6. Consolidated Balance Sheet Details

Accounts receivable trade, net

Accounts receivable trade, net consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015			December 31, 2014
Accounts receivable trade, gross	$	328,929		$	142,542
Allowance for doubtful accounts	(2		)	(7,108		)
Accounts receivable trade, net	$	328,927		$	135,434

At September 30, 2015 and December 31, 2014, $20.6 million and $21.4 million, respectively, of our accounts receivable trade, net were secured by letters of credit, bank guarantees, or other forms of financial security issued by creditworthy financial institutions.

Accounts receivable, unbilled and retainage

Accounts receivable, unbilled and retainage consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015		December 31, 2014
Accounts receivable, unbilled	$	219,455	$	41,868
Retainage	21,664		35,103
Accounts receivable, unbilled and retainage	$	241,119	$	76,971

Accounts receivable, unbilled represents revenue that has been recognized in advance of billing the customer, which is common for long-term construction contracts. For example, we recognize revenue from contracts for the construction and sale of PV solar power systems, which include the sale of such assets over the construction period using applicable accounting methods. One such method is the percentage-of-completion method, which recognizes revenue and gross profit as work is performed based on the relationship between actual costs incurred compared to the total estimated costs for the contract. Under this accounting method, revenue could be recognized under applicable revenue recognition criteria in advance of billing the customer, resulting in an amount recorded to “Accounts receivable, unbilled and retainage.” Once we meet the billing criteria under a construction contract, we bill our customer accordingly and reclassify the “Accounts receivable, unbilled and retainage” to “Accounts receivable trade, net.” Billing requirements vary by contract but are generally structured around completion of certain construction milestones.

The current portion of retainage is included within “Accounts receivable, unbilled and 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. Retainage included within “Accounts receivable, unbilled and retainage” is expected to be billed and collected within the next 12 months.

Inventories

Inventories consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015		December 31, 2014
Raw materials	$	158,816	$	157,468
Work in process	25,467		20,829
Finished goods	303,458		442,408
Inventories	$	487,741	$	620,705
Inventories — current	$	379,183	$	505,088
Inventories — noncurrent (1)	$	108,558	$	115,617


(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.

Balance of systems parts

Balance of systems parts were $104.4 million and $125.1 million as of September 30, 2015 and December 31, 2014, respectively, and represented mounting and electrical and other construction parts purchased for PV solar power systems to be constructed or currently under construction, which we held title to and were not yet installed in a system. Such construction parts included items such as posts, tilt brackets, tables, harnesses, combiner boxes, inverters, cables, tracker equipment, and other parts we may purchase or assemble for the systems we construct. Balance of systems parts do not include any solar modules that we manufacture. We carry these parts at the lower of cost or market, with market being based primarily on recoverability through installation in a solar power plant or recoverability through a sales agreement.

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015		December 31, 2014
Prepaid expenses	$	64,337	$	42,193
Derivative instruments	1,733		9,791
Restricted cash	39,756		74,695
Other current assets	104,573		75,472
Prepaid expenses and other current assets	$	210,399	$	202,151

Property, plant and equipment, net

Property, plant and equipment, net consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015			December 31, 2014
Land	$	12,155		$	12,378
Buildings and improvements (1)	411,594			397,087
Machinery and equipment (1)	1,815,151			1,649,363
Office equipment and furniture	141,751			134,268
Leasehold improvements	50,392			50,096
Construction in progress	41,909			154,497
Stored assets (2)	139,507			155,389
Property, plant and equipment, gross	2,612,459			2,553,078
Less: accumulated depreciation	(1,282,405		)	(1,133,090		)
Property, plant and equipment, net	$	1,330,054		$	1,419,988


(1)	In June 2015, we reclassified $15.2 million and $2.5 million from "Assets held for sale" to "Building and improvements" and "Machinery and equipment," respectively, as these assets no longer met the criteria to be classified as held for sale.

(2)

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 when such assets are required or beneficial to our existing installed manufacturing capacity or when market demand supports additional or market-specific manufacturing capacity. During the nine months ended September 30, 2015, we transferred $15.9 million of stored assets to our manufacturing facility in Perrysburg, Ohio for use in the production of solar modules. As the remaining stored assets are neither in the condition nor location to produce modules as intended, we will not begin depreciation until such assets are placed into service. The stored assets are evaluated for impairment under a held and used impairment model whenever events or changes in business circumstances arise, including consideration of technological obsolescence, that may indicate that the carrying amount of our long-lived assets may not be recoverable. We ceased the capitalization of interest on our stored assets once they were physically received from the related machinery and equipment vendors.

Depreciation of property, plant and equipment was $61.3 million and $185.4 million for the three and nine months ended September 30, 2015, respectively, and $59.7 million and $183.1 million for the three and nine months ended September 30, 2014, respectively.

