XML 73 R12.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Equity Method Investment and Receivable From Investee | 12 Months Ended
--- | ---
Dec. 31, 2012
Equity Method Investment and Receivable From Investee | 3. Equity Method Investment and Receivable From Investee On December 31, 2011, we converted our Real Goods Solar Class B common shares, which had ten votes per share, to Real Goods Solar Class A common shares, which have one vote per share. This conversion was done in accordance with the terms of a Shareholders Agreement dated December 19, 2011 entered into with Riverside Renewable Energy Investments, LLC, the majority owner of Earth Friendly Energy Group Holdings LLC d/b/a Alteris Renewables, Inc. (“Alteris”), in connection with Real Goods Solar’s acquisition of Alteris and no consideration was exchanged. As a result, our voting ownership in Real Goods Solar declined to 37.5% and, therefore, we changed our reporting for this investment from consolidation to equity method. In conjunction with this deconsolidation of Real Goods Solar, at December 31, 2011 we remeasured and adjusted our equity investment in Real Goods Solar to its estimated fair value based on Real Goods Solar’s closing stock price on December 30, 2011 (which is a level 1 input in the fair value hierarchy), and, thus, reported a pre-tax loss from deconsolidation of $4.5 million and, due to an adjustment to a deferred tax liability related to this investment, an after-tax gain of $2.6 million in our consolidated results of operations for the year ended December 31, 2011. See Note 12. Income Taxes. In connection the Real Goods Solar’s acquisition of Alteris, we advanced Real Goods Solar $1.7 million on December 30, 2011, which bears interest at an annual rate of 10% if not repaid on or before its maturity date. On November 13, 2012, we entered into a Loan Commitment with Real Goods Solar and Riverside to extend the maturity date for this loan from December 30, 2012 to April 30, 2013 provided Real Goods Solar repaid all interest owed on the loan upon extension. In addition, Riverside and we each agreed to advance up to an additional $1.0 million in cash upon request from Real Goods Solar until March 31, 2013 at an annual interest rate of 10% and with a maturity date of April 26, 2013, which was funded by both of us during December 2012. Further, the Loan Commitment requires Real Goods Solar to execute and deliver to us an option agreement, reasonably acceptable to both parties, permitting us to purchase for $0.2 million all tenant improvements constructed by us in the office space leased by Real Goods Solar from us. Our loss from equity investment (RSOL) for the year ended December 31, 2012 was comprised of our noncash portion, $17.0 million, of Real Goods Solar’s net loss for 2012, which included goodwill, net deferred tax assets, and other asset impairment noncash charges of $38.1 million, and a $1.6 million valuation allowance for a deferred tax asset related to our Tax Sharing Agreement with RSOL, partially offset by $0.2 million of interest received from RSOL on our first loan to RSOL. The recording of our portion of RSOL’s net loss for 2012 reduced the carrying values of our equity method investment in and loans to Real Good Solar to zero at December 31, 2012. As a result, we do not anticipate needing to report any potential future net losses from Real Goods Solar. Also, in connection with these transactions, we recognized an income tax benefit of $6.0 million. See Note 12. Income Taxes. Including the related income tax benefit, the net impact to us of these equity investment related transactions was a noncash loss of $12.4 million. Under our Intercorporate Services Agreement with Real Goods Solar, we provide services under the direction of Real Goods Solar and have no power to act independently on Real Goods Solar’s behalf other than as specifically authorized under the agreement or from time to time by Real Goods Solar. Real Goods Solar and we agree on the aggregate annual amount for a particular year for the services based upon a good faith estimate of the services required for that year and the estimated fees for such services. Upon a change to the annual amounts for a particular year, the parties make appropriate payments to reflect such change. The annual amount and formula for various services making up the annual amount, as well as any quarterly changes, are approved in writing by each of our and Real Goods Solar’s board of directors. As specified by our Tax Sharing Agreement with Real Goods Solar, to the extent Real Goods Solar becomes entitled to utilize certain loss carryforwards relating to periods prior to its initial public offering, it will distribute to us the tax effect (estimated to be 34% for federal income tax purposes) of the amount of such tax loss carryforwards so utilized. These net operating loss carryforwards expire beginning in 2018 if not utilized. Due to our step acquisitions of Real Goods Solar, it experienced “ownership changes” as defined in Section 382 of the Internal Revenue Code. Accordingly, its use of the net operating loss carryforwards is limited by annual limitations described in Sections 382 and 383 of the Internal Revenue Code. As of December 31, 2012, $4.4 million of these net operating loss carryforwards remained available for current and future utilization, meaning that Real Goods Solar’s potential future payments to us, which would be made over a period of several years, could therefore aggregate to approximately $1.6 million based on current tax rates. Based on Real Goods Solar’s establishment of a valuation allowance for all its net deferred tax assets at December 31, 2012, as discussed above, we established a valuation allowance, by charging loss from equity method investment, for our entire $1.6 million deferred tax asset related to our Tax Sharing Agreement with Real Goods Solar. On December 19, 2011, we entered into an Industrial Building Lease Agreement with Real Goods Solar for office space located in our owned building in Colorado. The five year lease commenced on January 1, 2012 and has a monthly payment of approximately $16,300 plus common area maintenance and tax expenses. As part of the Loan Commitment discussed above, Real Goods Solar and we agreed to cancel, effective December 31, 2012, the $3 per square foot credit set forth in this lease. The receivable from equity method investee at December 31, 2012 represents amounts owed in the ordinary course of business under our Intercorporate Services and Industrial Building Lease Agreements with Real Goods Solar. Charges under these agreements are typically billed and collected at least quarterly. At December 31, 2012, we owned approximately 37.5% of Real Goods Solar’s Class A common stock with an estimated fair value of $7.6 million based on the closing market price of Real Goods Solar’s Class A common stock on December 31, 2012. At December 31, 2012, our equity in the net assets of Real Goods Solar was approximately $1.5 million. Summarized financial information for our equity method investee, Real Goods Solar, is as follows:
|  | December 31, |
(in thousands) |  | 2012 |  |  | 2011 |
Current assets |  | $ | 38,317 |  |  | $ | 56,859 |
Noncurrent assets |  |  | 3,991 |  |  |  | 32,690 |
Total assets |  | $ | 42,308 |  |  | $ | 89,549 |
|  | December 31, |
(in thousands) |  | 2012 |  |  | 2011 |
Current liabilities |  | $ | 37,940 |  |  | $ | 38,108 |
Noncurrent liabilities |  |  | 443 |  |  |  | 635 |
Total liabilities |  | $ | 38,383 |  |  | $ | 38,743 |
|  | For the Year Ended December 31, |
(in thousands) |  | 2012 |  |  | 2011 |
Net revenue |  | $ | 92,891 |  |  | $ | 109,257 |
Gross profit |  |  | 23,032 |  |  |  | 27,860 |
Net loss |  |  | (47,206 | ) |  |  | (1,900 | )

X
- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32787-111569 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 18 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32847-111569 + Details
Name: | us-gaap_EquityMethodInvestmentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration