x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended: September 30, 2017 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Israel (State or other jurisdiction of incorporation or organization) | 98-0233400 (I.R.S. Employer Identification Number) |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o | |||
Emerging growth company o |
Page No. | ||
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
(in thousands, except par value) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 58,416 | $ | 56,780 | |||
Short-term investments | 287,743 | 271,661 | |||||
Accounts receivable, net | 133,618 | 141,768 | |||||
Inventories | 61,609 | 65,523 | |||||
Other current assets | 20,222 | 17,346 | |||||
Total current assets | 561,608 | 553,078 | |||||
Property and equipment, net | 117,483 | 118,585 | |||||
Severance assets | 17,839 | 15,870 | |||||
Intangible assets, net | 247,431 | 278,031 | |||||
Goodwill | 472,437 | 471,228 | |||||
Deferred taxes and other long-term assets | 53,942 | 36,713 | |||||
Total assets | $ | 1,470,740 | $ | 1,473,505 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 42,067 | $ | 59,533 | |||
Accrued liabilities | 91,510 | 105,042 | |||||
Deferred revenue | 23,257 | 24,364 | |||||
Current portion of term debt | 23,341 | 23,628 | |||||
Total current liabilities | 180,175 | 212,567 | |||||
Accrued severance | 22,825 | 19,874 | |||||
Deferred revenue | 17,134 | 15,968 | |||||
Term debt | 174,441 | 218,786 | |||||
Other long-term liabilities | 39,108 | 30,580 | |||||
Total liabilities | 433,683 | 497,775 | |||||
Commitments and Contingencies - (see Note 8) | |||||||
Shareholders’ equity: | |||||||
Ordinary shares: NIS 0.0175 par value, 200,000 shares authorized, 50,925 and 49,076 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 218 | 209 | |||||
Additional paid-in capital | 851,480 | 774,605 | |||||
Accumulated other comprehensive income (loss) | 1,136 | (928 | ) | ||||
Retained earnings | 184,223 | 201,844 | |||||
Total shareholders’ equity | 1,037,057 | 975,730 | |||||
Total liabilities and shareholders' equity | $ | 1,470,740 | $ | 1,473,505 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Total revenues | $ | 225,699 | $ | 224,211 | $ | 626,312 | $ | 635,822 | |||||||
Cost of revenues | 77,335 | 78,191 | 215,212 | 228,479 | |||||||||||
Gross profit | 148,364 | 146,020 | 411,100 | 407,343 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 90,916 | 83,611 | 271,755 | 236,969 | |||||||||||
Sales and marketing | 37,829 | 34,408 | 111,696 | 98,212 | |||||||||||
General and administrative | 13,039 | 13,501 | 38,034 | 54,933 | |||||||||||
Total operating expenses | 141,784 | 131,520 | 421,485 | 390,114 | |||||||||||
Income (loss) from operations | 6,580 | 14,500 | (10,385 | ) | 17,229 | ||||||||||
Interest expense | (2,016 | ) | (2,195 | ) | (6,005 | ) | (5,408 | ) | |||||||
Other income, net | 956 | 606 | 2,466 | 982 | |||||||||||
Interest and other, net | (1,060 | ) | (1,589 | ) | (3,539 | ) | (4,426 | ) | |||||||
Income (loss) before taxes on income | 5,520 | 12,911 | (13,924 | ) | 12,803 | ||||||||||
Provision for taxes on income | 2,117 | 874 | 2,908 | 3,280 | |||||||||||
Net income (loss) | $ | 3,403 | $ | 12,037 | $ | (16,832 | ) | $ | 9,523 | ||||||
Net income (loss) per share — basic | $ | 0.07 | $ | 0.25 | $ | (0.34 | ) | $ | 0.20 | ||||||
Net income (loss) per share — diluted | $ | 0.07 | $ | 0.24 | $ | (0.34 | ) | $ | 0.19 | ||||||
Shares used in computing net income (loss) per share: | |||||||||||||||
Basic | 50,587 | 48,385 | 49,999 | 47,883 | |||||||||||
Diluted | 51,575 | 49,494 | 49,999 | 49,232 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in thousands) | |||||||||||||||
Net income (loss) | $ | 3,403 | $ | 12,037 | $ | (16,832 | ) | $ | 9,523 | ||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Change in unrealized gains/losses on available-for-sale securities, net of tax | (11 | ) | (79 | ) | 11 | 569 | |||||||||
Change in unrealized gains/losses on derivative contracts, net of tax | (2,689 | ) | 1,717 | 2,053 | 3,066 | ||||||||||
Other comprehensive income (loss), net of tax | (2,700 | ) | 1,638 | 2,064 | 3,635 | ||||||||||
Total comprehensive income (loss), net of tax | $ | 703 | $ | 13,675 | $ | (14,768 | ) | $ | 13,158 |
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (16,832 | ) | $ | 9,523 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 76,564 | 73,264 | ||||||
Deferred income taxes | (704 | ) | 1,266 | |||||
Share-based compensation | 50,993 | 49,127 | ||||||
Gain on investments, net | (2,632 | ) | (1,190 | ) | ||||
Changes in assets and liabilities, net of effect of acquisitions: | ||||||||
Accounts receivable | 8,420 | (32,698 | ) | |||||
Inventories | 2,349 | 12,624 | ||||||
Prepaid expenses and other assets | (5,802 | ) | 5,343 | |||||
Accounts payable | (14,876 | ) | 4,876 | |||||
Accrued liabilities and other liabilities | (3,104 | ) | 15,132 | |||||
Net cash provided by operating activities | 94,376 | 137,267 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of severance-related insurance policies | (983 | ) | (865 | ) | ||||
Purchase of short-term investments | (139,861 | ) | (218,642 | ) | ||||
Proceeds from sales of short-term investments | 95,414 | 209,456 | ||||||
Proceeds from maturities of short-term investments | 31,008 | 130,187 | ||||||
Purchase of property and equipment | (35,243 | ) | (32,748 | ) | ||||
Purchase of intangible assets | (1,836 | ) | (6,060 | ) | ||||
Purchase of investments in private companies | (13,500 | ) | (1,284 | ) | ||||
Acquisition, net of cash acquired | (872 | ) | (693,692 | ) | ||||
Net cash used in investing activities | (65,873 | ) | (613,648 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from term debt | — | 280,000 | ||||||
Principal payments on term debt | (46,000 | ) | (27,000 | ) | ||||
Term debt issuance costs | — | (5,521 | ) | |||||
Payments on capital lease and intangible asset financings | (5,969 | ) | (491 | ) | ||||
Proceeds from issuances of ordinary shares through employee equity incentive plans | 25,102 | 21,649 | ||||||
Net cash provided by (used in) financing activities | (26,867 | ) | 268,637 | |||||
Net increase (decrease) in cash and cash equivalents | 1,636 | (207,744 | ) | |||||
Cash and cash equivalents at beginning of period | 56,780 | 263,199 | ||||||
Cash and cash equivalents at end of period | $ | 58,416 | $ | 55,455 | ||||
Supplemental disclosure of non-cash investing and financing activities | ||||||||
Intangible assets financed with debt | $ | 12,892 | $ | 6,989 | ||||
Unpaid additions to property and equipment | $ | 8,042 | $ | 1,778 | ||||
Transfer from inventory to property and equipment | $ | 1,565 | $ | 3,073 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Hewlett Packard Enterprise ("HPE") | 11.8 | % | 17.0 | % | 12.7 | % | 16.0 | % | |||
Dell Technologies | * | * | 10.9 | % | * | ||||||
____________________ | |||||||||||
* Less than 10% |
September 30, 2017 | December 31, 2016 | |||
HPE | * | 23.0 | % | |
____________________ | ||||
* Less than 10% |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(in thousands) | |||||||
Balance, beginning of the period | $ | 1,474 | $ | 1,641 | |||
Assumed warranty liability from acquisition | — | 290 | |||||
New warranties issued during the period | 1,128 | 1,098 | |||||
Reversal of warranty reserves | (355 | ) | (358 | ) | |||
Settlements during the period | (1,082 | ) | (942 | ) | |||
Balance, end of the period | 1,165 | 1,729 | |||||
Less: long-term portion of product warranty liability | (189 | ) | (355 | ) | |||
Current portion, end of the period | $ | 976 | $ | 1,374 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Net income (loss) | $ | 3,403 | $ | 12,037 | $ | (16,832 | ) | $ | 9,523 | ||||||
Basic and diluted shares: | |||||||||||||||
Weighted average ordinary shares outstanding | 50,587 | 48,385 | 49,999 | 47,883 | |||||||||||
Effect of dilutive shares | 988 | 1,109 | — | 1,349 | |||||||||||
Shares used to compute diluted net income (loss) per share | 51,575 | 49,494 | 49,999 | 49,232 | |||||||||||
Net income (loss) per share — basic | $ | 0.07 | $ | 0.25 | $ | (0.34 | ) | $ | 0.20 | ||||||
Net income (loss) per share — diluted | $ | 0.07 | $ | 0.24 | $ | (0.34 | ) | $ | 0.19 |
September 30, 2017 | December 31, 2016 | ||||||
(in thousands) | |||||||
Accounts receivable, net: | |||||||
Accounts receivable, gross | $ | 134,250 | $ | 142,400 | |||
Less: allowance for doubtful accounts | (632 | ) | (632 | ) | |||
$ | 133,618 | $ | 141,768 | ||||
Inventories: | |||||||
Raw materials | $ | 10,373 | $ | 8,243 | |||
Work-in-process | 20,529 | 26,118 | |||||
Finished goods | 30,707 | 31,162 | |||||
$ | 61,609 | $ | 65,523 | ||||
Other current assets: | |||||||
Prepaid expenses | $ | 8,136 | $ | 9,053 | |||
Derivative contracts receivable | 1,384 | 257 | |||||
VAT receivable | 6,738 | 6,093 | |||||
Other | 3,964 | 1,943 | |||||
$ | 20,222 | $ | 17,346 | ||||
Property and equipment, net: | |||||||
Computer, equipment, and software | $ | 239,432 | $ | 214,719 | |||
Furniture and fixtures | 5,307 | 5,210 | |||||
Leasehold improvements | 50,870 | 46,693 | |||||
295,609 | 266,622 | ||||||
Less: Accumulated depreciation and amortization | (178,126 | ) | (148,037 | ) | |||
$ | 117,483 | $ | 118,585 | ||||
Deferred taxes and other long-term assets: | |||||||
Equity investments in private companies | $ | 22,220 | $ | 12,720 | |||
Deferred taxes | 23,139 | 22,413 | |||||
Other assets | 8,583 | 1,580 | |||||
$ | 53,942 | $ | 36,713 | ||||
Accrued liabilities: | |||||||
Payroll and related expenses | $ | 51,167 | $ | 62,969 | |||
Accrued expenses | 30,563 | 33,125 | |||||
Derivative contracts payable | 80 | 1,006 | |||||
Product warranty liability | 976 | 1,263 | |||||
Other | 8,724 | 6,679 | |||||
$ | 91,510 | $ | 105,042 | ||||
Other long-term liabilities: | |||||||
Income tax payable | $ | 28,364 | $ | 24,184 | |||
Deferred rent | 2,429 | 2,504 | |||||
Other | 8,315 | 3,892 | |||||
$ | 39,108 | $ | 30,580 |
(in thousands) | ||||
Consideration: | ||||
Cash payment for all outstanding common shares of EZchip at $25.50 per share | $ | 781,237 | ||
Fair value of awards attributable to pre-acquisition services | 972 | |||
Total consideration: | 782,209 | |||
Less: cash acquired | 87,545 | |||
Fair value of total consideration transferred, net of cash acquired | $ | 694,664 |
(in thousands) | ||||
Short-term investments | $ | 108,862 | ||
Other current assets | 34,114 | |||
Other long-term assets | 9,638 | |||
Intangible assets | 288,246 | |||
Goodwill | 270,485 | |||
Total assets | 711,345 | |||
Current liabilities | (10,253 | ) | ||
Long-term liabilities | (6,428 | ) | ||
Total liabilities | (16,681 | ) | ||
Total preliminary purchase price allocation | $ | 694,664 |
Fair value | Weighted Average Useful Life | |||||
(in thousands) | (in years) | |||||
Purchased intangible assets: | ||||||
Trade names | $ | 5,600 | 3 | |||
Customer relationships | 56,400 | 9 | ||||
Backlog | 11,300 | 1 | ||||
Developed technology | 181,246 | 4 - 6 | ||||
In process research and development (1) | 33,700 | - | ||||
Total purchased intangible assets | $ | 288,246 | ||||
(1) In-process research and development ("IPR&D") will not be amortized until the underlying products reach technological feasibility. Upon completion, each IPR&D project will be amortized over its useful life. |
Level 1 | Level 2 | Total | |||||||||
(in thousands) | |||||||||||
Money market funds | $ | 4,777 | $ | — | $ | 4,777 | |||||
Certificates of deposit | — | 77,137 | 77,137 | ||||||||
U.S. Government and agency securities | — | 45,113 | 45,113 | ||||||||
Commercial paper | — | 36,976 | 36,976 | ||||||||
Corporate bonds | — | 94,029 | 94,029 | ||||||||
Municipal bonds | — | 15,697 | 15,697 | ||||||||
Foreign government bonds | — | 18,791 | 18,791 | ||||||||
4,777 | 287,743 | 292,520 | |||||||||
Derivative contracts | — | 1,384 | 1,384 | ||||||||
Total financial assets | $ | 4,777 | $ | 289,127 | $ | 293,904 | |||||
Derivative contracts | — | 80 | 80 | ||||||||
Total financial liabilities | $ | — | $ | 80 | $ | 80 |
Level 1 | Level 2 | Total | |||||||||
(in thousands) | |||||||||||
Money market funds | $ | 1,833 | $ | — | $ | 1,833 | |||||
Certificates of deposit | — | 78,643 | 78,643 | ||||||||
U.S. Government and agency securities | — | 56,347 | 56,347 | ||||||||
Commercial paper | — | 29,483 | 29,483 | ||||||||
Corporate bonds | — | 94,162 | 94,162 | ||||||||
Municipal bonds | — | 7,706 | 7,706 | ||||||||
Foreign government bonds | — | 5,320 | 5,320 | ||||||||
1,833 | 271,661 | 273,494 | |||||||||
Derivative contracts | — | 257 | 257 | ||||||||
Total financial assets | $ | 1,833 | $ | 271,918 | $ | 273,751 | |||||
Derivative contracts | — | 1,006 | 1,006 | ||||||||
Total financial liabilities | $ | — | $ | 1,006 | $ | 1,006 |
September 30, 2017 | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Cash | $ | 53,639 | $ | — | $ | — | $ | 53,639 | |||||||
Money market funds | 4,777 | — | — | 4,777 | |||||||||||
Certificates of deposit | 77,149 | 2 | (14 | ) | 77,137 | ||||||||||
U.S. Government and agency securities | 45,225 | — | (112 | ) | 45,113 | ||||||||||
Commercial paper | 36,992 | 6 | (22 | ) | 36,976 | ||||||||||
Corporate bonds | 94,056 | 53 | (80 | ) | 94,029 | ||||||||||
Municipal bonds | 15,728 | — | (31 | ) | 15,697 | ||||||||||
Foreign government bonds | 18,818 | 1 | (28 | ) | 18,791 | ||||||||||
Total | 346,384 | 62 | (287 | ) | 346,159 | ||||||||||
Less amounts classified as cash and cash equivalents | (58,416 | ) | — | — | (58,416 | ) | |||||||||
Short-term investments | $ | 287,968 | $ | 62 | $ | (287 | ) | $ | 287,743 |
December 31, 2016 | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Cash | $ | 54,947 | $ | — | $ | — | $ | 54,947 | |||||||
Money market funds | 1,833 | — | — | 1,833 | |||||||||||
Certificates of deposit | 78,643 | — | — | 78,643 | |||||||||||
U.S. Government and agency securities | 56,431 | 2 | (86 | ) | 56,347 | ||||||||||
Commercial paper | 29,486 | — | (3 | ) | 29,483 | ||||||||||
Corporate bonds | 94,292 | 37 | (167 | ) | 94,162 | ||||||||||
Municipal bonds | 7,718 | — | (12 | ) | 7,706 | ||||||||||
Foreign government bonds | 5,327 | — | (7 | ) | 5,320 | ||||||||||
Total | 328,677 | 39 | (275 | ) | 328,441 | ||||||||||
Less amounts classified as cash and cash equivalents | (56,780 | ) | — | — | (56,780 | ) | |||||||||
Short-term investments | $ | 271,897 | $ | 39 | $ | (275 | ) | $ | 271,661 |
September 30, 2017 | December 31, 2016 | ||||||||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Due in less than one year | $ | 204,399 | $ | 204,315 | $ | 157,270 | $ | 157,163 | |||||||
Due in one to three years | 83,569 | 83,428 | 114,627 | 114,498 | |||||||||||
$ | 287,968 | $ | 287,743 | $ | 271,897 | $ | 271,661 |
(in thousands) | |||
Carrying amount of goodwill at December 31, 2016 | $ | 471,228 | |
Acquisitions | 1,209 | ||
Balance as of September 30, 2017 | $ | 472,437 |
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
(in thousands) | |||||||||||
Licensed technology | $ | 39,311 | $ | (13,356 | ) | $ | 25,955 | ||||
Developed technology | 250,043 | (107,433 | ) | 142,610 | |||||||
Customer relationships | 69,776 | (23,020 | ) | 46,756 | |||||||
Trade names | 5,600 | (2,990 | ) | 2,610 | |||||||
Total finite-lived amortizable intangible assets | 364,730 | (146,799 | ) | 217,931 | |||||||
In-process research and development | 29,500 | — | 29,500 | ||||||||
Total intangible assets | $ | 394,230 | $ | (146,799 | ) | $ | 247,431 |
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
(in thousands) | |||||||||||
Licensed technology | $ | 24,583 | $ | (6,559 | ) | $ | 18,024 | ||||
Developed technology | 250,043 | (75,591 | ) | 174,452 | |||||||
Customer relationships | 69,776 | (17,731 | ) | 52,045 | |||||||
Backlog | 11,300 | (11,300 | ) | — | |||||||
Trade names | 5,600 | (1,590 | ) | 4,010 | |||||||
Total finite-lived amortizable intangible assets | 361,302 | (112,771 | ) | 248,531 | |||||||
In-process research and development | 29,500 | — | 29,500 | ||||||||
Total intangible assets | $ | 390,802 | $ | (112,771 | ) | $ | 278,031 |
(in thousands) | |||
2017 (remaining three months) | $ | 15,971 | |
2018 | 58,446 | ||
2019 | 50,607 | ||
2020 | 38,537 | ||
2021 | 30,680 | ||
Thereafter | 23,690 | ||
Total | $ | 217,931 |
Other current assets | Accrued liabilities | Other current assets | Accrued liabilities | |||||||||||||
September 30, 2017 | December 31, 2016 | |||||||||||||||
(in thousands) | ||||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Currency forward and option contracts | $ | 1,384 | $ | 72 | $ | 257 | $ | 999 | ||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||
Currency forward and option contracts | $ | — | $ | 8 | $ | — | $ | 7 | ||||||||
Total derivatives | $ | 1,384 | $ | 80 | $ | 257 | $ | 1,006 |
September 30, 2017 | December 31, 2016 | ||||||
(in thousands) | |||||||
Derivatives designated as hedging instruments | |||||||
Currency forward and option contracts | $ | 54,690 | $ | 105,730 | |||
Derivatives not designated as hedging instruments | |||||||
Currency forward and option contracts | $ | 43,922 | $ | 34,330 |
(in thousands) | |||
December 31, 2016 | $ | (692 | ) |
Amount of gain recognized in OCI (effective portion) | 7,844 | ||
Amount of gain reclassified from OCI to income (effective portion) | (5,791 | ) | |
September 30, 2017 | $ | 1,361 |
Derivatives designated as hedging instruments | Derivatives not designated as hedging instruments | |||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in thousands) | ||||||||||||||||
Operating income | $ | 1,976 | $ | 328 | $ | — | $ | — | ||||||||
Other income (loss) | $ | — | $ | — | $ | (538 | ) | $ | 715 |
Derivatives designated as hedging instruments | Derivatives not designated as hedging instruments | |||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in thousands) | ||||||||||||||||
Operating income | $ | 5,791 | $ | 489 | $ | — | $ | — | ||||||||
Other income | $ | — | $ | — | $ | 2,767 | $ | 1,258 |
(in thousands) | |||
2017 (remaining three months) | $ | 5,751 | |
2018 | 21,062 | ||
2019 | 15,835 | ||
2020 | 12,959 | ||
2021 | 11,207 | ||
Thereafter | 63,610 | ||
Total minimum lease payments | $ | 130,424 |
(in thousands) | |||
2017 (remaining three months) | $ | 78,212 | |
2018 | 42,640 | ||
2019 | 1,293 | ||
2020 | 591 | ||
2021 | 536 | ||
Thereafter | 536 | ||
$ | 123,808 |
Options Outstanding | ||||||
Number of Shares | Weighted Average Exercise Price | |||||
Outstanding at December 31, 2016 | 1,634,485 | $ | 32.79 | |||
Options exercised | (193,791 | ) | $ | 15.54 | ||
Options canceled | (32,355 | ) | $ | 70.53 | ||
Outstanding at September 30, 2017 | 1,408,339 | $ | 34.30 |
Restricted Share Units Outstanding | ||||||
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Non-vested restricted share units at December 31, 2016 | 3,324,519 | $ | 46.67 | |||
Restricted share units granted | 1,784,670 | $ | 50.05 | |||
Restricted share units vested | (1,086,886 | ) | $ | 46.43 | ||
Restricted share units canceled | (296,321 | ) | $ | 47.52 | ||
Non-vested restricted share units at September 30, 2017 | 3,725,982 | $ | 48.29 |
Number of Shares | ||
Share options outstanding | 1,408,339 | |
Restricted share units outstanding | 3,725,982 | |
Shares authorized for future issuance | 710,722 | |
ESPP shares available for future issuance | 3,425,469 | |
Total shares reserved for future issuance as of September 30, 2017 | 9,270,512 |
Nine Months Ended September 30, | |||||
2017 | 2016 | ||||
Dividend yield | — | % | — | % | |
Expected volatility | 24.6 | % | 36.4 | % | |
Risk free interest rate | 1.20 | % | 0.46 | % | |
Expected life, years | 0.5 | 0.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in thousands) | |||||||||||||||
Cost of goods sold | $ | 473 | $ | 627 | $ | 1,530 | $ | 1,773 | |||||||
Research and development | 10,811 | 10,396 | 29,799 | 30,318 | |||||||||||
Sales and marketing | 4,336 | 3,837 | 11,684 | 11,374 | |||||||||||
General and administrative | 2,940 | 2,716 | 7,980 | 10,471 | |||||||||||
Total share-based compensation expense | $ | 18,560 | $ | 17,576 | $ | 50,993 | $ | 53,936 |
Unrealized Gains (Losses) on Available-for-Sale Securities | Unrealized Gains (Losses) on Derivatives Designated as Hedging Instruments | Total | |||||||||
(in thousands) | |||||||||||
Balance at December 31, 2016 | $ | (236 | ) | $ | (692 | ) | $ | (928 | ) | ||
Other comprehensive income/(loss) before reclassifications, net of taxes | 5 | 7,844 | 7,849 | ||||||||
Realized (gains)/losses reclassified from accumulated other comprehensive income | 6 | (5,791 | ) | (5,785 | ) | ||||||
Net current-period other comprehensive income/(loss), net of taxes | 11 | 2,053 | 2,064 | ||||||||
Balance at September 30, 2017 | $ | (225 | ) | $ | 1,361 | $ | 1,136 | ||||
Balance at December 31, 2015 | $ | (578 | ) | $ | (1,091 | ) | $ | (1,669 | ) | ||
Other comprehensive income/(loss) before reclassifications, net of taxes | 85 | 3,555 | 3,640 | ||||||||
Realized (gains)/losses reclassified from accumulated other comprehensive income | 484 | (489 | ) | (5 | ) | ||||||
Net current-period other comprehensive income/(loss), net of taxes | 569 | 3,066 | 3,635 | ||||||||
Balance at September 30, 2016 | $ | (9 | ) | $ | 1,975 | $ | 1,966 |
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income (Loss) | Affected Line Item in the Statement of Operations | |||||||||
Nine Months Ended September 30, | ||||||||||
2017 | 2016 | |||||||||
(in thousands) | ||||||||||
Realized (gains)/losses on derivatives designated as hedging instruments | $ | (5,791 | ) | $ | (489 | ) | Cost of revenues and Operating expenses: | |||
(329 | ) | (14 | ) | Cost of revenues | ||||||
(644 | ) | (18 | ) | General and administrative | ||||||
(566 | ) | (28 | ) | Sales and marketing | ||||||
(4,252 | ) | (429 | ) | Research and development | ||||||
Realized (gains)/losses on available-for-sale securities | 6 | 484 | Other income, net | |||||||
Total reclassifications for the period | $ | (5,785 | ) | $ | (5 | ) | Total |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in thousands) | |||||||||||||||
Interest income and gains on short-term investments, net | $ | 1,018 | $ | 675 | $ | 2,846 | $ | 1,524 | |||||||
Foreign exchange loss, net | (92 | ) | (4 | ) | (414 | ) | (370 | ) | |||||||
Other | 30 | (65 | ) | 34 | (172 | ) | |||||||||
Other income, net | $ | 956 | $ | 606 | $ | 2,466 | $ | 982 |
(in thousands) | ||||
Term Debt, principal amount | $ | 200,000 | ||
Less unamortized debt issuance costs | 2,218 | |||
Term Debt, principal net of unamortized debt issuance costs | $ | 197,782 | ||
Effective interest rate | 3.56 | % |
(in thousands) | |||
2017 remainder of year | $ | — | |
2018 | 42,500 | ||
2019 | 157,500 | ||
$ | 200,000 |
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||
Total revenues | 100 | % | 100 | % | 100 | % | 100 | % | ||||||
Cost of revenues | 34 | 35 | 34 | 36 | ||||||||||
Gross profit | 66 | 65 | 66 | 64 | ||||||||||
Operating expenses: | ||||||||||||||
Research and development | 40 | 37 | 43 | 37 | ||||||||||
Sales and marketing | 17 | 15 | 18 | 15 | ||||||||||
General and administrative | 6 | 6 | 6 | 9 | ||||||||||
Total operating expenses | 63 | 59 | 67 | 61 | ||||||||||
Income (loss) from operations | 3 | 6 | (1 | ) | 3 | |||||||||
Interest expense | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||
Other income, net | 1 | 1 | — | — | ||||||||||
Interest and other, net | — | — | (1 | ) | (1 | ) | ||||||||
Income (loss) before taxes on income | 3 | 6 | (2 | ) | 2 | |||||||||
Provision for taxes on income | 1 | 1 | 1 | 1 | ||||||||||
Net income (loss) | 2 | % | 5 | % | (3 | ) | % | 1 | % |
Three Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
ICs | $ | 48,074 | 21.3 | % | $ | 51,462 | 23.0 | % | |||||
Boards | 84,247 | 37.3 | % | 84,022 | 37.5 | % | |||||||
Switch systems | 56,677 | 25.1 | % | 51,622 | 23.0 | % | |||||||
Cables, accessories and other | 36,701 | 16.3 | % | 37,105 | 16.5 | % | |||||||
Total Revenue | $ | 225,699 | 100.0 | % | $ | 224,211 | 100.0 | % |
Three Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
InfiniBand: | |||||||||||||
EDR | $ | 45,067 | 20.0 | % | $ | 30,715 | 13.7 | % | |||||
FDR | 46,123 | 20.4 | % | 77,678 | 34.6 | % | |||||||
QDR/DDR/SDR | 8,995 | 4.0 | % | 12,428 | 5.6 | % | |||||||
Total | 100,185 | 44.4 | % | 120,821 | 53.9 | % | |||||||
Ethernet | 110,673 | 49.0 | % | 89,558 | 39.9 | % | |||||||
Other | 14,841 | 6.6 | % | 13,832 | 6.2 | % | |||||||
Total revenue | $ | 225,699 | 100.0 | % | $ | 224,211 | 100.0 | % |
Three Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
Salaries and benefits | $ | 50,480 | 22.4 | % | $ | 44,110 | 19.7 | % | |||||
Share-based compensation | 10,811 | 4.8 | % | 10,396 | 4.6 | % | |||||||
Development and tape-out costs | 8,115 | 3.6 | % | 9,468 | 4.3 | % | |||||||
Other | 21,510 | 9.5 | % | 19,637 | 8.7 | % | |||||||
Total Research and development | $ | 90,916 | 40.3 | % | $ | 83,611 | 37.3 | % |
Three Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
Salaries and benefits | $ | 22,842 | 10.1 | % | $ | 19,774 | 8.8 | % | |||||
