The accompanying notes are an integral part of the consolidated financial statements.
The accompanying notes are an integral part of the consolidated financial statements.
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
|
|
Convertible
Preferred stock
|
|
|
Common stock
|
|
|
Additional paid in
Capital
|
|
|
Accumulated
other comprehensive
Income (loss)
|
|
|
Retained earnings (Accumulated
Deficit)
|
|
|
Total stockholders’
equity
|
|
|
|
Number
|
|
|
Amount
|
|
|
Number
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2014
|
|
|
75,422,773
|
|
|
$
|
116,203
|
|
|
|
2,809,950
|
|
|
$
|
* -
|
|
|
$
|
5,878
|
|
|
$
|
(61
|
)
|
|
$
|
(141,111
|
)
|
|
$
|
(135,294
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Stock upon exercise of employee stock options
|
|
|
-
|
|
|
|
-
|
|
|
|
34,898
|
|
|
|
* -
|
|
|
|
84
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84
|
|
Issuance of Series E Convertible Preferred stock, net of issuance expenses in the amount of $288
|
|
|
9,321,019
|
|
|
|
24,712
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Equity based compensation expenses to employees and non-employee consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,956
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,956
|
|
Conversion of convertible preferred stock into ordinary shares
|
|
|
(84,743,792
|
)
|
|
|
(140,915
|
)
|
|
|
28,247,923
|
|
|
|
3
|
|
|
|
140,912
|
|
|
|
-
|
|
|
|
-
|
|
|
|
140,915
|
|
Issuance of common stock in initial public offering, net of issuance expenses in an amount of $13,692
|
|
|
-
|
|
|
|
-
|
|
|
|
8,050,000
|
|
|
|
1
|
|
|
|
131,207
|
|
|
|
-
|
|
|
|
-
|
|
|
|
131,208
|
|
Exercise of warrants into common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
154,768
|
|
|
|
* -
|
|
|
|
6,115
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,115
|
|
Change in accumulated other comprehensive loss related to foreign currency translation adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(161
|
)
|
|
|
-
|
|
|
|
(161
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,121
|
|
|
|
21,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2015
|
|
|
-
|
|
|
$
|
-
|
|
|
|
39,297,539
|
|
|
$
|
4
|
|
|
$
|
287,152
|
|
|
$
|
(222
|
)
|
|
$
|
(119,990
|
)
|
|
$
|
166,944
|
|
*
Represents an amount less than $1.
The accompanying notes are an integral part of the consolidated financial statements.
SOLAREDGE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Cont.)
U.S. dollars in thousands (except share data)
|
|
Convertible
Preferred stock
|
|
|
Common stock
|
|
|
Additional paid in
Capital
|
|
|
Accumulated
Other comprehensive
Income (loss)
|
|
|
Retained earnings (Accumulated
Deficit)
|
|
|
Total stockholders’
equity
|
|
|
|
Number
|
|
|
Amount
|
|
|
Number
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2015
|
|
|
-
|
|
|
$
|
-
|
|
|
|
39,297,539
|
|
|
$
|
4
|
|
|
$
|
287,152
|
|
|
$
|
(222
|
)
|
|
$
|
(119,990
|
)
|
|
$
|
166,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
|
|
-
|
|
|
|
-
|
|
|
|
1,592,383
|
|
|
|
* -
|
|
|
|
2,973
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,973
|
|
Equity based compensation expenses to employees and non-employee consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,089
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,089
|
|
Other comprehensive income adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
493
|
|
|
|
-
|
|
|
|
493
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
76,609
|
|
|
|
76,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2016
|
|
|
-
|
|
|
$
|
-
|
|
|
|
40,889,922
|
|
|
$
|
4
|
|
|
$
|
299,214
|
|
|
$
|
271
|
|
|
$
|
(43,381
|
)
|
|
$
|
256,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
|
|
-
|
|
|
|
-
|
|
|
|
286,150
|
|
|
|
* -
|
|
|
|
349
|
|
|
|
-
|
|
|
|
-
|
|
|
|
349
|
|
Issuance of Common stock under employee stock purchase plan
|
|
|
-
|
|
|
|
-
|
|
|
|
83,319
|
|
|
|
* -
|
|
|
|
935
|
|
|
|
-
|
|
|
|
-
|
|
|
|
935
|
|
Equity based compensation expenses to employees and non-employee consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,600
|
|
Other comprehensive loss adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(595
|
)
|
|
|
-
|
|
|
|
(595
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,381
|
|
|
|
25,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016
|
|
|
-
|
|
|
$
|
-
|
|
|
|
41,259,391
|
|
|
$
|
4
|
|
|
$
|
307,098
|
|
|
$
|
(324
|
)
|
|
$
|
(18,000
|
)
|
|
$
|
288,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
|
|
-
|
|
|
|
-
|
|
|
|
2,368,152
|
|
|
|
* -
|
|
|
|
4,854
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,854
|
|
Issuance of Common stock under employee stock purchase plan
|
|
|
-
|
|
|
|
-
|
|
|
|
185,058
|
|
|
|
* -
|
|
|
|
2,386
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,386
|
|
Equity based compensation expenses to employees and non-employee consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,564
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,564
|
|
Other comprehensive loss adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(287
|
)
|
|
|
-
|
|
|
|
(287
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84,172
|
|
|
|
84,172
|
|
Balance as of December 31, 2017
|
|
|
-
|
|
|
$
|
-
|
|
|
|
43,812,601
|
|
|
$
|
4
|
|
|
$
|
331,902
|
|
|
$
|
(611
|
)
|
|
$
|
66,172
|
|
|
$
|
397,467
|
|
*
Represents an amount less than $1.
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
U.S. dollars in thousands
|
|
Year ended
December 31,
|
|
|
Six months ended December 31,
|
|
|
Year ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
84,172
|
|
|
$
|
25,381
|
|
|
$
|
76,609
|
|
|
$
|
21,121
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of property, equipment and intangible assets
|
|
|
7,155
|
|
|
|
2,759
|
|
|
|
3,847
|
|
|
|
2,253
|
|
Amortization of premium and accretion of discount on available-for-sale marketable securities
|
|
|
2,061
|
|
|
|
681
|
|
|
|
532
|
|
|
|
-
|
|
Stock-based compensation
|
|
|
17,564
|
|
|
|
6,600
|
|
|
|
9,089
|
|
|
|
2,956
|
|
Financial income, net related to term loan
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(992
|
)
|
Remeasurement of warrants to purchase convertible preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,350
|
|
Capital loss from disposal of property
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
104
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
(15,690
|
)
|
|
|
14,022
|
|
|
|
(7,356
|
)
|
|
|
(48,507
|
)
|
Prepaid expenses and other accounts receivable
|
|
|
(21,937
|
)
|
|
|
(367
|
)
|
|
|
10,542
|
|
|
|
(19,563
|
)
|
Trade receivables, net
|
|
|
(38,139
|
)
|
|
|
1,555
|
|
|
|
(37,271
|
)
|
|
|
(16,333
|
)
|
Deferred tax assets, net
|
|
|
(5,455
|
)
|
|
|
3,652
|
|
|
|
(6,380
|
)
|
|
|
-
|
|
Trade payables
|
|
|
35,455
|
|
|
|
(14,464
|
)
|
|
|
(32,200
|
)
|
|
|
41,111
|
|
Employees and payroll accruals
|
|
|
9,394
|
|
|
|
2,996
|
|
|
|
3,278
|
|
|
|
1,668
|
|
Warranty obligations
|
|
|
20,436
|
|
|
|
7,183
|
|
|
|
19,313
|
|
|
|
13,698
|
|
Deferred revenues
|
|
|
14,106
|
|
|
|
1,335
|
|
|
|
8,578
|
|
|
|
3,989
|
|
Accrued expenses, other accounts payable and non-current tax liabilities
|
|
|
27,839
|
|
|
|
(1,999
|
)
|
|
|
3,934
|
|
|
|
2,530
|
|
Lease incentive obligation
|
|
|
(296
|
)
|
|
|
(236
|
)
|
|
|
(88
|
)
|
|
|
2,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
136,665
|
|
|
|
49,098
|
|
|
|
52,427
|
|
|
|
12,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(21,382
|
)
|
|
|
(11,025
|
)
|
|
|
(15,690
|
)
|
|
|
(11,765
|
)
|
Purchase of intangible assets
|
|
|
-
|
|
|
|
(600
|
)
|
|
|
(800
|
)
|
|
|
-
|
|
Decrease (increase) in restricted cash
|
|
|
(619
|
)
|
|
|
31
|
|
|
|
2,711
|
|
|
|
(2,038
|
)
|
Decrease (increase) in long-term lease deposit
|
|
|
-
|
|
|
|
(77
|
)
|
|
|
103
|
|
|
|
(134
|
)
|
Investment in available-for-sale marketable securities
|
|
|
(143,675
|
)
|
|
|
(40,858
|
)
|
|
|
(118,511
|
)
|
|
|
-
|
|
Maturities of available-for-sale marketable securities
|
|
|
80,269
|
|
|
|
32,782
|
|
|
|
6,350
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
$
|
(85,407
|
)
|
|
$
|
(19,747
|
)
|
|
$
|
(125,837
|
)
|
|
$
|
(13,937
|
)
|
The accompanying notes are an integral part of the consolidated financial statements.
SOLAREDGE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.)
U.S. dollars in thousands
|
|
Year ended
December 31,
|
|
|
Six months ended December 31,
|
|
|
Year ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from short term bank loan
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,000
|
|
Repayment of short term bank loan
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(36,326
|
)
|
Repayments of term loan
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,919
|
)
|
Proceeds from issuance of Series E Convertible Preferred stock, net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,712
|
|
Proceeds from initial public offering, net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
131,402
|
|
Issuance costs related to initial public offering
|
|
|
-
|
|
|
|
-
|
|
|
|
(194
|
)
|
|
|
-
|
|
Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards
|
|
|
7,240
|
|
|
|
1,284
|
|
|
|
2,973
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
7,240
|
|
|
|
1,284
|
|
|
|
2,779
|
|
|
|
136,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
58,498
|
|
|
|
30,635
|
|
|
|
(70,631
|
)
|
|
|
135,070
|
|
Cash and cash equivalents at the beginning of the period
|
|
|
104,683
|
|
|
|
74,032
|
|
|
|
144,750
|
|
|
|
9,754
|
|
Effect of exchange rate differences on cash and cash equivalents
|
|
|
(18
|
)
|
|
|
16
|
|
|
|
(87
|
)
|
|
|
(74
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
163,163
|
|
|
$
|
104,683
|
|
|
$
|
74,032
|
|
|
$
|
144,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in accrued expenses and other accounts payable related to property and equipment additions
|
|
$
|
598
|
|
|
$
|
-
|
|
|
$
|
1,187
|
|
|
$
|
-
|
|
Deferred issuance costs related to initial public offering
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
194
|
|
Cashless exercise of warrants to purchase common stock
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
896
|
|
Cash paid for income taxes
|
|
$
|
3,100
|
|
|
$
|
1,103
|
|
|
$
|
1,178
|
|
|
$
|
4,040
|
|
The accompanying notes are an integral part of the 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 output from each and every module through constant tracking of Maximum Power Point individually per module; (ii) inverters which convert direct current (DC) from the PV module to alternating current (AC); (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; and (iv) a 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 through large distributors and electrical equipment wholesalers to smaller solar installers, as well as directly to large solar installers and engineering, procurement and construction firms (“EPCs”).
|
b.
|
Basis of presentation:
|
Effective December 31, 2016, the Company changed its fiscal year end from June 30 to December 31. This change was made in order to align the Company’s fiscal year end with other companies within the industry. As a result of this change, the consolidated financial statements include presentation of the six month transition period from July 1, 2016 through December 31, 2016. The Company refers to the period beginning July 1, 2015 and ending June 30, 2016 as “fiscal 2016” and the period beginning July 1, 2014 and ending June 30, 2015 as “fiscal 2015”.
|
c.
|
Initial Public Offering:
|
On March 31, 2015, the Company closed its initial public offering (“IPO”) whereby 8,050,000 shares of common stock were sold by the Company to the public (inclusive of 1,050,000 shares of common stock pursuant to the full exercise of an overallotment option granted to the underwriters). The aggregate net proceeds received by the Company from the offering were approximately $131,208, net of underwriting discounts and commissions and offering expenses. Upon the closing of the IPO, all shares of the Company’s outstanding convertible preferred stock automatically converted into 28,247,923 shares of common stock, and outstanding warrants to purchase convertible preferred stock automatically converted into warrants to purchase 187,671 shares of common stock (See Note 10).
