First Solar will reduce its workforce at its manufacturing facilities both domestically and internationally. Lay offs of 1,600 employees are expected as the Company stops prodction at its Perrysburg Township plant.
Additional reductions in administrative and other staff are also planned. First Solar designs and manufactures solar panels, as well as creates systems to help them run and provides operation and maintenance to power plants.
The Company expects to incur restructuring and asset impairment charges of $500 to $700 million, which includes a cash impact of $70 to $100 million. The charges are anticipated primarily in 2016 and are comprised of the following:
● $475 to $585 million, including asset impairments related to Series 4, Series 5 and stored manufacturing equipment, and charges for cancellation of open purchase orders. The cash impact is anticipated to range from $50 to $70 million.
● Up to $80 million for a non-cash impairment of goodwill
● $10 to $15 million in cash severance charges, expected primarily in 2016
● $15 to $20 million of other charges, expected primarily in 2017
● These pre-tax restructuring and asset impairment charges are expected to have an offsetting tax benefit of $50 to $100 million.
In addition to the restructuring and asset impairment charges, the Company also expects to incur $220 to $250 million of tax expense in 2016 associated with the distribution of between $700 and $750 million of cash to the United States from a foreign subsidiary. This distribution will provide liquidity for the restructuring of U.S. operations and Series 6 investment. The cash tax impact related to this transfer is expected to be between $8 and $10 million.