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As Of Filer Filing For·On·As Docs:Size Issuer Agent 11/26/14 Ormat Technologies, Inc. PRE 14C 11/26/14 1:9.8M Z-K Global Ltd/FA |
Document/Exhibit Description Pages Size 1: PRE 14C Preliminary Proxy Information Statement HTML 4.78M
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Preliminary Information Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
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Definitive Information Statement
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing:
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asking our stockholders to approve the issuance of the additional shares of our common stock, the share exchange or any related matter;
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By order of the Board of Directors,
/s/ Isaac Angel
Chief Executive Officer
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| RISK FACTORS | 22 |
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| NOTICE OF INTERNET AVAILABILITY |
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Annex A—Opinion of J.P. Morgan Securities LLC
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A-1
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Annex B—Consolidated Financial Statements of Ormat Industries Ltd. as of December 31, 2013
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B-1
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Annex C—Unaudited Consolidated Financial Statements of Ormat Industries Ltd. as of September 30, 2014
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C-1
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Annex D—Glossary of Terms
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D-1
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This is a summary of more detailed information you will find in other sections of this information statement and in documents we have incorporated by reference in this information statement. We encourage you to read the entire information statement and the documents we have incorporated by reference and not rely on this summary. A Glossary of certain defined terms is included in Annex D to this information statement.
Overview of the Share Exchange and Related Transactions
If certain conditions summarized below are satisfied, we plan to engage in a series of related transactions that will change the ownership and corporate structure of the Ormat Industries, Ormat, Ormat Systems and their subsidiaries, which we refer to as the “Ormat group.”
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Ormat Industries. Ormat Industries Ltd. is an Israeli company whose ordinary shares are listed for trading on the Tel Aviv Stock Exchange, or “TASE.” Ormat Industries’ assets consist primarily of its 59.75% interest in Ormat common stock. Ormat Industries’ other significant assets are (i) certain real estate properties, including production facilities and business offices located in Israel which are currently subleased to Ormat Systems, and (ii) cash, cash equivalents and tradable securities (other than Ormat Industries ownership of Ormat common stock) which, as of September 30, 2014, had an aggregate fair market value (on a standalone basis) of approximately $14.8 million. As of September 30, 2014, Ormat Industries’ total liabilities (on a standalone basis) were equal to
approximately $2.2 million.
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Ormat Systems. Ormat Systems Ltd., is an Israeli company, that is our direct wholly-owned subsidiary. Since 2004, Ormat Systems has been engaged in the business of designing, manufacturing and selling equipment for geothermal and recovered energy-based electricity generation, remote power units and other power generating units and provide services relating to the engineering, procurement, construction, operation and maintenance of geothermal and recovered energy-based power plants. It is essentially the entity within the Ormat group in charge of our product segment and is the owner of the Ormat group’s intellectual property rights associated with our products. The managerial and operational activities of Ormat Systems are conducted primarily, if not exclusively, in Israel.
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Ormat. Ormat Technologies, Inc., is a Delaware corporation whose common stock is listed for trading on The New York Stock Exchange, or “NYSE.” We are a leading vertically integrated company engaged primarily in the geothermal and recovered energy power business. We design, develop, build, sell, own, and operate clean, environmentally friendly geothermal and recovered energy-based power plants, in most cases using equipment that we design and manufacture.
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Ormat Subsidiaries. We conduct most of our operations through direct and indirect subsidiaries, most of which are wholly-owned. Except for Ormat Systems, the transactions will not affect the ownership or corporate structure of our subsidiaries.
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The diagram below shows the current ownership and corporate structure of the Ormat group (excluding any subsidiaries of the Ormat group other than Ormat Systems) prior to consummating the share exchange and the other transactions contemplated by the share exchange agreement.
If these transactions are all completed:
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We will be owned approximately 62.24% by then-current shareholders of Ormat Industries (rather than 59.75% by Ormat Industries) and approximately 38.76% by our then-current shareholders (other than Ormat Industries).
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The number of shares of our common stock held by non-affiliated, “public” shareholders will increase from approximately 40.25% to approximately 76.08%.
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The number or shares of our common stock held by entities that are currently affiliates of Ormat Industries, which we refer to as Bronicki Investments and FIMI, will be approximately 23.92%.
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We will initially own all of the outstanding ordinary shares of Ormat Industries and later merge it into Ormat Systems, so that Ormat Industries will no longer exist and Ormat Systems will continue with the combined assets, liabilities, business and operations of both of those companies.
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The diagram below shows the ownership and corporate structure of the Ormat group (excluding any subsidiaries of the Ormat group other than Ormat Systems) expected after consummating the share exchange and the other transactions contemplated by the share exchange agreement.
The Ormat Group – After the Transaction
Reasons for the Share Exchange and Related Transactions
We and Ormat Industries believe the transactions will provide a number of benefits to the Ormat group and its shareholders. Among other things, from Ormat’s perspective, the transactions are expected to:
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enhance the liquidity of Ormat common stock by significantly increasing the public float, improve the market’s perception of Ormat and increase institutional investors’ interest in Ormat;
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eliminate the inefficiencies and complexities associated with having two separate public companies in two different jurisdictions reporting under different accounting standards;
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We have carefully considered these and other factors in deciding to proceed with the transactions. As discussed in more detail below, we evaluated the transaction using a special committee of our board of directors. The special committee engaged independent financial and legal advisors to help evaluate the transactions. See “The Share Exchange and Related Transactions—Background of the Share Exchange.” We received an opinion from J.P. Morgan Securities LLC, which we refer to herein as J.P. Morgan, that, subject to the factors and assumptions set forth in the opinion, the proposed exchange ratio was fair, from a financial point of view, to Ormat. The full text of the written opinion of J.P. Morgan dated November
9, 2014, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex A to this information statement and is incorporated herein by reference. Ormat’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion is addressed to the Ormat board of directors, is directed only to the exchange ratio in the share exchange and does not constitute a recommendation to any stockholder of Ormat. The transactions were unanimously approved by the special committee, audit committee and board of directors of Ormat. Our board of directors has recommended that our stockholders approve the stock issuance.
Structure of the Share Exchange and Related Transactions
The transactions involve a series of related steps that will be implemented through:
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contractual arrangements described below among members of the Ormat group and, in some cases, Bronicki Investments and FIMI. These include:
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A Share Exchange Agreement and Plan of Merger dated as of November 10, 2014 among Ormat Industries, Ormat and Ormat Systems. This agreement, which we refer to as the “share exchange agreement” is the principal contract governing the terms and conditions for the transactions and is described in more detail later in this information statement. See “The Share Exchange Agreement.”
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Several agreements involving principally our relationship with Bronicki Investments and FIMI, before and after the transactions occur, including:
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Voting and Undertaking Agreements between Ormat and each of Bronicki Investments and FIMI. See “Additional Agreements—Ormat Industries Shareholder Undertaking Agreements.”
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Voting Neutralization Agreements between Ormat and each of Bronicki Investments and FIMI. See “Additional Agreements—Voting Neutralization Agreements.”
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An agreed form of escrow agreement to be entered into by Bronicki Investments, FIMI and an Israeli escrow agent satisfactory to the Israeli Tax Authority or reasonably satisfactory to us. See “Additional Agreements—Ormat Industries Shareholder Undertaking Agreements.”
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An agreed form of registration rights agreement to be entered into by us, Bronicki Investments and FIMI, upon request by Bronicki Investments and FIMI. See “Additional Agreements—Registration Rights Agreement.”
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A Voting Agreement between Ormat and Ormat Industries. See “Additional Agreements—Ormat Stockholder Undertaking Agreement.”
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a court-approved scheme of arrangement implemented through procedures under Sections 350 and 351 of the Israel Companies Law, which among other things, provide for the District Court of Tel Aviv-Jaffa, which we refer to as the “Court,” to approve the share exchange agreement and the transactions contemplated thereby, which we refer to as the “Court approval,” and a special vote of Ormat Industries shareholders, which we refer to as the “Section 350 voting approval.” See “The Share Exchange and Related Transactions—The Section 350 Voting Approval and Court Approval.”
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a ruling by the Israel Tax Authority, or “ITA,” which, as described below, generally makes the transactions income tax-free to the Ormat group and shareholders of Ormat Industries, if certain conditions described below continue to be satisfied. See “Material Consequences of Israeli Tax Ruling.”
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a structure that is intended to qualify as a tax-fee reorganization under section 368(a) of the Internal Revenue Code, or “Code.” See “Material U.S. Federal Income Tax Consequences of the Share Exchange and Related Transactions.”
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Share Exchange
The first and primary step of this series of transactions, which we refer to as the “share exchange,” will involve, among other things, Ormat issuing approximately 30.2 million new shares of its common stock to Ormat Industries shareholders in exchange for all the outstanding ordinary shares of Ormat Industries.
The share exchange will be based on the “exchange ratio” that has been agreed upon in the share exchange agreement. That exchange ratio is 0.2592 shares of our common stock for each ordinary share of Ormat Industries, subject to adjustment under certain circumstances described in the share exchange agreement. This exchange ratio was established taking into account various factors described in more detail below. See “The Share Exchange and Related Transactions—Background of the Share Exchange.”
If various conditions are satisfied, the share exchange is expected to be completed in the first quarter of 2015. We refer to the date when this happens as the “effective time” or “closing date.”
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The share exchange will only be completed if various conditions set forth in the share exchange agreement are satisfied. Some of these conditions have already been satisfied, including the receipt of the tax ruling from the Israel Tax Authority referred to above, and the approval by Ormat Industries, as our stockholder, of the share exchange and related transactions. However a number of conditions still must be satisfied before the share exchange can be completed, and there is no assurance when, if at all, that may occur. These include:
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Various “closing conditions” under the share exchange agreement which are described in more detail below. See “The Share Exchange Agreement—Conditions to Share Exchange.”
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Internal Reorganization Steps
After the share exchange is completed, we will effect a series of internal restructuring steps, culminating in the merger of Ormat Industries with and into Ormat Systems on March 31, 2015. These steps are:
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The transfer to us by Ormat Industries of all its shares of our common stock, which will be retired immediately upon receipt. This transfer is expected to occur within three business days after the share exchange is completed.
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The transfer by us to Ormat Industries of all the ordinary shares of Ormat Systems we hold in exchange for one ordinary share of Ormat Industries. This transfer is expected to occur shortly after the first transfer referred to above (but no sooner that one business day after that transfer) and will result in Ormat Systems becoming a subsidiary of Ormat Industries.
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Ormat Systems surviving as our direct, wholly-owned subsidiary with all the assets, liabilities, business and operations of the two combined companies.
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Accounting Treatment of Share Exchange and Related Transactions
The share exchange will be accounted for as the acquisition of Ormat Industries by Ormat, with Ormat as the continuing reporting entity. The historical carrying values of Ormat’s assets and liabilities will not change. The net assets of Ormat Industries, other than its equity interests in Ormat, will be transferred to Ormat at their historical carrying values.
Material Consequences of the Israeli Tax Ruling
The receipt of shares of Ormat common stock by a holder of Ormat Industries ordinary shares in connection with the share exchange is generally a taxable transaction for Israeli income tax purposes. However, the Ormat group has obtained a ruling from the ITA, which we refer to as the Israeli tax ruling, confirming that, subject to certain conditions stipulated in the Israeli tax ruling, the taxable event related to the capital gains tax to be imposed on holders of Ormat Industries ordinary shares in connection with the share exchange will be deferred until the holder subsequently transfers the Ormat common stock it receives in the share exchange. However, the receipt of cash in lieu of fractional shares of Ormat common stock will be a taxable transaction for Israeli income tax purposes for holders of Ormat Industries ordinary shares.
Provided that all of the conditions of the Israeli tax ruling are satisfied, including the ongoing restrictions imposed by that ruling, under the income tax laws of Israel, the share exchange will not have any tax consequences for Ormat Industries or Ormat Systems and the related corporate restructuring transactions, including the merger of Ormat Industries with and into Ormat Systems, will also not be treated as taxable transactions for any member of the Ormat group.
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The Israeli tax ruling has a number of conditions that must be satisfied. Some of those conditions will affect the Ormat group for several years after completing the share exchange. For a more complete discussion of the Israeli tax consequences of the share exchange and related transactions and the conditions imposed on Ormat by the Israeli tax ruling, see “Material Consequences of the Israeli Tax Ruling.” Tax matters are complicated and the consequences of the share exchange to you will depend on your particular facts and circumstances. You are urged to consult with your tax advisor as to the specific tax consequences of the share exchange to you, including the applicability of U.S. federal, state and local, Israel and other foreign and other tax laws.
Material U.S. Federal Income Tax Consequences of the Share Exchange and Related Transactions
The share exchange and related transactions should qualify as a reorganization within the meaning of Section 368(a) of the Code. As such, the transactions will not result in the taxable recognition of any material income, gain or loss to Ormat Industries or to us. In any event, whether or not the transactions so qualify, since our stockholders do not participate in the share exchange, our stockholders will not recognize taxable gain or loss in connection with the transactions.
For a more complete discussion of the U.S. federal income tax consequences of the share exchange and related transactions, see “The Share Exchange—Material U.S. Federal Income Tax Consequences of the Share Exchange and Related Transactions.” Tax matters are complicated and the consequences of the share exchange to you will depend on your particular facts and circumstances. You are urged to consult with your tax advisor as to the specific tax consequences of the share exchange to you, including the applicability of U.S. federal, state and local, Israeli and other foreign and other tax laws.
Interested Persons
You should be aware that Ormat Industries, certain of our directors and officers, by virtue of their interests in Bronicki Investments and FIMI or otherwise, Bronicki Investments and FIMI have interests in the share exchange and related transactions that may be different from, or in addition to, the interests of our stockholders generally. See “Certain Relationships and Related Party Transactions.”
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The following summary consolidated financial data of Ormat, summary consolidated financial data of Ormat Industries, pro forma financial data of Ormat, comparative historical per share data and market value data are being provided to help you in your analysis of the financial aspects of the share exchange and the other transactions contemplated by the share exchange agreement. You should read this information in conjunction with the financial information included elsewhere in, or incorporated by reference into, this information statement. See “Where You Can Find More Information,” “Incorporation by Reference,” “Selected Historical Consolidated Financial Information of Ormat,” “Selected Historical Consolidated Financial Information of Ormat Industries,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Market
Price and Dividend Information” and “Comparative Per Share Data.”
Summary Historical Financial Data of Ormat
The summary consolidated financial information of Ormat presented below for each of the five years in the period ended December 31, 2013 and the balance sheet data as of the end of each such year has been derived from Ormat’s audited consolidated financial statements included in its annual reports on Form 10-K filed with the SEC. The summary consolidated financial information of Ormat presented in the table below as of and for the nine months ended September 30, 2014 and 2013 is unaudited and has been derived from Ormat’s condensed consolidated financial statements included in its quarterly report on Form 10-Q filed with the SEC for the period ended September 30, 2014 incorporated
by reference into this information statement. In the opinion of Ormat’s management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for such periods have been included. The results of operations for the nine months ended September 30, 2014 may not be indicative of the results of operations to be expected for the full year. The summary consolidated financial data as of December 31, 2013 and 2012 and for the fiscal years ended December 31, 2013, 2012 and 2011 were derived from the audited consolidated financial statements incorporated by reference into this information
statement. The summary consolidated financial data as of December 31, 2011, 2010 and 2009 and for the fiscal years ended December 31, 2010 and 2009 was derived from audited consolidated financial statements that are not included or incorporated by reference into this information statement. The table below should be read in conjunction with Ormat’s consolidated financial statements and notes thereto and Ormat’s condensed consolidated financial statements and notes thereto incorporated by reference into this information statement. For more detailed information on the Pro Forma Financial Data, including explanations for adjustment,
refer to pages 57 to 65 of this information statement.
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Consolidated Statements of Operations Data
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Nine Months Ended September 30,
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Year Ended December 31,
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2013
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2013
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2012
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2011
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2010
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2009
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(In thousands, except per share data)
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Total revenues
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410,281 | 402,334 | 533,239 | 501,773 | 425,456 | 361,357 | 401,012 | |||||||||||||||||||||
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Operating income
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108,689 | 75,343 | 96,958 | (159,896 | ) | 61,555 | 20,777 | 63,110 | ||||||||||||||||||||
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Income (loss) from continuing operations
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47,872 | 28,979 | 37,334 | (216,154 | ) | (44,881 | ) | 30,689 | 62,298 | |||||||||||||||||||
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Income from discontinued operations
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— | 4,697 | 4,697 | 3,547 | 2,157 | 6,539 | 6,255 | |||||||||||||||||||||
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Net income (loss)
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47,872 | 33,676 | 42,031 | (212,607 | ) | (42,724 | ) | 37,228 | 68,553 | |||||||||||||||||||
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Net loss attributable to noncontrolling interest
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(670 | ) | (600 | ) | (793 | ) | (414 | ) | (332 | ) | 90 | 298 | ||||||||||||||||
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Net income (loss) attributable to Ormat’s stockholders
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$ | 47,202 | $ | 33,076 | $ | 41,238 | $ | (213,021 | ) | $ | (43,056 | ) | $ | 37,318 | $ | 68,851 | ||||||||||||
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Earnings per share attributable to Ormat’s stockholders:
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Basic:
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Income from continuing operations
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$ | 1.04 | $ | 0.62 | $ | 0.81 | $ | (4.77 | ) | $ | (1.00 | ) | $ | 0.67 | $ | 1.37 | ||||||||||||
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Discontinued operations
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— | 0.10 | 0.10 | 0.08 | 0.05 | 0.15 | 0.14 | |||||||||||||||||||||
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Net income
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$ | 1.04 | $ | 0.72 | $ | 0.91 | $ | (4.69 | ) | $ | (0.95 | ) | $ | 0.82 | $ | 1.52 | ||||||||||||
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Diluted:
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Income from continuing operations
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$ | 1.03 | $ | 0.62 | $ | 0.81 | $ | (4.77 | ) | $ | (1.00 | ) | $ | 0.67 | $ | 1.37 | ||||||||||||
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Discontinued operations
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— | 0.10 | 0.10 | 0.08 | 0.05 | 0.15 | 0.14 | |||||||||||||||||||||
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Net income
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$ | 1.03 | $ | 0.72 | $ | 0.91 | $ | (4.69 | ) | $ | (0.95 | ) | $ | 0.82 | $ | 1.51 | ||||||||||||
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Consolidated Balance Sheet Data
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Nine Months Ended September 30,
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Year Ended December 31,
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2013
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2013
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2012
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2011
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2010
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2009
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(In thousands, except per share data)
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Cash and cash equivalents
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$ | 42,451 | $ | 35,435 | $ | 57,354 | $ | 66,628 | $ | 99,886 | $ | 82,815 | $ | 46,307 | ||||||||||||||
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Working capital
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130,338 | 104,990 | 103,001 | 64,100 | 98,415 | 66,932 | 55,652 | |||||||||||||||||||||
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Property, plant and equipment, net (including construction-in process)
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1,727,665 | 1,719,268 | 1,741,163 | 1,649,014 | 1,889,083 | 1,696,101 | 1,517,288 | |||||||||||||||||||||
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Total assets
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2,171,913 | 2,168,335 | 2,159,433 | 2,087,523 | 2,314,718 | 2,043,328 | 1,864,193 | |||||||||||||||||||||
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Long-term debt (including current portion)
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1,040,245 | 1,075,094 | 1,077,857 | 1,030,928 | 1,025,010 | 789,669 | 624,442 | |||||||||||||||||||||
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Notes payable to Ormat
Industries (including current portion)
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— | — | — | — | — | — |
9,600
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Equity
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783,544 | 736,970 | 745,111 | 695,607 | 906,644 | 945,227 | 911,695 | |||||||||||||||||||||
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Summary Consolidated Financial Data of Ormat Industries
The following table presents summary consolidated financial data for Ormat Industries as of December 31, 2013 and for the nine months ended September 30, 2014 and 2013 and as of and for the fiscal years ended December 31, 2013, 2012, 2011, 2010 and 2009 under IFRS. The summary consolidated financial data of Ormat Industries presented in the table below as of and for the nine months ended September 30, 2014 and 2013 is unaudited
and has been derived from Ormat Industries’ condensed consolidated financial statements included elsewhere in this information statement. In the opinion of Ormat Industries’ management, the condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the information set forth in those statements. The results of operations for the nine months ended September 30, 2014 may not be indicative of the results of operations to be expected for the full year. The summary consolidated financial data as of December 31, 2013 and 2012 and for the fiscal years ended December 31, 2013, 2012 and 2011
has been derived from Ormat Industries’ audited consolidated financial statements included elsewhere in this information statement. The summary consolidated financial data as of December 31, 2011, 2010 and 2009 and for the fiscal years ended December 31, 2010 and 2009 has been derived from Ormat Industries’ audited consolidated financial statements not included elsewhere in this information statement. The summary consolidated financial data presented should be read together with Ormat Industries’ consolidated financial statements and the related notes thereto.
Consolidated Statements of Operations Data
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Nine Months Ended September 30,
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Year Ended December 31,
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2013
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2013
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2012
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2011
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2010
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2009
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(In thousands, except per share data)
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Total revenues
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$ | 430,781 | $ | 407,200 | $ | 538,105 | $ | 514,408 | $ | 439,925 | $ | 378,973 | $ | 431,511 | ||||||||||||||
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Income (loss) from operations
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115,235 | 97,487 | 120,149 | (84,499 | ) | 65,654 | (64,700 | ) | 79,542 | |||||||||||||||||||
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Income (loss) for the period
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49,800 | 42,414 | 49,650 | (177,324 | ) | (37,659 | ) | (46,053 | ) | 82,591 | ||||||||||||||||||
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Attributable to:
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Equity holders of Ormat Industries
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29,303 | 25,524 | 29,495 | (106,848 | ) | (21,799 | ) | (29,964 | ) | 52,869 | ||||||||||||||||||
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Noncontrolling interest
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20,497 | 16,890 | 20,155 | (70,476 | ) | (15,860 | ) | (16,089 | ) | 29,722 | ||||||||||||||||||
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Total
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$ | 49,800 | $ | 42,414 | $ | 49,650 | $ | (177,324 | ) | $ | (37,659 | ) | $ | (46,053 | ) | $ | 82,591 | |||||||||||
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Earnings per share attributable to
Ormat Industries stockholders:
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Basic:
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Basic and fully diluted
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$ | 0.25 | $ | 0.22 | $ | 0.25 | $ | (0.92 | ) | $ | (0.19 | ) | $ | (0.26 | ) | $ | 0.45 | |||||||||||
| Consolidated Balance Sheet Data | ||||||||||||||||||||||||||||
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Nine Months Ended September 30,
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Year Ended December 31,
|
|||||||||||||||||||||||||||
|
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 46,710 | $ | 38,128 | $ | 57,908 | $ | 71,767 | $ | 114,082 | $ | 147,860 | $ | 46,307 | ||||||||||||||
|
Working capital
|
138,980 | 141,647 | 114,872 | 99,968 | 109,190 | 123,991 | 183,930 | |||||||||||||||||||||
|
Property, plant and equipment, net (including construction-in process)
|
1,657,604 | 1,643,990 | 1,666,950 | 1,577,673 | 1,752,204 | 1,565,429 | 1,522,848 | |||||||||||||||||||||
|
Total assets
|
2,188,968 | 2,150,542 | 2,136,914 | 2,073,418 | 2,253,691 | 2,060,614 | 2,019,668 | |||||||||||||||||||||
|
Long-term debt (including current portion)
|
1,036,868 | 1,053,466 | 1,055,862 | 1,006,535 | 1,002,424 | 776,964 | 624,442 | |||||||||||||||||||||
|
Notes receivable from Ormat (including current portion)
|
— | — | — | — | — | — | 9,600 | |||||||||||||||||||||
|
Equity
|
773,766 | 731,455 | 734,454 | 684,908 | 858,413 | 991,052 | 1,094,019 | |||||||||||||||||||||
|
Summary Unaudited Pro Forma Condensed Combined Financial Information
The following sets forth certain summary unaudited pro forma condensed combined financial information that gives effect to the share exchange. The summary unaudited pro forma condensed combined financial information set forth below is presented for informational purposes only, and is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the share exchange been completed on the dates indicated. In addition, the summary unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company.
The unaudited pro forma condensed combined balance sheet information set forth below assumes that the share exchange occurred on September 30, 2014 in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined statements of operations information set forth below for the year ended December 31, 2013 and for the nine months ended September 30, 2014 assumes that the share exchange occurred on January 1, 2013 in accordance with Article 11 of Regulation S-X.
The historical consolidated financial information has been adjusted in the summary unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the share exchange, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. The summary unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements, which can be found under “Unaudited Pro Forma Condensed Combined Financial Information.” As discussed in the notes to the unaudited pro forma condensed combined financial statements, Ormat reports its financial results under GAAP and Ormat Industries reports its financial results under IFRS. In addition, the summary unaudited pro forma
condensed combined financial information is based on and should be read in conjunction with the historical consolidated financial statements and accompanying notes for each of Ormat (which are incorporated by reference into this information statement) and Ormat Industries (which are included elsewhere in this information statement) for the applicable periods.
|
|
Unaudited Pro Forma Condensed Combined Statements of Operations Information
|
||||||||||||||||||||
| Ormat |
Ormat Industries
|
Adj (I)
|
Adj (II)
|
Ormat Pro Forma
|
||||||||||||||||
|
Nine Months Ended September 30, 2014
|
||||||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||
|
Electricity
|
$ | 289,015 | 289,015 | (289,015 | ) | — | 289,015 | |||||||||||||
|
Product
|
121,266 | 141,766 | (121,266 | ) | (20,500 | ) | 121,266 | |||||||||||||
|
Total revenues
|
410,281 | 430,781 | (410,281 | ) | (20,500 | ) | 410,281 | |||||||||||||
|
Cost of revenues:
|
||||||||||||||||||||
|
Electricity
|
186,083 | 184,523 | (186,083 | ) | 438 | 186,083 | ||||||||||||||
| 1,122 | ||||||||||||||||||||
|
Product
|
75,307 | 93,778 | (75,307 | ) | 19 | 73,944 | ||||||||||||||
| (19,853 | ) | |||||||||||||||||||
|
Total cost of revenues
|
261,390 | 278,301 | (260,268 | ) | (19,396 | ) | 260,027 | |||||||||||||
|
Gross margin
|
148,891 | 152,480 | (150,013 | ) | (1,104 | ) | 150,254 | |||||||||||||
|
Operating expenses:
|
||||||||||||||||||||
|
Research and development expenses
|
395 | 395 | (395 | ) | — | 395 | ||||||||||||||
|
Selling and marketing expenses
|
10,853 | 10,861 | (10,853 | ) | 10,861 | |||||||||||||||
|
General and administrative expenses
|
20,847 | 22,529 | (20,847 | ) | (321 | ) | 22,208 | |||||||||||||
|
Write-off of unsuccessful exploration activities
|
8,107 | 8,107 | (8,107 | ) | — | 8,107 | ||||||||||||||
|
Operating income
|
108,689 | 110,588 | (109,811 | ) | (783 | ) | 108,683 | |||||||||||||
|
Other income (expense):
|
||||||||||||||||||||
|
Interest income
|
236 | (236 | ) | 50 | 236 | |||||||||||||||
| 186 | ||||||||||||||||||||
|
Interest expense, net
|
(65,084 | ) | (65,169 | ) | 65,084 | (65,109 | ) | |||||||||||||
| 1,122 | ||||||||||||||||||||
| (1,062 | ) | |||||||||||||||||||
|
Foreign currency translation and transaction gains (losses)
|
(3,639 | ) | — | (3,639 | ) | |||||||||||||||
|
Income attributable to sale of tax benefits
|
18,334 | — | 18,334 | |||||||||||||||||
|
Gain from sale of property, plant and equipment
|
7,628 | 7,628 | (7,628 | ) | — | 7,628 | ||||||||||||||
|
Other non-operating expense, net
|
649 | (2,981 | ) | (649 | ) | (76 | ) | 865 | ||||||||||||
| 3,639 | ||||||||||||||||||||
|
Income before income taxes and equity in income
|
(186 | ) | 469 | |||||||||||||||||
|
losses of investees
|
66,813 | 50,066 | (48,479 | ) | (1,402 | ) | 66,998 | |||||||||||||
|
Income tax provision
|
(17,731 | ) | (266 | ) | 17,731 | (1,125 | ) | (19,031 | ) | |||||||||||
| (18,334 | ) | |||||||||||||||||||
| 694 | ||||||||||||||||||||
|
Equity in income (losses) of investees, net
|
(1,210 | ) | — | (1,210 | ) | |||||||||||||||
|
Income from continuing operations
|
47,872 | 49,800 | (49,082 | ) | (1,833 | ) | 46,757 | |||||||||||||
|
Net income attributable to noncontrolling interest
|
(670 | ) | — | (670 | ) | |||||||||||||||
|
Net income attributable to the Ormat’s stockholders
|
$ | 47,202 | 49,800 | (49,082 | ) | (1,833 | ) | 46,087 | ||||||||||||
|
Earnings per share attributable to Ormat’s stockholders - Basic and diluted:
|
||||||||||||||||||||
|
Basic:
|
1.04 | 0.95 | ||||||||||||||||||
|
Diluted:
|
1.03 | 0.94 | ||||||||||||||||||
|
Weighted average shares:
|
||||||||||||||||||||
|
Basic:
|
45,594 | 2,997 | 48,591 | |||||||||||||||||
|
Diluted:
|
45,917 | 2,997 | 48,914 | |||||||||||||||||
| Ormat |
Ormat Industries
|
Adj (I)
|
Adj (II)
|
Ormat Pro Forma
|
||||||||||||||||
|
For the year ended December 31, 2013
|
||||||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||
|
Electricity
|
$ | 329,747 | 334,613 | (329,747 | ) | (4,866 | ) | 329,747 | ||||||||||||
|
Product
|
203,492 | 203,492 | (203,492 | ) | — | 203,492 | ||||||||||||||
|
Total revenues
|
533,239 | 538,105 | (533,239 | ) | (4,866 | ) | 533,239 | |||||||||||||
|
Cost of revenues:
|
||||||||||||||||||||
|
Electricity
|
232,874 | 235,335 | (232,874 | ) | (1,134 | ) | 232,874 | |||||||||||||
| 1,542 | (2,869 | ) | ||||||||||||||||||
|
Product
|
140,547 | 138,204 | (140,547 | ) | 546 | 138,750 | ||||||||||||||
|
Total cost of revenues
|
373,421 | 373,539 | (371,879 | ) | (3,457 | ) | 371,624 | |||||||||||||
|
Gross margin
|
159,818 | 164,566 | (161,360 | ) | (1,409 | ) | 161,615 | |||||||||||||
|
Operating expenses:
|
||||||||||||||||||||
|
Research and development expenses
|
4,965 | 4,965 | (4,965 | ) | — | 4,965 | ||||||||||||||
|
Selling and marketing expenses
|
24,613 | 24,835 | (24,613 | ) | (29 | ) | 24,613 | |||||||||||||
| (193 | ) | |||||||||||||||||||
|
General and administrative expenses
|
29,188 | 31,005 | (29,188 | ) | (61 | ) | 30,805 | |||||||||||||
|
Impairment charge
|
— | (139 | ) | — | ||||||||||||||||
|
Impairment of power plants - net
|
— | (8,038 | ) | — | 8,038 | — | ||||||||||||||
|
Write-off of unsuccessful exploration activities
|
4,094 | 4,094 | (4,094 | ) | — | 4,094 | ||||||||||||||
|
Operating income
|
96,958 | 107,705 | (98,500 | ) | (9,025 | ) | 97,138 | |||||||||||||
|
Other income (expense):
|
||||||||||||||||||||
|
Interest income
|
1,332 | — | — | 1,332 | ||||||||||||||||
|
Interest expense, net
|
(73,776 | ) | (76,914 | ) | 73,776 | 1,368 | (74,004 | ) | ||||||||||||
| 1,542 | ||||||||||||||||||||
| — | ||||||||||||||||||||
|
Foreign currency translation and transaction gains (losses)
|
5,085 | — | — | 5,085 | ||||||||||||||||
|
Income attributable to sale of tax benefits
|
19,945 | — | — | 19,945 | ||||||||||||||||
|
Gain from sale of investment in subsidiary
|
— | 4,230 | — | (4,230 | ) | — | ||||||||||||||
|
Other non-operating expense, net
|
1,592 | 8,214 | (1,592 | ) | (504 | ) | 1,293 | |||||||||||||
| (5,085 | ) | |||||||||||||||||||
|
Income before income taxes and equity in income
|
(1,332 | ) | — | |||||||||||||||||
|
losses of investees
|
51,136 | 43,235 | (31,191 | ) | (12,391 | ) | 50,789 | |||||||||||||
|
Income tax provision
|
(13,552 | ) | 6,415 | 13,552 | (2,271 | ) | (15,187 | ) | ||||||||||||
| (19,945 | ) | 614 | ||||||||||||||||||
| — | ||||||||||||||||||||
|
Equity in income (losses) of investees, net
|
(250 | ) | — | — | — | (250 | ) | |||||||||||||
|
Income from continuing operations
|
37,334 | 49,650 | (37,584 | ) | (14,048 | ) | 35,352 | |||||||||||||
|
Net income attributable to noncontrolling interest
|
(793 | ) | — | — | — | (793 | ) | |||||||||||||
|
Net income attributable to the Ormat’s stockholders
|
$ | 36,541 | 49,650 | (37,584 | ) | (14,048 | ) | 34,559 | ||||||||||||
|
Earnings per share attributable to Ormat’s stockholders - Basic and diluted:
|
||||||||||||||||||||
|
Basic:
|
0.81 | 0.71 | ||||||||||||||||||
|
Diluted:
|
0.81 | 0.71 | ||||||||||||||||||
|
Weighted average shares:
|
||||||||||||||||||||
|
Basic:
|
45,440 | 2,997 | 48,437 | |||||||||||||||||
|
Diluted:
|
45,475 | 2,997 | 48,472 | |||||||||||||||||
|
Unaudited Pro Forma Condensed Combined Balance Sheet Information
|
||||||||||||||||||||
|
Ormat
|
Ormat Industries
|
Adj (I)
|
Adj (II)
|
Ormat Pro Forma
|
||||||||||||||||
|
in thousands
|
||||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||
|
Current assets:
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 42,451 | $ | 46,710 | (42,451 | ) | (360 | ) | 46,350 | |||||||||||
|
Restricted cash, and cash equivalents
|
127,452 | 127,452 | (127,452 | ) | — | 127,452 | ||||||||||||||
|
Financial assets at fair value through profit and loss
|
— | 10,972 | (10,972 | ) | — | — | ||||||||||||||
|
Short-term investments
|
— | — | 10,972 | 10,972 | ||||||||||||||||
|
Derivatives
|
— | 1,637 | (1,637 | ) | — | — | ||||||||||||||
|
Receivables:
|
||||||||||||||||||||
|
Trade
|
75,224 | 75,224 | (75,224 | ) | — | 75,224 | ||||||||||||||
|
Related entity
|
506 | — | — | — | 506 | |||||||||||||||
|
Income taxes receivable
|
— | 6,064 | (6,064 | ) | — | — | ||||||||||||||
|
Other
|
9,165 | 42,497 | (9,165 | ) | — | 9,805 | ||||||||||||||
| (29,178 | ) | |||||||||||||||||||
| (3,514 | ) | |||||||||||||||||||
|
Due from Ormat Industries
|
970 | — | (970 | ) | — | — | ||||||||||||||
|
Inventories
|
17,337 | 17,337 | (17,337 | ) | — | 17,337 | ||||||||||||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
14,784 | 14,784 | (14,784 | ) | — | 14,784 | ||||||||||||||
|
Deferred income taxes
|
2,613 | — | — | — | 2,613 | |||||||||||||||
|
Prepaid expenses and other
|
36,879 | — | — | — | 36,879 | |||||||||||||||
|
Total current assets
|
327,381 | 342,677 | (324,262 | ) | (3,874 | ) | 341,922 | |||||||||||||
|
Financial assets at fair value through profit and loss
|
— | 251 | — | — | 251 | |||||||||||||||
|
Prepaid expenses in respect of operating lease
|
— | 2,444 | — | (2,444 | ) | — | ||||||||||||||
|
Unconsolidated investments
|
1,339 | — | — | — | 1,339 | |||||||||||||||
|
Deposits and other
|
21,679 | 5,632 | (21,679 | ) | (1,235 | ) | 21,679 | |||||||||||||
| 17,282 | ||||||||||||||||||||
|
Financial assets under concession arrangement
|
— | 23,591 | — | (23,591 | ) | — | ||||||||||||||
|
Deferred income taxes
|
— | 57,225 | — | (57,225 | ) | — | ||||||||||||||
|
Deferred charges
|
35,399 | — | — | — | 35,399 | |||||||||||||||
|
Property, plant and equipment, net
|
1,459,316 | 1,456,627 | (1,458,975 | ) | 709 | 1,471,679 | ||||||||||||||
| 1,137 | ||||||||||||||||||||
| 35,069 | ||||||||||||||||||||
| (22,204 | ) | |||||||||||||||||||
|
Construction-in-process
|
268,349 | 200,977 | (200,977 | ) | — | 268,349 | ||||||||||||||
|
Projects under exploration and development
|
— | 67,372 | (67,372 | ) | — | — | ||||||||||||||
|
Deferred financing and lease costs, net
|
28,969 | — | (28,969 | ) | 26,987 | 28,969 | ||||||||||||||
| 1,982 | ||||||||||||||||||||
|
Intangible assets, net
|
29,481 | 32,172 | (29,481 | ) | (709 | ) | 29,481 | |||||||||||||
| (1,982 | ) | |||||||||||||||||||
|
Total assets
|
$ | 2,171,913 | $ | 2,188,968 | (2,131,715 | ) | (30,098 | ) | 2,199,068 | |||||||||||
|
LIABILITIES AND EQUITY
|
||||||||||||||||||||
|
Current liabilities:
|
||||||||||||||||||||
|
Current maturities of notes and long term loans
|
— | 73,322 | (73,322 | ) | — | — | ||||||||||||||
|
Accounts payable and accrued expenses
|
$ | 78,411 | $ | — | (78,411 | ) | 78,491 | |||||||||||||
| (3,229 | ) | |||||||||||||||||||
| 83,799 | (2,288 | ) | ||||||||||||||||||
|
Trade
|
— | 30,152 | (30,072 | ) | (80 | ) | — | |||||||||||||
|
Income taxes payable
|
— | 4,335 | (3,472 | ) | — | 863 | ||||||||||||||
|
Accrued expenses
|
— | 981 | (981 | ) | — | — | ||||||||||||||
|
Customers advances
|
— | 3,946 | (3,946 | ) | — | — | ||||||||||||||
|
Other
|
— | 43,469 | (43,346 | ) | — | 123 | ||||||||||||||
|
Derivatives
|
— | 2,182 | (2,182 | ) | — | — | ||||||||||||||
| 209 | ||||||||||||||||||||
|
Short-term revolving credit lines with banks (full recourse
|
— | — | — | — | — | |||||||||||||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
45,310 | 45,310 | (45,310 | ) | — | 45,310 | ||||||||||||||
|
Current portion of long-term debt:
|
— | |||||||||||||||||||
|
Limited and non-recourse:
|
— | |||||||||||||||||||
|
Senior secured notes
|
31,211 | — | — | — | 31,211 | |||||||||||||||
|
Other loans
|
17,995 | — | — | — | 17,995 | |||||||||||||||
|
Full recourse
|
24,116 | — | — | — | 24,116 | |||||||||||||||
|
Total current liabilities
|
197,043 | 203,697 | (197,034 | ) | (5,597 | ) | 198,109 | |||||||||||||
|
Long-term debt, net of current portion:
|
||||||||||||||||||||
|
Limited and non-recourse:
|
||||||||||||||||||||
|
Senior secured notes
|
379,036 | 366,667 | (379,036 | ) | 12,369 | 379,036 | ||||||||||||||
|
Other loans
|
269,123 | 278,818 | (269,123 | ) | 7,859 | 269,123 | ||||||||||||||
|
Full recourse:
|
(17,554 | ) | — | |||||||||||||||||
|
Senior unsecured bonds
|
250,366 | 249,679 | (250,366 | ) | 687 | 250,366 | ||||||||||||||
|
Other loans
|
40,298 | 40,282 | (40,298 | ) | 16 | 40,298 | ||||||||||||||
|
Revolving credit lines with banks (full recourse
|
28,100 | 28,100 | (28,100 | ) | — | 28,100 | ||||||||||||||
|
Long term derivative
|
— | 5,158 | — | (5,158 | ) | — | ||||||||||||||
|
Liability associated with sale of tax benefits
|
44,757 | 54,900 | (44,757 | ) | (13,756 | ) | 44,757 | |||||||||||||
| 3,613 | ||||||||||||||||||||
|
Deferred lease income
|
61,294 | 61,294 | (61,294 | ) | — | 61,294 | ||||||||||||||
|
Deferred income taxes
|
67,328 | 61,339 | (67,328 | ) | (694 | ) | 67,328 | |||||||||||||
| 6,683 | ||||||||||||||||||||
|
Liability for unrecognized tax benefits
|
5,606 | — | — | — | 5,606 | |||||||||||||||
|
Liabilities for severance pay
|
21,984 | 4,001 | (21,984 | ) | 17,983 | 21,984 | ||||||||||||||
|
Asset retirement obligation
|
19,801 | — | — | — | 19,801 | |||||||||||||||
|
Other long-term liabilities
|
3,633 | 61,267 | (3,633 | ) | — | 3,870 | ||||||||||||||
| (19,801 | ) | (37,596 | ) | |||||||||||||||||
|
Total liabilities
|
1,388,369 | 1,415,202 | (1,382,754 | ) | (31,145 | ) | 1,389,672 | |||||||||||||
|
Equity:
|
||||||||||||||||||||
|
The Ormat’s stockholders’ equity:
|
||||||||||||||||||||
|
Common stock
|
46 | 38,374 | (38,374 | ) | — | 46 | ||||||||||||||
|
Additional paid-in capital
|
740,651 | 162,433 | (137,628 | ) | 1,047 | 766,503 | ||||||||||||||
|
Other capital surplus
|
— | (18,961 | ) | 18,961 | — | — | ||||||||||||||
|
Retained earnings
|
36,835 | 265,527 | (265,527 | ) | 36,835 | |||||||||||||||
|
Accumulated other comprehensive income
|
(5,710 | ) | — | — | — | (5,710 | ) | |||||||||||||
|
Less - cost of Ormat Industries shares held by Ormat Industries
|
— | (2,826 | ) | 2,826 | — | |||||||||||||||
| 771,822 | 444,547 | (419,742 | ) | 1,047 | 797,674 | |||||||||||||||
|
Noncontrolling interest
|
11,722 | 329,219 | (329,219 | ) | — | 11,722 | ||||||||||||||
|
Total equity
|
783,544 | 773,766 | (748,961 | ) | 1,047 | 809,396 | ||||||||||||||
|
Total liabilities and equity
|
$ | 2,171,913 | $ | 2,188,968 | (2,131,715 |
)
|
(30,098 | ) | 2,199,068 | |||||||||||
|
Supplemental Pro Forma Financial Information
The following balance sheet as of September 30, 2014 and statement of operations for the year ended December 31, 2013 and nine months ended September 30, 2014 are presented to assist in analyzing Ormat Industries balances as of such dates without consolidating those of Ormat, as well to adjust Ormat Industries’ financial results from IFRS to GAAP. This financial information is not in accordance with Article 11 of Regulation S-X and is only supplemental to the pro forma financial information presented above.
|
|
Ormat
|
Ormat Industries
(Standalone)
Adjusted for GAAP
|
Total
|
||||||||||
|
Nine Months Ended September 30, 2014
|
||||||||||||
|
Revenues:
|
||||||||||||
|
Electricity
|
289,015 | — | 289,015 | |||||||||
|
Product
|
121,266 | — | 121,266 | |||||||||
|
Total revenues
|
410,281 | — | 410,281 | |||||||||
|
Cost of revenues:
|
||||||||||||
|
Electricity
|
186,083 | — | 186,083 | |||||||||
|
Product
|
75,307 | (1,363 | ) | 73,944 | ||||||||
|
Total cost of revenues
|
261,390 | (1,363 | ) | 260,027 | ||||||||
|
Gross margin
|
148,891 | 1,363 | 150,254 | |||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development expenses
|
395 | — | 395 | |||||||||
|
Selling and marketing expenses
|
10,853 | 8 | 10,861 | |||||||||
|
General and administrative expenses
|
20,847 | 1,361 | 22,208 | |||||||||
|
Write-off of unsuccessful exploration activities
|
8,107 | — | 8,107 | |||||||||
|
Operating income
|
108,689 | (6 | ) | 108,683 | ||||||||
|
Other income (expense):
|
||||||||||||
|
Interest income
|
236 | — | 236 | |||||||||
|
Interest expense, net
|
(65,084 | ) | (25 | ) | (65,109 | ) | ||||||
|
Foreign currency translation and transaction gains (losses)
|
(3,639 | ) | — | (3,639 | ) | |||||||
|
Income attributable to sale of tax benefits
|
18,334 | — | 18,334 | |||||||||
|
Gain from sale of property, plant and equipment
|
7,628 | — | 7,628 | |||||||||
|
Other non-operating expense, net
|
649 | 216 | 865 | |||||||||
|
Income before income taxes and equity in income
|
||||||||||||
|
losses of investees
|
66,813 | 185 | 66,998 | |||||||||
|
Income tax provision
|
(17,731 | ) | (1,300 | ) | (19,031 | ) | ||||||
|
Equity in income (losses) of investees, net
|
(1,210 | ) | — | (1,210 | ) | |||||||
|
Income from continuing operations
|
47,872 | (1,115 | ) | 46,757 | ||||||||
|
Net income attributable to noncontrolling interest
|
(670 | ) | — | (670 | ) | |||||||
|
Net income attributable to the Ormat’s stockholders
|
47,202 | (1,115 | ) | 46,087 | ||||||||
|
Ormat
|
Ormat Industries (Standalone)
Adjusted for GAAP
|
Total
|
||||||||||
|
For the year ended December 31, 2013
|
||||||||||||
|
Revenues:
|
||||||||||||
|
Electricity
|
329,747 | — | 329,747 | |||||||||
|
Product
|
203,492 | — | 203,492 | |||||||||
|
Total revenues
|
533,239 | — | 533,239 | |||||||||
|
Cost of revenues:
|
||||||||||||
|
Electricity
|
232,874 | — | 232,874 | |||||||||
|
Product
|
140,547 | (1,797 | ) | 138,750 | ||||||||
|
Total cost of revenues
|
373,421 | (1,797 | ) | 371,624 | ||||||||
|
Gross margin
|
159,818 | 1,797 | 161,615 | |||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development expenses
|
4,965 | — | 4,965 | |||||||||
|
Selling and marketing expenses
|
24,613 | — | 24,613 | |||||||||
|
General and administrative expenses
|
29,188 | 1,617 | 30,805 | |||||||||
|
Impairment charge
|
— | — | — | |||||||||
|
Impairment of power plants - net
|
— | — | — | |||||||||
|
Write-off of unsuccessful exploration activities
|
4,094 | — | 4,094 | |||||||||
|
Operating income
|
96,958 | 180 | 97,138 | |||||||||
|
Other income (expense):
|
||||||||||||
|
Interest income
|
1,332 | — | 1,332 | |||||||||
|
Interest expense, net
|
(73,776 | ) | (228 | ) | (74,004 | ) | ||||||
|
Foreign currency translation and transaction gains (losses)
|
5,085 | — | 5,085 | |||||||||
|
Income attributable to sale of tax benefits
|
19,945 | — | 19,945 | |||||||||
|
Gain from sale of investment in subsidiary
|
— | — | — | |||||||||
|
Other non-operating expense, net
|
1,592 | (299 | ) | 1,293 | ||||||||
|
Income before income taxes and equity in income losses of investees
|
51,136 | (347 | ) | 50,789 | ||||||||
|
Income tax provision
|
(13,552 | ) | (1,635 | ) | (15,187 | ) | ||||||
|
Equity in income (losses) of investees, net
|
(250 | ) | — | (250 | ) | |||||||
|
Income from continuing operations
|
37,334 | (1,982 | ) | 35,352 | ||||||||
|
Net income attributable to noncontrolling interest
|
(793 | ) | — | (793 | ) | |||||||
|
Net income attributable to the Ormat’s stockholders
|
36,541 | (1,982 | ) | 34,559 | ||||||||
|
Ormat
|
Ormat Industries (Standalone)
Adjusted for GAAP
|
Total
|
||||||||||
|
in thousands
|
||||||||||||
|
Current assets:
|
||||||||||||
|
Cash and cash equivalents
|
42,451 | 3,899 | 46,350 | |||||||||
|
Restricted cash, and cash equivalents
|
127,452 | — | 127,452 | |||||||||
|
Financial assets at fair value through profit and loss
|
— | 10,972 | 10,972 | |||||||||
|
Short-term investments
|
— | |||||||||||
|
Derivatives
|
— | — | — | |||||||||
|
Receivables:
|
— | |||||||||||
|
Trade
|
75,224 | — | 75,224 | |||||||||
|
Related entity
|
506 | — | 506 | |||||||||
|
Income taxes receivable
|
— | — | — | |||||||||
|
Other
|
9,165 | 640 | 9,805 | |||||||||
|
Due from Ormat Industries
|
— | — | — | |||||||||
|
Inventories
|
17,337 | — | 17,337 | |||||||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
14,784 | — | 14,784 | |||||||||
|
Deferred income taxes
|
2,613 | — | 2,613 | |||||||||
|
Prepaid expenses and other
|
36,879 | — | 36,879 | |||||||||
|
Total current assets
|
326,411 | 15,511 | 341,922 | |||||||||
|
Financial assets at fair value through profit and loss
|
— | 251 | 251 | |||||||||
|
Prepaid expenses in respect of operating lease
|
— | — | — | |||||||||
|
Unconsolidated investments
|
1,339 | — | 1,339 | |||||||||
|
Deposits and other
|
21,679 | — | 21,679 | |||||||||
|
Financial assets under concession arrangement
|
— | — | — | |||||||||
|
Deferred income taxes
|
— | — | — | |||||||||
|
Deferred charges
|
35,399 | — | 35,399 | |||||||||
|
Property, plant and equipment, net
|
1,459,316 | 12,363 | 1,471,679 | |||||||||
|
Construction-in-process
|
268,349 | — | 268,349 | |||||||||
|
Projects under exploration and development
|
— | — | — | |||||||||
|
Deferred financing and lease costs, net
|
28,969 | — | 28,969 | |||||||||
|
Intangible assets, net
|
29,481 | — | 29,481 | |||||||||
|
Total assets
|
2,170,943 | 28,125 | 2,199,068 | |||||||||
|
Current liabilities:
|
||||||||||||
|
Current maturities of notes and long term loans
|
— | — | — | |||||||||
|
Accounts payable and accrued expenses
|
78,411 | 80 | 78,491 | |||||||||
|
Trade
|
— | — | — | |||||||||
|
Income taxes payable
|
— | 863 | 863 | |||||||||
|
Accrued expenses
|
— | — | — | |||||||||
|
Customers advances
|
— | — | — | |||||||||
|
Other
|
— | 123 | 123 | |||||||||
|
Derivatives
|
— | — | — | |||||||||
|
Short-term revolving credit lines with banks (full recourse
|
— | — | — | |||||||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
45,310 | — | 45,310 | |||||||||
|
Current portion of long-term debt:
|
||||||||||||
|
Limited and non-recourse:
|
— | |||||||||||
|
Senior secured notes
|
31,211 | — | 31,211 | |||||||||
|
Other loans
|
17,995 | — | 17,995 | |||||||||
|
Full recourse
|
24,116 | — | 24,116 | |||||||||
|
Total current liabilities
|
197,043 | 1,066 | 198,109 | |||||||||
|
Long-term debt, net of current portion:
|
||||||||||||
|
Limited and non-recourse:
|
||||||||||||
|
Senior secured notes
|
379,036 | — | 379,036 | |||||||||
|
Other loans
|
269,123 | — | 269,123 | |||||||||
|
Full recourse:
|
||||||||||||
|
Senior unsecured bonds
|
250,366 | — | 250,366 | |||||||||
|
Other loans
|
40,298 | — | 40,298 | |||||||||
|
Revolving credit lines with banks (full recourse
|
28,100 | — | 28,100 | |||||||||
|
Long term derivative
|
— | — | — | |||||||||
|
Liability associated with sale of tax benefits
|
44,757 | — | 44,757 | |||||||||
|
Deferred lease income
|
61,294 | — | 61,294 | |||||||||
|
Deferred income taxes
|
67,328 | — | 67,328 | |||||||||
|
Liability for unrecognized tax benefits
|
5,606 | — | 5,606 | |||||||||
|
Liabilities for severance pay
|
21,984 | — | 21,984 | |||||||||
|
Asset retirement obligation
|
19,801 | — | 19,801 | |||||||||
|
Other long-term liabilities
|
3,633 | 237 | 3,870 | |||||||||
|
Total liabilities
|
1,388,369 | 1,303 | 1,389,672 | |||||||||
|
Equity:
|
||||||||||||
|
The Ormat’s stockholders’ equity:
|
||||||||||||
|
Common stock
|
46 | — | 46 | |||||||||
|
Additional paid-in capital
|
739,681 | 26,822 | 766,503 | |||||||||
|
Other capital surplus
|
— | — | — | |||||||||
|
Retained earnings
|
36,835 | — | 36,835 | |||||||||
|
Accumulated other comprehensive income
|
(5,710 | ) | — | (5,710 | ) | |||||||
|
Less - cost of Ormat Industries shares held by Ormat Industries
|
— | — | — | |||||||||
| 770,852 | 26,822 | 797,674 | ||||||||||
|
Noncontrolling interest
|
11,722 | — | 11,722 | |||||||||
|
Total equity
|
782,574 | 26,822 | 809,396 | |||||||||
|
Total liabilities and equity
|
2,170,943 | 28,125 | 2,199,068 | |||||||||
|
Comparative Per Share Data
The historical net income (loss) per share from continuing operations and net book value per share of Ormat and Ormat Industries shown in the table below are derived from their unaudited consolidated financial statements as of and for the nine months ended September 30, 2014, Ormat’s audited consolidated financial statements for the year ended December 31, 2013 and Ormat Industries’ audited consolidated financial statements for the fiscal year ended December 31, 2013. The historical financial information for Ormat has been recognized and recorded in accordance with GAAP and the historical financial information for Ormat Industries has been recognized and recorded in accordance with IFRS. The pro forma comparative per share data for Ormat common stock and Ormat Industries
ordinary shares was derived from the unaudited pro forma condensed combined financial statements included in this information statement. The pro forma net book value per common share information as of September 30, 2014 was computed as if the share exchange had been completed on September 30, 2014. The pro forma equivalent information shows the effect of the share exchange for an owner of Ormat Industries ordinary shares. The information was computed by multiplying the pro forma combined income (loss) per share from continuing operations for the year ended December 31, 2013 and the nine months ended September 30, 2014, respectively, and pro forma combined net book value per common share as of September 30, 2014 by the exchange
ratio. You should read this information in conjunction with such pro forma financial statements and the related notes and with the historical financial information of Ormat and Ormat Industries included or incorporated elsewhere into this information statement, including Ormat’s and Ormat Industries’ financial statements and related notes thereto.
