Exhibit 99.1
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2023
(UNAUDITED)
INDEX TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(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 per share data) | ||||||||
March 31, 2023 | December 31, 2022 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 209,139 | $ | 150,470 | ||||
Short-term deposits | 78,448 | 177,367 | ||||||
Accounts receivable, net of allowance for credit losses of $0.8 million and $0.9 million as of March 31, 2023 and December 31, 2022, respectively | 144,519 | 144,739 | ||||||
Inventories | 201,997 | 194,054 | ||||||
Prepaid expenses | 8,466 | 5,767 | ||||||
Other current assets | 22,468 | 27,823 | ||||||
Total current assets | 665,037 | 700,220 | ||||||
Non-current assets | ||||||||
Property, plant and equipment, net | 196,986 | 195,063 | ||||||
Goodwill | 69,735 | 64,953 | ||||||
Other intangible assets, net | 129,756 | 121,402 | ||||||
Operating lease right-of-use assets | 16,884 | 18,122 | ||||||
Long-term investments | 140,621 | 141,610 | ||||||
Other non-current assets | 18,076 | 18,420 | ||||||
Total non-current assets | 572,058 | 559,570 | ||||||
Total assets | $ | 1,237,095 | $ | 1,259,790 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 54,834 | $ | 72,921 | ||||
Accrued expenses and other current liabilities | 49,554 | 45,912 | ||||||
Accrued compensation and related benefits | 37,261 | 34,432 | ||||||
Deferred revenues - short term | 53,774 | 50,220 | ||||||
Operating lease liabilities - short term | 6,724 | 7,169 | ||||||
Total current liabilities | 202,147 | 210,654 | ||||||
Non-current liabilities | ||||||||
Deferred revenues - long term | 25,439 | 25,214 | ||||||
Deferred income taxes - long term | 7,075 | 5,638 | ||||||
Operating lease liabilities - long term | 9,880 | 10,670 | ||||||
Contingent consideration - long term | 24,222 | 23,707 | ||||||
Other non-current liabilities | 23,869 | 24,475 | ||||||
Total non-current liabilities | 90,485 | 89,704 | ||||||
Total liabilities | $ | 292,632 | $ | 300,358 | ||||
Contingencies (see note 12) | ||||||||
Equity | ||||||||
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousand shares; 68,103 thousand shares and 67,086 thousand shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | $ | 190 | $ | 187 | ||||
Additional paid-in capital | 3,057,157 | 3,048,915 | ||||||
Accumulated other comprehensive loss | (13,808 | ) | (12,818 | ) | ||||
Accumulated deficit | (2,099,076 | ) | (2,076,852 | ) | ||||
Total equity | 944,463 | 959,432 | ||||||
Total liabilities and equity | $ | 1,237,095 | $ | 1,259,790 |
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 | |||||||
(in thousands, except per share data) | |||||||
Three Months Ended March 31, | |||||||
2023 | 2022 | ||||||
Revenues | |||||||
Products | $ | 100,971 | $ | 113,073 | |||
Services | 48,406 | 50,356 | |||||
149,377 | 163,429 | ||||||
Cost of revenues | |||||||
Products | 51,113 | 59,373 | |||||
Services | 32,869 | 34,379 | |||||
83,982 | 93,752 | ||||||
Gross profit | 65,395 | 69,677 | |||||
Operating expenses | |||||||
Research and development, net | 21,475 | 23,998 | |||||
Selling, general and administrative | 60,717 | 65,263 | |||||
82,192 | 89,261 | ||||||
Operating loss | (16,797 | ) | (19,584 | ) | |||
Financial income (expenses), net | 773 | (1,362 | ) | ||||
Loss before income taxes | (16,024 | ) | (20,946 | ) | |||
Income tax benefit (expenses) | (3,775 | ) | 73 | ||||
Share in losses of associated companies | (2,425 | ) | (75 | ) | |||
Net loss | $ | (22,224 | ) | $ | (20,948 | ) | |
Net loss per share - basic and diluted | $ | (0.33 | ) | $ | (0.32 | ) | |
Weighted average ordinary shares outstanding - basic and diluted | 67,583 | 65,721 | |||||
Comprehensive loss | |||||||
Net loss | (22,224 | ) | (20,948 | ) | |||
Other comprehensive income (loss), net of tax: | |||||||
Foreign currency translation adjustments | (2,245 | ) | (702 | ) | |||
Unrealized gains (losses) on derivatives designated as cash flow hedges | 1,255 | (351 | ) | ||||
Other comprehensive income (loss), net of tax | (990 | ) | (1,053 | ) | |||
Comprehensive loss | $ | (23,214 | ) | $ | (22,001 | ) |
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 Months Ended March 31, 2023 | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
Ordinary Shares | Paid-In | Accumulated | Comprehensive | Total | ||||||||||||||||||||
Number of shares | Par Value | Capital | deficit | Loss | Equity | |||||||||||||||||||
