##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 000-31523
 IXIA
 (Exact name of Registrant as specified in its charter)
 California(State or other jurisdiction of 
incorporation or organization)
    
    95-4635982(I.R.S. Employer Identification No.)
 26601 West Agoura Road, Calabasas, CA 91302  (Address of principal executive offices, including zip code)
 (818) 871-1800(Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Common Stock(Class of Common Stock)
    
    65,298,962(Outstanding at July 26, 2010)




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##### 



IXIA
 TABLE OF CONTENTS
  Page NumberPART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of June 30,
2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for
the three and six months ended June 30, 2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    25PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    26SIGNATURES
    
    
    27EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements (unaudited)
 IXIA
 
 Condensed Consolidated Balance Sheets
 (in thousands)
  June 30,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    28,246
    
    
    $
    15,061Short-term investments in marketable securities
    
    
    42,191
    
    
    
    10,337Accounts receivable, net of allowance for
doubtful accounts of $934 and $654 as of June
30, 2010 and December 31, 2009, respectively
    
    
    67,621
    
    
    
    55,765Inventories
    
    
    17,744
    
    
    
    14,541Prepaid expenses and other current assets
    
    
    8,716
    
    
    
    9,727Total current assets
    
    
    164,518
    
    
    
    105,431Investments in marketable securities
    
    
    32,474
    
    
    
    53,582Property and equipment, net
    
    
    19,886
    
    
    
    18,693Intangible assets, net
    
    
    59,930
    
    
    
    69,132Goodwill
    
    
    60,121
    
    
    
    60,121Other assets
    
    
    1,595
    
    
    
    2,129Total assets
    
    $
    338,524
    
    
    $
    309,088Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    12,144
    
    
    $
    6,136Accrued expenses
    
    
    26,586
    
    
    
    21,253Deferred revenues
    
    
    33,516
    
    
    
    29,842Income taxes payable
    
    
    312
    
    
    
    1,263Total current liabilities
    
    
    72,558
    
    
    
    58,494Deferred revenues
    
    
    7,142
    
    
    
    7,309Other liabilities
    
    
    6,748
    
    
    
    6,620Total liabilities
    
    
    86,448
    
    
    
    72,423Shareholders equity:Common stock, without par value; 200,000
shares authorized, 64,981 and 63,062 shares
issued and outstanding as of June 30, 2010 and
December 31, 2009, respectively
    
    
    96,254
    
    
    
    87,283Additional paid-in capital
    
    
    124,579
    
    
    
    118,754Retained earnings
    
    
    29,487
    
    
    
    28,979Accumulated other comprehensive income
    
    
    1,756
    
    
    
    1,649Total shareholders equity
    
    
    252,076
    
    
    
    236,665Total liabilities and shareholders equity
    
    $
    338,524
    
    
    $
    309,088
  3




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##### Table of Contents



IXIA
 
 Condensed Consolidated Statements of Operations
 (in thousands, except per share data)
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Products
    
    $
    54,925
    
    
    $
    30,441
    
    
    $
    105,594
    
    
    $
    60,522Services
    
    
    11,179
    
    
    
    7,964
    
    
    
    22,551
    
    
    
    15,007Total revenues
    
    
    66,104
    
    
    
    38,405
    
    
    
    128,145
    
    
    
    75,529Costs and operating expenses:(1)Cost of revenues  products
    
    
    13,773
    
    
    
    7,944
    
    
    
    25,218
    
    
    
    15,510Cost of revenues  services
    
    
    1,518
    
    
    
    801
    
    
    
    3,026
    
    
    
    1,744Research and development
    
    
    17,882
    
    
    
    11,443
    
    
    
    36,521
    
    
    
    23,309Sales and marketing
    
    
    19,160
    
    
    
    13,358
    
    
    
    38,321
    
    
    
    27,757General and administrative
    
    
    8,357
    
    
    
