ORMAT TECHNOLOGIES, INC. (Form: 10-Q, Received: 05/08/2019 09:24:28)

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 March 31, 2019, the consolidated results of operations and comprehensive income (loss), consolidated statements of equity and consolidated statements of cash flows for the three-month periods ended March 31, 2019 and 2018.

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 periods presented are not necessarily indicative of the results to be expected for the year.

These condensed unaudited 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, 2018. The condensed consolidated balance sheet data as of December 31, 2018 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2018 but does not include all disclosures required by U.S. GAAP.

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

Puna

On May 3, 2018, the Kilauea volcano located in close proximity to our Puna 38 MW geothermal power plant in the Puna district of Hawaii's Big Island erupted following a significant increase in seismic activity in the area. Before it stopped flowing, the lava covered the wellheads of three geothermal wells, monitoring wells and the substation of the Puna complex and an adjacent warehouse that stored a drilling rig that was also consumed by the lava. The insurance policy coverage for property and business interruption is provided by a consortium of insurers. All the insurers accepted and started paying for the costs to rebuild the destroyed substation, and during the first quarter of 2019, we received an additional $1.5 million of such proceeds. However only some of the insurers accepted that the business interruption coverage started in May 2018 and during the first quarter of 2019, we recorded an additional $1.3 million of such proceeds which were included under cost of revenues in the condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2019. The Company is still in discussions to reach an understanding with all insurers to start paying for the business interruption as of May 2018. In April 2019 the Company reached an agreement with another insurance company and received an additional $4.1 million for current and future business interruption loss. The business interruption coverage compensates the Company for the loss of profits that resulted from the inability of the on-surface property to generate electricity.

The Company is still assessing the damages in the Puna facilities and continue to coordinate with Hawaii Electric Light Company (“HELCO”) and local authorities to bring the power plant back to operation. The Company continues to assess the accounting implications of this event on the assets and liabilities on its balance sheet and whether an impairment will be required. Any significant damage to the geothermal resource or continued shut-down following the lava event at the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on our business and results of operations.

DEG 3 Loan

On January 4, 2019, an indirect subsidiary of the Company (“OrPower 4”) entered into an additional $41.5 million subordinated loan agreement with DEG (the “DEG 3 Loan Agreement”) and on February 28, 2019, OrPower 4 completed a drawdown of the full loan amount, with a fixed interest rate of 6.04% for the duration of the loan (the “DEG 3 Loan”). The DEG 3 Loan will be repaid in 19 equal semi-annual principal installments commencing June 21, 2019, with a final maturity date of June 21, 2028. Proceeds of the DEG 3 Loan were used by OrPower 4 to refinance upgrades to Plant 1 of the Olkaria III Complex, which were originally financed using equity. The DEG 3 Loan is subordinated to the senior loan provided by OPIC for Plants 1-3 of the Olkaria III Complex. The DEG 3 Loan is guaranteed by the Company.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Migdal Senior Unsecured Loan

On March 25, 2019, the Company entered into a first addendum (“First Addendum”) to the loan agreement (the "Migdal Loan Agreement") with Migdal Insurance Company Ltd., Migdal Makefet Pension and Provident Funds Ltd. and Yozma Pension Fund of Self-Employed Ltd., all entities within the Migdal Group, a leading insurance company and institutional investor in Israel dated March 22, 2018. The First Addendum provides for an additional loan by the lenders to the Company in an aggregate principal amount of $50.0 million (the “Additional Migdal Loan”). The Additional Migdal Loan will be repaid in 15 semi-annual payments of $2.1 million each, commencing on September 15, 2021, with a final payment of $18.5 million on March 15, 2029. The Additional Migdal Loan bears interest at a fixed rate of 4.6% per annum, payable semi-annually, subject to adjustment in certain circumstances as described below.

The Additional Migdal Loan was entered into under substantially the same terms and conditions of the Migdal Loan Agreement as disclosed in the Company’s Form 10-K for the year ended December 31, 2018.

Write-offs of unsuccessful exploration activities

There were no write-offs of unsuccessful exploration activities for the three months ended March 31, 2019. Write-offs of unsuccessful exploration activities for the three months ended March 31, 2018 were $0.1 million.

Reconciliation of Cash and cash equivalents and Restricted cash and cash equivalents

The following table provides a reconciliation of Cash and cash equivalents and Restricted cash and cash equivalents reported on the balance sheet that sum to the total of the same amounts shown on the statement of cash flows:

	March 31,		December 31,		March 31,
	2019		2018		2018
	(Dollars in thousands)
Cash and cash equivalents	$	79,366	$	98,802	$	54,723
Restricted cash and cash equivalents		93,098		78,693	$	50,332
Total Cash and cash equivalents and restricted cash and cash equivalents	$	172,464	$	177,495	$	105,055

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 (“U.S.”) and in foreign countries. At March 31, 2019 and December 31, 2018, the Company had deposits totaling $28.6 million and $31.3 million, respectively, in ten U.S. financial institutions that were federally insured up to $250,000 per account. At March 31, 2019 and December 31, 2018, the Company’s deposits in foreign countries amounted to approximately $75.9 million and $93.9 million, respectively.

At March 31, 2019 and December 31, 2018, accounts receivable related to operations in foreign countries amounted to approximately $106.8 million and $102.0 million, respectively. At March 31, 2019 and December 31, 2018, accounts receivable from the Company’s primary customers amounted to approximately 55% and 56% of the Company’s accounts receivable, respectively.

Sierra Pacific Power Company and Nevada Power Company (subsidiaries of NV Energy, Inc.) accounted for 18.2% and 17.4% of the Company’s total revenues for the three months ended March 31, 2019 and 2018, respectively.

Southern California Public Power Authority (“SCPPA”) accounted for 19.4% and 16.3% of the Company’s total revenues for the three months ended March 31, 2019 and 2018, respectively.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Kenya Power and Lighting Co. Ltd. accounted for 15.3% and 15.1% of the Company’s total revenues for the three months ended March 31, 2019 and 2018, respectively.

