What changed in this filing

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Item 1. Financial Statements

2022-11-08 compared with 2022-08-04 · 227 added, 147 removed, 496 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

CURRENT ASSETS:

17 unchanged sentences

(in thousands, except per share data)

September 30,

LIABILITIES AND STOCKHOLDERS’ EQUITY

17 unchanged sentences

Common stock of $ 0.0001 par value - Authorized:

125,000,000 shares as of June 30,

2022 and December 31, 2021;

125,000,000 shares as of September 30, 2022 and December 31, 2021;

issued and outstanding:

55,633,090 and 52,815,395

shares as of June 30, 2022 and December 31, 2021, respectively

55,894,106 and 52,815,395 shares as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenues

14 unchanged sentences

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in thousands, except per share data)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Other comprehensive income (loss), net of tax:

3 unchanged sentences

Foreign currency translation adjustments, net

Total other comprehensive income (loss)

Total other comprehensive loss

Comprehensive income (loss)

6 unchanged sentences

Issuance of common stock upon exercise of stock-based awards

Stock based compensation expenses

Stock based compensation

Issuance of common stock in a secondary public offering, net of underwriters' discounts and commissions of $ 27,140 and $ 834 of offering costs

3 unchanged sentences

Issuance of Common stock under employee stock purchase plan

Stock based compensation expenses

Stock based compensation

Other comprehensive loss adjustments

Balance as of June 30, 2022

Issuance of Common Stock upon exercise of stock-based awards

Stock based compensation

Other comprehensive loss adjustments

Balance as of September 30, 2022

* Represents an amount less than $1.

8 unchanged sentences

Issuance of Common Stock upon exercise of stock-based awards

Stock based compensation expenses

Stock based compensation

Other comprehensive loss adjustments

1 unchanged sentence

Issuance of Common Stock upon exercise of stock-based awards

Stock based compensation expenses

Stock based compensation

Other comprehensive income adjustments

Balance as of June 30, 2021

Issuance of Common Stock upon exercise of stock-based awards

Stock based compensation

Other comprehensive loss adjustments

Balance as of September 30, 2021

* Represents an amount less than $1.

3 unchanged sentences

(in thousands, except per share data)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

6 unchanged sentences

Stock-based compensation expenses

Gain from sale of privately held company

Deferred income taxes, net

Loss from sale and disposal of assets

Loss (gain) from sale and disposal of assets

Exchange rate fluctuations and other items, net

13 unchanged sentences

Investment in available-for-sale marketable securities

Investment in a privately-held company

Proceeds from sale of a privately-held company

Withdrawal from bank deposits, net

Payment for asset acquisition, net of cash acquired

Other investing activities

4 unchanged sentences

(in thousands, except per share data)

Six Months Ended

Nine Months Ended

September 30 ,

Cash flows from financing activities:

10 unchanged sentences

Supplemental disclosure of non-cash activities:

Right-of-use asset recognized with corresponding lease liability

Right-of-use asset recognized with a corresponding lease liability

The accompanying notes are an integral part of the condensed consolidated financial statements.

7 unchanged sentences

The Company has expanded its activity to other areas of smart energy technology organically and through acquisitions.

The Company now offers a 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 or UPS (“Critical Power”), as well as automated machines for industrial use (“Automation Machines”).

In June 2022, the Company decided to discontinue its stand-alone Critical Power activities.

The Company determined that the discontinuance of the Critical Power business doesn't represent a strategic shift that will have a major effect on the Company's operations and financial results and therefore it did not meet the criteria for discontinued operations classification.

The Company now offers a 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”), as well as automated machines for industrial use (“Automation Machines”).

In June 2022, the Company decided to discontinue its stand-alone uninterrupted power supply solutions or UPS (“Critical Power”).

The Company determined that the discontinuance of the Critical Power business does not represent a strategic shift that will have a major effect on the Company's operations and financial results and therefore it did not meet the criteria for discontinued operations classification.

Basis of Presentation:

16 unchanged sentences

Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.

As of June 30, 2022, and December 31, 2021, two contract manufacturers collectively accounted for 31.9 % and 27.9 % of the Company’s total trade payables, net, respectively.

As of September 30, 2022, and December 31, 2021, two contract manufacturers collectively accounted for 30.1 % and 27.9 % of the Company’s total trade payables, net, respectively.

