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Nova Ltd.
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(Translation of Registrant’s name into English)
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(Jurisdiction of incorporation or organization)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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The
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Yes
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive – based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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Page | |||
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Introduction |
- iii- | ||
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Cautionary Statement Regarding Forward Looking Statements and
Risk Factors |
- iii- | ||
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Presentation of Financial and Other Information |
- vii- | ||
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1 | |||
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1 | |||
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1 | |||
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1 | |||
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3A. |
Selected Financial Data |
1 | |
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3B. |
Capitalization and Indebtedness |
1 | |
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3C. |
Reasons for the Offer and Use of Proceeds |
1 | |
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3D. |
Risk Factors |
1 | |
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31 | |||
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4.A |
History and Development of the Company |
31 | |
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4.B |
Business Overview |
32 | |
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4.C |
Organizational Structure |
45 | |
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4.D |
Property, Plant and Equipment |
46 | |
| 46 | |||
| 46 | |||
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5.A |
Operating Results |
51 | |
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5.B |
Liquidity and Capital Resources |
53 | |
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5.C |
Research and Development, Patents and Licenses, etc. |
55 | |
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5.D |
Trend Information |
58 | |
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5.E |
Critical Accounting Estimates |
58 | |
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62 | |||
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6.A |
Directors and Senior Management |
62 | |
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6.B |
Compensation |
66 | |
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6.C |
Board Practices |
69 | |
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6.D |
Employees |
76 | |
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6.E |
Share Ownership |
77 | |
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6.F |
Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation.
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78 | |
| 78 | |||
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7.A |
Major Shareholders |
78 | |
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7.B |
Related Party Transactions |
80 | |
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7.C |
Interest of Experts and Counsel |
81 | |
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81 | |||
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8.A |
Consolidated Statements and Other Financial Information |
81 | |
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8.B |
Significant Changes |
82 | |
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82 | |||
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9.A |
Offer and Listing Details |
82 | |
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9.B |
Plan of Distribution |
82 | |
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9.C |
Markets |
82 | |
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9.D |
Selling Shareholders |
82 | |
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9.E |
Dilution |
82 | |
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9.F |
Expenses of the Issue |
82 | |
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82 | |||
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10.A |
Share Capital |
82 | |
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10.B |
Memorandum and Articles of Association |
82 | |
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10.C |
Material Contracts |
83 | |
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10.D |
Exchange Controls |
83 | |
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10.E |
Taxation |
83 | |
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10.F |
Dividends and Paying Agents |
100 | |
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10.G |
Statements by Experts |
100 | |
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10.H |
Documents on Display |
101 | |
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10.I |
Subsidiary Information |
101 | |
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10.J |
Annual Report to Security Holders |
101 | |
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101 | |||
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102 | |||
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103 | |||
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103 | |||
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103 | |||
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103 | |||
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104 | |||
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104 | |||
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104 | |||
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104 | |||
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105 | |||
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105 | |||
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106 | |||
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106 | |||
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106 | |||
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106 | |||
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106 | |||
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106 | |||
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106 | |||
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106 | |||
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SIGNATURES |
118 | ||
| • |
Increased cybersecurity threats and more sophisticated computer crime could disrupt our
business. |
| • |
We depend on international sales, which expose us to foreign political and economic risks.
|
| • |
We are subject to laws and regulations that could restrict our operations such as economic
sanctions and export restrictions. |
| • |
Changes in global trade policies and other factors beyond our control may adversely impact
our business, financial condition and results of operations. |
| • |
We may be affected by instability in the global economy and by financial turmoil.
|
| • |
Because we derive a significant portion of our revenues from sales in Asia, our sales could
be hurt by instability of Asian economies. |
| • |
Our business is subject to risks related with doing business in China. |
| • |
Because of the technical nature of our business, our intellectual property is extremely
important to our business, and our inability to protect our intellectual property could harm our competitive position. |
| • |
There has been significant litigation involving intellectual property rights in the semiconductor
and related industries, and similar litigation could force us to divert resources to defend against such litigation or deter our customers
from purchasing our systems. |
| • |
We may incorporate open-source technology in some of our software and product, which may
expose us to liability and have a material impact on our product development and sales. |
| • |
We operate in an extremely competitive market, and if we fail to compete effectively, our
revenues and market share will decline. |
| • |
If we do not respond effectively and on a timely basis to rapid technological changes, our
ability to attract and retain customers could be diminished, which would have an adverse effect on our sales and ability to remain competitive.
|
| • |
The ongoing consolidation in our industry may harm us if our competitors are able to offer
a broader range of products and greater customer support than we can offer or if our main suppliers cease delivery of important component
as a result of being acquired by a larger company. |
| • |
The markets we target are cyclical and it is difficult to predict the length and strength
of any downturn or expansion period. |
| • |
Our operations may be delayed or interrupted and our business could suffer if we violate
environmental, safety and health, or ESH, regulations. |
| • |
Pricing and demand for our specific product lines could substantially reduce our sales.
|
| • |
We depend on a small number of large customers, and the loss of one or more of them could
significantly lower our revenues. |
| • |
Our inability to significantly reduce spending during a protracted slowdown in the semiconductor
industry could reduce our prospects of achieving continued profitability. |
| • |
There can be no assurance that revenues from future products or product enhancements will
be sufficient to recover the development costs. |
| • |
New product lines that we may introduce in the future may contain defects, which will require
us to allocate time and financial resources to correct. |
| • |
If any of our systems fail to meet or exceed our internal quality specifications, we cannot
ship them until such time as they have met such specifications. |
| • |
Our dependence on a single manufacturing facility per product line magnifies the risk of
an interruption in our production capabilities. |
| • |
Our lease agreements for our Manufacturing Facilities include provisions that exempt the
landlord and others from liability for damages to our Manufacturing Facilities. |
| • |
Shipment changes or cancellation may render our backlog not a reliable indicator of actual
sales and financial results. |
| • |
We may not be able to successfully complete and integrate current and/or future acquisitions.
|
| • |
We depend on continuous cooperation with Process Equipment Manufacturers (“PEMs”)
to enable sales of our systems which are integrated with the process equipment. |
| • |
Some of our commercial agreements with PEMs and customers may include exclusivity provisions
and limitations on the use of certain intellectual property which could limit or prevent future business relationships with third parties.
|
| • |
We depend on a limited number of suppliers, and in some cases a sole supplier. |
| • |
The disclosure rules regarding the use of conflict minerals may affect our relationships
with suppliers and customers. |
| • |
Our lengthy sales cycle increases our exposure to customer delays in orders, which may result
in obsolete inventory and volatile quarterly revenues. |
| • |
Our inability to attract, recruit, retain highly skilled key personnel. |
| • |
Political, economic and military instability in Israel may impede our ability to operate and harm our financial results. |
| • |
Our convertible senior notes may impact our financial results, dilute existing shareholders,
and create downward pressure on the price of our ordinary shares. |
| • |
Currency fluctuations could harm our profit margins. |
| • |
We received certain research and development grants, which could impose restrictions on
our ability to use technology developed under these programs. |
| • |
Certain shareholders may control the outcome of matters submitted to a vote of our shareholders,
including the election of directors. |
| • |
The market price of our ordinary shares may be affected by a limited trading volume and
may fluctuate significantly. |
| • |
We may be classified as a “passive foreign investment company” for U.S. income
tax purposes, which could have significant and adverse tax consequences to U.S. shareholders. |
| • |
The rights and responsibilities of our shareholders are governed by Israeli law and differ
in some respects from the rights and responsibilities of shareholders under U.S. law. |
| • |
Our shares are listed for trade on more than one stock exchange. |
|
3A. |
Selected Financial Data
|
|
3B. |
Capitalization and Indebtedness
|
|
3C. |
Reasons for the Offer and Use
of Proceeds |
|
3D. |
Risk Factors |
| • |
instability in political or economic conditions, including but not limited to inflation,
recession, foreign currency exchange restrictions and devaluations, restrictive governmental controls on the movement and repatriation
of earnings and capital, and actual or anticipated military or political conflicts, particularly in emerging markets; Rising inflation
and elevated U.S. budget deficits and overall debt levels, including as a result of federal pandemic relief and stimulus legislation and/or
economic or market and supply chain conditions, can put upward pressure on interest rates and could be among the factors that could lead
to higher interest rates in the future. Higher interest rates could adversely affect our overall business or reduce our liquidity.
|
| • |
intergovernmental conflicts or actions, including but not limited to armed conflict, trade
wars and acts of terrorism or war, including current war between Russia and the Ukraine; and |
| • |
interruptions to the Company’s business with its largest customers, distributors and
suppliers resulting from but not limited to, strikes, and financial instabilities. For instance, trade restrictions, changes in tariffs
and import and export license requirements could adversely affect our ability to sell our products in the countries adopting or changing
those restrictions, tariffs or requirements. This could reduce our sales by a material amount. |
| • |
trade protection measures, such as tariff increases, and import and export licensing and
control requirements; |
| • |
potentially negative consequences from changes in tax laws; |
| • |
difficulties associated with the Chinese legal system, including increased costs and uncertainties
associated with enforcing contractual obligations in China; |
| • |
historically, lower protection of intellectual property rights; |
| • |
changes and volatility in currency exchange rates; and |
| • |
unexpected or unfavorable changes in regulatory requirements. |
| • |
pending patent applications will be approved; or |
| • |
any patents will be broad enough to protect our technology, will provide us with competitive
advantages or will not be challenged or invalidated by third parties. We also cannot assure that others will not independently develop
similar products, duplicate our products or, if patents are issued to us, design around these patents. Furthermore, because patents may
afford less protection under foreign law than is available under U.S. law, we cannot assure that any foreign patents issued to us will
adequately protect our proprietary rights. |
| • |
result in our loss of proprietary rights; |
| • |
subject us to significant liabilities, including triple damages in some instances;
|
| • |
require us to seek licenses from third parties, which licenses may not be available on reasonable
terms or at all; or |
| • |
prevent us from selling our products. |
| • |
the contribution and value our solutions bring to our customers; |
| • |
our product innovation, quality and performance; |
| • |
our global technical service and support; |
| • |
the return on investment (ROI) of our equipment and its cost of ownership; |
| • |
the breadth of our product line; |
| • |
our success in developing and marketing new products; and |
| • |
the extendibility of our products. |
| • |
our continuing need to invest in research and development; |
| • |
our continuing need to market our new products; and |
| • |
our extensive ongoing customer service and support requirements worldwide. |
|
Any acquisition may involve many risks, including the risks of: |
| • |
diverting management’s attention and other resources from our ongoing business concerns;
|
| • |
entering markets in which we have no direct prior experience; |
| • |
improperly evaluating new services, products and markets; |
| • |
being unable to maintain uniform standards, controls, procedures and policies; |
| • |
failing to comply with governmental requirements pertaining to acquisitions of local companies
or assets by foreign entities; |
| • |
being unable to integrate new technologies or personnel; |
| • |
incurring the expenses of any undisclosed or potential liabilities; and |
| • |
the departure of key management and employees. |
|
4.A |
History and Development of the
Company |
|
4.B |
Business Overview
|
|
Technology |
Product Line |
Key applications |
Product families |
|
• Broadband
Spectrophotometry
• Scatterometry
• Spectral
Reflectometry
• Imaging
and Image Processing |
Dimensional Optical CD Integrated Metrology |
Critical Dimensions
Thin films
|
Nova i Platform
Nova 3090
Nova 2040
Nova ASTERA |
|
Dimensional Optical CD Stand-Alone Metrology |
Nova T-platform
Nova MMSR | ||
|
• Spectral
Interferometry |
Nova PRISM | ||
|
• X-Ray
Photoelectron Spectroscopy
• X-Ray
Fluorescence |
X-Ray
Materials
Metrology |
Thin film
Composition
|
Nova VERAFLEX |
|
• Secondary
Ion Mass Spectrometry |
SIMS Materials
Metrology |
Composition depth-profiling
|
Nova METRION |
|
• Raman
Spectroscopy |
Optical Materials Metrology |
Strain
Crystallinity
|
Nova ELIPSON |
|
• Computational
Modeling for Metrology
Platforms |
Physical modeling (Modeling Software Solutions) |
Nova MARS | |
|
• Machine
Learning
• Advanced
Algorithms |
Mathematical modeling algorithms (Software solutions) |
Nova FIT | |
|
• Big
Data Analytics
• High
Power Computing |
Fleet Management (Software solutions) |
Nova FM
Nova HPC
QED | |
|
• Titration
– various types
• CVS,
CPVS, PCGA
• Spectrophotometry
• HPLC
• Dynamic
Surface Tension
• pH,
conductivity, density |
Chemical Process Control – Analysis and Replenishment |
Electroplating process applications in interconnect, advanced packaging, and PCB markets
|
Nova ancolyzer platform |
|
• Solid
dosing
|
Metal Replenishment
|
Powder dosing specialty metal oxide materials for electroplating applications
|
Nova DMR |
| 1. |
Dimensional Metrology |
| 2. |
Modeling and Software |
| • |
Nova MARS - Nova MARS software package is a multi-channel metrology modeling engine designed
for the most advanced 3D structures in advanced process nodes of semiconductor manufacturing. It’s a complete modeling solution
for scatterometry and interferometry models’ development, material characterization and recipe optimization which is crucial for
facing increasing challenges in semiconductor metrology. The Nova MARS also injects physical and process related knowledge to solve complex
structures. |
| • |
Nova FIT - Nova FIT modeling suite complements traditional modeling of Optical Critical
Dimensions by machine learning and data driven algorithmic solutions. The algorithmic suite works in conjunction with Nova MARS physical
modeling engine and Nova’s fleet management solution to improve metrology performance, speed up time to solution and expand metrology
envelope for enriched process control. Nova FIT embeds advanced machine learning and big data architecture into optical modeling, enhancing
the way customers utilize metrology measurement data to tighten process windows, avoid process excursions and improve yield. |
| • |
Nova’s Centralized Fleet Management and Control - Nova’s Fleet Management and
Performance Monitoring Center simplify the management and enhance the productivity of Nova tools in the fabrication site. The platform’s
ability to process and analyze large amounts of fleet and metrology data using advanced data analytic tools provides our customers with
intelligent and predictive insights on tool performance and process trends. |
| • |
Nova HPC - The Nova HPC is a High-Performance Computing solution, which is designed to accelerate
Nova MARS and Nova FIT work processes. Nova HPC significantly expedites application development by accelerating library-building, real
time regression and recipe-setting processes. Its advanced computing hardware design enables optimization of Nova’s proprietary
algorithm performance, thus enabling the most calculation-demanding application development. |
| 3. |
Materials Metrology |
| • |
VERAFLEX - Nova’s VERAFLEX combines enhanced XPS (X-ray photoelectron spectroscopy)
capability with an optional unique low energy XRF (X-ray fluorescence) channel to address logic and memory device fabrication challenges.
This innovative inline technology is a surface-sensitive quantitative spectroscopic technique that is used to determine the elemental
composition and thickness of thin films. |
| • |
Nova METRION -
Nova METRION- targets process control of 3D logic and
memory semiconductor devices. The technology enables advanced materials profile measurements by bringing secondary ion mass spectrometry
(SIMS) into semiconductor production lines on both monitor and product wafer. The Nova METRION provides quantitative and actionable results
on depth profiling of compositional information with high-depth resolution and precision. |
| • |
Nova ELIPSON - Nova ELIPSON utilizes Raman spectroscopy, a vibrational spectroscopy technique,
to detect multiple material properties such as strain, crystallinity, phases, grain size and composition. The combination of a small spot
and high speed of this non-destructive, optical method makes it a metrology of choice for both memory and logic segments. |
| 4. |
Chemical Metrology – |
| • |
Nova ancolyzer Damascene – the Nova ancolyzer Damascene is an industry-standard chemical
metrology solution for Damascene copper plating interconnects applications, qualified by leading global manufacturers for operation in
advanced nodes production processes. The solution supports a continuously growing range of copper baths and applications and offers a
fully automated analysis of bath components, overall plating performance, excursions, trends alarms and warnings, and overall process
control. |
| • |
Nova ANCOLYZER – the ancolyzer is a fully automated online chemical metrology platform
designed with the most flexible architecture for advanced packaging processes. Nova’s ancolyzer offers superior analytical performance
and supports a wide variety of analytical techniques for process control. The platform’s flexible and scalable architecture is configured
to the specific process analysis and replenishment requirements. The platform’s superior accuracy and precision are coupled with
uncompromising reliability and the highest availability. |
| • |
Nova DMR – the Nova DMR offers economical replenishment of metals in a plating bath.
This significantly extends the bath chemicals’ lifetime and improves the plater utilization. DMR provides fully automatic powder
container docking for uninterrupted operation and eliminates the constant increase in bath volume, reducing the need for bleed and feed
or full bath dump. Thus, reducing environmental impact and minimizing operational risks and costs. The platform integrates with Nova ANCOLYZER®
and can directly connect to any process tools. |
|
2020 |
2021 |
2022 |
||||||||||
|
Total revenues from five largest customers |
69 |
% |
70 |
% |
57 |
% | ||||||
|
Range of revenues from five largest customers |
5%-26 |
% |
4%-31 |
% |
6%-23 |
% | ||||||
| • |
We have a medium-high maturity level ESG with Business Continuity Plan indicating high level
understanding of risk management and preparedness. |
| • |
We demonstrate a wide range of Social and Governance activities, including but not limited
to, employees trainings on code of ethics, promoting gender equality, supporting employees and suppliers during COVID19, putting emphasis
on product quality, and more. |
|
4.C |
Organizational Structure |
|
Name of Subsidiary |
Place of Incorporation |
|
Nova Measuring Instruments, Inc. |
Delaware, U.S. |
|
Nova Measuring Instruments K.K. |
Japan |
|
Nova Measuring Instruments Taiwan Ltd. |
Taiwan |
|
Nova Measuring Instruments Korea Ltd. |
Korea |
|
Nova Measuring Instruments GmbH |
Germany |
|
Nova Measuring Instruments (Shanghai) Co., Ltd. |
China |
|
ancosys GmbH |
Germany |
100% owned by Nova |
|
Measuring Instruments GmbH |
|
4.D |
Property, Plant and Equipment
|
| • |
Significant business growth to record levels, with meaningful growth in both products and
service sales. |
| • |
Growth in systems’ production and deliveries at all our global sites. |
| • |
Diversified customers mix, across multiple territories. |
| • |
Expansion to adjacent semiconductor market, including advanced packaging and backend.
|
| • |
Further market adoption of Nova’s advanced portfolio: |
| o |
Materials, chemical and dimensional metrology solutions. |
| o |
Hardware and software coupling. |
| o |
Machine learning capabilities to compliment physical modeling. |
| o |
Holistic offering, including Integrated and Standalone metrology. |
| • |
Continuous proliferation of Nova’s newly announced solutions of ELIPSON, Metrion and
FE damascene chemical platform. |
| • |
Continued evolution of our OCD solutions with new generation of Integrated and Standalone
metrology platforms (PRISM). |
| • |
Continued investments in research and development programs aimed to generate new organic
growth engines for process control. |
| • |
Introduction of advanced Machine Learning solutions (NovaFIT) to enhance metrology measurements
and to complement the traditional Physical modeling (NovaMARS). |
| • |
Deepening collaboration with research institutes and customers' development centers, utilizing
a variety of our products, leading to our positioning as a long-term technology development and high-volume manufacturing partner.
|
| • |
The acquisition of ancosys, a privately held company headquartered in Germany, which was
completed in January 2022. Ancosys is a leading provider of chemical analysis and metrology solutions for advanced semiconductor manufacturing.
|
| • |
ESG (Environment, Social and Governance) – during 2022 the company has built and embraced
an enhanced Corporate Social Responsibility Strategy. We are determined as a company to play a vital role in creating a world that values
equality, safety and environmental health for the benefit of future generations to come. We are committed to proactively invest in embedding
social responsibility as part of our culture and business management to support our values. |
| • |
Investing in organization development to enhance our human capital and the strength of our
global teams based on our values and culture. |
| • |
Continue to strengthen our competitive market position, through unique innovation and technical
leadership. |
|
|
• |
Continue executing our innovation and development plans to meet future industry challenges.
|
| • |
Continue executing our well-defined strategy to reach
$1 billion in revenues, organically and inorganically. The strategy defines the Company’s growth path in revenue, customers, technology
and financial performance. |
| • |
Expand our total available markets by addressing new emerging metrology applications and
market segments, through solutions delivery to the challenging buildup of advanced Logic technology nodes, memory scaled VNAND nodes and
DRAM scaled devices at leading edge customers. |
| • |
Continue delivery of metrology systems to the trailing edge technology nodes to support
new applications ramp up and expansions. |
| • |
Continue the collaborations and joint research programs with leading semiconductor manufacturers
and relevant leading research institutes. |
| • |
Continue our products innovation and diversification through several new product introductions
to extend the Company’s market leadership and total available market. |
| • |
Continue our plans to generate revenues and competitive edge through SW algorithm and Machine
Learning solutions. |
| • |
Strengthening the partnership with our customers and build a “Customer Centric”
approach to accommodate and deliver customers’ requirements along the semiconductor lifecycle. |
| • |
Continue investing in developing new approach and methods to Inline materials process control.
|
| • |
Continue the post merger integration of ancosys, and build an extensive roadmap for ancosys'
chemical metrology products in order to enhance Nova's existing product offering. |
| • |
Create synergy between our product lines towards a combined offering for advanced applications,
which require dimensional, material and chemical metrology. |
| • |
Grow our production facilities to meet semiconductor demand and
our strategic plans, and continue to develop modern and streamlined core business processes through new ERP and Service CRM infrastructure.
|
| • |
Elevate our investment in ESG programs in order to promote social responsibilities programs
through our five pillars program (for details refer to Environmental, Social and Governance (ESG) chapter in Item 4.B in this
Annual Report). |
| • |
Meeting strategic, development, operational and delivery targets in light of the global
macro economical, geopolitical and trade restriction issues across the globe. |
| • |
Outbreak of another COVID-19 variant. |
| • |
Overcoming supply chain challenges in light of continuous shortage, demand and cost.
|
| • |
On time delivery of the required solutions to meet the current and future needs of our existing
and new customers. |
| • |
Correctly understanding the market trends and competitive landscape to ensure our products
retain proper differentiation to win customer confidence. |
| • |
Creating aggressive, innovative and competitive roadmap deliverables at reasonable costs
in order to properly control expenses. |
| • |
Identifying the metrology evolution roadmap for future industry needs to meet process control
requirements and lead the market. |
| • |
Achieving long-term growth targets while supporting extensive growth in all our activities.
|
| • |
Building a solid global infrastructure to accommodate further growth. |
| • |
Optical metrology has become an enabler for the industry over the last few years, sometimes
on the account of other metrology and process control methods. |
| • |
Materials metrology has been widely adopted by leading memory and logic/foundry customers.
We expect further adoption in the next few years. |
| • |
Nova’s unique metrology portfolio, combining optical, X-ray and chemical metrology
for both dimensions and materials. This provides the most advanced portfolio, combining the best innovative metrology capabilities with
the best reliability and return on investment. |
| • |
The ability to provide a unique and differentiated technology portfolio sets Nova apart
from the competition and adding a competitive edge to our offering. |
| • |
Our solutions are well accepted by leading customers that allow us to gain more market share
with additional process steps and new applications. |
| • |
Our ability to closely team with our customers allows us to predict the industry evolution
and process control challenges and by that introduce innovative metrology roadmap to solve industry needs. |
| • |
Our diversified portfolio, which is a result of continuous investment in research and development,
is becoming more attractive to our customers. |
| • |
Extending our solutions’ base to include hardware and software elements in a coupled
offering. |
| • |
Successful track record in completing and integrating inorganic products, as a result of
M&A, which allows us to diversify our product offering to expand our addressable markets. |
| • |
Well controlled and efficient operating model to support our profitable growth and operational
resiliency. |
|
5.A |
Operating Results
|
|
2020 |
2021 |
2022 |
||||||||||
|
Revenues from product sales |
78 |
% |
81 |
% |
81 |
% | ||||||
|
Revenues from services |
22 |
% |
19 |
% |
19 |
% | ||||||
|
Total revenues |
100 |
% |
100 |
% |
100 |
% | ||||||
|
Cost of products sale |
30 |
% |
32 |
% |
34 |
% | ||||||
|
Cost of services |
14 |
% |
12 |
% |
11 |
% | ||||||
|
Total cost of revenues |
44 |
% |
43 |
% |
45 |
% | ||||||
|
Gross profit |
56 |
% |
57 |
% |
56 |
% | ||||||
|
Operating expenses: |
||||||||||||
|
Research and development expenses, net |
20 |
% |
16 |
% |
16 |
% | ||||||
|
Sales and marketing expenses |
11 |
% |
10 |
% |
9 |
% | ||||||
|
General and administrative expenses |
5 |
% |
4 |
% |
4 |
% | ||||||
|
Total operating expenses |
36 |
% |
30 |
% |
29 |
% | ||||||
|
Operating profit |
21 |
% |
27 |
% |
26 |
% | ||||||
|
Financial income, net |
*0 |
% |
(1 |
)% |
2 |
% | ||||||
|
Income before income taxes |
21 |
% |
26 |
% |
28 |
% | ||||||
|
Income tax expenses |
3 |
% |
4 |
% |
3 |
% | ||||||
|
Net income |
18 |
% |
22 |
% |
25 |
% | ||||||
|
5.B |
Liquidity and Capital Resources
|
|
2020 |
2021 |
2022 |
||||||||||||||||||||||
|
Domestic |
Abroad |
Domestic |
Abroad |
Domestic |
Abroad |
|||||||||||||||||||
|
Electronic equipment |
2,742 |
431 |
2,356 |
1,134 |
3,664 |
4,155 |
||||||||||||||||||
|
Office furniture and equipment |
28 |
510 |
22 |
283 |
66 |
1,055 |
||||||||||||||||||
|
Leasehold improvements |
1,865 |
867 |
371 |
650 |
8,934 |
436 |
||||||||||||||||||
|
Land and buildings |
- |
- |
- |
- |
- |
3,004 |
||||||||||||||||||
|
Total |
4,635 |
1,808 |
2,749 |
2,067 |
12,664 |
8,650 |
||||||||||||||||||
|
5.C |
Research and Development, Patents
and Licenses, etc. |
| • |
Local Manufacturing Obligation. The terms of the
grants under the Innovation Law require that we manufacture the products developed with these grants in Israel. Under the regulations
promulgated under the Innovation Law, the products may be manufactured outside Israel by us or by another entity only if prior approval
is received from the IIA (such approval is not required for the transfer of less than 10% of the manufacturing capacity in the aggregate,
as declared to be manufactured out of Israel in the applications for funding, in which case a notice should be provided to the IIA). This
approval may be given only if we abide by all the provisions of the Innovation Law and related regulations. Ordinarily, as a condition
to obtaining approval to manufacture outside Israel, we would be required to pay royalties at an increased rate (usually 1% in addition
to the standard rate and increased royalties cap between 120% and 300% of the grants, depending on the manufacturing volume that is performed
outside Israel). We note that a company also has the option of declaring in its IIA grant application an intention to exercise a portion
of the manufacturing capacity abroad, thus, if the grant application is approved by IIA, such company will avoid the need to obtain additional
approvals and pay the increased royalties cap for manufacturing outside of Israel at portions which were mentioned in such approved grant
applications. |
| • |
Know-How transfer limitation. The Innovation Law
restricts the ability to transfer know-how funded by the IIA outside of Israel, including by way of a license to a non-Israeli entity.
