☐ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☒ |
ANNUAL 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
|
☐ |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Title of Each Class
Ordinary Shares, Par Value NIS 0.01
|
Name of Exchange of Which Registered
Nasdaq Global Select Market
|
Large accelerated filer ☐ | Accelerated filer ☑ |
Non-accelerated filer ☐
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39
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55
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75
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77
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78
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79
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93
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93
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· |
references to "Ceragon," the "Company," "us," "we" and "our" refer to Ceragon Networks Ltd. (the "Registrant"), an Israeli company, and its consolidated subsidiaries;
|
· |
references to "ordinary shares," "our shares" and similar expressions refer to the Registrant's Ordinary Shares, NIS 0.01 nominal (par) value per share;
|
· |
references to "dollars," "U.S. dollars" and "$" are to United States Dollars;
|
· |
references to "shekels" and "NIS" are to New Israeli Shekels, the Israeli currency;
|
· |
references to the "Companies Law" are to Israel's Companies Law, 5759-1999;
|
· |
references to the "SEC" are to the United States Securities and Exchange Commission; and
|
· |
references to the "Nasdaq Rules" are to rules of the Nasdaq Global Select Market.
|
Year ended December 31,
|
||||||||||||||||||||
2012
|
2013
|
2014
|
2015
|
2016
|
||||||||||||||||
Consolidated Statement of Operations Data:
|
(In thousands, except share and per share data)
|
|||||||||||||||||||
Revenues
|
$
|
446,651
|
$
|
361,772
|
$
|
371,112
|
$
|
349,435
|
$
|
293,641
|
||||||||||
Cost of revenues
|
308,354
|
249,543
|
286,670
|
246,487
|
194,479
|
|||||||||||||||
Gross profit
|
138,297
|
112,229
|
84,442
|
102,948
|
99,162
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Research and development
|
47,487
|
42,962
|
35,004
|
22,930
|
21,695
|
|||||||||||||||
Selling and marketing
|
77,326
|
67,743
|
56,059
|
40,816
|
39,515
|
|||||||||||||||
General and administrative.
|
27,519
|
26,757
|
23,657
|
21,235
|
20,380
|
|||||||||||||||
Restructuring costs
|
4,608
|
9,345
|
6,816
|
1,225
|
-
|
|||||||||||||||
Goodwill impairment
|
--
|
--
|
14,765
|
--
|
--
|
|||||||||||||||
Other income
|
--
|
(7,657
|
)
|
(19,827
|
)
|
(4,849
|
)
|
(1,921
|
)
|
|||||||||||
Total operating expenses
|
156,940
|
139,150
|
116,474
|
81,357
|
79,669
|
|||||||||||||||
Operating income (loss)
|
(18,643
|
)
|
(26,921
|
)
|
(32,032
|
)
|
21,591
|
19,493
|
||||||||||||
Financial expenses, net
|
(3,547
|
)
|
(14,018
|
)
|
(37,946
|
)
|
(14,738
|
)
|
(6,303
|
)
|
||||||||||
Income (loss) before taxes
|
(22,190
|
)
|
(40,939
|
)
|
(69,978
|
)
|
6,853
|
13,190
|
||||||||||||
Tax on income
|
(1,201
|
)
|
(6,539
|
)
|
(6,501
|
)
|
(5,842
|
)
|
(1,761
|
)
|
||||||||||
Net income (loss)
|
(23,391
|
)
|
(47,478
|
)
|
(76,479
|
)
|
1,011
|
11,429
|
||||||||||||
Basic net earnings (loss) per share
|
$
|
(0.64
|
)
|
$
|
(1.23
|
)
|
$
|
(1.22
|
)
|
$
|
0.01
|
$
|
0.15
|
|||||||
Diluted net earnings (loss) per share
|
$
|
(0.64
|
)
|
$
|
(1.23
|
)
|
$
|
(1.22
|
)
|
$
|
0.01
|
$
|
0.15
|
|||||||
Weighted average number of shares used in computing basic earnings (loss) per share
|
36,457,989
|
38,519,606
|
62,518,602
|
77,239,409
|
77,702,788
|
|||||||||||||||
Weighted average number of shares used in computing diluted earnings (loss) per share
|
36,457,989
|
38,519,606
|
62,518,602
|
77,296,681
|
78,613,528
|
At December 31
|
||||||||||||||||||||
2012
|
2013
|
2014
|
2015
|
2016
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Consolidated Balance Sheet Data:
|
||||||||||||||||||||
Cash and cash equivalents, short and long term bank deposits, short and long term marketable securities
|
$
|
51,589
|
$
|
52,337
|
$
|
42,371
|
$
|
36,318
|
$
|
36,338
|
||||||||||
Working capital
|
129,407
|
106,765
|
87,748
|
81,957
|
95,950
|
|||||||||||||||
Total assets
|
393,596
|
365,971
|
341,873
|
267,249
|
244,225
|
|||||||||||||||
Total long term liabilities
|
69,767
|
52,498
|
31,822
|
19,915
|
17,555
|
|||||||||||||||
Shareholders' equity
|
143,709
|
135,078
|
104,552
|
102,821
|
116,164
|
· unexpected changes in or enforcement of regulatory requirements, including security regulations relating to international terrorism and hacking concerns and regulations related to
licensing and allocation processes;
|
|
· unexpected changes in or imposition of tax or customs levies;
|
|
· fluctuations in foreign currency exchange rates;
|
|
· restrictions on currency and cash repatriation;
|
|
· imposition of tariffs and other barriers and restrictions;
|
|
· burden of complying with a variety of foreign laws, including foreign import restrictions which may be applicable to our products;
|
|
· difficulties in protecting intellectual property;
|
|
· laws and business practices favoring local competitors;
|
|
· demand for high-volume purchases with discounted prices;
|
|
· collection delays and uncertainties;
|
|
· civil unrest, war and acts of terrorism;
|
|
· requirements to do business in local currency; and
|
|
· requirements to manufacture or purchase locally.
|
·
|
new generations of products replacing older ones, including changes in products because of technological advances and cost reduction measures; and
|
||
·
|
the need of our contract manufacturers to order raw materials that have long lead times and our inability to estimate exact amounts and types of items thus needed, especially with regard to the frequencies in which the final products ordered will operate.
|
|
·
|
The component suppliers may experience shortages in components and interrupt or delay their shipments to our contract manufacturers. Consequently, these shortages could delay the manufacture of our products and shipments to our customers, which could result in penalties or cancellation of orders for our products.
|
|
·
|
The component suppliers could discontinue the manufacture or supply of components used in our systems. In such an event, our contract manufacturers or we may be unable to develop alternative sources for the components necessary to manufacture our products, which could force us to redesign our products or buy a large stock of the component into inventory before it is discontinued. Any such redesign of our products would likely interrupt the manufacturing process and could cause delays in our product shipments. Moreover, a significant modification in our product design may increase our manufacturing costs and bring about lower gross margins.
|
·
|
The component suppliers may increase component prices significantly at any time and with immediate effect, particularly if demand for certain components increases dramatically in the global market. These price increases would increase component procurement costs and could significantly reduce our gross margins and profitability.
|
o |
Our business is subject to numerous laws and regulations designed to protect the environment, including with respect to discharges management of hazardous substances. Although we believe that we comply with these requirements and that such compliance does not have a material adverse effect on our results of operations, financial condition or cash flows, the failure to comply with current or future environmental requirements could expose the Company to criminal, civil and administrative charges. Due to the nature of our business and environmental risks, we cannot provide assurance that any such material liability will not arise in the future.
|
o |
Our wireless communications products emit electromagnetic radiation. While we are currently unaware of any negative effects associated with our products, there has been publicity regarding the potentially negative direct and indirect health and safety effects of electromagnetic emissions from wireless telephones and other wireless equipment sources, including allegations that these emissions may cause cancer. Health and safety issues related to our products may arise that could lead to litigation or other actions against us or to additional regulation of our products, and we may be required to modify our technology without the ability to do so. Even if these concerns prove to be baseless, the resulting negative publicity could affect our ability to market these products and, in turn, could harm our business and results of operations. Claims against other wireless equipment suppliers or wireless service providers could adversely affect the demand for our backhaul solutions.
|
· |
announcements of technological innovations by us or by others;
|
· |
competitors' positions and other events related to this market;
|
· |
changes in the Company's estimations regarding forward looking statements and/or announcement of actual results that vary significantly from such estimations;
|
· |
announcement of corporate transactions or other events impacting our revenues;
|
· |
changes in financial estimates by securities analysts;
|
· |
our earnings releases and the earnings releases of our competitors;
|
· |
other announcements, whether by the Company or others, referring to the Company's financial condition, results of operations and changes in strategy;
|
· |
the general state of the securities markets (with a particular emphasis on the technology and Israeli sectors thereof);
|
· |
the general state of the credit markets, the volatility of which could have an adverse effect on our investments; and
|
· |
global macroeconomic developments.
|
· |
The rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q and immediate reports on Form 8-K;
|
· |
The sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of securities registered under the Exchange Act;
|
· |
The provisions of regulation FD aimed at preventing issuers from making selective disclosures of material information; and
|
· |
The sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profit realized from any "short-swing" trading transaction (a purchase and sale, or sale and purchase, of the issuer's equity securities within less than six months).
|
· |
Hostilities involving Israel;
|
· |
The interruption or curtailment of trade between Israel and its present trading partners;
|
· |
A downturn in the economic or financial conditions in Israel; and
|
· |
A full or partial mobilization of the reserve forces of the Israeli army.
|
· |
Shorthaul solutions, which typically provide a wireless link capacity of up to 1 Gbps per link and are used to carry voice and data services over distances of between several hundred feet to 10 miles. Short-haul links are deployed in access applications (macro cells and small cells) wirelessly connecting the individual base-stations and cellular towers to the core network. Short-haul solutions are also used in a range of non-carrier "vertical" applications such as state and local government, public safety, education and off-shore communication for oil and gas platforms.
|
· |
Long-haul solutions, which typically provide a capacity of up to 5 Gbps, are used in the "highways" of the telecommunication backbone network. These links are used to carry services at distances of 10 to 50 miles, and, using the right planning, configuration and equipment, can also bridge distances of 100 miles. Long-haul solutions are also used in a range of non-carrier "vertical" applications such as broadcast, state and local government, public safety, utilities and off-shore communication for oil and gas platforms.
|
· |
Software Defined Networking (SDN) is an emerging concept aimed at simplifying network operations and allowing network engineers and administrators to quickly respond to a fast-changing business environment. SDN delivers network architectures that transition networks from a world of task-specific dedicated network devices, to a world of optimization of network performance through network intelligence incorporated within network controllers performing control functions and network devices, which perform traffic (data-plane) transport. Our IP-20 Platform, which we launched during 2013, is an SDN-ready solutions suite that is built around a powerful software-defined engine and may be incorporated within the SDN network architecture. Our SDN architecture is envisioned to provide a set of applications that can achieve end-to-end wireless backhaul network optimization by intelligently making use of the scarce network resources, such as spectrum and power consumption.
|
· |
The emergence of small cells presents backhaul challenges that differ from those of traditional macro-cells. Small cells can be used to provide a second layer of coverage in 4G/LTE networks, resulting in higher throughput and data rates for the end-user. Although small cell deployments are still evolving and are as of yet not showing significant volumes, Ceragon already offers tailored solutions for forward looking mobile operators. Our small-cell wireless backhaul portfolio includes a variety of compact all-outdoor solutions that provide operators with optimal flexibility in meeting their unique physical, capacity, networking, and regulatory requirements.
|
· |
The network sharing business model is growing in popularity among mobile network operators (MNOs) who are faced with increasing competition from over-the-top players and an ever-growing capacity crunch. Network sharing can be particularly effective in the backhaul portion of mobile networks, especially as conventional macro cells evolve into super-sized macro sites that require exponentially more bandwidth for wireless backhaul. It has become abundantly clear that in these new scenarios, a new breed of wireless backhaul solutions with a significant investment is required. Our IP-20 Platform supports network sharing concepts by addressing both the ultra-high capacities required for carrying multiple operator traffic, as well as the policing for ensuring that each operator's service level agreement is maintained.
|
· |
While green-field deployments tend to be all IP-based, the overwhelming portion of network infrastructure investments goes into upgrading, or "modernizing" existing cell-sites to fit new services with a lower total cost of ownership. Modernizing is more than a simple replacement of network equipment. It helps operators build up a network with enhanced performance, capacity and service support. For example, Ceragon offers a variety of innovative mediation devices that eliminate the need to replace costly antennas that are already in deployment. In doing so, we help our customers to reduce the time and the costs associated with network upgrades. The result: a smoother upgrade cycle, short network down-time during upgrades and faster time to revenue.
|
· |
A growing market for non-mobile backhaul applications which includes: offshore communications for the oil and gas, as well as the shipping industry, which require a unique set of solutions for use on moving rigs and vessels; broadcast networks that require robust, highly reliable communication for the distribution of live video content either as a cost efficient alternative to fiber, or as a backup for fiber installations; and Smart Grid networks for utilities, as well as local and national governments that seek greater energy efficiency, reliability and scale.
|
· |
A growing demand for high capacity, IP-based long haul solutions in emerging markets. This demand is driven by the need of operators to connect more communities to 3.5G and 4G mobile value added services, and a lack of alternative (wire-line) backbone telecommunication infrastructure in these emerging markets.
|
· |
Market consolidation in the wireless backhaul segment continues. This trend was made evident in our acquisition of Nera and DragonWave's acquisition of the microwave division of Nokia Siemens Networks.
|
· |
Subscriber growth continues mainly in emerging markets such as India, Africa and Latin America.
|
· |
Increase business operational efficiency by reducing network related expenses: our customers are able to obtain the required capacity with one-quarter of the spectrum needed otherwise, double network capacity without adding more equipment simply by remotely expanding wireless link capacity, significantly reduce energy related expenses by utilizing our energy efficient products, use smaller antennas thereby reducing telecommunication tower leasing costs, and improve their staff productivity with the use of a single wireless backhaul platform for their longhaul, shorthaul and small cells backhaul needs. We offer a range of solutions for quick and simple modernization of wireless networks to 4G LTE, LTE-Advanced/Pro, which significantly contribute to our customers' ability to modernize and expand their service networks.
|
· |
Enhance customers' (subscribers) quality of experience: our multicore technology allows our customers to improve subscriber (user) quality of experience generated from the voice, data and multimedia services that they provide to their customers. Our solutions enable our customers to deliver services with the flexibility to deploy wireless bases stations and other types of communication sites, exactly where needed, in order to maximize their customers' quality of experience. We do so by providing a solution which can dramatically reduce the interference between wireless backhaul links, thereby allowing more flexibility for deploying wireless backhaul wherever needed.
|
· |
Ensure peace of mind: our solutions utilize the latest in microwave and millimeter-wave technology, incorporated in-house developed System-on-Chips (baseband and RF integrated circuits), and use the latest advances in SMT (Surface-mount technologies)-based manufacturing – allowing our customers to benefit from the highest service availability across their Ceragon-based wireless backhaul network.
|
Ø |
Indoor units which are used to convert the transmission signals from digital to intermediate frequency signals and vice versa, process and manage information transmitted to and from the outdoor unit, aggregate multiple transmission signals and provide a physical interface to wire-line networks.
|
Ø |
Outdoor units or Radio Frequency Units (RFU), which are used to control power transmission, convert intermediate frequency signals to radio frequency signals and vice versa, and provide an interface between antennas and indoor units. They are contained in compact weather-proof enclosures fastened to antennas. Indoor units are connected to outdoor units by standard coaxial cables.
|
· |
All-indoor solutions refer to solutions in which the entire system (indoor unit and RFU) reside in a single rack inside a transmission equipment room. A waveguide connection transports the radio signals to the antenna mounted on a tower. All indoor equipment is typically used in long-haul applications.
|
· |
All-outdoor solutions combine the functionality of both the indoor and outdoor units in a single, compact device. This weather-proof enclosure is fastened to an antenna, eliminating the need for rack space or sheltering as well as the need for air conditioning.
|
· |
Pointing accuracy solutions for high vibration environments. These are advanced microwave radio systems for use on moving rigs/vessels where the antenna is stabilized in one or two axes, azimuth or azimuth/elevation.
|
· |
Antennas are used to transmit and receive microwave radio signals from one side of the wireless link to the other. These devices are mounted on poles typically placed on rooftops, towers or buildings. We rely on third party vendors to supply this component.
|
· |
End-to-End Network Management. Our network management system uses standard management protocol to monitor and control managed devices at both the element and network level and can be easily integrated into our customers' existing network management systems.
|
Short-Haul
|
Long-Haul
|
||||||||
Product
|
FibeAir IP-20G & IP-20GX
|
FibeAir IP-20N / IP-20A*
|
FibeAir IP-20C
|
FibeAir IP-20S
|
FibeAir IP-20E
|
FibeAir IP-20C HP
|
FibeAir IP-20LH
|
Evolution IP-20 LH
|
PointLink
|
Description
|
Multi-Radio Technology Edge Node
|
Multi-Radio Technology Aggregation Node
|
Compact All-Outdoor Multi-Core Node
|
Compact All-Outdoor Node
|
Compact All-Outdoor Node for E-band (70-80GHz)
|
Compact, high power, multi-carrier trunk
|
Ultra-high power multi-carrier trunk with HP-radio ODUs
|
Ultra-high power multi-carrier trunk with Evolution ODUs
|
High capacity offshore communication
|
Interfaces
|
1GE, FE, and
E1/T1
|
10GE, 1GE, FE, E1/T1
|
1GE
|
1GE
|
1GE
|
10GE, 1GE, STM-1/OC-3, E1/T1
Note: support for some interfaces requires use of IP-20N/IP-20A IDU
|
10GE, 1GE, FE, STM-1/OC-3, E1/T1
|
10GE, 1GE, , FE, STM-1/OC-3, E1/T1
|
|
Site Configuration
|
Split-mount
|
All-outdoor
|
All-outdoor / Split Mount (with IP-20N or IP-20A IDU)
|
All-indoor /
Split-mount
|
Split mount
|
||||
Transport
Technology
|
Hybrid and/or all-packet
|
All-packet
|
All-packet and/or Hybrid
|
Hybrid and/or all-packet
|
|||||
Typical Applications
|
Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies)
|
Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies)
|
Cellular
operators,
Wireless ISPs,
Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies)
|
Cellular
operators,
Wireless ISPs,
Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies)
|
Cellular
operators,
Wireless ISPs,
Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies)
|
Cellular operators,
Wireless ISPs,
Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies)
|
Cellular operators, Wireless service providers,
Incumbent local exchange
carriers, Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies)
|
Cellular operators, Wireless service providers,
Incumbent local exchange
carriers Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies)
|
Offshore oil/gas rigs in high vibration environment
|
Type of Customers
|
Cellular operators, Wireless ISPs, Private Network providers, Government institutions
|
Cellular operators, Wireless ISPs, Private Network providers, Government institutions
|
Cellular operators, Wireless ISPs, Private Network providers, Government institutions
|
Cellular operators, Wireless ISPs, Private Network providers, Government institutions
|
Cellular operators, Wireless ISPs, Private Network providers, Government institutions
|
Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Network providers
|
Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Network providers
|
Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Network providers
|
Oil and gas drilling companies, shipping industry
|
Operating system
|
Unified operating system (CeraOS), uniformly supporting End-to-End networking, services and radio capabilities across the entire IP-20 platform series of products
|
Year Ended December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Region
|
||||||||||||
North America
|
11
|
%
|
13
|
%
|
14
|
%
|
||||||
Europe
|
16
|
%
|
14
|
%
|
15
|
%
|
||||||
Africa
|
15
|
%
|
10
|
%
|
7
|
%
|
||||||
India
|
25
|
%
|
30
|
%
|
27
|
%
|
||||||
APAC (excluding India)
|
11
|
%
|
9
|
%
|
10
|
%
|
||||||
Latin America
|
22
|
%
|
24
|
%
|
27
|
%
|
· |
for the standard character mark Ceragon Networks and our logo in the United States, Israel, and the European Union;
|
· |
for the standard character mark Ceragon Networks in Canada;
|
· |
for the standard character mark CERAGON in Russia, Morocco, Israel, Mexico, Malaysia, United States, South Africa, the Philippines, Argentina, Venezuela and Colombia and International Registration (protection granted in Australia, Iceland, Bosnia & Herzegovina, Switzerland, Croatia, Norway, Russia, South Korea, Ukraine, CTM (European Union), Turkey, Singapore, Egypt, Kenya and Macedonia);
|
· |
for our design mark for FibeAir in the United States, Israel and the European Union;
|
· |
for the standard character mark FibeAir in the United States;
|
· |
for the standard character mark CeraView in Israel and the European Union.
|
· |
for the standard character mark CERAGON in Japan, Brazil, Indonesia, India, Nigeria, and International Registration (protection pending in China and Vietnam).
|
· |
our focus on the mobile market and active involvement in shaping next generation standards and technologies, which deliver best customer value;
|
· |
our ability to expand to other vertical markets such as oil and gas and public safety, by drawing upon the capabilities of our technologies and solutions;
|
· |
product performance, reliability and functionality, which assist our customers to achieve the highest value;
|
· |
range and maturity of product portfolio, including the ability to provide solutions in every widely available microwave and millimeter-wave licensed and license-exempt frequency, as well as our ability to provide both circuit switch and IP solutions and therefore to facilitate a migration path for circuit-switched to IP-based networks;
|
· |
cost structure;
|
· |
focus on high-capacity, point-to-point microwave technology, which allows us to quickly adapt to our customers' evolving needs;
|
· |
range of rollout services offering for faster deployment of an entire network and reduced total cost of ownership; and
|
· |
support and technical service, experience and commitment to high quality customer service.
|
Company
|
Place of Incorporation
|
Ownership Interest
|
||||
Ceragon Networks, Inc.
|
New Jersey
|
100
|
%
|
|||
Ceragon Networks AS
|
Norway
|
100
|
%
|
|||
Ceragon Networks (India) Private Limited
|
India
|
100
|
%
|
|||
Ceragon Networks S.A. de CV | Mexico | 100 | % |
· |
in the United States, we lease approximately 5,350 square feet of new premises in Overlook at Great Notch, New Jersey, expiring September, 2021 and approximately 12,461 square feet of office space in Richardson, Texas expiring May 2018.
|
· |
in Norway we lease approximately 12,000 square feet of office space in Bergen, expiring in May 2019;
|
· |
in India, we lease approximately 11,737 square feet of office space in New Delhi expiring in October 2019.
|
· |
In Mexico we lease approximately 4,306 square feet of office space in Mexico City, Mexico, expiring in March 2019.