The pro forma shares outstanding as of September 30, 2014 assumes that (1) 116,524,664 ordinary shares of Ormat Industries are converted into 30,203,193 shares of Ormat common stock and (2) the 27,206,580 shares of Ormat common stock currently held by Ormat Industries are canceled in connection with the completion of the share exchange.
The basic and diluted pro forma combined earnings per share for Ormat is computed by dividing the total net income attributable to Ormat's stockholders by basic and diluted weighted average shares, respectively. The basic and diluted pro forma equivalent earnings per share for Ormat Industries is computed by dividing the pro forma total net income attributable to the Ormat’s stockholders by basic and diluted weighted average shares, respectively.
The historical net book values per common share are computed by dividing total stockholders’ equity, before noncontrolling interests, by the number of shares of common stock (in the case of Ormat) and ordinary shares (in the case of Ormat Industries) outstanding at the end of the period. The pro forma net income (loss) per common share of the combined company is computed by dividing the pro forma net income (loss) from continuing operations by the pro forma weighted average number of shares outstanding. The pro forma net book value per common share of the combined company is computed by dividing total pro forma stockholders’ equity by the pro forma number of shares of common stock (in the case of Ormat) and ordinary shares (in the case of Ormat Industries) outstanding at the end of the period.
The pro forma data is not necessarily indicative of actual results had the share exchange occurred during the periods indicated and is not necessarily indicative of future operations of the combined entity.
|
|
Ormat
|
Ormat Industries
|
|||||||||||||||
|
|
Historical
|
Pro Forma
Combined
|
Historical
|
Pro Forma
Equivalent
|
||||||||||||
|
As of and for the Nine Months Ended September 30, 2014 (Unaudited)
|
|
|
|
|
||||||||||||
|
Net income (loss) per share from continuing operations:
|
||||||||||||||||
|
Basic
|
$ | 1.04 | $ | 0.95 | $ | 0.25 | $ | 1.53 | ||||||||
|
Diluted
|
$ | 1.03 | $ | 0.94 | $ | 0.25 | $ | 1.53 | ||||||||
|
Net book value per common share
|
$ | 17.06 | $ | 16.55 | $ | 6.64 | $ | 26.80 | ||||||||
| Dividend per share declared | $ | 0.16 | $ | *0.16 | $ | 0.05 | $ | 0.04 | ||||||||
|
Shares outstanding as of September 30, 2014 (in thousands)
|
||||||||||||||||
|
Basic
|
45,594 | 48,591 | 116,525 | 30,203 | ||||||||||||
|
Diluted
|
45,917 | 48,014 | 116,525 | 30,203 | ||||||||||||
|
* Note: Same as historical since no change in dividend policy is expected as a result of the transaction.
|
||||||||||||||||
|
Ormat
|
Ormat Industries
|
|||||||||||||||
|
Historical
|
Pro Forma
Combined
|
Historical
|
Pro Forma
Equivalent
|
|||||||||||||
|
As of and for the Year Ended December 31, 2013
|
||||||||||||||||
|
Net income (loss) per share from continuing operations:
|
||||||||||||||||
|
Basic
|
$ | 0.81 | $ | 0.71 | $ | 0.25 | $ | 1.14 | ||||||||
|
Diluted
|
$ | 0.81 | $ | 0.71 | $ | 0.25 | $ | 1.14 | ||||||||
|
Net book value per common share
|
$ | 16.39 | $ | 6.30 | ||||||||||||
| Dividend per share declared | $ | 0.08 | $ | 0.08 | * | $ | 0.05 | $ | 0.02 | |||||||
|
Shares outstanding as of December 31, 2013 (in thousands)
|
||||||||||||||||
|
Basic
|
45,440 | 48,437 | 116,525 | 30,203 | ||||||||||||
|
Diluted
|
45,475 | 48,472 | 116,525 | 30,203 | ||||||||||||
|
* Note: Same as historical since no change in dividend policy is expected as a result of the transaction.
Comparative Market Value of Stock
Ormat common stock and Ormat Industries ordinary shares are listed for trading on the NYSE and the TASE under the symbols “ORA” and “ORMT,” respectively. The following table shows the closing prices per share of Ormat common stock and Ormat Industries ordinary shares as reported on October 28, 2014, the final trading day of Ormat prior to the announcement by Ormat acknowledging a report by Ormat Industries issued to the TASE and ISA that Ormat and Ormat Industries were considering a potential Ormat group corporate reorganization, November 7, 2014, the final trading day of Ormat prior to the public announcement of the share exchange, and on November 20, 2014, the latest practicable date prior to the date of this information statement. The closing prices
of Ormat Industries’ ordinary shares listed on the TASE for each of the periods referred to in the tables below were originally denominated in New Israeli Shekels and were converted to U.S. dollars using the representative exchange rate between the U.S. dollar and the New Israeli Shekels published by the Bank of Israel for each applicable day in the presented period.
|
|
|
Closing price
of Ormat
common stock
|
Closing price
of Ormat Industries
ordinary shares
|
Implied value
of share exchange
consideration
|
|||||||||
|
As of October 28, 2014
|
$ | 27.86 | $ | 6.89 | $ | 7.22 | ||||||
|
As of November 7, 2014
|
$ | 28.39 | $ | 6.87 | $ | 7.36 | ||||||
|
As of November 20, 2014
|
$ |
27.97
|
$ |
6.73
|
$ |
7.25
|
||||||
|
|
•
|
risks associated with Ormat’s and Ormat Industries’ ability to satisfy the conditions and terms of the share exchange agreement, and to consummate the transactions in the estimated timeframe, or at all;
|
|
|
•
|
uncertainties regarding the expected benefits of the share exchange and the other transactions contemplated under the share exchange agreement (including realizing any of the potential synergies);
|
|
|
•
|
risks arising as a result of unknown or unexpected obligations or liabilities of Ormat Industries;
|
|
|
•
|
the costs and outcome of any legal proceedings that may be instituted against us and others relating to the share exchange agreement;
|
|
|
•
|
the inability to complete the share exchange due to the failure of Ormat Industries to timely obtain shareholder approval or the failure to satisfy other conditions to completing the share exchange;
|
|
·
|
we will be required to pay certain expenses relating to the share exchange, including substantial legal, financial advisor and accounting fees, whether or not the share exchange is completed;
|
|
·
|
under the share exchange agreement, we are subject to certain restrictions on the conduct of our business prior to completing the share exchange that may affect our ability to execute certain of our business strategies; and
|
|
·
|
during the period before completion of the share exchange, our management’s attention, which could otherwise have been devoted to other opportunities that may have been beneficial to us, will be diverted from our day−to−day business, and there may also be unavoidable disruptions to our relationships with our employees, customers and suppliers.
|
|
·
|
until the end of the second calendar year following the receipt of the Ormat stockholder approval and the Ormat Industries shareholder approval (i.e., December 31, 2016 if we obtain these approvals by December 31, 2014):
|
|
o
|
Ormat must continue to hold a majority of the assets that it and Ormat Industries held immediately prior to the consummation share exchange and continue to use them in the ordinary course of business;
|
|
o
|
each of Bronicki Investments and FIMI may not sell their shares of common stock of Ormat that they receive in the share exchange, except in certain limited circumstances; and
|
|
o
|
in connection with the sale limitations imposed on Bronicki Investments and FIMI, we cannot engage in a sale of Ormat (through a merger or otherwise), certain private placements of our common stock or public offerings of our common stock that will result in a decrease of their stockholdings to less than 51% of their holdings immediately following the share exchange;
|
|
·
|
for a period of two years following the closing of the merger of Ormat Industries with and into Ormat Systems (i.e., until March 31, 2017, assuming the closing occurs on March 31, 2015), Ormat Systems, among other things, must continue to hold a majority of the assets that it and Ormat Industries held immediately prior to the merger closing and continue to use them in the ordinary course of business; and
|
|
·
|
until the end of the fourth calendar year after the date that each of the Ormat stockholder approval and Ormat Industries shareholder approval have been obtained, (i.e., until December 31, 2018 if we obtain these approvals by December 31, 2014), Ormat and its subsidiaries must maintain (and, to the extent that the Ormat group’s operations expand, likewise expand) the production activities currently carried out in Israel through Ormat Systems and may not open a production factory outside of Israel that produces the same items that are currently produced by Ormat Systems in Israel (except in the field of evaporative cooling).
|
|
|
·
|
determined that the share exchange and other transactions contemplated by the share exchange agreement were in the best interests of the Company and the stockholders of the Company, including specifically the stockholders other than Ormat Industries and its shareholders; and
|
|
|
·
|
approved the share exchange agreement, the share exchange and the other transactions contemplated by the share exchange agreement and recommended that the Company’s stockholders approve the share issuance.
|
|
|
·
|
enhance the liquidity of Ormat common stock by significantly increasing the public float, improve the market’s perception of Ormat and increase institutional investors’ interest in Ormat;
|
|
|
·
|
eliminate the inefficiencies and complexities associated with having two separate public companies;
|
|
|
·
|
Liquidity. The Ormat special committee considered the fact that the share exchange would result in an increase in the liquidity of Ormat’s stock and the removal of the control overhang associated with Ormat Industries’ approximately 59.75% ownership stake without a need for a secondary offering.
|
|
|
·
|
Cost Synergies. The Ormat special committee considered the potential cost synergies estimated by Ormat management that likely would result from consolidating Ormat and Ormat Industries into a single publicly traded company, including the reduction of time and costs required to comply with filing and disclosure requirements by two companies for two stock exchanges, the elimination of redundancies related to the maintenance of two boards of directors and audit committees, and removing the intercompany leasing contracts between Ormat and Ormat Industries.
|
|
|
·
|
Revenue Synergies. The Ormat special committee considered the potential revenue synergies estimated by Ormat management that may result due to Ormat no longer being perceived as a controlled foreign company, including the ability of Ormat to pursue two potential projects in Ormat’s product segment that Ormat currently does not believe it could undertake due to being perceived as a controlled foreign company.
|
|
|
·
|
Control Premium. The Ormat special committee considered that the economic and structural terms of the share exchange and related transactions would maximize the likelihood that Ormat stockholders could receive a control premium for their shares at a future time, given the elimination of Ormat Industries’ approximately 60% ownership stake and the restrictions placed on the Principal Stockholders through the voting neutralization agreements and the Israeli tax ruling.
|
|
|
·
|
Process of the Special Committee. The Ormat special committee consisted solely of independent directors not affiliated with Ormat Industries. The Ormat special committee was provided a clear mandate to review and negotiate the share exchange and to retain independent financial and legal advisors. Moreover, the Ormat board resolved that it would not approve or authorize a potential transaction involving Ormat and Ormat Industries without the prior favorable recommendation of the Ormat special committee. The Ormat special committee met twenty times, including seven times in person, and solicited the advice of its financial and legal advisors. During these meetings, the Ormat special committee extensively deliberated and discussed the advantages and disadvantages of the share exchange.
|
|
|
·
|
Exchange Ratio. The exchange ratio of 0.2592 shares of Ormat common stock for each share of Ormat Industries stock was only slightly higher than an exchange ratio calculated on an unaffected twenty trading day median of 0.2496. The Ormat special committee, in consultation with its independent financial advisor, concluded that the calculation of an exchange ratio using a twenty trading day median is consistent with certain precedent transactions and was reasonable and appropriate for a transaction of this type. In evaluating and negotiating the exchange ratio, the Ormat special committee considered only quantified cost and revenue synergies discussed above. The exchange ratio resulted in a premium to the trading value of Ormat Industries’ share price on October 28, 2014 (the last trading day unaffected by rumors of the transaction) of 4.2%.
|
|
|
·
|
Opinion of J.P. Morgan. The opinion of J.P. Morgan, dated November 9, 2014, to the Ormat board as to the fairness, from a financial point of view, to Ormat of the exchange ratio in the proposed share exchange, based on and subject to the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by J.P. Morgan (as more fully described below under “—Opinion of Financial Advisor to the Ormat Special Committee”).
|
|
|
·
|
Terms of the Share Exchange Agreement. The terms and conditions of the share exchange agreement, including Ormat’s ability to terminate (a) after December 31, 2014 if the stockholder approvals are not obtained prior to such date (and thus the restrictions imposed by the Israeli tax ruling would last for an additional year through the end of 2017 see “Material Consequences of the Israeli Tax Ruling”) and (b) after March 31, 2015 if the share exchange has not occurred, allow for Ormat to ensure that the share exchange is consummated as negotiated by the Ormat special committee.
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·
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Terms of the Voting Neutralization Agreements. The terms and conditions of the voting neutralization agreements ensure that FIMI and Bronicki Investments, after receiving a premium for their stock in Ormat, will be restricted in their ability to subsequently acquire voting control of Ormat. In particular, FIMI and Bronicki Investments have agreed to (a) vote all of their Ormat voting securities in excess of 16% and 9% of Ormat’s total voting power, respectively, in proportion to votes cast by the other holders of Ormat voting securities, (b) limit the direct or indirect acquisition of Ormat voting securities, if after giving effect to any such acquisition, such stockholder and its affiliates would beneficially own Ormat voting securities representing in the aggregate more than 20% and 12% of Ormat’s total voting power, respectively, (c) not sell, prior to January 1,
2017, Ormat voting securities that, in the aggregate, represent more than 10% of all such voting securities of Ormat owned in the aggregate by both of the stockholders as of the closing, (d) not act in concert, following January 1, 2017, to sell Ormat voting securities without providing Ormat with twenty days’ prior written notice (to which only Ormat’s disinterested directors may respond) and (e) not renew the shareholders’ agreement between them following its expiration in May 2017.
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·
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Interim Restrictions on Business. The Ormat special committee considered the impacts of the restrictions of the Israeli tax ruling, including the requirements that Ormat hold a majority of its assets for two years and not take certain actions during such time (including a merger, private placement or public offering) that would reduce the equity holdings of FIMI and Bronicki Investments below 51% of their aggregate holdings in Ormat. The Ormat special committee also considered that any sale of Ormat to a third party by means of a merger prior to December 31, 2016 (if the stockholder approvals are obtained by December 31, 2014) would constitute, absent prior approval by the ITA, a breach of the Israeli tax ruling and the potential impact on Ormat’s stock price due to this sale restriction.
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·
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Effect of Failure to Complete Share Exchange Agreement. While Ormat expects that the share exchange will be consummated, there can be no assurance that all of the conditions to the consummation of the share exchange will be satisfied or the required stockholder approvals of Ormat Industries will be timely obtained. As a result, it is possible that the share exchange may not be completed in a timely manner or at all. The Ormat special committee also considered the potential negative effects if the share exchange were not consummated, including that (a) Ormat would have incurred significant transaction and opportunity costs attempting to consummate the share exchange and (b) Ormat’s directors, officers, and other employees would have expended considerable time and effort to negotiate, implement and consummate the share exchange, and their time may have been diverted from other important business opportunities and
operational matters while working to implement the share exchange.
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·
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Revenue Synergies Not Achieved. The Ormat special committee considered that revenue synergies may not be realized despite Ormat no longer being controlled by a foreign company.
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·
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the unanimous recommendations of the Ormat special committee and the Ormat audit committee that the Ormat board of directors (i) approve and declare advisable the share exchange agreement and the transactions contemplated thereby, including the share exchange, (ii) direct that the share exchange be submitted to Ormat’s stockholders, and (iii) recommend, subject to the terms of the share exchange agreement, that the holders of Ormat common stock approve the share exchange; and
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·
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the factors considered by the Ormat special committee as described in “The Share Exchange and Related Transactions—Recommendations of the Ormat Special Committee and the Ormat Board of Directors and Their Reasons for the Share Exchange —The Ormat Special Committee,” including the positive factors and potential benefits of the share exchange agreement and the transactions contemplated thereby and by the other transaction documents, the risks and potentially negative factors relating to the share exchange agreement and the transactions contemplated thereby and the factors relating to procedural safeguards.
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·
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reviewed certain publicly available business and financial information concerning Ormat and Ormat Industries and the industries in which they operate;
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·
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compared the financial and operating performance of Ormat and Ormat Industries with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of shares of Ormat common stock and Ormat Industries ordinary shares and current market prices of certain publicly traded securities of such other companies;
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·
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reviewed certain internal financial analyses and forecasts prepared by the management of Ormat related to its business (for more information about the Ormat projections (as defined below), please see “—Ormat Internal Projections”), as well as the estimated amount and timing of cost savings and related expenses and synergies expected by the management of Ormat to result from the share exchange (the “potential synergies”);
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·
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reviewed certain appraisals, dated October 31, 2014, prepared by a third party regarding the appraised value of certain real estate and related assets of Ormat Industries (the “real estate appraisal”); and
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·
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performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.
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Trading Multiple
|
|||
|
Firm Value to 2014E EBITDA
|
Firm Value to 2015E EBITDA
|
||
|
High
|
11.4x
|
10.1x
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|
|
Low
|
7.2x
|
7.1x
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|
|
Median
|
9.2x
|
8.4x
|
|
|
Implied Exchange Ratios
|
|||
|
Low
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High
|
||
|
Public Trading Multiples Analysis
|
|||
|
0.1695x
|
0.3603x
|
||
|
0.1586x
|
0.3928x
|
||
|
Discounted Cash Flow Analysis
|
0.1587x
|
0.3887x
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|
|
Period
|
Average Exchange Ratio
|
|
Unaffected Date (10/28/2014)
|
0.2488x
|
|
10 days
|
0.2459x
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20 days
|
0.2532x
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3 months
|
0.2643x
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|
6 months
|
0.2679x
|
|
1 year
|
0.2672x
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|
3 years
|
0.2662x
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|
5 years
|
0.2702x
|
|
Fiscal Years Ending December 31,
(in millions)
|
||||||||||||||||
|
2014E
|
2015E
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2016E
|
2017E
|
|||||||||||||
|
Total Revenues
|
$ | 563 | $ | 588 | $ | 623 | $ | 678 | ||||||||
|
Total Cost of Revenues
|
$ | (363 | ) | $ | (376 | ) | $ | (393 | ) | $ | (424 | ) | ||||
|
Operating Income
|
$ | 149 | $ | 160 | $ | 176 | $ | 198 | ||||||||
|
Income Before Tax
|
$ | 85 | $ | 95 | $ | 110 | $ | 118 | ||||||||
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Net Income
|
$ | 63 | $ | 70 | $ | 81 | $ | 86 | ||||||||
|
Adjusted EBITDA
|
$ | 264 | $ | 273 | $ | 293 | $ | 325 | ||||||||
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·
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the Ormat projections were prepared for a presentation to our commercial lenders, and we understand they find that helpful in evaluating our compliance with financial covenants in certain of our loan agreements with those lenders and, generally, in evaluating our ability to service and/or incur debt; and
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·
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the Ormat projections, in the same form as presented to our commercial lenders, were made available to J.P. Morgan, for its use in performing certain financial analyses of Ormat as described above.
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·
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the transfer to Ormat of each outstanding Ormat Industries ordinary share in exchange for the right to receive 0.2592 shares of Ormat common stock (subject to adjustment as set forth in the share exchange agreement), so that Ormat Industries will become a direct wholly-owned subsidiary of Ormat;
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·
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within three business days thereafter, the transfer by Ormat Industries of all of the Ormat common stock held by it to Ormat, which will be canceled immediately upon receipt;
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·
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promptly following such distribution and in no event earlier than one business day thereafter, the transfer by Ormat of all the ordinary shares of Ormat Systems held by it to Ormat Industries, in exchange for one ordinary share of Ormat Industries, so that Ormat Systems becomes a wholly-owned subsidiary of Ormat Industries; and
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·
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on March 31, 2015, the merger of Ormat Industries with and into Ormat Systems following which Ormat Industries will cease to exist and Ormat Systems will be the surviving company.
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·
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Ormat will no longer be a “controlled company” under the NYSE rules and therefore will no longer be able to rely upon certain exemptions from the director independence requirements applicable to our compensation committee and nominating and corporate governance committee under the NYSE rules;
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·
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based on the estimated number of shares of Ormat common stock and Ormat Industries ordinary shares that will be outstanding immediately prior to the completion of the share exchange, we estimate that immediately following the consummation of the share exchange:
|
|
|
o
|
existing Ormat stockholders (other than Ormat Industries) will own approximately 37.76% of the outstanding shares of Ormat common stock;
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|
o
|
former Ormat Industries shareholders will own approximately 62.24% of the outstanding shares of Ormat common stock;
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o
|
the number of shares of Ormat common stock held by non-affiliated, “public” shareholders will increase from approximately 40.25% to 76.08%;
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o
|
Bronicki Investments and FIMI will own approximately 8.85% and 15.07%, respectively, of our outstanding common stock. Bronicki Investments and FIMI are parties to a shareholder rights agreement that, among other things, includes joint voting and other arrangements that affect Ormat and our subsidiaries, as described below in “Certain Relationships and Related Party Transactions.” As a result, the expected beneficial ownership of our outstanding common stock by these persons following the share exchange, and taking into consideration the shareholders rights agreement between them, Bronicki Investments and FIMI could exert significant influence on the
election of our directors and on decisions by our shareholders on matters submitted to shareholder vote, including mergers, consolidations and the sale of all or substantially all of our assets, subject to the conditions set forth in our voting neutralization agreements with each of them described below in “Additional Agreements—Voting Neutralization Agreements” below;
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·
|
the share exchange, after giving effect to the issuance of approximately 30.2 million shares of our common stock and the retirement of approximately 27.2 million shares of our common stock held by Ormat Industries, will reduce earnings per share, on a pro forma basis from $1.03 to $0.94 per share on a fully diluted basis;
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·
|
the conditions imposed by the Israeli tax ruling may limit our flexibility in operating our business and our ability to enter into certain corporate transactions (see “Material Consequences of the Israeli Tax Ruling” below); and
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●
|
Ormat must continue to hold a majority of the assets that it and Ormat Industries held immediately prior to the consummation of the share exchange and continue to use them in the ordinary course of business;
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|
●
|
each of Bronicki Investments and FIMI may not sell their shares of common stock of Ormat (and such restriction would be deemed to apply in the case of a sale of Ormat to a third party, such as by way of a merger), other than in certain limited situations (provided that in any such event their respective shareholdings shall not decrease to less than 51% of their holdings in Ormat immediately following the share exchange), including the following:
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|
o
|
a sale of less than 10% of the shares held by the relevant shareholder or, if Bronicki Investments and FIMI have agreed between themselves, a higher percentage, provided that the total number of shares that may be sold by Bronicki Investments and FIMI does not exceed 10% of all of their holdings in Ormat Technologies);
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|
o
|
a private placement by Ormat of Ormat common stock is not permitted unless it involves a private placement to investors that were not shareholders of Ormat prior to such issuance and is in an amount that shall not exceed 25% of the number of shares of Ormat common stock prior to such issuance (and 20% on a post-issuance basis); and
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·
|
for a period of two years following the closing of the merger of Ormat Industries with and into Ormat Systems (i.e., until March 31, 2017, assuming that the merger closing occurs on March 31, 2015 as contemplated):
|
|
o
|
Ormat Systems must continue to hold a majority of the assets that it and Ormat Industries held immediately prior to the merger closing and continue to use them in the ordinary course of business;
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o
|
Ormat Systems will continue to engage in the principal financial activities in which Ormat Systems and Ormat Industries were engaged immediately prior to the closing; and
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|
o
|
Ormat may not sell its shares in Ormat Systems, other than in certain limited situations, and in any event its interest in Ormat Systems may not be reduced to less than 51% during such period; and
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·
|
until the end of the fourth calendar year after the date that each of the Ormat stockholder approval and Ormat Industries shareholder approval have been obtained (i.e., until December 31, 2018 if we obtain these approvals by December 31, 2014):
|
|
o
|
The Ormat group must maintain (and, to the extent that the Ormat group’s operations expand, likewise expand) the production activities currently carried out in Israel through Ormat Systems and may not open a production factory outside of Israel that produces the same items that are currently produced by Ormat Systems in Israel (except in the field of evaporative cooling); and
|
|
o
|
to the extent that the Ormat Systems factory in Israel is producing at full capacity during this period, Ormat and its subsidiaries will supplement that production to the extent necessary through subcontractors in Israel and/or abroad and/or through an expansion of the Ormat Systems factory in Israel, provided that such commitment does not apply to the production of air coolers.
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·
|
Subsequent developments, new information or other changes could affect the continued accuracy of the representations and warranties. The representations and warranties were made as of dates specified in the share exchange agreement, without any obligation of the parties to update or revise them for subsequent developments. This summary only deals with the representations and warranties as they appear in the share exchange agreement, without change for any subsequent developments, new information or other factors that could affect their continued accuracy.
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|
·
|
The representations and warranties in the share exchange agreement reflect negotiations of the parties. They are negotiated, among other things, as a way of allocating certain risks among the parties, rather than establishing matters as factual or legal information. They are also negotiated based on various materiality or other priorities or the parties. Those contractual materiality or other standards may differ from what would be considered material or otherwise important to shareholders of Ormat or Ormat Industries, under applicable laws and rules or otherwise.
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·
|
The representations and warranties in the share exchange agreement are subject to important exceptions and qualifications that have been negotiated by the parties. Many of those exceptions and qualifications are set forth in disclosure letters exchanged by the parties. Information contained in those disclosure letters can significantly impact what might otherwise be understood just from the terms of the representation or warranty in the share exchange agreement or this summary.
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|
•
|
authority to enter into and perform the share exchange agreement and the other agreements executed in connection therewith as well as the execution, delivery and enforceability of such agreements;
|
|
|
•
|
the absence of conflicts with or violations of governance documents, material agreements or laws as a result of the execution and delivery of the share exchange agreement and other agreements executed in connection therewith or the completion of the share exchange, the merger and the other transactions contemplated by the share exchange agreement and the other agreements executed in connection therewith;
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|
|
•
|
filings with the ISA (in the case of Ormat Industries) and with the SEC (in the case of Ormat), the absence of any material adverse changes and their respective solvency as of the date the share exchange agreement was signed;
|
|
|
•
|
accuracy of information supplied by the parties for inclusion in the Ormat information statement and Ormat Industries proxy statement relating to the applicable meeting of stockholders of Ormat Industries, the information statement to be provided by Ormat and the proxy statement to be provided by Ormat Industries to its stockholders and other filings to be made by the parties in connection with the transactions;
|
|
|
•
|
that such entity is not subject to any “business combination,” “control share acquisition,” “fair price” or similar anti-takeover statute that applies to the share exchange or any other transaction contemplated under the share exchange agreement.
|
|
|
•
|
capital structure, subsidiaries and corporate separateness of direct Ormat Industries subsidiaries;
|
|
|
•
|
that it does not actively engage in any material business activities or conduct any business operations other than through its ownership of equity interests in Ormat and its other subsidiaries from time to time;
|
|
|
•
|
the authorized shares of Ormat capital stock and the due issuance of the shares of Ormat common stock to be issued to the Ormat Industries shareholders upon consummation of the share exchange.
|
|
|
•
|
consents required under certain bank financing documents and certain indentures to which Ormat is a party.
|
|
|
•
|
to file with the court a motion to convene, in the manner and content set forth in the Companies Law and the regulations promulgated pursuant to Sections 350 and 351 of the Companies Law and as shall be ordered by the Court, shareholders meetings (and, if necessary, creditors’ meetings), for the approval of the terms and conditions of the share exchange and to deliver a proxy statement to its shareholders in accordance with applicable law.
|
|
|
•
|
following consultation with Ormat and its representatives, to promptly respond to any comments or other written communications from the ISA with respect to the proxy statement.
|
|
|
•
|
declare, set aside, make or pay any dividend or other distribution with respect to any capital stock, enter into any agreement with respect to the voting of its capital stock or otherwise acquire any Ormat Industries equity interests (other than in connection with dividends payable by to a wholly-owned Ormat Industries subsidiary to Ormat Industries or another wholly-owned Ormat Industries subsidiary);
|
|
|
•
|
issue, grant or undertake to issue any Ormat Industries ordinary shares or other Ormat Industries equity interests;
|
|
|
•
|
take any action that would, or would reasonably be expected to, materially impair, prevent or delay the ability of Ormat Industries to consummate the transactions contemplated by the share exchange agreement; or
|
|
|
•
|
declare, set aside, make or pay any dividends or other distribution, payable in stock, property or otherwise, with respect to any of its capital stock, enter into any agreement with respect to the voting of its capital stock, or purchase or otherwise acquire, directly or indirectly, any Ormat equity interests, other than (i) dividends declared or payable in the ordinary course of business and consistent with its past practices and (ii) dividends payable by a wholly-owned subsidiary of Ormat to Ormat or another wholly-owned subsidiary of Ormat;
|
|
|
•
|
issue, grant or undertake to issue any Ormat common stock or other Ormat equity interests other than (i) the issuance of Ormat common stock upon exercise of Ormat stock options or other equity-based awards and (ii) the grant of Ormat options or other equity-based awards in the ordinary course of business and consistent with past practice;
|
|
|
•
|
take any action that would, or would reasonably be expected to, materially impair, prevent or delay the ability of Ormat and Ormat Systems to consummate the transactions;
|
|
|
•
|
the parties giving each other notice of a consent that may be required in connection with the transactions, any action commenced or threatened relating to the completion of the transactions and any change that would reasonably be expected to cause any condition, covenant or agreement contained in the share exchange agreement, or the other agreements executed in connection therewith, to fail to be complied with or satisfied;
|
|
|
Ormat having access to Ormat Industries’ properties, books, contracts, commitments, management and other personnel;
|
|
|
•
|
the parties cooperating in the prompt preparation and filing of certain required filings with the SEC or ISA;
|
|
•
|
requiring Ormat, for a period of seven years after the effective time, (i) to cause the charter documents of Ormat Systems to contain provisions for indemnification and limitation of liabilities of Ormat Industries directors and officers that are no less favorable than are set forth in the charter documents of Ormat Industries, and (ii) to perform any existing indemnification agreements between Ormat Industries and its current or former directors and officers in a manner that the share exchange will not adversely affect them. This means, among other things, that the limitation of liability imposed in such indemnification agreements, being 25% of the total equity of Ormat Industries as reported in its last financial statements before the payment for an indemnity claim, would mean that, following the share exchange, such limitation will be capped at 25% of the total equity of Ormat (as the public company surviving the transactions)
as reported on our last financial statements before the payment for an indemnity claim;
|
|
|
•
|
Ormat Industries buying, for a premium not to exceed $950,000, a prepaid “tail” to directors’ and officers’ liability insurance in amount and scope at least as favorable as Ormat Industries’ existing insurance policies to cover, for at least seven years, claims arising from facts or events that occurred prior to the effective time, which is expected to include coverage for matters, acts or omissions occurring in connection with the share exchange agreement;
|
|
|
•
|
the parties not taking any action which would cause the share exchange and related transactions to fail to qualify as a “reorganization” under applicable provisions of the Code;
|
|
|
the parties using their reasonable commercial efforts to obtain and maintain the Israeli tax ruling; and
|
|
|
•
|
the parties terminating the existing registration rights agreement between Ormat and Ormat Industries.
|
|
|
•
|
no governmental authority having competent jurisdiction has taken action restraining, enjoining or otherwise prohibiting the transactions;
|
|
|
•
|
the Ormat common stock to be issued in the share exchange is authorized for listing on the NYSE, subject to notice of official issuance;
|
|
|
•
|
each of the Ormat Industries shareholder undertaking agreements and the voting neutralization agreements is in full force and effect, in accordance with their terms.
|
|
|
•
|
all covenants of Ormat and Ormat Systems under the share exchange agreement and the other agreements executed in connection therewith to be performed on or before the completion of the share exchange must be performed by Ormat and Ormat Systems in all material respects;
|
|
|
•
|
the representations and warranties of Ormat in the share exchange agreement as to the authorized shares of Ormat capital stock and the due issuance of the shares of Ormat common stock to be issued to the Ormat Industries shareholders upon consummation of the share exchange must be true and correct in all respects at the closing date;
|
|
|
•
|
the other representations and warranties of Ormat and Ormat Systems in the share exchange agreement, must be true and correct in all respects at and as of the closing date (except for representations and warranties made as of a date other than the date of the share exchange agreement, which will be true and correct only as of the specified date), with only such exceptions as have not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Ormat;
|
|
|
•
|
Ormat must provide an officer’s certificate to the effect that each of the conditions specified in the preceding bullet points have been satisfied; and
|
|
|
•
|
since the date of the share exchange agreement, there can be no event, occurrence or condition which has had or would reasonably be expected to have a material adverse effect with respect to Ormat.
|
|
|
•
|
all covenants of Ormat Industries under the share exchange agreement and the other agreements executed in connection therewith to be performed on or before the closing of the share exchange must be performed by Ormat Industries in all material respects;
|
|
|
•
|
the representations and warranties of Ormat Industries in the share exchange agreement with respect to its ownership of shares of Ormat must be true and correct in all respects at the closing date;
|
|
|
•
|
the other representations and warranties of Ormat Industries in the share exchange agreement must be true and correct in all respects at the closing date (except for representations and warranties made as of a date other than the date of the share exchange agreement, which must be true and correct only as of the specified date), with only such exceptions as have not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Ormat Industries;
|
|
|
Ormat Industries must provide an officer’s certificate to the effect that each of the conditions specified in the preceding bullet points have been satisfied; and
|
|
|
•
|
since the date of the share exchange agreement, there can be no event, occurrence or condition which has had or would reasonably be expected to have a material adverse effect with regard to Ormat Industries.
|
|
|
•
|
the Section 350 voting approval (solely with respect to Ormat Systems creditors, if applicable) is not obtained;
|
|
|
•
|
(i) the Section 350 voting approval (of Ormat Industries shareholders and, if applicable, creditors) is not obtained or (ii) the Section 350 voting approval (solely of Ormat Industries shareholders) is not obtained by 11:59 p.m. (Israel time) on December 31, 2014;
|
|
|
•
|
any governmental authority with competent jurisdiction takes any action permanently restraining, enjoining or otherwise prohibiting any material component of the transactions and such action becomes final and non-appealable;
|
|
|
•
|
Ormat Industries materially breaches any of its representations and warranties or covenants contained in the share exchange agreement, and that breach cannot be or has not been cured within 30 days;
|
|
|
•
|
any of the joint conditions to the obligations of Ormat and Ormat Industries to effect the share exchange or the conditions to the obligation of Ormat to effect the share exchange becomes incapable of fulfillment, and has not been waived by Ormat to the extent waivable under applicable law;
|
|
|
•
|
the Ormat Industries special committee or board of directors withdraws, or modifies in a manner adverse to Ormat or Ormat Systems or publicly proposes to withdraw or modify in a manner adverse to Ormat or Ormat Systems, its recommendation of the share exchange agreement or the transactions contemplated thereby, or it fails to recommend, or continue to recommend (or reaffirm (publicly, if so requested)), that the Ormat Industries shareholders give the Section 350 voting approval;
|
|
|
•
|
Ormat or Ormat Systems materially breaches any of its representations and warranties or covenants contained in the share exchange agreement, and that breach cannot be or has not been cured within 30 days;
|
|
|
•
|
any of the joint conditions to the obligations of Ormat and Ormat Industries to effect the share exchange or the conditions to the obligation of Ormat Industries to effect the share exchange becomes incapable of fulfillment, and has not been waived by Ormat Industries to the extent waivable under applicable law;
|
|
|
•
|
the Ormat special committee withdraws, or modifies in a manner adverse to Ormat Industries or publicly proposes to withdraw or modify in a manner adverse to Ormat Industries, its recommendation of the share exchange agreement or the transactions contemplated thereby, or it fails to recommend, or continue to recommend (or reaffirm (publicly, if so requested), that the Ormat stockholders give the Ormat stockholder approval; or
|
|
|
•
|
to vote, and has provided to Ormat an irrevocable proxy to vote, at the meetings of Ormat Industries shareholders in favor of the approval and adoption of the share exchange agreement and the approval of the share exchange and the other transactions contemplated by the share exchange agreement and against any resolution that would preclude fulfillment of a condition precedent under the share exchange agreement to Ormat’s, Ormat Industries’ or Ormat Systems’ obligation to consummate the share exchange or the other transactions contemplated under the share exchange agreement;
|
|
|
•
|
to enter into an agreed-form of escrow agreement, pursuant to which it will deposit the ordinary shares of Ormat Industries it beneficially owns with an escrow agent no later than two business days prior to the closing, and instruct the escrow agent to act under the escrow agreement in accordance with the Israeli tax ruling and perform any actions required for Bronicki Investments and FIMI to comply with the provisions of the Israeli tax ruling.
|
|
|
•
|
Bronicki Investments currently owns approximately 14.21% of the outstanding ordinary shares of Ormat Industries. Based on the exchange ratio in the share exchange agreement, Bronicki Investments would own approximately 8.85% of our outstanding common stock if the share exchange is completed, based on the number of Ormat Industries ordinary shares held by Bronicki Investments as of November 20, 2014.
|
|
|
•
|
FIMI currently owns approximately 24.22% of the outstanding ordinary shares of Ormat Industries. Based on the exchange ratio in the share exchange agreement, FIMI would own approximately 15.07% of our common stock if the share exchange is completed, based on the number of Ormat Industries ordinary shares held by FIMI as of November 20, 2014.
|
|
|
•
|
Bronicki Investments and FIMI are parties to the Bronicki Investments FIMI Shareholder Agreement, as described in “Certain Relationships and Related Party Transactions—Agreements of Bronicki Investments and FIMI” below.
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•
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require each of FIMI and Bronicki Investments to vote all Ormat voting securities owned by them and their respective affiliates in excess of 16% and 9%, respectively, of the combined voting power of Ormat shares in proportion to votes cast by the other holders of Ormat voting securities at any time any action is to be taken by Ormat stockholders;
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•
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prohibit the acquisition of Ormat voting securities by FIMI and Bronicki Investments and their respective affiliates if after giving effect to any such acquisition FIMI and Bronicki Investments and their respective affiliates would beneficially own voting securities representing in the aggregate more than 20% and 12%, respectively, of the combined voting power of Ormat shares;
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•
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prohibit, prior to January 1, 2017, the sale of more than 10% of all Ormat voting securities owned in the aggregate by FIMI and Bronicki Investments;
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•
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allow, following January 1, 2017, the sale of Ormat voting securities owned by FIMI and Bronicki Investments only if FIMI and Bronicki Investments are not acting in concert to sell or, if they are, only with 20 days’ prior written notice to Ormat, subject to certain exceptions for public sales and mergers and acquisitions transactions; and
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•
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prohibit FIMI and Bronicki Investments from renewing their shareholder agreement (described below under “Certain Relationships and Related Party Transactions—Agreements of Bronicki Investments and FIMI—Bronicki Investments FIMI Shareholder Agreement”) beyond its expiration in May 2017.
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•
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each of Bronicki Investments and FIMI will have the right to require Ormat to prepare and file with the SEC, and use its best efforts to cause the effectiveness of, one registration statement to register the resale of the shares of Ormat common stock such shareholder will receive in the share exchange; and
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•
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in the event that Ormat files a registration statement in connection with any public offering of shares of its common stock it will provide to each of Bronicki Investments and FIMI the opportunity to include in such registration statement any of their shares of Ormat common stock that can be registered under the registration rights agreement.
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·
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Sublease Agreements between Ormat Systems and Ormat Industries effective as of July 1, 2004 (as amended);
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voting and transfers of the shares of Ormat common stock to be held by Bronicki Investments and FIMI following the share exchange (including a right of first offer, “tag-along” right, a “bring-along” right and, by way of an amendment to the Bronicki Investments sale agreement, a call option right to FIMI);
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the composition of the board of directors of Ormat and its active subsidiaries and the committees of the board of directors of Ormat;
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agreements concerning various corporate policies and governance matters relating to Ormat and its subsidiaries, to the extent subject to a vote of Ormat stockholders; and
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compliance with the Israeli tax ruling, including the internal allocation between Bronicki Investments and FIMI of the amount of shares of Ormat common stock they are permitted to sell under the Israeli tax ruling.
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subject to any applicable law and fiduciary duties, use their reasonable efforts to cause an equal number of designees of Bronicki Investments and FIMI to be elected or appointed to our board of directors and to the boards of all of our active subsidiaries and to the committees of our board of directors. Specifically, Bronicki Investments and FIMI agreed that they will each have the right to designate four members to our board of directors. The number of directors that Bronicki Investments and FIMI may designate is subject to staged adjustments if either Bronicki Investments or FIMI or both cease to own specified minimum numbers of shares of our common stock, within various ranges specified in the Bronicki Investments FIMI shareholder agreement; and
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·
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subject to any applicable law and subject to continued holding of certain minimum numbers of shares of our common stock, use their best efforts to cause the nomination of Bronicki Investments’ designee as our Chief Executive Officer or Chairman of our board or directors (as Bronicki Investments may decide in its sole discretion), and the appointment of FIMI’s designee as the Chairman of our board of directors (if Bronicki Investments’ designee serves as Chief Executive Officer) or our Chief Executive Officer (if Bronicki Investments’ designee serves as Chairman of our board of directors).