In the second quarter of 2022, the Company announced the opening of “Sella 2”, a two gigawatt-hour (GWh) Li-Ion battery cell manufacturing facility located in South Korea.

Sella 2 is currently in testing phase with ramp-up expected during the second half of 2022.

Sella 2, is the Company's second owned manufacturing facility following the opening of the Company's manufacturing facility in the North of Israel, “Sella 1” in 2020.

Sella 2 is currently in testing phase with ramp-up expected during the fourth quarter of 2022.

Sella 2, is the Company's second owned manufacturing facility following the opening of the Company's manufacturing facility in the North of Israel, “Sella 1” in 2020 that produces power optimizers and inverters for the Company's solar activities.

New accounting pronouncements not yet adopted:

10 unchanged sentences

The Company elected to early adopt ASU 2021-08 on January 1, 2022, and will apply this new guidance to all business combinations consummated subsequent to this date.

Currently, this ASU has no material impact on our consolidated financial statements.

Currently, this ASU has no impact on our consolidated financial statements.

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

12 unchanged sentences

MARKETABLE SECURITIES

The following is a summary of available-for-sale marketable securities as of June 30, 2022:

Amortized cost

The following is a summary of available-for-sale marketable securities as of September 30, 2022:

Gross unrealized

7 unchanged sentences

The following is a summary of available-for-sale marketable securities as of December 31, 2021:

Amortized cost

Gross unrealized

6 unchanged sentences

Governmental bonds

As of June 30, 2022, and December 31, 2021, the Company did not record an allowance for credit losses for its available-for-sale marketable securities.

As of September 30, 2022, and December 31, 2021, the Company did not record an allowance for credit losses for its available-for-sale marketable securities.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

INVENTORIES, NET

September 30,

Raw materials

3 unchanged sentences

On January 31, 2021, the Company completed an investment of $ 11,643 in the preferred stock of AutoGrid Systems, Inc.

("AutoGrid"), a privately held company without readily determinable fair values.

("AutoGrid"), a privately held company.

On February 1, 2021, the Company signed on a preferred stock purchase agreement for an additional investment of $ 5,000 in AutoGrid's preferred stock (the "second investment").

On April 28, 2021, the Company completed the second investment.

The Company accounted for the AutoGrid investment as an equity investment that does not have readily determinable fair values.

As such, the Company’s non-marketable equity securities had a carrying value of $ 16,643 as of June 30, 2022, and December 31, 2021.

The Company accounted for the AutoGrid investment as an equity investment without readily determinable fair values.

The Company’s non-marketable equity securities had a carrying value of $ 16,643 as of December 31, 2021.

Investments in privately-held companies are included within other long-term assets on the consolidated balance sheets.

No impairment or other adjustments related to observable price changes in orderly transactions for identical or similar investments were identified for the three and six months ended June 30, 2022, and 2021.

On July 20, 2022, the Company sold its investment in AutoGrid, see Note 18.

On July 20, 2022, the Company completed the sale of its investment in AutoGrid for proceeds of $ 24,175 , thus recognizing a gain of $ 7,533 which was recorded in the statement of income under "Other income".

No impairment or other adjustments related to observable price changes in orderly transactions for identical or similar investments were identified up to the date of the sale.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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 six months ended June 30, 2022, the Company instituted a foreign currency cash flow hedging program.

During the nine months ended September 30, 2022 , the Company instituted a foreign currency cash flow hedging program to protect against a forecasted increase in value of foreign currency cash flows resulting from salary denominated in Israeli currency, the New Israeli Shekels (“NIS”).

The Company hedges portions of the anticipated payroll denominated in NIS for a period of one to nine months with hedging contracts.

2 unchanged sentences

These hedging contracts are designated as cash flow hedges, as defined by ASC 815 and are all effective hedges.

As of June 30, 2022, the Company entered into forward contracts and put and call options to sell and buy U.S.

dollars (“USD”) for NIS in the amount of approximately $ 75 million and $ 34 million, respectively.

In addition to the above-mentioned cash flow hedges transactions, the Company also entered into derivative instrument arrangements to hedge the Company’s exposure to currencies other than the U.S.

