4 unchanged sentences
In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
−Removed: Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
+Added: Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective and operating to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
4 unchanged sentences
Management’s assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.
−Removed: Management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the purchased SMRE business, that was acquired during 2019 and included in the 2019 consolidated financial statements of the Company and constituted 2.4% and 3.1% of total and net assets respectively, as of December 31, 2019 and 1.4% of revenues for the year then ended.
−Removed: Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the purchased SMRE business.
Based on this assessment, management has concluded that our internal control over financial reporting was effective as of the end of the year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with U.S.
62 unchanged sentences
333-202159) filed with the SEC on March 11, 2015
+Added: Indenture, dated September 25, 2020, between the Company and U.S.
+Added: Bank National Association, as trustee
+Added: Incorporated by reference to Exhibit 4.1 to Form 8-K filed with the SEC on September 25, 2020
+Added: Form of 0.000% Convertible Senior Note due 2025 (included in Exhibit 4.2)
+Added: Incorporated by reference to Exhibit 4.2 to Form 8-K filed with the SEC on September 25, 2020
Employment Agreement, dated August 20, 2019 between SolarEdge Technologies Ltd.
23 unchanged sentences
333-203193) filed with the SEC on April 2, 2015
+Added: Incorporation by Reference
10.11 †
10 unchanged sentences
Incorporated by reference to Exhibit 10.14 to Form 10-K filed with the SEC on August 20, 2015
−Removed: Share Purchase Agreement, dated January 7, 2019, between SolarEdge Technologies Ltd.
−Removed: and MTI Holding s.r.l., Mr.
−Removed: Gabriele Amati and Mr.
−Removed: Giampaolo Giammarioli.
−Removed: Incorporated by reference to Exhibit 2.1 to Form 8-K filed with the SEC on January 7, 2019
−Removed: Share Purchase Agreement with Mr.
−Removed: Ji Jun Hong with respect to Kokam Co., Ltd.
−Removed: Incorporated by reference to Exhibit 10.16 to Form 10-K filed with the SEC on February 28, 2019
−Removed: Form of Ancillary Purchase Agreement with respect to Kokam Co., Ltd.
−Removed: Incorporated by reference to Exhibit 10.17 to Form 10-K filed with the SEC on February 28, 2019
List of Subsidiaries of the Registrant
29 unchanged sentences
Management contract or compensatory plan or arrangement.
−Removed: # Confidential treatment has been requested with respect to certain portions of this exhibit.
−Removed: Omitted portions have been filed separately with the Securities and Exchange Commission.
+Added: FORM 10–K SUMMARY
SOLAREDGE TECHNOLOGIES, INC.
10 unchanged sentences
Notes to Consolidated Financial Statements
+Added: - - - - - - - - - - - - - - - - - - - - -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
4 unchanged sentences
and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, stockholders’
−Removed: equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”).
+Added: equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.
generally accepted accounting principles.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2020 expressed an unqualified opinion thereon.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
−Removed: These financial statements are the responsibility of the Company’s management.
+Added: These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial statements based on our audits.
9 unchanged sentences
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:
−Removed: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
+Added: (1) relate to accounts or disclosures that are material to the financial statements and (2) involve our especially challenging, subjective or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
2 unchanged sentences
Description of the Matter
−Removed: As of December 31, 2019, the warranty obligation was $172,563 thousands, as more fully described in Notes 2.r and 12 to the consolidated financial statements.
−Removed: Substantially all of the Company’s warranty obligations are related to the solar business.
+Added: As described in Notes 2.t and 13 to the consolidated financial statements, as of December 31, 2020, the warranty obligation was $204,994 thousand.
+Added: Substantially all of the Company's warranty obligations are related to the solar business.
The calculation of such warranty obligations requires significant judgment due to the inherent complexity in estimating the amount and timing of future warranty costs.
−Removed: The Company's products include a warranty of up to 12 years for its inverters and up to 25 year for its power optimizers.
−Removed: In order to predict the failure rate of each product, the Company established a reliability model based on the estimated mean time between failures (“MTBF”) and an additional model to capture non-systematic failures.
+Added: The Company's products include a warranty of up to 12 years for inverters and up to 25 years for its power optimizers.
+Added: In order to predict the failure rate of each product, the Company established a reliability model based on the estimated mean time between failures ("MTBF") and an additional model to capture non-systematic failures.
Predicted failure rates are updated periodically based on new product versions and analysis of the root cause of actual failures, as are warranty related replacement costs.
−Removed: Auditing the management’s valuation of warranty obligation was complex and highly judgmental due to the significant estimation required in determining its amount.
+Added: Auditing the management’s valuation of warranty obligations was complex and subject to judgment calls due to the significant estimation required in determining its amount.
In particular, the warranty obligation is subject to significant assumptions such as product failure rates, the average cost of products replacements and other warranty related costs.
How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the accounting of warranty, including management's assessment of the assumptions and data underlying the warranty valuation.
−Removed: Our substantive audit procedures included, among others, look back analysis and testing the accuracy and completeness of the underlying data used in management's warranty valuation assessment.
−Removed: We assessed the accuracy of historical data as the best estimate for forecasted failure rates, repair replacement ratios and other warranty related costs and compared them to actual warranty claims.
+Added: We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the accounting for warranties, including management's assumptions and data underlying the warranty obligation valuation.
+Added: Our substantive audit procedures included, among others, look back analyses and testing the accuracy and completeness of the underlying data used in management's warranty obligation valuation assessment.
+Added: We assessed the accuracy of historical data used in estimating forecasted failure rates, repair replacement ratios and other warranty related costs and compared them to actual warranty claims.
In addition, we involved a specialist to assess the assumptions and the precision of the inputs underlying the MTBF model, including, evaluating the appropriateness of the MTBF model and its consistency with data obtained from external sources.
−Removed: F - 3
−Removed: Acquisition accounting for S.M.R.E S.p.A business combination
+Added: Valuation of and Accounting for Convertible Notes at Issuance
Description of the Matter
−Removed: As described in Notes 2.k and 3 to the consolidated financial statements, on January 24, 2019, the Company acquired 56.8% of the outstanding common shares and voting rights of S.M.R.E S.p.A for a net consideration of $73 million (the “SMRE Acquisition”).
−Removed: The SMRE Acquisition was accounted for as a business combination in accordance with ASC 805 “Business Combinations”.
−Removed: Auditing the Company’s accounting for the SMRE Acquisition was complex due to the significant estimation required in determining the fair value of the current technology intangible asset in the amount of $44 million.
−Removed: The significant estimation was primarily due to the complexity of the valuation model used to measure the fair value of such asset, as well as the sensitivity of the respective fair value to the underlying significant assumptions.
−Removed: The Company used a discounted cash flow model to measure the intangible asset.
−Removed: The significant assumptions used to estimate the fair value of the intangible asset included discount rates and certain assumptions that form the basis of the forecasted results, such as revenue growth rates and profitability margins.
−Removed: These significant assumptions are forward-looking and could be affected by future economic and market conditions.
+Added: As described in Note 11 to the consolidated financial statements, in September 2020, the Company issued $632.5 million aggregate principal amount of 0.00% Convertible Senior Notes (the “Notes”) in a private placement.
+Added: The nature of the convertible note transaction required management to allocate the proceeds between the liability and equity components, with the equity component representing the difference between the proceeds and the fair value of a similar liability that does not have an associated conversion feature.
+Added: Management applied significant judgment in estimating the borrowing rate for a comparable non-convertible note that does not have an associated conversion feature, including in determining the Company's synthetic credit rating.
+Added: Auditing the Company’s valuation of and accounting for convertible notes at issuance involved a high degree of auditor judgment, subjectivity, and effort due to significant management judgment required in determining the estimated borrowing rate of a comparable non-convertible note, which is a significant assumption in determining the fair value of a similar liability that does not have an associated conversion feature.
How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the accounting for acquisitions, such as controls over the measurement of current technology intangible asset, including the valuation models and underlying assumptions used to develop such estimates.
−Removed: To test the estimated fair value of the intangible asset, we performed audit procedures that included, among others, evaluating the Company’s selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company’s valuation specialist and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.
−Removed: Specifically, when assessing the key assumptions effecting the current technology intangible asset, we focused on forecasted revenue, weighted average cost of capital rate, market benchmarks assumptions and long-term revenue growth rates.
−Removed: We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates.
−Removed: We also evaluated the appropriateness of the related disclosures included in Note 3 to the consolidated financial statements in relation to SMRE Acquisition.
+Added: We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the valuation of and accounting for the Notes, including management's assessment of the assumptions and data underlying the Notes.
+Added: Our substantive audit procedures included, among others, analyzing the methodology used by management to determine the fair value of a similar liability that does not have an associated conversion feature, evaluating management’s selection of the borrowing rate of a comparable non-convertible note, assessing the reasonableness of the underlying assumptions used to determine the borrowing rate, such as the Company’s synthetic credit rating, and performing an independent calculation of the carrying amounts attributable to the liability and equity components.
+Added: In addition, professionals with specialized skill and knowledge were used to assist in evaluating whether the borrowing rate of a comparable non-convertible note used by management was reasonable considering consistency with external market and industry data.
+Added: We have also evaluated the Company’s disclosures regarding the issuance of the Notes included in Notes 2.u and 11 to the consolidated financial statements.
/s/ Kost Forer Gabbay & Kasierer
−Removed: A Member of Ernst & Young Global
−Removed: We have served as the Company’s auditor since 2007.
+Added: A Member of Ernst & Young Global  
+Added: We have served as the Company's auditor since 2007.
Tel-Aviv, Israel
8 unchanged sentences
In our opinion, SolarEdge Technologies, Inc.
−Removed: and subsidiaries (the “Company”) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria.
−Removed: As indicated in the accompanying Management's Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the business of S.M.R.E S.p.A, that was acquired during 2019 and included in the 2019 consolidated financial statements of the Company and constituted 2.4% and 3.1% of total and net assets, respectively, as of December 31, 2019 and 1.4% of revenues for the year then ended.
−Removed: Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the business of S.M.R.E S.p.A.
+Added: and subsidiaries (the "Company") maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020, and 2019, the related consolidated statements of income, comprehensive income, stockholders’
9 unchanged sentences
We believe that our audit provides a reasonable basis for our opinion.
−Removed: F - 5
Definition and Limitations of Internal Control over Financial Reporting
6 unchanged sentences
/s/ Kost Forer Gabbay & Kasierer
−Removed: A Member of Ernst & Young Global
+Added: A Member of Ernst & Young Global 
Tel-Aviv, Israel
10 unchanged sentences
Marketable securities
−Removed: Trade receivables, net
−Removed: Prepaid expenses and other current assets
+Added: Trade receivables, net of allowances of $ 2,886 and $ 2,473 , respectively
Inventories, net
+Added: Prepaid expenses and other current assets
Total current assets
1 unchanged sentence
Marketable securities
−Removed: Operating lease right-of-use assets, net
−Removed: Property, plant and equipment, net
Deferred tax assets, net
+Added: Property, plant and equipment, net
+Added: Operating lease right-of-use assets, net
Intangible assets, net
13 unchanged sentences
Warranty obligations
−Removed: Deferred revenues
+Added: Deferred revenues and customers advances
Accrued expenses and other current liabilities
1 unchanged sentence
LONG-TERM LIABILITIES:
+Added: Convertible senior notes, net
Warranty obligations
Deferred revenues
−Removed: Operating lease liabilities
Deferred tax liabilities, net
+Added: Finance lease liabilities
+Added: Operating lease liabilities
Other long-term liabilities
2 unchanged sentences
STOCKHOLDERS’
−Removed: Common stock of $ 0.0001 par value - Authorized:
+Added: Common stock of $ 0.0001 par value –
125,000,000 shares as of December 31, 2020, and 2019;
2 unchanged sentences
Additional paid-in capital
−Removed: Accumulated other comprehensive loss
+Added: Accumulated other comprehensive income (loss)
Retained earnings
−Removed: Total SolarEdge Technologies, Inc.
−Removed: stockholders’
−Removed: Non-controlling interests
Total stockholders’
12 unchanged sentences
General and administrative
−Removed: Other operating expenses
+Added: Other operating expenses (income), net
Total operating expenses
15 unchanged sentences
Year ended December 31,
−Removed: Other comprehensive income (loss):
+Added: Other comprehensive income:
Available-for-sale securities:
7 unchanged sentences
Comprehensive income
−Removed: Comprehensive loss attributable to Non-controlling interests
+Added: Comprehensive loss (income) attributable to Non-controlling interests
Comprehensive income attributable to SolarEdge Technologies, Inc.
9 unchanged sentences
Accumulated Other comprehensive Income (loss)
−Removed: Retained earnings (Accumulated Deficit)
+Added: Retained earnings
Total stockholders’
Balance as of December 31, 2017
+Added: Cumulative effect of adopting ASC 606
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
1 unchanged sentence
Equity based compensation expenses to employees and nonemployees
−Removed: Other comprehensive loss adjustments
+Added: Non-controlling interests related to business combination
+Added: Change in non-controlling interests
+Added: Other comprehensive income adjustments
Balance as of December 31, 2018
−Removed: Cumulative effect of adopting ASC 606
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
1 unchanged sentence
Equity based compensation expenses to employees and nonemployees
+Added: Treasury Stock
+Added: Issuance of Common stock upon business combination
Non-controlling interests related to business combination
13 unchanged sentences
Accumulated Other comprehensive Income (loss)
−Removed: Retained earnings (Accumulated Deficit)
+Added: Retained earnings
Total stockholders’
3 unchanged sentences
Equity based compensation expenses to employees and nonemployees
−Removed: Treasury Stock
−Removed: Issuance of Common stock upon business combination
−Removed: Non-controlling interests related to business combination
−Removed: Change in non-controlling interests
−Removed: Other comprehensive loss adjustments
+Added: Equity component of convertible senior notes, net
+Added: Other comprehensive income adjustments
Balance as of December 31, 2020
11 unchanged sentences
Amortization of intangible assets
+Added: Amortization of debt discount and debt issuance costs
Amortization of premium and accretion of discount on available-for-sale marketable securities, net
Stock-based compensation expenses
−Removed: Deferred income tax benefit, net
+Added: Deferred income taxes, net
Loss from sale of business
−Removed: Other expenses (income), net
Changes in assets and liabilities:
6 unchanged sentences
Warranty obligations
−Removed: Deferred revenues
+Added: Deferred revenues and customers advances
Other liabilities
1 unchanged sentence
Cash flows from investing activities:
−Removed: Business combinations, net of cash acquired
−Removed: Purchase of property, plant and equipment
−Removed: Withdrawal from (investment in) bank deposits
−Removed: Investment in restricted bank deposits
Investment in available-for-sale marketable securities
Proceed from sales and maturities of available-for- sale marketable securities
+Added: Purchase of property, plant and equipment
+Added: Withdrawal from (investment in) bank deposits, net
+Added: Withdrawal from (investment in) restricted bank Deposits, net
+Added: Business combinations, net of cash acquired
Other investing activities
Net cash used in investing activities
−Removed: The accompanying notes are an integral part of the consolidated financial statements.
F - 11
5 unchanged sentences
Cash flows from financing activities:
−Removed: Repayment of bank loans, net
−Removed: Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards
+Added: Proceeds from issuance of convertible senior notes, net
+Added: Repayment of bank loans
+Added: Proceeds from bank loans
+Added: Proceeds from exercise of stock-based awards
Change in non-controlling interests
Other financing activities
−Removed: Net cash provided (used in) by financing activities
+Added: Net cash provided by (used in) financing activities
Increase in cash and cash equivalents
3 unchanged sentences
Supplemental disclosure of non-cash activities:
−Removed: Operating lease, right of use assets
+Added: Right-of-use asset recognized with corresponding lease liability
Issuance of common stock upon business combination
11 unchanged sentences
(the “Company”) and its subsidiaries design, develop, and sell an intelligent inverter solution designed to maximize power generation at the individual photovoltaic (“PV”) module level while lowering the cost of energy produced by the solar PV system and providing comprehensive and advanced safety features.
−Removed: The Company’s products consist mainly of (i) power optimizers designed to maximize energy throughput from each and every module through constant tracking of Maximum Power Point individually per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC), (iii) a related cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters of a solar PV system to enable customers and system owners as applicable, to monitor and manage the solar PV systems and (iv) a storage solution that is used to increase energy independence and maximize self-consumption for homeowners by utilizing a battery that is sold separately by third party manufacturers, to store and supply power as needed (the “StorEdge solution”).
−Removed: The Company and its subsidiaries sell their products worldwide through large distributors and electrical equipment wholesalers to smaller solar installers as, well as directly to large solar installers and engineering, procurement and construction firms (“EPCs”).
−Removed: In 2018, the Company completed the acquisitions of substantially all of the assets and activities of Gamatronic Electronic Industries Ltd (“Gamatronic IL”) and all of the outstanding shares of its wholly owned subsidiary Gamatronic (UK) Limited (“Gamatronic UK”), respectively (together, the “Gamatronic Acquisition”).
−Removed: Together, this activity is referred to as the UPS division which provides and manufactures Uninterruptible Power Supplies (“UPS”) devices.
−Removed: On October 17, 2018, the Company completed the acquisition of 74.5 % of the outstanding common shares and voting rights of Kokam Co., Ltd.
−Removed: (“Kokam”), a Korean company whose shares were traded on the Korean OTC market, a provider of Lithium-ion cells, batteries and energy storage solutions.
−Removed: Since the Kokam acquisition date through December 31, 2019, the Company has increased its shareholdings in Kokam to 100 %.
−Removed: On January 24, 2019, the Company completed the acquisition of 56.8 % of the outstanding common shares and voting rights of S.M.R.E S.p.A (“SMRE”), an Italian company whose shares were traded on the Italian AIM, a provider of innovative integrated powertrain technology and electronics for electric vehicles (“e-Mobility”).
−Removed: Between January 24, 2019 and December 31, 2019, the Company increased its shareholdings in SMRE to 99.9 % (see Note 3).
−Removed: The Company organizes its operations into five operating segments:
−Removed: solar, UPS, energy storage, e-Mobility and machinery (see Note 22).
+Added: The Company’s products consist mainly of (i) power optimizers designed to maximize energy throughput from each and every module through constant tracking of Maximum Power Point individually per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC), (iii) a remote cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters to enable customers and system owners, to monitor and manage the solar PV system (iv) a storage and backup solution that is used to increase energy independence and maximize self-consumption for homeowners by utilizing a battery that is sold separately by third party manufacturers, to store and supply power as needed, and (v) additional smart energy management solutions.
+Added: The Company and its subsidiaries sell products worldwide through large distributors, electrical equipment wholesalers, as well as directly to large solar installers and engineering, procurement and construction firms.
+Added: The Company has expanded its activity to other areas of smart energy technology organically and through acquisitions.
+Added: The Company now offers variety of energy solutions, which include lithium-ion cells, batteries and energy storage systems (“Energy Storage”), full powertrain kits for electric vehicles, or EVs (“e-Mobility”), uninterrupted power supply solutions (“UPS”), as well as automated machines for industrial use (“Automation Machines”).
+Added: During 2018, the Company completed the acquisitions of substantially all of the assets and activities of Gamatronic Electronic Industries Ltd and all of the outstanding shares of its wholly owned subsidiary Gamatronic (UK) Limited, respectively.
+Added: Together, this activity is referred to as Critical Power, which provides and manufactures UPS devices.
+Added: During 2018 and 2019, the Company completed the acquisition of Kokam Co., Ltd., a provider of lithium-ion cells, batteries and energy storage solutions (“Kokam”).
