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FORM 10-Q
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T
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-3008969
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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October 3, 2010
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January 3, 2010 (1)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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281,212
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$
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615,879
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Restricted cash and cash equivalents, current portion
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37,209
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61,868
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Short-term investments
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172
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172
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Accounts receivable, net
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265,832
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248,833
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Costs and estimated earnings in excess of billings
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114,093
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26,062
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Inventories
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285,805
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202,301
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Advances to suppliers, current portion
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26,422
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22,785
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Project assets - plants and land, current portion
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162,935
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6,010
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Prepaid expenses and other current assets
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236,647
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98,521
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Total current assets
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1,410,327
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1,282,431
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Restricted cash and cash equivalents, net of current portion
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119,323
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248,790
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Property, plant and equipment, net
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589,690
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682,344
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Project assets - plants and land, net of current portion
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19,328
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9,607
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Goodwill
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344,861
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198,163
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Other intangible assets, net
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77,222
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24,974
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Advances to suppliers, net of current portion
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157,934
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167,843
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Other long-term assets
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190,058
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82,743
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Total assets
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$
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2,908,743
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$
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2,696,895
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Liabilities and Stockholders' Equity
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Current liabilities:
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Accounts payable
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$
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373,166
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$
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234,692
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Accrued liabilities
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238,905
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114,008
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Billings in excess of costs and estimated earnings
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16,451
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17,346
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Short-term debt and current portion of long-term debt
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—
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11,250
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Convertible debt, current portion
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—
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137,968
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Customer advances, current portion
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17,213
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19,832
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Total current liabilities
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645,735
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535,096
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Long-term debt
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—
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237,703
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Convertible debt, net of current portion
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585,343
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398,606
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Customer advances, net of current portion
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66,070
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72,288
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Long-term deferred taxes
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11,927
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6,777
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Other long-term liabilities
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171,170
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70,045
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Total liabilities
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1,480,245
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1,320,515
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Commitments and contingencies (Note 8)
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Stockholders' equity:
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Preferred stock, $0.001 par value, 10,042,490 shares authorized; none issued and outstanding
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—
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—
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Common stock, $0.001 par value, 150,000,000 shares of class B common stock authorized; 42,033,287 shares of class B common stock issued and outstanding; $0.001 par value, 217,500,000 shares of class A common stock authorized; 56,324,062 and 55,394,612 shares of class A common stock issued; 55,815,427 and 55,039,193 shares of class A common stock outstanding, at October 3, 2010 and January 3, 2010, respectively
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98
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97
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Additional paid-in capital
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1,561,312
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1,520,933
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Accumulated deficit
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(87,836
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(114,309
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Accumulated other comprehensive loss
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(29,553
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(17,357
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Treasury stock, at cost; 508,635 and 355,419 shares of class A stock at October 3, 2010 and January 3, 2010, respectively
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(15,523
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(12,984
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Total stockholders' equity
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1,428,498
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1,376,380
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Total liabilities and stockholders' equity
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$
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2,908,743
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$
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2,696,895
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Three Months Ended
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Nine Months Ended
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October 3, 2010
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September 27, 2009 (1)
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October 3, 2010
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September 27, 2009
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Revenue:
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Utility and power plants
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$
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257,803
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$
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195,117
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$
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521,896
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$
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428,668
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Residential and commercial
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292,842
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270,244
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760,261
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547,677
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Total revenue
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550,645
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465,361
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1,282,157
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976,345
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Cost of revenue:
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Utility and power plants
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212,526
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142,999
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421,178
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353,611
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Residential and commercial
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225,534
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222,532
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588,800
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449,991
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Total cost of revenue
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438,060
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365,531
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1,009,978
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803,602
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Gross margin
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112,585
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99,830
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272,179
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172,743
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Operating expenses:
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Research and development
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13,382
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8,250
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34,995
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23,067
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Sales, general and administrative
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91,015
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45,332
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233,671
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130,511
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Total operating costs
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104,397
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53,582
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268,666
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153,578
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Operating income
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8,188
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46,248
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3,513
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19,165
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Other income (expense):
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Interest income
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742
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—
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1,294
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1,949
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Interest expense
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(14,768
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(9,992
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(45,018
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(26,026
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Gain on deconsolidation of consolidated subsidiary
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36,849
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—
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36,849
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—
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Gain on change in equity interest in unconsolidated investee
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—
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—
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28,348
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—
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Gain (loss) on mark-to-market derivatives
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(2,967
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—
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28,885
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21,193
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Other, net
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(11,947
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585
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(28,344
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(3,765
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Other income (expense), net
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7,909
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(9,407
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22,014
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(6,649
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Income from continuing operations before income taxes and equity in earnings of unconsolidated investees
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16,097
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36,841
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25,527
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12,516
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Benefit from (provision for) income taxes
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(3,376
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(19,962
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(19,493
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)
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4,457
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Equity in earnings of unconsolidated investees
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5,825
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2,627
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10,973
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7,005
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Income from continuing operations
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18,546
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19,506
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17,007
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23,978
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Income from discontinued operations, net of taxes
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1,570
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—
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9,466
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—
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Net income
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$
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20,116
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$
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19,506
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$
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26,473
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$
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23,978
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Net income per share of class A and class B common stock:
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Net income per share - basic:
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Continuing operations
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$
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0.19
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$
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0.21
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$
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0.18
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$
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0.27
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Discontinued operations
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0.02
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—
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0.10
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—
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Net income per share - basic
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$
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0.21
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$
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0.21
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$
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0.28
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$
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0.27
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Net income per share - diluted:
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Continuing operations
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$
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0.19
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$
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0.20
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$
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0.18
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$
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0.26
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Discontinued operations
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0.02
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—
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0.09
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—
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Net income per share - diluted
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$
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0.21
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$
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0.20
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$
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0.27
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$
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0.26
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Weighted-average shares:
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Basic
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95,840
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94,668
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95,519
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89,764
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Diluted (2)
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105,648
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105,031
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96,741
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91,513
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(1)
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The Condensed Consolidated Statements of Operations for the three and nine months ended September 27, 2009 has been adjusted to reflect the adoption of new accounting guidance for share lending arrangements that were executed in connection with the Company's convertible debt offerings in fiscal 2007 (see Note 1).
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(2)
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See Note 14 for the calculation of diluted net income per share under the if-converted method.
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Nine Months Ended
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October 3, 2010
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September 27, 2009 (1)
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Cash flows from operating activities:
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Net income
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$
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26,473
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$
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23,978
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Less: Income from discontinued operations, net of taxes
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9,466
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—
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|
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Income from continuing operations
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17,007
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23,978
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Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities of continuing operations:
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Stock-based compensation
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38,064
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34,204
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Depreciation
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75,680
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60,348
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Amortization of other intangible assets
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28,039
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12,296
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Impairment (gain on sale) of investments
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(1,572
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)
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1,997
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Gain on mark-to-market derivatives
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(28,885
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)
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(21,193
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)
|
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Non-cash interest expense
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22,175
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|
16,709
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Amortization of debt issuance costs
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2,621
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2,454
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Amortization of promissory notes
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8,941
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—
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Gain on deconsolidation of consolidated subsidiary
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(36,849
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)
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|
—
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Gain on change in equity interest in unconsolidated investee
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(28,348
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)
|
|
—
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Equity in earnings of unconsolidated investees
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(10,973
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)
|
|
(7,005
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)
|
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Excess tax benefits from stock-based award activity
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(761
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)
|
|
(7,127
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)
|
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Deferred income taxes and other tax liabilities
|
18,708
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(14,760
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)
|
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Changes in operating assets and liabilities, net of effect of acquisition and deconsolidation:
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|
|
|
||||
Accounts receivable
|
(3,879
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)
|
|
(43,285
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)
|
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Costs and estimated earnings in excess of billings
|
(80,719
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)
|
|
(41,992
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)
|
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Inventories
|
(84,210
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)
|
|
27,776
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|
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Project assets
|
(146,268
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)
|
|
—
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Prepaid expenses and other assets
|
(76,774
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)
|
|
(6,615
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)
|
||
Advances to suppliers
|
1,672
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|
|
25,174
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|
||
Accounts payable and other accrued liabilities
|
219,133
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|
|
(13,142
|
)
|
||
Billings in excess of costs and estimated earnings
|
1,269
|
|
|
1,049
|
|
||
Customer advances
|
(7,961
|
)
|
|
(13,639
|
)
|
||
Net cash provided by (used in) operating activities of continuing operations
|
(73,890
|
)
|
|
37,227
|
|
||
Net cash used in operating activities of discontinued operations
|
(3,969
|
)
|
|
—
|
|
||
Net cash provided by (used in) operating activities
|
(77,859
|
)
|
|
37,227
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Decrease (increase) in restricted cash and cash equivalents
|
64,674
|
|
|
(145,583
|
)
|
||
Purchase of property, plant and equipment
|
(104,623
|
)
|
|
(149,624
|
)
|
||
Proceeds from sale of equipment to third-party
|
5,284
|
|
|
9,878
|
|
||
Proceeds from sales or maturities of available-for-sale securities
|
1,572
|
|
|
29,545
|
|
||
Cash paid for acquisition, net of cash acquired
|
(272,699
|
)
|
|
—
|
|
||
Cash decrease due to deconsolidation of consolidated subsidiary
|
(12,879
|
)
|
|
—
|
|
||
Cash paid for investments in joint ventures and other non-public companies
|
(3,798
|
)
|
|
(1,500
|
)
|
||
Net cash used in investing activities of continuing operations
|
(322,469
|
)
|
|
(257,284
|
)
|
||
Net cash provided by investing activities of discontinued operations
|
33,950
|
|
|
—
|
|
||
Net cash used in investing activities
|
(288,519
|
)
|
|
(257,284
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt, net of issuance costs
|
—
|
|
|
137,735
|
|
||
Proceeds from issuance of convertible debt, net of issuance costs
|
244,241
|
|
|
225,018
|
|
||
Proceeds from offering of class A common stock, net of offering expenses
|
—
|
|
|
218,781
|
|
||
Repayment of bank loans
|
(63,646
|
)
|
|
—
|
|
||
Cash paid for repurchase of convertible debt
|
(143,804
|
)
|
|
(75,636
|
)
|
||
Cash paid for purchased options
|
—
|
|
|
(97,336
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)
|
||
Cash paid for bond hedge
|
(75,200
|
)
|
|
—
|
|
||
Proceeds from warrant transactions
|
61,450
|
|
|
71,001
|
|
||
Proceeds from exercise of stock options
|
670
|
|
|
1,408
|
|
||
Excess tax benefits from stock-based award activity
|
761
|
|
|
7,127
|
|
||
Purchases of stock for tax withholding obligations on vested restricted stock
|
(2,539
|
)
|
|
(3,708
|
)
|
||
Net cash provided by financing activities from continuing operations
|
21,933
|
|
|
484,390
|
|
||
Net cash provided by financing activities from discontinued operations
|
17,059
|
|
|
—
|
|
||
Net cash provided by financing activities
|
38,992
|
|
|
484,390
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(7,281
|
)
|
|
5,462
|
|
||
Net increase (decrease) in cash and cash equivalents
|
(334,667
|
)
|
|
269,795
|
|
||
Cash and cash equivalents at beginning of period
|
615,879
|
|
|
202,331
|
|
||
Cash and cash equivalents at end of period
|
281,212
|
|
|
472,126
|
|
||
Less: Cash and cash equivalents of discontinued operations
|
—
|
|
|
—
|
|
||
Cash and cash equivalents of continuing operations, end of period
|
$
|
281,212
|
|
|
$
|
472,126
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
||||
Property, plant and equipment acquisitions funded by liabilities
|
$
|
4,382
|
|
|
$
|
21,594
|
|
Non-cash interest expense capitalized and added to the cost of qualified assets
|
2,951
|
|
|
4,456
|
|
||
Issuance of common stock for purchase acquisition
|
—
|
|
|
1,471
|
|
(1)
|
The Condensed Consolidated Statements of Cash Flows for the nine months ended September 27, 2009 has been adjusted to reflect the adoption of new accounting guidance for share lending arrangements that were executed in connection with the Company's convertible debt offerings in fiscal 2007 (see Note 1).
|
(In thousands)
|
|
As Adjusted in this Quarterly
Report on Form 10-Q
|
|
As Previously Reported in the
2009 Annual Report
on Form 10-K (1)
|
||||
Assets
|
|
|
|
|
||||
Prepaid expenses and other current assets
|
|
$
|
98,521
|
|
|
$
|
104,442
|
|
Other long-term assets
|
|
82,743
|
|
|
91,580
|
|
||
Total assets
|
|
2,696,895
|
|
|
2,696,036
|
|
||
Stockholders' Equity
|
|
|
|
|
|
|
||
Additional paid-in capital
|
|
1,520,933
|
|
|
1,305,032
|
|
||
Retained earnings (accumulated deficit)
|
|
(114,309
|
)
|
|
100,733
|
|
||
Total stockholders' equity
|
|
1,376,380
|
|
|
1,375,521
|
|
(1)
|
The prior period balance of “Other long-term assets” has been reclassified to conform to the current period presentation in the Company's Condensed Consolidated Balance Sheets which separately discloses “Project assets - plants and land, net of current portion.”
