10-Q 1 spwr_03292015x10-q.htm 10-Q SPWR_03.29.2015_10-Q
 
 
 
 
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
T
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 001-34166


SunPower Corporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware
 
94-3008969
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
77 Rio Robles, San Jose, California 95134
(Address of Principal Executive Offices and Zip Code)
(408) 240-5500
(Registrant's Telephone Number, Including Area Code)

_________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  T    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  T    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  o    No  T


The total number of outstanding shares of the registrant’s common stock as of April 24, 2015 was 133,269,858.


 
 
 
 
 
d


1



TABLE OF CONTENTS
 
 
Page
Part I. FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements (unaudited)
 
 
 
 
Consolidated Balance Sheets
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
Consolidated Statements of Comprehensive Income (Loss)
 
 
 
 
Consolidated Statements of Equity
 
 
 
 
Consolidated Statements of Cash Flows
 
 
 
 
Notes to Consolidated Financial Statements
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosure About Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
Part II. OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item IA.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 6.
Exhibits
 
 
 
 
 
 

2



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


SunPower Corporation
Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)
 
March 29, 2015
 
December 28, 2014
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
601,573

 
$
956,175

Restricted cash and cash equivalents, current portion
27,507

 
18,541

Accounts receivable, net1
467,868

 
504,316

Costs and estimated earnings in excess of billings1
46,117

 
187,087

Inventories
302,587

 
208,573

Advances to suppliers, current portion
90,270

 
98,129

Project assets - plants and land, current portion
179,650

 
101,181

Prepaid expenses and other current assets1
345,825

 
328,845

Total current assets
2,061,397

 
2,402,847

 
 
 
 
Restricted cash and cash equivalents, net of current portion
34,383

 
24,520

Restricted long-term marketable securities
7,027

 
7,158

Property, plant and equipment, net
594,466

 
585,344

Solar power systems leased and to be leased, net
427,187

 
390,913

Project assets - plants and land, net of current portion
29,394

 
15,475

Advances to suppliers, net of current portion
305,484

 
311,528

Long-term financing receivables, net
298,785

 
269,587

Goodwill and other intangible assets, net
38,008

 
37,981

Other long-term assets1
307,010

 
300,229

Total assets
$
4,103,141

 
$
4,345,582

 
 
 
 
Liabilities and Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable1
$
432,568

 
$
419,919

Accrued liabilities
269,491

 
331,034

Billings in excess of costs and estimated earnings
89,061

 
83,440

Short-term debt
18,222

 
18,105

Convertible debt, current portion

 
245,325

Customer advances, current portion1
27,367

 
31,788

Total current liabilities
836,709

 
1,129,611

 
 
 
 
Long-term debt
296,276

 
214,181

Convertible debt, net of current portion1
693,591

 
692,955

Customer advances, net of current portion1
143,218

 
148,896

Other long-term liabilities
542,973

 
555,344

Total liabilities
2,512,767

 
2,740,987

Commitments and contingencies (Note 8)


 


Redeemable noncontrolling interests in subsidiaries
29,306

 
28,566

Equity:
 

 
 

Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding as of both March 29, 2015 and December 28, 2014

 

Common stock, $0.001 par value, 367,500,000 shares authorized; 141,592,715 shares issued, and 133,254,173 outstanding as of March 29, 2015; 367,500,000 shares authorized; 138,616,252 shares issued, and 131,466,777 outstanding as of December 28, 2014;
133


131

Additional paid-in capital
2,235,562

 
2,219,581

Accumulated deficit
(570,179
)
 
(560,598
)
Accumulated other comprehensive loss
(19,535
)
 
(13,455
)
Treasury stock, at cost; 8,338,542 shares of common stock as of March 29, 2015; 7,149,475 shares of common stock as of December 28, 2014
(150,189
)
 
(111,485
)
Total stockholders' equity
1,495,792

 
1,534,174

Noncontrolling interests in subsidiaries
65,276

 
41,855

Total equity
1,561,068

 
1,576,029

Total liabilities and equity
$
4,103,141

 
$
4,345,582

1 
The Company has related-party balances for transactions made with Total and its affiliates as well as unconsolidated entities in which the Company has a direct equity investment. These related-party balances are recorded within the "Accounts Receivable, net," "Costs and estimated earnings in excess of billings," "Prepaid expenses and other current assets," "Other long-term assets," "Accounts payable," "Customer advances, current portion," "Convertible debt, net of current portion," and "Customer advances, net of current portion" financial statement line items in the Consolidated Balance Sheets (see Note 2, Note 6, Note 9, Note 10, and Note 11).

The accompanying notes are an integral part of these consolidated financial statements.

3


SunPower Corporation
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)

 
 
Three Months Ended
 
 
March 29, 2015
 
March 30, 2014

 
 
 
 
Revenue
 
$
440,871

 
$
692,422

Cost of revenue
 
350,053

 
529,433

Gross margin
 
90,818

 
162,989

Operating expenses:
 
 
 
 
Research and development
 
21,168

 
16,746

Sales, general and administrative
 
77,214

 
73,928

Restructuring charges
 
3,581

 
(461
)
Total operating expenses
 
101,963

 
90,213

Operating income (loss)
 
(11,145
)
 
72,776

Other income (expense), net:
 
 
 
 
Interest income
 
556

 
318

Interest expense
 
(15,681
)
 
(19,592
)
Other, net
 
(2,620
)
 
1,369

Other expense, net
 
(17,745
)
 
(17,905
)
Income (loss) before income taxes and equity in earnings of unconsolidated investees
 
(28,890
)
 
54,871

Provision for income taxes
 
(2,351
)
 
(13,620
)
Equity in earnings of unconsolidated investees
 
2,191

 
1,783

Net income (loss)
 
(29,050
)
 
43,034

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
19,469

 
22,010

Net income (loss) attributable to stockholders
 
$
(9,581
)
 
$
65,044

 
 
 
 
 
Net income (loss) per share attributable to stockholders:
 
 
 
 
Basic
 
$
(0.07
)
 
$
0.53

Diluted
 
$
(0.07
)
 
$
0.42

Weighted-average shares:
 
 
 
 
Basic
 
132,033

 
122,196

Diluted
 
132,033

 
160,434


The accompanying notes are an integral part of these consolidated financial statements.

4


SunPower Corporation
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(unaudited)


 
 
Three Months Ended
 
 
March 29, 2015
 
March 30, 2014
Net income (loss)
 
$
(29,050
)
 
$
43,034

Components of comprehensive income (loss):
 
 
 
 
Translation adjustment
 
(2,003
)
 
274

Net unrealized gain (loss) on derivatives (Note 11)
 
(4,188
)
 
385

Income taxes
 
111

 
(110
)
Net change in accumulated other comprehensive gain (loss)
 
(6,080
)
 
549

Total comprehensive income (loss)
 
(35,130
)
 
43,583

Comprehensive loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
19,469

 
22,010

Comprehensive income (loss) attributable to stockholders
 
$
(15,661
)
 
$
65,593


The accompanying notes are an integral part of these consolidated financial statements.


5


SunPower Corporation
Consolidated Statements of Equity
(In thousands)
(unaudited)


 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests
 
Shares
 
Value
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated Other
Comprehensive Income (Loss)
 
Retained Earnings (Accumulated Deficit)
 
Total
Stockholders’
Equity
 
Noncontrolling Interests
 
Total Equity
Balances at December 28, 2014
 
$
28,566

 
131,466

 
$
131

 
$
2,219,581

 
$
(111,485
)
 
$
(13,455
)
 
$
(560,598
)
 
$
1,534,174

 
$
41,855

 
$
1,576,029

Net income (loss)
 
869

 

 

 

 

 

 
(9,581
)
 
(9,581
)
 
(20,338
)
 
(29,919
)
Other comprehensive income (loss)
 

 

 

 

 

 
(6,080
)
 

 
(6,080
)
 

 
(6,080
)
Issuance of common stock upon exercise of options
 

 
1

 

 
3

 

 

 

 
3

 

 
3

Issuance of restricted stock to employees, net of cancellations
 

 
2,976

 
2

 
(2
)
 

 

 

 

 

 

Stock-based compensation expense
 

 

 

 
14,504

 

 

 

 
14,504

 

 
14,504

Tax benefit from convertible debt interest deduction
 

 

 

 
904

 

 

 

 
904

 

 
904

Tax benefit from stock-based compensation
 

 

 

 
572

 

 

 

 
572

 

 
572

Contributions from noncontrolling interests
 
431

 

 

 

 

 

 

 

 
45,459

 
45,459

Distributions to noncontrolling interests
 
(560
)
 

 

 

 

 

 

 

 
(1,700
)
 
(1,700
)
Purchases of treasury stock
 

 
(1,189
)
 

 

 
(38,704
)
 

 

 
(38,704
)
 

 
(38,704
)
Balances at March 29, 2015
 
$
29,306

 
133,254

 
$
133

 
$
2,235,562

 
$
(150,189
)
 
$
(19,535
)
 
$
(570,179
)
 
$
1,495,792

 
$
65,276

 
$
1,561,068


The accompanying notes are an integral part of these consolidated financial statements.