We have historically been able to collect on substantially all of our receivable balances. Recently, we have been receiving late payments from KPLC in Kenya related to our Olkaria Complex and from ENNE in Honduras related to our Platanares power plant. As of March 31, 2019, the amounts overdue are $29.4 million and $18.0 million related to KPLC and ENNE, respectively, of which $20.4 million and $3.0 million, respectively, were paid during April 2019. As we believe we will be able to collect all past due amounts, no provision for doubtful accounts has been recorded.

Additionally, Pacific Gas and Electric Corporation (“PG&E Corporation”) and its subsidiary Pacific Gas and Electric Company (“PG&E”), which accounts for 1.2% of our total revenues for the three months ended March 31, 2019, are facing extraordinary challenges relating to a series of catastrophic wildfires that occurred in Northern California in 2017 and 2018. As a result, on January 29, 2019, PG&E Corporation and its subsidiary, PG&E, voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. We are closely monitoring our PG&E account to ensure cash receipts are received timely each month. Our monthly invoice relating to January 2019 was not paid as it occurred before PG&E filed for reorganization under Chapter 11 bankruptcy, but cash was received for the February and March invoices.

Revenues from Contracts with Customers

Contract assets related to our Product segment reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities related to our Product segment reflect payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of March 31, 2019 and December 31, 2018 are as follows:

	March 31,			December 31,
	2019			2018
	(Dollars in thousands)
Contract assets (*)	$	29,762		$	42,130
Contract liabilities (*)		(15,508	)		(18,402	)
Contract assets, net	$	14,254		$	23,728

(*) Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheets.

On March 31, 2019, we had approximately $226.1 million of remaining performance obligations not yet satisfied or partly satisfied related to our Product segment. We expect to recognize approximately 100% of this amount as Product revenues during the next 24 months.

NOTE 2 — NEW ACCOUNTING PRONOUNCEMENTS

New accounting pronouncements effective in the three-month period ended March 31, 2019

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This new standard introduced a number of changes and simplified previous guidance, primarily the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The new standard retained the distinction between finance leases and operating leases and the classification criteria between the two types remains substantially similar. Also, lessor accounting remained largely unchanged from previous guidance. However, key aspects of the new standard were aligned with the revenue recognition guidance in Topic 606. Additionally, the new standard defined 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 Company adopted this new standard as of January 1, 2019 using the modified retrospective approach and accordingly recognized a cumulative-effect adjustment to the opening balance of retained earnings, which was an immaterial amount, with no restatement of comparative information.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

In accordance with the new standard, for agreements in which the Company is the lessee, the Company applies a unified accounting model by which it recognizes a right-of-use asset ("ROU") and a lease liability at the commencement date of the lease contract for all the leases in which the Company has a right to control identified assets for a specified period of time. The classification of the lease as a finance lease or an operating lease determines the subsequent accounting for the lease arrangement.

Upon the adoption of the new standard the Company, both as a lessee and as a lessor, chose to apply the following permitted practical expedients:

Not reassess whether any existing contracts are or contain a lease;

Not reassess the classification of leases that commenced before the effective date (for example, all existing leases that were classified as operating leases in accordance with Topic 840 will continue to be classified as operating leases, and all existing leases that were classified as capital leases in accordance with Topic 840 will continue to be classified as finance leases);

Exclude initial direct costs from measurement of the ROU asset at the date of initial application;

Applying the practical expedient (for a lessor) to not separate non-lease components accounted for under Topic 606 from lease components and, instead, to account for each separate lease component and the non-lease components associated with that lease component as a single component. If the non-lease components are the predominant components, the Company will account for the combined component as a single performance obligation entirely in accordance with Topic 606. Otherwise, the combined component will be accounted as an operating lease entirely in accordance with the new standard.

Applying the practical expedient (for a lessee) regarding the recognition and measurement of short-term leases, for leases for a period of up to 12 months from the commencement date. Instead, the Company will continue to recognize the lease payments for those leases in statement of operations on a straight-line basis over the lease term.

Since the Company elected to apply the practical expedients above, it applied the new standard to all contracts entered into before January 1, 2019 and identified as leases in accordance with Topic 840.

The new significant accounting policies regarding leases that were applied as from January 1, 2019 following the application of the new standard are as follows:

Determining whether an arrangement contains a lease

On the inception date of the lease, the Company determines whether the arrangement is a lease or contains a lease, while examining if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company as a lessee

Lease classification:

At the commencement date, a lease is a finance lease if it meets any one of the criteria below; otherwise the lease is an operating lease:

●

The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.

●

The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

●

The lease term is for the major part of the remaining economic life of the underlying asset.

●

The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset.

●

The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of lease term.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Leased assets and lease liabilities - initial recognition

Upon initial recognition, the Company recognizes a liability at the present value of the lease payments to be made over the lease term, and concurrently recognizes a ROU asset at the same amount of the liability, adjusted for any prepaid or accrued lease payments, plus initial direct costs incurred in respect of the lease. Since the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of the Company is used. The subsequent measurement depends of whether the lease is classified as a finance lease or an operating lease.

The lease term

The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the Company will exercise the option.

Subsequent measurement of operating leases

After lease commencement, the Company measures the lease liability at the present value of the remaining lease payments using the discount rate determined at lease commencement (as long as the discount rate hasn’t been updated as a result of a reassessment event).

The Company subsequently measures the ROU asset at the present value of the remaining lease payments, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs.

Further, the Company will recognize lease expense on a straight-line basis over the lease term.

Subsequent measurement of finance leases

After lease commencement, the Company measures the lease liability by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made during the period. The Company shall determine the interest on the lease liability in each period during the lease term as the amount that produces a constant periodic discount rate on the remaining balance of the liability, taking into consideration the reassessment requirements.

After lease commencement, the Company measures the ROU assets at cost less any accumulated amortization and any accumulated impairment losses, taking into consideration the reassessment requirements. The Company amortizes the ROU asset on a straight-line basis, unless another systematic basis better represents the pattern in which the Company expects to consume the ROU asset’s future economic benefits. The ROU asset is amortized over the shorter of the lease term or the useful life of the ROU asset as follows:

	(in years)
Land	1	-	35
Automobiles		5
Building		15

The total periodic expense (the sum of interest and amortization expense) of a finance lease is typically higher in the early periods and lower in the later periods.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Variable lease payments:

Variable lease payments that depend on an index or a rate

On the commencement date, the lease payments shall include variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate), initially measured using the index or rate at the commencement date.

