Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2020shares | |
Document Type | 20-F |
Amendment Flag | false |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Dec. 31, 2020 |
Entity File Number | 000-23288 |
Entity Registrant Name | SILICOM LTD. |
Entity Incorporation, State or Country Code | IL |
Entity Address, Address Line One | 14 Atir Yeda Street |
Entity Address, City or Town | Kfar Sava |
Entity Address Country | IL |
Entity Address, Postal Zip Code | 4464323 |
Title of 12(b) Security | Ordinary Shares, NIS 0.01 nominal value per share |
Trading Symbol | SILC |
Name of Exchange on which Security is Registered | NASDAQ |
Entity Common Stock, Shares Outstanding | 6,899,515 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Accelerated Filer |
Entity Emerging Growth Company | false |
Auditor Attestation Flag | true |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Central Index Key | 0000916793 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Business Contact [Member] | |
Contact Personnel Name | Eran Gilad |
Entity Address, Address Line One | 14 Atir Yeda Street |
Entity Address, City or Town | Kfar Sava |
Entity Address Country | IL |
Entity Address, Postal Zip Code | 4464323 |
City Area Code | 972 |
Local Phone Number | 9-764-4555 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 20,676 | $ 16,469 |
Short-term bank deposits | 5,000 | 13,542 |
Marketable securities | 35,117 | 14,045 |
Accounts receivable: | ||
Trade, net | 21,660 | 24,936 |
Other | 6,126 | 4,964 |
Inventories | 47,650 | 36,491 |
Total current assets | 136,229 | 110,447 |
Marketable securities | 15,281 | 46,542 |
Assets held for employees' severance benefits | 1,833 | 1,640 |
Deferred tax assets | 1,790 | 1,798 |
Property, plant and equipment, net | 4,110 | 3,574 |
Intangible assets, net | 1,170 | 1,718 |
Operating leases right-of-use, net | 9,913 | 3,783 |
Goodwill | 25,561 | 25,561 |
Total assets | 195,887 | 195,063 |
Current liabilities | ||
Trade accounts payable | 14,610 | 16,419 |
Other accounts payable and accrued expenses | 12,953 | 8,823 |
Operating lease liabilities | 1,813 | 1,090 |
Total current liabilities | 29,376 | 26,332 |
Long-term liabilities | ||
Operating lease liabilities | 8,282 | 2,693 |
Liability for employees' severance benefits | 3,256 | 2,910 |
Deferred tax liabilities | 136 | 205 |
Total liabilities | 41,050 | 32,140 |
Shareholders' equity | ||
Ordinary shares, ILS 0.01 par value; 10,000,000 shares authorized; 7,618,676 and 7,670,033 issued as at December 31, 2019 and 2020, respectively; 7,351,317 and 6,899,515 outstanding as at December 31, 2019 and 2020, respectively | 22 | 22 |
Additional paid-in capital | 60,117 | 57,130 |
Treasury shares (at cost) 267,359 and 770,518 ordinary shares as at December 31, 2019 and 2020, respectively | (24,807) | (8,009) |
Retained earnings | 119,505 | 113,780 |
Total shareholders' equity | 154,837 | 162,923 |
Total liabilities and shareholders' equity | $ 195,887 | $ 195,063 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - ₪ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value | ₪ 0.01 | ₪ 0.01 |
Ordinary shares, authorized | 10,000,000 | 10,000,000 |
Ordinary shares, issued | 7,670,033 | 7,618,676 |
Ordinary shares, outstanding | 6,899,515 | 7,351,317 |
Ordinary shares, treasury shares | 770,518 | 267,359 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Income Statement [Abstract] | ||||
Sales | [1] | $ 107,398 | $ 105,240 | $ 133,753 |
Cost of sales | 73,632 | 69,146 | 91,697 | |
Gross profit | 33,766 | 36,094 | 42,056 | |
Operating expenses | ||||
Research and development | [2] | 17,244 | 15,075 | 14,820 |
Sales and marketing | 6,209 | 6,647 | 6,642 | |
General and administrative | 4,065 | 4,159 | 3,943 | |
Total operating expenses | 27,518 | 25,881 | 25,405 | |
Operating income | 6,248 | 10,213 | 16,651 | |
Financial income, net | 1,034 | 1,646 | 923 | |
Income before income taxes | 7,282 | 11,859 | 17,574 | |
Income taxes | 1,557 | 1,623 | 2,937 | |
Net income | $ 5,725 | $ 10,236 | $ 14,637 | |
Income per share: | ||||
Basic income per ordinary share (US$) | $ 0.804 | $ 1.361 | $ 1.938 | |
Diluted income per ordinary share (US$) | $ 0.800 | $ 1.352 | $ 1.912 | |
Weighted average number of ordinary shares used to compute basic income per share (in thousands) | 7,118,244 | 7,520,389 | 7,552,094 | |
Weighted average number of ordinary shares used to compute diluted income per share (in thousands) | 7,156,763 | 7,572,617 | 7,657,330 | |
[1] | Including sales to related parties in the amount of US$ 1,063 thousand, US$ 0 thousand and US$ 0 thousand in 2018, 2019 and 2020, respectively. | |||
[2] | Including services from related parties in the amount of US$ 311 thousand, US$ 0 thousand and US$ 0 thousand in 2018, 2019 and 2020, respectively. |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated Statement of Operations Parenthetical: | |||
Sales to related parties | $ 0 | $ 0 | $ 1,063 |
Services from related parties | $ 0 | $ 0 | $ 311 |
Consolidated Statements of Chan
Consolidated Statements of Changes In Shareholders' Equity - USD ($) $ in Thousands | Ordinary shares [Member] | Additional paid-in capital [Member] | Treasury shares [Member] | Retained earnings [Member] | Total | ||
Balance at Dec. 31, 2017 | $ 22 | $ 51,909 | $ (38) | $ 88,907 | $ 140,800 | ||
Balance, shares at Dec. 31, 2017 | [1] | 7,549,531 | |||||
Exercise of options and RSUs | [3] | [2] | 288 | 288 | |||
Exercise of options and RSUs, shares | [1],[3] | 9,674 | |||||
Share-based compensation | 2,424 | 2,424 | |||||
Net income | 14,637 | 14,637 | |||||
Balance at Dec. 31, 2018 | $ 22 | 54,621 | (38) | 103,544 | 158,149 | ||
Balance, shares at Dec. 31, 2018 | [1] | 7,559,205 | |||||
Exercise of options and RSUs | [3] | [2] | 154 | 154 | |||
Exercise of options and RSUs, shares | [1],[3] | 44,500 | |||||
Purchase of treasury shares | (7,971) | (7,971) | |||||
Purchase of treasury shares, shares | [1] | (252,388) | |||||
Share-based compensation | 2,355 | 2,355 | |||||
Net income | 10,236 | 10,236 | |||||
Balance at Dec. 31, 2019 | $ 22 | 57,130 | (8,009) | 113,780 | 162,923 | ||
Balance, shares at Dec. 31, 2019 | [1] | 7,351,317 | |||||
Exercise of options and RSUs | [3] | [2] | 276 | 276 | |||
Exercise of options and RSUs, shares | [1],[3] | 51,357 | |||||
Purchase of treasury shares | (16,798) | (16,798) | |||||
Purchase of treasury shares, shares | [1] | (503,159) | |||||
Share-based compensation | 2,711 | 2,711 | |||||
Net income | 5,725 | 5,725 | |||||
Balance at Dec. 31, 2020 | $ 22 | $ 60,117 | $ (24,807) | $ 119,505 | $ 154,837 | ||
Balance, shares at Dec. 31, 2020 | [1] | 6,899,515 | |||||
[1] | Net of shares held by Silicom Inc. and Silicom Ltd. | ||||||
[2] | Less than 1 thousand. | ||||||
[3] | Restricted share units (hereinafter - "RSUs") |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | |||
Net income | $ 5,725 | $ 10,236 | $ 14,637 |
Adjustments required to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 2,384 | 1,997 | 3,293 |
Impairment of intangible assets | 1,657 | ||
Write-down of obsolete inventory | 1,578 | 2,106 | 6,211 |
Discount on marketable securities, net | 244 | 144 | 32 |
Share-based compensation expense | 2,711 | 2,355 | 2,424 |
Deferred taxes, net | (61) | (699) | 5 |
Changes in assets and liabilities: | |||
Accounts receivable - trade | 3,467 | (1,441) | 16,985 |
Accounts receivable - other | (1,362) | 4,385 | (3,384) |
Accounts receivable - related parties | 364 | 261 | |
Change in liability for employees' severance benefits, net | 153 | 175 | (79) |
Inventories | (13,336) | 3,529 | 2,540 |
Trade accounts payable | (2,076) | 769 | 3,059 |
Other accounts payable and accrued expenses | 3,872 | 2,824 | (314) |
Accounts payable - related parties | (18) | 8 | |
Net cash provided by operating activities | 4,956 | 26,726 | 45,678 |
Cash flows from investing activities | |||
Investment in short-term bank deposits, net | 8,542 | (13,542) | |
Purchase of property, plant and equipment | (1,694) | (1,441) | (1,345) |
Investment in intangible assets | (1,487) | (1,018) | (1,022) |
Proceeds from maturity of marketable securities | 16,629 | 1,997 | 7,750 |
Purchases of marketable securities | (6,558) | (15,604) | (41,670) |
Net cash provided by (used in) investing activities | 15,432 | (29,608) | (36,287) |
Cash flows from financing activities | |||
Exercise of options | 276 | 154 | 288 |
Purchase of treasury shares | (16,798) | (7,971) | |
Net cash provided by (used in) financing activities | (16,522) | (7,817) | 288 |
Effect of exchange rate changes on cash balances held | 341 | 360 | 108 |
Increase (decrease) in cash and cash equivalents | 4,207 | (10,339) | 9,787 |
Cash and cash equivalents at beginning of year | 16,469 | 26,808 | 17,021 |
Cash and cash equivalents at end of year | 20,676 | 16,469 | 26,808 |
Supplementary cash flow information Non-cash transactions: | |||
Investments in property, plant and equipment | 347 | 97 | 146 |
Supplementary cash flow information Cash paid during the year for: | |||
Income taxes | $ 1,284 | $ 1,103 | $ 3,260 |
General
General | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | Note 1 - General Silicom Ltd. is an Israeli corporation engaged in designing, manufacturing, marketing and supporting high performance networking and data infrastructure solutions for a broad range of servers, server based systems and communications devices. The Company's shares have been traded in the United States on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") since February 1994. Since January 2, 2014 the Company's shares have been traded on the NASDAQ Global Select Market (prior thereto they were traded on the NASDAQ Global Market). In these financial statements the terms "Company" or "Silicom" refer to Silicom Ltd. and its wholly owned subsidiaries, Silicom Connectivity Solutions, Inc. (hereinafter - "Silicom Inc.") and Silicom Denmark A/S (Fiberblaze A/S) (hereinafter – "Silicom Denmark"), whereas the term "subsidiaries" refers to Silicom Inc. and Silicom Denmark. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies The significant accounting policies, which are applied consistently throughout the periods presented, are as follows: A. Financial statements in US dollars Substantially all sales of the Company are made outside of Israel (see Note 13A regarding geographical distribution), in US dollars ("dollars"). Most purchases of materials and components, and a significant part of the marketing costs are made or incurred, primarily in dollars. Therefore, the dollar is the currency that represents the principal economic environment in which the Company operates and is thus its functional currency. Transactions and monetary balances in other currencies are translated into the functional currency using the current exchange rate. All exchange gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in earnings when they arise. B. Basis of presentation The accompanying consolidated financial statements have been prepared with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. F - 10 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) C. Estimates and assumptions The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include revenue recognition over time, income taxes, inventories, marketable securities, goodwill, intangible assets and share-based compensation. D. Business combinations The Company accounts for business combination in accordance with ASC No. 805, "Business Combinations". ASC No. 805 requires recognition of assets acquired and liabilities assumed at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in the consolidated statements of operations. E. Cash and cash equivalents The Company considers highly liquid investments with original maturities of three months or less from the date of deposit to be cash equivalents. F. Short-term bank deposits Short term bank deposits consist of bank deposits with original maturities of more than three months and up to twelve months. As of December 31, 2020, the Company's short-term bank deposits consist of bank deposits in US dollars carrying a weighted average interest rate of 2.05%. These short-term bank deposits are held with a major Israeli bank, and their use and withdrawal are not subject to any restrictions. G. Marketable securities The Company classifies its marketable securities as held-to-maturity as they are debt securities in which the Company has the intent and ability to hold to maturity. Held-to-maturity (HTM) debt securities are recorded at amortized cost adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts on debt securities are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective interest method. Such amortization and accretion are included in the "Financial income, net" line item in the consolidated statements of operations. F - 11 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) G. Marketable securities (cont’d) When other-than-temporary impairment has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. A decline in the market value of HTM security below cost that is deemed to be other than temporary results in an impairment to reduce the carrying amount to fair value. To determine whether an impairment is other than temporary, the Company considers all available information relevant to the collectibility of the security, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in. If the Company intends to sell the security or it is more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment is separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. H. Trade accounts receivable, net Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and its customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. As of December 31, 2019 and 2020, the provision for doubtful accounts receivable amounted to US$ 20 thousand. I. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the "weighted average-cost" method. The Company writes down obsolete or slow moving inventory to its net realizable value. F - 12 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) J. Assets held for employees’ severance benefits Assets held for employees’ severance benefits represent contributions to severance pay funds and cash surrender value of insurance policies. The assets are recorded at their current cash redemption value. K. Property, plant and equipment Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line basis over the estimated useful life of the assets at the following annual rates: % Machinery and equipment 15 - 33 Office furniture and equipment 6 - 33 Leasehold improvements * * Over the shorter term of the lease or the useful life of the asset L. Goodwill and other intangible assets Goodwill reflects the excess of the purchase price of business acquired over the fair value of net assets acquired. Goodwill is not amortized but instead is tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Company operates in one operating segment and this segment comprises one reporting unit. Goodwill is reviewed for impairment at least annually in accordance with ASC 350, Intangibles—Goodwill and Other. ASC 350 provides an entity the option to perform a qualitative assessment to determine whether it is more likely than-not that the fair value of a reporting unit is less than its carrying amount prior to performing the two-step goodwill impairment test. If this is the case, the two-step goodwill impairment test is required. If it is more likely than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required. If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed. During the year ended December 31, 2020, no impairments were found and therefore no impairment losses were recorded. F - 13 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) L. Goodwill and other intangible assets (cont’d) Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives in proportion to the economic benefits realized. This accounting policy results in amortization of such intangible assets in the straight-line method. M. Impairment of long-lived assets In accordance with Impairment or Disposal of long-lived assets Subsections of FASB ASC Subtopic 360-10, Property, Plant, and Equipment – Overall. Long-lived assets, such as property, plant, equipment and purchased intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or an asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. F - 14 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) N. Leases In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02. The guidance establishes a right-of-use model ("ROU") that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. The Company determines if an arrangement is or contains a lease at contract inception. The Company adopted the new accounting standard ASC 842 "Leases" and all the related amendments on January 1, 2019. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. As of December 31, 2020, all of the company's leases are operating leases. On the commencement date, the lease payments shall include variable lease payments that depend on an index (such as the Consumer Price Index), initially measured using the index at the commencement date. The Company does not remeasure the lease liability for changes in future lease payments arising from changes in an index unless the lease liability is remeasured for another reason. Therefore, after initial recognition, such variable lease payments are recognized in profit or loss as they are incurred. Variable payments that depends on use of the underlying asset are not included in the lease payments. Such variable payments are recognized in profit or loss in the period in which the event or condition that triggers the payment occurs. Upon initial recognition, the Company recognizes a liability at the present value of the lease payments to be made over the lease term, and concurrently recognizes a ROU asset at the same amount of the liability, adjusted for any prepaid lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments, the lease term and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease. After lease commencement, the Company measures the lease liability at the present value of the remaining lease payments using the discount rate determined at lease commencement (as long as the discount rate hasn’t been updated as a result of a reassessment event). The Company subsequently measures the ROU asset at the present value of the remaining lease payments, adjusted for the remaining balance of any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term. The Company's lease agreements have remaining lease terms up to 10 years. Some of these agreements include options to extend the leases for up to 5 years and some include options to terminate the leases immediately. Some of our vehicle lease agreements include rental payments based on the actual usage of the vehicles and other lease agreements include rental payments adjusted periodically for inflation. The agreements related to leases in Israel are in Israeli Shekel ("ILS") or in ILS, linked to the Israeli Consumer Price Index or to the US Dollars. The agreements related to leases in the USA are in US Dollars and the agreements related to leases in Denmark are in Danish Krone ("DKK"). The Company's lease agreements do not contain any residual value guarantees. See Note 10. F - 15 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) O. Revenue recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition. ASC 606 supersedes nearly all U.S. GAAP on revenue recognition and eliminated industry-specific guidance. The underlying principle of ASC 606 is to recognize revenue when a customer obtains control of the promised goods at an amount that reflects the consideration that is expected to be received in exchange for those goods. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers. The Company adopted ASC 606 at the beginning of the first quarter of fiscal year 2018 and implemented new accounting policies and internal controls necessary to support the requirements of ASC 606. The Company derives revenues primarily from the sale of networking and data infrastructure solutions. The Company recognizes revenue upon transfer of control of the promised goods in a contract with a customer in an amount that reflects the consideration the Company expects to receive in exchange for those products. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. The Company accounts for a contract with customer when it has approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company identifies separated contractual performance obligations and evaluates each distinct performance obligation within a contract, whether it is satisfied at a point in time or over time. Revenue is recognized over time for sales of goods manufactured to unique customer specifications, in which the Company’s performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date if the customer were to terminate the contract. Revenue recognized over time is measured by the costs incurred to date relative to the estimated total direct costs to fulfill each contract. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, materials and overhead. Revenue is allocated among performance obligations in a manner that reflects the consideration that the Company expects to be entitled to for the promised goods based on standalone selling prices (SSP). SSP are estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of the product when the Company sell the goods separately in similar circumstances and to similar customers. F - 16 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) P. Research and development costs Capitalization of software development costs related to programmable components incorporated into the Company's products, are charged to expense until technological feasibility has been established for the product. Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established. The company has determined that technological feasibility for its software components of hardware products is reached after all high-risk development issues have been resolved through coding and testing. Amortization begins once the software is ready for its intended use, generally based on the pattern in which the economic benefits will be consumed. The amortization of these costs is included in cost of revenue over the estimated life of the products. Other costs incurred in the research and development of the Company’s products are expensed as incurred. Q. Allowance for product warranty The Company grants service warranties related to certain products to end-users. The Company estimates its obligation for such warranties to be immaterial on the basis of historical experience. Accordingly, these financial statements do not include an accrual for warranty obligations. R. Treasury shares Treasury shares are recorded at cost and presented as a reduction of shareholders' equity. F - 17 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) S. Income taxes Deferred taxes are accounted for under the asset and liability method based on the estimated future tax effects of temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are presented as non-current assets and liabilities and measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured as the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. T. Share-based compensation The Company recognizes compensation expense based on estimated grant date fair value in accordance with ASC Topic 718, Compensation -Stock Compensation as follows: When portions of an award vest in increments during the requisite service period (graded-vesting award), the Company’s accounting policy is to recognize compensation cost for the award over the requisite service period for each separately vesting portion of the award. F - 18 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) U. Basic and diluted earnings per share Basic income per ordinary share is calculated by dividing the net income attributable to ordinary shares, by the weighted average number of ordinary shares outstanding. Diluted income per ordinary share calculation is similar to basic income per ordinary share except that the weighted average of common shares outstanding is increased to include outstanding potential common shares during the period if dilutive. Potential common shares arise from stock options and RSUs, and the dilutive effect is reflected by the application of the treasury stock method. The following table summarizes information related to the computation of basic and diluted income per ordinary share for the years indicated. Year ended December 31 2018 2019 2020 Net income attributable to ordinary shares (US$ thousands) 14,637 10,236 5,725 Weighted average number of ordinary shares outstanding used in basic income per ordinary share calculation 7,552,094 7,520,389 7,118,244 Add assumed exercise of outstanding dilutive potential ordinary shares 105,236 52,228 38,519 Weighted average number of ordinary shares outstanding used in diluted income per ordinary share calculation 7,657,330 7,572,617 7,156,763 Basic income per ordinary shares (US$) 1.938 1.361 0.804 Diluted income per ordinary shares (US$) 1.912 1.352 0.800 Weighted average number of shares related to options and RSUs excluded from the diluted earnings per share calculation because of anti-dilutive effect 171,086 351,610 180,916 F - 19 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of Significant Accounting Policies (cont’d) V. Comprehensive Income For the years ended December 31, 2018, 2019 and 2020, comprehensive income equals net income. W. Fair Value Measurements The Company's financial instruments consist mainly of cash and cash equivalents, marketable securities, trade and other receivables and trade accounts payable. The carrying amounts of these financial instruments, except for marketable securities, approximate their fair value because of the short maturity of these investments. The fair value of marketable securities is presented in Note 5 to these consolidated financial statements. Assets held for severance benefits are recorded at their current cash redemption value. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. F - 20 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of Significant Accounting Policies (cont’d) X. Concentrations of risks (1) Credit risk Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents, short-term bank deposits, marketable securities, trade receivables and assets held for employees’ severance benefits. Cash and cash equivalents balances of the Company, which are subject to credit risk, consist of cash accounts held with major financial institutions. Short-term bank deposits balances of the Company, which are subject to credit risk, consist of short-term bank deposits held with a major Israeli Bank. Marketable securities consist of held to maturity marketable securities issued by highly rated corporations. As of December 31, 2019 and 2020, the ratings of the securities in the Company's portfolio was at least A- and BBB+ respectively. Nonetheless, these investments are subject to general credit and counterparty risks (such as that the counterparty to a financial instrument fails to meet its contractual obligations). The Company closely monitors extensions of credit and has never experienced significant credit losses. On January 1, 2020, the Company adopted ASU 2016-13 (Topic 326) Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, as further clarified by the Financial Accounting Standards Board (the "FASB") through the issuance of additional related ASUs, which requires the measurement and recognition of current expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model, which requires the use of forward-looking information to calculate credit loss estimates. The Company adopted the standard under the modified retrospective approach. Upon adoption, the standard did not have a material impact on the Consolidated Financial Statements. We continue to monitor the financial implications of the COVID-19 pandemic on expected credit losses. (2) Significant customers The Company's top three customers accounted for approximately 36% of its revenues in 2020. The Company expects that a small number of customers will continue to account for a significant portion of its revenues for the foreseeable future. See Note 13. Y. Liabilities for loss contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. F - 21 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of Significant Accounting Policies (cont’d) Z. Recent Accounting Pronouncements (1) In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which removes |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Note 3 - Acquisitions A. ADI Engineering, Inc. On October 28, 2015 (hereinafter – "closing date") the Company acquired certain assets from ADI Engineering, Inc. (hereinafter – "ADI"), a privately-held, US-based provider of custom embedded communications and networking products, for an aggregate purchase price of US$ 10,000 thousand in cash and estimated contingent consideration of US$ 7,802 thousand in cash and in options to ordinary shares, payable in three yearly payments, after the closing, subject to the attainment of certain performance milestones until December 31, 2017. Of the total purchase price of US$ 17,802 thousand, US$ 222 thousand was attributed to tangible assets, US$ 4,261 thousand was attributed to intangible assets and US$ 13,319 thousand was attributed to goodwill. The goodwill is primarily attributable to the synergies expected to arise after the acquisition. The recognized goodwill is deductible for income tax purposes for 10 years. B. Silicom Denmark On December 10, 2014 (hereinafter – "closing date"), the Company completed the acquisition of all of the outstanding shares and voting interests of Silicom Denmark, a provider of high performance application acceleration solutions, for an aggregate purchase price of US$ 10,161 thousand in cash and estimated contingent consideration of US$ 4,683 thousand in cash and in options to ordinary shares, subject to the attainment of certain performance milestones until August 31, 2015. In connection with the contingent consideration, during 2016 the Company paid to the Silicom Denmark sellers an amount of US$ 1,463 thousand, of which 90% was paid in cash and 10% in options to ordinary shares of the Company. In relation to this acquisition, on April 18, 2016, the Company granted, in the aggregate, 22,795 options to the Silicom Denmark sellers and to the Silicom Denmark employees (see Note 12I). |
Cash and Cash Equivalents
Cash and Cash Equivalents | 12 Months Ended |
Dec. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Note 4 - Cash and Cash Equivalents December 31 2019 2020 US$ thousands Cash 13,382 19,477 Cash equivalents * 3,087 1,199 16,469 20,676 * Comprised mainly of deposits in banks as at December 31, 2019 and 2020 carrying a weighted average interest rate of 1.04% and 0.84%, respectively. |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | Note 5 - Marketable Securities The Company's investment in marketable securities as of December 31, 2019 and 2020 are classified as ''held-to-maturity'' and consist of the following: Amortized cost basis** Gross unrealized holding gains Gross unrealized holding (losses) Aggregate fair value* US$ thousands At December 31, 2020 Held to maturity: Corporate debt securities and government debt securities Current 35,445 265 (102 ) 35,608 Non-Current 15,365 339 - 15,704 50,810 604 (102 ) 51,312 At December 31, 2019 Held to maturity: Corporate debt securities and government debt securities Current 14,170 24 (97 ) 14,097 Non-Current 46,955 408 (112 ) 47,251 61,125 432 (209 ) 61,348 * Fair value is being determined using quoted market prices in active markets (Level 2). ** Including accrued interest in the amount of US$ 538 thousand and US$ 412 thousand as of December 31, 2019 and 2020, respectively. The accrued interest is presented as part of other receivables on the balance sheet. Activity in marketable securities in 2020 US$ thousands Balance at January 1, 2020 61,125 Purchases of marketable securities 6,558 Discount on marketable securities, net (244 ) Proceeds from maturity of marketable securities (16,629 ) Balance at December 31, 2020 50,810 F - 25 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 5 - Marketable Securities (Cont’d) The following table summarizes the gross unrealized losses on investment securities for which other-than-temporary impairments have not been recognized and the fair value of those securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2020: Less than 12 months 12 months or more Total Held to maturity: Unrealized Losses Fair value Unrealized Losses Fair value Unrealized Losses Fair value Corporate debt securities and government debt securities (2 ) 1,105 (100 ) 6,770 (102 ) 7,875 The unrealized losses on the investments were caused by changes in interest rate. The Company has the ability and intent to hold these investments until maturity and it is more likely than not that the Company will not be required to sell any of the securities before recovery; therefore these investments are not considered other than temporarily impaired. |
Other Receivables
Other Receivables | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Other Receivables | Note 6 - Other Receivables December 31 2019 2020 US$ thousands Advances to suppliers 805 618 Government authorities 2,758 3,668 Prepaid expense 553 477 Other receivables 848 1,363 4,964 6,126 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 7 - Inventories December 31 2019 2020 US$ thousands Raw materials and components 20,986 29,362 Products in process 7,137 10,041 Finished products 8,368 8,247 36,491 47,650 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | Note 8 - Property, Plant and Equipment, Net December 31 2019 2020 US$ thousands Machinery and equipment 13,374 15,494 Office furniture and equipment 924 991 Leasehold improvements 2,528 2,884 Property, plant and equipment 16,826 19,369 Accumulated depreciation (13,252 ) (15,259 ) Property, Plant and equipment, net 3,574 4,110 Depreciation expense for the years ended December 31, 2018, 2019 and 2020 were US$ 2,190 thousand, US$ 1,731 thousand and US$ 2,000 thousand, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets | Note 9 - Intangible Assets December 31 2019 2020 Useful life US$ thousands Original cost: Capitalization of software development costs 3 1,946 2,983 Licenses 3 106 556 2,052 3,539 Accumulated amortization: Capitalization of software development costs 274 2,163 Licenses 60 206 334 2,369 Intangible assets, net: Capitalization of software development costs 1,672 820 Licenses 46 350 1,718 1,170 Amortization expense for the years ended December 31, 2018, 2019 and 2020 were US$ 1,103 thousand, US$ 266 thousand and US$ 378 thousand, respectively. The company recorded an impairment charge of US$ 1,657 thousand in the year ended December 31, 2020, for software that will no longer be utilized by the company and the asset value and accumulated amortization were written off. The impairment was recorded in cost of sales. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | Note 10 - Leases A. The components of operating lease cost for the year ended December 31, 2020 and 2019 were as follows: Year ended December 31 2019 2020 US$ thousands Operating lease costs 1,494 1,623 Variable lease payments not included in the lease liability 2 3 Short-term lease cost 287 285 Total operating lease cost 1,783 1,911 B. Supplemental cash flow information related to operating leases was as follows: Year ended December 31 2019 2020 US$ thousands Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 1,541 1,601 Right-of-use assets obtained in exchange for lease obligations (non-cash): Operating leases 1,524 7,201 C. Supplemental balance sheet information related to operating leases was as follows: December 31 2019 2020 US$ thousands Operating leases: Operating leases right-of-use 3,783 9,913 Current operating lease liabilities 1,090 1,813 Non-current operating lease liabilities 2,693 8,282 Total operating lease liabilities 3,783 10,095 F - 29 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 10 - Leases (cont’d) C. Supplemental balance sheet information related to operating leases was as follows (cont’d): December 31 2019 2020 US$ thousands Weighted average remaining lease term (years) 4.8 8.2 Weighted average discount rate 3.3 % 2.4 % D. Future minimum lease payments under non-cancellable leases as of December 31, 2020 were as follows: December 31, 2020 US$ thousands 2021 1,743 2022 1,575 2023 1,426 2024 1,161 After 2025 4,934 Total operating lease payments 10,839 Less: imputed interest (744 ) Present value of lease liabilities 10,095 |
Assets Held and Liability for E
Assets Held and Liability for Employees' Severance Benefits | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Assets Held and Liability for Employees' Severance Benefits | Note 11 - Assets Held and Liability for Employees' Severance Benefits A. Under Israeli law and labor agreements, Silicom is required to make severance payments to retired or dismissed In respect of the liability to the employees, individual insurance policies are purchased and deposits are made with recognized severance pay funds. The liability for severance pay is calculated on the basis of the latest salary paid to each employee multiplied by the number of years of employment. The liability is covered by the amounts deposited including accumulated income thereon as well as by the unfunded provision. B. According to Section 14 to the Severance Pay Law ("Section 14") the payment of monthly deposits by a company into C. Consequently, the assets held for employees' severance benefits reported on the balance sheet, in respect of deposits As a result of the implementation of Section 14, as described above, the liability with respect to those employees is calculated on the basis of number of years of employment as of June 30, 2008, multiplied by the latest salary paid. The liability is covered by the amounts deposited, including accumulated income thereon, as well as by the unfunded provision. Such liability will be removed, either upon termination of employment or retirement. D. Expenses recorded with respect to employees' severance payments for the years ended December 31, 2018, 2019 and |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Note 12 - Shareholders' Equity Capital and reserves On May 2, 2019, the Company's Board of Directors authorized and began implementation of a one-year share repurchase plan to repurchase up to $15 million of the Company's ordinary shares. On April 30, 2020 the Company's Board of Directors authorized another one-year share repurchase plan allowing the Company to invest up to $15 million to repurchase its ordinary shares. This plan has began as the previously announced $15 million one-year share repurchase plan was completed. Repurchases may be made in the open market and will be in accordance with applicable securities laws and regulations. The timing and amount of each repurchase transaction may depend on a variety of factors. The share repurchase plan does not obligate the Company to acquire any specific number of ordinary shares and may be suspended or terminated at any time at management’s discretion. Share based compensation A. On October 21, 2013 the Board resolved to adopt the Global Share Incentive Plan (2013) (the "2013 Plan") and to B. Options or RSUs granted to Israeli residents may be granted under Section 102 of the Israeli Income Tax Ordinance Capital gains on awards granted under the plans are subjected to tax of Gains which are not capital gains on awards under the plans are subjected to regular tax rates on individuals, and the F - 32 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) C. During 2017 and 2020, the Company granted 1. The vesting period of the RSUs ranges between 2. The fair value of RSUs is estimated based on the market value of the Company’s stock on the date of grant, less 3. The Company recognizes compensation expenses on these RSUs based on estimated grant date fair value, with 2017 2020 Expected dividend yield 2.68 % 0 % Termination rate 1.74 % 1.58 % F - 33 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) D. On June 8, 2016, the Company granted, in the aggregate, 1. The exercise price for the options (per ordinary share) was US$ 2. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 1.58 % Expected dividend yield 2.42 % Average expected volatility (b) 47.90 % Termination rate 9 % Suboptimal factor (c) 3.32 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. F - 34 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) E. On January 30, 2017, the Company granted, in the aggregate, 1. The exercise price for the options (per ordinary share) was US$ 2. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 2.35 % Expected dividend yield 2.42 % Average expected volatility (b) 43.71 % Termination rate 9 % Suboptimal factor (c) 3.28 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. F - 35 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) F. On April 30, 2018, the Company granted, in the aggregate, 1. The exercise price for the options (per ordinary share) was US$ 2. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 2.92 % Expected dividend yield 0.0 % Average expected volatility (b) 45.13 % Termination rate 9 % Suboptimal factor (c) 3.2 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. F - 36 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) G. On January 31, 2019, the Company granted, in the aggregate, 1. The exercise price for the options (per ordinary share) was US$ 2. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 2.55 % Expected dividend yield 0.0 % Average expected volatility (b) 44.62 % Termination rate 9 % Suboptimal factor (c) 3.18 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. F - 37 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) H. On June 8, 2020, the Company granted, in the aggregate, 3. The exercise price for the options (per ordinary share) was US$ 4. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 0.75 % Expected dividend yield 0.0 % Average expected volatility (b) 45.29 % Termination rate 9 % Suboptimal factor (c) 3.16 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. F - 38 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) I. The following table summarizes information regarding stock options as at December 31, 2020: Options outstanding Options exercisable Weighted average Weighted average remaining remaining Exercise price Number contractual life Number contractual life US$ of options (in years) of options (in years) 26.91 19,332 2.6 19,332 2.6 33.27 19,706 5.3 19,706 5.3 28.38 68,649 3.4 68,649 3.4 39.62 101,004 4.1 101,004 4.1 36.11 114,090 5.3 114,090 5.3 33.83 125,674 6.1 - - 32.54 141,592 7.4 - - 590,047 322,781 The aggregate intrinsic value of options outstanding as of December 31, 2019 and 2020 is US$ 593 thousand and US$ 4,589 thousand, respectively. The aggregate intrinsic value of options exercisable as of December 31, 2019 and 2020 is US$ 593 thousand and US$ 2,263 thousand, respectively. The total intrinsic value of options exercised during the year ended December 31, 2019 and 2020, is US$ 28 thousand and US$ 240 thousand, respectively. F - 39 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) J. The stock option activity under the abovementioned plans is as follows: Number of options Weighted average exercise price Weighted average grant date fair value US$ US$ Balance at January 1, 2018 249,911 Granted 137,010 36.11 14.71 Exercised (9,674 ) 28.02 9.94 Forfeited (11,752 ) 36.73 13.05 Balance at December 31, 2018 365,495 Granted 141,928 33.83 13.35 Exercised (5,500 ) 28.09 10.03 Forfeited (36,676 ) 35.88 13.50 Balance at December 31, 2019 465,247 Granted 148,426 32.54 14.82 Exercised (12,357 ) 22.38 8.63 Forfeited (11,269 ) 33.93 14.56 Balance at December 31, 2020 590,047 Exercisable at December 31, 2020 322,781 F - 40 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) K. The Restricted Share Units activity under the abovementioned plans is as follows: Number of Restricted Share Units Weighted average grant date fair value US$ Balance at January 1, 2018 and December 31, 2018 78,000 Vested (39,000 ) 35.36 Balance at December 31, 2019 39,000 Granted 86,000 35.33 Vested (39,000 ) 34.43 Balance at December 31, 2020 86,000 The aggregate intrinsic value of RSUs outstanding as of December 31, 2019 and December 31, 2020 is US$ F - 41 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 12 - Shareholders' Equity (cont'd) Share based compensation (cont'd) L. During 2018, 2019 and 2020, the Company recorded share-based compensation expenses. The following summarizes Year ended December 31 2018 2019 2020 US$ thousands Cost of sales 372 437 535 Research and development costs 953 900 959 Selling and marketing expenses 569 493 602 General and administrative expenses 530 525 615 2,424 2,355 2,711 As of December 31, 2020, there were US$ The total tax benefit recognized in the consolidated statements of operations related to share based compensation |
Geographic areas and major cust
Geographic areas and major customers | 12 Months Ended |
Dec. 31, 2020 | |
Geographic areas and major customers [Abstract] | |
Geographic areas and major customers | Note 13 - Geographic areas and major customers A. Information on sales by geographic distribution: The Company has one operating segment. Sales are attributed to geographic distribution based on the location of the customer. Year ended December 31 2018 2019 2020 US$ thousands North America 108,024 77,161 65,142 Europe 21,038 20,956 35,570 Asia-Pacific 4,691 7,123 6,686 133,753 105,240 107,398 B. Sales to single customers exceeding 10% of sales (US$ thousands): Year ended December 31 2018 2019 2020 US$ thousands Customer "A" 305 2,428 13,468 Customer "B" - - 13,328 Customer "C" 18,855 17,107 12,278 Customer "D" 14,506 11,030 4,225 Customer "E" 14,220 121 44 F - 43 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 13 - Geographic areas and major customers (cont'd) C. Information on Long-Lived Assets - Property, Plant and Equipment and ROU assets by geographic areas: The following table presents the locations of the Company’s long-lived assets as of December 31, 2019 and 2020: Year ended December 31 2019 2020 US$ thousands North America 1,189 1,081 Europe 198 189 Israel 5,970 12,753 7,357 14,023 |
Financial Income (Expenses), Ne
Financial Income (Expenses), Net | 12 Months Ended |
Dec. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Financial Income (Expenses), Net | Note 14 - Financial Income (Expenses), Net Year ended December 31 2018 2019 2020 US$ thousands Interest income 840 2,295 2,197 Discount on marketable securities, net (32 ) (144 ) (244 ) Exchange rate differences, net 208 (357 ) (748 ) Bank charges (93 ) (148 ) (171 ) 923 1,646 1,034 |
Taxes on Income
Taxes on Income | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Taxes on Income | Note 15 - Taxes on Income A. Measurement of results for tax purposes under the Israeli Income Tax Regulations (Rules for Maintaining Accounting Records of Foreign Invested Companies and Certain Partnerships and Determining Their Taxable Income) - 1986 As a "foreign invested company" (as defined in the Israeli Law for the Encouragement of Capital Investments-1959), B. Corporate tax rate in Israel The regular corporate tax rate applied to taxable income of Israeli companies is C. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter - the "Law") 1. On December 29, 2010 the Knesset approved the Economic Policy Law for 2011-2012, which includes an Companies can choose to not be included in the scope of the Amendment to the Law and to stay in the scope of Under the Amendment to the Law, upon an irrevocable election made by a company, a uniform corporate tax rate Should the Company derive income from sources other than the Preferred Company, such income will be taxable F - 46 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 15 - Taxes on Income (cont’d) C. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter - the "Law") (cont'd) On December 29, 2016 the Israeli Parliament (the "Knesset") enacted the "Economic Efficiency Law (Legislative The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a Preferred technological income that meets the conditions required in the law, will be subject to a reduced On June 14, 2017 the Knesset Finance Committee approved "Encouragement of Capital Investment Regulations Should the Company derive income from sources other than the “preferred technological enterprise”, such income As a result of the aforesaid legislation, starting 2021 the Company is expected to implement the “preferred F - 47 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 15 - Taxes on Income (cont’d) C. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter - the "Law") (cont'd) 2. In the event of distribution by the Company of dividends out of its retained earnings that were generated prior to Out of the Company’s retained earnings as of December 31, 2020, approximately US$ F - 48 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 15 - Taxes on Income (cont’d) D. Taxation of the subsidiaries 1. The subsidiary Silicom Inc. files tax returns with US federal tax authorities and with state tax authorities in the The federal corporate income tax rate is 2. The subsidiary Silicom Denmark is taxed according to the tax laws in Denmark. 3. The Company has not provided for Israeli income and foreign withholding taxes on US$ The Company currently has no plans to repatriate those funds and intends to indefinitely reinvest them in its 4. As of December 31, 2020, the net operating loss carry-forwards of the Companys’ subsidiaries for tax purposes E. Tax assessments 1. For the Israeli jurisdiction the Company has final tax assessments for all years up to and including the tax year 2. For the US federal jurisdiction, Silicom Inc. has final tax assessments for all years up to and including the tax 3. For the Danish jurisdiction, Silicom Denmark has final tax assessments for all years up to and including the tax F - 49 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 15 - Taxes on Income (cont’d) F. Income before income taxes and income taxes expense (benefit) included in the consolidated statements of operations Year ended December 31 2018 2019 2020 US$ thousands Income before income taxes: Israel 14,703 9,339 5,565 Foreign jurisdictions 2,871 2,520 1,717 17,574 11,859 7,282 Current taxes: Israel 2,400 1,732 1,260 Foreign jurisdictions 831 611 506 3,231 2,343 1,766 Current tax (benefits) expenses relating to prior years: Israel (73 ) (17 ) 50 Foreign jurisdictions (226 ) (4 ) (198 ) (299 ) (21 ) (148 ) Deferred taxes: Israel (106 ) (904 ) 8 Foreign jurisdictions 111 205 (69 ) 5 (699 ) (61 ) Income tax expense 2,937 1,623 1,557 F - 50 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 15 - Taxes on Income (cont’d) G. Deferred tax assets and liabilities The tax effects of significant items comprising the Company’s deferred tax assets and liabilities are as follows: December 31 December 31 2019 2020 US$ thousands US$ thousands Deferred tax assets: Accrued employee benefits 327 368 Research and development costs 1,597 1,859 Operating loss carryforwards 196 66 Property, plant and equipment 31 - Share based compensation 374 365 Intangible assets 347 287 Operating lease liabilities - 1,121 Other - 1 Total deferred tax assets 2,872 4,067 Deferred tax liabilities: Intangible assets (397 ) (203 ) Goodwill (879 ) (1,089 ) Operating leases right-of-use, net - (1,100 ) Other (3 ) (21 ) Total deferred tax liabilities (1,279 ) (2,413 ) Net deferred tax assets 1,593 1,654 In Israel 1,798 1,790 Foreign jurisdictions (205 ) (136 ) Net deferred tax assets 1,593 1,654 Non-current deferred tax assets 1,798 1,790 Non-current deferred tax liabilities (205 ) (136 ) F - 51 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 15 - Taxes on Income (cont’d) H. Reconciliation of the statutory tax expense to actual tax expense Year ended December 31 2018 2019 2020 US$ thousands Income before income taxes 17,574 11,859 7,282 Statutory tax rate in Israel 23.0 % 23.0 % 23.0 % 4,042 2,728 1,675 Increase (decrease) in taxes resulting from: Non-deductible operating expenses 295 417 508 Prior years adjustments (299 ) (21 ) (148 ) Tax effect due to "Preferred Enterprise" status* (1,398 ) (1,099 ) (714 ) Statutory rate differential 176 18 105 Changes in tax rate - 7 181 Creation of deferred taxes for tax losses and benefits from previous years for which deferred taxes were not created in the past - (476 ) - Other 121 49 (50 ) Income tax expense 2,937 1,623 1,557 * The effect of the benefit resulting from the "Preferred Enterprise" status on net earnings per ordinary share is as follows: Year ended December 31 2018 2019 2020 Basic 0.19 0.15 0.10 Diluted 0.18 0.15 0.10 F - 52 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 15 - Taxes on Income (cont’d) I. Accounting for uncertainty in income taxes The accounting literature clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial During 2018, 2019 and 2020 the Company and its subsidiaries did not have any significant unrecognized tax benefits In addition, the Company and its subsidiaries do not expect that the amount of unrecognized tax benefits will change |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 - Subsequent Events (1) In January 2021, the Company’s compensation committee and board of directors, respectively, have approved the grant (2) Pursuant to the share repurchase plan approved on April 30, 2020, the Company has purchased |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Financial statements in US dollars | A. Financial statements in US dollars Substantially all sales of the Company are made outside of Israel (see Note 13A regarding geographical distribution), in US dollars ("dollars"). Most purchases of materials and components, and a significant part of the marketing costs are made or incurred, primarily in dollars. Therefore, the dollar is the currency that represents the principal economic environment in which the Company operates and is thus its functional currency. Transactions and monetary balances in other currencies are translated into the functional currency using the current exchange rate. All exchange gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in earnings when they arise. |
Basis of presentation | B. Basis of presentation The accompanying consolidated financial statements have been prepared with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Estimates and assumptions | C. Estimates and assumptions The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include revenue recognition over time, income taxes, inventories, marketable securities, goodwill, intangible assets and share-based compensation. |
Business combinations | D. Business combinations The Company accounts for business combination in accordance with ASC No. 805, "Business Combinations". ASC No. 805 requires recognition of assets acquired and liabilities assumed at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in the consolidated statements of operations. |
Cash and cash equivalents | E. Cash and cash equivalents The Company considers highly liquid investments with original maturities of three months or less from the date of deposit to be cash equivalents. |
Short-term bank deposits | F. Short-term bank deposits Short term bank deposits consist of bank deposits with original maturities of more than three months and up to twelve months. As of December 31, 2020, the Company's short-term bank deposits consist of bank deposits in US dollars carrying a weighted average interest rate of 2.05%. These short-term bank deposits are held with a major Israeli bank, and their use and withdrawal are not subject to any restrictions. |
Marketable securities | G. Marketable securities The Company classifies its marketable securities as held-to-maturity as they are debt securities in which the Company has the intent and ability to hold to maturity. Held-to-maturity (HTM) debt securities are recorded at amortized cost adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts on debt securities are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective interest method. Such amortization and accretion are included in the "Financial income, net" line item in the consolidated statements of operations. F - 11 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) G. Marketable securities (cont’d) When other-than-temporary impairment has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. A decline in the market value of HTM security below cost that is deemed to be other than temporary results in an impairment to reduce the carrying amount to fair value. To determine whether an impairment is other than temporary, the Company considers all available information relevant to the collectibility of the security, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in. If the Company intends to sell the security or it is more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment is separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. |
Trade accounts receivable, net | H. Trade accounts receivable, net Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and its customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. As of December 31, 2019 and 2020, the provision for doubtful accounts receivable amounted to US$ 20 thousand. |
