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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark one)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 001-33156
FSLR_Logo_2021.jpg
First Solar, Inc.
(Exact name of registrant as specified in its charter)
Delaware20-4623678
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

350 West Washington Street, Suite 600
Tempe, Arizona 85288
(Address of principal executive offices, including zip code)

(602) 414-9300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.001 par valueFSLRThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐
Smaller reporting company☐Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 27, 2023, 106,844,212 shares of the registrant’s common stock, $0.001 par value per share, were outstanding.



FIRST SOLAR, INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS
  Page

Throughout this Quarterly Report on Form 10-Q, we refer to First Solar, Inc. and its consolidated subsidiaries as “First Solar,” “the Company,” “we,” “us,” and “our.” The unit of electricity is typically stated in megawatts (“MW”) and gigawatts (“GW”).


PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

FIRST SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Net sales$801,090 $628,933 $2,160,049 $1,616,928 
Cost of sales424,915 607,951 1,361,403 1,607,683 
Gross profit376,175 20,982 798,646 9,245 
Operating expenses:
Selling, general and administrative50,172 46,368 140,528 121,990 
Research and development41,190 29,183 108,445 81,520 
Production start-up12,059 19,768 54,930 40,337 
Litigation loss— — 35,590 — 
Total operating expenses103,421 95,319 339,493 243,847 
Gain on sales of businesses, net211 5,984 329 253,272 
Operating income (loss)272,965 (68,353)459,482 18,670 
Foreign currency loss, net(987)(4,859)(11,586)(12,041)
Interest income23,254 9,749 74,102 14,954 
Interest expense, net(3,734)(2,991)(5,897)(9,092)
Other (expense) income, net(1,033)4,774 (1,492)2,679 
Income (loss) before taxes290,465 (61,680)514,609 15,170 
Income tax (expense) benefit(22,067)12,512 (33,071)(51,788)
Net income (loss)$268,398 $(49,168)$481,538 $(36,618)
Net income (loss) per share:
Basic$2.51 $(0.46)$4.51 $(0.34)
Diluted$2.50 $(0.46)$4.49 $(0.34)
Weighted-average number of shares used in per share calculations:
Basic106,834 106,596 106,795 106,532 
Diluted107,498 106,596 107,326 106,532 

See accompanying notes to these condensed consolidated financial statements.
1
FIRST SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Net income (loss)$268,398 $(49,168)$481,538 $(36,618)
Other comprehensive loss:
Foreign currency translation adjustments
(4,942)(12,403)(7,635)(40,698)
Unrealized loss on marketable securities and restricted marketable securities, net of tax of $340, $697, $23, and $2,624
(8,696)(13,884)(3,045)(53,372)
Unrealized gain (loss) on derivative instruments, net of tax of $(214), $905, $(1,087), and $2,540
719 (3,333)3,527 (9,418)
Other comprehensive loss(12,919)(29,620)(7,153)(103,488)
Comprehensive income (loss)$255,479 $(78,788)$474,385 $(140,106)

See accompanying notes to these condensed consolidated financial statements.

2
FIRST SOLAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 
 
September 30,
2023		December 31,
2022
ASSETS
Current assets: 
Cash and cash equivalents$1,492,958 $1,481,269 
Marketable securities329,516 1,096,712 
Accounts receivable trade, net753,520 324,337 
Accounts receivable unbilled33,603 30,654 
Inventories882,787 636,312 
Other current assets331,618 222,137 
Total current assets3,824,002 3,791,421 
Property, plant and equipment, net4,072,857 3,536,902 
Deferred tax assets, net133,407 78,680 
Restricted marketable securities183,700 182,070 
Government grants receivable582,202 — 
Goodwill28,473 14,462 
Intangible assets, net66,379 31,106 
Inventories261,359 260,395 
Other assets430,266 356,192 
Total assets$9,582,645 $8,251,228 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:  
Accounts payable$110,795 $341,409 
Income taxes payable33,583 29,397 
Accrued expenses600,421 382,782 
Current portion of long-term debt35,409 — 
Deferred revenue372,167 263,215 
Other current liabilities46,730 21,245 
Total current liabilities1,199,105 1,038,048 
Accrued solar module collection and recycling liability130,131 128,114 
Long-term debt464,040 184,349 
Deferred revenue1,349,602 944,725 
Other liabilities137,391 119,937 
Total liabilities3,280,269 2,415,173 
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 106,844,040 and 106,609,094 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively107 107 
Additional paid-in capital2,879,412 2,887,476 
Accumulated earnings3,621,827 3,140,289 
Accumulated other comprehensive loss(198,970)(191,817)
Total stockholders’ equity6,302,376 5,836,055 
Total liabilities and stockholders’ equity$9,582,645 $8,251,228 

