8-KLeadership ChangesFinancial EventsRegulation FD+2

FIRST SOLAR, INC. 8-K Report, Exit or Disposal Costs (Dec 14, 2011)

Filed December 14, 2011For Securities:FSLR

Summary

First Solar, Inc. (FSLR) filed an 8-K on December 14, 2011, detailing significant restructuring initiatives aimed at cost reduction and operational efficiency. The company anticipates incurring up to $85 million in charges, with the majority recognized in Q4 2011. These charges include up to $75 million for asset impairment and associated costs, primarily due to a reduction in certain R&D activities focused on an alternative PV product. The company is refocusing its R&D efforts on advanced CdTe PV technologies and will be reducing its global workforce by less than 1.5%, impacting approximately 85 employees in the U.S., largely related to the R&D shift. Additionally, the filing announces executive departures and provides updates on financial guidance for 2011 and 2012, along with plans to adjust manufacturing production capacity.

Key Highlights

  • 1First Solar expects to incur total restructuring charges of up to $85 million, primarily in Q4 2011.
  • 2Up to $75 million of the charges are for asset impairment and associated costs, largely driven by a shift in R&D focus away from an alternative PV product to advanced CdTe PV technologies.
  • 3The company plans to reduce its workforce by up to 100 positions globally (less than 1.5% of total workforce), with approximately 85 employees affected in the U.S.
  • 4TK Kallenbach, President of the Components Business Group, and James Zhu, Chief Accounting Officer, will depart the company effective January 1, 2012, and May 1, 2012, respectively.
  • 5Mark Widmar, CFO, will assume the additional role of Chief Accounting Officer.
  • 6First Solar is evaluating reductions in its 2012 annual manufacturing production by more than 400MW, aiming for approximately 2GW of module production with an 80% capacity utilization rate.
  • 7The company issued updated 2011 financial guidance and provided 2012 financial guidance concurrently with this filing.

Frequently Asked Questions

The restructuring charges, estimated up to $85 million, are primarily due to asset impairment and associated costs related to a significant reduction in certain research and development activities focused on an alternative photovoltaic (PV) product. First Solar is refocusing its R&D efforts on advanced CdTe PV technologies.

First Solar expects to eliminate up to 100 positions company-wide, which represents less than 1.5% of its global workforce. Approximately 70% of these reductions in the U.S. workforce are linked to the R&D refocusing.

TK Kallenbach, President of the Components Business Group, and James Zhu, Chief Accounting Officer, will be leaving the company. The CFO, Mark Widmar, will also take on the role of Chief Accounting Officer.

Yes, the company is evaluating reductions in its 2012 annual manufacturing production by over 400MW. This move aims to balance production capabilities with market demand, strategically idle some capacity for process upgrades, and better align production with market expectations. Their Mesa, Arizona plant is expected to qualify in 2012 but not commence commercial production until 2013.