The Company does not remeasure the lease liability for changes in future lease payments arising from changes in an index or rate unless the lease liability is remeasured for another reason. Therefore, after initial recognition, such variable lease payments are recognized in profit or loss as they are incurred.

Other variable lease payments:

Variable payments that depends on performance or use of the underlying asset are not included in the lease payments. Such variable payments are recognized in profit or loss in the period in which the event or condition that triggers the payment occurs.

The Company as a lessor

At lease commencement, the Company as a lessor classifies leases as either finance or operating leases. Finance leases are further classified as a sales-type lease or as a direct financing lease.

Under an operating lease, the Company recognizes the lease payment as income over the lease term, generally on a straight-line basis.

Impact of the new standard

Effects of the initial application of the new standard on the Company's consolidated balance sheet as of January 1, 2019:

	According to the previous accounting policy		The change			As presented according to Topic 842
	(Dollars in thousands)

As of January 1, 2019:

Prepaid expenses and other	$	51,441	$	(35,385	)	$	16,056
Deferred financing and lease costs, net		3,242		(1,659	)		1,583
Property, plant and equipment, net		1,959,578		(12,855	)		1,946,723
Operating leases right of use		-		62,244			62,244
Finance leases right of use		-		13,476			13,476

Accounts payable and accrued expenses		116,362		(2,860	)		113,502
Current maturity of operating lease liabilities		-		7,532			7,532
Current maturity of finance lease liabilities		-		2,841			2,841

Other long-term liabilities		16,087		(9,970	)		6,117
Long term portion of operating lease liabilities		-		17,668			17,668
Long term portion of finance lease liabilities		-		10,668			10,668

Retained earnings		422,222		(58	)		422,164

The Operating leases right of use is higher than the related lease liabilities as a result of prepayments of leases, including the Puna lease and deferred financing lease costs.

A weighted-average nominal incremental interest rate of 5% and 7% was used to discount future lease payments in the calculation of the operating and finance lease liabilities, respectively.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The guidance is effective for the fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

New accounting pronouncements effective in future periods

Financial Instruments—Credit Losses

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance will be effective beginning on January 1, 2020, including interim periods within that year. The Company is currently evaluating the potential effect on its consolidated financial statements.

NOTE 4 — LEASES

A.	Leases in which the Company is a lessee

The table below presents the effects on the amounts relating to the Company’s total lease cost:

	Three months ended March 31,
	2019
	(Dollars in thousands)
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	787
Interest on lease liabilities		306
Operating lease cost		2,134
Variable lease cost		278
Total lease cost	$	3,505

Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	-
Operating cash flows from operating leases		1,012
Financing cash flows from finance leases		767
Right-of-use assets obtained in exchange for new finance lease liabilities		2,154
Right-of-use assets obtained in exchange for new operating lease liabilities		-
Weighted-average remaining lease term — finance leases		4.0
Weighted-average remaining lease term — operating leases		5.7

Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows:

	Operating Leases		Finance Leases
	(Dollars in thousands)
Year ending December 31,
2019 (excluding the three months ended March 31, 2019)	$	7,513	$	3,400
2020		4,109		3,715
2021		3,400		2,720
2022		2,419		2,421
2023		1,590		1,834
Thereafter		12,061		2,692
Total future minimum lease payments		31,092		16,782
Less imputed interest		5,893		1,681
Total	$	25,199	$	15,101

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Future minimum lease payments under non-cancellable leases as of December 31, 2018, under ASC 840, Leases were as follows:

	(Dollars in thousands)
Year ending December 31,
2019	$	10,889
2020		7,515
2021		5,758
2022		4,415
2023		2,910
Thereafter		9,292
Total	$	40,779

B.	Leases in which the Company is a lessor

The table below presents the revenues accounted under ASC 842, Leases, as lessors:

	Three months ended March 31, 2019
	(Dollars in thousands)
Revenues accounted under ASC 842, Leases		125,908
Lease income relating to variable lease payments not included in the measurement of the lease		-
Total		125,908

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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).

The following table sets forth certain fair value information at March 31, 2019 and December 31, 2018 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.

				March 31, 2019
				Fair Value
	Carrying Value at March 31, 2019			Total			Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Current assets:
Cash equivalents (including restricted cash accounts)	$	21,552		$	21,552		$	21,552	$	—	$	—
Derivatives:
Contingent receivable ⁽¹⁾		101			101			—		—		101
Currency forward contracts ⁽²⁾		169			169			—		169		—
Liabilities:
Current liabilities:
Derivatives:
Contingent payable ⁽¹⁾		(3,351	)		(3,351	)		—		—		(3,351	)
	$	18,471		$	18,471		$	21,552	$	169	$	(3,250	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

				December 31, 2018
				Fair Value
	Carrying Value at December 31, 2018			Total			Level 1		Level 2			Level 3
	(Dollars in thousands)
Assets
Current assets:
Cash equivalents (including restricted cash accounts)	$	18,787		$	18,787		$	18,787	$	—		$	—
Derivatives:
Contingent receivable ⁽¹⁾		104			104			—		—			104
Liabilities:
Current liabilities:
Derivatives:
Contingent payable ⁽¹⁾		(3,424	)		(3,424	)		—		—			(3,424	)
Currency forward contracts ⁽²⁾		(1,040	)		(1,040	)		—		(1,040	)		—
	$	14,427		$	14,427		$	18,787	$	(1,040	)	$	(3,320	)

⁽¹⁾

These amounts relate to contingent receivables and payables relating to acquisition of the Guadeloupe power plant, 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 March 31, 2019 and December 31, 2018 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”, as applicable, on March 31, 2019 and December 31, 2018, 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.

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.

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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 (in thousands):

		Amount of recognized gain (loss)
Derivatives not designated as hedging instruments	Location of recognized gain (loss)	Three Months Ended March 31,
		2019		2018


Currency forward contracts	Derivative and foreign currency and transaction gains (losses)	$	1,083	$	(546	)
		$	1,083	$	(546	)

The foregoing 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 three months ended March 31, 2019.