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
|
d.
|
For the year ended December 31, 2017 and the six months ended December 31, 2016, the Company had one major customer (customer with attributable revenues that represents more than 10% of total revenues) that accounted for approximately 14.8% and 11.2% of the Company’s consolidated revenues, respectively (see Note 20), and for the years ended June 30, 2016 and 2015, the Company had three and one major customers that accounted for approximately 32.5% and 24.6% of the Company’s consolidated revenues, respectively (see Note 20).
|
|
e.
|
The Company depends on three contract manufacturers and several limited or single source component suppliers. 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 contract manufacturers collectively accounted for
51.6
%, 61% and 69% of the Company’s total trade payables as of December 31, 2017, 2016 and June 30, 2016, respectively.
The Company has the right to offset its payables to one of its contract manufacturers against vendor non-trade receivables. As of December 31, 2017, a total of $3,180 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 Consolidated Balance Sheets.
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”).
|
a.
|
Principles of consolidation:
|
The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances including profits from intercompany sales not yet realized outside the Company have been eliminated upon consolidation.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The preparation of financial statements, in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates its assumptions on an ongoing basis, including those related to warranty obligation, inventory valuation, contingencies, share-based compensation cost, marketable securities, deferred tax assets and liabilities, intangible assets and estimates used in applying the revenue recognition policy. The Company’s management believes that the estimates, judgment, and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
|
c.
|
Financial statements in U.S. dollars:
|
The functional currency of the Company and its subsidiaries (with the exception of Germany, Australia, and Japan) is the U.S. dollar, as the U.S. dollar is the currency of the primary economic environment in which the Company has operated and expects to continue to operate in the foreseeable future. Currently, the operations of these subsidiaries and the Company are primarily conducted in Israel, and a significant portion of its expenses are paid in U.S. dollars. Financing activities, including loans and cash investments are primarily made in U.S. dollars.
Accordingly, monetary accounts maintained in currencies other than the U.S. dollar are translated into U.S. dollars in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 830 (“Foreign Currency Matters”). All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the statements of operations as financial income or expenses, as appropriate.
The financial statements of other Company’s subsidiaries whose functional currency is other than the U.S. dollar have been translated into U.S dollars. Assets and liabilities have been translated using the exchange rates in effect on the balance sheet date. Statements of operations amounts have been translated using the average exchange rate for the relevant periods.
The resulting translation adjustments are reported as a component of stockholders’ equity in accumulated other comprehensive income.
Accumulated other comprehensive loss related to foreign currency translation adjustments, net amounted to $178, $207, and $29 as of December 31, 2017 and 2016, and June 30, 2016, respectively.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
d.
|
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.
Diluted net earnings per share is computed by giving effect to all potential shares of common stock, including stock options and convertible preferred stock, to the extent dilutive, all in accordance with ASC No. 260, "Earnings Per Share."
The total weighted average number of shares related to the outstanding stock options, convertible preferred stock and warrants to purchase convertible preferred stock, excluded from the calculation of diluted net earnings per share due to their anti-dilutive effect was
197,516,
374,156, 16,208, and 20,565,747 for the
year ended December 31, 2017, the
six months ended December 31, 2016 and the years ended June 30, 2016 and 2015, respectively.
Basic and diluted earnings per share is presented in conformity with the two-class method for participating securities for the periods prior to their conversion. Under this method, the earnings per share for each class of shares are calculated assuming 100% of the Company’s earnings are distributed as dividends to each class of shares based on their contractual rights.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The following table presents the computation of basic and diluted net earnings per share for the periods presented (in thousands, except share and per share data):
|
|
Year ended
|
|
|
Six months Ended
|
|
|
Year ended June 30,
|
|
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
|
2016
|
|
|
2015
|
|
Net basic earnings (loss) per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
84,172
|
|
|
$
|
25,381
|
|
|
$
|
76,609
|
|
|
$
|
21,121
|
|
Dividends accumulated for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,550
|
)
|
Net income available to shareholders of common stock
|
|
|
84,172
|
|
|
|
25,381
|
|
|
|
76,609
|
|
|
|
3,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing net earnings per share of common stock, basic
|
|
|
42,209,238
|
|
|
|
41,026,926
|
|
|
|
39,987,935
|
|
|
|
11,902,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net diluted earnings per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
84,172
|
|
|
|
25,381
|
|
|
|
76,609
|
|
|
|
21,121
|
|
Dividends accumulated for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,971
|
)
|
Net income available to shareholders of common stock
|
|
|
84,172
|
|
|
|
25,381
|
|
|
|
76,609
|
|
|
|
4,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing net earnings per share of common stock, basic
|
|
|
42,209,238
|
|
|
|
41,026,926
|
|
|
|
39,987,935
|
|
|
|
11,902,911
|
|
Effect of stock-based awards
|
|
|
3,216,069
|
|
|
|
2,812,416
|
|
|
|
4,388,140
|
|
|
|
3,366,537
|
|
Shares used in computing net earnings per share of common stock, diluted
|
|
|
45,425,307
|
|
|
|
43,839,342
|
|
|
|
44,376,075
|
|
|
|
15,269,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share
|
|
$
|
1.99
|
|
|
$
|
0.62
|
|
|
$
|
1.92
|
|
|
$
|
0.30
|
|
Diluted net income per share
|
|
$
|
1.85
|
|
|
$
|
0.58
|
|
|
$
|
1.73
|
|
|
$
|
0.27
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
e.
|
Cash and cash equivalents:
|
Cash equivalents are short-term, highly liquid investments that are readily convertible to cash, with original maturities of three months or less at the date acquired.
|
f.
|
Marketable Securities:
|
Marketable securities consist of corporate and governmental bonds. The Company determines the appropriate classification of marketable securities at the time of purchase and re-evaluates such designation at each balance sheet date. In accordance with FASB ASC No. 320 “Investments - Debt and Equity Securities”, the Company classifies marketable securities as available-for-sale. Available-for-sale securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), a separate component of stockholders’ equity, net of taxes.
Realized gains and losses on sales of marketable securities, as determined on a specific identification basis, are included in financial income (expenses), net. The amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income (expenses), net.
The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term.
The Company recognizes an impairment charge when a decline in the fair value of its investments in debt securities below the cost basis of such securities is judged to be other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period, and the Company’s intent to sell, including whether it is more likely than not that the Company will be required to sell the investment before recovery of cost basis. If the Company does not intend to sell the security or it is not more likely than not that it will be required to sell the security before it recovers in value, the Company must estimate the net present value of cash flows expected to be collected. If the amortized cost exceeds the net present value of cash flows, such excess is considered a credit loss and an other-than-temporary impairment has occurred. For securities that are deemed other-than-temporarily impaired (“OTTI”), the amount of impairment is recognized in the statement of operations and is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income (loss). The Company did not recognize OTTI on its marketable securities during the year ended December 31, 2017, the six months ended December 31, 2016, and the years ended June 30, 2016 and 2015.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Restricted cash is primarily invested in short-term bank deposits, which are primarily used to guarantee a letter of credit which has been issued to one of the Company’s major vendors, to the Company’s landlords for its office leases, and as security for the Company’s credit cards.
Inventories are stated at the lower of cost or market value. Inventory reserves are provided to cover risks arising from slow-moving items or technological obsolescence.
The Company periodically evaluates the quantities on hand relative to historical, current, and projected sales volume. Based on this evaluation, an impairment charge is recorded when required to write-down inventory to its market value. Cost of finished goods and raw materials is determined using the moving average cost method.
|
i.
|
Property, equipment, and intangible assets:
|
Property and equipment:
Property and equipment are stated at cost, net of accumulated depreciation. Machinery & equipment in progress is the construction or development of property and equipment that have not yet been placed in service for the Company's intended use. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, at the following rates:
|
|
%
|
|
|
|
Computers and peripheral equipment
|
|
15 – 33 (mainly 33)
|
Office furniture and equipment
|
|
7
|
Machinery & equipment
|
|
7 – 20 (mainly 10)
|
Laboratory equipment
|
|
15 – 25 (mainly 15)
|
Vehicles
|
|
15
|
Leasehold improvements
|
|
over the shorter of the lease term or useful economic life
|
Intangible assets:
Intangible assets are stated at cost, net of accumulated amortization. Amortization is calculated by the straight-line method over the estimated useful lives of the assets (see Note 7).
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
j.
|
Impairment of long-lived assets:
|
The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360 (“Property, Plants and Equipment”), whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or asset group) to the future undiscounted cash flows expected to be generated by the assets (or asset group).
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. For the year ended December 31, 2017, the six months ended December 31, 2016, and the years ended June 30, 2016 and 2015, no impairment losses have been identified.
k.
Severance pay:
Pursuant to Israel’s Severance Pay Law, Israeli employees are entitled to severance pay equal to one month’s salary for each year of employment, or a portion thereof. The employees of the Company’s Israeli subsidiary have elected to be included under section 14 of the Severance Pay Law, 1963, under which these employees are entitled only to monthly deposits made in their name with insurance companies, at a rate of 8.33% of their monthly salary. These payments cause the Company to be released from any future obligation under the Israeli Severance Pay Law to make severance payments in respect of those employees; therefore, related assets and liabilities are not presented in the balance sheet.
For the year ended December 31, 2017, the six months ended December 31, 2016, and the years ended June 30, 2016 and 2015, the Company recorded $2,995, $1,131, $1,761, and $1,273 in severance expenses, respectively.
The Company and its subsidiaries generate their revenues mainly from the sale of power optimizers, inverters, and cloud-based monitoring services to distributors, installers and PV module manufacturers.
Revenues from product sales and related services are recognized in accordance with ASC 605 (“Revenue Recognition”) when persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, collectability is reasonably assured, and no significant obligations remain.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Persuasive evidence of an arrangement exists
. The Company’s customers mainly consist of distributors and installers (the “Customers”). The Company’s sales arrangements with Customers are pursuant to written documentation, either by a written contract or purchase order. The actual documentation used is dependent on the business practice with each Customer. Therefore, the Company determines that persuasive evidence of an arrangement exists with respect to a Customer when it has a written contract or a binding purchase order from the Customer.
Delivery has occurred
. Each item of written documentation relating to a sale arrangement that is agreed upon with the Customer specifically sets forth when risk of loss and title are being transferred (based on the agreed International Commercial terms, or “INCOTERMS”). Unless a different written arrangement with the Customer exists, the Company determines that risk of loss and title are transferred to the Customer when the applicable INCOTERMS are satisfied and thus delivery of its products has occurred.
The fee is fixed or determinable
. The Company does not provide any price protection, stock rotation, and/or right of return, and thus the Company considers all the Customers as end-users and the fee is considered fixed and determinable upon execution of the written documentation with the Customers.
Additionally, payments that are due within the normal course of the Company’s credit terms, which are currently no more than three months from the delivery date, are deemed to be fixed and determinable. Fees and arrangements with payment terms extending beyond customary payment terms are considered not to be fixed or determinable, in which case revenues are deferred and recognized when payments become due, provided that all other revenue recognition criteria have been met.
Collectability is reasonably assured
. The Company determines whether collectability is reasonably assured on a Customer-by-Customer basis pursuant to its credit review policy. The Company typically sells to Customers with whom it has a long-term business relationship and a history of successful collection. For a new Customer, or when an existing Customer substantially expands its commitments, the Company evaluates the Customer’s financial position, the number of years the Customer has been in business, the history of collection with the Customer, and the Customer’s ability to pay, and typically assigns a credit limit based on that review.
Provisions for rebates, sales incentives, and discounts to customers are accounted for as reductions in revenue in the same period the related sales are recorded.
The Company increases a credit limit only after it has established a successful collection history with the Customer. The Company recognizes revenue under a particular arrangement as Customer payments are actually received if it determines at any time that collectability is not reasonably assured under that arrangement based upon its credit review process, the Customer’s payment history, or information that comes to light about a Customer’s financial position. No material revenues were recognized by the Company under that arrangement.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Revenues related to cloud-based monitoring and communication services are recognized ratably on a straight-line basis over the estimated service period.
For multiple-element arrangements, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”), and (iii) best estimate of the selling price (“ESP”).
VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. The Company has allocated revenue between its deliverables based on their relative selling prices. Because the Company has neither VSOE nor TPE for its deliverables, the allocation of revenue has been based on the Company’s ESPs. Amounts allocated to the delivered elements are recognized at the time of sale provided the other conditions for revenue recognition have been met.
The Company’s process for determining its ESP considers multiple factors that may vary depending upon the unique facts and circumstances related to each deliverable.
Key factors considered by the Company in developing the ESPs for its products include prices charged by the Company for similar offerings, the Company’s historical pricing practices and product-specific business objectives.
Deferred revenues consist of deferred cloud-based monitoring services, communication services and advance payments received from Customers for the Company’s products, and warranty extensions services, and are classified as short-term and long-term deferred revenues based on the period in which revenues are expected to be recognized.
Cost of revenues sold includes the following: product costs consisting of purchases from contract manufacturers and other suppliers, indirect manufacturing costs, shipping and handling costs, support, warranty expenses and changes in warranty provision, provision for losses related to slow moving and dead inventory, personnel and logistics costs, and royalty expense payments to the Israel Innovation Authority (“IIA”) (see Note 2p).
|
n.
|
Shipping and handling costs:
|
Shipping and handling costs, which amounted to $29,693, $8,131, $21,922, and $26,931 for the year ended December 31, 2017, the six months ended December 31, 2016, and the years ended June 30, 2016 and 2015, respectively, are included in cost of revenues in the consolidated statements of operations. Shipping and handling costs include all costs associated with the distribution of finished products from the Company’s point of selling directly to its Customers.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The Company’s products include a 10-year limited warranty for StorEdge products, a minimum 12-year limited warranty for inverters, and a 25-year limited warranty for power optimizers. In certain cases, the Company provides extended warranties for inverters that bring the warranty period up to 25 years. The Company maintains reserves to cover the expected costs that could result from these warranties. The warranty liability is generally in the form of product replacement and associated costs. Warranty reserves are based on the Company’s best estimate of such costs and are included in cost of revenues. The reserve for the related warranty expenses is based on various factors including assumptions about the frequency of warranty claims on product failures, derived from results of accelerated lab testing, field monitoring, analysis of the history of product field failures, and the Company’s reliability estimates.
The Company has established a reliability measurement system based on the units’ estimated mean time between failure, or MTBF, a metric that equates to a steady-state failure rate per year for each product generation. The MTBF predicts the expected failure rate of each product within the Company's products installed base during the expected product warranted lifetime.
The Company performs accelerated life cycle testing, which simulates the service life of the product in a short period of time.
The accelerated life cycle tests incorporate test methodologies derived from standard tests used by solar module vendors to evaluate the period over which solar modules wear out. Corresponding replacement costs are updated periodically to reflect changes in the Company’s actual and estimated production costs for its products, rate of usage of refurbished units as a replacement of faulty units, and other costs related to logistic and subcontractors services associated with the replacement.
In addition, through the collection of actual field failure statistics, the Company has identified several additional failure causes that are not included in the MTBF calculations. Such causes, which mostly consist of design errors, workmanship errors caused during the manufacturing process and, to a lesser extent, replacement of non-faulty units by installers, are generating additional replacement costs to the replacement costs projected under the MTBF model. The Company identified each of those causes, its failure pattern and the relative ratio compared to the pattern of malfunctions identified under the MTBF and accrued additional provisions for the occurrence of such malfunctioning. For the major causes of failures, the Company evaluates the continuation of these occurrences and the appearance of potential additional malfunctioning cases beyond the MTBF pattern and accrues additional expenses accordingly.
Warranty obligations are classified as short-term and long-term obligations based on the period in which the warranty is expected to be claimed.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Government grants received by the Company’s Israeli subsidiary relating to categories of operating expenditures are credited to the consolidated statements of operations during the period in which the expenditure to which they relate is charged. Royalty-bearing grants from the
IIA
for funding certain approved research and development projects are recognized at the time when the Company’s Israeli subsidiary is entitled to such grants, on the basis of the related costs incurred, and are included as a deduction from research and development expenses.
The Company recorded grants in the amount of $763 for the year ended June 30, 2015, which was deducted from research and development expenses.
No grants were recorded for the year ended December 31, 2017, the six months ended December 31, 2016, and for the year ended June 30, 2016.
|
q.
|
Research and development costs:
|
Research and development costs, net of grants received, are charged to the consolidated statement of operations as incurred.
|
r.
|
Concentrations of credit risks:
|
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, trade receivables, other accounts receivable, and marketable securities.
Cash and cash equivalents are mainly invested in major banks in the U.S., Israel, Australia, Japan, and Germany. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments.
The Company’s marketable securities consist of corporate and governmental bonds.
The Company's marketable securities include investments in highly-rated corporate debentures (mainly of U.S., UK, France, Canada, and other countries) and governmental bonds. The financial institutions that hold the Company's marketable securities are major financial institutions located in the United States. Management believes that the Company's marketable securities portfolio is a diverse portfolio of highly-rated securities and the Company's investment policy limits the amount the Company may invest in each issuer, and accordingly, management believes that minimal credit risk exists from geographic or credit concentration with respect to these securities.
As of December 31, 2017, December 31, 2016, and June 30, 2016, the amortized cost of the Company’s marketable securities was $180,974, $118,950, and $111,514, respectively, and their stated market value was $180,384, $118,727, and $111,609, respectively, representing a net unrealized loss of $590, $223, and a net unrealized gain of $95, respectively.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The trade receivables of the Company are derived from sales to Customers located primarily in North America, Europe, and Australia.
The Company generally does not require collateral, however, in certain circumstances, the Company may require letters of credit, other collateral, or additional guarantees.
An allowance for doubtful accounts is determined with respect to specific debts that are doubtful of collection. The Company accrued $128, $226, and $235 as allowance for doubtful accounts as of December 31, 2017 and 2016 and June 30, 2016, respectively.
In addition, an accrual for rebates is allocated to specific debts. The Company accrued $17,428, $9,089, and $4,294 for rebates as of December 31, 2017 and 2016 and June 30, 2016, respectively.
As of December 31, 2017 and 2016 and June 30, 2016, the Company had two, one, and two major customers (customers with a balance that represents more than 10% of total trade receivables), respectively, which accounted in the aggregate for approximately 35.2%, 20.2%, and 34.4%, respectively, of the Company’s consolidated trade receivables.
The Company and its subsidiaries have no off-balance sheet concentration of credit risk except for certain derivative instruments as mentioned below.
s.
Fair value of financial instruments:
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:
The carrying value of cash and cash equivalents, restricted cash, trade receivables, prepaid expenses and other accounts receivable, trade payables, employee and payroll accruals and accrued expenses, and other accounts payable approximate their fair values due to the short-term maturities of such instruments.
Assets measured at fair value on a recurring basis as of December 31, 2017, December 31, 2016, and June 30, 2016 are comprised of money market funds, foreign currency derivative contracts and marketable securities. (see Note 4)
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.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
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.
|
t.
|
Warrants to Purchase Convertible Preferred Stock:
|
The Company accounts for freestanding warrants to purchase shares of its convertible preferred stock as a liability on the balance sheets at fair value. The warrants to purchase convertible preferred stock are recorded as a liability because of a provision calling for minimum proceeds upon or after an “Exit Event”, as described in Note 10.
The fair value of warrants to purchase convertible preferred stock on the issuance date and on subsequent reporting dates was determined using a hybrid method utilizing the assumptions noted below. The fair value of the underlying preferred stock price was determined by the board of directors considering, among others, third party valuations. The valuation of the Company was performed using the hybrid method, a hybrid between the probability-weighted estimated return method (“PWERM”) and Option Pricing Method (“OPM”) estimating the probability-weighted value across multiple scenarios but using the OPM to estimate the allocation of value within one or more of those scenarios. The OPM was used to allocate the Company’s equity value between the preferred stock, common stock and warrants in a scenario of other liquidation events.
The expected terms of the warrants were based on the remaining contractual expiration period. The expected share price volatility for the shares was determined by examining the historical volatilities of a group of the Company’s industry peers as there was insufficient trading history of the Company’s shares. The risk-free interest rate was calculated using the average of the published interest rates for U.S. Treasury zero-coupon issues with maturities that approximate the expected term.
The dividend yield assumption was zero, as there is no history of dividend payments and the Company does not expect to pay any dividends in the foreseeable future.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The following assumptions were used to estimate the value of the warrants to purchase convertible preferred stock:
|
|
June 30,
|
|
|
|
2014
|
|
|
|
|
|
Expected volatility
|
|
|
45.0
|
%
|
Risk-free rate
|
|
|
0.09
|
%
|
Dividend yield
|
|
|
0
|
%
|
Expected term (in years)
|
|
|
1.21
|
The warrants to purchase convertible preferred stock were subject to re-measurement to fair value at each balance sheet date and any change in fair value was recognized as a component of financial expenses, net, on the statements of operations.
The change in the fair value of warrants to purchase convertible preferred stock is summarized below:
|
|
Balance at
beginning
of period
|
|
|
Issuance of
warrants to
purchase preferred stock
|
|
|
Exercise of
warrants to
purchase common stock (*)
|
|
|
Change in fair value
|
|
|
Balance at
end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
$
|
765
|
|
|
$
|
-
|
|
|
$
|
(6,115
|
)
|
|
$
|
5,350
|
|
|
$
|
-
|
|
|
(*)
|
Upon the closing of the IPO, all outstanding warrants to purchase convertible preferred stock automatically converted into warrants to purchase 187,671 shares of common stock (See Note 1c).
|
|
|
On June 18, 2015, the warrants were redeemed in a cashless exercise into 154,768 common shares. Immediately before the cashless exercise, the warrants were remeasured to fair value based on their intrinsic value which amounted to $6,115 (see Note 10).
|
|
u.
|
Accounting for stock-based compensation:
|
The Company accounts for stock-based compensation in accordance with ASC 718 (“Compensation-Stock Compensation”). ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option-Pricing Model (“OPM”). The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The Company recognizes compensation expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Estimated forfeitures are based on actual historical pre-vesting forfeitures (pursuant to the adoption of ASU 2016-09, the Company made a policy election to estimate the number of awards that are expected to vest).
The Company selected the Black-Scholes-Merton option pricing model as the most appropriate fair value method for its stock-option awards and Employee Stock Purchase Plan. The option-pricing model requires a number of assumptions, of which the most significant are the fair market value of the underlying common stock, expected stock price volatility, and the expected option term. Expected volatility for stock-option awards was calculated based upon certain peer companies that the Company considered to be comparable. Expected volatility for Employee Stock Purchase Plan was calculated based upon the Company’s stock prices. The expected option term represents the period of time that options granted are expected to be outstanding. The expected option term is determined based on the simplified method in accordance with SAB No. 110, as adequate historical experience is not available to provide a reasonable estimate. The simplified method will continue to apply until enough historical experience is available to provide a reasonable estimate of the expected term. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has not declared or paid any dividends on its common stock and does not expect to pay any dividends in the foreseeable future.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The fair value for options granted to employees and executive directors and Employee Stock Purchase Plan in the year ended December 31, 2017, the six months ended December 31, 2016, and the years ended June 30, 2016 and 2015 is estimated at the date of grant using a Black-Scholes-Merton option pricing model with the following assumptions:
|
|
Year ended
December 31, 2017
|
|
|
Six months ended December 31, 2016
|
|
|
Year Ended
June 30,
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Employee Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest
|
|
|
2.14% - 2.17
|
%
|
|
|
1.28% - 1.34
|
%
|
|
|
1.39% - 1.97
|
%
|
|
|
1.39% - 2.06
|
%
|
Dividend yields
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Volatility
|
|
|
58.08% - 58.10
|
%
|
|
|
55.33% - 55.34
|
%
|
|
|
55.45%-56.03
|
%
|
|
|
46.5%-55.1
|
%
|
Expected option term in years
|
|
|
6.06
|
|
|
6.06
|
|
|
5.50-6.11
|
|
|
5.50-6.27
|
Estimated forfeiture rate
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
10.3
|
%
|
|
|
12.5%-18.7
|
%
|
Employee Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest
|
|
|
0.6% - 1.07
|
%
|
|
|
0.60
|
%
|
|
|
0.40
|
%
|
|
|
-
|
|
Dividend yields
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
-
|
|
Volatility
|
|
|
45.6% - 48.08
|
%
|
|
|
48.08
|
%
|
|
|
62.84
|
%
|
|
|
-
|
|
Expected term
|
|
6 months
|
|
6 months
|
|
6 months
|
|
|
-
|
|
The following table set forth the parameters used in computation of the options compensation
to non-employee consultants in the year ended December 31, 2017, the six months ended December 31, 2016, and the years ended June 30, 2016 and 2015, using a Black-Scholes-Merton option pricing model with the following assumptions:
|
|
Year ended
December 31, 2017
|
|
|
Six months ended December 31, 2016
|
|
|
Year ended
June 30,
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest
|
|
|
2.12% - 2.42
|
%
|
|
|
1.16% - 2.45
|
%
|
|
|
1.15%-2.21
|
%
|
|
|
1.59%-2.58
|
%
|
Dividend yields
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Volatility
|
|
|
61.21% - 62.62
|
%
|
|
|
55.33% - 58.57
|
%
|
|
|
55.37%-55.75
|
%
|
|
|
45.5%-56.2
|
%
|
Contractual life in years
|
|
|
6-10
|
|
|
6 - 10
|
|
|
6.4-10
|
|
|
7.4-10
|
The Company recognizes compensation expenses for the value of its restricted stock unit (“RSU”) awards, based on the straight-line method over the requisite service period of each of the awards, net of estimated forfeitures. The fair value of each RSU is the market value as determined by the closing price of the common stock on the day of grant.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The Company and its subsidiaries account for income taxes in accordance with ASC 740, “Income Taxes.” ASC 740 prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse.
