Note 5. Business Acquisitions

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

5. Business Acquisitions

2013 Acquisitions

General Electric

In August 2013, we acquired all of the CdTe PV specific intellectual property assets and CdTe solar manufacturing processes (“GE Intellectual Property”) of General Electric Company (“GE”) pursuant to a Master Transaction Agreement and an Intellectual Property Purchase Agreement (the “Agreements”), by and between First Solar and GE and certain of their subsidiaries. Pursuant to the Agreements, First Solar received the GE Intellectual Property and GE received 1,750,000 shares of First Solar common stock, which had a market value of $83.8 million on August 5, 2013. The GE Intellectual Property included trade secrets, technology, business and technical information and know-how, databases, and other confidential and proprietary information as well as solar manufacturing processes and protocols. The combination of the GE Intellectual Property and our existing manufacturing capacity is expected to further advance CdTe technology and to achieve a more rapid increase in module efficiency.

In connection with applying the acquisition method of accounting, $73.7 million of the purchase price consideration was assigned to an in-process research and development (“IPR&D”) intangible asset at fair value that will be amortized over its useful life upon successful completion of the project or expensed earlier if impaired, and $10.1 million was assigned to goodwill. The underlying technology and IPR&D acquired from GE focuses on increasing the efficiency of the CdTe solar modules while at the same time lowering production and installation costs. We are expecting to integrate the acquired technology into our manufacturing process by 2016 in order to increase the efficiency of our solar modules. We valued the acquired IPR&D using the reproduction cost method and the income approach, as appropriate. The income approach reflected the present value of forecasted cash flows derived from the incremental module efficiency benefits. The remaining costs to complete the acquired R&D projects are estimated to be approximately $30.0 million over the next 2 to 3 years. The amortization period of the projects once completed is expected to be 8 to 10 years. IPR&D assets allocated to individual projects will be expensed earlier if impaired or determined to be abandoned due to obsolescence or technological advancement.

The pro forma effect of this all-stock acquisition was not material to our historical consolidated balance sheets, results of operations or cash flows. Substantially all of the goodwill and intangible assets recorded for this acquisition are deductible for tax purposes.

TetraSun

In April 2013, we acquired 100% of the stock not previously owned by us, of TetraSun, Inc. (“TetraSun”), a development stage company with high efficiency crystalline silicon technology that is expected to provide improvements in performance relative to conventional crystalline silicon solar modules. This all-cash acquisition was not material to our historical consolidated balance sheets, results of operations or cash flows. We have included the financial results of TetraSun in our consolidated financial statements from the date of acquisition.

In connection with applying the acquisition method of accounting, $39.1 million of the purchase price consideration was assigned to an IPR&D intangible asset that will be amortized over its useful life upon successful completion of the project or expensed earlier if impaired, and $6.1 million was assigned to goodwill. The acquired IPR&D involves a project to develop a lower cost and higher efficiency crystalline silicon cell. We valued the IPR&D using the multi-period excess earnings method under the income approach. The method reflected the present value of the projected cash flows that are expected to be generated by the IPR&D beginning in 2015 less charges representing the contribution of other assets to those cash flows. The remaining costs to complete the R&D project are estimated to be approximately $6.0 million through 2014. The amortization period of the project once completed is expected to be 10 to 12 years. 

Solar Chile

In January 2013, we acquired 100% of the ownership interest of Solar Chile S.A. (“Solar Chile”), a Chilean-based solar project development company with substantially all of its assets being a portfolio of early to mid-stage utility-scale PV power projects in northern Chile, in an all-cash transaction which was not material to our historical consolidated balance sheets, results of operations or cash flows. We have included the financial results of Solar Chile in our consolidated financial statements from the date of acquisition. In connection with applying the acquisition method of accounting, $3.4 million was assigned to goodwill.

In connection with the TetraSun and Solar Chile acquisitions we agreed to pay additional amounts to sellers contingent upon achievement by the acquired businesses of certain negotiated goals, such as targeted project and module shipment volume milestones. We have recognized $16.5 million and $11.7 million of current and long-term liabilities, respectively, for these contingent obligations based on their estimated fair value as of December 31, 2013.

2011 Acquisition

Ray Tracker

On January 4, 2011, we acquired 100% of the ownership interest of Ray Tracker, Inc. (“Ray Tracker”), a tracking technology and PV BoS business in an all-cash transaction, which was not material to our consolidated balance sheets, results of operations or cash flows. We have included the financial results of Ray Tracker in our consolidated financial statements from the date of acquisition.