First Solar Annual Report 2015

FY2015 Annual Report · First Solar

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2015

ANNUAL REPORT

About First Solar

First Solar is a leading global provider of comprehensive photovoltaic (PV)
solar systems which use its advanced module and system technology. The
company’s integrated power plant solutions deliver an economically attractive
alternative to fossil-fuel electricity generation today. From raw material
sourcing through end-of-life module recycling, First Solar’s renewable energy
systems protect and enhance the environment. With over 10 gigawatts
installed worldwide, First Solar has developed, financed, engineered,
constructed, and operated some of the world’s largest and most successful
PV power plants in existence, establishing the company as the partner of
choice for customers globally.

FIRST SOLAR | ANNUAL REPORT 2015

JAMES HUGHES
CEO

To Our Shareholders

As solar power becomes increasingly affordable, industry data and more industry
leaders are pointing to the fact that utility-scale solar will play a leading role in the
future of new electricity generation. While some may still be skeptical, the facts
are increasingly compelling. For example, in 2015 the United States installed over
7 gigawatts (GW) of solar power, representing 29% of all new power generation
capacity. This is significant as it is the first time the country installed more solar
power generating capacity than natural gas1. Internationally, the growth of solar
is equally impressive. Nearly 60GW of solar is estimated to have been installed
worldwide in 2015, representing a 34% increase from the prior year2.

What are the driving forces behind this energy transition? First, solar power is
becoming an increasingly affordable low-cost source of energy. At the end of 2015,
the unsubsidized Levelized Cost of Electricity (LCOE) of utility-scale thin film solar
stood in the range of $0.05 to $0.06 per kilowatt-hour, which was lower than any
conventional generation technology operating without the benefit of subsidized
fuel3. Second, policy makers, investors and the public increasingly recognize solar
as a sustainable response to the environmental cost of hydrocarbon-fueled power
generation. This is increasingly evident in international forums such as the COP21
gathering in Paris, and domestically through initiatives such as the Clean Power
Plan and California’s 50% Renewable Portfolio Standard. With the continuing
emergence of storage technologies, the potential for solar to meet even greater
energy demands will only continue to grow in the future.

First Solar stands at the forefront of this energy transition in a position of strength
that enables us to play a leading role in supplying affordable solar power. We
finished 2015 with the strongest technology position in our history, with record
bookings of new business and with unparalleled financial strength in the industry.
We are not content to rest upon our past success, and we are looking to the
future with increased expectations. Our long-term vision for First Solar is to
establish clear technology and cost-leadership which will enable us to achieve our
growth objectives. We look forward to the opportunities the future holds and are
committed to executing on our long-term vision for the benefit of our shareholders.

Our long-term vision for First Solar is to establish clear
technology and cost-leadership which will enable us to
achieve our growth objectives.

1PV Tech Feb 22, 2016. http://www.pv-tech.org/news/us-installed-7.3gw-of-solar-power-in-2015-says-report

2GTM Research Jan 22, 2016. http://www.greentechmedia.com/articles/read/gtm-research-global-solar-pv-installations-grew-34-in-2015

3Lazard’s Levelized Cost of Energy Analysis – Version 9.0; Nov 2015, pg 2. https://www.lazard.com/media/2390/lazards-levelized-cost-of-energy-
analysis-90.pdf

FIRST SOLAR | ANNUAL REPORT 2015

Technology & Operations

In 2016 we introduced our Series 5 module technology
which represents one of the greatest improvements to
our module technology in our company’s history. This
new module, with its larger form factor and substantially
higher wattage, reduces the number of electrical
connections and hardware required for installation. The
resulting labor and materials savings are a significant
improvement versus our prior technology. For our own
development projects and for customers that purchase
our modules, this technology advancement means a
substantial reduction in total installed costs, resulting
in improved project returns. We are excited about the
potential for this new technology and are pleased
with the response from our customers. We will begin
producing Series 5 modules in the latter part of 2016.

We have had a number of other remarkable technology
achievements during the past twelve months. First, in
early 2015 we announced a new record cell efficiency
of 21.5%. This was followed a few months later by a
new record module efficiency of 18.2%, a development
which placed us in a superior position to the best
recorded multi-crystalline silicon module. We continued
this rapid pace of improvement in early 2016 by setting
yet another cell efficiency record of 22.1%. This latest
record represents the ninth substantial update to our
record cell roadmap since 2011 and has been certified
by Newport TAC Labs and documented in the U.S.
Department of Energy’s NREL “Best Research Cell
Efficiencies” reference chart.

SERIES 5 PV MODULE

FIRST SOLAR | ANNUAL REPORT 2015The results of our research efforts are visible in the
tremendous conversion efficiency performance of our
manufacturing fleet. For 2015, our full fleet average
efficiency was 15.6% which represented a 160 basis
point improvement over the prior year. In the fourth
quarter of 2015, our full fleet averaged 16.1%, a 170
basis point year-over-year improvement. Our best
line in the fourth quarter of 2015 averaged 16.4%
as compared to a lead line efficiency of 14.8% in the
fourth quarter of 2014. Our lead line efficiency is
expected to reach above 17% by the end of 2016 and
increase significantly over the next several years on
the strength of our technology roadmap. We continue
to demonstrate efficiency improvements unmatched
in the industry and look forward to continued
advancements in the coming years.

TRACK RECORD OF R&D SUCCESS

22.1%

RECORD CELL EFFICIENCY

18.2%

RECORD MODULE EFFICIENCY

15.6%

2015 FULL FLEET
AVERAGE EFFICIENCY

16.4%

Q4 2015 LEAD LINE
EFFICIENCY

Our production capabilities were also impressive in
2015 as we produced over 2.5GW DC of modules,
representing an increase of 36% compared to the
prior year. Our plans for growth do not stop there,
as we expect production of over 3GW DC in 2016.
On the strength of our Series 5 module and future
technology improvements, we expect to more than
double our installed manufacturing capacity over the
next five years. Our expectations for such significant
growth is a reflection of the tremendous technology
we are developing and the demand we anticipate.

Financial
Performance

2015 was one of the strongest years of
financial performance in our company’s
history. First, we achieved record annual
sales of $3.6 billion on the strength of
our improved module technology and
global sales force. Additionally, we had
earnings per share of $5.37, which was
superior to both the guidance we set
early in 2015, as well as the longer term
targets provided in prior Analyst Day
meetings. We maintained tremendous
balance sheet strength with an ending
cash and marketable securities balance
of $1.8 billion and a net cash position of
$1.5 billion. We were able to maintain
this financial strength while at the same
time making significant investments
in project related assets both in
development and under construction.

In 2015, we also took the step of
retaining a partial ownership interest in
several of our solar projects through the
joint launch of 8point3 Energy Partners.
The 8point3 launch not only provides a
committed buyer of certain First Solar
projects, but also provides a steady
stream of future dividends to First Solar.
While broader macroeconomic factors
have adversely impacted yieldcos, such
as 8point3, the advantages of the joint
sponsorship structure with SunPower and
the focus on stable, long-term growth
positions 8point3 as one the strongest
players in this market.

FIRST SOLAR | ANNUAL REPORT 2015Global Markets

2015 was a milestone year as we established a new record for module shipments of 2.9GW DC. In addition our
Engineering, Procurement and Construction (EPC) group installed 1.8GW DC of modules in 2015 and reached a
cumulative 6GW DC of installed modules early in 2016. These remarkable achievements are a reflection of the
tremendous manufacturing, operations and sales expertise that we have developed, as well as the increasing
strength of our module technology. While the United States continues to be our largest market, 2015 was a
year of continued international expansion. With over 750 megawatts (MW) DC of international shipments, the
diversification of our markets is growing.

UNITED STATES

In the United States 2015 was a significant year, not only because of
our continued market share strength in the utility-scale solar market,
but also because of increasing geographical diversity across the
country.

In the western United States we continued to execute on the
construction of our Stateline, Silver State South, Moapa and McCoy
projects. The combined size of these projects represents 1,050MW
AC of solar production. Along with the progress we have made in
developing and constructing projects in this region, we have also
successfully added a number of projects to our contracted pipeline.
At the beginning of 2016, we announced signed power purchase
agreements (PPAs) with Southern California Edison (SCE) for the off-
take of electricity generated by four solar projects totaling 500MW AC.
With this signing, SCE is now the largest single off-taker of energy from
First Solar projects. It also provides a sizeable amount of contracted
volume for future delivery.

Also adding to our U.S. southwest pipeline were PPAs signed in 2015
with NV Energy for 179MW AC. All the power generated by the 179MW
AC power plant will support the commitment of Switch, a leading
technology company in Nevada, to utilize renewable energy under
NV Energy’s green energy rider tariff. The signing of this agreement
continues to demonstrate the strong interest commercial customers
have in solar power and the ability of utility-scale power plants to meet
those needs. In addition, the signing of these PPAs firmly establishes
First Solar as the leading solar supplier in Nevada.

THE U.S. IN NUMBERS

1,050MW+
PROJECTS UNDER
CONSTRUCTION
in Western U.S.

1,800MW+
MODULES SOLD
in Southeast U.S.

119MW AC
PPA WITH AUSTIN
ENERGY

9+
STATES WITH FIRST
SOLAR ACTIVITY

FIRST SOLAR | ANNUAL REPORT 2015Growth in our business in the southeastern United States was
dramatic in 2015 and was highlighted by both new EPC agreements
and module sales. In early 2015 we signed an agreement to construct
the 103MW AC Butler project for Southern Company. This is the fourth
EPC agreement we have signed in the Southeast; the cumulative
volume of these projects is now over 370MW AC. In October of 2015
we signed a 400MW DC module supply agreement with Strata Solar.
In addition, we have now signed module or module plus supply
agreements for projects across Georgia, Mississippi, Tennessee and
Florida. With these announcements First Solar has now sold over 1.8
GW of modules to projects in the U.S. Southeast. We are encouraged by
the rapid growth and are continuing to develop key relationships with
our partners and customers to meet the region’s energy needs.

We also continued to expand to new regions in the U.S. In Texas we
signed a 119MW AC PPA with Austin Energy, the first such award in a
state with excellent solar resources and significant growth potential.
This project represents an important step forward in our development
efforts outside the western U.S. In Indiana, we signed EPC agreements
to construct three projects for American Electric Power, which marked
the start of a new relationship with another leading U.S. utility.
Community solar continues to gain traction in the U.S. We announced
in 2015 that we would supply modules to Clean Energy Collective for
four projects in Colorado and Texas. These projects will introduce the
concept of community solar to nearly one million potential residential
users. With a superior cost structure as compared to rooftop solar,
and an offering that greatly expands the potential for residential
or business users to access solar power in collaboration with their
electric utility, there is great potential for the long-term growth of
community solar.

With a superior cost
structure as compared
to rooftop solar, and
an offering that greatly
expands the potential for
residential or business
users to access solar
power in collaboration
with their electric utility,
there is great potential
for the long-term growth
of community solar.

FIRST SOLAR | ANNUAL REPORT 2015INTERNATIONAL MARKETS

Turning to international markets, 2015 was another strong year in India as our
cumulative development pipeline grew to 200MW AC. During the course of
2015, we achieved commercial operation of 20MW AC of these projects with the
remaining pipeline in construction or in development. With additional module only
agreements of over 200MW DC signed during the year, we now have shipped more
than 1,000MW DC of our modules to the country, firmly establishing our presence
in this important market.

In the Asia-Pacific region, we continue to make good progress in both Japan and
Australia. In Japan we have now booked over 100MW AC of development projects.
We completed the construction of three projects and began construction on four
additional projects. Beyond the projects contracted, we have other late stage
bookings opportunities which we continue to pursue. In Australia we completed
the two largest utility-scale solar projects in the country for AGL. The combined
155MW AC projects will provide power for 50,000 average Australian homes. In
late 2015 we were awarded an EPC project and continue to have a strong set of
potential bookings opportunities.

We now have more
than 1,000MW
DC of our modules
shipped to India,
firmly establishing
our presence in this
important market.

The Middle East region continues to show signs of significant growth potential.
We signed an agreement to supply modules to a landmark 200MW AC project in
Dubai. First Solar modules already power the first 13MW AC phase of this project
and module installations are underway at a separate 53MW AC Shams Ma’an
plant in Jordan. This brings the total volume of projects in this region, either
contracted or already installed, to 270MW AC. We remain very active in other parts
of this region and look to build upon the success of this past year.

With good solar irradiance and with an emphasis on increasing energy
independence, Turkey is also an emerging market for solar. We were awarded our
first development projects in Turkey, while also signing module supply agreements
of 230MW DC during last year and in early 2016. The recent momentum has been
very strong in Turkey and we see this as a growth opportunity moving forward.

FIRST SOLAR | ANNUAL REPORT 2015Conclusion

We are optimistic about the future. We are competing in a rapidly growing industry with
a technology and a balance sheet that are best positioned to take advantage of this
growth. We continue to deepen our strong relationships with leading energy providers
both in the U.S. and internationally as we position ourselves as the partner of choice for
affordable solar power. Our 2015 results and accomplishments speak for themselves.
We continue to deliver strong earnings for our shareholders, while maintaining
tremendous financial strength and flexibility. Our technology and operations continue to
improve in line with the roadmap we laid out several years ago. Our record cell efficiency
now stands at over 22% and our fleet average efficiency in 2016 is at 16.2%. Our global
sales teams delivered record bookings in 2015 of 3.4 GWDC, which more than exceeded
our record shipments of 2.9 GWDC. As we look forward to 2016 and the years to come,
we are excited about the opportunities that await.

We appreciate the support of our shareholders who, along
with us, share a vision of the long-term potential of this
company.

FIRST SOLAR | ANNUAL REPORT 20152015 Financial Results

Net Sales

2,780

2,564

3,579

3,355

3,310

3,391

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

s
n
o

i
l
l
i

135

2,066

1,246

504

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Cash & Market Securities vs. Debt

$2,200

$1,700

$1,200

$700

$200

s
n
o

i
l
l
i

Total Cash

Total Debt

822

670

308

1,991

1,830

1,764

1,114

1,004

788

-$300

-81

-108

-198

-175

-237

-223 -213

-289

-664

-563

-$800

16.0%

15.0%

14.0%

13.0%

12.0%

11.0%

10.0%

9.0%

e
g
a
t
n
e
c
r
e
P

n
o
i
s
r
e
v
n
o
C

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Average Module Conversion Efficiency

15.6%

14.0%

13.2%

12.6%

11.9%

11.3%

11.0%

10.7%

10.4%

9.5%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

FIRST SOLAR | ANNUAL REPORT 2015

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

(Mark one)
Í

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015

‘

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from

Commission file number: 001-33156

First Solar, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

20-4623678
(I.R.S. Employer
Identification No.)

350 West Washington Street, Suite 600
Tempe, Arizona 85281
(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 class
Common stock, $0.001 par value

Name of each exchange on which registered
The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No Í
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 Í No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted 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 and post such files). Yes Í No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer Í

Smaller reporting company ‘

Accelerated filer ‘

Non-accelerated filer ‘
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No Í
The aggregate market value of the registrant’s common stock, $0.001 par value per share, held by non-affiliates of the registrant on
June 30, 2015, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $2.8 billion (based
on the closing sales price of the registrant’s common stock on that date). As of February 19, 2016, 101,767,670 shares of the registrant’s
common stock, $0.001 par value per share, were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Annual Report on Form 10-K, to the extent not set forth herein, is incorporated by reference
from the registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders to be held in 2016, which will be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates.

FIRST SOLAR, INC. AND SUBSIDIARIES

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2015
TABLE OF CONTENTS

PART I

Item 1: Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A: Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B: Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2:
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3:
Item 4: Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of

Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6:
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . .
Item 7A: Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8:
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . .
Item 9A: Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B: Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

Item 10: Directors, Executive Officers, and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11: Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13: Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . .
Item 14: Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

3
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49

50
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53
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83

84
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84
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85

PART IV

Item 15: Exhibits and Financial Statement Schedules
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

86
87
89
89
90
91
92
93
94
161

Throughout this Annual Report on Form 10-K, we refer to First Solar, Inc. and its consolidated subsidiaries
as “First Solar,” the “Company,” “we,” “us,” and “our.” Our last three fiscal years ended on December 31, 2015,
2014, and 2013.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Securities
Exchange Act of 1934 (the “Exchange Act”) and the Securities Act of 1933, which are subject to risks,
uncertainties, and assumptions that are difficult to predict. All statements in this Annual Report on Form 10-K,
other than statements of historical fact, are forward-looking statements. These forward-looking statements are
made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-
looking statements include statements, among other things, concerning: our business strategy, including antici-
pated trends and developments in and management plans for our business and the markets in which we operate;
future financial results, operating results, revenues, gross margin, operating expenses, products, projected costs
(including estimated future module collection and recycling costs), warranties, solar module efficiency and bal-
ance of systems (“BoS”) cost reduction roadmaps, restructuring, product reliability, investments in uncon-
solidated affiliates, and capital expenditures; our ability to continue to reduce the cost per watt of our solar
modules; our ability to reduce the costs to construct PV solar power systems; research and development pro-
grams and our ability to improve the conversion efficiency of our solar modules; sales and marketing initiatives;
and competition. In some cases, you can identify these statements by forward-looking words, such as “estimate,”
“expect,” “anticipate,” “project,” “plan,” “intend,” “seek,” “believe,” “forecast,” “foresee,” “likely,” “may,”
“should,” “goal,” “target,” “might,” “will,” “could,” “predict,” “continue,” and the negative or plural of these
words, and other comparable terminology. Forward-looking statements are only predictions based on our current
expectations and our projections about future events. All forward-looking statements included in this Annual
Report on Form 10-K are based upon information available to us as of the filing date of this Annual Report on
Form 10-K. You should not place undue reliance on these forward-looking statements. We undertake no obliga-
tion to update any of these forward-looking statements for any reason. These forward-looking statements involve
known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity,
performance, or achievements to differ materially from those expressed or implied by these statements, includ-
ing, but not limited to:

• structural imbalances in global supply and demand for photovoltaic (“PV”) modules;

• the market for renewable energy, including solar energy;

• reduction, elimination, or expiration of government subsidies and support programs for solar energy

projects;

• our ability to execute on our Long Term Strategic Plan;

• interest rate fluctuations and both our and our customers’ ability to secure financing;

• our ability to execute on our solar module and BoS cost reduction roadmaps;

• our ability to attract new customers and to develop and maintain existing customer and supplier relation-

ships;

• changes in, or the failure to comply with, government regulations and environmental, health and safety

requirements;

• our competitive position and other key competitive factors;

• environmental responsibility,

including with respect

to cadmium telluride and other semiconductor

materials;

• claims under our limited warranty obligations;

• future collection and recycling costs for solar modules covered by our module collection and recycling

program;

• our ability to protect our intellectual property;

• our ability to prevent and/or minimize the impact of cyber attacks or other breaches of our information

systems;

• our continued investment in research and development;

• the supply and price of components and raw materials, including cadmium telluride;

• our ability to successfully develop and complete our systems business projects;

• our ability to attract and retain key executive officers and associates;

• general economic and business conditions, including those influenced by international and geopolitical

events; and

• all other matters discussed in Item 1A: “Risk Factors,” and elsewhere in this Annual Report on Form

10-K.

You should carefully consider the risks and uncertainties described under this section.

Unit of Power

When referring to our manufacturing capacity, total sales, and solar module sales, the unit of electricity in
watts for megawatts (“MW”) and gigawatts (“GW”) is direct current (“DC”) unless otherwise noted. When refer-
ring to our PV solar power systems, the unit of electricity in watts for MW and GW is alternating current (“AC”)
unless otherwise noted.

Item 1:

Business

Company Overview

PART I

We are a leading global provider of comprehensive photovoltaic (“PV”) solar energy solutions. We design,
manufacture, and sell PV solar modules with an advanced thin-film semiconductor technology and also develop,
design, construct, and sell PV solar power systems that primarily use the modules we manufacture. Additionally,
we provide operations and maintenance (“O&M”) services to system owners that use solar modules manufac-
tured by us or by other third-party manufacturers. We have substantial, ongoing research and development efforts
focused on module and system level innovations. We are the world’s largest thin-film PV solar module manu-
facturer and one of the world’s largest PV solar module manufacturers. Our mission is to create enduring value
by enabling a world powered by clean, affordable solar energy.

In addressing overall global demand for PV solar electricity, our differentiated, fully integrated systems
business can provide competitively priced utility-scale PV solar energy solutions to system owners and low cost
electricity to end-users. Our systems business has enabled us to drive cost reduction across the value chain and
deliver compelling solutions to our customers. With our systems business, we believe we are in a position to
continue to expand our business in key geographic markets with a compelling need for mass-scale PV electricity.
We are committed to continually lowering the cost of solar electricity and plan to compete on an economic basis
with conventional fossil-fuel-based peaking power generation.

In furtherance of our goal of delivering affordable solar electricity, we are continually focused on reducing
PV solar power system costs in five primary areas: module manufacturing costs, BoS costs (consisting of the
costs of the components of a PV solar power system other than the modules that we manufacture, such as mount-
ing, inverters, cables, tracker equipment, and installation labor costs), project development costs, the cost of capi-
tal, and operating costs. First, with respect to our module manufacturing costs, we believe our advanced
technology has allowed us to reduce our average module manufacturing costs to among the lowest in the world
for modules produced on a commercial scale, based on publicly available information. We believe that our mod-
ule manufacturing cost is competitive, on a comparable basis with, or is lower than, those of traditional crystal-
line silicon solar module manufacturers. By continuing to improve module conversion efficiency and energy
density, increasing production line throughput, and lowering raw material costs, we believe that we can further
reduce our manufacturing costs per watt and maintain cost competitiveness with traditional crystalline silicon
solar module manufacturers. Second, with respect to our planned BoS cost reduction roadmap, we have
aggressive programs which target key improvements in components and system design, which, when combined
with continued improvements in module conversion efficiency, volume procurement around standardized hard-
ware platforms, the use of innovative installation techniques and know-how, and accelerated installation times,
are expected to result in continued reductions in our BoS costs and drive a lower system levelized cost of energy
(“LCOE”). Third, with respect to our project development costs, we seek optimal site locations in an effort to
maximize solar resources and minimize transmission and permitting costs, and to accelerate lead times to elec-
tricity generation. Fourth, with respect to the cost of capital, by continuing to demonstrate the financial viability
and operational performance of our utility-scale PV solar power systems, we believe we can continue to lower
the cost of capital associated with our systems, thereby further enhancing the economic viability of our projects
and lowering the cost of electricity generated by such systems incorporating our modules and technology. The
remaining primary system cost relates to the actual operating costs of a system, which includes the O&M costs of
the plant. We believe that our O&M services are an important aspect to further reductions in the LCOE of a PV
solar power system through seamless grid integration, increased reliability, and maximization of the availability
of the systems we operate and maintain for our customers.

In addition to enabling the system cost reductions described above, we believe that combining our vertical
integration across the value chain enables us to be more competitive, accelerate the adoption of our technology in
PV solar power systems, and successfully expand into key geographic markets around the world. Our vertically
integrated capabilities enable us to maximize value and mitigate risk for our customers and offer valuable bene-
fits such as grid integration and stabilization, thereby positioning us to deliver meaningful PV solar energy sol-
utions to varied energy problems worldwide. We seek to offer leadership across the entire solar value chain,

resulting in more reliable and cost effective PV solar energy solutions for our customers, and furthering our mis-
sion to create enduring value by enabling a world powered by clean, affordable solar electricity.

Market Overview

Solar energy is a growing form of renewable energy with numerous economic and environmental benefits
that make it an attractive complement to, and/or substitute for, traditional forms of electricity generation. In
recent years, the price of PV solar power systems, and accordingly the cost of producing electricity from such
systems, has dropped to levels that are competitive with or even below the retail price of electricity in many
markets. The rapid price decline that PV solar energy has experienced in recent years opens new possibilities to
develop systems in some locations with limited or no financial incentives. The fact that a PV solar power system
requires no fuel provides a unique and valuable hedging benefit to owners of such systems relative to traditional
electricity generation assets. Once installed, PV solar power systems can function for 25 or more years with rela-
tively less maintenance or oversight, compared to traditional forms of electricity generation. In addition to these
economic benefits, PV solar has several environmental benefits. For example, PV solar power systems do not
generate any greenhouse gas or other emissions and use no or minimal amounts of water compared to traditional
forms of electricity generation. Solar markets worldwide continue to develop, aided by the above factors as well
as demand elasticity resulting from declining industry average selling prices, both at the module and system
level, which make solar power more affordable to new markets, and we have continued to develop our localized
presence and expertise in such markets.

The solar industry continues to be characterized by intense pricing competition, both at the module and sys-
tem levels. In the aggregate, we believe manufacturers of solar modules and cells have, relative to global
demand, significant installed production capacity and the ability for additional capacity expansion. We believe
the solar industry may from time to time experience periods of structural imbalance between supply and demand
(i.e., where production capacity exceeds global demand), and that such periods will put pressure on pricing.
Additionally, intense competition at the systems level can result in an environment in which pricing falls rapidly,
thereby further increasing demand for solar energy solutions but constraining the ability for project developers;
engineering, procurement, and construction (“EPC”) companies; and vertically-integrated solar companies such
as First Solar to sustain meaningful and consistent profitability. In light of such market realities, we are executing
our Long Term Strategic Plan, Vision 2020 (“Long Term Strategic Plan”) described below, under which we are
focusing on our competitive strengths. Such strengths include our advanced module and system technologies as
well as our differentiated, vertically-integrated business model that enables us to provide utility-scale PV solar
energy solutions to key geographic markets with immediate electricity needs.

Strategy and Competitive Strengths

To build upon our industry leading position and to remain one of the preferred providers of PV solar energy

solutions, we are pursuing the following strategies: differentiation, sustainable growth, and financial viability.

Differentiation

• First Solar is vertically integrated across substantially the entire solar value chain. Many of the efficien-
cies, cost reductions, and capabilities that we deliver to our customers are not easily replicable for other
industry participants that are not similarly vertically integrated. The First Solar model offers PV solar
energy solutions that benefit from our capabilities, including: project development; engineering and plant
optimization; grid integration and plant control systems; advanced PV modules; trackers and fixed mount-
ing systems; procurement and construction consulting; and operations and maintenance services.

• First Solar systems deliver solar energy that is cost competitive with certain conventional energy sources,
depending on the location and application. Our solutions diversify the energy portfolio and reduce the risk
of fuel-price volatility, while delivering an LCOE that is cost competitive in some circumstances with
electricity generated from fossil fuels. With the absence of commodity price risk, solar energy has a mean-
ingful value proposition, including a long-term fixed price with relatively low operating costs and reliable
energy. When compared to the price of power derived from a conventional source of energy, a fixed price

cannot be achieved unless the cost of hedging is included. Hedging costs of a commodity such as natural
gas, along with the costs of credit support required for a long-term hedge, can significantly increase con-
ventional energy costs.

• First Solar’s bankability and financial credibility enable us to offer meaningful module and system warran-
ties after installation, which provide us with a competitive advantage relative to some of our peers in the
solar sector in the context of project financing.

• We offer one of the most bankable utility-scale solar energy solutions in the world. With our proven expe-
rience, financial stability, and ability to maximize the use of our leading technology in debt-financed proj-
ects, our bankable energy solutions provide access to capital and relatively low-cost financing to leading
utilities and energy investors.

• First Solar has developed advanced grid integration technology, which provides PV plants the ability to
actively stabilize the electricity grid and operate more like traditional electricity generation plants.
Advanced plant features of our grid integration systems include the ability to regulate voltage, curtail
active power when necessary, limit the rate of change of power, prevent trips during faults and dis-
turbances, and react to changes in grid frequency.

• First Solar has made significant improvements to BoS components to optimize the entire PV power plant
and reduce lifecycle costs. Our proprietary data acquisition, plant control, and mounting systems are
examples of plant optimizing technologies that enable us to provide reliable and predictable solar energy,
increased energy yields and system availabilities, faster construction velocities, and a lower LCOE. Addi-
tionally, our advanced plant controls enable seamless integration of our utility-scale solar plants onto the
electricity grid, providing vital grid support services such as voltage and power factor regulation, active
and reactive power control, ramp rate control, frequency regulation, and fault ride-through.

• We invest significant resources in research and development (“R&D”), both at the module and system
level. First Solar’s R&D model differentiates us from much of our competition due to its vertical
integration, from advanced research to product development, manufacturing, and applications. Our mod-
ule conversion efficiency has improved on average more than half a percent every year for the last ten
years. First Solar has recently achieved two new world records for cadmium telluride (“CdTe”) PV effi-
ciency, achieving an independently certified research cell efficiency of 22.1% and a full area module effi-
ciency of 18.2%. Our module R&D efforts are being focused on continually improving the energy density
of our modules and otherwise driving improvements in the lifetime energy production of our modules
while simultaneously integrating our module and BoS offerings for cost effective, productive, and reliable
PV power plants.

• In many climates, First Solar’s CdTe modules provide a significant energy yield advantage over conven-
tional crystalline silicon solar modules of equivalent efficiency rating. For example, in humid climates,
our CdTe modules provide a superior spectral response, and in hot climates, our CdTe modules provide a
superior temperature coefficient. As a result, at temperatures above 25°C (standard test conditions), our
CdTe modules produce more energy than competing conventional crystalline silicon solar modules with
an equivalent efficiency rating. This advantage provides stronger system performance in high temperature
climates, which is particularly advantageous as the vast majority of a system’s generation, on average (in
typical high insolation climates), occurs when module temperatures are above 25°C. As a result, our PV
solar power systems can produce more annual energy at a lower LCOE than competing systems with the
same nameplate capacity.

• First Solar CdTe PV modules are manufactured in a high-throughput, automated environment that
integrates all manufacturing steps into a continuous flow line. At the outset, a sheet of glass enters the
production line, and in less than 2.5 hours it is transformed into a complete PV module, which is flash
tested, boxed, and ready for shipment. We currently have 30 manufacturing lines worldwide and 2.8 GW
of annualized manufacturing capacity. Each line is currently capable of producing approximately
2,500 modules per day; totaling approximately 71,600 modules each day across 30 lines. About every
second, a completed PV module rolls off a First Solar manufacturing line somewhere in the world. With

expected increases in module efficiency as per our roadmap, our capacity has a potential to scale up to
approximately 3.1 GW in 2017 based on the 30 existing lines. In addition, our stored manufacturing
equipment includes up to 8 lines either from our former German factories or from manufacturing facilities
that we put on hold with capacity of up to approximately 0.8 GW. As a result, our total available manu-
facturing capacity includes up to 3.9 GW of either installed or stored capacity that can be readily installed
and deployed in production and become a significant enabler of our future growth. In January 2015, we
marked a new milestone by achieving over 10 GW of solar capacity installed globally using our CdTe PV
modules manufactured to date, making us the first thin-film PV module manufacturer in the world to
achieve this milestone.

• O&M is a key driver for power plants to deliver on their projected revenues. By leveraging our extensive
experience in plant optimization and advanced diagnostics, we have developed one of the most advanced
O&M programs in the industry. With more than 5.6 GW DC of utility-scale PV plants under the O&M
program, we maintain a fleet average system availability greater than 99.5%. Our experienced O&M staff
enhances the probability that our customers’ power plants produce the energy predicted in their energy
model. Our products and services are engineered to maximize energy output and revenue for our custom-
ers while significantly reducing their unplanned maintenance costs. Plant owners benefit from predictable
expenses over the life of the contract and reduced risk of energy loss. Our goal is to optimize our custom-
ers’ power plants to generate the maximum amount of energy and revenue under their respective power
purchase agreements (“PPA”) throughout the operational life of the plants. We have made significant
investments in O&M technologies in order to develop and create a scalable and sustainable O&M plat-
form. Our O&M program is compliant with the North American Electric Reliability Corporation
(“NERC”) standards and is designed to be scalable to accommodate the growing O&M needs of custom-
ers worldwide. We believe our O&M expertise is a significant differentiator, as it is difficult for many
competitors to replicate this experience.

• We manage, as owner or partial owner, project assets to preserve and enhance shareholder value. We
provide seamless management of projects from initial land development through construction, commis-
sioning, and operation bringing to bear all of our experience in each of these phases.

Sustainable Growth

In executing our Long Term Strategic Plan, we are focusing on providing PV solar energy solutions using
our modules to key geographic markets that we believe have a compelling need for mass-scale PV electricity,
including markets throughout the Americas, Asia, the Middle East, and Africa. As part of our Long Term Strate-
gic Plan, we are focusing on opportunities in which our PV solar energy solutions can compete directly with fos-
sil fuel offerings on an LCOE or similar basis, or complement such fossil fuel electricity offerings. Execution of
the Long Term Strategic Plan entails a prioritization of market opportunities worldwide relative to our core
strengths and a corresponding allocation of resources around the globe. This prioritization involves a focus on
our core utility-scale offerings and exists within a current market environment that includes rooftop and dis-
tributed generation solar, particularly in the U.S. While it is unclear how rooftop and distributed generation solar
might impact our core utility-scale offerings in the next several years, we believe that utility-scale solar will con-
tinue to be a compelling solar offering for companies with technology and cost leadership and will continue to
represent an increasing portion of the overall electricity generation mix.

significant current or projected electricity demand, and/or relatively high existing electricity prices. As part of
these efforts, we continue to expand or reallocate resources globally, including business development, sales per-
sonnel, and other supporting professional staff in target markets. Accordingly, we may shift current costs or incur
additional costs over time as we establish a localized business presence in these target markets.

Joint ventures or other strategic arrangements with partners are a key part of our Long Term Strategic Plan,
and we generally use such arrangements to expedite our penetration of various key markets and establish
relationships with potential customers. We also enter into joint ventures or strategic arrangements with customers
or other entities to maximize the value of particular projects. Some of these arrangements involve, and are
expected in the future to involve, significant investments or other allocations of capital. We continue to develop
relationships with policymakers, regulators, and end customers in these strategic markets with a view to creating
opportunities for utility-scale PV solar power systems. We sell such systems directly to end customers, including
utilities, independent power producers, commercial and industrial companies, and other system owners. Depend-
ing on the market opportunity, our sales offerings may range from module-only sales, to module sales with a
range of development, EPC services, and other solutions, to full turn-key PV solar power system sales. We
expect these offerings to continue to evolve over time as we work with our customers to optimize how our PV
solar energy solutions can best meet our customers’ energy and economic needs.

Financial Viability

First Solar’s commitment is to create long-term shareholder value and generate returns on invested capital in
excess of its weighted average cost of capital over that time horizon. Despite substantial downward pressure on
the price of solar modules due to pricing competition and significant capacity in the industry, we have continued
to deliver strong financial performance and liquidity. As planned, we expect to continue to drive operating
expense efficiencies and improvements while still investing in growth, the continued development of our global
sales capabilities, and our R&D roadmap. We seek to balance our incentive compensation and decision-making
processes to ensure we direct our efforts and investments towards long-term profitable and sustainable growth
with appropriate returns on invested capital and reinvest excess returns back into the business.

Offerings and Capabilities

Offerings

We are focusing on markets and energy applications in which solar power can be a least-cost, best-fit energy
solution, particularly in regions with high solar resources, significant current or projected electricity demand,
and/or relatively high existing electricity prices. We differentiate our product offerings by geographic market and
localize the solution, as needed. Our consultative approach to our customers’ solar energy needs and capabilities
results in customized solutions to meet their economic goals. We have designed our customer solutions according
to the needs of the following different business areas. Although we have substantial experience with the utility-
scale power plant and advanced PV module offerings described below, certain other offerings are in various
stages of development.

• Utility-Scale Power Plant. We have extensive, proven experience in delivering reliable grid-connected
bulk power systems for utility-scale generation. First Solar’s grid-connected PV solar power systems
diversify the energy portfolio, reduce fossil-fuel consumption, reduce the risk of fuel price volatility, and
save costs, proving that centralized solar generation can deliver reliable and affordable solar electricity to
the grid in many places around the world. Benefits of our grid-connected bulk power system solutions
include reduction of fuel imports and improvements in energy security; diversification of the energy port-
folio and reductions of risk related to fuel-price volatility; enhanced peaking generation and faster time-to-
improved grid reliability and stability with advanced PV plant controls; and managed PV
power;
variability through accurate forecasting.

• Advanced PV Modules. Our CdTe PV module outperforms conventional crystalline silicon solar mod-
ules with equal power rating due in part to superior spectral response and temperature coefficient in many
climates. At temperatures above 25°C, First Solar modules produce more energy than conventional
crystalline silicon solar modules with equal nameplate efficiency ratings. Our TetraSun crystalline silicon

module is designed for applications where space is at a premium or customers prefer a high power density
solution. With a proprietary cell architecture, our crystalline silicon modules offer one of the industry’s
highest power ratings and conversion efficiencies and lowest temperature coefficients, resulting in high
energy density in space-constrained installations.

• Module Plus. With module plus, we have further enhanced the performance of our industry-leading PV
solutions by improving the process of purchasing an integrated module and mounting system. Module
plus features the reliability of our advanced thin-film PV modules, paired with a range of specially
designed mounting systems that are optimized for accelerated installation and maximum energy return.
Accordingly, our module plus customers have access to our advanced PV modules and portfolio of addi-
tional system components by leveraging our global supplier network to streamline project logistics and
minimize risks through a single system component supplier.

• Commercial and Industrial. We are in the process of developing system solutions for commercial and
industrial applications. We believe the wholesale commercial and industrial market, while in its early
stages, is a promising opportunity for First Solar, given our large-scale PV system expertise. A recent
example is our announcement in February 2015 that Apple Inc. had committed to purchase electricity
from our California Flats solar project under construction in Monterey County, California. Apple will
receive electricity from 130 MW AC of the project under a 25-year power purchase agreement, the largest
agreement in the industry to provide clean energy to a commercial end user.

• Community Solar. Our community solar offering addresses the residential and small business sectors,
providing a broad range of customers access to competitively priced solar energy regardless of the suit-
ability of their rooftops. Community solar utilizes relatively small ground-mounted installations that pro-
vide clean energy to utilities, which then offer consumers the ability to buy into a specific community
installation and benefit from the solar power generated by that resource. First Solar’s expertise in utility-
scale generation and module technology, paired with the community solar experience of our partner Clean
Energy Collective, allows residential power consumers to “go solar,” including those who live in apart-
ment buildings or whose home rooftops cannot accommodate solar panels. We are currently working with
strategic partners to develop a commercially scalable community solar offering.

Full Suite of Capabilities

The First Solar model offers PV solar energy solutions with superior value and less risk with our expertise

across substantially the entire solar value chain, including:

• Project Development. During project development, we obtain land and land rights for the development
of PV solar power systems incorporating our modules, negotiate long-term PPAs with potential purchasers
of the electricity to be generated by those plants or develop plants in regulated markets where feed-in-
tariff (“FiT”) or similar structures are in place, manage the interconnection and transmission process,
negotiate agreements to interconnect the systems to the electricity grid, and obtain the permits that are
required prior to the construction of PV solar power systems, including applicable environmental and
land-use permits. We also buy projects in various stages of development and continue developing those
projects with system designs incorporating our own modules. We sell developed PV solar power systems
to utilities, independent power producers, commercial and industrial companies, and other system owners,
such as investors who are looking for long-term investment vehicles that are expected to generate con-
sistent returns.

• EPC Services. We provide EPC services to projects developed by us,

to projects developed by
independent solar power project developers, and directly to system owners such as utilities. EPC services
include engineering design and related services, BoS procurement, advanced development of grid
integration solutions, and construction contracting and management. Depending on the customer and
market need, we may provide our full EPC services or any combination of individual products and serv-
ices within our EPC capabilities. An example of such combination of individual services would be provid-
ing engineering design and procurement of BoS parts (“EP” services) for a third-party constructing a PV
solar power system.

• O&M Services. We have a comprehensive O&M service offering covering more than 5.6 GW DC of
utility-scale PV solar power systems. Utilizing a state of the art Global Operations Center, our team of
O&M experts provide a variety of services to optimize system performance and comply with PPAs, other
agreements, and regulations. We offer our O&M services to solar power plant owners that use either our
solar modules or modules manufactured by other third-party manufacturers.

• Tracker and Other Balance of Systems. BoS consists of all of the non-module components of the solar
power plant. We sell certain components of the solar system including single-axis trackers, which are
manufactured by a third-party using our proprietary technology. We offer several proprietary mounting
solutions that have been custom-designed by First Solar engineers to integrate exclusively with our mod-
ules and reduce system costs. Project-specific factors such as the local irradiance, weather, soil, wind, and
topography will dictate the optimal mounting solution for each project. With a single-axis tracker
technology and multiple fixed mounting solutions to choose from, we offer a suite of mounting systems
that have been engineered to maximize energy output, increase installation velocity, and reduce costs. Our
proprietary tracker systems follow the sun throughout the day to maximize energy output and generate up
to 25% more energy than fixed mounting systems. In addition, our vertical integration combined with
partner collaboration has enabled us to continue to make system-level improvements, such as PV solar
power systems combining our CdTe modules with 1500 volt inverter/transformer systems.

Global Markets

We have established and are continuing to develop a localized business presence on six continents, as
described below. Energy markets are by their nature localized, with different drivers and market forces impacting
electricity generation and demand in a particular region or for a particular application. Accordingly, our business
is evolving worldwide and is shaped by the varying ways in which our PV solar energy solutions can be a
compelling and economically viable solution to energy needs in different markets and applications.

The Americas

• United States. Multiple PV markets in the United States, which accounted for 87% of our 2015 net sales,
exemplify several of the criteria critical for a sustainable solar market: (i) sizeable electricity demand,
particularly around growing population centers and industrial areas, (ii) high existing power prices, and
(iii) abundant solar resources. In those areas and applications in which these factors are more pronounced,
our PV solar energy solutions compete favorably on an economic basis with more traditional forms of
energy generation. The market penetration of PV solar is impacted by certain state and federal support
programs, including the 30% federal investment tax credit, as described under “Support Programs.” We
have significant experience and a market leadership position in developing, engineering, constructing, and
maintaining utility-scale power plants in the United States, particularly in California and other southwest-
ern states, and increasingly in southeastern states. Currently, our solar projects in the United States
account for a majority of the 1.6 GW AC advanced-stage pipeline of projects that we are either currently
constructing or expect to construct. See Item 7: “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Systems Project Pipeline” for more information about these
projects.

• Chile. Chile is a promising region for PV solar in that certain markets are characterized by abundant
solar resources and potential demand in the form of mining or industrial activity. The Chilean gov-
ernment’s National Energy Strategy includes expansion of the country’s renewable energy capacity to
20% of its total generated power by 2025. Throughout 2015, we continued construction of our 141 MW
AC Luz del Norte PV solar power system located near Copiapó, Chile. Energy from the Luz del Norte
system will be supplied into the Chilean Central Interconnected System, contributing significantly toward
Chile’s renewable energy goal. Once completed, Luz del Norte will be one of the largest solar systems in
the region. We also expect to participate in upcoming auctions for additional PPAs in the region.

• Other Americas. We are developing our business in other countries in the Americas including Brazil,

Mexico, and certain Central American countries.

Europe, the Middle East, and Africa

• Europe. While PV solar adoption in prior years was driven to a large degree by feed-in-tariffs and other
incentive programs in Germany, France, Italy, and Spain, PV solar has entered its next phase in which
growth will ultimately be determined by the degree to which PV solar energy solutions can compete eco-
nomically with more traditional forms of electricity generation, particularly in areas with high prevailing
electricity prices, strong electricity demand, and strong solar resources. In particular, Germany, France,
and the Netherlands are all running tenders in which large-scale PV solar projects can bid for capacity.

In Europe, which accounted for approximately 2% of our 2015 net sales, we have been engaged in busi-
ness development and module sales activities in the United Kingdom (“U.K.”), Germany, France, and the
Netherlands, and we are actively evaluating additional sales opportunities in Turkey, Israel, and emerging
Southeastern European markets as well as mature Western European solar markets. We are party to a
joint venture with Belectric Solarkraftwerke GmbH to develop solar power projects in Europe, North
Africa, the United States, and the Middle East. Under the terms of the joint venture, First Solar provides
its thin-film modules, selected components, and value-added services, while Belectric provides its
advanced balance of systems and a range of service capabilities. Both companies’ engineering, procure-
ment, and construction contributions vary by project and geography.

• The Middle East. The solar energy market potential in the Middle East continues to be driven by strong
fundamentals, including attractive economics, abundant solar resources, and robust policy. The United
Arab Emirates (“UAE”), Egypt, and Jordan are important markets for utility-scale solar with indications
of future potential coming from Saudi Arabia, Oman, and Kuwait. The UAE, Egypt, and Jordan lead the
region with policy mechanisms designed to ramp up the share of renewable energy in their generation
portfolios. While their motives for investing in solar energy range from energy security to the diversifica-
tion of their generation portfolios to the minimization of domestic consumption of hydrocarbons, the
common factor is that the economics of PV solar have made it a compelling choice as a generation source.

Jordan and Egypt have actively facilitated the development of the independent power production sector in
their countries as a means of responding to urgent energy needs. For example, Jordan has committed to
installing 600 MW of PV solar capacity by 2020, while Egypt has progressed in its over-subscribed multi-
gigawatt solar tender. In the rest of the Arabian Gulf, the region’s state-owned hydrocarbon companies
are becoming more involved in regional solar programs. Examples include initiatives spearheaded by
Saudi Aramco, Petroleum Development Oman, and the Kuwait Oil Company. However, as with any
emerging market, challenges remain and these are primarily related to evolving policy and legislation,
prevailing energy subsidies, infrastructure, the availability of financing, the level of competition, and
geopolitical risk.

Since establishing a presence in the Middle East in 2013, First Solar has focused on the region’s utility-
scale segment while pursuing a range of opportunities. In addition to constructing the 13 MW DC first
phase of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai, First Solar will also be supplying
the modules for the Park’s 200 MW AC second phase. In Jordan, First Solar is constructing the 53 MW
AC Shams Ma’an PV solar power system, which is expected to account for approximately 1% of Jordan’s
annual energy output upon completion in 2016. Additionally, First Solar has provisionally been allocated
50 MW in Egypt’s Feed-in-Tariff program. As a result of these and other projects, First Solar expects to
be the leading provider of PV solutions in the Middle East, with a projected installed capacity of at least
271 MW across the region by 2017.

• Africa. Africa offers strong potential for PV solar, which can play a useful role in meeting the region’s
varying energy needs. Our focus in the region is primarily the sale of modules and BoS components for
utility-scale projects. In South Africa, the government is procuring bids under a competitive tender proc-
ess in support of a target of procuring over 18 GW of renewable energy (wind, solar, etc.) by 2030 as part
of South Africa’s Integrated Resource Plan of which over 9.4 GW was allocated to PV solar. Additionally,
we are working with our channel partners, such as Caterpillar Inc., to provide hybrid diesel and/or PV
solutions to the mining industry in the region. Whether mines are grid-connected or relying on diesel
generators, solar energy, with its cost competitiveness and reliability, represents a meaningful value

proposition for the industry. Deploying PV hybrid solutions that supplement existing power sources, such
as the electricity grid or diesel generators, can help mining companies address their daytime electricity
supply challenges, while minimizing costs and reducing environmental impacts.

Asia-Pacific (“APAC”) and India

• Australia. Australia is a promising region for PV solar. The Australian PV solar market is expected to
experience growth in 2016 after a pause in new development activity in 2014 and 2015. In Australia,
which accounted for approximately 5% of our 2015 net sales, the solar industry was adversely impacted
during 2014 and 2015 by regulatory uncertainty related to an extended review of the federal government’s
national Renewable Energy Target (“RET”) and potential de-funding of the federal government’s
Australia Renewable Energy Agency and Clean Energy Finance Corporation, which offer grant-based
funding for PV solar projects in both grid-connected and off-grid applications. In June 2015, the federal
government announced a compromise position on the RET, setting a target of 33,000 gigawatt hours by
2020. In addition to federal government support, numerous state and territory governments have
announced their own support programs. In particular, the Australian Capital Territory announced a reverse
auction for utility-scale PV projects, the Queensland government announced PPA support for up to 60
MW of utility-scale PV projects, and the Victorian government announced plans to support renewable
energy. In 2015, First Solar retained the title of Australia’s largest PV EPC and O&M company. First
Solar also completed commissioning of the Nyngan and Broken Hill solar projects (102 MW and 53 MW,
respectively), which are the largest solar plants in Australia.

• Japan.

Japan has evolving electricity market characteristics, particularly after the 2011 Fukushima Daii-
chi nuclear disaster, which make it an attractive market for PV solar. One such characteristic is the
announcement of new safety standards following the failure of the Fukushima Daiichi nuclear power sta-
tion, which resulted in the idling of Japan’s nuclear reactors, which had historically generated nearly 30%
of the country’s electricity. Japan has few domestic fossil fuel resources and relies heavily on fossil fuel
imports. Accordingly, the Japanese government has announced a long-term goal of dramatically increas-
ing installed solar power capacity and has provided various incentives for solar power installations. As a
result, strong solar demand is expected in Japan over the next several years.

In 2015, we completed the construction of three PV solar power systems and commenced the construction
of four additional systems. We have also acquired the rights to a 59 MW AC PV solar project in Japan,
which is expected to use our CdTe PV modules and begin construction in 2016. We are partnering with
local companies to develop, construct, and operate PV solar power systems, which will further mitigate
Japan’s dependence on nuclear power and fossil fuel imports. Our sales offerings in Japan include both
our CdTe modules and high-efficiency crystalline silicon modules as well as O&M services.

• India. There is significant potential for PV solar in India due to its growing energy needs, substantial
population centers, lack of electrification to many parts of the country, high energy costs, strong irradi-
ance, and aggressive renewable energy targets set by the government, which include increasing the coun-
try’s solar capacity to 100 GW by the year 2022. To support this initiative, several key electricity
regulations have been announced relating to ramping up renewable purchase obligations, implementing
penal provisions for non-compliance with the obligations under the Indian Electricity Act, budgetary allo-
cations under the Central Government for establishing the Green Transmission Corridor, and the creation
of numerous solar parks in various states with dedicated transmission infrastructure to be installed by the
government. In addition to these measures, the Central Government also introduced the Renewable Gen-
eration Obligations, which will mandate that all thermal power generators must implement new renewable
energy generation capacity to match 10% of their new thermal generation capacity. Overall, these policy
and regulatory measures have been introduced with an objective of creating significant and sustained
demand for PV solar in India. Accordingly, we are working to sell modules and develop utility-scale PV
solar projects in India to address the energy and renewable purchase obligation needs of utilities and target
the open access industrial and commercial power demand.

In 2015, we secured rights through a competitive auction to sell power under a 25-year PPA for a cumu-
lative capacity of 75 MW AC to the state owned electricity distribution companies in Telangana. We also

have 125 MW AC of existing projects, for which PPAs were secured in 2014. In 2015, we successfully
achieved commercial operation of 20 MW AC of our project pipeline and commenced development or
construction on 180 MW AC of the remaining pipeline, which is expected to achieve commercial oper-
ation during 2016. We continue to maintain our PV module market leadership in India with over 1,000
MW DC of installed modules.

• Other APAC. We are developing our business in other APAC countries including Indonesia, Malaysia,
Thailand, and the Philippines. Each of these regions has one or more market characteristics or trends (such
as an environment of declining fuel subsidies in Indonesia) which can make PV solar electricity attractive.
In China, we continue to evaluate our options and remain committed to our presence, with the goal of
developing sales opportunities in the market.

Support Programs

Although our Long Term Strategic Plan provides for First Solar to compete in key markets that do not
require solar-specific government subsidies or support programs, in the near term our net sales and profits remain
subject to variability based on the availability and size of government subsidies and economic incentives. Sup-
port programs for PV solar electricity generation, depending on the jurisdiction, include FiTs, quotas (including
renewable portfolio standards and tendering systems), and net energy metering programs. In addition to these
support programs, financial incentives for PV solar electricity generation include tax incentives, grants, loans,
rebates, and production incentives. Although we expect to become less impacted by, and less dependent on,
support programs as we execute our Long Term Strategic Plan, support programs will continue to play varying
roles in accelerating the adoption of PV solar systems around the world.

In Europe, renewable energy targets, in conjunction with FiTs, Renewable Obligation Certificates, and other
schemes such as tenders for utility-scale PV solar, have contributed to the growth in PV solar mar-
kets. Renewable energy targets prescribe how much energy consumption must come from renewable sour-
ces, while incentive policies and competitive tender policies are intended to support new supply development by
providing certainty to investors. A 2009 European Union (“EU”) directive on renewable energy, which replaced
an earlier 2001 directive, sets varying targets for all EU member states in support of the directive’s goal of a 20%
share of energy from renewable sources in the EU by 2020, and requires national action plans that establish clear
pathways for the development of renewable energy sources.

Tax incentive programs exist in the U.S. at both the federal and state level and can take the form of invest-
ment and production tax credits, accelerated depreciation, and sales and property tax exemptions and abatements.
At the federal level, investment tax credits for business and residential solar systems have gone through several
cycles of enactment and expiration since the 1980’s. In December 2015, the U.S. Congress extended the 30%
federal energy investment tax credit (“ITC”) for both residential and commercial solar installations through
December 31, 2019. The credit will step down to 26% in 2020, 22% in 2021, and remain at 10% permanently
beginning in 2022. The ITC has been an important economic driver of solar installations in the U.S., and its
extension is expected to contribute to greater medium-term demand visibility in the U.S. The positive impact of
the ITC has depended to a large degree on the availability of tax equity for project financing, and any significant
reduction in the availability of tax equity in the future could make it more difficult to develop and construct proj-
ects requiring financing. The eventual step-down of the ITC to 10% underscores the need for the LCOE from
solar systems to continue to decline and remain competitive with other sources of energy generation.

At the federal level, the Environmental Protection Agency’s adoption of a final Clean Power Plan Rule (the
“Rule”) and implementation of the Rule through state plans offered the possibility of increasing the demand for
PV solar generating capacity in certain regions of the U.S. in which PV solar has not historically received sig-
nificant state-level policy support. However, the adoption and implementation of the Rule has been impacted by
litigation against the Rule initiated by states and other stakeholders which has not yet been resolved, and in
February 2016, the U.S. Supreme Court stayed implementation of the Rule while such legal challenges are pend-
ing. It is therefore premature to assess what the effects of the Rule will be on PV solar markets.

The majority of states in the U.S. have enacted legislation adopting Renewable Portfolio Standard (“RPS”)
mechanisms. Under an RPS, regulated utilities and other load serving entities are required to procure a specified

percentage of their total electricity sales to end-user customers from eligible renewable resources, such as solar
generating facilities, by a specified date. Some programs may further require that a specified portion of the total
percentage of renewable energy must come from solar generating facilities. RPS legislation and implementing
regulations vary significantly from state to state, particularly with respect to the percentage of renewable energy
required to achieve the state’s RPS, the definition of eligible renewable energy resources, and the extent to which
renewable energy credits (certificates representing the generation of renewable energy) qualify for RPS com-
pliance. Measured in terms of the volume of renewable electricity required to meet its RPS mandate, California’s
RPS program is the most significant in the U.S., and the California market for renewable energy has dominated
the western U.S. region for the past several years. First enacted in 2002, California’s RPS statute has been
amended several times to increase the overall percentage requirement as well as to accelerate the target date for
program compliance. Pursuant to amendments enacted by the California Legislature in 2015, the California RPS
program now requires utilities and other obligated load serving entities to procure 50% of their retail electricity
demand from eligible renewable resources by 2030. In 2015, approximately 60% of our total net sales were
derived from our systems projects or third-party module sales to solar power systems in California.

Business Segments

We operate our business in two segments. Our components segment involves the design, manufacture, and
sale of solar modules, which convert sunlight into electricity. We primarily manufacture CdTe modules and also
manufacture high-efficiency crystalline silicon modules. Third-party customers of our components segment
include integrators and operators of PV solar power systems. Our second segment is our fully integrated systems
business (“systems segment”), through which we provide complete turn-key PV solar power systems, or solar
solutions, that draw upon our capabilities, which include (i) project development, (ii) EPC services, and
(iii) O&M services, as described in more detail below. We may provide our full EPC services or any combination
of individual products and services within our EPC capabilities depending upon the customer and market oppor-
tunity. All of our systems segment products and services are for PV solar power systems, which primarily use our
solar modules, and we sell such products and services to utilities, independent power producers, commercial and
industrial companies, and other system owners. Additionally, within our systems segment, we may own and
operate certain of our PV solar power systems for a period of time based on strategic opportunities.

See Note 23 “Segment and Geographical Information” to our consolidated financial statements for the year
ended December 31, 2015 included in this Annual Report on Form 10-K for further information on our business
segments.

Components Business

Our components business involves the design, manufacture, and sale of solar modules which convert sun-

light into electricity.

Solar Modules

CdTe Modules. Our flagship module since the inception of First Solar has been manufactured using our
advanced CdTe thin-film technology. Each solar module is a glass laminate approximately 2ft x 4ft (60cm x
120cm) in size that encapsulates a CdTe thin-film semiconductor. Our solar modules had an average rated power
per module of approximately 107 watts, 95 watts, and 91 watts for 2015, 2014, and 2013, respectively. During
2014, we announced the release of our Series 4TM module, which offers up to 8% more energy than conventional
crystalline silicon modules with the same efficiency rating, and is compatible with advanced 1500-volt plant
architectures. The Series 4ATM variant features a new anti-reflective coated glass, which enhances energy pro-
duction. Our semiconductor structure is a single-junction polycrystalline thin-film that uses CdTe as the absorp-
tion layer. CdTe has absorption properties that are matched to the solar spectrum and can deliver competitive
conversion efficiencies using approximately 1-2% of the amount of semiconductor material that is used to manu-
facture traditional crystalline silicon solar modules. One of the drivers of First Solar modules’ performance
advantage over traditional crystalline silicon modules is a lower temperature coefficient, delivering higher energy
yields at elevated operating temperatures typical of utility-scale solar power plants in sunny regions.

Crystalline Silicon Modules.

In addition to our primary CdTe module technology, we also manufacture
crystalline silicon modules made from high-efficiency N-Type Mono cells produced at our facility in Kulim,
Malaysia and then assembled into a 60 or 72 cell module by third-party contract manufacturers. When fully
ramped, we expect the facility to have the capacity to produce 55,000 156mm cells per day for a nameplate
capacity of 100 MW annually. The standard First Solar 60 cell PV module will have a power rating of 300 watts.
Accordingly, our crystalline silicon technology is expected to deliver a very high efficient cell at a much lower
manufacturing cost than is currently available in the marketplace.

Descriptions below of our components business relate to our CdTe modules unless otherwise noted.

Manufacturing Process

CdTe Modules. We manufacture our CdTe solar modules on high-throughput integrated production lines
in an automated, proprietary, and continuous process. Our solar modules employ a thin layer of semiconductor
material to convert sunlight into electricity. Our manufacturing process eliminates the multiple supply chain
operators and expensive and time-consuming batch processing steps that are used to produce crystalline silicon
solar modules. Currently, we manufacture our solar modules at our Perrysburg, Ohio and Kulim, Malaysia manu-
facturing facilities.

We have integrated our CdTe manufacturing processes into a continuous production line with the following
three stages: the deposition stage, the cell definition and treatment stage, and the assembly and test stage. In the
deposition stage, panels of transparent oxide-coated glass are robotically loaded onto the production line where
they are cleaned, laser etch identified with a serial number, heated, and coated with thin layers of CdTe and other
transport deposition technology, after which the
semiconductor materials using our proprietary vapor
semiconductor-coated plates are cooled rapidly to increase strength. In the cell definition and treatment stage, we
use high speed lasers to transform the large single semiconductor coating on the glass plate into a series of inter-
connected cells that deliver the desired current and voltage output. In this stage, we also treat the semiconductor
film using proprietary chemistries and processes to improve the device performance, and we apply a metal
terminated sputtered back contact. Finally, in the assembly and test stage, we apply busbars, inter-layer material,
and a rear glass cover sheet that is laminated to encapsulate the device. A junction box and termination wires are
then applied to complete the assembly. The final assembly stage is the only stage in our production line that
requires manual processing.

We maintain a robust quality and reliability assurance program that monitors critical process parameters and
measures product performance to ensure that industry and internal standards are met. Acceptance testing for both
electrical leakage and power measurement on a solar simulator are conducted prior to a module being boxed for
shipment. The quality and reliability tests complement production surveillance with an ongoing monitoring pro-
gram, subjecting production modules to accelerated life stress testing to help ensure ongoing conformance to
requirements of the International Electrotechnical Commission (“IEC”) and Underwriters Laboratories Inc.
(“UL”). These programs assure a high level of product quality and reliability, helping to deliver power perform-
ance in the field.

