8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________

FORM 8-K

________________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 13, 2014

________________________________________________

ENPHASE ENERGY, INC.

(Exact name of registrant as specified in its charter)

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Delaware	001-35480	20-4645388
(State of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

1420 N. McDowell Blvd

Petaluma, CA 94954

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (707) 774-7000

________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

On February 14, 2014, Enphase Energy, Inc. (the “Company”) entered into an amendment (the “Amendment”) to its revolving credit facility with Wells Fargo Bank, N.A. (“Wells”). The amendment provides for an automatic extension of the maturity date of the facility from November 7, 2015 to November 7, 2016 if (a) the maturity of the Company’s term loan owed to Hercules Technology Growth Capital, Inc. (“Hercules”) is extended to February 7, 2017 or later, (b) the Hercules term loan is refinanced, renewed or otherwise replaced on terms reasonably acceptable to Wells or (c) the Company does not exercise its option to borrow additional term loans prior to the end of the availability period with respect to those additional term loans, which period ends on March 31, 2014 (without any extension of the availability period). As of the date of this filing, the Company has not borrowed any additional term loans under its facility with Hercules, and does not expect to borrow any additional term loans prior to the end of the availability period (or extend the availability period).

In addition, the Amendment (a) reduces the required undrawn availability component of the minimum liquidity covenant from $8 million to $5 million, and (b) increases certain flexibility within the calculation of the borrowing base.

The foregoing description of the Amendment is not intended to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.51 hereto.

Item 2.02. Results of Operations and Financial Condition.

On February 18, 2014, the Company issued a press release announcing the Company’s financial results for the fourth quarter and fiscal year ended December 31, 2013. A copy of the press release is furnished as Exhibit 99.1 to this report.

The information in this Item 2.02 of the Form 8-K and the exhibit attached hereto as Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and shall not be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filings, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(b) On February 13, 2014, Stoddard M. Wilson submitted his resignation from the Board of Directors (the “Board”) of the Company, effective immediately. Mr. Wilson served in the class of directors whose term of office expires at the Company’s 2016 Annual Meeting of Stockholders. Mr. Wilson’s resignation was not the result of a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

(d) Effective immediately upon Mr. Wilson’s resignation from the Board, the Board appointed Richard Mora to the Board, to serve in the class of directors whose term of office expires at the Company’s 2016 Annual Meeting of Stockholders and until his successor is duly elected and qualified, or until his earlier death, resignation or removal. Mr. Mora’s appointment was recommended to the Board by the Nominating and Corporate Governance Committee of the Board. Mr. Mora was also named as a member of the Compensation Committee, effective immediately upon his appointment to the Board.

In accordance with the Company’s Non-Employee Director Compensation Policy (the “Director Compensation Policy”), Mr. Mora is entitled to receive a $35,000 annual retainer for service as a Board member and an annual retainer of $6,000 as a member of the Compensation Committee.

In connection with his appointment to the Board, Mr. Mora, as a non-employee director and pursuant to the Company’s 2011 Equity Incentive Plan and the Director Compensation Policy, was granted an option to purchase 39,109 shares of Common Stock (the “Option”) on February 13, 2014 (the “Appointment Date”). The Option vests in four equal annual installments beginning one year after the Appointment Date. The Option was granted with an exercise price equal to $7.30, the fair market value of the Company’s common stock on the date of the grant.

The Company also entered into its standard form of indemnification agreement with Mr. Mora (the “Indemnification Agreement”). The Indemnification Agreement provides, among other things, that the Company will indemnify Mr. Mora, under the circumstances and to the extent provided for therein, for certain expenses which he may be required to pay in connection with certain claims to which he may be made a party by reason of his position as a director of the Company, and otherwise to the fullest extent permitted under Delaware law and the Company’s Bylaws.

The Company’s standard form of indemnification agreement was previously filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (No. 333-174925), as amended, as filed on August 24, 2011.

There are no arrangements or understandings between Mr. Mora and any other persons pursuant to which he was elected as a director of the Company. There are no family relationships between Mr. Mora and any director, executive officer, or any person nominated or chosen by the Company to become a director or executive officer. There are no related person transactions (within the meaning of Item 404(a) of Regulation S-K promulgated by the Securities and Exchange Commission) between Mr. Mora and the Company.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description of Exhibits
10.51	Amendment No. 1 to Credit Agreement dated, February 14, 2014, by and among the lenders identified on the signature pages thereof, Wells Fargo Bank, N.A., as an agent for the lenders, and Enphase Energy, Inc.
99.1	Press release of the Company dated February 18, 2014, entitled “Enphase Energy Improves Financial Performance Driven by Strong Business Momentum.”

