SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2017
IN U.S. DOLLARS
UNAUDITED
INDEX
|
Page
|
|
|
|
F-2 - F-3
|
|
|
|
F-4
|
|
|
|
F-5
|
|
|
|
F-6 - F-7
|
|
|
|
F-8 - F-25
|
3
CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited)
U.S. dollars in thousands (except share and per share data)
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Unaudited
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
149,448
|
|
|
$
|
104,683
|
|
Restricted cash
|
|
|
1,400
|
|
|
|
897
|
|
Marketable Securities
|
|
|
81,488
|
|
|
|
74,465
|
|
Trade receivables, net
|
|
|
91,694
|
|
|
|
71,041
|
|
Prepaid expenses and other accounts receivable
|
|
|
38,201
|
|
|
|
21,347
|
|
Inventories
|
|
|
62,356
|
|
|
|
67,363
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
424,587
|
|
|
|
339,796
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM ASSETS:
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
|
72,351
|
|
|
|
44,262
|
|
Property, equipment and intangible assets, net
|
|
|
45,714
|
|
|
|
37,381
|
|
Prepaid expenses and lease deposits
|
|
|
732
|
|
|
|
489
|
|
Deferred tax assets, net
|
|
|
5,822
|
|
|
|
2,815
|
|
|
|
|
|
|
|
|
|
|
Total
long term assets
|
|
|
124,619
|
|
|
|
84,947
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
549,206
|
|
|
$
|
424,743
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
U.S. dollars in thousands (except share and per share data)
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
Trade payables, net
|
|
$
|
42,700
|
|
|
$
|
34,001
|
|
Employees and payroll accruals
|
|
|
17,640
|
|
|
|
13,018
|
|
Warranty obligations
|
|
|
12,942
|
|
|
|
13,616
|
|
Deferred revenues
|
|
|
2,743
|
|
|
|
1,202
|
|
Accrued expenses and other accounts payable
|
|
|
16,407
|
|
|
|
8,648
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
92,432
|
|
|
|
70,485
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
Warranty obligations
|
|
|
58,625
|
|
|
|
44,759
|
|
Deferred revenues
|
|
|
26,858
|
|
|
|
18,660
|
|
Lease incentive obligation
|
|
|
1,838
|
|
|
|
2,061
|
|
|
|
|
|
|
|
|
|
|
Total
long-term liabilities
|
|
|
87,321
|
|
|
|
65,480
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock of $0.0001 par value - Authorized: 125,000,000 shares as of September 30, 2017 (unaudited) and December 31, 2016; issued and
outstanding: 42,862,712 and 41,259,391 shares as of September 30, 2017 (unaudited) and December 31, 2016, respectively
|
|
|
4
|
|
|
|
4
|
|
Additional paid-in capital
|
|
|
323,076
|
|
|
|
307,098
|
|
Accumulated other comprehensive loss
|
|
|
(297
|
)
|
|
|
(324
|
)
|
Retained earnings (accumulated deficit)
|
|
|
46,670
|
|
|
|
(18,000
|
)
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
369,453
|
|
|
|
288,778
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
|
549,206
|
|
|
$
|
424,743
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (Unaudited)
U.S. dollars in thousands (except share and per share data)
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Unaudited
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
166,552
|
|
|
$
|
128,484
|
|
|
$
|
417,705
|
|
|
$
|
378,441
|
|
Cost of revenues
|
|
|
108,498
|
|
|
|
86,609
|
|
|
|
273,909
|
|
|
|
256,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
58,054
|
|
|
|
41,875
|
|
|
|
143,796
|
|
|
|
121,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development, net
|
|
|
14,363
|
|
|
|
9,935
|
|
|
|
38,546
|
|
|
|
27,876
|
|
Sales and marketing
|
|
|
13,217
|
|
|
|
10,036
|
|
|
|
35,953
|
|
|
|
27,792
|
|
General and administrative
|
|
|
5,078
|
|
|
|
3,664
|
|
|
|
12,782
|
|
|
|
10,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
32,658
|
|
|
|
23,635
|
|
|
|
87,281
|
|
|
|
65,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
25,396
|
|
|
|
18,240
|
|
|
|
56,515
|
|
|
|
55,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income, net
|
|
|
2,666
|
|
|
|
390
|
|
|
|
7,671
|
|
|
|
1,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes on income
|
|
|
28,062
|
|
|
|
18,630
|
|
|
|
64,186
|
|
|
|
57,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes on income (tax benefit)
|
|
|
91
|
|
|
|
3,014
|
|
|
|
(484
|
)
|
|
|
4,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
27,971
|
|
|
$
|
15,616
|
|
|
$
|
64,670
|
|
|
$
|
53,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net basic earnings per share of common stock
|
|
$
|
0.66
|
|
|
$
|
0.38
|
|
|
$
|
1.55
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net diluted earnings per share of common stock
|
|
$
|
0.61
|
|
|
$
|
0.35
|
|
|
$
|
1.44
|
|
|
$
|
1.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net basic earnings per share of common stock
|
|
|
42,433,648
|
|
|
|
40,926,887
|
|
|
|
41,831,400
|
|
|
|
40,691,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net diluted earnings per share of common stock
|
|
|
46,131,556
|
|
|
|
43,995,227
|
|
|
|
44,937,527
|
|
|
|
44,348,461
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (Unaudited)
U.S. dollars in thousands (except share and per share data)
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Unaudited
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
27,971
|
|
|
$
|
15,616
|
|
|
$
|
64,670
|
|
|
$
|
53,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in unrealized gains (losses), net of tax benefit
|
|
|
54
|
|
|
|
(92
|
)
|
|
|
87
|
|
|
|
45
|
|
Reclassification adjustments for gains, net of tax expence included in net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
Net change
|
|
