Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Equity

v3.7.0.1
Equity
 12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
Equity

Note 11. Equity

a. Share capital

The Company’s issued share capital is composed of ordinary shares at NIS 0.01 par value. Ordinary shares confer upon their holders the right to receive notice to participate and vote in general meetings of the Company, and the right to receive dividends if declared.

As of December 31, 2016, and 2015, there were 52,639 thousands ordinary shares and 52,082 thousands ordinary shares issued and outstanding, respectively. The Company’s ordinary shares are traded in the United States on the Nasdaq Global Select Market under the ticker symbol “SSYS”.

For significant share issuance in connection with business combinations during the years ended December 31, 2016, 2015 and 2014, refer to note 2.

b. Stock-based compensation plans

The Stratasys Ltd. 2012 Omnibus Equity Incentive Plan (the “2012 Plan”), which became effective upon closing of the Stratasys-Objet merger, provides for the grant of options, restricted shares, restricted share units (“RSUs”) and other share-based awards to the Company’s and its subsidiaries’ respective directors, employees, officers, consultants, and advisors and to any other person whose services are considered valuable to the Company or any of its affiliates. Under the 2012 plan, options and RSUs generally have a contractual term of ten years from the grant date. Options granted become exercisable and RSUs are vested over the vesting period, which is normally a four-year period beginning on the grant date, subject to the employee’s continuing service to the Company. As of December 31, 2016, 3.0 million shares were available for equity awards under the 2012 plan. On January 1, 2017, the reserve pool under the 2012 plan was automatically increased by 0.5 million shares.

Stock options

A summary of the stock option activity for the year ended December 31, 2016 is as follows:

            Weighted Average
Number of Options Exercise Price
Options outstanding as of December 31, 2015                   2,449,742 $                        39.73
Granted 559,340 23.03
Exercised (119,564 ) 9.91
Forfeited (274,057 ) 42.74
Options outstanding as of December 31, 2016 2,615,461 $ 37.21
Options exercisable as of December 31, 2016 1,426,304 $ 38.63

The following table summarizes information about stock options outstanding at December 31, 2016:

Options Outstanding     Options Exercisable
    Outstanding     Weighted- Average     Exercisable    
options at Remaining Weighted- Average options at Weighted- Average
Range of December 31, Contractual Exercise December 31, Exercise
Exercise Prices 2016 Life in Years Price 2016 Price
$      2.21 - $      22.16 666,353 2.21 $ 11.03 $         604,717 $ 10.04
  23.41 -   25.50   663,895     6.17   23.93 100,661     25.10
29.37 - 45.00     654,586     7.29     34.99     247,231   35.14
$ 46.87 -  $ 120.51 630,627 4.19 81.16 473,695 79.82
2,615,461 $ 4.96 $ 37.21   1,426,304 $ 38.63
 
Aggregate intrinsic
value (U.S. $ in
thousands) $         4,100 $ 4,082

As of December 31, 2016, the weighted-average remaining contractual life of exercisable options was 3.6 years. The total intrinsic value of options exercised during 2016, 2015 and 2014 was approximately $1.5 million, $4.6 million and $55.6 million, respectively.

The Company used the Black-Scholes option-pricing model to determine the fair value of options granted during 2016, 2015 and 2014. The following assumptions were applied in determining the options’ fair value on their grant date:

      2016       2015       2014
Risk-free interest rate 1.1%-1.5% 1.6% - 1.9% 1.3% - 2.0%
Expected option term (years) 5.2-6.0 6.0 4.2 - 6.5
Expected share price volatility 53.6%-56.1%   50.1%-53.5% 45.8% - 47.6%
Dividend yield -   -   -
Weighted average grant date fair value $            12.36 $             15.49   $              60.82

As of December 31, 2016, the Company had 1.2 million unvested options. As of December 31, 2016, the unrecognized compensation cost related to all unvested, equity-classified stock options of $13.0 million is expected to be recognized as an expense on a straight-line basis over a weighted-average period of 2.5 years.

Restricted Stock Units

A summary of the Company’s RSUs activity for the year ended December 31, 2016 is as follows:

      Weighted Average
Grant Date Fair
Number of RSUs Value
Unvested RSUs outstanding as of December 31, 2015                        559,124 $                        81.35
Vested (184,621 ) 94.36
Forfeited (106,747 ) 81.90
Unvested RSUs outstanding as of December 31, 2016 267,756 $ 72.17

The total vesting-date value of equity classified RSUs vested during 2016 was $3.5 million. As of December 31, 2016, the unrecognized compensation cost related to all unvested equity classified RSUs of $11.5 million is expected to be recognized as an expense on a straight-line basis over a weighted-average period of 1.9 years.

Stock-based compensation expense for stock options and equity classified RSUs included in the Company’s Statements of Operations were allocated as follows:

2016       2015       2014
(U.S. $ in thousands)
Cost of sales $      2,780 $      5,381 $      4,493
Research and development, net 4,768 5,759 4,862
Selling, general and administrative 13,225 18,870 20,852
Total stock-based compensation expenses        $ 20,773 $ 30,010 $ 30,207

c. Accumulated other comprehensive loss

The following tables present the changes in the components of accumulated other comprehensive loss, net of taxes for the years ended December 31, 2016, 2015 and 2014:

Year ended December 31, 2016
Net unrealized gain       Foreign currency      
(loss) on cash flow translation
hedges adjustments Total
U.S. $ in thousands
Balance as of January 1, 2016 $                          (107 ) $                    (10,667 ) $                (10,774 )
Other comprehensive loss before
       reclassifications 523 (2,788 ) (2,265 )
Amounts reclassified from accumulated
       other comprehensive loss (440 ) - (440 )
Other comprehensive income (loss) 83 (2,788 ) (2,705 )
Balance as of December 31, 2016 $ (24 ) $ (13,455 ) $ (13,479 )

Year ended December 31, 2015
Net unrealized gain       Foreign currency      
(loss) on cash flow translation
hedges adjustments Total
U.S. $ in thousands
Balance as of January 1, 2015 $                    (1,243 ) $                    (2,404 ) $                (3,647 )
Other comprehensive loss before    
       reclassifications (288 ) (8,263 ) $ (8,551 )
Amounts reclassified from accumulated  
       other comprehensive loss 1,424 - $ 1,424
Other comprehensive income (loss) 1,136 (8,263 ) (7,127 )
Balance as of December 31, 2015 $ (107 ) $ (10,667 ) $ (10,774 )

Year ended December 31, 2014      
Net unrealized gain       Foreign currency            
(loss) on cash flow translation
hedges adjustments Other Total
(U.S. $ in thousands)
Balance as of January 1, 2014 $                       153 $                   1,922 $      (167 ) $      1,908
Other comprehensive income before  
       reclassifications (2,222 ) (4,326 ) — (6,548 )
Amounts reclassified from accumulated
       other comprehensive income 826 — 167 993
Other comprehensive income (loss) (1,396 ) (4,326 ) 167 (5,555 )
Balance as of December 31, 2014 $ (1,243 ) $ (2,404 ) $ — $ (3,647 )

Realized gains and losses on cash flow hedges were reclassified primarily to research and development, net and selling and general and administrative expenses. Other reclassifications from accumulated other comprehensive loss were reclassified to financial expense, net.