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 18, 2014	ENPHASE ENERGY, INC.
	By:	/s/ Kris Sennesael
		Kris Sennesael
		Vice President and Chief Financial Officer

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibits
10.51	Amendment No. 1 to Credit Agreement dated, February 14, 2014, by and among the lenders identified on the signature pages thereof, Wells Fargo Bank, N.A., as an agent for the lenders, and Enphase Energy, Inc.
99.1	Press release of the Company dated February 18, 2014, entitled “Enphase Energy Improves Financial Performance Driven by Strong Business Momentum.”

EX-10.51

EXHIBIT 10.51

AMENDMENT NO. 1 TO CREDIT AGREEMENT

AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment”), dated as of February 14, 2014, among ENPHASE ENERGY, INC., a Delaware corporation (“Borrower”), the lenders identified on the signature pages hereto (together with their respective successors and assigns, each individually a “Lender” and collectively, the “Lenders”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Agent”), and is made with reference to that certain Credit Agreement, dated as of November 7, 2012 (the “Credit Agreement”), by and among Borrower, the Lenders and Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement.

RECITALS

WHEREAS, Agent, the Lenders and Borrower have entered into financing arrangements pursuant to which Lenders (or Agent on behalf of Lenders) have made and provided and may hereafter make and provide loans, advances and other financial accommodations to Borrower as set forth in the Credit Agreement and the other agreements, documents and instruments referred to therein or any time executed and/or delivered in connection therewith or related thereto;

WHEREAS,Borrower has requested that Agent and the Lenders make certain amendments to the Credit Agreement, and Agent and the Lenders are willing to make such amendments, subject to the terms and conditions set forth herein; and

WHEREAS, by this Amendment, Borrower, Agent and the Lenders desire and intend to evidence such amendments.

NOW, THEREFORE,in consideration of the foregoing, and the respective agreements and covenants contained herein, the parties hereto agree as follows:

Section 1. AMENDMENTS TO THE CREDIT AGREEMENT

A.Amendment to Section 7 - Financial Covenants

(i)    Section 7 of the Credit Agreement is hereby amended by amending and restating Section 7 in its entirety as follows:

“7.    FINANCIAL COVENANTS.

Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrower will cause the Loan Parties, on a consolidated basis, to maintain at least $15,000,000 of Liquidity at all times, which shall consist of (i) prior to the Amendment No. 1 Effective Date, at least $8,000,000 in Availability and (ii) on or after the Amendment No. 1 Effective Date, at least $5,000,000 in Availability; provided that, if Borrower maintains a Fixed Charge Coverage Ratio, measured on a month-end basis for the trailing 12-months, greater than or equal to 1.1:1, then, so long as no Event of Default has occurred and is continuing, Borrower may, at its option upon 10 Business Days prior written notice to Agent, elect to convert its financial covenant test from maintaining at least $15,000,000 of Liquidity at all times, which shall consist of (i) prior to the Amendment No. 1 Effective Date, at least $8,000,000 in Availability and (ii) on or after the Amendment No. 1 Effective Date, at least $5,000,000 in Availability, to maintaining a minimum Fixed Charge Coverage Ratio of 1.1:1 tested on a monthly basis; providedfurther that, after Borrower so elects, Borrower will be subject to the minimum Fixed Charge Coverage Ratio for the remainder of the term of this Agreement and cannot elect to switch back to the minimum Liquidity covenant in lieu thereof.”.

Section 2. AMENDMENTS TO SCHEDULE 1 (DEFINITIONS) TO THE CREDIT AGREEMENT

A.    Schedule 1.1 (Definitions) to the Credit Agreement is hereby amended by inserting the following defined terms in alphabetical order:

““Amendment No. 1” means that certain Amendment No. 1 to Credit Agreement, dated as of February 14, 2014, by and among Borrower, the Lenders and Agent.

“Amendment No. 1 Effective Date” has the meaning specified therefor in Amendment No. 1.

B.    Schedule 1.1 (Definitions) to the Credit Agreement is hereby further amended by amending and restating the following defined term in its entirety as follows:

““Maturity Date” means November 7, 2015; provided that, if either (x) the “Maturity Date” (as defined in the Hercules Facility) is extended to February 7, 2017 or later, (y) the Hercules Facility is refinanced, renewed or otherwise replaced with a new facility and documentation on terms reasonably acceptable to Agent and not otherwise in contradiction of this Agreement, or (z) (i) Borrower does not exercise its option to request any Growth Loans (as defined in the Hercules Facility) under the Hercules Facility on or prior to the Availability Termination Date (as defined in the Hercules Facility) and (ii) the Availability Termination Date (as defined in the Hercules Facility) is not amended, modified or otherwise extended past March 31, 2014, then the Maturity Date shall mean November 7, 2016.”.

C.    Schedule 1.1 (Definitions) to the Credit Agreement is hereby further amended by amending the definition of “Eligible Accounts” by amending and restating clause (i) thereof in its entirety as follows:

“(i) Accounts with respect to (x) prior to the Amendment No. 1 Effective Date, those Account Debtors disclosed in writing to Agent by Borrower prior to the Closing Date, whose total obligations owing to Borrower exceed 20% (such percentage, as applied to a particular such Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts (but the portion of the Accounts not in excess of the foregoing applicable percentages may be deemed Eligible Accounts), to the extent of the obligations owing by such Account Debtor in excess of such percentage, (y) on and after the Amendment No. 1 Effective Date, those Account Debtors disclosed in writing to Agent by Borrower on or prior to the Amendment No. 1 Effective Date, whose total obligations exceed 25% or 20%, as so disclosed (in each case, such percentage, as applied to a particular such Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts (but the portion of the Accounts not in excess of the foregoing applicable percentages may be deemed Eligible Accounts), to the extent of the obligations owing by such Account Debtor in excess of such percentage, and (z) all other Account Debtors, whose total obligations to Borrower exceed 10% (such percentage, as applied to a particular such Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts (but the portion of the Accounts not in excess of the foregoing applicable percentages may be deemed Eligible Accounts), to the extent of the obligations owing by such Account Debtor in excess of such percentage; provided, that, in each case, the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,”.

Section 3. CONDITIONS PRECEDENT

This Amendment shall become effective on the first date upon which each of the following conditions precedent has been waived or satisfied in a manner satisfactory to Agent (such date being the “Amendment No. 1 Effective Date”):

(i)    Agent shall have received this Amendment, duly authorized, executed and delivered by Borrower, Agent and the Lenders (the Credit Agreement, Exhibits and Schedules as so amended by this Amendment being referred to herein as the “Amended Credit Agreement”);

(ii)    Agent shall have received Amendment No. 1 to Intercreditor Agreement, duly authorized, executed and delivered by Agent and Hercules Technology Growth Capital, Inc., a Maryland corporation, as lender under the Hercules Facility, and acknowledged and agreed to by Borrower;

(iii)    on the date of this Amendment and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, nor shall either result from the entry into this Amendment;

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(iv)    the representations and warranties contained in Section 4 of this Amendment shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of this Amendment and on the Amendment No. 1 Effective Date (except, in each case, to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of such earlier date);

(v)    Agent shall have received a certificate from the Secretary of Borrower, (i) attesting to the resolutions of Borrower’s Board of Directors authorizing its execution and delivery of this Amendment and performance of the Amended Credit Agreement, (ii) authorizing specific officers of Borrower to execute this Amendment and (iii) attesting to the incumbency and signatures of such specific officers of Borrower;

(vi)    Agents shall have received a certificate of status with respect to Borrower, dated a date reasonably close to the Amendment No. 1 Effective Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of Borrower and each jurisdiction in which its failure to be duly qualified could reasonably be expected to result in a Material Adverse Effect, which certificates shall indicate that Borrower is in good standing in such jurisdiction;

(vii)    Borrower shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by this Amendment (to the extent incurred on or prior to the Amendment No. 1 Effective Date); and

(viii)    Borrower shall have paid to Agent an amendment fee equal to $50,000.

Section 4. BORROWER’S REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants to the Lender Group the following (which shall survive execution and delivery of this Amendment), the truth and accuracy of which representations and warranties are a continuing condition of the making of Revolving Loans and providing Letters of Credit to Borrower:

A.Due Organization. Borrower (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization (ii) is qualified to do business in any state where the failure to be so qualified could reasonably be expected to result in a Material Adverse Effect, and (iii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, and, with respect to the Borrower, to enter into this Amendment and to carry out the transactions contemplated by the Amended Credit Agreement.