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands, except per share data)
|
|
September 27, 2009
|
|
September 27, 2009
|
||||||||||||
|
|
As Adjusted n this Quarterly
Report on Form 10-Q
|
|
As Previously Reported in
Quarterly Report on Form 10-Q/A
|
|
As Adjusted in this Quarterly
Report on Form 10-Q
|
|
As Previously Reported in
Quarterly Report on Form 10-Q/A
|
||||||||
Interest expense
|
|
$
|
(9,992
|
)
|
|
$
|
(9,854
|
)
|
|
$
|
(26,026
|
)
|
|
$
|
(25,503
|
)
|
Income before income taxes and equity in earnings of unconsolidated investees
|
|
36,841
|
|
|
36,979
|
|
|
12,516
|
|
|
13,039
|
|
||||
Net income
|
|
19,506
|
|
|
19,644
|
|
|
23,978
|
|
|
24,501
|
|
||||
Net income per share of class A and class B common stock:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.27
|
|
|
$
|
0.27
|
|
Diluted
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.26
|
|
|
$
|
0.27
|
|
|
|
Nine Months Ended
|
||||||
(In thousands)
|
|
September 27, 2009
|
||||||
|
|
As Adjusted in this Quarterly
Report on Form 10-Q
|
|
As Previously Reported in
Quarterly Report on Form 10-Q/A
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
23,978
|
|
|
$
|
24,501
|
|
Non-cash interest expense
|
|
16,709
|
|
|
16,186
|
|
||
Net cash provided by operating activities
|
|
37,227
|
|
|
37,227
|
|
(In thousands)
|
|
As Adjusted
|
|
As Previously Reported
|
||||
Net tangible assets acquired
|
|
$
|
54,915
|
|
|
$
|
44,686
|
|
Project assets
|
|
79,160
|
|
|
79,160
|
|
||
Purchased technology
|
|
1,120
|
|
|
1,120
|
|
||
Goodwill
|
|
146,895
|
|
|
157,124
|
|
||
Total purchase consideration
|
|
$
|
282,090
|
|
|
$
|
282,090
|
|
(In thousands)
|
|
As Adjusted
|
|
As Previously Reported
|
||||
Cash and cash equivalents
|
|
$
|
9,391
|
|
|
$
|
9,391
|
|
Restricted cash and cash equivalents
|
|
36,701
|
|
|
36,701
|
|
||
Accounts receivable, net
|
|
1,958
|
|
|
1,958
|
|
||
Prepaid expenses and other assets
|
|
5,765
|
|
|
7,933
|
|
||
Project assets - plants and land
|
|
19,624
|
|
|
19,624
|
|
||
Property, plant and equipment, net
|
|
452
|
|
|
452
|
|
||
Assets of discontinued operations
|
|
199,071
|
|
|
186,674
|
|
||
Total assets acquired
|
|
272,962
|
|
|
262,733
|
|
||
Accounts payable
|
|
(4,324
|
)
|
|
(4,324
|
)
|
||
Other accrued expenses and liabilities
|
|
(11,688
|
)
|
|
(11,688
|
)
|
||
Debt (see Note 10)
|
|
(42,707
|
)
|
|
(42,707
|
)
|
||
Liabilities of discontinued operations
|
|
(159,328
|
)
|
|
(159,328
|
)
|
||
Total liabilities assumed
|
|
(218,047
|
)
|
|
(218,047
|
)
|
||
Net assets acquired
|
|
$
|
54,915
|
|
|
$
|
44,686
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands, except per share amounts)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Revenue
|
|
$
|
550,645
|
|
|
$
|
321,199
|
|
|
$
|
1,281,568
|
|
|
$
|
832,183
|
|
Net income (loss)
|
|
20,116
|
|
|
(49,989
|
)
|
|
11,171
|
|
|
(63,751
|
)
|
||||
Basic net income (loss) per share
|
|
0.21
|
|
|
(0.53
|
)
|
|
0.12
|
|
|
(0.71
|
)
|
||||
Diluted net income (loss) per share
|
|
0.21
|
|
|
(0.53
|
)
|
|
0.12
|
|
|
(0.71
|
)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
(In thousands)
|
|
October 3, 2010
|
|
October 3, 2010
|
||||
Utility and power plants revenue
|
|
$
|
3,176
|
|
|
$
|
11,081
|
|
Gross margin
|
|
3,176
|
|
|
11,081
|
|
||
Income (loss) from discontinued operations before sale of business unit
|
|
(5,648
|
)
|
|
5,862
|
|
||
Gain on sale of business unit
|
|
7,937
|
|
|
7,937
|
|
||
Income before income taxes
|
|
2,289
|
|
|
13,799
|
|
||
Income from discontinued operations, net of taxes
|
|
1,570
|
|
|
9,466
|
|
(In thousands)
|
|
UPP
|
|
R&C
|
|
Total
|
||||||
As of January 3, 2010
|
|
$
|
78,634
|
|
|
$
|
119,529
|
|
|
$
|
198,163
|
|
Goodwill arising from business combination
|
|
146,895
|
|
|
—
|
|
|
146,895
|
|
|||
Translation adjustment
|
|
—
|
|
|
(197
|
)
|
|
(197
|
)
|
|||
As of October 3, 2010
|
|
$
|
225,529
|
|
|
$
|
119,332
|
|
|
$
|
344,861
|
|
(In thousands)
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||
As of October 3, 2010
|
|
|
|
|
|
|
||||||
Project assets
|
|
$
|
79,160
|
|
|
$
|
(15,570
|
)
|
|
$
|
63,590
|
|
Patents and purchased technology
|
|
52,519
|
|
|
(50,054
|
)
|
|
2,465
|
|
|||
Purchased in-process research and development
|
|
1,000
|
|
|
—
|
|
|
1,000
|
|
|||
Trade names
|
|
2,639
|
|
|
(2,558
|
)
|
|
81
|
|
|||
Customer relationships and other
|
|
28,759
|
|
|
(18,673
|
)
|
|
10,086
|
|
|||
|
|
$
|
164,077
|
|
|
$
|
(86,855
|
)
|
|
$
|
77,222
|
|
|
|
|
|
|
|
|
|
|
|
|||
As of January 3, 2010
|
|
|
|
|
|
|
|
|
|
|||
Patents and purchased technology
|
|
$
|
51,398
|
|
|
$
|
(42,014
|
)
|
|
$
|
9,384
|
|
Purchased in-process research and development
|
|
1,000
|
|
|
—
|
|
|
1,000
|
|
|||
Trade names
|
|
2,623
|
|
|
(2,212
|
)
|
|
411
|
|
|||
Customer relationships and other
|
|
28,616
|
|
|
(14,437
|
)
|
|
14,179
|
|
|||
|
|
$
|
83,637
|
|
|
$
|
(58,663
|
)
|
|
$
|
24,974
|
|
(In thousands)
|
|
Amount
|
||
Year
|
|
|
||
2010 (remaining three months)
|
|
$
|
10,494
|
|
2011
|
|
27,505
|
|
|
2012
|
|
22,965
|
|
|
2013
|
|
16,153
|
|
|
2014
|
|
86
|
|
|
Thereafter
|
|
19
|
|
|
|
|
$
|
77,222
|
|
|
|
October 3, 2010
|
|
January 3, 2010
|
||||
(In thousands)
|
|
|
|
|
||||
Accounts receivable, net:
|
|
|
|
|
||||
Accounts receivable, gross
|
|
$
|
272,316
|
|
|
$
|
253,039
|
|
Less: allowance for doubtful accounts
|
|
(4,912
|
)
|
|
(2,298
|
)
|
||
Less: allowance for sales returns
|
|
(1,572
|
)
|
|
(1,908
|
)
|
||
|
|
$
|
265,832
|
|
|
$
|
248,833
|
|
Inventories:
|
|
|
|
|
||||
Raw materials
|
|
$
|
63,795
|
|
|
$
|
76,423
|
|
Work-in-process
|
|
41,087
|
|
|
20,777
|
|
||
Finished goods
|
|
180,923
|
|
|
105,101
|
|
||
|
|
$
|
285,805
|
|
|
$
|
202,301
|
|
Other long-term assets:
|
|
|
|
|
||||
Investments in joint ventures
|
|
$
|
106,836
|
|
|
$
|
39,820
|
|
Bond hedge derivative
|
|
44,694
|
|
|
—
|
|
||
Note receivable (1)
|
|
—
|
|
|
10,000
|
|
||
Investments in non-public companies
|
|
6,418
|
|
|
4,560
|
|
||
VAT receivables, net of current portion
|
|
7,056
|
|
|
7,357
|
|
||
Long-term debt issuance costs
|
|
11,954
|
|
|
6,942
|
|
||
Other
|
|
13,100
|
|
|
14,064
|
|
||
|
|
$
|
190,058
|
|
|
$
|
82,743
|
|
(1)
|
In June 2008, the Company loaned $10.0 million to a third-party private company under a three-year note receivable that is convertible into equity at the Company's option.
|
(2)
|
Includes tolling agreements with suppliers in which the Company provides polysilicon required for silicon ingot manufacturing and procures the manufactured silicon ingots from the suppliers (see Notes 8 and 9).
|
|
|
October 3, 2010
|
|
January 3, 2010
|
||||
(In thousands)
|
|
|
|
|
||||
Accrued liabilities:
|
|
|
|
|
||||
VAT payables
|
|
$
|
64,099
|
|
|
$
|
15,219
|
|
Foreign currency derivatives
|
|
79,422
|
|
|
27,354
|
|
||
Short-term warranty reserves
|
|
11,364
|
|
|
9,693
|
|
||
Employee compensation and employee benefits
|
|
29,986
|
|
|
18,161
|
|
||
Other
|
|
54,034
|
|
|
43,581
|
|
||
|
|
$
|
238,905
|
|
|
$
|
114,008
|
|
|
|
|
|
|
|
|
||
Other long-term liabilities:
|
|
|
|
|
|
|
||
Embedded conversion option derivatives
|
|
$
|
45,095
|
|
|
$
|
—
|
|
Warrants derivatives
|
|
37,044
|
|
|
—
|
|
||
Long-term warranty reserves
|
|
48,069
|
|
|
36,782
|
|
||
Uncertain tax positions
|
|
16,763
|
|
|
14,478
|
|
||
Other
|
|
24,199
|
|
|
18,785
|
|
||
|
|
$
|
171,170
|
|
|
$
|
70,045
|
|
|
|
|
|
|
|
|
||
Accumulated other comprehensive loss:
|
|
|
|
|
|
|
||
Cumulative translation adjustment
|
|
$
|
(2,961
|
)
|
|
$
|
(3,864
|
)
|
Net unrealized loss on derivatives, net of tax provision of $2.8 million and $2.3 million as of October 3, 2010 and January 3, 2010, respectively
|
|
(26,592
|
)
|
|
(13,493
|
)
|
||
|
|
$
|
(29,553
|
)
|
|
$
|
(17,357
|
)
|
|
|
October 3, 2010
|
|
January 3, 2010
|
||||
(In thousands)
|
|
|
|
|
||||
Land and buildings
|
|
$
|
13,913
|
|
|
$
|
17,409
|
|
Leasehold improvements
|
|
204,330
|
|
|
197,524
|
|
||
Manufacturing equipment (1)
|
|
547,340
|
|
|
547,968
|
|
||
Computer equipment
|
|
43,104
|
|
|
34,835
|
|
||
Solar power systems
|
|
10,040
|
|
|
8,708
|
|
||
Furniture and fixtures
|
|
5,123
|
|
|
4,540
|
|
||
Construction-in-process
|
|
26,944
|
|
|
57,305
|
|
||
|
|
850,794
|
|
|
868,289
|
|
||
Less: accumulated depreciation (2)
|
|
(261,104
|
)
|
|
(185,945
|
)
|
||
|
|
$
|
589,690
|
|
|
$
|
682,344
|
|
(1)
|
Certain manufacturing equipment associated with solar cell manufacturing lines located at one of the Company’s facilities in the Philippines is collateralized in favor of a third-party lender. The Company provided security for advance payments received from a third party in fiscal 2008 totaling $40.0 million in the form of collateralized manufacturing equipment with a net book value of
$30.2 million
and
$35.8 million
as of
October 3, 2010
and
January 3, 2010
, respectively.
|
(2)
|
Total depreciation expense was
$26.4 million
and
$75.7 million
in the three and
nine
months ended
October 3, 2010
, respectively, and
$21.4 million
and
$60.3 million
in the three and
nine
months ended
September 27, 2009
, respectively.
|
|
|
October 3, 2010
|
||||||||||||||
(In thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
328,983
|
|
|
$
|
—
|
|
|
$
|
172
|
|
|
$
|
329,155
|
|
|
|
January 3, 2010
|
||||||||||||||
(In thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
418,372
|
|
|
$
|
—
|
|
|
$
|
172
|
|
|
$
|
418,544
|
|
Bank notes
|
|
—
|
|
|
101,085
|
|
|
—
|
|
|
101,085
|
|
||||
|
|
$
|
418,372
|
|
|
$
|
101,085
|
|
|
$
|
172
|
|
|
$
|
519,629
|
|
|
|
October 3, 2010
|
|
January 3, 2010
|
||||||||||||||||||||||||||||
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
||||||||||||||||||||
(In thousands)
|
|
Cost
|
|
Gross Gains
|
|
Gross Losses
|
|
Fair Value
|
|
Cost
|
|
Gross Gains
|
|
Gross Losses
|
|
Fair Value
|
||||||||||||||||
Money market funds
|
|
$
|
329,155
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
329,155
|
|
|
$
|
418,544
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
418,544
|
|
Bank notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101,085
|
|
|
—
|
|
|
—
|
|
|
101,085
|
|
||||||||
|
|
$
|
329,155
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
329,155
|
|
|
$
|
519,629
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
519,629
|
|
|
|
October 3, 2010
|
|
January 3, 2010
|
||||||||||||||||||||
(In thousands)
|
|
Available-For- Sale
|
|
Cash Deposits
|
|
Total
|
|
Available-For- Sale
|
|
Cash Deposits
|
|
Total
|
||||||||||||
Cash and cash equivalents
|
|
$
|
175,046
|
|
|
$
|
106,166
|
|
|
$
|
281,212
|
|
|
$
|
325,906
|
|
|
$
|
289,973
|
|
|
$
|
615,879
|
|
Short-term restricted cash and cash equivalents (1)
|
|
34,705
|
|
|
2,504
|
|
|
37,209
|
|
|
61,868
|
|
|
—
|
|
|
61,868
|
|
||||||
Short-term investments
|
|
172
|
|
|
—
|
|
|
172
|
|
|
172
|
|
|
—
|
|
|
172
|
|
||||||
Long-term restricted cash and cash equivalents (1)
|
|
119,232
|
|
|
91
|
|
|
119,323
|
|
|
131,683
|
|
|
117,107
|
|
|
248,790
|
|
||||||
|
|
$
|
329,155
|
|
|
$
|
108,761
|
|
|
$
|
437,916
|
|
|
$
|
519,629
|
|
|
$
|
407,080
|
|
|
$
|
926,709
|
|
(1)
|
Includes cash collateralized bank standby letters of credit the Company provided to support advance payments received from customers and cash held in an escrow account for future advance payments by the Company.
|
(In thousands)
|
|
October 3, 2010
|
|
January 3, 2010
|
||||
Due in less than one year
|
|
$
|
329,155
|
|
|
$
|
519,629
|
|
(In thousands)
|
|
Amount
|
||
Year
|
|
|
||
2010 (remaining three months)
|
|
$
|
5,065
|
|
2011
|
|
9,949
|
|
|
2012
|
|
8,161
|
|
|
2013
|
|
7,183
|
|
|
2014
|
|
6,154
|
|
|
Thereafter
|
|
27,820
|
|
|
|
|
$
|
64,332
|
|
(In thousands)
|
|
Amount
|
||
Year
|
|
|
||
2010 (remaining three months)
|
|
$
|
404,669
|
|
2011
|
|
675,002
|
|
|
2012
|
|
624,449
|
|
|
2013
|
|
636,165
|
|
|
2014
|
|
731,216
|
|
|
Thereafter
|
|
2,526,662
|
|
|
|
|
$
|
5,598,163
|
|
(In thousands)
|
|
Amount
|
||
Year
|
|
|
||
2010 (remaining three months)
|
|
$
|
123,575
|
|
2011
|
|
117,402
|
|
|
2012
|
|
72,694
|
|
|
|
|
$
|
313,671
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Balance at the beginning of the period
|
|
$
|
51,991
|
|
|
$
|
34,108
|
|
|
$
|
46,475
|
|
|
$
|
28,062
|
|
Accruals for warranties issued during the period
|
|
8,604
|
|
|
6,756
|
|
|
18,309
|
|
|
15,749
|
|
||||
Settlements made during the period
|
|
(1,162
|
)
|
|
(1,069
|
)
|
|
(5,351
|
)
|
|
(4,016
|
)
|
||||
Balance at the end of the period
|
|
$
|
59,433
|
|
|
$
|
39,795
|
|
|
$
|
59,433
|
|
|
$
|
39,795
|
|
(In thousands)
|
|
Amount
|
||
Year
|
|
|
||
2010 (remaining three months)
|
|
$
|
170
|
|
2011
|
|
65,730
|
|
|
2012
|
|
75,870
|
|
|
2013
|
|
101,400
|
|
|
2014
|
|
96,770
|
|
|
|
|
$
|
339,940
|
|
Statement of Operations
|
||||||||
|
|
Nine Months Ended
|
||||||
(In thousands)
|
|
October 3,
2010
|
|
September 27,
2009
|
||||
Revenue
|
|
$
|
91,944
|
|
|
$
|
67,249
|
|
Cost of revenue
|
|
49,895
|
|
|
30,618
|
|
||
Gross margin
|
|
42,049
|
|
|
36,631
|
|
||
Operating income
|
|
37,194
|
|
|
33,121
|
|
||
Net income
|
|
28,413
|
|
|
15,463
|
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||
(In thousands)
|
|
Face Value
|
|
2010
(remaining
three months)
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
Beyond
2014
|
||||||||||||||
Convertible debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
4.50% debentures
|
|
$
|
250,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250,000
|
|
4.75% debentures
|
|
230,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
230,000
|
|
|
—
|
|
|||||||
1.25% debentures
|
|
198,608
|
|
|
—
|
|
|
—
|
|
|
198,608
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
0.75% debentures
|
|
79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|||||||
|
|
$
|
678,687
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
198,608
|
|
|
$
|
—
|
|
|
$
|
230,000
|
|
|
$
|
250,079
|
|
|
|
October 3, 2010
|
|
January 3, 2010
|
||||||||||||||||||||
(In thousands)
|
|
Carrying Value
|
|
Face Value
|
|
Fair Value (1)
|
|
Carrying Value
|
|
Face Value
|
|
Fair Value (1)
|
||||||||||||
4.50% debentures
|
|
$
|
176,709
|
|
|
$
|
250,000
|
|
|
$
|
232,910
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
4.75% debentures
|
|
230,000
|
|
|
230,000
|
|
|
212,693
|
|
|
230,000
|
|
|
230,000
|
|
|
270,250
|
|
||||||
1.25% debentures
|
|
178,555
|
|
|
198,608
|
|
|
180,982
|
|
|
168,606
|
|
|
198,608
|
|
|
172,789
|
|
||||||
0.75% debentures
|
|
79
|
|
|
79
|
|
|
74
|
|
|
137,968
|
|
|
143,883
|
|
|
139,746
|
|
||||||
|
|
$
|
585,343
|
|
|
$
|
678,687
|
|
|
$
|
626,659
|
|
|
$
|
536,574
|
|
|
$
|
572,491
|
|
|
$
|
582,785
|
|
(1)
|
The fair value of the convertible debt was determined based on quoted market prices as reported by an independent pricing source.
