View Filing Data

Less - accumulated depreciation

$ 268,658

$ 191,143

91,695

71,814

Total property, plant and equipment, net

^[1]

176,963

119,329

Depreciation expenses

17,261

11,426

$ 7,011

Land [Member]

Buildings and plants [Member]

6,938

6,592

Computers and peripheral equipment [Member]

23,670

18,196

Office furniture and equipment [Member]

24,953

17,615

Laboratory and testing equipment [Member]

6,792

5,286

Machinery and equipment [Member]

22,666

18,160

Equipment in progress under construction and development Cost

160,231

113,553

59,058

22,890

Leasehold improvements [Member]

Share-based Payment Arrangement [Abstract]

$ 23,408

$ 11,741

[1]	Long-lived assets are comprised of property and equipment, net.

STOCK CAPITAL (Schedule of stock-based compensation expense for employees and nonemployee) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	$ 60,353	$ 30,618	$ 17,564
Cost of Sales [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	6,964	4,343	2,250
Research and Development Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	16,872	11,205	5,703
Selling and Marketing Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	11,062	9,111	5,387
General and Administrative Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	6,991	5,959	4,224
Other operating expenses [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	$ 18,464

INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes [Line Items]
Corporate tax rate (as a percent)	21.00%	21.00%	34.00%
U.S. income tax rate for foreign subsidiaries earnings	15.50%
U.S. income tax rate for foreign subsidiaries earnings for other net current assets on remaining earnings	8.00%
Total tax liability	$ 8,500
Gross unrecognized tax benefits	9,500	$ 8,500	$ 600
Gross unrecognized tax benefits, would affect our effective tax rate	$ 9,500	$ 8,500	$ 600
Withholding tax	15.00%
Kokam [Member]
Income Taxes [Line Items]
Corporate tax rate (as a percent)	22.00%
Carryforward tax losses	$ 17,353
SMRE [Member]
Income Taxes [Line Items]
Corporate tax rate (as a percent)	24.00%
Carryforward tax losses	$ 11,000
Israel \| Subsidiaries [Member]
Income Taxes [Line Items]
Corporate tax rate (as a percent)	23.00%	23.00%	24.00%
Tax exempt profits		$ 289,900

STOCK CAPITAL (Stock option plans) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock reserved for issuance pursuant to stock awards under the plan	10,000,000
Unrecognized compensation expense	$ 145,033
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options available for future grant under the plan	379,358
Employee Stock Option [Member] \| Employees and Members of Board of Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrinsic value of options exercised	$ 37,509	$ 58,601	$ 44,625
Weighted average grant date fair values options granted to employees and executive directors	$ 19.83	$ 20.83	$ 7.94
Employee Stock Option [Member] \| 2015 Global Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock reserved for issuance pursuant to stock awards under the plan	10,383,357
Number of options available for future grant under the plan	8,686,589
Percentage of common shares increase automatically each year	5.00%
RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair values options granted to employees and executive directors	$ 71.46	$ 41.45	$ 27.30
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock reserved for issuance pursuant to stock awards under the plan	2,199,808
Number of options available for future grant under the plan	1,671,449
Number of Common stock purchased	528,359
Period of plan increase automatically number of shares	487,643
Percentage of common shares increase automatically each year	1.00%
Maximum percentage of salary	10.00%
Aggregate limit per participant	$ 10
Purchase price of common stock, percent	85.00%

SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Financial statements in U.S. dollars
Accumulated other comprehensive income (loss) related to foreign currency translation adjustments, net	$ (2,073)	$ 132
Severance pay
Severance expenses	7,285	4,331	$ 2,995
Shipping and handling costs
Shipping and handling costs	$ 113,635	$ 45,821	$ 29,693
Warranty obligations
Minimum term of warranty obligations for inverters	12 years
Minimum term of warranty obligations for power optimizers	25 years
Maximum extended product warranty period	25 years
Sales Revenue, Goods, Net [Member] \| Customer Concentration Risk [Member]
Derivative financial instruments
Percentage of customer revenue	20.40%	19.40%	14.80%
Accounts Receivable [Member] \| Customer Concentration Risk [Member]
Derivative financial instruments
Percentage of customer revenue	32.10%	41.30%
Accounts Payable [Member] \| Lender Concentration Risk [Member]
Derivative financial instruments
Percentage of customer revenue	42.30%	58.80%

INTANGIBLE ASSETS AND GOODWILL (Schedule of Goodwill Activity) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill at January 1, 2019	$ 34,874
Business combinations	97,498	34,445
Other changes related to measurement period and disposals	3,067
Foreign currency translation	(2,364)	429
Goodwill at December 31, 2019	129,654	34,874
Solar [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill at January 1, 2019	31,205
Business combinations		30,789
Other changes related to measurement period and disposals	1,299
Foreign currency translation	(1,239)	416
Goodwill at December 31, 2019	31,265	31,205
All other [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill at January 1, 2019	3,669
Business combinations	97,498	3,656
Other changes related to measurement period and disposals	(1,653)
Foreign currency translation	(1,125)	13
Goodwill at December 31, 2019	$ 98,389	$ 3,669

STOCK CAPITAL

12 Months Ended

Dec. 31, 2019

STOCK CAPITAL

NOTE 17:-STOCK CAPITAL

a.Composition of common stock capital of the Company:

	Number of shares
	Authorized as of December 31,				Issued as of December 31,				Outstanding as of December 31,
	2019		2018		2019		2018			2019		2018

Stock of $0.0001 par value:
Common stock		125,000,000		125,000,000		49,081,457		46,052,802			48,898,062		46,052,802

b.Common stock rights:

Common stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each share of common stock shall have one vote for all purposes; to share equally, on a per share basis, in bonuses, profits, or distributions out of fund legally available therefor; and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.

c.Stock option plans:

The Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007. The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder. All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grant were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan. The 2015 Plan became effective upon the consummation of the IPO. The 2015 Plan provides for the grant of options, RSUs and other share-based awards to directors, employees, officers and nonemployees of the Company and its subsidiaries. As of December 31, 2019, a total of 10,383,357 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”).

F - 44

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 17:-STOCK CAPITAL (Cont.)

The Share Reserve will automatically increase on January 1st of each year during the term of the 2015 Plan, commencing on January 1st of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year; provided, however, that the Company’s board of directors may determine that there will not be a January 1st increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of capital stock outstanding on the preceding December 31st.

The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000. As of December 31, 2019, an aggregate of 8,686,589 options are still available for future grant under the 2015 Plan.

A summary of the activity in the stock options granted to employees and members of the board of directors for the year ended December 31, 2019 and related information are as follows:

						Weighted
						average
				Weighted		remaining
	Number			average		contractual		Aggregate
	of			exercise		term		intrinsic
	options			price		in years		Value

Outstanding as of December 31, 2018		2,401,893			11.04		6.19		58,323
Granted		267,852			36.15
Exercised		(546,412	)		6.30
Forfeited or expired		(11,324	)		13.84
Outstanding as of December 31, 2019		2,112,009			15.44		3.58		168,229

Vested and expected to vest as of December 31, 2019		2,088,711			15.31		5.92		166,637

Exercisable as of December 31, 2019		1,789,915			13.07		2.77		146,813

The aggregate intrinsic value in the tables above represents the total intrinsic value (the difference between the fair value of the Company’s common stock as of the last day of each period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last day of each period.

The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was $37,509, $58,601, and $44,625, respectively.

The weighted average grant date fair value of options granted to employees and directors during the years ended December 31, 2019, 2018, and 2017, was $19.83, $20.83 and $7.94, respectively.

F - 45

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 17:-STOCK CAPITAL (Cont.)

A summary of the activity in the RSUs granted to employees and directors for the year ended December 31, 2019, is as follows:

	Number of RSUs			Weighted average grant date fair value
Unvested as of January 1, 2019		2,807,232			34.40
Granted		1,332,053			71.46
Vested		(1,122,712	)		32.23
Forfeited		(273,984	)		39.61
Unvested as of December 31, 2019		2,742,589			52.77

The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2019, 2018 and 2017, was $71.46, $41.45 and $27.30, respectively.

d.Employee Stock Purchase Plan:

The Company adopted an ESPP effective upon the consummation of the IPO. As of December 31, 2019, total of 2,199,808 shares were reserved for issuance under this plan. The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1st of each year, for ten years, by the lesser of 1% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or 487,643 shares.

However, the Company’s board of directors may reduce the amount of the increase in any particular year at their discretion, including a reduction to zero.

The ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use up to 10% of their salaries to purchase common stock up to an aggregate limit of $10 per participant for every six months plan. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

As of December 31, 2019, 528,359 shares of common stock had been purchased under the ESPP.

As of December 31, 2019, 1,671,449 shares of common stock were available for future issuance under the ESPP.

In accordance with ASC No. 718, the ESPP is compensatory and, as such, results in recognition of compensation cost.

F - 46

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 17:-STOCK CAPITAL (Cont.)

e.Stock-based compensation expenses for employees and non-employees:

The Company recognized stock-based compensation expenses related to stock options and RSUs granted to employees and nonemployees and ESPP in the consolidated statement of income for the years ended December 31, 2019, 2018 and 2017, as follows:

	Year ended December 31,
	2019		2018		2017

Cost of revenues	$	6,964	$	4,343	$	2,250
Research and development		16,872		11,205		5,703
Selling and marketing		11,062		9,111		5,387
General and administrative		6,991		5,959		4,224
Other operating expenses		18,464		-		-

Total stock-based compensation expenses	$	60,353	$	30,618	$	17,564

As of December 31, 2019, there were total unrecognized compensation expenses in the amount of $145,033 related to non-vested equity-based compensation arrangements granted under the Company’s Plans. These expenses are expected to be recognized during the period from January 1, 2020 through February 29, 2024.

LEASES (Tables)

12 Months Ended

Dec. 31, 2019

Lessee Disclosure [Abstract]

Schedule of Information Related to Operating Finance Leases

The following table presents certain information related to the operating and finance leases:

	Year ended December 31, 2019
Finance leases:
Finance lease cost	$	213
Weighted average remaining lease term in years		7.25
Weighted average annual discount rate		2.85	%

Operating leases:
Operating lease cost	$	9,665
Weighted average remaining lease term in years		4.61
Weighted average annual discount rate		1.46	%

Schedule of Supplemental Cash Flow Information Related to Leases

The following table presents supplemental cash flows information related to the lease costs for operating and finance leases:

	Year ended December 31, 2019
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows for operating and finance leases	$	9,748
Financing cash flows for finance leases	$	1,354

Schedule of Operating and Finance lease liabilities

The following table reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years of the operating and finance lease liabilities recorded on the consolidated balance sheets:

	Operating Lease			Finance Leases

2020	$	10,522		$	317
2021		9,195			317
2022		8,176			302
2023		7,172			302
2024		4,015			302
Thereafter		2,543			1,503
Total lease payments		41,623			3,043

Less amount of lease payments representing interest		(1,820	)		(413	)

Present value of future lease payments		39,803			2,630

Less current lease liabilities		(9,590	)		(231	)

Long-term lease liabilities	$	30,213		$	2,399

INTANGIBLE ASSETS AND GOODWILL (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expenses	$ 9,634	$ 1,193	$ 144

COMMITMENTS AND CONTINGENT LIABILITIES

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 16:-COMMITMENTS AND CONTINGENT LIABILITIES

a.Guarantees:

As of December 31, 2019, contingent liabilities exist regarding guarantees in the amounts of $51,473, $18,373, $2,064 and $328 in respect of projects with customers, bank loans, office rent lease agreements and customs transactions, respectively.

b.Contractual purchase obligations:

The Company has contractual obligations to purchase goods and raw materials. These contractual purchase obligations relate to inventories held by contract manufacturers and purchase orders initiated by the contract manufacturers, which cannot be canceled without penalty. The Company utilizes third parties to manufacture its products.

In addition, the Company acquires raw materials or other goods and services, including product components, by issuing authorizations to its suppliers to purchase materials based on its projected demand and manufacturing needs. As of December 31, 2019, the Company had non-cancelable purchase obligations totaling approximately $472,086, out of which the Company recorded a provision for loss in the amount of $1,896.

F - 42

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 16:-COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

As of December 31, 2019, the Company had contractual obligations for capital expenditures totaling approximately $60,634. These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s manufacturing process.

c.Legal claims:

From time to time, the Company may be involved in various claims and legal proceedings. 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. These accruals are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter.

In September, 2018, the Company’s German subsidiary, SolarEdge Technologies GmbH received a complaint filed by competitor SMA Solar Technology AG (“SMA”). The complaint, filed in the District Court Düsseldorf, Germany, alleges that SolarEdge's 12.5kW - 27.6kW inverters infringe two of plaintiff’s patents. In its complaint, SMA requests inter alia an injunction and a determination for a claim for damages for sales in Germany. Plaintiff also asserts a value in dispute of 5 million Euros (approximately $5,600) for both patents. In November 2019, the first instance court accepted the claim of infringement for one of the two patents and the Company has filed an appeal to the Appeals Court Dusseldorf and is challenging the validity of the allegedly infringed patent in the German Patent Court. Also, in November 2019 the first instance court stayed the infringement proceedings regarding the other one of the two patents since it considered it to be highly likely that the patent would be invalid. The Company believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against these lawsuits.

In May 2019, the Company was served with three lawsuits by Huawei Technologies Co., Ltd., a Chinese entity (“Huawei”), against the Company's two Chinese subsidiaries and its equipment manufacturer in China. The lawsuits, filed in the Guangzhou intellectual property court, allege infringement of three patents and ask for an injunction of manufacture, use, sale and offer for sale, and damage awards of 30 million RMB (approximately $4,300). Following the receipt of the lawsuits, the Company filed three lawsuits in China against Huawei for unauthorized use of patented technology. The Company believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against these lawsuits.

F - 43

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 16:-COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

In August 2019, the Company was served with a lawsuit by certain former shareholders of SMRE, against its Italian subsidiary that purchased the shares of SMRE in the tender offer which followed the SMRE Acquisition. The shareholders who tendered their shares are asking for the difference between 6 Euro per share, which is the amount they tendered their shares, and 6.77 Euro per share, for a total awards of 2.7 million Euros (approximately $3,100). The Company believes it has meritorious defenses to the claims asserted and intends to vigorously defend against this lawsuit.

In December 2019, the Company received a lawsuit filed by a former consultant of the Company and its Israeli subsidiary in the amount of 25.5 million NIS (approximately $7,400) claiming damages caused relating to a terminated consulting agreement and stock options therein. The Company believes it has meritorious defenses to the claims asserted and intends to vigorously defend against this lawsuit.

FINANCIAL EXPENSES (INCOME), NET (Tables)

12 Months Ended

Dec. 31, 2019

Nonoperating Income (Expense) [Abstract]

Schedule of Financial Expenses (Income), Net

	Year ended December 31,
	2019			2018			2017

Interest income on marketable securities	$	(4,590	)	$	(5,629	)	$	(4,398	)
Exchange rate loss (income), net		10,342			4,725			(8,488	)
Interest expenses		4,805			2,536			-
Bank charges		1,021			675			377
Amortization of marketable securities premium and accretion of discount, net		122			1,242			2,017
Other financial income, net		(357	)		(1,252	)		1,334

	$	11,343		$	2,297		$	(9,158	)

SIGNIFICANT ACCOUNTING POLICIES (Concentrations of Credit risks) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Accrued allowance for doubtful accounts	$ 2,473	$ 427
Rebate accrual	$ 62,288	$ 39,018

INCOME TAXES (Schedule of reconciliation between the theoretical tax expense and the actual tax expense (benefit)) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Income before taxes, as reported in the consolidated statements of income	$ 178,603	$ 137,123	$ 100,244
Statutory tax rate	21.00%	21.00%	34.00%
Theoretical tax expenses on the above amount at the US statutory tax rate	$ 37,507	$ 28,796	$ 34,083
Income tax at rate other than the U.S. statutory tax rate	(8,784)	(17,432)	(34,734)
Losses and timing differences for which valuation allowance was provided	2,317
Tax Cuts and Jobs Act of 2017	(1,246)	(1,367)	18,735
Non-deductible expenses	4,040	(644)	(1,545)
Other individually immaterial income tax items, net	(188)	(276)	(467)
Actual tax expense (tax benefit)	$ 33,646	$ 9,077	$ 16,072
Effective tax rate	18.80%	6.60%	16.00%

SIGNIFICANT ACCOUNTING POLICIES (Estimate Fair Value of Stock Options and Warrants) (Details) - Employee and Executive Director [Member]	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest	2.53%	2.32%
Dividend yields	0.00%	0.00%	0.00%
Volatility	56.26%	56.53%
Expected option term in years	6 years 10 days	6 years 21 days	6 years 21 days
Estimated forfeiture rate	0.00%	0.00%	0.00%
Employee Stock Option [Member] \| Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest			2.14%
Volatility			58.08%
Employee Stock Option [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest			2.17%
Volatility			58.10%
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yields	0.00%	0.00%	0.00%
Expected option term in years	6 months	6 months	6 months
Employee Stock Purchase Plan [Member] \| Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest	1.63%	2.10%	0.60%
Volatility	46.68%	54.13%	45.60%
Employee Stock Purchase Plan [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest	2.35%	2.52%	1.07%
Volatility	55.95%	56.67%	48.08%

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Net Earnings (Loss) Per Share

The following table presents the computation of basic and diluted EPS attributable to SolarEdge Technologies, Inc.:

	Year ended December 31,
	2019			2018		2017

Basic EPS:
Numerator:
Net income	$	144,957		$	128,046	$	84,172
Net loss attributable to Non-controlling interests		1,592			787		-
Net income attributable to SolarEdge Technologies, Inc.	$	146,549		$	128,833	$	84,172

Denominator:
Shares used in computing net earnings per share of common stock, basic		47,918,938			45,235,310		42,209,238

Diluted EPS:
Numerator:
Net income	$	144,957		$	128,046	$	84,172
Net loss attributable to Non-controlling interests		1,592			787		-
Undistributed earnings reallocated to non-vested stockholders		(906	)		-		-
Net income attributable to SolarEdge Technologies, Inc.	$	145,643		$	128,833	$	84,172

Denominator:
Shares used in computing net earnings per share of common stock, basic		47,918,938			45,235,310		42,209,238
Weighted average effect of dilutive securities:
Non-vested PSUs		(312,128	)		-		-
Effect of stock-based awards		2,588,851			2,744,692		3,216,069
Shares used in computing net earnings per share of common stock, diluted		50,195,661			47,980,002		45,425,307

FAIR VALUE MEASUREMENTS (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Level 1 [Member] \| Money Market Funds [Member]
Fair value of assets	$ 527	$ 1,767	$ 6,163
Level 2 [Member] \| Short-term corporate bonds [Member]
Fair value of assets	91,845	110,385	68,272
Level 2 [Member] \| Short-term governmental bonds [Member]
Fair value of assets		8,295	8,992
Level 2 [Member] \| Long-term corporate bonds [Member]
Fair value of assets	117,778	74,256	95,160
Level 2 [Member] \| Long-term governmental bonds [Member]
Fair value of assets	1,398		7,960
Level 3 [Member] \| Long-term earn-out provision [Member]
Fair value of liabilities		(332)
Level 3 [Member] \| Derivative instruments, liability [Member]
Fair value of liabilities			$ (180)

BANK LOANS (Schedule of Bank Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Maturities calendar year:
Current maturities of bank loans	$ 15,673	$ 16,639
Long-term bank loans	173	$ 3,510
Bank loans	15,826
Accrued interest of bank loans	20
Bank loans after accrued interest	$ 15,846
Effective interest rate	2.48%
Minimum [Member]
Maturities calendar year:
Effective interest rate	2.50%
Maximum [Member]
Maturities calendar year:
Effective interest rate	3.85%

BANK LOANS

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

BANK LOANS

NOTE 11:-BANK LOANS

The following table summarizes the Company’s bank loans:

	As of December 31, 2019		Effective interest rate

Maturities calendar year:
Current maturities of bank loans	$	15,653		2.5% - 3.85%
Long-term bank loans		173		2.48%
		15,826

Accrued interest of bank loans		20

	$	15,846

All bank loans are denominated in KRW except for two loans, which are denominated in USD and in EUR in the amount of $3,000 and €141 thousand, respectively. The bank loans bear interest at variable rates and are mainly payable monthly. The bank loans do not contain financial covenants.

During the years ended December 31, 2019 and 2018, the Company recognized $1,116 and $132 as interest expenses related to the bank loans in the consolidated statement of income in financial expenses (income), net.

As of December 31, 2019, the Company secured certain bank loans with an aggregate principal amount of $15,667 against bank guarantees.

STOCK CAPITAL (Summary of the activity in the share options) (Details) - Employee Stock Option [Member] - Employees and Members of Board of Directors [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Number of options
Outstanding at the beginning of the period	2,401,893
Granted	267,852
Exercised	(546,412)
Forfeited or expired	(11,324)
Outstanding at the end of the period	2,112,009	2,401,893
Weighted average exercise price
Outstanding at the beginning of the period	$ 11.04
Granted	36.15
Exercised	6.30
Forfeited or expired	13.84
Outstanding at the end of the period	$ 15.44	$ 11.04
Weighted average remaining contractual term in years
Outstanding	3 years 6 months 29 days	6 years 2 months 8 days
Aggregate intrinsic Value
Outstanding at the beginning of the period	$ 58,323
Outstanding at the end of the period	$ 168,229	$ 58,323
Vested and expected to vest at the end of the period
Number of options	2,088,711
Weighted average exercise price	$ 15.31
Weighted average remaining contractual term in years	5 years 11 months 1 day
Aggregate intrinsic Value	$ 166,637
Exercisable at the end of the period
Number of options	1,789,915
Weighted average exercise price	$ 13.07
Weighted average remaining contractual term in years	2 years 9 months 7 days
Aggregate intrinsic Value	$ 146,813

OTHER OPERATING EXPENSES (Tables)

12 Months Ended

Dec. 31, 2019

Other Operating Expenses

Schedule of Other Operating Expenses

	Year ended December 31, 2019
Compensation package related to the passing of the former Founder, CEO and Chairman (1)	$	8,305
Termination of SMRE’s former executive (2)		12,222
Sale of SMRE’s subsidiary (3)		5,269
A settlement of pre-acquisition legal claim against Kokam (4)		4,900
Total other operating expenses	$	30,696

EARNINGS PER SHARE (Schedule of Computation of Basic and Diluted Net Earnings (Loss) Per Share) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Numerator:
Net income	$ 144,957	$ 128,046	$ 84,172
Net loss attributable to Non-controlling interests	1,592	787
Net income attributable to SolarEdge Technologies, Inc.	$ 146,549	$ 128,833	$ 84,172
Denominator:
Shares used in computing net earnings per share of common stock, basic	47,918,938	45,235,310	42,209,238
Numerator:
Net income	$ 144,957	$ 128,046	$ 84,172
Net loss attributable to Non-controlling interests	1,592	787
Undistributed earnings reallocated to non-vested stockholders	(906)
Net income attributable to SolarEdge Technologies, Inc.	$ 145,643	$ 128,833	$ 84,172
Denominator:
Shares used in computing net earnings per share of common stock, basic	47,918,938	45,235,310	42,209,238
Weighted average effect of dilutive securities:
Non-vested PSUs	(312,128)
Effect of stock-based awards	2,588,851	2,744,692	3,216,069
Shares used in computing net earnings per share of common stock, diluted	50,195,661	47,980,002	45,425,307

INCOME TAXES (Schedule of Income taxes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current taxes:
U.S. Federal & State	$ 10,093	$ 13,894	$ 19,889
Foreign	29,590	2,276	1,638
Total current taxes	39,683	16,170	21,527
Deferred taxes:
U.S. Federal & State	(3,414)	(1,284)	(42)
Foreign	(2,623)	(5,809)	(5,413)
Total deferred taxes	(6,037)	(7,093)	(5,455)
Actual tax expense (tax benefit)	$ 33,646	$ 9,077	$ 16,072

PREPAID EXPENSES AND OTHER CURRENT ASSETS

12 Months Ended

Dec. 31, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

PREPAID EXPENSES AND OTHER CURRENT ASSETS

NOTE 6:-PREPAID EXPENSES AND OTHER CURRENT ASSETS

	As of December 31,
	2019		2018

Vendor non-trade receivables (*)	$	83,917	$	28,284
Government authorities		16,434		5,751
Prepaid expenses and other		14,917		11,038

	$	115,268	$	45,073

OTHER OPERATING EXPENSES (Details)
$ in Thousands

12 Months Ended

Dec. 31, 2019

USD ($)

Dec. 31, 2018

USD ($)

Dec. 31, 2017

USD ($)

Dec. 31, 2019

€ / shares

Compensation package

$ 8,305

Shares issued in acquisition, value

34,601

Recognized expenses

60,353

30,618

17,564

Loss from sale of business

5,269

A settlement of pre-acquisition legal claim against Kokam

^[1]

$ 4,900

SMRE Acquisition [Member] | PSUs [Member]

Shares issued in acquisition | shares

334,095

Shares vested | shares

150,000

Shares exercised | shares

183,395

Exercise price per share | € / shares

€ 0.01

Recognized expenses

$ 12,222

Loss from sale of business

$ 5,269

[1]	At the time of the Kokam acquisition, Kokam had outstanding against it a claim for damages. In December 2019, the claim was settled for an amount of $4,900, which was recognized as an expense in other operating expenses in the consolidated statement of income.

STOCK CAPITAL (Common Stock) (Details)	12 Months Ended
STOCK CAPITAL (Common Stock) (Details)	Dec. 31, 2019 item $ / shares shares	Dec. 31, 2018 $ / shares shares
Common stock capital
Par value \| $ / shares	$ 0.0001	$ 0.0001
Authorized	125,000,000	125,000,000
Common stock, issued shares	49,081,457	46,052,802
Common stock, outstanding shares	48,898,062	46,052,802
Number of votes per share \| item	1

ACCUMULATED OTHER COMPREHENSIVE LOSS

12 Months Ended

Dec. 31, 2019

Appletech Ltd [Member]

ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 14:-ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in accumulated balances of other comprehensive loss, net of taxes, for the year ended December 31, 2019:

	Unrealized gains (losses) on available-for-sale marketable securities			Unrealized gains on cash flow hedges		Unrealized gains (losses) on foreign currency translation			Total

Beginning balance	$	(656	)	$	-	$	132		$	(524	)
Other comprehensive income (loss) before reclassifications		829			-		(2,205	)		(1,376	)
Loses reclassified from accumulated other comprehensive income		91			-		-			91
Net current period other comprehensive income (loss)		920			-		(2,205	)		(1,285	)

Ending balance	$	264		$	-	$	(2,073	)	$	(1,809	)

The following table summarizes the changes in accumulated balances of other comprehensive loss, net of taxes, for the year ended December 31, 2018:

	Unrealized losses on available-for-sale marketable securities			Unrealized gains on cash flow hedges			Unrealized gains (losses) on foreign currency translation			Total

Beginning balance	$	(433	)	$	-		$	(178	)	$	(611	)
Other comprehensive income (loss) before reclassifications		(360	)		31			310			(19	)
Loses (gains) reclassified from accumulated other comprehensive income		137			(31	)		-			106
Net current period other comprehensive income (loss)		(223	)		-			310			87

Ending balance	$	(656	)	$	-		$	132		$	(524	)

The following table summarizes the changes in accumulated balances of other comprehensive, net of taxes, for the year ended December 31, 2017:

	Unrealized losses on available-for-sale marketable securities			Unrealized gains on cash flow hedges			Unrealized losses on foreign currency translation			Total

Beginning balance	$	(136	)	$	19		$	(207	)	$	(324	)
Other comprehensive income (loss) before reclassifications		(297	)		975			29			707
Gains reclassified from accumulated other comprehensive income		-			(994	)		-			(994	)
Net current period other comprehensive income (loss)		(297	)		(19	)		29			(287	)

Ending balance	$	(433	)	$	-		$	(178	)	$	(611	)

INCOME TAXES (Schedule of Deferred Tax Liabilities And Assets) (Details) - USD ($)
$ in Thousands

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Deferred tax assets, net:

Research and Development carryforward expenses

$ 4,994

$ 9,482

$ 5,380

Carryforward tax losses

6,318

4,155

Stock based compensation expenses

4,898

3,160

1,622

Deferred revenue

3,621

1,268

205

Inventory Impairment

2,442

1,471

Allowance and other reserves

7,305

3,072

1,133

Total Gross deferred tax assets, net

29,578

22,608

8,340

Less, Valuation Allowance

^[1]

(2,317)

Total deferred tax assets, net

27,261

22,608

8,340

Deferred tax liabilities, net:

Purchase price allocation

(15,424)

(9,408)

Total deferred tax liabilities, net

(15,424)

(9,408)

Recorded as:

Deferred tax assets, net

16,298

14,699

8,340

Deferred tax liabilities, net

(4,461)

(1,499)

Net deferred tax assets

$ 11,837

$ 13,200

$ 8,340

[1]	Related primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions.

INVENTORIES

12 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 7:-INVENTORIES

	As of December 31,
	2019		2018

Raw materials	$	64,714	$	39,380
Work in process		20,752		18,115
Finished goods		85,332		84,024

	$	170,798	$	141,519

The Company recorded inventory write-downs of $4,528, $943 and $1,352 for the years ended December 31, 2019, 2018 and 2017, respectively.

LEASES (Schedule of Information Related to Operating and Finance Leases) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Finance leases:
Finance lease cost	$ 213
Weighted average remaining lease term in years	7 years 3 months
Weighted average annual discount rate	2.85%
Operating lease
Operating lease cost	$ 9,665
Weighted average remaining lease term in years	4 years 7 months 9 days
Weighted average annual discount rate	1.46%

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

	As of December 31,
	2019		2018

Accrued expenses	$	36,158	$	14,859
Government authorities		27,191		11,344
Operating lease liabilities		9,590		-
Other		7,637		3,525

	$	80,576	$	29,728

FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Measurements Tables Abstract

Schedule of Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2019, 2018 and 2017 by level within the fair value hierarchy:

	Fair Value	Fair value measurements as of December 31,
Description	Hierarchy	2019		2018		2017

Measured at fair value on a recurring basis:

Assets:
Cash equivalents:
Money market mutual funds	Level 1	$	527	$	1,767	$	6,163

Short-term marketable securities:
Corporate bonds	Level 2	$	91,845	$	110,385	$	68,272
Governmental bonds	Level 2	$	-	$	8,295	$	8,992

Long-term marketable securities:
Corporate bonds	Level 2	$	117,778	$	74,256		$	95,160
Governmental bonds	Level 2	$	1,398	$	-		$	7,960

Liabilities
Long-term earn-out provision	Level 3	$	-	$	(332	)	$	-
Derivative instruments liability	Level 2	$	-	$	-		$	(180	)

Product Warranties Disclosures [Abstract]

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

STOCK CAPITAL (Schedule of RSU Activity) (Details)	12 Months Ended
STOCK CAPITAL (Schedule of RSU Activity) (Details)	Dec. 31, 2019 $ / shares shares
Stock Capital Schedule Of Rsu Activity
Unvested at beginning of period \| shares	2,807,232
Granted \| shares	1,332,053
Vested \| shares	(1,122,712)
Forfeited \| shares	(273,984)
Unvested at end of period \| shares	2,742,589
Unvested at beginning of period, grant date fair value \| $ / shares	$ 34.40
Granted \| $ / shares	71.46
Vested \| $ / shares	32.23
Forfeited \| $ / shares	39.61
Unvested at end of period, grant date fair value \| $ / shares	$ 52.77

SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Summary of Revenues by Product Family) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue from External Customer [Line Items]
Total revenues	$ 1,425,660	$ 937,237	$ 607,045
Inverters [Member]
Revenue from External Customer [Line Items]
Total revenues	626,445	416,966	290,632
Optimizers [Member]
Revenue from External Customer [Line Items]
Total revenues	634,007	432,410	286,856
Other Products [Member]
Revenue from External Customer [Line Items]
Total revenues	$ 165,208	$ 87,861	$ 29,557

WARRANTY OBLIGATIONS (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Warranty Obligations

Changes in the Company’s product warranty obligations for the years ended December 31, 2019 and 2018, were as follows:

	December 31,
	2019			2018

Balance, at the beginning of the year	$	121,826		$	78,811
Additions and adjustments to cost of revenues		94,048			70,854
Usage and current warranty expenses		(43,311	)		(27,839	)

Balance, at the end of the year		172,563			121,826
Less current portion		(65,112	)		(28,868	)

Long term portion	$	107,451		$	92,958

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Feb. 26, 2020	Jun. 30, 2019
Document and Entity Information [Abstract]
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Registrant Name	SOLAREDGE TECHNOLOGIES, INC.
Entity Central Index Key	0001419612
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		49,235,498
Entity Public Float			$ 2,862,849,120
Entity File Number	001-36894
Entity Interactive Data Current	Yes
Entity Address, Country	IL
Entity Incorporation, State or Country Code	DE
Entity Address, City or Town	Herziliya Pituach
Entity Address, State or Province	DE
Entity Tax Identification Number	20-5338862
Entity Address, Address Line One	1 HaMada Street
Entity Address, Postal Zip Code	4673335
Local Phone Number	(9) 957-6620
City Area Code	972
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	SEDG
Name of Exchange on which Security is Registered	NASDAQ

SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2019

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Estimated Useful Lives of Property and Equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation. Machinery and equipment in progress represent the construction or development stage of property and equipment that have not yet been placed in service for the Company's intended use. Depreciation is calculated by the straight-line method over the estimated useful live of the assets, at the following rates:

F - 18

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

		%

Buildings and plants		2 – 5 (mainly 2.5)
Computers and peripheral equipment		20 – 33 (mainly 33)
Office furniture and equipment		7 – 25 (mainly 7)
Machinery and equipment		7 – 33 (mainly 10)
Laboratory and testing equipment		10 – 20 (mainly 15)
Leasehold improvements		over the shorter of the lease term or useful economic life

Employee Stock Option [Member] | Employees and Members of Board of Directors [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Assumptions Used to Estimate Fair Value of Stock Options and Warrants

The fair value for options granted to employees and ESPP in the years ended December 31, 2019, 2018 and 2017, are estimated at the date of grant using a Black-Scholes-Merton option-pricing model with the following assumptions:

	Year ended December 31,
	2019			2018			2017

Employee Stock Options
Risk-free interest		2.53	%		2.32	%		2.14% - 2.17	%
Dividend yields		0	%		0	%		0	%
Volatility		56.26	%		56.53	%		58.08% - 58.10	%
Expected option term in years		6.03			6.06			6.06
Estimated forfeiture rate		0	%		0	%		0	%

ESPP
Risk-free interest		1.63% - 2.35	%		2.10% - 2.52	%		0.60% - 1.07	%
Dividend yields		0	%		0	%		0	%
Volatility		46.68% - 55.95	%		54.13% - 56.67	%		45.60% - 48.08	%
Expected term	6 months			6 months			6 months

OTHER LONG TERM LIABILITIES

12 Months Ended

Dec. 31, 2019

Other Liabilities Disclosure [Abstract]

OTHER LONG TERM LIABILITIES

NOTE 13:-OTHER LONG TERM LIABILITIES

	As of December 31,
	2019		2018
Tax liabilities	$	5,389	$	7,147
Accrued severance pay, net		4,647		411
Other		3,924		1,833

	$	13,960	$	9,391

LEASES (Schedule of Supplemental Cash Flow Information Related to Leases) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Cash paid for amounts included in measurement of lease liabilities
Operating cash flows for operating and finance leases	$ 9,748
Financing cash flows for finance leases	$ 1,354

SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Schedule of Long-Lived Assets) (Details) - USD ($)
$ in Thousands

Dec. 31, 2019

Dec. 31, 2018

Revenues from External Customers and Long-Lived Assets [Line Items]

Revenues from External Customers and Long-Lived Assets [Line Items]

^[1]

$ 176,963

$ 119,329

Israel

Revenues from External Customers and Long-Lived Assets [Line Items]

101,143

59,126

Asia [Member]

Revenues from External Customers and Long-Lived Assets [Line Items]

61,652

51,701

Europe [Member]

Revenues from External Customers and Long-Lived Assets [Line Items]

11,693

6,600

Others [Member]

Goodwill and Intangible Assets Disclosure [Abstract]

$ 2,475

$ 1,902

[1]	Long-lived assets are comprised of property and equipment, net.

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized shares	125,000,000	125,000,000
Common stock, issued shares	49,081,457	46,052,802
Common stock, outstanding shares	48,898,062	46,052,802

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows provided by operating activities:
Net income	$ 144,957	$ 128,046	$ 84,172
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment	17,261	11,426	7,011
Amortization of intangible assets	9,634	1,193	144
Amortization of premium and accretion of discount on available-for-sale marketable securities, net	92	1,242	2,061
Stock-based compensation expenses	60,353	30,618	17,564
Deferred income tax benefit, net	(6,037)	(7,093)	(5,455)
Loss from sale of business	5,269
Other expenses (income), net	713	551	(994)
Changes in assets and liabilities:
Inventories, net	(22,544)	(20,178)	(15,690)
Prepaid expenses and other assets	(67,323)	(2,711)	(20,943)
Trade receivables, net	(124,071)	(60,514)	(38,139)
Operating lease right-of-use assets and liabilities, net and effect of exchange rate differences	2,192
Trade payables, net	47,837	31,482	35,455
Employees and payroll accruals	18,592	4,583	9,394
Warranty obligations	50,780	41,878	20,436
Deferred revenues	83,137	37,041	14,106
Other liabilities	38,158	(8,485)	27,543
Net cash provided by operating activities	259,000	189,079	136,665
Cash flows from investing activities:
Business combinations, net of cash acquired	(38,435)	(94,737)
Purchase of property, plant and equipment	(72,562)	(38,608)	(21,382)
Withdrawal from (investment in) bank deposits	4,860	(9,870)
Investment in restricted bank deposits	(26,145)	(112)	(619)
Investment in available-for-sale marketable securities	(160,054)	(142,627)	(143,675)
Proceed from sales and maturities of available-for-sale marketable securities	142,744	129,345	80,269
Other investing activities	(3,261)
Net cash used in investing activities	(152,853)	(156,609)	(85,407)
Cash flows from financing activities:
Repayment of bank loans, net	(9,265)	(3,786)
Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards	9,066	10,021	7,240
Change in non-controlling interests	(71,468)	(14,190)
Other financing activities	(1,354)
Net cash provided (used in) by financing activities	(73,021)	(7,955)	7,240
Increase in cash and cash equivalents	33,126	24,515	58,498
Cash and cash equivalents at the beginning of the period	187,764	163,163	104,683
Effect of exchange rate differences on cash and cash equivalents	3,011	86	(18)
Cash and cash equivalents at the end of the period	223,901	187,764	163,163
Supplemental disclosure of non-cash activities:
Operating lease, right of use assets	37,298
Issuance of common stock upon business combination	34,601
Goodwill	3,067
Supplemental disclosure of cash flow information:
Cash paid for income taxes	41,076	15,368	3,100
Cash paid for interest on bank loans	$ 1,096	$ 143

INTANGIBLE ASSETS AND GOODWILL (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Acquired Intangible Assets

Acquired intangible assets consisted of the following as of December 31, 2019, and 2018:

	As of December 31,
	2019			2018

Intangible assets with finite lives:

Current Technology	$	72,613		$	30,821
Customer relationships		4,351			3,857
Trade names		5,990			3,721
Patents		1,400			1,400
Backlog		193			193

Gross intangible assets		84,547			39,992

Less - accumulated amortization		(10,539	)		(1,488	)

Total intangible assets, net	$	74,008		$	38,504

Schedule of Future Amortization Expense

Expected future amortization expenses of intangible assets as of December 31, 2019 are as follows:

2020	$	9,736
2021		9,783
2022		9,844
2023		9,830
2024		9,397
2025 and thereafter		25,418

	$	74,008

Schedule of Goodwill activity

The following summarizes the goodwill activity for the year ended December 31, 2019, and 2018:

	Solar			All other			Total

Goodwill at January 1, 2018	$	-		$	-		$	-
Business combinations		30,789			3,656			34,445
Foreign currency translation		416			13			429
Goodwill at December 31, 2018		31,205			3,669			34,874

Business combination		-			97,498			97,498
Other changes related to measurement period and disposals		1,299			(1,653	)		(354	)
Foreign currency translation		(1,239	)		(1,125	)		(2,364	)
Goodwill at December 31, 2019	$	31,265		$	98,389		$	129,654

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 18:-EARNINGS PER SHARE

Basic net Earnings Per Share (“EPS”) is computed by dividing the net earnings attributable to SolarEdge Technologies, Inc. by the weighted-average number of shares of common stock outstanding during the period.

Diluted net EPS is computed by giving effect to all potential shares of common stock, including stock options, to the extent dilutive, all in accordance with ASC No. 260, “Earnings Per Share.”

312,128 shares of common stock were excluded from the calculation of diluted net EPS due to their anti-dilutive effect for the year ended December 31, 2019.

No shares were excluded from the calculation for the year ended December 31, 2018.

The total weighted average number of shares related to the outstanding stock options, excluded from the calculation of diluted net EPS due to their anti-dilutive effect was 197,516, for the year ended December 31, 2017.

F - 47

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 18:-EARNINGS PER SHARE (Cont.)

The following table presents the computation of basic and diluted EPS attributable to SolarEdge Technologies, Inc.:

	Year ended December 31,
	2019			2018		2017

Basic EPS:
Numerator:
Net income	$	144,957		$	128,046	$	84,172
Net loss attributable to Non-controlling interests		1,592			787		-
Net income attributable to SolarEdge Technologies, Inc.	$	146,549		$	128,833	$	84,172

Denominator:
Shares used in computing net earnings per share of common stock, basic		47,918,938			45,235,310		42,209,238

Diluted EPS:
Numerator:
Net income	$	144,957		$	128,046	$	84,172
Net loss attributable to Non-controlling interests		1,592			787		-
Undistributed earnings reallocated to non-vested stockholders		(906	)		-		-
Net income attributable to SolarEdge Technologies, Inc.	$	145,643		$	128,833	$	84,172

Denominator:
Shares used in computing net earnings per share of common stock, basic		47,918,938			45,235,310		42,209,238
Weighted average effect of dilutive securities:
Non-vested PSUs		(312,128	)		-		-
Effect of stock-based awards		2,588,851			2,744,692		3,216,069
Shares used in computing net earnings per share of common stock, diluted		50,195,661			47,980,002		45,425,307

MARKETABLE SECURITIES (Tables)

12 Months Ended

Dec. 31, 2019

Marketable Securities Tables Abstract

Schedule of Available-For-Sale Marketable Securities

The following is a summary of available-for-sale marketable securities at December 31, 2019:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

Available-for-sale – matures within one year:
Corporate bonds	$	91,677	$	196	$	(28	)	$	91,845

Available for-sale – matures after one year:
Corporate bonds		117,692		336		(250	)		117,778
Governmental bonds		1,398		-		-			1,398
		119,090		336		(250	)		119,176

Total	$	210,767	$	532	$	(278	)	$	211,021

The following is a summary of available-for-sale marketable securities at December 31, 2018:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

Available-for-sale – matures within one year:
Corporate bonds	$	110,904	$	-	$	(519	)	$	110,385
Governmental bonds		8,343		-		(48	)		8,295
		119,247		-		(567	)		118,680

Available for-sale – matures after one year:
Corporate bonds		74,564		-		(308	)		74,256

Total	$	193,811	$	-	$	(875	)	$	192,936

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

NOTE 10:-ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

	As of December 31,
	2019		2018

Accrued expenses	$	36,158	$	14,859
Government authorities		27,191		11,344
Operating lease liabilities		9,590		-
Other		7,637		3,525

	$	80,576	$	29,728

OTHER OPERATING EXPENSES

12 Months Ended

Dec. 31, 2019

Other Operating Expenses

OTHER OPERATING EXPENSES

NOTE 19:-OTHER OPERATING EXPENSES

	Year ended December 31, 2019
Compensation package related to the passing of the former Founder, CEO and Chairman (1)	$	8,305
Termination of SMRE’s former executive (2)		12,222
Sale of SMRE’s subsidiary (3)		5,269
A settlement of pre-acquisition legal claim against Kokam (4)		4,900
Total other operating expenses	$	30,696

(1)On August 25, 2019, the Company announced the untimely death of Mr. Guy Sella, Founder, who had served as CEO and Chairman of the Board of Directors until shortly before his passing. For the year ended December 31, 2019, the Company recognized expenses in the amount of $8,305, in other operating expenses in the consolidated statement of income, related to payroll, bonus and acceleration of stock-based compensation award.

(2)As part of SMRE Acquisition, the Company issued to a shareholder who had served as an executive of SMRE 334,095 PSUs, which were subject to certain performance goals and a vesting period. In December 2019, in connection with a separation agreement between the parties, the Company and the shareholder amended the original agreement, which resulted in a modification to the terms of 150,000 of the original PSUs, such as, the fair value of the PSU, the service period and the performance goals. The Company exercised a call option with respect to the remaining 183,395 PSUs, for a price per share equal to €0.01. As a result of the modification, the Company accelerated the award and recognized expenses in the amount of $12,222, in other operating expenses in the consolidated statement of income.

(3)On December 31, 2019, the Company completed the sale of an SMRE’s subsidiary. As a result of this transaction, the Company recognized a loss of $5,269 in other operating expenses in the consolidated statement of income.

(4)At the time of the Kokam acquisition, Kokam had outstanding against it a claim for damages. In December 2019, the claim was settled for an amount of $4,900, which was recognized as an expense in other operating expenses in the consolidated statement of income.

INTANGIBLE ASSETS AND GOODWILL

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

NOTE 9:-INTANGIBLE ASSETS AND GOODWILL

a.Intangible assets:

Acquired intangible assets consisted of the following as of December 31, 2019, and 2018:

	As of December 31,
	2019			2018

Intangible assets with finite lives:

Current Technology	$	72,613		$	30,821
Customer relationships		4,351			3,857
Trade names		5,990			3,721
Patents		1,400			1,400
Backlog		193			193

Gross intangible assets		84,547			39,992

Less - accumulated amortization		(10,539	)		(1,488	)

Total intangible assets, net	$	74,008		$	38,504

Amortization expenses for the years ended December 31, 2019, 2018 and 2017, were $9,634, $1,193 and $144, respectively.

