NOTE 2   SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

a. Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, and disclose contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the years reported. Actual results could differ from those estimates.

On an on-going basis, management evaluates its estimates, judgments and assumptions. The most significant estimates and assumptions relate to employee compensation in connection with equity awards, realizability of deferred tax assets, provision for uncertain tax positions and contingencies.

b. Functional currency

Most of the revenues of the Company and its subsidiaries are derived in the United States dollars (the “Dollar”). Most purchases of materials and components are also made in Dollars. The Company’s management believes that the currency of the primary economic environment in which the Company and its subsidiaries operate is the Dollar.

Thus, the Dollar is the functional and reporting currency of the Company and its subsidiaries. Accordingly, transactions in currencies other than the Dollar are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the Dollar are measured using the official exchange rate at the balance sheet date. The effects of foreign currency re-measurements are recorded in the consolidated statements of operations as “financial income (expenses).”

c. Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions, including profits from intercompany sales not yet realized outside the Company, have been eliminated upon consolidation.

d. Cash and cash equivalents

Cash equivalents are short-term unrestricted highly liquid investments that are readily convertible to cash and with original maturities of three months or less at acquisition.

e. Restricted bank deposits

Restricted bank deposits are deposits with maturities of more than three months but less than one year. Such short-term deposits are stated at cost which approximates market values. Short-term restricted bank deposits include approximately $3.1 million and $2.3 million as of December 31, 2015 and December 31, 2014, respectively. These deposits serve as collateral for bank guarantees, and are included in other current assets in the consolidated balance sheets.

f. Marketable securities

The Company accounts for investments in marketable debt securities in accordance with ACS 320, “Investments — Debt and Equity Securities.” Management determines the appropriate classification of its investments in debt securities at the time of purchase and reevaluates such determinations at each balance sheet date.

The Company classifies its investments in marketable debt securities as available-for-sale. Accordingly, these securities are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) (“OCI”). Realized gains and losses on sales of investments are derived using the specific identification method for determining the cost of securities and are included in the consolidated statements of operations as “financial income (expenses), net”.

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Interest and amortization and accretion of premiums and discounts on debt securities are recorded as interest income.

Investments with original maturities of less than one year from the balance sheet date, or investments that the Company intends to sell within one year, are classified as current assets, while all other securities are classified as non-current assets. The majority of the investments are classified as non-current as they have stated maturities of more than one year from the balance sheet date. However, management believes that these investments are liquid and generally available to meet short-term needs, if required.

The Company recognizes an impairment charge when a decline in the fair value of its investments in debt securities below the cost basis of such securities is judged to be other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period and the Company’s intent to sell, including whether it is more likely than not that the Company will be required to sell the investment before recovery of cost basis.

An other-than-temporary impairment has occurred if the Company does not expect to recover the amortized cost basis of the debt security. If the Company does not intend to sell the impaired debt security, and it is not more likely than not it will be required to sell the debt security before the recovery of its amortized cost basis, the amount of the other-than-temporary impairment recognized is limited to the portion attributed to the credit loss. The remaining portion of the unrealized loss related to other factors is recognized in other comprehensive income (loss). A decline in value that is considered as other than temporary is included in the consolidated statements of operations as “financial income (expenses), net”.

g. Reclassifications

Certain comparative figures have been reclassified to conform to the current year presentation.

h. Risk factors

Concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents which include short-term deposits, marketable securities and account receivables.

The majority of the Company’s cash and cash equivalents are invested in major banks domiciled in Israel and the U.S. Generally, these cash equivalents may be redeemed upon demand. Short term bank deposits (included in cash and cash equivalent) are held in financial institutions with high credit standing. Accordingly, management believes that these bank deposits have minimal credit risk.

The Company’s marketable securities include investments in government debentures and corporate debentures including financial institutions debentures. Marketable securities owned by the Company are deposited with major financial institutions, located in the United States and Europe. The credit risk associated with the Company’s marketable securities portfolio is minimal as the Company invests in diverse portfolio of highly-rated securities and the Company’s investment policy requires an average rating of A+, as determined by S&P, of the Company’s marketable securities portfolio and limits the amount that the Company may invest with any one type of investment or issuer (except for bonds issued by the U.S. government).

