Document
false--12-31Q2201900012744940.035030000000.0010.0015000000005000000001048852611053903831048852611053903830.020.010.0150.0050.00750.0050.0350.0100.0150100000009140009780003580003310004100031510004170005600001080000020000000
 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 001-33156
fslrlogoa23.jpg
First Solar, Inc.
(Exact name of registrant as specified in its charter)
Delaware
20-4623678
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

350 West Washington Street, Suite 600
Tempe, Arizona 85281
(Address of principal executive offices, including zip code)

(602414-9300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common stock, $0.001 par value
FSLR
The NASDAQ Stock Market LLC

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
 
 

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

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

As of July 26, 2019, 105,394,760 shares of the registrant’s common stock, $0.001 par value per share, were outstanding.
 



FIRST SOLAR, INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019

TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 




Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net sales
 
$
584,956

 
$
309,318

 
$
1,116,934

 
$
876,583

Cost of sales
 
507,774

 
317,376

 
1,039,640

 
711,843

Gross profit (loss)
 
77,182

 
(8,058
)
 
77,294

 
164,740

Operating expenses:
 
 
 
 
 
 
 
 
Selling, general and administrative
 
50,934

 
50,854

 
96,286

 
91,980

Research and development
 
24,395

 
20,370

 
46,272

 
40,694

Production start-up
 
10,437

 
24,352

 
19,959

 
61,436

Total operating expenses
 
85,766

 
95,576

 
162,517

 
194,110

Operating loss
 
(8,584
)
 
(103,634
)
 
(85,223
)
 
(29,370
)
Foreign currency gain (loss), net
 
1,726

 
2,422

 
1,898

 
(95
)
Interest income
 
13,510

 
16,865

 
27,769

 
28,689

Interest expense, net
 
(8,921
)
 
(6,065
)
 
(19,042
)
 
(11,247
)
Other (loss) income, net
 
(4,438
)
 
(4,328
)
 
(929
)
 
13,606

(Loss) income before taxes and equity in earnings
 
(6,707
)
 
(94,740
)
 
(75,527
)
 
1,583

Income tax (expense) benefit
 
(11,744
)
 
6,164

 
(10,350
)
 
(5,461
)
Equity in earnings, net of tax
 
(97
)
 
40,085

 
(270
)
 
38,338

Net (loss) income
 
$
(18,548
)
 
$
(48,491
)
 
$
(86,147
)
 
$
34,460

 
 
 
 
 
 
 
 
 
Net (loss) income per share:
 
 
 
 
 
 
 
 
Basic
 
$
(0.18
)
 
$
(0.46
)
 
$
(0.82
)
 
$
0.33

Diluted
 
$
(0.18
)
 
$
(0.46
)
 
$
(0.82
)
 
$
0.32

Weighted-average number of shares used in per share calculations:
 
 
 
 
 
 
 
 
Basic
 
105,369

 
104,776

 
105,208

 
104,664

Diluted
 
105,369

 
104,776

 
105,208

 
106,234


See accompanying notes to these condensed consolidated financial statements.



1

Table of Contents

FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net (loss) income
 
$
(18,548
)
 
$
(48,491
)
 
$
(86,147
)
 
$
34,460

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
1,467

 
(15,059
)
 
325

 
(9,045
)
Unrealized gain (loss) on marketable securities and restricted investments, net of tax of $(417), $41, $560, and $3,151
 
11,905

 
506

 
8,558

 
(25,418
)
Unrealized (loss) gain on derivative instruments, net of tax of $358, $(914), $331, and $(978)
 
(1,279
)
 
2,899

 
(1,337
)
 
1,967

Other comprehensive income (loss)
 
12,093

 
(11,654
)
 
7,546

 
(32,496
)
Comprehensive (loss) income
 
$
(6,455
)
 
$
(60,145
)
 
$
(78,601
)
 
$
1,964


See accompanying notes to these condensed consolidated financial statements.