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each person, or group of affiliated persons, known to us to own beneficially 5% or more of our outstanding common stock;
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Shares of
Ormat Common Stock
Beneficially Owned Prior to Transaction
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Ordinary Shares of
Ormat Industries
Beneficially Owned Prior to Transaction
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Shares of
Ormat Common Stock
Beneficially Owned Following the Transaction
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Number
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Percent
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Number
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Percent
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Number
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Percent
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|||||||||||||||||||
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Principal Stockholder:
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||||||||||||||||||||||||
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Ormat Industries Ltd.†
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27,206,580 | (1) | 59.75 | % | — | — | ||||||||||||||||||
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Clal Insurance Enterprises Holdings Ltd. ‡
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3,680,759 | 8.1 | % | — | — | |||||||||||||||||||
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Directors and Named Executive Officers††
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— | — | ||||||||||||||||||||||
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Yehudit Bronicki†
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— | — | 16,563,442 | (2) | 14.21 | % | 4,293,244 | 8.85 | % | |||||||||||||||
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Lucien Bronicki†
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— | — | 16,563,442 | (2) | 14.21 | % | 4,293,244 | 8.85 | % | |||||||||||||||
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Yoram Bronicki†
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— | — | 16,563,442 | (2) | 14.21 | % | 4,293,244 | 8.85 | % | |||||||||||||||
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Gillon Beck†††
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22,500 | (4) | — | 28,218,049 | (3) | 24.22 | % | 7,314,118 | 15.07 | % | ||||||||||||||
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Ami Boehm†††
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22,500 | (5) | — | 28,218,049 | (3) | 24.22 | % | 7,314,118 | 15.07 | % | ||||||||||||||
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Dan Falk†††
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22,500 | (6) | * | — | — | 22,500 | — | |||||||||||||||||
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Robert F. Clarke†††
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39,500 | (7) | * | — | — | 39,500 | — | |||||||||||||||||
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David Granot†††
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18,750 | (8) | — |
—
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—
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18,750 | — | |||||||||||||||||
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Robert E. Joyal†††
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22,500 | (9) | — |
—
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—
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22,500 | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||||
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Doron Blachar†
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25,000 | (10) | * | — | — | 25,000 | — | |||||||||||||||||
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Nadav Amir†
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116,700 | (11) | * | — | — | 116,700 | — | |||||||||||||||||
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Zvi Reiss†
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99,500 | (12) | * | — | — | 99,500 | — | |||||||||||||||||
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Nir Wolf
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55,500 | (13) | * | — | — | 55,500 | — | |||||||||||||||||
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Directors and Executive Officers as a group
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857,016 | (14) | * | 44,781,291 | 38.43 | % |
12,464,378
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25.24
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% | |||||||||||||||
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Nine Months Ended September 30,
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Year Ended December 31,
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2013
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2013
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2012
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2011
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2010
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2009
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(In thousands, except per share data)
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Revenues:
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||||||||||||||||||||||||||||
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Electricity
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$ | 289,015 | $ | 245,005 | $ | 329,747 | $ | 314,894 | $ | 312,296 | $ | 279,947 | $ | 241,623 | ||||||||||||||
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Product
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121,266 | 157,329 | 203,492 | 186,879 | 113,160 | 81,410 | 159,389 | |||||||||||||||||||||
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Total revenues
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410,281 | 402,334 | 533,239 | 501,773 | 425,456 | 361,357 | 401,012 | |||||||||||||||||||||
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Cost of revenues:
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Electricity
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186,083 | 175,085 | 232,874 | 237,415 | 235,609 | 233,894 | 172,453 | |||||||||||||||||||||
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Product
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75,307 | 110,335 | 140,547 | 135,346 | 76,072 | 53,277 | 112,450 | |||||||||||||||||||||
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Total cost of revenues
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261,390 | 285,420 | 373,421 | 372,761 | 311,681 | 287,171 | 284,903 | |||||||||||||||||||||
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Gross margin
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148,891 | 116,914 | 159,818 | 129,012 | 113,775 | 74,186 | 116,109 | |||||||||||||||||||||
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Operating expenses:
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Research and development expenses
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395 | 3,446 | 4,965 | 6,108 | 8,801 | 10,120 | 10,502 | |||||||||||||||||||||
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Selling and marketing expenses
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10,853 | 17,861 | 24,613 | 15,718 | 16,053 | 13,302 | 14,222 | |||||||||||||||||||||
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General and administrative expenses
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20,847 | 20,264 | 29,188 | 28,066 | 27,366 | 26,937 | 25,908 | |||||||||||||||||||||
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Impairment charge
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— | — | — | 236,377 | — | — | — | |||||||||||||||||||||
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Write-off of unsuccessful exploration activities
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8,107 | — | 4,094 | 2,639 | — | 3,050 | 2,367 | |||||||||||||||||||||
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Operating income
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108,689 | 75,343 | 96,958 | (159,896 | ) | 61,555 | 20,777 | 63,110 | ||||||||||||||||||||
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Other income (expense):
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Interest income
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236 | 870 | 1,332 | 1,201 | 1,427 | 343 | 639 | |||||||||||||||||||||
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Interest expense, net
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(65,084 | ) | (51,826 | ) | (73,776 | ) | (64,069 | ) | (69,459 | ) | (40,473 | ) | (16,241 | ) | ||||||||||||||
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Foreign currency translation and transaction gains (losses)
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(3,639 | ) | 3,844 | 5,085 | 242 | (1,350 | ) | 1,557 | (1,695 | ) | ||||||||||||||||||
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Impairment of auction rate securities
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— | — | — | — | (137 | ) | (279 | ) | ||||||||||||||||||||
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Income attributable to sale of tax benefits
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18,334 | 14,342 | 19,945 | 10,127 | 11,474 | 8,729 | 15,515 | |||||||||||||||||||||
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Gain from sale of property, plant and equipment
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7,628 | — | — | — | — | — | — | |||||||||||||||||||||
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Gain on acquisition of controlling interest
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— | — | — | — | — | 36,928 | — | |||||||||||||||||||||
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Gain from extinguishment of liability
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— | — | — | — | — | — | 13,348 | |||||||||||||||||||||
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Other non-operating income, net
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649 | 1,583 | 1,592 | 590 | 671 | 267 | 479 | |||||||||||||||||||||
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Income (loss) from continuing operations, before income taxes and equity in income of investees
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66,813 | 44,156 | 51,136 | (211,805 | ) | 4,318 | 27,991 | 74,876 | ||||||||||||||||||||
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Income tax provision
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(17,731 | ) | (15,028 | ) | (13,552 | ) | (1,827 | ) | (48,240 | ) | 1,700 | (14,714 | ) | |||||||||||||||
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Equity in losses of investees, net
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(1,210 | ) | (149 | ) | (250 | ) | (2,522 | ) | (959 | ) | 998 | 2,136 | ||||||||||||||||
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Income (loss) from continuing operations
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47,872 | 28,979 | 37,334 | (216,154 | ) | (44,881 | ) | 30,689 | 62,298 | |||||||||||||||||||
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Discontinued operations:
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Income from discontinued operations (including gain on disposal of $0, $0, $0, $0, and $0, respectively)
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— | 5,311 | 5,311 | 4,811 | 2,452 | 9,141 | 6,971 | |||||||||||||||||||||
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Income tax provision
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— | (614 | ) | (614 | ) | (1,264 | ) | (295 | ) | (2,602 | ) | (716 | ) | |||||||||||||||
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Total income from discontinued operations
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— | 4,697 | 4,697 | 3,547 | 2,157 | 6,539 | 6,255 | |||||||||||||||||||||
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Net income (loss)
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47,872 | 33,676 | 42,031 | (212,607 | ) | (42,724 | ) | 37,228 | 68,553 | |||||||||||||||||||
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Net loss attributable to noncontrolling interest
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(670 | ) | (600 | ) | (793 | ) | (414 | ) | (332 | ) | 90 | 298 | ||||||||||||||||
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Net income (loss) attributable to Ormat’s stockholders
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$ | 47,202 | $ | 33,076 | $ | 41,238 | $ | (213,021 | ) | $ | (43,056 | ) | $ | 37,318 | $ | 68,851 | ||||||||||||
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Earnings per share attributable to Ormat’s stockholders:
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Basic:
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Income from continuing operations
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$ | 1.04 | $ | 0.62 | $ | 0.81 | $ | (4.77 | ) | $ | (1.00 | ) | $ | 0.67 | $ | 1.37 | ||||||||||||
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Discontinued operations
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— | 0.10 | 0.10 | 0.08 | 0.05 | 0.15 | 0.14 | |||||||||||||||||||||
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Net income
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$ | 1.04 | $ | 0.72 | $ | 0.91 | $ | (4.69 | ) | $ | (0.95 | ) | $ | 0.82 | $ | 1.52 | ||||||||||||
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Diluted:
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Income from continuing operations
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$ | 1.03 | $ | 0.62 | $ | 0.81 | $ | (4.77 | ) | $ | (1.00 | ) | $ | 0.67 | $ | 1.37 | ||||||||||||
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Discontinued operations
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— | 0.10 | 0.10 | 0.08 | 0.05 | 0.15 | 0.14 | |||||||||||||||||||||
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Net income
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$ | 1.03 | $ | 0.72 | $ | 0.91 | $ | (4.69 | ) | $ | (0.95 | ) | $ | 0.82 | $ | 1.51 | ||||||||||||
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Weighted average number of shares used in computation of earnings per share attributable to Ormat’s stockholders:
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Basic
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45,594 | 45,433 | 45,440 | 45,431 | 45,431 | 45,431 | 45,391 | |||||||||||||||||||||
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Diluted
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45,917 | 45,454 | 45,475 | 45,431 | 45,431 | 45,452 | 45,533 | |||||||||||||||||||||
| — | — | — | — | — | ||||||||||||||||||||||||
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Dividend per share declared
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$ | 0.16 | $ | 0.04 | $ | 0.08 | $ | 0.08 | $ | 0.13 | $ | 0.27 | $ | 0.25 | ||||||||||||||
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Nine Months Ended September 30,
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Year Ended December 31,
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2013
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2013
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2012
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2011
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2010
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2009
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(In thousands, except per share data)
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Cash and cash equivalents
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$ | 42,451 | $ | 35,435 | $ | 57,354 | $ | 66,628 | $ | 99,886 | $ | 82,815 | $ | 46,307 | ||||||||||||||
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Working capital
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130,338 | 104,990 | 103,001 | 64,100 | 98,415 | 66,932 | 55,652 | |||||||||||||||||||||
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Property, plant and equipment, net (including construction-in process)
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1,727,665 | 1,719,268 | 1,741,163 | 1,649,014 | 1,889,083 | 1,696,101 | 1,517,288 | |||||||||||||||||||||
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Total assets
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2,171,913 | 2,168,335 | 2,159,433 | 2,087,523 | 2,314,718 | 2,043,328 | 1,864,193 | |||||||||||||||||||||
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Long-term debt (including current portion)
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1,040,245 | 1,075,094 | 1,077,857 | 1,030,928 | 1,025,010 | 789,669 | 624,442 | |||||||||||||||||||||
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Notes payable to Ormat Industries (including current portion)
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— | — | — | — | — | — | 9,600 | |||||||||||||||||||||
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Equity
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783,544 | 736,970 | 745,111 | 695,607 | 906,644 | 945,227 | 911,695 | |||||||||||||||||||||
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Nine Months Ended September 30,
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Year Ended December 31,
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2013
|
2013
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2012
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2011
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2010
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2009
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(In thousands, except per share data)
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Revenues:
|
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Electricity
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$ | 289,015 | $ | 249,871 | $ | 334,613 | $ | 327,529 | $ | 323,849 | $ | 297,563 | $ | 265,775 | ||||||||||||||
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Product
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141,766 | 157,329 | 203,492 | 186,879 | 113,160 | 81,410 | 159,389 | |||||||||||||||||||||
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Royalties
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— | — | — | — | 2,916 | — | 6,347 | |||||||||||||||||||||
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Total revenues
|
430,781 | 407,200 | 538,105 | 514,408 | 439,925 | 378,973 | 431,511 | |||||||||||||||||||||
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Cost of revenues:
|
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Electricity
|
184,523 | 177,070 | 235,335 | 241,999 | 239,732 | 245,600 | 186,804 | |||||||||||||||||||||
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Product
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93,778 | 107,893 | 138,204 | 133,820 | 74,220 | 52,161 | 113,647 | |||||||||||||||||||||
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Total cost of revenues
|
278,301 | 284,963 | 373,539 | 375,819 | 313,952 | 297,761 | 300,451 | |||||||||||||||||||||
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Gross margin
|
152,480 | 122,237 | 164,566 | 138,589 | 125,973 | 81,212 | 131,060 | |||||||||||||||||||||
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Operating expenses:
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Research and development expenses
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(395 | ) | (3,446 | ) | (4,965 | ) | (6,108 | ) | (8,801 | ) | (10,120 | ) | (10,542 | ) | ||||||||||||||
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Selling and marketing expenses
|
(10,861 | ) | (18,054 | ) | (24,835 | ) | (16,122 | ) | (16,207 | ) | (13,447 | ) | (14,584 | ) | ||||||||||||||
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General and administrative expenses
|
(22,529 | ) | (21,604 | ) | (31,005 | ) | (29,882 | ) | (29,389 | ) | (29,304 | ) | (30,430 | ) | ||||||||||||||
|
Write-off of unsuccessful exploration activities
|
(8,107 | ) | — | (4,094 | ) | (2,639 | ) | — | (3,050 | ) | (2,367 | ) | ||||||||||||||||
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Impairment of power-plants, net
|
— | 8,038 | 8,038 | (171,928 | ) | (5,549 | ) | (128,614 | ) | (9,400 | ) | |||||||||||||||||
|
Other gains (losses)-net:
|
||||||||||||||||||||||||||||
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On disposal and decrease in value of financial assets
|
(222 | ) | (588 | ) | (636 | ) | 989 | (3,829 | ) | (9,564 | ) | 8,834 | ||||||||||||||||
|
Gain from measurement of fair value of equity interest held before control obtained
|
— | — | — | — | — | 36,730 | — | |||||||||||||||||||||
|
Gain from sale of investment in subsidiary
|
— | 4,230 | 4,230 | — | — | 6,405 | — | |||||||||||||||||||||
|
Gain from sale of power plant
|
7,628 | — | — | — | — | — | — | |||||||||||||||||||||
|
Sundry
|
(2,759 | ) | 6,674 | 8,850 | 2,602 | 3,456 | 5,052 | 6,971 | ||||||||||||||||||||
|
Income (loss) from operations
|
115,235 | 97,487 | 120,149 | (84,499 | ) | 65,654 | (64,700 | ) | 79,542 | |||||||||||||||||||
|
Gain from extinguishment of liability
|
14,433 | |||||||||||||||||||||||||||
|
Financial expenses
|
(65,169 | ) | (54,522 | ) | (76,914 | ) | (65,807 | ) | (70,314 | ) | (41,446 | ) | (17,299 | ) | ||||||||||||||
|
Shares in losses of associated companies
|
— | — | — | (2,522 | ) | (959 | ) | — | — | |||||||||||||||||||
|
Income before income taxes
|
50,066 | 42,965 | 43,235 | (152,828 | ) | (5,619 | ) | (106,146 | ) | 76,676 | ||||||||||||||||||
|
Income tax benefit (expense)
|
(266 | ) | (551 | ) | 6,415 | (24,496 | ) | (32,040 | ) | 60,093 | 5,915 | |||||||||||||||||
|
Income (loss) for the period
|
49,800 | 42,414 | 49,650 | (177,324 | ) | (37,659 | ) | (46,053 | ) | 82,591 | ||||||||||||||||||
|
Attributable to:
|
||||||||||||||||||||||||||||
|
Equity holders of Ormat Industries
|
29,303 | 25,524 | 29,495 | (106,848 | ) | (21,799 | ) | (29,964 | ) | 52,869 | ||||||||||||||||||
|
Noncontrolling interest
|
20,497 | 16,890 | 20,155 | (70,476 | ) | (15,860 | ) | (16,089 | ) | 29,722 | ||||||||||||||||||
|
Total
|
$ | 49,800 | $ | 42,414 | $ | 49,650 | $ | (177,324 | ) | (37,659 | ) | $ | (46,053 | ) | $ | 82,591 | ||||||||||||
|
Earnings per share attributable to Ormat Industries stockholders:
|
||||||||||||||||||||||||||||
|
Basic:
|
||||||||||||||||||||||||||||
|
Basic and fully diluted
|
$ | 0.25 | $ | 0.22 | $ | 0.25 | $ | (0.92 | ) | $ | (0.19 | ) | $ | (0.26 | ) | $ | 0.45 | |||||||||||
|
Weighted average number of shares used in computation of earnings per share attributable to Ormat Industries stockholders:
|
||||||||||||||||||||||||||||
|
Basic and fully diluted
|
116,525 | 116,525 | 116,525 | 116,525 | 116,525 | 116,525 | 116,525 | |||||||||||||||||||||
|
Nine Months Ended September 30,
|
Year Ended December 31,
|
|||||||||||||||||||||||||||
|
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 46,710 | $ | 38,128 | $ | 57,908 | $ | 71,767 | $ | 114,082 | $ | 147,860 | $ | 46,307 | ||||||||||||||
|
Working capital
|
138,980 | 141,647 | 114,872 | 99,968 | 109,190 | 123,991 | 183,930 | |||||||||||||||||||||
|
Property, plant and equipment, net (including construction-in process)
|
1,657,604 | 1,643,990 | 1,666,950 | 1,577,673 | 1,752,204 | 1,565,429 | 1,522,848 | |||||||||||||||||||||
|
Total assets
|
2,188,968 | 2,150,542 | 2,136,914 | 2,073,418 | 2,253,691 | 2,060,614 | 2,019,668 | |||||||||||||||||||||
|
Long-term debt (including current portion)
|
1,036,868 | 1,053,466 | 1,055,862 | 1,006,535 | 1,002,424 | 776,964 | 624,442 | |||||||||||||||||||||
|
Notes receivable from Ormat (including current portion)
|
— | — | — | — | — | — | 9,600 | |||||||||||||||||||||
|
Equity
|
773,766 | 731,455 | 734,454 | 684,908 | 858,413 | 991,052 | 1,094,019 | |||||||||||||||||||||
|
Ormat Pro Forma
|
Ormat Industries
|
Adj (I) | Adj (II) |
Ormat
|
||||||||||||||||||||||||
|
Nine Months Ended September 30, 2014
|
||||||||||||||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||||||
|
Electricity
|
$ | 289,015 | 289,015 | 1 | (289,015 | ) | — | 289,015 | ||||||||||||||||||||
|
Product
|
121,266 | 141,766 | 1 | (121,266 | ) | f | (20,500 | ) | 121,266 | |||||||||||||||||||
|
Total revenues
|
410,281 | 430,781 | (410,281 | ) | (20,500 | ) | 410,281 | |||||||||||||||||||||
|
Cost of revenues:
|
||||||||||||||||||||||||||||
|
Electricity
|
186,083 | 184,523 | 1 | (186,083 | ) | b | 438 | 186,083 | ||||||||||||||||||||
| 3 | 1,122 | |||||||||||||||||||||||||||
|
Product
|
75,307 | 93,778 | 1 | (75,307 | ) | c | 19 | 73,944 | ||||||||||||||||||||
| f | (19,853 | ) | ||||||||||||||||||||||||||
|
Total cost of revenues
|
261,390 | 278,301 | (260,268 | ) | (19,396 | ) | 260,027 | |||||||||||||||||||||
|
Gross margin
|
148,891 | 152,480 | (150,013 | ) | (1,104 | ) | 150,254 | |||||||||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||||||
|
Research and development expenses
|
395 | 395 | 1 | (395 | ) | — | 395 | |||||||||||||||||||||
|
Selling and marketing expenses
|
10,853 | 10,861 | 1 | (10,853 | ) | 10,861 | ||||||||||||||||||||||
|
General and administrative expenses
|
20,847 | 22,529 | 1 | (20,847 | ) | f | (321 | ) | 22,208 | |||||||||||||||||||
|
Write-off of unsuccessful exploration activities
|
8,107 | 8,107 | 1 | (8,107 | ) | — | 8,107 | |||||||||||||||||||||
|
Operating income
|
108,689 | 110,588 | (109,811 | ) | (783 | ) | 108,683 | |||||||||||||||||||||
|
Other income (expense):
|
||||||||||||||||||||||||||||
|
Interest income
|
236 | 1 | (236 | ) | 50 | 236 | ||||||||||||||||||||||
| 5 | 186 | |||||||||||||||||||||||||||
|
Interest expense, net
|
(65,084 | ) | (65,169 | ) | 1 | 65,084 | (65,109 | ) | ||||||||||||||||||||
| 3 | 1,122 | |||||||||||||||||||||||||||
| f | (1,062 | ) | ||||||||||||||||||||||||||
|
Foreign currency translation and transaction gains (losses)
|
(3,639 | ) | — | (3,639 | ) | |||||||||||||||||||||||
|
Income attributable to sale of tax benefits
|
18,334 | — | 18,334 | |||||||||||||||||||||||||
|
Gain from sale of property, plant and equipment
|
7,628 | 7,628 | 1 | (7,628 | ) | — | 7,628 | |||||||||||||||||||||
|
Other non-operating expense, net
|
649 | (2,981 | ) | 1 | (649 | ) | b | (76 | ) | 865 | ||||||||||||||||||
| 4 | 3,639 | |||||||||||||||||||||||||||
| 5 | (186 | ) | f | 469 | ||||||||||||||||||||||||
| Income before income taxes and equity in income | ||||||||||||||||||||||||||||
|
losses of investees
|
66,813 | 50,066 | (48,479 | ) | (1,402 | ) | 66,998 | |||||||||||||||||||||
|
Income tax provision
|
(17,731 | ) | (266 | ) | 1 | 17,731 | e | (1,125 | ) | (19,031 | ) | |||||||||||||||||
| 2 | (18,334 | ) | ||||||||||||||||||||||||||
| f | 694 | |||||||||||||||||||||||||||
|
Equity in income (losses) of investees, net
|
(1,210 | ) | — | (1,210 | ) | |||||||||||||||||||||||
|
Income from continuing operations
|
47,872 | 49,800 | (49,082 | ) | (1,833 | ) | 46,757 | |||||||||||||||||||||
|
Net income attributable to noncontrolling interest
|
(670 | ) | — | (670 | ) | |||||||||||||||||||||||
|
Net income attributable to the Ormat’s stockholders
|
$ | 47,202 | 49,800 | (49,082 | ) | (1,833 | ) | 46,087 | ||||||||||||||||||||
|
Earnings per share attributable to Ormat’s stockholders - Basic and diluted:
|
||||||||||||||||||||||||||||
|
Basic:
|
1.04 | 0.95 | ||||||||||||||||||||||||||
|
Diluted:
|
1.03 | 0.94 | ||||||||||||||||||||||||||
|
Weighted average shares:
|
||||||||||||||||||||||||||||
|
Basic:
|
45,594 | g | 2,997 | 48,591 | ||||||||||||||||||||||||
|
Diluted:
|
45,917 | 2,997 | 48,914 | |||||||||||||||||||||||||
|
Ormat Pro Forma
|
Ormat Industries
|
Adj (I) | Adj (II) |
Ormat
|
||||||||||||||||||||||||
|
For the year ended December 31, 2013
|
||||||||||||||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||||||
|
Electricity
|
$ | 329,747 | 334,613 | 1 | (329,747 | ) | a | (4,866 | ) | 329,747 | ||||||||||||||||||
|
Product
|
203,492 | 203,492 | 1 | (203,492 | ) | — | 203,492 | |||||||||||||||||||||
|
Total revenues
|
533,239 | 538,105 | (533,239 | ) | (4,866 | ) | 533,239 | |||||||||||||||||||||
|
Cost of revenues:
|
||||||||||||||||||||||||||||
|
Electricity
|
232,874 | 235,335 | 1 | (232,874 | ) | b | (1,134 | ) | 232,874 | |||||||||||||||||||
| 3 | 1,542 | a | (2,869 | ) | ||||||||||||||||||||||||
|
Product
|
140,547 | 138,204 | 1 | (140,547 | ) | c | 546 | 138,750 | ||||||||||||||||||||
|
Total cost of revenues
|
373,421 | 373,539 | (371,879 | ) | (3,457 | ) | 371,624 | |||||||||||||||||||||
|
Gross margin
|
159,818 | 164,566 | (161,360 | ) | (1,409 | ) | 161,615 | |||||||||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||||||
|
Research and development expenses
|
4,965 | 4,965 | 1 | (4,965 | ) | — | 4,965 | |||||||||||||||||||||
|
Selling and marketing expenses
|
24,613 | 24,835 | 1 | (24,613 | ) | b | (29 | ) | 24,613 | |||||||||||||||||||
| a | (193 | ) | ||||||||||||||||||||||||||
|
General and administrative expenses
|
29,188 | 31,005 | 1 | (29,188 | ) | b | (61 | ) | 30,805 | |||||||||||||||||||
| a | (139 | ) | ||||||||||||||||||||||||||
|
Impairment charge
|
— | — | ||||||||||||||||||||||||||
|
Impairment of power plants - net
|
— | (8,038 | ) | — | d | 8,038 | — | |||||||||||||||||||||
|
Write-off of unsuccessful exploration activities
|
4,094 | 4,094 | 1 | (4,094 | ) | — | 4,094 | |||||||||||||||||||||
|
Operating income
|
96,958 | 107,705 | (98,500 | ) | (9,025 | ) | 97,138 | |||||||||||||||||||||
|
Other income (expense):
|
||||||||||||||||||||||||||||
|
Interest income
|
1,332 | — | — | 1,332 | ||||||||||||||||||||||||
|
Interest expense, net
|
(73,776 | ) | (76,914 | ) | 1 | 73,776 | b | 1,368 | (74,004 | ) | ||||||||||||||||||
| 3 | 1,542 | |||||||||||||||||||||||||||
| — | ||||||||||||||||||||||||||||
|
Foreign currency translation and transaction gains (losses)
|
5,085 | — | — | 5,085 | ||||||||||||||||||||||||
|
Income attributable to sale of tax benefits
|
19,945 | — | — | 19,945 | ||||||||||||||||||||||||
|
Gain from sale of investment in subsidiary
|
— | 4,230 | — | a | (4,230 | ) | — | |||||||||||||||||||||
|
Other non-operating expense, net
|
1,592 | 8,214 | 1 | (1,592 | ) | b | (504 | ) | 1,293 | |||||||||||||||||||
| 4 | (5,085 | ) | ||||||||||||||||||||||||||
| 5 | (1,332 | ) | ||||||||||||||||||||||||||
|
Income before income taxes and equity in income
|
||||||||||||||||||||||||||||
|
losses of investees
|
51,136 | 43,235 | (31,191 | ) | (12,391 | ) | 50,789 | |||||||||||||||||||||
|
Income tax provision
|
(13,552 | ) | 6,415 | 1 | 13,552 | e | (2,271 | ) | (15,187 | ) | ||||||||||||||||||
| 2 | (19,945 | ) | 614 | |||||||||||||||||||||||||
| — | ||||||||||||||||||||||||||||
|
Equity in income (losses) of investees, net
|
(250 | ) | — | — | — | (250 | ) | |||||||||||||||||||||
|
Income from continuing operations
|
37,334 | 49,650 | (37,584 | ) | (14,048 | ) | 35,352 | |||||||||||||||||||||
|
Net income attributable to noncontrolling interest
|
(793 | ) | — | — | — | (793 | ) | |||||||||||||||||||||
|
Net income attributable to the Ormat’s stockholders
|
$ | 36,541 | 49,650 | (37,584 | ) | (14,048 | ) | 34,559 | ||||||||||||||||||||
|
Earnings per share attributable to Ormat’s stockholders - Basic and diluted:
|
||||||||||||||||||||||||||||
|
Basic:
|
0.81 | 0.71 | ||||||||||||||||||||||||||
|
Diluted:
|
0.81 | 0.71 | ||||||||||||||||||||||||||
|
Weighted average shares:
|
||||||||||||||||||||||||||||
|
Basic:
|
45,440 | g | 2,997 | 48,437 | ||||||||||||||||||||||||
|
Diluted:
|
45,475 | 2,997 | 48,472 | |||||||||||||||||||||||||
|
Ormat Pro Forma
|
Ormat Industries
|
Adj (I) | Adj (II) |
Ormat
|
||||||||||||||||||||||||
|
in thousands
|
||||||||||||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||||||||||
|
Current assets:
|
||||||||||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 42,451 | $ | 46,710 | 1 | (42,451 | ) | a | (360 | ) | 46,350 | |||||||||||||||||
|
Restricted cash, and cash equivalents
|
127,452 | 127,452 | 1 | (127,452 | ) | — | 127,452 | |||||||||||||||||||||
|
Financial assets at fair value through profit and loss
|
— | 10,972 | 5 | (10,972 | ) | — | — | |||||||||||||||||||||
|
Short-term investments
|
— | — | 5 | 10,972 | 10,972 | |||||||||||||||||||||||
|
Derivatives
|
— | 1,637 | 4 | (1,637 | ) | — | — | |||||||||||||||||||||
|
Receivables:
|
||||||||||||||||||||||||||||
|
Trade
|
75,224 | 75,224 | 1 | (75,224 | ) | — | 75,224 | |||||||||||||||||||||
|
Related entity
|
506 | — | — | — | 506 | |||||||||||||||||||||||
|
Income taxes receivable
|
— | 6,064 | 4 | (6,064 | ) | — | — | |||||||||||||||||||||
|
Other
|
9,165 | 42,497 | 1 | (9,165 | ) | — | 9,805 | |||||||||||||||||||||
| 4 | (29,178 | ) | ||||||||||||||||||||||||||
| a | (3,514 | ) | ||||||||||||||||||||||||||
|
Due from Ormat Industries
|
970 | — | 1 | (970 | ) | — | — | |||||||||||||||||||||
|
Inventories
|
17,337 | 17,337 | 1 | (17,337 | ) | — | 17,337 | |||||||||||||||||||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
14,784 | 14,784 | 1 | (14,784 | ) | — | 14,784 | |||||||||||||||||||||
|
Deferred income taxes
|
2,613 | — | — | — | 2,613 | |||||||||||||||||||||||
|
Prepaid expenses and other
|
36,879 | — | — | — | 36,879 | |||||||||||||||||||||||
|
Total current assets
|
327,381 | 342,677 | (324,262 | ) | (3,874 | ) | 341,922 | |||||||||||||||||||||
|
Financial assets at fair value through profit and loss
|
— | 251 | — | — | 251 | |||||||||||||||||||||||
|
Prepaid expenses in respect of operating lease
|
— | 2,444 | — | b | (2,444 | ) | — | |||||||||||||||||||||
|
Unconsolidated investments
|
1,339 | — | — | — | 1,339 | |||||||||||||||||||||||
|
Deposits and other
|
21,679 | 5,632 | 1 | (21,679 | ) | a | (1,235 | ) | 21,679 | |||||||||||||||||||
| h | 17,282 | |||||||||||||||||||||||||||
|
Financial assets under concession arrangement
|
— | 23,591 | — | a | (23,591 | ) | — | |||||||||||||||||||||
|
Deferred income taxes
|
— | 57,225 | — | e | (57,225 | ) | — | |||||||||||||||||||||
|
Deferred charges
|
35,399 | — | — | — | 35,399 | |||||||||||||||||||||||
|
Property, plant and equipment, net
|
1,459,316 | 1,456,627 | 1 | (1,458,975 | ) | d | 709 | 1,471,679 | ||||||||||||||||||||
| i | 1,137 | |||||||||||||||||||||||||||
| f | 35,069 | |||||||||||||||||||||||||||
| g | (22,204 | ) | ||||||||||||||||||||||||||
|
Construction-in-process
|
268,349 | 200,977 | 1 | (200,977 | ) | — | 268,349 | |||||||||||||||||||||
|
Projects under exploration and development
|
— | 67,372 | 6 | (67,372 | ) | — | — | |||||||||||||||||||||
|
Deferred financing and lease costs, net
|
28,969 | — | 1 | (28,969 | ) | b | 26,987 | 28,969 | ||||||||||||||||||||
| b | 1,982 | |||||||||||||||||||||||||||
|
Intangible assets, net
|
29,481 | 32,172 | 1 | (29,481 | ) | d | (709 | ) | 29,481 | |||||||||||||||||||
| b | (1,982 | ) | ||||||||||||||||||||||||||
|
Total assets
|
$ | 2,171,913 | $ | 2,188,968 | (2,131,715 | ) | (30,098 | ) | 2,199,068 | |||||||||||||||||||
|
LIABILITIES AND EQUITY
|
||||||||||||||||||||||||||||
|
Current liabilities:
|
||||||||||||||||||||||||||||
|
Current maturities of notes and long term loans
|
— | 73,322 | 2 | (73,322 | ) | — | — | |||||||||||||||||||||
|
Accounts payable and accrued expenses
|
$ | 78,411 | $ | — | 1 | (78,411 | ) | 78,491 | ||||||||||||||||||||
| j | (3,229 | ) | ||||||||||||||||||||||||||
| 3 | 83,799 | a | (2,288 | ) | ||||||||||||||||||||||||
|
Trade
|
— | 30,152 | 3 | (30,072 | ) | (80 | ) | — | ||||||||||||||||||||
|
Income taxes payable
|
— | 4,335 | 3 | (3,472 | ) | — | 863 | |||||||||||||||||||||
|
Accrued expenses
|
— | 981 | 3 | (981 | ) | — | — | |||||||||||||||||||||
|
Customers advances
|
— | 3,946 | 3 | (3,946 | ) | — | — | |||||||||||||||||||||
|
Other
|
— | 43,469 | 3 | (43,346 | ) | — | 123 | |||||||||||||||||||||
|
Derivatives
|
— | 2,182 | 3 | (2,182 | ) | — | — | |||||||||||||||||||||
| 5 | 209 | |||||||||||||||||||||||||||
|
Short-term revolving credit lines with banks (full recourse
|
— | — | — | — | — | |||||||||||||||||||||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
45,310 | 45,310 | 1 | (45,310 | ) | — | 45,310 | |||||||||||||||||||||
|
Current portion of long-term debt:
|
— | |||||||||||||||||||||||||||
|
Limited and non-recourse:
|
— | |||||||||||||||||||||||||||
|
Senior secured notes
|
31,211 | — | — | — | 31,211 | |||||||||||||||||||||||
|
Other loans
|
17,995 | — | — | — | 17,995 | |||||||||||||||||||||||
|
Full recourse
|
24,116 | — | — | — | 24,116 | |||||||||||||||||||||||
|
Total current liabilities
|
197,043 | 203,697 | (197,034 | ) | (5,597 | ) | 198,109 | |||||||||||||||||||||
|
Long-term debt, net of current portion:
|
||||||||||||||||||||||||||||
|
Limited and non-recourse:
|
||||||||||||||||||||||||||||
|
Senior secured notes
|
379,036 | 366,667 | 1 | (379,036 | ) | b | 12,369 | 379,036 | ||||||||||||||||||||
| a | — | |||||||||||||||||||||||||||
|
Other loans
|
269,123 | 278,818 | 1 | (269,123 | ) | b | 7,859 | 269,123 | ||||||||||||||||||||
|
Full recourse:
|
(17,554 | ) | — | |||||||||||||||||||||||||
|
Senior unsecured bonds
|
250,366 | 249,679 | 1 | (250,366 | ) | b | 687 | 250,366 | ||||||||||||||||||||
|
Other loans
|
40,298 | 40,282 | 1 | (40,298 | ) | b | 16 | 40,298 | ||||||||||||||||||||
|
Revolving credit lines with banks (full recourse
|
28,100 | 28,100 | 1 | (28,100 | ) | — | 28,100 | |||||||||||||||||||||
|
Long term derivative
|
— | 5,158 | — | a | (5,158 | ) | — | |||||||||||||||||||||
|
Liability associated with sale of tax benefits
|
44,757 | 54,900 | 1 | (44,757 | ) | c | (13,756 | ) | 44,757 | |||||||||||||||||||
| b | 3,613 | |||||||||||||||||||||||||||
|
Deferred lease income
|
61,294 | 61,294 | 1 | (61,294 | ) | — | 61,294 | |||||||||||||||||||||
|
Deferred income taxes
|
67,328 | 61,339 | 1 | (67,328 | ) | a | (694 | ) | 67,328 | |||||||||||||||||||
| e | 6,683 | |||||||||||||||||||||||||||
|
Liability for unrecognized tax benefits
|
5,606 | — | — | — | 5,606 | |||||||||||||||||||||||
|
Liabilities for severance pay
|
21,984 | 4,001 | 1 | (21,984 | ) | h | 17,983 | 21,984 | ||||||||||||||||||||
|
Asset retirement obligation
|
19,801 | — | — | — | 19,801 | |||||||||||||||||||||||
|
Other long-term liabilities
|
3,633 | 61,267 | 1 | (3,633 | ) | — | 3,870 | |||||||||||||||||||||
| 7 | (19,801 | ) | g | (37,596 | ) | |||||||||||||||||||||||
|
Total liabilities
|
1,388,369 | 1,415,202 | (1,382,754 | ) | (31,145 | ) | 1,389,672 | |||||||||||||||||||||
|
Equity:
|
||||||||||||||||||||||||||||
|
The Ormat’s stockholders’ equity:
|
||||||||||||||||||||||||||||
|
Common stock
|
46 | 38,374 | 9 | (38,374 | ) | — | 46 | |||||||||||||||||||||
|
Additional paid-in capital
|
740,651 | 162,433 | 9 | (137,628 | ) | k | 1,047 | 766,503 | ||||||||||||||||||||
|
Other capital surplus
|
— | (18,961 | ) | 9 | 18,961 | — | — | |||||||||||||||||||||
|
Retained earnings
|
36,835 | 265,527 | 9 | (265,527 | ) | 36,835 | ||||||||||||||||||||||
|
Accumulated other comprehensive income
|
(5,710 | ) | — | — | — | (5,710 | ) | |||||||||||||||||||||
|
Less - cost of Ormat Industries shares held by Ormat Industries
|
— | (2,826 | ) | 9 | 2,826 | — | ||||||||||||||||||||||
| 771,822 | 444,547 | (419,742 | ) | 1,047 | 797,674 | |||||||||||||||||||||||
|
Noncontrolling interest
|
11,722 | 329,219 | 9 | (329,219 | ) | — | 11,722 | |||||||||||||||||||||
|
Total equity
|
783,544 | 773,766 | (748,961 | ) | 1,047 | 809,396 | ||||||||||||||||||||||
|
Total liabilities and equity
|
$ | 2,171,913 | $ | 2,188,968 | (2,131,715 | ) | (30,098 | ) | 2,199,068 | |||||||||||||||||||
|
(1)
|
elimination of inter-company amounts and consolidating entries between Ormat and Ormat Industries due to Ormat Industries consolidating Ormat’s financial results;
|
|
(2)
|
reclassification of income tax provision according to Ormat’s presentation of income attributable to sale of tax benefits in accordance with GAAP;
|
|
(3)
|
reclassification of accretion expenses of the asset retirement obligation from interest expense according to Ormat’s presentation of cost of revenues in accordance with GAAP;
|
|
(4)
|
reclassification of foreign exchange differences within other non-operating expenses according to Ormat’s presentation of foreign currency translation and transaction gains (losses) in accordance with GAAP; and
|
|
(5)
|
reclassification of interest income within other non-operating expenses according to Ormat’s presentation of interest income in accordance with GAAP.
|
|
(a)
|
adjustment of the discontinued operations of the Momotombo geothermal power plant, which according to IFRS is not reclassified into discontinued operations compared to GAAP.
|
|
(b)
|
elimination of the impairment recorded under IFRS (IAS 36) for the Jersey power plant according to the discounted cash flows of the plant compared to GAAP. Under GAAP, the first step of the impairment analysis is based on undiscounted cash flows, for which there was no impairment as well as to adjust the depreciation of the property, plant and equipment that is calculated under IFRS (IAS 37) according to the interest risk-free rate (since under GAAP, the asset retirement obligation is recorded based on the Company’s weighted average interest rate);
|
|
(d)
|
elimination of the reduction of the Brawley power plant impairment amount for the proceeds of the grant received, which under IFRS can be recorded to the statement of operations;
|
|
(e)
|
adjustment of the calculation of uncertain tax positions from IFRS to GAAP as well as the reclassification of the non-controlling interest portion; and
|
|
(f)
|
adjustment of the recognition of the profit and loss of Ormat’s Sarulla geothermal power project as a result of Ormat Industries recording Sarulla according to IFRS based on Ormat’s undivided interest of 12.75% (proportionate share) of the Sarulla Consortium according to IFRS. Under GAAP, the proportionate share method is not allowed and is to be recorded under the equity method on the financial statement line item Equity in income (losses) of investees, net.
|
|
(1)
|
elimination of inter-company amounts and consolidating entries between Ormat and Ormat Industries due to Ormat Industries consolidating Ormat’s financial results as well as inter-company balances between the two companies;
|
|
(2)
|
adjustment to the mapping of current maturities of notes and long-term notes according to Ormat’s presentation in accordance with GAAP to current portion of long-term debt (recourse and non-recourse)
|
|
(3)
|
reclassification of detailed liability balances to accounts payable and accrued expenses to comply with presentation in accordance with GAAP;
|
|
(4)
|
reclassification of derivatives, income tax receivable and other to prepaid expenses and other to comply with presentation in accordance with GAAP;
|
|
(5)
|
reclassification of financial assets through profit and loss to short-term investments to comply with presentation in accordance with GAAP;
|
|
(6)
|
reclassification of projects under exploration and development to construction in progress to comply with presentation in accordance with GAAP; and
|
|
(7)
|
reclassification of other long-term liabilities to asset retirement obligation to comply with presentation in accordance with GAAP.
|
|
(8)
|
additional shares issued in connection with the share exchange as described in this information statement.
