Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 26, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Incorporation, State or Country Code | L3 | |
Title of 12(b) Security | Ordinary Shares, nominal value NIS 0.0175 per share | |
Entity Registrant Name | MELLANOX TECHNOLOGIES, LTD. | |
Trading Symbol | MLNX | |
Entity Central Index Key | 0001356104 | |
Entity File Number | 001-33299 | |
Entity Address, Address Line One | Beit Mellanox | |
Entity Address, City or Town | Yokneam | |
Entity Address, Country | IL | |
Entity Address, Postal Zip Code | 20692 | |
City Area Code | 972-4 | |
Local Phone Number | 909-7200 | |
Entity Interactive Data Current | Yes | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 54,799,274 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Tax Identification Number | 98-0233400 | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 53,782 | $ 56,766 |
Short-term investments | 556,806 | 381,724 |
Accounts receivable, net | 200,351 | 150,625 |
Inventories | 89,650 | 104,381 |
Other current assets | 20,895 | 16,942 |
Total current assets | 921,484 | 710,438 |
Property and equipment, net | 108,142 | 105,334 |
Intangible assets, net | 159,046 | 179,328 |
Goodwill | 473,916 | 473,916 |
Other long-term assets | 159,520 | 118,182 |
Total assets | 1,822,108 | 1,587,198 |
Current liabilities: | ||
Accounts payable | 73,790 | 70,336 |
Accrued and other liabilities | 142,246 | 121,878 |
Deferred revenue | 22,998 | 20,558 |
Total current liabilities | 239,034 | 212,772 |
Deferred revenue, long-term | 20,224 | 18,665 |
Other long-term liabilities | 100,093 | 54,113 |
Total liabilities | 359,351 | 285,550 |
Commitments and Contingencies - (see Note 9) | ||
Shareholders’ equity: | ||
Ordinary shares: NIS 0.0175 par value, 200,000 shares authorized, 54,795 and 53,918 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 237 | 233 |
Additional paid-in capital | 1,051,985 | 982,677 |
Accumulated other comprehensive income (loss) | 2,394 | (1,051) |
Retained earnings | 408,141 | 319,789 |
Total shareholders’ equity | 1,462,757 | 1,301,648 |
Total liabilities and shareholders' equity | $ 1,822,108 | $ 1,587,198 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - ₪ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
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) | 54,795,000 | 53,918,000 |
Ordinary shares, shares outstanding (in shares) | 54,795,000 | 53,918,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Total revenues | $ 310,324 | $ 268,462 | $ 615,541 | $ 519,462 |
Cost of revenues | 110,034 | 103,668 | 218,120 | 192,666 |
Gross profit | 200,290 | 164,794 | 397,421 | 326,796 |
Operating expenses: | ||||
Research and development | 99,329 | 87,152 | 191,534 | 173,578 |
Sales and marketing | 39,302 | 35,673 | 79,399 | 75,167 |
General and administrative | 19,199 | 23,635 | 38,470 | 40,151 |
Restructuring and impairment charges | 275 | 1,774 | 1,178 | 9,361 |
Total operating expenses | 158,105 | 148,234 | 310,581 | 298,257 |
Income from operations | 42,185 | 16,560 | 86,840 | 28,539 |
Interest and other, net | 2,268 | (338) | 10,499 | (871) |
Income before taxes on income | 44,453 | 16,222 | 97,339 | 27,668 |
Provision for (benefit from) taxes on income | 6,024 | (304) | 10,290 | (26,701) |
Net income | $ 38,429 | $ 16,526 | $ 87,049 | $ 54,369 |
Net income per share - basic (in USD per share) | $ 0.70 | $ 0.31 | $ 1.60 | $ 1.04 |
Net income per share - diluted (in USD per share) | $ 0.68 | $ 0.30 | $ 1.55 | $ 1 |
Shares used in computing net income per share: | ||||
Basic (in shares) | 54,707 | 52,615 | 54,469 | 52,219 |
Diluted (in shares) | 56,480 | 54,466 | 56,180 | 54,149 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 38,429 | $ 16,526 | $ 87,049 | $ 54,369 |
Other comprehensive income (loss), net of tax: | ||||
Change in unrealized gains (losses) on available-for-sale securities, net of tax | 1,186 | 213 | 1,968 | (80) |
Change in unrealized gains (losses) on derivative contracts, net of tax | 189 | (2,382) | 2,780 | (3,720) |
Other comprehensive income (loss), net of tax | 1,375 | (2,169) | 4,748 | (3,800) |
Total comprehensive income, net of tax | $ 39,804 | $ 14,357 | $ 91,797 | $ 50,569 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Ordinary Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2017 | 51,487,650 | ||||
Beginning balance at Dec. 31, 2017 | $ 1,057,448 | $ 221 | $ 873,979 | $ 1,618 | $ 181,630 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 37,843 | 37,843 | |||
Unrealized gains on available-for-sale securities and derivative contracts, net of taxes | (1,631) | (1,631) | |||
Share-based compensation | 14,974 | 14,974 | |||
Issuances of shares through employee equity incentive plans (in shares) | 384,523 | ||||
Issuances of shares through employee equity incentive plans | 2,710 | $ 2 | 2,708 | ||
Issuance of shares through employee share purchase plan (in shares) | 288,017 | ||||
Issuance of shares through employee share purchase plan | 11,348 | $ 1 | 11,347 | ||
Ending balance (in shares) at Mar. 31, 2018 | 52,160,190 | ||||
Ending balance at Mar. 31, 2018 | 1,127,193 | $ 224 | 903,008 | (13) | 223,974 |
Beginning balance (in shares) at Dec. 31, 2017 | 51,487,650 | ||||
Beginning balance at Dec. 31, 2017 | 1,057,448 | $ 221 | 873,979 | 1,618 | 181,630 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 54,369 | ||||
Unrealized gains on available-for-sale securities and derivative contracts, net of taxes | (3,800) | (3,800) | |||
Ending balance (in shares) at Jun. 30, 2018 | 52,930,763 | ||||
Ending balance at Jun. 30, 2018 | 1,161,749 | $ 229 | 923,202 | (2,182) | 240,500 |
Beginning balance (in shares) at Mar. 31, 2018 | 52,160,190 | ||||
Beginning balance at Mar. 31, 2018 | 1,127,193 | $ 224 | 903,008 | (13) | 223,974 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 16,526 | 16,526 | |||
Unrealized gains on available-for-sale securities and derivative contracts, net of taxes | (2,169) | (2,169) | |||
Share-based compensation | 14,916 | 14,916 | |||
Issuances of shares through employee equity incentive plans (in shares) | 770,573 | ||||
Issuances of shares through employee equity incentive plans | 5,283 | $ 5 | 5,278 | ||
Ending balance (in shares) at Jun. 30, 2018 | 52,930,763 | ||||
Ending balance at Jun. 30, 2018 | 1,161,749 | $ 229 | 923,202 | (2,182) | 240,500 |
Beginning balance (in shares) at Dec. 31, 2018 | 53,918,208 | ||||
Beginning balance at Dec. 31, 2018 | 1,301,648 | $ 233 | 982,677 | (1,051) | 319,789 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 48,620 | 48,620 | |||
Unrealized gains on available-for-sale securities and derivative contracts, net of taxes | 3,373 | 3,373 | |||
Share-based compensation | 24,242 | 24,242 | |||
Issuances of shares through employee equity incentive plans (in shares) | 451,535 | ||||
Issuances of shares through employee equity incentive plans | 5,972 | $ 2 | 5,970 | ||
Issuance of shares through employee share purchase plan (in shares) | 162,573 | ||||
Issuance of shares through employee share purchase plan | 11,055 | $ 1 | 11,054 | ||
Ending balance (in shares) at Mar. 31, 2019 | 54,532,316 | ||||
Ending balance at Mar. 31, 2019 | 1,394,910 | $ 236 | 1,023,943 | 2,322 | 368,409 |
Beginning balance (in shares) at Dec. 31, 2018 | 53,918,208 | ||||
Beginning balance at Dec. 31, 2018 | 1,301,648 | $ 233 | 982,677 | (1,051) | 319,789 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 87,049 | ||||
Unrealized gains on available-for-sale securities and derivative contracts, net of taxes | 4,748 | 3,445 | |||
Ending balance (in shares) at Jun. 30, 2019 | 54,794,873 | ||||
Ending balance at Jun. 30, 2019 | 1,462,757 | $ 237 | 1,051,985 | 2,394 | 408,141 |
Beginning balance (in shares) at Mar. 31, 2019 | 54,532,316 | ||||
Beginning balance at Mar. 31, 2019 | 1,394,910 | $ 236 | 1,023,943 | 2,322 | 368,409 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 38,429 | 38,429 | |||
Unrealized gains on available-for-sale securities and derivative contracts, net of taxes | 1,375 | 72 | 1,303 | ||
Share-based compensation | 26,949 | 26,949 | |||
Issuances of shares through employee equity incentive plans (in shares) | 262,557 | ||||
Issuances of shares through employee equity incentive plans | 1,094 | $ 1 | 1,093 | ||
Ending balance (in shares) at Jun. 30, 2019 | 54,794,873 | ||||
Ending balance at Jun. 30, 2019 | $ 1,462,757 | $ 237 | $ 1,051,985 | $ 2,394 | $ 408,141 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 87,049 | $ 54,369 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 47,449 | 52,674 |
Deferred income taxes | 0 | (28,085) |
Share-based compensation | 51,191 | 29,890 |
Gain on short-term investments, net | (6,558) | (1,828) |
Gain on investments in privately-held companies | (9,569) | 0 |
Impairment charges | 2,843 | 1,567 |
Changes in assets and liabilities: | ||
Accounts receivable | (49,726) | (1,451) |
Inventories | 11,800 | (30,598) |
Prepaid expenses and other assets | 4,047 | 718 |
Accounts payable | 1,969 | 12,530 |
Accrued and other liabilities | 6,509 | 12,334 |
Net cash provided by operating activities | 147,004 | 102,120 |
Cash flows from investing activities: | ||
Purchase of short-term investments | (364,777) | (82,486) |
Proceeds from sales and maturities of short-term investments | 198,221 | 76,289 |
Proceeds from sales of property and equipment | 0 | 3,239 |
Purchase of property and equipment | (15,208) | (20,078) |
Purchase of intangibles and other assets | (2,850) | (6,995) |
Proceeds from sale of an investment in a privately-held company | 16,887 | 0 |
Purchase of investments in privately-held companies | (4,247) | (6,000) |
Acquisition, net of cash acquired | 0 | (7,129) |
Net cash used in investing activities | (171,974) | (43,160) |
Cash flows from financing activities: | ||
Principal payments on term debt | 0 | (74,000) |
Payments on intangible asset financings | (4,019) | (3,446) |
Proceeds from share issuances through employee stock plans | 18,121 | 19,341 |
Net cash provided by (used in) financing activities | 14,102 | (58,105) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (10,868) | 855 |
Cash, cash equivalents, and restricted cash at beginning of period | 64,650 | 70,498 |
Cash, cash equivalents, and restricted cash at end of period | $ 53,782 | $ 71,353 |
THE COMPANY AND SUMMARY OF SIGN
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2019 | |
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. Pending Merger with NVIDIA Corporation On March 10, 2019, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with NVIDIA Corporation, a Delaware corporation ("NVIDIA"), NVIDIA International Holdings Inc., a Delaware corporation and wholly owned subsidiary of NVIDIA ("Parent") and Teal Barvaz Ltd., a wholly owned subsidiary of Parent organized under the laws of the State of Israel and wholly owned subsidiary of Parent ("Merger Sub"). NVIDIA has agreed to guarantee the payment and performance obligations of Parent under the Merger Agreement. The Merger Agreement and the Merger (as defined below) have been approved by the boards of directors of the Company, NVIDIA, Parent and Merger Sub. The Merger Agreement provides that, upon the terms and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will be merged with and into the Company (the "Merger") in accordance with Sections 314-327 of the Companies Law 5759-1999 of the State of Israel, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), each ordinary share, par value NIS 0.0175 per share, of the Company (a "Company Share") issued and outstanding immediately prior to the Effective Time, other than any shares owned by the Company, Parent and their respective subsidiaries or any shares held in the Company’s treasury, will be deemed to have been transferred to the Parent in exchange for the right to receive $125.00 in cash, without interest and subject to applicable withholding taxes. The Merger Agreement contains customary representations, warranties and covenants. The consummation of the Merger is conditioned on the receipt of the approval of the Company’s shareholders, as well as the satisfaction of other customary closing conditions, including domestic and foreign regulatory approvals and performance in all material respects by each party of its obligations under the Merger Agreement. At the Company’s extraordinary general meeting held on June 20, 2019, the Company’s shareholders approved the consummation of the Merger. Closing of the Merger is expected by the end of calendar year 2019. The Merger Agreement contains certain customary termination rights by either the Company or Parent, including if the Merger is not consummated by December 10, 2019, subject to two three-month extensions in order to obtain required regulatory approvals. If the Merger Agreement is terminated under certain circumstances, including termination by the Company to enter into a superior proposal, a termination by Parent following a change of the Company’s board of directors’ recommendation or a termination by Parent as a result of a willful material breach of the Merger Agreement’s no-solicitation obligations by the Company, the Company will be obligated to pay to Parent a termination fee equal to $225 million in cash. If the Merger Agreement is terminated under certain circumstances involving the failure to obtain certain regulatory approvals, Parent will be obligated to pay the Company a termination fee equal to $350 million in cash. The Company recorded transaction-related costs of $7.8 million , principally for investment banking and legal fees associated with the pending acquisition, during the six months ended June 30, 2019 . These costs are recorded in general and administrative expenses included in the condensed consolidated statement of operations for the six months ended June 30, 2019 . Additional transaction-related costs are expected to be incurred through the closing of the Merger. 