(5) Income taxes for fiscal 2013 included tax benefits related to two non-U.S. jurisdictions of $10 million for the favorable resolution of certain prior year tax matters, which was previously reserved as an uncertain tax position, and $9 million for a favorable change in tax law applicable to prior years. Income taxes for fiscal 2012 included tax benefits of $56 million related to the favorable resolution of certain prior year tax matters, which were previously reserved as uncertain tax position. Remaining taxes for fiscal 2013 and 2012, respectively, primarily reflect taxes on the company's non-U.S. operations. The company has a valuation allowance for its net deferred tax asset associated with its U.S. operations. The (provision) benefit for taxes on U.S. operations in fiscal 2013 and 2012 was substantially offset by changes in the valuation allowance.
(6) During the fourth quarter of fiscal 2013, the company borrowed $312 million under a four-year note, collateralized by a security interest in certain production equipment. Principal is payable in equal quarterly installments, commencing after November, 2013. Interest accrues at a variable rate equal to the three-month LIBOR rate plus a margin of 3.25% per annum, payable quarterly in arrears. Also during the fourth quarter of fiscal 2013, the company entered into a variable-for-fixed interest rate swap calculated on an aggregate notional amount equal to the scheduled outstanding balance of the loan. The interest rate swap effectively fixed the rate at 4.2% per annum. On February 12, 2013, the company issued $300 million of 1.625% Convertible Senior Notes due February 2033 (the "2033E Notes") and $300 million of 2.125% Convertible Senior Notes due February 2033 (the "2033F Notes" and together with the 2033E Notes, the "2033 Notes"). Issuance costs for the 2033 Notes totaled $16 million. The initial conversion rate for the 2033 Notes is 91.4808 shares of common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $10.93 per share of common stock. Upon issuance of the 2033 Notes, the company recorded $526 million of debt, $72 million of additional capital and $14 million of deferred debt issuance costs (included in other noncurrent assets). The difference between the debt recorded at inception and the principal amount ($31 million for the 2033E Notes and $43 million for the 2033F Notes) is being accreted to principal as interest expense through February 2018 for the 2033E Notes and February 2020 for the 2033F Notes, the expected life of the notes. Concurrent with the issuance of the 2033 Notes, the company entered into capped call transactions (the "2033 Capped Calls") that have initial strike prices of approximately $10.93 per share, subject to certain adjustments, which was set to equal the initial conversion price of the 2033 Notes. The 2033 Capped Calls have a cap price of $14.51 per share and cover an approximate combined total of 54.9 million shares of common stock. The 2033 Capped Calls are intended to reduce the potential dilution upon conversion of the 2033 Notes. The company paid $48 million to purchase the 2033 Capped Calls. The 2033 Capped Calls are considered capital transactions and the related cost was recorded as a charge to additional capital. In connection with the offering of the 2033 Notes, on February 12, 2013, the company repurchased $464 million of aggregate principal amount of its 1.875% Convertible Senior Notes due June 2014 (the "2014 Notes") for $477 million. The repurchase resulted in the derecognition of $431 million in debt for the principal amount (net of $33 million of debt discount) and $15 million in additional capital. The company recognized a charge of $31 million in the second quarter of fiscal 2013 associated with the early repurchase. During the first quarter of fiscal 2013, the company entered into two credit facilities. The first was a three-year revolving credit facility, under which the company can draw up to $255 million. Amounts drawn would be collateralized by a security interest in certain accounts receivables. As of August 29, 2013, the company had not drawn any amounts under this facility. The second was a term note providing for borrowing of up to $214 million. Amounts drawn are payable in 10 equal semi-annual installments beginning six months after the draw date. As of August 29, 2013, the note had been fully drawn and the outstanding balance was $191 million.
CONTACT: Kipp A. Bedard Investor Relations firstname.lastname@example.org (208) 368-4465 Daniel Francisco Media Relations email@example.com (208) 368-5584
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