2

Table of Contents

FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 
 
 
June 30,
2019
 
December 31,
2018
ASSETS
 
 
 
 
Current assets:
 

 
 
Cash and cash equivalents
 
$
1,221,568

 
$
1,403,562

Marketable securities
 
807,561

 
1,143,704

Accounts receivable trade, net
 
269,527

 
128,282

Accounts receivable, unbilled and retainage
 
127,972

 
458,166

Inventories
 
586,621

 
387,912

Balance of systems parts
 
91,728

 
56,906

Project assets
 
1,703

 
37,930

Prepaid expenses and other current assets
 
305,566

 
243,061

Total current assets
 
3,412,246

 
3,859,523

Property, plant and equipment, net
 
2,006,334

 
1,756,211

PV solar power systems, net
 
304,657

 
308,640

Project assets
 
528,246

 
460,499

Deferred tax assets, net
 
76,892

 
77,682

Restricted cash and investments
 
328,591

 
318,390

Goodwill
 
14,462

 
14,462

Intangible assets, net
 
69,119

 
74,162

Inventories
 
149,157

 
130,083

Notes receivable, affiliate
 

 
22,832

Other assets
 
248,103

 
98,878

Total assets
 
$
7,137,807

 
$
7,121,362

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 

 
 

Accounts payable
 
$
242,541

 
$
233,287

Income taxes payable
 
15,293

 
20,885

Accrued expenses
 
421,595

 
441,580

Current portion of long-term debt
 
28,312

 
5,570

Deferred revenue
 
112,237

 
129,755

Other current liabilities
 
23,341

 
14,380

Total current liabilities
 
843,319

 
845,457

Accrued solar module collection and recycling liability
 
136,275

 
134,442

Long-term debt
 
452,976

 
461,221

Other liabilities
 
570,113

 
467,839

Total liabilities
 
2,002,683

 
1,908,959

Commitments and contingencies
 


 


Stockholders’ equity:
 
 
 
 
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 105,390,383 and 104,885,261 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
 
105

 
105

Additional paid-in capital
 
2,826,533

 
2,825,211

Accumulated earnings
 
2,355,406

 
2,441,553

Accumulated other comprehensive loss
 
(46,920
)
 
(54,466
)
Total stockholders’ equity
 
5,135,124

 
5,212,403

Total liabilities and stockholders’ equity
 
$
7,137,807

 
$
7,121,362


See accompanying notes to these condensed consolidated financial statements.



3

Table of Contents

FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
 
 
Three Months Ended June 30, 2019
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated Earnings
 
Accumulated
Other
Comprehensive (Loss) Income
 
Total
Equity
 
 
Shares
 
Amount
 
 
 
 
Balance at March 31, 2019
 
105,353

 
$
105

 
$
2,814,115

 
$
2,373,954

 
$
(59,013
)
 
$
5,129,161

Net loss
 

 

 

 
(18,548
)
 

 
(18,548
)
Other comprehensive income
 

 

 

 

 
12,093

 
12,093

Common stock issued for share-based compensation
 
38

 

 
1,672

 

 

 
1,672

Tax withholding related to vesting of restricted stock
 
(1
)
 

 
(68
)
 

 

 
(68
)
Share-based compensation expense
 

 

 
10,814

 

 

 
10,814

Balance at June 30, 2019
 
105,390

 
$
105

 
$
2,826,533

 
$
2,355,406

 
$
(46,920
)
 
$
5,135,124

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated Earnings
 
Accumulated
Other
Comprehensive (Loss) Income
 
Total
Equity
 
 
Shares
 
Amount
 
 
 
 
Balance at March 31, 2018
 
104,763

 
$
105

 
$
2,797,671

 
$
2,380,178

 
$
(18,583
)
 
$
5,159,371

Net loss
 

 

 

 
(48,491
)
 

 
(48,491
)
Other comprehensive loss
 

 