Transfer of IIA funded know-how outside of Israel requires prior approval of the IIA. The IIA approval to transfer know-how created, in
whole or in part, in connection with an IIA-funded project to third party outside Israel is subject to payment of a redemption fee to
the IIA calculated according to a formula provided under the Innovation Law that is based, in general, on the ratio between the aggregate
IIA grants to the company’s aggregate investments in the project that was funded by these IIA grants, multiplied by the transaction
consideration, taking into account depreciation mechanism, and less royalties already paid to the IIA. The regulations promulgated under
the Innovation Law establish a maximum payment of the redemption fee paid to the IIA under the above mentioned formulas and differentiates
between two situations: (i) in the event that the company sells its IIA funded know-how, in whole or in part, or is sold as part of an
M&A transaction, and subsequently ceases to conduct business in Israel, the maximum redemption fee under the above mentioned formulas
will be no more than six times the total grants received (plus accrued interest) for development of the know-how being transferred, or
the entire amount received from the IIA, as applicable; (ii) in the event that following the transactions described above (i.e., asset
sale of IIA funded know-how or transfer as part of an M&A transaction) the company undertakes to continue its R&D activity in
Israel (for at least three years following such transfer and maintain at least 75% of its R&D staff employees it had for the six months
before the know-how was transferred, while keeping the same scope of employment for such R&D staff), then the company is eligible
for a reduced cap of the redemption fee of no more than three times the amounts received (plus accrued interest) for the applicable know-how
being transferred, or the entire amount received from the IIA, as applicable. No assurance can be given that approval to any such transfer,
if requested, will be granted and what will be the amount of the redemption fee payable. |
| • |
Licensing arrangements. Under the terms of the Innovation
Law, licensing know how developed under the IIA programs outside of Israel, requires prior consent of IIA and payment of license fees
to IIA, calculated in accordance with the licensing rules promulgated under the Innovation Law. The payment of the license fees does not
discharge the company from the obligation to pay royalties or other payments due to IIA in accordance with Innovation Law. |
|
5.D |
Trend Information
|
|
5.E |
Critical Accounting Estimates
|
|
6.A |
Directors and Senior Management
|
|
Name |
Age |
Position | ||
|
Avi Cohen (1)(2)
|
69 |
Interim Chairman of the Board of Directors | ||
|
Michael Brunstein
(3) |
79 |
Director | ||
|
Raanan Cohen (2)(3) |
67 |
Director | ||
|
Zehava Simon (1)(2) |
64 |
Director | ||
|
Dafna Gruber (1)(3) |
57 |
Director | ||
|
Sarit Sagiv (1)(2) |
54 |
Director | ||
|
Eitan Oppenhaim
|
57 |
Director, President and Chief Executive Officer | ||
|
Gabriel Waisman |
52 |
Chief Business Officer* | ||
|
Dror David
|
53 |
Chief Financial Officer | ||
|
Shay Wolfling
|
51 |
Chief Technology Officer | ||
|
Adrian S. Wilson |
51 |
President of US subsidiary & General Manager Material Metrology
Division | ||
|
Effi Aboody |
52 |
Corporate VP and General Manager Dimensional Metrology Division
|
| (1) |
Member of the audit committee |
| (2) |
Member of the compensation committee |
| (3) |
Member of the Nominating governance and sustainability committee
|
|
6.B |
Compensation |
|
6.C |
Board Practices |
|
6.D |
Employees |
|
As of December 31, |
2020(*)
|
2021(*)
|
2022(*)
|
|||||||||
|
Total Personnel |
713 |
819 |
1,177 |
|||||||||
|
Located in Israel |
385 |
428 |
505 |
|||||||||
|
Located abroad |
328 |
391 |
672 |
|||||||||
|
In operations |
129 |
176 |
280 |
|||||||||
|
In research and development |
300 |
328 |
462 |
|||||||||
|
In global business |
263 |
240 |
311 |
|||||||||
|
In general and administration |
49 |
75 |
124 |
|||||||||
|
6.E |
Share Ownership |
|
6.F |
Disclosure of Registrant’s
Action to Recover Erroneously Awarded Compensation. |
|
7.A |
Major Shareholders
|
|
Name |
Number of Ordinary
Shares Beneficially
Owned |
Percentage of Ordinary
Shares
Beneficially Owned |
||||||
|
Wasatch Advisors Inc.
(1) |
2,882,156 |
10.05 |
% | |||||
|
Menora Mivtachim Holdings Ltd.
(2) |
2,299,934 |
8.02 |
% | |||||
|
FMR LLC (3)
|
2,252,097 |
7.85 |
% | |||||
|
Migdal Insurance & Financial Holdings Ltd.
(4) |
1,982,699 |
6.91 |
% | |||||
|
Harel Insurance Investments & Financial Services Ltd.
(5) |
1,964,559 |
6.85 |
% | |||||
| (1) |
The information is based upon Amendment no. 3 Schedule 13G/A filed with the SEC by
Wasatch Advisors Inc. on February 8, 2023 regarding holdings as of December 31, 2022. |
| (2) |
The information is based upon Amendment no. 5 to Schedule 13G/A filed with the SEC by Menora
Mivtachim Holdings Ltd., Menora Mivtachim Pensions and Gemel Ltd., Menora Mivtahim Insurance Ltd., Menora Mivtachim Vehistadrut Hamehandesim
Nihul Kupot Gemel Ltd. and Shomera Insurance Company Ltd. on February 14, 2023 regarding holdings as of December 31, 2022.
|
| (3) |
The information is based upon Amendment no. 1 to Schedule 13G/A filed with the SEC by
FMR LLC, its subsidiaries and Abigail P. Johnson on February 9, 2023 regarding holdings as of December 31, 2022. |
| (4) |
The information is based upon Schedule 13G filed with the SEC by Migdal Insurance &
Financial Holdings Ltd. on January 26, 2023 regarding holdings as of December 31, 2022. |
| (5) |
The information is based upon Amendment no. 9 to Schedule 13G/A filed with the SEC by Harel
Insurance Investments & Financial Services Ltd. on January 17, 2023 regarding holdings as of December 31, 2022. |
|
7.B |
Related Party Transactions
|
|
7.C |
Interest of Experts and Counsel
|
|
8.A |
Consolidated Statements and Other
Financial Information |
|
8.B |
Significant Changes
|
|
9.A |
Offer and Listing Details
|
|
9.B |
Plan of Distribution
|
|
9.C |
Markets |
|
9.D |
Selling Shareholders
|
|
9.E |
Dilution |
|
9.F |
Expenses of the Issue
|
|
10.A |
Share Capital |
|
10.B |
Memorandum and Articles of Association
|
|
10.C |
Material Contracts
|
|
10.D |
Exchange Controls
|
|
10.E |
Taxation |
|
Tax Year |
Development Region “A” |
Other Areas within Israel |
||||||
|
2011-2012 |
10 |
% |
15 |
% | ||||
|
2013 |
7 |
% |
12.5 |
% | ||||
|
2014-2016 |
9 |
% |
16 |
% | ||||
|
2017 onwards |
7.5 |
% |
16 |
% | ||||
| • |
An individual citizen or resident of the U.S. (as determined under U.S. federal income tax
rules); |
| • |
a corporation (or another entity taxable as a corporation for U.S. federal income tax purposes)
created or organized in or under the laws of the U.S., any state thereof, or the District of Columbia; |
| • |
an estate, the income of which is subject to U.S. federal income taxation regardless of
its source; or |
| • |
a trust, if (a) a U.S. court 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 (b) the trust has in effect a valid election
in effect under applicable Treasury Regulations (as defined below) to be treated as a United States person. |
| • |
persons who own, directly, indirectly or constructively, 10% or more (by voting power or
value) of our outstanding voting shares; |
| • |
persons who hold the ordinary shares as part of a hedging, straddle or conversion transaction;
|
| • |
persons whose functional currency is not the U.S. dollar; |
| • |
persons who acquire their ordinary shares in a compensatory transaction; |
| • |
broker-dealers; |
| • |
insurance companies; |
| • |
regulated investment companies; |
| • |
real estate investment companies; |
| • |
qualified retirement plans, individual retirement accounts and other tax-deferred accounts;
|
| • |
traders who elect to mark-to-market their securities; |
| • |
tax-exempt organizations; |
| • |
banks or other financial institutions; |
| • |
persons subject to special tax accounting rules as a result of any item of gross income
with respect to ordinary shares being taken into account in an applicable financial statement; |
| • |
U.S. expatriates and certain former citizens and long-term residents of the United States;
and |
| • |
persons subject to any alternative minimum tax. |
| • |
fails to furnish its taxpayer identification number, or TIN, which, for an individual, is
ordinarily his or her social security number; |
| • |
furnishes an incorrect TIN; |
| • |
is notified by the IRS that it is subject to backup withholding because it has previously
failed to properly report payments of interest or dividends; or |
| • |
fails to certify, under penalties of perjury, that it has furnished a correct TIN and that
the IRS has not notified the U.S. holder that it is subject to backup withholding. |
|
10.F |
Dividends and Paying Agents
|
|
10.G |
Statements by Experts
|
|
10.H |
Documents on Display
|
|
10.I |
Subsidiary Information
|
|
10.J |
Annual Report to Security Holders
|
| • |
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect
our transactions and asset dispositions; |
| • |
provide reasonable assurance that transactions are recorded as necessary to permit the preparation
of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and directors; and |
| • |
provide reasonable assurance regarding the prevention or timely detection of unauthorized
acquisition, use or disposition of assets that could have a material effect on our financial statements. |
|
2021 |
2022 |
|||||||
|
Audit Fees |
570,000 |
713,000 |
||||||
|
Tax Fees |
64,000 |
50,000 |
||||||
|
Other Fees |
314,000 |
61,000 |
||||||
|
Total |
948,000 |
824,000 |
||||||
|
Period |
(a) Total Number
of Ordinary Shares Purchased |
(b) Average Price Paid per Ordinary Share |
(c) Total Number of Ordinary Shares Purchased as Part of Publicly Announced Plans or Programs |
(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) |
||||||||||||
|
May 2022 |
1,586 |
$ |
91.96 |
1,586 |
99.86 |
|||||||||||
|
June 2022 |
45,471 |
$ |
90.73 |
69,765 |
93.58 |
|||||||||||
|
November 2022 |
181,973 |
$ |
82.45 |
251,738 |
78.58 |
|||||||||||
|
|
Page
|
|
Reports of Independent Registered Public Accounting Firm (PCAOB ID No.
|
F-3 - F-6
|
|
F-7
|
|
|
F-8
|
|
|
F-9
|
|
|
F-10
|
|
|
F-11
|
|
|
F-12 - F-39
|
![]() |
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
F - 3
|
Valuation of excess and obsolete inventory reserve |
||
|
|
|
|
|
Description of the Matter
|
|
The Company’s inventories totaled $116.6 million as of December 31, 2022. As described in Note 2i to the consolidated financial statements, the Company assesses the value of inventories, including raw materials, service inventory, work-in-process and finished goods, in each reporting period, and values its inventories at the lower of cost or net realizable value. Reserves for potential excess and obsolete inventory are made based on management's analysis of inventory levels, future sales forecasts, the expected consumption of service spare parts, and market conditions.
Auditing management's estimates for valuation of inventories involved subjective auditor judgment due to the significant assumptions made by management about the future salability of the inventories. These assumptions include the assessment, by inventory category (finished goods, work-in-process, service inventory and raw materials), of future usage and market demand for the Company's products.
|
|
|
|
|
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's excess and obsolete inventory reserve process, including management's assessment of the underlying assumptions and data.
Our substantive audit procedures included, among others, evaluating the significant assumptions stated above and the accuracy and completeness of the underlying data management used to value excess and obsolete inventory. We compared the cost of on-hand inventories to historical sales and evaluated adjustments to sales forecasts for specific product considerations, such as technological changes or alternative uses. We also assessed the historical accuracy of management's estimates and performed sensitivity analyses over the significant assumptions to evaluate the changes in the obsolete and excess inventory estimates that would result from changes in the underlying assumptions.
|
|
Valuation of Acquired Intangible Asset as a result of business combination (Developed Technology) |
||
|
Description of the Matter |
As described in Note 3 to the consolidated financial statements, on January 25, 2022, the Company acquired all of the outstanding shares of ancosys GmbH for a total consideration of $86.9M, net of cash assumed (the “Acquisition”). The Acquisition was accounted for as a business combination in accordance with ASC 805 “Business Combination”. The Company’s accounting for the Acquisition included determining the fair value of the identifiable assets acquired and liabilities assumed, which included primarily technology intangible asset ($45.3M).
Auditing the Company’s determination of the technology intangible asset for the Acquisition was complex due to the significant estimations required by management. The complexity was primarily due to the sensitivity of the fair value to certain significant underlying assumptions. The Company primarily used a Multiperiod Excess Earnings Method (MEEM) to measure the technology intangible asset. The significant assumptions used to estimate the value of the technology intangible asset included the discount rate, technology migration curves and certain assumptions that form the basis of the projected financial information (e.g., revenue and operating profit margin). These significant assumptions are forward looking and could be affected by future economic and market conditions. |
|
|
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for determining the fair value of the technology intangible asset.
For example, we tested controls over management’s estimation process supporting the recognition and measurement of the technology intangible asset, including the review of the valuation model and significant assumptions used in the valuation model.
To test the estimated fair value of the technology intangible asset, we performed audit procedures that included, among others, evaluating the Company’s selection of the appropriate valuation methodology, evaluating the significant assumptions used by management and testing the completeness and accuracy of the underlying data. For example, we compared the significant assumptions to current industry, market and economic trends, historical results of the acquired business and to other relevant third-party industry outlooks. We also performed a sensitivity analysis of the significant assumptions to evaluate the effects on the estimated fair value. We also involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates, such as the discount rate utilized in the valuation of the technology intangible asset.
In addition, we evaluated the appropriateness of the related disclosures in relation to the Acquisition. |
/s/ KOST FORER GABBAY & KASIERER
![]() |
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash and cash equivalents
|
|
|
||||||
|
Short-term interest-bearing bank deposits
|
|
|
||||||
|
Marketable securities (Note 4)
|
|
|
||||||
|
Trade accounts receivable, net of allowance of $
|
|
|
||||||
|
Inventories (Note 5)
|
|
|
||||||
|
Other current assets (Note 6)
|
|
|
||||||
|
Total current assets
|
|
|
||||||
|
Non-current assets
|
||||||||
|
Marketable securities (Note 4)
|
|
|
||||||
|
Interest-bearing bank deposits
|
|
|
||||||
|
Restricted interest-bearing bank deposits and restricted cash
|
|
|
||||||
|
Deferred tax assets (Note 15)
|
|
|
||||||
|
Severance pay funds (Note 10)
|
|
|
||||||
|
Operating lease right-of-use assets (Note 12)
|
|
|
||||||
|
Property, plant and equipment, net (Note 7)
|
|
|
||||||
|
Intangible assets, net (Note 8)
|
|
|
||||||
|
Goodwill
|
|
|
||||||
|
Other long-term assets
|
|
|
||||||
|
Total non-current assets
|
|
|
||||||
|
TOTAL ASSETS
|
|
|
||||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Current liabilities
|
||||||||
|
Convertible senior notes, net (Note 11)
|
|
|
||||||
|
Trade accounts payable
|
|
|
||||||
|
Deferred revenues
|
|
|
||||||
|
Operating lease current liabilities (Note 12)
|
|
|
||||||
|
Other current liabilities (Note 9)
|
|
|
||||||
|
Total current liabilities
|
|
|
||||||
|
Non-Current liabilities
|
||||||||
|
Convertible senior notes, net (Note 11)
|
|
|
||||||
|
Accrued severance pay (Note 10)
|
|
|
||||||
|
Operating lease long-term liabilities (Note 12)
|
|
|
||||||
|
Deferred tax liability (Note 15) |
||||||||
|
Other long-term liabilities
|
|
|
||||||
|
Total non-current liabilities
|
|
|
||||||
|
Commitments and contingencies (Note 13)
|
||||||||
|
TOTAL LIABILITIES
|
|
|
||||||
|
SHAREHOLDERS’ EQUITY (Note 14)
|
||||||||
|
Ordinary shares,
|
|
|
||||||
|
Additional paid-in capital
|
|
|
||||||
|
Accumulated other comprehensive loss
|
(
|
)
|
(
|
) | ||||
|
Retained earnings
|
|
|
||||||
|
Total shareholders’ equity
|
|
|
||||||
|
Total liabilities and shareholders’ equity
|
|
|
||||||
F - 7
|
Year ended December 31,
|
||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Revenues:
|
||||||||||||
|
Products
|
|
|
|
|||||||||
|
Services
|
|
|
|
|||||||||
|
Total revenues
|
|
|
|
|||||||||
|
Cost of revenues:
|
||||||||||||
|
Products
|
|
|
|
|||||||||
|
Services
|
|
|
|
|||||||||
|
Total cost of revenues
|
|
|
|
|||||||||
|
Gross profit
|
|
|
|
|||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development, net (Note 2R)
|
|
|
|
|||||||||
|
Sales and marketing
|
|
|
|
|||||||||
|
General and administrative
|
|
|
|
|||||||||
|
Total operating expenses
|
|
|
|
|||||||||
|
Operating income
|
|
|
|
|||||||||
|
Financial income (expense), net (Note 18)
|
|
|
(
|
) |
|
|||||||
|
Income before taxes on income
|
|
|
|
|||||||||
|
Income tax expenses (Note 15)
|
|
|
|
|||||||||
|
Net income
|
|
|
|
|||||||||
|
Earnings per share:
|
||||||||||||
|
Basic
|
|
|
|
|||||||||
|
Diluted
|
|
|
|
|||||||||
|
Shares used in calculation of earnings per share:
|
||||||||||||
|
Basic
|
|
|
|
|||||||||
|
Diluted
|
|
|
|
|||||||||
|
Year ended December 31,
|
||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Net income
|
|
|
|
|||||||||
|
Other comprehensive income (loss), net of tax:
|
||||||||||||
|
Cumulative Translation Adjustment |
( |
) | ||||||||||
|
Available-for-sale investments (Note 4):
|
||||||||||||
|
Unrealized gain (loss) on available-for-sale marketable securities, net
|
(
|
)
|
(
|
) |
|
|||||||
|
Cash flow hedges (Note 17):
|
||||||||||||
|
Unrealized gain (loss) from cash flow hedges
|
(
|
) |
|
|
||||||||
|
Less: reclassification adjustment for net gain (loss) included in net income
|
|
(
|
)
|
(
|
)
|
|||||||
|
Other comprehensive income (loss)
|
(
|
)
|
(
|
) |
|
|||||||
|
Total comprehensive income
|
|
|
|
|||||||||
|
Ordinary Shares |
Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
Retained Earning |
Total Shareholders' Equity |
||||||||||||||||||||
|
Number |
Amount |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares upon exercise of options
|
|
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Issuance of shares upon vesting of RSU
|
|
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based compensation |
- | |||||||||||||||||||||||
|
Equity component of convertible senior notes, net of issuance costs and tax |
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share repurchase at cost
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
(
|
)
|
|
Other comprehensive income
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares upon exercise of options
|
|
|
|
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares upon vesting of RSU
|
|
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based compensation
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of the par value of the Ordinary shares (Note 1) |
-
|
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Other comprehensive loss
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
(
|
)
|
|
|
|
|
|
|
(
|
)
|
|
Net income
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
| ASU 2020-06 adoption (Note 11) | - | ( |
) | ( |
) | |||||||||||||||||||
|
Issuance of shares upon exercise of options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares upon vesting of RSU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based compensation
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share repurchase at cost
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
|
Other comprehensive loss |
- |
( |
) |
( |
) | |||||||||||||||||||
|
Net income
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|||||||||
|
|
|
2 0 2 2
|
|
|
2 0 2 1
|
|
|
2 0 2 0
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|||
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of premium and accretion of discount on marketable securities, net
|
|
|
|
|||||||||
|
Amortization of debt discount and issuance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of exchange rate fluctuation
|
|
|
(
|
)
|
(
|
) | ||||||
|
Changes in assets and liabilities:
|
|
|
||||||||||
|
Trade accounts receivables, net
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
Inventories
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
Other current and long-term assets
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
Operating lease right-of-use assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payables
|
|
|
|
|
|
|
|
|
|
|
||
|
Deferred revenues
|
|
|
|
|
|
|||||||
|
Operating lease liabilities
|
(
|
) |
(
|
) |
|
|||||||
|
Other current and long-term liabilities
|
|
|
|
|
||||||||
|
Accrued severance pay, net
|
|
(
|
) |
|
||||||||
|
Net cash provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investment activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of subsidiary, net of acquired cash |
( |
) | ||||||||||
|
Change in short-term and long-term interest-bearing bank deposits
|
|
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|
Investment in marketable securities
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
|
|
|
Proceed from sales and maturities of marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
Net cash used in investing activities
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of convertible senior notes, net of issuance costs
|
|
|
|
|||||||||
|
Settlement of a contingent consideration liability |
( |
) | ||||||||||
|
Purchases of treasury shares
|
|
|
(
|
)
|
|
|
|
|
|
|
(
|
)
|
|
Proceeds from exercise of options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
|
(
|
) |
|
|
|
|||||||
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
|
|
|
Cash and cash equivalents - beginning of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash - end of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating right-of-use assets recognized with corresponding operating lease liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
| A. |
Principles of Consolidation and Basis of Presentation
|
| B. |
Use of Estimates in the Preparation of Financial Statements
|
F - 12 |
| C. |
Financial Statements in U.S. Dollars
|
On consolidation, the assets and liabilities of foreign operations with functional currency other than dollar are translated into dollars at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognized in other comprehensive income (“OCI”).
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.
| D. |
Cash, Cash Equivalents and Restricted Cash |
|
As of December 31,
|
||||||||||||
|
2022
|
2021
|
2020
|
||||||||||
|
Cash and cash equivalents
|
|
|
|
|||||||||
|
Long term restricted cash
|
|
|
|
|||||||||
|
Cash, cash equivalents and restricted cash
|
|
|
|
|||||||||
| E. |
Short Term Bank Deposit
|
| F. |
Marketable Securities
|
The Company accounts for marketable securities in accordance with ASC Topic 320, “Investments – Debt Securities”. The Company’s investments in marketable securities consist of high-grade treasury, corporate and municipal bonds.
F - 13 |
|
The Company classifies its marketable securities as either short term or long term based on each instrument’s underlying contractual maturity date. Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with maturities greater than 12 months are classified as long-term.
The Company accounts for Credit losses in accordance with ASU 2016-13, Topic 326 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments” which modified the other than temporary impairment model for available for sale debt securities. The guidance requires the Company to determine whether a decline in fair value below the amortized cost basis of an available for sale debt security is due to credit related factors or noncredit related factors. A credit related impairment should be recognized as an allowance on the balance sheet with a corresponding adjustment to earnings, however, if the Company intends to sell an impaired available for sale debt security or more likely than not would be required to sell such a security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis.
The Company did not recognize an allowance for credit losses on marketable securities as there were no expected credit losses for the years ended December 31, 2022 and 2021.
|
| G. |
Trade Accounts Receivables
|
| H. |
Business Combination
|
Following the adoption of ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” for all business combinations with acquisition date from January 1, 2022, the Company applies ASC 606 “Revenue from Contracts with Customer”, to recognize and measure contract assets and contract liabilities on the acquisition date.
Contingent consideration incurred in a business combination is included as part of the purchase price and recorded at a probability weighted assessment of the fair value as of the acquisition date. The fair value of the contingent consideration is re-measured at each reporting period, with any adjustments in fair value recognized in earnings under general and administrative expenses.
Acquisition related costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an expense in the period in which the costs are incurred.
F - 14 |
| I. |
Inventories
|
| • |
Raw materials - based on the moving average cost method.
|
|
| • |
Service inventory, work in process and finished goods - based on actual production cost basis (materials, labor and indirect manufacturing costs).
|
| J. |
Property, Plant and Equipment
Property, plant and equipment are presented at cost, net of accumulated depreciation. Annual depreciation is calculated based on the straight-line method over the estimated useful lives of the related assets. Estimated useful life is as follows:
|
|
Years
|
|
|
Electronic equipment
|
|
|
Office furniture and equipment
|
|
|
Leasehold improvements
|
|
| K. |
Goodwill and Intangible Assets
|
F - 15 |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Weighted Average Useful Life (Years)
|
||
|
Technology
|
|
|
|
Customer relationships
|
|
| L. |
Impairment of Long-Lived Assets
|
| M. |
Accrued Warranty Costs
|
| N. |
Derivative Financial Instruments
|
In addition to the derivatives that are designated and qualify as a cash flow hedge, the Company enters into certain foreign exchange forward and option transactions to hedge suppliers. Gains and losses related to such derivative instruments are recorded in financial income (expenses), net.
See Note 17 for disclosure of the derivative financial instruments in accordance with such pronouncements.
| O. |
Leases
|
F - 16 |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
| P. |
Convertible Senior Notes
|
Prior to the adoption of the above-mentioned ASU 2020-06, issuers of certain convertible debt instruments, such as the Notes, that may be settled wholly or partially in cash upon conversion were required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The liability component at issuance was recognized at fair value, based on the fair value of a similar instrument of similar credit rating and maturity that does not have a conversion feature. The equity component was based on the excess of the principal amount of the convertible senior notes over the fair value of the liability component and was recorded in additional paid-in capital. The equity component, net of issuance costs and deferred tax effects was presented within additional paid-in-capital and was not remeasured as long as it continues to meet the conditions for equity classification. The difference between the principal amount and the liability component represents a debt discount that was amortized to financial expense over the respective terms of the Notes using an effective interest rate method. The Company allocated the total issuance costs incurred to the liability and equity components of the convertible senior notes based on their relative values. Issuance costs attributable to the liability and equity components were $
F - 17 |
| Q. |
Revenue Recognition
|
Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative Standalone Selling Price (“SSP”). Judgment is required to determine the SSP for each distinct performance obligation. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount to be allocated based on the relative SSP of the various products and services.
Remaining Performance Obligations
Remaining performance obligations (RPOs) represent contracted revenues that had not yet been recognized and include deferred revenues and invoices that have been issued to customers but were uncollected and have not been recognized as revenues. As of December 31, 2022, the aggregate amount of the RPOs was $
F - 18 |
| R. |
Research and Development
|
| S. |
Income Taxes
|
| T. |
Share-Based Compensation
|
The Company policy, under ASC 718, the fair market value of each option grant is estimated on the date of grant using the “Black-Scholes option pricing” method with the following weighted-average assumptions as relevant for prior years:
|
2 0 2 1
|
2 0 2 0
|
||||
|
Risk-free interest rate
|
|
|
|||
|
Expected term of options
|
|
|
|||
|
Expected volatility
|
|
|
|||
|
Expected dividend yield
|
|
|
|||
F - 19 |
The Company recognizes compensation expenses for the value of awards granted, based on the accelerated method. The Company account for forfeitures as they occur.
| U. |
Earnings per Share
|
Earnings per share are presented in accordance with ASC 260-10, “Earnings per Share”. Pursuant to which, basic earnings per share excludes the dilutive effects of convertible securities and is computed by dividing income (loss) available to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, net of treasury shares. Diluted earnings per share reflect the potential dilutive effect of options and RSUs. The number of potentially dilutive options and RSUs excluded from diluted earnings per share due to the anti-dilutive effect of out of the money options amounted to
Subsequent to the modified retrospective adoption of ASU 2020-06 (see note 2P), as of January 1, 2022, diluted earnings per share reflect the full dilutive effect of the Convertible Senior Notes. In 2021 and 2020, prior to the adoption of ASU 2020-06, shares amounted to
| V. |
Concentrations of Credit Risk
|
The trade accounts receivable of the Company are derived from sales to customers located primarily in Taiwan R.O.C., Korea, China and USA. The management of the Company performed risk assessment on an ongoing basis and believes it bears low risk.
The Company entered into options and forward contracts to hedge against the risk of overall changes in future cash flow from payments of payroll and related expenses as well as other expenses denominated in NIS. The derivative instruments hedge a portion of the Company's non-dollar currency exposure. Counterparty to the Company’s derivative instruments is major financial institution.
The Company's debt marketable securities include investments in highly rated corporate debentures and governmental bonds. The financial institutions that hold the Company's debt marketable securities are major financial institutions located in the United States. The Company believes its debt marketable securities portfolio is a diverse portfolio of highly rated securities and the Company's investment policy limits the amount the Company may invest in an issuer.