+Added: On January 24, 2019, the Company completed the acquisition of 56.8 % of the outstanding common stock and voting rights of SolarEdge Automation Machines, formerly known as S.M.R.E S.p.A (“SolarEdge Automation Machines”) and its subsidiaries, providers of innovative integrated powertrain technology and electronics for electric vehicles as well as automated machines for industries.
+Added: As of December 31, 2020, the Company increased its shareholdings in SolarEdge Automation Machines to 99.9 %.
F - 13
11 unchanged sentences
The preparation of financial statements in conformity with U.S.
−Removed: GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
−Removed: The Company evaluates its assumptions on an ongoing basis.
−Removed: The Company’s management believes that the estimates, judgment, and assumptions used are reasonable based upon information available at the time they are made.
−Removed: 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.
−Removed: Actual results could differ from those estimates.
+Added: GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes.
+Added: The duration, scope and effects of the ongoing COVID-19 pandemic, government and other third party responses to it, and the related macroeconomic effects, including to the Company’s business and the business of the Company’s suppliers and customers are uncertain, rapidly changing and difficult to predict.
+Added: As a result, the Company’s accounting estimates and assumptions may change over time in response to this evolving situation.
+Added: Such changes could result in future impairments of goodwill, intangibles, long-lived assets, inventories, incremental credit losses on receivables and AFS debt securities, or an increase in the Company’s insurance liabilities as of the time of a relevant measurement event.
Financial statements in U.S.
12 unchanged sentences
The resulting translation adjustments are reported as a component of stockholders’
−Removed: equity in accumulated other comprehensive loss.
−Removed: 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.
+Added: equity in accumulated other comprehensive income (loss).
+Added: Accumulated other comprehensive income (loss) related to foreign currency translation adjustments, net amounted to $ 3,617 and $( 2,073 ) as of December 31, 2020 and 2019, respectively.
F - 14
18 unchanged sentences
equity, net of taxes.
−Removed: Realized gains and losses on sales of marketable securities, as determined on a specific identification basis, are included in financial income (expenses), net.
−Removed: 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.
+Added: Realized gains and losses on sales of marketable securities, as determined on a specific identification basis, are included in financial expenses (income), net.
+Added: 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 expenses (income), 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.
+Added: On each reporting period, the Company evaluates whether declines in fair value below carrying value are due to expected credit losses, as well as the ability and intent to hold the investment until a forecasted recovery occurs, in accordance with ASC 326.
+Added: Allowance for credit losses on AFS debt securities are recognized as a charge in financial expenses (income), net, on the consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders'
+Added: The Company has not recorded credit losses for the year ended December 31, 2020.
+Added: There was no other-than-temporary-impairment charge for any unrealized losses in 2019 and 2018.
+Added: The Company determines realized gains or losses on sale of marketable securities on a specific identification method and records such gains or losses in financial expenses (income) on the consolidated statements of income.
F - 15
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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).
−Removed: The Company did not recognize OTTI on its marketable securities during the years ended December 31, 2019, 2018, and 2017.
+Added: Trade receivables:
+Added: Trade receivables are stated net of credit losses allowance.
+Added: The Company is exposed to credit losses primarily through sales of products.
+Added: The allowance against gross trade receivables reflects the current expected credit loss inherent in the receivables portfolio determined based on the Company’s methodology.
+Added: The Company’s methodology is based on historical collection experience, customer creditworthiness, current and future economic condition and market condition.
+Added: Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default.
+Added: The Company also considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted.
+Added: Trade receivables are written off after all reasonable means to collect the full amount have been exhausted.
+Added: The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of trade receivables to present the net amount expected to be collected:
+Added: December 31, 2020
+Added: Balance, at beginning of period
+Added: Provision for expected credit losses
+Added: Amounts written off charged against the allowance and others
+Added: Balance, at end of period
Inventories are stated at the lower of cost or net realizable value.
8 unchanged sentences
Depreciation is calculated by the straight-line method over the estimated useful live of the assets, at the following rates:
−Removed: F - 18
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Buildings and plants
10 unchanged sentences
over the shorter of the lease term or useful economic life
+Added: F - 16
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
+Added: NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The Company determines if an arrangement is a lease at inception.
−Removed: 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.
−Removed: 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.
+Added: Contracts containing a lease are further evaluated for classification as an operating or finance lease.
+Added: In determining the leases classification the Company assesses among other criteria:
+Added: (i) 75% or more of the remaining economic life of the underlying asset is a major part of the remaining economic life of that underlying asset;
+Added: and (ii) 90% or more of the fair value of the underlying asset comprises substantially all of the fair value of the underlying asset.
+Added: Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and long-term operating lease liabilities in the Company’s consolidated balance sheets.
+Added: Finance leases are included in property, plant and equipment, net, other current liabilities, and long-term finance lease 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.
−Removed: Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
+Added: For leases with terms greater than 12 months, the Company records the ROU asset and liability at commencement date based on the present value of lease payments according to their 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.
−Removed: The operating lease ROU asset also includes any lease payments made and excludes lease incentives.
+Added: The 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.
−Removed: Lease expenses for lease payments are recognized on a straight-line basis over the lease term.
+Added: Lease expenses are recognized on a straight-line basis over the lease term or the useful life of the leased asset.
+Added: In addition, the carrying amount of the ROU and lease liabilities are remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Business Combination:
6 unchanged sentences
Upon the finalization of the measurement period, any subsequent adjustments are recorded to earnings.
+Added: Intangible Assets:
+Added: 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.
F - 17
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
−Removed: Intangible Assets:
−Removed: 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.
10 unchanged sentences
(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.
−Removed: (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.
+Added: (2) If the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, 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, 2020 and 2019.
+Added: Impairment of long-lived assets:
+Added: The Company’s long-lived assets, other than goodwill and intangible assets, including right-of-use assets, 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.
+Added: 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).
+Added: If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value.
+Added: For the years ended December 31, 2020, 2019 and 2018, no impairment losses have been identified.
F - 18
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
−Removed: Impairment of long-lived assets:
−Removed: 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.
−Removed: 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).
−Removed: 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.
−Removed: For the years ended December 31, 2019, 2018 and 2017, no impairment losses have been identified.
Severance pay:
2 unchanged sentences
therefore, related assets and liabilities are not presented in the consolidated balance sheets.
−Removed: 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.
+Added: For the years ended December 31, 2020, 2019 and 2018, the Company recorded $ 10,598 , $ 7,285 and $ 4,331 , in severance expenses related to its employees, respectively.
+Added: Derivatives and Hedging:
+Added: The Company accounts for derivatives and hedging based on ASC 815 (“Derivatives and Hedging”).
+Added: ASC 815 requires the Company to recognize all derivatives on the balance sheet at fair value.
+Added: The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.
+Added: To protect against the increase in value of forecasted foreign currency cash flows resulting from salary denominated in the Israeli currency, the New Israeli Shekels (“NIS”), during the year ended December 31, 2020, the Company instituted a foreign currency cash flow hedging program whereby portions of the anticipated payroll denominated in NIS for a period of one to six months with hedging contracts.
+Added: Accordingly, when the dollar strengthens against the NIS, the decline in present value of future foreign currency expenses is offset by losses in the fair value of the hedging contracts.
+Added: Conversely, when the dollar weakens, the increase in the present value of future foreign currency cash flows is offset by gains in the fair value of the hedging contracts.
+Added: These hedging contracts are designated as cash flow hedges, as defined by ASC 815 and are all effective hedges.
+Added: The Company also entered into derivative instrument arrangements to hedge the Company’s exposure to currencies other than the U.S.
+Added: These derivative instruments are not designated as cash flow hedges, as defined by ASC 815, and therefore all gains and losses, resulting from fair value remeasurement, were recorded immediately in the statement of income, as a financial expense (income), net.
Revenue recognition:
−Removed: 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.
−Removed: 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.
+Added: Revenues are recognized in accordance with ASC 606;
+Added: revenue from contracts with customers is recognized 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.
+Added: The Company’s products consist mainly of (i) power optimizers, (ii) inverters, (iii) a related cloud-based monitoring platform, (iv) communication services, (v) a storage solution, (vi) UPS units, (vii) Lithium-ion cells, batteries and energy storage solutions, (viii) powertrain kits for the e-Mobility segment and (ix) automated 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.
−Removed: In order to achieve that core principle, the Company applies the following five-step approach:
−Removed: (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 - 19
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
+Added: In order to achieve that core principle, the Company applies the following five-step approach:
+Added: (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.
(1) Identify the contract with a customer
−Removed: A contract is an agreement between two or more parties that creates enforceable rights and obligations.
+Added: A contract is an agreement or purchase order 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.
15 unchanged sentences
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.
−Removed: The accrual for rebates is allocated to specific receivables.
+Added: Accrual for rebates for direct customers is presented net of receivables.
+Added: Accrual for sale incentives related to non-direct customers is presented under accrued expenses and other current liabilities.
The Company accrued $ 65,131 and $ 62,288 for rebates as of December 31, 2020 and 2019, respectively.
19 unchanged sentences
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.
−Removed: Deferred revenues are classified as short-term and long-term deferred revenues based on the period in which revenues are expected to be recognized.
+Added: Deferred revenues are classified as short-term and long-term deferred revenues based on the period in which revenues are expected to be recognized (see Note 14).
+Added: Cost of revenues:
+Added: Cost of revenues includes the following:
+Added: 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.
+Added: Shipping and handling costs, which amounted to $ 101,597 , $ 113,635 and $ 45,821 , for the years ended December 31, 2020, 2019 and 2018, respectively, are included in the cost of revenues in the consolidated statements of income.
+Added: Shipping and handling costs include custom tariff charges and all other costs associated with the distribution of finished goods from the Company’s point of sale directly to its customers.
