8-KOther EventsExhibits & Filings

FIRST SOLAR, INC. 8-K Report, Corporate Update (Sep 30, 2011)

Filed September 30, 2011For Securities:FSLR

Summary

First Solar, Inc. (FSLR) announced on September 30, 2011, the closing of the sale of its 550-megawatt Desert Sunlight solar photovoltaic project in California to affiliates of GE Energy Financial Services and NextEra Energy Resources. While the sale has been completed, First Solar has entered into Engineering, Procurement, and Construction (EPC) and Operations and Maintenance (O&M) contracts for the project. This structure means First Solar will not recognize revenue for the project until construction is substantially complete, which is anticipated by the first quarter of 2015, despite receiving cash payments for milestones during construction. Investors should note the potential for a 'Repayment' obligation under specific circumstances related to project permitting during construction. This Repayment could require First Solar to return substantially all funds received for the project, plus associated costs, with ownership reverting to First Solar if not fully covered. While these arrangements introduce complexity and contingent liabilities, they also ensure First Solar's continued involvement through EPC and O&M services, mitigating immediate cash flow impacts of the project sale while deferring revenue recognition.

Key Highlights

  • 1First Solar has sold its 550 MW Desert Sunlight solar project to GE Energy Financial Services and NextEra Energy Resources.
  • 2The company has secured EPC and O&M contracts for the Desert Sunlight project post-sale.
  • 3Revenue recognition for the Desert Sunlight project is deferred until substantial construction completion, expected by Q1 2015.
  • 4First Solar may be obligated to make a 'Repayment' to the project owners under limited permitting-related circumstances during construction.
  • 5The 'Repayment' could approximate the total amounts received plus project costs, less revenues, with ownership potentially reverting to First Solar.
  • 6Cash payments will be received by First Solar upon achieving construction milestones, despite deferred revenue recognition.
  • 7The transaction structure highlights a potential model for project development, sale, and continued service engagement.

Frequently Asked Questions

The main event is the announcement of the closing of the sale of First Solar's 550-megawatt Desert Sunlight solar project to affiliates of GE Energy Financial Services and NextEra Energy Resources.

Revenue recognition is not expected to occur until construction is substantially complete, which First Solar anticipates by the first quarter of 2015, in accordance with GAAP.

The 'Repayment' is a potential obligation where First Solar might have to refund amounts received from the project sale and EPC contracts, plus accrued interest and costs, less project revenues, under specific limited circumstances related to project permitting during construction. In such an event, ownership of the project could transfer back to First Solar.

Yes, First Solar subsidiaries will receive cash payments under the EPC contracts as certain construction milestones are achieved throughout the construction period, even though revenue recognition is deferred.