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[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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IXIA
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(Exact name of Registrant as specified in its charter)
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California
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95-4635982
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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26601 West Agoura Road, Calabasas, CA 91302
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(Address of principal executive offices, including zip code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, without par value
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The NASDAQ Stock Market LLC
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Large accelerated filer [X]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [ ]
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(Do not check if a smaller reporting company)
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Page
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PART I
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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PART II
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Item 5.
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Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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Item 15.
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Exhibits, Financial Statement Schedules
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SIGNATURES
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•
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Validate the network—test and confirm design in virtual and physical environments
|
•
|
Optimize the network—enhance application performance and visibility across the network
|
•
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Secure the network—assess and monitor security threats in real-world scenarios
|
•
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Versatile High Performance
. Our network test solutions generate and receive data traffic at full line rate – the maximum rate that data traffic can be transmitted over a network medium. Our systems provide accurate analysis across multiple layers of the overall network and of individual network components in real time. Our systems can be configured to either generate programmed packets of data or conduct complete sessions.
|
•
|
Highly Scalable
. Each of our network test interface cards provides one or more ports through which our systems generate and receive data traffic. Each physical port contains its own dedicated logic circuits, with substantial memory and compute resources. Our customers can easily scale the size of their test bed or the amount of data traffic generated by inserting additional interface cards. By connecting multiple chassis and synchronizing hundreds of ports to operate simultaneously, our customers can simulate extremely large networks. Our GPS-based components even allow our chassis to be distributed throughout the world, while maintaining the close time synchronization necessary for precision tests. We believe that our systems can offer our customers one of the highest port density and scalable space efficient systems available. In addition, our client-server architecture allows multiple users in the same or different geographic locations to simultaneously access and operate different ports contained in the same chassis to run independent tests. Customers using our high-density network visibility platform can easily scale their visibility needs through flexible port licensing and modular extensions that can grow with their expanding network monitoring needs.
|
•
|
Highly Modular Hardware Platform
. We offer network test hardware platforms with interchangeable interfaces, using a common set of applications and Application Programing Interfaces ("APIs"). Our architectures enable the emulation of millions of network users on scalable platforms, with a mixture of both network and application layer traffic. These architectures offer our customers an integrated test environment that might otherwise require multiple products to cover the same test scenarios. We believe that our network test hardware platform solutions decrease the overall cost while increasing productivity and scalability, and reducing training requirements for our customers. Our network test hardware products consist of stackable and portable chassis which, depending on the chassis model, can be configured with a mix of interface cards. This modular design allows our customers to quickly and easily create realistic, customized test configurations. Our open architecture accelerates the integration of additional network technologies into existing systems through the addition of new interface cards and distributed software. Our modular approach to network visibility allows customers to increase port density, add higher speed links, and/or add advanced features – helping customers to future proof their network monitoring and visibility investments.
|
•
|
Flexible
. Our customers can easily expand our systems to address changing technologies, protocols, and applications without changing system hardware or replacing interface cards. This protects and optimizes customers’ investments by eliminating the need for “forklift upgrades” or the purchase of additional niche products. Additionally, customers under our ATI subscription service receive automatic bi-weekly updates of the latest applications and attacks for use in their real-world testing scenarios.
|
•
|
Automation
. Our systems make it easy to create automated tests and network monitoring rules that can run unattended. We offer our customers a growing library of automated tests and monitoring automation scripts that simplify and streamline the test and monitoring processes. The automated tests are repeatable and the results are presented in a structured format for easy analysis. Ixia offers “Click-Thru Automation” that records and repeats interactive operation, providing automation without programming. In addition, Ixia's Tool Command Language ("Tcl") API is a comprehensive programming interface to our hardware, as well as to our software applications. The Tcl API enables libraries of automated scripts to be quickly built with specificity to a customer's environment. We also offer a utility that exports configurations created in our graphical user interface ("GUI") as Tcl scripts. Our visibility solutions can be automated and integrated with monitoring tools using our RESTful API.
|
•
|
Ease of Use
. We have designed our systems so that users can install and operate them with minimal training and setup. Our network test systems are easy to use and offer our customers a wide range of readily accessible pre-designed test configurations. These tests include industry standard and use case-specific tests. Users can easily configure and operate our systems to generate and analyze data traffic over any combination of interface cards or ports through our graphical user interface. Once tests are designed in our GUIs, they can be saved for reuse or in Tcl script form for customization and even greater levels of automation. Our network visibility systems also offer customers best in class ease-of-use, with a point-and-click GUI that enables customers to quickly develop complex filtering and packet distribution algorithms with simple, but powerful, drop-down menus. These configurations can be saved for reuse and automated using our RESTful API.
|
•
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Intelligent
. Our products and solutions are designed with high processing capability and intelligence leveraging the deep technical prowess and engineering capabilities at Ixia. These intelligence capabilities manifest themselves in our products in the form of protocol awareness, application context and knowledge of security threat vectors. Ixia continues to be a leader in the market through innovation by making our products more application and security aware and intelligent through analytics so that our customers are presented with relevant and actionable information whether it be test results in a lab environment or resiliency reports for some network equipment or real-time application flow data being sent to a monitoring & security analysis tool.
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•
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Continue to Expand our Addressable Markets
. We plan to further expand our addressable markets into growth areas for network and application security, next-generation networking technologies, monitoring network applications and services, and more.
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•
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Maintain Focus on Technology Leadership
. We will continue to focus on research and development in order to maintain our technology leadership position, and to offer solutions that address new and evolving network technologies. We intend to maintain an active role in industry standards committees such as IEEE and the Internet Engineering Task Force ("IETF"), and to continue our active involvement in industry forums, associations and alliances such as the Ethernet Alliance, Metro Ethernet Forum, Open Networking Foundation ("ONF"), Wi-Fi Alliance, International Telecommunications Union ("ITU"), Small Cell Forum, Telecommunications Industry Association ("TIA") and 3GPP. We also plan to continue to work closely with some of our established customers who are developing emerging network technologies, as well as leading edge start-up companies, to enhance the performance and functionality of our existing systems and to design future products that specifically address our customers’ needs as they evolve.
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•
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Expand and Further Penetrate Customer Base
. We plan to strengthen and further penetrate our existing customer relationships, and expand our reach into new enterprise, government, and service provider customers by:
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◦
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Continuing to develop and offer new and innovative solutions that meet our existing and potential customers’ needs,
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◦
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Expanding our sales and marketing efforts through direct channels and partner relationships to increase penetration in under-represented vertical and geographic market segments,
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◦
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Building upon and further strengthening our reputation and brand name recognition, and
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◦
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Continuing our focus on customer support by maintaining and expanding the capabilities of our highly qualified and specialized internal personnel.
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•
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Expand International Market Presence
. We will further pursue sales in key international markets, including EMEA, and the Asia Pacific region. In order to pursue sales in these markets, we intend to develop and expand our relationships with key customers, partners, resellers and distributors, as well as expand our direct sales and marketing presence within these markets.
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•
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License and Acquire New Products
. We will continue our strategy of acquiring products in key technologies that expand our product offerings, address customer needs, and enhance the breadth of our evolving product portfolio. To expand our product portfolio, we may partner with industry leaders, acquire or license technology assets, or acquire other companies.
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•
|
In July 2011, we acquired VeriWave, Inc. (“VeriWave”), a performance testing company for wireless LAN ("WLAN") and Wi-Fi enabled smart devices. This acquisition expanded our portfolio of supported network media and addressed the need for an end-to-end solution that completely tests converged Wi-Fi, wired, 3G, and 4G/LTE ecosystems.
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•
|
In June 2012, we acquired Anue Systems, Inc. (“Anue”). Anue's solutions provide visibility into live networks and the applications running within them in order to efficiently aggregate and filter traffic. With this acquisition, we expanded our addressable market, broadened our product portfolio, and expanded our customer base.
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•
|
In August 2012, we acquired BreakingPoint Systems, Inc. (“BreakingPoint”). BreakingPoint is a leader in application and security assessment and testing, and its solutions provide global visibility into emerging threats and applications, along with advance insight into the resiliency of an organization’s network infrastructure. With this acquisition, we expanded our addressable market, broadened our product portfolio, and expanded our customer base.
|
•
|
In December 2013, we acquired Net Optics, Inc. (“Net Optics”). Net Optics is a leading provider of total application and network visibility solutions. The acquisition of Net Optics solidified our position as a market leader with a comprehensive product offering including network packet brokers, physical and virtual taps, and application aware capabilities. The acquisition expanded our product portfolio, strengthened our service provider and enterprise customer bases and broadened our sales channel and partner programs.
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•
|
NEMs
. NEMs provide voice, video, and data and service infrastructure equipment to customer network operators, service providers, and network users. Such users require high standards of functionality, performance, security, and reliability. To meet these higher standards, NEMs must ensure the quality of their products during development and manufacturing (prior to deployment). Failure to ensure the consistent functionality and performance of their products may result in the loss of customers, increased research and development costs, increased support costs, and losses resulting from the return of products. NEMs, for example, use our network test systems to run large-scale subscriber and service emulations, generating extreme traffic loads to verify the performance and capacity of their wired and wireless devices prior to deployment in production networks. Our systems are also used by NEMs in the sales and acceptance process to demonstrate to their customers (e.g., service providers and enterprises) how the NEMs’ products will operate under real-world conditions. In addition, our conformance test suites are used by NEMs to ensure that their devices conform to published standards – ensuring that they will be interoperable with other equipment. These equipment manufacturers are also, in many cases, large enterprises and therefore have the same challenges that can be met using our assessment and monitoring solutions within their own internal network.
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•
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Service Providers
. Service providers seek to deliver a growing variety of high quality, advanced network services ranging from traditional telecommunications and Internet services, to social networking, cloud storage, and entertainment streaming. Failure to provide a quality experience to the end user can be costly through high subscriber churn rates and reduced revenues. To ensure quality of experience and service assurance, service provider R&D and network engineering groups must verify the performance and functionality of staged networks during equipment selection and network design, prior to deployment and after any change to the production network. Service providers also use our network test systems to emulate millions of mobile subscribers to realistically predict end-user quality of experience delivered by providers’ infrastructure and services. Service providers must also ensure security for customers and their own networks, as the keepers of vast amounts of business and personal data. And finally, service providers depend on our monitoring solutions to filter application traffic in order to prioritize, de-duplicate, and optimize wired and wireless data streams.
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•
|
Enterprises and Government
. Enterprise and government organizations depend on their networks and data centers to get business done, and they devote enormous resources to ensure applications and services run optimally and securely. These customers rely on our solutions to help evaluate equipment during selection, optimize and harden their network designs in labs prior to roll-out, and once rolled out, continuously monitor the production network to ensure optimal performance and security of the contents flowing through it. Notably, organizations must always be vigilant against the impact of security threats to its business critical network. Using our solutions, they consistently ensure their network and data center are optimized and resilient. Our security solutions are also used by major organizations to train their staff on the new generation of “cyber warfare and mitigation techniques” to recognize and defend against massive cyber-attacks.
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•
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Leading NEMs such as Cisco Systems, Juniper Networks, and Alcatel-Lucent;
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•
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Voice, broadband and/or wireless service providers such as Verizon, AT&T, and NTT;
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•
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Enterprises such as Oracle, Kaiser Permanente, and Wells Fargo; and
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•
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Government contractors, departments and agencies such as Raytheon, Defense Information Systems Agency, and the U.S. Army.
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•
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Breadth of product offerings and features on a single test or monitoring platform;
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•
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Timeliness of new product introductions;
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•
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Product quality, reliability and performance;
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•
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Price and overall cost of product ownership;
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•
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Ease of installation, integration and use;
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•
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Customer service and technical support; and
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•
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Company reputation and size.
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•
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Sponsoring technical seminars and webinars that highlight our solutions;
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•
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Participating in industry trade shows and technical conferences;
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•
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Advertising in digital media publications and physical locations;
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•
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Writing and distribution of various forms of collateral, including brochures, white papers, solution briefs, and application notes;
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•
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Demonstrating the performance and scalability of our products at our executive briefing center proof-of-concept labs;
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•
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Communicating through our corporate website and various social media outlets, such as LinkedIn, Twitter, and our corporate blog; and
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•
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Writing articles for online and print trade journals.
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•
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Assist new customers with product installation and licensing;
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•
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Provide configuration assistance and expert advice on best practices;
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•
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Investigate user issues and work to quickly resolve them;
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•
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Quickly respond to reported hardware failures and repair or replace as needed; and
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•
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Provide access to our self-service portal where customers can report new cases and access our extensive knowledge base articles.
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•
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we will have paid significant transaction costs and, in certain circumstances, a termination fee to Keysight of $59.7 million;
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•
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the attention of management will have been diverted to the Merger rather than to operations and the pursuit of other opportunities;
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•
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the potential loss of key personnel as personnel may experience uncertainty about their future with the combined company, and our potential inability to attract talent while the Merger is pending;
|
•
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we will have been subject to certain restrictions on the conduct of our business, which may have prevented us from making certain acquisitions or dispositions or pursuing other business opportunities; and
|
•
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the trading price of our common stock may decline to the extent that the market price reflects a market assumption that the Merger will be completed.
|
•
|
problems or delays in assimilating or transitioning to Ixia the acquired operations, systems, processes, controls, technologies, products, or personnel;
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•
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loss of acquired customer accounts;
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•
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unanticipated costs associated with the acquisition;
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•
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our failure to identify in the due diligence process significant issues with product quality or development and liabilities related to operational issues, intellectual property infringement or tax or other regulatory matters;
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•
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multiple and overlapping product lines as a result of our acquisitions that are offered, priced and supported differently, which could cause customer confusion and delays in orders;
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•
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higher than anticipated costs in continuing support and development of acquired products;
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•
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diversion of management’s attention from our core business and the challenges of managing larger and more widespread operations resulting from acquisitions;
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•
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adverse effects on existing business relationships of Ixia or the acquired business with suppliers, licensors, contract manufacturers, customers, resellers, and industry experts;
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•
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significant impairment, exit and/or restructuring charges if the products or technologies acquired in an acquisition do not meet our sales expectations or are unsuccessful;
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•
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insufficient revenues to offset increased expenses associated with acquisitions;
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•
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risks associated with entering markets in which we have no or limited prior experience; and
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•
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potential loss of the acquired organization’s or our own key employees.