|
· |
Growing Number of Global Wireless Subscribers. Growth in the number of global wireless subscribers is being driven by the availability of inexpensive cellular phones and more affordable wireless service, particularly in developing countries and emerging markets, and is being addressed by expanding wireless networks and by building new networks.
|
· |
Increasing Demand for Mobile Data Services. Cellular operators and other wireless service providers are facing increasing demand from subscribers to deliver voice and data services, including Internet browsing, music and video applications.
|
· |
The emergence of small cells in particular markets (North America, Asia Pacific) present wireless backhaul challenges that differ from those of traditional macro-cells. Small cells architectures can be used to provide a second layer of coverage in 4G networks, resulting in higher throughput and data rates for the end-user. While adoption by some service providers in North America and Asia Pacific, other service providers around the globe and which have previously considered the deployment of 4G small cells have come to the conclusion that the benefit of additional coverage and capacity versus the required investment, does not provide significant value and hence have deferred the consideration of small cells radio access network to a time in which 5G radio access networks shall be considered.
|
· |
Transition to IP-based Networks. Cellular operators and other wireless service providers are deploying all-IP networks and upgrading their infrastructure to interface with an IP-based core network in order to increase network efficiency, lower operating costs and more effectively deliver high-bandwidth data services.
|
· |
Software Defined Networking (SDN) deliver network architectures that transition networks from a world of task-specific dedicated equipment elements, to a world of optimization of network performance through network intelligence.
|
· |
Network sharing business models are being adopted by mobile network operators (MNOs) who are faced with increasing competition from over-the-top players and an ever-growing capacity crunch. Network sharing can be particularly effective in the backhaul portion of mobile networks, especially as conventional macro cells evolve into super-sized macro sites that require exponentially more bandwidth for backhaul.
|
· |
Increased Competition. Our target market is characterized by vigorous, worldwide competition for market share and rapid technological development. These factors have resulted in aggressive pricing practices and downward pricing pressures, and growing competition from both start-up companies and well-capitalized telecommunication systems providers.
|
· |
Regional Pricing Pressures. A significant portion of our sales derives from India, in response to the rapid build-out of cellular networks in this country. For the years ended December 31, 2014, 2015 and 2016, 24.8%, 30.3% and 27.3%, respectively, of our revenues were earned in India. Sales of our products in these markets are generally at lower gross margins in comparison to other regions. Recently, network operators have started to share parts of their network infrastructure through cooperation agreements, which may adversely affect demand for network equipment.
|
· |
Transaction Size. Competition for larger equipment orders is increasingly intensifying due to the fact that the number of large equipment orders in any year is limited. Consequently, we generally experience greater pricing pressure when we compete for larger orders as a result of this increased competition and demand from purchasers for greater volume discounts. As an increasing portion of our revenues is derived from large orders, we believe that our business will be more susceptible to these pressures.
|
· |
Revenue recognition;
|
· |
Inventory valuation; and
|
· |
Provision for doubtful accounts.
|
Year Ended December 31
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Revenues
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||
Cost of revenues
|
77.2
|
70.5
|
66.2
|
|||||||||
Gross profit
|
22.8
|
29.5
|
33.8
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development, net
|
9.4
|
6.6
|
7.4
|
|||||||||
Selling and marketing
|
15.1
|
11.7
|
13.5
|
|||||||||
General and administrative
|
6.4
|
6.1
|
6.9
|
|||||||||
Restructuring costs
|
1.8
|
0.4
|
-
|
|||||||||
Goodwill impairment
|
4.0
|
-
|
-
|
|||||||||
Other income
|
(5.3
|
)
|
(1.5
|
)
|
(0.7
|
)
|
||||||
Total operating expenses
|
31.4
|
23.3
|
27.1
|
|||||||||
Operating income (loss)
|
(8.6
|
)
|
6.2
|
6.7
|
||||||||
Financial expenses, net
|
10.2
|
4.2
|
2.1
|
|||||||||
Taxes on income
|
1.8
|
1.7
|
0.6
|
|||||||||
Net income (loss)
|
(20.6
|
)
|
0.3
|
4.0
|
· |
lower direct material and services costs primarily resulting from lower volume of revenues;
|
· |
lower other direct and supply chain costs primarily resulting from lower volume of revenues; and
|
· |
the Company's continued product-cost improvement.
|
· |
Lower direct material costs primarily resulting from lower volume of revenues;
|
· |
The Company's continued product-cost improvement; and
|
· |
Lower employee costs primarily as a result of the 2014 restructuring plan.
|
· |
our net income of $11.4 million;
|
· |
a $15.7 million decrease in trade and other receivables, net;
|
· |
$10.0 million of depreciation and amortization expenses; and
|
· |
a $4.7 million decrease in inventories.
|
· |
a $11.4 million decrease in trade payables and accrued expenses, net; and
|
· |
a $6.2 million decrease in deferred revenues paid in advance.
|
· |
our net income of 1.0 million;
|
· |
a $40.2 million decrease in trade and other receivables, net;
|
· |
$12.2 million of depreciation and amortization expenses; and
|
· |
a $10.2 million decrease in inventories.
|
· |
a $41.5 million decrease in trade payables and accrued expenses, net; and
|
· |
a $8.8 million decrease in deferred revenues paid in advance.
|
· |
our net loss of $76.5 million; and
|
· |
a $22.6 million increase in trade and other receivables, net.
|
· |
a $14.8 million impairment of goodwill;
|
· |
$13.5 million of depreciation and amortization expenses;
|
· |
a $9.7 million increase in deferred revenues paid in advance;
|
· |
a $8.9 million increase in trade payables and accrued expenses, net; and
|
· |
a $9.8 million decrease in deferred tax asset.
|
Payments due by period (in thousands of dollars)
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
|||||||||||||||
Operating lease obligations1
|
8,326
|
4, 612
|
3,557
|
157
|
||||||||||||||||
Purchase obligations2
|
23,126
|
23,126
|
||||||||||||||||||
Other long-term commitment3
|
4,622
|
4,622
|
||||||||||||||||||
Uncertain income tax positions4
|
3,939
|
3,939
|
||||||||||||||||||
Total
|
40,013
|
27,738
|
3,557
|
157
|
8,561
|
(1) |
Consists of operating leases for our facilities and for vehicles.
|
(2) |
Consists of all outstanding purchase orders for our products from our suppliers.
|
(3) |
Our obligation for accrued severance pay under Israel's Severance Pay Law as of December 31, 2016 was approximately $6.8 million, of which approximately $4.6 million was funded through deposits in severance pay funds, leaving a net commitment of approximately $2.2 million. In addition, the commitment includes a net amount of approximately $2.4 million in pension accruals in other subsidiaries, mainly in Norway.
|
(4) |
Uncertain income tax position under ASC 740-10, "Income Taxes," are due upon settlement and we are unable to reasonably estimate the ultimate amount or timing of settlement. See Note 13g of our Consolidated Financial Statements for further information regarding the Company's liability under ASC 740-10.
|
Name
|
Age
|
Position
|
Zohar Zisapel
|
68
|
Chairman of the Board of Directors
|
Ira Palti
|
59
|
President and Chief Executive Officer
|
Doron Arazi
|
53
|
Deputy Chief Executive Officer & Chief Financial Officer
|
Nurit Kruk-Zilca
|
43
|
Executive Vice President, Human Resources
|
Yuval Reina
|
50
|
Executive Vice President, Global Products
|
Oz Zimerman
|
53
|
Executive Vice President, Global Corporate Development
|
Flavio Perrucchetti
|
49
|
Regional President, Europe
|
Ram Prakash Tripathi
|
50
|
Regional President, India
|
Amit Ancikovsky
|
46
|
Regional President, Latin America & Africa
|
Charles Meyo
|
53
|
Regional President, North America
|
Shlomo Liran
|
66
|
Director
|
Yael Langer
|
52
|
Director
|
Yair E. Orgler
|
77
|
Director
|
Avi Patir
|
68
|
Director
|
a) |
Aggregate Executive Compensation
|
b) |
Individual Compensation of Office Holders
|
· |
Salary Costs. Salary Costs include gross salary, benefits and perquisites, including those mandated by applicable law which may include, to the extent applicable to each Covered Office Holder's, payments, contributions and/or allocations for pension, severance, car or car allowance, medical insurance and risk insurance (e.g., life, disability, accidents), phone, convalescence pay, relocation, payments for social security, and other benefits consistent with the Company's guidelines.
|
· |
Bonus Costs. Bonus Costs represent bonuses granted to the Covered Office Holder's with respect to the year ended December 31, 2016, paid in accordance with the Covered Office Holder's performance of targets as set forth in his bonus plan, as well as a proportionate amount of a retention bonus that is related to the reported year, and approved by the Company's Compensation Committee and Board of Directors.
|
· |
Equity Costs represent the expense recorded in our financial statements for the year ended December 31, 2016, with respect to equity-based compensation granted in 2016 and in previous years. For assumptions and key variables used in the calculation of such amounts see note 14c of our audited consolidated financial statements.
|
(1) |
Ira Palti – CEO. Salary Costs - $334,138; Bonus Costs - $266,194; Equity Costs - $287,002.
|
(2) |
Amit Ancikovsky – Regional President Latin America & Africa. Salary Costs - $293,931; Bonus Costs - $223,092; Equity Costs - $15,435.
|
(3) |
Doron Arazi – Deputy CEO & CFO. Salary Cost - $ 257,679; Bonus Cost - $ 231,375; Equity Cost - $68,909.
|
(4) |
Charles (Chuck) Meyo – Regional President North America. Salary Costs - $ 317,461; Bonus Costs - $173,855; Equity Costs -$ 28,658.
|
(5) |
Flavio Perrucchetti – Regional President Europe. Salary Cost - $219,591; Bonus Cost - $80,322; Equity Cost - $21,109.
|
· |
an employment relationship;
|
· |
a business or professional relationship maintained on a regular basis;
|
· |
"Control"; and
|
· |
service as an "Office Holder"; the term "Office Holder" as defined in the Companies Law includes a director, the CEO, an executive vice president, a vice president, any other person fulfilling or assuming any of the foregoing positions without regard to such person's title, and any manager who is directly subordinated to the CEO.
|
· |
the majority of the shares voted at the meeting, which are not held by controlling shareholders or shareholders with personal interest in approving the appointment (excluding personal interest not resulting from contacts with the controlling shareholder) ("Non-Related Votes"), not taking into account any abstentions, vote in favor of the election; or
|
· |
the total number of Non-Related Votes, voting against the election of the external director, does not exceed two percent of the aggregate voting rights in the company.
|
1. |
a shareholder holding one percent or more of a company's voting rights proposed the re-election of the nominee;
|
2. |
the board of directors proposed the re-election of the nominee and the election was approved by the shareholders by the majority required to appoint external directors for their initial term; or
|
3. |
the external director who is up for renewal has proposed himself or herself for re-election.
|
· |
transactions with office holders and third parties, where an office holder has a personal interest in the transaction;
|
· |
employment terms of office holders; and
|
· |
extraordinary transactions with controlling parties, and extraordinary transactions with a third party where a controlling party has a personal interest in the transaction, or any transaction with the controlling shareholder or his relative regarding terms of service provided directly or indirectly (including through a company controlled by the controlling shareholder) and terms of employment (for a controlling shareholder who is not an office holder). A "relative" is defined in the Companies Law as spouse, sibling, parent, grandparent, descendant, spouse's descendant, sibling or parent and the spouse of any of the foregoing.
|
· |
the majority of the shares of shareholders who have no personal interest in the transaction and who are present and voting, not taking into account any abstentions, vote in favor; or
|
· |
shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent of the aggregate voting rights in the company.
|
· |
a breach of his or her duty of care to us or to another person;
|
· |
a breach of his or her duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice our interests;
|
· |
a financial liability imposed upon him or her in favor of another person; and
|
· |
any other event, occurrence or circumstance in respect of which we may lawfully insure an office holder.
|
· |
a financial liability imposed on him or her in favor of another person by any judgment, including a settlement or an arbitration award approved by a court.
|
· |
reasonable litigation expenses, including attorney's fees, incurred by the office holder as a result of an investigation or proceeding instituted against him by a competent authority which concluded without the filing of an indictment against him and without the imposition of any financial liability in lieu of criminal proceedings, or which concluded without the filing of an indictment against him but with the imposition of a financial liability in lieu of criminal proceedings concerning a criminal offense that does not require proof of criminal intent or in connection with a financial sanction (the phrases "proceeding concluded without the filing of an indictment" and "financial liability in lieu of criminal proceeding" shall have the meaning ascribed to such phrases in section 260(a)(1a) of the Companies Law);
|
· |
reasonable litigation expenses, including attorneys' fees, expended by an office holder or charged to the office holder by a court, in a proceeding instituted against the office holder by the Company or on its behalf or by another person, or in a criminal charge from which the office holder was acquitted, or in a criminal proceeding in which the office holder was convicted of an offense that does not require proof of criminal intent;
|
· |
expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or payment required to be made to an injured party, pursuant to certain provisions of the Securities Law; and
|
· |
any other event, occurrence or circumstance in respect of which we may lawfully indemnify an office holder.
|
· |
a breach by the office holder of his or her duty of loyalty, except that the company may enter into an insurance contract or indemnify an office holder if the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
· |
a breach by the office holder of his or her duty of care, if such breach was intentional or reckless, but unless such breach was solely negligent;
|
· |
any act or omission intended to derive an illegal personal benefit; or
|
· |
any fine levied against the office holder.
|
Name
|
Number of Ordinary Shares(1)
|
Percentage of Outstanding
Ordinary Shares
|
Number of Stock Options Held (2)
|
Range of exercise prices per share of stock options
|
Number of RSUs
Held (2)
|
|||||||||||||||
Zohar Zisapel(3)
|
10,838,341
|
13.9
|
300,000
|
$
|
1.08 - $11.75
|
-
|
||||||||||||||
Ira Palti
|
1,003,253
|
1.3
|
1,470,000
|
$
|
1.16 - $13.04
|
20,622
|
||||||||||||||
All directors and senior management as a group consisting of 14 people(4)
|
13,121,430
|
16.3
|
3,716,336
|
$
|
1.08-$13.04
|
22,622
|
(1) |
Consists of ordinary shares and options to purchase ordinary shares which are vested or shall become vested within 60 days as of March 28, 2017.
|
(2) |
Each stock option is exercisable into one ordinary share, and expires between 6 and 10 years from the date of its grant. Of the number of stock options listed, 300,000, 1,003,253 and 2,583,089 options, are vested or shall become vested within 60 days of March 28, 2017 for Mr. Zisapel, Mr. Palti and all directors and senior management as a group, respectively. No RSU's listed are vested or expected to vest within 60 days as of March 28, 2017, for Mr. Zisapel, Mr. Palti and all directors and senior management as a group, respectively.
|
(3) |
The number of ordinary shares held by Zohar Zisapel includes 10,717 shares held by RAD Data Communications Ltd., of which Mr. Zisapel is a principal shareholder and chairman of the board.
|
(4) |
Each of the directors and senior managers other than Messrs. Zohar Zisapel and Ira Palti beneficially owns less than 1% of the outstanding ordinary shares as of March 28, 2017 (including options held by each such person and which are vested or shall become vested within 60 days as of March 28, 2017) and have therefore not been separately disclosed.
|
Cumulative Ordinary Shares
Reserved for Option Grants
|
Remaining Reserved Shares Available
for Option Grants
|
Options
Outstanding
|
Weighted Average
Exercise Price
|
|||||||
20,051,126 | 779,327 | 7,490,173 | $3.86 |
Cumulative Ordinary Shares
Reserved for RSU Grants
|
Remaining Reserved Shares
Available for RSU Grants
|
RSUs
Outstanding
|
Weighted Average
Exercise Price
|
|||||||
1,544,562 | --- | 47,535 | $0.00 |
Options and RSUs Outstanding
|
Unvested Options
and RSUs
|
|||||||
Directors and senior management
|
3,857,687
|
1,449,190
|
||||||
All other grantees
|
3,680,021
|
2,066,877
|
Name
|
Number of Ordinary
Shares(2)
|
Percentage of Outstanding Ordinary Shares(1)
|
||||||
Zohar Zisapel (3)
|
10,838,341
|
13.9
|
%
|
|||||
Joseph D. Samberg (4)
|
4,600,000
|
5.9
|
%
|
(1) |
Based on 77,768,929 ordinary shares issued and outstanding as of March 28, 2017.
|
(2) |
Consists of ordinary shares and options to purchase ordinary shares, which are vested or shall become vested within 60 days as of March 28, 2017.
|
(3) |
Zohar Zisapel's address is 24 Raoul Wallenberg St., Tel Aviv 69719, Israel. The ordinary shares held by Zohar Zisapel include 10,717 shares held by RAD Data Communications Ltd., of which Mr. Zisapel is a principal shareholders and the chairman of the board.
|
(4) |
Joseph D. Samberg's address is 1091 Boston Post Road, Rye, NY 10580.
|
·
|
the holders of the ordinary shares resulting from the conversion of such preferred shares; and
|
·
|
Yehuda Zisapel and Zohar Zisapel.
|
Ordinary Shares
|
||||||||
Annual
|
High
|
Low
|
||||||
2012
|
$
|
9.76
|
$
|
3.91
|
||||
2013
|
5.15
|
2.35
|
||||||
2014
|
3.84
|
0.93
|
||||||
2015
|
2.00
|
0.88
|
||||||
2016
|
2.94
|
0.89
|
||||||
Quarterly 2014
|
||||||||
First Quarter
|
$
|
3.84
|
$
|
2.8
|
||||
Second Quarter
|
2.95
|
2.13
|
||||||
Third Quarter
|
2.69
|
2.0
|
||||||
Fourth Quarter
|
2.39
|
0.93
|
Quarterly 2015
|
||||||||
First Quarter
|
$
|
1.35
|
$
|
0.88
|
||||
Second Quarter
|
1.47
|
1.02
|
||||||
Third Quarter
|
1.74
|
0.93
|
||||||
Fourth Quarter
|
2.00
|
1.09
|
||||||
Quarterly 2016
|
||||||||
First Quarter
|
$
|
1.30
|
$
|
0.89
|
||||
Second Quarter
|
1.84
|
1.11
|
||||||
Third Quarter
|
2.94
|
1.58
|
||||||
Fourth Quarter
|
2.89
|
1.95
|
Monthly
|
High
|
Low
|
||||||
October 2016
|
$
|
2.89
|
$
|
1.95
|
||||
November 2016
|
2.61
|
2.21
|
||||||
December 2016
|
2.84
|
2.21
|
||||||
January 2017 .
|
3.88
|
2.70
|
||||||
February 2017
|
4.23
|
3.43
|
||||||
March 2017
|
3.77
|
3.20
|
· |
Similar to the available alternative route, exemption from corporate tax on undistributed income for a period of two to ten years, depending on the geographic location of the Benefited Enterprise within Israel, and a reduced corporate tax rate of 10% to 25% for the remainder of the benefits period, depending on the level of foreign investment in each year. Benefits may be granted for a term of seven to ten years, depending on the level of foreign investment in the company. If the company pays a dividend out of income derived from the Benefited Enterprise during the tax exemption period, such income will be subject to corporate tax at the applicable rate (10%-25%) in respect of the gross amount of the dividend that we may distribute. The company is required to withhold tax at the source at a rate of 20% from any dividends distributed from income derived from the Benefited Enterprise; and
|
· |
A special tax route, which enables companies owning facilities in certain geographical locations in Israel to pay corporate tax at the rate of 11.5% on income of the Benefited Enterprise. The benefits period is ten years. Upon payment of dividends, the company is required to withhold tax at source at a rate of 20% for Israeli residents and at a rate of 4% for foreign residents.
|
(1) |
A reduction in the tax rate for Preferred Enterprises in Development Zone A from 9% to 7.5%; and
|
(2) |
Additional benefits to Preferred Technological Enterprises by reducing the tax rate on preferred Technological Enterprise income (as such is defined in Amendment 73) to 12% (the "Amendment").
|
· |
the expenditures are approved by the relevant Israeli government ministry, determined by the field of research;
|
· |
the research and development is for the promotion or development of the company; and
|
· |
the research and development is carried out by or on behalf of the company seeking the deduction.
|
· |
deduction of purchases of know-how, patents and the right to use a patent over an eight-year period for tax purposes;
|
· |
deduction over a three-year period of specified expenses incurred with the issuance and listing of shares on the Tel Aviv Stock Exchange or on a recognized stock exchange outside of Israel (including Nasdaq);
|
· |
the right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial companies; and
|
· |
accelerated depreciation rates on equipment and buildings.
|
· |
holds the ordinary shares as a capital asset;
|
· |
qualifies as a resident of the United States within the meaning of the U.S.-Israel tax treaty; and
|
· |
is entitled to claim the benefits available to the person by the U.S.-Israel tax treaty.
|
· |
an individual citizen or resident of the United States;
|
· |
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any political subdivision thereof or the District of Columbia;
|
· |
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
|
· |
a trust if (i) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person.
|
· |
are broker-dealers or insurance companies;
|
· |
have elected mark-to-market accounting;
|
· |
are tax-exempt organizations or retirement plans;
|
· |
are grantor trusts;
|
· |
are S corporations;
|
· |
are certain former citizens or long-term residents of the United States;
|
· |
are financial institutions;
|
· |
hold ordinary shares as part of a straddle, hedge or conversion transaction with other investments;
|
· |
acquired their ordinary shares upon the exercise of employee stock options or otherwise as compensation;
|
· |
are real estate investment trusts or regulated investment companies;
|
· |
own directly, indirectly or by attribution at least 10% of our voting power; or
|
· |
have a functional currency that is not the U.S. dollar.
|
· |
the item is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States and in the case of a resident of a country which has a treaty with the United States, the item is attributable to a permanent establishment, or in the case of an individual, the item is attributable to a fixed place of business in the United States; or
|
· |
the non-U.S. holder is an individual who holds the ordinary shares as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition, and certain other conditions are met.
|
Year Ended December 31,
|
||||||||||||||||
2015
|
2016
|
|||||||||||||||
Services Rendered
|
Fees
|
Percentages
|
Fees
|
Percentages
|
||||||||||||
Audit Fees (1)
|
$
|
605,518
|
71
|
$
|
735,556
|
73
|
%
|
|||||||||
Tax Fees (2)
|
$
|
176,341
|
21
|
$
|
190,646
|
19
|
%
|
|||||||||
Other Services(3)
|
$
|
63,607
|
8
|
$
|
83,726
|
8
|
%
|
|||||||||
Total
|
$
|
845,466
|
100
|
$
|
1,009,928
|
100
|
%
|
(1) |
Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements, including services that generally only the independent accountant can reasonably provide.