Balance as of December 31, 2022 | 67,086 | $ | 187 | $ | 3,048,915 | $ | (2,076,852 | ) | $ | (12,818 | ) | $ | 959,432 | |||||||||||
Issuance of shares in connection with stock-based compensation plans | 1,017 | 3 | 1 | - | - | 4 | ||||||||||||||||||
Stock-based compensation | - | - | 8,241 | - | - | 8,241 | ||||||||||||||||||
Comprehensive loss | - | - | - | (22,224 | ) | (990 | ) | (23,214 | ) | |||||||||||||||
Balance as of March 31, 2023 | 68,103 | $ | 190 | $ | 3,057,157 | $ | (2,099,076 | ) | $ | (13,808 | ) | $ | 944,463 |
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
Consolidated Statements of Changes in Equity | ||||||||||||||||||||||||
(in thousands ) | ||||||||||||||||||||||||
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
Ordinary Shares | Paid-In | Accumulated | Comprehensive | Total | ||||||||||||||||||||
Number of shares | Par Value | Capital | deficit | Loss | Equity | |||||||||||||||||||
Balance as of December 31, 2021 | 65,677 | $ | 182 | $ | 3,012,481 | $ | (2,047,878 | ) | $ | (8,771 | ) | $ | 956,014 | |||||||||||
Issuance of shares in connection with stock-based compensation plans | 731 | 3 | 152 | - | - | 155 | ||||||||||||||||||
Stock-based compensation | - | - | 8,533 | - | - | 8,533 | ||||||||||||||||||
Comprehensive income (loss) | - | - | - | (20,948 | ) | (1,053 | ) | (22,001 | ) | |||||||||||||||
Balance as of March 31, 2022 | 66,408 | $ | 185 | $ | 3,021,166 | $ | (2,068,826 | ) | $ | (9,824 | ) | $ | 942,701 |
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 | |||||||||
(in thousands) | Three Months Ended March 31, | ||||||||
2023 | 2022 | ||||||||
Cash flows from operating activities | |||||||||
Net loss | $ | (22,224 | ) | $ | (20,948 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 11,680 | 15,290 | |||||||
Stock-based compensation | 8,241 | 8,533 | |||||||
Foreign currency transaction loss | 531 | 2,792 | |||||||
Share in losses of associated companies | 2,425 | 75 | |||||||
Revaluation of investments | 1,042 | 1,061 | |||||||
Other non-cash items, net | (95 | ) | 83 | ||||||
Change in cash attributable to changes in operating assets and liabilities: | |||||||||
Accounts receivable, net | 1,081 | (7,950 | ) | ||||||
Inventories | (10,123 | ) | (14,775 | ) | |||||
Other current assets and prepaid expenses | 2,945 | 7,386 | |||||||
Other non-current assets | 2,746 | (85 | ) | ||||||
Accounts payable | (18,547 | ) | 7,194 | ||||||
Other current liabilities | 1,622 | (16,037 | ) | ||||||
Deferred revenues | 3,387 | 2,522 | |||||||
Deferred income taxes, net and uncertain tax positions | 2,581 | (381 | ) | ||||||
Other non-current liabilities | (5,218 | ) | (823 | ) | |||||
Net cash used in operating activities | (17,926 | ) | (16,063 | ) | |||||
Cash flows from investing activities | |||||||||
Cash paid for acquisitions, net of cash acquired | (16,480 | ) | - | ||||||
Purchase of property and equipment | (3,723 | ) | (3,741 | ) | |||||
Investments in short-term bank deposits | (12,448 | ) | (40,000 | ) | |||||
Proceeds from short-term bank deposits | 111,367 | 117,000 | |||||||
Purchase of intangible assets | (311 | ) | (444 | ) | |||||
Other investing activities | (30 | ) | (47 | ) | |||||
Investments in unconsolidated entities | (2,453 | ) | (5,030 | ) | |||||
Net cash provided by investing activities | 75,922 | 67,738 | |||||||
Cash flows from financing activities | |||||||||
Proceeds from exercise of stock options | 4 | 155 | |||||||
Other financing activities | 851 | 866 | |||||||
Net cash provided by financing activities | 855 | 1,021 | |||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (168 | ) | (2,228 | ) | |||||
Net change in cash, cash equivalents and restricted cash | 58,683 | 50,468 | |||||||
Cash, cash equivalents and restricted cash, beginning of period | 150,686 | 243,293 | |||||||
Cash, cash equivalents and restricted cash, end of period | $ | 209,369 | $ | 293,761 | |||||
Supplemental disclosures of cash flow information: | |||||||||
Transfer of inventory to fixed assets | 3,604 | 188 | |||||||
Transfer of fixed assets to inventory | 97 | 120 | |||||||
Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets: | |||||||||
Cash and cash equivalents | 209,139 | 293,649 | |||||||
Restricted cash included in other current assets | 230 | 112 | |||||||
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | $ | 209,369 | $ | 293,761 |
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.