As of December 31, 2015, 85% of the Company’s marketable securities portfolio was invested in debt securities of corporations, 12% in debt securities of financial institutions and 3% in debt securities of governmental institutions. From a geographic perspective, 65% of the Company’s marketable securities portfolio was invested in debt securities of North American issuers, 27% was invested in debt securities of European issuers and 8% was invested in debt securities of issuers in other jurisdictions.

The Company’s account receivables are derived primarily from sales to companies in the automotive manufacturing industry located mainly in the United States and Europe. Concentration of credit risk with respect to account receivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures. Credit is granted based on an evaluation of a customer’s financial condition and generally, collateral is not required. Trade accounts receivable are typically due from customers within 30 to 90 days. The Company performs ongoing credit evaluations of its customers and has not experienced any material losses in recent years. The Company establishes an allowance for doubtful accounts receivables by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history from such customers and the customer’s current ability to pay its obligation to the Company. The allowance for doubtful accounts is determined with respect to specific debts that are doubtful of collection and netted against accounts receivable. Allowance for doubtful accounts amounted to $50 and $50 thousands as of December 31, 2015 and 2014, respectively. The Company writes off accounts receivable when they are deemed uncollectible. For the years ended December 31, 2015, 2014 and 2013, the charge-offs and recoveries in relation to the allowance for doubtful accounts were insignificant. See also note 12b for the Company’s major customers.

Dependence on a single supplier

The Company purchases all its SoC from a single supplier. Any issues that occur and persist in connection with the manufacture, delivery, quality or cost of the assembly and testing of inventory could have a material adverse effect on the Company’s business and financial condition. The purchase agreement with the supplier expires on December 31, 2022.

i. Fair value measurement

The Company measures fair value and discloses fair value measurements for financial assets and liabilities. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Consistent with ASC 820, “Fair Value Measurement” the Company follows a three-tier fair value hierarchy as a basis for considering the assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data or active market data for similar but not identical assets or liabilities.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers credit risk in its assessment of fair value.

j. Inventories

In accordance with ASU 2015-11, which the Company has early-adopted and applied prospectively as of December 31, 2015 (see also note 2v), the Inventories are stated at the lower of cost and net realizable value. Cost of raw materials, purchased products and work in progress is computed using standard cost, which approximates average cost. Cost of finished products, with the addition of subcontracting and overhead costs, is computed using standard cost which approximates average cost. The Company analyzes and adjusts excess and obsolete inventories primarily based on future demand and market conditions. Once written-down, a new lower cost basis for that inventory is established.

k. Property and equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method.

Annual rates of depreciation are as follows:

Leasehold improvements are amortized by the straight-line method over the shorter of the term of the lease and estimated useful life of the improvements.

l. Impairment of long-lived assets

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In the event that the sum of the expected future undiscounted cash flows expected to be generated by the long-lived assets is less than the carrying amount of such assets, an impairment charge would be recognized and the assets would be written down to their estimated fair values.

m. Research and development, net

Research and development expenses are expensed as incurred, and consist primarily of personnel, facilities, equipment and supplies for research and development activities.

The Company occasionally enters into best-efforts nonrefundable “Non-Recurring Engineering” (“NRE”) arrangements pursuant to which the Company is reimbursed for a portion of the research and development expenses attributable to specific development programs. The Company does not receive any additional compensation or royalties upon completion of such projects and the potential customer does not commit to purchase the resulting product in the future. The participation reimbursement received by the Company does not depend on whether there are future benefits from the project. All intellectual property generated from these arrangements are exclusively owned by the Company.

Participations in expenses for research and development projects are recognized on the basis of the costs incurred and are netted against research and development expenses in the statement of operations. Research and development reimbursements of  $12,615 thousand, $9,884 thousand and $10,511 thousand were offset against research and development costs in the years ended in December 31, 2015, 2014 and 2013, respectively.

n. Comprehensive income (loss)

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting equity that under US GAAP are excluded from net income (loss). For the Company, such items consist of unrealized gains and losses on available-for-sale securities.

o. Revenue recognition

The Company recognizes revenue from sales of its products provided that (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price is fixed or determinable and (iv) collectibility is reasonably assured. Delivery occurs upon transfer of title and all risks and rewards of ownership to the customer, which is generally upon shipment.

