ORMAT TECHNOLOGIES, INC.ORA
ORMAT TECHNOLOGIES, INC. Fair Value Disclosure
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value measurement guidance clarifies that fair value represents the amount that would be received upon selling an asset or paid upon transferring a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:
Level 1 — unadjusted observable inputs that reflect quoted prices for identical assets or liabilities in active markets;
Level 2 — inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly;
Level 3 — unobservable inputs.
The following table sets forth certain fair value information at December 31, 2025 and 2024 for financial assets and liabilities measured at fair value by level within the fair value hierarchy, as well as cost or amortized cost. As required by the fair value measurement guidance, assets and liabilities are classified in their entirety based on the lowest level of inputs that is significant to the fair value measurement.
| December 31, 2025 | ||||||||||||||||||||||||||||||||
Carrying Value | Fair Value | |||||||||||||||||||||||||||||||
Total | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||||||||||
| Cash equivalents (including restricted cash accounts) | $ | 47,463 | $ | 47,463 | $ | 47,463 | $ | — | $ | — | ||||||||||||||||||||||
Derivatives: cross currency swap (2) | 1,343 | 1,343 | — | 1,343 | — | |||||||||||||||||||||||||||
| Long-term assets: | ||||||||||||||||||||||||||||||||
Derivatives: interest rate swap (3) | 1,407 | 1,407 | — | 1,407 | — | |||||||||||||||||||||||||||
Derivatives: cross currency swap (2) | 11,925 | 11,925 | — | 11,925 | — | |||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||||||||||
Derivatives: interest rate swap (3) | (832) | (832) | — | (832) | — | |||||||||||||||||||||||||||
| Long-term liabilities: | ||||||||||||||||||||||||||||||||
Derivatives: interest rate swap (3) | (430) | (430) | — | (430) | — | |||||||||||||||||||||||||||
| $ | 60,876 | $ | 60,876 | $ | 47,463 | $ | 13,413 | $ | — | |||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
Carrying Value | Fair Value | |||||||||||||||||||||||||||||||
Total | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||||||||||
| Cash equivalents (including restricted cash accounts) | $ | 52,031 | $ | 52,031 | $ | 52,031 | $ | — | $ | — | ||||||||||||||||||||||
Derivatives: interest rate swap (3) | 180 | 180 | — | 180 | — | |||||||||||||||||||||||||||
Derivatives: currency forward contracts (1) | 550 | 550 | — | 550 | — | |||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||||||||||
Derivatives: cross-currency swap (2) | (3,500) | (3,500) | — | (3,500) | — | |||||||||||||||||||||||||||
| Long-term liabilities: | ||||||||||||||||||||||||||||||||
Derivatives: cross-currency swap (2) | (6,653) | (6,653) | — | (6,653) | — | |||||||||||||||||||||||||||
| $ | 42,607 | $ | 42,607 | $ | 52,031 | $ | (9,424) | $ | — | |||||||||||||||||||||||
(1) These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within “Receivables, other” and “Accounts payable and accrued expenses” on December 31, 2025 and December 31, 2024, as applicable, in the consolidated balance sheet with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the consolidated statement of operations and comprehensive income.
(2) These amounts relate to cross-currency swap contracts valued primarily based on the present value of the cross-currency swap future settlement prices for U.S. Dollar and New Israeli Shekel zero yield curves and the applicable exchange rate as of December 31, 2025 and December 31, 2024, as applicable. These amounts are included within “Prepaid expenses and other”, “Deposits and other”, “Accounts payable and accrued expenses” and “Other long-term liabilities” on December 31, 2025, and 2024, in the consolidated balance sheets. Cash collateral deposits in respect of the cross-currency swap are presented under “Receivables, others” in the consolidated balance sheet. Such deposits amounted to $0.0 million as of December 31, 2025, and $9.7 million as of December 31, 2024.
(3) This amount relates to interest rate swap contracts valued primarily based on the present value of the interest rate swap settlement prices and the future 3-month SOFR prices based on USD zero yield curve as of December 31, 2025. This amount is included within “Receivables, other”, “Deposits and other”, “Accounts payable and accrued expenses”, and “Other long-term liabilities” in the consolidated balance sheets on December 31, 2025 and December 31, 2024. There were no cash collateral deposits in respect of the interest rate swap as of December 31, 2025 and 2024.