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, 2018 , filed with the SEC on February 21, 2019 . The results of operations for the six months ended June 30, 2019 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2019 or thereafter. Certain prior year amounts have been reclassified for consistency with the current year presentation. On the balance sheet, the severance assets were reclassified to other long-term assets, and the accrued severance was reclassified to other long-term liabilities. 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 Other than our accounting policy related to the new lease standard (see Note 14, "Leases"), 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, 2018 , filed with the SEC on February 21, 2019 . Restricted cash The Company maintained certain cash amounts that were restricted as to withdrawal or use over the long-term. The cash was securing bank guarantees primarily issued against long-term tenancy agreements. During the second quarter of 2019, the Company renegotiated the guarantee terms with the banks, and all restricted cash was released as of June 30, 2019. The long-term restricted cash balance of $7.9 million was reported in other long-term assets on the balance sheet as of June 30, 2018 , and was included in the ending balance of cash, cash equivalents and restricted cash in the statement of cash flows for the six months ended June 30, 2018 . The following table provides a reconciliation of the cash and cash equivalents balances reported on the balance sheets and the cash, cash equivalents and restricted cash balances reported in the statements of cash flows: June 30, 2019 2018 (In thousands) Cash and cash equivalents, as reported on the balance sheets $ 53,782 $ 63,422 Restricted cash in other long-term assets, as reported on the balance sheets — 7,931 Cash, cash equivalents, and restricted cash, as reported in the statements of cash flows $ 53,782 $ 71,353 Concentration of credit risk The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Hewlett Packard Enterprise ("HPE") 13.5 % 13.0 % 10.5 % 15.0 % Dell Technologies Inc. ("Dell") * 14.0 % 11.3 % 12.0 % ____________________ * Less than 10% There was no customer with an accounts receivable balance in excess of 10% of total accounts receivable as of June 30, 2019 and December 31, 2018 . Product warranty The following table provides changes in the product warranty accrual for the six months ended June 30, 2019 and 2018 : Six Months Ended June 30, 2019 2018 (in thousands) Balance, beginning of the period $ 1,376 $ 889 New warranties issued during the period 2,397 856 Reversal of warranty reserves (18 ) — Settlements during the period (1,934 ) (784 ) Balance, end of the period 1,821 961 Less: long-term portion of product warranty liability (362 ) (173 ) Current portion, end of the period $ 1,459 $ 788 Net income per share The following table sets forth the computation of basic and diluted net income per share for the three and six months ended June 30, 2019 and 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands, except per share data) Net income $ 38,429 $ 16,526 $ 87,049 $ 54,369 Basic and diluted shares: Weighted average ordinary shares outstanding 54,707 52,615 54,469 52,219 Effect of dilutive shares 1,773 1,851 1,711 1,930 Shares used to compute diluted net income per share 56,480 54,466 56,180 54,149 Net income per share — basic $ 0.70 $ 0.31 $ 1.60 $ 1.04 Net income per share — diluted $ 0.68 $ 0.30 $ 1.55 $ 1.00 There were no material amounts of potentially dilutive share options and restricted share units ("RSUs") that had an anti-dilutive effect for the computation of diluted net income per share for both the three and six months ended June 30, 2019 . The Company excluded 0.2 million potentially dilutive share options and RSUs from the computation of diluted net income per share for both the three and six months ended June 30, 2018 , respectively, because including them would have had an anti-dilutive effect. Adoption of new accounting principles In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The standard requires lessees to recognize almost all leases on the balance sheet as a right-of-use asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard became effective for the Company on January 1, 2019. The Company elected the available practical expedients and implemented internal controls to enable the preparation of financial information on adoption. The adoption of the standard had a material impact on the Company's condensed consolidated balance sheets due to the recognition of the right-of-use ("ROU") assets and lease liabilities related to the Company's operating leases. In addition, a material portion of the Company's leases are denominated in currencies other than the U.S. Dollar, mainly in New Israeli Shekels ("NIS"). As a result, the associated lease liabilities were remeasured using the current exchange rate, which resulted in non-operating foreign exchange losses. The standard did not have a material impact on the Company's results of operations or cash flows. See Note 14, "Leases" for details about the impact from adopting the new lease standard and other required disclosures. Recent accounting pronouncements In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Revenues by geographic region for the three and six months ended June 30, 2019 and 2018 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) United States $ 121,618 $ 101,396 $ 231,912 $ 197,656 China 91,868 54,182 170,008 110,395 Europe 38,343 41,454 85,589 77,450 Other Americas 28,082 33,112 53,811 60,852 Other Asia 30,413 38,318 74,221 73,109 Total revenues $ 310,324 $ 268,462 $ 615,541 $ 519,462 The following tables represent our total revenues for the three and six months ended June 30, 2019 and 2018 by product type and interconnect protocol: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) ICs $ 53,046 $ 28,934 $ 113,669 $ 57,521 Boards 120,643 136,708 229,073 254,759 Switch systems 73,808 57,074 155,866 112,721 Cables, accessories and other 62,827 45,746 116,933 94,461 Total revenues $ 310,324 $ 268,462 $ 615,541 $ 519,462 Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) InfiniBand: HDR $ 28,620 $ — $ 51,813 $ — EDR 66,643 59,319 $ 126,286 $ 115,265 FDR 28,972 35,649 69,570 77,397 QDR/DDR/SDR 8,646 7,143 23,350 12,587 Total 132,881 102,111 271,019 205,249 Ethernet 169,131 157,470 330,024 294,418 Other 8,312 8,881 14,498 19,795 Total revenues $ 310,324 $ 268,462 $ 615,541 $ 519,462 Contract balances The Company recognizes contract liabilities, or deferred revenues, when it receives advance payments from customers before performance obligations primarily related to extended warranty and post-contract customer support have been performed. Advance payments are received at the beginning of the service period and the related deferred revenues are reclassified to revenue ratably over the service period. The balance of deferred revenues approximates the aggregate amount of the transaction price allocated to the unsatisfied performance obligations at the end of reporting period. The Company expects to recognize the long-term portion of deferred revenue over the remaining service period of up to five years . The following table presents the significant changes in the deferred revenue balance during the six months ended June 30, 2019 : (in thousands) Balance, beginning of the period $ 39,223 New deferred revenue 21,013 Reclassification to revenues during the year (1) (17,014 ) Balance, end of the period 43,222 Less: long-term portion of deferred revenue 20,224 Current portion, end of the period $ 22,998 (1) Of the total reclassification from deferred revenue to revenues, $11.7 million was related to the beginning balance, and $5.3 million was related to the new deferred revenue during the period. Unsatisfied performance obligations, other than extended warranty and post-contract customer support, primarily represent contracts with future delivery dates. As of June 30, 2019, the Company had $57.5 million of unbilled transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied related to contracts with an original duration over one year. The Company expects to invoice and recognize the revenue as it satisfies each performance obligation during a period of three years . The foregoing excludes the value of the remaining unsatisfied performance obligations related to contracts that have original durations of one year or less. The Company recognizes assets for the material incremental costs of obtaining contracts with customers if it expects the benefit of those costs to be longer than one year. The Company allocates these assets proportionally to the performance obligations in the contracts and amortizes them as the performance obligations are satisfied. During the six months ended June 30, 2019 , the Company recognized $11.3 million of assets related to costs to obtain contracts, and amortized $6.7 million of these assets during the same period. The unamortized balance of the assets was $4.6 million as of June 30, 2019 . |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS: June 30, 2019 December 31, 2018 (in thousands) Accounts receivable, net: Accounts receivable, gross $ 209,851 $ 156,525 Less: unearned distribution price adjustments allowance (9,000 ) (5,400 ) Less: allowance for doubtful accounts (500 ) (500 ) $ 200,351 $ 150,625 Inventories: Raw materials $ 19,331 $ 19,391 Work-in-process 32,580 39,425 Finished goods 37,739 45,565 $ 89,650 $ 104,381 Property and equipment, net: Computer, equipment, and software $ 189,505 $ 180,125 Furniture and fixtures 1,886 2,140 Leasehold improvements 50,057 46,179 241,448 228,444 Less: Accumulated depreciation and amortization (133,306 ) (123,110 ) $ 108,142 $ 105,334 Other long-term assets: Right of use assets $ 62,376 $ — Deferred taxes 50,660 50,660 Equity investments in privately-held companies 35,496 40,300 Long-term restricted cash — 7,884 Severance assets 5,428 17,043 Other 5,560 2,295 $ 159,520 $ 118,182 Accrued and other liabilities: Payroll and related expenses $ 68,965 $ 76,788 Accrued expenses 31,227 28,821 Lease liability, current 17,706 — Intangible asset financings 5,379 4,488 Other 18,969 11,781 $ 142,246 $ 121,878 Other long-term liabilities: Lease liability, long term $ 51,490 $ — Income tax payable 36,211 25,600 Accrued severance 6,778 21,645 Deferred rent — 2,532 Other 5,614 4,336 $ 100,093 $ 54,113 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS: Fair value hierarchy: The Company measures its cash equivalents and marketable securities at fair value. The Company’s cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. The Company's investments in debt securities and certificates of deposits are classified within Level 2 as the market inputs to value these instruments consist of market yields, reported trades and broker/dealer quotes. In addition, foreign currency contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. The Level 3 valuation inputs include the Company's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. As of June 30, 2019 and December 31, 2018 , the Company did not have any assets or liabilities valued based on Level 3 valuations. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis: The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 : Level 1 Level 2 Total (in thousands) Money market funds $ 4,048 $ — $ 4,048 Certificates of deposit — 149,108 149,108 Government debt securities — 150,144 150,144 Corporate debt securities — 257,554 257,554 4,048 556,806 560,854 Derivative contracts — 706 706 Total financial assets $ 4,048 $ 557,512 $ 561,560 Derivative contracts — 22 22 Total financial liabilities $ — $ 22 $ 22 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, 2018 : Level 1 Level 2 Total (in thousands) Money market funds $ 1,265 $ 1,265 Certificates of deposit 95,038 95,038 Government debt securities 100,478 100,478 Corporate debt securities 186,208 186,208 1,265 381,724 382,989 Long-term restricted cash — 7,884 7,884 Derivative contracts — 96 96 Total financial assets $ 1,265 $ 389,704 $ 390,969 Derivative contracts — 2,536 2,536 Total financial liabilities $ — $ 2,536 $ 2,536 There were no transfers between Level 1 and Level 2 securities during the six months ended June 30, 2019 and 2018 . |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS: Cash, cash equivalents and short-term investments: The short-term investments are classified as available-for-sale securities. The cash, cash equivalents and short-term investments at June 30, 2019 and December 31, 2018 were as follows: June 30, 2019 Amortized Unrealized Unrealized Estimated (in thousands) Cash and cash equivalents $ 49,734 $ — $ — $ 49,734 Money market funds 4,048 — — 4,048 Certificates of deposit 149,074 39 (5 ) 149,108 Government debt securities 149,683 474 (13 ) 150,144 Corporate debt securities 256,457 1,124 (27 ) 257,554 Total 608,996 1,637 (45 ) 610,588 Less amounts classified as cash and cash equivalents (53,782 ) — — (53,782 ) Short-term investments $ 555,214 $ 1,637 $ (45 ) $ 556,806 December 31, 2018 Amortized Unrealized Unrealized Estimated (in thousands) Cash and cash equivalents $ 55,501 $ — $ — $ 55,501 Money market funds 1,265 — — 1,265 Certificates of deposit 95,080 1 (43 ) 95,038 Government debt securities 100,449 92 (63 ) 100,478 Corporate debt securities 186,571 27 (390 ) 186,208 Total 438,866 120 (496 ) 438,490 Less amounts classified as cash and cash equivalents (56,766 ) — — (56,766 ) Short-term investments $ 382,100 $ 120 $ (496 ) $ 381,724 Interest income and gains on short-term investments, net were $3.8 million and 1.0 million for the three months ended June 30, 2019 and 2018 , respectively. Interest income and gains on short-term investments, net were $6.8 million and $1.9 million for the six months ended June 30, 2019 and 2018 , respectively. At June 30, 2019 , there were no material gross unrealized losses on investments that were in a gross unrealized loss position for a period greater than 12 months. 