    6,514
    
    
    
    17,224
    
    
    
    12,738Amortization of intangible assets
    
    
    5,086
    
    
    
    1,386
    
    
    
    10,144
    
    
    
    2,711Acquisition and other related
    
    
    1,556
    
    
    
    2,522
    
    
    
    2,679
    
    
    
    2,522Restructuring
    
    
    67
    
    
    
    1,011
    
    
    
    3,557
    
    
    
    1,011Total costs and operating expenses
    
    
    67,399
    
    
    
    44,979
    
    
    
    136,690
    
    
    
    87,302Loss from operations
    
    
    (1,295
    )
    
    
    (6,574
    )
    
    
    (8,545
    )
    
    
    (11,773
    )Interest and other income, net
    
    
    309
    
    
    
    668
    
    
    
    9,096
    
    
    
    1,229Other-than-temporary impairment on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,405(Loss) income before income taxes
    
    
    (986
    )
    
    
    (5,906
    )
    
    
    551
    
    
    
    (11,949
    )Income tax (benefit) expense
    
    
    (625
    )
    
    
    (3,252
    )
    
    
    43
    
    
    
    (5,304
    )Net (loss) income
    
    $
    (361
    )
    
    $
    (2,654
    )
    
    $
    508
    
    
    $
    (6,645
    )(Loss) earnings per share:Basic
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    0.01
    
    
    $
    (0.11
    )Diluted
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    0.01
    
    
    $
    (0.11
    )Weighted average number of common and common
equivalent shares outstanding:Basic
    
    
    64,603
    
    
    
    62,349
    
    
    
    64,052
    
    
    
    62,699Diluted
    
    
    64,603
    
    
    
    62,349
    
    
    
    65,628
    
    
    
    62,699
 
 (1)
    
    Stock-based compensation included in: Cost of revenues  products
    
    $
    133
    
    
    $
    93
    
    
    $
    256
    
    
    $
    263Cost of revenues  services
    
    
    50
    
    
    
    36
    
    
    
    96
    
    
    
    100Research and development
    
    
    1,356
    
    
    
    1,042
    
    
    
    2,557
    
    
    
    2,663Sales and marketing
    
    
    896
    
    
    
    797
    
    
    
    1,731
    
    
    
    2,061General and administrative
    
    
    961
    
    
    
    644
    
    
    
    1,552
    
    
    
    1,360
  4




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IXIA
 
 Condensed Consolidated Statements of Cash Flows
 (in thousands)
  Six months endedJune 30,2010
    
    
    2009Cash flows from operating activities:Net income (loss)
    
    $
    508
    
    
    $
    (6,645
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    5,501
    
    
    
    5,114Amortization of intangible assets
    
    
    10,144
    
    
    
    2,711Stock-based compensation
    
    
    6,192
    
    
    
    6,447Deferred income taxes
    
    
    
    
    
    
    (6,444
    )Impairment on investments
    
    
    
    
    
    
    1,405Tax (shortfall) benefit from stock option transactions
    
    
    (367
    )
    
    
    61Excess tax benefits from stock-based compensation
    
    
    (410
    )
    
    
    (53
    )Changes in operating assets and liabilities, net of
effect of acquisitions:Accounts receivable, net
    
    
    (11,856
    )
    
    
    6,167Inventories
    
    
    (3,203
    )
    
    
    496Prepaid expenses and other current assets
    
    
    1,011
    
    
    
    563Other assets
    
    
    534
    
    
    
    1,436Accounts payable
    
    
    5,608
    
    
    
    (1,391
    )Accrued expenses
    
    
    5,508
    
    
    
    (6,581
    )Deferred revenues
    
    
    3,507
    
    
    
    (72
    )Income taxes payable and other liabilities
    
    
    (794
    )
    
    
    72Net cash provided by operating activities
    
    
    21,883
    
    
    
    3,286Cash flows from investing activities:Purchases of property and equipment
    
    
    (6,543
    )
    
    
    (4,611
    )Purchases of available-for-sale securities
    
    
    (41,582
    )
    
    
    (211,260
    )Proceeds from available-for-sale securities
    
    
    30,763
    
    
    
    133,988Purchases of other intangible assets
    
    
    (192
    )
    
    
    (156
    )Payments in
connection with acquisitions, net of cash acquired
    
    
    (525
    )
    
    
    (76,360
    )Net cash used in investing activities
    
    
    (18,079
    )
    
    
    (158,399
    )Cash flows from financing activities:Proceeds from exercise of stock options and employee stock
purchase plan options
    
    
    8,971
    
    
    
    1,626Repurchase of common stock
    
    
    
    
    
    
    (8,424
    )Excess tax benefits from stock-based compensation
    
    
    410
    
    
    
    53Net cash provided by (used in) financing activities
    
    
    9,381
    
    
    
    (6,745
    )Net increase
(decrease) in cash and cash equivalents
    
    
    13,185
    
    
    
    (161,858
    )Cash and cash equivalents at beginning of period
    
    
    15,061
    
    
    
    192,791Cash and cash equivalents at end of period
    
    $
    28,246
    
    
    $
    30,933
  5




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IXIA
 
 Notes to Condensed Consolidated Financial Statements
(unaudited)
 1. Business
  2. Basis of Presentation
   3. Acquisitions
   Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2009
    
    2009(Pro forma)
    
    (Pro forma)Total revenues
    
    $
    53,880
    
    
    $
    112,682Net loss
    
    
    (17,730
    )
    
    
    (26,445
    )
 6




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4. Restructuring Costs
     N2X
    
    
    Catapult
    
    
    IxiaTotal
    
    
    Restructuring
    
    
    Restructuring
    
    
    RestructuringAccrual at January 1, 2010
    
    $
    879
    
    
    $
    
    
    
    $
    837
    
    
    $
    42Charges
    
    
    3,490
    
    
    
    3,479
    
    
    
    11
    
    
    
    Payments
    
    
    (1,896
    )
    
    
    (1,209
    )
    
    
    (655
    )
    
    
    (32
    )Accrual at March 31, 2010
    
    $
    2,473
    
    
    $
    2,270
    
    
    $
    193
    
    
    $
    10Charges
    
    
    140
    
    
    
    132
    
    
    
    8
    
    
    
    Payments
    
    
    (2,263
    )
    
    
    (2,201
    )
    
    
    (62
    )
    
    
    Adjustments
    
    
    (73
    )
    
    
    
    
    
    
    (63
    )
    
    
    (10
    )Accrual at June 30, 2010
    
    $
    276
    
    
    $
    201
    
    
    $
    75
    
    
    $
    
 5. Inventories
  June 30,
    
    
    December 31,2010
    
    
    2009Raw materials
    
    $
    5,423
    
    
    $
    3,674Work in process
    
    
    4,507
    
    
    
    4,731Finished goods
    
    
    7,814
    
    
    
    6,136$
    17,744
    
    
    $
    14,541
 7




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6. Shareholders Equity
 Other Comprehensive (Loss) Income
  Employee Stock Purchase Plan
  7. (Loss) Earnings Per Share
   Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Net (loss) income
    
    $
    (361
    )
    
    $
    (2,654
    )
    
    $
    508
    
    
    $
    (6,645
    )Denominator:Basic presentation:Weighted average common shares
    
    
    64,603
    
    
    
    62,349
    
    
    
    64,052
    
    
    
    62,699Denominator for basic calculation
    
    
    64,603
    
    
    
    62,349
    
    
    
    64,052
    
    
    
    62,699Diluted presentation:Shares used above
    
    
    64,603
    
    
    
    62,349
    
    
    
    64,052
    
    
    
    62,699Weighted average effect of
dilutive stock options and other
share-based awards
    
    
    
    
    
    
    
    
    
    
    1,576
    
    
    
    Denominator for diluted calculation
    
    
    64,603
    
    
    
    62,349
    
    
    
    65,628
    
    
    
    62,699Basic (loss) earnings per share
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    0.01
    
    
    $
    (0.11
    )Diluted (loss) earnings per share
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    0.01
    
    
    $
    (0.11
    )
 8




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8. Concentrations
 Significant Customer
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2010
    
    2009
    
    2010
    
    2009Amount of total revenues
    
    $
    9,437
    
    
    $
    7,134
    
    
    $
    21,453
    
    
    $
    13,984As a percentage of total revenues
    
    
    14.3
    %
    
    
    18.6
    %
    
    
    16.7
    %
    
    
    18.5
    %
  International Data
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2010
    
    2009
    
    2010
    
    2009Amount of total international revenues
    
    $
    26,403
    
    
    $
    13,477
    
    
    $
    59,841
    
    
    $
    30,205As a percentage of total revenues
    
    
    39.9
    %
    
    
    35.1
    %
    
    
    46.7
    %
    
    
    40.0
    %
  June 30,
    
    
    December 31,2010
    
    
    2009United States
    
    $
    11,527
    
    
    $
    10,874India
    
    
    2,208
    
    
    
    2,506Romania
    
    
    2,167
    
    
    
    2,647Other
    
    
    3,984
    
    
    
    2,666$
    19,886
    
    
    $
    18,693
 9




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9. Fair Value Measurements
  Level 1.
    
    Observable inputs such as quoted prices in active markets;Level 2.
    
    Inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly; andLevel 3.
    
    Unobservable inputs in which there is little or no market data,
which require the reporting entity to develop its own
assumptions.
  June 30, 2010
    
    
    December 31, 2009QuotedQuoted Prices
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Prices inin Active
    
    
    Significant
    
    
    
    
    
    
    
    
    
    
    Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    Significant
    
    
    
    
    
    
    Markets for
    
    
    Other
    
    
    SignificantIdentical
    
    
    Observable
    
    
    Unobservable
    
    
    
    
    
    
    Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs
    
    
    
    
    
    
    Assets
    
    
    Inputs
    
    
    InputsFair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash equivalents:(1)Money market funds
    
    $
    943
    
    
    $
    943
    
    
    $
    
    
    
    $
    
    
    
    $
    241
    
    
    $
    241
    
    
    $
    
    
    
    $
    Short-term investments:(1)U.S.
Treasury, government and
agency debt securities
    
    
    35,164
    
    
    
    
    
    
    
    35,164
    
    
    
    
    
    
    
    5,713
    
    
    
    
    
    
    
    5,713
    
    
    
    Corporate debt securities
    
    
    7,027
    
    
    
    
    
    
    
    7,027
    
    
    
    
    
    
    
    4,624
    
    
    
    
    
    
    
    4,624
    
    
    
    Long-term investments:U.S. Treasury, government and agency
debt securities
    
    
    12,565
    
    
    
    
    
    
    
    12,565
    
    
    
    
    
    
    
    34,673
    
    
    
    
    
    
    
    34,673
    
    
    
    Corporate debt securities
    
    
    14,722
    
    
    
    
    
    
    
    14,722
    
    
    
    
    
    
    
    13,236
    
    
    
    
    
    
    
    13,236
    
    
    
    Auction rate securities (2)
    
    
    5,187
    
    
    
    
    
    
    
    
    
    
    
    5,187
    
    
    
    5,673
    
    
    
    
    
    
    
    
    
    
    
    5,673Total financial assets
    
    $
    75,608
    
    
    $
    943
    
    
    $
    69,478
    
    
    $
    5,187
    
    
    $
    64,160
    
    
    $
    241
    
    
    $
    58,246
    
    
    $
    5,673
 
 (1)
    
    To estimate the fair value of our money market funds, U.S. government and agency debt
securities, and corporate debt securities, we use the estimated fair value per our
investment brokerage/custodial statements. To the extent deemed necessary, we may also
obtain non-binding market quotes to corroborate the estimated fair values reflected in our
investment brokerage/custodial statements.(2)
    
    Given the disruption in the auction process in the auction rate securities market,
there is no longer an actively quoted market price for these securities. Accordingly, we
utilized models to estimate the fair values of these auction rate securities based on,
among other items: (i) the underlying structure of each security; (ii) the present value of
future principal, interest and/or dividend payments discounted at the appropriate rate
considering the market rate and conditions; (iii) consideration of the probabilities of
default, auction failure, or repurchase at par for each period; and (iv) credit quality and
estimates of the recovery rates in the event of default for each security. These estimated
fair values could change significantly based on, among other events: (i) a further
deterioration in market conditions; (ii) further declines in the credit quality of our
auction rate securities or of the issuers of our auction rate securities; or (iii) a
default on interest or principal payments by the issuer of the securities. 10




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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Beginning balance
    
    $
    5,819
    
    
    $
    1,806
    
    
    $
    5,673
    
    
    $
    3,211Unrealized (loss) gain recorded in other comprehensive income
    
    
    (353
    )
    
    
    1,462
    
    
    
    (92
    )
    
    
    1,462Unrealized loss recorded in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,405
    )Additions from Catapult acquisition
    
    
    
    
    
    
    4,366
    
    
    
    
    
    
    
    4,366Settlements
    
    
    (279
    )
    
    
    
    
    
    
    (394
    )
    
    
    Ending balance
    
    $
    5,187
    
    
    $
    7,634
    
    
    $
    5,187
    
    
    $
    7,634Unrealized losses recorded in earnings for level 3 assets still held at June 30
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (1,405
    )
 Auction Rate Securities Settlement
  10. Commitments and Contingencies
 Litigation
 IneoQuest Technologies, Inc. vs. Ixia.
  11




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Tucana Telecom NV vs. Catapult.
    11. Recent Accounting Pronouncements
   
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13




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ITEM 2
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
  Acquisition of Catapult Communications Corporation.
 Acquisition of Agilent Technologies N2X Data Network Testing Product Line.
 Revenues.
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Stock-Based Compensation.
 16




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Cost of Revenues
  
    
    our pricing policies and those of our competitors;
    
    the pricing we are able to obtain from our component suppliers and contract
manufacturers;
    
    the mix of customers and sales channels through which our products are sold;
    
    the mix of our products sold, such as the mix of software versus hardware
product sales;
    
    new product introductions by us and by our competitors;
    
    demand for our products; and
    
    production volume.
  Operating Expenses
 17




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Interest and Other Income, Net.
 Income Tax.
 18




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RESULTS OF OPERATIONS
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Products
    
    
    83.1
    %
    
    
    79.3
    %
    
    
    82.4
    %
    
    
    80.1
    %Services
    
    
    16.9
    
    
    
    20.7
    
    
    
    17.6
    
    
    
    19.9Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Costs and operating expenses:(1)Cost of revenues  products
    
    
    20.8
    
    
    
    20.7
    
    
    
    19.7
    
    
    
    20.5Cost of revenues  services
    
    
    2.3
    
    
    
    2.1
    
    
    
    2.4
    
    
    
    2.3Research and development
    
    
    27.1
    
    
    
    29.8
    
    
    
    28.5
    
    
    
    30.9Sales and marketing
    
    
    29.0
    
    
    
    34.7
    
    
    
    29.9
    
    
    
    36.8General and administrative
    
    
    12.6
    
    
    
    17.0
    
    
    
    13.4
    
    
    
    16.8Amortization of intangible assets
    
    
    7.7
    
    
    
    3.6
    
    
    
    7.9
    
    
    
