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8-K


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 8-K

 
 
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 17, 2016
 
 
SunPower Corporation
(Exact name of registrant as specified in its charter)

 
 
001-34166
(Commission File Number)
 
Delaware
94-3008969
(State or other jurisdiction
of incorporation)
(I.R.S. Employer
Identification No.)

77 Rio Robles, San Jose, California 95134
(Address of principal executive offices, with zip code)

(408) 240-5500
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 





Item 1.01.
Entry into a Material Definitive Agreement.

On February 17, 2016, SunPower Corporation and its subsidiaries SunPower Corporation, Systems; SunPower North America LLC; and SunPower Capital, LLC entered into the Second Amendment (the “Amendment”) to the Revolving Credit Agreement with Credit Agricole Corporate and Investment Bank, as “Administrative Agent,” and the other lenders party thereto, dated as of July 3, 2013 and as amended from time to time.

The Amendment increased the amount the Company may borrow to up to $300,000,000 and established a sublimit of $200,000,000 for letters of credit.

The Company will be required to pay interest on letters of credit under the Amendment of (a) with respect to any performance letter of credit, an amount ranging from 0.90% to 1.20% (depending on the Company's leverage ratio from time to time); and (b) with respect to any other letter of credit, an amount ranging from 1.50% to 2.00% (depending on the Company's leverage ratio from time to time). 

Item 2.02.
Results of Operations and Financial Condition.

On February 17, 2016, SunPower Corporation issued a press release, included as Exhibit 99.1 hereto, announcing its results of operations for its fourth fiscal quarter ended January 3, 2016.

The information furnished in Item 2.02 and Item 9.01 of this Current Report on Form 8-K and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 2.03.
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information contained in Item 1.01 above is incorporated herein by reference.

Item 9.01.
Financial Statements and Exhibits.

(d) Exhibits
 
Exhibit No.
Description
 
 
99.1
Press release dated February 17, 2016




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
SUNPOWER CORPORATION
 
 
 
February 17, 2016
By:
/S/ CHARLES D. BOYNTON
 
Name:
Charles D. Boynton
 
Title:
Executive Vice President and
Chief Financial Officer





EXHIBIT INDEX
 
Exhibit No.
Description
 
 
99.1
Press release dated February 17, 2016



Exhibit


Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:

Investors
Bob Okunski
408-240-5447
Bob.Okunski@sunpower.com

Media
Natalie Wymer
408-457-2348
Natalie.Wymer@sunpower.com


SunPower Reports Fourth Quarter and Fiscal Year 2015 Results
Record Annual EBITDA of More Than $550 Million


SAN JOSE, Calif., February 17, 2016 - SunPower Corp. (NASDAQ: SPWR) today announced financial results for its fourth quarter and fiscal year ended Jan. 3, 2016.

($ Millions, except percentages and per-share data)
4th Quarter 2015
3rd Quarter 2015
4th Quarter 2014
FY 2015
FY 2014
GAAP revenue
$374.4
$380.2
$1,164.2
$1,576.5
$3,027.3
GAAP gross margin
5.4%
16.5%
22.3%
15.5%
20.6%
GAAP net income (loss)
$(127.6)
$(56.3)
$134.7
$(187.0)
$245.9
GAAP net income (loss) per diluted share
$(0.93)
$(0.41)
$0.83
$(1.39)
$1.55
Non-GAAP revenue1
$1,363.9
$441.4
$609.7
$2,612.7
$2,618.7
Non-GAAP gross margin1
28.8%
17.7%
20.4%
23.9%
19.6%
Non-GAAP net income1
$270.4
$20.5
$39.4
$337.8
$205.1
Non-GAAP net income per diluted share1
$1.73
$0.13
$0.26
$2.17
$1.33
EBITDA1
$379.9
$54.2
$84.9
$556.5
$373.9
1 
Information about SunPower's use of non-GAAP financial information is provided under "Use of Non-GAAP Financial Measures" below.