 

 

 
(11,654
)
 
(11,654
)
Common stock issued for share-based compensation
 
36

 

 
1,709

 

 

 
1,709

Tax withholding related to vesting of restricted stock
 
(1
)
 

 
(114
)
 

 

 
(114
)
Share-based compensation expense
 

 

 
10,006

 

 

 
10,006

Balance at June 30, 2018
 
104,798

 
$
105

 
$
2,809,272

 
$
2,331,687

 
$
(30,237
)
 
$
5,110,827


See accompanying notes to these condensed consolidated financial statements.




4

Table of Contents

FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)
(In thousands)
(Unaudited)
 
 
Six Months Ended June 30, 2019
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated Earnings
 
Accumulated
Other
Comprehensive (Loss) Income
 
Total
Equity
 
 
Shares
 
Amount
 
 
 
 
Balance at December 31, 2018
 
104,885

 
$
105

 
$
2,825,211

 
$
2,441,553

 
$
(54,466
)
 
$
5,212,403

Net loss
 

 

 

 
(86,147
)
 

 
(86,147
)
Other comprehensive income
 

 

 

 

 
7,546

 
7,546

Common stock issued for share-based compensation
 
805

 
1

 
1,672

 

 

 
1,673

Tax withholding related to vesting of restricted stock
 
(300
)
 
(1
)
 
(15,731
)
 

 

 
(15,732
)
Share-based compensation expense
 

 

 
15,381

 

 

 
15,381

Balance at June 30, 2019
 
105,390

 
$
105

 
$
2,826,533

 
$
2,355,406

 
$
(46,920
)
 
$
5,135,124

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated Earnings
 
Accumulated
Other
Comprehensive (Loss) Income
 
Total
Equity
 
 
Shares
 
Amount
 
 
 
 
Balance at December 31, 2017
 
104,468

 
$
104

 
$
2,799,107

 
$
2,297,227

 
$
2,259

 
$
5,098,697

Net income
 

 

 

 
34,460

 

 
34,460

Other comprehensive loss
 

 

 

 

 
(32,496
)
 
(32,496
)
Common stock issued for share-based compensation
 
480

 
1

 
1,709

 

 

 
1,710

Tax withholding related to vesting of restricted stock
 
(150
)
 

 
(10,251
)
 

 

 
(10,251
)
Share-based compensation expense
 

 

 
18,707

 

 

 
18,707

Balance at June 30, 2018
 
104,798

 
$
105

 
$
2,809,272

 
$
2,331,687

 
$
(30,237
)
 
$
5,110,827


See accompanying notes to these condensed consolidated financial statements.




5

Table of Contents

FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
Six Months Ended
June 30,
 
 
2019
 
2018
Cash flows from operating activities:
 
 
 
 
Net (loss) income
 
$
(86,147
)
 
$
34,460

Adjustments to reconcile net (loss) income to cash used in operating activities:
 
 
 
 
Depreciation, amortization and accretion
 
98,816

 
54,764

Share-based compensation
 
15,782

 
19,236

Equity in earnings, net of tax
 
270

 
(38,338
)
Distributions received from equity method investments
 

 
12,394

Remeasurement of monetary assets and liabilities
 
(917
)
 
6,178

Deferred income taxes
 
1,508

 
(49,788
)
Gains on sales of marketable securities and restricted investments
 
(15,016
)
 
(19,473
)
Liabilities assumed by customers for the sale of systems
 
(88,050
)
 
(60,307
)
Other, net
 
1,409

 
4,139

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable, trade, unbilled and retainage
 
188,300

 
81,655

Prepaid expenses and other current assets
 
(36,553
)
 
(27,384
)
Inventories and balance of systems parts
 
(253,028
)
 
(112,145
)
Project assets and PV solar power systems
 
(23,572
)
 
(1,167
)
Other assets
 
(3,231
)
 