F - 20 |
| W. |
Fair Value Measurements
|
| X. |
Certain prior period amounts have been reclassified to conform to the current period presentation. |
| Y. |
Recent accounting guidance - Accounting standards adopted
In November 2021, the FASB issued ASU 2021-10, ASC Topic 832 “Disclosures by Business Entities about Government Assistance”. The standard require the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy: (1) Information about the nature of the transactions and the related accounting policy used to account for the transactions (2) The line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item (3) Significant terms and conditions of the transactions, including commitments and contingencies. The standard will become effective for fiscal years beginning after December 15, 2021. The Company adopted ASU 2021-10 on January 1, 2022. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.
|
F - 21 |
On January 25, 2022 , the Company acquired all of the outstanding shares of ancosys GmbH. (“ancosys”), a provider of chemical analysis and metrology solutions for semiconductor manufacturing for a cash amount of $
The agreement stipulated additional performance-based contingent consideration to shareholders of ancosys in an aggregate amount of up to $
The following table summarizes the fair value of the consideration transferred to ancosys shareholders as of the acquisition date:
|
Cash paid
|
|
|||
|
Fair-value of contingent consideration
|
|
|||
|
|
|
The table below summarizes the fair value of the acquired assets and assumed liabilities and the resulting goodwill as of the acquisition date:
|
Fair Value
|
Amortization
period
|
|||||||
|
Cash and cash equivalents
|
|
|
||||||
|
Trade accounts receivable |
|
|
||||||
|
Inventories |
|
|
||||||
|
Property, plant and equipment |
|
|||||||
|
Other tangible assets assumed |
||||||||
|
Current Technology |
||||||||
|
Customer Relationships |
||||||||
|
Goodwill |
||||||||
|
Total assets acquired |
||||||||
|
Deferred tax liability
|
||||||||
|
Other liabilities assumed |
||||||||
|
Total liabilities assumed |
|
|
||||||
|
Net assets acquired
|
|
|
||||||
Goodwill is primarily attributable to expected synergies arising from technology integration and expanded product availability to the Company’s existing and new customers. Goodwill is not deductible for income tax purpose.
The Company incurred approximately $
Pro forma results of operations related to this acquisition have not been presented because they are not material to the Company’s consolidated statements of operations. The amounts of revenue and earning of the acquiree since the acquisition date included in the consolidated income statements for the reporting period.
F - 22 |
The following is a summary of marketable securities amortized cost, unrealized gains, unrealized losses, and fair value as of December 31, 2022:
|
Marketable securities
|
Amortized
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair Value
|
||||||||||||
|
Matures within one year:
|
||||||||||||||||
|
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
|
Governmental bonds
|
|
|
(
|
)
|
|
|||||||||||
|
|
|
(
|
)
|
|
||||||||||||
|
Matures after one year:
|
||||||||||||||||
|
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
|
Governmental bonds
|
|
|
(
|
)
|
|
|||||||||||
|
|
|
(
|
)
|
|
||||||||||||
|
|
|
(
|
)
|
|
||||||||||||
The following is a summary of marketable securities amortized cost, unrealized gains, unrealized losses, and fair value as of December 31, 2021:
|
Marketable securities
|
Amortized
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair Value
|
||||||||||||
|
Matures within one year:
|
||||||||||||||||
|
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
|
Governmental bonds
|
|
|
(
|
)
|
|
|||||||||||
|
|
|
(
|
)
|
|
||||||||||||
|
Matures after one year:
|
||||||||||||||||
|
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
|
Governmental bonds
|
|
|
(
|
)
|
|
|||||||||||
|
|
|
(
|
)
|
|
||||||||||||
|
|
|
(
|
)
|
|
||||||||||||
Proceeds from maturity of available-for-sale marketable securities during the year ended December 31, 2022, were $
Proceeds from sales of available-for sale marketable securities during the year ended December 31, 2022, were $
Out of the $
NOTE 5 - INVENTORIES
| A. |
Composition:
|
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Raw materials
|
|
|
||||||
|
Service inventory
|
|
|
||||||
|
Work in process
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
|
|
|||||||
| B. |
In the years ended December 31, 2022, 2021 and 2020, the Company wrote down inventories in a total amount of $
|
F - 23 |
NOTE 6 - OTHER CURRENT ASSETS
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Prepaid expenses |
|
|
||||||
|
Governmental institutions
|
|
|
||||||
|
Governments grants receivables |
|
|
||||||
|
Other
|
|
|
||||||
|
|
|
|||||||
NOTE 7 - PROPERTY, PLANT AND EQUIPMENT, NET
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Cost:
|
||||||||
|
Electronic equipment
|
|
|
||||||
|
Office furniture and equipment
|
|
|
||||||
|
Leasehold improvements
|
|
|
||||||
|
Land and building |
|
|||||||
|
|
|
|||||||
|
Accumulated depreciation:
|
||||||||
|
Electronic equipment
|
|
|
||||||
|
Office furniture and equipment
|
|
|
||||||
|
Leasehold improvements
|
|
|
||||||
|
Land and building |
||||||||
|
|
|
|||||||
|
Net book value
|
|
|
||||||
Depreciation expenses amounted to $
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Original amount:
|
||||||||
|
Technology
|
|
|
||||||
|
Customer relationships
|
|
|
||||||
|
|
|
|||||||
|
Accumulated amortization:
|
||||||||
|
Technology
|
|
|
||||||
|
Customer relationships
|
|
|
||||||
|
|
|
|||||||
|
Net book value
|
|
|
||||||
F - 24 |
NOTE 8 - INTANGIBLE ASSETS (Cont.)
|
|
Year ended December 31,
|
|||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Technology
|
|
|
|
|||||||||
|
Customer relationships
|
|
|
|
|||||||||
|
|
|
|
||||||||||
Annual amortization expenses are expected as follows:
|
Year ending December 31,
|
||||
|
2023
|
|
|||
|
2024
|
|
|||
|
2025
|
|
|||
|
2026 |
|
|||
| 2027 and thereafter |
|
|||
|
Total |
|
|||
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Accrued salaries and fringe benefits
|
|
|
||||||
|
Accrued warranty costs (See B below)
|
|
|
||||||
|
Governmental institutions
|
|
|
||||||
|
Governments grants payables |
|
|
||||||
|
Other
|
|
|
||||||
|
|
|
|||||||
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Other current liabilities
|
|
|
||||||
|
Other long-term liabilities
|
|
|
||||||
|
|
|
|||||||
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Balance as of beginning of year
|
|
|
||||||
|
Services provided under warranty
|
(
|
)
|
(
|
)
|
||||
|
Changes in provision
|
|
|
||||||
|
Balance as of end of year
|
|
|
||||||
F - 25 |
| 1. |
During any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s ordinary shares for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to
|
|
| 2. |
During the five business day period after any 10 consecutive trading day period (“measurement period”) in which the trading price, determined pursuant to the terms of the Convertible Notes, per $
|
|
| 3. |
If the Company calls such Convertible Notes for redemption in certain circumstances, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or
|
|
| 4. |
Upon the occurrence of specified corporate events.
|
F - 26 |
The adoption of ASU 2020-06 (see Note 2P) resulted in:
|
|
• |
An increase of $
|
|
• |
A reduction of $
|
|
|
• |
An increase to deferred tax assets, net of $
|
|
|
• |
A cumulative-effect adjustment of $
|
|
The adoption of this new guidance reduced interest expense by $
F - 27 |
NOTE 11 - CONVERTIBLE SENIOR NOTES, NET (Cont.)
|
As of December 31,
|
||||||||
|
|
2 0 2 2
|
2 0 2 1
|
||||||
|
Liability component: |
||||||||
|
Principal amount
|
|
|
||||||
|
Unamortized discount
|
|
|
(
|
)
|
||||
|
Unamortized issuance costs
|
(
|
)
|
(
|
)
|
||||
|
Net carrying amount
|
|
|
||||||
|
Equity component, net of issuance costs of $
|
|
|
||||||
Interest expense related to the Convertible Notes was as follows:
|
Year ended
December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Amortization of debt discount
|
|
|
||||||
|
Amortization of debt issuance costs
|
|
|
||||||
|
Total financial expense recognized
|
|
|
||||||
NOTE 12 - LEASES
The Company has operating leases for facilities and vehicles. The Company recognized Operating lease right-of-use assets of $
F - 28 |
NOTE 12 - LEASES (Cont.)
Lease expenses amounted to $
|
Year
|
||||
|
2023
|
|
|||
|
2024
|
|
|||
|
2025
|
|
|||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028 and thereafter
|
|
|||
|
Total lease payments
|
|
|||
|
Less imputed interest
|
(
|
)
|
||
|
Total
|
|
Operating cash flows for operating leases amounted to $
From time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated the Company would accrue a liability for the estimated loss. As of December 31, 2022 and 2021, the Company is not involved in any material claims or legal proceedings which require accrual of liability for the estimated loss.
|
A. |
Rights of Shares: |
|
B. |
Share Repurchase: |
In March 2022, the Company announced a $
|
C. |
Equity Based Incentive Plans: |
F - 29 |
|
Year ended December 31,
|
||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Cost of Revenues:
|
||||||||||||
|
Product
|
|
|
|
|||||||||
|
Service
|
|
|
|
|||||||||
|
Research and Development
|
|
|
|
|||||||||
|
Sales and Marketing
|
|
|
|
|||||||||
|
General and Administrative
|
|
|
|
|||||||||
|
Total
|
|
|
|
|||||||||
Shares Options
During 2022, the Company did not grant share options. The weighted average fair value (in dollars) of the options granted during 2021 and 2020, according to Black-Scholes option-pricing model, amounted to $
Summary of the status of the Company’s share option plans as of December 31, 2022, as well as changes during the year then ended, is presented below:
|
2022
|
||||||||
|
Share
Options
|
Weighted
Average
Exercise
Price
|
|||||||
|
Outstanding - beginning of year
|
|
|
||||||
|
Exercised
|
(
|
)
|
|
|||||
|
Expired and forfeited
|
(
|
)
|
|
|||||
|
Outstanding - year end
|
|
|
||||||
|
Options exercisable at year end
|
|
|
||||||
The aggregate intrinsic value represents the total intrinsic value (the difference between the Company's closing share market price on the last trading day of the fiscal 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 trading day of the fiscal year. This amount changes based on the fair market value of the Company's shares.
F - 30 |
|
Range of
Exercise
Prices
|
Number
Outstanding
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||
|
(US dollars)
|
(in years)
|
(US dollars)
|
(US dollars)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|||||||||||||||||||
|
2022
|
||||||||
|
Number of
RSUs
|
Weighted
average
grant date
fair value
(USD)
|
|||||||
|
Unvested - beginning of year
|
|
|
||||||
|
Granted
|
|
|
||||||
|
Vested
|
(
|
)
|
|
|||||
|
Canceled
|
(
|
)
|
|
|||||
|
Unvested at year end
|
|
|
||||||
The total intrinsic value of RSUs vested during the years 2022, 2021 and 2020 was $
NOTE 15 - INCOME TAXES
| A. |
Income Tax Regulations (Rules on Bookkeeping by Foreign Invested Companies and Certain Partnerships and Determination of their Taxable Income), 1986:
|
|
As a "Controlled Foreign Cooperation" (as defined in the Israeli Law for the Encouragement of Capital Investments-1959), the Company's management has elected to apply Income Tax Regulations (Rules for Maintaining Accounting Records of Foreign Invested Companies and Certain Partnerships and Determining Their Taxable Income)-1986. Accordingly, its taxable income or loss is calculated in US Dollars.
F - 31 |
| B. |
Law for the Encouragement of Capital Investments-1959:
|
Part of the Company’s investment in equipment has received approvals in accordance with the Law for the Encouragement of Capital Investments, 1959 (“Approved Enterprise” status) in three separate investment plans. The Company has chosen to receive its benefits through the “Alternative Benefits” track, and, as such, is eligible for various benefits. These benefits include accelerated depreciation of fixed assets used in the investment program, as well as a full tax exemption on undistributed income in relation to income derived from the first plan for a period of
On April 1, 2005, an amendment to the Investment Law came into effect (“the Amendment”) and has significantly changed the provisions of the Investment Law. The Amendment limits the scope of enterprises which may be approved by the Investment Center by setting criteria for the approval of a facility as a Privileged Enterprise, such as provisions generally requiring that at least
In 2008, the Company submitted a request to approve a new plan (fourth plan) as a Privileged Enterprise in accordance with the Amendment to the Investment Law. The commencing year was 2010, and the expiration year was 2021.
In 2011, new legislation amending to the Investment Law was adopted. Under this new legislation, a uniform corporate tax rate will apply to all qualifying income of certain Industrial Companies (Requirement of a minimum export of
F - 32 |
Under the transition provisions of the new legislation, the Company may decide to irrevocably implement the new law while waiving benefits provided under the current law or to remain subject to the current law.
In August 2013 "The Arrangements Law" (hereinafter—"the Law") was officially published. The following significant changes affecting taxation were approved:
1. The tax rate on a company in Development area A, effective January 1, 2014 is
2. The tax rate on dividend distributed, generated from "preferred income" or by a company that has an approved enterprise increased effective January 1, 2014 from
| C. |
The New Technological Enterprise Incentives Regime - Amendment 73 to the Investment Law
|
In December 2016, the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which includes Amendment 73 to the Law for the Encouragement of Capital Investments ("the 2017 Amendment") was published. According to the 2017 Amendment, Technological preferred enterprise, as defined in the Law for the Encouragement of Capital Investments, 1959 ("the Encouragement Law"), with total consolidated revenues of less than NIS
| D. |
The Tax Cuts and Jobs Act, 2017:
|
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “US Tax Act”) that instituted fundamental changes to the taxation of multinational corporations. The Tax Act includes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from
F - 33 |
In 2022 Congress enacted the CHIPS and Science Act. Among other provisions, the law includes an "advanced manufacturing investment credit". This is a 25% investment tax credit for investments in semiconductor manufacturing and includes incentives for the manufacturing of semiconductors, as well as for manufacturing of specialized tooling equipment required in the semiconductor manufacturing process. Taxpayers are allowed to treat the credit as a payment against tax ("direct pay").
| E. |
Deferred Taxes:
|
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.
Deferred tax assets
Significant components of the deferred tax assets are as follows
|
As of December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Deferred tax assets:
|
||||||||
|
Net operating loss carryforwards
|
|
|
||||||
|
Tax credits carryforward
|
|
|
||||||
|
Reserve and allowances, mainly research and development expenses carryforward
|
|
|
||||||
|
Operating lease liabilities
|
|
|
||||||
|
Deferred tax assets before valuation allowance
|
|
|
||||||
|
Valuation Allowance
|
(
|
)
|
(
|
)
|
||||
|
Deferred tax assets after valuation allowance
|
|
|
||||||
|
Deferred tax liabilities:
|
||||||||
|
Convertible senior notes
|
|
(
|
)
|
|||||
|
Operating lease right-of-use assets
|
(
|
)
|
(
|
)
|
||||
|
Intangible assets
|
(
|
)
|
(
|
)
|
||||
|
Reserve and allowances
|
(
|
)
|
(
|
)
|
||||
|
Deferred tax liabilities
|
(
|
)
|
(
|
)
|
||||
|
Deferred tax assets, net
|
|
|
||||||
F - 34 |
Deferred tax assets by domestic and foreign are as follows:
|
Year ended
December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Domestic
|
|
|
||||||
|
Foreign
|
|
|
||||||
|
|
|
|||||||
Under ASC 740-10, deferred tax assets are to be recognized for the anticipated tax benefits associated with net operating loss and tax credits carry-forwards and deductible temporary differences; unless it is more-likely-than-not that some or all of the deferred tax assets will not be realized.
Deferred Tax liability
The $
| F. |
Income before taxes on income included in the consolidated statements of operations:
|
|
|
Year ended December 31,
|
|||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Domestic
|
|
|
|
|||||||||
|
Foreign (mainly US)
|
|
|
|
|||||||||
|
|
|
|
||||||||||
| G. |
Income tax expenses (tax benefits) included in the consolidated statements of operations:
|
|
|
Year ended December 31,
|
|||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Domestic
|
|
|
|
|||||||||
|
Foreign (mainly US)
|
|
|
|
|
||||||||
|
|
|
|
||||||||||
|
Current
|
|
|
|
|||||||||
|
Deferred
|
(
|
)
|
(
|
)
|
(
|
) | ||||||
|
|
|
|
||||||||||
F - 35 |
| H. |
Tax Reconciliation:
|
The following is a reconciliation of the theoretical tax expense, assuming that all income is taxed at the ordinary statutory average corporate tax rate in Israel and the actual tax expense in the statement of operations, is as follows:
|
Year ended December 31,
|
||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Income before taxes on income
|
|
|
|
|||||||||
|
Statutory tax expenses
|
|
|
|
|||||||||
|
Effect of non-benefited income New Technological or Preferred Enterprises statuses in Israel
|
|
|
|
|||||||||
|
Permanent differences, including difference between the basis of measurement of income reported for tax purposes and the basis of measurement of income for financial reporting purposes, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Change in tax reserve for uncertain tax positions
|
(
|
) |
(
|
) |
|
|||||||
|
Effect of foreign operations taxed at various rates
|
|
|
|
|||||||||
|
Foreign Derived Intangible Income benefit
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Tax credits
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Trapped Profits agreement net effect
|
|
|
|
|||||||||
|
Adjustments for previous year’s tax
|
(
|
)
|
(
|
) |
|
|
||||||
|
Change in valuation allowance
|
|
|
|
|||||||||
|
Other
|
|
|
|
|||||||||
|
(
|
) |
|
|
|
||||||||
|
Actual tax expenses
|
|
|
|
|||||||||
| I. |
Effective Tax Rates:
|
The Company’s effective tax rates differ from the statutory rates applicable to the Company for tax year 2022, primarily due to stock-based compensation deductible expenses, tax credits and foreign derived intangible income benefit in the US.
The Company’s effective tax rates differ from the statutory rates applicable to the Company for tax year 2021, primarily due to stock-based compensation deductible expenses, tax credits and foreign derived intangible income benefit in the US.
| J. |
Tax Assessments:
|
In December 2021 the Parent Company has received final tax assessments for the years 2016-2019 from the Israeli Tax Authorities.
F - 36 |
| K. |
Undistributed earnings of foreign subsidiaries:
|
The Company considers the earnings of certain subsidiaries to be indefinitely invested outside Israel on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and the Company’s specific plans for reinvestment of those subsidiary earnings. The Company has not recorded a deferred tax liability of approximately $
| L. |
Uncertain Tax Positions:
|
The taxation of the Company's business is subject to the application of multiple and sometimes conflicting tax laws and regulations as well as multinational tax conventions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.
|
As of
December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
Balance at the beginning of the year
|
|
|
||||||
|
Increase related to prior year tax positions
|
|
|
||||||
|
Decrease related to prior year tax positions
|
(
|
)
|
(
|
)
|
||||
|
Increase related to current year tax positions
|
|
|
||||||
|
Balance at the end of the year*
|
|
|
||||||
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expenses.
| M. |
Income from Other Sources in Israel:
|
Income not eligible for benefits under the New Technological Enterprise Laws mentioned in ”C” above are taxed at the corporate tax rate of
F - 37 |
| A. |
Sales by Geographic Area (as Percentage of Total Sales):
|
|
Year ended December 31,
|
||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
%
|
%
|
%
|
||||||||||
|
Taiwan, R.O.C.
|
|
|
|
|||||||||
|
China |
|
|
|
|||||||||
|
USA
|
|
|
|
|||||||||
|
Korea
|
|
|
|
|||||||||
|
Other
|
|
|
|
|||||||||
|
Total
|
|
|
|
|||||||||
| B. |
Sales by Major Customers (as Percentage of Total Sales): |
|
Year ended December 31,
|
||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
%
|
%
|
%
|
||||||||||
|
Customer A
|
|
|
|
|||||||||
|
Customer B
|
|
|
|
|||||||||
| C. |
Long-lived assets by geographic location:
|
|
As of
December 31,
|
||||||||
|
2 0 2 2
|
2 0 2 1
|
|||||||
|
%
|
%
|
|||||||
|
Israel
|
|
|
||||||
|
US
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total long-lived assets (*)
|
|
|
||||||
F - 38 |
| A. |
Hedging Activities
|
| B. |
Derivative Instruments
|
|
Derivative Assets
Reported in
Other Current Assets
|
Derivative Liabilities
Reported in
Other Current Liabilities
|
|||||||||||||||
|
December 31,
|
December 31,
|
|||||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 2
|
2 0 2 1
|
|||||||||||||
|
Derivatives designated as hedging instruments in cash flow hedge
|
|
|
|
|
||||||||||||
|
Year ended December 31,
|
||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Loss (gain) on derivative instruments
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
||||||||||||
|
2 0 2 2
|
2 0 2 1
|
2 0 2 0
|
||||||||||
|
Interest income
|
|
|
|
|||||||||
|
Financial expense related to the Convertible Senior Notes (Note 11)
|
(
|
)
|
(
|
)
|
(
|
) | ||||||
|
Exchange rate gain (loss), net
|
|
|
(
|
)
|
(
|
)
|
||||||
|
Bank charges
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Total
|
|
|
(
|
) |
|
|||||||
Number | Description |
101.INS | Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
101.SCH | Inline XBRL Taxonomy Extension Schema |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase |
104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 |
NOVA LTD. By: /s/ Eitan Oppenhaim Eitan Oppenhaim President and Chief Executive Officer |
| Date: |
|
| 1. |
The Company hereby undertakes to indemnify you for any obligation imposed on you or expense spent by you as a result of your capacity as an Officer of the Company, as
defined under the Israeli Companies Law 5759-1999 (the “Companies Law”) (hereinafter: the “Officer”), subject to the applicable law, the Company’s Amended and Restated Articles of Association and as follows:
|
| 1.1. |
A monetary obligation imposed on you or incurred by you in favor of another person pursuant to a judgment, including a judgment given in settlement or a court approved
settlement or arbitrator’s award, subject to Section 1.6 below.
|
| 1.2. |
Reasonable litigation expenses, including attorney’s fees, incurred by you in consequence of an investigation or proceeding conducted or filed against you by an
authority that is authorized to conduct such investigation or proceeding, provided that such investigation or proceeding: (i) concludes without the filing of an indictment against you and without imposition of a monetary liability in lieu of
criminal proceedings; (ii) concludes with the imposition of a monetary payment on you in lieu of criminal proceedings, but the criminal offense in question does not require the proof of criminal intent; or (iii) in connection with a monetary
sanction.
|
| 1.3. |
Reasonable litigation expenses, including attorney’s fees, incurred by you or which you were obligated to pay by a court, in proceedings filed against you by the
Company or on its behalf or by another person, or in a criminal charge of which you were acquitted, or in a criminal charge of which you were convicted of an offense that does not require proof of criminal intent.
|
| 1.4. |
Any monetary obligation imposed on you in favor of all the injured parties by a breach in an Administrative Procedure, as stated in Section 52(54)(a)(1)(a) to the
Securities Law, 5728-1968 (the “Securities Law”). The term “Administrative Procedure” shall have the following meaning: a procedure according to Chapter 8C (Financial Sanctions), 8D (Administrative Enforcement Measures Imposition by the
Administrative Enforcement Committee) or 9A (Arrangement for Avoidance from or Cessation of Procedures) to the Securities Law, as amended from time to time.
|
| 1.5. |
Expenses expended by you with respect to an Administrative Procedure (as defined in Section 1.4 above) relating to you, including reasonable litigation expenses, which
include attorneys’ fees.
|
| 1.6. |
With regards to Section 1.1, this obligation to indemnify is limited to the events detailed in Annex A which according to the Board of Directors’ opinion, are foreseen
in light of the Company’s actual activities, and which shall not exceed the Maximum Indemnification Amount, as detailed below in Section 1.7. The Board of
Directors has determined that such amounts and criteria set by the Board of Directors are reasonable under the circumstances.
|
| 1.7. |
The aggregate indemnification amount that the Company will pay to all of its Officers, whether in advance or post factum, under all the indemnification letters that
shall be issued by the Company pursuant to this Letter of Indemnification, shall not exceed the greater of (a) twenty-five percent (25%) of the Company’s total shareholders’ equity according to the Company’s most recent financial statements
as of the time of the actual payment of indemnification; (b) US$200 million; (c) ten percent (10%) of the Company Total Market Cap (which shall mean the average closing price of the Company’s ordinary shares over the 30 trading days prior to
the actual payment of indemnification multiplied by the total number of issued and outstanding shares of the Company as of the date of actual payment); and (d) in connection with or arising out of a public offering of the Company’s
securities, the aggregate amount of proceeds from the sale by the Company and/or any shareholder of Company’s securities in such offering (hereinafter the “Maximum Indemnification Amount”).
|
| 1.8. |
In the event the indemnification amount the Company is required to pay its Officers, as set forth above, exceeds the Maximum Indemnification Amount or its remaining
balance (as existing at that time), the Maximum Indemnification Amount or its remaining balance will be divided among the Officers entitled to indemnification, so that the amount of indemnification each of them will actually receive will be
calculated in accordance with the ratio between the amount for which each individual may be indemnified and the aggregate amount for which all the relevant Officers may be indemnified.
|
| 1.9. |
For the avoidance of doubt, it is hereby clarified that nothing contained in this Letter of Indemnification or in the above resolutions derogate from
the Company’s right, subject to Board of Directors approval, to indemnify you post factum for any amounts which you may be obligated to pay as set forth in Section 1 above without the limitations set forth in Section 1.7 above. The aforesaid
shall however not be construed as an obligation of the Company to indemnify you after the fact.
|
| 2. |
The Company shall act according to this Letter of Indemnification as detailed above in regards to any other company controlled, directly or indirectly, by the Company
(a “Subsidiary”) with respect to the periods such other company is a Subsidiary or in your capacity as a director, or observer at board of director meetings, of a company not controlled by the Company but where your appointment as a director
or observer results from the Company’s holdings in such company (“Affiliate”).
|
| 3. |
Notwithstanding the above, in no event will the Company indemnify you for the following events:
|
| 3.1. |
a breach of fiduciary duty, except for a breach of a fiduciary duty to the Company, a Subsidiary or an Affiliate while acting in good faith and having reasonable cause
to assume that such act would not harm the Company’s interests;
|
| 3.2. |
a reckless or intentional breach of duty of care that was not done negligently;
|
| 3.3. |
an action taken with the intent of making personal gain unlawfully;
|
| 3.4. |
a fine, civil fine, a monetary sanction or forfeit imposed upon you for an offense;
|
| 3.5. |
a counterclaim made by the Company or in its name in connection with a claim against the Company filed by you.
|
| 4. |
The Company will make available all amounts needed in accordance with Section 1 above on the date on which such amounts are first payable by you.
|
| 5. |
The Company shall advance to you all expenses incurred by you in connection with a claim on the date on which such amounts are first payable, but has no duty to advance
payments within less than fourteen (14) days following delivery of a written request therefor. The foregoing shall not apply in circumstances where the Company shall take upon itself to manage the proceedings as provided herein below.
|
| 6. |
As part of the aforementioned undertaking and subject to Sections 1.1 – 1.5 above, the Company will make available to you any security or guarantee that you may be
required to post in accordance with an interim decision given by a court or an arbitrator, including for the purpose of substituting liens imposed on your assets.
|
| 7. |
The Company will indemnify you, in accordance with this Letter of Indemnification, even if at the relevant time of indebtedness you are no longer an Officer of the
Company or of a Subsidiary or a director or board observer of an Affiliate, provided that the obligations are in respect of actions taken by you while you were an Officer and/or board observer, as aforesaid, and in such capacity, including if
taken prior to the above resolutions.
|
| 8. |
No payment hereunder shall be made to you in connection with any event for which payment is actually paid to you under a valid and collectible insurance policy or under
a valid and enforceable indemnity clause or agreement (excluding this Letter of Indemnification), except in respect of any excess beyond the payment under such insurance, clause or agreement.
|
| 9. |
Additionally, it is emphasized that this Letter of Indemnification is not to be construed as an agreement for the benefit of any third party, including any insured
party, and it is not transferable, and no insurer will have the right to request that the Company participate in any payment for which the insurer is obligated under any insurance agreement to which it is a party, other than a deductible that
is specified in such agreement.
|
| 10. |
Subject to this Letter of Indemnification, the indemnification will, in each case, cover all sums of money (100%) that you will be obligated to pay, in those
circumstances for which indemnification is permitted under law and under this Letter of Indemnification.
|
| 11. |
The Company will be entitled to any amount collected from a third party in connection with liabilities indemnified hereunder.
|
| 12. |
Indemnification by the Company as detailed in this Letter of Indemnification will also be subject to fulfilling the following procedures:
|
| 12.1. |
You will inform the Company of every legal or administrative proceeding that may be brought against you in connection with any event that may entitle you to
indemnification, and of every warning made to you in writing, regarding legal or administrative proceedings that may be commenced against you, and this will be done in a timely manner, immediately after you first become aware of such, and
you will provide to the Company or to whom the Company will instruct you, all documents in connection with such proceedings.