|
54
|
|
|
|
(92
|
)
|
|
|
87
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in unrealized gains, net of tax expense
|
|
|
-
|
|
|
|
320
|
|
|
|
975
|
|
|
|
655
|
|
Reclassification adjustments for loses, net of tax expense included in net income
|
|
|
-
|
|
|
|
(254
|
)
|
|
|
(994
|
)
|
|
|
(421
|
)
|
Net change
|
|
|
-
|
|
|
|
66
|
|
|
|
(19
|
)
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments, net
|
|
|
16
|
|
|
|
(125
|
)
|
|
|
(41
|
)
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
70
|
|
|
|
(151
|
)
|
|
|
27
|
|
|
|
413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
28,041
|
|
|
$
|
15,465
|
|
|
$
|
64,697
|
|
|
$
|
54,101
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
U.S. dollars in thousands
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Unaudited
|
|
Cash flows provided by operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
64,670
|
|
|
$
|
53,688
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization of property, equipment and intangible assets
|
|
|
4,932
|
|
|
|
3,468
|
|
Amortization of premiums on available-for-sale marketable securities
|
|
|
1,310
|
|
|
|
829
|
|
Stock-based compensation
|
|
|
12,183
|
|
|
|
8,132
|
|
Deferred tax assets, net
|
|
|
(3,063
|
)
|
|
|
2,327
|
|
Realized losses on Cash Flow Hedges
|
|
|
-
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
5,005
|
|
|
|
19,216
|
|
Prepaid expenses and other accounts receivable
|
|
|
(17,360
|
)
|
|
|
8,214
|
|
Trade receivables, net
|
|
|
(20,168
|
)
|
|
|
(38,105
|
)
|
Trade payables, net
|
|
|
8,667
|
|
|
|
(21,699
|
)
|
Employees and payroll accruals
|
|
|
4,509
|
|
|
|
(916
|
)
|
Warranty obligations
|
|
|
13,192
|
|
|
|
15,514
|
|
Deferred revenues
|
|
|
9,699
|
|
|
|
5,069
|
|
Accrued expenses and other accounts payable
|
|
|
7,537
|
|
|
|
2,192
|
|
Lease incentive obligation
|
|
|
(223
|
)
|
|
|
(185
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
90,890
|
|
|
|
57,746
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(13,203
|
)
|
|
|
(13,869
|
)
|
Decrease (increase) in restricted cash
|
|
|
(503
|
)
|
|
|
2,471
|
|
Decrease (increase) in short and long-term lease deposits
|
|
|
(60
|
)
|
|
|
37
|
|
Investment in available-for-sale marketable securities
|
|
|
(82,469
|
)
|
|
|
(85,579
|
)
|
Maturities of available-for-sale marketable securities
|
|
|
46,513
|
|
|
|
21,654
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
$
|
(49,722
|
)
|
|
$
|
(75,286
|
)
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.)
U.S. dollars in thousands
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Unaudited
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Issuance costs related to initial public offering
|
|
$
|
-
|
|
|
$
|
(194
|
)
|
Proceeds from issuance of shares upon exercise of options
|
|
|
3,795
|
|
|
|
1,774
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
3,795
|
|
|
|
1,580
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
44,963
|
|
|
|
(15,960
|
)
|
Cash and cash equivalents at the beginning of the period
|
|
|
104,683
|
|
|
|
106,150
|
|
Effect of exchange rate differences on cash and cash equivalents
|
|
|
(198
|
)
|
|
|
(176
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
149,448
|
|
|
$
|
90,014
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
|
a.
|
SolarEdge Technologies, Inc. (the "Company") and its subsidiaries design, develop, and sell an intelligent inverter solution designed to maximize power generation at the individual photovoltaic ("PV") module level while lowering the cost of energy produced by the solar PV system and providing comprehensive and advanced safety features
.
The Company's products consist mainly of (i) power optimizers designed to maximize energy throughput from each and every module through constant tracking of Maximum Power Point individually per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC) and (iii) a related cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters of a solar PV system to enable customers and system owners as applicable, to monitor and manage the solar PV systems. (iv) storage solution that is used to increase energy independence and maximize self-consumption for homeowners by utilizing a battery that is sold separately by third-party manufacturers, to store and supply power as needed (the "StorEdge solution"). The StorEdge solution is designed to provide smart energy functions such as maximizing self-consumption, Time-of-Use programming for desired hours of the day, and home energy backup solutions. In addition, the Company offers several communication and smart energy management solutions.
|
The Company and its subsidiaries sell their products worldwide directly to large solar installers and engineering, procurement and construction firms ("EPCs"), as well as through large distributors and electrical equipment wholesalers to smaller solar installers.
|
b.
|
Recent accounting pronouncements:
|
In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). The new standard applies only to inventory for which cost is determined by methods other than last-in, first-out and the retail inventory method, which includes inventory that is measured using first-in, first-out or average cost. Inventory within the scope of ASU 2015-11 is required to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted ASU 2015-11 during the first quarter of 2017, which did not have a material impact on our results of operations, cash flows or financial position.