|
|
(9)
|
elimination of equity amounts between Ormat and Ormat Industries due to Ormat Industries consolidating Ormat’s financial results, excluding Ormat Instrustries (Standalone) assets and liabilities;
|
|
(a)
|
adjustment of the recognition of the assets and liabilities of Ormat’s Sarulla geothermal power project as a result of Ormat Industries recording Sarulla according to IFRS based on Ormat’s undivided ownership interest of 12.75% (proportionate share) of the Sarulla consortium. Under GAAP, the proportionate share method is not allowed and is to be recorded under the equity method on the financial statement line item, Unconsolidated Investments;
|
|
(b)
|
adjustment of the allocation of deferred financing costs, which is presented primarily as an offset to long-term liabilities according to IFRS (IAS 32), to deferred financing cost (asset) according to GAAP;
|
|
(c)
|
reclassification of the minority portion of the liability associated with the sale of the tax benefit under IFRS (IAS 32) to the non-controlling interest according to GAAP;
|
|
(d)
|
adjustment of the internal use software recorded as intangible assets according to IFRS (IAS 38) to property, plant and equipment net according to GAAP;
|
|
(e)
|
adjustment of the allocation of the current deferred taxes and deferred charges from non-current deferred tax asset according to IFRS (IAS 12) as well as to primarily eliminate the tax impact of inter-company profit according to IFRS from the tax percentage of the provider (Ormat Nevada, a wholly-owned subsidiary of Ormat) compared to the tax percentage of the supplier (Ormat Systems);
|
|
(f)
|
elimination of the impairment recorded under IFRS (IAS 36) for the Jersey power plant according to the discounted cash flows of the plant compared to GAAP (since under GAAP, the first step of the impairment analysis is based on undiscounted cash flows, for which there was no impairment);
|
|
(g)
|
adjustment of the depreciation of the property, plant and equipment and the asset retirement obligation amount that is calculated under IFRS (IAS 37) according to the interest risk-free rate (since under GAAP the asset retirement obligation is recorded based on the Company’s weighted average interest rate);
|
|
(h)
|
adjustment of the net presentation of liabilities for severance pay according to IFRS compared to the gross presentation required under GAAP as well as the elimination of the implementation of IAS 19, Employee Benefits;
|
|
Ormat
|
Ormat Industries
(Standalone)
Adjusted for GAAP
|
Total
|
||||||||||
|
Nine Months Ended September 30, 2014
|
||||||||||||
|
Revenues:
|
||||||||||||
|
Electricity
|
289,015 | — | 289,015 | |||||||||
|
Product
|
121,266 | — | 121,266 | |||||||||
|
Total revenues
|
410,281 | — | 410,281 | |||||||||
|
Cost of revenues:
|
||||||||||||
|
Electricity
|
186,083 | — | 186,083 | |||||||||
|
Product
|
75,307 | (1,363 | ) | 73,944 | ||||||||
|
Total cost of revenues
|
261,390 | (1,363 | ) | 260,027 | ||||||||
|
Gross margin
|
148,891 | 1,363 | 150,254 | |||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development expenses
|
395 | — | 395 | |||||||||
|
Selling and marketing expenses
|
10,853 | 8 | 10,861 | |||||||||
|
General and administrative expenses
|
20,847 | 1,361 | 22,208 | |||||||||
|
Write-off of unsuccessful exploration activities
|
8,107 | — | 8,107 | |||||||||
|
Operating income
|
108,689 | (6 | ) | 108,683 | ||||||||
|
Other income (expense):
|
||||||||||||
|
Interest income
|
236 | — | 236 | |||||||||
|
Interest expense, net
|
(65,084 | ) | (25 | ) | (65,109 | ) | ||||||
|
Foreign currency translation and transaction gains (losses)
|
(3,639 | ) | — | (3,639 | ) | |||||||
|
Income attributable to sale of tax benefits
|
18,334 | — | 18,334 | |||||||||
|
Gain from sale of property, plant and equipment
|
7,628 | — | 7,628 | |||||||||
|
Other non-operating expense, net
|
649 | 216 | 865 | |||||||||
|
Income before income taxes and equity in income
|
||||||||||||
|
losses of investees
|
66,813 | 185 | 66,998 | |||||||||
|
Income tax provision
|
(17,731 | ) | (1,300 | ) | (19,031 | ) | ||||||
|
Equity in income (losses) of investees, net
|
(1,210 | ) | — | (1,210 | ) | |||||||
|
Income from continuing operations
|
47,872 | (1,115 | ) | 46,757 | ||||||||
|
Net income attributable to noncontrolling interest
|
(670 | ) | — | (670 | ) | |||||||
|
Net income attributable to the Ormat’s stockholders
|
47,202 | (1,115 | ) | 46,087 | ||||||||
|
Ormat
|
Ormat Industries
(Standalone)
Adjusted for GAAP
|
Total
|
||||||||||
|
For the year ended December 31, 2013
|
||||||||||||
|
Revenues:
|
||||||||||||
|
Electricity
|
329,747 | — | 329,747 | |||||||||
|
Product
|
203,492 | — | 203,492 | |||||||||
|
Total revenues
|
533,239 | — | 533,239 | |||||||||
|
Cost of revenues:
|
||||||||||||
|
Electricity
|
232,874 | — | 232,874 | |||||||||
|
Product
|
140,547 | (1,797 | ) | 138,750 | ||||||||
|
Total cost of revenues
|
373,421 | (1,797 | ) | 371,624 | ||||||||
|
Gross margin
|
159,818 | 1,797 | 161,615 | |||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development expenses
|
4,965 | — | 4,965 | |||||||||
|
Selling and marketing expenses
|
24,613 | — | 24,613 | |||||||||
|
General and administrative expenses
|
29,188 | 1,617 | 30,805 | |||||||||
|
Impairment charge
|
— | — | — | |||||||||
|
Impairment of power plants - net
|
— | — | — | |||||||||
|
Write-off of unsuccessful exploration activities
|
4,094 | — | 4,094 | |||||||||
|
Operating income
|
96,958 | 180 | 97,138 | |||||||||
|
Other income (expense):
|
||||||||||||
|
Interest income
|
1,332 | — | 1,332 | |||||||||
|
Interest expense, net
|
(73,776 | ) | (228 | ) | (74,004 | ) | ||||||
|
Foreign currency translation and transaction gains (losses)
|
5,085 | — | 5,085 | |||||||||
|
Income attributable to sale of tax benefits
|
19,945 | — | 19,945 | |||||||||
|
Gain from sale of investment in subsidiary
|
— | — | — | |||||||||
|
Other non-operating expense, net
|
1,592 | (299 | ) | 1,293 | ||||||||
|
Income before income taxes and equity in income
|
||||||||||||
|
losses of investees
|
51,136 | (347 | ) | 50,789 | ||||||||
|
Income tax provision
|
(13,552 | ) | (1,635 | ) | (15,187 | ) | ||||||
|
Equity in income (losses) of investees, net
|
(250 | ) | — | (250 | ) | |||||||
|
Income from continuing operations
|
37,334 | (1,982 | ) | 35,352 | ||||||||
|
Net income attributable to noncontrolling interest
|
(793 | ) | — | (793 | ) | |||||||
|
Net income attributable to the Ormat’s stockholders
|
36,541 | (1,982 | ) | 34,559 | ||||||||
|
Ormat
|
Ormat Industries
(Standalone)
Adjusted for GAAP
|
Total
|
||||||||||
|
in thousands
|
||||||||||||
|
Current assets:
|
||||||||||||
|
Cash and cash equivalents
|
42,451 | 3,899 | 46,350 | |||||||||
|
Restricted cash, and cash equivalents
|
127,452 | — | 127,452 | |||||||||
|
Financial assets at fair value through profit and loss
|
— | 10,972 | 10,972 | |||||||||
|
Short-term investments
|
— | |||||||||||
|
Derivatives
|
— | — | — | |||||||||
|
Receivables:
|
— | |||||||||||
|
Trade
|
75,224 | — | 75,224 | |||||||||
|
Related entity
|
506 | — | 506 | |||||||||
|
Income taxes receivable
|
— | — | — | |||||||||
|
Other
|
9,165 | 640 | 9,805 | |||||||||
|
Due from Ormat Industries
|
— | — | — | |||||||||
|
Inventories
|
17,337 | — | 17,337 | |||||||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
14,784 | — | 14,784 | |||||||||
|
Deferred income taxes
|
2,613 | — | 2,613 | |||||||||
|
Prepaid expenses and other
|
36,879 | — | 36,879 | |||||||||
|
Total current assets
|
326,411 | 15,511 | 341,922 | |||||||||
|
Financial assets at fair value through profit and loss
|
— | 251 | 251 | |||||||||
|
Prepaid expenses in respect of operating lease
|
— | — | — | |||||||||
|
Unconsolidated investments
|
1,339 | — | 1,339 | |||||||||
|
Deposits and other
|
21,679 | — | 21,679 | |||||||||
|
Financial assets under concession arrangement
|
— | — | — | |||||||||
|
Deferred income taxes
|
— | — | — | |||||||||
|
Deferred charges
|
35,399 | — | 35,399 | |||||||||
|
Property, plant and equipment, net
|
1,459,316 | 12,363 | 1,471,679 | |||||||||
|
Construction-in-process
|
268,349 | — | 268,349 | |||||||||
|
Projects under exploration and development
|
— | — | — | |||||||||
|
Deferred financing and lease costs, net
|
28,969 | — | 28,969 | |||||||||
|
Intangible assets, net
|
29,481 | — | 29,481 | |||||||||
|
Total assets
|
2,170,943 | 28,125 | 2,199,068 | |||||||||
|
Current liabilities:
|
||||||||||||
|
Current maturities of notes and long term loans
|
— | — | — | |||||||||
|
Accounts payable and accrued expenses
|
78,411 | 80 | 78,491 | |||||||||
|
Trade
|
— | — | — | |||||||||
|
Income taxes payable
|
— | 863 | 863 | |||||||||
|
Accrued expenses
|
— | — | — | |||||||||
|
Customers advances
|
— | — | — | |||||||||
|
Other
|
— | 123 | 123 | |||||||||
|
Derivatives
|
— | — | — | |||||||||
|
Short-term revolving credit lines with banks (full recourse
|
— | — | — | |||||||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
45,310 | — | 45,310 | |||||||||
|
Current portion of long-term debt:
|
||||||||||||
|
Limited and non-recourse:
|
— | |||||||||||
|
Senior secured notes
|
31,211 | — | 31,211 | |||||||||
|
Other loans
|
17,995 | — | 17,995 | |||||||||
|
Full recourse
|
24,116 | — | 24,116 | |||||||||
|
Total current liabilities
|
197,043 | 1,066 | 198,109 | |||||||||
|
Long-term debt, net of current portion:
|
||||||||||||
|
Limited and non-recourse:
|
||||||||||||
|
Senior secured notes
|
379,036 | — | 379,036 | |||||||||
|
Other loans
|
269,123 | — | 269,123 | |||||||||
|
Full recourse:
|
||||||||||||
|
Senior unsecured bonds
|
250,366 | — | 250,366 | |||||||||
|
Other loans
|
40,298 | — | 40,298 | |||||||||
|
Revolving credit lines with banks (full recourse
|
28,100 | — | 28,100 | |||||||||
|
Long term derivative
|
— | — | — | |||||||||
|
Liability associated with sale of tax benefits
|
44,757 | — | 44,757 | |||||||||
|
Deferred lease income
|
61,294 | — | 61,294 | |||||||||
|
Deferred income taxes
|
67,328 | — | 67,328 | |||||||||
|
Liability for unrecognized tax benefits
|
5,606 | — | 5,606 | |||||||||
|
Liabilities for severance pay
|
21,984 | — | 21,984 | |||||||||
|
Asset retirement obligation
|
19,801 | — | 19,801 | |||||||||
|
Other long-term liabilities
|
3,633 | 237 | 3,870 | |||||||||
|
Total liabilities
|
1,388,369 | 1,303 | 1,389,672 | |||||||||
|
Equity:
|
||||||||||||
|
The Ormat’s stockholders’ equity:
|
||||||||||||
|
Common stock
|
46 | — | 46 | |||||||||
|
Additional paid-in capital
|
739,681 | 26,822 | 766,503 | |||||||||
|
Other capital surplus
|
— | — | — | |||||||||
|
Retained earnings
|
36,835 | — | 36,835 | |||||||||
|
Accumulated other comprehensive income
|
(5,710 | ) | — | (5,710 | ) | |||||||
|
Less - cost of Ormat Industries shares held by Ormat Industries
|
— | — | — | |||||||||
| 770,852 | 26,822 | 797,674 | ||||||||||
|
Noncontrolling interest
|
11,722 | — | 11,722 | |||||||||
|
Total equity
|
782,574 | 26,822 | 809,396 | |||||||||
|
Total liabilities and equity
|
2,170,943 | 28,125 | 2,199,068 | |||||||||
|
|
Dividend
|
|||||
|
Date Declared
|
Amount per Share
|
Record Date
|
Payment Date
|
|||
|
$0.04
|
||||||
|
$0.04
|
||||||
|
$0.06
|
||||||
|
$0.05
|
||||||
|
$0.05
|
|
|
First
Quarter
2012
|
Second
Quarter
2012
|
Third
Quarter
2012
|
Fourth
Quarter
2012
|
First
Quarter
2013
|
Second
Quarter
2013
|
Third
Quarter
2013
|
Fourth
Quarter
2013
|
January 1
to
|
|||||||||||||||||||||||||||
|
High
|
$ | 21.05 | $ | 22.24 | $ | 21.50 | $ | 20.80 | $ | 21.75 | $ | 23.89 | $ | 27.61 | $ | 27.95 | 30.46 | |||||||||||||||||||
|
Low:
|
$ | 16.01 | $ | 20.60 | $ | 17.61 | $ | 16.67 | $ | 19.55 | $ | 19.80 | $ | 22.55 | $ | 25.00 | 23.95 | |||||||||||||||||||
|
Ormat
|
Ormat Industries
|
|||||||||||||||
|
|
Historical
|
Pro Forma
Combined
|
Historical
|
Pro Forma
Equivalent
|
||||||||||||
|
As of and for the Nine Months Ended September 30, 2014 (Unaudited)
|
|
|
|
|
||||||||||||
|
Net income (loss) per share from continuing operations:
|
||||||||||||||||
|
Basic
|
$ | 1.04 | $ | 0.95 | $ | 0.25 | $ | 1.53 | ||||||||
|
Diluted
|
$ | 1.03 | $ | 0.95 | $ | 0.25 | $ | 1.53 | ||||||||
|
Net book value per common share
|
$ | 17.06 | $ | 16.55 | $ | 6.64 | $ | 26.80 | ||||||||
| Dividend per share declared | $ | 0.16 | $ | *0.16 | $ | 0.05 | $ | 0.04 | ||||||||
|
Shares outstanding as of September 30, 2014 (in thousands)
|
||||||||||||||||
|
Basic
|
45,594 | 48,591 | 116,525 | 30,203 | ||||||||||||
|
Diluted
|
45,917 | 48,014 | 116,525 | 30,203 | ||||||||||||
|
|
Ormat
|
Ormat Industries
|
||||||||||||||
|
Historical
|
Pro Forma
Combined
|
Historical
|
Pro Forma
Equivalent
|
|||||||||||||
|
As of and for the Year Ended December 31, 2013
|
||||||||||||||||
|
Net income (loss) per share from continuing operations:
|
||||||||||||||||
|
Basic
|
$ | 0.81 | $ | 0.71 | $ | 0.25 | $ | 1.14 | ||||||||
|
Diluted
|
$ | 0.81 | $ | 0.71 | $ | 0.25 | $ | 1.14 | ||||||||
|
Net book value per common share
|
$ | 16.39 | $ | 6.30 | ||||||||||||
| Dividend per share declared | $ | 0.08 | $ | 0.08 | $ | 0.05 | $ | 0.02 | ||||||||
|
Shares outstanding as of December 31, 2013 (in thousands)
|
||||||||||||||||
|
Basic
|
45,440 | 48,437 | 116,525 | 30,203 | ||||||||||||
|
Diluted
|
45,475 | 48,472 | 116,525 | 30,203 | ||||||||||||
|
|
Closing price
of Ormat
common stock
|
Closing price
of Ormat
Industries ordinary shares |
Implied value
of share exchange
consideration
|
|||||||||
|
As of October 28, 2014
|
$ | 27.86 | $ | 6.89 | $ | 7.22 | ||||||
|
As of November 7, 2014
|
$ | 28.39 | $ | 6.87 | $ | 7.36 | ||||||
|
As of November 20, 2014
|
$ |
27.97
|
$ |
6.73
|
$ |
7.25
|
||||||
|
|
(i)
|
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed February 28, 2014;
|
|
|
(iii)
|
Our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2014, June 30, 2014, and September 30, 2014, filed on May 9, 2014, August 6, 2014, and November 6, 2014 , respectively; and
|
|
|
(iv)
|
The Company’s Current Reports on Form 8-K filed on February 11, 2014, February 27, 2014, March 31, 2014, April 3, 2014, May 1, 2014, May 9, 2014, May 12, 2014, July 15, 2014, August 6, 2014, September 3, 2014, October 29, 2014, November 6, 2014 and November
17, 2014.
|
|
By order of the Board of Directors,
/s/ Isaac Angel
|
|
Very truly yours,
|
|
Page
|
|
|
B-2 – B-3
|
|
|
Report of Independent Auditors – Consolidated Financial Statements
|
|
|
Consolidated Financial Statements - in U.S. dollars ($):
|
|
|
B-4 – B-5
|
|
|
B-6
|
|
|
B-7
|
|
|
B-8 – B-9
|
|
|
B-10 – B-11
|
|
|
B-12 – B-123
|
|
Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, P.O Box 50005 Tel-Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.co.il
|
|
Tel Aviv, Israel
|
|
|
Certified Public Accountants (lsr.)
|
|
|
A member firm of PricewaterhouseCoopers International Limited
|
|
Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, P.O Box 50005 Tel-Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.co.il
|
|
December 31,
|
||||||||||||
|
Note
|
2013
|
2012
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||
|
Assets
|
||||||||||||
|
Current assets:
|
||||||||||||
|
Cash and cash equivalents
|
5a | 57,908 | 71,767 | |||||||||
|
Short-term bank deposit
|
— | 3,010 | ||||||||||
|
Restricted cash, cash equivalents and deposits
|
5b | 51,065 | 76,537 | |||||||||
|
Financial assets at fair value through profit and loss
|
6 | 15,433 | 14,668 | |||||||||
|
Derivatives
|
7 | 2,290 | 6,613 | |||||||||
|
Accounts receivable:
|
8 | |||||||||||
|
Trade
|
95,365 | 55,680 | ||||||||||
|
Income taxes receivable
|
4,001 | 6,111 | ||||||||||
|
Other
|
34,854 | 30,825 | ||||||||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
9a | 21,217 | 9,613 | |||||||||
|
Inventories
|
10 | 22,289 | 20,669 | |||||||||
|
Total current assets
|
304,422 | 295,493 | ||||||||||
|
Non-current assets:
|
||||||||||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
9b | — | 13,077 | |||||||||
|
Financial assets at fair value through profit and loss
|
6 | 251 | 251 | |||||||||
|
Prepaid expenses in respect of operating lease
|
17a | 2,582 | 2,766 | |||||||||
|
Power plants and other assets:
|
12 | |||||||||||
|
Power plants and other fixed assets
|
1,440,388 | 1,246,506 | ||||||||||
|
Power plants under construction
|
226,562 | **331,167 | ||||||||||
|
Projects under exploration and development
|
12b | 69,639 | 67,565 | |||||||||
|
Intangible assets
|
13 | 33,213 | 39,959 | |||||||||
|
Non-current receivables
|
2,541 | 3,170 | ||||||||||
|
Deferred income taxes
|
14c | 57,316 | *73,464 | |||||||||
|
Total non-current assets
|
1,832,492 | 1,777,925 | ||||||||||
|
Total assets
|
$ | 2,136,914 | $ | 2,073,418 | ||||||||
|
Ishay Davidi
|
Yehudit Bronicki
|
Doron Blachar
|
||
|
Chairman of the Board
|
Chief Executive Officer
|
Chief Financial
|
||
|
of Directors
|
and Director
|
Officer
|
| December 31, | ||||||||||||
|
Note
|
2013
|
2012
|
||||||||||
| (Dollars in thousands) | ||||||||||||
|
Liability and equity
|
||||||||||||
|
Current liabilities:
|
||||||||||||
|
Current maturities of notes and long-term loans
|
15 | 80,389 | 68,333 | |||||||||
|
Accounts payable and accruals:
|
16 | |||||||||||
|
Trade
|
49,660 | 51,343 | ||||||||||
|
Income taxes payable
|
3,081 | 5,149 | ||||||||||
|
Accrued expenses
|
969 | 1,026 | ||||||||||
|
Customers advances
|
6,410 | 9,592 | ||||||||||
|
Other
|
38,307 | 34,674 | ||||||||||
|
Derivatives
|
7 | 2,831 | — | |||||||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
9a | 7,903 | 25,408 | |||||||||
|
Total current liabilities
|
189,550 | 195,525 | ||||||||||
|
Long-term liabilities:
|
||||||||||||
|
Project financing liabilities (limited and non-recourse):
|
15 | |||||||||||
|
Senior securred notes
|
258,492 | 298,986 | ||||||||||
|
Other
|
301,909 | 234,004 | ||||||||||
|
Senior secured notes, loans and credit (full recourse):
|
15 | |||||||||||
|
Senior unsecured bonds
|
249,612 | 249,404 | ||||||||||
|
Loans
|
53,443 | 82,202 | ||||||||||
|
Credit from banks
|
112,017 | 73,606 | ||||||||||
|
Liability in respect of tax partnership
|
21 | 69,557 | 58,234 | |||||||||
|
Deferred lease income
|
17 | 63,496 | 66,398 | |||||||||
|
Deferred income taxes
|
14c | 49,745 | 61,992 | |||||||||
|
Retirement benefit obligations, net
|
18 | 3,661 | 3,540 | |||||||||
|
Provisions and other liabilities
|
19 | 50,978 | 64,619 | |||||||||
|
Total long-term liabilities
|
1,212,910 | 1,192,985 | ||||||||||
|
Total Liabilities
|
1,402,460 | 1,388,510 | ||||||||||
|
Equity:
|
||||||||||||
|
Equity holders of the Parent Company:
|
23 | |||||||||||
|
Ordinary shares
|
38,374 | 38,374 | ||||||||||
|
Additional paid-in capital
|
162,433 | 162,433 | ||||||||||
|
Other capital surplus
|
(15,378 | ) | (15,345 | ) | ||||||||
|
Retained earnings
|
242,267 | *218,425 | ||||||||||
|
Less- cost of Company shares held by the Company
|
(2,826 | ) | (2,826 | ) | ||||||||
|
Total equity holders of the Parent Company
|
424,870 | 401,061 | ||||||||||
|
Noncontrolling interest
|
309,584 | *283,847 | ||||||||||
|
Total equity
|
734,454 | 684,908 | ||||||||||
|
Total liabilities and equity
|
2,136,914 | 2,073,418 | ||||||||||
|
Year ended December 31,
|
||||||||||||||||
|
Note
|
2013
|
2012
|
2011
|
|||||||||||||
|
Dollars in thousands
|
||||||||||||||||
|
Revenues:
|
24a | |||||||||||||||
|
Electricity
|
334,613 | 327,529 | 323,849 | |||||||||||||
|
Product
|
203,492 | 186,879 | 113,160 | |||||||||||||
|
Royalties
|
— | — | 2,916 | |||||||||||||
|
Total revenues
|
538,105 | 514,408 | 439,925 | |||||||||||||
|
Cost of revenues:
|
24b | |||||||||||||||
|
Electricity
|
235,335 | 241,999 | 239,732 | |||||||||||||
|
Product
|
138,204 | 133,820 | 74,220 | |||||||||||||
|
Total cost of revenues
|
373,539 | 375,819 | 313,952 | |||||||||||||
|
Gross profit
|
164,566 | 138,589 | 125,973 | |||||||||||||
|
Research and development expenses- net
|
25 | (4,965 | ) | (6,108 | ) | (8,801 | ) | |||||||||
|
Selling and marketing expenses
|
26 | (24,835 | ) | (16,122 | ) | (16,207 | ) | |||||||||
|
General and administrative expenses
|
26 | (31,005 | ) | (29,882 | ) | (29,389 | ) | |||||||||
|
Write-off of unsuccessful exploration activities
|
12b | (4,094 | ) | (2,639 | ) | — | ||||||||||
|
Impairement of power plants- net
|
12 | 8,038 | (171,928 | ) | (5,549 | ) | ||||||||||
|
Other gains (losses)- net:
|
||||||||||||||||
|
On disposal and increase (decrease) in value of financial assets
|
6 | (636 | ) | 989 | (3,829 | ) | ||||||||||
|
Gain from sale of investment in subsidiary
|
4c | 4,230 | — | — | ||||||||||||
|
Sundry
|
27 | 8,850 | 2,602 | 3,456 | ||||||||||||
|
Income (loss) from operations
|
120,149 | (84,499 | ) | 65,654 | ||||||||||||
|
Financial expenses
|
28 | (76,914 | ) | (65,807 | ) | (70,314 | ) | |||||||||
|
Share in losses of associated companies
|
— | (2,522 | ) | (959 | ) | |||||||||||
|
Income (loss) before income taxes
|
43,235 | (152,828 | ) | (5,619 | ) | |||||||||||
|
Income tax benefit (provision)
|
14d | 6,415 | *(24,496 | ) | (32,040 | ) | ||||||||||
|
Profit (loss) for the year
|
49,650 | (177,324 | ) | (37,659 | ) | |||||||||||
|
Attributable to:
|
||||||||||||||||
|
Owners of the Parent Company
|
29,495 | (106,848 | ) | (21,799 | ) | |||||||||||
|
Noncontrolling interest
|
20,155 | (70,476 | ) | (15,860 | ) | |||||||||||
|
Total
|
49,650 | (177,324 | ) | (37,659 | ) | |||||||||||
|
|
Dollars
|
|||||||||||||||
|
Income (loss) per share attributable to equity holders of the Company-
|
||||||||||||||||
|
basic and fully diluted
|
29 | 0.25 | *(0.92 | ) | (0.19 | ) | ||||||||||
|
Weighted average number of shares used in calculation of earning (loss) per share attributable to equity holders of the Company-
|
||||||||||||||||
|
|
||||||||||||||||
|
basic and fully diluted (in thousands)
|
116,525 | 116,525 | 116,525 | |||||||||||||
|
Year ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Income (loss) for the year
|
49,650 | (177,324 | ) | (37,659 | ) | |||||||
|
Other comprehensive income (loss):
|
||||||||||||
|
Items that will not be reclassified to profit or loss-
|
||||||||||||
|
remeasurement of retirement benefit obligations
|
520 | (427 | ) | (157 | ) | |||||||
|
Items that may be subsequently reclassified to profit or loss-
|
||||||||||||
|
in respect of cash flow hedge
|
(164 | ) | (190 | ) | (212 | ) | ||||||
| (164 | ) | (190 | ) | (212 | ) | |||||||
|
Total Other comprehensive income (loss), net of tax
|
356 | (617 | ) | (369 | ) | |||||||
|
Total Other comprehensive income (loss) for the year
|
50,006 | (177,941 | ) | (38,028 | ) | |||||||
|
Attributable to:
|
||||||||||||
|
Euity holders of the company
|
29,708 | (107,218 | ) | (22,020 | ) | |||||||
|
Non-controlling interest
|
20,298 | (70,723 | ) | (16,008 | ) | |||||||
|
Total
|
50,006 | (177,941 | ) | (38,028 | ) | |||||||
| Equity attributed to owners of the Parent Company | ||||||||||||||||||||||||||||||||||||
|
Other capital surplus
|
||||||||||||||||||||||||||||||||||||
|
In respect of
|
||||||||||||||||||||||||||||||||||||
|
transactions with
|
||||||||||||||||||||||||||||||||||||
|
Additional
|
In respect of
|
noncontrolling
|
Cost of Company
|
|||||||||||||||||||||||||||||||||
|
Ordinary
|
Paid-in
|
cash flow
|
interests without
|
Retained
|
shares held by
|
Non-controling
|
||||||||||||||||||||||||||||||
|
shares
|
Capital
|
hedges
|
losing control
|
earnings
|
a subsidiary
|
Total
|
interests
|
Total
|
||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
|
Balance at January 1, 2011
|
38,374 | 162,433 | 624 | (15,728 | ) | 446,502 | (2,826 | ) | 629,379 | 361,673 | 991,052 | |||||||||||||||||||||||||
|
Changes during 2011:
|
||||||||||||||||||||||||||||||||||||
|
Loss for the year
|
— | — | — | (21,799 | ) | — | (21,799 | ) | (15,860 | ) | (37,659 | ) | ||||||||||||||||||||||||
|
Other comprehensive loss for the year
|
— | — | (127 | ) | — | (94 | ) | — | (221 | ) | (148 | ) | (369 | ) | ||||||||||||||||||||||
|
Share-based payment
|
— | — | — | — | — | — | — | 6,672 | 6,672 | |||||||||||||||||||||||||||
|
Dividend paid by the Company
|
— | — | — | — | (99,080 | ) | — | (99,080 | ) | — | (99,080 | ) | ||||||||||||||||||||||||
|
Dividend paid by a subsidiary
|
— | — | — | — | — | — | — | (2,203 | ) | (2,203 | ) | |||||||||||||||||||||||||
|
Balance at December 31, 2011
|
38,374 | 162,433 | 497 | (15,728 | ) | 325,529 | (2,826 | ) | 508,279 | 350,134 | 858,413 | |||||||||||||||||||||||||
|
Balance at January 1, 2012
|
38,374 | 162,433 | 497 | (15,728 | ) | 325,529 | (2,826 | ) | 508,279 | 350,134 | 858,413 | |||||||||||||||||||||||||
|
Changes during 2012:
|
||||||||||||||||||||||||||||||||||||
|
Loss for the year
|
*(106,848 | ) | (106,848 | ) | *(70,476 | ) | (177,324 | ) | ||||||||||||||||||||||||||||
|
Other comprehensive loss for the year
|
— | — | (114 | ) | — | (256 | ) | — | (370 | ) | (247 | ) | (617 | ) | ||||||||||||||||||||||
|
Share-based payment
|
— | — | — | — | — | — | — | 6,394 | 6,394 | |||||||||||||||||||||||||||
|
Transaction with non-controlling interests without losing control
|
— | — | — | — | — | — | — | (499 | ) | (499 | ) | |||||||||||||||||||||||||
|
Dividend paid by a subsidiary
|
— | — | — | — | — | — | — | (1,459 | ) | (1,459 | ) | |||||||||||||||||||||||||
|
Balance at December 31, 2012
|
38,374 | 162,433 | 383 | (15,728 | ) | 218,425 | (2,826 | ) | 401,061 | 283,847 | 684,908 | |||||||||||||||||||||||||
| Equity attributed to owners of the Parent Company | ||||||||||||||||||||||||||||||||||||
|
Other capital surplus
|
||||||||||||||||||||||||||||||||||||
|
In respect of
|
||||||||||||||||||||||||||||||||||||
|
transactions with
|
||||||||||||||||||||||||||||||||||||
|
Additional
|
In respect of
|
noncontrolling
|
Cost of Company
|
|||||||||||||||||||||||||||||||||
|
Ordinary
|
Paid-in
|
cash flow
|
interests without
|
Retained
|
shares held by
|
Non-controling
|
||||||||||||||||||||||||||||||
|
shares
|
Capital
|
hedges
|
losing control
|
earnings
|
a subsidiary
|
Total
|
interests
|
Total
|
||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
|
Balance at January 1, 2013
|
38,374 | 162,433 | 383 | (15,728 | ) | 218,425 | (2,826 | ) | 401,061 | 283,847 | 684,908 | |||||||||||||||||||||||||
|
Changes during 2013:
|
||||||||||||||||||||||||||||||||||||
|
Profit for the year
|
29,495 | 29,495 | 20,155 | 49,650 | ||||||||||||||||||||||||||||||||
|
Other comprehensive income(loss) for the year
|
— | — | (98 | ) | — | 311 | — | 213 | 143 | 356 | ||||||||||||||||||||||||||
|
Share-based payment
|
— | — | — | — | — | — | 6,434 | 6,434 | ||||||||||||||||||||||||||||
|
Dividend paid by the Company
|
— | — | — | — | (5,964 | ) | — | (5,964 | ) | — | (5,964 | ) | ||||||||||||||||||||||||
|
Exercise of options in the subsidiary
|
65 | 65 | 464 | 529 | ||||||||||||||||||||||||||||||||
|
Dividend paid by a subsidiary
|
— | — | — | — | — | — | — | (1,459 | ) | (1,459 | ) | |||||||||||||||||||||||||
|
Balance at December 31, 2013
|
38,374 | 162,433 | 285 | (15,663 | ) | 242,267 | (2,826 | ) | 424,870 | 309,584 | 734,454 | |||||||||||||||||||||||||
|
Year ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Cash flows from operating activities:
|
||||||||||||
|
Income (loss) before income taxes
|
43,235 | (152,828 | ) | (5,619 | ) | |||||||
|
Adjustments in respect of:
|
||||||||||||
|
Income and expenses not involving cash flows:
|
||||||||||||
|
Loss (gain) from disposal and decrease (increase) in value of marketable securities
|
636 | (989 | ) | 3,829 | ||||||||
|
Interest income from deposits and marketable securities
|
(1,490 | ) | (1,562 | ) | (3,441 | ) | ||||||
|
Change in fair value of of derivatives on oil and natural gas prices
|
7,813 | |||||||||||
|
Interest expense in respect of tax partnership
|
13,753 | 6,828 | 7,837 | |||||||||
|
Interest on notes and loans
|
57,408 | 57,241 | 45,242 | |||||||||
|
Retirement benefit obligations, net
|
954 | 1,370 | (383 | ) | ||||||||
|
Depreciation and amortization
|
88,731 | 96,085 | 91,174 | |||||||||
|
Impairement (reverse of impairement) of power plants-net
|
(8,038 | ) | 171,928 | 5,549 | ||||||||
|
Loss on impairment of associated company
|
2,114 | — | ||||||||||
|
Gain on sale of a subsidiary
|
(4,230 | ) | — | — | ||||||||
|
Write-off of unsuccessful exploration activities
|
4,039 | 2,639 | — | |||||||||
|
The financing component of asset retirement obligation
|
1,915 | 1,708 | 1,145 | |||||||||
|
Deferred lease income, net
|
(2,685 | ) | (2,685 | ) | (2,685 | ) | ||||||
|
Capital gain on early repayment of OFC bonds
|
(819 | ) | ||||||||||
|
Deferred lease fees
|
(217 | ) | 128 | 376 | ||||||||
|
Exchange differences on dividend paid
|
— | — | (707 | ) | ||||||||
|
Exchange differences on cash and cash equivalents
|
(465 | ) | 576 | — | ||||||||
|
Equity in losses of associated companies
|
— | 442 | 959 | |||||||||
|
Amounts recorded in respect of options granted to employees and directors of a subsidiary
|
6,434 | 6,394 | 6,672 | |||||||||
| 206,974 | 189,389 | 149,948 | ||||||||||
|
Changes in operating asset and liability items:
|
||||||||||||
|
Decrease (increase) in accounts receivable:
|
||||||||||||
|
Trade
|
(34,804 | ) | (4,406 | ) | 3,221 | |||||||
|
Other
|
(5,676 | ) | (22,355 | ) | (6,434 | ) | ||||||
|
Increase (decrease) in accounts payable and accruals:
|
||||||||||||
|
Trade
|
7,179 | (70 | ) | 4,523 | ||||||||
|
Provisions
|
(57 | ) | 28 | 258 | ||||||||
|
Other
|
3,421 | 2,500 | 1,193 | |||||||||
|
Increase (decrease) in receivables/ payables in respect of uncompleted contracts, net
|
(29,109 | ) | (13,343 | ) | 32,130 | |||||||
|
Decrease (Increase) in inventories
|
(1,620 | ) | (8,128 | ) | (3 | ) | ||||||
|
Decrease in long term accrued expenses and other liabilities
|
2,303 | 895 | (708 | ) | ||||||||
| (58,363 | ) | (44,879 | ) | 34,180 | ||||||||
|
Interest received
|
1,321 | 1,558 | 3,558 | |||||||||
|
Interest paid
|
(56,645 | ) | (46,629 | ) | (36,704 | ) | ||||||
|
Income taxes paid, net
|
(6,454 | ) | (11,658 | ) | (9,736 | ) | ||||||
|
Net cash provided by operating activities-carried forward
|
86,833 | 87,781 | 141,246 | |||||||||
|
Year ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Net cash provided by operating activities-brought forward
|
86,833 | 87,781 | 141,246 | |||||||||
|
Cash flows from investing activities:
|
||||||||||||
|
Construction of power palnts and acquisition of other fixed assets
|
(207,535 | ) | (231,660 | ) | (269,712 | ) | ||||||
|
Cash grant received
|
14,685 | 119,199 | — | |||||||||
|
Purchase of intangible assets
|
(562 | ) | (1,370 | ) | (2,280 | ) | ||||||
|
Acquisition of securities
|
(23,645 | ) | (36,249 | ) | (107,561 | ) | ||||||
|
Proceeds from sale of securities
|
22,413 | 45,764 | 124,596 | |||||||||
|
Proceeds from sale of a subsidiary
|
7,699 | — | — | |||||||||
|
Decrease (increase)in bank deposit
|
3,010 | (3,010 | ) | — | ||||||||
|
Decrease (increase) in cash, cash equivalents and restricted deposits
|
25,472 | (1,016 | ) | (52,212 | ) | |||||||
|
Investment in an associated company
|
— | (1,390 | ) | (472 | ) | |||||||
|
Net cash used in inveting activities
|
(158,463 | ) | (109,732 | ) | (307,641 | ) | ||||||
|
Cash flows from financing activities:
|
||||||||||||
|
Exercise of optionsin a subsidiary
|
529 | — | — | |||||||||
|
Credit received from banks
|
3,058,956 | 2,953,535 | 891,566 | |||||||||
|
Long-term loans received from banks and others
|
90,000 | 220,000 | — | |||||||||
|
Proceeds from issuance of senior unsecured bonds
|
— | 1,171 | 109,422 | |||||||||
|
Proceeds from issuance of senior secured bonds by the U.S. Department of Energy
|
— | — | 151,739 | |||||||||
|
Repayment of bank credit
|
(3,020,545 | ) | (3,093,978 | ) | (867,000 | ) | ||||||
|
Early repayment of OFC Notes
|
(11,888 | ) | ||||||||||
|
Repayment of long-term loans from banks and others
|
(68,396 | ) | (74,528 | ) | (50,157 | ) | ||||||
|
Extinguishment of liability in respect of a tax partnership
|
(13,384 | ) | (14,884 | ) | (14,039 | ) | ||||||
|
Net proceeds from the sale of a tax partnership
|
31,376 | — | 24,878 | |||||||||
|
Dividend paid
|
(5,964 | ) | — | (98,373 | ) | |||||||
|
Deferred financing costs
|
(1,919 | ) | (9,146 | ) | (13,216 | ) | ||||||
|
Transaction with noncontrolling interests without losing control
|
— | (499 | ) | — | ||||||||
|
Dividend paid to noncontrolling interest in a subsidiary
|
(1,459 | ) | (1,459 | ) | (2,203 | ) | ||||||
|
Net cash provided by (used in) financing activities
|
57,306 | (19,788 | ) | 132,617 | ||||||||
|
Decrease in cash and cash equivalents
|
(14,324 | ) | (41,739 | ) | (33,778 | ) | ||||||
|
Balance of cash and cash equivalents at beginning of year
|
71,767 | 114,082 | 147,860 | |||||||||
|
Effect of changes in exchange rates on cash and cash equivalents in foreign currency
|
465 | (576 | ) | — | ||||||||
|
Balance of cash and cash equivalents at end of year
|
57,908 | 71,767 | 114,082 | |||||||||
| NOTE 1 – | GENERAL: | |
|
|
a.
|
Operations |
|
Ormat Industries Ltd. (the “Company”) and its subsidiaries (jointly - the “Group”) are engaged in the development, design, construction and operation of power plants owned by the Group and used for the production of electricity from geothermal and recovered energy sources; the group is also engaged in the design, development, and manufacture for others of turbines and power units used for the supply of electricity.
The Company is a public company incorporated and resident in Israel. The address of the Company’s registered headquarters is 1 Szydlowski Street, New Industrial Zone, Yavne, Israel.
The Company’s shares are listed on the Tel-Aviv Stock Exchange (“TASE”).
|
||
|
Subsidiary
|
-
|
A company in which the Company has direct or indirect control (as defined in International Accounting Standard No. 10, “Consolidated Financial Statements” (IAS 10) whose financial statements are consolidated with the Company’s financial statements.
|
|
|
Proportionately consolidated company
|
-
|
A company held under joint control, none of whose shareholders holds exclusive control therein, financial statements of which are consolidated with those of the Company by the proportionate consolidation method.
|
|
|
Associated companies
|
-
|
Companies in which the Company has significant influence.
|
|
|
Investees
|
-
|
Subsidiaries, proportionately consolidated companies, and associated companies.
|
|
|
The Group
|
-
|
The Company and companies under its control, including jointly controlled companies, as detailed below.
|
|
|
Solmat
|
-
|
Solmat Systems Ltd., an Israeli subsidiary.
|
|
|
OrFuel
|
-
|
OrFuel Ltd., an Israeli subsidiary.
|
|
|
Ormat Technologies
|
-
|
Ormat Technologies, Inc., a subsidiary in the United States and the companies under its control.
|
|
|
OPTI B.V.
|
-
|
OPTI Technologies B.V., a subsidiary in the Netherlands.
|
|
|
Interested parties
|
-
|
As defined in the Israeli Securities (Annual Financial Statements) Regulations, 2010.
|
|
|
Dollar
|
-
|
U.S. dollar.
|
|
|
Israeli CPI
|
-
|
The consumer price index as published by the Central Bureau of Statistics in Israel.
|
|
NOTE 2 –
|
SIGNIFICANT ACCOUNTING POLICIES: | ||
|
a.
|
Basis of presentation:
|
||
|
The consolidated financial statements of the Group as of December 31, 2013 and 2012 and for each of the three years in the period ended December 31, 2013 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), which include standards and interpretations as issued by the International Accounting Standards Board (“IASB”) and include additional disclosures required by the Israeli Securities (Preparation of Annual Financial Statements) Regulations, 2010.
The significant accounting policies set out below have been consistently applied to all the periods presented, unless otherwise stated.
The consolidated financial statements have been prepared under the historical cost convention, as modified by revaluation of amounts funded in respect of retirement benefit obligations, and by revaluation of financial assets at fair value through profit and loss and derivative instruments at fair value through profit or loss, which are presented at their fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. Actual results may differ materially from estimates and assumptions used by the Group’s management.
The classification of assets and liabilities in the consolidated statements of financial position is based on division into current assets and liabilities, which pertain to periods not in excess of 12 months, and non-current assets and liabilities, except for projects the revenue from which is recognized by the percentage of completion method, with respect of which the period exceeds 12 months but does not exceed 24 months, since the Group charges advances based on the percentage of completion.
The Group analyzed the results set forth in the statements of operations using a classification method based on the operating characteristics of expenses.
|
|||
| b. | Consolidated financial statements: | ||
| 1) | Subsidiaries | ||
|
Subsidiaries are all entities (including special purpose entities) controlled by the Group. The Group controls an entity when it has the power to govern the financial and operating policies of the investee, is exposed or entitled to variable benefits resulting from its involvement in the entity and can apply its power therein to influence the amount of the yield from such entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Intercompany transactions, balances, and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated, unless there are circumstances indicating impairment in value of the asset transferred.
|
|||
|
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group for the purpose of consolidation.
|
|||
| 2) |
Transactions with non-controlling interests that do not result in loss of control
|
||
|
Transactions with non-controlling interests that do not result in loss of control are treated as equity transactions. In such transactions, the difference between the fair value of any compensation paid or received and the amount at which the non-controlling interests is adjusted to reflect changes in their relative interests in the subsidiary are carried directly to equity and attributed to equity holders of the Company.
|
|||
| 3) | Joint arrangements | ||
|
Commencing January 1, 2011, the Group has applied IFRS 11 to all joint arrangements. IFRS 11 classifies joint arrangements into only two types: “joint operations” and “joint ventures,” depending on how rights and obligations are shared by the parties to the joint arrangement. The joint arrangement in the Sarulla project is classified as a joint operation.
|
|||
| 4) | Associated companies | ||
|
Associated companies are companies in which the Group has significant influence, but not control; usually, this means a 20% to 50% share in voting rights. Investments in associated companies are presented by the equity method and initially recognized at cost. The book value of these investments varies, as cumulative post-acquisition profits or losses of associated companies and of joint ventures are carried to the carrying amount of the investment.
The Group’s share in post-acquisition profits or losses of associated companies is carried to income, and its share in post-acquisition changes in other comprehensive income is carried to other comprehensive income. Cumulative post-acquisition changes are carried to the carrying amount of the investment. In the event that the Group’s equity in losses of an associated company is equal to, or higher than, the value of its interest therein (including unsecured receivables), the Group does not recognize losses in excess of the cost of its investment in such associated company, unless it is has a legal or constructive obligation to bear such losses in excess of its investment in the associated company or payments have been made on behalf thereof.
The Group determines at each reporting date if there is any indication that the carrying amount of the investment in associated companies is not recoverable. The impairment to be recognized is measured by the amount by which the recoverable amount of the investment in the associated company (the higher of value in use and fair value less costs to sell) exceeds their book value. Such difference is recognized in profit and loss under the “share in losses of associated companies” line item.
|
|||
| c. | Segment reporting | ||
|
Business segments are reported on the same basis that is used for the purpose of internal reporting to the chief executive decision maker of the Group, who is in charge of allocation of resources to the various segments and evaluation of their performance.
|
|||
|
d.
|
Translation of foreign currency balances and transactions:
|
||
| 1) | Functional and presentation currency | ||
|
Items included in the financial statements of each of the Group companies are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The dollar is the functional and presentation currency of the Company and of most Group companies.
|
|||
| 2) | Transactions and balances | ||
|
Transactions made in a currency different from the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the end-of-period exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of operations.
Exchange differences in respect of financial assets and liabilities which are not monetary assets (such as equity securities, e.g. – shares or share options) classified as financial instruments at fair value through profit and loss, are recognized in income as part of changes in their fair value.
|
|||
|
e.
|
Power plants and other property, plant and equipment
|
||
|
Cost of power plants and other property, plant and equipment are recognized only if: (a) it is probable that future economic benefits associated with the item will flow to the Group, and (b) the cost of the item can be measured reliably.
Power plants and other property, plant, and equipment are initially recognized at cost of acquisition or costs of construction, less relevant government grants. Cost of construction of power plants includes direct expenses incurred in geothermal resource exploration (see also f . below), construction and running until they are put into service, borrowing costs in respect of loans used to finance the construction, as well as the estimate of anticipated costs for eventual dismantling the asset and restoring the site to its previous condition. Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. When part of an asset is replaced, its carrying amount is derecognized. All other repairs
and maintenance costs are expensed when incurred.
Power plants and other property, plant, and equipment are stated at cost, net of accumulated depreciation and impairment losses. Depreciation and impairment charges on property, plant, and equipment stated at cost are charged to income.
Power plants are depreciated using the straight-line method, over their estimated useful lives (25-30 years).
Depreciation on other assets is calculated using the straight-line method so as to bring their cost amounts to their residual values over their estimated useful lives, as follows:
|
|||
|
Years
|
||
|
Buildings
|
15-50
|
|
|
Machinery and equipment
|
10
|
|
|
Vehicles
|
5-7
|
|
|
Furniture, fittings, and computer equipment
|
3-14
|
|
Leasehold improvements are amortized using the straight-line method over the expected useful lives of the improvements.
The residual values and useful lives of the assets are reviewed, and adjusted if appropriate, on an annual basis.
When impairment in value of an asset occurs, it is written down immediately to the recoverable value, see h. below.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount, and are recognized within “other gains (losses) - net” in the statement of operations.
|
|||
| f. | Geothermal resources exploration and evaluation costs | ||
|
The Group capitalizes costs incurred in connection with the exploration and development of geothermal resources beginning when it acquires land rights to the potential geothermal resource. Usually, prior to acquiring land rights, the Group makes an initial assessment that an economically feasible geothermal reservoir is probable on that land using available data and external assessments vetted through its exploration department and, occasionally, through its outside service providers. Costs incurred prior to acquiring land rights are expensed as part of cost of revenues. Such costs were not material in any of the three years ended December 31, 2013, 2012 and 2011. It normally takes two to three years from the beginning of active exploration of a particular geothermal resource
to the time the Group has an operating production well, assuming the resource is commercially viable. In some cases, however, the process may be longer due to delays in obtaining permits, preparing transmission infrastructure, or other causes of commercial matters required for the advancement of the process.
In most cases, the Group obtains the right to conduct geothermal development and operations on land owned by the Bureau of Land Management of the U.S. Department of the Interior (“BLM”) or by private parties. In consideration for certain of these leases, the Group may pay an up-front non-refundable payment which is a component of the competitive lease process. The up-front non-refundable payments and other related costs, such as legal fees, are capitalized. Upon completion of construction and commencement of operation of a power plant, the Groups pays royalties computed as a percentage of electricity revenue to the owners of the land. Such royalties are expensed as part of cost of revenues.
Once land rights to the potential geothermal resource are acquired, the Group performs further studies and surveys, including water and soil analyses, and augments its database with the results of these studies. The Group then initiates a series of geophysical surveys to assess the resource and determine drilling locations. If the results of these activities support the initial assessment of the feasibility of the geothermal resource, the Group then proceeds to exploratory drilling and other related activities, which may include drilling of temperature gradient holes, drilling of core holes, building access roads to drilling locations, drilling full size production and/or injection wells and flow tests. If the slim hole supports a conclusion that the geothermal resource will support a commercially viable power plant, it may be converted to a full-size commercial well, used either for extraction or re-injection or geothermal
fluids, or used as an observation well to monitor and define the geothermal resource. Costs associated with these activities and other directly attributable costs, including interest incurred once physical exploration activities begin, as well costs related to obtaining permits, are capitalized and included in “geothermal resources exploration and evaluation”.
|
|||
|
Each geothermal resource is examined separately for the purpose of economic feasibility evaluation. Accordingly, in the period in which the Group concludes that the geothermal resource found justifies construction of a power plant, costs hitherto capitalized in respect of the geothermal resource are reclassified from “geothermal resources exploration and evaluation” in the statements of financial position to “power plants under construction.” In the event that the Group concludes that the geothermal resource does not warrant the construction of a power plant and resolves to abandon it, the costs hitherto capitalized are charged to income as “write-off of costs of unsuccessful exploration activities” when that decision is taken.
All capitalized exploration and evaluation costs, including a one-off payment for the land, which are attributed to a power plant, are amortized over the useful life of that plant commencing with the date on which the related geothermal power plant is substantially completed and ready for use. A geothermal power plant is ready for use when it can commence operations in the manner intended by the Group.
|
| g. | Intangible assets: | ||
| 1) |
Power purchase agreements
Power purchase agreements (“PPAs”) are mainly stated on the basis of an allocation of acquisition costs, performed at the time the power plants were purchased by the Group, and are amortized over the terms of the agreements (12-25 years), using the straight-line method.
|
||
| 2) | Patents and trademarks | ||
|
Expenses relating to registration of patents and trademarks that give the Group protection in respect of the use of its technological and production know-how are expensed when incurred. In the statements of financial position, they are stated at token value.
|
|||
| 3) | Computer software | ||
|
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over the estimated useful lives of such licenses (three to five years), using the straight-line method.
Costs of maintenance of computer software are recognized as incurred.
|
|||
| 4) | Research and development | ||
|
Research expenditure is expensed as incurred. Costs incurred in respect of development projects (relating to the design and testing of new or improved products) are also expensed, since, at the time of completion, the criteria defined in International Accounting Standard 38, “Intangible Assets”, for recognition as an asset are not fulfilled.
|
|||
|
At the end of each calendar year, the Group reviews the estimated useful life of its intangible assets, and the amortization method it uses. Significant changes, if any, in such estimates are implemented prospectively. When impairment in value of an asset occurs, it is written down immediately to the recoverable amount, see h. below.
|
|||
| h. | Impairment of non-monetary assets | ||
|
Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Factors which could trigger impairment include, among others, significant underperformance or projected future underperformance of a power plant, significant changes in the Group’s use of assets or in its overall business strategy, negative industry or economic trends, a significant increase in costs necessary to complete a project, etc.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). In the electricity segment, each power plant, or power plant complex which serves a single customer, as well as assets used thereby, are defined as cash-generating units. For example, the operating power plants in a complex are managed under a combined operation management generally with one central control room that controls all of the power plants in a complex and one maintenance group that services all of the power plants in a complex. As a result, the cash flows from individual plants within a complex are not largely independent of the cash flows of other plants within the complex. The Company also tests for impairment operating plants which are not operated as a complex,
as well as projects under construction or exploration and evaluation, as described in f. above.
An impairment loss is recognized for the amount by which the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of fair value of an asset less costs to sell, and its value in use. Non-monetary assets in respect of which impairment loss was recognized are reviewed for possible reversal of the impairment at each reporting date.
Fair value and value in use are measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset. The significant assumptions that are used in estimating undiscounted future cash flows include: (i) projected generating capacity of the power plant or a complex of power plants, and rates to be received under the respective PPA or in cases that the estimated useful lives are longer than the PPA period, in accordance with the estimated rates at those periods; (ii) projected operating expenses of the relevant power plant or complex; and (iii) the interest rate used to determine the discounted future cash flows.
|
|||
| i. | Borrowing costs | ||
|
Borrowing costs incurred on specific or general credit directly attributable to the acquisition, construction or manufacture of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) during the period of time that is required to complete and prepare the asset for its intended use, commencing when all the following conditions are met: (a) the group incurs expenses in respect of the asset; (b) the Group incurs borrowing costs; and (c) it carries out actions required for the preparation of the said asset for its own use or for sale. Capitalization is discontinued when all the actions required for the preparation of the said asset for its designated use or for sale are virtually completed.
The Group mainly capitalizes borrowing costs pertaining to the construction of buildings and power plants or exploration and evaluation activities, whether for its own use or for sale. Other borrowing costs are expensed.
|
|||
|
If the Group suspends the development of the qualifying asset for an extended period, it suspends capitalization of the related borrowing costs.
|
|||
| j. | Government grants | ||
|
Government grants relating to costs are deferred and recognized in the statement of operations over the period necessary to match them with the costs for which they are intended to compensate.
Government grants in respect of property, plant, and equipment are deducted from the cost of the related asset in the accounts and recognized in income by way of reduced depreciation charges over the estimated useful life of those assets.
|
|||
| k. | Financial assets | ||
|
The Group has elected December 31, 2009 as the initial application date of International Financial Reporting Standard 9, “Financial Instruments” (“IFRS 9”). IFRS 9 deals with the classification, recognition and measurement of financial assets.
The Group classifies its financial assets into two categories: assets stated at amortized cost and assets stated at fair value.
Application of the amortized cost approach is reserved for assets which meet both of the following criteria: (i) the objective of the entity’s business model is to hold the financial asset to collect the contractual cash flows, and (ii) the contractual cash flows (principal and interest on the balance of the principal) are collectible at fixed dates. If one of those criteria is not met, the asset is accounted for using the fair value approach.
Assets stated at amortized value are initially recognized at fair value with the addition of transaction costs, and thereafter measured at amortized cost (using the effective interest method), net of any impairment provision. Such assets include loans, accounts receivable and deposits.
Assets stated at fair value are initially recognized at fair value and then remeasured at fair value in subsequent periods. Acquisition costs and fair value adjustments are carried to income upon occurrence. This category includes listed securities and derivative financial instruments.
Financial instruments are derecognized when the entitlement to receive cash flows in respect thereof has expired or transferred, and the Group has disposed of all ownership risks and benefits deriving therefrom.
Maturities of assets presented at amortized cost for periods exceeding 12 months from the date of the statement of financial position, and assets stated at fair value that are not designated for current disposal, are included in the statement of financial position among non-current assets, and the other financial assets are presented as current assets.
Fair values of financial assets, which are quoted in an active market, are based on their sale price as of the reporting date. If the trading market of the financial asset (and also in case that the financial asset is not registered for trading), the Group determines the fair value of these assets using valuation methods. These methods are based on reported prices in previous transactions at market value, relying on similar financial instruments and analysis of forecasted discounted cash flows, which are based on market data and rely as little as possible on entity specific data, see also note 30 below.
|
|||
|
Financial assets and financial liabilities are offset and are presented in a net amount in the statement of financial position, only if there is an enforceable legal right to offset the financial assets against the financial liabilities, and when there is an intention to settle on a net basis or realize the assets and settle the liabilities simultaneously.
|
|||
| l. | Derivative financial instruments and hedging activities | ||
|
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value.