Similarly, you must advise the Company on an ongoing and current basis concerning all events which you suspect may
give rise to the initiation of legal or administrative proceedings against you.
|
| 12.2. |
The Company will, within a reasonable period of time (or within a shorter period of time if the matter requires
filing a statement of defense or a response to a proceeding), take upon itself the handling of your defense in the legal proceeding and/or entrust such handling to any prominent attorney the Company may select at its discretion for this
purpose, subject to the fulfillment of all the following conditions: (a) you have informed the Company as provided in Section 12.1 above; and (b) the legal proceedings against you solely involves a claim for monetary damages. The Company
and/or the above-mentioned attorney will be entitled to act within their exclusive discretion to bring the proceeding to a close; the appointed attorney will owe his/her duty of loyalty to the Company and to you. In the event that a
conflict of interests arises between you and the Company, the attorney will so inform the Company of any such conflict and you, subject to the Company’s approval, which approval not to be unreasonably withheld, will have the right to
appoint an attorney on your behalf, and the provisions of this Letter of Indemnification will apply to expenses you may incur as a result of such appointment. If the Company decides to settle or arbitrate a monetary obligation, the
Company will be entitled to do so, as long as the lawsuit or the threat of a lawsuit against you will be fully withdrawn. At the request of the Company you will sign any document that will empower the Company and/or attorney as mentioned
above, to act on your behalf with regard to your defense in the above-mentioned proceedings and to represent you in all matters relating to these proceedings, as set forth above. Without derogating from the above provision with respect to
a conflict of interests, in any event where, on reasonable grounds, the attorney chosen by the Company is unacceptable to you, you shall be entitled to appoint your own attorney and the provisions of this Letter of Indemnification will
apply to expenses you may incur as a result, provided, however, that the proposed appointment of such attorney including the identity and terms of engagement of such attorney be brought immediately to the attention of the Company for its
prior written approval, which approval not to be unreasonably withheld.
|
| 12.3. |
You will cooperate with the Company and/or with any attorneys as set forth above in every reasonable manner required of you by any of them in connection with the
handling of such legal proceedings, all subject to this Letter of Indemnification.
|
| 12.4. |
Whether or not the Company acts as specified in Section 12.2 above, the Company will cover all other expenditures and payments that are mentioned in this Letter of
Indemnification, so that you will not be required to pay or to finance them yourself.
|
| 12.5. |
Your indemnification in connection with any legal proceeding against you, as set forth in this Letter of Indemnification, will not be enforceable in connection with
amounts you may be required to pay as a result of a settlement or arbitration unless the Company agrees in writing to the settlement or to the entering into the arbitration proceeding, as the case may be.
If required by law, the Company’s authorized organs will consider the request for indemnification and the amount thereof
and will determine if you are entitled to indemnification and the amount thereof.
|
| 12.6. |
If, for any reason, the Company has decided not to appoint an attorney, as detailed in Section 12.2 above, you will have the right to appoint an attorney of your
choice, provided that the proposed appointment of such attorney including the identity and terms of engagement of such attorney be brought immediately to the attention of the Company for its prior written approval, which approval not to be
unreasonably withheld. If you do not inform the Company regarding your choice of attorney in compliance with the above, the Company will have the right in its discretion to appoint an attorney on your behalf.
|
| 13. |
This Letter of Indemnification is issued after receipt by the Company of all required approvals under law and the Amended and Restated Articles of Association of the
Company. Should any additional approval be required, the Company will exert its best effort to obtain such approval.
|
| 14. |
If the Company pays to you, or on your behalf, any amount in connection with a legal proceeding as provided in this Letter of Indemnification, and thereafter it is
determined that you are not entitled to such indemnification from the Company as detailed in this Letter of Indemnification, the sums paid by the Company will be considered a loan that was extended to you by the Company, which will be linked
to the Consumer Price Index plus interest at the rate established in the Income Tax Regulations (Establishment of Interest Rates) – 1985, as may be in effect from time to time, and you will be required to repay these sums to the Company when
requested to do so in writing by the Company and in accordance with a payment schedule that the Company determines.
|
| 15. |
In order to remove any doubt, in the event of death, this Letter of Indemnification will apply to your heirs.
|
| 16. |
Subject to the provisions of the Companies Law, the Company hereby releases you, in advance, from liability for any damage that arises from the breach of your duty of
care (within the meaning of such terms under Sections 252 and 253 of the Companies Law), other than breach of the duty of care towards the Company in a distribution (as such term is defined in the Companies Law).
|
| 17. |
No waiver, omission or grant of extension by the Company or by you will be interpreted in any manner as a waiver of rights pursuant to this Letter of Indemnification or
under applicable law, and will not prevent either party from taking all legal and other measures in order to enforce such rights.
|
| 18. |
If any undertaking included in this Letter of Indemnification is held invalid or unenforceable, such invalidity or unenforceability will not affect any of the other
undertakings which will remain in full force and effect. Furthermore, if such invalid or unenforceable undertaking may be modified or amended so as to be valid and enforceable as a matter of law, such undertakings will be deemed to have been
modified or amended, and any competent court or arbitrator are hereby authorized to modify or amend such undertaking, so as to be valid and enforceable to the maximum extent permitted by law. Notwithstanding the above, if this Letter of
Indemnification shall be declared or found void for any reason whatsoever then any previous undertaking of the Company for indemnification towards you, which this Letter of Indemnification is intended to replace, shall remain in full force
and effect.
|
| 19. |
The terms contained in this Letter of Indemnification will be construed in accordance with the Companies Law, and in the absence of any definition in the Companies Law,
pursuant to the Securities Law.
|
| 20. |
This Letter of Indemnification and the agreement herein shall be governed by and construed and enforced in accordance with the laws of the State of Israel. You should
be aware, however, that, insofar as indemnification for liabilities arising under the United States Securities Act of 1933, as amended (the “Securities Act”) may be permitted to the Officers of the Company, the Company has been advised that
in the opinion of the U.S. Securities and Exchange Commission (the “SEC”) such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event of a claim for such indemnification
(other than the payment by the Company of expenses incurred or paid by an Officer in the successful defense of any action, suit or proceeding), the Company will (in accordance with an undertaking given to the SEC), unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
|
| 21. |
Notwithstanding anything herein to the contrary, the Company shall have no obligation to provide indemnity hereunder if a court of competent jurisdiction determines
that such indemnification is not lawful.
|
| 22. |
This Letter of Indemnification will enter into effect upon your signature in the space provided below and return of the signed copy to the Company.
|
| 23. |
This Letter of Indemnification replaces and substitutes any previous undertaking of the Company for indemnification, to the extent granted.
|
|
|
Respectfully,
___________________________________________________
Eitan Oppenhaim Dror David
President & Chief Executive Officer Chief Financial Officer
on behalf of
Nova Ltd. |
|
|
____________________
Name: _______________ Date: ________________ |
| 1. |
The issuance of securities including, but not limited to the public according to a prospectus, a private offering, sales offering, the issuance of bonus shares,
issuance of securities and/or any other manner of security offering and also tender offers for securities, the Company’s purchase of its own and it subsidiaries’ securities, as well as any action relating to any of the above.
|
| 2. |
A “Transaction” or “Activity” as defined in Article 1 of the Companies Law, including among others a negotiation regarding such Transaction and/or Activity, transfer,
sale and/or purchase of assets and/or liabilities, including securities and/or the granting and/or receiving of any right in any of the above, including among others, the acquisition, sale or merger of entities and/or any action connected
directly or indirectly with such a Transaction.
|
| 3. |
The filing of a report and/or announcement required by the Companies Law and/or Securities Law, or U.S. Securities Laws, including the regulations pertaining to these
laws, and/or according to rules and/or regulations adopted by the Tel-Aviv Stock Exchange Ltd. or The Nasdaq or any other stock exchange and/or any law of any other country pertaining to these issues and/or the failure to file such a report
and/or announcement.
|
| 4. |
Any decision regarding a Distribution, as defined in the Companies Law including a Distribution pursuant to a court order.
|
| 5. |
Preparation of financial statements of the Company and its Subsidiaries and approval of such financials.
|
| 6. |
A change in the Company’s structure and/or a reorganization of the Company, including any arrangement between the Company and its shareholders and/or creditors
according to the Companies Law, and/or any decision relating to these issues including, but not limited to, a merger, a demerger, a change in the Company’s capital, the establishment of subsidiaries and/or their liquidation or sale, and/or
all allotments or distributions.
|
| 7. |
Expressions, announcements, statements, including a position taken, and/or an opinion made in good faith by an Officer in the course of and/or in connection with
his/her duties, including during negotiations and contracting with suppliers, consultants and consumers and/or during a meeting of the Company’s management, Board of Directors and/or one of its committees.
|
| 8. |
An action made in good faith in contradiction to the Memorandum of Incorporation and/or the Amended and Restated Articles of Association.
|
| 9. |
An Action and/or decision relating to employer-employee relations including employment agreements, negotiations regarding employment agreements, salary and/or other
employee benefits, including employee stock option plans and/or option distributions to employees.
|
| 10. |
An action and/or decision relating to work safety and/or working conditions and/or employee activities and/or any event relating thereto.
|
| 11. |
An action or decision relating to insurance matters and/or risk management of the Company.
|
| 12. |
Actions relating to the Company’s commercial relations, including with employees, outside contractors, customers, suppliers, and service providers.
|
| 13. |
Preparation of work plans, including pricing, marketing, distribution, and instructions to employees, to customers and to suppliers and to cooperative arrangements,
including with competitors.
|
| 14. |
Actions relating to product development, to the conduct of product testing, approvals, sales, distribution of licensing in their regard.
|
| 15. |
Decisions and/or actions relating to environmental compliance, including pollution, contamination, and hazardous materials.
|
| 16. |
Granting of liens on Company assets and granting guarantees on behalf of the Company.
|
| 17. |
Compliance with various governmental requirements in Israel and outside Israel, including a Ministry of Defense, Antitrust Authority, Securities Authority,
Environmental Compliance Agency and Tax Authorities.
|
| 18. |
Investigations conducted against you by any governmental or quasi-governmental authority.
|
| 19. |
Establishment and management of financial policy, including credit policies, hedging against changes in currency exchange rates and utilization of cash reserves.
|
| 20. |
Actions taken (or alleged omissions) pursuant to or in accordance with the policies and procedures of the Company, its subsidiaries and/or its affiliates, whether such
policies and procedures are published or not.
|
| 21. |
Causing damages, including bodily injury and property damage, partial or comprehensive loss, loss of use or disability, during any action or omission relating to the
Company, or relating to its employees, agents or others who act or are purported to act on behalf of the Company.
|
| 22. |
An event resulting from the Company being a publicly traded company or due to its shares being issued to the public.
|
| 23. |
Transfer of information required or permitted to be transferred under applicable law to an interested party of the Company.
|
| 24. |
An act that may be considered as an infringement of the intellectual property rights of a third party, or an act relating to the Company’s intellectual property, inter alia, by taking action and filing lawsuits.
|
| 25. |
Any of the above specified events relating to an activity of an entity controlled by the Company or an entity affiliated with the Company or pursuant to the Officer’s
position in an affiliated entity and/or in an entity controlled by the Company.
|
| 26. |
Any other actions which can be anticipated for companies of the type of the Company, and which the Board of Directors may deem appropriate.
|
| 27. |
Any indemnifiable event and/or action pursuant to the Efficiency of Enforcement Procedures in the Securities Authority Law (Legislation Amendments), 2011.
|
| 28. |
Any of the above specified events, whether occurring in Israel or occurring outside of Israel.
|
| A. Overview and Objectives |
3
|
|
4
|
|
| 6 | |
|
8
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
11
|
|
|
12
|
| 1. |
Introduction
|
| 2. |
Objectives
|
| 2.1. |
To closely align the interests of the Executive Officers with those of Nova’s shareholders in order to enhance shareholder value;
|
| 2.2. |
To align a significant portion of the Executive Officers’ compensation with Nova’s short and long-term goals and performance;
|
| 2.3. |
To provide the Executive Officers with a structured compensation package, including competitive salaries, performance-motivating cash and equity incentive programs and
benefits, and to be able to present to each Executive Officer an opportunity to advance in a growing organization;
|
| 2.4. |
To strengthen the retention and the motivation of Executive Officers in the long term;
|
| 2.5. |
To provide appropriate awards in order to incentivize superior individual excellency and corporate performance; and
|
| 2.6. |
To maintain consistency in the way Executive Officers are compensated.
|
| 3. |
Compensation Instruments
|
| 3.1. |
Base salary;
|
| 3.2. |
Benefits;
|
| 3.3. |
Cash bonuses;
|
| 3.4. |
Equity based compensation; and
|
| 3.5. |
Retirement and termination terms.
|
| 4. |
Overall Compensation - Ratio Between Fixed and Variable Compensation
|
| 4.1. |
This Policy aims to balance the mix of “Fixed Compensation” (comprised of base salary and benefits) and “Variable Compensation” (comprised of cash bonuses and equity-based
compensation) in order to, among other things, appropriately incentivize Executive Officers to meet Nova’s short- and long-term goals while taking into consideration the Company’s need to manage a variety of business risks.
|
| 4.2. |
The total annual bonus and equity-based compensation of each Executive Officer shall not exceed
90% of the total compensation package of such Executive Officer on an annual basis.
|
| 5. |
Inter-Company Compensation Ratio
|
| 5.1. |
In the process of drafting and updating this Policy, Nova’s Board and Compensation Committee have examined the ratio between employer cost associated with the
engagement of the Executive Officers, including directors, and the average and median employer cost associated with the engagement of Nova’s other employees (including contractor employees as defined in the Companies Law) (the “Ratio”).
|
| 5.2. |
The possible ramifications of the Ratio on the daily working environment in Nova were examined and will continue to be examined by Nova from time to time in order to
ensure that levels of executive compensation, as compared to the overall workforce will not have a negative impact on work relations in Nova.
|
| 6. |
Base Salary
|
| 6.1. |
A base salary provides stable compensation to Executive Officers and allows Nova to attract and retain competent executive talent and maintain a stable management team.
The base salary varies among Executive Officers, and is individually determined according to the educational background, prior vocational
experience, qualifications, company’s role, business responsibilities and the past performance of each Executive Officer.
|
| 6.2. |
Since a competitive base salary is essential to Nova’s ability to attract and retain highly skilled professionals, Nova will seek to establish a base salary that is
competitive with base salaries paid to Executive Officers in a peer group of other companies operating in technology sectors which are similar in their characteristics to Nova’s, as much as possible, while considering, among others, such
companies’ size and characteristics including their revenues, profitability rate, number of employees and operating arena (in Israel or globally), the list of which shall be reviewed and approved by the Compensation Committee at least every
two years. To that end, Nova shall utilize as a reference, comparative market data and practices, which will include a compensation survey that compares and analyses the level of the overall compensation package offered to an Executive
Officer of the Company with compensation packages in similar positions to that of the relevant officer) in such companies. Such compensation survey may be conducted internally or through an external independent consultant. Information on such
compensation survey shall be included in the proxy statement published in connection with the annual general meeting of Nova’s shareholders.
|
| 6.3. |
The Compensation Committee and the Board may periodically consider and approve base salary adjustments for Executive Officers. The main considerations for salary
adjustment are similar to those used in initially determining the base salary, but may also include change of role or responsibilities, recognition for professional achievements, regulatory or contractual requirements, budgetary constraints
or market trends. The Compensation Committee and the Board will also consider the previous and existing compensation arrangements of the Executive Officer whose base salary is being considered for adjustment.
|
| 7. |
Benefits
|
| 7.1. |
The following benefits may be granted to the Executive Officers in order, among other things, to comply with legal requirements:
|
| 7.1.1. |
Vacation days in accordance with market practice;
|
| 7.1.2. |
Sick days in accordance with market practice;
|
| 7.1.3. |
Convalescence pay according to applicable law;
|
| 7.1.4. |
Monthly remuneration for a study fund, as allowed by applicable law and with reference to Nova’s practice and the practice in peer group companies;
|
| 7.1.5. |
Nova shall contribute on behalf of the Executive Officer to an insurance policy or a pension fund, as allowed by applicable law and with reference to Nova’s policies
and procedures and the practice in peer group companies; and
|
| 7.1.6. |
Nova shall contribute on behalf of the Executive Officer towards work disability insurance, as allowed by applicable law and with reference to Nova’s policies and
procedures and to the practice in peer group companies.
|
| 7.2. |
Non-Israeli Executive Officers may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which they are employed. Such
customary benefits shall be determined based on the methods described in Section 6.2 of this Policy (with the necessary changes).
|
| 7.3. |
In the event of relocation of an Executive Officer to another geography, such Executive Officer may receive other similar, comparable or customary benefits as
applicable in the relevant jurisdiction in which he or she is employed or additional payments to reflect adjustments in cost of living. Such benefits shall include reimbursement for out of pocket one-time payments and other ongoing expenses,
such as housing allowance, car allowance, and home leave visit, etc.
|
| 7.4. |
Nova may offer additional benefits to its Executive Officers, which will be comparable to customary market practices, such as, but not limited to: cellular and land line phone benefits, company car and travel benefits, reimbursement of business
travel including a daily stipend when traveling and other business related expenses, insurances, other benefits (such as newspaper subscriptions, academic and professional studies), etc.,
provided, however, that such additional benefits shall be determined in accordance with Nova’s policies and procedures.
|
| 8. |
Annual Cash Bonuses - The Objective
|
| 8.1. |
Compensation in the form of an annual cash bonus is an important element in aligning the Executive Officers’ compensation with Nova’s objectives and business goals.
Therefore, a pay-for-performance element, as payout eligibility and levels are determined based on actual financial and operational results, as well as individual performance.
|
| 8.2. |
An annual cash bonus may be awarded to Executive Officers upon the attainment of pre-set periodical objectives and individual targets determined by the Compensation
Committee (and, if required by law, by the Board) at the beginning of each calendar year, or upon engagement, in case of newly hired Executive Officers, taking into account Nova’s short and long-term goals, as well as its compliance and risk
management policies. The Compensation Committee and the Board shall also determine applicable minimum thresholds (based on annual budget revenue and/or positive non-GAAP operating income) that must be met for entitlement to the annual cash
bonus (all or any portion thereof) and the formula for calculating any annual cash bonus payout, with respect to each calendar year, for each Executive Officer. In special circumstances, as determined by the Compensation Committee and the
Board (e.g., regulatory changes, significant changes in Nova’s business environment, a significant organizational change and a significant merger and acquisition events), the Compensation Committee and the Board may modify the objectives
and/or their relative weights during the calendar year.
|
| 8.3. |
The total annual cash bonuses awarded to all of Nova’s Executive Officers shall not exceed 10% of Nova’s non-GAAP operating income.
|
| 8.4. |
In the event the employment of an Executive Officer is terminated prior to the end of a fiscal year, the Company may pay such Executive Officer a full annual cash bonus
or a prorated one. Such bonus will become due on the same scheduled date for annual cash bonus payments by the Company.
|
| 8.5. |
The actual annual cash bonus to be awarded to Executive Officers shall be approved by the Compensation Committee and the Board.
|
| 9. |
Annual Cash Bonuses - The Formula
|
| 9.1. |
The annual cash bonus of Nova’s Executive Officers, other than the chief executive officer (the “CEO”), will be based on performance objectives and a discretionary evaluation of the Executive Officer’s overall performance by the CEO and subject to minimum thresholds. The performance objectives will be
approved by Nova’s CEO at the commencement of each calendar year (or upon engagement, in case of newly hired Executive Officers or in special circumstances as indicated in Section 8.2 above) on the basis of, but not limited to, company,
division and individual objectives. The performance measurable objectives, which include the objectives and the weight to be assigned to each achievement in the overall evaluation, will be based on:
|
| 9.1.1. |
Overall company performance measures, which are based on actual financial and operational results, such as revenues, sales, operating income and cash flow. At least 30%
of the annual cash bonus of Nova’s Executive Officers will be based on overall company performance measures; and
|
| 9.1.2. |
Divisional objectives which may include operational objectives, such as market share, initiation of new markets and products and operational efficiency, customer focus
objectives, such as system availability requirements and customer satisfaction, project milestones objectives, such as product implementation in production, product acceptance and new product penetration, and investment in human capital
objectives, such as employee satisfaction, employee retention and employee training and leadership programs.
|
| 9.2. |
Information on the CEO’s performance measurable objectives shall be included in the proxy statement published in connection with the annual general meeting of Nova’s
shareholders.
|
| 9.3. |
The target annual cash bonus that an Executive Officer, other than the CEO, will be entitled to receive for any given calendar year, will not exceed 100% of such
Executive Officer’s annual base salary.
|
| 9.4. |
The maximum annual cash bonus including for overachievement performance that an Executive Officer, other than the CEO, will be entitled to receive for any given
calendar year, will not exceed 150% of such Executive Officer’s annual base salary.
|
| 9.5. |
The annual cash bonus of Nova’s CEO will be mainly based on performance measurable objectives and subject to minimum thresholds as provided in Section 8.2 above. Such
performance measurable objectives will be determined annually by Nova’s Compensation Committee (and, if required by law, by Nova’s Board) at the commencement of each calendar year (or upon engagement, in case of newly hired CEO or in special
circumstances as indicated in Section 8.2 above) on the basis of, but not limited to, company and personal objectives. These performance measurable objectives, which include the objectives and the weight to be assigned to each achievement in
the overall evaluation, will be categorized as described below:
|
| 9.5.1. |
Between 40%-60% will be based on overall company performance measures, which are based on actual financial and operational results, such as revenues, sales, operating
income and cash flow; and
|
| 9.5.2. |
Between 20%-50% will be based on goals set forth in the Company’s annual operating plan and long-term plan, such as expansion of the Company’s organic growth engines
and achieving strategic technology objectives.
|
| 9.6. |
The less significant part of the annual cash bonus granted to Nova’s CEO, and in any event not more than 30% of the annual cash bonus, may be based on a discretionary
evaluation of the CEO’s overall performance by the Compensation Committee and the Board based on quantitative and qualitative criteria.
|
| 9.7. |
The target annual cash bonus that the CEO will be entitled to receive for any given calendar year, will not exceed 150% of his or her annual base salary.
|
| 9.8. |
The maximum annual cash bonus including for overachievement performance that the CEO will be entitled to receive for any given calendar year, will not exceed 200% of
his or her annual base salary.
|
| 10. |
Other Bonuses
|
| 10.1. |
Special Bonus. Nova may grant its Executive Officers a special bonus as an award for special achievements (such as in connection with mergers and acquisitions, offerings, achieving target budget or business plan under exceptional
circumstances or special recognition in case of retirement) at the CEO’s discretion (and in the CEO’s case, at the Board’s discretion), subject to any additional
approval as may be required by the Companies Law (the “Special Bonus”). The Special Bonus will not exceed 30% of the Executive Officer’s total compensation package on an annual basis.
|
| 10.2. |
Signing Bonus. Nova may grant a newly recruited Executive Officer a signing bonus at the CEO’s discretion (and in the CEO’s case, at the Board’s discretion), subject to any additional approval as may be required by the Companies Law (the
“Signing Bonus”). The Signing Bonus will not exceed
twelve (12) monthly entry base salaries of the Executive Officer.
|
| 10.3. |
Relocation Bonus. Nova may grant its Executive Officers a special bonus in
the event of relocation of an Executive Officer to another geography (the “Relocation Bonus”). The Relocation bonus will include customary
benefits associated with such relocation and its monetary value will not exceed 30% of the Executive Officer’s annual base salary.
|
| 11. |
Compensation Recovery (“Clawback”)
|
| 11.1. |
In the event of an accounting restatement, Nova shall be entitled to recover from its Executive Officers the bonus compensation or performance-based equity compensation
in the amount in which such compensation exceeded what would have been paid under the financial statements, as restated, provided that a claim is made by Nova prior to the second anniversary of fiscal year end of the restated financial
statements.
|
| 11.2. |
Notwithstanding the aforesaid, the compensation recovery will not be triggered in the following events:
|
| 11.2.1. |
The financial restatement is required due to changes in the applicable financial reporting standards; or
|
| 11.2.2. |
The Compensation Committee has determined that Clawback proceedings in the specific case would be impossible, impractical or not commercially or legally efficient.
|
| 11.3. |
Nothing in this Section 11 derogates from any other “Clawback” or similar provisions regarding disgorging of profits imposed on Executive Officers by virtue of
applicable securities laws.
|
| 12. |
The Objective
|
| 12.1. |
The equity-based compensation for Nova’s Executive Officers is designed in a manner consistent with the underlying objectives in determining the base salary and the
annual cash bonus, with its main objectives being to enhance the alignment between the Executive Officers’ interests with the long-term interests of Nova and its shareholders, and to strengthen the retention and the motivation of Executive
Officers in the long term. In addition, since equity-based awards are structured to vest over several years, their incentive value to recipients is aligned with longer-term strategic plans.
|
| 12.2. |
The equity-based compensation offered by Nova is intended to be in a form of share options and/or other equity based awards, such as RSUs, in accordance with the
Company’s equity incentive plan in place as may be updated from time to time.
|
| 12.3. |
Equity-based compensation awarded by the Company to employees, Executive Officers or directors shall not be, in the aggregate, in excess of 10% of the Company’s
share capital on a fully diluted basis at the date of the grant.
|
| 12.4. |
All equity-based incentives granted to Executive Officers shall be subject to vesting periods in order to promote long-term retention of the awarded Executive Officers.
