x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 20-4645388 (I.R.S. Employer Identification No.) | |
1420 N. McDowell Blvd. Petaluma, California | 94954 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth Company | x |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Financial Statements (Unaudited) |
September 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 28,878 | $ | 17,764 | |||
Accounts receivable, net of allowances of $2,824 and $2,921 at September 30, 2017 and December 31, 2016, respectively | 68,869 | 61,019 | |||||
Inventory | 25,316 | 31,960 | |||||
Prepaid expenses and other assets | 13,254 | 7,121 | |||||
Total current assets | 136,317 | 117,864 | |||||
Property and equipment, net | 28,191 | 31,440 | |||||
Goodwill | 3,664 | 3,664 | |||||
Intangibles, net | 591 | 945 | |||||
Other assets | 8,318 | 9,663 | |||||
Total assets | $ | 177,081 | $ | 163,576 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 34,620 | $ | 31,696 | |||
Accrued liabilities | 24,152 | 22,937 | |||||
Deferred revenues, current | 9,014 | 6,411 | |||||
Warranty obligations, current (includes $2,765 and $3,296 measured at fair value at September 30, 2017 and December 31, 2016, respectively) | 7,151 | 8,596 | |||||
Revolving credit facility | — | 10,100 | |||||
Current portion of term loan | 10,552 | 3,032 | |||||
Total current liabilities | 85,489 | 82,772 | |||||
Long-term liabilities: | |||||||
Deferred revenues, noncurrent | 36,327 | 33,893 | |||||
Warranty obligations, noncurrent (includes $8,954 and $7,036 measured at fair value at September 30, 2017 and December 31, 2016, respectively) | 23,201 | 22,818 | |||||
Other liabilities | 2,808 | 2,025 | |||||
Term loan, less current portion | 37,058 | 20,768 | |||||
Total liabilities | 184,883 | 162,276 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.00001 par value, 10,000 shares authorized; none issued and outstanding | — | — | |||||
Common stock, $0.00001 par value, 125,000 and 100,000 shares authorized and 85,217 and 62,269 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 1 | 1 | |||||
Additional paid-in capital | 285,449 | 252,126 | |||||
Accumulated deficit | (292,787 | ) | (250,535 | ) | |||
Accumulated other comprehensive loss | (465 | ) | (292 | ) | |||
Total stockholders’ (deficit) equity | (7,802 | ) | 1,300 | ||||
Total liabilities and stockholders’ (deficit) equity | $ | 177,081 | $ | 163,576 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net revenues | $ | 77,038 | $ | 88,684 | $ | 206,492 | $ | 231,990 | |||||||
Cost of revenues | 60,577 | 72,805 | 169,438 | 190,215 | |||||||||||
Gross profit | 16,461 | 15,879 | 37,054 | 41,775 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 7,397 | 13,169 | 24,949 | 39,326 | |||||||||||
Sales and marketing | 5,453 | 11,016 | 18,186 | 31,218 | |||||||||||
General and administrative | 5,441 | 6,708 | 16,238 | 21,121 | |||||||||||
Restructuring charges | 4,071 | 2,717 | 14,927 | 2,717 | |||||||||||
Total operating expenses | 22,362 | 33,610 | 74,300 | 94,382 | |||||||||||
Loss from operations | (5,901 | ) | (17,731 | ) | (37,246 | ) | (52,607 | ) | |||||||
Other income (expense), net: | |||||||||||||||
Interest expense | (1,760 | ) | (1,234 | ) | (5,979 | ) | (1,598 | ) | |||||||
Other income | 623 | 353 | 1,771 | 655 | |||||||||||
Total other expense, net | (1,137 | ) | (881 | ) | (4,208 | ) | (943 | ) | |||||||
Loss before income taxes | (7,038 | ) | (18,612 | ) | (41,454 | ) | (53,550 | ) | |||||||
Income tax (provision) benefit | 184 | (144 | ) | (798 | ) | (724 | ) | ||||||||
Net loss | $ | (6,854 | ) | $ | (18,756 | ) | $ | (42,252 | ) | $ | (54,274 | ) | |||
Net loss per share: | |||||||||||||||
Basic and diluted | $ | (0.08 | ) | $ | (0.40 | ) | $ | (0.52 | ) | $ | (1.16 | ) | |||
Shares used in per share calculation: | |||||||||||||||
Basic and diluted | 84,862 | 47,278 | 81,993 | 46,704 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net loss | $ | (6,854 | ) | $ | (18,756 | ) | $ | (42,252 | ) | $ | (54,274 | ) | |||
Other comprehensive loss: | |||||||||||||||
Foreign currency translation adjustments | (296 | ) | 54 | (173 | ) | (44 | ) | ||||||||
Comprehensive loss | $ | (7,150 | ) | $ | (18,702 | ) | $ | (42,425 | ) | $ | (54,318 | ) |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (42,252 | ) | $ | (54,274 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 6,763 | 8,039 | |||||
Provision for doubtful accounts | 911 | 3,194 | |||||
Asset impairment and restructuring | 1,638 | 1,440 | |||||
Amortization of debt issuance costs | 1,337 | 101 | |||||
Stock-based compensation | 5,277 | 8,239 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (8,761 | ) | (16,577 | ) | |||
Inventory | 6,644 | 1,699 | |||||
Prepaid expenses and other assets | (5,110 | ) | (3,857 | ) | |||
Accounts payable, accrued and other liabilities | 3,051 | 14,867 | |||||
Warranty obligations | (1,062 | ) | (198 | ) | |||
Deferred revenues | 5,036 | 8,739 | |||||
Net cash used in operating activities | (26,528 | ) | (28,588 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (3,609 | ) | (9,607 | ) | |||
Purchases of intangible assets | — | (678 | ) | ||||
Net cash used in investing activities | (3,609 | ) | (10,285 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock, net of issuance costs | 26,425 | 14,593 | |||||
Proceeds from term loan, net | 24,240 | 24,175 | |||||
Proceeds from borrowings under revolving credit facility | — | 10,000 | |||||
Payments under revolving credit facility | (10,100 | ) | (14,550 | ) | |||
Payments of deferred financing costs | — | (401 | ) | ||||
Contingent consideration payment related to prior acquisition | — | (29 | ) | ||||
Proceeds from issuance of common stock under employee stock plans | 174 | 852 | |||||
Net cash provided by financing activities | 40,739 | 34,640 | |||||
Effect of exchange rate changes on cash | 512 | (107 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 11,114 | (4,340 | ) | ||||
Cash and cash equivalents—Beginning of period | 17,764 | 28,452 | |||||
Cash and cash equivalents—End of period | $ | 28,878 | $ | 24,112 | |||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Purchases of fixed and intangible assets included in accounts payable | $ | 871 | $ | 517 | |||
Warrants issued in connection with debt | $ | 1,447 | $ | — |
September 30, 2017 | December 31, 2016 | ||||||
Raw materials | $ | 1,975 | $ | 5,095 | |||
Finished goods | 23,341 | 26,865 | |||||
Total inventory | $ | 25,316 | $ | 31,960 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Warranty obligations, beginning of period | $ | 31,613 | $ | 30,066 | $ | 31,414 | $ | 30,547 | |||||||
Accruals for warranties issued during period | 1,009 | 1,194 | 2,913 | 2,931 | |||||||||||
Changes in estimates | (1,046 | ) | 783 | (826 | ) | 1,548 | |||||||||
Settlements | (1,494 | ) | (2,561 | ) | (5,092 | ) | (6,517 | ) | |||||||
Increase due to accretion expense | 549 | 461 | 1,542 | 1,279 | |||||||||||
Other | (279 | ) | 406 | 401 | 561 | ||||||||||
Warranty obligations, end of period | $ | 30,352 | $ | 30,349 | $ | 30,352 | $ | 30,349 | |||||||
Less current portion | $ | (7,151 | ) | $ | (6,761 | ) | |||||||||
Noncurrent | $ | 23,201 | $ | 23,588 |
• | Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment. |
• | Level 2—Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
• | Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
Fair Value Hierarchy | September 30, 2017 | December 31, 2016 | |||||||
Liabilities: | |||||||||
Warranty obligations | Level 3 | $ | 11,719 | $ | 10,332 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Balance at beginning of period | $ | 12,564 | $ | 8,053 | $ | 10,332 | $ | 6,182 | |||||||
Accruals for warranties issued during period | 867 | 1,185 | 2,760 | 2,898 | |||||||||||
Changes in estimates | (1,452 | ) | (200 | ) | (2,051 | ) | (678 | ) | |||||||
Settlements | (530 | ) | (390 | ) | (1,265 | ) | (726 | ) | |||||||
Increase due to accretion expense | 549 | 461 | 1,542 | 1,279 | |||||||||||
Other | (279 | ) | 406 | 401 | 560 | ||||||||||
Balance at end of period | $ | 11,719 | $ | 9,515 | $ | 11,719 | $ | 9,515 |
Item Measured at Fair Value | Valuation Technique | Description of Significant Unobservable Input | Percent Used (Weighted-Average) | |||
Warranty obligations for microinverters sold since January 1, 2014 | Discounted cash flows | Profit element and risk premium | 17% | |||
Credit-adjusted risk-free rate | 18% |
Item Measured at Fair Value | Valuation Technique | Description of Significant Unobservable Input | Percent Used (Weighted-Average) | |||
Warranty obligations for microinverters sold since January 1, 2014 | Discounted cash flows | Profit element and risk premium | 17% | |||
Credit-adjusted risk-free rate | 19% |
September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
Goodwill | $ | 3,664 | $ | — | $ | 3,664 | $ | 3,664 | $ | — | $ | 3,664 | |||||||||||
Other indefinite-lived intangibles | $ | 286 | $ | — | $ | 286 | $ | 286 | $ | — | $ | 286 | |||||||||||
Intangible assets with finite lives: | |||||||||||||||||||||||
Patents and licensed technology | $ | 1,665 | $ | (1,360 | ) | $ | 305 | $ | 1,665 | $ | (1,006 | ) | $ | 659 |
Year | (In thousands) | |||
2017 | $ | 76 | ||
2018 | 229 | |||
Total | $ | 305 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||
Employee severance and benefit arrangements | $ | 1,111 | $ | 1,308 | $ | 2,826 | $ | 1,308 | ||||||
Asset impairments | — | 1,409 | 522 | 1,409 | ||||||||||
Consultants engaged in restructuring activities | 3,100 | — | 10,100 | — | ||||||||||
Lease loss reserves and contract termination costs | (140 | ) | — | 1,479 | — | |||||||||
Total restructuring and asset impairment charges | $ | 4,071 | $ | 2,717 | $ | 14,927 | $ | 2,717 |
Employee Severance and Benefits | Asset Impairments | Lease Loss Reserves and Contractual Obligations | Total | ||||||||||||
Balance at beginning of period as of December 31, 2016 | $ | 198 | $ | — | $ | 484 | $ | 682 | |||||||
Charges | 2,826 | 522 | 11,579 | 14,927 | |||||||||||
Cash settlement | (2,783 | ) | — | (10,857 | ) | (13,640 | ) | ||||||||
Non-cash settlement | — | (522 | ) | — | (522 | ) | |||||||||
Balance at end of period as of September 30, 2017 | $ | 241 | $ | — | $ | 1,206 | $ | 1,447 |
September 30, 2017 | December 31, 2016 | ||||||
Term loan | $ | 50,000 | $ | 25,000 | |||