6


SunPower Corporation
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
 
 
Three Months Ended
 
 
March 29, 2015
 
March 30, 2014
Cash flows from operating activities:
 
 
 
 
Net income (loss)
 
$
(29,050
)
 
$
43,034

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
Depreciation and amortization
 
28,563

 
25,371

Stock-based compensation
 
13,546

 
14,867

Non-cash interest expense
 
4,680

 
5,170

Equity in earnings of unconsolidated investees
 
(2,191
)
 
(1,783
)
Excess tax benefit from stock-based compensation
 
(572
)
 

Deferred income taxes and other tax liabilities
 
(5,078
)
 
17,985

Other, net
 
855

 
206

Changes in operating assets and liabilities, net of effect of acquisition:
 
 
 
 
Accounts receivable
 
32,735

 
93,574

Costs and estimated earnings in excess of billings
 
140,970

 
14,009

Inventories
 
(108,072
)
 
4,043

Project assets
 
(93,150
)
 
22,491

Prepaid expenses and other assets
 
(25,090
)
 
(12,191
)
Long-term financing receivables, net
 
(29,198
)
 
(32,333
)
Advances to suppliers
 
13,903

 
(7,263
)
Accounts payable and other accrued liabilities
 
(51,781
)
 
(16,972
)
Billings in excess of costs and estimated earnings
 
5,621

 
(117,009
)
Customer advances
 
(10,099
)
 
(2,727
)
Net cash provided by (used in) operating activities
 
(113,408
)
 
50,472

Cash flows from investing activities:
 
 
 
 
Increase in restricted cash and cash equivalents
 
(18,828
)
 
(2,293
)
Purchases of property, plant and equipment
 
(24,564
)
 
(8,800
)
Cash paid for solar power systems, leased and to be leased
 
(19,403
)
 
(14,989
)
Cash paid for investments in unconsolidated investees
 

 
(5,013
)
Cash paid for intangibles
 
(526
)
 

Net cash used in investing activities
 
(63,321
)
 
(31,095
)
Cash flows from financing activities:
 
 
 
 
Cash paid for repurchase of convertible debt
 
(324,273
)
 
(1
)
Proceeds from settlement of 4.75% Bond Hedge
 

 
68,842

Payments to settle 4.75% Warrants
 

 
(81,077
)
Proceeds from settlement of 4.50% Bond Hedge
 
74,628

 

Proceeds from issuance of non-recourse debt financing, net of issuance costs
 

 
39,108

Repayment of non-recourse debt financing
 
(398
)
 

Proceeds from issuance of project loans, net of issuance costs
 
89,991

 

Assumption of project loan by customer
 

 
(40,672
)
Repayment of bank loans, project loans and other debt
 
(7,946
)
 
(7,850
)
Repayment of residential lease financing
 
(10,546
)
 
(7,213
)
Proceeds from sale-leaseback financing
 
727

 
16,685

Repayment of sale-leaseback financing
 
(90
)
 
(779
)
Contributions from noncontrolling interests and redeemable noncontrolling interests
 
45,890

 
30,552

Distributions to noncontrolling interests and redeemable noncontrolling interests
 
(2,260
)
 
(1,117
)
Proceeds from exercise of stock options
 
3

 
68

Excess tax benefit from stock-based compensation
 
572

 

Purchases of stock for tax withholding obligations on vested restricted stock
 
(38,704
)
 
(43,506
)
Net cash used in financing activities
 
(172,406
)
 
(26,960
)
Effect of exchange rate changes on cash and cash equivalents
 
(5,467
)
 
(187
)
Net increase (decrease) in cash and cash equivalents
 
(354,602
)
 
(7,770
)
Cash and cash equivalents, beginning of period
 
956,175

 
762,511

Cash and cash equivalents, end of period
 
$
601,573

 
$
754,741

 
 
 
 
 
Non-cash transactions:
 
 
 
 
Assignment of residential lease receivables to a third-party financial institution
 
$
1,307

 
$
1,496

Costs of solar power systems, leased and to be leased, sourced from existing inventory
 
$
14,664

 
$
7,120

Costs of solar power systems, leased and to be leased, funded by liabilities
 
$
6,388

 
$
1,634

Costs of solar power systems under sale-leaseback financing arrangements, sourced from project assets
 
$
1,050

 
$
15,269

Property, plant and equipment acquisitions funded by liabilities
 
$
20,185

 
$
5,544


The accompanying notes are an integral part of these consolidated financial statements.

7


Note 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company
 
SunPower Corporation (together with its subsidiaries, the "Company" or "SunPower") is a vertically integrated solar energy products and solutions company that designs, manufactures and delivers high-performance solar systems worldwide, serving as a one-stop shop for residential, commercial and utility-scale power plant customers. SunPower Corporation is a majority owned subsidiary of Total Energies Nouvelles Activités USA ("Total"), a subsidiary of Total S.A. ("Total S.A.") (see Note 2).

In the first quarter of fiscal 2015, in connection with a realignment of its internal organizational structure, the Company changed its segment reporting from its Americas, EMEA and APAC Segments to three end-customer segments: (i) Residential Segment, (ii) Commercial Segment and (iii) Power Plant Segment. The Residential and Commercial Segments combined are referred to as Distributed Generation. Historically, the Americas Segment included both North and South America, the EMEA Segment included European countries as well as the Middle East and Africa, and the APAC Segment included all Asia-Pacific countries.

Under the new segmentation, the Company’s Residential Segment refers to sales of solar energy solutions to residential end customers through a variety of means, including cash sales and long-term leases directly to end customers, sales to resellers, including the Company's third-party global dealer network, and sales of the Company's operations and maintenance (“O&M”) services.  The Company’s Commercial Segment refers to sales of solar energy solutions to commercial and public entity end customers through a variety of means, including direct sales of turn-key engineering, procurement and construction ("EPC") services, sales to the Company's third-party global dealer network, sales of energy under power purchase agreements ("PPAs"), and sales of the Company's O&M services. The Power Plant Segment refers to the Company's large-scale solar products and systems business, which includes power plant project development and project sales, EPC services for power plant construction, power plant O&M services and component sales for power plants developed by third-parties, sometimes on a multi-year, firm commitment basis. 

The Company’s President and Chief Executive Officer, as the chief operating decision maker (“CODM”), reviews the Company's business and manages resource allocations and measures performance of the Company’s activities among these three end-customer segments.

Reclassifications of prior period segment information have been made to conform to the current period presentation. This change does not affect the Company's previously reported Consolidated Financial Statements.

Basis of Presentation and Preparation
    
Principles of Consolidation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("United States" or "U.S.") and include the accounts of the Company, all of its subsidiaries and special purpose entities, as appropriate under consolidation accounting guidelines. Intercompany transactions and balances have been eliminated in consolidation. The assets of the special purpose entities that the Company sets up related to project financing for customers are not designed to be available to service the general liabilities and obligations of the Company in certain circumstances.

Reclassifications

Certain prior period balances, including prior period segment information, have been reclassified to conform to the current period presentation in the Company's consolidated financial statements and the accompanying notes. Such reclassifications had no effect on previously reported results of operations or accumulated deficit.

Fiscal Years

The Company has a 52-to-53-week fiscal year that ends on the Sunday closest to December 31. Accordingly, every fifth or sixth year will be a 53-week fiscal year. The current fiscal year, fiscal 2015, consists of 53 weeks, including a 14-week fourth fiscal quarter, while fiscal year 2014 consists of 52 weeks. The first quarter of fiscal 2015 ended on March 29, 2015, while the first quarter of fiscal 2014 ended on March 30, 2014. The first quarter of fiscal 2015 and fiscal 2014 were both 13-week quarters.

8



Management Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates in these consolidated financial statements include percentage-of-completion for construction projects; allowances for doubtful accounts receivable and sales returns; inventory and project asset write-downs; stock-based compensation; estimates for future cash flows and economic useful lives of property, plant and equipment, goodwill, valuations for business combinations, other intangible assets and other long-term assets; the fair value and residual value of leased solar power systems; fair value of financial instruments; valuation of contingencies and certain accrued liabilities such as accrued warranty; and income taxes and tax valuation allowances. Actual results could materially differ from those estimates.

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board ("FASB") issued an update to the standards to provide a practical expedient for the measurement date of defined benefit obligation and plan assets for reporting entities with fiscal year-ends that do not coincide with a month-end. The updated standard allows such entities to measure defined benefit plan assets and obligations using the month-end that is closest to the entity's fiscal year-end and apply that practical expedient consistently from year to year and to all plans, if an entity has more than one plan. The new practical expedient guidance is effective for the Company no later than the first quarter of fiscal 2016 and requires a prospective approach to adoption. Early adoption is permitted. The Company is evaluating the potential impact of this standard on its consolidated financial statements and disclosures.