Substantially all of the Company’s contracts do not include rights of return or acceptance provisions.

Revenue from sales of products to resellers and distributors occurs upon delivery of products to the resellers and distributors, assuming all other revenue recognition criteria are met. The Company does not offer resellers and distributors any return rights, price protection or other similar rights.

p. Share-based compensation

Equity awards granted to employees and directors are accounted for using the estimated grant date fair value. The Company estimates the fair value of employee stock options at the date of grant using a Black-Scholes option pricing model and values restricted stock units (“RSUs”) based on the market value of the underlying shares at the date of grant. The fair value of share-based payment transactions is recognized as an expense over the requisite service period, net of estimated forfeitures. The Company estimates forfeitures based on historical experience and anticipated future conditions.

The Company elected to recognize compensation cost for awards that have a graded vesting schedule using the accelerated multiple-option approach.

Equity awards granted to non-employees are re-measured at each reporting period at fair value until they have vested. The fair value of equity awards is charged to the statement of operations over the service period.

q. Taxes on income

Deferred taxes are determined utilizing the asset and liability method, which is based on the estimated future tax effects of the differences between the financial accounting and tax bases of assets and liabilities under the applicable tax laws. Deferred tax balances are computed using the tax rates expected to be in effect when those differences reverse. A valuation allowance in respect of deferred tax assets is provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Deferred tax liabilities and assets are classified as noncurrent prospectively as of December 31, 2015 (see also note 2v). Deferred tax liabilities and assets as of December 31, 2014 were classified as current or non-current based on the classification of the related asset or liability for financial reporting, or according to the expected reversal dates of the specific temporary differences if not related to an asset or liability for financial reporting.

Results for tax purposes for the Israeli subsidiary were measured in NIS until January 1, 2015. The Company has not provided deferred income taxes on the differences resulted from changes in exchange rate and indexation. As of January 1, 2015 results for tax purposes for the Israeli subsidiary were measured in US Dollars (see also Note 9).

The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate resolution. Such liabilities are classified as long-term, unless the liability is expected to be settled in cash within twelve months from the balance sheet date. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within income tax expense and exchange rate differences within financial income (expenses), net.

r. Provision for warranty

The Company provides warranties for its products, which vary with respect to each contract and in accordance with the nature of each specific product, for terms of one to three years. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time revenues are recognized. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Provision for warranty as of December 31, 2015 and 2014, was $558 thousand and $470 thousand, respectively. Provision for warranty is included in other current liabilities in the balance sheet. Warranty expenses for the years ended December 31, 2015, 2014 and 2013 were immaterial.

s. Contingencies

The Company is currently involved in some commercial claims in the ordinary course of business. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. When accruing these costs, the Company recognizes an accrual in the amount within a range of loss that is the best estimate within the range. When no amount within the range is a better estimate than any other amount, the Company accrues for the minimum amount within the range. No material amounts for contingencies were accrued as of December 31, 2015 and 2014. Legal fees are expensed as incurred.

t. Basic and diluted net profit (loss) per share

Basic earnings (losses) per share are computed by dividing net income or loss applicable to ordinary shareholders by the weighted average number of Class A ordinary shares outstanding for each period prior to the Company’s IPO and by the weighted-average number of ordinary shares for the periods commencing the Company’s IPO.

Diluted earnings (losses) per share are calculated by dividing net income or loss applicable to ordinary shareholders by the weighted-average number of Class A ordinary shares outstanding during each period prior to the Company’s IPO and by the weighted-average number of ordinary shares for the periods commencing after the Company’s IPO, plus the effect of dilutive outstanding equity-based awards which is calculated using the treasury stock method.

Basic and diluted earnings (losses) per share are presented in conformity with the two-class method required for participating securities for the periods prior to their conversion upon the Company’s IPO in August 2014, when all classes of shares were converted to ordinary shares.