Crystalline Silicon Modules. We manufacture our crystalline silicon cells at our facility in Kulim,
Malaysia. The manufacturing process starts with 156mm N-Type mono-crystalline silicon wafers supplied by a
variety of wafer suppliers. Incoming wafers are subjected to a series of inspections to ensure that high quality
standards are met. The proprietary manufacturing process consists of passivation, annealing, metalization, print-
ing, wet cleans, and electroplating steps and are all fully automated independent steps. Completed cells are tested
and binned according to strict performance criteria. The final module assembly is completed by a contract manu-
facturing company that performs manufacturing to our module specifications using a bill of materials managed
by us.

We maintain a robust quality and reliability assurance program that monitors critical process parameters to
ensure that industry and internal standards are met. This rigorous set of evaluations is conducted prior to each
solar module undergoing acceptance testing for both electrical leakage and power measurement on a solar simu-
lator. The quality and reliability tests complement production surveillance with an ongoing monitoring program,
subjecting production modules to accelerated life cycle and stress testing to ensure conformance to IEC and UL

requirements. This program assures a high level of product quality and reliability, helping to predict power per-
formance in the field.

Research, Development, and Engineering

We continue to devote substantial resources to research and development with the primary objective of
lowering the lifecycle cost of electricity generated by our PV solar power systems. We conduct our research and
development activities primarily in the United States. Within our components business, we focus our research
and development activities on, among other areas, continuing to increase the conversion efficiency and energy
yield of our solar modules and continuously improving durability and manufacturing efficiencies, including
throughput improvement, volume ramp, and material cost reduction.

In the course of our research and development activities, we continuously explore and research technologies
in our efforts to sustain competitive differentiation in our modules. We typically qualify process and product
improvements for full production at our Perrysburg, Ohio plant and then use a systematic process to propagate
them to our other production lines. We believe that our systematic approach to technology change management
will provide continuous improvements and ensure uniform adoption across our production lines. In addition, our
CdTe production lines are replicas or near replicas of each other and, as a result, a process or production
improvement on one line can be rapidly and reliably deployed to other production lines.

We regularly produce research cells in our laboratories, some of which are tested for performance and certi-
fied by independent labs such as the National Renewable Energy Laboratory. Cell efficiency measures the pro-
portion of light converted in a single solar cell at standard test conditions. Our research cells are produced using
laboratory equipment and methods and are not intended to be representative of our manufacturing capability. We
believe that our record cells demonstrate a potential long-term module efficiency entitlement of over 19% using
our commercial-scale manufacturing equipment.

In 2013, we acquired GE’s global CdTe solar intellectual property portfolio, setting a course for significant
advancement of our PV thin-film solar technology. The combination of the two companies’ complementary
technologies and First Solar’s existing manufacturing capabilities have accelerated the development of CdTe
solar module performance and improved efficiency at a manufacturing scale.
In addition, GE Global
Research and First Solar R&D are collaborating on future technology development to further advance CdTe solar
technology pursuant to an agreement through 2016.

For information regarding our research and development expense for the years ended December 31, 2015,
2014, and 2013, See Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Results of Operations.”

Customers

With respect to our components business, during 2015, we sold the majority of our solar modules (not
included in our systems projects) to integrators and operators of systems in India and Great Britain. Third-party
module sales represented approximately 6% of our total 2015 net sales. Additionally, we develop, design, con-
struct, and sell PV solar power systems that use the solar modules we manufacture.

During 2015, Southern Power Company, Strata Solar, LLC, and NextEra Energy, Inc.

individually
accounted for more than 10% of our components segment’s net sales, which includes the solar modules used in
our systems projects. We are investing in key geographic markets, particularly in areas with abundant solar
resources and sizable electricity demand, and as part of such efforts, we are seeking to develop additional
customer relationships, which has reduced and is expected to continue to reduce our customer and geographic
concentration and dependence.

Competition

The renewable energy, solar energy, and solar module sectors are highly competitive and continually evolv-
ing as participants in these sectors strive to distinguish themselves within their markets and compete within the
larger electric power industry. We face intense competition for sales of solar modules, which has resulted in and

may continue to result in reduced margins and loss of market share. With respect to our components business,
our primary sources of competition are currently crystalline silicon solar module manufacturers as well as other
thin-film module manufacturers. Certain of our existing or future competitors may be part of larger corporations
that have greater financial resources and greater brand name recognition than we do and, as a result, may be bet-
ter positioned to adapt to changes in the industry or the economy as a whole. Certain competitors may have direct
or indirect access to sovereign capital, which could enable such competitors to operate at minimal or negative
operating margins for sustained periods of time. Among PV module and cell manufacturers, the principal meth-
ods of competition include sales price per watt, conversion efficiency, energy yield, reliability, warranty terms,
and customer payment terms. If competitors reduce module pricing to levels near or below their manufacturing
costs, or are able to operate at minimal or negative operating margins for sustained periods of time, our results of
operations could be adversely affected. At December 31, 2015, the global PV industry consisted of more than
150 manufacturers of solar modules and cells. In the aggregate, these manufacturers have, relative to global
demand, significant installed production capacity and the ability for additional capacity expansion. We believe
the solar industry may from time to time experience periods of structural imbalance between supply and demand
(i.e., where production capacity exceeds global demand), and that such periods will put pressure on pricing,
which could adversely affect our results of operations.

In addition, we expect to compete with future entrants into the PV solar industry that offer new techno-
logical solutions. We also face competition from semiconductor manufacturers and semiconductor equipment
manufacturers or their customers that produce PV solar cells, solar modules, or turn-key production lines. We
also face competition from companies that currently offer or are developing other renewable energy technologies
(including wind, hydropower, geothermal, biomass, and tidal technologies) and other power generation sources
that employ conventional fossil fuels.

Raw Materials

Our CdTe module manufacturing process uses approximately 30 types of raw materials and components to
construct a complete solar module. One critical raw material in our production process is cadmium telluride. Of
the other raw materials and components, the following are also critical to our manufacturing process: front glass
coated with transparent conductive oxide, other semiconductor materials, organics such as photo resist, tempered
back glass, packaging components such as interlayer, cord plate/cord plate cap, junction box, lead wire, and solar
connectors. Before we use these materials and components in our manufacturing process, a supplier must
undergo a rigorous qualification process. We continually evaluate new suppliers and currently are qualifying
several new suppliers and materials. When possible, we attempt to use suppliers that can provide a raw material
supply source that is near our manufacturing locations, reducing the cost and lead times for such materials. A few
of our critical materials or components are single sourced and most others are supplied by a limited number of
suppliers.

CdTe Solar Module Collection and Recycling Program

First Solar is committed to extended producer responsibility and takes into account the environmental
impact of its products over their entire life cycle. We established the solar industry’s first comprehensive module
collection and recycling program. First Solar’s module recycling process is designed to enable the recovery of
valuable materials, including the glass and encapsulated semiconductor material, for use in new modules or other
new products and minimizes the environmental impacts associated with our modules at the end of their useful
lives. Approximately 90% of each collected First Solar module can be recycled into materials for use in new
products, including new solar modules.

First Solar’s recycling services provide plant owners with flexibility in determining end-of-life module
disposition. For modules sold under sales arrangements covered under our Solar Module Collection and
Recycling Program (“the program”), we include a description of our module collection and recycling obligations.
For such modules covered under the program, we agree to cover the costs for the collection and recycling of solar
modules, and the end-users agree to notify us, disassemble their systems, package the solar modules for ship-
ment, and revert module ownership rights back to us at the end of the modules’ service lives.

The European Union’s Waste Electronics and Electrical Equipment (“WEEE”) Directive places the obliga-
tion of recycling (including collection, treatment, and environmentally sound disposal) of electrical and elec-
tronic equipment (“EEE”) products upon producers. The WEEE Directive is now applicable to PV solar modules
in EU member states. For modules covered under our pre-funded program that were previously sold into and
installed in the EU, we continue to maintain a commitment to cover the estimated collection and recycling costs
consistent with our historical program. In addition, as a result of the transposition of the WEEE Directive by the
EU member states, we will be adjusting our offering in the various EU member states as required to ensure
compliance with specific EU member state WEEE regulations.

In addition to achieving substantial environmental benefits, our solar module collection and recycling pro-
gram may provide us the opportunity to recover certain raw materials and components for reuse in our manu-
facturing process. We currently have recycling facilities operating at each of our current manufacturing facilities
in the U.S. and Malaysia and at our former manufacturing facility location in Germany that produce glass cullet
suitable for use in the production of new glass products by a third-party supplier and unrefined semiconductor
materials that will be further processed by a third-party supplier and then used to produce semiconductor materi-
als for use in new solar modules.

Solar Module Warranties

We provide a limited PV solar module warranty covering defects in materials and workmanship under
normal use and service conditions for 10 years following the transfer of title to our modules. We also typically
warrant that modules installed in accordance with agreed-upon specifications will produce at least 97% of their
labeled power output rating during the first year, with the warranty coverage reducing by 0.7% every year there-
after throughout the 25-year performance warranty period. Prior to 2014, we warranted that modules installed in
accordance with agreed-upon specifications would produce at least 90% of their labeled power output rating
during the first 10 years following installation and at least 80% of their labeled power output rating during the
following 15 years. In resolving claims under both the defect and power output warranties, we have the option of
either repairing or replacing the covered modules or, under the power output warranty, providing additional
modules to remedy the power shortfall. We also have the option to make a payment for the then current market
price of modules to resolve the claims. Such limited module warranties are standard for module sales and are
automatically transferred from the original purchasers of the solar modules to subsequent purchasers upon resale.

As an alternative form of our standard limited module power output warranty, we also offer an aggregated
or system level limited module performance warranty. This system level limited module performance warranty is
designed for utility-scale systems and provides 25-year system level energy degradation protection. In addition,
this warranty represents a practical expedient to address the challenge of identifying, from the potential millions
of modules installed in a utility-scale system, individual modules that may be performing below warranty thresh-
olds by focusing on the aggregate energy generated by the system rather than the power output of individual
modules. The system level limited module performance warranty typically is calculated as a percentage of a sys-
tem’s expected energy production, adjusted for certain actual site conditions, with the warranted level of
performance declining each year in a linear fashion, but never falling below 80% during the term of the war-
ranty. In resolving claims under the system level limited module performance warranty to restore the system to
warranted performance levels, we first must validate that the root cause of the issue is due to module perform-
ance; we then have the option of either repairing or replacing the covered modules, providing supplemental
modules, or making a cash payment. Consistent with our limited module power output warranty, when we elect
to satisfy a warranty claim by providing replacement or supplemental modules under the system level module
performance warranty, we do not have any obligation to pay for the labor to remove or install modules.

From time to time, we have taken remediation actions with respect to affected modules beyond our limited
warranty, and we may elect to do so in the future, in which case we would incur additional expenses. Such poten-
tial voluntary future remediation actions beyond our limited warranty obligation could have a material adverse
effect on our results of operations if we commit to any such remediation actions.

Systems Business

Through our fully integrated systems business, we provide complete turn-key PV solar power systems, or

solar solutions, which may include project development, EPC services, and/or O&M services.

Project Development

Project development activities include: site selection and securing rights to acquire or use the site, obtaining
the requisite interconnection and transmission studies, executing an interconnection agreement, obtaining
environmental and land-use permits, maintaining effective site control, and entering into a PPA with an off-taker
of the power to be generated by the project. These activities culminate in receiving the right to construct and
operate a PV solar power system. Depending on the market opportunity or geographic location, we may acquire
projects in various stages of development or acquire project companies from developers in order to complete the
development process, construct a system incorporating our modules, and sell the system to a long-term owner.
We may also collaborate with local partners in connection with these project development activities. Depending
on the type of project or geographic location, PPAs or FiT structures define the price and terms the utility
customer or investor will pay for power produced from the project. Entering into a PPA generally provides the
underlying economics needed to finalize development including permitting, beginning construction, arranging
financing, and marketing the project for sale to a long-term owner. Depending primarily on the location, stage of
development upon our acquisition of the project, and other site attributes, the development cycle typically ranges
from one to two years but can be as long as five years. We may be required to incur significant costs for prelimi-
nary engineering, permitting, legal, and other expenses before we can determine whether a project is feasible,
economically attractive, or capable of being built. If there is a delay in obtaining any required regulatory appro-
vals, we may be forced to incur additional costs, write-down capitalized project assets, and the right of the off-
taker under the PPA to terminate may be triggered.

EPC Services

EPC services include engineering design and related services, BoS procurement, advanced development of
grid integration solutions, and construction contracting and management. We provide the majority of our EPC
services to our self-developed projects intended to be sold; however, we also provide EPC services to projects
developed by independent solar power project developers, and directly to system owners such as utilities.
Depending on the customer and market need, we may provide our full EPC services or any combination of
individual products and services within our EPC capabilities.

For PV solar power systems built by us, we typically provide a limited product warranty on BoS parts for
defects in engineering design, installation, and workmanship for a period of one to two years following the sub-
stantial completion of a system. In resolving claims under such BoS warranties, we have the option of remedying
the defect through repair or replacement.

As part of our systems business, we conduct performance testing of a system prior to substantial completion
to confirm the system meets its operational and capacity expectations noted in the EPC agreement. In addition,
we may provide an energy performance test during the first year of a system’s operation. Such a test is designed
to demonstrate that the actual energy generation for the first year meets or exceeds the modeled energy expect-
ation, after certain adjustments. These adjustments include factors, such as irradiance, weather, module degrada-
tion, soiling, curtailment, and other conditions that may affect a system’s energy output but are unrelated to the
quality, design, or construction.

O&M Services

Our typical O&M service arrangements involve the performance of standard activities associated with oper-
ating and maintaining a PV solar power system. We perform such activities pursuant to the scope of services
outlined in the underlying contract. These activities are considered necessary to optimize system performance
and comply with PPAs, other agreements, and regulations. Although the scope of our services may vary by con-
tract, our O&M service arrangements generally include 24/7 system monitoring, certain PPA and other agree-
ment compliance, North American Electric Reliability Corporation compliance, Large Generator Interconnection

Agreement compliance, energy forecasting, performance engineering analysis, regular performance reporting,
turn-key maintenance services including spare parts and corrective maintenance repair, warranty management,
and environmental services. As part of our O&M services, we also typically provide an effective availability
guarantee, which stipulates that a system will be available to generate a certain percentage of total possible
energy during a specific period after adjusting for factors outside of our control as the service provider, such as
weather, curtailment, outages, force majeure, and other conditions that may affect system availability.

Customers

With respect to our systems business, our customers consist of utilities, independent power producers,
commercial and industrial companies, and other system owners. These customers may purchase completed PV
solar power systems, which include our solar modules, or any combination of development, EPC services, and
O&M services. During 2015, the substantial majority of our systems business sales were in North America, and
the principal customers of our systems business were NextEra Energy, Inc. and Southern Power Company, each
of which also accounted for more than 10% of the segment’s net sales.

Competition

With respect to our systems business, we face competition from other providers of renewable energy sol-
utions, including developers of PV solar power systems and developers of other forms of renewable energy proj-
ects, including wind, hydropower, geothermal, biomass, and tidal projects. To the extent other solar module
manufacturers become more vertically integrated, we expect to face increased competition from such companies
as well. We also face competition from other EPC companies and joint venture type arrangements between EPC
companies and solar companies. Certain current or potential future competitors may also have a low cost of capi-
tal and/or access to foreign capital. While the decline in PV module prices over the last several years has
increased interest in solar electricity worldwide, there are limited barriers of entry in many parts of the PV solar
value chain, depending on the geographic market. Accordingly, competition at the systems level can be intense,
thereby exerting downward pressure on systems level profit margins industry-wide, to the extent competitors are
willing and able to bid aggressively low prices for new projects and PPAs, using low cost assumptions for mod-
ules, BoS components, installation, maintenance, and other costs. Please see Item 1A: “Risk Factors — Competi-
tion at the systems level can be intense, thereby potentially exerting downward pressure on systems level profit
margins industry-wide, which could reduce our profitability and adversely affect our results of operations.”

Research, Development, and Engineering

Our systems business research and development activities are primarily focused on the objective of lowering
the LCOE through reductions in BoS costs, improved system design, and energy yield enhancements associated
with PV solar power systems that use our modules. These R&D efforts are also focused on continuing to improve
our systems in terms of grid reliability. We conduct our research and development activities for the systems
business primarily in the United States. Innovations related to system design, hardware platforms, inverters,
trackers, and installation techniques and know-how, among other things, can and are expected in the future to
continue to reduce BoS costs, which can represent a significant portion of the costs associated with the con-
struction of a typical utility-scale PV solar power system.

For information regarding our research and development expense for the years ended December 31, 2015,
2014, and 2013, see Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Results of Operations.”

Own and Operate

From time to time, we may temporarily own and operate certain PV solar power systems, often with the
intention to sell at a later date. The ability to do so allows us to gain control of the sales process, provide a lower
risk profile to a future buyer of a system, and improve our ability to drive higher eventual sale values. As of
December 31, 2015, we owned and operated a number of systems in various geographic markets. As an owner
and operator for certain of these systems, we may be subject to the authority of the Federal Energy Regulatory

Commission (“FERC”), as well as various other local, state, and federal regulatory bodies. For more information
about risks related to owning and operating PV solar power systems, please see Item 1A: “Risk Factors — As an
owner and operator of PV solar power systems that deliver electricity to the grid, certain of our affiliated entities
may be regulated as public utilities under U.S. federal and state law, which could adversely affect the cost of
doing business and limit our growth.” For more information about the economics of such ownership and the
impacts on our liquidity see Item 7: “Management’s Discussion and Analysis of Financial Condition and Results
of Operations — Liquidity and Capital Resources.”

Intellectual Property

Our success depends, in part, on our ability to maintain and protect our proprietary technology and to con-
duct our business without infringing on the proprietary rights of others. We rely primarily on a combination of
patents, trademarks, and trade secrets, as well as associate and third-party confidentiality agreements, to safe-
guard our intellectual property. We regularly file patent applications to protect inventions arising from our
research and development and are currently pursuing patent applications in the U.S. and other countries. Our
patent applications and any future patent applications might not result in a patent being issued with the scope of
the claims we seek, or at all, and any patents we may receive may be challenged, invalidated, or declared
unenforceable. In addition, we have registered and/or have applied to register trademarks and service marks in
the U.S. and a number of foreign countries for “First Solar” and “First Solar and Design.”

With respect to proprietary know-how that is not patentable and processes for which patents are difficult to
enforce, we rely on, among other things, trade secret protection and confidentiality agreements to safeguard our
interests. We believe that many elements of our PV module manufacturing process, including our unique materi-
als sourcing, involve proprietary know-how, technology, or data that are not covered by patents or patent applica-
tions, including technical processes, equipment designs, algorithms, and procedures. We have taken security
measures to protect these elements. Our research and development personnel have entered into confidentiality
and proprietary information agreements with us. These agreements address intellectual property protection issues
and require our associates to assign to us all of the inventions, designs, and technologies they develop during the
course of employment with us. We also require our customers and business partners to enter into confidentiality
agreements before we disclose any sensitive aspects of our modules, technology, or business plans.

We have not been subject to any material intellectual property infringement or misappropriation claims.

Environmental, Health, and Safety Matters

Our operations include the use, handling, storage, transportation, generation, and disposal of hazardous
materials and hazardous wastes. We are subject to various national, state, local, and international laws and regu-
lations relating to the protection of the environment, including those governing the discharge of pollutants into
the air and water, the use, management, and disposal of hazardous materials and wastes, occupational health and
safety, and the cleanup of contaminated sites. Therefore, we could incur substantial costs, including cleanup
costs, fines, and civil or criminal sanctions and costs arising from third-party property damage or personal injury
claims as a result of violations of, or liabilities under, environmental and occupational health and safety laws and
regulations or non-compliance with environmental permits required for our operations. We believe we are cur-
rently in substantial compliance with applicable environmental and occupational health and safety requirements
and do not expect to incur material expenditures for environmental and occupational health and safety controls in
the foreseeable future. However, future developments such as the implementation of new, more stringent laws
and regulations, more aggressive enforcement policies, or the discovery of unknown environmental conditions
may require expenditures that could have a material adverse effect on our business, financial condition, or results
of operations. See Item 1A: “Risk Factors — Environmental obligations and liabilities could have a substantial
negative impact on our financial condition, cash flows, and profitability.”

Corporate History

In February 2006, we were incorporated as a Delaware corporation. Our common stock has been listed on
The NASDAQ Global Select Market under the symbol “FSLR” since our initial public offering in November

2006. In October 2009, our common stock was added to the S&P 500 Index, making First Solar the first, and
currently only, pure-play renewable energy company in the index.

Associates

As of December 31, 2015, we had approximately 6,350 associates (our term for full and part-time
employees), including approximately 4,760 in module manufacturing positions and approximately 560 associates
that work directly in our systems business. The remainder of our associates are in research and development,
sales and marketing, and general and administrative positions. None of our associates are currently represented
by labor unions or covered by a collective bargaining agreement. As we expand domestically and internationally,
we may encounter either regional laws that mandate union representation or associates who desire union repre-
sentation or a collective bargaining agreement. We believe that our relations with our associates are good.

Information About Geographic Areas

We have significant marketing, distribution, and manufacturing operations both within and outside the
United States. Currently, we manufacture our solar modules at our Perrysburg, Ohio and Kulim, Malaysia manu-
facturing facilities.

In 2015, the foreign country with the greatest concentration risk was Australia, which accounted for 5% of
our consolidated net sales. As part of our Long Term Strategic Plan, we are in the process of expanding our oper-
ations to various countries across the world, including countries in the Americas, Asia, the Middle East, and
Africa. As a result, we are subject to the legal, tax, political, social, regulatory, and economic conditions of an
increasing number of foreign jurisdictions. The international nature of our operations subjects us to a number of
risks, including fluctuations in exchange rates, adverse changes in foreign laws or regulatory requirements, and
tariffs, taxes, and other trade restrictions. See Item 1A: “Risk Factors — Our substantial international operations
subject us to a number of risks, including unfavorable political, regulatory, labor, and tax conditions in foreign
countries” and “Risk Factors — We may be unable to fully execute on our Long Term Strategic Plan, which
could have a material adverse effect on our business, financial condition, or results of operations. “ See Note 23
“Segment and Geographical Information” to our consolidated financial statements included in this Annual Report
on Form 10-K for information about our net sales and long-lived assets by geographic region.

Available Information

We maintain a website at http://www.firstsolar.com. We make available free of charge on our website our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements,
and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act,
as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the Secu-
rities and Exchange Commission (“SEC”). The information contained in or connected to our website is not
incorporated by reference into this report. We use our website as one means of disclosing material non-public
information and for complying with our disclosure obligations under the SEC’s Regulation FD. Such disclosures
will typically be included within the Investor Relations section of our website at http://investor.firstsolar.com.
Accordingly, investors should monitor such portions of our website in addition to following our press releases,
SEC filings, and public conference calls and webcasts.

The public may also read and copy any materials that we file with the SEC at the SEC’s Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at
http://www.sec.gov that contains reports and other information regarding issuers, such as First Solar, that file
electronically with the SEC.

Executive Officers of the Registrant

Our executive officers and their ages and positions as of February 24, 2016, were as follows:

Name

James A. Hughes . . . . . . . . . . . . . . . . . . .
Mark R. Widmar . . . . . . . . . . . . . . . . . . .
Joseph G. Kishkill . . . . . . . . . . . . . . . . . .
Georges Antoun . . . . . . . . . . . . . . . . . . .
Philip Tymen deJong . . . . . . . . . . . . . . .
Raffi Garabedian . . . . . . . . . . . . . . . . . . .
Paul J. Kaleta . . . . . . . . . . . . . . . . . . . . .
Timothy Rebhorn . . . . . . . . . . . . . . . . . .

Christopher R. Bueter . . . . . . . . . . . . . . .

Age

53
50
51
53
56
49
60
54

Position

Chief Executive Officer
Chief Financial Officer
President, International
President, U.S.
Chief Operating Officer
Chief Technology Officer
Executive Vice President & General Counsel
Executive Vice President, Corporate Development
& Strategic Marketing
Executive Vice President, Human Resources

James A. Hughes joined First Solar in March 2012 as Chief Commercial Officer and was appointed Chief
Executive Officer in May 2012. Prior to joining First Solar, Mr. Hughes served, from October 2007 until April
2011, as Chief Executive Officer and Director of AEI Services LLC, which owned and operated power dis-
tribution, power generation (both thermal and renewable), natural gas transportation and services, and natural gas
distribution businesses in emerging markets worldwide. From 2004 to 2007, he engaged in principal investing
with a privately held company based in Houston, Texas that focused on micro-cap investments in North Ameri-
can distressed manufacturing assets. Previously, he served, from 2002 until March 2004, as President and Chief
Operating Officer of Prisma Energy International, which was formed out of former Enron interests in interna-
tional electric and natural gas utilities. Prior to that role, Mr. Hughes spent almost a decade with Enron Corpo-
ration in positions that included President and Chief Operating Officer of Enron Global Assets, President and
Chief Operating Officer of Enron Asia Pacific, Africa, and China, and as Assistant General Counsel of Enron
International. Mr. Hughes is a Director of TPI Composites, Inc., a leading manufacturer of composite wind
blades for the wind energy market. He is Chairman of the board of directors of the Los Angeles branch of the
Federal Reserve Bank of San Francisco. Mr. Hughes holds a juris doctor degree from the University of Texas at
Austin School of Law, a Certificate of Completion in international business law from Queen Mary’s College,
University of London, and a bachelor’s degree in business administration from Southern Methodist University.

Mark R. Widmar joined First Solar in April 2011 as Chief Financial Officer and served as First Solar’s
Chief Accounting Officer from February 2012 through June 2015. Mr. Widmar also serves as CFO and as a
director on the board of 8point3 Energy Partners LP, the joint yieldco formed by First Solar and SunPower
Corporation in 2015 to own and operate a portfolio of selected solar generation assets. Prior to joining First
Solar, Mr. Widmar served as Chief Financial Officer of GrafTech International Ltd., a leading global manu-
facturer of advanced carbon and graphite materials, from May 2006 through March 2011, as well as President,
Engineered Solutions from January 2011 through March 2011. Prior to joining GrafTech, Mr. Widmar served as
Corporate Controller of NCR Inc. from 2005 to 2006, and was a Business Unit Chief Financial Officer for NCR
from November 2002 to his appointment as Controller. He also served as a Division Controller at Dell, Inc. from
August 2000 to November 2002 prior to joining NCR. Mr. Widmar also held various financial and managerial
positions with Lucent Technologies Inc., Allied Signal, Inc., and Bristol Myers/Squibb, Inc. He began his career
in 1987 as an accountant with Ernst & Young. Mr. Widmar holds a Bachelor of Science in Business Accounting
and a Masters of Business Administration from Indiana University.

Joseph G. Kishkill was appointed President, International, in July 2015. Mr. Kishkill has leadership
responsibility for global business development, sales, and international public affairs, with a primary focus on
sustainable growth in emerging markets. Mr. Kishkill joined First Solar in September 2013 as Chief Commercial
Officer and is a proven leader in business development and growth in global markets, and thrives in an environ-
ment of cultural diversity. He also serves as a director on the board of 8point3 Energy Partners LP. Prior to join-
ing First Solar, Mr. Kishkill was President, Eastern Hemisphere Operations, for Exterran Energy Solutions, LP
and Senior Vice President of Exterran Holdings, Inc., a global provider of natural gas, petroleum, and water

treatment production services. He previously led Exterran’s business in the Latin America region. Prior to joining
Exterran’s predecessor company in 2002, Mr. Kishkill held positions of increasing responsibility with Enron
Corporation from 1990 to 2001, advancing to Chief Executive Officer for South America. During his career,
Mr. Kishkill has been based in Dubai, Brazil, and Argentina and has provided management services for energy
projects and pipelines throughout South America. Mr. Kishkill holds a Master in Business Administration degree
from the Harvard Graduate School of Business Administration and holds a Bachelor of Science degree in Elec-
trical Engineering from Brown University.

Georges Antoun was appointed President, U.S. in July 2015. Mr. Antoun has leadership responsibility for
the identification, development, and execution of all projects in the United States. Prior to this appointment,
Mr. Antoun served as Chief Operating Officer since joining First Solar in July 2012. Mr. Antoun has over 20
years of operational and technical experience, including leadership positions at several global technology
companies. Prior to joining First Solar, Mr. Antoun served as Venture Partner at Technology Crossover Ventures
(“TCV”), a private equity and venture firm that he joined in July 2011. Prior to joining TCV, Mr. Antoun was the
Head of Product Area IP & Broadband Networks for Ericsson, based in San Jose, California. Mr. Antoun joined
Ericsson in 2007, when Ericsson acquired Redback Networks, a telecommunications equipment company, where
Mr. Antoun served as the Senior Vice President of World Wide Sales & Operations. After the acquisition,
Mr. Antoun was promoted to Chief Executive Officer of the Redback Networks subsidiary. Prior to Redback
Networks, Mr. Antoun spent five years at Cisco Systems, where he served as Vice President of Worldwide Sys-
tems Engineering and Field Marketing, Vice President of Worldwide Optical Operations, and Vice President of
Carrier Sales. He has also held senior management positions at Newbridge Networks, a data and voice network-
ing company, and Nynex (now Verizon Communications), where he was part of its Science and Technology
Division. Mr. Antoun is a member of the board of directors of Ruckus Wireless, Inc. and Violin Memory, Inc.,
both publicly-traded companies. Mr. Antoun earned a Bachelor of Science degree in Engineering from the Uni-
versity of Louisiana at Lafayette and a Master’s degree in Information Systems Engineering from NYU Poly.

Philip Tymen deJong was appointed Chief Operating Officer in July 2015. Mr. deJong has comprehensive
leadership responsibility for areas including manufacturing, EPC, quality and reliability, supply chain, and prod-
uct management. Mr. deJong joined First Solar in January 2010 as Vice President, Plant Management and served
in several Senior Vice President roles in manufacturing and operations prior to being appointed Senior Vice
President, Manufacturing & EPC in January 2015. Prior to joining First Solar, Mr. deJong was Vice President of
Assembly/Test Manufacturing for Numonyx Corporation. Prior to that, he worked for 25 years at Intel Corpo-
ration, holding various positions in engineering, manufacturing, wafer fabrication management, and assembly/
test manufacturing. Mr. deJong holds a Bachelor of Science degree in industrial engineering/mechanical
engineering from Oregon State University and has completed advanced study at the University of New Mexico
Anderson School of Management.

technology, photovoltaic module, and power plant

Raffi Garabedian has been the Chief Technology Officer of First Solar, Inc. since May 2012 and manages
the Company’s
system products and roadmaps.
Mr. Garabedian joined First Solar in June 2008 as Director of Disruptive Technologies. Prior to First Solar,
Mr. Garabedian spent over 15 years in the MEMS (micro-electro-mechanical systems) industry, developing new
products ranging from automotive engine control sensors to fiberoptic telecommunications switching systems.
He was the founding CEO of Touchdown Technologies, Inc., which was acquired by Verigy, as well as Micro-
machines Inc., which was acquired by Kavlico. Mr. Garabedian is named on approximately 28 issued U.S. pat-
ents. Mr. Garabedian earned a Bachelor of Science degree in Electrical Engineering from Rensselaer Polytechnic
Institute and a Master of Science degree in Electrical Engineering with a focus on semiconductor and micro-
systems technology from the University of California Davis.

Paul Kaleta joined First Solar in March 2014 as Executive Vice President & General Counsel. Prior to joining
First Solar, Mr. Kaleta was Executive Vice President, General Counsel, Shared Services & Secretary, and Chief
Compliance Officer for NV Energy, Inc., which was acquired by Berkshire Hathaway’s Energy Group in December
2013. Before that, he was Vice President and General Counsel for Koch Industries, Inc., one of the world’s largest
privately held companies with diverse businesses worldwide, including refining, petrochemicals, and commodity
trading, among others. He also served in a number of legal and other leadership roles for Koch companies. Before
joining Koch, he was Vice President and General Counsel of Niagara Mohawk Power Corporation (now part of

National Grid). In private practice, Mr. Kaleta was an equity partner in the Washington D.C. law firm Swidler Ber-
lin LLP and an associate in the Washington D.C. office of Skadden, Arps, Slate, Meagher & Flom LLP. He also
served as a federal judicial clerk. Mr. Kaleta is the founding chair of the Southern Nevada Chapter of the “I Have a
Dream Foundation” (now “Core Academy-powered by The Rogers Foundation”), a member of the Client Advisory
Council of Lex Mundi, and has taught both energy law and business ethics and leadership, as an adjunct professor,
among other professional and community activities. Mr. Kaleta holds a juris doctor degree from Georgetown Uni-
versity Law Center and a bachelor’s degree from Hamilton College.

Timothy Rebhorn was appointed Executive Vice President, Corporate Development & Strategic Marketing
in February 2016. In this role, he is responsible for managing relationships with key global account customers,
global competitive analysis and market strategies, and leading corporate development activities such as mergers
and acquisitions and joint ventures. Mr. Rebhorn joined First Solar in December 2012 as Senior Vice President,
Sales — Americas and also served as Senior Vice President, Corporate Development & Strategic Marketing. His
30-year career in the energy industry includes leadership roles in the global natural gas and power generation
markets. His efforts have been focused on developing, financing, and operating utility-scale energy projects and
large infrastructure projects in water and steel. Prior to joining First Solar, he was CEO of Quail Nuclear Spe-
cialty Services, an industrial construction company. His previous experience includes executive leadership of
Resolutions Management and Merrill International, which provided high-level consulting for clients in the
infrastructure,
energy, steel, engineering, and construction industries. With an emphasis on international
Mr. Rebhorn led a “development SWAT Team” that explored and developed energy projects outside the tradi-
tional models of power plants and pipelines, conducted market entry analysis for large energy clients, and led
cross-functional teams in the workout of Enron’s international pipeline and power plant portfolio. Mr. Rebhorn
began his career in the United States Navy, where he served as a Certified Nuclear Engineer in the Naval Nuclear
Propulsion program (USS Parche SSN-683 nuclear submarine) and as a NATO staff planning officer.
Mr. Rebhorn is a graduate of the U.S. Naval Academy and earned a Masters in Business Administration from
Texas A&M University.

Christopher R. Bueter was appointed Executive Vice President, Human Resources in February 2016.
Mr. Bueter joined First Solar in November 2009 as Global Director for Industrial Relations and also served as
Vice President, Human Resources Global Business Development and Corporate Services, Vice President, Global
Human Resources and Labor Relations, and Senior Vice President, Human Resources. Prior to joining First
Solar, Mr. Bueter served as the Vice President of Global Employee Relations at Dana Corporation, an American-
based worldwide supplier of powertrain components. In his 24 years at Dana Corporation, he served in a variety
of roles,
including Corporate Director of Employee Relations and Distribution Services Division Human
Resources Manager. Mr. Bueter holds a Bachelor of Science in human resources management from the Uni-
versity of Toledo, and a juris doctor degree from the University of Toledo Law School.

Item 1A: Risk Factors

An investment in our stock involves a high degree of risk. You should carefully consider the following
information, together with the other information in this Annual Report on Form 10-K, before buying shares of
our stock. If any of the following risks or uncertainties occur, our business, financial condition, and results of
operations could be materially and adversely affected and the trading price of our stock could decline.

Risks Related to Our Markets and Customers

Competition at the systems level can be intense, thereby potentially exerting downward pressure on systems
level profit margins industry-wide, which could reduce our profitability and adversely affect our results of
operations.

The significant decline in PV module prices over the last several years continues to create a challenging
environment for module manufacturers, but it has also increased interest in solar electricity worldwide by eroding
one of the primary historical constraints to widespread solar market penetration, namely its affordability. Aided
by such lower module prices, competitors have in many cases been willing and able to bid aggressively for new
projects and PPAs, using low cost assumptions for modules, BoS components, installation, maintenance, and

other costs as the basis for such bids. Relatively low barriers to entry for competitors have led to, depending on
the market and other factors, intense competition at the systems level. Intense competition at the systems level
can result in an environment in which systems level pricing falls rapidly, thereby further increasing demand for
solar solutions but constraining the ability for project developers, EPC companies, and/or vertically-integrated
solar companies such as First Solar to sustain meaningful and consistent profitability. Accordingly, while we
believe our systems offerings and experience are positively differentiated in many cases from that of our com-
petitors, we may fail to correctly identify our competitive position, we may be unable to develop or maintain a
sufficient magnitude of new systems projects worldwide at economically attractive rates of return, and we may
not otherwise be able to achieve meaningful profitability under our Long Term Strategic Plan.

Depending on the market opportunity, we may be at a disadvantage compared to potential systems-level
competitors. For example, certain of our competitors may have a stronger and/or more established localized
business presence in a particular geographic region. Certain of our competitors may be larger entities that have
greater financial resources and greater overall brand name recognition than we do and, as a result, may be better
positioned to impact customer behavior or adapt to changes in the industry or the economy as a whole. Certain
competitors may also have direct or indirect access to sovereign capital and/or other incentives, which could
enable such competitors to operate at minimal or negative operating margins for sustained periods of time.

Additionally, large-scale solar systems are still in their relatively early stages of existence, and, depending
on the geographic area, certain potential customers may still be in the process of educating themselves about the
points of differentiation among various available providers of PV solar solutions, including a company’s proven
overall experience and bankability, system design and optimization expertise, grid interconnection and stabiliza-
tion expertise, and proven O&M capabilities. If we are unable over time to meaningfully differentiate our offer-
ings at scale, from the viewpoint of our potential customer base, our business, financial condition, and results of
operations could be adversely affected.

An increased global supply of PV modules has caused and may continue to cause structural imbalances in
which global PV module supply exceeds demand, which could have a material adverse effect on our busi-
ness, financial condition, and results of operations

In the aggregate, solar manufacturers have, relative to global demand, significant installed production
capacity and the ability for additional capacity expansion. We believe the solar industry may from time to time
experience periods of structural imbalance between supply and demand (i.e., where production capacity exceeds
global demand), and that such periods will put pressure on pricing. During the past several years, industry aver-
age sales prices per watt (“ASPs”) have declined, at times significantly, both at the module and system levels, as
competitors have reduced ASPs to sell-through inventories worldwide. If our competitors reduce module pricing
to levels near or below their manufacturing costs, or are able to operate at minimal or negative operating margins
for sustained periods of time, or if demand for PV modules does not grow sufficiently to justify the current pro-
duction supply, our business, financial condition, and results of operations could be adversely affected.

If PV technology is not suitable for widespread adoption at economically attractive rates of return or if suffi-
cient additional demand for solar modules and systems does not develop or takes longer to develop than we
anticipate, our net sales and profit may flatten or decline and we may be unable to sustain profitability.

In comparison to fossil fuel-based electricity generation, the solar energy market is at a relatively early stage
of development. If PV technology proves unsuitable for widespread adoption at economically attractive rates of
return or if additional demand for solar modules and systems fails to develop sufficiently or takes longer to
develop than we anticipate, we may be unable to grow our business or generate sufficient net sales to sustain
profitability. In addition, demand for solar modules and systems in our targeted markets may develop to a lesser
extent than we anticipate. Many factors may affect the viability of widespread adoption of PV technology and
demand for solar modules and systems, including the following:

• cost-effectiveness of the electricity generated by PV solar power systems compared to conventional
energy sources, such as natural gas and coal (which fuel sources may be subject to significant price
fluctuations from time to time), and other non-solar renewable energy sources, such as wind;

• performance, reliability, and availability of energy generated by PV solar power systems compared to
conventional and other non-solar renewable energy sources and products, particularly conventional energy
generation capable of providing 24-hour, non-intermittent baseload power;

• success of other renewable energy generation technologies, such as hydroelectric, tidal, wind, geothermal,

and biomass;

• fluctuations in economic and market conditions that affect the price of, and demand for, conventional and
non-solar renewable energy sources, such as increases or decreases in the prices of natural gas, coal, oil,
and other fossil fuels;

• fluctuations in capital expenditures by end-users of solar modules and systems which tend to decrease

when the economy slows and when interest rates increase; and

• availability, substance, and magnitude of support programs including government targets, subsidies,

incentives, and renewable portfolio standards to accelerate the development of the solar industry.

The reduction, elimination, or expiration of government subsidies, economic incentives, renewable energy
targets, and other support for on-grid solar electricity applications, or an increase in protectionist or other
adverse public policies, could reduce demand and/or price levels for our solar modules and limit our growth
or lead to a reduction in our net sales, thereby adversely impacting our operating results.

Although our Long Term Strategic Plan provides for First Solar to transition over time toward operating in
key geographic markets that do not require solar-specific government subsidies or support programs, and we
believe that solar will experience widespread adoption in those applications where it competes economically with
traditional forms of energy without any support programs, in the near-term our net sales and profit remain subject
to variability based on the availability and size of government subsidies and economic incentives. Federal, state,
and local governmental bodies in many countries have provided subsidies in the form of FiTs, rebates, tax
incentives, and other incentives to end-users, distributors, systems integrators, and manufacturers of PV products.
Many of these support programs expire, phase out over time, require renewal by the applicable authority, or may
be amended. A summary of recent developments in the major government support programs that can impact our
business appears under Item 1: “Business — Support Programs.” To the extent these support programs are
reduced earlier than previously expected or are changed retroactively, or free-field or conversion land applica-
tions are disadvantaged, such changes could reduce demand and/or price levels for our solar modules and sys-
tems, lead to a reduction in our net sales, and adversely impact our operating results. Another consideration in the
U.S. market, and to a lesser extent in other global markets, is the effect of governmental land-use planning poli-
cies and environmental policies on utility-scale PV solar development. The adoption of restrictive land-use
designations or environmental regulations which proscribe or restrict the siting of utility-scale solar facilities
could adversely affect the marginal cost of such development. These examples show that established markets for
PV solar development, such as the U.S. market, face uncertainties arising from policy, regulatory, and gov-
ernmental constraints. While the expected potential of the emerging markets we are targeting is significant,
policy promulgation and market development are especially vulnerable to governmental
inertia, political
instability, geopolitical risk, fossil fuel subsidization, potentially stringent localization requirements, and limited
available infrastructure.

We could be adversely affected by any violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), the
U.K. Bribery Act, and other foreign anti-bribery laws.

The FCPA generally prohibits companies and their intermediaries from making improper payments to non-
U.S. government officials for the purpose of obtaining or retaining business. Other countries in which we operate
also have anti-bribery laws, some of which prohibit improper payments to government and non-government persons
and entities, and others (e.g., the FCPA and the U.K. Bribery Act) extend their application to activities outside of
their country of origin. Our policies mandate compliance with all applicable anti-bribery laws. We currently operate
in, and pursuant to our Long Term Strategic Plan may further expand into, key parts of the world that have experi-
enced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-bribery
laws may conflict with local customs and practices. In addition, due to the level of regulation in our industry, our

operation in certain jurisdictions, including India, China, South America, and the Middle East, requires substantial
government contact where norms can differ from U.S. standards. Although we have implemented policies and
procedures designed to facilitate compliance with these anti-bribery laws, our officers, directors, associates, subcon-
tractors, agents, and partners (such as joint venture partners) may take actions in violation of our policies and anti-
bribery laws. Any such violation, even if prohibited by our policies, could subject us and such persons to criminal
and/or civil penalties or other sanctions, which could have a material adverse effect on our business, financial con-
dition, cash flows, and reputation.

We may be unable to fully execute on our Long Term Strategic Plan, which could have a material adverse
effect on our business, financial condition, or results of operations.

We face numerous difficulties in executing on our Long Term Strategic Plan, particularly in new foreign

jurisdictions, including the following:

• difficulty in accurately prioritizing geographic markets which we can most effectively and profitably serve
with our PV offerings, including miscalculations in overestimating or underestimating the addressable
market demand;

• difficulty in overcoming the inertia involved in changing local electricity ecosystems as necessary to

accommodate large-scale PV solar deployment and integration;

• protectionist or other adverse public policies in countries we operate in and/or are pursuing, including

local content requirements or capital investment requirements;

• business climates, such as that in China, that may have the effect of putting foreign companies at a dis-

advantage relative to domestic companies;

• unstable economic, social, and/or operating environments in foreign jurisdictions, including social unrest,

currency, inflation, and interest rate uncertainties;

• the possibility of applying an ineffective commercial approach to targeted markets, including product

offerings that may not meet market needs;

• difficulty in generating sufficient sales volumes at economically sustainable profitability levels;

• difficulty in timely identifying, attracting, training, and retaining qualified sales, technical, and other per-

sonnel in geographies targeted for expansion;

• the possibility of having insufficient capital resources necessary to achieve an effective localized business

presence in targeted jurisdictions;

• difficulty in maintaining proper controls and procedures as we expand our business operations both in
terms of complexity and geographical reach, including transitioning certain business functions to low-cost
geographies, with any material control failure potentially leading to reputational damage and loss of con-
fidence in our financial reporting accuracy;

• difficulty in competing against companies who may have greater financial resources and/or a more effec-
tive or established localized business presence and/or an ability to operate with minimal or negative
operating margins for sustained periods of time;

• difficulty in competing against companies who may gain in profitability and financial strength over time
by successfully participating in the global rooftop PV solar market, which is a segment in which we do not
have significant historical experience;

• difficulty in establishing and implementing a commercial and operational approach adequate to address

the specific needs of the markets we are pursuing;

• difficulty in identifying the right local partners and developing any necessary partnerships with local busi-

nesses on commercially acceptable terms; and

• difficulty in balancing market demand and manufacturing production in an efficient and timely manner,
potentially causing us to be manufacturing capacity constrained in some future periods or over-supplied in
others.

In addition, please see the Risk Factors entitled “Our substantial international operations subject us to a
number of risks, including unfavorable political, regulatory, labor, and tax conditions in foreign countries,” and
“The reduction, elimination, or expiration of government subsidies, economic incentives, renewable energy tar-
gets, and other support for on-grid solar electricity applications, or an increase in protectionist or other adverse
public policies, could reduce demand and/or price levels for our solar modules and limit our growth or lead to a
reduction in our net sales, thereby adversely impacting our operating results.”

We may be unable to profitably provide new solar offerings or achieve sufficient market penetration with
such offerings.

We may expand our portfolio of offerings to include solutions that build upon our core competencies but for
which we have not had significant historical experience, including variations in our traditional product offerings
or other offerings related to commercial and industrial customers and community solar. We cannot be certain that
we will be able to ascertain and allocate the appropriate financial and human resources necessary to grow these
business areas. We could invest capital into growing these businesses but fail to address market or customer
needs or otherwise not experience a satisfactory level of financial return. Also, in expanding into these areas, we
may be competing against companies that previously have not been significant competitors, such as companies
that currently have substantially more experience than we do in the rooftop or other targeted offerings. If we are
unable to achieve growth in these areas, our overall growth and financial performance may be limited relative to
our competitors and our operating results could be adversely impacted.

An increase in interest rates or tightening of the supply of capital in the global financial markets (including
a reduction in total tax equity availability) could make it difficult for customers to finance the cost of a PV
solar power system and could reduce the demand for our modules or systems and/or lead to a reduction in
the average selling price for PV modules.

Many of our customers and our systems business depend on debt and/or equity financing to fund the initial
capital expenditure required to develop, build, and/or purchase a PV solar power system. As a result, an increase
in interest rates, or a reduction in the supply of project debt financing or tax equity investments, could reduce the
number of solar projects that receive financing or otherwise make it difficult for our customers or our systems
business to secure the financing necessary to develop, build, purchase, or install a PV solar power system on
favorable terms, or at all, and thus lower demand for our solar modules which could limit our growth or reduce
our net sales. In addition, we believe that a significant percentage of our end-users install systems as an invest-
ment, funding the initial capital expenditure through a combination of equity and debt. An increase in interest
rates could lower an investor’s return on investment in a system, increase equity return requirements, or make
alternative investments more attractive relative to PV solar power systems, and, in each case, could cause these
end-users to seek alternative investments.

Risks Related to Regulations

Existing regulations and policies, changes thereto, and new regulations and policies may present technical,
regulatory, and economic barriers to the purchase and use of PV products or systems, which may sig-
nificantly reduce demand for our solar modules, systems, or services.

The market for electricity generation products is heavily influenced by foreign, federal, state, and local
government regulations and policies concerning the electric utility industry, as well as policies promulgated by
electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of
customer-owned electricity generation. In the United States and in a number of other countries, these regulations
and policies have been modified in the past and may be modified again in the future. These regulations and poli-
cies could deter end-user purchases of PV products and investment in the research and development of PV tech-
nology. For example, without a mandated regulatory exception for PV solar power systems, utility customers are

often charged interconnection or standby fees for putting distributed power generation on the electric utility grid.
If these interconnection standby fees were applicable to PV solar power systems, it is likely that they would
increase the cost of using such systems for end-users, which could make the systems less desirable, thereby
adversely affecting our business, financial condition, and results of operations. In addition, with respect to util-
ities that utilize a peak hour pricing policy or time-of-use pricing methods whereby the price of electricity is
adjusted based on electricity supply and demand, electricity generated by PV solar power systems currently
benefits from competing primarily with expensive peak hour electricity, rather than the less expensive average
price of electricity. Modifications to the peak hour pricing policies of utilities, such as to a flat rate for all times
of the day, would require PV solar power systems to achieve lower prices in order to compete with the price of
electricity from other sources and would adversely impact our operating results.

Our modules, systems, and services (such as O&M) are subject to oversight and regulation in accordance
with national and local ordinances relating to building codes, safety, environmental protection, utility inter-
connection and metering, and other matters, and tracking the requirements of individual jurisdictions is complex.
Any new government regulations or utility policies pertaining to our solar modules, systems, or services may
result in significant additional expenses to us or our customers and, as a result, could cause a significant reduc-
tion in demand for our solar modules, systems, or services. In addition, any regulatory compliance failure could
result in significant management distraction, unplanned costs, and/or reputational damage.

Environmental obligations and liabilities could have a substantial negative impact on our financial con-
dition, cash flows, and profitability.

Our operations involve the use, handling, generation, processing, storage, transportation, and disposal of
hazardous materials and are subject to extensive environmental laws and regulations at the national, state, local,
and international levels. These environmental laws and regulations include those governing the discharge of
pollutants into the air and water, the use, management, and disposal of hazardous materials and wastes, the
cleanup of contaminated sites, and occupational health and safety. As we execute our Long Term Strategic Plan
and expand our business into foreign jurisdictions worldwide, our environmental compliance burden may con-
tinue to increase both in terms of magnitude and complexity. We have incurred and may continue to incur sig-
nificant costs in complying with these laws and regulations. In addition, violations of, or liabilities under,
environmental laws or permits may result in restrictions being imposed on our operating activities or in our being
subjected to substantial fines, penalties, criminal proceedings, third-party property damage or personal injury
claims, cleanup costs, or other costs. Such solutions could also result in substantial delay or termination of proj-
ects under construction within our systems business, which could adversely impact our results of operations.
While we believe we are currently in substantial compliance with applicable environmental requirements, future
developments such as more aggressive enforcement policies, the implementation of new, more stringent laws and
regulations, or the discovery of presently unknown environmental conditions may require expenditures that could
have a material adverse effect on our business, financial condition, and results of operations.

Our CdTe solar modules contain cadmium telluride and other semiconductor materials. Elemental cadmium
and certain of its compounds are regulated as hazardous materials due to the adverse health effects that may arise
from human exposure. Based on existing research, the risks of exposure to cadmium telluride are not believed to
be as serious as those relating to exposure to elemental cadmium. In our manufacturing operations, we maintain
engineering controls to minimize our associates’ exposure to cadmium or cadmium compounds and require our
associates who handle cadmium compounds to follow certain safety procedures, including the use of personal
protective equipment such as respirators, chemical goggles, and protective clothing. Relevant studies and third-
party peer review of our technology have concluded that the risk of exposure to cadmium or cadmium com-
pounds from our end-products is negligible. In addition, the risk of exposure is further minimized by the
encapsulated nature of these materials in our products, the physical properties of cadmium compounds used in
our products, and the recycling or responsible disposal of our modules. While we believe that these factors and
procedures are sufficient to protect our associates, end-users, and the general public from adverse health effects
that may arise from cadmium exposure, we cannot ensure that human or environmental exposure to cadmium or
cadmium compounds used in our products will not occur. Any such exposure could result in future third-party
claims against us, damage to our reputation, and heightened regulatory scrutiny, which could limit or impair our

ability to sell and distribute our products. The occurrence of future events such as these could have a material
adverse effect on our business, financial condition, and results of operations.

The use of cadmium or cadmium compounds in various products is also coming under increasingly stringent
governmental regulation. Future regulation in this area could impact the manufacturing, sale, collection, and
recycling of solar modules and could require us to make unforeseen environmental expenditures or limit our abil-
ity to sell and distribute our products. For example, European Union Directive 2011/65/EU on the Restriction of
the Use of Hazardous Substances in electrical and electronic equipment (recast RoHS Directive) restricts the use
of certain hazardous substances, including cadmium and its compounds, in specified products. Other juris-
dictions, such as China, have adopted similar legislation or are considering doing so. Currently, PV modules are
explicitly excluded from the scope of recast RoHS (Article 2), as adopted by the European Parliament and the
Council in June 2011. The next general review of the RoHS Directive is scheduled for 2021, involving a broader
discussion of the existing scope. A scope review focusing on additional exclusions is expected to be proposed by
the European Commission in 2016 under the European Union’s co-decision process which allows the European
Parliament and the European Council to amend the European Commission’s proposal on exclusions. The co-
decision procedure is expected to be completed in 2017 or 2018. If PV modules were to be included in the scope
of future RoHS revisions without an exemption or exclusion, we would be required to redesign our solar modules
to reduce cadmium and other affected hazardous substances to the maximum allowable concentration thresholds
in the RoHS Directive in order to continue to offer them for sale within the European Union. As this would be
impractical, such an event would effectively close the European Union market to us, which could have a material
adverse effect on our business, financial condition, and results of operations.

As an owner and operator of PV solar power systems that deliver electricity to the grid, certain of our affili-
ated entities may be regulated as public utilities under U.S. federal and state law, which could adversely
affect the cost of doing business and limit our growth.

As an owner and operator of PV solar power systems that deliver electricity to the grid, certain of our affili-
ated entities may be considered public utilities for purposes of the Federal Power Act, as amended (the “FPA”)
and public utility companies for purposes of the Public Utility Holding Company Act of 2005 (“PUHCA 2005”),
and are subject to regulation by the FERC, as well as various local and state regulatory bodies.

Some of our affiliated entities may be exempt wholesale generators or qualifying facilities under the Public
Utility Regulatory Policies Act of 1978, as amended (“PURPA”) and as such are exempt from regulation under
PUHCA 2005. In addition, our affiliated entities may be exempt from most provisions of the FPA, as well as
state laws regarding the financial or organizational regulation of public utilities. We are not directly subject to
FERC regulation under the FPA. However, we are considered to be a “holding company” for purposes of Sec-
tion 203 of the FPA, which regulates certain transactions involving public utilities, and such regulation could
adversely affect our ability to grow the business through acquisitions. Likewise, investors seeking to acquire our
public utility subsidiaries or acquire ownership interests in our securities sufficient to give them control over us
and our public utility subsidiaries may require prior FERC approval to do so. Such approval could result in trans-
action delays or uncertainties.

Public utilities under the FPA are required to obtain FERC acceptance of their rate schedules for wholesale
sales of electricity and to comply with various regulations. The FERC may grant our affiliated entities the author-
ity to sell electricity at market-based rates and may also grant them certain regulatory waivers, such as waivers
from compliance with FERC’s accounting regulations. These FERC orders reserve the right to revoke or revise
market-based sales authority if the FERC subsequently determines that our affiliated entities can exercise market
power in the sale of generation products, the provision of transmission services, or if it finds that any of the enti-
ties can create barriers to entry by competitors. In addition, if the entities fail to comply with certain reporting
obligations, the FERC may revoke their power sales tariffs. Finally, if the entities were deemed to have engaged
in manipulative or deceptive practices concerning their power sales transactions, they would be subject to poten-
tial fines, disgorgement of profits, and/or suspension or revocation of their market-based rate authority. If our
affiliated entities were to lose their market-based rate authority, such companies would be required to obtain the
FERC’s acceptance of a cost-of-service rate schedule and could become subject to the accounting, record-
keeping, and reporting requirements that are imposed on utilities with cost-based rate schedules, which would

impose cost and compliance burdens on us and have an adverse effect on our results of operations. In addition to
the risks described above, we may be subject to additional regulatory regimes at state or foreign levels to the
extent we own and operate PV solar power systems in such jurisdictions.

Risks Related to our Operations, Manufacturing, and Technology

Our operating history to date may not serve as an adequate basis to judge our future prospects and results
of operations.

Our historical operating results may not provide a meaningful basis for evaluating our business, financial
performance, and prospects. We may be unable to achieve similar growth, or grow at all, in future periods. Our
ability to achieve similar growth in future periods is also affected by current economic conditions. Our past
results occurred in an environment where, among other things, capital was at times more accessible to our cus-
tomers to finance the cost of developing solar projects and economic incentives for solar power in certain mar-
kets were more favorable. Accordingly, you should not rely on our results of operations for any prior period as an
indication of our future performance.

We face intense competition from manufacturers of crystalline silicon solar modules, as well as other thin-
film solar modules; if global supply exceeds global demand, it could lead to a reduction in the average sell-
ing price for PV modules, which could reduce our net sales and adversely affect our results of operations.

The solar and renewable energy industries are highly competitive and are continually evolving as partic-
ipants strive to distinguish themselves within their markets and compete with the larger electric power industry.
Within the global PV solar industry, we face competition from crystalline silicon solar module manufacturers and
other thin-film solar module manufacturers. Existing or future solar manufacturers might be acquired by larger
companies with significant capital resources,
the
introduction of a low cost disruptive technology, such as commercially viable energy storage, could adversely
affect our ability to compete, which could reduce our net sales and adversely affect our results of operations.

thereby intensifying competition with us. In addition,

Even if demand for solar modules continues to grow, the rapid manufacturing capacity expansion under-
taken by many solar module manufacturers, particularly manufacturers of crystalline silicon solar modules, has
created and may continue to cause periods of structural imbalance in which supply exceeds demand. See the Risk
Factor entitled “An increased global supply of PV modules has caused and may continue to cause structural
imbalances in which global PV module supply exceeds demand, which could have a material adverse effect on
our business, financial condition, and results of operations,” for additional information. In addition, we believe
any significant decrease in the cost of silicon feedstock would reduce the manufacturing cost of crystalline sili-
con solar modules and lead to further pricing pressure for solar modules and potentially the oversupply of solar
modules.

During any such period, our competitors could decide to reduce their sales prices in response to competition,
even below their manufacturing costs, in order to generate sales. Other competitors may have direct or indirect
access to sovereign capital, which could enable such competitors to operate at minimal or negative operating
margins for sustained periods of time. As a result, we may be unable to sell our solar modules or systems at
attractive prices, or for a profit, during any period of excess supply of solar modules, which would reduce our net
sales and adversely affect our results of operations. Also, we may decide to lower our average selling price to
certain customers in certain markets in response to competition.

Problems with product quality or performance may cause us to incur significant and/or unexpected war-
ranty and related expenses, damage our market reputation, and prevent us from maintaining or increasing
our market share.

We perform a variety of module quality and life tests under different conditions upon which we base our
assessments and warranty of module performance over the duration of the warranty. However, if our thin-film or
high-efficiency crystalline solar modules perform below expectations, we could experience significant warranty
and related expenses, damage to our market reputation, and erosion of market share. With respect to our modules,
we provide a limited warranty covering defects in materials and workmanship under normal use and service

conditions for 10 years following the transfer of title to our modules. We also typically warrant that modules
installed in accordance with agreed-upon specifications will produce at least 97% of their labeled power output
rating during the first year, with the warranty coverage reducing by 0.7% every year thereafter throughout the
25-year performance warranty period. As an alternative form of our module power output warranty, we also offer
an aggregated or system level module performance warranty. This system level module performance warranty is
designed for utility-scale systems and also provides 25-year system level energy degradation protection. The
system level module performance warranty typically is calculated as a percentage of a system’s expected energy
production, adjusted for certain actual site conditions, with the warranted level of performance declining each
year in a linear fashion, but never falling below 80% during the term of the warranty. As a result of these pro-
grams, we bear a defined level of risk of product warranty claims long after we have sold our solar modules and
recognized net sales.

