Form 8-K Mellanox Technologies, For: Oct 22

�

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

�

�

FORM�8-K

�

CURRENT REPORT

PURSUANT TO SECTION�13 OR 15(d)�OF THE

SECURITIES EXCHANGE ACT OF 1934

�

Date of report (Date of earliest event reported): October�22, 2014

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�

Mellanox Technologies,�Ltd.

(Exact name of Registrant as Specified in its Charter)

�

�

Beit Mellanox

Yokneam,�Israel 20692

(Address of Principal Executive Offices)

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+972-74-723-7200

(Registrant�s telephone number, including area code)

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Not Applicable

(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form�8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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o���������������� Written communications pursuant to Rule�425 under the Securities Act (17 CFR 230.425)

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o���������������� Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17 CFR 240.14a-12)

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o���������������� Pre-commencement communications pursuant to Rule�14d-2(b)�under the Exchange Act (17 CFR 240.14d-2(b))

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o���������������� Pre-commencement communications pursuant to Rule�13e-4(c)�under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02.��������������������������������������� Results of Operations and Financial Condition.

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The information in this current report, including Exhibit�99.1 attached hereto, is furnished pursuant to Item 2.02 of this Form�8-K. Consequently, it is not deemed �filed� for the purposes of Section�18 of the Securities and Exchange Act of 1934 (the �Exchange Act�), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933 if such subsequent filing specifically references this Form�8-K.

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On October�22, 2014, Mellanox Technologies,�Ltd. publicly disseminated a press release announcing financial results for the third quarter ended September�30, 2014. The foregoing description is qualified in its entirety by reference to the press release dated October�22, 2014, a copy of which is attached hereto as Exhibit�99.1 and incorporated herein by reference.

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Item 9.01.��������������������������������������� Financial Statements and Exhibits.

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(d)������ Exhibits.

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The following exhibit is filed with this Form�8-K:

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99.1 Press Release dated October�22, 2014.

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SIGNATURES

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

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Date: October�22, 2014	MELLANOX TECHNOLOGIES,�LTD.
�	�	�
�	By:	/s/ Jacob Shulman
�	Name:	Jacob Shulman
�	Title:	Chief Financial Officer

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3

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Exhibit�Index

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Exhibit�99.1 Press Release dated October�22, 2014.

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4

Exhibit 99.1

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PRESS RELEASE

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Mellanox Technologies,�Ltd.

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Press/Media Contact

Allyson Scott

McGrath/Power Public Relations and Communications

+1-408-727-0351

[email protected]

�

USA Investor Contact

Gwyn Lauber

Mellanox Technologies

+1-408-916-0012

[email protected]

�

Israel Investor Contact

Keren Goldberg

Gelbart Kahana Investor Relations

+972-3-6070593

[email protected]

�

Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

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17.7 percent sequential revenue growth

�

SUNNYVALE, Calif. and YOKNEAM,�ISRAEL � October�22, 2014 � Mellanox� Technologies,�Ltd. (NASDAQ: MLNX), a leading supplier of end-to-end interconnect solutions for servers and storage systems, today announced financial results for its third quarter 2014, ended September�30, 2014.

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Third Quarter 2014 Highlights

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������������������ Revenues were $120.7 million

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������������������ GAAP gross margins were 67.2 percent

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������������������ Non-GAAP gross margins were 70.2 percent

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������������������ GAAP operating loss was $1.1 million

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������������������ Non-GAAP operating income was $16.5 million

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������������������ GAAP net income was $0.4 million

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������������������ Non-GAAP net income was $18.0 million

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������������������ GAAP net income per diluted share was $0.01

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������������������ Non-GAAP net income per diluted share was $0.38

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������������������ $17.2 million in cash was provided by operating activities

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������������������ Total cash and investments increased $10.6 million to $354.3 million at September�30, 2014

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Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 2 - �

Third Quarter Financial Results

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In accordance with U.S. generally accepted accounting principles (GAAP), the company reported revenue of $120.7 million for the third quarter of 2014, up 17.7 percent from $102.6 million in the second quarter of 2014, and up 16.0 percent from $104.1 million in the third quarter of 2013.

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GAAP gross margins in the third quarter of 2014 were 67.2 percent, compared with 66.6 percent in the second quarter of 2014, and 64.6 percent in the third quarter of 2013.

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Non-GAAP gross margins in the third quarter of 2014 were 70.2 percent, compared with 69.1 percent in the second quarter of 2014, and 69.1 percent in the third quarter of 2013.