PV solar power systems, net

PV solar power systems, net consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015			December 31, 2014
PV solar power systems, gross	$	96,532		$	47,727
Accumulated depreciation	(3,112		)	(1,334		)
PV solar power systems, net	$	93,420		$	46,393

In September 2015, we placed $50.7 million of projects into service, net of investment tax credits, including our 30 MW AC Barilla Solar project in Pecos County, Texas and various other projects in India and Australia. Depreciation of PV solar power systems was $0.6 million and $1.8 million for the three and nine months ended September 30, 2015, respectively, and $0.6 million and $0.7 million for the three and nine months ended September 30, 2014, respectively.

Capitalized interest

The cost of constructing facilities, equipment, and project assets includes interest costs incurred during the assets’ construction period. The components of interest expense and capitalized interest were as follows during the three and nine months ended September 30, 2015 and 2014 (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Interest cost incurred	$	(5,697	)	$	(2,415	)	$	(13,923	)	$	(7,451	)
Interest cost capitalized — property, plant and equipment	290			544			1,152			1,566
Interest cost capitalized — project assets	3,632			1,782			9,976			4,456
Interest expense, net	$	(1,775	)	$	(89	)	$	(2,795	)	$	(1,429	)

Project assets and deferred project costs

Project assets primarily consist of costs relating to solar power projects in various stages of development that are capitalized prior to entering into a definitive sales agreement for the projects, including projects that have begun commercial operation under power purchase agreements (“PPAs”) and are actively marketed and intended to be sold. These project related costs include costs for land, development, and construction of a PV solar power system. Development costs may include legal, consulting, permitting, interconnection, and other similar costs. Once we enter into a definitive sales agreement, we reclassify project assets to deferred project costs on our condensed consolidated balance sheet until the sale is completed and we have met all of the criteria to recognize the sale as revenue, which is typically subject to real estate revenue recognition requirements. We expense project assets and deferred project costs to cost of sales after each respective project is sold to a customer and all revenue recognition criteria have been met (matching the expensing of costs to the underlying revenue recognition method). We classify project assets as noncurrent due to the nature of solar power projects (long-lived assets) and the time required to complete all activities to develop, construct, and sell projects, which is typically longer than 12 months.

Deferred project costs represent (i) costs that we capitalize as project assets for arrangements that we account for as real estate transactions after we have entered into a definitive sales arrangement, but before the sale is completed or before we have met all criteria to recognize the sale as revenue, (ii) recoverable pre-contract costs that we capitalize for arrangements accounted for as long-term construction contracts prior to entering into a definitive sales agreement, or (iii) costs that we capitalize for arrangements accounted for as long-term construction contracts after we have signed a definitive sales agreement, but before all revenue recognition criteria have been met. We classify deferred project costs as current if completion of the sale and the meeting of all revenue recognition criteria are expected within the next 12 months.

If a project is completed and begins commercial operation prior to entering into or the closing of a sales arrangement, the completed project will remain in project assets or deferred project costs until the earliest of the closing of the sale of such project, our decision to temporarily hold such project, or one year from the project’s commercial operations date. Any income generated by a project while it remains within project assets or deferred project costs is accounted for as a reduction to our basis in the project, which at the time of sale and meeting all revenue recognition criteria will be recorded within cost of sales.

Project assets and deferred project costs consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015		December 31, 2014
Project assets — land	$	27,229	$	20,170
Project assets — development costs including project acquisition costs	383,210		359,203
Project assets — construction costs	619,997		408,402
Project assets	1,030,436		787,775
Deferred project costs — current	98,421		29,354
Deferred project costs — noncurrent	—		22,573
Deferred project costs	98,421		51,927
Total project assets and deferred project costs	$	1,128,857	$	839,702

Other assets

Other assets consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015		December 31, 2014
Notes receivable (1)	$	12,111	$	12,096
Income taxes receivable	4,058		4,850
Deferred rent	23,433		23,823
Other	25,571		20,901
Other assets	$	65,173	$	61,670

(1)

On April 8, 2009, we entered into a credit facility agreement with a solar power project entity of one of our customers for an available amount of €17.5 million to provide financing for a PV solar power system. The credit facility replaced a bridge loan that we had made to this entity. The credit facility bears interest at 8.0% per annum payable quarterly with the full amount due on December 31, 2026. As of September 30, 2015 and December 31, 2014, the balance on the credit facility was €7.0 million ($7.9 million and $8.5 million, respectively, at the balance sheet dates). On February 7, 2014, we entered into a convertible loan agreement with a strategic entity for an available amount of up to $5.0 million. The loan bears interest at 8.0% per annum. As of September 30, 2015 and December 31, 2014, the balance outstanding on the convertible loan was $4.3 million and $3.5 million, respectively.