Unless determined otherwise in a specific award agreement approved by the Compensation Committee and the Board, grants to Executive Officers other than directors shall vest gradually over a period of between three (3) to five (5) years or
based on performance. The exercise price of options shall be determined in accordance with Nova’s Equity-Based Compensation Policy, the main terms of which shall be disclosed in the annual report of Nova.
|
| 12.5. |
All other terms of the equity awards shall be in accordance with Nova’s incentive plans and other related practices and policies. Accordingly, the Board may, following
approval by the Compensation Committee, extend the period of time for which an award is to remain exercisable and make provisions with respect to the acceleration of the vesting period of any Executive Officer’s awards, including, without
limitation, in connection with a corporate transaction involving a change of control, subject to any additional approval as may be required by the Companies Law.
|
| 13. |
General Guidelines for the Grant of Awards
|
| 13.1. |
The equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior
business experience, qualifications, role and the personal responsibilities of the Executive Officer.
|
| 13.2. |
In determining the equity-based compensation granted to each Executive Officer, the Compensation Committee and Board shall consider the factors specified in Section
13.1 above, and in any event the total fair market value of an annual equity-based compensation at the time of grant shall not exceed: (i) with respect to the CEO – the lower of 650% of the CEO’s annual base salary or 0.2% of the market
capitalization of the Company; and (ii) with respect to each of the other Executive Officers - 300% of such Executive Officer’s annual base salary.
|
| 13.3. |
The fair market value of the equity-based compensation for the Executive Officers will be determined according to acceptable valuation practices at the time of grant.
|
| 14. |
Advanced Notice Period
|
| 15. |
Adjustment Period
|
| 16. |
Additional Retirement and Termination Benefits
|
| 17. |
Non-Compete Grant
|
| 18. |
Limitation Retirement and Termination of Service Arrangements
|
| 19. |
Exculpation
|
| 20. |
Insurance and Indemnification
|
| 20.1. |
Nova may indemnify its directors and Executive Officers to the fullest extent permitted by applicable law, for any liability and expense that may be imposed on the
director or the Executive Officer, as provided in the indemnity agreement between such individuals and Nova, all subject to applicable law and the Company’s articles of association.
|
| 20.2. |
Nova will provide directors’ and officers’ liability insurance (the “Insurance
Policy”) for its directors and Executive Officers as follows:
|
| 20.2.1. |
The limit of liability of the insurer shall not exceed the greater of $50 million or 30% of the Company’s shareholders equity based on the most recent financial statements of the Company at the time of approval by the Compensation Committee;
and
|
| 20.2.2. |
The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Compensation Committee (and, if required
by law, by the Board) which shall determine that the sums are reasonable considering Nova’s exposures, the scope of coverage and the market conditions and that the Insurance Policy reflects the current market conditions, and it shall not
materially affect the Company’s profitability, assets or liabilities.
|
| 20.3. |
Upon circumstances to be approved by the Compensation Committee (and, if required by law, by the Board), Nova shall be entitled to enter into a “run off” Insurance
Policy of up to seven (7) years, with the same insurer or any other insurance, as follows:
|
| 20.3.1. |
The limit of liability of the insurer shall not exceed the greater of $50 million or 30% of the Company’s shareholders equity based on the most recent financial statements of the Company at the time of approval by the Compensation Committee;
and
|
| 20.3.2. |
The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Compensation Committee (and, if required
by law, by the Board) which shall determine that the sums are reasonable considering the Company’s exposures covered under such policy, the scope of cover and the market conditions, and that the Insurance Policy reflects the current market
conditions and that it shall not materially affect the Company’s profitability, assets or liabilities.
|
| 20.4. |
Nova may extend the Insurance Policy in place to include cover for liability
pursuant to a future public offering of securities. The Insurance Policy, as well as the additional premium shall be approved by the Compensation Committee (and if required by law, by the Board) which shall determine that the sums are
reasonable considering the exposures pursuant to such public offering of securities, the scope of cover and the market conditions and that the Insurance Policy reflects the current market conditions, and it does not materially affect the
Company’s profitability, assets or liabilities.
|
| 21. |
The following benefits may be granted to the Executive Officers in addition to the benefits applicable in the case of any retirement or termination of
service upon a “Change of Control”:
|
| 21.1. |
Vesting acceleration of outstanding options or other equity-based awards;
|
| 21.2. |
Extension of the exercising period of options for Nova’s Executive Officer for a period of up to one (1) year in case of an Executive Officer other than the CEO and two
(2) years in case of the CEO, following the date of employment termination; and
|
| 21.3. |
Up to an additional six (6) months of continued base salary and benefits following the date of employment termination (the “Additional Adjustment Period”). For avoidance of doubt, such
additional Adjustment Period shall be in addition to the advance notice and adjustment periods pursuant to Sections 14 and 15 of this Policy, but subject to the limitation set forth in Section 18 of this Policy.
|
| 21.4. |
A cash bonus not to exceed 150% of the Executive Officer’s annual base salary in case of an Executive Officer other than the CEO and 200% in case of the CEO.
|
| 22. |
All Nova’s non-employee Board members may be entitled to an annual cash fee retainer of up to NIS 210,000 (and up to
NIS 360,000 for the chairperson of Nova’s Board), an annual committee membership fee retainer of up to NIS 42,000, and an annual committee chairperson cash fee retainer of up to NIS 63,000 (it is being clarified that the payment for the
chairpersons would be in lieu of (and not in addition) to the payments referenced above for committee membership).23.1.
|
| 24. |
The compensation of the Company’s external directors, if elected, shall be in accordance with the Companies Regulations (Rules Regarding the Compensation and Expenses
of an External Director), 5760-2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel),
5760-2000, as such regulations may be amended from time to time.
|
| 25. |
Notwithstanding the provisions of Section 22 above, in special circumstances, such as in
the case of a professional director, an expert director or a director who makes a unique contribution to the Company, such director’s compensation may be different than the compensation of all other directors and maybe greater than the
maximal amount allowed under Section 22.
|
| 26. |
Each non-employee member of Nova’s Board (excluding the chairperson of the Board) may be granted annually equity-based awards with a total fair market value of up to US$170,000. The equity-based awards shall vest annually over a period of between three (3) to four (4) years. Each non-employee member of Nova’s Board (excluding the chairperson of the Board) may be granted a
welcome equity-based award with a total fair market value of up to US$170,000.
|
| 27. |
The chairperson of the Board may be granted annually equity-based awards with a total fair market value of up to US$600,000. The equity-based awards shall vest annually
over a period of between three (3) to four (4) years.
|
| 28. |
In addition, members of Nova’s Board may be entitled to reimbursement of expenses when traveling abroad on behalf of Nova.
|
| 29. |
It is hereby clarified that the compensation stated under Section H will not apply to directors who serve as Executive Officers.
|
| 30. |
Nothing in this Policy shall be deemed to grant any of Nova’s Executive Officers or
employees or any third party any right or privilege in connection with their employment by the Company. Such rights and privileges shall be governed by the respective personal employment agreements. The Board may determine that none
or only part of the payments, benefits and perquisites detailed in this Policy shall be granted, and is authorized to cancel or suspend a compensation package or part of it.
|
| 31. |
An Immaterial Change in the Terms of Employment of an Executive Officer other than the CEO
may be approved by the CEO, provided that the amended terms of employment are in accordance with this Policy. An “Immaterial Change in the Terms of Employment” means a change in the terms of employment of an Executive Officer with
an annual total cost to the Company not exceeding an amount equal to two (2) monthly base salaries of such employee.
|
| 32. |
In the event that new regulations or law amendment in connection with Executive Officers and directors compensation will be enacted following the adoption of this Policy, Nova may follow such new regulations or law amendments, even if such new regulations are in contradiction to the compensation terms set forth
herein.
|
|
As of the end of 2022:
|
||
|
Name of Subsidiary
|
|
Country of Incorporation
|
|
Nova Measuring Instruments, Inc.
|
|
Delaware, U.S.
|
|
Nova Measuring Instruments K.K.
|
|
Japan
|
|
Nova Measuring Instruments Taiwan Ltd.
|
|
Taiwan
|
|
Nova Measuring Instruments Korea Ltd.
|
|
Korea
|
|
Nova Measuring Instruments GmbH
|
|
Germany
|
|
Nova Measuring Instruments (Shanghai) Co., Ltd
|
China
|
|
|
ancosys GmbH*
|
Germany
|
|
|
1.
|
I have reviewed this Annual Report of Nova 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 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 company’s board of directors (or persons performing the equivalent function):
|
|
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 of Nova 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 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 company’s board of directors (or persons performing the equivalent function):
|
|
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.
|
This Annual Report on Form 20-F of Nova Ltd. (the “Company”) for the period ended December 31,
2022 (the “Report”) fully complies with the requirements of Section 13 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.
|
|
|
/s/ Eitan Oppenhaim
Eitan Oppenhaim
President and Chief Executive Officer |
|
1.
|
This Annual Report on Form 20-F of Nova Ltd. (the “Company”) for the period ended December 31,
2022 (the “Report”) fully complies with the requirements of Section 13 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.
|
|
|
/s/ Dror David
Dror David
Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Trade accounts receivable, allowance for doubtful accounts | $ 215 | $ 37 |
CONSOLIDATED BALANCE SHEETS (Parentheticals) - ₪ / shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Ordinary shares, par value | ₪ 0 | ₪ 0 |
| Ordinary shares, shares authorized | 60,000,000 | 60,000,000 |
| Ordinary shares, shares issued | 28,678,476 | 28,579,044 |
| Ordinary shares, shares outstanding | 28,678,476 | 28,579,044 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Revenues: | |||
| Total revenues | $ 570,729 | $ 416,113 | $ 269,396 |
| Cost of revenues: | |||
| Total cost of revenues | 253,759 | 180,670 | 118,231 |
| Gross profit | 316,970 | 235,443 | 151,165 |
| Operating expenses: | |||
| Research and development, net (Note 2R) | 90,458 | 65,857 | 53,015 |
| Sales and marketing | 52,729 | 39,876 | 30,066 |
| General and administrative | 23,852 | 17,324 | 12,514 |
| Total operating expenses | 167,039 | 123,057 | 95,595 |
| Operating income | 149,931 | 112,386 | 55,570 |
| Financial income (expense), net (Note 18) | 8,478 | (3,133) | 926 |
| Income before taxes on income | 158,409 | 109,253 | 56,496 |
| Income tax expenses (Note 15) | 18,196 | 16,152 | 8,589 |
| Net income | $ 140,213 | $ 93,101 | $ 47,907 |
| Earnings per share: | |||
| Basic | $ 4.89 | $ 3.28 | $ 1.71 |
| Diluted | $ 4.4 | $ 3.12 | $ 1.65 |
| Shares used in calculation of earnings per share: | |||
| Basic | 28,697,365 | 28,371,610 | 28,096,814 |
| Diluted | 31,869,788 | 29,816,066 | 28,949,739 |
| Product [Member] | |||
| Revenues: | |||
| Total revenues | $ 464,152 | $ 337,026 | $ 209,320 |
| Cost of revenues: | |||
| Total cost of revenues | 191,402 | 131,453 | 80,313 |
| Service [Member] | |||
| Revenues: | |||
| Total revenues | 106,577 | 79,087 | 60,076 |
| Cost of revenues: | |||
| Total cost of revenues | $ 62,357 | $ 49,217 | $ 37,918 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Statement of Comprehensive Income [Abstract] | |||
| Net income | $ 140,213 | $ 93,101 | $ 47,907 |
| Other comprehensive income (loss), net of tax: | |||
| Cumulative Translation Adjustment | (5,039) | 0 | 0 |
| Available-for-sale investments (Note 4): | |||
| Unrealized gain (loss) on available-for-sale marketable securities, net | (6,047) | (1,016) | 0 |
| Cash flow hedges (Note 17): | |||
| Unrealized gain (loss) from cash flow hedges | (2,421) | 74 | 1,351 |
| Less: reclassification adjustment for net gain (loss) included in net income | 1,813 | (442) | (796) |
| Other comprehensive income (loss) | (11,694) | (1,384) | 555 |
| Total comprehensive income | $ 128,519 | $ 91,717 | $ 48,462 |
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Cash flows from operating activities: | |||
| Net income | $ 140,213 | $ 93,101 | $ 47,907 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation of property, plant and equipment | 8,621 | 6,475 | 5,875 |
| Amortization of intangible assets | 6,033 | 2,458 | 2,503 |
| Amortization of premium and accretion of discount on marketable securities, net | 1,666 | 1,708 | 0 |
| Amortization of debt discount and issuance costs | 1,282 | 4,229 | 868 |
| Share-based compensation | 16,647 | 10,488 | 6,949 |
| Net effect of exchange rate fluctuation | 4,523 | (745) | (1,584) |
| Changes in assets and liabilities: | |||
| Trade accounts receivables, net | (31,634) | (5,132) | (11,711) |
| Inventories | (29,311) | (18,457) | (16,271) |
| Other current and long-term assets | (4,223) | 192 | 6,878 |
| Deferred tax assets, net | (13,740) | (2,989) | (193) |
| Operating lease right-of-use assets | 3,873 | 1,680 | 1,351 |
| Trade accounts payables | 5,142 | 11,697 | 3,255 |
| Deferred revenues | 15,243 | 10,621 | 2,461 |
| Operating lease liabilities | (6,351) | (904) | 91 |
| Other current and long-term liabilities | 1,509 | 17,919 | 11,520 |
| Accrued severance pay, net | 46 | (79) | 354 |
| Net cash provided by operating activities | 119,539 | 132,262 | 60,253 |
| Cash flows from investment activities: | |||
| Acquisition of subsidiary, net of acquired cash | (78,469) | 0 | 0 |
| Change in short-term and long-term interest-bearing bank deposits | 129,944 | (31,456) | (36,016) |
| Investment in marketable securities | (211,742) | (215,091) | 0 |
| Proceed from sales and maturities of marketable securities | 81,325 | 12,862 | 0 |
| Purchase of property, plant and equipment | (21,314) | (4,816) | (6,443) |
| Net cash used in investing activities | (100,256) | (238,501) | (42,459) |
| Cash flows from financing activities: | |||
| Proceeds from the issuance of convertible senior notes, net of issuance costs | 0 | 0 | 193,588 |
| Settlement of a contingent consideration liability | (8,480) | 0 | 0 |
| Purchases of treasury shares | (21,416) | 0 | (12,549) |
| Proceeds from exercise of options | 90 | 11 | 367 |
| Net cash provided by (used in) financing activities | (29,806) | 11 | 181,406 |
| Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash | (4,454) | 622 | 1,356 |
| Increase (decrease) in cash, cash equivalents and restricted cash | (14,977) | (105,606) | 200,556 |
| Cash and cash equivalents - beginning of year | 126,698 | 232,304 | 31,748 |
| Cash, cash equivalents and restricted cash - end of year | 111,721 | 126,698 | 232,304 |
| Supplemental disclosure of non-cash activities: | |||
| Operating right-of-use assets recognized with corresponding operating lease liabilities | 17,398 | 3,198 | 2,367 |
| Supplemental disclosure of cash flow information: | |||
| Cash paid during the year for income taxes | $ 23,014 | $ 13,275 | $ 3,981 |
GENERAL |
12 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| GENERAL |
NOTE 1 - GENERAL
Business Description:
Nova Ltd. (”Nova” or the “Parent Company”) was incorporated and commenced operations in 1993 in the design, development and production of process control systems, used in the manufacturing of semiconductors. Nova has wholly owned subsidiaries in the United States of America (the “U.S.”), Japan, Taiwan, Korea, China and Germany (together defined as the “Company”).
The Company's Chief Operating Decision Maker (CODM) is the Company's president and CEO. The Company operates in one operating segment.
On April 2, 2015, the Company completed the acquisition of 100% shares of ReVera Inc. (hereinafter – ReVera) a privately-held U.S. company. On December 31, 2017, ReVera, merged into Nova Measuring Instruments, Inc.
On January 25, 2022, the Company completed the acquisition of 100% shares of ancosys GmbH (hereinafter – ancosys) a privately-held German company.
The ordinary shares of the Company are traded on the NASDAQ Global Market since April 2000 and on the Tel-Aviv Stock Exchange since June 2002.
On June 24, 2021, the Company increased its authorized share capital to 60,000,000 Ordinary Shares and eliminated the par value of the Ordinary shares.
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SIGNIFICANT ACCOUNTING POLICIES |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SIGNIFICANT ACCOUNTING POLICIES |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America.
The following is a summary of the significant accounting policies, which were applied in the preparation of these financial statements, on a consistent basis:
The Company’s consolidated financial statements include the financial statements of Nova Ltd. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company's management evaluates its estimates on an ongoing basis, including those related to, but not limited to income taxes and tax uncertainties, collectability of trade accounts receivable, inventory accruals, fair value and useful lives of intangible assets, lease discount rate, lease period, and revenue recognition. These estimates are based on management's knowledge about current events and expectations about actions the Company may undertake in the future. Actual results could differ from those estimates.
The Company considered the impact of COVID-19 on the estimates and assumptions and determined that there were no material adverse impacts on the consolidated financial statements for the period ended December 31, 2022.
The currency of the primary economic environment in which the operations of the Company is conducted is the U.S. dollar (“dollar” or “USD”). Accordingly, the Company uses the dollar as its functional and reporting currency. Certain dollar amounts in the financial statements may represent the dollar equivalent of other currencies, including the New Israeli Shekel (“NIS”) and the Euro. Transactions and balances denominated in dollars are presented at their dollar amounts. Non-dollar transactions and balances are re-measured into dollars in accordance with the principles set forth in ASC 830, “Foreign Currency Translation”.
All transaction gains and losses of the re-measured monetary balance sheet items are reflected in the statements of operations as financial income or expenses, as appropriate.
On consolidation, the assets and liabilities of foreign operations with functional currency other than dollar are translated into dollars at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognized in other comprehensive income (“OCI”).
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.
Cash and cash equivalents represent short-term highly liquid investments (mainly interest-bearing deposits) with maturity dates not exceeding three months from the date of deposit. Restricted Cash consist primarily of cash used as collateral for the Company's office leases. Any cash that is legally restricted from use is classified as restricted cash.
The following table provides a summary of cash, cash equivalents and restricted cash that constitute the total amounts shown in the consolidated statements of cash flows:
Short-term bank deposits consist of bank deposits with original maturities of more than three months and up to twelve months.
The Company accounts for marketable securities in accordance with ASC Topic 320, “Investments – Debt Securities”. The Company’s investments in marketable securities consist of high-grade treasury, corporate and municipal bonds. Investments in marketable securities are classified as available for sale at the time of purchase. Available for sale securities are carried at fair value based on quoted market prices, with unrealized gains and losses, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sales of marketable securities, are included in financial income (expenses), net. The amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income (expenses), net.
Trade accounts receivables are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts, in accordance with ASC 326. The Company makes estimates of expected credit losses for based upon its assessment of various factors, including historical experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers.
The results of an acquired business in a business combination are included in the Company’s consolidated financial statements from the date of acquisition according to the guidance of ASC Topic 805, “Business Combinations.” The Company allocates the purchase price, which is the sum of the consideration provided and may consist of cash, equity or a combination of the two, to the identifiable assets and liabilities of the acquired business at their fair values as of the acquisition date. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill.
Following the adoption of ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” for all business combinations with acquisition date from January 1, 2022, the Company applies ASC 606 “Revenue from Contracts with Customer”, to recognize and measure contract assets and contract liabilities on the acquisition date.
Contingent consideration incurred in a business combination is included as part of the purchase price and recorded at a probability weighted assessment of the fair value as of the acquisition date. The fair value of the contingent consideration is re-measured at each reporting period, with any adjustments in fair value recognized in earnings under general and administrative expenses.
Acquisition related costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an expense in the period in which the costs are incurred.
Inventories are stated at the lower of cost or net realizable 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), the age of the inventory and the expected consumption of service spare parts. At the point of the loss recognition, a new lower cost basis for that inventory is established. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.
Inventory includes costs of products delivered to customers and not recognized as cost of revenues, where revenues in the related arrangements were not recognized.
To support the Company’s service operations, the Company maintains service spare parts inventory and reduce the net carrying value of this inventory over the service life.
Cost is determined as follows:
Depreciation methods, useful lives and residual values are reviewed at the end each reporting year and adjusted if appropriate.
Goodwill and other purchased intangible assets have been recorded as a result of the acquisition of ReVera and ancosys. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and identifiable intangible assets acquired, and related liabilities.
Goodwill is carried at cost and is not amortized, but rather is subject to an impairment test, in accordance with ASC 350, “Intangibles – Goodwill and Other”, at least annually (in the fourth quarter), or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. ASC 350 allows the Company to first perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value prior to performing the quantitative goodwill impairment test. The Company operates in one operating segment, and this segment comprises its only reporting unit.
Following the adoption of ASU 2017-04, "Simplifying the Test for Goodwill Impairment", any excess of the carrying value of the reporting unit over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to the fair value of the reporting unit.
Intangible assets with finite life (refer to note 2L for impairment assessment of intangible assets with finite life) are amortized over their useful lives using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used, or, if that pattern cannot be reliably determined, using a straight-line amortization method. There was no impairment of goodwill during the periods presented.
Long-lived assets (tangible and intangible assets with finite life), held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets (or asset Group) may not be recoverable. In the event that the sum of the expected future cash flows (undiscounted and without interest charges) of the long-lived assets is less than the carrying amount of such assets, an impairment charge would be recognized, and the assets (or asset Group) would be written down to their estimated fair values. During the years 2022, 2021 and 2020, no impairment losses have been identified.
Accrued warranty costs are calculated with respect to the warranty period on the Company’s products and are based on the Company’s prior experience and in accordance with management’s estimate. The estimated future warranty obligations are affected by the warranty periods, install base, labor and other related costs incurred in correcting a product failure.
ASC 815 requires the presentation of all derivatives as either assets or liabilities on the balance sheet and the measurement of those instruments at fair value.
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 gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
In addition to the derivatives that are designated and qualify as a cash flow hedge, the Company enters into certain foreign exchange forward and option transactions to hedge suppliers. Gains and losses related to such derivative instruments are recorded in financial income (expenses), net.
See Note 17 for disclosure of the derivative financial instruments in accordance with such pronouncements.
Under ASC 842, a contract is or contains a lease when the Company has the right to control the use of an identified asset for a period of time. The Company determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an underlying asset available for the Company’s use. On the commencement date leases are evaluated for classification and assets and liabilities are recognized based on the present value of lease payments over the lease term.
The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. The right-of-use (“ROU”) asset is initially measured as the amount of lease liability, adjusted for any initial lease costs, prepaid lease payments and any lease incentives. Costs incurred for common area maintenance, real estate taxes, and insurance are not included in the lease liability and are recognized as they are incurred.
The Company's leases include buildings and car leases, which are all classified as operating leases. Certain lease agreements include rental payments that are adjusted periodically for the consumer price index ("CPI"). The ROU and lease liability were calculated using the CPI as of the adoption date and will not be subsequently adjusted, unless the liability is reassessed for other reasons. Certain leases include renewal options that are under the Company's sole discretion. The renewal options were included in the ROU and liability calculation if it was reasonably assured that the Company will exercise the option.
As the Company’s lease arrangements do not provide an implicit rate, the Company uses its incremental estimated borrowing rate at lease commencement to measure ROU assets and lease liabilities. Operating lease expense is generally recognized on a straight-line basis over the lease term. For leases with a term of one year or less, the Company elected not to record the ROU asset or liability.
The Company accounts for its convertible senior notes in accordance with ASC 470-20 "Debt with Conversion and Other Options" including Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06) which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The Company adopted ASU 2020-06 using the modified retrospective method as of January 1, 2022. See also Note 11.
Prior to the adoption of the above-mentioned ASU 2020-06, issuers of certain convertible debt instruments, such as the Notes, that may be settled wholly or partially in cash upon conversion were required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The liability component at issuance was recognized at fair value, based on the fair value of a similar instrument of similar credit rating and maturity that does not have a conversion feature. The equity component was based on the excess of the principal amount of the convertible senior notes over the fair value of the liability component and was recorded in additional paid-in capital. The equity component, net of issuance costs and deferred tax effects was presented within additional paid-in-capital and was not remeasured as long as it continues to meet the conditions for equity classification. The difference between the principal amount and the liability component represents a debt discount that was amortized to financial expense over the respective terms of the Notes using an effective interest rate method. The Company allocated the total issuance costs incurred to the liability and equity components of the convertible senior notes based on their relative values. Issuance costs attributable to the liability and equity components were $5,894 and $518, respectively. Issuance costs attributable to the liability were netted against the principal balance and were amortized to financial expense using the effective interest method over the contractual term of the notes. The effective borrowing rate of the liability component of the notes (after deduction of the abovementioned issuance costs attributed to the liability component) was 2.365%. This borrowing rate was based on Company's synthetic credit risk rating.
Revenue Recognition Policy
The Company enters into revenue arrangements that include products and services which are distinct and accounted for as separate performance obligations. The Company determines whether promises are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether the Company's commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract.
The Company derives revenue from sales of advanced process control systems, spare parts, labor hours (mainly related to installation) and service contracts.
Revenues derived from sales of advanced process control systems, spare parts and labor hours are recognized at a point in time, when control of the promised goods or services is transferred to the customers, upon fulfillment of the contractual terms (typically upon shipment of the systems and spare parts or when the service is completed for labor hours).
Revenues derived from service contracts, are recognized ratably over time in accordance with the term of the contract since the Company has a stand-ready obligation to provide the service. Such contracts generally include a fixed fee.
Revenues from sales which were not yet determined to be final sales due to certain acceptance provisions are deferred.
Contracts with Multiple Performance Obligations
Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative Standalone Selling Price (“SSP”). Judgment is required to determine the SSP for each distinct performance obligation. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount to be allocated based on the relative SSP of the various products and services.
Remaining Performance Obligations Remaining performance obligations (RPOs) represent contracted revenues that had not yet been recognized and include deferred revenues and invoices that have been issued to customers but were uncollected and have not been recognized as revenues. As of December 31, 2022, the aggregate amount of the RPOs was $46,602, comprised of $30,543 deferred revenues and $16,059 of uncollected amounts that were not yet recognized as revenues. The Company expects the RPO to be recognized as revenues over the next year. Contract Balances
Contract balances are presented separately on the consolidated balance sheets.
Revenues recognized during 2022, 2021 and 2020 from deferred revenues amounts included in current liabilities at the beginning of the period amounted to $12,924, $3,651 and $1,544 respectively.
In certain arrangements, the Company receives payment from a customer either before or after the performance obligation has been satisfied. The expected timing difference between the payment and satisfaction of performance obligations for the Company’s contracts is one year or less; therefore, the Company applies a practical expedient and does not consider the effects of the time value of money.
Research and development costs are charged to operations as incurred. Amounts received or receivable from the Government of Israel through the Israeli Innovation Authority (“IIA”) or from the European Community as participation in certain research and development programs are offset against research and development costs. The accrual for grants receivable is determined based on the terms of the programs, provided that the criteria for entitlement are expected to be met. Research and development grants recognized during the years ended December 31, 2022, 2021 and 2020 were $3,064, $4,395 and $5,645 respectively.
The Company accounts for income taxes utilizing the asset and liability method in accordance with ASC 740, “Income Taxes”. Current tax liabilities are recognized for the estimated taxes payable on tax returns for the current year. Deferred tax liabilities or assets are recognized for the estimated future tax effects attributable to temporary differences between the income tax bases of assets and liabilities and their reported amounts in the financial statements, and for tax loss carryforwards.
Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax laws, and deferred tax assets are reduced, if necessary, by the amount of tax benefits, the realization of which is not considered more likely than not based on available evidence.
ASC 740-10 requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement.
The Company accounts for equity-based compensation using ASC 718 “Compensation - Stock Compensation,” which requires companies to recognize the cost of employee services received in exchange for awards of equity instruments based upon the grant-date fair value of those awards.
Share Options
In 2022 the Company did not grant share options.
The Company policy, under ASC 718, the fair market value of each option grant is estimated on the date of grant using the “Black-Scholes option pricing” method with the following weighted-average assumptions as relevant for prior years:
Expected volatility was calculated based on actual historical share price movements over a term that is equivalent to the expected term of granted options. The expected term of options granted is based on historical experience and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends.
The Company recognizes compensation expenses for the value of awards granted, based on the accelerated method. The Company account for forfeitures as they occur. Restricted Share Units
The Company recognizes the fair value of Restricted Share Units (“RSUs”) on the grant date based on the market value of the underlying share and the expense is recognized over the requisite service period for awards using the accelerated method.
Earnings per share are presented in accordance with ASC 260-10, “Earnings per Share”. Pursuant to which, basic earnings per share excludes the dilutive effects of convertible securities and is computed by dividing income (loss) available to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, net of treasury shares. Diluted earnings per share reflect the potential dilutive effect of options and RSUs. The number of potentially dilutive options and RSUs excluded from diluted earnings per share due to the anti-dilutive effect of out of the money options amounted to 265,085 in 2022, 336,857 in 2021 and 492,963 in 2020.
Subsequent to the modified retrospective adoption of ASU 2020-06 (see note 2P), as of January 1, 2022, diluted earnings per share reflect the full dilutive effect of the Convertible Senior Notes. In 2021 and 2020, prior to the adoption of ASU 2020-06, shares amounted to 2,055,641 and 2,680,965 in 2021 and 2020 respectively, underlying the conversion option of the Convertible Senior Notes were not considered in the calculation of earnings per share.
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, bank deposits, marketable securities, trade accounts receivable and foreign currency derivative contracts.
The majority of the Company’s cash and cash equivalents and bank deposits are invested in dollar instruments with major banks in Israel. Management believes that the financial institutions that hold the Company's investments are corporations with high credit standing. Accordingly, management believes that low credit risk exists with respect to these financial investments.
The trade accounts receivable of the Company are derived from sales to customers located primarily in Taiwan R.O.C., Korea, China and USA. The management of the Company performed risk assessment on an ongoing basis and believes it bears low risk.