In April 2015, the FASB issued an update to the standards for the presentation of debt issuance costs to reduce complexity in accounting standards and to align with IFRS. The updated standard requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. U.S. generally accepted accounting principles previously required debt issuance costs to be reflected as an asset on the Company's balance sheet. The new debt issuance cost guidance is effective for the Company no later than the first quarter of fiscal 2016 and requires a retrospective approach to adoption. The Company has elected early adoption of the updated accounting standard, effective in the first quarter of fiscal 2015, resulting in the reclassification of $11.6M of debt issuance costs from "Other long-term assets" to "Long-term debt" and "Convertible debt, net of current portion" in the Consolidated Balance Sheets as of December 28, 2014.

In February 2015, the FASB issued a new standard that modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The new consolidation guidance is effective for the Company in the first quarter of fiscal 2016 and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted.  The Company is evaluating the available methods and the potential impact of this standard on its consolidated financial statements and disclosures.

In May 2014, the FASB issued a new revenue recognition standard based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new revenue recognition standard becomes effective for the Company in the first quarter of fiscal 2017 and is to be applied retrospectively using one of two prescribed methods. The Company is evaluating the application method and impact on its consolidated financial statements and disclosures.

Other than as described above, there has been no issued accounting guidance not yet adopted by the Company that it believes is material or potentially material to its consolidated financial statements.


9


Note 2. TRANSACTIONS WITH TOTAL AND TOTAL S.A.

In June 2011, Total completed a cash tender offer to acquire 60% of the Company's then outstanding shares of common stock at a price of $23.25 per share, for a total cost of approximately $1.4 billion. In December 2011, the Company entered into a Private Placement Agreement with Total, under which Total purchased, and the Company issued and sold, 18.6 million shares of the Company's common stock for a purchase price of $8.80 per share, thereby increasing Total's ownership to approximately 66% of the Company's outstanding common stock as of that date.

Credit Support Agreement

On April 28, 2011, the Company and Total S.A. entered into a Credit Support Agreement (the "Credit Support Agreement") under which Total S.A. agreed to enter into one or more guarantee agreements (each a "Guaranty") with banks providing letter of credit facilities to the Company. Total S.A. will guarantee the Company's obligation to reimburse the applicable issuing bank a draw on a letter of credit and pay interest thereon in accordance with the letter of credit facility between such bank and the Company. Under the Credit Support Agreement, the Company may also request that Total S.A. provide a Guaranty in support of the Company's payment obligations with respect to a letter of credit facility. The Company is required to pay Total S.A. a guarantee fee for each letter of credit that is the subject of a Guaranty under the Credit Support Agreement and was outstanding for all or part of the preceding calendar quarter. The Credit Support Agreement was amended on June 7, 2011, it became effective on June 28, 2011 in connection with the completion of the Tender Offer (the "CSA Effective Date"), and it was further amended on each of December 12, 2011, and December 14, 2012.

The Credit Support Agreement will terminate following the fifth anniversary of the CSA Effective Date, after the later of the payment in full of all obligations thereunder and the termination or expiration of each Guaranty provided thereunder.

Affiliation Agreement

The Company and Total have entered into an Affiliation Agreement that governs the relationship between Total and the Company (the "Affiliation Agreement"). Until the expiration of a standstill period (the "Standstill Period"), and subject to certain exceptions, Total, Total S.A., any of their respective affiliates and certain other related parties (collectively the "Total Group") may not effect, seek, or enter into discussions with any third-party regarding any transaction that would result in the Total Group beneficially owning shares of the Company in excess of certain thresholds, or request the Company or the Company's independent directors, officers or employees, to amend or waive any of the standstill restrictions applicable to the Total Group.

The Affiliation Agreement imposes certain limitations on the Total Group's ability to seek to effect a tender offer or merger to acquire 100% of the outstanding voting power of the Company and imposes certain limitations on the Total Group's ability to transfer 40% or more of outstanding shares or voting power of the Company to a single person or group that is not a direct or indirect subsidiary of Total S.A. During the Standstill Period, no member of the Total Group may, among other things, solicit proxies or become a participant in an election contest relating to the election of directors to the Company's Board of Directors.

The Affiliation Agreement provides Total with the right to maintain its percentage ownership in connection with any new securities issued by the Company, and Total may also purchase shares on the open market or in private transactions with disinterested stockholders, subject in each case to certain restrictions.

The Affiliation Agreement also imposes certain restrictions with respect to the Company's and its Board of Directors' ability to take certain actions, including specifying certain actions that require approval by the directors other than the directors appointed by Total and other actions that require stockholder approval by Total.

Research & Collaboration Agreement

Total and the Company have entered into a Research & Collaboration Agreement (the "R&D Agreement") that establishes a framework under which the parties engage in long-term research and development collaboration ("R&D Collaboration"). The R&D Collaboration encompasses a number of different projects, with a focus on advancing the Company's technology position in the crystalline silicon domain, as well as ensuring the Company's industrial competitiveness. The R&D Agreement enables a joint committee to identify, plan and manage the R&D Collaboration.

10



Compensation and Funding Agreement

In February 2012, the Company entered into a Compensation and Funding Agreement (the "Compensation and Funding Agreement") with Total S.A. that established the parameters for the terms of liquidity injections that may be required to be provided by Total S.A. to the Company from time to time. During the term of the Compensation and Funding Agreement, the Company is required to pay Total S.A. a guarantee fee in an amount equal to 2.75% per annum of the average amount of the Company's indebtedness that is guaranteed by Total S.A. pursuant to any guaranty issued in accordance with the terms of the Compensation and Funding Agreement during such quarter. Any payment obligations of the Company to Total S.A. under the Compensation and Funding Agreement that are not paid when due accrue interest until paid in full at a rate equal to 6-month U.S. LIBOR as in effect from time to time plus 5.00% per annum.

Upfront Warrant

In February 2012, the Company issued a warrant (the "Upfront Warrant") to Total S.A. to purchase 9,531,677 shares of the Company's common stock with an exercise price of $7.8685, subject to adjustment for customary anti-dilution and other events. The Upfront Warrant, governed by the Private Placement Agreement and the Compensation and Funding Agreement, is exercisable at any time for seven years after its issuance, provided that, so long as at least $25.0 million in aggregate of the Company's convertible debt remains outstanding, such exercise will not cause "any person," including Total S.A., to, directly or indirectly, including through one or more wholly-owned subsidiaries, become the "beneficial owner" (as such terms are defined in Rule 13d-3 and Rule 13d-5 under the Securities and Exchange Act of 1934, as amended), of more than 74.99% of the voting power of the Company's common stock at such time, a circumstance which would trigger the repurchase or conversion of the Company's existing convertible debt.

0.75% Debentures Due 2018

In May 2013, the Company issued $300.0 million in principal amount of its 0.75% senior convertible debentures due 2018 (the "0.75% debentures due 2018"). $200.0 million in aggregate principal amount of the 0.75% debentures due 2018 were acquired by Total. The 0.75% debentures due 2018 are convertible into shares of the Company's common stock at any time based on an initial conversion price equal to $24.95 per share, which provides Total the right to acquire up to 8,017,420 shares of the Company's common stock. The applicable conversion rate may adjust in certain circumstances, including a fundamental change, as described in the indenture governing the 0.75% debentures due 2018 (see Note 10).

0.875% Debentures Due 2021

In June 2014, the Company issued $400.0 million in principal amount of its 0.875% senior convertible debentures due 2021 (the "0.875% debentures due 2021"). An aggregate principal amount of $250.0 million of the 0.875% debentures due 2021 were acquired by Total. The 0.875% debentures due 2021 are convertible into shares of the Company's common stock at any time based on an initial conversion price equal to $48.76 per share, which provides Total the right to acquire up to 5,126,775 shares of the Company's common stock. The applicable conversion rate may adjust in certain circumstances, including a fundamental change, as described in the indenture governing the 0.875% debentures due 2021 (see Note 10).

Joint Projects with Total and its Affiliates:

The Company enters into various engineering, procurement and construction ("EPC") and operations and maintenance ("O&M") agreements relating to solar projects, including EPC and O&M services agreements relating to projects owned or partially owned by Total and its affiliates. As of March 29, 2015, the Company had $0.7 million of "Costs and estimated earnings in excess of billings" and $1.6 million of "Accounts receivable, net" on its Consolidated Balance Sheets related to projects in which Total and its affiliates have a direct or indirect material interest.

