8-KFinancial EventsRegulation FDExhibits & Filings

FIRST SOLAR, INC. 8-K Report, Exit or Disposal Costs (Jul 5, 2016)

Filed July 5, 2016For Securities:FSLR

Summary

First Solar, Inc. (FSLR) announced a significant strategic shift in its manufacturing operations via an 8-K filing on July 5, 2016. The company has elected to cease production of its crystalline silicon (c-Si) modules to reallocate capacity towards its Series 5 cadmium telluride (CdTe) module technology. This decision aligns with the company's focus on its core CdTe technology and utility-scale solar power systems, aiming to streamline operations and concentrate resources on its more advanced offerings. This strategic pivot is expected to result in charges between $90 million and $110 million, primarily in the second quarter and second half of 2016. These charges are mainly due to the impairment of long-lived and intangible assets associated with the c-Si manufacturing, including equipment, intellectual property, and goodwill. While the financial impact is significant, the company plans to redeploy the majority of its c-Si manufacturing workforce to the new Series 5 assembly line, which is slated to be operational in early 2017, mitigating some of the human capital impact.

Key Highlights

  • 1First Solar is discontinuing its crystalline silicon (c-Si) module production.
  • 2Production capacity will be reallocated to support the new Series 5 cadmium telluride (CdTe) module offering.
  • 3The company expects charges of $90 million to $110 million primarily related to asset impairment (long-lived and intangible assets, goodwill) from the c-Si exit.
  • 4The majority of these charges are anticipated in Q2 2016 and the second half of 2016.
  • 5Approximately $10 million of the charges will involve cash expenditures.
  • 6Most c-Si manufacturing employees are expected to be redeployed to the new Series 5 assembly line.
  • 7The new Series 5 assembly line is scheduled to be operational in early 2017.

Frequently Asked Questions

First Solar is discontinuing c-Si module production to reallocate its manufacturing capacity to support its newer, recently announced Series 5 cadmium telluride (CdTe) module offering. This strategic shift allows the company to focus on its core CdTe module technology and utility-scale photovoltaic solar power systems.

First Solar expects to incur charges ranging from $90 million to $110 million primarily due to the impairment of long-lived and intangible assets, including equipment, intellectual property, and goodwill associated with its c-Si manufacturing operations. A portion of these charges, approximately $10 million, will involve cash expenditures.

The majority of the charges are expected to be incurred in the second quarter of 2016, with the remaining amounts recognized throughout the second half of 2016.

The company intends to redeploy the majority of its crystalline silicon manufacturing associates to the new Series 5 assembly line, which is expected to become operational in early 2017. This aims to minimize workforce reductions and leverage existing talent.