(7,575
)
Income tax receivable and payable
 
(22,504
)
 
28,562

Accounts payable
 
5,505

 
22,627

Accrued expenses and other liabilities
 
(74,393
)
 
134,961

Accrued solar module collection and recycling liability
 
1,951

 
1,057

Net cash (used in) provided by operating activities
 
(289,870
)
 
83,856

Cash flows from investing activities:
 
 
 
 
Purchases of property, plant and equipment
 
(327,836
)
 
(372,623
)
Purchases of marketable securities and restricted investments
 
(380,900
)
 
(761,633
)
Proceeds from sales and maturities of marketable securities and restricted investments
 
687,951

 
471,444

Proceeds from sales of equity method investments
 

 
247,595

Payments received on note receivable, affiliate
 

 
48,369

Other investing activities
 
2,899

 
(5,973
)
Net cash used in investing activities
 
(17,886
)
 
(372,821
)
Cash flows from financing activities:
 
 
 
 
Repayment of long-term debt
 
(10,583
)
 
(18,140
)
Proceeds from borrowings under long-term debt, net of discounts and issuance costs
 
107,396

 
100,198

Payments of tax withholdings for restricted shares
 
(15,731
)
 
(10,251
)
Other financing activities
 
(363
)
 
(1,816
)
Net cash provided by financing activities
 
80,719

 
69,991

Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(2,018
)
 
(13,077
)
Net decrease in cash, cash equivalents and restricted cash
 
(229,055
)
 
(232,051
)
Cash, cash equivalents and restricted cash, beginning of the period
 
1,562,623

 
2,330,476

Cash, cash equivalents and restricted cash, end of the period
 
$
1,333,568

 
$
2,098,425

Supplemental disclosure of noncash investing and financing activities:
 
 

 
 

Property, plant and equipment acquisitions funded by liabilities
 
$
148,316

 
$
165,670

Sale of system previously accounted for as sale-leaseback financing
 
$

 
$
31,992


See accompanying notes to these condensed consolidated financial statements.



6

Table of Contents

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of First Solar, Inc. and its subsidiaries in this Quarterly Report have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of First Solar management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Certain prior period balances have been reclassified to conform to the current period presentation.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and the accompanying notes. Despite our intention to establish accurate estimates and reasonable assumptions, actual results could differ materially from such estimates and assumptions. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any other period. The condensed consolidated balance sheet at December 31, 2018 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These interim financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2018 included in our Annual Report on Form 10-K, which has been filed with the SEC.

Unless expressly stated or the context otherwise requires, the terms “the Company,” “we,” “us,” “our,” and “First Solar” refer to First Solar, Inc. and its consolidated subsidiaries, and the term “condensed consolidated financial statements” refers to the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report.

2. Recent Accounting Pronouncements

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities, to simplify certain aspects of hedge accounting for both non-financial and financial risks and better align the recognition and measurement of hedge results with an entity’s risk management activities. ASU 2017-12 also amends certain presentation and disclosure requirements for hedging activities and changes how an entity assesses hedge effectiveness. The adoption of ASU 2017-12 in the first quarter of 2019 did not have a significant impact on our consolidated financial statements and associated disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), to provide financial statement users with more useful information about expected credit losses. ASU 2016-13 also changes how entities measure credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years and interim periods within those years beginning after December 15, 2019, and early adoption is permitted for periods beginning after December 15, 2018. We are currently evaluating the impact ASU 2016-13 will have on our consolidated financial statements and associated disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months and disclosing key information about leasing transactions. Leases are classified as either operating or financing, with such classification affecting the pattern of expense recognition in the income statement.



7

Table of Contents

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements, which provided an optional transition method to apply the new lease requirements through a cumulative-effect adjustment in the period of adoption.