In May 2017, the FASB issued ASU 2017-09, "Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting." ASU 2017-09 was issued to provide clarity and reduce both 1) diversity in practice and 2) cost and complexity when applying the guidance in Topic 718 to a change in the terms or conditions of a share-based payment award. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. The amendments in ASU 2017-09 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in ASU 2017-09 should be applied prospectively to an award modified on or after the adoption date. The adoption of this standard will not have a material impact on the consolidated financial statements.
In May 2014, the FASB issued a new standard related to revenue recognition. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on identifying performance obligations.
The guidance permits two methods of modification: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method).
The Company will adopt the new standard effective January 1, 2018. The Company currently anticipates adopting
the standard using the modified retrospective method. We are in the process of finalizing our analysis of the impact this guidance will have on our consolidated financial statements, related disclosures, and our internal controls over financial reporting.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
|
c.
|
The significant accounting policies applied in the Company's audited 2016 consolidated financial statements and notes thereto included in the Company's Transition Report on Form 10-KT for transition period from July 1, 2016 to December 31, 2016 (the "2016 Form 10-KT") are applied consistently in these financial statements.
|
|
d.
|
Basis of Presentation:
|
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with Article 10 of Regulation S-X, "Interim Financial Statements" and the rules and regulations for Form 10-Q of the Securities and Exchange Commission (the "SEC"). Pursuant to those rules and regulations, the Company has condensed or omitted certain information and footnote disclosure it normally includes in its annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").
In management's opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present its condensed consolidated financial position, results of operations and cash flows. The Company's interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the 2016 consolidated financial statements and notes thereto included in the Company's Transition Report on Form 10-KT for transition period from July 1, 2016 to December 31, 2016 filed with the SEC on February 21, 2017. There have been no changes in the significant accounting policies from those that were disclosed in the audited consolidated financial statements for the transition period from July 1, 2016 to December 31, 2016 included in the 2016 Form 10-KT.
|
e.
|
The Company depends on two contract manufacturers and several limited or single source component suppliers. Currently, the Company has entered into an agreement with a third manufacturer and is in the process of transitioning manufacturing from one manufacturer to another. During this transition period the Company mainly relies on one contract manufacturer. Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields and costs.
|
These vendors collectively account for 43.3% and 61.0% of the Company's total trade payables as of September 30, 2017 (unaudited) and December 31, 2016, respectively.
The Company has the right to offset its payables to one of its contract manufacturers against vendor non-trade receivables. As of September 30, 2017 (unaudited), a total of $3,393 of these receivables met the criteria for net recognition and were offset against the corresponding accounts payable balances for this contract manufacturer in the accompanying condensed Consolidated Balance Sheets.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
|
f.
|
Derivative financial instruments:
|
To protect against the increase in value of forecasted foreign currency cash flows resulting from salary and lease payments of its Israeli facilities denominated in the Israeli currency, the New Israeli Shekel ("NIS"), during the nine months ended September 30, 2017, the Company instituted a foreign currency cash flow hedging program. The Company hedges portions of the anticipated payroll and lease payments denominated in NIS for a period of one to six months with hedging contracts. Accordingly, when the dollar strengthens against the foreign currencies, the decline in present value of future foreign currency expenses is offset by losses in the fair value of the hedging contracts. Conversely, when the dollar weakens, the increase in the present value of future foreign currency cash flows is offset by gains in the fair value of the hedging contracts. These hedging contracts are designated as cash flow hedges, as defined by ASC 815 and are all effective hedges.
As of September 30, 2017 (unaudited), the Company entered into forward contracts and put and call options to sell U.S. dollars for Euros in the amount of 1.5 million Euro and 4.5 million Euro, respectively. These hedging contracts do not contain any credit-risk-related contingency features. See Note 4 for information on the fair value of these hedging contracts.
The fair value of the Company's outstanding derivative instruments is as follows:
|
|
Balance as of
September 30,
|
|
|
Balance as of
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
|
|
Derivative assets:
|
|
|
|
|
|
|
Derivatives not designated as cash flow hedging instruments:
|
|
|
|
|
|
|
Foreign exchange option contracts
|
|
$
|
1
|
|
|
$
|
-
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
|
-
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
Derivatives not designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
Foreign exchange option contracts
|
|
|
(301
|
)
|
|
|
-
|
|
Foreign exchange forward contracts
|
|
|
(107
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(407
|
)
|
|
$
|
19
|
|
The Company recorded the fair value of derivative assets and liabilities, net in "Accrued expenses and other accounts payable" and "Prepaid expenses and other accounts receivable" on the Company's consolidated balance sheets as of September 30, 2017 (unaudited) and December 31, 2016, respectively.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
The net increase in unrealized gains (losses) recognized in "accumulated other comprehensive income (loss)" on derivatives, net of tax effect, is as follows:
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
$
|
-
|
|
|
$
|
320
|
|
|
$
|
975
|
|
|
$
|
655
|
|
The net gains reclassified from "accumulated other comprehensive income (loss)" into the company's consolidated statements of income, are as follows:
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
$
|
-
|
|
|
$
|
254
|
|
|
$
|
994
|
|
|
$
|
421
|
|
The Company recorded in the financial income, net, a net loss related to derivatives not qualified as hedging instruments of $492 and $170 during the three months ended September 30, 2017 (unaudited) and 2016 (unaudited), respectively and $1,164 and $245 during the nine months ended September 30, 2017 (unaudited) and 2016 (unaudited), respectively.