|
(2) |
Tax fees relate to tax compliance, planning and advice
|
(3) |
Other consulting services
|
- |
We have opted out of the requirement to adopt and file a compensation committee charter as set forth in Nasdaq Rule 5605(d)(1). Instead, our Compensation Committee conducts itself in accordance with provisions governing the establishment and the responsibilities of a compensation committee as set forth in the Companies Law.
|
- |
We have opted out of the requirement for shareholder approval of stock option plans and other equity based compensation arrangements as set forth in Nasdaq Rule 5635 and Nasdaq Rule 5605(d), respectively. Nevertheless, as required under the Companies Law, shareholder voting procedures are followed for the approval of equity-based compensation of certain office holders or employees, such as our CEO and members of our Board of Directors. Equity based compensation arrangements with other office holders are approved by our Compensation Committee and our Board of Directors, provided they are consistent with our Compensation Policy, and in special circumstances in deviation therefrom, taking into account certain considerations as set forth in the Companies Law.
|
- |
We have opted out of the requirement for conducting annual meetings as set forth in Nasdaq Rule 5620(a), which requires Ceragon to hold its annual meetings of shareholders within twelve months of the end of its fiscal year end. Instead, Ceragon is following home country practice and law in this respect. The Companies Law requires that an annual meeting of shareholders be held every year, and not later than 15 months following the last annual meeting (see in Item 10.B above –"Additional Information –Voting, Shareholders' Meetings and Resolutions"). Further, we have opted out of the requirement set under Rule 5620(c) of the Nasdaq Rules, which requires the presence of two or more shareholders holding at least 33 1/3%, and in lieu follow our home country practice and Israeli law, according to which the quorum for any shareholders meeting will be the presence of two or more shareholders holding at least 25% of the voting rights in the aggregate - within half an hour from the time set for opening the meeting.
|
- |
We have chosen to follow our home country practice in lieu of the requirements of Nasdaq Rule 5250(d)(1), relating to an issuer's furnishing of its annual report to shareholders. Specifically, we file annual reports on Form 20-F, which contain financial statements audited by an independent accounting firm, electronically with the SEC and post a copy on our website.
|
Page
|
|
Index to Consolidated Financial Statements
|
|
F-2 - F-4
|
|
F-5 - F-6
|
|
F-7
|
|
F-8
|
|
F-9
|
|
F-10 - F-11
|
|
F-12 - F-51
|
1.2 |
Articles of Association, as amended September 20, 2016
|
4.4 |
Credit facility, dated as of March 14, 2013 ("Credit Facility") by and among the Company and Bank Hapoalim B.M., HSBC Bank Plc, Bank Leumi Le'Israel Ltd. and First International Bank of Israel Ltd. (English summary of the material terms) (1)
|
4.5 |
Amendment, effective as of October 1, 2013, to the Credit Facility (English summary of the material terms) (2)
|
4.6 |
Amendment No. 2, effective as of April 29, 2014, to the Credit Facility (English summary of the material terms) (3)
|
4.7 |
Amendment No. 3, effective as of March 31, 2015, to the Credit Facility (English summary of the material terms) (3)
|
4.8 |
Amended and Restated Share Option and RSU Plan, as Amended August 10, 2014(3)
|
4.9 |
Amendment No. 4, effective as of March 10, 2016, to the Credit Facility (English summary of the material terms) (4)
|
4.10 |
Amendment No. 5, executed in December 2016, to the Credit Facility (English summary of the material terms)
|
4.11 |
Amendment No. 6, effective as of March 30, 2017, to the Credit Facility (English summary of the material terms)
|
8.1 |
List of Significant Subsidiaries
|
10.1 |
Consent of Independent Registered Public Accounting Firm
|
12.1 |
Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
12.2 |
Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
13.1 |
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101 |
The following financial information from Ceragon Networks Ltd.'s Annual Report on Form 20-F for the year ended December 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014; (ii) Consolidated Statements of Comprehensive Income (Loss) at December 31, 2016, 2015 and 2014; (iii) Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2016, 2015 and 2014; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014; and (v) Notes to Consolidated Financial Statements. Users of this data are advised, in accordance with Rule 406T of Regulation S-T promulgated by the SEC, that this Interactive Data File is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.
|
Page
|
|
F-2 - F-4
|
|
F-5 - F-6
|
|
F-7
|
|
F-8
|
|
F-9
|
|
F-10 - F-11
|
|
F-12 - F-51
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
Tel-Aviv, Israel
|
KOST FORER GABBAY & KASIERER
|
April 7, 2017
|
A Member of Ernst & Young Global
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
Tel-Aviv, Israel
|
KOST FORER GABBAY & KASIERER
|
April 7, 2017
|
A Member of Ernst & Young Global
|
December 31,
|
|||||||||||
Note
|
2015
|
2016
|
|||||||||
ASSETS
|
|||||||||||
CURRENT ASSETS:
|
|||||||||||
Cash and cash equivalents
|
$
|
36,318
|
$
|
36,338
|
|||||||
Trade receivables (net of allowance for doubtful accounts of $12,229 and $12,162 at December 31, 2015 and 2016, respectively)
|
116,683
|
107,395
|
|||||||||
Other accounts receivable and prepaid expenses
|
3
|
23,779
|
17,076
|
||||||||
Inventories
|
4
|
49,690
|
45,647
|
||||||||
Total current assets
|
226,470
|
206,456
|
|||||||||
NON-CURRENT ASSETS:
|
|||||||||||
Deferred tax assets, net
|
13c
|
1,822
|
1,344
|
||||||||
Severance pay and pension fund
|
4,681
|
4,575
|
|||||||||
Other accounts receivable
|
2,178
|
2,746
|
|||||||||
PROPERTY AND EQUIPMENT, NET
|
5
|
28,906
|
27,560
|
||||||||
INTANGIBLE ASSETS, NET
|
6
|
3,192
|
1,544
|
||||||||
Total long-term assets
|
40,779
|
37,769
|
|||||||||
Total assets
|
$
|
267,249
|
$
|
244,225
|
December 31,
|
|||||||||||
Note
|
2015
|
2016
|
|||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||||||
CURRENT LIABILITIES:
|
|||||||||||
Short-term loans
|
8
|
$
|
34,922
|
$
|
17,000
|
||||||
Trade payables
|
73,638
|
68,408
|
|||||||||
Deferred revenues
|
8,901
|
2,673
|
|||||||||
Other accounts payable and accrued expenses
|
7
|
27,052
|
22,425
|
||||||||
Total current liabilities
|
144,513
|
110,506
|
|||||||||
LONG-TERM LIABILITIES:
|
|||||||||||
Accrued severance pay and pensions
|
9,276
|
9,198
|
|||||||||
Other long-term liabilities
|
10,639
|
8,357
|
|||||||||
Total long-term liabilities
|
19,915
|
17,555
|
|||||||||
COMMITMENTS AND CONTINGENT LIABILITIES
|
11
|
||||||||||
SHAREHOLDERS' EQUITY:
|
12
|
||||||||||
Share capital -
|
|||||||||||
Ordinary shares of NIS 0.01 par value -
|
|||||||||||
Authorized: 120,000,000 shares at December 31, 2015 and 2016; Issued: 81,118,387 and 81,250,452 shares at December 31, 2015 and 2016, respectively; Outstanding: 77,636,864 and 77,768,929 shares at December 31, 2015 and 2016, respectively
|
214
|
214
|
|||||||||
Additional paid-in capital
|
408,174
|
409,320
|
|||||||||
Treasury shares at cost – 3,481,523 ordinary shares as of December 31, 2015 and 2016
|
(20,091
|
)
|
(20,091
|
)
|
|||||||
Accumulated other comprehensive loss
|
(8,616
|
)
|
(7,848
|
)
|
|||||||
Accumulated deficit
|
(276,860
|
)
|
(265,431
|
)
|
|||||||
Total shareholders' equity
|
102,821
|
116,164
|
|||||||||
Total liabilities and shareholders' equity
|
$
|
267,249
|
$
|
244,225
|
Year ended
December 31,
|
|||||||||||||||
Note
|
2014
|
2015
|
2016
|
||||||||||||
Revenues
|
14b
|
$
|
371,112
|
$
|
349,435
|
$
|
293,641
|
||||||||
Cost of revenues
|
286,670
|
246,487
|
194,479
|
||||||||||||
Gross profit
|
84,442
|
102,948
|
99,162
|
||||||||||||
Operating expenses:
|
|||||||||||||||
Research and development, net
|
35,004
|
22,930
|
21,695
|
||||||||||||
Selling and marketing
|
56,059
|
40,816
|
39,515
|
||||||||||||
General and administrative
|
23,657
|
21,235
|
20,380
|
||||||||||||
Restructuring costs
|
6,816
|
1,225
|
-
|
||||||||||||
Goodwill impairment
|
14,765
|
-
|
-
|
||||||||||||
Other income
|
(19,827
|
)
|
(4,849
|
)
|
(1,921
|
)
|
|||||||||
Total operating expenses
|
116,474
|
81,357
|
79,669
|
||||||||||||
Operating income (loss)
|
(32,032
|
)
|
21,591
|
19,493
|
|||||||||||
Financial expenses, net
|
15
|
37,946
|
14,738
|
6,303
|
|||||||||||
Income (loss)before taxes on income
|
(69,978
|
)
|
6,853
|
13,190
|
|||||||||||
Taxes on income
|
13b
|
6,501
|
5,842
|
1,761
|
|||||||||||
Net income (loss)
|
$
|
(76,479
|
)
|
$
|
1,011
|
$
|
11,429
|
||||||||
Net Income (loss) per share:
|
|||||||||||||||
Basic net income (loss) per share
|
$
|
(1.22
|
)
|
$
|
0.01
|
$
|
0.15
|
||||||||
Diluted net income (loss) per share
|
$
|
(1.22
|
)
|
$
|
0.01
|
$
|
0.15
|
||||||||
Weighted average number of ordinary shares used in computing basic net income (loss) per share
|
62,518,602
|
77,239,409
|
77,702,788
|
||||||||||||
Weighted average number of ordinary shares used in computing diluted net income (loss) per share
|
62,518,602
|
77,296,681
|
78,613,528
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Net income (loss)
|
$
|
(76,479
|
)
|
$
|
1,011
|
$
|
11,429
|
|||||
Other comprehensive income (loss):
|
||||||||||||
Change in foreign currency translation adjustment
|
(1,853
|
)
|
(4,149
|
)
|
861
|
|||||||
Available-for-sale investments:
|
||||||||||||
Change in net unrealized gain (losses)
|
260
|
(423
|
)
|
-
|
||||||||
Amounts reclassified from AOCI
|
(735
|
)
|
330
|
-
|
||||||||
Net change
|
(475
|
)
|
(93
|
)
|
-
|
|||||||
Cash flow hedges:
|
||||||||||||
Change in net unrealized gains (losses)
|
(709
|
)
|
(153
|
)
|
168
|
|
||||||
Amounts reclassified from AOCI
|
495
|
(110
|
)
|
(261
|
) | |||||||
Net change
|
(214
|
)
|
(263
|
)
|
(93
|
)
|
||||||
Other comprehensive income (loss), net
|
(2,542
|
)
|
(4,505
|
)
|
768
|
|||||||
Total of comprehensive income (loss)
|
$
|
(79,021
|
)
|
$
|
(3,494
|
)
|
$
|
12,197
|
Ordinary
shares
|
Share
capital
|
Additional
paid-in
capital
|
Treasury
shares
at cost
|
Accumulated
other
comprehensive
loss
|
Accumulated
deficit
|
Total
shareholders'
equity
|
||||||||||||||||||||||
Balance as of January 1, 2014
|
52,457,168
|
$
|
141
|
$
|
357,989
|
$
|
(20,091
|
)
|
$
|
(1,569
|
)
|
$
|
(201,392
|
)
|
$
|
135,078
|
||||||||||||
Exercise of options and RSU's
|
573,698
|
1
|
-
|
-
|
-
|
-
|
1
|
|||||||||||||||||||||
Issuance of shares, net of $ 400 issuance expenses
|
24,100,000
|
70
|
45,079
|
-
|
-
|
-
|
45,149
|
|||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
3,345
|
-
|
-
|
-
|
3,345
|
|||||||||||||||||||||
Other comprehensive loss, net
|
-
|
-
|
-
|
-
|
(2,542
|
)
|
-
|
(2,542
|
)
|
|||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(76,479
|
)
|
(76,479
|
)
|
|||||||||||||||||||
Balance as of December 31, 2014
|
77,130,866
|
212
|
406,413
|
(20,091
|
)
|
(4,111
|
)
|
(277,871
|
)
|
104,552
|
||||||||||||||||||
Exercise of options and RSU's
|
505,998
|
2
|
136
|
-
|
-
|
-
|
138
|
|||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
1,625
|
-
|
-
|
-
|
1,625
|
|||||||||||||||||||||
Other comprehensive loss, net
|
-
|
-
|
-
|
-
|
(4,505
|
)
|
-
|
(4,505
|
)
|
|||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
1,011
|
1,011
|
|||||||||||||||||||||
Balance as of December 31, 2015
|
77,636,864
|
214
|
408,174
|
(20,091
|
)
|
(8,616
|
)
|
(276,860
|
)
|
102,821
|
||||||||||||||||||
Exercise of options and RSU's
|
132,065
|
*)-
|
75
|
-
|
-
|
-
|
75
|
|||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
1,071
|
-
|
-
|
-
|
1,071
|
|||||||||||||||||||||
Other comprehensive income, net
|
-
|
-
|
-
|
-
|
768
|
-
|
768
|
|||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
11,429
|
11,429
|
|||||||||||||||||||||
Balance as of December 31, 2016
|
77,768,929
|
214
|
409,320
|
(20,091
|
)
|
(7,848
|
)
|
(265,431
|
)
|
116,164
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$
|
(76,479
|
)
|
$
|
1,011
|
$
|
11,429
|
|||||
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||||||
Depreciation and amortization
|
13,498
|
12,203
|
10,037
|
|||||||||
Share-based compensation expense
|
3,345
|
1,625
|
1,071
|
|||||||||
Impairment of long-lived assets
|
2,367
|
-
|
-
|
|||||||||
Impairment of goodwill
|
14,765
|
-
|
-
|
|||||||||
Other than temporary impairment and loss from sale of marketable securities
|
3,471
|
330
|
-
|
|||||||||
Accrued severance pay and pensions, net
|
(787
|
)
|
(1,188
|
)
|
28
|
|||||||
Decrease (increase) in trade receivables, net
|
(33,876
|
)
|
39,545
|
11,051
|
||||||||
Decrease in other accounts receivable and prepaid expenses
|
11,283
|
(1,291
|
) |
4,747
|
||||||||
Decrease in inventories
|
1,792
|
10,240
|
4,706
|
|||||||||
Increase (decrease) in trade payables
|
25,155
|
(28,444
|
)
|
(2,355
|
)
|
|||||||
Increase (decrease) in deferred revenues
|
9,699
|
(8,766
|
)
|
(6,228
|
)
|
|||||||
Decrease in deferred tax asset, net
|
9,788
|
1,975
|
478
|
|||||||||
Decrease in other accounts payable and accrued expenses (including other long term liabilities)
|
(16,300
|
)
|
(11,119
|
)
|
(9,193
|
)
|
||||||
Net cash provided by (used in) operating activities
|
(32,279
|
)
|
16,121
|
25,771
|
||||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of property and equipment
|
(12,691
|
)
|
(5,266
|
)
|
(8,190
|
)
|
||||||
Investment in short-term bank deposits
|
(36
|
)
|
(19
|
)
|
(153
|
)
|
||||||
Proceeds from maturities of short-term bank deposits
|
69
|
432
|
153
|
|||||||||
Proceeds from sale of marketable securities
|
5,161
|
122
|
-
|
|||||||||
Net cash used in investing activities
|
(7,497
|
)
|
(4,731
|
)
|
(8,190
|
)
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds and loans from financial institutions
|
22,691
|
4,200
|
-
|
|||||||||
Repayment of bank loan
|
(29,012
|
)
|
(20,182
|
)
|
(17,922
|
)
|
||||||
Proceeds from issuance of shares, net
|
45,149
|
-
|
-
|
|||||||||
Proceeds from exercise of options
|
-
|
138
|
75
|
|||||||||
Net cash provided by (used in) financing activities
|
38,828
|
(15,844
|
)
|
(17,847
|
)
|
|||||||
Effect of exchange rate changes on cash
|
(36
|
)
|
(651
|
)
|
286
|
|||||||
Decrease in cash and cash equivalents
|
(984
|
)
|
(5,105
|
)
|
20
|
|||||||
Cash and cash equivalents at the beginning of the year
|
42,407
|
41,423
|
36,318
|
|||||||||
Cash and cash equivalents at the end of the year
|
$
|
41,423
|
$
|
36,318
|
$
|
36,338
|
||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the year for income taxes
|
$
|
2,572
|
$
|
1,509
|
$
|
1,370
|
||||||
Cash paid during the year for interest
|
$
|
3,541
|
$
|
2,820
|
$
|
1,739
|
NOTE 1:- |
GENERAL
|
a. |
Ceragon Networks Ltd. ("the Company") is a wireless backhaul specialist. It provides wireless backhaul solutions that enable cellular operators and other wireless service providers to deliver voice and data services, enabling smart-phone applications such as internet browsing, social networking applications, image sharing, music and video applications. Its wireless backhaul solutions use microwave radio technology to transfer large amounts of telecommunication traffic between base stations and small-cells and the core of the service provider's network. The Company also provides wireless fronthaul solutions that use microwave technology for ultra-high speed, ultra-low latency communication between LTE/LTE-Advanced base band digital units stations and remote radio heads.
|
b. |
Acquisitions:
|
NOTE 1:- |
GENERAL (Cont.)
|
c. |
Cost reduction plan:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES
|
a. |
Basis of presentation:
|
b. |
Use of estimates:
|
c. |
Financial statements in U.S. dollars:
|
d. |
Principles of consolidation:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
e. |
Cash equivalents:
|
f. |
Short-term bank deposits:
|
g. |
Inventories:
|
h. |
Property and equipment:
|
%
|
|
Computers, manufacturing and peripheral equipment
|
6 – 33
|
Enterprise Resource Planning systems ("ERP")
|
10
|
Office furniture and equipment
|
Mainly 15
|
Leasehold improvements
|
Over the shorter of the term of the
lease or useful life of the asset
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
i. |
Impairment of long-lived assets:
|
j. |
Income taxes:
|
k. |
Goodwill and other intangible assets:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
l. |
Revenue recognition:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
m. |
Research and development expenses, net:
|
n. |
Warranty costs:
|
o. |
Derivative instruments:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
p. |
Concentrations of credit risk:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
q. |
Allowance for doubtful debt:
|
r. |
Transfers of financial assets:
|
s. |
Severance pay:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
t. |
Pension accrual:
|
u. |
Accounting for stock-based compensation:
|
December 31,
|
||||||
2014
|
2015
|
2016
|
||||
Dividend yield
|
0%
|
0%
|
0%
|
|||
Volatility
|
49%-65%
|
48%-70%
|
51%-73%
|
|||
Risk free interest
|
0.1%-2.40%
|
0.1%-2.40%
|
0.2%-2.1%
|
|||
Early exercise multiple
|
2.20-2.80
|
2.60-3.40
|
2.20-3.40
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
v. |
Fair value of financial instruments:
|
Level 1 - |
Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does 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.
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
w. |
Restructuring costs:
|
x. |
Comprehensive income:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Unrealized Gains (Losses) on
Cash Flow
Hedges
|
Foreign
Currency
Translation Adjustments
|
Total
|
||||||||||
Balance as of January 1, 2016
|
$
|
(163
|
)
|
$
|
(8,453
|
)
|
$
|
(8,616
|
)
|
|||
Other comprehensive income (loss) before reclassifications
|
168
|
|
861
|
1,029
|
||||||||
Amounts reclassified from AOCI
|
(261
|
) |
-
|
(261
|
) | |||||||
Other comprehensive income (loss)
|
(93
|
)
|
861
|
768
|
||||||||
Balance as of December 31, 2016
|
(256
|
)
|
(7,592
|
) |
(7,848
|
)
|
y. |
Treasury shares:
|
z. |
Basic and diluted net earnings per share:
|
aa. |
Going concern:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
ab. |
Reclassifications:
|
ac. |
Impact of recently issued Accounting Standards:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 3:- |
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Government authorities
|
$
|
6,219
|
$
|
7,856
|
||||
Advances to suppliers
|
3,593
|
668
|
||||||
Deferred charges and prepaid expenses
|
8,379
|
4,304
|
||||||
Financial institutions
|
3,411
|
3,493
|
||||||
Other
|
2,177
|
755
|
||||||
$
|
23,779
|
$
|
17,076
|
NOTE 4:- |
INVENTORIES
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Raw materials
|
$
|
6,984
|
$
|
7,651
|
||||
Work in progress
|
252
|
232
|
||||||
Finished products
|
42,454
|
37,764
|
||||||
$
|
49,690
|
$
|
45,647
|
During the year ended December 31, 2014, 2015 and 2016, the Company recorded inventory write-offs for excess inventory and slow moving inventory in a total amount of $ 3,515, $ 5,124 and $ 4,503, respectively that have been included in cost of revenues.
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Cost:
|
||||||||
Computers, manufacturing, peripheral equipment
|
$
|
86,244
|
$
|
90,397
|
||||
Office furniture and equipment
|
2,903
|
2,938
|
||||||
Leasehold improvements
|
1,161
|
1,079
|
||||||
90,308
|
94,414
|
|||||||
Accumulated depreciation:
|
||||||||
Computers, manufacturing, peripheral equipment
|
58,469
|
63,656
|
||||||
Office furniture and equipment
|
2,084
|
2,435
|
||||||
Leasehold improvements
|
849
|
763
|
||||||
61,402
|
66,854
|
|||||||
Depreciated cost
|
$
|
28,906
|
$
|
27,560
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Original amounts:
|
||||||||
Technology
|
$
|
8,600
|
$
|
8,600
|
||||
Trademarks
|
800
|
800
|
||||||
Customer relationships
|
7,970
|
7,970
|
||||||
17,370
|
17,370
|
|||||||
Accumulated amortization:
|
||||||||
Technology
|
6,082
|
7,314
|
||||||
Trademarks
|
800
|
800
|
||||||
Customer relationships
|
7,296
|
7,712
|
||||||
14,178
|
15,826
|
|||||||
Intangible assets, net
|
$
|
3,192
|
$
|
1,544
|
b. |
Amortization expense for the years ended December 31, 2014, 2015 and 2016 amounted to $ 2,121, $ 1,865 and $1,648 respectively.
|
c. |
The estimated future amortization expense of purchased intangible assets as of December 31, 2016 is $ 1,544 which will be charged in 2017.
