9. Consolidated Balance Sheet Details

See Note 2. “Summary of Significant Accounting Policies,” for further discussion of our significant accounting policies.

Accounts receivable trade, net

Accounts receivable trade, net consisted of the following at December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012			December 31, 2011
Accounts receivable trade, gross	$	568,070		$	320,600
Allowance for doubtful accounts	(14,503		)	(10,032		)
Accounts receivable trade, net	$	553,567		$	310,568

At December 31, 2012, $104.5 million of our Accounts receivable trade, net, were secured by letters of credit, bank guarantees or other forms of financial security issued by credit worthy financial institutions.

Our historical solar module rebate program offered to certain customers ended as of September 30, 2011. Subsequent sales of solar modules are based upon a sales price without such rebate program. At December 31, 2011, we had $1.4 million of rebate claims accrued, which reduced our accounts receivable accordingly. There were no outstanding rebates as of December 31, 2012.

Accounts receivable, unbilled

Accounts receivable, unbilled was $401.0 million (including $58.4 million of retainage) and $533.4 million (including $35.4 million of retainage) at December 31, 2012 and December 31, 2011, respectively. We expect to bill and collect accounts receivable, unbilled within the next 12 months.

Included within Accounts receivable, unbilled is the current portion of retainage. Retainage refers to the portion of the 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.

Inventories

Inventories consisted of the following at December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012		December 31, 2011
Raw materials	$	184,006	$	230,675
Work in process	14,868		28,817
Finished goods	370,422		277,126
Total inventories	$	569,296	$	536,618
Inventories — current	$	434,921	$	475,867
Inventories — noncurrent (1)	$	134,375	$	60,751

(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 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 December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012		December 31, 2011
Prepaid expenses	$	39,582	$	151,630
Derivative instruments	7,230		63,673
Deferred costs of goods sold	96,337		1,152
Other assets - current	64,219		112,577
Prepaid expenses and other current assets	$	207,368	$	329,032

Property, plant and equipment, net

Property, plant and equipment, net consisted of the following at December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012			December 31, 2011
Buildings and improvements	$	446,133		$	393,676
Machinery and equipment	1,415,632			1,453,293
Office equipment and furniture	117,228			110,936
Leasehold improvements	49,367			48,374
Depreciable property, plant and equipment, gross	2,028,360			2,006,279
Accumulated depreciation	(803,501		)	(617,787		)
Depreciable property, plant and equipment, net	1,224,859			1,388,492
Land	22,256			8,065
Construction in progress	51,133			419,401
Stored assets (1)	227,134			—
Property, plant and equipment, net	$	1,525,382		$	1,815,958

(1) Consists of machinery and equipment (“stored assets”) that were originally purchased for installation in our previously planned manufacturing capacity expansions. We intend to install and place the stored assets into service in yet to be determined locations 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 our long-lived assets may not be recoverable. We ceased the capitalization of interest on such stored assets once they were physically received from the related machinery and equipment vendors.

See Note 12. “Economic Development Funding,” to our consolidated financial statements for further information about grants recorded as a reduction to the carrying value of the property, plant and equipment related to the expansion of our manufacturing plant in Frankfurt (Oder), Germany.

Depreciation of property, plant and equipment was $263.3 million, $230.2 million, and $150.5 million for the years ended December 31, 2012, December 31, 2011, and December 31, 2010, respectively.

In December 2011, February 2012, and April 2012, we announced a series of restructuring initiatives. As part of these initiatives, certain property, plant and equipment were determined to be impaired and impairment charges were recorded. See Note 4. “Restructuring,” for more information on the long-lived asset impairments related to these restructuring initiatives.

Capitalized interest

We capitalized interest costs incurred into our property, plant and equipment or our project assets as follows during the years ended December 31, 2012, December 31, 2011, and December 31, 2010 (in thousands):



	2012			2011			2010
Interest cost incurred	$	(24,191	)	$	(15,349	)	$	(10,069	)
Interest cost capitalized – property, plant and equipment	4,201			7,483			6,177
Interest cost capitalized – project assets	6,102			7,766			3,886
Interest expense, net	$	(13,888	)	$	(100	)	$	(6	)

Project assets

Project assets consisted of the following at December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012		December 31, 2011
Project assets — land	$	9,164	$	13,704
Project assets — project acquistion and development costs	157,489		136,251
Project assets — construction costs	192,171		224,926
Project assets	$	358,824	$	374,881

Deferred project costs

As of December 31, 2012, deferred project costs were $508.1 million, of which, $21.4 million was classified as current and $486.7 million was classified as noncurrent. As of December 31, 2011, deferred project costs were $320.4 million, of which $197.7 million was classified as current and $122.7 million was classified as noncurrent. We classify deferred project costs as current if completion of the sale and the meeting of all revenue recognition criteria is expected within the next 12 months.

Note receivable

On April 8, 2009, we entered into a credit facility agreement with a solar project entity of one of our customers for an original available amount of €17.5 million to provide financing for a PV power generation facility. The credit facility replaced a bridge loan that we had made to this entity. The credit facility bears interest at 8% per annum and is due on December 31, 2026. As of December 31, 2012 and December 31, 2011, the balance on this credit facility was €7.0 million. The outstanding amount of this credit facility is included within “Other assets” on our consolidated balance sheets.

Other assets

Other assets consisted of the following at December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012		December 31, 2011
Retainage (1)	$	270,364	$	—
Other assets - noncurrent	56,452		67,615
Other assets	$	326,816	$	67,615

(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 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 2014 through 2015, after certain construction milestones have been met.

Accrued expenses

Accrued expenses consisted of the following at December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012		December 31, 2011
Accrued compensation and benefits	$	105,677	$	57,480
Accrued property, plant and equipment	20,564		41,015
Accrued inventory	52,408		46,028
Accrued project assets and deferred project costs	76,133		34,837
Product warranty liability	90,581		78,637
Accrued expenses in excess of normal product warranty liability and related expenses (1)	75,020		89,893
Other accrued expenses	134,050		58,769
Accrued expenses	$	554,433	$	406,659

(1) $59.2 million of accrued expenses in excess of normal product warranty liability and related expenses as of December 31, 2012, consisted primarily of commitments to certain customers, each related to the manufacturing excursion during the period between June 2008 to June 2009, whereby certain modules manufactured during that time period may experience premature power loss once installed in the field. The accrued expenses as of December 31, 2012 included the following commitments to certain customers, each related to such manufacturing excursion and our related remediation program: (i) $22.5 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) $34.8 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 December 31, 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 have proactively contacted 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.

Deferred revenue

We recognize deferred revenue as net sales only after all revenue recognition criteria are met. We expect to recognize these amounts as net sales within the next 12 months.

Other current liabilities

Other current liabilities consisted of the following at December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012		December 31, 2011
Derivative instruments	$	5,825	$	37,342
Deferred tax liabilities	2,226		6,612
Billings in excess of costs and estimated earnings	2,422		32,204
Payments and billings for deferred project costs and deferred cost of sales (1)	94,535		192,440
Other liabilities - current	21,824		26,048
Other current liabilities	$	126,832	$	294,646

(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 solar power project related sales contracts for which all revenue recognition criteria for real estate transactions have not yet been met. The associated solar power project related costs are included as current deferred project costs or prepaid expenses and other current assets.

Other liabilities

Other liabilities consisted of the following at December 31, 2012 and December 31, 2011 (in thousands):



	December 31, 2012		December 31, 2011
Product warranty liability	$	101,015	$	79,105
Other taxes payable	102,599		73,054
Billings in excess of costs and estimated earnings	47,623		—
Other liabilities - noncurrent	40,979		53,973
Other liabilities	$	292,216	$	206,132