Under the two-class method, the earnings per share for each class of shares are calculated assuming 100% of the Company’s earnings are distributed as dividends to each class of shares based on their contractual rights. In addition, since all classes other than Class A Ordinary shares, did not participate in losses, for the year ended December 31, 2014 these shares are not included in the computation of basic loss per share.

u. Impact of recently issued accounting pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 supersedes the existing revenue recognition guidance and clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.

Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In August 2015, the FASB issued an update to ASU 2014-09 deferring the effective date for public entities to annual reporting periods beginning on or after December 15, 2017 (early adoption is permitted for the interim and annual periods beginning on or after December 15, 2016). The Company is currently evaluating the effect of the adoption of this ASU on its consolidated financial statements.

Future minimum annual lease commitments under all of the Company’s operating lease agreements are as follows:

Rent expenses net of sublease income for the Company for the years ended December 31, 2015, 2014 and 2013 were $2,563 thousand, $2,211 thousand and $1,447 thousand, respectively.

In July 2015, the Israeli subsidiary entered into several agreements related to acquisition of land in Jerusalem, Israel which the Company intends to use for the construction of a new R&D and innovation center that will also host our headquarters. The Company estimates total costs related to the land acquisition of approximately $12 million. The agreements are subject to various closing conditions, including the receipt of certain regulatory approvals. There is no assurance that the Company will obtain these regulatory approvals and meet the closing conditions of the agreements. As of December 31, 2015, the effect of those agreements on the financial statements was immaterial.

Share capital

a.

As of December 31, 2015, the Company’s issued share capital was comprised of ordinary shares, € 0.01 par value. The ordinary shares confer upon the holders the right to receive notice to participate and vote in shareholders meetings of the Company and to receive dividend, if and when declared.​

b.

On August 6, 2014, the Company completed its IPO. In connection with the IPO, all then outstanding share classes were converted to ordinary shares on a one-for-one basis. For additional information see Note 1.

​

c.

In July 2014, the Company’s shareholders approved a five-for-one stock split of all classes of the Company’s shares. All of the share and per share amounts have been adjusted, on a retroactive basis, to reflect this stock split.

​

In addition, in July 2014, the Company’s Articles were amended to convert all classes of shares into one class of ordinary shares on a one-for-one basis and the Company’s shareholders approved an increase in the number of authorized shares to 1,012,565,725 ordinary shares.

​

​

​

Ordinary  shares

​

​

Class A  Ordinary  shares

​

​

Class B  Ordinary  shares

​

​

Class C  Ordinary  shares

​

​

Class D  Ordinary  shares

​

​

Class E  Ordinary  shares

​

​

Class F1  Ordinary  shares

​

​

Class F2  Ordinary  shares

​

​

Ordinary  shares (with  liquidation  preference)

​

​

​

​

Number of shares – issued and outstanding

​

Balance, as of January 1, 2013

​

​

​

​

​

​

​

​

​

​

40,190,595

​

​

​

​

​

11,913,135

​

​

​

​

​

4,818,795

​

​

​

​

​

43,469,535

​

​

​

​

​

14,047,435

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

77,546,385

​

​

Exercise of options

​

​

​

​

​

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

6,229,270

​

​

Issuance of F1 shares

​

​

​

​

​

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

4,297,995

​

​

​

​

​

—

​

​

​

​

​

—

​

​

Investment transaction (see note 8(d))

​

​

​

​

​

​

​

​

​

​

(8,119,760)

​

​

​

​

​

(5,209,615)

​

​

​

​

​

(1,428,305)

​

​

​

​

​

(11,304,580)

​

​

​

​

​

(2,297,735)

​

​

​

​

​

10,028,655

​

​

​

​

​

41,547,280

​

​

​

​

​

(23,215,940)

​

​

Balance, as of December 31, 2013

​

​

​

​

​

​

​

​

​

​

32,070,835

​

​

​

​

​

6,703,520

​

​

​

​

​

3,390,490

​

​

​

​

​

32,164,955

​

​

​

​

​

11,749,700

​

​

​

​

​

14,326,650

​

​

​

​

​

41,547,280

​

​

​

​

​

60,559,715

​

​

Exercise of options – prior to IPO

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

1,463,051

​

​

Conversion upon IPO closing

​

​

​

​

203,976,196

​

​

​

​

​

(32,070,835)