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Employees and payroll accruals
|
$
|
11,352
|
$
|
11,099
|
||||
Provision for warranty costs
|
2,712
|
2,460
|
||||||
Government authorities
|
4,820
|
3,655
|
||||||
Accrued expenses
|
5,035
|
4,128
|
||||||
Other accounts payables
|
3,133
|
1,083
|
||||||
$
|
27,052
|
$
|
22,425
|
NOTE 9:- |
DERIVATIVE INSTRUMENTS
|
Loss recognized in Statements of Comprehensive loss
|
Gain (loss) recognized
in consolidated statements of operations |
||||||||||||||||
December 31,
|
Statement of
|
Year ended December 31,
|
|||||||||||||||
2016
|
Operations item
|
2014
|
2015
|
2016
|
|||||||||||||
Derivatives designated as hedging instruments:
|
|||||||||||||||||
Foreign exchange option and forward contract
|
$
|
(256
|
)
|
Operating expenses
|
$
|
(495
|
) |
$
|
110
|
|
$
|
261
|
|||||
Derivatives not designated as hedging instruments:
|
|||||||||||||||||
Foreign exchange forward contracts
|
-
|
Financial expenses
|
(240
|
) |
705
|
|
(452
|
)
|
|||||||||
Total
|
$
|
(256
|
)
|
$
|
(735
|
) |
$
|
815
|
|
$
|
(191
|
)
|
December 31,
|
|||||||||
Balance sheet
|
2015
|
2016
|
|||||||
Derivatives designated as hedging instruments:
|
|||||||||
Foreign exchange forward contracts
|
"Other account receivables and prepaid expenses"
|
$
|
-
|
$
|
21
|
||||
"Other account payables and accrued expenses"
|
$
|
(163
|
)
|
$
|
(277
|
)
|
|||
"Other comprehensive income (loss)"
|
$
|
(163
|
)
|
$
|
(256
|
)
|
|||
Derivatives not designated as hedging instruments:
|
|||||||||
Foreign exchange forward contracts and other derivatives
|
"Other receivables and prepaid expenses"
|
$
|
138
|
$
|
176
|
||||
"Other account payables and accrued expenses"
|
$
|
(395
|
)
|
$
|
(79
|
)
|
NOTE 10:- |
PENSION LIABILITIES, NET
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Accumulated benefit obligation
|
$
|
2,362
|
$
|
2,444
|
||||
Change in projected benefit obligation
|
||||||||
Projected benefit obligation at beginning of year
|
3,243
|
2,362
|
||||||
Liability assumed at the acquisition date of Nera
|
||||||||
Service cost
|
16
|
18
|
||||||
Interest cost
|
53
|
55
|
||||||
Expenses paid
|
(315
|
)
|
(322
|
)
|
||||
Exchange rates differences
|
(417
|
)
|
56
|
|||||
Actuarial loss (gain)
|
(218
|
)
|
204
|
|||||
Projected benefit obligation at end of year
|
$
|
2,362
|
$
|
2,373
|
||||
Fair value of plan assets at end of year
|
$
|
-
|
$
|
-
|
NOTE 10:- |
PENSION LIABILITIES, NET (Cont.)
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Weighted-average assumptions
|
||||||||
Discount rate
|
2.70
|
%
|
2,30
|
%
|
||||
Rate of compensation increase
|
2.50
|
%
|
2.25
|
%
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Components of net periodic benefit cost
|
||||||||
Service cost
|
$
|
16
|
$
|
18
|
||||
Interest cost
|
53
|
55
|
||||||
Net periodic benefit cost
|
$
|
69
|
$
|
73
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
2016
|
290
|
-
|
||||||
2017
|
240
|
270
|
||||||
2018
|
150
|
200
|
||||||
2019 and thereafter
|
700
|
740
|
||||||
$
|
1,380
|
$
|
1,210
|
NOTE 11:- |
COMMITMENTS AND CONTINGENT LIABILITIES
|
a. |
Lease commitments:
|
2017
|
$
|
4,612
|
||
2018
|
1,781
|
|||
2019
|
1,185
|
|||
2020
|
591
|
|||
2021 and thereafter
|
157
|
|||
$
|
8,326
|
b. |
During 2015 and 2016, the Company received several grants from the Israeli Innovation Authority("IIA"). The grants require the Company to comply with the requirements of the Research and Development Law, however, the Company is not obligated to pay royalties on sales of products based on technology or know how developed from the grants. In a case involving the transfer of technology or know how developed from the grants outside of Israel, the Company may be required to pay royalties related to past sales of products based on the technology or the developed know how. The Company recorded income from IIA grants for the years ended December 31, 2014, 2015 and 2016 in the amount of $ 1,092, $ 1,318 and $ 2,536, respectively.
|
c. |
Charges and guarantees:
|
d. |
Litigations:
|
NOTE 11:- |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
NOTE 12:- |
SHAREHOLDERS' EQUITY
|
a. |
General:
|
NOTE 12:- |
SHAREHOLDERS' EQUITY (Cont.)
|
b. |
In August 2014, the Company completed a public offering of its shares on NASDAQ. The Company issued 21,250,000 of its ordinary shares, nominal value NIS 0.01 per share at a price of $ 1.89 per share before issuance expenses. The Company also granted to the underwriters the option to purchase up to 2,850,000 additional ordinary shares within 30 days, which was fully exercised. Total net proceeds from the issuance amounted to approximately $ 45,149, net of issuance expenses in the amount of $ 400.
|
c. |
Stock options plans:
|
1. |
In 2003, the Company adopted a share option plan (the "Plan"). Under the Plan, options and RSU’s may be granted to officers, directors, employees and consultants of the Company or its subsidiaries. The options vest primarily over four years. The options expire ten years from the date of grant. In December 2012, the Company extended the term of the Plan for an additional period of ten years.
|
2. |
On September 6, 2010, the Company's board of directors amended the Plan so as to enable to grant Restricted Share Units ("RSUs") pursuant to such Plan.
|
NOTE 12:- |
SHAREHOLDERS' EQUITY (Cont.)
|
3. |
The following is a summary of the Company's stock options and RSUs granted among the various plans:
|
Year ended
December 31, 2016
|
||||||||||||||||
Number
of options
|
Weighted
average
exercise
price
|
Weighted average remaining contractual term
(in years)
|
Aggregate
intrinsic
value
|
|||||||||||||
Outstanding at beginning of year
|
6,465,782
|
$
|
4.81
|
4.76
|
$
|
88
|
||||||||||
Granted
|
1,777,875
|
$
|
1.43
|
|||||||||||||
Exercised
|
(72,832
|
)
|
$
|
1.18
|
||||||||||||
Forfeited or expired
|
(680,652
|
)
|
$
|
6.78
|
||||||||||||
Outstanding at end of the year
|
7,490,173
|
$
|
3.86
|
4.33
|
$
|
6,003
|
||||||||||
Options exercisable at end of the year
|
4,021,641
|
$
|
6.01
|
3.92
|
$
|
1,639
|
||||||||||
Vested and expected to vest
|
6,611,066
|
$
|
4.20
|
4.26
|
$
|
4,842
|
Year ended
December 31, 2016
|
||||||||
Number
of RSUs
|
Aggregate
intrinsic
value
|
|||||||
Outstanding at beginning of year
|
106,768
|
$
|
120
|
|||||
Granted
|
-
|
|||||||
Exercised
|
(59,233
|
)
|
||||||
Forfeited
|
-
|
|||||||
Outstanding at end of the year
|
47,535
|
$
|
125
|
|||||
Vested and expected to vest
|
43,118
|
$
|
113
|
NOTE 12:- |
SHAREHOLDERS' EQUITY (Cont.)
|
Exercise price
(range)
|
Options and RSUs outstanding
as of
December 31, 2016
|
Weighted
average
remaining
contractual
life (years)
|
Weighted
average
exercise
price
|
Options and RSUs exercisable
as of
December 31, 2016
|
Remaining contractual life (years for exercisable options
|
Weighted
average
exercise
price
|
|||||||||||||||||||
$
|
$
|
$
|
|||||||||||||||||||||||
RSUs 0.0
|
47,535
|
0.00
|
-
|
||||||||||||||||||||||
0.01-2.00
|
4,015,854
|
4.65
|
1.19
|
1,064,599
|
4.36
|
1.19
|
|||||||||||||||||||
2.01-4.00
|
921,522
|
4.72
|
2.49
|
420,067
|
4.37
|
2.62
|
|||||||||||||||||||
4.01-6.00
|
933,139
|
2.94
|
5.22
|
917,317
|
2.88
|
5.23
|
|||||||||||||||||||
6.01-8.00
|
41,500
|
5.39
|
6.84
|
41,500
|
5.39
|
6.84
|
|||||||||||||||||||
8.01-10.00
|
845,074
|
4.17
|
9.07
|
845,074
|
4.17
|
9.07
|
|||||||||||||||||||
10.01-13.04
|
733,084
|
3.94
|
12.35
|
733,084
|
3.94
|
12.35
|
|||||||||||||||||||
7,537,708
|
4,021,641
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Cost of revenues
|
$
|
215
|
$
|
73
|
$
|
30
|
||||||
Research and development
|
1,625
|
736
|
151
|
|||||||||
Selling and marketing
|
674
|
495
|
369
|
|||||||||
General and administrative
|
831
|
321
|
521
|
|||||||||
Total stock-based compensation expenses
|
$
|
3,345
|
$
|
1,625
|
$
|
1,071
|
NOTE 12:- |
SHAREHOLDERS' EQUITY (Cont.)
|
d. |
Dividends:
|
a. |
Israeli taxation:
|
1. |
Measurement of taxable income:
|
2. |
Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the "Law"):
|
The value of productive
assets before the expansion
(NIS in millions)
|
The new proportion that the
required investment bears to the
value of productive assets
|
|
Up to NIS 140
|
12%
|
|
NIS 140 - NIS 500
|
7%
|
|
More than NIS 500
|
5%
|
3. |
Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969:
|
4. |
Tax rates:
|
b. |
The income tax expense (benefit) for the years ended December 31, 2014, 2015 and 2016 consisted of the following:
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Current
|
$
|
(3,382
|
)
|
$
|
3,895
|
$
|
1,418
|
|||||
Deferred
|
9,883
|
1,947
|
343
|
|||||||||
$
|
6,501
|
$
|
5,842
|
$
|
1,761
|
|||||||
Domestic (Israel)
|
$
|
335
|
$
|
(606
|
)
|
$
|
968
|
|||||
Foreign
|
6,166
|
6,448
|
793
|
|||||||||
$
|
6,501
|
$
|
5,842
|
$
|
1,761
|
c. |
Deferred income taxes:
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carry forward
|
$
|
64,476
|
$
|
79,860
|
||||
Research and Development
|
5,147
|
3,843
|
||||||
Other temporary differences mainly relating to reserve and allowances
|
30,283
|
28,012
|
||||||
Deferred tax asset before valuation allowance
|
99,906
|
111,715
|
||||||
Valuation allowance
|
(97,899
|
)
|
(110,143
|
)
|
||||
Deferred tax asset
|
2,007
|
1,572
|
||||||
Deferred tax liabilities:
|
||||||||
Acquired intangibles
|
(185
|
)
|
(228
|
)
|
||||
Deferred tax asset, net
|
$
|
1,822
|
$
|
1,344
|
d. |
Net operating loss carry forward and capital loss:
|
e. |
Income (Loss) before taxes is comprised as follows:
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Domestic
|
$
|
(81,227
|
)
|
$
|
14,479
|
$
|
(518
|
)
|
||||
Foreign
|
11,249
|
(7,626
|
)
|
13,708
|
||||||||
$
|
(69,978
|
)
|
$
|
6,853
|
$
|
13,190
|
f. |
Reconciliation of the theoretical tax expense to the actual tax expense:
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Income (Loss) before taxes as reported in the consolidated statements of operations
|
$
|
(69,978
|
)
|
$
|
6,853
|
$
|
13,190
|
|||||
Statutory tax rate
|
26.5
|
%
|
26.5
|
%
|
25
|
%
|
||||||
Theoretical tax income on the above amount at the Israeli statutory tax rate
|
$
|
(18,544
|
)
|
$
|
1,816
|
$
|
3,298
|
|||||
Non-deductible expenses
|
2,741
|
1,527
|
467
|
|||||||||
Non-deductible expenses related to employee stock options
|
886
|
430
|
268
|
|||||||||
Changes in tax rate
|
-
|
-
|
8,900
|
|||||||||
Losses in respect of which no deferred taxes were generated (including changes in valuation allowance)
|
20,286
|
2,003
|
(10,055
|
)
|
||||||||
Other
|
1,132
|
66
|
(1,117
|
)
|
||||||||
Actual tax expense
|
$
|
6,501
|
$
|
5,842
|
$
|
1,761
|
g. |
The Company adopted the provisions of ASC topic 740-10, "Income Taxes".
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Uncertain tax positions, beginning of year
|
$
|
4,659
|
$ |
6,942
|
||||
Decreases in tax positions for prior years
|
(3,722
|
)
|
(4,362
|
)
|
||||
Increases in tax positions for prior years
|
2,875
|
620
|
||||||
Increase in tax position for current year
|
3,130
|
1,486
|
||||||
Uncertain tax positions, end of year
|
$
|
6,942
|
$ |
4,686
|
NOTE 14:- |
SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION
|
a. |
The Company applies ASC topic 280, "Segment Reporting", ("ASC 820"). The Company operates in one reportable segment (see note 1 for a brief description of the Company's business). The total revenues are attributed to geographic areas based on the location of the end customer.
|
b. |
The following tables present total revenues for the years ended December 31, 2014, 2015 and 2016 and long-lived assets as of December 31, 2014, 2015 and 2016:
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Revenues from sales to unaffiliated customers:
|
||||||||||||
North America
|
$
|
40,353
|
$
|
45,934
|
$
|
40,236
|
||||||
Europe
|
58,537
|
48,637
|
43,457
|
|||||||||
Africa
|
55,954
|
34,642
|
19,872
|
|||||||||
Asia-Pacific and Middle East
|
42,095
|
31,929
|
29,743
|
|||||||||
India
|
92,066
|
105,990
|
80,247
|
|||||||||
Latin America
|
82,107
|
82,303
|
80,086
|
|||||||||
$
|
371,112
|
$
|
349,435
|
$
|
293,641
|
|||||||
Property and equipment, net, by geographic areas:
|
||||||||||||
Israel
|
$
|
26,127
|
$
|
23,162
|
||||||||
Others
|
2,779
|
4,398
|
||||||||||
$
|
28,906
|
$
|
27,560
|
c. |
Major customer data as a percentage of total revenues:
|
a. |
Financial income, net:
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Financial income:
|
||||||||||||
Interest on marketable securities and bank deposits
|
$
|
140
|
$
|
101
|
$
|
242
|
||||||
Foreign currency translation differences and derivatives
|
1,567
|
1,273
|
966
|
|||||||||
1,707
|
1,374
|
1,208
|
||||||||||
Financial expenses:
|
||||||||||||
Bank charges and interest on loans
|
(7,691
|
)
|
(5,885
|
)
|
(3,794
|
)
|
||||||
Foreign currency translation differences (*)
|
(28,491
|
)
|
(9,897
|
)
|
(3,717
|
)
|
||||||
Impairment and amortization of premium on marketable securities (*)
|
(3,471
|
)
|
(330
|
)
|
-
|
|||||||
(39,653
|
)
|
(16,112
|
)
|
(7,511
|
)
|
|||||||
$
|
(37,946
|
)
|
$
|
(14,738
|
)
|
$
|
(6,303
|
)
|
(*) |
The amounts for the years ended December 2014 and 2015 include expenses of $ 20,452 and $1,634, respectively, resulting from the devaluation of the local currency in Venezuela, pursuant to SICAD II, and the related realization of certain assets denominated in or linked to the U.S. dollar due to restrictive government policies on payments in foreign currency. During 2016, the Company recorded $ 907 income upon collection of trade receivables balances at a rate which is higher than the SICAD II. In addition, for the year ended December 31, 2014 this amount also includes $ 2,170 related to certain transactions to expatriate cash from Venezuela and Argentina.
|
b. |
Net income per share:
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Numerator:
|
||||||||||||
Numerator for basic and diluted net income (loss) per share - income (loss) available to shareholders of Ordinary shares
|
$
|
(76,479
|
)
|
$
|
1,011
|
$
|
11,429
|
|||||
Denominator:
|
||||||||||||
Denominator for basic net income (loss) per share - weighted average number of shares
|
62,518,602
|
77,239,409
|
77,702,788
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Employee stock options and RSU
|
*)-
|
57,272
|
910,740
|
|||||||||
Denominator for diluted net income (loss) per share - adjusted weighted average number of shares
|
62,518,602
|
77,296,681
|
78,613,528
|
Year ended
December 31, 2016
|
||||||||
Fair value measurements
using input type
|
||||||||
Level 2
|
Total
|
|||||||
Derivatives instruments
|
$
|
(159
|
)
|
$
|
(159
|
)
|
||
Total liabilities
|
$
|
(159
|
)
|
$
|
(159
|
)
|
Year ended
December 31, 2015
|
||||||||
Fair value measurements
using input type
|
||||||||
Level 2
|
Total
|
|||||||
Derivatives instruments
|
$
|
(420
|
)
|
$
|
(420
|
)
|
||
Total liabilities
|
$
|
(420
|
)
|
$
|
(420
|
)
|
Year ended
December 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Cost of revenues
|
$
|
4,613
|
$
|
3,343
|
$
|
3,561
|
||||||
Research and development expenses
|
$
|
1,244
|
$
|
1,465
|
$
|
1,093
|
||||||
Selling and marketing expenses
|
$
|
914
|
$
|
737
|
$
|
733
|
||||||
General and administrative expenses
|
$
|
1,123
|
$
|
606
|
$
|
1,109
|
||||||
Purchase of property and equipment
|
$
|
100
|
$
|
51
|
$
|
1,019
|
December 31,
|
||||||||
2015
|
2016
|
|||||||
Trade payables, other accounts payable and accrued expenses
|
$
|
1,915
|
$
|
1,209
|
1. |
General
|
2. |
A Permitted Factoring Transaction
|
2.1 |
As of the date of execution of this Amendment and until the Final Repayment Date, Section 16.16 of the Credit Agreement shall be amended such that the existing section shall be deleted and the following shall come in its stead:
|
"16.16 |
The Borrower and/or any of the held companies shall not perform Permitted Factoring Transactions in an aggregate sum that at any time exceeds 20 (twenty) million US dollars (hereinafter: the "Allowed Factoring Sum"). Notwithstanding that stated, the Borrower and/or any of the held companies shall be permitted to perform a Permitted Factoring Transaction with respect to the sale of their rights to receive accounts receivables from customers that are among a certain customer group, in accordance with the transaction with the customer group in an additional aggregate sum which shall not, at any time, exceed 94 million dollars. For the avoidance of doubt, that stated shall not derogate from the right of the Borrower and/or any of the held companies to perform other Permitted Factoring Transactions with the group of customers up to the Allowed Factoring Sum. The Borrower and/or any of the held companies shall not perform a Factoring Transaction that is not a Permitted Factoring Transaction or any other transaction in the framework of which any of the rights to receive accounts receivables belonging to any of them, shall be sold, endorsed, assigned or otherwise transferred. For the avoidance of doubt it is clarified that the responsibility to comply with the undertaking under this Section 16.16 lies solely on the Borrower and the held companies, and that a Lender shall be responsible for non-compliance with the said restriction only in the event in which such Lender itself performed Factoring Transactions with the Borrower and/or with a held company in an amount that, at such time, exceeds the Allowed Factoring Sum.
|
3. |
Miscellaneous
|
3.1 |
Unless otherwise expressly set forth in this Amendment, the terms and conditions and the obligations specified in this Amendment do not derogate from and/or prejudice and/or modify any other undertaking of the Borrower towards the Lenders and/or the validity of any security whatsoever that was made available to the benefit of the Securities' Trustee for the Lenders, under and by virtue of the Credit Agreement and/or the other Credit Documents and/or any other agreement or document that was and/or shall be delivered to the Lenders or to a position holder with respect to the Credit, and these shall continue to have full and binding force, including all of the provisions relating to the Lenders' rights to make the Credit immediately payable, all in accordance with and subject to the provisions and the terms and conditions of the Credit Documents.
|
3.2 |
This Amendment, unless explicitly stated otherwise herein, is meant to be in addition to all that is stated in the Credit Agreement and in the Amendments, and shall not derogate from and/or modify and/or prejudice them, and other than as explicitly specified in this Amendment, all of the rights of the Lenders and of the Borrower under the Credit Agreement, the Amendments and applicable law, are fully reserved.
|
1. |
General
|
2. |
Extension of the Final Repayment Date
|
2.1 |
As of the date of execution of this Amendment, Section 2 of the Credit Agreement shall be amended such that the definition of "Final Repayment Date" existing therein shall be deleted and the following shall come in its stead:
|
3. |
Replacing a Lender and Increasing the Guarantee Facility
|
3.1 |
Commencing from the date of execution of this Amendment the Other Bank shall be removed from the list of the Lenders specified in Annex 1 of the Credit Agreement and the Annex shall be amended as follows: Each of the Remaining Lenders shall replace the Other Bank’s part in the amount of the Loan Facility and in the amount of the Guarantee Facility, pro rata, in accordance with each of the Remaining Lender's relative part of the amount of the Loan Facility and the amount of the Guarantee Facility. Additionally, and without derogating from the provisions of Sections 18.8 and 18.9 of the Credit Agreement, commencing from the date of execution of this Amendment, the amount of the Bank Guarantee Facility that each of the Lenders allocated shall be amended such that the total Bank Guarantee Facilities that shall be allocated by all of the Lenders together shall increase by an amount of 10 million US dollars.
|
3.2 |
In light of the replacement of the Other Bank in the Credit Agreement by the Remaining Lenders, in each of the Credit Documents in which there is reference to the Lenders, the Lenders shall be deemed to be the Remaining Lenders (without the Other Bank), and any reference to the Other Bank in the Credit Documents shall be interpreted accordingly.
|
4. |
Extension of the Termination Date of Amendment no. 3
|
4.1 |
As of the date of execution of this Amendment, Section 1 of Amendment no. 3 shall be amended such that the definition of "Termination Date" existing therein shall be deleted and the following shall come in its stead:
|
5. |
Interest and Commissions
|
5.1 |
As of the date of execution of this Amendment, Sections 4.1-4.4 of Amendment no. 3 shall be cancelled, such that the amendments specified therein shall be deleted and the sections mentioned in Sections 4.1-4.4 of Amendment no. 3 shall resume to their drafting in the Credit Agreement (in its original drafting as was executed on March 14, 2013, prior to its amendment).
|
5.2 |
For the avoidance of doubt, it shall be clarified that with respect to the commissions that apply to issuing bank guarantees as specified in Section 28.2.4 of the Credit Agreement, and which bank guarantees have already been issued by a Lender prior to the execution of this Amendment, the commission that the Borrower shall pay the Lender shall be updated at the date of the payment of the upcoming commission, in accordance with the commission rate as is updated in this Amendment.
|
5.3 |
The Borrower shall pay: (a) to the leading bank, in its capacity as Credit Manager, and (b) to each Lender, through the Credit Manager, a one-time commission for handling the request to amend the Credit Agreement, all as specified in the Commissions Letter, which shall be executed concurrently with the execution of this Amendment by the Borrower.
|
5.4 |
The payment of any of the commissions specified above shall be deemed final and absolute, and shall not be refunded to the Borrower for any reason whatsoever.
|
6. |
Miscellaneous
|
6.1 |
Unless otherwise expressly set forth in this Amendment, the terms and conditions and the obligations specified in this Amendment do not derogate from and/or prejudice and/or modify any other undertaking of the Borrower towards the Lenders and/or the validity of any security whatsoever that was made available to the benefit of the Securities' Trustee for the Lenders, under and by virtue of the Credit Agreement and/or the other Credit Documents and/or any other agreement or document that was and/or shall be delivered to the Lenders or to a position holder with respect to the Credit, and these shall continue to have full and binding force, including all of the provisions relating to the Lenders' rights to make the Credit immediately payable, all in accordance with and subject to the provisions and the terms and conditions of the Credit Documents.
|
6.2 |
This Amendment, unless explicitly stated otherwise herein, is meant to be in addition to all that is stated in the Credit Agreement and in the Amendments, and shall not derogate from and/or modify and/or prejudice them, and other than as explicitly specified in this Amendment, all of the rights of the Lenders and of the Borrower under the Credit Agreement, the Amendments and applicable law, are fully reserved.
|
Company
|
Place of Incorporation
|
|
Ceragon Networks, Inc.
|
New Jersey
|
|
Ceragon Networks AS
|
Norway
|
|
Ceragon Networks (India) Private Limited
|
India
|
|
Ceragon Networks S.A. de CV
|
Mexico
|
Tel-Aviv, Israel
April 7, 2017
|
/s/
KOST FORER GABBAY and KASIERER
A Member of Ernst & Young Global
|
1. |
I have reviewed this annual report on Form 20-F of Ceragon Networks Ltd.;
|
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 company as of, and for, the periods presented in this report;
|
4. |
The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the 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 15d-15(f)) for the company 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 company, 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 company'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 company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
5. |
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company'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 company'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 company's internal control over financial reporting.
|
1. |
I have reviewed this annual report on Form 20-F of Ceragon Networks Ltd.;
|
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 company as of, and for, the periods presented in this report;
|
4. |
The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the 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 15d-15(f)) for the company 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 company, 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 company'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 company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
5. |
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company'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 company'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 company's internal control over financial reporting.
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Document And Entity Information |
12 Months Ended |
---|---|
Dec. 31, 2016
shares
| |
Document And Entity Information [Abstract] | |
Document Type | 20-F |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2016 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2016 |
Entity Registrant Name | CERAGON NETWORKS LTD |
Entity Central Index Key | 0001119769 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Accelerated Filer |
Entity Common Stock, Shares Outstanding | 77,768,929 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Trade receivables, allowance for doubtful accounts | $ 12,162 | $ 12,229 |
Ordinary shares, par value | $ 0.01 | $ 0.01 |
Ordinary shares, shares authorized | 120,000,000 | 120,000,000 |
Ordinary shares, shares issued | 81,250,452 | 81,118,387 |
Ordinary shares, shares outstanding | 77,768,929 | 77,636,864 |
Treasury stock, ordinary shares | 3,481,523 | 3,481,523 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 11,429 | $ 1,011 | $ (76,479) |
Other comprehensive income (loss): | |||
Change in foreign currency translation adjustment | 861 | (4,149) | (1,853) |
Available-for-sale investments: | |||
Change in net unrealized gain (losses) | (423) | 260 | |
Amounts reclassified from AOCI | 330 | (735) | |
Net change | (93) | (475) | |
Cash flow hedges: | |||
Change in net unrealized gains (losses) | 168 | (153) | (709) |
Amounts reclassified from AOCI | (261) | (110) | 495 |
Net change | (93) | (263) | (214) |
Other comprehensive income (loss), net | 768 | (4,505) | (2,542) |
Total of comprehensive income (loss) | $ 12,197 | $ (3,494) | $ (79,021) |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands |
Common Stock [Member] |
Additional paid-in Capital [Member] |
Treasury shares at cost [Member] |
Accumulated other comprehensive loss [Member] |
Accumulated deficit [Member] |
Total |
|||
---|---|---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2013 | $ 141 | $ 357,989 | $ (20,091) | $ (1,569) | $ (201,392) | $ 135,078 | |||
Balance, shares at Dec. 31, 2013 | 52,457,168 | ||||||||
Exercise of options and RSU's | $ 1 | 1 | |||||||
Exercise of options and RSU's, shares | 573,698 | ||||||||
Issuance of shares, net of $400 issuance expenses | $ 70 | 45,079 | 45,149 | ||||||
Issuance of shares, net of $400 issuance expenses, shares | 24,100,000 | ||||||||
Share-based compensation expense | 3,345 | 3,345 | |||||||
Other comprehensive income (loss), net | (2,542) | (2,542) | |||||||
Net income (loss) | (76,479) | (76,479) | |||||||
Balance at Dec. 31, 2014 | $ 212 | 406,413 | (20,091) | (4,111) | (277,871) | 104,552 | |||
Balance, shares at Dec. 31, 2014 | 77,130,866 | ||||||||
Exercise of options and RSU's | $ 2 | 136 | $ 138 | ||||||
Exercise of options and RSU's, shares | 505,998 | 125,000 | |||||||
Share-based compensation expense | 1,625 | $ 1,625 | |||||||
Other comprehensive income (loss), net | (4,505) | (4,505) | |||||||
Net income (loss) | 1,011 | 1,011 | |||||||
Balance at Dec. 31, 2015 | $ 214 | 408,174 | (20,091) | (8,616) | (276,860) | $ 102,821 | |||
Balance, shares at Dec. 31, 2015 | 77,636,864 | 77,636,864 | |||||||
Exercise of options and RSU's | [1] | 75 | $ 75 | ||||||
Exercise of options and RSU's, shares | 132,065 | 72,832 | |||||||
Share-based compensation expense | 1,071 | $ 1,071 | |||||||
Other comprehensive income (loss), net | 768 | 768 | |||||||
Net income (loss) | 11,429 | 11,429 | |||||||
Balance at Dec. 31, 2016 | $ 214 | $ 409,320 | $ (20,091) | $ (7,848) | $ (265,431) | $ 116,164 | |||
Balance, shares at Dec. 31, 2016 | 77,768,929 | 77,768,929 | |||||||
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) $ in Thousands |
12 Months Ended |
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Dec. 31, 2014
USD ($)
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Statement of Stockholders' Equity [Abstract] | |
Issuance expenses | $ 400 |
GENERAL |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||
GENERAL |
The Company's solutions support all wireless access technologies, including LTE-Advanced, LTE, HSPA, EV-DO, CDMA, W-CDMA and GSM. The Company's systems also serve evolving network architectures including all-IP long haul networks.
The Company sells its products through a direct sales force, systems integrators, distributors and original equipment manufacturers.
The Company's wholly owned subsidiaries provide research and development, marketing, manufacturing, distribution, sales and technical support to the Company's customers worldwide.
As to principal markets and major customers, see notes 14b and 14c.
On January 19, 2011 ("Acquisition Date"), the Company completed the acquisition of Nera Networks AS (now called Ceragon Networks AS) and its subsidiaries (the "Nera") from Eltek ASA. The consideration for all of the shares of Nera was $ 57,175. January 19, 2011 was considered to be the Acquisition Date, as control was obtained, assets were received and liabilities assumed. Eltek ASA undertook not to compete with the Company for a period of five years. In April 2014, the Company signed an agreement with Eltek ASA, to settle all claims, counter claims, legal proceedings, and any other contingent or potential claims regarding alleged breaches of representations and warranties contained in the purchase agreement governing the Nera Acquisition from Eltek in January 2011. In May 2014, the Company received $ 16,800 in cash, net of associated legal expenses and recorded it as part of other income in the consolidated statements of operations.
During the fourth quarter of 2014, in addition to previous restructuring plans, the Company initiated another restructuring plan to reduce its operating cost and improve its efficiency, mainly by relocating certain offices and reducing staff functions and some operations positions, as well as other measures. The restructuring expenses include mainly post termination benefits, write-off of property and equipment that is related to activities that were terminated and facilities related expenses for warehouse and office closing and relocations. The total restructuring costs in 2014 and 2015 associated with exiting activities of the Company were $ 5,838 and $ 1,225, respectively, recorded in operating expenses, as restructuring costs. Additional restructuring cost of $978 included in 2014 expenses is related to previous restructuring plan.
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SIGNIFICANT ACCOUNTING POLICIES |
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SIGNIFICANT ACCOUNTING POLICIES |
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP").
The preparation of the financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent there are material differences between the Company's estimates and the actual results, the Company's future consolidated results of operation may be affected.
A majority of the revenues of the Company and certain of its subsidiaries are generated in U.S. dollars ("dollars"). In addition, a substantial portion of the Company's and certain of its subsidiaries' costs is incurred in dollars. Since management believes that the dollar is the currency of the primary economic environment in which the Company and its subsidiaries operate and considers the non-U.S. subsidiaries to be a direct, integral extension of the parent company's operations, the dollar is its functional and reporting currency. Accordingly, amounts in currencies other than U.S dollars have been re-measured in accordance with ASC topic 830, "Foreign Currency Matters" ("ASC 830") as follows:
Monetary balances - at the exchange rate in effect on the balance sheet date. Consolidated statements of operations items - average exchange rates prevailing during the year.
All exchange gains and losses from the re-measurement mentioned above are reflected in the statement of operations in financial expenses, net.
The financial statements of the Company's Brazilian subsidiaries, whose functional currency is not the dollar, have been re-measured and translated into dollars. All amounts on the balance sheets have been translated into the dollar using the exchange rates in effect on the relevant balance sheet dates. All amounts in the statements of operations have been translated into the dollar using the average exchange rate for the relevant periods. The resulting translation adjustments are reported as a component of accumulated other comprehensive loss in shareholders' equity.
The consolidated financial statements include the accounts of the Company and its subsidiaries ("the Group"). Intercompany balances and transactions including profits from intercompany sales not yet realized outside the Group, have been eliminated upon consolidation.
Cash equivalents include short-term, highly liquid investments that are readily convertible to cash with original maturities of three months or less.
Short-term bank deposits are deposits with maturities of more than three months and up to one year. The short-term bank deposits are presented at their cost, including accrued interest.
As of December 31, 2015, and 2016, the Company had no short-term bank deposits.
Inventories are stated at the lower of cost or net releasable value. Inventory write-downs are provided to cover risks arising from slow-moving items, technological obsolescence, excess inventories, discontinued products, and for market prices lower than cost, if any. The Company periodically evaluates the quantities on hand relative to historical and projected sales volume (which is determined based on an assumption of future demand and market conditions) and the age of the inventory. At the point of the loss recognition, a new lower cost basis for that inventory is established. In addition, if required the Company records a liability for firm non-cancelable and unconditional purchase commitments with contract manufacturers for quantities in excess of the Company's future demands forecast consistent with its valuation of excess and obsolete inventory.
Inventory includes costs of products delivered to customers and not recognized as cost of sales, where revenues in the related arrangements were not recognized.
Cost is determined for all types of inventory using the moving average cost method plus indirect costs.
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, at the following annual rates:
The Company's and its subsidiaries' long-lived assets are reviewed for impairment in accordance with ASC topic 360," Property Plant and Equipment", ("ASC 360"), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. During 2014 the Company recognized impairment expenses in the amount of $ 2,367. During 2015 and 2016, no impairment losses have been recognized
The Company and its subsidiaries account for income taxes in accordance with ASC topic 740, "Income Taxes", ("ASC 740"). This Statement prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and for carry forward losses deferred taxes are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company and its subsidiaries provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that some portion or all of the deferred tax asset will not be realized. For more information see note 13c.
The Company adopted ASC topic 740-10, "Income Taxes", ("ASC 740-10"). ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with ASC 740. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company elected to classify interest expenses and penalties recognized in the financial statements as income taxes. For more information see note 13g.
Goodwill and certain other purchased intangible assets have been recorded in the Company's financial statements as a result of acquisitions. Goodwill represents excess of the costs over the net tangible and intangible assets acquired of businesses acquired under ASC topic 350, "Intangible - Goodwill and Other", ("ASC 350") according to which goodwill is not amortized.
According to ASC 350, goodwill impairment testing is a two-step process. The first step involves comparing the fair value of a company's reporting units to their carrying amount. If the fair value of the reporting unit is determined to be greater than its carrying amount, there is no impairment. If the reporting unit's carrying amount is determined to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of the goodwill, an impairment loss equivalent to the difference is recorded. During 2014, the Company identified indicators of goodwill impairment and accordingly performed the two-step impairment which resulted in recording an impairment charge of its goodwill.
Intangible assets that are considered to have definite useful life are amortized using the straight-line basis over their estimated useful lives, 7 years for Technology and Customer relations. The carrying amount of these assets is reviewed whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.
The Company and its subsidiaries generate revenues from selling products to end users, distributors, system integrators and original equipment manufacturers ("OEM").
Revenues from product sales are recognized in accordance with ASC topic 605-10, "Revenue recognition" and with ASC 605-25 "Multiple-Element Arrangements", ("ASC 605"), when delivery has occurred, persuasive evidence of an arrangement exists, the vendor's fee is fixed or determinable, no future obligation exists and collectability is probable.
When required, the Company complies with ASC 605-25, "Multiple-Deliverable Revenue Arrangements". This standard changes the requirements for establishing separate units of accounting in a multiple element arrangement by elimination of the residual method and requires the allocation of arrangement consideration to each deliverable to be based on using the relative selling price method.
Pursuant to the guidance of ASC 605-25, when a sales arrangement contains multiple elements, such as equipment and services, the Company allocates revenues to each element based on a selling price hierarchy.
The selling price for a deliverable is based on its vendor specific objective evidence (''VSOE'') if available, third party evidence (''TPE'') if VSOE is not available, or estimated selling price (''ESP'') if neither VSOE nor TPE is available. In multiple element arrangements, revenues are allocated to each separate unit of accounting for each of the deliverables based on the aforementioned selling price hierarchy.
The Company considers the sale of equipment and its installation to be two separate units of accounting in the arrangement in which the installation is not essential to the functionality of the equipment, the equipment has value to the customer on a standalone basis and whenever the arrangement does not include a general right of return relative to the delivered item or delivery or performance of the undelivered item is considered probable and substantially in the control of the Company. In such arrangement, revenues from the sale of equipment are recognized upon delivery, if all other revenue recognition criteria are met and the installation revenues are deferred to the period in which such installation occurs (but not less than the amount contingent upon completion of installation, if any) using relative selling prices of each of the deliverables based on the aforementioned selling price hierarchy.
The Company determines the selling price in its multiple-element arrangements by reviewing historical transactions, and considering internal factors including, but not limited to, pricing practices including discounting, margin objectives, and competition. The determination of estimated selling price ("ESP") is made through consultation with management, taking into consideration the pricing model and strategy.
When sale arrangements include a customer acceptance provision, revenue is recognized when the Company has demonstrated that the criteria specified in the acceptance provision have been satisfied or as the acceptance provision has lapsed and deemed to be attained.
To assess the probability of collection for revenue recognition purposes, the Company analyzes historical collection experience, current economic trends and the financial position of its customers. On the basis of these criterions, the Company concludes whether revenue recognition should be deferred and recognized on a cash basis.
When applicable, the Company records a provision for estimated sale returns, stock rotation and credits granted to customers on products in the same period the related revenues are recorded in accordance with ASC 605. These estimates are based on historical sales returns, stock rotations and other known factors.
Deferred revenue includes unearned amounts received in its arrangements, and amounts received from customers but not recognized as revenues due to the fact that these transactions did not meet the revenue recognition criteria.
Research and development expenses, net are charged to the statement of operations as incurred.
The Company generally offers a standard limited warranty, including parts and labor for an average period of 1-3 years for its products. The Company estimates the costs that may be incurred under its basic limited warranty and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the Company's warranty liability include the number of installed units, historical and anticipated rates of warranty claims, and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. The Company recorded income from decrease of warranty provision for the years ended December 31, 2014, 2015 and 2016 in the amount of $ 133, $ 139 and $ 252, respectively. As of December 31, 2015 and 2016, the warranty provision was $ 2,712 and $ 2,460, respectively.
The Company has instituted a foreign currency cash flow hedging program using foreign currency forward contracts ("derivative instruments") in order to hedge the exposure to variability in expected future cash flows resulting from changes in related foreign currency exchange rates. These transactions are designated as cash flow hedges, as defined under ASC topic 815, "Derivatives and Hedging".
ASC 815 requires companies to recognize all of their derivative instruments as either assets or liabilities in the financial statements at fair value. The Company measured the fair value of the contracts in accordance with ASC topic 820, "Fair value Measurement and Disclosures" at Level 2 (see also note 2v). The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.
For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.
For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss), net of taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The non-effective portion of the derivative's change in fair value is recognized in earnings.
For derivative instruments that are designated as fair value hedges to hedge foreign currency risks for our exposure denominated in currencies other than the U.S. dollar.
Gains and losses on these forward contracts are recognized in earnings.
The Company's cash flow hedging program is to hedge against the risk of overall changes in cash flows resulting from forecasted foreign currency salary payments during the year. The Company hedges portions of its forecasted expenses denominated in NIS with forward exchange contracts. These forward exchange contracts are designated as cash flow hedges, as defined by ASC 815 and Derivative Implementation Group No. G20, "Cash Flow Hedges: Assessing and Measuring the Effectiveness of a Purchased option Used in a Cash Flow Hedge" ("DIG 20") and are all effective.
Financial instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents, short-term bank deposits, marketable securities, trade receivables and trade payables.
The majority of the Company's cash and cash equivalents and short-term bank deposits are invested in U.S. dollar instruments with major banks worldwide. Such cash and cash equivalents and deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Generally, these cash and cash equivalents and deposits may be redeemed upon demand and, therefore, bear minimal risk. Management believes that the financial institutions that hold the Company's and its subsidiaries' investments are institutions with high credit standing, and accordingly, minimal credit risk exists with respect to these investments.
The Company's trade receivables are geographically diversified and derived from sales to customers mainly in the Europe, Latin America and Asia. The Company and its subsidiaries generally do not require collateral; however, in certain circumstances, the Company and its subsidiaries may require letters of credit, additional guarantees or advance payments.
The Company and its subsidiaries perform ongoing credit evaluations of their customers and insure certain trade receivables under credit insurance policies.
An allowance for doubtful accounts is determined with respect to specific receivables, of which the collection may be doubtful. The Company charges off receivables when they are deemed uncollectible.
ASC 860 "Transfers and Servicing", ("ASC 860"), establishes a standard for determining when a transfer of financial assets should be accounted for as a sale. The Company's arrangements are such that the underlying conditions are met for the transfer of financial assets to qualify for accounting as a sale. The transfers of financial assets are typically performed by the factoring of receivables to three financial institutions.
As of December 31, 2015 and 2016, the Company sold trade receivables to several different financial institutions in a total net amount of $ 14,443 and $ 14,306, respectively. Control and risk of those trade receivables were fully transferred in accordance with ASC 860.
The agreements, pursuant to which the Company sells its trade receivables, are structured such that the Company (i) transfers the proprietary rights in the receivable from the Company to the financial institution; (ii) legally isolates the receivable from the Company's other assets, and presumptively puts the receivable beyond the lawful reach of the Company and its creditors, even in bankruptcy or other receivership; (iii) confers on the financial institution the right to pledge or exchange the receivable; and (iv) eliminates the Company's effective control over the receivable, in the sense that the Company is not entitled and shall not be obligated to repurchase the receivable other than in case of failure by the Company to fulfill its commercial obligation.
The Company's severance pay liability for its Israeli employees is calculated pursuant to Israel's Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment, as of the balance sheet date. Employees are entitled to one month's salary for each year of employment or a portion thereof. The Company's liability for all of its employees in Israel is fully covered by monthly deposits with pension funds, insurance policies and an accrual. The value of the funds deposited into pension funds and insurance policies is recorded as an asset - severance pay fund - in the Company's balance sheet.
The severance pay fund includes the deposited funds and accumulated adjustments to the Israeli Consumer Price Index up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law or labor agreements. The value of the deposited funds in insurance policies, is based on the cash surrendered value of these policies, and includes profits / losses.
Starting April 2009, the Company's agreements with new employees in Israel are under section 14 of the Severance Pay Law -1963. The Company's contributions for severance pay shall replace its severance obligation, no additional calculations shall be conducted between the parties regarding the matter of severance pay and no additional payments shall be made by the Company to the employee. Further, the related obligation and amounts deposited on behalf of such obligation are not stated on the balance sheet, as the Company is legally released from obligation to employees once the deposit amounts have been paid.
As of December 2015 and 2016, accrued severance pay amounted to $ 6,914 and $ 6,825, respectively. Severance expense for the years ended December 31, 2014, 2015 and 2016, amounted to approximately $ 1,964, $ 2,130 and $ 1,662, respectively.
The Company accounts, for its obligations for pension and other postretirement benefits, in accordance with ASC 715, "Compensation - Retirement Benefits". For more information refer to note 10.
ASC topic 718, "Compensation - Stock Compensation", ("ASC 718"), requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statements of operations.
The Company estimates the fair value of stock options granted under ASC 718 using the binomial model with the following weighted-average assumptions for 2014, 2015 and 2016:
Risk-free interest rates are based on the yield from U.S. Treasury zero-coupon bonds with a term equivalent to the contractual life of the options; volatility of price of the Company's shares based upon actual historical stock price movements. The Early exercise factor is representing the value of the underlying stock as a multiple of the exercise price of the option which, if achieved, results in exercise of the option.
