First Solar (FSLR) 10-Q 29 Apr 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
	3 Months Ended Mar. 27, 2010	Apr. 23, 2010	Jun. 27, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	FIRST SOLAR, INC.
Entity Central Index Key	0001274494
Document Type	10-Q
Document Period End Date	2010-03-27
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-25
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$7,360,781,207
Entity Common Stock, Shares Outstanding		85,291,195

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands	Mar. 27, 2010	Dec. 26, 2009
Current assets:
Cash and cash equivalents	$420,886	$664,499
Marketable securities	293,288	120,236
Accounts receivable trade, net	269,222	226,826
Accounts receivable, unbilled	25,898	58
Inventories	172,119	152,821
Project assets	109	1,081
Deferred tax asset, net	22,487	21,679
Prepaid expenses and other current assets	200,524	164,071
Total current assets	1,404,533	1,351,271
Property, plant and equipment, net	1,030,219	988,782
Project assets	131,919	131,415
Deferred tax asset, net	150,031	130,515
Marketable securities	305,802	329,608
Restricted cash and investments	77,343	36,494
Investment in related party	25,000	25,000
Goodwill	286,515	286,515
Inventories	26,945	21,695
Other assets	35,207	48,217
Total assets	3,473,514	3,349,512
Current liabilities:
Accounts payable	76,029	75,744
Income tax payable	15,729	8,740
Accrued expenses	141,470	186,682
Current portion of long-term debt	26,355	28,559
Other current liabilities	62,891	95,202
Total current liabilities	322,474	394,927
Accrued solar module collection and recycling liability	97,836	92,799
Long-term debt	136,129	146,399
Other liabilities	70,220	62,600
Total liabilities	626,659	696,725
Stockholders' equity:
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 85,279,882 and 85,208,199 shares issued and outstanding at March 27, 2010 and December 26, 2009, respectively	85	85
Additional paid-in capital	1,674,507	1,658,091
Contingent consideration	2,844	2,844
Accumulated earnings	1,173,708	1,001,363
Accumulated other comprehensive loss	(4,289)	(9,596)
Total stockholders' equity	2,846,855	2,652,787
Total liabilities and stockholders' equity	$3,473,514	$3,349,512

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical)
	Mar. 27, 2010	Dec. 26, 2009
Stockholders' equity:
Common stock, par value	0.001	0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	85,279,882	85,208,199
Common stock, shares outstanding	85,279,882	85,208,199

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data	3 Months Ended Mar. 27, 2010	3 Months Ended Mar. 28, 2009
Condensed Consolidated Statements of Operations [Abstract]
Net sales	$567,961	$418,208
Cost of sales	285,925	182,924
Gross profit	282,036	235,284
Operating expenses:
Research and development	22,888	11,704
Selling, general and administrative	66,864	49,315
Production start-up	1,143	6,209
Total operating expenses	90,895	67,228
Operating income	191,141	168,056
Foreign currency (loss) gain	(696)	1,834
Interest income	5,648	2,103
Interest expense, net		(935)
Other expense, net	(734)	(1,326)
Income before income taxes	195,359	169,732
Income tax expense	23,014	5,137
Net income	$172,345	$164,595
Net income per share:
Basic	2.04	2.01
Diluted	$2	1.99
Weighted-average number of shares used in per share calculations:
Basic	84,505	81,685
Diluted	86,092	82,612

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands	3 Months Ended Mar. 27, 2010	3 Months Ended Mar. 28, 2009
Cash flows from operating activities:
Cash received from customers	$447,878	$325,712
Cash paid to suppliers and associates	(404,696)	(259,726)
Interest received	9,359	2,885
Interest paid	(74)	(2,208)
Income taxes paid, net of refunds	(18,892)	658
Excess tax benefit from share-based compensation arrangements	(1,568)	(3,254)
Other operating activities	(734)	(326)
Net cash provided by operating activities	31,273	63,741
Cash flows from investing activities:
Purchases of property, plant and equipment	(105,976)	(86,404)
Purchases of marketable securities	(383,757)	(117,554)
Proceeds from maturities of marketable securities	33,756	7,000
Proceeds from sales of marketable securities	200,220	29,787
Investment in note receivable		(13,750)
Payments received on notes receivable	35,817
Increase in restricted investments	(43,443)	(313)
Other investing activities	1,019
Net cash used in investing activities	(262,364)	(181,234)
Cash flows from financing activities:
Proceeds from stock option exercises	1,107	1,440
Repayment of long-term debt	(714)	(3,858)
Proceeds from issuance of debt, net of issuance costs		45,267
Excess tax benefit from share-based compensation arrangements	1,568	3,254
Proceeds from economic development funding		615
Other financing activities		(1)
Net cash provided by financing activities	1,961	46,717
Effect of exchange rate changes on cash and cash equivalents	(14,483)	(20,510)
Net decrease in cash and cash equivalents	(243,613)	(91,286)
Cash and cash equivalents, beginning of the period	664,499	716,218
Cash and cash equivalents, end of the period	420,886	624,932
Supplemental disclosure of noncash investing and financing activities:
Property, plant and equipment acquisitions funded by liabilities	$56,329	$35,480

Basis of Presentation

Basis of Presentation
	3 Months Ended Mar. 27, 2010
Basis of Presentation [Abstract]
Basis of Presentation	Note 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of First Solar, Inc. and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the instructions to Form 10-Q and Article10 of RegulationS-X of the Securities and Exchange Commission. Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Operating results for the three months ended March27, 2010 are not necessarily indicative of the results that may be expected for the year ending December25, 2010, or for any other period. The balance sheet at December26, 2009 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These financial statements and notes should be read in conjunction with the financial statements and notes thereto for the year ended December26, 2009 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission. We report our results of operations using a 52 or 53week fiscal year, which ends on the Saturday on or before December31. Our fiscal quarters end on the Saturday closest to the end of the applicable calendar quarter. Fiscal 2010 will end on December25, 2010 and will consist of 52 weeks. Unless expressly stated or the context otherwise requires, the terms we, our, us and First Solar refer to First Solar, Inc. and its subsidiaries.

