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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-02-25 compared with 2024-02-26 · 34 added, 60 removed, 6 unchanged (94% of the section changed)

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

68.2%, 60.1% and 54.3% of our revenues for the years ended December 31, 2023, 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 and New Israeli Shekel ("NIS"), Euro, and 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.

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 commodity price risk.

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

Foreign Currency Exchange Risk

Approximately 43.8%, 68.1% and 60.1% of our revenues for the years ended December 31, 2024, 2023 and 2022, 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 ("NIS") and Euro.

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 $194.7 million for the year ended December 31, 2023.

A hypothetical 10% change in foreign currency exchange rates between the NIS and

dollar would increase or decrease our net income by $14.9 million for the year ended December 31, 2024.

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.

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 $62.9 million for the year ended December 31, 2024.

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.

dollar during the reporting period.

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.

Our foreign currency forward

contracts are expected to mitigate exchange rate changes related to the hedged assets.

Those hedging contracts are designated as cash

addition, from time to time we enter into derivative financial instruments to hedge the Company’s exposure to currencies other than

To 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.

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, from time to time we enter into derivative financial instruments to hedge the Company’s exposure to currencies other than the U.S.

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

These derivative instruments are not

designated as cash flow hedges.

had cash and cash equivalents of $338.5 million and $783.1 million as of December 31, 2023 and 2022, respectively, which was held for

working capital purposes.

We had available-for-sale marketable securities with an estimated fair value of $929.4 million and $886.6 million

as of December 31, 2023 and 2022, respectively.

In addition, we had restricted bank deposits of 0.3 million and $1.9 million as of December

31, 2023 and 2022, respectively.

Additionally,

our hedging activities may also contribute to increased losses as a result of volatility in foreign currency markets.

If foreign exchange

currency markets continue to be volatile, such fluctuations in foreign currency exchange rates could materially and adversely affect our

profit margins and results of operations in future periods.

Also, the volatility in the foreign currency markets may make it difficult

to hedge our foreign currency exposures effectively.

Concentrations

of Major Customers

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

For the year ended December

31, 2023, two major customers accounted for 24.0% of our total revenues, and as of December 31, 2023, three major customers accounted

for approximately 46.8% of our consolidated trade receivables balance.

For the year ended December 31, 2022, one major customers accounted

for 18.5% of total revenues, and as of December 31, 2022, two major customers accounted for approximately 42.2% of our consolidated trade

receivables balance.

These derivative instruments are not designated as cash flow hedges.

We had cash,cash equivalents and restricted cash of $409.9 million and $338.5 million as of December 31, 2024 and 2023, respectively, which was held for working capital purposes.

We had available-for-sale marketable securities with an estimated fair value of $353.9 million and $929.4 million as of December 31, 2024 and 2023, respectively.

In addition, we had restricted deposits of 3.4 million and $0.3 million as of December 31, 2024 and 2023, respectively.

Additionally, our hedging activities may also contribute to increased losses as a result of volatility in foreign currency markets.

If foreign exchange currency markets continue to be volatile, such fluctuations in foreign currency exchange rates could materially and adversely affect our profit margins and results of operations in future periods.

Also, the volatility in the foreign currency markets may make it difficult to hedge our foreign currency exposures effectively.

Concentrations of Major Customers

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

For the year ended December 31, 2024, one major customer accounted for 12.9% of our total revenues, and as of December 31, 2024, three major customers accounted for approximately 43.4% of our consolidated trade receivables balance.

For the year ended December 31, 2023, two major customers accounted for 24.0% of total revenues, and as of December 31, 2023, two major customers accounted for approximately 47.1% of our consolidated trade receivables balance.

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 which are used in our products, including Copper,

Lithium, Nickel and Cobalt.

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.

Commodity Price Risk

We are subject to risk from fluctuating market prices of certain commodity raw materials which are used in our products, including Copper, Lithium, Nickel and Cobalt.

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-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk