Note 9. Consolidated Balance Sheet Details (Tables)
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9 Months Ended |
Sep. 30, 2012
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Consolidated Balance Sheet Details [Abstract] |
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Schedule of Accounts Receivable |
Accounts receivable trade, net consisted of the following at September 30, 2012 and December 31, 2011 (in thousands):
| | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Accounts receivable trade, gross | | $ | 480,575 |
| | $ | 320,600 |
| Allowance for doubtful accounts | | (12,935 | ) | | (10,032 | ) | Accounts receivable trade, net | | $ | 467,640 |
| | $ | 310,568 |
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Schedule of Inventory, Current and Noncurrent |
Inventories consisted of the following at September 30, 2012 and December 31, 2011 (in thousands): | | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Raw materials | | $ | 188,845 |
| | $ | 230,675 |
| Work in process | | 7,244 |
| | 28,817 |
| Finished goods | | 478,374 |
| | 277,126 |
| Inventories | | $ | 674,463 |
| | $ | 536,618 |
| Inventories — current | | $ | 537,567 |
| | $ | 475,867 |
| Inventories — noncurrent (1) | | $ | 136,896 |
| | $ | 60,751 |
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(1) We purchase a critical raw material that is used in our core production process in quantities that exceed anticipated consumption within our operating cycle (which is 12 months). We classify the raw materials that we do not expect to be consumed within our operating cycle as noncurrent. The increase in our noncurrent inventories was primarily the result of a decrease in the amount of such critical raw material we anticipate consuming in our next operating cycle. Such decrease resulted from a combination of the planned reduction in our manufacturing capacity and the amount of critical raw material for our next operating cycle that is required to be sourced through vendor supply agreements. |
Prepaid expenses and other current assets |
Prepaid expenses and other current assets consisted of the following at September 30, 2012 and December 31, 2011 (in thousands): | | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Prepaid expenses | | $ | 36,313 |
| | $ | 151,630 |
| Derivative instruments | | 2,842 |
| | 63,673 |
| Deferred costs of goods sold | | 95,940 |
| | 1,152 |
| Other assets — current | | 81,101 |
| | 112,577 |
| Prepaid expenses and other current assets | | $ | 216,196 |
| | $ | 329,032 |
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Property, plant and equipment, net |
Property, plant and equipment, net consisted of the following at September 30, 2012 and December 31, 2011 (in thousands): | | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Buildings and improvements | | $ | 438,672 |
| | $ | 393,676 |
| Machinery and equipment | | 1,367,752 |
| | 1,453,293 |
| Office equipment and furniture | | 115,616 |
| | 110,936 |
| Leasehold improvements | | 54,299 |
| | 48,374 |
| Depreciable property, plant and equipment, gross | | 1,976,339 |
| | 2,006,279 |
| Accumulated depreciation | | (777,044 | ) | | (617,787 | ) | Depreciable property, plant and equipment, net | | 1,199,295 |
| | 1,388,492 |
| Land | | 22,348 |
| | 8,065 |
| Construction in progress (1) | | 328,046 |
| | 419,401 |
| Property, plant and equipment, net | | $ | 1,549,689 |
| | $ | 1,815,958 |
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| | (1) | Included within construction in progress as of September 30, 2012 is $222.8 million of machinery and equipment (“stored assets”) that was originally purchased for installation in our previously planned manufacturing capacity expansions. We intend to install and place the stored assets into service once market demand supports such additional manufacturing capacity. As the stored assets are neither in the condition or location to produce modules as intended, we will not begin depreciation until the assets are placed into service. The stored assets are evaluated for impairment whenever events or changes in business circumstances arise that may indicate that the carrying amount of the stored assets may not be recoverable. |
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Schedule of Capitalized Interest |
We capitalized interest costs incurred into property, plant and equipment or project assets as follows during the three and nine months ended September 30, 2012 and September 30, 2011 (in thousands): | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | | September 30, 2012 | | September 30, 2011 | | September 30, 2012 | | September 30, 2011 | Interest cost incurred | | $ | (4,254 | ) | | $ | (4,847 | ) | | $ | (20,304 | ) | | $ | (8,638 | ) | Interest cost capitalized —– property, plant and equipment | | 715 |
| | 1,442 |
| | 3,538 |
| | 4,553 |
| Interest cost capitalized —– project assets | | 637 |
| | 3,405 |
| | 5,572 |
| | 4,085 |
| Interest expense, net | | $ | (2,902 | ) | | $ | — |
| | $ | (11,194 | ) | | $ | — |
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Schedule of Project Assets Noncurrent |
Project assets consisted of the following at September 30, 2012 and December 31, 2011 (in thousands): | | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Project assets — land | | $ | 8,900 |
| | $ | 13,704 |
| Project assets — development costs | | 142,848 |
| | 136,251 |
| Project assets — construction costs | | 99,064 |
| | 224,926 |
| Project assets | | $ | 250,812 |
| | $ | 374,881 |
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Schedule of Other Assets, Noncurrent |
Other assets consisted of the following at September 30, 2012 and December 31, 2011 (in thousands):
| | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Retainage (1) | | $ | 225,483 |
| | $ | — |
| Other assets - noncurrent | | 54,592 |
| | 67,615 |
| Other assets | | $ | 280,075 |
| | $ | 67,615 |
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| | (1) | Certain of the EPC contracts for solar power plants we build contain retainage provisions. Retainage refers to the portion of the EPC contract price earned by us for work performed, but held for payment by our customer as a form of security until we reach certain construction milestones. We consider whether collectability of such retainage is reasonably assured in connection with our overall assessment of the collectability of amounts due or that will become due under our EPC contracts. Retainage expected to be collected within the next 12 months is classified within Accounts receivable, unbilled on the condensed consolidated balance sheet. After we have met the EPC contract requirements to bill for retainage, we will reclassify such amounts to Accounts receivable trade, net. Amounts are expected to be collected in 2013 through 2015, after certain construction milestones have been met. |
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Schedule of Accrued Liabilities |
Accrued expenses consisted of the following at September 30, 2012 and December 31, 2011 (in thousands): | | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Accrued compensation, benefits and severance | | $ | 97,128 |
| | $ | 57,480 |
| Accrued property, plant and equipment | | 27,979 |
| | 41,015 |
| Accrued inventory | | 61,063 |
| | 46,028 |
| Accrued project assets and deferred project costs | | 97,880 |
| | 34,837 |
| Product warranty liability (Note 15) | | 82,795 |
| | 78,637 |
| Accrued expenses in excess of normal product warranty liability and related expenses (1) | | 116,655 |
| | 89,893 |
| Other accrued expenses | | 91,656 |
| | 58,769 |
| Accrued expenses | | $ | 575,156 |
| | $ | 406,659 |
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(1) $100.9 million of accrued expenses in excess of normal product warranty liability and related expenses as of September 30, 2012 consisted primarily of commitments to certain customers, each related to the manufacturing excursion occurring during the period between June 2008 to June 2009 (“2008-2009 manufacturing excursion”), whereby certain modules manufactured during that time period may experience premature power loss once installed in the field. The accrued expense as of September 30, 2012 included the following commitments to certain customers, each related to the 2008-2009 manufacturing excursion and our related remediation program: (i) $61.9 million in estimated expenses for remediation efforts related to module removal, replacement and logistical services committed to by us beyond the normal product warranty; and (ii) $37.8 million in estimated compensation payments to customers, under certain circumstances, for power lost prior to remediation of the customer’s system under our remediation program.
$15.8 million of accrued expenses in excess of normal product warranty liability and related expenses as of September 30, 2012 consisted of commitments to certain customers related to a workmanship issue potentially affecting a limited number of solar modules manufactured between October 2008 to June 2009. A limited number of the modules manufactured during that time utilized a new material and process to attach the cord plate (junction box) to the module which may not adhere securely over time. We know the serial numbers of the affected modules and are proactively contacting the system owners to repair or replace the potentially impaired modules currently in service in a manner consistent with our normal workmanship warranty. For roof-mounted systems, we will also remove and replace the affected modules at no cost to the system owner, which remediation is in excess of our limited workmanship warranty obligation.
Our best estimate for such remediation programs is based on evaluation and consideration of currently available information, including the estimated number of potentially affected modules in the field, historical experience related to our remediation efforts, customer-provided data related to potentially affected systems, the estimated costs of performing the removal, replacement and logistical services and the post-sale expenses covered under our remediation program. If any of our estimates prove incorrect, we could be required to accrue additional expenses. |
Schedule of Other Liabilities |
Other current liabilities
Other current liabilities consisted of the following at September 30, 2012 and December 31, 2011 (in thousands): | | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Derivative instruments | | $ | 10,427 |
| | $ | 37,342 |
| Deferred tax liabilities | | 1,898 |
| | 6,612 |
| Payments and billings for deferred project costs and deferred cost of sales (1) | | 224,759 |
| | 192,440 |
| Other liabilities — current | | 22,929 |
| | 58,252 |
| Other current liabilities | | $ | 260,013 |
| | $ | 294,646 |
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| | (1) | Payments and billings for deferred project costs and deferred cost of sales represent customer payments received or customer billings made under the terms of certain solar power project related sales contracts for which all revenue recognition criteria for real estate transactions under ASC 360 have not yet been met. Such solar power project related costs are included as current deferred project costs or other current assets. |
Other liabilities
Other liabilities consisted of the following at September 30, 2012 and December 31, 2011 (in thousands): | | | | | | | | | | | | September 30, 2012 | | December 31, 2011 | Product warranty liability | | $ | 94,419 |
| | $ | 79,105 |
| Other taxes payable | | 96,481 |
| | 73,054 |
| Payments and billings for deferred project costs and deferred cost of sales (1) | | 468,562 |
| | 167,374 |
| Other liabilities — noncurrent | | 42,585 |
| | 53,973 |
| Other liabilities | | $ | 702,047 |
| | $ | 373,506 |
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| | (1) | Payments and billings for deferred project costs and deferred cost of sales represent customer payments received or customer billings made under the terms of certain solar power project related sales contracts for which all revenue recognition criteria for real estate transactions under ASC 360 have not yet been met. Such solar power project related costs are included as noncurrent deferred project costs. |
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