|
|
Embedded option
(1)
|
||
Stock price
|
$
|
14.06
|
|
Exercise price
|
$
|
22.53
|
|
Interest rate
|
1.04
|
%
|
|
Stock volatility
|
51.50
|
%
|
|
Maturity date
|
February 18, 2015
|
|
(1)
|
The valuation model utilizes these inputs to value the right but not the obligation to purchase one share at $22.53. The Company utilized a Black-Scholes model to value the embedded cash conversion option. The underlying input assumptions were determined as follows:
|
(i)
|
Stock price. The closing price of the Company's class A common stock on the last trading day of the quarter.
|
(ii)
|
Exercise price. The exercise price of the embedded conversion option.
|
(iii)
|
Interest rate. The Treasury Strip rate associated with the life of the embedded conversion option.
|
(iv)
|
Stock volatility. The volatility of the Company's class A common stock over the life of the embedded conversion option.
|
(In thousands)
|
|
Debt Discount
|
||
2010 (remaining three months)
|
|
$
|
3,248
|
|
2011
|
|
13,368
|
|
|
2012
|
|
15,225
|
|
|
2013
|
|
17,340
|
|
|
2014
|
|
19,748
|
|
|
Thereafter
|
|
4,362
|
|
|
|
|
$
|
73,291
|
|
|
Bond Hedge (1)
|
|
Warrants (1)
|
||||
Stock price
|
$
|
14.06
|
|
|
$
|
14.06
|
|
Exercise price
|
$
|
22.53
|
|
|
$
|
27.03
|
|
Interest rate
|
1.04
|
%
|
|
1.04
|
%
|
||
Stock volatility
|
51.50
|
%
|
|
48.80
|
%
|
||
Credit risk adjustment
|
1.18
|
%
|
|
Not applicable
|
|
||
Maturity date
|
February 18, 2015
|
|
|
July 7, 2015
|
|
(1)
|
The valuation model utilizes these inputs to value the right but not the obligation to purchase one share at $22.53 and $27.03 for the Bond Hedge and Warrants, respectively. The Company utilized a Black-Scholes model to value the Bond Hedge and Warrants. The underlying input assumptions were determined as follows:
|
(i)
|
Stock price. The closing price of the Company's class A common stock on the last trading day of the quarter.
|
(ii)
|
Exercise price. The exercise price of the Bond Hedge and Warrants.
|
(iii)
|
Interest rate. The Treasury Strip rate associated with the life of the Bond Hedge and Warrants.
|
(iv)
|
Stock volatility. The volatility of the Company's class A common stock over the life of the Bond Hedge and Warrants.
|
(v)
|
Credit risk adjustment. Represents the average of the credit default swap rate of the counterparties.
|
(In thousands)
|
|
Debt Discount
|
||
2010 (remaining three months)
|
|
$
|
3,468
|
|
2011
|
|
14,687
|
|
|
2012
|
|
1,898
|
|
|
|
|
$
|
20,053
|
|
(In thousands)
|
|
Issuance Costs
|
||
2010 (remaining three months)
|
|
$
|
91
|
|
2011
|
|
362
|
|
|
2012
|
|
45
|
|
|
|
|
$
|
498
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Net income
|
|
$
|
20,116
|
|
|
$
|
19,506
|
|
|
$
|
26,473
|
|
|
$
|
23,978
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Translation adjustment
|
|
(831
|
)
|
|
4,124
|
|
|
903
|
|
|
(9,934
|
)
|
||||
Unrealized gain (loss) on derivatives
|
|
(77,042
|
)
|
|
331
|
|
|
(14,763
|
)
|
|
4,170
|
|
||||
Unrealized gain on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Estimated provision for income taxes
|
|
8,940
|
|
|
(4
|
)
|
|
1,664
|
|
|
(277
|
)
|
||||
Net change in accumulated other comprehensive loss
|
|
(68,933
|
)
|
|
4,451
|
|
|
(12,196
|
)
|
|
(6,033
|
)
|
||||
Total comprehensive income (loss)
|
|
$
|
(48,817
|
)
|
|
$
|
23,957
|
|
|
$
|
14,277
|
|
|
$
|
17,945
|
|
(In thousands)
|
|
Balance Sheet Classification
|
|
October 3, 2010
|
|
January 3, 2010
|
||||
Assets
|
|
Prepaid expenses and other current assets
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign currency option contracts
|
|
|
|
$
|
7,889
|
|
|
$
|
—
|
|
Foreign currency forward exchange contracts
|
|
|
|
84
|
|
|
—
|
|
||
|
|
|
|
$
|
7,973
|
|
|
$
|
—
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign currency option contracts
|
|
|
|
$
|
1,844
|
|
|
$
|
4,936
|
|
Foreign currency forward exchange contracts
|
|
|
|
9,100
|
|
|
64
|
|
||
|
|
|
|
$
|
10,944
|
|
|
$
|
5,000
|
|
Liabilities
|
|
Accrued liabilities
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign currency option contracts
|
|
|
|
$
|
14,470
|
|
|
$
|
—
|
|
Foreign currency forward exchange contracts
|
|
|
|
13,205
|
|
|
—
|
|
||
|
|
|
|
$
|
27,675
|
|
|
$
|
—
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign currency option contracts
|
|
|
|
$
|
2,138
|
|
|
$
|
—
|
|
Foreign currency forward exchange contracts
|
|
|
|
49,609
|
|
|
27,354
|
|
||
|
|
|
|
$
|
51,747
|
|
|
$
|
27,354
|
|
|
|
Unrealized Gain (Loss) Recognized in OCI
(Effective Portion)
|
||||||
(In thousands)
|
|
As of October 3, 2010
|
|
As of January 3, 2010
|
||||
Derivatives designated as cash flow hedges:
|
|
$
|
240
|
|
|
$
|
(41,902
|
)
|
|
|
Three Months Ended
|
||||||||||||||
|
|
Gain Reclassified
from OCI to Revenue
(Effective Portion)
|
|
Loss Recognized
in Other, Net on Derivatives
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing) (1)
|
||||||||||||
(In thousands)
|
|
October 3,
2010 |
|
September 27,
2009 |
|
October 3,
2010 |
|
September 27,
2009 |
||||||||
Derivatives designated as cash flow hedges:
|
|
$
|
13,778
|
|
|
$
|
—
|
|
|
$
|
(9,810
|
)
|
|
$
|
—
|
|
|
|
Nine Months Ended
|
||||||||||||||
|
|
Gain Reclassified
from OCI to Revenue
(Effective Portion)
|
|
Loss Recognized
in Other, Net on Derivatives
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing) (1)
|
||||||||||||
(In thousands)
|
|
October 3,
2010 |
|
September 27,
2009 |
|
October 3,
2010 |
|
September 27,
2009 |
||||||||
Derivatives designated as cash flow hedges:
|
|
$
|
27,558
|
|
|
$
|
—
|
|
|
$
|
(18,077
|
)
|
|
$
|
—
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
Loss Reclassified
from OCI to Cost of Revenue
(Effective Portion)
|
|
Loss Recognized
in Other, Net on Derivatives
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing) (1)
|
||||||||||||
(In thousands)
|
|
October 3,
2010 |
|
September 27,
2009 |
|
October 3,
2010 |
|
September 27,
2009 |
||||||||
Derivatives designated as cash flow hedges:
|
|
$
|
—
|
|
|
$
|
(10,625
|
)
|
|
$
|
—
|
|
|
$
|
(1,365
|
)
|
|
|
Nine Months Ended
|
||||||||||||||
|
|
Loss Reclassified
from OCI to Cost of Revenue
(Effective Portion)
|
|
Loss Recognized
in Other, Net on Derivatives
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing) (1)
|
||||||||||||
(In thousands)
|
|
October 3,
2010 |
|
September 27,
2009 |
|
October 3,
2010 |
|
September 27,
2009 |
||||||||
Derivatives designated as cash flow hedges:
|
|
$
|
(12,478
|
)
|
|
$
|
(10,750
|
)
|
|
$
|
—
|
|
|
$
|
(3,899
|
)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Derivatives not designated as hedging instruments:
|
|
$
|
(28,275
|
)
|
|
$
|
(12,648
|
)
|
|
$
|
9,115
|
|
|
$
|
(16,634
|
)
|
|
|
As of
|
||||
(In thousands)
|
|
October 3, 2010
|
|
September 27, 2009
|
||
Stock options
|
|
318
|
|
|
394
|
|
Restricted stock units
|
|
1,958
|
|
|
1,960
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands, except per share amounts)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Basic net income per share:
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
18,546
|
|
|
$
|
19,506
|
|
|
$
|
17,007
|
|
|
$
|
23,978
|
|
Less: undistributed earnings allocated to unvested restricted stock awards
|
|
(22
|
)
|
|
(61
|
)
|
|
(29
|
)
|
|
(92
|
)
|
||||
Income from continuing operations available to common stockholders
|
|
$
|
18,524
|
|
|
$
|
19,445
|
|
|
$
|
16,978
|
|
|
$
|
23,886
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common shares
|
|
95,840
|
|
|
94,668
|
|
|
95,519
|
|
|
89,764
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic income per share from continuing operations
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
|
$
|
0.18
|
|
|
$
|
0.27
|
|
Basic income per share from discontinued operations
|
|
0.02
|
|
|
—
|
|
|
0.10
|
|
|
—
|
|
||||
Basic net income per share
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.28
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share:
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
18,546
|
|
|
$
|
19,506
|
|
|
$
|
17,007
|
|
|
$
|
23,978
|
|
Add: Interest expense incurred on 4.75% debentures, net of tax
|
|
1,666
|
|
|
1,666
|
|
|
—
|
|
|
—
|
|
||||
Less: undistributed earnings allocated to unvested restricted stock awards
|
|
(22
|
)
|
|
(60
|
)
|
|
(29
|
)
|
|
(91
|
)
|
||||
Income from continuing operations available to common stockholders
|
|
$
|
20,190
|
|
|
$
|
21,112
|
|
|
$
|
16,978
|
|
|
$
|
23,887
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common shares
|
|
95,840
|
|
|
94,668
|
|
|
95,519
|
|
|
89,764
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Stock options
|
|
861
|
|
|
1,436
|
|
|
1,036
|
|
|
1,612
|
|
||||
Restricted stock units
|
|
235
|
|
|
215
|
|
|
186
|
|
|
137
|
|
||||
4.75% debentures
|
|
8,712
|
|
|
8,712
|
|
|
—
|
|
|
—
|
|
||||
Diluted weighted-average common shares
|
|
105,648
|
|
|
105,031
|
|
|
96,741
|
|
|
91,513
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Diluted income per share from continuing operations
|
|
$
|
0.19
|
|
|
$
|
0.20
|
|
|
$
|
0.18
|
|
|
$
|
0.26
|
|
Diluted income per share from discontinued operations
|
|
0.02
|
|
|
—
|
|
|
0.09
|
|
|
—
|
|
||||
Diluted net income per share
|
|
$
|
0.21
|
|
|
$
|
0.20
|
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
||||||||
Utility and power plants
|
|
$
|
2,442
|
|
|
$
|
1,530
|
|
|
$
|
5,265
|
|
|
$
|
4,090
|
|
Residential and commercial
|
|
1,941
|
|
|
2,772
|
|
|
5,759
|
|
|
5,665
|
|
||||
Research and development
|
|
1,886
|
|
|
1,736
|
|
|
5,822
|
|
|
4,649
|
|
||||
Sales, general and administrative
|
|
9,396
|
|
|
7,036
|
|
|
21,218
|
|
|
19,800
|
|
||||
Total stock-based compensation expense
|
|
$
|
15,665
|
|
|
$
|
13,074
|
|
|
$
|
38,064
|
|
|
$
|
34,204
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Employee stock options
|
|
$
|
550
|
|
|
$
|
1,048
|
|
|
$
|
1,452
|
|
|
$
|
3,346
|
|
Restricted stock awards and units
|
|
15,115
|
|
|
10,955
|
|
|
37,496
|
|
|
30,470
|
|
||||
Shares and options released from re-vesting restrictions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
168
|
|
||||
Change in stock-based compensation capitalized in inventory
|
|
—
|
|
|
1,071
|
|
|
(884
|
)
|
|
220
|
|
||||
Total stock-based compensation expense
|
|
$
|
15,665
|
|
|
$
|
13,074
|
|
|
$
|
38,064
|
|
|
$
|
34,204
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(As a percentage of total revenue)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Revenue by geography:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
32
|
%
|
|
32
|
%
|
|
32
|
%
|
|
46
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
||||||||
Italy
|
|
38
|
%
|
|
29
|
%
|
|
27
|
%
|
|
20
|
%
|
||||
Germany
|
|
11
|
%
|
|
26
|
%
|
|
15
|
%
|
|
21
|
%
|
||||
Other
|
|
12
|
%
|
|
8
|
%
|
|
17
|
%
|
|
8
|
%
|
||||
Rest of world
|
|
7
|
%
|
|
5
|
%
|
|
9
|
%
|
|
5
|
%
|
||||
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
||||
Revenue by segment (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility and power plants (as reviewed by CODM)
|
|
$
|
260,979
|
|
|
$
|
195,117
|
|
|
$
|
532,977
|
|
|
$
|
428,668
|
|
Revenue earned by discontinued operations
|
|
(3,176
|
)
|
|
—
|
|
|
(11,081
|
)
|
|
—
|
|
||||
Utility and power plants
|
|
$
|
257,803
|
|
|
$
|
195,117
|
|
|
$
|
521,896
|
|
|
$
|
428,668
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential and commercial
|
|
$
|
292,842
|
|
|
$
|
270,244
|
|
|
$
|
760,261
|
|
|
$
|
547,677
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenue by segment (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility and power plants (as reviewed by CODM)
|
|
$
|
208,845
|
|
|
$
|
140,656
|
|
|
$
|
412,535
|
|
|
$
|
346,498
|
|
Amortization of intangible assets
|
|
946
|
|
|
683
|
|
|
2,409
|
|
|
2,049
|
|
||||
Stock-based compensation expense
|
|
2,442
|
|
|
1,530
|
|
|
5,265
|
|
|
4,090
|
|
||||
Non-cash interest expense
|
|
293
|
|
|
130
|
|
|
969
|
|
|
974
|
|
||||
Utility and power plants
|
|
$
|
212,526
|
|
|
$
|
142,999
|
|
|
$
|
421,178
|
|
|
$
|
353,611
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential and commercial (as reviewed by CODM)
|
|
$
|
221,578
|
|
|
$
|
217,406
|
|
|
$
|
575,882
|
|
|
$
|
436,854
|
|
Amortization of intangible assets
|
|
1,745
|
|
|
2,119
|
|
|
5,994
|
|
|
6,341
|
|
||||
Stock-based compensation expense
|
|
1,941
|
|
|
2,772
|
|
|
5,759
|
|
|
5,665
|
|
||||
Non-cash interest expense
|
|
270
|
|
|
235
|
|
|
1,165
|
|
|
1,131
|
|
||||
Residential and commercial
|
|
$
|
225,534
|
|
|
$
|
222,532
|
|
|
$
|
588,800
|
|
|
$
|
449,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross margin by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility and power plants (as reviewed by CODM)
|
|
20
|
%
|
|
28
|
%
|
|
23
|
%
|
|
19
|
%
|
||||
Residential and commercial (as reviewed by CODM)
|
|
24
|
%
|
|
20
|
%
|
|
24
|
%
|
|
20
|
%
|
||||
Utility and power plants
|
|
18
|
%
|
|
27
|
%
|
|
19
|
%
|
|
18
|
%
|
||||
Residential and commercial
|
|
23
|
%
|
|
18
|
%
|
|
23
|
%
|
|
18
|
%
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||
(As a percentage of total revenue)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||
Significant Customers:
|
Business Segment
|
|
|
|
|
|
|
|
|
|||
Etrion Corporation
|
Utility and power plants
|
|
12
|
%
|
|
*
|
|
|
*
|
|
*
|
|
Veronagest SpA
|
Utility and power plants
|
|
10
|
%
|
|
*
|
|
|
*
|
|
*
|
|
SunRay
|
Utility and power plants
|
|
**
|
|
|
15
|
%
|
|
**
|
|
*
|
|
Florida Power & Light Company
|
Utility and power plants
|
|
*
|
|
|
*
|
|
|
*
|
|
14
|
%
|
•
|
superior performance, including the ability to generate up to 50% more power per unit area than conventional solar cells;
|
•
|
superior aesthetics, with our uniformly black surface design that eliminates highly visible reflective grid lines and metal interconnect ribbons;
|
•
|
more kilowatts per pound can be transported using less packaging, resulting in lower distribution costs; and
|
•
|
more efficient use of silicon, a key raw material used in the manufacture of solar cells.
|
•
|
high performance delivered by enhancing energy delivery and financial return through systems technology design;
|
•
|
customer service and systems performance delivered using state of the art monitoring, reporting and maintenance management systems;
|
•
|
cutting edge systems design to meet customer needs and reduce cost, including non-penetrating, fast roof installation technologies; and
|
•
|
channel breadth and flexible delivery capability including turnkey systems.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Utility and power plants
|
$
|
257,803
|
|
|
$
|
195,117
|
|
|
$
|
521,896
|
|
|
$
|
428,668
|
|
Residential and commercial
|
292,842
|
|
|
270,244
|
|
|
760,261
|
|
|
547,677
|
|
||||
Total revenue
|
$
|
550,645
|
|
|
$
|
465,361
|
|
|
$
|
1,282,157
|
|
|
$
|
976,345
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||
(As a percentage of total revenue)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||
Significant Customer:
|
Business Segment
|
|
|
|
|
|
|
|
|
|||
Etrion Corporation ("Etrion")
|
Utility and power plants
|
|
12
|
%
|
|
*
|
|
|
*
|
|
*
|
|
Veronagest SpA
|
Utility and power plants
|
|
10
|
%
|
|
*
|
|
|
*
|
|
*
|
|
SunRay
|
Utility and power plants
|
|
**
|
|
|
15
|
%
|
|
**
|
|
*
|
|
Florida Power & Light Company ("FPL")
|
Utility and power plants
|
|
*
|
|
|
*
|
|
|
*
|
|
14
|
%
|
|
Three Months Ended
|
||||||||||||||||||||||
|
UPP
|
|
R&C
|
|
Consolidated
|
||||||||||||||||||
(Dollars in thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||||||
Amortization of other intangible assets
|
$
|
946
|
|
|
$
|
683
|
|
|
$
|
1,745
|
|
|
$
|
2,119
|
|
|
$
|
2,691
|
|
|
$
|
2,802
|
|
Stock-based compensation
|
2,442
|
|
|
1,530
|
|
|
1,941
|
|
|
2,772
|
|
|
4,383
|
|
|
4,302
|
|
||||||
Non-cash interest expense
|
293
|
|
|
130
|
|
|
270
|
|
|
235
|
|
|
563
|
|
|
365
|
|
||||||
Materials and other cost of revenue
|
208,845
|
|
|
140,656
|
|
|
221,578
|
|
|
217,406
|
|
|
430,423
|
|
|
358,062
|
|
||||||
Total cost of revenue
|
$
|
212,526
|
|
|
$
|
142,999
|
|
|
$
|
225,534
|
|
|
$
|
222,532
|
|
|
$
|
438,060
|
|
|
$
|
365,531
|
|
Total cost of revenue as a percentage of revenue
|
82
|
%
|
|
73
|
%
|
|
77
|
%
|
|
82
|
%
|
|
80
|
%
|
|
79
|
%
|
||||||
Total gross margin percentage
|
18
|
%
|
|
27
|
%
|
|
23
|
%
|
|
18
|
%
|
|
20
|
%
|
|
21
|
%
|
|
Nine Months Ended
|
||||||||||||||||||||||
|
UPP
|
|
R&C
|
|
Consolidated
|
||||||||||||||||||
(Dollars in thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||||||
Amortization of other intangible assets
|
$
|
2,409
|
|
|
$
|
2,049
|
|
|
$
|
5,994
|
|
|
$
|
6,341
|
|
|
$
|
8,403
|
|
|
$
|
8,390
|
|
Stock-based compensation
|
5,265
|
|
|
4,090
|
|
|
5,759
|
|
|
5,665
|
|
|
11,024
|
|
|
9,755
|
|
||||||
Non-cash interest expense
|
969
|
|
|
974
|
|
|
1,165
|
|
|
1,131
|
|
|
2,134
|
|
|
2,105
|
|
||||||
Materials and other cost of revenue
|
412,535
|
|
|
346,498
|
|
|
575,882
|
|
|
436,854
|
|
|
988,417
|
|
|
783,352
|
|
||||||
Total cost of revenue
|
$
|
421,178
|
|
|
$
|
353,611
|
|
|
$
|
588,800
|
|
|
$
|
449,991
|
|
|
$
|
1,009,978
|
|
|
$
|
803,602
|
|
Total cost of revenue as a percentage of revenue
|
81
|
%
|
|
82
|
%
|
|
77
|
%
|
|
82
|
%
|
|
79
|
%
|
|
82
|
%
|
||||||
Total gross margin percentage
|
19
|
%
|
|
18
|
%
|
|
23
|
%
|
|
18
|
%
|
|
21
|
%
|
|
18
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Stock-based compensation
|
$
|
1,886
|
|
|
$
|
1,736
|
|
|
$
|
5,822
|
|
|
$
|
4,649
|
|
Other research and development
|
11,496
|
|
|
6,514
|
|
|
29,173
|
|
|
18,418
|
|
||||
Total research and development
|
$
|
13,382
|
|
|
$
|
8,250
|
|
|
$
|
34,995
|
|
|
$
|
23,067
|
|
Total research and development as a percentage of revenue
|
2
|
%
|
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Amortization of other intangible assets
|
$
|
8,887
|
|
|
$
|
1,344
|
|
|
$
|
19,636
|
|
|
$
|
3,906
|
|
Stock-based compensation
|
9,396
|
|
|
7,036
|
|
|
21,218
|
|
|
19,800
|
|
||||
Amortization of promissory notes
|
6,022
|
|
|
—
|
|
|
8,941
|
|
|
—
|
|
||||
Other sales, general and administrative
|
66,710
|
|
|
36,952
|
|
|
183,876
|
|
|
106,805
|
|
||||
Total sales, general and administrative
|
$
|
91,015
|
|
|
$
|
45,332
|
|
|
$
|
233,671
|
|
|
$
|
130,511
|
|
Total sales, general and administrative as a percentage of revenue
|
17
|
%
|
|
10
|
%
|
|
18
|
%
|
|
13
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Interest income
|
$
|
742
|
|
|
$
|
—
|
|
|
$
|
1,294
|
|
|
$
|
1,949
|
|
Total interest income as a percentage of revenue
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||
Non-cash interest expense
|
$
|
(5,844
|
)
|
|
$
|
(5,023
|
)
|
|
$
|
(20,041
|
)
|
|
$
|
(14,604
|
)
|
Other interest expense
|
(8,924
|
)
|
|
(4,969
|
)
|
|
(24,977
|
)
|
|
(11,422
|
)
|
||||
Total interest expense
|
$
|
(14,768
|
)
|
|
$
|
(9,992
|
)
|
|
$
|
(45,018
|
)
|
|
$
|
(26,026
|
)
|
Total interest expense as a percentage of revenue
|
3
|
%
|
|
2
|
%
|
|
4
|
%
|
|
3
|
%
|
||||
Gain on deconsolidation of consolidated subsidiary
|
$
|
36,849
|
|
|
$
|
—
|
|
|
$
|
36,849
|
|
|
$
|
—
|
|
Total gain on deconsolidation of consolidated subsidiary as a percentage of revenue
|
7
|
%
|
|
—
|
%
|
|
3
|
%
|
|
—
|
%
|
||||
Gain on change in equity interest in unconsolidated investee
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,348
|
|
|
$
|
—
|
|
Total gain on change in equity interest in unconsolidated investee as a percentage of revenue
|
—
|
%
|
|
—
|
%
|
|
2
|
%
|
|
—
|
%
|
||||
Gain (loss) on mark-to-market derivatives
|
$
|
(2,967
|
)
|
|
$
|
—
|
|
|
$
|
28,885
|
|
|
$
|
21,193
|
|
Total gain (loss) on mark-to-mark derivatives as a percentage of revenue
|
1
|
%
|
|
—
|
%
|
|
2
|
%
|
|
2
|
%
|
||||
Other, net
|
$
|
(11,947
|
)
|
|
$
|
585
|
|
|
$
|
(28,344
|
)
|
|
$
|
(3,765
|
)
|
Total other, net as a percentage of revenue
|
2
|
%
|
|
—
|
%
|
|
2
|
%
|
|
—
|
%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Gain (loss) on derivatives and foreign exchange
|
|
$
|
(12,316
|
)
|
|
$
|
696
|
|
|
$
|
(29,930
|
)
|
|
$
|
(1,852
|
)
|
Gain on sale (impairment) of investments
|
|
—
|
|
|
(190
|
)
|
|
1,572
|
|
|
(1,997
|
)
|
||||
Other income (expense), net
|
|
369
|
|
|
79
|
|
|
14
|
|
|
84
|
|
||||
Total other, net
|
|
$
|
(11,947
|
)
|
|
$
|
585
|
|
|
$
|
(28,344
|
)
|
|
$
|
(3,765
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Benefit from (provision for) income taxes
|
$
|
(3,376
|
)
|
|
$
|
(19,962
|
)
|
|
$
|
(19,493
|
)
|
|
$
|
4,457
|
|
Total benefit from (provision for) income taxes as a percentage of revenue
|
1
|
%
|
|
4
|
%
|
|
2
|
%
|
|
—
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Equity in earnings of unconsolidated investees
|
$
|
5,825
|
|
|
$
|
2,627
|
|
|
$
|
10,973
|
|
|
$
|
7,005
|
|
As a percentage of revenue
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
October 3, 2010
|
|
September 27, 2009
|
|
October 3, 2010
|
|
September 27, 2009
|
||||||||
Income from discontinued operations, net of taxes
|
$
|
1,570
|
|
|
$
|
—
|
|
|
$
|
9,466
|
|
|
$
|
—
|
|
As a percentage of revenue
|
—
|
%
|
|
—
|
%
|
|
1
|
%
|
|
—
|
%
|
|
Nine Months Ended
|
||||||
(In thousands)
|
October 3, 2010
|
|
September 27, 2009
|
||||
Net cash provided by (used in) operating activities of continuing operations
|
$
|
(73,890
|
)
|
|
$
|
37,227
|
|
Net cash used in investing activities of continuing operations
|
(322,469
|
)
|
|
(257,284
|
)
|
||
Net cash provided by financing activities of continuing operations
|
21,933
|
|
|
484,390
|
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||
(In thousands)
|
|
Total
|
|
2010
(remaining
3 months)
|
|
2011-2012
|
|
2013-2014
|
|
Beyond 2014
|
||||||||||
Convertible debt, including interest (1)
|
|
$
|
770,953
|
|
|
$
|
6,165
|
|
|
$
|
245,752
|
|
|
$
|
266,613
|
|
|
$
|
252,423
|
|
Future financing commitments (2)
|
|
339,940
|
|
|
170
|
|
|
141,600
|
|
|
198,170
|
|
|
—
|
|
|||||
Customer advances (3)
|
|
83,283
|
|
|
4,303
|
|
|
22,980
|
|
|
16,000
|
|
|
40,000
|
|
|||||
Operating lease commitments (4)
|
|
64,332
|
|
|
5,065
|
|
|
18,110
|
|
|
13,337
|
|
|
27,820
|
|
|||||
Utility obligations (5)
|
|
750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
750
|
|
|||||
Non-cancelable purchase orders (6)
|
|
14,729
|
|
|
14,729
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments under agreements (7)
|
|
5,532,321
|
|
|
331,273
|
|
|
1,299,452
|
|
|
1,367,381
|
|
|
2,534,215
|
|
|||||
Total
|
|
$
|
6,806,308
|
|
|
$
|
361,705
|
|
|
$
|
1,727,894
|
|
|
$
|
1,861,501
|
|
|
$
|
2,855,208
|
|
(1)
|
Convertible debt and interest on convertible debt relate to the aggregate of
$678.7 million
in outstanding principal amount of our senior convertible debentures on
October 3, 2010
. For the purpose of the table above, we assume that all holders of the 4.50% debentures and 4.75% debentures will hold the debentures through the date of maturity in fiscal 2015 and 2014, respectively, and all holders of the 1.25% debentures and 0.75% debentures will require our Company to repurchase the debentures on February 15, 2012 and August 1, 2015, respectively, and upon conversion, the values of the 1.25% debentures and 0.75% debentures will be equal to the aggregate principal amount of
$198.7 million
with no premiums (see Note 10 of Notes to our Condensed Consolidated Financial Statements).