See accompanying notes to these condensed consolidated financial statements.

3
FIRST SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Three Months Ended September 30, 2023
 Common StockAdditional
Paid-In
Capital		Accumulated EarningsAccumulated
Other
Comprehensive Loss		Total
Stockholders' Equity
 SharesAmount
Balance at June 30, 2023106,831 $107 $2,872,153 $3,353,429 $(186,051)$6,039,638 
Net income— — — 268,398 — 268,398 
Other comprehensive loss— — — — (12,919)(12,919)
Common stock issued for share-based compensation
18 — — — — — 
Tax withholding related to vesting of restricted stock
(5)— (853)— — (853)
Share-based compensation expense
— — 8,112 — — 8,112 
Balance at September 30, 2023106,844 $107 $2,879,412 $3,621,827 $(198,970)$6,302,376 
Three Months Ended September 30, 2022
 Common StockAdditional
Paid-In
Capital		Accumulated EarningsAccumulated
Other
Comprehensive Loss		Total
Stockholders' Equity
 SharesAmount
Balance at June 30, 2022106,594 $107 $2,868,945 $3,197,005 $(170,230)$5,895,827 
Net loss— — — (49,168)— (49,168)
Other comprehensive loss— — — — (29,620)(29,620)
Common stock issued for share-based compensation
15 — — — — — 
Tax withholding related to vesting of restricted stock
(3)— (457)— — (457)
Share-based compensation expense
— — 11,755 — — 11,755 
Balance at September 30, 2022106,606 $107 $2,880,243 $3,147,837 $(199,850)$5,828,337 

See accompanying notes to these condensed consolidated financial statements.
4
FIRST SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Nine Months Ended September 30, 2023
 Common StockAdditional
Paid-In
Capital		Accumulated EarningsAccumulated
Other
Comprehensive Loss		Total
Equity
 SharesAmount
Balance at December 31, 2022106,609 $107 $2,887,476 $3,140,289 $(191,817)$5,836,055 
Net income— — — 481,538 — 481,538 
Other comprehensive loss— — — — (7,153)(7,153)
Common stock issued for share-based compensation
389 — — — — — 
Tax withholding related to vesting of restricted stock
(154)— (31,100)— — (31,100)
Share-based compensation expense
— — 23,036 — — 23,036 
Balance at September 30, 2023106,844 $107 $2,879,412 $3,621,827 $(198,970)$6,302,376 
Nine Months Ended September 30, 2022
Common StockAdditional
Paid-In
Capital		Accumulated EarningsAccumulated
Other
Comprehensive Loss		Total
Equity
SharesAmount
Balance at December 31, 2021106,332 $106 $2,871,352 $3,184,455 $(96,362)$5,959,551 
Net loss— — — (36,618)— (36,618)
Other comprehensive loss— — — — (103,488)(103,488)
Common stock issued for share-based compensation
441 1 — — — 1 
Tax withholding related to vesting of restricted stock
(167)— (12,048)— — (12,048)
Share-based compensation expense
— — 20,939 — — 20,939 
Balance at September 30, 2022106,606 $107 $2,880,243 $3,147,837 $(199,850)$5,828,337 