Method of recognitions of differences in fair value of derivative financial instruments depends on whether they are designated as hedges, and if so, on the nature of the hedged asset. Changes in fair value of derivatives which do not qualify for hedge accounting are recognized directly in the statements of operations. The Group does not purchase derivative financial instruments for trading purposes, but only in order to hedge the fair value of recognized assets or liabilities and firm commitments, or the anticipated changes in cash flows. Nevertheless, these derivative instruments do not qualify for hedge accounting. Consequently, changes in their fair value are recognized directly in the statements of operations within “other gains (losses) - net”. These instruments are classified as current assets if the realization thereof is anticipated within one year of the date of the statement of financial position.
The Group entered into several derivatives transactions to reduce its exposure to fluctuations in the price of natural gas and oil. The derivatives are not accounted for as hedge transactions and are presented at fair value at each statement of financial position date and fair value differences are recognized within electricity revenues.
In addition, in order to hedge its Israeli currency expenses, the Group carries out forward currency transactions and transactions in currency options. Such transactions are not accounted for as hedges, and therefore they are stated at their fair value as of each balance sheet date, with any differences in such fair value being carried to income under “other income (losses)”.
|
|||
| m. | Inventories | ||
|
Inventories are valued at the lower of cost or net realizable value. Provisions for decrease in value of slow or inactive items are based on management’s estimate.
The cost on inventories includes the raw material costs, production costs and other expenses accrued to bring the inventories to the current condition. The Group allocates related fixed production overheads (based on normal operating capacity) to the inventories.
Cost of items not ordinarily interchangeable and of goods or services separated for the needs of specific projects is determined based on specific identification of their costs.
|
|||
|
Cost of other inventory items is determined on the following basis:
|
|||
|
Raw materials and purchased parts for
|
|||
|
Assembly
|
-
|
On the moving average basis.
|
|
|
Self-manufactured assembly parts, work in
|
|||
|
process and finished products:
|
|||
|
Raw material component
|
-
|
On the moving average basis.
|
|
|
Labor and overhead component
|
-
|
At computed production costs (including labor and other direct and indirect costs), based on the stage of processing.
|
|
Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
|
|||
| n. | Trade accounts receivable | ||
| These balances represent amounts receivable from customers in respect of electricity sales, construction of power plants, equipment sold and services rendered in the ordinary course of business. They are classified to current assets when the payment is expected within a year or less; otherwise, they are classified to non-current liabilities. | |||
| o. | Cash and cash equivalents | ||
|
Cash and cash equivalents include cash on hand, short-term bank deposits, and other short-term highly liquid investments with original maturities of three months or less.
|
|||
| p. | Share capital | ||
|
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options, net of tax, are shown in equity, as a deduction from issuance proceeds.
Where the Company or any Group company purchases the Company’s shares (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s equity holders until such shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.
|
|||
| q. | Trade accounts payable | ||
|
These balances represent the Group’s liabilities in respect of goods and services acquired in the ordinary course of business. They are classified to current liabilities when the payment is expected during the normal operational cycle of business; otherwise, they are classified to non-current liabilities.
|
|||
| r. | Borrowings | ||
|
Borrowings (which comprise, among others, project financing senior secured notes, bank credit and loans from banks and from institutional investors) are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the statement of operations over the period of the borrowings, using the effective interest method.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.
Loans are classified to current liabilities, unless the Group has an unconditional right to defer payment for at least twelve months after the date of the statement of financial position.
|
|||
| s. | Current and deferred income taxes | ||
|
Taxes on income for the year include current and deferred taxes. Taxes are recognized in the statements of operations, except for taxes in respect of items carried directly to other comprehensive income, which are also recognized in equity with the related item.
The current income tax provision is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Company and its subsidiaries operate and generate taxable income. The Group’s management periodically examines the tax position under the relevant applicable tax laws and regulations and establishes provisions for the estimated tax amounts payable.
The Group fully recognizes deferred taxes on temporary differences arising between the carrying amounts in the consolidated financial statements of assets and liabilities and their tax bases, using the liability method. However, deferred income taxes are not accounted for if they arise from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, has no effect on the profit or loss, whether for accounting or tax purposes.
Deferred income tax assets are recognized to the extent that it is probable that future taxable profits, against which the temporary differences can be utilized, will be available. Deferred income taxes are determined using tax rates (and laws) that have been enacted or substantially enacted by the date of the statement of financial position and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. See also note 14b.
Deferred income taxes are created in respect of temporary differences arising on investments in subsidiaries and associated companies, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
|
|||
|
Deferred income tax assets and liabilities are offset only if: there is an enforceable legal right to offset current deferred tax assets against current deferred tax liabilities; and such deferred tax assets and liabilities relate to taxes levied by the same jurisdiction on an entity or entities that intend to discharge the tax balances on a net basis.
In the event of distribution of dividend out of tax exempt income from “approved and benefited enterprises,” the distributed amount will be subject to tax at the rates applicable to the Company’s income had it not been tax exempt. Should this occur, such additional taxes will be charged to income.
|
|||
| t. | Employee benefits: | ||
| 1) | Pension and retirement benefit obligations | ||
|
Under labor laws and agreements in Israel, as well as accepted practice, the Israeli company in the Group is required to pay retirement benefits to employees dismissed or retiring in certain other circumstances. This obligation is covered by a defined benefit plan, and for some employees - by a defined contribution plan.
The obligation to those Israeli employees for whom there is a defined benefit plan is to pay severance based on the number of years of employment and the employee’s last monthly salary.
The obligation to the remaining Israeli employees, and to the U.S. employees for whom there are defined contributions plans, is to make regular contributions to separate and independent entities (insurance policies and pension and severance pay funds in Israel, and 401K plans in the US), while it has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
The liability recognized in the statement of financial position in respect of retirement benefit obligations is the present value of the defined benefit obligation at the date of the statement of financial position, less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows (after taking into account the expected rate of salary increases) using interest rates of government bonds denominated in new Israeli shekels (the currency in which the benefits will be paid) and that have terms to maturity approximating to the terms of the related retirement benefit obligations.
The discount rate used in computation of the anticipated cash flows for the purpose of calculation of the actuarial liability was determined based on interest rates of government bonds denominated in new Israeli shekels because it is the opinion of management that there is no deep market in high-quality corporate bonds.
The Group carries the remeasurement of the net liability (assets) in respect of the defined benefit obligation directly to the statement of comprehensive income and expense, in the period in which they arise. Such remeasurement results from changes in actuarial valuation, differences between past assumptions and actual results, and differences between the net yield of the plan assets stated at the net interest thereon and the net amount of the liability in respect of that obligation.
|
|||
|
Past-service costs are currently recognized in income.
Severance pay funds are measured at fair value. These funds represent “plan assets” as defined by IAS 19, and therefore are deducted from the balance of retirement benefit obligations for the statement of financial position presentation purposes.
As mentioned above, for part of its Israeli employees, the Group purchases insurance policies and pays contributions to pension and severance pay funds in respect of its obligation to pay pension and retirement benefits. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses commensurate with the service in respect of which the employees are entitled to those payments.
|
|||
| 2) | Vacation and recreation benefits | ||
|
In certain countries in which the Group operates every employee is legally entitled to vacation and recreation benefits, both of which are computed on an annual basis. This entitlement is based on the term of employment. The Group recognizes liability and expense in respect of vacation and recreation pay based on the benefits accumulated for each employee. This obligation is measured based on the additional amount expected to be payable for unutilized entitlement to the benefit accumulated at the end of the reported period.
|
|||
| 3) | Share-based compensation | ||
|
The Group operates a number of share-based compensation plans which are equity-settled to the subsidiary’s equity instruments. Under these plans, the Group grants its employees, from time to time, stock options, at its discretion, to purchase shares of the subsidiary. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense in the statements of operations, with a corresponding credit carried to capital surplus in equity under non-controlling interests. The total amount to be expensed over the vesting period (the period in which all the vesting conditions are expected to be fulfilled) is determined by reference to the fair value of the options granted, at grant date. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each date of the statement of financial position, the Group revises its estimates
of the number of options that are expected to vest on the basis of such non-market vesting conditions. It recognizes the impact of the revision of original estimates, if any, in the statements of operations, with a corresponding adjustment to equity.
Proceeds from exercise of stock options, net of any directly attributable transaction costs, are credited to share capital (par value) and additional paid-in capital when the options are exercised.
|
|||
| 4) | Profit sharing and bonus plans | ||
| The Group recognizes a liability and expense for bonuses and profit-sharing based on a formula that takes into consideration the net income of the Group and its subsidiary, after certain adjustments. The Group recognizes the said liability where contractually obliged or where there is a constructive obligation. |
| u. | Provisions | |
|
Provisions for environmental restoration, restructuring costs, and legal claims are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations is small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.
|
| v. | Revenue recognition | |
|
The Group’s revenues are measured at the fair value of the consideration received or receivable for the sale of products and services in the ordinary course of business. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.
The Group recognizes revenue when the amount of revenue can be reliably measured, when it is probable that future economic benefits will flow to the Group, and when specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction, and the specifics of each arrangement:
|
| 1) |
Revenues from sales of electricity
|
||
| Revenues from sales of electricity comprise a capacity component and a delivered output component. Revenues from sales of electricity are recorded based upon output delivered, with adjustments for capacity provided, at rates specified under relevant contract terms. Certain power sale arrangements contain elements of operating lease of the plants, as defined in Interpretation 4 published by the International Financial Reporting Interpretations Committee (“IFRIC”), “Determination Whether an Arrangement Contains a Lease” (“IFRIC 4”). The Group separates the lease fee component of such revenues based on the proportion of the fair value of the service and the lease fees. Since the revenue recognition process is identical both for the service component and for the lease fees component and revenue is recognized based on actual output, they are not disclosed separately but rather included together in note 24a, as “revenues for sale of electricity;” separation of those components would not add any significant information to the users of the financial statements. |
| 2) |
Revenues from construction contracts - revenues from sale and construction of power plants
|
||
|
The Group uses the “percentage-of-completion method” to determine the appropriate amount to be recognized in a given period. The percentage of completion is measured by reference to the contract costs incurred up to the date of the statement of financial position as a percentage of total estimated costs for each contract.
When the outcome of a construction contract can be estimated reliably, contract revenue and costs related to the sale and construction contract are recognized as income or expenses, respectively, according to the percentage of completion at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.
In the event of fixed price contract, the outcome can be reliably measured when all the following conditions are met: (a) total revenue from the contract can be reliably measured; (b) it is probable that future economic benefits associated with the item will flow to the Group; (c) both costs to completion and the percentage of completion at the end of the reporting period can be reliably measured; and (d) costs attributable to the contract can be clearly identified and reliably measured, so as to facilitate comparison between actual costs and previous estimates.
In the event of a cost plus margin contract, the outcome can be reliably measured when all the following conditions are met: (a) it is probable that future economic benefits associated with the item will flow to the Group; and (b) costs attributable to the contract, whether or not subject to specific compensation, can be clearly identified and reliably measured.
Changes in contract work, claims and incentive payments are included in contract revenue to the extent that they have been agreed with the customer and can be reliably measured.
The Group presents as an asset (“receivables in respect of uncompleted contracts”) the gross amount due from customers for contract work for all contracts in progress for which costs incurred plus recognized profits (less recognized losses) exceed progress billings.
|
|||
| 3) |
Contract revenues - revenues from sale and construction of power plants involving the granting of credit
|
||
| The Group has entered into a power plant construction contract which involves extension of credit for the financing of construction and sale of the power plant to the customer. If the Group cannot collect the contractual consideration, it will become the owner of the power plant. | |||
| In the event of uncertainty as to collection of the contractual consideration for such projects, the Group does not recognize revenues or costs in respect thereof based on the percentage of completion, but rather presents the costs incurred as assets (“receivables in respect of uncompleted contracts”) until the consideration is received. |
| 4) |
Sale of products
|
||
|
Revenue from sale of products is recognized when the significant risks and benefits of ownership have been transferred to the customer, usually upon delivery of the product, the Group does not retain effective control of the products or continuing managerial involvement therein to the degree associated with ownership, and the costs incurred or that will be incurred in respect of the transaction can be measured reliably.
|
|||
|
5)
|
Warranty provision
|
||
| With respect of products sold outside Israel, the Group usually provides a one year warranty from the date of installation. The annual provision is calculated at the rate of 0.5% of the sales price and is charged to the statement of operations. | |||
|
6)
|
Revenue from engineering and operating services and from sale of spare parts
|
||
| Revenue from provision of services is recognized when the service is rendered or the spare parts are delivered. | |||
|
7)
|
Royalty income
|
||
| Royalty income is recognized on an accrual basis, according to the nature of the relevant agreement. | |||
|
w.
|
Leases
|
||
|
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of operations on a straight-line basis over the period of the lease.
With regard to arrangements containing lease elements, see v(1) above.
The Group has land lease agreements with the Israel Land Administration. Prepaid lease fees are presented in the statement of financial position as “power plants and other fixed assets”, and amortized by the straight-line method over the lease period (disregarding the option to extend the lease period).
Buildings erected on that land are classified as fixed assets.
|
|||
| x. | Dividend distribution | ||
| Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s Board of directors. | |||
| y. | Earnings (loss) per share | ||
|
Basic earnings (loss) per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of shares in issue during the year excluding treasury shares held by a subsidiary.
|
|||
|
In computing diluted earnings (loss) per share, the weighted average number of shares that will be issued, assuming all potentially dilutive convertible instruments are actually converted into shares, is added to the average of ordinary shares used for computing the basic earnings per share. The potential shares are taken into account only when their effect is dilutive (i.e., reducing the earnings per share or increasing loss per share).
|
||||
|
z.
|
New international financial reporting standards, standard amendments and interpretations:
|
|||
| 1) |
New international financial reporting that came into effect and are binding for financial reporting periods commencing January 1, 2013:
|
|||
| a) | IFRS 10, “Consolidated Financial Statements” (hereafter – IFRS 10) | |||
|
IFRS 10 replaces all the provisions of IAS 27 – “Consolidated and Separate Financial Statements” (hereafter – IAS 27) and of SIC 12 - “Consolidation – Special Purpose Entities” pertaining to control and consolidation of financial statements. IFRS 10 has changed the definition of “control.” Under IFRS 10, the definition of control includes power over an investee and exposure or rights to variable returns of the investee. Power means the ability to affect and direct the activities of the investee in such a way as to significantly affect the investor’s returns. IFRS 10 also contains guidelines distinguishing between participating rights and protective rights, as well as guidelines for instances where an investor acts as principal or as an agent of another party or other parties. The basic principle that a consolidated
entity presents parent company and its subsidiaries as if they were a single entity, as well as the methods of consolidation, remains unchanged.
The Group first applied IFRS 10 commencing January 1, 2013. Application of the IFRS 10 for the first time had no material effect on the Group’s financial statements.
|
||||
| b) | IFRS 11 – “Joint Arrangements” (hereafter – IFRS 11) | |||
| IFRS 11 replaces IAS 31, “Interests in Joint Ventures” (hereafter – IAS 31) and SIC 13, “Jointly Controlled Entities – Non-Monetary Contributions by Venturers.” IFRS 11 classifies joint arrangements into only two types: “joint operations” and “joint ventures,” the type “jointly controlled assets,” recognized under IAS 31, being merged into “joint operations”. The guidelines of IFRS 11 regarding the determination of the type of the joint arrangement focus on how rights and obligations are shared by the parties to the joint arrangement. Under IFRS 11, a joint operation is a joint arrangement that gives parties to the arrangement (“joint operators”) direct rights to the assets and obligations for the liabilities. A joint venture gives the parties (“joint venturers”) rights to the net assets of the joint arrangement. IFRS 11 abolishes the policy choice of proportionate consolidation of jointly held entities, previously allowed by IAS 31. Instead, the joint venturers must account for the joint investments by the equity method. Joint operators, however, are allowed to apply an accounting treatment similar to that currently applicable under IAS 31 to “jointly controlled assets” and jointly controlled operations.” A joint operator will recognize its interest based on its involvement in the joint operation (that is, based on its direct rights in assets, obligations, revenues and expenditures) rather than on the participation interest it has in the joint arrangement. Inter alia, IFRS 11 also provides guidelines for instances in which some parties to the joint arrangement have no joint control therein. | ||||
| The Group first applied IFRS 11 commencing January 1, 2013. Application of the IFRS 11 for the first time had no material effect on the Group’s financial statements. | ||||
| c) | IFRS 12 – “Disclosure of Interests in Other Entities” (hereafter - IFRS 12) | |||
|
IFRS 12 sets out the required disclosures for entities reporting under IFRS 10 and IFRS 11; it also replaces the disclosure requirements currently found in IAS 28 and IAS 27. The disclosure requirements under IFRS 12 pertain to the following issues: significant judgments and assumptions; interest in subsidiaries; interests in joint arrangements and associates; and interests in unconsolidated structured entities.
|
||||
|
The Group first applied IFRS 12 commencing January 1, 2013. Application of the IFRS 12 has extended the disclosures in the Group’s consolidated financial statements.
|
||||
| d) | IFRS 13 – “Fair Value Measurement” (hereafter - IFRS 13) | |||
|
IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs.
|
||||
|
The Group first applied IFRS 13 commencing January 1, 2013 on a prospective basis. IFRS 13 does not require the application of the disclosures stipulated thereby to comparative figures for periods preceding its application for the first time. Application of the IFRS 11 for the first time had no material effect on measurement of items in the Group’s financial statements.
|
||||
| e) |
Amendment to IAS 19 - “Employee Benefits” (hereafter - amendment to IAS19)
|
|||
|
The amendment to IAS 19 makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits discussed by IAS 19. Following is a summary of the key changes:
|
|
-
|
The term “actuarial gains and losses” has been replaced by “remeasurements of the net defined benefit liability (asset)” which, in addition to actuarial gains and losses include other components defined by the revised IAS 19. Remeasurements are recognized immediately in other comprehensive income (hereafter - OCI). Thus, the possibility of recognition of such gains and losses as part of income and loss statement and the use of the “corridor” approach has been eliminated.
|
|
-
|
Past service costs are to be recognized in profit or loss immediately when a change in the plan occurs, rather than spread over the future-service period until it vests.
|
|
|
-
|
Employee benefit expenses in cases where plan assets exist will reflect net interest income/expense, based on the net defined benefit asset or liability, using the discount rates applicable under IAS 19 before the amendment for measuring defined benefit liability. This accounting treatment replaces the “interest cost” and “expected return on plan assets” under IAS 19 before the amendment.
|
|
|
-
|
The distinction between short-term and long-term benefits for the purpose of measurement in the financial statements will be based on the time when payment is expected rather than when payment can be demanded.
|
|
|
-
|
Any benefit that has a future-service obligation is not a termination benefit. A liability for termination benefits will be recognized when an offer of such benefits can no longer be withdrawn or when the related restructuring costs are recognized.
|
|
|
-
|
Disclosure requirements have been expanded in comparison to those stipulated by IAS 19 before the amendment.
|
|
| The Group applied the revised IAS 19 for the first time commencing January 1, 2013, retrospectively for all the reported periods, except for: | ||
| 1) |
An entity need not adjust the carrying amount of assets outside the scope of IAS 19 for changes in employee benefits costs that were included in the carrying amount before the date of initial application of the amendment.
|
||||
| 2) |
Presentation of comparative information pertaining to certain disclosures with regard to the sensitivity analysis of the defined benefit obligation stipulated by the amendment to IAS 19 in the financial statements for periods commencing January 1, 2014, is not required.
|
||||
| Application of the amendment to IAS 19 for the first time had no material effect on measurement of items in the Group’s financial statements, inter alia since the Group had already recognized the remeasurement in other comprehensive income. | |||||
| f) |
Amendment to IAS 1 - “Presentation of financial statements” (hereafter - amendment to IAS 1)
|
||||
| This amendment changes the disclosure of items presented in OCI in the statement of comprehensive income. Following is a summary of the key provisions of the amendment: | |||||
|
-
|
The amendment requires entities to separate items presented in OCI into two groups, based on whether or not they may be reclassified to profit or loss in the future. Accordingly, items that will not be reclassified are to be presented separately from items that may be reclassified in the future.
|
|
-
|
Entities that choose to present OCI items before tax are required to show the amount of tax related to the two groups separately.
|
|
|
-
|
The title used by IAS 1 for the statement of comprehensive income has changed to ‘statement of profit or loss and other comprehensive income’. However, the amended IAS 1 still permits entities to use other titles.
|
|
| The Group applied the revised IAS 1 for the first time commencing January 1, 2013, retrospectively for all the reported periods. Following the application of amendment to IAS 1 for the first time the Group presents each group of items in OCI in the statement of comprehensive income separately. | ||
| g) |
Amendment to IAS 16 - “Fixed assets” (hereafter - IAS 16)
|
|||
|
The Amendment to IAS 16, published in May 2012, clarifies section 8 of IAS 16 directives relating to classification of auxiliary equipment and spare parts as property plant and equipment or as inventories. According to the amendment, servicing equipment and spare part equipment qualify as property, plant and equipment when they meet the definition of property, plant and equipment in IAS 16; otherwise, they are classified as inventory.
The Group first applied the revised IAS 16 commencing January 1, 2013. Application of the revised IAS 16 for the first time had no material effect on measurement of items in the Group’s financial statements.
|
||||
| 2) | Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group: | |||
| a) |
The additional phase of IFRS 9 - Financial Instruments (“IFRS 9”)
|
|||
|
In October 2010, guidelines pertaining to financial liabilities were published as a component of the first phase of IFRS 9. Those guidelines leave most guidelines of IAS 39 intact. The main change is with regard to entities which have financial liabilities carried at fair value though profit and loss that will now recognize the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income rather than within profit or loss, unless such treatment would cause accounting imbalance. Amounts so recognized will not be subsequently reclassified to profit or loss. However, they may be reclassified from one equity item to another.
The second phase of IFRS 9, dealing with impairment in value of monetary assets, has not yet been published.
The third phase of IFRS 9, which deals with hedging accounting, was published in November 2013. The new hedging model differs in some aspects from that of IAS 39, and is designated to enable companies to better reflect their hedging policies, inter alia by adopting the effectiveness “bright line” of 80%-125% required by IAS 39 to an effectiveness range actually used in risk management, hedging of groups of financial instruments in a more flexible manner and, under certain circumstances, permitting hedge accounting for components of non-financial items, provided certain criteria can be satisfied. Nevertheless, the stringent documentation requirements have been left intact, and certain disclosure requirements have been added.
|
||||
|
In November 2013, additional amendment to IFRS 9 was published, as follows:
One change allows recognition of changes in fair value of financial liabilities deriving from the credit risks of an entity in the statement of comprehensive income, even without applying other provisions of IFRS 9.
The said amendment cancelled the effective date of January 1, 2015, as previously required, and has not named another effective date. The effective application date will only be determined when the other phases of IFRS 9 are completed. However, early adoption of the phases already published is allowed.
The Group has not applied the guidelines of IFRS 9, other than those pertaining to monetary assets. At this stage, the Group is assessing the possible impact of applying IFRS 9 on the Group’s financial statements in the coming periods and of the timing of such application.
|
||||
| b) |
IFRIC 21 - Levies (“IFRIC 21”)
|
|||
| IFRIC 21 determines the accounting treatment of the obligation to pay levies imposed by government in accordance with law, that are accounted for in accordance with IAS 37 and which are not taxes on income. Under IFRIC 21, an obligating event in respect of which such a liability should be recognized is the activity triggering the levy as identified by legislation. | ||||
|
aa.
|
Immaterial adjustment of comparative figures and reclassification
|
|||
|
An error in the financial statements of Ormat Technologies as of December 31, 2012 was identified in the course of preparation of the Group’s financial statements as of June 30, 2013. The error resulted from the calculation of a tax asset in respect of US Federal carryforward losses and credit, in an excess amount of approximately $ 7.1 million which was a direct result of the deferred tax effects of the non-cash asset impairment charge recorded in the fourth quarter of 2012.
Management assessed the materiality of this error in accordance with the position of the Staff of the Israeli Securities Authority as per “Update 99-4 Regarding Guidelines for Examination of Materiality of an Error in the Financial Statements” and concluded that the misstatement in the previously issued financial statements was not material as defined by IAS 8 – “Accounting Policies, Changes in Accounting Estimates and Errors.”
The assessment of the materiality of the error in accordance with the guidelines for such assessment showed that it was not material for all the periods to which it pertains taken as a whole. However, if the entire correction of the error was recorded in the current reported period, the impact would be significant to operating results for that period. Ormat Technologies and the Company have rectified the error by way of revision of comparative figures presented in these finacial sttements. Financial statement items affected by such revision are marked as “immaterial revision of comparative figures.” This revision had no impact on the Group’s revenues, loss before taxes and consolidated cash flows for the said period.
|
||||
|
Year ended
December 31, 2012 |
||||
|
Dollars in
thousands |
||||
|
The effect on statement of comprehensive income (loss):
|
||||
|
Loss as previously reprted
|
(170,859 | ) | ||
|
Effect of the revision – increase in tax expense
|
(7,082 | ) | ||
|
Loss as reprted in these financial statements
|
(177,941 | ) | ||
|
Attribution of the effect of the revision on the comprehensive loss for the period:
|
||||
|
To equity holders of the Company:
|
||||
|
Loss attrbuted to equity holders, as previously reported
|
(102,977 | ) | ||
|
Effect of the revision
|
(4,241 | ) | ||
|
Loss attributed to equity holders, as reported in these financial statements
|
(107,218 | ) | ||
|
To non-controlling interests:
|
||||
|
Loss attributed to non-controlling interests, as previously reported
|
(67,882 | ) | ||
|
Effect of the revision
|
(2,841 | ) | ||
|
Loss attrbuted to non-controlling interests, as reported in these financial statements
|
(70,723 | ) | ||
|
Dollars
|
||||
|
Basic and diluted, as previously reported
|
(0.88 | ) | ||
|
Effect of the revision
|
(0.04 | ) | ||
|
Basic and diluted, as reported in these financial statements
|
(0.92 | ) | ||
|
As
previously reported |
Effect of
the revision |
As
reported in these financial statements |
||||||||||
|
Dollars in thousands
|
||||||||||||
|
Effect on assets – deferred taxes
|
80,546 | (7,082 | ) | (73,464 | ) | |||||||
|
Effect on equity:
|
||||||||||||
|
Attributed to equity holders of the Company - retained earnings
|
222,666 | (4,241 | ) | 218,425 | ||||||||
|
Attributed to non-controlling interests
|
286,688 | (2,841 | ) | 283,847 | ||||||||
|
NOTE 3 – CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
|
||
|
Estimates and judgments are continually evaluated, and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that involve a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year and matters involving material judgment are discussed below:
|
||
|
a.
|
Revenue recognition
|
|
|
The Group uses the percentage-of-completion method of accounting for recognizing revenues generated from the sale and installation of power plants, taking into account that the plants are constructed for the customers, under terms negotiated therewith.
The percentage-of-completion method requires estimates of actual costs of services provided as a proportion of the total costs of services to be provided. Such cost estimates are made by management based on prior experience and the characteristics and engineering design of specific projects.
Had the percentage of actual cost out of total cost to completion been 10% higher than management’s estimates, revenues recognized in 2013, 2012 and 2011 would have increased by approximately $12.2 million, $23.9 million and $6.2 million, respectively. Had such percentage been 10% lower than management’s estimates, revenues recognized in 2013, 2012 and 2011 would have decreased by approximately $3.9 million, $20.3 million and $6.2 million, respectively.
|
||
| b. |
Power plants and other property, plant and equipment
|
|
|
The Group estimates the useful life and depreciation expense of the power plants it owns. Such estimates are made by management based on factors such as prior experience, engineering surveys, the terms of the underlying PPAs, geothermal resources that feed the plant, the location of the assets and specific power plant characteristics and designs. Such estimates may change significantly as a result of changes in the above parameters. Currently, the useful life of the Group’s power plants ranges between 25 and 30 years. Should the useful life of an asset prove lower than prior estimates, management will either increase depreciation expense or recognize impairment. In the event that an asset becomes technologically obsolete, or when non-strategic assets are abandoned or sold, the value of such assets is written off.
Should the actual useful life of power plants be 10% higher than management’s estimates, the total carrying amount of power plants and other fixed assets as of December 31, 2013 and 2012 would increase by approximately $52.9 million and $50.5 million respectively. Should the actual useful life of power plants 10% lower than management’s estimates, the total carrying amount of power plants and other fixed assets as of December 31, 2013 and 2012 would decrease by approximately $58.2 million and $55.6 million, respectively.
|
||
|
c.
|
Impairment of non-monetary assets
|
|
|
Assets that are subject to depreciation or amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of the fair value of an asset less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
|
||
|
The significant assumptions that the Group uses in estimating the fair value of power plants are: (i) projected generating capacity of the power plant and rates to be received under the respective PPA; (ii) projected operating expenses of the relevant power plant; and (iii) the interest rate used to determine the discounted future cash flows.
|
||
|
The North Brawley power plant
|
||
|
As of September 30, 2013, the fair value of the North Brawley power plant - approximately $23.7 million - was determined based on an after-tax capitalization rate of 8%.
|
||
|
The following are the effects of different capitalization rates on identical generated output:
|
|
Capitalization rate (percent)
|
10%
|
9%
|
8%
|
7%
|
6%
|
|
Fair value, net of selling costs (millions of dollars)
|
20.7
|
22.1
|
23.7
|
25.5
|
27.7
|
|
Net effect on the loss on impairment of power plants’ value (millions of dollars)
|
3.0
|
1.6
|
—
|
(1.8)
|
(4.0)
|
|
As of December 31, 2012, the fair value of the North Brawley power plant - approximately $32 million - was determined based on an after-tax capitalization rate of 8%.
|
||
|
The following are the effects of different capitalization rates on identical generated output:
|
|
Capitalization rate (percent)
|
9%
|
8.5%
|
8%
|
7.5%
|
7%
|
|
Fair value, net of selling costs (millions of dollars)
|
28.9
|
30.2
|
32.0
|
33.1
|
34.7
|
|
Net effect on the loss on impairment of power plants’ value (millions of dollars)
|
3.1
|
1.8
|
—
|
(1.1)
|
(2.7)
|
|
As of December 31, 2011, the fair value of the North Brawley power plant - approximately $156.2 million - was determined based on an after-tax capitalization rate of 8% and on a generated output as detailed in note 12 and the probability of obtaining a new PPA with a new customer.
|
||
|
The following are the effects of different capitalization rates on identical generated output:
|
|
Capitalization rate (percent)
|
7%
|
7.5%
|
8%
|
8.5%
|
9%
|
|
Fair value, net of selling costs (millions of dollars)
|
167.6
|
161.7
|
156.2
|
151.0
|
146.2
|
|
Net effect on the loss on impairment of power plants’ value (millions of dollars)
|
11.4
|
5.5
|
—
|
(5.2)
|
(10.0)
|
|
The following are the effects of different generated output given a capitalization rate of 8%:
|
|
Generated output (MW)
|
37
|
40
|
45
|
50
|
|
Fair value, net of selling costs (millions of dollars)
|
143.1
|
154.2
|
182.6
|
198.9
|
|
Net effect on the loss on impairment of power plants’ value (millions of dollars)
|
13.1
|
2.0
|
(26.4)
|
(42.7)
|
|
The effect of obtaining a new PPA with a new customer, at higher prices than established in the current PPA, given a capitalization rate of 8%, would be:
|
|
Probability of obtaining a new PPA
|
40%/60%
|
30%/70%
|
20%/80%
|
10%/90%
|
0%/100%
|
|
Fair value, net of selling costs (millions of dollars)
|
141.2
|
148.7
|
156.2
|
163.7
|
171.2
|
|
Net effect on the loss on impairment of power plants’ value (millions of dollars)
|
15.0
|
7.5
|
—
|
(7.5)
|
(15.0)
|
| The Jersey Valley power plant | ||
|
As of December 31, 2012, the fair value of the Jersey Valley power plant - approximately $31.3 million - was determined based on an after-tax capitalization rate of 8%.
|
||
|
Following are the effects of different capitalization rates on identical generated output:
|
|
Capitalization rate (percent)
|
9%
|
8.5%
|
8%
|
7.5%
|
7%
|
|
Fair value, net of selling costs (millions of dollars)
|
28.0
|
29.6
|
31.3
|
33.1
|
35.2
|
|
Effect on the loss on impairment of power plants’ value (millions of dollars)
|
3.3
|
1.7
|
—
|
(1.8)
|
(3.9)
|
|
The fair value of the Jersey Valley power plant as of December 31, 2013, has not been examined since there was no indication that the impairment loss recognized in 2012 did not exist anymore or was reduced.
|
||
|
The OREG 4 power plant
|
||
|
As of December 31, 2012, the fair value of the OREG 4 power plant - approximately $3.6 million - was determined based on an after-tax capitalization rate of 8%.
|
||
|
Since the value of OREG 4 power plant as of December 31, 2012 was only $3.6 million, a change in the capitalization rate would not materially affect the fair value of the plant; thus a sensitivity analysis was not presented.
|
||
|
As of December 31, 2011, the fair value of the OREG 4 power plant - approximately $7.2 million was determined based on an after-tax capitalization rate of 8%.
|
||
|
The following are the effects of different capitalization rates on identical generated output:
|
|
Capitalization rate (percent)
|
10%
|
9.0%
|
8.0%
|
7.0%
|
6.0%
|
|
Fair value, net of installation costs (millions of dollars)
|
5.8
|
6.4
|
7.2
|
8.1
|
9.1
|
|
Net effect on the loss on impairment of power plants’ value (millions of dollars)
|
1.4
|
0.8
|
—
|
(0.9)
|
(1.9)
|
|
The OREG 1 power plant
|
||
|
As of December 31, 2011, the fair value of the OREG 1 power plant - approximately $26.1 million - was determined based on an after-tax capitalization rate of 8%.
|
||
|
Since the carrying value of the OREG 1 power plant is lower than its fair value, the carrying value has been changed to $24.6 million.
|
||
|
The following are the effects of different capitalization rates on identical generated output:
|
|
Capitalization rate (percent)
|
10%
|
9%
|
8%
|
7%
|
6%
|
|
Fair value, net of selling costs (millions of dollars)
|
22.9
|
24.4
|
26.1
|
28.5
|
31.3
|
|
Net effect on the loss on impairment of power plants’ value (millions of dollars)
|
3.2
|
1.7
|
—
|
*
|
*
|
|
*Since the book value before loss on impairment amounted to $26.1 million, the discount rate which is lower than 8% has no effect.
|
||
|
d.
|
Income taxes and deferred taxes
|
|
|
The Group is subject to income taxes in numerous jurisdictions; accordingly, significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax liability is different from the amounts that were initially recorded, the difference will impact the income tax and deferred tax provisions in the period in which the final assessment is determined by the tax authorities.
|
||
|
In addition, the Group recognizes deferred tax assets and liabilities based on the differences between the carrying amounts of assets and liabilities and their amount for tax purposes. The Group continually assesses the recoverability of the deferred tax assets included in its accounts, based on historical taxable income, expected taxable income, expected timing of reversals of temporary differences, and the application of tax planning strategies. If the Group is unable to produce sufficient future taxable income, or in case of material change in effective tax rates for the period during which the related temporary differences become taxable or deductible, the Group might be required to eliminate part of the deferred tax assets or to increase its deferred tax liabilities, which may increase its effective tax rate and negatively affect the results of its operations. With regard to the decrease in deferred tax assets in
the year ended December 31, 2012, see note 14c.
|
||
|
The Group does not recognize deferred taxes assets in respect of temporary differences resulting from investments in subsidiaries since the timing of reversal of such temporary differences is controlled by the Group and it is not expected to occur in the foreseeable future.
|
|
Ormat Technologies(2)
|
Solmat(3)
|
OrFuel
|
OPTI BV(4)
|
|||||||||||||||||||||||||||
|
December 31,
|
December 31,
|
December 31,
|
||||||||||||||||||||||||||||
|
2012
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
||||||||||||||||||||||||
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
|||||||||||||||||||||||
|
Holding and voting rights:
|
||||||||||||||||||||||||||||||
|
Ordinary shares held by the Company
|
59.84 | 59.89 | 100 | 100 | 100 | 100 | 100 | 100 | ||||||||||||||||||||||
|
Under the assumption of exercise of convertible vested securities
|
57.17 | 57.86 | ||||||||||||||||||||||||||||
|
Under the assumption of exercise of all convertible securities
|
54.23 | 55.53 | ||||||||||||||||||||||||||||
|
Dollars in thousands
|
Dollars in thousands
|
Dollars in thousands
|
Dollars in thousands
|
|||||||||||||||||||||||||||
|
Investment – net (deferred rights)
|
396,866 | 372,181 | 2,978 | 2,647 | 4,945 | 4,609 | (18 | ) | 447 | |||||||||||||||||||||
|
Market value of the investee shares
|
740,291 | 524,543 | — | — | — | — | — | — | ||||||||||||||||||||||
|
Dividend received
|
2,177 | 2,177 | — | — | — | — | — | — | ||||||||||||||||||||||
|
(2)
|
Company incorporated in Delaware, U.S., whose shares are traded on the New-York Stock Exchange (NYSE). The market value of Ormat Technologies shares as of March 10, 2014 was approximately $777 million.
|
|
(4)
|
Company incorporated in the Netherlands. In 2013, the Company repaid most of its investment in the subsidiary.
|
|
The
lender |
Book value of
liability
(dollars in
millions)
|
Category/goal of financing
|
Securities
|
Restricted cash and deposits (dollars in millions)
|
Restrictions imposed on the corporation
|
Financial covenants
|
Financial covenants as of December 31, 2013
|
|
OFC Senior Secured Notes
|
90.8
|
Project financing
|
Unconditional guarantee by all of the wholly owned subsidiaries of OFC and charges on substantially all of the assets of OFC and those of its wholly owned subsidiaries, without recourse to either the Company or Ormat Technologies.
An account which may be funded by cash or backed by letters of credit in an amount sufficient to pay scheduled debt service amounts, including principal and interest, in the following six months.
|
2.9
|
Restriction on dividend distribution in the event failure to meet the covenants.
|
Historical and projected 12-month debt service coverage ratio (“DSCR”) of not less than 1.25 for four consecutive quarters.
|
Historical DSCR was 1.29
|
|
OFC 2 LLC Senior Secured Notes
|
144.5
|
Project financing
|
Unconditional guarantee by all of the wholly owned subsidiaries of OFC 2 and charges on substantially all of the assets of OFC 2 and those of its wholly owned subsidiaries.
Ormat Technologies has guaranteed the OFC 2 Notes and will guarantee each new series of Notes. The guarantee may be drawn upon if certain triggering events occur (see note 15).
|
29.8
|
Limitations on additional indebtedness and dividend distribution.
|
Historical and projected 12-month “DSCR” of not less than 1.2 for four consecutive quarters, and 1.5 on a pro forma basis.
|
Historical DSCR was 1.79, and 2.25 on a pro forma basis.
|
|
The
lender |
Book value of loan (dollars
in millions)
|
Category/goal of financing
|
Securities
|
Restricted cash and deposits (dollars in millions)
|
Restrictions imposed on the corporation
|
Financial covenants
|
Financial covenants as of December 31, 2013
|
|
OrCal Geothermal Inc. Notes
|
66.2
|
Project financing
|
Unconditional guarantee by all of the wholly owned subsidiaries of OrCal and charges on substantially all of the assets of OrCal and those of its wholly owned subsidiaries, without recourse to either the Company or Ormat Technologies.
An account which may be funded by cash or backed by letters of credit in an amount sufficient to pay scheduled debt service amounts, including principal and interest, in the following six months.
|
3.0
|
Restriction on dividend distribution in the event failure to meet the covenants.
|
Historical and projected 12-month “DSCR” of not less than 1.25 for four consecutive quarters.
|
Historical DSCR was 1.3.
|
|
Loan from OPIC
|
299.9
|
Renewal of existing loan for the construction and expansion of power plants.
|
An account which may be funded by cash or backed by letters of credit in an amount sufficient to pay scheduled debt service amounts, including principal and interest, in the following six months.
|
10.1
|
Restriction on dividend distribution by OrPower 4 in the event failure to meet the covenants.
|
With respect to dividends: Historical and projected 12-month “DSCR” of not less than 1.4 for four consecutive quarters.
With respect to default: Historical and projected 12-month “DSCR” of not less than 1.1 for four consecutive quarters.
|
The ratios will be calculated for the first time in 2014.
|
|
Loan from TCW Global Project Fund II, Ltd. (“TCW”)
|
31.5
|
Project financing
|
An account which may be funded by cash or backed by letters of credit in an amount sufficient to pay scheduled debt service amounts, including principal and interest, in the following six months.
|
1.0
|
Restriction on dividend distribution by Amatitlan4 in the event failure to meet the covenants.
|
a) Historical and projected 12-month “DSCR” of not less than 1.2 for four consecutive quarters, and b) Debt/equity ratio not exceeding 4.
|
a) Historical DSCR was 1.61; b) Debt/equity ratio was 2.21.
|
|
The
lender |
Book value of
loan (dollars
in millions)
|
Category/goal of financing
|
Securities
|
Restricted cash
and deposits
(dollars in
millions)
|
Restrictions imposed on the corporation
|
Financial covenants
|
Financial covenants as of December 31, 2013
|
|
Unsecured Senior Bonds
|
250.6
|
Project financing
|
The Bonds, the loan agreements and the credit agreements are unsecured; however, Ormat Technologies is subject to a negative pledge in favor of the banks and the other lenders and certain other restrictive covenants. These include, among other things, a prohibition on: (a) creating any floating charge or any permanent pledge, charge or lien over Ormat Technologies’ assets without obtaining the prior written approval of the lender; (b) guaranteeing the liabilities of any third party without obtaining the prior written approval of the lender; and (c) selling, assigning, transferring, conveying or disposing of all or substantially all of its assets, or a change of control in Ormat Technologies’ ownership structure.
|
Some of the credit agreements, the term loan agreements, as well as the trust instrument contain cross-default provisions with respect to other material indebtedness owed to any third party.
|
Financial ratios: a) Ormat Technologies nust maintainequity of at least $600 million and in no event less than 30% of its total assets; b) 12-month debt, net of cash, cash equivalents, marketable securities and short-term bank deposits to adjusted EBITDA ratio not to exceed 7; and c) dividend distribution not to exceed 35% of net income for the year.
|
Total equity was $702.2 million, the actual equity to total assets ratio was 34.2%, and) the 12-month debt, net of cash, cash equivalents, marketable securities and short-term bank deposits to adjusted EBITDA ratio was 4.5.
|
|
|
Loans from financial institutions:
|
|||||||
|
Loan a
|
7.9
|
Project financing
|
|||||
|
Loan b
|
13.3
|
Project financing
|
|||||
|
Loan c
|
11.7
|
Project financing
|
|||||
|
Bank loans:
|
|||||||
|
Bank loan
|
10.0
|
Project financing
|
Restriction on dividend distribution by Ormat Nevada in the event failure to meet the covenants.
|
Financial ratios: a) debt to EBITDA ratio not to exceed 4.5, b) 12-month “DSCR” of not less than 4.5 for four consecutive quarters, and c) a distribution leverage ratio not to exceed 2.
|
a) Debt to EBITDA ratio was 2.58, b) 12-month “DSCR” was 2.47, and c) distribution leverage ratio was 1.34.
|
||
|
Credit from five banks
|
112.0
|
Project financing
|
|||||
|
Deferred lease fees:
|
|||||||
|
Puna Power Plant PVG
|
63.5
|
— |
4.3
|
||||
| C. | Sale of investment in subsidiary |
|
In May 2013, the Group sold the Momotombo Power Company (“OMPC”), which operates the Momotombo geothermal power plant located in Nicaragua, to a third party (hereafter – the buyer) for approximately $7.8 million, approximately one year before the scheduled termination of the concession arrangement with the Nicaraguan owner. In conjunction with the sale, the Group and the buyer have signed a technical support agreement for an undefined period, whereby the Group will provide technical consulting services, which can be terminated by either party. The Group is of the opinion that the expected continuing cash flows from this agreement are insignificant in comparison to those derived from the operation of the plant. In the year ended December 31, 2013, the Group recognized a gain of $4.2 million in respect of the sale.
|
| NOTE 5 – | CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS: | |
| a. |
Cash and cash equivalents:
|
|
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Cash in bank and on hand
|
23,887 | 69,670 | ||||||
|
Short-term bank deposits
|
34,021 | 2,097 | ||||||
| 57,908 | 71,767 | |||||||
| b. |
Cash, cash equivalents and restricted deposits
|
|
|
Under long-term loan agreements, Senior Secured Notes agreements and operating lease agreements of the Puna power plant, the Group is required to maintain certain reserve funds and restricted balances (see notes 15 and 17). All the balances included herein are in dollars.
The book value of cash, cash equivalents and the restricted deposits is close to their carrying value, since the effect of capitalization is immaterial.
|
||
| NOTE 6 – | FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS | |
| Composed as follows: | ||
|
2012
|
|||||||||
|
Dollars in thousands
|
|||||||||
|
Corporate bonds – see below
|
15,433 | 14,668 | |||||||
|
Financial funds and other funds
|
251 | 251 | |||||||
|
Total investment in securities
|
15,684 | 14,919 | |||||||
|
Presented in the balance sheet as follows:
|
|||||||||
|
Current portion
|
15,433 | 14,668 | |||||||
|
Non-current portion
|
251 | 251 | |||||||
| 15,684 | 14,919 | ||||||||
|
The Group holds corporate bonds bearing interest of 0.6%-6.00% and maturing between September 2016 and May 2018.
The fair value of the corporate bonds represents the close price at the market as of December 31, 2013.
Changes in value of those bonds are carried to gains (losses) on realization and increase (impairment) in value of investments in securities.
