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

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

F - 30

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3:-BUSINESS COMBINATION (Cont.)

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

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

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

Components of Purchase Price:

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

Allocation of Purchase Price:

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

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

Goodwill (2)		97,498

Non-controlling interests		(67,734	)

Total purchase price allocation	$	73,036

F - 31

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3:-BUSINESS COMBINATION (Cont.)

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

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

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

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

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

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

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

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

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