The following table presents the amounts of gain (loss) recognized in the consolidated statements of operations and comprehensive income (loss):
Derivatives instruments | Location of recognized gain (loss) | Amount of recognized gain (loss) | ||||||||||||||||||||||||
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||||||||||
Currency forward contracts (1) | (a) | $ | 4,320 | $ | 419 | $ | (2,190) | |||||||||||||||||||
Derivatives designated as cash flow hedging instruments | ||||||||||||||||||||||||||
Cross-currency swap (2) | (a) | 25,135 | 357 | (6,201) | ||||||||||||||||||||||
Interest rate swap (2) | (b) | 67 | 1,504 | — | ||||||||||||||||||||||
Total | 25,202 | 1,861 | (6,201) | |||||||||||||||||||||||
(a) Derivative and foreign currency transaction gains (losses).
(b) Interest expenses, net.
(1) The foregoing currency forward transactions were not designated as hedge transactions and were marked to market with the corresponding gains or losses recognized within “Derivatives and foreign currency transaction gains (losses)” in the consolidated statements of operations and comprehensive income.
(2) The foregoing cross-currency and interest rate swap transactions were designated as a cash flow hedging instruments. The changes in the cross-currency swap fair value are initially recorded in “Other comprehensive income (loss)” and a corresponding amount is reclassified out of “Accumulated other comprehensive income (loss)” to “Derivatives and foreign currency transaction gains (losses)” to offset the remeasurement of the underlying hedged transaction which also impacts the same line item in the consolidated statements of operations and comprehensive income. The changes in the interest rate swap fair value are initially recorded in “Other comprehensive income (loss)” and a corresponding amount is reclassified out of “Accumulated other comprehensive income (loss)” to “Interest expenses, net” to offset the remeasurement of the underlying hedged transaction which also impacts the same line item in the consolidated statements of operations and comprehensive income.
There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 during the year ended December 31, 2025.
The following table presents the effect of derivative instruments designated as cash flow hedges on the consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
Cash flow hedges: | |||||||||||||||||
Balance in Accumulated other comprehensive income (loss) beginning of period | $ | 684 | $ | (318) | $ | 3,920 | |||||||||||
Gain or (loss) recognized in Other comprehensive income (loss) (1): | |||||||||||||||||
Cross-currency swap | 23,354 | 1,346 | 1,963 | ||||||||||||||
Interest rate swap | 180 | 1,517 | — | ||||||||||||||
| Amount reclassified from Other comprehensive income (loss) into earnings: | |||||||||||||||||
Cross-currency swap | (25,135) | (357) | (6,201) | ||||||||||||||
| Interest rate swap | (67) | (1,504) | — | ||||||||||||||
| Balance in Other comprehensive income (loss) end of period | $ | (984) | $ | 684 | $ | (318) | |||||||||||
(1) The amount of gain or (loss) recognized in Other comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023 is net of tax of $0.1 million, $0.3 million and $1.5 million, respectively.
The estimated net amount of existing gain (loss) that is reported in “Accumulated other comprehensive income (loss)” as of December 31, 2025 that is expected to be reclassified into earnings within the next 12 months is immaterial. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flow is from the transaction commencement date through June 2031.
The fair value of the Company’s long-term debt approximates its fair value, except for the following:
Fair value | Fair Value | Carrying Amount (*) | |||||||||||||||||||||||||||
Hierarchy | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | ||||||||||||||||||||||||||||
Limited and non-recourse loans: fixed rate | 3 | $ | 743.4 | $ | 636.5 | $ | 739.2 | $ | 657.3 | ||||||||||||||||||||
Full recourse loans: | |||||||||||||||||||||||||||||
Fixed-rate | 3 | 804.8 | 920.4 | 808.7 | 940.4 | ||||||||||||||||||||||||
Variable-rate | 3 | 427.6 | 48.5 | 418.8 | 48.4 | ||||||||||||||||||||||||
Financing liability: fixed-rate | 3 | 223.0 | 223.4 | 216.4 | 220.6 | ||||||||||||||||||||||||
Convertible senior notes | 2 | 643.7 | 471.2 | 476.4 | 476.4 | ||||||||||||||||||||||||
(*) The carrying amount value excludes the related deferred financing costs.
The fair value of the long-term debt is determined by a valuation model, which is based on a conventional discounted cash flow methodology, and utilizes assumptions of current borrowing rates, except for the fair value of the convertible senior notes for which the fair value was estimated based on a quoted bid price of the notes in an over-the-counter market on the last trading day of the reporting period. A hypothetical change in the quoted bid price of the convertible senior notes will result in a corresponding change in the estimated fair value of these notes. The carrying value of the deposits of $11.4 million, the short term revolving credit lines with banks of $80.0 million, and the commercial paper of $100.0 million, approximate their fair value. Future changes to the interest rate may have a direct impact on the fair value of the Company's financial instruments.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.