11



Related-Party Transactions with Total and its Affiliates:
 
 
Three Months Ended
(In thousands)
 
March 29, 2015
 
March 30, 2014
Revenue:
 
 
 
 
EPC, O&M, and components revenue under joint projects
 
$
199

 
$
2,889

Research and development expense:
 
 
 
 
Offsetting contributions received under R&D Agreement
 
$
(422
)
 
$
(260
)
Interest expense:
 
 
 
 
Guarantee fees incurred under Credit Support Agreement
 
$
2,726

 
$
2,745

Fees incurred under the Compensation and Funding Agreement
 
$

 
$
1,200

Interest expense incurred on the 0.75% debentures due 2018
 
$
375

 
$
375

Interest expense incurred on the 0.875% debentures due 2021
 
$
680

 
$


Note 3. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

As of both March 29, 2015 and December 28, 2014, the Company had goodwill with a carrying amount of $21.2 million, $20.8 million of which was allocated to the Residential Segment and $0.4 million of which was allocated to the Power Plant Segment. No goodwill impairment was recorded during the three months ended March 29, 2015 and March 30, 2014.

Other Intangible Assets

The following tables present details of the Company's acquired other intangible assets:
(In thousands)
 
Gross
 
Accumulated
Amortization
 
Net
As of March 29, 2015
 
 
 
 
 
 
Patents and purchased technology
 
$
13,675

 
$
(1,088
)
 
$
12,587

Purchased in-process research and development
 
3,700

 

 
3,700

Other
 
$
500

 
$

 
500

 
 
$
17,875

 
$
(1,088
)
 
$
16,787

 
 
 
 
 
 
 
As of December 28, 2014
 
 
 
 
 
 
Patents and purchased technology
 
$
13,675

 
$
(615
)
 
$
13,060

Purchased in-process research and development
 
$
3,700

 
$

 
$
3,700

 
 
$
17,375

 
$
(615
)
 
$
16,760


Amortization expense for intangible assets totaled $0.5 million for the three months ended March 29, 2015. No amortization expense was incurred during the three months ended March 30, 2014.

As of March 29, 2015, the estimated future amortization expense related to intangible assets with finite useful lives is as follows:

12


(In thousands)
 
Amount
Fiscal Year
 
 
2015 (remaining nine months)
 
$
1,891

2016
 
2,114

2017
 
1,989

2018
 
1,989

2019
 
1,989

Thereafter
 
3,115

 
 
$
13,087


Note 4. BALANCE SHEET COMPONENTS
 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Accounts receivable, net:
 
 
 
 
Accounts receivable, gross1,2
 
$
485,614

 
$
523,613

Less: allowance for doubtful accounts
 
(17,226
)
 
(18,152
)
Less: allowance for sales returns
 
(520
)
 
(1,145
)
 
 
$
467,868

 
$
504,316

1 
Includes short-term financing receivables associated with solar power systems leased of $11.3 million and $9.1 million as of March 29, 2015 and December 28, 2014, respectively (see Note 5).

2 
Includes short-term retainage of $240.3 million and $213.0 million as of March 29, 2015 and December 28, 2014, respectively. Retainage refers to the earned, but unbilled, portion of a construction and development project for which payment is deferred by the customer until certain contractual milestones are met.

 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Inventories:
 
 
 
 
Raw materials
 
$
71,552

 
$
46,848

Work-in-process
 
85,800

 
67,903

Finished goods
 
145,235

 
93,822

 
 
$
302,587

 
$
208,573


 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Prepaid expenses and other current assets:
 
 
 
 
Deferred project costs
 
$
57,989

 
$
64,784

Bond hedge derivative
 

 
51,951

VAT receivables, current portion
 
6,628

 
7,554

Deferred costs for solar power systems to be leased
 
26,633

 
22,537

Derivative financial instruments
 
12,196

 
7,018

Prepaid inventory
 
50,395

 

Other receivables
 
92,924

 
79,927

Other prepaid expenses
 
54,923

 
47,448

Other current assets
 
44,137

 
47,626

 
 
$
345,825

 
$
328,845


13



 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Project assets - plants and land:
 
 
 
 
Project assets — plants
 
$
196,890

 
$
104,328

Project assets — land
 
12,154

 
12,328

 
 
$
209,044

 
$
116,656

Project assets — plants and land, current portion
 
$
179,650

 
$
101,181

Project assets — plants and land, net of current portion
 
$
29,394

 
$
15,475


 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Property, plant and equipment, net:
 
 
 
 
Manufacturing equipment3
 
$
556,730

 
$
554,124

Land and buildings
 
26,138

 
26,138

Leasehold improvements
 
237,713

 
236,867

Solar power systems4
 
126,350

 
124,848

Computer equipment
 
92,636

 
88,257

Furniture and fixtures
 
9,384

 
9,436

Construction-in-process
 
97,493

 
75,570

 
 
1,146,444

 
1,115,240

Less: accumulated depreciation
 
(551,978
)
 
(529,896
)
 
 
$
594,466

 
$
585,344

3 
The Company's mortgage loan agreement with International Finance Corporation ("IFC") is collateralized by certain manufacturing equipment with a net book value of $107.7 million and $111.9 million as of March 29, 2015 and December 28, 2014, respectively.

4 
Includes $95.4 million and $94.4 million of solar power systems associated with sale-leaseback transactions under the financing method as of March 29, 2015 and December 28, 2014, respectively, which are depreciated using the straight-line method to their estimated residual values over the lease terms of up to 20 years (see Note 5).
 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Property, plant and equipment, net by geography5:
 
 
 
 
Philippines
 
$
345,803

 
$
335,643

United States
 
182,362

 
183,631

Mexico
 
40,393

 
40,251

Europe
 
24,620

 
24,748

Other
 
1,288

 
1,071

 
 
$
594,466

 
$
585,344

5 
Property, plant and equipment, net by geography is based on the physical location of the assets.


14


 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Other long-term assets:
 
 
 
 
Equity method investments
 
$
213,089

 
$
210,898

Cost method investments
 
32,277

 
32,308

Other
 
61,644

 
57,023

 
 
$
307,010

 
$
300,229


 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Accrued liabilities:
 
 
 
 
Bond hedge derivatives
 
$

 
$
51,951

Employee compensation and employee benefits
 
36,355

 
47,667

Deferred revenue
 
27,075

 
33,412

Short-term residential lease financing
 
1,270

 
1,489

Interest payable
 
11,703

 
10,575

Short-term warranty reserves
 
14,467

 
13,278

Restructuring reserve
 
9,130

 
13,477

VAT payables
 
7,316

 
6,073

Derivative financial instruments
 
2,715

 
1,345

Inventory payable
 
50,395

 

Other
 
109,065

 
151,767

 
 
$
269,491

 
$
331,034


 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Other long-term liabilities:
 
 
 
 

Deferred revenue
 
$
178,602

 
$
176,804

Long-term warranty reserves
 
139,630

 
141,370

Long-term sale-leaseback financing
 
112,240

 
111,904

Long-term residential lease financing
 
19,032

 
27,122

Unrecognized tax benefits
 
23,069

 
31,764

Long-term pension liability
 
10,780

 
9,980

Derivative financial instruments
 
10,548

 
3,712

Other
 
49,072

 
52,688

 
 
$
542,973

 
$
555,344


 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Accumulated other comprehensive loss:
 
 
 
 

Cumulative translation adjustment
 
$
(10,715
)
 
$
(8,712
)
Net unrealized loss on derivatives
 
(5,631
)
 
(1,443
)
Net loss on long-term pension liability adjustment
 
(2,878
)
 
(2,878
)
Deferred taxes
 
(311
)
 
(422
)
 
 
$
(19,535
)
 
$
(13,455
)


15


Note 5. LEASING

Residential Lease Program

The Company offers a solar lease program, in partnership with third-party investors, which provides U.S. residential customers SunPower systems under 20-year lease agreements that include system maintenance and warranty coverage. Leases are classified as either operating or sales-type leases in accordance with the relevant accounting guidelines.

Operating Leases

The following table summarizes "Solar power systems leased and to be leased, net" under operating leases on the Company's Consolidated Balance Sheets as of March 29, 2015 and December 28, 2014:
 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Solar power systems leased and to be leased, net1,2:
 
 
 
 
Solar power systems leased
 
$
429,687

 
$
396,704

Solar power systems to be leased
 
28,683

 
21,202

 
 
458,370

 
417,906

Less: accumulated depreciation
 
(31,183
)
 
(26,993
)
 
 
$
427,187

 
$
390,913

1 
Solar power systems leased and to be leased, net are physically located in the United States.

2 
As of March 29, 2015 and December 28, 2014, the Company has pledged solar assets with an aggregate book value of $82.1 million and $140.1 million, respectively, to third-party investors as security for the Company's contractual obligations.

