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Section 1: 10-Q/A (FORM 10-Q/A)

ora20170930_10qa.htm
 

 

Table of Contents



 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

Form 10-Q/A

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the quarterly period ended September 30, 2017

 

 

or

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from              to              

 

Commission file number: 001-32347

 

ORMAT TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE

88-0326081

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

 

6225 Neil Road, Reno, Nevada

89511-1136

(Address of principal executive offices)

(Zip Code)

 

(775) 356-9029

(Registrant’s telephone number, including area code)

  

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☑     No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☑     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☑

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

 

 

 

 

Emerging growth company ☐

 

 

 

 

 

(Do not check if a smaller reporting company)

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes     ☑ No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 5, 2017, the number of outstanding shares of common stock, par value $0.001 per share, was 50,597,124.

 



 

 

 

Certain Definitions

 

For convenience purposes in this filing on Form 10-Q/A, all references to “Ormat”, “the Company”, “we”, “us”, “our company”, “Ormat Technologies” or “our” refer to Ormat Technologies, Inc. and its consolidated subsidiaries.

 

Explanatory Note

 

This Amendment No. 1 to Form 10-Q (this “Amendment”) amends the Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2017 originally filed with the Securities and Exchange Commission (“SEC”) on November 9, 2017 (the “Original Filing”) by Ormat Technologies, Inc. (the "Company").

 

Restatement

 

As further discussed in Note 1 to our unaudited condensed consolidated financial statements in Part I, Item 1, "Financial Statements" of this Amendment, on May 16, 2018, we concluded that we would restate our previously issued consolidated financial statements as of and for the year ended December 31, 2017 to correct for (i) errors in our income tax provision, primarily related to the Company’s ability to utilize Federal tax credits in the United States (“U.S.”) prior to their expiration starting in 2027, and the resulting impact on the Company’s deferred tax asset valuation allowance, and (ii) the inappropriate netting of certain deferred income tax assets and deferred income tax liabilities across different tax jurisdictions that was not permissible under  U.S. generally accepted accounting principles (“GAAP”). In addition, there were other immaterial prior period errors, including an  out-of-period adjustment that had been previously recorded for the correction of an understated liability for unrecognized tax benefits related to intercompany interest. We also concluded that we would revise our previously issued consolidated financial statements as of and for the year ended December 31, 2016 and for the year ended December 31, 2015 to correct for errors in our income tax provision, primarily related to the translation of deferred tax liabilities in a foreign subsidiary. The restatement, for 2017, and revision, for 2016 and 2015, is being effected through the Company’s filing of an amendment on Form 10-K/A for the year ended December 31, 2017. In connection with these restatements and revisions, the Company also recorded adjustments to correct other immaterial tax errors. This decision to restate and revise our previously issued financial statements was approved by, and with the continuing oversight of, the Company’s Board of Directors upon the recommendation of its Audit Committee.

 

These error corrections also resulted in the restatement, for 2017, and revision, for 2016, of the Company’s previously issued unaudited condensed consolidated financial statements for the three and six months ended June 30, 2017 and 2016, respectively, which has been effected through the Company’s filing of an amendment on Form 10-Q/A for the quarter ended June 30, 2017, and the three and nine months ended September 30, 2017 and 2016, respectively, which is being effected through the Company’s filing of this Amendment. The revision of the Company’s previously issued unaudited condensed consolidated financial statements for the quarter ended March 31, 2017 will be effected in connection with the Company’s filing of its Form 10-Q for the quarter ended March 31, 2018. The impact of the revision for the quarters ended March 31, 2017 and 2016 is also discussed in Note 1 to our unaudited condensed consolidated financial statements in Part I, Item 1, "Financial Statements" of this Amendment.

 

Internal Control Over Financial Reporting

 

Management has reassessed its evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as of September 30, 2017. As a result of that reassessment, management has concluded that the Company did not maintain effective disclosure controls and procedures due to the material weakness in internal control over financial reporting which existed at that date. For a description of the material weakness in internal control over financial reporting and actions taken, and to be taken, to address the material weakness, see Part 1, Item 4. "Controls and Procedures" of this Amendment.   

 

Amendment

 

The purpose of this Amendment is to (i) restate the Company’s previously issued unaudited condensed consolidated financial statements and related disclosures as of and for the three and nine-months ended September 30, 2017; (ii) revise the Company’s unaudited condensed consolidated financial statements for the three and nine-months ended September 30, 2016; and (iii) revise the Company’s condensed consolidated balance sheet as of December 31, 2016, which was derived from the audited consolidated financial statements, which have been revised as described above, but does not include all disclosures required by GAAP, all contained in Part I, Item 1. "Financial Statements" of this Amendment. This Amendment also includes (a) an amended Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" to reflect the correction of the errors described above, and (b) an amended Part I, Item 4. "Controls and Procedures" to restate the conclusion on the effectiveness of disclosure controls and procedures. Disclosure controls and procedures were deemed effective in the Original Filing on November 9, 2017 and are deemed ineffective as a result of the material weakness described in Part I, Item 4. “Controls and Procedures” of this Amendment. In addition, the Company has updated Note 12 to the condensed consolidated financial statements contained in Part I, Item 1. "Financial Statements" to include disclosure of subsequent events occurring through the date of the filing of this Amendment.

 

 

Table of Contents

 

Except as expressly set forth herein, this Amendment does not reflect events occurring after the date of the Original Filing or modify or update any of the other disclosures contained therein in any way other than as required to reflect the amendment discussed above. Accordingly, this Amendment should be read in conjunction with the Original Filing and our other filings with the SEC.

 

Items Amended in this Filing 

 

For reasons discussed above, we are filing this Amendment in order to amend the following items in our Original Report to the extent necessary to reflect the adjustments discussed above and make corresponding revisions to our financial data cited elsewhere in this Amendment:

 

 

Part I, Item 1. Financial Statements

 

Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Part I, Item 4. Controls and Procedures

 

In accordance with applicable SEC rules, this Amendment includes new certifications required by Rule 13a-14 under the Securities Exchange Act of 1934 from our Chief Executive Officer and Chief Financial Officer dated as of the date of filing of this Amendment.

 

 

Table of Contents

 

ORMAT TECHNOLOGIES, INC.

 

 

FORM 10-Q/A

 

FOR THE QUARTER ENDED SEPTEMBER 30, 2017

 

PART I — FINANCIAL INFORMATION

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

4

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

32

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

66

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

66

 

 

 

PART II — OTHER INFORMATION

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

67

 

 

 

ITEM 1A.

RISK FACTORS

68

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

68

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

68

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

68

 

 

 

ITEM 5.

OTHER INFORMATION

68

 

 

 

ITEM 6.