Inventories | I. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the "weighted average-cost" method. The Company writes down obsolete or slow moving inventory to its net realizable value. |
Assets held for employees' severance benefits | J. Assets held for employees’ severance benefits Assets held for employees’ severance benefits represent contributions to severance pay funds and cash surrender value of insurance policies. The assets are recorded at their current cash redemption value. |
Property, plant and equipment | K. Property, plant and equipment Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line basis over the estimated useful life of the assets at the following annual rates: % Machinery and equipment 15 - 33 Office furniture and equipment 6 - 33 Leasehold improvements * * Over the shorter term of the lease or the useful life of the asset |
Goodwill and other intangible assets | L. Goodwill and other intangible assets Goodwill reflects the excess of the purchase price of business acquired over the fair value of net assets acquired. Goodwill is not amortized but instead is tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Company operates in one operating segment and this segment comprises one reporting unit. Goodwill is reviewed for impairment at least annually in accordance with ASC 350, Intangibles—Goodwill and Other. ASC 350 provides an entity the option to perform a qualitative assessment to determine whether it is more likely than-not that the fair value of a reporting unit is less than its carrying amount prior to performing the two-step goodwill impairment test. If this is the case, the two-step goodwill impairment test is required. If it is more likely than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required. If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed. During the year ended December 31, 2020, no impairments were found and therefore no impairment losses were recorded. F - 13 Silicom Ltd. and its Subsidiaries Notes to the Consolidated Financial Statements Note 2 - Summary of significant Accounting Policies (cont’d) L. Goodwill and other intangible assets (cont’d) Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives in proportion to the economic benefits realized. This accounting policy results in amortization of such intangible assets in the straight-line method. |
Impairment of long-lived assets | M. Impairment of long-lived assets In accordance with Impairment or Disposal of long-lived assets Subsections of FASB ASC Subtopic 360-10, Property, Plant, and Equipment – Overall. Long-lived assets, such as property, plant, equipment and purchased intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or an asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. |
Leases | N. Leases In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02. The guidance establishes a right-of-use model ("ROU") that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. The Company determines if an arrangement is or contains a lease at contract inception. The Company adopted the new accounting standard ASC 842 "Leases" and all the related amendments on January 1, 2019. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. As of December 31, 2020, all of the company's leases are operating leases. On the commencement date, the lease payments shall include variable lease payments that depend on an index (such as the Consumer Price Index), initially measured using the index at the commencement date. The Company does not remeasure the lease liability for changes in future lease payments arising from changes in an index unless the lease liability is remeasured for another reason. Therefore, after initial recognition, such variable lease payments are recognized in profit or loss as they are incurred. Variable payments that depends on use of the underlying asset are not included in the lease payments. Such variable payments are recognized in profit or loss in the period in which the event or condition that triggers the payment occurs. Upon initial recognition, the Company recognizes a liability at the present value of the lease payments to be made over the lease term, and concurrently recognizes a ROU asset at the same amount of the liability, adjusted for any prepaid lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments, the lease term and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease. After lease commencement, the Company measures the lease liability at the present value of the remaining lease payments using the discount rate determined at lease commencement (as long as the discount rate hasn’t been updated as a result of a reassessment event). The Company subsequently measures the ROU asset at the present value of the remaining lease payments, adjusted for the remaining balance of any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term. The Company's lease agreements have remaining lease terms up to 10 years. Some of these agreements include options to extend the leases for up to 5 years and some include options to terminate the leases immediately. Some of our vehicle lease agreements include rental payments based on the actual usage of the vehicles and other lease agreements include rental payments adjusted periodically for inflation. The agreements related to leases in Israel are in Israeli Shekel ("ILS") or in ILS, linked to the Israeli Consumer Price Index or to the US Dollars. The agreements related to leases in the USA are in US Dollars and the agreements related to leases in Denmark are in Danish Krone ("DKK"). The Company's lease agreements do not contain any residual value guarantees. See Note 10. |
Revenue recognition | O. Revenue recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition. ASC 606 supersedes nearly all U.S. GAAP on revenue recognition and eliminated industry-specific guidance. The underlying principle of ASC 606 is to recognize revenue when a customer obtains control of the promised goods at an amount that reflects the consideration that is expected to be received in exchange for those goods. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers. The Company adopted ASC 606 at the beginning of the first quarter of fiscal year 2018 and implemented new accounting policies and internal controls necessary to support the requirements of ASC 606. The Company derives revenues primarily from the sale of networking and data infrastructure solutions. The Company recognizes revenue upon transfer of control of the promised goods in a contract with a customer in an amount that reflects the consideration the Company expects to receive in exchange for those products. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. The Company accounts for a contract with customer when it has approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company identifies separated contractual performance obligations and evaluates each distinct performance obligation within a contract, whether it is satisfied at a point in time or over time. Revenue is recognized over time for sales of goods manufactured to unique customer specifications, in which the Company’s performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date if the customer were to terminate the contract. Revenue recognized over time is measured by the costs incurred to date relative to the estimated total direct costs to fulfill each contract. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, materials and overhead. Revenue is allocated among performance obligations in a manner that reflects the consideration that the Company expects to be entitled to for the promised goods based on standalone selling prices (SSP). SSP are estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of the product when the Company sell the goods separately in similar circumstances and to similar customers. |
Research and development costs | P. Research and development costs Capitalization of software development costs related to programmable components incorporated into the Company's products, are charged to expense until technological feasibility has been established for the product. Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established. The company has determined that technological feasibility for its software components of hardware products is reached after all high-risk development issues have been resolved through coding and testing. Amortization begins once the software is ready for its intended use, generally based on the pattern in which the economic benefits will be consumed. The amortization of these costs is included in cost of revenue over the estimated life of the products. Other costs incurred in the research and development of the Company’s products are expensed as incurred. |
Allowance for product warranty | Q. Allowance for product warranty The Company grants service warranties related to certain products to end-users. The Company estimates its obligation for such warranties to be immaterial on the basis of historical experience. Accordingly, these financial statements do not include an accrual for warranty obligations. |
Treasury shares | R. Treasury shares Treasury shares are recorded at cost and presented as a reduction of shareholders' equity. |
Income taxes | S. Income taxes Deferred taxes are accounted for under the asset and liability method based on the estimated future tax effects of temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are presented as non-current assets and liabilities and measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured as the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. |
Share-based compensation | T. Share-based compensation The Company recognizes compensation expense based on estimated grant date fair value in accordance with ASC Topic 718, Compensation -Stock Compensation as follows: When portions of an award vest in increments during the requisite service period (graded-vesting award), the Company’s accounting policy is to recognize compensation cost for the award over the requisite service period for each separately vesting portion of the award. |
Basic and diluted earnings per share | U. Basic and diluted earnings per share Basic income per ordinary share is calculated by dividing the net income attributable to ordinary shares, by the weighted average number of ordinary shares outstanding. Diluted income per ordinary share calculation is similar to basic income per ordinary share except that the weighted average of common shares outstanding is increased to include outstanding potential common shares during the period if dilutive. Potential common shares arise from stock options and RSUs, and the dilutive effect is reflected by the application of the treasury stock method. The following table summarizes information related to the computation of basic and diluted income per ordinary share for the years indicated. Year ended December 31 2018 2019 2020 Net income attributable to ordinary shares (US$ thousands) 14,637 10,236 5,725 Weighted average number of ordinary shares outstanding used in basic income per ordinary share calculation 7,552,094 7,520,389 7,118,244 Add assumed exercise of outstanding dilutive potential ordinary shares 105,236 52,228 38,519 Weighted average number of ordinary shares outstanding used in diluted income per ordinary share calculation 7,657,330 7,572,617 7,156,763 Basic income per ordinary shares (US$) 1.938 1.361 0.804 Diluted income per ordinary shares (US$) 1.912 1.352 0.800 Weighted average number of shares related to options and RSUs excluded from the diluted earnings per share calculation because of anti-dilutive effect 171,086 351,610 180,916 |
Comprehensive Income | V. Comprehensive Income For the years ended December 31, 2018, 2019 and 2020, comprehensive income equals net income. |
Fair Value Measurements | W. Fair Value Measurements The Company's financial instruments consist mainly of cash and cash equivalents, marketable securities, trade and other receivables and trade accounts payable. The carrying amounts of these financial instruments, except for marketable securities, approximate their fair value because of the short maturity of these investments. The fair value of marketable securities is presented in Note 5 to these consolidated financial statements. Assets held for severance benefits are recorded at their current cash redemption value. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. |
Concentrations of risks | X. Concentrations of risks (1) Credit risk Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents, short-term bank deposits, marketable securities, trade receivables and assets held for employees’ severance benefits. Cash and cash equivalents balances of the Company, which are subject to credit risk, consist of cash accounts held with major financial institutions. Short-term bank deposits balances of the Company, which are subject to credit risk, consist of short-term bank deposits held with a major Israeli Bank. Marketable securities consist of held to maturity marketable securities issued by highly rated corporations. As of December 31, 2019 and 2020, the ratings of the securities in the Company's portfolio was at least A- and BBB+ respectively. Nonetheless, these investments are subject to general credit and counterparty risks (such as that the counterparty to a financial instrument fails to meet its contractual obligations). The Company closely monitors extensions of credit and has never experienced significant credit losses. On January 1, 2020, the Company adopted ASU 2016-13 (Topic 326) Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, as further clarified by the Financial Accounting Standards Board (the "FASB") through the issuance of additional related ASUs, which requires the measurement and recognition of current expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model, which requires the use of forward-looking information to calculate credit loss estimates. The Company adopted the standard under the modified retrospective approach. Upon adoption, the standard did not have a material impact on the Consolidated Financial Statements. We continue to monitor the financial implications of the COVID-19 pandemic on expected credit losses. (2) Significant customers The Company's top three customers accounted for approximately 36% of its revenues in 2020. The Company expects that a small number of customers will continue to account for a significant portion of its revenues for the foreseeable future. See Note 13. |
Liabilities for loss contingencies | Y. Liabilities for loss contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. |
Recent Accounting Pronouncements | Z. Recent Accounting Pronouncements (1) In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which removes |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Depreciation of Property, Plant and Equipment | Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line basis over the estimated useful life of the assets at the following annual rates: % Machinery and equipment 15 - 33 Office furniture and equipment 6 - 33 Leasehold improvements * * Over the shorter term of the lease or the useful life of the asset |
Computation of Basic and Diluted Income Per Ordinary Share | The following table summarizes information related to the computation of basic and diluted income per ordinary share for the years indicated. Year ended December 31 2018 2019 2020 Net income attributable to ordinary shares (US$ thousands) 14,637 10,236 5,725 Weighted average number of ordinary shares outstanding used in basic income per ordinary share calculation 7,552,094 7,520,389 7,118,244 Add assumed exercise of outstanding dilutive potential ordinary shares 105,236 52,228 38,519 Weighted average number of ordinary shares outstanding used in diluted income per ordinary share calculation 7,657,330 7,572,617 7,156,763 Basic income per ordinary shares (US$) 1.938 1.361 0.804 Diluted income per ordinary shares (US$) 1.912 1.352 0.800 Weighted average number of shares related to options and RSUs excluded from the diluted earnings per share calculation because of anti-dilutive effect 171,086 351,610 180,916 |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of Cash and Cash Equivalents | December 31 2019 2020 US$ thousands Cash 13,382 19,477 Cash equivalents * 3,087 1,199 16,469 20,676 * Comprised mainly of deposits in banks as at December 31, 2019 and 2020 carrying a weighted average interest rate of 1.04% and 0.84%, respectively. |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Held-to-Maturity Securities | The Company's investment in marketable securities as of December 31, 2019 and 2020 are classified as ''held-to-maturity'' and consist of the following: Amortized cost basis** Gross unrealized holding gains Gross unrealized holding (losses) Aggregate fair value* US$ thousands At December 31, 2020 Held to maturity: Corporate debt securities and government debt securities Current 35,445 265 (102 ) 35,608 Non-Current 15,365 339 - 15,704 50,810 604 (102 ) 51,312 At December 31, 2019 Held to maturity: Corporate debt securities and government debt securities Current 14,170 24 (97 ) 14,097 Non-Current 46,955 408 (112 ) 47,251 61,125 432 (209 ) 61,348 * Fair value is being determined using quoted market prices in active markets (Level 2). ** Including accrued interest in the amount of US$ 538 thousand and US$ 412 thousand as of December 31, 2019 and 2020, respectively. The accrued interest is presented as part of other receivables on the balance sheet. |
Schedule of Reconciliation of Marketable Securities | Activity in marketable securities in 2020 US$ thousands Balance at January 1, 2020 61,125 Purchases of marketable securities 6,558 Discount on marketable securities, net (244 ) Proceeds from maturity of marketable securities (16,629 ) Balance at December 31, 2020 50,810 |
Summary of Investment Securities in an Unrealized Loss Position | The following table summarizes the gross unrealized losses on investment securities for which other-than-temporary impairments have not been recognized and the fair value of those securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2020: Less than 12 months 12 months or more Total Held to maturity: Unrealized Losses Fair value Unrealized Losses Fair value Unrealized Losses Fair value Corporate debt securities and government debt securities (2 ) 1,105 (100 ) 6,770 (102 ) 7,875 |
Other Receivables (Tables)
Other Receivables (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Other Receivables | December 31 2019 2020 US$ thousands Advances to suppliers 805 618 Government authorities 2,758 3,668 Prepaid expense 553 477 Other receivables 848 1,363 4,964 6,126 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | December 31 2019 2020 US$ thousands Raw materials and components 20,986 29,362 Products in process 7,137 10,041 Finished products 8,368 8,247 36,491 47,650 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment, Net | December 31 2019 2020 US$ thousands Machinery and equipment 13,374 15,494 Office furniture and equipment 924 991 Leasehold improvements 2,528 2,884 Property, plant and equipment 16,826 19,369 Accumulated depreciation (13,252 ) (15,259 ) Property, Plant and equipment, net 3,574 4,110 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Net Intangible Assets | December 31 2019 2020 Useful life US$ thousands Original cost: Capitalization of software development costs 3 1,946 2,983 Licenses 3 106 556 2,052 3,539 Accumulated amortization: Capitalization of software development costs 274 2,163 Licenses 60 206 334 2,369 Intangible assets, net: Capitalization of software development costs 1,672 820 Licenses 46 350 1,718 1,170 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of Operating Lease Cost | A. The components of operating lease cost for the year ended December 31, 2020 and 2019 were as follows: Year ended December 31 2019 2020 US$ thousands Operating lease costs 1,494 1,623 Variable lease payments not included in the lease liability 2 3 Short-term lease cost 287 285 Total operating lease cost 1,783 1,911 |
Schedule of Supplemental Cash Flow Information Operating Lease | B. Supplemental cash flow information related to operating leases was as follows: Year ended December 31 2019 2020 US$ thousands Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 1,541 1,601 Right-of-use assets obtained in exchange for lease obligations (non-cash): Operating leases 1,524 7,201 |
Schedule of Supplemental Balance Sheet Information Operating Lease | C. Supplemental balance sheet information related to operating leases was as follows: December 31 2019 2020 US$ thousands Operating leases: Operating leases right-of-use 3,783 9,913 Current operating lease liabilities 1,090 1,813 Non-current operating lease liabilities 2,693 8,282 Total operating lease liabilities 3,783 10,095 |
Schedule of Additional Information Related to Operating Leases | December 31 2019 2020 US$ thousands Weighted average remaining lease term (years) 4.8 8.2 Weighted average discount rate 3.3 % 2.4 % |
Schedule of Future Minimum Lease Payments | D. Future minimum lease payments under non-cancellable leases as of December 31, 2020 were as follows: December 31, 2020 US$ thousands 2021 1,743 2022 1,575 2023 1,426 2024 1,161 After 2025 4,934 Total operating lease payments 10,839 Less: imputed interest (744 ) Present value of lease liabilities 10,095 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of assumptions used in estimation of grant date fair value of RSUs | 3. The Company recognizes compensation expenses on these RSUs based on estimated grant date fair value, with 2017 2020 Expected dividend yield 2.68 % 0 % Termination rate 1.74 % 1.58 % |
Schedule of assumptions used in estimation of grant date fair value of options | 2. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 1.58 % Expected dividend yield 2.42 % Average expected volatility (b) 47.90 % Termination rate 9 % Suboptimal factor (c) 3.32 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. 2. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 2.35 % Expected dividend yield 2.42 % Average expected volatility (b) 43.71 % Termination rate 9 % Suboptimal factor (c) 3.28 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. 2. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 2.92 % Expected dividend yield 0.0 % Average expected volatility (b) 45.13 % Termination rate 9 % Suboptimal factor (c) 3.2 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. 2. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 2.55 % Expected dividend yield 0.0 % Average expected volatility (b) 44.62 % Termination rate 9 % Suboptimal factor (c) 3.18 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. 4. The Company recognizes compensation expenses on these options based on estimated grant date fair value using Average Risk-free interest rate (a) 0.75 % Expected dividend yield 0.0 % Average expected volatility (b) 45.29 % Termination rate 9 % Suboptimal factor (c) 3.16 (a) Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. (b) Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. (c) Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. |
Stock Option Summary | I. The following table summarizes information regarding stock options as at December 31, 2020: Options outstanding Options exercisable Weighted average Weighted average remaining remaining Exercise price Number contractual life Number contractual life US$ of options (in years) of options (in years) 26.91 19,332 2.6 19,332 2.6 33.27 19,706 5.3 19,706 5.3 28.38 68,649 3.4 68,649 3.4 39.62 101,004 4.1 101,004 4.1 36.11 114,090 5.3 114,090 5.3 33.83 125,674 6.1 - - 32.54 141,592 7.4 - - 590,047 322,781 |
Stock Option Activity | J. The stock option activity under the abovementioned plans is as follows: Number of options Weighted average exercise price Weighted average grant date fair value US$ US$ Balance at January 1, 2018 249,911 Granted 137,010 36.11 14.71 Exercised (9,674 ) 28.02 9.94 Forfeited (11,752 ) 36.73 13.05 Balance at December 31, 2018 365,495 Granted 141,928 33.83 13.35 Exercised (5,500 ) 28.09 10.03 Forfeited (36,676 ) 35.88 13.50 Balance at December 31, 2019 465,247 Granted 148,426 32.54 14.82 Exercised (12,357 ) 22.38 8.63 Forfeited (11,269 ) 33.93 14.56 Balance at December 31, 2020 590,047 Exercisable at December 31, 2020 322,781 |
Schedule of Restricted Share Units activity | K. The Restricted Share Units activity under the abovementioned plans is as follows: Number of Restricted Share Units Weighted average grant date fair value US$ Balance at January 1, 2018 and December 31, 2018 78,000 Vested (39,000 ) 35.36 Balance at December 31, 2019 39,000 Granted 86,000 35.33 Vested (39,000 ) 34.43 Balance at December 31, 2020 86,000 |
Summary of Allocation of the Stock-Based Compensation Expenses | L. During 2018, 2019 and 2020, the Company recorded share-based compensation expenses. The following summarizes Year ended December 31 2018 2019 2020 US$ thousands Cost of sales 372 437 535 Research and development costs 953 900 959 Selling and marketing expenses 569 493 602 General and administrative expenses 530 525 615 2,424 2,355 2,711 |
Geographic areas and major cu_2
Geographic areas and major customers (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Geographic areas and major customers [Abstract] | |
Sales by Geographic Region | Sales are attributed to geographic distribution based on the location of the customer. Year ended December 31 2018 2019 2020 US$ thousands North America 108,024 77,161 65,142 Europe 21,038 20,956 35,570 Asia-Pacific 4,691 7,123 6,686 133,753 105,240 107,398 |
Sales to Single Customers Exceeding 10% of Sales | B. Sales to single customers exceeding 10% of sales (US$ thousands): Year ended December 31 2018 2019 2020 US$ thousands Customer "A" 305 2,428 13,468 Customer "B" - - 13,328 Customer "C" 18,855 17,107 12,278 Customer "D" 14,506 11,030 4,225 Customer "E" 14,220 121 44 |
Schedule of Locations of Company's Long Lived Assets - Property, Plant and Equipment | The following table presents the locations of the Company’s long-lived assets as of December 31, 2019 and 2020: Year ended December 31 2019 2020 US$ thousands North America 1,189 1,081 Europe 198 189 Israel 5,970 12,753 7,357 14,023 |
Financial Income (Expenses), _2
Financial Income (Expenses), Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Financial Income (Expenses), Net | Year ended December 31 2018 2019 2020 US$ thousands Interest income 840 2,295 2,197 Discount on marketable securities, net (32 ) (144 ) (244 ) Exchange rate differences, net 208 (357 ) (748 ) Bank charges (93 ) (148 ) (171 ) 923 1,646 1,034 |
Taxes on Income (Tables)
Taxes on Income (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Before Income Taxes and Income Taxes Expense (Benefit) Included in The Consolidated Statements of Operations | F. Income before income taxes and income taxes expense (benefit) included in the consolidated statements of operations Year ended December 31 2018 2019 2020 US$ thousands Income before income taxes: Israel 14,703 9,339 5,565 Foreign jurisdictions 2,871 2,520 1,717 17,574 11,859 7,282 Current taxes: Israel 2,400 1,732 1,260 Foreign jurisdictions 831 611 506 3,231 2,343 1,766 Current tax (benefits) expenses relating to prior years: Israel (73 ) (17 ) 50 Foreign jurisdictions (226 ) (4 ) (198 ) (299 ) (21 ) (148 ) Deferred taxes: Israel (106 ) (904 ) 8 Foreign jurisdictions 111 205 (69 ) 5 (699 ) (61 ) Income tax expense 2,937 1,623 1,557 |
Deferred Tax Assets and Liabilities | The tax effects of significant items comprising the Company’s deferred tax assets and liabilities are as follows: December 31 December 31 2019 2020 US$ thousands US$ thousands Deferred tax assets: Accrued employee benefits 327 368 Research and development costs 1,597 1,859 Operating loss carryforwards 196 66 Property, plant and equipment 31 - Share based compensation 374 365 Intangible assets 347 287 Operating lease liabilities - 1,121 Other - 1 Total deferred tax assets 2,872 4,067 Deferred tax liabilities: Intangible assets (397 ) (203 ) Goodwill (879 ) (1,089 ) Operating leases right-of-use, net - (1,100 ) Other (3 ) (21 ) Total deferred tax liabilities (1,279 ) (2,413 ) Net deferred tax assets 1,593 1,654 In Israel 1,798 1,790 Foreign jurisdictions (205 ) (136 ) Net deferred tax assets 1,593 1,654 Non-current deferred tax assets 1,798 1,790 Non-current deferred tax liabilities (205 ) (136 ) |
Reconciliation of the Statutory Tax Expense to Actual Tax Expense | H. Reconciliation of the statutory tax expense to actual tax expense Year ended December 31 2018 2019 2020 US$ thousands Income before income taxes 17,574 11,859 7,282 Statutory tax rate in Israel 23.0 % 23.0 % 23.0 % 4,042 2,728 1,675 Increase (decrease) in taxes resulting from: Non-deductible operating expenses 295 417 508 Prior years adjustments (299 ) (21 ) (148 ) Tax effect due to "Preferred Enterprise" status* (1,398 ) (1,099 ) (714 ) Statutory rate differential 176 18 105 Changes in tax rate - 7 181 Creation of deferred taxes for tax losses and benefits from previous years for which deferred taxes were not created in the past - (476 ) - Other 121 49 (50 ) Income tax expense 2,937 1,623 1,557 * The effect of the benefit resulting from the "Preferred Enterprise" status on net earnings per ordinary share is as follows: |