The following table presents the Company's minimum future rental receipts on operating leases placed in service as of March 29, 2015:
(In thousands)
 
Fiscal 2015 (remaining nine months)
 
Fiscal 2016
 
Fiscal 2017
 
Fiscal 2018
 
Fiscal 2019
 
Thereafter
 
Total
Minimum future rentals on operating leases placed in service1
 
$
12,888

 
15,165

 
15,206

 
15,255

 
15,303

 
218,379

 
$
292,196

1 
Minimum future rentals on operating leases placed in service does not include contingent rentals that may be received from customers under agreements that include performance-based incentives.

Sales-Type Leases

As of March 29, 2015 and December 28, 2014, respectively, the Company's net investment in sales-type leases presented in "Accounts receivable, net" and "Long-term financing receivables, net" on the Company's Consolidated Balance Sheets was as follows:
 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Financing receivables:
 
 
 
 
Minimum lease payments receivable1
 
$
351,029

 
$
319,244

Unguaranteed residual value
 
37,775

 
34,343

Unearned income
 
(78,769
)
 
(74,859
)
Net financing receivables
 
$
310,035

 
$
278,728

Current
 
$
11,250

 
$
9,141

Long-term
 
$
298,785

 
$
269,587


16


1 
Net of allowance for doubtful accounts.

As of March 29, 2015, future maturities of net financing receivables for sales-type leases are as follows:
(In thousands)
 
Fiscal 2015 (remaining nine months)
 
Fiscal 2016
 
Fiscal 2017
 
Fiscal 2018
 
Fiscal 2019
 
Thereafter
 
Total
Scheduled maturities of minimum lease payments receivable1
 
$
12,938

 
17,172

 
17,369

 
17,574

 
17,784

 
268,192

 
$
351,029

1 
Minimum future rentals on sales-type leases placed in service does not include contingent rentals that may be received from customers under agreements that include performance-based incentives.

Third-Party Financing Arrangements

The Company has entered into multiple facilities under which solar power systems are financed by third-party investors. Under the terms of certain programs the investors make an upfront payment to the Company, which the Company recognizes as a non-recourse liability that will be reduced over the specified term of the program as customer receivables and government incentives are received by the third-party investors. As the non-recourse liability is reduced over time, the Company makes a corresponding reduction in customer and government incentive receivables on its balance sheet. The Company accounts for both operating and sales-type leases with its residential lease customers under this approach in the consolidated financial statements. As of March 29, 2015, and December 28, 2014, the remaining liability to the third-party investors presented in "Accrued liabilities" and "Other long-term liabilities" on the Company's Consolidated Balance Sheets, was $20.3 million and $28.6 million, respectively (see Note 4).

The Company has entered into multiple facilities with third-party investors under which the parties invest in entities that hold SunPower solar power systems and leases with residential customers. The Company holds controlling interests in these less-than-wholly-owned entities and has therefore fully consolidated these entities. The Company accounts for the portion of net assets in the consolidated entities attributable to the investors as "Redeemable noncontrolling interests" and "Noncontrolling interests" in its consolidated financial statements. Noncontrolling interests in subsidiaries that are redeemable at the option of the noncontrolling interest holder are classified as "Redeemable noncontrolling interests in subsidiaries," between liabilities and equity on the Company's Consolidated Balance Sheets. During the three months ended March 29, 2015 and March 30, 2014 the Company received $45.9 million and $30.6 million, respectively, in contributions from investors under the related facilities and attributed $19.6 million and $22.0 million, respectively, in losses to the third-party investors primarily as a result of allocating certain assets, including tax credits, to the investors.

Sale-Leaseback Arrangements

The Company enters into sale-leaseback arrangements under which solar power systems are sold to third parties and subsequently leased back by the Company over minimum lease terms of up to 20 years. Separately, the Company enters into PPAs with end customers, who host the leased solar power systems and buy the electricity directly from the Company under PPAs with durations of up to 25 years. At the end of the lease term, the Company has the option to purchase the systems at fair value or may be required to remove the systems and return them to the third parties.

The Company has classified its sale-leaseback arrangements of solar power systems not involving integral equipment as operating leases. The deferred profit on the sale of these systems is recognized over the term of the lease. As of March 29, 2015, future minimum lease obligations associated with these systems was $93.1 million, which will be recognized over the minimum lease terms. Future minimum payments to be received from customers under PPAs associated with the solar power systems under sale-leaseback arrangements classified as operating leases will be recognized over the lease terms of up to 20 years and are contingent upon the amounts of energy produced by the solar power systems.

The Company enters into sale-leaseback arrangements under which the systems under the sale-leaseback arrangements have been determined to be integral equipment as defined under the accounting guidance for such transactions. The Company was further determined to have continuing involvement with the solar power systems throughout the lease due to purchase option rights. As a result of such continuing involvement, the Company accounts for each transaction as a financing. Under the financing method, the proceeds received from the sale of the solar power systems are recorded by the Company as financing liabilities and presented within "Other long-term liabilities" in the Company's Consolidated Balance Sheets (see Note 4). The financing liabilities are subsequently reduced by the Company's payments to lease back the solar power systems, less

17


interest expense calculated based on the Company's incremental borrowing rate adjusted to the rate required to prevent negative amortization. The solar power systems under the sale-leaseback arrangements remain on the Company's balance sheet and are classified within "Property, plant and equipment, net" (see Note 4). As of March 29, 2015, future minimum lease obligations for the sale-leaseback arrangements accounted for under the financing method were $99.4 million, which will be recognized over the lease terms of up to 20 years.


Note 6. FAIR VALUE MEASUREMENTS

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement (observable inputs are the preferred basis of valuation):

Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Measurements are inputs that are observable for assets or liabilities, either directly or indirectly, other than quoted prices included within Level 1.
Level 3 — Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company measures certain assets and liabilities at fair value on a recurring basis. There were no transfers between fair value measurement levels during any presented period. The Company did not have any assets or liabilities measured at fair value on a recurring basis requiring Level 3 inputs as of March 29, 2015 or December 28, 2014.

The following table summarizes the Company's assets and liabilities measured and recorded at fair value on a recurring basis as of March 29, 2015 and December 28, 2014, respectively:
 
 
March 29, 2015
 
December 28, 2014
(In thousands)
 
Total
 
Level 1
 
Level 2
 
Total
 
Level 1
 
Level 2
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents1:
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
 
$
170,000

 
$
170,000

 
$

 
$
375,000

 
$
375,000

 
$

Prepaid expenses and other current assets:
 
 
 
 
 
 
 
 
 
 
 
 
Debt derivatives (Note 10)
 

 

 

 
51,951

 

 
51,951

Derivative financial instruments (Note 11)
 
12,196

 

 
12,196

 
7,018

 

 
7,018

Total assets
 
$
182,196

 
$
170,000

 
$
12,196

 
$
433,969

 
$
375,000


$
58,969

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Debt derivatives (Note 10)
 
$

 
$

 
$

 
$
51,951

 
$

 
$
51,951

Derivative financial instruments (Note 11)
 
2,715

 

 
2,715

 
1,345

 

 
1,345

Other long-term liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative financial instruments (Note 11)
 
10,548

 

 
10,548

 
3,712

 

 
3,712

Total liabilities
 
$
13,263

 
$

 
$
13,263

 
$
57,008

 
$

 
$
57,008

1The Company's cash equivalents consist of money market fund instruments and commercial paper that are classified as available-for-sale and are highly liquid investments with original maturities of 90 days or less. The Company's money market fund instruments are categorized within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical instruments in active markets.

Other financial instruments, including the Company's accounts receivable, accounts payable and accrued liabilities, are carried at cost, which generally approximates fair value due to the short-term nature of these instruments.

18




Debt Derivatives

The 4.50% Bond Hedge (as defined in Note 10) and the embedded cash conversion option within the 4.50% debentures due 2015 (as defined in Note 10), which both matured in the first quarter of 2015, were classified as derivative instruments that required mark-to-market treatment with changes in fair value reported in the Company's Consolidated Statements of Operations. The fair values of these derivative instruments as of December 28, 2014 were determined utilizing the following Level 1 and Level 2 inputs:
 
 
As of1
 
 
December 28, 2014
Stock price
 
$
26.32

Exercise price
 
$
22.53

Interest rate
 
0.19
%
Stock volatility
 
61.7
%
Credit risk adjustment
 
0.65
%
Maturity date
 
February 18, 2015

1 
The valuation model utilizes these inputs to value the right but not the obligation to purchase one share of the Company's common stock at $22.53. The Company utilized a Black-Scholes valuation model to value the 4.50% Bond Hedge and embedded cash conversion option. The underlying input assumptions were determined as follows:
(i)
Stock price. The closing price of the Company's common stock on the last trading day of the quarter.
(ii)
Exercise price. The exercise price of the 4.50% Bond Hedge and the embedded cash conversion option.
(iii)
Interest rate. The Treasury Strip rate associated with the life of the 4.50% Bond Hedge and the embedded cash conversion option.
(iv)
Stock volatility. The volatility of the Company's common stock over the life of the 4.50% Bond Hedge and the embedded cash conversion option.
(v)
Credit risk adjustment. Represents the weighted average of the credit default swap rate of the counterparties.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company measures certain investments and non-financial assets (including project assets, property, plant and equipment, and other intangible assets) at fair value on a non-recurring basis in periods after initial measurement in circumstances when the fair value of such asset is impaired below its recorded cost.

Held-to-Maturity Debt Securities

The Company's debt securities, classified as held-to-maturity, are Philippine government bonds that the Company maintains as collateral for present and future business transactions within the Philippines. These bonds have maturity dates of up to five years and are classified as "Restricted long-term marketable securities" on the Company's Consolidated Balance Sheets. As of March 29, 2015 and December 28, 2014, these bonds had a carrying value of $7.0 million and $7.2 million, respectively. The Company records such held-to-maturity investments at amortized cost based on its ability and intent to hold the securities until maturity. The Company monitors for changes in circumstances and events that would affect its ability and intent to hold such securities until the recorded amortized costs are recovered. No other-than-temporary impairment loss was incurred during any presented period. The held-to-maturity debt securities were categorized in Level 2 of the fair value hierarchy.

Equity and Cost Method Investments

The Company holds equity investments in non-consolidated entities that are accounted for under both the equity and cost method. The Company monitors these investments, which are included in "Other long-term assets" in its Consolidated Balance Sheets, for impairment and records reductions in the carrying values when necessary. Circumstances that indicate an other-than-temporary decline include Level 2 and Level 3 measurements such as the valuation ascribed to the issuing company in subsequent financing rounds, decreases in quoted market prices, and declines in operations of the issuer.

As of March 29, 2015 and December 28, 2014, the Company had $213.1 million and $210.9 million, respectively, in investments accounted for under the equity method (see Note 9). As of March 29, 2015 and December 28, 2014, the Company had $32.3 million and $32.3 million, respectively, in investments accounted for under the cost method.


19


Related-Party Transactions with Investees:
 
 
As of
(In thousands)
 
March 29, 2015
 
December 28, 2014
Accounts receivable
 
$
20,235

 
$
22,425

Accounts payable
 
$
26,252

 
$
50,039

Customer advances
 
$
1,212

 
$
4,210

Other long-term assets:
 
 
 
 
Long-term note receivable
 
$
1,553

 
$
1,623

 
 
Three Months Ended
(In thousands)
 
March 29, 2015
 
March 30, 2014
Payments made to investees for products/services
 
$
119,177

 
$
105,010

Revenue from sales to investees of products/services
 
$
5,603

 
$


Cost Method Investment in Tendril Networks, Inc. ("Tendril")

In November 2014, the Company purchased $20.0 million of preferred stock for a minority stake in Tendril, accounted for under the cost method as the preferred stock was deemed not to be in-substance common stock. In connection with the investment, the Company entered into an agreement to purchase, at the Company's option, up to 14 million shares of Tendril common stock through November 23, 2024, subject to the parties' achievement of certain financial and operational milestones and other conditions.

In connection with the initial investment in Tendril, the Company also entered into commercial agreements under a Master Services Agreement ("MSA") and Statements of Work ("SOWs"). Under these commercial agreements, Tendril will use up to $13.0 million of SunPower's initial investment to develop, jointly with SunPower, solar software solution products for the Company.

Note 7. RESTRUCTURING

November 2014 Restructuring Plan

On November 14, 2014, the Company announced a reorganization plan aimed towards realigning resources consistently with SunPower's global strategy and improving its overall operating efficiency and cost structure. In connection with this plan, which is expected to be completed by the end of fiscal 2015, SunPower expects approximately 95 to 115 employees to be affected, primarily in Europe, representing approximately 1% to 2% of SunPower's global workforce. SunPower expects to incur restructuring charges totaling approximately $17 million to $25 million, principally composed of severance benefits, lease and related termination costs, and other associated costs. SunPower expects more than 90% of total charges to be cash. The actual timing and costs of the plan may differ from SunPower’s current expectations and estimates due to a number of factors, including uncertainties related to required consultations with employee representatives as well as other local labor law requirements and mandatory processes in the relevant jurisdictions.

Legacy Restructuring Plans

During fiscal 2012 and 2011, the Company implemented approved restructuring plans, related to all segments, to align with changes in the global solar market which included the consolidation of the Company's Philippine manufacturing operations as well as actions to accelerate operating cost reduction and improve overall operating efficiency. These restructuring activities were substantially complete as of March 29, 2015, however, the Company expects to continue to incur costs as it finalizes previous estimates and actions in connection with these plans, primarily due to other costs, such as legal services.

The following table summarizes the restructuring charges recognized in the Company's Consolidated Statements of Operations:

20


 
 
Three Months Ended
 
Cumulative To Date
(In thousands)
 
March 29, 2015
 
March 30, 2014
 
November 2014 Plan:
 
 
 
 
 
 
Non-cash impairment charges
 
$

 
$

 
$
719

Severance and benefits
 
2,063

 

 
14,243

Other costs1
 
1,724

 

 
1,937

 
 
3,787

 

 
16,899

 
 
 
 
 
 
 
Legacy Restructuring Plans:
 
 
 
 
 
 
Non-cash impairment charges
 

 

 
60,596

Severance and benefits
 
(132
)
 
(531
)
 
46,577

Lease and related termination costs
 

 
(402
)
 
5,774

Other costs1
 
(74
)
 
472

 
10,786

 
 
(206
)
 
(461
)
 
123,733

Total restructuring charges
 
$
3,581

 
$
(461
)
 
$
140,632

 
 
 
 
 
 
 
The following table summarizes the restructuring reserve activity during the fiscal year ended March 29, 2015:
 
 
Three Months Ended
(In thousands)
 
December 28, 2014
 
Charges (Benefits)
 
Payments
 
March 29, 2015
November 2014 Plan:
 
 
 
 
 
 
 
 
Severance and benefits
 
$
12,075

 
$
2,063

 
$
(6,745
)
 
$
7,393

Other costs1
 
145

 
1,724

 
(852
)
 
1,017

 
 
12,220

 
3,787

 
(7,597
)
 
8,410

 
 
 
 
 
 
 
 
 
Legacy Restructuring Plans:
 
 
 
 
 
 
 
 
Severance and benefits
 
421

 
(132
)
 
(144
)
 
145

Lease and related termination costs
 
390

 

 
(80
)
 
310

Other costs1
 
446

 
(74
)
 
(107
)
 
265

 
 
1,257

 
(206
)
 
(331
)
 
720

Total restructuring liability
 
$
13,477

 
$
3,581

 
$
(7,928
)
 
$
9,130

1 
Other costs primarily represent associated legal services.

Note 8. COMMITMENTS AND CONTINGENCIES

Facility and Equipment Lease Commitments

The Company leases certain facilities under non-cancellable operating leases from unaffiliated third parties. As of March 29, 2015, future minimum lease payments for facilities under operating leases were $52.8 million, to be paid over the remaining contractual terms of up to 10 years. The Company also leases certain buildings, machinery and equipment under non-cancellable capital leases. As of March 29, 2015, future minimum lease payments for assets under capital leases were $6.4 million, to be paid over the remaining contractual terms of up to 10 years.

Purchase Commitments
 
The Company purchases raw materials for inventory and manufacturing equipment from a variety of vendors. During the normal course of business, in order to manage manufacturing lead times and help assure adequate supply, the Company enters into agreements with contract manufacturers and suppliers that either allow them to procure goods and services based on specifications defined by the Company, or that establish parameters defining the Company's requirements. In certain instances, these agreements allow the Company the option to cancel, reschedule or adjust the Company's requirements based on its

21


business needs before firm orders are placed. Consequently, only a portion of the Company's disclosed purchase commitments arising from these agreements are firm, non-cancellable and unconditional commitments.

The Company also has agreements with several suppliers, including some of its non-consolidated investees, for the procurement of polysilicon, ingots, wafers, and Solar Renewable Energy Credits, among others, which specify future quantities and pricing of products to be supplied by the vendors for periods up to 10 years and provide for certain consequences, such as forfeiture of advanced deposits and liquidated damages relating to previous purchases, in the event that the Company terminates the arrangements.

Future purchase obligations under non-cancellable purchase orders and long-term supply agreements as of March 29, 2015 are as follows:
(In thousands)
 
Fiscal 2015 (remaining nine months)
 
Fiscal 2016
 
Fiscal 2017
 
Fiscal 2018
 
Fiscal 2019
 
Thereafter
 
Total1,2,3
Future purchase obligations
 
$
646,615

 
317,916

 
343,806

 
182,181

 
175,695

 
164,847

 
$
1,831,060

1 
Total future purchase obligations as of March 29, 2015 include $81.8 million to related parties.
2 
Total future purchase obligations was composed of $203.2 million related to non-cancellable purchase orders and $1.6 billion related to long-term supply agreements.
3The Company did not fulfill all of the purchase commitments it was otherwise obligated to take by December 31, 2014, as specified in several related contracts with a supplier. As of March 29, 2015, the Company has recorded an offsetting asset, recorded within "Prepaid expenses and other current assets," and liability, recorded within "Accrued liabilities," totaling $50.4 million. This amount represents the unfulfilled amount as of that date as the Company expects to satisfy the obligation via purchases of inventory in fiscal 2015, within the cure period specified in the contracts.

The Company expects that all obligations related to non-cancellable purchase orders for manufacturing equipment will be recovered through future cash flows of the solar cell manufacturing lines and solar panel assembly lines when such long-lived assets are placed in service. Factors considered important that could result in an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of use of acquired assets, and significant negative industry or economic trends. Obligations related to non-cancellable purchase orders for inventories match current and forecasted sales orders that will consume these ordered materials and actual consumption of these ordered materials are compared to expected demand regularly. The Company anticipates total obligations related to long-term supply agreements for inventories will be recovered because quantities are less than management's expected demand for its solar power products. The terms of the long-term supply agreements are reviewed by management and the Company assesses the need for any accruals for estimated losses on adverse purchase commitments, such as lower of cost or market value adjustments that will not be recovered by future sales prices, forfeiture of advanced deposits and liquidated damages, as necessary.

Advances to Suppliers

As noted above, the Company has entered into agreements with various vendors, some of which are structured as "take or pay" contracts, that specify future quantities and pricing of products to be supplied. Certain agreements also provide for penalties or forfeiture of advanced deposits in the event the Company terminates the arrangements. Under certain agreements, the Company is required to make prepayments to the vendors over the terms of the arrangements. The Company did not make any additional advance payments under its long-term supply agreements during the first quarter of fiscal 2015. As of March 29, 2015 and December 28, 2014, advances to suppliers totaled $395.8 million and $409.7 million, respectively, of which $90.3 million and $98.1 million, respectively, is classified as short-term in the Company's Consolidated Balance Sheets. Two suppliers accounted for 83% and 17% of total advances to suppliers as of March 29, 2015, and 82% and 17% as of December 28, 2014.

Advances from Customers

The Company has entered into other agreements with customers who have made advance payments for solar power products and systems. These advances will be applied as shipments of product occur or upon completion of certain project milestones. The estimated utilization of advances from customers as of March 29, 2015 is as follows:

22


(In thousands)
 
Fiscal 2015 (remaining nine months)
 
Fiscal 2016
 
Fiscal 2017
 
Fiscal 2018
 
Fiscal 2019
 
Thereafter
 
Total
Estimated utilization of advances from customers
 
$
19,382

 
25,020

 
27,039

 
27,039

 
28,842

 
43,263

 
$
170,585


In fiscal 2010, the Company and its joint venture, AUO SunPower Sdn. Bhd. ("AUOSP"), entered into an agreement under which the Company resells to AUOSP polysilicon purchased from a third-party supplier. Advance payments provided by AUOSP related to such polysilicon are then made by the Company to the third-party supplier. These advance payments are applied as a credit against AUOSP’s polysilicon purchases from the Company. Such polysilicon is used by AUOSP to manufacture solar cells that are sold to the Company on a "cost-plus" basis. As of March 29, 2015 and December 28, 2014, outstanding advance payments received from AUOSP totaled $162.7 million and $167.2 million, respectively, of which $19.4 million and $18.3 million, respectively, was classified as short-term in the Company's Consolidated Balance Sheets, based on projected product shipment dates.

Product Warranties

The following table summarizes accrued warranty activity for the three months ended March 29, 2015 and March 30, 2014, respectively:
 
 
Three Months Ended
(In thousands)
 
March 29, 2015
 
March 30, 2014
Balance at the beginning of the period
 
$
154,648

 
$
149,372

Accruals for warranties issued during the period
 
8,161

 
5,190

Settlements and adjustments during the period
 
(8,711
)
 
(3,147
)
Balance at the end of the period
 
$
154,098

 
$
151,415


Contingent Obligations

Project agreements entered into with the Company's Commercial and Power Plant customers often require the Company to undertake obligations including: (i) system output performance warranties; (ii) system maintenance; (iii) penalty payments or customer termination rights if the system the Company is constructing is not commissioned within specified timeframes or other milestones are not achieved; and (iv) system put-rights whereby the Company could be required to buy back a customer's system at fair value on specified future dates if certain minimum performance thresholds are not met for periods of up to two years. Historically, the Company's systems have performed significantly above the performance warranty thresholds, and there have been no cases in which the Company has had to buy back a system.

Future Financing Commitments

The Company is required to provide certain funding under the joint venture agreement with AU Optronics Singapore Pte. Ltd. ("AUO") and another unconsolidated investee, subject to certain conditions (see Note 9). As of March 29, 2015, the Company has future financing obligations through fiscal 2015 totaling $171.9 million.

Liabilities Associated with Uncertain Tax Positions
 
Total liabilities associated with uncertain tax positions were $31.1 million and $31.8 million as of March 29, 2015 and December 28, 2014, respectively. As of March 29, 2015, $8.0 million of uncertain tax positions are included in "Accrued liabilities" in the Company's Consolidated Balance Sheets as they are expected to be paid within the next twelve months, and $23.1 million of uncertain tax positions are included in "Other long-term liabilities" in the Company's Consolidated Balance Sheets as they are not expected to be paid within the next twelve months. As of December 28, 2014, total liabilities of $31.8 million associated with uncertain tax positions were included in "Other long-term liabilities" as they were not expected to be paid within the next 12 months. Due to the complexity and uncertainty associated with its tax positions, the Company cannot make a reasonably reliable estimate of the period in which cash settlement, if any, would be made for its liabilities associated with uncertain tax positions in other long-term liabilities.

Indemnifications

23


 
The Company is a party to a variety of agreements under which it may be obligated to indemnify the counterparty with respect to certain matters. Typically, these obligations arise in connection with contracts and license agreements or the sale of assets, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of warranties, representations and covenants related to such matters as title to assets sold, negligent acts, damage to property, validity of certain intellectual property rights, non-infringement of third-party rights, and certain tax related matters including indemnification to customers under §48(c) solar commercial investment tax credit ("ITC") and Treasury Grant payments under Section 1603 of the American Recovery and Reinvestment Act ("Cash Grant"). In each of these circumstances, payment by the Company is typically subject to the other party making a claim to the Company that is contemplated by and valid under the indemnification provisions of the particular contract, which provisions are typically contract-specific, as well as bringing the claim under the procedures specified in the particular contract. These procedures usually allow the Company to challenge the other party's claims or, in case of breach of intellectual property representations or covenants, to control the defense or settlement of any third party claims brought against the other party. Further, the Company's obligations under these agreements may be limited in terms of activity (typically to replace or correct the products or terminate the agreement with a refund to the other party), duration and/or amounts. In some instances, the Company may have recourse against third parties and/or insurance covering certain payments made by the Company.

In certain limited circumstances the Company has provided indemnification to customers and investors under which the Company is contractually obligated to compensate these parties for losses they may suffer as a result of reductions in benefits received under ITC and Treasury Cash Grant programs. The Company applies for ITC and Cash Grant incentives based on guidance provided by IRS and the Treasury Department, which include assumptions regarding the fair value of the qualified solar power systems, among others.  Certain of the Company’s development agreements, sale-leaseback arrangements, and financing arrangements with investors of its residential lease program, incorporate assumptions regarding the future level of incentives to be received, which in some instances may be claimed directly by its customers and investors. Since the Company cannot determine future revisions to the U.S. Treasury guidelines governing system values or how the IRS will evaluate system values used in claiming ITCs, the Company is unable to reliably estimate the maximum potential future payments that it could have to make under the Company’s contractual investor obligation as of each reporting date.

Defined Benefit Pension Plans

The Company maintains defined benefit pension plans for the majority of its non-U.S. employees. Benefits under these plans are generally based on an employee’s years of service and compensation. Funding requirements are determined on an individual country and plan basis and are subject to local country practices and market circumstances. The funded status of the pension plans, which represents the difference between the benefit obligation and fair value of plan assets, is calculated on a plan-by-plan basis. The benefit obligation and related funded status are determined using assumptions as of the end of each fiscal year. The Company recognizes the overfunded or underfunded status of its pension plans as an asset or liability on its Consolidated Balance Sheets. As of March 29, 2015 and December 28, 2014, the underfunded status of the Company’s pension plans, presented in "Other long-term liabilities" on the Company’s Consolidated Balance Sheets, was $10.8 million and $10.0 million, respectively. The impact of transition assets and obligations and actuarial gains and losses are recorded in "Accumulated other comprehensive loss", and are generally amortized as a component of net periodic cost over the average remaining service period of participating employees. Total other comprehensive loss related to the Company’s pension plans was zero for the three months ended March 29, 2015.