If any of the assumptions used in estimating our module warranties prove incorrect, we could be required to
accrue additional expenses, which could adversely impact our financial position, operating results, and cash
flows. Although we have taken significant precautions to avoid a manufacturing excursion from occurring, any
manufacturing excursions, including any commitments made by us to take remediation actions in respect of
affected modules beyond our warranties, could adversely impact our business reputation, financial position,
operating results, and cash flows.

Although our module performance warranties extend for 25 years, our oldest solar modules manufactured
during the qualification of our pilot production line have only been in use since 2001. Accordingly, our warran-
ties are based on a variety of quality and life tests that enable predictions of durability and future performance.
These predictions, however, could prove to be materially different from the actual performance during the war-
ranty period, causing us to incur substantial expense to repair or replace defective solar modules in the future. For
example, our solar modules could suffer various failure modes, including breakage, delamination, corrosion, or
performance degradation in excess of expectations, and our manufacturing operations or supply chain could be
subject to materials or process variations that could cause affected modules to fail or underperform compared to
our expectations. These risks could be amplified as we implement design and process changes in connection with
our efforts to improve our products and accelerate module conversion efficiencies as part of our Long Term Stra-
tegic Plan. In addition, as we increase the number of installations in extreme climates, we may experience
increased failure rates due to deployment into such field conditions. Any widespread product failures may dam-
age our market reputation, cause our net sales to decline, require us to repair or replace the defective modules,
and result in us taking voluntary remedial measures beyond those required by our standard warranty terms to
enhance customer satisfaction, which could have a material adverse effect on our operating results.

In resolving claims related to defective modules, we have the option to repair or replace the covered mod-
ules, provide additional modules, or make a cash payment equal to the current market price of the modules;
however, historical versions of our module warranty did not provide a refund remedy. Consequently, we may be
obligated to repair or replace the covered modules under such historical programs. As our manufacturing process
may change from time-to-time in accordance with our technology roadmap, we may elect to stop production of
older versions of our modules that would constitute compatible replacement modules. In some jurisdictions, our
inability to provide compatible replacement modules could potentially expose us to liabilities beyond the limi-
tations of our module warranties, which could adversely impact our business reputation, financial position,
operating results, and cash flows.

In addition to our solar module warranties, we also provide warranties for our BoS equipment, including,
but not limited to, mounting structures, solar trackers, electronics, and cabling. These warranties cover defects in
materials and workmanship for one to five years for most equipment and up to 10 years for mounting structures.
As with our modules, these warranties are based on a variety of quality and life tests that enable predictions of
durability and future performance. For PV solar power systems we construct, we also typically provide a limited
warranty against defects in engineering design, installation, and workmanship for a period of one to two years
following the substantial completion of a system. Any failures in BoS equipment or system construction beyond
our expectations may also adversely impact our business reputation, financial position, operating results, and
cash flows.

As part of our systems business, we may provide an energy performance test during the first year of a sys-
tem’s operation. Such a test is designed to demonstrate that the actual energy generation for the first year meets
or exceeds the modeled energy expectation, after certain adjustments, such as irradiance, weather, module degra-
dation, soiling, curtailment, and other conditions that may affect a system’s energy output but are unrelated to the
quality, design, or construction. If there is an underperformance event, determined at the end of the first year
after substantial completion, we may incur liquidated damages as a percentage of the contract price.

If our estimates regarding the future costs of collecting and recycling CdTe solar modules covered by our
collection and recycling program are incorrect, we could be required to accrue additional expenses at and
from the time we realize our estimates are incorrect and face a significant unplanned cash burden.

We have pre-funded, and may need to continue to pre-fund, our estimated future costs for collecting and
recycling CdTe solar modules covered by our collection and recycling program. We estimate these costs based
on the present value of the expected probability weighted future costs of collecting and recycling the modules,
which includes estimates for the cost of packaging materials, the cost of freight from the solar module installation
sites to a recycling center, the material, labor, capital costs, and scale of recycling centers, and an estimated third-
party profit margin and return on risk for collection and recycling services. We base these estimates on (i) our
experience collecting and recycling our solar modules, (ii) the expected timing of when our solar modules will be
returned for recycling, and (iii) expected economic conditions at the time the solar modules will be collected and
recycled. If our estimates prove incorrect, we could be required to accrue additional expenses at and from the
time we realize our estimates are incorrect and could also face a significant unplanned cash burden at the time we
realize our estimates are incorrect or end-users return their modules, which could adversely affect our operating
results. In addition, participating end-users can return their modules covered under the collection and recycling
program at any time. As a result, we could be required to collect and recycle covered CdTe solar modules earlier
than we expect.

Our failure to further refine our technology, reduce module manufacturing and BoS costs, and develop and
introduce improved PV products could render our solar modules or systems uncompetitive and reduce our
net sales, profitability, and/or market share.

We need to continue to invest significant financial resources in research and development to continue to
improve our module conversion efficiencies, lower the LCOE of our PV solar power systems, and otherwise
keep pace with technological advances in the solar industry. However, research and development activities are
inherently uncertain, and we could encounter practical difficulties in commercializing our research results. We
seek to continuously improve our products and processes, and the resulting changes carry potential risks in the
form of delays, additional costs, or other unintended contingencies. In addition, our significant expenditures on
research and development may not produce corresponding benefits. Other companies are developing a variety of
competing PV technologies, including advanced multi-crystalline silicon cells, PERC or advanced p-type crystal-
line silicon cells, high-efficiency n-type crystalline silicon cells, copper indium gallium diselenide, and amor-
phous silicon thin films, which could produce solar modules or systems that prove more cost-effective or have
better performance than our solar modules or systems. In addition, other companies could potentially develop a
highly reliable renewable energy system that mitigates the intermittent power generation drawback of many
renewable energy systems, or offer other value-added improvements from the perspective of utilities and other
system owners, in which case such companies could compete with us even if the LCOE associated with such new
system is higher than that of our systems. As a result, our solar modules or systems may be negatively differ-
entiated or rendered obsolete by the technological advances of our competitors, which would reduce our net
sales, profitability, and/or market share.

In addition, we often forward price our products and services in anticipation of future cost reductions and
technology improvements, and thus an inability to further refine our technology and execute our module con-
version efficiency roadmap and long-term manufacturing cost, BoS cost and LCOE reduction objectives could
adversely affect our operating results.

Our failure to protect our intellectual property rights may undermine our competitive position, and liti-
gation to protect our intellectual property rights or defend against third-party allegations of infringement
may be costly.

Protection of our proprietary processes, methods, and other technology is critical to our business. Failure to
protect and monitor the use of our existing intellectual property rights could result in the loss of valuable tech-
nologies. We rely primarily on patents, trademarks, trade secrets, copyrights, and contractual restrictions to pro-
tect our intellectual property. We regularly file patent applications to protect inventions arising from our research
and development, and are currently pursuing such patent applications in various countries in accordance with our
strategy for intellectual property in that jurisdiction. Our existing patents and future patents could be challenged,
invalidated, circumvented, or rendered unenforceable. Our pending patent applications may not result in issued
patents, or if patents are issued to us, such patents may not be sufficient to provide meaningful protection against
competitors or against competitive technologies.

We also rely upon unpatented proprietary manufacturing expertise, continuing technological innovation, and
other trade secrets to develop and maintain our competitive position. Although we generally enter into con-
fidentiality agreements with our associates and third parties to protect our intellectual property, such con-
fidentiality agreements are limited in duration and could be breached and may not provide meaningful protection
for our trade secrets or proprietary manufacturing expertise. Adequate remedies may not be available in the event
of unauthorized use or disclosure of our trade secrets and manufacturing expertise. In addition, others may obtain
knowledge of our trade secrets through independent development or legal means. The failure of our patents or
confidentiality agreements to protect our processes, equipment, technology, trade secrets, and proprietary manu-
facturing expertise, methods, and compounds could have a material adverse effect on our business. In addition,
effective patent, trademark, copyright, and trade secret protection may be unavailable or limited in some foreign
countries, especially any developing countries into which we may expand our operations. In some countries we
have not applied for patent, trademark, or copyright protection.

Third parties may infringe or misappropriate our proprietary technologies or other intellectual property
rights, which could have a material adverse effect on our business, financial condition, and operating results.
Policing unauthorized use of proprietary technology can be difficult and expensive. Also, litigation may be
necessary to enforce our intellectual property rights, protect our trade secrets, or determine the validity and scope
of the proprietary rights of others. We cannot ensure that the outcome of such potential litigation will be in our
favor. Such litigation may be costly and may divert management attention and other resources away from our
business. An adverse determination in any such litigation may impair our intellectual property rights and may
harm our business, prospects, and reputation. In addition, we have no insurance coverage against such litigation
costs and would have to bear all costs arising from such litigation to the extent we are unable to recover them
from other parties.

Some of our key raw materials and components are either single-sourced or sourced from a limited number
of third-party suppliers, and their failure to perform could cause manufacturing delays and impair our abil-
ity to deliver solar modules to customers in the required quality and quantities and at a price that is profit-
able to us.

Our failure to obtain raw materials and components that meet our quality, quantity, and cost requirements in
a timely manner could interrupt or impair our ability to manufacture our solar modules or increase our manu-
facturing cost. Some of our key raw materials and components are either single-sourced or sourced from a lim-
ited number of third-party suppliers. As a result, the failure of any of our suppliers to perform could disrupt our
supply chain and impair our operations. In addition, some of our suppliers are small companies that may be
unable to supply our increasing demand for raw materials and components as we continue to expand our busi-
ness. We may be unable to identify new suppliers or qualify their products for use on our production lines in a
timely manner and on commercially reasonable terms. A constraint on our production may cause us to be unable
to meet our capacity plans and/or our obligations under our customer contracts, which would have an adverse
impact on our business.

A disruption in our supply chain for cadmium telluride could interrupt or impair our ability to manufacture
solar modules and could adversely impact our profitability and long-term growth prospects.

A key raw material we use in our CdTe module production process is a cadmium telluride compound. Tel-
lurium, one of the main components of cadmium telluride, is mainly produced as a by-product of copper refining,
and therefore, its supply is largely dependent upon demand for copper. Our supply of cadmium telluride could be
limited if any of our current suppliers or any of our future suppliers are unable to acquire an adequate supply of
tellurium in a timely manner or at commercially reasonable prices. If our competitors begin to use or increase
their demand for cadmium telluride, supply could be reduced and prices could increase. If our current suppliers
or any of our future suppliers cannot obtain sufficient tellurium, they could substantially increase prices or be
unable to perform under their contracts. We may be unable to pass increases in the costs of our raw materials
through to our customers. A substantial increase in tellurium prices could adversely impact our profitability and
long-term growth objectives.

Our TetraSun module offering may not be able to achieve profitable commercial scale, which could
adversely impact our operating results and our future growth objectives with respect to PV solar in
restricted spaces.

In 2013, we acquired TetraSun, Inc., a development stage company with high-efficiency crystalline silicon
technology. We expect our high-power density TetraSun modules to offer advantages relative to our CdTe mod-
ules in certain commercial & industrial, rooftop, and other space constrained applications. Although we began
manufacturing TetraSun modules during the fourth quarter of 2014, we have less experience with crystalline sili-
con module manufacturing compared to many of our competitors, and accordingly we face numerous risks and
uncertainties. Many of these risks are inherent in PV module manufacturing generally, or otherwise similar to
risks involved in our CdTe PV module manufacturing operations, and are discussed elsewhere in Item 1A: “Risk
Factors.”

Additionally, scaling of high-volume TetraSun module manufacturing could present supply chain, timing,
and other challenges. Contrasted with our largely automated CdTe manufacturing lines, our TetraSun module
manufacturing operations involve a batch process and are not fully integrated from initial feedstock to final
module, potentially resulting in timing, cost, supply, and other constraints. We outsource module assembly to a
third party, and any constraints such party faces in meeting our volume or quality requirements would negatively
impact our ability to deliver modules to our customers. TetraSun cells are manufactured using n-type mono-
crystalline wafers. We rely on our wafer suppliers to contract polysilicon feedstock in sufficient volumes to meet
our demand. Market-driven increases in polysilicon prices realized by our wafer suppliers or increases in wafer
prices generally would increase our manufacturing costs and negatively impact margins on TetraSun modules.

If we are able to achieve high-volume manufacturing of TetraSun modules, we may not have an adequate
sales channel for such modules and/or the prevailing average selling price or conversion efficiency of PV mod-
ules in general may have changed in such a manner as to make our TetraSun modules uncompetitive. If our
TetraSun modules are unable to achieve profitable commercial scale, we may have to write down all or a portion
of the assets related to this business area, and our future growth strategy with respect to PV solar in restricted
spaces could be adversely impacted, which could have an adverse effect on our business, financial condition, and
results of operations.

Our future success depends on our ability to effectively balance manufacturing production with market
demand and, when necessary, continue to build new manufacturing plants over time in response to such
demand and add production lines in a cost-effective manner, all of which are subject to risks and
uncertainties.

Our future success depends on our ability to effectively balance manufacturing production with market
demand and increase both our manufacturing capacity and production throughput over time in a cost-effective
and efficient manner. If we cannot do so, we may be unable to expand our business, decrease our manufacturing
cost per watt, maintain our competitive position, satisfy our contractual obligations, or sustain profitability. See
“An increased global supply of PV modules has caused and may continue to cause structural imbalances in which

global PV module supply exceeds demand, which could have a material adverse effect on our business, financial
condition, and results of operations.” Our ability to expand production capacity is subject to significant risks and
uncertainties, including the following:

• delays and cost overruns as a result of a number of factors, many of which may be beyond our control,

such as our inability to secure successful contracts with equipment vendors;

• our custom-built equipment taking longer and costing more to manufacture than expected and not operat-

ing as designed;

• delays or denial of required approvals by relevant government authorities;

• being unable to hire qualified staff;

• failure to execute our expansion plans effectively;

• manufacturing concentration risk resulting from a majority of our production lines worldwide being
located in one geographic area, Malaysia, and the possible inability to meet customer demand in the event
of compromises to shipping processes, supply chain, or other aspects of such facility;

• incurring manufacturing asset write-downs, write-offs, and other charges and costs, which may be sig-

nificant, during those periods in which we idle, slow down, or shut down manufacturing capacity.

If any future production lines are not built in line with our committed schedules it may impair any future
growth plans. If any future production lines do not achieve operating metrics similar to our existing pro-
duction lines, our solar modules could perform below expectations and cause us to lose customers.

If we are unable to systematically replicate our production lines as necessary over time and achieve and
sustain similar operating metrics in our future production lines as we have achieved at our existing production
lines, our manufacturing capacity could be substantially constrained, our manufacturing costs per watt could
increase, and our growth could be limited. Such factors may result in lower net sales and lower net income than
we anticipate. For instance, future production lines could produce solar modules that have lower conversion effi-
ciencies, higher failure rates, and higher rates of degradation than solar modules from our existing production
lines, and we could be unable to determine the cause of the lower operating metrics or develop and implement
solutions to improve performance.

Some of our manufacturing equipment is customized and sole sourced. If our manufacturing equipment
fails or if our equipment suppliers fail to perform under their contracts, we could experience production
disruptions and be unable to satisfy our contractual requirements.

Some of our manufacturing equipment is customized to our production lines based on designs or specifica-
tions that we provide to equipment manufacturers, which then undertake a specialized process to manufacture the
custom equipment. As a result, the equipment is not readily available from multiple vendors and would be diffi-
cult to repair or replace if it were to become damaged or stop working. If any piece of equipment fails, pro-
the failure of our equipment
duction along the entire production line could be interrupted. In addition,
manufacturers to supply equipment in a timely manner or on commercially reasonable terms could delay our
expansion plans, otherwise disrupt our production schedule, and/or increase our manufacturing costs, all of which
would adversely impact our operating results.

We may be unable to manage the expansion of our operations effectively.

We expect to continue to expand our business in order to provide utility-scale PV generation to existing and
new geographic markets and to maintain or increase market share. To manage the continued expansion of our
operations, we will be required to continue to improve our operational and financial systems, procedures and
controls, and expand, train, manage, and retain our growing associate base. Our management will also be

required to maintain and expand our relationships with customers, suppliers, and other third parties and attract
new customers and suppliers. In addition, our current and planned operations, personnel, systems, and internal
controls and procedures might be inadequate to support our future growth. The effectiveness of our controls and
procedures could be adversely impacted to the extent we transfer more business functions to lower cost geog-
raphies as part of our cost reduction initiatives. If we cannot manage our growth effectively, we may be unable to
take advantage of market opportunities, execute our business strategies, or respond to competitive pressures.

Our substantial international operations subject us to a number of risks, including unfavorable political,
regulatory, labor, and tax conditions in foreign countries.

We have significant marketing, distribution, and manufacturing operations both within and outside the
United States and expect to continue to expand our operations worldwide. As a result, we will be subject to the
legal, political, social, tax, and regulatory requirements, and economic conditions of many jurisdictions. Risks
inherent to international operations include, but are not limited to, the following:

• difficulty in enforcing agreements in foreign legal systems;

• difficulty in forming appropriate legal entities to conduct business in foreign countries in the required time

frame and the associated costs of forming those legal entities;

• varying degrees of protection afforded to foreign investments in the countries in which we operate, and

irregular interpretations and enforcement of laws and regulations in these jurisdictions;

• foreign countries may impose additional income and withholding taxes or otherwise tax our foreign oper-
ations, impose tariffs, or adopt other restrictions on foreign trade and investment, including currency
exchange controls;

• fluctuations in exchange rates may affect demand for our products and services and may adversely affect
our profitability and cash flow in U.S. dollars to the extent that our equity investments, net sales, or our
costs are denominated in a foreign currency and the cost associated with hedging the U.S. dollar equiv-
alent of such exposures is prohibitive; the longer the duration of such foreign currency exposure, the
greater the risk;

• anti-corruption compliance issues, including the costs related to the mitigation of such risk;

• inability to obtain, maintain, or enforce intellectual property rights;

• risk of nationalization or other expropriation of private enterprises;

• changes in general economic and political conditions in the countries in which we operate, including

changes in government incentive provisions;

• unexpected adverse changes in foreign laws or regulatory requirements, including those with respect to

environmental protection, export duties, and quotas;

• opaque approval processes in which the lack of transparency may cause delays and increase the

uncertainty of project approvals;

• difficulty in staffing and managing widespread operations;

• difficulty in repatriating earnings;

• difficulty in negotiating a successful collective bargaining agreement in applicable foreign jurisdictions;

• trade barriers such as export requirements, tariffs, taxes, local content requirements, anti-dumping regu-
lations and requirements, and other restrictions and expenses, which could increase the effective price of
our solar modules and make us less competitive in some countries; and

• difficulty of, and costs relating to, compliance with the different commercial and legal requirements of the

overseas countries in which we offer and sell our solar modules.

Our business in foreign markets requires us to respond to rapid changes in market conditions in these countries.
Our overall success as a global business depends, in part, on our ability to succeed in differing legal, regulatory,

economic, social, and political conditions. We may not be able to develop and implement policies and strategies that
will be effective in each location where we do business.

Risks Related to Our Systems Business

Project development or construction activities may not be successful; projects under development may not
receive required permits, real property rights, PPAs, interconnection, and transmission arrangements; or
financing or construction may not commence or proceed as scheduled, which could increase our costs and
impair our ability to recover our investments.

The development and construction of solar power electric generation facilities and other energy infra-
structure projects involve numerous risks. We may be required to spend significant sums for land and inter-
connection rights, preliminary engineering, permitting, legal, and other expenses before we can determine
whether a project is feasible, economically attractive, or capable of being built. Success in developing a partic-
ular project is contingent upon, among other things:

• obtaining financeable land rights, including land rights for the project site, transmission lines, and

environmental mitigation;

• receipt from governmental agencies of required environmental, land-use, and construction permits and

approvals;

• receipt of governmental approvals related to the presence of any protected or endangered species or hab-

itats, migratory birds, wetlands or other jurisdictional water resources, and/or cultural resources;

• negotiation of development agreements, public benefit agreements, and other agreements to compensate

local governments for project impacts;

• negotiation of state and local tax abatement and incentive agreements;

• receipt of rights to interconnect the project to the electric grid or to transmit energy;

• negotiation of satisfactory EPC agreements;

• entering into financeable arrangements for the purchase of the electrical output and renewable energy

attributes generated by the project;

• securing necessary rights of way for access and transmission lines;

• securing necessary water rights for project construction and operation;

• securing appropriate title coverage, including coverage for mineral rights, mechanics’ liens, etc.;

• obtaining construction financing, including debt, equity, and funds associated with the monetization of tax

credits and other tax benefits;

• payment of PPA, interconnection, and other deposits (some of which are non-refundable); and

• timely implementation and satisfactory completion of construction.

Successful completion of a particular project may be adversely affected, delayed and/or rendered infeasible

by numerous factors, including:

• delays in obtaining and maintaining required governmental permits and approvals, including appeals of

approvals obtained;

• potential permit and litigation challenges from project stakeholders, including local residents, environ-

mental organizations, labor organizations, tribes, and others who may oppose the project;

• in connection with any such permit and litigation challenges, grants of injunctive relief to stop develop-

ment and/or construction of a project;

• discovery of unknown impacts to protected or endangered species or habitats, migratory birds, wetlands or

other jurisdictional water resources, and/or cultural resources at project sites;

• discovery of unknown title defects;

• discovery of unknown environmental conditions;

• unforeseen engineering problems;

• construction delays and contractor performance shortfalls;

• work stoppages;

• cost over-runs;

• labor, equipment, and materials supply shortages or disruptions;

• cost or schedule impacts arising from changes in federal, state, or local land-use or regulatory policies;

• changes in electric utility procurement practices;

• risks arising from transmission grid congestion issues;

• project delays that could adversely impact our ability to maintain interconnection rights;

• additional complexities when conducting project development or construction activities in foreign juris-
dictions (either on a stand-alone basis or in collaboration with local business partners), including operating
in accordance with the U.S. Foreign Corrupt Practices Act and applicable local laws and customs;

• unfavorable tax treatment;

• adverse weather conditions;

• water shortages;

• adverse environmental and geological conditions; and

• force majeure and other events out of our control.

If we fail to complete the development of a solar power project, fail to meet one or more agreed upon target
construction milestone dates, fail to achieve system-level capacity, or fail to meet other contract terms, we may
be subject to forfeiture of significant deposits under PPAs or interconnection agreements or termination of such
agreements, incur significant liquidated damages, penalties, and/or other obligations under other project related
agreements, and may not be able to recover our investment in the project. Some of these investments are included
as assets on our consolidated balance sheets under the line item “Project assets and deferred project costs.” If we
are unable to complete the development of a solar power project, we may write-down or write-off some or all of
these capitalized investments, which would have an adverse impact on our net income in the period in which the
loss is recognized.

We may be unable to accurately estimate costs under fixed-price EPC agreements in which we act as the
general contractor for our customers in connection with the construction and installation of their PV solar
power systems.

We may enter into fixed-price EPC contracts in which we act as the general contractor for our customers in
connection with the installation of their PV solar power systems. All essential costs are estimated at the time of
entering into the EPC contract for a particular project, and these are reflected in the overall fixed-price that we
charge our customers for the project. These cost estimates are preliminary and may or may not be covered by
contracts between us or the subcontractors, suppliers, and other parties to the project. In addition, we require
qualified, licensed subcontractors to install many of our systems. Shortages of such skilled labor could sig-
nificantly delay a project or otherwise increase our costs. Should actual results prove different from our estimates
(including those due to unexpected increases in inflation, commodity prices, or labor costs) or we experience
delays in execution and we are unable to commensurately increase the EPC sales price, we may not achieve our
expected margins or we may be required to record a loss in the relevant fiscal period.

We may be unable to acquire or lease land, obtain necessary interconnection and transmission rights, and/
or obtain the approvals, licenses, permits, and electric transmission grid interconnection and transmission
rights necessary to build and operate PV solar power systems in a timely and cost effective manner, and
regulatory agencies, local communities, labor unions, tribes, or other third parties may delay, prevent, or
increase the cost of construction and operation of the system we intend to build.

In order to construct and operate our PV solar power systems, we need to acquire or lease land and rights of
way, obtain interconnection rights, and obtain all necessary local, county, state, federal, and foreign approvals,
licenses, and permits, as well as rights to interconnect the systems to the transmission grid and transmit energy
generated from the system. We may be unable to acquire the land or lease interests needed, may not obtain or
maintain satisfactory interconnection rights, may not receive or retain the requisite approvals, permits, licenses,
and interconnection and transmission rights, or may encounter other problems that could delay or prevent us
from successfully constructing and operating such systems.

Many of our proposed PV solar power systems are located on or require access through public lands
administered by federal and state agencies pursuant to competitive public leasing and right-of-way procedures
and processes. The authorization for the use, construction, and operation of systems and associated transmission
facilities on federal, state, and private lands will also require the assessment and evaluation of mineral rights,
private rights-of-way, and other easements; environmental, agricultural, cultural, recreational, and aesthetic
impacts; and the likely mitigation of adverse impacts to these and other resources and uses. The inability to
obtain the required permits and, potentially, any excessive delays in obtaining such permits due, for example, to
litigation or third-party appeals, could prevent us from successfully constructing and operating PV solar power
systems in a timely manner and could result in the potential forfeiture of any deposit we have made with respect
to a given project. Moreover, project approvals subject to project modifications and conditions, including miti-
gation requirements and costs, could affect the financial success of a given project. Changing regulatory
requirements and the discovery of unknown site conditions could also affect the financial success of a given
project.

In addition, local labor unions may increase the cost of, and/or lower the productivity of, project develop-
ment in California and elsewhere. We may also be subject to labor unavailability and/or increased union labor
requirements due to multiple simultaneous projects in a geographic region.

Lack of transmission capacity availability, potential upgrade costs to the transmission grid, and other sys-
tems constraints could significantly impact our ability to build PV solar power systems and generate solar
electricity power sales.

In order to deliver electricity from our PV solar power systems to our customers, our projects generally need
to connect to the transmission grid. The lack of available capacity on the transmission grid could substantially
impact our projects and cause reductions in project size, delays in project implementation, increases in costs from
transmission upgrades, and potential forfeitures of any deposit we have made with respect to a given project.
These transmission issues, as well as issues relating to the availability of large equipment such as transformers
and switch gear, could significantly impact our ability to build such systems and generate solar electricity sales.

Our systems business is largely dependent on us and third parties arranging financing from various sour-
ces, which may not be available or may only be available on unfavorable terms or in insufficient amounts.

The construction of large utility-scale solar power projects is expected in many cases to require project
financing, including non-recourse project debt financing in the bank loan market and institutional debt capital
markets. Uncertainties exist as to whether our projects will be able to access the debt markets in a magnitude
sufficient to finance their construction. If we are unable to arrange such financing or if it is only available on
unfavorable terms, we may be unable to fully execute our systems business plan. In addition, we generally expect
to sell our projects by raising project equity capital from tax-oriented, strategic industry, and other equity invest-
ors. Such equity sources may not be available or may only be available in insufficient amounts or on unfavorable
terms, in which case our ability to sell our projects may be delayed or limited, and our business, financial con-
dition, and results of operations may be adversely affected. Even if such financing sources are available, the

counterparty to many of our fixed-price EPC contracts, which own the project we are constructing, are often
special purpose vehicles that do not have significant assets other than their interests in the project and have
pledged all or substantially all of these assets to secure the project-related debt and certain other sources of
financing. If the owner defaults on its payments or other obligations to us, we may face difficulties in collecting
payment of amounts due to us for the costs previously incurred or for the amounts previously expended or com-
mitted to be expended to purchase equipment or supplies (including intercompany purchases of PV modules), or
for termination payments we are entitled to under the terms of the related EPC contract. If we are unable to col-
lect the amounts owed to us, or are unable to complete the project because of an owner default, we may be
required to record a charge against earnings related to the project, which could result in a material loss.

In addition, for projects to which we provide EPC services but are not the project developer, our EPC activ-
ities are in many cases dependent on the ability of third parties to finance their systems projects, which, in turn, is
dependent on their ability to obtain financing for such purchases on acceptable terms. Depending on prevailing
conditions in the credit markets, interest rates and other factors, such financing may not be available or may only
be available on unfavorable terms or in insufficient amounts. If third parties are limited in their ability to access
financing to support their purchase of PV solar power system construction services from us, we may not realize
the cash flows that we expect from such sales, which could adversely affect our ability to invest in our business
and/or generate revenue. See also the risk factor above entitled “An increase in interest rates or tightening of the
supply of capital in the global financial markets (including a reduction in total tax equity availability) could make
it difficult for customers to finance the cost of a PV solar power system and could reduce the demand for our
modules or systems and/or lead to a reduction in the average selling price for PV modules.”

Developing solar power projects may require significant upfront investment prior to the signing of an EPC
contract and commencing construction, which could adversely affect our business and results of operations.

Our solar power project development cycles, which span the time between the identification of land and the
commercial operation of a PV solar power system, vary substantially and can take many months or years to
mature. As a result of these long project cycles, we may need to make significant upfront investments of
resources (including, for example, payments for land rights, large transmission and PPA deposits, or other pay-
ments, which may be non-refundable) in advance of the signing of EPC contracts, commencing construction,
receiving cash proceeds, and recognizing any revenue, which may not be recognized for several additional
months or years following contract signing. Our potential inability to enter into sales contracts with potential
customers on favorable terms after making such upfront investments could cause us to forfeit certain non-
refundable payments or otherwise adversely affect our business and results of operations. Furthermore, we may
become constrained in our ability to simultaneously fund our other business operations and these systems
investments through our long project development cycles.

Our liquidity may be adversely affected to the extent the project sales market weakens and we are unable to
sell our solar projects on pricing, timing, and other terms commercially acceptable to us. In such a scenario, we
may choose to continue to own and operate certain solar projects for a period of time, after which the projects
may be sold to third parties.

We may not be able to obtain long-term contracts for the sale of power produced by our projects at prices
and on other terms favorable to attract financing and other investments; with regard to projects for which
electricity is or will be sold on an open-contract basis rather than under a PPA, our results of operations
could be adversely affected to the extent prevailing spot electricity prices decline in an unexpected manner.

Obtaining long-term contracts for the sale of power produced by our projects at prices and on other terms favor-
able to us is essential for obtaining financing and commencing construction of our projects. We must compete for
PPAs against other developers of solar and renewable energy projects. Further, other sources of power, such as
natural gas-fired power plants, have historically been cheaper than the cost of solar power, and power from certain
types of projects, such as natural gas-fired power plants, can be delivered on a firm basis. The inability to compete
successfully against other power producers or otherwise enter into PPAs favorable to us would negatively affect our
ability to develop and finance our projects and negatively impact our revenue. In addition, the availability of PPAs
is dependent on utility procurement practices that could evolve and shift allocation of market risks over time. In

addition, PPA availability and terms are a function of a number of economic, regulatory, tax, and public policy fac-
tors, which are also subject to change. Also, certain of our projects may be scheduled for substantial completion
prior to the commencement of a long-term PPA with a major off-taker, in which case we would be required to enter
into a stub-period PPA for the intervening time period or sell down the project. We may not be able to do either on
terms that are commercially attractive to us. Finally, the electricity from certain of our projects is or will be sold on
an open-contract basis for a period of time rather than under a PPA. If prevailing spot electricity prices relating to
any such project were to decline in an unexpected manner, such project may decline in value and our results of
operations could otherwise be adversely affected.

We may be subject to unforeseen costs, liabilities, or obligations when providing O&M services.

We may provide ongoing O&M services to system owners under separate service agreements, pursuant to
which we generally perform standard activities associated with operating a PV solar power system, including
24/7 monitoring and control, compliance activities, energy forecasting, and scheduled and unscheduled main-
tenance. Our costs to perform these services are estimated at the time of entering into the O&M agreement for a
particular project, and these are reflected in the price we charge our customers. We have limited experience in
performing O&M services in certain jurisdictions outside of the United States, Canada, and Australia where we
plan to offer PV systems solutions as part of our Long Term Strategic Plan, including estimating actual costs for
such jurisdictions under our O&M agreements relative to the price that we charge our customers. Should our
estimates of O&M costs prove inaccurate (including any unexpected increases in inflation or labor or BoS costs),
our growth strategy and results of operations could be adversely affected. Because of the potentially long-term
nature of these O&M agreements, the adverse impacts on our results of operations could be significant, partic-
ularly if our costs are not capped under the terms of the agreements. We may also be subject to substantial costs
in the event we do not achieve certain thresholds under the effective availability guarantees included in our O&M
agreements.

Our systems business is subject to regulatory oversight and liability if we fail to operate our PV solar power
systems in compliance with electric reliability rules.

The ongoing O&M services that we provide for system owners may subject us to regulation by the North
American Electric Reliability Corporation (“NERC”), or its designated regional representative, as a “generator
operator,” or “GOP,” under electric reliability rules filed with FERC. Our failure to comply with the reliability
rules applicable to GOPs could subject us to substantial fines by NERC, subject to FERC’s review. In addition,
the system owners that receive our O&M services may be regulated by NERC as “generator owners,” or “GOs”
and we may incur liability for GO violations and fines levied by NERC, subject to FERC’s review, based on the
terms of our O&M agreements. Finally, as a systems owner and operator, we may in the future be subject to
regulation by NERC as a GO.

Other Risks

We may not realize the anticipated benefits of past or future business combinations or transactions, and
integration of these business combinations may disrupt our business and management.

We have made several acquisitions in the last several years and in the future we may acquire additional
companies, project pipelines, products, or technologies or enter into joint ventures or other strategic initiatives.
We may not realize the anticipated benefits of a business combination, and each transaction has numerous risks.
These risks include the following:

• difficulty in assimilating the operations and personnel of the acquired or partner company;

• difficulty in effectively integrating the acquired products or technologies with our current products or

technologies;

• difficulty in achieving profitable commercial scale from acquired technologies;

• difficulty in maintaining controls, procedures, and policies during the transition and integration;

• disruption of our ongoing business and distraction of our management and associates from other oppor-

tunities and challenges due to integration issues;

• difficulty integrating the acquired or partner company’s accounting, management information, and other

administrative systems;

• inability to retain key technical and managerial personnel of the acquired business;

• inability to retain key customers, vendors, and other business partners of the acquired business;

• inability to achieve the financial and strategic goals for the acquired and combined businesses, as a result

of insufficient capital resources or otherwise;

• incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact

our operating results;

• potential impairment of our relationships with our associates, customers, partners, distributors, or third-

party providers of products or technologies;

• potential failure of the due diligence processes to identify significant issues with product quality, legal and

financial liabilities, among other things;

• potential inability to assert that internal controls over financial reporting are effective;

• potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which

could delay or prevent such acquisitions; and

• potential delay in customer purchasing decisions due to uncertainty about the direction of our product

offerings.

Mergers and acquisitions of companies are inherently risky, and ultimately, if we do not complete the
integration of acquired businesses successfully and in a timely manner, we may not realize the anticipated bene-
fits of the acquisitions to the extent anticipated, which could adversely affect our business, financial condition, or
results of operations.

We may not be able to achieve the full strategic and financial benefits expected to result from the formation
of 8point3 Energy Partners LP, on a timely basis or at all.

In June 2015, 8point3 Energy Partners LP (the “YieldCo” or the “Partnership”), a limited partnership formed
by First Solar and SunPower Corporation (“SunPower”), completed its initial public offering. The YieldCo is a joint
venture vehicle into which we and SunPower each contributed a portfolio of selected solar generation assets from
our existing portfolios of assets. We launched the YieldCo to enable a competitive cost of capital and greater
optionality in the project sales process for a portion of our future project sales. Given the broader economic factors
currently impacting the yieldco sector in general, including yieldco equity valuations generally, the timing and
execution of asset drop downs to the YieldCo are subject to market conditions. We believe that the viability of the
YieldCo strategy will depend on, among other things, such market conditions and our ability to continue to develop
revenue-generating solar assets, which is subject to the same project-level, business, and industry risks described in
the other Risk Factors contained in this Annual Report on Form 10-K. The viability of the YieldCo strategy is also
subject to the risks described in the YieldCo’s Annual Report on Form 10-K. In addition, due to the joint venture
nature of the YieldCo, we do not exercise control over the YieldCo in the same manner that we could over our
wholly-owned subsidiaries, and, as such, the viability of the YieldCo strategy will also depend in part on our ability
to effectively manage our business relationships with SunPower. Furthermore, the value of our investment in the
YieldCo will fluctuate over time and may decline. As a result, we may never recover the value of the assets we
contributed to the YieldCo, and we may realize less of a return on such contributions than if we had retained or
operated the assets. In addition, our stock price may be impacted by fluctuations in the price of YieldCo shares and
market perceptions about the value of our interest in the YieldCo. If we are unable to achieve the strategic and
financial benefits expected to result from the YieldCo strategy, we would pursue traditional and other pathways in
the project sales process, but our business, financial condition, and results of operations could be materially
adversely affected. See Note 12 “Investments in Unconsolidated Affiliates and Joint Ventures” to our consolidated
financial statements included in this Annual Report on Form 10-K.

Our future success depends on our ability to retain our key associates and to successfully integrate them
into our management team.

We are dependent on the services of our executive officers and other members of our senior management
team. The loss of one or more of these key associates or any other member of our senior management team could
have a material adverse effect on our business. We may not be able to retain or replace these key associates, and
we may not have adequate succession plans in place. Several of our current key associates including our execu-
tive officers are subject
to employment conditions or arrangements that contain post-employment non-
competition provisions. However, these arrangements permit the associates to terminate their employment with
us upon little or no notice and the enforceability of the non-competition provisions in certain jurisdictions is
uncertain.

If we are unable to attract, train, and retain key personnel, our business may be materially and adversely
affected; any regulatory compliance failure with respect to applicable labor laws and regulations, including
the Davis-Bacon and Related Acts, could have an adverse effect on us.

Our future success depends, to a significant extent, on our ability to attract, train, and retain management,
operations, sales, training, and technical personnel, including in foreign jurisdictions as we continue to execute
on our Long Term Strategic Plan. Recruiting and retaining capable personnel, particularly those with expertise in
the PV industry across a variety of technologies, are vital to our success. There is substantial competition for
qualified technical personnel and while we continue to benchmark our organization against the broad spectrum of
business in our market space to remain economically competitive, there can be no assurances that we will be able
to attract and retain our technical personnel. If we are unable to attract and retain qualified associates, or other-
wise experience unexpected labor disruptions within our business, we may be materially and adversely affected.

Labor used on some of our job sites that are completed or under construction are subject to the Davis-Bacon
and Related Acts (collectively, “Davis-Bacon”). Davis-Bacon requires that personnel assigned to the project be
paid at least the prevailing wage and fringe benefits, as established by and in accordance with the regulations
promulgated by the U.S. Department of Labor (“DOL”). We have an established policy pursuant to which we
evaluate Davis-Bacon requirements in conjunction with our subcontractors on the project and ensure our collec-
tive compliance with these requirements. If it was ultimately determined that any person working under Davis-
Bacon requirements on First Solar projects was not properly classified, was being paid the incorrect prevailing
wage, or had not been paid fringe benefits to which he or she was entitled, we could incur additional liability
with respect to such worker or be exposed to other adverse outcomes. For example, in March 2015, the Wage and
Hour Division of the DOL notified our wholly-owned subsidiary First Solar Electric, LLC (“FSE”) of the DOL’s
findings following a labor standards compliance review under Davis-Bacon at our Agua Caliente project in
southwestern Arizona. FSE served as the general contractor for the project. The DOL alleges that certain workers
at the project were misclassified and, as a result of that misclassification, were not paid the required prevailing
wage. We disagree with certain of the DOL’s investigative findings and are reviewing those issues of disagree-
ment with the DOL. Possible adverse outcomes include the payment of back wages and debarment of FSE and its
affiliates from doing certain business with the U.S. federal government. We cannot predict the ultimate outcome
of the DOL proceeding.

We may be exposed to infringement or misappropriation claims by third parties, which, if determined
adversely to us, could cause us to pay significant damage awards or prohibit us from the manufacture and
sale of our solar modules or the use of our technology.

Our success depends largely on our ability to use and develop our technology and know-how without infring-
ing or misappropriating the intellectual property rights of third parties. The validity and scope of claims relating
to PV technology patents involve complex scientific, legal, and factual considerations and analysis and, there-
fore, may be highly uncertain. We may be subject to litigation involving claims of patent infringement or viola-
tion of intellectual property rights of third parties. The defense and prosecution of intellectual property suits,
patent opposition proceedings, and related legal and administrative proceedings can be both costly and time
consuming and may significantly divert the efforts and resources of our technical and management personnel. An
adverse determination in any such litigation or proceedings to which we may become a party could subject us to

significant liability to third parties, require us to seek licenses from third parties, which may not be available on
reasonable terms, or at all, or pay ongoing royalties, require us to redesign our solar modules, or subject us to
injunctions prohibiting the manufacture and sale of our solar modules or the use of our technologies. Protracted
litigation could also result in our customers or potential customers deferring or limiting their purchase or use of
our solar modules until the resolution of such litigation.

Currency translation and transaction risk may negatively affect our results of operations.

Although our reporting currency is the U.S. dollar, we conduct our business and incur costs in the local
currency of most countries in which we operate. As a result, we are subject to currency translation and trans-
action risk. For example, certain of our net sales in 2015 were denominated in foreign currencies, such as
Australian dollars, Indian rupees, and Euros, and we expect more than a minor percentage of our net sales to be
outside the United States and denominated in foreign currencies in the future. In addition, our operating expenses
for our manufacturing plants located outside the U.S. and our operations for our systems business in foreign
countries will generally be denominated in local currencies. Joint ventures or other business arrangements with
strategic partners outside of the United States have involved, and are expected in the future to involve, significant
investments denominated in local currencies. Changes in exchange rates between foreign currencies and the
U.S. dollar could affect our results of operations and result in exchange gains or losses. We cannot accurately
predict the impact of future exchange rate fluctuations on our results of operations.

We could also expand our business into emerging markets, many of which have an uncertain regulatory
environment relating to currency policy. Conducting business in such emerging markets could cause our
exposure to changes in exchange rates to increase, due to the relatively high volatility associated with emerging
market currencies and potentially longer payment terms for our proceeds.

Our ability to hedge foreign currency exposure is dependent on our credit profile with the banks that are
willing and able to do business with us. Deterioration in our credit position or a significant tightening of the
credit market conditions could limit our ability to hedge our foreign currency exposure; and therefore, result in
exchange gains or losses.

Sustained declines in worldwide oil prices could adversely affect trading prices of our common shares.

Worldwide oil prices have declined over the last few years and may continue to decline or remain low. Oil
is used as a fuel for electricity generation in only a small percentage of applications worldwide, compared to
natural gas or coal-fired electricity generation and other forms of electricity generation, and accordingly, fluctua-
tions in oil prices generally do not have a significant direct causal effect on prevailing competitive electricity
prices, including electricity from solar sources. Nonetheless, there can be an observed market correlation effect
between declining oil prices and depressed equity valuations of solar companies. If oil prices remain low or con-
tinue to decline, the trading price of our common shares may suffer.

Global sovereign debt issues could adversely impact our business.

Potential sovereign debt issues in Europe, emerging markets, and other regions and their impact on the bal-
ance sheets and lending practices of global banks in particular could negatively impact our access to, and cost of,
capital and therefore could have an adverse effect on our business, financial condition, results of operations, and
competitive position. It could also similarly affect our customers and therefore limit the sales of our modules and
demand for our systems. Sovereign debt problems may also cause governments to reduce, eliminate, or allow to
expire government subsidies and economic incentives for solar energy, which could limit our growth or cause our
net sales to decline and materially and adversely affect our business, financial condition, and results of
operations.

We are subject to litigation risks, including securities class actions and stockholder derivative actions,
which may be costly to defend and the outcome of which is uncertain.

From time to time, we are subject to legal claims, with and without merit, that may be costly and which may
divert the attention of our management and our resources in general. In addition, our projects may be subject to

litigation or other adverse proceedings that may adversely impact our ability to proceed with construction or sell
a given project, which would adversely affect our ability to recognize revenue with respect to such project. The
results of complex legal proceedings are difficult to predict. Moreover, many of the complaints filed against us
do not specify the amount of damages that plaintiffs seek, and we therefore are unable to estimate the possible
range of damages that might be incurred should these lawsuits be resolved against us. Certain of these lawsuits
assert types of claims that, if resolved against us, could give rise to substantial damages, and an unfavorable
outcome or settlement of one or more of these lawsuits, or any future lawsuits, may result in a significant mone-
tary judgment or award against us or a significant monetary payment by us, and could have a material adverse
effect on our business, financial condition, or results of operations. Even if these lawsuits, or any future lawsuits,
are not resolved against us, the costs of defending such lawsuits may be significant and may not be covered by
our insurance policies. Because the price of our common stock has been, and may continue to be, volatile, we can
provide no assurance that additional securities or other litigation will not be filed against us in the future. For
more information on our legal proceedings, including our securities class action and derivative actions, see “Note
16 “Commitments and Contingencies” under the heading “Legal Proceedings” of our consolidated financial
statements for the year ended December 31, 2015 included in this Annual Report on Form 10-K.

Our largest stockholder has significant influence over us and its interests may conflict with or differ from
interests of other stockholders.

Our largest stockholder, consisting collectively of JCL FSLR Holdings, LLC and its beneficiaries and JTW
Trust No. 1 UAD 9/19/02 and its beneficiaries, each affiliated in the past with the former Estate of John T. Wal-
ton (collectively, the “Significant Stockholder”), owned approximately 26% of our outstanding common stock at
December 31, 2015. As a result, the Significant Stockholder has substantial influence over all matters requiring
stockholder approval, including the election of our directors and the approval of significant corporate trans-
actions such as mergers, tender offers, and the sale of all or substantially all of our assets. The interests of the
Significant Stockholder could conflict with or differ from interests of other stockholders. For example, the con-
centration of ownership held by the Significant Stockholder could delay, defer or prevent a change of control of
our company or impede a merger, takeover, or other business combination, which other stockholders may view
favorably.

If our goodwill and other intangible assets or project related assets become impaired, we may be required to
record a significant charge to earnings.

We may be required to record a significant charge to earnings in our financial statements should we
determine that our goodwill, other intangible assets, or project assets are impaired. Such a charge might have a
significant impact on our financial position and results of operations.

As required by accounting rules, we review our goodwill for impairment at least annually in the fourth quar-
ter or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a
reporting unit that has goodwill is less than its carrying value. Factors that may be considered a change in
circumstances indicating that the carrying value of our goodwill might not be recoverable include a significant
decline in our stock price and market capitalization, a significant decline in projections of future cash flows, and
lower future growth rates in our industry.

We review project related assets for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. We consider a project commercially viable and recoverable if it is
anticipated to be sellable for a profit once it is either fully developed or constructed or if the expected operating
cash flows from future power generation exceed the cost basis of the asset. If our projects are not considered
commercially viable, we would be required to impair the respective assets.

Unanticipated changes in our tax provisions, the adoption of a new tax legislation, or exposure to additional
income tax liabilities could affect our profitability.

We are subject to income taxes in the United States and the foreign jurisdictions in which we operate. Our
tax liabilities are affected by the amounts we charge for inventory, services, licenses, funding, and other inter-
company transactions. We are subject to potential tax examinations in these various jurisdictions. Tax authorities

may disagree with our intercompany charges, cross-jurisdictional transfer pricing or other tax positions and
assess additional taxes. We regularly assess the likely outcomes of these examinations in order to determine the
appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the
outcomes of these potential examinations, and the amounts ultimately paid upon resolution of examinations
could be materially different from the amounts previously included in our income tax provision and, therefore,
could have a material impact on our results of operations and cash flows. In addition, our future effective tax rate
could be adversely affected by changes to our operating structure, a loss of our Malaysian tax holiday, changes in
the mix of earnings in countries with tax holidays or differing statutory tax rates, changes in the valuation of
deferred tax assets and liabilities, changes in tax laws, and the discovery of new information in the course of our
tax return preparation process. A number of proposals for broad reform of the corporate tax system in the U.S.
are under evaluation by various legislative and administrative bodies, but it is not possible to accurately
determine the overall impact of such proposals on our effective tax rate at this time. Changes in tax laws or regu-
lations, including multijurisdictional changes enacted in response to the guidelines provided by the Organization
for Economic Co-operation and Development to address base erosion and profit sharing, may increase tax
uncertainty and adversely affect our results of operations.

Cyber attacks or other breaches of our information systems, or those of third parties with which we do busi-
ness, could have a material adverse effect on our financial condition and results of operations.

Our operations rely on our computer systems, hardware, software, and networks, as well as those of the third
parties with which we do business, to securely process, store, and transmit proprietary, confidential, and other
information, including intellectual property. Such information systems may be compromised by cyber attacks,
computer viruses, and other events that put the security of our information, and that of the third parties with
which we do business, at risk of misappropriation or destruction. In recent years, such cyber incidents have
become increasingly frequent and sophisticated, targeting or otherwise affecting a wide range of companies.
While we have instituted security measures to minimize the likelihood and impact of a cyber incident, there is no
assurance that these measures, or those of the third parties with which we do business, will be adequate in the
future. If these measures fail, valuable information may be lost, our manufacturing, construction, O&M, and
other operations may be disrupted, and our reputation may suffer. We may also be subject to litigation, regulatory
action, remedial expenses, and financial losses beyond the scope or limits of our insurance coverage. These con-
sequences of a failure of security measures could, individually or in the aggregate, have a material adverse effect
on our financial condition and results of operations.

Changes in, or any failure to comply with, privacy laws, regulations, and standards may adversely affect our
business.

Personal privacy and data security have become significant issues in the United States, Europe, and in many
other jurisdictions in which we operate. The regulatory framework for privacy and security issues worldwide is
rapidly evolving and is likely to remain uncertain for the foreseeable future. For example, the Court of Justice of
the European Union recently ruled that the U.S.-EU Safe Harbor framework, which provided U.S. companies
with a streamlined means of complying with the European Union’s Data Protection Directive regarding the
treatment of customers’ and employees’ personal information and other privacy matters, and upon which we
relied for the transfer of personal data from the EU to the U.S., was invalid. Furthermore, federal, state, or for-
eign government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations
affecting data privacy. Industry organizations also regularly adopt and advocate for new standards in this area. In
the United States, these include rules and regulations promulgated under the authority of federal agencies and
state attorneys general and legislatures and consumer protection agencies. Internationally, many jurisdictions in
which we operate have established their own data security and privacy legal framework with which we or our
customers must comply, including but not limited to, the Data Protection Directive established in the European
Union and data protection legislation of the individual member states subject to such directive. The Data Pro-
tection Directive may be replaced in time with the pending European General Data Protection Regulation, which
may impose additional obligations and risk upon our business. In many jurisdictions, enforcement actions and
consequences for noncompliance are also rising. In addition to government regulation, privacy advocates and
industry groups may propose new and different self-regulatory standards that either legally or contractually apply

to us. Any inability or perceived inability to adequately address privacy and security concerns, even if
unfounded, or comply with applicable privacy and data security laws, regulations, and policies, could result in
additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business.

Our credit agreements contain covenant restrictions that may limit our ability to operate our business.

We may be unable to respond to changes in business and economic conditions, engage in transactions that
might otherwise be beneficial to us, and obtain additional financing, if needed, because our Revolving Credit
Facility, our Malaysian credit facility agreements, and certain of our project financing arrangements contain, and
other future debt agreements may contain, covenant restrictions that limit our ability to, among other things:

• incur additional debt, assume obligations in connection with letters of credit, or issue guarantees;

• create liens;

• enter into certain transactions with our affiliates;

• sell certain assets; and

• declare or pay dividends, make other distributions to stockholders, or make other restricted payments.

Under our Revolving Credit Facility, our Malaysian credit facility agreements, and certain of our project
financing arrangements, we are also subject to certain financial covenants. Our ability to comply with covenants
under our credit agreements is dependent on our future performance, which will be subject to many factors, some
of which are beyond our control, including prevailing economic conditions. In addition, our failure to comply
with these covenants could result in a default under these agreements and any of our other future debt agree-
ments, which if not cured or waived, could permit the holders thereof to accelerate such debt and could cause
cross-defaults under our other facility agreements and the possible acceleration of debt under such other facility
agreements, as well as cross-defaults under certain of our key project and operational agreements and could also
result in requirements to post additional security instruments to secure future obligations. In addition, we cannot
assure you that events that occur within the Company, or in the industry or the economy as a whole, will not
constitute material adverse effects under these agreements. If it is determined that a material adverse effect has
occurred, the lenders can, under certain circumstances, restrict future borrowings or accelerate the due date of
outstanding loan balances. If any of our debt is accelerated, we may in the future not have sufficient funds avail-
able to repay such debt, and we may experience cross-defaults under our other debt agreements or project and
key operational agreements, which could materially and negatively affect our business, financial condition, and
results of operations.

Item 1B: Unresolved Staff Comments

None.

Item 2:

Properties

As of December 31, 2015, our principal properties consisted of the following:

Nature

Primary
Segment(s)
Using Property

Location

Manufacturing Plant, Research and

Components

Perrysburg, Ohio, United States

Held

Own

Major Encumbrances

n/a

Lease Land/
Own Buildings

Malaysian Ringgit
Facility Agreement(1)

Development Facility, and
Administrative Offices . . . . . . . .

Manufacturing Plants and

Components

Kulim, Kedah, Malaysia

Administrative Offices . . . . . . . .

Administrative Office . . . . . . . . . . .

Components
& Systems

Georgetown, Penang, Malaysia

Lease

Manufacturing Plants(2) . . . . . . . . .

Components

Frankfurt/Oder, Germany

Own

Manufacturing Plant(3) . . . . . . . . . .

Components

Ho Chi Minh City, Vietnam

Lease Land/
Own Building

Corporate Headquarters . . . . . . . . .

Administrative Office . . . . . . . . . . .

Administrative Office, Research

and Development Facility . . . . . .

Components
& Systems

Systems

Administrative Office . . . . . . . . . . .

Systems

Research and Development

Facility . . . . . . . . . . . . . . . . . . . .

Administrative Office . . . . . . . . . . .

Components
& Systems

Systems

Tempe, Arizona, United States

Houston, Texas, United States

Bridgewater, New Jersey, United
States

San Francisco, California,
United States

Santa Clara, California, United
States

Mainz, Germany

New Delhi, India

Sydney, Australia

Dubai, United Arab Emirates

Santiago, Chile

Cape Town, South Africa

Tokyo, Japan

Lease

n/a

(1) See Note 15 “Debt” to our consolidated financial statements for the year ended December 31, 2015 included

in this Annual Report on Form 10-K for additional information on property encumbrances.
(2) Manufacturing ceased in December 2012, and such property is being actively marketed for sale.
(3) We did not proceed with our previously announced four-line plant in Vietnam, and such property is being

actively marketed for sale.

In addition, we lease small amounts of office and warehouse space in several other U.S. and international

locations.

Item 3:

Legal Proceedings

In the ordinary conduct of our business, we are subject to periodic lawsuits, investigations, and claims,
including, but not limited to, routine employment matters. Although we cannot predict with certainty the ultimate
resolution of lawsuits, investigations, and claims asserted against us, we do not believe that any currently pend-
ing legal proceeding to which we are a party will have a material adverse effect on our business, financial con-
dition, results of operations, or cash flows.

See Note 16 “Commitments and Contingencies” under the heading “Legal Proceedings” of our consolidated
financial statements for the year ended December 31, 2015 included in this Annual Report on Form 10-K for
information regarding legal proceedings and related matters.

Item 4: Mine Safety Disclosures

None.

PART II

Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of

Equity Securities

Price Range of Common Stock

Our common stock has been listed on The NASDAQ Global Select Market under the symbol “FSLR” since
November 17, 2006. Prior to this time, there was no public market for our common stock. The following table
sets forth the range of high and low closing prices per share as reported on The NASDAQ Global Select Market
for the periods indicated.

Fiscal year 2015

First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal year 2014

High

Low

$62.52
$64.75
$53.48
$66.99

$73.87
$73.34
$72.78
$64.10

$39.83
$46.98
$40.81
$42.68

$47.73
$58.63
$61.45
$40.90

The closing price of our common stock on The NASDAQ Global Select Market was $62.76 per share on
February 19, 2016. As of February 19, 2016, there were 51 record holders of our common stock. This figure does
not reflect the beneficial ownership of shares held in nominee names.

Dividend Policy

We have never paid, and it is our present intention for the foreseeable future not to pay, dividends on our
common stock. Our Revolving Credit Facility imposes restrictions on our ability to declare or pay dividends. The
declaration and payment of dividends is subject to the discretion of our board of directors and depends on various
factors, including the continued applicability of the above-referenced restrictions under our Revolving Credit
Facility, our net income, financial condition, cash requirements, future prospects, and other factors deemed rele-
vant by our board of directors.

Stock Price Performance Graph

The following graph compares the 5-year cumulative total return on our common stock relative to the cumu-
lative total returns of the S&P 500 Index and the Guggenheim Solar ETF, which represents a peer group of solar
companies. In the stock price performance graph included below, an investment of $100 (with reinvestment of all
dividends) is assumed to have been made in our common stock, the S&P 500 Index, and the Guggenheim Solar
ETF on December 31, 2010, and its relative performance is tracked through December 31, 2015. No cash divi-
dends have been declared on shares of our common stock. This performance graph is not “soliciting material,” is
not deemed filed with the SEC, and is not to be incorporated by reference in any filing by us under the Securities
Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date
hereof, and irrespective of any general incorporation language in any such filing. The stock price performance

shown on the graph represents past performance and should not be considered an indication of future price
performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among First Solar, Inc., the S&P 500 Index,
and Guggenheim Solar ETF

$180

$160

$140

$120

$100

$80

$60

$40

$20

12/10

12/11

12/12

12/13

12/14

12/15

First Solar, Inc.

S&P 500

Guggenheim Solar ETF

* $100 invested on December 31, 2010 in stock or index, including reinvestment of dividends. Index calculated

on a month-end basis.

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliate Purchases

None.

Item 6:

Selected Financial Data

The following tables set forth our selected consolidated financial data for the periods and at the dates

indicated.

The selected consolidated financial data from the consolidated statements of operations and consolidated
statements of cash flows for the years ended December 31, 2015, 2014, and 2013 and the selected consolidated
financial data from the consolidated balance sheets for the years ended December 31, 2015 and 2014 have been
derived from the audited consolidated financial statements included in this Annual Report on Form 10-K. The
selected consolidated financial data from the consolidated balance sheets for the years ended December 31, 2013,
2012, and 2011 and selected consolidated financial data from the consolidated statements of operations and
consolidated statements of cash flows for the years ended December 31, 2012 and 2011 have been derived from
audited consolidated financial statements not included in this Annual Report on Form 10-K. We have revised our
previously issued financial statements from 2011 to 2014 to properly record a liability associated with an
uncertain tax position related to income of a foreign subsidiary. Additional revisions have been made for pre-
viously identified errors that were corrected in a period subsequent to the period in which the error originated.
All financial information presented herein was revised to reflect the correction of these errors. See “Note 1. First

Solar and Its Business — Revision of Previously Issued Financial Statements” to our consolidated financial state-
ments for the year ended December 31, 2015 included in this Annual Report on Form 10-K for additional
information. The information presented below should also be read in conjunction with Item 7: “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial state-
ments and the related notes thereto.

December 31,
2015

December 31,
2014

December 31,
2013

December 31,
2012(2)

December 31,
2011(3)

Years Ended

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . .
Net income (loss) per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . .

Cash dividends declared per common

share . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash (used in) provided by operating

activities . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . .
Net cash provided by (used in) financing

$3,578,995
919,267
516,664
$ 546,421

(In thousands, except per share amounts)
$3,309,616
864,632
370,407
$ 350,718

$3,391,187
824,941
421,999
$ 395,964

$3,354,920
847,820
(42,933)

$2,779,832
976,966
(63,008)
$ (106,909) $ (61,648)

$
$

5.42
5.37

$
$

3.96
3.90

$
$

3.74
3.67

$
$

(1.23) $
(1.23) $

(0.72)
(0.72)

— $

—

$ (360,919) $ 680,989
(511,879)

(112,140)

$ 856,126
(537,106)

$ 762,209
(383,732)

$ (33,463)
(676,457)

activities . . . . . . . . . . . . . . . . . . . . . . . . .

137,103

7,359

101,164

(89,109)

571,218

Cash and cash equivalents . . . . . . . . . . . . .
Marketable securities, current and

noncurrent

. . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Total long-term debt
Total liabilities . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . .

December 31,
2015

December 31,
2014

December 31,
2013(1)

December 31,
2012(2)

December 31,
2011(3)

$1,126,826

$1,482,054

(In thousands)
$1,325,072

$ 901,294

$ 605,619

703,454
7,316,331
289,415
1,767,844
5,548,487

509,032
6,720,991
213,473
1,729,504
4,991,487

439,102
6,876,586
223,323
2,408,516
4,468,070

102,578
6,356,975
562,572
2,783,681
3,573,294

182,338
5,782,339
663,648
2,163,593
3,618,746

(1) Includes adjustments for the revisions described above, which decreased total assets by $6.9 million,

increased total liabilities by $28.1 million, and decreased total stockholders’ equity by $35.0 million.

(2) Includes adjustments for the revisions described above, which decreased net sales by $13.6 million,
decreased gross profit by $4.9 million, increased operating loss by $5.4 million, increased net loss by
$10.6 million, increased total assets by $8.3 million, increased total liabilities by $40.5 million, and
decreased total stockholders’ equity by $32.2 million.

(3) Includes adjustments for the revisions described above, which increased net sales by $13.6 million, increased
gross profit by $5.2 million, decreased operating loss by $5.6 million, increased net loss by $22.2 million,
increased total assets by $4.7 million, increased total liabilities by $29.8 million, and decreased total stock-
holders’ equity by $25.1 million.

Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and the related notes thereto included in this Annual
Report on Form 10-K. Unless expressly stated or the context otherwise requires, the terms “we,” “our,” “us,”
and “First Solar” refer to First Solar, Inc. and its subsidiaries. In addition to historical consolidated financial
information, the following discussion and analysis contains forward-looking statements that involve risks,
uncertainties, and assumptions as described under the “Note Regarding Forward-Looking Statements,” that
appears earlier in this Annual Report on Form 10-K. Our actual results could differ materially from those
anticipated by these forward-looking statements as a result of many factors, including those discussed under
Item 1A: “Risk Factors,” and elsewhere in this Annual Report on Form 10-K.

Executive Overview

We are a leading global provider of comprehensive PV solar energy solutions. We design, manufacture, and
sell PV solar modules with an advanced thin-film semiconductor technology and also develop, design, construct,
and sell PV solar power systems that primarily use the modules we manufacture. Additionally, we provide O&M
services to system owners that use solar modules manufactured by us or by other third-party manufacturers. We
have substantial, ongoing research and development efforts focused on module and system level innovations. We
are the world’s largest thin-film PV solar module manufacturer and one of the world’s largest PV solar module
manufacturers. Our mission is to create enduring value by enabling a world powered by clean, affordable solar
energy.

Certain highlights of our financial results and other key developments include the following:

• Net sales for 2015 increased by 6% to $3.6 billion compared to $3.4 billion in 2014. The increase in net
sales was primarily attributable to higher revenue from module plus transactions. Our net sales for 2015
also included the sale of majority interests in the partially constructed Desert Stateline project and North
Star project and higher revenue from our Silver State South, McCoy, and Imperial Solar Energy Center
West projects, which commenced construction in late 2014. These 2015 net sales were offset by lower
revenue from the completion, or substantial completion, of our Desert Sunlight, Solar Gen 2, Topaz, and
Campo Verde projects in 2014.

• Gross profit increased 1.4 percentage points to 25.7% during 2015 from 24.3% during 2014, primarily due
to a reduction in our module collection and recycling obligation and improved utilization of our manu-
facturing facilities.

• As of December 31, 2015, we had 30 installed production lines with an annual global manufacturing
capacity of approximately 2.8 GW at our manufacturing facilities in Perrysburg, Ohio and Kulim,
Malaysia. We produced 2.5 GW of solar modules during 2015, which represented a 39% increase from
2014. The increase in production was primarily driven by the restart of various production lines at our
manufacturing facility in Malaysia, increased throughput, and higher module conversion efficiencies. We
expect to produce approximately 3.0 GW of solar modules during 2016.

• During 2015, we ran our manufacturing facilities at approximately 92% capacity utilization, which repre-

sented an 11.0 percentage point increase from 2014.

• The average conversion efficiency of our modules produced in 2015 was 15.6%, which represented an

improvement of 1.6 percentage points from our average conversion efficiency of 14.0% in 2014.

Market Overview

Additionally, intense competition at the system level can result in an environment in which pricing falls rapidly,
thereby further increasing demand for solar energy solutions but constraining the ability for project developers,
EPC companies, and vertically-integrated solar companies such as First Solar to sustain meaningful and con-
sistent profitability. In light of such market realities, we are executing our Long Term Strategic Plan, Vision 2020
described below, under which we are focusing on our competitive strengths. Such strengths include our advanced
module and system technologies as well as our differentiated, vertically-integrated business model that enables
us to provide utility-scale PV solar energy solutions to key geographic markets with immediate electricity needs.

Worldwide solar markets continue to develop, in part aided by demand elasticity resulting from declining
industry average selling prices, both at the module and system level, which make solar power more affordable to
new markets, and we have continued to develop our localized presence and expertise in such markets. We are
developing, constructing, or operating multiple solar projects around the world, many of which are the largest or
among the largest in their regions. In North America, we continue to execute on our advanced-stage utility-scale
project pipeline, which includes the construction of some of the world’s largest PV solar power systems. We
expect a substantial portion of our consolidated net sales, operating income, and cash flows through the end of
2016 to be derived from these projects. We continue to advance the development and selling efforts for the other
projects included in our advanced-stage utility-scale project pipeline and also continue to develop our early-to-
mid stage project pipeline and evaluate acquisitions of projects to continue to add to our advanced-stage utility-
scale project pipeline.

Lower industry module and system pricing, while currently challenging for certain solar manufacturers
(particularly manufacturers with high cost structures), is expected to continue to contribute to global market
diversification and volume elasticity. Over time, declining average selling prices are consistent with the erosion
of one of the primary historical constraints to widespread solar market penetration, its affordability. In the near
term, however, declining average selling prices could adversely affect our results of operations. If competitors
reduce pricing to levels below their costs, bid aggressively low prices for PPAs and EPC agreements, or are able
to operate at negative or minimal operating margins for sustained periods of time, our results of operations could
be further adversely affected. We continue to mitigate this uncertainty in part by executing on and building our
advanced-stage utility-scale systems pipeline, executing on our module efficiency improvement and BoS cost
reduction roadmaps, and continuing the development of key geographic markets.

We continue to face intense competition from manufacturers of crystalline silicon solar modules and other
types of solar modules and PV solar power systems. Solar module manufacturers compete with one another in
several product performance attributes, including conversion efficiency, energy density, reliability, and selling
price per watt, and, with respect to PV solar power systems, net present value, return on equity, and LCOE,
meaning the net present value of total life cycle costs of the PV solar power system divided by the quantity of
energy which is expected to be produced over the system’s life.

We believe we are among the lowest cost PV module manufacturers in the solar industry on a module cost
per watt basis, based on publicly available information. This cost competitiveness is reflected in the price at
which we sell our modules and fully integrated PV solar power systems and enables our systems to compete
favorably. Our cost competitiveness is based in large part on our module conversion efficiency, proprietary
manufacturing technology (which enables us to produce a CdTe module in less than 2.5 hours using a continuous
and highly automated industrial manufacturing process, as opposed to a batch process), our scale, and our opera-
tional excellence. In addition, our CdTe modules use approximately 1-2% of the amount of the semiconductor
material that is used to manufacture traditional crystalline silicon solar modules. The cost of polysilicon is a sig-
nificant driver of the manufacturing cost of crystalline silicon solar modules, and the timing and rate of change in
the cost of silicon feedstock and polysilicon could lead to changes in solar module pricing levels. Polysilicon
costs have had periods of decline over the past several years, contributing to a decline in our relative manufactur-
ing cost competitiveness over traditional crystalline silicon module manufacturers. Given the smaller size
(sometimes referred to as form factor) of our CdTe modules compared to certain types of crystalline silicon
modules, we may incur higher labor and BoS costs associated with systems using our modules. Thus, to compete
effectively on an LCOE basis, our modules may need to maintain a certain cost advantage per watt compared to
crystalline silicon-based modules with larger form factors. BoS costs represent a significant portion of the costs
associated with the construction of a typical utility-scale PV solar power system.

In terms of energy density, in many climates, our CdTe modules provide a significant energy yield advan-
tage over conventional crystalline silicon solar modules of equivalent efficiency rating. For example, in humid
climates, our CdTe modules provide a superior spectral response, and in hot climates, our CdTe modules provide
a superior temperature coefficient. As a result, at temperatures above 25°C (standard test conditions), our CdTe
modules produce more energy than competing conventional crystalline silicon solar modules with an equivalent
efficiency rating. This advantage provides stronger system performance in high temperature climates, which is
particularly advantageous as the vast majority of a system’s generation, on average (in typical high insolation
climates), occurs when module temperatures are above 25°C. As a result, our PV solar power systems can pro-
duce more annual energy at a lower LCOE than competing systems with the same nameplate capacity.

While our modules and PV solar power systems are generally competitive in cost, reliability, and perform-
ance attributes, there can be no guarantee such competitiveness will continue to exist in the future to the same
extent or at all. Any declines in the competitiveness of our products could result in additional margin com-
pression, further declines in the average selling prices of our modules and systems, erosion in our market share
for modules and systems, decreases in the rate of net sales growth, and/or declines in overall net sales. We con-
tinue to focus on enhancing the competitiveness of our solar modules and PV solar power systems by accelerat-
ing progress along our module efficiency improvement and BoS cost reduction roadmaps, continuing to make
technological advances at the system level, leveraging volume procurement around standardized hardware plat-
forms, using innovative installation techniques and know-how, and accelerating installation times to reduce labor
costs.

As we continue to expand our systems business into key geographic markets, we can offer value beyond
solar modules, reduce our exposure to module-only competition, provide differentiated product offerings to
minimize the impact of solar module commoditization, and provide comprehensive utility-scale PV solar power
system solutions that reduce solar electricity costs. Thus, our systems business allows us to play a more active
role than many of our competitors in managing the demand for our solar modules. Finally, we continue to form
and develop strong relationships with our customers and strategic partners around the world and continue to
refine our product offerings, including EPC capabilities and O&M services, in order to enhance the competitive-
ness of systems using our modules. For example, we have formed, and expect in the future to form, joint ventures
or other business arrangements with project developers in certain strategic markets in order to provide our mod-
ules and utility-scale PV solar energy solutions to the projects developed by such ventures.

Certain Trends and Uncertainties

We believe that our operations may be favorably or unfavorably impacted by the following trends and
uncertainties that may affect our financial condition and results of operations. See Item 1A: “Risk Factors” and
elsewhere in this Annual Report on Form 10-K for a discussion of other risks that may affect our financial con-
dition and results of operations.

Long Term Strategic Plan, Vision 2020

Our Long Term Strategic Plan, Vision 2020 is a long-term roadmap to achieve our growth objectives and
our technology and cost leadership goals. In executing our Long Term Strategic Plan, we are focusing on provid-
ing utility-scale PV solar energy solutions using our modules to key geographic markets that we believe have a
compelling need for mass-scale PV electricity, including markets throughout the Americas, Asia, the Middle
East, and Africa. As part of our Long Term Strategic Plan, we are focusing on opportunities in which our PV
solar energy solutions can compete directly with fossil fuel offerings on an LCOE or similar basis, or comple-
ment such fossil fuel electricity offerings. Execution of the Long Term Strategic Plan entails a prioritization of
market opportunities worldwide relative to our core strengths and a corresponding allocation of resources around
the globe. This prioritization involves a focus on our core utility-scale offerings and exists within a current mar-
ket environment that includes rooftop and distributed generation solar, particularly in the U.S. While it is unclear
how rooftop and distributed generation solar might impact our core utility-scale offerings in the next several
years, we believe that utility-scale solar will continue to be a compelling solar offering for companies with tech-
nology and cost leadership and will continue to represent an increasing portion of the overall electricity gen-
eration mix.

We are closely evaluating and managing the appropriate level of resources required as we pursue the most
advantageous and cost effective projects and partnerships in our target markets. We have dedicated, and intend to
continue to dedicate, significant capital and human resources to reduce the total installed cost of PV solar energy,
to optimize the design and logistics around our PV solar energy solutions, and to ensure that our solutions
integrate well into the overall electricity ecosystem of each specific market. We expect that, over time, an
increasing portion of our consolidated net sales, operating income, and cash flows may come from solar offerings
in the key geographic markets described above as we execute on our Long Term Strategic Plan. The timing,
execution, and financial impacts of our Long Term Strategic Plan are subject to risks and uncertainties, as
described in Item 1A: “Risk Factors,” and elsewhere in this Annual Report on Form 10-K. We are focusing our
resources in those markets and energy applications in which solar power can be a least-cost, best-fit energy sol-
ution, particularly in regions with high solar resources, significant current or projected electricity demand, and/or
relatively high existing electricity prices. As part of these efforts, we continue to expand or reallocate resources
globally, including business development, sales personnel, and other supporting professional staff in target mar-
kets. Accordingly, we may shift current costs or incur additional costs over time as we establish a localized busi-
ness presence in these target markets.

Joint ventures or other strategic arrangements with partners are a key part of our Long Term Strategic Plan,
and we generally use such arrangements to expedite our penetration of various key markets and establish
relationships with potential customers. We also enter into joint ventures or strategic arrangements with customers
or other entities to maximize the value of particular projects. Some of these arrangements involve and are
expected in the future to involve significant investments or other allocations of capital. We continue to develop
relationships with policymakers, regulators, and end customers in these strategic markets with a view to creating
opportunities for utility-scale PV solar power systems. We sell such systems directly to end customers, including
utilities, independent power producers, commercial and industrial companies, and other system owners. Depend-
ing on the market opportunity, our sales offerings may range from module-only sales, to module sales with a
range of development, EPC services, and other solutions, to full turn-key PV solar power system sales. We
expect these offerings to continue to evolve over time as we work with our customers to optimize how our PV
solar energy solutions can best meet our customers’ energy and economic needs.

In order to create or maintain a market position in certain strategically targeted markets, our offerings from
time to time may need to be competitively priced at levels associated with minimal gross profit margins, which
may adversely affect our results of operations. We expect the profitability associated with our various sales offer-
ings to vary from one another over time, and possibly vary from our internal long-range profitability expectations
and targets, depending on the market opportunity and the relative competitiveness of our offerings compared
with other energy solutions, fossil fuel-based or otherwise, that are available to potential customers. In addition,
as we execute on our Long Term Strategic Plan, we will continue to monitor and adapt to any changing dynamics
in the market set of potential buyers of solar project assets. Market environments with few potential project buy-
ers and a higher cost of capital would generally exert downward pressure on the potential revenue from the
uncontracted solar project assets we are developing, whereas, conversely, market environments with many poten-
tial project buyers and a lower cost of capital would likely have a favorable impact on the potential revenue from
such uncontracted solar project assets.

We expect to use our working capital, the availability under our Revolving Credit Facility, or project financ-
ing to finance the construction of certain PV solar power systems for strategic purposes or to maximize the value
of such systems at the time of sale. From time to time, we may temporarily own and operate certain PV solar
power systems, often with the intention to sell at a later date. We may also elect to construct and temporarily
retain ownership interests in systems for which there is no PPA with an off-taker, such as a utility, but rather an
intent to sell the electricity produced by the system on an open contract basis until the system is sold. We also
continue to assess and pursue business arrangements that provide access to a lower cost of capital and optimize
the value of our projects. Business arrangements that provide a competitive cost of capital and other benefits
relating to the project sales process, such as our recently formed YieldCo (as described below and under the
heading “8point3 Energy Partners LP”), have been used increasingly by renewable energy companies. Addition-
ally, our joint ventures and other business arrangements with strategic partners have and may in the future result
in us temporarily retaining a noncontrolling ownership interest in the underlying systems projects we develop,

supply modules to, or construct potentially for a period of up to several years. Such business arrangements could
become increasingly important to our competitive profile in markets globally, including North America. In each
of the above mentioned examples, we may retain such ownership interests in a consolidated or unconsolidated
separate entity.

8point3 Energy Partners LP

As previously disclosed in a Current Report on Form 8-K filed with the SEC on June 30, 2015, 8point3
Energy Partners LP (the “Partnership”), a limited partnership formed by First Solar and SunPower (the
“Sponsors”), completed its initial public offering (the “IPO”) in June 2015. As part of the IPO, we contributed
various projects to a subsidiary of the Partnership in exchange for a 31% interest in the entity. We also received a
distribution of $283.7 million following the IPO. The Partnership owns, operates, and is expected to acquire
additional solar energy generation projects from the Sponsors and is expected to provide a competitive cost of
capital and greater optionality in the project sales process. The Partnership’s initial project portfolio includes
interests in more than 0.4 GW of various solar energy generation projects, and the Partnership also has rights of
first offer on interests in over 1.1 GW of additional solar energy generation projects that are currently contracted
or are expected to be contracted prior to being sold by the Sponsors. Given the broader economic factors cur-
rently impacting the yieldco sector in general, including yieldco equity valuations generally, the timing and
execution of asset drop downs to the Partnership are subject to market conditions. For additional information, see
Item 1A: “Risk Factors — We may not be able to achieve the full strategic and financial benefits expected to
result from the formation of 8point3 Energy Partners LP, on a timely basis or at all” and “Note 12. Investments in
Unconsolidated Affiliates and Joint Ventures — 8point3 Energy Partners LP” of our consolidated financial
statements included in this Annual Report on Form 10-K.

Construction of Some of the World’s Largest PV Solar Power Systems

We continue to execute on our advanced-stage utility-scale project pipeline and expect a substantial portion
of our consolidated net sales, operating income, and cash flows through 2016 to be derived from several large
projects in this pipeline, including the following contracted projects which will be among the world’s largest PV
solar power systems: the 300 MW Desert Stateline project, located in San Bernardino County, California; the
250 MW McCoy Solar Energy Project, located in Riverside County, California; the 250 MW Silver State South
project, located in Clark County, Nevada; the 175 MW Astoria Project, located in Kern County, California; and
the 150 MW Imperial Solar Energy Center West project, located in Imperial County, California. Our advanced
stage utility-scale project pipeline also includes the following projects which are not yet sold or contracted: the
280 MW California Flats project, located in Monterey County, California; the 250 MW Moapa project, located in
Clark County, Nevada; the 150 MW Rosamond project located in Kern County, California; the 150 MW Sun
Streams project, located in Maricopa County, Arizona; and the 141 MW Luz del Norte project located near
Copiapó, Chile. Please see the tables under “Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Systems Project Pipeline” for additional information about these and other projects
within our systems business advanced-stage project pipeline. The construction progress of these projects is sub-
ject to risks and delays as described in Item 1A: “Risk Factors,” and elsewhere in this Annual Report on
Form 10-K. Revenue recognition for these and other system projects is in many cases not linear in nature due to
the timing of when all revenue recognition criteria are met, and consequently, period-over-period comparisons of
results of operations may not be meaningful. Expected revenue from projects without a PPA, for which elec-
tricity will be sold on an open contract basis, may be subject to greater variability and uncertainty based on
market factors compared to projects with a PPA.

Systems Project Pipeline

The following tables summarize, as of February 23, 2016, our approximately 3.8 GW systems business
advanced-stage project pipeline. As of December 31, 2015, for the Projects Sold/Under Contract
in our
advanced-stage project pipeline of approximately 1.6 GW, we have recognized revenue with respect to the
equivalent of approximately 0.9 GW. Such MW equivalent amount refers to the ratio of revenue recognized for
the Projects Sold/Under Contract compared to the total contracted revenue for such projects, multiplied by the

total MW for such projects. The remaining revenue to be recognized subsequent to December 31, 2015 for the Projects Sold/
Under Contract is expected to be approximately $1.7 billion. The majority of such amount is expected to be recognized as
revenue through the later of the substantial completion or closing dates of the projects. The remaining revenue to be recog-
nized does not have a direct correlation to expected remaining module shipments for such Projects Sold/Under Contract as
expected module shipments do not represent total systems revenues and do not consider the timing of when all revenue
recognition criteria are met, including the timing of module installation. The actual volume of modules installed in our Proj-
ects Sold/Under Contract will be greater than the project size in MW AC as module volumes required for a project are based
upon MW DC, which will be greater than the MW AC size pursuant to a DC-AC ratio typically ranging from 1.2 to 1.3. Such
ratio varies across different projects due to various system design factors. Projects are removed from our advanced-stage
project pipeline tables below once we have substantially completed construction and after substantially all revenue has been
recognized. Projects or portions of projects may also be removed from the tables below in the event an EPC-contracted or
partner-developed project does not get permitting or financing or an unsold or uncontracted project does not get sold or con-
tracted due to the changing economics of the project or other factors.

We continually seek to make additions to our advanced-stage project pipeline. We are actively developing our early to
mid-stage project pipeline in order to secure PPAs and are also pursuing opportunities to acquire advanced-stage projects,
which already have PPAs in place. New additions to our project pipeline during the period from February 25, 2015 to Febru-
ary 23, 2016 included 250 MW AC of solar power projects in California, 279 MW AC of solar power projects in Nevada, a
150 MW AC solar power project in Arizona, a 119 MW AC solar power project in Texas, a 103 MW AC solar power project
in Georgia, 99 MW AC of solar power projects in Japan, 55 MW AC of solar power projects in India, a 26 MW AC solar
power project in Honduras, and an 18 MW AC solar power project in Turkey.

Projects Sold/Under Contract
(Includes uncompleted sold projects, projects under sales contracts subject to conditions precedent, and EPC agree-
ments including partner developed projects that we will be or are constructing.)

Project/Location

Project Size
in MW AC(1)

PPA Contracted
Partner

EPC Contract/Partner
Developed Project

Stateline, California . . . . . . . . .

300

SCE

McCoy, California . . . . . . . . . .
Silver State South, Nevada . . . .
Astoria, California . . . . . . . . . .
Imperial Solar Energy Center

West, California . . . . . . . . . .
Taylor, Georgia . . . . . . . . . . . .

250
250
175
150

147

SCE
SCE
(3)
SDG&E

(4)

Butler, Georgia . . . . . . . . . . . . .

103

Georgia Power

Decatur Parkway Solar,

Georgia . . . . . . . . . . . . . . . . .
Shams Ma’an, Jordan . . . . . . . .
Seville, California . . . . . . . . . . .

Elm City, North Carolina . . . . .
Portal Ridge, California . . . . . .

53
52

40
31

Georgia Power

NEPCO(5)
Seville Solar

UOG(6)
PG&E/SCE(13)

Total . . . . . . . . . . . . . . . . . . . . .

1,634

Southern
Company(2)
NextEra
NextEra
Recurrent
Tenaska

Southern
Company
Southern
Company
Southern
Company
(3)
Seville
Solar
Duke
(7)

As of December 31, 2015

Expected Year
Revenue Recognition
Will Be Completed
By

Percentage
Complete

Percentage
of Revenue
Recognized

2016

2016
2016
2016
2016

2016

2016
2016

65%

63%

76%
70%
28%
98%

76%
63%
24%
98%

—%

97%

14%
97%

83%
(7)

—%
97%

83%
(7)

Projects with Executed PPA Not Sold/Not Contracted

Project/Location

Fully
Permitted

Project Size
in MW AC(1)

PPA Contracted
Partner

Expected or Actual
Substantial
Completion Year

Percentage Complete as
of December 31, 2015

Tribal Solar . . . . . . . . . . . . . . .
No
No
California Flats, California . . .
Moapa, Nevada . . . . . . . . . . . . Yes
No
India (Multiple Locations) . . . .

Rosamond, California . . . . . . . Yes
Sun Streams, Arizona . . . . . . . Yes
Luz del Norte, Chile . . . . . . . . Yes
No
East Pecos Solar, Texas . . . . . .
Willow Springs, California . . .
No
Sunshine Valley, Nevada . . . . . Yes
No
Switch Station 1, Nevada . . . . .

Switch Station 2, Nevada . . . . .

Japan . . . . . . . . . . . . . . . . . . . . Yes
No
Miyagi, Japan . . . . . . . . . . . . . .

Cuyama, California . . . . . . . . . Yes
Kingbird, California . . . . . . . . . Yes

Turkey (Multiple Locations) . .

310
280
250
190

150
150
141
119
100
100
100

59
40

40
40

SCE
PG&E/Apple Inc.(8)
LADWP
TSSPDCL /
APSPDCL(9)
SCE
SCE
(10)
Austin Energy
SCE
SCE
Nevada Power
Company
Nevada Power
Company / Sierra
Pacific Power Company
(3)
Tohoku Electric
Power Company
PG&E
SCPPA /
City of Pasadena(11)
(12)

2019
2018
2016
2016

2019
2019
2016
2016
2019
2019
2017

2017

2017/2018
2018

2017
2016

2018

1%
11%
71%
20%

7%
2%
96%
2%
15%
1%
9%

—%

4%
7%

22%
91%

Total . . . . . . . . . . . . . . . . .

2,179

(1) The volume of modules installed in MW DC will be higher than the MW AC size pursuant to a DC-AC
ratio typically ranging from 1.2 to 1.3; such ratio varies across different projects due to various system
design factors

(2) Controlling interest in the project sold to Southern Company in August 2015
(3) Contracted but not specified
(4) PPA contracted partners include Cobb Electric Membership Corporation, Flint Electric Membership

Corporation, and Sawnee Electric Membership Corporation

(5) NEPCO is defined as National Electric Power Company, the country of Jordan’s regulatory authority

for power generation and distribution and a consortium of investors

(6) UOG is defined as Utility Owned Generation
(7) Project sold under a development agreement in February 2016
(8) PG&E 150 MW AC and Apple Inc. 130 MW AC
(9) TSSPDCL is defined as Southern Power Distribution Company of Telangana State Ltd and consists of
110 MW AC of projects; and APSPDCL is defined as Andhra Pradesh Southern Power Distribution
Company Ltd and consists of 80 MW AC of projects
(10) No PPA — Electricity to be sold on an open contract basis
(11) SCPPA is defined as Southern California Public Power Authority; SCPPA 20 MW AC and City of

Pasadena 20 MW AC

(12) Electricity expected to be sold under feed-in-tariff structure for ten years, pending acquisition of certain

licenses

(13) PG&E 11 MW AC and SCE 20 MW AC

Results of Operations

During 2015, we revised our previously issued financial statements from 2011 to 2014 to properly record a
liability associated with an uncertain tax position related to income of a foreign subsidiary. Additional revisions
were made for previously identified errors that were corrected in a period subsequent to the period in which the
error originated. All financial information presented herein was revised to reflect the correction of these errors.
See Note 1 “First Solar and Its Business — Revision of Previously Issued Financial Statements” to our con-
solidated financial statements for the year ended December 31, 2015 included in this Annual Report on
Form 10-K for additional information.

The following table sets forth our consolidated statements of operations as a percentage of net sales for the

years ended December 31, 2015, 2014, and 2013:

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production start-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency (loss) gain, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated affiliates, net of tax . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years Ended December 31,

2015

2014

2013

100.0% 100.0% 100.0%
74.3% 75.7% 73.9%
25.7% 24.3% 26.1%
4.1%
4.2%
3.6%
8.2%
7.5%
7.1%
0.1%
0.5%
0.2%
2.6%
—% —%
14.4% 12.4% 11.2%
(0.2)% —% —%
0.6%
0.5%
0.5%
(0.2)% (0.1)% (0.1)%
(0.2)% (0.1)% (0.2)%
0.2% (0.9)% (0.9)%
0.6% (0.1)% —%
15.3% 11.7% 10.6%

Segment Overview

We operate our business in two segments. Our components segment involves the design, manufacture, and
sale of solar modules which convert sunlight into electricity, and our systems segment includes the development,
construction, operation, and maintenance of PV solar power systems, which primarily use our solar modules.

See Note 23 “Segment and Geographical Information” to our consolidated financial statements for the year
ended December 31, 2015 included in this Annual Report on Form 10-K. See also Item 7: “Management’s Dis-
cussion and Analysis of Financial Condition and Results of Operations — Systems Project Pipeline” for a
description of the system projects in our advanced-stage project pipeline.

Product Revenue

The following table sets forth the total amounts of solar module and solar power system net sales for the
years ended December 31, 2015, 2014, and 2013. For the purpose of the following table, (i) solar module revenue
is composed of total net sales from the sale of solar modules to third parties, and (ii) solar power system revenue
is composed of total net sales from the sale of PV solar power systems and related services and solutions

including the solar modules installed in the systems we develop and construct along with revenue generated from
such systems (in thousands):

2015

2014

2013

Solar module revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Solar power system revenue . . . . . . . . . . . . . . . . . . . . . . . .

$ 227,461
3,351,534

$ 228,319
3,162,868

$ 380,869
2,928,747

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,578,995

$3,391,187

$3,309,616

Solar module revenue to third parties decreased by $0.9 million during 2015 compared to 2014 primarily
due to a 10% decrease in the average selling price per watt, partially offset by an 11% increase in the volume of
watts sold.

Solar power system revenue increased by $188.7 million during 2015 compared to 2014 primarily due to
higher revenue from module plus transactions. Our net sales for 2015 also included the sale of majority interests
in the partially constructed Desert Stateline project and North Star project and higher revenue from our Silver
State South, McCoy, and Imperial Energy Center West projects, which commenced construction in late 2014.
These 2015 net sales were offset by lower revenue from the completion, or substantial completion, of our Desert
Sunlight, Solar Gen 2, Topaz, and Campo Verde projects in 2014.

Solar module revenue to third parties decreased by $152.6 million during 2014 compared to 2013 primarily
as a result of a 26% decrease in the volume of watts sold and a 19% decrease in the average selling price per
watt.

Solar power system revenue increased by $234.1 million during 2014 compared to 2013 primarily as a result
of the number and size of projects under construction between these periods as well as the timing of when all the
revenue recognition criteria was met. Specifically, the increase was attributable to higher revenue from the partial
sale of our Solar Gen 2 project, the sale of our Campo Verde and Macho Springs projects, and the commence-
ment of construction and related revenue recognition on multiple projects in California and our AGL Nyngan
project in Australia. These increases were partially offset by decreases in systems business project revenue from
our Desert Sunlight project as it neared substantial completion, our completed first phase of the Imperial Solar
Energy Center South project and our completed Amherstburg, Belmont, Walpole, and Agua Caliente projects.

Net sales

Components Business

We generally price and sell our solar modules per watt of nameplate power. During 2015, a significant por-
tion of net sales for the components business related to modules included in our PV solar power systems
described below under “Net Sales — Systems Business.” Other than the modules included in our systems, we
sold the majority of our solar modules to integrators and operators of systems in India and Great Britain.

From time to time we enter into module sales agreements with customers worldwide for specific projects or
volumes of modules. Such agreements are generally short-term in nature. During 2015, 11% and 8% of our
components business net sales, excluding modules installed in our PV solar power systems, were denominated in
British pounds and Euros, respectively, and were subject to fluctuations in the exchange rate between such
currencies and the U.S. dollar.

Under our standard sales contracts for solar modules, we transfer title and risk of loss to the customer and
recognize revenue upon shipment. Pricing is typically fixed or determinable at the time of shipment, and our
customers generally do not have extended payment terms or rights of return under these contracts. Our revenue
recognition policies for the components business are described further in Note 2 “Summary of Significant
Accounting Policies” to our consolidated financial statements for the year ended December 31, 2015 included in
this Annual Report on Form 10-K.

During 2015, Southern Power Company; Strata Solar, LLC; and NextEra Energy, Inc. each accounted for
more than 10% of our components business’ net sales, which includes the solar modules used in our systems
projects.

Systems Business

Through our fully integrated systems business, we provide complete turn-key PV solar power systems, or
solar solutions, which may include project development, EPC services, and/or O&M services. Additionally, we
may temporarily own and operate certain of our PV solar power systems, which are also included within our
systems business. We typically use the percentage-of-completion method using actual costs incurred over total
estimated costs to construct a project (including module costs) as our standard accounting policy and apply this
method after all revenue recognition criteria have been met. There are also instances in which we recognize rev-
enue after a project has been completed, primarily due to a project not being sold prior to completion or because
all revenue recognition criteria are not met until the project is completed. Our revenue recognition policies for the
systems business are described in further detail in Note 2 “Summary of Significant Accounting Policies” to our
consolidated financial statements for the year ended December 31, 2015 included in this Annual Report on Form
10-K.

During 2015, the majority of our systems business net sales were generated in North America, and the princi-
pal customers of our systems business were NextEra Energy, Inc. and Southern Power Company, each of which
accounted for more than 10% of the segment’s net sales.

The following table shows net sales by reportable segment for the years ended December 31, 2015, 2014,

and 2013:

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Years Ended

Change

Components . . . . . . . . . . . . . . . . . . .
Systems . . . . . . . . . . . . . . . . . . . . . .

$1,389,579
2,189,416

$1,102,674
2,288,513

$1,173,947
2,135,669

$286,905
(99,097)

26% $ (71,273)
(4)% 152,844

(6)%
7%

Net sales . . . . . . . . . . . . . . . . . . . . . .

$3,578,995

$3,391,187

$3,309,616

$187,808

6% $ 81,571

Net sales from our components segment, which includes solar modules used in our systems projects,
increased by $286.9 million in 2015 primarily due to a 33% increase in the volume of watts sold, partially offset
by a 5% decrease in the average selling price per watt. Net sales from our systems segment, which excludes solar
modules used in our systems projects, decreased by $99.1 million in 2015 primarily as a result of lower revenue
from the completion, or substantial completion, of our Desert Sunlight, Solar Gen 2, Topaz, and Campo Verde
projects in 2014. These decreases were partially offset by the sale of majority interests in the partially constructed
Desert Stateline project and North Star project, and higher revenue from our Silver State South, McCoy, and
Imperial Solar Energy Center West projects, which commenced construction in late 2014.

Net sales from our components segment, which includes solar modules used in our systems projects,
decreased by $71.3 million in 2014 primarily due to a 12% decrease in the average selling price per watt, parti-
ally offset by a 7% increase in the volume of watts sold. Net sales from our systems segment, which excludes
solar modules used in our systems projects, increased by $152.8 million in 2014 primarily as a result of the
number and size of projects under construction between these periods as well as the timing of when all the rev-
enue recognition criteria have been met. Specifically, the increase was attributable to higher revenue from the
partial sale of our Solar Gen 2 project, the sale of our Campo Verde and Macho Springs projects, and the com-
mencement of construction and related revenue recognition on multiple projects in California and our AGL
Nyngan project in Australia. These increases were partially offset by decreases in systems business project rev-
enue from our Desert Sunlight project as it neared substantial completion, our completed first phase of the
Imperial Solar Energy Center South project and our completed Amherstburg, Belmont, Walpole, and Agua Cal-
iente projects.

Cost of sales

Components Business

Our cost of sales includes the cost of raw materials and components for manufacturing solar modules, such
as glass, transparent conductive coatings, cadmium telluride and other thin-film semiconductors, laminate
materials, connector assemblies, edge seal materials, and other materials and components. In addition, our cost of

sales includes direct labor for the manufacturing of solar modules and manufacturing overhead such as engineer-
ing, equipment maintenance, environmental health and safety, quality and production control, information tech-
nology, and procurement costs. Our cost of sales also includes depreciation of manufacturing plant and
equipment, facility-related expenses, and costs associated with shipping, warranties, and our solar module collec-
tion and recycling obligation (excluding accretion).

As further described in Note 23 “Segment and Geographical Information” to our consolidated financial
statements for the year ended December 31, 2015 included within this Annual Report on Form 10-K, we include
the sale of our solar modules manufactured by our components business and used by our systems business within
net sales of our components business. Therefore, the related cost of sales is also included within our components
business.

Systems Business

For our systems business, project-related costs include standard EPC costs (consisting primarily of BoS
costs for inverters, electrical and mounting hardware, project management and engineering costs, and con-
struction labor costs), site specific costs, and development costs (including nonrefundable transmission upgrade
costs, interconnection fees, and permitting costs).

The following table shows cost of sales by reportable segment for the years ended December 31, 2015,

2014, and 2013:

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Years Ended

Change

Components . . . . . . . . . . . . . . . . . . .
Systems . . . . . . . . . . . . . . . . . . . . . .

$1,041,726
1,618,002

$1,009,164
1,557,082

$1,085,441
1,359,543

$32,562
60,920

3% $ (76,277)
197,539
4%

(7)%
15%

Cost of sales . . . . . . . . . . . . . . . . . .

$2,659,728

$2,566,246

$2,444,984

$93,482

4% $121,262

% of net sales . . . . . . . . . . . . . . . . . .

74.3%

75.7%

73.9%

Our cost of sales increased $93.5 million, or 4%, and decreased 1.4 percentage points as a percentage of net
sales when comparing 2015 with 2014. The increase in cost of sales was driven by a $60.9 million increase in our
systems segment cost of sales primarily due to a mix of lower gross profit system projects sold or under con-
struction during the period. Our components segment cost of sales increased by a $32.6 million primarily as a
result of the following:

• Higher costs of $309.4 million associated with the increased volume of modules sold as part of our sys-

tems business projects; partially offset by

• Continued manufacturing cost reductions of $135.1 million;

• A reduction in our module collection and recycling obligation of $69.6 million resulting from the
implementation of advanced recycling technologies, which significantly increased the throughput of
modules able to be recycled at a point in time, along with other material and labor cost reductions; and

• Lower underutilization penalties of $55.0 million due to the improved capacity utilization of our manu-
facturing facilities. During 2015, we ran our factories at approximately 92% capacity utilization, which
represented an 11.0 percentage point increase from 2014.

Our costs of sales increased $121.3 million, or 5%, and increased 1.8 percentage points as a percentage of
net sales when comparing 2014 with 2013. The increase in cost of sales was primarily due to a $197.5 million
increase in our systems segment cost of sales primarily for BoS components and other construction and
development costs related to the number of projects and the timing of when all revenue recognition criteria were
met along with a mix of higher cost projects. These increases were partially offset by a $76.3 million reduction in
cost of sales for our components segment primarily due to the following:

• Continued manufacturing cost reductions of $164.9 million and

• Lower inventory write-off and asset impairment charges of $16.8 million; partially offset by

• Higher costs of $67.9 million associated with increased solar module sales volumes and

• A reduction in our module collection and recycling obligation of $43.3 million recorded during 2013.

Gross profit

Gross profit is affected by numerous factors, including the selling prices of our modules and systems, our
manufacturing costs, BoS costs, project development costs, the capacity utilization of our manufacturing facili-
ties, and foreign exchange rates. Gross profit is also affected by the mix of net sales generated by our components
and systems businesses. Gross profit for our systems business excludes the net sales and cost of sales for solar
modules used in our systems projects as these amounts are included in the gross profit of our components
business.

The following table shows gross profit for the years ended December 31, 2015, 2014, and 2013:

Years Ended

Change

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . . . . . . . .

$919,267

$824,941

$864,632

$94,326

11% $(39,691)

(5)%

25.7%

24.3%

26.1%

Gross profit as a percentage of net sales increased by 1.4 percentage points during 2015 compared with
2014 primarily due to a reduction in our module collection and recycling obligation and improved utilization of
our manufacturing facilities. Gross profit as a percentage of net sales decreased by 1.8 percentage point during
2014 compared with 2013 primarily due to a mix of lower gross profit projects sold and under construction in
2014 and an adjustment for lower estimated recycling costs recorded in 2013. These decreases in gross profit
were partially offset by favorable changes in estimated costs on systems projects accounted for under the
percentage-of-completion method, a lower volume of third-party module net sales, which generally have margins
less than systems business projects, and improved utilization of our manufacturing facilities.

Research and development

Research and development expense consists primarily of salaries and personnel-related costs, the cost of
products, materials, and outside services used in our process and product research and development activities for
both the components and systems businesses, and depreciation and amortization expense associated with research
and development specific facilities and equipment. The majority of our research and development expense is
attributable to our components segment. We maintain a number of programs and activities to improve our tech-
nology and processes in order to enhance the performance and reduce the costs of our solar modules and PV solar
power systems using our modules.

The following table shows research and development expense for the years ended December 31, 2015, 2014,

and 2013:

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Years Ended

Change

Research and development . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . . . . . . .

$130,593

$143,969

$134,300

$(13,376)

(9)% $9,669

3.6%

4.2%

4.1%

The decrease in our research and development expense during 2015 compared to 2014 was primarily due to
reduced material and module testing costs associated with the development of next-generation CdTe solar mod-
ules and lower costs for outside services, partially offset by higher employee compensation expense. During
2015, the average conversion efficiency of our CdTe solar modules produced was 15.6% compared to 14.0% in
2014.

The increase in our research and development expense during 2014 compared to 2013 was primarily attribut-
able to additional costs related to the development of our next-generation CdTe solar modules, our joint collabo-
ration agreement with GE to further advance our CdTe solar technology, and higher employee compensation

costs. During 2014, the average conversion efficiency of our CdTe solar modules was 14.0% compared to 13.2%
in 2013.

Selling, general and administrative

Selling, general and administrative expense consists primarily of salaries and other personnel-related costs,
professional fees, insurance costs, travel expenses, and other business development and selling expenses. Our
components and systems businesses each have their own dedicated administrative key functions, such as
accounting, legal, finance, project finance, human resources, procurement, and marketing. Costs for these func-
tions are recorded and included within selling, general and administrative expense of the respective segment. Our
key corporate support functions consist primarily of company-wide tax, treasury, accounting, legal, finance,
investor relations, information technology, communications, government relations, and executive management.
These corporate functions and the assets supporting such functions benefit both the components and systems
segments. We allocate corporate costs to the components and systems segments as part of selling, general and
administrative costs based upon the estimated benefits provided to each segment from these corporate functions.
We determine the estimated benefits provided to each segment for these corporate costs based upon a combina-
tion of the estimated time spent by corporate employees supporting each segment and the average relative sell-
ing, general and administrative costs incurred by each segment before such corporate allocations.

The following table shows selling, general and administrative expense for the years ended December 31,

2015, 2014, and 2013:

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Years Ended

Change

Selling, general and administrative . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . . . . . . . . .

$255,192

$253,827

$270,261

$1,365

1% $(16,434)

(6)%

7.1%

7.5%

8.2%

Our selling, general and administrative expenses increased by $1.4 million, or 1%, and were 7.1% and 7.5%
as a percentage of net sales, when comparing 2015 with 2014, respectively. The increase was mainly attributable
to higher employee compensation expense and higher professional fees associated with the initial public offering
of 8point3 Energy Partners LP, partially offset by lower project development expense and lower accretion
expense associated with the reduction in our module collection and recycling obligation.

Our selling, general and administrative expenses decreased by $16.4 million, or 6%, and were 7.5% and
8.2% as a percentage of net sales, when comparing 2014 with 2013, respectively. The most significant items
affecting our selling, general and administrative costs during 2014 and 2013 are as follows:

• Lower depreciation and amortization expense of $14.4 million primarily due to accelerated depreciation

for certain leasehold improvements and the sale of our Mesa facility in 2013 and

• Lower employee compensation and benefits expense of $5.4 million primarily as a result of lower

incentive and share-based compensation; partially offset by

• Higher business development expense of $4.0 million driven by our expansion into certain key geographic

markets.

Production start-up

Production start-up expense consists primarily of employee compensation and other costs associated with
operating a production line before it has been qualified for full production, including the cost of raw materials for
solar modules run through the production line during the qualification phase. Costs related to equipment
upgrades and implementation of manufacturing process improvements are also included in production start-up
expense as well as costs related to the selection of a new site, including related legal and regulatory costs, and
costs to maintain our plant replication program, to the extent we cannot capitalize these expenditures. In general,
we expect production start-up expense per production line to be higher when we build an entirely new manu-
facturing facility compared with the addition of new production lines at an existing manufacturing facility,

primarily due to the additional infrastructure investment required when building an entirely new facility. Pro-
duction start-up expense is attributable to our components segment.

The following table shows production start-up expense for the years ended December 31, 2015, 2014, and

2013:

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Years Ended

Change

Production start-up . . . . . . . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,818

$5,146

$2,768

$11,672

227% $2,378

86%

0.5%

0.2%

0.1%

During 2015 and 2014, our production start-up expense related to the commencement of our TetraSun oper-
ations at our manufacturing facility in Kulim, Malaysia. Our TetraSun operations involve the manufacturing of
crystalline silicon solar modules with proprietary high-power density, mono-crystalline technology. These pro-
duction start-up activities commenced during the third quarter of 2014. During 2015, we also incurred start-up
expenses related to a manufacturing line at our facility in Perrysburg, Ohio. Production start-up expense for 2013
was primarily for global manufacturing personnel dedicated to plant expansion, new equipment installations,
equipment upgrades, and process improvements for both new and existing plants.

Restructuring and asset impairments

Restructuring and asset impairment expense includes those expenses incurred related to material restructur-
ing initiatives and includes severance and employee termination costs that are directly related to such restructur-
ing initiatives, costs associated with contract
terminations, and other restructuring related costs. These
restructuring initiatives are intended to align the organization with current business conditions and to reduce
costs.

The following table shows restructuring and asset impairment expense for the years ended December 31,

2015, 2014, and 2013:

(Dollars in thousands)

Years Ended

Change

2015

2014

2013

2015 over
2014

2014 over
2013

Restructuring and asset impairments . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —% —%

$— $— $86,896

2.6%

$— —% $(86,896)

(100)%

During 2013, our restructuring and asset impairment expense included $5.2 million related to restructuring
initiatives associated with the closure of our German manufacturing plants and our decision not to move forward
with our previously planned four-line manufacturing plant in Vietnam. Additionally, during 2013 we recorded an
asset impairment charge of $56.5 million related to the agreement to sell our Mesa, Arizona facility and an addi-
tional $25.2 million impairment charge to adjust the carrying value of our plant in Vietnam. The effect of these
asset impairments reduced the book values of both our Mesa, Arizona facility and Vietnam plant to their
respective fair values, less costs to sell. See Note 4 “Asset Impairments” to our consolidated financial statements
for the year ended December 31, 2015 included in this Annual Report on Form 10-K for additional information.

Foreign currency (loss) gain, net

Foreign currency (loss) gain, net consists of the net effect of gains and losses resulting from holding assets
and liabilities and conducting transactions denominated in currencies other than our subsidiaries’ functional cur-
rencies.

The following table shows foreign currency (loss) gain, net for the years ended December 31, 2015, 2014,

and 2013:

(Dollars in thousands)

Years Ended

Change

2015

2014

2013

2015 over
2014

2014 over
2013

Foreign currency (loss) gain, net

. . . . . . . . . . . . . .

$(6,868) $(1,461) $893

$(5,407) 370% $(2,354)

(264)%

Foreign currency loss increased during 2015 compared with 2014. The increase was primarily due to differ-
ences between our economic hedge positions and the underlying exposures along with changes in foreign cur-
rency rates, which included the strengthening of the U.S. dollar relative to certain foreign currencies. Foreign
currency loss increased during 2014 compared with 2013, primarily due to differences between our economic
hedge positions and the underlying exposure along with changes in foreign currency rates.

Interest income

Interest income is earned on our cash, cash equivalents, marketable securities, and restricted cash and

investments. Interest income also includes interest earned from notes receivable and late customer payments.

The following table shows interest income for the years ended December 31, 2015, 2014, and 2013:
Change

Years Ended

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$22,516

$18,030

$16,752

$4,486

25% $1,278

Interest income during 2015 increased compared to 2014 primarily as a result of higher average balances of

notes receivable due from affiliates. Interest income during 2014 was consistent with 2013.

Interest expense, net

Interest expense is incurred on various debt financings. We capitalize interest expense into our project assets
or property, plant and equipment when such costs qualify for interest capitalization, which reduces the amount of
net interest expense reported in any given period.

The following table shows interest expense, net for the years ended December 31, 2015, 2014, and 2013:

(Dollars in thousands)

Years Ended

Change

2015

2014

2013

2015 over
2014

2014 over
2013

Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(6,975) $(1,982) $(1,884) $(4,993) 252% $(98) 5%

Interest expense, net of amounts capitalized increased in 2015 compared to 2014 primarily as a result of
higher levels of project specific debt financings. Interest expense, net of amounts capitalized during 2014 was
consistent with 2013.

Other expense, net

Other expense, net is primarily comprised of miscellaneous items, amounts excluded from hedge effective-

ness, and realized gains and losses on the sale of marketable securities.

The following table shows other expense, net for the years ended December 31, 2015, 2014, and 2013:

(Dollars in thousands)

Years Ended

Change

2015

2014

2013

2015 over
2014

2014 over
2013

Other expense, net

. . . . . . . . . . . . . . . . . . . . . . . . . . .

$(5,502) $(4,485) $(5,189) $(1,017) 23% $704

(14)%

Other expense, net in 2015 was consistent with other expense, net in 2014 and 2013.

Income before taxes and equity in earnings of unconsolidated affiliates

The following table shows income before taxes and equity in earnings of unconsolidated affiliates for the

years ended December 31, 2015, 2014, and 2013:

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Years Ended

Change

Components . . . . . . . . . . . . . . . . . . .
Systems . . . . . . . . . . . . . . . . . . . . . . .

$171,817
348,018

$(105,531)
537,632

(221,230) $ 277,348
(189,614)
602,209

(263)% $115,699
(35)% (64,577)

(52)%
(11)%

Total income before taxes . . . . . . . .

$519,835

$ 432,101

$ 380,979

$ 87,734

20% $ 51,122

13%

Components segment income before taxes increased by $277.3 million during 2015 compared to 2014 pri-
marily due to the increase in net sales resulting from higher volumes of module sold as part of systems projects,
the reduction in our module collection and recycling obligation, improved utilization of our manufacturing assets,
and lower selling, general and administrative expense. Systems segment income before income taxes decreased
by $189.6 million during 2015 compared to 2014 primarily as a result of the decrease in net sales, a mix of lower
gross profit systems projects sold or under construction during the period, and higher selling, general and admin-
istrative expense.

Components segment loss before income taxes decreased by $115.7 million during 2014 compared to 2013
primarily due to lower restructuring and asset impairment charges related to the sale of our facility in Mesa,
Arizona and a decrease in selling, general and administrative expense mainly driven by less depreciation and
amortization expense for certain leasehold improvements and our Mesa facility. These reductions were partially
offset by a reduction in our module collection and recycling obligation recorded during 2013. Systems segment
income before income taxes decreased $64.6 million during 2014 compared to 2013 primarily as a result of a mix
of lower gross profit systems projects sold and under construction in 2014 and higher selling, general and admin-
istrative expense. These items were partially offset by favorable changes in estimated costs on systems projects
accounted for under the percentage-of-completion method.

Income tax benefit (expense)

Income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect
our best assessment of estimated current and future taxes to be paid. We are subject to income taxes in both the
United States and numerous foreign jurisdictions in which we operate; principally Australia, Germany, and
Malaysia. Significant judgments and estimates are required in determining our consolidated income tax expense.
In Malaysia, we have been granted a long-term tax holiday, scheduled to expire in 2027, pursuant to which sub-
stantially all of our income earned in Malaysia is exempt from income tax.

The following table shows income tax benefit (expense) for the years ended December 31, 2015, 2014, and

2013:

(Dollars in thousands)

2015

2014

2013

2015 over
2014

2014 over
2013

Years Ended

Change

Income tax benefit (expense) . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . .

$6,156

$(31,188) $(30,098) $37,344

(120)% $(1,090) 4%

(1.2)%

7.2%

7.9%

Income tax expense decreased by $37.3 million during 2015 compared to 2014. The decrease in income tax
expense was primarily the result of a $41.7 million discrete tax benefit associated with the receipt of a private
letter ruling during the period. See Note 20 “Income Taxes” to our consolidated financial statements for the year
ended December 31, 2015 included in this Annual Report on Form 10-K for additional information.

Income tax expense increased by $1.1 million during 2014 compared with 2013. The increase in income tax
expense was primarily attributable to an increase in pretax book income earned in higher tax jurisdictions in
2014, partially offset by a discrete tax benefit due to the expiration of the statute of limitations for various
uncertain tax positions. See Note 20 “Income Taxes” to our consolidated financial statements for the year ended
December 31, 2015 included in this Annual Report on Form 10-K for additional information.

Equity in earnings of unconsolidated affiliates, net of tax

Equity in earnings of unconsolidated affiliates, net of tax represents our proportionate share of the earnings

and losses of unconsolidated affiliates with whom we have made equity method investments.

The following table shows equity in earnings of unconsolidated affiliates, net of tax for the years ended

December 31, 2015, 2014, and 2013:

(Dollars in thousands)

Years Ended

Change

2015

2014

2013

2015 over
2014

2014 over
2013

Equity in earnings, net of tax . . . . . . . . . . . . . . . . . .

20,430

(4,949)

(163) $25,379

(513)% $(4,786)

(100)%

Equity in earnings of unconsolidated affiliates, net of tax increased during 2015 compared to 2014 primarily
as a result of our investment in 8point3 Operating Company, LLC, a subsidiary of 8point3 Energy Partners LP,
along with the impairments of certain investments during 2014. Losses from unconsolidated affiliates increased
during 2014 compared to 2013 primarily due to the impairments of certain investments.

Liquidity and Capital Resources

As of December 31, 2015, we believe that our cash, cash equivalents, marketable securities, cash flows from
operating activities including the contracted portion of our advanced-stage project pipeline, availability under our
Revolving Credit Facility considering minimum liquidity covenant requirements, and access to the capital mar-
kets will be sufficient to meet our working capital, systems project investment, and capital expenditure needs for
at least the next 12 months. We monitor our working capital to ensure we have adequate liquidity, both domes-
tically and internationally. Additionally, we have an active shelf registration statement filed with the SEC for the
issuance of debt or equity securities if needed.

We intend to maintain appropriate debt levels based upon cash flow expectations, our overall cost of capital,
and expected cash requirements for operations, capital expenditures, and discretionary strategic spending. In the
future, we may also engage in additional debt or equity financings, including project specific debt financings. We
believe that when necessary, we will have adequate access to the capital markets, although our ability to raise
capital on terms commercially acceptable to us could be constrained if there is insufficient lender or investor
interest due to industry-wide or company-specific concerns. Such financings could result in increased debt serv-
ice expenses or dilution to our existing stockholders.

As of December 31, 2015, we had $1.8 billion in cash, cash equivalents, and marketable securities compared
with $2.0 billion as of December 31, 2014. Cash, cash equivalents, and marketable securities as of December 31,
2015 decreased primarily as the result of financing the construction of certain solar power projects. As of
December 31, 2015 and 2014, $1.5 billion and $1.4 billion, respectively, of our cash, cash equivalents, and mar-
ketable securities were held by foreign subsidiaries and were generally based in U.S. dollar and Euro denomi-
nated holdings. We utilize a variety of tax planning and financing strategies in an effort to ensure that our
worldwide cash is available in the locations in which it is needed.

Our expanding systems business requires liquidity and is expected to continue to have significant liquidity
requirements in the future. The net amount of our project assets, deferred project costs, billings in excess of costs
and estimated earnings, and payments and billings for deferred project costs, which approximates our net capital
investment in the development and construction of systems projects as of December 31, 2015 was $1.2 billion.
Solar power project development and construction cycles, which span the time between the identification of a site
location and the commercial operation of a system, vary substantially and can take many years to mature. As a
result of these long project cycles and strategic decisions to finance the construction of certain projects, we may
need to make significant up-front investments of resources in advance of the receipt of any cash from the sale of
such projects. These up-front investments may include using our working capital, the availability under our
Revolving Credit Facility, or entering into project financing arrangements to finance the construction of our sys-
tems projects. For example, we may have to complete, or substantially complete, the construction of a systems
project before such project is sold. Delays in construction progress or in completing the sale of our systems proj-
ects that we are self-financing may also impact our liquidity. We have historically financed these up-front sys-
tems project investments primarily using working capital. In certain circumstances, we may need to finance
construction costs exclusively using working capital, if project financing becomes unavailable due to market-
wide, regional, or other concerns.

We are partnering with local developers on project development in markets around the world where we may
take an equity stake in a project for a number of years. We are also self-developing projects in such markets
where we may hold all or a significant portion of the equity in the projects for several years. Given the duration
of these investments and the currency risk relative to the U.S. dollar in some of these new markets, we continue
to explore local financing alternatives. Should these financing alternatives be unavailable or too cost prohibitive,
we could be exposed to significant currency risk and our liquidity could be adversely impacted.

Additionally, we may elect to retain an ownership interest in certain systems projects after they become
operational if we determine it would be of economic and strategic benefit to do so. If, for example, we cannot sell
a systems project at economics that are attractive to us or potential customers are unwilling to assume the risks
and rewards typical of PV solar power system ownership, we may instead elect to temporarily own and operate
such systems until we can sell the systems on economically attractive terms. As with traditional electricity gen-
erating assets, the selling price of a PV solar power system could be higher at or post-completion to reflect the
elimination of construction and performance risks and other uncertainties. The decision to retain ownership of a
system impacts liquidity depending upon the size and cost of the project. As of December 31, 2015, we had $93.7
million of PV solar power systems that have been placed in service. We may elect to enter into temporary or
long-term project financing to reduce the impact on our liquidity and working capital. We also formed a limited
partnership YieldCo vehicle described under “Management’s Discussion and Analysis of Financial Condition
and Results of Operations — Certain Trends and Uncertainties — 8point3 Energy Partners LP” and may consider
entering into tax equity or other arrangements with respect to ownership interests in certain of our projects, which
could cause a portion of the economics of such projects to be recognized over time.

The following additional considerations have impacted or may impact our liquidity in 2016 and beyond:

• The amount of accounts receivable, unbilled and retainage as of December 31, 2015 was $59.2 million,
which included $40.2 million of unbilled amounts. These unbilled accounts receivable represent revenue
that has been recognized in advance of billing the customer under the terms of the underlying construction
contracts. Such construction costs have been funded with working capital, and the unbilled amounts are
expected to be billed and collected from customers during the next 12 months. Once we meet the billing
criteria under a construction contract, we bill our customers accordingly and reclassify the accounts
receivable, unbilled and retainage to accounts receivable trade, net. The amount of accounts receivable,
unbilled and retainage as of December 31, 2015 also included $19.0 million of retainage, which represents
the portion of a systems project contract price earned by us for work performed, but held for payment by
our customer as a form of security until we reach certain construction milestones. Such retainage amounts
relate to construction costs incurred and construction work already performed.

• The amount of solar module inventory and BoS parts as of December 31, 2015 was $446.3 million. As we
continue with the construction of our advanced-stage project pipeline, we must produce solar modules and
procure BoS parts in the required volumes to support our planned construction schedules. As part of this
construction cycle, we typically must manufacture modules or acquire the necessary BoS parts for con-
struction activities in advance of receiving payment for such materials, which may temporarily reduce our
liquidity. Once solar modules and BoS parts are installed in a project, such installed amounts are classified
as either project assets, deferred project costs, PV solar power systems, or cost of sales depending upon
whether the project is subject to a definitive sales contract and whether all revenue recognition criteria
have been met. As of December 31, 2015, $237.5 million, or 77%, of our solar module inventory was
either on-site or in-transit to our systems projects. All BoS parts are for our systems business projects.

• We may commit working capital during 2016 and beyond to acquire solar power projects in various stages
of development, including advanced-stage projects with PPAs, and to continue developing those projects
as necessary. Depending upon the size and stage of development, costs to acquire such solar power proj-
ects could be significant. When evaluating project acquisition opportunities, we consider both the strategic
and financial benefits of any such acquisitions.

• Joint ventures or other strategic arrangements with partners are a key part of our strategy. We have ini-
tiatives in several markets to expedite our penetration of those markets and establish relationships with
potential customers. Some of these arrangements involve and are expected to involve significant invest-

ments or other allocations of capital that could reduce our liquidity or require us to pursue additional sour-
ces of financing, assuming such sources are available to us. Additionally, we have elected and may in the
future elect or be required to temporarily retain a noncontrolling ownership interest in certain underlying
systems projects we develop, supply modules to, or construct. Any such retained ownership interest is
expected to impact our liquidity to the extent we do not obtain new sources of capital to fund such
investments.

• During 2016, we expect to spend $300 million to $400 million for capital expenditures, including
expenditures for upgrades to our existing machinery and equipment, which we believe will further
increase our solar module conversion efficiencies.