|
g.
|
Accumulated other comprehensive income:
|
The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of taxes, for the three months ended September 30, 2017 (unaudited):
|
|
Unrealized gains (losses) on available-for-sale marketable securities
|
|
|
Unrealized gains (losses) on cash flow hedges
|
|
|
Unrealized gains (losses) on foreign currency translation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
(103
|
)
|
|
$
|
-
|
|
|
$
|
(264
|
)
|
|
$
|
(367
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
54
|
|
|
|
-
|
|
|
|
16
|
|
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(49
|
)
|
|
$
|
-
|
|
|
$
|
(248
|
)
|
|
$
|
(297
|
)
|
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of taxes, for the nine months ended September 30, 2017 (unaudited):
|
|
Unrealized gains (losses) on available-for-sale marketable securities
|
|
|
Unrealized gains (losses) on cash flow hedges
|
|
|
Unrealized gains (losses) on foreign currency translation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
(136
|
)
|
|
$
|
19
|
|
|
$
|
(207
|
)
|
|
$
|
(324
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
87
|
|
|
|
975
|
|
|
|
(41
|
)
|
|
|
1,021
|
|
Losses (gains) reclassified from accumulated other comprehensive income (loss)
|
|
|
-
|
|
|
|
(994
|
)
|
|
|
-
|
|
|
|
(994
|
)
|
Net current period other comprehensive income (loss)
|
|
|
87
|
|
|
|
(19
|
)
|
|
|
(41
|
)
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(49
|
)
|
|
$
|
-
|
|
|
$
|
(248
|
)
|
|
$
|
(297
|
)
|
The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of taxes, for the three months ended September 30, 2016 (unaudited):
|
|
Unrealized gains (losses) on available-for-sale marketable securities
|
|
|
Unrealized gains (losses) on cash flow hedges
|
|
|
Unrealized gains (losses) on foreign currency translation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
57
|
|
|
$
|
243
|
|
|
$
|
(29
|
)
|
|
$
|
271
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
(92
|
)
|
|
|
320
|
|
|
|
(125
|
)
|
|
|
103
|
|
Losses (gains) reclassified from accumulated other comprehensive income (loss)
|
|
|
-
|
|
|
|
(254
|
)
|
|
|
-
|
|
|
|
(254
|
)
|
Net current period other comprehensive income (loss)
|
|
|
(92
|
)
|
|
|
66
|
|
|
|
(125
|
)
|
|
|
(151
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(35
|
)
|
|
$
|
309
|
|
|
$
|
(154
|
)
|
|
$
|
120
|
|
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
The following table summarizes the changes in accumulated balances of other comprehensive loss, net of taxes, for the nine months ended September 30, 2016 (unaudited):
|
|
Unrealized gains (losses) on available-for-sale marketable securities
|
|
|
Unrealized gains (losses) on cash flow hedges
|
|
|
Unrealized gains (losses) on foreign currency translation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
(81
|
)
|
|
$
|
75
|
|
|
$
|
(287
|
)
|
|
$
|
(293
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
45
|
|
|
|
655
|
|
|
|
133
|
|
|
|
833
|
|
Losses (gains) reclassified from accumulated other comprehensive income (loss)
|
|
|
1
|
|
|
|
(421
|
)
|
|
|
-
|
|
|
|
(420
|
)
|
Net current period other comprehensive income (loss)
|
|
|
46
|
|
|
|
234
|
|
|
|
133
|
|
|
|
413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(35
|
)
|
|
$
|
309
|
|
|
$
|
(154
|
)
|
|
$
|
120
|
|
The
following table provides details about reclassifications out of accumulated other comprehensive income (loss):
Details about Accumulated Other Comprehensive Income (Loss) Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
Affected Line Item in the Statements of Income
|
|
|
Three months ended
September 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(unaudited)
|
|
|
Unrealized gains on cash flow hedges, net
|
|
$
|
-
|
|
|
$
|
32
|
|
Cost of revenues
|
|
|
|
-
|
|
|
|
152
|
|
Research and development, net
|
|
|
|
-
|
|
|
|
39
|
|
Sales and marketing
|
|
|
|
-
|
|
|
|
31
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
254
|
|
Total, before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Taxes on income (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
|
$
|
254
|
|
Total, net of income taxes
|
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
The
following table provides details about reclassifications out of accumulated other comprehensive income (loss):
Details about Accumulated Other Comprehensive Income (Loss) Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
Affected Line Item in the Statements of Income
|
|
|
Nine months ended
September 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(unaudited)
