##### 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 September 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
    
    95-4635982(State or other jurisdiction of 
incorporation or organization)
    
    (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
    
    66,525,860(Class of Common Stock)
    
    (Outstanding at October 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 September
30, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for
the three and nine months ended September 30, 2010
and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for
the nine months ended September 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)
 September 30,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    42,691
    
    
    $
    15,061Short-term investments in marketable securities
    
    
    40,379
    
    
    
    10,337Accounts receivable, net of allowance for
doubtful accounts of $934 and $654 as of
September 30, 2010 and December 31, 2009,
respectively
    
    
    65,843
    
    
    
    55,765Inventories
    
    
    23,659
    
    
    
    14,541Prepaid expenses and other current assets
    
    
    9,232
    
    
    
    9,727Total current assets
    
    
    181,804
    
    
    
    105,431Investments in marketable securities
    
    
    37,493
    
    
    
    53,582Property and equipment, net
    
    
    22,372
    
    
    
    18,693Intangible assets, net
    
    
    56,481
    
    
    
    69,132Goodwill
    
    
    60,121
    
    
    
    60,121Other assets
    
    
    2,232
    
    
    
    2,129Total assets
    
    $
    360,503
    
    
    $
    309,088Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    11,776
    
    
    $
    6,136Accrued expenses
    
    
    31,221
    
    
    
    21,253Deferred revenues
    
    
    34,488
    
    
    
    29,842Income taxes payable
    
    
    1,090
    
    
    
    1,263Total current liabilities
    
    
    78,575
    
    
    
    58,494Deferred revenues
    
    
    7,206
    
    
    
    7,309Other liabilities
    
    
    6,654
    
    
    
    6,620Total liabilities
    
    
    92,435
    
    
    
    72,423Shareholders equity:Common stock, without par value; 200,000
shares authorized, 66,061 and 63,062 shares
issued and outstanding as of September 30,
2010 and December 31, 2009, respectively
    
    
    103,940
    
    
    
    87,283Additional paid-in capital
    
    
    127,634
    
    
    
    118,754Retained earnings
    
    
    34,361
    
    
    
    28,979Accumulated other comprehensive income
    
    
    2,133
    
    
    
    1,649Total shareholders equity
    
    
    268,068
    
    
    
    236,665Total liabilities and shareholders equity
    
    $
    360,503
    
    
    $
    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
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Products
    
    $
    58,540
    
    
    $
    37,076
    
    
    $
    164,134
    
    
    $
    97,598Services
    
    
    12,350
    
    
    
    9,298
    
    
    
    34,901
    
    
    
    24,305Total revenues
    
    
    70,890
    
    
    
    46,374
    
    
    
    199,035
    
    
    
    121,903Costs and operating expenses:(1)Cost of revenues  products
    
    
    14,231
    
    
    
    10,461
    
    
    
    39,449
    
    
    
    25,971Cost of revenues  services
    
    
    1,535
    
    
    
    823
    
    
    
    4,561
    
    
    
    2,567Research and development
    
    
    17,802
    
    
    
    13,692
    
    
    
    54,323
    
    
    
    37,001Sales and marketing
    
    
    19,665
    
    
    
    15,233
    
    
    
    57,986
    
    
    
    42,990General and administrative
    
    
    8,443
    
    
    
    7,359
    
    
    
    25,667
    
    
    
    20,097Amortization of intangible assets
    
    
    3,532
    
    
    
    3,774
    
    
    
    13,676
    
    
    
    6,485Acquisition and other related
    
    
    312
    
    
    
    880
    
    
    
    2,991
    
    
    
    3,402Restructuring
    
    
    30
    
    
    
    2,527
    
    
    
    3,587
    
    
    
    3,538Total costs and operating expenses
    
    
    65,550
    
    
    
    54,749
    
    
    
    202,240
    
    
    
    142,051Income (loss) from operations
    
    
    5,340
    
    
    
    (8,375
    )
    
    
    (3,205
    )
    
    
    (20,148
    )Interest and other income, net
    
    
    578
    
    
    
    343
    
    
    
    9,674
    
    
    
    1,572Other-than-temporary impairment on investments
    
    
    
    
    
    
    (1,356
    )
    
    
    
    
    
    
    (2,761
    )Income (loss) before income taxes
    
    
    5,918
    
    
    
    (9,388
    )
    
    
    6,469
    
    
    
    (21,337
    )Income tax expense (benefit)
    
    
    1,044
    
    
    
    (3,165
    )
    
    
    1,087
    
    
    
    (8,469
    )Net income (loss)
    
    $
    4,874
    
    
    $
    (6,223
    )
    
    $
    5,382
    
    
    $
    (12,868
    )Earnings (loss) per share:Basic
    
    $
    0.07
    
    
    $
    (0.10
    )
    