See accompanying notes to these condensed consolidated financial statements.
5
FIRST SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended
September 30,
20232022
Cash flows from operating activities:  
Net income (loss)$481,538 $(36,618)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation, amortization and accretion218,303 199,183 
Impairments and net losses on disposal of long-lived assets304 62,793 
Share-based compensation23,209 21,121 
Deferred income taxes(46,053)(4,600)
Gain on sales of businesses, net(329)(253,272)
Other, net89 (6,998)
Changes in operating assets and liabilities:
Accounts receivable, trade and unbilled(385,046)177,020 
Inventories(247,729)(164,205)
Project assets and PV solar power systems8,626 (160,300)
Government grants receivable(429,744)— 
Other assets(149,635)(49,071)
Income tax receivable and payable(16,809)40,902 
Accounts payable and accrued expenses121,382 (42,809)
Deferred revenue472,934 293,872 
Other liabilities(9,889)1,136 
Net cash provided by operating activities41,151 78,154 
Cash flows from investing activities:
Purchases of property, plant and equipment(1,039,863)(576,704)
Purchases of marketable securities(3,220,467)(2,278,125)
Proceeds from sales and maturities of marketable securities3,996,439 1,870,973 
Proceeds from sales of businesses, net of cash and restricted cash sold— 363,898 
Acquisitions, net of cash acquired(35,739)— 
Other investing activities— (2,561)
Net cash used in investing activities(299,630)(622,519)
Cash flows from financing activities:
Proceeds from borrowings under long-term debt, net of issuance costs307,214 297,405 
Repayment of long-term debt— (75,896)
Payments of tax withholdings for restricted shares(31,100)(12,048)
Net cash provided by financing activities276,114 209,461 
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents(855)39,866 
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents16,780 (295,038)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of the period1,493,462 1,455,837 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of the period$1,510,242 $1,160,799 
Supplemental disclosure of noncash investing and financing activities:  
Property, plant and equipment acquisitions funded by liabilities$185,064 $163,147 
Proceeds to be received from asset-based government grants
$152,458 $— 
Acquisitions funded by contingent consideration$18,500 $— 
Proceeds to be received from sales of businesses$208 $72,689 

See accompanying notes to these condensed consolidated financial statements.
6
FIRST SOLAR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of First Solar, Inc. and its subsidiaries in this Quarterly Report have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). 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 First Solar management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Certain prior period balances have been reclassified to conform to the current period presentation.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Despite our intention to establish accurate estimates and reasonable assumptions, actual results could differ materially from such estimates and assumptions. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other period. The condensed consolidated balance sheet at December 31, 2022 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 interim financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K, which has been filed with the SEC.

Unless expressly stated or the context otherwise requires, the terms “the Company,” “we,” “us,” “our,” and “First Solar” refer to First Solar, Inc. and its consolidated subsidiaries, and the term “condensed consolidated financial statements” refers to the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report.

2. Business Acquisitions

In May 2023, we acquired 100% of the shares of Evolar AB (“Evolar”), a developer of perovskite technology, for cash payments of $35.5 million, net of cash acquired of $0.5 million, and a promise to pay additional consideration of up to $42.5 million contingent on the achievement of certain technical milestones. The fair value of such contingent consideration was determined to be $18.5 million at the acquisition date. In connection with applying the acquisition method of accounting, $47.0 million of the purchase price consideration was assigned to an in-process research and development (“IPR&D”) intangible asset to be amortized over its useful life upon successful completion of the underlying project, $15.0 million was assigned to goodwill, $9.2 million was assigned to a deferred tax liability, and $2.0 million was assigned to property, plant and equipment.

The acquired IPR&D includes technical information, know-how, and other proprietary information associated with certain production capabilities for perovskite technology. The acquisition is expected to accelerate the development of high efficiency multi-junction devices by integrating Evolar’s know-how with First Solar’s existing research and development (“R&D”) capabilities, intellectual property portfolio, and expertise in developing and commercially scaling thin film photovoltaic (“PV”) products. The goodwill is attributable to the acquired technical workforce of Evolar and the synergies the Company expects through integrating the acquired technology to accelerate the development of next-generation PV technology. The goodwill resulting from this transaction is not expected to be deductible for income tax purposes.

7
3. Sales of Businesses

Sale of Japan Project Development Business

In May 2022, we entered into various agreements with certain subsidiaries of PAG Real Assets (“PAG”), a private investment firm, for the sale of our Japan project development business. The transaction included our approximately 293 MW utility-scale solar project development platform, which comprised the business of developing, contracting for the construction of, and selling utility-scale PV solar power systems.

In June 2022, we completed the sale of our Japan project development business for an aggregate purchase price of ¥66.4 billion ($488.4 million), subject to certain customary post-closing adjustments. During the nine months ended September 30, 2022, we received proceeds of ¥56.8 billion ($419.2 million) and transferred cash and restricted cash of ¥8.4 billion ($61.9 million) to PAG. As a result of this transaction, we recognized a gain of $245.2 million, net of transaction costs, during the nine months ended September 30, 2022, which was included in “Gain on sales of businesses, net” in our condensed consolidated statements of operations.

During the three and nine months ended September 30, 2023, we recognized certain post-closing adjustments associated with the prior sale of our Japan project development business, which was included in “Gain on sales of businesses, net” in our condensed consolidated statements of operations.

Sales of International O&M Operations

In January 2022, we completed the sale of our Chilean operations and maintenance (“O&M”) operations to a subsidiary of Clairvest Group, Inc. (“Clairvest”) and received total consideration of $1.9 million. As a result of this transaction, we recognized a gain of $1.6 million, net of transaction costs and post-closing adjustments, during the nine months ended September 30, 2022, which was included in “Gain on sales of businesses, net” in our condensed consolidated statements of operations.

In September 2022, we completed the sale of our Australian O&M operations to a separate subsidiary of Clairvest for consideration of $6.6 million, subject to certain customary post-closing adjustments. Proceeds from the transaction were received in early October 2022. As a result of this transaction, we recognized a gain of $5.1 million, net of transaction costs, during the three months ended September 30, 2022, which was included in “Gain on sales of businesses, net” in our condensed consolidated statements of operations.

In September 2022, we also completed the sale of our Japanese O&M operations to a subsidiary of PAG for consideration of ¥660.0 million ($4.6 million), subject to certain customary post-closing adjustments. As a result of this transaction, we recognized a gain of $1.2 million, net of transaction costs, during the three months ended September 30, 2022, which was included in “Gain on sales of businesses, net” in our condensed consolidated statements of operations.

During the nine months ended September 30, 2023, we recognized certain post-closing adjustments associated with the prior sale of our O&M operations in a foreign jurisdiction, which was included in “Gain on sales of businesses, net” in our condensed consolidated statements of operations.

8
4. Cash, Cash Equivalents, and Marketable Securities

Cash, cash equivalents, and marketable securities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
September 30,
2023		December 31,
2022
Cash and cash equivalents:
Cash$1,034,684 $1,476,945 
Money market funds458,274 4,324 
Total cash and cash equivalents1,492,958 1,481,269 
Marketable securities:
Foreign debt34,716 59,777 
U.S. debt43,701 56,463 
U.S. Treasury securities99,713 — 
Time deposits151,386 980,472 
Total marketable securities329,516 1,096,712 
Total cash, cash equivalents, and marketable securities$1,822,474 $2,577,981 

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 to the total of such amounts as presented in the condensed consolidated statements of cash flows (in thousands):
Balance Sheet Line ItemSeptember 30,
2023		December 31,
2022
Cash and cash equivalentsCash and cash equivalents$1,492,958 $1,481,269 
Restricted cash – current
Other current assets8,262 3,175 
Restricted cash – noncurrent
Other assets3,266 2,734 
Restricted cash equivalents – noncurrentOther assets5,756 6,284 
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,510,242 $1,493,462 

During the nine months ended September 30, 2023, we sold marketable securities for proceeds of $34.9 million and realized a loss of less than $0.1 million on such sales. See Note 10. “Fair Value Measurements” to our condensed consolidated financial statements for information about the fair value of our marketable securities.