F - 36

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 9:-INTANGIBLE ASSETS AND GOODWILL (Cont.)

Expected future amortization expenses of intangible assets as of December 31, 2019 are as follows:

2020	$	9,736
2021		9,783
2022		9,844
2023		9,830
2024		9,397
2025 and thereafter		25,418

	$	74,008

b.Goodwill:

The following summarizes the goodwill activity for the year ended December 31, 2019, and 2018:

	Solar			All other			Total

Goodwill at January 1, 2018	$	-		$	-		$	-
Business combinations		30,789			3,656			34,445
Foreign currency translation		416			13			429
Goodwill at December 31, 2018		31,205			3,669			34,874

Business combination		-			97,498			97,498
Other changes related to measurement period and disposals		1,299			(1,653	)		(354	)
Foreign currency translation		(1,239	)		(1,125	)		(2,364	)
Goodwill at December 31, 2019	$	31,265		$	98,389		$	129,654

LEASES

12 Months Ended

Dec. 31, 2019

Lessee Disclosure [Abstract]

LEASES

NOTE 15:-LEASES

The Company leases offices, plants and vehicles under operating and finance leases. For leases with terms greater than 12 months, the Company records the related asset and liability at the present value of lease payments according to their term. Several of the Company’s leases include renewal options and some have termination options that are factored into the Company’s determination of the lease payments when appropriate. The Company estimates the incremental borrowing rate in order to discount the lease payments based on the information available at the lease commencement date.

The following table presents certain information related to the operating and finance leases:

	Year ended December 31, 2019
Finance leases:
Finance lease cost	$	213
Weighted average remaining lease term in years		7.25
Weighted average annual discount rate		2.85	%

Operating leases:
Operating lease cost	$	9,665
Weighted average remaining lease term in years		4.61
Weighted average annual discount rate		1.46	%

The following table presents supplemental cash flows information related to the lease costs for operating and finance leases:

	Year ended December 31, 2019
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows for operating and finance leases	$	9,748
Financing cash flows for finance leases	$	1,354

F - 41

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 15:-LEASES (Cont.)

	Operating Lease			Finance Leases

2020	$	10,522		$	317
2021		9,195			317
2022		8,176			302
2023		7,172			302
2024		4,015			302
Thereafter		2,543			1,503
Total lease payments		41,623			3,043

Less amount of lease payments representing interest		(1,820	)		(413	)

Present value of future lease payments		39,803			2,630

Less current lease liabilities		(9,590	)		(231	)

Long-term lease liabilities	$	30,213		$	2,399

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Revenues	$ 1,425,660	$ 937,237	$ 607,045
Cost of revenues	946,322	618,001	392,279
Gross profit	479,338	319,236	214,766
Operating expenses:
Research and development	121,351	82,245	54,966
Sales and marketing	87,984	68,307	50,032
General and administrative	49,361	29,264	18,682
Other operating expenses	30,696
Total operating expenses	289,392	179,816	123,680
Operating income	189,946	139,420	91,086
Financial expenses (income), net	11,343	2,297	(9,158)
Income before income taxes	178,603	137,123	100,244
Income taxes	33,646	9,077	16,072
Net income	144,957	128,046	84,172
Net loss attributable to Non-controlling interests	1,592	787
Net income attributable to SolarEdge Technologies, Inc.	$ 146,549	$ 128,833	$ 84,172
Net basic earnings per share of common stock attributable to SolarEdge Technologies, Inc.	$ 3.06	$ 2.85	$ 1.99
Net diluted earnings per share of common stock attributable to SolarEdge Technologies, Inc.	$ 2.90	$ 2.69	$ 1.85
Weighted average number of shares used in computing net basic earnings per share of common stock	47,918,938	45,235,310	42,209,238
Weighted average number of shares used in computing net diluted earnings per share of common stock	50,195,661	47,980,002	45,425,307

BUSINESS COMBINATION (Schedule of Preliminary Estimated Components and Allocations of Combined Purchase Prices) (Details) - SMRE [Member]
$ in Thousands

Dec. 31, 2019

USD ($)

Components of Purchase Price:

$ 42,240

(3,805)

(34,601)

73,036

Net tangible assets (liabilities):

Trade receivables, net

7,516

Prepaid expenses and other current assets

4,495

Inventories, net

7,529

Property, plant and equipment, net

9,454

Other non-current assets

11,102

Trade payables

(4,450)

Loans

(7,230)

Accrued expenses and other current liabilities

(6,868)

Other non-current liabilities

(14,379)

Total net tangible assets

7,169

Identifiable intangible assets:

Technology

44,071

^[1]

Customer relationships

953

^[1]

Backlog

254

^[1]

Tradename

2,509

^[1]

Deferred tax liabilities

(11,684)

Total identifiable intangible assets acquired

36,103

^[1]

Goodwill

97,498

^[2]

Non-controlling interests

(67,734)

Total purchase price allocation

$ 73,036

[1]	SMRE’s definite-lived intangible assets include current technology of $44,071 (10 years weighted-average useful life), tradename of $2,509 (9 years weighted-average useful life), customer relationships of $953 (8 years weighted-average useful life) and backlog of $254 (6 months weighted-average useful life).
[2]	The goodwill resulted from SMRE Acquisition is primarily attributable to sales growth from future products, new customers, together with certain intangible assets that do not qualify for separate recognition.

ACCUMULATED OTHER COMPREHENSIVE LOSS (Schedule of Changes in AOCI) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Beginning balance	$ (524)	$ (611)	$ (324)
Other comprehensive income (loss) before reclassifications	(1,376)	(19)	707
Loses reclassified from accumulated other comprehensive income	91	106	(994)
Net current period other comprehensive income (loss)	(1,285)	87	(287)
Ending balance	(1,809)	(524)	(611)
Available-for-sale Securities [Member]
Beginning balance	(656)	(433)	(136)
Other comprehensive income (loss) before reclassifications	829	(360)	(297)
Loses reclassified from accumulated other comprehensive income	91	137
Net current period other comprehensive income (loss)	920	(223)	(297)
Ending balance	264	(656)	(433)
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Beginning balance			19
Other comprehensive income (loss) before reclassifications		31	975
Loses reclassified from accumulated other comprehensive income		(31)	(994)
Net current period other comprehensive income (loss)			(19)
Ending balance
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Beginning balance	132	(178)	(207)
Other comprehensive income (loss) before reclassifications	(2,205)	310	29
Loses reclassified from accumulated other comprehensive income
Net current period other comprehensive income (loss)	(2,205)	310	29
Ending balance	$ (2,073)	$ 132	$ (178)

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued expenses	$ 36,158	$ 14,859
Government authorities	27,191	11,344
Operating lease liabilities	9,590
Other	7,637	3,525
Accrued expenses and other accounts payable	$ 80,576	$ 29,728

WARRANTY OBLIGATIONS

12 Months Ended

Dec. 31, 2019

Product Warranties Disclosures [Abstract]

WARRANTY OBLIGATIONS

NOTE 12:-WARRANTY OBLIGATIONS

Changes in the Company’s product warranty obligations for the years ended December 31, 2019 and 2018, were as follows:

	December 31,
	2019			2018

Balance, at the beginning of the year	$	121,826		$	78,811
Additions and adjustments to cost of revenues		94,048			70,854
Usage and current warranty expenses		(43,311	)		(27,839	)

Balance, at the end of the year		172,563			121,826
Less current portion		(65,112	)		(28,868	)

Long term portion	$	107,451		$	92,958

MARKETABLE SECURITIES (Schedule of Available-For-Sale Securities) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Available for-sale - matures within one year, amortized cost		$ 119,247
Available for-sale - matures within one year, gross unrealized gains
Available for-sale - matures within one year, gross unrealized losses		(567)
Available for-sale - matures within one year, fair value		118,680
Available for-sale - matures after one year, amortized cost	$ 119,090
Available for-sale - matures after one year, gross unrealized gains	336
Available for-sale - matures after one year, gross unrealized losses	(250)
Available for-sale - matures after one year, fair value	119,176
Amortized cost	210,767	193,811
Gross unrealized gains	532
Gross unrealized losses	(278)	(875)
Fair value	211,021	192,936
Corporate bonds [Member]
Available for-sale - matures within one year, amortized cost	91,677	110,904
Available for-sale - matures within one year, gross unrealized gains	196
Available for-sale - matures within one year, gross unrealized losses	(28)	(519)
Available for-sale - matures within one year, fair value	91,845	110,385
Available for-sale - matures after one year, amortized cost	117,692	74,564
Available for-sale - matures after one year, gross unrealized gains	336
Available for-sale - matures after one year, gross unrealized losses	(250)	(308)
Available for-sale - matures after one year, fair value	117,778	74,256
Governmental bonds [Member]
Available for-sale - matures within one year, amortized cost		8,343
Available for-sale - matures within one year, gross unrealized gains
Available for-sale - matures within one year, gross unrealized losses		(48)
Available for-sale - matures within one year, fair value		$ 8,295
Available for-sale - matures after one year, amortized cost	1,398
Available for-sale - matures after one year, gross unrealized gains
Available for-sale - matures after one year, gross unrealized losses
Available for-sale - matures after one year, fair value	$ 1,398

FINANCIAL EXPENSES (INCOME), NET

12 Months Ended

Dec. 31, 2019

Nonoperating Income (Expense) [Abstract]

FINANCIAL EXPENSES (INCOME), NET

NOTE 21:-FINANCIAL EXPENSES (INCOME), NET

	Year ended December 31,
	2019			2018			2017

Interest income on marketable securities	$	(4,590	)	$	(5,629	)	$	(4,398	)
Exchange rate loss (income), net		10,342			4,725			(8,488	)
Interest expenses		4,805			2,536			-
Bank charges		1,021			675			377
Amortization of marketable securities premium and accretion of discount, net		122			1,242			2,017
Other financial income, net		(357	)		(1,252	)		1,334

	$	11,343		$	2,297		$	(9,158	)

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”).

a.Principles of consolidation:

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

b.Use of estimates:

The preparation of financial statements, in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates its assumptions on an ongoing basis. The Company’s management believes that the estimates, judgment, and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

c.Financial statements in U.S. dollars:

A major part of the Company’s operations is carried out in the United States, Israel and certain other countries. The functional currency of these entities is the U.S. dollar.

Financing activities, including cash investments are primarily made in U.S. dollars.

Accordingly, monetary accounts maintained in currencies other than the U.S. dollar are translated into U.S. dollars in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 830 “Foreign Currency Matters”. All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the statements of income as financial income or expenses, as appropriate.

The financial statements of other Company’s subsidiaries whose functional currency is other than the U.S. dollar have been translated into U.S dollars. Assets and liabilities have been translated using the exchange rates in effect as of the balance sheet date. Statements of income amounts have been translated using the average exchange rate for the relevant periods.

The resulting translation adjustments are reported as a component of stockholders’ equity in accumulated other comprehensive loss.

Accumulated other comprehensive gains (losses) related to foreign currency translation adjustments, net amounted to $(2,073) and $132 as of December 31, 2019 and 2018, respectively.

F - 16

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

d.Cash and cash equivalents:

Cash equivalents are short-term, highly liquid investments that are readily convertible to cash, with original maturities of three months or less at the date acquired.

e.Short-term bank deposits:

Short-term bank deposits are deposits with an original maturity of more than three months and less than a year from the date of investment and which do not meet the definition of cash equivalents. The deposits are presented according to their term deposits.

f.Restricted bank deposits:

Restricted bank deposits are primarily invested in short-term bank deposits, with an original maturity of more than three months and less than a year from the date of investment and which are primarily used as collateral for a letter of credit for the Company’s customers and security for the Company’s office leases and credit cards.

g.Marketable Securities:

Marketable securities consist of corporate and governmental bonds. The Company determines the appropriate classification of marketable securities at the time of purchase and re-evaluates such designation at each balance sheet date. In accordance with FASB ASC No. 320 “Investments - Debt and Equity Securities”, the Company classifies marketable securities as available-for-sale.

Available-for-sale securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), a separate component of stockholders’ equity, net of taxes.

Realized gains and losses on sales of marketable securities, as determined on a specific identification basis, are included in financial income (expenses), net. The amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income (expenses), net.

The Company classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with maturities greater than 12 months are classified as long-term.

F - 17

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

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. If the Company does not intend to sell the security or it is not more likely than not that it will be required to sell the security before it recovers in value, the Company must estimate the net present value of cash flows expected to be collected. If the amortized cost exceeds the net present value of cash flows, such excess is considered a credit loss and an other-than-temporary impairment (“OTTI”) has occurred.

For securities that are deemed OTTI, the amount of impairment is recognized in the statement of income and is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income (loss).

The Company did not recognize OTTI on its marketable securities during the years ended December 31, 2019, 2018, and 2017.

h.Inventories:

Inventories are stated at the lower of cost or net realizable value. Cost includes depreciation, labor, material and overhead costs. Inventory reserves are provided to cover risks arising from slow-moving items or technological obsolescence.

The Company periodically evaluates the quantities on hand relative to historical, current, and projected sales volume. Based on this evaluation, an impairment charge is recorded when required to write-down inventory to its net realizable value. Cost of finished goods and raw materials is determined using the moving average cost method.

i.Property, plant and equipment:

F - 18

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

		%

Buildings and plants		2 – 5 (mainly 2.5)
Computers and peripheral equipment		20 – 33 (mainly 33)
Office furniture and equipment		7 – 25 (mainly 7)
Machinery and equipment		7 – 33 (mainly 10)
Laboratory and testing equipment		10 – 20 (mainly 15)
Leasehold improvements		over the shorter of the lease term or useful economic life

j.Leases:

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property, plant and equipment, net, other current liabilities, and other long-term liabilities in the Company’s consolidated balance sheets.

ROU assets represent the 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. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The Company uses incremental borrowing rates based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for lease payments are recognized on a straight-line basis over the lease term.

k.Business Combination:

The Company allocates the fair value of the purchase price to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair value. The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which does not exceed one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the finalization of the measurement period, any subsequent adjustments are recorded to earnings.

F - 19

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

l.Intangible Assets:

The Company evaluates the recoverability of finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.

The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these group of assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the group of assets is expected to generate.

If such review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. The Company has not recorded any impairment charges of finite-lived intangible assets during the years ended December 31, 2019 and 2018.

Acquired identifiable finite-lived intangible assets are amortized on a straight-line basis or accelerated method over the estimated useful lives of the assets. The basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful lives. The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets. In case the Company reduces the estimated useful life for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life (see Note 9).

m.Goodwill:

Goodwill reflects the excess of the consideration transferred, including the fair value of any contingent consideration and any non-controlling interest in the acquiree, over the assigned fair values of the identifiable net assets acquired. Goodwill is not amortized, and is assigned to reporting units and tested for impairment at least on an annual basis, in the fourth quarter of the fiscal year.

The goodwill impairment test is performed according to the following principles:

(1) An initial qualitative assessment may be performed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

(2) If the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying mount, a quantitative fair value test is performed. An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value is recognized.

The Company has not recorded any impairment charges of goodwill during the years ended December 31, 2019 and 2018.

F - 20

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

n.Impairment of long-lived assets:

The Company’s long-lived assets to be held or used, including right-of-use assets and intangible assets that are subject to amortization, are reviewed for impairment in accordance with ASC 360 “Property, Plants and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or asset group) to the future undiscounted cash flows expected to be generated by the assets (or asset group).