We adopted ASU 2016-02 in the first quarter of 2019 using the optional transition method and elected certain practical expedients permitted under the transition guidance, which, among other things, allowed us to not reassess prior conclusions related to contracts containing leases or lease classification. The adoption primarily affected our condensed consolidated balance sheet through the recognition of $140.7 million of right-of-use assets and $119.9 million of lease liabilities as of January 1, 2019 and the derecognition of historical prepaid and deferred rent balances. The adoption did not have a significant impact on our results of operations or cash flows. See Note 7. “Leases” to our condensed consolidated financial statements for further discussion of the effects of the adoption of ASU 2016-02 and the associated disclosures.

3. Cash, Cash Equivalents, and Marketable Securities

Cash, cash equivalents, and marketable securities consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
Cash and cash equivalents:
 
 
 
 
Cash
 
$
1,180,410

 
$
1,202,774

Money market funds
 
41,158

 
200,788

Total cash and cash equivalents
 
1,221,568

 
1,403,562

Marketable securities:
 
 
 
 
Foreign debt
 
368,738

 
318,646

Foreign government obligations
 
30,350

 
98,621

U.S. debt
 
69,802

 
44,468

Time deposits
 
338,671

 
681,969

Total marketable securities
 
807,561

 
1,143,704

Total cash, cash equivalents, and marketable securities
 
$
2,029,129

 
$
2,547,266



The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within our condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018 to the total of such amounts as presented in the condensed consolidated statement of cash flows (in thousands):
 
 
Balance Sheet Line Item
 
June 30,
2019
 
December 31,
2018
Cash and cash equivalents
 
Cash and cash equivalents
 
$
1,221,568

 
$
1,403,562

Restricted cash  current (1)
 
Prepaid expenses and other current assets
 
16,244

 
19,671

Restricted cash  noncurrent (1)
 
Restricted cash and investments
 
95,756

 
139,390

Total cash, cash equivalents, and restricted cash
 
 
 
$
1,333,568

 
$
1,562,623

——————————
(1)
See Note 4. “Restricted Cash and Investments” to our condensed consolidated financial statements for discussion of our “Restricted cash” arrangements.

During the three and six months ended June 30, 2019, we sold marketable securities for proceeds of $20.0 million and realized no gain or loss on the sale. During the three and six months ended June 30, 2018, we sold marketable securities for proceeds of $10.8 million and realized gains of less than $0.1 million on such sales. See Note 8. “Fair Value Measurements” to our condensed consolidated financial statements for information about the fair value of our marketable securities.




8

Table of Contents

The following tables summarize the unrealized gains and losses related to our available-for-sale marketable securities, by major security type, as of June 30, 2019 and December 31, 2018 (in thousands):
 
 
As of June 30, 2019
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Foreign debt
 
$
368,988

 
$
448

 
$
698

 
$
368,738

Foreign government obligations
 
30,385

 

 
35

 
30,350

U.S. debt
 
69,671

 
177

 
46

 
69,802

Time deposits
 
338,671

 

 

 
338,671

Total
 
$
807,715

 
$
625

 
$
779

 
$
807,561

 
 
As of December 31, 2018
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Foreign debt
 
$
320,056

 
$
468

 
$
1,878

 
$
318,646

Foreign government obligations
 
99,189

 

 
568

 
98,621

U.S. debt
 
44,625

 
53

 
210

 
44,468

Time deposits
 
681,969

 

 

 
681,969

Total
 
$
1,145,839

 
$
521

 
$
2,656

 
$
1,143,704



As of June 30, 2019, we identified 12 investments totaling $139.7 million that had been in a loss position for a period of time greater than 12 months with unrealized losses of $0.5 million. As of December 31, 2018, we identified 15 investments totaling $207.2 million that had been in a loss position for a period of time greater than 12 months with unrealized losses of $1.8 million. Such unrealized losses were primarily due to increases in interest rates relative to rates at the time of purchase. Based on the underlying credit quality of the investments, we do not intend to sell these securities prior to the recovery of our cost basis. Therefore, we did not consider these securities to be other-than-temporarily impaired.

The following tables show unrealized losses and fair values for those marketable securities that were in an unrealized loss position as of June 30, 2019 and December 31, 2018, aggregated by major security type and the length of time the marketable securities have been in a continuous loss position (in thousands):
 
 
As of June 30, 2019
 
 
In Loss Position for
Less Than 12 Months
 
In Loss Position for
12 Months or Greater
 
Total
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Foreign debt
 
$
105,597

 
$
282

 
$
117,111

 
$
416

 
$
222,708

 
$
698

Foreign government obligations
 
21,957

 
27

 
8,393

 
8

 
30,350

 
35

U.S. debt
 
10,011

 
9

 
14,233

 
37

 
24,244

 
46

Total
 
$
137,565

 
$
318

 
$
139,737

 
$
461

 
$
277,302

 
$
779




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As of December 31, 2018
 
 
In Loss Position for
Less Than 12 Months
 
In Loss Position for
12 Months or Greater
 
Total
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Foreign debt
 
$
150,842

 
$
802

 
$
94,446

 
$
1,076

 
$
245,288

 
$
1,878

Foreign government obligations
 

 

 
98,621

 
568

 
98,621

 
568

U.S. debt
 
15,356

 
32

 
14,085

 
178

 
29,441

 
210

Total
 
$
166,198

 
$
834

 
$
207,152

 
$
1,822

 
$
373,350

 
$
2,656


The contractual maturities of our marketable securities as of June 30, 2019 were as follows (in thousands):
 
 
Fair
Value
One year or less
 
$
479,281

One year to two years
 
221,396

Two years to three years
 
76,804

Three years to four years
 
30,080

Total
 
$
807,561



4. Restricted Cash and Investments

Restricted cash and investments consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
 
June 30,
2019
 
December 31,
2018
Restricted cash
 
$
95,756

 
$
139,390

Restricted investments
 
232,835

 
179,000

Total restricted cash and investments (1)
 
$
328,591

 
$
318,390


——————————
(1)
There was an additional $16.2 million and $19.7 million of restricted cash included within “Prepaid expenses and other current assets” at June 30, 2019 and December 31, 2018, respectively.

At June 30, 2019 and December 31, 2018, our restricted cash consisted of deposits held by various banks to secure certain of our letters of credit and other deposits designated for the construction or operation of systems projects as well as the payment of amounts related to project specific debt financings. Restricted cash also included certain deposits held in custodial accounts to fund the estimated future costs of our solar module collection and recycling obligations.

At June 30, 2019 and December 31, 2018, our restricted investments consisted of long-term marketable securities that were also held in custodial accounts to fund the estimated future costs of collecting and recycling modules covered under our solar module collection and recycling program. As necessary, we fund any incremental amounts for our estimated collection and recycling obligations on an annual basis based on the estimated costs of collecting and recycling covered modules, estimated rates of return on our restricted investments, and an estimated solar module life of 25 years less amounts already funded in prior years. To ensure that amounts previously funded will be available in the future regardless of potential adverse changes in our financial condition (even in the case of our own insolvency), we have established a trust under which estimated funds are put into custodial accounts with an established and reputable bank, for which First Solar, Inc.; First Solar Malaysia Sdn. Bhd.; and First Solar Manufacturing GmbH are grantors. Trust funds may be disbursed for qualified module collection and recycling costs (including capital and facility related recycling costs), payments to customers for assuming collection and recycling obligations, and reimbursements of any overfunded amounts. Investments in the trust must meet certain investment quality criteria comparable to highly rated government or agency bonds.




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During the six months ended June 30, 2019, we sold certain restricted investments for proceeds of $47.9 million and realized gains of $15.0 million on such sales as part of efforts to align the currencies of the investments with those of the corresponding collection and recycling liabilities and disburse $14.9 million of overfunded amounts. During the six months ended June 30, 2018, we sold certain restricted investments for proceeds of $101.6 million, realized gains of $19.5 million on such sales, and withdrew the funds from the trust as a reimbursement of overfunded amounts. See Note 8. “Fair Value Measurements” to our condensed consolidated financial statements for information about the fair value of our restricted investments.

The following tables summarize the unrealized gains and losses related to our restricted investments, by major security type, as of June 30, 2019 and December 31, 2018 (in thousands):
 
 
As of June 30, 2019
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Foreign government obligations
 
$
120,973

 
$
11,570

 
$

 
$
132,543

U.S. government obligations
 
97,787

 
2,505

 

 
100,292

Total
 
$
218,760

 
$
14,075

 
$

 
$
232,835

 
 
As of December 31, 2018
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Foreign government obligations
 
$
73,798

 
$
14,234

 
$
235

 
$
87,797

U.S. government obligations
 
97,223

 
416

 
6,436

 
91,203

Total
 
$
171,021

 
$
14,650

 
$
6,671

 
$
179,000



As of June 30, 2019, we had no restricted investments in a loss position. As of December 31, 2018, we identified six restricted investments totaling $87.4 million that had been in a loss position for a period of time greater than 12 months with unrealized losses of $6.4 million. Such unrealized losses were primarily due to increases in interest rates relative to rates at the time of purchase.

The following table shows unrealized losses and fair values for those restricted investments that were in an unrealized loss position as of December 31, 2018, aggregated by major security type and the length of time the restricted investments have been in a continuous loss position (in thousands):
 
 
As of December 31, 2018
 
 
In Loss Position for
Less Than 12 Months
 
In Loss Position for
12 Months or Greater
 
Total
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Foreign government obligations
 
$
41,335

 
$
235

 
$

 
$

 
$
41,335

 
$
235

U.S. government obligations
 

 

 
87,401

 
6,436

 
87,401

 
6,436

Total
 
$
41,335

 
$
235

 
$
87,401

 
$
6,436

 
$
128,736

 
$
6,671



As of June 30, 2019, the contractual maturities of our restricted investments were between 10 years and 20 years.




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5. Consolidated Balance Sheet Details

Accounts receivable trade, net

Accounts receivable trade, net consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
Accounts receivable trade, gross
 
$
270,862

 
$
129,644

Allowance for doubtful accounts
 
(1,335
)
 
(1,362
)
Accounts receivable trade, net
 
$
269,527

 
$
128,282



At June 30, 2019 and December 31, 2018, $49.2 million and $8.5 million, respectively, of our accounts receivable trade, net were secured by letters of credit, bank guarantees, surety bonds, or other forms of financial security issued by creditworthy financial institutions.

Accounts receivable, unbilled and retainage

Accounts receivable, unbilled and retainage consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
Accounts receivable, unbilled
 
$
103,171

 
$
441,666

Retainage
 
24,801

 
16,500

Accounts receivable, unbilled and retainage
 
$
127,972

 
$
458,166



Inventories

Inventories consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
Raw materials
 
$
241,336

 
$
224,329

Work in process
 
47,743

 
41,294

Finished goods
 
446,699

 
252,372

Inventories
 
$
735,778

 
$
517,995

Inventories – current
 
$
586,621

 
$
387,912

Inventories – noncurrent
 
$
149,157

 
$
130,083






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Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
Prepaid expenses
 
$
117,375

 
$
90,981

Prepaid income taxes
 
71,402

 
59,319

Indirect tax receivables
 
37,583

 
26,327

Notes receivable (1)
 
23,911

 
5,196

Restricted cash
 
16,244

 
19,671

Derivative instruments (2)
 