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•
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rapid technological change such as the recent advancements of IP-based networks and wireless technologies;
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•
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frequent new product introductions such as higher speed and more complex routers;
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•
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evolving industry standards;
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•
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changing customer needs such as the increase in advanced IP services agreed to between service providers and their customers;
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•
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short product life cycles as a result of rapid changes in our customers’ products; and
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•
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new paradigms like virtualization, software defined networks, and cloud computing.
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•
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anticipate technological changes and industry trends;
|
•
|
properly identify customer needs;
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•
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innovate, develop and license or acquire new technologies and applications;
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•
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hire and retain necessary technical personnel;
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•
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successfully commercialize new technologies in a timely manner;
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•
|
timely obtain key components for the manufacture of new products;
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•
|
manufacture and deliver our products in sufficient volumes and on time;
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•
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price our products competitively;
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•
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provide high quality, timely technical support; and
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•
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differentiate our offerings from our competitors’ offerings.
|
•
|
increased price competition;
|
•
|
changes in customer, geographic or product mix (such as the mix of software versus hardware product sales);
|
•
|
new product introductions by us and by our competitors;
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•
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changes in shipment volume;
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•
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excess or obsolete inventory costs;
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•
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increased industry consolidation among our customers, which may lead to decreased demand for, and downward pricing pressure on, our products; and
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•
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increases in labor costs.
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•
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difficulties in recruiting, hiring, training, and retaining international personnel;
|
•
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increased complexity and costs of managing international operations;
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•
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growing demand for and cost of technical personnel;
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•
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changing governmental laws and regulations, including those related to income taxes, the UK Anti-Bribery Act, and the Foreign Corrupt Practices Act;
|
•
|
increased exposure to foreign currency exchange rate fluctuations;
|
•
|
political and economic instability, including military conflict and social unrest;
|
•
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commercial laws and business practices that favor local competition;
|
•
|
differing labor and employment laws;
|
•
|
supporting multiple languages;
|
•
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reduced or limited protections of intellectual property rights;
|
•
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more complicated logistical and distribution arrangements; and
|
•
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longer accounts receivable cycles and difficulties in collecting receivables.
|
•
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be time-consuming;
|
•
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result in costly and protracted litigation;
|
•
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divert the efforts of our technical and management personnel;
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•
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require us to modify the products or services at issue or to develop alternative technology, thereby causing delivery delays and the loss or deferral of revenues;
|
•
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require us to cease selling the products or services at issue;
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•
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require us to pay substantial damage awards;
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•
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expose us to indemnity claims from our customers;
|
•
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damage our reputation; or
|
•
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require us to enter into royalty or licensing agreements which, if required, may not be available on terms acceptable to us, if at all.
|
•
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increasing our vulnerability to downturns in our business, competitive pressures, and adverse economic and industry conditions;
|
•
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requiring the dedication of an increased portion of our expected cash from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes; and
|
•
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limiting our flexibility in planning for, or reacting to, changes in our business and our industry.
|
(a)
|
Market Price, Dividends and Related Matters
|
|
High
|
|
Low
|
||||
2016
|
|
|
|
||||
Fourth quarter
|
$
|
17.00
|
|
|
$
|
11.45
|
|
Third quarter
|
12.56
|
|
|
9.40
|
|
||
Second quarter
|
12.46
|
|
|
9.10
|
|
||
First quarter
|
12.63
|
|
|
8.50
|
|
||
2015
|
|
|
|
||||
Fourth quarter
|
$
|
15.50
|
|
|
$
|
12.34
|
|
Third quarter
|
16.05
|
|
|
12.08
|
|
||
Second quarter
|
13.51
|
|
|
11.45
|
|
||
First quarter
|
12.54
|
|
|
9.84
|
|
|
12/31/2011
|
|
|
12/31/2012
|
|
|
12/31/2013
|
|
|
12/31/2014
|
|
|
12/31/2015
|
|
|
12/31/2016
|
|
||||||
Ixia
|
$
|
100.00
|
|
|
$
|
161.56
|
|
|
$
|
126.64
|
|
|
$
|
107.04
|
|
|
$
|
118.27
|
|
|
$
|
153.19
|
|
NASDAQ Composite
|
$
|
100.00
|
|
|
$
|
116.41
|
|
|
$
|
165.47
|
|
|
$
|
188.69
|
|
|
$
|
200.32
|
|
|
$
|
216.54
|
|
NASDAQ Telecommunications
|
$
|
100.00
|
|
|
$
|
102.78
|
|
|
$
|
143.40
|
|
|
$
|
149.42
|
|
|
$
|
144.02
|
|
|
$
|
153.88
|
|
(b)
|
Use of Proceeds
|
(c)
|
Issuer Purchases of Equity Securities
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
(1)
|
|
Total Number of
Shares Purchased as Part of Publicly Announced Program |
|
Approximate Dollar
Value of Shares that may yet be Purchased under the Program |
||||||
October 1, 2016 - October 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
18,161,932
|
|
November 1, 2016 - November 30, 2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,161,932
|
|
||
December 1, 2016 - December 31, 2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,161,932
|
|
||
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2013
(3)
|
|
2012
(4)
|
||||||||||
Consolidated Statement of Operations Data (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Products
|
$
|
311,203
|
|
|
$
|
361,923
|
|
|
$
|
325,455
|
|
|
$
|
352,712
|
|
|
$
|
330,315
|
|
Services
|
173,642
|
|
|
155,014
|
|
|
139,003
|
|
|
114,544
|
|
|
83,119
|
|
|||||
Total revenues
|
484,845
|
|
|
516,937
|
|
|
464,458
|
|
|
467,256
|
|
|
413,434
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Costs and operating expenses:
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenues – products
(2)
|
87,528
|
|
|
97,415
|
|
|
98,815
|
|
|
89,136
|
|
|
71,668
|
|
|||||
Cost of revenues – services
|
16,041
|
|
|
16,443
|
|
|
16,166
|
|
|
13,867
|
|
|
10,493
|
|
|||||
Research and development
|
102,534
|
|
|
113,443
|
|
|
115,156
|
|
|
117,502
|
|
|
98,169
|
|
|||||
Sales and marketing
|
161,604
|
|
|
155,211
|
|
|
151,765
|
|
|
137,724
|
|
|
117,214
|
|
|||||
General and administrative
|
58,975
|
|
|
68,925
|
|
|
66,475
|
|
|
47,158
|
|
|
45,607
|
|
|||||
Amortization of intangible assets
|
39,099
|
|
|
42,315
|
|
|
46,901
|
|
|
40,805
|
|
|
30,018
|
|
|||||
Acquisition and other related
|
785
|
|
|
656
|
|
|
3,277
|
|
|
6,920
|
|
|
11,861
|
|
|||||
Restructuring
(5)
|
(130
|
)
|
|
(517
|
)
|
|
10,310
|
|
|
1,840
|
|
|
4,077
|
|
|||||
Total costs and operating expenses
|
466,436
|
|
|
493,891
|
|
|
508,865
|
|
|
454,952
|
|
|
389,107
|
|
|||||
Income (loss) from operations
|
18,409
|
|
|
23,046
|
|
|
(44,407
|
)
|
|
12,304
|
|
|
24,327
|
|
|||||
Interest income and other, net
(6)
|
310
|
|
|
(372
|
)
|
|
(24
|
)
|
|
6,269
|
|
|
2,255
|
|
|||||
Interest expense
(7)
|
(1,930
|
)
|
|
(8,331
|
)
|
|
(8,266
|
)
|
|
(7,771
|
)
|
|
(7,215
|
)
|
|||||
Income (loss) before income taxes
|
16,789
|
|
|
14,343
|
|
|
(52,697
|
)
|
|
10,802
|
|
|
19,367
|
|
|||||
Income tax expense (benefit)
(8)
|
50,700
|
|
|
8,392
|
|
|
(11,105
|
)
|
|
(1,068
|
)
|
|
(26,093
|
)
|
|||||
Net (loss) income
|
$
|
(33,911
|
)
|
|
$
|
5,951
|
|
|
$
|
(41,592
|
)
|
|
$
|
11,870
|
|
|
$
|
45,460
|
|
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.54
|
)
|
|
$
|
0.16
|
|
|
$
|
0.63
|
|
Diluted
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.54
|
)
|
|
$
|
0.15
|
|
|
$
|
0.59
|
|
Weighted average number of common and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
81,470
|
|
|
79,633
|
|
|
77,629
|
|
|
75,757
|
|
|
72,183
|
|
|||||
Diluted
|
81,470
|
|
|
81,459
|
|
|
77,629
|
|
|
77,513
|
|
|
84,505
|
|
|
2016
(8)
|
|
2015
|
|
2014
|
|
2013
(3)
|
|
2012
(4)(8)
|
||||||||||
Consolidated Balance Sheet Data (in thousands):
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
71,759
|
|
|
$
|
52,472
|
|
|
$
|
46,394
|
|
|
$
|
34,189
|
|
|
$
|
47,508
|
|
Short-term investments in marketable securities
|
71,251
|
|
|
14,504
|
|
|
79,760
|
|
|
51,507
|
|
|
126,851
|
|
|||||
Working capital
|
134,834
|
|
|
69,725
|
|
|
(44,758
|
)
|
|
128,960
|
|
|
227,309
|
|
|||||
Long-term investments in marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,119
|
|
|||||
Total assets
|
757,567
|
|
|
779,877
|
|
|
868,791
|
|
|
885,403
|
|
|
815,729
|
|
|||||
Convertible senior notes
(7)
|
—
|
|
|
—
|
|
|
198,880
|
|
|
197,680
|
|
|
196,480
|
|
|||||
Term loan
|
33,586
|
|
|
37,532
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total liabilities
|
246,030
|
|
|
260,866
|
|
|
387,700
|
|
|
386,291
|
|
|
368,231
|
|
|||||
Total shareholders’ equity
|
511,537
|
|
|
519,011
|
|
|
481,091
|
|
|
499,112
|
|
|
447,498
|
|
|
(1)
|
Stock-based compensation included in:
|
Cost of revenues – products
|
$
|
280
|
|
|
$
|
315
|
|
|
$
|
331
|
|
|
$
|
550
|
|
|
$
|
423
|
|
Cost of revenues – services
|
108
|
|
|
120
|
|
|
126
|
|
|
209
|
|
|
162
|
|
|||||
Research and development
|
6,489
|
|
|
6,625
|
|
|
6,843
|
|
|
8,065
|
|
|
6,242
|
|
|||||
Sales and marketing
|
5,944
|
|
|
4,730
|
|
|
5,624
|
|
|
7,367
|
|
|
5,352
|
|
|||||
General and administrative
|
5,886
|
|
|
7,186
|
|
|
3,595
|
|
|
4,571
|
|
|
7,462
|
|
(2)
|
Cost of revenues – products excludes amortization of intangible assets related to purchased technology of
$25.3 million
,
$25.7 million
,
$28.9 million
,
$26.0 million
, and
$20.3 million
for the years ended
December 31, 2016
,
2015
,
2014
,
2013
, and
2012
, respectively, which is included in
Amortization of intangible assets
.
|
(3)
|
During the year ended December 31, 2013, we completed the acquisition of Net Optics, Inc. for approximately
$187.4 million
.
|
(4)
|
During the year ended December 31, 2012, we completed the acquisitions of Anue, Inc. and BreakingPoint Systems, Inc. for approximately $152.4 million and $163.7 million, respectively.
|
(5)
|
In each of 2012 and 2014, our management approved, committed to, and initiated a plan to restructure our operations in light of our acquisitions of BreakingPoint, Inc. in 2012 and Net Optics, Inc. in 2013, respectively. In 2013, management approved, committed to, and initiated a plan to restructure certain operations related to our network test products. In 2014, management approved, committed to, and initiated a plan to restructure our operations to better align our operating costs with our business opportunities.
|
(6)
|
In 2013, we recorded realized gains of $2.9 million related to the sale of previously written down auction rate and corporate debt securities.
|
(7)
|
In December 2010, we issued $200 million in aggregate principal amount of 3.00% convertible senior notes that matured on December 15, 2015. The interest was payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2011. During each of 2012, 2013, and 2014, we made interest payments of
$6.0 million
. During 2015, we made interest payments of
$4.9 million
. In July 2015, we repurchased
$65 million
in aggregate principal amount of these notes, and in December 2015, the remaining outstanding notes in the aggregate principal amount of
$135 million
matured, and we repaid them in full.
