equity

Accumulated Other Comprehensive Income

We sold available-for-sale securities in the three and six months ended June 30, 2013, which resulted in a gross reclassification from accumulated other comprehensive income for realized gains of $3.1 million and $3.2 million, respectively, which were included within our interest income and other, net line item on our condensed consolidated statements of operations These realized gains, along with the related tax impact of $1.2 million, for both the three and six months ended June 30, 2013, were reclassified from accumulated other comprehensive income. The reclassification amounts for the three and six months ended June 30, 2012 were not significant. Excluding the reclassification for the sale of available-for-sale securities, we had a net unrealized gain during the periods of $286,000 and $517,000 for the three and six months ended June 30, 2013, respectively. The tax impact for these unrealized gains and losses was a benefit of $80,000 and $145,000 for the three and six months ended June 30, 2013, respectively.

Stock Buyback Program

On October 22, 2012, our Board of Directors authorized the repurchase of up to $25 million of our common stock from time to time during the 12 months thereafter on the open market or in privately negotiated transactions. The timing of repurchases and the actual number of shares repurchased will depend on a variety of factors, including our stock price, regulatory requirements, and market conditions. We may terminate this repurchase program at any time. As of June 30, 2013, no shares of our common stock had been repurchased under this program.

Stock Award Plans

In June 2013, our shareholders approved our Second Amended and Restated Ixia 2008 Equity Incentive Plan (the “Plan”), which resulted in amendments to the Company’s Amended and Restated 2008 Ixia Equity Incentive Plan, as amended, that include the following:

● Increase in Share Reserve. Increased the total number of shares of our common stock available for future grants by 9.8 million shares for a total of 29.0 million shares of our common stock authorized and reserved over the term of the Plan, of which 13.3 million shares were available for future grant as of such date.

●  Types of Awards. Added cash awards to the types of awards that may be granted under the Plan, including performance-based incentives that are intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

●  Award Limits. Added (i) a limit on the total number of shares (i.e., 1,000,000) subject to options and share appreciation rights granted to an eligible participant in any calendar year, (ii) with respect to performance-based awards that are intended to comply with the exception under Section 162(m) of the Code, limits on the total number of shares (i.e., 1,000,000) subject to restricted stock unit and restricted stock awards that an individual may earn over a 12-month period and on the total dollar amount (i.e., $2,000,000) subject to cash awards that an individual may earn over a 12-month period, and (iii) a limit (i.e., $500,000) on the total dollar value of equity and cash awards that may be granted to a non-employee director in any calendar year.

The Plan also provides for the following:

●  Shares Not Available for Awards. None of the following will be added to the shares available for awards under the Plan: (i) shares tendered by a participant or withheld by the Company in payment of the exercise price of an option, or to satisfy any tax withholding obligation with respect to options, and (ii) shares reacquired by the Company on the open market using cash proceeds from the exercise of options.

● Acquisitions and Combinations. In connection with acquisitions and combinations by us, we may grant under the Plan awards in substitution or exchange for awards or rights to future awards previously granted by the acquired or combined company without reducing the shares available under the Plan. Any shares subject to but not issued under any such substitute awards would not become available for other awards granted under the Plan. Also, in the event that a company acquired by us or with which we combine has a pre-existing plan approved by its shareholders that was not adopted in contemplation of the acquisition or combination, available shares under that plan may be used for Plan awards without reducing the shares available under the Plan. Any such awards may only be made to persons who were not eligible to receive awards under the Plan prior to the acquisition or combination and may not be made after the date that awards could have been made under the terms of the pre-existing plan.

Employee Stock Purchase Plan

In June 2013, our shareholders approved a 2,000,000-share increase in the number of shares of our common stock authorized and reserved for issuance under the Company’s 2010 Employee Stock Purchase Plan, as amended (the “Purchase Plan”). During the second quarter of 2013, the number of shares authorized and reserved for issuance under the Purchase Plan was also increased by an additional 500,000 shares pursuant to the automatic annual increase provision of the Purchase Plan.

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Note 3 - Acquisitions (Tables)

6 Months Ended

Jun. 30, 2013

Note 3 - Acquisitions (Tables) [Line Items]

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Total revenues	$	116,629	$	225,458
Net income		5,586		6,839

Anue Systems, Inc. [Member]

Note 3 - Acquisitions (Tables) [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Cash and cash equivalents	$	3,659
Accounts receivable		12,016
Inventories		4,380
Prepaid and other assets		2,980
Fixed assets, net		1,600
Identifiable intangible assets		74,700
Goodwill		91,008
Total assets acquired		190,343
Accounts payable, accrued expenses and other liabilities		(7,942	)
Deferred revenues		(6,997	)
Deferred tax liability, net		(22,964	)
Net assets acquired	$	152,440

BreakingPoint Systems, Inc. [Member]

Note 3 - Acquisitions (Tables) [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Cash and cash equivalents	$	13,417
Accounts receivable		4,610
Inventories		3,156
Prepaid and other assets		796
Fixed assets, net		936
Identifiable intangible assets		65,600
Goodwill		102,594
Total assets acquired		191,109
Accounts payable, accrued expenses and other liabilities		(6,889	)
Deferred revenues		(6,387	)
Deferred tax liability, net		(14,146	)
Net assets acquired	$	163,687

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Note 13 - Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

13.           Income Taxes

As of June 30, 2013 and December 31, 2012, current deferred tax assets totaled $24.1 million and $24.2 million, respectively, and were included within the Prepaid Expenses & Other Current Assets line item in our condensed consolidated balance sheets.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Ixia
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		75,927,530
Amendment Flag	false
Entity Central Index Key	0001120295
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Note 14 - Restatement