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. For the years ended December 31, 2019, 2018 and 2017, no impairment losses have been identified.

o.Severance pay:

The employees of the Company’s Israeli subsidiary are included under Section 14 of the Severance Pay Law, 1963, under which these employees are entitled only to monthly deposits made in their name with insurance companies, at a rate of 8.33% of their monthly salary. These payments cause the Company to be released from any future obligation under the Israeli Severance Pay Law to make severance payments in respect of those employees; therefore, related assets and liabilities are not presented in the consolidated balance sheets.

For the years ended December 31, 2019, 2018 and 2017, the Company recorded $7,285, $4,331, $2,995, in severance expenses related to its employees, respectively.

p.Revenue recognition:

Revenues are recognized in accordance with ASC 606, revenue from contracts with customers when control of the promised goods or services is transferred to the customers, in an amount that the Company expects in exchange for those goods or services.

The Company’s products consist mainly of (i) power optimizers, (ii) inverters, (iii) a related cloud-based monitoring platform, (iv) a storage solution, (v) UPS units (vi) Lithium-ion cells, batteries and energy storage solutions (vii) powertrains solutions for the e-Mobility segment and (viii) machinery for manufacturing lines.

The Company recognizes revenue under the core principle that transfer of control to the Company’s customers should be depicted in an amount reflecting the consideration the Company expects to receive in revenue. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when the performance obligation is satisfied.

F - 21

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(1) Identify the contract with a customer

A contract is an agreement between two or more parties that creates enforceable rights and obligations. In evaluating the contract, the Company analyzes the customer’s intent and ability to pay the amount of promised consideration (credit risk) and considers the probability of collecting substantially all of the consideration.

The Company determines whether collectability is reasonably assured on a customer-by-customer basis pursuant to its credit review policy.

The Company typically sells to customers with whom it has a long-term business relationship and a history of successful collection. For a new customer, or when an existing customer substantially expands its commitments, the Company evaluates the customer’s financial position, the number of years the customer has been in business, the history of collection with the customer, and the customer’s ability to pay, and typically assigns a credit limit based on that review.

(2) Identify the performance obligations in the contract

At a contract’s inception, the Company assesses the goods or services promised in a contract with a customer and identifies the performance obligations.

The main performance obligations are the provisions of the following: delivery of the Company’s products; cloud based monitoring services; extended warranty services and communication services.

(3) Determine the transaction price

The transaction price is the amount of consideration to which the Company is entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Generally, the Company does not provide price protection, stock rotation, and/or right of return. The Company determines the transaction price for all satisfied and unsatisfied performance obligations identified in the contract from contract inception to the beginning of the earliest period presented.

Rebates or discounts on goods or services are accounted for as variable consideration. The rebate or discount program is applied retrospectively for future purchases. Provisions for rebates, sales incentives, and discounts to customers are accounted for as reductions in revenue in the same period the related sales are recorded.

The accrual for rebates is allocated to specific receivables. The Company accrued $62,288 and $39,018 for rebates as of December 31, 2019 and 2018, respectively.

F - 22

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

When a contract provides a customer with payment terms of more than a year, the Company considers whether those terms create variability in the transaction price and whether a significant financing component exists.

As of December 31, 2019, the Company has not provided payment terms of more than a year.

The performance obligations that extend for a period greater than one year are those that include a financial component: (i) warranty extension services, (ii) cloud-based monitoring, and (iii) communication services.

The Company recognizes financing component expenses in its consolidated statement of income in relation to advance payments for performance obligations that extend for a period greater than one year. These financing component expenses are reflected in the Company’s deferred revenues balance.

(4) Allocate the transaction price to the performance obligations in the contract

The Company performs an allocation of the transaction price to each separate performance obligation, in proportion to their relative standalone selling prices.

(5) Recognize revenue when a performance obligation is satisfied

Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer. Control either transfers over time or at a point in time, which affects when revenue is recorded.

Revenues from sales of products are recognized when control is transferred (based on the agreed International Commercial terms, or “INCOTERMS”). Revenues related to warranty extension services, cloud-based monitoring, and communication services are recognized over time on a straight-line basis.

Deferred revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services and advance payments received from customers for the Company’s products. Deferred revenues are classified as short-term and long-term deferred revenues based on the period in which revenues are expected to be recognized.

F - 23

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

q.Cost of revenues:

Cost of revenues includes the following: product costs consisting of purchases from contract manufacturers and other suppliers, direct and indirect manufacturing costs, shipping and handling, support, warranty expenses and changes in warranty provision, provision for losses related to slow moving and dead inventory, personnel and logistics costs.

Shipping and handling costs, which amounted to $113,635, $45,821 and $29,693, for the years ended December 31, 2019, 2018 and 2017, respectively, are included in the cost of revenues in the consolidated statements of income. Shipping and handling costs include all costs associated with the distribution of finished goods from the Company’s point of sale directly to its customers.

r.Warranty obligations:

The Company provides a product warranty for its solar related products as follows: a 10-year limited warranty for StorEdge products, a standard 12-year limited warranty for inverters, and a 25-year limited warranty for power optimizers.

In certain cases, the Company provides an extended warranty for inverters that increases the warranty period for up to 25 years.

The Company maintains reserves to cover the expected costs that could result from the standard warranty. The warranty liability is in the form of product replacement and associated costs. Warranty reserves are based on the Company’s best estimate of such costs and are included in cost of revenues. The reserve for the related warranty expenses is based on various factors including assumptions about the frequency of warranty claims on product failures, derived from results of accelerated lab testing, field monitoring, analysis of the history of product field failures, and the Company’s reliability estimates.

The Company has established a reliability measurement system based on the units’ estimated mean time between failure, or MTBF, a metric that equates to a steady-state failure rate per year for each product generation. The MTBF predicts the expected failure rate of each product within the Company's products installed base during the expected product warranted lifetime.

The Company performs accelerated life cycle testing, which simulates the service life of the product in a short period of time.

The accelerated life cycle tests incorporate test methodologies derived from standard tests used by solar module vendors to evaluate the period over which solar modules wear out. Corresponding replacement costs are updated periodically to reflect changes in the Company’s actual and estimated production costs for its products, rate of usage of refurbished units as a replacement of faulty units, and other costs related to logistic and subcontractors’ services associated with the replacement products.

F - 24

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

In addition, through the collection of actual field failure statistics, the Company has identified several additional failure causes that are not included in the MTBF model. Such causes, which mostly consist of design errors, workmanship errors caused during the manufacturing process and, to a lesser extent, replacement of non-faulty units by installers, result in generating additional replacement costs to the replacement costs projected under the MTBF model.

For other products, the Company accrues for warranty costs based on the Company’s best estimate of product and associated costs. The Company’s other products are sold with a standard limited warranty that typically range in duration from one to ten years.

Warranty obligations are classified as short-term and long-term obligations based on the period in which the warranty is expected to be claimed.

s.Research and development costs:

Research and development costs, are charged to the consolidated statement of income as incurred.

t.Concentrations of credit risks:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term bank deposits, restricted bank deposits, marketable securities, trade receivables and other accounts receivable.

Cash and cash equivalents, short-term bank deposits and restricted bank deposits are mainly invested in major banks in the U.S., Israel and Korea. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments.

The Company's marketable securities include investments in highly-rated corporate debentures (mainly of U.S., UK, Canada, France, Australia, New Zealand and other countries) and governmental bonds. The financial institutions that hold the Company's marketable securities are major financial institutions located in the United States. Management believes that the Company's marketable securities portfolio is a diverse portfolio of highly-rated securities and the Company's investment policy limits the amount the Company may invest in each issuer, and accordingly, management believes that minimal credit risk exists from geographic or credit concentration with respect to these securities.

The trade receivables of the Company derive from sales to customers located primarily in North America, Europe, Korea and Australia.

F - 25

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Company generally does not require collateral, however, in certain circumstances, the Company may require letters of credit, other collateral, or additional guarantees.

An allowance for doubtful accounts is determined with respect to specific receivables that are doubtful of collection. The Company accrued $2,473 and $427 as allowance for doubtful accounts as of December 31, 2019 and 2018, respectively.

The Company had one major customer (customer with attributable revenues that represents more than 10% of total revenues) that accounted for approximately 20.4%, 19.4% and 14.8% of the Company’s consolidated revenues, for the years ended December 31, 2019, 2018 and 2017, respectively.

The Company had one major customer (customer with a balance that represents more than 10% of total trade receivables, net) as of December 31, 2019 and two major customers as of December 31, 2018 that accounted in the aggregate for approximately 32.1% and 41.3%, of the Company’s consolidated trade receivables, net, respectively.

u.Concentrations of supply risks:

The Company depends on two contract manufacturers and several limited or single source component suppliers. Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.

As of December 31, 2019 and 2018, two and three contract manufacturers collectively accounted for 42.3% and 58.8% of the Company’s total trade payables, net, respectively.

v.Fair value of financial instruments:

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

The carrying value of cash and cash equivalents, short-term bank deposits, restricted bank deposits, trade receivables, net, long term bank loans and current maturities, prepaid expenses and other current assets, trade payables, net, employee and payroll accruals and accrued expenses and other current liabilities approximate their fair values due to the short-term maturities of such instruments.

Assets measured at fair value on a recurring basis as of December 31, 2019 and 2018 are comprised of money market funds and marketable securities (see Note 4).

The Company applies ASC 820 “Fair Value Measurements and Disclosures”, with respect to fair value measurements of all financial assets and liabilities.

F - 26

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Fair value is an exit price, representing the amount that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

A three-tiered fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1-Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2- Include other inputs that are directly or indirectly observable in the marketplace.

Level 3-Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

w.Accounting for stock-based compensation:

The Company accounts for stock-based compensation in accordance with ASC 718 “Compensation-Stock Compensation”.

ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option-Pricing Model (“OPM”). The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of income.

The Company recognizes compensation expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Estimated forfeitures are based on actual historical pre-vesting forfeitures.

The Company selected the Black-Scholes-Merton option-pricing model as the most appropriate fair value method for its stock-option awards and Employee Stock Purchase Plan (“ESPP”). The option-pricing model requires a number of assumptions, of which the most significant are the fair market value of the underlying common stock, expected stock price volatility, and the expected option term. Expected volatility for stock-option awards was calculated until December 31, 2017 based upon certain peer companies that the Company considered to be comparable and starting January 1, 2018 based upon the Company’s actual historical stock price movements over the most recent periods. Expected volatility for ESPP was calculated based upon the Company’s stock prices. The expected term of options granted is based upon historical experience and represents the period between the options’ grant date and the expected exercise or expiration date.

F - 27

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term.

The Company doesn't use dividend yield rate since the Company has not declared or paid any dividends on its common stock and does not expect to pay any dividends in the foreseeable future.

	Year ended December 31,
	2019			2018			2017

Employee Stock Options
Risk-free interest		2.53	%		2.32	%		2.14% - 2.17	%
Dividend yields		0	%		0	%		0	%
Volatility		56.26	%		56.53	%		58.08% - 58.10	%
Expected option term in years		6.03			6.06			6.06
Estimated forfeiture rate		0	%		0	%		0	%

ESPP
Risk-free interest		1.63% - 2.35	%		2.10% - 2.52	%		0.60% - 1.07	%
Dividend yields		0	%		0	%		0	%
Volatility		46.68% - 55.95	%		54.13% - 56.67	%		45.60% - 48.08	%
Expected term	6 months			6 months			6 months

The Company recognizes compensation expenses for the value of its restricted stock unit (“RSU”) awards, based on the straight-line method over the requisite service period of each of the awards, net of estimated forfeitures. The fair value of each RSU is the market value of the Company’s stock as determined by the closing price of the common stock on the day of grant.

x.Income taxes:

The Company and its subsidiaries account for income taxes in accordance with ASC 740, “Income Taxes”. ASC 740 prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse.

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.

F - 28

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent the Company believes they will not be realized.

The Company accounts for uncertain tax positions in accordance with ASC 740. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement.

y.Comprehensive income:

The Company reports comprehensive income in accordance with ASC 220 (“Comprehensive Income”). ASC 220 establishes standards for the reporting and presentation of comprehensive income and its components in a full set of general purpose financial statements.

Total comprehensive income and the components of accumulated other comprehensive income are presented in the consolidated statements of stockholders’ equity. Accumulated other comprehensive income consists of foreign currency translation effects, unrealized gains and losses on available-for-sale marketable securities and hedging contracts.

z.New accounting pronouncements not yet effective:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. The new accounting standard will be effective for the fiscal year beginning on January 1, 2020, including interim periods within that year. The Company does not expect that adoption of this standard will have a material impact on its consolidated financial statements.

F - 29

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

aa.Recently issued and adopted pronouncements:

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (Topic 842) "Leases". Topic 842 supersedes the lease requirements in Accounting Standards Codification (ASC) Topic 840, "Leases". Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. ASU No. 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. In July 2018, the FASB issued amendments in ASU 2018-11, which provide a transition election to not restate comparative periods for the effects of applying the new standard. This transition election permits entities to change the date of initial application to the beginning of the earliest comparative period presented, or retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment. The Company has elected to apply the standard retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment. The new lease standard provides a number of optional practical expedients in transition. The Company elected the transition practical expedients, which permits the Company not to reassess its prior conclusions regarding lease identification, lease classification and initial direct costs under the new standard and the use of hindsight in determining the lease term. The Company also elected the short-term lease recognition exemption for all leases with a term shorter than 12 months. The Company adopted Topic 842 effective January 1, 2019. The Consolidated Financial Statements for the year ended December 31, 2019 are presented under the new standard, while comparative periods presented are not adjusted and continue to be reported under ASC 840 (See Note 15).

On October 1, 2019, the Company early adopted Accounting Standards Update No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04) using the prospective approach, which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance was effective beginning January 1, 2020, with early adoption permitted. The adoption of this new standard did not have a material impact on the Company's consolidated financial statements.

ab.Certain prior period amounts have been reclassified to conform to the current period presentation.

MARKETABLE SECURITIES

12 Months Ended

Dec. 31, 2019

Marketable Securities [Abstract]

MARKETABLE SECURITIES

NOTE 4:-MARKETABLE SECURITIES

The following is a summary of available-for-sale marketable securities at December 31, 2019:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

Available-for-sale – matures within one year:
Corporate bonds	$	91,677	$	196	$	(28	)	$	91,845

Available for-sale – matures after one year:
Corporate bonds		117,692		336		(250	)		117,778
Governmental bonds		1,398		-		-			1,398
		119,090		336		(250	)		119,176

Total	$	210,767	$	532	$	(278	)	$	211,021

The following is a summary of available-for-sale marketable securities at December 31, 2018:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

Available-for-sale – matures within one year:
Corporate bonds	$	110,904	$	-	$	(519	)	$	110,385
Governmental bonds		8,343		-		(48	)		8,295
		119,247		-		(567	)		118,680

Available for-sale – matures after one year:
Corporate bonds		74,564		-		(308	)		74,256

Total	$	193,811	$	-	$	(875	)	$	192,936

F - 33

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 4:-MARKETABLE SECURITIES (Cont.)

As of December 31, 2019, 2018 and 2017, the unrealized losses are not other than temporary and therefore such unrealized losses were recorded in accumulated other comprehensive loss.

Proceeds from maturity of available-for-sale marketable securities during the years ended December 31, 2019, 2018 and 2017, were $120,834, $84,497 and $80,269, respectively. Proceeds from sales of available-for-sale marketable securities during the year ended December 31, 2019 and 2018 were $21,910 and $44,848, which lead to a realized loss of $91 and $137, respectively.

