Exhibit 99.1
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED
(UNAUDITED)
INDEX TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(UNAUDITED)
|
Item |
Page | |
|
Consolidated Balance Sheets |
2 | |
|
Consolidated Statements of Operations and Comprehensive Loss |
3 | |
|
Consolidated Statements of Changes in Equity |
4-5 | |
|
Consolidated Statements of Cash Flows |
6 | |
|
Notes to Condensed Consolidated Interim Financial Statements |
7-18 |
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Balance Sheets | ||||||||
| (in thousands, except share data) | ||||||||
| September 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term deposits | ||||||||
| Accounts receivable, net of allowance for credit losses of $ | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Accrued compensation and related benefits | ||||||||
| Deferred revenues - short term | ||||||||
| Operating lease liabilities - short term | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Deferred revenues - long term | ||||||||
| Operating lease liabilities - long term | ||||||||
| Contingent consideration | ||||||||
| Other non-current liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Contingencies (see note 12) | ||||||||
| Redeemable non-controlling interests | - | |||||||
| Equity | ||||||||
| Ordinary shares, NIS | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Statements of Operations and Comprehensive Loss | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| in thousands, except per share data | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Revenues | |||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||
| Services | |||||||||||||||
| Cost of revenues | |||||||||||||||
| Products | |||||||||||||||
| Services | |||||||||||||||
| Gross profit | |||||||||||||||
| Operating expenses | |||||||||||||||
| Research and development, net | |||||||||||||||
| Selling, general and administrative | |||||||||||||||
| Goodwill impairment | | ||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
| Financial expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
| Income tax benefit | |||||||||||||||
| Share in profit (loss) of associated companies | ( | ) | ( | ) | |||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss attributable to non-controlling interests | ( | ) | ( | ) | |||||||||||
| Net loss attributable to Stratasys Ltd. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss per ordinary share attributable to Stratasys Ltd. - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Weighted average ordinary shares outstanding. - basic and diluted | |||||||||||||||
| Comprehensive loss | |||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | |||||||||
| Unrealized gains (losses) on derivatives designated as cash flow hedges | ( | ) | ( | ) | |||||||||||
| Other comprehensive income (loss), net of tax | ( | ) | ( | ) | ( | ) | |||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
| Less: comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | |||||||||||
| Comprehensive loss attributable to Stratasys Ltd. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Statements of Changes in Equity | ||||||||||||||||||||||||
| (in thousands ) | ||||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2021 and 2020 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Ordinary Shares | Paid-In | Accumulated | Comprehensive | Total | ||||||||||||||||||||
| Number of shares | Par Value | Capital | deficit | Loss | Equity | |||||||||||||||||||
| Balance as of December 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of shares in connection with stock-based compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Public offering of ordinary shares, net | ||||||||||||||||||||||||
| Deferred tax assets in connection with public offering expenses | - | |||||||||||||||||||||||
| Comprehensive income (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of March 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of shares in connection with stock-based compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Deferred tax assets in connection with public offering expenses | - | |||||||||||||||||||||||
| Comprehensive income (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of June 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of shares in connection with stock-based compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Expenses in connection with March 2021 public offering | - | ( | ) | ( | ) | |||||||||||||||||||
| Reduction of redeemable non-controlling interest | - | |||||||||||||||||||||||
| Comprehensive loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance as of September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Statements of Changes in Equity | ||||||||||||||||||||||||
| (in thousands ) | ||||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2021 and 2020 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Ordinary Shares | Paid-In | Accumulated | Comprehensive | Total | ||||||||||||||||||||
| Number of shares | Par Value | Capital | deficit | Loss | Equity | |||||||||||||||||||
| Balance as of December 31, 2019 | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of shares in connection with stock-based compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Comprehensive loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance as of March 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of shares in connection with stock-based compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Comprehensive income (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of June 30, 2020 | $ | $ | $ | ( | ) | ( | ) | $ | ||||||||||||||||
| Issuance of shares in connection with stock-based compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Comprehensive loss | - | ( | ( | ( | ||||||||||||||||||||
| Balance as of September 30, 2020 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Statements of Cash Flows | |||||||||
| Nine Months Ended September 30, | |||||||||
| in thousands | 2021 | 2020 | |||||||
| Cash flows from operating activities | |||||||||
| Net loss | $ | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
| Goodwill impairment | |||||||||
| Impairment of other long-lived assets | |||||||||
| Depreciation and amortization | |||||||||
| Stock-based compensation | |||||||||
| Foreign currency transaction loss | ( | ) | |||||||
| Deferred income taxes | ( | ) | ( | ) | |||||
| Share in loss (profit) of associated companies | ( | ) | |||||||
| Revaluation of investments | |||||||||
| Other non-cash items, net | |||||||||
| Change in cash attributable to changes in operating assets and liabilities: | |||||||||
| Accounts receivable, net | ( | ) | |||||||
| Inventories | |||||||||
| Other current assets and prepaid expenses | ( | ) | |||||||
| Other non-current assets | |||||||||
| Accounts payable | ( | ) | |||||||
| Other current liabilities | ( | ) | |||||||
| Deferred revenues | ( | ) | |||||||
| Other non-current liabilities | ( | ) | ( | ) | |||||
| Net cash provided by operating activities | |||||||||
| Cash flows from investing activities | |||||||||
| Cash paid for acquisitions, net of cash acquired | ( | ) | |||||||
| Purchase of property and equipment | ( | ) | ( | ) | |||||
| Investments in short-term bank deposits | ( | ) | ( | ) | |||||
| Investments in unconsolidated entities | ( | ) | |||||||
| Proceeds from maturity of short-term bank deposits | |||||||||
| Proceeds from sale of equity method investment | |||||||||
| Net proceeds from divestitures of subsidiaries and associated companies | |||||||||
| Purchase of intangible assets | ( | ) | ( | ) | |||||
| Other investing activities | ( | ) | |||||||
| Net cash used in investing activities | ( | ) | ( | ) | |||||
| Cash flows from financing activities | |||||||||
| Proceeds from public offering, net of issuance costs | |||||||||
| Proceeds from exercise of stock options | |||||||||
| Other financing activities | |||||||||
| Net cash provided by financing activities | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ( | ) | |||||
| Net change in cash, cash equivalents and restricted cash | ( | ) | |||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||
| Supplemental disclosures of cash flow information: | |||||||||
| Transfer of inventory to fixed assets | |||||||||
| Transfer of fixed assets to inventory | |||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Business Description and Basis of Presentation
The condensed consolidated interim financial information herein is unaudited; however, such information reflects all adjustments (consisting of normal, recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim period. The condensed consolidated interim financial statements include the accounts of Stratasys Ltd. and its subsidiaries. All intercompany accounts and transactions, including profits from intercompany sales not yet realized outside the Company, have been eliminated in consolidation.
The Company's financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), which requires the Company to make estimates based on assumptions about current and, for some estimates, future economic and market conditions which affect reported amounts and related disclosures in its financial statements. Although the Company current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from the Company expectations, which could materially affect its results of operations and financial position.
In particular, a number of estimates have been and will continue to be affected by the ongoing COVID-19 pandemic. The severity, magnitude and duration of, and recovery from, as well as the economic consequences of, the COVID-19 pandemic, remain uncertain, rapidly changing and difficult to predict. As a result, the accounting estimates and assumptions may change over time in response to COVID-19. Such changes could have an additional impact on the Company’s long-lived asset and intangible asset valuation; inventory valuation; assessment of the annual effective tax rate; and the allowance for expected credit losses and bad debt.
The results of operations for the three and nine months ended September 30, 2021 are not indicative of results that could be expected for the entire fiscal year. Certain financial information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The reader is referred to the audited consolidated financial statements and notes thereto for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the “SEC”) as part of the Company’s Annual Report on Form 20-F for such year on March 1, 2021.