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 June 30, 2019 and December 31, 2018 were as follows: June 30, 2019 December 31, 2018 Amortized Estimated Amortized Estimated (in thousands) Due in less than one year $ 359,796 $ 360,247 $ 281,303 $ 280,959 Due in one to three years 195,418 196,559 100,797 100,765 $ 555,214 $ 556,806 $ 382,100 $ 381,724 Equity investments in privately-held companies: As of June 30, 2019 and December 31, 2018 , the Company held a total of $35.5 million and $40.3 million , respectively, in equity investments in privately-held companies. During the first quarter of 2019, one of the investees of the Company's equity investments in privately-held companies was acquired. As a result, the Company recorded a gain on sale of $9.1 million in the first quarter of 2019 . In addition, $3.2 million of the consideration owed to the Company was held back in an escrow account as of June 30, 2019 . The final amount released from escrow, if any, will be recognized as an additional gain on sale when released. During the second quarter of 2019, the Company recorded a gain of $0.4 million from the conversion of a note receivable to equity in a privately-held company. While performing its review for impairment for the first quarter of 2019 , the Company noted an observable price change related to one of its investments in a privately-held company. As a result, the Company recorded an impairment charge of $1.8 million in the first quarter of 2019 . The gains on the investments and the impairment charge were reported in interest and other, net on the condensed consolidated statement of operations. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS: There has been no change in the carrying amount of goodwill of $473.9 million during the six months ended June 30, 2019 . The carrying amounts of intangible assets as of June 30, 2019 were as follows: Gross Accumulated Net Useful Life (in thousands) (in years) Licensed technology $ 56,526 $ (34,470 ) $ 22,056 1-8 Developed technology 285,443 (183,849 ) 101,594 4-7 Customer relationships 69,776 (34,380 ) 35,396 4-9 Trade names 5,600 (5,600 ) — 3 Total intangible assets $ 417,345 $ (258,299 ) $ 159,046 The carrying amounts of intangible assets as of December 31, 2018 were as follows: Gross Accumulated Net Useful Life (in thousands) (in years) Licensed technology $ 49,546 $ (30,062 ) $ 19,484 1-8 Developed technology 285,443 (164,406 ) 121,037 4-7 Customer relationships 69,776 (31,246 ) 38,530 4-9 Trade names 5,600 (5,323 ) 277 3 Total intangible assets $ 410,365 $ (231,037 ) $ 179,328 Amortization expense of intangible assets totaled approximately $14.6 million and $16.5 million for the three months ended June 30, 2019 and 2018 , respectively. Amortization expense of intangible assets totaled approximately $29.6 million and $32.8 million for the six months ended June 30, 2019 and 2018 , respectively. The estimated future amortization expense from amortizable intangible assets is as follows: (in thousands) 2019 (remainder of the year) $ 32,245 2020 53,723 2021 43,113 2022 13,077 2023 8,291 Thereafter 8,597 Total $ 159,046 |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES | 6 Months Ended |
Jun. 30, 2019 | |
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 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 derivative contracts in the unaudited condensed consolidated balance sheets at June 30, 2019 and December 31, 2018 were as follows: Other current assets Accrued liabilities Other current assets Accrued liabilities June 30, 2019 December 31, 2018 (in thousands) Derivatives designated as hedging instruments Currency forward and option contracts $ 706 $ 22 $ 27 $ 2,122 Derivatives not designated as hedging instruments Currency forward and option contracts $ — $ — $ 69 $ 414 Total derivatives $ 706 $ 22 $ 96 $ 2,536 The gross notional amounts of derivative contracts were NIS denominated. The notional amounts of outstanding derivative contracts in U.S. dollars at June 30, 2019 and December 31, 2018 were as follows: June 30, 2019 December 31, 2018 (in thousands) Derivatives designated as hedging instruments Currency forward and option contracts $ 56,197 $ 92,956 Derivatives not designated as hedging instruments Currency forward and option contracts $ — $ 57,844 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 June 30, 2019 and December 31, 2018 and their effect on OCI for the six months ended June 30, 2019 : (in thousands) December 31, 2018 $ (1,978 ) Amount of gain recognized in OCI (effective portion) 3,197 Amount of gain reclassified from OCI to income (effective portion) (417 ) June 30, 2019 $ 802 Effect of Derivative Contracts on the Unaudited Condensed Consolidated Statement of Operations The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018 was as follows: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Three Months Ended June 30, Three Months Ended June 30, 2019 2018 2019 2018 (in thousands) Operating income (expenses) $ 455 $ (1,419 ) $ — $ — Interest and other, net $ — $ — $ 693 $ (1,814 ) The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the six months ended June 30, 2019 and 2018 was as follows: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Six Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) Operating income (expenses) $ 417 $ (884 ) $ — $ — Interest and other, net $ — $ — $ 2,256 $ (2,704 ) |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS: As a general rule, under Israeli law, an employee whose employment has been terminated by an employer or an employee who has resigned under circumstances which entitle him/her to receive statutory severance, in each case after completing at least one year of service with a particular employer or in a particular workplace, is entitled to statutory severance. For Israeli employees hired prior to January 1, 2007 ("Group One"), the severance pay liability is calculated based on the last monthly salary of each employee multiplied by the number of years of such employee's employment and is presented in the Company's balance sheet in other long-term liabilities, as if it was payable at each balance sheet date on an undiscounted basis. This liability is partially funded by the amounts accrued in the severance component of the employees’ pension arrangements (the “Severance Fund”). The surrender value of Severance Funds is presented in other long-term assets. The severance pay detail is as follows: June 30, 2019 December 31, 2018 (in thousands) Accrued severance liabilities $ 6,778 $ 21,645 Severance assets 5,428 17,043 Unfunded portion $ 1,350 $ 4,602 As a general rule, Israeli employees who were hired on or after January 1, 2007 ("Group Two"), are subject to the arrangement pursuant to Section 14 of the Severance Pay Law, 1963 (“Section 14 Arrangement”). When the Company makes the full monthly contribution equal to 8.3% of the employee's salary towards the Severance Fund and undertakes that the amounts accumulated in the Severance Fund will be released to the employee in the event that the employment relationship comes to an end, no additional calculations shall be conducted between the parties regarding the matter of severance pay and no additional payments will be made by the Company to the employee. Further, the related obligation and amounts deposited for the employee by the Company for such obligation are not stated on the balance sheet, as the Company is legally released from the obligation to employees once the deposit amounts have been paid. During the first quarter of 2019, a significant portion of the employees in Group One elected to move to Group Two under settlement agreements with the Company, which were permitted by a formal approval obtained by the Company from the Israeli Ministry of Labor. In accordance with the Ministry of Labor’s approval (which applied to each of the relevant employees individually), the Company undertook to make the necessary contributions to ensure coverage of severance based on the employees' entire salary for the period during which the employees were not subject to the Section 14 Arrangement up to June 30, 2018. The Company reclassified the accumulated amount of severance assets and accrued severance liabilities as of June 30, 2018 related to these employees to accrued and other liabilities as of March 31, 2019. The Company paid the net severance liabilities (i.e., it made the necessary contributions to each of these employees’ Severance Fund) in April 2019. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES: Commitments Leases See Note 14 "Leases" for lease-related commitments as of June 30, 2019 . Purchase commitments At June 30, 2019 , the Company had the following non-cancelable purchase commitments: (in thousands) 2019 (remainder of the year) $ 145,822 2020 30,001 2021 982 2022 353 Total $ 177,158 Other Commitments 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 June 30, 2019 , the Company's unrecognized tax benefits totaled $57.7 million , out of which an amount of $35.1 million would reduce the Company's income tax expense and effective tax rate, if recognized. Contingencies Legal proceedings On May 1, 2019, a purported class action suit, entitled Marc Henzel v. Mellanox Technologies, Ltd., et al. , was filed in the United States District Court for the Northern District of California against the Company and the members of its board of directors. On May 2, 2019, a purported class action suit, entitled Michael Kent v. Mellanox Technologies, Ltd., et al. , was filed in the United States District Court for the Southern District of New York. Also on May 2, 2019, a purported class action suit, entitled David Thornton v. Mellanox Technologies, Ltd., et al. , was filed in the United States District Court for the Northern District of California. On May 3, 2019, a purported class action suit, entitled Lewis Stein v. Mellanox Technologies, Ltd., et al. , was filed in the United States District Court for the Northern District of California against the Company, the members of its board of directors, NVIDIA International Holdings Inc., Teal Barvaz Ltd., and NVIDIA Corporation. Also on May 3, 2019, a lawsuit entitled Elaine Wang v. Mellanox Technologies, Ltd., et al. , was filed in the United States District Court for the Northern District of California against the Company and the members of its board of directors. All five suits alleged that the preliminary proxy statement filed by the Company on April 22, 2019 with the SEC in connection with the proposed Merger omits material information with respect to the transactions contemplated by the Merger Agreement, rendering it false and misleading in violation of Sections 14(a) and 20(a) of the Exchange Act. Each plaintiff sought, among other things, injunctive relief, rescission, declaratory relief and unspecified monetary damages. None of the plaintiffs moved for injunctive relief before the shareholder vote, which occurred on June 20, 2019. On June 25, 2019, the plaintiffs of the class action suit entitled Michael Kent v. Mellanox Technologies, Ltd., et al. filed a voluntary dismissal in the United States District Court for the Southern District of New York. The Company believes that the claims asserted in these lawsuits are without merit and intends to defend vigorously against all claims asserted. The Company is currently unable to estimate the reasonably possible loss or range of loss related to these lawsuits. Additional lawsuits arising out of or relating to the Merger Agreement and the transactions contemplated thereby may be filed in the future. 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 the probability and the estimated amount of a loss or potential loss. The Company may be unable to estimate the reasonably possible loss or range of loss for a particular legal contingency for various reasons, including, among others: (i) if the damages sought are indeterminate; (ii) if proceedings are in the early stages; (iii) if there is uncertainty as to the outcome of pending proceedings (including motions and appeals); (iv) if there is uncertainty as to the likelihood of settlement and the outcome of any negotiations with respect thereto; (v) if there are significant factual issues to be determined or resolved; (vi) if the proceedings involve a large number of parties; (vii) if relevant law is unsettled or novel or untested legal theories are presented; or (viii) if the proceedings are taking place in jurisdictions where the laws are complex or unclear. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. |
SHARE INCENTIVE PLANS
SHARE INCENTIVE PLANS | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
SHARE INCENTIVE PLANS | SHARE INCENTIVE PLANS Share option plans On July 25, 2018, the Company's shareholders approved the Mellanox Technologies, Ltd. Third Amended and Restated Global Share Incentive Plan (2006) (the "Third Restated Plan"), which constitutes an amendment and restatement of the Mellanox Technologies, Ltd. Second Amended and Restated Global Share Incentive Plan (2006) (the "Second Restated Plan"). The Third Restated Plan increased the ordinary shares reserved for issuance under the Second Restated Plan by 2,077,000 shares to 4,467,000 shares plus any shares subject to issued and outstanding awards under certain of the Company’s prior equity plans that expire, are cancelled or otherwise terminated after March 14, 2016, the effective date of the first amendment and restatement of the Global Share Incentive Plan (2006). The Third Restated Plan also implements certain additional amendments, including specifically providing for the grant of performance share units. Share option activity Share option activity under the Company's equity incentive plans in the six months ended June 30, 2019 is set forth below: Options Outstanding Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2018 494,503 $ 50.73 Options exercised (199,425 ) $ 35.43 Options canceled (1,040 ) $ 91.91 Outstanding at June 30, 2019 294,038 $ 60.96 The total pretax intrinsic value of options exercised in the six months ended June 30, 2019 and 2018 was $13.9 million and $19.4 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 $110.67 on June 28, 2019, the last trading day of the quarter ended June 30, 2019 , the total pretax intrinsic value of options outstanding at June 30, 2019 was $14.6 million . The total pretax intrinsic value of options outstanding at December 31, 2018 was $21.8 million . There were 293,621 and 493,462 options exercisable at June 30, 2019 and December 31, 2018 , respectively. The total pretax intrinsic value of exercisable options at June 30, 2019 was $14.6 million . The total pretax intrinsic value of exercisable options at December 31, 2018 was $21.7 million . Restricted share unit activity RSU activity under the Company's equity incentive plans in the six months ended June 30, 2019 is set forth below: Restricted Share Units Outstanding Number of Shares Weighted Average Grant Date Fair Value Non-vested restricted share units at December 31, 2018 3,294,163 $ 65.05 Restricted share units granted 1,241,432 $ 103.59 Restricted share units vested (514,667 ) $ 50.81 Restricted share units canceled (147,187 ) $ 69.39 Non-vested restricted share units at June 30, 2019 3,873,741 $ 79.13 The weighted average fair value of RSUs granted in the six months ended June 30, 2019 and 2018 was $103.59 and $70.32 , respectively. The total intrinsic value of all outstanding RSUs as of June 30, 2019 and December 31, 2018 was $428.7 million and $304.3 million , respectively. The non-vested restricted share units at June 30, 2019 included 36,000 performance share units. The PSUs will vest and be earned based on the Company’s achievement of relative total shareholder return and average non-GAAP net operating margin over a three-year performance period commencing on January 1, 2018 and ending on December 31, 2020, subject to the continued service to the Company through the end of the performance period. The number of shares that will actually vest ranges from zero to 175% of the target. Employee Stock Purchase Plan activity There were 162,573 and 288,017 shares purchased under the ESPP for the six months ended June 30, 2019 and 2018 at an average price per share of $68.00 and $39.40 , respectively. Shares reserved for future issuance The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of June 30, 2019 : Number of Share options outstanding 294,038 Restricted share units outstanding 3,873,741 Shares authorized for future issuance 537,246 ESPP shares available for future issuance 2,772,773 Total shares reserved for future issuance as of June 30, 2019 7,477,798 Share-based compensation The Company accounts for share-based compensation expense based on the estimated fair value of the share equity awards as of the grant dates. The following weighted average assumptions were used to value ESPP shares issued pursuant to the Company's share incentive plans for the six months ended June 30, 2019 and 2018 : Six Months Ended June 30, 2019 2018 Dividend yield — % — % Expected volatility 42.6 % 37.2 % Risk free interest rate 2.44 % 1.20 % Expected life, years 0.5 0.5 The following table summarizes the distribution of total share-based compensation expense in the unaudited condensed consolidated statements of operations: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) Cost of goods sold $ 829 $ 415 $ 1,513 $ 826 Research and development 14,486 8,340 27,727 16,514 Sales and marketing 6,504 3,646 12,156 7,245 General and administrative 5,130 2,515 9,795 5,305 Total share-based compensation expense $ 26,949 $ 14,916 $ 51,191 $ 29,890 At June 30, 2019 , there was $263.4 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 3.14 years . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2019 and 2018 : Unrealized Gains (Losses) on Available-for-Sale Securities Unrealized Gains (Losses) on Derivatives Designated as Hedging Instruments Total (in thousands) Balance at December 31, 2018 $ 927 $ (1,978 ) $ (1,051 ) Other comprehensive income before reclassifications, net of taxes 1,976 3,197 5,173 Realized gains reclassified from accumulated other comprehensive income (1,311 ) (417 ) (1,728 ) Net current-period other comprehensive income, net of taxes 665 2,780 3,445 Balance at June 30, 2019 $ 1,592 $ 802 $ 2,394 Balance at December 31, 2017 $ 693 $ 925 $ 1,618 Other comprehensive loss before reclassifications, net of taxes (81 ) (4,604 ) (4,685 ) Realized loss reclassified from accumulated other comprehensive income 1 884 885 Net current-period other comprehensive loss, net of taxes (80 ) (3,720 ) (3,800 ) Balance at June 30, 2018 $ 613 $ (2,795 ) $ (2,182 ) The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2019 and 2018 : Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Financial Statements Six Months Ended June 30, 2019 2018 (in thousands) Realized (gains)/losses on derivatives designated as hedging instruments $ (417 ) $ 884 Cost of revenues and Operating expenses: (21 ) 45 Cost of revenues (42 ) 78 General and administrative (38 ) 81 Sales and marketing (316 ) 680 Research and development Realized (gains)/losses on available-for-sale securities (1,311 ) 1 Retained earnings and interest and other, net Total reclassifications for the period $ (1,728 ) $ 885 Total |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES: As of June 30, 2019 and December 31, 2018 , the Company had gross unrecognized tax benefits of $57.7 million and $46.5 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 $ 3.2 million at June 30, 2019 and $2.6 million at December 31, 2018 . As of June 30, 2019 , the 2014 through 2018 tax years are open and may be subject to potential examinations in the United States. The Company has NOLs in the United States from prior tax periods beginning in 2003 which may be subject to examination upon utilization in future tax periods. As of June 30, 2019 , the 2014 through 2018 tax years are open and may be subject to potential examinations in Denmark and Israel. As of June 30, 2019 , the income tax returns of the Company and one of its subsidiaries in Israel are under examination by the Israeli Income Tax Authorities for certain years from 2014 to 2017 . The Company's operations in Israel were granted "Approved Enterprise" status by the Investment Center in the Israeli Ministry of Economy and Industry 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 . The tax holiday has resulted in a cash tax savings of $19.7 million for the six months ended June 30, 2019 , increasing diluted earnings per share by approximately $0.35 in the six months ended June 30, 2019 . 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% . 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 10.6% and (96.5)% for the six months ended June 30, 2019 and 2018 , respectively. The difference between the Company’s effective tax rate and the 21.0% federal statutory rate for the six months ended June 30, 2019 resulted primarily from the excess benefits related to share-based compensation, 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 and non-tax-deductible expenses such as share-based compensation. 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. At June 30, 2019 , the Company maintained a valuation allowance against deferred tax assets related to capital loss carryforwards of certain subsidiaries. The Company assesses its ability to recover its deferred tax assets on an ongoing basis. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. In evaluating the ability to recover deferred tax assets, the Company considers available positive and negative evidence including its recent cumulative losses, its ability to carry-back losses against prior taxable income and its projected financial results. The Company also considers, commensurate with its objective verifiability, the forecast of future taxable income including the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. A valuation allowance may be recorded in the event it is deemed to be more-likely-than-not that the deferred tax asset cannot be realized. Previously established valuation allowances may also be released in the event it is deemed to be more-likely-than-not that the deferred tax asset can be realized. Any release of valuation allowance will be recorded as a tax benefit which will positively impact the Company’s operating results. Management has determined on the basis of the quarterly assessment performed at June 30, 2019 |
INTEREST AND OTHER, NET
INTEREST AND OTHER, NET | 6 Months Ended |
Jun. 30, 2019 | |
Other Income and Expenses [Abstract] | |
INTEREST AND OTHER, NET | INTEREST AND OTHER, NET: Interest and other, net is summarized in the following table: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) Interest expense $ (77 ) $ (871 ) $ (91 ) $ (2,042 ) Interest income and gains on short-term investments, net 3,792 972 6,795 1,939 Foreign exchange loss, net (1,800 ) (399 ) (4,052 ) (579 ) Gain on investments in privately-held companies 441 — 9,569 — Impairment of investment in a privately-held company — — (1,755 ) — Other (88 ) (40 ) 33 (189 ) Interest and other, net $ 2,268 $ (338 ) $ 10,499 $ (871 ) |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES: On January 1, 2019 , the Company adopted Topic 842 and elected the available practical expedient to recognize the cumulative effect of initially adopting Topic 842 as an adjustment to the opening balance sheet of the period of adoption (i.e., January 1, 2019 ). The Company also elected the other available practical expedients, and will not separate lease components from non-lease components, and will not reassess whether contracts are or contain leases, lease classification, or initial direct costs for existing leases as of January 1, 2019 . Only the minimum lease payments in accordance with Topic 840 were included in the calculation of the ROU and liability for existing leases as of January 1, 2019 . The condensed consolidated balance sheets and results from operations for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under Topic 840. The Company's leases include office buildings for its facilities worldwide and car leases in Israel, which are all classified as operating leases. Certain lease agreements include rental payments that are adjusted periodically for the consumer price index ("CPI"). The ROU and lease liability were calculated using the initial CPI and will not be subsequently adjusted. Certain leases include renewal options that are under the Company's sole discretion. The renewal options were included in the ROU and liability calculation if it was reasonably assured that the Company will exercise the option. The cumulative effect of the changes made to the condensed consolidated balance sheet as of January 1, 2019 for the adoption of Topic 842 were as follows: December 31, 2018 Adjustments January 1, 2019 (in thousands) Other long-term assets $ 118,182 $ 69,102 $ 187,284 Accrued and other liabilities $ 121,878 $ 16,618 $ 138,496 Other long-term liabilities $ 54,113 $ 52,484 $ 106,597 The components of lease expense and supplemental cash flow information related to leases for the three and six months ended June 30, 2019 were as follows: Three Months Ended Six Months Ended June 30, 2019 June 30, 2019 (in thousands) Components of lease expense Operating lease cost $ 5,997 $ 11,859 Supplemental cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 5,199 $ 10,016 Supplemental non-cash information related to lease liabilities arising from obtaining right-of-use assets $ 1,545 $ 2,862 For the six months ended June 30, 2019 , the weighted average remaining lease term is 6.6 years, and the weighted average discount rate is 3.22 percent . The discount rate was determined based on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease. Maturities of lease liabilities as of June 30, 2019 were as follows: (in thousands) 2019 (remainder of the year) $ 17,766 2020 16,081 2021 9,591 2022 7,012 2023 6,919 Thereafter 19,169 Total (1) 76,538 Less: Imputed interest (7,342 ) Lease liability $ 69,196 (1) Future lease payments have not been reduced by minimum sublease rental income of $2.3 million owed to the Company in the future under noncancelable subleases. The lease liabilities as of June 30, 2019 do not include the obligations under a lease agreement related to an office being built in Tel Aviv, Israel. The Company is not involved in the construction and will not be exposed to any risks during the construction period. The lease term expires 10 years after the expected lease inception. In addition, the lease contains a renewal option, which the Company determined is not reasonably assured to be exercised. As of June 30, 2019 , the estimated total future lease obligation is approximately $31.1 million |
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES | 6 Months Ended |