9
The following tables summarize the unrealized gains and losses related to our available-for-sale marketable securities, by major security type, as of September 30, 2023 and December 31, 2022 (in thousands):
 As of September 30, 2023
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Allowance for Credit LossesFair
Value
Foreign debt$35,000 $— $276 $8 $34,716 
U.S. debt45,562 15 1,864 12 43,701 
U.S. Treasury securities99,701 12 — — 99,713 
Time deposits151,427 — — 41 151,386 
Total$331,690 $27 $2,140 $61 $329,516 
 As of December 31, 2022
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Allowance for Credit LossesFair
Value
Foreign debt$59,940 $— $140 $23 $59,777 
U.S. debt58,308 — 1,823 22 56,463 
Time deposits980,810 — — 338 980,472 
Total$1,099,058 $— $1,963 $383 $1,096,712 

The contractual maturities of our marketable securities as of September 30, 2023 were as follows (in thousands):
Fair
Value
One year or less$316,221 
One year to two years5,116 
Two years to three years4,451 
Three years to four years— 
Four years to five years— 
More than five years3,728 
Total$329,516 

5. Restricted Marketable Securities

Restricted marketable securities consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):
 
 
September 30,
2023		December 31,
2022
Foreign government obligations$46,140 $46,886 
Supranational debt15,166 8,661 
U.S. debt105,336 109,328 
U.S. government obligations17,058 17,195 
Total restricted marketable securities$183,700 $182,070 

Our restricted marketable securities represent long-term investments to fund the estimated future cost of collecting and recycling modules covered under our solar module collection and recycling program. We have established a trust under which estimated funds are put into custodial accounts with an established and reputable bank, for which First Solar, Inc.; First Solar Malaysia Sdn. Bhd.; and First Solar Manufacturing GmbH are grantors. As of September 30, 2023 and December 31, 2022, such custodial accounts also included noncurrent restricted cash and cash equivalents balances of $5.8 million and $6.7 million, respectively, which were reported within “Other assets.”
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Trust funds may be disbursed for qualified module collection and recycling costs (including capital and facility related recycling costs), payments to customers for assuming collection and recycling obligations, and reimbursements of any overfunded amounts. Investments in the trust must meet certain investment quality criteria comparable to highly rated government or agency bonds. As necessary, we fund any incremental amounts for our estimated collection and recycling obligations on an annual basis based on the estimated costs of collecting and recycling covered modules, estimated rates of return on our restricted marketable securities, and an estimated solar module life of 25 years, less amounts already funded in prior years. See Note 10. “Fair Value Measurements” to our condensed consolidated financial statements for information about the fair value of our restricted marketable securities.

The following tables summarize the unrealized gains and losses related to our restricted marketable securities, by major security type, as of September 30, 2023 and December 31, 2022 (in thousands):

 As of September 30, 2023
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Allowance for Credit LossesFair
Value
Foreign government obligations$63,377 $— $17,227 $10 $46,140 
Supranational debt17,743 341 2,918 — 15,166 
U.S. debt146,938 — 41,574 28 105,336 
U.S. government obligations24,483 — 7,421 4 17,058 
Total$252,541 $341 $69,140 $42 $183,700 
 As of December 31, 2022
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Allowance for Credit LossesFair
Value
Foreign government obligations$64,008 $— $17,112 $10 $46,886 
Supranational debt11,146 — 2,485 — 8,661 
U.S. debt148,288 — 38,932 28 109,328 
U.S. government obligations24,551 — 7,352 4 17,195 
Total$247,993 $— $65,881 $42 $182,070 

As of September 30, 2023, the contractual maturities of these securities were between 7 years and 16 years.

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6. Consolidated Balance Sheet Details

Accounts receivable trade, net

Accounts receivable trade, net consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
 September 30,
2023		December 31,
2022
Accounts receivable trade, gross$757,726 $325,379 
Allowance for credit losses(4,206)(1,042)
Accounts receivable trade, net$753,520 $324,337 

Inventories

Inventories consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
 September 30,
2023		December 31,
2022
Raw materials$445,412 $412,848 
Work in process92,494 66,641 
Finished goods606,240 417,218 
Inventories$1,144,146 $896,707 
Inventories – current$882,787 $636,312 
Inventories – noncurrent$261,359 $260,395 

Other current assets

Other current assets consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
 September 30,
2023		December 31,
2022
Spare maintenance materials and parts$144,820 $114,428 
Prepaid expenses51,736 43,262 
Operating supplies41,993 32,556 
Insurance receivable for accrued litigation (1)21,800 — 
Prepaid income taxes14,688 8,314 
Restricted cash8,262 3,175 
Derivative instruments (2)1,836 2,018 
Other46,483 18,384 
Other current assets$331,618 $222,137 
——————————
(1)See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for discussion of our legal proceedings.

