Debt and Credit Sources | 3 Months Ended |
Mar. 30, 2014 |
Debt Disclosure [Abstract] | ' |
Debt Disclosure [Text Block] | ' |
DEBT AND CREDIT SOURCES |
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The following table summarizes the Company's outstanding debt on its Consolidated Balance Sheets: |
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| | 30-Mar-14 | | 29-Dec-13 |
(In thousands) | | Face Value | | Short-term | | Long-term | | Total | | Face Value | | Short-term | | Long-term | | Total |
Convertible debt: | | | | | | | | | | | | | | | | |
0.75% debentures due 2018 | | $ | 300,000 | | | $ | — | | | $ | 300,000 | | | $ | 300,000 | | | $ | 300,000 | | | $ | — | | | $ | 300,000 | | | $ | 300,000 | |
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4.50% debentures due 2015 | | 250,000 | | | 230,537 | | | — | | | 230,537 | | | 250,000 | | | 225,889 | | | — | | | 225,889 | |
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4.75% debentures due 2014 | | 230,000 | | | 229,964 | | | — | | | 229,964 | | | 230,000 | | | 230,000 | | | — | | | 230,000 | |
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0.75% debentures due 2015 | | 79 | | | — | | | 79 | | | 79 | | | 79 | | | — | | | 79 | | | 79 | |
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IFC mortgage loan | | 55,000 | | | 15,000 | | | 40,000 | | | 55,000 | | | 62,500 | | | 15,000 | | | 47,500 | | | 62,500 | |
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CEDA loan | | 30,000 | | | — | | | 30,000 | | | 30,000 | | | 30,000 | | | — | | | 30,000 | | | 30,000 | |
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Credit Agricole revolving credit facility | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
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Other debt1 | | 49,284 | | | 1,320 | | | 47,964 | | | 49,284 | | | 50,926 | | | 41,227 | | | 9,699 | | | 50,926 | |
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| | $ | 914,363 | | | $ | 476,821 | | | $ | 418,043 | | | $ | 894,864 | | | $ | 923,505 | | | $ | 512,116 | | | $ | 387,278 | | | $ | 899,394 | |
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1 | The balance of Other debt excludes payments related to capital leases which are disclosed in Note 7. "Commitments and Contingencies" to these consolidated financial statements. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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As of March 30, 2014 the aggregate future contractual maturities of the Company's outstanding debt, at face value, was as follows: |
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(In thousands) | | 2014 (remaining nine months) | | 2015 | | 2016 | | 2017 | | 2018 | | Thereafter | | Total | | | | | | | | | |
Aggregate future maturities of outstanding debt | | $ | 238,395 | | | 266,166 | | | 16,217 | | | 16,272 | | | 303,852 | | | 73,461 | | | $ | 914,363 | | | | | | | | | | |
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Convertible Debt |
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The following table summarizes the Company's outstanding convertible debt: |
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| | March 30, 2014 | | December 29, 2013 | | | | | | | | |
(In thousands) | | Carrying Value | | Face Value | | Fair Value1 | | Carrying Value | | Face Value | | Fair Value1 | | | | | | | | |
Convertible debt: | | | | | | | | | | | | | | | | | | | | |
0.75% debentures due 2018 | | $ | 300,000 | | | $ | 300,000 | | | $ | 417,132 | | | $ | 300,000 | | | $ | 300,000 | | | $ | 367,578 | | | | | | | | | |
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4.50% debentures due 2015 | | 230,537 | | | 250,000 | | | 372,500 | | | 225,889 | | | 250,000 | | | 343,895 | | | | | | | | | |
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4.75% debentures due 2014 | | 229,964 | | | 230,000 | | | 275,704 | | | 230,000 | | | 230,000 | | | 269,252 | | | | | | | | | |
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0.75% debentures due 2015 | | 79 | | | 79 | | | 80 | | | 79 | | | 79 | | | 102 | | | | | | | | | |
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| | $ | 760,580 | | | $ | 780,079 | | | $ | 1,065,416 | | | $ | 755,968 | | | $ | 780,079 | | | $ | 980,827 | | | | | | | | | |
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1 | The fair value of the convertible debt was determined using Level 1 inputs based on quarterly market prices as reported by an independent pricing source. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The Company's outstanding convertible debentures are senior, unsecured obligations of the Company, ranking equally with all existing and future senior unsecured indebtedness of the Company. |
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0.75% Debentures Due 2018 |
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In May 2013, the Company issued $300.0 million in principal amount of its 0.75% debentures due 2018. Interest is payable semi-annually, beginning on December 1, 2013. Holders are able to exercise their right to convert the debentures at any time into shares of the Company's common stock at an initial conversion price approximately equal to $24.95 per share, subject to adjustment in certain circumstances. The maximum number of shares of the Company's common stock that may be issued through the conversion is 15,633,957, subject to anti-dilution and certain other adjustments. If not earlier repurchased or converted, the 0.75% debentures due 2018 mature on June 1, 2018. |
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4.50% Debentures due 2015 |