B.Binding Obligations. This Amendment, when duly executed and delivered by Borrower, will be the legally valid and binding obligation of Borrower, enforceable against Borrower in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

C.Due Authorization; No Conflict.

(i)    The execution and delivery by Borrower of this Amendment and the performance by Borrower of the Amended Credit Agreement have been duly authorized by all necessary action on the part of Borrower.

(ii)    The execution and delivery by Borrower of this Amendment, and the performance by Borrower of the Amended Credit Agreement do not and will not (a) violate any material provision of federal, state, or local law or regulation applicable to Borrower or its Subsidiaries, the Governing Documents of Borrower or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on Borrower or its Subsidiaries, (b) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of Borrower or its Subsidiaries where any such conflict, breach or default could individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (c) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of Borrower or its Subsidiaries, other than Permitted Liens, or (d) require any approval of any holder of Equity Interests of Borrower or any approval or consent of any Person under any material agreement of Borrower, other than consents or approvals that have been obtained and

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that are still in force and effect and except, in the case of material agreements, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material Adverse Effect.

D.Governmental Consents. The execution and delivery by Borrower of this Amendment, and the performance by Borrower of the Amended Credit Agreement and the consummation of the transactions contemplated hereby do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that (i) have been obtained and that are still in force and effect or (ii) the failure of which to obtain or perform could not reasonably be expected to result in a Material Adverse Effect.

E.Incorporation of Representations and Warranties From Amended Credit Agreement. The representations and warranties of the Loan Parties contained in the Credit Agreement, the Amended Credit Agreement and the other Loan Documents are true, correct and complete in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the Amendment No. 1 Effective Date as though made on and as the date hereof (except to the extent such representations and warranties specifically relate to an earlier date).

F.No Default. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute a Default or an Event of Default.

Section 5. MISCELLANEOUS

A.Effect of this Amendment.

(i)    On and after the Amendment No. 1 Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Credit Agreement.

(ii)    Except as expressly amended pursuant hereto, no other changes, waiver or modifications to the Loan Documents are intended or implied, and in all other respects the Loan Documents are hereby specifically ratified and confirmed by all parties hereto as of the date hereof. To the extent that any provision of the Credit Agreement or any of the other Loan Documents are inconsistent with the provisions of this Amendment, the provisions of this Amendment shall control.

B.Further Assurances. The Loan Parties shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Agent to effectuate the provisions and purposes hereof.

C.Governing Law. The validity of this Amendment, the construction, interpretation and enforcement hereof, and the rights of the parties hereto with respect to all matters arising hereunder or related thereto shall be determined under, governed by, and construed in accordance with the laws of the State of California.

D.Binding Effect. This Amendment shall bind and inure to the benefit of the respective successors and assigns of each of the parties hereto.

E.Counterparts; Electronic Execution. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this Amendment by telefacsimile or other electronic method of transmission (including .pdf format) shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile or other electronic method of transmission (including .pdf format) also shall deliver an original executed counterpart of this Amendment but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

BORROWER:

ENPHASE ENERGY, INC.
By:	/s/ Kris Sennesael
	Name: Kris Sennesael
	Title: Vice President and Chief Financial Officer

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent and as a Lender
By:	/s/ Patrick McCormack
	Name: Patrick McCormack
	Title: Authorized Signatory

EX-99.1

Exhibit 99.1

Enphase Energy Improves Financial Performance Driven by Strong Business Momentum

PETALUMA, Calif. — February 18, 2014 — Enphase Energy, Inc. (NASDAQ: ENPH) announced today financial results for the fourth quarter and fiscal year ended December 31, 2013.

Fourth Quarter 2013 Highlights

• Record revenue of $67.1 million

• Shipped a record 107MW (AC) of microinverter systems, up 30 percent year-over-year

• Record non-GAAP gross margin of 32.3 percent, up 430 basis points year-over-year

• Non-GAAP operating income of $0.4 million

• Strong positive cash flow from operations of $7.6 million

Enphase Energy reported total revenues for the fourth quarter of 2013 of $67.1 million, an increase of 8 percent compared to the third quarter of 2013 and an increase of 16 percent compared to the fourth quarter of 2012. During the fourth quarter, Enphase sold 107MW (AC) or 485,000 microinverters. This is an increase in MW of 14 percent compared to the third quarter of 2013 and an increase of 30 percent compared to the fourth quarter of 2012.