The Company accounts for uncertain tax positions in accordance with ASC 740. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement.
The Company record reserves for uncertain tax positions to the extent it is more likely than not that the tax position will be sustained on audit, based on the technical merits of the position.
|
x.
|
Derivative financial instruments:
|
The Company accounts for derivatives and hedging based on ASC 815 (“Derivatives and Hedging”). ASC 815 requires the Company to recognize all derivatives on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.
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”), 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 twelve months with hedging contracts. These hedging contracts are designated as cash flow hedges, as defined by ASC 815 and are all effective hedges.
In accordance with ASC 815, for derivative instruments that are designated and qualify as a cash flow hedge (i.e. hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any gain or loss on a derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item is recognized in current earnings during the period of change.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
In addition to the above-mentioned cash flow hedges transactions, the Company also entered into derivative instrument arrangements to hedge the Company’s exposure to currencies other than the U.S. dollar. These derivative instruments are not designated as cash flow hedges, as defined by ASC 815, and therefore all gains and losses, resulting from fair value remeasurement, were recorded immediately in the statement of operations, as financial income (expenses).
As of December 31, 2017, the Company entered into forward contracts and put and call options to sell Euros for U.S. dollars in the amount of €54 million.
As of December 31, 2017, the Company had no derivative instruments that are designated as cash flow hedges.
As of December 31, 2016, the Company entered into forward contracts to sell U.S. dollars for NIS in the amount of $5,098. 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.
As of December 31, 2016, the Company had no derivative instruments that are not designated as cash flow hedges.
As of June 30, 2016, the Company entered into forward contracts and put and call options to sell U.S. dollars for NIS and Euros for U.S. dollars in the amount of $17,693 and €30 million, respectively. These hedging contracts do not contain any credit-risk-related contingency features.
The fair value of derivative assets and derivative liabilities as of December 31, 2017 was $221 and $401, respectively, which was recorded at net amount in
accrued expenses and other accounts payable
in the consolidated balance sheets (see Note 13).
The fair value of derivative assets as of December 31, 2016 was $19, which was recorded in other accounts receivable and prepaid expenses in the consolidated balance sheets (see Note 13).
The fair value of derivative assets and derivative liabilities as of June 30, 2016 was $504 and $23, respectively, which was recorded at net amount in other accounts receivable and prepaid expenses in the consolidated balance sheets.
The Company recorded changes in the fair value (i.e., gains or losses) of the derivatives in the accompanying consolidated statements of cash flows as changes in operating activities.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The Company reports comprehensive income in accordance with ASC 220 (“Comprehensive Income”). ASC 220 establishes standards for the reporting and presentation of comprehensive income and its components in a full set of general purpose financial statements.
Total comprehensive income and the components of accumulated other comprehensive income are presented in the consolidated statements of stockholders’ equity. Accumulated other comprehensive income consists of foreign currency translation effects, unrealized gains and losses on available-for-sale marketable securities and hedging contracts.
|
z.
|
New accounting pronouncements not yet effective:
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 flow arising from contracts with customers. 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 modified retrospective method.). The Company will adopt the new standard, effective January 1, 2018, using the modified retrospective method applied to those contracts which were not substantially completed as of January 1, 2018. The cumulative adjustment will decrease the Company’s retained earnings by $3,875 while increasing the Company’s deferred revenues by the same amount.
|
The most significant impact of the standard on the Company’s financial statements relates to advance payments received for performance obligations that extend for a period greater than one year. Applying the new standard, such performance obligations related to warranty extension services, cloud-based monitoring, and other communication services are those that include a financial component.
Upon adoption, the financing component will result in interest expenses which will be included in the Company’s consolidated statement of operations to reflect the financial portion cost of the long-term deferred revenue that is related to such services.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), whereby lessees will be required to recognize for all leases at the commencement date a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. A modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements must be applied. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Companies may not apply a full retrospective transition approach. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. Early application is permitted. The Company is evaluating the potential impact of this pronouncement.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 also applies to employee benefit plan accounting, with an effective date of the first quarter of fiscal 2022. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements, footnote disclosures, and employee benefit plans’ accounting.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance with the intent of reducing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted, including adoption in an interim period. The Company will adopt the new standard effective January 1, 2018, and does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory (ASU 2016-16), which requires companies to recognize the income-tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset has been sold to an outside party. The Company will adopt the new standard effective January 1, 2018 and does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.
In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company will adopt the new standard effective January 1, 2018, and does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.
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 Company will adopt the new standard effective January 1, 2018 and adoption of this standard is not expected to have a material impact on the consolidated financial statements.
In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Tax Cuts and Jobs Act (the "TCJA"). The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. Due to the complexity of this new tax rule, the Company continues to evaluate this provision of the TCJA and whether such taxes are recorded as a current-period expense when incurred or whether such amount should be factored into a company’s measurement of its deferred taxes. As a result,
the Company
has
not included an estimate of the tax expense/benefit related to this item for the
year
ended December 31, 2017.
|
aa.
|
Recently issued and adopted 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 or the retail inventory method, such as inventory 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. The Company 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.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 3:-
|
MARKETABLE SECURITIES
|
The following is a summary of available-for-sale marketable securities at December 31, 2017:
|
|
Amortized
cost
|
|
|
Gross unrealized
gains
|
|
|
Gross unrealized
losses
|
|
|
Fair
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for-sale – matures within one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
68,392
|
|
|
$
|
1
|
|
|
$
|
(121
|
)
|
|
$
|
68,272
|
|
Governmental bonds
|
|
|
9,019
|
|
|
|
-
|
|
|
|
(27
|
)
|
|
|
8,992
|
|
|
|
|
77,411
|
|
|
|
1
|
|
|
|
(148
|
)
|
|
|
77,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for-sale – matures after one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
95,540
|
|
|
|
-
|
|
|
|
(380
|
)
|
|
|
95,160
|
|
Governmental bonds
|
|
|
8,023
|
|
|
|
-
|
|
|
|
(63
|
)
|
|
|
7,960
|
|
|
|
|
103,563
|
|
|
|
-
|
|
|
|
(443
|
)
|
|
|
103,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
180,974
|
|
|
$
|
1
|
|
|
$
|
(591
|
)
|
|
$
|
180,384
|
|
The following is a summary of available-for-sale marketable securities at December 31, 2016:
|
|
Amortized
cost
|
|
|
Gross unrealized
gains
|
|
|
Gross unrealized
losses
|
|
|
Fair
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for-sale – matures within one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
71,753
|
|
|
$
|
20
|
|
|
$
|
(54
|
)
|
|
$
|
71,719
|
|
Governmental bonds
|
|
|
2,758
|
|
|
|
-
|
|
|
|
(12
|
)
|
|
|
2,746
|
|
|
|
|
74,511
|
|
|
|
20
|
|
|
|
(66
|
)
|
|
|
74,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for-sale – matures after one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
39,435
|
|
|
|
3
|
|
|
|
(159
|
)
|
|
|
39,279
|
|
Governmental bonds
|
|
|
5,004
|
|
|
|
-
|
|
|
|
(21
|
)
|
|
|
4,983
|
|
|
|
|
44,439
|
|
|
|
3
|
|
|
|
(180
|
)
|
|
|
44,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
118,950
|
|
|
$
|
23
|
|
|
$
|
(246
|
)
|
|
$
|
118,727
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 3:-
|
MARKETABLE SECURITIES (Cont.)
|
The following is a summary of available-for-sale marketable securities at June 30, 2016:
|
|
Amortized
cost
|
|
|
Gross unrealized
gains
|
|
|
Gross unrealized
losses
|
|
|
Fair
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for-sale – matures within one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
57,119
|
|
|
$
|
50
|
|
|
$
|
(11
|
)
|
|
$
|
57,158
|
|
Governmental bonds
|
|
|
2,005
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,005
|
|
|
|
|
59,124
|
|
|
|
50
|
|
|
|
(11
|
)
|
|
|
59,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for-sale – matures after one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
46,375
|
|
|
|
86
|
|
|
|
(31
|
)
|
|
|
46,430
|
|
Governmental bonds
|
|
|
6,015
|
|
|
|
7
|
|
|
|
(6
|
)
|
|
|
6,016
|
|
|
|
|
52,390
|
|
|
|
93
|
|
|
|
(37
|
)
|
|
|
52,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
111,514
|
|
|
$
|
143
|
|
|
$
|
(48
|
)
|
|
$
|
111,609
|
|
The following table presents gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2017, December 31, 2016, and June 30, 2016 based on the investments maturity date:
|
|
Less than 12 months
|
|
|
12 months or greater
|
|
|
|
Fair value
|
|
|
Gross unrealized losses
|
|
|
Fair value
|
|
|
Gross unrealized losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2017
|
|
$
|
72,269
|
|
|
$
|
(148
|
)
|
|
$
|
103,116
|
|
|
$
|
(443
|
)
|
As of
December 31, 2016
|
|
$
|
51,124
|
|
|
$
|
(66
|
)
|
|
$
|
39,373
|
|
|
$
|
(180
|
)
|
As of
June 30, 2016
|
|
$
|
22,895
|
|
|
$
|
(11
|
)
|
|
$
|
20,070
|
|
|
$
|
(37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 3:-
|
MARKETABLE SECURITIES (Cont.)
|
As of December 31, 2017 and 2016 and June 30, 2016, management believes the unrealized losses are not other than temporary and therefore such unrealized losses were recorded in accumulated other comprehensive income (loss). The Company has no intent to sell these securities and it is more likely than not that the Company will not be required to sell these securities prior to the recovery of the entire amortized cost basis.
Proceeds from maturity of available-for-sale marketable securities during the year ended December 31, 2017, the six months ended December 31, 2016, and the year ended June 30, 2016 were $80,269, $32,782 and $6,350, respectively. The Company had no proceeds from sales of available-for-sale marketable securities during the year ended December 31, 2017, the six months ended December 31, 2016, and the year ended June 30, 2016, therefore no realized gains or losses from the sale of available-for sale marketable securities were recognized. The Company determines realized gains or losses on the sale of available-for-sale marketable securities based on a specific identification method.
NOTE 4:-
|
FAIR VALUE MEASUREMENTS
|
In accordance with ASC 820, the Company measures its cash equivalents, foreign currency derivative contracts, and marketable securities, at fair value using the market approach valuation technique.
Cash equivalents and marketable securities are classified within Level 1 or Level 2. This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
Foreign currency derivative contracts are classified within the Level 2 value hierarchy, as the valuation inputs are based on quoted prices and market observable data of similar instruments.