"2015 was a transformational year for the solar industry as increasing demand, favorable policy developments and broad global support for renewables created strong industry growth fundamentals. SunPower benefited from these trends as we exceeded our forecasts and closed out the year with record fourth quarter and full year non-GAAP 2015 results. During the year, we executed on our technology roadmaps, added new products and launched our joint YieldCo vehicle 8point3 Energy Partners. We are well positioned to capitalize on the continued growing adoption of solar in North America as well as key international markets such as China and Latin America. We also expanded our global power plant footprint while completing the world’s largest solar power plant, located in California. In distributed generation, we made further investments in Smart Energy and launched a range of complete customer solutions for the commercial market that will significantly reduce cost while improving performance,” said Tom Werner, SunPower president and CEO. “Upstream, we again delivered record output and yield while ramping our new Fab 4 cell manufacturing facility for volume production in 2016. We made strong progress on our cost reduction roadmaps and in the fourth quarter announced the launch of our new lower cost, high efficiency Performance Series product line which enhances our ability to rapidly expand SunPower’s global footprint with significantly lower capital cost.

“In the power plant segment for the fourth quarter, we successfully met our project commitments, added to our pipeline and further built out our U.S. HoldCo asset base, improving visibility for drop downs to 8point3 Energy Partners in 2016. Specifically, our 135-megawatt (MW) Quinto project achieved commercial operation during the quarter and is now generating energy for 8point3 Energy Partners. Our quarterly power plant segment results benefited from strong Engineering,




Procurement and Construction (EPC) execution as our 50-MW Hooper project for Xcel was completed a quarter ahead of schedule. We also commenced construction on our 100-MW project for NV Energy in Nevada and recently dedicated our second 15-MW project at Nellis Air Force base. Going forward, we see significant upside opportunity in the U.S. power plant market as the recent extension of the U.S. federal solar investment tax credit (ITC) provides a sustainable, long term market structure to support further growth. Internationally, we continue to expand our footprint into new markets and recently announced our first project in Mexico, a 36-MW project for Aeropuertos Del Sureste (ASUR), a leading airport operator in the country. This power purchase agreement (PPA) is one of the first significant solar PPAs in Mexico and extends our position as a leader in international solar development. Construction of this project will begin this year and is expected to be completed in 2017.

“We also executed well in our residential business. In North America, our performance was solid as our fourth quarter results exceeded plan, we gained market share and broadened our leasing footprint as megawatt installed growth exceeded 45 percent year over year. Additionally, based on our fourth quarter bookings, we expect continued strong residential demand in 2016. Finally, we also expanded our utility partnership strategy during the quarter as we announced an innovative agreement with TXU Energy to bring SunPower solar solutions to the Texas market.

In our commercial segment, we are well positioned for 2016, having added projects to our backlog and building our pipeline to over $1 billion. As we announced during the quarter, we launched our Helix platform, the world’s first fully-integrated solar solution for commercial customers. Designed for the rooftop, carport and commercial ground-mount markets, Helix delivers significantly lower costs and improved reliability while reducing installation times. We are currently shipping our first systems, and interest from both new and existing customers is significant. Finally, we were pleased to announce that we recently completed our first commercial project drop down to 8point3 Energy Partners. This 20-MW project for Kern County School District consists of 27 carports at various locations across the district and will be constructed in three phases with completion scheduled before the end of 2016,” Werner concluded.

“Solid execution across all segments, along with the ability to leverage our development capabilities, enabled us to post record results for the fourth quarter and 2015 fiscal year,” said Chuck Boynton, SunPower CFO. “Our balance sheet remains strong as we successfully executed a new convertible bond offering and recently renewed our revolver including increasing its size to $300 million. With an approximately $1 billion cash position and our undrawn revolver, we have the resources we need to continue our long term growth initiatives. Finally, we prudently managed our working capital during the quarter as we improved our performance in a number of key cash metrics while adding assets to our HoldCo base.”

Fourth quarter and fiscal year 2015 GAAP and non-GAAP results reflect a charge of $33 million, or approximately 20 cents on a non-GAAP basis, related to the contracted sale, at current market based rates, of above market priced polysilicon acquired through a long term supply agreement.

Additionally, fourth quarter fiscal 2015 non-GAAP results include net adjustments that, in the aggregate, increased non-GAAP net income by $398.0 million, including $394.1 million related to 8point3 Energy Partners, $13.1 million related to utility and power plant projects, $2.0 million related to sale of operating lease assets, $16.5 million related to stock-based compensation expense, $1.7 million related to the 8point3 Energy Partners initial public offering, and $3.3 million related to other adjustments, offset by $32.7 million related to tax effect.

Financial Outlook
Given strong global demand as well as a favorable policy environment, the company remains very confident that it can achieve its long term strategic and financial goals by leveraging its flexible business model to drive sustainable growth. With the recent extension of the ITC, the company anticipates increasing its investment in the United States while maintaining its global go-to-market focus.