Summary of Significant Accounti

Summary of Significant Accounting Policies
	3 Months Ended Mar. 27, 2010
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 2. Summary of Significant Accounting Policies These condensed consolidated financial statements and accompanying notes should be read in conjunction with our annual consolidated financial statements and notes thereto for the year ended December26, 2009 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission. Our significant accounting policies reflect the adoption of Financial Accounting Standards Board (FASB)Accounting Standards Codification Topic (ASC)605, Revenue Recognition Multiple Deliverable Revenue Arrangements, in the first quarter of 2010.

Recent Accounting Pronouncement

Recent Accounting Pronouncements
	3 Months Ended Mar. 27, 2010
Recent Accounting Pronouncements [Abstract]
Recent Accounting Pronouncements	Note 3. Recent Accounting Pronouncements In October2009, the FASB issued Accounting Standards Codification Update (ASU)2009-13, Revenue Recognition (Topic 605) Multiple-Deliverable Revenue Arrangements. ASU 2009-13 revises certain accounting for revenue arrangements with multiple deliverables. In particular when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, ASU 2009-13 allows use of a best estimate of the selling price to allocate the arrangement consideration among them. ASU 2009-13 is effective for the first quarter of 2011, with early adoption permitted. We elected to early adopt ASU 2009-13 at the beginning of the first quarter of fiscal 2010. The adoption of ASU 2009-13 did not have a material impact on our financial position, results of operations, or cash flows. In October2009, the FASB issued ASU 2009-14, Software (Topic 985) - Certain Revenue Arrangements That Include Software Elements. This ASU changes the accounting model for revenue arrangements that involve a combination of tangible products and software. Tangible products containing software components and non-software components that function together to deliver the tangible products essential functionality are no longer within the scope of the software revenue recognition guidance in ASC 985. ASU 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June15, 2010, with early adoption permitted. We elected to early adopt ASU 2009-14 at the beginning of the first quarter of fiscal 2010. The adoption of ASU 2009-14 did not have a material impact on our financial position, results of operations, or cash flows. In October2009, the FASB issued ASU 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This ASU amends the accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features or other options. ASU 2009-15 is effective for fiscal years beginning on or after December15, 2009. The adoption of ASU 2009-15 did not have a material impact on our financial position, results of operations, or cash flows. In December2009, the FASB issued ASU 2009-16, Transfers and Servicing (Topic 860) Accounting for Transfers of Financial Assets. This ASU amends the accounting for transfers of financials assets and requires disclosure of more information about transfers of financial assets, including securitizations, and about where entities have continuing exposure to the risks related to transferred financial assets. ASU 2009-16 is effective at the start of a reporting entitys first fiscal year beginning after November15, 2009, with early adoption not permitted. The adoption of ASU 2009-16 did not have a material impact on our financial position, results of operations, or cash flows. In December2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This ASU changes how a reporting entity determines when an entity that i

Acquisition

Acquisition
	3 Months Ended Mar. 27, 2010
Acquisition [Abstract]
Acquisition	Note 4. Acquisitions OptiSolar On April3, 2009, we completed the acquisition of the solar power project development business (the Project Business) of OptiSolar Inc. (OptiSolar). Pursuant to an Agreement and Plan of Merger (the Merger Agreement) dated March2, 2009, by and among First Solar, Inc., First Solar Acquisition Corp. (Merger Sub), OptiSolar and OptiSolar Holdings LLC (OptiSolar Holdings), Merger Sub merged with and into OptiSolar, with OptiSolar surviving as a wholly-owned subsidiary of First Solar, Inc. (the Merger). Pursuant to the Merger, all the outstanding shares of common stock of OptiSolar held by OptiSolar Holdings were exchanged for 2,972,420 shares of First Solar common stock, par value $0.001 per share (the Merger Shares), of which 732,789 shares were issued and deposited with an escrow agent to support certain indemnification obligations of OptiSolar Holdings. Also, 355,096 shares were holdback shares as further described below under Contingent Consideration (the Holdback Shares). As of March27, 2010, 2,951,256 Merger Shares had been issued. The period during which claims for indemnification from the escrow fund may be initiated began on April3, 2009 and will end on April3, 2011. Purchase Price Consideration The total consideration for this acquisition, based on the closing price of our common stock on April3, 2009 of $134.38 per share, was $399.4million. Contingent Consideration Pursuant to the Merger Agreement, of the 2,972,420 Merger Shares, as of April3, 2009, 355,096 shares were Holdback Shares that were issuable to OptiSolar Holdings upon satisfaction of conditions relating to certain then-existing liabilities of OptiSolar. As of March27, 2010, 333,932 Holdback Shares had been issued to OptiSolar Holdings. The estimated fair value of the 21,164 Holdback Shares remaining to be issued at March27, 2010 was $2.8million and has been classified separately within stockholders equity on our balance sheet. Subsequent to March27, 2010, we issued 9,205 additional Holdback Shares to OptiSolar Holdings. Goodwill We recorded the excess of the acquisition date fair value of consideration transferred over the estimated fair value of the net tangible assets and intangible assets acquired as goodwill. Subsequent to the acquisition of OptiSolar, we adjusted goodwill downward during 2009 by $8.5 million as additional information relating to acquired deferred tax assets became available. We have allocated $251.3million and $1.4million of this goodwill to our components reporting segment and our systems segment (reported under Other in our disclosure of segment operating results at Note 20. Segment Reporting), respectively. This goodwill is not deductible for tax purposes. Acquired project assets Management engaged a third-party valuation firm to assist in the determination of the fair value of the acquired project development business. In our determination of the fair value of the project assets acquired, we considered among other factors, three generally accepted valuation approaches: the income approach, market approach, and cost approach. We selected the approaches that are most indicative of fair v

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	3 Months Ended Mar. 27, 2010
Goodwill and Intangible Assets [Abstract]
Goodwill and Intangible Assets	Note 5. Goodwill and Intangible Assets Goodwill On November30, 2007, we acquired 100% of the outstanding membership interests of Turner Renewable Energy, LLC. Under the purchase method of accounting, we allocated $33.4million to goodwill through December29, 2007, which represents the excess of the purchase price over the fair value of the identifiable net tangible and intangible assets of Turner Renewable Energy, LLC. All of this goodwill was allocated to our systems segment (reported under Other in our disclosure of segment operating results at Note 20. Segment Reporting). At March27, 2010 and December26, 2009, the carrying amount of this goodwill was $33.8million. On April3, 2009, we acquired the solar power project development business of OptiSolar. Under the acquisition method of accounting, we allocated $261.1million to goodwill (excluding subsequent adjustments of $8.5million), which primarily represents the synergies and economies of scale expected from acquiring OptiSolars project pipeline and using our solar modules in the acquired projects. During 2009, we adjusted goodwill downward by $8.5million as additional information relating to acquired deferred tax assets became available. We have allocated $251.3million and $1.4million of this goodwill to our components reporting segment and systems segment (reported under Other in our disclosure of segment operating results at Note 20. Segment Reporting), respectively. At March27, 2010 and December26, 2009, the carrying amount of this goodwill was $252.7million. See Note 4. Acquisitions, to our condensed consolidated financial statements for additional information about this acquisition. The changes in the carrying amount of goodwill for the three months ended March27, 2010 were as follows (in thousands): Components Systems Consolidated Ending balance, December26, 2009 $ 251,275 $ 35,240 $ 286,515 Adjustments Ending balance, March27, 2010 $ 251,275 $ 35,240 $ 286,515 ASC 350, Intangibles Goodwill and Other, requires us to test goodwill for impairment at least annually, or sooner, if facts or circumstances between scheduled annual tests indicate that it is more likely than not that the fair value of a reporting unit that has goodwill might be less than its carrying value. We performed our goodwill impairment test in the fourth fiscal quarter of the year ended December26, 2009 and determined that the fair value of our goodwill substantially exceeded the carrying value. Therefore we concluded that our goodwill was not impaired. We have also concluded that there have been no changes in facts and circumstances since the date of that test that would trigger an interim goodwill impairment test. Project Assets In connection with the acquisition of the solar power project development business of OptiSolar, we measured at fair value certain acquired project assets based on the varying development stages of each project asset on the acquisition date. Once we enter into a definitive sales agreement, we reclassify these costs to deferred project co

Cash and Investments

Cash and Investments
	3 Months Ended Mar. 27, 2010
Cash and Investments [Abstract]
Cash and Investments	Note 6. Cash and Investments Cash, cash equivalents, and marketable securities consisted of the following at March27, 2010 and December26, 2009 (in thousands): March 27, December 26, 2010 2009 Cash and cash equivalents: Cash $ 247,364 $ 269,068 Cash equivalents: Money market mutual fund 173,522 395,431 Total cash and cash equivalents 420,886 664,499 Marketable securities: Asset-backed securities 3,278 5,544 Certificates of deposit 10,704 Commercial paper 9,088 Corporate debt securities 192,428 115,248 Federal agency debt 73,166 78,911 Foreign agency debt 224,410 168,963 Foreign government obligations 14,728 10,128 Supranational debt 67,272 71,050 U.S. government obligations 4,016 Total marketable securities 599,090 449,844 Total cash, cash equivalents, and marketable securities $ 1,019,976 $ 1,114,343 We have classified our marketable securities as available-for-sale. Accordingly, we record them at fair value and account for net unrealized gains and losses as part of accumulated other comprehensive income. We report realized gains and losses on the sale of our marketable securities in earnings, computed using the specific identification method. During the three months ended March27, 2010, we realized $0.3million in gains and $0.1million in losses on our marketable securities. During the three months ended March28, 2009, we realized an immaterial amount in gains and did not realize any losses on our marketable securities. See Note 10. Fair Value Measurement, to our condensed consolidated financial statements for information about the fair value measurement of our marketable securities. All of our available-for-sale marketable securities are subject to a periodic impairment review. We consider a marketable debt security to be impaired when its fair value is less than its carrying cost, in which case we would further review the investment to determine whether it is other-than-temporarily impaired. When we evaluate an investment for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, our intent to sell, and whether it is more likely than not we will be required to sell the investment before we have recovered its cost basis. If an investment is other-than-temporarily impaired, we write it down through earnings to its impaired value and establish that as a new cost basis for the investment. We did not identify any of our marketable securities as other-than-temporarily impaired at March27, 2010 and December26, 2009. The following table summarizes the unrealized gains and losses related to our investments in marketable securities designated as available-for-sale, by major security type as of March27, 2010 and December26, 2009 (in thousands):