The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2017 by level within the fair value hierarchy:
|
|
Balance as of
|
|
|
Fair value measurements
|
|
Description
|
|
December 31,
2017
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds
|
|
$
|
6,163
|
|
|
$
|
6,163
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments liability
|
|
$
|
(180
|
)
|
|
|
-
|
|
|
$
|
(180
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
68,272
|
|
|
|
-
|
|
|
$
|
68,272
|
|
|
|
-
|
|
Governmental bonds
|
|
$
|
8,992
|
|
|
|
-
|
|
|
$
|
8,992
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
95,160
|
|
|
|
-
|
|
|
$
|
95,160
|
|
|
|
-
|
|
Governmental bonds
|
|
$
|
7,960
|
|
|
|
-
|
|
|
$
|
7,960
|
|
|
|
-
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except 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
|
|
|
|
-
|
|
The following table sets forth the Company’s assets that were measured at fair value as of June 30, 2016 by level within the fair value hierarchy:
|
|
Balance as of
|
|
|
Fair value measurements
|
|
Description
|
|
June 30,
2016
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds
|
|
$
|
13,373
|
|
|
$
|
13,373
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments asset
|
|
$
|
481
|
|
|
|
-
|
|
|
$
|
481
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
57,158
|
|
|
|
-
|
|
|
$
|
57,158
|
|
|
|
-
|
|
Governmental bonds
|
|
$
|
2,005
|
|
|
|
-
|
|
|
$
|
2,005
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
46,430
|
|
|
|
-
|
|
|
$
|
46,430
|
|
|
|
-
|
|
Governmental bonds
|
|
$
|
6,016
|
|
|
|
-
|
|
|
$
|
6,016
|
|
|
|
-
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 5:-
|
PREPAID EXPENSES AND OTHER ACCOUNTS RECEIVABLE
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Vendor non-trade receivables
(*)
|
|
$
|
33,719
|
|
|
$
|
15,209
|
|
|
$
|
15,375
|
|
Government authorities
|
|
|
3,421
|
|
|
|
2,585
|
|
|
|
2,727
|
|
Prepaid expenses and other
|
|
|
5,083
|
|
|
|
3,534
|
|
|
|
2,756
|
|
Foreign currency derivative contracts
|
|
|
-
|
|
|
|
19
|
|
|
|
482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
42,223
|
|
|
$
|
21,347
|
|
|
$
|
21,340
|
|
(*) Vendor non-trade receivables related to contract manufacturers
derive
from the sale of components to manufacturing vendors who manufacture products for the Company. The Company purchases these components directly from other suppliers. The Company does not reflect the sale of these components to the contract manufacturers in revenues (see also Note 14e).
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
25,887
|
|
|
$
|
10,053
|
|
|
$
|
9,805
|
|
Finished goods
|
|
|
57,105
|
|
|
|
57,310
|
|
|
|
71,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
82,992
|
|
|
$
|
67,363
|
|
|
$
|
81,550
|
|
The Company recorded inventory write-downs of $1,352, $113, $2,539, and $992 for the year ended December 31, 2017, the six months ended December 31, 2016, and for the years ended June 30, 2016 and 2015, respectively.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 7:-
|
PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS, NET
|
|
a.
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computers and peripheral equipment
|
|
$
|
9,872
|
|
|
$
|
6,053
|
|
|
$
|
5,190
|
|
Office furniture and equipment
|
|
|
1,785
|
|
|
|
1,505
|
|
|
|
1,289
|
|
Laboratory and testing equipment
|
|
|
13,732
|
|
|
|
9,589
|
|
|
|
8,590
|
|
Machinery and equipment
|
|
|
38,422
|
|
|
|
26,285
|
|
|
|
18,433
|
|
Leasehold improvements
|
|
|
7,536
|
|
|
|
5,898
|
|
|
|
5,450
|
|
Vehicles
|
|
|
39
|
|
|
|
13
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,386
|
|
|
|
49,343
|
|
|
|
38,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less - accumulated depreciation
|
|
|
20,204
|
|
|
|
13,221
|
|
|
|
11,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciated cost
|
|
$
|
51,182
|
|
|
$
|
36,122
|
|
|
$
|
27,831
|
|
Property in progress under construction and development with a cost basis of $8,783, $10,698, and $5,519 was included in Machinery and equipment as of December 31, 2017 and 2016 and June 30, 2016, respectively.
Depreciation expenses for the year ended December 31, 2017, the six months ended December 31, 2016, and for the years ended June 30, 2016 and 2015 were $7,011, $2,702, $3,763, and $2,253, respectively.
On March 9, 2015, the Company and Beacon Power LLC, a Delaware limited liability company (“Beacon”) entered into a patent purchase agreement pursuant to which the Company agreed to purchase all rights in the patents. In July 2015, the Company completed the purchase of the patents for $800.
In October 2016, the Company and Accurate Solar Power, LLC, a limited liability corporation, entered into a patent purchase agreement, under which the Company agreed to purchase certain patents, provisional patent applications, and pending patent applications. The Company completed the purchase in return for total consideration of $600.
Intangible assets include an acquired patents with an original cost of $1,400 as of December 31, 2017 and December 31, 2016, and $800 as of June 30, 2016.
Accumulated amortization amounted to $285, $141, and $84 as of December 31, 2017, 2016 and June 30, 2016, respectively. The patents are amortized over a 10 year period.
Amortization expenses for the year ended December 31, 2017, for the six months ended December 31, 2016, and for the year ended June 30, 2016 were $144, $57, and $84, respectively.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 8:-
|
ACCRUED EXPENSES AND OTHER ACCOUNTS PAYABLE
|
|
|
As of
December 31,
|
|
|
As of
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
14,863
|
|
|
$
|
4,209
|
|
|
$
|
5,615
|
|
Government authorities
|
|
|
1,905
|
|
|
|
1,568
|
|
|
|
1,406
|
|
Loss provision related to contractual inventory purchase obligations *
|
|
|
1,627
|
|
|
|
2,009
|
|
|
|
2,834
|
|
Other
|
|
|
1,983
|
|
|
|
862
|
|
|
|
870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,378
|
|
|
$
|
8,648
|
|
|
$
|
10,725
|
|
NOTE 9:-
|
WARRANTY OBLIGATIONS
|
Changes in the Company’s product warranty liability for the year ended December 31, 2017, the six months ended December 31, 2016, and the year ended June 30, 2016 were as follows:
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at beginning of year
|
|
$
|
58,375
|
|
|
$
|
51,192
|
|
|
$
|
31,879
|
|
Additions and adjustments to cost of revenues
|
|
|
34,650
|
|
|
|
13,749
|
|
|
|
28,848
|
|
Usage and current warranty expenses
|
|
|
(14,214
|
)
|
|
|
(6,566
|
)
|
|
|
(9,535
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at end of year
|
|
|
78,811
|
|
|
|
58,375
|
|
|
|
51,192
|
|
Less current portion
|
|
|
(14,785
|
)
|
|
|
(13,616
|
)
|
|
|
(14,114
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term portion
|
|
$
|
64,026
|
|
|
$
|
44,759
|
|
|
$
|
37,078
|
|
NOTE 10:-
|
TERM LOAN AND WARRANTS TO PURCHASE CONVERTIBLE PREFERRED STOCK
|
On December 28, 2012, (the “Agreement Date”), the Company entered into a loan facility agreement (the “Loan Agreement”) with a lender (the “Lender”), pursuant to which the Lender agreed to loan the Company up to $10,000. On the Agreement Date, the Company received a total of $10,000, less a $100 loan transaction fee paid to the Lender (the “Loan”). The Loan is for a period of 42 months and bears annual interest of 11.90%, which is to be paid monthly.
The principal of the loan is to be paid in 33 monthly payments, beginning in September 2013, except for the last loan payment which was paid in advance on the Agreement Date. Repayment of the Loan and payment of all other amounts owed to the Lender is paid in Euro.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 10:-
|
TERM LOAN AND WARRANTS TO PURCHASE CONVERTIBLE PREFERRED STOCK (Cont.)
|
In connection with the Loan Agreement, the Company granted the Lender 563,014 warrants to purchase Series D-1 convertible preferred stock at an exercise price of $2.309 (the “Warrants”). The Warrants were exercisable in whole or in part prior to earliest of (i) the tenth anniversary of the Agreement Date, or (ii) 12 months after a qualified initial public offering, or (iii) immediately prior to the consumption of a merger or sale of all or substantially all of the Company’s assets (“M&A Transaction”, and together with a qualified initial public offering, an “Exit Event”).
Upon the closing of the IPO, all outstanding warrants to purchase convertible preferred stock automatically converted into warrants to purchase 187,671 shares of common stock (See Note 1c).
In January 2015, the Company fully settled the amount borrowed from the Lender under the Term Loan.
On June 18, 2015, the Lender elected to exercise its cashless exercise rights under which the Company issued 154,768 shares of common stock. The fair value of the Warrants liability as of the exercise date in the amount of $6,115 was reclassified to stockholders’ equity (deficiency).
NOTE 11:-
|
REVOLVING CREDIT LINE
|
In June 2011, the Company entered into an agreement for a revolving line of credit from a Bank Lender (the "Bank Lender"), which, as amended to date, permits aggregate borrowings of up to $20,000 in an amount not to exceed 80% of the eligible trade receivables plus 65% of inventories in transit to customers and bears interest, payable monthly, at the Bank Lender’s prime rate plus a margin of 0.75% to 2.75%.
On February 17, 2015, the Company amended and restated the agreement with the Bank Lender for a revolving line of credit, which permits aggregate borrowings of up to $40,000 in an amount not to exceed 80% of the eligible accounts receivable and bears interest, payable monthly, at the Bank Lender’s prime rate plus a margin of 0.5% to 2.0%. As of December 31, 2016, the revolving line of credit was terminated and the Company had no outstanding borrowings related to this revolving line of credit.
As of June 30, 2016 and 2015, the Company met all its Bank Lender covenants.
As of December 31, 2016, June 30, 2016 and 2015, the Company had no outstanding borrowings related to this revolving line of credit. The revolving line of credit terminated on December 31, 2016.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 12:- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes in accumulated balances of other comprehensive income, net of taxes, for the year ended December 31, 2017:
|
|
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
|
|
|
(297
|
)
|
|
|
975
|
|
|
|
29
|
|
|
|
707
|
|
Gains
reclassified from accumulated other comprehensive income
|
|
|
-
|
|
|
|
(994
|
)
|
|
|
-
|
|
|
|
(994
|
)
|
Net current period other comprehensive income (loss)
|
|
|
(297
|
)
|
|
|
(19
|
)
|
|
|
29
|
|
|
|
(287
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(433
|
)
|
|
$
|
-
|
|
|
$
|
(178
|
)
|
|
$
|
(611
|
)
|
The following table summarizes the changes in accumulated balances of other comprehensive loss, net of taxes, for the six months ended December 31, 2016:
|
|
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
|
|
|
(193
|
)
|
|
|
93
|
|
|
|
(178
|
)
|
|
|
(278
|
)
|
G
ains reclassified from accumulated other comprehensive income
|
|
|
-
|
|
|
|
(317
|
)
|
|
|
-
|
|
|
|
(317
|
)
|
Net current period other comprehensive loss
|
|
|
(193
|
)
|
|
|
(224
|
)
|
|
|
(178
|
)
|
|
|
(595
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(136
|
)
|
|
$
|
19
|
|
|
$
|
(207
|
)
|
|
$
|
(324
|
)
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share dat
NOTE 12:- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Cont.)
The following table summarizes the changes in accumulated balances of other comprehensive income, net of taxes, for the year ended June 30, 2016:
|
|
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
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(222
|
)
|
|
$
|
(222
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
56
|
|
|
|
412
|
|
|
|
193
|
|
|
|
661
|
|
Losses (gains) reclassified from accumulated other comprehensive income (loss)
|
|
|
1
|
|
|
|
(169
|
)
|
|
|
-
|
|
|
|
(168
|
)
|
Net current period other comprehensive income
|
|
|
57
|
|
|
|
243
|
|
|
|
193
|
|
|
|
493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
57
|
|
|
$
|
243
|
|
|
$
|
(29
|
)
|
|
$
|
271
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 12:- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Cont.)
The
following tables provides details about reclassifications out of accumulated other comprehensive income (loss):
Details about Accumulated Other Comprehensive
Loss Components
|
|
Amount Reclassified from
Accumulated Other
Comprehensive Loss
|
|
Affected Line Item in the Statements of Operations
|
|
|
Year ended
|
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
Unrealized gains on cash flow hedges
|
|
$
|
166
|
|
Cost of revenues
|
|
|
|
570
|
|
Research and development
|
|
|
|
151
|
|
Sales and marketing
|
|
|
|
153
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
1,040
|
|
Total, before income taxes
|
|
|
|
|
|
|
|
|
|
46
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
$
|
994
|
|
Total, net of income taxes
|
|
|
|
|
|
|
Unrealized gains on available-for-sale marketable securities
|
|
$
|
-
|
|
Financial income, net
|
|
|
|
-
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
$
|
-
|
|
Total, net of income taxes
|
|
|
|
|
|
|
|
|
$
|
994
|
|
Total, net of income taxes
|
|
|
|
|
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 12:- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Cont.)