The Company entered into options and forward contracts to hedge against the risk of overall changes in future cash flow from payments of payroll and related expenses as well as other expenses denominated in NIS. The derivative instruments hedge a portion of the Company's non-dollar currency exposure. Counterparty to the Company’s derivative instruments is major financial institution.
The Company's debt marketable securities include investments in highly rated corporate debentures and governmental bonds. The financial institutions that hold the Company's debt marketable securities are major financial institutions located in the United States. The Company believes its debt marketable securities portfolio is a diverse portfolio of highly rated securities and the Company's investment policy limits the amount the Company may invest in an issuer.
The fair values of the Company’s cash and cash equivalents, short-term interest-bearing bank deposits, trade accounts receivable, and accounts payable approximate their carrying amounts due to their short-term nature.
The Company follows the provisions of ASC No. 820, “Fair Value Measurement” (“ASC 820”), which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
In determining a 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 an asset or liability, based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect assumptions that market participants would use in pricing an asset or liability, based on the best information available under given circumstances.
The hierarchy is broken down into three levels, based on the observability of inputs and assumptions, as follows:
Level 1 - Observable inputs obtained from independent sources, such as quoted prices for identical assets and liabilities in active markets.
Level 2 - Other inputs that are directly or indirectly observable in the market place.
Level 3 - Unobservable inputs which are supported by little or no market activity.
In accordance with ASC 820, the Company measures its marketable securities, at fair value using the market approach valuation technique. Marketable securities are classified within Level 2 because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
The estimated fair values of the derivative instruments are determined based on market rates to settle the instruments. The fair value of the Company’s derivative contracts (including forwards and options) is determined using standard valuation models. The significant inputs used in these models are readily available in public markets or can be derived from observable market transactions and, therefore, the Company’s derivative contracts have been classified as Level 2.
Inputs used in these standard valuation models include the applicable spot, forward, and discount rates. The standard valuation model for the Company options contracts also includes implied volatility, which is specific to individual options and is based on rates quoted from a widely used third-party resource.
The Company’s cash and cash equivalents, Interest-bearing bank deposits and restricted interest-bearing bank deposits are classified within level 1. Marketable securities, Derivative instruments and Convertible senior notes classified within Level 2 (see Note 4, Note 17 and Note 11, respectively).
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| BUSINESS COMBINATION |
NOTE 3 - BUSINESS COMBINATION
On January 25, 2022 , the Company acquired all of the outstanding shares of ancosys GmbH. (“ancosys”), a provider of chemical analysis and metrology solutions for semiconductor manufacturing for a cash amount of $81,708. The results of operations of ancosys were consolidated in the Company’s financial statements commencing the date of acquisition.
The agreement stipulated additional performance-based contingent consideration to shareholders of ancosys in an aggregate amount of up to $10,115 to be paid during 2022. The fair-value of the contingent consideration as of the acquisition date was $8,480 and measured based on the estimated future cash outflows, utilizing the Risk Neutral Probabilities Method. As of December 31, 2022, the performance-based contingent consideration was fully paid.
The following table summarizes the fair value of the consideration transferred to ancosys shareholders as of the acquisition date:
The table below summarizes the fair value of the acquired assets and assumed liabilities and the resulting goodwill as of the acquisition date:
Goodwill is primarily attributable to expected synergies arising from technology integration and expanded product availability to the Company’s existing and new customers. Goodwill is not deductible for income tax purpose. The Company incurred approximately $1,360 in acquisition-related expenses and $1,635 in contingent consideration revaluation for the year ended December 31, 2022, recorded under general and administrative expenses. The contingent consideration was paid in full during 2022. Pro forma results of operations related to this acquisition have not been presented because they are not material to the Company’s consolidated statements of operations. The amounts of revenue and earning of the acquiree since the acquisition date included in the consolidated income statements for the reporting period. |
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MARKETABLE SECURITIES |
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| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MARKETABLE SECURITIES |
NOTE 4 - MARKETABLE SECURITIES
The following is a summary of marketable securities amortized cost, unrealized gains, unrealized losses, and fair value as of December 31, 2022:
The following is a summary of marketable securities amortized cost, unrealized gains, unrealized losses, and fair value as of December 31, 2021:
Proceeds from maturity of available-for-sale marketable securities during the year ended December 31, 2022, were $80,391.
Proceeds from sales of available-for sale marketable securities during the year ended December 31, 2022, were $934 which led to $68 realized losses. The Company had no proceeds from sales of available-for sale marketable securities during the year ended December 31, 2021, therefore no realized gains or losses from the sale of available-for-sale marketable securities were recognized.
Out of the $8,087 unrealized loss as of December 31, 2022, unrealized loss of $1,191 was included in the unrealized loss balance as of December 31, 2021. |
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INVENTORIES |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORIES |
NOTE 5 - INVENTORIES
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OTHER CURRENT ASSETS |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHER CURRENT ASSETS |
NOTE 6 - OTHER CURRENT ASSETS
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PROPERTY AND EQUIPMENT, NET |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT, NET |
NOTE 7 - PROPERTY, PLANT AND EQUIPMENT, NET
Depreciation expenses amounted to $8,621, $6,475 and $5,875 for the years ended December 31, 2022, 2021 and 2020, respectively. |
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INTANGIBLE ASSETS |
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS |
NOTE 8 - INTANGIBLE ASSETS
Intangible assets originated from the acquisition of ReVera on April 2, 2015, and the acquisition of ancosys on January 25, 2022. The following is a summary of intangible assets as of December 31, 2022 and 2021:
Amortization expenses amounted as following:
Annual amortization expenses are expected as follows:
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OTHER CURRENT LIABILITIES |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHER CURRENT LIABILITIES |
NOTE 9 - OTHER CURRENT LIABILITIES
A. Consists of:
B. Accrued Warranty Costs:
The Company provides standard warranty coverage on its systems. Parts and labor are covered under the terms of the warranty agreement. The Company accounts for the estimated warranty cost as a charge to costs of revenues when revenue is recognized.
Accrued warranty costs presented in:
The following table provides the changes in the product warranty accrual for the fiscal years ended December 31, 2022 and 2021:
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LIABILITY FOR EMPLOYEE SEVERANCE PAY, NET |
12 Months Ended |
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Dec. 31, 2022 | |
| Postemployment Benefits [Abstract] | |
| LIABILITY FOR EMPLOYEE SEVERANCE PAY, NET |
NOTE 10 - LIABILITY FOR EMPLOYEE SEVERANCE PAY, NET
Israeli law and labor agreements determine the obligations of the Company to make severance payments to dismissed employees and to employees leaving employment under certain other circumstances. The obligation for severance pay benefits, as determined by Israeli law, is based upon length of service and the employee’s most recent salary. The liability is partially covered through insurance policies purchased by the Company and deposits in a severance fund.
The deposited funds include profits accumulated 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, 1963 or labor agreements.
Since July 2008, the Company's agreements with new Israeli employees are under Section 14 of the Israeli Severance Pay Law, 1963. The Company's contributions for severance pay have replaced its severance obligation.
Upon contribution of the full amount of the employee's monthly salary for each year of service, no additional calculations are conducted between the parties regarding the matter of severance pay and no additional payments are made by the Company to the employee.
Labor agreements in Taiwan determine the obligations of the Company to make severance payments to dismissed employees and to employees leaving employment under certain other circumstances. The obligation for severance pay benefits is based upon length of service and the employee’s average salary.
Severance pay expenses for the years ended December 31, 2022, 2021 and 2020, amounted to $1,114, $818 and $617, respectively (excluding the Company’s contributions for severance pay under section 14).
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CONVERTIBLE SENIOR NOTES, NET |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONVERTIBLE SENIOR NOTES, NET |
NOTE 11 - CONVERTIBLE SENIOR NOTES, NET
In October 2020, the Company issued $175,000 aggregate principal amount, 0% coupon rate, of convertible senior notes due 2025 and an additional $25,000 aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment option of the initial purchasers (collectively, “Convertible Notes” or “Notes”).
The Convertible Notes are convertible based upon an initial conversion rate of 13.4048 of the Company’s ordinary shares per $1,000 principal amount of Convertible Notes (equivalent to a conversion price of approximately $74.60 per ordinary share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events. The Convertible Notes are senior unsecured obligations of the Company.
The Convertible Notes will mature on October 15, 2025, (the "Maturity Date"), unless earlier repurchased, redeemed or converted. Prior to July 15, 2025, a holder may convert all or a portion of its Convertible Notes only under the following circumstances:
On or after July 15, 2025 until the close of business on the second scheduled trading day immediately preceding the Maturity Date, a holder may convert its Convertible Notes at any time, regardless of the foregoing circumstances.
Upon conversion, the Company can pay or deliver cash, ordinary shares or a combination of cash and ordinary shares, at the Company’s election.
The Company may not redeem the notes prior to October 20, 2023, except in the event of certain tax law changes. The Company may, at any time and from time to time, redeem for cash all or any portion of the notes, at the Company's option, on or after October 20, 2023, if the last reported sale price of the Company`s ordinary shares has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which it delivers notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, (plus accrued and unpaid special interest (if any) to, but excluding, the redemption date).
Upon the occurrence of a Fundamental Change as defined in the Indenture, holders may require the Company to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes, (plus accrued and unpaid special interest payable under certain circumstances set forth in the terms of the Convertible Notes (if any) to, but excluding, the fundamental change repurchase date). In addition, in connection with a make-whole fundamental change (as defined in the Indenture), or following our delivery of a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event or redemption, as the case may be.
As of December 31, 2022, condition 1 as stated above has not been met, as the Company share price did not exceeded the abovementioned threshold. The Notes are therefore non-convertible as of December 31, 2022 and are classified as non-current liability.
As of December 31, 2021, condition 1 as stated above has been met, as the Company share price exceeded the abovementioned threshold. The Notes were therefore convertible as of December 31, 2021, and were classified as current liability.
The adoption of ASU 2020-06 (see Note 2P) resulted in:
The adoption of this new guidance reduced interest expense by $3,053 in 2022. In addition, the required use of the if-converted method by the new guidance in calculating diluted earnings per share increased the number of potentially dilutive shares in 2022 by 2,055,641 shares compared to the potentially dilutive shares used in 2021 calculation of earnings per share. In connection with the adoption, the Company calculated an effective interest rate of 0.7%. The net carrying amount of the liability and equity components of the Convertible Notes as of December 31, 2022 and December 31, 2021 are as follows:
Interest expense related to the Convertible Notes was as follows:
As of December 31, 2022, the total estimated fair value of the convertible senior notes was approximately $245,000. The fair value of the convertible senior notes is considered to be Level 2 within the fair value hierarchy and was determined based on quoted price of the convertible senior notes in an over-the-counter market.
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LEASES |
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Lessee Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES |
NOTE 12 - LEASES
The Company has operating leases for facilities and vehicles. The Company recognized Operating lease right-of-use assets of $44,885 and corresponding operating lease current liabilities of $5,968, and non-current liabilities of $43,697, as of December 31, 2022. The Company’s leases have remaining terms of 1 to 8 years, some of which include options to extend the leases for up to additional 10 years. The weighted average remaining lease term was 13.8 years, and the weighted average discount rate was 3.7% as of December 31, 2022.
Lease expenses amounted to $8,194, $3,935 and $4,654 for the years ended December 31, 2022, 2021 and 2020, respectively. The expected discounted and undiscounted lease payments under non-cancelable leases as of December 31, 2022, excluding non-lease components, were as follows:
Operating cash flows for operating leases amounted to $6,450, $4,134 and $5,840 for the years ended December 31, 2022, 2021 and 2020, respectively. |
COMMITMENTS AND CONTINGENCIES |
12 Months Ended |
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Dec. 31, 2022 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES |
NOTE 13 - COMMITMENTS AND CONTINGENCIES
The Company is obligated under certain agreements with its suppliers to purchase specified items of inventory which are expected to be utilized during the years 2023-2025. As of December 31, 2022, non-cancelable purchase obligations were approximately $152,000.
From time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated the Company would accrue a liability for the estimated loss. As of December 31, 2022 and 2021, the Company is not involved in any material claims or legal proceedings which require accrual of liability for the estimated loss. |
SHAREHOLDERS' EQUITY |
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| Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHAREHOLDERS' EQUITY |
NOTE 14 -
SHAREHOLDERS’ EQUITY
Holders of ordinary shares are entitled to participate equally in the payment of cash dividends and bonus shares (stock dividends) and, in the event of the liquidation of the Company, in the distribution of assets after satisfaction of liabilities to creditors. Each ordinary share is entitled to one vote on all matters to be voted on by shareholders.
In March 2022, the Company announced a $100 million repurchase program of the Company’s ordinary shares. Through December 31, 2022, the Company spent an aggregate of $21,416 million to repurchase 251,738 ordinary shares under the Company’s share repurchase program.
All treasury shares have been canceled as of the end of each respective year.
The Company’s Board of directors approves, from time to time, equity-based incentive plans, the last of which was approved in August 2017. Equity-based incentive plans include stock options, restricted share units and restricted stock awards to employees, officers and directors.
Share-based compensation
The following table summarizes the effects of share-based compensation resulting from the application of ASC 718 included in the Statements of Operations as follows:
As of December 31, 2022, there was $209 of total unrecognized compensation cost related to non-vested employee options and $23,514 of total unrecognized compensation cost related to non-vested employee RSUs. These costs are generally expected to be recognized over a period of four years.
Shares Options
Share options vest over four years and their contractual term may not exceed 10 years. The exercise price is the market price at the date of each grant.
During 2022, the Company did not grant share options. The weighted average fair value (in dollars) of the options granted during 2021 and 2020, according to Black-Scholes option-pricing model, amounted to $35.94 and $15.46 per option, respectively.
Summary of the status of the Company’s share option plans as of December 31, 2022, as well as changes during the year then ended, is presented below:
The aggregate intrinsic value represents the total intrinsic value (the difference between the Company's closing share market price on the last trading day of the fiscal 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 trading day of the fiscal year. This amount changes based on the fair market value of the Company's shares.
The total intrinsic value of options outstanding as of December 31, 2022 and 2021 was $15,271 and $58,835, respectively. The total intrinsic value of options exercisable as of December 31, 2022 and 2021 was $12,956 and $41,117, respectively. The total intrinsic value of options exercised during the years 2022, 2021 and 2020 was $14,523, $18,571 and $10,463 respectively.
The following table summarizes information about share options outstanding as of December 31, 2022:
Restricted Share Units
Restricted Share Units (“RSU”) grants are rights to receive shares of the Company's ordinary shares on a one-for-one basis and are not entitled to dividends or voting rights, if any, until they are vested. RSU’s vesting schedules are 25% on each of the first, second, third and fourth anniversaries of the grant date, or, 33% on each of the first, second, and third anniversaries of the grant date. The fair value of such RSU grants is being recognized based on the accelerated method over the vesting period. Performance based RSU grants vest over a period of 3 years and are subject to certain performance criteria; accordingly, compensation expense is recognized for such awards when it becomes probable that the related performance condition will be satisfied.
The total intrinsic value of RSUs vested during the years 2022, 2021 and 2020 was $16,907, $17,341 and $6,344, respectively. |
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INCOME TAXES |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES |
NOTE 15 - INCOME TAXES
As a "Controlled Foreign Cooperation" (as defined in the Israeli Law for the Encouragement of Capital Investments-1959), the Company's management has elected to apply Income Tax Regulations (Rules for Maintaining Accounting Records of Foreign Invested Companies and Certain Partnerships and Determining Their Taxable Income)-1986. Accordingly, its taxable income or loss is calculated in US Dollars.
Part of the Company’s investment in equipment has received approvals in accordance with the Law for the Encouragement of Capital Investments, 1959 (“Approved Enterprise” status) in three separate investment plans. The Company has chosen to receive its benefits through the “Alternative Benefits” track, and, as such, is eligible for various benefits. These benefits include accelerated depreciation of fixed assets used in the investment program, as well as a full tax exemption on undistributed income in relation to income derived from the first plan for a period of 4 years and for the second and third plans for a period of 2 years. Thereafter a reduced tax rate of 25% will be applicable for an additional period of up to 3 years for the first plan and 5 years for the second and third plans, commencing with the date on which taxable income is first earned but not later than certain dates. The benefit period of the second and third plan have commenced. On April 1, 2005, an amendment to the Investment Law came into effect (“the Amendment”) and has significantly changed the provisions of the Investment Law. The Amendment limits the scope of enterprises which may be approved by the Investment Center by setting criteria for the approval of a facility as a Privileged Enterprise, such as provisions generally requiring that at least 25% of the Privileged Enterprise’s Income will be derived from export. Additionally, the Amendment enacted major changes in the manner in which tax benefits are awarded under the Investment Law so that companies no longer require Investment Center approval in order to qualify for tax benefits.
However, the Investment Law provides that terms and benefits included in any certificate of approval already granted will remain subject to the provisions of the law as they were on the date of such approval. Therefore, the Israeli companies with Approved Enterprise status will generally not be subject to the provisions of the Amendment.
The entitlement to the above benefits is conditional upon the Company fulfilling the conditions stipulated by the above law, regulations published thereunder and the instruments of approval for the specific investments in "Approved Enterprises". In the event of failure to comply with these conditions, the benefits may be canceled, and the Company may be required to refund the amount of the benefits, in whole or in part, including interest.
In the event of distribution by the Company of a cash dividend out of retained earnings that were tax exempt due to its Approved Enterprise status, the Company would have to pay corporate tax of 10% - 25% on the income from which the dividend was distributed based on the extent to which non-Israeli shareholders hold Company’s shares. A 15% withholding tax may be deducted from dividends distributed to the recipients.
On November 15, 2021 a new amendment of the Investment Law (“the Amendment’) was enacted (i) providing a reduced corporate income tax on the Trapped Profits distributed within a year from such amendment. The reduced corporate income tax is based on a certain formula and subject to reinvestment of certain amounts in enumerated assets/activities; (ii) harshening the rules with respect to determining the profits from which a dividend was distributed and providing that part of any dividend distribution, will be deemed as distributed from the Trapped Profits, according to a certain formula.
During December 2021, as part of the Tax Assessment audit for the years 2016-2019, the Company entered into an agreement with the Israeli Tax Authorities and opted-in with the new Amendment. The reduced corporate income tax on the Trapped Profits resulted in income tax expenses (net of reductions of uncertain tax positions provisions) of approximately $3.7M, and was included in the 2021 consolidated statements of operations.
In 2008, the Company submitted a request to approve a new plan (fourth plan) as a Privileged Enterprise in accordance with the Amendment to the Investment Law. The commencing year was 2010, and the expiration year was 2021.
In 2011, new legislation amending to the Investment Law was adopted. Under this new legislation, a uniform corporate tax rate will apply to all qualifying income of certain Industrial Companies (Requirement of a minimum export of 25% of the company's total turnover), as opposed to the current law's incentives, which are limited to income from Approved Enterprises during their benefits period. Under the new law, the uniform tax rate will be 10% in areas in Israel designated as Development Zone A and 15% elsewhere in Israel during 2011-2012, 7% and 12.5%, respectively, in 2013-2014, and 6% and 12%, respectively thereafter. The profits of these Industrial Companies will be freely distributable as dividends, subject to a 15% withholding tax (or lower, under an applicable tax treaty). Under the transition provisions of the new legislation, the Company may decide to irrevocably implement the new law while waiving benefits provided under the current law or to remain subject to the current law. In August 2013 "The Arrangements Law" (hereinafter—"the Law") was officially published. The following significant changes affecting taxation were approved:
1. The tax rate on a company in Development area A, effective January 1, 2014 is 9% (instead of 7% in 2014 and 6% in 2015 and thereafter), and the tax rate for companies in all other areas will be 16% (instead of 12.5% in 2014 and 12% in 2015 and thereafter).
2. The tax rate on dividend distributed, generated from "preferred income" or by a company that has an approved enterprise increased effective January 1, 2014 from 15% to 20%.
In 2016, most of the Company’s taxable income in Israel was attributable to Preferred Enterprises, with a related tax rate of 16%. In 2015 and 2014, most of the Company’s taxable income in Israel was attributable to Approved Enterprise programs with zero tax.
In December 2016, the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which includes Amendment 73 to the Law for the Encouragement of Capital Investments ("the 2017 Amendment") was published. According to the 2017 Amendment, Technological preferred enterprise, as defined in the Law for the Encouragement of Capital Investments, 1959 ("the Encouragement Law"), with total consolidated revenues of less than NIS 10 billion, shall be subject to 12% tax rate on income deriving from intellectual property (in development area A - a tax rate of 7.5%).
Any dividends distributed deriving from income from the preferred technological enterprises will be subject to tax at a rate of 20%. The 2017 Amendment further provides that, in certain circumstances, a dividend distributed to a foreign corporate shareholder, would be subject to a 4% tax rate (if the percentage of foreign investors exceeds 90%).
The Company assessed the criteria for qualifying to a “Preferred Technological Enterprise,” status and concluded that the Israeli entity is entitled to the above-mentioned benefits. The Company implemented the new incentives in its tax calculations starting 2017.
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “US Tax Act”) that instituted fundamental changes to the taxation of multinational corporations. The Tax Act includes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%, adjustments to rules relating to limitations on the deductibility of interest expense and executive compensation, the transition of U.S. international taxation from a worldwide tax system to a territorial tax system, foreign derived intangible income deduction, rules that impact the utilization of US NOLs and other corporate tax provisions. Foreign-Derived Intangible Income:
The 2017 Tax Act provides tax incentives to U.S. companies to earn income from the sale, lease or license of goods and services abroad (i.e., the portion of a domestic corporation’s intangible income that is derived from serving foreign markets) in the form of a deduction for foreign-derived intangible income (“FDII”). FDII is taxed at an effective rate of 13.125% for taxable years beginning after December 31, 2017 and at an effective rate of 16.406% for taxable years beginning after December 31, 2025. The accounting for the deduction for FDII is similar to a special deduction and should be accounted for based on the guidance in ASC 740-10-25-37. The tax benefits for special deductions ordinarily are recognized no earlier than the year in which they are deductible on a tax return.
In 2022 Congress enacted the CHIPS and Science Act. Among other provisions, the law includes an "advanced manufacturing investment credit". This is a 25% investment tax credit for investments in semiconductor manufacturing and includes incentives for the manufacturing of semiconductors, as well as for manufacturing of specialized tooling equipment required in the semiconductor manufacturing process. Taxpayers are allowed to treat the credit as a payment against tax ("direct pay").
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.
Deferred tax assets
Significant components of the deferred tax assets are as follows
Deferred tax assets by domestic and foreign are as follows:
Under ASC 740-10, deferred tax assets are to be recognized for the anticipated tax benefits associated with net operating loss and tax credits carry-forwards and deductible temporary differences; unless it is more-likely-than-not that some or all of the deferred tax assets will not be realized.
Deferred Tax liability
The $12,190 deferred tax liability as of December 31, 2022, is due to the intangible assets acquired in the business combination, see note 3 above.
The following is a reconciliation of the theoretical tax expense, assuming that all income is taxed at the ordinary statutory average corporate tax rate in Israel and the actual tax expense in the statement of operations, is as follows:
The Company’s effective tax rates differ from the statutory rates applicable to the Company for tax year 2022, primarily due to stock-based compensation deductible expenses, tax credits and foreign derived intangible income benefit in the US.
The Company’s effective tax rates differ from the statutory rates applicable to the Company for tax year 2021, primarily due to stock-based compensation deductible expenses, tax credits and foreign derived intangible income benefit in the US.
In December 2021 the Parent Company has received final tax assessments for the years 2016-2019 from the Israeli Tax Authorities.
For the US subsidiary, with regards to any tax years starting 2015 and any tax attributes carryforwards from prior periods remain subject to examination in future periods (under the standard US statute of limitation and subject to tax filing).
In 2019, Ancosys GmbH received final tax assessments for the years 2014-2016.
The other subsidiaries received final tax assessments through tax years 2012 until 2016.
The Company considers the earnings of certain subsidiaries to be indefinitely invested outside Israel on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and the Company’s specific plans for reinvestment of those subsidiary earnings. The Company has not recorded a deferred tax liability of approximately $26,432 related to the Israel income taxes of undistributed earnings of foreign subsidiaries indefinitely invested outside Israel. Should the Company decide to repatriate the foreign earnings, the Company would need to adjust the Company’s income tax provision in the period the Company determined that the earnings will no longer be indefinitely invested outside Israel.
The taxation of the Company's business is subject to the application of multiple and sometimes conflicting tax laws and regulations as well as multinational tax conventions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.
In addition, the Company classifies interest and penalties recognized in the financial statements relating to uncertain tax position under the income taxes line item.
Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation and the evolution of regulations and court rulings. Consequently, taxing authorities may impose tax assessments or judgments against the Company that could materially impact its tax liability and/or its effective income tax rate.
The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to tax audits and settlement. The final tax outcome of its tax audits could be different from that which is reflected in the Company’s income tax provisions and accruals. Such differences could have a material effect on the Company’s income tax provision and net income in the period in which such determination is made.
The following table summarizes the changes in uncertain tax positions:
* The amounts for the years ended December 31, 2022 and 2021 includes $2,590 and $2,412 unrecognized tax benefits, respectively, which are presented as a reduction from deferred tax assets, see Note 15e.
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expenses.
Income not eligible for benefits under the New Technological Enterprise Laws mentioned in ”C” above are taxed at the corporate tax rate of 23%. |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GEOGRAPHIC AREAS AND MAJOR CUSTOMERS |
NOTE 16 - GEOGRAPHIC AREAS AND MAJOR CUSTOMERS
Revenues are attributed to countries based on the geographic location of the customer.
(*) Long-lived assets are comprised of property, plant and equipment, net and operating lease right-of-use assets.
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FINANCIAL INSTRUMENTS |
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| Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCIAL INSTRUMENTS |
NOTE 17 - FINANCIAL INSTRUMENTS
The Company enters into forward contracts, and currency options to hedge its balance sheet exposure as well as certain future cash flows in connection with certain operating expenses (mainly payroll and related expenses) and forecast transactions which are expected to be denominated mainly in New Israeli Shekel ("NIS"). The Company is exposed to losses in the event of non-performance by counterparties to financial instruments; however, as the counterparties are major Israeli banks, credit risk is considered immaterial. The Company does not hold or issue derivatives for trading purposes. The notional amounts of the hedging instruments as of December 31, 2022 and December 31, 2021 were $85,293, and $32,590 respectively. The terms of all of these currency derivatives are less than one year.
The fair value of derivative contracts as of December 31, 2022 and December 31, 2021 was as follows:
The impact of derivative instrument on total operating expenses in the year ended December 31, 2022, 2021 and 2020 was:
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FINANCIAL INCOME (EXPENSE), NET |
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| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCIAL INCOME (EXPENSE), NET |
NOTE 18 - FINANCIAL INCOME (EXPENSE), NET
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SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of Consolidation and Basis of Presentation |
The Company’s consolidated financial statements include the financial statements of Nova Ltd. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
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| Use of Estimates in the Preparation of Financial Statements |
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company's management evaluates its estimates on an ongoing basis, including those related to, but not limited to income taxes and tax uncertainties, collectability of trade accounts receivable, inventory accruals, fair value and useful lives of intangible assets, lease discount rate, lease period, and revenue recognition. These estimates are based on management's knowledge about current events and expectations about actions the Company may undertake in the future. Actual results could differ from those estimates.
The Company considered the impact of COVID-19 on the estimates and assumptions and determined that there were no material adverse impacts on the consolidated financial statements for the period ended December 31, 2022.
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| Financial Statements in U.S. Dollars |
The currency of the primary economic environment in which the operations of the Company is conducted is the U.S. dollar (“dollar” or “USD”). Accordingly, the Company uses the dollar as its functional and reporting currency. Certain dollar amounts in the financial statements may represent the dollar equivalent of other currencies, including the New Israeli Shekel (“NIS”) and the Euro. Transactions and balances denominated in dollars are presented at their dollar amounts. Non-dollar transactions and balances are re-measured into dollars in accordance with the principles set forth in ASC 830, “Foreign Currency Translation”.