Share-based compensation | 4,336 | 1.9 | % | 3,837 | 1.7 | % | |||||||
Trade shows and promotions | 4,188 | 1.9 | % | 5,033 | 2.2 | % | |||||||
Other | 6,463 | 2.9 | % | 5,764 | 2.6 | % | |||||||
Total Sales and marketing | $ | 37,829 | 16.8 | % | $ | 34,408 | 15.3 | % |
Three Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
Salaries and benefits | $ | 5,191 | 2.3 | % | $ | 5,193 | 2.3 | % | |||||
Share-based compensation | 2,940 | 1.3 | % | 2,716 | 1.2 | % | |||||||
Professional services | 3,185 | 1.4 | % | 3,498 | 1.6 | % | |||||||
Other | 1,723 | 0.8 | % | 2,094 | 0.9 | % | |||||||
Total General and administrative | $ | 13,039 | 5.8 | % | $ | 13,501 | 6.0 | % |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(in thousands) | |||||||
Cost of goods sold | $ | 473 | $ | 627 | |||
Research and development | 10,811 | 10,396 | |||||
Sales and marketing | 4,336 | 3,837 | |||||
General and administrative | 2,940 | 2,716 | |||||
$ | 18,560 | $ | 17,576 |
Nine Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
ICs | $ | 124,559 | 19.9 | % | $ | 126,532 | 19.9 | % | |||||
Boards | 228,964 | 36.6 | % | 259,435 | 40.8 | % | |||||||
Switch systems | 160,012 | 25.5 | % | 145,318 | 22.9 | % | |||||||
Cables, accessories and other | 112,777 | 18.0 | % | 104,537 | 16.4 | % | |||||||
Total Revenue | $ | 626,312 | 100.0 | % | $ | 635,822 | 100.0 | % |
Nine Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
InfiniBand: | |||||||||||||
EDR | $ | 144,126 | 23.0 | % | $ | 76,497 | 12.0 | % | |||||
FDR | 138,930 | 22.2 | % | 232,530 | 36.6 | % | |||||||
QDR/DDR/SDR | 22,225 | 3.5 | % | 35,971 | 5.7 | % | |||||||
Total | 305,281 | 48.7 | % | 344,998 | 54.3 | % | |||||||
Ethernet | 278,173 | 44.4 | % | 246,210 | 38.7 | % | |||||||
Other | 42,858 | 6.9 | % | 44,614 | 7.0 | % | |||||||
Total revenue | $ | 626,312 | 100.0 | % | $ | 635,822 | 100.0 | % |
Nine Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
Salaries and benefits | $ | 146,681 | 23.4 | % | $ | 126,380 | 19.9 | % | |||||
Share-based compensation | 29,799 | 4.8 | % | 30,318 | 4.8 | % | |||||||
Development and tape-out costs | 31,058 | 5.0 | % | 27,618 | 4.3 | % | |||||||
Other | 64,217 | 10.1 | % | 52,653 | 8.3 | % | |||||||
Total Research and development | $ | 271,755 | 43.3 | % | $ | 236,969 | 37.3 | % |
Nine Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
Salaries and benefits | $ | 67,157 | 10.6 | % | $ | 56,002 | 8.8 | % | |||||
Share-based compensation | 11,684 | 1.9 | % | 11,374 | 1.8 | % | |||||||
Trade shows and promotions | 14,391 | 2.3 | % | 14,969 | 2.4 | % | |||||||
Other | 18,464 | 2.9 | % | 15,867 | 2.4 | % | |||||||
Total Sales and marketing | $ | 111,696 | 17.7 | % | $ | 98,212 | 15.4 | % |
Nine Months Ended September 30, | |||||||||||||
2017 | % of Revenues | 2016 | % of Revenues | ||||||||||
(dollars in thousands) | |||||||||||||
Salaries and benefits | $ | 15,919 | 2.5 | % | $ | 15,702 | 2.5 | % | |||||
Share-based compensation | 7,980 | 1.2 | % | 10,471 | 1.6 | % | |||||||
Professional services | 9,100 | 1.5 | % | 22,771 | 3.6 | % | |||||||
Other | 5,035 | 0.9 | % | 5,989 | 0.9 | % | |||||||
Total General and administrative | $ | 38,034 | 6.1 | % | $ | 54,933 | 8.6 | % |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(in thousands) | |||||||
Cost of goods sold | $ | 1,530 | $ | 1,773 | |||
Research and development | 29,799 | 30,318 | |||||
Sales and marketing | 11,684 | 11,374 | |||||
General and administrative | 7,980 | 10,471 | |||||
$ | 50,993 | $ | 53,936 |
September 30, 2017 | December 31, 2016 | ||||||
(in thousands) | |||||||
Cash and cash equivalents | $ | 58,416 | $ | 56,780 | |||
Short-term investments | 287,743 | 271,661 | |||||
Total | $ | 346,159 | $ | 328,441 | |||
Working capital | $ | 381,433 | $ | 340,511 |
Contractual Obligations: | |||||||||||||||
Total | Non-cancelable operating lease commitments | Purchase commitments | Term Debt including interest | ||||||||||||
(in thousands) | |||||||||||||||
2017 (remainder of the year) | $ | 85,449 | $ | 5,751 | $ | 78,212 | $ | 1,486 | |||||||
2018 | 111,798 | 21,062 | 42,640 | 48,096 | |||||||||||
2019 | 175,289 | 15,835 | 1,293 | 158,161 | |||||||||||
2020 | 13,550 | 12,959 | 591 | — | |||||||||||
2021 | 11,743 | 11,207 | 536 | — | |||||||||||
Thereafter | 64,146 | 63,610 | 536 | — | |||||||||||
Total | $ | 461,975 | $ | 130,424 | $ | 123,808 | $ | 207,743 |
• | increasing our vulnerability to adverse general economic and industry conditions; |
• | requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts, the execution of our business strategy, acquisitions and other general corporate purposes; |
• | making it more difficult to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures and other purposes. |
• | difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired companies, particularly companies with large and widespread operations and/or complex products; |
• | the diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions; |
• | possible disruption to the continued expansion of our product lines; |
• | potential changes in our customer base and changes to the total available market for our products; |
• | reduced demand for our products; |
• | potential difficulties in completing projects associated with in-process research and development intangibles; |
• | the use of a substantial portion of our cash resources and incurrence of significant amounts of debt; |
• | significantly increase our interest expense, leverage and debt service requirements as a result of incurring debt; |
• | the impact of any such acquisition on our financial results; |
• | internal controls may become more complex and may require significantly more resources to ensure they remain effective; |
• | negative customer reaction to any such acquisition; and |
• | assuming the liabilities of the acquired company. |
• | reduced control over product cost, delivery schedules and product quality; |
• | potential price increases; |
• | inability to achieve sufficient production, increase production or test capacity and achieve acceptable yields on a timely basis; |
• | increased exposure to potential misappropriation of our intellectual property; |
• | shortages of materials used to manufacture products; |
• | capacity shortages; |
• | labor shortages or labor strikes; |
• | political instability in the regions where these subcontractors are located; and |
• | natural disasters impacting these subcontractors. |
• | unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; |
• | the loss of one or more of our customers, or a significant reduction or postponement of orders from our customers; |
• | our customers' sales outlooks, purchasing patterns and inventory levels based on end-user demands and general economic conditions; |
• | seasonal buying trends; |
• | the timing of new product announcements or introductions by us or by our competitors; |
• | our ability to successfully develop, introduce and sell new or enhanced products in a timely manner; |
• | changes in the relative sales mix of our products; |
• | decreases in the overall average selling prices of our products; |
• | changes in the cost of our finished goods; and |
• | the availability, pricing and timeliness of delivery of other components used in our customers' products. |
• | people may not be deterred from misappropriating our technologies despite the existence of laws or contracts prohibiting it; |
• | policing unauthorized use of our intellectual property may be difficult, expensive and time-consuming, and we may be unable to determine the extent of any unauthorized use; and |
• | the laws of other countries in which we market our products, such as some countries in the Asia/Pacific region, may offer little or no protection for our proprietary technologies. |
• | manage and enhance our relationships with customers, distributors, suppliers, end users and other third parties; |
• | implement additional, and enhance existing, administrative, financial and operations systems, procedures and controls; |
• | address capacity shortages; |
• | expand and upgrade our technological capabilities; |
• | manage the challenges of having U.S., Israeli and other foreign operations; and |
• | hire, train, integrate and manage additional qualified engineers for research and development activities as well as additional personnel to strengthen our sales and marketing, financial and IT functions. |
• | reduced protection of intellectual property rights in some countries; |
• | difficulties in staffing and managing foreign operations; |
• | longer sales and payment cycles; |
• | greater difficulties in collecting accounts receivable; |
• | adverse economic conditions; |
• | seasonal reductions in business activity; |
• | potentially adverse tax consequences; |
• | laws and business practices favoring local competition; |
• | costs and difficulties of customizing products for foreign countries; |
• | compliance with a wide variety of complex foreign laws and treaties; |
• | compliance with the United States' Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions; |
• | compliance with export control and regulations; |
• | licenses, tariffs, other trade barriers, transit restrictions and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets; |
• | restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments; |
• | foreign currency exchange risks; |
• | fluctuations in freight rates and transportation disruptions; |
• | political and economic instability; |
• | variance and unexpected changes in local laws and regulations; |
• | natural disasters and public health emergencies; and |
• | trade and travel restrictions. |
• | quarterly variations in our results of operations or those of our competitors; |
• | announcements by us, our competitors, our customers or rumors from sources other than our company related to acquisitions, new products, significant contracts, commercial relationships, capital commitments or changes in the competitive landscape; |
• | our ability to develop and market new and enhanced products on a timely basis; |
• | disruption to our operations; |
• | geopolitical instability; |
• | the emergence of new sales channels in which we are unable to compete effectively; |
• | any major change in our board of directors or management; |
• | changes in financial estimates, including our ability to meet our future revenue and operating profit or loss projections; |
• | changes in governmental regulations or in the status of our regulatory approvals; |
• | general economic conditions and slow or negative growth of related markets; |
• | anticompetitive practices of our competitors; |
• | commencement of, or our involvement in, litigation; |
• | whether our operating results meet our guidance or the expectations of investors or securities analysts; |
• | continuing international conflicts and acts of terrorism; and |
• | changes in accounting rules. |
• | no cumulative voting; |
• | a requirement for any merger involving the Company shall require the approval of the shareholders of at least a majority of the voting power of the Company; |
• | a requirement for the approval of at least 75% of the voting power represented at the general meeting of the shareholders for the removal of any director (not including external directors) from office, and election of any director instead of the director so removed; and |
• | an advance notice requirement for shareholder proposals and nominations. |
3.1 | (1) | |||
31.1 | ||||
31.2 | ||||
32.1 | ||||
32.2 | ||||
101.INS | XBRL Instance Document | |||
101.SCH | XBRL Taxonomy Extension Schema Document | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
(1) | Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q (SEC File No. 001-33299) filed on July 29, 2016. |
Date: | November 3, 2017 | Mellanox Technologies, Ltd. |
/s/ Jacob Shulman | ||
Jacob Shulman | ||
Chief Financial Officer | ||
(Duly Authorized Officer and Principal Financial Officer) |
By: | /s/ EYAL WALDMAN | ||||
Name: | Eyal Waldman | ||||
Title: | President and Chief Executive Officer | ||||
(Principal Executive Officer) |
By: | /s/ JACOB SHULMAN | ||||
Name: | Jacob Shulman | ||||
Title: | Chief Financial Officer | ||||
(Principal Financial Officer) |
By: | /s/ EYAL WALDMAN | |||||||
Name: | Eyal Waldman | |||||||
Title: | President and Chief Executive Officer | |||||||
(Principal Executive Officer) |
By: | /s/ JACOB SHULMAN | |||||||
Name: | Jacob Shulman | |||||||
Title: | Chief Financial Officer | |||||||
(Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 27, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | Mellanox Technologies, Ltd. | |
Trading Symbol | MLNX | |
Entity Central Index Key | 0001356104 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 50,928,819 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - ₪ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value (in NIS per share) | ₪ 0.0175 | ₪ 0.0175 |
Ordinary shares, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Ordinary shares, shares issued (in shares) | 50,925,000 | 49,076,000 |
Ordinary shares, shares outstanding (in shares) | 50,925,000 | 49,076,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Statement [Abstract] | ||||
Total revenues | $ 225,699 | $ 224,211 | $ 626,312 | $ 635,822 |
Cost of revenues | 77,335 | 78,191 | 215,212 | 228,479 |
Gross profit | 148,364 | 146,020 | 411,100 | 407,343 |
Operating expenses: | ||||
Research and development | 90,916 | 83,611 | 271,755 | 236,969 |
Sales and marketing | 37,829 | 34,408 | 111,696 | 98,212 |
General and administrative | 13,039 | 13,501 | 38,034 | 54,933 |
Total operating expenses | 141,784 | 131,520 | 421,485 | 390,114 |
Income (loss) from operations | 6,580 | 14,500 | (10,385) | 17,229 |
Interest expense | (2,016) | (2,195) | (6,005) | (5,408) |
Other income, net | 956 | 606 | 2,466 | 982 |
Interest and other, net | (1,060) | (1,589) | (3,539) | (4,426) |
Income (loss) before taxes on income | 5,520 | 12,911 | (13,924) | 12,803 |
Provision for taxes on income | 2,117 | 874 | 2,908 | 3,280 |
Net income (loss) | $ 3,403 | $ 12,037 | $ (16,832) | $ 9,523 |
Net income (loss) per share - basic (in USD per share) | $ 0.07 | $ 0.25 | $ (0.34) | $ 0.20 |
Net income (loss) per share - diluted (in USD per share) | $ 0.07 | $ 0.24 | $ (0.34) | $ 0.19 |
Shares used in computing net income (loss) per share: | ||||
Basic (in shares) | 50,587 | 48,385 | 49,999 | 47,883 |
Diluted (in shares) | 51,575 | 49,494 | 49,999 | 49,232 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 3,403 | $ 12,037 | $ (16,832) | $ 9,523 |
Other comprehensive income (loss), net of tax: | ||||
Change in unrealized gains/losses on available-for-sale securities, net of tax | (11) | (79) | 11 | 569 |
Change in unrealized gains/losses on derivative contracts, net of tax | (2,689) | 1,717 | 2,053 | 3,066 |
Other comprehensive income (loss), net of tax | (2,700) | 1,638 | 2,064 | 3,635 |
Total comprehensive income (loss), net of tax | $ 703 | $ 13,675 | $ (14,768) | $ 13,158 |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Company Mellanox Technologies, Ltd., an Israeli corporation (the "Company" or "Mellanox"), was incorporated and commenced operations in March 1999. Mellanox is a supplier of high-performance interconnect products for computing, storage and communications applications. Principles of presentation The unaudited condensed consolidated financial statements include the Company's accounts as well as those of its wholly owned subsidiaries after the elimination of all intercompany balances and transactions. The unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The year-end balance sheet data were derived from audited consolidated financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on February 17, 2017. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2017 or thereafter. Risks and uncertainties The Company is subject to all of the risks inherent in a company which operates in the dynamic and competitive semiconductor industry. Significant changes in any of the following areas could have a material adverse impact on the Company's financial position and results of operations: unpredictable volume or timing of customer orders; ordered product mix; the sales outlook and purchasing patterns of the Company's customers based on consumer demands and general economic conditions; loss of one or more of the Company's customers; decreases in the average selling prices of products or increases in the average cost of finished goods; the availability, pricing and timeliness of delivery of components used in the Company's products; reliance on a limited number of subcontractors to manufacture, assemble, package and production test the Company's products; the Company's ability to successfully develop, introduce and sell new or enhanced products in a timely manner; product obsolescence and the Company's ability to manage product transitions; the timing of announcements or introductions of new products by the Company's competitors; and the Company's ability to successfully integrate acquired businesses. Use of estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, allowances for price adjustments, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, useful lives of property, equipment, and intangibles, accounting for business combinations, goodwill and purchased intangible asset valuation, investments in privately-held companies, accounting and fair value of financial instruments and derivatives, deferred income tax asset valuation, uncertain tax positions, and litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results that the Company experiences may differ materially and adversely from the Company's original estimates. To the extent there are material differences between the estimates and actual results, the Company's future results of operations will be affected. Significant accounting policies In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718); Improvements to Employee Share-Based Payment Accounting. The Company adopted ASU No. 2016-09 during the quarter ended March 31, 2017. The standard requires, among other things, excess tax benefits to be recognized in the statement of operations as an income tax benefit as opposed to additional paid in capital. This change was adopted prospectively and did not have a material effect on the Company's condensed consolidated financial statements. The standard also requires, among other things, excess tax benefits to be included in operating activities in the statement of cash flows as opposed to in financing activities. This change was adopted retrospectively and did not have a material effect on the Company's condensed consolidated financial statements. The standard further requires excess tax benefits to be recognized when they arise, instead of when they actually reduce taxes payable under the prior guidance. This change was adopted using a modified retrospective method through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The impact of the adoption was to increase deferred tax assets by $4.6 million, which in turn was offset by an increase in the valuation allowance in the same amount, resulting in no change in net deferred tax assets and retained earnings as of January 1, 2017. The standard also establishes an alternative practical expedient for estimating the effects of forfeitures of an award by recognizing such effects in compensation cost when the forfeitures occur. Adoption of the alternative practical expedient was applied using a modified retrospective method through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The impact of the adoption was to reduce retained earnings and to increase additional paid-in capital by $0.8 million as of January 1, 2017. Other than the adoption of ASU No. 2016-09 as discussed above, there have been no changes in the Company’s significant accounting policies that were disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on February 17, 2017. Concentration of credit risk The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10.0% of the total revenues:
The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable:
Product warranty The following table provides changes in the product warranty accrual for the nine months ended September 30, 2017 and 2016:
Net income (loss) per share The following table sets forth the computation of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2017 and 2016:
The Company excluded 1.8 million potentially dilutive share options and restricted share units ("RSUs") from the computation of diluted net income per share for the three months ended September 30, 2017, 5.1 million outstanding share options and RSUs from the computation of diluted net loss per share for the nine months ended September 30, 2017, and 0.6 million and 0.7 million potentially dilutive share options and RSUs from the computation of diluted net income per share for the three and nine months ended September 30, 2016, respectively, because including them would have had an anti-dilutive effect. Recent accounting pronouncements In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands the activities that qualify for hedge accounting and simplifies the rules for reporting hedging transactions. The standard is effective for the Company beginning January 1, 2019. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The standard is effective for the Company beginning January 1, 2018, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year. The new standard should be adopted on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize almost all leases on the balance sheet as a right-of-use asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. Early adoption of the standard is allowed. The standard becomes effective for the Company beginning January 1, 2019. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and may be applied retrospectively to each prior period presented, or applied using a modified retrospective method with the cumulative effect recognized in the beginning retained earnings during the period of initial application. Subsequently, the FASB has issued several additional ASUs related to ASU No. 2014-09, collectively they are referred to as the “new revenue standards”, which become effective for the Company beginning January 1, 2018. The Company expects to adopt the new revenue standards using the modified retrospective method. Under the current guidance, the Company defers the recognition of revenue and the cost of revenue from distributor sales until the distributors report that they have sold the products to their customers (known as “sell-though” revenue recognition). Upon the adoption of the new revenue standards, the Company will recognize revenue on sales to all distributors upon shipment and transfer of control (known as “sell-in” revenue recognition), net of the estimated allowances for price adjustments. While the evaluation of the impact of the new revenue recognition standard has not yet been finalized, the Company does not anticipate that the standard will have a material impact on the manner in which it treats certain costs to obtain contracts and costs to fulfill contracts. The Company has also not yet fully determined the impacts of the disclosure requirements under the new standard. The Company does not expect any other material effects on its consolidated financial statements and related disclosures. |
BALANCE SHEET COMPONENTS |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS:
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BUSINESS COMBINATION |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATION | BUSINESS COMBINATION: On February 23, 2016, the Company completed its acquisition of EZchip Semiconductor Ltd. ("EZchip"). Under the terms of the Agreement of Merger dated as of September 30, 2015 (as amended on November 17, 2015), by and among the Company, Mondial Europe Sub Ltd. and EZchip (the "Merger Agreement") the total consideration was $782.2 million including $1.0 million attributable to assumed RSUs. The net cash purchase price of $693.7 million consisted of a $781.2 million cash payment for all outstanding common shares of EZchip at the price of $25.50 per share and net of $87.5 million cash acquired. The Company also assumed 891,822 EZchip RSUs and converted them to 499,894 equivalent Company RSU awards. The fair value of the converted RSUs was determined based on the per share value of the underlying Mellanox ordinary shares of $46.40 per share as of the acquisition date. The 499,894 RSUs had a total aggregate value of $23.2 million, of which $1.0 million was recorded as a component of the purchase price for service rendered prior to the acquisition date and $22.2 million will be recognized as share-based compensation expense over the remaining required service period of up to 2.25 years from the acquisition date. In connection with the acquisition, the Company entered into a $280.0 million variable interest rate Term Debt maturing February 21, 2019. For additional information on the Term Debt, see Note 13 in the notes to the unaudited condensed consolidated financial statements. The Company accounted for the transaction using the acquisition method, which requires, among other things, that the assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The following summarizes consideration paid for EZchip at the acquisition date:
The following summarizes the Company's allocation of the total purchase price, net of cash acquired for the EZchip acquisition after consultation with third party valuation specialists:
There were no acquisition-related expenses for the EZchip acquisition for the three months ended September 30, 2017. Acquisition-related expenses for the EZchip acquisition for the nine months ended September 30, 2017 were $0.3 million and primarily consisted of employee-related expenses. Acquisition-related expenses for the EZchip acquisition for the three and nine month periods ending September 30, 2016 were $0.4 million and $7.5 million, respectively, and primarily consisted of investment banking, consulting and other professional fees. Identifiable finite-lived intangible assets
Trade name represents the fair values of brand and name recognition associated with the marketing of EZchip’s products and services. The Company used the income approach and utilized a discount rate of 10.0% to determine the fair value of trade name assets. Customer relationships represent the fair value of future projected revenues that will be derived from the sale of products to existing customers of EZchip. The Company used the comparative method ("with/without") of the income approach to determine the fair value of this intangible asset and utilized a discount rate of 10.0%. Backlog represents the fair value of sales order backlog as of the valuation date. The Company used the income approach to determine the fair value of this intangible asset and utilized a discount rate of 8.0%. Developed technology represents completed technology that has passed technological feasibility and/or is currently offered for sale to customers. The Company used the income approach to value the developed technology. Under the income approach, the expected future cash flows from each technology are estimated and discounted to their net present values at an appropriate risk-adjusted rate of return. Significant factors considered in the calculation of the rate of return are the weighted average cost of capital and the return on assets. The Company applied a discount rate of 9.0% to value the developed technology assets taking into consideration market rates of return on debt and equity capital and the risk associated with achieving forecasted revenues related to these assets. The IPR&D intangible asset represents the value assigned to an acquired research and development project that, as of the acquisition date, had not established technological feasibility. The fair value of IPR&D was determined using a discount rate of 12.0%. This intangible asset will be capitalized on the balance sheet and evaluated periodically for impairment until the project is completed, at which time it will be transferred to developed technology and become subject to amortization over its useful life. IPR&D consists of one project related to the development of two network processors. The project is expected to be completed over the next several years. The estimated remaining costs to complete the IPR&D project was $22.3 million as of the acquisition date, which will be charged to operating expense in the condensed consolidated statements of operations as incurred. During the three months ended September 30, 2016, one component of the IPR&D project reached technological feasibility and $4.2 million was transferred to developed technology and is being amortized over three years. Goodwill Goodwill arising from the acquisition represents the value of the skilled assembled workforce and projected growth in overall revenues. The EZchip acquisition is a step in the Company's strategy to become a leading broad-line supplier of intelligent interconnect solutions for data centers. The addition of EZchip’s products and expertise in network processing is expected to enhance the Company's leadership position, and ability to deliver complete end-to-end, intelligent 10, 25, 40, 50, and 100Gb/s interconnect and processing solutions for advanced data center and edge platforms. The combined company will have diverse and robust solutions to enable customers to meet the growing demands of data-intensive applications used in high-performance computing, Web 2.0, cloud, secure data center, enterprise, telecom, database, financial services, and storage environments. These significant factors were the basis for the recognition of goodwill. Goodwill is not expected to be deductible for tax purposes. Goodwill will not be amortized but instead will be tested for impairment annually or more frequently if certain indicators are present. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS: | FAIR VALUE MEASUREMENTS: Fair value hierarchy: The Company measures its cash equivalents and marketable securities at fair value. The Company’s cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. The Company's investments in debt securities and certificates of deposits are classified within Level 2 as the market inputs to value these instruments consist of market yields, reported trades and broker/dealer quotes. In addition, foreign currency contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. The Level 3 valuation inputs include the Company's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. As of September 30, 2017 and December 31, 2016, the Company did not have any assets or liabilities valued based on Level 3 valuations. Financial Liabilities Measured at Fair Value on a Nonrecurring Basis: As of September 30, 2017, the remaining principal of $200.0 million on the Company's $280.0 million Term Debt is classified as a Level 2 fair value measurement in the fair value hierarchy. The Company calculated a fair value amount of $202.3 million at September 30, 2017 based on a discounted cash flow model using observable market inputs and taking into consideration variables such as interest rate changes, comparable instruments, and long-term credit ratings. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis: The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017:
The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:
There were no transfers between Level 1 and Level 2 securities during the nine months ended September 30, 2017 and the year ended December 31, 2016. |
INVESTMENTS |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | INVESTMENTS: Cash, cash equivalents and short-term investments: The short-term investments are classified as available-for-sale securities. The cash, cash equivalents and short-term investments at September 30, 2017 and December 31, 2016 were as follows:
Interest income and gains on short-term investments, net were $1.0 million and $0.7 million for the three months ended September 30, 2017 and 2016, respectively. Interest income and gains on short-term investments, net were $2.8 million and $1.2 million for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017, gross unrealized losses on investments that were in a gross unrealized loss position for greater than 12 months were immaterial. These investments were not deemed to be other-than-temporarily impaired and the gross unrealized losses were recorded in other comprehensive income (loss) ("OCI"). The contractual maturities of short-term investments at September 30, 2017 and December 31, 2016 were as follows:
Equity investments in privately-held companies: As of September 30, 2017 and December 31, 2016, the Company held a total of $22.2 million and $12.7 million, respectively, in equity investments in privately-held companies. |
GOODWILL AND INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS: The following table represents changes in the carrying amount of goodwill:
The carrying amounts of intangible assets as of September 30, 2017 were as follows:
The carrying amounts of intangible assets as of December 31, 2016 were as follows:
Amortization expense of intangible assets totaled approximately $15.2 million and $17.1 million for the three months ended September 30, 2017 and 2016, respectively. Amortization expense of intangible assets totaled approximately $45.3 million and $44.8 million for the nine months ended September 30, 2017 and 2016, respectively. The estimated future amortization expense from amortizable intangible assets is as follows:
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DERIVATIVES AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES | DERIVATIVES AND HEDGING ACTIVITIES: The Company enters into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks, mainly the exposure to changes in the exchange rate of the New Israeli Shekels ("NIS") against the U.S. dollar that are associated with forecasted cash flows and existing assets and liabilities. The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. Fair Value of Derivative Contracts The fair value of derivatives contracts in the unaudited condensed consolidated balance sheets at September 30, 2017 and December 31, 2016 were as follows:
The gross notional amounts of derivative contracts were NIS denominated. The notional amounts of outstanding derivative contracts in U.S. dollars at September 30, 2017 and December 31, 2016 were as follows:
Effect of Derivatives Designated as Hedging Instruments on Accumulated Other Comprehensive Income The following table represents the unrealized gains (losses) of derivatives designated as hedging instruments, net of tax effects, that were recorded in accumulated other comprehensive income as of September 30, 2017 and December 31, 2016 and their effect on OCI for the nine months ended September 30, 2017:
Effect of Derivative Contracts on the Unaudited Condensed Consolidated Statement of Operations The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the three months ended September 30, 2017 and 2016 was as follows:
The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2017 and 2016 was as follows:
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES: | COMMITMENTS AND CONTINGENCIES: Commitments Leases At September 30, 2017, future minimum payments under non-cancelable operating leases are as follows:
Purchase commitments At September 30, 2017, the Company had the following non-cancelable purchase commitments:
Other Commitments Operating lease On May 3, 2016, the Company entered into a lease agreement for additional office space expected to be built in Yokneam, Israel. The lease term expires 10 years after lease inception with no options to extend the lease term. The Company's occupancy of the additional office space and its obligation under the lease agreement is contingent on the lessor's attainment of stated milestones in the lease agreement. As such, the Company cannot make a reliable estimate as to the timing of cash payments under the lease. At September 30, 2017, the estimated total future lease obligation is approximately $30.2 million. Over a twelve month period an estimated rental expense is approximately $3.0 million, and if recognized, would increase the Company's operating expenses in its condensed consolidated statement of operations. Royalty-bearing grants The Company is obliged to pay royalties to the Israeli National Authority for Technological Innovation, previously known as the Office of the Chief Scientist of Israel's Ministry of Economy and Industry (the "OCS"), for research and development efforts partially funded through grants from the OCS and under approved plans in accordance with the Israeli Law for Encouragement of Research and Development in the Industry, 1984 (the "R&D Law"). Royalties are payable to the Israeli government at the rate of 4.5% of the revenues of the Company's products incorporating OCS-funded know-hows, and up to the amount of the grants received. The Company's obligation to pay these royalties is contingent on actual sales of the products, at which time a liability is recorded. In the absence of such sales, the Company cannot make a reliable estimate as to the timing of cash settlement of the royalties. At September 30, 2017, the Company estimated a total future royalty obligation of approximately $36.7 million, and if recognized, would increase the Company's cost of revenues in its condensed consolidated statement of operations. Unrecognized tax benefits Due to the inherent uncertainty with respect to the timing of future cash outflows associated with the Company's unrecognized tax benefits, it is unable to reliably estimate the timing of cash settlement with the respective taxing authorities. As of September 30, 2017, the Company's unrecognized tax benefits totaled $46.0 million, out of which an amount of $28.6 million would reduce the Company's income tax expense and effective tax rate, if recognized. Contingencies Legal proceedings The Company is involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of its business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, securities, personal injuries and other matters. The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on the Company’s condensed consolidated financial position or results of operations. The Company records a liability when it believes that it is both probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount of a loss or potential loss. The Company may be unable to reasonably estimate the reasonably possible loss or range of loss for a particular legal contingency for various reasons, including, among others: (i) if the damages sought are indeterminate; (ii) if proceedings are in the early stages; (iii) if there is uncertainty as to the outcome of pending proceedings (including motions and appeals); (iv) if there is uncertainty as to the likelihood of settlement and the outcome of any negotiations with respect thereto; (v) if there are significant factual issues to be determined or resolved; (vi) if the proceedings involve a large number of parties; (vii) if relevant law is unsettled or novel or untested legal theories are presented; or (viii) if the proceedings are taking place in jurisdictions where the laws are complex or unclear. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. |