|
|
|
Unrealized gains on cash flow hedges, net
|
|
$
|
-
|
|
|
$
|
(1
|
)
|
Financial income
|
|
|
|
166
|
|
|
|
62
|
|
Cost of revenues
|
|
|
|
570
|
|
|
|
267
|
|
Research and development, net
|
|
|
|
151
|
|
|
|
72
|
|
Sales and marketing
|
|
|
|
153
|
|
|
|
53
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,040
|
|
|
|
453
|
|
Total, before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46
|
)
|
|
|
(33
|
)
|
Taxes on income (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
994
|
|
|
$
|
420
|
|
Total, net of income taxes
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
18,476
|
|
|
$
|
10,053
|
|
Finished goods
|
|
|
43,880
|
|
|
|
57,310
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
62,356
|
|
|
$
|
67,363
|
|
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 3:-
|
WARRANTY OBLIGATIONS
|
Changes in the Company's product warranty liability for the nine months ended September 30, 2017 and 2016 were as follows:
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Balance, at beginning of period
|
|
$
|
58,375
|
|
|
$
|
40,894
|
|
Additions and adjustments to cost of revenues
|
|
|
23,758
|
|
|
|
24,441
|
|
Usage and current warranty expenses
|
|
|
(10,566
|
)
|
|
|
(8,927
|
)
|
|
|
|
|
|
|
|
|
|
Balance, at end of period
|
|
|
71,567
|
|
|
|
56,408
|
|
Less current portion
|
|
|
(12,942
|
)
|
|
|
(15,103
|
)
|
|
|
|
|
|
|
|
|
|
Long term portion
|
|
$
|
58,625
|
|
|
$
|
41,305
|
|
NOTE 4:-
|
FAIR VALUE MEASUREMENTS
|
The Company applies ASC 820 ("Fair Value Measurements and Disclosures"), with respect to fair value measurements of all financial assets and liabilities.
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
A three-tiered fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
|
Level 1-
|
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
Level 2-
|
Include other inputs that are directly or indirectly observable in the marketplace.
|
|
Level 3-
|
Unobservable inputs which are supported by little or no market activity.
|
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 4:-
|
FAIR VALUE MEASUREMENTS (Cont.)
|
The following table sets forth the Company's assets and liabilities that were measured at fair value as of September 30, 2017 (unaudited) by level within the fair value hierarchy:
|
|
Balance as of
|
|
|
Fair value measurements
|
|
Description
|
|
September 30,
2017
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds
|
|
$
|
11,669
|
|
|
$
|
11,669
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange option contracts not designated as hedging instruments
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
1
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
74,743
|
|
|
|
-
|
|
|
$
|
74,743
|
|
|
|
-
|
|
Governmental bonds
|
|
$
|
6,745
|
|
|
|
-
|
|
|
$
|
6,745
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
66,256
|
|
|
|
-
|
|
|
$
|
66,256
|
|
|
|
-
|
|
Governmental bonds
|
|
$
|
6,095
|
|
|
|
-
|
|
|
$
|
6,095
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange option contracts not designated as hedging instruments
|
|
$
|
(301
|
)
|
|
|
-
|
|
|
$
|
(301
|
)
|
|
|
-
|
|
Foreign exchange forward contracts not designated as hedging instruments
|
|
$
|
(107
|
)
|
|
|
-
|
|
|
$
|
(107
|
)
|
|
|
-
|
|
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 4:-
|
FAIR VALUE MEASUREMENTS (Cont.)
|
The following table sets forth the Company's assets that were measured at fair value as of December 31, 2016 by level within the fair value hierarchy:
|
|
Balance as of
|
|
|
Fair value measurements
|
|
Description
|
|
December 31,
2016
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds
|
|
$
|
6,510
|
|
|
$
|
6,510
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments asset
|
|
$
|
19
|
|
|
|
-
|
|
|
$
|
19
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
71,719
|
|
|
|
-
|
|
|
$
|
71,719
|
|
|
|
-
|
|
Governmental bonds
|
|
$
|
2,746
|
|
|
|
-
|
|
|
$
|
2,746
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
39,279
|
|
|
|
-
|
|
|
$
|
39,279
|
|
|
|
-
|
|
Governmental bonds
|
|
$
|
4,983
|
|
|
|
-
|
|
|
$
|
4,983
|
|
|
|
-
|
|
In addition to the assets and liabilities described above, the Company's financial instruments also include cash and cash equivalents, restricted and short-term deposits, trade receivables, other accounts receivable, trade payables, accrued expenses and other payables. The fair value of these financial instruments was not materially different from their carrying values on September 30, 2017 due to the short-term maturity of these instruments.