EXHIBITS

69

 

 

 

SIGNATURES

70

 

i

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   

September 30,

   

December 31,

 
   

2017 (As restated)

   

2016

 
   

(Dollars in thousands)

 

ASSETS

 

Current assets:

               

Cash and cash equivalents

  $ 77,212     $ 230,214  

Restricted cash and cash equivalents (primarily related to VIEs)

    42,559       34,262  

Receivables:

               

Trade

    98,384       80,807  

Other

    11,591       17,482  

Inventories

    18,685       12,000  

Costs and estimated earnings in excess of billings on uncompleted contracts

    42,087       52,198  

Prepaid expenses and other

    41,727       45,867  

Total current assets

    332,245       472,830  

Investment in an unconsolidated company

    25,367        

Deposits and other

    17,371       18,553  

Deferred charges

    43,972       43,773  

Property, plant and equipment, net ($1,518,962 and $1,483,224 related to VIEs, respectively)

    1,621,012       1,556,378  

Construction-in-process ($105,848 and $120,853 related to VIEs, respectively)

    350,872       306,709  

Deferred financing and lease costs, net

    5,426       3,923  

Intangible assets, net

    86,806       52,753  

Goodwill

    20,667       6,650  

Total assets

  $ 2,503,738     $ 2,461,569  

LIABILITIES AND EQUITY

 

Current liabilities:

               

Accounts payable and accrued expenses

  $ 103,335     $ 91,650  

Short term revolving credit lines with banks (full recourse)

    33,900        

Billings in excess of costs and estimated earnings on uncompleted contracts

    6,015       31,630  

Current portion of long-term debt:

               

Limited and non-recourse (primarily related to VIEs):

               

Senior secured notes

    27,847       32,234  

Other loans

    21,495       21,495  

Full recourse

    864       12,242  

Total current liabilities

    193,456       189,251  

Long-term debt, net of current portion:

               

Limited and non-recourse (primarily related to VIEs):

               

Senior secured notes (less deferred financing costs of $8,202 and $9,177, respectively)

    322,299       350,388  

Other loans (less deferred financing costs of $5,496 and $6,409, respectively)

    247,401       261,845  

Full recourse:

               

Senior unsecured bonds (less deferred financing costs of $617 and $755, respectively)

    203,715       203,577  

Other loans (less deferred financing costs of $1,043 and $1,346, respectively)

    48,957       57,063  

Investment in an unconsolidated company

          11,081  

Liability associated with sale of tax benefits

    46,803       54,662  

Deferred lease income

    52,273       54,561  

Deferred income tax liabilities

    77,914       36,411  

Liability for unrecognized tax benefits

    6,188       6,444  

Liabilities for severance pay

    20,364       18,600  

Asset retirement obligation

    24,740       23,348  

Other long-term liabilities

    19,121       21,294  

Total liabilities

    1,263,231       1,288,525  

Commitments and contingencies (Note 10)

               
                 

Redeemable noncontrolling interest

    6,481       4,772  
                 

Equity:

               

The Company's stockholders' equity:

               

Common stock, par value $0.001 per share; 200,000,000 shares authorized; 50,597,124 and 49,667,340 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively

    51       50  

Additional paid-in capital

    896,005       869,463  

Retained earnings

    266,534       215,352  

Accumulated other comprehensive loss

    (6,026

)

    (8,175

)

Total stockholders' equity attributable to the Company's stockholders

    1,156,564       1,076,690  

Noncontrolling interest

    77,462       91,582  

Total equity

    1,234,026       1,168,272  

Total liabilities, redeemable noncontrolling interest and equity

  $ 2,503,738     $ 2,461,569  

 

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

 

4

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

(Unaudited)

 

   

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
   

2017

(As restated)

   

2016

   

2017

(As restated)

   

2016

 
   

(Dollars in thousands,

except per share data)

   

(Dollars in thousands,

except per share data)

 

Revenues:

                               

Electricity

  $ 112,273     $ 109,795     $ 339,826     $ 321,664  

Product

    44,912       74,822       186,621       174,408  

Total revenues

    157,185       184,617       526,447       496,072  

Cost of revenues:

                               

Electricity

    65,774       66,481       197,249       192,410  

Product

    32,218       43,647       125,102       99,504  

Total cost of revenues

    97,992       110,128       322,351       291,914  

Gross profit

    59,193       74,489       204,096       204,158  

Operating expenses:

                               

Research and development expenses

    716       1,086       2,368       2,030  

Selling and marketing expenses

    3,630       4,793       12,083       12,136  

General and administrative expenses

    10,877       19,093       33,027       36,625  

Write-off of unsuccessful exploration activities

          1,294             2,714  

Operating income

    43,970       48,223       156,618       150,653  

Other income (expense):

                               

Interest income

    255       266       861       831  

Interest expense, net

    (11,692

)

    (17,137

)

    (41,155

)

    (51,561

)

Derivatives and foreign currency transaction gains (losses)

    (1,001

)

    (222

)

    2,040       (2,592

)

Income attributable to sale of tax benefits

    3,506       3,463       14,019       12,380  

Other non-operating expense, net

    (1,592

)

    (5,546

)

    (1,678

)

    (5,306

)

Income from continuing operations before income taxes and equity in losses of investees

    33,446       29,047       130,705       104,405  

Income tax provision

    (6,224

)

    (12,109

)

    (49,993

)

    (29,703

)

Equity in earnings (losses) of investees, net

    337       (2,653

)

    (1,690

)

    (4,734

)

Income from continuing operations

    27,559       14,285       79,022       69,968  

Net income attributable to noncontrolling interest

    (3,599

)

    (2,326

)

    (11,228

)

    (4,584

)

Net income attributable to the Company's stockholders

  $ 23,960     $ 11,959     $ 67,794     $ 65,384  

Comprehensive income:

                               

Net income

    27,559       14,285       79,022       69,968  

Other comprehensive income (loss), net of related taxes:

                               

Change in foreign currency translation adjustments

    1,005             2,544        

Change in unrealized gains or losses in respect of the Company's share in derivatives instruments of unconsolidated investment

    618       1,337       271       (3,829

)

Loss in respect of derivative instruments designated for cash flow hedge

    20       35       113       105  

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge

    (18

)

    (24

)

    (57

)

    (72

)

Comprehensive income

    29,184       15,633       81,893       66,172  

Comprehensive income attributable to noncontrolling interest

    (4,006

)

    (2,326

)

    (11,950

)

    (4,584

)

Comprehensive income attributable to the Company's stockholders

  $ 25,178     $ 13,307     $ 69,943     $ 61,588  

Earnings per share attributable to the Company's stockholders:

                               

Basic:

                               

Net income

  $ 0.48     $ 0.24     $ 1.36     $ 1.32  

Diluted:

                               

Net income

  $ 0.47     $ 0.24     $ 1.34     $ 1.31  

Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:

                               

Basic

    50,367       49,599       49,942       49,410  

Diluted

    50,867       50,289       50,669       50,097  

Dividend per share declared

  $ 0.08     $ 0.07     $ 0.33     $ 0.45  

 

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

 

5

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

 

   

The Company's Stockholders' Equity

                 
                           

 

   

Accumulated

                         
                   

Additional

   

 

   

Other

                         
   

Common Stock

   

Paid-in

   

Retained

   

Income

           

Noncontrolling

   

Total

 
   

Shares

   

Amount

   

Capital

   

Earnings

   

(Loss)

   

Total

   

Interest

   

Equity

 
                                                                 
   

(Dollars in thousands, except per share data)

 
                                                                 

Balances at December 31, 2015

    49,107     $ 49     $ 849,223     $ 152,326     $ (8,164

)

  $ 993,434     $ 93,873     $ 1,087,307  
                                                                 

Stock-based compensation

                3,383                   3,383             3,383  

Exercise of options by employees and directors

    528       1       7,249                   7,250             7,250  

Cash paid to noncontrolling interest

                                        (10,622

)

    (10,622

)

Cash dividend declared, $0.45 per share

                      (22,469

)

          (22,469

)

          (22,469

)

Increase in noncontrolling interest in Guadeloupe

                                        8,272       8,272  

Net income

                      65,384             65,384       4,390       69,774  
Other comprehensive income (loss), net of related taxes:                                                                

Loss in respect of derivative instruments designated for cash flow hedge

                            105       105             105  

Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment 

                            (3,829

)

    (3,829

)

          (3,829

)

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $44)

                            (72

)

    (72

)

          (72

)

