Item 1. Condensed Consolidated Financial Statements (Unaudited)

FIRST SOLAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Net sales						$	801,090					$	628,933					$	2,160,049					$	1,616,928
Cost of sales						424,915						607,951						1,361,403						1,607,683
Gross profit						376,175						20,982						798,646						9,245
Operating expenses:
Selling, general and administrative						50,172						46,368						140,528						121,990
Research and development						41,190						29,183						108,445						81,520
Production start-up						12,059						19,768						54,930						40,337
Litigation loss						—						—						35,590						—
Total operating expenses						103,421						95,319						339,493						243,847
Gain on sales of businesses, net						211						5,984						329						253,272
Operating income (loss)						272,965						(68,353)						459,482						18,670
Foreign currency loss, net						(987)						(4,859)						(11,586)						(12,041)
Interest income						23,254						9,749						74,102						14,954
Interest expense, net						(3,734)						(2,991)						(5,897)						(9,092)
Other (expense) income, net						(1,033)						4,774						(1,492)						2,679
Income (loss) before taxes						290,465						(61,680)						514,609						15,170
Income tax (expense) benefit						(22,067)						12,512						(33,071)						(51,788)
Net income (loss)						$	268,398					$	(49,168)					$	481,538					$	(36,618)
Net income (loss) per share:
Basic						$	2.51					$	(0.46)					$	4.51					$	(0.34)
Diluted						$	2.50					$	(0.46)					$	4.49					$	(0.34)
Weighted-average number of shares used in per share calculations:
Basic						106,834						106,596						106,795						106,532
Diluted						107,498						106,596						107,326						106,532

See accompanying notes to these condensed consolidated financial statements.

FIRST SOLAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Net income (loss)						$	268,398					$	(49,168)					$	481,538					$	(36,618)
Other comprehensive loss:
Foreign currency translation adjustments						(4,942)						(12,403)						(7,635)						(40,698)
Unrealized loss on marketable securities and restricted marketable securities, net of tax of $340, $697, $23, and $2,624						(8,696)						(13,884)						(3,045)						(53,372)
Unrealized gain (loss) on derivative instruments, net of tax of $(214), $905, $(1,087), and $2,540						719						(3,333)						3,527						(9,418)
Other comprehensive loss						(12,919)						(29,620)						(7,153)						(103,488)
Comprehensive income (loss)						$	255,479					$	(78,788)					$	474,385					$	(140,106)

See accompanying notes to these condensed consolidated financial statements.

FIRST SOLAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

						September 30, 2023						December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents						$	1,492,958					$	1,481,269
Marketable securities						329,516						1,096,712
Accounts receivable trade, net						753,520						324,337
Accounts receivable unbilled						33,603						30,654
Inventories						882,787						636,312
Other current assets						331,618						222,137
Total current assets						3,824,002						3,791,421
Property, plant and equipment, net						4,072,857						3,536,902
Deferred tax assets, net						133,407						78,680
Restricted marketable securities						183,700						182,070
Government grants receivable						582,202						—
Goodwill						28,473						14,462
Intangible assets, net						66,379						31,106
Inventories						261,359						260,395
Other assets						430,266						356,192
Total assets						$	9,582,645					$	8,251,228
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable						$	110,795					$	341,409
Income taxes payable						33,583						29,397
Accrued expenses						600,421						382,782
Current portion of long-term debt						35,409						—
Deferred revenue						372,167						263,215
Other current liabilities						46,730						21,245
Total current liabilities						1,199,105						1,038,048
Accrued solar module collection and recycling liability						130,131						128,114
Long-term debt						464,040						184,349
Deferred revenue						1,349,602						944,725
Other liabilities						137,391						119,937
Total liabilities						3,280,269						2,415,173
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 106,844,040 and 106,609,094 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively						107						107
Additional paid-in capital						2,879,412						2,887,476
Accumulated earnings						3,621,827						3,140,289
Accumulated other comprehensive loss						(198,970)						(191,817)
Total stockholders’ equity						6,302,376						5,836,055
Total liabilities and stockholders’ equity						$	9,582,645					$	8,251,228

See accompanying notes to these condensed consolidated financial statements.

FIRST SOLAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

						Three Months Ended September 30, 2023
						Common Stock												Additional Paid-In Capital						Accumulated Earnings						Accumulated Other Comprehensive Loss						Total Stockholders' Equity
						Shares						Amount
Balance at June 30, 2023						106,831						$	107					$	2,872,153					$	3,353,429					$	(186,051)					$	6,039,638
Net income						—						—						—						268,398						—						268,398
Other comprehensive loss						—						—						—						—						(12,919)						(12,919)
Common stock issued for share-based compensation						18						—						—						—						—						—
Tax withholding related to vesting of restricted stock						(5)						—						(853)						—						—						(853)
Share-based compensation expense						—						—						8,112						—						—						8,112
Balance at September 30, 2023						106,844						$	107					$	2,879,412					$	3,621,827					$	(198,970)					$	6,302,376
						Three Months Ended September 30, 2022
						Common Stock												Additional Paid-In Capital						Accumulated Earnings						Accumulated Other Comprehensive Loss						Total Stockholders' Equity
						Shares						Amount
Balance at June 30, 2022						106,594						$	107					$	2,868,945					$	3,197,005					$	(170,230)					$	5,895,827
Net loss						—						—						—						(49,168)						—						(49,168)
Other comprehensive loss						—						—						—						—						(29,620)						(29,620)
Common stock issued for share-based compensation						15						—						—						—						—						—
Tax withholding related to vesting of restricted stock						(3)						—						(457)						—						—						(457)
Share-based compensation expense						—						—						11,755						—						—						11,755
Balance at September 30, 2022						106,606						$	107					$	2,880,243					$	3,147,837					$	(199,850)					$	5,828,337

See accompanying notes to these condensed consolidated financial statements.

FIRST SOLAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

						Nine Months Ended September 30, 2023
						Common Stock												Additional Paid-In Capital						Accumulated Earnings						Accumulated Other Comprehensive Loss						Total Equity
						Shares						Amount
Balance at December 31, 2022						106,609						$	107					$	2,887,476					$	3,140,289					$	(191,817)					$	5,836,055
Net income						—						—						—						481,538						—						481,538
Other comprehensive loss						—						—						—						—						(7,153)						(7,153)
Common stock issued for share-based compensation						389						—						—						—						—						—
Tax withholding related to vesting of restricted stock						(154)						—						(31,100)						—						—						(31,100)
Share-based compensation expense						—						—						23,036						—						—						23,036
Balance at September 30, 2023						106,844						$	107					$	2,879,412					$	3,621,827					$	(198,970)					$	6,302,376
						Nine Months Ended September 30, 2022
						Common Stock												Additional Paid-In Capital						Accumulated Earnings						Accumulated Other Comprehensive Loss						Total Equity
						Shares						Amount
Balance at December 31, 2021						106,332						$	106					$	2,871,352					$	3,184,455					$	(96,362)					$	5,959,551
Net loss						—						—						—						(36,618)						—						(36,618)
Other comprehensive loss						—						—						—						—						(103,488)						(103,488)
Common stock issued for share-based compensation						441						1						—						—						—						1
Tax withholding related to vesting of restricted stock						(167)						—						(12,048)						—						—						(12,048)
Share-based compensation expense						—						—						20,939						—						—						20,939
Balance at September 30, 2022						106,606						$	107					$	2,880,243					$	3,147,837					$	(199,850)					$	5,828,337

See accompanying notes to these condensed consolidated financial statements.