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

	Fair Value				Carrying Amount
	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
	(Dollars in millions)				(Dollars in millions)
Olkaria III Loan - OPIC		210.0		211.8		206.1		210.6
Olkaria IV Loan - DEG 2		48.6		47.2		47.5		47.5
Olkaria IV Loan - DEG 3		42.5		—		41.5		—
Platanares Loan - OPIC		118.5		119.1		110.6		112.7
Amatitlan Loan		29.0		29.9		28.9		29.8
Senior Secured Notes:
OrCal Geothermal Inc. ("OrCal")		19.2		19.0		18.7		18.7
OFC 2 LLC ("OFC 2")		213.4		214.5		213.2		217.8
Don A. Campbell 1 ("DAC 1")		78.6		78.8		81.7		83.3
USG Prudential - NV		29.9		29.4		27.8		27.8
USG Prudential - ID		18.0		18.6		18.4		18.9
USG DOE		47.3		48.3		49.8		51.4
Senior Unsecured Bonds		199.3		199.4		204.3		204.3
Senior Unsecured Loan		153.6		102.2		150.0		100.0
Other long-term debt		5.3		5.4		6.2		6.2

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The fair value of the long-term debt is determined by a valuation model, which is based on a conventional discounted cash flow methodology and utilizes assumptions of current borrowing rates. The fair value of revolving lines of credit is determined using a comparison of market-based price sources that are reflective of similar credit ratings to those of the Company.

The carrying value of financial instruments such as revolving lines of credit and deposits approximates fair value.

The following table presents the fair value of financial instruments as of March 31, 2019:

	Level 1		Level 2		Level 3		Total
	(Dollars in millions)
Olkaria III - OPIC		—		—		210.0		210.0
Olkaria IV - DEG 2		—		—		48.6		48.6
Olkaria IV Loan - DEG 3		—		—		42.5		42.5
Platanares Loan - OPIC		—		—		118.5		118.5
Amatitlan Loan		—		29.0		—		29.0
Senior Secured Notes:
OrCal Senior Secured Notes		—		—		19.2		19.2
OFC 2 Senior Secured Notes		—		—		213.4		213.4
DAC 1 Senior Secured Notes		—		—		78.6		78.6
USG Prudential - NV		—		—		29.9		29.9
USG Prudential - ID		—		—		18.0		18.0
USG DOE		—		—		47.3		47.3
Senior Unsecured Bonds		—		—		199.3		199.3
Senior Unsecured Loan		—		—		153.6		153.6
Other long-term debt		—		—		5.3		5.3
Revolving lines of credit		—		60.9		—		60.9
Deposits		11.9		—		—		11.9

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The following table presents the fair value of financial instruments as of December 31, 2018:

	Level 1		Level 2		Level 3		Total
	(Dollars in millions)
Olkaria III Loan - OPIC		—		—		211.8		211.8
Olkaria IV - DEG 2		—		—		47.2		47.2
Platanares Loan - OPIC		—		—		119.1		119.1
Amatitlan Loan		—		29.9		—		29.9
Senior Secured Notes:
OrCal Senior Secured Notes		—		—		19.0		19.0
OFC 2 Senior Secured Notes		—		—		214.5		214.5
DAC 1 Senior Secured Notes		—		—		78.8		78.8
USG Prudential - NV		—		—		29.4		29.4
USG Prudential - ID		—		—		18.6		18.6
USG DOE		—		—		48.3		48.3
Senior Unsecured Bonds		—		—		199.4		199.4
Senior Unsecured Loan		—		—		102.2		102.2
Other long-term debt		—		—		5.4		5.4
Revolving lines of credit		—		159.0		—		159.0
Deposits		12.0		—		—		12.0

NOTE 9 — BUSINESS SEGMENTS

The Company has three reporting segments: the Electricity segment, the Product segment and the Other segment. These segments are managed and reported separately as each offers different products and serves different markets. The Electricity segment is engaged in the sale of electricity from the Company’s power plants pursuant to PPAs. The Product segment is engaged in the manufacture, including design and development, of turbines and power units for the supply of electrical energy and in the associated construction of power plants utilizing the power units manufactured by the Company to supply energy from geothermal fields and other alternative energy sources. The Other segment is engaged in management of curtailable customer loads under contracts with U.S. retail energy providers and directly with large commercial and industrial customers as well as battery storage as a service.

Transfer prices between the operating segments are determined based on current market values or cost-plus markup of the seller’s business segment.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables:

	Electricity		Product		Other			Consolidated
	(Dollars in thousands)
Three Months Ended March 31, 2019:
Revenues from external customers:
United States ⁽¹⁾	$	91,528	$	11,243	$	4,002		$	106,773
Foreign ⁽²⁾		51,380		40,885		—			92,265
Net revenues from external customers		142,908		52,128		4,002			199,038
Intersegment revenues		—		18,261		—			18,261
Operating income (loss)		51,551		4,252		(2,078	)		53,725
Segment assets at period end ^{(3) (*)}		2,950,444		125,248		67,522			3,143,214
* Including unconsolidated investments		71,885		—		—			71,885

Three Months Ended March 31, 2018:
Revenues from external customers:
United States ⁽¹⁾	$	83,683	$	194	$	2,862		$	86,739
Foreign ⁽²⁾		48,806		48,478		—			97,284
Net revenues from external customers		132,489		48,672		2,862			184,023
Intersegment revenues		—		24,827		—			24,827
Operating income		46,412		9,553		(1,372	)		54,593
Segment assets at period end ^{(3) (*)}		2,542,154		114,815		53,848			2,710,817
* Including unconsolidated investments		63,109		—		—			63,109

	⁽¹⁾	Electricity segment revenues in the United States are all accounted under ASC 842, Leases, except for $17.0 million in the three months ended March 31, 2019 that are accounted under ASC 606. For the three months ended March 31, 2018, Electricity segment revenues in the United States are all accounted under ASC 840, Leases, except for $6.7 million that are accounted under ASC 606.

	⁽ ² ⁾	For the three months ended March 31, 2019, Electricity segment revenues in foreign countries are all accounted under ASC 842, Leases, and Product revenues in foreign countries are accounted under ASC 606. For the three months ended March 31, 2018, Electricity segment revenues in foreign countries are all accounted under ASC 840, Leases, and Product revenues in foreign countries are accounted under ASC 606.