                                                                 

Balances at September 30, 2016

    49,635     $ 50     $ 859,855     $ 195,241     $ (11,960

)

  $ 1,043,186     $ 95,913     $ 1,139,099  
                                                                 

Balances at December 31, 2016

    49,667     $ 50     $ 869,463     $ 215,352     $ (8,175

)

  $ 1,076,690     $ 91,582     $ 1,168,272  
                                                                 

Stock-based compensation

                7,204                   7,204             7,204  

Exercise of options by employees and directors

    930       1       16,382                   16,383             16,383  

Cash paid to noncontrolling interest

                                        (18,032

)

    (18,032

)

Cash dividend declared, $0.33 per share

                      (16,612

)

          (16,612

)

          (16,612

)

Buyout of Class B membership in ORTP

                2,956                   2,956       (6,964

)

    (4,008

)

Net income (As restated)

                      67,794             67,794       10,154       77,948  

Other comprehensive income (loss), net of related taxes:

                                                               

Currency translation adjustment

                            1,822       1,822       722       2,544  

Loss in respect of derivative instruments designated for cash flow hedge (As restated)

                            113       113             113  

Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment 

                            271       271             271  

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $35)

                            (57

)

    (57

)

          (57

)

                                                                 

Balances at September 30, 2017 (As restated)

    50,597     $ 51     $ 896,005     $ 266,534     $ (6,026

)

  $ 1,156,564     $ 77,462     $ 1,234,026  

 

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

 

6

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   

Nine Months Ended September 30,

 
   

2017

(As restated)

   

2016

 
                 
   

(Dollars in thousands)

 

Cash flows from operating activities:

               

Net income

  $ 79,022     $ 69,968  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation and amortization

    81,010       77,565  

Amortization of premium from senior unsecured bonds

          (513

)

Accretion of asset retirement obligation

    1,392       1,243  

Stock-based compensation

    7,204       3,383  

Amortization of deferred lease income

    (2,014

)

    (2,014

)

Income attributable to sale of tax benefits, net of interest expense

    (8,851

)

    (5,920

)

Equity in losses of investees

    1,690       4,735  

Mark-to-market of derivative instruments

    (764

)

    (381

)

Write-off of unsuccessful exploration activities

          2,714  

Gain on severance pay fund asset

    (1,463

)

    (690

)

Deferred income tax provision and deferred charges

    38,123       20,742  

Liability for unrecognized tax benefits

    568       191  

Deferred lease revenues

    (274

)

    (625

)

Other

    501        

Changes in operating assets and liabilities, net of amounts acquired:

               

Receivables

    (10,808

)

    (13,711

)

Costs and estimated earnings in excess of billings on uncompleted contracts

    10,111       (12,905

)

Inventories

    (209

)

    5,339  

Prepaid expenses and other

    (636

)

    (5,364

)

Deposits and other

    1,231       (867

)

Accounts payable and accrued expenses

    (3,655

)

    10,463  

Billings in excess of costs and estimated earnings on uncompleted contracts

    (25,344

)

    3,242  

Liabilities for severance pay

    1,764       (369

)

Other long-term liabilities

    (2,065

)

    1,801  

Net cash provided by operating activities

    166,533       158,027  

Cash flows from investing activities:

               

Net change in restricted cash, cash equivalents and marketable securities

    (8,297

)

    (1,022

)

Capital expenditures

    (177,410

)

    (107,951

)

Investment in unconsolidated companies

    (37,867

)

     

Buyout of Class B membership in ORTP

    (2,357

)

     

Cash paid for acquisition of controlling interest in a subsidiary, net of cash acquired

    (35,300

)

    (18,135

)

Intangible assets acquired

    (868

)

     

Decrease (increase) in severance pay fund asset, net of payments made to retired employees

    529       1,919  

Net cash used in investing activities

    (261,570

)

    (125,189

)

Cash flows from financing activities:

               

Proceeds from exercise of options by employees

    16,382       7,250  

Proceeds from issuance of senior unsecured notes, net of transaction costs

          203,483  

Purchase of Senior unsecured notes

          (249,468

)

Prepayment of OFC Senior Secured Notes

    (14,270

)

    (6,815

)

Proceeds from revolving credit lines with banks

    695,600       259,900  

Repayment of revolving credit lines with banks

    (661,700

)

    (259,900

)

Cash received from noncontrolling interest

    2,017       1,972  

Repayments of long-term debt

    (55,226

)

    (40,997

)

Cash paid to noncontrolling interest

    (18,032

)

    (17,296

)

Payments of capital leases

    (1,472

)

    (845

)

Deferred debt issuance costs

    (4,652

)

    (3,506

)

Cash dividends paid

    (16,612

)

    (22,469

)

Net cash used in financing activities

    (57,965

)

    (128,691

)

Net change in cash and cash equivalents

    (153,002

)

    (95,853

)

Cash and cash equivalents at beginning of period

    230,214       185,919  

Cash and cash equivalents at end of period

  $ 77,212     $ 90,066  

Supplemental non-cash investing and financing activities:

               

Increase (decrease) in accounts payable related to purchases of property, plant and equipment

  $ 982     $ (4,517

)

Accrued liabilities related to financing activities

  $     $ 6,291  

 

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

  

7

Table of Contents

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

NOTE 1 — GENERAL AND BASIS OF PRESENTATION

 

These unaudited condensed consolidated interim financial statements of Ormat Technologies, Inc. and its subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not contain all information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of September 30, 2017, the consolidated results of operations and comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016 and the consolidated cash flows for the nine months ended September 30, 2017 and 2016.

 

The financial data and other information disclosed in the notes to the condensed consolidated financial statements related to these periods are unaudited. The results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017.

 

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The condensed consolidated balance sheet data as of December 31, 2016 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2016, but does not include all disclosures required by U.S. GAAP. As discussed in the Explanatory Note to this amended Form 10-Q, the 2016 financial statements will be revised, which revision is being effected through the Company’s filing of an amendment on Form 10-K/A for the year ended December 31, 2017.

 

Dollar amounts, except per share data, in the notes to these financial statements are rounded to the closest $1,000.

 

Restatement of previously issued condensed consolidated financial statements

 

As described further in Note 11, in the second quarter of 2017, the Company partially released its valuation allowance against the U.S. deferred tax assets. During the first quarter of 2018, the Company concluded that there were material tax provision and related balance sheet errors in its previously issued financial statements as of and for the three and nine months ended September 30, 2017, primarily relating to the Company’s ability to utilize Federal tax credits in the U.S. prior to their expiration starting in 2027, and the resulting impact on the Company’s deferred tax asset valuation allowance. Specifically, the error in the deferred tax asset valuation allowance resulted in an overstatement of the income tax provision and an understatement of net income of $4.8 million for the three months ended September 30, 2017 and an understatement of the income tax provision and an overstatement of net income of $21.7 million for the nine months ended September 30, 2017. As a result of such errors, the Company concluded that the previously issued unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2017 were materially misstated and accordingly has restated these financial statements. Included in such restatement is also the correction of other immaterial tax errors, including an out-of-period adjustment that had been previously recorded for the correction of an understated liability for unrecognized tax benefits related to intercompany interest.

 

Revision of previously issued condensed consolidated financial statements

 

The Company had previously identified certain other tax errors, including a prior period error related to the translation of deferred tax liabilities in the Company’s Kenyan subsidiary, which were previously determined to be immaterial and were previously corrected for as out-of-period adjustments in the period of identification.