All transaction gains and losses of the re-measured monetary balance sheet items are reflected in the statements of operations as financial income or expenses, as appropriate.
On consolidation, the assets and liabilities of foreign operations with functional currency other than dollar are translated into dollars at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognized in other comprehensive income (“OCI”).
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date. |
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| Cash, Cash Equivalents and Restricted Cash |
Cash and cash equivalents represent short-term highly liquid investments (mainly interest-bearing deposits) with maturity dates not exceeding three months from the date of deposit. Restricted Cash consist primarily of cash used as collateral for the Company's office leases. Any cash that is legally restricted from use is classified as restricted cash.
The following table provides a summary of cash, cash equivalents and restricted cash that constitute the total amounts shown in the consolidated statements of cash flows:
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| Short Term Bank Deposit |
Short-term bank deposits consist of bank deposits with original maturities of more than three months and up to twelve months.
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| Marketable Securities |
The Company accounts for marketable securities in accordance with ASC Topic 320, “Investments – Debt Securities”. The Company’s investments in marketable securities consist of high-grade treasury, corporate and municipal bonds. Investments in marketable securities are classified as available for sale at the time of purchase. Available for sale securities are carried at fair value based on quoted market prices, with unrealized gains and losses, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sales of marketable securities, are included in financial income (expenses), net. The amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income (expenses), net.
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| Trade accounts receivables |
Trade accounts receivables are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts, in accordance with ASC 326. The Company makes estimates of expected credit losses for based upon its assessment of various factors, including historical experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers.
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| Business Combination |
The results of an acquired business in a business combination are included in the Company’s consolidated financial statements from the date of acquisition according to the guidance of ASC Topic 805, “Business Combinations.” The Company allocates the purchase price, which is the sum of the consideration provided and may consist of cash, equity or a combination of the two, to the identifiable assets and liabilities of the acquired business at their fair values as of the acquisition date. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill.
Following the adoption of ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” for all business combinations with acquisition date from January 1, 2022, the Company applies ASC 606 “Revenue from Contracts with Customer”, to recognize and measure contract assets and contract liabilities on the acquisition date.
Contingent consideration incurred in a business combination is included as part of the purchase price and recorded at a probability weighted assessment of the fair value as of the acquisition date. The fair value of the contingent consideration is re-measured at each reporting period, with any adjustments in fair value recognized in earnings under general and administrative expenses.
Acquisition related costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an expense in the period in which the costs are incurred. |
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| Inventories |
Inventories are stated at the lower of cost or net realizable 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), the age of the inventory and the expected consumption of service spare parts. At the point of the loss recognition, a new lower cost basis for that inventory is established. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.
Inventory includes costs of products delivered to customers and not recognized as cost of revenues, where revenues in the related arrangements were not recognized.
To support the Company’s service operations, the Company maintains service spare parts inventory and reduce the net carrying value of this inventory over the service life.
Cost is determined as follows:
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| Property, Plant and Equipment |
Depreciation methods, useful lives and residual values are reviewed at the end each reporting year and adjusted if appropriate.
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| Goodwill and Intangible Assets |
Goodwill and other purchased intangible assets have been recorded as a result of the acquisition of ReVera and ancosys. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and identifiable intangible assets acquired, and related liabilities.
Goodwill is carried at cost and is not amortized, but rather is subject to an impairment test, in accordance with ASC 350, “Intangibles – Goodwill and Other”, at least annually (in the fourth quarter), or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. ASC 350 allows the Company to first perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value prior to performing the quantitative goodwill impairment test. The Company operates in one operating segment, and this segment comprises its only reporting unit.
Following the adoption of ASU 2017-04, "Simplifying the Test for Goodwill Impairment", any excess of the carrying value of the reporting unit over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to the fair value of the reporting unit.
Intangible assets with finite life (refer to note 2L for impairment assessment of intangible assets with finite life) are amortized over their useful lives using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used, or, if that pattern cannot be reliably determined, using a straight-line amortization method. There was no impairment of goodwill during the periods presented.
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| Impairment of Long-Lived Assets |
Long-lived assets (tangible and intangible assets with finite life), held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets (or asset Group) may not be recoverable. In the event that the sum of the expected future cash flows (undiscounted and without interest charges) of the long-lived assets is less than the carrying amount of such assets, an impairment charge would be recognized, and the assets (or asset Group) would be written down to their estimated fair values. During the years 2022, 2021 and 2020, no impairment losses have been identified.
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| Accrued Warranty Costs |
Accrued warranty costs are calculated with respect to the warranty period on the Company’s products and are based on the Company’s prior experience and in accordance with management’s estimate. The estimated future warranty obligations are affected by the warranty periods, install base, labor and other related costs incurred in correcting a product failure.
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| Derivative Financial Instruments |
ASC 815 requires the presentation of all derivatives as either assets or liabilities on the balance sheet and the measurement of those instruments at fair value.
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 gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
In addition to the derivatives that are designated and qualify as a cash flow hedge, the Company enters into certain foreign exchange forward and option transactions to hedge suppliers. Gains and losses related to such derivative instruments are recorded in financial income (expenses), net.
See Note 17 for disclosure of the derivative financial instruments in accordance with such pronouncements. |
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| Leases |
Under ASC 842, a contract is or contains a lease when the Company has the right to control the use of an identified asset for a period of time. The Company determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an underlying asset available for the Company’s use. On the commencement date leases are evaluated for classification and assets and liabilities are recognized based on the present value of lease payments over the lease term.
The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. The right-of-use (“ROU”) asset is initially measured as the amount of lease liability, adjusted for any initial lease costs, prepaid lease payments and any lease incentives. Costs incurred for common area maintenance, real estate taxes, and insurance are not included in the lease liability and are recognized as they are incurred.
The Company's leases include buildings and car leases, which are all classified as operating leases. Certain lease agreements include rental payments that are adjusted periodically for the consumer price index ("CPI"). The ROU and lease liability were calculated using the CPI as of the adoption date and will not be subsequently adjusted, unless the liability is reassessed for other reasons. Certain leases include renewal options that are under the Company's sole discretion. The renewal options were included in the ROU and liability calculation if it was reasonably assured that the Company will exercise the option.
As the Company’s lease arrangements do not provide an implicit rate, the Company uses its incremental estimated borrowing rate at lease commencement to measure ROU assets and lease liabilities. Operating lease expense is generally recognized on a straight-line basis over the lease term. For leases with a term of one year or less, the Company elected not to record the ROU asset or liability.
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| Convertible senior notes |
The Company accounts for its convertible senior notes in accordance with ASC 470-20 "Debt with Conversion and Other Options" including Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06) which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The Company adopted ASU 2020-06 using the modified retrospective method as of January 1, 2022. See also Note 11.
Prior to the adoption of the above-mentioned ASU 2020-06, issuers of certain convertible debt instruments, such as the Notes, that may be settled wholly or partially in cash upon conversion were required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The liability component at issuance was recognized at fair value, based on the fair value of a similar instrument of similar credit rating and maturity that does not have a conversion feature. The equity component was based on the excess of the principal amount of the convertible senior notes over the fair value of the liability component and was recorded in additional paid-in capital. The equity component, net of issuance costs and deferred tax effects was presented within additional paid-in-capital and was not remeasured as long as it continues to meet the conditions for equity classification. The difference between the principal amount and the liability component represents a debt discount that was amortized to financial expense over the respective terms of the Notes using an effective interest rate method. The Company allocated the total issuance costs incurred to the liability and equity components of the convertible senior notes based on their relative values. Issuance costs attributable to the liability and equity components were $5,894 and $518, respectively. Issuance costs attributable to the liability were netted against the principal balance and were amortized to financial expense using the effective interest method over the contractual term of the notes. The effective borrowing rate of the liability component of the notes (after deduction of the abovementioned issuance costs attributed to the liability component) was 2.365%. This borrowing rate was based on Company's synthetic credit risk rating. |
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| Revenue Recognition |
Revenue Recognition Policy
The Company enters into revenue arrangements that include products and services which are distinct and accounted for as separate performance obligations. The Company determines whether promises are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether the Company's commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract.
The Company derives revenue from sales of advanced process control systems, spare parts, labor hours (mainly related to installation) and service contracts.
Revenues derived from sales of advanced process control systems, spare parts and labor hours are recognized at a point in time, when control of the promised goods or services is transferred to the customers, upon fulfillment of the contractual terms (typically upon shipment of the systems and spare parts or when the service is completed for labor hours).
Revenues derived from service contracts, are recognized ratably over time in accordance with the term of the contract since the Company has a stand-ready obligation to provide the service. Such contracts generally include a fixed fee.
Revenues from sales which were not yet determined to be final sales due to certain acceptance provisions are deferred.
Contracts with Multiple Performance Obligations
Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative Standalone Selling Price (“SSP”). Judgment is required to determine the SSP for each distinct performance obligation. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount to be allocated based on the relative SSP of the various products and services.
Remaining Performance Obligations Remaining performance obligations (RPOs) represent contracted revenues that had not yet been recognized and include deferred revenues and invoices that have been issued to customers but were uncollected and have not been recognized as revenues. As of December 31, 2022, the aggregate amount of the RPOs was $46,602, comprised of $30,543 deferred revenues and $16,059 of uncollected amounts that were not yet recognized as revenues. The Company expects the RPO to be recognized as revenues over the next year. Contract Balances
Contract balances are presented separately on the consolidated balance sheets.
Revenues recognized during 2022, 2021 and 2020 from deferred revenues amounts included in current liabilities at the beginning of the period amounted to $12,924, $3,651 and $1,544 respectively.
In certain arrangements, the Company receives payment from a customer either before or after the performance obligation has been satisfied. The expected timing difference between the payment and satisfaction of performance obligations for the Company’s contracts is one year or less; therefore, the Company applies a practical expedient and does not consider the effects of the time value of money.
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| Research and Development |
Research and development costs are charged to operations as incurred. Amounts received or receivable from the Government of Israel through the Israeli Innovation Authority (“IIA”) or from the European Community as participation in certain research and development programs are offset against research and development costs. The accrual for grants receivable is determined based on the terms of the programs, provided that the criteria for entitlement are expected to be met. Research and development grants recognized during the years ended December 31, 2022, 2021 and 2020 were $3,064, $4,395 and $5,645 respectively.
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| Income Taxes |
The Company accounts for income taxes utilizing the asset and liability method in accordance with ASC 740, “Income Taxes”. Current tax liabilities are recognized for the estimated taxes payable on tax returns for the current year. Deferred tax liabilities or assets are recognized for the estimated future tax effects attributable to temporary differences between the income tax bases of assets and liabilities and their reported amounts in the financial statements, and for tax loss carryforwards.
Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax laws, and deferred tax assets are reduced, if necessary, by the amount of tax benefits, the realization of which is not considered more likely than not based on available evidence.
ASC 740-10 requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement.
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| Share-Based Compensation |
The Company accounts for equity-based compensation using ASC 718 “Compensation - Stock Compensation,” which requires companies to recognize the cost of employee services received in exchange for awards of equity instruments based upon the grant-date fair value of those awards.
Share Options
In 2022 the Company did not grant share options.
The Company policy, under ASC 718, the fair market value of each option grant is estimated on the date of grant using the “Black-Scholes option pricing” method with the following weighted-average assumptions as relevant for prior years:
Expected volatility was calculated based on actual historical share price movements over a term that is equivalent to the expected term of granted options. The expected term of options granted is based on historical experience and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends.
The Company recognizes compensation expenses for the value of awards granted, based on the accelerated method. The Company account for forfeitures as they occur. Restricted Share Units
The Company recognizes the fair value of Restricted Share Units (“RSUs”) on the grant date based on the market value of the underlying share and the expense is recognized over the requisite service period for awards using the accelerated method.
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| Earnings per Share |
Earnings per share are presented in accordance with ASC 260-10, “Earnings per Share”. Pursuant to which, basic earnings per share excludes the dilutive effects of convertible securities and is computed by dividing income (loss) available to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, net of treasury shares. Diluted earnings per share reflect the potential dilutive effect of options and RSUs. The number of potentially dilutive options and RSUs excluded from diluted earnings per share due to the anti-dilutive effect of out of the money options amounted to 265,085 in 2022, 336,857 in 2021 and 492,963 in 2020.
Subsequent to the modified retrospective adoption of ASU 2020-06 (see note 2P), as of January 1, 2022, diluted earnings per share reflect the full dilutive effect of the Convertible Senior Notes. In 2021 and 2020, prior to the adoption of ASU 2020-06, shares amounted to 2,055,641 and 2,680,965 in 2021 and 2020 respectively, underlying the conversion option of the Convertible Senior Notes were not considered in the calculation of earnings per share. |
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| Concentrations of Credit Risk |
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, bank deposits, marketable securities, trade accounts receivable and foreign currency derivative contracts.
The majority of the Company’s cash and cash equivalents and bank deposits are invested in dollar instruments with major banks in Israel. Management believes that the financial institutions that hold the Company's investments are corporations with high credit standing. Accordingly, management believes that low credit risk exists with respect to these financial investments.
The trade accounts receivable of the Company are derived from sales to customers located primarily in Taiwan R.O.C., Korea, China and USA. The management of the Company performed risk assessment on an ongoing basis and believes it bears low risk.
The Company entered into options and forward contracts to hedge against the risk of overall changes in future cash flow from payments of payroll and related expenses as well as other expenses denominated in NIS. The derivative instruments hedge a portion of the Company's non-dollar currency exposure. Counterparty to the Company’s derivative instruments is major financial institution.
The Company's debt marketable securities include investments in highly rated corporate debentures and governmental bonds. The financial institutions that hold the Company's debt marketable securities are major financial institutions located in the United States. The Company believes its debt marketable securities portfolio is a diverse portfolio of highly rated securities and the Company's investment policy limits the amount the Company may invest in an issuer. |
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| Fair Value Measurements |
The fair values of the Company’s cash and cash equivalents, short-term interest-bearing bank deposits, trade accounts receivable, and accounts payable approximate their carrying amounts due to their short-term nature.
The Company follows the provisions of ASC No. 820, “Fair Value Measurement” (“ASC 820”), which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
In determining a 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 an asset or liability, based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect assumptions that market participants would use in pricing an asset or liability, based on the best information available under given circumstances.
The hierarchy is broken down into three levels, based on the observability of inputs and assumptions, as follows:
Level 1 - Observable inputs obtained from independent sources, such as quoted prices for identical assets and liabilities in active markets.
Level 2 - Other inputs that are directly or indirectly observable in the market place.
Level 3 - Unobservable inputs which are supported by little or no market activity.
In accordance with ASC 820, the Company measures its marketable securities, at fair value using the market approach valuation technique. Marketable securities are classified within Level 2 because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
The estimated fair values of the derivative instruments are determined based on market rates to settle the instruments. The fair value of the Company’s derivative contracts (including forwards and options) is determined using standard valuation models. The significant inputs used in these models are readily available in public markets or can be derived from observable market transactions and, therefore, the Company’s derivative contracts have been classified as Level 2.
Inputs used in these standard valuation models include the applicable spot, forward, and discount rates. The standard valuation model for the Company options contracts also includes implied volatility, which is specific to individual options and is based on rates quoted from a widely used third-party resource.
The Company’s cash and cash equivalents, Interest-bearing bank deposits and restricted interest-bearing bank deposits are classified within level 1. Marketable securities, Derivative instruments and Convertible senior notes classified within Level 2 (see Note 4, Note 17 and Note 11, respectively).
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| Recent accounting standards |
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| New Accounting Pronouncements |
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SIGNIFICANT ACCOUNTING POLICIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of cash, cash equivalents and restricted cash |
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| Schedule of Estimated Useful Lives of Fixed Assets |
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| Schedule of Estimated Useful Lives of the Intangible Assets |
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| Schedule of Weighted Average Assumptions used in Determining Fair Market Value of Options |
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BUSINESS COMBINATION (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair value of the consideration transferred to ancosys shareholders as of acquisition date |
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| Schedule of fair value of acquired assets and assumed liabilities and resulting goodwill as of acquisition date |
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MARKETABLE SECURITIES (Tables) |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of summarizes the amortized cost, unrealized gains, unrealized losses, and fair value of marketable securities |
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INVENTORIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventories |
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OTHER CURRENT ASSETS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Current Assets |
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PROPERTY, PLANT AND EQUIPMENT, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property, Plant and Equipment, Net |
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INTANGIBLE ASSETS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets |
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| Schedule of Amortization Expenses |
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| Schedule of Annual Amortization Expenses |
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OTHER CURRENT LIABILITIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Current Liabilities |
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| Schedule of Accrued Warranty Costs |
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| Schedule of Changes in the Product Warranty Accrual |
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CONVERTIBLE SENIOR NOTES, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Net Carrying Amount of Convertible Notes |
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| Schedule of Interest Expense Related to Convertible Notes |
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LEASES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Lessee Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Future Minimum Lease Payments |
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SHAREHOLDERS' EQUITY (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Effects of Stock-Based Compensation in the Statements of Operations |
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| Schedule of Status of the Company's Share Option Plans |
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| Schedule of Information about Share Options Outstanding |
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| Schedule of Unvested Restricted Share Units |
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INCOME TAXES (Tables) |
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Significant Components of Deferred Tax Assets |
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| Schedule of Presentation in Balance Sheets for Deferred Taxes |
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| Schedule of Israel and International Components of Income before Taxes |
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| Schedule of Israel and International Components of Income Taxes |
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| Schedule of Reconciliation of Theoretical and Actual Tax Expense |
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| Schedule of Uncertain Tax Positions |
* The amounts for the years ended December 31, 2022 and 2021 includes $2,590 and $2,412 unrecognized tax benefits, respectively, which are presented as a reduction from deferred tax assets, see Note 15e.
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GEOGRAPHIC AREAS AND MAJOR CUSTOMERS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Sales by Geographic Area as Percentage of Total Sales |
|
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| Schedule of Sales by Major Customers as Percentage of Total Sales |
|
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| Schedule of Long-lived assets by Geographic Location |
|
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FINANCIAL INSTRUMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair Value of Derivative Contracts |
|
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| Schedule of Loss (gain) on Derivative Instruments |
|
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FINANCIAL INCOME (EXPENSE), NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Financial Income Expenses, Net |
|
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GENERAL (Narrative) (Details) - shares |
Dec. 31, 2022 |
Jan. 25, 2022 |
Dec. 31, 2021 |
Jun. 24, 2021 |
Apr. 02, 2015 |
|---|---|---|---|---|---|
| Business Acquisition [Line Items] | |||||
| Increased authorized ordinary share capital | 60,000,000 | 60,000,000 | 60,000,000 | ||
| Revera Inc [Member] | |||||
| Business Acquisition [Line Items] | |||||
| Percentage of shares acquired | 100.00% | ||||
| Ancosys GmBH | |||||
| Business Acquisition [Line Items] | |||||
| Percentage of shares acquired | 100.00% |
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
|
Dec. 31, 2022
USD ($)
Segment
shares
|
Dec. 31, 2021
USD ($)
shares
|
Dec. 31, 2020
USD ($)
shares
|
|
| Debt Instrument [Line Items] | |||
| Number of Operating Segments | Segment | 1 | ||
| Uncertain tax position, likelihood of being sustained, threshold for recognition | 50.00% | ||
| Dilutive securities excluded from diluted earnings per share | shares | 265,085 | 336,857 | 492,963 |
| Remaining Performance Obligations | $ 46,602 | ||
| Deferred revenues | 30,543 | ||
| Uncollected amounts of deferred revenue | 16,059 | ||
| Revenues recognized from deferred revenues | 12,924 | $ 3,651 | $ 1,544 |
| Research and development grants recognized | $ 3,064 | $ 4,395 | $ 5,645 |
| Debt Instrument, Interest Rate, Effective Percentage | 0.70% | ||
| Convertible senior notes [Member] | |||
| Debt Instrument [Line Items] | |||
| Dilutive securities excluded from diluted earnings per share | shares | 2,055,641 | 2,680,965 | 2,680,965 |
| Issuance costs of liability | $ 5,894 | ||
| Issuance costs of equity components | $ 518 | ||
| Debt Instrument, Interest Rate, Effective Percentage | 2.365% | ||
SIGNIFICANT ACCOUNTING POLICIES (Summary of cash, cash equivalents and restricted cash) (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|---|---|
| Accounting Policies [Abstract] | ||||
| Cash and cash equivalents | $ 111,121 | $ 126,698 | $ 232,304 | |
| Long term restricted cash | 600 | 0 | 0 | |
| Cash, cash equivalents and restricted cash | $ 111,721 | $ 126,698 | $ 232,304 | $ 31,748 |
SIGNIFICANT ACCOUNTING POLICIES (Estimated Useful Lives of Property and Equipment) (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Electronic equipment [Member] | Minimum [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful life | 3 years |
| Electronic equipment [Member] | Maximum [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful life | 7 years |
| Office furniture and equipment [Member] | Minimum [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful life | 3 years |
| Office furniture and equipment [Member] | Maximum [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful life | 17 years |
| Leasehold improvements [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful life | Over the shorter of the term of the lease (including its extension periods) or the useful life of the asset |
SIGNIFICANT ACCOUNTING POLICIES (Estimated Useful Lives of Intangible Assets) (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Technology [Member] | Minimum [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Weighted Average Useful Life | 3 years |
| Technology [Member] | Maximum [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Weighted Average Useful Life | 9 years |
| Customer relationships [Member] | Minimum [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Weighted Average Useful Life | 10 years |
| Customer relationships [Member] | Maximum [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Weighted Average Useful Life | 13 years |
SIGNIFICANT ACCOUNTING POLICIES (Weighted-Average Assumptions Used in Determinig Fair Market Value of Options) (Details) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Accounting Policies [Abstract] | ||
| Risk-free interest rate | 0.89% | 0.38% |
| Expected term of options | 4 years 11 months 19 days | 5 years 29 days |
| Expected volatility | 39.02% | 36.61% |
| Expected dividend yield | 0.00% | 0.00% |
BUSINESS COMBINATION (Narrative) (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended |
|---|---|---|
Jan. 25, 2022 |
Dec. 31, 2022 |
|
| Business Acquisition [Line Items] | ||
| Business combination, separately recognized transactions, additional disclosures, acquisition cost expensed | $ 1,360 | |