⁽ ³ ⁾

Electricity segment assets include goodwill in the amount of $20.1 million and $7.8 million as of March 31, 2019 and 2018, respectively. Other segment assets include goodwill in the amount of $13.5 million as of March 31, 2018. No goodwill is included in the Other segments assets as of March 31, 2019.

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Reconciling information between reportable segments and the Company’s consolidated totals is shown in the following table:

	Three Months Ended March 31,
	2019			2018
		(Dollars in thousands)
Revenue:
Total segment revenue	$	199,038		$	184,023
Intersegment revenue		18,261			24,827
Elimination of intersegment revenue		(18,261	)		(24,827	)
Total consolidated revenue	$	199,038		$	184,023

Operating income:
Operating income	$	53,725		$	54,593
Interest income		293			113
Interest expense, net		(21,223	)		(14,344	)
Derivatives and foreign currency transaction gains (losses)		472			(1,599	)
Income attributable to sale of tax benefits		7,764			7,361
Other non-operating income (expense), net		91			(20	)
Total consolidated income from operations before income taxes and equity in earnings of investees	$	41,122		$	46,104

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 10 — COMMITMENTS AND CONTINGENCIES

●

On May 21, 2018, a motion to certify a class action was filed in Tel Aviv District Court against Ormat Technologies, Inc. and 11 officers and directors. The alleged class is defined as "All persons who purchased Ormat shares on the Tel Aviv Stock Exchange between August 3, 2017 and May 13, 2018". The motion alleges that the Company violated Sections 31(a)(1) and 38C of the Israeli Securities Law because it allegedly: (1) misled investors by stating in its financial statements that it maintains effective internal controls over its accounting policies and procedures, however the Company's internal controls had material weaknesses which led to erroneous accounting in its 2017 unaudited quarterly reports that had to be restated, including adjustments to the Company’s net income and shareholders’ equity; and (2) failed to issue an immediate report in Israel until May 16, 2018, analogous to the report that was released in the United States on May 11, 2018 stating, inter alia, that the errors in its financial reports affected its balance sheet and would be remedied in its 2017 annual report. The Company filed an agreed motion to the Tel Aviv District Court to stay the proceedings in Israel until a final decision in the U.S. case (Mac Costas) is adjudicated.

●

On June 11, 2018, a putative class action was filed by Mac Costas on behalf of alleged shareholders that purchased or acquired the Company's ordinary shares between August 8, 2017 and May 15, 2018 was commenced in the U.S. District Court for the District of Nevada against the Company and its Chief Executive Officer and Chief Financial Officer. The complaint asserts claim against all defendants pursuant to Section 10(b) of the Exchange Act, as amended, and Rule 10b-5 thereunder and against its officers pursuant to Section 20(a) of the Exchange Act. The complaint alleges that the Company's Form 10-K for the years ended December 31, 2016 and 2017, and Form 10-Qs for each of the quarters in the nine months ended September 30, 2017 contained material misstatements or omissions, among other things, with respect to the Company’s tax provisions and the effectiveness of its internal control over financial reporting, and that, as a result of such alleged misstatements and omissions, the plaintiffs suffered damages. Following the Mac Costas filing and in accordance with the terms of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), a number of law firms filed applications on behalf of entities purporting to hold shares in the Company, seeking to be appointed as lead plaintiff and lead counsel in the action. On March 12, 2019 the court appointed Phoenix Insurance Company Ltd. (“Phoenix Insurance”) as lead plaintiff and approved their selection of lead counsel. Pursuant to a scheduling stipulation entered between the parties, Phoenix Insurance must file a consolidated amended complaint by May 13, 2019, the Company’s motion to dismiss must be filed by July 12, 2019, Phoenix Insurance must file their Opposition by August 26, 2019, and the Company must file their reply by September 25, 2019. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

●

On September 11, 2018, the Klein derivative action (“Klein Action”) was filed against the Company, our board and our Chief Executive Officer and Chief Financial Officer in the U.S. District Court for the District of Nevada, and on October 22, 2018, the Matthew derivative action (“Matthew Action”) was filed against the company, certain named present and former board members (Barniv, Beck, Boehm, Clark, Falk, Freeland, Granot, Joyal, Nishigori, Sharir, Stern and Wong) in the U.S. District Court, District of Nevada. The Klein complaint asserts four derivative causes of action generally arising from Ormat's restatement of its financial statements: (i) the individual defendants allegedly breached their fiduciary duties by allowing the company to improperly report its financials; (ii) the individual defendants allegedly were unjustly enriched by being compensated while breaching their fiduciary duties; (iii) the individual defendants allegedly committed corporate waste in paying officers and directors and by incurring legal costs and potential liability; and (iv) the director defendants allegedly breached Section 14(a) of the Exchange Act in connection with the issuance of 2018 proxy. The Matthew complaint similarly alleges derivatively a breach of fiduciary duties, abuse of control, gross mismanagement, and corporate waste by the named directors. On January 24, 2019, the Nevada Court entered an order consolidating the Klein Action and Matthew Action, and staying all deadlines and hearings in the consolidated action pending entry of an order on the motion to dismiss in the Mac Costas putative class action. Within thirty days of entry of an order on the motion to dismiss in the Mac Costas putative class action, the parties are required to meet and confer and to submit a proposed schedule for further proceedings in the consolidated action.

Table of Contents

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

●

Following the announcement of the Company’s acquisition of U.S. Geothermal Inc. (“USG”), a number of putative shareholder class action complaints were initially filed on behalf of USG shareholders between March 8, 2018 and March 30, 2018 against USG and the individual members of the USG board of directors. All of the purported class action suits filed in Federal Court in Idaho have been voluntarily dismissed. The single remaining class action complaint is a purported class action filed in the Delaware Chancery Court, entitled Riche v. Pappas, et al., Case No. 2018-0177 (Del. Ch., Mar. 12, 2018). An amended complaint was filed on May 24, 2018 under seal, under a confidentiality agreement that was executed by plaintiff. The amended Riche complaint alleges state law claims for breach of fiduciary duty against former USG directors and seeks post-closing damages. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

●

On August 5, 2016, George Douvris, Stephanie Douvris, Michael Hale, Cheryl Cacocci, Hillary E. Wilt and Christina Bryan, acting for themselves and on behalf of all other similarly situated residents of the lower Puna District, filed a complaint in the Third Circuit Court for the State of Hawaii seeking certification of a class action for preliminary and permanent injunctive relief, consequential and punitive damages, attorney’s fees and statutory interest against Puna Geothermal Venture (“PGV”) and other presently unknown defendants. HELCO and other parties were later joined as co-defendants. The Parties have reached an amicable settlement in an immaterial amount which, on April 4, 2019, was recorded by the Court, and the claim dismissed.