Changes in financial assets at fair value through profit and loss during the reported years are as follows:
|
|
Year Ended December 31
|
||||||||
|
2013
|
2012
|
|||||||
|
Dollars in thousands
|
||||||||
|
Balance at beginning of year
|
14,919 | 23,441 | ||||||
|
Purchases
|
23,645 | 36,249 | ||||||
|
Disposals
|
(22,413 | ) | (45,764 | ) | ||||
|
Accrued interest
|
596 | 1,147 | ||||||
|
Interest received
|
(427 | ) | (1,143 | ) | ||||
|
Gains (losses) on disposal and increase (impairment) in value
|
(636 | ) | 989 | |||||
|
Balance at end of year
|
15,684 | 14,919 | ||||||
|
Less – non-current portion
|
251 | 251 | ||||||
|
Current portion
|
15,433 | 14,668 | ||||||
| NOTE 7 – |
DERIVATIVE FINANCIAL INSTRUMENTS:
|
|
| 1. Composed as follows: | ||
|
Year Ended December 31
|
||||||||
|
2013
|
2012
|
|||||||
|
Dollars in thousands
|
||||||||
|
Current assets:
|
||||||||
|
Derivatives – see 2 below:
|
|
|||||||
|
Derivatives on oil prices
|
— | 2,136 | ||||||
|
Derivatives on natural gas prices
|
— | 2,804 | ||||||
|
Forward transactions
|
2,290 | 1,673 | ||||||
|
Total assets
|
2,290 | 6,613 | ||||||
|
Current liabilities:
|
||||||||
|
Derivatives – see 2 below:
|
||||||||
|
Derivatives on oil prices
|
||||||||
|
Derivatives on natural gas prices
|
(351 | ) | ||||||
|
Forward transactions
|
(2,490 | ) | — | |||||
|
Total liabilities
|
(2,831 | ) | — | |||||
| 2. |
Additional information:
|
|||
| a. |
Derivatives to reduce exposure to fluctuations in the price of energy
|
|||
|
As explained in note 2l, the Group has revenues derived from the sale of electricity from power plants at a variable price in California and Hawaii. The Group’s power purchase agreements (“PPAs”) for the Ormesa complex, the Mammoth complex and the Heber 1 and 2 power plants in California were fixed until May 1, 2012. Thereafter, the energy price component under these PPAs changed from a fixed rate to a variable rate based on Short Run Avoided Costs (“SRAC”) pricing of the off-taker. These PPAs are impacted by fluctuations in natural gas prices. In addition, the prices paid for electricity pursuant to the 25 MW PPA for the Puna complex in Hawaii are impacted by the price of oil and are calculated on a monthly basis and are exposed to material fluctuations during the year. Therefore, the group entered into swap contracts
and put transactions in an attempt to reduce its exposure to fluctuations in the prices of natural gas and oil until December 31, 2013, as follows:
|
||||
| 1) |
Derivatives on oil prices
|
|||
|
On April 18, 2012, the Group entered into two oil swap contracts with a bank, each effective from May 1, 2012 until March 31, 2013, to reduce its exposure to fluctuations in the price of oil prices under the Group’s 25 MW PPA for the Puna complex, Hawaii, U.S. Under the terms of these contracts, the Group will make floating rate payments to the bank and receive fixed rate payments from the bank on each settlement date ($130.50 per BBL in respect of NYMEX Heating Oil and $115.50 per BBL in respect of ICE Brent). The swap contracts
have monthly settlements whereby the difference between the fixed price and the monthly average market price will be settled on a cash basis.
|
||||
| In addition, on September 27, 2012, the Group entered into European put transactions with two banks effective from January 1, 2013 until December 31, 2013. The Group entered into these transactions in order to reduce its exposure to fluctuations in the energy rate caused by fluctuations in oil prices. The Group paid up-front premiums in the total amount of approximately $2.6 million that were recorded as current assets -derivative financial instrument. Under these transactions, the Group will receive from the banks on each settlement date the difference between the strike price of $126.63 per BBL in respect of NYMEX Heating Oil and $106.80 in respect of ICE Brent and the respective monthly average market price of the relevant commodity. If the strike price is lower than the monthly average market price, no payment will be made. | ||||
| On October 16, 2013, the Group entered into a swap contract with a bank for a notional volume of 275,000 BBL effective from January 1, 2014 until December 31, 2014 to reduce the Company’s exposure to fluctuations in the energy rate caused by fluctuations in oil prices under the 25 MW PPA for the Puna complex. Under the terms of this contract, the Group will make payments linked to the oil price index to the bank and receive fixed rate payments $125.15 per BBL from the bank. The swap contract has monthly settlements whereby the difference between the fixed price and the monthly average market price will be settled on a cash basis. | ||||
| As explained in note 2l, the derivative instruments have not been presented as hedges and are measured at their fair value as of the balance sheet date and all changes in fair value of these derivatives are recognized directly in the electricity revenues in the statements of operations. As a result, a net gain (reduction in revenue) of ($2.0 million) and $0.8 million on these derivative contracts was recognized in the years ended December 31, 2013 and 2012, respectively. | ||||
|
2)
|
Derivatives on natural gas prices
|
|||
|
On May 24, 2012, the Group entered into a European put transaction with a bank for the period from July 1, 2012 until December 31, 2012. The Group entered into this transaction in order to reduce its exposure to fluctuations in the energy rate caused by fluctuations in natural gas prices under the Group’s PPAs with Southern California Edison Company (SCE). The Group paid up-front premium in the amount of approximately $1.6 million that was recorded as a derivative financial instrument under current assets. Under the terms of the transaction, each month the Group received the difference between $3.08 and the NGI price per MMbtu at the first day of the month. If the NGI price was higher than $3.08, no payment was made.
|
||||
| In addition, on July 13, 2012, the Group entered into another European put transaction with the same bank for the period from August 1, 2012 until December 31, 2012 in order to reduce its exposure to fluctuations in the energy rate caused by fluctuations in natural gas prices. The Group paid an up-front premium in the amount of approximately $0.2 million that was recorded as a derivative financial instrument under current assets. Under the terms of the transaction, each month the Group received the difference between $3.19 and the NGI price per MMbtu at the first day of the month. If the NGI price was higher than $3.19, no payment was made. | ||||
| In October 2012, the Group entered into NGI swap contracts with a bank for a period from January 1, 2013 until December 31, 2013, in order to reduce its exposure to fluctuations in the energy rate caused by fluctuations in natural gas prices. Under the terms of these contracts, the Group makes floating rate payments to the bank and receives fixed rate payments from the bank on each settlement date. The swap contracts have monthly settlements whereby the difference between the fixed price of $4.00 per MMbtu and the market price is settled on a cash basis. | ||||
| On September 3, 2013, the Group entered into a NGI swap contract with a bank for a notional volume of approximately 4.4 million MMbtus for settlement effective January 1, 2014 until December 31, 2014, in order to reduce its exposure to NGI. Under the terms of this contract, the Company will make floating rate payments to the bank and receive fixed rate payments from the bank on each settlement date. The swap contract has monthly settlements whereby the difference between the fixed price of $4.035 per MMbtu and the market price on the first commodity business day on which the relevant commodity reference price is published in the relevant calculation period (January 1, 2014 to December 1, 2014) will be settled on a cash basis. | ||||
| On October 16, 2013, the Group entered into a NGI swap contract with a bank for a notional volume of approximately 4.2 million MMbtus for settlement effective January 1, 2014 until December 31, 2014, in order to reduce its exposure to NGI below $4.103 per MMbtu under its PPAs with Southern California Edison. Under the terms of this contract, the Company will make floating rate payments to the bank and receive fixed rate payments from the bank on each settlement date. The swap contract has monthly settlements whereby the difference between the fixed price of $4.103 per MMbtu and the market price on the first commodity business day on which the relevant commodity reference price is published in the relevant calculation period (January 1, 2014 to December 1, 2014) will be settled on a cash basis. |
| As explained in note 2l, the derivative instruments have not been presented as hedges and are measured at their fair value as of the balance sheet date and all changes in fair value of these derivatives are recognized directly in the electricity revenues in the statements of operations. As a result, net gain (reduction in revenue) of approximately $(3.0 million) and of $1.5 million on these derivative contracts was recognized in the years ended December 31, 2013 and 2012, respectively. | ||||
|
b.
|
Currency forward transactions
|
|||
|
In addition, the Group has forward currency transactions and transactions in currency options in order to reduce exposure to fluctuations in its Israeli currency expenses.
|
||||
| As of December 31, 2013 and 2012, the notional amount of the forward currency transactions was $2.3 million and $1.7 million, respectively. These amounts were recognized as income in the statements of operations for the years ended December 31, 2013 and 2012, under “other income”. | ||||
|
For details on fair value measurement of derivatives, see note 11.
|
||||
|
The maximum credit risk exposure as of the date of the statement of financial position equals the fair value of the derivative instruments therein.
|
||||
|
a.
|
Trade:
|
|
2012
|
||||||||||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||||||
|
In
dollars
|
In other currencies
|
Total
|
In
dollars
|
In other currencies
|
Total
|
|||||||||||||||||||
|
Composed as follows:
|
||||||||||||||||||||||||
|
Abroad – utility companies
|
39,536 | 39,536 | 32,128 | 32,128 | ||||||||||||||||||||
|
Abroad – other
|
55,803 | 26 | 55,829 | 18,604 | 4,948 | 23,552 | ||||||||||||||||||
| 95,339 | 26 | 95,365 | 50,732 | 4,948 | 55,680 | |||||||||||||||||||
| The amounts included in the trade receivables include open accounts only. |
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Institutions
|
3,587 | 4,172 | ||||||
|
Advances to suppliers
|
1,047 | 1,902 | ||||||
|
Prepaid expenses
|
24,712 | 21,680 | ||||||
|
Sundry
|
5,508 | 3,071 | ||||||
| 34,854 | 30,825 | |||||||
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
In dollars
|
31,593 | 26,701 | ||||||
|
In other currencies
|
3,261 | 4,124 | ||||||
| 34,854 | 30,825 | |||||||
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Costs accrued in respect of uncompleted contracts
|
36,023 | 139,775 | ||||||
|
Add –recognized profits
|
15,527 | 53,173 | ||||||
|
Revenue recognized
|
51,550 | 192,948 | ||||||
|
Less – progress billings
|
(38,236 | ) | (208,743 | ) | ||||
| 13,314 | (15,795 | ) | ||||||
|
Presented in the statements of financial position as follows:
|
||||||||
|
Receivables in respect of uncompleted contracts
|
21,217 | 9,613 | ||||||
|
Payables in respect of uncompleted contracts
|
(7,903 | ) | (25,408 | ) | ||||
| 13,314 | (15,795 | ) | ||||||
|
1)
|
Construction of five projects was completed in the year ended December 31, 2013; revenue recognized in respect of those projects in 2013 was approximately $66 million, and the cumulative revenue therefrom was approximately $250 million.
|
|
2)
|
In the year ended December 31, 2013, the Group entered into six new contracts in a total amount of approximately $104 million; revenues of approximately $16 million were recognized in respect of those contracts, and approximately $31 million was received as advances.
|
|
3)
|
In the year ended December 31, 2013 the Group completed the sale of products for five projects while construction is still in process. Revenue in a total amount of approximately $70 million was recognized in respect of those projects.
|
|
4)
|
The construction of the Ngatamriki power plant in New Zealand was completed in 2013. Total revenues recognized in respect of this project during the construction period were approximately $139 million.
|
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Raw materials and purchased parts for assembly
|
6,326 | 9,775 | ||||||
|
Self-manufactured assembly parts and finished products
|
15,963 | 10,894 | ||||||
| 22,289 | 20,669 | |||||||
|
Carrying amount
|
Fair Value
|
|||||||||||||
|
December 31,
|
||||||||||||||
|
2012
|
2013
|
2012
|
||||||||||||
|
Dollars in thousands
|
Dollars in thousands
|
|||||||||||||
|
Notes :
|
||||||||||||||
|
Senior unsecured bonds (2)
|
250,596 | 250,904 | 270,618 | 273,200 | ||||||||||
|
OFC Senior Secured Notes – in dollars and bearing fixed interest (1)
|
90,840 | 114,136 | 83,544 | 105,000 | ||||||||||
|
OrCal Senior Secured Notes – in dollars and bearing fixed interest (1)
|
66,156 | 76,548 | 65,769 | 77,300 | ||||||||||
|
OFC 2 LLC Notes - in dollars and bearing fixed interest
|
144,450 | 150,473 | 119,015 | 131,200 | ||||||||||
|
Loans from banks and institutional investors (2):
|
||||||||||||||
|
Loan agreement – Olkaria III project, Kenya – OPIC
|
299,946 | — | 279,580 | — | ||||||||||
|
Loan agreement – Olkaria III project, Kenya – DEG
|
39,474 | 47,369 | 40,268 | 48,800 | ||||||||||
|
Loan agreement Amatitlan project, Guatemala
|
31,509 | 34,268 | 34,805 | 38,900 | ||||||||||
|
Loans from a financial institution
|
19,535 | 26,957 | 20,071 | 27,700 | ||||||||||
|
Total
|
942,506 | 700,655 | 913,670 | 702,100 | ||||||||||
|
(1)
|
The fair value is based on prices quoted in an active market as of the date of the statement of financial position.
|
|
(2)
|
The fair value of these loans and bonds is based on computation of the present value of future cash flows, discounted at interest rates usually applicable to similar loans and/or debentures, or, where applicable - on market value.
|
|
Customer
|
Rating by S&P
|
Rating by Moody’s
|
|||||
|
Southern California Edison Company
|
BBB+ (stable outlook)
|
A3 (stable outlook)
|
|||||
|
HELCO
|
BBB- (stable outlook)
|
Baa1(under review)
|
|||||
|
Sierra Pacific Power Company
|
BBB+ (stable outlook)
|
Baa2 (under review)
|
|||||
|
Nevada Power Company
|
BBB+ (stable outlook)
|
Baa2 (under review)
|
|||||
|
Southern California Power Public Authority
|
A-(negative outlook)
|
Aa3 (stable outlook)
|
|||||
|
Pacific Gas and Electric
|
BBB (negative outlook)
|
Aa3 (stable outlook)
|
|
Subsequent
|
||||||||||||||||||||||||||||
|
2014
|
2015
|
2016
|
2017
|
2018
|
to 2018
|
Total | ||||||||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||||||||||
|
Accounts payable and accruals
|
77,549 | — | — | — | — | — | 77,549 | |||||||||||||||||||||
|
Long-term liabilities
|
80,389 | 74,386 | 201,621 | 311,890 | 53,954 | 355,617 | 1,077,857 | |||||||||||||||||||||
|
Interest on long-term liabilities
|
64,091 | 59,103 | 51,687 | 44,949 | 23,555 | 117,153 | 360,538 | |||||||||||||||||||||
| 222,029 | 133,489 | 253,308 | 356,839 | 77,509 | 472,770 | 1,515,944 | ||||||||||||||||||||||
|
Subsequent
|
||||||||||||||||||||||||||||
|
2013
|
2014
|
2015
|
2016
|
2017
|
to 2018
|
Total | ||||||||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||||||||||
|
Accounts payable and accruals
|
82,646 | — | — | — | — | — | 82,646 | |||||||||||||||||||||
|
Long-term liabilities
|
68,333 | 150,873 | 70,850 | 86,188 | 308,938 | 345,747 | 1,030,929 | |||||||||||||||||||||
|
Interest on long-term liabilities
|
62,409 | 56,947 | 51,192 | 45,422 | 40,331 | 108,146 | 364,447 | |||||||||||||||||||||
| 213,388 | 207,820 | 122,042 | 131,610 | 349,269 | 453,893 | 1,478,022 | ||||||||||||||||||||||
|
●
|
Level 1 - Quoted prices (unadjusted) in active markets where similar assets or liabilities are listed.
|
|
●
|
Level 2 - Inputs other than quoted prices included within level 1 that are observable for the assets and liabilities, either directly (that is, as prices) or indirectly (that is, derived from prices).
|
|
●
|
Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Dollars in thousands
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Cash equivalents
|
40,015 | — | — | 40,015 | ||||||||||||
|
Investments in securities:
|
||||||||||||||||
| — | — | 251 | 251 | |||||||||||||
| 15,433 | — | — | 15,433 | |||||||||||||
|
Derivatives -
|
||||||||||||||||
| — | 2,990 | — | 2,990 | |||||||||||||
|
Total assets
|
55,448 | 2,290 | 251 | 57,989 | ||||||||||||
|
Liabilities -
|
||||||||||||||||
|
Derivatives:
|
||||||||||||||||
| — | (2,490 | ) | — | (2,490 | ) | |||||||||||
| — | (341 | ) | — | (341 | ) | |||||||||||
|
Total liabilities
|
— | (2,831 | ) | — | (2,831 | ) | ||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Dollars in thousands
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Cash equivalents
|
54,298 | — | — | 54,298 | ||||||||||||
|
Investments in securities:
|
||||||||||||||||
| — | — | 251 | 251 | |||||||||||||
| 14,668 | — | — | 14,668 | |||||||||||||
|
Derivatives:
|
||||||||||||||||
|
Derivatives on oil prices
|
— | 2,134 | — | 2,134 | ||||||||||||
|
Derivatives on natural gas prices
|
— | 2,804 | — | 2,804 | ||||||||||||
|
Forward transactions
|
— | 1,675 | — | 1,675 | ||||||||||||
|
Total assets
|
68,966 | 6,613 | 251 | 75,830 | ||||||||||||
|
Financial instruments measured at fair value
|
||||||||||||
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Balance at beginning of year
|
251 | 451 | 11,897 | |||||||||
|
Sales of securities
|
— | — | (10,589 | ) | ||||||||
|
Interest received
|
— | — | (67 | ) | ||||||||
|
Losses recognized in the statement of operations
|
— | (200 | ) | (790 | ) | |||||||
|
Balance at end of year
|
251 | 251 | 451 | |||||||||
|
NOTE 12 –
|
POWER PLANTS, OTHER PROPERTY, PLANT AND EQUIPMENT, AND COSTS OF EXPLORATION AND VALUATION OF GEOTHERMAL RESOURCES:
|
|
Cost
|
Accumulated depreciation and impairment
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Classified
|
Reduction
|
|
Depreciated
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance at
|
Additions
|
Cash
|
as asset
|
Retirements
|
Balance
|
Balance at
|
Additions
|
of
|
Retirements
|
|
Balance
|
balance at
|
||||||||||||||||||||||||||||||||||||||||||||
|
beginning
|
during
|
Grant
|
retirement
|
during
|
at end
|
beginning
|
during
|
impairment
|
during
|
|
at end
|
December
|
||||||||||||||||||||||||||||||||||||||||||||
|
of year
|
the year
|
Received
|
obligation
|
the year
|
Deconsolidation
|
of year
|
of year
|
the year (1)
|
losses
|
year
|
Deconsolidation
|
of year
|
31. 2013
|
|||||||||||||||||||||||||||||||||||||||||||
| Dollars in Thousands | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Power plants
|
1,942,416 | 296,004 | (14,685 | ) | (13,250 | ) | — | (30,158 | ) | 2,180,327 | 800,856 | 72,482 | (8,038 | ) | (769 | ) | (27,927 | ) | 836,604 | 1,343,723 | ||||||||||||||||||||||||||||||||||||
|
Buildings
|
54,438 | 25 | — | — | — | (39 | ) | 54,424 | 8,829 | 837 | — | — | (39 | ) | 9,627 | 44,797 | ||||||||||||||||||||||||||||||||||||||||
|
Machinery and equipment
|
94,602 | 1,550 | — | — | — | (945 | ) | 95,207 | 40,331 | 10,611 | — | — | (920 | ) | 50,022 | 45,185 | ||||||||||||||||||||||||||||||||||||||||
|
Vehicles
|
5,816 | 237 | — | — | — | (308 | ) | 5,745 | 4,814 | 451 | — | — | (232 | ) | 5,033 | 712 | ||||||||||||||||||||||||||||||||||||||||
|
Equipment, furniture and computers
|
15,218 | 2,909 | — | — | — | (141 | ) | 17,986 | 11,154 | 992 | — | — | (131 | ) | 12,015 | 5,971 | ||||||||||||||||||||||||||||||||||||||||
|
Total operating power plants and other property, plant and equipment
|
2,112,490 | 300,725 | (14,685 | ) | (13,250 | ) | — | (31,591 | ) | 2,353,689 | 865,984 | 85,373 | (8,038 | ) | (769 | ) | (29,249 | ) | 913,301 | 1,440,388 | ||||||||||||||||||||||||||||||||||||
|
Power plants under construction
|
331,167 | 192,999 | — | — | (296,729 | ) | (875 | ) | 226,562 | — | — | — | — | — | — | 226,562 | ||||||||||||||||||||||||||||||||||||||||
|
Cost
|
Accumulated depreciation and impairment
|
|||||||||||||||||||||||||||||||||||||||||||
|
Depreciated
|
||||||||||||||||||||||||||||||||||||||||||||
|
Balance at
|
Additions
|
Cash
|
Additions
|
Balance
|
Balance at
|
Additions
|
Retirements
|
Balance
|
balance at
|
|||||||||||||||||||||||||||||||||||
|
beginning
|
during
|
grant
|
during
|
at end
|
beginning
|
during
|
Impairment
|
during
|
at end
|
December
|
||||||||||||||||||||||||||||||||||
|
of year
|
the year
|
received
|
the year
|
of year
|
of year
|
the year
|
during the year
|
the year
|
of year
|
31, 2012
|
||||||||||||||||||||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||||||||||||||||||||||||||
|
Power plants
|
1,895,552 | 166,063 | (119,199 | ) | — | 1,942,416 | 544,469 | 77,080 | 179,307 | — | 800,856 | 1,141,560 | ||||||||||||||||||||||||||||||||
|
Buildings
|
54,428 | 10 | — | — | 54,438 | 7,957 | 872 | — | — | 8,829 | 45,609 | |||||||||||||||||||||||||||||||||
|
Machinery and equipment
|
87,701 | 6,901 | — | — | 94,602 | 30,671 | 9,660 | — | — | 40,331 | 54,271 | |||||||||||||||||||||||||||||||||
|
Vehicles
|
5,581 | 235 | — | — | 5,816 | 4,084 | 730 | — | — | 4,814 | 1,002 | |||||||||||||||||||||||||||||||||
|
Equipment, furniture and computers
|
16,444 | 2,134 | — | (3,360 | ) | 15,218 | 12,219 | 2,295 | — | (3,360 | ) | 11,154 | 4,064 | |||||||||||||||||||||||||||||||
|
Total operating power plants and other, property, plant and equipment
|
2,059,706 | 175,343 | (119,199 | ) | (3,360 | ) | 2,112,490 | 599,400 | 90,637 | 179,307 | (3,360 | ) | 865,984 | 1,246,506 | ||||||||||||||||||||||||||||||
|
Power plants under construction
|
294,179 | 206,396 | — | (169,408 | ) | 331,167 | — | — | — | — | — | 331,167 | ||||||||||||||||||||||||||||||||
|
Cost
|
Accumulated depreciation and impairment
|
Depreciated
|
||||||||||||||||||||||||||||||||||
|
Balance at
|
Additions
|
Retirements
|
Balance
|
Balance at
|
Additions
|
Retirements
|
Balance
|
balance
|
||||||||||||||||||||||||||||
|
beginning
|
during
|
during
|
at end
|
beginning
|
during
|
during
|
at end
|
December
|
||||||||||||||||||||||||||||
|
of year
|
the year
|
the year
|
of year
|
of year
|
the year
|
the year
|
of year
|
31, 2011
|
||||||||||||||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||||||||||||||||||
|
Power plants
|
1,718,452 | 177,100 | — | 1,895,552 | 464,003 | 74,917 | 5,549 | 544,469 | 1,351,083 | |||||||||||||||||||||||||||
|
Buildings
|
47,550 | 6,878 | — | 54,428 | 7,123 | 834 | — | 7,957 | 46,471 | |||||||||||||||||||||||||||
|
Machinery and equipment
|
70,826 | 16,875 | — | 87,701 | 22,933 | 7,738 | — | 30,671 | 57,030 | |||||||||||||||||||||||||||
|
Vehicles
|
5,283 | 298 | — | 5,581 | 3,397 | 687 | — | 4,084 | 1,497 | |||||||||||||||||||||||||||
|
Equipment, furniture and computers
|
14,979 | 1,465 | — | 16,444 | 10,142 | 2,077 | — | 12,219 | 4,225 | |||||||||||||||||||||||||||
|
Total operating power plants and other, property, plant and equipment
|
1,857,090 | 202,616 | — | 2,059,706 | 507,598 | 86,253 | 5,549 | 599,400 | 1,460,306 | |||||||||||||||||||||||||||
|
Power plants under construction
|
217,746 | 252,746 | (176,313 | ) | 294,179 | — | — | — | — | 294,179 | ||||||||||||||||||||||||||
|
1)
|
The item includes capitalized borrowing costs in the amount of $106,153,000 and $99,755,000 at December 31, 2013 and 2012, respectively.
|
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Payment for rights to land granted by the BLM (see note2w)
|
27,473 | 29,160 | ||||||
|
Cost of exploration and valuation of geothermal resources
|
192,141 | *286,464 | ||||||
|
Capitalized borrowing costs
|
6,948 | 15,543 | ||||||
| 226,562 | 331,167 | |||||||
|
Electricity generation (MW)
|
Probability (%)
|
|
|
37
|
50.0
|
|
|
40
|
25.0
|
|
|
45
|
12.5
|
|
|
50
|
12.5
|
|
Parameters
|
Inputs used in measurement
|
|
|
Output
|
26.8 MW-27 MW
|
|
|
Range of average prices
|
$84.3-$111.25
|
|
|
Operating expense range
|
$13.1 million-$20.5 million
|
|
Electricity generation (MW)
|
Probability (%)
|
|
|
10
|
70.0
|
|
|
12
|
30.0
|
|
(1)
|
Changes in exploration and valuation of geothermal resources costs in the years 2012 and 2013 are as follows:
|
|
Payment on account of
rights to
land
|
Cost of exploration
and
valuation of geothermal resources
|
Capitalized financial expenses
|
Total
|
|||||||||||||
|
Dollars in thousands
|
||||||||||||||||
|
Balance at January 1, 2012
|
36,832 | 40,223 | 1,598 | 78,653 | ||||||||||||
|
Costs accrued during the year
|
— | 3,782 | 420 | 4,202 | ||||||||||||
|
Write-off of costs of unsuccessful exploration activities *
|
(1,160 | ) | (1,479 | ) | — | (2,639 | ) | |||||||||
|
Transfer to property, plant and equipment
|
(1,687 | ) | (10,224 | ) | (740 | ) | (12,651 | ) | ||||||||
|
Balance at December 31, 2012
|
33,985 | 32,302 | 1,278 | 67,565 | ||||||||||||
|
Costs accrued during the year
|
— | 6,168 | — | 6,168 | ||||||||||||
|
Write-off of costs of unsuccessful exploration activities *
|
(3,844 | ) | (250 | ) | — | (4,094 | ) | |||||||||
|
Balance at December 31, 2013
|
30,141 | 38,220 | 1,278 | 69,639 | ||||||||||||
|
*
|
The costs incurred in connection with the exploration and valuation of geothermal resources that were charged to income in the year ended December 31, 2013 relate to three exploration sites in Nevada, Utah and Idaho, U.S..The costs incurred in connection with the exploration and valuation of geothermal resources that were charged to income in the year ended December 31, 2012 relate to five exploration sites in Nevada, U.S. There were no write-offs of unsuccessful exploration activities for the year ended December 31, 2011.
|
|
Cost
|
Accumulated amortization
|
|||||||||||||||||||||||||||||||||||||||
|
Balance at
beginning
of year
|
Additions
during
the year
|
Reclassified to
long term
liabilities
|
Retirements
during the
year
|
Balance
at end
of year
|
Balance at
beginning
of year
|
Additions
during
the year
|
Retirements
during the
year
|
Balance
at end
of year
|
Amortized
balance at
|
|||||||||||||||||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||||||||||||||||||||||
|
Costs of obtaining long-term debt
|
3,230 | 442 | (2,654 | ) | (196 | ) | 822 | 291 | 210 | (196 | ) | 305 | 517 | |||||||||||||||||||||||||||
|
Power supply agreements
|
63,018 | — | — | — | 63,018 | 29,308 | 3,318 | — | 32,626 | 30,392 | ||||||||||||||||||||||||||||||
|
Computer software and other intangible assets
|
7,676 | 562 | — | (1,268 | ) | 6,970 | 4,367 | 1,327 | (1,027 | ) | 4,667 | 2,303 | ||||||||||||||||||||||||||||
|
Patent rights (at token value)
|
1 | — | — | — | 1 | — | — | — | — | 1 | ||||||||||||||||||||||||||||||
|
Total
|
73,925 | 1,004 | (2,654 | ) | (1,464 | ) | 70,811 | 33,966 | 4,855 | (1,223 | ) | 37,598 | 33,213 | |||||||||||||||||||||||||||
|
Cost
|
Accumulated amortization
|
|||||||||||||||||||||||||||||||||||||||
|
Balance at
beginning
of year
|
Additions
during
the year
|
Reclassified
to
long term
liabilities
|
Retirements
during the
year
|
Balance
at end
of year
|
Balance at
beginning
of year
|
Additions
during
the year
|
Retirements
during the
year
|
Balance
at end
of year
|
Amortized
balance at
|
|||||||||||||||||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||||||||||||||||||||||
|
Costs of obtaining long-term debt
|
1,445 | 2,685 | (176 | ) | (724 | ) | 3,230 | 476 | 191 | (376 | ) | 291 | 2,939 | |||||||||||||||||||||||||||
|
Power supply agreements
|
63,018 | — | — | — | 63,018 | 26,018 | 3,290 | — | 29,308 | 33,710 | ||||||||||||||||||||||||||||||
|
Computer software and other intangible assets
|
6,306 | 1,370 | — | — | 7,676 | 3,089 | 1,278 | — | 4,367 | 3,309 | ||||||||||||||||||||||||||||||
|
Patent rights (at token value)
|
1 | — | — | — | 1 | — | — | — | — | 1 | ||||||||||||||||||||||||||||||
|
Total
|
70,770 | 4,055 | (176 | ) | (724 | ) | 73,925 | 29,583 | 4,759 | (376 | ) | 33,966 | 39,959 | |||||||||||||||||||||||||||
|
Cost
|
Accumulated amortization
|
Amortized | ||||||||||||||||||||||||||||||
|
Balance at
beginning
of year
|
Additions
during
the year
|
Reclassified
to
long-term
liabilities
|
Balance
at end
of year
|
Balance at
beginning
of year
|
Additions
during
the year
|
Balance
at end
of year
|
balance
at
|
|||||||||||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||||||||||||||
|
Costs of obtaining long-term debt
|
1,923 | — | (478 | ) | 1,445 | 443 | 33 | 476 | 969 | |||||||||||||||||||||||
|
Power supply agreements
|
63,018 | — | — | 63,018 | 22,739 | 3,279 | 26,018 | 37,000 | ||||||||||||||||||||||||
|
Computer software and other intangible assets
|
2,934 | 3,372 | — | 6,306 | 1,981 | 1,108 | 3,089 | 3,217 | ||||||||||||||||||||||||
|
Patent rights (at token value)
|
1 | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||
|
Total
|
67,876 | 3,372 | (478 | ) | 70,770 | 25,163 | 4,420 | 29,583 | 41,187 | |||||||||||||||||||||||
|
a.
|
Corporate taxation in Israel:
|
|
1)
|
Commencing in 2008, the operating results of the Company and its Israeli subsidiaries for tax purposes are measured in nominal values. Through tax year 2007 the results for tax purposes were measured in real terms, having regard to the changes in the Israeli CPI, under the Income Tax (Inflationary Adjustments) Law, 1985 (the “Inflationary Adjustments Law”).
|
|
|
a)
|
Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the “Investment Law”)
|
|
●
|
“Investment tax credit” for approximately 30% of the cost of each new geothermal power plant when the qualifying facility placed in service until January 1, 2014, and 10% for plants placed in service thereafter, or -
|
|
●
|
“Production tax credit”, for a period of ten years on the electricity output of new geothermal power plants put into service by December 31, 2013. In 2013, the production tax credit was 2.3 cents per kWh; the credit amount is adjusted annually for U.S. inflation. Any unused tax credit has a 1-year carry back and a 20-year carry forward. The U.S. tax laws permits the U.S. subsidiaries to depreciate most of their plants for tax purposes over five years on an accelerated basis. If those subsidiaries claim the investment tax credit, their “tax base” for depreciation purposes
is reduced by half of the tax credit. Furthermore, companies that placed qualifying renewable energy facilities in service in 2009, 2010 or 2011, or that began construction of qualifying renewable energy facilities during 2009, 2010 or 2011, and placed them in service by December 31, 2013, may choose to apply for a cash grant from the U.S. Department of Treasury in an amount equal to the above “investment tax credit”. In such a case, their “tax base” for depreciation purposes is reduced by half of the grant amount.
|
|
1)
|
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same tax jurisdiction.
|
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Deferred tax assets:
|
||||||||
|
Deferred tax assets recoverable within more than 12 months from the date of the statement of financial position
|
56,793 | *72,827 | ||||||
|
Deferred tax assets recoverable within 12 months of the statement of financial position
|
523 | 637 | ||||||
| 57,316 | 73,464 | |||||||
|
Deferred tax liabilities:
|
||||||||
|
Deferred tax liabilities to be settled within more than 12 months from the date of the statement of financial position
|
49,745 | 41,600 | ||||||
|
Deferred tax assets to be settled within 12 months of the date of the statement of financial position
|
— | 20,392 | ||||||
| 49,745 | 61,992 | |||||||
|
Balance – net
|
7,571 | 11,472 | ||||||
|
2)
|
Composition of the deferred taxes at date of the statement of financial positions, and the changes therein during the years ended December 31, 2012 and 2013, are as follows:
|
|
Deferred taxes on
|
||||||||||||||||||||
|
Property
plant and equipment
and power
plants
|
Severance
pay
liabilities
(1)
|
Vacation
pay
accrual
|
Carry-
forward losses,
tax credits and
expenses (2)
|
Total
|
||||||||||||||||
|
Dollars in thousands
|
||||||||||||||||||||
|
Balance at January 1, 2012
|
(93,455 | ) | 184 | 420 | 124,260 | 31,409 | ||||||||||||||
|
Changes during 2012:
|
||||||||||||||||||||
|
Carried to statements of operations
|
50,036 | 119 | (37 | ) | *(70,232 | ) | (20,114 | ) | ||||||||||||
|
Carried to other comprehensive income (loss)
|
— | 58 | — | 119 | 177 | |||||||||||||||
|
Balance at December 31, 2012
|
(43,419 | ) | 361 | 383 | 54,147 | 11,472 | ||||||||||||||
|
Changes during 2013:
|
||||||||||||||||||||
|
Carried to statements of operations
|
57,708 | 280 | 157 | (62,049 | ) | (3,904 | ) | |||||||||||||
|
Carried to other comprehensive income
|
— | (99 | ) | — | 102 | 3 | ||||||||||||||
|
Balance at December 31, 2013
|
14,289 | 542 | 540 | (7,800 | ) | 7,571 | ||||||||||||||
|
(2)
|
Includes deferred taxes respect of cash flow hedges and remeasurement of the net liability for retirement benefits carried to other comprehensive income.
|
|
3)
|
Losses for tax purposes, investment tax credit and production tax credit carried forward to future years
|
|
4)
|
As of December 31, 2013, the temporary differences on Group’s investments in investees, which mainly arise from undistributed profits amount to approximately $264 million. The Group has not recognized a deferred tax liability in respect of such differences, since the utilization thereof in the foreseeable future is not anticipated.
|
|
5)
|
Deferred taxes have been computed at the tax rates expected to apply when such deferred taxes are utilized.
|
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Tax benefit (current taxes)*
|
10,320 | **(11,463 | ) | 181 | ||||||||
|
In respect of previous years
|
— | — | (645 | ) | ||||||||
|
Deferred taxes
|
(3,905 | ) | (13,033 | ) | (31,576 | ) | ||||||
| 6,415 | (24,496 | ) | (32,040 | ) | ||||||||
|
Tax rate applied in computation of provision for current taxes in Israel
|
12.5%-25 | % | 15%-25 | % | 15%-25 | % | ||||||
|
|
*The computation of current taxes takes into account $19,152,000, $10,127,000 and $11,142,000 in the years ended December 31, 2013, 2012, and 2011, respectively, in respect of income from tax monetization transaction, see note 21.
|
|
-
|
Final assessments through tax year 2008.
|
||
|
Ormat Systems
|
-
|
Final assessments through tax year 2008.
|
|
|
Solmat
|
-
|
Tax returns through tax year 2009 are considered final.
|
|
|
OrFuel
|
-
|
Tax returns through tax year 2009 are considered final.
|
|
USA
|
-
|
Final assessments through tax year 1999.
|
|
|
Kenya
|
-
|
Final assessments through tax year 2006.
|
|
|
Guatemala
|
-
|
Final assessments through tax year 2008.
|
|
|
New Zealand
|
Final assessments through tax year 2008.
|
||
|
Nicaragua
|
Final assessments through tax year 2008.
|
||
|
The Philippines
|
-
|
Final assessments through tax year 2008.
|
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Income (loss) before income taxes, as reported in the statements of operations
|
43,235 | (152,828 | ) | (5,619 | ) | |||||||
|
Corporate tax rate in Israel
|
25 | % | 25 | % | 24 | % | ||||||
|
Theoretical tax expense (benefits) in respect of that income (loss)
|
(10,809 | ) | 38,207 | 1,349 | ||||||||
|
Increase (decrease) resulting from:
|
||||||||||||
|
Different tax rates and tax credits related to foreign subsidiaries
|
15,071 | **33,173 | 29,856 | |||||||||
|
Valuation allowance in respect of deferred tax assets of a subsidiary due to uncertainty as to realization thereof
|
— | — | (61,500 | ) | ||||||||
|
Tax-exempt income, net of disallowed expenses
|
(967 | ) | (628 | ) | (738 | ) | ||||||
|
Taxes applicable to income from dividend distribution of a subsidiary
|
— | (83,825 | ) | — | ||||||||
|
Losses and benefits for which deferred taxes were not provided
|
1,101 | (10,248 | ) | — | ||||||||
|
Taxes in respect of previous years
|
— | — | (645 | ) | ||||||||
|
Difference between the basis of measurement of income reported for tax purposes and the basis of measurement of income for financial reporting purposes—net*
|
1,531 | (262 | ) | (174 | ) | |||||||
|
Utilization of carryforward tax losses for which deferred taxes were not previously provided
|
177 | (282 | ) | 131 | ||||||||
|
Increase in deferred taxes due to change in tax rates
|
225 | — | — | |||||||||
|
Sundry
|
86 | (631 | ) | (319 | ) | |||||||
|
Income tax benefit (taxes) as reported in the statement of operations
|
6,415 | (24,496 | ) | (32,040 | ) | |||||||
|
*
|
The difference results from the gap between the Israeli currency results for tax purposes of the Company and its subsidiaries in Israel, which are calculated in real terms having regard to the changes in the Israeli CPI, and their results calculated in dollars for financial reporting purposes.
|
|
|
a.
|
Non-recourse Senior Secured Notes, credit lines and non-recourse and limited recourse bank credit for the financing of projects:
|
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Liabilities for financing projects (limited recourse and non-recourse):
|
||||||||
|
Loan agreements:
|
||||||||
|
Non-recourse loan agreements:
|
||||||||
|
Loan agreement Amatitlan Power Plant, Guatemala
|
31,509 | 34,268 | ||||||
|
Limited recourse loan agreements-Olkaria III complex, Kenya from OPIC
|
299,946 | 220,000 | ||||||
|
Notes:
|
||||||||
|
Non-recourse:
|
||||||||
|
Ormat Funding Corp.
|
90,840 | 114,136 | ||||||
|
OrCal Geothermal Inc.
|
66,156 | 76,548 | ||||||
|
Limited recourse – OFC 2 LLC
|
144,450 | 150,473 | ||||||
| 632,901 | 595,425 | |||||||
|
Less - current maturities
|
(51,514 | ) | (39,684 | ) | ||||
| 581,387 | 555,741 | |||||||
|
Less – credit raising expenses
|
(20,987 | ) | (22,751 | ) | ||||
| 560,400 | 532,990 | |||||||
|
Full recourse liabilities:
|
||||||||
|
Senior unsecured bonds
|
250,596 | 250,904 | ||||||
|
Loans from institutional investors
|
32,868 | 43,624 | ||||||
|
Loan agreement – Olkaria III complex, Kenya with DEG
|
39,474 | 47,369 | ||||||
|
Bank loan
|
10,000 | 20,000 | ||||||
|
Credit from bank
|
112,017 | 73,606 | ||||||
| 444,955 | 435,503 | |||||||
|
Less - current maturities
|
(28,875 | ) | (28,649 | ) | ||||
| 416,080 | 406,854 | |||||||
|
Less – credit raising expenses
|
(1,007 | ) | (1,642 | ) | ||||
| 415,073 | 405,212 | |||||||
|
|
●
|
Tranche I, in an aggregate principal amount of $85 million, which was drawn on November 9, 2012, was used to prepay approximately $20.5 million (plus associated prepayment penalty and breakage costs of $1.5 million) of the DEG Loan, as described below. The remainder of Tranche I proceeds was used for reimbursement of prior capital costs and other corporate purposes.
|
|
|
●
|
Tranche II, in an aggregate principal amount of up to $180 million, was used to fund the construction and well field drilling for the expansion of the Olkaria III geothermal power complex to up to 84 MW (“Plant 2”). On November 9, 2012, an amount of $135 million was disbursed under this Tranche II, and in February 2013, the remaining $45 million was disbursed under this Tranche II .
|
|
|
●
|
Tranche III is a stand-by tranche in an aggregate principal amount of up to $45 million, was disbursed in November 2013 and was applied to a further expansion of the Olkaria III complex of up to an additional 16 MW (“Plant 3”).
|
|
|
(a)
|
A debt service reserve account which may be funded by cash or backed by letters of credit (see below) in an amount sufficient to pay scheduled debt service amounts, including principal and interest, due under the terms of the OFC 2 Senior Secured Notes in the following six months. This restricted cash account is classified as current assets in the consolidated statement of financial position. As of December 31, 2013, part of the required debt service reserve was backed by a letter of credit in the amount of $10.4 million, see Note 20.
|
|
|
(b)
|
A performance level reserve account, intended to provide additional security for the OFC 2 Senior Secured Notes, which may be funded by cash or backed by letters of credit. This reserve builds up over time and reduces gradually each time the project achieves certain milestones. Upon issuance of the Series A Notes, this reserve was funded in the amount of $28 million. As of December 31, 2013, the balance of such account was $45.7 million, and in addition OFC 2 funded $10 million in a letter of credit issued that is required to be maintained at all times until this reserve reduces to zero.
|
|
|
(c)
|
Under the terms of the OFC 2 Senior Secured Notes, OFC 2 is also required to maintain a well field drilling and maintenance reserve that builds up over time and is dedicated to costs and expenses associated with drilling and maintenance of the project’s well field, which may be funded by cash deposit or backed by letters of credit. Certain other reserves are required in the event OFC 2 elects to commence construction of Phase II of any facility and fund such construction with any Series of Notes (other than Series A and Series B Notes).
|
|
(8)
|
The credit agreements, the loan agreements, and the trust instrument governing the bonds, described above, are unsecured; however, Ormat Technologies is subject to a negative pledge in favor of the banks and the other lenders and certain other restrictive covenants. These include, among other things, a prohibition on: (a) creating any floating charge or any permanent pledge, charge or lien over Ormat Technologies’ assets without obtaining the prior written approval of the lender; (b) guaranteeing the liabilities of any third party without obtaining the prior written approval of the lender; and (c) selling, assigning, transferring, conveying or disposing of all or substantially all of its assets, or a change of control in Ormat Technologies’ ownership structure. Some of the credit agreements, the term loan agreements, as well as the trust instrument, contain cross-default provisions
with respect to other material indebtedness owed by us to any third party. In some cases, Ormat Technologies has agreed to maintain certain financial ratios, which are measured quarterly, such as: (i) equity of at least $600 million and in no event less than 30% of total assets; (ii) 12-month debt, net of cash, cash equivalents, marketable securities and short-term bank deposits to adjusted EBITDA ratio not to exceed 7; and (iii) dividend distribution not to exceed 35% of net income for that year. As of December 31, 2013: (i) total equity was $745.1 million and the actual equity to total assets ratio was 34.5%, and (ii) the 12-month debt, net of cash, cash equivalents, marketable securities and short-term bank deposits to Adjusted EBITDA ratio was 4.5. During the year ended December 31, 2012, Ormat Technologies distributed interim dividends in an aggregate amount of
$3.6 million. Although Ormat Technologies reported net loss for the year, under the credit agreements, the loan agreements, and the trust instrument governing the bonds the Ormat Technologies can distribute interim dividends on the basis of its estimate of its net income for the year. Since Ormat Technologies incurred a loss for the year ended December 31, 2012, it made an adjustment of $3.6 million to its 2013 dividends. The failure to perform or observe any of the covenants set forth in the above agreements, subject to various cure periods, would result in the occurrence of an event of default and would enable the lenders to accelerate all amounts due under each such agreement.
|
| 2013 |
2012
|
|||||||
| Dollars in thousands | ||||||||
|
Up to 6 months
|
112,017 | 73,606 | ||||||
|
6-12 months
|
23,333 | 256,667 | ||||||
| 135,350 | 330,273 | |||||||
|
|
e)
|
For information on the effect of interest changes on the fair value of non-current liabilities, see note 11a(3).
|
|
|
b.
|
The long-term debt matures in the following years after the dates of the statement of financial position:
|
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
First year – current maturities
|
80,389 | 68,333 | ||||||
|
Second year
|
74,386 | 77,266 | ||||||
|
Third year
|
89,604 | 70,850 | ||||||
|
Fourth year
|
311,890 | 86,188 | ||||||
|
Fifth year
|
53,954 | 308,938 | ||||||
|
Sixth year and thereafter
|
355,617 | 345,747 | ||||||
| 965,840 | 957,322 | |||||||
|
2012
|
|||||||||
|
Dollars in thousands
|
|||||||||
|
Open accounts:
|
|||||||||
|
In dollars
|
45,249 | 44,050 | |||||||
|
In Israeli currency – unlinked
|
3,254 | 2,871 | |||||||
|
In other currencies
|
1,157 | 4,422 | |||||||
| 49,660 | 51,343 | ||||||||
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Payroll and related expenses
|
11,711 | 10,423 | ||||||
|
Interest accrued on Senior Secured Notes and loans
|
9,277 | 9,110 | ||||||
|
Deferred income
|
5,750 | |||||||
|
Institutions
|
4,671 | 4,399 | ||||||
|
Royalties
|
1,531 | 1,646 | ||||||
|
Sundry
|
5,367 | 9,096 | ||||||
| 38,307 | 34,674 | |||||||
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
In dollars
|
27,496 | 18,961 | ||||||
|
In Israeli currency – unlinked
|
5,499 | 4,924 | ||||||
|
In New Zealand dollars
|
1,291 | 6,455 | ||||||
|
Other currencies
|
4,021 | 4,333 | ||||||
| 38,307 | 34,674 | |||||||
|
|
a.
|
Ormat Technologies’ wholly owned subsidiary in Hawaii - Puna Geothermal Ventures (“PGV”) entered into a transaction involving the Puna geothermal power plant located on the Big Island of Hawaii (the “Puna Power Plant”).
|
|
Dollars in thousands
|
||||
|
First year
|
8,647 | |||
|
Second year
|
8,222 | |||
|
Third year
|
8,374 | |||
|
Fourth year
|
8,747 | |||
|
Fifth year
|
8,944 | |||
|
Sixth year and thereafter
|
12,932 | |||
| 55,866 | ||||
|
|
c.
|
As required under the terms of the lease agreements, PGV is required to deposit certain amounts in restricted accounts. As of December 31, 2013 and 2012, such funds amounted to $4.3 million and $4.4 million, respectively and are classified as current assets in the statements of financial position as of December 31, 2013 and 2012.
|
|
|
d.
|
Under the lease agreement, PGV is required to deposit its remaining cash, after making all of the necessary payments and transfers as provided for in the lease agreements, in order to make distributions to its parent company. The distributions are allowed only if PGV maintains various restrictive covenants under the lease agreements, which include, inter alia, limitations on additional indebtedness. As of December 31, 2013 and 2012, the balance of such account was zero.
