O’Fallon-based MEMC Electronic Materials Inc. will appeal a $19 million “windfall” verdict, the company said Thursday.
A federal jury in St. Louis on Wednesday awarded the amount, finding that MEMC breached its 2005 contract to sell chunk polysilicon and polysilicon solar ingot to Semi-Materials Co. Ltd., headquartered in Seoul, South Korea.
The jury rejected Semi-Materials’ claims of fraud and unjust enrichment against MEMC.
MEMC anticipates the verdict will result in a one-time charge against earnings in the first quarter of 2011 of approximately $14 million, the company said in a filing with the Securities and Exchange Commission. The company said it previously recorded about $5.1 million of the jury award.
The award was not based on the “actual harm” done to Semi-Materials because of failed deliveries, but on the difference in price of polysilicon under the alleged 2005 purchase orders and the substantially higher price of polysilicon in November 2006, MEMC said in the filing.
The verdict is a windfall for Semi-Materials, MEMC said in the filing, which was signed by General Counsel Bradley Kohn.
Semi-Materials alleged that MEMC promised to sell the polysilicon at one price, and then sell the material later on at a lower price. Semi-Materials says MEMC did not fulfill its obligation to sell the polysilicon at the lower price, resulting in an overpayment to MEMC of about $5 million.
Last week Semi-Materials CEO Kun Park testified through an interpreter that it was his understanding the high price would be $188 per kilogram and the low price would be $40 per kilogram, with the average price working out to $54.20 per kilogram.
Semi-Materials makes photovoltaic materials and other products. MEMC, which had revenue of $2.2 billion in 2010, makes wafers and other products for the semiconductor and solar industries.