• Under sales agreements for certain of our solar power projects, we may be required to repurchase such
projects if certain events occur, such as not achieving commercial operation of the project within a certain
time frame. Although we consider the possibility that we would be required to repurchase any of our solar
power projects to be remote, our current working capital and other available sources of liquidity may not
be sufficient to make any required repurchase. If we are required to repurchase a solar power project, we
would have the ability to market and sell such project at then current market pricing, which could be at a
lower than expected price to the extent the event requiring the repurchase impacts the project’s market-
ability. Our liquidity may also be impacted as the time between the repurchase of a project and the poten-
tial sale of such repurchased project could take several months.

Global sovereign debt problems and their impact on the balance sheets and lending practices of global
banks, such as the disruption in the credit markets during and after the 2008 financial crisis, could negatively
impact our access to and cost of capital and therefore could have an adverse effect on our business, financial
condition, results of operations, and competitive position. Such problems could also similarly affect our custom-
ers and therefore limit the demand for our systems projects or solar modules. As of December 31, 2015, our liq-
uidity, marketable securities, and restricted investments have not been materially adversely impacted by the
current credit environment, and we believe that they will not be materially adversely impacted in the near future.
We will continue to closely monitor our liquidity and the credit markets. However, we cannot predict with any
certainty the impact to us of any further disruption in the current credit environment.

Cash Flows

The following table summarizes our cash flow activity for the years ended December 31, 2015, 2014, and

2013 (in thousands):

Net cash (used in) provided by operating activities . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and cash

Years Ended

2015

2014

2013

$(360,919)
(112,140)
137,103

$ 680,989
(511,879)
7,359

$ 856,126
(537,106)
101,164

equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(19,272)

(19,487)

3,594

Net (decrease) increase in cash and cash equivalents . . . . . . .

$(355,228)

$ 156,982

$ 423,778

Operating Activities

The decrease in cash provided by operating activities during 2015 was primarily driven by the increase in
project assets and deferred project costs resulting from our financing the construction of certain projects with our
working capital and increases in our trade accounts receivable. The decrease in cash provided by operating activ-
ities during 2014 was primarily attributable to the timing of cash received from customers for the sale of certain
systems projects.

Investing Activities

The decrease in cash used in investing activities during 2015 was driven by the receipt of $239.0 million
from the initial public offering of 8point3 Energy Partners LP, changes in our restricted cash balance, and lower
purchases of property, plant and equipment. The effects of these items were partially offset by net purchases of
marketable securities of $203.1 million during 2015 compared to $77.5 million during 2014. The decrease in
cash used in investing activities during 2014 was primarily due to changes in our restricted cash balance, lower
proceeds from sales of property, plant and equipment, and certain investments in affiliate notes receivable. The
effects of these items were partially offset by net purchases of marketable securities of $77.5 million during 2014
compared to $341.0 million during 2013.

Financing Activities

Cash provided by financing activities during 2015 resulted primarily from $146.0 million of proceeds from
borrowings under our project construction credit facilities in Chile, Japan, and India and $44.7 million of pro-
ceeds from the leaseback financing associated with the Maryland Solar project, partially offset by $47.1 million
of payments on long-term debt. Cash provided by financing activities during 2014 resulted primarily from
$65.6 million of proceeds from borrowings under our project construction credit facilities in Chile, partially off-
set by $60.1 million of payments on long-term debt. Cash provided by financing activities during 2013 was pri-
marily driven by proceeds from our June 2013 equity offering of $428.2 million, partially offset by net payments
on our revolving credit facility of $270.0 million and $65.0 million of payments on long-term debt.

Contractual Obligations

The following table presents our contractual obligations as of December 31, 2015 (in thousands), which
consists of legal commitments requiring us to make fixed or determinable cash payments. We purchase raw
materials for inventory, construction materials, various services, and manufacturing equipment from a variety of
vendors. During the normal course of business, in order to manage manufacturing and construction lead times
and help assure an adequate supply of certain items, we enter into agreements with suppliers that either allow us
to procure goods and services when we choose or that establish purchase requirements over the term of the
agreement.

Payments Due by Year

Total

Less Than
1 Year

1 - 3
Years

3 - 5
Years

More Than
5 Years

Long-term debt obligations . . . . . . . . . . . . . . . . . . . .
Interest payments(1) . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . .
Operating lease obligations . . . . . . . . . . . . . . . . . . . .
Sale-leaseback payments(2) . . . . . . . . . . . . . . . . . . . .
Purchase obligations(3)
. . . . . . . . . . . . . . . . . . . . . . .
Recycling obligations . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration(4) . . . . . . . . . . . . . . . . . . . .
Other obligations(5) . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 299,327
104,591
1,122
164,970
19,611
789,723
163,407
17,988
56,069

$ 38,331
16,531
540
16,824
5,277
736,026
—
9,232
7,912

$ 97,111
23,371
517
27,403
10,380
18,689
—
8,756
16,839

$17,715
20,339
65
15,883
3,954
11,238

$146,170
44,350
—
104,860
—
23,770
— 163,407
—
—
14,243
17,075

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,616,808

$830,673

$203,066

$86,269

$496,800

(1) Includes estimated cash interest to be paid over the remaining terms of the underlying debt. Interest payments
are based on fixed and floating rates in effect at December 31, 2015 and include the effect of interest rate and
cross currency swap agreements.

(2) Sale-leaseback payments represent the fixed rent payments associated with our leaseback of the Maryland
Solar project from a subsidiary of 8point3 Energy Partners LP. See Note 12 “Investments in Unconsolidated
Affiliates and Joint Ventures” to our consolidated financial statements for further information.

(3) Purchase obligations are agreements to purchase goods or services that are noncancelable, enforceable, and
legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased;
fixed, minimum, or variable price provisions; and the approximate timing of the transactions.

(4) In connection with project acquisitions, we may agree to pay additional amounts to project sellers upon ach-
ievement of project-related milestones such as obtaining a PPA, obtaining financing, and selling to a new
owner. We recognize a contingent liability when we determine that such liability is both probable and
reasonably estimable. See Note 16 “Commitments and Contingencies” to our consolidated financial state-
ments for the year ended December 31, 2015 included in this Annual Report on Form 10-K for further
information about our contingent consideration.

(5) Includes expected letter of credit fees and unused revolver fees.

In addition to the amounts shown in the table above, we have recorded $141.8 million of unrecognized tax
benefits as liabilities in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes, and we
are uncertain as to if or when such amounts may be settled.

Off-Balance Sheet Arrangements

We have no off-balance sheet debt or similar obligations, other than financial assurance related instruments
and operating leases, that are not classified as debt. We do not guarantee any third-party debt. See Note 15
“Commitments and Contingencies,” to our consolidated financial statements for the year ended December 31,
2015 included in this Annual Report on Form 10-K for further information about our financial assurance related
instruments.

Recent Accounting Pronouncements

See Note 3 “Recent Accounting Pronouncements” to our consolidated financial statements for the year
ended December 31, 2015 included in this Annual Report on Form 10-K for a summary of recent accounting
pronouncements.

Critical Accounting Estimates

In preparing our financial statements in conformity with generally accepted accounting principles in the
United States, we make estimates and assumptions that affect the amounts of reported assets, liabilities, revenues,
and expenses, as well as the disclosure of contingent liabilities in our consolidated financial statements and the
related notes thereto. Some of our accounting policies require the application of significant judgment by
management in the selection of the appropriate assumptions for making these estimates. By their nature, these
judgments are subject to an inherent degree of uncertainty. We base our judgments and estimates on our histor-
ical experience, our forecasts, and other available information, as appropriate. Our significant accounting policies
are described in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements
for the year ended December 31, 2015 included in this Annual Report on Form 10-K. Our critical accounting
estimates, which require the most significant management estimates and judgment in determining the amounts
reported in our consolidated financial statements included in this Annual Report on Form 10-K, are as follows:

Revenue Recognition — Systems Business. We recognize revenue for arrangements entered into by our
systems business generally using two revenue recognition models, following the guidance in either ASC 605-35,
Construction-Type and Production-Type Contracts, or ASC 360-20, Real Estate Sales, for arrangements which
include land or land rights.

Systems business sales arrangements in which we construct a PV solar power system for a specific customer
on land that is controlled by the customer, and has not been previously controlled by First Solar, are accounted
for under ASC 605-35. For such sales arrangements, we use the percentage-of-completion method, as described
further below, using actual costs incurred over total estimated costs to develop and construct the system
(including module costs) as our standard accounting policy.

Systems business sales arrangements in which we convey control of land or land rights as part of the trans-
action are accounted for under ASC 360-20. Accordingly, we use one of the following revenue recognition
methods, based upon an evaluation of the substance and form of the terms and conditions of such real estate
sales:

(i) We apply the percentage-of-completion method, as further described below, to certain real estate sales
arrangements in which we convey control of land or land rights, when a sale has been consummated,
we have transferred the usual risks and rewards of ownership to the buyer, the initial and continuing
investment criteria have been met, we have the ability to estimate our costs and progress toward com-
pletion, and all other revenue recognition criteria have been met. When evaluating whether the usual
risks and rewards of ownership have transferred to the buyer, we consider whether we have or may be
contingently required to have any prohibited forms of continuing involvement with the project pursuant
to ASC 360-20. The initial and continuing investment requirements, which demonstrate a buyer’s
commitment to honor its obligations for the sales arrangement, can typically be met through the receipt
of cash or an irrevocable letter of credit from a highly creditworthy lending institution.

(ii) Depending on whether the initial and continuing investment requirements have been met and whether
collectability from the buyer is reasonably assured, we may align our revenue recognition and release
of project assets or deferred project costs to cost of sales with the receipt of payment from the buyer if
the sale has been consummated and we have transferred the usual risks and rewards of ownership to the
buyer.

For any systems business sales arrangements containing multiple deliverables (including our solar modules)
not required to be accounted for under ASC 605-35 (long-term construction contracts) or ASC 360-20 (real
estate), we analyze each activity within the sales arrangement to adhere to the separation guidelines of ASC 605-
25 for multiple-element arrangements. We allocate revenue for any transactions involving multiple elements to
each unit of accounting based on its relative selling price and recognize revenue for each unit of accounting when
all revenue recognition criteria for a unit of accounting have been met.

Our system business sales arrangements within the scope of ASC 360-20 involve a range of standard prod-
uct warranties, which include limited solar module warranties, limited BoS warranties, and system energy per-
formance testing. Each standard product warranty program represents a risk of the module manufacturer or
system EPC contractor, and is not an obligation or risk of a system owner. These programs do not represent any
guarantee of energy output and relate to the underlying performance of the system assets. Consequently, our
product warranty programs do not represent any guarantees of cash flows related to the systems, and we have not
assumed any of the risks and rewards of ownership with respect to such programs. Separately, our systems cus-
tomers may also engage us to provide O&M services, which would typically include an effective availability
guarantee. Our availability guarantees are an incremental offering within separate arrangements for O&M serv-
ices. Availability guarantees are guarantees of our own service performance and do not represent guarantees of a
system’s output or cash flows. Accordingly, our product warranties and market based service contracts are not
forms of continuing involvement that would indicate that substantially all of the risks and rewards of ownership
have not been transferred to the system owner.

Revenue Recognition — Percentage-of-Completion.

In applying the percentage-of-completion method, we
use the actual costs incurred relative to the total estimated costs (including module costs) in order to determine
the progress towards completion and calculate the corresponding amount of revenue and profit to recog-
nize. Costs incurred include direct materials, solar modules, labor, subcontractor costs, and those indirect costs
related to contract performance, such as indirect labor and supplies. We recognize direct material and solar
module costs as incurred when the direct materials and solar modules have been installed in the project. When
contracts specify that title to direct materials and solar modules transfers to the customer before installation has
been performed, we will not recognize revenue or the associated costs until those materials are installed and have
met all other revenue recognition requirements. We consider direct materials and solar modules to be installed
when they are permanently placed or affixed to a PV solar power system as required by engineering designs.
Solar modules manufactured and owned by us that will be used in our systems remain within inventory until such
modules are installed in a system.

The percentage-of-completion method of revenue recognition requires us to make estimates of net contract
revenues and costs to complete our projects. In making such estimates, management judgments are required to
evaluate significant assumptions including the amount of net contract revenues, the cost of materials and labor,
expected labor productivity, the impact of potential variances in schedule completion, and the impact of any
penalties, claims, change orders, or performance incentives.

If estimated total costs on any contract are greater than the net contract revenues, we recognize the entire
estimated loss in the period the loss becomes known. The cumulative effect of the revisions to estimates related
to net contract revenues and costs to complete contracts, including penalties, claims, change orders, performance
incentives, anticipated losses, and others are recorded in the period in which the revisions to estimates are identi-
fied and the amounts can be reasonably estimated. The effect of the changes on future periods are recognized as
if the revised estimates had been used since revenue was initially recognized under the contract. Such revisions
could occur in any reporting period, and the effects may be material depending on the size of the contracts or the
changes in estimates.

Accrued Solar Module Collection and Recycling Liability. At the time of sale, we record our collection
and recycling obligation based on the estimated cost to collect and recycle the covered solar modules. We esti-
mate the cost of our collection and recycling obligations based on the present value of the expected probability
weighted future cost of collecting and recycling the solar modules, which includes estimates for the cost of pack-
aging materials, the cost of freight from the solar module installation sites to a recycling center, the material,
labor, capital costs, and scale of recycling centers, and an estimated third-party profit margin and return on risk
for collection and recycling services. We base these estimates on (i) our experience collecting and recycling our
solar modules, (ii) the expected timing of when our solar modules will be returned for recycling, and
(iii) expected economic conditions at the time the solar modules will be collected and recycled. In the periods
between the time of sale and the related settlement of the collection and recycling obligation, we accrete the
carrying amount of the associated liability by applying the discount rate used for its initial measurement. We
periodically review our estimates of expected future recycling costs and may adjust our liability accordingly.

During the year ended December 31, 2015, we completed our annual cost study of obligations under our
module collection and recycling program based on newly implemented recycling technologies at our manufactur-
ing facility in Perrysburg, Ohio and reduced our associated liability by $80.0 million. The new recycling
technology represents a significant improvement over previous technologies and contains a continuous flow
recycling process, which increases the throughput of modules able to be recycled at a point in time. Such process
improvements also result in corresponding reductions in capital, chemical, labor, maintenance, and other general
recycling costs, which further contribute to the reduction in the recycling rate per module and corresponding
change in the liability. At December 31, 2015, our estimated liability for collecting and recycling solar modules
covered by our collection and recycling program was $163.4 million. A 1% increase in the annualized inflation
rate used in our estimated future collection and recycling cost per module would increase our liability by
$36.7 million, and a 1% decrease in that rate would decrease our liability by $30.7 million.

Product Warranties and Accrued Expense in Excess of Product Warranties. We provide a limited PV
solar module warranty covering defects in materials and workmanship under normal use and service conditions
for 10 years following the transfer of title to our modules. We also typically warrant that modules installed in
accordance with agreed-upon specifications will produce at least 97% of their labeled power output rating during
the first year, with the warranty coverage reducing by 0.7% every year thereafter throughout the 25-year
performance warranty period. Prior to 2014, we warranted that modules installed in accordance with agreed-upon
specifications would produce at least 90% of their labeled power output rating during the first 10 years following
installation and at least 80% of their labeled power output rating during the following 15 years. In resolving
claims under both the defect and power output warranties, we have the option of either repairing or replacing the
covered modules or, under the power output warranty, providing additional modules to remedy the power short-
fall. We also have the option to make a payment for the then current market price of modules to resolve the
claims. Such limited module warranties are standard for module sales and are automatically transferred from the
original purchasers of the solar modules to subsequent purchasers upon resale.

As an alternative form of our standard limited module power output warranty, we also offer an aggregated
or system level limited module performance warranty. This system level limited module performance warranty is
designed for utility-scale systems and provides 25-year system level energy degradation protection. In addition,
this warranty represents a practical expedient to address the challenge of identifying, from the potential millions
of modules installed in a utility-scale system, individual modules that may be performing below warranty thresh-
olds by focusing on the aggregate energy generated by the system rather than the power output of individual
modules. The system level module performance warranty typically is calculated as a percentage of a system’s
expected energy production, adjusted for certain actual site conditions, with the warranted level of performance
declining each year in a linear fashion, but never falling below 80% during the term of the warranty. In resolving
claims under the system level limited module performance warranty to restore the system to warranted perform-
ance levels, we first must validate that the root cause of the issue is due to module performance; we then have the
option of either repairing or replacing the covered modules, providing supplemental modules, or making a cash
payment. Consistent with our limited module power output warranty, when we elect to satisfy a warranty claim
by providing replacement or supplemental modules under the system level module performance warranty, we do
not have any obligation to pay for the labor to remove or install modules.

In addition to our limited solar module warranty described above, for PV solar power systems built by us,
we typically provide a limited product warranty on BoS parts for defects in engineering design, installation, and
workmanship for a period of one to two years following the substantial completion of a system. In resolving
claims under such BoS warranties, we have the option of remedying the defect through repair or replacement.

When we recognize revenue for module or systems sales, we accrue liabilities for the estimated future costs
of meeting our limited warranty obligations. We make and revise these estimates based primarily on the number
of our solar modules under warranty installed at customer locations, our historical experience with warranty
claims, our monitoring of field installation sites, our internal testing of and the expected future performance of
our solar modules and BoS components, and our estimated per-module replacement costs.

We may also accrue expenses for the cost of any voluntary remediation programs beyond our normal prod-
uct warranty. Our estimates for such remediation programs are based on an evaluation of available information
including the estimated number of potentially affected solar modules, historical experience related to our
remediation efforts, customer-provided data related to potentially affected systems, estimated costs for perform-
ing removal, replacement, and logistical services, and any post-sale expenses covered under our voluntary
remediation program. If any of our estimates prove incorrect, we could be required to accrue additional expenses.

At December 31, 2015, our accrued liabilities for product warranties and accrued expense in excess of prod-
uct warranties were $231.8 million and $24.6 million, respectively. We have historically estimated our product
warranty liability for power output and defects in materials and workmanship under normal use and service con-
ditions to have an estimated warranty return rate of approximately 3% of modules covered under warranty. A 1%
change in the estimated warranty return rate would change our estimated product warranty liability by $71.5 mil-
lion, and a 1% change in the estimated warranty return rate for BoS components would not have a material
impact on the associated warranty liability.

Performance Guarantees. For systems sales arrangements, we also conduct performance testing of a sys-
tem prior to substantial completion to confirm the system meets its operational and capacity expectations noted in
the EPC agreement. In addition, we may provide an energy performance test during the first year of a system’s
operation to demonstrate that the actual energy generation for the first year meets or exceeds the modeled energy
expectation, after certain adjustments. These tests are based on meteorological, energy, and equipment perform-
ance data measured at the system’s location as well as certain projections of such data over the remaining meas-
urement period. If there is an underperformance event with regards to these tests, we may incur liquidated
damages as a percentage of the EPC contract price. If necessary, we accrue estimates for liquidated damages at
the end of each reporting period based on our performance testing. In certain instances, a bonus payment may be
received at the end of the first year if the system performs above a specified level.

outages, force majeure, and other conditions that may affect system availability. Effective availability guarantees
are only offered as part of our O&M services and terminate at the end of an O&M arrangement. These guarantees
are based on meteorological, energy, and equipment performance data measured at the system’s location as well
as certain projections of such data over the remaining measurement period. If we fail to meet the contractual
threshold for these guarantees, we may incur liquidated damages for certain lost energy under the PPA. If neces-
sary, we accrue estimates for liquidated damages at the end of each reporting period based on our effective avail-
ability calculations. Conversely, many of our O&M agreements contain provisions whereby we may receive a
bonus payment if system availability exceeds a separate threshold.

Accounting for Income Taxes. We are subject to the income tax laws of the United States, and its states
and municipalities, and those of the foreign jurisdictions in which we have significant business operations. These
tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental tax-
ing authorities. We must make judgments and interpretations about the application of these inherently complex
tax laws when determining our provision for income taxes and must also make estimates about when in the future
certain items affect taxable income in the various tax jurisdictions. Disputes over interpretations of the tax laws
may be settled with the taxing authority upon examination or audit. We regularly evaluate the likelihood of
assessments in each of the taxing jurisdictions resulting from current and future examinations, and we record tax
liabilities as appropriate.

We establish liabilities for potential additional taxes based on our assessment of the outcome of our tax posi-
tions. Once established, we adjust the liabilities when additional information becomes available or when an event
occurs requiring an adjustment. Significant judgment is required in making these estimates and the actual cost of
a tax assessment, fine, or penalty may ultimately be materially different from our recorded liabilities, if any.

In preparing our consolidated financial statements, we calculate our income tax expense based on our inter-
pretation of the tax laws and regulations in the various jurisdictions where we conduct business. This requires us
to estimate our current tax obligations, assess uncertain tax positions, and assess temporary differences between
the financial statement carrying amounts and the tax basis of assets and liabilities. These temporary differences
result in deferred tax assets and liabilities.

We must also assess the likelihood that each of our deferred tax assets will be realized. To the extent we
believe that realization of any of our deferred tax assets is not more likely than not, we establish a valuation
allowance. When we establish a valuation allowance or increase this allowance in a reporting period, we gen-
erally record a corresponding tax expense in our consolidated statement of operations. Conversely, to the extent
circumstances indicate that a valuation allowance is no longer necessary, that portion of the valuation allowance
is reversed, which generally reduces our overall income tax expense.

We also consider the earnings of our foreign subsidiaries and determine whether such amounts are indef-
initely reinvested. Accordingly, no additional U.S. or non-U.S. taxes have been accrued that may be incurred if
such amounts were repatriated to the United States. We have concluded that, except for the earnings of our
Canadian subsidiary and with respect to previously taxed income, all such accumulated earnings are currently
indefinitely reinvested or that if upon repatriation no additional U.S. or non-U.S. tax would be due. If our
intention to indefinitely reinvest the earnings of our foreign subsidiaries changes, additional U.S. and non-U.S.
taxes may be required to be accrued. See Note 20 “Income Taxes” to our consolidated financial statements for
the year ended December 31, 2015 included in this Annual Report on Form 10-K for additional information.

We continually explore initiatives to better align our tax and legal entity structure with the footprint of our
non-U.S. operations and recognize the tax impact of these initiatives, including changes in the assessment of
uncertain tax positions, indefinite reinvestment exception assertions, and the realizability of deferred tax assets,
in the period when we believe all necessary internal and external approvals associated with such initiatives have
been obtained, or when the initiatives are materially complete. It is possible that the completion of one or more of
these initiatives may occur within the next 12 months.

Long-Lived Asset Impairment. We are required to assess the recoverability of the carrying value of long-
lived assets including property, plant and equipment, PV solar power systems, and project assets when an
indicator of impairment has been identified. We review our long-lived assets each reporting period to assess
whether impairment indicators are present, and we must exercise judgment in assessing whether an event

indicating potential impairment has occurred. For purposes of recognition and measurement of an impairment
loss, a long-lived asset is grouped with other assets and liabilities at the lowest level for which identifiable cash
flows are largely independent of the cash flows of other assets and liabilities, and we must exercise judgment in
assessing such groupings and levels.

For long-lived assets, when impairment indicators are present, we compare undiscounted future cash flows,
including the eventual disposition of the asset group at market value, to the asset group’s carrying value to
determine if the asset group is recoverable. This assessment requires the exercise of judgment in assessing the
future use of and projected value to be derived from the assets to be held and used. Assessments also consider
changes in asset group utilization, including the temporary idling of capacity and the expected timing of placing
the capacity back into production.

For an asset group that fails the test of recoverability described above, the estimated fair value of long-lived
assets may be determined using an income approach, market approach, cost approach, or a combination of one or
more of these approaches as appropriate for the particular asset group being reviewed. All of these approaches
start with the forecast of expected future net cash flows including the eventual disposition at market value of the
long-lived assets. We also utilize third-party valuations and information available regarding the current market
for similar assets. If there is an impairment, a loss is recorded to reflect the difference between the asset group’s
fair value and carrying value prior to impairment. This may require judgment in estimating future cash flows,
relevant discount rates, and residual values applied in the income approach used in estimating the current fair
value of the impaired assets to be held and used.

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

We may first make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair
value is less than its carrying value to determine whether it is necessary to perform the two-step goodwill
impairment test. The qualitative impairment test considers various factors including macroeconomic conditions,
industry and market considerations, cost factors, the overall financial performance of a reporting unit, and any
other relevant events affecting the entity or its reporting units. If we determine through the qualitative assessment
that a reporting unit’s fair value is more likely than not greater than its carrying value, the two-step impairment
test is not required. If the qualitative assessment indicates it is more likely than not that a reporting unit’s fair
value is less than its carrying value, we must perform the two-step impairment test. We may also elect to proceed
directly to the two-step impairment test without considering such qualitative factors.

The first step in a two-step impairment test is the comparison of the fair value of a reporting unit with its
carrying amount, including goodwill. Our reporting units consist of our fully integrated systems business, CdTe
module manufacturing business, and our crystalline silicon module manufacturing business from our TetraSun
acquisition in 2013. In accordance with the authoritative guidance over fair value measurements, we define the
fair value of a reporting unit as the price that would be received to sell the unit as a whole in an orderly trans-
action between market participants at the measurement date. We primarily use the income approach methodology
of valuation, which includes the discounted cash flow method, to estimate the fair values of our reporting units.

Significant management judgment is required when estimating the fair value of our reporting units including
the forecasting of future operating results and the selection of discount and expected future growth rates that we
use in determining the projected cash flows. If the estimated fair value of a reporting unit exceeds its carrying
value, goodwill is not impaired and no further analysis is required.

If the carrying value of a reporting unit exceeds its estimated fair value in the first step, then we are required
to perform the second step of the impairment test. In this step, we assign the fair value of the reporting unit calcu-
lated in step one to all of the assets and liabilities of the reporting unit, as if a market participant just acquired the
reporting unit in a business combination. The excess of the fair value of the reporting unit determined in the first
step of the impairment test over the total amount assigned to the assets and liabilities in the second step of the
impairment test represents the implied fair value of goodwill. If the carrying value of a reporting unit’s goodwill

exceeds the implied fair value of goodwill, we would record an impairment loss equal to the difference. If there
is no such excess, then all goodwill for a reporting unit is considered impaired.

Item 7A: Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Exchange Risk

Our primary foreign currency exposures are cash flow exposure, transaction exposure, and earnings trans-

lation exposure.

Cash Flow Exposure. We expect many of our subsidiaries to have material 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. Accord-
ingly, we 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 ASC 815, and
we designated them as such. We initially report the effective portion of a derivative’s unrealized gain or loss in
“Accumulated other comprehensive income” and subsequently reclassify amounts into earnings when the hedged
transaction occurs and impacts earnings.

Our operations in Malaysia pay a portion of their operating expenses, such as associate wages and utilities,
in Malaysian ringgit, exposing us to foreign currency exchange risk for those Malaysian ringgit expenses. As we
expand into new markets worldwide, particularly emerging markets, our total foreign currency exchange risk, in
terms of both size and exchange rate volatility, and the number of foreign currencies we are exposed to could
increase significantly.

For additional details on our derivative hedging instruments and activities, refer to Note 10 “Derivative
Financial Instruments” to our consolidated financial statements for the year ended December 31, 2015 included
in this Annual Report on Form 10-K.

Our international customers accounted for 13% of our net sales during the year ended December 31, 2015,
of which 40% of these international net sales were denominated in Australian dollars. Our international custom-
ers accounted for 10% and 14% of our net sales during the years ended December 31, 2014 and 2013,
respectively, of which 25% and 38% of these international net sales, respectively, were denominated in Euro. As
a result, we have exposure to foreign currency exchange risk with respect to our net sales. Fluctuations in
exchange rates, particularly in the U.S. dollar to Australian dollar, U.S. dollar to Euro, and U.S. dollar to
Malaysian ringgit, affect our gross profit and could result in foreign exchange and operating losses. In the past,
most of our exposure to foreign currency exchange risk has related to currency gains and losses between the time
we sign and settle our sales contracts denominated in Australian dollars and Euros. For the year ended
December 31, 2015, a 10% change in the U.S. dollar to Australian dollar exchange rate would have impacted our
net sales by $18.6 million, excluding the effect of our hedging activities. During the years ended December 31,
2014 and 2013, a 10% change in the U.S. dollar to Euro exchange rate would have impacted our net sales by $8.8
million and $18.3 million, respectively, excluding the effect of our hedging activities.

Transaction Exposure. Many of our subsidiaries have assets and liabilities (primarily cash, receivables,
marketable securities, payables, 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 func-
tional currencies of our subsidiaries and the other currencies in which these assets and liabilities are denominated
will create fluctuations in our reported 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.

For additional details on our economic hedging instruments and activities, refer to Note 10 “Derivative
Financial Instruments” to our consolidated financial statements for the year ended December 31, 2015 included
in this Annual Report on Form 10-K.

If the U.S. dollar weakened by 10% against the Chinese yuan, Singapore dollar, and Vietnamese dong, we
would have incurred an additional $4.5 million in foreign currency losses for the year ended December 31, 2015.

Earnings Translation Exposure. Fluctuations in foreign currency exchange rates create volatility in our
reported results of operations because we are required to translate the financial statements of our subsidiaries that
do not have a U.S. dollar functional currency. We do not hedge translation exposure at this time, but may, in the
future, decide to purchase forward exchange contracts or other instruments to offset this impact from currency
fluctuations.

In the past, currency exchange rate fluctuations have had an impact on our business and results of oper-
ations. For example, currency exchange rate fluctuations impacted our cash flows by $19.3 million (unfavorable),
$19.5 million (unfavorable), and $3.6 million (favorable) for the years ended December 31, 2015, 2014, and
2013, respectively. Although we cannot predict the impact of future currency exchange rate fluctuations on our
business or results of operations, we believe that we will continue to have risk associated with currency exchange
rate fluctuations in the future.

Interest Rate Risk

Our primary interest rate risks relate to our outstanding variable rate debt, our system sales prices from the
effect of interest rates on our customers’ financing of such systems, and our investments in marketable securities
and restricted investments.

Variable Rate Debt Exposure. We are exposed to interest rate risk because our Revolving Credit Facility,
Malaysian Ringgit Facility Agreement, Malaysian Euro Facility Agreement, the floating rate portion of our
Malaysian Facility Agreement, and various project construction credit facilities have variable interest rates,
exposing us to variability in interest expense and cash flows. We use interest rate and cross-currency swap con-
tracts to mitigate our exposure to interest rate fluctuations associated with a portion of our variable rate debt
instruments. We have interest rate swap contracts in place to mitigate the interest rate risk for the floating rate
portion of our Malaysian Facility Agreement. We also have a cross-currency swap contract in place to mitigate
the interest rate risk of our Malaysian Ringgit Facility Agreement. For additional details on our derivative hedg-
ing instruments and activities, refer to Note 10 “Derivative Financial Instruments” to our consolidated financial
statements for the year ended December 31, 2015 included in this Annual Report on Form 10-K.

An increase in the Euro Interbank Offered Rate (“EURIBOR”) would impact our cost of borrowing under
our Malaysian euro facility agreement, an increase in the prime rate or London Interbank Offered Rate
(“LIBOR”) would impact our cost of borrowing under our Revolving credit facility, and an increase in Tokyo
Interbank Offered Rate (“TIBOR”) or equivalent variable rates would impact our cost of borrowings under our
project construction credit facilities. If these variable rates changed by 100 basis points, our interest cost for the
year ended December 31, 2015 would have changed by $0.3 million, including the effect of our hedging
activities.

Effect of Interest Rates on our Customers’ Financing of Systems. We are exposed to interest rate risk
because many of our systems business customers depend on debt financing to purchase a PV solar power system
from us. Although the useful life of a PV solar power system is considered to be approximately 25 years, owners
of our systems must pay the entire cost of the system by the time such system is completed. As a result, many of
our customers rely on debt financing to fund their up-front capital expenditures. An increase in interest rates
available to finance such purchases could make it difficult for our customers to secure the financing and under-
lying interest rate necessary to purchase a system. Such factors could lower demand or the price we can charge
for our systems and reduce our net sales and gross profit. In addition, we believe that a significant percentage of
our customers purchase systems as an investment, funding the initial capital expenditure through a combination
of equity and debt. An increase in interest rates could lower an investor’s return on investment in a system or
make alternative investments more attractive relative to solar power systems, which, in each case, could cause
these end-users to seek alternative investments that promise higher returns.

Investments in Marketable Securities and Restricted Investments Exposure. We invest in various debt
securities, which exposes us to interest rate risk. The primary objective of our investment activities is to preserve

principal and provide liquidity, while at the same time maximizing the income we receive from our investments
without significantly increasing risk. Some of the securities in which we invest may be subject to market risk.
This means that a change in prevailing interest rates may cause the market value of the investment to fluctuate.
For example, if we hold a security that was issued with an interest rate fixed at the then-prevailing rate and the
prevailing interest rate later rises, the market value of our investment may decline.

To provide a meaningful assessment of the interest rate risk associated with our investments in marketable
securities and restricted investments, we performed a sensitivity analysis to determine the impact a change in
interest rates would have on the value of our investments assuming a 100 basis point change in interest rates.
During 2015, our marketable securities earned a pre-tax yield of less than 1% and had a weighted average
maturity of 17 months as of December 31, 2015. Based on our investment positions as of December 31, 2015, a
hypothetical 100 basis point change in interest rates would result in a $9.1 million change in the market value of
our investment portfolio. As of December 31, 2014, a similar 100 basis point change in interest rates would have
resulted in a $3.7 million change in the market value of our investment portfolio. As of December 31, 2015, our
marketable securities were comprised of foreign debt and time deposits.

During 2015, our restricted investments earned a pre-tax yield of 2% and had a weighted average maturity
of approximately 19 years as of December 31, 2015. Based on our investment positions as of December 31,
2015, a hypothetical 100 basis point change in interest rates would result in a $60.9 million change in the market
value of our restricted investment portfolio. As of December 31, 2014, a similar 100 basis point change in inter-
est rates would have resulted in a $74.4 million change in the market value of our restricted investment portfolio.
As of December 31, 2015, all of our restricted investments were in foreign and U.S. government obligations.

Commodity and Component Risk

We are exposed to price risks for the raw materials, components, and energy costs used in the manufacturing
and transportation of our solar modules and BoS parts used in PV solar power systems. Also, some of our raw
materials and components are sourced from a limited number of suppliers or a single supplier. We endeavor to
qualify multiple suppliers using a robust qualification process. In some cases, we also enter into long-term supply
contracts for raw materials and components. As a result, we remain exposed to price changes in the raw materials
and components used in our solar modules. In addition, the failure of a key supplier could disrupt our supply
chain, which could result in higher prices and/or a disruption in our manufacturing or construction processes. We
may be unable to pass along changes in the cost of the raw materials and components for our products and sys-
tems to our customers and may be in default of our delivery obligations if we experience a manufacturing or
construction disruption.

Credit Risk

We have certain financial and derivative instruments that subject us to credit risk. These consist primarily of
cash, cash equivalents, marketable securities, restricted cash and investments, trade accounts receivable, notes
receivable, interest rate swap and cross-currency swap contracts, and foreign exchange forward contracts. We are
exposed to credit losses in the event of nonperformance by the counterparties to our financial and derivative
instruments. We place cash, cash equivalents, marketable securities, restricted cash and investments, interest rate
swap and cross-currency swap contracts, and foreign exchange forward contracts with various high-quality
financial institutions and limit the amount of credit risk from any one counterparty. We continuously evaluate the
credit standing of our counterparty financial institutions. Our net sales are primarily concentrated among a lim-
ited number of customers. We monitor the financial condition of our customers and perform credit evaluations
whenever considered necessary. Depending upon the sales arrangement, we may require some form of payment
security from our customers, including bank guarantees or commercial letters of credit.

Item 8:

Financial Statements and Supplementary Data

Consolidated Financial Statements

Our consolidated financial statements as required by this item are included in Item 15: “Exhibits and Finan-
cial Statement Schedules — Consolidated Financial Statements.” See Item 15(a)(1) for a list of our consolidated
financial statements.

Selected Quarterly Financial Data (Unaudited)

The following selected quarterly financial data should be read in conjunction with our consolidated financial
statements, the related notes thereto and Item 7: “Management’s Discussion and Analysis of Financial Condition
and Results of Operations.” This information has been derived from our unaudited consolidated financial state-
ments that, in our opinion, reflect all recurring adjustments necessary to fairly present this information when read
in conjunction with our consolidated financial statements and the related notes thereto appearing in the section
entitled “Consolidated Financial Statements.” We have revised our unaudited consolidated financial statements
from March 31, 2014 through June 30, 2015 to properly record a liability associated with an uncertain tax posi-
tion related to income of a foreign subsidiary. Additional revisions have been made for previously identified
errors that were corrected in a period subsequent to the period in which the error originated. All selected quar-
terly financial data presented herein was revised to reflect the correction of these errors. See “Note 1. First Solar
and Its Business — Revision of Previously Issued Financial Statements” to our consolidated financial statements
for the year ended December 31, 2015 included in this Annual Report on Form 10-K for additional information.
The results of operations for any quarter are not necessarily indicative of the results to be expected for any future
period.

Quarters Ended

Dec 31,
2015

Sep 30,
2015

Jun 30,
2015

Mar 31,
2015

Dec 31,
2014

Sep 30,
2014

Jun 30,
2014

Mar 31,
2014

(In thousands, except per share amounts)

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $942,324 $1,271,245 $896,217 $469,209 $1,007,993 $890,288 $546,283 $946,623
94,828 232,329
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231,438
4,011 134,892
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . 131,823
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164,135
5,079 107,734
Net income per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

484,365 164,483
57,133
397,821
93,885
349,318

308,382 189,402
83,875
199,221
89,833
193,318

38,981
(70,113)
(60,917)

(0.61)$
(0.61)$

0.90 $
0.89 $

3.46 $
3.41 $

1.93 $
1.90 $

1.62 $
1.60 $

0.93 $
0.92 $

0.05 $
0.05 $

1.08
1.06

Item 9:

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A: Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that
we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time peri-
ods specified in SEC rules and forms, and that such information is accumulated and communicated to our man-
agement, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures,
management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are
met. Additionally, in designing disclosure controls and procedures, our management was required to apply its
judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of
any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions.

Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our
Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures
were effective as of that date.

(b) Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate “internal control over financial
reporting,” as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and
with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we
conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31,
2015 based on the criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles in the United States of America.

Based on the results of our evaluation, our management concluded that our internal control over financial

reporting was effective as of December 31, 2015.

The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited
by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which
appears herein.

We carried out an evaluation, under the supervision and with the participation of management, including our
Chief Executive Officer and Chief Financial Officer, of our “internal control over financial reporting” as defined
in Exchange Act Rule 13a-15(f) and Rule 15d-15(f) to determine whether any changes in our internal control
over financial reporting occurred during the year ended December 31, 2015 that materially affected, or are
reasonably likely to material affect, our internal control over financial reporting.

Based on that evaluation, there have been no such changes in our internal control over financial reporting
that occurred during the quarter ended December 31, 2015 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.

(d)

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our
disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. Control sys-
tems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the con-
trol systems’ objectives are being met. Further, the design of any control system must reflect the fact that there are
resource constraints, and the benefits of all controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns can occur because of error or mis-
take. Control systems can also be circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the controls. The design of any system of controls is also based in part upon
certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate
because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Item 9B: Other Information

Majority Voting Standard for Uncontested Director Elections

On February 18, 2016, our Board of Directors approved an amendment and restatement of the Company’s
bylaws (the “Amended and Restated Bylaws”) and Corporate Governance Guidelines (the “Amended and
Restated Corporate Governance Guidelines”), effective February 18, 2016. The Company’s prior majority voting
policy for uncontested director elections, previously appearing in the Corporate Governance Guidelines, was
replaced with a majority voting standard for uncontested director elections directly in the bylaws. The Amended
and Restated Bylaws and the Amended and Restated Corporate Governance Guidelines are filed as Exhibits 3.2
and 10.17 hereto, respectively, and are incorporated herein by reference.

PART III

Item 10: Directors, Executive Officers, and Corporate Governance

Information concerning our board of directors and audit committee will appear in our 2016 Proxy State-
ment, under the sections entitled “Directors” and “Corporate Governance.” The information in that portion of the
Proxy Statement is incorporated in this Annual Report on Form 10-K by reference.

For information with respect to our executive officers, see Item 1: “Business — Executive Officers of the

Registrant.”

Information concerning Section 16(a) beneficial ownership reporting compliance will appear in our 2016
Proxy Statement under the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance.” The
information in that portion of the Proxy Statement is incorporated in this Annual Report on Form 10-K by refer-
ence.

We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers, and asso-
ciates of First Solar. Information concerning this code will appear in our 2016 Proxy Statement under the section
entitled “Corporate Governance.” The information in that portion of the Proxy Statement is incorporated in this
Annual Report on Form 10-K by reference.

Item 11: Executive Compensation

Information concerning executive compensation and related information will appear in our 2016 Proxy
Statement under the section entitled “Executive Compensation,” and information concerning the Compensation
Committee will appear under “Corporate Governance” and “Compensation Committee Report.” The information
in that portion of the Proxy Statement is incorporated in this Annual Report on Form 10-K by reference.

Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Information concerning the security ownership of certain beneficial owners and management and related
stockholder matters, including certain information regarding our equity compensation plans, will appear in our
2016 Proxy Statement under the section entitled “Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.” The information in that portion of the Proxy Statement is
incorporated in this Annual Report on Form 10-K by reference.

Equity Compensation Plans

The following table sets forth certain information as of December 31, 2015 concerning securities authorized

for issuance under our equity compensation plans:

Plan Category

Number of Securities
to be Issued Upon
Exercise of
Outstanding Options
and Rights (a)(1)

Weighted-Average
Exercise Price of
Outstanding
Options and
Rights (b)(2)

Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding
Securities Reflected
in Column (a))(c)(3)

Equity compensation plans approved by our

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,974,493

Equity compensation plans not approved by our

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,974,493

$—

—

$—

6,128,406

—

6,128,406

(1) Includes 2,974,493 shares issuable upon vesting of restricted stock units (“RSUs”) granted under our 2010

and 2015 Omnibus Incentive Compensation Plans.

(2) The weighted average exercise price does not take into account the shares issuable upon vesting of out-

standing RSUs, which have no exercise price.

(3) Includes 952,270 shares of common stock reserved for future issuance under our stock purchase plan for

employees.

See Note 18 “Share-Based Compensation” to our consolidated financial statements for the year ended
December 31, 2015 included in this Annual Report on Form 10-K for further discussion on our equity compensa-
tion plans.

Item 13: Certain Relationships and Related Transactions, and Director Independence

Information concerning certain relationships and related party transactions will appear in our 2016 Proxy
Statement under the section entitled “Certain Relationships and Related Party Transactions.” The information in
is incorporated in this Annual Report on Form 10-K by reference.
that portion of the Proxy Statement
Information concerning director independence will appear in our 2016 Proxy Statement under the section entitled
“Corporate Governance.” The information in that portion of the Proxy Statement is incorporated in this Annual
Report on Form 10-K by reference.

Item 14: Principal Accountant Fees and Services

Information concerning principal accountant fees and services and the audit committee’s pre-approval poli-
cies and procedures will appear in our 2016 Proxy Statement under the section entitled “Principal Accountant
Fees and Services.” The information in that portion of the Proxy Statement is incorporated in this Annual Report
on Form 10-K by reference.

PART IV

Item 15: Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K:

(1) Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm
Financial Statements

Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

(2) Financial Statement Schedule:

Schedule II — Valuation and Qualifying Accounts

SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2015, 2014, and 2013

Description

Balance at
Beginning
of Year

Additions Deductions

(In thousands)

Balance
at End of
Year

Allowance for doubtful accounts receivable
Year ended December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$14,503
12,310
7,108

$2,489
24
11

$(4,682)
(5,226)
(7,117)

$12,310
7,108
2

(3) Exhibits: See Item 15(b) below.

(b) Exhibits: The exhibits listed on the accompanying Index to Exhibits on this Annual Report on

Form 10-K are filed, or incorporated into this Annual Report on Form 10-K by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized on February 24, 2016.

FIRST SOLAR, INC.

By:

/s/ BRYAN SCHUMAKER

Bryan Schumaker
Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/

JAMES A. HUGHES

James A. Hughes

Chief Executive Officer and
Director

February 24, 2016

/s/ MARK R. WIDMAR

Chief Financial Officer

February 24, 2016

Mark R. Widmar

Additional Directors:

/s/ SHARON L. ALLEN

Sharon L. Allen

Director

February 24, 2016

/s/ RICHARD D. CHAPMAN

Director

February 24, 2016

Richard D. Chapman

/s/ GEORGE A. HAMBRO

George A. Hambro

/s/ CRAIG KENNEDY

Craig Kennedy

/s/

JAMES F. NOLAN

James F. Nolan

/s/

J. THOMAS PRESBY

J. Thomas Presby

/s/ PAUL H. STEBBINS

Paul H. Stebbins

/s/ MICHAEL SWEENEY
Michael Sweeney

Director

February 24, 2016

Director

February 24, 2016

Director

February 24, 2016

Director

February 24, 2016

Director

February 24, 2016

Director

February 24, 2016

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of First Solar, Inc.

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) pres-
ent fairly, in all material respects, the financial position of First Solar, Inc. and its subsidiaries at December 31,
2015 and December 31, 2014, and the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement schedule listed in the index appear-
ing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Orga-
nizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial
statements and financial statement schedule, for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s
Report on Internal Control over Financial Reporting appearing under Item 9A(b). Our responsibility is to express
opinions on these financial statements, on the financial statement schedule, and on the Company’s internal con-
trol over financial reporting based on our integrated audits. We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all
material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effective-
ness of internal control based on the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opin-
ions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the compa-
ny’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect mis-
statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that con-
trols may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Phoenix, Arizona
February 24, 2016

FIRST SOLAR, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

Current assets:

ASSETS

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable trade, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, unbilled and retainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance of systems parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred project costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes receivable, affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net
PV solar power systems, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Project assets and deferred project costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash and investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated affiliates and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes receivable, affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31,

2015

2014

$1,126,826
703,454
500,629
59,171
380,424
136,889
187,940
1,276
248,977

3,345,586
1,284,136
93,741
1,111,137
357,693
333,878
399,805
84,985
110,002
107,759
17,887
69,722

$1,482,054
509,032
135,434
76,971
505,088
125,083
29,354
12,487
202,151

3,077,654
1,419,988
46,393
810,348
313,891
407,053
255,029
84,985
119,236
115,617
9,127
61,670

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$7,316,331

$6,720,991

Current liabilities:

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billings in excess of costs and estimated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments and billings for deferred project costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued solar module collection and recycling liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 337,668
1,330
409,452
38,090
87,942
28,580
57,738

960,800
163,407
251,325
392,312

$ 214,656
1,727
388,156
51,399
195,346
60,591
88,664

1,000,539
246,307
162,074
320,584

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,767,844

1,729,504

Commitments and contingencies
Stockholders’ equity:

Common stock, $0.001 par value per share; 500,000,000 shares authorized; 101,766,797 and

100,288,942 shares issued and outstanding at December 31, 2015 and 2014, respectively . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

102
2,742,795
2,790,110
15,480

100
2,697,558
2,243,689
50,140

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,548,487

4,991,487

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$7,316,331

$6,720,991

See accompanying notes to these consolidated financial statements.

FIRST SOLAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

Years Ended December 31,

2015

2014

2013

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,578,995
2,659,728

$3,391,187
2,566,246

$3,309,616
2,444,984

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:

919,267

824,941

864,632

Research and development
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production start-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . .

130,593
255,192
16,818
—

143,969
253,827
5,146
—

134,300
270,261
2,768
86,896

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

402,603

402,942

494,225

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency (loss) gain, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income before taxes and equity in earnings of unconsolidated

affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated affiliates, net of tax . . . . . . . . . . . .

516,664
(6,868)
22,516
(6,975)
(5,502)

519,835
6,156
20,430

421,999
(1,461)
18,030
(1,982)
(4,485)

432,101
(31,188)
(4,949)

370,407
893
16,752
(1,884)
(5,189)

380,979
(30,098)
(163)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 546,421

$ 395,964

$ 350,718

Net income per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.42

5.37

3.96

3.90

3.74

3.67

Weighted-average number of shares used in per share calculations:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100,886

100,048

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101,815

101,643

93,697

95,468

See accompanying notes to these consolidated financial statements.

FIRST SOLAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain on marketable securities and restricted

Years Ended December 31,

2015

2014

2013

$546,421

$395,964

$350,718

(16,432)

(19,147)

4,295

investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain on derivative instruments . . . . . . . . . . . . . . . . . . . . . .

(15,415)
(2,813)

90,741
4,322

(39,685)
(565)

Other comprehensive (loss) income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . .

(34,660)

75,916

(35,955)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$511,761

$471,880

$314,763

See accompanying notes to these consolidated financial statements.

FIRST SOLAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)

Common Stock

Shares Amount

Additional
Paid-In
Capital

Accumulated
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Balance, December 31, 2012 . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . .
Common stock issued for share-based

87,145 $ 87 $2,066,021 $1,497,007
— 350,718
—

— —
— —

$ 10,179
—
— (35,955)

compensation . . . . . . . . . . . . . . . . . . . .

1,244

5,346

Share-based compensation tax

benefits . . . . . . . . . . . . . . . . . . . . . . . . .

— —

21,017

Tax withholding related to vesting of

restricted stock . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . .
Common stock issued for acquisition . . .
Common stock issued for public

(380) —
— —
2

1,750

(11,979)
53,684
83,753

offering . . . . . . . . . . . . . . . . . . . . . . . .

9,747

428,180

—

—
—
—

—

—
—
—

—

Balance, December 31, 2013 . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income . . . . . . . . .
Common stock issued for share-based

99,506

100
— —
— —

2,646,022

1,847,725
— 395,964
—
—

(25,776)
—
75,916

compensation . . . . . . . . . . . . . . . . . . . .

1,126 —

4,950

Share-based compensation tax

benefits . . . . . . . . . . . . . . . . . . . . . . . . .

— —

24,505

Tax withholding related to vesting of

restricted stock . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . .

(344) —
— —

(23,100)
45,181

—

—
—

—

—
—

Balance, December 31, 2014 . . . . . . . . . . . . 100,288

Net income . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . .
Common stock issued for share-based

100
— —
— —

2,697,558

2,243,689
— 546,421
—

50,140
—
— (34,660)

compensation . . . . . . . . . . . . . . . . . . . .

1,782

5,886

Share-based compensation tax

benefits . . . . . . . . . . . . . . . . . . . . . . . . .

— —

14,567

Tax withholding related to vesting of

restricted stock . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . .

(303) —
— —

(18,189)
42,973

—

—
—

—

—
—

Total
Equity

$3,573,294
350,718
(35,955)

5,347

21,017

(11,979)
53,684
83,755

428,190

4,468,071
395,964
75,916

4,950

24,505

(23,100)
45,181

4,991,487
546,421
(34,660)

5,888

14,567

(18,189)
42,973

Balance, December 31, 2015 . . . . . . . . . . . . 101,767 $102 $2,742,795 $2,790,110

$ 15,480

$5,548,487

See accompanying notes to these consolidated financial statements.

FIRST SOLAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to cash (used in) provided by operating activities:

Depreciation, amortization and accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and net loss on disposal of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated affiliates, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurement of monetary assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits from share-based compensation arrangements . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:

Accounts receivable, trade, unbilled and retainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories and balance of systems parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Project assets and deferred project costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued solar module collection and recycling liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years Ended December 31,

2015

2014

2013

$ 546,421

$ 395,964

$ 350,718

257,825
14,593
44,899
(20,430)
(4,043)
(17,534)
(17,707)
520

(340,292)
(38,635)
113,537
(857,529)
(8,484)
143,872
(13,281)
(85,425)
(79,226)

245,798
5,228
43,810
4,949
7,216
14,068
(31,166)
1,780

462,630
(36,805)
(99,870)
143,047
(5,371)
(53,057)
(1,131)
(442,153)
26,052

234,370
97,132
54,585
163
(16,261)
(20,878)
(35,076)
870

570,731
119,241
15,394
(316,705)
(1,684)
(92,828)
36,392
(150,686)
10,648

Net cash (used in) provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(360,919)

680,989

856,126

Cash flows from investing activities:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and maturities of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of equity and cost method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions received from equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in notes receivable, affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments received on notes receivable, affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(166,438)
77
(556,479)
353,359
(27,475)
238,980
(55,163)
57,866
44,037
—
(904)

(257,549)
1,532
(305,396)
227,900
(24,967)
—
(72,692)
49,517
(124,061)
(4,306)
(1,857)

(282,576)
116,403
(435,015)
93,984
(17,905)
—
—
17,108
5,173
(30,745)
(3,533)

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(112,140)

(511,879)

(537,106)

Cash flows from financing activities:

Repayment of borrowings under revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from borrowings under revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from borrowings under long-term debt, net of discounts and issuance costs . . . . . . . . . .
Repayment of sale-leaseback financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale-leaseback financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits from share-based compensation arrangements . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from equity offering, net of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration payments and other financing activities . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
(47,078)
146,027
(3,702)
44,718
17,707
—
(20,569)

—
—
(60,063)
65,563
—
—
31,166
—
(29,307)

(605,000)
335,000
(64,954)
—
—
—
35,076
428,190
(27,148)

Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

137,103

7,359

101,164

Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(19,272)

(19,487)

Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(355,228)
1,482,054

156,982
1,325,072

3,594

423,778
901,294

Cash and cash equivalents, end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,126,826

$1,482,054

$1,325,072

Supplemental disclosure of noncash investing and financing activities:

Equity interests retained from the partial sale of project assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment acquisitions funded by liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions currently or previously funded by liabilities and contingent consideration . . . . . . . .
Shares issued for acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 324,430
17,749
$
$
17,988
$

$ 220,679
61,130
$
53,894
$
— $

$
$
$
— $

—
60,677
97,885
83,755

See accompanying notes to these consolidated financial statements.

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. First Solar and Its Business

We are a leading global provider of comprehensive photovoltaic (“PV”) solar energy solutions. We design,
manufacture, and sell PV solar modules with an advanced thin-film semiconductor technology and also develop,
design, construct, and sell PV solar power systems that primarily use the modules we manufacture. Additionally,
we provide operations and maintenance (“O&M”) services to system owners that use solar modules manufac-
tured by us or by other third-party manufacturers. We have substantial, ongoing research and development efforts
focused on module and systems level innovations. We are the world’s largest thin-film PV solar module manu-
facturer and one of the world’s largest PV solar module manufacturers. Our mission is to create enduring value
by enabling a world powered by clean, affordable solar energy.

First Solar Holdings, LLC was formed as a Delaware limited liability company in May 2003 to act as the
holding company for First Solar, LLC, which was formed in 1999 and renamed First Solar US Manufacturing,
LLC in the second quarter of 2006, and other subsidiaries formed during 2003 and later. On February 22, 2006,
First Solar Holdings, LLC was incorporated in Delaware as First Solar Holdings, Inc. and, also during the first
quarter of 2006, was renamed First Solar, Inc.

Revision of Previously Issued Financial Statements

During the three months ended September 30, 2015, we revised our previously issued financial statements
from 2011 to 2014 to properly record a liability associated with an uncertain tax position, including penalties,
related to income of a foreign subsidiary along with corresponding adjustments in each successive period for the
effect of changes in foreign currency exchange rates associated with the liability. The prior periods also include
revisions for previously disclosed errors from 2012 primarily related to “cut-off” of our inventories and balance
of systems (“BoS”) parts and foreign tax credits. Additional revisions were made for previously identified errors
related to sales taxes, use taxes, share-based compensation, and miscellaneous items that were corrected in a
period subsequent to the period in which the error originated. As several of these errors affected the estimated
costs for systems business sales arrangements accounted for under the percentage-of-completion method, we also
recorded adjustments to revenue for the changes in the percentage completion of the affected projects.

We evaluated the aggregate effects of the errors to our previously issued financial statements in accordance
with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors,
determined that the errors were not material to our previously issued financial statements. As part of this evalua-
tion, we considered a number of qualitative factors, including, among others, that the errors did not change a net
loss into net income or vice versa, did not have an impact on our long-term debt covenant compliance, and did
not mask a change in earnings or other trends when considering the overall competitive and economic environ-
ment within the industry during the periods. However, the cumulative effect of the errors, including the uncertain
tax position matter identified during the three months ended September 30, 2015, was significant to our financial
results for the year ended December 31, 2015. Accordingly, we revised our historical financial statements, which
resulted in decreases to our accumulated earnings of $36.0 million, $35.0 million, and $32.7 million as of
December 31, 2014, 2013, and 2012, respectively.

All financial information presented in the accompanying notes to these consolidated financial statements
was revised to reflect the correction of these errors. Periods not presented herein will be revised, as applicable, as
they are included in future filings.

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the effect of the aforementioned revisions on our consolidated balance sheet as

of December 31, 2014 (in thousands):

December 31, 2014

As Reported

Adjustment

As Revised

Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 284,584
1,693,504
2,279,689
5,027,487

$ 36,000
36,000
(36,000)
(36,000)

$ 320,584
1,729,504
2,243,689
4,991,487

The following tables present the effect of the aforementioned revisions on our consolidated statements of

operations for the years ended December 31, 2014 and 2013 (in thousands, except per share amounts):

Year Ended December 31, 2014

As Reported

Adjustment

As Revised

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before taxes and equity in earnings of

unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic net income per share . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income per share . . . . . . . . . . . . . . . . . . . . . . . .

$3,391,814
2,564,709
827,105
424,163
(3,017)
(5,203)

431,991
(30,124)
396,918
472,834
3.97
3.91

$
$

$ (627)
1,537
(2,164)
(2,164)
1,556
718

110
(1,064)
(954)
(954)
$ (0.01)
$ (0.01)

$3,391,187
2,566,246
824,941
421,999
(1,461)
(4,485)

432,101
(31,188)
395,964
471,880
3.96
3.90

$
$

Year Ended December 31, 2013

As Reported

Adjustment

As Revised

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency (loss) gain, net . . . . . . . . . . . . . . . . . . . . . .
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before taxes and equity in earnings of

$3,308,989
2,446,235
862,754
368,529
(259)
(4,758)

378,380
(25,179)
353,038
317,083
3.77
3.70

$
$

627
(1,251)
1,878
1,878
1,152
(431)

2,599
(4,919)
(2,320)
(2,320)
$ (0.03)
$ (0.03)

$3,309,616
2,444,984
864,632
370,407
893
(5,189)

380,979
(30,098)
350,718
314,763
3.74
3.67

$
$

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables present the effect of the aforementioned revisions on our consolidated statements of

cash flows for the years ended December 31, 2014 and 2013 (in thousands):

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to cash provided by

operating activities:

Remeasurement of monetary assets and liabilities . . . . . . . . .
Changes in operating assets and liabilities:
Accounts receivable, trade, unbilled and retainage . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . .
Project assets and deferred project costs . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to cash provided by

operating activities:

Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurement of monetary assets and liabilities . . . . . . . . .
Changes in operating assets and liabilities:
Accounts receivable, trade, unbilled and retainage . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . .
Project assets and deferred project costs . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . .

Year Ended December 31, 2014

As Reported

Adjustment

As Revised

$ 396,918

(954)

$ 395,964

8,772

(1,556)

7,216

453,826
(19,947)
141,908
(52,339)
(989)
(452,438)
680,989

8,804
(16,858)
1,139
(718)
(142)
10,285
—

462,630
(36,805)
143,047
(53,057)
(1,131)
(442,153)
680,989

Year Ended December 31, 2013

As Reported

Adjustment

As Revised

$ 353,038

$ (2,320)

$ 350,718

55,079
(15,109)

(494)
(1,152)

54,585
(16,261)

564,964
109,126
(316,022)
(93,259)
36,307
(138,937)
856,126

5,767
10,115
(683)
431
85
(11,749)
—

570,731
119,241
(316,705)
(92,828)
36,392
(150,686)
856,126

2. Summary of Significant Accounting Policies

Basis of Presentation. These consolidated financial statements include the accounts of First Solar, Inc. and
all of its subsidiaries and are prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”). We eliminated all intercompany transactions and balances during con-
solidation. Investments in unconsolidated affiliates in which we have less than a controlling interest are
accounted for using the cost or equity method of accounting. Certain prior year balances have been reclassified to
conform to the current year presentation. Such reclassifications did not have a material effect on our consolidated
financial statements. In addition, the method of reporting the consolidated statements of cash flows was changed
from the direct to the indirect method.

Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. GAAP
requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

statements and the accompanying notes. On an ongoing basis, we evaluate our estimates, including those related
to percentage-of-completion revenue recognition, inventory valuation, recoverability of project assets and photo-
voltaic (“PV”) solar power systems, estimates of future cash flows from and the economic useful lives of long-
lived assets, asset retirement obligations, certain accrued liabilities, income taxes and tax valuation allowances,
reportable segment allocations, product warranties and manufacturing excursions, solar module collection and
recycling liabilities, and applying the acquisition method of accounting for business combinations and goodwill.
Despite our intention to establish accurate estimates and reasonable assumptions, actual results could differ mate-
rially from these estimates and assumptions.

Fair Value Measurements. We measure certain financial assets and liabilities at fair value. As of
December 31, 2015, our financial assets and liabilities consisted principally of cash and cash equivalents,
marketable securities, trade accounts receivable, unbilled accounts receivable and retainage, notes receivable,
restricted cash and investments, derivative contracts, accounts payable, income taxes payable, accrued expenses,
and debt. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a
liability (i.e., 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. Accounting standards include disclosure
requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The
hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair
value are observable in the market. Each fair value measurement is reported in one of three levels:

• 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 value drivers are
observable in active markets are Level 2 valuation techniques.

• Level 3 — Valuation techniques in which one or more significant

inputs or 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.

Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of 90 days

or less at the time of purchase to be cash equivalents.

Marketable Securities — Current and Noncurrent and Restricted Investments. We determine the classi-
fication of our marketable securities and restricted investments at the time of purchase and reevaluate such
designation at each balance sheet date. We have classified our marketable securities and restricted investments as
available-for-sale. These marketable securities and restricted investments are recorded at fair value and unreal-
ized gains and losses are recorded to “Accumulated other comprehensive income” until realized. Realized gains
and losses on sales of these marketable securities and restricted investments are reported in earnings, computed
using the specific identification method.

We may sell marketable securities prior to their stated maturities after consideration of our liquidity require-
ments. We view unrestricted securities with maturities beyond 12 months as available to support current oper-
ations and, accordingly, classify all such securities as current assets under the caption marketable securities in the
consolidated balance sheets. Restricted investments consist of long-term duration marketable securities that we
hold through a custodial account to fund the estimated future costs of our solar module collection and recycling

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

obligations. Accordingly, we classify all restricted investments as noncurrent assets under the caption “Restricted
cash and investments” in the consolidated balance sheets.

All of our available-for-sale marketable securities and restricted investments are subject to a periodic impair-
ment review. We consider a marketable security or restricted investment to be impaired when its fair value is less
than its carrying cost, in which case we would further review the marketable security or restricted investment to
determine if it is other-than-temporarily impaired. When we evaluate a marketable security or restricted invest-
ment for other-than-temporary impairment, we review factors such as the length of time and the extent to which
its fair value has been below its cost basis, the financial conditions of the issuer and any changes thereto, our
intent to sell, and whether it is more likely than not that we will be required to sell the marketable security or
restricted investment before we have recovered its cost basis. If a marketable security or restricted investment
were other-than-temporarily impaired, we would write it down through “Other expense, net” to its impaired value
and establish that value as a new cost basis for the marketable security or restricted investment.

Derivative Instruments. We recognize derivative instruments on our consolidated balance sheets at their
fair value. On the date that we enter into a derivative contract, we designate the derivative instrument as a fair
value hedge, a cash flow hedge, a hedge of a net investment in a foreign operation, or a derivative instrument that
will not be accounted for using hedge accounting methods. As of December 31, 2015 and 2014, all of our
derivative instruments were designated either as cash flow hedges or as derivative instruments not accounted for
using hedge accounting methods.

We record changes in the fair value of a derivative instrument that is highly effective and that is designated
and qualifies as a cash flow hedge in “Other comprehensive income, net of tax” until our earnings are affected by
the variability of cash flows of the underlying hedge. We record any hedge ineffectiveness and amounts excluded
from effectiveness testing in current period earnings within “Other expense, net.” We report changes in the fair
values of derivative instruments that are not designated or do not qualify for hedge accounting in current period
earnings. We classify cash flows from derivative instruments on the consolidated statements of cash flows in the
same category as the item being hedged or on a basis consistent with the nature of the instrument.

We formally document all relationships between hedging instruments and the underlying hedged items, as
well as our risk-management objective and strategy for undertaking various hedge transactions, at the inception
of the hedge. We support all of our derivatives with documentation specifying the underlying exposure being
hedged. We also formally assess (both at the hedge’s inception and on an ongoing basis) whether the derivative
instruments that we use in hedging transactions have been highly effective in offsetting changes in the fair value
or cash flows of the underlying hedged items and whether those derivatives are expected to remain highly effec-
tive in future periods. When we determine that a derivative instrument is not highly effective as a hedge, we
discontinue hedge accounting prospectively. In all situations in which we discontinue hedge accounting and the
derivative instrument remains outstanding, we will carry the derivative instrument at its fair value on our con-
solidated balance sheets and recognize subsequent changes in its fair value in our current period earnings.

Receivables and Allowance for Doubtful Accounts. The carrying value of our receivables, net of the allow-
ance for doubtful accounts, represents their estimated net realizable value. We estimate our allowance for doubt-
ful accounts based on historical collection trends, the age of outstanding receivables, and existing economic
conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired,
further consideration is given to the collectability of those balances, and the allowance is adjusted accordingly.
Past-due receivable balances are written off when our internal collection efforts have been unsuccessful.

Retainage. Certain of our engineering, procurement, and construction (“EPC”) contracts for solar power
plants we build contain retainage provisions. Retainage refers to the portion of the contract price earned by us for
work performed, but held for payment by our customer as a form of security until we reach certain construction
milestones. We consider whether collectability of such retainage is reasonably assured in connection with our
overall assessment of the collectability of amounts due or that will become due under our EPC contracts.

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Retainage expected to be collected within 12 months is classified within “Accounts receivable, unbilled and
retainage” on the consolidated balance sheets. Retainage expected to be collected after 12 months is classified
within “Other assets” on the consolidated balance sheets. After we have met the EPC contract requirements to
bill for retainage, we will reclassify such amounts to “Accounts receivable trade, net.”

Inventories — Current and Noncurrent. We report our inventories at the lower of cost or net realizable
value. We determine cost on a first-in, first-out basis and include both the costs of acquisition and the costs of
manufacturing in our inventory costs. These costs include direct material, direct labor, and indirect manufactur-
ing costs, including depreciation and amortization. Our capitalization of costs into inventory is based on the
normal utilization of our plants. If our plant utilization is abnormally low, the portion of our indirect manufactur-
ing costs related to the abnormal utilization level is expensed as incurred. Finished goods inventory is comprised
exclusively of solar modules that have not yet been installed in a solar power plant under construction or sold to a
third-party customer.

We regularly review the cost of inventories, including noncurrent inventories, against their estimated net
realizable value and record write-downs if any inventories have costs in excess of their net realizable values. We
also regularly evaluate the quantities and values of our inventories, including noncurrent inventories, in light of
current market conditions and market trends, among other factors, and record write-downs for any quantities in
excess of demand and for any new obsolescence. This evaluation considers the use of modules in our systems
business, historical usage, expected demand, anticipated sales prices, desired strategic raw material requirements,
new product development schedules, the effect new products might have on the sale of existing products, product
obsolescence, customer concentrations, product merchantability, and other factors. Market conditions are subject
to change, and actual consumption of our inventory could differ from forecasted demand.

We purchase a critical raw material that is used in our core production process in quantities that exceed
anticipated consumption within our normal operating cycle (which is 12 months). We classify such raw materials
that we do not expect to be consumed within our operating cycle as noncurrent.

Balance of Systems Parts. BoS parts represent mounting, electrical, and other construction parts purchased
for PV solar power systems to be constructed or currently under construction, which we hold title to and are not
yet installed in a system. Such construction parts include items such as posts, tilt brackets, tables, harnesses,
combiner boxes, inverters, cables, tracker equipment, and other parts we may purchase or assemble for the sys-
tems we construct. We carry these parts at the lower of cost or net realizable value, with such value being based
primarily on recoverability through installation in a solar power system or recoverability through a sales agree-
ment. BoS parts do not include any solar modules that we manufacture.

Asset Impairments. We assess long-lived assets classified as “held and used,” including our property, plant
and equipment, project assets, and PV solar power systems for impairment whenever events or changes in busi-
ness circumstances arise that may indicate that the carrying amount of our long-lived assets may not be recover-
able. These events and changes can include significant current period operating losses or negative cash flows
associated with the use of a long-lived asset, or group of assets, combined with a history of such factors, sig-
nificant changes in the manner of use of the assets, and current expectations that it is more likely than not that a
long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated
useful life. For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped
with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the
cash flows of other assets and liabilities. When impairment indicators are present, we compare undiscounted
future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s
carrying value to determine if the asset group is recoverable. If the carrying values are in excess of undiscounted
expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to
its carrying value. Fair value is generally determined by considering (i) internally developed discounted projected
cash flow analysis of the asset or asset group, (ii) actual third-party valuations, and/or (iii) information available
regarding the current market for similar assets. If the fair value of an asset or asset group is determined to be less

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

than the carrying amount of the asset or asset group, an impairment in the amount of the difference is recorded in
the period that the impairment indicator occurs and is included in “Restructuring and asset impairments” in our
consolidated statement of operations. Estimating future cash flows requires significant judgment, and projections
may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an
asset has been impaired.

We consider a long-lived asset to be abandoned after we have ceased use of such asset and we have no

intent to use or re-purpose the asset in the future.

We classify each long-lived tangible asset we plan to sell, excluding PV solar power systems, as an asset
including:
held for sale on our consolidated balance sheets only after certain criteria have been met
(i) management has the authority and commits to a plan to sell the asset; (ii) the asset is available for immediate
sale in its present condition; (iii) there is an active program to locate a buyer, and the plan to sell the asset has
been initiated; (iv) the sale of the asset is probable within 12 months; (v) the asset is being actively marketed at a
reasonable sales price relative to its current fair value; and (vi) it is unlikely that the plan to sell will be with-
drawn or that significant changes to the plan will be made. We record assets held for sale at the lower of their
carrying value or fair value less costs to sell. If, due to unanticipated circumstances, such assets are not sold in
the 12 months after being classified as held for sale, then held for sale classification will continue as long as the
above criteria are still met and the asset is being actively marketed at a reasonable sales price relative to its then
current fair value.

We assess held for sale long-lived assets for impairment whenever events or circumstances arise that may
indicate that the carrying amount of our held for sale long-lived assets may not be recoverable. Depreciation and
amortization expense is not recorded on assets once they are classified as assets held for sale.

Property, Plant and Equipment. We report our property, plant and equipment at cost, less accumulated
depreciation. Cost includes the price paid to acquire or construct the assets, required installation costs, interest
capitalized during the construction period, and any expenditure that substantially adds to the value of or sub-
stantially extends the useful life of an existing asset. We expense repair and maintenance costs at the time we
incur them.

We begin depreciation for such assets when they are placed into service. We consider an asset to be placed

into service when the asset is both in the location and condition for its intended use.

We compute depreciation expense using the straight-line method over the estimated useful lives of assets, as
presented in the table below. We depreciate leasehold improvements over the shorter of their estimated useful
lives or the remaining term of the lease. The estimated useful life of an asset is reassessed whenever applicable
facts and circumstances indicate a change in the estimated useful life of such asset has occurred.

Buildings and building improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures, computer hardware, and computer software . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Useful Lives
in Years

25 – 40
5 – 7
3 – 7
up to 15

Idle Property, Plant and Equipment. For property, plant and equipment that has been placed into service,
but is subsequently idled temporarily, we continue to record depreciation expense during the idle period. We
adjust the estimated useful lives of the idled assets if the estimated useful lives have changed. At December 31,
2015, the current net book value of our temporarily idled equipment was $4.0 million.

PV Solar Power Systems. PV solar power systems represent solar systems that we may temporarily own
and operate after being placed into service. We report our PV solar power systems at cost, less accumulated

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depreciation. When we are entitled to incentive tax credits for our systems, we reduce the related carrying value
of the assets by the amount of the tax credits, which reduces future depreciation. Any energy generated by the
systems prior to being placed into service is accounted for as a reduction in the related carrying value of the
assets. We begin depreciation for PV solar power systems when they are placed into service. We compute depre-
ciation expense for the systems using the straight-line method over the shortest of the term of the related power
purchase agreement (“PPA”), the lease on the land, or 25 years. Our current PV solar power systems have esti-
mated useful lives ranging from 15 to 25 years.

We sell energy generated by our PV solar power systems under PPAs or on an open contract basis. We
recognize revenue from such sales at the time the energy is delivered to our customers or the grid (in the case of
merchant power). For the year ended December 31, 2015, we recognized revenue from our PV solar power sys-
tems of $9.8 million.

Asset Retirement Obligations. We develop, construct, and operate certain project assets and PV solar
power systems under power purchase or other agreements that include a requirement for the removal of the assets
at the end of the term of the agreement. We recognize asset retirement obligations (“AROs”) at fair value in the
period in which they are incurred, and the carrying amounts of the related project assets or PV solar power sys-
tems are correspondingly increased. AROs represent the present value of the expected costs and timing of the
related decommissioning activities. At December 31, 2015 and 2014, our AROs totaled $15.9 million and $6.7
million, respectively.

Internal-Use Software Costs. We capitalize the costs related to computer software obtained or developed
for internal use. Software obtained for internal use has generally been enterprise-level business and finance soft-
ware that we customize to meet our specific operational requirements. The capitalized costs are amortized on a
straight-line basis over the estimated useful life of the software, ranging from 3 to 7 years.

Interest Capitalization. We capitalize interest as part of the historical cost of acquiring or constructing
certain assets during the period of time required to place the assets into service or sell the assets to customers.
These assets include property, plant and equipment and PV solar power system development and construction
costs that we have capitalized as project assets. Interest capitalized for property, plant and equipment is depreci-
ated over the estimated useful life of the related assets when they are placed into service. We charge interest cap-
italized for project assets to cost of sales when such assets are sold and we have met all revenue recognition
criteria. We capitalize interest to the extent that expenditures to acquire, construct, or develop an asset have
occurred and interest cost has been incurred. We cease capitalization of interest for projects in development or
under construction if the projects are substantially complete or if we receive any payment for or have sold such
projects.

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

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We review project assets for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. We consider a project commercially viable or recoverable if it is
anticipated to be sold for a profit once it is either fully developed or fully constructed. We consider a partially
developed or partially constructed project commercially viable or recoverable if the anticipated selling price is
higher than the carrying value of the related project assets. We examine a number of factors to determine if the
project will be recoverable, the most notable of which include whether there are any changes in environmental,
ecological, permitting, market pricing, or regulatory conditions that impact the project. Such changes could cause
the costs of the project to increase or the selling price of the project to decrease. If a project is not considered
recoverable, we impair the respective project assets and adjust the carrying value to the estimated recoverable
amount, with the resulting impairment recorded within operating expenses.

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

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

The following table summarizes the balance sheet classification of project assets and deferred project costs:

Milestone

Execution of a definitive sales arrangement, but
all revenue recognition criteria are not yet met
Pre-execution of a definitive sales arrangement

Arrangements Accounted for
under ASC 360-20 (Real Estate
Sales)

Arrangements Accounted for under
ASC 605-35 (Long-Term Construction
Contracts)

Deferred project costs

Project asset

Deferred project costs (recoverable
pre-contract costs)

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

Billings in Excess of Costs and Estimated Earnings. The liability “Billings in excess of costs and esti-
mated earnings” represents billings made or payments received in excess of revenue recognized on contracts
accounted for under the percentage-of-completion method. Typically, billings are made based on the completion

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of certain construction milestones as provided for in the sales arrangement, and the timing of revenue recognition
may be different from when we can bill or collect from a customer.

Payments and Billings for Deferred Project Costs. The liability “Payments and billings for deferred proj-
ect costs” represents customer payments received or customer billings made under the terms of solar power proj-
ect related sales contracts for which all revenue recognition criteria for real estate transactions have not yet been
met. The associated solar power project costs are included within deferred project costs. We classify such
amounts as current or noncurrent depending on when all revenue recognition criteria are expected to be met,
consistent with the classification of the associated deferred project costs.

Deferred Revenue. Deferred revenue consists of payments received in advance of meeting all revenue
recognition criteria (with the exception of payments and billings for deferred project costs) for the sale of solar
modules or services performed under our O&M agreements. We recognize deferred revenue as net sales after all
revenue recognition criteria are met.

Business Combinations. We account for business acquisitions using the acquisition method of accounting
and record intangible assets separate from goodwill. Intangible assets are recorded at fair value based on esti-
mates as of the date of acquisition. Goodwill is recorded as the residual amount of the purchase price consid-
eration less the fair value assigned to the individual assets acquired and liabilities assumed as of the date of
acquisition. We charge acquisition related costs that are not part of the purchase price consideration to general
and administrative expense as they are incurred. These costs typically include transaction and integration costs,
such as legal, accounting, and other professional fees. Contingent consideration, which represents an obligation
of the acquirer to transfer additional assets or equity interests to the former owner as part of the exchange if
specified future events occur or conditions are met, is accounted for at fair value either as a liability or as equity
depending on the terms of the acquisition agreement.

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

The first step in a two-step impairment test is the comparison of the fair value of a reporting unit with its
carrying amount, including goodwill. Our reporting units consist of our fully integrated systems business, cad-
mium telluride (“CdTe”) module manufacturing business, and our crystalline silicon module manufacturing
business from our TetraSun acquisition in 2013. In accordance with the authoritative guidance over fair value
measurements, we define the fair value of a reporting unit as the price that would be received to sell the unit as a
whole in an orderly transaction between market participants at the measurement date. We primarily use the
income approach methodology of valuation, which includes the discounted cash flow method, to estimate the fair
values of our reporting units.

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See Note 6 “Goodwill and Intangible Assets” for additional information on our goodwill impairment tests.

In-Process Research and Development.

In-process research and development (“IPR&D”) is initially cap-
italized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When
the IPR&D project is complete, it is reclassified as a definite-lived intangible asset and amortized over its esti-
mated useful life. If an IPR&D project is abandoned, we will record a charge for the value of the related
intangible asset to our consolidated statement of operations in the period it is abandoned.

Product Warranties. We provide a limited PV solar module warranty covering defects in materials and
workmanship under normal use and service conditions for 10 years following the transfer of title to our modules.
We also typically warrant that modules installed in accordance with agreed-upon specifications will produce at
least 97% of their labeled power output rating during the first year, with the warranty coverage reducing by 0.7%
every year thereafter throughout the 25-year performance warranty period. Prior to 2014, we warranted that
modules installed in accordance with agreed-upon specifications would produce at least 90% of their labeled
power output rating during the first 10 years following installation and at least 80% of their labeled power output
rating during the following 15 years. In resolving claims under both the defect and power output warranties, we
have the option of either repairing or replacing the covered modules or, under the power output warranty, provid-
ing additional modules to remedy the power shortfall. We also have the option to make a payment for the then
current market price of modules to resolve the claims. Such limited module warranties are standard for module
sales and are automatically transferred from the original purchasers of the solar modules to subsequent pur-
chasers upon resale.

As an alternative form of our standard limited module power output warranty, we also offer an aggregated
or system level limited module performance warranty. This system level limited module performance warranty is
designed for utility-scale systems and provides 25-year system level energy degradation protection. In addition,
this warranty represents a practical expedient to address the challenge of identifying, from the potential millions
of modules installed in a utility-scale system, individual modules that may be performing below warranty thresh-
olds by focusing on the aggregate energy generated by the system rather than the power output of individual
modules. The system level module performance warranty typically is calculated as a percentage of a system’s
expected energy production, adjusted for certain actual site conditions, with the warranted level of performance
declining each year in a linear fashion, but never falling below 80% during the term of the warranty. In resolving
claims under the system level limited module performance warranty to restore the system to warranted perform-
ance levels, we first must validate that the root cause of the issue is due to module performance; we then have the
option of either repairing or replacing the covered modules, providing supplemental modules, or making a cash
payment. Consistent with our limited module power output warranty, when we elect to satisfy a warranty claim
by providing replacement or supplemental modules under the system level module performance warranty, we do
not have any obligation to pay for the labor to remove or install modules.

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From time to time, we have taken remediation actions with respect to affected modules beyond our limited
warranties, and we may elect to do so in the future, in which case we would incur additional expenses. Such
potential voluntary future remediation actions beyond our limited warranty obligations could be material to our
consolidated statement of operations if we commit to any such remediation actions.

Accrued Solar Module Collection and Recycling Liability. We recognize expense at the time of sale for
the estimated cost of our future obligations for collecting and recycling solar modules covered by our collection
and recycling program. See Note 14 “Solar Module Collection and Recycling Liability” for further information.

Income Taxes. We use the asset and liability method to account for income taxes whereby we calculate the
deferred tax asset or liability account balances using tax laws and rates in effect at that time. We establish valu-
ation allowances, when necessary, to reduce deferred tax assets to the extent it is more likely than not that such
deferred tax assets will not be realized. We do not provide deferred taxes related to the U.S. GAAP basis in
excess of the outside tax basis in the investment in our foreign subsidiaries to the extent such amounts relate to
indefinitely reinvested earnings and profits of such foreign subsidiaries.

Income tax expense includes (i) deferred tax expense, which generally represents the net change in the
deferred tax asset or liability balance during the year plus any change in valuation allowances, and (ii) current tax
expense, which represents the amount of tax currently payable to or receivable from taxing authorities. We only
recognize tax benefits related to uncertain tax positions that are more likely than not of being sustained upon
examination. For those positions that satisfy such recognition criteria, the amount of tax benefit that we recognize
is the largest amount of tax benefit that is more likely than not of being sustained on ultimate settlement of the
uncertain tax position.

Foreign Currency Translation. The functional currencies of certain of our international subsidiaries are
their local currencies. Accordingly, we apply the period-end exchange rates to translate their assets and liabilities,
and the daily transaction exchange rates are used to translate their revenues, expenses, gains, and losses into
U.S. dollars. We include the translation adjustments as a separate component of “Accumulated other compre-
hensive income” within stockholders’ equity. The functional currency of our subsidiaries in Canada, Malaysia,
Singapore, and Chile is the U.S. dollar; therefore, we do not translate their financial statements. Gains and losses
arising from the remeasurement of monetary assets and liabilities denominated in currencies other than a sub-
sidiary’s functional currency are included in “Foreign currency (loss) gain, net” in the period in which they
occur.

Comprehensive Income. Our comprehensive income consists of our net income, the effects on our con-
solidated financial statements of translating the financial statements of our subsidiaries that operate in foreign
currencies, the unrealized gains or losses on available-for-sale marketable securities and restricted investments,
and the unrealized gains or losses on derivative instruments that qualify for and have been designated as cash
flow hedges. We present our comprehensive income in the consolidated statements of comprehensive income.
Our “Accumulated other comprehensive income” is presented as a component of stockholders’ equity in our
consolidated balance sheets.

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Per Share Data. Basic net income per share is based on the weighted effect of all common shares out-
standing and is calculated by dividing net income by the weighted average number of common shares out-
standing during the period. Diluted net income per share is based on the weighted effect of all common shares
and dilutive potential common shares outstanding and is calculated by dividing net income by the weighted aver-
age number of common shares and dilutive potential common shares outstanding during the period.

Revenue Recognition — Percentage-of-Completion.

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been performed, we will not recognize revenue or the associated costs until those materials are installed and have
met all other revenue recognition requirements. We consider direct materials and solar modules to be installed
when they are permanently placed or affixed to a PV solar power system as required by engineering designs.
Solar modules manufactured and owned by us that will be used in our systems remain within inventory until such
modules are installed in a system.

Revenue Recognition — Operations and Maintenance. Our O&M revenue is billed and recognized as

services are performed. Costs of these revenues are expensed in the period in which they are incurred.

Revenue Recognition — Components Business. Our components business sells solar modules directly to
third-party solar power system integrators and operators. We recognize revenue for module sales when persua-
sive evidence of an arrangement exists, delivery of the modules has occurred and title and risk of loss have
passed to the customer, the sales price is fixed or determinable, and the collectability of the resulting receivable is
reasonably assured. Under this policy, we record a trade receivable for the selling price of our module and reduce
inventory for the cost of goods sold when delivery occurs in accordance with the terms of the sales contract. Our
customers typically do not have extended payment terms or rights of return for our products.

Research and Development Expense. We incur research and development costs during the process of
researching and developing new products and enhancing our existing products, technologies, and manufacturing
processes. Our research and development costs consist primarily of employee compensation, materials, outside
services, and depreciation. We expense these costs as incurred until the resulting product has been completed,
tested, and made ready for commercial manufacturing.

Restructuring and Exit Activities. We record costs associated with exit activities such as employee termi-
nation benefits that represent a one-time benefit when management approves and commits to a plan of termi-
nation, or over the future service period, if any. Other costs associated with exit activities may include contract
termination costs, including costs related to leased facilities to be abandoned or subleased, and facility and
employee relocation costs.

Production Start-Up. Production start-up expense consists primarily of employee compensation and other
costs associated with operating a production line before it has been qualified for full production, including the
cost of raw materials for solar modules run through the production line during the qualification phase. Costs
related to equipment upgrades and implementation of manufacturing process improvements are also included in
production start-up expense as well as costs related to the selection of a new site, including related legal and
regulatory costs, and costs to maintain our plant replication program, to the extent we cannot capitalize these
expenditures.

Share-Based Compensation. We recognize share-based compensation expense on the estimated grant-date
fair value of equity instruments issued as compensation to employees over the requisite service period, which is

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generally four years. The share-based compensation expense that we recognize is based on the number of awards
expected to ultimately vest; therefore, the amounts used to determine share-based compensation expense have
been reduced for estimated forfeitures. We estimate the number of awards that we expect to vest at the time the
awards are granted and revise those estimates, if necessary, in subsequent periods. We also estimate the number
of awards that we expect to vest based on our historical experience with forfeitures, giving consideration to
whether future forfeiture behavior might be expected to differ from past behavior. We recognize compensation
expense for awards with graded vesting schedules on a straight-line basis over the requisite service periods for
each separately vesting portion of the awards as if each award was in substance multiple awards.

Our forfeiture rate assumptions, including estimates as to which share-based awards will ultimately vest,
require judgment, and to the extent actual results or updated estimates differ from our current estimates, such
amounts will be recorded as a cumulative adjustment in the period of change and could be materially different
from share-based compensation expense recorded in prior periods. Additionally, when an associate’s employ-
ment is terminated, all previously unvested awards granted to such associate are forfeited, which results in a
benefit to share-based compensation expense in the period of such associate’s termination equal to the cumu-
lative expense recorded through the termination date for such forfeited unvested awards.

Shipping and Handling Costs. We classify shipping and handling costs as a component of cost of sales.

We record customer payments of shipping and handling costs as a component of net sales.

Taxes Collected from Customers and Remitted to Governmental Authorities. We do not include tax

amounts collected from customers in sales transactions as a component of net sales.

Self-Insurance. We are self-insured for certain healthcare benefits provided to our U.S. employees. The
liability for the self-insured benefits is limited by the purchase of stop-loss insurance. The stop-loss coverage
provides payment for claims exceeding$0.2 million per covered person for any given year. Accruals for losses
are made based on our claim experience and estimates based on historical data. Actual losses may differ from
accrued amounts. Should actual losses exceed the amounts expected and, as a result, the recorded liabilities are
determined to be insufficient, an additional expense will be recorded.

Ventures and Variable Interest Entities.

In the normal course of business we establish wholly owned proj-
ect companies which may be considered variable interest entities (“VIEs”). We consolidate wholly owned varia-
ble interest entities when we are considered the primary beneficiary of such entities. Additionally, we have, and
may in the future form, joint venture type arrangements, including partnerships and partially owned limited
liability companies or similar legal structures, with one or more third parties primarily to develop, construct,
own, and/or sell solar power projects. These types of ventures are core to our business and long-term strategy
related to providing PV solar generation solutions using our modules to key geographic markets. We analyze all
of our ventures and classify them into two groups: (i) ventures that must be consolidated because they are either
not VIEs and we hold a majority voting interest, or because they are VIEs and we are the primary beneficiary and
(ii) ventures that do not need to be consolidated and are accounted for under either the cost or equity method of
accounting because they are either not VIEs and we hold a minority voting interest, or because they are VIEs and
we are not the primary beneficiary.

Ventures are considered VIEs if (i) the total equity investment at risk is not sufficient to permit the entity to
finance its activities without additional subordinated financial support; (ii) as a group, the holders of the equity
investment at risk lack the ability to make certain decisions, the obligation to absorb expected losses, or the right
to receive expected residual returns; or (iii) an equity investor has voting rights that are disproportionate to its
economic interest and substantially all of the entity’s activities are conducted on behalf of that investor. Our
venture agreements typically require us to fund some form of capital for the development and construction of a
project, depending upon the opportunity and the market in which our ventures are located.

We are considered the primary beneficiary of and are required to consolidate a VIE if we have the power to
direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb

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losses or the right to receive benefits of the VIE that could potentially be significant to the entity. If we determine
that we do not have the power to direct the activities that most significantly impact the entity, then we are not the
primary beneficiary of the VIE.

Cost and Equity Method Investments. We account for our unconsolidated ventures using either the cost or
equity method of accounting depending upon whether we have the ability to exercise significant influence over
the venture. As part of this evaluation, we consider our participating and protective rights in the venture as well
as its legal form. We record our cost method investments at their historical cost and subsequently record any
dividends received from the net accumulated earnings of the investee as income. Dividends received in excess of
earnings are considered a return of investment and are recorded as reductions in the cost of the investment. We
use the equity method of accounting for our investments when we have the ability to significantly influence the
operations or financial activities of the investee. We record our equity method investments at cost and sub-
sequently adjust their carrying amount each period for our share of the earnings or losses of the investee and
other adjustments required by the equity method of accounting. Dividends received from our equity method
investments are recorded as reductions in the cost of such investments. We monitor our investments, which are
included in “Investments in unconsolidated affiliates and joint ventures” in the accompanying consolidated bal-
ance sheets, for impairment and record reductions in their carrying values if the carrying amount of the invest-
ment exceeds its fair value. An impairment charge is recorded when such impairment is deemed to be other-than-
temporary. To determine whether an impairment is other-than-temporary, we consider our ability and intent to
hold the investment until the carrying amount is fully recovered. Circumstances that indicate an other-than-
temporary impairment may have occurred include factors such as decreases in quoted market prices or declines
in the operations of the investee. The evaluation of an investment for potential impairment requires us to exercise
significant judgment and to make certain assumptions. The use of different judgments and assumptions could
result in different conclusions. No impairment losses were recorded related to our cost and equity method
investments during the year ended December 31, 2015. We recorded impairment losses related to our cost and
equity method investments of $7.1 million and $0.2 million during the years ended December 31, 2014 and 2013,
respectively.

3. Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to clar-
ify the principles of recognizing revenue and create common revenue recognition guidance between U.S. GAAP
and International Financial Reporting Standards. An entity has the option to apply the provisions of ASU 2014-
09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of
initially applying this standard recognized at the date of initial application. ASU 2014-09 is effective for fiscal
years and interim periods within those years beginning after December 15, 2017, and early adoption is permitted
for periods beginning after December 15, 2016. We are currently evaluating our method of adoption and the
impact ASU 2014-09 will have on our consolidated financial statements and associated disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810) — Amendments to the Con-
solidation Analysis. ASU 2015-02 modifies existing consolidation guidance related to (i) limited partnerships and
similar legal entities, (ii) the evaluation of variable interests for fees paid to decision makers or service providers,
(iii) the effect of fee arrangements and related parties on the primary beneficiary determination, and (iv) certain
investment funds. These changes are expected to limit the number of consolidation models and place more
emphasis on risk of loss when determining a controlling financial interest. ASU 2015-02 is effective for fiscal
years and interim periods within those years beginning after December 15, 2015. We do not expect the adoption
of ASU 2015-02 to have a significant impact on our consolidated financial statements and associated disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30) — Sim-
plifying the Presentation of Debt Issuance Costs. ASU 2015-03 simplifies the presentation of debt issuance costs
by requiring such costs to be presented in the balance sheet as a reduction to the carrying amount of the

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corresponding debt liability, consistent with debt discounts, rather than as a deferred charge. The adoption of
ASU 2015-03 in the second quarter of 2015 resulted in reclassifications of $0.5 million in unamortized debt issu-
ance costs from “Prepaid expenses and other current assets” to “Current portion of long-term debt” and
$2.9 million in unamortized debt issuance costs from “Other assets” to “Long-term debt” on our consolidated
balance sheet as of December 31, 2014.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330) — Simplifying the Measurement of
Inventory. ASU 2015-11 simplifies the subsequent measurement of inventory by replacing the current lower of
cost or market test with a lower of cost or net realizable value test. The adoption of ASU 2015-11 in the fourth
quarter of 2015 did not have a significant impact on the subsequent measurement of inventory included in our
consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) — Balance Sheet Classi-
fication of Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred taxes by requiring all deferred
tax assets and liabilities to be classified as noncurrent. The adoption of ASU 2015-17 in the fourth quarter of
2015 resulted in reclassifications of $77.9 million and $91.6 million from current “Deferred tax assets, net” to
noncurrent “Deferred tax assets, net” on our consolidated balance sheets as of December 31, 2015 and 2014,
respectively.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10) —
Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 changes how entities
measure certain equity investments and present changes in the fair value of financial liabilities measured under
the fair value option that are attributable to their own credit. The guidance also changes certain disclosure
requirements and other aspects of current U.S. GAAP. ASU 2016-01 is effective for fiscal years and interim
periods within those years beginning after December 15, 2017, and certain provisions of the guidance may be
early adopted. We are currently evaluating the impact ASU 2016-01 will have on our consolidated financial
statements and associated disclosures.

4. Asset Impairments

In October 2013, we entered into an agreement to sell our facility in Mesa, Arizona. The facility consisted of
land, a building, and certain fixtures and improvements. The facility housed our O&M capabilities as well as
certain equipment and inventory. The facility was originally designed to house CdTe PV module manufacturing
lines; however, we never commissioned manufacturing at the facility. As a result of the sales agreement, we
recognized a $56.5 million asset impairment charge, which lowered the carrying value of the facility to its fair
value, less costs to sell. During the fourth quarter of 2013, we received cash proceeds, net of costs to sell, of
$115.0 million in connection with the Mesa sales agreement. The transaction was completed during the first
quarter of 2014.

As a result of our February 2012 manufacturing restructuring, our Vietnam facility was made available for
sale, and during 2013, we expanded our marketing strategy for the facility to include potential strategic and
financial buyers. As a result of this change, we determined that the estimated fair value of our Vietnam facility,
including the related equipment, was less than its carrying value and recorded an asset impairment charge of
$25.2 million to lower the carrying value of the facility to its estimated fair value, less costs to sell. We continue
to actively market the facility at a price that is at or above the current carrying value of the assets. Impairment
charges recognized for our Mesa and Vietnam facilities are presented in “Restructuring and asset impairments”
on the consolidated statements of operations.

5. Business Acquisitions

General Electric

In August 2013, we acquired all of the CdTe PV specific intellectual property assets and CdTe solar manu-
facturing processes (“GE Intellectual Property”) of General Electric Company (“GE”) pursuant to a Master

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

In connection with applying the acquisition method of accounting, $73.7 million of the purchase price con-
sideration was assigned to an IPR&D intangible asset to be amortized over its useful life upon successful com-
pletion of the project, and $10.1 million was assigned to goodwill. The underlying technology and IPR&D
acquired from GE focuses on increasing the efficiency of CdTe solar modules while at the same time lowering
production and installation costs. We valued the acquired IPR&D using the reproduction cost method and the
income approach, as appropriate. The income approach reflected the present value of forecasted cash flows
derived from the incremental module efficiency benefits. We integrated the acquired technology into our manu-
facturing process during 2015 as part of our efforts to increase the efficiency of our solar modules.

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

TetraSun

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

In connection with applying the acquisition method of accounting, $39.1 million of the purchase price con-
sideration was assigned to an IPR&D intangible asset to be amortized over its useful life upon successful com-
pletion of the project, and $6.1 million was assigned to goodwill. The acquired IPR&D involves a project to
develop a lower cost and higher efficiency crystalline silicon cell. We valued the IPR&D using the multi-period
excess earnings method under the income approach. The method reflected the present value of the projected cash
flows that are expected to be generated by the IPR&D less charges representing the contribution of other assets to
those cash flows. During 2015, we fully integrated the acquired technology into our manufacturing processes and
began selling crystalline silicon modules with proprietary high-power density, mono-crystalline technology.

Solar Chile

In January 2013, we acquired a 100% ownership interest

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

In connection with the TetraSun and Solar Chile acquisitions, we agreed to pay additional amounts to sellers
contingent upon achievement by the acquired businesses of certain negotiated goals, such as targeted project and
module shipment volume milestones. We recognized $2.5 million and $4.9 million of current liabilities and
$4.9 million and $14.7 million of long-term liabilities for these contingent obligations based on their estimated

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fair value as of December 31, 2015 and 2014, respectively. During 2015, we made $2.5 million of payments for
contingent consideration related to these acquisitions and recorded an additional adjustment to reduce the asso-
ciated liabilities by $10.0 million.

6. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 were as

follows (in thousands):

Reporting Unit

CdTe components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Crystalline silicon components . . . . . . . . . . . . . . . . . . . . . .
Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment losses . . . . . . . . . . . . . . . . . . . . .

Balance at
December 31,
2014

$ 403,420
6,097
68,833
(393,365)

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 84,985

Reporting Unit

Balance at
December 31,
2013

$ 403,420
6,097
68,833
(393,365)

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 84,985

Acquisitions

$—
—
—
—

$—

Acquisitions

$—
—
—
—

$—

Balance at
December 31,
2015

$ 403,420
6,097
68,833
(393,365)

$ 84,985

Balance at
December 31,
2014

$ 403,420
6,097
68,833
(393,365)

$ 84,985

At December 31, 2015 and 2014, accumulated impairment losses related entirely to the CdTe components

reporting unit.

2015 Goodwill Impairment Testing

We performed our annual impairment analysis in the fourth quarter of 2015. ASC 350-20 provides that prior
to performing the traditional two-step goodwill impairment test, companies are permitted to perform a qualitative
assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value to
determine whether it is necessary to perform the two-step goodwill impairment test. The qualitative impairment
test considers various factors including macroeconomic conditions, industry and market considerations, cost
factors, the overall financial performance of a reporting unit, and any other relevant events affecting the entity or
its reporting units. We performed a qualitative assessment for each of our reporting units and concluded that it
was not more likely than not that the fair value of each reporting unit was less than its carrying amount. Accord-
ingly, the two-step goodwill impairment test for our reporting units was not considered necessary.

2014 and 2013 Goodwill Impairment Testing

We performed our annual impairment analysis in the fourth quarter of 2014 and 2013 and determined that
the carrying amount of goodwill for our CdTe components, crystalline silicon components, and systems reporting
units to be recoverable because the results of the impairment tests indicated that the fair values of the reporting
units significantly exceeded their carrying values. The underlying assumptions used in the first step of our 2014
and 2013 impairment tests considered our market capitalization as of October 1, 2014 and 2013, respectively, as
well as the solar industry and market conditions when determining the fair value of our reporting units.

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Intangible Assets

Intangible assets primarily include those assets acquired as part of our GE and TetraSun acquisitions
described in Note 5 “Business Acquisitions” and our internally-generated intangible assets, which represent pat-
ents on technologies related to our products and production processes. We record an asset for patents, after the
patent has been issued, based on the legal, filing, and other costs incurred to secure them. We amortize intangible
assets on a straight-line basis over their estimated useful lives once the intangible assets meet the criteria to be
amortized. During 2015, $73.7 million of IPR&D from the GE acquisition was reclassified to developed technol-
ogy and began amortizing over its useful life of 10 years, and $39.1 million of IPR&D from the TetraSun acquis-
ition was also reclassified to developed technology and began amortizing over its useful life of 12 years.

The following table summarizes our intangible assets at December 31, 2015 and 2014 (in thousands):

December 31, 2015

Gross
Amount

Accumulated
Amortization

Net Amount

Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Developed technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,070
114,565

$ (1,824)
(8,809)

4,246
105,756

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$120,635

$(10,633)

$110,002

Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Developed technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-process research and development . . . . . . . . . . . . . . . . . . .

5,347
2,757
112,800

$(1,208)
(460)
—

December 31, 2014

Gross
Amount

Accumulated
Amortization

Net Amount

4,139
2,297
112,800

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$120,904

$(1,668)

$119,236

Amortization expense for our intangible assets was $9.2 million, $1.2 million, and $0.9 million for the years

ended December 31, 2015, 2014, and 2013, respectively.

Estimated future amortization expense for our intangible assets was as follows at December 31, 2015 (in

thousands):

2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amortization
Expense

$ 11,787
11,403
11,161
11,161
11,161
53,329

Total amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$110,002

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7. Cash, Cash Equivalents, and Marketable Securities

Cash, cash equivalents, and marketable securities consisted of the following at December 31, 2015 and 2014

(in thousands):

Cash and cash equivalents:

2015

2014

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash equivalents:

$1,126,496

$1,480,452

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

330

1,602

Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,126,826

1,482,054

Marketable securities:

Foreign debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. government obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

663,454
40,000
—
—

703,454

462,731
40,000
2,800
3,501

509,032

Total cash, cash equivalents, and marketable securities . . . . . . . . .

$1,830,280

$1,991,086

We classify our marketable securities as available-for-sale. Accordingly, we record them at fair value and
account for the net unrealized gains and losses as part of “Accumulated other comprehensive income” until real-
ized. We record realized gains and losses on the sale or maturity of our marketable securities in “Other expense,
net” computed using the specific identification method.

During the years ended December 31, 2015, 2014, and 2013, we realized gains on the sale or maturity of our
marketable securities of less than $0.1 million, $0.2 million, and less than $0.1 million, respectively. See Note 11
“Fair Value Measurements” to our consolidated financial statements for information about the fair value of our
marketable securities.

As of December 31, 2015 and 2014, we identified two investments totaling $31.5 million and $41.1 million,
respectively, that had been in a loss position for a period of time greater than 12 months with unrealized losses of
less than $0.1 million. The unrealized losses were primarily due to increases in interest rates relative to rates at
the time of purchase. Based on the underlying credit quality of the investments, we do not intend to sell these
securities prior to the recovery of our cost basis. Therefore, we did not consider these securities to be other-than-
temporarily impaired. All of our available-for-sale marketable securities are subject to a periodic impairment
review. We did not
identify any of our marketable securities as other-than-temporarily impaired as of
December 31, 2015 and 2014.

The following tables summarize the unrealized gains and losses related to our available-for-sale marketable

securities, by major security type, as of December 31, 2015 and 2014 (in thousands):

Foreign debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amortized
Cost

$665,900
40,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$705,900

114

As of December 31, 2015

Gross
Unrealized
Gains

Gross
Unrealized
Losses

$2,455
—

$ 9
—

$ 9

Estimated
Fair
Value

$663,454
40,000

$2,455

$703,454

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Foreign debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. government obligations . . . . . . . . . . . . . . . . . .

Amortized
Cost

$463,466
40,000
2,800
3,500

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$509,766

As of December 31, 2014

Gross
Unrealized
Gains

Gross
Unrealized
Losses

$18
—
—
1

$19

$753
—
—
—

$753

Estimated
Fair
Value

$462,731
40,000
2,800
3,501

$509,032

The contractual maturities of our marketable securities as of December 31, 2015 and 2014 were as follows

(in thousands):

One year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One year to two years . . . . . . . . . . . . . . . . . . . . . . .
Two years to three years . . . . . . . . . . . . . . . . . . . . .

Amortized
Cost

$290,377
228,492
187,031

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$705,900

As of December 31, 2015

Gross
Unrealized
Gains

Gross
Unrealized
Losses

$ 406
1,183
866

$ 9
—
—

$ 9

Estimated
Fair
Value

$289,980
227,309
186,165

$2,455

$703,454

Amortized
Cost

$329,974
125,892
53,900

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$509,766

As of December 31, 2014

Gross
Unrealized
Gains

Gross
Unrealized
Losses

$14
5
—

$19

$174
380
199

$753

Estimated
Fair
Value

$329,814
125,517
53,701

$509,032

The net unrealized losses of $2.4 million and $0.7 million as of December 31, 2015 and 2014, respectively,
on our marketable securities were primarily the result of increases in interest rates relative to rates at the time of
purchase. Our investment policy requires marketable securities to be highly rated and limits the security types,
issuer concentration, and duration to maturity of our marketable securities portfolio.

The following tables show gross unrealized losses and estimated fair values for those marketable securities
that were in an unrealized loss position as of December 31, 2015 and 2014, aggregated by major security type
and the length of time the marketable securities have been in a continuous loss position (in thousands):

Security Type

As of December 31, 2015

In Loss Position for Less
Than 12 Months

In Loss Position for
12 Months or Greater

Total

Estimated
Fair
Value

Gross
Unrealized
Losses

Estimated
Fair
Value

Gross
Unrealized
Losses

Estimated
Fair
Value

Gross
Unrealized
Losses

Foreign debt

. . . . . . . . . . . . . . . . . . . . . . . .

$629,033

$2,386

$31,491

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

$629,033

$2,386

$31,491

$69

$660,524

$2,455

$660,524

$2,455

115

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Security Type

As of December 31, 2014

In Loss Position for Less
Than 12 Months

In Loss Position for
12 Months or Greater

Total

Estimated
Fair
Value

Gross
Unrealized
Losses

Estimated
Fair
Value

Gross
Unrealized
Losses

Estimated
Fair
Value

Gross
Unrealized
Losses

Foreign debt

. . . . . . . . . . . . . . . . . . . . . . . .

$391,840

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

$391,840

$740

$41,060

$13

$432,900

$753

8. Restricted Cash and Investments

Restricted cash and investments consisted of the following at December 31, 2015 and 2014 (in thousands):

2015

2014

Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,764
326,114

$ 49,818
357,235

Total restricted cash and investments(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$333,878

$407,053

(1) There was an additional $72.5 million and $74.7 million of restricted cash included within prepaid expenses

and other current assets at December 31, 2015 and 2014, respectively.

At December 31, 2015 and 2014, our restricted cash consisted of deposits held by various banks to secure
certain of our letters of credit and deposits designated for the construction of systems projects and payment of
amounts related to project construction credit facilities. Restricted cash for our letters of credit is classified as
current or noncurrent based on the maturity date of the corresponding letter of credit. See Note 16 “Commitments
and Contingencies” to our consolidated financial statements for further discussion relating to letters of credit.
Restricted cash for project construction and financing is classified as current or noncurrent based on the projected
use of the restricted funds.

At December 31, 2015 and 2014, our restricted investments consisted of long-term marketable securities
that were held in custodial accounts to fund the estimated future costs of collecting and recycling modules cov-
ered under our solar module collection and recycling program. We classify our restricted investments as
available-for-sale. Accordingly, we record them at fair value and account for the net unrealized gains and losses
as a part of “Accumulated other comprehensive income” until realized. We record realized gains and losses on
the sale or maturity of our restricted investments in “Other expense, net” computed using the specific identi-
fication method. Restricted investments are classified as noncurrent as the underlying accrued solar module col-
lection and recycling liability is also noncurrent in nature.

As necessary, we fund any incremental amounts for our estimated collection and recycling obligations
within 90 days of the end of each year. We determine the funding requirement, if any, based on estimated costs
of collecting and recycling covered modules, estimated rates of return on our restricted investments, and an esti-
mated solar module life of 25 years less amounts already funded in prior years. To ensure that these funds will be
available in the future regardless of any potential adverse changes in our financial condition (even in the case of
our own insolvency), 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. (“FSI”), First Solar Malaysia Sdn. Bhd.
(“FS Malaysia”), and First Solar Manufacturing GmbH are grantors. Only the trustee can distribute funds from
the custodial accounts, and these funds cannot be accessed for any purpose other than to cover qualified costs of
module collection and recycling, either by us or a third party performing the required collection and recycling
services. Investments in these custodial accounts must meet certain investment quality criteria comparable to
highly rated government or agency bonds. We closely monitor our exposure to European markets and maintain
holdings primarily consisting of German and French sovereign debt securities that are not currently at risk of

116

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

default. As of December 31, 2015, we do not expect to fund any incremental amounts during the first quarter of
2016 for our module collection and recycling program.

The following tables summarize the unrealized gains and losses related to our restricted investments, by

major security type, as of December 31, 2015 and 2014 (in thousands):

Foreign government obligations . . . . . . . . . . . . . . .
U.S. government obligations . . . . . . . . . . . . . . . . . .

Amortized
Cost

$177,507
61,228

$75,670
11,709

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$238,735

$87,379

$—
—

$—

As of December 31, 2015

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Foreign government obligations . . . . . . . . . . . . . . .
U.S. government obligations . . . . . . . . . . . . . . . . . .

Amortized
Cost

$189,455
58,510

Gross
Unrealized
Gains

$ 93,280
15,990

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$247,965

$109,270

Gross
Unrealized
Losses

$—
—

$—

As of December 31, 2014

Estimated
Fair
Value

$253,177
72,937

$326,114

Estimated
Fair
Value

$282,735
74,500

$357,235

As of December 31, 2015, the contractual maturities of these restricted investments were between 12 years
and 21 years. As of December 31, 2014, the contractual maturities of these restricted investments were between
13 years and 22 years.

9. Consolidated Balance Sheet Details

Accounts receivable trade, net

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

2015

2014

Accounts receivable trade, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$500,631
(2)

$142,542
(7,108)

Accounts receivable trade, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$500,629

$135,434

At December 31, 2015 and 2014, $21.5 million and $21.4 million, respectively, of our accounts receivable
trade, net were secured by letters of credit, bank guarantees, or other forms of financial security issued by cred-
itworthy financial institutions.

Accounts receivable, unbilled and retainage

Accounts receivable, unbilled and retainage consisted of the following at December 31, 2015 and 2014 (in

thousands):

2015

2014

Accounts receivable, unbilled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$40,205
18,966

$41,868
35,103

Accounts receivable, unbilled and retainage . . . . . . . . . . . . . . . . . . . . . . . . . . .

$59,171

$76,971

117

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The current portion of retainage is included within accounts receivable, unbilled and retainage. Retainage
refers to the portion of the contract price earned by us for work performed, but held for payment by our customer
as a form of security until we reach certain construction milestones. Retainage included within accounts receiv-
able, unbilled and retainage is expected to be billed and collected within the next 12 months.

Inventories

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

2015

2014

Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$159,078
19,736
309,369

$157,468
20,829
442,408

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$488,183

$620,705

Inventories — current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories — noncurrent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$380,424
$107,759

$505,088
$115,617

Balance of systems parts

Balance of systems parts were $136.9 million and $125.1 million as of December 31, 2015 and 2014,
respectively, and represented mounting, electrical, and other construction parts purchased for PV solar power
systems to be constructed or currently under construction, which we held title to and were not yet installed in a
system. Such construction parts included items such as posts, tilt brackets, tables, harnesses, combiner boxes,
inverters, cables, tracker equipment, and other parts we may purchase or assemble for the systems we construct.
We carry these parts at the lower of cost or net realizable value, with such value being based primarily on
recoverability through installation in a solar power system or recoverability through a sales agreement. Balance
of systems parts do not include any solar modules that we manufacture.

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following at December 31, 2015 and 2014 (in

thousands):

2015

2014

Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 74,990
2,691
72,526
98,770

$ 42,193
9,791
74,695
75,472

Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . .

$248,977

$202,151

118

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property, plant and equipment, net

Property, plant and equipment, net consisted of the following at December 31, 2015 and 2014 (in

thousands):

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office equipment and furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stored assets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015

2014

12,063
410,898
1,824,717
144,773
50,546
37,734
138,954

12,378
397,087
1,649,363
134,268
50,096
154,497
155,389

Property, plant and equipment, gross . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,619,685
(1,335,549)

2,553,078
(1,133,090)

Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,284,136

$ 1,419,988

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

(2) Consists of machinery and equipment (“stored assets”) that were originally purchased for installation in our
previously planned manufacturing capacity expansions. We intend to install and place the stored assets into
service when such assets are required or beneficial to our existing installed manufacturing capacity or when
market demand supports additional or market-specific manufacturing capacity. During the year ended
December 31, 2015, we transferred $16.4 million of stored assets to our manufacturing facility in Perrysburg,
Ohio for use in the production of solar modules. As the remaining stored assets are neither in the condition
nor location to produce modules as intended, we will not begin depreciation until such assets are placed into
service. The stored assets are evaluated for impairment under a held and used impairment model whenever
events or changes in business circumstances arise, including consideration of technological obsolescence,
that may indicate that the carrying amount of our long-lived assets may not be recoverable. We ceased the
capitalization of interest on our stored assets once they were physically received from the related machinery
and equipment vendors.

Depreciation of property, plant and equipment was $245.7 million, $245.0 million, and $237.9 million for

the years ended December 31, 2015, 2014, and 2013, respectively.

PV solar power systems, net

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

2015

2014

PV solar power systems, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$97,991
(4,250)

$47,727
(1,334)

PV solar power systems, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$93,741

$46,393

During 2015, we placed $52.2 million of projects into service, net of investment tax credits, including our
30 MW AC Barilla Solar project in Pecos County, Texas and various other projects in India and Australia.
Depreciation of PV solar power systems was $2.9 million, $1.4 million, and zero for the years ended
December 31, 2015, 2014, and 2013, respectively.

119

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Capitalized interest

The cost of constructing facilities, equipment, and project assets includes interest costs incurred during the
assets’ construction period. The components of interest expense and capitalized interest were as follows during
the years ended December 31, 2015, 2014, and 2013 (in thousands):

2015

2014

2013

Interest cost incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost capitalized — property, plant and equipment
. . . . . .
Interest cost capitalized — project assets . . . . . . . . . . . . . . . . . . . .

$(19,367)
1,335
11,057

$(10,828)
2,324
6,522

$(11,703)
2,608
7,211

Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (6,975)

$ (1,982)

$ (1,884)

Project assets and deferred project costs

Project assets and deferred project costs consisted of the following at December 31, 2015 and 2014 (in

thousands):

Project assets — development costs, including project acquisition and land
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Project assets — construction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015

2014

436,375
674,762

379,373
408,402

Project assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,111,137

787,775

Deferred project costs — current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred project costs — noncurrent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred project costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187,940
—

187,940

29,354
22,573

51,927

Total project assets and deferred project costs . . . . . . . . . . . . . . . . . . . . . .

$1,299,077

$839,702

Other assets

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

2015

2014

Notes receivable(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$12,648
4,071
23,317
29,686

$12,096
4,850
23,823
20,901

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$69,722

$61,670

(1) On April 8, 2009, we entered into a credit facility agreement with a solar power project entity of one of our
customers for an available amount of €17.5 million to provide financing for a PV solar power system. The
credit facility replaced a bridge loan that we had made to this entity. The credit facility bears interest at
8.0% per annum payable quarterly with the full amount due on December 31, 2026. As of December 31,
the balance on the credit facility was €7.0 million ($7.6 million and $8.5 million,
2015 and 2014,
respectively, at the balance sheet dates). On February 7, 2014, we entered into a convertible loan agreement
with a strategic entity for an available amount of up to $5.0 million. The loan bears interest at 8.0% per
annum. As of December 31, 2015 and 2014, the balance outstanding on the convertible loan was $5.0 million
and $3.5 million respectively.

120

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued expenses

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

Accrued compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued property, plant and equipment
Accrued inventory and balance of systems parts . . . . . . . . . . . . . . . . . . . . . . .
Accrued project assets and deferred project costs . . . . . . . . . . . . . . . . . . . . . . .
Product warranty liability(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses in excess of normal product warranty liability and related

2015

2014

$ 63,699
7,808
53,542
145,695
38,468

$ 43,072
30,723
36,233
113,012
69,656

expenses(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,040
95,200

7,800
87,660

Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$409,452

$388,156

(1) See Note 16 “Commitments and Contingencies” to our consolidated financial statements for further dis-
cussion of “Product warranty liability” and “Accrued expenses in excess of normal product warranty liability
and related expenses.”

Billings in excess of costs and estimated earnings

Billings in excess of costs and estimated earnings was $87.9 million and $195.3 million at December 31,
2015 and 2014, respectively, and represented billings made or payments received in excess of revenue recog-
nized on contracts accounted for under the percentage-of-completion method. Typically, billings are made based
on the completion of certain construction milestones as provided for in the sales arrangement, and the timing of
revenue recognition may be different from when we can bill or collect from a customer.

Payments and billings for deferred project costs

Payments and billings for deferred project costs was $28.6 million and $60.6 million at December 31, 2015
and 2014, respectively, customer payments received or customer billings made under the terms of solar power
project related sales contracts for which all revenue recognition criteria for real estate transactions have not yet
been met. The associated solar power project costs are included within deferred project costs. We classify such
amounts as current or noncurrent depending on when all revenue recognition criteria are expected to be met,
consistent with the classification of the associated deferred project costs.

Other current liabilities

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

Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing liability(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015

2014

$17,957
16,450
9,233
5,277
8,821

$21,879
7,657
36,817
—
22,311

Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$57,738

$88,664

(1) See Note 16 “Commitments and Contingencies” to our consolidated financial statements for further dis-

cussion.

121

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) See Note 12 “Investments in Unconsolidated Affiliates and Joint Ventures” to our consolidated financial
statements for further discussion of the financing liabilities associated with our leaseback of the Maryland
Solar project.

Other liabilities

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

2015

2014

Product warranty liability(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $193,283 $153,401
82,555
Other taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,077
Contingent consideration(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,139
Liability in excess of normal product warranty liability and related expenses(1) . . .
Financing liability(2)
—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,412
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66,549
8,756
19,565
36,706
67,453

Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $392,312 $320,584

(1) See Note 16 “Commitments and Contingencies” to our consolidated financial statements for further dis-
cussion on “Product warranty liability,” “Contingent consideration,” and “Liability in excess of normal
product warranty liability and related expenses.”

10. 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 consolidated net assets, 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 income” if the derivative instruments qualify for hedge accounting. For
those derivative instruments that do not qualify for hedge accounting (“economic hedges”), we record the
changes in fair value directly to earnings. See Note 11 “Fair Value Measurements” to our consolidated financial
statements for information about the techniques we use to measure the fair value of our derivative instruments.

122

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables present the fair values of derivative instruments included in our consolidated balance

sheets as of December 31, 2015 and 2014 (in thousands):

December 31, 2015

Prepaid
Expenses and
Other Current
Assets

Other
Current
Liabilities

Other
Liabilities

Derivatives designated as hedging instruments:

Foreign exchange forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cross-currency swap contract
Interest rate swap contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ —
—
—

132
6,909
16

285
13,835
—

Total derivatives designated as hedging instruments . . . . . . . . . . . . . . . . . . .

$ —

$ 7,057

$14,120

Derivatives not designated as hedging instruments:

Foreign exchange forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,691

$ 9,393

$ —

Total derivatives not designated as hedging instruments . . . . . . . . . . . . . . . .

$2,691

$ 9,393

$ —

Total derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,691

$16,450

$14,120

December 31, 2014

Prepaid
Expenses and
Other Current
Assets

Other
Current
Liabilities

Other
Liabilities

Derivatives designated as hedging instruments:

$1,213
—
—

$ — $ —
8,995
2,996
46
164

Total derivatives designated as hedging instruments . . . . . . . . . . . . . . . . .

$1,213

$3,160

$9,041

Derivatives not designated as hedging instruments:

Foreign exchange forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$8,578

$4,497

$ —

Total derivatives not designated as hedging instruments . . . . . . . . . . . . . . . .