FIRST SOLAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

						Nine Months Ended September 30,
						2023						2022
Cash flows from operating activities:
Net income (loss)						$	481,538					$	(36,618)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation, amortization and accretion						218,303						199,183
Impairments and net losses on disposal of long-lived assets						304						62,793
Share-based compensation						23,209						21,121
Deferred income taxes						(46,053)						(4,600)
Gain on sales of businesses, net						(329)						(253,272)
Other, net						89						(6,998)
Changes in operating assets and liabilities:
Accounts receivable, trade and unbilled						(385,046)						177,020
Inventories						(247,729)						(164,205)
Project assets and PV solar power systems						8,626						(160,300)
Government grants receivable						(429,744)						—
Other assets						(149,635)						(49,071)
Income tax receivable and payable						(16,809)						40,902
Accounts payable and accrued expenses						121,382						(42,809)
Deferred revenue						472,934						293,872
Other liabilities						(9,889)						1,136
Net cash provided by operating activities						41,151						78,154
Cash flows from investing activities:
Purchases of property, plant and equipment						(1,039,863)						(576,704)
Purchases of marketable securities						(3,220,467)						(2,278,125)
Proceeds from sales and maturities of marketable securities						3,996,439						1,870,973
Proceeds from sales of businesses, net of cash and restricted cash sold						—						363,898
Acquisitions, net of cash acquired						(35,739)						—
Other investing activities						—						(2,561)
Net cash used in investing activities						(299,630)						(622,519)
Cash flows from financing activities:
Proceeds from borrowings under long-term debt, net of issuance costs						307,214						297,405
Repayment of long-term debt						—						(75,896)
Payments of tax withholdings for restricted shares						(31,100)						(12,048)
Net cash provided by financing activities						276,114						209,461
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents						(855)						39,866
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents						16,780						(295,038)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of the period						1,493,462						1,455,837
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of the period						$	1,510,242					$	1,160,799
Supplemental disclosure of noncash investing and financing activities:
Property, plant and equipment acquisitions funded by liabilities						$	185,064					$	163,147
Proceeds to be received from asset-based government grants						$	152,458					$	—
Acquisitions funded by contingent consideration						$	18,500					$	—
Proceeds to be received from sales of businesses						$	208					$	72,689

See accompanying notes to these condensed consolidated financial statements.

FIRST SOLAR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of First Solar, Inc. and its subsidiaries in this Quarterly Report have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of First Solar management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Certain prior period balances have been reclassified to conform to the current period presentation.

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

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

2. Business Acquisitions

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

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

3. Sales of Businesses

Sale of Japan Project Development Business

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

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

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

Sales of International O&M Operations

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

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

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

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

4. Cash, Cash Equivalents, and Marketable Securities

Cash, cash equivalents, and marketable securities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Cash and cash equivalents:
Cash						$	1,034,684					$	1,476,945
Money market funds						458,274						4,324
Total cash and cash equivalents						1,492,958						1,481,269
Marketable securities:
Foreign debt						34,716						59,777
U.S. debt						43,701						56,463
U.S. Treasury securities						99,713						—
Time deposits						151,386						980,472
Total marketable securities						329,516						1,096,712
Total cash, cash equivalents, and marketable securities						$	1,822,474					$	2,577,981

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 to the total of such amounts as presented in the condensed consolidated statements of cash flows (in thousands):

						Balance Sheet Line Item						September 30, 2023						December 31, 2022
Cash and cash equivalents						Cash and cash equivalents						$	1,492,958					$	1,481,269
Restricted cash – current						Other current assets						8,262						3,175
Restricted cash – noncurrent						Other assets						3,266						2,734
Restricted cash equivalents – noncurrent						Other assets						5,756						6,284
Total cash, cash equivalents, restricted cash, and restricted cash equivalents												$	1,510,242					$	1,493,462

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

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

						As of September 30, 2023
						Amortized Cost						Unrealized Gains						Unrealized Losses						Allowance for Credit Losses						Fair Value
Foreign debt						$	35,000					$	—					$	276					$	8					$	34,716
U.S. debt						45,562						15						1,864						12						43,701
U.S. Treasury securities						99,701						12						—						—						99,713
Time deposits						151,427						—						—						41						151,386
Total						$	331,690					$	27					$	2,140					$	61					$	329,516

						As of December 31, 2022
						Amortized Cost						Unrealized Gains						Unrealized Losses						Allowance for Credit Losses						Fair Value
Foreign debt						$	59,940					$	—					$	140					$	23					$	59,777
U.S. debt						58,308						—						1,823						22						56,463
Time deposits						980,810						—						—						338						980,472
Total						$	1,099,058					$	—					$	1,963					$	383					$	1,096,712

The contractual maturities of our marketable securities as of September 30, 2023 were as follows (in thousands):

						Fair Value
One year or less						$	316,221
One year to two years						5,116
Two years to three years						4,451
Three years to four years						—
Four years to five years						—
More than five years						3,728
Total						$	329,516

5. Restricted Marketable Securities

Restricted marketable securities consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Foreign government obligations						$	46,140					$	46,886
Supranational debt						15,166						8,661
U.S. debt						105,336						109,328
U.S. government obligations						17,058						17,195
Total restricted marketable securities						$	183,700					$	182,070

Our restricted marketable securities represent long-term investments to fund the estimated future cost of collecting and recycling modules covered under our solar module collection and recycling program. We have established a trust under which estimated funds are put into custodial accounts with an established and reputable bank, for which First Solar, Inc.; First Solar Malaysia Sdn. Bhd.; and First Solar Manufacturing GmbH are grantors. As of September 30, 2023 and December 31, 2022, such custodial accounts also included noncurrent restricted cash and cash equivalents balances of $5.8 million and $6.7 million, respectively, which were reported within “Other assets.”

Trust funds may be disbursed for qualified module collection and recycling costs (including capital and facility related recycling costs), payments to customers for assuming collection and recycling obligations, and reimbursements of any overfunded amounts. Investments in the trust must meet certain investment quality criteria comparable to highly rated government or agency bonds. As necessary, we fund any incremental amounts for our estimated collection and recycling obligations on an annual basis based on the estimated costs of collecting and recycling covered modules, estimated rates of return on our restricted marketable securities, and an estimated solar module life of 25 years, less amounts already funded in prior years. See Note 10. “Fair Value Measurements” to our condensed consolidated financial statements for information about the fair value of our restricted marketable securities.