(2)See Note 8. “Derivative Financial Instruments” to our condensed consolidated financial statements for discussion of our derivative instruments.

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Property, plant and equipment, net

Property, plant and equipment, net consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
 September 30,
2023		December 31,
2022
Land$35,240 $35,259 
Buildings and improvements 998,516 893,049 
Machinery and equipment 3,561,843 2,762,801 
Office equipment and furniture157,510 146,467 
Leasehold improvements40,064 40,160 
Construction in progress964,135 1,121,938 
Property, plant and equipment, gross5,757,308 4,999,674 
Accumulated depreciation(1,684,451)(1,462,772)
Property, plant and equipment, net$4,072,857 $3,536,902 

Depreciation of property, plant and equipment was $80.7 million and $223.5 million for the three and nine months ended September 30, 2023, respectively, and $61.6 million and $180.2 million for the three and nine months ended September 30, 2022, respectively.

Other assets

Other assets consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
 September 30,
2023		December 31,
2022
Advance payments for raw materials$163,192 $91,260 
Operating lease assets (1)81,512 93,185 
Income tax receivables70,818 56,993 
Project assets26,906 30,108 
Prepaid expenses22,443 11,714 
Restricted cash equivalents5,756 6,284 
Accounts receivable unbilled, net4,691 11,498 
Restricted cash3,266 2,734 
Accounts receivable trade, net— 1,500 
Other51,682 50,916 
Other assets$430,266 $356,192 
——————————
(1)See Note 9. “Leases” to our condensed consolidated financial statements for discussion of our lease arrangements.

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Accrued expenses

Accrued expenses consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
 September 30,
2023		December 31,
2022
Accrued inventory $232,503 $44,679 
Accrued property, plant and equipment178,077 148,777 
Accrued freight64,668 77,136 
Accrued compensation and benefits37,697 47,939 
Accrued other taxes20,172 19,765 
Product warranty liability (1)7,647 10,660 
Other59,657 33,826 
Accrued expenses$600,421 $382,782 
——————————
(1)See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for discussion of our “Product Warranties.”

Other current liabilities

Other current liabilities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
 September 30,
2023		December 31,
2022
Accrued litigation (1)$21,800 $— 
Operating lease liabilities (2)9,647 9,193 
Contingent consideration (3)7,500 — 
Derivative instruments (4)2,959 6,668 
Other4,824 5,384 
Other current liabilities$46,730 $21,245 
——————————
(1)See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for discussion of our legal proceedings.

(2)See Note 9. “Leases” to our condensed consolidated financial statements for discussion of our lease arrangements.

(3)See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for discussion of our contingent consideration arrangements.

(4)See Note 8. “Derivative Financial Instruments” to our condensed consolidated financial statements for discussion of our derivative instruments.


14
Other liabilities

Other liabilities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):
 September 30,
2023		December 31,
2022
Deferred tax liabilities, net$47,632 $28,929 
Operating lease liabilities (1)34,222 40,589 
Product warranty liability (2)18,500 23,127 
Contingent consideration (3)11,000 — 
Other26,037 27,292 
Other liabilities$137,391 $119,937 
——————————
(1)See Note 9. “Leases” to our condensed consolidated financial statements for discussion of our lease arrangements.

(2)See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for discussion of our “Product Warranties.”

(3)See Note 12. “Commitments and Contingencies” to our condensed consolidated financial statements for discussion of our contingent consideration arrangements.

7. Government Grants

Government grants represent benefits provided by federal, state, or local governments that are not subject to the scope of ASC 740. We recognize a grant when we have reasonable assurance that we will comply with the grant’s conditions and that the grant will be received. Government grants whose primary condition is the purchase, construction, or acquisition of a long-lived asset are considered asset-based grants and are recognized as a reduction to such asset’s cost-basis, which reduces future depreciation. Other government grants not related to long-lived assets are considered income-based grants, which are recognized as a reduction to the related cost of activities that generated the benefit.