|
(2)
|
On July 5, 2010, SPTL and AUO each contributed to AUOSP total initial funding of Malaysian Ringgit 45.0 million and will contribute additional amounts from 2011 to 2014 amounting to $335 million by each shareholder, or such lesser
|
(3)
|
Customer advances relate to advance payments received from customers for future purchases of solar power products and future polysilicon purchases by a third party that manufactures ingots which are sold back to us under an ingot supply agreement.
|
(4)
|
Operating lease commitments primarily relate to: (i) four solar power systems leased from Wells Fargo over minimum lease terms of 20 years; (ii) a 5-year lease agreement with Cypress for our headquarters in San Jose, California which expires in April 2011 (
we will enter into another operating lease arrangement for a San Jose, California facility before our current agreement with Cypress expires)
; (iii) an 11-year lease agreement with an unaffiliated third party for our administrative, research and development offices in Richmond, California; and (iv) other leases for various office space (see Note 8 of Notes to our Condensed Consolidated Financial Statements).
|
(5)
|
Utility obligations relate to our 11-year lease agreement with an unaffiliated third party for our administrative, research and development offices in Richmond, California.
|
(6)
|
Non-cancelable purchase orders relate to purchases of raw materials for inventory and manufacturing equipment from a variety of vendors (see Note 8 of Notes to our Condensed Consolidated Financial Statements).
|
(7)
|
Purchase commitments under agreements relate to arrangements entered into with several suppliers, including joint ventures, for polysilicon, ingots, wafers and solar panels as well as agreements to purchase solar renewable energy certificates from solar installation owners in New Jersey. These agreements specify future quantities and pricing of products to be supplied by the vendors for periods up to eleven years and there are certain consequences, such as forfeiture of advanced deposits and liquidated damages relating to previous purchases, in the event that we terminate the arrangements (see Note 8 of Notes to our Consolidated Financial Statements).
|
•
|
There was not an effective control environment in our Philippines operations. Specifically, certain of the Company's employees in the Philippines violated the Company's code of business conduct and ethics. Individuals in the Company's Philippines finance organization intentionally proposed and/or approved journal entries that were not substantiated by actual transactions or costs.
|
•
|
We did not maintain in the Philippines operations, a sufficient complement of personnel with an appropriate level of accounting knowledge, experience and training to ensure that our controls, and specifically our controls over inventory variance capitalization, were effective.
|
•
|
During the first, second and third fiscal quarter of 2010, we re-emphasized management's expectations to all accounting and finance employees in our Philippines operations regarding adherence to our policies and ethical business standards;
|
•
|
During the first and second fiscal quarters of 2010, we developed and implemented additional training programs to increase awareness of our code of business conduct and ethics and “whistle-blower” policies;
|
•
|
During the third fiscal quarter of 2010, we mandated related training as part of the new employee orientation process for the Philippines accounting and finance staff; and
|
•
|
We continue to reinforce corporate policies as part of the all-hands meetings and month-end close meetings held with employees of our Philippines operations;
|
•
|
During the first fiscal quarter of 2010, we appointed a new vice president and controller - Asia region;
|
•
|
During the first fiscal quarter of 2010, we added resources to our corporate finance team to support enhancements for enterprise resource planning systems;
|
•
|
During the first and second fiscal quarters of 2010, we terminated employees due to involvement in unethical activities or insufficient qualifications to perform assigned activities;
|
•
|
During the first and second fiscal quarters of 2010, we reorganized reporting structures so that accounting employees in the Philippines report directly on a centralized basis to the chief financial officer's organization;
|
•
|
During the first, second and third fiscal quarters of 2010, we added corporate management presence in the Philippines;
|
•
|
During the first, second and third fiscal quarters of 2010, we hired additional qualified employees in our Philippines finance organization for key leadership positions; and
|
•
|
During the first, second and third fiscal quarters of 2010, we segregated duties between the financial planning and accounting functions and added additional layers of accounting review;
|
•
|
During the first fiscal quarter of 2010, we standardized and documented our process for capitalizing manufacturing variances;
|
•
|
During the first fiscal quarter of 2010, we added specific reviews for required manual journal entries;
|
•
|
During the first and second fiscal quarters of 2010, we established a formal process for certifications and sub-certifications of financial reports;
|
•
|
During the second fiscal quarter of 2010, we trained responsible employees on the proper method to capitalize manufacturing variances;
|
•
|
During the third fiscal quarter of 2010, we standardized and documented key accounting policies and job descriptions for all accounting employees; and
|
•
|
During the third fiscal quarter of 2010, we improved our monthly and quarterly closing processes by enabling functions within our enterprise resource planning system, standardizing reports generated from the system and providing implementation training.
|
•
|
System output performance guarantees;
|
•
|
System maintenance;
|
•
|
Penalty payments or customer termination rights if the system we are constructing is not commissioned within specified timeframes or other construction milestones are not achieved;
|
•
|
Guarantees of certain minimum residual value of the system at specified future dates; and
|
•
|
System put-rights whereby we 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.
|
•
|
cost overruns, delays, equipment problems and other operating difficulties;
|
•
|
difficulties expanding our processes to larger production capacity;
|
•
|
custom-built equipment may take longer and cost more to engineer than planned and may never operate as designed;
|
•
|
incorporating first-time equipment designs and technology improvements, which we expect to lower unit capital and operating costs, but this new technology may not be successful;
|
•
|
problems managing the joint venture with AUO, whom we do not control and whose business objectives are different from ours and may be inconsistent with our best interest;
|
•
|
AUO's ability to obtain interim financing to fund the joint venture's business plan until such time as third party financing is obtained;
|
•
|
the joint venture's ability to obtaining third party financing to fund its capital requirements;
|
•
|
difficulties in maintaining or improving our historical yields and manufacturing efficiencies;
|
•
|
difficulties in protecting our intellectual property and obtaining rights to intellectual property developed by the joint venture;
|
•
|
difficulties in hiring key technical, management, sales and other personnel;
|
•
|
difficulties in integration, implementing IT infrastructure and an effective control environment; and
|
•
|
potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities for operations.
|
•
|
insufficient experience with technologies and markets in which the acquired business or joint venture is involved, which may be necessary to successfully operate and/or integrate the business or the joint venture;
|
•
|
problems integrating the acquired operations, personnel, IT infrastructure, technologies or products with the existing business and products;
|
•
|
diversion of management time and attention from the core business to the acquired business or joint venture;
|
•
|
potential failure to retain or hire key technical, management, sales and other personnel of the acquired business or joint venture;
|
•
|
difficulties in retaining or building relationships with suppliers and customers of the acquired business or joint venture, particularly where such customers or suppliers compete with us;
|
•
|
potential failure of the due diligence processes to identify significant issues with product quality and development or legal and financial liabilities, among other things;
|
•
|
potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent acquisitions or the successful operation of joint ventures;
|
•
|
potential necessity to re-apply for permits of acquired projects;
|
•
|
problems managing joint ventures with our partners, and reliance upon joint ventures which we do not control, for example, our ability to effectively manage our joint venture with AUO for the expansion of our manufacturing capacity;
|
•
|
subsequent impairment of the acquired assets, including intangible assets; and
|
•
|
assumption of liabilities including, but not limited to, lawsuits, tax examinations, warranty issues, liabilities associated with compliance with laws (for example, the Foreign Corrupt Practices Act).
|
Period
|
|
Total Number of Shares Purchased (in thousands)(1)
|
|
Average Price
Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs
|
|||||
July 5, 2010 through August 1, 2010
|
|
3
|
|
|
$
|
12.88
|
|
|
—
|
|
|
—
|
|
August 2, 2010 through August 29, 2010
|
|
25
|
|
|
$
|
12.04
|
|
|
—
|
|
|
—
|
|
August 30, 2010 through October 3, 2010
|
|
19
|
|
|
$
|
12.02
|
|
|
—
|
|
|
—
|
|
|
|
47
|
|
|
$
|
12.08
|
|
|
—
|
|
|
—
|
|
(1)
|
The total number of shares purchased includes only shares surrendered to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.
|
Exhibit Number
|
|
Description
|
|
|
|
10.1*
|
|
Amendment No. 1 to Joint Venture Agreement, dated June 29, 2010, by and among SunPower Technology, Ltd., AU Optronics Singapore Pte. Ltd., AU Optronics Corporation and SunPower Malaysia Manufacturing Sdn. Bhd.
|
10.2*
|
|
Amendment No. 2 to Joint Venture Agreement, dated July 5, 2010, by and among SunPower Technology, Ltd., AU Optronics Singapore Pte. Ltd., AU Optronics Corporation and SunPower Malaysia Manufacturing Sdn. Bhd.
|
10.3*†
|
|
Supply Agreement, dated July 5, 2010, by and among SunPower Malaysia Manufacturing Sdn. Bhd., SunPower Systems, Sarl and AU Optronics Singapore Pte. Ltd.
|
10.4*
|
|
License and Technology Agreement, dated July 5, 2010, by and among SunPower Technology, Ltd., AU Optronics Singapore Pte. Ltd. and SunPower Malaysia Manufacturing Sdn. Bhd.
|
10.5*
|
|
Sixth Amendment to Amended and Restated Credit Agreement, dated August 11, 2010, by and among SunPower Corporation, SunPower North America, LLC, SunPower Corporation, Systems and Wells Fargo Bank, National Association
|
31.1*
|
|
Certification by Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).
|
31.2*
|
|
Certification by Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).
|
32.1*
|
|
Certification Furnished Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*^
|
|
XBRL Instance Document.
|
101.SCH*^
|
|
XBRL Taxonomy Schema Document.
|
101.CAL*^
|
|
XBRL Taxonomy Calculation Linkbase Document.
|
101.LAB*^
|
|
XBRL Taxonomy Label Linkbase Document.
|
101.PRE*^
|
|
XBRL Taxonomy Presentation Linkbase Document.
|
101.DEF*^
|
|
XBRL Taxonomy Definition Linkbase Document.
|
|
SUNPOWER CORPORATION
|
|
|
|
|
Dated: November 12, 2010
|
By:
|
/s/ DENNIS V. ARRIOLA
|
|
|
|
|
|
Dennis V. Arriola
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
Exhibit Number
|
|
Description
|
|
|
|
10.1*
|
|
Amendment No. 1 to Joint Venture Agreement, dated June 29, 2010, by and among SunPower Technology, Ltd., AU Optronics Singapore Pte. Ltd., AU Optronics Corporation and SunPower Malaysia Manufacturing Sdn. Bhd.
|
10.2*
|
|
Amendment No. 2 to Joint Venture Agreement, dated July 5, 2010, by and among SunPower Technology, Ltd., AU Optronics Singapore Pte. Ltd., AU Optronics Corporation and SunPower Malaysia Manufacturing Sdn. Bhd.
|
10.3*†
|
|
Supply Agreement, dated July 5, 2010, by and among SunPower Malaysia Manufacturing Sdn. Bhd., SunPower Systems, Sarl and AU Optronics Singapore Pte. Ltd.
|
10.4*
|
|
License and Technology Agreement, dated July 5, 2010, by and among SunPower Technology, Ltd., AU Optronics Singapore Pte. Ltd. and SunPower Malaysia Manufacturing Sdn. Bhd.
|
10.5*
|
|
Sixth Amendment to Amended and Restated Credit Agreement, dated August 11, 2010, by and among SunPower Corporation, SunPower North America, LLC, SunPower Corporation, Systems and Wells Fargo Bank, National Association
|
31.1*
|
|
Certification by Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).
|
31.2*
|
|
Certification by Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).
|
32.1*
|
|
Certification Furnished Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*^
|
|
XBRL Instance Document.
|
101.SCH*^
|
|
XBRL Taxonomy Schema Document.
|
101.CAL*^
|
|
XBRL Taxonomy Calculation Linkbase Document.
|
101.LAB*^
|
|
XBRL Taxonomy Label Linkbase Document.
|
101.PRE*^
|
|
XBRL Taxonomy Presentation Linkbase Document.
|
101.DEF*^
|
|
XBRL Taxonomy Definition Linkbase Document.
|
2.
|
Section 2.4(a) of the Initial Agreement is hereby deleted in its entirety and replaced with the following:
|
AU OPTRONICS SINGAPORE PTE. LTD.
|
AU OPTRONICS CORPORATION
|
|
|
|
|
By: /s/ James CP Chen
|
By: /s/ Lai Juh Chen
|
|
|
Name: James CP Chen
|
Name: Lai Juh Chen
|
|
|
Title: Junior AVP
|
Title: President
|
|
|
SUNPOWER TECHNOLOGY, LTD.
|
SUNPOWER MALAYSIA MANUFACTURING SDN.BHD.
|
|
|
|
|
By: /s/ Thomas H. Werner
|
By: /s/ Thomas H. Werner
|
|
|
Name: Thomas H. Werner
|
Name: Thomas H. Werner
|
|
|
Title: President and Chief Executive Officer
|
Title: Director
|
AU OPTRONICS SINGAPORE PTE. LTD.
|
AU OPTRONICS CORPORATION
|
|
|
|
|
By: /s/ James CP Chen
|
By: /s/ Lai Juh Chen
|
|
|
Name: James CP Chen
|
Name: Lai Juh Chen
|
|
|
Title: Director
|
Title: Chief Executive Officer
|
|
|
SUNPOWER TECHNOLOGY, LTD.
|
SUNPOWER MALAYSIA MANUFACTURING SDN.BHD.
|
|
|
By: /s/ Thomas H. Werner
|
By: /s/ Thomas H. Werner
|
|
|
Name: Thomas H. Werner
|
Name: Thomas H. Werner
|
|
|
Title: Director
|
Title: Director
|
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
|
1.
|
SCOPE OF AGREEMENT
.
|
1.1
|
Affiliated Companies
. SPSW and its Affiliates may purchase Product under the terms of this Agreement. Submission of a Purchase Order referencing this Agreement and the issuance of an order acknowledgment is deemed to constitute acceptance of the terms of this Agreement by the applicable Affiliate. For purposes of this Agreement “
Buyer
” shall refer to either SPSW or its Affiliate issuing a Purchase Order.
|
1.2
|
Master Agreement Structure
. The Parties acknowledge that this Agreement shall not constitute a commitment to purchase any particular quantity of Products or services. Except as provided in Section 2.8, Buyer shall only be committed to purchase Products and the JVC shall only be committed and authorized to ship Products to Buyer when Buyer has tendered a Purchase Order. Notwithstanding the foregoing, the JVC shall offer
|
2.
|
FORECASTS AND PURCHASE ORDERS
.
|
2.1
|
Initial Annual Operating Plan
. The JVC will provide Buyer with an initial production forecast, issued at least 8 weeks prior to the first day of each fiscal year, which sets forth the JVC's good faith estimate of the aggregate amount of Product that the JVC will produce in such year on a monthly basis (the “
Initial
Annual
Operating Plan
”).