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In fiscal 2010, the Company issued $250.0 million in principal amount of its 4.50% senior cash convertible debentures ("4.50% debentures due 2015"). Interest is payable semi-annually, beginning on September 15, 2010. If not earlier repurchased or converted, the 4.50% debentures due 2015 mature on March 15, 2015. The 4.50% debentures due 2015 are convertible, upon certain events and restrictions, only into cash, and not into shares of the Company's common stock (or any other securities) at an initial conversion price of $22.53 per share. The conversion price is subject to adjustment in certain events, such as distributions of dividends or stock splits. Upon conversion, the Company will deliver an amount of cash calculated by reference to the price of its common stock over the applicable observation period. |
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The embedded cash conversion option is a derivative instrument (derivative liability) that is required to be separated from the 4.50% debentures due 2015. The fair value of the derivative liability is classified within "Other long-term liabilities" on the Company's Consolidated Balance Sheets. Changes in the fair value of the derivative liability are reported in the Company's Consolidated Statements of Operations until such transaction settles or expires. |
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During the three months ended March 30, 2014 and March 31, 2013 the Company recognized a non-cash loss of $19.1 million and $11.6 million, respectively, recorded in "Other, net" in the Company's Consolidated Statement of Operations related to the change in fair value of the embedded cash conversion option. |
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Call Spread Overlay with Respect to 4.50% Debentures |
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Concurrent with the issuance of the 4.50% debentures due 2015, the Company entered into privately negotiated convertible debenture hedge transactions (collectively, the "4.50% Bond Hedge") and warrant transactions (collectively, the "4.50% Warrants" and together with the 4.50% Bond Hedge, the “CSO2015”), with certain of the initial purchasers of the 4.50% debentures due 2015 or their affiliates. The CSO2015 transactions represent a call spread overlay with respect to the 4.50% debentures due 2015, whereby the cost of the 4.50% Bond Hedge purchased by the Company to cover the cash outlay upon conversion of the debentures is reduced by the sales prices of the 4.50% Warrants. Assuming full performance by the counterparties (and 4.50% Warrants strike prices in excess of the conversion price of the 4.50% debentures due 2015), the transactions effectively reduce the Company's potential payout over the principal amount on the 4.50% debentures due 2015 upon conversion of the 4.50% debentures due 2015. |
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Under the terms of the 4.50% Bond Hedge, the Company bought from affiliates of certain of the initial purchasers options to acquire, at an exercise price of $22.53 per share, subject to customary adjustments for anti-dilution and other events, cash in an amount equal to the market value of up to 11.1 million shares of the Company's common stock. Under the terms of the 4.50% Warrants the Company sold to affiliates of certain of the initial purchasers of the 4.50% cash convertible debentures warrants to acquire, at an exercise price of $24.00 per share, up to 11.1 million shares of the Company's common stock. Each 4.50% Bond Hedge and 4.50% Warrant transaction is a separate transaction, entered into by the Company with each counterparty, and is not part of the terms of the 4.50% debentures due 2015. |
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The 4.50% Bond Hedge, which is indexed to the Company's common stock, is a derivative instrument that requires mark-to-market accounting treatment due to the cash settlement features until such transactions settle or expire. The fair value of the 4.50% Bond Hedge is classified as "Other long-term assets" in the Company's Consolidated Balance Sheets. |
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During the three months ended March 30, 2014 and March 31, 2013, the Company recognized a non-cash gain of $19.1 million and $11.6 million, respectively, in "Other, net" in the Company's Consolidated Statement of Operations related to the change in fair value of the 4.50% Bond Hedge. |
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4.75% Debentures |
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In May 2009, the Company issued $230.0 million in principal amount of its 4.75% senior convertible debentures ("4.75% debentures due 2014"). Interest on the 4.75% debentures due 2014 is payable semi-annually, beginning October 15, 2009. Holders of the 4.75% debentures due 2014 are able to exercise their right to convert the debentures at any time into shares of the Company's common stock at a conversion price equal to $26.40 per share, subject to adjustment upon certain events. |
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Call Spread Overlay with Respect to the 4.75% Debentures |
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Concurrently with the issuance of the 4.75% debentures due 2014, the Company entered into certain convertible debenture hedge transactions (the "4.75% Bond Hedge") and warrant transactions (the "4.75% Warrants") with affiliates of certain of the underwriters of the 4.75% debentures (together, the "CSO2014"), whereby the cost of the 4.75% Bond Hedges purchased by the Company to cover the potential share outlays upon conversion of the debentures is reduced by the sales prices of the 4.75% Warrants. The CSO2014 are not subject to mark-to-market accounting treatment since they may only be settled by issuance of the Company's common stock. |