The following table presents the benefits recognized from asset-based government grants in our condensed consolidated balance sheet as of September 30, 2023 and December 31, 2022 (in thousands):

Balance Sheet Line ItemSeptember 30,
2023		December 31,
2022
Property, plant and equipment, net$146,596 $— 
Other assets5,862 — 

In February 2021, the state government of Tamil Nadu granted First Solar certain incentives associated with the construction of our first manufacturing facility in India. Among other things, such incentives provide a 24% subsidy for eligible capital investments, contingent upon meeting certain minimum investment and employment commitments. The capital subsidy is expected to be paid in six annual installments beginning in the fiscal year following the initial period of module production. Module production began during the three months ended September 30, 2023. Such credit is reflected on our condensed consolidated balance sheets within “Government grants receivable.”

15
The following table presents the benefits recognized from income-based government grants in our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
Income Statement Line Item2023202220232022
Cost of sales$204,623 $— $429,744 $— 

In August 2022, the U.S. President signed into law the Inflation Reduction Act of 2022 (“IRA”). Among other things, the IRA offers a tax credit, pursuant to Section 45X of the Internal Revenue Code (“IRC”), for solar modules and solar module components manufactured in the United States and sold to third parties. Such credit may be refundable or transferable to a third party and is available from 2023 to 2032, subject to phase down beginning in 2030. For eligible components, the credit is equal to (i) $12 per square meter for a PV wafer, (ii) 4 cents multiplied by the capacity of a PV cell, and (iii) 7 cents multiplied by the capacity of a PV module. Based on the current form factor of our modules, we expect to qualify for a credit of approximately 17 cents per watt for each module produced in the United States and sold to a third party. We recognize such credit as a reduction to “Cost of sales” in the period the modules are sold to customers. Such credit is also reflected on our condensed consolidated balance sheets within “Government grants receivable.”

8. Derivative Financial Instruments

As a global company, we are exposed in the normal course of business to interest rate, foreign currency, and commodity price risks that could affect our financial position, results of operations, and cash flows. We use derivative instruments to hedge against these risks and only hold such instruments for hedging purposes, not for speculative or trading purposes.

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 balance sheet date. We report all of our derivative instruments at fair value and account for changes in the fair value of derivative instruments within “Accumulated other comprehensive loss” if the derivative instruments qualify for hedge accounting. For those derivative instruments that do not qualify for hedge accounting (i.e., “economic hedges”), we record the changes in fair value directly to earnings. See Note 10. “Fair Value Measurements” to our condensed consolidated financial statements for information about the techniques we use to measure the fair value of our derivative instruments.

16
The following tables present the fair values of derivative instruments included in our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 (in thousands):
 September 30, 2023
Other Current AssetsOther Current Liabilities
Derivatives designated as hedging instruments:
Commodity swap contracts$— $1,478 
Total derivatives designated as hedging instruments$— $1,478 
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts$1,836 $1,481 
Total derivatives not designated as hedging instruments$1,836 $1,481 
Total derivative instruments$1,836 $2,959 
 December 31, 2022
Other Current AssetsOther AssetsOther Current LiabilitiesOther Liabilities
Derivatives designated as hedging instruments:
Commodity swap contracts$— $17 $4,447 $144 
Total derivatives designated as hedging instruments$— $17 $4,447 $144 
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts$2,018 $— $2,221 $— 
Total derivatives not designated as hedging instruments$2,018 $— $2,221 $— 
Total derivative instruments$2,018 $17 $6,668 $144 

The following table presents the pretax amounts related to derivative instruments designated as cash flow hedges affecting accumulated other comprehensive income (loss) and our condensed consolidated statements of operations for the nine months ended September 30, 2023 and 2022 (in thousands):
Foreign Exchange Forward ContractsCommodity Swap ContractsTotal
Balance as of December 31, 2022$— $(7,242)$(7,242)
Amounts recognized in other comprehensive income (loss)— (962)(962)
Amounts reclassified to earnings impacting:
Cost of sales— 5,576 5,576 
Balance as of September 30, 2023$— $(2,628)$(2,628)
Balance as of December 31, 2021$1,126 $— $1,126 
Amounts recognized in other comprehensive income (loss)545 (10,832)(10,287)
Amounts reclassified to earnings impacting:
Cost of sales(1,671)— (1,671)
Balance as of September 30, 2022$— $(10,832)$(10,832)

During the nine months ended September 30, 2022, we recognized unrealized losses of less than $0.1 million within “Cost of sales” for amounts excluded from effectiveness testing for our foreign exchange forward contracts designated as cash flow hedges.