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

						As of September 30, 2023
						Amortized Cost						Unrealized Gains						Unrealized Losses						Allowance for Credit Losses						Fair Value
Foreign government obligations						$	63,377					$	—					$	17,227					$	10					$	46,140
Supranational debt						17,743						341						2,918						—						15,166
U.S. debt						146,938						—						41,574						28						105,336
U.S. government obligations						24,483						—						7,421						4						17,058
Total						$	252,541					$	341					$	69,140					$	42					$	183,700

						As of December 31, 2022
						Amortized Cost						Unrealized Gains						Unrealized Losses						Allowance for Credit Losses						Fair Value
Foreign government obligations						$	64,008					$	—					$	17,112					$	10					$	46,886
Supranational debt						11,146						—						2,485						—						8,661
U.S. debt						148,288						—						38,932						28						109,328
U.S. government obligations						24,551						—						7,352						4						17,195
Total						$	247,993					$	—					$	65,881					$	42					$	182,070

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

6. Consolidated Balance Sheet Details

Accounts receivable trade, net

Accounts receivable trade, net consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Accounts receivable trade, gross						$	757,726					$	325,379
Allowance for credit losses						(4,206)						(1,042)
Accounts receivable trade, net						$	753,520					$	324,337

Inventories

Inventories consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Raw materials						$	445,412					$	412,848
Work in process						92,494						66,641
Finished goods						606,240						417,218
Inventories						$	1,144,146					$	896,707
Inventories – current						$	882,787					$	636,312
Inventories – noncurrent						$	261,359					$	260,395

Other current assets

Other current assets consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Spare maintenance materials and parts						$	144,820					$	114,428
Prepaid expenses						51,736						43,262
Operating supplies						41,993						32,556
Insurance receivable for accrued litigation (1)						21,800						—
Prepaid income taxes						14,688						8,314
Restricted cash						8,262						3,175
Derivative instruments (2)						1,836						2,018
Other						46,483						18,384
Other current assets						$	331,618					$	222,137

——————————

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

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

Property, plant and equipment, net

Property, plant and equipment, net consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Land						$	35,240					$	35,259
Buildings and improvements						998,516						893,049
Machinery and equipment						3,561,843						2,762,801
Office equipment and furniture						157,510						146,467
Leasehold improvements						40,064						40,160
Construction in progress						964,135						1,121,938
Property, plant and equipment, gross						5,757,308						4,999,674
Accumulated depreciation						(1,684,451)						(1,462,772)
Property, plant and equipment, net						$	4,072,857					$	3,536,902

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

Other assets

Other assets consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Advance payments for raw materials						$	163,192					$	91,260
Operating lease assets (1)						81,512						93,185
Income tax receivables						70,818						56,993
Project assets						26,906						30,108
Prepaid expenses						22,443						11,714
Restricted cash equivalents						5,756						6,284
Accounts receivable unbilled, net						4,691						11,498
Restricted cash						3,266						2,734
Accounts receivable trade, net						—						1,500
Other						51,682						50,916
Other assets						$	430,266					$	356,192

——————————

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

Accrued expenses

Accrued expenses consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Accrued inventory						$	232,503					$	44,679
Accrued property, plant and equipment						178,077						148,777
Accrued freight						64,668						77,136
Accrued compensation and benefits						37,697						47,939
Accrued other taxes						20,172						19,765
Product warranty liability (1)						7,647						10,660
Other						59,657						33,826
Accrued expenses						$	600,421					$	382,782

——————————

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

Other current liabilities

Other current liabilities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Accrued litigation (1)						$	21,800					$	—
Operating lease liabilities (2)						9,647						9,193
Contingent consideration (3)						7,500						—
Derivative instruments (4)						2,959						6,668
Other						4,824						5,384
Other current liabilities						$	46,730					$	21,245

——————————

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

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

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

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

Other liabilities

Other liabilities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023						December 31, 2022
Deferred tax liabilities, net						$	47,632					$	28,929
Operating lease liabilities (1)						34,222						40,589
Product warranty liability (2)						18,500						23,127
Contingent consideration (3)						11,000						—
Other						26,037						27,292
Other liabilities						$	137,391					$	119,937

——————————

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

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

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

7. Government Grants

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

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

Balance Sheet Line Item						September 30, 2023						December 31, 2022
Property, plant and equipment, net						$	146,596					$	—
Other assets						5,862						—

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

The following table presents the benefits recognized from income-based government grants in our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):

						Three Months Ended September 30,												Nine Months Ended September 30,
Income Statement Line Item						2023						2022						2023						2022
Cost of sales						$	204,623					$	—					$	429,744					$	—

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

8. Derivative Financial Instruments

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

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

The following tables present the fair values of derivative instruments included in our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 (in thousands):

						September 30, 2023
						Other Current Assets												Other Current Liabilities
Derivatives designated as hedging instruments:
Commodity swap contracts						$	—											$	1,478
Total derivatives designated as hedging instruments						$	—											$	1,478
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts						$	1,836											$	1,481
Total derivatives not designated as hedging instruments						$	1,836											$	1,481
Total derivative instruments						$	1,836											$	2,959

						December 31, 2022
						Other Current Assets						Other Assets						Other Current Liabilities						Other Liabilities
Derivatives designated as hedging instruments:
Commodity swap contracts						$	—					$	17					$	4,447					$	144
Total derivatives designated as hedging instruments						$	—					$	17					$	4,447					$	144
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts						$	2,018					$	—					$	2,221					$	—
Total derivatives not designated as hedging instruments						$	2,018					$	—					$	2,221					$	—
Total derivative instruments						$	2,018					$	17					$	6,668					$	144

The following table presents the pretax amounts related to derivative instruments designated as cash flow hedges affecting accumulated other comprehensive income (loss) and our condensed consolidated statements of operations for the nine months ended September 30, 2023 and 2022 (in thousands):

						Foreign Exchange Forward Contracts						Commodity Swap Contracts						Total
Balance as of December 31, 2022						$	—					$	(7,242)					$	(7,242)
Amounts recognized in other comprehensive income (loss)						—						(962)						(962)
Amounts reclassified to earnings impacting:
Cost of sales						—						5,576						5,576
Balance as of September 30, 2023						$	—					$	(2,628)					$	(2,628)
Balance as of December 31, 2021						$	1,126					$	—					$	1,126
Amounts recognized in other comprehensive income (loss)						545						(10,832)						(10,287)
Amounts reclassified to earnings impacting:
Cost of sales						(1,671)						—						(1,671)
Balance as of September 30, 2022						$	—					$	(10,832)					$	(10,832)

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

The following table presents gains and losses related to derivative instruments not designated as hedges affecting our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):

												Amount of Gain (Loss) Recognized in Income
												Three Months Ended September 30,												Nine Months Ended September 30,
						Income Statement Line Item						2023						2022						2023						2022
Foreign exchange forward contracts						Cost of sales						$	—					$	55					$	—					$	577
Foreign exchange forward contracts						Foreign currency loss, net						4,533						7,905						(9,568)						71,420

Foreign Currency Risk

Cash Flow Exposure

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

Transaction Exposure and Economic Hedging

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

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

As of September 30, 2023 and December 31, 2022, the notional values of our foreign exchange forward contracts that do not qualify for hedge accounting were as follows (notional amounts and U.S. dollar equivalents in millions):

						September 30, 2023
Transaction						Currency						Notional Amount						USD Equivalent
Sell						Canadian dollar						CAD 4.2						$3.1
Sell						Chilean peso						CLP 1,372.6						$1.5
Purchase						Euro						€63.9						$67.3
Sell						Euro						€23.5						$24.8
Sell						Indian rupee						INR 57,797.8						$695.1
Purchase						Japanese yen						¥695.6						$4.7
Sell						Japanese yen						¥709.2						$4.7
Purchase						Malaysian ringgit						MYR 160.7						$34.1
Sell						Malaysian ringgit						MYR 16.5						$3.5
Sell						Mexican peso						MXN 34.6						$2.0
Sell						Singapore dollar						SGD 12.3						$9.0

						December 31, 2022
Transaction						Currency						Notional Amount						USD Equivalent
Sell						Canadian dollar						CAD 4.2						$3.1
Sell						Chilean peso						CLP 5,996.5						$7.0
Purchase						Euro						€160.2						$170.5
Sell						Euro						€38.4						$40.9
Sell						Indian rupee						INR 27,119.5						$327.4
Purchase						Japanese yen						¥2,982.7						$22.4
Sell						Japanese yen						¥8,950.3						$67.1
Purchase						Malaysian ringgit						MYR 99.8						$22.6
Sell						Malaysian ringgit						MYR 13.7						$3.1
Sell						Mexican peso						MXN 34.6						$1.8
Purchase						Singapore dollar						SGD 1.4						$1.0

Commodity Price Risk

We use commodity swap contracts to mitigate our exposure to commodity price fluctuations for certain raw materials used in the production of our modules. During the year ended December 31, 2022, we entered into various commodity swap contracts to hedge a portion of our forecasted cash flows for purchases of aluminum frames between July 2022 and December 2023. Such swaps had an aggregate initial notional value based on metric tons of forecasted aluminum purchases, equivalent to $70.5 million, and entitle us to receive a three-month average London Metals Exchange price for aluminum while requiring us to pay certain fixed prices. The notional amount of the commodity swap contracts proportionately adjusted with forecasted purchases of aluminum frames. As of September 30, 2023, there was no notional value associated with these contracts.

These commodity swap contracts qualify for accounting as cash flow hedges in accordance with ASC 815, and we designated them as such. We report unrealized gains or losses on such contracts in “Accumulated other comprehensive loss” and subsequently reclassify applicable amounts into earnings when the hedged transactions occur and impact earnings. We determined that these derivative financial instruments were highly effective as cash flow hedges as of September 30, 2023 and December 31, 2022. In the following 12 months, we expect to reclassify into earnings $2.6 million of net unrealized losses related to these commodity swap contracts that are included in “Accumulated other comprehensive loss” at September 30, 2023 as we realize the earnings effects of the related forecasted transactions.

9. Leases

Our lease arrangements include land associated with our corporate and administrative offices, land for our international manufacturing facilities, and certain of our manufacturing equipment. Such leases primarily relate to assets located in the United States, Malaysia, India, and Vietnam.

The following table presents certain quantitative information related to our lease arrangements for the three and nine months ended September 30, 2023 and 2022, and as of September 30, 2023 and December 31, 2022 (in thousands):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Operating lease cost						$	2,980					$	3,034					$	8,931					$	11,643
Variable lease cost						512						635						2,528						1,838
Short-term lease cost						150						48						318						300
Total lease cost						$	3,642					$	3,717					$	11,777					$	13,781
Payments of amounts included in the measurement of operating lease liabilities																		$	8,513					$	11,867
Lease assets obtained in exchange for operating lease liabilities																		$	1,791					$	3,992
																		September 30, 2023						December 31, 2022
Operating lease assets																		$	81,512					$	93,185
Operating lease liabilities – current																		9,647						9,193
Operating lease liabilities – noncurrent																		34,222						40,589
Weighted-average remaining lease term																		5 years						6 years
Weighted-average discount rate																		5.1		%				5.1		%

As of September 30, 2023, the future payments associated with our lease liabilities were as follows (in thousands):

						Total Lease Liabilities
Remainder of 2023						$	2,903
2024						11,340
2025						10,365
2026						8,255
2027						5,760
2028						5,873
Thereafter						5,313
Total future payments						49,809
Less: interest						(5,940)
Total lease liabilities						$	43,869

10. 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 and Restricted Cash Equivalents. At September 30, 2023 and December 31, 2022, our cash equivalents and restricted cash equivalents consisted of money market funds. We value our cash equivalents and restricted cash equivalents using observable inputs that reflect quoted prices for securities with identical characteristics and classify the valuation techniques that use these inputs as Level 1.

*•*Marketable Securities and Restricted Marketable Securities. At September 30, 2023 and December 31, 2022, our marketable securities consisted of foreign debt, U.S. debt, U.S. Treasury securities, and time deposits, and our restricted marketable securities consisted of foreign and U.S. government obligations, supranational debt, and U.S. debt. We value our marketable securities and restricted marketable securities 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 standing in these fair value measurements.

*•*Derivative Assets and Liabilities. At September 30, 2023 and December 31, 2022, our derivative assets and liabilities consisted of foreign exchange forward contracts involving major currencies and commodity swap contracts involving major commodity prices. Since our derivative assets and liabilities are not traded on an exchange, we value them using standard industry valuation models. As applicable, these models project future cash flows and discount the amounts to a present value using market-based observable inputs, including credit risk, foreign exchange rates, forward and spot prices for currencies, and forward prices for commodities. These inputs are observable in active markets over the contract term of the derivative instruments we hold, and accordingly, we classify the valuation techniques as Level 2. In evaluating credit risk, 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 September 30, 2023 and December 31, 2022, the fair value measurements of our assets and liabilities measured on a recurring basis were as follows (in thousands):

												Fair Value Measurements at Reporting Date Using
						September 30, 2023						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						$	458,274					$	458,274					$	—					$	—
Restricted cash equivalents:
Money market funds						5,756						5,756						—						—
Marketable securities:
Foreign debt						34,716						—						34,716						—
U.S. debt						43,701						—						43,701						—
U.S. Treasury securities						99,713						99,713						—						—
Time deposits						151,386						151,386						—						—
Restricted marketable securities						183,700						—						183,700						—
Derivative assets						1,836						—						1,836						—
Total assets						$	979,082					$	715,129					$	263,953					$	—
Liabilities:
Derivative liabilities						$	2,959					$	—					$	2,959					$	—

												Fair Value Measurements at Reporting Date Using
						December 31, 2022						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						$	4,324					$	4,324					$	—					$	—
Restricted cash equivalents:
Money market funds						6,284						6,284						—						—
Marketable securities:
Foreign debt						59,777						—						59,777						—
U.S. debt						56,463						—						56,463						—
Time deposits						980,472						980,472						—						—
Restricted marketable securities						182,070						—						182,070						—
Derivative assets						2,035						—						2,035						—
Total assets						$	1,291,425					$	991,080					$	300,345					$	—
Liabilities:
Derivative liabilities						$	6,812					$	—					$	6,812					$	—

Fair Value of Financial Instruments

At September 30, 2023 and December 31, 2022, the carrying values and fair values of our financial instruments not measured at fair value were as follows (in thousands):

						September 30, 2023												December 31, 2022
						Carrying Value						Fair Value						Carrying Value						Fair Value
Assets:
Government grants receivable - noncurrent						$	582,202					$	541,753					$	—					$	—
Accounts receivable unbilled, net - noncurrent						4,691						4,062						11,498						10,304
Accounts receivable trade, net - noncurrent						—						—						1,500						1,339
Liabilities:
Long-term debt (1)						$	500,000					$	450,040					$	185,000					$	160,986

——————————

(1)Excludes unamortized issuance costs.