F - 21
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
−Removed: Cost of revenues:
−Removed: Cost of revenues includes the following:
−Removed: 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.
−Removed: 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.
−Removed: 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.
Warranty obligations:
13 unchanged sentences
services associated with the replacement products.
+Added: 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.
+Added: 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.
+Added: For other products, the Company accrues for warranty costs based on the Company’s best estimate of product and associated costs.
+Added: The Company’s other products are sold with a standard limited warranty that typically range in duration from one to ten years.
+Added: Warranty obligations are classified as short-term and long-term obligations based on the period in which the warranty is expected to be claimed.
+Added: Convertible senior notes:
+Added: The Company accounts for its convertible senior notes in accordance with ASC 470-20 "Debt with Conversion and Other Options".
+Added: The Company separately accounts for the liability and equity components of convertible debt instruments.
+Added: The liability component at issuance is recognized at fair value, based on the fair value of a similar instrument that does not have a conversion feature.
F - 22
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
−Removed: 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.
−Removed: 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.
−Removed: For other products, the Company accrues for warranty costs based on the Company’s best estimate of product and associated costs.
−Removed: The Company’s other products are sold with a standard limited warranty that typically range in duration from one to ten years.
−Removed: Warranty obligations are classified as short-term and long-term obligations based on the period in which the warranty is expected to be claimed.
+Added: The equity component is based on the excess of the principal amount of the debentures over the fair value of the liability component, after adjusting for an allocation of debt issuance costs and deferred taxes, and is recorded in additional paid-in capital.
+Added: Debt discount is amortized as additional non-cash interest expense over the expected life of the debt using the effective interest rate method.
+Added: In accounting for the issuance costs related to the Notes, the issuance costs incurred were allocated between the liability and equity components based on their relative values.
+Added: The Company’s convertible senior notes are included in the calculation of diluted Earnings Per Share (“EPS”) if the assumed conversion into common shares is dilutive, using the “if-converted”
+Added: This involves adding back the periodic non-cash interest expense net of tax associated with the Notes to the numerator and by adding the shares that would be issued in an assumed conversion (regardless of whether the conversion option is in or out of the money) to the denominator for the purposes of calculating diluted EPS, unless the Notes are antidilutive (See Note 20).
Research and development costs:
4 unchanged sentences
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.
−Removed: 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.
−Removed: The financial institutions that hold the Company's marketable securities are major financial institutions located in the United States.
−Removed: 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.
−Removed: The trade receivables of the Company derive from sales to customers located primarily in North America, Europe, Korea and Australia.
+Added: The Company's debt marketable securities include investments in highly-rated corporate debentures (located mainly in U.S., UK, France, South Korea, Netherlands and other countries) and governmental bonds.
+Added: The financial institutions that hold the Company's debt marketable securities are major financial institutions located in the United States.
+Added: The Company believes that the its debt 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 an issuer (see Note 2g).
+Added: The trade receivables of the Company derive from sales to customers located primarily in United States, Europe and Australia.
+Added: The Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for doubtful accounts (see Note 2h).
+Added: The Company generally does not require collaterals, however, in certain circumstances, the Company may require letters of credit, other collateral, or additional guarantees.
+Added: From time to time, the Company may purchase trade credit insurance.
+Added: The Company had one major customer (customer with attributable revenues that represents more than 10% of total revenues) that accounted for approximately 14.8 %, 20.4 % and 19.4 % of the Company’s consolidated revenues, for the years ended December 31, 2020, 2019 and 2018, respectively.
+Added: All of the revenues from this customer were generated in the solar segment.
F - 23
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
−Removed: The Company generally does not require collateral, however, in certain circumstances, the Company may require letters of credit, other collateral, or additional guarantees.
−Removed: An allowance for doubtful accounts is determined with respect to specific receivables that are doubtful of collection.
−Removed: The Company accrued $ 2,473 and $ 427 as allowance for doubtful accounts as of December 31, 2019 and 2018, respectively.
−Removed: 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.
−Removed: 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.
+Added: The Company had two major customers (customer with a balance that represents more than 10% of total trade receivables, net) as of December 31, 2020 and one major customer as of December 31, 2019 that accounted in the aggregate for approximately 34.6 % and 32.1 %, of the Company’s consolidated trade receivables, net, respectively.
Concentrations of supply risks:
1 unchanged sentence
Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.
−Removed: 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.
+Added: As of December 31, 2020 and 2019, two contract manufacturers collectively accounted for 48.5 % and 42.3 % of the Company’s total trade payables, net, respectively.
+Added: During 2020, the Company started production in its manufacturing facility in the North of Israel, “Sella 1”.
Fair value of financial instruments:
1 unchanged sentence
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.
−Removed: 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).
+Added: Assets measured at fair value on a recurring basis as of December 31, 2020 and 2019 are comprised of money market funds and debt 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.
−Removed: F - 26
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: 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.
2 unchanged sentences
Level 1- Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
−Removed: Level 2- 
−Removed: Include other inputs that are directly or indirectly observable in the marketplace.
+Added: 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.
+Added: F - 24
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
+Added: NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Accounting for stock-based compensation:
11 unchanged sentences
grant date and the expected exercise or expiration date.
+Added: The risk-free interest rate is based on the yield from U.S.
+Added: treasury bonds with an equivalent term.
+Added: 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.
+Added: The Company measures a modified stock based award at fair value and recognizes the compensation cost at the beginning of the modification date over the employee’s requisite service period of the modified award.
F - 25
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
−Removed: The risk-free interest rate is based on the yield from U.S.
−Removed: treasury bonds with an equivalent term.
−Removed: 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.
The fair value for options granted to employees and ESPP in the years ended December 31, 2020, 2019 and 2018, are estimated at the date of grant using a Black-Scholes-Merton option-pricing model with the following assumptions:
2 unchanged sentences
Risk-free interest
−Removed: 2.14 % - 2.17
Dividend yields
−Removed: 58.08 % - 58.10
Expected option term in years
9 unchanged sentences
Expected term
−Removed: 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.
−Removed: 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.
+Added: The Company recognizes compensation expenses for the value of its restricted stock units (“RSU”) awards, based on the straight-line method over the requisite service period of each of the awards, net of estimated forfeitures.
+Added: 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 grant date.
Income taxes:
2 unchanged sentences
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.
−Removed: F - 28
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: 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.
3 unchanged sentences
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.
−Removed: Comprehensive income:
−Removed: The Company reports comprehensive income in accordance with ASC 220 (“Comprehensive Income”).
−Removed: ASC 220 establishes standards for the reporting and presentation of comprehensive income and its components in a full set of general purpose financial statements.
−Removed: Total comprehensive income and the components of accumulated other comprehensive income are presented in the consolidated statements of stockholders’
−Removed: Accumulated other comprehensive income consists of foreign currency translation effects, unrealized gains and losses on available-for-sale marketable securities and hedging contracts.
−Removed: New accounting pronouncements not yet effective:
−Removed: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments.
−Removed: 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.
−Removed: The new accounting standard will be effective for the fiscal year beginning on January 1, 2020, including interim periods within that year.
−Removed: The Company does not expect that adoption of this standard will have a material impact on its consolidated financial statements.
F - 26
4 unchanged sentences
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
+Added: New accounting pronouncements not yet effective:
+Added: In January 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No.
+Added: 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (ASU 2020-01), which clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815.
+Added: This guidance will be effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.
+Added: The Company do not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
+Added: In August 2020, the FASB issued Accounting Standards Update No.
+Added: 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):
+Added: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.
+Added: This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.
+Added: This guidance will be effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.
+Added: Early adoption is not permitted before fiscal years beginning after December 15, 2020.
+Added: The Company do not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
Recently issued and adopted pronouncements:
−Removed: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No.
−Removed: 2016-02 (Topic 842) "Leases".
−Removed: Topic 842 supersedes the lease requirements in Accounting Standards Codification (ASC) Topic 840, "Leases".
−Removed: Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures.
−Removed: 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018.
−Removed: 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.
−Removed: 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.
−Removed: The Company has elected to apply the standard retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment.
−Removed: The new lease standard provides a number of optional practical expedients in transition.
−Removed: 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.
−Removed: The Company also elected the short-term lease recognition exemption for all leases with a term shorter than 12 months.
−Removed: The Company adopted Topic 842 effective January 1, 2019.
−Removed: 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).
−Removed: On October 1, 2019, the Company early adopted Accounting Standards Update No.
−Removed: 2017-04, Intangibles-Goodwill and Other (Topic 350):
−Removed: Simplifying the Test for Goodwill Impairment (ASU 2017-04) using the prospective approach, which eliminates step two from the goodwill impairment test.
−Removed: 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.
−Removed: This guidance was effective beginning January 1, 2020, with early adoption permitted.
−Removed: The adoption of this new standard did not have a material impact on the Company's consolidated financial statements.
−Removed: Certain prior period amounts have been reclassified to conform to the current period presentation.
−Removed: NOTE 3:- BUSINESS COMBINATION
−Removed: 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”).
−Removed: As of January 24, 2019, the fair value of the 43.2 % non-controlling interests in SMRE amounted to $ 67,734 .
−Removed: The fair value of the non-controlling interests was valued based on and at the transaction price.
−Removed: F - 30
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: NOTE 3:- BUSINESS COMBINATION (Cont.)
−Removed: 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.
−Removed: The SMRE Acquisition was accounted for as a business combination in accordance with ASC 805 "Business Combinations”.
−Removed: 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 .
−Removed: 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”).