GAAP gross margin for the fourth quarter of 2013 was 32.1 percent. Non-GAAP gross margin was 32.3 percent, an increase of 400 basis points compared to the third quarter of 2013, and an increase of 430 basis points compared to the fourth quarter of 2012.

GAAP operating expenses for the fourth quarter were $23.1 million and non-GAAP operating expenses were $21.3 million.

GAAP operating loss for the fourth quarter of 2013 was $1.6 million, and non-GAAP operating income was $0.4 million, resulting in Enphase’s first profitable quarter on a non-GAAP operating income basis. This compares to a non-GAAP operating loss of $4.2 million in the fourth quarter of 2012.

Fourth quarter of 2013 GAAP net loss was $2.8 million, or a loss of $0.07 per share. On a non-GAAP basis, the net loss was $0.7 million, or a loss of $0.02 per share.

Cash flow from operations during the fourth quarter was $7.6 million and net cash flow was $6.4 million. As a result, the company exited the year with a total cash balance of $38.2 million.

“We ended 2013 with a breakthrough fourth quarter,” commented Paul Nahi, CEO of Enphase. “We posted the highest revenue in our company’s history, shipping over 100MW for the first time in any quarter, while our record gross margin marks the first time we have exceeded 30 percent in any quarter. Combined with our ongoing focus on expense management, we were able to post a non-GAAP operating profit for the first time in Enphase’s history. We also continue to drive working capital improvements, resulting in strong cash generation during the quarter.”

He added, “This quarter’s results demonstrate the power of the Enphase business model and our ability to execute on our key initiatives. We are extremely pleased to have achieved several company milestones during the fourth quarter and exited 2013 with strong business momentum. Since inception, we have shipped over 1GW (AC) or approximately 5 million microinverters. We are well positioned for 2014, which by many accounts, is expected to be a very strong year for the solar industry, and we are off to a great start.”

For the full year 2013, total revenues were $232.8 million representing 355MW (AC) or 1.6 million microinverters. GAAP gross margin for the year was 29.0 percent, and non-GAAP gross margin was 29.1 percent. GAAP net loss for the year totaled $25.9 million, or a loss of $0.62 per share. Non-GAAP net loss was $18.0 million, or a loss of $0.43 per share.

“2013 was another year of impressive results by Enphase, highlighted by continued gross margin expansion which has improved 350 basis points year-over-year,” said Paul Nahi. “We strengthened our industry leadership position and introduced our fourth-generation microinverter. We continue to improve the overall financial performance of the company, and substantially improved the cash flow from operations for the year close to the break-even level.” He added, “I am tremendously proud of what we accomplished, which was made possible by the ongoing innovation, hard work and commitment of our entire Enphase family.”

Business Outlook

“Looking forward, we expect revenues for the first quarter of 2014 to be within a range of $54 million to $57 million, and for gross margin to be within a range of 30 percent to 33 percent,” said Kris Sennesael, CFO of Enphase. “The strong business momentum from the fourth quarter of 2013 is carrying over into the first quarter of 2014. At the midpoint of the revenue outlook range, revenue is up 22 percent compared to the first quarter of 2013. We also expect operating expenses for the first quarter of 2014 to be up approximately 5 to 8 percent compared to the fourth quarter of 2013, as we continue to invest in the growth of the company.”

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this press release. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. Enphase believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting its business.

Conference Call Information

Enphase Energy will host a conference call for analysts and investors to discuss its fourth quarter and full year 2013 results and first quarter 2014 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). Open to the public, investors may access the call by dialing 877-644-1284; participant passcode 47007756. A live webcast of the conference call, along with accompanying presentation slides, will also be accessible from the Investor Relations section of the company's website at investor.enphase.com. Following the webcast, an archived version will be available on the website for 30 days. In addition, an audio replay of the conference call will be available by calling 855-859-2056; participant passcode 47007756 beginning approximately one hour after the call.