Early exercise multiple is based on actual historical exercise activity. The expected term of the options granted is derived from output of the option valuation model and represents the period of time that options granted are expected to be outstanding.
The Company recognizes compensation expense using the accelerated method for all awards ultimately expected to vest. Estimated forfeitures are based on historical pre-vesting forfeitures and on management's estimates. ASC topic 718 requires forfeitures to be estimated and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
The Company applies ASC 820, "Fair Value Measurements and Disclosures". Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The hierarchy is broken down into three levels based on the inputs as follows:
The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the investments are categorized as Level 3.
The following methods and assumptions were used by the Company and its subsidiaries in estimating their fair value disclosures for financial instruments:
The carrying amounts of cash and cash equivalents, short-term bank deposits, trade receivables, other accounts receivable, trade payables, and other accounts payable and accrued expenses approximate their fair values due to the short-term maturities of such instruments.
The derivative instruments are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments.
The Company accounts for restructuring activities in accordance to ASC topic 420, "Exit or Disposal Cost Obligations" and ASC 712 "Compensation-Nonretirement Postemployment Benefits" ("ASC 712"), which requires that a liability for a cost associated with an exit or disposal activity be recognized and measured, initially at fair value, only when the liability is incurred and for contractual postemployment benefits under ASC 712 when it is probable that the employees will be entitled to the benefits, the amount is estimable. For more information regarding impairment of long lived assets related to the restructuring plan, see note 2i.
The Company accounts for comprehensive income in accordance with ASC topic 220, "Comprehensive Income". This statement establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income generally represents all changes in stockholders' equity during the period except those resulting from investments by, or distributions to, stockholders.
The components of AOCI, net of tax, were as follows:
The effects on net income of amounts reclassified from AOCI for the year ended December 31, 2016 derive from realized gains on Cash Flow Hedges, included in operating expenses.
The Company repurchased its ordinary shares on the open-market and holds such shares as Treasury shares. The Company presents the cost of repurchased treasury shares as a reduction of shareholders' equity.
Basic net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted net earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year, in accordance with ASC topic 260, "Earnings Per Share" ("ASC 260").
The total weighted average number of shares related to the outstanding options excluded from the calculations of diluted net earnings per share due to their anti-dilutive effect was 6,895,891, 5,679,468 and 3,848,290 for the years ended December 31, 2014, 2015 and 2016, respectively.
In 2016, the Company adopted ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (ASU 2014-15), that provides guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and to provide related footnote disclosures. The adoption of ASU 2014-15 don't have any impact on the consolidated financial statements or related disclosures.
Certain amounts in prior years' financial statements have been reclassified to conform to the current year's presentation. The reclassification had no effect on previously reported net income (loss) or shareholders' equity.
In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17) “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”. ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent amounts in the consolidated balance sheet statement of financial position. The amendments in the update require that all deferred tax liabilities and assets be classified as noncurrent in the consolidated balance sheet. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods therein and may be applied either prospectively or retrospectively to all periods presented. Early adoption is permitted. The Company has early adopted this standard in the fourth quarter of 2016 on a retrospective basis. Prior periods have been retrospectively adjusted. As a result of the adoption of ASU 2015-17, the Company made the following adjustments to the December 31, 2015 balance sheet: a $1,633 decrease to current deferred tax assets and a corresponding increase to noncurrent deferred tax asset.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02-Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of their classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASC 842 supersedes the previous leases standard, ASC 840. The standard is effective on January 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships” (“ASU 2016-05”), which clarifies that a change in the counter party to a derivative instrument designated as a hedging instrument does not require de-designation of that hedging relationship, provided that all other hedge accounting criteria are met. The new guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within this fiscal year. The Company is currently in the process of evaluating the impact of the adoption of ASU 2016-05 on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, "Compensation – Stock Compensation", which effects all entities that issue share-based payment awards to their employees. The amendments in this ASU cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2016. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method. Early adoption is permitted. The Company does not expect that this new guidance will have a material impact on the Company's Consolidated Financial Statements.
In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 also applies to employee benefit plan accounting, with an effective date of the first quarter of fiscal 2022. The amendments in this update are effective for fiscal years beginning after December 31, 2019, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements, footnote disclosures and employee benefit plans’ accounting.
In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interests obtained in a financial asset securitization. ASU 2016-15 designates the appropriate cash flow classification, including requirements to allocate certain components of these cash receipts and payments among operating, investing and financing activities. The retrospective transition method, requiring adjustment to all comparative periods presented, is required unless it is impracticable for some of the amendments, in which case those amendments would be prospectively as of the earliest date practicable. The standard is effective on January 1, 2019. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements and footnote disclosures.
In October 2016, the Financial Accounting Standards Board, ("FASB") issued ASU 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year. The new standard should be adopted on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently in the process of evaluating the impact of this new pronouncement on its consolidated financial statements and related disclosures.
In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This standard requires the presentation of the statement of cash flows to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. The standard is effective for fiscal years and the interim periods within those fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the effects of the adoption of this ASU on the consolidated financial statements.
In May 2014, the FASB issued a new standard related to revenue recognition. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on identifying performance obligations.
The guidance permits two methods of modification: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company currently evaluating the method of adoption.
The new standard will be effective for the Company beginning January 1, 2018, and adoption as of the original effective date of January 1, 2017 is permitted. The Company will adopt the new standard as of January 1, 2018.
The Company has made progress toward completing its evaluation of the potential changes from adopting this new standard on its financial reporting and disclosures. The Company has evaluated the impact of the standard on majority of its revenue streams and associated contracts. The Company formed an implementation work group and expects to complete the evaluation of the impact of the accounting and disclosure changes on its business processes, controls and systems throughout 2017, design any changes to such business processes, controls and systems, and implement the changes before the end of 2017.
Currently, the Company is analyzing the impact that the adoption of the standard will have on specific performance obligations and variable consideration transactions. In addition, incremental costs that are related to sales from contracts signed during the period would require capitalization. The company also will consider if there is a significant financing component if the time between payment and delivery is more than one year.
The Company continues to assess all potential impacts under the new revenues standard. |
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES |
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OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSE |
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INVENTORIES |
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INVENTORIES |
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PROPERTY AND EQUIPMENT, NET |
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PROPERTY AND EQUIPMENT, NET | NOTE 5:- PROPERTY AND EQUIPMENT, NET
Depreciation expenses for the years ended December 31, 2014, 2015 and 2016 were $ 11,377, $ 10,338 and $ 8,389 respectively.
Changes of property and equipment not resulted in cash flow outflows as of December 31, 2015 and 2016 amounted of $ (1,013) and $ (1,221), respectively.
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INTANGIBLE ASSETS, NET |
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Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS, NET | NOTE 6:- INTANGIBLE ASSETS, NET
a. Intangible assets:
The following table sets forth the components of intangible assets associated with the Nera Acquisition:
Customer relationships represent relationships with customer through whom Nera generates its revenue, capable of being separated or divided from the entity and sold, or transferred.
Technology includes Nera's internally developed proprietary technologies, features, platforms, and offerings, capable of being separated or divided from the entity and sold, transferred, or licensed.
Trade names value consists of the right to use for two years Nera's trade names, trademarks, logos and URLs, capable of being separated or divided from the entity and sold, transferred, or licensed.
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OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
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OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSE | NOTE 7:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
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LOAN AND CREDIT LINES |
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Long-term Debt, Unclassified [Abstract] | |
LOAN AND CREDIT LINES | NOTE 8:- LOAN AND CREDIT LINES
In March 2013, the Company was provided with a revolving Credit Facility by four financial institutions, under which a sum of up to $ 40,200 in the form of bank guarantees and $ 73,500 in the form of loans was available. The agreement replaced all of the Company's previously existing credit facilities. Each portion of the Credit Facility was operated by its furnishing financial institution.
The Credit Facility was secured by a floating charge over all Company assets as well as several customary fixed charges on specific assets and subject to certain financial covenants.
Repayment could have been accelerated by the financial institutions in certain events of default including in insolvency events, failure to comply with financial covenants or an event in which a current or future shareholder acquires control (as defined under the Israel Securities Law) of the Company.
During 2014 and 2015 the Company amended its Credit Facility arrangements. The loan facility was reduced gradually to $ 50,000 and few financial covenants, interest rates and fees were adjusted. In addition, the Company was allowed to discount LC (Letter of Credit) from one of its customers up to $ 54,000 which was in addition to the existing $ 20,000 receivables factoring limit.
In March 2016, the Company signed a further amendment to its agreement with the four financial institutions to extend the credit facility repayment date to March 31, 2017 (from June 30, 2016).
In December 2016, the Company signed a further amendment to its agreement with the four financial institutions to increase the allowed discounting activities of LC receivables to $ 94,000.
In March 2017, the Company signed a further amendment to its agreement with the four financial institutions to extend the credit facility repayment date to March 31, 2018. One of the four bank had to terminate its participation in the agreement because of regulatory constraints and its share in the Credit Facility was re-distributed by the other three on a pro-rata basis. In addition the credit facility for bank guarantees was increased to $ 50,200. Other change adjusted the fees and interest spread to the same levels of the original agreement from March 2013.
As of December 31, 2016 the Company utilized $ 17,000 out of $ 50,200 of available credit lines from several banks. The credit lines carry interest rates in the range of Libor+3.3% and Libor+3.4%.
The credit agreement contains financial and other covenants requiring that the Company maintains, among other things, minimum shareholders’ equity value and financial assets, a certain ratio between our shareholders’ equity and the total value of our assets on our balance sheet, a certain ratio between our net financial debt to each of our working capital and accounts receivable. As of December 31, 2016 and 2015, the Company met all of its covenants. |
DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS |
As of December 31, 2015, the Company had outstanding forward exchange contracts designated as cash flow hedge for the acquisition of NIS 122,407 in consideration for $ 31,686 maturing, in a period of up to one year. As of December 31, 2016, the Company had outstanding forward exchange contracts designated as cash flow hedge for the acquisition of NIS 71,274 in consideration for $ 18,890 maturing in a period of up to one year.
The Company also enters into forward exchange contracts to hedge a portion of its certain monetary items in the balance sheet, such as trade receivables and trade payables denominated in foreign currencies for a period of up to one month (the "Fair Value Hedging Program"). The purpose of the Company's Fair Value Hedging Program is to protect the fair value of the monetary assets from foreign exchange rates fluctuations. Gains and losses from derivatives related to the Fair Value Hedging Program are not designated as hedging instruments.
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PENSION LIABILITIES, NET |
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Pension and Other Postretirement Defined Benefit Plans, Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION LIABILITIES, NET |
The Norwegian subsidiary Ceragon Networks AS (formerly "Nera Networks AS") has defined contribution schemes and 4 unfunded pension plans.
Under the defined contributions scheme Ceragon Networks AS makes a payment to the insurance company who administer the fund on behalf of the employee. Ceragon Networks AS has no liabilities relating to such schemes after the payment to the insurance company. As of December 31, 2016, almost all active employees are in this scheme. The contribution and the corresponding social security taxes are recognized as payroll expenses in the period to which the employee's services are rendered. The defined pension contribution schemes meet the requirements of the law on compulsory occupational pension.
Defined benefit scheme was stopped for admission from December 1, 2007, and persons that were employed after that date were automatically entered into the defined contribution scheme. The schemes give right to defined future benefits. These are mainly dependent on the number of qualifying employment years, salary level at pension age, and the amount of benefits from the national insurance scheme. The commitment related to the pension scheme is covered through an insurance company. As of December 31, 2016 the pension scheme has 0 members.
AFP-scheme - in force from 1 January 2011, the AFP-scheme is a defined benefit multi-enterprise scheme, but is recognized in the accounts as a defined contribution scheme until reliable and sufficient information is available for the group to recognize its proportional share of pension cost, pension liability and pension funds in the scheme. Ceragon Networks AS's liabilities are therefore not recognized as liability in the balance sheet.
The liabilities in respect of Ceragon Networks AS's pension plans have been recalculated based on updated employee numbers as at December 31, 2016. These plans together represent 100% of the PBO of the entire group.
The following tables provide a reconciliation of the changes in the plans' benefits obligation for the year ended December 31, 2016, and the statement of funds status as of December 31, 2016:
The assumptions used in the measurement of the Company' benefits obligations as of December 31, 2016 is as follows:
The amounts reported for net periodic pension costs and the respective benefit obligation amounts are dependent upon the actuarial assumptions used. The Company reviews historical trends, future expectations, current market conditions and external data to determine the assumptions. The discount rate is the covered bond. For purposes of calculating the 2016 net periodic benefit cost and the 2016 benefit obligation, the Company has used a discount rate of 2.30%. The rate of compensation increase is determined by the Company, based upon its long-term plans for such increases.
The following table provides the components of net periodic benefits cost for the years ended December 31, 2015 and 2016:
Benefit payments are expected to be paid as follows:
Regarding the policy for amortizing actuarial gains or losses for pension and post-employment plans, the Company has chosen to charge the actuarial gains or losses to statement of operations.
For the years ended December 31, 2014, 2015 and 2016, an actuarial gain (loss) of $ (533), $ 174 and $ (204) respectively, was recognized in statements of income (loss).
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COMMITMENTS AND CONTINGENT LIABILITIES |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES |
The Company and its subsidiaries lease their facilities and motor vehicles under various operating lease agreements that expire on various dates. Aggregate minimum rental commitments under non-cancelable leases at December 31, 2016, are as follows:
Expenses for lease of facilities for the years ended December 31, 2014, 2015 and 2016 were approximately $ 5,426, $ 3,797 and $ 4,235, respectively.
Expenses for the lease of motor vehicles for the years ended December 31, 2014, 2015 and 2016 were approximately $ 1,174, $ 1,175 and $ 735, respectively.
As of December 31, 2015 and 2016, the Company provided bank guarantees in an aggregate amount of $ 25,410 and $ 32,203, respectively, with respect to tender offer guarantees and performance guarantees to its customers.
The Company is currently involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.
On January 6, 2015 the
Company was served with a motion to approve a purported class action, naming the Company, its Chief Executive Officer and its
directors as defendants. The motion was filed with the District Court of Tel-Aviv. The purported class action alleges
breaches of duties by making false and misleading statements in the Company's SEC filings and public statements. The Company
filed its defense on June 21, 2015, and on October 22, 2015 the plaintiff filed a request for discovery of specific
documents. The Company filed its response to the plaintiffs' request for discovery on January 25, 2016 and the plaintiffs
submitted their response on February 24, 2016. On June 8, 2016, the District Court partially accepted the plaintiff's request
for discovery, and ordered the Company to disclose some of the requested documents. The Company's request to appeal this
decision was denied by the Supreme Court on October 25, 2016, and the Company disclosed the required documents to the
plaintiff. The plaintiff filed his reply to the Company’s response to the motion on April 2, 2017. A preliminary
hearing has been set to May 8, 2017. The plaintiff seeks specified compensatory damages in a sum of up to $75,000,000, as
well as attorneys’ fees and costs.
The initial procedure (i.e. until the District Court decides whether to approve the motion or to deny it) has been conducted for over 2 years now. The Company is unable to estimate how long it is expected to last. The Company believes that the District Court should deny the motion. There is no assurance that the Company's position will be accepted by the District Court. In such case the Company may have to divert attention of its executives to deal with this class action as well as incur expenses that may be beyond its insurance coverage for such cases, which cause a risk of loss and expenditures that may adversely affect its financial condition and results of operations.
The Company believes it has strong defense claims and intends to vigorously defend its position. The Company cannot assess the outcome of this claim due its early stage. Therefore, the company did not record a provision as of December 31, 2016. |
SHAREHOLDERS' EQUITY |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY |
The ordinary shares of the Company are traded on Nasdaq Global Market and on the Tel Aviv Stock Exchange, under the symbol "CRNT".
The ordinary shares entitle their holders to receive notice to participate and vote in general meetings of the Company, the right to share in distributions upon liquidation of the Company, and to receive dividends, if declared.
Upon adoption of the Plan, the Company reserved for issuance 8,639,000 ordinary shares in accordance with the respective terms thereof. Any options or RSU’s, which are canceled or forfeited before the expiration date, become available for future grants. As of December 31, 2016, the Company has 779,327 Ordinary shares available for future grant under the Plan.
The Company's options are generally granted at exercise prices which are equal to the average market value of the ordinary shares in the period of 30 trading days prior to the grant date. The weighted average grant date fair value of the options granted during 2014, 2015 and 2016 were $ 0.96, $ 0.54 and $ 0.78, respectively. No RSUs were granted during 2015 and 2016.
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on the last trading day of the year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last day of the year.
This amount is impacted by the changes in the fair market value of the Company's shares. Total intrinsic value of options and RSUs exercised during the years ended December 31, 2015 and 2016 were $ 480 and $ 238, respectively. As of December 31, 2016, there was $ 1,085 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. This cost is expected to be recognized over a weighted-average period of 0.92 years.
The following is a summary of the Company's stock options and RSUs granted separated into ranges of exercise price:
The total equity-based compensation expense related to all of the Company's equity-based awards, recognized for the years ended December 31, 2014, 2015 and 2016, was comprised as follows:
In the event that cash dividends are declared in the future, such dividends will be paid in NIS or in foreign currency subject to any statutory limitations. The Company does not intend to pay cash dividends in the foreseeable future.
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TAXES ON INCOME |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TAXES ON INCOME |
NOTE 13:- TAXES ON INCOME
The Company has elected to file its tax return under the Israeli Income Tax Regulations 1986 (Principles Regarding the Management of Books of Account of Foreign Invested Companies and Certain Partnerships and the Determination of Their Taxable Income). Accordingly, starting tax year 2003, results of operations in Israel are measured in terms of earnings in U.S. dollars.
According to the Law, the Company is entitled to various tax benefits by virtue of the "approved enterprise" and/or " benefited enterprise" status granted to part of their enterprises, as implied by this Law. The principal benefits by virtue of the Law are:
According to the provisions of the Law, the Company has chosen to enjoy the "Alternative" track. Under this track, the Company is tax exempt in the first two years of the benefit period and subject to tax at the reduced rate of 10%-25% for the remaining benefit period.
For receiving the benefits under the alternative track, there is a minimum qualifying investment. This condition requires an investment in the acquisition of productive assets such as machinery and equipment which must be carried out within three years.
The minimum qualifying investment required for setting up a plant is NIS 300 thousand. As for plant expansions, the minimum qualifying investment is the higher of NIS 300 thousand and an amount equivalent to the "qualifying percentage" of the value of the productive assets. Productive assets that are used by the plant but not owned by it will also be viewed as productive assets. The Company was eligible under the terms of minimum qualifying investment and elected 2006 and 2009 as its "years of election".
The qualifying percentage of the value of the productive assets is as follows:
The income qualifying for tax benefits under the alternative track is the taxable income of a company that has met certain conditions as determined by the Law ("a Benefited company"), and which is derived from an industrial enterprise. The Law specifies the types of qualifying income that is entitled to tax benefits under the alternative track with respect of an industrial enterprise, whereby income from an industrial enterprise includes, among others, revenues from the production and development of software products and revenues from industrial research and development activities performed for a foreign resident (and approved by the Head of the Administration of Industrial Research and Development).
The benefit period starts with the first year the Benefited enterprise earns taxable income, provided that 14 years have not passed since the approval was granted and 12 years have not passed since the enterprise began operating. In respect of expansion programs pursuant to Amendment No. 60 to the Law, the benefit period starts at the later of the year elected and the first year the Company earns taxable income provided that 12 years have not passed since the beginning of the year of election. The respective benefit period has not yet begun.
The above benefits are conditional upon the fulfillment of the conditions stipulated by the Law, regulations published thereunder and the letters of approval for the investments in the approved enterprises, as above. Non-compliance with the conditions may cancel all or part of the benefits and refund of the amount of the benefits, including interest. As of December 31, 2016, the management believes that the Company is in compliance with all of the aforementioned conditions.
The Company is also a "foreign investors' company", as defined by the Capital Investments Law, and, as such, is entitled to a 10-year period of benefits and may be entitled to reduced tax rates of between 10% to 25% (depending on the percentage of foreign ownership in each tax year).
The Company has three capital investment programs that have been granted approved enterprise status, under the Law and two programs under benefited enterprise status pursuant to Amendment 60.
Income from sources other than the "Approved Enterprise" and "Benefited Enterprise" during the benefit period will be subject to the tax at the regular tax rate.
Amendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 68):
Effective January 1, 2011, the "Knesset" (Israeli Parliament) enacted the Law for Economic Policy for 2011 and 2012 (Amended Legislation), and among other things, amended the Law, ("Amendment 68"). According to the Amendment, the benefit tracks in the Investment Law were modified and a flat tax rate applies to preferred enterprise entire preferred income. The Company can elect to apply Amendment by waiving its benefits under the approved enterprise and benefited enterprise programs. According to the Amendment, the tax rate on preferred income form a preferred enterprise in 2014 and thereafter will be 16% (in development area A - 9%).
The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings in 2014 and thereafter will be subject to tax at a rate of 20%.
The Company has evaluated the effect of the adoption of the Amendment on its financial statements, and as of the date of the approval of the financial statements, the Company believes that it will not apply the Amendment. Accordingly, the Company has not adjusted its deferred tax balances as of December 31, 2016. The Company may change its position in the future.
In December 2016, the Knesset passed an additional amendment to the Law which provides for additional benefits to Preferred Technological Enterprises by reducing the tax rate on preferred Technological Enterprise income (as such is defined in Amendment 73) to 12% (the "Amendment"). However, the Amendment has not yet come into effect as regulations for implementation of have not yet been promulgated by the Minister of Finance and therefore the Company cannot yet evaluate the effect of the Amendment on its financial statements.
The Encouragement Law provides several tax benefits for industrial companies. An industrial company is defined as a company resident and located in Israel, at least 90% of the income of which in a given tax year exclusive of income from specified Government loans, capital gains, interest and dividends, is derived from an industrial enterprise owned by it. An industrial enterprise is defined as an enterprise whose major activity in a given tax year is industrial production activity.
Management believes that the Company is currently qualified as an "industrial company" under the Encouragement Law and, as such, enjoys tax benefits, including: (1) deduction of purchase of know-how and patents and/or right to use a patent over an eight-year period; (2) the right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial companies and an industrial holding company; (3) accelerated depreciation rates on equipment and buildings; and (4) expenses related to a public offering on the Tel-Aviv Stock Exchange and on recognized stock markets outside of Israel, are deductible in equal amounts over three years.
Eligibility for benefits under the Encouragement Law is not subject to receipt of prior approval from any Governmental authority. No assurance can be given that the Israeli tax authorities will agree that the Company qualifies, or, if the Company qualifies, that the Company will continue to qualify as an industrial company or that the benefits described above will be available to the Company in the future.
Taxable income of Israeli companies was subject to tax at the rate of 26.5% in the years ended December 31, 2014 and 2015 and 25% in 2016.
In December 2016 the Knesset approved amendment 235 to the Income Tax Ordinance which further reduces the corporate tax rate to 24% in 2017 and 23% in 2018 and thereafter. The effective tax rate payable by a company which is taxed under the Investment Law may be considerably lower (see also Note 13.a2 above).
Israeli corporations are generally taxed at the corporate income tax rate on their capital gains.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities are as follows:
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized in each tax jurisdiction. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded a valuation allowance amounting $ 97,899 and $110,143 at December 31, 2015 and 2016, respectively.
The Company has accumulated net operating losses and capital loss for Israeli income tax purposes as of December 31, 2016 in the amount of approximately $ 211,187 and $ 7,870, respectively. The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period.
As of December 31, 2016, the Company's U.S. subsidiary had a U.S. federal net operating loss carry forward of approximately $ 845 that can be carried forward and offset against taxable income and that expires during the years 2017 to 2031. Utilization of U.S. net operating losses may be subject to substantial annual limitations due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state law provisions. The annual limitations may result in the expiration of net operating losses before utilization.
As of December 31, 2016, the Company's Norwegian subsidiary had a net operating loss carry forward of approximately $ 12,700 that can be carried forward. The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period.
As of December 31, 2016, the Company's Brazilian subsidiary had a net operating loss carryforward of approximately $ 74,196 that can be carried forward. The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period. The offset is limited to a maximum 30% of the annual taxable income.
Reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company and the actual tax expense as reported in the Statement of Income (Loss) is as follows:
A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:
The Company has further accrued $ 902 due to interest and penalty related to uncertain tax positions as of December 31, 2016.
As of December 31, 2016, the Company is undergoing income and indirect tax audits in Africa. In addition, during 2016, the Company reached an arrangement with the Norwegian IRS resulted in a reduction of $650 in tax positions. |
SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION |
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Geographic Areas, Revenues from External Customers [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION |
In 2014 the company had revenue from a single customer that accounted for approximately 16.1% of total revenues. In 2015, the Company had revenue from a single customer group of affiliated companies equaling 17.7% of total revenues, in 2016 the company had revenue from a single customer that accounted for approximately 16.6% of total revenues.
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SELECTED STATEMENTS OF OPERATIONS DATA |
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Quarterly Financial Data [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SELECTED STATEMENTS OF OPERATIONS DATA | NOTE 15:- SELECTED STATEMENTS OF OPERATIONS DATA
The following table sets forth the computation of basic and diluted net earnings per share:
*) Anti-dilutive
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FAIR VALUE MEASUREMENT |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENT | NOTE 16:- FAIR VALUE MEASUREMENT:
The Company's financial assets (liabilities) measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments:
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RELATED PARTY BALANCES AND TRANSACTIONS |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY BALANCES AND TRANSACTIONS | NOTE 17:- RELATED PARTY BALANCES AND TRANSACTIONS
Most of the related party balances and transactions are with related companies and principal shareholders. Yehuda Zisapel is a principal shareholder of the Company. Zohar Zisapel is the Chairman of the Board of Directors and a principal shareholder of the Company. Yehuda and Zohar Zisapel are brothers who do not have a voting agreement between them. Jointly or severally, they are also founders, directors and principal shareholders of several other companies that are known as the RAD-BYNET group.
Members of the RAD-BYNET group provide the Company on an as-needed basis with information systems, marketing, and administrative services, the Company reimburses each company for its costs in providing these services. The aggregate amount of these expenses was approximately $ 1,699, $ 1,060 and $ 1,668 in 2014, 2015 and 2016, respectively.
The Company leases its offices in Israel from real estate holding companies controlled by Yehuda and Zohar Zisapel. The leases for the majority of this facility expire in December 2017, with an option to terminate early after three years.
Additionally, the Company leases the U.S. subsidiary's office space from a real estate holding company controlled by Yehuda and Zohar Zisapel. The lease for this facility was terminated in April 2015.
The aggregate amount of rent and maintenance expenses related to these properties was approximately $ 2,046 in 2014, $ 2,182 in 2015 and $ 1,963 in 2016.
The Company has an
OEM arrangement with RADWIN, a member of RAD-BYNET group, according to which the Company purchases RADWIN products which are
then resold to the Company’s customers. In addition, the Company purchases certain inventory components from other
members of the RAD-BYNET group, which are integrated into its products. The aggregate purchase price of these components was
approximately $ 4,149, $ 2,911 and $ 2,866 for the years ended December 31, 2014, 2015 and 2016,
respectively.
The Company purchases certain property and equipment from members of the RAD-BYNET group, the aggregate purchase price of these assets was approximately $ 100, $ 51 and $ 1,019 for the years ended December 31, 2014, 2015 and 2016, respectively.
Transactions with related parties:
Balances with related parties:
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SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis Of Presentation |
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP").
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Use Of Estimates |
The preparation of the financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent there are material differences between the Company's estimates and the actual results, the Company's future consolidated results of operation may be affected.
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Financial Statements In U.S. Dollars |
A majority of the revenues of the Company and certain of its subsidiaries are generated in U.S. dollars ("dollars"). In addition, a substantial portion of the Company's and certain of its subsidiaries' costs is incurred in dollars. Since management believes that the dollar is the currency of the primary economic environment in which the Company and its subsidiaries operate and considers the non-U.S. subsidiaries to be a direct, integral extension of the parent company's operations, the dollar is its functional and reporting currency. Accordingly, amounts in currencies other than U.S dollars have been re-measured in accordance with ASC topic 830, "Foreign Currency Matters" ("ASC 830") as follows:
Monetary balances - at the exchange rate in effect on the balance sheet date. Consolidated statements of operations items - average exchange rates prevailing during the year.
All exchange gains and losses from the re-measurement mentioned above are reflected in the statement of operations in financial expenses, net.
The financial statements of the Company's Brazilian subsidiaries, whose functional currency is not the dollar, have been re-measured and translated into dollars. All amounts on the balance sheets have been translated into the dollar using the exchange rates in effect on the relevant balance sheet dates. All amounts in the statements of operations have been translated into the dollar using the average exchange rate for the relevant periods. The resulting translation adjustments are reported as a component of accumulated other comprehensive loss in shareholders' equity.
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Principles Of Consolidation |
The consolidated financial statements include the accounts of the Company and its subsidiaries ("the Group"). Intercompany balances and transactions including profits from intercompany sales not yet realized outside the Group, have been eliminated upon consolidation.
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Cash Equivalents |
Cash equivalents include short-term, highly liquid investments that are readily convertible to cash with original maturities of three months or less.
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Short-Term Bank Deposit |
Short-term bank deposits are deposits with maturities of more than three months and up to one year. The short-term bank deposits are presented at their cost, including accrued interest.
As of December 31, 2015, and 2016, the Company had no short-term bank deposits.
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Inventories |
Inventories are stated
at the lower of cost or net releasable value. Inventory
write-downs are provided to cover risks arising from slow-moving items, technological obsolescence, excess inventories,
discontinued products, and for market prices lower than cost, if any. The Company periodically evaluates the quantities on
hand relative to historical and projected sales volume (which is determined based on an assumption of future demand and
market conditions) and the age of the inventory. At the point of the loss recognition, a new lower cost basis for that
inventory is established. In addition, if required the Company records a liability for firm non-cancelable and unconditional
purchase commitments with contract manufacturers for quantities in excess of the Company's future demands forecast consistent
with its valuation of excess and obsolete inventory.
Inventory includes costs of products delivered to customers and not recognized as cost of sales, where revenues in the related arrangements were not recognized.
Cost is determined for all types of inventory using the moving average cost method plus indirect costs.
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Property And Equipment |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, at the following annual rates:
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Impairment Of Long-Lived Assets |
The Company's and its subsidiaries' long-lived assets are reviewed for impairment in accordance with ASC topic 360," Property Plant and Equipment", ("ASC 360"), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. During 2014 the Company recognized impairment expenses in the amount of $ 2,367. During 2015 and 2016, no impairment losses have been recognized
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Income Taxes |
The Company and its subsidiaries account for income taxes in accordance with ASC topic 740, "Income Taxes", ("ASC 740"). This Statement prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and for carry forward losses deferred taxes are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company and its subsidiaries provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that some portion or all of the deferred tax asset will not be realized. For more information see note 13c.
The Company adopted ASC topic 740-10, "Income Taxes", ("ASC 740-10"). ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with ASC 740. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company elected to classify interest expenses and penalties recognized in the financial statements as income taxes. For more information see note 13g.
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Goodwill And Other Intangible Assets |
Goodwill and certain other purchased intangible assets have been recorded in the Company's financial statements as a result of acquisitions. Goodwill represents excess of the costs over the net tangible and intangible assets acquired of businesses acquired under ASC topic 350, "Intangible - Goodwill and Other", ("ASC 350") according to which goodwill is not amortized.
According to ASC 350, goodwill impairment testing is a two-step process. The first step involves comparing the fair value of a company's reporting units to their carrying amount. If the fair value of the reporting unit is determined to be greater than its carrying amount, there is no impairment. If the reporting unit's carrying amount is determined to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of the goodwill, an impairment loss equivalent to the difference is recorded. During 2014, the Company identified indicators of goodwill impairment and accordingly performed the two-step impairment which resulted in recording an impairment charge of its goodwill.
Intangible assets that are considered to have definite useful life are amortized using the straight-line basis over their estimated useful lives, 7 years for Technology and Customer relations. The carrying amount of these assets is reviewed whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.
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Revenue Recognition |
The Company and its subsidiaries generate revenues from selling products to end users, distributors, system integrators and original equipment manufacturers ("OEM").
Revenues from product sales are recognized in accordance with ASC topic 605-10, "Revenue recognition" and with ASC 605-25 "Multiple-Element Arrangements", ("ASC 605"), when delivery has occurred, persuasive evidence of an arrangement exists, the vendor's fee is fixed or determinable, no future obligation exists and collectability is probable.
When required, the Company complies with ASC 605-25, "Multiple-Deliverable Revenue Arrangements". This standard changes the requirements for establishing separate units of accounting in a multiple element arrangement by elimination of the residual method and requires the allocation of arrangement consideration to each deliverable to be based on using the relative selling price method.
Pursuant to the guidance of ASC 605-25, when a sales arrangement contains multiple elements, such as equipment and services, the Company allocates revenues to each element based on a selling price hierarchy.
The selling price for a deliverable is based on its vendor specific objective evidence (''VSOE'') if available, third party evidence (''TPE'') if VSOE is not available, or estimated selling price (''ESP'') if neither VSOE nor TPE is available. In multiple element arrangements, revenues are allocated to each separate unit of accounting for each of the deliverables based on the aforementioned selling price hierarchy.
The Company considers the sale of equipment and its installation to be two separate units of accounting in the arrangement in which the installation is not essential to the functionality of the equipment, the equipment has value to the customer on a standalone basis and whenever the arrangement does not include a general right of return relative to the delivered item or delivery or performance of the undelivered item is considered probable and substantially in the control of the Company. In such arrangement, revenues from the sale of equipment are recognized upon delivery, if all other revenue recognition criteria are met and the installation revenues are deferred to the period in which such installation occurs (but not less than the amount contingent upon completion of installation, if any) using relative selling prices of each of the deliverables based on the aforementioned selling price hierarchy.
The Company determines the selling price in its multiple-element arrangements by reviewing historical transactions, and considering internal factors including, but not limited to, pricing practices including discounting, margin objectives, and competition. The determination of estimated selling price ("ESP") is made through consultation with management, taking into consideration the pricing model and strategy.
When sale arrangements include a customer acceptance provision, revenue is recognized when the Company has demonstrated that the criteria specified in the acceptance provision have been satisfied or as the acceptance provision has lapsed and deemed to be attained.
To assess the probability of collection for revenue recognition purposes, the Company analyzes historical collection experience, current economic trends and the financial position of its customers. On the basis of these criterions, the Company concludes whether revenue recognition should be deferred and recognized on a cash basis.
When applicable, the Company records a provision for estimated sale returns, stock rotation and credits granted to customers on products in the same period the related revenues are recorded in accordance with ASC 605. These estimates are based on historical sales returns, stock rotations and other known factors.
Deferred revenue includes unearned amounts received in its arrangements, and amounts received from customers but not recognized as revenues due to the fact that these transactions did not meet the revenue recognition criteria.
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Research and development expenses, net |
Research and development expenses, net are charged to the statement of operations as incurred.
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Warranty Costs |
The Company generally offers a standard limited warranty, including parts and labor for an average period of 1-3 years for its products. The Company estimates the costs that may be incurred under its basic limited warranty and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the Company's warranty liability include the number of installed units, historical and anticipated rates of warranty claims, and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. The Company recorded income from decrease of warranty provision for the years ended December 31, 2014, 2015 and 2016 in the amount of $ 133, $ 139 and $ 252, respectively. As of December 31, 2015 and 2016, the warranty provision was $ 2,712 and $ 2,460, respectively.
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Derivative Instruments |
The Company has instituted a foreign currency cash flow hedging program using foreign currency forward contracts ("derivative instruments") in order to hedge the exposure to variability in expected future cash flows resulting from changes in related foreign currency exchange rates. These transactions are designated as cash flow hedges, as defined under ASC topic 815, "Derivatives and Hedging".
ASC 815 requires companies to recognize all of their derivative instruments as either assets or liabilities in the financial statements at fair value. The Company measured the fair value of the contracts in accordance with ASC topic 820, "Fair value Measurement and Disclosures" at Level 2 (see also note 2v). The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.
For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.
For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss), net of taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The non-effective portion of the derivative's change in fair value is recognized in earnings.
For derivative instruments that are designated as fair value hedges to hedge foreign currency risks for our exposure denominated in currencies other than the U.S. dollar.
Gains and losses on these forward contracts are recognized in earnings.
The Company's cash flow hedging program is to hedge against the risk of overall changes in cash flows resulting from forecasted foreign currency salary payments during the year. The Company hedges portions of its forecasted expenses denominated in NIS with forward exchange contracts. These forward exchange contracts are designated as cash flow hedges, as defined by ASC 815 and Derivative Implementation Group No. G20, "Cash Flow Hedges: Assessing and Measuring the Effectiveness of a Purchased option Used in a Cash Flow Hedge" ("DIG 20") and are all effective.
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Concentrations Of Credit Risk |
Financial instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents, short-term bank deposits, marketable securities, trade receivables and trade payables.
The majority of the Company's cash and cash equivalents and short-term bank deposits are invested in U.S. dollar instruments with major banks worldwide. Such cash and cash equivalents and deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Generally, these cash and cash equivalents and deposits may be redeemed upon demand and, therefore, bear minimal risk. Management believes that the financial institutions that hold the Company's and its subsidiaries' investments are institutions with high credit standing, and accordingly, minimal credit risk exists with respect to these investments.
The Company's trade receivables are geographically diversified and derived from sales to customers mainly in the Europe, Latin America and Asia. The Company and its subsidiaries generally do not require collateral; however, in certain circumstances, the Company and its subsidiaries may require letters of credit, additional guarantees or advance payments.
The Company and its subsidiaries perform ongoing credit evaluations of their customers and insure certain trade receivables under credit insurance policies.
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Allowance For Doubtful Debt |
An allowance for doubtful accounts is determined with respect to specific receivables, of which the collection may be doubtful. The Company charges off receivables when they are deemed uncollectible.
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Transfers Of Financial Assets |
ASC 860 "Transfers and Servicing", ("ASC 860"), establishes a standard for determining when a transfer of financial assets should be accounted for as a sale. The Company's arrangements are such that the underlying conditions are met for the transfer of financial assets to qualify for accounting as a sale. The transfers of financial assets are typically performed by the factoring of receivables to three financial institutions.
As of December 31, 2015 and 2016, the Company sold trade receivables to several different financial institutions in a total net amount of $ 14,443 and $ 14,306, respectively. Control and risk of those trade receivables were fully transferred in accordance with ASC 860.
The agreements, pursuant to which the Company sells its trade receivables, are structured such that the Company (i) transfers the proprietary rights in the receivable from the Company to the financial institution; (ii) legally isolates the receivable from the Company's other assets, and presumptively puts the receivable beyond the lawful reach of the Company and its creditors, even in bankruptcy or other receivership; (iii) confers on the financial institution the right to pledge or exchange the receivable; and (iv) eliminates the Company's effective control over the receivable, in the sense that the Company is not entitled and shall not be obligated to repurchase the receivable other than in case of failure by the Company to fulfill its commercial obligation.
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Severance Pay |
The Company's severance pay liability for its Israeli employees is calculated pursuant to Israel's Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment, as of the balance sheet date. Employees are entitled to one month's salary for each year of employment or a portion thereof. The Company's liability for all of its employees in Israel is fully covered by monthly deposits with pension funds, insurance policies and an accrual. The value of the funds deposited into pension funds and insurance policies is recorded as an asset - severance pay fund - in the Company's balance sheet.
The severance pay fund includes the deposited funds and accumulated adjustments to the Israeli Consumer Price Index up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law or labor agreements. The value of the deposited funds in insurance policies, is based on the cash surrendered value of these policies, and includes profits / losses.
Starting April 2009, the Company's agreements with new employees in Israel are under section 14 of the Severance Pay Law -1963. The Company's contributions for severance pay shall replace its severance obligation, no additional calculations shall be conducted between the parties regarding the matter of severance pay and no additional payments shall be made by the Company to the employee. Further, the related obligation and amounts deposited on behalf of such obligation are not stated on the balance sheet, as the Company is legally released from obligation to employees once the deposit amounts have been paid.
As of December 2015 and 2016, accrued severance pay amounted to $ 6,914 and $ 6,825, respectively. Severance expense for the years ended December 31, 2014, 2015 and 2016, amounted to approximately $ 1,964, $ 2,130 and $ 1,662, respectively.
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Pension Accrual |
The Company accounts, for its obligations for pension and other postretirement benefits, in accordance with ASC 715, "Compensation - Retirement Benefits". For more information refer to note 10.
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Accounting For Stock-Based Compensation |
ASC topic 718, "Compensation - Stock Compensation", ("ASC 718"), requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statements of operations.
The Company estimates the fair value of stock options granted under ASC 718 using the binomial model with the following weighted-average assumptions for 2014, 2015 and 2016:
Risk-free interest rates are based on the yield from U.S. Treasury zero-coupon bonds with a term equivalent to the contractual life of the options; volatility of price of the Company's shares based upon actual historical stock price movements. The Early exercise factor is representing the value of the underlying stock as a multiple of the exercise price of the option which, if achieved, results in exercise of the option.
Early exercise multiple is based on actual historical exercise activity. The expected term of the options granted is derived from output of the option valuation model and represents the period of time that options granted are expected to be outstanding.
The Company recognizes compensation expense using the accelerated method for all awards ultimately expected to vest. Estimated forfeitures are based on historical pre-vesting forfeitures and on management's estimates. ASC topic 718 requires forfeitures to be estimated and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
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Fair Value Of Financial Instruments |
The Company applies ASC 820, "Fair Value Measurements and Disclosures". Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The hierarchy is broken down into three levels based on the inputs as follows:
The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the investments are categorized as Level 3.
The following methods and assumptions were used by the Company and its subsidiaries in estimating their fair value disclosures for financial instruments:
The carrying amounts of cash and cash equivalents, short-term bank deposits, trade receivables, other accounts receivable, trade payables, and other accounts payable and accrued expenses approximate their fair values due to the short-term maturities of such instruments.
The derivative instruments are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments.
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Restructuring Cost |
The Company accounts for restructuring activities in accordance to ASC topic 420, "Exit or Disposal Cost Obligations" and ASC 712 "Compensation-Nonretirement Postemployment Benefits" ("ASC 712"), which requires that a liability for a cost associated with an exit or disposal activity be recognized and measured, initially at fair value, only when the liability is incurred and for contractual postemployment benefits under ASC 712 when it is probable that the employees will be entitled to the benefits, the amount is estimable. For more information regarding impairment of long lived assets related to the restructuring plan, see note 2i.
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Comprehensive Income |
The Company accounts for comprehensive income in accordance with ASC topic 220, "Comprehensive Income". This statement establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income generally represents all changes in stockholders' equity during the period except those resulting from investments by, or distributions to, stockholders.
The components of AOCI, net of tax, were as follows:
The effects on net income of amounts reclassified from AOCI for the year ended December 31, 2016 derive from realized gains on Cash Flow Hedges, included in operating expenses.
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Treasury Shares |
The Company repurchased its ordinary shares on the open-market and holds such shares as Treasury shares. The Company presents the cost of repurchased treasury shares as a reduction of shareholders' equity.
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Basic And Diluted Net Earnings Per Share |
Basic net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted net earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year, in accordance with ASC topic 260, "Earnings Per Share" ("ASC 260").
The total weighted average number of shares related to the outstanding options excluded from the calculations of diluted net earnings per share due to their anti-dilutive effect was 6,895,891, 5,679,468 and 3,848,290 for the years ended December 31, 2014, 2015 and 2016, respectively.
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Going concern |
In 2016, the Company adopted ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (ASU 2014-15), that provides guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and to provide related footnote disclosures. The adoption of ASU 2014-15 don't have any impact on the consolidated financial statements or related disclosures. |
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Reclassifications |
Certain amounts in prior years' financial statements have been reclassified to conform to the current year's presentation. The reclassification had no effect on previously reported net income (loss) or shareholders' equity. |
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Impact Of Recently Issued Accounting Standards |
In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17) “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”. ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent amounts in the consolidated balance sheet statement of financial position. The amendments in the update require that all deferred tax liabilities and assets be classified as noncurrent in the consolidated balance sheet. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods therein and may be applied either prospectively or retrospectively to all periods presented. Early adoption is permitted. The Company has early adopted this standard in the fourth quarter of 2016 on a retrospective basis. Prior periods have been retrospectively adjusted. As a result of the adoption of ASU 2015-17, the Company made the following adjustments to the December 31, 2015 balance sheet: a $1,633 decrease to current deferred tax assets and a corresponding increase to noncurrent deferred tax asset.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02-Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of their classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASC 842 supersedes the previous leases standard, ASC 840. The standard is effective on January 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships” (“ASU 2016-05”), which clarifies that a change in the counter party to a derivative instrument designated as a hedging instrument does not require de-designation of that hedging relationship, provided that all other hedge accounting criteria are met. The new guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within this fiscal year. The Company is currently in the process of evaluating the impact of the adoption of ASU 2016-05 on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, "Compensation – Stock Compensation", which effects all entities that issue share-based payment awards to their employees. The amendments in this ASU cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2016. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method. Early adoption is permitted. The Company does not expect that this new guidance will have a material impact on the Company's Consolidated Financial Statements.