NOTE 5:-
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
As of September 30, 2017 (unaudited), contingent liabilities exist regarding guarantees in the amount of $1,134, $57 and $181 in respect of office rent lease agreements, customs transactions and credit card limits, respectively.
|
b.
|
Royalty and Governmental commitments:
|
The Company's Israeli subsidiary receives research and development grants from the Israel Innovation Authority (the IIA). In consideration for the research and development grants received from the IIA, the Company has undertaken to pay royalties as a percentage of revenues from products developed from research and development projects financed. If the Company will not generate sales of products developed with funds provided by the IIA, the Company is not obligated to pay royalties or repay the grants.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 5:-
|
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
Royalties are payable at the rate of 4% to 4.5% from the time of commencement of sales of all of these products until the cumulative amount of the royalties paid equals 100% of the dollar-linked amounts of the grants received, plus interest at LIBOR rate.
As of September 30, 2017 (unaudited), the Company redeemed all obligations and no provision was recorded.
|
c.
|
Contractual purchase obligations:
|
The Company has contractual obligations to purchase goods and raw materials. These contractual purchase obligations relate to inventories held by contract manufacturers and purchase orders initiated by the contract manufacturers and suppliers, which cannot be canceled without penalty. The Company utilizes third parties to manufacture its products. In addition, it acquires raw materials or other goods and services, including product components, by issuing to suppliers authorizations to purchase based on its projected demand and manufacturing needs.
As of September 30, 2017 (unaudited), the Company had non-cancelable purchase obligations totaling approximately $158,018 out of which the Company already recorded a provision for loss in the amount of $1,086.
From time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. These accruals are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter.
|
|
Authorized
|
|
|
Issued and outstanding
|
|
|
|
Number of shares
|
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock of $0.0001 par value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
125,000,000
|
|
|
|
125,000,000
|
|
|
|
42,862,712
|
|
|
|
41,259,391
|
|
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 6:-
|
STOCK CAPITAL (Cont.)
|
|
b.
|
Stock Incentive plans:
|
The Company's 2007 Global Incentive Plan (the "2007 Plan") was adopted by the board of directors on August 30, 2007. On March 31, 2015, once the Company completed its Initial Public Offering ("IPO"), the 2007 Plan has been terminated and no further awards will be granted thereunder. All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grant were transferred to the Company's 2015 Global Incentive Plan (the "2015 Plan") and are reserved for future issuances under the 2015 plan.
The 2015 Plan became effective upon the consummation of the IPO. The 2015 Plan provides for the grant of options, RSUs and other share-based awards to directors, employees, officers and consultants of the Company and its Subsidiaries. As of September 30, 2017 (unaudited), a total of 5,890,087 (unaudited) shares of common stock were reserved for issuance under the 2015 Plan (the "Share Reserve").
The Share Reserve will automatically increase on January 1st of each year during the term of the 2015 Plan commencing on January 1st of the year following the year in which the 2015 Plan becomes effective in an amount equal to five percent (5%) of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year; provided, however, that our board of directors may provide that there will not be a January 1st increase in the Share Reserve in a given year or that the increase will be less than five percent (5%) of the shares of capital stock outstanding on the preceding December 31st.
The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is ten million (10,000,000).
As of September 30, 2017 (unaudited), an aggregate of 2,583,240 shares of common stock are still available for future grant under the 2015 Plan.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 6:-
|
STOCK CAPITAL (Cont.)
|
|
c.
|
Options granted to employees
and members of the board of directors:
|
A summary of the activity in the share options granted to employees and members of the board of directors for the nine months ended September 30, 2017 (unaudited) and related information follows:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
average
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
remaining
|
|
|
|
|
|
|
Number
|
|
|
average
|
|
|
contractual
|
|
|
Aggregate
|
|
|
|
of
|
|
|
exercise
|
|
|
term
|
|
|
intrinsic
|
|
|
|
Options
|
|
|
price
|
|
|
in years
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of December 31, 2016
|
|
|
4,864,469
|
|
|
|
5.05
|
|
|
|
6.24
|
|
|
$
|
39,585
|
|
Granted
|
|
|
445,680
|
|
|
|
14.64
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(1,077,256
|
)
|
|
|
2.48
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(8,919
|
)
|
|
|
5.18
|
|
|
|
|
|
|
|
|
|
Outstanding as of September 30, 2017
|
|
|
4,223,974
|
|
|
|
6.72
|
|
|
|
6.33
|
|
|
$
|
92,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest as of September 30, 2017
|
|
|
4,123,214
|
|
|
|
6.63
|
|
|
|
6.30
|
|
|
$
|
90,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2017
|
|
|
2,889,086
|
|
|
|
4.79
|
|
|
|
5.54
|
|
|
$
|
68,653
|
|
The aggregate intrinsic value represents the total intrinsic value (the difference between the fair value of the Company's common stock as of the last day of each period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last day of each period. The total intrinsic value of options exercised during the nine months ended on
September 30, 2017
(unaudited) was $22,678.
The weighted average grant date fair values of options granted to employees and executive directors during the nine months ended September 30, 2017 (unaudited) was $7.94.
|
d.
|
A summary of the activity in the RSUs granted to employees and members of the board of directors for the nine months ended September 30
, 2017
(unaudited) is as follows:
|
|
|
No. of
RSUs
|
|
|
Weighted average
grant date
fair value
|
|
Unvested as of December 31, 2016
|
|
|
1,515,018
|
|
|
$
|
19.74
|
|
Granted
|
|
|
628,210
|
|
|
|
16.39
|
|
Vested
|
|
|
(403,668
|
)
|
|
|
20.59
|
|
Forfeited
|
|
|
(91,779
|
)
|
|
|
17.86
|
|
Unvested as of
September 30, 2017
|
|
|
1,647,781
|
|
|
$
|
18.27
|
|
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 6:-
|
STOCK CAPITAL (Cont.)
|
e.