|
2.2
|
Annual Demand Forecast
. Buyer will provide the JVC with an annual demand forecast, issued at least 7 weeks prior to the first day of each fiscal year, which sets forth Buyer's Product demand for such fiscal year on a monthly basis (the “
Annual Demand Forecast
”);
provided
,
however
, that for any fiscal year, such demand shall not exceed the amount of Product set forth in the Initial Annual Operating Plan for such year or that the JVC is obligated to provide to Buyer in such year pursuant to Section 1.2. The difference between Buyer's Product allocation and Annual Demand Forecast shall be known as the “
SPSW
Unsubscribed Annual Forecast
.” If Buyer's Annual Demand Forecast is less than Buyer's Product allocation for the first six months in any year pursuant to Section 1.2, then during the term of that certain Supply Agreement among the JVC, AUO and SPTL dated f even date herewith (“
AUO Supply Agreement
”), the JVC shall deliver notice to AUO that it or may subscribe to purchase the SPSW Unsubscribed Annual Forecast with respect to such six months. AUO shall confirm in writing within 7 days whether it will purchase all or a portion of the SPSW Unsubscribed Annual Forecast. If AUO's Product demand for the first six months of any fiscal year (the “
AUO Annual Demand Forecast
”) pursuant to the AUO Supply Agreement is less than AUO's Product allocation for such six month period pursuant to the AUO Supply Agreement, then during the term of this Agreement, the JVC shall deliver notice to Buyer that it may subscribe to purchase the difference between such Product allocation and the AUO Annual Demand Forecast (the “
AUO Unsubscribed Annual Forecast
”) with respect to the applicable six month period of such AUO Annual Demand Forecast. Buyer shall confirm in writing within 7 days whether it will purchase all or a portion of the AUO Unsubscribed Annual Forecast.
|
2.3
|
Final Annual Operating Plan
. The JVC will provide Buyer with an annual production forecast, issued at least 5 weeks prior to the first day of each fiscal year, setting forth the JVC's revised estimate of aggregate amount of Product that the JVC will produce in such year, which shall not exceed the aggregate amount of Product subscribed for by Buyer and AUO pursuant to Section 2.2 (the “
Final
Annual
Operating Plan
”). The Final Annual Operating Plan shall have been approved by the Board prior to its delivery to Buyer. If AUO elects not to purchase all of the SPSW Unsubscribed Annual Forecast for any six month period or if Buyer elects not to purchase all of the AUO Unsubscribed Annual Forecast for any six month period pursuant to Section 2.2, then the JVC shall use best efforts to minimize Fixed and Variable Costs for such six month period.
|
2.4
|
Initial Mid-Year Operating Plan
. The JVC will provide Buyer with an initial production forecast, issued at least 8 weeks prior to the first day of the third fiscal quarter,
|
2.5
|
Mid-Year Demand Forecast
. Buyer will provide the JVC with a demand forecast, issued at least 7 weeks prior to the first day of the third fiscal quarter, which sets forth Buyer's Product demand for the third and fourth quarter of such fiscal year on a monthly basis (the “
Mid-Year Demand Forecast
”);
provided
,
however
, that for any six month period, such demand shall not exceed the amount of Product set forth in the Initial Mid-Year Operating Plan or the amount that the JVC is obligated to provide to Buyer over the applicable six month period pursuant to Section 1.2. The difference between Buyer's Product allocation for any six month period and Mid-Year Demand Forecast for such period shall be known as the “
SPSW
Unsubscribed Mid-Year Forecast
.” If Buyer's Mid-Year Demand Forecast is less than Buyer's Product allocation for the applicable six month period pursuant to Section 1.2, then during the term of the AUO Supply Agreement, the JVC shall deliver notice to AUO that it may subscribe to purchase the SPSW Unsubscribed Mid-Year Forecast with respect to such six month period. AUO shall confirm in writing within 7 days whether it will purchase all or a portion of the SPSW Unsubscribed Mid-Year Forecast with respect to the following six months. If AUO's Product demand for the last six months of any year (the “
AUO Mid-Year Demand Forecast
”) pursuant to the AUO Supply Agreement is less than AUO's Product allocation for such six period pursuant to the AUO Supply Agreement, then during the term of this Agreement, the JVC shall deliver notice to Buyer that it may subscribe to purchase the difference between such Product allocation and the AUO Mid-Year Demand Forecast (the “
AUO Unsubscribed Mid-Year Forecast
”) with respect to the applicable six month period of such AUO Mid-Year Demand Forecast. Buyer shall confirm in writing within 7 days whether it will purchase all or a portion of the AUO Unsubscribed Mid-Year Forecast with respect to the following six months.
|
2.6
|
Final Mid-Year Operating Plan
. The JVC will provide Buyer with a production forecast, issued at least 5 weeks prior to the first day of the third fiscal quarter, which sets forth the JVC's revised estimate of aggregate amount of Product that the JVC will produce in the third and fourth quarter of such fiscal year, on a monthly basis, which shall not exceed the aggregate amount of Product subscribed for by Buyer and AUO pursuant to Section 2.5 (the “
Final
Mid-Year
Operating Plan
”). The Final Mid-Year Operating Plan shall have been approved by the Board prior to its delivery to Buyer. If AUO elects not to purchase all of the SPSW Unsubscribed Annual Forecast for any six month period or if Buyer elects not to purchase all of the AUO Unsubscribed Mid-Year Forecast for any six month period pursuant to Section 2.5, then the JVC shall use best efforts to minimize Fixed and Variable Costs for such six month period.
|
2.7
|
Monthly Demand Allocation
. The JVC will deliver to Buyer a demand allocation once per month, which sets forth the aggregate amount of Product that the JVC expects to produce during the following month and sets forth the amount of Product to be purchased by Buyer and AUO during such month based on the JVC's expected production and each of Buyer's and AUO's percentage of aggregate Product demand for such month pursuant to Sections 2.2 and 2.5 of this Agreement and the AUO Supply Agreement, as applicable for such month (the “
Monthly Demand Allocation
”). The Monthly Demand Allocation
|
2.8
|
Purchase Order
. Buyer shall deliver a Purchase Order to the JVC in the first week of the then current month to confirm purchase commitments consistent with the Monthly Demand Allocation for the subsequent month of such Monthly Demand Allocation. Purchase Orders are a binding commitment to purchase Product. The JVC shall deliver a formal acknowledgement and acceptance within two business days from the date the Purchase Order was sent to the JVC. In the event that the JVC does not receive a Purchaser Order from Buyer with respect to any given month within the first 10 days of the prior month, Buyer shall be obligated in such given month to purchase an amount of Product consistent with the Monthly Demand Allocation for such month. Buyer and AUO shall meet with the JVC monthly to review updated monthly production forecasts and rescheduling of planned production and shipments.
|
2.9
|
Binning and Testing
. The JVC shall bin and test solar cells manufactured by the JVC in accordance with SPTL Document Numbers 001-03833 Rev. *K and 001-04189 Rev. AI or as mutually agreed upon in writing by the Parties. Solar cells sorted into different bins but still conforming to applicable specifications shall be allocated between Buyer and AUO in accordance with Section 1.2 and Sections 2.1-2.10 of this Agreement and the AUO Supply Agreement.
|
2.10
|
Additional Allocations
. The JVC shall offer to sell solar cells manufactured by the JVC that do not satisfy the specifications set forth in Section 2.9, including scrap cells (collectively “
Offspec Cells
”), and such Offspec Cells shall be allocated between Buyer and AUO consistent with their respective allocations pursuant to Section 1.2 and Sections 2.1-2.10 of this Agreement and the AUO Supply Agreement. If the JVC manufactures more cells during a month than otherwise previously ordered by Buyer and AUO, then Buyer and AUO will purchase their respective allocations pursuant to Section 1.2 and Sections 2.2, 2.5, 2.7, 2.8 and 2.9 of this Agreement and the AUO Supply Agreement.
|
3.
|
PRICING
.
|
3.1
|
Product Pricing
. Prices for the Products shall be calculated as described in Exhibit A to this Agreement. Upon Buyer's prior request, and by the end of the current month, or more frequently if Buyer requests, the JVC shall submit an updated cost forecast for the current and following twelve (12) months. Offspec Cells shall have a transfer price of *** dollars ($***).
|
4.
|
LEAD-TIME; DELIVERY
.
|
4.1
|
On-Time Delivery
. The JVC will maintain On-Time Delivery Performance equal to or greater than *** percent (***%), as measured each fiscal quarter.
|
4.2
|
Shipping Specifications
. Buyer shall specify the delivery address in the Purchase Order or by separate notice. All shipping information, including that on invoices and packing labels will list the Country of Origin for all Products supplied, and must be in both text
|
4.3
|
Delivery; Title; Risk of Loss; Damage
. The JVC agrees to deliver all Products to Buyer, EXW Melaka (Incoterms 2000), and title for such Products shall pass to Buyer when risk of loss passes in accordance therewith. The JVC shall be responsible for any loss or damage to Product due to the JVC's failure to properly preserve, package, or handle the Product. All Products shall be packaged, marked, and otherwise prepared in accordance with good commercial practices to reduce the risk of damage and to be packaged in the smallest commercially acceptable form in order to enable Buyer to obtain the lowest shipping rates possible (based on volume metric dimensions) and in accordance with all applicable federal, state and local packaging and transportation laws and regulations.
|
4.4
|
Inspections after Delivery
. Products shall be subject to inspection, testing and acceptance by Buyer. Buyer shall inspect all Products within a reasonable period after arrival at Buyer's premises. Such incoming inspection shall include checks for identity, quantity, damage due to transportation and other visible damage or noncompliance with the Product Specifications. If Buyer's inspection results in multiple Products failing to meet the Product Specifications, then upon Buyer's request, the JVC shall inspect all Products delivered with such shipment to confirm compliance with Product Specifications, segregating conforming Products from nonconforming Products. The JVC shall be responsible for all costs incurred in connection with such inspection and sorting by the JVC.
|
4.5
|
Product Specification Claims
. If Buyer determines as a result of its inspection that Products fail to meet Product Specifications and/or applicable warranties set forth in this Agreement, Buyer shall notify the JVC whereupon the JVC shall have the right to undertake its own inspection. Upon the JVC's request, Buyer shall ship to the JVC, at the JVC's expense, the nonconforming Product, along with relevant information from the shipping notice. If the Product fails to meet the acceptance criteria set forth in the Product Specifications, the JVC shall make, at the JVC's expense, such adjustments or corrections, or deliver replacement Product, as may be required to satisfy the requirements. The JVC shall be responsible for costs of either disposing or returning such nonconforming Products, including shipping and insurance costs.
|
5.
|
ENGINEERING CHANGES
.
|
5.1
|
The Parties agree that further changes, modifications or amendments to the Specifications shall only be accomplished by mutual agreement between the JVC and SPSW, with the consent of AUO (during the term of the AUO Supply Agreement), and through the formal change control process set forth below:
|
(a)
|
Either Party may at any time propose changes to the Specifications by a written Engineering Change Notice (an “
ECN
”) to the other party;
provided
,
however
, that no ECN shall not be binding unless approved in writing by both Parties.
|
(b)
|
The recipient of an ECN will use all reasonable efforts to provide a detailed response within seven (7) days of receipt.
|
(c)
|
The JVC will inform Buyer of all known and likely impacts of an ECN (including but not limited to delivery scheduling and prices) on the provisions of any relevant Purchase Orders.
|
(d)
|
The Parties will endeavour to agree and implement at the earliest opportunity ECNs relating to personal and product safety.
|
(e)
|
Until an ECN and any associated impact have been agreed in writing, the Parties will continue to perform their obligations without taking account of that ECN.
|
6.
|
SUPPLY CONSTRAINTS
.
|
6.1
|
Allocation
. The JVC will notify Buyer within one (1) business day or less, if possible, whenever the JVC identifies a reasonable likelihood that there is or will be a Supply Constraint that adversely impacts either open Purchase Orders or forecasts. During any period of Supply Constraint, the JVC agrees to allocate materials and capacity to Buyer on a pro rata basis compared against all other pending Purchase Orders and production allocation rights. If JVC experiences a Supply Constraint consistently over one quarter due to a raw materials shortage, Buyer has a right to supplement with its own raw materials and provide such raw materials to the JVC until the JVC can demonstrate that it can source sufficient raw materials for its production, and in such event Buyer shall be reimbursed by the JVC for the cost of such raw materials.
|
7.
|
WARRANTIES
.
|
7.1
|
General
. The JVC represents and warrants that: (a) it is duly incorporated and validly existing in its jurisdiction of formation or organization; (b) it has full authority to enter into this Agreement; (c) this Agreement is a valid, legally binding and enforceable agreement; (d) there are no prior commitments or other obligations that prevent the JVC from fully performing all its obligations under this Agreement, and neither execution of this Agreement or performance of obligations hereunder will result in a breach of any obligations owed by the JVC under any other agreement; (e) the services to be provided in connection with the manufacture and sale of Products shall be performed in a good and workmanlike manner consistent with prevailing industry standards by competent and qualified personnel; (f) the JVC will not enter into any agreement or obligation that will conflict with the JVC obligations under this Agreement; (g) neither the JVC nor any of its Representatives has given to or received from Buyer or its Representatives any commission, fee, rebate, kickback, or unreasonable gift or entertainment of value in connection with this Agreement; (h) Buyer will receive good and marketable title to each Product free from liens or encumbrances of any nature; and (i) the Products comply with all applicable laws and regulations.
|
7.2
|
Epidemic Failure Event
. Upon occurrence of an Epidemic Failure Event, the remedies of Section 7.2(a) and Section 7.2(b) below shall apply to the entire Product population affected by the root cause failure until corrective action is complete.
|
(a)
|
Corrective Action
. Upon occurrence of an Epidemic Failure Event, Buyer shall promptly notify the JVC and AUO, and shall provide, if known and as may then exist, a description of the failure, and the suspected lot numbers, serial numbers or
|
(b)
|
Remuneration
. Upon occurrence of an Epidemic Failure Event, the JVC shall: (i) at Buyer's option: (1) either pre-emptively repair and/or replace the affected Products; or (2) provide a credit or payment to Buyer in an amount equal to the cost to Buyer for qualified, replacement Products acceptable to Buyer; and (ii) all labor, equipment and processing costs incurred by Buyer or third parties in the implementation of the corrective action program, including test procedures, test equipment, the testing of Products, the cost of pre-emptively (i.e., prior to fail) repairing and/or replacing the affected Products; and (c) reasonable freight, transportation, customs, duties, insurance, storage, handling and other incidental shipping costs incurred by Buyer in connection with the repair and/or replacement of the affected Products.
|
8.
|
PAYMENT TERMS; INVOICES
.
|
8.1
|
Payment
. Except as permitted under Section 8.2 below, payment is due within thirty (30) days after the receipt of invoice or receipt of Product, whichever is later (“
Payment Due Date
”).
|
8.2
|
Adjustments
. Buyer shall not be required to pay the portion of any invoice that is the subject of a bona fide dispute pending resolution of that dispute. Invoices will be subject to adjustment by Buyer for errors, shortages, and/or rejected Products. Payment of an invoice does not constitute Product acceptance.
|
8.3
|
Invoices
. The information on the JVC's invoice shall include, without limitation, the following (each stated separately): Purchase Order number, Buyer part number(s), quantities, unit value and settlement currency, and freight charges, if applicable. Any terms and conditions that may be printed on or attached to the JVC's invoice shall not be enforceable and shall not be incorporated into this Agreement. Invoices must be addressed to Buyer at the address set forth in Section 13.12(a), unless Buyer provides notice otherwise.
|
8.4
|
Currency
. All references to amounts payable under this Agreement or any Purchase Order shall be to the currency of the United States of America (i.e., U.S. Dollars), unless expressly stated otherwise in the applicable Purchase Order from Buyer.
|
9.
|
CONFIDENTIAL INFORMATION
.
|
9.1
|
Obligation
. The confidentiality obligations between the Parties shall be governed by the JVA.
|
10.
|
EXIT TRANSACTION
.