Goodwill

Goodwill, summarized by relevant reporting unit, consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands):



	December 31, 2014			Acquisitions		September 30, 2015
CdTe components	$	403,420		$	—	$	403,420
Crystalline silicon components	6,097			—		6,097
Systems	68,833			—		68,833
Accumulated impairment losses	(393,365		)	—		(393,365		)
Total	$	84,985		$	—	$	84,985

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value assigned to the individual assets acquired and liabilities assumed. We do not amortize goodwill, but instead are required to test goodwill for impairment at least annually. If necessary, we would record any impairment in accordance with ASC 350, Intangibles - Goodwill and Other. We perform impairment tests between scheduled annual tests in the fourth quarter if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value.

Other intangibles, net

Other intangibles, net consisted of intangible assets acquired as part of our GE and TetraSun acquisitions and our internally-generated intangible assets, substantially all of which were patents on technologies related to our products and production processes. We record an asset for patents, after the patent has been issued, based on the legal, filing, and other costs incurred to secure them. We amortize intangible assets on a straight-line basis over their estimated useful lives once the intangible assets meet the criteria to be amortized. During the nine months ended September 30, 2015, $73.7 million of in-process research and development from the GE acquisition was reclassified to developed technology and began amortizing over its useful life of 10 years, and $39.1 million of in-process research and development from the TetraSun acquisition was also reclassified to developed technology and began amortizing over its useful life of 12 years.

The following tables summarize our intangible assets at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015
	Gross Amount		Accumulated Amortization			Net Amount
Patents	$	5,523	$	(1,610	)	$	3,913
Developed technology	114,614		(6,057		)	108,557
Total	$	120,137	$	(7,667	)	$	112,470



	December 31, 2014
	Gross Amount		Accumulated Amortization			Net Amount
Patents	5,347		$	(1,208	)	$	4,139
Developed technology	2,757		(460		)	2,297
In-process research and development	112,800		—			112,800
Total	$	120,904	$	(1,668	)	$	119,236

Amortization expense for our intangible assets was $3.0 million and $6.3 million for the three and nine months ended September 30, 2015, respectively, and $0.4 million and $0.9 million for the three and nine months ended and September 30, 2014, respectively.

Accrued expenses

Accrued expenses consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015		December 31, 2014
Accrued compensation and benefits	$	57,641	$	43,072
Accrued property, plant and equipment	12,077		30,723
Accrued inventory and balance of systems parts	58,471		36,233
Accrued project assets and deferred project costs	163,164		113,012
Product warranty liability (1)	48,311		69,656
Accrued expenses in excess of normal product warranty liability and related expenses (1)	6,383		7,800
Other	66,120		87,660
Accrued expenses	$	412,167	$	388,156


(1)	See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for further discussion of “Product warranty liability” and “Accrued expenses in excess of normal product warranty liability and related expenses.”

Billings in excess of costs and estimated earnings

Billings in excess of costs and estimated earnings was $74.1 million and $195.3 million at September 30, 2015 and December 31, 2014, respectively, and represented billings made or payments received in excess of revenue recognized on contracts accounted for under the percentage-of-completion method. Typically, billings are made based on the completion of certain construction milestones as provided for in the sales arrangement, and the timing of revenue recognition may be different from when we can bill or collect from a customer.

Payments and billings for deferred project costs

Payments and billings for deferred project costs was $22.7 million and $60.6 million at September 30, 2015 and December 31, 2014, respectively, and represented 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 corresponding solar power project related costs are included as deferred project costs. We classify such amounts as current or noncurrent depending on when all revenue recognition criteria are expected to be met, consistent with the classification of the associated deferred project costs.

Other current liabilities

Other current liabilities consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015		December 31, 2014
Deferred revenue	$	9,199	$	21,879
Derivative instruments	10,299		7,657
Contingent consideration (1)	4,132		36,817
Financing liability (2)	5,289		—
Other	14,116		22,349
Other current liabilities	$	43,035	$	88,702


(1)	See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for further discussion.


(2)	See Note 9. “Investments in Unconsolidated Affiliates and Joint Ventures” to our condensed consolidated financial statements for further discussion of the financing liabilities associated with our leaseback of the Maryland Solar project.

Other liabilities

Other liabilities consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015		December 31, 2014
Product warranty liability (1)	$	184,759	$	153,401
Other taxes payable	54,523		82,555
Derivative instruments	15,364		9,041
Contingent consideration (1)	7,237		17,077
Liability in excess of normal product warranty liability and related expenses (1)	20,111		23,139
Financing liability (2)	37,207		—
Other	45,308		35,333
Other liabilities	$	364,509	$	320,546


(1)	See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for further discussion on “Product warranty liability,” “Contingent consideration,” and “Liability in excess of normal product warranty liability and related expenses.”


(2)	See Note 9. “Investments in Unconsolidated Affiliates and Joint Ventures” to our condensed consolidated financial statements for further discussion of the financing liabilities associated with our leaseback of the Maryland Solar project.