Note 2. New Accounting Pronouncements
Accounting Pronouncements Adopted in 2021
In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and simplification of areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes The guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted this guidance effective January 1, 2021, with no material impact on its consolidated financial statements.
| U.S. $ in thousands | |||
| Cash payments | $ | ||
| Issuance of ordinary shares to Origin stockholders | |||
| Contingent consideration at estimated fair value | |||
| Total consideration | $ |
| Allocation of Purchase Price | |||
| (U.S. $ in thousands) | |||
| Cash and cash equivalents | $ | ||
| Goodwill | |||
| Intangible assets | |||
| Other assets | |||
| Total assets acquired | |||
| Net deferred tax liabilities | |||
| Other labilities | |||
| Total liabilities assumed | |||
| Net assets acquired | $ |
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 4. Revenues
Disaggregation of Revenues
The following table presents the Company’s revenues disaggregated by geographical region (based on the Company's customers' locations) and revenue type for the three and nine months ended September 30, 2021 and 2020:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| (U.S. $ in thousands) | (U.S. $ in thousands) | ||||||||||||||
| Americas | |||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||
| Service | |||||||||||||||
| Total Americas | |||||||||||||||
| EMEA | |||||||||||||||
| Products | |||||||||||||||
| Service | |||||||||||||||
| Total EMEA | |||||||||||||||
| Asia Pacific | |||||||||||||||
| Products | |||||||||||||||
| Service | |||||||||||||||
| Total Asia Pacific | |||||||||||||||
| Total Revenues | $ | $ | $ | $ | |||||||||||
The following table presents the Company’s revenues disaggregated based on the timing of revenue recognition (at a specific point in time or over the course of time) for the three and nine months ended September 30, 2021 and 2020:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (U.S. $ in thousands) | (U.S. $ in thousands) | |||||||||||||||
| Revenues recognized in point in time from: | ||||||||||||||||
| Products | $ | $ | $ | $ | ||||||||||||
| Services | ||||||||||||||||
| Total revenues recognized in point in time | ||||||||||||||||
| Revenues recognized over time from: | ||||||||||||||||
| Services | ||||||||||||||||
| Total revenues recognized over time | ||||||||||||||||
| Total Revenues | $ | $ | $ | $ | ||||||||||||
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Contract Assets and Contract Liabilities
Contract assets are recorded when the Company's right to consideration is conditional on constraints other than the passage of time. The Company had no material contract assets as of September 30, 2021 and December 31, 2020.
Contract liabilities include advance payments and billings in excess of revenue recognized, which are primarily related to advanced billings for service type warranty. Contract liabilities are presented under deferred revenues. The Company's deferred revenues as of September 30, 2021 and December 31, 2020 were as follows:
| September 30, 2021 | December 31, 2020 | |||||||
| U.S. $ in thousands | ||||||||
| Deferred revenue* | ||||||||
*Includes $
Revenue recognized in 2021 that was included in deferred revenue balance as of December 31, 2020 was $
Remaining Performance Obligations
Remaining Performance Obligations (“RPO“) represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of September 30, 2021, the total RPO amounted to $
Incremental Costs of Obtaining a Contract
Sales commissions earned mainly by the Company’s sales agents are considered incremental costs of obtaining a contract with a customer, as the Company expects the benefit of those commissions to be longer than one year. The majority of the sales commissions are not subject to capitalization, as the commission expense is recognized as the related revenue is recognized. Sales commissions for initial contracts related to the service type warranty are deferred and then amortized on a straight-line basis over the expected customer relationship period if the Company expects to recover those costs. Amortization expense is included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. As of September 30, 2021 and December 31, 2020, the deferred commissions amounted to $
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 5. Inventories
Inventories consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| U.S. $ in thousands | ||||||||
| Finished goods | $ | $ | ||||||
| Work-in-process | ||||||||
| Raw materials | ||||||||
| $ | $ | |||||||
Note 6. Goodwill and Other Intangible Assets
Goodwill
Changes in the carrying amount of the Company’s goodwill for the nine months ended September 30, 2021 were as follows:
| U.S. $ in thousands | ||||
| Goodwill as of January 1, 2021* | $ | |||
| Goodwill acquired** | | |||
| Measurement period adjustments | ||||
| Foreign currency translation adjustments | ( | ) | ||
| Goodwill as of September 30, 2021 | $ |
*The goodwill was acquired as part of the Origin acquisition. See Note 3.