Details about Accumulated Other Comprehensive
Loss Components
|
|
Amount Reclassified from
Accumulated Other
Comprehensive Loss
|
|
Affected Line Item in the Statements of Operations
|
|
|
Six months ended
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
Unrealized gains on cash flow hedges
|
|
$
|
47
|
|
Cost of revenues
|
|
|
|
227
|
|
Research and development
|
|
|
|
58
|
|
Sales and marketing
|
|
|
|
46
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
378
|
|
Total, before income taxes
|
|
|
|
|
|
|
|
|
|
61
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
$
|
317
|
|
Total, net of income taxes
|
|
|
|
|
|
|
Unrealized gains on available-for-sale marketable securities
|
|
$
|
-
|
|
Financial income, net
|
|
|
|
-
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
$
|
-
|
|
Total, net of income taxes
|
|
|
|
|
|
|
|
|
$
|
317
|
|
Total, net of income taxes
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 12:- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Cont.)
Details about Accumulated Other Comprehensive
Income Components
|
|
Amount Reclassified from
Accumulated Other
Comprehensive Income
|
|
Affected Line Item in the Statements of Operations
|
|
|
Year ended
|
|
|
|
|
June 30, 2016
|
|
|
|
|
|
|
|
Unrealized gains on cash flow hedges
|
|
$
|
30
|
|
Cost of revenues
|
|
|
|
115
|
|
Research and development
|
|
|
|
33
|
|
Sales and marketing
|
|
|
|
24
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
202
|
|
Total, before income taxes
|
|
|
|
|
|
|
|
|
|
33
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
$
|
169
|
|
Total, net of income taxes
|
|
|
|
|
|
|
Unrealized losses on available-for-sale marketable securities
|
|
$
|
(1
|
)
|
Financial income, net
|
|
|
|
-
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
$
|
(1
|
)
|
Total, net of income taxes
|
|
|
|
|
|
|
|
|
$
|
168
|
|
Total, net of income taxes
|
No amounts were reclassified from accumulated other comprehensive income for the year ended June 30, 2015.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 13:- DERIVATIVE INSTRUMENTS
The fair value of the Company’s outstanding derivative instruments is as follows:
|
|
As of December 31,
|
|
|
As of June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets:
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
Foreign exchange option contracts
|
|
$
|
221
|
|
|
$
|
-
|
|
|
$
|
214
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
|
-
|
|
|
|
19
|
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
221
|
|
|
$
|
19
|
|
|
$
|
504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange option contracts
|
|
$
|
(285
|
)
|
|
$
|
-
|
|
|
$
|
(23
|
)
|
Foreign exchange forward contracts
|
|
|
(116
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(401
|
)
|
|
$
|
-
|
|
|
$
|
(23
|
)
|
The increase (decrease) in unrealized gains (losses) recognized in “accumulated other comprehensive income (loss)” on derivatives, net of tax effect, is as follows:
|
|
Year ended
December 31,
|
|
|
Six months ended
December 31,
|
|
|
Year ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
$
|
975
|
|
|
$
|
93
|
|
|
$
|
412
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
975
|
|
|
$
|
93
|
|
|
$
|
412
|
|
|
$
|
-
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 13:- DERIVATIVE INSTRUMENTS (Cont.)
The net (gains) losses reclassified from “accumulated other comprehensive income (loss)” into income (loss), are as follows:
|
|
Year ended
December 31,
|
|
|
Six months ended
December 31,
|
|
|
Year ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
$
|
994
|
|
|
$
|
(317
|
)
|
|
$
|
(169
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
994
|
|
|
$
|
(317
|
)
|
|
$
|
(169
|
)
|
|
$
|
-
|
|
The Company recorded in the financial income (expenses), a net gain (loss) of $1,334, $(87), $(136), and $1,721 during the year ended December 2017, the six months ended December 31, 2016, and years ended June 30, 2016 and 2015, respectively, related to derivatives not qualified as hedging instruments.
NOTE 14:-
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
The Company and its subsidiaries lease their operating facilities under non-cancelable operating lease agreements, which expire over the next ten years, with the last ending in September 2027.
On July 10, 2017 the Company entered into a ten years lease agreement, intended for the establishment of a manufacturing facility and includes three extension period options. The Company accounts for this lease as an operating lease according to ASC 840 (“Leases”).
The future minimum lease commitments of the Company and its subsidiaries under various non-cancelable operating lease agreements in respect of premises, that are in effect as of December 31, 2017, are as follows:
2018
|
|
|
4,520
|
|
2019
|
|
|
3,801
|
|
2020
|
|
|
3,094
|
|
2021
|
|
|
2,512
|
|
2022
|
|
|
2,472
|
|
2023 and thereafter
|
|
|
6,934
|
|
|
|
|
|
|
|
|
$
|
23,333
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 14:-
|
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
Rent expenses for the year ended December 31, 2017, the six months ended December 31, 2016, and for the years ended June 30, 2016 and 2015
were approximately $3,449, $1,199, $2,238, and $1,714, respectively.
As of December 31, 2017, contingent liabilities exist regarding guarantees in the amount of $1,191, $58, and $184 in respect of office rent lease agreements, customs transactions and credit card limits, respectively.
|
c.
|
Governmental commitments:
|
The Company has received royalty-bearing grants sponsored by the Israeli government for the support of research and development activities. Through June 30, 2015, the Company had obtained grants from the
IIA
for certain of the Company’s research and development projects. The Company is obligated to pay royalties to the
IIA
, amounting to 4% in the first three years, and 4.5% thereafter, of the sales of the products and other related revenues (based on the dollar equivalent amount of the grant) generated from such projects, up to 100% of the grants received. The royalty payment obligations also bear interest at the LIBOR rate. The obligation to pay these royalties is contingent on actual sales of the applicable products and in the absence of such sales, no payment is required.
As of December 31, 2016, the aggregate contingent liability to the
IIA
with respect to royalty-bearing participation, net of royalties accrued, amounted to $1,022 out of which the Company already recorded a provision for royalties in the amount of $260. The total research and development grants that the Company has received from the
IIA
as of December 31, 2016 were $990. The accumulated interest as of December 31, 2016 was $32.
As of December 31, 2017, the Company redeemed its entire obligation to the
IIA
.
Royalty expenses relating to the
IIA
grants included in cost of revenues for the year ended December 31, 2017 and the six months ended December 31, 2016, amounted to $748 and $260, respectively.
As of June 30, 2016 and 2015, there have been no sales or revenues on which royalties are payables.
The Israeli Research and Development Law provides that know-how developed under an approved research and development program may not be transferred to third parties without the approval of the
IIA
. Such approval is not required for the sale or export of any products resulting from such research or development.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 14:-
|
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
The
IIA
, under special circumstances, may approve the transfer of
IIA
-funded know-how outside Israel, in the following cases: (a) the grant recipient pays to the
IIA
a portion of the sale price paid in consideration for such
IIA
-funded know-how or in consideration for the sale of the grant recipient itself, as the case may be, which portion will not exceed six times the amount of the grants received plus interest (or three times the amount of the grant received plus interest, in the event that the recipient of the know-how has committed to retain the R&D activities of the grant recipient in Israel after the transfer); (b) the grant recipient receives know-how from a third party in exchange for its
IIA
-funded know-how; (c) such transfer of
IIA
-funded know-how arises in connection with certain types of cooperation in research and development activities; or (d) if such transfer of know-how arises in connection with a liquidation by reason of insolvency or receivership of the grant recipient.
|
e.
|
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, 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 December 31, 2017, the Company had non-cancelable purchase obligations totaling approximately $196,222, out of which the Company already recorded a provision for loss in the amount of $1,627 (see also Note 8).
As of December 31, 2017, the Company had contractual obligations for capital expenditures totaling approximately $23,263. These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s manufacturing.
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.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 15:-
|
LEASE INCENTIVE OBLIGATION
|
The Company has an operating lease agreement for building in Herzliya, Israel. In connection with this lease, the Company and its third party lessor (the "Lessor") agreed that the Lessor would pay approximately $2,938 for certain leasehold improvements on behalf of the Company.
As of December 31, 2017, the Company received in cash the entire amount of $2,938 from the Lessor in connection with such leasehold improvements. These leasehold improvements are accounted for as a lease incentive obligation, which is recorded under long-term liabilities, net of the current portion recorded in accrued expenses and other accounts payable under current liabilities. The lease incentive obligation is being amortized over the life of the lease and as a reduction to rent expense. As of December 31, 2017, the net amortized amount of lease incentive obligation is $2,049, out of which $1,765 was recorded under long-term liabilities.
NOTE 16:-
|
CONVERTIBLE PREFERRED STOCK
|
|
a.
|
Composition of convertible preferred stock of the Company:
|
|
|
Authorized
|
|
|
Issued and outstanding
|
|
|
|
Number of shares
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock of $0.0001 par value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
95,000,000
|
|
|
|
95,000,000
|
|
|
|
95,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
The Company issued Series A through E Preferred stock between the years 2006 and 2015. The Company classified the convertible preferred stock outside of stockholders’ equity (deficiency) as required by ASC 480-10-S99-3A and ASR 268, since the shares possessed deemed liquidation features that could trigger a distribution of cash or assets not solely within the Company’s control.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 16:-
|
CONVERTIBLE PREFERRED STOCK (Cont.)
|
|
b.
|
Prior to the consummation of the Company’s IPO on March 31, 2015, the Company had the following convertible preferred stock outstanding, all of which was converted into common stock following with the IPO on March 31, 2015 (see Note 1c) which resulted in classification of convertible preferred stock temporary equity in the amount of $140,915 into stockholders’ equity (deficiency):
|
|
|
Shares outstanding
|
|
|
Number of shares of Common Stock issued upon conversion
|
|
|
|
|
|
|
|
|
Series A Preferred stock
|
|
|
15,558,830
|
|
|
|
5,186,276
|
|
Series B Preferred stock
|
|
|
18,760,196
|
|
|
|
6,253,398
|
|
Series C Preferred stock
|
|
|
15,984,655
|
|
|
|
5,328,217
|
|
Series D Preferred stock
|
|
|
16,024,251
|
|
|
|
5,341,416
|
|
Series D-1 Preferred stock
|
|
|
2,165,441
|
|
|
|
721,813
|
|
Series D-2 Preferred stock
|
|
|
2,598,528
|
|
|
|
866,175
|
|
Series D-3 Preferred stock
|
|
|
4,330,872
|
|
|
|
1,443,623
|
|
Series E Preferred stock
|
|
|
9,321,019
|
|
|
|
3,107,005
|
|
|
|
|
84,743,792
|
|
|
|
28,247,923
|
|
|
a.
|
Composition of common stock capital of the Company:
|
|
|
Authorized
|
|
|
Issued and outstanding
|
|
|
|
Number of shares
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock of $0.0001 par value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
125,000,000
|
|
|
|
125,000,000
|
|
|
|
125,000,000
|
|
|
|
43,812,601
|
|
|
|
41,259,391
|
|
|
|
40,889,922
|
|
|
b.
|
Common stock rights:
Common stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each share of common stock shall have one vote for all purposes; to share equally, on a per share basis, in bonuses, profits, or distributions out of fund legally available therefor; and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 17:-
STOCK CAPITAL (Cont.)
|
c.
|
As a result of the reverse stock split, (i) every 3 shares of authorized, issued, and outstanding common stock was decreased to one share of authorized, issued, and outstanding common stock, (ii) the number of shares of common stock into which each outstanding warrant or option to purchase common stock is exercisable was proportionally decreased on a 1-for-3 basis, and (iii) all share prices and exercise prices were proportionately increased. All of the share numbers, share prices, and exercise prices have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this 1-for-3 reverse stock split.
|
|
d.
|
Stock option plans:
The Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007. The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may 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 December 31, 2017, a total of 5,890,087 shares of common stock were reserved for issuance pursuant to stock awards 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 5% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year; provided, however, that the Company’s board of directors may determine 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 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 10,000,000. As of December 31, 2017, an aggregate of 2,003,126 options are still available for future grant under the 2015 Plan.
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 17:-
|
STOCK CAPITAL (Cont.)
|
A summary of the activity in the share options granted to employees and members of the board of directors for the year ended December 31, 2017 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
|
|
|
(1,758,288
|
)
|
|
|
2.70
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(27,551
|
)
|
|
|
10.06
|
|
|
|
|
|
|
|
|
|
Outstanding as of December 31, 2017
|
|
|
3,524,310
|
|
|
|
7.40
|
|
|
|
6.35
|
|
|
|
106,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest as of December 31, 2017
|
|
|
3,442,470
|
|
|
|
7.32
|
|
|
|
6.34
|
|
|
|
104,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of December 31, 2017
|
|
|
2,406,369
|
|
|
|
5.58
|
|
|
|
5.64
|
|
|
|
76,931
|
|
The aggregate intrinsic value in the tables above 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 year ended December 31, 2017, the six months ended December 31, 2016, and the year ended June 30, 2016 was $44,625, $1,790, and $30,670, respectively.