Schedule of Effect of the Benefit Resulting From the "Preferred Enterprise" Status on Net Earnings Per Ordinary Share | Year ended December 31 2018 2019 2020 Basic 0.19 0.15 0.10 Diluted 0.18 0.15 0.10 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($)itemCustomers | Dec. 31, 2019USD ($) | |
Accounting Policies [Abstract] | ||
Provision for doubtful accounts | $ | $ 20 | $ 20 |
Number of major customers | Customers | 3 | |
Percentage of revenue contributed by major customers | 36.00% | |
Number of operating segments | 1 | |
Number of reporting units | 1 | |
Weighted average interest rate | 2.05% | |
Remaining lease terms | 10 years | |
Options to extend leases | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Depreciation of Property, Plant and Equipment) (Details) | 12 Months Ended | |
Dec. 31, 2020 | ||
Machinery and equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Straight-line depreciation rate | 15.00% | |
Machinery and equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Straight-line depreciation rate | 33.00% | |
Office Furniture and Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Straight-line depreciation rate | 6.00% | |
Office Furniture and Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Straight-line depreciation rate | 33.00% | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Straight-line depreciation rate | [1] | |
[1] | Over the shorter term of the lease or the useful life of the asset |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Computation of Basic and Diluted Income Per Ordinary Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||
Net income attributable to ordinary shares (US$ thousands) | $ 5,725 | $ 10,236 | $ 14,637 |
Weighted average number of ordinary shares outstanding used in basic income per ordinary share calculation | 7,118,244 | 7,520,389 | 7,552,094 |
Add assumed exercise of outstanding dilutive potential ordinary shares | 38,519 | 52,228 | 105,236 |
Weighted average number of ordinary shares outstanding used in diluted income per ordinary share calculation | 7,156,763 | 7,572,617 | 7,657,330 |
Basic income per ordinary shares (US$) | $ 0.804 | $ 1.361 | $ 1.938 |
Diluted income per ordinary shares (US$) | $ 0.800 | $ 1.352 | $ 1.912 |
Weighted average number of shares related to options and RSUs excluded from the diluted earnings per share calculation because of anti-dilutive effect | 180,916 | 351,610 | 171,086 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Oct. 28, 2015 | Dec. 10, 2014 | Apr. 15, 2016 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||||
Purchase price allocated to goodwill | $ 25,561 | $ 25,561 | ||||
Silicom Denmark [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Aggregate purchase price in cash | $ 10,161 | |||||
Contingent consideration | $ 4,683 | |||||
Total obligation the company paid | $ 1,463 | |||||
Percentage of contingent consideration paid in cash | 90.00% | |||||
Percentage of contingent consideration paid in options to ordinary shares | 10.00% | |||||
Aggregate options granted | 22,795 | |||||
ADI Engineering, Inc. [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Aggregate purchase price in cash | $ 10,000 | |||||
Contingent consideration | 7,802 | |||||
Total purchase price | 17,802 | |||||
Purchase price allocated to tangible assets | 222 | |||||
Purchase price allocated to intangibles assets | 4,261 | |||||
Purchase price allocated to goodwill | $ 13,319 |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Cash and Cash Equivalents [Abstract] | |||||
Cash | $ 19,477 | $ 13,382 | |||
Cash equivalents | [1] | 1,199 | 3,087 | ||
Cash and cash equivalents | $ 20,676 | $ 16,469 | $ 26,808 | $ 17,021 | |
Weighted average interest rate of cash on deposit | 0.84% | 1.04% | |||
[1] | Comprised mainly of deposits in banks as at December 31, 2019 and 2020 carrying a weighted average interest rate of 1.04% and 0.84%, respectively. |
Marketable Securities (Held-To-
Marketable Securities (Held-To-Maturity Securities) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of Held-to-maturity Securities [Line Items] | |||
Aggregate fair value | [1] | $ 51,312 | $ 61,348 |
Gross unrealized holding gains | 604 | 432 | |
Gross unrealized holding (losses) | (102) | (209) | |
Amortized cost basis | [2] | 50,810 | 61,125 |
Accrued interest on securities | 412 | 538 | |
Current [Member] | |||
Schedule of Held-to-maturity Securities [Line Items] | |||
Aggregate fair value | [1] | 35,608 | 14,097 |
Gross unrealized holding gains | 265 | 24 | |
Gross unrealized holding (losses) | (102) | (97) | |
Amortized cost basis | [2] | 35,445 | 14,170 |
Non Current [Member] | |||
Schedule of Held-to-maturity Securities [Line Items] | |||
Aggregate fair value | [1] | 15,704 | 47,251 |
Gross unrealized holding gains | 339 | 408 | |
Gross unrealized holding (losses) | (112) | ||
Amortized cost basis | [2] | $ 15,365 | $ 46,955 |
[1] | Fair value is being determined using quoted market prices in active markets (Level 2). | ||
[2] | Including accrued interest in the amount of US$ 538 thousand and US$ 412 thousand as of December 31, 2019 and 2020, respectively. |
Marketable Securities (Schedule
Marketable Securities (Schedule of Reconciliation of Marketable Securities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Investments, Debt and Equity Securities [Abstract] | ||||
Balance | [1] | $ 61,125 | ||
Purchases of marketable securities | 6,558 | $ 15,604 | $ 41,670 | |
Discount on marketable securities, net | (244) | (144) | (32) | |
Proceeds from maturity of marketable securities | (16,629) | (1,997) | $ (7,750) | |
Balance | [1] | $ 50,810 | $ 61,125 | |
[1] | Including accrued interest in the amount of US$ 538 thousand and US$ 412 thousand as of December 31, 2019 and 2020, respectively. |
Marketable Securities (Summary
Marketable Securities (Summary of Investment Securities in an Unrealized Loss Position) (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Investments, Debt and Equity Securities [Abstract] | |
Unrealized Losses, Less than 12 months | $ (2) |
Unrealized Losses, 12 months or more | (100) |
Unrealized Losses, Total | (102) |
Fair value, Less than 12 months | 1,105 |
Fair value, 12 months or more | 6,770 |
Fair value, Total | $ 7,875 |
Other Receivables (Details)
Other Receivables (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Advances to suppliers | $ 618 | $ 805 |
Government authorities | 3,668 | 2,758 |
Prepaid expense | 477 | 553 |
Other receivables | 1,363 | 848 |
Total other receivables | $ 6,126 | $ 4,964 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials and components | $ 29,362 | $ 20,986 |
Products in process | 10,041 | 7,137 |
Finished products | 8,247 | 8,368 |
Inventories | $ 47,650 | $ 36,491 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | $ 19,369 | $ 16,826 | |
Accumulated depreciation | (15,259) | (13,252) | |
Property, Plant and equipment, net | 4,110 | 3,574 | |
Depreciation | 2,000 | 1,731 | $ 2,190 |
Machinery and equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | 15,494 | 13,374 | |
Office Furniture and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | 991 | 924 | |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | $ 2,884 | $ 2,528 |
Intangible Assets (Schedule of
Intangible Assets (Schedule of net intangible assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||
Original cost | $ 3,539 | $ 2,052 | |
Accumulated amortization | 2,369 | 334 | |
Intangible assets, Net | 1,170 | 1,718 | |
Amortization expense | 378 | 266 | $ 1,103 |
Impairment charge | 1,657 | ||
Capitalization of software development costs [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Original cost | 2,983 | 1,946 | |
Accumulated amortization | 2,163 | 274 | |
Intangible assets, Net | $ 820 | 1,672 | |
Useful life | 3 years | ||
Licenses [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Original cost | $ 556 | 106 | |
Accumulated amortization | 206 | 60 | |
Intangible assets, Net | $ 350 | $ 46 | |
Useful life | 3 years |
Leases (Schedule of Operating L
Leases (Schedule of Operating Lease Cost) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating lease costs | $ 1,623 | $ 1,494 |
Variable lease payments not included in the lease liability | 3 | 2 |
Short-term lease cost | 285 | 287 |
Total operating lease cost | $ 1,911 | $ 1,783 |
Leases (Schedule of Supplementa
Leases (Schedule of Supplemental Cash Flow Information Operating Lease) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 1,601 | $ 1,541 |
Right-of-use assets obtained in exchange for lease obligations (non-cash): | ||
Operating leases | $ 7,201 | $ 1,524 |
Leases (Schedule of Supplemen_2
Leases (Schedule of Supplemental Balance Sheet Information Operating Lease) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Operating leases: | ||
Operating leases right-of-use | $ 9,913 | $ 3,783 |
Current operating lease liabilities | 1,813 | 1,090 |
Non-current operating lease liabilities | 8,282 | 2,693 |
Total operating lease liabilities | $ 10,095 | $ 3,783 |
Weighted average remaining lease term Operating leases | 8 years 2 months 12 days | 4 years 9 months 18 days |
Weighted average discount rate Operating leases | 2.40% | 3.30% |
Leases (Schedule of Future Mini
Leases (Schedule of Future Minimum Lease Payments) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Year one | $ 1,743 | |
Year two | 1,575 | |
Year three | 1,426 | |
Year four | 1,161 | |
Thereafter | 4,934 | |
Total operating lease payments | 10,839 | |
Less: imputed interest | (744) | |
Total operating lease liabilities | $ 10,095 | $ 3,783 |
Assets Held and Liability for_2
Assets Held and Liability for Employees' Severance Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |||
Severance costs | $ 986 | $ 929 | $ 605 |
Shareholders' Equity (Share Opt
Shareholders' Equity (Share Option Plan) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2018 | Dec. 31, 2020 | Apr. 30, 2020 | May 02, 2019 | Oct. 21, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Capital gains tax | 25.00% | ||||
Value of shares authorized under one-year share repurchase plan | $ 15 | ||||
Share Option Plan 2013 [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares authorized | 500,000 | ||||
Additional shares authorized | 600,000 | ||||
Board of Directors [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Value of shares authorized under one-year share repurchase plan | $ 15 |
Shareholders' Equity (RSUs Gran
Shareholders' Equity (RSUs Granted in 2017 and 2020) (Narrative) (Details) - Restricted Share Units [Member] - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs grant | 86,000 | 78,000 |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period from date of grant | 2 years | 2 years |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period from date of grant | 3 years | 3 years |
Shareholders' Equity (Stock Opt
Shareholders' Equity (Stock Options Granted in 2017 and 202020) (Narrative) (Details) - $ / shares | Jun. 08, 2020 | Jun. 08, 2016 | Jan. 31, 2019 | Apr. 30, 2018 | Jan. 30, 2017 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Exercise price of options | $ 32.54 | $ 33.83 | $ 36.11 | |||||
Share Option Plan 2013 [Member] | 28.38 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options granted | 93,660 | |||||||
Exercise price of options | $ 28.38 | |||||||
Expiration date | Jun. 8, 2024 | |||||||
Closing price to determine expiration date | $ 14.19 | |||||||
Share Option Plan 2013 [Member] | 39.62 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options granted | 119,925 | |||||||
Exercise price of options | $ 39.62 | |||||||
Expiration date | Jan. 30, 2025 | |||||||
Closing price to determine expiration date | $ 19.81 | |||||||
Share Option Plan 2013 [Member] | 36.11 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options granted | 137,010 | |||||||
Exercise price of options | $ 36.11 | |||||||
Expiration date | Apr. 30, 2026 | |||||||
Closing price to determine expiration date | $ 18.06 | |||||||
Share Option Plan 2013 [Member] | 33.83 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options granted | 141,928 | |||||||
Exercise price of options | $ 33.83 | |||||||
Expiration date | Jan. 31, 2027 | |||||||
Closing price to determine expiration date | $ 16.92 | |||||||
Share Option Plan 2013 [Member] | $32.54 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options granted | 148,426 | |||||||
Exercise price of options | $ 32.54 | |||||||
Expiration date | Jun. 8, 2028 | |||||||
Closing price to determine expiration date | $ 16.27 |
Shareholders' Equity (Fair Valu
Shareholders' Equity (Fair Value Assumptions) (Details) - item | Jun. 08, 2016 | Jul. 08, 2020 | Jan. 31, 2019 | Apr. 30, 2018 | Jan. 30, 2017 | Dec. 31, 2020 | Dec. 31, 2017 | |
Restricted Share Units [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Expected dividend yield | 0.00% | 2.68% | ||||||
Termination rate | 1.58% | 1.74% | ||||||
$28.38 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Average risk-free interest rate | [1] | 1.58% | ||||||
Expected dividend yield | 2.42% | |||||||
Average expected volatility | [2] | 47.90% | ||||||
Termination rate | 9.00% | |||||||
Suboptimal factor | [3] | 3.32 | ||||||
$39.62 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Average risk-free interest rate | [1] | 2.35% | ||||||
Expected dividend yield | 2.42% | |||||||
Average expected volatility | [2] | 43.71% | ||||||
Termination rate | 9.00% | |||||||
Suboptimal factor | [3] | 3.28 | ||||||
36.11 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Average risk-free interest rate | [1] | 2.92% | ||||||
Expected dividend yield | 0.00% | |||||||
Average expected volatility | [2] | 45.13% | ||||||
Termination rate | 9.00% | |||||||
Suboptimal factor | [3] | 3.2 | ||||||
$32.54 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Average risk-free interest rate | [1] | 0.75% | ||||||
Expected dividend yield | 0.00% | |||||||
Average expected volatility | [2] | 45.29% | ||||||
Termination rate | 9.00% | |||||||
Suboptimal factor | [3] | 3.16 | ||||||