●

On March 29, 2016, a former local sales representative in Chile, Aquavant, S.A., filed a claim on the basis of unjust enrichment against Ormat’s subsidiaries in the 27th Civil Court of Santiago, Chile. The claim requests that the court order Ormat to pay Aquavant $4.6 million in connection with its activities in Chile, including the EPC contract for the Cerro Pabellon project and various geothermal concessions, plus 3.75% of Ormat geothermal products sales in Chile over the next 10 years. Pursuant to various motions submitted by the defendants and the plaintiffs to various courts, including the Court of Appeals, the case was removed from the original court and then refiled before the 11th Civil Court of Santiago. The Civil Court has heard oral testimonies and the “factual” stage of the proceedings are completed. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

In addition, from time to time, the Company is named as a party to various other lawsuits, claims and other legal and regulatory proceedings that arise in the ordinary course of our business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to such lawsuits, claims and proceedings, the Company accrues reserves when a loss is probable, and the amount of such loss can be reasonably estimated. It is the opinion of the Company’s management that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole.

Delaware	88-0326081
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

6140 Plumas Street, Reno, Nevada	89519-6075
Address of principal executive offices)	( Zip Code)

Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐

Emerging growth company ☐

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	ORA	NYSE

PART I — FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	45
ITEM 4.	CONTROLS AND PROCEDURES	45
PART II — OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	46
ITEM 1A.	RISK FACTORS	46
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	46
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	46
ITEM 4.	MINE SAFETY DISCLOSURES	46
ITEM 5.	OTHER INFORMATION	46
ITEM 6.	EXHIBITS	46
SIGNATURES		47

	March 31,			December 31,
	2019			2018
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	79,366		$	98,802
Restricted cash and cash equivalents (primarily related to VIEs)		93,098			78,693
Receivables:
Trade		139,870			137,581
Other		18,319			19,393
Inventories		42,982			45,024
Costs and estimated earnings in excess of billings on uncompleted contracts		29,762			42,130
Prepaid expenses and other		18,224			51,441
Total current assets		421,621			473,064
Investment in an unconsolidated company		71,885			71,983
Deposits and other		18,154			18,209
Deferred income taxes		109,821			113,760
Property, plant and equipment, net ($1,843,823 and $1,859,228 related to VIEs, respectively)		1,962,580			1,959,578
Construction-in-process ($110,907 and $104,085 related to VIEs, respectively)		266,083			261,690
Operating leases right of use		60,656			—
Finance leases right of use ($8,396 related to VIEs)		14,433			—
Deferred financing and lease costs, net		1,733			3,242
Intangible assets, net		196,125			199,874
Goodwill		20,123			19,950
Total assets	$	3,143,214		$	3,121,350
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	108,309		$	116,362
Short term revolving credit lines with banks (full recourse)		60,900			159,000
Billings in excess of costs and estimated earnings on uncompleted contracts		15,508			18,402
Current portion of long-term debt:
Limited and non-recourse (primarily related to VIEs):
Senior secured notes		33,639			33,493
Other loans		29,687			29,687
Full recourse		9,368			5,000
Operating lease liabilities		7,532			—
Finance lease liabilities		3,147			—
Total current liabilities		268,090			361,944
Long-term debt, net of current portion:
Limited and non-recourse (primarily related to VIEs):
Senior secured notes (less deferred financing costs of $7,149 and $7,434, respectively)		367,142			375,337
Other loans (less deferred financing costs of $9,262 and $9,354, respectively)		312,779			320,242
Full recourse:
Senior unsecured bonds (less deferred financing costs of $706 and $758, respectively)		353,626			303,575
Other loans (less deferred financing costs of $1,483 and $921, respectively)		78,149			41,579
Operating lease liabilities		17,667			—
Finance lease liabilities		11,954			—
Liability associated with sale of tax benefits		68,852			69,893
Deferred lease income		47,658			48,433
Deferred income taxes		68,005			61,323
Liability for unrecognized tax benefits		12,482			11,769
Liabilities for severance pay		18,400			17,994
Asset retirement obligation		41,246			39,475
Other long-term liabilities		5,464			16,087
Total liabilities		1,671,514			1,667,651
Commitments and contingencies (Note 10)
Redeemable noncontrolling interest		8,705			8,603
Equity:
The Company's stockholders' equity:
Common stock, par value $0.001 per share; 200,000,000 shares authorized; 50,752,101 and 50,699,781 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		51			51
Additional paid-in capital		903,723			901,363
Retained earnings		442,531			422,222
Accumulated other comprehensive income (loss)		(5,956	)		(3,799	)
Total stockholders' equity attributable to Company's stockholders		1,340,349			1,319,837
Noncontrolling interest		122,646			125,259
Total equity		1,462,995			1,445,096
Total liabilities, redeemable noncontrolling interest and equity	$	3,143,214		$	3,121,350