The carrying values in our condensed consolidated balance sheets of our current trade accounts receivable, current unbilled accounts receivable, restricted cash, accounts payable, and accrued expenses approximated their fair values due to their nature and relatively short maturities; therefore, we excluded them from the foregoing table. The fair value measurements for our noncurrent unbilled accounts receivable, noncurrent trade accounts receivable, government grants receivable, and long-term debt are considered Level 2 measurements under the fair value hierarchy.

Credit Risk

We have certain financial and derivative instruments that subject us to credit risk. These consist primarily of cash, cash equivalents, marketable securities, accounts receivable, restricted cash, restricted cash equivalents, restricted marketable securities, foreign exchange forward contracts, and commodity swap contracts. We are exposed to credit losses in the event of nonperformance by the counterparties to our financial and derivative instruments. We place these instruments with various high-quality financial institutions and limit the amount of credit risk from any one counterparty. We monitor the credit standing of our counterparty financial institutions. Our net sales are primarily concentrated among a limited number of customers. We monitor the financial condition of our customers and perform credit evaluations whenever considered necessary. We typically require some form of payment security from our customers, including, but not limited to, advance payments, parent guarantees, letters of credit, bank guarantees, or surety bonds.

11. Debt

Our long-term debt consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

												Balance (USD)
Loan Agreement						Currency						September 30, 2023						December 31, 2022
Revolving Credit Facility						USD						$	—					$	—
India Credit Facility						USD						500,000						185,000
Long-term debt principal												500,000						185,000
Less: unamortized issuance costs												(551)						(651)
Total long-term debt												499,449						184,349
Less: current portion												(35,409)						—
Noncurrent portion												$	464,040					$	184,349

Revolving Credit Facility

In June 2023, we entered into a credit agreement with several financial institutions as lenders and JPMorgan Chase Bank, N.A. as administrative agent, which provides us with a senior secured credit facility (the “Revolving Credit Facility”) with an aggregate borrowing capacity of $1.0 billion. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to, at our option, (i) the Term Secured Overnight Financing Rate (“Term SOFR”), plus a credit spread of 0.10%, plus a margin that ranges from 1.25% to 2.25% or (ii) an alternate base rate as defined in the credit agreement, plus a margin that ranges from 0.25% to 1.25%. The margins under the Revolving Credit Facility are based on the Company’s net leverage ratio or, if the Company elects to switch to a credit ratings-based system after the investment grade ratings trigger date occurs (as defined in the credit agreement), margins are based on the Company’s public debt rating.

In addition to paying interest on outstanding principal under the Revolving Credit Facility, we are required to pay an unused commitment fee that ranges from 0.125% to 0.375% per annum, based on the same factors discussed above and the daily unused commitments under the facility. We are also required to pay (i) a letter of credit fee based on the applicable margin for Term SOFR loans on the face amount of each letter of credit, (ii) a letter of credit fronting fee as agreed by the Company and such issuing lender, and (iii) other customary letter of credit fees. Our Revolving Credit Facility matures in June 2028.

As of September 30, 2023, we had no borrowings or letters of credit under our Revolving Credit Facility. Loans and letters of credit issued under the Revolving Credit Facility are secured by liens on substantially all of the Company’s tangible and intangible assets.

India Credit Facility

In July 2022, FS India Solar Ventures Private Limited, our indirect wholly-owned subsidiary, entered into a finance agreement (the “India Credit Facility”) with the U.S. International Development Finance Corporation (“DFC”) for aggregate borrowings of up to $500.0 million for the development and construction of a solar module manufacturing facility in India. Principal on the India Credit Facility is payable in scheduled semi-annual installments beginning in the second half of 2024 through the facility’s expected maturity in August 2029. The India Credit Facility is guaranteed by First Solar, Inc.

Interest Rate Risk

As of September 30, 2023, our long-term debt borrowing rates were as follows:

Loan Agreement						Interest Rate						Effective Interest Rate
India Credit Facility						U.S. Treasury Constant Maturity Yield plus 1.75%						5.80%

Future Principal Payments

At September 30, 2023, the future principal payments on our long-term debt were due as follows (in thousands):

						Total Debt
Remainder of 2023						$	—
2024						35,450
2025						90,900
2026						90,900
2027						90,950
2028						91,000
Thereafter						100,800
Total long-term debt future principal payments						$	500,000

12. Commitments and Contingencies

Commercial Commitments

During the normal course of business, we enter into commercial commitments in the form of letters of credit and surety bonds to provide financial and performance assurance to third parties. As of September 30, 2023, the issued and outstanding amounts and available capacities under these commitments were as follows (in millions):

						Issued and Outstanding						Available Capacity
Revolving Credit Facility (1)						$	—					$	250.0
Bilateral facilities (2)						126.2						118.9
Surety bonds						21.6						232.0

——————————

(1)Our Revolving Credit Facility provides us with a sub-limit of $250.0 million to issue letters of credit, at a fee based on the applicable margin for Term SOFR loans, a fronting fee, and other customary letter of credit fees.

(2)Of the total letters of credit issued under the bilateral facilities, $8.9 million was secured with cash.

Product Warranties

When we recognize revenue for sales of modules or projects, we accrue liabilities for the estimated future costs of meeting our limited warranty obligations for both modules and the balance of the systems. We estimate our limited product warranty liability for power output and defects in materials and workmanship under normal use and service conditions based on return rates for each series of module technology. We make and revise these estimates based primarily on the number of solar modules under warranty installed at customer locations, our historical experience with and projections of warranty claims, and our estimated per-module replacement costs. We also monitor our expected future module performance through certain quality and reliability testing and actual performance in certain field installation sites. From time to time, we have taken remediation actions with respect to affected modules beyond our limited warranties and 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 may be material to our condensed consolidated statements of operations if we commit to any such remediation actions.

Product warranty activities during the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Product warranty liability, beginning of period						$	31,969					$	47,129					$	33,787					$	52,553
Accruals for new warranties issued						1,310						1,376						3,155						3,649
Settlements						(1,326)						(3,160)						(4,519)						(10,414)
Changes in estimate of product warranty liability						(5,806)						(10,360)						(6,276)						(10,803)
Product warranty liability, end of period						$	26,147					$	34,985					$	26,147					$	34,985
Current portion of warranty liability						$	7,647					$	11,039					$	7,647					$	11,039
Noncurrent portion of warranty liability						$	18,500					$	23,946					$	18,500					$	23,946

We estimate our limited product warranty liability for power output and defects in materials and workmanship under normal use and service conditions based on return rates for each series of module technology. During the three months ended September 30, 2023, we revised this estimate based on updated information regarding our warranty claims, which reduced our product warranty liability by $5.7 million. This updated information reflected lower-than-expected warranty claims for our older series of module technology and revisions to projected settlements, resulting in reductions to our projected module return rate. During the three months ended September 30, 2022, we revised the estimate based on updated information regarding our warranty claims, which reduced our product warranty liability by $10.2 million. This updated information reflected lower-than-expected warranty claims for our older series of module technology as well as the evolving claims profile of our newest series of module technology, resulting in reductions to our projected module return rates.

Contingent Consideration

As part of our Evolar acquisition, we agreed to pay additional consideration of up to $42.5 million to the selling shareholders contingent upon the successful achievement of certain technical milestones. See Note 2. “Business Acquisitions” to our condensed consolidated financial statements for further discussion of this acquisition. As of September 30, 2023, we recorded $7.5 million of current liabilities and $11.0 million of long-term liabilities for such contingent obligations based on their estimated fair values.

Solar Module Collection and Recycling Liability

We previously established a module collection and recycling program, which has since been discontinued, to collect and recycle modules sold and covered under such program once the modules reach the end of their service lives. For legacy customer sales contracts that are covered under this program, we agreed to pay 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 modules’ service lives. Accordingly, we recorded any collection and recycling obligations within “Cost of sales” at the time of sale based on the estimated cost to collect and recycle the covered solar modules.

We estimate the cost of our collection and recycling obligations based on the present value of the expected future cost of collecting and recycling the solar modules, which includes estimates for the cost of packaging materials; the cost of freight from the solar module installation sites to a recycling center; material, labor, and capital costs; and by-product credits for certain materials recovered during the recycling process. We base these estimates on our experience collecting and recycling solar modules and certain assumptions regarding costs 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 and classify the corresponding expense within “Selling, general and administrative” expense on our condensed consolidated statements of operations.

We periodically review our estimates of expected future recycling costs and may adjust our liability accordingly. During the three months ended September 30, 2022, we completed our annual cost study of obligations under our module collection and recycling program and reduced the associated liability by $7.5 million primarily due to lower estimated capital and chemical costs resulting from improvements to our module recycling technology.

Our module collection and recycling liability was $130.1 million and $128.1 million as of September 30, 2023 and December 31, 2022, respectively. See Note 5. “Restricted Marketable Securities” to our condensed consolidated financial statements for more information about our arrangements for funding this liability.

Legal Proceedings

Class Action

In January 2022, a putative class action lawsuit titled City of Pontiac General Employees’ Retirement System v. First Solar, Inc., et al., Case No. 2:22-cv-00036-MTL, was filed in the United States District Court for the District of Arizona (hereafter “Arizona District Court”) against the Company and certain of our current officers (collectively, “Putative Class Action Defendants”). The complaint was filed on behalf of a purported class consisting of all purchasers of First Solar common stock between February 22, 2019 and February 20, 2020, inclusive. The complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 based on allegedly false and misleading statements related to the Company’s Series 6 solar modules and its project development business. It seeks unspecified damages and an award of costs and expenses. On April 25, 2022, the Arizona District Court issued an order appointing the Palm Harbor Special Fire Control & Rescue District Firefighters’ Pension Plan and the Greater Pennsylvania Carpenters’ Pension Fund as Lead Plaintiffs. On June 23, 2022, Lead Plaintiffs filed an Amended Complaint that brought the same claims and sought the same relief as the original complaint. On January 10, 2023, the Court granted the Putative Class Action Defendants’ motion to dismiss in full, with leave to amend by February 10, 2023. On February 10, 2023, Lead Plaintiffs filed a Second Amended Complaint. Putative Class Action Defendants filed a motion to dismiss the Second Amended Complaint on February 24, 2023. Lead Plaintiffs filed their opposition to the motion to dismiss on March 10, 2023, and Putative Class Action Defendants filed a reply in support of their motion to dismiss on March 17, 2023. On June 23, 2023, the Court granted the Putative Class Action Defendants’ motion to dismiss with prejudice. On July 14, 2023, the Clerk of Court entered judgment in favor of the Putative Class Action Defendants. Lead Plaintiffs did not file an appeal, and the judgment in favor of the Putative Class Action Defendants is now final.

Derivative Action

In September 2022, a derivative action titled Federman v. Widmar, et al., Case No. 2:22-cv-01541-JAT, was filed by a putative stockholder purportedly on behalf of the Company in the Arizona District Court against our current directors and certain officers of the Company (collectively, “Derivative Action Defendants”), alleging violations of Section 14(a) of the Securities Exchange Act of 1934, breach of fiduciary duties, contribution and indemnification, aiding and abetting, and gross mismanagement. The complaint generally alleges that the Derivative Action Defendants caused or allowed false and misleading statements to be made concerning the Company’s Series 6 modules and project development business. The action includes claims for, among other things, damages in favor of the Company and an award of costs and expenses to the putative plaintiff stockholder, including attorneys’ fees. The Company believes that the plaintiff in the derivative action lacks standing to pursue litigation on behalf of First Solar. On February 17, 2023, the case was transferred to Judge Liburdi, who is also presiding over the related putative class action. On March 10, 2023, the plaintiff filed an Amended Complaint. On April 10, 2023, the Derivative Action Defendants filed a motion to dismiss the Amended Complaint. The plaintiff filed its opposition to the motion to dismiss on May 17, 2023, and the Derivative Action Defendants filed a reply in support of their motion to dismiss on June 17, 2023. Given the Court’s dismissal of the putative class action, the parties agreed that the claims in the Derivative Action should be dismissed with prejudice and filed a joint stipulation to that effect on September 7, 2023. On September 8, 2023, the Court ordered the Clerk of Court to dismiss the action with prejudice.

Other Matters and Claims

In July 2021, Southern Power Company and certain of its affiliates (“Southern”) filed an arbitration demand with the American Arbitration Association against two subsidiaries of the Company, alleging breach of the engineering, procurement, and construction (“EPC”) agreements for five projects in the United States, for which the Company’s subsidiaries served as the EPC contractor. The arbitration demand asserts breach of obligations to design and engineer the projects in accordance with the EPC agreements, particularly as such obligations relate to the procurement of tracker systems and inverters. The Company and its subsidiaries denied the claims, and defended the claims in arbitration hearings, which concluded in February 2023. In May 2023, the parties submitted their final proposals of individual award claims to the arbitration panel. On July 19, 2023, the arbitration panel entered an interim award to Southern for $35.6 million. As a result, we accrued a loss for such interim award in our results of operations for the nine months ended September 30, 2023. Such amount was paid during the three months ended September 30, 2023. The interim award permitted the parties to raise additional issues with the arbitration panel, and Southern moved for pre- and post-judgment interest and a limited claim for attorneys’ fees. In orders dated October 13, 2023 and October 16, 2023, the arbitration panel denied Southern’s motion for interest and attorney’s fees, respectively. Because all post-award motions have been resolved, the award will become final. The Company believes that the deadline to appeal the interim award judgment will expire no earlier than December 17, 2023.

During the year ended December 31, 2022, we received several indemnification demands from certain customers, for whom we provided EPC services, regarding claims that such customers’ PV tracker systems infringe, in part, on patents owned by Rovshan Sade (“Sade”), the owner of a company called Trabant Solar, Inc. In January 2023, we were notified by two of our customers that Sade served them with patent infringement complaints, and we have assumed the defense of these claims. We have conducted due diligence on the patents and claims and believe that we will prevail in the actions. In April 2023, we commenced an Inter Partes Review (“IPR”) before the United States Patent and Trademark Office seeking to invalidate such claims. Based upon that filing, we have also sought to stay the litigation proceedings pending the IPR process. One such action has been formally stayed pending the IPR outcome. There has been no action in the second proceeding, and unless plaintiff or the court order the parties to proceed, First Solar will not seek a stay prior to the IPR decision. The decision whether to allow the IPR to proceed is expected in November 2023. Given the early stage of the litigation, at this time we are not in a position to assess the likelihood of any potential loss or adverse effect on our financial condition or to estimate the amount or range of possible loss, if any, from these actions.

In April 2019, a subcontractor of First Solar sustained certain injuries while performing work at a former project site and, in May 2019, commenced legal action against a subsidiary of the Company. In June 2023, a jury awarded damages of approximately $51.3 million to the plaintiff. On September 21, 2023, the Superior Court of California for Monterey County ruled, in response to a motion for remittitur filed by the Company, that the damages awarded to the plaintiff were excessive and reduced the award from $51.3 million to $21.8 million. Accordingly, as of September 30, 2023, we recorded a $21.8 million accrued litigation payable included in “Other current liabilities” in our condensed consolidated balance sheet. We believe the full amount of awarded damages will be covered by our various insurance policies. Accordingly, we also recorded a $21.8 million receivable included in “Other current assets” in our condensed consolidated balance sheet as of September 30, 2023. The plaintiff did not accept the reduced award by the court ordered deadline of October 10, 2023, and, as a result, the $21.8 million award has been vacated and a new trial will be scheduled. We, in conjunction with our insurance carriers, are exploring challenges to the verdict in an appellate court.

On September 29, 2023, the Company received a subpoena from the Division of Enforcement of the SEC seeking documents and information since 2019 relating to the Company’s operations in India, the Company's entry into a PV module supply agreement with an India-based customer, and certain aspects of the Company's technology roadmap, among other things. The Company is cooperating with the SEC and cannot predict the ultimate timing, scope, or outcome of this matter.

We are party to other legal matters and claims in the normal course of our operations. While we believe the ultimate outcome of these matters and claims will not have a material adverse effect on our financial position, results of operations, or cash flows, the outcome of such matters and claims is not determinable with certainty, and negative outcomes may adversely affect us.

13. Revenue from Contracts with Customers

The following table presents the disaggregation of revenue from contracts with customers for the three and nine months ended September 30, 2023 and 2022 along with the reportable segment for each category (in thousands):

												Three Months Ended September 30,												Nine Months Ended September 30,
Category						Segment						2023						2022						2023						2022
Solar modules						Modules						$	800,393					$	619,922					$	2,139,220					$	1,582,248
Solar power systems						Other						217						90						19,474						2,433
O&M services						Other						481						3,481						1,374						11,558
Energy generation						Other						(1)						5,440						(19)						20,689
Net sales												$	801,090					$	628,933					$	2,160,049					$	1,616,928

We recognize revenue for module sales at a point in time following the transfer of control of the modules to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Such contracts may contain provisions that require us to make liquidated damage payments to the customer if we fail to ship or deliver modules by scheduled dates. For certain contracts, we may also be required to make liquidated damage payments if we fail to deliver modules that meet certain U.S. domestic content requirements. We recognize these liquidated damages as a reduction of revenue in the period we transfer control of the modules to the customer.

We recognize revenue for sales of development projects or completed systems when we enter into the associated sales contract. For certain prior project sales, such revenue included estimated amounts of variable consideration. These estimates may require significant judgment to determine the most likely amount of net contract revenues. The cumulative effect of revisions to estimates is recorded in the period in which the revisions are identified and the amounts can be reasonably estimated. During the nine months ended September 30, 2023 revenue increased $12.3 million due to adjustments to the estimated transaction prices for certain projects we previously sold, which represented 3.1% of the aggregate revenue for such projects.

The following table reflects the changes in our contract assets, which we classify as “Accounts receivable unbilled, net” and our contract liabilities, which we classify as “Deferred revenue,” for the nine months ended September 30, 2023 (in thousands):

						September 30, 2023						December 31, 2022						Nine Month Change
Accounts receivable unbilled, net (1)						$	38,294					$	42,152					$	(3,858)					(9)		%
Deferred revenue						$	1,721,769					$	1,207,940					$	513,829					43		%

——————————

(1)Includes $4.7 million and $11.5 million of noncurrent accounts receivable unbilled, net classified as “Other assets” on our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively.

During the nine months ended September 30, 2023, our contract assets decreased by $3.9 million primarily due to billings for certain prior project sales, partially offset by unbilled receivables associated with variable consideration related to certain prior project sales. During the nine months ended September 30, 2023, our contract liabilities increased by $513.8 million primarily due to advance payments received for sales of solar modules in the current period, partially offset by the recognition of revenue for sales of solar modules for which payment was received in prior years. During the nine months ended September 30, 2023 and 2022, we recognized revenue of $320.3 million and $186.2 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods.

As of September 30, 2023, we had entered into contracts with customers for the future sale of 77.6 GW of solar modules for an aggregate transaction price of $23.0 billion, which we expect to recognize as revenue through 2030 as we transfer control of the modules to the customers. Such aggregate transaction price excludes estimates of variable consideration associated with (i) future module technology improvements, including enhancements to certain energy related attributes, (ii) sales freight in excess of a defined threshold, (iii) changes to certain commodity prices, and (iv) the module wattage committed for delivery, among other things. As a result, the revenue recognized from such contracts may increase or decrease in future periods relative to the original transaction price. These contracts may also be subject to amendments as agreed to by the parties to the contract. These amendments may increase or decrease the volume of modules to be sold under the contract, change delivery schedules, or otherwise adjust the expected revenue under these contracts.

14. Share-Based Compensation

The following table presents share-based compensation expense recognized in our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Cost of sales						$	1,238					$	1,044					$	3,513					$	1,988
Selling, general and administrative						5,905						9,572						16,668						16,900
Research and development						1,047						1,227						2,959						2,219
Production start-up						8						11						69						14
Total share-based compensation expense						$	8,198					$	11,854					$	23,209					$	21,121

As of September 30, 2023, we had $40.1 million of unrecognized share-based compensation expense related to unvested restricted stock and performance units, which we expect to recognize over a weighted-average period of approximately 1.4 years.

In March 2020, the compensation committee of our board of directors approved grants of performance units (“PUs”) for key executive officers to be earned over a multi-year performance period, which ended in December 2022. Vesting of the 2020 grants of PUs was contingent upon the relative attainment of target contracted revenue, module wattage, and return on capital metrics. In March 2023, the compensation committee certified the achievement of the vesting conditions applicable to the grants, which approximated the target level of performance. Accordingly, each participant received one share of common stock for each vested PU granted, net of any tax withholdings.

In May 2021, the compensation committee approved additional grants of PUs for key executive officers. Such grants are expected to be earned over a multi-year performance period ending in December 2023. Vesting of the 2021 grants of PUs is contingent upon the relative attainment of target contracted revenue, cost per watt, incremental average selling price, and operating income metrics.

In March 2022, the compensation committee approved additional grants of PUs for key executive officers. Such grants are expected to be earned over a multi-year performance period ending in December 2024. Vesting of the 2022 grants of PUs is contingent upon the relative attainment of target contracted revenue, cost per watt, and return on capital metrics.

In March 2023, the compensation committee approved additional grants of PUs for key executive officers. Such grants are expected to be earned over a multi-year performance period ending in December 2025. Vesting of the 2023 grants of PUs is contingent upon the relative attainment of target contracted revenue, production, and operating margin metrics.

Vesting of PUs is also contingent upon the employment of program participants through the applicable vesting dates, with limited exceptions in case of death, disability, a qualifying retirement, or a change-in-control of First Solar. Outstanding PUs are included in the computation of diluted net income per share based on the number of shares that would be issuable if the end of the reporting period were the end of the contingency period.

15. Income Taxes

In August 2022, the U.S. President signed into law the IRA, which revised U.S. tax law by, among other things, including a new corporate alternative minimum tax of 15% on certain large corporations, imposing a 1% excise tax on stock buybacks, and providing various incentives to address climate change, including the introduction of the advanced manufacturing production credit. The provisions of the IRA are generally effective for tax years beginning after 2022. Given the complexities of the IRA, which is pending technical guidance and regulations from the Internal Revenue Service (“IRS”) and U.S. Treasury Department, we will continue to monitor these developments and evaluate the potential future impact to our results of operations.

In November 2022, the U.S. Treasury Department released proposed foreign tax credit (“FTC”) regulations addressing various aspects of the U.S. FTC regime. Among other items, these proposed regulations provide certain exceptions for determining creditable foreign withholding taxes. Taxpayers may rely on these proposed regulations, which apply to tax years beginning on or after December 28, 2021. As a result of these proposed regulations, foreign withholding taxes will continue to be creditable. In July 2023, the U.S. Treasury Department issued Notice 2023-55, which provides temporary relief for taxpayers in determining whether a foreign tax is eligible for a foreign tax credit for taxable years beginning on or after December 28, 2021, and ending before December 31, 2023.

Our effective tax rate was 6.4% and 341.4% for the nine months ended September 30, 2023 and 2022, respectively. The decrease in our effective tax rate was primarily driven by the relative size of our pretax income in the prior period, higher prior period losses in certain jurisdictions for which no tax benefit could be recorded, the effect of the advanced manufacturing production credit described in Note 7. "Government Grants" to our condensed consolidated financial statements, a discrete tax expense in the prior period associated with the remeasurement of our net deferred tax assets in Vietnam, and the effect of tax law changes associated with the proposed FTC regulations described above. Our provision for income taxes differed from the amount computed by applying the U.S. statutory federal income tax rate of 21% primarily due to the effect of tax law changes associated with the IRA described above and excess tax benefits associated with share-based compensation.

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 with 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.

Our Vietnamese subsidiary had previously been granted a tax incentive that provided a two-year tax exemption, which began in 2020, and reduced annual tax rates through the end of 2025. In May 2022, our Vietnamese subsidiary was granted a new long-term tax incentive that provides an additional two-year tax exemption through 2023, followed by reduced annual tax rates of 5% through 2032 and 10% through 2036. Such long-term tax incentive is conditional upon our continued compliance with certain revenue and R&D spending thresholds, which we are currently in compliance with and expect to continue to comply with through the expiration of the tax holiday.

We are subject to audit by federal, state, local, and foreign tax authorities. We are currently under examination in India, Chile, Singapore, and the state of Florida. We believe that adequate provisions have been made for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. If any issues addressed by our tax examinations 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.

16. Net Income (Loss) per Share

The calculation of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2023 and 2022 was as follows (in thousands, except per share amounts):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Basic net income (loss) per share
Numerator:
Net income (loss)						$	268,398					$	(49,168)					$	481,538					$	(36,618)
Denominator:
Weighted-average common shares outstanding						106,834						106,596						106,795						106,532
Diluted net income (loss) per share
Denominator:
Weighted-average common shares outstanding						106,834						106,596						106,795						106,532
Effect of restricted stock and performance units						664						—						531						—
Weighted-average shares used in computing diluted net income (loss) per share						107,498						106,596						107,326						106,532
Net income (loss) per share:
Basic						$	2.51					$	(0.46)					$	4.51					$	(0.34)
Diluted						$	2.50					$	(0.46)					$	4.49					$	(0.34)

The following table summarizes the potential shares of common stock that were excluded from the computation of diluted net income per share for the three and nine months ended September 30, 2023 and 2022 as such shares would have had an anti-dilutive effect (in thousands):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Anti-dilutive shares						—						626						—						523

17. Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2023 (in thousands):

						Foreign Currency Translation Adjustment						Unrealized (Loss) Gain on Marketable Securities and Restricted Marketable Securities						Unrealized (Loss) Gain on Derivative Instruments						Total
Balance as of December 31, 2022						$	(121,473)					$	(64,780)					$	(5,564)					$	(191,817)
Other comprehensive (loss) income before reclassifications						(8,504)						(3,077)						(962)						(12,543)
Amounts reclassified from accumulated other comprehensive loss						869						9						5,576						6,454
Net tax effect						—						23						(1,087)						(1,064)
Net other comprehensive (loss) income						(7,635)						(3,045)						3,527						(7,153)
Balance as of September 30, 2023						$	(129,108)					$	(67,825)					$	(2,037)					$	(198,970)

The following table presents the pretax amounts reclassified from accumulated other comprehensive loss into our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Comprehensive Income Components						Income Statement Line Item						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Foreign currency translation adjustment:
Foreign currency translation adjustment						Cost of sales						$	—					$	—					$	146					$	—
Foreign currency translation adjustment						Gain on sales of businesses, net						—						—						—						3,756
Foreign currency translation adjustment						Other (expense) income, net						(1,005)						403						(1,015)						556
Total foreign currency translation adjustment												(1,005)						403						(869)						4,312
Unrealized loss on marketable securities and restricted marketable securities						Other (expense) income, net						—						—						(9)						—
Unrealized (loss) gain on derivative contracts:
Foreign exchange forward contracts						Cost of sales						—						218						—						1,671
Commodity swap contracts						Cost of sales						(911)						—						(5,576)						—
Total unrealized (loss) gain on derivative contracts												(911)						218						(5,576)						1,671
Total (loss) gain reclassified												$	(1,916)					$	621					$	(6,454)					$	5,983

18. Segment Reporting

Our primary segment is our modules business, which involves the design, manufacture, and sale of cadmium telluride (“CdTe”) solar modules, which convert sunlight into electricity. Third-party customers of our modules segment include developers and operators of systems, utilities, independent power producers, commercial and industrial companies, and other system owners. Our residual business operations include certain project development activities, O&M services, the results of operations from PV solar power systems we owned and operated in certain international regions, and the sale of such systems to third-party customers.

See Note 19. “Segment and Geographical Information” in our Annual Report on Form 10-K for the year ended December 31, 2022 for additional discussion of our segment reporting.

The following tables provide a reconciliation of certain financial information for our reportable segment to information presented in our condensed consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 and as of September 30, 2023 and December 31, 2022 (in thousands):

						Three Months Ended September 30, 2023																		Three Months Ended September 30, 2022
						Modules						Other						Total						Modules						Other						Total
Net sales						$	800,393					$	697					$	801,090					$	619,922					$	9,011					$	628,933
Gross profit (loss)						367,359						8,816						376,175						24,040						(3,058)						20,982
Depreciation and amortization expense						76,991						2						76,993						58,287						2,075						60,362
						Nine Months Ended September 30, 2023																		Nine Months Ended September 30, 2022
						Modules						Other						Total						Modules						Other						Total
Net sales						$	2,139,220					$	20,829					$	2,160,049					$	1,582,248					$	34,680					$	1,616,928
Gross profit (loss)						776,170						22,476						798,646						66,396						(57,151)						9,245
Depreciation and amortization expense						211,161						6						211,167						172,296						7,276						179,572
						September 30, 2023																		December 31, 2022
						Modules						Other						Total						Modules						Other						Total
Goodwill						$	28,473					$	—					$	28,473					$	14,462					$	—					$	14,462