Restricted Cash and Investments

Restricted Cash and Investments
	3 Months Ended Mar. 27, 2010
Restricted Cash and Investment [Abstract]
Restricted Cash and Investment	Note 7. Restricted Cash and Investments Restricted cash and investments consisted of the following at March27, 2010 and December26, 2009 (in thousands): March 27, December 26, 2010 2009 Restricted cash $ 21 $ 27 Restricted investments 77,322 36,467 Total restricted cash and investments noncurrent $ 77,343 $ 36,494 At March27, 2010 and December26, 2009, our restricted investments consisted of long-term marketable securities that we hold through a custodial account to fund future costs of our solar module collection and recycling program. We pre-fund our estimated solar module collection and recycling costs at the time of module sale through a custodial account with a large bank as the investment advisor in the name of a trust, for which First Solar Inc., First Solar Malaysia Sdn. Bhd., and First Solar Manufacturing GmbH are grantors. We fund this custodial account within 60days of the beginning of a fiscal year for the prior year module sales, assuming for this purpose a minimum service life of 25years for our solar modules. The following table summarizes unrealized gains and losses related to our restricted investments in marketable securities designated as available-for-sale by major security type as of March27, 2010 and December26, 2009 (in thousands): As of March 27, 2010 Gross Gross Estimated Amortized Unrealized Unrealized Fair Security Type Cost Gains Losses Value Foreign government obligations $ 71,060 $ 2,092 $ 940 $ 72,212 U.S. government obligations 5,312 202 5,110 Total $ 76,372 $ 2,092 $ 1,142 $ 77,322 As of December 26, 2009 Gross Gross Estimated Amortized Unrealized Unrealized Fair Security Type Cost Gains Losses Value Foreign government obligations $ 34,403 $ 1,308 $ $ 35,711 U.S. government obligations 783 27 756 Total $ 35,186 $ 1,308 $ 27 $ 36,467 As of March27, 2010 and December26, 2009, the contractual maturities of these available-for-sale marketable securities were between 18 and 26years.

Consolidated Balance Sheet Deta

Consolidated Balance Sheet Details
	3 Months Ended Mar. 27, 2010
Consolidated Balance Sheet Details [Abstract]
Consolidated Balance Sheet Details	Note 8. Consolidated Balance Sheet Details Accounts receivable trade, net Accounts receivable trade consisted of the following at March27, 2010 and December26, 2009 (in thousands): March 27, December 26, 2010 2009 Accounts receivable, trade gross $ 269,222 $ 227,816 Allowance for doubtful account (990 ) Accounts receivable trade, net $ 269,222 $ 226,826 The increase in accounts receivable trade during the three months ended March27, 2010 was mainly due to higher shipment volumes and the timing of shipments to customers during the quarter. During 2009, we amended our Long-Term Supply Contracts with certain of our customers to implement a program which extends a price rebate to certain of these customers for solar modules purchased from us. The intent of this program is to enable our customers to successfully compete in our core segments in Germany. The rebate program applies a specified rebate rate to solar modules sold for solar power projects in Germany at the beginning of each quarter for the upcoming quarter. The rebate program is subject to periodic review and we will adjust the rebate rate quarterly upward or downward as appropriate. The rebate period began during the third quarter of 2009 and ends at the end of the fourth quarter of 2010. Customers need to meet certain requirements in order to be eligible for and benefit from this program. We account for these rebates as a reduction to the selling price of our solar modules and, therefore, as a reduction in revenue at the time of sale. No rebates granted under this program can be claimed as cash; instead, rebates may only be applied to reduce outstanding accounts receivable balances. During the three months ended March27, 2010, we extended rebates to customers in the amount of 20.0million ($27.8million at the average exchange rate of $1.39/1.00). At March 27, 2010, we had 31.8million ($42.6million at the balance sheet close rate on March27, 2010 of $1.34/1.00) of rebate claims accrued, which reduced our accounts receivable accordingly. In June2009, we provided an allowance for doubtful accounts receivable in the amount of $7.0 million due to uncertainty about the collectability of the outstanding accounts receivable from a specific customer. As of December26, 2009, we had collected $6.0million of the overdue accounts receivable from this specific customer and reduced our allowance for the doubtful account accordingly. During the three months ended March27, 2010, we collected the remaining $1.0million. Accounts receivable, unbilled We recognize revenue from long-term contracts for the construction and sale of project assets and solar power systems over the contractual period under applicable accounting methods. Under the percentage-of-completion method of accounting, sales and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at the completion of the contract. We recognize revenues that will not be billed under the terms of the contracts until a later date in accounts receivable, unb