​

​

​

​

​

(6,703,520)

​

​

​

​

​

(3,390,490)

​

​

​

​

​

(32,164,955)

​

​

​

​

​

(11,749,700)

​

​

​

​

​

(14,326,650)

​

​

​

​

​

(41,547,280)

​

​

​

​

​

(62,022,766)

​

​

IPO

​

​

​

​

8,325,000

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

Exercise of options – commencing  IPO

​

​

​

​

2,252,865

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

Balance, as of December 31, 2014

​

​

​

​

214,554,061

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

Exercise of options

​

​

​

​

4,293,369

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

Balance, as of December 31, 2015

​

​

​

​

218,847,430

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

d. Investment transactions

On June 28, 2013, the Company entered into a share purchase agreement with an investor pursuant to which the Company agreed to sell and issue to the investor 4,297,995 Class F1 Shares par value EUR 0.01 each, at a purchase price of  $6.98 per share and total consideration of  $30,000 thousand. On the same day, investors, including the investor in the preceding sentence, entered into an agreement with the Company and a newly formed Dutch private company, Driving Momentum BV (“Newco”), which owned 500 Ordinary shares (with liquidation preference) of the Company pursuant to which Newco agreed to sell to the investors an aggregate of 10,028,655 Class F1 and 41,547,280 Class F2 shares. NewCo then purchased 51,575,935 issued and outstanding Class A, Ordinary Shares (with liquidation preference), Class B, Class C, Class D and Class E shares of the Company from existing shareholders, at a purchase price of US $6.61 (net of expenses) per share. Newco converted the 51,575,935 shares it had acquired from the existing shareholders into 10,028,655 Class F1 and 41,547,280 Class F2 shares. The closing of the purchase of the 4,297,995 F1 shares from the Company and the 10,028,655 Class F1 and 41,547,280 Class F2 shares from Newco occurred on August 22, 2013. The repurchase conversion and sale of the shares took place simultaneously. Subsequent to the completion of these transactions, Newco, which did not have any substantive net assets, was merged with the Company.

This transaction was accounted for as benefit to participating shareholders of the Class A, B, C, D, E and Ordinary shares (with liquidation preference); The Company redeemed 43,456,175 aggregate shares of classes B, C, D, E and Ordinary shares (with liquidation preference) (total of 51,575,935 less 8,119,760 Class A), which were subsequently converted to Class F1 and Class F2 shares and sold to new investors. In connection with this redemption, the Company transferred value to the preferred shareholders, which was calculated as the difference between (1) the fair value of consideration transferred and (2) the carrying value of the 43,456,175 shares of classes B, C, D, E and Ordinary shares (with liquidation preferences) surrendered. The difference, in the amount of  $230,000 thousand, was recorded as a reduction to net income applicable to Class A Ordinary shares used to calculate basic and diluted loss per share.

(i) Description of plans and taxation

The Company has adopted a stock option plan (the “2003 Plan”), whereby options exercisable for ordinary shares representing up to 11% of the Company’s total issued and outstanding shares may be granted to employees and service providers. In May 2014, the Company increased the pool of options available under the 2003 Plan to up to 18% of the total issued and outstanding shares of the Company. Under the terms of the 2003 Plan, the board of directors or the designated committee will grant options, determine the vesting period over which options become exercisable and determine the exercise terms.

In December 2014, the board of directors approved and the Company adopted its 2014 Equity Incentive Plan (the “2014 Plan”). Under the 2014 Plan, the board of directors or its designated committee will grant share options, restricted shares and restricted share units (“RSUs”). The total number of shares available under both the 2003 Plan and the 2014 Plan may not exceed 38,619,123.

Under both plans, the Company usually grants options that vest over a period of 4.5 years and expire 7 years after grant and under the 2014 Plan for RSUs that vest over a period of three. Each option can be exercised for one ordinary share EUR 0.01 par value of the Company.

No additional awards are expected to be granted under the 2003 Plan.