As of September 30, 2022 , the Company entered into forward contracts and put and call options to sell U.S.

dollars (“USD”) for NIS in the amount of approximately NIS 334 million and NIS 10 million , respectively.

In addition to the above-mentioned cash flow hedge transactions, the Company also entered into derivative instrument arrangements to hedge the Company’s exposure to currencies other than the USD.

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, under " Financial expense, net ".

As of June 30, 2022, the Company entered into forward contracts to sell Australian dollars (“AUD”) for U.S.

dollars in the amount of AUD 10 million.

As of June 30, 2022, the Company entered into forward contracts to sell Euro for U.S.

dollars in the amount of € 18 million.

The fair value of derivative assets as of June 30, 2022, and December 31, 2021, was $ 2,348 and $ 4,009 , which was recorded in prepaid expenses and other current assets in the Consolidated Balance Sheets, respectively.

The fair value of derivative liabilities as of June 30, 2022, and December 31, 2021, was $ 4,123 and $ 169 , which was recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets, respectively.

For the three months ended June 30, 2022, and 2021, the Company recorded a gain in the amount of $ 3,009 and $ 820 , respectively, in financial expense, net, related to the derivative instruments not designated as cash flow hedges.

For the three months ended June 30, 2022 and 2021, the Company recorded an unrealized loss in the amount of $ 6,351 , net of tax effect and an unrealized gain in the amount of $ 841 , net of tax effect, respectively, in “accumulated other comprehensive loss” related to the derivative assets designated as hedging instruments.

For the six months ended June 30, 2022, and 2021, the Company recorded a gain in the amount of $ 3,943 and $ 4,355 , respectively, in financial expense, net, related to the derivative instruments not designated as cash flow hedges.

For the six months ended June 30, 2022 and 2021, the Company recorded an unrealized loss in the amount of $ 7,529 , net of tax effect and an unrealized gain in the amount of $ 713 , net of tax effect, respectively, in “accumulated other comprehensive loss” related to the derivative assets designated as hedging instruments.

The Company classifies cash flows related to its hedging as operating activities in its condensed consolidated statement of cash flows.

As of September 30, 2022 , the Company entered into forward contracts to sell Australian dollars (“AUD”) for USD in the amount of AUD 4 million .

As of September 30, 2022 , the Company entered into forward contracts to sell Euro for USD in the amount of € 9 million .

The fair values of outstanding derivative instruments were as follows:

Balance sheet location

September 30,

Derivative assets of options and forward contracts:

Designated cash flow hedges

Prepaid expenses and other current assets

Non-designated hedges

Prepaid expenses and other current assets

Total derivative assets

Derivative liabilities of options and forward contracts:

Designated cash flow hedges

Accrued expenses and other current liabilities

Non-designated hedges

Accrued expenses and other current liabilities

Total derivative liabilities

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

Gains (losses) on derivative instruments recognized in our income statements are summarized below:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Affected line item

Foreign exchange contracts

Non Designated Hedging Instruments

Financial expenses, net

See Note 13 for information regarding gains (losses) from designated hedging instruments reclassified from accumulated other comprehensive loss.

Gains (losses) on derivative instruments recognized in the consolidated comprehensive income (loss) statements were as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Foreign exchange contracts:

Designated Hedging Instruments

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

FAIR VALUE MEASUREMENTS

2 unchanged sentences

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.

The following table sets forth the Company’s assets that were measured at fair value as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy:

The following table sets forth the Company’s assets that were measured at fair value as of September 30, 2022 and December 31, 2021, by level within the fair value hierarchy:

Fair value measurements as of

Fair Value Hierarchy

September 30,

Cash equivalents:

Money market mutual funds

Derivative instruments asset:

Forward contracts designated as hedging instruments

Options and forward contracts not designated as hedging instruments

Derivative instruments

Short-term marketable securities:

4 unchanged sentences

Governmental bonds

Derivative instruments liability:

Options and forward contracts designated as hedging instruments

Forward contracts not designated as hedging instruments

Derivative instruments

WARRANTY OBLIGATIONS

Changes in the Company’s product warranty obligations for the three and six months ended June 30, 2022 and 2021, were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Changes in the Company’s product warranty obligations for the three and nine months ended September 30, 2022 and 2021, were as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Balance, at the beginning of the period

11 unchanged sentences

Significant changes in the balances of deferred revenues during the period are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Balance, at the beginning of the period

4 unchanged sentences

Long term portion

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 June 30, 2022:

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 September 30, 2022:

Total deferred revenues

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

September 30,

Accrued expenses

21 unchanged sentences

If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion rate for the Notes may be increased.