The company’s fourth quarter financial results reflected a shift of approximately $65 million in EBITDA originally forecasted to be recognized in fiscal year 2016. This shift was primarily due to earlier than forecasted project completions in power plants, accelerated recognition of residential leases and earlier than anticipated benefits related to 8point3 Energy Partners. As a result of this approximately $65 million EBITDA shift, the company now expects 2016 EBITDA to be in the range of $450 million to $500 million compared to previous guidance of $515 million to $565 million. For 2017, the company believes that with the ITC extension, further investment in the U.S. market and a strong global project pipeline, it is well positioned to sustainably grow its EBITDA.

For fiscal year 2016, the company’s non-GAAP expectations are as follows: revenue of $3.2 billion to $3.4 billion, gross margin of 14 percent to 16 percent, capital expenditures of $210 million to $240 million and gigawatts deployed in the range of 1.7 GW to 2.0 GW. On a GAAP basis, the company expects 2016 revenue of $2.2 billion to $2.4 billion, gross margin of 17




percent to 19 percent and net income of $0 million to $50 million. Fiscal year 2016 GAAP guidance includes the impact of the company’s HoldCo strategy and deferrals due to real estate accounting.

The company’s first quarter fiscal 2016 non-GAAP guidance is as follows: revenue of $290 million to $340 million, gross margin of 12 percent to 13 percent, EBITDA of $0 to $25 million and megawatts deployed in the range of 315 MW to 340 MW. On a GAAP basis, the company expects revenue of $280 million to $330 million, gross margin of 11 percent to 12 percent and net loss of $115 million to $90 million. First quarter 2016 GAAP guidance includes the impact of the company’s HoldCo strategy and deferrals due to real estate accounting.

The company will host a conference call for investors this afternoon to discuss its fourth quarter and fiscal year 2015 performance at 1:30 p.m. Pacific Time. The call will be webcast and can be accessed from SunPower’s website at http://investors.sunpower.com/events.cfm.

This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its fourth quarter 2015 performance on the Events and Presentations section of the SunPower Investor Relations page at http://investors.sunpower.com/events.cfm. The capacity of power plants in this release is described in approximate megawatts on a direct current (dc) basis unless otherwise noted.

About SunPower
As one of the world’s most innovative and sustainable energy companies, SunPower Corp. (NASDAQ: SPWR) provides a diverse group of customers with complete solar solutions and services. Residential customers, businesses, governments, schools and utilities around the globe rely on SunPower’s more than 30 years of proven experience. From the first flip of the switch, SunPower delivers maximum value and performance throughout the long life of every solar system. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, and North and South America. For more information about how SunPower is changing the way our world is powered, visit www.sunpower.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) strong industry growth fundamentals, including continued growing adoption of solar in key markets; (b) our ability to reduce costs while improving product performance; (c) timing of volume production at our Fab 4 cell manufacturing facility and production of our Performance Series product line enhancing our ability to rapidly expand our global footprint with significantly lower capital cost; (d) improved visibility for drop downs to 8point3 Energy Partners; (e) upside opportunity in the U.S. power plant market; (f) the impact of certain government policies supporting adoption of solar, including the U.S. federal solar investment tax credit (ITC); (g) our continued expansion into new markets; (h) construction schedules; (i) our backlog and project pipeline; (j) the adequacy of our financial resources for executing on our initiatives to drive long term strategic and financial goals, including sustainable growth of EBITDA; (k) first quarter fiscal 2016 guidance, including non-GAAP revenue, gross margin, EBITDA, and MW deployed, as well as GAAP revenue, gross margin, and net loss; (l) full year fiscal 2016 guidance, including non-GAAP revenue, gross margin, capital expenditures, and gigawatts deployed, as well as GAAP revenue, gross margin and net income; and (m) full year fiscal 2017 guidance, including non-GAAP EBITDA.  These forward-looking statements are based on our current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (1) competition in the industry and downward pressure on average selling prices; (2) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (3) risks relating to our residential lease business, including risks of customer default, challenges securing lease financing, and declining conventional electricity prices; (4) our ability to meet our cost reduction targets; (5) regulatory changes and the availability of economic incentives promoting use of solar energy; (6) challenges inherent in constructing and maintaining certain of our large projects; (7) the success of our ongoing research and development efforts and our ability to commercialize new products and services, including products and services developed through strategic partnerships; (8) fluctuations in our operating results; (9) maintaining or increasing our manufacturing capacity, containing associated costs, and manufacturing difficulties that could arise; (10) challenges managing our joint ventures and partnerships; (11) challenges executing on our HoldCo and YieldCo strategies, including the risk that 8point3 Energy Partners may be unsuccessful; and (12) fluctuations or declines in the performance of our solar panels and other products and solutions.  A detailed discussion of these factors and other risks that affect our business is included in filings we make with the Securities and Exchange Commission (SEC) from time to time, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.”  Copies of these filings are available online from the SEC or on the SEC Filings section of our Investor Relations website at investors.sunpower.com.  All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events.

©2016 SunPower Corporation. All rights reserved. SUNPOWER and the SUNPOWER logo are trademarks or registered trademarks of SunPower Corporation in the U.S. and other countries as well. All other trademarks are the property of their respective owners.





SUNPOWER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


 
Jan. 3, 2016
 
Dec. 28, 2014
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
954,528

 
$
956,175

Restricted cash and cash equivalents, current portion
24,488

 
18,541

Accounts receivable, net
190,448

 
504,316

Costs and estimated earnings in excess of billings
38,685

 
187,087

Inventories
382,390

 
208,573

Advances to suppliers, current portion
85,012

 
98,129

Project assets - plants and land, current portion
479,452

 
101,181

Prepaid expenses and other current assets
359,517

 
328,845

Total current assets
2,514,520

 
2,402,847

 
 
 
 
Restricted cash and cash equivalents, net of current portion
41,748

 
24,520

Restricted long-term marketable securities
6,475

 
7,158

Property, plant and equipment, net
731,230

 
585,344

Solar power systems leased and to be leased, net
531,520

 
390,913

Project assets - plants and land, net of current portion
5,072

 
15,475

Advances to suppliers, net of current portion
274,085

 
311,528

Long-term financing receivables, net
334,791

 
269,587

Goodwill and other intangible assets, net
119,577

 
37,981

Other long-term assets
297,975

 
300,229

Total assets
$
4,856,993

 
$
4,345,582

 
 
 
 
Liabilities and Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
514,654

 
$
419,919

Accrued liabilities
313,497

 
331,034

Billings in excess of costs and estimated earnings
115,739

 
83,440

Short-term debt
21,041

 
18,105

Convertible debt, current portion
—

 
245,325

Customer advances, current portion
33,671

 
31,788

Total current liabilities
998,602

 
1,129,611

 
 
 
 
Long-term debt
478,948

 
214,181

Convertible debt, net of current portion
1,110,960

 
692,955

Customer advances, net of current portion
126,183

 
148,896

Other long-term liabilities
564,557

 
555,344

Total liabilities
3,279,250

 
2,740,987

 
 
 
 
Redeemable noncontrolling interests in subsidiaries
69,104

 
28,566

 
 
 
 




Equity:
 

 
 

Preferred stock
—

 
—

Common stock
137

 
131

Additional paid-in capital
2,359,917

 
2,219,581

Accumulated deficit
(747,617
)
 
(560,598
)
Accumulated other comprehensive loss
(8,023
)
 
(13,455
)
Treasury stock, at cost
(155,265
)
 
(111,485
)
Total stockholders' equity
1,449,149

 
1,534,174

Noncontrolling interests in subsidiaries
59,490

 
41,855

Total equity
1,508,639

 
1,576,029

Total liabilities and equity
$
4,856,993

 
$
4,345,582






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 3, 2016
 
Sept. 27, 2015
 
Dec. 28, 2014
 
Jan. 3, 2016
 
Dec. 28, 2014
Revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
$
172,428

 
$
163,563

 
$
181,137

 
$
643,520

 
$
655,936

Commercial
 
80,113

 
84,983

 
105,407

 
277,143

 
361,828

Power Plant
 
121,823

 
131,672

 
877,694

 
655,810

 
2,009,501

Total revenue
 
374,364

 
380,218

 
1,164,238

 
1,576,473

 
3,027,265

Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
142,287

 
126,411

 
157,571

 
508,449

 
541,812

Commercial
 
81,541

 
72,337

 
105,841

 
259,600

 
326,324

Power Plant
 
130,233

 
118,826

 
641,347

 
563,778

 
1,534,002

Total cost of revenue
 
354,061

 
317,574

 
904,759

 
1,331,827

 
2,402,138

Gross margin
 
20,303

 
62,644

 
259,479

 
244,646

 
625,127

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
32,362

 
24,973

 
22,725

 
99,063

 
73,343

Selling, general and administrative
 
105,643

 
81,109

 
74,500

 
345,486

 
288,321

Restructuring charges
 
335

 
726

 
13,213

 
6,391

 
12,223

Total operating expenses
 
138,340

 
106,808

 
110,438

 
450,940

 
373,887

Operating income (loss)
 