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 4

	For the quarterly period ended March 31, 2019


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

	For the transition period from to

	The Company's Stockholders' Equity
						Retained			Accumulated
				Additional		Earnings			Other
	Common Stock			Paid-in		(Accumulated			Income						Noncontrolling			Total
	Shares	Amount		Capital		Deficit)			(Loss)			Total			Interest			Equity
	(Dollars in thousands, except per share data)
Balance at December 31, 2017	50,609	$	51	$	888,778	$	327,255		$	(4,706	)	$	1,211,378		$	84,322		$	1,295,700
Cumulative effect of changes in accounting principles	—		—		—		25,635			—			25,635			—			25,635
Adjusted balance as of the beginning of the year	50,609		51		888,778		352,890			(4,706	)		1,237,013			84,322			1,321,335
Stock-based compensation	—		—		1,707		—			—			1,707			—			1,707
Exercise of options by employees and directors	8		—		—		—			—			—			—			—
Cash paid to noncontrolling interest	—		—		—		—			—			—			(4,674	)		(4,674	)
Cash dividend declared, $0.23 per share	—		—		—		(11,640	)		—			(11,640	)		—			(11,640	)
Net income	—		—		—		69,508			—			69,508			4,482			73,990
Other comprehensive income (loss), net of related taxes:
Currency translation adjustment	—		—		—		—			1,158			1,158			370			1,528
Loss in respect of derivative instruments designated for cash flow hedge (net of related tax of $13)	—		—		—		—			20			20			—			20
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment (net of related tax of $0)	—		—		—		—			2,634			2,634			—			2,634
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $9)	—		—		—		—			(15	)		(15	)		—			(15	)
Balance at March 31, 2018	50,617	$	51	$	890,485	$	410,758		$	(909	)	$	1,300,385		$	84,500		$	1,384,885
Balance at December 31, 2018	50,700	$	51	$	901,363	$	422,222		$	(3,799	)	$	1,319,837		$	125,259		$	1,445,096
Cumulative effect of changes in accounting principles	—		—		—		(58	)		—			(58	)		—			(58	)
Adjusted balance as of the beginning of the year	50,700		51		901,363		422,164			(3,799	)		1,319,779			125,259			1,445,038
Stock-based compensation	—		—		2,360		—			—			2,360			—			2,360
Exercise of options by employees and directors	52		—		—		—			—			—			—			—
Cash paid to noncontrolling interest	—		—		—		—			—			—			(4,146	)		(4,146	)
Cash dividend declared, $0.11 per share	—		—		—		(5,579	)		—			(5,579	)		—			(5,579	)
Net income	—		—		—		25,946			—			25,946			1,855			27,801
Other comprehensive income (loss), net of related taxes:
Currency translation adjustment	—		—		—		—			(1,026	)		(1,026	)		(322	)		(1,348	)
Loss in respect of derivative instruments designated for cash flow hedge (net of related tax of $24)	—		—		—		—			22			22			—			22
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment (net of related tax of $0)	—		—		—		—			(1,145	)		(1,145	)		—			(1,145	)
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $18)	—		—		—		—			(8	)		(8	)		—			(8	)
Balance at March 31, 2019	50,752	$	51	$	903,723	$	442,531		$	(5,956	)	$	1,340,349		$	122,646		$	1,462,995

	Three Months Ended March 31,
	2019		2018
	(Dollars in thousands)
Interest related to sale of tax benefits	$	3,661	$	1,409
Interest expense		17,562		13,306
Less — amount capitalized		—		(371	)
	$	21,223	$	14,344

	Revenue (dollars in thousands)				Increase (decrease)				% of Revenue for Period Indicated
	Three Months Ended March 31,								Three Months Ended March 31,
	2019		2018						2019			2018
Revenues:
Electricity	$	142,908	$	132,489	$	10,419	7.9	%		71.8	%		72.0	%
Product		52,128		48,672		3,456	7.1			26.2			26.4
Other		4,002		2,862		1,140	39.8			2.0			1.6
Total	$	199,038	$	184,023	$	15,015	8.2	%		100	%		100	%

Loan	Issued Amount ($M)	Outstanding Amount as of March 31, 201 9	Interest Rate	Maturity Date	Related Projects
OrCal Geothermal Senior Secured Notes	165.0	18.7	6.21%	2020	Heber Complex
OFC 2 Senior Secured Notes – Series A	151.7	99.4	4.67%	2032	McGinness Hills phase 1 and Tuscarora
OFC 2 Senior Secured Notes – Series B	140.0	113.8	4.61%	2032	McGinness Hills phase 2
Olkaria III Financing Agreement with OPIC – Tranche 1	85.0	55.5	6.34%	2030	Olkaria III Complex
Olkaria III Financing Agreement with OPIC – Tranche 2	180.0	119.1	6.29%	2030	Olkaria III Complex
Olkaria III Financing Agreement with OPIC – Tranche 3	45.0	31.6	6.12%	2030	Olkaria III Complex
Amatitlan Financing ⁽¹⁾	42.0	28.9	LIBOR+4.35%	2027	Amatitlan
Don A. Campbell Senior Secured Notes	92.5	81.7	4.03%	2033	Don A. Campbell Complex
Prudential Capital Group Idaho Loan ⁽²⁾	20.0	18.4	5.8%	2023	Neal Hot Springs and Raft River
U.S. Department of Energy loan ⁽³⁾	96.8	49.8	2.6%	2035	Neal Hot Springs
Prudential Capital Group Nevada Loan	30.7	27.8	6.75%	2037	San Emidio
Platanares Loan with OPIC	114.7	110.6	7.02%	2032	Platanares
Total	1 , 163.4	7 55.3

Loan	Issued Amount ($M)	Outstanding as of March 31, 2019	Interest Rate	Maturity Date
Senior Unsecured Bonds Series 2	67.0	67.0	3.7%	September 2020
Senior Unsecured Bonds Series 3	137.0	137.0	4.45%	September 2022
Senior unsecured Loan 1	100.0	100.0	4.8%	March 2029
Senior unsecured Loan 2	50.0	50.0	4.6%	March 2029
DEG Loan 2	50.0	47.5	6.28%	June 2028
DEG Loan 3	41.5	41.5	6.04%	June 2028
Total	445.5	443.0

Credit Agreements	Issued Amount ($M)	Issued and Outstanding as of March 31, 201 9	Termination Date
Union Bank	60.0	54.5	June 2019
HSBC	35.0	30.0	August 2019
Other Banks 1	233.0	27.9	June 2019- March 2020
Other Banks 2	140.0	112.9	May 2019-September 2019
Other Banks 3 (Non-committed)		10.1
Total	468.0	2 35.5

	(Dollars in thousands)

Year ending December 31:
2019	$	67,749
2020		148,210
2021		76,627
2022		219,317
2023		96,094
Thereafter		644,530
Total	$	1,252,527

Date Declared	Dividend Amount per Share		Record Date	Payment Date
May 8, 2017	$	0.08	May 22, 2017	May 31, 2017
August 3, 2017	$	0.08	August 15, 2017	August 29, 2017
November 7, 2017	$	0.08	November 21, 2017	December 5, 2017
March 1, 2018	$	0.23	March 14, 2018	March 29, 2018
May 7, 2018	$	0.10	May 21, 2018	May 30, 2018
August 7, 2018	$	0.10	August 21, 2018	August 29, 2018
November 6, 2018	$	0.10	November 20, 2018	December 4, 2018
February 26, 2019	$	0.11	March 14, 2019	March 28, 2019
May 6, 2019	$	0.11	May 20, 2019	May 28, 2019