|
(8)
|
In 2012, we released $34.8 million of our valuation allowance previously established against our U.S. deferred tax assets. The 2012 partial releases related primarily to the net deferred tax liabilities recorded as part of the Anue and BreakingPoint acquisitions. In 2016, our income tax expense includes a $42.9 million charge related to the establishment of a valuation allowance against our remaining net deferred tax assets in the U.S.
|
•
|
our pricing policies and those of our competitors;
|
•
|
the pricing we are able to obtain from our component suppliers and contract manufacturers;
|
•
|
the mix of customers and sales channels through which our products are sold;
|
•
|
the mix of our products sold, such as the mix of software versus hardware product sales and the mix of product versus services sales;
|
•
|
new product introductions by us and by our competitors;
|
•
|
demand for and quality of our products; and
|
•
|
shipment volume.
|
•
|
Research and development
expenses consist primarily of salaries and other personnel costs related to the design, development, testing, and enhancement of our products. We expense our research and development costs as they are incurred. We also capitalize and depreciate over a five-year period costs of our products used for internal purposes. We plan to continue to strategically invest in research and development and new products and technology, as we believe that such investment is critical to attaining our strategic objectives and will further differentiate us in the marketplace.
|
•
|
Sales and marketing
expenses consist primarily of compensation and related costs for personnel engaged in direct sales, sales support, and marketing functions, as well as tradeshow, promotional, and advertising expenditures. We also capitalize and depreciate over a two-year period costs of our products used for sales and marketing activities, including product demonstrations for potential customers.
|
•
|
General and administrative
expenses consist primarily of salaries and related expenses for certain executive, finance, legal, human resources, information technology, and administrative personnel, as well as professional fees (e.g., legal and accounting), facility costs related to our corporate headquarters, insurance costs, and other general corporate expenses. General and administrative expenses also include costs related to internal and other investigations, shareholder litigation, and related matters.
|
•
|
Amortization of intangible assets
consists of the recognition of the purchase price of various intangible assets over their estimated useful lives. The future amortization expense of acquired intangible assets depends on a number of factors, including the extent to which we acquire additional businesses, technologies, and product lines or are required to record impairment charges related to our acquired intangible assets. See Note 8 to the consolidated financial statements included in this Form 10-K.
|
•
|
Acquisition and other related costs
are expensed as incurred and consist primarily of transaction and integration related costs such as success-based banking fees, professional fees for legal, accounting, tax, due diligence, valuation and other related services, change in control payments, amortization of deferred compensation, consulting fees, regulatory costs, certain employee, facility and infrastructure transition costs, and other acquisition related expenses. We expect our acquisition and other related expenses to fluctuate over time based on the timing of our acquisitions and related integration activities.
|
•
|
Restructuring
expenses consist primarily of employee severance costs and other related charges, as well as facility-related charges to exit certain locations. See Note 4 to the consolidated financial statements included in this Form 10-K.
|
•
|
Revenue Recognition Policy
. We exercise significant judgment and use estimates in connection with the determination of the amount of revenue that is recognized in each accounting period and the allocation of those amounts to either product or services revenue. We recognize our revenue in accordance with authoritative guidance on both hardware and software revenue recognition. For our hardware and software products and related services, we recognize revenue based on the following four criteria: whether (i) evidence of an arrangement exists, which is typically in the form of a customer purchase order; (ii) delivery has occurred (i.e., risks and rewards of ownership have passed to the customer); (iii) the sales price is fixed or determinable; and (iv) collectability is deemed reasonably assured (or probable for software-related deliverables). Provided that the above criteria are met, revenue from hardware and software product sales is typically recognized upon shipment, and service revenues are recognized as the services are provided or completed. Our service revenues from our initial and separately purchased technical support, warranty, and software maintenance arrangements are recognized on a straight-line basis over the applicable contractual period.
|
•
|
Acquisition Purchase Price Allocation.
When we acquire a business, product line, or rights to a product or technology, we allocate the purchase price to the various tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values. Determining the fair value of certain assets and liabilities acquired is subjective in nature and often involves the use of significant estimates and assumptions, some of which may be based in part on historical experience and information obtained from the management of the acquired business, and are inherently uncertain. Many of the estimates and assumptions used to determine fair values, such as those for purchased technologies and customer relationships, are made based on forecasted information and discount rates. To assist in the purchase price allocation process as well as the determination of estimated useful lives of acquired intangible assets, we may obtain appraisals from valuation specialists. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates and assumptions.
|
•
|
Write-Down of Excess or Obsolete Inventory
. We write down inventory for estimated obsolescence, excessive quantities, or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon market and economic conditions, technology changes, new product introductions, and changes in strategic business direction, and requires estimates that may include elements that are uncertain. If actual future demand is less favorable than our initial estimate, additional inventory write-downs may be required and would be reflected in cost of goods sold in the period the revision is made. Once written down, the inventory reserves are not reversed until the inventory is disposed of or sold.
|
•
|
Income Taxes.
We operate in numerous states and countries through our various subsidiaries, and must allocate our income, expenses, and earnings under the various laws and regulations of each of these taxing jurisdictions. Accordingly, our provision for income taxes represents our total estimate of the liability that we have incurred in doing business each year in all of our locations. Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. In determining whether we need to record a valuation allowance against our deferred tax assets, management must make a number of estimates, assumptions, and judgments, including estimates of future earnings and taxable income. We establish a valuation allowance to reduce deferred tax assets to the amount we believe is more likely than not to be realized. The determination to record or release valuation allowances requires significant judgment. In the fourth quarter of 2016, we concluded that it is more likely than not that all of our net deferred tax assets in the U.S. may not be realized. Our conclusion was due to the realization of a three year cumulative pre-tax book loss in the U.S.
|
•
|
Goodwill
. We record goodwill as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. We evaluate the recoverability of our goodwill on an annual basis or if events or changes in circumstances indicate that impairment in the value of goodwill recorded on our balance sheet may exist. We have determined that we have one reporting unit for goodwill impairment testing purposes. The fair value of the Company’s reporting unit is determined using the market capitalization of Ixia, which considers the observed market price of the Company’s publicly-traded equity securities on the impairment test date. The fair value of the Company’s reporting unit is then compared to the carrying amount of the Company’s reporting unit under “step 1” of the impairment testing model. If the carrying value of the reporting unit exceeds its fair value, then the fair value of goodwill is determined and compared to its carrying value under “step 2.” Impairment losses are recorded to the extent that the carrying value of the goodwill exceeds its estimated fair value. Currently, management believes that it is not at risk of failing the “step 1” impairment test because the Company’s market capitalization is significantly in excess of the carrying value of the reporting unit. We completed our annual goodwill impairment test of our single reporting unit as of
December 31, 2016
and determined that there was no impairment.
|
•
|
Long-lived Asset Valuation (Intangible Assets and Property, Plant and Equipment).
We test long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. When such events or changes in circumstances occur, we assess recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Fair value is determined using a discounted cash flow analysis that involves the use of significant estimates and assumptions, some of which may be based in part on historical experience, forecasted information, and discount rates. No such impairment charges were recorded during the years ended
December 31, 2016
,
2015
, and
2014
.
|
•
|
Stock-Based Compensation.
Share-based payments, including grants of stock options, restricted stock units, and employee stock purchase rights, are recognized based on the estimated fair values for accounting purposes on the grant date. We use the Black-Scholes option pricing model to estimate the fair value for accounting purposes of stock options and employee stock purchase rights. We use the grant date closing share sales price of a share of our common stock to estimate the fair value for accounting purposes of restricted stock units. The determination of the fair value of share-based awards utilizing the Black-Scholes model is affected by our stock price and a number of assumptions, including expected volatility, expected life, and risk-free interest rate. The expected life and expected volatility are estimated based on historical data. The risk-free interest rate assumption is based on observed interest rates appropriate for the lives of our share-based awards. Stock-based compensation expense recognized in our consolidated financial statements is based on awards that are ultimately expected to vest. The amount of stock-based compensation expense is reduced for estimated forfeitures based on historical experience as well as future expectations. We recognize stock-based compensation expense based on the graded, or accelerated multiple-option, approach over the vesting period.
|
•
|
Impairment of Marketable Securities.
We regularly review our investment portfolio to determine if any security is other-than-temporarily impaired, which would require us to record an impairment charge in the period any such determination is made. In making this judgment, we evaluate, among other things, the duration and extent to which the fair value of a security is less than its cost and our intent and ability to sell, or whether we will more likely than not be required to sell, the security before recovery of its amortized cost basis. We have evaluated our investments as of
December 31, 2016
and have determined that no investments with unrealized losses are other-than-temporarily impaired.
|
•
|
Contingencies and Litigation
. We evaluate contingent liabilities, including threatened or pending litigation, and record accruals when the loss is deemed probable and the liability can reasonably be estimated. We make these assessments based on the facts and circumstances of each situation and in some instances following consultation with outside legal counsel.
|
|
(1)
|
Stock-based compensation included in:
|
Cost of revenues – products
|
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Cost of revenues – services
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
Research and development
|
|
1.3
|
|
|
1.3
|
|
|
1.5
|
|
Sales and marketing
|
|
1.2
|
|
|
0.9
|
|
|
1.2
|
|
General and administrative
|
|
1.2
|
|
|
1.4
|
|
|
0.8
|
|
(2)
|
Cost of revenues – products
excludes amortization of intangible assets related to purchased technology, as a percentage of total revenues, of
5.2%
,
5.0%
, and
6.2%
for the years ended
December 31, 2016
,
2015
, and
2014
, respectively, which is included in
Amortization of intangible assets
.
|
|
Year ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Product revenues
|
$
|
223,945
|
|
|
$
|
271,247
|
|
Service revenues
|
125,612
|
|
|
115,367
|
|
||
Total Network Test Solutions
|
349,557
|
|
|
386,614
|
|
||
|
|
|
|
||||
Product revenues
|
87,258
|
|
|
90,676
|
|
||
Service revenues
|
48,030
|
|
|
39,647
|
|
||
Total Network Visibility Solutions
|
135,288
|
|
|
130,323
|
|
||
Total Revenues
|
$
|
484,845
|
|
|
$
|
516,937
|
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Product revenues
|
$
|
271,247
|
|
|
$
|
238,282
|
|
Service revenues
|
115,367
|
|
|
107,391
|
|
||
Total Network Test Solutions
|
386,614
|
|
|
345,673
|
|
||
|
|
|
|
||||
Product revenues
|
90,676
|
|
|
87,173
|
|
||
Service revenues
|
39,647
|
|
|
31,612
|
|
||
Total Network Visibility Solutions
|
130,323
|
|
|
118,785
|
|
||
Total Revenues
|
$
|
516,937
|
|
|
$
|
464,458
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash provided by operating activities
|
$
|
81,176
|
|
|
$
|
98,804
|
|
|
$
|
38,071
|
|
Cash (used in) provided by investing activities
|
(66,542
|
)
|
|
55,837
|
|
|
(34,916
|
)
|
|||
Cash provided by (used in) financing activities
|
4,653
|
|
|
(148,563
|
)
|
|
9,050
|
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating leases (1)
|
$
|
54,107
|
|
|
$
|
11,849
|
|
|
$
|
20,657
|
|
|
$
|
13,319
|
|
|
$
|
8,282
|
|
Purchase obligations (2)
|
42,135
|
|
|
42,135
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Term Loan (Principal and Interest) (3)
|
36,235
|
|
|
6,351
|
|
|
29,884
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
132,477
|
|
|
$
|
60,335
|
|
|
$
|
50,541
|
|
|
$
|
13,319
|
|
|
$
|
8,282
|
|
(1)
|
Minimum lease payments have not been reduced by minimum sublease rentals of
$43,000
due in the future under non-cancelable subleases. See Note 10 to the consolidated financial statements included in this Form 10-K.
|
(2)
|
Purchase obligations in the table above consist of purchase orders issued to certain of our contract manufacturers in the normal course of business to purchase specified quantities of our hardware products. It is not our intent, nor is it reasonably likely, that we would cancel these executed purchase orders.
|
(3)
|
In March 2015, we entered into an amended and restated credit agreement which provides for a term loan in the aggregate principal amount of
$40 million
. The Term Loan requires quarterly repayments of principal on the last day of the eleven fiscal quarters commencing with the fiscal quarter ended June 30, 2015. The first four payments were in the amount of $500,000 each, the following four payments are in the amount of $1.0 million each, and the subsequent three payments will be in the amount of $1.5 million each. The remaining principal balance of the Term Loan will be due and payable on the maturity date, which is February 15, 2018. See Note 3 to the consolidated financial statements included in this Form 10-K. The term loan obligations in the table above assume an interest rate of 2.61% in future years.
|
(a)
|
The following documents are filed as part of this Report:
|
(1)
|
Consolidated Financial Statements
|
(2)
|
Financial Statement Schedule
|
(3)
|
Exhibits
|
2.1
|
Agreement and Plan of Merger, dated as of January 30, 2017, by and between Ixia and Keysight Technologies, Inc. (1)
|
|
|
|
|
2.4.1
|
Joinder Agreement, dated as of February 2, 2017, executed by Keysight Acquisition, Inc. and acknowledged by the Company and Keysight Technologies, Inc.