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GAAP net income in the third quarter of 2014 was $0.4 million, or $0.01 per diluted share, compared with GAAP net loss of $9.0 million, or $0.20 per diluted share in the second quarter of 2014, and GAAP net loss of $5.9 million, or $0.14 per diluted share, in the third quarter of 2013.

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Non-GAAP net income in the third quarter of 2014 was $18.0 million, or $0.38 per diluted share, compared with $6.8 million, or $0.15 per diluted share in the second quarter of 2014, and $12.6 million, or $0.28 per diluted share, in the third quarter of 2013. The third quarter 2014 non-GAAP net income excludes $11.8 million of share-based compensation expenses compared to $11.9 million in the second quarter of 2014, and $11.9 million in the third quarter of 2013. Third quarter 2014 non-GAAP net income also excludes the amortization of intangible assets of $2.8 million, acquisition-related charges of $1.7 million and settlement costs of $1.3 million, compared to amortization expenses of acquired intangible assets of $2.8 million and $1.0 million of acquisition-related charges in the second quarter of 2014, and compared to $4.6 million and $2.0 million, respectively, in the third quarter of 2013.

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Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 3 - �

Total cash and investments increased by $10.6 million to $354.3 million at September�30, 2014, compared to $343.7 million at June�30, 2014. The company generated $17.2 million in cash from operating activities in the third quarter.

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�We are pleased with our results for the third quarter.� Demand from high-performance computing customers was strong which contributed to solid revenue growth from our FDR InfiniBand solutions.� Revenue from our Ethernet solutions also increased in the quarter,� said Eyal Waldman, president and CEO of Mellanox Technologies. �The transition from 10 Gigabit Ethernet to 40 Gigabit Ethernet is happening now with our Web 2.0 and cloud customers.� We expect to ship hundreds of thousands of 40 Gigabit Ethernet adapters in the fourth quarter to these markets.� This transition is driven by the growth of data producing and consuming applications.� We expect this transition to accelerate in 2015 and beyond.�

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Recent Mellanox Press Release Highlights

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������������������ Oct.�21, 2014 - Mellanox InfiniBand Powers Top European High Performance Computing Centers

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������������������ Oct.�20, 2014 - Mellanox Ethernet Solutions Selected for New HP 64-bit ARM Data Center Platform

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������������������ Oct.�15, 2014 - Mellanox Introduces New Ethernet Switches to Provide Enhanced Features and Performance for Hyperscale and Cloud Data Centers

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������������������ Oct.�6, 2014 - Mellanox Technologies Named to Inaugural CRN Cloud Partner Program Guide

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������������������ Sept. 30, 2014 - Science�& Technology Facilities Council Selects Mellanox�s Ethernet Solutions to Further Atmospheric Science and Research

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������������������ Sept. 29, 2014 - Yahoo! Japan Selects Mellanox InfiniBand Solutions

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������������������ Sept. 29, 2014 - Mellanox�s CloudX Platform Now Supported with Oracle OpenStack for Oracle Linux

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������������������ Sept. 16, 2014 - Mellanox Announces Complete End-to-End Support for New RDMA over Converged Ethernet Version 2 (RoCEv2) Specification

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������������������ Sept. 8, 2014 - Mellanox End-to-End InfiniBand and Ethernet Interconnect Solutions Optimized for Intel Xeon E5-2600 v3 Product Family (code name �Haswell�) Platforms

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������������������ Aug.�25, 2014 - Mellanox Enables Highly Efficient Virtual Desktop Infrastructure using VMware�s Virtual SAN Storage Solution and Micron SSDs

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Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 4 - �

Fourth Quarter 2014 Guidance

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Our guidance for fourth quarter 2014 non-GAAP results is as follows:

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������������������ Quarterly revenues of $133 million to $137 million.

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������������������ Non-GAAP gross margins of 69 percent to 70 percent.

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������������������ An increase in non-GAAP operating expenses of 4 percent to 6 percent.

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������������������ Share-based compensation expense of $11.9 million to $12.4 million.

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������������������ Non-GAAP diluted share count of 46.9 million to 47.4 million shares.

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Conference Calls

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Mellanox will hold its third quarter 2014 financial results conference call today at 2�p.m. Pacific Time to discuss the company�s financial results. To listen to the call, dial +1-785-424-1826 approximately 10 minutes prior to the start time.