The weighted average grant date fair values of options granted to employees and executive directors during the year ended December 31, 2017, the six months ended December 31, 2016, and the years ended June 30, 2016 and 2015 were $7.94, $8.86, $13.27, and $4.24, respectively.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 17:-
|
STOCK CAPITAL (Cont.)
|
The options outstanding as of December 31, 2017, have been separated into exercise price ranges as follows:
|
|
|
Options
|
|
|
Weighted
|
|
|
Options
|
|
|
Weighted
|
|
|
|
|
outstanding
|
|
|
average
|
|
|
exercisable
|
|
|
average
|
|
Range of
|
|
|
as of
|
|
|
remaining
|
|
|
as of
|
|
|
remaining
|
|
exercise
|
|
|
December 31,
|
|
|
contractual
|
|
|
December 31,
|
|
|
contractual
|
|
price
|
|
|
2017
|
|
|
Life in years
|
|
|
2017
|
|
|
Life in years
|
|
$
|
0.87 - $1.50
|
|
|
|
202,281
|
|
|
|
1.44
|
|
|
|
202,281
|
|
|
|
1.44
|
|
$
|
1.68 - $2.46
|
|
|
|
660,264
|
|
|
|
3.68
|
|
|
|
660,264
|
|
|
|
3.68
|
|
$
|
3.03 - $5.01
|
|
|
|
1,778,547
|
|
|
|
6.81
|
|
|
|
1,263,352
|
|
|
|
6.79
|
|
$
|
9.36
|
|
|
|
15,267
|
|
|
|
7.08
|
|
|
|
8,949
|
|
|
|
7.08
|
|
$
|
13.70 – $14.85
|
|
|
|
438,430
|
|
|
|
9.12
|
|
|
|
78,309
|
|
|
|
9.02
|
|
$
|
15.34 – $17.14
|
|
|
|
193,571
|
|
|
|
8.61
|
|
|
|
60,314
|
|
|
|
8.49
|
|
$
|
20.81 - $25.09
|
|
|
|
235,950
|
|
|
|
7.57
|
|
|
|
132,900
|
|
|
|
7.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,524,310
|
|
|
|
6.35
|
|
|
|
2,406,369
|
|
|
|
5.64
|
|
A summary of the activity in the RSUs granted to employees and members of the board of directors for the year ended December 31, 2017, is as follows:
|
|
No. of
RSUs
|
|
|
Weighted average
grant date
fair value
|
|
Unvested as of January 1, 2017
|
|
|
1,515,018
|
|
|
|
19.74
|
|
Granted
|
|
|
1,252,815
|
|
|
|
27.30
|
|
Vested
|
|
|
(547,104
|
)
|
|
|
20.07
|
|
Forfeited
|
|
|
(132,737
|
)
|
|
|
18.65
|
|
Unvested as of December 31, 2017
|
|
|
2,087,992
|
|
|
|
24.33
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 17:-
|
STOCK CAPITAL (Cont.)
|
Options and RSUs issued to non-employee consultants:
The Company has granted options to purchase common shares and RSU’s to non-employee consultants as of December 31, 2017 as follows:
|
|
Options & RSU’s
|
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
|
|
|
|
Exercisable
|
|
|
|
|
as of
|
|
|
|
|
|
as of
|
|
|
Issuance
|
|
December 31,
|
|
|
Exercise
|
|
|
December 31,
|
|
Exercisable
|
Date
|
|
2017
|
|
|
price
|
|
|
2017
|
|
Through
|
October 24, 2012
|
|
|
2,000
|
|
|
|
2.46
|
|
|
|
2,000
|
|
October 24, 2022
|
January 27, 2014
|
|
|
1,144
|
|
|
|
3.51
|
|
|
|
713
|
|
January 27, 2024
|
May 1, 2014
|
|
|
2,000
|
|
|
|
3.51
|
|
|
|
1,875
|
|
May 1, 2024
|
September 17, 2014
|
|
|
6,498
|
|
|
|
3.96
|
|
|
|
5,509
|
|
September 17, 2024
|
October 29, 2014
|
|
|
2,668
|
|
|
|
5.01
|
|
|
|
224
|
|
October 29, 2024
|
August 19, 2015
|
|
|
10,439
|
|
|
|
0.00
|
|
|
|
-
|
|
|
November 8, 2015
|
|
|
1,449
|
|
|
|
0.00
|
|
|
|
-
|
|
|
April 18, 2016
|
|
|
1,250
|
|
|
|
0.00
|
|
|
|
-
|
|
|
July 11, 2016
|
|
|
1,501
|
|
|
|
0.00
|
|
|
|
-
|
|
|
September 21, 2016
|
|
|
4,000
|
|
|
|
15.34
|
|
|
|
250
|
|
September 21, 2026
|
September 21, 2016
|
|
|
3,813
|
|
|
|
0.00
|
|
|
|
-
|
|
|
March 15, 2017
|
|
|
7,000
|
|
|
|
0.00
|
|
|
|
-
|
|
|
March 15, 2017
|
|
|
7,500
|
|
|
|
13.70
|
|
|
|
500
|
|
March 15, 2027
|
March 27, 2017
|
|
|
4,000
|
|
|
|
0.00
|
|
|
|
-
|
|
|
November 20, 2017
|
|
|
6,000
|
|
|
|
0.00
|
|
|
|
-
|
|
|
December 26, 2017
|
|
|
2,667
|
|
|
|
0.00
|
|
|
|
667
|
|
|
|
|
|
63,929
|
|
|
|
|
|
|
|
11,738
|
|
|
The Company accounts for its options granted to non-employee consultants under the fair value method of ASC 505-50 (“Equity-Based Payments to Non-Employees”).
In connection with the grant of stock options to non-employee consultants, the Company recorded stock compensation expenses in
the year ended December 31, 2017, the six months ended December 31, 2016, and the years ended June 30,
2016 and 2015 in the amounts of $986, $66, $524, and $563, respectively.
|
e.
|
Employee Stock Purchase Plan (“ESPP”):
The Company adopted an Employee Stock Purchase Plan (the “ESPP”) effective upon the consummation of the IPO. As of December 31, 2017, 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 17:-
|
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 December 31, 2017, 268,377 common stock shares had been purchased under the ESPP.
As of December 31, 2017, 1,032,777 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.
|
f.
|
Stock-based compensation expense for employees and non-employee consultants:
|
The Company recognized stock-based compensation expenses related to stock options and RSUs granted to employees and non-employee consultants and ESPP in the consolidated statement of operations for the year ended December 31, 2017, the six months ended December 31, 2016, and for the years ended June 30, 2016 and 2015, as follows:
|
|
Year ended
December 31,
|
|
|
Six months ended
December 31,
|
|
|
Year ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
$
|
2,250
|
|
|
$
|
871
|
|
|
$
|
945
|
|
|
$
|
442
|
|
Research and development, net
|
|
|
5,703
|
|
|
|
2,061
|
|
|
|
2,364
|
|
|
|
635
|
|
Selling and marketing
|
|
|
5,387
|
|
|
|
1,852
|
|
|
|
2,915
|
|
|
|
809
|
|
General and administrative
|
|
|
4,224
|
|
|
|
1,816
|
|
|
|
2,820
|
|
|
|
1,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
$
|
17,564
|
|
|
$
|
6,600
|
|
|
$
|
9,044
|
|
|
$
|
2,956
|
|
As of December 31, 2017, there was a total unrecognized compensation expense of $56,867 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 January 1, 2018 through November 30, 2021.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 18:-
INCOME TAXES
The Company is subject to U.S. federal tax at the rate of 34%.
On December 22, 2017, the TCJA was signed into law making significant changes to U.S. income tax law. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company has calculated its best estimate of the impact of the TCJA in its year end income tax provision in accordance with its understanding of the TCJA and guidance available as of the date of this filing and as a result has recorded $19.2 million as an additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted.
The provisional amount related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future was $0.5 million. Additional work is necessary to reflect the actual rate at which those deferred tax assets and liabilities expected to reverse.
The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $18.7 million based on cumulative foreign earnings of $145 million. Additional work is necessary to do a more detailed analysis of historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 when the analysis is complete.
Additionally, the TCJA requires certain Global Intangible Low Taxed Income (“GILTI”) earned by controlled foreign corporations (“CFCs”) to be included in the gross income of the CFCs’ U.S. shareholder. GAAP allows the Company to either: (i) treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”); or (ii) factor such amounts into its measurement of deferred taxes (the “deferred method”).
The GILTI tax rules will become effective for the 2018 tax year and therefore the Company has not made any adjustments related to the potential GILTI tax in its financial statements for the year ended December 31, 2017. The Company continues to evaluate the impact of the new GILTI tax rules and the application of ASC 740 on its financial statements.
|
b.
|
The Company’s German subsidiary is subject to German tax at the rate of 33%.
|
|
c.
|
Corporate tax in Israel:
|
Taxable income of Israeli companies is subject to corporate tax at the rate of 26.5% in the year
s
ended June 30, 2014 and 2015, and 25% in the year ended June 30, 2016 onwards.
The Israeli subsidiary is also eligible for tax benefits as further described in note 18k.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 18:-
INCOME TAXES (Cont.)
In December 2016, the Israeli Parliament approved the Economic Efficiency Law
2016
(Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), which reduces the corporate income tax rate to 24% (instead of 25%) effective from January 1, 2017 and to 23% effective from January 1, 2018.
|
d.
|
Carryforward tax losses:
|
As of December 31, 2017, the Company has no federal or state carryforward tax losses.
As of December 31, 2017, the Israeli and German subsidiaries have no net carryforward tax losses.
|
e.
|
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.
The Company’s Israeli subsidiary’s tax-exempt profit from Benefited Enterprises is permanently reinvested, as the Company’s management and the Board of Directors has determined that the Company does not currently intend to distribute dividends. Therefore, deferred taxes have not been provided for such tax-exempt income. The Company intends to continue to reinvest these profits and does not currently foresee a need to distribute dividends out of such tax-exempt income.
Significant components of the Company’s deferred tax liabilities and assets are as follows:
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Assets in respect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carryforward tax losses
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
|
|
Research and Development carryforward expenses- temporary differences
|
|
|
5,380
|
|
|
|
908
|
|
|
|
743
|
|
Stock based compensation
|
|
|
1,622
|
|
|
|
1,039
|
|
|
|
562
|
|
Other reserves
|
|
|
1,338
|
|
|
|
868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
$
|
8,340
|
|
|
$
|
2,815
|
|
|
$
|
6,296
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 18:-
INCOME TAXES (Cont.)
The Company remeasured these non-current assets and liabilities at the applicable tax rate of 21% in accordance with the TCJA. The remeasurement resulted in a total decrease in these assets of $0.5 million.
|
f.
|
Uncertain tax positions:
|
As of December 31, 2017 and 2016, the Company’s Israeli subsidiary recognized a total liability for uncertain tax positions in the amount of $0.6 and $0.3 million, respectively.
|
g.
|
Income before taxes is comprised as follows:
|
|
|
Year Ended
December 31, 2017
|
|
|
Six months
ended
December 31, 2016
|
|
|
Year ended June 30,
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
7,461
|
|
|
$
|
3,165
|
|
|
$
|
3,758
|
|
|
$
|
2,830
|
|
Foreign
|
|
|
92,783
|
|
|
|
27,433
|
|
|
|
68,472
|
|
|
|
20,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
100,244
|
|
|
$
|
30,598
|
|
|
$
|
72,230
|
|
|
$
|
23,076
|
|
|
h.
|
Taxes on income (tax benefit) are comprised as follows:
|
|
|
Year ended December 31, 2017
|
|
|
Six months ended December 31, 2016
|
|
|
Year ended June 30,
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Domestic taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
1,047
|
|
|
|
1,737
|
|
|
|
1,655
|
|
Deferred
|
|
|
(42
|
)
|
|
|
507
|
|
|
|
(1,380
|
)
|
|
|
-
|
|
Foreign taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
1,639
|
|
|
|
518
|
|
|
|
263
|
|
|
|
300
|
|
Deferred
|
|
|
(5,414
|
)
|
|
|
3,145
|
|
|
|
(4,999
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16,072
|
|
|
$
|
5,217
|
|
|
$
|
(4,379
|
)
|
|
$
|
1,955
|
|
|
i.
|
Reconciliation of theoretical tax expense to actual tax expense:
|
The differences between the statutory tax rate of the Company and the effective tax rate are primarily accounted for by the non-recognition of tax benefits from accumulated net carryforward tax losses among the Company and various subsidiaries due to uncertainty of the realization of such tax benefits.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 18:-
INCOME TAXES (Cont.)