Derivative Financial Instrument

Derivative Financial Instruments
	3 Months Ended Mar. 27, 2010
Derivative Financial Instruments [Abstract]
Derivative Financial Instruments	Note 9. Derivative Financial Instruments As a global company, we are exposed in the normal course of business to interest rate and foreign currency risks that could affect our net assets, financial position, results of operations, and cash flows. We use derivative instruments to hedge against certain risks, such as these, and we only hold derivative instruments for hedging purposes, not for speculative or trading purposes. Our use of derivative instruments is subject to strict internal controls based on centrally defined, performed, and controlled policies and procedures. Depending on the terms of the specific derivative instruments and market conditions, some of our derivative instruments may be assets and others liabilities at any particular point in time. As required by ASC 815, Derivatives and Hedging, we report all of our derivative instruments that are within the scope of that accounting standard at fair value on our balance sheet. Depending on the substance of the hedging purpose for our derivative instruments, we account for changes in the fair value of some of them using cash-flow-hedge accounting pursuant to ASC 815 and of others by recording the changes in fair value directly to current earnings (so-called economic hedges). These accounting approaches and the various classes of risk that we are exposed to in our business and the risk management systems using derivative instruments that we apply to these risks are described below. See Note 10. Fair Value Measurement, to our condensed consolidated financial statements for information about the techniques we use to measure the fair value of our derivative instruments. The following table presents the fair values of derivative instruments included in our consolidated balance sheet as of March27, 2010 and December26, 2009 (in thousands): March 27, 2010 Other Other Other Assets - Other Assets - Liabilities - Liabilities Current Noncurrent Current Noncurrent Derivatives designated as hedging instruments under ASC 815: Foreign exchange forward contracts $ 21,127 $ 794 $ 964 $ Interest rate swap contracts 252 1,286 Total derivatives designated as hedging instruments 21,127 794 1,216 1,286 Derivatives not designated as hedging instruments under ASC 815: Foreign exchange forward contracts 3,425 3,978 Total derivatives not designated as hedging instruments 3,425 3,978 Total derivative instruments $ 24,552 $ 794 $ 5,194 $ 1,286 December 26, 2009 Other Other Other Assets - Other Assets - Liabilities - Liabilities - Current Noncurrent Current Noncurrent Derivatives designated as hedging instruments under ASC 815:

Fair Value Measurement

Fair Value Measurement
	3 Months Ended Mar. 27, 2010
Fair Value Measurement [Abstract]
Fair Value Measurement	Note 10. Fair Value Measurement ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and provides financial statement disclosure requirements for fair value measurements. ASC 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. ASC 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows: Level 1 Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. Level 2 Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. Level 3 Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about the assumptions that market participants would use to price an asset or liability. When available, we use quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, we measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates. Following is a description of the valuation techniques that we use to measure the fair value of assets and liabilities that we measure and report at fair value on a recurring or on a one-time basis: Cash equivalents. At March27, 2010, our cash equivalents consisted of money market mutual funds. We value our cash equivalents using observable inputs that reflect quoted prices for securities with identical characteristics, and accordingly, we classify the valuation techniques that use these inputs as Level 1. Marketable securities. At March27, 2010, our marketable securities consisted of asset-backed securities, certificates of deposit, commercial paper, corporate debt securities, federal and foreign agency debt, U.S. and foreign government obligations, and supranational debt. We value our marketable securities using quoted prices for securities with similar characteristics and other observable inputs (such as interest rates that are observable at commonly quoted intervals), and accordingly, we classify the valuation techniques that use these inputs

Related Party Transactions

Related Party Transactions
	3 Months Ended Mar. 27, 2010
Related Party Transactions [Abstract]
Related Party Transactions	Note 11. Related Party Transactions During 2008, we entered into a long-term solar module supply agreement with a company based in the United States that supplies and installs solar power systems to commercial and residential customers and that also qualifies as a related party. During the three months ended March27, 2010, we recognized $9.6million in net sales to this related party. At March27, 2010, we had accounts receivable from this related party of $6.7million.

Notes Receivable

Notes Receivable
	3 Months Ended Mar. 27, 2010
Notes Receivable [Abstract]
Notes Receivable	Note 12. Notes Receivable On April8, 2009 we entered into a credit facility agreement with a solar project entity of one of our customers for an available amount of 17.5million ($23.5million at the balance sheet close rate on March27, 2010 of $1.34/1.00) to provide financing for a photovoltaic 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 December31, 2026. As of March27, 2010 and December26, 2009, the balance on this credit facility was 7.0million and 17.5 million, respectively ($9.4million and $23.5million at the balance sheet close rate on March27, 2010 of $1.34/1.00). The outstanding amount of this credit facility is included within Other assets noncurrent on our consolidated balance sheets. On April21, 2009, we entered into a revolving VAT financing facility agreement for an available amount of 9.0million ($12.1million at the balance sheet close rate on March27, 2010 of $1.34/1.00) with the same solar project entity with which we entered into the credit facility agreement on April8, 2009. The VAT facility agreement pre-finances the amounts of German value added tax (VAT)and any other tax obligations of similar nature during the construction phase of the photovoltaic power generation facility. Borrowings under this facility are short-term in nature, since the facility is repaid when VAT amounts are reimbursed by the government. The VAT facility agreement bears interest at the rate of Euribor plus 1.2% and matures on December31, 2010. As of March27, 2010, the facility was fully repaid and there was no balance outstanding. As of December26, 2009, the balance on this financing agreement was 1.4million ($1.9million at the balance sheet close rate on March27, 2010 of $1.34/1.00). The outstanding amount of this financing agreement was included within Prepaid expenses and other current assets on our consolidated balance sheets during the year ended December26, 2009. In October2009, we entered into a fixed rate note with a solar power project entity to finance construction and start-up costs of a photovoltaic facility in Germany. This note provides funding in the amount of 19.2million ($25.7million at the balance sheet close rate on March 27, 2010 of $1.34/1.00). The fixed rate note is due on May31, 2010 and bears interest at 7% per annum. The fixed rate note is collateralized by a bank account pledge agreement, a security assignment agreement, a partnership interest pledge agreement, and a share pledge agreement. 19.2million ($25.7million at the balance sheet close rate on March27, 2010 of $1.34/1.00) was outstanding as of March27, 2010 and December26, 2009. The outstanding amount of this fixed rate note is included within Prepaid expenses and other current assets on our consolidated balance sheets. Subsequent to March27, 2010, we received the full repayment of this fixed rate note, including interest. In October2009, we entered into a fixed rate note with another solar power project entity to finance construction and start-up costs of a photovoltaic facility in Germany. This note provides funding in the amou

Debt

Debt
	3 Months Ended Mar. 27, 2010
Debt [Abstract]
Debt	Note 13. Debt Our long-term debt at March27, 2010 and December26, 2009 consisted of the following (in thousands): March 27, December 26, Type 2010 2009 Malaysian Facility Agreement Fixed rate term loan $ 78,149 $ 84,166 Malaysian Facility Agreement Floating rate term loan (1) 78,149 84,166 Director of Development of the State of Ohio 9,419 9,994 Director of Development of the State of Ohio 139 Capital lease obligations 1 2 165,718 178,467 Less unamortized discount (3,234 ) (3,509 ) Total long-term debt 162,484 174,958 Less current portion (26,355 ) (28,559 ) Noncurrent portion $ 136,129 $ 146,399 (1) We entered into an interest rate swap contract related to this loan. See Note 9. Derivative Instruments, to our condensed consolidated financial statements. We did not have any short-term debt at March27, 2010 and December26, 2009. Revolving Credit Facility On September4, 2009, we entered into a revolving credit facility pursuant to a credit agreement among First Solar, Inc., certain designated Borrowing Subsidiaries (consisting of First Solar Manufacturing GmbH, a German subsidiary, and other subsidiaries of our Company who may in the future be designated as borrowers pursuant to the credit agreement), and several lenders. JPMorgan Chase Bank, N.A. and Bank of America served as Joint-Lead Arrangers and Bookrunners, with JPMorgan also acting as Administrative Agent. The credit agreement provides First Solar, Inc. and the Borrowing Subsidiaries with a senior secured three-year revolving credit facility in an aggregate available amount of $300.0million, a portion of which is available for letters of credit and swingline loans. Subject to certain conditions, we have the right to request an increase in the aggregate commitments under the credit facility up to $400.0million. In connection with the credit agreement, we also entered into a guarantee and collateral agreement and foreign security agreements. Borrowings under the credit agreement currently bear interest at (i)LIBOR (adjusted for eurocurrency reserve requirements) plus a margin of 2.75% or (ii)a base rate as defined in the credit agreement plus a margin of 1.75%, depending on the type of borrowing requested by us. These margins are subject to adjustments depending on our consolidated leverage ratio and the credit rating of the facility provided by Moodys Investors Service, Inc. and Standard and Poors Rating Services. At March27, 2010, we had no borrowings outstanding and $48.7million in letters of credit drawn on the revolving credit facility, leaving approximately $251.3million in capacity available under the revolving credit facility, $26.3million of which may be used for letters of credit. As of March27, 2010, based on applicable indices, the all-in effective three month LIBOR borrowing rate was 3.51%. In addition to paying interest on outstanding principal under the credit agreement, we are required to pay a commitment fee current

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Mar. 27, 2010
Commitments and Contingencies [Abstract]
Commitments and Contingencies	Note 14. Commitments and Contingencies Financial guarantees In the normal course of business, we occasionally enter into agreements with third parties under which we guarantee the performance of our subsidiaries related to certain service contracts, which may include services such as development, engineering, procurement of permits and equipment, construction management, and monitoring and maintenance. These agreements meet the definition of a guarantee according to ASC 460, Guarantees. As of March27, 2010, none of these guarantees were material to our financial position. Loan guarantees At March27, 2010 our only loan guarantees were guarantees of our own debt as disclosed in Note 13.Debt, to our condensed consolidated financial statements. Commercial commitments During the three months ended March27, 2010, we entered into three commercial commitments in the form of letters of credit related to our systems business totaling 2.1million ($2.8 million at the balance sheet close rate on March27, 2010 of $1.34/1.00). As of March27, 2010, we also had over 50 commercial commitments in the form of letters of credit related to our systems business in the amount of $41.8million, of which $13.4million will expire between 2010 and 2015 and $28.4million has an initial expiration in 2010 and automatically extends for one year annually unless our counterparty elects not to extend the letter of credit beyond its then current expiration date. In addition, we held two bank guarantees for energy supply agreements totaling MYR 11.8million ($3.5million at the balance sheet close rate on March27, 2010 of $0.30/MYR1.00) and two outstanding bank guarantees of MYR 3.0million ($0.9million at the balance sheet close rate on March27, 2010 of $0.30/MYR1.00) for Malaysian custom and excise tax. These four bank guarantees expire between 2010 and 2013. Product warranties We offer warranties on our products and record an estimate of the associated liability based on the number of solar modules under warranty at customer locations, our historical experience with warranty claims, our monitoring of field installation sites, our in-house testing of our solar modules, and our estimated per-module replacement cost. Product warranty activity during the three months ended March27, 2010 and March28, 2009 was as follows (in thousands): Three Months Ended March 27, March 28, 2010 2009 Product warranty liability, beginning of period $ 22,583 $ 11,905 Accruals for new warranties issued (warranty expense) 3,807 3,091 Settlements (5,850 ) (208 ) Change in estimate of warranty liability 2,835 (1,231 ) Product warranty liability, end of period $ 23,375 $ 13,557 Current portion of warranty liability $ 8,461 $ 5,311 Non-current portion of warranty liability $ 14,914 $ 8,246

Share-Based Compensation

Share-Based Compensation
	3 Months Ended Mar. 27, 2010
Share-Based Compensation [Abstract]
Share-Based Compensation	Note 15. Share-Based Compensation We measure share-based compensation cost at the grant date based on the fair value of the award and recognize this cost as an expense over the grant recipients requisite service periods, in accordance with ASC 718, Compensation-Stock Compensation. The share-based compensation expense that we recognized in our consolidated statements of operations for the three months ended March 27, 2010 and March28, 2009 was as follows (in thousands): Three Months Ended March 27, March 28, 2010 2009 Share-based compensation expense included in: Cost of sales $ 5,158 $ 3,019 Research and development 2,081 1,819 Selling, general and administrative 11,901 9,874 Production start-up 334 472 Total share-based compensation expense $ 19,474 $ 15,184 The increase in share-based compensation expense was primarily the result of new awards. The following table presents our share-based compensation expense by type of award for the three months ended March27, 2010 and March28, 2009 (in thousands): Three Months Ended March 27, March 28, 2010 2009 Stock options $ 978 $ 2,054 Restricted stock units 18,226 13,243 Unrestricted stock 150 113 Net amount absorbed into inventory 120 (226 ) Total share-based compensation expense $ 19,474 $ 15,184 Share-based compensation cost capitalized in our inventory was $0.9million and $1.0million at March27, 2010 and December26, 2009, respectively. As of March27, 2010, we had $2.5million of unrecognized share-based compensation cost related to unvested stock option awards, which we expect to recognize as an expense over a weighted-average period of approximately 0.7years, and $199.2 million of unrecognized share-based compensation cost related to unvested restricted stock units, which we expect to recognize as an expense over a weighted-average period of approximately 2.2 years.

Income Taxes

Income Taxes
	3 Months Ended Mar. 27, 2010
Income Taxes [Abstract]
Income Taxes	Note 16. Income Taxes Our Malaysian subsidiary has been granted a tax holiday for a period of 16.5years, which was originally scheduled to commence on January1, 2009. The tax holiday, which generally provides for a 100% exemption from Malaysian income tax, is conditional upon our continued compliance in meeting certain employment and investment thresholds. On January9, 2009, we received formal approval granting our request to pull forward this previously approved tax holiday by one year; the result of which was an $11.5million reduction in the amount of income taxes previously accrued for during the year ended December27, 2008. As a result, we recognized an income tax benefit of $11.5million during the three months ended March28, 2009. Our effective tax rates were 11.8% and 3.0% for the three months ended March27, 2010 and March28, 2009, respectively. Without the $11.5million tax benefit discussed above, our effective tax rate would have been 9.8% for the three months ended March28, 2009. Without the beneficial impact of the Malaysian tax holiday on operations for the three months ended March27, 2010 and March28, 2009, our effective tax rates would have been 27.9% and 20.8%, respectively. The provision for income taxes differs from the amount computed by applying the statutory U.S. federal rate primarily due to the benefit associated with foreign income taxed at lower rates and the beneficial impact of the Malaysian tax holiday. During 2009, we applied for a federal renewable energy manufacturing tax credit in the amount of $16.3million that was enacted under the American Recovery and Reinvestment Act of 2009. The tax credit request related to the recent expansion of our module manufacturing facility in Perrysburg, Ohio. In January2010, the U.S. Department of the Treasury accepted our application and approved the $16.3million credit request. At March27, 2010, we recorded the tax credit as a reduction to the acquisition cost of our Perrysburg, Ohio manufacturing expansion.

Net Income per Share

Net Income per Share
	3 Months Ended Mar. 27, 2010
Net Income per Share [Abstract]
Net Income per Share	Note 17. Net Income per Share Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per share is computed giving effect to all potential dilutive common stock, including employee stock options and restricted stock units. The calculation of basic and diluted net income per share for the three months ended March27, 2010 and March28, 2009 is as follows (in thousands, except per share amounts): Three Months Ended March 27, March 28, 2010 2009 Basic net income per share Numerator: Net income $ 172,345 $ 164,595 Denominator: Weighted-average shares used in computing basic net income per share 84,505 81,685 Diluted net income per share Denominator: Weighted-average shares used in computing basic net income per share 84,505 81,685 Effect of stock options , restricted stock units outstanding, and contingent issuable shares 1,587 927 Weighted-average shares used in computing diluted net income per share 86,092 82,612 March 27, March 28, 2010 2009 Per share information basic: Net income per share $ 2.04 $ 2.01 Per share information diluted Net income per share $ 2.00 $ 1.99 The following number of outstanding employee stock options and restricted stock units were excluded from the computation of diluted net income per share for the three months ended March 27, 2010 and March28, 2009 as they would have had an antidilutive effect (in thousands): Three Months Ended March 27, March 28, 2010 2009 Restricted stock units and options to purchase common stock 238 261

Comprehensive Income

Comprehensive Income
	3 Months Ended Mar. 27, 2010
Comprehensive Income [Abstract]
Comprehensive Income	Note 18. Comprehensive Income Comprehensive income, which includes foreign currency translation adjustments, unrealized gains and losses on derivative instruments designated and qualifying as cash flow hedges, and unrealized gains and losses on available-for-sale securities, the impact of which has been excluded from net income and reflected as components of stockholders equity, is as follows (in thousands): Three Months Ended March 27, March 28, 2010 2009 Net income $ 172,345 $ 164,595 Foreign currency translation adjustments (32,234 ) (13,886 ) Change in unrealized gain on marketable securities, net of tax of $107 for 2010 1,097 103 Change in unrealized gain on derivative instruments, net of tax of $0 for 2010 36,444 23,650 Comprehensive income $ 177,652 $ 174,462 Components of accumulated other comprehensive loss were as follows (in thousands): March 27, December 26, 2010 2009 Foreign currency translation adjustments $ (26,756 ) $ 5,478 Unrealized gain on marketable securities, net of tax of $414 for 2010 and $520 for 2009 3,048 1,951 Unrealized gain (loss)on derivative instruments, net of tax of $0 for 2010 and $0 for 2009 19,419 (17,025 ) Accumulated other comprehensive loss $ (4,289 ) $ (9,596 )