BUSINESS COMBINATION (Schedule of Pro-forma Consolidated Income Statements) (Details) - SMRE Acquisition [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Revenue	$ 1,426,883	$ 961,367
Net income	$ 144,433	$ 120,027

INCOME TAXES (Schedule of Income (Loss) Before Taxes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Domestic	$ 6,029	$ 13,405	$ 7,461
Foreign	172,574	123,718	92,783
Income (loss) before taxes on income	$ 178,603	$ 137,123	$ 100,244

STOCK CAPITAL (Tables)

12 Months Ended

Dec. 31, 2019

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Composition of Common Stock Capital

a.Composition of common stock capital of the Company:

	Number of shares
	Authorized as of December 31,				Issued as of December 31,				Outstanding as of December 31,
	2019		2018		2019		2018			2019		2018

Stock of $0.0001 par value:
Common stock		125,000,000		125,000,000		49,081,457		46,052,802			48,898,062		46,052,802

Schedule of RSU Activity

A summary of the activity in the RSUs granted to employees and directors for the year ended December 31, 2019, is as follows:

	Number of RSUs			Weighted average grant date fair value
Unvested as of January 1, 2019		2,807,232			34.40
Granted		1,332,053			71.46
Vested		(1,122,712	)		32.23
Forfeited		(273,984	)		39.61
Unvested as of December 31, 2019		2,742,589			52.77

Schedule of Recognized Stock-based Compensation Expenses

	Year ended December 31,
	2019		2018		2017

Cost of revenues	$	6,964	$	4,343	$	2,250
Research and development		16,872		11,205		5,703
Selling and marketing		11,062		9,111		5,387
General and administrative		6,991		5,959		4,224
Other operating expenses		18,464		-		-

Total stock-based compensation expenses	$	60,353	$	30,618	$	17,564

Employee Stock Option [Member] | Employees and Members of Board of Directors [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of the Activity in the Share Options Granted to Employees and Members of the Board of Directors

A summary of the activity in the stock options granted to employees and members of the board of directors for the year ended December 31, 2019 and related information are as follows:

						Weighted
						average
				Weighted		remaining
	Number			average		contractual		Aggregate
	of			exercise		term		intrinsic
	options			price		in years		Value

Outstanding as of December 31, 2018		2,401,893			11.04		6.19		58,323
Granted		267,852			36.15
Exercised		(546,412	)		6.30
Forfeited or expired		(11,324	)		13.84
Outstanding as of December 31, 2019		2,112,009			15.44		3.58		168,229

Vested and expected to vest as of December 31, 2019		2,088,711			15.31		5.92		166,637

Exercisable as of December 31, 2019		1,789,915			13.07		2.77		146,813

SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=65888546&loc=d3e21300-112643

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(28))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21553-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 480
-SubTopic 10
-Section S99
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=65877616&loc=d3e177068-122764

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(d))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21488-112644

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 12: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(27))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21484-112644

Reference 14: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

NOTE 22:-SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION

a.Segment Information:

Following the acquisitions of Gamatronic, Kokam, and SMRE, the Company has changed its segments measurement, beginning in 2019. The purpose of the new measurement is to provide the Company’s chief operating decision maker (“CODM”) better information to asses’ segment performance and to make resource allocation decisions. The Company now operates in five different operating segments: Solar, UPS, energy storage, e-Mobility and machinery.

The Company's CODM is our Chief Executive Officer who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the operating segments.

Segment profit is comprised of gross profit for the segment less operating expenses that do not include amortization, stock based compensation expenses and certain other items.

The Company manages its assets on a group basis, not by segments, as many of its assets are shared or commingled. The Company’s CODM does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.

The Company identified one operating segment as reportable – the solar segment. The other operating segments are insignificant individually and in aggregate and therefore their results are presented together under “All other”.

F - 58

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 22:-SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Cont.)

The solar segment includes the design, development, manufacturing, and sales of an intelligent inverter solution designed to maximize power generation at the individual PV module level. The solution consists mainly of the Company’s power optimizers, inverters and cloud‑based monitoring platform.

The All other category includes the design, development, manufacturing and sales of UPS products, energy storage products, e-Mobility products, and special machines for automatic and semi-automatic linear sewing, digital welding and digital cutting.

Information on reportable segments and reconciliation to consolidated operating income is as follows:

	As of December 31, 2019
	Solar		All other
Revenues	$	1,336,618	$	89,042
Cost of revenues		852,330		75,702
Gross profit		484,288		13,340
Research and development		91,868		12,520
Sales and marketing		67,275		8,433
General and administrative		31,201		9,561
Segments profit (loss)	$	293,944	$	(17,174	)

	As of December 31,
	2019

Solar profit	$	293,944
All other loss		17,174
Segments operating profit		276,770
Expenses not allocated to segments:
Stock based compensation expenses		60,353
Amortization		11,112
Sale of SMRE’s subsidiary		5,269
Legal settlement		4,900
Cost of products adjustments		1,556
Other unallocated expenses		3,634
Consolidated operating income	$	189,946

The All other Segment results were immaterial for the year ended December 31, 2018. For the year ended December 31, 2017, the Company operated in the solar segment only.

F - 59

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 22:-SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Cont.)

b.Revenues by geographic location:

	Year ended December 31,
	2019		2018		2017

Revenues based on Customers’ location:
United States	$	678,565	$	505,469	$	348,949
Europe (*)		345,685		175,894		128,295
Netherlands		199,526		123,959		70,067
Rest of the world		201,884		131,915		59,734

Total revenues	$	1,425,660	$	937,237	$	607,045

(*) Except for Netherlands

c.Revenues by product:

	Year ended December 31,
	2019		2018		2017

Inverters	$	626,445	$	416,966	$	290,632
Optimizers		634,007		432,410		286,856
Others		165,208		87,861		29,557
Total revenues	$	1,425,660	$	937,237	$	607,045

d.Long-lived assets by geographic location:

	As of December 31,
	2019		2018

Israel	$	101,143	$	59,126
Asia		61,652		51,701
Europe		11,693		6,600
Other		2,475		1,902

Total long-lived assets (*)	$	176,963	$	119,329

(*) Long-lived assets are comprised of property and equipment, net.

BUSINESS COMBINATION (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Jan. 24, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Additional common shares purchased		$ 38,435	$ 94,737
Noncontrolling interest			8,318
Acquisition-related costs		604
Net income		$ 144,957	$ 128,046	$ 84,172
SMRE [Member]
Business Acquisition [Line Items]
Percentage of acquisition	56.80%	99.90%
Amount of investment	$ 73,036
Additional common shares purchased		$ 66,604
Percentage of noncontrolling interest	43.20%
Noncontrolling interest	$ 67,734
Cash paid	42,240
Common shares, value, paid	$ 34,601
SMRE [Member] \| Current Technology [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets		$ 44,071
Finite-lived Intangible Assets, Weighted Average Useful Life		10 years
SMRE [Member] \| Trade names [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets		$ 2,509
Finite-lived Intangible Assets, Weighted Average Useful Life		9 years
SMRE [Member] \| Customer Relationships [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets		$ 953
Finite-lived Intangible Assets, Weighted Average Useful Life		8 years
SMRE [Member] \| Backlog [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets		$ 254
Finite-lived Intangible Assets, Weighted Average Useful Life		6 years
Series of Individually Immaterial Business Acquisitions [Member]
Business Acquisition [Line Items]
Revenues		$ 20,461
Net income		33,795
Other operating expenses		$ 17,491

INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 20:-INCOME TAXES

a. Tax rates in U.S:

The Company is subject to U.S. federal tax at the rate of 21%.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law making significant changes to U.S. income tax law. These changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years 2018 onwards and created new taxes on certain foreign-sourced earnings and certain related-party payments.

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements as of December 31, 2017. As the Company collected and prepared necessary data, and interpreted the additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, it made adjustments, over the course of 2018, to the provisional amounts including refinements to deferred taxes. The accounting for the tax effects of the Tax Act was completed as of December 31, 2018.

Transition tax:

The Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiaries earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. The total tax liability was calculated to approximately $8,500. The Company has elected to pay its transition tax over the eight-year period provided in the Tax Act.

b.Kokam is subject to Korean tax on progressive tax rates of up to 22%.

SMRE is subject to Italian corporate tax rate of 24%.

c.Corporate tax in Israel:

Taxable income of Israeli companies is subject to corporate tax at the rate of 23%.

In December 2016, the Israeli Parliament approved the Economic Efficiency Law 2016 (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), which reduces the corporate income tax rate to 24% effective from January 1, 2017 and to 23% effective from January 1, 2018 onwards.

The Israeli subsidiary is also eligible for tax benefits as further described in note 20k.

F - 50

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 20:-INCOME TAXES (Cont.)

d.Carryforward tax losses:

As of December 31, 2019, Kokam has carryforward tax losses of $17,353.

As of December 31, 2019, SMRE has carryforward tax losses of approximately $11,000.

e.Deferred taxes:

Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The Company’s Israeli subsidiary’s tax-exempt profit from Benefited Enterprises (as defined in in note 20k) is permanently reinvested, as the Company’s management and the Board of Directors has determined that the Company does not currently intend to distribute dividends. Therefore, deferred taxes have not been provided for such tax-exempt income. The Company intends to continue to reinvest these profits and does not currently foresee a need to distribute dividends out of such tax-exempt income. Therefore, no deferred taxes have been provided in respect of such tax-exempt income as the undistributed tax-exempt income is essentially permanent in duration.

The Company may incur additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries. Such additional tax liability in respect of these subsidiaries has not been provided for in the Financial Statements as the Company’s management and the Board of Directors has determined that the Company intends to reinvest earnings of its subsidiaries indefinitely.

Taxes that would apply in the event of disposal of investments in subsidiaries have not been taken into account in computing deferred income taxes, as the Company’s management and the Board of Directors has determined that the Company’s intention to hold, and not to realize, these investments.

F - 51

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 20:-INCOME TAXES (Cont.)

Significant components of the Company’s deferred tax liabilities and assets are as follows:

	December 31,
	2019			2018			2017

Deferred tax assets, net:

Research and Development carryforward expenses	$	4,994		$	9,482		$	5,380
Carryforward tax losses		6,318			4,155			-
Stock based compensation expenses		4,898			3,160			1,622
Deferred revenue		3,621			1,268			205
Inventory Impairment		2,442			1,471			-
Allowance and other reserves		7,305			3,072			1,133

Total Gross deferred tax assets, net	$	29,578		$	22,608		$	8,340

Less, Valuation Allowance (1)		(2,317	)		-			-

Total deferred tax assets, net	$	27,261		$	22,608		$	8,340

Deferred tax liabilities, net:
Purchase price allocation		(15,424	)		(9,408	)		-

Total deferred tax liabilities, net	$	(15,424	)	$	(9,408	)	$	-

Recorded as:
Deferred tax assets, net	$	16,298		$	14,699		$	8,340
Deferred tax liabilities, net		(4,461	)		(1,499	)		-
Net deferred tax assets	$	11,837		$	13,200		$	8,340

(1)Related primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions.

F - 52

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 20:-INCOME TAXES (Cont.)

f.Uncertain tax positions:

	December 31,
	2019		2018			2017
Balance at January 1,	$	8,499	$	579		$	249
Increases related to current year tax positions		463		8,499			330
Decreases related to prior year tax positions		-		(579	)		-
Balance at December 31,	$	8,962	$	8,499		$	579

The total amount of gross unrecognized tax benefits was $9,500, $8,500, and $600 as of December 31, 2019, 2018 and 2017, respectively, of which, $9,500, $8,500 and $600, if recognized, would affect our effective tax rate, respectively.

The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. The total amount of penalties and interest were not material as of December 31, 2019, 2018 and 2017. The Company does not expect a material change in its unrecognized tax benefits within the next 12 months.

g.Income before taxes are comprised as follows:

	Year ended December 31,
	2019		2018		2017

Domestic	$	6,029	$	13,405	$	7,461
Foreign		172,574		123,718		92,783

	$	178,603	$	137,123	$	100,244

h.Income taxes (tax benefit) are comprised as follows:

	Year ended December 31,
	2019			2018			2017
Current taxes:
U.S. Federal & State	$	10,093		$	13,894		$	19,889
Foreign		29,590			2,276			1,638
Total current taxes		39,683			16,170			21,527

Deferred taxes:
U.S. Federal & State		(3,414	)		(1,284	)		(42	)
Foreign		(2,623	)		(5,809	)		(5,413	)
Total deferred taxes		(6,037	)		(7,093	)		(5,455	)

Income taxes, net	$	33,646		$	9,077		$	16,072

F - 53

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 20:-INCOME TAXES (Cont.)

i.Reconciliation of theoretical tax expense to actual tax expense:

The differences between the statutory tax rate of the Company and the effective tax rate are primarily accounted for by the non-recognition of tax benefits from accumulated net carryforward tax losses among the Company and various subsidiaries due to uncertainty of the realization of such tax benefits.

	Year ended December 31,
	2019			2018			2017

Income before taxes, as reported in the consolidated statements of income	$	178,603		$	137,123		$	100,244

Statutory tax rate		21	%		21	%		34	%
Theoretical tax expenses on the above amount at the US statutory tax rate		37,507			28,796			34,083
Income tax at rate other than the U.S. statutory tax rate		(8,784	)		(17,432	)		(34,734	)
Losses and timing differences for which valuation allowance was provided		2,317			-			-
Tax Cuts and Jobs Act of 2017		(1,246	)		(1,367	)		18,735
Non-deductible expenses		4,040			(644	)		(1,545	)
Other individually immaterial income tax items, net		(188	)		(276	)		(467	)

Actual tax expense (tax benefit)	$	33,646		$	9,077		$	16,072

Effective tax rate		18.8	%		6.6	%		16	%

j.Tax assessments:

As of December 31, 2019, the Company and certain of its subsidiaries filed U.S. federal and various state and foreign income tax returns. The statute of limitations relating to the consolidated U.S. federal income tax return is closed for all tax years up to and including 2015. Net operating losses generated in years prior to 2016 and carried forward are available to adjustment and subject to the statute of limitation provisions of such year when the net operating losses were utilized.

The statute of limitations related to tax returns of the Company’s Israeli subsidiary for all tax years up to and including 2013 has lapsed.

The statute of limitations related to tax returns of the Company’s other subsidiaries has lapsed for part of the tax years, which differs between the different subsidiaries.

F - 54

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 20:-INCOME TAXES (Cont.)

The Company believes that it has adequately provided for reasonably foreseeable outcomes related to tax audits and settlements. The final tax outcome of any Company tax audits could be different from that which is reflected in the Company’s income tax provisions and accruals. Such differences could have a material effect on the Company’s income tax provision and net income (loss) in the period in which such determination is made.

k.Tax benefits for Israeli companies under the Law for the Encouragement of Capital Investments, 1959 (the “Investments Law”):

The Israeli subsidiary elected tax year 2012 as a "Year of Election" for “Benefited Enterprise” status under the Investments Law. According to the Investments Law, the Israeli subsidiary elected to participate in the alternative benefits program which provides certain benefits, including tax exemptions and reduced tax rates (which depend on, inter alia, the geographic location in Israel). Income not eligible for Benefited Enterprise benefits is taxed at a regular corporate tax rate.

Upon meeting the requirements under the Investments Law, undistributed income derived from Benefited Enterprise from productive activity will be exempt from tax for two years from the year in which the Israeli subsidiary first has taxable income, provided that 12 years have not passed from the beginning of the year of election.

By December 31, 2016, the Israeli subsidiary utilized all of its operating loss carryforwards in Israel and became profitable for tax purposes.