A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company, and the actual tax expense (benefit) as reported in the consolidated statements of operations is as follows:
|
|
Year ended
December 31,
|
|
|
Six months
ended
December 31,
|
|
|
Year ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes, as reported in the consolidated statements of operations
|
|
$
|
100,244
|
|
|
$
|
30,598
|
|
|
$
|
72,230
|
|
|
$
|
23,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory tax rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
35
|
%
|
Theoretical tax benefits on the above amount at the US statutory tax rate
|
|
|
34,083
|
|
|
|
10,403
|
|
|
|
24,558
|
|
|
|
8,077
|
|
Income tax at rate other than the U.S. statutory tax rate
|
|
|
(34,734
|
)
|
|
|
(5,396
|
)
|
|
|
(30,229
|
)
|
|
|
(9,305
|
)
|
Tax Cuts and Jobs Act of 2017
|
|
|
18,735
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Non-deductible expenses
|
|
|
(1,545
|
)
|
|
|
164
|
|
|
|
1,514
|
|
|
|
3,003
|
|
Other individually immaterial income tax items
|
|
|
(467
|
)
|
|
|
46
|
|
|
|
(222
|
)
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual tax expense (tax benefit)
|
|
$
|
16,072
|
|
|
$
|
5,217
|
|
|
$
|
(4,379
|
)
|
|
$
|
1,955
|
|
As of December 31, 2017, the Company and certain of its subsidiaries filed U.S. federal and various state and foreign income tax returns. The statute of limitations relating to the consolidated U.S. federal income tax return is closed for all tax years up to and including 2014.
The statute of limitations related to tax returns of the Company’s Israeli subsidiary is closed for all tax years up to and including 2012.
The statute of limitations related to tax returns of the Company’s German subsidiary is closed for all tax years up to and including 2014.
With respect to the Company’s Chinese, Australian, Canadian, Dutch, Japanese, UK, French, Italian, Bulgarian, Turkish, Belgian, Indian, Swedish, and Romanian subsidiaries, the statute of limitations related to its tax returns is open for all tax years since incorporation.
The Company believes that it has adequately provided for reasonably foreseeable outcomes related to tax audits and settlements. The final tax outcome of any Company tax audits could be different from that which is reflected in the Company’s income tax provisions and accruals. Such differences could have a material effect on the Company’s income tax provision and net income (loss) in the period in which such determination is made.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 18:-
INCOME TAXES (Cont.)
|
k.
|
Tax benefits for Israeli companies under the Law for the Encouragement of Capital Investments, 1959 (the “Investment Law”):
|
The Israeli subsidiary elected tax year 2012 as a "Year of Election" for “Beneficiary Enterprise” status under the Investment Law. According to the Investment Law, the Israeli subsidiary elected to participate in the alternative benefits program which provides certain benefits, including tax exemptions and reduced tax rates. Income not eligible for Beneficiary Enterprise benefits is taxed at a regular corporate tax rate (which depend on, inter alia, the geographic location in Israel). Upon meeting the requirements under the Investment Law,
undistributed income derived from Beneficiary Enterprise from productive activity will be exempt from tax for two years from the year in which the Israeli subsidiary first has taxable income, provided that 12 years have not passed from the beginning of the year of election. In the six months ended December 31, 2016, the Israeli subsidiary utilized all of its operating loss carryforwards in Israel and became profitable for tax purposes. As of December 31, 2017, the Israeli subsidiary is entitled to benefit from a two year tax exemption as part of the Beneficiary Enterprise regime.
If dividends are distributed out of tax-exempt profits, the Israeli subsidiary will then become liable for tax, with respect of the gross amount of the dividend at the rate applicable to its profits from the Beneficiary Enterprise in the year in which the income was earned, as if it had not chosen the alternative track of benefits.
The dividend recipient is subject to withholding tax at the rate of 15% applicable to dividends from Beneficiary enterprises, or such lower rate as may be provided in an applicable tax treaty. If the dividend is distributed during the tax benefits period or within twelve years thereafter. This limitation does not apply to a foreign investors' company. The Israeli subsidiary currently has no plans to distribute dividends and intends to retain future earnings to finance the development of its business.
Through December 31, 2017, the Israeli subsidiary had generated income under the provision of the Investment Law.
As of December 31, 2017, approximately $151
million was derived from tax exempt profits earned by the Israeli subsidiary “Beneficiary Enterprises.” The Company has determined that such tax-exempt income will not be distributed as dividends and intends to reinvest the amount of its tax exempt income earned by the Israeli subsidiary. Accordingly, no provision for deferred income taxes has been provided on income attributable to the Israeli subsidiary “Beneficiary Enterprises” as such income is essentially permanently reinvested.
If the Israeli subsidiary retained tax-exempt income is distributed, the income would be taxed at the applicable corporate tax rate which depend on the foreign ownership in each tax year, the tax rate can range between 10% (when foreign ownership exceeds 90%) to 25% (when foreign ownership exceeds 49%).
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 18:-
INCOME TAXES (Cont.)
Amendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 71):
On August 5, 2013, the Israeli Parliament issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013 which consists of Amendment 71 to the Law for the Encouragement of Capital Investments ("the Amendment"). According to the Amendment, the tax rate on preferred income from a preferred enterprise in 2014 and thereafter will be 16% (in development area A (as defined therein and which details specific areas in development in Israel) will be 9%).
The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings as above will be subject to tax at a rate of 20%.
Amendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 73):
In December 2016, the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which includes Amendment 73 to the Law for the Encouragement of Capital Investments ("the 2017 Amendment") was published. According to the 2017 Amendment, a preferred enterprise located in development area A will be subject to a tax rate of 7.5% instead of 9% effective from January 1, 2017 and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16%).
The 2017 Amendment also prescribes special tax tracks for technological enterprises, which are subject to rules that were issued by the Ministry of Finance.
The new tax tracks under the 2017 Amendment are as follows:
According to the 2017 Amendment, preferred technological enterprise is an enterprise for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. A technological preferred enterprise, as defined in the Investment Law, which is located in the center of Israel will be subject to tax at a rate of 12% on profits deriving from intellectual property (in development area A - a tax rate of 7.5%).
Special preferred technological enterprise is an enterprise for which total consolidated revenues of its parent company and all subsidiaries exceed NIS 10 billion. Such enterprise will be subject to tax at a rate of 6% on profits deriving from intellectual property, regardless of the enterprise's geographical location.
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 18:-
INCOME TAXES (Cont.)
Any dividends distributed deriving from income from the preferred technological enterprises or special preferred technological enterprise will be subject to tax at a rate of 20%. The 2017 Amendment further provides that, in certain circumstances, a dividend distributed to a foreign corporate shareholder, would be subject to tax at a rate of 4% (if the amount of foreign investors exceeds 90%).
The Israeli subsidiary is entitle to the above mentioned preferred technological enterprise benefits and will be subject to tax at a rate of 12% on profits deriving from intellectual property or 7.5% in development area A, under the 2017 Amendment.
Tax Benefits for Research and Development:
Israeli tax law (section 20a to the Israeli Tax Ordinance) allows, under certain conditions, a tax deduction for research and development expenses, including capital expenses, for the year in which they are paid. Such expenses must relate to scientific research in industry, agriculture, transportation, or energy, and must be approved by the relevant Israeli government ministry, determined by the field of research. Furthermore, the research and development must be for the promotion of the company’s business and carried out by or on behalf of the company seeking such tax deduction. However, the amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific research and development projects. As for expenses incurred in scientific research that is not approved by the relevant Israeli government ministry, they will be deductible over a three-year period starting from the tax year in which they are paid.
NOTE 19:-
|
FINANCIAL EXPENSES (INCOME), NET
|
|
|
Year ended
December 31,
|
|
|
Six months
ended
December 31,
|
|
|
Year ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement of warrants to purchase convertible preferred stock
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,350
|
|
Interest on term loan
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
579
|
|
Other financial expenses related to term loan
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
373
|
|
Expenses (income) related to hedging transaction
|
|
|
1,334
|
|
|
|
87
|
|
|
|
136
|
|
|
|
(1,721
|
)
|
Interest on short- term loan
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
316
|
|
Interest on marketable securities
|
|
|
(4,398
|
)
|
|
|
(1,504
|
)
|
|
|
(1,112
|
)
|
|
|
-
|
|
Amortization of marketable securities premium and accretion of discount, net
|
|
|
2,017
|
|
|
|
685
|
|
|
|
532
|
|
|
|
-
|
|
Exchange rate loss (income), net, bank charges and other finance expenses
|
|
|
(8,111
|
)
|
|
|
3,521
|
|
|
|
(27
|
)
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(9,158
|
)
|
|
$
|
2,789
|
|
|
$
|
(471
|
)
|
|
$
|
5,077
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 20:-
|
GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATA
|
Summary information about geographic areas:
ASC 280 (“Segment Reporting”) establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company manages its business on the basis of one reportable segment, and derives revenues from selling its products (see Note 1a for a brief description of the Company’s business).
The following is a summary of revenues within geographic areas:
|
|
Year ended
December 31,
|
|
|
Six months
ended
December 31,
|
|
|
Year ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues based on Customers’ location:
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
348,949
|
|
|
$
|
160,321
|
|
|
$
|
334,260
|
|
|
$
|
238,340
|
|
Netherlands
|
|
|
70,067
|
|
|
|
23,099
|
|
|
|
36,377
|
|
|
|
21,349
|
|
Europe (*)
|
|
|
128,295
|
|
|
|
37,500
|
|
|
|
74,830
|
|
|
|
44,104
|
|
Rest of the World
|
|
|
59,734
|
|
|
|
19,077
|
|
|
|
44,376
|
|
|
|
21,285
|
|
Total revenues
|
|
$
|
607,045
|
|
|
$
|
239,997
|
|
|
$
|
489,843
|
|
|
$
|
325,078
|
|
(*) Except for Netherlands
Major customer data as a percentage of total revenues:
|
|
Year ended
December 31,
|
|
|
Six months
ended
December 31,
|
|
|
Year ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer A
|
|
|
14.8
|
%
|
|
|
11.2
|
%
|
|
|
11.6
|
%
|
|
|
4.9
|
%
|
Customer B
|
|
|
8.1
|
%
|
|
|
8.4
|
%
|
|
|
10.1
|
%
|
|
|
5.4
|
%
|
Customer C
|
|
|
3.0
|
%
|
|
|
8.7
|
%
|
|
|
10.9
|
%
|
|
|
24.6
|
%
|
The following is a summary of revenues by product family:
|
|
Year ended
December 31,
|
|
|
Six months
ended
December 31,
|
|
|
Year ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inverters
|
|
$
|
290,632
|
|
|
$
|
112,585
|
|
|
$
|
223,756
|
|
|
$
|
156,984
|
|
Optimizers
|
|
|
286,856
|
|
|
|
115,229
|
|
|
|
244,852
|
|
|
|
158,513
|
|
Others
|
|
|
29,557
|
|
|
|
12,183
|
|
|
|
21,235
|
|
|
|
9,581
|
|
Total revenues
|
|
$
|
607,045
|
|
|
$
|
239,997
|
|
|
$
|
489,843
|
|
|
$
|
325,078
|
|
SOLAREDGE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 20:-
|
GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATA (Cont.)
|
Long-lived assets by geographic region:
|
|
As of December 31,
|
|
|
As of June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Israel
|
|
$
|
43,273
|
|
|
$
|
35,055
|
|
|
$
|
26,751
|
|
U.S.
|
|
|
567
|
|
|
|
515
|
|
|
|
518
|
|
Europe
|
|
|
1,219
|
|
|
|
466
|
|
|
|
508
|
|
China
|
|
|
5,985
|
|
|
|
36
|
|
|
|
31
|
|
Other
|
|
|
138
|
|
|
|
50
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-lived assets*
|
|
$
|
51,182
|
|
|
$
|
36,122
|
|
|
$
|
27,831
|
|
|
*
|
Long-lived assets are comprised of property and equipment, net (marketable securities, prepaid expenses, and lease deposits, intangible assets and deferred tax assets are not included).
|