−Removed: The following table summarizes the purchase price allocation of SMRE Acquisition:
−Removed: Components of Purchase Price:
−Removed: Less cash acquired
−Removed: Common shares
−Removed: Total purchase price
−Removed: Allocation of Purchase Price:
−Removed: Net tangible assets (liabilities):
−Removed: Trade receivables, net
−Removed: Prepaid expenses and other current assets
−Removed: Inventories, net
−Removed: Property, plant and equipment, net
−Removed: Other non-current assets
−Removed: Trade payables
−Removed: Accrued expenses and other current liabilities
−Removed: Other non-current liabilities
−Removed: Total net tangible assets
−Removed: Identifiable intangible assets (1):
−Removed: Customer relationships
−Removed: Deferred tax liabilities
−Removed: Total identifiable intangible assets acquired
−Removed: Non-controlling interests
−Removed: Total purchase price allocation
−Removed: F - 31
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: NOTE 3:- BUSINESS COMBINATION (Cont.)
−Removed: (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).
−Removed: (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.
−Removed: 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.
−Removed: The Company recognized $ 604 of aggregate acquisition-related costs that were expensed in the consolidated statement of income in general and administrative expenses.
−Removed: 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:
−Removed: Year ended December 31,
−Removed: 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.
−Removed: These pro-forma results (unaudited) are based on estimates and assumptions, which the Company believe are reasonable.
−Removed: 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.
−Removed: The pro-forma results (unaudited) include adjustments related to purchase accounting, primarily amortization of intangible assets.
−Removed: As of December 31, 2019, the purchase price allocation for all acquisitions was finalized.
+Added: In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No.
+Added: 2016-13, Financial Instruments - Credit Losses (Topic 326):
+Added: Measurement of Credit Losses on Financial Instruments.
+Added: The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2020.
+Added: This standard requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings and report credit losses using an expected losses model rather than the incurred losses model that was previously used, and establishes additional disclosures related to credit risks.
+Added: For available-for-sale (“AFS”) debt securities with unrealized losses, the standard eliminates the concept of other-than-temporary impairments and requires allowances to be recorded instead of reducing the amortized cost of the investment.
+Added: This standard limits the amount of credit losses to be recognized for AFS debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases.
F - 27
3 unchanged sentences
dollars in thousands (except share and per share data)
+Added: NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
+Added: The Company adopted Topic 326 effective January 1, 2020, based on the composition of the Company’s trade receivables, investment portfolio and other financial assets, current economic conditions and historical credit loss activity.
+Added: The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
+Added: The consolidated financial statements for the year ended December 31, 2020 are presented under the new standard, while comparative periods presented are not adjusted and continue to be reported in accordance with the Company’s historical accounting policy.
+Added: Certain prior period amounts have been reclassified to conform to the current period presentation.
NOTE 3:- MARKETABLE SECURITIES
The following is a summary of available-for-sale marketable securities at December 31, 2020:
−Removed: Gross unrealized
−Removed: Gross unrealized
Available-for-sale –
1 unchanged sentence
Corporate bonds
+Added: Governmental bonds
Available for-sale –
2 unchanged sentences
Governmental bonds
+Added: F - 28
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
+Added: NOTE 3:- MARKETABLE SECURITIES (Cont.)
The following is a summary of available-for-sale marketable securities at December 31, 2019:
−Removed: Gross unrealized
−Removed: Gross unrealized
Available-for-sale –
1 unchanged sentence
Corporate bonds
−Removed: Governmental bonds
Available for-sale –
1 unchanged sentence
Corporate bonds
+Added: Governmental bonds
+Added: Proceeds from maturity of available-for-sale marketable securities during the years ended December 31, 2020, 2019 and 2018, were $ 141,839 , $ 120,834 and $ 84,497 , respectively.
+Added: The Company had no proceeds from sales of available-for sale, marketable securities during the year ended December 31, 2020, therefore no realized gains or losses from the sale of available for sale marketable securities were recognized.
+Added: 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 led to realized losses of $ 91 and $ 137 , respectively.
+Added: NOTE 4:- FAIR VALUE MEASUREMENTS
+Added: In accordance with ASC 820, the Company measures its cash equivalents and marketable securities, at fair value using the market approach valuation technique.
+Added: 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.
+Added: Foreign currency derivative contracts are classified within the Level 2 value hierarchy, as the valuation inputs are based on quoted prices and market observable data of similar instruments.
F - 29
3 unchanged sentences
dollars in thousands (except share and per share data)
−Removed: NOTE 4:- MARKETABLE SECURITIES (Cont.)
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: NOTE 5:- FAIR VALUE MEASUREMENTS
−Removed: In accordance with ASC 820, the Company measures its cash equivalents and marketable securities, at fair value using the market approach valuation technique.
−Removed: 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.
+Added: NOTE 4:- FAIR VALUE MEASUREMENTS (Cont.)
The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2020 and 2019 by level within the fair value hierarchy:
4 unchanged sentences
Money market mutual funds
+Added: Derivative instruments asset:
+Added: Options and forward contracts not designated as hedging instruments  
Short-term marketable securities:
4 unchanged sentences
Governmental bonds
−Removed: Long-term earn-out provision
Derivative instruments liability:
+Added: Options and forward contracts not designated as hedging instruments  
+Added: NOTE 5:- DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
+Added: As of December 31, 2020, the Company had no derivative instruments that were designated as cash flow hedges.
+Added: As of December 31, 2020, the Company entered into forward contracts and put and call options to sell Australian dollars (“AUD”) for U.S.
+Added: dollars in the amount of AUD 12 million and AUD 42 million, respectively.
+Added: As of December 31, 2020, the Company entered into forward contracts and put and call options to sell Euro (“EUR”) for U.S.
+Added: dollars in the amount of EUR 48 million and EUR 60 million, respectively.
+Added: As of December 31, 2020, the Company entered into forward contracts to sell U.S.
+Added: dollars for South Korean Won in the amount of USD 40.6 million.
+Added: The fair value of derivative assets as of December 31, 2020, was $ 3,786 , which was recorded in prepaid expenses and other current assets in the Consolidated Balance Sheets.
+Added: The fair value of derivative liabilities as of December 31, 2020, was $ 5,819 , which was recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets.
F - 30
3 unchanged sentences
dollars in thousands (except share and per share data)
+Added: NOTE 5:- DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Cont.)
+Added: For the year ended December 31, 2020, the Company recorded a loss in the amount of $ 4,013 , in financial expense (income), net, related to the derivative instruments not designated as cash flow hedges.
+Added: As of December 31, 2019 and for the year then ended, the Company had no derivative instruments (see Note 4).
+Added: For the year ended December 31, 2018, the Company recorded a gain in the amount of $ 698 , in financial expense (income), net, related to the derivative instruments not designated as cash flow hedges
NOTE 6:- PREPAID EXPENSES AND OTHER CURRENT ASSETS
6 unchanged sentences
The Company does not reflect the sale of these components to the contract manufacturers in its revenues (see also Note 18b).
−Removed: NOTE 7:- INVENTORIES
+Added: NOTE 7:- INVENTORIES, NET
As of December 31,
16 unchanged sentences
Leasehold improvements
+Added: Assets under construction and payments on account
Gross property, plant and equipment
1 unchanged sentence
Total property, plant and equipment, net
−Removed: Property, plant and equipment in progress under construction and development with a cost basis of $ 59,058 and $ 22,890 , was included in machinery and equipment as of December 31, 2019 and 2018, respectively.
Depreciation expenses for the years ended December 31, 2020, 2019 and 2018, were $ 22,355 , $ 17,261 and $ 11,426 , respectively.
−Removed: NOTE 9:- INTANGIBLE ASSETS AND GOODWILL
+Added: NOTE 9:- INTANGIBLE ASSETS AND GOODWILL, NET
Intangible assets:
1 unchanged sentence
As of December 31,
−Removed: Intangible assets with finite lives:
+Added: Finite-lived intangible assets:
Current Technology
11 unchanged sentences
Expected future amortization expenses of intangible assets as of December 31, 2020 are as follows:
−Removed: 2025 and thereafter
The following summarizes the goodwill activity for the year ended December 31, 2020, and 2019:
Goodwill at January 1, 2019
+Added: Changes during the year:
Business combinations
−Removed: Foreign currency translation
−Removed: Goodwill at December 31, 2018
−Removed: Business combination
Other changes related to measurement period and disposals
−Removed: Foreign currency translation
+Added: Foreign currency adjustments
Goodwill at December 31, 2019
+Added: Changes during the year:
+Added: Foreign currency adjustments
+Added: Goodwill at December 31, 2020
NOTE 10:- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
3 unchanged sentences
Operating lease liabilities
+Added: Derivative liabilities
F - 33
3 unchanged sentences
dollars in thousands (except share and per share data)
+Added: NOTE 11:- CONVERTIBLE SENIOR NOTES
+Added: On September 25, 2020, the Company sold $ 632,500 aggregate principal amount of its 0.00 % convertible senior notes due 2025 (the “Notes”).
+Added: The Notes were sold pursuant to an indenture, dated September 25, 2020 (the “Indenture”), between the Company and U.S.
+Added: Bank National Association, as trustee (the “Trustee”).
+Added: The Notes do not bear regular interest and mature on September 15, 2025 , unless earlier repurchased or converted in accordance with their terms.
+Added: The Notes are general senior unsecured obligations of the Company.
+Added: Holders may convert their Notes prior to the close of business on the business day immediately preceding June 15, 2025 in multiples of $ 1,000 principal amount, only under the following circumstances:
+Added: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
+Added: (2) during the five-business-day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each trading day of that five consecutive trading day period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;
+Added: or (3) upon the occurrence of specified corporate events as described in the Indenture.
+Added: In addition, holders may convert their Notes, in multiples of $1,000 principal amount, at their option at any time beginning on or after June 15, 2025, and prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of the Notes, without regard to the foregoing circumstances.
+Added: The initial conversion rate for the Notes was 3.5997 shares of common stock per $ 1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 277.80 per share of common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture.
+Added: Upon conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock.
+Added: In addition, upon the occurrence of a fundamental change (as defined in the Indenture), holders of the Notes may require the Company to repurchase all or a portion of their Notes, in multiples of $1,000 principal amount, at a repurchase price of 100% of the principal amount of the Notes, plus any accrued and unpaid special interest, if any, to, but excluding, the repurchase date.