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The following table presents gains and losses related to derivative instruments not designated as hedges affecting our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):
Amount of Gain (Loss) Recognized in Income
Three Months Ended
September 30,		Nine Months Ended
September 30,
Income Statement Line Item2023202220232022
Foreign exchange forward contracts
Cost of sales$— $55 $— $577 
Foreign exchange forward contracts
Foreign currency loss, net4,533 7,905 (9,568)71,420 

Foreign Currency Risk

Cash Flow Exposure

We expect certain of our subsidiaries to have future cash flows that will be denominated in currencies other than the subsidiaries’ functional currencies. Changes in the exchange rates between the functional currencies of our subsidiaries and the other currencies in which they transact will cause fluctuations in the cash flows we expect to receive or pay when these cash flows are realized or settled. Accordingly, from time to time we may enter into foreign exchange forward contracts to hedge a portion of these forecasted cash flows. These foreign exchange forward contracts qualify for accounting as cash flow hedges in accordance with Accounting Standards Codification (“ASC”) 815, and we designated them as such. We report unrealized gains or losses on such contracts in “Accumulated other comprehensive loss” and subsequently reclassify applicable amounts into earnings when the hedged transaction occurs and impacts earnings.

Transaction Exposure and Economic Hedging

Many of our subsidiaries have assets and liabilities (primarily cash, receivables, deferred taxes, payables, accrued expenses, operating lease liabilities, long-term debt, and solar module collection and recycling liabilities) that are denominated in currencies other than the subsidiaries’ functional currencies. Changes in the exchange rates between the functional currencies of our subsidiaries and the other currencies in which these assets and liabilities are denominated will create fluctuations in our reported condensed consolidated statements of operations and cash flows. We may enter into foreign exchange forward contracts or other financial instruments to economically hedge assets and liabilities against the effects of currency exchange rate fluctuations. The gains and losses on such foreign exchange forward contracts will economically offset all or part of the transaction gains and losses that we recognize in earnings on the related foreign currency denominated assets and liabilities.

We also enter into foreign exchange forward contracts to economically hedge balance sheet and other exposures related to transactions between certain of our subsidiaries and transactions with third parties. Such contracts are considered economic hedges and do not qualify for hedge accounting. Accordingly, we recognize gains or losses from the fluctuations in foreign exchange rates and the fair value of these derivative contracts in “Foreign currency loss, net” on our condensed consolidated statements of operations.

18
As of September 30, 2023 and December 31, 2022, the notional values of our foreign exchange forward contracts that do not qualify for hedge accounting were as follows (notional amounts and U.S. dollar equivalents in millions):
September 30, 2023
TransactionCurrencyNotional AmountUSD Equivalent
SellCanadian dollarCAD 4.2$3.1
SellChilean pesoCLP 1,372.6$1.5
PurchaseEuro€63.9$67.3
SellEuro€23.5$24.8
SellIndian rupeeINR 57,797.8$695.1
PurchaseJapanese yen¥695.6$4.7
SellJapanese yen¥709.2$4.7
PurchaseMalaysian ringgitMYR 160.7$34.1
SellMalaysian ringgitMYR 16.5$3.5
SellMexican pesoMXN 34.6$2.0
SellSingapore dollarSGD 12.3$9.0
December 31, 2022
TransactionCurrencyNotional AmountUSD Equivalent
SellCanadian dollarCAD 4.2$3.1
SellChilean pesoCLP 5,996.5$7.0
PurchaseEuro€160.2$170.5
SellEuro€38.4$40.9
SellIndian rupeeINR 27,119.5$327.4
PurchaseJapanese yen¥2,982.7$22.4
SellJapanese yen¥8,950.3$67.1
PurchaseMalaysian ringgitMYR 99.8$22.6
SellMalaysian ringgitMYR 13.7$3.1