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The Mellanox financial results conference call will be available via live webcast on the investor relations section of the Mellanox website at http://ir.mellanox.com. Access the webcast 15 minutes prior to the start of the call to download and install any necessary audio software. Replay of the webcast will also be available on the Mellanox website.

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About Mellanox

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Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability. Mellanox offers a choice of fast interconnect products: adapters, switches, software, cables and silicon that accelerate application runtime and maximize business results for a wide range of markets including high-performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services. More information is available at www.mellanox.com.

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Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 5 - �

GAAP to Non-GAAP Reconciliation

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To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Mellanox uses non-GAAP measures of net income which are adjusted from results based on GAAP to exclude share-based compensation expense, amortization expense of acquired intangible assets, acquisition related expense and settlement costs. The company believes the non-GAAP results provide useful information to both management and investors, as these non-GAAP results exclude expenses that are not indicative of our core operating results. Management believes it is useful to exclude share-based compensation expense, amortization expense of acquired intangible assets, acquisition related expense and settlement costs because it enhances investors� ability to understand our business from the same perspective as management, which believes that such items are not directly attributable to nor reflect the underlying performance of the company�s business operations.� Further, management believes certain non-cash charges such as share-based compensation and amortization of acquired intangible assets do not reflect the cash operating results of the business. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. These non-GAAP measures may be different than the non-GAAP measures used by other companies. A reconciliation of GAAP to non-GAAP condensed consolidated statements of operations is also presented in the financial statements portion of this release and is posted under the �Investors� section on our website.

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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

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All statements included or incorporated by reference in this release, other than statements or characterizations of historical fact, are forward-looking statements, including the guidance for the three months ended December�31, 2014, statements related to the technologies we acquired in 2013, trends in the market for our solutions and services and opportunities for our company in 2014 and beyond. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management�s beliefs and certain assumptions made by us, all of which are subject to change.

�

Forward-looking statements can often be identified by words such as �projects,� �anticipates,� �expects,� �intends,� �plans,� �predicts,� �believes,� �seeks,� �estimates,� �may,� �will,� �should,� �would,� �could,� �potential,� �continue,� �ongoing,� similar expressions and variations or negatives of these words.� These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

�

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include the continued expansion of our product line, customer base and the total available market of our products, the continued growth in demand for our products, the continued, increased demand for industry standards-based technology, our ability to react to trends and challenges in our business and the markets in which we operate, our ability to anticipate market needs or develop new or enhanced products to meet those needs, the adoption rate of our products, our ability to establish and maintain successful relationships with our OEM partners, our ability to effectively compete in our industry, fluctuations in demand, sales cycles and prices for our products and services, our success converting design wins to revenue-generating product shipments, the continued launch and volume ramp of large customer sales opportunities, and our ability to protect our intellectual property rights. Furthermore, the majority of our quarterly revenues are derived from customer orders received and fulfilled in the same quarterly period. We have limited visibility into actual end-user demand as such demand impacts us and our OEM customer inventory balances in any given quarter. Consequently, this introduces risk and uncertainty into our revenue and production forecasts and business planning and could negatively impact our financial results. In addition, current uncertainty in the global economic environment poses a risk to the overall economy as businesses may defer purchases in response to tighter credit conditions, changing overall demand for our products, and negative financial news. Consequently, our results could differ materially from our prior results due to these general economic and market conditions, political events and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission.

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More information about the risks, uncertainties and assumptions that may impact our business is set forth in our annual report on Form�10-K filed with the SEC on February�28, 2014 and in our subsequent quarterly reports filed on Form�10-Q. All forward-looking statements in this press release, including the guidance for the three months ended December�31, 2014, are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

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Mellanox is a registered trademark of Mellanox Technologies,�Ltd. All other trademarks are property of their respective owners.