 

The Company assessed the materiality of these errors in accordance with the SEC’s Staff Accounting Bulletin (“SAB”) Topic 1.M, Materiality, codified in ASC Topic 250, Presentation of Financial Statements (“ASC 250”), and concluded that the previously issued unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2016 were not materially misstated; however, in order to correctly reflect the immaterial adjustments as described above in the appropriate period, management has elected to revise the affected previously issued financial statements in this Form 10-Q/A filing. As a result, the revised condensed consolidated financial statements for the three and nine months ended September 30, 2016 reflect a $0.1 million and $0.3 million increase, respectively, in the tax provision, with a corresponding decrease in net income and comprehensive income. The impact of the revision as of January 1 and December 31, 2016 was an increase of $3.9 million and decrease of $1.3 million, respectively, to retained earnings, as a result of certain errors originating in periods prior to 2016, primarily related to the error in the determination of the exchange rate used in the translation of deferred tax liabilities in the Company’s Kenyan subsidiary.

 

8

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The effects of the 2017 restatement and the 2016 revision on the line items within the Company's condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 are as follows (in thousands):

 

   

September 30, 2017

   

December 31, 2016

 
   

As

originally reported

   

Adjustments

   

As Restated

   

As

originally reported

   

Adjustments

   

As Revised

 

Deferred income tax liabilities

  $ 54,495     $ 23,419     $ 77,914     $ 35,382     $ 1,029     $ 36,411  

Liability for unrecognized tax benefits

    6,188       -       6,188       5,738       706       6,444  

Total liabilities

    1,239,812       23,419       1,263,231       1,286,790       1,735       1,288,525  

Retained earnings

    289,561       (23,027

)

    266,534       216,644       (1,292

)

    215,352  

Accumulated other comprehensive loss

    (5,634

)

    (392

)

    (6,026

)

    (7,732

)

    (443

)

    (8,175

)

Total stockholders’ equity attributable to the Company stockholders

    1,179,983       (23,419

)

    1,156,564       1,078,425       (1,735

)

    1,076,690  

Total equity

    1,257,445       (23,419

)

    1,234,026       1,170,007       (1,735

)

    1,168,272  

 

The effects of the 2017 restatement and 2016 revision on the line items within the Company's condensed consolidated statements of operations and comprehensive income for the three and nine-months ended September 30, 2017 and 2016 are as follows (in thousands):

 

   

Three months ended September 30, 2017

   

Nine months ended September 30, 2017

 
   

As

originally reported

   

Adjustments

   

As Restated

   

As

originally reported

   

Adjustments

   

As Restated

 

Income tax provision

  $ (11,003

)

  $ 4,779     $ (6,224

)

  $ (28,258

)

  $ (21,735

)

  $ (49,993

)

Income from continuing operations

    22,780       4,779       27,559       100,757       (21,735

)

    79,022  

Net income attributable to the Company’s stockholders

    19,181       4,779       23,960       89,529       (21,735

)

    67,794  

Loss in respect of derivative instruments designated for cash flow hedge

    20       -       20       62       51       113  

Comprehensive income

    24,405       4,779       29,184       103,577       (21,684

)

    81,893  

Comprehensive income attributable to the Company’s stockholders

    20,399       4,779       25,178       91,627       (21,684

)

    69,943  

Net income per share attributable to the Company’s stockholders

                                               

Basic:

  $ 0.38     $ 0.10     $ 0.48     $ 1.79     $ (0.43

)

  $ 1.36  

Diluted:

  $ 0.38     $ 0.09     $ 0.47     $ 1.77     $ (0.43

)

  $ 1.34  

 

9

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

   

Three months ended September 30, 2016

   

Nine months ended September 30, 2016

 
   

As

originally reported

   

Adjustments

   

As Revised

   

As

originally reported

   

Adjustments

   

As Revised

 

Income tax provision

  $ (11,988

)

  $ (121

)

  $ (12,109

)

  $ (29,387

)

  $ (316

)

  $ (29,703

)

Income from continuing operations

    14,406       (121

)

    14,285       70,284       (316

)

    69,968  

Net income attributable to the Company’s stockholders

    12,080       (121

)

    11,959       65,700       (316

)

    65,384  

Loss in respect of derivative instruments designated for cash flow hedge

    22       13       35       65       40       105  

Comprehensive income

    15,741       (108

)

    15,633       66,448       (276

)

    66,172  

Comprehensive income attributable to the Company’s stockholders

    13,415       (108

)

    13,307       61,864       (276

)

    61,588  

Net income per share attributable to the Company’s stockholders

                                               

Basic:

  $ 0.24     $ -     $ 0.24     $ 1.33     $ (0.01

)

  $ 1.32  

Diluted:

  $ 0.24     $ -     $ 0.24     $ 1.31     $ -     $ 1.31  

 

The effects of the 2017 restatement and 2016 revision on the line items within the Company’s condensed consolidated statements of equity for the nine-months ended September 30, 2017 and 2016 are as follows (in thousands):

 

   

As originally

reported

   

Adjustments

   

As Revised

 

Balances as of December 31, 2015:

                       

Retained earnings

  $ 148,396     $ 3,930     $ 152,326  

Accumulated other comprehensive loss

    (7,667

)

    (497

)

    (8,164

)

Total stockholders’ equity attributable to the Company’s stockholders

    990,001       3,433       993,434  

Total equity

    1,083,874       3,433       1,087,307  

Net income for the nine months ended September 30, 2016

    70,090       (316

)

    69,774  

Net income attributable to the Company’s stockholders for the nine months ended September 30, 2016

    65,700       (316

)

    65,384  

Loss in respect of derivative instruments designated for cash flow hedge for the nine months ended September 30, 2016

    65       40       105  

Balances as of September 30, 2016:

                       

Retained earnings

    191,627       3,614       195,241  

Accumulated other comprehensive loss

    (11,503

)

    (457

)

    (11,960

)

Total stockholders’ equity attributable to the Company’s stockholders

    1,040,029       3,157       1,043,186  

Total equity

    1,135,942       3,157       1,139,099  

 

   

As

originally

reported

   

Adjustments

   

As Restated

 

Balances as of December 31, 2016:

                       

Retained earnings

  $ 216,644     $ (1,292

)

  $ 215,352  

Accumulated other comprehensive loss

    (7,732

)

    (443

)

    (8,175

)

Total stockholders’ equity attributable to the Company’s stockholders

    1,078,425       (1,735

)

    1,076,690  

Total equity

    1,170,007       (1,735

)

    1,168,272  

Net income for the nine months ended September 30, 2017

    99,683       (21,735

)

    77,948  

Net income attributable to the Company’s stockholders for the nine months ended September 30, 2017

    89,529       (21,735

)

    67,794  

Loss in respect of derivative instruments designated for cash flow hedge for the nine months ended September 30, 2017

    62       51       113  

Balances as of September 30, 2017:

                       

Retained earnings

    289,561       (23,027

)

    266,534  

Accumulated other comprehensive loss

    (5,634

)

    (392

)

    (6,026

)

Total stockholders’ equity attributable to the Company’s stockholders

    1,179,983       (23,419

)

    1,156,564  

Total equity

    1,257,445       (23,419

)

    1,234,026  

 

10

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Although there was with no impact to net cash provided by operating activities, net cash used in investing activities or net cash used in financing activities, the effects of the 2017 restatement and the 2016 revision on the line items within the condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016 are as follows (in thousands):

 

   

Nine months ended September 30, 2017

   

Nine months ended September 30, 2016

 
   

As

originally reported

   

Adjustments

   

As Restated

   

As

originally reported

   

Adjustments

   

As Revised

 

Cash flows from operating activities:

                                               

Net income

  $ 100,757     $ (21,735 )   $ 79,022     $ 70,284     $ (316 )   $ 69,968  

Deferred income tax provision

    16,506       21,617       38,123       20,742       -       20,742  

Liability for unrecognized tax benefits

    450       118       568       (125 )     316       191  
Net cash provided by operating activities     166,533       -       166,533       158,027       -       158,027  

 

The impacts of the restatement and revision have been reflected throughout the financial statements, including the applicable footnotes, as appropriate. This resulted in changes to the deferred tax balances, valuation allowance and effective tax rate, together with other disclosures in Note 11.

 

 

Platanares geothermal power plant

 

On September 26, 2017, the Company announced that its 35 MW Platanares geothermal project in Honduras commenced commercial operation. The Company constructed the Platanares geothermal project under a Build, Operate, and Transfer (BOT) contract with ELCOSA, a privately owned Honduran energy company. The Company will operate the project for 15 years from commercial operation date (COD). Platanares sells its power under a 30-year power purchase agreement with the national utility of Honduras, ENEE. A portion of the land on which the project is located at is held by us through a lease from a local municipality.  Because the term of the lease exceeds the term in office of the relevant municipal government, it remains subject to an additional approval of the Honduran Congress in order to be fully valid.  The Company has commenced the necessary steps to obtain such approval but the current elections in Honduras may result in a delay in obtaining such approval.

 

OFC Senior Secured Notes prepayment

 

In September 2017, the Company fully prepaid all of its outstanding OFC Senior Secured Notes for $14.3 million. As a result of the prepayment, the Company recognized a loss of $1.5 million, including amortization of deferred financing costs of $0.2 million, which was included in other non-operating income (expense), net in the consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2017.

 

DEG Loan prepayment

 

In September 2017, the Company fully prepaid its DEG loan for $11.8 million. As a result of the prepayment, the Company recognized a loss of $0.5 million, including amortization of deferred financing costs of $0.4 million, which was included in other non-operating income (expense), net in the consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2017.

 

ORIX transaction 

 

On July 26, 2017, the Company announced that ORIX Corporation (“ORIX”) closed its acquisition of approximately 11 million shares of the Company’s common stock, representing an approximately 22%  ownership stake in the Company, from FIMI ENRG Limited Partnership, FIMI ENRG, L.P., Bronicki Investments, Ltd. and certain senior members of the Company’s management team pursuant to a stock purchase agreement entered into by ORIX and the selling stockholders on May 4, 2017. In connection with the acquisition, on May 4, 2017, the Company entered into certain related agreements with ORIX, including a Governance Agreement, a Commercial Cooperation Agreement and a Registration Rights Agreement, following the unanimous recommendation of a Special Committee of the board of directors of the Company (the “Board”) that was formed to evaluate and negotiate the stockholder arrangements proposed by ORIX, and following approval by the Board. The closing of the transactions contemplated by the related agreements between ORIX and the Company also occurred on July 26, 2017.  

  

11

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Under the Governance Agreement, ORIX has the right to designate three persons to the Board, which was expanded to nine directors, and also propose a fourth person to be mutually agreed by the Company and ORIX to serve as a new independent director on the Board. In addition, for so long as ORIX is entitled to board representation pursuant to the Governance Agreement, ORIX will be subject to certain customary standstill restrictions, including an effective 25% cap on its voting rights. Pursuant to the Registration Rights Agreement, ORIX also has certain customary registration rights with respect to the shares of the Company’s common stock that it owns.

 

Under the Commercial Cooperation Agreement, the Company has exclusive rights to develop, own, operate and provide equipment for ORIX geothermal energy projects in all markets outside of Japan. In addition, the Company has certain rights to serve as technical partner and co-invest in ORIX geothermal energy projects in Japan. ORIX will also assist the Company in obtaining project financing for its geothermal energy projects from a variety of leading providers of renewable energy debt financing with which ORIX has relationships in Asia and around the world.

 

ORTP buyout

 

On March 30, 2017, the Company’s partner JPM Capital Corporation (“JPM”) achieved its target after-tax yield on its investment in ORTP, LLC (“ORTP”) and on July 10, 2017, Ormat Nevada Inc. (“Ormat Nevada”) purchased all of the Class B membership units in ORTP from JPM for $2.4 million. As a result, Ormat Nevada is now the sole owner of all of the economic and voting interests in ORTP and continues to consolidate ORTP in its financial statements. The purchase of Class B membership units of ORTP was recorded in equity as a reduction to Noncontrolling Interest with the surplus charged to Additional Paid-in Capital.

 

SCPPA power purchase agreement

 

During the second quarter of 2017, ONGP LLC (“ONGP”), one of the Company’s wholly-owned subsidiaries, entered into a power purchase agreement (“PPA”) with Southern California Public Power Authority (“SCPPA”), pursuant to which ONGP will sell, and SCPPA will purchase, geothermal power generated by a portfolio of nine different geothermal power plants owned by the Company and located in the US. The parties’ obligations under the PPA are based on a geothermal power generation capacity of 150 MW, and, pursuant to the PPA, ONGP is required to deliver a minimum of 135 MW and is entitled to deliver a maximum of 185 MW to SCPPA over the next five years. The portfolio PPA is for a term of approximately 26 years, expiring in December 31, 2043 and has a fixed price of $75.50 per MWh.

 

Assertion of permanent reinvestment of foreign unremitted earnings in a subsidiary

 

During the second quarter of 2017, in conjunction with (i) the final approval of the SCPPA PPA which will require the Company to make significant capital expenditures in the United Sates, (ii) the fact that the Company is currently exploring acquisition opportunities in the United States, and (iii) the acquisition of substantially all the assets of Viridity for $35.3 million with two additional earn-out payments that may have to be made in 2018 and 2021, the Company has re-evaluated its position with respect to a portion of the unrepatriated earnings of Ormat Systems Ltd. (“OSL”), its wholly owned subsidiary in Israel, and after consideration of the aforementioned change in facts, determined that it can no longer maintain the permanent reinvestment position with respect to a portion of OSL’s unrepatriated earnings which will be repatriated to support the Company’s capital expenditures in the United Sates. Accordingly, and as further described in Note 11, the permanent reinvestment assertion of foreign unremitted earnings of OSL was reassessed and removed and the related deferred tax assets and liabilities as well as the estimated withholding taxes on expected remittance of OSL earnings to the United States were recorded by the Company in the second quarter of 2017.

 

Viridity transaction

 

On March 15, 2017, the Company completed the acquisition of substantially all of the business and assets of Viridity Energy, Inc., a privately held Philadelphia-based company formerly engaged in the provision of demand response, energy management and energy storage services. At closing, Viridity Energy Solutions Inc. (“Viridity”), a wholly owned subsidiary of the Company, paid initial consideration of $35.3 million. Additional contingent consideration with an estimated fair value of $ 12.8 million will be payable in two installments upon the achievement of certain performance milestones measured at the end of fiscal years 2017 and 2020. The acquired business and assets are operated by Viridity.

 

12

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Using proprietary software and solutions, Viridity serves primarily retail energy providers, utilities, and large commercial and industrial customers. Viridity’s offerings enable its customers to optimize and monetize their energy management, demand response and storage facilities potential by interacting on their behalf with regional transmission organizations and independent system operators.

 

The Company accounted for the transaction in accordance with Accounting Standard Codification 805, Business Combinations, and consequently recorded intangible assets of $34.7 million primarily relating to Viridity’s storage and non-storage activities with a weighted-average amortization period of 17 years, approximately $0.4 million of working capital and fixed assets and $13.9 million of goodwill. Following the transaction, the Company consolidated Viridity in accordance with Accounting Standard Codification 810, Consolidation. The acquisition enabled the Company to enter the growing energy storage and demand response markets and expand its market presence. 