Jun. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING CHARGES | RESTRUCTURING CHARGES: In connection with the discontinuation of its 1550nm silicon photonics development activities, the Company initiated a restructuring plan in the first quarter of 2018 to wind down the business operations related to these activities, which primarily included terminating employees, exiting contracts with vendors, selling assets, and exiting facilities. The Company recorded $3.5 million , $3.4 million , and $2.4 million of employee separation and severance costs, contract exit costs with vendors, and impairment charges or losses on disposal of assets during the six months ended June 30, 2018 , respectively. The Company does not expect any significant restructuring charges in the future. |
THE COMPANY AND SUMMARY OF SI_2
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2018 , filed with the SEC on February 21, 2019 . The results of operations for the six months ended June 30, 2019 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2019 or thereafter. Certain prior year amounts have been reclassified for consistency with the current year presentation. On the balance sheet, the severance assets were reclassified to other long-term assets, and the accrued severance was reclassified to other long-term liabilities. |
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. |
Restricted cash | Restricted cash |
Adoption of new accounting principles and Recent accounting pronouncements | Adoption of new accounting principles In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The standard requires lessees to recognize almost all leases on the balance sheet as a right-of-use asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard became effective for the Company on January 1, 2019. The Company elected the available practical expedients and implemented internal controls to enable the preparation of financial information on adoption. The adoption of the standard had a material impact on the Company's condensed consolidated balance sheets due to the recognition of the right-of-use ("ROU") assets and lease liabilities related to the Company's operating leases. In addition, a material portion of the Company's leases are denominated in currencies other than the U.S. Dollar, mainly in New Israeli Shekels ("NIS"). As a result, the associated lease liabilities were remeasured using the current exchange rate, which resulted in non-operating foreign exchange losses. The standard did not have a material impact on the Company's results of operations or cash flows. See Note 14, "Leases" for details about the impact from adopting the new lease standard and other required disclosures. Recent accounting pronouncements In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. |
THE COMPANY AND SUMMARY OF SI_3
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of cash and cash equivalents | The following table provides a reconciliation of the cash and cash equivalents balances reported on the balance sheets and the cash, cash equivalents and restricted cash balances reported in the statements of cash flows: June 30, 2019 2018 (In thousands) Cash and cash equivalents, as reported on the balance sheets $ 53,782 $ 63,422 Restricted cash in other long-term assets, as reported on the balance sheets — 7,931 Cash, cash equivalents, and restricted cash, as reported in the statements of cash flows $ 53,782 $ 71,353 |
Reconciliation of cash and cash equivalents to cash, cash equivalents and restricted cash | The following table provides a reconciliation of the cash and cash equivalents balances reported on the balance sheets and the cash, cash equivalents and restricted cash balances reported in the statements of cash flows: June 30, 2019 2018 (In thousands) Cash and cash equivalents, as reported on the balance sheets $ 53,782 $ 63,422 Restricted cash in other long-term assets, as reported on the balance sheets — 7,931 Cash, cash equivalents, and restricted cash, as reported in the statements of cash flows $ 53,782 $ 71,353 |
Schedule of revenues and accounts receivable from customers | The following table summarizes the revenues from customers (including original equipment manufacturers) in excess of 10% of the total revenues: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Hewlett Packard Enterprise ("HPE") 13.5 % 13.0 % 10.5 % 15.0 % Dell Technologies Inc. ("Dell") * 14.0 % 11.3 % 12.0 % ____________________ * Less than 10% |
Schedule of changes in the entity's liability for product warranty | The following table provides changes in the product warranty accrual for the six months ended June 30, 2019 and 2018 : Six Months Ended June 30, 2019 2018 (in thousands) Balance, beginning of the period $ 1,376 $ 889 New warranties issued during the period 2,397 856 Reversal of warranty reserves (18 ) — Settlements during the period (1,934 ) (784 ) Balance, end of the period 1,821 961 Less: long-term portion of product warranty liability (362 ) (173 ) Current portion, end of the period $ 1,459 $ 788 |
Schedule of computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share for the three and six months ended June 30, 2019 and 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands, except per share data) Net income $ 38,429 $ 16,526 $ 87,049 $ 54,369 Basic and diluted shares: Weighted average ordinary shares outstanding 54,707 52,615 54,469 52,219 Effect of dilutive shares 1,773 1,851 1,711 1,930 Shares used to compute diluted net income per share 56,480 54,466 56,180 54,149 Net income per share — basic $ 0.70 $ 0.31 $ 1.60 $ 1.04 Net income per share — diluted $ 0.68 $ 0.30 $ 1.55 $ 1.00 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | Revenues by geographic region for the three and six months ended June 30, 2019 and 2018 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) United States $ 121,618 $ 101,396 $ 231,912 $ 197,656 China 91,868 54,182 170,008 110,395 Europe 38,343 41,454 85,589 77,450 Other Americas 28,082 33,112 53,811 60,852 Other Asia 30,413 38,318 74,221 73,109 Total revenues $ 310,324 $ 268,462 $ 615,541 $ 519,462 The following tables represent our total revenues for the three and six months ended June 30, 2019 and 2018 by product type and interconnect protocol: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) ICs $ 53,046 $ 28,934 $ 113,669 $ 57,521 Boards 120,643 136,708 229,073 254,759 Switch systems 73,808 57,074 155,866 112,721 Cables, accessories and other 62,827 45,746 116,933 94,461 Total revenues $ 310,324 $ 268,462 $ 615,541 $ 519,462 Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) InfiniBand: HDR $ 28,620 $ — $ 51,813 $ — EDR 66,643 59,319 $ 126,286 $ 115,265 FDR 28,972 35,649 69,570 77,397 QDR/DDR/SDR 8,646 7,143 23,350 12,587 Total 132,881 102,111 271,019 205,249 Ethernet 169,131 157,470 330,024 294,418 Other 8,312 8,881 14,498 19,795 Total revenues $ 310,324 $ 268,462 $ 615,541 $ 519,462 |
Changes in deferred revenue balances | The following table presents the significant changes in the deferred revenue balance during the six months ended June 30, 2019 : (in thousands) Balance, beginning of the period $ 39,223 New deferred revenue 21,013 Reclassification to revenues during the year (1) (17,014 ) Balance, end of the period 43,222 Less: long-term portion of deferred revenue 20,224 Current portion, end of the period $ 22,998 (1) Of the total reclassification from deferred revenue to revenues, $11.7 million was related to the beginning balance, and $5.3 million was related to the new deferred revenue during the period. |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of balance sheet components | June 30, 2019 December 31, 2018 (in thousands) Accounts receivable, net: Accounts receivable, gross $ 209,851 $ 156,525 Less: unearned distribution price adjustments allowance (9,000 ) (5,400 ) Less: allowance for doubtful accounts (500 ) (500 ) $ 200,351 $ 150,625 Inventories: Raw materials $ 19,331 $ 19,391 Work-in-process 32,580 39,425 Finished goods 37,739 45,565 $ 89,650 $ 104,381 Property and equipment, net: Computer, equipment, and software $ 189,505 $ 180,125 Furniture and fixtures 1,886 2,140 Leasehold improvements 50,057 46,179 241,448 228,444 Less: Accumulated depreciation and amortization (133,306 ) (123,110 ) $ 108,142 $ 105,334 Other long-term assets: Right of use assets $ 62,376 $ — Deferred taxes 50,660 50,660 Equity investments in privately-held companies 35,496 40,300 Long-term restricted cash — 7,884 Severance assets 5,428 17,043 Other 5,560 2,295 $ 159,520 $ 118,182 Accrued and other liabilities: Payroll and related expenses $ 68,965 $ 76,788 Accrued expenses 31,227 28,821 Lease liability, current 17,706 — Intangible asset financings 5,379 4,488 Other 18,969 11,781 $ 142,246 $ 121,878 Other long-term liabilities: Lease liability, long term $ 51,490 $ — Income tax payable 36,211 25,600 Accrued severance 6,778 21,645 Deferred rent — 2,532 Other 5,614 4,336 $ 100,093 $ 54,113 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of the fair value hierarchy of the Company's financial assets and liabilities measured at fair value | The following table represents the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 : Level 1 Level 2 Total (in thousands) Money market funds $ 4,048 $ — $ 4,048 Certificates of deposit — 149,108 149,108 Government debt securities — 150,144 150,144 Corporate debt securities — 257,554 257,554 4,048 556,806 560,854 Derivative contracts — 706 706 Total financial assets $ 4,048 $ 557,512 $ 561,560 Derivative contracts — 22 22 Total financial liabilities $ — $ 22 $ 22 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, 2018 : Level 1 Level 2 Total (in thousands) Money market funds $ 1,265 $ 1,265 Certificates of deposit 95,038 95,038 Government debt securities 100,478 100,478 Corporate debt securities 186,208 186,208 1,265 381,724 382,989 Long-term restricted cash — 7,884 7,884 Derivative contracts — 96 96 Total financial assets $ 1,265 $ 389,704 $ 390,969 Derivative contracts — 2,536 2,536 Total financial liabilities $ — $ 2,536 $ 2,536 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of cash, cash equivalents and short-term investments | The short-term investments are classified as available-for-sale securities. The cash, cash equivalents and short-term investments at June 30, 2019 and December 31, 2018 were as follows: June 30, 2019 Amortized Unrealized Unrealized Estimated (in thousands) Cash and cash equivalents $ 49,734 $ — $ — $ 49,734 Money market funds 4,048 — — 4,048 Certificates of deposit 149,074 39 (5 ) 149,108 Government debt securities 149,683 474 (13 ) 150,144 Corporate debt securities 256,457 1,124 (27 ) 257,554 Total 608,996 1,637 (45 ) 610,588 Less amounts classified as cash and cash equivalents (53,782 ) — — (53,782 ) Short-term investments $ 555,214 $ 1,637 $ (45 ) $ 556,806 December 31, 2018 Amortized Unrealized Unrealized Estimated (in thousands) Cash and cash equivalents $ 55,501 $ — $ — $ 55,501 Money market funds 1,265 — — 1,265 Certificates of deposit 95,080 1 (43 ) 95,038 Government debt securities 100,449 92 (63 ) 100,478 Corporate debt securities 186,571 27 (390 ) 186,208 Total 438,866 120 (496 ) 438,490 Less amounts classified as cash and cash equivalents (56,766 ) — — (56,766 ) Short-term investments $ 382,100 $ 120 $ (496 ) $ 381,724 |
Schedule of contractual maturities of short-term investments | The contractual maturities of short-term investments at June 30, 2019 and December 31, 2018 were as follows: June 30, 2019 December 31, 2018 Amortized Estimated Amortized Estimated (in thousands) Due in less than one year $ 359,796 $ 360,247 $ 281,303 $ 280,959 Due in one to three years 195,418 196,559 100,797 100,765 $ 555,214 $ 556,806 $ 382,100 $ 381,724 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of carrying amounts of intangible assets | The carrying amounts of intangible assets as of June 30, 2019 were as follows: Gross Accumulated Net Useful Life (in thousands) (in years) Licensed technology $ 56,526 $ (34,470 ) $ 22,056 1-8 Developed technology 285,443 (183,849 ) 101,594 4-7 Customer relationships 69,776 (34,380 ) 35,396 4-9 Trade names 5,600 (5,600 ) — 3 Total intangible assets $ 417,345 $ (258,299 ) $ 159,046 The carrying amounts of intangible assets as of December 31, 2018 were as follows: Gross Accumulated Net Useful Life (in thousands) (in years) Licensed technology $ 49,546 $ (30,062 ) $ 19,484 1-8 Developed technology 285,443 (164,406 ) 121,037 4-7 Customer relationships 69,776 (31,246 ) 38,530 4-9 Trade names 5,600 (5,323 ) 277 3 Total intangible assets $ 410,365 $ (231,037 ) $ 179,328 |
Schedule of estimated future amortization expense from amortizable intangible assets | The estimated future amortization expense from amortizable intangible assets is as follows: (in thousands) 2019 (remainder of the year) $ 32,245 2020 53,723 2021 43,113 2022 13,077 2023 8,291 Thereafter 8,597 Total $ 159,046 |
DERIVATIVES AND HEDGING ACTIV_2
DERIVATIVES AND HEDGING ACTIVITIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of derivative contracts | The fair value of derivative contracts in the unaudited condensed consolidated balance sheets at June 30, 2019 and December 31, 2018 were as follows: Other current assets Accrued liabilities Other current assets Accrued liabilities June 30, 2019 December 31, 2018 (in thousands) Derivatives designated as hedging instruments Currency forward and option contracts $ 706 $ 22 $ 27 $ 2,122 Derivatives not designated as hedging instruments Currency forward and option contracts $ — $ — $ 69 $ 414 Total derivatives $ 706 $ 22 $ 96 $ 2,536 |