|
|
|
|
|
3.1
|
Amended and Restated Articles of Incorporation, as amended (2)
|
|
|
|
|
3.2
|
Bylaws, as amended (3)
|
|
|
|
|
10.1
|
Amended and Restated Credit Agreement dated as of March 2, 2015, by and among the Company, as the Borrower, Anue Systems, Inc., BreakingPoint Systems, Inc., Catapult Communications Corporation, Net Optics, Inc., Net Optics IL, LLC, and VeriWave, Inc., as the Guarantors, Silicon Valley Bank, as Administrative Agent, Swingline Lender, and Letter of Credit Issuer, and the Other Lenders Parties Thereto (4)
|
|
|
|
|
10.1.1
|
Corrective Amendment to Credit Agreement effective as of March 20, 2015 between the Company and Silicon Valley Bank, as Administrative Agent (5)
|
|
|
|
|
10.1.2
|
Second Amendment to Amended and Restated Credit Agreement dated as of September 30, 2015, by and among the Company, as the Borrower, Anue Systems, Inc., BreakingPoint Systems, Inc., Catapult Communications Corporation, Net Optics, Inc., Net Optics IL LLC, and VeriWave, Inc., as the Guarantors, Silicon Valley Bank, as Administrative Agent, and the Lenders Party Thereto (6)
|
|
|
|
|
10.1.3
|
Third Amendment to Amended and Restated Credit Agreement dated as of January 25, 2016, by and among the Company, as the Borrower, Anue Systems, Inc., BreakingPoint Systems, Inc., Catapult Communications Corporation, Net Optics, Inc., Net Optics IL LLC, and VeriWave, Inc., as the Guarantors, Silicon Valley Bank, as Administrative Agent, and the Lenders Party Thereto (7)
|
|
|
|
|
10.2*
|
Ixia 2010 Employee Stock Purchase Plan, as amended (8), including Amendment No. 2 dated May 9, 2013 (9) and Amendment No. 3 dated June 19, 2013 (10)
|
|
|
|
|
10.3*
|
Officer Severance Plan (11), including Amendment dated December 31, 2008 (12), Amendment No. 2 dated March 22, 2011 (13), Amendment No. 3 dated December 21, 2012 (14) , and Amendment No. 4 dated January 29, 2017 (15)
|
|
|
|
|
10.4*
|
Ixia Officer Severance Plan (As Amended and Restated effective February 12, 2016) (16), including Amendment No. 1 dated January 29, 2017 (17)
|
|
|
|
|
10.5*
|
Form of Indemnity Agreement between Ixia and its directors and executive officers (adopted January 29, 2017) (18)
|
|
|
|
|
10.6
|
Office Lease Agreement dated September 14, 2007 between MS LPC Malibu Property Holdings, LLC and the Company (19)
|
|
|
|
|
10.6.1
|
First Amendment to Office Lease dated February 11, 2010, between MS LPC Malibu Property Holdings, LLC and the Company (20)
|
|
|
|
|
10.6.2
|
Second Amendment to Office Lease dated November 15, 2010, between MS LPC Malibu Property Holdings, LLC and the Company (21)
|
|
|
|
|
10.6.3
|
Third Amendment to Office Lease dated January 10, 2012 between MS LPC Malibu Property Holdings, LLC and the Company (22)
|
|
|
|
|
10.6.4
|
Fourth Amendment to Office Lease dated June 1, 2012 between MS LPC Malibu Property Holdings, LLC and the Company (23)
|
|
|
|
|
10.6.5
|
Fifth Amendment to Office Lease dated November 1, 2012 between MS LPC Malibu Property Holdings, LLC and the Company (24)
|
|
|
|
|
10.6.6
|
Sixth Amendment to Office Lease dated June 18, 2013 between MS LPC Malibu Property Holdings, LLC and the Company (25)
|
|
|
|
|
10.7*
|
Compensation of Named Executive Officers as of December 31, 2016
|
|
|
|
|
10.8*
|
Summary of Compensation for the Company’s Non-Employee Directors effective April 1, 2013 (26)
|
|
|
|
|
10.9*
|
Ixia 2016 Senior Officer Bonus Plan (27)
|
|
|
|
|
10.10*
|
Amended and Restated Ixia 2008 Equity Incentive Plan, including Amended and Restated First Amendment dated as of May 4, 2011 and Second Amendment dated as of April 8, 2011 (28)
|
|
|
|
|
10.11*
|
Second Amended and Restated Ixia 2008 Equity Incentive Plan (29)
|
|
|
|
|
10.11.1*
|
Form of 2016-2017 Performance-Based Restricted Stock Unit Award Agreement under the Second Amended and Restated Ixia 2008 Equity Incentive Plan (30)
|
|
|
|
|
10.12*
|
Employment Offer Letter Agreement dated as of August 8, 2014 and effective as of August 13, 2014 between the Company and Bethany Mayer, as amended (31)
|
|
|
|
|
10.13*
|
Letter Agreement effective August 4, 2014 between the Company and Brent Novak (32)
|
|
|
|
|
10.14*
|
Employment Agreement entered into as of May 4, 2012 between the Company, as assignee of Anue Systems, Inc., and Alexander J. Pepe (33)
|
|
|
|
|
10.14.1*
|
Amendment No. 1 to Employment Agreement entered into as of August 14, 2013 between the Company and Alexander J. Pepe (34)
|
|
|
|
|
10.14.2*
|
Amendment No. 2 to Employment Agreement entered into as of October 24, 2013 between the Company and Alexander J. Pepe, as executed by the parties on August 5, 2014 (35)
|
|
|
|
10.14.3*
|
Amendment No. 3 to Employment Agreement dated January 13, 2017 between the Company and Alexander J. Pepe
|
|
|
|
|
10.15*
|
Employment Offer Letter Agreement dated February 19, 2015 between the Company and Hans-Peter Klaey (36)
|
|
|
|
|
10.16*
|
Employment Separation Agreement dated as of September 9, 2016 between Ixia and Hans-Peter Klaey (37)
|
|
|
|
|
10.17
|
Voting and Support Agreement, dated as of January 30, 2017, by and among Keysight Technologies, Inc., Ixia, Laurent Asscher and Katelia Capital Group Ltd. (38)
|
|
|
|
|
10.18
|
Voting and Support Agreement, dated as of January 30, 2017, by and among Keysight Technologies, Inc., Ixia, Errol Ginsberg and The Errol Ginsberg and Annette R. Michelson Family Trust dated October 13, 1999 (39)
|
|
|
|
|
10.19*
|
2017 Sales SEC Plan for Patricia Key
|
|
|
|
|
10.20*
|
Form of Indemnity Agreement between Ixia and its directors and executive officers (superseded on January 29, 2017) (40)
|
|
|
|
|
14.1
|
Code of Ethics for Chief Executive Officer and Senior Financial Officers (40)
|
|
|
|
|
21.1
|
Subsidiaries of the Company
|
|
|
|
|
23.1
|
Consent of Deloitte & Touche, LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
31.1
|
Certificate of Chief Executive Officer of Ixia pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
31.2
|
Certificate of Chief Financial Officer of Ixia pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
32.1
|
Certificate of Chief Executive Officer and Chief Financial Officer of Ixia pursuant to Rule 13a-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Label Linkbase Document
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Document
|
|
*
|
Constitutes a management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K.
|
(1)
|
Incorporated by reference to Exhibit 2.1 to Ixia’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on February 1, 2017.
|
(2)
|
Incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (Reg. No. 333-42678) filed with the SEC on September 5, 2000.
|
(3)
|
Incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on April 4, 2013.
|
(4)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on March 6, 2015
|
(5)
|
Incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on March 31, 2015.
|
(6)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on October 5, 2015.
|
(7)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on January 29, 2016.
|
(8)
|
Incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (Reg. No. 333-176237) filed with the SEC on August 11, 2011.
|
(9)
|
Incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (Reg. No. 333-188689) filed with the SEC on May 17, 2013.
|
(10)
|
Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (File No. 0-31523) filed with the SEC on June 25, 2013.
|
(11)
|
Incorporated by reference to Exhibit 10.4 to Amendment No. 1 to the Company’s Registration Statement on Form S- 1 (Reg. No. 333-42678) filed with the SEC on September 5, 2000.
|
(12)
|
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on January 7, 2009.
|
(13)
|
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on March 28, 2011.
|
(14)
|
Incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on April 4, 2013.
|
(15)
|
Incorporated by reference to Exhibit 10.4 to Ixia’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on February 1, 2017.
|
(16)
|
Amends and restates the Ixia Officer Severance Plan (as Amended and Restated effective January 1, 2009), as amended. Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 0-31523) filed with the SEC on May 6, 2016.
|
(17)
|
Incorporated by reference to Exhibit 10.5 to Ixia’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on February 1, 2017.
|
(18)
|
Incorporated by reference to Exhibit 10.3 to Ixia’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on February 1, 2017.
|
(19)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on September 25, 2007.
|
(20)
|
Incorporated by reference to Exhibit 10.7.1 to the Company’s Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on March 5, 2012.
|
(21)
|
Incorporated by reference to Exhibit 10.7.2 to the Company’s Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on March 5, 2012.
|
(22)
|
Incorporated by reference to Exhibit 10.8.3 to the Company’s Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on April 4, 2013.
|
(23)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on July 10, 2012.
|
(24)
|
Incorporated by reference to Exhibit 10.8.5 to the Company’s Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on April 4, 2013.
|
(25)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 0-31523) filed with the SEC on August 9, 2013.
|
(26)
|
Incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on June 23, 2014.
|
(27)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on March 25, 2016.
|
(28)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on May 25, 2011.
|
(29)
|
Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 0-31523) filed with the SEC on June 25, 2013.
|
(30)
|
Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 0-31523) filed with the SEC on May 6, 2016.
|
(31)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 0-31523) filed with the SEC on November 7, 2014.
|
(32)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on August 5, 2014.
|
(33)
|
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on August 5, 2014.
|
(34)
|
Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on August 5, 2014.
|
(35)
|
Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on August 5, 2014.
|
(36)
|
Incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on February 29, 2016.
|
(37)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 0-31523) filed with the SEC on November 7, 2016.
|
(38)
|
Incorporated by reference to Exhibit 10.1 to Ixia’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on February 1, 2017.
|
(39)
|
Incorporated by reference to Exhibit 10.2 to Ixia’s Current Report on Form 8-K (File No. 0-31523) filed with the SEC on February 1, 2017.
|
(40)
|
Incorporated by reference to Exhibit 10.5 to Amendment No. 1 to the Company’s Registration Statement on Form S-8 (Reg. No. 333-42678) filed with the SEC on September 5, 2000.
|
(41)
|
Incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K (File No. 0-31523) filed with the SEC on March 12, 2004.
|
(b)
|
Exhibits
|
(c)
|
Financial Statement Schedules
|
Dated: March 1, 2017
|
IXIA
|
|
|
|
|
|
|
|
|
/s/ BETHANY MAYER
|
|
|
|
Bethany Mayer
|
|
|
|
Chief Executive Officer
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ BETHANY MAYER
|
|
President, Chief Executive Officer, Director
|
|
March 1, 2017
|
Bethany Mayer
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ BRENT NOVAK
|
|
Chief Financial Officer
|
|
March 1, 2017
|
Brent Novak
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ ERROL GINSBERG
|
|
Chairman of the Board, Director
|
|
March 1, 2017
|
Errol Ginsberg
|
|
|
|
|
|
|
|
|
|
/s/ JONATHAN FRAM
|
|
Director
|
|
March 1, 2017
|
Jonathan Fram
|
|
|
|
|
|
|
|
|
|
/s/ GAIL HAMILTON
|
|
Director
|
|
March 1, 2017
|
Gail Hamilton
|
|
|
|
|
|
|
|
|
|
/s/ LAURENT ASSCHER
|
|
Director
|
|
March 1, 2017
|
Laurent Asscher
|
|
|
|
|
|
|
|
|
|
/s/ ILAN DASKAL
|
|
Director
|
|
March 1, 2017
|
Ilan Daskal
|
|
|
|
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
71,759
|
|
|
$
|
52,472
|
|
Marketable securities
|
71,251
|
|
|
14,504
|
|
||
Accounts receivable, net
|
103,395
|
|
|
121,932
|
|
||
Inventories
|
28,657
|
|
|
33,289
|
|
||
Prepaid expenses and other current assets
|
29,711
|
|
|
44,384
|
|
||
Total current assets
|
304,773
|
|
|
266,581
|
|
||
|
|
|
|
||||
Property and equipment, net
|
36,666
|
|
|
36,536
|
|
||
Intangible assets, net
|
65,677
|
|
|
103,660
|
|
||
Goodwill
|
338,873
|
|
|
338,873
|
|
||
Other assets
|
11,578
|
|
|
34,227
|
|
||
Total assets
|
$
|
757,567
|
|
|
$
|
779,877
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
9,705
|
|
|
$
|
15,346
|
|
Accrued expenses and other
|
39,402
|
|
|
70,029
|
|
||
Deferred revenues
|
115,784
|
|
|
108,436
|
|
||
Term loan, net
|
5,048
|
|
|
3,045
|
|
||
Total current liabilities
|
169,939
|
|
|
196,856
|
|
||
|
|
|
|
||||
Deferred revenues
|
30,861
|
|
|
22,117
|
|
||
Other liabilities
|
16,692
|
|
|
7,406
|
|
||
Term loan, net
|
28,538
|
|
|
34,487
|
|
||
Total liabilities
|
246,030
|
|
|
260,866
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 10)
|
|
|
|
||||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, without par value; 1,000 shares authorized and none outstanding
|
—
|
|
|
—
|
|
||
Common stock, without par value; 200,000 shares authorized at December 31, 2016 and 2015; 82,604 and 80,805 shares issued and outstanding as of December 31, 2016 and 2015, respectively
|
209,475
|
|
|
201,087
|
|
||
Additional paid-in capital
|
243,356
|
|
|
225,432
|
|
||
Retained earnings
|
59,614
|
|
|
93,525
|
|
||
Accumulated other comprehensive loss
|
(908
|
)
|
|
(1,033
|
)
|
||
Total shareholders’ equity
|
511,537
|
|
|
519,011
|
|
||
|
|
|
|
||||
Total liabilities and shareholders’ equity
|
$
|
757,567
|
|
|
$
|
779,877
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Products
|
$
|
311,203
|
|
|
$
|
361,923
|
|
|
$
|
325,455
|
|
Services
|
173,642
|
|
|
155,014
|
|
|
139,003
|
|
|||
Total revenues
|
484,845
|
|
|
516,937
|
|
|
464,458
|
|
|||
|
|
|
|
|
|
||||||
Costs and operating expenses:
(1)
|
|
|
|
|
|
||||||
Cost of revenues – products
(2)
|
87,528
|
|
|
97,415
|
|
|
98,815
|
|
|||
Cost of revenues – services
|
16,041
|
|
|
16,443
|
|
|
16,166
|
|
|||
Research and development
|
102,534
|
|
|
113,443
|
|
|
115,156
|
|
|||
Sales and marketing
|
161,604
|
|
|
155,211
|
|
|
151,765
|
|
|||
General and administrative
|
58,975
|
|
|
68,925
|
|
|
66,475
|
|
|||
Amortization of intangible assets
|
39,099
|
|
|
42,315
|
|
|
46,901
|
|
|||
Acquisition and other related costs
|
785
|
|
|
656
|
|
|
3,277
|
|
|||
Restructuring
|
(130
|
)
|
|
(517
|
)
|
|
10,310
|
|
|||
Total costs and operating expenses
|
466,436
|
|
|
493,891
|
|
|
508,865
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) from operations
|
18,409
|
|
|
23,046
|
|
|
(44,407
|
)
|
|||
Interest income and other, net
|
310
|
|
|
(372
|
)
|
|
(24
|
)
|
|||
Interest expense
|
(1,930
|
)
|
|
(8,331
|
)
|
|
(8,266
|
)
|
|||
Income (loss) before income taxes
|
16,789
|
|
|
14,343
|
|
|
(52,697
|
)
|
|||
Income tax expense (benefit)
|
50,700
|
|
|
8,392
|
|
|
(11,105
|
)
|
|||
Net (loss) income
|
$
|
(33,911
|
)
|
|
$
|
5,951
|
|
|
$
|
(41,592
|
)
|
|
|
|
|
|
|
||||||
(Loss) earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.54
|
)
|
Diluted
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.54
|
)
|
|
|
|
|
|
|
||||||
Weighted average number of common and common equivalent shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
81,470
|
|
|
79,633
|
|
|
77,629
|
|
|||
Diluted
|
81,470
|
|
|
81,459
|
|
|
77,629
|
|
(1)
|
Stock-based compensation included in:
|
Cost of revenues – products
|
$
|
280
|
|
|
$
|
315
|
|
|
$
|
331
|
|
Cost of revenues – services
|
108
|
|
|
120
|
|
|
126
|
|
|||
Research and development
|
6,489
|
|
|
6,625
|
|
|
6,843
|
|
|||
Sales and marketing
|
5,944
|
|
|
4,730
|
|
|
5,624
|
|
|||
General and administrative
|
5,886
|
|
|
7,186
|
|
|
3,595
|
|
(2)
|
Cost of revenues – products excludes amortization of intangible assets related to purchased technologies of
$25.3 million
,
$25.7 million
, and
$28.9 million
for the years ended
December 31, 2016
,
2015
, and
2014
, respectively, which is included in
Amortization of intangible assets
.
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net (loss) income
|
$
|
(33,911
|
)
|
|
$
|
5,951
|
|
|
$
|
(41,592
|
)
|
|
|
|
|
|
|
||||||
Unrealized gain (loss) on investments, net of tax
|
62
|
|
|
(56
|
)
|
|
(74
|
)
|
|||
Foreign currency translation adjustment
|
63
|
|
|
(184
|
)
|
|
(342
|
)
|
|||
|
|
|
|
|
|
||||||
Other comprehensive income (loss)
|
125
|
|
|
(240
|
)
|
|
(416
|
)
|
|||
|
|
|
|
|
|
||||||
Comprehensive (loss) income
|
$
|
(33,786
|
)
|
|
$
|
5,711
|
|
|
$
|
(42,008
|
)
|
|
Common Stock - No Par
|
|
Additional
Paid-in-
Capital
|
|
Retained
Earnings
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
|
Total
Shareholders'
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2013
|
76,849
|
|
|
$
|
178,347
|
|
|
$
|
191,976
|
|
|
$
|
129,166
|
|
|
$
|
(377
|
)
|
|
$
|
499,112
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,592
|
)
|
|
—
|
|
|
(41,592
|
)
|
|||||
Change in unrealized gains and losses on investments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(74
|
)
|
|
(74
|
)
|
|||||
Cumulative translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(342
|
)
|
|
(342
|
)
|
|||||
Shares issued pursuant to stock incentive plans and employee stock purchase plan options
|
1,726
|
|
|
9,050
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,050
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
16,519
|
|
|
|
|
|
|
|
|
16,519
|
|
|||||
Stock award tax deficiency
|
—
|
|
|
—
|
|
|
(1,582
|
)
|
|
—
|
|
|
—
|
|
|
(1,582
|
)
|
|||||
Balance at December 31, 2014
|
78,575
|
|
|
$
|
187,397
|
|
|
$
|
206,913
|
|
|
$
|
87,574
|
|
|
$
|
(793
|
)
|
|
$
|
481,091
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
5,951
|
|
|
—
|
|
|
5,951
|
|
|||||
Change in unrealized gains and losses on investments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56
|
)
|
|
(56
|
)
|
|||||
Cumulative translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(184
|
)
|
|
(184
|
)
|
|||||
Shares issued pursuant to stock incentive plans and employee stock purchase plan options
|
2,230
|
|
|
13,690
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,690
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
18,976
|
|
|
|
|
|
|
|
|
18,976
|
|
|||||
Stock award tax deficiency
|
—
|
|
|
—
|
|
|
(457
|
)
|
|
—
|
|
|
—
|
|
|
(457
|
)
|
|||||
Balance at December 31, 2015
|
80,805
|
|
|
$
|
201,087
|
|
|
$
|
225,432
|
|
|
$
|
93,525
|
|
|
$
|
(1,033
|
)
|
|
$
|
519,011
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,911
|
)
|
|
—
|
|
|
(33,911
|
)
|
|||||
Change in unrealized gains and losses on investments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
62
|
|
|||||
Cumulative translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|
63
|
|
|||||
Shares issued pursuant to stock incentive plans and employee stock purchase plan options
|
2,506
|
|
|
15,240
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,240
|
|
|||||
Repurchases of common stock
|
(707
|
)
|
|
(6,852
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,852
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
18,707
|
|
|
—
|
|
|
—
|
|
|
18,707
|
|
|||||
Stock award tax deficiency
|
—
|
|
|
—
|
|
|
(783
|
)
|
|
—
|
|
|
—
|
|
|
(783
|
)
|
|||||
Balance at December 31, 2016
|
82,604
|
|
|
$
|
209,475
|
|
|
$
|
243,356
|
|
|
$
|
59,614
|
|
|
$
|
(908
|
)
|
|
$
|
511,537
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(33,911
|
)
|
|
$
|
5,951
|
|
|
$
|
(41,592
|
)
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
18,146
|
|
|
16,833
|
|
|
16,525
|
|
|||
Amortization of intangible assets
|
39,099
|
|
|
42,315
|
|
|
46,901
|
|
|||
Realized (gain) loss on sale of available-for-sale securities, net
|
(14
|
)
|
|
31
|
|
|
(85
|
)
|
|||
Stock-based compensation
|
18,707
|
|
|
18,976
|
|
|
16,519
|
|
|||
Deferred income taxes
|
37,196
|
|
|
(7,666
|
)
|
|
(14,382
|
)
|
|||
Excess tax benefits from stock-based compensation
|
(662
|
)
|
|
(758
|
)
|
|
—
|
|
|||
Amortization of deferred issuance costs
|
452
|
|
|
1,500
|
|
|
1,870
|
|
|||
Amortization of investment premiums
|
51
|
|
|
80
|
|
|
63
|
|
|||
Changes in operating assets and liabilities, net of the effect of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
18,537
|
|
|
(22,404
|
)
|
|
10,062
|
|
|||
Inventories
|
(5,718
|
)
|
|
4,365
|
|
|
(8,028
|
)
|
|||
Prepaid expenses and other current assets
|
5,955
|
|
|
(9,560
|
)
|
|
(4,586
|
)
|
|||
Other assets
|
3,546
|
|
|
3,936
|
|
|
5,538
|
|
|||
Accounts payable
|
(5,815
|
)
|
|
(1,262
|
)
|
|
(2,419
|
)
|
|||
Accrued expenses and other
|
(31,780
|
)
|
|
34,129
|
|
|
(5,400
|
)
|
|||
Deferred revenues
|
16,092
|
|
|
12,337
|
|
|
13,853
|
|
|||
Other liabilities
|
1,295
|
|
|
1
|
|
|
3,232
|
|
|||
Net cash provided by operating activities
|
81,176
|
|
|
98,804
|
|
|
38,071
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(8,742
|
)
|
|
(8,381
|
)
|
|
(8,063
|
)
|
|||
Purchases of available-for-sale securities
|
(77,135
|
)
|
|
(196,659
|
)
|
|
(96,886
|
)
|
|||
Proceeds from available-for-sale securities
|
20,451
|
|
|
261,744
|
|
|
68,580
|
|
|||
Purchases of other intangible assets
|
(1,116
|
)
|
|
(867
|
)
|
|
(771
|
)
|
|||
Proceeds from purchase price adjustments related to previous acquisitions
|
—
|
|
|
—
|
|
|
6,081
|
|
|||
Payments in connection with acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(3,857
|
)
|
|||
Net cash (used in) provided by investing activities
|
(66,542
|
)
|
|
55,837
|
|
|
(34,916
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from borrowings under term loan
|
—
|
|
|
40,000
|
|
|
—
|
|
|||
Repayments of debt
|
(3,500
|
)
|
|
(201,663
|
)
|
|
—
|
|
|||
Debt issuance costs
|
(897
|
)
|
|
(1,348
|
)
|
|
—
|
|
|||
Proceeds from exercise of stock options and employee stock purchase plan options
|
15,467
|
|
|
13,737
|
|
|
9,443
|
|
|||
Cash paid for shares withheld for taxes
|
(227
|
)
|
|
(47
|
)
|
|
(393
|
)
|
|||
Repurchases of common stock
|
(6,852
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits from stock-based compensation
|
662
|
|
|
758
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
4,653
|
|
|
(148,563
|
)
|
|
9,050
|
|
|||
Net increase in cash and cash equivalents
|
19,287
|
|
|
6,078
|
|
|
12,205
|
|
|||
Cash and cash equivalents at beginning of year
|
52,472
|
|
|
46,394
|
|
|
34,189
|
|
|||
Cash and cash equivalents at end of year
|
$
|
71,759
|
|
|
$
|
52,472
|
|
|
$
|
46,394
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid (received) during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
1,476
|
|
|
$
|
7,036
|
|
|
$
|
6,003
|
|
Income taxes
|
$
|
12,348
|
|
|
$
|
1,141
|
|
|
$
|
(1,446
|
)
|
Supplemental disclosure of non-cash investing activities:
|
|
|
|
|
|
||||||
Purchased and unpaid property and equipment
|
$
|
560
|
|
|
$
|
1,440
|
|
|
$
|
1,088
|
|
Transfers of inventory to property and equipment
|
$
|
10,350
|
|
|
$
|
7,172
|
|
|
$
|
10,464
|
|
1.
|
Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements
|
|
December 31,
2016 |
|
December 31,
2015 |
|
December 31,
2014 |
||||||
Balance at beginning of year
|
$
|
538
|
|
|
$
|
716
|
|
|
$
|
646
|
|
Current year provision
|
1,972
|
|
|
2,072
|
|
|
1,759
|
|
|||
Expenditures
|
(2,193
|
)
|
|
(2,250
|
)
|
|
(1,689
|
)
|
|||
Balance at end of year
|
$
|
317
|
|
|
$
|
538
|
|
|
$
|
716
|
|
(1)
|
The total arrangement fee is allocated to the separate non-software deliverables (e.g., chassis, interface cards, and software post contract customer support and maintenance (“PCS”) related to the Company's operating system software that is essential to the functionality of its hardware platform) and the software-related deliverables as a group (e.g., application software and software PCS) based on a relative selling price (“RSP”) method applied to all elements in the arrangement using the selling price hierarchy in the revenue recognition guidance as discussed below; and
|
(2)
|
The value assigned to the software group for the software deliverables is then allocated to each software element based on the residual method, whereby value is allocated first to the undelivered elements, typically PCS, and the residual portion of the value is then allocated to the delivered elements (typically the software products) and recognized as revenue, provided all other revenue recognition criteria discussed above have been met. The fair value of an element must be based on vendor specific objective evidence (“VSOE”) of the selling price, which typically only exists for technical support, warranty, and software maintenance services as discussed below.
|
2.
|
Acquisitions
|
Cash and cash equivalents
|
$
|
1,967
|
|
Accounts receivable
|
9,253
|
|
|
Inventories
|
6,543
|
|
|
Prepaid and other assets
|
1,742
|
|
|
Fixed assets,
|
2,976
|
|
|
Deferred tax asset
|
26,915
|
|
|
Identifiable intangible assets
|
72,858
|
|
|
Goodwill
|
78,727
|
|
|
Total assets acquired
|
200,981
|
|
|
Accounts payable, accrued expenses and other liabilities
|
(8,440
|
)
|
|
Deferred revenues
|
(5,170
|
)
|
|
Net assets acquired
|
$
|
187,371
|
|
3.
|
Debt
|
4.
|
Restructuring Costs
|
|
|
Restructuring Prior to 2014
|
|
Net Optics
Restructuring
|
|
2014 Corporate
Restructuring
|
|
Other Restructuring
|
|
Total
|
||||||||||
Accrual at December 31, 2013
|
|
$
|
1,507
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,507
|
|
Charges
|
|
136
|
|
|
3,852
|
|
|
6,322
|
|
|
—
|
|
|
10,310
|
|
|||||
Payments
|
|
(1,391
|
)
|
|
(3,515
|
)
|
|
(4,382
|
)
|
|
—
|
|
|
(9,288
|
)
|
|||||
Non-cash items
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Accrual at December 31, 2014
|
|
246
|
|
|
337
|
|
|
1,940
|
|
|
—
|
|
|
2,523
|
|
|||||
Credits
|
|
—
|
|
|
(322
|
)
|
|
(195
|
)
|
|
—
|
|
|
(517
|
)
|
|||||
Payments
|
|
(140
|
)
|
|
(15
|
)
|
|
(1,304
|
)
|
|
—
|
|
|
(1,459
|
)
|
|||||
Non-cash items
|
|
(106
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(106
|
)
|
|||||
Accrual at December 31, 2015
|
|
—
|
|
|
—
|
|
|
441
|
|
|
—
|
|
|
441
|
|
|||||
(Credits) charges
|
|
—
|
|
|
—
|
|
|
(319
|
)
|
|
189
|
|
|
(130
|
)
|
|||||
Payments
|
|
—
|
|
|
—
|
|
|
317
|
|
|
—
|
|
|
317
|
|
|||||
Non-cash items
|
|
—
|
|
|
—
|
|
|
(133
|
)
|
|
—
|
|
|
(133
|
)
|
|||||
Accrual at December 31, 2016
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
306
|
|
|
$
|
189
|
|
|
$
|
495
|
|
5.
|
Concentrations
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Network Test Solutions
|
$
|
349,557
|
|
|
$
|
386,614
|
|
|
$
|
345,673
|
|
Network Visibility Solutions
|
135,288
|
|
|
130,323
|
|
|
118,785
|
|
|||
Total
|
$
|
484,845
|
|
|
$
|
516,937
|
|
|
$
|
464,458
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
International revenues
|
43.6
|
%
|
|
38.5
|
%
|
|
40.8
|
%
|
6.
|
Selected Balance Sheet Data
|
|
December 31,
2016 |
|
December 31,
2015 |
|
December 31,
2014 |
||||||
Balance at beginning of year
|
$
|
1,107
|
|
|
$
|
1,011
|
|
|
$
|
840
|
|
Additions: charged to costs and expenses
|
416
|
|
|
525
|
|
|
275
|
|
|||
Deductions: write-offs, net of recoveries
|
(612
|
)
|
|
(429
|
)
|
|
(104
|
)
|
|||
Balance at end of year
|
$
|
911
|
|
|
$
|
1,107
|
|
|
$
|
1,011
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Available-for-sale – short-term:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury, government, and agency debt securities
|
$
|
37,002
|
|
|
$
|
24
|
|
|
$
|
(21
|
)
|
|
$
|
37,005
|
|
Corporate debt securities
|
34,292
|
|
|
8
|
|
|
(54
|
)
|
|
34,246
|
|
||||
Total
|
$
|
71,294
|
|
|
$
|
32
|
|
|
$
|
(75
|
)
|
|
$
|
71,251
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Available-for-sale – short-term:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury, government, and agency debt securities
|
$
|
4,301
|
|
|
$
|
—
|
|
|
$
|
(13
|
)
|
|
$
|
4,288
|
|
Corporate debt securities
|
10,265
|
|
|
—
|
|
|
(49
|
)
|
|
10,216
|
|
||||
Total
|
$
|
14,566
|
|
|
$
|
—
|
|
|
$
|
(62
|
)
|
|
$
|
14,504
|
|
|
Amortized
Cost
|
|
Fair Value
|
||||
Due in less than 1 year
|
$
|
34,715
|
|
|
$
|
34,706
|
|
Due within 1-2 years
|
20,928
|
|
|
20,928
|
|
||
Due within 2-5 years
|
10,051
|
|
|
10,017
|
|
||
Due after 5 years
|
5,600
|
|
|
5,600
|
|
||
Total
|
$
|
71,294
|
|
|
$
|
71,251
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Raw materials
|
$
|
1,252
|
|
|
$
|
3,864
|
|
Work in process
|
6,581
|
|
|
11,253
|
|
||
Finished goods
|
20,824
|
|
|
18,172
|
|
||
Total
|
$
|
28,657
|
|
|
$
|
33,289
|
|
|
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
|
Useful Life
|
|
|
||||||||
|
(in years)
|
|
|
|
|
||||||
Development equipment
|
|
5
|
|
|
$
|
39,312
|
|
|
$
|
35,831
|
|
Demonstration equipment
|
|
2
|
|
|
32,543
|
|
|
29,258
|
|
||
Furniture and other equipment
|
|
5
|
|
|
23,497
|
|
|
22,066
|
|
||
Computer software
|
3
|
-
|
5
|
|
22,803
|
|
|
20,702
|
|
||
Building and leasehold improvements
|
1
|
-
|
40
|
|
22,574
|
|
|
20,921
|
|
||
Computer equipment
|
|
3
|
|
|
17,929
|
|
|
16,698
|
|
||
Total
|
|
|
|
|
158,658
|
|
|
145,476
|
|
||
Accumulated depreciation
|
|
|
|
|
(121,992
|
)
|
|
(108,940
|
)
|
||
Total
|
|
|
|
|
$
|
36,666
|
|
|
$
|
36,536
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Compensation and related expenses
|
$
|
12,428
|
|
|
$
|
12,805
|
|
Vacation
|
5,724
|
|
|
7,967
|
|
||
Commissions
|
4,711
|
|
|
5,083
|
|
||
Professional fees
|
3,409
|
|
|
2,163
|
|
||
Other taxes
|
2,651
|
|
|
3,106
|
|
||
Bonuses
|
2,202
|
|
|
20,423
|
|
||
Legal contingencies
|
750
|
|
|
4,825
|
|
||
Income taxes
|
707
|
|
|
3,599
|
|
||
Other
|
6,820
|
|
|
10,058
|
|
||
Total
|
$
|
39,402
|
|
|
$
|
70,029
|
|
7.
|
Fair Value Measurements
|
Level 3.
|
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
|
Fair Value
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair Value
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
$
|
769
|
|
|
$
|
769
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
284
|
|
|
$
|
284
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate debt securities
|
7,943
|
|
|
—
|
|
|
7,943
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Treasury, government and agency debt securities
|
37,005
|
|
|
—
|
|
|
37,005
|
|
|
—
|
|
|
4,288
|
|
|
—
|
|
|
4,288
|
|
|
—
|
|
||||||||
Corporate debt securities
|
34,246
|
|
|
—
|
|
|
34,246
|
|
|
—
|
|
|
10,216
|
|
|
—
|
|
|
10,216
|
|
|
—
|
|
||||||||
Total financial assets
|
$
|
79,963
|
|
|
$
|
769
|
|
|
$
|
79,194
|
|
|
$
|
—
|
|
|
$
|
14,788
|
|
|
$
|
284
|
|
|
$
|
14,504
|
|
|
$
|
—
|
|
8.
|
Goodwill and Other Intangible Assets
|
|
Weighted
Average
Useful
Life
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||
|
(in years)
|
|
|
|
|
|
|
||||||
Other intangible assets:
|
|
|
|
|
|
|
|
||||||
Technology
|
5.5
|
|
$
|
185,665
|
|
|
$
|
(151,672
|
)
|
|
$
|
33,993
|
|
Customer relationships
|
6.0
|
|
71,700
|
|
|
(59,659
|
)
|
|
12,041
|
|
|||
Service agreements
|
6.4
|
|
30,100
|
|
|
(17,968
|
)
|
|
12,132
|
|
|||
Trademark
|
5.1
|
|
11,300
|
|
|
(8,966
|
)
|
|
2,334
|
|
|||
Non-compete agreements
|
4.0
|
|
8,000
|
|
|
(7,142
|
)
|
|
858
|
|
|||
Other
|
4.7
|
|
6,866
|
|
|
(2,547
|
)
|
|
4,319
|
|
|||
Total
|
|
|
$
|
313,631
|
|
|
$
|
(247,954
|
)
|
|
$
|
65,677
|
|
|
Weighted
Average
Useful
Life
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||
|
(in years)
|
|
|
|
|
|
|
||||||
Other intangible assets:
|
|
|
|
|
|
|
|
||||||
Technology
|
5.5
|
|
$
|
185,665
|
|
|
$
|
(129,509
|
)
|
|
$
|
56,156
|
|
Customer relationships
|
6.0
|
|
71,700
|
|
|
(51,533
|
)
|
|
20,167
|
|
|||
Service agreements
|
6.4
|
|
30,100
|
|
|
(13,272
|
)
|
|
16,828
|
|
|||
Trademark
|
5.1
|
|
11,300
|
|
|
(7,000
|
)
|
|
4,300
|
|
|||
Non-compete agreements
|
4.0
|
|
8,000
|
|
|
(5,641
|
)
|
|
2,359
|
|
|||
Other
|
4.5
|
|
5,750
|
|
|
(1,900
|
)
|
|
3,850
|
|
|||
Total
|
|
|
$
|
312,515
|
|
|
$
|
(208,855
|
)
|
|
$
|
103,660
|
|
2017
|
$
|
31,930
|
|
2018
|
20,666
|
|
|
2019
|
7,434
|
|
|
2020
|
3,892
|
|
|
2021
|
700
|
|
|
Thereafter
|
1,055
|
|
|
Total
|
$
|
65,677
|
|
9.
|
Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
7,260
|
|
|
$
|
10,150
|
|
|
$
|
(372
|
)
|
State
|
684
|
|
|
1,635
|
|
|
1,111
|
|
|||
Foreign
|
5,560
|
|
|
4,273
|
|
|
2,538
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
25,981
|
|
|
(5,145
|
)
|
|
(12,479
|
)
|
|||
State
|
11,299
|
|
|
(1,044
|
)
|
|
(1,916
|
)
|
|||
Foreign
|
(84
|
)
|
|
(1,477
|
)
|
|
13
|
|
|||
Income tax expense (benefit)
|
$
|
50,700
|
|
|
$
|
8,392
|
|
|
$
|
(11,105
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Federal statutory expense
|
$
|
5,876
|
|
|
$
|
5,020
|
|
|
$
|
(18,445
|
)
|
State taxes, net of federal benefit
|
11,866
|
|
|
269
|
|
|
(805
|
)
|
|||
Research and development credits
|
(1,603
|
)
|
|
(1,177
|
)
|
|
(1,585
|
)
|
|||
Domestic production deduction
|
(236
|
)
|
|
(595
|
)
|
|
—
|
|
|||
Foreign branch losses
|
(2
|
)
|
|
90
|
|
|
(1,213
|
)
|
|||
Stock-based compensation
|
1,507
|
|
|
1,740
|
|
|
1,700
|
|
|||
Foreign rate differential
|
(5,463
|
)
|
|
(3,240
|
)
|
|
1,633
|
|
|||
Inter-company royalty
|
2,964
|
|
|
3,121
|
|
|
3,168
|
|
|||
Inter-company transfer
|
1,994
|
|
|
1,994
|
|
|
1,841
|
|
|||
Valuation allowance
|
31,077
|
|
|
(1,939
|
)
|
|
—
|
|
|||
Unrecognized tax benefits
|
1,157
|
|
|
1,160
|
|
|
1,497
|
|
|||
Other
|
1,563
|
|
|
1,949
|
|
|
1,104
|
|
|||
Income tax expense (benefit)
|
$
|
50,700
|
|
|
$
|
8,392
|
|
|
$
|
(11,105
|
)
|
|
|
|
|
|
|
||||||
Net effective income tax rate
|
302.0
|
%
|
|
58.5
|
%
|
|
21.1
|
%
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Deferred tax assets:
|
|
|
|
||||
Research and development credit carryforward
|
$
|
13,734
|
|
|
$
|
13,544
|
|
Deferred revenue
|
6,272
|
|
|
3,611
|
|
||
Stock-based compensation
|
11,474
|
|
|
10,674
|
|
||
Inventory adjustments
|
6,651
|
|
|
8,862
|
|
||
Net operating loss carryforward
|
4,331
|
|
|
4,939
|
|
||
Realized loss on investments
|
1,069
|
|
|
3,421
|
|
||
Accrued liabilities and other
|
1,117
|
|
|
1,056
|
|
||
Depreciation and amortization
|
5,894
|
|
|
958
|
|
||
Allowance for doubtful accounts
|
228
|
|
|
282
|
|
||
|
50,770
|
|
|
47,347
|
|
||
Valuation allowance
|
(45,000
|
)
|
|
(2,056
|
)
|
||
|
5,770
|
|
|
45,291
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(202
|
)
|
|
(382
|
)
|
||
Intercompany royalty
|
(10,537
|
)
|
|
(11,852
|
)
|
||
Net deferred tax (liabilities) assets
|
$
|
(4,969
|
)
|
|
$
|
33,057
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Unrecognized tax benefits - beginning balance
|
$
|
21,178
|
|
|
$
|
19,134
|
|
|
$
|
16,766
|
|
Gross increases – tax positions taken in prior period
|
50
|
|
|
188
|
|
|
417
|
|
|||
Gross decreases – tax positions taken in prior period
|
(51
|
)
|
|
(161
|
)
|
|
(74
|
)
|
|||
Gross increases – tax positions taken in current period
|
2,515
|
|
|
2,017
|
|
|
2,167
|
|
|||
Lapse of statute of limitations
|
(166
|
)
|
|
—
|
|
|
(142
|
)
|
|||
Unrecognized tax benefits – ending balance
|
$
|
23,526
|
|
|
$
|
21,178
|
|
|
$
|
19,134
|
|
10.
|
Commitments and Contingencies
|
11.
|
Shareholders’ Equity
|
•
|
Increase in Share Reserve.
Increased the total number of shares of the Company's common stock available for future grants by
9.8 million
shares for a total of
29.0 million
shares of our common stock authorized and reserved over the term of the Plan, of which
6.1 million
shares were available for future grant as of
December 31, 2016
.
|
•
|
Types of Awards.
Added cash awards to the types of awards that may be granted under the Plan, including performance-based incentives that are intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
|
•
|
Award Limits.
Added (i) a limit on the total number of shares (i.e.,
1,000,000
) subject to options and share appreciation rights granted to an eligible participant in any calendar year, (ii) with respect to performance-based awards that are intended to comply with the exception under Section 162(m) of the Code, limits on the total number of shares (i.e.,
1,000,000
) subject to RSUs and restricted stock awards that an individual may earn over a
12
-month period and on the total dollar amount (i.e.,
$2,000,000
) subject to cash awards that an individual may earn over a
12
-month period, and (iii) a limit (i.e.,
$500,000
) on the total dollar value of equity and cash awards that may be granted to a non-employee director in any calendar year.
|
•
|
Shares Not Available for Awards.
None of the following will be added to the shares available for awards under the Plan: (i) shares tendered by a participant or withheld by us in payment of the exercise price of an option, or to satisfy any tax withholding obligation with respect to options, and (ii) shares reacquired by the Company on the open market using cash proceeds from the exercise of options.
|
•
|
Acquisitions and Combinations.
In connection with acquisitions and combinations by the Company, it may grant under the Plan awards in substitution or exchange for awards or rights to future awards previously granted by the acquired or combined company without reducing the shares available under the Plan. Any shares subject to but not issued under any such substitute awards would not become available for other awards granted under the Plan. Also, in the event that a company acquired by the Company or with which the Company combined has a pre-existing plan approved by its shareholders that was not adopted in contemplation of the acquisition or combination, available shares under that plan may be used for Plan awards without reducing the shares available under the Plan. Any such awards may only be made to persons who were not eligible to receive awards under the Plan prior to the acquisition or combination and may not be made after the date that awards could have been made under the terms of the pre-existing plan.
|
|
Number
of Options
|
|
Weighted
Average
Exercise Price
Per Share
|
|
Weighted
Average
Remaining
Contractual Life
(in years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding as of December 31, 2015
|
5,474
|
|
|
$
|
12.11
|
|
|
4.35
|
|
$
|
9,350
|
|
Granted
|
1,240
|
|
|
11.30
|
|
|
|
|
|
|||
Exercised
|
(775
|
)
|
|
8.68
|
|
|
|
|
|
|||
Forfeited/canceled
|
(459
|
)
|
|
14.56
|
|
|
|
|
|
|||
Outstanding as of December 31, 2016
|
5,480
|
|
|
$
|
12.21
|
|
|
4.34
|
|
$
|
22,638
|
|
Vested and expected to vest as of December 31, 2016
|
5,336
|
|
|
$
|
12.23
|
|
|
4.30
|
|
$
|
21,933
|
|
Exercisable at December 31, 2016
|
3,395
|
|
|
$
|
12.96
|
|
|
3.56
|
|
$
|
11,950
|
|
|
Number
of Awards
|
|
Weighted Average
Grant Date Fair Value
Per Share
|
|||
Outstanding as of December 31, 2015
|
1,963
|
|
|
$
|
12.63
|
|
Awarded
|
1,114
|
|
|
11.70
|
|
|
Vested
|
(730
|
)
|
|
13.10
|
|
|
Forfeited/canceled
|
(188
|
)
|
|
12.13
|
|
|
Outstanding as of December 31, 2016
|
2,159
|
|
|
$
|
12.03
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Expected lives (in years)
|
4.0
|
|
|
3.9
|
|
|
4.0
|
|
Risk-free interest rates
|
1.1
|
%
|
|
1.2
|
%
|
|
1.2
|
%
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected volatility
|
37.4
|
%
|
|
43.3
|
%
|
|
46.7
|
%
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Expected lives (in years)
|
1.3
|
|
|
1.3
|
|
|
1.2
|
|
Risk-free interest rates
|
0.6
|
%
|
|
0.4
|
%
|
|
0.2
|
%
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected volatility
|
35.7
|
%
|
|
28.4
|
%
|
|
32.9
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Options
|
$
|
4,438
|
|
|
$
|
5,032
|
|
|
$
|
3,934
|
|
RSUs
|
11,267
|
|
|
10,078
|
|
|
9,328
|
|
|||
Common shares issued under the Purchase Plan
|
3,002
|
|
|
3,866
|
|
|
3,257
|
|
|||
Total stock-based compensation
|
$
|
18,707
|
|
|
$
|
18,976
|
|
|
$
|
16,519
|
|
|
Unrealized Gains and Losses on Available-for-
Sale
Securities
(a)
|
|
Foreign Currency
Items
(a)
|
|
Total
|
||||||
Beginning balance, December 31, 2014
|
$
|
(32
|
)
|
|
$
|
(761
|
)
|
|
$
|
(793
|
)
|
Other comprehensive loss before reclassifications
|
(76
|
)
|
|
(184
|
)
|
|
(260
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss
(b)
|
20
|
|
|
—
|
|
|
20
|
|
|||
Net current-period other comprehensive loss
|
(56
|
)
|
|
(184
|
)
|
|
(240
|
)
|
|||
Ending balance, December 31, 2015
|
$
|
(88
|
)
|
|
$
|
(945
|
)
|
|
$
|
(1,033
|
)
|
Other comprehensive gain before reclassifications
|
75
|
|
|
63
|
|
|
138
|
|
|||
Amounts reclassified from accumulated other comprehensive loss
(b)
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|||
Net current-period other comprehensive gain
|
62
|
|
|
63
|
|
|
125
|
|
|||
Ending balance, December 31, 2016
|
$
|
(26
|
)
|
|
$
|
(882
|
)
|
|
$
|
(908
|
)
|
(a)
|
All amounts are net-of-tax. Amounts in parentheses indicate reductions.
|
(b)
|
Amount represents gain on the sale of securities and is included as a component of
Interest income and other, net
in the consolidated statements of operations.
|
12.
|
Retirement Plan
|
13.
|
Earnings Per Share
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Basic Presentation:
|
|
|
|
|
|
||||||
Numerator for basic (loss) earnings per share:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(33,911
|
)
|
|
$
|
5,951
|
|
|
$
|
(41,592
|
)
|
Denominator for basic (loss) earnings per share:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
81,470
|
|
|
79,633
|
|
|
77,629
|
|
|||
|
|
|
|
|
|
||||||
Basic (loss) earnings per share
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.54
|
)
|
|
|
|
|
|
|
||||||
Diluted presentation:
|
|
|
|
|
|
||||||
Numerator for diluted (loss) earnings per share:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(33,911
|
)
|
|
$
|
5,951
|
|
|
$
|
(41,592
|
)
|
Denominator for diluted (loss) earnings per share:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
81,470
|
|
|
79,633
|
|
|
77,629
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock options and other share-based awards
|
—
|
|
|
1,826
|
|
|
—
|
|
|||
Dilutive potential common shares
|
81,470
|
|
|
81,459
|
|
|
77,629
|
|
|||
|
|
|
|
|
|
||||||
Diluted (loss) earnings per share
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.54
|
)
|
14.
|
Quarterly Financial Summary (Unaudited)
|
|
For the three months ended
|
||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
|
Dec. 31
|
|
Sep. 30
|
|
Jun. 30
|
|
Mar. 31
|
|
Dec. 31
|
|
Sep. 30
|
|
Jun. 30
|
|
Mar. 31
|
||||||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues
|
$
|
128,163
|
|
|
$
|
123,911
|
|
|
$
|
120,098
|
|
|
$
|
112,673
|
|
|
$
|
138,478
|
|
|
$
|
125,887
|
|
|
$
|
131,610
|
|
|
$
|
120,962
|
|
Total cost of revenues
(1)
|
33,558
|
|
|
33,352
|
|
|
30,343
|
|
|
31,660
|
|
|
35,697
|
|
|
33,913
|
|
|
34,983
|
|
|
35,001
|
|
||||||||
Gross profit
|
94,605
|
|
|
90,559
|
|
|
89,755
|
|
|
81,013
|
|
|
102,781
|
|
|
91,974
|
|
|
96,627
|
|
|
85,961
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income (loss) before income taxes
|
6,949
|
|
|
6,560
|
|
|
8,249
|
|
|
(4,969
|
)
|
|
12,309
|
|
|
506
|
|
|
6,574
|
|
|
(5,046
|
)
|
||||||||
Net (loss) income
(2)
|
(37,520
|
)
|
|
4,773
|
|
|
1,523
|
|
|
(2,687
|
)
|
|
5,751
|
|
|
4,008
|
|
|
5,803
|
|
|
(9,611
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.46
|
)
|
|
$
|
0.06
|
|
|
$
|
0.02
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
(0.12
|
)
|
Diluted
|
$
|
(0.46
|
)
|
|
$
|
0.06
|
|
|
$
|
0.02
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
(0.12
|
)
|
(1)
|
For the quarters ended:
December 31, 2016
; September 30,
2016
; June 30,
2016
; March 31,
2016
;
December 31, 2015
; September 30,
2015
; June 30,
2015
; and March 31,
2015
; total cost of revenues includes charges related to amortization of intangible assets of
$6.2 million
,
$6.3 million
,
$6.4 million
,
$6.4 million
,
$6.4 million
,
$6.4 million
,
$6.4 million
, and
$6.4 million
, respectively.
|
(2)
|
In the quarter ended
December 31, 2016
, income tax expense includes a
$42.9 million
charge related to the establishment of a valuation allowance against the Company's remaining net deferred tax assets in the U.S.
|
15.
|
Subsequent Events
|
Exhibit No.
|
|
Description
|
|
|
|
2.4.1
|
|
Joinder Agreement, dated as of February 2, 2017, executed by Keysight Acquisition, Inc. and acknowledged by the Company and Keysight Technologies, Inc.
|
|
|
|
10.7*
|
|
Compensation of Named Executive Officers as of December 31, 2016
|
|
|
|
10.14.3*
|
|
Amendment No. 3 to Employment Agreement dated January 13, 2017 between the Company and
Alexander J. Pepe
|
|
|
|
10.19*
|
|
2017 Sales Commission Plan for Patricia Key
|
|
|
|
21.1
|
|
Subsidiaries of the Registrant
|
|
|
|
23.1
|
|
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer of Ixia pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer of Ixia pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
|
|
Certifications of Chief Executive Officer and Chief Financial Officer of Ixia pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Document
|
|
*
|
Constitutes a management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K.
|
1.
|
Merger Sub is, and shall be deemed to be for all purposes, a party to the Merger Agreement, and is and shall be bound by all of the terms and conditions of the Merger Agreement applicable to Merger Sub, effective as of the date hereof, as if it were an original signatory thereto.
|
2.
|
Merger Sub expressly disclaims reliance on any and all representations and warranties other than the representations and warranties set forth in Article 3 of the Merger Agreement, whether express or implied.
|
3.
|
Merger Sub acknowledges and agrees that having actually obtained any consents or waivers referenced in Section 5.10 of the Merger Agreement is not a condition to Closing.
|
KEYSIGHT ACQUISITION, INC.
|
||
|
||
By:
|
/s/ Jeffrey K. Li
|
|
Name:
|
Jeffrey K. Li
|
|
Title:
|
Vice President, Assistant General Counsel, and Assistant Secretary
|
KEYSIGHT TECHNOLOGIES, INC.
|
||
|
||
By:
|
/s/ Stephen D. Williams
|
|
Name:
|
Stephen D. Williams
|
|
Title:
|
SVP, General Counsel, and Secretary
|
IXIA
|
||
|
||
By:
|
/s/ Matthew S. Alexander
|
|
Name:
|
Matthew S. Alexander
|
|
Title:
|
Senior Vice President, General Counsel, and Corporate Secretary
|
(2)
|
In connection with his appointment as the Company’s Acting Chief Financial Officer in August 2014, the Company and Mr. Novak entered into a letter agreement setting forth certain compensation and benefits payable to Mr. Novak. The letter agreement is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 5, 2014.