 

The revenues of Viridity for the period from March 15, 2017 to September 30, 2017 were included in the Company’s consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2017.

 

Accounting guidance provides that the allocation of the purchase price may be modified for up to one year from the date of the acquisition to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date.

 

Other comprehensive income

 

For the nine months ended September 30, 2017 and 2016, the Company classified $5,000 and $7,000, respectively, related to derivative instruments designated as cash flow hedges, from accumulated other comprehensive income, of which $9,000 and $11,000, respectively, were recorded to reduce interest expense and $4,000 and $4,000, respectively, were recorded against the income tax provision, in the condensed consolidated statements of operations and comprehensive income. For the three months ended September 30, 2017 and 2016, the Company classified $2,000 and $2,000, respectively, related to derivative instruments designated as cash flow hedges, from accumulated other comprehensive income, of which $6,000 and $3,000 respectively, was recorded to reduce interest expense and $4,000 and $1,000, respectively, were recorded against the income tax provision, in the condensed consolidated statements of operations and comprehensive income. The accumulated net loss included in Other comprehensive income as of September 30, 2017, is $0.6 million

 

Write-offs of unsuccessful exploration activities

 

There were no write-offs of unsuccessful exploration activities for the three and nine months ended September 30, 2017. Write-offs of unsuccessful exploration activities for the three and nine months ended 2016 were $1.3 million and $2.7 million, respectively. The write-offs of exploration costs in 2016 were related to the Company’s exploration activities in Nevada and Chile, after which the Company determined that the applicable sites would not support commercial operations.

 

Concentration of credit risk

 

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.

 

The Company places its temporary cash investments with high credit quality financial institutions located in the United States and in foreign countries. At September 30, 2017 and December 31, 2016, the Company had deposits totaling $23.9 million and $72.5 million, respectively, in seven United States financial institutions that were federally insured up to $250,000 per account. At September 30, 2017 and December 31, 2016, the Company’s deposits in foreign countries amounted to approximately $56.0 million and $166.2 million, respectively.

 

At September 30, 2017 and December 31, 2016, accounts receivable related to operations in foreign countries amounted to approximately $67.5 million and $53.3 million, respectively. At September 30, 2017 and December 31, 2016, accounts receivable from the Company’s primary customers amounted to approximately 48% and 60% of the Company’s accounts receivable, respectively.

 

13

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Sierra Pacific Power Company and Nevada Power Company (subsidiaries of NV Energy, Inc.) accounted for 16.3% and 14.4% of the Company’s total revenues for the three months ended September 30, 2017 and 2016, respectively, and 17.4% and 18.6% for the nine months ended September 30, 2017 and 2016, respectively.

 

Kenya Power and Lighting Co. Ltd. accounted for 17.6% and 15.1% of the Company’s total revenues for the three months ended September 30, 2017 and 2016, respectively, and 15.7% and 16.4% of the Company’s total revenues for the nine months ended September 30, 2017 and 2016, respectively.

 

Southern California Public Power Authority (“SCPPA”) accounted for 9.1% and 7.7% of the Company’s total revenues for the three months ended September 30, 2017 and 2016, respectively, and 8.9% and 9.9% of the Company’s total revenues for the nine months ended September 30, 2017 and 2016, respectively.

 

Hyundai (Sarulla geothermal project) accounted for 0.9% and 24% of the Company’s total revenues for the three months ended September 30, 2017 and 2016, respectively, and 4.7% and 14% for the nine months ended September 30, 2017 and 2016, respectively.

 

The Company has historically been able to collect on all of its receivable balances, and accordingly, no provision for doubtful accounts has been made.

 

 

NOTE 2 — NEW ACCOUNTING PRONOUNCEMENTS

 

New accounting pronouncements effective in the nine months ended September 30, 2017

 

Improvement to Employee Share-Based Payment Accounting

 

In March 2016, the Financial Accounting Standards Board “(FASB”) issued Accounting Standard Update (“ASU”) 2016-09, Improvement to Employee Share-Based Payment Accounting, an update to the guidance on stock-based compensation. Under the new guidance, all excess tax benefits and tax deficiencies will be recognized in the income statement as they occur. This will replace previous guidance, which required tax benefits that exceed compensation cost (windfalls) to be recognized in equity. It also eliminated the need to maintain a “windfall pool,” and removed the requirement to delay recognizing a windfall until it reduces current taxes payable. The new guidance also changed the cash flow presentation of excess tax benefits, classifying them as operating inflows, consistent with other cash flows related to income taxes. Previously, windfalls were classified as financing activities. This guidance affects the dilutive effects in earnings per share, as there will no longer be excess tax benefits recognized in additional paid in capital. Previously those excess tax benefits were included in assumed proceeds from applying the treasury stock method when computing diluted EPS. Under the amended guidance, companies are able to make an accounting policy election to either (1) continue to estimate forfeitures or (2) account for forfeitures as they occur. This updated guidance is effective for annual and interim periods beginning after December 15, 2016. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

 Interests Held through Related Parties that are under Common Control

 

 In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests held through Related Parties that are under Common Control. The amendments in this update require that if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this update should be applied retrospectively for each period presented and are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

Simplifying the Measurement of Inventory

 

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, Topic 330. The update contains no amendments to disclosure requirements, but replaces the concept of ‘lower of cost or market’ with that of ‘lower of cost and net realizable value’. The amendments in this update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. The amendments should be applied prospectively with early adoption permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

14

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

 

New accounting pronouncements effective in future periods

 

Derivatives and Hedging

 

In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. The amendments in this Update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the Update. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements, if any.

 

Intangibles –Goodwill and Other

 

 In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this Update require the entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This Update, eliminated Step 2 from the goodwill impairment test under the current guidance. Step 2 measures a goodwill impairment loss by comparing the implied fair value of reporting unit’s goodwill with the carrying amount of that goodwill. The amendments in this Update should be applied on a prospective basis. An entity is also required to disclose the nature of and the reason for the change in accounting principal upon transition. That disclosure should be provided in the first annual period and the interim period within the first annual period when the entity initially adopts the amendments in this Update. The amendments in this Update are effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

 

Compensation - Stock Compensation

 

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718). The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this update require that an entity should account for the effects of a modification unless all of the following are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this Update. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

 

Business Combinations

 

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805). The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update primarily provide a screen to determine when a set of assets and activities is not a business and by that reduces the number of transactions that need to be further evaluated. The amendments in this update should be applied prospectively and are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

 

15

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

 

Statement of Cash Flows

 

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) – Restricted Cash. The amendments in this update require that a statement of cash flows explain the changes during the period in total cash, cash equivalents, and the amounts generally described as restricted cash or cash equivalents. Therefore, amounts of restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update should be applied retrospectively for each period presented and are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

 

Intra-Entity Transfers of Assets Other than Inventory

 

In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The amendments in this update require that the entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new guidance does not apply to intra-entity transfers on inventory. The amendments in this update should be applied for each period presented and are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The modified retrospective approach will be required for transition to the new guidance, with cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. Early adoption is permitted in the first quarter of 2017. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

 

Revenues from Contracts with Customers

 

In May 2014, the FASB issued ASU 2014-09, Revenues from Contracts with Customers, Topic 606, which was a joint project of the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The update provides that an entity should recognize revenue in connection with the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, an entity is required to apply each of the following steps: (1) identify the contract(s) with the customer; (2) identify the performance obligations in the contracts; (3) determine the transaction price; (4) allocate the transaction price to the performance obligation in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 also prescribes additional financial presentations and disclosures. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Early adoption is permitted no earlier than 2017 for calendar fiscal year entities. The Company expects the adoption of this standard to have an immaterial impact, if any, on its Electricity segment as it accounts for its PPA’s under ASC 840, Leases, however, the Company is still evaluating the related potential impact on its investment in an unconsolidated company. The Company is still evaluating the potential impact of the adoption of the standard on its Product segment, however, it believes that such impact, if any, will be immaterial.