|
10.1
|
Exit Transaction
. Upon the time (if any) in which SPTL or its Affiliates no longer hold any shares of the JVC, the terms and conditions set forth in Exhibit B to this Agreement are deemed incorporated herein and all other terms and conditions of this Agreement shall remain in full force and effect;
provided
,
however
, that to the extent that there are any inconsistencies or ambiguities between the terms set forth in Exhibit B and the other terms of this Agreement, the terms set forth in Exhibit B shall supersede the other terms of this Agreement. Until such time, the terms set forth in Exhibit B to this Agreement shall not apply.
|
11.
|
C
OMPLIANCE PROGRAM
.
|
11.1
|
Compliance with Applicable Law
. It is Buyer's policy to comply fully with all economic sanctions and trade restrictions promulgated by the United States government. The JVC agrees to comply, in performing this Agreement, with all applicable laws, including, without limitation, all statutory and regulatory requirements under the Export Administration Regulations (15 C.F.R. § 730 et seq.) administered by the U.S. Department of Commerce; the laws, regulations, and executive orders implemented by the Office of Foreign Assets Control of the U.S. Department of the Treasury; and equivalent laws in any jurisdiction in which the JVC operates. In addition, the JVC shall comply with all laws and regulations applicable to the manufacture and sale of the Products, including, by way of example and not limitation, Executive Order 11246 as amended by Executive Order 11375 (non-discrimination in employment), the U.S. Clean Air Act of 1990, FAR 52.219-8, Utilization of Small Business Concerns (October 2000) (15. U.S.C. 637(d) (2) and (3)), and FARS 52.222-26, 52.222-35, 52.222-36 and 52.247-64. The JVC shall not use any ozone depleting substances listed in annexes A and B of the Montreal Protocol, including but not limited to chlorofluorocarbons, in the manufacture of Products. Buyer reserves the right to reject any Products manufactured utilizing or containing such materials if Buyer has not previously been notified of the same. Additional requirements set forth in Exhibit C are incorporated by reference.
|
11.2
|
Anti-Corruption Laws
. The JVC acknowledges that it has reviewed a copy (available at www.justice.gov/criminal/fraud/fcpa) of the FCPA and confirms its understanding that the FCPA prohibits the payment or giving of anything of value either directly or indirectly, to an official of a foreign government, foreign political party or official thereof, or any candidate for foreign political office, for the purpose of influencing an act or decision in his official capacity, or inducing him to use his influence with the foreign government, to assist in obtaining or retaining business for or with, or directing business to, any person. The JVC agrees that it shall comply with the FCPA and similar anti-corruption laws and will take no action that would cause either Party to be in violation of such laws. The JVC agrees to immediately notify Buyer of any request that such Party receives to take any action that might constitute, or be construed as, a violation of anti-corruption laws. The JVC agrees that Buyer is authorized to take all appropriate actions
|
11.3
|
Conflicts of Interest
. Neither the JVC nor any of its Representatives shall give to, or receive from, Buyer or its Representatives any commission, fee, rebate, or any unreasonable gift or entertainment of value in connection with this Agreement, or enter into any other business arrangement with Buyer or its Representatives, other than those contemplated by the JVA, without the prior consent of the Buyer. The JVC shall (a) promptly notify Buyer of any violation of this clause and (b) repay or credit to Buyer any consideration received as a result of such violation. The JVC shall promptly disclose to Buyer any conflict of interest between (i) the JVC and its Representatives, on the one hand, and (ii) Buyer and its Representatives, on the other hand.
|
12.
|
TERM; EVENTS OF DEFAULT; TERMINATION
.
|
12.1
|
Expiration
. The term of this Agreement shall commence on the Effective Date and continue for a period of seven (7) years (“
Initial Term
”) and shall thereafter may be renewed for additional one (1) year periods by the Buyer, in the Buyer's sole discretion;
provided
,
however
, that Buyer may terminate this Agreement under those certain circumstances set forth in the JVA; and
provided,
further
, that this Agreement shall automatically terminate upon dissolution of the JVC.
|
12.2
|
Force Majeure
. Neither Party shall be deemed to have failed to fulfil an obligation under this Agreement if the delay or failure is the result of a Force Majeure. To the extent reasonably practicable, within forty-eight (48) hours of commencement of a Force Majeure, the non-performing Party shall provide the other Party with oral notice of the Force Majeure, and within two (2) weeks of the commencement of a Force Majeure the non-performing Party shall provide the other Party with notice in the form of a letter describing in detail the particulars of the occurrence giving rise to the Force Majeure claim. The suspension of performance due to a claim of Force Majeure must be of no greater scope and of no longer duration than is required by the Force Majeure. The non-performing Party shall use reasonable efforts to overcome or mitigate the Force Majeure. Nothing in this Section 12.2 is meant to relieve the JVC's obligations under Section 7.3.
|
12.3
|
Limitation of Liability
. EXCEPT FOR EACH PARTY'S OBLIGATIONS REGARDING PROTECTION OF CONFIDENTIAL INFORMATION UNDER THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, PUNITIVE, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT (INCLUDING WITHOUT LIMITATION, LOSS OF BUSINESS, REVENUE, PROFITS, GOODWILL, USE, DATA, OR OTHER ECONOMIC ADVANTAGE), HOWEVER THEY ARISE, WHETHER IN BREACH OF CONTRACT, BREACH OF WARRANTY OR IN TORT, INCLUDING NEGLIGENCE, EVEN IF THAT PARTY HAS PREVIOUSLY BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. LIABILITY FOR DAMAGES WILL BE LIMITED AND EXCLUDED UNDER THIS
|
13.
|
MISCELLANEOUS
.
|
13.1
|
Entire Agreement
. This Agreement, the JVA and the agreements, documents and instruments to be executed and delivered pursuant hereto or thereto are intended to embody the final, complete and exclusive agreement between the Parties with respect to the matters addressed herein; are intended to supersede all prior agreements, understandings and representations written or oral, with respect thereto; and may not be contradicted by evidence of any such prior or contemporaneous agreement, understanding or representation, whether written or oral.
|
13.2
|
English Language
. All agendas, notices, other documentation relating to this Agreement shall be prepared in and entered into the English language. In the event of any dispute concerning the construction or meaning of this Agreement, the text of the Agreement as written in the English language shall prevail over any translation of this Agreement that may have been or will be made.
|
13.3
|
Interpretation
. In this Agreement: (i) headings are for convenience of reference only and shall not affect the interpretation of the provisions of this Agreement except to the extent that the context otherwise requires; (ii) words importing the singular shall include the plural and vice versa; (iii) words denoting individuals shall include any form of entity and vice versa; (iv) words denoting any gender shall include all genders; (v) where any act, matter or thing is required by this Agreement to be performed or carried out on a certain day and that day is not a Business Day, then that act, matter or thing shall be carried out or performed on the next following Business Day; (vi) unless specified otherwise, any reference herein to any Section shall be deemed to be a reference to a Section of this Agreement; (vii) any reference to any agreement, document or instrument shall refer to such agreement, document or instrument as amended, modified or supplemented; (viii) the words “include,” “including” and the derivations thereof shall not be limiting and shall be deemed to be followed by the phase “without limitation”, (ix) where there is any inconsistency between the definitions set out in this clause and the definitions set out in any Section, then for the purposes of construing such Section, the definitions set out therein shall prevail, (x) references to “$” are to the lawful currency of the United States, (xi) where any provision is qualified or phrased by reference to the ordinary course of business, such reference shall be construed as meaning the customary course of business in the country concerned and (xii) references to any “fiscal” period shall refer to such period in accordance with the JVC's fiscal year.
|
13.4
|
Counterparts
. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
|
13.5
|
Severability
. If one or more of the provisions of this Agreement shall be found, by a court with proper jurisdiction, to be illegal, invalid or unenforceable, it shall not affect the legality, validity or enforceability of any of the remaining provisions of this Agreement. The Parties agree to attempt to substitute for any illegal, invalid or unenforceable
|
13.6
|
Amendment
. This Agreement shall not be modified, amended, cancelled or altered in any way, and may not be modified by custom, usage of trade or course of dealing, except by an instrument in writing signed by the JVC (with the written consent of AUO) and SPSW. The failure to refer to this Agreement in related Purchase Order, invoices, and quotations exchanged by the Parties will not per se affect the governance of this Agreement.
|
13.7
|
Survival
. Sections 4.4, 4.5, 7.1, 7.2, 9.1, 11.1-11.3, 12.1-12.3 and 13.1-13.14 shall survive any termination or expiration of this Agreement for as long as necessary to permit their full discharge.
|
13.8
|
Waiver
. The performance of any obligation required of the JVC or AUO hereunder may be waived only by a written waiver signed by the other party (and in the case of a waiver by the JVC, with the written consent of AUO), and such waiver shall be effective only with respect to the specific obligation described. The waiver by either of the JVC or SPSW of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach of the same provision or another provision of this Agreement.
|
13.9
|
Successors and Assigns
. The provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. Notwithstanding the foregoing, this Agreement shall not be assignable or otherwise transferable by any party hereto without the prior written consent of the other parties thereto, and any purported assignment or other transfer without such consent shall be void and unenforceable;
provided
,
however
, that either of SPSW or AUO may assign this Agreement:
|
(a)
|
to any of its wholly-owned, direct or indirect subsidiaries so long as it will be made at the same time as a transfer of its (or, in the case of SPSW, SPTL's) shares in the JVC to such subsidiary specifically permitted by this Agreement; and
|
(b)
|
in connection with the sale of all of its (or, in the case of SPSW, SPTL's) shares in the JVC beneficially owned by such party as specifically provided by this Agreement.
|
13.10
|
Third-party Beneficiaries
. This Agreement is made and entered into for the sole protection and benefit of the Parties hereto, their respective permitted successors and assigns, including Buyer's Contractors, and AUO (which shall have the right to enforce this Agreement on the JVC's and/or its own behalf), and no other person or entity shall be a third-party beneficiary of, or have any direct or indirect cause of action or claim in connection with this Agreement.
|
13.11
|
Disclaimer of Agency
. The Parties are, and intend to be, independent contractors with respect to the services described in this Agreement. This Agreement shall not be deemed to constitute any Party the agent of the other Party.
|
13.12
|
Notices
. All notices, demands, requests, consents or other communications hereunder shall be in writing and shall be given by personal delivery, by express courier, by
|
(a)
|
To Buyer:
|
(b)
|
To the JVC:
|
(c)
|
To AUO:
|
13.13
|
Governing Law and Dispute Resolution
. This Agreement and all disputes arising out of or in connection with this Agreement shall be governed by, interpreted under, and construed and enforceable in accordance with, the laws of the State of California, without regard to conflicts of laws principles or the U.N. Convention on Contracts for the International Sale of Goods. Any disputes incapable of being resolved by mutual agreement of the JVC (with the written consent of AUO) and Buyer shall be handled in accordance with Section 18.2 (Arbitration) of the JVA;
provided
,
however
, that the JVC may not take any action with respect to any such disputes or arbitration or settlement thereof without the written consent of AUO. Pending resolution of any dispute, the JVC agrees to continue to fabricated and deliver Products under the terms of this Agreement as directed by Buyer.
|
13.14
|
Expenses
. Except as specifically provided for in this Agreement, each of the Parties shall bear its respective expenses, costs and fees (including attorneys' fees) in connection with the transactions contemplated hereby, including the preparation, execution and delivery of this Agreement and an exhibits hereto and compliance herewith and therewith, whether or not the transactions contemplated hereby or thereby shall be consummated.
|
|
SUNPOWER MALAYSIA MANUFACTURING SDN.BHD.
By: /s/ Thomas H. Werner
Name: Thomas H. Werner
Title: Director
|
|
SUNPOWER SYSTEMS SARL
By: /s/ Christian Tamisier
Name: Christian Tamisier
Title: Director
By: /s/ Pascal Böni
Name: Pascal Böni
Title: Director
|
|
AU OPTRONICS SINGAPORE PTE. LTD.
By: /s/ James CP Chen
Name: James Chen
Title: Director
|
1.
|
“
Actual Monthly Cost
” shall have the meaning set forth on Exhibit A.
|
2.
|
“
Affiliate
” of a Party shall mean another person or entity that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party.
|
3.
|
“
Annual Demand Forecast
” shall have the meaning set forth in Section 2.2.
|
4.
|
“
Agreement
” shall have the meaning set forth in the introductory paragraph.
|
5.
|
“
AUO
” shall have the meaning set forth in the introductory paragraph.
|
6.
|
“
AUO Supply Agreement
” shall have the meaning set forth in Section 2.2.
|
7.
|
“
AUO Unsubscribed Annual Forecast
” shall have the meaning set forth in Section 2.2.
|
8.
|
“
AUO Unsubscribed Mid-Year Forecast
” shall have the meaning set forth in Section 2.5.
|
9.
|
“
Buyer
” shall have the meaning set forth in Section 1.1.
|
10.
|
“
ECN
” shall have the meaning set forth in Section 5.1(a).
|
11.
|
“
Effective Date
” shall have the meaning set forth in the introductory paragraph.
|
12.
|
“
Epidemic Failure Event
” shall mean the occurrence of an Epidemic Failure.
|
13.
|
“
Epidemic Failure
” shall mean Product failures (i) having the same or similar cause, verified by Buyer, or an independent Third Party on behalf of Buyer (ii) occurring within *** years after the date of delivery of the Product (iii) resulting from defects in materials, workmanship, manufacturing process or design or failure to conform with the Specifications, (iv) having a one month failure rate equal to or in excess of the rate calculation defined as *** times the most current, consecutive *** month (or any other mutually agreed upon, currently monitored duration) rolling average failure rate where the failure rate is calculated by dividing the number of unit fails by the unit population or installed base (Failure Rate = N unit failures / N unit population), (v) having a failure rate of *** percent (***%) or higher, or (vi) wherein it has been determined that product poses an environmental, safety, or health issue.
|
14.
|
“
Event of Default
” shall have the meaning set forth on Exhibit B.
|
15.
|
“
FCC
” shall mean the United States Federal Communications Commission.
|
16.
|
“
FCPA
” shall mean the United States Foreign Corrupt Practices Act.
|
17.
|
“
Initial Annual Operating Plan
” shall have the meaning set forth in Section 2.1.
|
18.
|
“
Initial Mid-Year Operating Plan
” shall have the meaning set forth in Section 2.4.
|
19.
|
“
Initial Term
” shall have the meaning set forth in Section 12.1.
|
20.
|
“
Final Annual Operating Plan
” shall have the meaning set forth in Section 2.3.
|
21.
|
“
Final Mid-Year Operating Plan
” shall have the meaning set forth in Section 2.6.
|
22.
|
“
JVA
” shall have the meaning set forth in the Recitals.
|
23.
|
“
JVC
” shall have the meaning set forth in the introductory paragraph.
|
24.
|
“
Mid-Year Demand Forecast
” shall have the meaning set forth in Section 2.5.
|
25.
|
“
Monthly Demand Allocation
” shall have the meaning set forth in Section 2.7.
|
26.
|
“
Offspec Cells
” shall have the meaning set forth in Section 2.10.
|
27.
|
“
Party
” and “
Parties
” shall have the meanings set forth in the introductory paragraph.
|
28.
|
“
Payment Due Date
” shall have the meaning set forth in Section 8.1.
|
29.
|
“
Product(s)
” shall have the meaning set forth in the Recitals.
|
30.
|
“
Product Warranty
” shall have the meaning set forth on Exhibit B.
|
31.
|
“
Projected Monthly Cost
” shall have the meaning set forth on Exhibit A.
|
32.