Less unamortized discount and issuance costs | (2,390 | ) | (1,200 | ) | |||
Carrying amount of debt | 47,610 | 23,800 | |||||
Less current portion | (10,552 | ) | (3,032 | ) | |||
Long-term debt | $ | 37,058 | $ | 20,768 |
Year | Amounts | |||
2017 | $ | — | ||
2018 | 15,229 | |||
2019 | 20,084 | |||
2020 | 14,687 | |||
Total | $ | 50,000 |
Number of Shares Outstanding | Weighted- Average Exercise Price per Share | |||||
Outstanding at December 31, 2016 | 8,730 | $ | 4.56 | |||
Granted | 4,191 | 1.14 | ||||
Exercised | (17 | ) | 0.39 | |||
Canceled | (4,193 | ) | 7.02 | |||
Outstanding at September 30, 2017 | 8,711 | $ | 1.74 |
RSUs | Weighted Average Fair Value per Share at Grant Date | |||||
Outstanding at December 31, 2016 | 606 | $ | 9.33 | |||
Granted | 4,318 | 1.13 | ||||
Vested | (824 | ) | 3.87 | |||
Canceled | (1,299 | ) | 2.03 | |||
Outstanding at September 30, 2017 | 2,801 | $ | 1.68 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of revenues | $ | 347 | $ | 295 | $ | 796 | $ | 907 | |||||||
Research and development | 607 | 941 | 1,994 | 3,047 | |||||||||||
Sales and marketing | 226 | 560 | 889 | 1,760 | |||||||||||
General and administrative | 547 | 736 | 1,598 | 2,525 | |||||||||||
Total | $ | 1,727 | $ | 2,532 | $ | 5,277 | $ | 8,239 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Stock options and restricted stock units | $ | 1,473 | $ | 1,983 | $ | 4,363 | $ | 6,703 | |||||||
Employee stock purchase plan | 254 | 549 | 914 | 1,536 | |||||||||||
Total | $ | 1,727 | $ | 2,532 | $ | 5,277 | $ | 8,239 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Weighted average grant date fair value | $ | 0.69 | $ | 1.25 | $ | 0.70 | $ | 1.31 | |||||||
Expected term (in years) | 4.2 | 4.5 | 4.4 | 4.5 | |||||||||||
Expected volatility | 83.8 | % | 84.7 | % | 84.4 | % | 79.8 | % | |||||||
Annual risk-free rate of return | 1.6 | % | 1.1 | % | 1.8 | % | 1.1 | % | |||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net loss | $ | (6,854 | ) | $ | (18,756 | ) | $ | (42,252 | ) | $ | (54,274 | ) | |||
Denominator: | |||||||||||||||
Weighted average common shares outstanding | 84,862 | 47,278 | 81,993 | 46,704 | |||||||||||
Net loss per share, basic and diluted | $ | (0.08 | ) | $ | (0.40 | ) | $ | (0.52 | ) | $ | (1.16 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Employee stock options | 7,844 | 9,383 | 8,121 | 8,944 | |||||||
Restricted stock units | 3,306 | 840 | 1,959 | 994 | |||||||
Warrants to purchase common stock | 1,220 | 45 | 1,033 | 85 | |||||||
Total | 12,370 | 10,268 | 11,113 | 10,023 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | Change in | Nine Months Ended September 30, | Change in | ||||||||||||||||||||||||||
2017 | 2016 | $ | % | 2017 | 2016 | $ | % | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Net revenues | $ | 77,038 | $ | 88,684 | $ | (11,646 | ) | (13 | )% | $ | 206,492 | $ | 231,990 | $ | (25,498 | ) | (11 | )% |
Three Months Ended September 30, | Change in | Nine Months Ended September 30, | Change in | ||||||||||||||||||||||||||
2017 | 2016 | $ | % | 2017 | 2016 | $ | % | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Cost of revenues | $ | 60,577 | $ | 72,805 | $ | (12,228 | ) | (17 | )% | $ | 169,438 | $ | 190,215 | $ | (20,777 | ) | (11 | )% | |||||||||||
Gross profit | 16,461 | 15,879 | 582 | 4 | % | 37,054 | 41,775 | (4,721 | ) | (11 | )% | ||||||||||||||||||
Gross margin | 21.4 | % | 17.9 | % | 3.5 | % | 17.9 | % | 18.0 | % | (0.1 | )% |
Three Months Ended September 30, | Change in | Nine Months Ended September 30, | Change in | ||||||||||||||||||||||||||
2017 | 2016 | $ | % | 2017 | 2016 | $ | % | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Research and development | $ | 7,397 | $ | 13,169 | $ | (5,772 | ) | (44 | )% | $ | 24,949 | $ | 39,326 | $ | (14,377 | ) | (37 | )% |
Three Months Ended September 30, | Change in | Nine Months Ended September 30, | Change in | ||||||||||||||||||||||||||
2017 | 2016 | $ | % | 2017 | 2016 | $ | % | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Sales and marketing | $ | 5,453 | $ | 11,016 | $ | (5,563 | ) | (50 | )% | $ | 18,186 | $ | 31,218 | $ | (13,032 | ) | (42 | )% |
Three Months Ended September 30, | Change in | Nine Months Ended September 30, | Change in | ||||||||||||||||||||||||||
2017 | 2016 | $ | % | 2017 | 2016 | $ | % | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
General and administrative | $ | 5,441 | $ | 6,708 | $ | (1,267 | ) | (19 | )% | $ | 16,238 | $ | 21,121 | $ | (4,883 | ) | (23 | )% |
Three Months Ended September 30, | Change in | Nine Months Ended September 30, | Change in | ||||||||||||||||||||||||||
2017 | 2016 | $ | % | 2017 | 2016 | $ | % | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Restructuring charges | $ | 4,071 | $ | 2,717 | $ | 1,354 | 50 | % | $ | 14,927 | $ | 2,717 | $ | 12,210 | 449 | % |
Three Months Ended September 30, | Change in | Nine Months Ended September 30, | Change in | |||||||||||||||||||||||||
2017 | 2016 | $ | % | 2017 | 2016 | $ | % | |||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||||||
Other income (expense), net | $ | (1,137 | ) | $ | (881 | ) | $ | (256 | ) | 29 | % | $ | (4,208 | ) | $ | (943 | ) | $ | (3,265 | ) | 346% |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Net cash used in operating activities | $ | (26,528 | ) | $ | (28,588 | ) | |
Net cash used in investing activities | (3,609 | ) | (10,285 | ) | |||
Net cash provided by financing activities | 40,739 | 34,640 | |||||
Effect of exchange rate changes on cash | 512 | (107 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 11,114 | (4,340 | ) |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
• | fund our operations; |
• | invest in our research and development efforts; |
• | expand our operations into new product markets and new geographies; |
• | acquire complementary businesses, products, services or technologies; or |
• | otherwise pursue our strategic plans and respond to competitive pressures. |
• | market acceptance of solar PV systems based on our product platform; |
• | cost competitiveness, reliability and performance of solar PV systems compared to conventional and non-solar renewable energy sources and products; |
• | availability and amount of government subsidies and incentives to support the development and deployment of solar energy solutions; |
• | the extent to which the electric power industry and broader energy industries are deregulated to permit broader adoption of solar electricity generation; |
• | the cost and availability of key raw materials and components used in the production of solar PV systems; |
• | prices of traditional utility-provided energy sources; |
• | levels of investment by end-users of solar energy products, which tend to decrease when economic growth slows; and |
• | the emergence, continuance or success of, or increased government support for, other alternative energy generation technologies and products. |
• | changes in customer, geographic or product mix; |
• | increased price competition, including the impact of customer and competitor discounts and rebates; |
• | our ability to reduce and control product costs, including our ability to make product cost reductions in a timely manner to offset declines in our product prices; |
• | warranty costs and reserves, including changes resulting from changes in estimates related to the long-term performance of our products, product replacement costs and warranty claim rates; |
• | loss of cost savings due to changes in component or raw material pricing or charges incurred due to inventory holding periods if product demand is not correctly anticipated; |
• | introduction of new products; |
• | ordering patterns from our distributors; |
• | price reductions on older products to sell remaining inventory; |
• | our ability to reduce production costs, such as through technology innovations, in order to offset price declines in our products over time; |
• | changes in shipment volume; |
• | changes in distribution channels; |
• | excess and obsolete inventory and inventory holding charges; |
• | expediting costs incurred to meet customer delivery requirements; and |
• | fluctuations in foreign currency exchange rates. |
• | our ability to produce microinverter systems and AC Battery storage products that compete favorably against other solutions on the basis of price, quality, reliability and performance; |
• | our ability to timely introduce and complete new designs and timely qualify and certify our products; |
• | whether installers, system owners and solar financing providers will continue to adopt our microinverter systems, which have a relatively limited history with respect to reliability and performance; |
• | whether installers, system owners and solar financing providers will adopt our AC Battery storage solution, which is a new technology with a limited history with respect to reliability and performance; |
• | the ability of prospective system owners to obtain long-term financing for solar PV installations based on our product platform on acceptable terms or at all; |
• | our ability to develop products that comply with local standards and regulatory requirements, as well as potential in-country manufacturing requirements; and |
• | our ability to develop and maintain successful relationships with our customers and suppliers. |
• | manage a dynamic organization; |
• | expand third-party manufacturing, testing and distribution capacity; |
• | execute on our cost reduction efforts and product initiatives with reduced headcount; |
• | build additional custom manufacturing test equipment; |
• | manage an increasing number of relationships with customers, suppliers and other third parties; |
• | increase our sales and marketing efforts; |
• | train and manage a dynamic employee base; |
• | broaden our customer support capabilities; and |
• | implement new and upgrade existing operational and financial systems. |
• | acceptance of microinverters in markets in which they have not traditionally been used; |
• | our ability to compete in new product markets to which we are not accustomed; |
• | our ability to manage manufacturing capacity and production; |
• | willingness of our potential customers to incur a higher upfront capital investment than may be required for competing solutions; |
• | timely qualification and certification of new products; |