| Payments for contingent consideration revaluation | $ 1,635 | |
| Ancosys GmBH | ||
| Business Acquisition [Line Items] | ||
| Cash paid | $ 81,708 | |
| Payment of stipulated additional performance based contingent consideration to shareholders | 10,115 | |
| Fair-value of contingent consideration | $ 8,480 |
BUSINESS COMBINATION (Schedule of fair value of the consideration transferred) (Details) - Ancosys GmBH $ in Thousands |
1 Months Ended |
|---|---|
|
Jan. 25, 2022
USD ($)
| |
| Business Acquisition [Line Items] | |
| Cash paid | $ 81,708 |
| Fair-value of contingent consideration | 8,480 |
| Total consideration | $ 90,188 |
BUSINESS COMBINATION (Schedule of fair value of acquired assets and assumed liabilities and resulting goodwill as of acquisition date) (Details) - USD ($) $ in Thousands |
1 Months Ended | ||
|---|---|---|---|
Jan. 25, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Business Acquisition [Line Items] | |||
| Goodwill | $ 49,009 | $ 20,114 | |
| Ancosys GmBH | |||
| Business Acquisition [Line Items] | |||
| Cash and cash equivalents | $ 3,239 | ||
| Trade accounts receivable | 10,074 | ||
| Inventories | 13,849 | ||
| Property, plant and equipment | 4,345 | ||
| Other tangible assets assumed | 1,192 | ||
| Technology | 45,284 | ||
| Customer Relationships | 4,681 | ||
| Goodwill | 30,655 | ||
| Total assets acquired | 113,319 | ||
| Deferred tax liability | 15,245 | ||
| Other liabilities assumed | 7,886 | ||
| Total liabilities assumed | 23,131 | ||
| Net assets acquired | $ 90,188 | ||
| Current Technology, amortization period | 9 years | ||
| Customer Relationships, amortization period | 13 years |
MARKETABLE SECURITIES (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Investments, Debt and Equity Securities [Abstract] | ||
| Proceeds from maturity of available for sale marketable securities | $ 80,391 | |
| Proceeds from sales of available-for sale marketable securities | 934 | |
| Realized losses | $ 68 | |
| Amount of unrealized loss part included in previous year | $ 1,191 | |
MARKETABLE SECURITIES (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Marketable Securities [Line Items] | ||
| Amortized Cost | $ 328,593 | $ 200,302 |
| Unrealized gains | 29 | 1 |
| Unrealized losses | (8,087) | (1,320) |
| Fair Value | 320,535 | 198,983 |
| Corporate bonds, Matures within one year [Member] | ||
| Marketable Securities [Line Items] | ||
| Amortized Cost | 114,475 | 53,238 |
| Unrealized gains | 1 | 0 |
| Unrealized losses | (1,341) | (67) |
| Fair Value | 113,135 | 53,171 |
| Governmental bonds, Matures within one year [Member] | ||
| Marketable Securities [Line Items] | ||
| Amortized Cost | 54,282 | 8,409 |
| Unrealized gains | 0 | 0 |
| Unrealized losses | (344) | (12) |
| Fair Value | 53,938 | 8,397 |
| Marketable Securities, Matures within one year [Member] | ||
| Marketable Securities [Line Items] | ||
| Amortized Cost | 168,757 | 61,647 |
| Unrealized gains | 1 | 0 |
| Unrealized losses | (1,685) | (79) |
| Fair Value | 167,073 | 61,568 |
| Corporate bonds, Matures after one year [Member] | ||
| Marketable Securities [Line Items] | ||
| Amortized Cost | 147,888 | 122,701 |
| Unrealized gains | 28 | 0 |
| Unrealized losses | (6,046) | (1,138) |
| Fair Value | 141,870 | 121,563 |
| Governmental bonds, Matures after one year [Member] | ||
| Marketable Securities [Line Items] | ||
| Amortized Cost | 11,948 | 15,954 |
| Unrealized gains | 0 | 1 |
| Unrealized losses | (356) | (103) |
| Fair Value | 11,592 | 15,852 |
| Marketable Securities, Matures after one year [Member] | ||
| Marketable Securities [Line Items] | ||
| Amortized Cost | 159,836 | 138,655 |
| Unrealized gains | 28 | 1 |
| Unrealized losses | (6,402) | (1,241) |
| Fair Value | $ 153,462 | $ 137,415 |
INVENTORIES (Schedule of inventory) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Inventory Disclosure [Abstract] | |||
| Raw materials | $ 38,050 | $ 22,953 | |
| Service inventory | 26,069 | 19,838 | |
| Work in process | 25,676 | 19,125 | |
| Finished goods | 26,805 | 16,749 | |
| Inventories | 116,600 | 78,665 | |
| Write-offs | $ 6,406 | $ 5,126 | $ 5,664 |
OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
| Prepaid expenses | $ 9,107 | $ 4,412 |
| Governmental institutions | 2,889 | 3,441 |
| Governments grants receivables | 1,416 | 1,006 |
| Other | 115 | 383 |
| Other current assets | $ 13,527 | $ 9,242 |
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Property, Plant and Equipment [Line Items] | |||
| Cost: | $ 109,783 | $ 77,827 | |
| Accumulated depreciation: | 53,897 | 43,367 | |
| Net book value | 55,886 | 34,460 | |
| Depreciation of property, plant and equipment | 8,621 | 6,475 | $ 5,875 |
| Electronic equipment [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Cost: | 64,135 | 48,861 | |
| Accumulated depreciation: | 43,414 | 36,932 | |
| Office furniture and equipment [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Cost: | 6,301 | 4,602 | |
| Accumulated depreciation: | 2,833 | 883 | |
| Leasehold improvements [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Cost: | 34,166 | 24,364 | |
| Accumulated depreciation: | 7,650 | 5,552 | |
| Land and building [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Cost: | 5,181 | 0 | |
| Accumulated depreciation: | $ 0 | $ 0 | |
INTANGIBLE ASSETS (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||
| Original amount | $ 66,519 | $ 19,423 |
| Accumulated amortization | 22,933 | 16,822 |
| Net book value | 43,586 | 2,601 |
| Technology [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Original amount | 56,916 | 14,232 |
| Accumulated amortization | 17,525 | 12,026 |
| Customer relationships [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Original amount | 9,603 | 5,191 |
| Accumulated amortization | $ 5,408 | $ 4,796 |
INTANGIBLE ASSETS (Schedule of Amortization Expenses) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Finite-Lived Intangible Assets [Line Items] | |||
| Amortization expenses | $ 6,033 | $ 2,458 | $ 2,503 |
| Technology [Member] | |||
| Finite-Lived Intangible Assets [Line Items] | |||
| Amortization expenses | 5,426 | 1,918 | 1,758 |
| Customer relationships [Member] | |||
| Finite-Lived Intangible Assets [Line Items] | |||
| Amortization expenses | $ 607 | $ 540 | $ 745 |
INTANGIBLE ASSETS (Schedule of Annual Amortization Expenses) (Details) $ in Thousands |
Dec. 31, 2022
USD ($)
|
|---|---|
| Year ending December 31 | |
| 2023 | $ 5,808 |
| 2024 | 5,579 |
| 2025 | 5,082 |
| 2026 | 5,082 |
| 2027 and thereafter | 22,036 |
| Total | $ 43,587 |
OTHER CURRENT LIABILITIES (Schedule of Other Current Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued salaries and fringe benefits | $ 31,652 | $ 28,176 |
| Accrued warranty costs (See B below) | 9,517 | 8,287 |
| Governmental institutions | 12,202 | 11,377 |
| Governments grants payables | 647 | 995 |
| Other | 807 | 50 |
| Other current liabilities | $ 54,825 | $ 48,885 |
OTHER CURRENT LIABILITIES (Schedule of Accrued Warranty Costs) (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Payables and Accruals [Abstract] | |||
| Other current liabilities | $ 9,517 | $ 8,287 | |
| Other long-term liabilities | 1,113 | 598 | |
| Accrued warranty costs | $ 10,630 | $ 8,885 | $ 5,152 |
OTHER CURRENT LIABILITIES (Changes in the Product Warranty Accrual) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Payables and Accruals [Abstract] | ||
| Balance as of beginning of year | $ 8,885 | $ 5,152 |
| Services provided under warranty | (11,959) | (8,798) |
| Changes in provision | 13,704 | 12,531 |
| Balance as of end of year | $ 10,630 | $ 8,885 |
LIABILITY FOR EMPLOYEE SEVERANCE PAY, NET (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Postemployment Benefits [Abstract] | |||
| Severance-pay expenses | $ 1,114 | $ 818 | $ 617 |
CONVERTIBLE SENIOR NOTES, NET (Narrative) (Details) $ / shares in Units, shares in Thousands, $ in Thousands |
1 Months Ended | 12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
|
Oct. 31, 2020
USD ($)
Rate
$ / shares
|
Dec. 31, 2022
USD ($)
shares
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2022
₪ / shares
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
₪ / shares
|
Dec. 31, 2021
USD ($)
|
|
| Debt Instrument [Line Items] | ||||||||
| Ordinary shares, par value | ₪ / shares | ₪ 0 | ₪ 0 | ||||||
| Deferred taxes | $ (14,127) | $ (3,159) | $ (1,031) | |||||
| Amount of increase liability for convertible senior notes | 12,075 | |||||||
| Amount of reduction of additional paid-in capital | 13,770 | |||||||
| Amount of increase to deferred tax assets | 1,444 | |||||||
| Amount of cumulative effect adjustment of net of estimated income tax effects | 3,139 | |||||||
| Amount of reduced interest expense | $ 3,053 | |||||||
| Dilutive shares | shares | 2,055,641 | |||||||
| Effective interest rate | 0.70% | |||||||
| Convertible Notes [Member] | ||||||||
| Debt Instrument [Line Items] | ||||||||
| Principal amount | $ 175,000 | $ 200,000 | $ 200,000 | |||||
| Maturity date | Oct. 15, 2025 | |||||||
| Additional aggregate principal amount | $ 25,000 | |||||||
| Conversion rate | Rate | 13.4048 | |||||||
| Principal amount of convertible notes in conversion | $ 1,000 | $ 1,000 | ||||||
| Conversion price | $ / shares | $ 74.6 | |||||||
| Percentage of conversion price | 130.00% | 130.00% | ||||||
| Percentage of measurement period | 98.00% | |||||||
| Percentage of redemption price equal to principal amount | 100.00% | |||||||
| Percentage of repurchase price equal to principal amount | 100.00% | |||||||
| Equity component, net of issuance costs | $ 518 | |||||||
| Deferred taxes | $ 1,878 | |||||||
| Estimated fair value of convertible senior notes | $ 245,000 | |||||||
CONVERTIBLE SENIOR NOTES, NET (Schedule of Net Carrying Amount of Convertible Notes) (Details) - Convertible Notes [Member] - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Oct. 31, 2020 |
|---|---|---|---|
| Debt Instrument [Line Items] | |||
| Principal amount | $ 200,000 | $ 200,000 | $ 175,000 |
| Unamortized discount | 0 | (12,032) | |
| Unamortized issuance costs | (3,606) | (4,931) | |
| Net carrying amount | 196,394 | 183,037 | |
| Equity component, net of issuance costs of $518 and deferred taxes of $1,878 | $ 0 | $ 13,770 |
CONVERTIBLE SENIOR NOTES, NET (Schedule of Interest Expense Related to Convertible Notes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Debt Instrument [Line Items] | |||
| Total financial expense recognized | $ 1,282 | $ 4,229 | $ 868 |
| Convertible Notes [Member] | |||
| Debt Instrument [Line Items] | |||
| Amortization of debt discount | 0 | 3,000 | |
| Amortization of debt issuance costs | 1,276 | 1,229 | |
| Total financial expense recognized | $ 1,276 | $ 4,229 | |
LEASES (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Lessee, Lease, Description [Line Items] | |||
| Recognized leased assets | $ 44,885 | $ 30,627 | |
| Current liabilities | 5,968 | 4,452 | |
| Long-term liabilities | $ 43,697 | 33,450 | |
| Extend lease term | up to additional 10 years | ||
| Remaining lease term | 13 years 9 months 18 days | ||
| Weighted average discount rate | 3.70% | ||
| Lease expense | $ 8,194 | 3,935 | $ 4,654 |
| Operating cash flows for operating leases | $ 6,450 | $ 4,134 | $ 5,840 |
| Minimum [Member] | |||
| Lessee, Lease, Description [Line Items] | |||
| Remaining lease term | 1 year | ||
| Maximum [Member] | |||
| Lessee, Lease, Description [Line Items] | |||
| Remaining lease term | 8 years | ||
LEASES (Schedule of Future Minimum Lease Payments) (Details) $ in Thousands |
Dec. 31, 2022
USD ($)
|
|---|---|
| Lessee Disclosure [Abstract] | |
| 2023 | $ 6,032 |
| 2024 | 6,323 |
| 2025 | 5,815 |
| 2026 | 5,399 |
| 2027 | 5,370 |
| 2028 and thereafter | 36,131 |
| Total lease payments | 65,070 |
| Less imputed interest | (15,405) |
| Total | $ 49,665 |
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) $ in Thousands |
Dec. 31, 2022
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| Non-cancelable purchase obligations amount | $ 152,000 |
SHAREHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands |
10 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Mar. 31, 2022 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Weighted-average fair value of options granted | $ 35.94 | $ 15.46 | |||
| Share repurchase program | $ 100,000 | ||||
| Ordinary share repurchased, shares | 251,738 | ||||
| Ordinary share repurchased | $ 21,416 | ||||
| Total intrinsic value of options outstanding | 15,271 | $ 15,271 | $ 58,835 | ||
| Total intrinsic value of options exercisable at year-end | 12,956 | 12,956 | 41,117 | ||
| Total intrinsic value of options exercised | $ 14,523 | $ 18,571 | $ 10,463 | ||
| Employee Stock Option [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting period | 4 years | ||||
| Unrecognized compensation cost related to non-vested employee options | 209 | $ 209 | |||
| Unrecognized compensation cost, recognition period | 4 years | ||||
| Employee Stock Option [Member] | Maximum [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Options contractual term | 10 years | ||||
| Restricted Stock Units (RSUs) [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting period | 3 years | ||||
| Unrecognized compensation cost related to unvested restricted shares | $ 23,514 | $ 23,514 | |||
| Total intrinsic value of RSU's vested | $ 16,907 | $ 17,341 | $ 6,344 | ||
| Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche One [Member] | 25% on each of anniversaries of the grant date [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting percentage | 25.00% | ||||
| Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche One [Member] | 33% on each of anniversaries of the grant date [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting percentage | 33.00% | ||||
| Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche Two [Member] | 25% on each of anniversaries of the grant date [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting percentage | 25.00% | ||||
| Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche Two [Member] | 33% on each of anniversaries of the grant date [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting percentage | 33.00% | ||||
| Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche Three [Member] | 25% on each of anniversaries of the grant date [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting percentage | 25.00% | ||||
| Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche Three [Member] | 33% on each of anniversaries of the grant date [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting percentage | 33.00% | ||||
| Restricted Stock Units (RSUs) [Member] | Share Based Compensation Award Tranche Four [Member] | 25% on each of anniversaries of the grant date [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting percentage | 25.00% | ||||
| Restricted Stock Units (RSUs) [Member] | Share Based Compensation Award Tranche Four [Member] | 33% on each of anniversaries of the grant date [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Vesting percentage | 33.00% | ||||
SHAREHOLDERS' EQUITY (Effects of Stock-Based Compensation in the Statements of Operations) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
| Share-based compensation | $ 16,647 | $ 10,488 | $ 6,949 |
| Product [Member] | |||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
| Share-based compensation | 2,456 | 1,358 | 927 |
| Service [Member] | |||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
| Share-based compensation | 1,710 | 802 | 437 |
| Research and Development [Member] | |||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
| Share-based compensation | 6,861 | 3,994 | 2,556 |
| Sales and Marketing [Member] | |||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
| Share-based compensation | 3,179 | 2,221 | 1,531 |
| General and Administrative [Member] | |||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
| Share-based compensation | $ 2,441 | $ 2,113 | $ 1,498 |
SHAREHOLDERS' EQUITY (Status of the Company's Share Option Plans) (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2022
$ / shares
shares
| |
| Share Options | |
| Outstanding - beginning of year | shares | 485,542 |
| Exercised | shares | (161,416) |
| Expired and forfeited | shares | (33,415) |
| Outstanding - year end | shares | 290,711 |
| Options exercisable at year-end | shares | 235,952 |
| Weighted Average Exercise Price | |
| Outstanding - beginning of year | $ / shares | $ 25.33 |
| Exercised | $ / shares | 17.61 |
| Expired and forfeited | $ / shares | 23.34 |
| Outstanding - year end | $ / shares | 29.83 |
| Options exercisable at year-end | $ / shares | $ 26.98 |
SHAREHOLDERS' EQUITY (Information About Share Options Outstanding) (Details) |
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2022
₪ / shares
$ / shares
shares
|
Dec. 31, 2022
$ / shares
shares
|
|
| Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Number Outstanding | shares | 290,711 | 290,711 |
| Weighted Average Exercise Price, Outstanding | $ 29.83 | |
| Number Exercisable, Exercisable | shares | 235,952 | 235,952 |
| Weighted Average Exercise Price, Exercisable | $ 26.98 | |
| 10.01-20.00 [Member] | ||
| Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Exercise Prices, minimum | $ 10.01 | |
| Exercise Prices, maximum | $ 20 | |
| Number Outstanding | shares | 24,220 | 24,220 |
| Weighted Average Remaining Contractual Life (in years), Outstanding | 7 months 9 days | |
| Weighted Average Exercise Price, Outstanding | $ 11.73 | |
| Number Exercisable, Exercisable | shares | 24,220 | 24,220 |
| Weighted Average Exercise Price, Exercisable | $ 11.73 | |
| 20.01-35.00 [Member] | ||
| Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Exercise Prices, minimum | $ 20.01 | |
| Exercise Prices, maximum | $ 35 | |
| Number Outstanding | shares | 225,320 | 225,320 |
| Weighted Average Remaining Contractual Life (in years), Outstanding | 2 years 6 months 21 days | |
| Weighted Average Exercise Price, Outstanding | $ 26.31 | |
| Number Exercisable, Exercisable | shares | 193,683 | 193,683 |
| Weighted Average Exercise Price, Exercisable | $ 26.35 | |
| 35.01-50.00 [Member] | ||
| Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Exercise Prices, minimum | $ 35.01 | |
| Exercise Prices, maximum | $ 50 | |
| Number Outstanding | shares | 28,635 | 28,635 |
| Weighted Average Remaining Contractual Life (in years), Outstanding | 4 years 5 months 4 days | |
| Weighted Average Exercise Price, Outstanding | $ 46.08 | |
| Number Exercisable, Exercisable | shares | 14,181 | 14,181 |
| Weighted Average Exercise Price, Exercisable | $ 46.15 | |
| 50.01-70.00 [Member] | ||
| Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Exercise Prices, minimum | $ 50.01 | |
| Exercise Prices, maximum | $ 70 | |
| Number Outstanding | shares | 2,921 | 2,921 |
| Weighted Average Remaining Contractual Life (in years), Outstanding | 4 years 7 months 2 days | |
| Weighted Average Exercise Price, Outstanding | $ 53.61 | |
| Number Exercisable, Exercisable | shares | 1,462 | 1,462 |
| Weighted Average Exercise Price, Exercisable | ₪ / shares | $ 53.61 | |
| 70.01-102.35 [Member] | ||
| Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Exercise Prices, minimum | $ 70.01 | |
| Exercise Prices, maximum | $ 102.35 | |
| Number Outstanding | shares | 9,615 | 9,615 |
| Weighted Average Remaining Contractual Life (in years), Outstanding | 4 years 5 months 23 days | |
| Weighted Average Exercise Price, Outstanding | $ 102.35 | |
| Number Exercisable, Exercisable | shares | 2,406 | 2,406 |
| Weighted Average Exercise Price, Exercisable | ₪ / shares | $ 102.35 |
SHAREHOLDERS' EQUITY (Schedule of Unvested Restricted Share Units) (Details) - Restricted Stock Units (RSUs) [Member] |
12 Months Ended |
|---|---|
|
Dec. 31, 2022
$ / shares
shares
| |
| Number of RSUs | |
| Unvested - beginning of year | shares | 463,051 |
| Granted | shares | 228,938 |
| Vested | shares | (191,494) |
| Canceled | shares | (15,774) |
| Unvested - year end | shares | 484,721 |
| Weighted average grant date fair value | |
| Unvested - beginning of year | $ / shares | $ 67.79 |
| Granted | $ / shares | 87.02 |
| Vested | $ / shares | 55.69 |
| Canceled | $ / shares | 86.95 |
| Unvested - year end | $ / shares | $ 81.05 |
INCOME TAXES (Narrative) (Details) $ in Thousands, ₪ in Billions |
1 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
Dec. 31, 2025 |
Dec. 31, 2022
ILS (₪)
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019 |
|
| Required income from exports, percent | 25.00% | 25.00% | ||||
| Withholding tax rate | 15.00% | 15.00% | ||||
| Trapped Profits Agreement Net Effect | $ 0 | $ 3,716 | $ 0 | |||
| Corporate tax rate | 23.00% | 23.00% | ||||
| Taxable income in Israel is attributable to Preferred Enterprises tax rate | 16.00% | 16.00% | ||||
| Deferred tax liability | $ 12,190 | 0 | ||||
| Unrecognized deferred tax liability related to the Israel income taxes of undistributed earnings of foreign subsidiaries indefinitely invested outside the Israel | 26,432 | |||||
| Unrecognized Tax Benefits Presented As Reduction From Deferred Tax Assets | $ 2,590 | $ 2,412 | ||||
| Minimum [Member] | ||||||
| Corporate tax on income if approved enterprise status earnings are distributed | 10.00% | 10.00% | ||||
| Permanent reduction in corporate tax rate | 21.00% | 21.00% | ||||
| The minimum holding rate by foreign investors for which the company will be entitled to a reduced tax rate on dividend | 15.00% | 15.00% | ||||
| Maximum [Member] | ||||||
| Corporate tax on income if approved enterprise status earnings are distributed | 25.00% | 25.00% | ||||
| Permanent reduction in corporate tax rate | 35.00% | 35.00% | ||||
| The minimum holding rate by foreign investors for which the company will be entitled to a reduced tax rate on dividend | 20.00% | 20.00% | ||||
| Foreign-Derived Intangible Income [Member] | ||||||
| Corporate tax rate | 13.125% | |||||
| Law for the Encouragement of Capital Investments Investment First Plan [Member] | ||||||
| Period of full tax exemption | 4 years | 4 years | ||||
| Tax rate after full exemption period | 25.00% | 25.00% | ||||
| Post exemption period | 3 years | 3 years | ||||
| Law for the Encouragement of Capital Investments Investment Plan Second and Third Plans [Member] | ||||||
| Period of full tax exemption | 2 years | 2 years | ||||
| Tax rate after full exemption period | 25.00% | 25.00% | ||||
| Post exemption period | 5 years | 5 years | ||||
| Development Area A [Member] | ||||||
| Tax rate applicable to approved industrial enterprise, 2015 and after | 6.00% | 6.00% | ||||
| Tax rate applicable to approved industrial enterprise, 2013-2014 | 7.00% | 7.00% | ||||
| Development Area A [Member] | Minimum [Member] | ||||||
| Taxable income in Israel is attributable to Preferred Enterprises tax rate | 9.00% | 9.00% | ||||
| Development Area A [Member] | Maximum [Member] | ||||||
| Taxable income in Israel is attributable to Preferred Enterprises tax rate | 7.50% | 7.50% | ||||
| Outside development area A [Member] | ||||||
| Tax rate applicable to approved industrial enterprise, 2015 and after | 12.00% | 12.00% | ||||
| Tax rate applicable to approved industrial enterprise, 2013-2014 | 12.50% | 12.50% | ||||
| Preferred Area A [Member] | ||||||
| Withholding tax rate | 15.00% | 15.00% | ||||
| Tax rate applicable to approved industrial enterprise, 2015 and after | 6.00% | 6.00% | ||||
| Required percentage of export of company' s total turnover | 25.00% | 25.00% | ||||
| Tax rate applicable to approved industrial enterprise, 2011-2012 | 10.00% | 10.00% | ||||
| Tax rate applicable to approved industrial enterprise, 2013-2014 | 7.00% | 7.00% | ||||
| The minimum holding rate by foreign investors for which the company will be entitled to a reduced tax rate on dividend | 20.00% | 20.00% | ||||
| Outside Preferred Area A [Member] | ||||||
| Tax rate applicable to approved industrial enterprise during the current period and the next rolling twelve months following the latest balance sheet presented in other than Development Zone A | 15.00% | 15.00% | ||||
| Tax rate applicable to approved industrial enterprise, 2015 and after | 12.00% | 12.00% | ||||
| Required percentage of export of company' s total turnover | 25.00% | 25.00% | ||||
| Tax rate applicable to approved industrial enterprise, 2011-2012 | 15.00% | 15.00% | ||||
| Tax rate applicable to approved industrial enterprise, 2013-2014 | 12.50% | 12.50% | ||||
| Taxable income in Israel is attributable to Preferred Enterprises tax rate | 16.00% | 16.00% | ||||
| Preferred Technological Enterprises [Member] | ||||||
| The limit of consolidated revenue for which the Company is entitled to be considered a preferred technology enterprise | ₪ | ₪ 10 | |||||
| Technological preferred enterprise subject tax rate | 12.00% | 12.00% | ||||
| Foreign Corporate [Member] | ||||||
| The minimum holding rate by foreign investors for which the company will be entitled to a reduced tax rate on dividend | 4.00% | 4.00% | ||||
| Foreign Investors [Member] | ||||||
| The minimum holding rate by foreign investors for which the company will be entitled to a reduced tax rate on dividend | 90.00% | 90.00% | ||||
| Subsequent Event [Member] | Foreign-Derived Intangible Income [Member] | ||||||
| Corporate tax rate | 16.406% | |||||
INCOME TAXES (Significant Components of Deferred Tax Assets) (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Deferred tax assets: | ||
| Net operating loss carryforwards | $ 1,080 | $ 501 |
| Tax credits carryforward | 1,610 | 1,052 |
| Reserve and allowances, mainly research and development expenses carryforward | 20,234 | 8,692 |
| Operating lease liabilities | 3,178 | 1,627 |
| Deferred tax assets before valuation allowance | 26,102 | 11,872 |
| Valuation Allowance | (2,098) | (1,737) |
| Deferred tax assets after valuation allowance | 24,004 | 10,135 |
| Deferred tax liabilities: | ||
| Convertible senior notes | 0 | (1,444) |
| Operating lease right-of-use assets | (2,631) | (1,300) |
| Intangible assets | (349) | (578) |
| Reserve and allowances | (927) | (652) |
| Deferred tax liabilities | (3,907) | (3,974) |
| Deferred tax assets (Note 15) | $ 20,097 | $ 6,161 |
INCOME TAXES (Schedule of Balance Sheet Presentation of Deferred Taxes) (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Income Taxes [Line Items] | ||
| Long-term deferred tax assets | $ 20,097 | $ 6,161 |
| Domestic [Member] | ||
| Income Taxes [Line Items] | ||
| Long-term deferred tax assets | 8,683 | 3,414 |
| Foreign [Member] | ||
| Income Taxes [Line Items] | ||
| Long-term deferred tax assets | $ 11,414 | $ 2,747 |
INCOME TAXES (Schedule of Israel and International Components of Income before taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Schedule of Income Before Income Tax Domestic and Foreign [Line Items] | |||
| Net income before taxes | $ 158,409 | $ 109,253 | $ 56,496 |
| Domestic [Member] | |||
| Schedule of Income Before Income Tax Domestic and Foreign [Line Items] | |||
| Net income before taxes | 121,076 | 76,400 | 42,164 |
| Foreign [Member] | |||
| Schedule of Income Before Income Tax Domestic and Foreign [Line Items] | |||
| Net income before taxes | $ 37,333 | $ 32,853 | $ 14,332 |
INCOME TAXES (Israel and International Components of Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Income Tax Disclosure [Abstract] | |||
| Domestic | $ 15,868 | $ 12,297 | $ 7,238 |
| Foreign (mainly US) | 2,328 | 3,855 | 1,351 |
| Income tax expenses (tax benefits) | 18,196 | 16,152 | 8,589 |
| Current and deferred: | |||
| Current | 32,323 | 19,311 | 9,620 |
| Deferred | (14,127) | (3,159) | (1,031) |
| Income tax expenses (tax benefits) | $ 18,196 | $ 16,152 | $ 8,589 |
INCOME TAXES (Reconciliation of the Theoretical and Actual Tax Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Income Tax Disclosure [Abstract] | |||
| Income before taxes on income | $ 158,409 | $ 109,253 | $ 56,496 |
| Statutory tax expenses | 19,009 | 13,110 | 6,780 |
| Effect of non-benefited income New Technological or Preferred Enterprises statuses in Israel | 335 | 88 | 130 |
| Permanent differences, including difference between the basis of measurement of income reported for tax purposes and the basis of measurement of income for financial reporting purposes, net | (1,131) | (448) | (199) |
| Change in tax reserve for uncertain tax positions | (51) | (713) | 1,806 |
| Effect of foreign operations taxed at various rates | 3,477 | 3,249 | 1,381 |
| Foreign Derived Intangible Income benefit | (2,483) | (1,785) | (526) |
| Tax credits | (1,640) | (1,592) | (1,526) |
| Trapped Profits agreement net effect | 0 | 3,716 | 0 |
| Adjustments for previous year's tax | (172) | (113) | 249 |
| Change in valuation allowance | 692 | 601 | 413 |
| Other | 160 | 39 | 81 |
| Total reconciling items | (813) | 3,042 | 1,809 |
| Income tax expenses (Note 15) | $ 18,196 | $ 16,152 | $ 8,589 |
INCOME TAXES (Schedule of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
|---|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
||||
| Income Tax Disclosure [Abstract] | |||||
| Balance at the beginning of the year | $ 8,135 | [1] | $ 11,080 | ||
| Increase related to prior year tax positions | 0 | 271 | |||
| Decrease related to prior year tax positions | (1,099) | (4,403) | |||
| Increase related to current year tax positions | 1,709 | 1,187 | |||
| Balance at the end of the year | [1] | $ 8,745 | $ 8,135 | ||
| |||||
GEOGRAPHIC AREAS AND MAJOR CUSTOMERS (Sales by Geographic Area as Percentage of Total Sales) (Details) - Percentage of Total Sales [Member] - Geographic Concentration Risk [Member] |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Revenue from External Customer [Line Items] | |||
| Concentration percentage | 100.00% | 100.00% | 100.00% |
| Taiwan, R.O.C. [Member] | |||
| Revenue from External Customer [Line Items] | |||
| Concentration percentage | 32.00% | 37.00% | 33.00% |
| China [Member] | |||
| Revenue from External Customer [Line Items] | |||
| Concentration percentage | 28.00% | 21.00% | 19.00% |
| USA [Member] | |||
| Revenue from External Customer [Line Items] | |||
| Concentration percentage | 16.00% | 23.00% | 23.00% |
| Korea [Member] | |||
| Revenue from External Customer [Line Items] | |||
| Concentration percentage | 13.00% | 11.00% | 17.00% |
| Other [Member] | |||
| Revenue from External Customer [Line Items] | |||
| Concentration percentage | 11.00% | 8.00% | 8.00% |
GEOGRAPHIC AREAS AND MAJOR CUSTOMERS (Sales by Major Customers as Percentage of Total Sales) (Details) - Percentage of Total Sales [Member] - Customer Concentration Risk [Member] |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Customer A [Member] | |||
| Revenue, Major Customer [Line Items] | |||
| Concentration percentage | 23.00% | 31.00% | 26.00% |
| Customer B [Member] | |||
| Revenue, Major Customer [Line Items] | |||
| Concentration percentage | 12.00% | 21.00% | 24.00% |
GEOGRAPHIC AREAS AND MAJOR CUSTOMERS (Long-lived Assets by Geographic Location) (Details) - Percentage of Long-lived Assets [Member] - Geographic Concentration Risk [Member] |
12 Months Ended | |||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|||
| Revenue from External Customer [Line Items] | ||||
| Concentration percentage | [1] | 100.00% | 100.00% | |
| Israel [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Concentration percentage | 66.00% | 74.00% | ||
| USA [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Concentration percentage | 20.00% | 19.00% | ||
| Other [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Concentration percentage | 14.00% | 7.00% | ||
| ||||
FINANCIAL INSTRUMENTS (Narrative) (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Investments, All Other Investments [Abstract] | ||
| Notional amount of the hedging instruments | $ 85,293 | $ 32,590 |
FINANCIAL INSTRUMENTS (Fair Value of Derivative Contracts) (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Derivative Assets Reported in Other Current Assets [Member] | ||
| Derivative [Line Items] | ||
| Derivatives designated as hedging instruments in cash flow hedge | $ 0 | $ 249 |
| Derivative Liabilities Reported in Other Current Liabilities [Member] | ||
| Derivative [Line Items] | ||
| Derivatives designated as hedging instruments in cash flow hedge | $ 454 | $ 0 |
FINANCIAL INSTRUMENTS (Impact of Derivative Instruments on Total Operating Expenses) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Investments, All Other Investments [Abstract] | |||
| Loss (gain) on derivative instruments | $ 1,813 | $ 453 | $ 796 |
FINANCIAL INCOME (EXPENSE), NET (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Other Income and Expenses [Abstract] | |||
| Interest income | $ 6,478 | $ 2,194 | $ 4,057 |
| Financial expense related to the Convertible Senior Notes (Note 16) | (1,282) | (4,229) | (868) |
| Exchange rate gain (loss), net | 3,469 | (948) | (2,172) |
| Bank charges | (187) | (150) | (91) |
| Total | $ 8,478 | $ (3,133) | $ 926 |
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