+Added: If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion rate for the Notes may be increased.
+Added: The Convertible Senior Notes consisted of the following as of December 31, 2020:
+Added: December 31, 2020
+Added: Unamortized debt discount
+Added: Unamortized issuance costs
+Added: Net carrying amount
+Added: Equity component:
+Added: Amount allocated to conversion option
+Added: Deferred taxes liability, net
+Added: Allocated issuance costs
+Added: Equity component, net
+Added: As of December 31, 2020, the debt discount and debt issuance costs of the Notes will be amortized over the remaining term of approximately 4.7 years.
+Added: F - 34
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
+Added: NOTE 11:- CONVERTIBLE SENIOR NOTES (Cont.)
+Added: The annual effective interest rate of the liability component is 2.10 % for the Notes which remains unchanged from the Notes issuance date.
+Added: The following table presents the total amount of interest expenses recognized related to the Notes for the year ended December 31, 2020:
+Added: December 31, 2020
+Added: Amortization of debt discount
+Added: Amortization of debt issuance costs
+Added: Total interest expenses
+Added: Total initial issuance costs of $ 14,631 related to the Notes were allocated between the liability and equity components in the same proportion as the allocation of the total proceeds to the liability and equity components.
+Added: Issuance costs attributable to the liability component are being amortized to interest expense over the respective term of the Notes using the effective interest rate method.
+Added: The issuance costs attributable to the equity component were netted against the respective equity component in additional paid-in capital.
+Added: The Company initially allocated issuance costs of $ 13,502 and $ 1,130 to the liability and equity components, respectively.
+Added: As of December 31, 2020, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 871,117 .
+Added: The estimated fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period.
+Added: As of December 31, 2020, the if-converted value of the Notes exceeded the principal amount by $ 238,617 .
NOTE 12:- BANK LOANS
1 unchanged sentence
As of December 31, 2020
−Removed: Effective interest rate
+Added: Effective interest rate on bank loans
Maturities calendar year:
−Removed: Current maturities of bank loans
+Added: Current maturities of bank loans and accrued interest
1.54 % - 2.5 %
Long-term bank loans
−Removed: Accrued interest of bank loans
−Removed: 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 €
−Removed: 141 thousand, respectively.
−Removed: The bank loans bear interest at variable rates and are mainly payable monthly.
+Added: The Company has two bank loans that are denominated in KRW and one loan, which is denominated in NIS in the amount of $ 1,523 .
+Added: The bank loans bear interest at a fix rate and are payable monthly.
The bank loans do not contain financial covenants.
1 unchanged sentence
As of December 31, 2020, the Company secured certain bank loans with an aggregate principal amount of $ 18,373 against bank guarantees.
+Added: F - 35
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
NOTE 13:- WARRANTY OBLIGATIONS
6 unchanged sentences
Long term portion
+Added: NOTE 14:- DEFERRED REVENUES
+Added: 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.
+Added: Deferred revenues are classified as short-term and long-term deferred revenues based on the period in which revenues are expected to be recognized.
+Added: Significant changes in the balances of deferred revenues during the period are as follows:
+Added: Balance, at the beginning of the year
+Added: Revenue recognized
+Added: Increase in deferred revenues and customer advances
+Added: Balance, at the end of the year
+Added: Less current portion
+Added: Long term portion
+Added: The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2020:
+Added: Total deferred revenues
F - 36
7 unchanged sentences
Accrued severance pay, net
−Removed: NOTE 14:- ACCUMULATED OTHER COMPREHENSIVE LOSS
−Removed: The following table summarizes the changes in accumulated balances of other comprehensive loss, net of taxes, for the year ended December 31, 2019:
−Removed: Unrealized gains (losses) on available-for-sale marketable securities
−Removed: Unrealized gains on cash flow hedges
−Removed: Unrealized gains (losses) on foreign currency translation
+Added: NOTE 16:- ACCUMULATED OTHER COMPREHENSIVE (INCOME) LOSS
+Added: The following table summarizes the changes in accumulated balances of other comprehensive income, net of taxes, for the year ended December 31, 2020:
+Added: gains (losses)
+Added: on available-
Beginning balance
Other comprehensive income (loss) before reclassifications
−Removed: Loses reclassified from accumulated other comprehensive income
+Added: Losses reclassified from accumulated other comprehensive income
Net current period other comprehensive income (loss)
Ending balance
−Removed: F - 39
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: NOTE 14:- ACCUMULATED OTHER COMPREHENSIVE LOSS (Cont.)
The following table summarizes the changes in accumulated balances of other comprehensive loss, net of taxes, for the year ended December 31, 2019:
−Removed: Unrealized losses on available-for-sale marketable securities
−Removed: Unrealized gains on cash flow hedges
−Removed: Unrealized gains (losses) on foreign currency translation
+Added: gains (losses)
+Added: on available-
Beginning balance
Other comprehensive income (loss) before reclassifications
−Removed: Loses (gains) reclassified from accumulated other comprehensive income
+Added: Losses reclassified from accumulated other comprehensive income
Net current period other comprehensive income (loss)
1 unchanged sentence
The following table summarizes the changes in accumulated balances of other comprehensive, net of taxes, for the year ended December 31, 2018:
−Removed: Unrealized losses on available-for-sale marketable securities
−Removed: Unrealized gains on cash flow hedges
−Removed: Unrealized losses on foreign currency translation
+Added: (losses) on foreign
Beginning balance
Other comprehensive income (loss) before reclassifications
−Removed: Gains reclassified from accumulated other comprehensive income
+Added: Losses (gains) reclassified from accumulated other comprehensive income
Net current period other comprehensive income (loss)
7 unchanged sentences
The Company leases offices, plants and vehicles under operating and finance leases.
−Removed: 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.
−Removed: 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.
−Removed: The Company estimates the incremental borrowing rate in order to discount the lease payments based on the information available at the lease commencement date.
+Added: During the year ended December 31, 2020, due to a change in the expected lease term of the Company’s offices and laboratories in Modiin, Israel, the Company reassessed the lease classification of the leased building, which resulted in a change in classification of this lease from an operating lease to a finance lease.
+Added: As a result, the ROU assets and lease liabilities under operating leases decreased by $ 4,144 and $ 4,910 million, respectively, and the ROU assets and lease liabilities under finance leases increased by $ 24,471 and $ 25,237 , respectively.
+Added: During the year ended December 31, 2020, due to a change in the expected lease term of the Company’s manufacturing facility, “Sella 1”, the ROU assets and lease liabilities under operating leases increased by $ 10,203 .
+Added: The following table summarizes the Company’s lease-related assets and liabilities recorded on the condensed consolidated balance sheet:
+Added: Classification on the condensed consolidated Balance Sheet
+Added: Operating lease assets, net of lease incentive obligation
+Added: Operating lease right-of use assets, net
+Added: Finance lease assets
+Added: Property, plant and equipment, net
+Added: Total lease assets
+Added: Operating leases short term
+Added: Accrued expenses and other current liabilities
+Added: Finance leases short term
+Added: Accrued expenses and other current liabilities
+Added: Operating leases long term
+Added: Operating lease liabilities
+Added: Finance leases long term
+Added: Finance lease liabilities
+Added: Total lease liabilities
+Added: F - 38
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
+Added: NOTE 17:- LEASES (Cont.)
The following table presents certain information related to the operating and finance leases:
13 unchanged sentences
Financing cash flows for finance leases
−Removed: F - 41
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: NOTE 15:- LEASES (Cont.)
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:
−Removed: Operating Lease
+Added: Operating Leases
Finance Leases
5 unchanged sentences
Long-term lease liabilities
+Added: F - 39
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
NOTE 18:- COMMITMENTS AND CONTINGENT LIABILITIES
−Removed: 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.
+Added: As of December 31, 2020, contingent liabilities exist regarding guarantees in the amounts of $ 18,373 , $ 2,813 and $ 675 in respect of bank loans, office rent lease agreements and other transactions, respectively.
Contractual purchase obligations:
4 unchanged sentences
As of December 31, 2020, the Company had non-cancelable purchase obligations totaling approximately $ 380,100 , out of which the Company recorded a provision for loss in the amount of $ 3,545 .
−Removed: F - 42
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: NOTE 16:- COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
As of December 31, 2020, the Company had contractual obligations for capital expenditures totaling approximately $ 79,447 .
−Removed: These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s manufacturing process.
+Added: These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s manufacturing process as well as capital expenditures associated with the construction of Sella 2, the Company’s planned second lithium-ion cell and battery factory in Korea.
Legal claims:
4 unchanged sentences
In September 2018, the Company’s German subsidiary, SolarEdge Technologies GmbH received a complaint filed by competitor SMA Solar Technology AG (“SMA”).
−Removed: The complaint, filed in the District Court Düsseldorf, Germany, alleges that SolarEdge's 12.5kW - 27.6kW inverters infringe two of plaintiff’s patents.
−Removed: In its complaint, SMA requests inter alia an injunction and a determination for a claim for damages for sales in Germany.
−Removed: Plaintiff also asserts a value in dispute of 5 million Euros (approximately $ 5,600 ) for both patents.
−Removed: 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.
−Removed: 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.
−Removed: The Company believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against these lawsuits.
−Removed: 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.
−Removed: 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 ).
−Removed: Following the receipt of the lawsuits, the Company filed three lawsuits in China against Huawei for unauthorized use of patented technology.
−Removed: The Company believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against these lawsuits.
+Added: The complaint, filed in the District Court Düsseldorf, Germany, alleges that SolarEdge's 12.5kW - 27.6kW inverters infringe two of the plaintiff’s patents.
+Added: SMA asserted a value in dispute of EUR 5.5 million (approximately $ 6,747 ) for both patents.
+Added: The Company challenged the validity of both patents.
+Added: In December 2019 the District Court of Düsseldorf found one of the two patents to be infringed and the Company appealed this decision to the Appeals Court Düsseldorf.
+Added: In the parallel nullity proceedings regarding this patent, in October 2020, the German Patent Court rendered the SMA patent invalid.
+Added: This invalidity decision has been appealed by SMA.
+Added: Due to the invalidity proceedings, the infringement proceedings regarding this patent have been stayed.
+Added: With respect to the other patent, in November 2019, the first instance court stayed the infringement proceedings since it considered it to be highly likely that the second SMA patent would also be rendered invalid.
+Added: The Company believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against the remaining lawsuit.
F - 40
4 unchanged sentences
NOTE 18:- COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
−Removed: 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.
−Removed: 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 ).
−Removed: The Company believes it has meritorious defenses to the claims asserted and intends to vigorously defend against this lawsuit.
+Added: In May 2019, the Company’s two Chinese subsidiaries and its equipment manufacturer in China were served with three lawsuits by Huawei Technologies Co., Ltd., a Chinese entity (“Huawei”).
+Added: The lawsuits, filed in the Guangzhou intellectual property court, alleged infringement of three patents and asked for an injunction of manufacture, use, sale and offer for sale, and damage awards.
+Added: A first-instance judgment was issued on August 7, 2020 ordering the three defendants to collectively pay damages in the amount of approximately Chinese Yuan (“CNY”) 10.5 million (approximately $ 1,609 ), including court fees, with respect of one of the patents.
+Added: The Company has filed an appeal with the Supreme People’s Court of China.
+Added: The first instance court’s judgement is not effective or enforceable pending the appeal.
+Added: In addition, in January 2021, Huawei filed a motion to increase its claimed monetary damages to CNY 50 million (approximately $ 7,660 ) and for a preliminary injunction with respect to the second lawsuit.
+Added: In February 2021, a preliminary injunction was rendered by the Guangzhou intellectual property court with respect to such second lawsuit and applying to seven inverter models.
+Added: In line with the court’s mandate, the Company took immediate action to make software changes to meet the court order and also appealed the decision.
+Added: The Company believes that it has meritorious defenses to the claims asserted by Huawei.
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 $ 7,932 ) 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.
+Added: As of December 31, 2020, accrued amounts for legal claims of $ 5,866 , were recorded in accrued expenses and other current liabilities.
NOTE 19:- STOCK CAPITAL
−Removed: Composition of common stock capital of the Company:
−Removed: Number of shares
−Removed: as of December 31,
−Removed: as of December 31,
−Removed: as of December 31,
−Removed: Stock of $ 0.0001 par value:
Common stock rights:
2 unchanged sentences
and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.
+Added: F - 41
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
+Added: NOTE 19:- STOCK CAPITAL (Cont.)
Stock option plans:
5 unchanged sentences
As of December 31, 2020, a total of 12,828,270 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”).
−Removed: F - 44
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: 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;
8 unchanged sentences
Exercisable as of December 31, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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 - 42
4 unchanged sentences
NOTE 19:- STOCK CAPITAL (Cont.)
+Added: 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.
+Added: The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $ 251,564 , $ 37,509 , and $ 58,601 , respectively.
+Added: The weighted average grant date fair value of options granted to employees and directors during the years ended December 31, 2020, 2019, and 2018, was $ 62.11 , $ 19.83 and $ 20.83 , respectively.
A summary of the activity in the RSUs granted to employees and directors for the year ended December 31, 2020, is as follows:
31 unchanged sentences
As of December 31, 2020, there were total unrecognized compensation expenses in the amount of $ 230,503 related to non-vested equity-based compensation arrangements granted under the Company’s Plans.
−Removed: These expenses are expected to be recognized during the period from January 1, 2020 through February 29, 2024.
+Added: These expenses are expected to be recognized during the period from January 1, 2021 through November 30, 2025.
NOTE 20:- EARNINGS PER SHARE
−Removed: Basic net Earnings Per Share (“EPS”) is computed by dividing the net earnings attributable to SolarEdge Technologies, Inc.
+Added: Basic net 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.
−Removed: 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.
−Removed: 260, “Earnings Per Share.”
−Removed: 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.
+Added: Diluted net EPS is computed by giving effect to all potential shares of common stock, to the extent dilutive, including stock options, RSUs, PSUs, shares to be purchased under the Company’s ESPP, and the Notes due 2025, all in accordance with ASC No.
+Added: 260, "Earnings Per Share."
+Added: 2,276,818 and 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, 2020 and 2019, respectively.
No shares were excluded from the calculation for the year ended December 31, 2018.
−Removed: 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 - 44
22 unchanged sentences
dollars in thousands (except share and per share data)
−Removed: NOTE 19:- OTHER OPERATING EXPENSES
+Added: NOTE 21:- OTHER OPERATING EXPENSES (INCOME)
Year ended December 31,
−Removed: Compensation package related to the passing of the former Founder, CEO and Chairman (1)
−Removed: Termination of SMRE’s former executive (2)
−Removed: Sale of SMRE’s subsidiary (3)
A settlement of pre-acquisition legal claim against Kokam (1)
−Removed: Total other operating expenses
+Added: Write-off of intangible assets (2)
+Added: Compensation package related to the passing of the former Founder, CEO and Chairman (3)
+Added: Termination of SolarEdge Automation Machines’s former executive (4)
+Added: Sale of SolarEdge Automation Machines’s subsidiary (5)
+Added: Total other operating expenses (income)
+Added: (1) At the time of the acquisition of Kokam, Kokam had an outstanding claim against it for damages.
+Added: The claim was settled for an amount of $ 4,900 , which was recognized as an expense in the year ended December 31, 2019.
+Added: In March 2020, the Company was indemnified for the full amount by a major selling shareholder of Kokam, which was recognized as an income in the year ended December 31, 2020.
+Added: (2) The Company ceased to use intangible assets of one of SolarEdge Automation Machines’s subsidiaries.
(3) 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.
−Removed: 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.
−Removed: (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.
+Added: The amount is related to payroll, bonus and acceleration of stock-based compensation award.
+Added: (4) As part of SolarEdge Automation Machines acquisition, the Company issued to a shareholder who had served as an executive of SolarEdge Automation Machines 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 €
−Removed: 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.
−Removed: (3) On December 31, 2019, the Company completed the sale of an SMRE’s subsidiary.
−Removed: As a result of this transaction, the Company recognized a loss of $ 5,269 in other operating expenses in the consolidated statement of income.
−Removed: (4) At the time of the Kokam acquisition, Kokam had outstanding against it a claim for damages.
−Removed: 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.
+Added: (5) On December 31, 2019, the Company completed the sale of a SolarEdge Automation Machines subsidiary.
F - 46
10 unchanged sentences
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.
−Removed: 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.
−Removed: As the Company collected and prepared necessary data, and interpreted the additional guidance issued by the U.S.
−Removed: 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.
−Removed: The accounting for the tax effects of the Tax Act was completed as of December 31, 2018.
−Removed: Transition tax:
The Tax Act required the Company to pay U.S.
4 unchanged sentences
Kokam is subject to Korean tax on progressive tax rates of up to 22 %.
−Removed: SMRE is subject to Italian corporate tax rate of 24 %.
+Added: SolarEdge Automation Machines is subject to Italian corporate tax rate of 24 %.
Corporate tax in Israel:
Taxable income of Israeli companies is subject to corporate tax at the rate of 23 %.
−Removed: 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.
−Removed: The Israeli subsidiary is also eligible for tax benefits as further described in note 20k.
+Added: 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 23 % effective from January 1, 2018 onwards.
+Added: The Israeli subsidiary is also eligible for tax benefits as further described in note 22l.
+Added: Carryforward tax losses:
+Added: As of December 31, 2020, Kokam has carryforward tax losses of $ 28,520 .
+Added: As of December 31, 2020, SolarEdge Automation Machines has carryforward tax losses of approximately $ 59,140 .
+Added: Deferred taxes:
+Added: 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.
F - 47
4 unchanged sentences
NOTE 22:- INCOME TAXES (Cont.)
−Removed: Carryforward tax losses:
−Removed: As of December 31, 2019, Kokam has carryforward tax losses of $ 17,353 .
−Removed: As of December 31, 2019, SMRE has carryforward tax losses of approximately $ 11,000 .
−Removed: Deferred taxes:
−Removed: 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.
−Removed: 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.
+Added: The Company’s Israeli subsidiary’s tax-exempt profit from Benefited Enterprises (as defined in note 22l) 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.
4 unchanged sentences
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.
−Removed: F - 51
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: NOTE 20:- INCOME TAXES (Cont.)
Significant components of the Company’s deferred tax liabilities and assets are as follows:
10 unchanged sentences
Deferred tax liabilities, net:
+Added: Convertible Note
Purchase price allocation
3 unchanged sentences
Net deferred tax assets
−Removed: (1) Related primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions.
+Added: (1) Related to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions.
F - 48
7 unchanged sentences
Increases related to current year tax positions
+Added: Increase for tax positions related to prior years
Decreases related to prior year tax positions
Balance at December 31,
−Removed: 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.
+Added: The total amount of gross unrecognized tax benefits was $ 10,564 , $ 9,532 and $ 8,499 as of December 31, 2020, 2019 and 2018, respectively, and if recognized, would affect our effective tax rate.
The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes.
−Removed: The total amount of penalties and interest were not material as of December 31, 2019, 2018 and 2017.
−Removed: The Company does not expect a material change in its unrecognized tax benefits within the next 12 months.
−Removed: Income before taxes are comprised as follows:
+Added: The total amount of penalties and interest were $ 127 as of December 31, 2020 and not material as of December 31, 2019 and 2018.
+Added: Income before income taxes are comprised as follows:
Year ended December 31,
+Added: Income before income taxes
Income taxes (tax benefit) are comprised as follows:
1 unchanged sentence
Current taxes:
−Removed: Federal & State
+Added: Federal and State
Total current taxes
Deferred taxes:
−Removed: Federal & State
+Added: Federal and State
Total deferred taxes
7 unchanged sentences
Reconciliation of theoretical tax expense to actual tax expense:
−Removed: 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.
+Added: The differences between the statutory tax rate of the Company and the effective tax rate are result of a variety of factors, including different effective tax rates applicable to non-US subsidiaries that have tax rates different than the Company tax rate, tax benefits relating to stock-based compensation and adjustments to valuation allowances on deferred tax assets on such subsidiaries.
A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company, and the actual tax expense (benefit) as reported in the consolidated statements of income is as follows:
Year ended December 31,
−Removed: Income before taxes, as reported in the consolidated statements of income
Statutory tax rate
−Removed: Theoretical tax expenses on the above amount at the US statutory tax rate
Income tax at rate other than the U.S.
statutory tax rate
−Removed: Losses and timing differences for which valuation allowance was provided
+Added: Losses and timing differences for which valuation allowance was provided  
Tax Cuts and Jobs Act of 2017
−Removed: Non-deductible expenses
+Added: Disallowable and allowable deductions
Other individually immaterial income tax items, net
−Removed: Actual tax expense (tax benefit)
Effective tax rate
7 unchanged sentences
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.
+Added: The Company believes that it has adequately provided for reasonably foreseeable outcomes related to tax audits and settlements.
+Added: 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.
+Added: Such differences could have a material effect on the Company’s income tax provision and net income in the period in which such determination is made.
+Added: The Israeli tax authorities issued a tax assessment for 2018 against the Company’s Israeli subsidiary in the total amount of $ 11.5 million.
+Added: The Israeli subsidiary has challenged the tax assessment.
+Added: The Company believes it has adequately provided for this tax assessment such that any adverse results would have an immaterial impact on the Company’s financial statements.
F - 50
4 unchanged sentences
NOTE 22:- INCOME TAXES (Cont.)
−Removed: The Company believes that it has adequately provided for reasonably foreseeable outcomes related to tax audits and settlements.
−Removed: 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.
−Removed: 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.
Tax benefits for Israeli companies under the Law for the Encouragement of Capital Investments, 1959 (the “Investments Law”):
4 unchanged sentences
Income not eligible for Benefited Enterprise benefits is taxed at a regular corporate tax rate.
−Removed: 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.
+Added: 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 (“exempt period”), 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.
1 unchanged sentence
As of December 31, 2018, approximately $ 289,900 was derived from tax exempt profits earned by the Israeli subsidiary “Benefited Enterprises”
+Added: in the two tax years exempt period, years 2017 - 2018.
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.
1 unchanged sentence
as such income is essentially permanently reinvested.
−Removed: 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%).
+Added: If the Israeli subsidiary’s 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.
+Added: Through December 31, 2020, the Israeli subsidiary had generated income under the provision of the Investments Law.
+Added: 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.
+Added: 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%).
+Added: 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.
F - 51
4 unchanged sentences
NOTE 22:- INCOME TAXES (Cont.)
−Removed: Through December 31, 2019, the Israeli subsidiary had generated income under the provision of the Investments Law.
−Removed: 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.
−Removed: 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%).
−Removed: 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.
5 unchanged sentences
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.
−Removed: 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.
+Added: Tax rates applicable to such production income 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.
+Added: 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 Zone A - a tax rate of 7.5%).
+Added: The Israeli subsidiary’s PTE facilities in Israel are not located in Development Zone A.
+Added: The Israeli subsidiary has developed its own solar products manufacturing facilities in Israel, located in a Development Zone A.
+Added: The Israeli subsidiary notified the ITA of its election to implement the PTE with effect from January 1, 2019.
+Added: 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).
+Added: 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%.
+Added: Such taxes would generally be withheld at source by the distributing company.
+Added: 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.
F - 52
4 unchanged sentences
NOTE 22:- INCOME TAXES (Cont.)
−Removed: 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%).
−Removed: The Israeli subsidiary’s PTE facilities in Israel are not located in Development Zone A.
−Removed: SolarEdge Technologies Ltd.
−Removed: is in the final stages of building its own manufacturing facilities in Israel, which is located in a Development Zone A.
−Removed: The Company notified the ITA of its election to implement the PTE with effect from January 1, 2019.
−Removed: 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).
−Removed: 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%.
−Removed: Such taxes would generally be withheld at source by the distributing company.
−Removed: 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:
8 unchanged sentences
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.
+Added: NOTE 23:- FINANCIAL EXPENSES (INCOME), NET
+Added: Year ended December 31,
+Added: Exchange rate loss (income), net
+Added: Interest income on marketable securities
+Added: Interest expenses
+Added: Hedging activity, net
+Added: Amortization of debt discount and debt issuance costs
+Added: Other financial expenses (income), net
+Added: Financial expenses (income), net
F - 53
3 unchanged sentences
dollars in thousands (except share and per share data)
−Removed: NOTE 21:- FINANCIAL EXPENSES (INCOME), NET
−Removed: Year ended December 31,
−Removed: Interest income on marketable securities
−Removed: Exchange rate loss (income), net
−Removed: Interest expenses
−Removed: Amortization of marketable securities premium and accretion of discount, net
−Removed: Other financial income, net
NOTE 24:- SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION
Segment Information:
−Removed: Following the acquisitions of Gamatronic, Kokam, and SMRE, the Company has changed its segments measurement, beginning in 2019.
+Added: Following the completion of three acquisitions during 2018 and 2019, 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’
1 unchanged sentence
The Company now operates in five different operating segments:
−Removed: Solar, UPS, energy storage, e-Mobility and machinery.
−Removed: 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.
+Added: Solar, Critical Power (formerly known as UPS), Energy Storage, e-Mobility and Automation Machines.
+Added: The Company's Chief Executive Officer, who is the CODM, 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.
3 unchanged sentences
the Solar segment.
−Removed: The other operating segments are insignificant individually and in aggregate and therefore their results are presented together under “All other”.
−Removed: F - 58
−Removed: SOLAREDGE TECHNOLOGIES, INC.
−Removed: AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: dollars in thousands (except share and per share data)
−Removed: NOTE 22:- SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Cont.)
+Added: The other operating segments are insignificant individually and therefore their results are presented together under “All other”.
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.
−Removed: The solution consists mainly of the Company’s power optimizers, inverters and cloud‑based monitoring platform.
−Removed: 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.
−Removed: Information on reportable segments and reconciliation to consolidated operating income is as follows:
−Removed: As of December 31, 2019
+Added: The solution consists mainly of the Company’s power optimizers, inverters and cloud-based monitoring platform.
+Added: The “All other”
+Added: category includes the design, development, manufacturing and sales of UPS products, energy storage products, e-Mobility products and automated machines.
+Added: Intersegment sales are a source of revenue for one of the operating segments included in the “All other”
+Added: The Company accounts for intersegment sales as if the sales were to third parties, that is, at current market prices.
+Added: The following table presents information on reportable segments profit (loss) for the period presented:
+Added: Year ended December 31,
Cost of revenues
3 unchanged sentences
Segments profit (loss)
−Removed: All other loss
+Added: F - 54
+Added: SOLAREDGE TECHNOLOGIES, INC.
+Added: AND ITS SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: dollars in thousands (except share and per share data)
+Added: NOTE 24:- SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Cont.)
+Added: The following table presents information on reportable segments reconciliation to consolidated revenues for the periods presented:
+Added: Year ended December 31,
+Added: Solar segment revenues
+Added: All other segment revenues
+Added: Adjustment of intersegment revenues
+Added: Consolidated revenues
+Added: The following table presents information on reportable segments reconciliation to consolidated operating income for the periods presented:
+Added: Year ended December 31,
+Added: Solar segment profit
+Added: All other segment loss
Segments operating profit
−Removed: Expenses not allocated to segments:
+Added: Amounts not allocated to segments:
Stock based compensation expenses
−Removed: Sale of SMRE’s subsidiary
−Removed: Legal settlement
+Added: Amortization related to business combinations
+Added: Sale of SolarEdge Automation Machines’
+Added: Legal settlement (see Note 21)
Cost of products adjustments
Other unallocated expenses
+Added: Intersegment profit
Consolidated operating income
The All other segment results were immaterial for the year ended December 31, 2018.
−Removed: For the year ended December 31, 2017, the Company operated in the solar segment only.
+Added: Revenues by geographic, based on Customers’
+Added: Year ended December 31,
+Added: United States
+Added: Rest of the world
+Added: Total revenues
+Added: (*) Except for Netherlands
F - 55
4 unchanged sentences
NOTE 24:- SEGMENT, GEOGRAPHIC, MAJOR CUSTOMER AND PRODUCT INFORMATION (Cont.)
−Removed: Revenues by geographic location:
−Removed: Year ended December 31,
−Removed: Revenues based on Customers’
−Removed: United States
−Removed: Rest of the world
−Removed: Total revenues
−Removed: (*) Except for Netherlands
Revenues by product:
4 unchanged sentences
Total long-lived assets (*)
−Removed: (*) Long-lived assets are comprised of property and equipment, net.
+Added: (*) Long-lived assets are comprised of property and equipment, net and Operating lease right-of-use assets, net.
+Added: - - - - - - - - - - - - - - - - - - - - -
F - 56
6 unchanged sentences
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated below.
−Removed: Chief Executive Officer
+Added: Chief Executive Officer and Director
( Principal Executive Officer )
−Removed: February 27, 2020
+Added:  February 19, 2021
/s/Ronen Faier
1 unchanged sentence
( Principal Financial and Accounting Officer )
−Removed: February 27, 2020
+Added:  February 19, 2021
/s/Nadav Zafrir
1 unchanged sentence
February 19, 2021
−Removed: February 27, 2020
/s/Yoni Cheifetz
9 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.