The Convertible Senior Notes consisted of the following as of June 30, 2022 and December 31, 2021:

The Convertible Senior Notes consisted of the following as of September 30, 2022 and December 31, 2021:

September 30,

Unamortized issuance costs

Net carrying amount

For the three months ended June 30, 2022 and 2021 the Company recorded issuance costs related to the Notes in the amount of $ 728 and $ 726 , respectively.

For the six months ended June 30, 2022 and 2021 the Company recorded issuance costs related to the Notes in the amount of $ 1,456 and $ 1,450 , respectively.

As of June 30, 2022, the issuance costs of the Notes will be amortized over the remaining term of approximately 3.2 years.

For the three months ended September 30, 2022 and 2021 the Company recorded amortized debt issuance costs related to the Notes in the amount of $ 730 and $ 726 , respectively.

For the nine months ended September 30, 2022 and 2021 the Company recorded amortized debt issuance costs related to the Notes in the amount of $ 2,186 and $ 2,175 , respectively.

As of September 30, 2022, the unamortized issuance costs of the Notes will be amortized over the remaining term of approximately 3.0 years.

The annual effective interest rate of the Notes is 0.47 %.

As of June 30, 2022, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 755,920 .

As of September 30, 2022, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 691,190 .

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.

As of June 30, 2022, the if-converted value of the Notes did not exceed the principal amount.

As of September 30, 2022, the if-converted value of the Notes did not exceed the principal amount.

SOLAREDGE TECHNOLOGIES INC.

3 unchanged sentences

Common stock rights:

to share equally, on a per share basis, in bonuses, profits, or distributions out of fund legally available therefor;

and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.

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

Secondary public offering:

8 unchanged sentences

The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder.

All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grant were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan.

All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grants were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan.

The 2015 Plan became effective upon the consummation of the IPO.

The 2015 Plan provides for the grant of options, restricted stock units ("RSU"), performance stock units ("PSU"), and other share-based awards to directors, employees, officers, and non-employees of the Company and its subsidiaries.

As of June 30, 2022, a total of 18,047,085 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”).

As of September 30, 2022, a total of 18,047,085 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”) , an aggregate of 9,802,734 shares are still available for future grants.

The Share Reserve will automatically increase on January 1 st of each year during the term of the 2015 Plan, commencing on January 1 st 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 31 st of the preceding calendar year;

4 unchanged sentences

The Company recognizes such compensation expenses on an accelerated vesting method.

The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000 .

As of September 30, 2022, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000 .

As of June 30, 2022, an aggregate of 8,617,974 options are still available for future grant under the 2015 Plan.

A summary of the activity in stock options and related information is as follows:

Weighted average exercise price

Weighted average remaining contractual

Number of options

Weighted average

exercise price

Weighted average

remaining contractual

term in years

intrinsic Value

Aggregate intrinsic

Outstanding as of December 31, 2021

Forfeited or expired

Outstanding as of June 30, 2022

Vested and expected to vest as of June 30, 2022

Exercisable as of June 30, 2022

Outstanding as of September 30, 2022

Vested and expected to vest as of September 30, 2022

Exercisable as of September 30, 2022

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.

A summary of the activity in the RSUs and related information is as follows:

average grant

date fair value

Number of RSUs

Weighted average

grant date fair value

Unvested as of December 31, 2021

Unvested as of June 30, 2022

Unvested as of September 30, 2022

A summary of the activity in the PSUs and related information is as follows:

average grant

date fair value

Number of PSUs

Weighted average

grant date fair value

Unvested as of December 31, 2021

Unvested as of June 30, 2022

Unvested as of September 30, 2022

Employee Stock Purchase Plan:

The Company adopted an ESPP effective upon the consummation of the IPO.

As of June 30, 2022, a total of 3,662,737 shares were reserved for issuance under this plan.

As of September 30, 2022, a total of 3,662,737 shares were reserved for issuance under this plan.

The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1st of each year, for ten years, by the lesser of 1 % of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or 487,643 shares.