In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 also applies to employee benefit plan accounting, with an effective date of the first quarter of fiscal 2022. The amendments in this update are effective for fiscal years beginning after December 31, 2019, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements, footnote disclosures and employee benefit plans’ accounting.
In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interests obtained in a financial asset securitization. ASU 2016-15 designates the appropriate cash flow classification, including requirements to allocate certain components of these cash receipts and payments among operating, investing and financing activities. The retrospective transition method, requiring adjustment to all comparative periods presented, is required unless it is impracticable for some of the amendments, in which case those amendments would be prospectively as of the earliest date practicable. The standard is effective on January 1, 2019. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements and footnote disclosures.
In October 2016, the Financial Accounting Standards Board, ("FASB") issued ASU 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year. The new standard should be adopted on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently in the process of evaluating the impact of this new pronouncement on its consolidated financial statements and related disclosures.
In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This standard requires the presentation of the statement of cash flows to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. The standard is effective for fiscal years and the interim periods within those fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the effects of the adoption of this ASU on the consolidated financial statements.
In May 2014, the FASB issued a new standard related to revenue recognition. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on identifying performance obligations.
The guidance permits two methods of modification: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company currently evaluating the method of adoption.
The new standard will be effective for the Company beginning January 1, 2018, and adoption as of the original effective date of January 1, 2017 is permitted. The Company will adopt the new standard as of January 1, 2018.
The Company has made progress toward completing its evaluation of the potential changes from adopting this new standard on its financial reporting and disclosures. The Company has evaluated the impact of the standard on majority of its revenue streams and associated contracts. The Company formed an implementation work group and expects to complete the evaluation of the impact of the accounting and disclosure changes on its business processes, controls and systems throughout 2017, design any changes to such business processes, controls and systems, and implement the changes before the end of 2017.
Currently, the Company is analyzing the impact that the adoption of the standard will have on specific performance obligations and variable consideration transactions. In addition, incremental costs that are related to sales from contracts signed during the period would require capitalization. The company also will consider if there is a significant financing component if the time between payment and delivery is more than one year.
The Company continues to assess all potential impacts under the new revenues standard. |
SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Annual Depreciation Rates | Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, at the following annual rates:
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Schedule Of Stock Option Granted Assumptions |
The Company estimates the fair value of stock options granted under ASC 718 using the binomial model with the following weighted-average assumptions for 2014, 2015 and 2016:
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Schedule of Accumulated Other Comprehensive Income, Net |
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OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES (Tables) |
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Schedule of other accounts receivable and prepaid expenses |
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INVENTORIES (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Inventory |
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PROPERTY AND EQUIPMENT, NET (Tables) |
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Schedule Of Property And Equpment, Net |
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INTANGIBLE ASSETS, NET (Tables) |
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Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Intangible Assets |
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OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) |
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Schedule Of Other Accounts Payable And Accrued Expenses |
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DERIVATIVE INSTRUMENTS (Tables) |
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Schedule Of Derivative Instruments |
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PENSION LIABILITIES, NET (Tables) |
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Pension and Other Postretirement Defined Benefit Plans, Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Changes In Projected Benefit Obligations | The following tables provide a reconciliation of the changes in the plans' benefits obligation for the year ended December 31, 2016, and the statement of funds status as of December 31, 2016:
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Schedule Of Assumptions Used | The assumptions used in the measurement of the Company' benefits obligations as of December 31, 2016 is as follows:
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Schedule Of Net Benefit Costs |
The following table provides the components of net periodic benefits cost for the years ended December 31, 2015 and 2016:
|
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Schedule Of Expected Benefit Payments | Benefit payments are expected to be paid as follows:
|
COMMITMENTS AND CONTINGENT LIABILITIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
Schedule Of Future Minimum Rental Commitments |
|
SHAREHOLDERS' EQUITY (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Stock Options And RSUs Granted | The following is a summary of the Company's stock options and RSUs granted among the various plans:
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Summary Of Stock Options And RSUs Granted Separated Into Ranges Of Exercise Price | The following is a summary of the Company's stock options and RSUs granted separated into ranges of exercise price:
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Schedule Of Equity-Based Compensation Expense | The total equity-based compensation expense related to all of the Company's equity-based awards, recognized for the years ended December 31, 2014, 2015 and 2016, was comprised as follows:
|
TAXES ON INCOME (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of The Qualifying Percentage Of The Value Of The Productive Assets | The qualifying percentage of the value of the productive assets is as follows:
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Schedule Of Income Tax Expense (Benefit) | The income tax expense (benefit) for the years ended December 31, 2014, 2015 and 2016 consisted of the following:
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Schedule Of Deferred Income Taxes | Significant components of the Company's deferred tax assets and liabilities are as follows:
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Schedule Of Income (Loss) Before Taxes | Income (Loss) before taxes is comprised as follows:
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Schedule Of Income Tax Reconciliation |
|
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Schedule Of Changes In Unrecognized Tax Benefits |
|
SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Areas, Revenues from External Customers [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Major Customer Data As Percentage Of Total Revenues | The following tables present total revenues for the years ended December 31, 2014, 2015 and 2016 and long-lived assets as of December 31, 2014, 2015 and 2016:
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SELECTED STATEMENTS OF OPERATIONS DATA (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Financial Income, Net | Financial income, net:
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Schedule Of Net income per share | The following table sets forth the computation of basic and diluted net earnings per share:
*) Anti-dilutive
|
FAIR VALUE MEASUREMENT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Assets And Liabilities Measured At Fair Value On Recurring Basis | The Company's financial assets (liabilities) measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments:
|
RELATED PARTY BALANCES AND TRANSACTIONS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Transaction With Related Parties | Transactions with related parties:
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Schedule Of Balances With Related Parties | Balances with related parties:
|
SIGNIFICANT ACCOUNTING POLICIES (Schedule Of Annual Depreciation Rates) (Details) |
Dec. 31, 2016 |
---|---|
Computers, manufacturing and peripheral equipment [Member] | Minimum [Member] | |
Significant Accounting Policies [Line Items] | |
Depreciation rate | 6.00% |
Computers, manufacturing and peripheral equipment [Member] | Maximum [Member] | |
Significant Accounting Policies [Line Items] | |
Depreciation rate | 33.00% |
Enterprise Resource Planning systems ("ERP") [Member] | |
Significant Accounting Policies [Line Items] | |
Depreciation rate | 10.00% |
Office furniture and equipment [Member] | |
Significant Accounting Policies [Line Items] | |
Depreciation rate | 15.00% |
SIGNIFICANT ACCOUNTING POLICIES (Schedule Of Stock Option Granted Assumptions) (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Accounting Policies [Abstract] | |||
Dividend yield | 0.00% | 0.00% | 0.00% |
Volatility, minimum | 51.00% | 48.00% | 49.00% |
Volatility, maximum | 73.00% | 70.00% | 65.00% |
Risk free interest, minimum | 0.20% | 0.10% | 0.10% |
Risk free interest, maximum | 2.10% | 2.40% | 2.40% |
Early exercise multiple, minimum | 2.20 | 2.60 | 2.20 |
Early exercise multiple, maximum | 3.40 | 3.40 | 2.80 |
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Prepaid Expense and Other Assets [Abstract] | ||
Government authorities | $ 7,856 | $ 6,219 |
Advances to suppliers | 668 | 3,593 |
Deferred charges and prepaid expenses | 4,304 | 8,379 |
Financial institutions | 3,493 | 3,411 |
Other | 755 | 2,177 |
Other accounts receivable and prepaid expenses, Total | $ 17,076 | $ 23,779 |
INVENTORIES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Inventory Disclosure [Abstract] | |||
Raw materials | $ 7,651 | $ 6,984 | |
Work in progress | 232 | 252 | |
Finished products | 37,764 | 42,454 | |
Inventories, Net | 45,647 | 49,690 | |
Inventory write-off | $ 4,503 | $ 5,124 | $ 3,515 |
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Line Items] | |||
Cost | $ 94,414 | $ 90,308 | |
Accumulated depreciation | 66,854 | 61,402 | |
Depreciated cost | 27,560 | 28,906 | |
Depreciation expenses | 8,389 | 10,338 | $ 11,377 |
Changes of property and equipment | (1,221) | (1,013) | |
Computers, manufacturing, peripheral equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 90,397 | 86,244 | |
Accumulated depreciation | 63,656 | 58,469 | |
Office furniture and equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 2,938 | 2,903 | |
Accumulated depreciation | 2,435 | 2,084 | |
Leasehold improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 1,079 | 1,161 | |
Accumulated depreciation | $ 763 | $ 849 |
INTANGIBLE ASSETS, NET (Schedule Of Intangible Assets) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Original amount | $ 17,370 | $ 17,370 | |
Accumulated amortization | 15,826 | 14,178 | |
Intangible assets, net | 1,544 | 3,192 | |
Amortization expense | 1,648 | 1,865 | $ 2,121 |
Technology [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Original amount | 8,600 | 8,600 | |
Accumulated amortization | 7,314 | 6,082 | |
Trademarks [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Original amount | 800 | 800 | |
Accumulated amortization | $ 800 | 800 | |
Useful lives | 2 years | ||
Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Original amount | $ 7,970 | 7,970 | |
Accumulated amortization | $ 7,712 | $ 7,296 |
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Employees and payroll accruals | $ 11,099 | $ 11,352 |
Provision for warranty costs | 2,460 | 2,712 |
Government authorities | 3,655 | 4,820 |
Accrued expenses | 4,128 | 5,035 |
Other accounts payable | 1,083 | 3,133 |
Other accounts payable and accrued expenses | $ 22,425 | $ 27,052 |
LOAN AND CREDIT LINES (Narrative) (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2013 |
|
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity under the credit agreement | $ 50,200 | $ 50,200 | $ 56,000 | |
Line of credit outstanding amount | 17,000 | 17,000 | 34,922 | |
Increase allowed discounting activities of LC receivables | 94,000 | |||
Increase of credit facility for bank guarantees | $ 50,200 | |||
Maximum [Member] | Libor [Member] | ||||
Debt Instrument [Line Items] | ||||
Libor spread | 3.40% | |||
Minimum [Member] | Libor [Member] | ||||
Debt Instrument [Line Items] | ||||
Libor spread | 3.30% | |||
Line Of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of credit outstanding amount | $ 73,500 | |||
Maximum bank guarantees | $ 40,200 | |||
Line of credit covenant, allowed discounting | 54,000 | $ 54,000 | $ 20,000 | |
Loan amount after reduction | $ 50,000 | $ 50,000 |
DERIVATIVE INSTRUMENTS (Narrative) (Details) ₪ in Thousands, $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2016
ILS (₪)
|
Dec. 31, 2015
ILS (₪)
|
|
Outstanding forward exchange contracts | $ | $ 18,890 | $ 31,686 | ||
Forward exchange contract remaining maturity | 1 year | 1 year | ||
Israel, New Shekels | ||||
Outstanding forward exchange contracts | ₪ | ₪ 71,274 | ₪ 122,407 |
DERIVATIVE INSTRUMENTS (Schedule Of Derivative Instruments) (Balance Sheets) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivatives designated as hedging instruments [Member] | Foreign exchange forward contracts [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other account receivables and prepaid expenses | $ 21 | |
Other account payables and accrued expenses | (277) | (163) |
Other comprehensive income (loss) | (256) | (163) |
Derivatives not designated as hedging instruments [Member] | Foreign exchange forward contracts and other derivatives [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other account receivables and prepaid expenses | 176 | 138 |
Other account payables and accrued expenses | $ (79) | $ (395) |
PENSION LIABILITIES, NET (Narrative) (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016
USD ($)
item
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
Pension and Other Postretirement Defined Benefit Plans, Liabilities [Abstract] | |||
Number of participants | item | 0 | ||
Net periodic benefit cost, discount rate | 2.30% | ||
Actuarial gain (loss) | $ | $ (204) | $ 174 | $ (533) |
PENSION LIABILITIES, NET (Schedule Of Changes In Projected Benefit Obligations) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||
Accumulated benefit obligation | $ 2,444 | $ 2,362 |
Projected benefit obligation at beginning of year | 2,362 | 3,243 |
Service cost | 18 | 16 |
Interest cost | 55 | 53 |
Expenses paid | (322) | (315) |
Exchange rates differences | 56 | (417) |
Actuarial loss (gain) | 204 | (218) |
Projected benefit obligation at end of year | 2,373 | 2,362 |
Fair value of plan assets at end of year |
PENSION LIABILITIES, NET (Schedule Of Assumptions Used) (Details) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Pension and Other Postretirement Defined Benefit Plans, Liabilities [Abstract] | ||
Discount rate | 2.30% | 2.70% |
Rate of compensation increase | 2.25% | 2.50% |
PENSION LIABILITIES, NET (Summary Of Components Of Net Periodic Benefit Cost) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||
Service cost | $ 18 | $ 16 |
Interest cost | 55 | 53 |
Net periodic benefit cost | $ 73 | $ 69 |
PENSION LIABILITIES, NET (Schedule Of Expected Benefit Payments) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||
2016 | $ 290 | |
2017 | 270 | 240 |
2018 | 200 | 150 |
2019 and thereafter | 740 | 700 |
Expected benefit payments, total | $ 1,210 | $ 1,380 |
COMMITMENTS AND CONTINGENT LIABILITIES (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Operating Leased Assets [Line Items] | |||
Bank guarantees | $ 32,203 | $ 25,410 | |
Income from OCS grants | 2,536 | 1,318 | $ 1,092 |
Damages sought by plaintiff | 75,000 | ||
Facilities [Member] | |||
Operating Leased Assets [Line Items] | |||
Operating lease expense | 4,235 | 3,797 | 5,426 |
Vehicles [Member] | |||
Operating Leased Assets [Line Items] | |||
Operating lease expense | $ 735 | $ 1,175 | $ 1,174 |
COMMITMENTS AND CONTINGENT LIABILITIES (Schedule Of Future Minimum Lease Payments For Capital Leases) (Details) $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2017 | $ 4,612 |
2018 | 1,781 |
2019 | 1,185 |
2020 | 591 |
2021 and thereafter | 157 |
Operating Leases, Future Minimum Payments Due, Total | $ 8,326 |
SHAREHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2014 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Expiration period | 10 years | |||
Ordinary shares reserved for issuance | 8,639,000 | |||
Ordinary shares available for future grant | 779,327 | |||
Average market value, trading day period | 30 days | |||
Total intrinsic value of options exercised | $ 238 | $ 480 | ||
Unrecognized compensation cost, period for recognition | 11 months 1 day | |||
Total unrecognized compensation cost | $ 1,071 | $ 1,625 | $ 3,345 | |
Total proceeds from public offering | $ 45,149 | $ 45,149 | ||
Additional Shares authorized | 2,850,000 | |||
Stock issued, shares | 21,250,000 | |||
Issuance expenses | $ 400 | |||
Share price | $ 1.89 | |||
Stock Option [Member] | ||||
Weighted average grant date fair value of options granted | $ 0.78 | $ 0.54 | $ 0.96 | |
Total unrecognized compensation cost | $ 1,085 |
SHAREHOLDERS' EQUITY (Schedule Of Equity-Based Compensation Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Total stock-based compensation expense | $ 1,071 | $ 1,625 | $ 3,345 |
Cost of Revenue [Member] | |||
Total stock-based compensation expense | 30 | 73 | 215 |
Research And Development Expense [Member] | |||
Total stock-based compensation expense | 151 | 736 | 1,625 |
Selling And Marketing Expense [Member] | |||
Total stock-based compensation expense | 369 | 495 | 674 |
General And Administrative Expense [Member] | |||
Total stock-based compensation expense | $ 521 | $ 321 | $ 831 |
TAXES ON INCOME (Schedule Of Income Tax Expense (Benefit)) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | |||
Current | $ 1,418 | $ 3,895 | $ (3,382) |
Deferred | 343 | 1,947 | 9,883 |
Income tax expense | 1,761 | 5,842 | 6,501 |
Domestic (Israel) | 968 | (606) | 335 |
Foreign | $ 793 | $ 6,448 | $ 6,166 |
TAXES ON INCOME (Schedule Of Deferred Income Taxes) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred tax assets: | ||
Net operating loss carry forward | $ 79,860 | $ 64,476 |
Research and Development | 3,843 | 5,147 |
Other temporary differences mainly relating to reserve and allowances | 28,012 | 30,283 |
Deferred tax asset before valuation allowance | 111,715 | 99,906 |
Valuation allowance | (110,143) | (97,899) |
Deferred tax asset | 1,572 | 2,007 |
Deferred tax liabilities: | ||
Acquired intangibles | (228) | (185) |
Deferred tax asset, net | $ 1,344 | $ 1,822 |
TAXES ON INCOME (Schedule Of Income (Loss) Before Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | |||
Domestic | $ (518) | $ 14,479 | $ (81,227) |
Foreign | 13,708 | (7,626) | 11,249 |
Income (loss) before taxes | $ 13,190 | $ 6,853 | $ (69,978) |
TAXES ON INCOME (Schedule Of Income Tax Reconciliation) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | |||
Income (Loss) before taxes as reported in the consolidated statements of operations | $ 13,190 | $ 6,853 | $ (69,978) |
Statutory tax rate | 25.00% | 26.50% | 26.50% |
Theoretical tax income on the above amount at the Israeli statutory tax rate | $ 3,298 | $ 1,816 | $ (18,544) |
Non-deductible expenses | 467 | 1,527 | 2,741 |
Non-deductible expenses related to employee stock options | 268 | 430 | 886 |
Changes in tax rate | 8,900 | ||
Losses in respect of which no deferred taxes were generated (including changes in valuation allowance) | (10,055) | 2,003 | 20,286 |
Other | (1,117) | 66 | 1,132 |
Income tax expense | $ 1,761 | $ 5,842 | $ 6,501 |
TAXES ON INCOME (Schedule Of Changes In Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||
Uncertain tax positions, beginning of year | $ 6,942 | $ 4,659 |
Decreases in tax positions for prior years | (4,362) | (3,722) |
Increases in tax positions for prior years | 620 | 2,875 |
Increase in tax position for current year | 1,486 | 3,130 |
Uncertain tax positions, end of year | $ 4,686 | $ 6,942 |
SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION (Schedule Of Major Customer Data As Percentage Of Total Revenues) (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Sales Revenue Goods Net [Member] | |||
Concentration Risk [Line Items] | |||
Percentage of total revenues | 16.60% | 17.70% | 16.10% |
SELECTED STATEMENTS OF OPERATIONS DATA (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Net Investment Income [Line Items] | |||
Income (loss) resulting from devaluation of the local currency in Venezuela | $ 907 | $ (1,634) | $ (20,452) |
Others [Member] | |||
Net Investment Income [Line Items] | |||
Income (loss) resulting from devaluation of the local currency in Venezuela | $ 2,170 |
SELECTED STATEMENTS OF OPERATIONS DATA (Schedule Of Financial Income, Net) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
||||
Quarterly Financial Data [Abstract] | ||||||
Interest on marketable securities and bank deposits | $ 242 | $ 101 | $ 140 | |||
Foreign currency translation differences and derivatives | 966 | 1,273 | 1,567 | |||
Total gross financial income | 1,208 | 1,374 | 1,707 | |||
Bank charges and interest on loans | (3,794) | (5,885) | (7,691) | |||
Foreign currency translation differences | [1] | (3,717) | (9,897) | (28,491) | ||
Impairment and amortization of premium on marketable securities | [1] | (330) | (3,471) | |||
Total gross financial expenses | (7,511) | (16,112) | (39,653) | |||
Financial income, net | $ (6,303) | $ (14,738) | $ (37,946) | |||
|
SELECTED STATEMENTS OF OPERATIONS DATA (Schedule Of Net income per share) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
||||
Numerator: | ||||||
Numerator for basic and diluted net income (loss) per share - income (loss) available to shareholders of Ordinary shares | $ 11,429 | $ 1,011 | $ (76,479) | |||
Denominator: | ||||||
Denominator for basic net income (loss) per share - weighted average number of shares | 77,702,788 | 77,239,409 | 62,518,602 | |||
Effect of dilutive securities: | ||||||
Employee stock options and RSU | $ 910,740 | $ 57,272 | [1] | |||
Denominator for diluted net income (loss) per share - adjusted weighted average number of shares | 78,613,528 | 77,296,681 | 62,518,602 | |||
|
FAIR VALUE MEASUREMENT (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives instruments | $ (159) | $ (420) |
Total assets (liabilities) | (159) | (420) |
Fair Value Inputs Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives instruments | (159) | (420) |
Total assets (liabilities) | $ (159) | $ (420) |
RELATED PARTY BALANCES AND TRANSACTIONS (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Purchase Of Property And Equpment [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses | $ 1,019 | $ 51 | $ 100 |
Rent And Maintenance [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses | 1,963 | 2,182 | 2,046 |
Rad Bynet [Member] | |||
Related Party Transaction [Line Items] | |||
Reimbursements for services provided | 1,668 | 1,060 | 1,699 |
Rad Bynet [Member] | Inventories [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses | 2,866 | 2,911 | 4,149 |
Rad Bynet [Member] | Purchase Of Property And Equpment [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses | $ 1,019 | $ 51 | $ 100 |
RELATED PARTY BALANCES AND TRANSACTIONS (Schedule Of Transaction With Related Parties) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Related Party Transaction [Line Items] | |||
Cost of revenues | $ 3,561 | $ 3,343 | $ 4,613 |
Research And Development Expense [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses | 1,093 | 1,465 | 1,244 |
Selling And Marketing Expense [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses | 733 | 737 | 914 |
General And Administrative Expense [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses | 1,109 | 606 | 1,123 |
Purchase Of Property And Equpment [Member] | |||
Related Party Transaction [Line Items] | |||
Expenses | $ 1,019 | $ 51 | $ 100 |
RELATED PARTY BALANCES AND TRANSACTIONS (Schedule Of Balances With Related Parties) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Related Party Transactions [Abstract] | ||
Trade payables, other accounts payable and accrued expenses | $ 1,209 | $ 1,915 |
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