 

In March 2016, the FASB issued ASU 2016-08, Principal versus Agent Considerations. This update does not change the core principles of the guidance and is intended to clarify the implementation guidance on principal versus agent considerations. When another entity is involved in providing goods or services to a customer, an entity is required to determine if the nature of its promise is to provide the specific good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). The guidance includes indicators to assist an entity in determining whether it acts as a principal or agent in a specified transaction. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Early adoption is permitted no earlier than 2017 for calendar fiscal year entities. The Company is currently evaluating the potential impact, if any, of the adoption of these amendments on its consolidated financial statements, however, it believes that any such impact, if any, will be immaterial.

 

Leases

 

 In February 2016, the FASB issued ASU 2016-02, Leases, Topic 842. This update introduces a number of changes and simplifies previous guidance, primarily the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The Update retains the distinction between finance leases and operating leases and the classification criteria between the two types remains substantially similar. Also, lessor accounting remains largely unchanged from previous guidance. However, key aspects of the Update were aligned with the revenue recognition guidance in Topic 606. Additionally, the Update defines a lease as a contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of the identified asset means that the customer has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. The amendments in this update are effective for annual reporting periods beginning after December 15, 2018, including interim periods within those reporting periods. Early adoption is permitted. The Company is currently evaluating the potential impact, if any, of the adoption of these amendments on its consolidated financial statements.

 

16

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

 

Recognition and Measurement of Financial Assets and Financial Liabilities

 

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The update primarily requires that an entity present separately, in other comprehensive income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk if the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The application of this update should be by means of cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted as of the beginning of the fiscal year of adoption. The Company is currently evaluating the potential impact, if any, of the adoption of this update on its consolidated financial statements.

 

 

NOTE 3 — INVENTORIES

 

Inventories consist of the following:

 

   

September 30,

   

December 31,

 
   

2017

   

2016

 
   

(Dollars in thousands)

 

Raw materials and purchased parts for assembly

  $ 9,461     $ 5,429  

Self-manufactured assembly parts and finished products

    9,224       6,571  

Total

  $ 18,685     $ 12,000  

 

 

NOTE 4 — UNCONSOLIDATED INVESTMENTS

 

Unconsolidated investments consist of the following:

 

   

September 30,

   

December 31,

 
   

2017

   

2016

 
   

(Dollars in thousands)

 

Sarulla

  $ 25,367     $ (11,081

)

 

 

The Sarulla Project

 

The Company holds a 12.75% equity interest in a consortium which is in the process of developing the Sarulla geothermal power project in Indonesia with an expected generating capacity of approximately 330 MW. The Sarulla project is located in Tapanuli Utara, North Sumatra, Indonesia and is owned and operated by the consortium members under the framework of a joint operating contract and energy sales contract that were both signed on April 4, 2013. Under the joint operating contract, PT Pertamina Geothermal Energy, the concession holder for the project, has provided the consortium with the right to use the geothermal field, and under the energy sales contract, PT PLN, the state electric utility, is the off-taker at Sarulla for a period of 30 years. In addition to its equity interest in the consortium, the Company designed the Sarulla power plant and supplies its Ormat energy converters to the power plant pursuant to a supply agreement (the "Supply Agreement") that was signed in October 2013, as further described below. 

 

17

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

 

The project is being constructed in three phases of approximately 110 MW each, utilizing both steam and brine extracted from the geothermal field to increase the power plant’s efficiency. The first phase of the power plant commenced commercial operation on March 17, 2017 and is performing well, demonstrating its ability to produce geothermal power in excess of its design capacity. The second phase of the power plant commenced commercial operation on October 2, 2017. Construction work on the third phase of the power plant is progressing and on schedule although the gathering piping system may face some delays. The Company has achieved all of its contractual milestones under the Supply Agreement. Drilling for the third phase of the power plant is ongoing and the project has achieved to date, based on preliminary estimates, 100% of the required injection capacity and approximately 85% of the required production capacity.

 

On May 16, 2014, the consortium closed $1.17 billion in financing for the development of the Sarulla project with a consortium of lenders comprised of Japan Bank for International Cooperation (“JBIC”), the Asian Development Bank and six commercial banks and obtained construction and term loans on a limited recourse basis backed by a political risk guarantee from JBIC. Of the $1.17 billion, $0.1 billion (which was drawn down by the Sarulla project company on May 23, 2014) bears interest at a fixed rate and $1.07 billion bears interest at a rate linked to LIBOR. The project has missed several milestones under the financing documents, but, in each case, has either already received, or expects to receive in the near future, waivers from the lenders. The project experienced delays in field development and cost overruns resulting from delays and excess drilling costs. Due to the cost overruns in drilling, the lenders may request that the project sponsors contribute additional equity to the project.

 

The Sarulla consortium entered into interest rate swap agreements with various international banks, effective as of June 4, 2014, in order to fix the interest rate linked to LIBOR on up to $0.96 billion of the $1.07 billion portion of the financing arrangement subject to such interest rate at 3.4565%. The Sarulla project company accounted for the interest rate swap as a cash flow hedge upon which changes in the fair value of the hedging instrument, relative to the effective portion, are recorded in other comprehensive income. During the three and nine months ended September 30, 2017, the Sarulla project company recorded gains of $4.8 million and $2.1 million, respectively, net of deferred tax, of which the Company’s share was $0.6 million and $0.3 million, respectively. The Company’s share of such gains were recorded in other comprehensive income. During the three and nine months ended September 30, 2016, the Sarulla project company recorded a gain of $10.5 million and a loss of $30.0 million, respectively, net of deferred tax, of which the Company’s share was $1.3 million and $3.8 million, respectively. The Company’s share of such losses were recorded in other comprehensive income. The related accumulated loss recorded by the Company in other comprehensive income (loss) as of September 30, 2017 is $5.6 million.

 

The Company had added the $255.6 million supply agreement to its Product segment backlog in 2014. The Company started to recognize revenue from the project during the third quarter of 2014 and will complete revenue recognition over the course of the next year. The Company has eliminated the related intercompany profit of $14.1 million against equity in loss of investees.

 

During the three and nine months ended September 30, 2017, the Company made additional equity investments in the Sarulla project of approximately $10.5 million and $37.9 million, respectively, for a total of $49.8 million since inception.

 

 

 

NOTE 5— FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received upon selling an asset or paid upon transferring a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:

 

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

 

Level 2 — Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability

 

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

18

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

 

The following table sets forth certain fair value information at September 30, 2017 and December 31, 2016 for financial assets and liabilities measured at fair value by level within the fair value hierarchy, as well as cost or amortized cost. As required by the fair value measurement guidance, assets and liabilities are classified in their entirety based on the lowest level of inputs that is significant to the fair value measurement.