• | our ability to reduce production costs in order to price our products competitively over time; |
• | availability of government subsidies and economic incentives for solar energy solutions; |
• | accurate forecasting and effective management of inventory levels in line with anticipated product demand; and |
• | our customer service capabilities and responsiveness. |
• | differing regulatory requirements, including tax laws, trade laws, labor, safety, local content, recycling and consumer protection regulations, tariffs, export quotas, customs duties or other trade restrictions; |
• | limited or unfavorable intellectual property protection; |
• | risk of change in international political or economic conditions; |
• | restrictions on the repatriation of earnings; |
• | fluctuations in the value of foreign currencies and interest rates; |
• | difficulties and increased expenses in complying with a variety of U.S. and foreign laws, regulations and trade standards, including the Foreign Corrupt Practices Act and UK Bribery Act; |
• | potentially longer sales cycles; |
• | higher volume requirements; |
• | increased customer concentrations; |
• | warranty expectations and product return policies; and |
• | cost, performance and compatibility requirements. |
• | obtain from a third party claiming infringement a license to sell or use the relevant technology, which may not be available on reasonable terms, or at all; |
• | stop manufacturing, selling, incorporating or using our products that embody the asserted intellectual property; |
• | pay substantial monetary damages; |
• | indemnify our customers pursuant to indemnification obligations under some of our customer contracts; or |
• | expend significant resources to redesign the products that use the infringing technology and to develop or acquire non-infringing technology. |
• | fluctuations in demand for our products; |
• | the timing, volume and product mix of sales of our products, which may have different average selling prices or profit margins; |
• | changes in our pricing and sales policies or the pricing and sales policies of our competitors; |
• | our ability to design, manufacture and deliver products to our customers in a timely and cost-effective manner and that meet customer requirements; |
• | our ability to manage our relationships with our contract manufacturers, customers and suppliers; |
• | quality control or yield problems in our manufacturing operations; |
• | the anticipation, announcement or introductions of new or enhanced products by our competitors and ourselves; |
• | reductions in the retail price of electricity; |
• | changes in laws, regulations and policies applicable to our business and products, particularly those relating to government incentives for solar energy applications; |
• | unanticipated increases in costs or expenses; |
• | the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our business operations; |
• | the impact of government-sponsored programs on our customers; |
• | our exposure to the credit risks of our customers, particularly in light of the fact that some of our customers are relatively new entrants to the solar market without long operating or credit histories; |
• | our ability to estimate future warranty obligations due to product failure rates, claim rates or replacement costs; |
• | our ability to forecast our customer demand and manufacturing requirements, and manage our inventory; |
• | fluctuations in our gross profit; |
• | our ability to predict our revenue and plan our expenses appropriately; and |
• | fluctuations in foreign currency exchange rates. |
• | providing for a classified board of directors with staggered, three-year terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors; |
• | not providing for cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; |
• | authorizing our board of directors to issue, without stockholder approval, preferred stock rights senior to those of common stock, which could be used to significantly dilute the ownership of a hostile acquiror; |
• | prohibiting stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; |
• | requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of voting stock, voting as a single class, to amend provisions of our certificate of incorporation relating to the management of our business, our board of directors, stockholder action by written consent, advance notification of stockholder nominations and proposals, forum selection and the liability of our directors, or to amend our bylaws, which may inhibit the ability of stockholders or an acquiror to effect such amendments to facilitate changes in management or an unsolicited takeover attempt; |
• | requiring special meetings of stockholders may only be called by our chairman of the board, if any, our chief executive officer, our president or a majority of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and |
• | requiring advance notification of stockholder nominations and proposals, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
ENPHASE ENERGY, INC. | |||
By: | /s/ Humberto Garcia | ||
Humberto Garcia | |||
Vice President and Chief Financial Officer |
Exhibit Number | Description | |
3.1 | Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Enphase Energy, Inc. dated May 18, 2017(1) | |
3.2 | Amended and Restated Bylaws of Enphase Energy, Inc.(2) | |
4.1 | Specimen Common Stock Certificate of Enphase Energy, Inc.(3) | |
4.2 | 2010 Amended and Restated Investors’ Rights Agreement by and between Enphase Energy, Inc. and the investors listed on Exhibit A thereto, dated March 15, 2010, as amended.(4) | |
10.1+ | ||
10.2+ | ||
32.1* | ||
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Document. |
(1) | Previously filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q (File No. 001-35480), filed with the Securities and Exchange Commission on August 9, 2017, and incorporated by reference herein. |
(2) | Previously filed as Exhibit 3.5 to Amendment No. 7 to the Registration Statement on Form S-1/A (File No. 333-174925), filed with the Securities and Exchange Commission on March 12, 2012, and incorporated by reference herein. |
(3) | Previously filed as Exhibit 4.1 to the Registration Statement on Form S-1/A (File No. 333-174925), and incorporated herein by reference herein. |
(4) | Previously filed as Exhibit 4.2 to Amendment No. 1 to the Registration Statement on Form S-1/A (File No 333-174925), filed with the Securities and Exchange Commission on July 25, 2011, and incorporated by reference herein. |
+ | Management contract, compensatory plan or arrangement |
* | The certifications attached as Exhibit 32.1 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by Enphase Energy, Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
1. | Position, Duties and Location. Your title will be President and Chief Executive Officer ("CEO"). You will report to the Company's Board of Directors (the "Board"), and you will perform those duties and responsibilities customary to the CEO position and as may be reasonably directed by the Board. You will also be appointed to the Board as a Class Ill Director. Your primary office location will be the Company's headquarters in Petaluma, California. Notwithstanding the foregoing, the Company reserves the right to reasonably require you to perform your duties at places other than its corporate headquarters from time to time, and to require reasonable business travel. During the term of your employment with the Company, you will devote your best efforts and substantially all of your business time and attention to the business of the Company, except for approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company's general employment policies. |
2. | Base Salary. The Company will pay you an annualized base salary at the rate of four hundred fifty thousand dollars ($450,000}, less applicable payroll deductions and withholdings, payable in accordance with the Company’s standard payroll schedule. Beginning in calendar year 2019, the Board's Compensation Committee (the "Compensation Committee") will review your base salary for potential modification on an annual basis as part of its annual compensation review of the Company's executives. |
3. | Annual Bonus. You will be eligible to earn an annual discretionary bonus of up to one hundred percent (100%) of your current annualized base salary rate (the "Annual Bonus"), which, for calendar year 2017, will be prorated for the level of your base salary over the course of the year. The Annual Bonus will be based upon the Compensation Committee's assessment of your performance against individual performance goals and the Company's attainment of financial and/or other business goals as set by the Compensation Committee for a given calendar year in its sole discretion. Bonus payments, if any, will be subject to applicable payroll deductions and withholdings. Following the close of each calendar year, the Compensation Committee will determine whether you shall be paid an Annual Bonus, and the amount of any such bonus, based on the achievement of such goals. Except as set forth in this Agreement, no amount of Annual Bonus is guaranteed, and you must be an employee on the Annual Bonus payment date to receive and earn an Annual Bonus, which will be paid within ninety (90) days following the end of the applicable bonus year. No partial or prorated bonuses will be provided. |
4. | Stock Grants. In connection with your promotion to the CEO position, the Company will grant you an option to purchase 1,000,000 shares of the Company's Common Stock with an exercise price equal to the fair market value of a share of Common Stock as determined by the Board (or the Compensation Committee) on the applicable date of the grant (the "Option"). The Option will be subject to the terms of the Company’s 2011 Equity Incentive Plan (the "Plan") and the applicable stock option agreements (the "Stock Agreements"). The Option shares will vest subject to your continued employment as CEO over a four-year period, whereby twenty-five percent (25%) of the |
5. | Severance and Change in Control Benefit Plan. You will continue be eligible for severance and change in control benefits under the Company's Severance and Change in Control Benefit Plan (the "Severance Plan"). In connection with your promotion to the CEO position, you will be designated as a Tier I Participant (i.e., the highest level of participation), subject to the terms and conditions set forth in the Severance Plan. |