Schedule of notional amounts of outstanding derivative positions | The notional amounts of outstanding derivative contracts in U.S. dollars at June 30, 2019 and December 31, 2018 were as follows: June 30, 2019 December 31, 2018 (in thousands) Derivatives designated as hedging instruments Currency forward and option contracts $ 56,197 $ 92,956 Derivatives not designated as hedging instruments Currency forward and option contracts $ — $ 57,844 |
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 June 30, 2019 and December 31, 2018 and their effect on OCI for the six months ended June 30, 2019 : (in thousands) December 31, 2018 $ (1,978 ) Amount of gain recognized in OCI (effective portion) 3,197 Amount of gain reclassified from OCI to income (effective portion) (417 ) June 30, 2019 $ 802 |
Effect of derivative contracts on the condensed consolidated statement of operations | The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018 was as follows: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Three Months Ended June 30, Three Months Ended June 30, 2019 2018 2019 2018 (in thousands) Operating income (expenses) $ 455 $ (1,419 ) $ — $ — Interest and other, net $ — $ — $ 693 $ (1,814 ) The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the six months ended June 30, 2019 and 2018 was as follows: Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Six Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) Operating income (expenses) $ 417 $ (884 ) $ — $ — Interest and other, net $ — $ — $ 2,256 $ (2,704 ) |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Schedule of severance pay details | The severance pay detail is as follows: June 30, 2019 December 31, 2018 (in thousands) Accrued severance liabilities $ 6,778 $ 21,645 Severance assets 5,428 17,043 Unfunded portion $ 1,350 $ 4,602 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase commitments | At June 30, 2019 , the Company had the following non-cancelable purchase commitments: (in thousands) 2019 (remainder of the year) $ 145,822 2020 30,001 2021 982 2022 353 Total $ 177,158 |
SHARE INCENTIVE PLANS (Tables)
SHARE INCENTIVE PLANS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of share option awards activity under equity incentive plans | Share option activity under the Company's equity incentive plans in the six months ended June 30, 2019 is set forth below: Options Outstanding Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2018 494,503 $ 50.73 Options exercised (199,425 ) $ 35.43 Options canceled (1,040 ) $ 91.91 Outstanding at June 30, 2019 294,038 $ 60.96 |
Summary of restricted share units activity | RSU activity under the Company's equity incentive plans in the six months ended June 30, 2019 is set forth below: Restricted Share Units Outstanding Number of Shares Weighted Average Grant Date Fair Value Non-vested restricted share units at December 31, 2018 3,294,163 $ 65.05 Restricted share units granted 1,241,432 $ 103.59 Restricted share units vested (514,667 ) $ 50.81 Restricted share units canceled (147,187 ) $ 69.39 Non-vested restricted share units at June 30, 2019 3,873,741 $ 79.13 |
Summary of ordinary shares reserved for future issuance under equity incentive plans | The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of June 30, 2019 : Number of Share options outstanding 294,038 Restricted share units outstanding 3,873,741 Shares authorized for future issuance 537,246 ESPP shares available for future issuance 2,772,773 Total shares reserved for future issuance as of June 30, 2019 7,477,798 |
Schedule of weighted average assumptions used to value share options granted | The following weighted average assumptions were used to value ESPP shares issued pursuant to the Company's share incentive plans for the six months ended June 30, 2019 and 2018 : Six Months Ended June 30, 2019 2018 Dividend yield — % — % Expected volatility 42.6 % 37.2 % Risk free interest rate 2.44 % 1.20 % Expected life, years 0.5 0.5 |
Summary of the distribution of total share-based compensation expense | The following table summarizes the distribution of total share-based compensation expense in the unaudited condensed consolidated statements of operations: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) Cost of goods sold $ 829 $ 415 $ 1,513 $ 826 Research and development 14,486 8,340 27,727 16,514 Sales and marketing 6,504 3,646 12,156 7,245 General and administrative 5,130 2,515 9,795 5,305 Total share-based compensation expense $ 26,949 $ 14,916 $ 51,191 $ 29,890 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Summary of the changes in accumulated balances of other comprehensive income (loss) | The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2019 and 2018 : Unrealized Gains (Losses) on Available-for-Sale Securities Unrealized Gains (Losses) on Derivatives Designated as Hedging Instruments Total (in thousands) Balance at December 31, 2018 $ 927 $ (1,978 ) $ (1,051 ) Other comprehensive income before reclassifications, net of taxes 1,976 3,197 5,173 Realized gains reclassified from accumulated other comprehensive income (1,311 ) (417 ) (1,728 ) Net current-period other comprehensive income, net of taxes 665 2,780 3,445 Balance at June 30, 2019 $ 1,592 $ 802 $ 2,394 Balance at December 31, 2017 $ 693 $ 925 $ 1,618 Other comprehensive loss before reclassifications, net of taxes (81 ) (4,604 ) (4,685 ) Realized loss reclassified from accumulated other comprehensive income 1 884 885 Net current-period other comprehensive loss, net of taxes (80 ) (3,720 ) (3,800 ) Balance at June 30, 2018 $ 613 $ (2,795 ) $ (2,182 ) |
Reclassification out of accumulated other comprehensive income | The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2019 and 2018 : Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Financial Statements Six Months Ended June 30, 2019 2018 (in thousands) Realized (gains)/losses on derivatives designated as hedging instruments $ (417 ) $ 884 Cost of revenues and Operating expenses: (21 ) 45 Cost of revenues (42 ) 78 General and administrative (38 ) 81 Sales and marketing (316 ) 680 Research and development Realized (gains)/losses on available-for-sale securities (1,311 ) 1 Retained earnings and interest and other, net Total reclassifications for the period $ (1,728 ) $ 885 Total |
INTEREST AND OTHER, NET (Tables
INTEREST AND OTHER, NET (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Other Income and Expenses [Abstract] | |
Schedule of interest and other income, net | Interest and other, net is summarized in the following table: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) Interest expense $ (77 ) $ (871 ) $ (91 ) $ (2,042 ) Interest income and gains on short-term investments, net 3,792 972 6,795 1,939 Foreign exchange loss, net (1,800 ) (399 ) (4,052 ) (579 ) Gain on investments in privately-held companies 441 — 9,569 — Impairment of investment in a privately-held company — — (1,755 ) — Other (88 ) (40 ) 33 (189 ) Interest and other, net $ 2,268 $ (338 ) $ 10,499 $ (871 ) |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Effect of adopting ASU 2016-02 | The cumulative effect of the changes made to the condensed consolidated balance sheet as of January 1, 2019 for the adoption of Topic 842 were as follows: December 31, 2018 Adjustments January 1, 2019 (in thousands) Other long-term assets $ 118,182 $ 69,102 $ 187,284 Accrued and other liabilities $ 121,878 $ 16,618 $ 138,496 Other long-term liabilities $ 54,113 $ 52,484 $ 106,597 |
Components of lease expense and supplemental cash flow information | The components of lease expense and supplemental cash flow information related to leases for the three and six months ended June 30, 2019 were as follows: Three Months Ended Six Months Ended June 30, 2019 June 30, 2019 (in thousands) Components of lease expense Operating lease cost $ 5,997 $ 11,859 Supplemental cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 5,199 $ 10,016 Supplemental non-cash information related to lease liabilities arising from obtaining right-of-use assets $ 1,545 $ 2,862 |
Maturities of lease liabilities | Maturities of lease liabilities as of June 30, 2019 were as follows: (in thousands) 2019 (remainder of the year) $ 17,766 2020 16,081 2021 9,591 2022 7,012 2023 6,919 Thereafter 19,169 Total (1) 76,538 Less: Imputed interest (7,342 ) Lease liability $ 69,196 (1) Future lease payments have not been reduced by minimum sublease rental income of $2.3 million owed to the Company in the future under noncancelable subleases. |
THE COMPANY AND SUMMARY OF SI_4
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Pending Merger with NVIDIA Corporation) (Details) $ / shares in Units, $ in Millions | Mar. 10, 2019USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019₪ / shares | Mar. 10, 2019₪ / shares | Mar. 10, 2019$ / shares | Dec. 31, 2018₪ / shares |
Business Acquisition [Line Items] | ||||||
Ordinary shares, par value (in NIS per share) | ₪ / shares | ₪ 0.0175 | ₪ 0.0175 | ||||
NVIDIA Merger | ||||||
Business Acquisition [Line Items] | ||||||
Ordinary shares, par value (in NIS per share) | ₪ / shares | ₪ 0.0175 | |||||
Conversion price of shares (in usd per share) | $ / shares | $ 125 | |||||
Merger extension period | 3 months | |||||
Termination fee, due to Parent | $ 225 | |||||
Termination fee, due from Parent | $ 350 | |||||
Merger related costs | $ 7.8 |
THE COMPANY AND SUMMARY OF SI_5
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Restricted cash narrative) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Restricted cash in other long-term assets, as reported on the balance sheets | $ 0 | $ 7,884 | $ 7,931 |
THE COMPANY AND SUMMARY OF SI_6
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Restricted cash) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents, as reported on the balance sheets | $ 53,782 | $ 56,766 | $ 63,422 | |
Restricted cash in other long-term assets, as reported on the balance sheets | 0 | 7,884 | 7,931 | |
Cash, cash equivalents, and restricted cash, as reported in the statements of cash flows | $ 53,782 | $ 64,650 | $ 71,353 | $ 70,498 |
THE COMPANY AND SUMMARY OF SI_7
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concentration of credit risk) (Details) - Customer Concentration Risk - Sales revenue, net | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Hewlett Packard Enterprise (HPE) | ||||
Concentration Risk [Line Items] | ||||
Percentage of consolidated revenue by major customer | 13.50% | 13.00% | 10.50% | 15.00% |
Dell Technologies Inc. (Dell) | ||||
Concentration Risk [Line Items] | ||||
Percentage of consolidated revenue by major customer | 14.00% | 11.30% | 12.00% |
THE COMPANY AND SUMMARY OF SI_8
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Product warranty) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Changes in the entity's liability for product warranty | ||
Balance, beginning of the period | $ 1,376 | $ 889 |
New warranties issued during the period | 2,397 | 856 |
Reversal of warranty reserves | (18) | 0 |
Settlements during the period | (1,934) | (784) |
Balance, end of the period | 1,821 | 961 |
Less: long-term portion of product warranty liability | (362) | (173) |
Current portion, end of the period | $ 1,459 | $ 788 |
THE COMPANY AND SUMMARY OF SI_9
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Net income (loss) (per share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Net income | $ 38,429 | $ 48,620 | $ 16,526 | $ 37,843 | $ 87,049 | $ 54,369 |
Basic and diluted shares: | ||||||
Weighted average ordinary shares outstanding (in shares) | 54,707 | 52,615 | 54,469 | 52,219 | ||
Effect of dilutive shares (in shares) | 1,773 | 1,851 | 1,711 | 1,930 | ||
Shares used to compute diluted net income per share (in shares) | 56,480 | 54,466 | 56,180 | 54,149 | ||
Net income per share - basic (in USD per share) | $ 0.70 | $ 0.31 | $ 1.60 | $ 1.04 | ||
Net income per share - diluted (in USD per share) | $ 0.68 | $ 0.30 | $ 1.55 | $ 1 | ||
Share options and restricted stock units | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 200 | 0 | 200 |
REVENUE (Revenue by Geographic
REVENUE (Revenue by Geographic Location) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 310,324 | $ 268,462 | $ 615,541 | $ 519,462 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 121,618 | 101,396 | 231,912 | 197,656 |
China | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 91,868 | 54,182 | 170,008 | 110,395 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 38,343 | 41,454 | 85,589 | 77,450 |
Other Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 28,082 | 33,112 | 53,811 | 60,852 |
Other Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 30,413 | $ 38,318 | $ 74,221 | $ 73,109 |
REVENUE (Revenue by Product Typ
REVENUE (Revenue by Product Type) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 310,324 | $ 268,462 | $ 615,541 | $ 519,462 |
ICs | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 53,046 | 28,934 | 113,669 | 57,521 |
Boards | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 120,643 | 136,708 | 229,073 | 254,759 |
Switch systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 73,808 | 57,074 | 155,866 | 112,721 |
Cables, accessories and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 62,827 | $ 45,746 | $ 116,933 | $ 94,461 |
REVENUE (Revenue by Interconnec
REVENUE (Revenue by Interconnect Protocol) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 310,324 | $ 268,462 | $ 615,541 | $ 519,462 |
Remaining service period | remaining service period of up to five years | |||
InfiniBand: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 132,881 | 102,111 | $ 271,019 | 205,249 |
HDR | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 28,620 | 0 | 51,813 | 0 |
EDR | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 66,643 | 59,319 | 126,286 | 115,265 |
FDR | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 28,972 | 35,649 | 69,570 | 77,397 |