**The goodwill was acquired as part of the RPS acquisition. See Note 3.
Other Intangible Assets
Other intangible assets consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
| Carrying Amount, | Net | Carrying Amount, | Net | |||||||||||||||||||||
| Net of | Accumulated | Book | Net of | Accumulated | Book | |||||||||||||||||||
| Impairment | Amortization | Value | Impairment | Amortization | Value | |||||||||||||||||||
| U.S. $ in thousands | ||||||||||||||||||||||||
| Developed technology | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Patents | ( | ) | ( | ) | ||||||||||||||||||||
| Trademarks and trade names | ( | ) | ( | ) | ||||||||||||||||||||
| Customer relationships | ( | ) | ( | ) | ||||||||||||||||||||
| Capitalized software development costs | ( | ) | ( | ) | - | |||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||
Amortization expenses relating to intangible assets for the three-month periods ended September 30, 2021 and 2020 were approximately $
As of September 30, 2021, the estimated amortization expenses relating to intangible assets for each of the following future periods were as follows:
| Estimated | ||||
| amortization expense | ||||
| (U.S. $ in thousands) | ||||
| Remaining 3 months of 2021 | $ | |||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 and thereafter | ||||
| Total | $ |
Note 7. Net Loss Per Share
The following table presents the numerator and denominator of the basic and diluted net loss per share computations for the three and nine months ended September 30, 2021 and 2020:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| In thousands, except per share amounts | In thousands, except per share amounts | ||||||||||||||
| Numerator: | |||||||||||||||
| Net loss attributable to Stratasys Ltd. for basic and diluted net loss per share | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
| Denominator: | |||||||||||||||
| Weighted average shares - for basic and diluted net loss per share | |||||||||||||||
| Net loss per share attributable to Stratasys Ltd. | |||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
The computation of diluted net loss per share excluded share awards of
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 8. Income Taxes
The Company had income tax benefit of $
Note 9. Fair Value Measurements
Financial instruments measured at fair value
The following table summarizes the Company’s financial assets and liabilities that are carried at fair value on a recurring basis, in its consolidated balance sheets:
| September 30, 2021 | December 31, 2020 | ||||||||||||||
| Level 2 | Level 3 | Level 2 | Level 3 | ||||||||||||
| (U.S. $ in thousands) | |||||||||||||||
| Assets: | |||||||||||||||
| Foreign exchange forward contracts not designated as hedging instruments | $ | $ | |||||||||||||
| Foreign exchange forward contracts designated as hedging instruments | |||||||||||||||
| Liabilities: | |||||||||||||||
| Foreign exchange forward contracts not designated as hedging instruments | ( | ) | ( | ) | |||||||||||
| Foreign exchange forward contracts designated as hedging instruments | ( | ) | |||||||||||||
| Contingent consideration | |||||||||||||||
| $ | $ | $ | ( | ) | $ | ||||||||||
The Company’s foreign exchange forward contracts are classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs, including interest rate curves and both forward and spot prices for currencies (Level 2 inputs).
Contingent consideration represents liabilities recorded at fair value in connection with acquisitions, and thus represents a Level 3 measurement within the fair value hierarchy (refer to Note 3).
Other financial instruments consist mainly of cash and cash equivalents, short-term deposits, current and non-current assets, accounts payable and other current liabilities. The fair value of these financial instruments approximates their carrying values.
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 10. Derivative instruments and hedging activities
Since the Company conducts its operations globally, it is exposed to global market risks and to the risk that its earnings, cash flows and equity could be adversely impacted by fluctuations in foreign currency exchange rates. The Company enters into transactions involving foreign currency exchange derivative financial instruments. The Company manages its foreign currency exposures on a consolidated basis, which allows the Company to net exposures and take advantage of any natural hedging. The transactions are designed to manage the Company’s net exposure to foreign currency exchange rates and to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The Company does not enter into derivative transactions for trading purposes.
The Company is primarily exposed to foreign exchange risk with respect to recognized assets and liabilities and forecasted transactions denominated in the New Israeli Shekel (“NIS”), Euro, GBP, Korean Won, Chinese Yuan and the Japanese Yen. The gains and losses on the hedging instruments partially offset losses and gains on the hedged items. Financial markets and currency volatility may limit the Company’s ability to hedge these exposures. These contracts mature through December 2021.