|
(3)
|
The Company also typically pays the monthly lease payments and fuel expenses for a car that is used by Mr. Ginsberg for both business and personal use.
|
|
(i)
|
|
Second Amended and Restated Ixia 2008 Equity Incentive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 25, 2013); and
|
|
(ii)
|
|
2010 Employee Stock Purchase Plan, as amended (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed with the Commission on August 11, 2011).
|
“6.
|
Officer Severance Plan
. The parties agree that Employee previously has been, and from and after the Effective Date shall continue to be, designated as an “Eligible Officer” for purposes of Employer’s Officer Severance Plan (As Amended and Restated Effective February 12, 2016) (the “2016 Plan”) or any successor thereto. Employer acknowledges that vesting of the stock options and RSUs described in the Second Amendment may be accelerated under the terms of the 2016 Plan."
|
IXIA
By:
/s/ Bethany Mayer
Bethany Mayer
President and Chief Executive Officer
|
EMPLOYEE
/s/ Alexander J. Pepe
Alexander J. Pepe
|
Date Signed:
1/16/17
|
Date Signed:
1/16/17
|
Plan_Start_Date:
01/01/2017
|
Region:
Global Sales
|
|
Manager:
Bethany Mayer
|
Target_Incentives_USD:
105,000 USD
|
Title:
Senior Vice President, Global Sales
|
Overall Target_USD:
84,000 USD
Raw Margin Corporate Target_USD:
21,000 USD
|
Overall_Target_Weighting:
80%
Raw Margin Corporate Target_Weighting:
20%
|
Overall Quota
|
Rate Based on Year to Date Achievement of Quota
|
0 % - 100 %
|
0.01458333%
|
100 % - 125 %
|
0.04375000%
|
125 % - and above
|
0.07291667%
|
Raw Margin
|
Payout
|
<Threshold Margin%*
|
0%
|
*
|
60%
|
*
|
80%
|
*
|
100%
|
*
|
125%
|
>Maximum Margin%*
|
150%
|
¨
|
The Company may modify or terminate this Commission Plan, or any aspect thereof, subject to approval by the Committee. Without limiting the foregoing, Ixia may decide to modify the 2017 quota and/or raw margin levels, with the Committee's approval, due to significant changes to the business, such as acquisitions by Ixia or its customers. If such changes are made to the 2017 quotas and/or raw margin levels, then employee's quota and variable pay may be updated in this Commission Plan based on the effective date of such changes.
|
¨
|
A change may only be made effective as of the first day of a month. Changes cannot have a mid-month effective date.
|
¨
|
Notwithstanding anything to the contrary, any retroactive changes to this Commission Plan will be limited to a retroactive period of no greater than 30 days. Additionally, the effective date of any changes to this Commission Plan cannot be prior to the fiscal quarter in which Commission Processing is first made aware of the proposed change in writing, including all relevant details of the proposed change. As such, it is critical that no account team changes be made without confirmed and approved compensation plan changes.
|
¨
|
In the event of any conflict or inconsistency between this Plan and any other document or understanding, the terms and provisions of this Plan will govern.
|
¨
|
A booking of an order occurs when an order is processed in Oracle via our Order Management or Service Contract systems. Commissions will be calculated and paid based upon the booking date of an order as noted in these systems. Commissions will
not
be paid on orders with Order Management system holds, including but not limited to:
|
o
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Order must be placed with the appropriate Ixia legal entity (US vs. ITIL)
|
o
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Order must contain a valid Purchase Order (PO) or contract number (no letters of intent)
|
o
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Order must be submitted in the customer’s standard format and contain an authorized buyer’s signature/ electronic approval
|
o
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Order must contain “Bill to” & “Ship to” addresses
|
o
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Order must contain payment terms
|
o
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Order must contain Incoterms (freight method)
|
o
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Carrier or Freight Forwarder/Broker must be specified on the PO
|
o
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Order must contain End Customer/ User detail
|
o
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Order must contain Trade-in Part #s/ Serial #s and/or Software License/Registration information (if applicable)
|
o
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Proper internal approvals must be obtained (e.g., margin and/or pricing)
|
o
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Order must be accepted by the appropriate Ixia entity
|
o
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Order must be shippable and not contingent upon some other element (e.g., contract with a third-party implementation partner)
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¨
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If it is determined that revenue may not be able to be recognized on an order, it may be withheld from or charged back against current commission earnings for the period in which the determination is made. If at a later date revenue on that order can be recognized, the related commissions will be paid in the period in which that determination is made.
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¨
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For multi-year renewals of extended service contracts, both the renewals sales team and the field sales team will receive full commissions for the booked amount. In the event the customer or partner defaults on any renewal payment or portion thereof in the current or any subsequent years, commissions will be adjusted to deduct the defaulted amount. In addition, if employee's employment is terminated either voluntarily or involuntarily within the term of the multi-year agreement, employee may be required, at Ixia’s and the Committee's discretion, to pay back the prorated commission amount that represents the unearned portion of the multi-year renewal at the time of the employee’s termination.
|
¨
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Commissions are not considered “final” until the customer has made payment in full for the order. The commission amount is subject to adjustment prior to payment in full by the customer, based upon changes in the terms of the order or other factors affecting the calculation of the commission due.
|
¨
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Booking credit will be given on orders accepted for new product introductions (NPIs), but Ixia reserves the right to recover commissions paid if the product does not ship within 90 days following the order booked date.
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¨
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All applicable commissions for an order will be paid on that order only once. For example, if an order is booked and commissions are paid, but later the order de-books and subsequently re-books, the commission will be paid only once - even if the salesperson changes between the original order and the re-booked order.
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¨
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Ixia may elect to not advance or pay commissions if a customer ceases operations, becomes insolvent or files for bankruptcy protection or if there are other circumstances Ixia determines may render the invoice uncollectible. Should payment for such invoices be obtained at a later date, commissions shall become payable for the period in which collection occurred.
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¨
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If an order does not qualify for quota relief, then the commission payment will be calculated separately from this Commission Plan on a case-by-case basis, and the amount of such commission will be determined in Ixia’s and the Committee's discretion.
|
¨
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Commissions are calculated monthly, based on bookings of customer orders during the preceding calendar month, and are paid by the end of each calendar month.
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¨
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If employee terminates her employment with Ixia (voluntarily or involuntarily for any reason) or ceases to be an employee with a Commission Plan, commissions will be paid only on orders booked with no system holds or other holdbacks as noted above through the employment termination date or the effective date of change of status.
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¨
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If employee terminates her employment with Ixia (voluntarily or involuntarily for any reason) or ceases to be an employee with a Commission Plan, her final commission payment may be held for up to 90 days, where permitted by law, before it is released for payment. This will allow adequate time for additional information to be received or order adjustments to be processed, which may affect the commission calculation. For example, if employee terminates in May and would otherwise receive her commission payment for May in June, her commission payment could be held and released for payment by September.
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¨
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If employee terminates her employment with Ixia (voluntarily or involuntarily for any reason) or ceases to be an employee with a Commission Plan, her annual target or annual quota will
not
be adjusted pro rata based upon her termination date.
|
¨
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Future credits/reductions to customers’ accounts receivable balances related to product returns, product trade-ins, customer non-payment or similar events may, in Ixia’s sole discretion, result in a reduction or other adjustment of commissions. Ixia has the right to recover previously paid commissions on past due accounts starting at 45 days past the initial credit term. For example, an order with standard 30-day payment terms will not be subject to adjustment until day 76 (30 days + 45-day window). If the receivable is collected by Ixia after the commission was recovered from the employee, the commission will be repaid in the next commission cycle following Ixia’s receipt of payment from the customer.
|
¨
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Manual adjustments for booking corrections will be reflected in Xactly in the month following the month in which the adjustment is made. This is due to the fact that Xactly must be “closed” for the given month in order for the adjustment to be calculated. The adjustment will be uploaded to Xactly with a comment describing the reason for the adjustment. This comment is visible in the Order Item Code field of an employee’s Incentive Details in Xactly.
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¨
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All commission adjustments (including corrections of errors) approved by Sales Operations must be provided to Finance by the 25th day of the current calendar month (or earlier, if the 25
th
falls on a weekend or holiday) for inclusion in that month’s commission calculation. Any adjustments received after this date will likely be reflected in the next commission period.
|
¨
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Commission adjustments approved by Sales Operations will not be reflected in the same month in which the corresponding order is processed. Due to the need for a clean audit trail, an approved adjustment that occurs in the same month in which the order is processed will be reflected in the following month. For example, an adjustment for an order processed in February will be reflected in March.
|
¨
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If employee terminates her employment with Ixia (voluntarily or involuntarily for any reason) or ceases to be an employee with a Commission Plan prior to Ixia recovering overpaid commissions, the commission overpayment will be deducted from the employee’s final paycheck to the maximum extent permitted by law. If for any reason Ixia is unable to or elects not to recover the full amount of overpaid commissions from compensation owed upon termination of employment and therefore requires the employee to directly reimburse Ixia, the employee will be advised of the repayment obligations and the consequences of failing to reimburse Ixia for all amounts due.
|
¨
|
Adjustments not defined by this Commission Plan with a financial impact of $10,000 or more must be approved by the CFO.
|
¨
|
Ixia endeavors to assume foreign exchange risk and to not pass the related costs to its commissioned employees. This is generally accomplished by selling our products and services via US dollar (USD) arrangements and fixing commission payment calculations to static USD to local currency exchange rates. The static exchange rate is typically the closing exchange rate on the first business day of the current calendar year.
|
¨
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If employee is on an approved leave of absence (“LOA”), including but not limited to a medical or maternity leave, Ixia will continue to pay her full earned commissions at the prevailing rate that is applicable at the time of booking (i.e., standard or possible accelerators) for 90 days after the commencement of the approved LOA. After the expiration of 90 days following the commencement of employee’s LOA, the employee’s right to receive commissions under this Commission Plan shall terminate to the maximum extent permitted by law, and employee’s participation in this Commission Plan shall not resume until such time as she returns to active employment with the Company, at which time her eligibility under and participation in this Commission Plan shall be governed by the terms of this Commission Plan.
|
¨
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Notwithstanding anything to the contrary in this Commission Plan, if employee is on an approved LOA she will not qualify during the period of such LOA for any incentive programs
|
¨
|
This Plan is jointly administered by Sales and Finance. All questions, disputes and issues arising under this Plan must be submitted in writing to the Commission Processing team (___________________)
within 60 days of the month in which the order being questioned or disputed is booked
in order to qualify for review and resolution. For example, if the employee disputes the calculation of commission for an order booked in the month of February, then such employee has until April 30th (30 days after the month in which the respective commissions are paid) to submit such written communication.
|
¨
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The Committee shall have the sole and absolute authority to resolve all questions arising in the administration, interpretation and /or application of this Commission Plan and each Commission Plan, and to construe the terms thereof, including any disputed or doubtful terms or the eligibility of employee for any benefit under a Commission Plan.
|
¨
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The failure of the Company to enforce at any time any of the provisions of this Commission Plan, or to require at any time performance of any of the provisions of this Commission Plan, shall in no way be construed to be a waiver of these provisions, nor in any way affect the validity of this Commission Plan or any part thereof, or the right of the Company thereafter to enforce every provision herein.
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Name of Subsidiary *
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State or Other Jurisdiction of Incorporation or
Organization
|
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|
|
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Net Optics, Inc.
|
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California
|
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Anue Systems, Inc.
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Delaware
|
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BreakingPoint Systems, Inc.
|
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Delaware
|
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|
|
|
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Catapult Communications Corporation
|
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Nevada
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Catapult Communications Corporation Subsidiaries:
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Ixia Technologies International Limited
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Ireland
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Ixia Communications Kabushiki Kaisha
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Japan
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G3 NOVA Technology, Inc.
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California
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Ixia do Brasil Produtos e Solucoes Tecnologicas Ltda.
|
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Brazil
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Ixia Federal Systems, Inc.
|
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Delaware
|
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Ixia RUS Limited Liability Company
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Russia
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Ixia Technologies International Limited Subsidiaries:
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Ixia Australia Pty. Ltd.
|
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Australia
|
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Ixia Communications Canada Limited
|
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Canada
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Ixia Technologies Europe Limited
|
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United Kingdom
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Ixia Hong Kong Limited
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Hong Kong, Special Administrative Region, China
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Ixia Technologies (Shanghai) Company Limited
|
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China
|
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Ixia Korea, Inc.
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Korea
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IxiaCom Technologies Sdn. Bhd.
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Malaysia
|
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Ixia Israel Ltd.
|
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Israel
|
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Ixia Technologies Mexico, S. DE R.L. DE C.V.
|
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Mexico
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Ixia Technologies Private Limited
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India
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Ixia Pte. Ltd.
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Singapore
|
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S.C. Ixia SRL
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Romania
|
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VeriWave, Inc.
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Delaware
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*
|
|
The subsidiaries of the Registrant do not do business under any name other than as listed above.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Ixia;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
March 1, 2017
|
/s/ Bethany Mayer
|
|
|
|
Bethany Mayer
President and Chief Executive Officer
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Ixia;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
March 1, 2017
|
/s/ Brent Novak
|
|
|
|
Brent Novak
Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
March 1, 2017
|
|
/s/ Bethany Mayer
|
|
|
|
Bethany Mayer
President and Chief Executive Officer
|
Date:
|
March 1, 2017
|
|
/s/ Brent Novak
|
|
|
|
Brent Novak
Chief Financial Officer
|