QDR/DDR/SDR | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 8,646 | 7,143 | 23,350 | 12,587 |
Ethernet | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 169,131 | 157,470 | 330,024 | 294,418 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 8,312 | $ 8,881 | $ 14,498 | $ 19,795 |
REVENUE (Contract Liabilities)
REVENUE (Contract Liabilities) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Change in Contract with Customer, Asset and Liability [Roll Forward] | ||
Balance, beginning of the period | $ 39,223 | |
New deferred revenue | 21,013 | |
Reclassification to revenues during the year | (17,014) | |
Balance, end of period | 43,222 | |
Less: long-term portion of deferred revenue | 20,224 | $ 18,665 |
Current portion, end of the period | 22,998 | $ 20,558 |
Revenue recognized | 11,700 | |
New deferred revenue during the year | 5,300 | |
Performance obligation | 57,500 | |
Assets related to costs related to obtain contracts | 11,300 | |
Amortization of capitalized contract costs | 6,700 | |
Unamortized balance of contract assets related to costs to obtain contracts | $ 4,600 |
REVENUE (Performance Obligation
REVENUE (Performance Obligations) (Details) | Jun. 30, 2019 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation, expected timing of satisfaction | 3 years |
BALANCE SHEET COMPONENTS (Detai
BALANCE SHEET COMPONENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Accounts receivable, net: | ||||
Accounts receivable, gross | $ 209,851 | $ 156,525 | ||
Less: unearned distribution price adjustments allowance | (9,000) | (5,400) | ||
Less: allowance for doubtful accounts | (500) | (500) | ||
Accounts receivable, net | 200,351 | 150,625 | ||
Inventories: | ||||
Raw materials | 19,331 | 19,391 | ||
Work-in-process | 32,580 | 39,425 | ||
Finished goods | 37,739 | 45,565 | ||
Inventories | 89,650 | 104,381 | ||
Property and equipment, net: | ||||
Property and equipment, gross | 241,448 | 228,444 | ||
Less: Accumulated depreciation and amortization | (133,306) | (123,110) | ||
Property and equipment, net | 108,142 | 105,334 | ||
Other long-term assets: | ||||
Right of use assets | 62,376 | |||
Deferred taxes | 50,660 | 50,660 | ||
Equity investments in privately-held companies | 35,496 | 40,300 | ||
Long-term restricted cash | 0 | 7,884 | $ 7,931 | |
Severance assets | 5,428 | 17,043 | ||
Other | 5,560 | 2,295 | ||
Deferred taxes and other long-term assets | 159,520 | $ 187,284 | 118,182 | |
Accrued and other liabilities: | ||||
Payroll and related expenses | 68,965 | 76,788 | ||
Accrued expenses | 31,227 | 28,821 | ||
Lease liability, current | 17,706 | |||
Intangible asset financings | 5,379 | 4,488 | ||
Other | 18,969 | 11,781 | ||
Accrued and other liabilities | 142,246 | 121,878 | ||
Other long-term liabilities: | ||||
Lease liability, long term | 51,490 | |||
Income tax payable | 36,211 | 25,600 | ||
Accrued severance | 6,778 | 21,645 | ||
Deferred rent | 0 | 2,532 | ||
Other | 5,614 | 4,336 | ||
Other long-term liabilities | 100,093 | $ 106,597 | 54,113 | |
Computer, equipment, and software | ||||
Property and equipment, net: | ||||
Property and equipment, gross | 189,505 | 180,125 | ||
Furniture and fixtures | ||||
Property and equipment, net: | ||||
Property and equipment, gross | 1,886 | 2,140 | ||
Leasehold improvements | ||||
Property and equipment, net: | ||||
Property and equipment, gross | $ 50,057 | $ 46,179 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Fair value, measurements, recurring basis - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Financial assets measured at fair value | ||
Investments | $ 560,854 | $ 382,989 |
Long-term restricted cash | 7,884 | |
Derivative contracts | 706 | 96 |
Total financial assets | 561,560 | 390,969 |
Derivative contracts | 22 | 2,536 |
Total financial liabilities | 22 | 2,536 |
Money market funds | ||
Financial assets measured at fair value | ||
Investments | 4,048 | 1,265 |
Certificates of deposit | ||
Financial assets measured at fair value | ||
Investments | 149,108 | 95,038 |
Government debt securities | ||
Financial assets measured at fair value | ||
Investments | 150,144 | 100,478 |
Corporate debt securities | ||
Financial assets measured at fair value | ||
Investments | 257,554 | 186,208 |
Level 1 | ||
Financial assets measured at fair value | ||
Investments | 4,048 | 1,265 |
Long-term restricted cash | 0 | |
Derivative contracts | 0 | 0 |
Total financial assets | 4,048 | 1,265 |
Derivative contracts | 0 | 0 |
Total financial liabilities | 0 | 0 |
Level 1 | Money market funds | ||
Financial assets measured at fair value | ||
Investments | 4,048 | 1,265 |
Level 1 | Certificates of deposit | ||
Financial assets measured at fair value | ||
Investments | 0 | |
Level 1 | Government debt securities | ||
Financial assets measured at fair value | ||
Investments | 0 | |
Level 1 | Corporate debt securities | ||
Financial assets measured at fair value | ||
Investments | 0 | |
Level 2 | ||
Financial assets measured at fair value | ||
Investments | 556,806 | 381,724 |
Long-term restricted cash | 7,884 | |
Derivative contracts | 706 | 96 |
Total financial assets | 557,512 | 389,704 |
Derivative contracts | 22 | 2,536 |
Total financial liabilities | 22 | 2,536 |
Level 2 | Money market funds | ||
Financial assets measured at fair value | ||
Investments | 0 | |
Level 2 | Certificates of deposit | ||
Financial assets measured at fair value | ||
Investments | 149,108 | 95,038 |
Level 2 | Government debt securities | ||
Financial assets measured at fair value | ||
Investments | 150,144 | 100,478 |
Level 2 | Corporate debt securities | ||
Financial assets measured at fair value | ||
Investments | $ 257,554 | $ 186,208 |
INVESTMENTS (Schedule of cash,
INVESTMENTS (Schedule of cash, cash equivalents and short-term investments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Debt Securities, Available-for-sale [Line Items] | |||||
Cash and cash equivalents | $ 53,782 | $ 63,422 | $ 53,782 | $ 63,422 | $ 56,766 |
Short-term Investments | |||||
Amortized cost | 555,214 | 555,214 | 382,100 | ||
Unrealized Gains | 1,637 | 1,637 | 120 | ||
Unrealized Losses | (45) | (45) | (496) | ||
Estimated fair value | 556,806 | 556,806 | 381,724 | ||
Cash, cash equivalents and short-term investments, amortized cost | 608,996 | 608,996 | 438,866 | ||
Cash, cash equivalents and short-term investments, estimated fair value | 610,588 | 610,588 | 438,490 | ||
Interest income and gains on short-term investments, net | 3,792 | $ 972 | 6,795 | $ 1,939 | |
Unrealized losses, greater than 12 months | 0 | 0 | |||
Cash and cash equivalents | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Cash and cash equivalents | 49,734 | 49,734 | 55,501 | ||
Cash and cash equivalents, estimated fair value | 49,734 | 49,734 | 55,501 | ||
Money market funds | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Cash and cash equivalents | 4,048 | 4,048 | 1,265 | ||
Cash and cash equivalents, estimated fair value | 4,048 | 4,048 | 1,265 | ||
Certificates of deposit | |||||
Short-term Investments | |||||
Amortized cost | 149,074 | 149,074 | 95,080 | ||
Unrealized Gains | 39 | 39 | 1 | ||
Unrealized Losses | (5) | (5) | (43) | ||
Estimated fair value | 149,108 | 149,108 | 95,038 | ||
Government debt securities | |||||
Short-term Investments | |||||
Amortized cost | 149,683 | 149,683 | 100,449 | ||
Unrealized Gains | 474 | 474 | 92 | ||
Unrealized Losses | (13) | (13) | (63) | ||
Estimated fair value | 150,144 | 150,144 | 100,478 | ||
Corporate debt securities | |||||
Short-term Investments | |||||
Amortized cost | 256,457 | 256,457 | 186,571 | ||
Unrealized Gains | 1,124 | 1,124 | 27 | ||
Unrealized Losses | (27) | (27) | (390) | ||
Estimated fair value | 257,554 | 257,554 | 186,208 | ||
Cash and cash equivalents | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Cash and cash equivalents | 53,782 | 53,782 | 56,766 | ||
Cash and cash equivalents, estimated fair value | $ 53,782 | $ 53,782 | $ 56,766 |
INVESTMENTS (Fair value due by
INVESTMENTS (Fair value due by period) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Amortized Cost | ||||||
Due in less than one year | $ 359,796 | $ 359,796 | $ 281,303 | |||
Due in one to three years | 195,418 | 195,418 | 100,797 | |||
Amortized Cost | 555,214 | 555,214 | 382,100 | |||
Estimated Fair Value | ||||||
Due in less than one year | 360,247 | 360,247 | 280,959 | |||
Due in one to three years | 196,559 | 196,559 | 100,765 | |||
Estimated Fair Value | 556,806 | 556,806 | 381,724 | |||
Equity investments in privately-held companies | 35,496 | 35,496 | $ 40,300 | |||
Gain on sale of investment | $ 9,100 | |||||
Escrow deposits | 3,200 | |||||
Impairment charge | $ 0 | $ 1,800 | $ 0 | $ 1,755 | $ 0 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Goodwill Narrative) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 473,916 | $ 473,916 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS (Schedule of Carrying Amounts of Intangible Assets) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 417,345 | $ 410,365 |
Accumulated Amortization | (258,299) | (231,037) |
Net Carrying Value | 159,046 | 179,328 |
Licensed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 56,526 | 49,546 |
Accumulated Amortization | (34,470) | (30,062) |
Net Carrying Value | 22,056 | 19,484 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 285,443 | 285,443 |
Accumulated Amortization | (183,849) | (164,406) |
Net Carrying Value | 101,594 | 121,037 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 69,776 | 69,776 |
Accumulated Amortization | (34,380) | (31,246) |
Net Carrying Value | 35,396 | 38,530 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 5,600 | 5,600 |
Accumulated Amortization | (5,600) | (5,323) |
Net Carrying Value | $ 0 | $ 277 |
Useful life | 3 years | 3 years |
Minimum | Licensed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 1 year | 1 year |
Minimum | Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 4 years | 4 years |
Minimum | Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 4 years | 4 years |
Maximum | Licensed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 8 years | 8 years |
Maximum | Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 7 years | 7 years |
Maximum | Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 9 years | 9 years |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 14.6 | $ 16.5 | $ 29.6 | $ 32.8 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS (Schedule of Estimated Future Amortization Expense) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 (remainder of the year) | $ 32,245 | |
2020 | 53,723 | |
2021 | 43,113 | |
2022 | 13,077 | |
2023 | 8,291 | |
Thereafter | 8,597 | |
Net Carrying Value | $ 159,046 | $ 179,328 |
DERIVATIVES AND HEDGING ACTIV_3
DERIVATIVES AND HEDGING ACTIVITIES (Fair Value of Derivative Contracts and Notional Amounts) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Derivatives designated as hedging instruments | ||
Notional Disclosures [Abstract] | ||
Currency forward and option contracts | $ 56,197 | $ 92,956 |
Derivatives not designated as hedging instruments | ||
Notional Disclosures [Abstract] | ||
Currency forward and option contracts | 0 | 57,844 |
Currency forward and option contracts | Other current assets | ||
Derivative, Fair Value, Net [Abstract] | ||
Currency forward contracts, assets | 706 | 96 |
Currency forward and option contracts | Other current assets | Derivatives designated as hedging instruments | ||
Derivative, Fair Value, Net [Abstract] | ||
Currency forward contracts, assets | 706 | 27 |
Currency forward and option contracts | Other current assets | Derivatives not designated as hedging instruments | ||
Derivative, Fair Value, Net [Abstract] | ||
Currency forward contracts, assets | 0 | 69 |
Currency forward and option contracts | Accrued liabilities | ||
Derivative, Fair Value, Net [Abstract] | ||
Currency forward contracts, liabilities | 22 | 2,536 |
Currency forward and option contracts | Accrued liabilities | Derivatives designated as hedging instruments | ||
Derivative, Fair Value, Net [Abstract] | ||
Currency forward contracts, liabilities | 22 | 2,122 |
Currency forward and option contracts | Accrued liabilities | Derivatives not designated as hedging instruments | ||
Derivative, Fair Value, Net [Abstract] | ||
Currency forward contracts, liabilities | $ 0 | $ 414 |
DERIVATIVES AND HEDGING ACTIV_4
DERIVATIVES AND HEDGING ACTIVITIES (Effect of Derivatives Designated as Hedging Instruments on AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Balance of designated derivative contracts as cash flow hedges and their impact on OCI | ||||
Balance at the beginning of the period | $ (1,051) | |||
Amount of gain recognized in OCI (effective portion) | $ 189 | $ (2,382) | 2,780 | $ (3,720) |
Balance at the end of the period | 2,394 | 2,394 | ||
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 | (1,978) | |||
Amount of gain recognized in OCI (effective portion) | 3,197 | |||
Amount of gain reclassified from OCI to income (effective portion) | (417) | |||
Balance at the end of the period | $ 802 | $ 802 |
DERIVATIVES AND HEDGING ACTIV_5
DERIVATIVES AND HEDGING ACTIVITIES (Effective of Contracts on Statement of Operations) (Details) - Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivatives designated as hedging instruments | Operating income (expenses) | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain (loss) on derivatives | $ 455 | $ (1,419) | $ 417 | $ (884) |
Derivatives designated as hedging instruments | Interest and other, net | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain (loss) on derivatives | 0 | 0 | 0 | 0 |