6 Months Ended

Jun. 30, 2013

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

14.           Restatement

In our 2012 Form 10-K, we restated, among other previously issued financial statements, our unaudited consolidated financial statements for the three and six months ended June 30, 2012 to reflect certain corrections in the manner in which we recognize revenue related to our warranty and software maintenance contracts, including a previous implied warranty and software maintenance arrangement with one of our customers. Specifically, we made the following two corrections to our revenue recognition practices to properly report revenue in prior periods:

● Accounting Practice Error - We now recognize revenue related to our warranty and software maintenance contracts on the effective date of each such contract rather than in the first calendar month following the effective date of the contract as though the warranty and maintenance period commenced on the first day of such month. We also now recognize revenue related to back maintenance fees when evidence of an arrangement exists rather than commencing in the first calendar month following the effective date of the contract as though the warranty and maintenance period commenced on the first day of such month.

● Implied Arrangement Error - We now cease to defer revenue for any implied warranty and software maintenance arrangement upon the receipt from the applicable customer of the first substantive contract for extended warranty and software maintenance services, and we will recognize the applicable previously deferred revenue related to the implied arrangement, provided all other revenue recognition criteria have been met. The Company’s historical practice was to continue to defer revenue for implied warranty and software maintenance arrangements (despite the receipt of an initial substantive extended warranty and software maintenance contract) until we could establish a pattern that we were able to enforce our warranty and software maintenance contracts as evidenced by, among other items, (i) the consistent receipt of extended renewal orders from the specific customer for warranty and software maintenance services and (ii) senior management’s assertion that warranty and software maintenance services would not be provided to the customer if existing contracts were canceled or were not renewed.

These changes in our revenue recognition practices resulted in a shift of revenue between accounting periods, and do not have any impact on the total revenue recognized over the life of a warranty and software maintenance contract or arrangement, although the timing of the recognition of such revenue commences earlier and ends earlier than would be the case under the Company’s previously used accounting treatment.

See our 2012 Form 10-K for additional information regarding the restatement of our unaudited consolidated financial statements for the quarter ended June 30, 2012, and for information regarding the restatement in the 2012 Form 10-K of our audited consolidated financial statements for the years ended December 31, 2011 and 2010 and of our unaudited consolidated financial statements for each of the quarters in the year ended December 31, 2011 and for the quarters ended March 31, 2012 and September 30, 2012.

This Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (this “Form 10-Q”) reflects the impact of the restatement on the applicable unaudited quarterly financial information for the three and six months ended June 30, 2012.

Our previously filed Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 has not been and will not be amended.

The combined impact of the adjustments to specified line items included in this Form 10-Q have been restated to reflect the corrections of the above errors, which impact revenues from products, revenues from services and deferred revenues (current and non-current). All other adjustments relate to the applicable income tax effects of these errors. The following schedules reconcile the amounts as originally reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 to the corresponding restated amounts as reported herein and in our 2012 Form 10-K.

Restated consolidated statement of operations amounts (unaudited)

	For the Three Months Ended June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands, except per share data)
Revenues:
Products
Implied arrangement error	$	—		$	(2,650	)	$	—
		75,938			(2,650	)		73,288
Services
Accounting practice error		—			340			—
Implied arrangement error		—			669			—
		16,405			1,009			17,414
Total revenues		92,343			(1,641	)		90,702
Income from operations		8,104			(1,641	)		6,463
Income before income taxes		6,906			(1,641	)		5,265
Income tax benefit		(19,944	)		(487	)		(20,431	)
Net income		26,850			(1,154	)		25,696
Earnings per share:
Basic	$	0.38		$	(0.02	)	$	0.36
Diluted	$	0.33		$	(0.01	)	$	0.32

	For the Six Months Ended June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands, except per share data)
Revenues:
Products
Implied arrangement error	$	—		$	(2,086	)	$	—
		144,981			(2,086	)		142,895
Services
Accounting practice error		—			1,028			—
Implied arrangement error		—			432			—
		33,005			1,460			34,465
Total revenues		177,986			(626	)		177,360
Income from operations		15,391			(626	)		14,765
Income before income taxes		12,503			(626	)		11,877
Income tax benefit		(18,729	)		(257	)		(18,986	)
Net income		31,232			(369	)		30,863
Earnings per share:
Basic	$	0.44		$	(0.01	)	$	0.43
Diluted	$	0.40		$	—		$	0.40

Restated consolidated statements of comprehensive income amounts (unaudited)

	For the Three Months Ended
	June 30, 2012
	As Previously Reported		Restatement Adjustments			Restated
	(in thousands)
Net income	$	26,850	$	(1,154	)	$	25,696
Comprehensive income	$	26,357	$	(1,154	)	$	25,203

	For the Six Months Ended
	June 30, 2012
	As Previously Reported		Restatement Adjustments			Restated
	(in thousands)
Net income	$	31,232	$	(369	)	$	30,863
Comprehensive income	$	31,526	$	(369	)	$	31,157

Restated consolidated statements of cash flows amounts (unaudited)

The correction of the errors described above did not impact our total cash flows from operating activities, investing activities or financing activities within our consolidated statements of cash flows.

	For the Six Months Ended
	June 30, 2012
	As Previously Reported			Restatement Adjustments			Restated
	(in thousands)
Net income	$	31,232		$	(369	)	$	30,863
Deferred income taxes		(23,363	)		—			(23,363	)
Accrued expenses and other		1,382			(257	)		1,125
Deferred revenues		4,471			626			5,097
Net cash provided by operating activities	$	46,999		$	—		$	46,999