13. Related Party Transactions
Refer to Note 1 for discussion on
corporate expense allocations.
Sales to Affiliates
Sales to affiliates represent polysilicon sales made to subsidiaries of our Parent which are then sold to external parties. These products were sold on a cost
plus basis for polysilicon mainly produced at our Merano, Italy polysilicon facility. After shuttering our Merano, Italy polysilicon facility during the fourth quarter of 2011, we significantly reduced our sales to affiliates since subsidiaries of
our Parent purchased polysilicon externally or sourced polysilicon through its other subsidiaries. Net sales to affiliates were $6.8 million, $147.0 million, $5.1 million and $3.3 million for the years ended December 31,
2012 and 2011 and for the six months ended June 30, 2013 and 2012, respectively.
Due to/from Affiliates
We ship intermediate products such as polysilicon, trichlorosilane gas, ingots and scrap wafers and other inventory items to SunEdisons subsidiaries in
the United States, Europe and Asia for use in their operations. Any sales related to these shipments are recognized as an accounts receivable, affiliate in the combined balance sheet and revenue is recognized as net sales to affiliates in the
combined statement of operations. Any intracompany sales between our subsidiaries are eliminated. SunEdison performs financing, cash management, treasury and other services for us on a centralized basis and the related amounts due to SunEdison are
recorded as an accounts payable, affiliate in the combined balance sheet. As of December 31, 2012, December 31, 2011 and June 30, 2013, we had $89.1 million, $20.4 million and $19.4 million, respectively, of receivables
due from affiliates, and $102.0 million, $59.7 million and $111.9 million, respectively, of payables due to affiliates.
Receivable and DebtAffiliates
We have various note receivables from certain SunEdison subsidiaries. As of December 31, 2012,
December 31, 2011 and June 30, 2013, we had $158.5 million, $111.5 million and $181.6 million, respectively, of note receivables due from affiliates. Interest is calculated based on fixed rates ranging from 2% to 3%. The
notes mature one year or less but are usually renewed and are therefore considered long-term.
We have long-term intercompany borrowings with our Parent
of $129.4 million, $127.3 million and $76.0 million as of December 31, 2012, December 31, 2011 and June 30, 2013, respectively. The weighted-average costs of borrowing were 0.5%, 1.4% and 0.5% as of December 31,
2012, December 31, 2011 and June 30, 2013, respectively. Interest is determined based on the Euribor one year rate. The payments on long-term affiliate debt are due in 2049. There are no guarantees or debt covenants related to these
Interest income on intercompany notes receivable and interest expense on intercompany borrowings is recorded as interest
(income) expense, netaffiliates on the combined statements of operations.
Collateralized Debt Obligations
Certain of our assets are pledged as collateral under SunEdisons revolving credit facility and second lien term loan credit agreement. The indebtedness
related to these SunEdison debt obligations has not been allocated to us but our pledged assets may be seized or sold in the event SunEdison defaults on these debt obligations to satisfy the guaranteed obligations. However, we do not believe it is
likely SunEdison will default on these debt obligations. Upon consummation of the Transactions, these assets will no longer be pledged as collateral under SunEdisons credit facility or term loan.