|
|
Year Ended December 31
|
||||||||
|
2013
|
2012
|
|||||||
|
Dollars in thousands
|
||||||||
|
Present value of the obligations relating to partly or fully funded plans
|
24,577 | 23,262 | ||||||
|
Fair value of plan assets
|
(20,916 | ) | (19,722 | ) | ||||
|
Liability presented in the statement of financial position- net
|
3,661 | 3,540 | ||||||
|
Present value of the liability
|
Fair value of plan assets
|
Liability (assets) - net
|
||||||||||
|
Dollars in thousands
|
||||||||||||
|
Balance at January 1, 2013
|
23,262 | (19,722 | ) | 3,540 | ||||||||
|
Current service cost
|
948 | — | 948 | |||||||||
|
Interest income (expense), including transfers to provident funds
|
926 | (518 | ) | 408 | ||||||||
|
Exchange differences
|
1,789 | (1,477 | ) | 312 | ||||||||
| 26,295 | (21,717 | ) | 5,208 | |||||||||
|
Remeasurement of liability (assets), net – actuarial losses resulting from remeasurement based on experience
|
(185 | ) | (434 | ) | (619 | ) | ||||||
| 26,740 | (22,151 | ) | 4,589 | |||||||||
|
Plan contributions
|
— | (615 | ) | (615 | ) | |||||||
|
Benefits paid
|
(1,850 | ) | 1,850 | — | ||||||||
|
Retirement resulting from disposal of subsidiary
|
(313 | ) | — | (313 | ) | |||||||
|
Balance December 31, 2013
|
24,577 | (20,916 | ) | 3,661 | ||||||||
|
Present value of the liability
|
Fair value of plan assets
|
Liability (assets) - net
|
||||||||||
|
Dollars in thousands
|
||||||||||||
|
Balance at January 1, 2012
|
19,971 | (18,228 | ) | 1,743 | ||||||||
|
Current service cost
|
898 | — | 898 | |||||||||
|
Interest income (expense), including transfers to provident funds
|
929 | (496 | ) | 433 | ||||||||
|
Exchange differences
|
966 | (465 | ) | 501 | ||||||||
| 22,764 | (19,189 | ) | 3,575 | |||||||||
|
Remeasurement of liability (assets), net:
|
||||||||||||
|
Actuarial losses resulting from changes in financial estimates
|
989 | (275 | ) | 714 | ||||||||
|
Actuarial losses resulting from remeasurement based on experience
|
(330 | ) | 101 | (229 | ) | |||||||
| 22,423 | (19,363 | ) | 4,060 | |||||||||
|
Plan contributions
|
— | (604 | ) | (604 | ) | |||||||
|
Benefits paid
|
161 | 245 | 84 | |||||||||
|
Balance December 31, 2012
|
23,262 | (19,722 | ) | 3,540 | ||||||||
|
Present value of the liability
|
Fair value of plan assets
|
Liability (assets) - net
|
||||||||||
|
Dollars in thousands
|
||||||||||||
|
Balance at January 1, 2011
|
20,271 | (18,302 | ) | 1,969 | ||||||||
|
Current service cost
|
892 | — | 892 | |||||||||
|
Interest income (expense), including transfers to provident funds
|
997 | (582 | ) | 415 | ||||||||
|
Exchange differences
|
(1,520 | ) | 1,385 | (135 | ) | |||||||
| 20,640 | (17,499 | ) | 3,141 | |||||||||
|
Remeasurement of liability (assets), net:
|
||||||||||||
|
Actuarial losses resulting from changes in financial estimates
|
(46 | ) | (207 | ) | (253 | ) | ||||||
|
Actuarial losses resulting from remeasurement based on experience
|
84 | 348 | 432 | |||||||||
| 20,678 | (17,358 | ) | 3,320 | |||||||||
|
Plan contributions
|
— | (1,557 | ) | (1,557 | ) | |||||||
|
Benefits paid
|
(707 | ) | 687 | (20 | ) | |||||||
|
Balance December 31, 2011
|
19,971 | (18,228 | ) | 1,743 | ||||||||
|
Year Ended December 31,
|
|||||
|
2012
|
2011
|
||||
|
Discount rate
|
3.62%
|
3.95%
|
4.73%
|
||
|
Inflation rate
|
2.24%-2.28%
|
2.49%-2.63%
|
2.44%-2.51%
|
||
|
Expected rate of retirement
|
1%-10%
|
1%-10%
|
1%-10%
|
||
|
Future salary increases
|
3.27%
|
3.52%
|
3.47%
|
||
|
Increase (decrease) in the
defined benefit liability |
|||
|
Dollars in thousands
|
|||
|
+10%
|
-10%
|
||
|
Capitalization rate
|
(492)
|
336
|
|
|
Future salary increases
|
312
|
(264)
|
|
|
Retirement rate
|
74
|
(70)
|
|
|
Dollars in
thousands
|
|||
|
Less than a year
|
4,791
|
||
|
1-2 years
|
232
|
||
|
2-5 years
|
5,802
|
||
|
Over 5 years
|
39,021
|
||
|
49,846
|
|
Asset
retirement obligation
|
Other
|
Total
|
||||||||||
|
Dollars in thousands
|
||||||||||||
|
Balance at January 1, 2012
|
66,750 | 4,568 | 71,318 | |||||||||
|
Changes during the year:
|
||||||||||||
|
Reduction of provision due to change in estimate
|
(9,275 | ) | — | (9,275 | ) | |||||||
|
Provisions cancelled
|
— | 895 | 895 | |||||||||
|
Financing component of asset retirement obligation
|
1,708 | — | 1,708 | |||||||||
|
Payments during the year
|
— | (27 | ) | (27 | ) | |||||||
|
Balance at December 31, 2012
|
59,183 | 5,436 | 64,619 | |||||||||
|
Changes during the year:
|
||||||||||||
|
Additional provisions
|
1,866 | — | 1,866 | |||||||||
|
Reduction of provision due to change in estimate
|
(15,778 | ) | — | (15,778 | ) | |||||||
|
Change in provisions
|
— | (1,618 | ) | (1,618 | ) | |||||||
|
Financing component of asset retirement obligation
|
1,915 | — | 1,915 | |||||||||
|
Payments during the year
|
— | (26 | ) | (26 | ) | |||||||
|
Balance at December 31, 2013
|
47,186 | 3,792 | 50,978 | |||||||||
|
NOTE 20 –
|
COMMITMENTS, CONTINGENT LIABILITIES, RESTRICTIVE COVENANTS RELATING TO LIABILITIES, PLEDGES ON ASSETS AND SECURITIES:
|
|
1)
|
On December 24, 2012, Laborers’ International Union of North America Local Union No. 783 (“LiUNA”), an organized labor union, filed a petition in Mono County Superior Court, naming Mono County and Ormat Technologies as defendant and real party in interest, respectively. The petitioners brought this action to challenge the November 13, 2012 decision of the Mono County Board of Supervisors in denying Petitioners’ administrative appeal of the Planning Commission’s approval of Conditional Use Permit (“CUP”), adoption of findings under the California environmental quality reports for the Mammoth Pacific I replacement project. The petition asks the court to set aside the approval of the CUP and adoption of the environmental quality reports and cause a new environmental quality report to be prepared and circulated.
|
|
2)
|
In January 2014, the Group learned that two former employees of Ormat Technologies alleged in a qui tam complaint filed in the United States District Court for the Southern District of California that the latter submitted fraudulent applications and certifications to obtain grants. While the United States Department of Justice has declined to intervene, the former employees may proceed on their own.
|
|
3)
|
On February 19, 2012, a stockholder lodged a claim in the Tel Aviv District Court to recognize the claim as a derivative claim under section 198 of the Companies Law, 1999 against Gazit Israel (established by Gazit Inc., Panama) a subsidiary of Norstar Holdings Ltd. (formerly Gazit Inc.) (hereafter, collectively - “Gazit”) regarding alleged use of inside information by Gazit when it purchased Company shares in 2007. The claim alleges that the Gazit purchases of Company shares during that period were made with the intention of acquiring control over the Company and the shareholders claim that Gazit should have reported this to the public in real time, because publication of that information would have caused a significant change in the price of the
Company’s shares. Therefore, the allegation is that the said purchase was based on illegal use of inside information. The amount of the claim against Gazit is approximately NIS 365 million. On March 5, 2012 a request to approve a consensual motion was filed to the court requesting to approve procedural arrangement, according to which the respondents (Gazit and the Company) response to approve the derivative claim would be filed through May 15, 2012, and plaintiff’s response to the respondents response would be filed by June 15, 2012. On March 6, 2012 the procedural arrangement was validated by the court and a hearing was scheduled to June
25, 2012. Following an extension granted by the court, on May 20, 2012 the Company filed its response to the motion, in which it objected on legal and factual grounds, to approval of the claim as a derivative claim. On November 12, 2012, the plaintiff filed a request for discovery and for shifting the burden to the respondents. The Company and Gazit filed their response to this request and the plaintiff filed its reply to their response. On December 11, 2012, a pre-trial was held. In this hearing it was determined that with respect to the motion for discovery of documents, a protocol referring to Gazit’s decision to purchase up to 20% of the
Company’s shares will be transferred and would be confidential. As to the motion for shifting the burden it was determined that such motion will be decided within the determination of whether to approve the claim as a derivative claim. A hearing of evidence took place on March 24, 2013. Following the court decision, the parties submitted their summings-up in writing: the plaintiff – on May 12, 2013, and the defendant – on August 8, 2013. The plaintiff submitted the rejoinder to the defendant’s summing-up on September 30, 2013. On October 3, 2013, the court rejected the request to recognize the claim as a derivative claim and adjudged the plaintiff to pay legal costs of NIS 25,000 to each defendant. The plaintiff
was given 45 days to appeal that judgement. To the best of the Group’s knowledge, no appeal was lodged and the time to do so has expired.
|
|
Authorized
|
Issued and outstanding
|
Authorized
|
Issued and outstanding
|
||||||||||||||
|
Ordinary shares of NIS 1 par value
|
150,000 | 118,741 | 150,000 | 118,741 | |||||||||||||
|
|
2)
|
The ordinary shares of NIS 1 par value confer on their holders rights to vote, to receive dividends and to participate in the distribution of the Company’s assets in the event of liquidation.
|
|
|
3)
|
All the ordinary shares are listed for trading on the Tel-Aviv Stock Exchange (“TASE”). On December 31, 2013, the shares were quoted at NIS 23.791 (approximately $6.85).
|
|
|
4)
|
Until May 17, 2012, Company shares with a par value of NIS 2,216,360 as of December 31, 2013 and 2012 (approximately 1.9% of the issued and outstanding share capital) were held by a subsidiary. On May 17, 2013 the Company shares were transferred from its subsidiary in accordance with the Israeli Tax Ordinance- section 104c . This transaction had no effect on the consolidated financial statements.
|
|
Year Ended
|
Year Ended
|
Year Ended
|
||||||||||||||||||||||
|
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||
|
average
|
average
|
average
|
||||||||||||||||||||||
|
Number
|
exercise
|
Number
|
exercise
|
Number
|
exercise
|
|||||||||||||||||||
|
of options
|
price
|
of options
|
price
|
of options
|
price
|
|||||||||||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
||||||||||||||||||||||
|
Outstanding at beginning of Year
|
3,563 | 30.09 | 2,934 | $ | 32.40 | 2,335 | $ | 34.35 | ||||||||||||||||
|
Granted:
|
||||||||||||||||||||||||
|
Options
|
45 | 26.70 | 75 | 19.01 | 30 | 19.10 | ||||||||||||||||||
|
SARs*
|
1,250 | 23.08 | 602 | 20.13 | 622 | 25.65 | ||||||||||||||||||
|
Forfeited
|
(114 | ) | 28.92 | (48 | ) | 28.92 | (53 | ) | 31.69 | |||||||||||||||
|
Exercised**
|
(39 | ) | — | — | — | |||||||||||||||||||
|
Expired
|
(15 | ) | ||||||||||||||||||||||
|
Outstanding at end of year
|
4,690 | 28.23 | 3,563 | 30.09 | 2,934 | 32.40 | ||||||||||||||||||
|
Exercisable at end of year
|
2,123 | 33.82 | 1,592 | 36.61 | 1,086 | 37.46 | ||||||||||||||||||
|
|
*
|
The SARs entitle the participant to receive cash or shares in an amount equal to the excess of the fair market value of the shares on exercise date over the purchase price of the shares under the option.
|
|
|
**
|
The total consideration received upon the exercise of the options in 2013 was $529,000. No options were exercised in the years ended December 31, 2012 and 2011.
|
|
Year Ended December 31, 2013
|
Year Ended December 31, 2012
|
Year Ended December 31, 2011
|
|||||||||||||||||||||||||||||||
|
Number
outstanding at end of period (in thousands) |
Exercise
price |
Weighted
average remaining contractual life |
Number
outstanding at end of period (in thousands) |
Exercise
price |
Weighted
average remaining contractual life |
Number outstanding at end of period
(in thousands) |
Exercise
price |
Weighted average remaining contractual
life |
|||||||||||||||||||||||||
|
21
|
15.00 | 0.8 | 32 | 15.00 | 1.8 | 33 | 15.00 | 2.8 | |||||||||||||||||||||||||
|
45
|
18.56 | 5.8 | 45 | 18.56 | 6.8 | — | — | — | |||||||||||||||||||||||||
|
23
|
19.10 | 4.8 | 30 | 19.10 | 5.8 | 30 | 19.10 | 6.8 | |||||||||||||||||||||||||
|
26
|
19.69 | 5.6 | 30 | 19.69 | 6.6 | — | — | — | |||||||||||||||||||||||||
| 8 | 20.10 | 1.8 | 8 | 20.10 | 2.8 | ||||||||||||||||||||||||||||
|
578
|
20.13 | 5.3 | 590 | 20.13 | 6.3 | — | — | — | |||||||||||||||||||||||||
|
100
|
20.54 | 5.3 | |||||||||||||||||||||||||||||||
|
1,135
|
23.34 | 5.4 | |||||||||||||||||||||||||||||||
|
578
|
25.65 | 4.3 | 602 | 25.65 | 5.3 | 612 | 25.65 | 6.3 | |||||||||||||||||||||||||
|
23
|
25.74 | 1.8 | 32 | 25.74 | 2.8 | 22 | 25.74 | 3.8 | |||||||||||||||||||||||||
|
45
|
26.70 | 6.8 | |||||||||||||||||||||||||||||||
|
529
|
26.84 | 2.2 | 552 | 26.84 | 3.2 | 559 | 26.84 | 4.2 | |||||||||||||||||||||||||
|
30
|
28.19 | 3.8 | 30 | 28.19 | 4.8 | 30 | 28.19 | 5.8 | |||||||||||||||||||||||||
|
8
|
29.21 | 3.3 | 8 | 29.21 | 4.3 | 8 | 29.21 | 5.3 | |||||||||||||||||||||||||
|
547
|
29.95 | 3.3 | 567 | 29.95 | 4.3 | 578 | 29.95 | 5.3 | |||||||||||||||||||||||||
|
222
|
34.13 | 2.3 | 225 | 34.13 | 3.3 | 227 | 34.13 | 4.3 | |||||||||||||||||||||||||
| 15 | 37.90 | 0.8 | 15 | 37.90 | 1.8 | ||||||||||||||||||||||||||||
|
23
|
38.50 | 2.8 | 23 | 38.50 | 3.8 | 22 | 38.50 | 4.8 | |||||||||||||||||||||||||
|
8
|
38.85 | 0.2 | 8 | 38.85 | 1.2 | 8 | 38.85 | 2.2 | |||||||||||||||||||||||||
|
329
|
42.08 | 0.3 | 340 | 42.08 | 1.3 | 343 | 42.08 | 2.3 | |||||||||||||||||||||||||
|
397
|
45.78 | 1.3 | 412 | 45.78 | 2.3 | 417 | 45.78 | 3.3 | |||||||||||||||||||||||||
|
23
|
52.98 | 0.8 | 23 | 52.98 | 1.8 | 22 | 52.98 | 2.8 | |||||||||||||||||||||||||
|
4,690
|
3,563 | 2,934 | |||||||||||||||||||||||||||||||
|
1)
|
On November 25, 2013, the Company distributed a cash dividend of NIS 0.18 for each ordinary share of NIS 1 par value, in a total amount of approximately $5.9 million.
|
|
2)
|
On December 27, 2011, the Company distributed a cash dividend of NIS 2.83 for each ordinary share of NIS 1 par value, in a total amount of approximately $89 million (of which approximately $1.7 million – to a subsidiary).
|
|
3)
|
On April 12, 2011, the Company distributed a cash dividend of NIS 0.33 for each ordinary share of NIS 1 par value, in a total amount of approximately $11 million (of which approximately $205,000 – to a subsidiary).
|
|
4)
|
As stipulated by the Companies Law, in determining the amount of distributable earnings the amount of Company shares held by the Company (presented as a separate equity item) was deducted from retained earnings reflected in equity.
|
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Electricity:
|
||||||||||||
|
Electricity sales
|
336,945 | 322,606 | 321,164 | |||||||||
|
Derivative contracts to reduce exposure to fluctuations in energy rate
|
(5,017 | ) | 2,238 | — | ||||||||
|
Lease fees
|
2,685 | 2,685 | 2,685 | |||||||||
| 334,616 | 327,529 | 323,849 | ||||||||||
|
Contracted work and sale of products
|
203,492 | 186,879 | 113,160 | |||||||||
|
Royalties
|
— | — | 2,916 | |||||||||
| 538,105 | 514,408 | 439,925 | ||||||||||
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Electricity:
|
||||||||||||
|
Field costs and materials
|
27,073 | 22,196 | 35,429 | |||||||||
|
Payroll and related expenses
|
39,582 | 37,379 | 34,772 | |||||||||
|
Royalties, utilities and lease expenses
|
32,205 | 31,653 | 29,447 | |||||||||
|
Depreciation and amortization
|
84,437 | 91,673 | 86,829 | |||||||||
|
Maintenance
|
30,112 | 31,561 | 31,137 | |||||||||
|
Insurance
|
7,894 | 7,921 | 7,258 | |||||||||
|
Other
|
14,032 | 19,616 | 14,824 | |||||||||
| 235,335 | 241,999 | 239,732 | ||||||||||
|
Products:
|
||||||||||||
|
Materials consumed
|
91,315 | 93,089 | 29,221 | |||||||||
|
Payroll and related expenses
|
22,914 | 20,436 | 21,638 | |||||||||
|
Subcontractors
|
10,252 | 13,967 | 10,053 | |||||||||
|
Depreciation and amortization
|
3,779 | 3,461 | 3,030 | |||||||||
|
Maintenance of buildings and equipment
|
2,512 | 2,874 | 3,621 | |||||||||
|
Traveling
|
2,188 | 1,818 | 2,283 | |||||||||
|
Other manufacturing expenses
|
6,864 | 6,303 | 4,377 | |||||||||
| 139,824 | 141,948 | 74,223 | ||||||||||
|
Decrease (increase) in inventories of own manufacture
|
(1,620 | ) | (8,128 | ) | (3 | ) | ||||||
| 138,204 | 133,820 | 74,220 | ||||||||||
| 373,539 | 375,819 | 313,952 | ||||||||||
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Total expenses
|
6,581 | 6,768 | 9,944 | |||||||||
|
Less – grants and participations
|
(1,616 | ) | (660 | ) | (1,143 | ) | ||||||
| 4,965 | 6,108 | 8,801 | ||||||||||
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Selling and marketing:
|
||||||||||||
|
Payroll and related expenses
|
5,935 | 6,550 | 6,496 | |||||||||
|
Commissions
|
2,670 | 4,250 | 3,617 | |||||||||
|
Travel abroad
|
580 | 865 | 708 | |||||||||
|
Patent registration costs
|
345 | 403 | 413 | |||||||||
|
Public relations and project promotion
|
1,326 | 1,440 | 1,571 | |||||||||
|
Professional consultancy
|
1,421 | 1,549 | 2,562 | |||||||||
|
Termination fees paid in connection with new PPAs*
|
11,618 | |||||||||||
|
Other
|
940 | 1,065 | 840 | |||||||||
| 24,835 | 16,122 | 16,207 | ||||||||||
|
General and administrative:
|
||||||||||||
|
Payroll and related expenses
|
13,387 | 14,253 | 15,155 | |||||||||
|
Professional fees
|
7,523 | 6,559 | 5,162 | |||||||||
|
Insurance
|
1,079 | 1,012 | 1,294 | |||||||||
|
Office maintenance
|
2,319 | 2,290 | 2,542 | |||||||||
|
Depreciation and amortization
|
711 | 766 | 707 | |||||||||
|
Other
|
5,986 | 5,002 | 4,529 | |||||||||
| 31,005 | 29,882 | 29,389 | ||||||||||
|
|
*Selling and marketing expenses for the year ended December 31, 2013 include a one-time early termination fee in the amount of $9.0 million paid to SCE relating to the termination of the PPAs for the G1 and G3 power plants in the Mammoth complex and a $2.6 million termination fee paid to NV Energy related to the termination of the Dixie Meadows PPA.
|
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Interest on deposits and investments in securities
|
1,940 | 1,562 | 3,441 | |||||||||
|
Exchange differences
|
5,266 | 447 | (1,981 | ) | ||||||||
|
Other
|
1,644 | 593 | 1,996 | |||||||||
| 8,850 | 2,602 | 3,456 | ||||||||||
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Interest expense in respect of:
|
||||||||||||
|
Project financing Senior Secured Notes
|
21,713 | 24,494 | 19,344 | |||||||||
|
Project financing loans
|
19,486 | 12,388 | 10,606 | |||||||||
|
Loans and credit lines from institutional investors and banks
|
9,043 | 14,066 | 9,563 | |||||||||
|
Senior unsecured bonds
|
17,672 | 18,287 | 17,148 | |||||||||
|
Asset retirement obligation
|
1,915 | 1,708 | 1,145 | |||||||||
|
Tax partnership
|
13,753 | 6,828 | 7,837 | |||||||||
|
Losses in respect of hedging transactions*
|
— | — | 16,380 | |||||||||
|
Other
|
(270 | ) | ||||||||||
|
Less – borrowing costs capitalized to property, plant and equipment
|
(6,398 | ) | (11,964 | ) | (11,709 | ) | ||||||
| 76,914 | 65,807 | 70,314 | ||||||||||
|
|
* Representing losses relating to two hedging transactions for interest rates on loans in respect of which requests for guarantees have been submitted to the U.S. Department of Energy (DOE), see note 15. The loss in respect of these transactions was charged to income as they do not meet the accounting criteria for recognition as hedging transactions.
|
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Income (loss) attributable to the equity holders of the Company (dollars in thousands)
|
29,495 | (106,848 | ) | (21,799 | ) | |||||||
|
Weighted average number of outstanding ordinary shares (in thousands)
|
116,525 | 116,525 | 116,525 | |||||||||
|
Basic and diluted earnings (loss) per share (dollars)
|
0.25 | (0.92 | ) | (0.19 | ) |
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Agreements with a related party and a company under his control, see (5) below
|
55 | 90 | 83 | |||||||||
|
Year Ended December 31,
|
||||||||||||
|
Interested parties employed by the Company that
|
2013
|
2012
|
2011
|
|||||||||
|
Dollars in thousands
|
||||||||||||
|
Interested parties employed by the Company that are key management personnel, see (4) below
|
1,492 | 632 | 653 | |||||||||
|
Number of recipients
|
3 | 3 | 3 | |||||||||
|
Directors not employed by the Company or on its behalf, see (6) below:
|
121 | 60 | — | |||||||||
|
Number of recipients
|
3 | 3 | — | |||||||||
|
Directors not employed by the Company or on its behalf, see (6) below:
|
267 | 275 | 248 | |||||||||
|
Number of recipients
|
5 | 8 | 6 | |||||||||
|
Directors not employed by the Company or on its behalf, see (6) below:
|
273 | 124 | — | |||||||||
|
Number of recipients
|
2 | 2 | — | |||||||||
|
Directors not employed by the Company or on its behalf, see (6) below:
|
507 | 511 | 489 | |||||||||
|
Number of recipients
|
4 | 6 | 4 | |||||||||
|
Rent, see 7 below
|
1,797 | 1,763 | 1,718 | |||||||||
|
Management fees, see 8 below
|
148 | 146 | 143 |
|
a.
|
Mrs. Yehudit Bronicki serves as the CEO of Ormat Technologies and its wholly-owned subsidiary Ormat Systems Ltd. and Mr. Yehuda Bronicki serves as the Chief Technology Officer of Ormat Technologies. Under their employment agreements, which expired on June 30, 2014, the monthly salary of Mrs. Bronicki is $12,500, and of Mr. Yehuda Bronicki – $10,333. Moreover, each of them is entitled to an annual bonus representing 0.75% of Ormat Technologies net income in excess of $2 million of Ormat Technologies (but not more than an amount equal to six monthly salaries each), as well as the usual social benefits. In addition, in the event of change of control in Ormat Technologies (as defined in the employment agreements), Ms. Yehudit Bronicki and Mr. Yehuda Bronicki are entitled to a retirement grant in an amount of $1,602,000 and 1,364,000, respectively, calculated as of December
31, 2013, which is equal to their monthly salaries at the time of transfer of control, including any salary increases thereafter, multiplied by 24, with the addition of twice the average amount of their annual bonuses for the two years preceding the transfer of control.
|
|
The agreements were approved by the general shareholders meeting of the Company on September 8, 2004, after approval of the audit committee and board of directors of the Company, before Ormat Technologies went public. The agreements were for a four year period, with an extension option for another four years, ending June 30, 2012. On February 22, 2012, the board of directors of Ormat Technologies approved the extension of the employment agreements for a further 24-month period ending June 30, 2014. Based on legal advice obtained by the
Company, in the context of Amendment 16 to the Companies Law, the Company’s approval of the agreements of Ormat Technologies with the Bronickis is not required, because Ormat Technologies is an American public company subject to specific regulatory procedures relating to approval of agreements with its office-holders. The original agreements with the Bronickis stipulated that they were also entitled to receive a bonus equal to 0.75% of the consolidated profits of the Company after tax, net of the consolidated profits of Ormat Technologies after tax. Nevertheless, taking into account the said Amendment 16, the Company is not allowed to pay this grant to either of the Bronickis, without
the approval of an extraordinary general shareholders meeting, with the majority stipulated in section 275 of the Companies Law.
|
||||
| On November 6, 2013, Ms. and Mr. Bronicki announced that they intended to retire from their offices as above on June 30, 2014. The board of directors of the Company has resolved to appoint Ms. Bronicki as its chaiperson upon her retirement from her current position, and the present chairman, Mr. Ishay Davidi, announced that he would retire from his position and continue serve as a director. | ||||
| The Bronickis have a personal interest in these agreements since they are parties to the agreements. Other Bronicki family members may be considered as having personal interest in these agreements due to their family ties with Ms. and Mr. Bronicki. Bronicki Investments Ltd. may be considered as having a personal interest in those agreements since it is controlled by the Bronicki family and Fimi fund may be considered as having a personal interest due to the shareholders’ agreement with Bronicki Investments. | ||||
|
b.
|
Mr. Yoram Bronicki (“Yoram”), serves as the President and Chief Operating Officer of Ormat Technologies. Under Yoram’s employment agreement, expiring June 30, 2014, his salary is $14,000 per month, and he is entitled to an annual bonus representing 0.75% of Ormat Technologies net consolidated income in excess of $2 million (but not in excess of an amount equal to six annual salaries). Capital gains or losses on dilution of holdings in subsidiaries shall not be taken into account in the calculation of the bonus. In addition, in the event of change of control in Ormat Technologies (as defined in his agreement), Yoram is entitled to a retirement grant in the amount of approximately $1,069,000 calculated as of December
31, 2013, which is equal to Yoram’s monthly salary at the time of transfer of control, including any salary increases thereafter, multiplied by 24, with the addition of twice the average amount of his annual bonuses for the two years preceding the transfer of control; in addition to the above, he is entitled to twice the computed maximum amount of the annual contributions of Ormat Technologies towards his pension. Yoram’s employment agreement came into force on July 1, 2004 and has been automatically extended for additional two year periods. The employment agreement was approved by the general shareholders meetings of the Company held on September 8, 2004 and on September 15, 2009, after approvals of the audit committee and the board
of directors of the Company. The agreement have since been automatically renewed for further two year periods expiring June 30, 2014, as stated above. As to legal advice obtained by the Company, in the context of Amendment 16 to the Companies Law, the Company’s approval of the agreements of Ormat Technologies with the Bronickis is not required, see a. above.
|
|
In December 2013, Ormat Technologies and Yoram entered into an amended employment agreement, whereunder his employment with Ormat has been extended till June 30, 2016, effective June 30, 2014 he will retire from his office as its COO and as of July 2014 will be appointed the Chairman of its board of directors. The amendment stipulates that Yoram must devote most of his time to his duties with Ormat Technologies and reduces his annual bonus from 0.75% of Ormat Technologies net consolidated income in excess of $2 million (but not in excess of an amount equal to six annual salaries) to 0.5% of the said amount. Since the agreement enters into effect on June 30, 2014, the reduction does not apply to Yoram’s 2013 bonus.
|
||||
|
Yoram has a personal interest in the employment agreement since he is party to the agreement. Other Bronicki family members may be considered as having personal interest in this agreement due to the family ties. Bronicki Investments Ltd. may be considered as having a personal interest in those agreements since it is controlled by the Bronicki family and Fimi fund may be considered as having a personal interest due to the shareholders’ agreement with Bronicki Investments.
|
||||
|
5)
|
Agreements with an interested party and companies under his control:
|
|||
|
a.
|
Mr. Yuval Bronicki (“Yuval”) provides consulting, development and implementation services with respect to the Group’s exclusive ERP software (hereafter – software development and assimilation services). Yuval is entitled hourly pay of $100.
|
|||
|
On July 16, 2008, following the approval of the audit committee and the board of directors of the Company, the general shareholders meeting approved the extension of scope of the engagement entered with Yuval for a limited number of hours. On August 3, 2011, the audit committee of Ormat Technologies approved the extension of the agreement with Yuval without any limitation on the number of hours, since the Group had submitted requests for development of additional modules for the ERP system. Moreover, it was decided that the agreement would be between Ormat Technologies and a company controlled by Yuval. Based on legal advice obtained by the Company,
the Company’s approval of the agreements of Ormat Technologies is not required, because Ormat Technologies is an American public company subject to specific regulatory procedures relating to approval of agreements with its office-holders who, indirectly, are its controlling shareholders.
|
||||
|
Yuval has a personal interest in the employment agreement since he is party to the agreement and other Bronicki family members may be considered as having personal interest in this agreement due to the family ties. Bronicki Investments Ltd. may be considered as having a personal interest in those agreements since it is controlled by the Bronicki family and Fimi fund may be considered as having a personal interest due to the shareholders’ agreement with Bronicki Investments.
|
||||
|
b.
|
Ormat Systems, a wholly owned subsidiary of Ormat Technologies, entered into an agreement with Tersus Software Ltd. (“Tersus”), in which Yuval is an interested party, whereunder Tersus provides support and maintenance services with respect to the Group’s ERP software which is being developed by Yuval (through Tersus) and others, see a. above. Yuval holds approximately 40% of the outstanding share capital of Tersus and serves as a director and an employee thereof. The engagement was approved by the general shareholders meeting of the Company, held on September 30, 2009, after the approval of the audit committee and the board of directors of the Company. In addition, the shareholders
approved the new rate for Tersus’ support and maintenance services, so that, commencing October 1, 2009, Tersus provides the said services in consideration for an annual amount of up to NIS 120,000 (NIS 220 per hour). This consideration is linked to the last Israeli consumer price index published before October 1, 2009. As to legal advice obtained by the Company, in the context of Amendment 16 to the Companies Law, the Company is not required to request approval of the agreements of Ormat Technologies, see a. above.
|
|||
|
Yuval has a personal interest in the employment agreement since he is party to the agreement and other Bronicki family members may be considered as having personal interest in this agreement due to the family ties. Bronicki Investments Ltd. may be considered as having a personal interest in those agreements since it is controlled by the Bronicki family and Fimi fund may be considered as having a personal interest due to the shareholders’ agreement with Bronicki Investments.
|
||||
|
c.
|
In the years ended December 31, 2013, 2012 and 2011, $15,000, $51,000 and $54,000, respectively, were paid to Yuval, and/or Tersus and/or a company controlled by Yuval related to the agreements mentioned in a. and b. above.
|
|||
|
6)
|
Compensation to directors who are controlling shareholders:
|
|||
|
a.
|
Yuval serves as a director of the Company and is entitled to annual compensation and a participation pay at the maximum amount set under the directives of the Companies Regulations (Rules Regarding Compensation and Expenses for Outside Directors), 2000. Such compensation was approved for all board of directors’ members (except for Yehudit Bronicki, Yehuda Bronicki and Yoram Bronicki) by the audit committee and the board of directors on May 18, 2008. Yuval’s compensation was approved in accordance with Regulation 1b(3) of the Companies Regulations (Reliefs in Transactions with Interested Parties), 2000. Yuval’ compensation was ratified again on December
11, 2012, in the context of Amendment 16 to the Companies Law.
|
|||
|
Yuval has a personal interest in that decision since it deals with his compensation by the Company. Other Bronicki family members may be considered as having personal interest due to the family ties. Fimi fund is considered as having a personal interest due to the shareholders’ agreement with Bronicki Investments.
|
||||
|
b.
|
Mr. Ishay Davidi and Mr. Gillon Beck, who are partners in Fimi fund which is a controlling shareholder of the Company, and who serve as directors of the Company, are entitled to annual compensation and participation pay at the maximum amount pay set under the directives of the Companies Regulations (Rules Regarding Compensation and Expenses for Outside Directors), 2000. Such compensation was approved by the audit committee and the board of directors on March 26, 2012 and on April 1, 2012, respectively. The compensation was approved in accordance to regulation 1b(3) to the Companies Regulations (Reliefs
in Transactions with Interested Parties) -2000.
|
|||
|
FIMI fund is considered as having a personal interest in the decision since it is managed by Mr. Davidi and by Mr. Beck who are partners in the FIMI fund. Bronicki family members are considered as having personal interest due to the shareholders’ agreement with FIMI fund.
|
||||
|
7)
|
Rent
|
|||
| In July 2004, the Company and Ormat Systems, a subsidiary of Ormat Technologies, entered into a sublease agreement for the real estate located in Yavne, for a monthly rent of $52,000, payable in advance and adjusted annually for changes in the Israeli Consumer Price Index. The agreement period is the shorter of (a) 25 years (including the initial term) or (b) the remaining period of the underlying lease agreements with the Israel Land Administration (which terminate between 2018 and 2047). | ||||
| Effective as of April 1, 2009, the Company and Ormat Systems entered into a new sublease agreement for production facilities built near the existing production facilities in Yavne. The monthly rent under this agreement is $77,000, payable in advance and adjusted annually for changes in the Israeli Consumer Price Index. The term of the sublease terminates on the same date as the sublease agreement of July 2004. | ||||
|
8)
|
Management fees
|
|||
| In July 2004, the Company entered into a service agreement with Ormat Systems, pursuant to which Ormat Systems provides certain corporate administrative services to the Company, for a monthly fee of $10,000 (adjusted annually, in part based on changes in the Israeli Consumer Price Index). In addition, Ormat Systems agreed to provide the Company with certain engineering services for a fee equal to the cost of such services plus 10.0%. The agreements can be cancelled by each of the parties. | ||||
|
9)
|
Ormat Systems agreements with companies controlled by FIMI
|
|||
| Ormat Systems performs or may execute transactions in its ordinary course of business with companies controlled by FIMI. Such engagements are carried out within the framework of the procedure adopted by Ormat Technologies in July 2012. In accordance with the adopted procedure, Ormat Systems may enter during normal business transactions with any of the companies controlled by FIMI, without getting approval from the organs of Ormat Technologies in respect to any individual transaction, up to the amounts that will be determined by the Audit Committee of Ormat Technologies (hereinafter “The amounts approved”). In this regard, the Audit Committee of Ormat Technologies determined that such transactions of up to $2 million in a year with each of the companies controlled by FIMI do not require prior approval for agreements. This mechanism established under the working assumption that: (1) engagements are performed in the ordinary course of the Group; and (2) such transactions were carried out with the aforementioned companies before becoming FIMI controlling shareholder of the Group. In addition, the Audit Committee of Ormat Technologies will audit once a year, the business relationship of Ormat Systems with companies controlled by FIMI (based on report of the Disclosure Committee of Ormat Technologies, see below) and determine whether the business relationship is in favor of Ormat Technologies and its shareholders and whether the agreements are carried at market terms and in the ordinary course of business. Further, it was decided that engagements which exceed the amounts approved will require the prior approval of the Audit Committee of Ormat Technologies regarding the amount in excess of the approved amount. In addition, an annual report will be submited by the Disclosure Committee of Ormat Technologies summarizes the amount of purchase orders over a period of 12 months, together with a copy of the engagements (if any) made by Ormat Systems with companies controlled by FIMI during the past year. | ||||
|
b.
|
Balances of interested parties who are key managerial employees of the Group
|
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
Current liabilities – remuneration and grants
|
920 | 37 | ||||||
|
c.
|
Continuing agreement with an interested party at different terms
|
|||
|
As mentioned above, in December 2013, Ormat Technologies and Yoram entered into an amended employment agreement. Under that agreement, Yoram’s annual bonus was reduced from 0.75% of Ormat Technologies net consolidated income in excess of $2 million (but not in excess of an amount equal to six annual salaries) to 0.5% of the amount stipulated by the previous agreement.
|
||||
|
Since in 2011 and 2012 Ormat Technologies did not derive consolidated profit, Yoram did not receive his annual bonus, so that the change did not affect the amounts that would have been payable under the agreement in effect prior to the amendment. The effect thereof for 2013 was reducing the bonus paid by approximately $100,000.
|
||||
|
NOTE 31 – SEGMENT INFORMATION:
|
||||
|
The Group has defined the Chief Executive Officer of the subsidiary, Ormat Technologies, Inc., who manages the Group and makes its strategic decisions, as the Group’s Chief operating decision maker. The chief operating decision maker reviews the Group’s internal reports for the purpose of evaluating performance and allocating resources. Management has defined the business segments based on those reports.
|
||||
|
Operating results reviewed by the chief operating decision maker are based on the financial statements of Ormat Technologies, presented in conformity with the accounting principles generally accepted in the United States. The chief operating decision maker examines each segment’s performance based on measurement of its operating profit.
|
|||
| a. |
General business segment information:
|
||
|
The Group is engaged mainly in the following business segments, which are reported to management for decision-making purposes:
|
|||
|
Electricity
|
-
|
This segment is engaged in the maintenance and operation of wholly or partly owned geothermal and recovered energy power plants in the international market, to produce and supply electricity they produce for customers, which are utilities, according to PPAs.
|
|
Product
|
-
|
This segment is engaged in the manufacture, including design and development, of turbines and power units for the supply of electrical energy and in the construction of power plants to supply energy from geothermal fields and other alternative energy sources.
|
|
Transfer prices between the operating segments are determined on current market values or cost plus markup of the seller’s business segment. Segment assets include power plants, other property, plant and equipment, geothermal resources exploration and evaluation costs, inventories and accounts receivable.
|
||
|
Segment assets also include deferred tax assets, while segment operating results do not reflect the tax effect.
|
|
Segment data in the consolidated financial statements:
|
|
Year Ended December 31, 2013
|
||||||||||||||||
|
Electricity
|
Product
|
Adjustments
(1)
|
Consolidated
|
|||||||||||||
| Dollars in thousands | ||||||||||||||||
|
Statement of operations data:
|
||||||||||||||||
|
External revenues
|
329,747 | 203,492 | 4,866 | 538,105 | ||||||||||||
|
Intersegment revenues
|
— | 37,248 | (37,248 | ) | — | |||||||||||
|
Total revenues
|
329,747 | 240,740 | (32,382 | ) | 538,105 | |||||||||||
|
Segment results
|
54,265 | 42,693 | 12,364 | 109,322 | ||||||||||||
|
Expenses not allocated to segments
|
(1,617 | ) | ||||||||||||||
|
Other gains – net
|
12,444 | |||||||||||||||
|
Income from operations
|
120,149 | |||||||||||||||
|
Financial expenses
|
(76,914 | ) | ||||||||||||||
|
Income before taxes on income
|
43,235 | |||||||||||||||
|
Other data:
|
||||||||||||||||
|
Segment assets
|
2,017,838 | 141,595 | (22,519 | ) | 2,136,914 | |||||||||||
|
Depreciation and amortization
|
88,853 | 4,079 | (4,201 | ) | 88,731 | |||||||||||
|
Reduction in loss from impairment
|
— | — | (8,038 | ) | (8,038 | ) | ||||||||||
| 88,853 | 4,079 | (12,239 | ) | 80,693 | ||||||||||||
|
Income tax benefit (tax provision)
|
(6,980 | ) | (6,572 | ) | 19,967 | 6,415 | ||||||||||
|
Cost of acquisition and construction of long-lived assets (capital expenditures)
|
203,047 | 1,581 | 3,469 | 208,097 | ||||||||||||
|
Year Ended December 31, 2012
|
||||||||||||||||
|
Electricity
|
Product
|
Adjustments (1)
|
Consolidated
|
|||||||||||||
|
Dollars in thousands
|
||||||||||||||||
|
Statement of operations data:
|
||||||||||||||||
|
External revenues
|
314,892 | 186,879 | 12,637 | 514,408 | ||||||||||||
|
Intersegment revenues
|
— | 48,315 | (48,315 | ) | — | |||||||||||
|
Total revenues
|
314,892 | 235,194 | (35,678 | ) | 514,408 | |||||||||||
|
Segment results
|
(189,458 | ) | 30,279 | 72,681 | (86,498 | ) | ||||||||||
|
Expenses not allocated to segments
|
(1,592 | ) | ||||||||||||||
|
Other losses – net
|
3,591 | |||||||||||||||
|
Loss from operations
|
(84,499 | ) | ||||||||||||||
|
Financial expenses
|
(65,807 | ) | ||||||||||||||
|
Share in losses of associated companies
|
(2,522 | ) | ||||||||||||||
|
Pre-tax loss
|
(152,828 | ) | ||||||||||||||
|
Other data:
|
||||||||||||||||
|
|
|
|
|
|||||||||||||
|
Segment assets
|
*1,990,490 | 97,033 | (14,105 | ) | 2,073,418 | |||||||||||
|
Depreciation and amortization
|
95,927 | 3,557 | (3,399 | ) | 96,085 | |||||||||||
|
Impairment
|
257,965 | — | (86,037 | ) | 171,928 | |||||||||||
| 353,892 | 3,557 | (89,436 | ) | 268,013 | ||||||||||||
|
Income tax benefit (tax provision)
|
*2,412 | (5,994 | ) | (20,914 | ) | (24,496 | ) | |||||||||
|
Cost of acquisition and construction of long-lived assets (capital expenditures)
|
228,289 | 4,731 | 10 | 233,030 | ||||||||||||
|
Year Ended December 31, 2011
|
||||||||||||||||
|
Electricity
|
Product | Adjustments (1) | Consolidated | |||||||||||||
| Dollars in thousands | ||||||||||||||||
|
Statement of operations data:
|
||||||||||||||||
|
External revenues
|
312,296 | 113,160 | 14,469 | 439,925 | ||||||||||||
|
Intersegment revenues
|
— | 80,712 | (80,712 | ) | — | |||||||||||
|
Total revenues
|
312,296 | 193,872 | (66,243 | ) | 439,925 | |||||||||||
|
Segment results
|
42,686 | 18,869 | 11,495 | 73,050 | ||||||||||||
|
Expenses not allocated to segments
|
(1,474 | ) | ||||||||||||||
|
Other losses – net
|
(5,922 | ) | ||||||||||||||
|
Income from operations
|
65,654 | |||||||||||||||
|
Financial expenses
|
(70,314 | ) | ||||||||||||||
|
Share in losses of associated companies
|
(959 | ) | ||||||||||||||
|
Pre-tax loss
|
(5,619 | ) | ||||||||||||||
|
Other data:
|
||||||||||||||||
|
|
|
|
|
|||||||||||||
|
Segment assets
|
2,222,836 | 91,882 | (61,027 | ) | 2,253,691 | |||||||||||
|
Depreciation and amortization
|
90,464 | 3,070 | (2,360 | ) | 91,174 | |||||||||||
|
Impairment
|
— | — | 5,549 | 5,549 | ||||||||||||
| 90,464 | 3,070 | 3,189 | 96,723 | |||||||||||||
|
Income tax benefit (tax provision)
|
(39,356 | ) | (7,915 | ) | 15,231 | (32,040 | ) | |||||||||
|
Cost of acquisition and construction of long-lived assets (capital expenditures)
|
266,258 | 3,419 | 2,315 | 271,992 | ||||||||||||
|
Investments recorded by the straight-line method
|
— | 1,542 | — | 3,793 | ||||||||||||
|
(1)
|
The adjustments include the differences between International Financial Reporting Standards and U.S. GAAP, as well as group activities not carried out by Ormat Technologies (subsidiary).
|
| b. |
Supplementary information on geographical segments:
|
|
USA
|
-
|
Product and geothermal and recovered energy power plants.
|
|
|
New Zealand
|
-
|
Product and geothermal power plants.
|
|
|
Latin America
|
-
|
Product and geothermal power plants.
|
|
|
Far East
|
-
|
Product.
|
|
|
Africa
|
-
|
Geothermal power plants.
|
|
|
Europe
|
-
|
Product
|
|
|
Israel
|
-
|
Product.
|
|
Year Ended December 31,
|
||||||||||||
|
2012
|
2011
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
USA
|
314,666 | 271,845 | 257,181 | |||||||||
|
New Zealand
|
20,082 | 109,177 | 32,174 | |||||||||
|
Europe
|
97,284 | 49,852 | 61,970 | |||||||||
|
Africa
|
68,746 | 40,885 | 36,307 | |||||||||
|
Latin America
|
26,745 | 40,574 | 38,930 | |||||||||
|
Far East
|
10,582 | 2,075 | 13,363 | |||||||||
|
Total
|
538,105 | 514,408 | 439,925 | |||||||||
|
Non-current assets
|
||||||||
|
2012
|
||||||||
|
Dollars in thousands
|
||||||||
|
USA
|
1,352,691 | 1,338,088 | ||||||
|
Africa
|
330,499 | 266,427 | ||||||
|
Latin America
|
63,372 | 66,693 | ||||||
|
New Zealand and Far East
|
671 | 210 | ||||||
|
Total abroad
|
1,747,233 | 1,671,418 | ||||||
|
Israel
|
25,151 | 27,031 | ||||||
|
Total
|
1,772,384 | 1,698,449 | ||||||
|
c.
|
Major customers:
|
|
Year Ended December 31,
|
||||||||||||||||||||||||
|
2012
|
2011
|
|||||||||||||||||||||||
|
%
|
Dollars in thousands
|
%
|
Dollars in thousands
|
%
|
Dollars in thousands
|
|||||||||||||||||||
|
1) Revenues:
|
||||||||||||||||||||||||
|
Customer A (1)
|
14 | 75,562 | 18 | 90,239 | 28 | 121,049 | ||||||||||||||||||
|
Customer B (1)
|
9 | 48,825 | 9 | 48,606 | 10 | 46,432 | ||||||||||||||||||
|
Customer C (1)
|
17 | 94,111 | 15 | 78,631 | 13 | 56,778 | ||||||||||||||||||
|
Customer D (2)
|
4 | 19,174 | 19 | 99,617 | 5 | 19,956 | ||||||||||||||||||
|
Customer E (1)
|
11 | 61,876 | 8 | 40,887 | 8 | 35,179 | ||||||||||||||||||
| 55 | 299,548 | 69 | 357,980 | 64 | 279,394 | |||||||||||||||||||
|
Customer A (1)
|
6 | 5,486 | 10 | 5,304 | ||||||||||||||||||||
|
Customer B (1)
|
5 | 4,475 | 6 | 3,611 | ||||||||||||||||||||
|
Customer C (1)
|
9 | 8,987 | 16 | 9,098 | ||||||||||||||||||||
|
Customer D (2)
|
1 | 1,366 | — | — | ||||||||||||||||||||
|
Customer E (1)
|
15 | 13,959 | 13 | 7,126 | ||||||||||||||||||||
| 36 | 34,273 | 45 | 25,139 | |||||||||||||||||||||
|
Year Ended December 31,
|
||||||||||||
|
2011
|
2010
|
|||||||||||
|
Dollars in thousands
|
||||||||||||
|
Increase (decrease) in suppliers’ credit received for acquisition of power plants and fixed assets
|
4,372 | (18,813 | ) | 13,117 | ||||||||
|
Increase (decrease) in cost of power plants as a result of adjustment of provisions for asset retirement obligation
|
(12,481 | ) | (9,275 | ) | 21,368 | |||||||
|
Page
|
||
|
Consolidated Financial Statements - in U.S. dollars ($):
|
||
|
C-2 – C-3
|
||
|
C-4
|
||
|
C-5
|
||
|
C-6 – C-8
|
||
|
C-9 – C-10
|
||
|
C-11 – C-21
|
|
September 30,
|
||||||||||||
|
2013
|
2013
|
|||||||||||
|
(Unaudited)
|
(Audited)
|
|||||||||||
| (Dollars in thousands) | ||||||||||||
|
Assets
|
||||||||||||
|
Current assets:
|
||||||||||||
|
Cash and cash equivalents
|
46,710 | 38,128 | 57,908 | |||||||||
|
Restricted cash, cash equivalents and deposits
|
127,452 | 84,197 | 51,065 | |||||||||
|
Financial assets at fair value through profit and loss
|
10,972 | 17,868 | 15,433 | |||||||||
|
Derivatives
|
1,637 | 4,447 | 2,290 | |||||||||
|
Accounts receivable:
|
||||||||||||
|
Trade
|
75,224 | 60,526 | 95,365 | |||||||||
|
Income taxes receivable
|
6,064 | 10,524 | 4,001 | |||||||||
|
Other
|
42,497 | 47,565 | 34,854 | |||||||||
|
Receivables in respect of uncompleted contracts
|
14,784 | 36,201 | 21,217 | |||||||||
|
Inventories
|
17,337 | 20,396 | 22,289 | |||||||||
|
Total current assets
|
342,677 | 319,852 | 304,422 | |||||||||
|
Non-current assets:
|
||||||||||||
|
Long-term receivables in respect of uncompleted contracts
|
— | 9,289 | — | |||||||||
|
Financial assets at fair value through profit and loss
|
251 | 251 | 251 | |||||||||
|
Prepaid expenses in respect of operating lease
|
2,444 | 2,628 | 2,582 | |||||||||
|
Financial asset in respoct of concession agreement
|
23,591 | |||||||||||
|
Power plants and other assets:
|
||||||||||||
|
Power plants and other fixed assets
|
1,456,627 | 1,373,612 | 1,440,388 | |||||||||
|
Power plants under construction
|
200,977 | 270,378 | 226,562 | |||||||||
|
Projects under exploration and development
|
67,372 | 70,956 | 69,639 | |||||||||
|
Intangible assets
|
32,172 | 33,965 | 33,213 | |||||||||
|
Non-current receivables
|
5,632 | 2,655 | 2,541 | |||||||||
|
Deferred income taxes
|
57,225 | 66,956 | 57,316 | |||||||||
|
Total non-current assets
|
1,846,291 | 1,830,690 | 1,832,492 | |||||||||
|
Total assets
|
$ | 2,188,968 | $ | 2,150,542 | $ | 2,136,914 | ||||||
|
Yehudit Bronicki
|
Doron Blachar
|
|||||
|
Chairman of the Board
|
Chief Executive Officer
|
Chief Financial
|
||||
|
of Directors
|
Officer
|
|
September 30,
|
||||||||||||
|
2013
|
2013
|
|||||||||||
|
(Dollars in thousands)
|
||||||||||||
|
Liability and equity
|
||||||||||||
|
Current liabilities:
|
||||||||||||
|
Current maturities of notes and long-term loans
|
73,322 | 77,222 | 80,389 | |||||||||
|
Accounts payable and accruals:
|
||||||||||||
|
Trade
|
30,152 | 41,005 | 49,660 | |||||||||
|
Income taxes payable
|
4,335 | 4,589 | 3,081 | |||||||||
|
Accrued expenses
|
981 | 982 | 969 | |||||||||
|
Customers advances
|
3,946 | 6,347 | 6,410 | |||||||||
|
Other
|
43,468 | 35,352 | 38,307 | |||||||||
|
Derivatives
|
2,183 | — | 2,831 | |||||||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
45,310 | 12,708 | 7,903 | |||||||||
|
Total current liabilities
|
203,697 | 178,205 | 189,550 | |||||||||
|
Long-term liabilities:
|
||||||||||||
|
Project financing liabilities (limited and non-recourse):
|
||||||||||||
|
Senior securred notes
|
366,667 | 274,508 | 258,492 | |||||||||
|
Other
|
278,818 | 264,528 | 301,909 | |||||||||
|
Senior secured notes, loans and credit (full recourse):
|
||||||||||||
|
Senior unsecured bonds
|
249,679 | 249,561 | 249,612 | |||||||||
|
Loans
|
40,282 | 64,359 | 53,443 | |||||||||
|
Credit from banks
|
28,100 | 123,288 | 112,017 | |||||||||
|
Long term derivative
|
5,158 | — | — | |||||||||
|
Liability in respect of tax partnership
|
54,900 | 73,646 | 69,557 | |||||||||
|
Deferred lease income
|
61,294 | 64,217 | 63,496 | |||||||||
|
Deferred income taxes
|
61,339 | 67,810 | 49,745 | |||||||||
|
Retirement benefit obligations, net
|
4,001 | 3,976 | 3,661 | |||||||||
|
Provisions and other liabilities
|
61,267 | 54,989 | 50,978 | |||||||||
|
Total long-term liabilities
|
1,211,505 | 1,240,882 | 1,212,910 | |||||||||
|
Total Liabilities
|
1,415,202 | 1,419,087 | 1,402,460 | |||||||||
|
Equity:
|
||||||||||||
|
Equity holders of the Parent Company:
|
||||||||||||
|
Ordinary shares
|
38,374 | 38,374 | 38,374 | |||||||||
|
Additional paid-in capital
|
162,433 | 162,433 | 162,433 | |||||||||
|
Other capital surplus
|
(18,961 | ) | (15,319 | ) | (15,378 | ) | ||||||
|
Retained earnings
|
265,527 | 243,949 | 242,267 | |||||||||
|
Less- cost of Company shares held by the Company
|
(2,826 | ) | (2,826 | ) | (2,826 | ) | ||||||
|
Total equity holders of the Parent Company
|
444,547 | 426,611 | 424,870 | |||||||||
|
Noncontrolling interest
|
329,219 | 304,844 | 309,584 | |||||||||
|
Total equity
|
773,766 | 731,455 | 734,454 | |||||||||
|
Total liabilities and equity
|
2,188,968 | 2,150,542 | 2,136,914 | |||||||||
|
Nine Months Ended
|
Three Months Ended
|
Year ended
|
||||||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||||||
|
2013
|
2014
|
2013
|
2013
|
|||||||||||||||||
| Dollars in thousands | ||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||
|
Electricity
|
289,015 | 249,871 | 102,506 | 88,994 | 334,613 | |||||||||||||||
|
Product
|
141,766 | 157,329 | 38,983 | 41,755 | 203,492 | |||||||||||||||
|
Total revenues
|
430,781 | 407,200 | 141,489 | 130,749 | 538,105 | |||||||||||||||
|
Cost of revenues:
|
||||||||||||||||||||
|
Electricity
|
184,523 | 177,070 | 61,242 | 60,567 | 235,335 | |||||||||||||||
|
Product
|
93,778 | 107,893 | 23,871 | 28,575 | 138,204 | |||||||||||||||
|
Total cost of revenues
|
278,301 | 284,963 | 85,113 | 89,142 | 373,539 | |||||||||||||||
|
Gross profit
|
152,480 | 122,237 | 56,376 | 41,607 | 164,566 | |||||||||||||||
|
Research and development expenses-net
|
(395 | ) | (3,446 | ) | (250 | ) | (838 | ) | (4,965 | ) | ||||||||||
|
Selling and marketing expenses
|
(10,861 | ) | (18,054 | ) | (4,266 | ) | (2,575 | ) | (24,835 | ) | ||||||||||
|
General and administrative expenses
|
(22,529 | ) | (21,604 | ) | (7,831 | ) | (7,022 | ) | (31,005 | ) | ||||||||||
|
Write-off of unsuccessful exploration activities
|
(8,107 | ) | — | — | — | (4,094 | ) | |||||||||||||
|
Impairement of power plants-net
|
— | 8,038 | — | 8,038 | 8,038 | |||||||||||||||
|
Other gains (losses)-net:
|
||||||||||||||||||||
|
On disposal and decrease in value of financial assets
|
(222 | ) | (588 | ) | (155 | ) | (34 | ) | (636 | ) | ||||||||||
|
Gain from sale of investment in subsidiary
|
— | 4,230 | — | — | 4,230 | |||||||||||||||
|
Gain from sale of power plant
|
7,628 | — | — | — | — | |||||||||||||||
|
Sundry
|
(2,759 | ) | 6,674 | (2,457 | ) | 2,205 | 8,850 | |||||||||||||
|
Income (loss) from operations
|
115,235 | 97,487 | 41,417 | 41,381 | 120,149 | |||||||||||||||
|
Financial expenses
|
(65,169 | ) | (54,522 | ) | (22,568 | ) | (19,011 | ) | (76,914 | ) | ||||||||||
|
Income (loss) before income taxes
|
50,066 | 42,965 | 18,849 | 22,370 | 43,235 | |||||||||||||||
|
Income tax benefit
|
(266 | ) | (551 | ) | (2,008 | ) | (1,133 | ) | 6,415 | |||||||||||
|
Income (loss) for the period
|
49,800 | 42,414 | 16,841 | 21,237 | 49,650 | |||||||||||||||
|
Attributable to:
|
||||||||||||||||||||
|
Equity holders of the Parent Company
|
29,303 | 25,524 | 9,852 | 12,578 | 29,495 | |||||||||||||||
|
Noncontrolling interest
|
20,497 | 16,890 | 6,989 | 8,659 | 20,155 | |||||||||||||||
|
Total
|
49,800 | 42,414 | 16,841 | 21,237 | 49,650 | |||||||||||||||
| Dollars | ||||||||||||||||||||
|
Earnings (loss) per share attributable to equity holders of the Parent Company -
|
||||||||||||||||||||
|
basic and fully diluted
|
0.25 | 0.22 | 0.08 | 0.11 | 0.25 | |||||||||||||||
|
Weighted average number of shares used in computation of per-share data -
|
||||||||||||||||||||
|
basic and fully diluted (in thousands)
|
116,525 | 116,525 | 116,525 | 116,525 | 116,525 | |||||||||||||||
|
Nine Months Ended
|
Three Months Ended
|
Year ended
|
||||||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||||||
|
2013
|
2014
|
2013
|
2013
|
|||||||||||||||||
| Dollars in thousands | ||||||||||||||||||||
|
Income (loss) for the period
|
49,800 | 42,414 | 16,841 | 21,237 | 49,650 | |||||||||||||||
|
Other comprehensive income:
|
||||||||||||||||||||
|
Items that will not be reclassified to profit or loss- remeasurement of retirement benefit obligations
|
— | — | — | — | 520 | |||||||||||||||
| — | — | — | — | 520 | ||||||||||||||||
|
|
||||||||||||||||||||
|
Items that may be subsequently reclassified to profit or loss- in respect of cash flow hedges
|
(6,197 | ) | (124 | ) | (2,037 | ) | (40 | ) | (164 | ) | ||||||||||
|
Total other comprehensive income (loss), net of tax
|
(6,197 | ) | (124 | ) | (2,037 | ) | (40 | ) | 356 | |||||||||||
|
Total other comprehensive income (loss) for the period
|
43,603 | 42,290 | 14,804 | 21,197 | 50,006 | |||||||||||||||
|
Attributable to:
|
||||||||||||||||||||
|
Equity holders of the Parent Company
|
25,599 | 25,450 | 8,635 | 12,554 | 29,708 | |||||||||||||||
|
Noncontrolling interest
|
18,004 | 16,840 | 6,169 | 8,643 | 20,298 | |||||||||||||||
|
Total
|
43,603 | 42,290 | 14,804 | 21,197 | 50,006 | |||||||||||||||
| Equity holderes of the Parent Company | ||||||||||||||||||||||||||||||||||||
| Other capital surplus | ||||||||||||||||||||||||||||||||||||
|
In respect of
|
||||||||||||||||||||||||||||||||||||
|
transactions with
|
||||||||||||||||||||||||||||||||||||
|
Additional
|
In respect of
|
noncontrolling
|
Cost of Company
|
|||||||||||||||||||||||||||||||||
|
Ordinary
|
Paid-in
|
cash flow
|
interests without
|
Retained
|
shares held by
|
Noncontroling
|
||||||||||||||||||||||||||||||
|
shares
|
Capital
|
hedges
|
losing control
|
earnings
|
Total
|
interests
|
Total
|
|||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
|
Balance at January 1, 2014
|
38,374 | 162,433 | 285 | (15,663 | ) | 242,267 | (2,826 | ) | 424,870 | 309,584 | 734,454 | |||||||||||||||||||||||||
|
Changes during the period:
|
||||||||||||||||||||||||||||||||||||
|
Profit for the period
|
— | — | — | — | 29,303 | — | 29,303 | 20,497 | 49,800 | |||||||||||||||||||||||||||
|
Comprehensive income (loss)
for the period |
— | — | (3,704 | ) | — | — | — | (3,704 | ) | (2,493 | ) | (6,197 | ) | |||||||||||||||||||||||
|
Share-based payment
|
— | — | — | — | — | — | — | 4,510 | 4,510 | |||||||||||||||||||||||||||
|
Exercise of options in the subsidiary
|
— | — | — | 26 | — | — | 26 | 863 | 889 | |||||||||||||||||||||||||||
|
Purchase of non controlling interests
|
95 | — | — | 95 | (923 | ) | (828 | ) | ||||||||||||||||||||||||||||
|
Increase in noncontroling rights
|
— | — | — | — | — | — | — | 257 | 257 | |||||||||||||||||||||||||||
|
Payments to non-controlling interest in a subsidiary without losing control
|
— | — | — | — | — | — | — | (150 | ) | (150 | ) | |||||||||||||||||||||||||
|
Dividend paid by the Company
|
— | — | — | — | (6,043 | ) | — | (6,043 | ) | — | (6,043 | ) | ||||||||||||||||||||||||
|
Dividend paid by a subsidiary
|
— | — | — | — | — | — | — | (2,926 | ) | (2,926 | ) | |||||||||||||||||||||||||
|
Balance at September 30, 2014
|
38,374 | 162,433 | (3,419 | ) | (15,542 | ) | 265,527 | (2,826 | ) | 444,547 | 329,219 | 773,766 | ||||||||||||||||||||||||
|
Balance at January 1, 2013
|
38,374 | 162,433 | 383 | (15,728 | ) | 218,425 | (2,826 | ) | 401,061 | 283,847 | 684,908 | |||||||||||||||||||||||||
|
Changes during the period:
|
||||||||||||||||||||||||||||||||||||
|
Profit for the period
|
— | — | — | — | 25,524 | — | 25,524 | 16,890 | 42,414 | |||||||||||||||||||||||||||
|
Comprehensive income (loss) for the period
|
— | — | (74 | ) | — | — | (74 | ) | (50 | ) | (124 | ) | ||||||||||||||||||||||||
|
Share-based payment
|
4,548 | 4,548 | ||||||||||||||||||||||||||||||||||
|
Issuance of shares by a subsidiary
|
100 | — | 100 | 337 | 437 | |||||||||||||||||||||||||||||||
|
Dividend paid by a subsidiary
|
— | — | — | — | — | — | — | (728 | ) | (728 | ) | |||||||||||||||||||||||||
|
Balance at September 30, 2013
|
38,374 | 162,433 | 309 | (15,628 | ) | 243,949 | (2,826 | ) | 426,611 | 304,844 | 731,455 | |||||||||||||||||||||||||
| Equity holderes of the Parent Company | ||||||||||||||||||||||||||||||||||||
|
Other capital surplus
|
||||||||||||||||||||||||||||||||||||
|
In respect of
|
||||||||||||||||||||||||||||||||||||
|
transactions with
|
||||||||||||||||||||||||||||||||||||
|
Additional
|
In respect of
|
noncontrolling
|
Cost of Company
|
|||||||||||||||||||||||||||||||||
|
Ordinary
|
Paid-in
|
cash flow
|
interests without
|
Retained
|
shares held by
|
Noncontroling
|
||||||||||||||||||||||||||||||
|
shares
|
Capital
|
hedges
|
losing control
|
earnings
|
Total
|
interests
|
Total
|
|||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
|
Balance at July 1, 2014
|
38,374 | 162,433 | (2,202 | ) | (15,714 | ) | 255,675 | (2,826 | ) | 435,740 | 323,264 | 759,004 | ||||||||||||||||||||||||
|
Changes during the period:
|
||||||||||||||||||||||||||||||||||||
|
Profit for the period
|
— | — | — | — | 9,852 | — | 9,852 | 6,989 | 16,841 | |||||||||||||||||||||||||||
|
Comprehensive income (loss)
for the period |
— | — | (1,217 | ) | — | — | (1,217 | ) | (820 | ) | (2,037 | ) | ||||||||||||||||||||||||
|
Share—based payment
|
— | — | — | — | — | — | — | 1,704 | 1,704 | |||||||||||||||||||||||||||
|
Exercise of options in the subsidiary
|
— | — | — | 77 | — | — | 77 | 71 | 148 | |||||||||||||||||||||||||||
|
Purchase of non controlling interests
|
— | — | — | 95 | — | — | 95 | (923 | ) | (828 | ) | |||||||||||||||||||||||||
|
Payments to non-controlling interest in a subsidiary without losing control
|
— | — | — | — | — | — | — | (150 | ) | (150 | ) | |||||||||||||||||||||||||
|
Dividend paid by a subsidiary
|
— | — | — | — | — | — | — | (916 | ) | (916 | ) | |||||||||||||||||||||||||
|
Balance at September 30, 2014
|
38,374 | 162,433 | (3,419 | ) | (15,542 | ) | 265,527 | (2,826 | ) | 444,547 | 329,219 | 773,766 | ||||||||||||||||||||||||
|
Balance at July 1, 2013
|
38,374 | 162,433 | 333 | (15,728 | ) | 231,371 | (2,826 | ) | 413,957 | 294,901 | 708,858 | |||||||||||||||||||||||||
|
Changes during the period:
|
||||||||||||||||||||||||||||||||||||
|
Profit for the period
|
— | — | — | — | 12,578 | — | 12,578 | 8,659 | 21,237 | |||||||||||||||||||||||||||
|
Comprehensive income (loss) for the period
|
— | — | (24 | ) | — | — | — | (24 | ) | (16 | ) | (40 | ) | |||||||||||||||||||||||
|
Share-based payment
|
— | — | — | — | — | — | — | 1,691 | 1,691 | |||||||||||||||||||||||||||
|
Issuance of shares by a subsidiary
|
— | — | — | 100 | — | — | 100 | 337 | 437 | |||||||||||||||||||||||||||
|
Dividend paid by a subsidiary
|
— | — | — | — | — | — | — | (728 | ) | (728 | ) | |||||||||||||||||||||||||
|
Balance at September 30, 2013
|
38,374 | 162,433 | 309 | (15,628 | ) | 243,949 | (2,826 | ) | 426,611 | 304,844 | 731,455 | |||||||||||||||||||||||||
| Equity holderes of the Parent Company | ||||||||||||||||||||||||||||||||||||
|
Other capital surplus
|
||||||||||||||||||||||||||||||||||||
|
In respect of
|
||||||||||||||||||||||||||||||||||||
|
transactions with
|
||||||||||||||||||||||||||||||||||||
|
Additional
|
In respect of
|
noncontrolling
|
Cost of Company
|
|||||||||||||||||||||||||||||||||
|
Ordinary
|
Paid-in
|
cash flow
|
interests without
|
Retained
|
shares held by
|
Noncontroling
|
||||||||||||||||||||||||||||||
|
shares
|
Capital
|
hedges
|
losing control
|
earnings
|
a subsidiary
|
Total
|
interests
|
Total
|
||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
|
Balance at January 1, 2013
|
38,374 | 162,433 | 383 | (15,728 | ) | 218,425 | (2,826 | ) | 401,061 | 283,847 | 684,908 | |||||||||||||||||||||||||
|
Changes during the year 2013:
|
||||||||||||||||||||||||||||||||||||
|
Profit for the year
|
— | — | — | — | 29,495 | — | 29,495 | 20,155 | 49,650 | |||||||||||||||||||||||||||
|
Comprehensive income (loss)
for the period |
— | — | (98 | ) | — | 311 | — | 213 | 143 | 356 | ||||||||||||||||||||||||||
|
Share-based payment
|
— | — | — | — | — | — | — | 6,434 | 6,434 | |||||||||||||||||||||||||||
|
Dividend paid by the Company
|
— | — | — | — | (5,964 | ) | — | (5,964 | ) | — | (5,964 | ) | ||||||||||||||||||||||||
|
Exercise of options in the subsidiary
|
— | — | — | 65 | — | 65 | 464 | 529 | ||||||||||||||||||||||||||||
|
Dividend paid by a subsidiary
|
— | — | — | — | — | — | — | (1,459 | ) | (1,459 | ) | |||||||||||||||||||||||||
|
Balance at December 31, 2013
|
38,374 | 162,433 | 285 | (15,663 | ) | 242,267 | (2,826 | ) | 424,870 | 309,584 | 734,454 | |||||||||||||||||||||||||
|
Nine Months Ended
|
Three Months Ended
|
Year ended
|
||||||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||||||
|
2013
|
2014
|
2013
|
2013
|
|||||||||||||||||
| Dollars in thousands | ||||||||||||||||||||
|
Cash flows from operating activities:
|
||||||||||||||||||||
|
Income before income taxes
|
50,066 | 42,965 | 18,849 | 22,370 | 43,235 | |||||||||||||||
|
Adjustments in respect of:
|
||||||||||||||||||||
|
Income and expenses not involving cash flows:
|
||||||||||||||||||||
|
Loss (gain) from disposal and decrease (increase) in value of marketable securities
|
222 | 588 | 155 | 34 | 636 | |||||||||||||||
|
Interest income from deposits and marketable securities
|
(625 | ) | (616 | ) | (152 | ) | (232 | ) | (1,490 | ) | ||||||||||
|
Change in fair value of of derivatives on oil and natural gas
|
(4,467 | ) | 3,487 | (4,165 | ) | 1,117 | 7,813 | |||||||||||||
|
Interest expense in respect of tax partnership
|
9,677 | 9,234 | 3,511 | 3,486 | 13,753 | |||||||||||||||
|
Interest on notes and loans
|
55,629 | 43,793 | 19,132 | 14,886 | 57,408 | |||||||||||||||
|
Retirement benefit obligations, net
|
340 | 749 | (87 | ) | 268 | 954 | ||||||||||||||
|
Financial asset in respoct of concession agreement
|
(16,217 | ) | — | (3,485 | ) | — | ||||||||||||||
|
Depreciation and amortization
|
70,131 | 67,362 | 24,021 | 23,920 | 88,731 | |||||||||||||||
|
Impairement (reverse of impairement) of power plants-net
|
— | (8,038 | ) | — | (8,038 | ) | (8,038 | ) | ||||||||||||
|
Gain from sale of subsidiary
|
— | (4,230 | ) | — | — | (4,230 | ) | |||||||||||||
|
Gain from sale of power plant
|
(7,628 | ) | — | — | — | — | ||||||||||||||
|
Write-off of unsuccessful exploration activities
|
8,107 | — | — | — | 4,039 | |||||||||||||||
|
The financing component of asset retirement obligation
|
1,123 | 1,476 | 357 | 537 | 1,915 | |||||||||||||||
|
Deferred lease income, net
|
(2,014 | ) | (2,014 | ) | (671 | ) | (671 | ) | (2,685 | ) | ||||||||||
|
Capital gain on early repayment of OFC bonds
|
(181 | ) | (819 | ) | — | — | (819 | ) | ||||||||||||
|
Deferred lease fees
|
(188 | ) | (167 | ) | (64 | ) | (50 | ) | (217 | ) | ||||||||||
|
Exchange differences on cash and cash equivalents
|
33 | (387 | ) | 177 | 10 | (465 | ) | |||||||||||||
|
Amounts recorded in respect of options granted to employees and
directors of a subsidiary |
4,510 | 4,548 | 1,704 | 1,691 | 6,434 | |||||||||||||||
| 168,518 | 157,931 | 59,282 | 59,328 | 206,974 | ||||||||||||||||
|
Changes in operating asset and liability items:
|
||||||||||||||||||||
|
Decrease (increase) in accounts receivable:
|
||||||||||||||||||||
|
Trade
|
20,141 | (7,217 | ) | 3,540 | 7,019 | (34,804 | ) | |||||||||||||
|
Other
|
(4,580 | ) | (15,201 | ) | 2,976 | (7,989 | ) | (5,676 | ) | |||||||||||
|
Increase (decrease) in accounts payable and accruals:
|
||||||||||||||||||||
|
Trade
|
(12,606 | ) | (17,537 | ) | (4,040 | ) | (5,461 | ) | 7,179 | |||||||||||
|
Provisions
|
12 | (44 | ) | 36 | (15 | ) | (57 | ) | ||||||||||||
|
Other
|
(1,122 | ) | (2,632 | ) | (3,424 | ) | 2,089 | 3,421 | ||||||||||||
|
Increase (decrease) in receivables/ payables in respect
|
43,840 | (39,288 | ) | 28,259 | (18,140 | ) | (29,109 | ) | ||||||||||||
|
Decrease (Increase) in inventories
|
4,952 | 273 | 955 | (2,490 | ) | (1,620 | ) | |||||||||||||
|
Decrease in long term accrued expenses and other liabilities
|
(527 | ) | 960 | (840 | ) | 1,184 | 2,303 | |||||||||||||
| 50,110 | (80,686 | ) | 27,462 | (23,803 | ) | (58,363 | ) | |||||||||||||
|
Interest received
|
719 | 481 | 186 | 270 | 1,321 | |||||||||||||||
|
Interest paid
|
(49,140 | ) | (40,994 | ) | (16,007 | ) | (24,015 | ) | (56,645 | ) | ||||||||||
|
Income taxes paid, net
|
(6,802 | ) | (4,776 | ) | (1,843 | ) | 647 | (6,454 | ) | |||||||||||
|
Net cash provided by operating activities-carried forward
|
163,405 | 31,956 | 69,080 | 12,427 | 86,833 | |||||||||||||||
|
Nine Months Ended
|
Three Months Ended
|
Year ended
|
||||||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||||||
|
2013
|
2014
|
2013
|
2013
|
|||||||||||||||||
| Dollars in thousands | ||||||||||||||||||||
|
Net cash provided by operating activities-brought forward
|
163,405 | 31,956 | 69,080 | 12,427 | 86,833 | |||||||||||||||
|
Cash flows from investing activities:
|
||||||||||||||||||||
|
Construction of power plants and acquisition of other fixed assets
|
(122,176 | ) | (145,637 | ) | (33,365 | ) | (44,106 | ) | (207,535 | ) | ||||||||||
|
Cash grant received
|
27,427 | 14,685 | — | 14,685 | 14,685 | |||||||||||||||
|
Purchase of intangible assets
|
(429 | ) | (267 | ) | (115 | ) | (55 | ) | (562 | ) | ||||||||||
|
Acquisition of securities
|
(2,200 | ) | (22,553 | ) | — | (1,654 | ) | (23,645 | ) | |||||||||||
|
Proceeds from sale of securities
|
6,345 | 18,900 | — | — | 22,413 | |||||||||||||||
|
Proceeds from sale of a subsidiary
|
— | 7,699 | — | — | 7,699 | |||||||||||||||
|
Proceeds from sale of power plant
|
35,250 | — | — | — | — | |||||||||||||||
|
Decrease (increase) in bank deposit
|
— | 3,010 | — | 3,010 | 3,010 | |||||||||||||||
|
Decrease (increase) in cash, cash equivalents and restricted deposits
|
(76,387 | ) | (7,660 | ) | (73,375 | ) | 1,315 | 25,472 | ||||||||||||
|
Net cash used in investing activities
|
(132,170 | ) | (131,823 | ) | (106,855 | ) | (26,805 | ) | (158,463 | ) | ||||||||||
|
Cash flows from financing activities:
|
||||||||||||||||||||
|
Exercise of options in a subsidiary
|
741 | 437 | 349 | 437 | 529 | |||||||||||||||
|
Acquisition of shares in a subsidiary from noncontrolling interests
|
(1,490 | ) | (1,490 | ) | ||||||||||||||||
|
Net proceeds from the sale of a tax partnership
|
— | 31,376 | — | (132 | ) | 31,376 | ||||||||||||||
|
Credit received from banks
|
2,400,683 | 2,170,287 | 698,300 | 815,526 | 3,058,956 | |||||||||||||||
|
Long-term loans received from banks and others
|
17,554 | 45,000 | 5,390 | — | 90,000 | |||||||||||||||
|
Proceeds from issuance of senior secured bonds by the U.S. Department of Energy
|
140,000 | 140,000 | ||||||||||||||||||
|
Repayment of bank credit
|
(2,484,600 | ) | (2,120,605 | ) | (794,800 | ) | (772,485 | ) | (3,020,545 | ) | ||||||||||
|
Early repayment of notes
|
(12,860 | ) | (11,888 | ) | — | — | (11,888 | ) | ||||||||||||
|
Repayment of long-term loans from banks and others
|
(80,249 | ) | (37,506 | ) | (39,145 | ) | (18,719 | ) | (68,396 | ) | ||||||||||
|
Extinguishment of liability in respect of a tax partnership
|
(9,065 | ) | (10,184 | ) | (3,667 | ) | (3,194 | ) | (13,384 | ) | ||||||||||
|
Net proceeds from the sale of a tax partnership
|
2,234 | — | ||||||||||||||||||
|
Dividend paid
|
(6,043 | ) | — | (5,964 | ) | |||||||||||||||
|
Cash paid for interest rate cap
|
(1,505 | ) | (1,505 | ) | ||||||||||||||||
|
Financing costs
|
(4,724 | ) | (348 | ) | (2,053 | ) | (348 | ) | (1,919 | ) | ||||||||||
|
Payments to non-controlling interest in a a subsidiary without losing control
|
(150 | ) | (150 | ) | ||||||||||||||||
|
Dividend paid to non-controlling interest in a subsidiary
|
(2,926 | ) | (728 | ) | (916 | ) | (728 | ) | (1,459 | ) | ||||||||||
|
Net cash provided by (used in) financing activities
|
(42,400 | ) | 65,841 | 313 | 20,357 | 57,306 | ||||||||||||||
|
Decrease in cash and cash equivalents
|
(11,165 | ) | (34,026 | ) | (37,462 | ) | 5,979 | (14,324 | ) | |||||||||||
|
Balance of cash and cash equivalents at beginning of period
|
57,908 | 71,767 | 84,349 | 32,159 | 71,767 | |||||||||||||||
|
Effect of changes in exchange rates on cash and cash equivalents in foreign currency
|
(33 | ) | 387 | (177 | ) | (10 | ) | 465 | ||||||||||||
|
Balance of cash and cash equivalents at end of period
|
46,710 | 38,128 | 46,710 | 38,128 | 57,908 | |||||||||||||||
| Electricity | - | This segment is engaged in the maintenance and operation of wholly or partly owned geothermal and recovered energy power plants in the international market, to produce and supply electricity they produce for customers, which are utilities, according to power purchase agreements. |
| Product | - | This segment is engaged in the manufacture, including design and development, of turbines and power units for the supply of electrical energy and in the construction of power plants to supply energy from geothermal fields and other alternative energy sources. |
|
Electricity
|
Product
|
Adjustments
|
Consolidated
|
|||||||||||||
| (Dollars in thousands) | ||||||||||||||||
|
Nine months ended September 30, 2014:
|
||||||||||||||||
|
External revenues
|
289,015 | 121,266 | 20,500 | 430,781 | ||||||||||||
|
Intersegment revenues
|
43,580 | (43,580 | ) | — | ||||||||||||
|
Total revenues
|
289,015 | 164,846 | (23,080 | ) | 430,781 | |||||||||||
|
Segment results
|
72,850 | 35,839 | 3,173 | 111,862 | ||||||||||||
|
Income not allocated to segments
|
4,647
|
|||||||||||||||
|
Other gains, net
|
(1,274
|
) | ||||||||||||||
|
Total income from operations
|
115,235 | |||||||||||||||
|
Financial expenses
|
(65,169 | ) | ||||||||||||||
|
Income beofre income taxes
|
50,066 | |||||||||||||||
|
Electricity
|
Product
|
Adjustments
|
Consolidated
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
Three months ended September 30, 2014:
|
||||||||||||||||
|
External revenues
|
102,506 | 37,736 | 1,247 | 141,489 | ||||||||||||
|
Intersegment revenues
|
7,244 | (7,244 | ) | — | ||||||||||||
|
Total revenues
|
102,506 | 44,980 | (5,997 | ) | 141,489 | |||||||||||
|
Segment results
|
32,411 | 11,377 | 642 | 44,430 | ||||||||||||
|
Expenses not allocated to segments
|
(400 | ) | ||||||||||||||
|
Other losses, net
|
(2,612 | ) | ||||||||||||||
|
Total income from operations
|
41,418 | |||||||||||||||
|
Financial expenses
|
(22,568 | ) | ||||||||||||||
|
Income beofre income taxes
|
18,850 | |||||||||||||||
|
Electricity
|
Product
|
Adjustments
|
Consolidated
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
Nine months ended September 30, 2013:
|
||||||||||||||||
|
External revenues
|
245,005 | 157,329 | 4,866 | 407,200 | ||||||||||||
|
Intersegment revenues
|
— | 29,731 | (29,731 | ) | — | |||||||||||
|
Total revenues
|
245,005 | 187,060 | (24,865 | ) | 407,200 | |||||||||||
|
Segment results
|
42,057 | 33,286 | 13,015 | 88,358 | ||||||||||||
|
Expenses not allocated to segments
|
(1,187 | ) | ||||||||||||||
|
Other gains, net
|
10,465 | |||||||||||||||
|
Total income from operations
|
97,636 | |||||||||||||||
|
Financial expenses
|
(54,522 | ) | ||||||||||||||
|
Equity in losses of associated companies
|
(149 | ) | ||||||||||||||
|
Income beofre income taxes
|
42,965 | |||||||||||||||
|
Electricity
|
Product
|
Adjustments
|
Consolidated
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
Three months ended September 30, 2013:
|
||||||||||||||||
|
External revenues
|
88,994 | 41,755 | — | 130,749 | ||||||||||||
|
Intersegment revenues
|
4,329 | (4,329 | ) | — | ||||||||||||
|
Total revenues
|
88,994 | 46,084 | (4,329 | ) | 130,749 | |||||||||||
|
Segment results
|
20,732 | 9,065 | 9,880 | 39,677 | ||||||||||||
|
Expenses not allocated to segments
|
(467 | ) | ||||||||||||||
|
Other gains, net
|
2,329 | |||||||||||||||
|
Total income from operations
|
41,539 | |||||||||||||||
|
Financial expenses
|
(19,011 | ) | ||||||||||||||
|
Equity in losses of associated companies
|
(158 | ) | ||||||||||||||
|
Income beofre income taxes
|
22,370 | |||||||||||||||
|
Electricity
|
Product
|
Adjustments
|
Consolidated
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
Year ended December 31, 2013:
|
||||||||||||||||
|
External revenues
|
329,747 | 203,492 | 4,866 | 538,105 | ||||||||||||
|
Intersegment revenues
|
— | 37,248 | (37,248 | ) | — | |||||||||||
|
Total revenues
|
329,747 | 240,740 | (32,382 | ) | 538,105 | |||||||||||
|
Segment results
|
54,265 | 42,693 | 12,364 | 109,322 | ||||||||||||
|
Expenses not allocated to segments
|
(1,617 | ) | ||||||||||||||
|
Other gains, net
|
12,444 | |||||||||||||||
|
Total income from operations
|
120,149 | |||||||||||||||
|
Financial expenses
|
(76,914 | ) | ||||||||||||||
|
Loss beofre income taxes
|
43,235 | |||||||||||||||
|
Total assets:
|
||||||||||||||||
| 2,083,715 | 88,198 | 17,055 | 2,188,968 | |||||||||||||
| 2,048,021 | 120,314 | (17,793 | ) | 2,150,542 | ||||||||||||
| 2,017,838 | 141,595 | (22,519 | ) | 2,136,914 | ||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Dollars in thousands
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Cash, cash equivalents and restricted cash
|
116,118 | — | — | 116,118 | ||||||||||||
|
Investments in securities:
|
||||||||||||||||
| — | — | 251 | 251 | |||||||||||||
| 10,972 | — | — | 10,972 | |||||||||||||
|
Derivatives :
|
||||||||||||||||
| 1,134 | 1,134 | |||||||||||||||
|
Derivatives on natural gas prices
|
— | 502 | — | 502 | ||||||||||||
|
Total assets
|
127,090 | 1,636 | 251 | 128,977 | ||||||||||||
|
Liabilities -
|
||||||||||||||||
|
Derivatives-
|
||||||||||||||||
| — | (2,183 | ) | — | (2,182 | ) | |||||||||||
|
Total liabilities
|
— | (2,183 | ) | — | (2,182 | ) | ||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Dollars in thousands
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Cash equivalents
|
67,234 | — | — | 67,234 | ||||||||||||
|
Investments in securities:
|
||||||||||||||||
| — | — | 251 | 251 | |||||||||||||
| 17,868 | — | — | 17,868 | |||||||||||||
|
Derivatives -
|
||||||||||||||||
|
Derivatives on oil prices
|
— | 142 | — | 142 | ||||||||||||
|
Derivatives on natural gas prices
|
— | 1,353 | — | 1,353 | ||||||||||||
| — | 2,952 | — | 2,952 | |||||||||||||
|
Total assets
|
85,102 | 4,447 | 251 | 89,800 | ||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Dollars in thousands
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Cash equivalents
|
40,015 | — | — | 40,015 | ||||||||||||
|
Investments in securities:
|
||||||||||||||||
| — | — | 251 | 251 | |||||||||||||
| 15,433 | — | — | 15,433 | |||||||||||||
|
Derivatives -
|
||||||||||||||||
| — | 2,990 | — | 2,990 | |||||||||||||
|
Total assets
|
55,448 | 2,290 | 251 | 57,989 | ||||||||||||
|
Liabilities -
|
||||||||||||||||
|
Derivatives:
|
||||||||||||||||
| — | (2,490 | ) | — | (2,490 | ) | |||||||||||
| — | (341 | ) | — | (341 | ) | |||||||||||
|
Total liabilities
|
— | (2,831 | ) | — | 2,831 | ) | ||||||||||
|
Dollars in thousands
|
||||||||||||
|
Assets:
|
||||||||||||
|
Non-current
|
882,906 | 913,695 | 913,609 | |||||||||
|
Current
|
128,918 | 132,289 | 135,412 | |||||||||
|
Total
|
1,011,824 | 1,045,984 | 1,049,021 | |||||||||
|
Nine Months Ended
|
Three Months Ended
|
Year ended
|
||||||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||||||
|
2013
|
2014
|
2013
|
2013
|
|||||||||||||||||
| Dollars in thousands | ||||||||||||||||||||
|
Supplementary information on investing and financing activities not involving cash flows:
|
||||||||||||||||||||
|
Increase (decrease) in suppliers’ credit received during the reported period for the construction
|
(5,221 | ) | 7,744 | 2,068 | 3,681 | 4,372 | ||||||||||||||
|
|
||||||||||||||||||||
|
Increase (decrease) in cost of power plants resulting from adjustment of provision for asset retirement obligation
|
9,088 | (10,509 | ) | 1,549 | (1,870 | ) | (12,481 | ) | ||||||||||||
|
Deferred financing costs
|
— | (1,347 | ) | — | — | — | ||||||||||||||
|
|
•
|
“arrangement” or “plan of arrangement” means an arrangement among Ormat Industries, Ormat Systems and their respective shareholders (and, if applicable, creditors), with respect to the share exchange, the merger and the other transactions contemplated in the share exchange agreement, including a request to exempt from the need to publish a prospectus by reason of Section 15A(a)(3) of the Israel Securities Law.
|
|
•
|
“Bronicki Investments” means Bronicki Investments Ltd., an Israeli company, that currently holds approximately 14.21% of Ormat Industries ordinary shares and through which Lucien Bronicki, Yehudit Bronicki and Yoram Bronicki, among other members of the Bronicki family, are beneficial owners of those shares.
|
|
|
•
|
“Code” means the Internal Revenue Code of 1986 (or any successor statute), as amended from time to time, and the Treasury Regulations promulgated thereunder.
|
|
|
•
|
“Court approval” means the approval by the Court of Ormat Industries’ request that the Court (i) hold a hearing on the fairness of the arrangement contemplated by the share exchange agreement regardless of whether or not any objections have been raised and (ii) approve the arrangement and the order of all actions to be taken in accordance therewith.
|
|
|
•
|
“escrow agreement” means the escrow agreement to be entered into no later than two business days prior to the closing date of the share exchange by and among Ormat, Bronicki, FIMI and the escrow agent, substantially in the form of Exhibit B to the Ormat Industries shareholder undertaking agreements.
|
|
|
•
|
“exchange ratio” means 0.2592 shares of Ormat common stock for each ordinary share of Ormat Industries.
|
|
|
•
|
“FIMI” means FIMI ENRG Limited Partnership, an Israeli limited partnership, FIMI ENRG L.P., a Delaware limited partnership, and FIMI Opportunity IV, L.P., a Delaware limited partnership, individually or collectively as the context requires.
|
|
|
•
|
“Israeli tax ruling” means the ruling dated November 6, 2014, received from the ITA on November 9, 2014, confirming, among other things, that, subject to the conditions stipulated therein, the obligation of Ormat Industries shareholders to pay Israeli capital gains tax on the share exchange will be deferred in accordance with the provisions of Section 103C of the Tax Ordinance.
|
|
|
•
|
“Ormat” (or “we,” “us,” “the Company,” or “our Company”) means Ormat Technologies, Inc., a Delaware corporation.
|
|
|
•
|
“Ormat Industries intervening event” means a material event or development relating to the business or assets of Ormat Industries and the Ormat Industries subsidiaries (including Ormat) that is (i) not known to the board of directors of Ormat Industries as of the date of the share exchange agreement and (ii) becomes known to or by the board of directors of Ormat Industries prior to obtaining the Section 350 voting approval.
|
|
|
•
|
“Ormat Industries recommendation” means the recommendation by the Ormat Industries board of directors and special committee that the shareholders of Ormat Industries approve the share exchange agreement, the share exchange and the other transactions contemplated thereby.
|
|
|
•
|
“Ormat Industries shareholder undertaking agreements” means the voting agreements, dated as November 10, 2014, between Ormat and each of Bronicki Investments and FIMI.
|
|
|
•
|
“Ormat intervening event” means a material event or development relating to the business or assets of Ormat and the Ormat subsidiaries that is (i) not known to the board of directors of Ormat as of the date of the share exchange agreement and (ii) becomes known to or by the board of directors of Ormat prior to obtaining the Ormat stockholder approval.
|
|
|
•
|
“Ormat stockholder approval” means the Ormat stockholder approval by written consent of the share issuance dated November 10, 2014.
|
|
|
•
|
“Ormat stockholder undertaking agreement” means the voting agreement, dated as November 10, 2014, between Ormat Industries and Ormat.
|
|
|
•
|
“Ormat Systems” means Ormat Systems Ltd., an Israeli company and wholly-owned subsidiary of Ormat.
|
|
|
•
|
“registration rights agreement” means the registration rights agreement by and among Ormat, Bronicki and FIMI, substantially in the form of Exhibit B to the voting neutralization agreements.
|
|
|
•
|
“Section 350 voting approval” means, unless otherwise ordered by the Court, the approval of the share exchange and related transactions by Ormat Industries shareholders (and, if ordered by the Court, creditors) by a majority in number (per capita) of shareholders (or, if applicable creditors) present, by person or by proxy, representing at least 75% of the votes cast at each of the Ormat Industries meetings; provided, that, with respect to the Ormat Industries shareholders meeting either (i) the shares voting in favor of such matters include at least a majority of the shares voted by shareholders who are not Bronicki Investments and FIMI, or (ii) the total number of shares voted against the resolution by the shareholders described in clause (i) does not exceed two percent of the outstanding Ormat Industries ordinary shares.
|
|
|
•
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“share exchange” means the exchange of newly issued shares of Ormat common stock for all of the outstanding ordinary shares of Ormat Industries on the terms and conditions set forth in the share exchange agreement.
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“share exchange agreement” means the Share Exchange Agreement and Plan of Merger dated as of November 10, 2014 among Ormat, Ormat Industries and Ormat Systems.
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“share exchange consideration” means that number of fully paid and nonassessable shares of Ormat common stock (and cash, without interest, in lieu of fractional shares) to be issued to holders of Ormat Industries ordinary shares at the completion of the share exchange.
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“Treasury Regulations” means the regulations promulgated under the Code by the U.S. Department of the Treasury.
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“voting neutralization agreements” means the voting neutralization agreements, dated as November 10, 2014, among Ormat and each of Bronicki Investments and FIMI.
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| This ‘PRE 14C’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 12/31/34 | ||||
| 9/30/21 | ||||
| 3/31/21 | ||||
| 12/30/20 | ||||
| 11/7/20 | ||||
| 11/5/20 | ||||
| 8/18/19 | ||||
| 8/1/19 | ||||
| 4/7/19 | ||||
| 4/2/19 | ||||
| 12/31/18 | ||||
| 12/15/18 | ||||
| 11/4/18 | ||||
| 3/31/18 | ||||
| 8/1/17 | ||||
| 5/22/17 | ||||
| 3/31/17 | ||||
| 1/1/17 | ||||
| 12/31/16 | ||||
| 11/16/16 | ||||
| 11/5/16 | ||||
| 6/30/16 | ||||
| 6/15/16 | ||||
| 11/5/15 | ||||
| 7/16/15 | ||||
| 4/8/15 | ||||
| 3/31/15 | ||||
| 1/1/15 | ||||
| 12/31/14 | ||||
| 12/4/14 | ||||
| 12/1/14 | ||||
| 11/30/14 | ||||
| 11/28/14 | ||||
| Filed on / For Period End: | 11/26/14 | |||
| 11/20/14 | ||||
| 11/17/14 | 8-K | |||
| 11/10/14 | 8-K | |||
| 11/9/14 | ||||
| 11/8/14 | ||||
| 11/7/14 | 3, 4 | |||
| 11/6/14 | 10-Q, 8-K | |||
| 11/5/14 | 3, 4, 8-K | |||
| 11/4/14 | ||||
| 11/3/14 | ||||
| 11/2/14 | ||||
| 10/31/14 | ||||
| 10/29/14 | 8-K | |||
| 10/28/14 | ||||
| 10/24/14 | ||||
| 10/22/14 | ||||
| 10/21/14 | ||||
| 10/15/14 | ||||
| 10/13/14 | ||||
| 10/12/14 | ||||
| 10/6/14 | ||||
| 9/30/14 | 10-Q | |||
| 9/29/14 | ||||
| 9/21/14 | ||||
| 9/18/14 | ||||
| 9/17/14 | ||||
| 9/15/14 | ||||
| 9/9/14 | ||||
| 9/8/14 | ||||
| 9/3/14 | 8-K | |||
| 8/15/14 | ||||
| 8/13/14 | ||||
| 8/6/14 | 10-Q, 8-K | |||
| 8/5/14 | 8-K | |||
| 7/15/14 | 8-K | |||
| 7/8/14 | ||||
| 7/1/14 | ||||
| 6/30/14 | 10-Q | |||
| 5/30/14 | SD | |||
| 5/23/14 | ||||
| 5/21/14 | ||||
| 5/16/14 | ||||
| 5/12/14 | 8-K | |||
| 5/9/14 | 10-Q, 8-K | |||
| 5/8/14 | 8-K, DEF 14A | |||
| 5/1/14 | 8-K | |||
| 4/9/14 | ||||
| 4/3/14 | 3, 8-K | |||
| 4/2/14 | ||||
| 4/1/14 | 3, 4 | |||
| 3/31/14 | 10-Q, 4, 8-K | |||
| 3/27/14 | DEF 14A, DEFA14A | |||
| 3/26/14 | 8-K | |||
| 3/25/14 | ||||
| 3/13/14 | 4 | |||
| 3/12/14 | ||||
| 3/10/14 | ||||
| 3/6/14 | ||||
| 2/28/14 | 10-K | |||
| 2/27/14 | 8-K | |||
| 2/25/14 | ||||
| 2/14/14 | SC 13G/A | |||
| 2/11/14 | 3/A, 4, 8-K | |||
| 2/7/14 | ||||
| 1/22/14 | ||||
| 1/1/14 | ||||
| 12/31/13 | 10-K, SD | |||
| 12/4/13 | ||||
| 11/25/13 | 8-K | |||
| 11/20/13 | ||||
| 11/7/13 | 4, 8-K | |||
| 11/6/13 | 10-Q, 8-K | |||
| 10/16/13 | ||||
| 10/3/13 | ||||
| 9/30/13 | 10-Q | |||
| 9/3/13 | ||||
| 8/29/13 | 4 | |||
| 8/19/13 | ||||
| 8/8/13 | ||||
| 8/6/13 | 8-K | |||
| 7/1/13 | ||||
| 6/30/13 | 10-Q, NT 10-Q | |||
| 6/4/13 | 4 | |||
| 5/17/13 | ||||
| 5/16/13 | ||||
| 5/12/13 | ||||
| 4/4/13 | ||||
| 4/2/13 | 3, 3/A | |||
| 3/31/13 | 10-Q | |||
| 3/24/13 | ||||
| 1/24/13 | ||||
| 1/14/13 | ||||
| 1/1/13 | ||||
| 12/31/12 | 10-K | |||
| 12/24/12 | ||||
| 12/11/12 | ||||
| 12/3/12 | ||||
| 11/13/12 | 8-K | |||
| 11/12/12 | ||||
| 11/9/12 | 8-K | |||
| 11/7/12 | 8-K | |||
| 9/30/12 | 10-Q | |||
| 9/27/12 | ||||
| 8/1/12 | 4, 8-K | |||
| 7/13/12 | ||||
| 7/1/12 | ||||
| 6/30/12 | 10-Q | |||
| 6/25/12 | ||||
| 6/15/12 | ||||
| 5/24/12 | 8-K | |||
| 5/20/12 | ||||
| 5/17/12 | ||||
| 5/15/12 | ||||
| 5/1/12 | ||||
| 4/18/12 | ||||
| 4/2/12 | 4, 4/A | |||
| 4/1/12 | ||||
| 3/26/12 | 8-K, DEF 14A, DEFA14A | |||
| 3/16/12 | 8-K | |||
| 3/6/12 | ||||
| 3/5/12 | ||||
| 2/22/12 | ||||
| 2/19/12 | ||||
| 2/1/12 | ||||
| 1/12/12 | ||||
| 1/9/12 | ||||
| 1/1/12 | ||||
| 12/31/11 | 10-K | |||
| 12/27/11 | 8-K | |||
| 11/4/11 | 10-Q, 4, 8-K | |||
| 10/31/11 | 8-K | |||
| 8/3/11 | ||||
| 4/12/11 | ||||
| 3/31/11 | 10-Q, 4, 4/A | |||
| 2/3/11 | 8-K | |||
| 1/1/11 | ||||
| 12/31/10 | 10-K | |||
| 8/3/10 | 8-K | |||
| 5/10/10 | 4, 8-K | |||
| 2/4/10 | ||||
| 1/25/10 | ||||
| 1/16/10 | ||||
| 12/31/09 | 10-K, NT 10-K | |||
| 10/30/09 | 8-K | |||
| 10/1/09 | 4 | |||
| 9/30/09 | 10-Q, 4 | |||
| 9/15/09 | ||||
| 4/1/09 | ||||
| 3/23/09 | 4, DEF 14A, DEFA14A | |||
| 7/16/08 | ||||
| 5/18/08 | ||||
| 1/1/08 | ||||
| 6/7/07 | ||||
| 6/30/06 | 10-Q | |||
| 11/11/04 | 3 | |||
| 11/10/04 | 3, 3/A, S-1/A | |||
| 9/8/04 | ||||
| 7/15/04 | ||||
| 7/1/04 | ||||
| 6/30/04 | ||||
| 1/1/99 | ||||
| List all Filings | ||||