Options and RSUs issued to non-employee consultants:
The Company has granted options and RSUs to purchase common shares to non-employee consultants as of
September 30
, 2017
(unaudited)
as follows:
|
|
Outstanding
|
|
|
|
|
|
Exercisable
|
|
|
|
|
as of
|
|
|
|
|
|
as of
|
|
|
Issuance
|
|
September 30,
|
|
|
Exercise
|
|
|
September 30,
|
|
Exercisable
|
Date
|
|
2017
|
|
|
price
|
|
|
2017
|
|
Through
|
July 31, 2008
|
|
|
33,333
|
|
|
$
|
0.87
|
|
|
|
33,333
|
|
July 31, 2018
|
October 24, 2012
|
|
|
2,000
|
|
|
|
2.46
|
|
|
|
2,000
|
|
October 24, 2022
|
January 23, 2013
|
|
|
3,333
|
|
|
|
3.03
|
|
|
|
3,333
|
|
January 23, 2023
|
January 27, 2014
|
|
|
1,228
|
|
|
|
3.51
|
|
|
|
506
|
|
January 27, 2024
|
May 1, 2014
|
|
|
2,000
|
|
|
|
3.51
|
|
|
|
1,750
|
|
May 1, 2024
|
September 17, 2014
|
|
|
6,498
|
|
|
|
3.96
|
|
|
|
5,040
|
|
September 17, 2024
|
October 29, 2014
|
|
|
3,335
|
|
|
|
5.01
|
|
|
|
557
|
|
October 29, 2024
|
August 19, 2015
|
|
|
12,167
|
|
|
|
0.00
|
|
|
|
-
|
|
|
November 8, 2015
|
|
|
1,709
|
|
|
|
0.00
|
|
|
|
-
|
|
|
April 18, 2016
|
|
|
1,459
|
|
|
|
0.00
|
|
|
|
-
|
|
|
July 11, 2016
|
|
|
1,667
|
|
|
|
0.00
|
|
|
|
-
|
|
|
September 21, 2016
|
|
|
4,000
|
|
|
|
15.34
|
|
|
|
1,000
|
|
September 21, 2026
|
September 21, 2016
|
|
|
5,250
|
|
|
|
0.00
|
|
|
|
-
|
|
|
March 15, 2017
|
|
|
7,500
|
|
|
|
0.00
|
|
|
|
-
|
|
|
March 15, 2017
|
|
|
8,000
|
|
|
|
13.70
|
|
|
|
500
|
|
March 15, 2027
|
March 27, 2017
|
|
|
4,000
|
|
|
$
|
0.00
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,479
|
|
|
|
|
|
|
|
48,019
|
|
|
The Company had accounted for its options and RSUs granted to non-employee consultants under the fair value method of ASC 505-50.
In connection with the grant of stock options and RSUs to non‑employee consultants, the Company recorded stock compensation expenses in the nine months ended September 30, 2017
(unaudited)
and 2016
(unaudited)
in the amounts $582 and $195, respectively.
|
f.
|
Employee Stock Purchase Plan ("ESPP"):
|
|
|
The Company adopted an Employee Stock Purchase Plan (the "ESPP") effective upon the consummation of the IPO. As of September 30, 2017 (unaudited), a total of 1,301,154 shares were reserved for issuance under this plan. The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1st of each year, for ten years, by the lesser of 1% of the total number of shares of the Company's common stock outstanding on December 31st of the preceding calendar year or 487,643 shares. However, the Company's board of directors may reduce the amount of the increase in any particular year at their discretion, including a reduction to zero.
|
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 6:-
|
STOCK CAPITAL (Cont.)
|
|
|
The ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use up to 10% of their salaries to purchase common stock shares up to an aggregate limit of $10 per participant for every six months plan. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.
|
|
|
As of September 30, 2017
(unaudited)
, 185,173 common stock shares had been purchased under the ESPP.
|
|
|
As of September 30, 2017
(unaudited)
, 1,115,981 common stock shares were available for future issuance under the ESPP.
|
|
|
In accordance with ASC No. 718, the ESPP is compensatory and as such results in recognition of compensation cost.
|
|
g.
|
Stock-based compensation expense for employees and consultants:
|
|
|
The Company recognized stock-based compensation expenses related to stock options and RSUs granted to employees and non-employees and ESPP in the condensed consolidated statement of operations for the three and nine months ended on September 30, 2017 (unaudited) and 2016 (unaudited), as follows:
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
$
|
538
|
|
|
$
|
384
|
|
|
$
|
1,548
|
|
|
$
|
940
|
|
Research and development
|
|
|
1,423
|
|
|
|
927
|
|
|
|
3,908
|
|
|
|
2,398
|
|
Selling and marketing
|
|
|
1,439
|
|
|
|
850
|
|
|
|
3,673
|
|
|
|
2,422
|
|
General and administrative
|
|
|
1,137
|
|
|
|
939
|
|
|
|
3,054
|
|
|
|
2,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
$
|
4,537
|
|
|
$
|
3,100
|
|
|
$
|
12,183
|
|
|
$
|
8,132
|
|
As of
September 30, 2017
(unaudited),
there was a total unrecognized compensation expense of $37,860 related to non‑vested equity‑based compensation arrangements granted under the Company's Plans. These expenses are expected to be recognized during the period from October 1, 2017 through August 31, 2021.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 7:-
|
BASIC AND DILUTED NET EARNINGS PER SHARE
|
Basic net earnings per share is computed by dividing the net earnings by the weighted-average number of shares of common stock outstanding during the period.