Derivatives not designated as hedging instruments | Operating income (expenses) | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain (loss) on derivatives | 0 | 0 | 0 | 0 |
Derivatives not designated as hedging instruments | Interest and other, net | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain (loss) on derivatives | $ 693 | $ (1,814) | $ 2,256 | $ (2,704) |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Accrued severance liabilities | $ 6,778 | $ 21,645 |
Severance assets | 5,428 | 17,043 |
Unfunded portion | $ 1,350 | $ 4,602 |
Company's contribution as a percentage of employee monthly salary | 8.30% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Purchase commitments | ||
2019 (remainder of the year) | $ 145,822 | |
2020 | 30,001 | |
2021 | 982 | |
2022 | 353 | |
Total | 177,158 | |
Unrecognized tax benefits | 57,700 | $ 46,500 |
Unrecognized tax benefits that would impact effective tax rate | $ 35,100 |
SHARE INCENTIVE PLANS (Share Op
SHARE INCENTIVE PLANS (Share Option Plans) (Details) - shares | Jul. 25, 2018 | Jun. 30, 2019 |
Share incentive plans | ||
Common stock, capital shares reserved for future issuance (in shares) | 7,477,798 | |
Third Restated Plan | ||
Share incentive plans | ||
Common stock, capital shares reserved for future issuance (in shares) | 2,077,000 | |
Number of additional shares authorized (in shares) | 4,467,000 |
SHARE INCENTIVE PLANS (Summary
SHARE INCENTIVE PLANS (Summary of Share Option Awards Activity Under Equity Incentive Plans) (Details) - Employee Stock Option - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 28, 2019 | Dec. 31, 2018 | |
Number of Shares | ||||
Options outstanding at the beginning of the period (in shares) | 494,503 | |||
Options exercised (in shares) | (199,425) | |||
Options canceled (in shares) | (1,040) | |||
Options outstanding at the end of the period (in shares) | 294,038 | |||
Weighted Average Exercise Price | ||||
Options outstanding at the beginning of the period (in USD per share) | $ 50.73 | |||
Options exercised (in USD per share) | 35.43 | |||
Options canceled (in USD per share) | 91.91 | |||
Options outstanding at the end of the period (in USD per share) | $ 60.96 | |||
Pretax intrinsic value of options exercised | $ 13.9 | $ 19.4 | ||
Share price (in USD per share) | $ 110.67 | |||
Pretax intrinsic value of options outstanding | $ 14.6 | $ 21.8 | ||
Options, exercisable, number (in shares) | 293,621 | 493,462 | ||
Pretax intrinsic value of exercisable options | $ 14.6 | $ 21.7 |
SHARE INCENTIVE PLANS (Summar_2
SHARE INCENTIVE PLANS (Summary of Restricted Share Units Activity) (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Restricted Share Units Outstanding | |||
Number of Shares | |||
Non vested restricted share units at the beginning of the period (in shares) | 3,294,163 | ||
Restricted share units granted (in shares) | 1,241,432 | ||
Restricted share units vested (in shares) | (514,667) | ||
Restricted share units canceled (in shares) | (147,187) | ||
Non vested restricted share units at the end of the period (in shares) | 3,873,741 | ||
Weighted Average Grant Date Fair Value | |||
Non vested restricted share units at the beginning of the period (in USD per share) | $ 65.05 | ||
Restricted share units granted (in USD per share) | 103.59 | $ 70.32 | |
Restricted share units vested (in USD per share) | 50.81 | ||
Restricted share units cancelled (in USD per share) | 69.39 | ||
Non vested restricted share units at the end of the period (in USD per share) | $ 79.13 | ||
Total intrinsic value of all outstanding restricted share units | $ 428.7 | $ 304.3 | |
Performance Shares | |||
Number of Shares | |||
Non vested restricted share units at the end of the period (in shares) | 36,000 | ||
Minimum | Performance Shares | |||
Weighted Average Grant Date Fair Value | |||
Award vesting rights, percentage of the target | 0.00% | ||
Maximum | Performance Shares | |||
Weighted Average Grant Date Fair Value | |||
Award vesting rights, percentage of the target | 175.00% |
SHARE INCENTIVE PLANS (Employee
SHARE INCENTIVE PLANS (Employee Stock Purchase Plan activity) (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Stock issued during period, employee stock ownership plan (in shares) | 162,573 | 288,017 |
Average price per share (in USD per share) | $ 68 | $ 39.40 |
SHARE INCENTIVE PLANS (Shares R
SHARE INCENTIVE PLANS (Shares Reserved, ESPP Assumptions) (Details) - shares | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Number of Shares | |||
Share options outstanding (in shares) | 294,038 | ||
Shares authorized for future issuance (in shares) | 537,246 | ||
Common stock, capital shares reserved for future issuance (in shares) | 7,477,798 | ||
Restricted Share Units Outstanding | |||
Number of Shares | |||
Restricted share units outstanding (in shares) | 3,873,741 | 3,294,163 | |
Employee stock | |||
Number of Shares | |||
Shares authorized for future issuance (in shares) | 2,772,773 | ||
Weighted average assumptions | |||
Dividend yield | 0.00% | 0.00% | |
Expected volatility | 42.60% | 37.20% | |
Risk free interest rate | 2.44% | 1.20% | |
Expected life, years | 15 days | 15 days |
SHARE INCENTIVE PLANS (Share-Ba
SHARE INCENTIVE PLANS (Share-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based compensation expense | ||||
Allocated share-based compensation expense | $ 26,949 | $ 14,916 | $ 51,191 | $ 29,890 |
Total unrecognized share-based compensation costs related to non-vested awards | 263,400 | $ 263,400 | ||
Weighted average period for recognition of unrecognized share-based compensation costs (in years) | 3 years 1 month 20 days | |||
Cost of goods sold | ||||
Share-based compensation expense | ||||
Allocated share-based compensation expense | 829 | 415 | $ 1,513 | 826 |
Research and development | ||||
Share-based compensation expense | ||||
Allocated share-based compensation expense | 14,486 | 8,340 | 27,727 | 16,514 |
Sales and marketing | ||||
Share-based compensation expense | ||||
Allocated share-based compensation expense | 6,504 | 3,646 | 12,156 | 7,245 |
General and administrative | ||||
Share-based compensation expense | ||||
Allocated share-based compensation expense | $ 5,130 | $ 2,515 | $ 9,795 | $ 5,305 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Summary of the changes in accumulated balances of other comprehensive income (loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | $ 1,394,910 | $ 1,301,648 | $ 1,127,193 | $ 1,057,448 | $ 1,301,648 | $ 1,057,448 |
Other comprehensive income (loss), net of tax | 1,375 | 3,373 | (2,169) | (1,631) | 4,748 | (3,800) |
Ending balance | 1,462,757 | 1,394,910 | 1,161,749 | 1,127,193 | 1,462,757 | 1,161,749 |
Unrealized Gains (Losses) on Available-for-Sale Securities | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | 927 | 693 | 927 | 693 | ||
Other comprehensive income (loss) before reclassifications, net of taxes | 1,976 | (81) | ||||
Realized (gains) loss reclassified from accumulated other comprehensive income | (1,311) | 1 | ||||
Other comprehensive income (loss), net of tax | 665 | (80) | ||||
Ending balance | 1,592 | 613 | 1,592 | 613 | ||
Unrealized Gains (Losses) on Derivatives Designated as Hedging Instruments | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | (1,978) | 925 | (1,978) | 925 | ||
Other comprehensive income (loss) before reclassifications, net of taxes | 3,197 | (4,604) | ||||
Realized (gains) loss reclassified from accumulated other comprehensive income | (417) | 884 | ||||
Other comprehensive income (loss), net of tax | 2,780 | (3,720) | ||||
Ending balance | 802 | (2,795) | 802 | (2,795) | ||
Total | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | 2,322 | (1,051) | (13) | 1,618 | (1,051) | 1,618 |
Other comprehensive income (loss) before reclassifications, net of taxes | 5,173 | (4,685) | ||||
Realized (gains) loss reclassified from accumulated other comprehensive income | (1,728) | 885 | ||||
Other comprehensive income (loss), net of tax | 72 | 3,373 | (2,169) | (1,631) | 3,445 | (3,800) |
Ending balance | $ 2,394 | $ 2,322 | $ (2,182) | $ (13) | $ 2,394 | $ (2,182) |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Reclassification out of accumulated other comprehensive income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Reclassifications out of accumulated other comprehensive income | ||||||
Cost of revenues | $ 110,034 | $ 103,668 | $ 218,120 | $ 192,666 | ||
General and administrative | 19,199 | 23,635 | 38,470 | 40,151 | ||
Sales and marketing | 39,302 | 35,673 | 79,399 | 75,167 | ||
Research and development | 99,329 | 87,152 | 191,534 | 173,578 | ||
Retained earnings and interest and other, net | (2,268) | 338 | (10,499) | 871 | ||
Net income | $ (38,429) | $ (48,620) | $ (16,526) | $ (37,843) | (87,049) | (54,369) |
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income (Loss) | Realized (gains)/losses on derivatives designated as hedging instruments | ||||||
Reclassifications out of accumulated other comprehensive income | ||||||
Cost of revenues and Operating expenses | (417) | 884 | ||||
Cost of revenues | (21) | 45 | ||||
General and administrative | (42) | 78 | ||||
Sales and marketing | (38) | 81 | ||||
Research and development | (316) | 680 | ||||
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income (Loss) | Realized (gains)/losses on available-for-sale securities | ||||||
Reclassifications out of accumulated other comprehensive income | ||||||
Retained earnings and interest and other, net | (1,311) | 1 | ||||
Realized (Gains)/Losses Reclassified from Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | ||||||
Reclassifications out of accumulated other comprehensive income | ||||||
Net income | $ (1,728) | $ 885 |
INCOME TAXES (Details)
INCOME TAXES (Details) $ / shares in Units, $ in Millions | Jun. 14, 2017 | Jun. 30, 2019USD ($)subsidiary$ / shares | Jun. 30, 2018 | Dec. 31, 2018USD ($) |
Income Tax Disclosure [Line Items] | ||||
Unrecognized tax benefits | $ 57.7 | $ 46.5 | ||
Unrecognized tax benefits, income tax penalties and interest accrued | $ 3.2 | $ 2.6 | ||
Effective income tax rate, percent | 10.60% | (96.50%) | ||
Israel Tax Authority | ||||
Income Tax Disclosure [Line Items] | ||||
Income tax holiday, income tax benefits (in usd per share) | $ / shares | $ 0.35 | |||
Tel Aviv | Israel Tax Authority | ||||
Income Tax Disclosure [Line Items] | ||||
Effective income tax rate, percent | 12.00% | |||
Yokneam | Israel Tax Authority | ||||
Income Tax Disclosure [Line Items] | ||||
Effective income tax rate, percent | 7.50% | |||
Israel Tax Authority | ||||
Income Tax Disclosure [Line Items] | ||||
Income tax holiday, aggregate dollar amount | $ 19.7 | |||
Israel Tax Authority | Israel Tax Authority | ||||
Income Tax Disclosure [Line Items] | ||||
Number of subsidiaries | subsidiary | 1 | |||
Israel Tax Authority | Tel Aviv | ||||
Income Tax Disclosure [Line Items] | ||||
Income tax holiday reduced income tax rate after second year of tax holiday | 10.00% |
INTEREST AND OTHER, NET (Detail
INTEREST AND OTHER, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Other Income and Expenses [Abstract] | |||||
Interest expense | $ (77) | $ (871) | $ (91) | $ (2,042) | |
Interest income and gains on short-term investments, net | 3,792 | 972 | 6,795 | 1,939 | |
Foreign exchange loss, net | (1,800) | (399) | (4,052) | (579) | |
Gain on investments in privately-held companies | 441 | 0 | 9,569 | 0 | |
Impairment of investment in a privately-held company | 0 | $ (1,800) | 0 | (1,755) | 0 |
Other | (88) | (40) | 33 | (189) | |
Interest and other, net | $ 2,268 | $ (338) | $ 10,499 | $ (871) |
LEASES (Effect of Changes Made
LEASES (Effect of Changes Made to the Balance Sheet) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other long-term assets | $ 159,520 | $ 187,284 | $ 118,182 |
Accrued and other liabilities | 138,496 | 121,878 | |
Other long-term liabilities | $ 100,093 | 106,597 | $ 54,113 |
ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other long-term assets | 69,102 | ||
Accrued and other liabilities | 16,618 | ||
Other long-term liabilities | $ 52,484 |
LEASES (Components of Lease Exp
LEASES (Components of Lease Expense and Supplemental Cash Flow Information) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Components of lease expense | ||
Operating lease cost | $ 5,997 | $ 11,859 |
Supplemental cash flow information: | ||
Cash paid for amounts included in the measurement of lease liabilities | 5,199 | 10,016 |
Supplemental non-cash information related to lease liabilities arising from obtaining right-of-use assets | $ 1,545 | $ 2,862 |
Weighted average remaining lease term | 6 years 7 months 6 days | 6 years 7 months 6 days |
Weighted average discount rate | 3.22% | 3.22% |
LEASES (Lease Liabilities Matur
LEASES (Lease Liabilities Maturities) (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
2019 (remainder of the year) | $ 17,766 |
2020 | 16,081 |
2021 | 9,591 |
2022 | 7,012 |
2023 | 6,919 |
Thereafter | 19,169 |
Total | 76,538 |
Less: Imputed interest | (7,342) |
Lease liability | 69,196 |
Sublease rental income | $ 2,300 |
Lease term, lease not yet commenced | 10 years |
Future lease obligation | $ 31,100 |
RETRUCTURING CHARGES (Details)
RETRUCTURING CHARGES (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Impairment of long-lived assets | $ 2.4 |
Employee separation and severance costs | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and impairment charges | 3.5 |
Contract termination | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and impairment charges | $ 3.4 |
Uncategorized Items - a20190630
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 4,501,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 4,501,000 |