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The 4.75% Bond Hedge allows the Company to purchase up to 8.7 million shares of the Company's common stock, on a net share basis. Each 4.75% Bond Hedge and 4.75% Warrant is a separate transaction, entered into by the Company with each counterparty, and is not part of the terms of the 4.75% debentures due 2014. The exercise prices of the 4.75% Bond Hedge are $26.40 per share of the Company's common stock, subject to customary adjustment for anti-dilution and other events. In February 2014, the parties agreed to unwind the 4.75% Bond Hedge in full for a total cash settlement of $68.8 million, calculated by reference to the weighted price of the Company's common stock on the settlement day, received by the Company. |
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Under the 4.75% Warrants, the Company sold warrants to acquire up to 8.7 million shares of the Company's common stock at an exercise price of $26.40 per share of the Company's common stock, subject to adjustment for certain anti-dilution and other events. The 4.75% Warrants expire in 2014. In February 2014, the parties agreed to unwind the 4.75% Warrants in full for a total cash settlement of $81.1 million, calculated by reference to the weighted price of the Company's common stock on the settlement date, paid by the Company. |
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Other Debt and Credit Sources |
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Mortgage Loan Agreement with IFC |
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In May 2010, the Company entered into a mortgage loan agreement with IFC. Under the loan agreement, the Company may borrow up to $75.0 million during the first two years, and shall repay the amount borrowed, starting 2 years after the date of borrowing, in 10 equal semi-annual installments. The Company is required to pay interest of LIBOR plus 3% per annum on outstanding borrowings; a front-end fee of 1% on the principal amount of borrowings at the time of borrowing; and a commitment fee of 0.5% per annum on funds available for borrowing and not borrowed. The Company may prepay all or a part of the outstanding principal, subject to a 1% prepayment premium. The Company has pledged certain assets as collateral supporting its repayment obligations (see Note 3). As of both March 30, 2014 and December 29, 2013, the Company had restricted cash and cash equivalents of $9.2 million related to the IFC debt service reserve which contains the amount, as determined by IFC, equal to the aggregate principal and interest due on the next succeeding interest payment date. |
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Loan Agreement with California Enterprise Development Authority ("CEDA") |
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In fiscal 2010, the Company borrowed the proceeds of the $30.0 million aggregate principal amount of CEDA's tax-exempt Recovery Zone Facility Revenue Bonds (SunPower Corporation - Headquarters Project) Series 2010 (the "Bonds") maturing April 1, 2031 under a loan agreement with CEDA. The Bonds mature on April 1, 2031, bear interest at a fixed rate of 8.50% through maturity, and include customary covenants of, and other restrictions on the Company. |
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July 2013 Revolving Credit Facility with Credit Agricole |
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In July 2013, the Company entered into a revolving credit facility with Credit Agricole, as administrative agent, and certain financial institutions, under which the Company may borrow up to $250.0 million until the earliest of: (i) July 3, 2016, or (ii) December 31, 2014, if the Company has not repaid, exchanged or repurchased its outstanding 4.50% debentures due 2015 by September 30, 2014 and is not in compliance with certain liquidity requirements as of such date (the earliest of the above events, the "Maturity Date"). Amounts borrowed may be repaid and reborrowed until the Maturity Date. The Company may request increases to the available capacity of the July 2013 revolving credit facility to an aggregate of $300.0 million, subject to the satisfaction of certain conditions. The July 2013 revolving credit facility includes representations, covenants, and events of default customary for financing transactions of this type. |
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The July 2013 revolving credit facility was entered into in conjunction with the delivery by Total S.A. of a guarantee of the Company's obligations under the related facility. On January 31, 2014, as contemplated by the facility, (i) the Company's obligations under the facility became secured by a pledge of certain accounts receivable and inventory; (ii) certain of the Company's subsidiaries entered into guarantees of the facility; and (iii) Total S.A.'s guarantee of the Company's obligations under the facility expired. Until the expiration of the guarantee on January 31, 2014, the Company was required to pay Total S.A. an annual guarantee fee of 2.75% of the outstanding amount under the July 2013 revolving credit facility. |
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Before January 31, 2014, the Company was required to pay interest on outstanding borrowings and fees of (a) with respect to any LIBOR rate loan, 0.60% plus the LIBOR rate divided by a percentage equal to one minus the stated maximum rate of all reserves required to be maintained against "Eurocurrency liabilities" as specified in Regulation D; (b) with respect to any alternative base rate loan, 0.25% plus the greater of (1) the prime rate, (2) the Federal funds rate plus 0.50%, and (3) the one month LIBOR rate plus 1%; and (c) a commitment fee of 0.06% per annum on funds available for borrowing and not borrowed. |