1,719

 
2,364

Other current assets
 
37,332

 
39,203

Prepaid expenses and other current assets
 
$
305,566

 
$
243,061


——————————
(1)
In November 2014 and February 2016, we entered into a term loan agreement and a convertible loan agreement, respectively, with Clean Energy Collective, LLC (“CEC”). Our term loan bears interest at 16% per annum, and our convertible loan bears interest at 10% per annum. In November 2018, we amended the terms of the loan agreements to (i) extend their maturity to June 2020, (ii) waive the conversion features on our convertible loan, and (iii) increase the frequency of interest payments, subject to certain conditions. In January 2019, CEC finalized certain restructuring arrangements, which resulted in a dilution of our ownership interest in CEC and the loss of our representation on the company’s board of managers. As a result of such restructuring, CEC no longer qualified to be accounted for under the equity method. As of June 30, 2019, the aggregate balance outstanding on the loans was $23.6 million and was presented within “Prepaid expenses and other current assets.” As of December 31, 2018, the aggregate balance outstanding on the loans was $22.8 million and was presented within “Notes receivable, affiliate.”

(2)
See Note 6. “Derivative Financial Instruments” to our condensed consolidated financial statements for discussion of our derivative instruments.

Property, plant and equipment, net

Property, plant and equipment, net consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
Land
 
$
14,366

 
$
14,382

Buildings and improvements
 
566,496

 
567,605

Machinery and equipment
 
2,091,215

 
1,826,434

Office equipment and furniture
 
180,968

 
178,011

Leasehold improvements
 
49,045

 
49,055

Construction in progress
 
448,199

 
405,581

Property, plant and equipment, gross
 
3,350,289

 
3,041,068

Accumulated depreciation
 
(1,343,955
)
 
(1,284,857
)
Property, plant and equipment, net
 
$
2,006,334

 
$
1,756,211



Depreciation of property, plant and equipment was $43.7 million and $86.6 million for the three and six months ended June 30, 2019, respectively, and $24.6 million and $43.2 million for the three and six months ended June 30, 2018, respectively.




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PV solar power systems, net

Photovoltaic (“PV”) solar power systems, net consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
PV solar power systems, gross
 
$
346,150

 
$
343,061

Accumulated depreciation
 
(41,493
)
 
(34,421
)
PV solar power systems, net
 
$
304,657

 
$
308,640


Depreciation of PV solar power systems was $3.5 million and $7.0 million for the three and six months ended June 30, 2019, respectively, and $4.0 million and $8.3 million for the three and six months ended June 30, 2018, respectively.

Project assets

Project assets consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
Project assets – development costs, including project acquisition and land costs
 
$
299,592

 
$
298,070

Project assets – construction costs
 
230,357

 
200,359

Project assets
 
$
529,949

 
$
498,429

Project assets – current
 
$
1,703

 
$
37,930

Project assets – noncurrent
 
$
528,246

 
$
460,499



Capitalized interest

The cost of constructing project assets may include interest costs incurred during the construction period. The components of interest expense and capitalized interest were as follows during the three and six months ended June 30, 2019 and 2018 (in thousands):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Interest cost incurred
 
$
(10,161
)
 
$
(7,591
)
 
$
(21,109
)
 
$
(14,057
)
Interest cost capitalized – project assets
 
1,240

 
1,526

 
2,067

 
2,810

Interest expense, net
 
$
(8,921
)
 
$
(6,065
)
 
$
(19,042
)
 
$
(11,247
)





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Other assets

Other assets consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
 
 
June 30,
2019
 
December 31,
2018
Operating lease assets (1)
 
$
166,512

 
$

Note receivable (2)
 
7,968

 
8,017

Indirect tax receivables
 
8,372

 
22,487

Income taxes receivable
 
4,444

 
4,444

Equity method investments (3)
 
2,833

 
3,186

Deferred rent
 

 
27,249

Other
 
57,974

 
33,495

Other assets
 
$
248,103

 
$
98,878

——————————
(1)
See Note 7. “Leases” to our condensed consolidated financial statements for discussion of our lease arrangements.