6. | At-Will Employment Relationship. Employment with the Company is for no specific period of time. Your employment relationship with the Company is "at will,” meaning that either you or the Company may terminate your employment at any time, with or without Cause (as defined in the Severance Plan) or advance notice. Any contrary representations that may have been made to you are superseded by this Updated Agreement. Although your job duties, title, compensation and benefits, as well as the Company's personnel policies and procedures, may change from time to time, the "at will" nature of your employment may only be changed in an express written agreement signed by both you and a duly authorized representative of the Board (other than you). |
7. | Miscellaneous. This Updated Agreement, together with the Existing Agreement (and exhibits thereto including your Employee Invention Assignment and Confidentiality Agreement), constitutes the complete and exclusive statement of your employment agreement with the Company. It supersedes any other agreements or promises made to you by anyone, whether oral or written. In the event of any conflict between this Updated Agreement and the Existing Agreement, the provisions of this Updated Agreement shall control. Changes in your employment terms, other than those changes expressly reserved to the Company's, the Board's or the Compensation Committee’s discretion in this Agreement, require a written modification approved by the Company and signed by a duly authorized representative of the Board (other than you). This Updated Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns. If any provision of this Updated Agreement is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this Updated Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law. This Updated Agreement shall be construed and enforced in accordance with the laws of the State of California without regard to conflicts of law principles. You and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco County and Sonoma County in connection with any and all disputes, claims, or causes of action arising from or relating to the enforcement, breach, performance, negotiation, execution, or interpretation of this Updated Agreement, your employment, or the termination of your employment. Any ambiguity in this Updated Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Updated Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This Updated Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile and electronic signatures shall be equivalent to original signatures. |
Enphase Energy, Inc.: | Employee: | |
By: | /s/ Humberto Garcia | /s/ Paul B. Nahi |
Signature | ||
Name: | Humberto Garcia | Paul B. Nahi |
Title: | Chief Financial Officer |
Title | Identifying Number or Brief Description | |
1. | I have reviewed this Form 10-Q of Enphase Energy, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Badrinarayanan Kothandaraman | ||
Badrinarayanan Kothandaraman President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Form 10-Q of Enphase Energy, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Humberto Garcia | |
Humberto Garcia Vice President and Chief Financial Officer (Principal Financial Officer) |
/s/ Badrinarayanan Kothandaraman | /s/ Humberto Garcia | |
Badrinarayanan Kothandaraman President and Chief Executive Officer (Principal Executive Officer) | Humberto Garcia Vice President and Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 03, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Enphase Energy, Inc. | |
Entity Central Index Key | 0001463101 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 85,532,519 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowances, accounts receivable | $ 2,824 | $ 2,921 |
Warranty obligations, current at fair value | 2,765 | 3,296 |
Warranty obligations, non-current at fair value | $ 8,954 | $ 7,036 |
Preferred stock, par value (in usd per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 85,217,000 | 62,269,000 |
Common stock, shares outstanding (in shares) | 85,217,000 | 62,269,000 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Statement [Abstract] | ||||
Net revenues | $ 77,038 | $ 88,684 | $ 206,492 | $ 231,990 |
Cost of revenues | 60,577 | 72,805 | 169,438 | 190,215 |
Gross profit | 16,461 | 15,879 | 37,054 | 41,775 |
Operating expenses: | ||||
Research and development | 7,397 | 13,169 | 24,949 | 39,326 |
Sales and marketing | 5,453 | 11,016 | 18,186 | 31,218 |
General and administrative | 5,441 | 6,708 | 16,238 | 21,121 |
Restructuring charges | 4,071 | 2,717 | 14,927 | 2,717 |
Total operating expenses | 22,362 | 33,610 | 74,300 | 94,382 |
Loss from operations | (5,901) | (17,731) | (37,246) | (52,607) |
Other income (expense), net: | ||||
Interest expense | (1,760) | (1,234) | (5,979) | (1,598) |
Other income | 623 | 353 | 1,771 | 655 |
Total other expense, net | (1,137) | (881) | (4,208) | (943) |
Loss before income taxes | (7,038) | (18,612) | (41,454) | (53,550) |
Income tax (provision) benefit | 184 | (144) | (798) | (724) |
Net loss | $ (6,854) | $ (18,756) | $ (42,252) | $ (54,274) |
Net loss per share: | ||||
Net loss per share, basic and diluted (in usd per share) | $ (0.08) | $ (0.40) | $ (0.52) | $ (1.16) |
Shares used in per share calculation: | ||||
Shares used in per share calculation, basic and diluted (in shares) | 84,862 | 47,278 | 81,993 | 46,704 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (6,854) | $ (18,756) | $ (42,252) | $ (54,274) |
Other comprehensive loss: | ||||
Foreign currency translation adjustments | (296) | 54 | (173) | (44) |
Comprehensive loss | $ (7,150) | $ (18,702) | $ (42,425) | $ (54,318) |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Enphase Energy, Inc. and subsidiaries (the “Company”) delivers simple, innovative and reliable energy management solutions that advance the worldwide potential of renewable energy. Our semiconductor-based microinverter system converts direct current (DC) electricity to alternating current (AC) electricity at the individual solar module level, and brings a system-based, high technology approach to solar energy generation leveraging our design expertise across power electronics, semiconductors, networking, and cloud-based software technologies. Since inception, the Company has shipped approximately 16 million microinverters, representing over 3 gigawatts of solar photovoltaic (PV) generating capacity, and approximately 700,000 Enphase residential and commercial systems have been deployed in over 100 countries. Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the U.S, or GAAP. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company disclosed in its Form 10-K for the year ended December 31, 2016 that certain conditions led it to conclude that substantial doubt existed as to the Company’s ability to continue as a going concern. The Company believes that the same or similar conditions continue to exist and that substantial doubt as to its ability to continue as a going concern within one year from the date of this filing also continues to exist. The accompanying consolidated financial statements for the three and nine months ended September 30, 2017 are presented on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. The Company has taken actions and intends to take further actions to improve its liquidity, including raising funds in the capital markets. In 2016, the Company completed a public offering of its common stock. The Company sold approximately 15 million shares and realized net proceeds of approximately $16.2 million. In December of 2016, the Company entered into an At The Market Issuance Sales Agreement (ATM) under which it may sell shares of common stock up to a gross aggregate offering price of $17.0 million. The Company realized the full gross proceeds of $17.0 million from common stock sold under the ATM during the three months ended March 31, 2017. In January 2017, the Company completed a private placement of securities that resulted in gross proceeds of $10.0 million. In July 2016, the Company entered into a loan and security agreement (the “Term Loan Agreement”) with lenders that are affiliates of Tennenbaum Capital Partners, LLC (collectively “TCP”). Under the agreement, the lenders committed to advance a term loan in an aggregate principal amount of up to $25.0 million with a maturity date of July 1, 2020. The Company drew down the $25.0 million term loan commitment at closing. In February 2017, the Company amended its loan and security agreement with TCP to provide an additional $25.0 million in principal. The Company simultaneously terminated its revolving credit facility with Wells Fargo Bank, N.A., and the combined principal and interest balance of $10.3 million was fully repaid. The amended loan has the same July 1, 2020 maturity date as the original TCP loan, both of which are interest only until February 2018. See Note 7, “Debt” for further information. The Company launched its next generation microinverter, the Enphase Home Energy Solution with IQ, in March 2017. This product is a major milestone in the Company’s product cost reduction initiative, and the Company expects to introduce the next generation of the Enphase Home Energy Solution with IQ in the first quarter of 2018, which the Company believes will achieve further cost savings. Actions the Company has taken to reduce its operating expenses include a reduction in its global workforce in the third quarter of 2016 and a second reduction in January 2017. The Company has eliminated certain projects that did not have a near-term return on investment, consolidated office space at its headquarters, divested its services business and engaged a management consulting firm to help it lower expenses and improve operational efficiencies. The Company expects the cumulative impact of these actions to decrease its ongoing annualized operating expenses by approximately $40.0 million as compared to pre-restructuring annualized operating expenses. For the nine months ended September 30, 2017, the Company achieved a combined $32.3 million in savings for research and development, sales and marketing and general and administrative expenses over the same period in 2016, which was partially offset by increased restructuring charges of $12.2 million. Unaudited Interim Financial Information These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company's financial condition, results of operations, comprehensive income (loss) and cash flows for the interim periods indicated. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2017, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Reference is made to the disclosures therein for a summary of all of the Company’s significant accounting policies. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, inventory valuation and accrued warranty obligations. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions. Recently Adopted Accounting Pronouncements In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires most entities to measure most inventories at the lower of cost or net realizable value ("NRV"). This simplifies the evaluation from the current method of lower of cost or market, where market is based on one of three measures (i.e. replacement cost, net realizable value, or net realizable value less a normal profit margin). ASU 2015-11 does not apply to inventories measured under the last-in, first-out method or the retail inventory method, and defines NRV as the “estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” This standard, which was adopted in the first quarter of 2017, did not have a material impact on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which will simplify the income tax consequences, accounting for forfeitures and classification on the Statements of Consolidated Cash Flows. This standard, which was adopted in the first quarter of 2017, did not have a material impact on the consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU simplifies the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 was early adopted by the Company for the year beginning January 1, 2017. The Company has a single reporting unit, and adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Effective In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively, and collectively Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The updated standard’s core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The standard generally requires an entity to identify performance obligations in its contracts, estimate the amount of variable consideration to be received in the transaction price, allocate the transaction price to each separate performance obligation, and recognize revenue as obligations are satisfied. In addition, the updated standard requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Topic 606 is effective for the Company as of our first quarter of fiscal 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. The Company plans to adopt Topic 606 in the first quarter of fiscal 2018 pursuant to the aforementioned adoption method (2). Under ASC 605 Envoy hardware and Enlighten service are considered two units of accounting with a portion of the consideration related to the hardware recognized upfront and the remaining deferred over the estimated service period. Under ASC 606 the full consideration for these products may represent a single performance obligation and need to be deferred over the estimated service period. This treatment would result in an increase in deferred revenue upon adoption of ASC 606. Under ASC 605 the Company recorded certain contra revenue promotions at the later of the date the sale was made and revenue recognized or the date at which the promotional offer was extended. Under ASC 606 all such contra revenue programs will be treated as variable consideration and recognized at the time the related revenue is recorded resulting in a potential increase in and change in timing of contra revenue upon adoption. The Company is finalizing its review of contracts to quantify the impact of adoption on its consolidated financial statements. The Company is also in the process of assessing the appropriate changes to its business processes and upgrading its systems and controls to support recognition and disclosure under ASC 606. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Changes to the current guidance include the accounting for equity investments, the presentation and disclosure requirements for financial instruments, and the assessment of valuation allowance on deferred tax assets related to available-for-sale securities. In addition, ASU 2016-01 establishes an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option has been elected. Under this guidance, an entity would be required to separately present in other comprehensive income the portion of the total fair value change attributable to instrument-specific credit risk as opposed to reflecting the entire amount in earnings. ASU 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements. |
INVENTORY |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY | INVENTORY Inventory as of September 30, 2017 and December 31, 2016 consists of the following (in thousands):
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WARRANTY OBLIGATIONS |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTY OBLIGATIONS | WARRANTY OBLIGATIONS The Company’s warranty activities during the three and nine months ended September 30, 2017 and 2016 were as follows (in thousands):
As of September 30, 2017, the $30.4 million of warranty obligations included $11.7 million measured at fair value. See Note 4, “Fair Value Measurements” for additional information. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
The following table presents the Company’s liabilities that were measured at fair value on a recurring basis and its categorization within the fair value hierarchy at September 30, 2017 and December 31, 2016 (in thousands):
Fair Value Option for Warranty Obligations Related to Microinverters Sold Since January 1, 2014 The Company’s warranty obligations related to substantially all microinverters sold since January 1, 2014 provide the Company the right, but not the requirement, to assign its warranty obligations to a third-party. Under Accounting Standards Codification (“ASC”) 825—Financial Instruments, (“fair value option”), an entity may choose to elect the fair value option for such warranties at the time it first recognizes the eligible item. The Company made an irrevocable election to account for all eligible warranty obligations associated with microinverters sold since January 1, 2014 at fair value. This election was made to reflect the underlying economics of the time value of money for an obligation that will be settled over an extended period of up to 25 years. The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of failure rates, claim rates and replacement costs, the Company used certain Level 3 inputs which are unobservable and significant to the overall fair value measurement. Such additional assumptions included a discount rate based on the Company’s credit-adjusted risk-free rate and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation. The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated (in thousands):
Quantitative and Qualitative Information about Level 3 Fair Value Measurements As of September 30, 2017, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows:
As of December 31, 2016, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows:
Sensitivity of Level 3 Inputs Warranty Obligations Each of the significant unobservable inputs is independent of the other. The profit element and risk premium are estimated based on requirements of a third-party participant willing to assume the Company’s warranty obligations. The credit-adjusted risk free rate (“discount rate”) is determined by reference to the Company’s own credit standing at the fair value measurement date. Increasing or decreasing the profit element and risk premium input by 100 basis points would not have a material impact on the fair value measurement of the liability. Increasing the discount rate by 100 basis points would result in a $0.5 million reduction of the liability. Decreasing the discount rate by 100 basis points would result in a $0.6 million increase to the liability. |
GOODWILL AND INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS The following table presents the details of the Company’s goodwill and purchased intangible assets as of September 30, 2017 and December 31, 2016 (in thousands):
In July 2014, the Company purchased certain patents related to system interconnection and photovoltaic AC module construction. The patents are being amortized over their legal life of 3 years. In October 2015, the Company licensed certain technology related to ASIC development for a 3 year term, which is also its estimated useful life. For the nine months ended September 30, 2017, amortization expense related to intangible assets was $0.4 million. As of September 30, 2017, estimated future amortization expense related to finite-lived intangible assets was as follows:
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RESTRUCTURING |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING | RESTRUCTURING In the third quarter of 2016, the Company began implementing restructuring actions to lower its operating expenses and cost of revenues. The restructuring actions have included reductions in the Company’s global workforce, the elimination of certain non-core projects, consolidation of office space at the Company’s corporate headquarters and the engagement of management consultants to assist the Company in making organizational and structural changes to improve operational efficiencies and reduce expenses. The following table presents the details of the Company’s restructuring charges for the periods indicated (in thousands):
The following table provides information regarding changes in the Company’s accrued restructuring balance for the periods indicated (in thousands):