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After January 31, 2014, the Company is required to pay interest on outstanding borrowings and fees of (a) with respect to any LIBOR rate loan, an amount ranging from 1.50% to 2.00% (depending on the Company's leverage ratio from time to time) plus the LIBOR rate divided by a percentage equal to one minus the stated maximum rate of all reserves required to be maintained against “Eurocurrency liabilities” as specified in Regulation D; (b) with respect to any alternate base rate loan, an amount ranging from 0.50% to 1.00% (depending on the Company's leverage ratio from time to time) plus the greater of (1) the prime rate, (2) the Federal Funds rate plus 0.50%, and (3) the one-month LIBOR rate plus 1%; and (c) a commitment fee ranging from 0.25% to 0.35% (depending on the Company's leverage ratio from time to time) per annum on funds available for borrowing and not borrowed. |
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As of March 30, 2014 and December 29, 2013, the Company had no outstanding borrowing under the July 2013 revolving credit facility. |
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Liquidity Support Agreement with Total S.A. |
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In February 2012, the Company entered into a Liquidity Support Agreement with Total S.A. and the DOE, and a series of related agreements with Total S.A. and Total, under which Total S.A. has agreed to provide the Company, or cause to be provided, additional liquidity under certain circumstances. The Liquidity Support Agreement was terminated in the first quarter of fiscal 2014. There were no outstanding guarantees or debt under the agreement upon termination (see Note 2). |
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Project Financing |
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In order to facilitate the construction and sale of certain solar projects, the Company obtains non-recourse project loans from third-party financial institutions and are contemplated as part of the structure of the sales transaction. The customer, which is not a related party to either the financial institution or the Company, in certain circumstances is permitted to assume the loans at the time that the project entity is sold to the customer. During fiscal 2013, the Company entered into a project loan with a consortium of lenders to facilitate the development of a 10 MW utility and power plant projects under construction in Israel. During the first quarter of fiscal 2014, the Company sold the Israeli project. The related loan, amounting to ILS 141.8 million (approximately $40.7 million based on the exchange rate at the time of sale), and accrued and unpaid interest was assumed by the customer. In instances where the debt is issued as a form of pre-established customer financing, subsequent debt assumption is reflected as a financing outflow and operating inflow for purposes of the statement of cash flows to reflect the substance of the assumption as a facilitation of customer financing from a third-party. |
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Other Debt |
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During the first quarter of fiscal 2014, the Company entered into a long-term non-recourse loan to finance solar power systems and leases under its residential lease program. During the quarter, the Company drew down $39.1 million of proceeds, net of issuance costs, under the loan agreement. |
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During fiscal 2013, the Company entered into a long-term non-recourse loan agreement with a third-party financial institution to finance a 5.4 MW utility and power plant operating in Arizona. The outstanding balance of the loan as of March 30, 2014 was $9.0 million. |
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Other debt is further comprised of non-recourse project loans in EMEA which are scheduled to mature through 2028. |
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August 2011 Letter of Credit Facility with Deutsche Bank |
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In August 2011, the Company entered into a letter of credit facility agreement with Deutsche Bank, as administrative agent, and certain financial institutions. Payment of obligations under the letter of credit facility is guaranteed by Total S.A. pursuant to the Credit Support Agreement (see Note 2). The letter of credit facility provides for the issuance, upon request by the Company, of letters of credit by the issuing banks thereunder in order to support certain obligations of the Company, in an aggregate amount not to exceed (i) $771.0 million for the period from January 1, 2013 through December 31, 2013, and (ii) $878.0 million for the period from January 1, 2014 through December 31, 2014. Aggregate letter of credit amounts may be increased upon the agreement of the parties but, otherwise, may not exceed (i) $936.0 million for the period from January 1, 2015 through December 31, 2015, and (ii) $1.0 billion for the period from January 1, 2016 through June 28, 2016. |
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As of March 30, 2014 and December 29, 2013, letters of credit issued under the August 2011 letter of credit facility with Deutsche Bank totaled $755.9 million and $736.0 million, respectively. |
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September 2011 Letter of Credit Facility with Deutsche Bank Trust |
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In September 2011, the Company entered into a letter of credit facility with Deutsche Bank Trust which provides for the issuance, upon request by the Company, of letters of credit to support obligations of the Company in an aggregate amount not to exceed $200.0 million. Each letter of credit issued under the facility is fully cash-collateralized and the Company has entered into a security agreement with Deutsche Bank Trust, granting them a security interest in a cash collateral account established for this purpose. |
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As of March 30, 2014 and December 29, 2013, letters of credit issued under the Deutsche Bank Trust facility amounted to $2.3 million and $2.4 million, respectively, which were fully collateralized with restricted cash on the Consolidated Balance Sheets. |