    $
    0.08
    
    
    $
    (0.21
    )Diluted
    
    $
    0.07
    
    
    $
    (0.10
    )
    
    $
    0.08
    
    
    $
    (0.21
    )Weighted average number of common and common
equivalent shares outstanding:Basic
    
    
    65,513
    
    
    
    62,551
    
    
    
    64,388
    
    
    
    62,649Diluted
    
    
    68,018
    
    
    
    62,551
    
    
    
    66,341
    
    
    
    62,649(1) Stock-based compensation included in:Cost of revenues  products
    
    $
    115
    
    
    $
    76
    
    
    $
    371
    
    
    $
    339Cost of revenues  services
    
    
    44
    
    
    
    29
    
    
    
    140
    
    
    
    129Research and development
    
    
    1,191
    
    
    
    596
    
    
    
    3,748
    
    
    
    3,259Sales and marketing
    
    
    772
    
    
    
    271
    
    
    
    2,503
    
    
    
    2,332General and administrative
    
    
    916
    
    
    
    626
    
    
    
    2,468
    
    
    
    1,986
  4




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IXIA
 
 Condensed Consolidated Statements of Cash Flows  (in thousands)
 Nine months endedSeptember 30,2010
    
    
    2009Cash flows from operating activities:Net income (loss)
    
    $
    5,382
    
    
    $
    (12,868
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    8,240
    
    
    
    7,631Amortization of intangible assets
    
    
    13,676
    
    
    
    6,485Stock-based compensation
    
    
    9,230
    
    
    
    8,045Deferred income taxes
    
    
    (634
    )
    
    
    (10,212
    )Impairment on investments
    
    
    
    
    
    
    2,761Tax (shortfall) benefit from stock option transactions
    
    
    (350
    )
    
    
    228Excess tax benefits from stock-based compensation
    
    
    (712
    )
    
    
    (77
    )Changes in operating assets and liabilities, net of
effect of acquisitions:Accounts receivable, net
    
    
    (10,078
    )
    
    
    597Inventories
    
    
    (9,118
    )
    
    
    2,734Prepaid expenses and other current assets
    
    
    495
    
    
    
    2,471Other assets
    
    
    531
    
    
    
    1,399Accounts payable
    
    
    5,240
    
    
    
    (1,053
    )Accrued expenses
    
    
    10,143
    
    
    
    (5,473
    )Deferred revenues
    
    
    4,543
    
    
    
    (2,405
    )Income taxes payable and other liabilities
    
    
    (208
    )
    
    
    133Net cash provided by operating activities
    
    
    36,380
    
    
    
    396Cash flows from investing activities:Purchases of property and equipment
    
    
    (11,544
    )
    
    
    (6,166
    )Purchases of available-for-sale securities
    
    
    (63,140
    )
    
    
    (236,204
    )Proceeds from available-for-sale securities
    
    
    49,365
    
    
    
    149,621Purchases of other intangible assets
    
    
    (275
    )
    
    
    (156
    )Payments in connection with acquisitions, net of cash
acquired
    
    
    (525
    )
    
    
    (78,368
    )Net cash used in investing activities
    
    
    (26,119
    )
    
    
    (171,273
    )Cash flows from financing activities:Proceeds from exercise of stock options and employee stock
purchase plan options
    
    
    16,657
    
    
    
    1,755Repurchase of common stock
    
    
    
    
    
    
    (8,424
    )Excess tax benefits from stock-based compensation
    
    
    712
    
    
    
    77Net cash provided by (used in) financing activities
    
    
    17,369
    
    
    
    (6,592
    )Net increase (decrease) in cash and cash equivalents
    
    
    27,630
    
    
    
    (177,469
    )Cash and cash equivalents at beginning of period
    
    
    15,061
    
    
    
    192,791Cash and cash equivalents at end of period
    
    $
    42,691
    
    
    $
    15,322
  5




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IXIA
 
 Notes to Condensed Consolidated Financial Statements
 (unaudited)
 1. Business
  2. Basis of Presentation
     3. Acquisitions
   6




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Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2009(Pro forma)
    
    
    (Pro forma)Total revenues
    
    $
    57,382
    
    
    $
    170,064Net loss
    
    
    (9,146
    )
    
    
    (35,590
    )
  4. Restructuring Costs
    N2X
    
    
    CatapultTotal
    
    
    Restructuring
    
    
    RestructuringAccrual at January 1, 2010
    
    $
    837
    
    
    $
    
    
    
    $
    837Charges
    
    
    3,490
    
    
    
    3,479
    
    
    
    11Payments
    
    
    (1,864
    )
    
    
    (1,209
    )
    
    
    (655
    )Accrual at March 31, 2010
    
    $
    2,463
    
    
    $
    2,270
    
    
    $
    193Charges
    
    
    140
    
    
    
    132
    
    
    
    8Payments
    
    
    (2,263
    )
    
    
    (2,201
    )
    
    
    (62
    )Adjustments
    
    
    (64
    )
    
    
    
    
    
    
    (64
    )Accrual at June 30, 2010
    
    $
    276
    
    
    $
    201
    
    
    $
    75Charges
    
    
    30
    
    
    
    
    
    
    
    30Payments
    
    
    (246
    )
    
    
    (182
    )
    
    
    (64
    )Accrual at September 30, 2010
    
    $
    60
    
    
    $
    19
    
    
    $
    41
 5. Inventories
  September 30,
    
    
    December 31,2010
    
    
    2009Raw materials
    
    $
    6,065
    
    
    $
    3,674Work in process
    
    
    6,866
    
    
    
    4,731Finished goods
    
    
    10,728
    
    
    
    6,136$
    23,659
    
    
    $
    14,541
 7




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6. Shareholders Equity
 Other Comprehensive Income (Loss)
  Employee Stock Purchase Plan
  7. Earnings (Loss) Per Share
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Net (loss) income
    
    $
    4,874
    
    
    $
    (6,223
    )
    
    $
    5,382
    
    
    $
    (12,868
    )Denominator:Basic presentation:Weighted average common shares
    
    
    65,513
    
    
    
    62,551
    
    
    
    64,388
    
    
    
    62,649Denominator for basic calculation
    
    
    65,513
    
    
    
    62,551
    
    
    
    64,388
    
    
    
    62,649Diluted presentation:Shares used above
    
    
    65,513
    
    
    
    62,551
    
    
    
    64,388
    
    
    
    62,649Weighted average effect of
dilutive stock options and other
share-based awards
    
    
    2,505
    
    
    
    
    
    
    
    1,953
    
    
    
    Denominator for diluted calculation
    
    
    68,018
    
    
    
    62,551
    
    
    
    66,341
    
    
    
    62,649Basic (loss) earnings per share
    
    $
    0.07
    
    
    $
    (0.10
    )
    
    $
    0.08
    
    
    $
    (0.21
    )Diluted (loss) earnings per share
    
    $
    0.07
    
    
    $
    (0.10
    )
    
    $
    0.08
    
    
    $
    (0.21
    )
 8




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8. Concentrations
 Significant Customer
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Amount of total revenues
    
    $
    9,034
    
    
    $
    6,354
    
    
    $
    30,487
    
    
    $
    20,338As a percentage of total revenues
    
    
    12.7
    %
    
    
    13.7
    %
    
    
    15.3
    %
    
    
    16.7
    %
  International Data
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Amount of total international revenues
    
    $
    37,234
    
    
    $
    19,132
    
    
    $
    97,075
    
    
    $
    49,337As a percentage of total revenues
    
    
    52.5
    %
    
    
    41.3
    %
    
    
    48.8
    %
    
    
    40.5
    %
   September 30,
    
    
    December 31,2010
    
    
    2009United States
    
    $
    11,670
    
    
    $
    10,874India
    
    
    2,646
    
    
    
    2,506Romania
    
    
    2,124
    
    
    
    2,647Other
    
    
    5,932
    
    
    
    2,666$
    22,372
    
    
    $
    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.
  September 30, 2010
    
    
    December 31, 2009Quoted Prices in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    Significant
    
    
    
    
    
    
    Active Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable Inputs
    
    
    
    
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsFair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash equivalents:(1)Money market funds
    
    $
    2,180
    
    
    $
    2,180
    
    
    $
    
    
    
    $
    
    
    
    $
    241
    
    
    $
    241
    
    
    $
    
    
    
    $
    Short-term investments:(1)U.S. Treasury, government
and agency debt securities
    
    
    33,768
    
    
    
    
    
    
    
    33,768
    
    
    
    
    
    
    
    5,713
    
    
    
    
    
    
    
    5,713
    
    
    
    Corporate debt securities
    
    
    6,611
    
    
    
    
    
    
    
    6,611
    
    
    
    
    
    
    
    4,624
    
    
    
    
    
    
    
    4,624
    
    
    
    Long-term investments:(1)U.S. Treasury, government
and agency debt securities
    
    
    10,034
    
    
    
    
    
    
    
    10,034
    
    
    
    
    
    
    
    34,673
    
    
    
    
    
    
    
    34,673
    
    
    
    Corporate debt securities
    
    
    22,238
    
    
    
    
    
    
    
    22,238
    
    
    
    
    
    
    
    13,236
    
    
    
    
    
    
    
    13,236
    
    
    
    Auction rate securities (2)
    
    
    5,221
    
    
    
    
    
    
    
    
    
    
    
    5,221
    
    
    
    5,673
    
    
    
    
    
    
    
    
    
    
    
    5,673Total financial assets
    
    $
    80,052
    
    
    $
    2,180
    
    
    $
    72,651
    
    
    $
    5,221
    
    
    $
    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
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Beginning balance
    
    $
    5,187
    
    
    $
    7,634
    
    
    $
    5,673
    
    
    $
    3,211Unrealized gain recorded in other
comprehensive income
    
    
    117
    
    
    
    219
    
    
    
    25
    
    
    
    1,681Unrealized loss recorded in earnings
    
    
    
    
    
    
    (1,356
    )
    
    
    
    
    
    
    (2,761
    )Additions from Catapult acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,366Settlements
    
    
    (83
    )
    
    
    (950
    )
    
    
    (477
    )
    
    
    (950
    )Ending balance
    
    $
    5,221
    
    
    $
    5,547
    
    
    $
    5,221
    
    
    $
    5,547Unrealized losses recorded in earnings
for level 3 assets still held at
September 30
    
    $
    
    
    
    $
    (1,356
    )
    
    $
    
    
    
    $
    (2,761
    )
 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
  12




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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.
 14




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15




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Stock-Based Compensation.
  16




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##### Table of Contents



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 and quality of 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
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Products
    
    
    82.6
    %
    
    
    79.9
    %
    
    
    82.5
    %
    
    
    80.1
    %Services
    
    
    17.4
    
    
    
    20.1
    
    
    
    17.5
    
    
    
    19.9Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Costs and operating expenses:(1)Cost of revenues  products
    
    
    20.1
    
    
    
    22.6
    
    
    
    19.8
    
    
    
    21.3Cost of revenues  services
    
    
    2.2
    
    
    
    1.7
    
    
    
    2.3
    
    
    
    2.1Research and development
    
    
    25.2
    
    
    
    29.6
    
    
    
    27.3
    
    
    
    30.4Sales and marketing
    
    
    27.7
    
    
    
    32.9
    
    
    
    29.1
    
    
    
    35.2General and administrative
    
    
    11.9
    
    
    
    15.9
    
    
    
    12.9
    
    
    
    16.5Amortization of intangible assets
    
    
    5.0
    
    
    
    8.1
    
    
    
    6.9
    
    
    
    5.3Acquisition and other related
    
    
    0.4
    
    
    
    1.9
    
    
    
    1.5
    
    
    
    2.8Restructuring
    
    
    0.0
    
    
    
    5.4
    
    
    
    1.8
    
    
    
    2.9Total costs and operating expenses
    
    
    92.5
    
    
    
    118.1
    
    
    
    101.6
    
    
    
    116.5Income (loss) from operations
    
    
    7.5
    
    
    
    (18.1
    )
    
    
    (1.6
    )
    
    
    (16.5
    )Interest and other income, net
    
    
    0.8
    
    
    
    0.7
    
    
    
    4.9
    
    
    
    1.3Other-than-temporary impairment on investments
    
    
    
    
    
    
    (2.9
    )
    
    
    
    
    
    
    (2.3
    )Income (loss) before income taxes
    
    
    8.3
    
    
    
    (20.3
    )
    
    
    3.3
    
    
    
    (17.5
    )Income tax expense (benefit)
    
    
    1.4
    
    
    
    (6.9
    )
    
    
    0.6
    
    
    
    (6.9
    )Net income (loss)
    
    
    6.9
    %
    
    
    (13.4
    )%
    
    
    2.7
    %
    
    
    (10.6
    )%(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
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.9
    
    
    
    2.7Sales and marketing
    
    
    0.6
    
    
    
    0.6
    
    
    
    1.3
    
    
    
    1.9General and administrative
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.2
    
    
    
    1.6
 Comparison of Three and Nine Months Ended September 30, 2010 and 2009
  Revenues.
 19




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Cost of Revenues
 Research and Development Expenses.
  Sales and Marketing Expenses.
  20




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General and Administrative Expenses.
  Amortization of Intangible Assets.
 Acquisition and Other Related Expenses.
 Restructuring
 Interest and Other Income, Net.
 Other-than-Temporary Impairment on Investments.
 21




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Income Tax.
 22




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LIQUIDITY AND CAPITAL RESOURCES
  Nine Months Ended September 30,2010
    
    
    2009Net cash provided by operating activities
    
    $
    36,380
    
    
    $
    396Net cash used in investing activities
    
    
    (26,119
    )
    
    
    (171,273
    )Net cash provided by (used in) financing
activities
    
    
    17,369
    
    
    
    (6,592
    )
      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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##### Table of Contents



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
 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
 26




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##### Table of Contents



SIGNATURES
  IXIADate:   November 5, 2010
    By:
    /s/ Atul BhatnagarAtul BhatnagarPresident and Chief Executive Officer Date:   November 5, 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