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

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

The ESPP is implemented through an offering every six months.

1 unchanged sentence

The price of an ordinary share purchased under the ESPP is equal to 85 % of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

As of June 30, 2022, 696,852 shares of common stock had been purchased under the ESPP.

As of June 30, 2022, 2,965,885 shares of common stock were available for future issuance under the ESPP.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

As of September 30, 2022, 696,852 shares of common stock had been purchased under the ESPP.

As of September 30, 2022, 2,965,885 shares of common stock were available for future issuance under the ESPP.

In accordance with ASC No.

1 unchanged sentence

Stock-based compensation expenses:

The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income for the three and six months ended June 30, 2022, and 2021, as follows:

Three Months Ended June 30,

Six Months Ended June 30,

The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income for the three and nine months ended September 30, 2022, and 2021, as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenues

3 unchanged sentences

Total stock-based compensation expenses

An immaterial amount of stock-based compensation was capitalized to prepaid expenses during the three and six months ended June 30, 2022.

The total tax benefit associated with share-based compensation for the three months ended June 30, 2022 and 2021 was $ 3,058 and $ 2,062 , respectively.

The tax benefit realized from share-based compensation for the three months ended June 30, 2022, and 2021 was $ 2,885 and $ 2,931 , respectively.

The total tax benefit associated with share-based compensation for the six months ended June 30, 2022, and 2021 was $ 6,536 and $ 6,459 , respectively.

The tax benefit realized from share-based compensation for the six months ended June 30, 2022, and 2021 was $ 5,812 and $ 5,680 , respectively.

As of June 30, 2022, there were total unrecognized compensation expenses in the amount of $ 306,131 related to non-vested equity-based compensation arrangements granted under the Company’s plans and non-plan awards.

These expenses are expected to be recognized during the period from July 1, 2022, through May 31, 2026.

The Company capitalized stock-based compensation as part of inventories and prepaid expenses for the three and nine months ended September 30, 2022, in the amount of $ 881 and $ 977 , respectively.

In 2021 the Company did not capitalize any stock- based compensation expenses.

The total tax benefit associated with share-based compensation for the three months ended September 30, 2022 and 2021 was $ 2,646 and $ 3,791 , respectively.

The tax benefit realized from share-based compensation for the three months ended September 30, 2022 , and 2021 was $ 3,060 and $ 4,720 , respectively.

The total tax benefit associated with share-based compensation for the nine months ended September 30, 2022 , and 2021 was $ 9,182 and $ 10,249 , respectively.

The tax benefit realized from share-based compensation for the nine months ended September 30, 2022 , and 2021 was $ 8,871 and $ 10,400 , respectively.

As of September 30, 2022 , there were total unrecognized compensation expenses in the amount of $ 279,982 related to non-vested equity-based compensation arrangements granted under the Company’s plans and non-plan awards.

These expenses are expected to be recognized during the period from October 1, 2022 , through August 31, 2026 .

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

COMMITMENTS AND CONTINGENT LIABILITIES

As of June 30, 2022, contingent liabilities exist regarding guarantees in the amounts of $ 5,892 , $ 2,815 , and $ 1,388 in respect of office rent lease agreements, projects with customers, and other transactions, respectively.

As of September 30, 2022, contingent liabilities exist regarding guarantees in the amounts of $ 5,924 , $ 2,767 , and $ 1,321 in respect of office rent lease agreements, projects with customers, and other transactions, respectively.

Contractual purchase obligations:

2 unchanged sentences

In addition, the Company acquires raw materials or other goods and services, including product components, by issuing authorizations to its suppliers to purchase materials based on its projected demand and manufacturing needs.

As of June 30, 2022, the Company had non-cancelable purchase obligations totaling approximately $ 1,532,469 , out of which the Company recorded a provision for loss in the amount of $ 5,408 .

As of June 30, 2022, the Company had contractual obligations for capital expenditures totaling approximately $ 92,915 .

As of September 30, 2022 , the Company had non-cancelable purchase obligations totaling approximately $ 1,639,157 , out of which the Company recorded a provision for loss in the amount of $ 5,874 .

As of September 30, 2022 , the Company had contractual obligations for capital expenditures totaling approximately $ 69,158 .

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 second lithium-ion cell and battery factory in Korea.