(118,037
)
 
(44,164
)
 
149,041

 
(206,294
)
 
251,240

  Other expense, net
 
(13,282
)
 
(11,949
)
 
(17,637
)
 
(36,017
)
 
(66,626
)
Income (loss) before income taxes and equity in earnings of unconsolidated investees
 
(131,319
)
 
(56,113
)
 
131,404

 
(242,311
)
 
184,614

Provision for income taxes
 
(28,778
)
 
(36,224
)
 
(11,628
)
 
(66,694
)
 
(8,760
)
Equity in earnings of unconsolidated investees
 
462

 
5,052

 
1,833

 
9,569

 
7,241

Net income (loss)
 
(159,635
)
 
(87,285
)
 
121,609

 
(299,436
)
 
183,095

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
32,014

 
30,959

 
13,106

 
112,417

 
62,799

Net income (loss) attributable to stockholders
 
$
(127,621
)
 
$
(56,326
)
 
$
134,715

 
$
(187,019
)
 
$
245,894

 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to stockholders:
 
 
 
 
 
 
 
 
 
 
- Basic
 
$
(0.93
)
 
$
(0.41
)
 
$
1.03

 
$
(1.39
)
 
$
1.91

- Diluted
 
$
(0.93
)
 
$
(0.41
)
 
$
0.83

 
$
(1.39
)
 
$
1.55

Weighted-average shares:
 
 
 
 
 
 
 
 
 
 
- Basic
 
136,653

 
136,473

 
131,393

 
134,884

 
128,635

- Diluted
 
136,653

 
136,473

 
164,075

 
134,884

 
162,751






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 3, 2016
 
Sept. 27, 2015
 
Dec. 28, 2014
 
Jan. 3, 2016
 
Dec. 28, 2014
 
 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(159,635
)
 
$
(87,285
)
 
$
121,609

 
$
(299,436
)
 
$
183,095

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
 
40,638

 
37,364

 
33,671

 
138,007

 
108,795

Stock-based compensation
 
16,476

 
14,898

 
13,652

 
58,960

 
55,592

Non-cash interest expense
 
416

 
517

 
5,593

 
6,184

 
21,585

Equity in earnings of unconsolidated investees
 
(462
)
 
(5,052
)
 
(1,833
)
 
(9,569
)
 
(7,241
)
Excess tax benefit from stock-based compensation
 
(14,285
)
 
(18,363
)
 
(2,379
)
 
(39,375
)
 
(2,379
)
Deferred income taxes and other tax liabilities
 
41,004

 
28,480

 
23,549

 
63,672

 
21,656

Gain on sale of residential lease portfolio to 8point3 Energy Partners LP
 
—

 
—

 
—

 
(27,915
)
 
—

Other, net
 
649

 
563

 
2,660

 
2,589

 
5,278

Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
19,641

 
226,900

 
14,429

 
311,743

 
(31,505
)
Costs and estimated earnings in excess of billings
 
408

 
9,380

 
(140,831
)
 
148,426

 
(155,300
)
Inventories
 
(50,611
)
 
(56,427
)
 
(25,107
)
 
(237,764
)
 
(1,247
)
Project assets
 
(263,218
)
 
(188,073
)
 
(34,909
)
 
(763,065
)
 
(68,247
)
Prepaid expenses and other assets
 
(99,650
)
 
(16,785
)
 
351,803

 
(87,010
)
 
201,858

Long-term financing receivables, net
 
(34,555
)
 
(39,160
)
 
(17,205
)
 
(142,973
)
 
(94,314
)
Advances to suppliers
 
20,760

 
4,706

 
(7,765
)
 
50,560

 
(26,343
)
Accounts payable and other accrued liabilities
 
150,745

 
6,243

 
61,144

 
90,904

 
45,768

Billings in excess of costs and estimated earnings
 
34,629

 
(13,298
)
 
(265,650
)
 
30,661

 
(225,210
)
Customer advances
 
179

 
(8,527
)
 
(10,082
)
 
(20,830
)
 