Note 2. New Accounting Pronouncements
U.S. $ in thousands | ||||
Fair value, net | $ | 55,751 | ||
Net assets deconsolidated | (14,146 | ) | ||
Transaction expenses | (2,469 | ) | ||
Gain on deconsolidation of subsidiary | $ | 39,136 |
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 4. Revenues
Disaggregation of Revenues
Three months ended March 31, | |||||||
2023 | 2022 | ||||||
(U.S. $ in thousands) | |||||||
Americas | |||||||
Systems | $ | 21,186 | $ | 28,982 | |||
Consumables | 32,572 | 31,354 | |||||
Service | 36,322 | 38,231 | |||||
Total Americas | 90,080 | 98,567 | |||||
EMEA | |||||||
Systems | 11,402 | 15,076 | |||||
Consumables | 18,911 | 17,825 | |||||
Service | 7,567 | 7,153 | |||||
Total EMEA | 37,880 | 40,055 | |||||
Asia Pacific | |||||||
Systems | 7,864 | 10,458 | |||||
Consumables | 9,036 | 9,377 | |||||
Service | 4,517 | 4,972 | |||||
Total Asia Pacific | 21,417 | 24,807 | |||||
Total Revenues | $ | 149,377 | $ | 163,429 |
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 months ended March 31, 2023 and 2022:
Three months ended March 31, | |||||||
2023 | 2022 | ||||||
(U.S. $ in thousands) | |||||||
Revenues recognized in point in time from: | |||||||
Products | $ | 100,971 | $ | 113,073 | |||
Services | 13,691 | 12,492 | |||||
Total revenues recognized in point in time | 114,662 | 125,565 | |||||
Revenues recognized over time from: | |||||||
Services | 34,715 | 37,864 | |||||
Total revenues recognized over time | 34,715 | 37,864 | |||||
Total Revenues | $ | 149,377 | $ | 163,429 |
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Contract Assets and Contract Liabilities
March 31, | December 31, | |||||||||
2023 | 2022 | |||||||||
U.S. $ in thousands | ||||||||||
Deferred revenue* | $ | 79,213 | $ | 75,434 |
*Includes $25.4 million and $25.2 million under long term deferred revenue in the Company's consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.
Revenue recognized in 2023 that was included in deferred revenue balance as of December 31, 2022 was $16.1 million for the three months ended March 31, 2023.
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 March 31, 2023, the total RPO amounted to $111.9 million. The Company expects to recognize $79.1 million of this RPO during the next 12 months, $19.1 million over the subsequent 12 months and the remaining $13.7 million thereafter.
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. As of March 31, 2023 and December 31, 2022, the deferred commissions amounted to $9.5 million and $9.6 million, respectively.