$8,578

$4,497

$ —

Total derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$9,791

$7,657

$9,041

The impact of offsetting balances associated with derivative instruments designated as hedging instruments

is shown below (in thousands):

December 31, 2015

Gross Amounts Not Offset in
Consolidated Balance Sheet

Gross Asset
(Liability)

Gross Offset in
Consolidated
Balance Sheet

Net Amount
Recognized in
Financial
Statements

Financial
Instruments

Cash Collateral
Pledged

Net
Amount

Foreign exchange forward contracts . . . . $
(417)
Cross-currency swap contract . . . . . . . . . $(20,744)
(16)
Interest rate swap contract . . . . . . . . . . . . $

—
—
—

(417)
(20,744)
(16)

—
—
—

$
(417)
$(20,744)
(16)
$

123

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2014

Gross Amounts Not Offset in
Consolidated Balance Sheet

Gross Asset
(Liability)

Gross Offset in
Consolidated
Balance Sheet

Net Amount
Recognized in
Financial
Statements

Financial
Instruments

Cash Collateral
Pledged

Net
Amount

Foreign exchange forward contracts . . . . $ 1,213
Cross-currency swap contract . . . . . . . . . $(11,991)
(210)
Interest rate swap contract . . . . . . . . . . . . $

—
—
—

1,213
(11,991)
(210)

—
—
—

$ 1,213
$(11,991)
(210)
$

The following table presents the effective amounts related to derivative instruments designated as cash flow
hedges affecting accumulated other comprehensive income (loss) and our consolidated statements of operations
for the years ended December 31, 2015, 2014, and 2013 (in thousands):

Balance in accumulated other comprehensive income (loss)
at December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amounts recognized in other comprehensive income

Foreign
Exchange
Forward
Contracts

Interest Rate
Swap Contract

Cross
Currency Swap
Contract

Total

$ 8,980

$(1,467)

$ (8,031)

(518)

(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,486

(30)

(6,666)

1,790

Amounts reclassified to net sales as a result of forecasted

transactions being probable of not occurring . . . . . . . . . .

(13,115)

Amounts reclassified to earnings impacting:

Foreign currency (loss) gain, net
. . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—

—

—
794

—

(13,115)

8,426
451

8,426
1,245

Balance in accumulated other comprehensive income (loss)
at December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amounts recognized in other comprehensive income

4,351

(703)

(5,820)

(2,172)

(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,769

Amounts reclassified to earnings impacting:

Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency (loss) gain, net
. . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

501
—
—

—
—
481

(2,846)

(1,065)

—
5,050
217

501
5,050
698

Balance in accumulated other comprehensive income (loss)
at December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amounts reclassified to net sales as a result of forecasted

6,621

(210)

(3,399)

3,012

transactions being probable of not occurring . . . . . . . . . .

(1,295)

Amounts recognized in other comprehensive income

(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

832

Amounts reclassified to earnings impacting:

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency (loss) gain, net
. . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(487)
(5,509)
—
—

—

—
—
—
171

—

(1,295)

(9,219)

(8,364)

—
—
10,135
466

(487)
(5,509)
10,135
637

Balance in accumulated other comprehensive income (loss)
at December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

162

(16)

$ (2,017)

$ (1,871)

We recorded no amounts related to ineffective portions of our derivative instruments designated as cash
flow hedges during the years ended December 31, 2015, 2014, and 2013. We recognized unrealized losses of

124

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$0.1 million, unrealized gains of $1.8 million, and unrealized losses of $2.1 million related to amounts excluded
from effectiveness testing for our foreign exchange forward contracts designated as cash flow hedges within
“Other expense, net” during the years ended December 31, 2015, 2014, and 2013, respectively.

The following table presents amounts related to derivative instruments not designated as hedges affecting
our consolidated statements of operations for the years ended December 31, 2015, 2014, and 2013 (in thousands):

Amount of Gain (Loss)
Recognized in Income

Derivatives Not Designated as Hedging Instruments

Location of Gain (Loss)
Recognized in Income

2015

2014

2013

Foreign exchange forward contracts . . . . . . . . . Foreign currency (loss) gain, net
Foreign exchange forward contracts . . . . . . . . . Cost of sales
Foreign exchange forward contracts . . . . . . . . . Net sales

$ (3,425) $ (8,066) $ 6,063
12,422
(3,760)
13,240
— 5,324
—

Interest Rate Risk

We use cross-currency swap and interest rate swap contracts to mitigate our exposure to interest rate fluctua-
tions associated with certain of our debt instruments. We do not use such swap contracts for speculative or trad-
ing purposes.

On September 30, 2011, we entered into a cross-currency swap contract to hedge the floating rate foreign
currency denominated loan under our Malaysian Ringgit Facility Agreement. This swap had an initial notional
value of Malaysian Ringgit (“MYR”) MYR 465.0 million and entitled us to receive a three-month floating Kuala
Lumpur Interbank Offered Rate (“KLIBOR”) interest rate while requiring us to pay a U.S. dollar fixed rate of
3.495%. Additionally, this swap hedges the foreign currency risk of the Malaysian Ringgit denominated principal
and interest payments as we make swap payments in U.S. dollars and receive swap payments in Malaysian Ring-
gits at a fixed exchange rate of 3.19 MYR to USD. The notional amount of the swap is scheduled to decline in
line with our scheduled principal payments on the underlying hedged debt. As of December 31, 2015 and 2014,
the notional value of this cross-currency swap contract was MYR 232.6 million ($54.2 million) and MYR
310.1 million ($88.6 million), respectively. This swap is a derivative instrument that qualifies for accounting as a
cash flow hedge in accordance with ASC 815, and we designated it as such. We determined that this swap was
highly effective as a cash flow hedge at December 31, 2015 and 2014. For the years ended December 31, 2015
and 2014, there were no amounts of ineffectiveness from this cash flow hedge.

On May 29, 2009, we entered into an interest rate swap contract to hedge a portion of the floating rate loans
under our Malaysian Credit Facility, which became effective on September 30, 2009 with an initial notional
value of €57.3 million and pursuant to which we are entitled to receive a six-month floating Euro Interbank
Offered Rate (“EURIBOR”) interest rate while being required to pay a fixed rate of 2.80%. The notional amount
of the interest rate swap contract is scheduled to decline in line with our scheduled principal payments on the
underlying hedged debt. As of December 31, 2015 and 2014, the notional value of this interest rate swap contract
was €2.2 million ($2.4 million) and €10.3 million ($12.5 million), respectively. This derivative instrument quali-
fies for accounting as a cash flow hedge in accordance with ASC 815, and we designated it as such. We
determined that our interest rate swap contract was highly effective as a cash flow hedge at December 31, 2015
and 2014. For the years ended December 31, 2015, 2014, and 2013, there were no amounts of ineffectiveness
from this cash flow hedge.

In the following 12 months, we expect to reclassify to earnings $0.7 million of net unrealized losses related
to swap contracts that are included in “Accumulated other comprehensive income” at December 31, 2015 as we
realize the earnings effect of the underlying loans. The amount we ultimately record to earnings will depend on
the actual interest rates and foreign exchange rates when we realize the earnings effect of the underlying loans.

125

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Foreign Currency Exchange Risk

Cash Flow Exposure

We expect of our subsidiaries to have material future cash flows that will be denominated in currencies
other than the subsidiaries’ functional currencies. Changes in the exchange rates between the functional curren-
cies 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, we enter into foreign
exchange forward contracts to hedge a portion of these forecasted cash flows. As of December 31, 2015 and
2014, these foreign exchange forward contracts hedged our forecasted cash flows for 33 months and 6 months,
respectively. These foreign exchange forward contracts qualify for accounting as cash flow hedges in accordance
with ASC 815, and we designated them as such. We initially report the effective portion of a derivative’s unreal-
ized gain or loss in “Accumulated other comprehensive income” and subsequently reclassify amounts into earn-
ings when the hedged transaction occurs and impacts earnings. We determined that these derivative financial
instruments were highly effective as cash flow hedges at December 31, 2015 and 2014. During the years ended
December 31, 2015, 2014, and 2013, we did not discontinue any cash flow hedges because a hedging relationship
was no longer highly effective. As of December 31, 2015 and 2014, the notional values associated with our for-
eign exchange forward contracts qualifying as cash flow hedges were as follows (notional amounts and U.S.
dollar equivalents in millions):

Currency

Indian rupee

Currency

Australian dollar
Japanese yen

December 31, 2015

Notional Amount USD Equivalent

INR1,290.0

$19.4

December 31, 2014

Notional Amount USD Equivalent

AUD 38.4
JPY1,223.2

$31.5
$10.3

As of December 31, 2015 and 2014, the unrealized gains on these contracts were $0.2 million and

$6.6 million, respectively.

In the following 12 months, we expect to reclassify to earnings $0.1 million of net unrealized gains related
to these forward contracts that are included in “Accumulated other comprehensive income” at December 31,
2015 as we realize the earnings effect of the related forecasted transactions. The amount we ultimately record to
earnings will depend on the actual exchange rates when we realize the related forecasted transactions.

Transaction Exposure and Economic Hedging

Many of our subsidiaries have assets and liabilities (primarily cash, receivables, marketable securities,
payables, 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 fluctua-
tions in our reported 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 eco-
nomically 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 purchase 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. We recognize gains or losses from the
fluctuation in foreign exchange rates and the fair value of these derivative contracts in “Net sales,” “Cost of

126

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

sales,” and “Foreign currency (loss) gain, net” on our consolidated statements of operations, depending on where
the gain or loss from the economically hedged item is classified. As of December 31, 2015, the total net unreal-
ized loss on our economic hedge foreign exchange forward contracts was $6.7 million. As of December 31, 2014,
the total net unrealized gain on our economic hedge foreign exchange forward contracts was $4.1 million. As
these amounts do not qualify for hedge accounting, changes in the fair value of such derivative instruments are
recorded directly to earnings. These contracts mature at dates within the next two years.

As of December 31, 2015 and 2014, 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):

Transaction

Purchase
Sell
Purchase
Sell
Purchase
Sell
Sell
Sell
Purchase
Sell
Sell
Purchase
Sell

Transaction

Purchase
Sell
Purchase
Sell
Purchase
Sell
Purchase
Sell
Purchase
Sell
Purchase
Sell

December 31, 2015

Currency

Notional Amount USD Equivalent

Euro
Euro
Australian dollar
Australian dollar
Malaysian ringgit
Malaysian ringgit
Canadian dollar
Japanese yen
British pound
British pound
Indian rupee
South African rand
South African rand

€42.0
€150.1
AUD 41.1
AUD 89.0
MYR 61.4
MYR 80.7
CAD 4.5
JPY 8,448.7
GBP 11.1
GBP 16.0
INR 8,939.0
ZAR 41.1
ZAR 81.5

$ 45.9
$164.0
$ 29.9
$ 64.8
$ 14.3
$ 18.8
3.2
$
$ 70.1
$ 16.5
$ 23.7
$134.6
2.7
$
5.3
$

December 31, 2014

Currency

Notional Amount USD Equivalent

Euro
Euro
Australian dollar
Australian dollar
Malaysian ringgit
Malaysian ringgit
Canadian dollar
Canadian dollar
Japanese yen
Japanese yen
British pound
British pound

€91.1
€92.4
AUD 26.0
AUD 118.0
MYR 146.0
MYR 93.6
CAD 0.7
CAD 8.3
JPY 244.6
JPY 2,322.1
GBP 1.4
GBP 37.7

$110.9
$112.5
$ 21.3
$ 96.7
$ 41.7
$ 26.7
0.6
$
7.1
$
2.1
$
$ 19.5
$
2.2
$ 58.6

11. Fair Value Measurements

The 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 basis:

• Cash equivalents. At December 31, 2015 and 2014, our cash equivalents consisted of money market
funds. We value our money market cash equivalents using observable inputs that reflect quoted prices for

127

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

securities with identical characteristics, and accordingly, we classify the valuation techniques that use
these inputs as Level 1.

• Marketable securities and restricted investments. At December 31, 2015, our marketable securities con-
sisted of foreign debt and time deposits, and our restricted investments consisted of foreign and U.S. gov-
ernment obligations. At December 31, 2014, our marketable securities consisted of foreign debt, time
deposits, U.S. debt, and U.S. government obligations, and our restricted investments consisted of foreign
and U.S. government obligations. We value our marketable securities and restricted investments using
observable inputs that reflect quoted prices for securities with identical characteristics or quoted prices for
securities with similar characteristics and other observable inputs (such as interest rates that are
observable at commonly quoted intervals). Accordingly, we classify the valuation techniques that use
these inputs as either Level 1 or Level 2 depending on the inputs used. We also consider the effect of our
counterparties’ credit standings in these fair value measurements.

• Derivative assets and liabilities. At December 31, 2015 and 2014, our derivative assets and liabilities
consisted of foreign exchange forward contracts involving major currencies, an interest rate swap contract
involving a benchmark of interest rates, and a cross-currency swap contract including both. Since our
derivative assets and liabilities are not traded on an exchange, we value them using standard industry
valuation models. Where applicable, these models project future cash flows and discount the future
amounts to a present value using market-based observable inputs including interest rate curves, credit risk,
foreign exchange rates, and forward and spot prices for currencies. These inputs are observable in active
markets over the contract term of the derivative instruments we hold, and accordingly, we classify these
valuation techniques as Level 2. We consider the effect of our counterparties’ and our own credit standing
in the fair value measurements of our derivative assets and liabilities, respectively.

At December 31, 2015 and 2014, the fair value measurements of our assets and liabilities that we measure

on a recurring basis were as follows (in thousands):

December 31, 2015

Fair Value Measurements at Reporting Date
Using

Total Fair
Value and
Carrying
Value on Our
Balance
Sheet

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets:

Cash equivalents:

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . .

330

—

$—

Marketable securities:

Foreign debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted investments . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

663,454
40,000
326,114
2,691

—
40,000
—
—

663,454
—
326,114
2,691

—
—
—
—

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,032,589

$40,330

$992,259

$—

Liabilities:

Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,570

$ — $ 30,570

$—

128

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2014

Fair Value Measurements at Reporting Date
Using

Total Fair
Value and
Carrying
Value on Our
Balance
Sheet

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets:

Cash equivalents:

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . .

1,602

$ 1,602

—

$—

Marketable securities:

Foreign debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. government obligations . . . . . . . . . . . . . . . . . . .
Restricted investments . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

462,731
40,000
2,800
3,501
357,235
9,791

—
40,000
—
—
—
—

462,731
—
2,800
3,501
357,235
9,791

—
—
—
—
—
—

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$877,660

$41,602

$836,058

$—

Liabilities:

Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 16,698

$ — $ 16,698

$—

Fair Value of Financial Instruments

The carrying values and fair values of our financial and derivative instruments at December 31, 2015 and

2014 were as follows (in thousands):

December 31, 2015

December 31, 2014

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Assets:

Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange forward contract assets . . . . . . . . . . . . . . . . .
Restricted investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes receivable — noncurrent . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes receivable, affiliates — noncurrent . . . . . . . . . . . . . . . . . .

$703,454
2,691
326,114
12,648
17,887

$703,454
2,691
326,114
18,382
19,932

$509,032
9,791
357,235
12,096
9,127

$509,032
9,791
357,235
12,189
9,812

Liabilities:

Long-term debt, including current maturities . . . . . . . . . . . . . . .
Interest rate swap contract liabilities . . . . . . . . . . . . . . . . . . . . . .
Cross-currency swap contract liabilities . . . . . . . . . . . . . . . . . . .
Foreign exchange forward contract liabilities . . . . . . . . . . . . . . .

$288,350
16
20,744
9,810

$294,449
16
20,744
9,810

$211,915
210
11,991
4,497

$224,489
210
11,991
4,497

The carrying values on our consolidated balance sheets of our cash and cash equivalents, trade accounts
receivable, unbilled accounts receivable and retainage, current affiliate notes receivable, other assets, restricted
cash, accounts payable, income taxes payable, and accrued expenses approximated their fair values due to their
nature and relatively short maturities; therefore, we excluded them from the foregoing table.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We estimated the fair value of our long-term debt and notes receivable using a discounted cash flow
approach (an income approach) or a market approach based on observable market inputs. We incorporated the
credit risk of our counterparty for all asset fair value measurements and our own credit risk for all liability fair
value measurements. Such fair value measurements are considered Level 2 under the fair value hierarchy.

Credit Risk

12.

Investments in Unconsolidated Affiliates and Joint Ventures

We have joint ventures or other strategic arrangements with partners in several markets, which are generally
used to expedite our penetration of those markets and establish relationships with potential customers. We also
enter into joint ventures or strategic arrangements with customers or other entities to maximize the value of
particular projects. Some of these arrangements involve and are expected in the future to involve significant
investments or other allocations of capital. Investments in unconsolidated entities for which we have significant
influence, but not control, over the entities’ operating and financial activities are accounted for under the equity
method of accounting. Investments in entities for which we do not have the ability to exert such significant influ-
ence are accounted for under the cost method of accounting. The following table summarizes our equity and cost
method investments as of December 31, 2015 and 2014 (in thousands):

2015

2014

Equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$375,355
24,450

$249,614
5,415

Investments in unconsolidated affiliates and joint ventures . . . . . . . . . . . . .

$399,805

$255,029

8point3 Energy Partners LP

In June 2015, 8point3 Energy Partners LP (the “Partnership”), a limited partnership formed by First Solar
and SunPower Corporation (the “Sponsors”), completed its initial public offering (the “IPO”) of 20,000,000
Class A shares representing limited partner interests in the Partnership at $21.00 per share pursuant to a Registra-
tion Statement on Form S-1, as amended. As part of the IPO, the Sponsors contributed various projects to 8point3
Operating Company, LLC (“OpCo”) in exchange for voting and economic interests in the entity, and the Partner-
ship acquired an economic interest in OpCo using proceeds from the IPO. Our contributions to OpCo included
our 49% membership interests in SG2 Holdings, LLC; Lost Hills Blackwell Holdings, LLC; and NS Solar Hold-
ings, LLC as well as our 100% membership interest in Maryland Solar LLC.

After the closing of the IPO, we owned an aggregate of 22,116,925 Class B shares representing a 31% vot-
ing interest in the Partnership, and an aggregate of 6,721,810 common units and 15,395,115 subordinated units in
OpCo together representing a 31% economic and voting interest in the entity. We also received a distribution
from OpCo of $283.7 million following the IPO. Future quarterly distributions from OpCo are subject to certain

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FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

forbearance and subordination periods. During the forbearance period, the Sponsors have agreed to forego any
distributions declared on their common and subordinated units. The forbearance period will end on or after
March 1, 2016 when the board of directors of the Partnership’s general partner, 8point3 General Partner, LLC
(“General Partner”), with the concurrence of its conflicts committee, determines that OpCo will be able to earn
and pay at least the minimum quarterly distribution on each of its outstanding common and subordinated units
for such quarter and the successive quarter.

During the subordination period, holders of the subordinated units are not entitled to receive any dis-
tributions until the common units have received their minimum quarterly distribution plus any arrearages in the
payment of minimum distributions from prior quarters. The subordination period will end after OpCo has earned
and paid minimum quarterly distributions for three years ending on or after August 31, 2018 and there are no
outstanding arrearages on common units. Notwithstanding the foregoing, the subordination period could end after
OpCo has earned and paid 150% of minimum quarterly distributions, plus the related distribution on the
incentive distribution rights, for one year ending on or after August 31, 2016 and there are no outstanding arrea-
rages on common units. At the end of the subordination period, all subordinated units will convert to common
units on a one-for-one basis. We also hold certain incentive distribution rights in OpCo, which represent a right
to incremental distributions after certain distribution thresholds are met.

The Partnership is managed and controlled by its General Partner, and we account for our interest in OpCo,
a subsidiary of the Partnership, under the equity method of accounting as we are able to exercise significant
influence over the Partnership due to our representation on the board of directors of its General Partner. The
Partnership owns, operates, and is expected to acquire additional solar energy generation projects from the Spon-
sors. The Partnership’s initial project portfolio includes interests in more than 0.4 GW of various solar energy
generation projects, and the Partnership also has rights of first offer on interests in over 1.1 GW of additional
solar energy generation projects that are currently contracted or are expected to be contracted prior to being sold
by the Sponsors.

Under the equity method of accounting, we recognize equity in earnings for our proportionate share of
OpCo’s net income or loss including adjustments for the amortization of a $45.5 million basis difference result-
ing from the cost of our investment differing from our proportionate share of OpCo’s equity. We recognized
equity in earnings, net of tax, from our investment in OpCo of $20.8 million for the year ended December 31,
2015. As of December 31, 2015, the carrying value of our investment in OpCo was $152.5 million.

In connection with the IPO, we entered into an agreement with a subsidiary of the Partnership to lease back
the Maryland Solar project until December 31, 2019. Under the terms of the agreement, we will make fixed rent
payments to the Partnership’s subsidiary and be entitled to all the energy generated by the project. Due to our
continuing involvement with the project, we account for the leaseback agreement as a financing transaction. As
of December 31, 2015, our financing obligation associated with the leaseback was $42.0 million, of which
$5.3 million and $36.7 million was classified as “Other current liabilities” and “Other liabilities,” respectively, in
the accompanying consolidated balance sheets.

We have also entered into a Management Services Agreement with the Partnership whereby we will provide
certain corporate support services for an annual management fee of $0.6 million, which is consistent with the
prevailing market rates for such services. These services include functions such as general oversight and super-
vision of the preparation and filing of income taxes, information technology, internal audit and compliance serv-
ices, and other management functions. Between December 1, 2015 and November 30, 2016, we have the
one-time right to increase the management fee by an amount not to exceed 15% in the event that our costs exceed
the amount of the management fee.

Additionally, we entered into various Asset Management Agreements with project entities of the Partner-
ship. Under each agreement, we will provide administrative services to the project entities for an annual fee of
$0.3 million, which increases by 2% per year thereafter. These asset management fees are also consistent with
the prevailing market rates for such services.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We also provide O&M services to certain of the Partnership’s partially owned project entities, including
SG2 Holdings, LLC; Lost Hills Blackwell Holdings, LLC; and NS Solar Holdings, LLC. During the year ended
December 31, 2015, we recognized revenue of $2.6 million for such O&M services.

In June 2015, OpCo entered into a $525.0 million senior secured credit facility, consisting of a $300.0 million
term loan facility, a $25.0 million delayed draw term loan facility, and a $200.0 million revolving credit facility (the
“OpCo Credit Facility”). Proceeds from the term loan were used to make initial distributions to the Sponsors. The
OpCo Credit Facility is secured by a pledge of the Sponsors’ equity interests in OpCo.

SG2 Holdings, LLC

In November 2014, we completed the sale of 51% of our 150 MW Solar Gen 2 project to a subsidiary of
Southern Power Company. The Solar Gen 2 project spans three sites, each of which is an approximately 50 MW
grid-connected PV solar power system, comprising a combined 1,451 acres of land in Imperial County,
California. Electricity generated by the systems is contracted to serve a 25-year PPA with a local utility
company. Our remaining 49% membership interest in the project holding company, SG2 Holdings, LLC, was
accounted for under the equity method of accounting as we were able to exercise significant influence over the
project due to our representation on its management committee. Under the terms of the project LLC agreement,
each member is entitled to receive cash distributions based on their respective membership interests, and
Southern Power Company is entitled to substantially all of the project’s federal tax benefits. In June 2015, our
49% interest in SG2 Holdings, LLC with a carrying value of $224.5 million was contributed to OpCo. Prior to
the contribution, we recognized equity in earnings, net of tax, from our investment in SG2 Holdings, LLC of $2.1
million for the six months ended June 30, 2015. As of December 31, 2014, the carrying value of our investment
was $219.9 million.

Lost Hills Blackwell Holdings, LLC

In April 2015, we sold 51% of our 32 MW Lost Hills Blackwell project to a subsidiary of Southern Power
Company. Electricity generated by the system is contracted to serve a short-term PPA with a local municipality
and a 25-year PPA with a local utility company. Our remaining 49% membership interest in the project holding
company, Lost Hills Blackwell Holdings, LLC, was accounted for under the equity method of accounting as we
were able to exercise significant influence over the project due to our representation on its management commit-
tee. Under the terms of the project LLC agreement, each member is entitled to receive cash distributions based on
their respective membership interests, and Southern Power Company is entitled to substantially all of the proj-
ect’s federal tax benefits. In June 2015, our 49% interest in Lost Hills Blackwell Holdings, LLC with a carrying
value of $34.1 million was contributed to OpCo. Prior to the contribution, we recognized equity in earnings, net
of tax, from our investment in Lost Hills Blackwell Holdings, LLC of $0.2 million for the six months ended
June 30, 2015.

NS Solar Holdings, LLC

In April 2015, we also sold 51% of our 60 MW North Star Solar project to a subsidiary of Southern Power
Company. Electricity generated by the system is contracted to serve a 20-year PPA with a local utility company.
Our remaining 49% membership interest in the project holding company, NS Solar Holdings, LLC, was
accounted for under the equity method of accounting as we were able to exercise significant influence over the
project due to our representation on its management committee. Under the terms of the project LLC agreement,
each member is entitled to receive cash distributions based on their respective membership interests, and South-
ern Power Company is entitled to substantially all of the project’s federal tax benefits. In June 2015, our 49%
interest in NS Solar Holdings, LLC with a carrying value of $93.6 million was contributed to OpCo. Prior to the
contribution, we recognized a loss, net of tax, from our investment in NS Solar Holdings, LLC of less than $0.1
million for the six months ended June 30, 2015.

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FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Desert Stateline Holdings, LLC

In August 2015, we sold 51% of our partially constructed 300 MW Desert Stateline project to a subsidiary
of Southern Power Company. Electricity generated by the system is contracted to serve a 20-year PPA with a
local utility company. Our remaining 49% membership interest in the project holding company, Desert Stateline
Holdings, LLC, is accounted for under the equity method of accounting as we are able to exercise significant
influence over the project due to our representation on its management committee. Under the terms of the project
LLC agreement, each member is entitled to receive cash distributions based on their respective membership
interests, and Southern Power Company is entitled to substantially all of the project’s federal tax benefits. During
the year ended December 31, 2015, we recognized no equity in earnings from our investment in Desert Stateline
Holdings, LLC. As of December 31, 2015, the carrying value of our investment was $196.9 million.

Clean Energy Collective, LLC

In November 2014, we entered into various agreements to purchase a minority ownership interest in Clean
Energy Collective, LLC (“CEC”). This investment provided us with additional access to the distributed gen-
eration market and a partner to develop and market community solar offerings to North American residential
customers and businesses directly on behalf of client utility companies. As part of the investment, we also
received a warrant, valued at $1.8 million, to purchase additional ownership interests at prices at or above our
initial investment price per unit.

In addition to our equity investment in CEC, we also entered into a loan agreement to provide CEC with
term loan advances up to $15.0 million. All loans are due in November 2017 on the third anniversary of the ini-
tial loan agreement. Interest is payable semiannually at rates ranging from 7% to 16% depending on CEC’s cur-
rent capital structure. As of December 31, 2015 and 2014, the balance outstanding on the loans was $15.0 million
and $9.1 million, respectively.

CEC is considered a variable interest entity, and our 27% ownership interest in and loans to the company are
considered variable interests. We account for our investment in CEC under the equity method of accounting as
we concluded we are not the primary beneficiary of the company given that we do not have the power to make
decisions over the activities that most significantly impact the company’s economic performance. Under the
equity method of accounting, we recognize equity in earnings for our proportionate share of CEC’s net income or
loss including adjustments for the amortization of a basis difference resulting from the cost of our investment
differing from our proportionate share of CEC’s equity. During the years ended December 31, 2015 and 2014, we
recognized losses, net of tax, of $1.9 million and $0.3 million, respectively, from our investment in CEC. As of
December 31, 2015 and 2014, the carrying value of our investment was $16.1 million and $19.5 million,
respectively.

Joint Venture with Customer

In September 2013, we contributed an immaterial amount for a 50% ownership interest in a newly formed
joint venture, which was established to develop solar power projects in Europe, North Africa, the United States,
and the Middle East. One of our customers also contributed an immaterial amount for the remaining 50% owner-
ship interest in the joint venture. The project development and related activities of the entity are governed by a
joint venture agreement. The intent of this agreement is to outline the general parameters of the arrangement with
our customer, whereby we will supply solar modules for various solar power projects and our customer will
develop and construct the projects. The joint venture agreement also requires each party to consent to all deci-
sions related to the most significant activities of the entity. There are no requirements for us to make further con-
tributions to the joint venture, and the proceeds from the sale of any future projects are to be divided equally
between us and our customer after the repayment of any project financing and project development related costs.

In 2014 and 2015, we subsequently entered into various loan agreements with solar power project entities of
the joint venture pursuant to which the project entities may borrow funds for the construction of PV solar power

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FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

systems in the United Kingdom. The loans bear interest at rates ranging from 6% to 8% per annum and are pay-
able at the earlier of the sale of the associated project entities or maturity in June 2016 or December 2018,
depending on the terms of the individual loan. As of December 31, 2015 and 2014, the balance outstanding on
the loans was £2.8 million ($4.2 million) and £8.0 million ($12.5 million), respectively.

The joint venture is considered a variable interest entity, and our ownership interest in and loans to the proj-
ect entities of the joint venture are considered variable interests. We account for our investment in the joint ven-
ture under the equity method of accounting as we concluded we are not the primary beneficiary of the joint
venture given that we currently share the power to make the decisions that most significantly impact the entity’s
economic performance. The variable interest model may require a reconsideration as to whether we are the pri-
mary beneficiary of the variable interest entity due to changes in facts and circumstances. A failure of a project
entity to repay its loan agreements by their respective maturity dates would be an event of default, if uncured,
that triggers our ability to take over key decisions that would significantly impact the defaulting project entity’s
economic performance. Our specific rights in the event of default would include (i) a unilateral right to terminate
the EPC contractor, (ii) a unilateral right to negotiate the sale of the project, and (iii) an ability to enforce our
rights over all of the project entity’s shares, which have been pledged as a form of security. Such a development
would be a reconsideration event that could result in us concluding that we are the primary beneficiary of the
defaulting project entity.

Summarized Financial Information

The following table presents summarized financial information, in the aggregate, for our significant equity

method investees, as provided to us by the investees (in thousands):

Summary statement of operations information:

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to equity method investees . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal 2015

7,099
(555)
8,936
111,135

As of Fiscal
2015

Summary balance sheet information:

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests, including redeemable noncontrolling interests . . . . . . . . . . .

70,135
1,938,785
150,313
309,169
101,520

13. Percentage-of-Completion Changes in Estimates

We recognize revenue for certain systems business sales arrangements under the percentage-of-completion
method. The percentage-of-completion method of revenue recognition requires us to make estimates of net contract
revenues and costs to complete our projects. In making such estimates, management judgments are required to
evaluate significant assumptions including the amount of net contract revenues, the cost of materials and labor,
expected labor productivity, the impact of potential variances in schedule completion, and the impact of any penal-
ties, claims, change orders, or performance incentives. If estimated total costs on any contract are greater than the
net contract revenues, we recognize the entire estimated loss in the period the loss becomes known. The cumulative
effect of the revisions to estimates related to net contract revenues and costs to complete contracts are recorded in
the period in which the revisions to estimates are identified and the amounts can be reasonably estimated.

134

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes in estimates for systems business sales arrangements accounted for under the percentage-of-
completion method occur for a variety of reasons, including but not limited to (i) construction plan accelerations
or delays, (ii) module cost forecast changes, (iii) cost related change orders, and (iv) changes in other information
used to estimate costs. Changes in estimates could have a material effect on our consolidated statements of oper-
ations. The table below outlines the impact on gross profit of the aggregate net changes in systems business con-
tract estimates (both increases and decreases) for the years ended December 31, 2015 and 2014 as well as the
number of projects that comprise such aggregate net changes in estimates. For purposes of the following table,
we only include projects with changes in estimates that have a net impact on gross profit of at least $1.0 million
during the periods presented. Also included in the table is the net change in estimates as a percentage of the
aggregate gross profit for such projects.

Number of projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases (decreases) in gross profit resulting from net changes in estimates (in
thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net change in estimate as percentage of aggregate gross profit for associated

2015

2014

$31,928

$40,118

projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.4%

1.6%

14. Solar Module Collection and Recycling Liability

We established a voluntary module collection and recycling program to collect and recycle modules sold
and covered under such program once the modules reach the end of their useful lives. Historically, we included a
description of our module collection and recycling obligations in customer sales contracts covered under the
program. Based on the terms of these contracts, we agreed to cover the costs for the collection and recycling of
qualifying solar modules, and the end-users agreed to notify us, disassemble their solar power systems, package
the solar modules for shipment, and revert ownership rights over the modules back to us at the end of the mod-
ules’ service lives.

For modules covered under this program, we record our collection and recycling obligation within “Cost of
sales” at the time of sale based on the estimated cost to collect and recycle the covered solar modules. We esti-
mate the cost of our collection and recycling obligations based on the present value of the expected probability
weighted future cost of collecting and recycling the solar modules, which includes estimates for the cost of pack-
aging materials, the cost of freight from the solar module installation sites to a recycling center, the material,
labor, capital costs, and scale of recycling centers, and an estimated third-party profit margin and return on risk
for collection and recycling services. We base these estimates on (i) our experience collecting and recycling our
solar modules, (ii) the expected timing of when our solar modules will be returned for recycling, and
(iii) expected economic conditions at the time the solar modules will be collected and recycled. In the periods
between the time of sale and the related settlement of the collection and recycling obligation, we accrete the
carrying amount of the associated liability by applying the discount rate used for its initial measurement. We
classify accretion as an operating expense within “Selling, general and administrative” expense on our con-
solidated statement of operations. We periodically review our estimates of expected future recycling costs and
may adjust our liability accordingly.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our module collection and recycling liability was $163.4 million and $246.3 million at December 31, 2015
and 2014, respectively. During the year ended December 31, 2015, we recognized a benefit of $67.6 million to
cost of sales and a benefit of $4.4 million to accretion expense from the reduction in our module collection and
recycling liability, net of the incremental costs associated with the program. During the years ended
December 31, 2014 and 2013, we recognized $30.7 million and $15.1 million, respectively, in cost of sales for
the estimated costs of collection and recycling for modules sold during the period. During the years ended
December 31, 2014 and 2013, we also recognized accretion expense of $7.5 million and $4.6 million,
respectively, associated with our module collection and recycling liability. A 1% increase in the annualized
inflation rate used in our estimated future collection and recycling cost per module would increase our liability
by $36.7 million, and a 1% decrease in that rate would decrease our liability by $30.7 million. The percentage of
modules sold that were subject to our solar module collection and recycling liability was 1% and 56% for the
years ended December 31, 2015 and 2014, respectively.

See Note 8 “Restricted Cash and Investments” to our consolidated financial statements for more information

about our arrangements for funding this liability.

15. Debt

Our long-term debt consisted of the following at December 31, 2015 and 2014 (in thousands):

Loan Agreement

Maturity

Loan
Denomination

2015

2014

Balance (USD)

Revolving credit facility . . . . . . . . . . . . .
Project construction credit facilities . . . .
Malaysian ringgit facility agreement . . . .
Malaysian euro facility agreement . . . . . .
Malaysian facility agreement . . . . . . . . . .
Capital lease obligations . . . . . . . . . . . . .

July 2018
Various
September 2018
April 2018
March 2016
Various

USD
Various
MYR
EUR
EUR
Various

Long-term debt principal . . . . . . . . . . . . .
Less: unamortized discount and issuance
costs . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total long-term debt
. . . . . . . . . . . . . . . .
Less: current portion . . . . . . . . . . . . . . . .

Noncurrent portion . . . . . . . . . . . . . . . . . .

Revolving Credit Facility

— $

218,183
54,175
21,869
5,100
1,065

—
75,418
88,606
34,112
25,818
1,558

300,392

225,512

(10,977)

(12,039)

289,415
(38,090)

213,473
(51,399)

$251,325

$162,074

Our amended and restated credit agreement with several financial institutions as lenders and JPMorgan
Chase Bank, N.A. as administrative agent provides us with a senior secured credit facility (the “Revolving Credit
Facility”) with an aggregate available amount of $700.0 million, with the right to request an increase up to
$900.0 million, subject to certain conditions. Borrowings under the Revolving Credit Facility bear interest at
(i) LIBOR (adjusted for Eurocurrency reserve requirements) plus a margin of 2.25% or (ii) a base rate as defined
in the credit agreement plus a margin of 1.25%, depending on the type of borrowing requested. These margins
are subject to adjustment depending on our consolidated leverage ratio. We had no borrowings under our
Revolving Credit Facility, as of December 31, 2015 and 2014. We had issued $191.6 million and $202.5 million
leaving $508.4 million and
of letters of credit using availability under our Revolving Credit Facility,
$397.5 million of availability at December 31, 2015 and 2014, respectively. Loans and letters of credit issued

136

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

under the Revolving Credit Facility are jointly and severally guaranteed by First Solar, Inc.; First Solar Electric,
LLC; First Solar Electric (California), Inc.; and First Solar Development, LLC and are secured by security
interest in substantially all of the grantors’ tangible and intangible assets other than certain excluded assets.

The credit agreement contains financial covenants including: a leverage ratio covenant, a minimum
EBITDA covenant, and a minimum liquidity covenant. Additionally, the credit agreement contains customary
non-financial covenants and certain restrictions on our ability to pay dividends. We were in compliance with all
covenants of the facility as of December 31, 2015.

In addition to paying interest on outstanding principal under the Revolving Credit Facility, we are required
to pay a commitment fee at a rate of 0.375% per annum, based on the average daily unused commitments under
the facility. The commitment fee may also be adjusted due to changes in our consolidated leverage ratio. We also
pay a letter of credit fee based on the applicable margin for Eurocurrency revolving loans on the face amount of
each letter of credit and a fronting fee of 0.125%.

In June 2015, we entered into the fifth amendment (the “Amendment”) to the Revolving Credit Facility. The
Amendment provided for, among other things, the conversion of the prior tranche B revolving commitments into
tranche A revolving commitments, an increase in the aggregate commitment amount to $700.0 million, and a
maturity date of July 15, 2018. The Amendment also contained changes to certain terms, restrictions, and cove-
nants of the Revolving Credit Facility and provided us with the right to increase the commitments under the
facility up to $900.0 million.

Project Construction Credit Facilities

Chile

In August 2014, Parque Solar Fotovoltaico Luz del Norte SpA (“Luz del Norte”), our indirect wholly-owned
subsidiary, entered into credit facilities with the Overseas Private Investment Corporation (“OPIC”) and the
International Finance Corporation (“IFC”) to provide limited-recourse senior secured debt financing in an
aggregate principal amount of up to $290.0 million for the design, development, financing, construction, testing,
commissioning, operation, and maintenance of a 141 MW PV solar power plant located near Copiapó, Chile. In
September 2015, Luz del Norte reduced the borrowing capacity on the credit facilities to $238.0 million.

Up to $178.0 million of the aggregate principal amount of the loans will be funded by OPIC. The OPIC
commitment is comprised of fixed rate loans in an aggregate principal amount of up to $133.3 million and
variable rate loans in an aggregate principal amount of up to $44.7 million. The fixed rate loans mature on
September 15, 2029, and the variable rate loans mature on September 15, 2032. As of December 31, 2015 and
2014, the balances outstanding on the OPIC loans were $125.1 million and $47.3 million, respectively.

Up to $60.0 million of the aggregate principal amount of the loans will be funded by IFC. The IFC commit-
ment is comprised of fixed rate loans in an aggregate principal amount of up to $44.9 million and variable rate
loans in an aggregate principal amount of up to $15.1 million. The fixed rate loans mature on September 15,
2029, and the variable rate loans mature on September 15, 2032. As of December 31, 2015 and 2014, the balan-
ces outstanding on the IFC loans were $42.2 million and $16.0 million, respectively.

The OPIC and IFC loans are secured by liens over all of Luz del Norte’s assets, which had an aggregate
book value of $388.9 million, including intercompany charges, as of December 31, 2015 and by a pledge of all of
the equity interests in the entity. The financing agreements contain customary representations and warranties,
covenants, and events of default for comparable credit facilities. We were in compliance with all covenants
related to the Luz del Norte Credit Facilities as of December 31, 2015.

In August 2014, Luz del Norte also entered into a Chilean peso facility (“VAT facility” and together with
the OPIC and IFC loans, the “Luz del Norte Credit Facilities”) equivalent to $65.0 million with Banco de Crédito
e Inversiones to fund Chilean value added tax associated with the construction of the Luz del Norte project

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described above. In connection with the VAT facility, FSI provided a guaranty of substantially all payment obli-
gations of Luz del Norte thereunder. As of December 31, 2015 and 2014, the balance outstanding on the VAT
facility was $40.4 million and $12.2 million, respectively.

Japan

In September 2015, First Solar Japan GK, our wholly-owned subsidiary, entered into a construction loan
facility with Mizuho Bank Ltd. for borrowings up to ¥4.0 billion ($33.2 million) for the development and
construction of utility-scale PV solar power plants in Japan (the “Japan Credit Facility”). The facility matures in
September 2016 and is renewable for an additional one-year period at the option of First Solar Japan GK, subject
to certain conditions including timely payment of interest and compliance with all covenants. The facility is
guaranteed by FSI and secured by pledges of certain projects’ cash accounts and other rights in the projects. The
facility contains customary representations and warranties, covenants, and events of default for comparable
construction loan facilities in Japan. As of December 31, 2015, the balance outstanding on the facility was
$5.3 million. We were in compliance with all covenants related to the Japan Credit Facility as of December 31,
2015.

India

In March 2015, Marikal Solar Parks Private Limited and Mahabubnagar Solar Parks Private Limited, our
indirect wholly-owned subsidiaries, entered into term loan facilities with Axis Bank, as administrative agent, for
combined aggregate borrowings up to Rs 1.1 billion ($16.6 million) for the development and construction of two
10 MW PV solar power plants located in Telangana, India (the “India Credit Facilities”). The term loan facilities
have a combined letter of credit sub-limit of Rs 0.8 billion ($12.0 million), which may also be used to support
construction activities. As of December 31, 2015, we had issued Rs 0.8 billion ($11.3 million) of letters of credit
under the facilities. The term loan facilities mature in December 2028 and are secured by certain assets of the
borrowers, which had an aggregate book value of $90.3 million,
including intercompany charges, as of
December 31, 2015 and a pledge of a portion of the equity interests in the borrowers. The India Credit Facilities
contain various financial covenants, including leverage ratio covenants, a debt service ratio covenant, and a fixed
asset coverage ratio covenant. As of December 31, 2015, the balance outstanding on the term loan facilities was
$5.2 million. We were in compliance with all covenants associated with the India Credit Facilities as of
December 31, 2015.

Malaysian Ringgit Facility Agreement

FS Malaysia, our indirect wholly-owned subsidiary, entered into a credit facility agreement (“Malaysian
Ringgit Facility Agreement”), among FSI as guarantor, CIMB Investment Bank Berhad, Maybank Investment
Bank Berhad, and RHB Investment Bank Berhad as arrangers with CIMB Investment Bank Berhad also acting as
facility agent and security agent, and the original lenders party thereto. The loans made to FS Malaysia are
secured by, among other things, FS Malaysia’s leases for the lots on which our fifth and sixth manufacturing
plants in Kulim, Malaysia (“Plants 5 and 6”) are located and all plant, machinery, and equipment purchased by
FS Malaysia with the proceeds of the facility or otherwise installed in or utilized in Plants 5 and 6, to the extent
not financed, or subject to a negative pledge under a separate financing facility related to Plants 5 and 6. In addi-
tion, FS Malaysia’s obligations under the Malaysian Ringgit Facility Agreement are guaranteed, on an unsecured
basis, by FSI. As of December 31, 2015, buildings, machinery, equipment, and land leases with an aggregate net
book value of $240.8 million were pledged as collateral for this loan.

The Malaysian Ringgit Facility Agreement contains negative covenants that, among other things, restrict,
subject to certain exceptions, the ability of FS Malaysia to incur indebtedness, create liens, effect asset sales,
engage in reorganizations, issue guarantees, and make loans. In addition, the agreement includes financial cove-
nants relating to a net total leverage ratio, an interest coverage ratio, a total debt to equity ratio, a debt service

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coverage ratio, and tangible net worth. It also contains certain representations and warranties, affirmative cove-
nants, and events of default provisions. We were in compliance with all covenants associated with the Malaysian
Ringgit Facility Agreement as of December 31, 2015.

Malaysian Euro Facility Agreement

FS Malaysia entered into a credit facility agreement (“Malaysian Euro Facility Agreement”) with Commerz-
bank Aktiengesellschaft and Natixis Zweigniederlassung Deutschland as arrangers and original lenders, and
Commerzbank Aktiengesellschaft, Luxembourg Branch as facility agent and security agent. In connection with
the Malaysian Euro Facility Agreement, FSI concurrently entered into a first demand guarantee agreement in
favor of the lenders. Under this agreement, FS Malaysia’s obligations related to the credit facility are guaranteed,
on an unsecured basis, by FSI. At the same time, FS Malaysia and FSI also entered into a subordination agree-
ment, pursuant to which any payment claims of FSI against FS Malaysia are subordinated to the claims of the
lenders.

The Malaysian Euro Facility Agreement contains negative covenants that, among other things, restrict, sub-
ject to certain exceptions, the ability of FS Malaysia to grant liens over the equipment financed by the facilities,
effect asset sales, provide guarantees, change its business, engage in mergers, consolidations, and restructurings,
and enter into contracts with FSI and its subsidiaries. In addition, the agreement includes the following financial
covenants: a maximum total debt to equity ratio, a maximum total leverage ratio, a minimum interest coverage
ratio, and a minimum debt service coverage ratio. It also contains certain representations and warranties, affirma-
tive covenants, and events of default provisions. We were in compliance with all covenants associated with the
Malaysian Euro Facility Agreement through December 31, 2015.

Malaysian Facility Agreement

FS Malaysia entered into an export financing facility agreement (“Malaysian Facility Agreement”) with a
consortium of banks. FS Malaysia’s obligations related to the agreement are guaranteed, on an unsecured basis,
by FSI. In connection with the Malaysian Facility Agreement, all of FS Malaysia’s obligations are secured by a
first party, first legal charge over the machinery and equipment financed by the credit facilities, and any other
documents, contracts, and agreements related to that machinery and equipment. Also in connection with the
agreement, any payment claims of FSI against FS Malaysia are subordinated to the claims of the lenders. At
December 31, 2015, machinery and equipment with an aggregate net book value of $1.0 million was pledged as
collateral for these loans.

The Malaysian Facility Agreement contains negative covenants that, among other things, restrict, subject to
certain exceptions, the ability of FS Malaysia to incur indebtedness, create liens, effect asset sales, engage in
reorganizations, issue guarantees, and make loans. In addition, the Malaysian Facility Agreement includes finan-
cial covenants relating to a net total leverage ratio, an interest coverage ratio, a total debt to equity ratio, a debt
service coverage ratio, and tangible net worth. The Malaysian Facility Agreement also contains certain
representations and warranties, affirmative covenants, and events of default provisions. We were in compliance
with all covenants associated with the Malaysian Facility Agreement as of December 31, 2015.

Variable Interest Rate Risk

Certain of our

long-term debt agreements bear

interest at prime, Euro Interbank Offered Rate
(“EURIBOR”), KLIBOR, LIBOR, Tokyo Interbank Offered Rate (“TIBOR”), or equivalent variable rates. A
disruption of the credit environment, as previously experienced, could negatively impact interbank lending and,
therefore, negatively impact these floating rates. An increase in EURIBOR would impact our cost of borrowing
under our entire Malaysian Euro Facility Agreement, but would not impact our cost of borrowing of the floating-
rate term loan under our Malaysian Facility Agreement as we entered into an interest rate swap contract to miti-
gate such risk. An increase in KLIBOR would not increase our cost of borrowing under our Malaysian Ringgit

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Facility Agreement as we entered into a cross-currency swap contract to mitigate such risk. An increase in prime,
London Interbank Offered Rate (“LIBOR”), TIBOR, or equivalent variable rates would increase our cost of bor-
rowing under our Revolving Credit Facility and various Project Construction Credit Facilities.

Our long-term debt borrowing rates as of December 31, 2015 were as follows:

Loan Agreement

Borrowing Rate at December 31, 2015

Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . .

Luz del Norte Credit Facilities . . . . . . . . . . . . . . . . .

Japan Credit Facility . . . . . . . . . . . . . . . . . . . . . . . .

India Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . .
Malaysian Ringgit Facility Agreement
. . . . . . . . . .
. . . . . . . . . . . .
Malaysian Euro Facility Agreement

Malaysian Facility Agreement(1)

. . . . . . . . . . . . . .

Capital lease obligations . . . . . . . . . . . . . . . . . . . . .

2.86%
Fixed rate loans at bank rate plus 3.50%
Variable rate loans at 91-Day U.S. Treasury Bill
Yield or LIBOR plus 3.50%
VAT loans at bank rate plus 1.30%
TIBOR plus 0.5%
Bank rate plus 2.35%
KLIBOR plus 2.00%(2)
EURIBOR plus 1.00%
Fixed rate facility at 4.54% Floating rate facility
at EURIBOR plus 0.55%(2)
Various

(1) Outstanding balance split equally between fixed and floating rates.

(2) Interest rate hedges have been entered into relating to these variable rates. See Note 10 “Derivative Financial

Instruments” to our consolidated financial statements.

During the years ended December 31, 2015, 2014, and 2013, we paid $15.2 million, $7.6 million, and $9.3

million, respectively, of interest related to our long-term debt arrangements.

Future Principal Payments

At December 31, 2015, the future principal payments on our long-term debt, excluding payments related to

capital leases, were due as follows (in thousands):

2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Debt

$ 38,331
29,419
67,692
5,785
11,930
146,170

Total long-term debt future principal payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$299,327

16. Commitments and Contingencies

Commercial Commitments

During the normal course of business, we enter into commercial commitments in the form of letters of
credit, bank guarantees, and surety bonds to provide financial and performance assurance to third parties. Our
Revolving Credit Facility provides us with an aggregate available amount of $700.0 million, with a sub-limit of
$500.0 million to issue letters of credit subject to certain limits depending on the currencies of the letters of

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credit, at a fee based on the applicable margin for Eurocurrency revolving loans and a fronting fee. As of
December 31, 2015, we had $191.6 million in letters of credit issued under our Revolving Credit Facility, leaving
$308.4 million of availability which can be used for the issuance of letters of credit. The majority of these letters
of credit were supporting our systems business projects. As of December 31, 2015, we also had $16.8 million in
bank guarantees and letters of credit under separate agreements that were posted by certain of our foreign sub-
sidiaries, $103.2 million of letters of credit issued under two bilateral facilities, of which $71.5 million was
secured with cash, and $154.0 million in surety bonds outstanding primarily for our systems business projects.
The available bonding capacity under our surety lines was $639.0 million as of December 31, 2015.

Lease Commitments

We lease our corporate headquarters in Tempe, Arizona and administrative, research and development,
business development, customer support, and government affairs offices throughout the United States and the
rest of the world under noncancelable operating leases. These leases may require us to pay property taxes,
common area maintenance, and certain other costs in addition to base rent. We also lease certain machinery and
equipment under operating and capital leases. Future minimum payments under all of our noncancelable leases
are as follows as of December 31, 2015 (in thousands):

Gross operating lease

2016

2017

2018

2019

2020 Thereafter

Total
Minimum
Lease
Payments

Less
Amounts
Representing
Interest

Present
Value of
Minimum
Lease
Payments

Less
Current
Portion of
Capital
Leases

Noncurrent
Portion of
Capital
Leases

obligations . . . . . . . . . . . $18,273 $16,025 $13,733 $10,505 $5,378 $104,860 $168,774
— (3,804)

(1,449)

(906)

—

Sublease income . . . . . . . .
Net operating lease

obligations . . . . . . . . . . .
Capital leases . . . . . . . . . . .

16,824
540

14,576
420

12,827
97

10,505
65

5,378
—

104,860
—

164,970
1,122

(57)

1,065

(374)

691

Total . . . . . . . . . . . . . . . . . . $17,364 $14,996 $12,924 $10,570 $5,378 $104,860 $166,092

Our rent expense was $22.5 million, $18.0 million, and $14.4 million for the years ended December 31,

2015, 2014, and 2013, respectively.

Purchase Commitments

We purchase raw materials for inventory, construction materials, various services, and manufacturing equip-
ment from a variety of vendors. During the normal course of business, in order to manage manufacturing and
construction lead times and help assure an adequate supply of certain items, we enter into agreements with
suppliers that either allow us to procure goods and services when we choose or that establish purchase require-
ments over the term of the agreement. In certain instances, the agreements with purchase requirements allow us
the option to cancel, reschedule, or adjust our requirements based on our business needs prior to firm orders
being placed. Consequently, only a portion of our purchase commitments are firm, noncancelable, enforceable,
and legally binding. At December 31, 2015, our obligations under such agreements were $789.7 million, of
which $35.2 million was for commitments related to capital expenditures. $736.0 million of our purchase obliga-
tions are due in 2016.

Product Warranties

When we recognize revenue for module or systems sales, we accrue liabilities for the estimated future costs
of meeting our limited warranty obligations for both modules and the balance of the systems. We make and
revise these estimates based primarily on the number of our solar modules under warranty installed at customer
locations, our historical experience with warranty claims, our monitoring of field installation sites, our internal

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FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

testing of and the expected future performance of our solar modules and BoS components, and our estimated
replacement costs.

From time to time, we have taken remediation actions with respect to affected modules beyond our limited
warranties, and we may elect to do so in the future, in which case we would incur additional expenses. Such
potential voluntary future remediation actions beyond our limited warranty obligations could be material to our
consolidated statements of operations if we commit to any such remediation actions.

Product warranty activities during the years ended December 31, 2015, 2014, and 2013 were as follows

(in thousands):

2015

2014

2013

Product warranty liability, beginning of period . . . . . . . . . . . . . .
Accruals for new warranties issued . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in estimate of product warranty liability . . . . . . . . . .

$223,057
50,040
(13,392)
(27,954)

$198,041
40,599
(16,721)
1,138

$191,596
35,985
(33,499)
3,959

Product warranty liability, end of period . . . . . . . . . . . . . . . . . . .

$231,751

$223,057

$198,041

Current portion of warranty liability . . . . . . . . . . . . . . . . . . . . . .
Noncurrent portion of warranty liability . . . . . . . . . . . . . . . . . . .

$ 38,468
$193,283

$ 69,656
$153,401

$ 67,097
$130,944

We have historically estimated our limited product warranty liability for power output and defects in materi-
als and workmanship under normal use and service conditions to have a warranty return rate of approximately
3% of modules covered under warranty. A 1% change in the estimated warranty return rate would change our
module warranty liability by $71.5 million, and a 1% change in the estimated warranty return rate for
BoS components would not have a material impact on the associated warranty liability.

Accrued Expenses in Excess of Product Warranty

We may also accrue expenses for the cost of any voluntary remediation programs beyond our normal prod-
uct warranty. As of December 31, 2015 and 2014, accrued expenses in excess of our product warranty were
$24.6 million and $30.9 million, respectively, of which $5.0 million and $7.8 million, respectively, were classi-
fied as current and included in “Accrued expenses” on our consolidated balance sheets and $19.6 million and
$23.1 million, respectively, were classified as noncurrent and included in “Other liabilities” on our consolidated
balance sheets. Our estimates for such remediation programs are based on an evaluation of available information
including the estimated number of potentially affected solar modules, historical experience related to our
remediation efforts, customer-provided data related to potentially affected systems, estimated costs for perform-
ing removal, replacement, and logistical services, and any post-sale expenses covered under our voluntary
remediation program. If any of our estimates prove incorrect, we could be required to accrue additional expenses.

Performance Guarantees

As part of our systems business, we conduct performance testing of a system prior to substantial completion
to confirm the system meets its operational and capacity expectations noted in the EPC agreement. In addition,
we may provide an energy performance test during the first year of a system’s operation to demonstrate that the
actual energy generation for the first year meets or exceeds the modeled energy expectation, after certain adjust-
ments. If there is an underperformance event with regards to these tests, we may incur liquidated damages as a
percentage of the EPC contract price. In certain instances, a bonus payment may be received at the end of the
first year if the system performs above a specified level. As of December 31, 2015 and 2014, we accrued
$0.3 million and $4.3 million, respectively, of estimated obligations under such arrangements, which were classi-
fied as “Other current liabilities” in the consolidated balance sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As part of our O&M service offerings, we typically offer an effective availability guarantee, which stip-
ulates that a system will be available to generate a certain percentage of total possible energy during a specific
period after adjusting for factors outside of our control as the service provider, such as weather, curtailment,
outages, force majeure, and other conditions that may affect system availability. Effective availability guarantees
are only offered as part of our O&M services and terminate at the end of an O&M arrangement. If we fail to meet
the contractual threshold for these guarantees, we may incur liquidated damages for certain lost energy under the
PPA. Our O&M agreements typically contain provisions limiting our total potential losses under an agreement,
including amounts paid for liquidated damages, to a percentage of O&M fees. Many of our O&M agreements
also contain provisions whereby we may receive a bonus payment if system availability exceeds a separate
threshold. As of December 31, 2015 and 2014, we did not accrue any estimated obligations under our effective
availability guarantees.

Repurchase of Systems Projects

From time to time under sales agreements for a limited number of our solar power projects, we may be
required to repurchase the projects if certain events occur, such as not achieving commercial operation of the
project within a certain timeframe. For any sales agreements that have such conditional repurchase clauses, we
will not recognize revenue on such sales agreements until the conditional repurchase clauses are of no further
force or effect and all other necessary revenue recognition criteria have been met.

Contingent Consideration

In connection with our TetraSun and Solar Chile acquisitions, we agreed to pay additional amounts to sellers
contingent upon achievement by the acquired businesses of certain negotiated goals, such as targeted project and
module shipment volume milestones. As of December 31, 2015 and 2014, we recorded $2.5 million and $4.9
million of current
respectively, and $4.9 million and $14.7 million of long-term liabilities,
respectively, for these contingent obligations based on their estimated fair value.

liabilities,

We continually seek to make additions to our advanced-stage project pipeline and are also actively develop-
ing our early to mid-stage project pipeline in order to secure PPAs and are also pursuing opportunities to acquire
advanced-stage projects, which already have PPAs in place. In connection with such project acquisitions, we may
agree to pay additional amounts to project sellers upon achievement of certain project-related milestones, such as
obtaining a PPA, obtaining financing, and selling to a new owner. We recognize an estimated project acquisition
contingent liability when we determine that such liability is both probable and reasonably estimable, and the
carrying amount of the related project asset is correspondingly increased. As of December 31, 2015 and 2014, we
recorded $6.7 million and $31.9 million of current liabilities, respectively, and $3.9 million and $2.4 million of
for such contingent obligations. Any future differences between the
long-term liabilities,
acquisition-date contingent obligation estimate and the ultimate settlement of the obligations will be recognized
primarily as an adjustment to project assets, as contingent payments are considered direct and incremental to the
underlying value of the related projects.

respectively,

Legal Proceedings

We are party to legal matters and claims that are normal in the course of our operations. While we believe
that the ultimate outcome of these matters will not have a material adverse effect on our financial position, results
of operations, or cash flows, the outcome of these matters is not determinable with certainty, and negative out-
comes may adversely affect us.

Class Action

On March 15, 2012, a purported class action lawsuit

titled Smilovits v. First Solar, Inc., et al.,
Case No. 2:12-cv-00555-DGC, was filed in the United States District Court for the District of Arizona (hereafter

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FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

“Arizona District Court”) against the Company and certain of our current and former directors and officers. The
complaint was filed on behalf of persons who purchased or otherwise acquired the Company’s publicly traded
securities between April 30, 2008 and February 28, 2012 (the “Class Action”). The complaint generally alleges
that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and
misleading statements regarding the Company’s financial performance and prospects. The action includes claims
for damages, including interest, and an award of reasonable costs and attorneys’ fees to the putative class. The
Company believes it has meritorious defenses and will vigorously defend this action.

On July 23, 2012, the Arizona District Court issued an order appointing as lead plaintiffs in the Class Action
the Mineworkers’ Pension Scheme and British Coal Staff Superannuation Scheme (collectively “Pension
Schemes”). The Pension Schemes filed an amended complaint on August 17, 2012, which contains similar
allegations and seeks similar relief as the original complaint. Defendants filed a motion to dismiss on
September 14, 2012. On December 17, 2012, the court denied Defendants’ motion to dismiss. On October 8,
2013, the Arizona District Court granted the Pension Schemes’ motion for class certification, and certified a class
comprised of all persons who purchased or otherwise acquired publicly traded securities of the Company
between April 30, 2008 and February 28, 2012 and were damaged thereby, excluding defendants and certain
related parties. Merits discovery closed on February 27, 2015.

Defendants filed a motion for summary judgment on March 27, 2015. On August 11, 2015, the Arizona
District Court granted defendants’ motion in part and denied it in part, and certified an issue for immediate
appeal to the Ninth Circuit Court of Appeals. First Solar filed a petition for interlocutory appeal with the
Ninth Circuit, and that petition was granted on November 18, 2015. First Solar’s opening brief is due on
March 25, 2016. The Arizona District Court entered a stay of the proceedings in district court until the appeal is
decided. Given the pending appeal, the need for further expert discovery, and the uncertainties of trial, we are not
in a position to assess whether any loss or adverse effect on our financial condition is probable or remote or to
estimate the range of potential loss, if any.