On October 24, 2018, the Company’s Israeli subsidiary received an approval from the Israeli Tax Authorities confirming the applicability of the two-year tax exemption as provided in the Investments Law until December 31, 2018.

As of December 31, 2018, approximately $289,900 was derived from tax exempt profits earned by the Israeli subsidiary “Benefited Enterprises”. The Company has determined that such tax-exempt income will not be distributed as dividends and intends to reinvest the amount of its tax-exempt income earned by the Israeli subsidiary. Accordingly, no provision for deferred income taxes has been provided on income attributable to the Israeli subsidiary “Benefited Enterprises” as such income is essentially permanently reinvested.

If the Israeli subsidiary retained tax-exempt income is distributed, the income would be taxed at the applicable corporate tax rate which depends on the foreign ownership in each tax year, and the tax rate can range between 10% (when foreign ownership exceeds 90%) to 25% (when foreign ownership is below 49%).

The dividend recipient is subject to withholding tax at the rate of 15%, applicable to dividends from Benefited enterprises, or such lower rate as may be provided in an applicable tax treaty, which would generally be withheld at source by the distributing company.

F - 55

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 20:-INCOME TAXES (Cont.)

Through December 31, 2019, the Israeli subsidiary had generated income under the provision of the Investments Law.

Amendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 73) - In December 2016, the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which includes Amendment 73 to the Investments Law (the “2017 Amendment") was published. According to the 2017 Amendment, a preferred enterprise located in development area A will be subject to a tax rate of 7.5% instead of 9% effective from January 1, 2017 and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16%). The 2017 Amendment also prescribes special tax tracks for preferred technological enterprises (“PTE”), which are subject to rules that were issued by the Ministry of Finance.

On June 14, 2017, the Encouragement of Capital Investments Regulations (Preferred Technological Income and Capital Gain for Technological Enterprise), 2017 (the “Regulations”) were published.

The Regulations applied Action 5 under the Action Plan on Base Erosion and Profit Shifting (BEPS). The Regulations describe, inter alia, the mechanism used to determine the calculation of the benefits under the PTE regime and determine certain requirements relating to documentation of intellectual property for the purpose of the PTE. According to these provisions, a company that complies with the terms under the PTE regime may be entitled to certain tax benefits with respect to income generated during the company’s regular course of business and derived from the preferred intangible asset (as determined in the Investment Law), excluding income derived from intangible assets used for marketing and income attributed to production activity. In the event that intangible assets used for marketing purposes generate over 10% of the PTE’s income, the relevant portion, calculated using a transfer pricing study, would be subject to regular corporate income tax. If such income does not exceed 10%, the PTE will not be required to exclude the marketing income from the PTE’s total income.

The Regulations establish a presumption of direct production expenses plus 10% with respect to income related to production, which can be countered by the results of a supporting transfer pricing study. Tax rates applicable to such production income expenses will be similar to the tax rates under the Preferred Enterprise regime to the extent such income would be considered as eligible. In order to calculate the preferred income, the PTE is required to take into account the income and the research and development expenses that are attributed to each single preferred intangible asset. Nevertheless, it should be noted that the transitional provisions allow companies to take into account the income and research and development expenses attributed to all of the preferred intangible assets they have.

F - 56

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 20:-INCOME TAXES (Cont.)

A PTE, which is located in the center of Israel will be subject to tax at a rate of 12% on profits deriving from intellectual property (in development area A - a tax rate of 7.5%).

The Israeli subsidiary’s PTE facilities in Israel are not located in Development Zone A. SolarEdge Technologies Ltd. is in the final stages of building its own manufacturing facilities in Israel, which is located in a Development Zone A.

The Company notified the ITA of its election to implement the PTE with effect from January 1, 2019.

A Preferred Company distributing dividends from Preferred Income or income derived from its PTE, would subject the recipient to a tax at the rate of 20% (or lower, if so provided under an applicable tax treaty). In certain circumstances, a dividend distributed to a corporate shareholder who is not an Israeli resident for tax purposes, would be subject to a tax at the rate of 4%. Such taxes would generally be withheld at source by the distributing company. To benefit from any lower tax rates under an applicable tax treaty, a non-resident of Israel would need to receive in advance a valid certificate from the ITA allowing for a reduced tax rate, or to file an appropriate tax return with the ITA claiming a refund based on the lower rate under the applicable tax treaty.

Tax Benefits for Research and Development:

Israeli tax law (section 20A to the Israeli Tax Ordinance (New Version), 1961) allows, a tax deduction for research and development expenses, including capital expenses, for the year in which they are paid. Such expenses must relate to scientific research in industry, agriculture, transportation or energy, and must be approved by the relevant Israeli government ministry, determined by the field of research. Furthermore, the research and development must be for the promotion of the company’s business and carried out by or on behalf of the company seeking such tax deduction. However, the amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific research and development projects. As for expenses incurred in scientific research that is not approved by the relevant Israeli government ministry, they will be deductible over a three-year period starting from the tax year in which they are paid. The Company’s Israeli subsidiary intends to submit a formal request to the relevant Israeli government ministry in order to obtain such approval for 2019.

l.Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969:

The Company’s Israeli subsidiary claims currently to be qualified as ‘industrial company’ as defined by this law and as such, is entitled to certain tax benefits, consisting mainly of accelerated depreciation and amortization of patents and certain other intangible property.

SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Schedule of Reportable Segments and Operating Income) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Revenues	$ 1,425,660	$ 937,237	$ 607,045
Cost of revenues	946,322	618,001	392,279
Gross profit	479,338	319,236	214,766
Research and development	121,351	82,245	54,966
Sales and marketing	87,984	68,307	50,032
General and administrative	49,361	29,264	18,682
Segment profit (loss)	144,957	128,046	84,172
Solar profit	293,944
All other loss	17,174
Segments operating profit	276,770
Expenses not allocated to segments:
Stock based compensation expenses	60,353	30,618	17,564
Amortization	11,112
Sale of business	5,269
Legal settlement	4,900
Cost of products adjustment	1,556
Other unallocated amounts	3,634
Consolidated operating income	189,946	$ 139,420	$ 91,086
Solar [Member]
Segment Reporting Information [Line Items]
Revenues	1,336,618
Cost of revenues	852,330
Gross profit	484,288
Research and development	91,868
Sales and marketing	67,275
General and administrative	31,201
Segment profit (loss)	293,944
All Other [Member]
Segment Reporting Information [Line Items]
Revenues	89,042
Cost of revenues	75,702
Gross profit	13,340
Research and development	12,520
Sales and marketing	8,433
General and administrative	9,561
Segment profit (loss)	$ (17,174)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands

Common Stock [Member]

Additional paid in capital [Member]

Accumulated other comprehensive Income (loss) [Member]

Retained earnings (Accumulated Deficit) [Member]

Total

Noncontrolling Interest [Member]

Stockholders Equity

Balance at Dec. 31, 2016

$ 4

$ 307,098

$ (324)

$ (18,000)

$ 288,778

Balance (in shares) at Dec. 31, 2016

41,259,391

Issuance of Common Stock upon exercise of employee and non-employees stock-based awards

^[1]

4,854

Issuance of Common Stock upon exercise of employee and non-employee stock options, shares

2,368,152

Issuance of Common stock under employee stock purchase plan

^[1]

2,386

Issuance of Common stock under employee stock purchase plan, share

185,058

Equity based compensation expenses to employees and nonemployees

17,564

Issuance of Common stock upon business combination

Change in non-controlling interests

Other comprehensive loss adjustments

(287)

Net income

84,172

Balance at Dec. 31, 2017

$ 4

331,902

(611)

66,172

397,467

Balance (in shares) at Dec. 31, 2017

43,812,601

Cumulative effect of adopting new accounting standard

(3,872)

Issuance of Common Stock upon exercise of employee and non-employees stock-based awards

$ 1

6,333

6,334

Issuance of Common Stock upon exercise of employee and non-employee stock options, shares

2,122,932

Issuance of Common stock under employee stock purchase plan

^[1]

3,687

Issuance of Common stock under employee stock purchase plan, share

117,269

Equity based compensation expenses to employees and nonemployees

30,618

Issuance of Common stock upon business combination

Non-controlling interests related to business combination

$ 22,159

22,159

Change in non-controlling interests

(746)

14,190

(13,204)

(13,950)

Other comprehensive loss adjustments

150

237

Net income

128,833

(787)

128,046

Balance at Dec. 31, 2018

$ 5

371,794

(524)

191,133

562,408

8,318

570,726

Balance (in shares) at Dec. 31, 2018

46,052,802

Issuance of Common Stock upon exercise of employee and non-employees stock-based awards

^[1]

3,498

Issuance of Common Stock upon exercise of employee and non-employee stock options, shares

1,691,896

Issuance of Common stock under employee stock purchase plan

^[1]

5,568

Issuance of Common stock under employee stock purchase plan, share

142,713

Equity based compensation expenses to employees and nonemployees

60,353

Treasury Stock

^[1]

(2)

Treasury Stock, shares

(183,395)

Issuance of Common stock upon business combination

^[1]

34,601

Issuance of Common stock upon business combination, shares

1,194,046

Non-controlling interests related to business combination

67,734

Change in non-controlling interests

(20)

71,468

(73,479)

(73,499)

Other comprehensive loss adjustments

(1,285)

(981)

(2,266)

Net income

146,549

(1,592)

144,957

Balance at Dec. 31, 2019

$ 5

$ 475,792

$ (1,809)

$ 337,682

$ 811,670

Balance (in shares) at Dec. 31, 2019

48,898,062

[1]	Represents an amount less than $1.

BANK LOANS (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of Bank Loans

The following table summarizes the Company’s bank loans:

	As of December 31, 2019		Effective interest rate

Maturities calendar year:
Current maturities of bank loans	$	15,653		2.5% - 3.85%
Long-term bank loans		173		2.48%
		15,826

Accrued interest of bank loans		20

	$	15,846

BUSINESS COMBINATION (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Schedule of Preliminary Estimated Components and Allocations of Combined Purchase Prices

The following table summarizes the purchase price allocation of SMRE Acquisition:

Components of Purchase Price:

Cash	$	42,240
Less cash acquired		(3,805	)
Common shares		34,601
Total purchase price		73,036

Allocation of Purchase Price:

Net tangible assets (liabilities):
Trade receivables, net		7,516
Prepaid expenses and other current assets		4,495
Inventories, net		7,529
Property, plant and equipment, net		9,454
Other non-current assets		11,102
Trade payables		(4,450	)
Loans		(7,230	)
Accrued expenses and other current liabilities		(6,868	)
Other non-current liabilities		(14,379	)
Total net tangible assets		7,169

Identifiable intangible assets (1):
Technology		44,071
Customer relationships		953
Backlog		254
Tradename		2,509
Deferred tax liabilities		(11,684	)
Total identifiable intangible assets acquired		36,103

Goodwill (2)		97,498

Non-controlling interests		(67,734	)

Total purchase price allocation	$	73,036

Schedule of Pro-forma Consolidated Statement of Operations

The following table represents the pro-forma (unaudited) consolidated revenues and net income of the Company as if SMRE Acquisition had occurred as of the beginning of 2018:

	Year ended December 31,
	2019		2018
	Unaudited
Revenue	$	1,426,883	$	961,367
Net income	$	144,433	$	120,027

EARNINGS PER SHARE (Narrative) (Details) - shares	12 Months Ended
EARNINGS PER SHARE (Narrative) (Details) - shares	Dec. 31, 2019	Dec. 31, 2017
Earnings Per Share [Abstract]
Anti-dilutive securities	312,128	197,516

OTHER LONG TERM LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2019

Other Liabilities Disclosure [Abstract]

Schedule of Other Long Term Liabilties

	As of December 31,
	2019		2018
Tax liabilities	$	5,389	$	7,147
Accrued severance pay, net		4,647		411
Other		3,924		1,833

	$	13,960	$	9,391

COMMITMENTS AND CONTINGENT LIABILITIES (Details) € / shares in Units, $ in Thousands, € in Millions, ₪ in Millions, ¥ in Millions	1 Months Ended		12 Months Ended
	Aug. 31, 2019 USD ($)	Aug. 31, 2019 EUR (€) € / shares	Dec. 31, 2019 USD ($)	Dec. 31, 2019 EUR (€)	Dec. 31, 2019 ILS (₪)	Dec. 31, 2019 CNY (¥)
Non-cancelable purchase obligations			$ 472,086
Provision for loss			1,896
Contractual obligations for capital expenditures			60,634
Lawsuit claims			4,300
Difference amount of tendered shares for shareholders of SMRE	$ 3,100
Former Consultant and Israeli Subsidiary [Member]
Lawsuit claims			7,400
Patents [Member]
Value in dispute			5,600
SMRE [Member]
Difference amount of tendered shares for shareholders of SMRE \| €		€ 2.7
SMRE [Member] \| Minimum [Member]
Difference amount per share of tendered shares for shareholders of SMRE \| € / shares		€ 6
SMRE [Member] \| Maximum [Member]
Difference amount per share of tendered shares for shareholders of SMRE \| € / shares		€ 6.77
RMB [Member]
Lawsuit claims \| ¥						¥ 30
Euro Member Countries, Euro [Member] \| Patents [Member]
Value in dispute \| €				€ 5.0
Israel, New Shekels \| Former Consultant and Israeli Subsidiary [Member]
Lawsuit claims \| ₪					₪ 25.5
Projects with customers [Member]
Guarantees amount			51,473
Bank loans [Member]
Guarantees amount			18,373
Office Rent Lease Agreements [Member]
Guarantees amount			2,064
Customs Transactions [Member]
Guarantees amount			$ 328

FINANCIAL EXPENSES (INCOME), NET (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Nonoperating Income (Expense) [Abstract]
Interest income on marketable securities	$ (4,590)	$ (5,629)	$ (4,398)
Exchange rate loss (income), net	10,342	4,725	(8,488)
Interest expenses	4,805	2,536
Bank charges	1,021	675	377
Amortization of marketable securities premium and accretion of discount, net	122	1,242	2,017
Other financial income, net	(357)	(1,252)	1,334
Financial expenses (income), net	$ 11,343	$ 2,297	$ (9,158)

INVENTORIES (Details) - USD ($) $ in Thousands	12 Months Ended
INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 64,714	$ 39,380
Work in process	20,752	18,115
Finished goods	85,332	84,024
Inventories	170,798	141,519
Write-down amount of inventory	$ 4,528	$ 943	$ 1,352

SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Summary of Revenues Within Geographic Areas) (Details)
$ in Thousands

12 Months Ended

Dec. 31, 2019

USD ($)

item

Dec. 31, 2018

USD ($)

Dec. 31, 2017

USD ($)

Revenues from External Customers and Long-Lived Assets [Line Items]

Number of reportable segments | item

Revenues from External Customers and Long-Lived Assets [Line Items]

$ 1,425,660

$ 937,237

$ 607,045

UNITED STATES

Revenues from External Customers and Long-Lived Assets [Line Items]

678,565

505,469

348,949

Europe [Member]

Revenues from External Customers and Long-Lived Assets [Line Items]

^[1]

345,685

NETHERLANDS

Revenues from External Customers and Long-Lived Assets [Line Items]

199,526

123,959

70,067

Others [Member]

Revenues from External Customers and Long-Lived Assets [Line Items]

$ 201,884

131,915

59,734

Europe [Member]

Schedule of Reportable Segments and Operating Income

^[1]

$ 175,894

$ 128,295

[1]	Except for Netherlands

INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

	As of December 31,
	2019		2018

Raw materials	$	64,714	$	39,380
Work in process		20,752		18,115
Finished goods		85,332		84,024

	$	170,798	$	141,519

SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Information on reportable segments and reconciliation to consolidated operating income is as follows:

	As of December 31, 2019
	Solar		All other
Revenues	$	1,336,618	$	89,042
Cost of revenues		852,330		75,702
Gross profit		484,288		13,340
Research and development		91,868		12,520
Sales and marketing		67,275		8,433
General and administrative		31,201		9,561
Segments profit (loss)	$	293,944	$	(17,174	)

	As of December 31,
	2019

Solar profit	$	293,944
All other loss		17,174
Segments operating profit		276,770
Expenses not allocated to segments:
Stock based compensation expenses		60,353
Amortization		11,112
Sale of SMRE’s subsidiary		5,269
Legal settlement		4,900
Cost of products adjustments		1,556
Other unallocated expenses		3,634
Consolidated operating income	$	189,946

Summary of Revenues Within Geographic Areas

	Year ended December 31,
	2019		2018		2017

Revenues based on Customers’ location:
United States	$	678,565	$	505,469	$	348,949
Europe (*)		345,685		175,894		128,295
Netherlands		199,526		123,959		70,067
Rest of the world		201,884		131,915		59,734

Total revenues	$	1,425,660	$	937,237	$	607,045

(*) Except for Netherlands

Summary of Revenues By Product Family

	Year ended December 31,
	2019		2018		2017

Inverters	$	626,445	$	416,966	$	290,632
Optimizers		634,007		432,410		286,856
Others		165,208		87,861		29,557
Total revenues	$	1,425,660	$	937,237	$	607,045

Schedule of Long-lived Assets By Geographic Region

d.Long-lived assets by geographic location:

	As of December 31,
	2019		2018

Israel	$	101,143	$	59,126
Asia		61,652		51,701
Europe		11,693		6,600
Other		2,475		1,902

Total long-lived assets (*)	$	176,963	$	119,329

(*) Long-lived assets are comprised of property and equipment, net.