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 5. Inventories
Inventories consisted of the following:
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
U.S. $ in thousands | ||||||||
Finished goods | $ | 86,214 | $ | 81,564 | ||||
Work-in-process | 8,319 | 7,562 | ||||||
Raw materials | 107,464 | 104,928 | ||||||
$ | 201,997 | $ | 194,054 |
Note 6. Goodwill and Other Intangible Assets
Goodwill
Changes in the carrying amount of the Company’s goodwill during the three months ended March 31, 2023 were as follows:
U.S. $ in thousands | ||||
Goodwill as of January 1, 2023 | $ | 64,953 | ||
Goodwill acquired | 4,743 | |||
Foreign currency translation adjustments | 39 | |||
Goodwill as of March 31, 2023 | $ | 69,735 |
Other Intangible Assets
Other intangible assets consisted of the following:
March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
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 | $ | 392,867 | $ | (287,704 | ) | $ | 105,163 | $ | 387,603 | $ | (283,671 | ) | $ | 103,932 | ||||||||||
Patents | 17,808 | (9,302 | ) | 8,506 | 17,508 | (8,970 | ) | 8,538 | ||||||||||||||||
Trademarks and trade names | 17,291 | (14,328 | ) | 2,963 | 16,278 | (14,030 | ) | 2,248 | ||||||||||||||||
Customer relationships | 101,619 | (88,495 | ) | 13,124 | 93,609 | (86,925 | ) | 6,684 | ||||||||||||||||
Capitalized software development costs | 7,066 | (7,066 | ) | - | 7,066 | (7,066 | ) | - | ||||||||||||||||
$ | 536,651 | $ | (406,895 | ) | $ | 129,756 | $ | 522,064 | $ | (400,662 | ) | $ | 121,402 |
Amortization expenses relating to intangible assets for the three-month period ended March 31, 2023 and 2022 were approximately $6.2 million and $9.2 million, respectively.
As of March 31, 2023, the estimated amortization expenses relating to intangible assets for each of the following future periods were as follows:
Estimated | ||||
amortization expenses | ||||
(U.S. $ in thousands) | ||||
Remaining 9 months of 2023 | $ | 19,362 | ||
2024 | 21,627 | |||
2025 | 19,149 | |||
2026 | 19,063 | |||
2027 | 18,099 | |||
2028 and thereafter | 32,456 | |||
Total | $ | 129,756 |
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
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 months ended March 31, 2023 and 2022:
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands, except per share amounts) | ||||||||
Numerator: | ||||||||
Net loss for basic and diluted loss per share | $ | (22,224 | ) | $ | (20,948 | ) | ||
Denominator: | ||||||||
Weighted average shares - for basic and diluted net loss per share | 67,583 | 65,721 | ||||||
Net loss per share | ||||||||
Basic and diluted | $ | (0.33 | ) | $ | (0.32 | ) |
The computation of diluted net loss per share excluded share awards of 3.4 million and 5.4 million shares for the three months ended March 31, 2023 and 2022, respectively, because the inclusion of those shares would have had an anti-dilutive effect on the diluted net loss per share.
Note 8. Income Taxes
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 9. Fair Value Measurements
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:
March 31, 2023 | December 31, 2022 | ||||||||||||||
Level 2 | Level 3 | Level 2 | Level 3 | ||||||||||||
(U.S. $ in thousands) | |||||||||||||||
Assets: | |||||||||||||||
Foreign exchange forward contracts not designated as hedging instruments | $ | 73 | - | $ | 159 | - | |||||||||
Foreign exchange forward contracts designated as hedging instruments | 220 | - | 3 | - | |||||||||||
Liabilities: | |||||||||||||||
Foreign exchange forward contracts not designated as hedging instruments | (100 | ) | - | (38 | ) | - | |||||||||
Foreign exchange forward contracts designated as hedging instruments | (2,610 | ) | - | (1,640 | ) | - | |||||||||
Convertible notes | 4,327 | - | 1,894 | ||||||||||||
Contingent consideration* | 38,606 | - | 38,341 | ||||||||||||
(2,417 | ) | 42,933 | (1,516 | ) | 40,235 |
*Includes $14.4 million and $14.6 million under Accrued expenses and other current liabilities in the Company's consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.
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 receivables, 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 New Israeli Shekels (“NIS”), Euro, British Pound, 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 2023.
The following table summarizes the consolidated balance sheets classification and fair values of the Company’s derivative instruments:
Fair Value | Notional Amount | |||||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||||
Balance sheet location | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
U.S. $ in thousands | ||||||||||||||||||
Assets derivatives -Foreign exchange contracts, not designated as hedging instruments | Other current assets | $ | 73 | $ | 159 | $ | 40,375 | $ | 101,733 | |||||||||
Assets derivatives -Foreign exchange contracts, designated as cash flow hedge | Other current assets | 220 | 3 | 31,480 | 4,900 | |||||||||||||
Liability derivatives -Foreign exchange contracts, not designated as hedging instruments | Accrued expenses and other current liabilities | (100 | ) | (38 | ) | 22,311 | 16,751 | |||||||||||
Liability derivatives -Foreign exchange contracts, designated as hedging instruments | Accrued expenses and other current liabilities | (2,610 | ) | (1,640 | ) | 52,115 | 72,273 | |||||||||||
$ | (2,417 | ) | $ | (1,516 | ) | $ | 146,281 | $ | 195,657 |
Foreign exchange contracts not designated as hedging instruments
As of March 31, 2023, the notional amounts of the Company’s outstanding exchange forward contracts, not designated as hedging instruments, were $62.7 million, and were used to reduce foreign currency exposures of the Euro, NIS, Japanese Yen, Korean Won and Chinese Yuan. With respect to such derivatives, loss of $0.4 million and gain of $0.7 million were recognized under financial income, net for the three-month period ended March 31, 2023 and 2022, respectively. Such gains or losses partially offset the foreign currency revaluation changes of the balance sheet items. These foreign currencies revaluation changes are also recognized under financial income, net.