15 unchanged sentences

In December 2019, the Company received a lawsuit filed by a former consultant of the Company and its Israeli subsidiary in the amount of NIS 25.5 million (approximately $ 7,197 ) 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.

As of June 30, 2022, accrued amounts for legal claims of $ 141 were recorded in accrued expenses and other current liabilities.

The claim was recently settled with no payment due by the Company.

On July 28, 2022, the Company was served with complaints filed by Ampt LLC in the International Trade Commission (the “Commission”) pursuant to Section 337 of the Tariff Act of 1930, as amended and the District Court for the District of Delaware alleging patent infringement against the Company and its subsidiary SolarEdge Technologies Ltd.

On October 24, 2022, the complaint filed in the District Court of Delaware was administratively stayed until the Commission's action is resolved.

The Company believes that it has meritorious defenses to the complaints and intend to vigorously defend against them.

As of September 30, 2022, an immaterial amount for legal claims was recorded in accrued expenses and other current liabilities.

SOLAREDGE TECHNOLOGIES INC.

3 unchanged sentences

The following table summarizes the changes in accumulated balances of other comprehensive gain (loss), net of taxes:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Unrealized gains (losses) on available-for-sale marketable securities

1 unchanged sentence

Tax on revaluation

Other comprehensive loss before reclassifications

Other comprehensive income (loss) before reclassifications

Reclassification

Tax on reclassification

Losses reclassified from accumulated other comprehensive income

Net current period other comprehensive loss

Gains (losses) reclassified from accumulated other comprehensive income (loss)

Net current period other comprehensive income (loss)

Ending balance

2 unchanged sentences

Tax on revaluation

Other comprehensive loss before reclassifications

Other comprehensive income (loss) before reclassifications

Reclassification

Tax on reclassification

Losses reclassified from accumulated other comprehensive loss

Net current period other comprehensive loss

Gains (losses) reclassified from accumulated other comprehensive income (loss)

Net current period other comprehensive income (loss)

Ending balance

9 unchanged sentences

The following table summarizes the changes in "Accumulated other comprehensive loss", net of taxes:

Details about Accumulated Other Comprehensive Loss Components

Three Months Ended June 30,

Six Months Ended June 30,

Affected Line Item in the Statement of Income

Unrealized losses on available-for-sale marketable securities

Details about Accumulated Other

Comprehensive Loss Components

Three Months Ended

September 30,

Nine Months Ended

September 30,

Affected Line Item in the

Statement of Income

Unrealized gains (losses) on available-for-sale marketable securities

Financial expense, net

Total, net of income taxes

Unrealized losses on cash flow hedges, net

Unrealized gains (losses) on cash flow hedges, net

Cost of revenues

6 unchanged sentences

OTHER OPERATING EXPENSES

The following table presents the expenses recorded in the three and six months ended June 30, 2022, and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

The following table presents the expenses recorded in the three and nine months ended September 30, 2022, and 2021:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Impairment of goodwill and intangible assets (1)

Write-off of property, plant and equipment

Sale of property, plant and equipment

Sale of Critical Power assets

Kokam purchase escrow (2)

1 unchanged sentence

(1) In June 2022, the Company decided to discontinue its stand-alone Critical Power activities.

The Company wrote-off goodwill and intangible assets related to its Critical Power business in an amount of $ 4,008 , see also Note 1b.

(2) In the three and six months ended June 30, 2021, the Company received a payment of $ 859 out of the Kokam acquisition escrow (“the escrow”), with regards to a working capital adjustment.

The Company recorded an impairment of goodwill and intangible assets related to its Critical Power business in an amount of $ 4,008 , see also Note 1b.

(2) In the nine months ended September 30, 2021, the Company received a payment of $ 859 out of the Kokam acquisition escrow, with regards to a working capital adjustment.

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

The effective tax rate for the three months ended June 30, 2022, and 2021 was 30.5 % and 16.2 %, respectively, and for the six months ended June 30, 2022, and 2021 the effective tax rate was 28.2 % and 18.2 %, respectively.

The increase in the effective tax rate in the current year, is primarily due to a different allocation of income among the Company’s US, Israeli, and foreign subsidiaries and the change to Section 174 of the U.S Internal Revenue Code, which went into effect on January 1, 2022.