Opt-Out Action

On June 23, 2015, a suit titled Maverick Fund, L.D.C. v. First Solar, Inc., et al., Case No. 2:15-cv-01156-ROS,
was filed in Arizona District Court by putative stockholders that opted out of the Class Action. The complaint
names the Company and certain of our current and former directors and officers as defendants, and alleges that the
defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and violated state law, by
making false and misleading statements regarding the Company’s financial performance and prospects. The action
includes claims for recessionary and actual damages, interest, punitive damages, and an award of reasonable attor-
neys’ fees, expert fees, and costs. The Company believes it has meritorious defenses and will vigorously defend this
action.

The Arizona District Court has extended the deadline for responding to the complaint until after the Ninth
Circuit Court of Appeals resolves the petition for appeal and/or the appeal in the Smilovits matter described
above. Accordingly, we are not in a position to assess whether any loss or adverse effect on our financial con-
dition is probable or remote or to estimate the range of potential loss, if any.

Derivative Actions

On April 3, 2012, a derivative action titled Tsevegmid v. Ahearn, et al., Case No. 1:12-cv-00417-CJB, was
filed by a putative stockholder on behalf of the Company in the United States District Court for the District of
Delaware (hereafter “Delaware District Court”) against certain current and former directors and officers of the
Company, alleging breach of fiduciary duties and unjust enrichment. The complaint generally alleges that from
June 1, 2008, to March 7, 2012, the defendants caused or allowed false and misleading statements to be made
concerning the Company’s financial performance and prospects. The action includes claims for, among other
things, damages in favor of the Company, certain corporate actions to purportedly improve the Company’s

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FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

corporate governance, and an award of costs and expenses to the putative plaintiff stockholder, including attor-
neys’ fees. On April 10, 2012, a second derivative complaint was filed in the Delaware District Court. The com-
plaint, titled Brownlee v. Ahearn, et al., Case No. 1:12-cv-00456-CJB, contains similar allegations and seeks
similar relief to the Tsevegmid action. By court order on April 30, 2012, pursuant to the parties’ stipulation, the
Tsevegmid action and the Brownlee action were consolidated into a single action in the Delaware District Court.
On May 15, 2012, defendants filed a motion to challenge Delaware as the appropriate venue for the consolidated
action. On March 4, 2013, the magistrate judge issued a Report and Recommendation recommending to the court
that defendants’ motion be granted and that the case be transferred to the District of Arizona. On July 12, 2013,
the court adopted the magistrate judge’s Report and Recommendation and ordered the case transferred to the
District of Arizona. The transfer was completed on July 15, 2013.

On April 12, 2012, a derivative complaint was filed in the United States District Court for the District of
Arizona (hereafter “Arizona District Court”), titled Tindall v. Ahearn, et al., Case No. 2:12-cv-00769-ROS. In
addition to alleging claims and seeking relief similar to the claims and relief asserted in the Tsevegmid and
Brownlee actions, the Tindall complaint alleges violations of Sections 14(a) and 20(b) of the Securities Exchange
Act of 1934. On April 19, 2012, a second derivative complaint was filed in the Arizona District Court, titled
Nederhood v. Ahearn, et al., Case No. 2:12-cv-00819-JWS. The Nederhood complaint contains similar allega-
tions and seeks similar relief to the Tsevegmid and Brownlee actions. On May 17, 2012 and May 30, 2012,
respectively, two additional derivative complaints, containing similar allegations and seeking similar relief as the
Nederhood complaint, were filed in Arizona District Court: Morris v. Ahearn, et al., Case No. 2:12-cv-01031-
JAT and Tan v. Ahearn, et al., 2:12-cv-01144-NVW.

On July 17, 2012, the Arizona District Court issued an order granting First Solar’s motion to transfer the
derivative actions to Judge David Campbell, the judge to whom the Smilovits class action is assigned. On
August 8, 2012, the court consolidated the four derivative actions pending in Arizona District Court, and on
August 31, 2012, plaintiffs filed an amended complaint. Defendants filed a motion to stay the action on Sep-
tember 14, 2012. On December 17, 2012, the Arizona District Court granted Defendants’ motion to stay pending
resolution of the Smilovits class action. On August 13, 2013, Judge Campbell consolidated the two derivative
actions transferred from the Delaware District Court with the stayed Arizona derivative actions. On February 19,
2016, the Arizona District Court issued an order lifting the stay in part. Pursuant to the February 19, 2016 order,
the plaintiffs shall file an amended complaint by March 11, 2016. Defendants shall file a motion to dismiss the
amended complaint by April 1, 2016. All other litigation activity, including discovery, remains stayed.

On July 16, 2013, a derivative complaint was filed in the Superior Court of Arizona, Maricopa County,
titled Bargar, et al. v. Ahearn, et al., Case No. CV2013-009938, by a putative stockholder against certain current
and former directors and officers of the Company. The complaint contains similar allegations to the Delaware
and Arizona derivative cases, and includes claims for, among other things, breach of fiduciary duties, insider
trading, unjust enrichment, and waste of corporate assets. By court order on October 3, 2013, the Superior Court
of Arizona, Maricopa County granted the parties’ stipulation to defer defendants’ response to the complaint
pending resolution of the Smilovits class action or expiration of the stay issued in the consolidated derivative
actions in the Arizona District Court. On November 5, 2013, the matter was placed on the court’s inactive calen-
dar. The parties have jointly sought and obtained multiple requests to continue the action on the inactive calen-
dar. Most recently, on November 24, 2015, the court entered an order continuing the action on the inactive
calendar until March 31, 2016.

The Company believes that plaintiffs in the derivative actions lack standing to pursue litigation on behalf of
First Solar. The derivative actions are still in the initial stages and there has been no discovery. Accordingly, we
are not in a position to assess whether any loss or adverse effect on our financial condition is probable or remote
or to estimate the range of potential loss, if any.

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Department of Labor Proceeding

In March 2015, the Wage and Hour Division of the U.S. Department of Labor (the “DOL”) notified our
wholly-owned subsidiary First Solar Electric, LLC (“FSE”) of the DOL’s findings following a labor standards
compliance review under the Davis Bacon and Related Acts at the Agua Caliente project in southwestern
Arizona. FSE served as the general contractor for the project. The DOL alleges that certain workers at the project
were misclassified and, as a result of that misclassification, were not paid the required prevailing wage. We dis-
agree with certain of the DOL’s investigative findings and are currently reviewing those issues of disagreement
with the DOL. Possible adverse outcomes include the payment of back wages and debarment of FSE and its
affiliates from doing certain business with the U.S. federal government. We cannot predict the ultimate outcome
of the DOL proceeding.

17. Stockholders’ Equity

Preferred Stock

We have authorized 30,000,000 shares of undesignated preferred stock, $0.001 par value, none of which
was issued and outstanding at December 31, 2015 and 2014. Our board of directors is authorized to determine the
rights, preferences, and restrictions on any series of preferred stock that we may issue.

Common Stock

We have authorized 500,000,000 shares of common stock, $0.001 par value, of which 101,766,797 and
100,288,942 shares were issued and outstanding at December 31, 2015 and 2014, respectively. Each share of
common stock is entitled to a single vote. We have not declared or paid any dividends through December 31,
2015.

During June 2013, we completed an equity offering of 9,747,000 shares of our common stock at a public
offering price of $46.00 per share. Net proceeds from the equity offering were $428.2 million, after deducting
$17.9 million of underwriting discounts and offering expenses of $2.2 million. We have used proceeds from this
offering for general corporate purposes, which includes items such as acquisitions of under development PV
solar power system projects, investments in PV solar power system projects that will be jointly developed with
strategic partners, and capital expenditures or strategic investments to develop certain business units and expand
in new geographies.

18. Share-Based Compensation

We measure share-based compensation cost at the grant date based on the fair value of the award and recog-
nize this cost as share-based compensation expense over the required or estimated service period for awards
expected to vest. The share-based compensation expense that we recognized in our consolidated statements of
operations for the years ended December 31, 2015, 2014, and 2013 was as follows (in thousands):

2015

2014

2013

Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . .
Production start-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,713
4,109
30,052
25

$11,713
4,417
27,660
20

$17,116
5,760
31,426
283

Total share-based compensation expense . . . . . . . . . . . . . . . . . . .

$44,899

$43,810

$54,585

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The following table presents our share-based compensation expense by type of award for the years ended

December 31, 2015, 2014, and 2013 (in thousands):

Restricted and performance stock units . . . . . . . . . . . . . . . . . . . . . . .
Unrestricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock purchase plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net amount released from (absorbed into) inventory . . . . . . . . . . . .

2015

2014

2013

$40,393
1,326
1,254

42,973
1,926

$42,852
1,326
1,003

45,181
(1,371)

$51,433
1,253
998

53,684
901

Total share-based compensation expense . . . . . . . . . . . . . . . . . . .

$44,899

$43,810

$54,585

Share-based compensation expense capitalized in inventory was $3.4 million and $5.3 million as of
December 31, 2015 and 2014, respectively. As of December 31, 2015, we had $28.3 million of unrecognized
share-based compensation expense related to unvested restricted and performance stock units and rights under
our stock purchase plan (the “Stock Purchase Plan”), which we expect to recognize as expense over a weighted-
average period of approximately 0.7 years.

The estimated forfeiture rate used to record compensation expense is based on historical forfeitures and is

adjusted periodically based on actual results. At December 31, 2015 and 2014, our forfeiture rate was 9.5%.

During the years ended December 31, 2015, 2014, and 2013, we recognized an income tax benefit in our
statement of operations of $15.3 million, $15.8 million, and $19.4 million, respectively, related to share-based
compensation expense.

We authorize our transfer agent to issue new shares, net of shares withheld for minimum statutory with-
holding taxes as appropriate, for the vesting of restricted and performance stock units or grants of unrestricted
stock.

Share-Based Compensation Plans

During 2010, we adopted our 2010 Omnibus Incentive Compensation Plan (“the 2010 Omnibus Plan”).
Under the 2010 Omnibus Plan, directors, associates, and consultants of First Solar, Inc. (including any of its
subsidiaries) were eligible to participate. The 2010 Omnibus Plan was administered by the compensation
committee of our board of directors (or any other committee designated by our board of directors), which was
authorized to, among other things, determine who would receive grants and determine the exercise price and
vesting schedule of the awards made under the 2010 Omnibus Plan. The 2010 Omnibus Plan provided for the
grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units,
performance units, cash incentive awards, and other equity-based and equity-related awards.

During 2015, the 2010 Omnibus Plan was replaced by our 2015 Omnibus Incentive Compensation Plan
(“the 2015 Omnibus Plan”). Upon approval by our shareholders, the 2010 Omnibus Plan share reserve was trans-
ferred to the 2015 Omnibus Plan and any forfeitures under the 2010 Omnibus Plan become available for grant
under the 2015 Omnibus Plan. This new plan differs from prior equity compensation plans in that the 2015
Omnibus Plan (i) alters the definition of “Change of Control” to increase the percentage threshold for triggering a
change of control and to better reflect the current ownership of our most significant stockholders, (ii) alters the
number of, and manner in which we calculate, the 2015 Omnibus Plan share reserve (A) to eliminate recycling of
shares surrendered or tendered to satisfy exercise price payments or applicable tax withholding with respect to
options and stock appreciation rights (“SARs”) and (B) to count each share in respect of which a stock-settled
SAR was exercised against the maximum aggregate limit of shares that may be awarded under the 2015 Omnibus
Plan, regardless of the number of shares actually delivered upon settlement of such stock-settled SAR,
(iii) reflects changes (actual or anticipated in the near future) in the law (such as clawback provisions that would

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satisfy Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as codified in
Section 10D of the Exchange Act, and Section 304 of the Sarbanes-Oxley Act of 2002), (iv) clarifies that, to sat-
isfy the exercise price due upon a participant’s exercise of a vested option under the 2015 Omnibus Plan, the
Company may withhold from the shares otherwise deliverable to such participant a number of shares with an
equivalent fair market value to such exercise price, (v) clarifies that for any awards under the 2015 Omnibus Plan
that are subject to vesting based on the achievement of performance goals (or any performance compensation
awards as described below) and for which the compensation committee has provided for the payment of divi-
dends or dividend equivalents, participants would not be entitled to payment of such dividends or dividend
equivalents unless and to the extent that such performance goals are achieved or otherwise deemed to be sat-
isfied, and (vi) responds to other compensation and governance trends.

Under the 2015 Omnibus Plan, directors, officers, employees, and consultants of FSI (including any of its
subsidiaries) are eligible to participate. The 2015 Omnibus Plan is administered by the compensation committee
of our board of directors (or any other committee designated by our board of directors), which is authorized to,
among other things, determine who will receive grants and determine the exercise price and vesting schedule of
the awards made under the 2015 Omnibus Plan. Our board of directors may amend, modify, or terminate the
2015 Omnibus Plan without the approval of our stockholders, except stockholder approval is required for
amendments that would increase the maximum number of shares of our common stock available for awards
under the 2015 Omnibus Plan, increase the maximum number of shares of our common stock that may be deliv-
ered by incentive stock options, or modify the requirements for participation in the 2015 Omnibus Plan.

The 2015 Omnibus Plan provides for the grant of incentive stock options, non-qualified stock options,
SARs, restricted shares, restricted stock units, performance units, cash incentive awards, performance compensa-
tion awards, and other equity-based and equity-related awards. The maximum number of new shares of our
common stock that may be delivered by awards granted under the 2015 Omnibus Plan is 5,183,172. Also, the
shares underlying forfeited, expired, terminated, or canceled awards, or shares surrendered as payment for taxes
required to be withheld become available for new award grants. We may not grant awards under the 2015 Omni-
bus Plan after 2025, which is the tenth anniversary of the 2015 Omnibus Plan’s approval by our stockholders. At
December 31, 2015, 5,176,136 shares were available for grant under the 2015 Omnibus Plan.

Restricted Stock Units and Performance Based Restricted Stock Units

We issue shares to the holders of restricted units on the date the restricted stock units vest. The majority of
shares issued are net of the minimum statutory withholding requirements, which we pay on behalf of our asso-
ciates. As a result, the actual number of shares issued will be less than the number of restricted stock units
granted. Prior to vesting, restricted stock units do not have dividend equivalent rights or voting rights, and the
shares underlying the restricted stock units are not considered issued and outstanding.

Some of our restricted stock units below are characterized as performance based restricted stock units. Our
board of directors approved and adopted the Key Senior Talent Equity Performance Program (“KSTEPP”), a
performance unit program under our prior 2010 Omnibus Plan applicable to our senior executives. The KSTEPP
rewards achievement of certain performance objectives aligned to the success of our Long Term Strategic Plan.
The performance objectives for the rolling annual measurement periods include KSTEPP adjusted operating
income, sales in key geographic markets, and cash adjusted return on invested capital. The KSTEPP awards were
designed so that the attainment of the performance criteria required for full or partial vesting would be attained
over time. In November 2015, the compensation committee of our board of directors certified the Company’s
achievement of the partial KSTEPP vesting conditions for the rolling annual period ended September 30, 2015.
Accordingly, one-third of each KSTEPP award vested in 2015, and each KSTEPP participant received one share
of common stock for each vested KSTEPP performance unit, net of any forfeitures or tax withholdings.

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The following is a summary of our restricted and performance stock unit activity for the year ended

December 31, 2015:

Unvested restricted stock units at December 31, 2014 . . . . . . . . . . . . .
Restricted stock units granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Shares

4,319,461
444,942
(1,629,123)
(160,787)

Unvested restricted stock units at December 31, 2015 . . . . . . . . . . . . .

2,974,493

Weighted Average
Grant-Date
Fair Value

$29.80
60.91
33.88
41.32

$31.59

We estimate the fair value of our restricted stock unit awards based on our stock price on the grant date. For
the years ended December 31, 2014 and 2013, the weighted average grant-date fair value for restricted stock
units granted in such years was $57.74 and $29.56, respectively. The total fair value of restricted stock units
vested during 2015, 2014, and 2013 was $96.4 million, $66.8 million, and $33.6 million, respectively.

Stock Awards

During the years ended December 31, 2015, 2014, and 2013, we awarded 25,376, 21,879, and 31,891,
respectively, of fully vested, unrestricted shares of our common stock to the independent members of our board
of directors. We recognized $1.3 million, $1.3 million, and $1.3 million of share-based compensation expense for
these awards during the years ended December 31, 2015, 2014, and 2013, respectively.

Stock Purchase Plan

Our shareholders approved our Stock Purchase Plan for employees in June 2010. The plan allows employees
to purchase our common stock through payroll withholdings over a six-month offering period at 85% of the clos-
ing share price on the last day of the offering period (the “exercise date”). We estimate the fair value of the Stock
Purchase Plan compensation expense based primarily on our stock price on the exercise date.

19. Benefit Plans

We offer a 401(k) retirement savings plan into which all of our U.S. associates (our term for employees) can
voluntarily contribute a portion of their annual salaries and wages, subject to legally prescribed dollar limits. Our
contributions to our associates’ plan accounts are made at the discretion of our board of directors and are based
on a percentage of the participating associates’ contributions. Associate contributions are matched dollar-for-
dollar up to the first 4%. Our contributions to the plan were $7.4 million, $6.5 million, and $6.7 million for the
years ended December 31, 2015, 2014, and 2013, respectively. Our 401(k) retirement savings plan does not offer
participants an option to invest in our common stock.

We also offer certain retirement savings plans to certain non-U.S. associates. These plans are managed in
accordance with applicable local statutes and practices and are defined contribution plans. Our contributions to
these plans were $0.9 million, $0.9 million, and $0.9 million during the years ended December 31, 2015, 2014,
and 2013, respectively.

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20.

Income Taxes

The U.S. and non-U.S. components of our income before income taxes for the years ended December 31,

2015, 2014, and 2013 were as follows (in thousands):

2015

2014

2013

U.S. income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$126,958
392,877

$139,137
292,964

$ 78,346
302,633

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$519,835

$432,101

$380,979

The components of our income tax (benefit) expense for the years ended December 31, 2015, 2014, and

2013 were as follows (in thousands):

Current expense:

2015

2014

2013

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 20,208
4,172
23,215

$15,492
1,699
8,123

$ 44,518
836
5,622

Total current expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47,595

25,314

50,976

Deferred (benefit) expense:

(716)
3,118
(56,153)

2,926
5,133
(2,185)

(12,022)
2,229
(11,085)

Total deferred (benefit) expense . . . . . . . . . . . . . . . . . . . . . . .

(53,751)

5,874

(20,878)

Total income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . .

$ (6,156)

$31,188

$ 30,098

The current tax expense listed above does not reflect income tax benefits of $14.6 million, $24.5 million,
and $21.0 million for the years ended December 31, 2015, 2014, and 2013, respectively, related to excess tax
deductions on share-based compensation as we recorded such benefits directly to additional paid-in capital.

We use the deferral method of accounting for investment tax credits under which the credits are recognized
as reductions in the carrying value of the related assets. The use of the deferral method also results in a basis dif-
ference from the recognition of a deferred tax asset and an immediate income tax benefit for the future tax depre-
ciation of the related assets. Such basis differences are accounted for pursuant to the income statement method.
During 2015, we generated a $19.2 million investment tax credit from placing a project into service.

Our Malaysian subsidiary has been granted a long-term tax holiday that expires in 2027. The tax holiday,
which generally provides for a full exemption from Malaysian income tax, is conditional upon our continued
compliance in meeting certain employment and investment thresholds, which we are currently in compliance
with and expect to continue to comply with through the expiration of the tax holiday in 2027.

Income tax expense decreased by $37.3 million during 2015 compared to 2014. The decrease in income tax
expense was primarily the result of a $41.7 million discrete tax benefit associated with the receipt of a private
letter ruling. Income tax expense increased by $1.1 million during 2014 compared to 2013. The increase in
income tax expense was primarily attributable to an increase in pretax book income earned in higher tax juris-
dictions in 2014, partially offset by a discrete tax benefit due to the expiration of the statute of limitations for
various uncertain tax positions.

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Our income tax results differed from the amount computed by applying the U.S. statutory federal income
tax rate of 35.0% to our income before income taxes for the following reasons for the years ended December 31,
2015, 2014, and 2013 (in thousands):

2015

2014

2013

Tax

Percent

Tax

Percent

Tax

Percent

Statutory income tax expense . . . . . . . . . . . . . . . .
Non-deductible expenses . . . . . . . . . . . . . . . . . . . .
State tax, net of federal benefit . . . . . . . . . . . . . . .
Effect of tax holiday . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax rate differential . . . . . . . . . . . . . . . . . .
Effect of private letter ruling . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of changes in valuation allowance . . . . . .

$ 181,936
4,161
5,437
(126,324)
(9,637)
(41,694)
(2,566)
(9,670)
(7,799)

0.8%
1.0%

35.0% $151,235
3,001
4,549
(24.3)% (80,049)
(1.9)% (7,524)
(8.0)%
—
(0.5)% (3,014)
(1.8)% (5,369)
(1.5)% (31,641)

0.7%
1.0%

35.0% $133,342
707
1,579
(18.5)% (80,076)
(1.7)% (19,839)
—
(0.7)% (13,267)
(1.2)% 1,606
(7.4)% 6,046

—%

35.0%
0.2%
0.4%
(21.0)%
(5.2)%
—%
(3.5)%
0.4%
1.6%

Reported income tax (benefit) expense . . . . . . . . .

(6,156)

(1.2)% $ 31,188

7.2% $ 30,098

7.9%

For the years ended December 31, 2015 and 2014, the tax benefit from the foreign tax rate differential pri-
marily related to our income generated in Malaysia calculated at the statutory tax rate of 25.0%, compared to the
U.S. statutory tax rate of 35.0%. For the year ended December 31, 2013, the tax benefit from the foreign tax rate
differential primarily related to our income generated in Germany and Malaysia calculated at statutory tax rates
of 29.6% and 25.0%, respectively, compared to the U.S. statutory tax rate of 35.0%.

During the years ended December 31, 2015 and 2014, we made net tax payments of $30.8 million and
$17.0 million, respectively. During the year ended December 31, 2013, we received a net tax refund of $1.6 million.

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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities calculated for U.S. GAAP financial reporting purposes and the amounts calculated for
preparing our income tax returns in accordance with tax regulations. The items that gave rise to our deferred
taxes for the years ended December 31, 2015 and 2014 were as follows (in thousands):

2015

2014

Deferred tax assets:

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 32,022
38,938
74,432
211,066
95,562
5,961
8,559
38,869
2,522
8,622

$ 39,299
38,890
59,517
174,633
86,268
11,435
3,778
48,026
11,120
5,736

Deferred tax assets, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

516,553
(121,524)

478,702
(129,323)

Deferred tax assets, net of valuation allowance . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:

395,029

349,379

Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition accounting / basis difference . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted investments and derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4,270)
(3,527)
(14,128)
(379)
(21,895)
(2,388)

(5,216)
(13,780)
(18,124)
(967)
(1,020)
(5,044)

Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(46,587)

(44,151)

Net deferred tax assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 348,442

$ 305,228

In April 2015, we received a private letter ruling in a foreign jurisdiction related to the timing of the
deduction for certain of our obligations. In accordance with this ruling, we will begin treating these obligations as
deductible when we actually make payments on the obligations, which are expected to occur subsequent to the
expiration of the tax holiday. As a result, we recorded a benefit of $41.7 million through the tax provision to
establish a deferred tax asset associated with the future deductibility of these obligations.

In December 2015, FS Malaysia prepaid a $96.6 million intellectual property royalty to First Solar, Inc. As a
result of this transaction, FS Malaysia and First Solar, Inc. expect to recognize corresponding amounts for royalty
expense and royalty revenue in 2016.

152

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes in our valuation allowance against our deferred tax assets were as follows during the years ended

December 31, 2015, 2014, and 2013 (in thousands):

2015

2014

2013

Valuation allowance, beginning of year . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$129,323
368
(8,167)

$160,965
2,068
(33,710)

$154,919
15,059
(9,013)

Valuation allowance, end of year . . . . . . . . . . . . . . . . . . . . . . . . .

$121,524

$129,323

$160,965

We maintained a valuation allowance of $121.5 million and $129.3 million as of December 31, 2015 and
2014, respectively, against certain of our deferred tax assets, as it is more likely than not that such amounts will
not be fully realized. In 2015, the valuation allowance decreased by $7.8 million primarily due to (i) the partial
release of valuation allowances in jurisdictions with current year operating income and (ii) a reduction of
deferred tax assets with a full valuation allowance due to a decrease in foreign exchange rates. These decreases
were partially offset by an increase in valuation allowances due to current year operating losses.

Except as required under U.S. tax law, we do not provide for U.S. or non-U.S. taxes on the cumulative undis-
tributed earnings of our foreign subsidiaries that have not been previously taxed since we intend to invest such
undistributed earnings indefinitely or repatriation of such earnings would not give rise to additional U.S. or non-
U.S. taxes. If our intent changes or if these funds are needed for our U.S. or non-U.S. operations, we would be
required to accrue or pay U.S. or non-U.S. taxes on some or all of these undistributed earnings. Accordingly, we
have not provided for $1.0 billion of deferred income taxes on $2.9 billion of undistributed earnings of our for-
eign subsidiaries. These taxes would be required to be recognized when and if we determine that these amounts
are not indefinitely reinvested.

At December 31, 2015, we had federal and aggregate state net operating loss carryforwards of $129.5 mil-
lion and $23.8 million, respectively. At December 31, 2014, we had federal and aggregate state net operating loss
carryforwards of $117.3 million and $20.5 million, respectively. If not used, the federal net operating loss carry-
forwards will expire beginning in 2028, and the state net operating loss carryforwards will begin to expire in
2016. The utilization of a portion of our net operating loss carryforwards is subject to an annual limitation under
Section 382 of the Internal Revenue Code due to changes in ownership. Based on our analysis, we do not believe
such annual limitation will impact our realization of the net operating loss carryforwards as we anticipate utiliz-
ing them prior to 2028. At December 31, 2015 our deferred tax assets do not include $24.7 million of excess tax
deductions from employee stock option exercises and vested restricted stock units that are included in our net
operating loss carryforwards. Our stockholders’ equity will increase by up to $24.7 million if and when we ulti-
mately realize these excess tax benefits. We use tax law ordering to determine when excess tax benefits have
been realized.

At December 31, 2015 we had gross federal and state research and development credit carryforwards of $32.7
million, U.S. foreign tax credit carryforwards of $167.0 million, and investment tax credits of $56.9 million avail-
able to reduce future federal and state income tax liabilities. If not used, the research and development credits,
investment tax credits, and U.S. foreign tax credits will begin to expire in 2026 through 2034, 2026 through 2034,
and 2016 through 2024, respectively.

153

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions for

the years ended December 31, 2015, 2014, and 2013 is as follows (in thousands):

2015

2014

2013

Unrecognized tax benefits, beginning of year . . . . . . . . . . . . . . .
Increases related to prior year tax positions . . . . . . . . . . . . . . .
Decreases related to prior year tax positions . . . . . . . . . . . . . .
Decreases from lapse in statute of limitations . . . . . . . . . . . . .
Decreases relating to settlements with authorities . . . . . . . . . .
Increases related to current tax positions . . . . . . . . . . . . . . . . .

$162,029
484
(2,693)
(13,827)
(20,485)
16,247

$183,239
522
(2,513)
(28,649)
(3,111)
12,541

$174,181
6,178
(15,245)
—
—
18,125

Unrecognized tax benefits, end of year . . . . . . . . . . . . . . . . . . . .

$141,755

$162,029

$183,239

If recognized, $141.8 million of unrecognized tax benefits would reduce our annual effective tax rate. Due
to the uncertain and complex application of tax laws and regulations, it is possible that the ultimate resolution of
uncertain tax positions may result in liabilities that could be materially different from these estimates. In such an
event, we will record additional tax expense or tax benefit in the period in which such resolution occurs. Our
policy is to recognize any interest and penalties that we might incur related to our tax positions as a component of
income tax expense. We did not accrue any penalties related to these unrecognized tax benefits during 2015,
2014, or 2013. We also did not accrue any interest related to these unrecognized tax benefits in 2015 and 2014.
We accrued interest related to these unrecognized tax benefits of $0.6 million during 2013. Within the next
twelve months, we do not expect to recognize any previously unrecognized tax benefits.

We are subject to audit by U.S. federal, state, local, and foreign tax authorities. During the year ended
December 31, 2015, we settled a tax audit in Spain, which resulted in a discrete tax expense of $3.0 million. We
are currently under examination in Chile and also continue to have discussions with the German tax authorities
regarding an ongoing dispute. We believe that adequate provisions have been made for any adjustments that may
result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any
issues addressed by our tax audits are not resolved in a manner consistent with our expectations, we could be
required to adjust our provision for income taxes in the period such resolution occurs.

The following table summarizes the tax years that are either currently under audit or remain open and sub-

ject to examination by the tax authorities in the most significant jurisdictions in which we operate:

Tax Years

Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2011 - 2015
2010 - 2014
2010 - 2014
2008 - 2009; 2012 - 2014

In certain of the jurisdictions noted above, we operate through more than one legal entity, each of which has
different open years subject to examination. The table above presents the open years subject to examination for
the most material of the legal entities in each jurisdiction. Additionally, it is important to note that tax years are
technically not closed until the statute of limitations in each jurisdiction expires. In the jurisdictions noted above,
the statute of limitations can extend beyond the open years subject to examination.

21. Net Income per Share

Basic net income per share is computed by dividing net income by the weighted-average number of com-
mon shares outstanding for the period. Diluted net income per share is computed giving effect to all potentially

154

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

dilutive common stock, including restricted and performance stock units and Stock Purchase Plan shares, unless
there is a net loss for the period. In computing diluted net income per share, we utilize the treasury stock method.

The calculation of basic and diluted net income per share for the years ended December 31, 2015, 2014, and

2013 was as follows (in thousands, except per share amounts):

2015

2014

2013

Basic net income per share
Numerator:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$546,421

$395,964

$350,718

Denominator:

Weighted-average common stock outstanding . . . . . . . . . . . .

100,886

100,048

93,697

Diluted net income per share
Denominator:

Weighted-average common stock outstanding . . . . . . . . . . . .
Effect of restricted and performance stock units and stock

100,886

100,048

93,697

purchase plan shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

929

1,595

1,771

Weighted-average shares used in computing diluted net

income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101,815

101,643

95,468

2015

2014

2013

Per share information — basic:
Net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per share information — diluted:
Net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5.42

$3.96

$3.74

$5.37

$3.90

$3.67

The following table summarizes the potential shares of common stock that were excluded from the computa-
tion of diluted net income per share for the years ended December 31, 2015, 2014, and 2013 as they would have
had an anti-dilutive effect (in thousands):

Anti-dilutive shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015

2014

2013

155

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

22. Comprehensive Income and Accumulated Other Comprehensive Income

Comprehensive income, which includes foreign currency translation adjustments, unrealized gains and losses
on available-for-sale securities, and unrealized gains and losses on derivative instruments designated and qualifying
as cash flow hedges, the impact of which has been excluded from net income and reflected as components of stock-
holders’ equity, was as follows for the years ended December 31, 2015, 2014, and 2013 (in thousands):

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain on marketable securities and restricted
investments for the period, net of tax of $1,248, $(6,644),
and $3,334 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: reclassification for gains included in net income, net of
tax of $0, $83, and $0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealized (loss) gain on marketable securities and restricted
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealized (loss) on derivative instruments for the period, net
of tax of $(207), $(711), and $(2,387) . . . . . . . . . . . . . . . . .
Less: reclassification for losses included in net income, net of
tax of $2,278, $(150), and $3,475 . . . . . . . . . . . . . . . . . . . .

2015

2014

2013

$546,421

$395,964

$350,718

(16,432)

(19,147)

4,295

(15,413)

90,868

(39,685)

(2)

(127)

—

(15,415)

90,741

(39,685)

(8,572)

(1,777)

(596)

5,759

6,099

4,322

(565)

Unrealized (loss) gain on derivative instruments . . . . . . . . . . .

(2,813)

Other comprehensive (loss) income, net of tax . . . . . . . . . . . . . .

(34,660)

75,916

(35,955)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$511,761

$471,880

$314,763

The following tables reflect the changes in accumulated other comprehensive income, net of tax, for the

years ended December 31, 2015 and 2014 (in thousands):

Balance as of December 31, 2013 . . . . . . . . . . . . . . . . . . . .
Other comprehensive (loss) income before

Foreign
Currency
Translation
Adjustment

Unrealized
Gain (Loss) on
Marketable
Securities

Unrealized
Gain (Loss) on
Derivative
Instruments

Total

$(34,190)

$ 11,558

$(3,144)

$(25,776)

reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(19,147)

90,868

(1,777)

69,944

Amounts reclassified from accumulated other

comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

(127)

Net other comprehensive (loss) income . . . . . . . . . . . . . . . .

(19,147)

90,741

Balance as of December 31, 2014 . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss before reclassifications . . . . . . . .
Amounts reclassified from accumulated other

(53,337)
(16,432)

102,299
(15,413)

6,099

4,322

1,178
(8,572)

5,972

75,916

50,140
(40,417)

comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

(2)

5,759

5,757

Net other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . .

(16,432)

(15,415)

(2,813)

(34,660)

Balance as of December 31, 2015 . . . . . . . . . . . . . . . . . . . .

$(69,769)

$ 86,884

$(1,635)

$ 15,480

156

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Details of Accumulated Other Comprehensive Income

2015

2014

Income Statement Line Item

Amounts Reclassified for the
Year Ended December 31,

(Losses) and gains on marketable securities and

restricted investments:

Gains and (losses) on derivative contracts:
Foreign exchange forward contracts . . . . . . . . . . . .
Foreign exchange forward contracts . . . . . . . . . . . .
Interest rate and cross currency swap contracts . . . .
. . . . . . . . . . . . . . . . .
Cross currency swap contract

2
—

$ 1,782
5,509
(10,135)
(637)

(3,481)
(2,278)

210
83

Other expense, net
Tax expense

127

Total, net of tax

$ — Net sales

(501)
(698)
(5,050)

(6,249)
150

Cost of sales
Interest expense, net
Foreign currency (loss) gain, net

Total before tax
Tax expense

$ (5,759)

$(6,099)

Total, net of tax

23. Segment and Geographical Information

We operate our business in two segments. Our components segment involves the design, manufacture, and
sale of solar modules which convert sunlight into electricity. We primarily manufacture CdTe modules and also
manufacture high-efficiency crystalline silicon modules. Third-party customers of our components segment
include integrators and operators of PV solar power systems. Our second segment is our fully integrated systems
business (“systems segment”), through which we provide complete turn-key PV solar power systems, or solar
solutions, that draw upon our capabilities, which include (i) project development, (ii) EPC services, and
(iii) O&M services. We may provide our full EPC services or any combination of individual products and serv-
ices within our EPC capabilities depending upon the customer and market opportunity. All of our systems seg-
ment products and services are for PV solar power systems, which primarily use our solar modules, and we sell
such products and services to utilities, independent power producers, commercial and industrial companies, and
other system owners. Additionally, within our systems segment, we may temporarily own and operate certain of
our PV solar power systems for a period of time based on strategic opportunities.

Our Chief Operating Decision Maker (“CODM”), consisting of certain members of our senior executive
officers, views both the manufacturing of solar modules from our components segment and our ability to provide
customers with a complete PV solar power system through our fully integrated systems segment as the primary
drivers of our resource allocation, profitability, and cash flows. Our components segment contributes to our
operating results by providing the fundamental technologies and solar modules that drive our business, and our
systems segment contributes to our operating results by using these modules as part of a range of comprehensive
PV solar energy solutions to meet our customers’ needs.

In our reportable segment financial disclosures, we include an allocation of net sales value for all solar
modules manufactured by our components segment and installed in projects sold or built by our systems segment
in the net sales of our components segment. In the gross profit of our reportable segment disclosures, we include
the corresponding cost of sales value for the solar modules installed in projects sold or built by our systems
segment in the components segment. The cost of solar modules is comprised of the manufactured cost incurred
by our components segment.

157

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

After we have determined the amount of revenue earned for our systems projects following the applicable
accounting guidance for the underlying sales arrangements, we allocate module revenue from the systems seg-
ment to the components segment based on how our CODM strategically views these segments. The amount of
module revenue allocated from the systems segment to the components segment approximates the average selling
price for such solar modules as if the modules were sold to a third-party EPC customer. In order to develop our
estimate of the average selling price used for this revenue allocation, we utilize a combination of our actual third-
party module sales transactions, our competitor benchmarking, and our internal pricing lists used to provide
module price quotes to potential customers. This allocation methodology and the estimated average selling prices
are consistent with how our CODM views the value proposition our components segment brings to a utility-scale
systems project and how our CODM reviews financial information to assess the performance of the components
segment.

Our components and systems segments have certain of their own dedicated administrative key functions,
such as accounting, legal, finance, project finance, human resources, procurement, and marketing. Costs for these
functions are recorded and included within the respective selling, general and administrative costs for our
components and systems segments. Our corporate key functions consist primarily of company-wide corporate
tax, corporate treasury, corporate accounting/finance, corporate legal, investor relations, corporate communica-
tions, and executive management functions. These corporate functions and the assets supporting such functions
benefit both the components and systems segments. We allocate corporate costs to the components and systems
segments as part of selling, general and administrative costs, based upon the estimated benefits provided to each
segment from these corporate functions. We determine the estimated benefits provided to each segment for these
corporate costs based upon a combination of the estimated time spent by corporate employees supporting each
segment and the average relative selling, general and administrative costs incurred by each segment before such
corporate allocations. Infrequent and other miscellaneous costs including restructuring and manufacturing
excursions are included in the components or systems segment operating results based upon which segment
incurred the underlying costs.

Financial information about our reportable segments during the years ended December 31, 2015, 2014, and

2013 was as follows (in thousands):

Year Ended
December 31, 2015

Components

Systems

Total

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization expense . . . . . . . . . . . . . . .
Income before income taxes(1) . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,389,579
347,853
243,898
171,817
16,152
4,037,955

$2,189,416
571,414
14,124
348,018
68,833
3,278,376

$3,578,995
919,267
258,022
519,835
84,985
7,316,331

Year Ended
December 31, 2014

Components

Systems

Total

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization expense . . . . . . . . . . . . . . .
(Loss) income before income taxes . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,102,674
93,510
223,381
(105,531)
16,152
4,168,060

$2,288,513
731,431
23,268
537,632
68,833
2,552,931

$3,391,187
824,941
246,649
432,101
84,985
6,720,991

158

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended
December 31, 2013

Components

Systems

Total

$1,173,947
88,506
211,357
(221,230)

$2,135,669
776,126
27,417
602,209

$3,309,616
864,632
238,774
380,979

(1) The operating results for our components segment for the year ended December 31, 2015 include the impact
of the $80.0 million reduction in our module collection and recycling liability. See Note 14 “Solar Module
Collection and Recycling Liability” to our consolidated financial statements for more information regarding
the change in this liability.

Product Revenue

The following table sets forth the total amounts of solar module and solar power system net sales recognized
for the years ended December 31, 2015, 2014, and 2013. For the purposes of the following table, (i) “Solar
module revenue” is composed of total revenues from the sale of solar modules to third parties, which does not
include any systems segment product or service offerings, and (ii) “Solar power system revenue” is composed of
total revenues from the sale of our PV solar power systems and related products and services, including the solar
modules installed in such solar power systems along with any revenue generated from our PV solar power sys-
tems (in thousands):

2015

2014

2013

Solar module revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Solar power system revenue . . . . . . . . . . . . . . . . . . . . . . . .

$ 227,461
3,351,534

$ 228,319
3,162,868

$ 380,869
2,928,747

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,578,995

$3,391,187

$3,309,616

The following table presents net sales for the years ended December 31, 2015, 2014, and 2013 by geo-

graphic region, which is based on the customer country of invoicing (in thousands):

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Arab Emirates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Honduras . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other foreign countries . . . . . . . . . . . . . . . . . . . . . . . . .

2015

2014

2013

$3,117,797
63,709
134,462
185,064
—
6,188
—
48,773
23,002

$3,042,006
121,941
44,118
157,152
8,409
7,085
569
—
9,907

$2,832,102
142,028
8,253
604
35,772
264,573
21,137
—
5,147

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,578,995

$3,391,187

$3,309,616

159

FIRST SOLAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents long-lived assets, which includes property, plant and equipment, PV solar power sys-
tems, and project assets and deferred project costs as of December 31, 2015 and 2014 by geographic region, based on the
physical location of the assets (in thousands):

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,434,891
788,086
270,623
183,354

$1,206,333
936,482
103,604
59,664

Long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,676,954

$2,306,083

2015

2014

24. Concentrations of Risks

Customer Concentration. The following customers each comprised 10% or more of our total net sales and/or 10%
or more of our total accounts receivable during the years ended December 31, 2015, 2014, and 2013 (dollars in
thousands):

2015

2014

2013

Net Sales

% of
Total NS

A/R
Outstanding

% of
Total A/R

Net Sales

% of
Total NS

A/R
Outstanding

% of
Total A/R

Net Sales

% of
Total NS

*
Customer #1 . . .
*
Customer #2 . . .
Customer #3 . . . $1,060,074
*
Customer #4 . . .
Customer #5 . . .
*
Customer #6 . . . $ 946,820

$ 69,452
*
*
*
30% $ 96,956
*
*
*
*
26% $216,296

*
15%
*
*
21% $1,065,862
$ 524,678
*
*
*
48% $ 467,941

*
*
$18,549
*
31%
*
15% $32,612
$17,199
*
*
14%

*
*
*
14%
*
*
24% $664,669
13%
*
$584,638
*

*
*
*
20%
*
18%

* Net sales and/or accounts receivable to these customers were less than 10% of our total net sales and/or accounts

receivable during the period.

Geographic Risk. During 2015, our third-party solar modules net sales were predominantly in India and Great Brit-
ain, and our solar power system net sales were predominantly in the United States. This concentration of our net sales in a
limited number of geographic regions exposes us to local economic, public policy, and regulatory risks in such regions.

Production. Our products include components that are available from a limited number of suppliers or sources.
Shortages of essential components could occur due to increases in demand or interruptions of supply, thereby impairing
our ability to meet customer demand for our products. Our solar modules are produced in facilities in Perrysburg, Ohio
and Kulim, Malaysia. Damage to or disruption of these facilities could interrupt our business and impair our ability to
generate net sales.

160

Set forth below is a list of exhibits that are being filed or incorporated by reference into this Annual Report

on Form 10-K:

INDEX TO EXHIBITS

Exhibit
Number

3.1

3.2
4.4†

4.5

4.6

4.7

4.8

4.9

Exhibit Description

Form

File No.

Date of
First
Filing

Exhibit
Number

Filed
Herewith

Incorporated by Reference

and

agent

original

Restated

Certificate

Amended
and
Incorporation of First Solar, Inc.
Amended and Restated Bylaws of First Solar, Inc.
Facility Agreement dated May 6, 2008 between
First Solar Malaysia Sdn. Bhd., as borrower, and
IKB Deutsche Industriebank AG, as arranger,
NATIXIS Zweigniederlassung Deutschland, as
lender, AKA
facility
Ausfuhrkredit-Gesellschaft mbH,
original
lender, and NATIXIS Labuan Branch as security
agent
First Demand Guaranty dated May 6, 2008 by
First Solar Inc, as guarantor,
in favor of IKB
Deutsche Industriebank AG, NATIXIS Zweignie-
derlassung Deutschland, AKA Ausfuhrkredit-
Gesellschaft mbH and NATIXIS Labuan Branch
Credit Agreement, dated as of September 4, 2009,
among First Solar, Inc., First Solar Manufacturing
GmbH, the lenders party thereto, JPMorgan Chase
Bank, N.A., as Administrative Agent, Bank of
America and The Royal Bank of Scotland plc, as
Documentation Agents, and Credit Suisse, Cay-
man Islands Branch, as Syndication Agent
Charge of Company Shares, dated as of September
4, 2009, between First Solar, Inc., as Chargor, and
JPMorgan Chase Bank, N.A., as Security Agent,
relating to 66% of the shares of First Solar FE
Holdings Pte. Ltd. (Singapore)
German Share Pledge Agreements, dated as of
September 4, 2009, between First Solar, Inc., First
Solar Holdings GmbH, First Solar Manufacturing
GmbH, First Solar GmbH, and JPMorgan Chase
Bank, N.A., as Administrative Agent
Guarantee and Collateral Agreement, dated as of
September 4, 2009, by First Solar, Inc. in favor of
JPMorgan Chase Bank, N.A., as Administrative
Agent

S-1/A 333-135574

9/18/06

3.1

—

8-K

001-33156

—
5/12/08

—
10.1

8-K

001-33156

5/12/08

10.2

8-K

001-33156

9/10/09

10.1

8-K

001-33156

9/10/09

10.2

8-K

001-33156

9/10/09

10.3

8-K

001-33156

9/10/09

10.4

161

Exhibit
Number

4.10

4.11

4.12

4.13

4.14

4.15

4.16

4.17

Exhibit Description

Form

File No.

Date of
First
Filing

Exhibit
Number

Filed
Herewith

Incorporated by Reference

Guarantee, dated as of September 8, 2009, between
First Solar Holdings GmbH, First Solar GmbH,
First Solar Manufacturing GmbH, as German
Guarantors, and JPMorgan Chase Bank, N.A., as
Administrative Agent
Assignment Agreement, dated as of September 4,
2009, between First Solar Holdings GmbH and
JPMorgan Chase Bank, N.A., as Administrative
Agent
Assignment Agreement, dated as of September 4,
2009, between First Solar GmbH and JPMorgan
Chase Bank, N.A., as Administrative Agent
Assignment Agreement, dated as of September 8,
2009, between First Solar Manufacturing GmbH
and JPMorgan Chase Bank, N.A., as Admin-
istrative Agent
Security Trust Agreement, dated as of Sep-
tember 4, 2009, between First Solar, Inc., First
Solar Holdings GmbH, First Solar GmbH, First
Solar Manufacturing GmbH, as Security Grantors,
JPMorgan Chase Bank, N.A., as Administrative
Agent, and the other Secured Parties party thereto
Amended and Restated Credit Agreement, dated as
of October 15, 2010, among First Solar, Inc., the
borrowing subsidiaries party thereto, the lenders
party thereto, Bank of America N.A. and The
Royal Bank of Scotland PLC, as documentation
agents, Credit Suisse, Cayman Islands Branch, as
syndication agent and JPMorgan Chase Bank,
N.A., as administrative agent
Facility Agreement dated as of August 3, 2011
among First Solar Malaysia Sdn. Bhd., Commerz-
bank Aktiengesellschaft, as arranger and original
lender, Commerzbank Aktiengesellschaft, Lux-
embourg Branch, as facility agent and security
agent, and Natixis Zweigniederlassung Deutsch-
land, as arranger and original lender
First Demand Guaranty, dated as of August 3,
2011, among First Solar, Inc., First Solar Malaysia
Sdn. Bhd. and Commerzbank Aktiengesellschaft,
Luxembourg Branch, as facility agent and security
agent

8-K

001-33156

9/10/09

10.5

8-K

001-33156

9/10/09

10.6

8-K

001-33156

9/10/09

10.7

8-K

001-33156

9/10/09

10.8

8-K

001-33156

9/10/09

10.9

8-K

001-33156

10/20/10

10.1

10-Q 001-33156

8/5/11

10.1

10-Q 001-33156

8/5/11

10.2

162

Exhibit
Number

4.18

4.19

4.20

4.21

4.22

4.23

Exhibit Description

Form

File No.

Date of
First
Filing

Exhibit
Number

Filed
Herewith

Incorporated by Reference

8-K

001-33156

5/12/11

10.1

8-K

001-33156

5/24/11

10.1

8-K

001-33156

5/24/11

10.2

8-K

001-33156

7/7/11

10.1

8-K

001-33156

7/14/11

10.1

10-K 001-33156

2/29/12

10.1

First Amendment, dated as of May 6, 2011, to the
Amended and Restated Credit Agreement, dated as
of October 15, 2010, among First Solar, Inc., the
borrowing subsidiaries party thereto,
the lenders
party thereto, Bank of America, N.A. and The Royal
Bank of Scotland plc, as documentation agents,
Credit Suisse, Cayman Islands Branch, as syndi-
cation agent, and JPMorgan Chase Bank, N.A., as
administrative agent
Credit Facility Agreement, dated as of May 18,
2011, among First Solar Manufacturing GmbH,
Commerzbank Aktiengesellschaft,
Luxembourg
Branch, as security agent, and the additional finance
parties party thereto
Guarantee Agreement, dates as of May 18, 2011,
among First Solar, Inc., First Solar Manufacturing
GmbH and Commerzbank Aktiengesellschaft,
Luxembourg Branch
Facility Agreement, dated June 30, 2011, among
First Solar Malaysia Sdn. Bhd., as borrower, First
Solar, Inc., as guarantor, CIMB Investment Bank
Berhad, Maybank Investment Bank Berhad and
RHB Investment Bank Berhad, as arrangers, CIMB
Investment Bank Berhad as facility agent and secu-
rity agent, and the original lenders party thereto
Second Amendment and Waiver, dated as of June
30, 2011,
to the Amended and Restated Credit
Agreement, dated as of October 15, 2010, among
First Solar, Inc., the lenders party thereto, Bank of
America, N.A. and The Royal Bank of Scotland plc,
as documentation agents, Credit Suisse, Cayman
Islands Branch, as syndication agent, and JPMorgan
Chase Bank, N.A., as administrative agent
Amendment Letter, dated as of November 8, 2011,
to the Facility Agreement, dated June 30, 2011,
among First Solar Malaysia Sdn. Bhd., as borrower,
First Solar, Inc., as guarantor, CIMB Investment
Bank Berhad, Maybank Investment Bank Berhad
and RHB Investment Bank Berhad, as arrangers,
CIMB Investment Bank Berhad as facility agent and
security agent, and the original lenders party thereto

163

Exhibit
Number

Exhibit Description

Form

File No.

Date of
First
Filing

Exhibit
Number

Filed
Herewith

Incorporated by Reference

4.24

4.27

4.25

4.26

syndication agent,

Third Amendment, dated as of October 23, 2012
to the Amended and Restated Credit Agreement
dated as of October 15, 2010, among First Solar,
Inc., the lenders party thereto, Bank of America,
N.A. and The Royal Bank of Scotland plc, as
documentation agents, Credit Suisse, Cayman
Islands Branch,
and
JPMorgan Chase Bank, N.A., as administrative
agent
Amendment dated as of November 7, 2012 to the
Export Financing Facility Agreement dated May
6, 2008 (as amended, the “Malaysian Facility
Agreement”) among FS Malaysia, the lenders
party thereto, and Natixis Zweigniederlassung
Deutschland, as Facility Agent.
Fourth Amendment dated as of July 15, 2013, to
the Amended and Restated Credit Agreement,
dated as of October 15, 2010, among First Solar,
Inc.,
the lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent.
Amended and Restated Guarantee and Collateral
Agreement, dated as of July 15, 2013, by First
Solar, Inc., First Solar Electric, LLC, First Solar
Electric (California), Inc. and First Solar Devel-
opment, LLC in favor of JPMorgan Chase Bank,
N.A., as administrative agent
Second Amendment
Facility Agreement
Fifth Amendment, dated as of June 3, 2015, to
the Amended and Restated Credit Agreement,
dated as of October 1, 2010, among First Solar,
Inc.,
the lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent
10.1† Amendment to the Framework Agreement dated
April 10, 2006 on the Sale and Purchase of Solar
Modules between First Solar GmbH and Blitz-
strom GmbH
Amended and Restated 2006 Omnibus Incentive
Compensation Plan
Form of Change in Control Severance Agree-
ment
Form of Director and Officer Indemnification
Agreement
First Solar, Inc. 2010 Omnibus Incentive Com-
pensation Plan
First Solar, Inc. Stock Purchase Plan

to the Malaysian Euro

10.2

10.3

10.5

4.29

4.28

10.6

10.4

8-K

001-33156

10/26/12

10.1

10-K 001-33156

2/27/13

4.25

8-K

001-33156

7/15/13

10.1

8-K

001-33156

7/15/13

10.2

10-Q 001-33156

8/7/13

4.1

8-K

001-33156

8/6/15

10.1

10-K 001-33156

3/16/07

10.02

10-Q 001-33156

5/1/09

10.2

S-1/A 333-135574

10/25/06

10.15

10-K 001-33156

2/27/13

10.20

001-33156

4/20/10

App. A

001-33156

4/20/10

App. B

DEF
14A
DEF
14A

164

Exhibit Description

Form

File No.

Date of
First
Filing

Exhibit
Number

Filed
Herewith

Incorporated by Reference

Exhibit
Number

10.7

10.8

10.9

Employment Agreement, dated March 15, 2011, and
Change in Control Severance Agreement, dated
April 4, 2011 between First Solar, Inc. and Mark
Widmar
Employment Agreement, dated March 14, 2012, and
Change in Control Severance Agreement, dated
March 19, 2012 between First Solar, Inc. and James
Hughes
Form of Key Senior Talent Equity Performance
Program Grant Notice

and Amendment

10.10 Amendment to Employment Agreement, effective
as of May 3, 2012, between First Solar, Inc. and
James Hughes,
to Non-
and Non-Solicitation Agreement,
Competition
effective as of May 3, 2012, between First Solar,
Inc. and James Hughes.
Employment Agreement, effective July 1, 2012, and
Change in Control Severance Agreement, effective
July 1, 2012 between First Solar, Inc. and Georges
Antoun

10.11

10-Q 001-33156

5/5/11

10.3

10-Q 001-33156

5/4/12

10.1

10-Q 001-33156

5/4/12

10.2

8-K

001-33156

5/11/12

10.1

10-Q 001-33156

8/3/12

10.1

10.12 Non-Competition and Non-Solicitation Agreement,
effective as of March 15, 2011, between First Solar,
Inc. and Mark Widmar

10.13 Change in Control Severance Agreement, effective
as of July 1, 2012, between First Solar, Inc. and
Georges Antoun

10-Q 001-33156

5/7/13

10.2

10-Q 001-33156

5/7/13

10.3

10.14 Amendment to Change in Control Severance Agree-

10-Q 001-33156

8/7/13

10.1

10.15

10.16

ment
Employment Agreement, effective September 9,
2013, and Change in Control Severance Agreement,
effective September 9, 2013 between First Solar,
Inc. and Joseph Kishkill
Employment Agreement, effective March 3, 2014,
and Change in Control Severance Agreement, effec-
tive March 3, 2014 between First Solar, Inc. and
Paul Kaleta

10-K 001-33156

2/25/15

10.25

10-K 001-33156

2/26/14

10.1

10.17 Amended and Restated Corporate Governance

—

Guidelines dated February 18, 2016

10.18 Restricted Cash Assignment of Deposits
10.19 Master Formation Agreement by and between First
Solar, Inc. and SunPower Corporation as of March
10, 2015
First Solar, Inc. 2015 Omnibus Incentive Compensa-
tion Plan

10.20

10.21 Amended and Restated Limited Liability Company
Agreement of 8Point3 Operating Company, LLC as
of June 24, 2015

165

10-Q 001-33156
001-33156
8-K

8/6/14
3/11/15

10.2
2.1

001-33156

DEF
14A
10-Q 001-33156

4/8/15

App. A

8/5/15

10.1

Exhibit Description

Form

File No.

Date of
First
Filing

Exhibit
Number

Filed
Herewith

Incorporated by Reference

Exhibit
Number

10.22†

10.23

10.24

10.25

10.26

14.1
21.1
23.1

31.01

31.02

32.01*

Amended and Restated Limited Liability Company
Agreement of 8Point3 Holding Company, LLC as
of June 24, 2015
Employment Agreement, effective as of July 25,
2011, and Change in Control Severance Agree-
ment, effective as of October 25, 2011 and
amended as of August 1, 2013, between First Solar,
Inc. and Philip Tymen deJong
Employment Agreement, effective as of May 1,
2012, and Change in Control Severance Agree-
ment, effective as of May 1, 2012 and amended as
of August 1, 2013, between First Solar, Inc. and
Raffi Garabedian
Employment Agreement, effective as of December
31, 2012 and amended as of April 8, 2013, and
Change in Control Severance Agreement, effective
as of December 31, 2012 and amended as of
August 1, 2013, between First Solar, Inc. and
Timothy Rebhorn
Employment Agreement, effective as of February
17, 2016, and Change in Control Severance
Agreement, effective as of February 17, 2016
between First Solar, Inc. and Chris Bueter
Code of Ethics
List of Subsidiaries of First Solar, Inc.
Consent of Independent Registered Public Account-
ing Firm
Certification of Chief Executive Officer pursuant to
Rule 13a-14(a) and 15d-14(a), as amended
Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) and 15d-14(a), as amended
Certification of Chief Executive Officer and Chief
Financial Officer pursuant
to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes Oxley Act of 2002

101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.DEF XBRL Definition Linkbase Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase

Document

101.LAB XBRL Taxonomy Label Linkbase Document
101.PRE XBLR Taxonomy Extension Presentation Docu-

ment

10-Q 001-33156

8/5/15

10.2

—

10-Q 001-33156
—
—

—
—

8/5/15
—
—

14.1
—
—

—

—
—
—
—

—
—

—

—
—
—
—

—
—

—

—
—
—
—

—
—

—

—
—
—
—

—
—

X
X

X
X
X
X

X
X

† Confidential treatment has been requested and granted for portions of this exhibit.

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date
hereof and irrespective of any general incorporation language in any filings.

166

Corporate Information

EXECUTIVE MANAGEMENT
James A. Hughes, Chief Executive Officer
Mark Widmar, Chief Financial Officer
Joseph Kishkill, President, International
Georges Antoun, President, U.S.
Philip Tymen deJong, Chief Operating Officer
Raffi Garabedian, Chief Technology Officer
Paul Kaleta, Executive Vice President and General Counsel
Tim Rebhorn, Executive Vice President, Corporate Development and Strategic Marketing
Chris Bueter, Executive Vice President, Human Resources

BOARD OF DIRECTORS
Michael J. Ahearn, Chairman of the Board
Sharon L. Allen, Independent Director
Richard Chapman, Independent Director
George Hambro, Independent Director
James A. Hughes, Director and Chief Executive Officer
Craig Kennedy, Independent Director
James F. Nolan, Independent Director
William J. Post, Independent Director
J. Thomas Presby, Independent Director
Paul H. Stebbins, Independent Director
Michael Sweeney, Independent Director

CORPORATE HEADQUARTERS
350 West Washington Street
Suite 600
Tempe, AZ 85281
Telephone +1 602 414 9300
Facsimile +1 602 414 9400
info@firstsolar.com
www.firstsolar.com

TRANSFER AGENT
Computershare Trust Company, N.A.
250 Royal Street
Canton, MA 02021
Stockholder Services:
+1 781 575 2879
www.computershare.com

INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP

INVESTOR RELATIONS
350 West Washington Street
Suite 600
Tempe, AZ 85281
Telephone +1 602 414 9315
investor@firstsolar.com

ANNUAL MEETING
Desert Willow Conference Center
4340 East Cotton Center Boulevard
Phoenix, AZ 85040
May 18, 2016–9:00 a.m. local time

STOCK LISTING
First Solar, Inc. common stock
is traded on the Nasdaq Global
Select Market, listed under FSLR.

FIRST SOLAR | ANNUAL REPORT 2015

Corporate Headquarters

350 West Washington Street, Suite 600

Tempe, AZ 85281 USA

Telephone: +1 602 414 9300

Facsimile: +1 602 414 9400

info@firstsolar.com

www.firstsolar.com

All financial numbers in this report are based on U.S. Generally
Accepted Accounting Principles.

This report contains forward-looking statements within the meaning
of the United States federal securities laws. These forward-looking
statements do not constitute guarantees of future performance.
These forward-looking statements are based on current information
and expectations, are subject to uncertainties and changes in
circumstances, and involve a number of factors that could cause
actual results to differ materially from those anticipated by these
forward-looking statements, including risks described in the
company’s most recent annual report on Form 10-K, and other filings
with the Securities and Exchange Commission. First Solar assumes
no obligation to update any forward-looking information contained in
this report or with respect to the information described herein.