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to Enphase Energy’s financial performance, market demands for its microinverters, advantages of its technology, market trends and future financial performance. These forward-looking statements are based on the Company’s current expectations and inherently involve significant risks and uncertainties. Enphase Energy’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to: the future demands for solar energy solutions; the reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar electricity applications; the Company’s ability to achieve broad market acceptance of its microinverter systems and to develop new and enhanced products in response to customer demands and rapid market and technological changes in the solar industry; the success of competing solar solutions that are or become available; the Company’s ability to effectively manage the growth of its organization and expansion into new markets and to maintain or achieve anticipated product quality, product performance and cost metrics; competition and other factors that may cause potential future price reductions for its products; the Company’s ability to optimally match production with demand and dependence on a limited number of outside contract manufacturers and lack of supply contracts with these manufacturers; general economic conditions in domestic and international markets; and other risks detailed in the “Risk Factors” and elsewhere in Enphase Energy’s Securities and Exchange Commission (SEC) filings and reports, including its most recent report on Form 10-Q filed on November 12, 2013. Additional information will also be set forth in those sections in Enphase Energy’s Annual Report on Form 10-K for the year ended December 31, 2013, which will be filed with the SEC in the first quarter of 2014. Enphase Energy undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

A copy of this press release can be found on the Investor Relations page of Enphase Energy’s website atinvestor.enphase.com.

About Enphase Energy, Inc.

Enphase Energy delivers microinverter technology for the solar industry that increases energy production, simplifies design and installation, improves system uptime and reliability, reduces fire safety risk and provides a platform for intelligent energy management. Our semiconductor-based microinverter system converts energy at the individual module level and brings a system-based, high technology approach to solar energy generation. www.enphase.com

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Contacts

Media Relations

Christine Bennett, Enphase Energy

Corporate Communications

pr@enphaseenergy.com

+1-707-763-4784

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended December  31,						Twelve Months Ended December 31,
	2013			2012			2013			2012
Net revenues	$	67,056		$	57,568		$	232,846		$	216,678
Cost of revenues	45,560			41,512			165,430			161,390
Gross profit	21,496			16,056			67,416			55,288
Operating expenses:
Research and development	8,721			8,533			34,524			35,601
Sales and marketing	8,315			7,525			31,080			25,973
General and administrative	6,071			6,177			23,970			24,875
Total operating expenses	23,107			22,235			89,574			86,449
Loss from operations	(1,611		)	(6,179		)	(22,158		)	(31,161		)
Other expense, net:
Interest expense	(670		)	(1,025		)	(2,055		)	(6,436		)
Other (expense) income	(113		)	(233		)	(837		)	30
Total other expense, net	(783		)	(1,258		)	(2,892		)	(6,406		)
Loss before income taxes	(2,394		)	(7,437		)	(25,050		)	(37,567		)
Provision for income taxes	(416		)	(305		)	(863		)	(651		)
Net loss attributable to common stockholders	$	(2,810	)	$	(7,742	)	$	(25,913	)	$	(38,218	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.07	)	$	(0.19	)	$	(0.62	)	$	(1.24	)
Shares used in computing net loss per share attributable to common stockholders, basic and diluted	42,032			40,819			41,647			30,740

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	As of December 31,
	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	38,190		$	45,294
Accounts receivable, net	32,084			27,743
Inventory	16,580			19,843
Prepaid expenses and other	3,655			2,118
Total current assets	90,509			94,998
Property and equipment, net	24,853			25,541
Other assets	1,307			1,752
Total assets	$	116,669		$	122,291
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,363		$	11,272
Accrued liabilities	19,722			19,266
Deferred revenues	2,773			933
Current portion of term loans	3,507			2,384
Total current liabilities	33,365			33,855
Long-term liabilities:
Deferred revenues	11,284			7,537
Warranty obligations	25,490			15,260
Other liabilities	1,154			307
Term loans	5,170			8,677
Total long-term liabilities	43,098			31,781
Total liabilities	76,463			65,636
Commitments and contingencies
Stockholders’ equity:
Preferred stock	—			—
Common stock	—			—
Additional paid-in capital	192,916			183,629
Accumulated deficit	(152,939		)	(127,026		)
Accumulated other comprehensive income	229			52
Total stockholders’ equity	40,206			56,655
Total liabilities and stockholders’ equity	$	116,669		$	122,291