The following table summarizes the consolidated balance sheets classification and fair values of the Company’s derivative instruments:
| Fair Value | Notional Amount | |||||||||||||||||
| September 30, | December 31, | September 30, | December 31, | |||||||||||||||
| Balance sheet location | 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| U.S. $ in thousands | ||||||||||||||||||
| Assets derivatives -Foreign exchange contracts, not designated as hedging instruments | Other current assets | $ | $ | $ | $ | |||||||||||||
| Assets derivatives -Foreign exchange contracts, designated as cash flow hedge | Other current assets | |||||||||||||||||
| Liability derivatives -Foreign exchange contracts, not designated as hedging instruments | Accrued expenses and other current liabilities | ( | ) | ( | ) | |||||||||||||
| Liability derivatives -Foreign exchange contracts, designated as hedging instruments | Accrued expenses and other current liabilities | ( | ) | |||||||||||||||
| $ | $ | ( | ) | $ | $ | |||||||||||||
Foreign exchange contracts not designated as hedging instruments
As of September 30, 2021, the notional amounts of the Company’s outstanding exchange forward contracts, not designated as hedging instruments, were $
Cash Flow Hedging - Hedges of forecasted foreign currency payroll and other operating expenses
As of September 30, 2021, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of $
Cash Flow Hedging - Hedges of forecasted foreign currency revenue
As of September 30, 2021, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 11. Equity
a. Stock-based compensation plans
Stock-based compensation expenses for equity-classified stock options, restricted share units (“RSUs”) and performance-based restricted share units (”PSUs”) were allocated as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| U.S $ in thousands | U.S $ in thousands | ||||||||||||||
| Cost of revenues | $ | $ | $ | $ | |||||||||||
| Research and development, net | |||||||||||||||
| Selling, general and administrative | |||||||||||||||
| Total stock-based compensation expenses | $ | $ | $ | $ | |||||||||||
A summary of the Company’s stock option activity for the nine months ended September 30, 2021 is as follows:
| Number of Options | Weighted Average Exercise Price | |||||||
| Options outstanding as of January 1, 2021 | $ | |||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Options outstanding as of September 30, 2021 | ||||||||
| Options exercisable as of September 30, 2021 | $ |
As of September 30, 2021, the unrecognized compensation cost of $
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
A summary of the Company’s RSUs and PSUs activity for the three months ended September 30, 2021 is as follows:
| Number of RSUs and PSUs | Weighted Average Grant Date Fair Value | |||||||
| Unvested as of January 1, 2021 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Unvested as of September 30, 2021 | $ |
The fair value of RSUs and PSUs is determined based on the quoted price of the Company’s ordinary shares on the date of the grant.
As of September 30, 2021, the unrecognized compensation cost of $
b. Accumulated other comprehensive loss
The following tables present the changes in the components of accumulated other comprehensive income (loss), net of taxes, for the nine months ended September 30, 2021 and 2020, respectively:
| Nine Months Ended September 30, 2021 | ||||||||||||||
| Net Unrealized Gain (Loss) on Cash Flow Hedges | Foreign Currency Translation Adjustments | Total | ||||||||||||
| U.S. $ in thousands | ||||||||||||||
| Balance as of January 1, 2021 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Other comprehensive income before reclassifications | ( | ) | ||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ||||||||||||||
| Other comprehensive income | ( | ) | ||||||||||||
| Balance as of September 30, 2021 | $ | $ | ( | ) | $ | ( | ) | |||||||
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
| Nine Months Ended September 30, 2020 | ||||||||||||||
| Net Unrealized Gain (Loss) on Cash Flow Hedges | Foreign Currency Translation Adjustments | Total | ||||||||||||
| U.S. $ in thousands | ||||||||||||||
| Balance as of January 1, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | ( | ) | ||||||||
| Amounts reclassified from accumulated other comprehensive loss | ( | ) | ( | ) | ||||||||||
| Other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance as of September 30, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
c. Public offering of ordinary shares
Note 12. Contingencies
Legal proceedings
The Company is a party to various legal proceedings from time to time, the outcome of which, in the opinion of management, will not have a significant effect on the financial position, profitability or cash flows of the Company.