Legal Matters

Tax Benefit Indemnification Litigation

On March 19, 2014, the Company received notice that a lawsuit had been filed by NRG Solar LLC (“NRG”) against SunPower Corporation, Systems, a wholly-owned subsidiary of the Company (“SunPower Systems”), in the Superior Court of Contra Costa County, California.  The complaint asserts that, according to the indemnification provisions in the contract pertaining to SunPower Systems’ sale of a large California solar project to NRG, SunPower Systems owes NRG $75 million in connection with certain tax benefits associated with the project that were approved by the Treasury Department for an amount that was less than expected. The Company does not believe that the facts support NRG’s claim under the operative indemnification provisions and intends to vigorously contest the claim. On May 5, 2014, SunPower Systems filed a demurrer to NRG’s complaint.  The Court sustained the demurrer with leave to amend. NRG filed its amended complaint on September 3, 2014. SunPower Systems filed a demurrer to NRG's amended complaint, which the Court sustained, again, with leave to amend.  NRG filed its second amended complaint on January 13, 2015.  SunPower Systems filed a demurrer to NRG’s second amended complaint, which was overruled, whereupon SunPower Systems filed its answer and also filed a cross-complaint against NRG.  The case currently is pending and no trial date or case schedule has been set yet. The Company is currently

24


unable to determine if the resolution of this matter will have a material effect on the Company's consolidated financial statements. 

First Philec Arbitration

On January 28, 2015, an arbitral tribunal of the International Court of Arbitration of the International Chamber of Commerce declared a binding partial award in the matter of an arbitration between First Philippine Electric Corporation ("FPEC") and First Philippine Solar Corporation ("FPSC") against SunPower Philippines Manufacturing, Ltd. ("SPML"), our wholly-owned subsidiary. FPSC is a joint venture of FPEC and SPML for the purpose of slicing silicon wafers from ingots. SPML has not purchased any wafers from FPSC since the third quarter of 2012.

The tribunal found SPML in breach of its obligations under its supply agreement with FPSC, and in breach of its joint venture agreement with FPEC. The tribunal ordered that (i) SPML must purchase FPEC’s interests in FPSC for an aggregate of $30.3 million, subject to adjustment to account for minority interests, and (ii) after completing the purchase of FPEC’s controlling interest in FPSC, to pay FPSC damages in the amount of $25.2 million. SPML’s purchase of FPEC’s interests in FPSC and the subsequent damages payment to FPSC have been suspended pending the parties’ agreement as to legal arrangements required to complete these transactions. On March 18, 2015, the tribunal held a hearing on the issue of the transfer of FPSC shares. The tribunal has not yet issued a ruling on this issue, and has not yet set a date for SPML's purchase of FPEC's interests in FPSC or the subsequent damages payment to FPSC.

As of March 29, 2015, the Company recorded an accrual of $63.0 million related to this matter based on the Company's best estimate of probable loss.

Other Litigation

The Company is also a party to various other litigation matters and claims that arise from time to time in the ordinary course of its business. While the Company believes that the ultimate outcome of such matters will not have a material adverse effect on the Company, their outcomes are not determinable and negative outcomes may adversely affect the Company's financial position, liquidity or results of operations.

Note 9. EQUITY METHOD INVESTMENTS

As of March 29, 2015 and December 28, 2014, the Company's carrying value of its equity method investments totaled $213.1 million and $210.9 million, respectively, and is classified as "Other long-term assets" in its Consolidated Balance Sheets. The Company's share of its earnings (loss) from equity method investments is reflected as "Equity in earnings of unconsolidated investees" in its Consolidated Statements of Operations.

Equity Investment and Joint Venture with AUOSP

In fiscal 2010, the Company, AUO and AU Optronics Corporation, the ultimate parent company of AUO ("AUO Taiwan"), formed the joint venture AUOSP. The Company and AUO each own 50% of the joint venture AUOSP. AUOSP owns a solar cell manufacturing facility in Malaysia and manufactures solar cells and sells them on a "cost-plus" basis to the Company and AUO.

In connection with the joint venture agreement, the Company and AUO also entered into licensing and joint development, supply, and other ancillary transaction agreements. Through the licensing agreement, the Company and AUO licensed to AUOSP, on a non-exclusive, royalty-free basis, certain background intellectual property related to solar cell manufacturing (in the case of the Company), and manufacturing processes (in the case of AUO). Under the seven-year supply agreement with AUOSP, renewable by the Company for one-year periods thereafter, the Company is committed to purchase 80% of AUOSP's total annual output allocated on a monthly basis to the Company. The Company and AUO have the right to reallocate supplies from time to time under a written agreement. In fiscal 2010, the Company and AUOSP entered into an agreement under which the Company will resell to AUOSP polysilicon purchased from a third-party supplier and AUOSP will provide prepayments to the Company related to such polysilicon, which prepayment will then be made by the Company to the third-party supplier.

The Company and AUO are not permitted to transfer any of AUOSP's shares held by them, except to each other. The Company and AUO agreed to each contribute additional amounts through fiscal 2015 amounting to $169.0 million, or such lesser amount as the parties may mutually agree. In addition, if AUOSP, the Company or AUO requests additional equity

25


financing to AUOSP, then the Company and AUO will each be required to make additional cash contributions of up to $50.0 million in the aggregate.

The Company has concluded that it is not the primary beneficiary of AUOSP since, although the Company and AUO are both obligated to absorb losses or have the right to receive benefits, the Company alone does not have the power to direct the activities of AUOSP that most significantly impact its economic performance. In making this determination the Company considered the shared power arrangement, including equal board governance for significant decisions, elective appointment, and the fact that both parties contribute to the activities that most significantly impact the joint venture's economic performance. The Company accounts for its investment in AUOSP using the equity method as a result of the shared power arrangement. As of March 29, 2015, the Company's maximum exposure to loss as a result of its equity investment in AUOSP is limited to the carrying value of the investment. As of March 29, 2015 and December 28, 2014, the Company's investment in AUOSP had a carrying value of $194.2 million and $191.7 million, respectively.

Equity Investment in Huaxia CPV (Inner Mongolia) Power Co., Ltd. ("CCPV")

In December 2012, the Company entered into an agreement with Tianjin Zhonghuan Semiconductor Co. Ltd., Inner Mongolia Power Group Co. Ltd. and Hohhot Jinqiao City Development Company Co., Ltd. to form CCPV, a jointly owned entity to manufacture and deploy the Company's C7 Tracker concentrator technology in Inner Mongolia and other regions in China. CCPV is based in Hohhot, Inner Mongolia. The establishment of the entity was subject to approval of the Chinese government, which was received in the fourth quarter of fiscal 2013. In December 2013, the Company made a $16.4 million equity investment in CCPV, for a 25% equity ownership.

The Company has concluded that it is not the primary beneficiary of CCPV since, although the Company is obligated to absorb losses and has the right to receive benefits, the Company alone does not have the power to direct the activities of CCPV that most significantly impact its economic performance. The Company accounts for its investment in CCPV using the equity method since the Company is able to exercise significant influence over CCPV due to its board position.

Equity Investment in Diamond Energy Pty Ltd. ("Diamond Energy")

In October 2012, the Company made a $3.0 million equity investment in Diamond Energy, an alternative energy project developer and clean electricity retailer headquartered in Melbourne, Australia, in exchange for a 25% equity ownership.

The Company has concluded that it is not the primary beneficiary of Diamond Energy since, although the Company is obligated to absorb losses and has the right to receive benefits, the Company alone does not have the power to direct the activities of Diamond that most significantly impact its economic performance. The Company accounts for its investment in Diamond using the equity method since the Company is able to exercise significant influence over Diamond due to its board position.



26


Note 10. DEBT AND CREDIT SOURCES

The following table summarizes the Company's outstanding debt on its Consolidated Balance Sheets:
 
 
March 29, 2015
 
December 28, 2014
(In thousands)
 
Face Value
 
Short-term
 
Long-term
 
Total
 
Face Value
 
Short-term
 
Long-term
 
Total
Convertible debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.875% debentures due 2021
 
$
400,000

 
$

 
$
395,922

 
$
395,922

 
$
400,000

 
$

 
$
395,475

 
$
395,475

0.75% debentures due 2018
 
300,000

 

 
297,590

 
297,590

 
300,000

 

 
297,401

 
297,401

4.50% debentures due 2015
 

 


 

 

 
249,645

 
245,325

 

 
245,325

0.75% debentures due 2027
 
79

 

 
79

 
79

 
79

 

 
79

 
79

IFC mortgage loan
 
40,000

 
15,000

 
24,081

 
39,081

 
47,500

 
14,983

 
31,492

 
46,475

CEDA loan
 
30,000

 

 
27,479

 
27,479

 
30,000

 

 
27,379