MARKETABLE SECURITIES (Schedule of Contractual Maturities) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Sales and maturities of available-for-sale marketable securities	$ 142,744	$ 129,345	$ 80,269
Loss	144,957	128,046	$ 84,172
Marketable securities [Member]
Sales and maturities of available-for-sale marketable securities	21,910	44,848
Loss	$ 91	$ 137

Property, Plant and Equipment [Abstract]

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=118930883&loc=SL7669619-108580

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (a)(1)
-URI http://asc.fasb.org/extlink&oid=109239629&loc=SL4573702-111684

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=118930883&loc=SL7669625-108580

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (c)(1)
-URI http://asc.fasb.org/extlink&oid=109239629&loc=SL4573702-111684

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=115929826&loc=d3e8736-108599

Reference 6: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 55
-Paragraph 4J
-URI http://asc.fasb.org/extlink&oid=116874947&loc=SL4591551-111686

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=118932676&loc=d3e3000-108585

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 45
-Paragraph 19
-URI http://asc.fasb.org/extlink&oid=108774443&loc=SL4569616-111683

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=115929826&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 55
-Paragraph 4K
-URI http://asc.fasb.org/extlink&oid=116874947&loc=SL4591552-111686

+ Details

BUSINESS COMBINATION

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

BUSINESS COMBINATION

NOTE 3:-BUSINESS COMBINATION

On January 24, 2019, the Company completed the acquisition of 56.8% of the outstanding common shares and voting rights of SMRE, a provider of innovative integrated powertrain technology and electronics for electric vehicles in the total consideration of $73,036, net of cash acquired, out of which $42,240 was paid in cash and $34,601 was paid in shares of SolarEdge common stock (the “SMRE Acquisition”).

As of January 24, 2019, the fair value of the 43.2% non-controlling interests in SMRE amounted to $67,734. The fair value of the non-controlling interests was valued based on and at the transaction price.

F - 30

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 3:-BUSINESS COMBINATION (Cont.)

The primary reason for the SMRE Acquisition was to acquire technology and customer relationships and to expand and diversify the Company’s business by entering into the e-Mobility market. The SMRE Acquisition was accounted for as a business combination in accordance with ASC 805 "Business Combinations”.

During the period from the SMRE Acquisition through December 31, 2019, the Company purchased additional common shares of SMRE in the open market and through a tender offer in a total amount of $66,604. As of December 31, 2019, the Company holds 99.9% of the outstanding common shares and voting rights of SMRE and SMRE’s shares were delisted from the Italian Alternative Investment Market (“AIM”).

The following table summarizes the purchase price allocation of SMRE Acquisition:

Components of Purchase Price:

Cash	$	42,240
Less cash acquired		(3,805	)
Common shares		34,601
Total purchase price		73,036

Allocation of Purchase Price:

Net tangible assets (liabilities):
Trade receivables, net		7,516
Prepaid expenses and other current assets		4,495
Inventories, net		7,529
Property, plant and equipment, net		9,454
Other non-current assets		11,102
Trade payables		(4,450	)
Loans		(7,230	)
Accrued expenses and other current liabilities		(6,868	)
Other non-current liabilities		(14,379	)
Total net tangible assets		7,169

Identifiable intangible assets (1):
Technology		44,071
Customer relationships		953
Backlog		254
Tradename		2,509
Deferred tax liabilities		(11,684	)
Total identifiable intangible assets acquired		36,103

Goodwill (2)		97,498

Non-controlling interests		(67,734	)

Total purchase price allocation	$	73,036

F - 31

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 3:-BUSINESS COMBINATION (Cont.)

(1)SMRE’s definite-lived intangible assets include current technology of $44,071 (10 years weighted-average useful life), tradename of $2,509 (9 years weighted-average useful life), customer relationships of $953 (8 years weighted-average useful life) and backlog of $254 (6 months weighted-average useful life).

(2)The goodwill resulted from SMRE Acquisition is primarily attributable to sales growth from future products, new customers, together with certain intangible assets that do not qualify for separate recognition.

The amounts of revenue and net loss of SMRE included in the Company’s consolidated statements of income for the period from January 24, 2019 to December 31, 2019 are $20,461 and $33,795 (including other operating expenses in the amount of $17,491, see Notes 19 (2) and 19 (3)), respectively.

The Company recognized $604 of aggregate acquisition-related costs that were expensed in the consolidated statement of income in general and administrative expenses.

The following table represents the pro-forma (unaudited) consolidated revenues and net income of the Company as if SMRE Acquisition had occurred as of the beginning of 2018:

	Year ended December 31,
	2019		2018
	Unaudited
Revenue	$	1,426,883	$	961,367
Net income	$	144,433	$	120,027

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of SMRE to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to tangible and intangible assets had been applied since the acquisition date, together with the consequential tax effects.

These pro-forma results (unaudited) are based on estimates and assumptions, which the Company believe are reasonable. They are not the results that would have been realized had the acquisitions actually occurred on January 1, 2018 and 2019 and are not necessarily indicative of the Company consolidated statements of income in future periods. The pro-forma results (unaudited) include adjustments related to purchase accounting, primarily amortization of intangible assets.

As of December 31, 2019, the purchase price allocation for all acquisitions was finalized.

PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Property and Equipment

	As of December 31,
	2019		2018

Cost:
Land	$	6,938	$	6,592
Buildings and plants		23,670		18,196
Computers and peripheral equipment		24,953		17,615
Office furniture and equipment		6,792		5,286
Laboratory and testing equipment		22,666		18,160
Machinery and equipment		160,231		113,553
Leasehold improvements		23,408		11,741

Gross property, plant and equipment		268,658		191,143

Less - accumulated depreciation		91,695		71,814

Total property, plant and equipment, net	$	176,963	$	119,329

INTANGIBLE ASSETS AND GOODWILL (Schedule of Future Amortization Expense) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
2020	$ 9,736
2021	9,783
2022	9,844
2023	9,830
2024	9,397
2025 and thereafter	25,418
Total intangible assets, net	$ 74,008	$ 38,504

PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($)
$ in Thousands

Dec. 31, 2019

Dec. 31, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Vendor non-trade receivables

^[1]

$ 83,917

$ 28,284

Government authorities

16,434

5,751

Prepaid expenses and other

14,917

11,038

Prepaid expenses and other current assets

$ 115,268

$ 45,073

[1]

Vendor non-trade receivables related to contract manufacturers derive from the sale of components to manufacturing vendors who manufacture products for the Company. The Company purchases these components directly from other suppliers. The Company does not reflect the sale of these components to the contract manufacturers in its revenues (see also Note 16b).

SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Principles of consolidation

a.Principles of consolidation:

Use of estimates

b.Use of estimates:

Financial statements in U.S. dollars

c.Financial statements in U.S. dollars:

A major part of the Company’s operations is carried out in the United States, Israel and certain other countries. The functional currency of these entities is the U.S. dollar.

Financing activities, including cash investments are primarily made in U.S. dollars.

The resulting translation adjustments are reported as a component of stockholders’ equity in accumulated other comprehensive loss.

Accumulated other comprehensive gains (losses) related to foreign currency translation adjustments, net amounted to $(2,073) and $132 as of December 31, 2019 and 2018, respectively.

Cash and cash equivalents

d.Cash and cash equivalents:

Cash equivalents are short-term, highly liquid investments that are readily convertible to cash, with original maturities of three months or less at the date acquired.

Short-term bank deposits

e.Short-term bank deposits:

Restricted bank deposits

f.Restricted bank deposits:

Marketable Securities

g.Marketable Securities:

F - 17

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Company did not recognize OTTI on its marketable securities during the years ended December 31, 2019, 2018, and 2017.

Inventories

h.Inventories:

Property, plant and equipment

i.Property, plant and equipment:

F - 18

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

		%

Buildings and plants		2 – 5 (mainly 2.5)
Computers and peripheral equipment		20 – 33 (mainly 33)
Office furniture and equipment		7 – 25 (mainly 7)
Machinery and equipment		7 – 33 (mainly 10)
Laboratory and testing equipment		10 – 20 (mainly 15)
Leasehold improvements		over the shorter of the lease term or useful economic life

Leases

j.Leases:

Business Combination

k.Business Combination:

Intangible Assets

l.Intangible Assets:

Goodwill

m.Goodwill:

The goodwill impairment test is performed according to the following principles:

(1) An initial qualitative assessment may be performed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

The Company has not recorded any impairment charges of goodwill during the years ended December 31, 2019 and 2018.

F - 20

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Impairment of long-lived assets

n.Impairment of long-lived assets:

Severance pay

o.Severance pay:

For the years ended December 31, 2019, 2018 and 2017, the Company recorded $7,285, $4,331, $2,995, in severance expenses related to its employees, respectively.

Revenue recognition

p.Revenue recognition:

F - 21

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(1) Identify the contract with a customer

The Company determines whether collectability is reasonably assured on a customer-by-customer basis pursuant to its credit review policy.

(2) Identify the performance obligations in the contract

At a contract’s inception, the Company assesses the goods or services promised in a contract with a customer and identifies the performance obligations.

The main performance obligations are the provisions of the following: delivery of the Company’s products; cloud based monitoring services; extended warranty services and communication services.

(3) Determine the transaction price

The accrual for rebates is allocated to specific receivables. The Company accrued $62,288 and $39,018 for rebates as of December 31, 2019 and 2018, respectively.

F - 22

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

As of December 31, 2019, the Company has not provided payment terms of more than a year.

(4) Allocate the transaction price to the performance obligations in the contract

The Company performs an allocation of the transaction price to each separate performance obligation, in proportion to their relative standalone selling prices.

(5) Recognize revenue when a performance obligation is satisfied

Cost of revenues

q.Cost of revenues:

Shipping and handling costs

Warranty obligations

r.Warranty obligations:

In certain cases, the Company provides an extended warranty for inverters that increases the warranty period for up to 25 years.

The Company performs accelerated life cycle testing, which simulates the service life of the product in a short period of time.

F - 24

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Warranty obligations are classified as short-term and long-term obligations based on the period in which the warranty is expected to be claimed.

Research and development costs

s.Research and development costs:

Research and development costs, are charged to the consolidated statement of income as incurred.

Concentrations of credit risks

t.Concentrations of credit risks:

The trade receivables of the Company derive from sales to customers located primarily in North America, Europe, Korea and Australia.

F - 25

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Company generally does not require collateral, however, in certain circumstances, the Company may require letters of credit, other collateral, or additional guarantees.

Concentrations of supply risks

u.Concentrations of supply risks:

As of December 31, 2019 and 2018, two and three contract manufacturers collectively accounted for 42.3% and 58.8% of the Company’s total trade payables, net, respectively.

Fair value of financial instruments

v.Fair value of financial instruments:

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Assets measured at fair value on a recurring basis as of December 31, 2019 and 2018 are comprised of money market funds and marketable securities (see Note 4).

The Company applies ASC 820 “Fair Value Measurements and Disclosures”, with respect to fair value measurements of all financial assets and liabilities.

F - 26

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

A three-tiered fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1-Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2- Include other inputs that are directly or indirectly observable in the marketplace.

Level 3-Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Accounting for stock-based compensation

w.Accounting for stock-based compensation:

The Company accounts for stock-based compensation in accordance with ASC 718 “Compensation-Stock Compensation”.

F - 27

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term.

The Company doesn't use dividend yield rate since the Company has not declared or paid any dividends on its common stock and does not expect to pay any dividends in the foreseeable future.

	Year ended December 31,
	2019			2018			2017

Employee Stock Options
Risk-free interest		2.53	%		2.32	%		2.14% - 2.17	%
Dividend yields		0	%		0	%		0	%
Volatility		56.26	%		56.53	%		58.08% - 58.10	%
Expected option term in years		6.03			6.06			6.06
Estimated forfeiture rate		0	%		0	%		0	%

ESPP
Risk-free interest		1.63% - 2.35	%		2.10% - 2.52	%		0.60% - 1.07	%
Dividend yields		0	%		0	%		0	%
Volatility		46.68% - 55.95	%		54.13% - 56.67	%		45.60% - 48.08	%
Expected term	6 months			6 months			6 months

Income taxes

x.Income taxes:

F - 28

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent the Company believes they will not be realized.

Comprehensive income

y.Comprehensive income:

New accounting pronouncements not yet effective

z.New accounting pronouncements not yet effective:

Recently issued and adopted pronouncements

aa.Recently issued and adopted pronouncements:

ab.Certain prior period amounts have been reclassified to conform to the current period presentation.

FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2019

Fair Value Measurements

FAIR VALUE MEASUREMENTS

NOTE 5:-FAIR VALUE MEASUREMENTS

In accordance with ASC 820, the Company measures its cash equivalents and marketable securities, at fair value using the market approach valuation technique. Cash equivalents and marketable securities are classified within Level 1 and Level 2, respectively, because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2019, 2018 and 2017 by level within the fair value hierarchy:

	Fair Value	Fair value measurements as of December 31,
Description	Hierarchy	2019		2018		2017

Measured at fair value on a recurring basis:

Assets:
Cash equivalents:
Money market mutual funds	Level 1	$	527	$	1,767	$	6,163

Short-term marketable securities:
Corporate bonds	Level 2	$	91,845	$	110,385	$	68,272
Governmental bonds	Level 2	$	-	$	8,295	$	8,992

Long-term marketable securities:
Corporate bonds	Level 2	$	117,778	$	74,256		$	95,160
Governmental bonds	Level 2	$	1,398	$	-		$	7,960

Liabilities
Long-term earn-out provision	Level 3	$	-	$	(332	)	$	-
Derivative instruments liability	Level 2	$	-	$	-		$	(180	)