Cash Flow Hedging - Hedges of forecasted foreign currency payroll and other operating expenses
As of March 31, 2023, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of $48.9 million into NIS. The Company uses short-term cash flow hedge contracts to reduce its exposure to variability in expected future cash flows resulting mainly from payroll costs and other operating expenses denominated in NIS. The changes in fair value of those contracts are included in the Company’s accumulated other comprehensive loss.
Cash Flow Hedging - Hedges of forecasted foreign currency revenue
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 March 31, | ||||||||
2023 | 2022 | |||||||
U.S $ in thousands | ||||||||
Cost of revenues | $ | 932 | $ | 900 | ||||
Research and development, net | 2,089 | 1,786 | ||||||
Selling, general and administrative | 5,220 | 5,847 | ||||||
Total stock-based compensation expenses | $ | 8,241 | $ | 8,533 |
A summary of the Company’s stock option activity for the three months ended March 31, 2023 is as follows:
Number of Options | Weighted Average Exercise Price | |||||||
Options outstanding as of January 1, 2023 | $ | 1,619,559 | $ | 27.62 | ||||
Granted | - | - | ||||||
Exercised | (1,083 | ) | 3.58 | |||||
Forfeited | (2,910 | ) | 34.73 | |||||
Options outstanding as of March 31, 2023 | 1,615,566 | 27.62 | ||||||
Options exercisable as of March 31, 2023 | $ | 1,243,725 | $ | 31.13 |
As of March 31, 2023, the unrecognized compensation cost of $1.1 million related to all unvested, equity-classified stock options is expected to be recognized as an expense over a weighted-average period of 1.66 years.
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 March 31, 2023 is as follows:
Number of RSUs and PSUs | Weighted Average Grant Date Fair Value | |||||||
Unvested as of January 1, 2023 | $ | 3,496,099 | $ | 23.98 | ||||
Granted | 1,642,257 | 13.02 | ||||||
Vested | (996,094 | ) | 25.58 | |||||
Forfeited | (104,741 | ) | 25.03 | |||||
Unvested as of March 31, 2023 | $ | 4,037,521 | $ | 19.10 |
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 March 31, 2023, the unrecognized compensation cost of $63.5 million related to all unvested, equity-classified RSUs and PSUs is expected to be recognized as expense over a weighted-average period of 2.4 years.
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 three months ended March 31, 2023 and 2022, respectively:
Three Months Ended March 31, 2023 | ||||||||||||||
Net Unrealized Gain (Loss) on Cash Flow Hedges | Foreign Currency Translation Adjustments | Total | ||||||||||||
U.S. $ in thousands | ||||||||||||||
Balance as of January 1, 2023 | $ | (299 | ) | $ | (12,519 | ) | $ | (12,818 | ) | |||||
Other comprehensive income (loss) before reclassifications | (1,828 | ) | 1,255 | (573 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | (417 | ) | - | (417 | ) | |||||||||
Other comprehensive income (loss) | (2,245 | ) | 1,255 | (990 | ) | |||||||||
Balance as of March 31, 2023 | $ | (2,544 | ) | $ | (11,264 | ) | $ | (13,808 | ) |
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Three Months Ended March 31, 2022 | ||||||||||||||
Net Unrealized Gain (Loss) on Cash Flow Hedges | Foreign Currency Translation Adjustments | Total | ||||||||||||
U.S. $ in thousands | ||||||||||||||
Balance as of January 1, 2022 | $ | 1,572 | $ | (10,343 | ) | $ | (8,771 | ) | ||||||
Other comprehensive income (loss) before reclassifications | 271 | (702 | ) | (431 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | (622 | ) | - | (622 | ) | |||||||||
Other comprehensive income (loss) | (351 | ) | (702 | ) | (1,053 | ) | ||||||||
Balance as of March 31, 2022 | $ | 1,221 | $ | (11,045 | ) | $ | (9,824 | ) |
Note 12. Contingencies