    3.6Acquisition and other related
    
    
    2.4
    
    
    
    6.6
    
    
    
    2.1
    
    
    
    3.3Restructuring
    
    
    0.1
    
    
    
    2.6
    
    
    
    2.8
    
    
    
    1.3Total costs and operating expenses
    
    
    102.0
    
    
    
    117.1
    
    
    
    106.7
    
    
    
    115.5Loss from operations
    
    
    (2.0
    )
    
    
    (17.1
    )
    
    
    (6.7
    )
    
    
    (15.5
    )Interest and other income, net
    
    
    0.6
    
    
    
    1.7
    
    
    
    7.1
    
    
    
    1.6Other-than-temporary impairment on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.9
    )(Loss) income before income taxes
    
    
    (1.4
    )
    
    
    (15.4
    )
    
    
    0.4
    
    
    
    (15.8
    )Income tax (benefit) expense
    
    
    (0.9
    )
    
    
    (8.5
    )
    
    
    0.0
    
    
    
    (7.0
    )Net (loss) income
    
    
    (0.5
    )%
    
    
    (6.9
    )%
    
    
    0.4
    %
    
    
    (8.8
    )%
 
 (1) Stock-based compensation included in:Cost of revenues  products
    
    
    0.2
    %
    
    
    0.2
    %
    
    
    0.2
    %
    
    
    0.3
    %Cost of revenues  services
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Research and development
    
    
    2.1
    
    
    
    2.7
    
    
    
    2.0
    
    
    
    3.5Sales and marketing
    
    
    1.4
    
    
    
    2.1
    
    
    
    1.4
    
    
    
    2.7General and administrative
    
    
    1.5
    
    
    
    1.7
    
    
    
    1.2
    
    
    
    1.8
 Comparison of Three and Six Months Ended June 30, 2010 and 2009
  Revenues.
 19




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Cost of Revenues
  Research and Development Expenses.
  20




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Sales and Marketing Expenses.
  General and Administrative Expenses.
  Amortization of Intangible Assets.
 Acquisition and Other Related Expenses.
 Restructuring
 Interest and Other Income, Net.
 21




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Other-than-Temporary Impairment on Investments.
 Income Tax.
  22




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LIQUIDITY AND CAPITAL RESOURCES
  Six Months Ended June 30,2010
    
    2009Net cash provided by operating activities
    
    $
    21,883
    
    
    $
    3,286Net cash used in investing activities
    
    
    (18,079
    )
    
    
    (158,399
    )Net cash provided by (used in) financing activities
    
    
    9,381
    
    
    
    (6,745
    )
      23




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##### Table of Contents



SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Sensitivity
  Exchange Rate Sensitivity
  24




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ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  Inherent Limitations on Effectiveness of Controls
  25




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  
 ITEM 5. Other Information
  
 ITEM 6. Exhibits
 10.1
    
    2010 Employee Stock Purchase Plan(1)10.2
    
    Amended and Restated 2008 Equity Incentive Plan(2)31.1
    
    Certification of Chief Executive Officer of Ixia pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer of Ixia pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    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
 
 (1)
    
    Incorporated by reference to Exhibit 10.1 to Ixias Current Report on Form
8-K dated May 27, 2010 (File No. 000-31523), as filed with the Commission on
June 3, 2010.(2)
    
    Incorporated by reference to Exhibit 10.2 to Ixias Current Report on Form
8-K dated May 27, 2010 (File No. 000-31523), as filed with the Commission on
June 3, 2010. 26




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SIGNATURES
  IXIADate:      August 6, 2010
    By:
    /s/ Atul BhatnagarAtul BhatnagarPresident and Chief Executive OfficerDate:      August 6, 2010
    By:
    /s/ Thomas B. MillerThomas B. MillerChief Financial Officer 27




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    Certification of Chief Executive Officer of Ixia pursuant
to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer of Ixia pursuant
to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    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