The total weighted average number of shares related to the outstanding stock options, excluded from the calculation of diluted net earnings per share due to their anti-dilutive effect was 235,845 for the three months ended September 30, 2016 (unaudited).
No shares related to the outstanding stock options, were excluded from the calculation of diluted net earnings per share for the three months ended September 30, 2017 (unaudited).
The total weighted average number of shares related to the outstanding stock options, excluded from the calculation of diluted net earnings per share due to their anti-dilutive effect was 263,355 and 87,281 for the nine months ended September 30, 2017 (unaudited) and 2016 (unaudited), respectively.
The following table presents the computation of basic and diluted net earnings per share for the periods presented (in thousands, except per share data):
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
27,971
|
|
|
|
15,616
|
|
|
|
64,670
|
|
|
|
53,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing net earnings per share of common stock, basic
|
|
|
42,433,648
|
|
|
|
40,926,887
|
|
|
|
41,831,400
|
|
|
|
40,691,402
|
|
Effect of stock-based awards
|
|
|
3,697,908
|
|
|
|
3,068,340
|
|
|
|
3,106,127
|
|
|
|
3,657,059
|
|
Shares used in computing net earnings per share of common stock, diluted
|
|
|
46,131,556
|
|
|
|
43,995,227
|
|
|
|
44,937,527
|
|
|
|
44,348,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share
|
|
$
|
0.66
|
|
|
$
|
0.38
|
|
|
$
|
1.55
|
|
|
$
|
1.32
|
|
Diluted net income per share
|
|
$
|
0.61
|
|
|
$
|
0.35
|
|
|
$
|
1.44
|
|
|
$
|
1.21
|
|
NOTE 8:-
INCOME TAXES
|
a.
|
Corporate tax in Israel:
|
On May 28, 2017, the Israeli government legislated new regulations regarding the "Preferred Technological Enterprise" regime, under which a company that complies with certain criteria is entitled to lower corporate tax rates. The Company expects that its operations in Israel will comply with the criteria of the Preferred Technological Enterprise regime. Therefore, the Company will utilize the tax benefits under this regime after the end of the utilization of the current zero corporate tax rate benefit period under its Approved and Beneficiary Enterprise status. Under the new legislation, the Company's taxable income will be subject to a corporate tax rate of 12%.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 8:-
INCOME TAXES (Cont.)
|
b.
|
Taxes on income (tax benefit) are comprised as follows:
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year taxes
|
|
$
|
878
|
|
|
$
|
835
|
|
|
$
|
2,906
|
|
|
$
|
1,741
|
|
Deferred tax income and others
|
|
|
(787
|
)
|
|
|
2,179
|
|
|
|
(3,390
|
)
|
|
|
2,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes on income (tax benefit)
|
|
$
|
91
|
|
|
$
|
3,014
|
|
|
$
|
(484
|
)
|
|
$
|
4,067
|
|
|
c.
|
Deferred income taxes:
|
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets are as follows:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Assets in respect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development carryforward expenses- temporary differences
|
|
$
|
2,934
|
|
|
$
|
908
|
|
Stock based compensation
|
|
|
1,528
|
|
|
|
1,039
|
|
Other reserves
|
|
|
1,360
|
|
|
|
868
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
5,822
|
|
|
$
|
2,815
|
|
During fiscal year 2016, the Company determined that the positive evidence outweighs the negative evidence for deferred tax assets and concluded that these deferred tax assets are realizable on a "more likely than not" basis. This determination was mainly due to expected future results of positive operations and earnings history.
|
d.
|
Uncertain tax positions:
|
The Company recognized a total liability for uncertain tax positions in the amount of $471 as of September 30, 2017.
SOLAREDGE TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share and per share data)
NOTE 9:-
|
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS
|
|
a.
|
For the three month period ended September 30, 2017 (unaudited), the Company had two major customers that accounted for 21.60% of its consolidated revenues. For the three month period ended September 30, 2016 (unaudited) the Company had one major customer that accounted for 12.38% of its consolidated revenues.
|
For the nine month period ended September 30, 2017 (unaudited) and 2016 (unaudited), the Company had one major customer that accounted for 12.48% and 12.40% of its consolidated revenues, respectively.
|
b.
|
As of September 30, 2017, (unaudited) two customers accounted for approximately 31.19% and as of December 31, 2016, one customer accounted for approximately 20.15%, of the Company's net accounts receivable, respectively.
|