	Assuming a 10% Increase in Rates						Assuming a 10% Decrease in Rates
Risk	March 31, 2019			December 31, 201 8			March 31, 2019		December 31, 201 8		Change in the Fair Value of
	(Dollars in thousands)
Foreign Currency		(3,570	)		(4,042	)		4,363		4,940	Foreign currency forward contracts
Interest Rate		(111	)		(113	)		112		114	Orcal Senior Secured Notes
Interest Rate		(5,583	)		(5,955	)		5,806		6,211	OFC 2 Senior Secured Notes
Interest Rate		(5,647	)		(6,022	)		5,887		6,294	OPIC Loan
Interest Rate		(2,716	)		(3,054	)		2,767		3,118	Senior Unsecured Bonds
Interest Rate		(1,130	)		(1,216	)		1,173		1,266	DEG 2 Loan
Interest Rate		(2,195	)		(2,324	)		2,296		2,438	DAC 1 Senior Secured Notes
Interest Rate		(662	)		(714	)		689		745	Amatitlan Loan
Interest Rate		(4,048	)		(2,897	)		4,193		3,010	Migdal Loan and the Additional Migdal Loan
Interest Rate		(1,226	)		(1,306	)		1,352		1,398	San Emidio Loan
Interest Rate		(1,068	)		(1,153	)		1,106		1,197	DOE Loan
Interest Rate		(375	)		(440	)		385		453	Idaho Holdings Loan
Interest Rate		(3,518	)		(3,719	)		3,686		3,907	Platanares OPIC Loan
Interest Rate		(922	)		-			954		-	DEG 3 Loan
Interest Rate		(130	)		(143	)		134		148	Other long-term loans

Exhibit No .	Document

10.1*	First Addendum to Loan Agreement dated March 25, 2019 between and among Ormat Technologies, Inc. and Migdal Insurance Company Ltd., Migdal Makefet Pension and Provident Funds Ltd. And Yozma Pension Fund of Self-Employed Ltd.

10.2* +	Amendment to Employment Agreement dated as of December 1, 2017 between Ormat Technologies, Inc. and Isaac Angel.

10.3* +	Employment Agreement dated as of November 1, 2017, between Ormat Technologies Inc. and Shlomo Argas.

31.1*	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2*	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

101.IN*	XBRL Instance Document.

101.SC*	XBRL Taxonomy Extension Schema Document.

101.CA*	XBRL Taxonomy Extension Calculation Linkbase Document.

101.DE*	XBRL Taxonomy Extension Definition Linkbase Document.

101.LA*	XBRL Taxonomy Extension Label Linkbase Document.

101.PR*	XBRL Taxonomy Extension Presentation Linkbase Document.

*	Filed herewith

+	This document has been identified as a management contract or compensatory plan or arrangement.

	ORMAT TECHNOLOGIES, INC.


	By:	/s/ Doron Blachar
		Name: Doron Blachar
		Title: Chief Financial Officer

Ormat Technologies, Inc.	Migdal Insurance Company



By: _/s/ Doron Blachar/Hezi Kattan Name: Doron Blachar/Hezi Kattan Title: CFO/ CG& CCO	By: /s/ Doron Sapir/Asaf Shoham Name: Doron Sapir/ Asaf Shoham Title: CEO \ CIO

Migdal Makefet Pension and	Yozma Pension Fund of Self Employed
Provident Funds Ltd.	Ltd.



By: By:/s/ Doron Sapir/Asaf Shoham Name: Doron Sapir/ Asaf Shoham Title: CEO \ CIO	By:/s/ Doron Sapir/Asaf Shoham Name: Doron Sapir/ Asaf Shoham Title: CEO \ CIO

Name of Original Lender	Loan Amount
Migdal Insurance Company Ltd.	USD 30,154,956.31 (Thirty million one hundred and fifty-four thousand nine hundred and fifty-six dollars and thirty-one cents

Migdal Makefet Pension and Provident Funds Ltd.	USD 19,471,719.55(Nineteen million four hundred and seventy-one thousand seven hundred and nineteen dollars and fifty-five cents

Yozma Pension Fund of Self Employed Ltd.	USD 373,324.14 (Three hundred seventy-three thousand three hundred and twenty-four dollars and fourteen cents

Date	Interest payment (thousands of dollars)	Principal repayment (thousands of dollars)	Balance of principal (thousands of dollars)
28/03/19	-	-	50,000
15/09/19	1,078	-	50,000
15/03/20	1,147	-	50,000
15/09/20	1,159	-	50,000
15/03/21	1,141	-	50,000
15/09/21	1,159	2,100	47,900
15/03/22	1,093	2,100	45,800
15/09/22	1,062	2,100	43,700
15/03/23	997	2,100	41,600
15/09/23	965	2,100	39,500
15/03/24	906	2,100	37,400
15/09/24	867	2,100	35,300
15/03/25	805	2,100	33,200
15/09/25	770	2,100	31,100
15/03/26	709	2,100	29,000
15/09/26	672	2,100	26,900
15/03/27	614	2,100	24,800
15/09/27	575	2,100	22,700
15/03/28	521	2,100	20,600
15/09/28	478	2,100	18,500
15/03/29	422	18,500	0

Proposed Utilisation Date:	28.3.2019 (or, if that is not a Business Day, the next Business Day)

Currency of Loan:	US dollars

Amount:	US$50,000,000 (fifty million US dollars)

Interest Period:	Shall be in accordance with the provisions of Clause 9.1 of the Loan Agreement dated March 22, 2018, pursuant to which Lenders provided Borrower with a loan in an amount of US $100,000,000 (the "Agreement").

Ormat Systems Ltd.		Shlomi Argas
Isaac Angel CEO /s/ Isaac Angel		/s/ Shlomi Argas
Signature		Signature



Date		Date



	By:	/s/ ISAAC ANGEL
		Name: Isaac Angel
		Title: Chief Executive Officer