SHARE INCENTIVE PLANS |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE INCENTIVE PLANS | SHARE INCENTIVE PLANS Stock Option Plans On April 25, 2017, the Company's shareholders approved the Mellanox Technologies, Ltd. Second Amended and Restated Global Share Incentive Plan (2006) (the “Second Restated Plan”), which constitutes a second amendment and restatement of the Mellanox Technologies, Ltd. Global Share Incentive Plan (2006) and its appendices (the “2006 Plan”), as amended and restated by the Mellanox Technologies, Ltd. Amended and Restated Global Share Incentive Plan (2006) as of March 14, 2016 (the “First Restated Plan”). The Second Restated Plan became effective on February 14, 2017. The Second Restated Plan increases the ordinary shares reserved for issuance under the First Restated Plan by 1,640,000 shares to 2,390,000 shares plus any shares subject to issued and outstanding awards under the other equity incentive plans that existed prior to the First Restated Plan that expire, are cancelled or otherwise terminated after the effective date of the First Restated Plan. The Second Restated Plan also extends the term of the First Restated Plan to February 14, 2027. In addition, the Second Restated Plan implements additional amendments to reflect compensation and governance best practices. Share option activity Share option activity under the Company's equity incentive plans in the nine months ended September 30, 2017 is set forth below:
The total pretax intrinsic value of options exercised in the nine months ended September 30, 2017 and 2016 was $6.3 million and $9.8 million, respectively. This intrinsic value represents the difference between the fair market value of the Company's ordinary shares on the date of exercise and the exercise price of each option. Based on the closing price of the Company's ordinary shares of $47.15 on September 30, 2017, the total pretax intrinsic value of options outstanding at September 30, 2017 was $30.5 million. The total pretax intrinsic value of options outstanding at December 31, 2016 was $29.0 million. There were 1,405,804 and 1,624,756 options exercisable at September 30, 2017 and December 31, 2016, respectively. The total pretax intrinsic value of exercisable options at September 30, 2017 was $30.5 million. The total pretax intrinsic value of exercisable options at December 31, 2016 was $28.9 million. Restricted share unit activity RSU activity under the Company's equity incentive plans in the nine months ended September 30, 2017 is set forth below:
The weighted average fair value of RSUs granted in the nine months ended September 30, 2017 and 2016 was $50.05 and $48.58, respectively. The total intrinsic value of all outstanding RSUs as of September 30, 2017 and December 31, 2016 was $175.7 million and $136.0 million, respectively. Employee Stock Purchase Plan activity There were 568,876 and 491,968 shares purchased under the ESPP for the nine months ended September 30, 2017 and 2016 at an average price per share of $38.83 and $35.50, respectively. Shares reserved for future issuance The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of September 30, 2017:
Share-based compensation The Company accounts for share-based compensation expense based on the estimated fair value of the share equity awards as of the grant dates. The following weighted average assumptions were used to value ESPP shares issued pursuant to the Company's share incentive plans for the nine months ended September 30, 2017 and 2016:
The following table summarizes the distribution of total share-based compensation expense in the unaudited condensed consolidated statements of operations:
Share-based compensation expense for the nine months ended September 30, 2016 included cash payments of $4.8 million for the settlement of accelerated RSUs for individuals terminated on the closing date of the EZchip acquisition. At September 30, 2017, there was $162.0 million of total unrecognized share-based compensation costs related to non-vested share-based compensation arrangements. The costs are expected to be recognized over a weighted average period of approximately 2.86 years. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended September 30, 2017 and 2016:
The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2017 and 2016:
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INCOME TAXES |
9 Months Ended |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES: As of September 30, 2017 and December 31, 2016, the Company had gross unrecognized tax benefits of $46.0 million and $41.5 million, respectively. It is the Company’s policy to classify accrued interest and penalties as part of the unrecognized tax benefits and record the expense in the provision for income taxes. The amount of accrued interest and penalties related to unrecognized tax benefits totaled $2.6 million at September 30, 2017 and $1.8 million at December 31, 2016. On January 12, 2017, the Company received a ruling from the Israeli Tax Authorities ("ITA"), which approved a succession of mergers in a tax-exempted manner, subject to certain limitations (the "Tax-Exempted Merger"), in which EZchip Technologies Ltd., fully owned by EZchip, merged into EZchip, which in turn merged into the Company. The Tax-Exempted Merger resulted in a net increase of approximately $0.9 million in deferred tax assets and a corresponding increase in benefit from taxes on income during the first quarter of 2017. As of September 30, 2017, the 2014 through 2016 tax years are open and may be subject to potential examinations in the United States. The Company has net operating losses in the United States from prior tax periods beginning in 2002 which may be subject to examination upon utilization in future tax periods. As of September 30, 2017, the 2011 through 2016 tax years are open and may be subject to potential examinations in Denmark and Israel. As of September 30, 2017, the income tax returns of the Company and one of its subsidiaries in Israel are under examination by the ITA for certain years from 2011 to 2014. The Company's operations in Israel were granted "Approved Enterprise" status by the Investment Center in the Israeli Ministry of Economy and "Beneficiary Enterprise" status from the Israeli Income Tax Authority, which makes the Company eligible for tax benefits under the Israeli Law for Encouragement of Capital Investments, 1959 (the "Encouragement Law"). Under the terms of the Beneficiary Enterprise program, income that is attributable to the Company's operations in Yokneam, Israel, is exempt from income tax commencing fiscal year 2011 through 2021. Income that is attributable to the Company's operations in Tel Aviv, Israel is subject to a reduced income tax rate (generally between 10.0% and the current corporate tax rate, depending on the percentage of foreign investment in the Company) commencing fiscal year 2013 through 2021. On June 14, 2017, the Israeli government legislated new regulations regarding the "Preferred Technological Enterprise" regime, under which a company that complies with the terms may be entitled to certain tax benefits. The Company expects that its operation in Israel will comply with the terms of the Preferred Technological Enterprise regime. Therefore, the Company may utilize the tax benefits under this regime after the end of the benefit period of its Approved and Beneficiary Enterprise statuses (i.e. from fiscal year 2022 onwards). Under the new legislation, the majority of the Company’s income from its operations in Yokneam, Israel, will be subject to a corporate rate of 7.5%, while the majority of the income from its operations in Tel-Aviv, Israel, will be subject to a corporate rate of 12.0%. As a result of the lower tax rates mentioned above, the Company recorded a decrease of approximately $0.2 million in deferred tax assets and a corresponding increase in tax expense during the second quarter of 2017. The Company’s effective tax rate is highly dependent upon the geographic distribution of its worldwide earnings or losses, tax regulations and tax holiday benefits in Israel, and the effectiveness of the Company’s tax planning strategies. The Company’s effective tax rates were 38.4% and 6.8% for the three months ended September 30, 2017 and 2016, respectively. The Company’s effective tax rates were (20.9)% and 25.6% for the nine months ended September 30, 2017 and 2016, respectively. The difference between the Company’s effective tax rate and the 35.0% federal statutory rate for the nine months ended September 30, 2017 resulted primarily from the tax holiday in Israel and foreign earnings taxed at rates lower than the federal statutory rates, partially offset by the accrual of unrecognized tax benefits, interest and penalties associated with unrecognized tax positions, non-tax-deductible expenses such as share-based compensation and losses generated from subsidiaries without tax benefit. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous, and the Company is required to make many subjective assumptions and judgments regarding its income tax exposures. In addition, interpretations of and guidance surrounding income tax laws and regulations are subject to change over time. Any changes in the Company’s subjective assumptions and judgments could materially affect amounts recognized in its condensed consolidated balance sheets and statements of operations. The Company has maintained a valuation allowance against deferred tax assets of certain subsidiaries. The Company assesses its ability to recover its deferred tax assets on an ongoing basis. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. In evaluating the ability to recover deferred tax assets, the Company considers available positive and negative evidence including its recent cumulative losses, its ability to carry-back losses against prior taxable income and its projected financial results. The Company also considers, commensurate with its objective verifiability, the forecast of future taxable income including the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. A valuation allowance may be recorded in the event it is deemed to be more-likely-than-not that the deferred tax asset cannot be realized. Previously established valuation allowances may also be released in the event it is deemed to be more-likely-than-not that the deferred tax asset can be realized. Any release of valuation allowance will be recorded as a tax benefit which will positively impact the Company’s operating results. Management has determined on the basis of the quarterly assessment performed at September 30, 2017, that these deferred tax assets are not more-likely-than-not to be realized. |