Share Option Plan 2013 [Member] | 33.83 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Average risk-free interest rate | [1] | 2.55% | ||||||
Expected dividend yield | 0.00% | |||||||
Average expected volatility | [2] | 44.62% | ||||||
Termination rate | 9.00% | |||||||
Suboptimal factor | [3] | 3.18 | ||||||
[1] | Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant. | |||||||
[2] | Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market. | |||||||
[3] | Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies. |
Shareholders' Equity (Stock O_2
Shareholders' Equity (Stock Option Summary) (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding, number of options | 590,047 | 465,247 | 365,495 | 249,911 |
Options exercisable, number of options | 322,781 | |||
$26.91 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price US$ | $ 26.91 | |||
Options outstanding, number of options | 19,332 | |||
Options outstanding, weighted average remaining contractual life (in years) | 2 years 7 months 6 days | |||
Options exercisable, number of options | 19,332 | |||
Options exercisable, weighted average remaining contractual life (in years) | 2 years 7 months 6 days | |||
33.27 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price US$ | $ 33.27 | |||
Options outstanding, number of options | 19,706 | |||
Options outstanding, weighted average remaining contractual life (in years) | 5 years 3 months 18 days | |||
Options exercisable, number of options | 19,706 | |||
Options exercisable, weighted average remaining contractual life (in years) | 5 years 3 months 18 days | |||
28.38 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price US$ | $ 28.38 | |||
Options outstanding, number of options | 68,649 | |||
Options outstanding, weighted average remaining contractual life (in years) | 3 years 4 months 24 days | |||
Options exercisable, number of options | 68,649 | |||
Options exercisable, weighted average remaining contractual life (in years) | 3 years 4 months 24 days | |||
39.62 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price US$ | $ 39.62 | |||
Options outstanding, number of options | 101,004 | |||
Options outstanding, weighted average remaining contractual life (in years) | 4 years 1 month 6 days | |||
Options exercisable, number of options | 101,004 | |||
Options exercisable, weighted average remaining contractual life (in years) | 4 years 1 month 6 days | |||
36.11 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price US$ | $ 36.11 | |||
Options outstanding, number of options | 114,090 | |||
Options outstanding, weighted average remaining contractual life (in years) | 5 years 3 months 18 days | |||
Options exercisable, number of options | 114,090 | |||
Options exercisable, weighted average remaining contractual life (in years) | 5 years 3 months 18 days | |||
33.83 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price US$ | $ 33.83 | |||
Options outstanding, number of options | 125,674 | |||
Options outstanding, weighted average remaining contractual life (in years) | 6 years 1 month 6 days | |||
Options exercisable, number of options | ||||
32.54 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price US$ | $ 32.54 | |||
Options outstanding, number of options | 141,592 | |||
Options outstanding, weighted average remaining contractual life (in years) | 7 years 4 months 24 days | |||
Options exercisable, number of options |
Shareholders' Equity (Intrinsic
Shareholders' Equity (Intrinsic Value of Stock Options) (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | ||
Aggregate intrinsic value of options outstanding | $ 4,589 | $ 593 |
Aggregate intrinsic value of options exercisable | 2,263 | 593 |
Total intrinsic value of options exercised | $ 240 | $ 28 |
Shareholders' Equity (Stock O_3
Shareholders' Equity (Stock Option Activity) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |||
Options, beginning balance | 465,247 | 365,495 | 249,911 |
Options, granted | 148,426 | 141,928 | 137,010 |
Options, exercised | (12,357) | (5,500) | (9,674) |
Options, forfeited | (11,269) | (36,676) | (11,752) |
Options, ending balance | 590,047 | 465,247 | 365,495 |
Options, exercisable | 322,781 | ||
Weighted average exercise price, granted | $ 32.54 | $ 33.83 | $ 36.11 |
Weighted average exercise price, exercised | 22.38 | 28.09 | 28.02 |
Weighted average exercise price, forfeited | 33.93 | 35.88 | 36.73 |
Weighted average grant date fair value, granted | 14.82 | 13.35 | 14.71 |
Weighted average grant date fair value, exercised | 8.63 | 10.03 | 9.94 |
Weighted average grant date fair value, forfeited | $ 14.56 | $ 13.50 | $ 13.05 |
Shareholders' Equity (Schedule
Shareholders' Equity (Schedule Of Restricted Share Units Activity) (Details) - Restricted Share Units [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2017 | |
Number of Restricted Share Units | |||
Restricted Share Units, beginning balance | 39,000 | 78,000 | |
Restricted Share Units, granted | 86,000 | 78,000 | |
Restricted Share Units, vested | (39,000) | (39,000) | |
Restricted Share Units, ending balance | 86,000 | 39,000 | |
Weighted average grant date fair value | |||
Weighted average grant date fair value, granted | $ 35.33 | ||
Weighted average grant date fair value, vested | $ 34.43 | $ 35.36 |
Shareholders' Equity (Intrins_2
Shareholders' Equity (Intrinsic Value of Restricted Share Units) (Narrative) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Restricted Share Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Aggregate intrinsic value of RSUs outstanding | $ 3,599 | $ 1,297 |
Shareholders' Equity (Summary o
Shareholders' Equity (Summary of Allocation of Stock-Based Compensation Expenses) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 2,711 | $ 2,355 | $ 2,424 |
Unrecognized compensation costs related to outstanding stock options and RSUs | $ 3,616 | ||
Unrecognized compensation costs related to outstanding stock options and RSUs, period for recognition | 1 year 8 months 23 days | ||
Tax benefit recognized in the consolidated statements of operations related to share based compensation expenses | $ 67 | ||
Cost Of Sales [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 535 | 437 | 372 |
Research And Development Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 959 | 900 | 953 |
Selling And Marketing Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 602 | 493 | 569 |
General And Administrative Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 615 | $ 525 | $ 530 |
Geographic areas and major cu_3
Geographic areas and major customers (Sales By Geographic Region) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Sales attributable based on geographic location | [1] | $ 107,398 | $ 105,240 | $ 133,753 |
North America [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Sales attributable based on geographic location | 65,142 | 77,161 | 108,024 | |
Europe [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Sales attributable based on geographic location | 35,570 | 20,956 | 21,038 | |
Asia Pacific [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Sales attributable based on geographic location | $ 6,686 | $ 7,123 | $ 4,691 | |
[1] | Including sales to related parties in the amount of US$ 1,063 thousand, US$ 0 thousand and US$ 0 thousand in 2018, 2019 and 2020, respectively. |
Geographic areas and major cu_4
Geographic areas and major customers (Sales to Single Customers Exceeding 10% of Sales) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Revenue, Major Customer [Line Items] | ||||
Sales | [1] | $ 107,398 | $ 105,240 | $ 133,753 |
Customer A [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Sales | 13,468 | 2,428 | 305 | |
Customer B [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Sales | 13,328 | |||
Customer C [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Sales | 12,278 | 17,107 | 18,855 | |
Customer D [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Sales | 4,225 | 11,030 | 14,506 | |
Customer E [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Sales | $ 44 | $ 121 | $ 14,220 | |
[1] | Including sales to related parties in the amount of US$ 1,063 thousand, US$ 0 thousand and US$ 0 thousand in 2018, 2019 and 2020, respectively. |
Geographic areas and major cu_5
Geographic areas and major customers (Schedule of Locations of Company's Long Lived Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long lived assets | $ 14,023 | $ 7,357 |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long lived assets | 1,081 | 1,189 |
Europe [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long lived assets | 189 | 198 |
Israel [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long lived assets | $ 12,753 | $ 5,970 |
Financial Income (Expenses), _3
Financial Income (Expenses), Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |||
Interest income | $ 2,197 | $ 2,295 | $ 840 |
Discount on marketable securities, net | (244) | (144) | (32) |
Exchange rate differences, net | (748) | (357) | 208 |
Bank charges | (171) | (148) | (93) |
Financial income, net | $ 1,034 | $ 1,646 | $ 923 |
Taxes on Income (Narrative) (De
Taxes on Income (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Line Items] | |||
Tax rate | 23.00% | 23.00% | 23.00% |
Federal corporate income tax rate | 21.00% | ||
Corporate tax on cash dividends distributed from exempted profits | 25.00% | ||
Withholding tax deduction from cash dividends distributed from benefited profits | 20.00% | ||
Non-Israeli subsidiaries' undistributed earnings for which Company has not provided for Israeli income and foreign withholding taxes | $ 8,702 | ||
Assumed deferred tax liability attributable to taxable temporary differences from non-Israeli subsidiaries'' undistributed earnings | 1,188 | ||
Net operating loss carry-forwards | $ 300 | ||
Preferred Enterprise [Member] | |||
Income Tax Disclosure [Line Items] | |||
Reduction in corporate tax rate | 12.00% | ||
Preferred Enterprise [Member] | Development Area A [Member] | |||
Income Tax Disclosure [Line Items] | |||
Corporate statutory tax rate on 2017 and thereafter | 7.50% | ||
Corporate statutory tax rate on 2016 | 7.50% | ||
Reduction in corporate tax rate | 7.50% | ||
Preferred Enterprise [Member] | Rest Of Country [Member] | |||
Income Tax Disclosure [Line Items] | |||
Corporate statutory tax rate on 2016 and thereafter | 16.00% | ||
Reduction in corporate tax rate | 6.00% | ||
Israel Tax Reform [Member] | |||
Income Tax Disclosure [Line Items] | |||
Corporate statutory tax rate on 2018 and thereafter | 23.00% | ||
Corporate statutory tax rate on 2016 | 25.00% | ||
Beneficial Enterprise [Member] | |||
Income Tax Disclosure [Line Items] | |||
Tax exemption | $ 54,303 | ||
Assumed income tax liability | $ 13,576 |
Taxes on Income (Income Before
Taxes on Income (Income Before Income Taxes and Income Taxes Expense (Benefit) Included in the Consolidated Statements of Operations) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Income before income taxes, Israel | $ 5,565 | $ 9,339 | $ 14,703 |
Income before income taxes, foreign jurisdictions | 1,717 | 2,520 | 2,871 |
Income before income taxes | 7,282 | 11,859 | 17,574 |
Current taxes, Israel | 1,260 | 1,732 | 2,400 |
Current taxes, foreign jurisdictions | 506 | 611 | 831 |
Current taxes | 1,766 | 2,343 | 3,231 |
Current tax (benefits) expenses relating to prior years, Israel | 50 | (17) | (73) |
Current tax (benefits) expenses relating to prior years, foreign jurisdictions | (198) | (4) | (226) |
Current tax (benefits) expenses relating to prior years | (148) | (21) | (299) |
Deferred taxes, Israel | 8 | (904) | (106) |
Deferred taxes, foreign jurisdictions | (69) | 205 | 111 |
Deferred taxes | (61) | (699) | 5 |
Income tax expense | $ 1,557 | $ 1,623 | $ 2,937 |
Taxes on Income (Deferred Tax A
Taxes on Income (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Accrued employee benefits | $ 368 | $ 327 |
Research and development costs | 1,859 | 1,597 |
Operating loss carryforwards | 66 | 196 |
Property, plant and equipment | 31 | |
Share based compensation | 365 | 374 |
Intangible assets | 287 | 347 |
Operating lease liabilities | 1,121 | |
Other | 1 | |
Total deferred tax assets | 4,067 | 2,872 |
Deferred tax liabilities: | ||
Intangible assets | (203) | (397) |
Goodwill | (1,089) | (879) |
Operating leases right-of-use, net | (1,100) | |
Other | (21) | (3) |
Total deferred tax liabilities | (2,413) | (1,279) |
Net deferred tax assets | 1,654 | 1,593 |
In Israel | 1,790 | 1,798 |
Foreign jurisdictions | (136) | (205) |
Net deferred tax assets | 1,654 | 1,593 |
Non-current deferred tax assets | 1,790 | 1,798 |
Non-current deferred tax liabilities | $ (136) | $ (205) |
Taxes on Income (Reconciliation
Taxes on Income (Reconciliation of Statutory Tax Expense To Actual Tax Expense) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Income before income taxes | $ 7,282 | $ 11,859 | $ 17,574 | |
Statutory tax rate in Israel | 23.00% | 23.00% | 23.00% | |
Computed expected tax | $ 1,675 | $ 2,728 | $ 4,042 | |
Non-deductible operating expenses | 508 | 417 | 295 | |
Prior years adjustments | (148) | (21) | (299) | |
Tax effect due to "Preferred Enterprise" status | [1] | (714) | (1,099) | (1,398) |
Statutory rate differential | 105 | 18 | 176 | |
Changes in tax rate | 181 | 7 | ||
Creation of deferred taxes for tax losses and benefits from previous years for which deferred taxes were not created in the past | (476) | |||
Other | (50) | 49 | 121 | |
Income tax expense | $ 1,557 | $ 1,623 | $ 2,937 | |
Basic | $ 0.804 | $ 1.361 | $ 1.938 | |
Diluted | 0.800 | 1.352 | 1.912 | |
Preferred Enterprise - Effect on Net Earnings Per Ordinary Share [Member] | ||||
Basic | 0.10 | 0.15 | 0.19 | |
Diluted | $ 0.10 | $ 0.15 | $ 0.18 | |
[1] | The effect of the benefit resulting from the "Preferred Enterprise" status on net earnings per ordinary share is as follows: |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 12 Months Ended | |
Jan. 31, 2021 | Mar. 05, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Subsequent Event [Line Items] | ||||
Ordinary shares repurchased value | $ 16,798 | $ 7,971 | ||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Ordinary shares repurchased | 49,555 | |||
Ordinary shares repurchased value | $ 2,257 | |||
Global Share Incentive Plan (2013) [Member] | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Options approved for grant during period not yet issued | 137,759 |