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Item 3. Quantitative and Qualitative Disclosures About Market Risk

2022-05-04 compared with 2021-11-03 · 53 added, 31 removed, 3 unchanged (97% of the section changed)

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk in the ordinary course of our business.

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates.

Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates, customer concentrations and interest rates.

We do not hold or issue financial instruments for trading purposes.

Foreign Currency Exchange Risk

Approximately 57.1% and 50.7% of our revenues for the nine months ended September 30, 2021 and 2020, respectively, were earned in non-U.S.

Dollar denominated currencies, principally the Euro.

Our expenses are generally denominated in the currencies in which our operations are located, primarily the U.S.

Dollar and New Israeli Shekel, and to a lesser extent, the Euro and South Korean Won.

Our New Israeli Shekel-denominated expenses consist primarily of personnel and overhead costs.

Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.

A hypothetical 10% change in foreign currency exchange rates during the nine months ended September 30, 2021, between the Euro and the U.S.

Dollar would increase or decrease our net income by $50.9 million for the nine months ended September 30, 2021.

A hypothetical 10% change in foreign currency exchange rates during the nine months ended September 30, 2021 between the New Israeli Shekel and the U.S.

Dollar would increase or decrease our net income by $8.4 million for the nine months ended September 30, 2021.

A hypothetical 10% change in foreign currency exchange rates during the nine months ended September 30, 2021, between the South Korean Won and the U.S.

Dollar would increase or decrease our net income by $22.5 million for the nine months ended September 30, 2021.

For purposes of our consolidated financial statements, local currency assets and liabilities are translated at the rate of exchange to the U.S.

Dollar on the balance sheet date and local currency revenues and expenses are translated at the exchange rate as of the date of the transaction or at the average exchange rate to the U.S.

Quantitative and Qualitative

Disclosures About Market Risk

are exposed to market risk in the ordinary course of our business.

Market risk represents the risk of loss that may impact our financial

position due to adverse changes in financial market prices and rates.

Our market risk exposure is primarily a result of fluctuations in

foreign currency exchange rates, customer concentrations, and interest rates.

We do not hold or issue financial instruments for trading

Currency Exchange Risk

Approximately

56.9% and 54.9% of our revenues for the three months ended March 31, 2022, and 2021, respectively, were earned in non U.S.

denominated currencies, principally the Euro.

Our expenses are generally denominated in the currencies in which our operations are located,

primarily the U.S.

dollar, New Israeli Shekel ("NIS"), Euro, and to a lesser extent, the South Korean Won ("KRW").

Our NIS denominated

expenses consist primarily of personnel and overhead costs.

Our consolidated results of operations and cash flows are, therefore, subject

to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign

exchange rates.

A hypothetical 10% change in foreign currency exchange rates between the Euro and the U.S.

dollar would increase or decrease

our net income by $23.4 million for the three months ended March 31, 2022.

A hypothetical 10% change in foreign currency exchange

rates between the NIS and the U.S.

dollar would increase or decrease our net income by $14.5 million for the three months ended March 31,

purposes of our consolidated financial statements, local currency assets and liabilities are translated at the rate of exchange to the

dollar on the balance sheet date and local currency revenues and expenses are translated at the exchange rate as of the date of the

transaction or at the average exchange rate to the U.S.

dollar during the reporting period.

To date, we have used derivative financial instruments, specifically foreign currency forward to manage exposure to foreign currency risks by hedging portions of the anticipated payroll payments denominated in New Israeli Shekels (“NIS”).

Our foreign currency forward contracts are expected to mitigate exchange rate changes related to the hedged assets.

Those hedging contracts are designated as cash flow hedges.

In addition, we also entered into derivative instrument arrangements to hedge the Company’s exposure to currencies other than the U.S.

dollar, mainly forward contracts and put and call options to sell Euro for U.S.

dollars, forward contracts and put and call options to sell Australian dollars (“AUD”) for U.S.

date, we have used derivative financial instruments, specifically foreign currency forward contracts and put and call options, to manage

exposure to foreign currency risks by hedging portions of the anticipated payroll payments denominated in NIS.

These derivative instruments

are designated as cash flow hedges.

addition, we also entered into derivative financial instrument to hedge the Company’s exposure to currencies other than the U.S.

dollar, mainly forward contracts and put and call options to buy and sell Euro for U.S.

dollars, forward contracts to sell AUD for U.S.

dollars and forward contracts to sell U.S.

dollars for South Korean Won (“KRW”).

dollars for KRW.

These derivative instruments are not designated as cash flow hedges.

Concentrations of Major Customers

Our trade accounts receivables potentially expose us to a concentration of credit risk with our major customers.

As of September 30, 2021, two customers accounted for approximately 29.09% of our consolidated trade receivables, net balance.

We currently do not foresee a credit risk associated with these receivables other than the amount included in our financial statements.

Concentrations

of Major Customers

trade accounts receivables potentially expose us to a concentration of credit risk with our major customers.

As of March 31, 2022,

two major customers accounted for approximately 34.3% of our consolidated trade receivables balance.

As of March 31, 2021, one major

customer accounted for approximately 16.0% of our consolidated trade receivables balance.

For the three months ended March 31, 2022

and 2021, one major customer accounted for approximately 23.5% and 21.2% of total revenues, respectively.

We currently do not foresee

a credit risk associated with these receivables.

are subject to risk from fluctuating market prices of certain commodity raw materials, including copper, which are used in our products.

Prices of these raw materials may be affected by supply restrictions or other market factors from time to time, and we do not enter into

hedging arrangements to mitigate commodity risk.

Significant price changes for these raw materials could reduce our operating margins

if we are unable to recover such increases from our customers, and could harm our business, financial condition, and results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk