CORRESP 1 filename1.htm

VIA EDGAR

September 20, 2013

Ms. Jennifer Thompson

Accounting Branch Chief
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street NE
Washington, DC 20549

Re:

Ormat Technologies, Inc.

Form 10-K for the year ended December 31, 2012

Filed March 11, 2013

Form 10-Q for the fiscal quarter ended June 30, 2013

Filed August 12, 2013

File No. 001-32347

Dear Ms. Thompson:

Ormat Technologies, Inc. (the “Company” or "we") acknowledges receipt of the letter dated September 6, 2013 (the “Staff Letter”) from the staff (“Staff”) of the Division of Corporation Finance of the United States Securities and Exchange Commission (the “Commission”).

We acknowledge that the Company is responsible for the adequacy and accuracy of the disclosure in its filing and that Staff comments or changes to disclosures in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing. We also represent that we may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Set forth below are the Staff’s comments contained in the Staff Letter (in bold face type) followed by our responses.

Form 10-K for the Fiscal Year Ended December 31, 2012

Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 97

Ms. Jennifer Thompson
Division of Corporation Finance
United States Securities and Exchange Commission
September 20, 2013

Page 2

Liquidity and Capital Resources, page 118

1.

We note your disclosure on page 141 that you had deposits in foreign countries of approximately $33.2M and $57.8M at December 31, 2012 and 2011, respectively. Given your significant foreign operations coupled with the fact that these balances are a significant component of the consolidated balance sheet, please tell us your consideration of disclosing a statement that you would need to accrue and pay taxes if repatriated and, if true, a statement that you do not intend to repatriate the funds.

The Company considered this matter in light of, among others, Item 303(a) (1) of Regulation S−K and Section IV of SEC Release 33−8350. As more fully described in the response to #3 below, the Company plans for its foreign subsidiaries to continue to invest their earnings outside of the United States (“U.S.”), and it currently does not have plans to repatriate these earnings.

In the event that the Company changes its plans and repatriates these earnings, even though there may be subsequent tax consequences to the Company, it is impractical at this time for the Company to determine if it would need to accrue and pay taxes in respect thereof. As of December 31, 2012, the Company has net operating losses in the U.S. of approximately $267.6 million. Likewise, the Company cannot predict at this time what the applicable tax laws would be in the U.S. and in the applicable foreign jurisdiction that the Company will be operating at the time of any such repatriation, and what tax credits (if any) would be available to the Company at the time of such distribution.

As such, the Company did not believe any disclosure with respect to the subject matter of the Staff's comment was necessary. However, in light of the Staff’s comment, we will continue to evaluate our disclosure in connection with future filings regarding this matter and, where material, we will provide additional disclosure as appropriate. In addition, beginning with its Form 10-Q for the fiscal quarter ended September 30, 2013 and in its future filings, the Company intends to add the following language in the Liquidity and Capital Resources section of its Management Discussion and Analysis:

“We believe that based on our plans to increase our operations outside of the U.S., the cash generated from our operations outside of the U.S. will be reinvested outside of the U.S.. In addition, our U.S. sources of cash and liquidity are sufficient to meet our needs in the U.S. and, accordingly, we do not currently plan to repatriate the funds we have designated as being permanently invested outside the U.S. If we change our plans, we may be required to accrue and pay U.S. taxes to repatriate these funds.”

Financial Statements and Supplementary Data, page 134

Notes to Condensed Consolidated Financial Statements, page 140

Ms. Jennifer Thompson
Division of Corporation Finance
United States Securities and Exchange Commission
September 20, 2013

Page 3

Note 19 – Income Taxes, page 185

2.

We note the reconciling item of “Dividends from foreign subsidiaries” as a major contributor to the difference between the U.S federal statutory tax rate and your effective tax rate. Please tell us more about the nature of this significant reconciling item. Please also tell us what consideration you gave to providing more detail on this reconciling item. We refer you to ASC 740-10-50-12.

The Company has historically concluded that the permanent reinvestment of unrepatriated earnings allowed for under ASC 740 applies to the earnings of its foreign subsidiaries. Accordingly, the Company has not recorded deferred taxes for the repatriation of such foreign earnings.

During the quarter ended December 31, 2012, the Company repatriated earnings from two foreign subsidiaries, Ormat Holding Corporation (“OHC”), a Cayman entity, and Ormat Systems Ltd (“OSL”), an Israeli entity:

-

OHC distributed $100.0 million in cash and recorded a payable to Ormat International Inc., a wholly-owned subsidiary of the Company, in the amount of $50.0 million, for a total distribution of $150.0 million. Of such amounts, approximately $137.0 million was a distribution out of tax “earnings and profits” and, therefore, was recognized as a taxable dividend that was offset by net operating losses, and the remaining $13.0 million reduced the Company’s tax basis in OHC, as provided for in IRC §316.

-

With regard to the repatriation of approximately $100.0 million from OSL, approximately $79.0 million was distributed in the form of a note to the Company and approximately $21.0 million was converted from a preexisting trade payable to a note. Of such amounts, approximately $40.2 million was recognized as an inclusion in taxable income in 2012 as provided for in IRC §956 and offset by the Company’s net operating losses, and approximately $59.8 million will be recognized in taxable income during 2013 under IRC §956.

These cash distributions to the Company made during 2012 were the first ever remittances of foreign earnings received by the Company, and were a one-time event and we do not plan to repatriate the funds we have designated as being permanently invested outside the U.S. (see also the response to the Staff's comment #3 below).

We believe that the description “Dividends from foreign subsidiaries” used in the reconciliation of the statutory rate appropriately reflects the nature of the reconciling item in compliance with ASC 740-10-50-12.

Ms. Jennifer Thompson
Division of Corporation Finance
United States Securities and Exchange Commission
September 20, 2013

Page 4

3.

We note your intention to reinvest undistributed earnings of your foreign subsidiaries. Please reconcile this intention with the loan received from Ormat Systems Ltd. and please elaborate for us why this does not represent a change in your indefinite reinvestment position.

The cash distributions to the Company made during 2012 were the first ever remittances of foreign earnings received by the Company, and were a one-time event. Nevertheless, as a result of these distributions the Company re-evaluated its position that the undistributed earnings of foreign subsidiaries are indefinitely reinvested. Upon analysis of all factors and future cash projections, summarized below, the Company continues to maintain that the indefinite reinvestment assertion is appropriate.

The cash for both of the distributions discussed was generated through third party financing with favorable terms received in the fourth quarter of 2012 when the Company met the conditions for funding on a newly constructed power plant in Kenya which is owned by OHC through its subsidiary OrPower 4, Inc. (“OrPower 4”). OrPower 4 had constructed the Kenya plant using equipment and technology produced and provided by OSL (creating a loan to OrPower 4 from OSL). Once the third party financing was received, OrPower 4 repaid the loan to OSL using a portion of the Kenya financing. As a result of this one-time event, both OSL and OHC had unusually a significant amount of cash on-hand that management believed was not necessary for OSL or OHC to finance their operations or to develop future foreign projects.

Although the company used the proceeds to pay down higher interest debt in the U.S., the Company did not require the distribution to cover its U.S. operations or make U.S. debt payments and there were no outstanding loans payable to the Company prior to the distribution. The Company believes that it has sufficient capital in the U.S., including cash on hand, cash generated through the U.S. operations, and sufficient access to the capital markets as well as credit facilities, to support its ongoing operating needs, existing loan payments and future capital expenditures. The Company's U.S. operations currently generate positive cash flows and are projected to continue to generate positive cash flows as well as taxable income. In addition, the Company has analyzed the current cash and future cash flow of its foreign subsidiaries. Based on the Company’s current business strategy, the foreign subsidiaries have existing and future plans that will require that they use their cash, including cash for current and future project sites in foreign jurisdictions (including explorations in several sites in Chile, advanced negotiation on a Build, Operate, Transfer (“BOT”) contract in Honduras (a 35 Mega Watt project), various business developments in Indonesia including a $1.6 billion project (the Sarulla project) that the Company will own 12.75% of the concessioner and supply products for a total price of $254 million, negotiations on a Build, Operate, Transfer (“BOT”) contract in New Zealand (a 45 Mega Watt project) and other locations and foreign loan repayments). Furthermore, foreign subsidiaries have direct debt facilities and need cash to satisfy their local borrowings. Given these cash flow requirements, the Company plans that its foreign subsidiaries will use their own cash as well as debt facilities which are available to those subsidiaries to support the growth outside of the U.S.

Form 10-Q for the Fiscal Quarter Ended June 30, 2013

Notes to Condensed Consolidated Financial Statements, page 8

Ms. Jennifer Thompson
Division of Corporation Finance
United States Securities and Exchange Commission
September 20, 2013

Page 5

Note 1 – General and Basis of Presentation, page 8

Revision of Previously Issued Financial Statements, page 8

4.

We note your revision of financial statements for the year ended December 31, 2012 and quarter ended March 31, 2013 regarding the calculation and presentation of your income tax provision and the related deferred tax asset which relates to the non-cash impairment charge recorded in the fourth quarter of 2012. Please provide us with your SAB 99 materiality analysis to support your conclusion that your previously issued financial statements were not materially misstated. Please ensure you describe in detail why you believe your previously issued financial statements were qualitatively and quantitatively not materially misstated.

During the preparation of the financial statements for the second quarter of 2013, the Company discovered an error in the financial statements for the year ended December 31, 2012, and for the first quarter of 2013 regarding the calculation and presentation of its income tax provision and the related deferred tax asset. The attached SAB 99 analysis was prepared by the Director of Finance and reviewed by the Company's Audit Committee on August 8, 2013. Based on the weight of quantitative and qualitative factors detailed in the attached analysis, the Company concluded that its previously issued financial statements were not qualitatively or quantitatively materially misstated. However, the correction was too large to record in the second quarter of 2013 and the Company corrected the error by revising the affected financial statements.

* * * * * *

We trust that the responses provided above address the issues raised in the Staff Letter. If you have any questions or require further clarification, please do not hesitate to contact the undersigned at (775) 356-9029 (ext. 32218).

Sincerely,

/s/ Doron Blachar

Doron Blachar

Chief Financial Officer,

Ormat Technologies, Inc.

cc:

Securities and Exchange Commission

Yong Kim

Jason Neithamer

Chadbourne & Parke LLP

Noam Ayali, Esq.
Charles E. Hord, III, Esq.

Goldfarb Seligman & Co.

Ido Zemach, Adv.