Statement of Cash Flows

Statement of Cash Flows
	3 Months Ended Mar. 27, 2010
Statement of Cash Flows [Abstract]
Statement of Cash Flows	Note 19. Statement of Cash Flows The following table presents a reconciliation of net income to net cash provided by operating activities for the three months ended March27, 2010 and March28, 2009 (in thousands): Three Months Ended March 27, March 28, 2010 2009 Net income $ 172,345 $ 164,595 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 39,089 26,085 Impairment of project assets 110 Share-based compensation 19,475 15,184 Remeasurement of monetary assets and liabilities 570 (255 ) Deferred income taxes (2,656 ) (1,874 ) Excess tax benefits from share-based compensation arrangements (1,568 ) (3,254 ) Loss on disposal of property and equipment 1,289 294 Provision for doubtful accounts receivable (990 ) Inventory reserve 2,165 Gain on sales of investments, net (222 ) (7 ) Changes in operating assets and liabilities: Accounts receivable, trade (55,499 ) (119,754 ) Accounts receivable, unbilled (25,840 ) 114 Inventories (25,524 ) (12,649 ) Project assets 1,458 Deferred project costs (30,054 ) (11,370 ) Prepaid expenses and other current assets 5,573 (6,837 ) Costs and estimated earnings in excess of billings (36,383 ) 114 Other assets (1,452 ) (1,888 ) Billings in excess of costs and estimated earnings 3,727 951 Accounts payable and accrued expenses (18,392 ) (14,423 ) Deferred revenue current (13,783 ) 26,550 Total adjustments (141,072 ) (100,854 ) Net cash provided by operating activities $ 31,273 $ 63,741

Segment Reporting

Segment Reporting
	3 Months Ended Mar. 27, 2010
Segment Reporting [Abstract]
Segment Reporting	Note 20. Segment Reporting ASC 280, Segment Reporting, establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers. The method of determining what information to report is based on the way that management organizes the operating segments within the company for making operating decisions and assessing financial performance. Our components segment is our principal business and involves the design, manufacture, and sale of solar modules which convert sunlight into electricity. Customers of our components segment include project developers, system integrators, and operators of renewable energy projects. Through our fully integrated systems business, we provide a complete PV solar power system, which includes project development, engineering, procurement and construction (EPC)services, operating and maintenance (OM) services, and, when required, project finance. Our systems segment sells solar power systems directly to investor owned utilities, independent power developers and producers, commercial and industrial companies, and other system owners who purchase completed solar power plants, EPC services, and/or OM services from us. Our Chief Operating Decision Makerconsisting of senior executive staffviews the sale of solar modules from the components segment as the core driver of our profitability, return on net assets, and cash throughput; and as a result, we view our systems segment as an enabler to drive module throughput. Therefore, we operate our systems segment with the objective to achieve break-even results before income taxes. We include the sale of our solar modules manufactured by the components segment and installed in projects sold by our systems segment in net sales of our components business. In the event gross profit from our systems segment (excluding solar module sales) is less than operating expenses in a given fiscal period, the components segment will compensate the systems segment for the temporary shortfall. Compensation by the components segment to our systems segment during the three months ended March27, 2010 and March28, 2009 was $8.9million and $3.9million, respectively. Our systems segment does not currently meet the quantitative criteria for disclosure as a separate reporting segment; and therefore, we classify it in the Other category in the following tables. Reported net sales, gross profit (loss), income before income taxes, and total assets for the three months ended March28, 2009, have been reclassified to conform to the revised presentation of segment information. Financial information about our segments was as follows (in thousands): Three Months Ended Three Months Ended March 27, 2010 March 28, 2009 Components Other Total Components Other Total Net sales $ 529,268 $ 38,693 $ 567,961 $ 415,997 $ 2,211 $ 418,208 Gross profit (loss) $ 277,651 $ 4,385 $ 282,036 $ 235,997 $ (713 ) $ 235,284 Income before income taxes $ 195,359 $

Subsequent Events

Subsequent Events
	3 Months Ended Mar. 27, 2010
Subsequent Events [Abstract]
Subsequent Events	Note 21. Subsequent Events As reported in a Current Report on Form 8-K filed with the Securities and Exchange Commission on April28, 2010, on April27, 2010, we entered into a definitive agreement (the Merger Agreement) to acquire NextLight Renewable Power, LLC (NextLight) from Energy Capital Partners. The acquisition includes a 1.1GW solar project pipeline. We will acquire NextLight in an all cash transaction that is expected to be completed in the third quarter of 2010, pending the satisfaction of certain closing conditions including (i)the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (ii)the approval by the California Public Utility Commission of a power purchase agreement relating to one of the NextLight projects under development, and the expiration of all appeal periods with respect thereto, in addition to other customary closing conditions. The total consideration for the transaction is approximately $285.0million minus (i)estimated closing date indebtedness plus (ii) estimated closing date cash minus (iii)estimated transaction expenses plus (iv)estimated development and other expense plus (v)estimated pro-rated 2010 bonus payable to certain NextLight employees, as adjusted pursuant to the Merger Agreement minus (vi)estimated closing date accounts payable and accrued liabilities above a specified threshold, as adjusted pursuant to the Merger Agreement. On April20, 2010 we received the full repayment, including interest, of a fixed rate note with a solar power project entity in the amount of 19.9million ($26.7million at the balance sheet close rate on March27, 2010 of $1.34/1.00). See also Note 12. Notes Receivables to our condensed consolidated financial statements.