OTHER INCOME, NET |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER INCOME, NET | OTHER INCOME, NET: Other income, net is summarized in the following table:
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TERM DEBT |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TERM DEBT | TERM DEBT: In connection with the Company’s acquisition of EZchip, on February 22, 2016, the Company and its wholly owned subsidiary, Mellanox Technologies, Inc., entered into a $280.0 million variable interest rate Term Debt note maturing February 21, 2019. Debt issuance costs of $5.5 million on the Term Debt are being amortized to interest expense at the effective interest rate over the contractual term of the Term Debt. The Term Debt allows for voluntary prepayments at any time and additional term loan borrowings under certain conditions. The following table presents the Term Debt at September 30, 2017:
During the nine months ended September 30, 2017 the Company paid $46.0 million of principal. At September 30, 2017, future contractual principal payments on the Company's Term Debt is summarized as follows:
The Term Debt bears interest through maturity at a variable rate based upon, at the Company’s option, either (a) the LIBOR rate for Eurocurrency borrowing or (b) an Alternate Base Rate (“ABR”), which is the highest of (i) the administrative agent’s prime rate, (ii) one-half of 1.00% in excess of the overnight U.S. Federal Funds rate, and (iii) 1.00% in excess of the one-month LIBOR, plus in each case, an applicable margin. The applicable margin for Eurocurrency loans ranges, based on the applicable total net leverage ratio, from 1.25% to 2.00% per annum and the applicable margin for ABR loans ranges, based on the applicable total net leverage ratio, from 0.25% to 1.00% per annum. The Term Debt contains a number of covenants and restrictions that among other things, and subject to certain agreed upon exceptions, require the Company and its subsidiaries to satisfy certain financial covenants and restricts the ability of the Company and its subsidiaries to incur liens, incur additional indebtedness, make loans and investments, engage in mergers and acquisitions, engage in asset sales, declare dividends or redeem or repurchase capital stock, prepay, redeem or purchase subordinated debt and amend or otherwise alter debt agreements, in each case, subject to certain agreed upon exceptions. A failure to comply with these covenants could permit the lenders under the Term Debt to declare all amounts borrowed under the Term Debt, together with accrued interest and fees, to be immediately due and payable. At September 30, 2017, the Company was in compliance with the covenants for the Term Debt. |
SUBSEQUENT EVENT |
9 Months Ended |
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Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENT: On October 31, 2017, the Company made a $126.0 million prepayment against the principal balance of the Term Debt. |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of presentation | Principles of presentation The unaudited condensed consolidated financial statements include the Company's accounts as well as those of its wholly owned subsidiaries after the elimination of all intercompany balances and transactions. The unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The year-end balance sheet data were derived from audited consolidated financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on February 17, 2017. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2017 or thereafter. |
Risks and uncertainties | Risks and uncertainties The Company is subject to all of the risks inherent in a company which operates in the dynamic and competitive semiconductor industry. Significant changes in any of the following areas could have a material adverse impact on the Company's financial position and results of operations: unpredictable volume or timing of customer orders; ordered product mix; the sales outlook and purchasing patterns of the Company's customers based on consumer demands and general economic conditions; loss of one or more of the Company's customers; decreases in the average selling prices of products or increases in the average cost of finished goods; the availability, pricing and timeliness of delivery of components used in the Company's products; reliance on a limited number of subcontractors to manufacture, assemble, package and production test the Company's products; the Company's ability to successfully develop, introduce and sell new or enhanced products in a timely manner; product obsolescence and the Company's ability to manage product transitions; the timing of announcements or introductions of new products by the Company's competitors; and the Company's ability to successfully integrate acquired businesses. |
Use of estimates | Use of estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, allowances for price adjustments, investment valuation, warranty reserves, inventory reserves, share-based compensation expense, long-term asset valuations, useful lives of property, equipment, and intangibles, accounting for business combinations, goodwill and purchased intangible asset valuation, investments in privately-held companies, accounting and fair value of financial instruments and derivatives, deferred income tax asset valuation, uncertain tax positions, and litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results that the Company experiences may differ materially and adversely from the Company's original estimates. To the extent there are material differences between the estimates and actual results, the Company's future results of operations will be affected. |
Recent accounting pronouncements | Recent accounting pronouncements In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands the activities that qualify for hedge accounting and simplifies the rules for reporting hedging transactions. The standard is effective for the Company beginning January 1, 2019. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The standard is effective for the Company beginning January 1, 2018, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year. The new standard should be adopted on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize almost all leases on the balance sheet as a right-of-use asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. Early adoption of the standard is allowed. The standard becomes effective for the Company beginning January 1, 2019. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and may be applied retrospectively to each prior period presented, or applied using a modified retrospective method with the cumulative effect recognized in the beginning retained earnings during the period of initial application. Subsequently, the FASB has issued several additional ASUs related to ASU No. 2014-09, collectively they are referred to as the “new revenue standards”, which become effective for the Company beginning January 1, 2018. The Company expects to adopt the new revenue standards using the modified retrospective method. Under the current guidance, the Company defers the recognition of revenue and the cost of revenue from distributor sales until the distributors report that they have sold the products to their customers (known as “sell-though” revenue recognition). Upon the adoption of the new revenue standards, the Company will recognize revenue on sales to all distributors upon shipment and transfer of control (known as “sell-in” revenue recognition), net of the estimated allowances for price adjustments. While the evaluation of the impact of the new revenue recognition standard has not yet been finalized, the Company does not anticipate that the standard will have a material impact on the manner in which it treats certain costs to obtain contracts and costs to fulfill contracts. The Company has also not yet fully determined the impacts of the disclosure requirements under the new standard. The Company does not expect any other material effects on its consolidated financial statements and related disclosures. |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues and accounts receivable from customers | The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10.0% of the total revenues:
The following table summarizes accounts receivable balances in excess of 10% of total accounts receivable:
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Schedule of changes in the entity's liability for product warranty | The following table provides changes in the product warranty accrual for the nine months ended September 30, 2017 and 2016:
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Schedule of computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2017 and 2016:
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BALANCE SHEET COMPONENTS BALANCE SHEET COMPONENTS (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of balance sheet components |
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BUSINESS COMBINATION (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of business combination consideration transferred | The following summarizes consideration paid for EZchip at the acquisition date:
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Schedule of recognized identified assets acquired and liabilities assumed | The following summarizes the Company's allocation of the total purchase price, net of cash acquired for the EZchip acquisition after consultation with third party valuation specialists:
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Identifiable finite-lived intangible assets Identifiable finite-lived intangible assets | Identifiable finite-lived intangible assets
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FAIR VALUE MEASUREMENTS (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the fair value hierarchy of the Company's financial assets and liabilities measured at fair value | The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017:
The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:
|
INVESTMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of cash, cash equivalents and short-term investments | The short-term investments are classified as available-for-sale securities. The cash, cash equivalents and short-term investments at September 30, 2017 and December 31, 2016 were as follows:
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Schedule of contractual maturities of short-term investments | The contractual maturities of short-term investments at September 30, 2017 and December 31, 2016 were as follows:
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | The following table represents changes in the carrying amount of goodwill:
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Schedule of carrying amounts of intangible assets | The carrying amounts of intangible assets as of September 30, 2017 were as follows:
The carrying amounts of intangible assets as of December 31, 2016 were as follows:
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Schedule of estimated future amortization expense from amortizable intangible assets | The estimated future amortization expense from amortizable intangible assets is as follows:
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DERIVATIVES AND HEDGING ACTIVITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of derivative contracts | The fair value of derivatives contracts in the unaudited condensed consolidated balance sheets at September 30, 2017 and December 31, 2016 were as follows:
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Schedule of notional amounts of outstanding derivative positions | The notional amounts of outstanding derivative contracts in U.S. dollars at September 30, 2017 and December 31, 2016 were as follows:
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Schedule of designated derivative contracts as cash flow hedges and their impact on OCI | The following table represents the unrealized gains (losses) of derivatives designated as hedging instruments, net of tax effects, that were recorded in accumulated other comprehensive income as of September 30, 2017 and December 31, 2016 and their effect on OCI for the nine months ended September 30, 2017:
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Effect of derivative contracts on the condensed consolidated statement of operations | The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the three months ended September 30, 2017 and 2016 was as follows:
The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2017 and 2016 was as follows:
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COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum payments under non-cancelable operating and capital leases | At September 30, 2017, future minimum payments under non-cancelable operating leases are as follows:
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Purchase commitment, excluding long-term commitment | At September 30, 2017, the Company had the following non-cancelable purchase commitments:
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SHARE INCENTIVE PLANS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of share option awards activity under equity incentive plans | Share option activity under the Company's equity incentive plans in the nine months ended September 30, 2017 is set forth below:
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Summary of restricted share units activity | RSU activity under the Company's equity incentive plans in the nine months ended September 30, 2017 is set forth below:
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Summary of ordinary shares reserved for future issuance under equity incentive plans | The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of September 30, 2017:
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Schedule of weighted average assumptions used to value share options granted | The following weighted average assumptions were used to value ESPP shares issued pursuant to the Company's share incentive plans for the nine months ended September 30, 2017 and 2016:
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Summary of the distribution of total share-based compensation expense | The following table summarizes the distribution of total share-based compensation expense in the unaudited condensed consolidated statements of operations:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the changes in accumulated balances of other comprehensive income (loss) | The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended September 30, 2017 and 2016:
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Reclassification out of accumulated other comprehensive income | The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2017 and 2016:
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OTHER INCOME, NET (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other income, net | Other income, net is summarized in the following table:
|
TERM DEBT (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
Schedule of debt | The following table presents the Term Debt at September 30, 2017:
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Contractual obligation, fiscal year maturity schedule | At September 30, 2017, future contractual principal payments on the Company's Term Debt is summarized as follows:
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THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (ASU adoption) (Details) - Accounting Standards Update 2016-09 $ in Millions |
Dec. 31, 2016
USD ($)
|
---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Deferred tax assets, net | $ 4.6 |
Retained Earnings | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of new accounting principle | (0.8) |
Additional Paid-in Capital | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of new accounting principle | $ 0.8 |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of revenues and accounts receivable from customers) (Details) - Customer Concentration Risk |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
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Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Hewlett Packard Enterprise (HPE) | Net sales revenue | |||||
Concentration of credit risk | |||||
Percentage of consolidated revenue by major customer | 11.80% | 17.00% | 12.70% | 16.00% | |
Hewlett Packard Enterprise (HPE) | Accounts receivable | |||||
Concentration of credit risk | |||||
Percentage of consolidated revenue by major customer | 23.00% | ||||
Dell Technologies | Net sales revenue | |||||
Concentration of credit risk | |||||
Percentage of consolidated revenue by major customer | 10.90% |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Product warranty) (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Changes in the entity's liability for product warranty | |||
Balance, beginning of the period | $ 1,474 | $ 1,641 | |
Assumed warranty liability from acquisition | 0 | 290 | |
New warranties issued during the period | 1,128 | 1,098 | |
Reversal of warranty reserves | (355) | (358) | |
Settlements during the period | (1,082) | (942) | |
Balance, end of the period | 1,165 | 1,729 | |
Less: long-term portion of product warranty liability | (189) | (355) | |
Current portion, end of the period | $ 976 | $ 1,374 | $ 1,263 |
BUSINESS COMBINATION (Schedule of business combination consideration transferred) (Details) - EZchip $ / shares in Units, $ in Thousands |
Feb. 23, 2016
USD ($)
$ / shares
|
---|---|
Business Acquisition [Line Items] | |
Cash payment for all outstanding common shares of EZchip at $25.50 per share | $ 781,237 |
Fair value of awards attributable to pre-acquisition services | 972 |
Total consideration: | 782,209 |
Less: cash acquired | 87,545 |
Fair value of total consideration transferred, net of cash acquired | $ 694,664 |
EZchip purchase price (in USD per share) | $ / shares | $ 25.50 |
BUSINESS COMBINATION (Schedule of recognized identified assets acquired and liabilities assumed) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Feb. 23, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 472,437 | $ 471,228 | |
EZchip | |||
Business Acquisition [Line Items] | |||
Short-term investments | $ 108,862 | ||
Other current assets | 34,114 | ||
Other long-term assets | 9,638 | ||
Intangible assets | 288,246 | ||
Goodwill | 270,485 | ||
Total assets | 711,345 | ||
Current liabilities | (10,253) | ||
Long-term liabilities | (6,428) | ||
Total liabilities | (16,681) | ||
Total preliminary purchase price allocation | $ 694,664 |
INVESTMENTS (Fair value due by period) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Amortized Cost | ||
Due in less than one year | $ 204,399 | $ 157,270 |
Due in one to three years | 83,569 | 114,627 |
Available-for-sale securities, amortized cost basis | 287,968 | 271,897 |
Estimated Fair Value | ||
Due in less than one year | 204,315 | 157,163 |
Due in one to three years | 83,428 | 114,498 |
Estimated Fair Value | 287,743 | 271,661 |
Investment in a privately-held companies accounted for under the cost method | $ 22,200 | $ 12,700 |
GOODWILL AND INTANGIBLE ASSETS (Schedule of goodwill) (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Changes in the carrying amount of goodwill | |
Balance at the Beginning | $ 471,228 |
Acquisitions | 1,209 |
Balance at the End | $ 472,437 |
GOODWILL AND INTANGIBLE ASSETS (Schedule of estimated future amortization expense from amortizable intangible assets) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
2017 (remaining three months) | $ 15,971 | |
2018 | 58,446 | |
2019 | 50,607 | |
2020 | 38,537 | |
2021 | 30,680 | |
Thereafter | 23,690 | |
Net Carrying Value | $ 217,931 | $ 248,531 |
DERIVATIVES AND HEDGING ACTIVITIES (Effect of Derivatives Designated as Hedging Instruments on AOCI) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | ||||
Balance at the beginning of the period | $ (928) | |||
Amount of gain recognized in OCI (effective portion) | $ (2,689) | $ 1,717 | 2,053 | $ 3,066 |
Balance at the end of the period | 1,136 | 1,136 | ||
Derivatives designated as hedging instruments | ||||
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | ||||
Balance at the beginning of the period | (692) | |||
Amount of gain recognized in OCI (effective portion) | 7,844 | |||
Amount of gain reclassified from OCI to income (effective portion) | (5,791) | |||
Balance at the end of the period | $ 1,361 | $ 1,361 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Future minimum payments under non-cancelable operating leases | ||
2017 (remaining three months) | $ 5,751 | |
2018 | 21,062 | |
2019 | 15,835 | |
2020 | 12,959 | |
2021 | 11,207 | |
Thereafter | 63,610 | |
Total minimum lease payments | 130,424 | |
Purchase commitments | ||
2017 (remaining three months) | 78,212 | |
2018 | 42,640 | |
2019 | 1,293 | |
2020 | 591 | |
2021 | 536 | |
Thereafter | 536 | |
Amount of non-cancelable purchase commitments | 123,808 | |
Loss Contingencies [Line Items] | ||
Total minimum lease payments | $ 130,424 | |
Royalties payable, percentage | 4.50% | |
Accrued royalties | $ 36,700 | |
Unrecognized tax benefits | 46,000 | $ 41,500 |
Unrecognized tax benefits that would impact effective tax rate | 28,600 | |
Yokneam | ||
Future minimum payments under non-cancelable operating leases | ||
Total minimum lease payments | $ 3,000 | |
Loss Contingencies [Line Items] | ||
Length of operating lease term | 10 years | |
Present value of capital lease obligations | $ 30,200 | |
Total minimum lease payments | $ 3,000 |
SHARE INCENTIVE PLANS (Stock Option Plans) (Details) - shares |
Feb. 14, 2017 |
Sep. 30, 2017 |
---|---|---|
Share incentive plans | ||
Common stock, capital shares reserved for future issuance | 9,270,512 | |
Second Restated Plan | ||
Share incentive plans | ||
Number of additional shares authorized | 1,640,000 | |
Common stock, capital shares reserved for future issuance | 2,390,000 |
SHARE INCENTIVE PLANS (Summary of share option awards activity under equity incentive plans) (Details) - Employee Stock Option - USD ($) $ / shares in Units, $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Number of Shares | |||
Options outstanding at the beginning of the period (in shares) | 1,634,485 | ||
Options exercised (in shares) | (193,791) | ||
Options canceled (in shares) | (32,355) | ||
Options outstanding at the end of the period (in shares) | 1,408,339 | ||
Weighted Average Exercise Price | |||
Options outstanding at the beginning of the period (in USD per share) | $ 32.79 | ||
Options exercised (in USD per share) | 15.54 | ||
Options canceled (in USD per share) | 70.53 | ||
Options outstanding at the end of the period (in USD per share) | $ 34.30 | ||
Pretax intrinsic value of options exercised | $ 6.3 | $ 9.8 | |
Share price (in USD per share) | $ 47.15 | ||
Pretax intrinsic value of options outstanding | $ 30.5 | $ 29.0 | |
Options, exercisable, number | 1,405,804 | 1,624,756 | |
Pretax intrinsic value of exercisable options | $ 30.5 | $ 28.9 |
SHARE INCENTIVE PLANS (Shares reserved for future issuance) (Details) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock issued during period, shares, employee stock ownership plan | 568,876 | 491,968 |
Employee Stock Ownership Plan (ESOP), weighted average purchase price of shares purchased (in USD per share) | $ 38.83 | $ 35.50 |
SHARE INCENTIVE PLANS (Shares reserved, ESPP assumptions) (Details) - shares |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Ordinary shares reserved for future issuance under equity incentive plans | |||
Share options outstanding | 1,408,339 | ||
Shares authorized for future issuance | 710,722 | ||
Common stock, capital shares reserved for future issuance | 9,270,512 | ||
Restricted Share Units Outstanding | |||
Ordinary shares reserved for future issuance under equity incentive plans | |||
Restricted share units outstanding | 3,725,982 | 3,324,519 | |
Employee stock | |||
Ordinary shares reserved for future issuance under equity incentive plans | |||
Shares authorized for future issuance | 3,425,469 | ||
Weighted average assumptions | |||
Dividend yield | 0.00% | 0.00% | |
Expected volatility | 24.60% | 36.40% | |
Risk free interest rate | 1.20% | 0.46% | |
Expected life, years | 6 months | 6 months |
OTHER INCOME, NET (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Other Nonoperating Income (Expense) [Abstract] | ||||
Interest income and gains on short-term investments, net | $ 1,018 | $ 675 | $ 2,846 | $ 1,524 |
Foreign exchange loss, net | (92) | (4) | (414) | (370) |
Other | 30 | (65) | 34 | (172) |
Other income, net | $ 956 | $ 606 | $ 2,466 | $ 982 |
SUBSEQUENT EVENT (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Oct. 31, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Subsequent Event [Line Items] | |||
Prepayment against principal balance of Term Debt | $ 46,000 | $ 27,000 | |
Subsequent event | |||
Subsequent Event [Line Items] | |||
Prepayment against principal balance of Term Debt | $ 126,000 |
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