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Year Ended December 31,
	2013			2012
Cash flows from operating activities:
Net loss	$	(25,913	)	$	(38,218	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	6,981			5,568
Provision for doubtful accounts	885			1,068
Net loss on disposal of assets	82			120
Non-cash interest expense	429			4,777
Stock-based compensation	6,849			4,766
Change in fair value of convertible preferred stock warrants	—			(520		)
Changes in operating assets and liabilities:
Accounts receivable	(5,226		)	(11,040		)
Inventory	3,263			(8,615		)
Prepaid expenses and other assets	(1,450		)	(711		)
Accounts payable, accrued liabilities and warranty obligations	7,641			16,774
Deferred revenues	5,587			(18,614		)
Net cash used in operating activities	(872		)	(44,645		)
Cash flows from investing activities:
Purchases of property and equipment	(6,257		)	(12,990		)
Net cash used in investing activities	(6,257		)	(12,990		)
Cash flows from financing activities:
Proceeds from borrowings under term loans	—			10,000
Payments of financing costs	—			(1,031		)
Repayments of term loans	(2,447		)	(14,103		)
Principal payments under capital leases	(40		)	(96		)
Proceeds from issuance of common stock under employee stock plans	2,429			255
Proceeds from issuance of common stock in IPO, net of underwriting discounts and commissions	—			58,609
Payment of offering costs	—			(2,198		)
Net cash (used in) provided by financing activities	(58		)	51,436
Effect of exchange rate changes on cash	83			(31		)
Net decrease in cash and cash equivalents	(7,104		)	(6,230		)
Cash and cash equivalents—Beginning of period	45,294			51,524
Cash and cash equivalents—End of period	$	38,190		$	45,294

ENPHASE ENERGY, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(Unaudited)

	Three Months Ended December  31,						Twelve Months Ended December 31,
	2013			2012			2013			2012
Reconciliation of Gross Profit and Gross Margin on a GAAP Basis to Gross Profit and Gross Margin on a Non-GAAP Basis:
Gross profit on a GAAP basis	$	21,496		$	16,056		$	67,416		$	55,288
Stock-based compensation	129			76			438			196
Gross profit on a non-GAAP basis	$	21,625		$	16,132		$	67,854		$	55,484
Gross margin on a GAAP basis	32.1		%	27.9		%	29.0		%	25.5		%
Gross margin on a non-GAAP basis	32.3		%	28.0		%	29.1		%	25.6		%
Reconciliation of Operating Expenses on a GAAP Basis to Operating Expenses on a Non-GAAP Basis:
Operating expenses on a GAAP basis	$	(23,107	)	$	(22,235	)	$	(89,574	)	$	(86,449	)
Stock-based compensation(1)	1,765			1,531			6,411			4,570
Severance costs	84			371			662			371
Operating expenses on a non-GAAP basis	$	(21,258	)	$	(20,333	)	$	(82,501	)	$	(81,508	)
(1) Includes stock-based compensation as follows:
Research and development	$	569		$	557		$	2,110		$	1,728
Sales and marketing	495			429			1,812			1,254
General and administrative	701			545			2,489			1,588
Total	$	1,765		$	1,531		$	6,411		$	4,570
Reconciliation of Loss from Operations on a GAAP Basis to Income (Loss) from Operations on a Non-GAAP Basis:
Loss from operations on a GAAP basis	$	(1,611	)	$	(6,179	)	$	(22,158	)	$	(31,161	)
Stock-based compensation	1,894			1,607			6,849			4,766
Severance costs	84			371			662			371
Income (loss) from operations on a non-GAAP basis	$	367		$	(4,201	)	$	(14,647	)	$	(26,024	)
Reconciliation of Net Loss on a GAAP Basis to Net Loss on a Non-GAAP Basis:
Net loss on a GAAP basis	$	(2,810	)	$	(7,742	)	$	(25,913	)	$	(38,218	)
Stock-based compensation	1,894			1,607			6,849			4,766
Severance costs	84			371			662			371
Non-cash interest expense and write-off of deferred financing costs	107			808			429			4,777
(Gains) losses from convertible preferred stock warrant liability revaluation	—			—			—			(520		)
Net loss on a non-GAAP basis	$	(725	)	$	(4,956	)	$	(17,973	)	$	(28,824	)
Reconciliation of Basic and Diluted Net Loss per Share on a GAAP Basis to Basic and Diluted Net Loss per Share on a Non-GAAP Basis:
Basic and diluted net loss per share on a GAAP basis	$	(0.07	)	$	(0.19	)	$	(0.62	)	$	(1.24	)
Stock-based compensation	0.05			0.04			0.16			0.16
Severance costs	—			0.01			0.02			0.01
Non-cash interest expense and write-off of deferred financing costs	—			0.02			0.01			0.16
(Gains) losses from convertible preferred stock warrant liability revaluation	—			—			—			(0.02		)
Basic and diluted net loss per share on a non-GAAP basis	$	(0.02	)	$	(0.12	)	$	(0.43	)	$	(0.93	)