The change eliminates the option to deduct research and development expenditures currently and requires taxpayers to amortize them over five years (if generated from a US entity) and fifteen years (if generated from non-US entities).

The effective tax rate for the three months ended September 30, 2022, and 2021 was 58.0 % and 12.6 %, respectively, and for the nine months ended September 30, 2022, and 2021 the effective tax rate was 42.1 % and 15.9 %, respectively.

The increase in the effective tax rate in the current year, is primarily due to the change to Section 174 of the U.S Internal Revenue Code, which came into effect on January 1, 2022.

The change requires taxpayers to amortize research and development expenditures over five years (if expensed by a U.S.

entity) or fifteen years (if expensed by non-U.S.

This change resulted in an increase in the Company’s taxable income and Global Intangible Low Taxed Income (“GILTI”) tax.

As of June 30, 2022, and December 31, 2021, unrecognized tax benefits were $ 2,403 and $ 2,192 , respectively.

In addition, the change in the Company's tax rate resulted from a different allocation of income among the Company’s U.S., Israeli, and foreign subsidiaries, and lower tax benefits relating to stock-based compensation.

As of September 30, 2022, and December 31, 2021, unrecognized tax benefits were $ 2,561 and $ 2,192 , respectively.

If recognized, such benefits would favorably affect the Company’s effective tax rate.

The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes.

The total amount of penalties and interest were immaterial as of June 30, 2022, and December 31, 2021.

The total amount of penalties and interest were immaterial as of September 30, 2022, and December 31, 2021.

In August 2022, the U.S.

government signed into law the Inflation Reduction Act of 2022 (the “IRA”), which, among other things, revised U.S.

tax law by, including a new corporate alternative minimum tax (the “CAMT”) of 15 % on certain large corporations, imposing a 1 % excise tax on stock buybacks, and providing incentives to address climate change, including the introduction of advanced manufacturing production tax credits, that may be relevant to the company's products, if they will be manufactured in the US.

The provisions of the IRA are generally effective for tax years beginning after 2022.

Given the complexities of the IRA, which is pending technical guidance and regulations from the Internal Revenue Service and U.S.

Treasury Department, the Company is in the process of evaluating provisions included under the IRA and its impact to the Company’s consolidated financial statements.

SOLAREDGE TECHNOLOGIES INC.

3 unchanged sentences

The following table presents the computation of basic and diluted earnings per share (“EPS”):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Shares used in computing net EPS of common stock, basic

26 unchanged sentences

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 2022

September 30, 2022

Nine Months Ended

September 30, 2022

Cost of revenues

7 unchanged sentences

Three Months Ended

June 30, 2021

Six Months Ended

June 30, 2021

September 30, 2021

Nine Months Ended

September 30, 2021

Cost of revenues

4 unchanged sentences

The following table presents information on reportable segments reconciliation to consolidated revenues for the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Solar revenues

3 unchanged sentences

The following table presents information on reportable segments reconciliation to consolidated operating income for the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Solar segment profit

3 unchanged sentences

Stock based compensation expenses

Amortization related to business combinations

Impairment of goodwill and intangible assets

Disposal of assets related to Critical Power

Other unallocated expenses, net

Sale of Critical Power assets

Other unallocated income (expenses), net

Consolidated operating income

SUBSEQUENT EVENTS

On July 20, 2022, the Company completed the sale of its investment in AutoGrid and received payment in the amount of $ 24,175 , subject to post-closing adjustments.

On July 28, 2022, the Company received notice that Ampt LLC had filed complaints against SolarEdge Technologies Inc and SolarEdge Technologies Ltd in the U.S.

International Trade Commission and the District Court for the District of Delaware alleging patent infringement.

The Company anticipates a vigorous defense of these new actions.

On November 3, 2022, the Company received notice that a class action lawsuit was filed in the U.S District Court of the Southern District of New York against the Company, SolarEdge Technologies Ltd., the Company’s CEO and the Company’s CFO, by a purported stockholder of the Company, alleging violations of the Federal Securities Act in connection with complaints filed against the Company by Ampt LLC, the details for which can be found under “Note 12- Commitments and Contingent Liabilities”.

The Company believes the allegations contained in this new action are without merit and intends to vigorously defend against them.

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.

What changed 10-Q

Item 1. Financial Statements