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Revolving Credit Facility The Company had a $50.0 million revolving credit facility with Wells Fargo Bank, N.A. (“Wells Fargo”) that was entered into in November 2012, as first amended on February 14, 2014. On December 18, 2015, the Company entered into an amended and restated revolving credit agreement with Wells Fargo (the “Revolver”) which extended the maturity date to November 7, 2019 and added an uncommitted accordion feature that could increase the size of the facility by $25.0 million, subject to the satisfaction of certain conditions. The Revolver was fully repaid and terminated in February 2017. Term Loan In July 2016, the Company entered into a Term Loan Agreement (the “Original Term Loan”) with lenders that are affiliates of Tennenbaum Capital Partners, LLC. (the “Lenders”). Under the agreement, the Lenders committed to advance a term loan in an aggregate principal amount of up to $25.0 million with a maturity date of July 1, 2020. The Company borrowed the entire $25.0 million of term loan commitments on the loan closing date. Monthly payments due through June 30, 2017 were interest only, followed by consecutive equal monthly payments of principal plus accrued interest that were to begin on July 1, 2017 and continue through the maturity date. The term loan provides for an interest rate per annum equal to the higher of (i) 10.25% or (ii) LIBOR plus 9.5625%, subject to a 1.0% reduction if the Company achieves minimum levels of Revenue and EBITDA (each as defined in the Term Loan Agreement) for the twelve-consecutive month period ending June 30, 2017 as set forth in the Term Loan Agreement. In addition, the Company paid a commitment fee of 3.3% of the loan amount upon closing and a closing fee of 10.0% of the loan amount is payable in four equal installments at each anniversary of the closing date. The Company may elect to prepay the loan by incurring a prepayment fee between 1% and 3% of the principal amount of the term loan depending on the timing and circumstances of prepayment. In February 2017, the Company entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) that amended and restated the Original Term Loan. The Loan Agreement provides for a $25.0 million secured term loan to the Company (the “New Term Loan”), which is in addition to the $25.0 million secured term loan borrowed by the Company under the Original Term Loan (together with the “New Term Loan” the “Term Loans”). The New Term Loan has the same July 1, 2020 maturity date that was applicable to the Original Term Loan. The New Term Loan was fully drawn at closing, with approximately $10.3 million of the proceeds used to repay existing combined principal and interest due under the Company’s Revolver with Wells Fargo. Upon the repayment of loans under the Wells Fargo Revolver, the Wells Fargo Revolving Credit Agreement was terminated. The Company expects to use the remainder of the proceeds from the New Term Loan for general corporate purposes. Monthly payments under the Term Loans through February 28, 2018 are interest only, followed by consecutive equal monthly payments of principal plus accrued interest beginning on March 1, 2018 and continuing through the maturity date; provided, however, that the Company may extend the interest only period on a month to month basis up to February 28, 2019 if no Event of Default (as defined in the Loan Agreement) has occurred and is continuing and the Company has Consolidated Operating Income (as defined in the Loan Agreement) for the calendar year 2017 and each month thereafter on a trailing twelve consecutive month basis of at least $15.0 million (collectively, the “Accommodation Conditions”). The Term Loans provide for an interest rate per annum equal to the greater of (i) 10.3125% and (ii) LIBOR plus 9.25%, subject to a 1.0% reduction if and for so long as the Accommodation Conditions have been met. In addition, the Company paid a commitment fee of 3.0% of the New Term Loan amount upon closing and a closing fee of 4.0% of the New Term Loan amount, which is payable with the closing fee under the Original Term Loan in four equal installments at each anniversary of the closing date of the Original Loan Agreement. The Company may elect to prepay the Term Loans by incurring a prepayment fee between 1% and 3% of the principal amount of the Term Loans depending on the timing and circumstances of prepayment. The Term Loans are secured by a first-priority security interest on substantially all assets of the Company; provided, however that the security interest in the Company’s intellectual property may be released if the Company satisfies certain requirements. The Company’s obligations under the Term Loans are not guaranteed by any of the Company’s existing subsidiaries, nor have any existing subsidiaries of the Company pledged any of their assets to secure the Term Loans. The Loan Agreement requires that (i) at all times from the closing date to and including March 31, 2018, the Company, and any future guarantors, have Unrestricted Cash (as defined in the Loan Agreement) of at least $10.0 million; (ii) at all times from the closing date to and including March 31, 2018, that the aggregate amount of Consolidated Unrestricted Cash, plus the value of Consolidated Receivables, plus the value of Consolidated Inventory (each as defined in the Loan Agreement) divided by the outstanding principal amount of Term Loans, shall equal or exceed 1.5; and (iii) at all times from April 1, 2018 and thereafter, that the aggregate amount of Consolidated Unrestricted Cash, plus the value of Consolidated Receivables, plus the value of Consolidated Inventory divided by the outstanding principal amount of Term Loans, shall equal or exceed 1.75. In addition, the Loan Agreement is subject to customary affirmative and negative covenants including restrictions on creation of liens, dispositions of assets, mergers, changing the nature of its business and dividends and other distributions, in each case subject to certain exceptions. The Term Loan Agreement also contains certain customary events of default including, but not limited to, failure to pay interest, principal and fees or other amounts when due, material breach of any representation or warranty, covenant defaults, cross defaults to other material indebtedness, events of bankruptcy and the occurrence of a material adverse change (as defined in the agreement) to the Company’s business. The Term Loan Agreement offers TCP typical rights and remedies in any event of default, including the ability to declare all amounts outstanding immediately due and payable. The Company was in compliance with all financial covenants as of September 30, 2017. In connection with the New Term Loan, the Company issued to the Lenders warrants to purchase an aggregate 1,220,000 shares of the Company’s Common Stock at an exercise price of $1.05 per share. The warrants have a term of seven years and contain a “cashless exercise” feature that allows the holder to exercise the warrant without a cash payment upon the terms set forth therein. The Company estimated the fair value of the warrants by using the Black-Scholes approach and the following assumptions: stock price of $1.56; strike price of $1.05; volatility of 85.9%, risk-free rate of 2.23%; dividend yield of 0%; and a 7 year term. The resulting fair value was used to allocate the proceeds from the Term Loan between liability and equity components. The Company classified the warrants as equity and allocated the proceeds from the Term Loan and warrants using the relative fair value method. Using this method, the Company allocated $1.4 million to the warrants, which was recorded as equity. This amount represents debt discount that will be amortized to interest expense over the term of the loan. Long-term debt was comprised of the following at September 30, 2017 and December 31, 2016 (in thousands):
As of September 30, 2017, the amount of scheduled principal payments due on the term loan is as follows (in thousands):
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company may be subject to legal proceedings arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently does not believe that the final outcome of any such matters will have a material adverse effect on the Company’s business, financial position, results of operations or cash flows. |
SALE OF COMMON STOCK |
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Equity [Abstract] | |
SALE OF COMMON STOCK | SALE OF COMMON STOCK In January 2017, the Company completed a private placement of securities that resulted in the issuance of approximately 10.8 million shares of common stock and gross proceeds of $10.0 million. In December of 2016, the Company entered into an At Market Issuance Sales Agreement (ATM) under which it could sell shares of its common stock up to a gross aggregate offering price of $17.0 million. During the three months ended March 31, 2017 the Company sold approximately 11.1 million shares of common stock under the ATM and received net proceeds of approximately $16.6 million. |
STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company has adopted certain equity incentive and stock purchase plans as described in the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Equity Awards Activity Stock Options The following is a summary of stock option activity for the nine months ended September 30, 2017 (in thousands, except per share data):
The intrinsic value of options exercised in the nine months ended September 30, 2017 was nominal. As of September 30, 2017, the intrinsic value of options outstanding was $3.1 million based on the closing price of the Company’s stock as of September 30, 2017. Restricted Stock Units The following is a summary of restricted stock unit activity for the nine months ended September 30, 2017 (in thousands, except per share data):
On April 3, 2017, the Company commenced a Tender Offer (Offer) to exchange out of the money stock options for restricted stock units. The Offer expired on Monday, May 1, 2017. Pursuant to the Offer, the Company accepted elections to exchange options to purchase 2,362,470 shares of common stock and issued replacement awards of restricted stock units for 733,559 shares of common stock. As the transaction approximated a value-for-value exchange, it did not have a material impact on the Company’s stock based compensation expense. The total intrinsic value of restricted stock units that were vested in the nine months ended September 30, 2017 was $0.8 million. As of September 30, 2017, the intrinsic value of restricted stock units outstanding was $4.3 million based on the closing price of the Company’s stock as of September 30, 2017. Stock-Based Compensation Expense Compensation expense for all stock-based awards expected to vest is measured at fair value on the date of grant and recognized ratably over the requisite service period. The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented (in thousands):
The following table summarizes the various types of stock-based compensation expense for the periods presented (in thousands):
The following table presents the weighted-average grant date fair value of options granted for the periods presented and the assumptions used to estimate those values using a Black-Scholes option pricing model:
As of September 30, 2017, there was approximately $8.8 million of total unrecognized compensation expense related to unvested equity awards expected to be recognized over a weighted-average period of 2.8 years. |
INCOME TAXES |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company used the discrete tax approach in calculating the tax expense for the three and nine months ended September 30, 2017 and 2016 due to the fact that a relatively small change in the Company’s projected pre-tax net income (loss) could result in a volatile effective tax rate. Under the discrete method, the Company determines its tax (expense) benefit based upon actual results as if the interim period was an annual period. The tax provision recorded was primarily related to income taxes attributable to its foreign operations. |
NET LOSS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER SHARE | NET LOSS PER SHARE Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed in a similar manner, but it also includes the effect of potential common shares outstanding during the period, when dilutive. Potential common shares include outstanding in-the-money stock options, restricted stock units, shares to be purchased under the Company’s employee stock purchase plan and warrants to purchase common stock. The dilutive effect of potentially dilutive common shares is reflected in diluted earnings per share by application of the treasury stock method. To the extent these potential common shares are antidilutive, they are excluded from the calculation of diluted net loss per share. The following table presents the computation of basic and diluted net loss per share for the periods presented (in thousands, except per share data):
As the Company incurred a net loss for all periods presented, potential dilutive securities from employee stock options, restricted stock units and warrants have been excluded from the diluted net loss per share computations because the effect of including such shares would have been anti-dilutive. The following table sets forth the potentially dilutive securities excluded from the computation of the diluted net loss per share (in thousands):
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DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies) |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the U.S, or GAAP. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company's financial condition, results of operations, comprehensive income (loss) and cash flows for the interim periods indicated. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, inventory valuation and accrued warranty obligations. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Effective | Recently Adopted Accounting Pronouncements In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires most entities to measure most inventories at the lower of cost or net realizable value ("NRV"). This simplifies the evaluation from the current method of lower of cost or market, where market is based on one of three measures (i.e. replacement cost, net realizable value, or net realizable value less a normal profit margin). ASU 2015-11 does not apply to inventories measured under the last-in, first-out method or the retail inventory method, and defines NRV as the “estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” This standard, which was adopted in the first quarter of 2017, did not have a material impact on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which will simplify the income tax consequences, accounting for forfeitures and classification on the Statements of Consolidated Cash Flows. This standard, which was adopted in the first quarter of 2017, did not have a material impact on the consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU simplifies the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 was early adopted by the Company for the year beginning January 1, 2017. The Company has a single reporting unit, and adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Effective In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively, and collectively Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The updated standard’s core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The standard generally requires an entity to identify performance obligations in its contracts, estimate the amount of variable consideration to be received in the transaction price, allocate the transaction price to each separate performance obligation, and recognize revenue as obligations are satisfied. In addition, the updated standard requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Topic 606 is effective for the Company as of our first quarter of fiscal 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. The Company plans to adopt Topic 606 in the first quarter of fiscal 2018 pursuant to the aforementioned adoption method (2). Under ASC 605 Envoy hardware and Enlighten service are considered two units of accounting with a portion of the consideration related to the hardware recognized upfront and the remaining deferred over the estimated service period. Under ASC 606 the full consideration for these products may represent a single performance obligation and need to be deferred over the estimated service period. This treatment would result in an increase in deferred revenue upon adoption of ASC 606. Under ASC 605 the Company recorded certain contra revenue promotions at the later of the date the sale was made and revenue recognized or the date at which the promotional offer was extended. Under ASC 606 all such contra revenue programs will be treated as variable consideration and recognized at the time the related revenue is recorded resulting in a potential increase in and change in timing of contra revenue upon adoption. The Company is finalizing its review of contracts to quantify the impact of adoption on its consolidated financial statements. The Company is also in the process of assessing the appropriate changes to its business processes and upgrading its systems and controls to support recognition and disclosure under ASC 606. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Changes to the current guidance include the accounting for equity investments, the presentation and disclosure requirements for financial instruments, and the assessment of valuation allowance on deferred tax assets related to available-for-sale securities. In addition, ASU 2016-01 establishes an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option has been elected. Under this guidance, an entity would be required to separately present in other comprehensive income the portion of the total fair value change attributable to instrument-specific credit risk as opposed to reflecting the entire amount in earnings. ASU 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements. |
Income Taxes | The Company used the discrete tax approach in calculating the tax expense for the three and nine months ended September 30, 2017 and 2016 due to the fact that a relatively small change in the Company’s projected pre-tax net income (loss) could result in a volatile effective tax rate. Under the discrete method, the Company determines its tax (expense) benefit based upon actual results as if the interim period was an annual period. |
INVENTORY (Tables) |
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Summary of Inventory | Inventory as of September 30, 2017 and December 31, 2016 consists of the following (in thousands):
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WARRANTY OBLIGATIONS (Tables) |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Warranty Activities | The Company’s warranty activities during the three and nine months ended September 30, 2017 and 2016 were as follows (in thousands):
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the Company’s liabilities that were measured at fair value on a recurring basis and its categorization within the fair value hierarchy at September 30, 2017 and December 31, 2016 (in thousands):
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Schedule of Changes in Nonfinancial Liabilities Related to Warrant Obligations Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs | The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated (in thousands):
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Summary of Significant Unobservable Inputs used in the Fair Value Measurement of Liabilities Designated as Level 3 | As of September 30, 2017, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows:
As of December 31, 2016, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows:
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill and Intangible Assets | The following table presents the details of the Company’s goodwill and purchased intangible assets as of September 30, 2017 and December 31, 2016 (in thousands):
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Schedule of Estimated Future Amortization Expense Related to Finite-Lived Intangible Assets | As of September 30, 2017, estimated future amortization expense related to finite-lived intangible assets was as follows:
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RESTRUCTURING (Tables) |
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Restructuring and Related Costs | The following table presents the details of the Company’s restructuring charges for the periods indicated (in thousands):
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Schedule of Restructuring Reserve by Type of Cost | The following table provides information regarding changes in the Company’s accrued restructuring balance for the periods indicated (in thousands):
|
DEBT (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Long-term debt was comprised of the following at September 30, 2017 and December 31, 2016 (in thousands):
|
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Schedule of Maturities of Long-term Debt | As of September 30, 2017, the amount of scheduled principal payments due on the term loan is as follows (in thousands):
|
STOCK-BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity | The following is a summary of stock option activity for the nine months ended September 30, 2017 (in thousands, except per share data):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock Unit Activity | The following is a summary of restricted stock unit activity for the nine months ended September 30, 2017 (in thousands, except per share data):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Components of Total Stock-Based Compensation Expense | The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock-Based Compensation Associated with Each Type of Award | The following table summarizes the various types of stock-based compensation expense for the periods presented (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Weighted-Average Grant Date Fair Value of Options Granted | The following table presents the weighted-average grant date fair value of options granted for the periods presented and the assumptions used to estimate those values using a Black-Scholes option pricing model:
|
NET LOSS PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Net Loss Per Share | The following table presents the computation of basic and diluted net loss per share for the periods presented (in thousands, except per share data):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Potentially Dilutive Securities Excluded from the Computation of Diluted Net Loss Per Share | The following table sets forth the potentially dilutive securities excluded from the computation of the diluted net loss per share (in thousands):
|
INVENTORY - Summary of Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of inventory | ||
Raw materials | $ 1,975 | $ 5,095 |
Finished goods | 23,341 | 26,865 |
Total inventory | $ 25,316 | $ 31,960 |
WARRANTY OBLIGATIONS - Summary of Warranty Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Changes in the Company's product warranty liability | |||||
Warranty obligations, beginning of period | $ 31,613 | $ 30,066 | $ 31,414 | $ 30,547 | |
Accruals for warranties issued during period | 1,009 | 1,194 | 2,913 | 2,931 | |
Changes in estimates | (1,046) | 783 | (826) | 1,548 | |
Settlements | (1,494) | (2,561) | (5,092) | (6,517) | |
Increase due to accretion expense | 549 | 461 | 1,542 | 1,279 | |
Other | (279) | 406 | 401 | 561 | |
Warranty obligations, end of period | 30,352 | 30,349 | 30,352 | 30,349 | |
Less current portion | (7,151) | (6,761) | (7,151) | (6,761) | $ (8,596) |
Noncurrent | $ 23,201 | $ 23,588 | $ 23,201 | $ 23,588 | $ 22,818 |
WARRANTY OBLIGATIONS - Narrative (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|---|---|
Product Warranty Liability [Line Items] | ||||||
Warranty obligations | $ 30,352 | $ 31,613 | $ 31,414 | $ 30,349 | $ 30,066 | $ 30,547 |
Recurring | Warranty obligations for microinverters sold since January 1, 2014 | Level 3 | ||||||
Product Warranty Liability [Line Items] | ||||||
Fair value liabilities | $ 11,719 | $ 12,564 | $ 10,332 | $ 9,515 | $ 8,053 | $ 6,182 |
FAIR VALUE MEASUREMENTS - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|---|---|
Recurring | Level 3 | Warranty obligations | ||||||
Liabilities: | ||||||
Fair value liabilities | $ 11,719 | $ 12,564 | $ 10,332 | $ 9,515 | $ 8,053 | $ 6,182 |
FAIR VALUE MEASUREMENTS - Schedule of Changes in Nonfinancial Liabilities Related to Warrant Obligations Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Details) - Level 3 - Recurring - Warranty obligations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | $ 12,564 | $ 8,053 | $ 10,332 | $ 6,182 |
Accruals for warranties issued during period | 867 | 1,185 | 2,760 | 2,898 |
Changes in estimates | (1,452) | (200) | (2,051) | (678) |
Settlements | (530) | (390) | (1,265) | (726) |
Increase due to accretion expense | 549 | 461 | 1,542 | 1,279 |
Other | (279) | 406 | 401 | 560 |
Balance at end of period | $ 11,719 | $ 9,515 | $ 11,719 | $ 9,515 |
FAIR VALUE MEASUREMENTS - Summary of Significant Unobservable Inputs used in the Fair Value Measurement of Liabilities Designated as Level 3 (Details) - Discounted cash flows - Recurring - Level 3 - Warranty obligations for microinverters sold since January 1, 2014 |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Profit element and risk premium | 17.00% | 17.00% |
Credit-adjusted risk-free rate | 18.00% | 19.00% |
FAIR VALUE MEASUREMENTS - Narrative (Details) - Discounted cash flows - Recurring - Level 3 - Contingent consideration $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Derivative [Line Items] | |
Decrease to fair value measurement as a result of 100 basis point increase | $ 0.5 |
Increase to fair value measurement as a result of 100 basis point decrease | $ 0.6 |
GOODWILL AND INTANGIBLE ASSETS - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill, gross | $ 3,664 | $ 3,664 |
Goodwill | 3,664 | 3,664 |
Other indefinite-lived intangibles | 286 | 286 |
Intangible assets with finite lives: | ||
Total | 305 | |
Patents and licensed technology | ||
Intangible assets with finite lives: | ||
Intangibles assets with finite lives, gross | 1,665 | 1,665 |
Intangibles assets with finite lives, accumulated amortization | (1,360) | (1,006) |
Total | $ 305 | $ 659 |
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Oct. 31, 2015 |
Jul. 31, 2014 |
Sep. 30, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense related to intangible assets | $ 0.4 | ||
Patents and licensed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 3 years | ||
ASIC development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 3 years |
GOODWILL AND INTANGIBLE ASSETS - Schedule of Estimated Future Amortization Expense Related to Finite-Lived Intangible Assets (Details) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2017 | $ 76 |
2018 | 229 |
Total | $ 305 |
DEBT - Long term debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Disclosure [Abstract] | ||
Term loan | $ 50,000 | $ 25,000 |
Less unamortized discount and issuance costs | (2,390) | (1,200) |
Carrying amount of debt | 47,610 | 23,800 |
Less current portion | (10,552) | (3,032) |
Long-term debt | $ 37,058 | $ 20,768 |
DEBT - Maturities (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 | $ 0 | |
2018 | 15,229 | |
2019 | 20,084 | |
2020 | 14,687 | |
Total | $ 50,000 | $ 25,000 |
SALE OF COMMON STOCK (Details) - USD ($) $ in Thousands, shares in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2017 |
Dec. 31, 2016 |
Mar. 31, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Subsidiary, Sale of Stock [Line Items] | |||||
Proceeds from issuance of common stock | $ 26,425 | $ 14,593 | |||
Private Placement | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued during period (in shares) | 10.8 | ||||
Gross proceeds from issuance of common stock | $ 10,000 | ||||
Proceeds from issuance of common stock | $ 10,000 | ||||
Market Issuance Sales Agreement (ATM) | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued during period (in shares) | 11.1 | ||||
Gross proceeds from issuance of common stock | $ 17,000 | ||||
Gross aggregate offering price | $ 17,000 | ||||
Proceeds from issuance of common stock | $ 16,600 |
STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) shares in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
$ / shares
shares
| |
Number of Shares Outstanding | |
Outstanding, beginning balance (in shares) | shares | 8,730 |
Granted (in shares) | shares | 4,191 |
Exercised (in shares) | shares | (17) |
Canceled (in shares) | shares | (4,193) |
Outstanding, ending balance (in shares) | shares | 8,711 |
Weighted- Average Exercise Price per Share | |
Outstanding, beginning balance (in usd per share) | $ / shares | $ 4.56 |
Granted (in usd per share) | $ / shares | 1.14 |
Exercised (in usd per share) | $ / shares | 0.39 |
Canceled (in usd per share) | $ / shares | 7.02 |
Outstanding, ending balance (in usd per share) | $ / shares | $ 1.74 |
STOCK-BASED COMPENSATION - Summary of Restricted Stock Unit Activity (Details) - Restricted stock units shares in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
$ / shares
shares
| |
RSUs | |
Outstanding, beginning balance (in shares) | shares | 606 |
Granted (in shares) | shares | 4,318 |
Vested (in shares) | shares | (824) |
Canceled (in shares) | shares | (1,299) |
Outstanding, ending balance (in shares) | shares | 2,801 |
Weighted Average Fair Value per Share at Grant Date | |
Outstanding, beginning balance (in usd per share) | $ / shares | $ 9.33 |
Granted (in usd per share) | $ / shares | 1.13 |
Vested (in usd per share) | $ / shares | 3.87 |
Canceled (in usd per share) | $ / shares | 2.03 |
Outstanding, ending balance (in usd per share) | $ / shares | $ 1.68 |
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Associated with Each Type of Award (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 1,727 | $ 2,532 | $ 5,277 | $ 8,239 |
Stock options and restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 1,473 | 1,983 | 4,363 | 6,703 |
Employee stock purchase plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 254 | $ 549 | $ 914 | $ 1,536 |
STOCK-BASED COMPENSATION - Summary of the Weighted-Average Grant Date Fair Value of Options Granted (Details) - Stock options - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
The fair value of each option granted during the periods | ||||
Weighted average grant date fair value (in usd per share) | $ 0.69 | $ 1.25 | $ 0.70 | $ 1.31 |
Expected term (in years) | 4 years 2 months 12 days | 4 years 6 months | 4 years 4 months 24 days | 4 years 6 months |
Expected volatility | 83.80% | 84.70% | 84.40% | 79.80% |
Annual risk-free rate of return | 1.60% | 1.10% | 1.80% | 1.10% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
NET LOSS PER SHARE - Schedule of Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Numerator: | ||||
Net loss | $ (6,854) | $ (18,756) | $ (42,252) | $ (54,274) |
Denominator: | ||||
Shares used in per share calculation, basic and diluted (in shares) | 84,862 | 47,278 | 81,993 | 46,704 |
Net loss per share, basic and diluted (in usd per share) | $ (0.08) | $ (0.40) | $ (0.52) | $ (1.16) |
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