 

           

September 30, 2017

 
           

Fair Value

 
   

Carrying

Value at

September

30, 2017

   

Total

   

Level 1

   

Level 2

   

Level 3

 
   

(Dollars in thousands)

 

Assets:

                                       

Current assets:

                                       

Cash equivalents (including restricted cash accounts)

  $ 13,497     $ 13,497     $ 13,497     $     $  

Derivatives:

                                       

Put options on gas price (3)

    61       61             61        

Contingent receivable (1)

    1,125       1,125                   1,125  

Currency forward contracts (2)

    486       486             486        

Liabilities:

                                       

Current and long-term liabilities:

                                       

Derivatives:

                                       

Contingent payables (1)

  $ (25,913

)

  $ (25,913

)

  $     $     $ (25,913

)

Warrants (1)

    (3,889

)

    (3,889

)

                    (3,889

)

Currency forward contracts (2)

    (203

)

    (203

)

          (203

)

     
    $ (14,836

)

  $ (14,836

)

  $ 13,497     $ 344     $ (28,677

)

 

 

           

December 31, 2016

 
           

Fair Value

 
   

Carrying

Value at

December

31, 2016

   

Total

   

Level 1

   

Level 2

   

Level 3

 
   

(Dollars in thousands)

 

Assets

                                       

Current assets:

                                       

Cash equivalents (including restricted cash accounts)

  $ 14,922     $ 14,922     $ 14,922     $     $  

Derivatives:

                                       

Contingent receivable (1)

    1,443       1,443                   1,443  

Liabilities:

                                       

Current and long-term liabilities:

                                       

Derivatives:

                                       

Contingent payables (1)

  $ (11,581

)

  $ (11,581

)

  $     $     $ (11,581

)

Warrants (1)

    (3,429

)

    (3,429

)

                (3,429

)

Currency forward contracts (2)

    (481

)

    (481

)

          (481

)

     
    $ 874     $ 874     $ 14,922     $ (481

)

  $ (13,567

)

 

19

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

 

 

(1) 

These amounts relate to contingent receivables and payables relating to the Viridity acquisition and Guadeloupe power plant purchase transaction, valued primarily based on unobservable inputs and are included within Prepaid expenses and other, Accounts payable and accrued expenses and Other long-term liabilities on September 30, 2017 and within Prepaid expenses and other and Other long-term liabilities on December 31, 2016 in the consolidated balance sheets with the corresponding gain or loss being recognized within Derivatives and foreign currency transaction gains (losses) in the consolidated statement of operations and comprehensive income.

 

 

(2)

These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within Prepaid expenses and other and Accounts payable and accrued expenses on September 30, 2017 and December 31, 2016, in the consolidated balance sheet with the corresponding gain or loss being recognized within Derivatives and foreign currency transaction gains (losses) in the consolidated statement of operations and comprehensive income.

 

 

(3)

These amounts relate to natural gas put options, valued primarily based on observable inputs, including spot prices on related commodity indices, and are included within Prepaid expenses and other on September 30, 2017 in the consolidated balance sheets with the corresponding gain or loss being recognized within Derivatives and foreign currency transaction gains (losses) in the consolidated statement of operations and comprehensive income.

 

The amounts set forth in the tables above include investments in debt instruments and money market funds (which are included in cash equivalents). Those securities and deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in an active market.

 

The following table presents the amounts of gain (loss) recognized in the consolidated statements of operations and comprehensive income on derivative instruments not designated as hedges:

 

       

Amount of recognized gain (loss)

 

Derivatives not designated

 

Location of recognized

 

Three Months

Ended

September 30,

   

Nine Months

Ended

September 30,

 

as hedging instruments

 

gain (loss)

 

2017

   

2016

   

2017

   

2016

 
                                     

Put options on natural gas price

 

Derivatives and foreign currency transaction gains (losses)

  $ (121

)

  $     $ (362

)

  $  

Call options on natural gas price

 

Derivatives and foreign currency transaction gains (losses)

          32             (1,114

)

Call and put options on oil price

 

Derivatives and foreign currency transaction gains (losses)

          230             (1,312

)

Contingent considerations

 

Derivative and foreign currency transaction gains (losses)

    (19

)

          (114

)

     

Currency forward contracts

 

Derivative and foreign currency and transaction gains (losses)

    (887

)

    689       2,832       1,154  
        $ (1,027

)

  $ 951     $ 2,356     $ (1,272

)

 

20

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

 

In January 2017, the Company entered into Henry Hub Natural Gas Future contracts under which it has bought a number of put options covering a notional quantity of approximately 4.1 million British Thermal Units (“MMBtu”) with exercise prices of $3 and expiration dates ranging from January 26, 2017 until November 27, 2017 in order to reduce its exposure to fluctuations in natural gas prices under its PPAs with Southern California Edison. The Company paid an aggregate amount of approximately $0.7 million for these put options. The put option contracts have monthly expiration dates at which the options can be called and the transaction would be settled on a net cash basis.

 

On February 2, 2016, the Company entered into Henry Hub Natural Gas Future contracts under which it had written a number of call options covering a notional quantity of approximately 4.1 MMBtu with exercise prices of $2 and expiration dates ranging from February 24, 2016 until December 27, 2016 in order to reduce its exposure to fluctuations in natural gas prices under its PPAs with Southern California Edison. The Company received an aggregate premium of approximately $1.9 million from these call options. The call option contracts had monthly expiration dates on which the options could have been called and the Company would have had to settle its liability on a cash basis.

 

On February 24, 2016, the Company entered into Brent Oil Future contracts under which it had written a number of call options covering a notional quantity of approximately 185,000 barrels (“BBL”) of Brent with exercise prices of $32.80 to $35.50 and expiration dates ranging from March 24, 2016 until December 22, 2016 in order to reduce its exposure to fluctuations in Brent prices under its PPA with HELCO. The Company received an aggregate premium of approximately $1.1 million from these call options. The call option contracts had monthly expiration dates on which the options could have been be called and the Company would have had to settle its liability on a cash basis. Moreover, during March 2016, the Company rolled 2 existing call options covering a total notional quantity of 31,800 BBL of Brent in order to limit its exposure to $41 to $42.50 instead of $32.80 to $33.50. In addition, the Company entered into short risk reversal transactions (sell call and buy put options) by rolling existing call options covering notional quantities of 16,500 BBL and 17,000 BBL in order to limit its exposure from the outstanding call options originally entered into in February 2016 to between $28.50 and $37.50 and $28 and $38.50, respectively.

 

The foregoing future and forward transactions were not designated as hedge transactions and are marked to market with the corresponding gains or losses recognized within “Derivatives and foreign currency transaction gains (losses)”.

 

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 during the nine months ended September 30, 2017.

 

The fair value of the Company’s long-term debt approximates its carrying amount, except for the following:

 

   

Fair Value

   

Carrying Amount

 
   

September 30,

2017

   

December 31,

2016

   

September 30,

2017

   

December 31,

2016

 
   

(Dollars in millions)

   

(Dollars in millions)

 

Olkaria III Loan - DEG

  $     $ 16.3     $     $ 15.8  

Olkaria III Loan - OPIC

    242.9       253.4       233.1       246.6  

Olkaria IV Loan - DEG 2

    52.4       50.9       50.0       50.0  

Amatitlan Loan

    34.2       37.3       34.1       36.8  

Senior Secured Notes:

                               

Ormat Funding Corp. ("OFC")

          17.0             17.0  

OrCal Geothermal Inc. ("OrCal")

    34.1       37.4       32.1       35.2  

OFC 2 LLC ("OFC 2")

    242.5       249.0       236.6       247.2  

Don A. Campbell 1 ("DAC1")

    88.2       88.9       89.6       92.4  

Senior Unsecured Bonds

    201.4       200.1       204.3       204.3  

Other long-term debt