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Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 6 - �

Mellanox Technologies,�Ltd.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)

�

�	�	Three�Months�Ended					�	Nine�Months�Ended					�
�	�	September�30,					�	September�30,					�
�	�	2014		�	2013�*		�	2014		�	2013�*		�
�	�	�		�	�		�	�		�	�		�
Total revenues	�	$	120,708	�	$	104,067	�	$	321,987	�	$	285,315	�
Cost of revenues	�	39,540		�	36,869		�	107,788		�	97,974		�
Gross profit	�	81,168		�	67,198		�	214,199		�	187,341		�
Operating expenses:	�	�		�	�		�	�		�	�		�
Research and development	�	54,220		�	44,607		�	152,063		�	121,498		�
Sales and marketing	�	18,864		�	18,204		�	56,865		�	51,389		�
General and administrative	�	9,184		�	9,674		�	26,861		�	27,193		�
Total operating expenses	�	82,268		�	72,485		�	235,789		�	200,080		�
Loss from operations	�	(1,100		)	(5,287		)	(21,590		)	(12,739		)
Other income, net	�	361		�	482		�	952		�	927		�
Loss before taxes	�	(739		)	(4,805		)	(20,638		)	(11,812		)
Benefit (provision) for taxes on income	�	1,167		�	(1,080		)	589		�	(4,092		)
Net income (loss)	�	$	428	�	$	(5,885	)	$	(20,049	)	$	(15,904	)
Net income (loss) per share � basic	�	$	0.01	�	$	(0.14	)	$	(0.45	)	$	(0.37	)
Net income (loss) per share � diluted	�	$	0.01	�	$	(0.14	)	$	(0.45	)	$	(0.37	)
Shares used in computing income (loss) per share:	�	�		�	�		�	�		�	�		�
Basic	�	44,984		�	43,579		�	44,646		�	43,257		�
Diluted	�	46,229		�	43,579		�	44,646		�	43,257		�

�

* Certain prior year amounts have been revised to reflect non-material adjustments.

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Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 7 - �

Mellanox Technologies,�Ltd.

Reconciliation of Non-GAAP Adjustments

(in thousands, percentages, unaudited)

�

�

�

Three�Months�Ended

�

Nine�Months�Ended

�

�

�

September�30,

�

September�30,

�

�

�

2014

�

2013�*

�

2014

�

2013�*

�

�

�

�

�

�

�

�

�

�

�

Reconciliation of GAAP net income (loss) to non-GAAP:

�

�

�

�

�

�

�

�

�

GAAP net income (loss)

�

$

428

�

$

(5,885

)

$

(20,049

)

$

(15,904

)

Adjustments:

�

�

�

�

�

�

�

�

�

Share-based compensation expense:

�

�

�

�

�

�

�

�

�

Cost of revenues

�

532

�

461

�

1,586

�

1,359

�

Research and development

�

6,756

�

6,898

�

20,187

�

19,148

�

Sales and marketing

�

2,473

�

2,407

�

7,385

�

6,873

�

General and administrative

�

2,088

�

2,166

�

6,276

�

6,092

�

Total share-based compensation expense

�

11,849

�

11,932

�

35,434

�

33,472

�

Amortization of acquired intangibles:

�

�

�

�

�

�

�

�

�

Cost of revenues

�

1,562

�

3,570

�

5,367

�

7,230

�

Research and development

�

195

�

164

�

586

�

339

�

Sales and marketing

�

1,039

�

837

�

3,117

�

1,912

�

Total amortization of acquired intangibles

�

2,796

�

4,571

�

9,070

�

9,481

�

Settlement costs:

�

�

�

�

�

�

�

�

�

Cost of revenues

�

1,250

�

�

�

1,250

�

�

�

Total settlement costs

�

1,250

�

�

�

1,250

�

�

�

Acquisition related charges:

�

�

�

�

�

�

�

�

�

Cost of revenues

�

230

�

699

�

849

�

699

�

Research and development

�

1,216

�

333

�

1,949

�

333

�

Sales and marketing

�

225

�

261

�

637

�

261

�

General and administrative

�

�

�

672

�

�

�

2,500

�

Total acquisition related charges

�

1,671

�

1,965

�

3,435

�

3,793

�

Non-GAAP net income

�

$

17,994

�

$

12,583

�

$

29,140

�

$

30,842

�

�

�

�

�

�

�

�

�

�

�

Reconciliation of GAAP gross profit to non-GAAP:

�

�

�

�

�

�

�

�

�

Revenues

�

$

120,708

�

$

104,067

�

$

321,987

�

$

285,315

�

GAAP gross profit

�

81,168

�

67,198

�

214,199

�

187,341

�

GAAP gross margin

�

67.2

%

64.6

%

66.5

%

65.7

%

Share-based compensation expense

�

532

�

461

�

1,586

�

1,359

�

Amortization of acquired intangibles

�

1,562

�

3,570

�

5,367

�

7,230

�

Settlement costs

�

1,250

�

�

�

1,250

�

�

�

Acquisition related charges

�

230

�

699

�

849

�

699

�

Non-GAAP gross profit

�

$

84,742

�

$

71,928

�

$

223,251

�

$

196,629

�

Non-GAAP gross margin

�

70.2

%

69.1

%

69.3

%

68.9

%

�

�

�

�

�

�

�

�

�

�

Reconciliation of GAAP operating expenses to non-GAAP:

�

�

�

�

�

�

�

�

�

GAAP operating expenses

�

$

82,268

�

$

72,485

�

$

235,789

�

$

200,080

�

Share-based compensation expense

�

(11,317

)

(11,471

)

(33,848

)

(32,113

)

Amortization of acquired intangibles

�

(1,234

)

(1,001

)

(3,703

)

(2,251

)

Acquisition related charges

�

(1,441

)

(1,266

)

(2,586

)

(3,094

)

Non-GAAP operating expenses

�

$

68,276

�

$

58,747

�

$

195,652

�

$

162,622

�

�

�

�

�

�

�

�

�

�

�

Reconciliation of GAAP loss from operations to non-GAAP income:

�

�

�

�

�

�

�

�

�

GAAP loss from operations

�

$

(1,100

)

$

(5,287

)

$

(21,590

)

$

(12,739

)

Share-based compensation expense

�

11,849

�

11,932

�

35,434

�

33,472

�

Amortization of acquired intangibles

�

2,796

�

4,571

�

9,070

�

9,481

�

Settlement costs

�

1,250

�

�

�

1,250

�

�

�

Acquisition related charges

�

1,671

�

1,965

�

3,435

�

3,793

�

Non-GAAP income from operations

�

$

16,466

�

$

13,181

�

$

27,599

�

$

34,007

�

�

�

Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 8 - �

Mellanox Technologies,�Ltd.

Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data, unaudited)

�

�

�

Three�Months�Ended

�

Nine�Months�Ended

�

�

�

September�30,

�

September�30,

�

�

�

2014

�

2013�*

�

2014

�

2013�*

�

�

�

�

�

�

�

�

�

�

�

Shares used in computing GAAP diluted earnings per share

�

46,229

�

43,579

�

44,646

�

43,257

�

Adjustments:

�

�

�

�

�

�

�

�

�

Effect of dilutive securities under GAAP**

�

(1,245

)

�

�

�

�

�

�

Total options vested and exercisable

�

1,879

�

1,911

�

1,879

�

1,911

�

Shares used in computing non-GAAP diluted earnings per share

�

46,863

�

45,490

�

46,525

�

45,168

�

�

�

�

�

�

�

�

�

�

�

GAAP diluted net income (loss) per share

�

$

0.01

�

$

(0.14

)

$

(0.45

)

$

(0.37

)

Adjustments:

�

�

�

�

�

�

�

�

�

Share-based compensation expense

�

0.25

�

0.27

�

0.79

�

0.77

�

Amortization of acquired intangibles

�

0.06

�

0.11

�

0.20

�

0.22

�

Settlement costs

�

0.03

�

0.00

�

0.03

�

0.00

�

Acquisition related charges

�

0.04

�

0.05

�

0.08

�

0.09

�

Effect of dilutive securities under GAAP**

�

0.01

�

0.00

�

0.00

�

0.00

�

Total options vested and exercisable

�

(0.02

)

(0.01

)

(0.02

)

(0.03

)

Non-GAAP diluted income per share

�

$

0.38

�

$

0.28

�

$

0.63

�

$

0.68

�

�

*�Certain prior year amounts have been revised to reflect non-material adjustments.

**�This adjustment adds back the GAAP effect of additional ordinary shares that would have been outstanding if the dilutive potential ordinary shares from stock options had been issued under the Treasury method.

�

�

Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 9 - �

Mellanox Technologies,�Ltd.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)

�

�	�	September�30,		�	December�31,		�
�	�	2014		�	2013�*		�
ASSETS	�	�		�	�		�
Current assets:	�	�		�	�		�
Cash and cash equivalents	�	$	54,852	�	$	63,164	�
Short-term investments	�	295,795		�	263,528		�
Restricted cash	�	3,604		�	�		�
Accounts receivable, net	�	72,959		�	70,566		�
Inventories	�	39,326		�	35,963		�
Deferred taxes and other current assets	�	24,511		�	17,581		�
Total current assets	�	491,047		�	450,802		�
Property and equipment, net	�	73,954		�	70,815		�
Severance assets	�	9,814		�	10,630		�
Intangible assets, net	�	44,975		�	54,362		�
Goodwill	�	201,105		�	199,558		�
Deferred taxes and other long-term assets	�	21,327		�	20,613		�
Total assets	�	$	842,222	�	$	806,780	�
�	�	�		�	�		�
LIABILITIES AND SHAREHOLDERS� EQUITY	�	�		�	�		�
Current liabilities:	�	�		�	�		�
Accounts payable	�	$	37,245	�	$	29,964	�
Accrued liabilities	�	57,894		�	51,251		�
Deferred revenue	�	14,539		�	15,849		�
Capital lease liabilities, current	�	1,101		�	1,245		�
Total current liabilities	�	110,779		�	98,309		�
Accrued severance	�	12,401		�	13,418		�
Deferred revenue	�	8,669		�	9,045		�
Capital lease liabilities	�	768		�	1,600		�
Other long-term liabilities	�	14,889		�	17,091		�
Total liabilities	�	147,506		�	139,463		�
Shareholders� equity:	�	�		�	�		�
Ordinary shares	�	191		�	185		�
Additional paid-in capital	�	601,840		�	550,795		�
Accumulated other comprehensive income (loss)	�	(2,213		)	1,390		�
Retained earnings	�	94,898		�	114,947		�
Total shareholders� equity	�	694,716		�	667,317		�
Total liabilities and shareholders� equity	�	$	842,222	�	$	806,780	�

�

* Certain prior year amounts have been revised to reflect non-material adjustments.

�

�

Mellanox Technologies,�Ltd. Announces Third Quarter 2014 Financial Results

- 10 - �

Mellanox Technologies,�Ltd.

Condensed Consolidated Statement of Cash Flows

(in thousands, unaudited)

�

�	�	Nine�Months�Ended�September�30,					�
�	�	2014		�	2013�*		�
Cash flows from operating activities:	�	�		�	�		�
Net loss	�	$	(20,049	)	$	(15,904	)
Adjustments to reconcile net loss to net cash provided by operating activities:	�	�		�	�		�
Depreciation and amortization	�	28,999		�	25,439		�
Deferred income taxes	�	(202		)	(2,403		)
Share-based compensation	�	35,434		�	33,472		�
Gain on investments	�	(94		)	(710		)
Excess tax benefit from share-based compensation	�	(346		)	(2,796		)
Changes in assets and liabilities:	�	�		�	�		�
Accounts receivable, net	�	(1,530		)	(12,137		)
Inventories	�	(4,239		)	12,942		�
Prepaid expenses and other assets	�	(10,040		)	699		�
Accounts payable	�	6,692		�	(8,896		)
Accrued liabilities and other payables	�	406		�	(8,429		)
Net cash provided by operating activities	�	35,031		�	21,277		�
�	�	�		�	�		�
Cash flows from investing activities:	�	�		�	�		�
Acquisition of Kotura,�Inc., net of cash acquired of $101	�	�		�	(80,671		)
Acquisition of IPtronics A/S., net of cash acquired of $2,077	�	�		�	(42,848		)
Purchase of severance-related insurance policies	�	(597		)	(632		)
Purchases of short-term investments	�	(202,818		)	(151,535		)
Proceeds from sale of short-term investments	�	130,652		�	133,435		�
Proceeds from maturities of short-term investments	�	39,801		�	63,947		�
Increase in restricted cash deposits	�	(103		)	(3,943		)
Purchase of property and equipment	�	(21,228		)	(24,050		)
Purchase of intangible assets	�	�		�	(6,440		)
Purchase of equity investment in private companies	�	(3,691		)	(3,123		)
Net cash used in investing activities	�	(57,984		)	(115,860		)
�	�	�		�	�		�
Cash flows from financing activities:	�	�		�	�		�
Principal payments on capital lease obligations	�	(976		)	(960		)
Proceeds from exercise of share awards	�	15,271		�	13,571		�
Excess tax benefit from share-based compensation	�	346		�	2,796		�
Net cash provided by financing activities	�	14,641		�	15,407		�
�	�	�		�	�		�
Net decrease in cash and cash equivalents	�	(8,312		)	(79,176		)
Cash and cash equivalents at beginning of period	�	63,164		�	117,054		�
Cash and cash equivalents at end of period	�	$	54,852	�	$	37,878	�

�

* Certain prior year amounts have been revised to reflect non-material adjustments.