|
“
Purchase Order
” shall mean Buyer written or electronic purchase order that Buyer may place as specified in this Agreement or otherwise on an as-needed basis. Each Purchase Order will indicate the price(s), part number(s), quantity(s), delivery date(s), and destination(s) of the requested Product(s).
|
33.
|
“
Representatives
” include a Party's Affiliates, as well as a Party and its Affiliates' directors, officers, employees, agents and advisors (including, without limitation, attorneys, accountants, consultants, bankers, financial advisors or lending institutions.
|
34.
|
“
Specifications
” shall mean (a) the specifications and or assembly drawings for the Products set forth in the applicable exhibit, and (b) references within this Agreement to controlled specifications. It is the obligation of the JVC to request any referenced documents or specifications with this Agreement and amended Exhibits.
|
35.
|
“
SPSW
” shall have the meaning set forth in the introductory paragraph.
|
36.
|
“
SPSW Annual Demand Forecast
” shall have the meaning set forth in Section 2.2.
|
37.
|
“
SPSW Mid-Year Demand Forecast
” shall have the meaning set forth in Section 2.5.
|
38.
|
“
SPSW Unsubscribed Annual Forecast
” shall have the meaning set forth in Section 2.2.
|
39.
|
“
SPSW Unsubscribed Mid-Year Forecast
” shall have the meaning set forth in Section 2.5.
|
40.
|
“
SPTL
” shall have the meaning set forth in the Recitals.
|
41.
|
Supply Constraint
” shall mean a materials or capacity constraint that could adversely affect the JVC's ability to meet the quantity requirements specified in the Purchaser Order, and/or Monthly Demand Allocation for Products.
|
42.
|
“
Value Engineering Change
” means, for the Product, an alternative technical and/or engineering solution that alters the specification of the Product and provides equivalent or better functionality at a lower cost.
|
•
|
Projected per Watt Fixed Cost allocated to Buyer is described below;
|
•
|
Projected per Watt Variable Cost allocated to Buyer is described below;
|
•
|
“
Projected Monthly Cost
” is defined as the sum of the Projected per Watt Fixed Cost and the Projected per Watt Variable Cost; and
|
•
|
Premium Percentage shall equal ***% for ***, and shall equal ***% starting in ***, subject to adjustment as set forth below.
|
•
|
Total Fixed Costs is the projected Fixed Cost to be incurred by the JVC in such month in producing the Product;
|
•
|
SPSW Demand Forecast is the total amount of Product (in Watts) to be purchased by Buyer for such month, as set forth in Buyer's Annual Demand Forecast or Mid-Year Demand Forecast, as applicable;
|
•
|
Net Unsubscribed Forecast is the total amount of Product (in Watts) of any SPSW Unsubscribed Annual Forecast or SPSW Unsubscribed Mid-Year Demand Forecast net
|
•
|
Initial Capacity Projection is the projected amount of Product (in Watts) to be produced by the JVC for such month, as set forth in the Initial Annual Operating Plan or the Initial Mid-Year Operating Plan, as applicable, for such month.
|
•
|
Total Variable Costs is the projected Variable Cost to be incurred by the JVC in such month in producing the Product;
|
•
|
Monthly Production Forecast is the projected amount of Product (in Watts) to be produced by the JVC in such month in producing the Product.
|
1.
|
PRICING
.
|
1.1
|
Cost Reductions
. It is agreed and acknowledged that the pricing shall be calculated as described in Exhibit A to this Agreement and
the JVC will work in good faith to achieve cost reductions on all materials and manufacturing process costs. The JVC will provide to Buyer an anticipated twelve (12) month cost reduction plan on a monthly basis. Allocation of costs savings shall be as follows:
|
(a)
|
Material Cost Savings
. Material cost savings developed by the JVC and accepted by Buyer will be retained by the JVC for the month in which the JVC achieved the cost savings, and thereafter, the JVC shall pass on to Buyer the cost savings through a Product price reduction.
|
(b)
|
Value Engineering
. If a Value Engineering Change is developed by the JVC and approved by Buyer, the cost savings shall be retained by the JVC for the month in which the JVC implemented the Value Engineering Change, plus five (5) succeeding quarters, and thereafter, the JVC will pass on the cost savings to Buyer through a Product price reduction. If a Value Engineering Change is developed by Buyer, the associated cost savings shall be passed on to Buyer immediately upon implementation. If the Value Engineering Change is jointly developed by Buyer and the JVC, the Parties will negotiate in good faith an equitable allocation of the cost savings which shall, in all cases, pass to Buyer through a Product price reduction no later than the next month following the month in which the Value Engineering Change was implemented. Value Engineering Changes to the Product, where Buyer is the primary design provider, shall be owned by Buyer.
|
(c)
|
Sub-tier Components
. Upon the effective date of any cost reduction in a sub-tier component, the JVC shall immediately pass on to Buyer one hundred percent (100%) of the cost savings on a forward looking, weighted average basis or as mutually agreed by the Parties.
|
1.2
|
Non-approved Charges
. Buyer shall not be liable to the JVC for any overtime charges, freight charges or component product price variances incurred by the JVC as the result of factors including, but not limited to, component purges and stop-shipments to the extent attributable to the JVC. Any other extraordinary charges must be submitted by the JVC to Buyer in writing in advance for approval.
|
2.
|
LEAD-TIME; DELIVERY
.
|
2.1
|
Delivery Delay Penalty
. Upon acceptance of the Purchase Order by the JVC, all deliveries are to be made according the committed delivery schedule. In the event of late delivery of more than *** days from the committed delivery date, the JVC shall pay as liquidated damages an amount equal to ***% of the value of the Products delayed for every
|
2.2
|
Extraordinary Transportation for Late Deliveries
. If the JVC will not, or is not reasonably likely to, deliver Product on the applicable delivery date through no fault of Buyer, after mutual consultation about the proper allocation of the expenses incurred or to be incurred as a result of the extraordinary transportation, the JVC shall use any extraordinary transportation, including air transportation, to deliver Product at the earliest possible date.
|
2.3
|
Inspection before Delivery
. Buyer may, in its sole discretion, but not more than twice a year, perform a source inspection of the Products at the JVC's facility. The applicable testing and inspection process shall be set forth in the applicable Product Specification. The source inspection shall be at the JVC's facility and shall be made within thirty (30) days after the Products are available and ready for inspection, provided that the JVC delivers notice to Buyer that the Product shall be ready for source inspection as soon as practicable and in any event at least thirty (30) days prior to the date when Products are expected to be available and ready for inspection. Should the Product fail the initial inspection in accordance with the mutually agreed inspection standard before delivery, the JVC shall reimburse Buyer for the additional actual costs, including airfare, meals, and lodging, incurred by Buyer arising from any additional inspection. The JVC shall be responsible for its own additional costs incurred. Buyer's Representatives may witness any test necessary or appropriate to demonstrate the performance of Products. Upon Buyer's request, the JVC shall provide any relevant equipment performance test data. Buyer's approval for release shall not constitute a waiver of its right to inspect Products after delivery to the Buyer's facility.
|
3.
|
WARRANTIES
.
|
3.1
|
The JVC Warranty Term
. The JVC represents and warrants that all Products delivered to Buyer hereunder shall comply with the mutually agreed upon warranty terms (the “
Product Warranty
”) for the warranty period set forth therein. The parties shall discuss and agree in good faith on the warranty terms comparable to the general industry standard.
|
4.
|
EVENTS OF DEFAULT
.
|
4.1
|
Events of Default
. The occurrence of any of the following shall constitute an “
Event of Default
” by the JVC under this Agreement: (a) if the representations and warranties of the JVC are materially incorrect or inaccurate, and the JVC fails to remedy such misstatements or inaccuracies within thirty (30) days of delivery of notice of such misstatements or inaccuracies by SPSW; (b) if the JVC fails to comply with the terms of this Agreement, and such failure is not cured within thirty (30) days of delivery of notice of such failure by SPSW; or (c) if the JVC becomes subject to an assignment for the
|
4.2
|
Rights upon Event of Default
. Upon an Event of Default by the JVC, SPSW may immediately terminate this Agreement and/or any outstanding Purchase Orders by sending notice of its intent to the JVC. Upon termination of this Agreement, SPSW shall be entitled to receive from the JVC payment for all actual damages incurred, subject to Section 12.3 of this Agreement, and all outstanding amounts owed by the JVC to SPSW shall accelerate and become due and payable;
provided
,
however
, that outstanding transactions under accepted Purchase Orders which are not terminated shall survive termination until completed.
|
TRANSFER PRICING PROCESS
|
|
|
|
|
|
||
|
FORECAST
|
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
NOTES
|
|
|
Initial Forecast
|
|
|
|
|
|
|
1
|
|
Total Production Forecast (MW)
|
50.0
|
50.0
|
50.0
|
50.0
|
Forecasted by JV
|
2
|
|
Party A Allocated %
|
0.2
|
0.2
|
0.2
|
0.2
|
Based on contractual amounts
|
3
|
|
Party S Allocated %
|
0.8
|
0.8
|
0.8
|
0.8
|
Based on contractual amounts
|
4
|
|
Party A Allocated MW
|
10.0
|
10.0
|
10.0
|
10.0
|
Equals Row 1 * Row 2
|
5
|
|
Party S Allocated MW
|
40.0
|
40.0
|
40.0
|
40.0
|
Equals Row 1 * Row 3
|
|
|
|
|
|
|
|
|
|
Final Production Plan
|
|
|
|
|
|
|
6
|
|
Total Production (MW)
|
50.0
|
45.0
|
45.0
|
37.5
|
MW based on demand submitted
|
7
|
|
Party A Demand (MW)
|
10.0
|
5.0
|
15.0
|
7.5
|
MW based on demand submitted
|
8
|
|
Party S Demand (MW)
|
40.0
|
40.0
|
30.0
|
30.0
|
MW based on demand submitted
|
9
|
|
Party A Unsubscribed MW
|
0.0
|
5.0
|
0.0
|
2.5
|
Equals shortfall minus any MW claimed by partner
|
10
|
|
Party S Unsubscribed MW
|
0.0
|
0.0
|
5.0
|
10.0
|
Equals shortfall minus any MW claimed by partner
|
|
|
|
|
|
|
|
|
|
Cost Allocation
|
|
|
|
|
|
|
11
|
|
Party A - % of Variable Costs
|
0.2
|
0.11
|
0.33
|
0.2
|
Equals Row 7 / Row 6
|
12
|
|
Party S - % of Variable Costs
|
0.8
|
0.89
|
0.67
|
0.8
|
Equals Row 8 / Row 6
|
13
|
|
Party A - % of Fixed Costs
|
0.2
|
0.2
|
0.3
|
0.2
|
Equals (Row 7 + Row 9) / Row 1
|
14
|
|
Party S - % of Fixed Costs
|
0.8
|
0.8
|
0.7
|
0.8
|
Equals (Row 8 + Row 10) / Row 1
|
|
|
|
|
|
|
|
|
|
Standard Costs
|
|
|
|
|
|
|
|
Total Projected Costs
|
|
|
|
|
|
|
15
|
|
Total Variable Costs
|
***
|
***
|
***
|
***
|
Assumes ***/W variable costs
|
16
|
|
Total Fixed Costs
|
***
|
***
|
***
|
***
|
Assumes ***/W fixed costs for full production
|
17
|
|
Total Costs
|
***
|
***
|
***
|
***
|
Equals Row 15 + Row 16
|
18
|
|
Total Costs/W
|
***
|
***
|
***
|
***
|
Equals Row 17 / Row 6
|
19
|
|
Fully Production Cost/W
|
***
|
***
|
***
|
***
|
Used to determine cost improvement trigger
|
|
Party A
|
|
|
|
|
|
|
20
|
|
Total Variable Costs
|
***
|
***
|
***
|
***
|
Equals Row 11 * Row 15
|
21
|
|
Total Fixed Costs
|
***
|
***
|
***
|
***
|
Equals Row 13 * Row 16
|
22
|
|
Total Costs
|
***
|
***
|
***
|
***
|
Equals Row 20 + Row 21
|
23
|
|
Total Costs/W
|
***
|
***
|
***
|
***
|
Equals Row 22 / Row 7
|
|
Party S
|
|
|
|
|
|
|
24
|
|
Total Variable Costs
|
***
|
***
|
***
|
***
|
Equals Row 12 * Row 15
|
25
|
|
Total Fixed Costs
|
***
|
***
|
***
|
***
|
Equals Row 14 * Row 16
|
26
|
|
Total Costs
|
***
|
***
|
***
|
***
|
Equals Row 24 + Row 25
|
27
|
|
Total Costs/W
|
***
|
***
|
***
|
***
|
Equals Row 26 / Row 8
|
|
Transfer Price
|
|
|
|
|
|
|
28
|
|
Mark-up
|
***
|
***
|
***
|
***
|
Assumption - based on cost improvements
|
29
|
|
Party A Transfer Price
|
***
|
***
|
***
|
***
|
Equals Row 23 * (1 + Row 28)
|
30
|
|
Party S Transfer Price
|
***
|
***
|
***
|
***
|
Equals Row 27 * (1 + Row 28)
|
|
True-UP
|
|
|
|
|
|
|
31
|
|
Quarter-end True-up
|
***
|
***
|
***
|
***
|
Assumption
|
32
|
|
Net Party A Transfer Price
|
***
|
***
|
***
|
***
|
Equals Row 29 + Row 31
|
33
|
|
Net Party S Transfer Price
|
***
|
***
|
***
|
***
|
Equals Row 30 + Row 31
|
SUNPOWER TECHNOLOGY, LTD.
By: /s/ Thomas H. Werner
Name: Thomas H. Werner
Title: Director
|
AU OPTRONICS SINGAPORE PTE. LTD.
By: /s/ James CP Chen
Name: James Chen
Title: Director
|
SUNPOWER MALAYSIA MANUFACTURING SDN.BHD.
By: /s/ Thomas H. Werner
Name: Thomas H. Werner
Title: Director
|
|
SunPower:
|
|
|
|
SUNPOWER CORPORATION,
a Delaware corporation
By: /s/ Dennis V. Arriola
Name: Dennis V. Arriola
Title: Executive Vice President and CFO
|
|
Third Party Obligors:
|
|
|
|
SUNPOWER NORTH AMERICA, LLC,
a Delaware limited liability company
By: /s/ Dennis V. Arriola
Name: Dennis V. Arriola
Title: Chief Financial Officer
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SUNPOWER CORPORATION, SYSTEMS,
a Delaware corporation
By: /s/ Dennis V. Arriola
Name: Dennis V. Arriola
Title: Senior Vice President and CFO
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Bank:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association
By: /s/ Matt Servatius
Name: Matt Servatius
Title: Vice President
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1
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I have reviewed this Quarterly Report on Form 10-Q of SunPower Corporation;
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2
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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5
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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/S/ THOMAS H. WERNER
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Thomas H. Werner
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President and Chief Executive Officer
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(Principal Executive Officer)
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1
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I have reviewed this Quarterly Report on Form 10-Q of SunPower Corporation;
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2
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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5
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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/S/ DENNIS V. ARRIOLA
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Dennis V. Arriola
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Executive Vice President and Chief Financial Officer
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(Principal Financial and Accounting Officer)
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/S/ THOMAS H. WERNER
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Thomas H. Werner
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President and Chief Executive Officer
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(Principal Executive Officer)
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/S/ DENNIS V. ARRIOLA
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Dennis V. Arriola
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Executive Vice President and Chief Financial Officer
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(Principal Financial and Accounting Officer)
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