With respect to Israeli employees, both plans are intended to be governed by the terms stipulated by Section 102 of the Israeli Income Tax Ordinance. In accordance with the capital gain track chosen by the Company and pursuant to the terms thereof, the Company is not allowed to claim, as an expense for tax purposes, the amounts credited to employees as a benefit, including amounts recorded as salary benefits in the Company’s financial statements, in respect of equity granted to employees under the Plans — with the exception of the work-income benefit component, if any, determined on the grant date.

​

Exercise price

​

​

Outstanding

​

​

Exercisable

​

​

(US $)

​

​

Number

​

​

Weighted average  remaining  contractual life  (in years)

​

​

Number

​

​

Weighted average  remaining  contractual life  (in years)

​

​

0.096 – 2.991

​

​

​

​

1,930,756

​

​

​

​

​

1.22

​

​

​

​

​

1,849,506

​

​

​

​

​

1.12

​

​

​

3.7

​

​

​

​

6,321,072

​

​

​

​

​

3.79

​

​

​

​

​

5,765,162

​

​

​

​

​

3.82

​

​

​

6.98 – 7.1

​

​

​

​

13,633,209

​

​

​

​

​

5.07

​

​

​

​

​

8,348,824

​

​

​

​

​

5.03

​

​

​

25 – 46.39

​

​

​

​

890,950

​

​

​

​

​

6.08

​

​

​

​

​

73,325

​

​

​

​

​

5.63

​

​

​

55.63 – 59.33

​

​

​

​

4,412,700

​

​

​

​

​

6.69

​

​

​

​

​

0

​

​

​

​

​

—

​

​

​

​

​

​

​

​

27,188,687

​

​

​

​

​

4.79

​

​

​

​

​

16,036,817

​

​

​

​

​

4.15

​

​

​

​

​

​

Number

​

​

Weighted average exercise price

​

​

Aggregated  intrinsic value(1)

​

​

​

​

​

​

​

​

​

​

$

​

​

U.S. dollars  in thousands

​

Options outstanding at beginning of year

​

​

​

​

26,782,719

​

​

​

​

​

5.44

​

​

​

Changes during the year:

​

​

​

​

Granted(2)

​

​

​

​

4,795,450

​

​

​

​

​

56.28

​

​

​

Exercised

​

​

​

​

(4,218,174)

​

​

​

​

​

2.13

​

​

​

Forfeited

​

​

​

​

(171,308)

​

​

​

​

​

16.65

​

​

​

Expired

​

​

​

​

0

​

​

​

​

​

—

​

​

​

​

​

​

​

​

Options outstanding at end of year

​

​

​

​

27,188,687

​

​

​

​

​

14.85

​

​

​

​

​

745,841

​

​

Options exercisable at year-end

​

​

​

​

16,036,817

​

​

​

​

​

5.20

​

​

​

​

​

594,618

​

​

​

​

​

​

Number

​

​

Weighted average  grant date fair value ($)

​

Outstanding at beginning of year

​

​

​

​

0

​

​

​

​

​

—

​

​

Changes during the year:

​

​

​

Granted(1)

​

​

​

​

357,265

​

​

​

​

​

40.14

​

​

Vested

​

​

​

​

(75,195)

​

​

​

​

​

36.95

​

​

Forfeited

​

​

​

​

(889)

​

​

​

​

​

38.91

​

​

Outstanding at end of year

​

​

​

​

281,181

​

​

​

​

​

41.0

​

​

​

​	​	​	Year ended December 31,							​
​	​	​	2015	​	​	2014	​	​	2013	​
Risk-free interest rate	​	​	0.75% – 2.01%​	​	​	0.7% – 2.17%​	​	​	0.19% – 2.74%​	​
Expected option term	​	​	2.16 – 6.95 years​	​	​	3.82 – 7.27 years​	​	​	1 – 12.35 years​	​
Expected price volatility	​	​	35% – 53%​	​	​	36% – 55%​	​	​	42% – 53%​	​
Dividend yield	​	​	0%​	​	​	0%​	​	​	0%​	​
Weighted average fair value at the date of grant	​	​	$16.05​	​	​	$7.28​	​	​	$2.22​	​

​

​

​