(23,481
)
Net cash provided by (used in) operating activities
 
(296,871
)
 
(103,919
)
 
122,349

 
(726,231
)
 
8,360

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
Decrease (increase) in restricted cash and cash equivalents
 
4,485

 
748

 
(2,012
)
 
(23,174
)
 
(11,562
)




Purchases of property, plant and equipment
 
(97,699
)
 
(63,574
)
 
(56,997
)
 
(230,051
)
 
(102,505
)
Cash paid for solar power systems, leased and to be leased
 
(23,957
)
 
(22,587
)
 
(15,415
)
 
(88,376
)
 
(50,974
)
Cash paid for solar power systems
 
—

 
—

 
(8,540
)
 
(10,007
)
 
(13,457
)
Proceeds from sales or maturities of marketable securities
 
—

 
—

 
—

 
—

 
1,380

Proceeds from 8point3 Energy Partners LP attributable to real estate projects and residential lease portfolio
 
175,863

 
22,754

 
—

 
539,791

 
—

Purchases of marketable securities
 
—

 
—

 
—

 
—

 
(30
)
Cash paid for acquisitions, net of cash acquired
 
(5,735
)
 
(59,021
)
 
(28,184
)
 
(64,756
)
 
(35,078
)
Cash paid for investments in unconsolidated investees
 
—

 
3,000

 
(92,000
)
 
(4,092
)
 
(97,013
)
Cash paid for intangibles
 
(6,535
)
 
(2,875
)
 
—

 
(9,936
)
 
—

Net cash provided by (used in) investing activities
 
46,422

 
(121,555
)
 
(203,148
)
 
109,399

 
(309,239
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
Proceeds from issuance of convertible debt, net of issuance costs
 
416,305

 
—

 
—

 
416,305

 
395,275

Cash paid for repurchase of convertible debt
 
—

 
(79
)
 
(97
)
 
(324,352
)
 
(42,250
)
Proceeds from settlement of 4.75% Bond Hedge
 
—

 
—

 
—

 
—

 
68,842

Payments to settle 4.75% Warrants
 
—

 
—

 
—

 
—

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

 
—

 
17

 
74,628

 
131

Payments to settle 4.5% Warrants
 
—

 
—

 
—

 
(574
)
 
—

Proceeds from issuance of non-recourse debt financing, net of issuance costs
 
11,684

 
25,615

 
7,086

 
92,129

 
81,926

Repayment of non-recourse debt financing
 
(445
)
 
(256
)
 
(244
)
 
(1,528
)
 
(244
)
Proceeds from issuance of project loans, net of issuance costs
 
212,709

 
21,356

 
61,537

 
424,556

 
61,537

Assumption of project loan by customer
 
—

 
—

 
—

 
—

 
(40,672
)
Repayment of bank loans, project loans and other debt
 
(12,397
)
 
(38
)
 
(533
)
 
(252,595
)
 
(17,073
)
Proceeds from residential lease financing
 
5,760

 
2,219

 
—

 
7,979

 
—

Repayment of residential lease financing
 
—

 
—

 
—

 
(39,975
)
 
(15,686
)




Proceeds from sale-leaseback financing
 
—

 
—

 
27,022

 
17,219

 
50,600

Repayment of sale-leaseback financing
 
—

 
—

 
(2,856
)
 
(2,237
)
 
(4,216
)
Proceeds from 8point3 Energy Partners LP attributable to operating leases and unguaranteed sales-type lease residual values
 
—

 
—

 
—

 
29,300

 
—

Contributions from noncontrolling interests attributable to real estate projects
 
12,410

 
—

 
—

 
12,410

 
—

Contributions from noncontrolling interests and redeemable noncontrolling interests
 
47,149

 
41,796

 
25,371

 
180,881

 
100,683

Distributions to noncontrolling interests and redeemable noncontrolling interests
 
(3,501
)
 
(2,223
)
 
(2,285
)
 
(10,291
)
 
(5,093
)
Proceeds from exercise of stock options
 
50

 
289

 
113

 
517

 
1,052

Excess tax benefit from stock-based compensation
 
14,285

 
18,363

 
2,379

 
39,375

 
2,379

Purchases of stock for tax withholding obligations on vested restricted stock
 
(1,373
)
 
(2,081
)
 
(1,548
)
 
(43,780
)
 
(57,548
)
Net cash provided by financing activities
 
702,636

 
104,961

 
115,962

 
619,967

 
498,566

Effect of exchange rate changes on cash and cash equivalents
 
(540
)
 
351

 
(1,717
)
 
(4,782
)
 
(4,023
)
Net increase (decrease) in cash and cash equivalents
 
451,647

 
(120,162
)
 
33,446

 
(1,647
)
 
193,664

Cash and cash equivalents, beginning of period
 
502,881

 
623,043

 
922,729

 
956,175

 
762,511

Cash and cash equivalents, end of period
 
$
954,528

 
$
502,881

 
$
956,175

 
$
954,528

 
$
956,175

 
 
 
 
 
 
 
 
 
 
 
Non-cash transactions:
 
 
 
 
 
 
 
 
 
 
Assignment of financing receivables to a third party financial institution
 
$
573

 
$
1,053

 
$
1,604

 
3,315

 
$
8,023

Costs of solar power systems, leased and to be leased, sourced from existing inventory
 
19,309

 
16,867

 
15,396

 
66,604

 
41,204

Costs of solar power systems, leased and to be leased, funded by liabilities
 
10,972

 
8,229

 
3,786

 
10,972

 
3,786

Costs of solar power systems under sale-leaseback financing arrangements sourced from project assets
 
—

 
—

 
10,926

 
6,076

 
28,259

Property, plant and equipment acquisitions funded by liabilities
 
28,950

 
43,083

 
11,461

 
28,950

 
11,461





Issuance of common stock upon conversion of convertible debt
 
—

 
—

 
—

 
—

 
188,263

Sale of residential lease portfolio in exchange for non-controlling equity interests in the 8point3 Group
 
—

 
—

 
—

 
68,273

 
—

Acquisition of intangible assets funded by liabilities
 
—

 
6,512

 
—

 
—

 
—

Net reclassification of cash proceeds offset by project assets in connection with the deconsolidation of assets sold to the 8point3 Group

 
97,272

 
5,061

 
—

 
102,333

 
—







Use of Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures, as described below. The specific non-GAAP measures listed below are: revenue; gross margin; net income; net income per diluted share; earnings before interest, taxes, depreciation and amortization (“EBITDA”); and free cash flow. Management believes that each of these non-GAAP measures is useful to investors, enabling them to better assess changes in each of these key elements of the company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, each of these non-GAAP financial measures provides investors with another method to assess the company's operating results in a manner that is focused on its ongoing, core operating performance, absent the effects of these items. Management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Many of the analysts covering the company also use these non-GAAP measures in their analyses. Given management's use of these non-GAAP measures, the company believes these measures are important to investors in understanding the company's operating results as seen through the eyes of management. These non-GAAP measures are not prepared in accordance with GAAP or intended to be a replacement for GAAP financial data; the non-GAAP measures should be reviewed together with the GAAP measures and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

Non-GAAP revenue includes adjustments relating to 8point3, utility and power plant projects, and the sale of operating lease assets as described below. Non-GAAP gross margin includes adjustments relating to 8point3, utility and power plant projects, the sale of operating lease assets, the FPSC arbitration ruling, stock-based compensation, and other items as described below. In addition to those same adjustments, non-GAAP net income and non-GAAP net income per diluted share are adjusted for adjustments relating to IPO-related costs and the tax effect of these non-GAAP adjustments as described below. In addition to the same adjustments as non-GAAP net income, EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation. Free cash flow includes adjustments relating to investing cash flows and lease financings as described below.

Non-GAAP Adjustments

•
8point3. In June 2015, 8point3 Energy Partners LP ("8point3 Energy Partners"), a joint YieldCo vehicle formed by the company and First Solar, Inc. ("First Solar" and, together with the company, the "Sponsors") to own, operate and acquire solar energy generation assets, completed an initial public offering (“IPO”) of Class A shares representing limited partner interests in 8point3 Energy Partners. The IPO was consummated on June 24, 2015 whereupon the Class A shares are now listed on the NASDAQ Global Select Market under the trading symbol “CAFD.” Immediately after the IPO, the company contributed a portfolio of 170 MW of its solar generation assets (the “SPWR Projects”) to 8point3 Operating Company, LLC ("OpCo"), 8point3 Energy Partners' primary operating subsidiary. In exchange for the SPWR Projects, the company received cash proceeds of $371 million as well as equity interests in several 8point3 Energy Partners affiliated entities: primarily common and subordinated units representing a 40.7% stake in OpCo and a 50.0% economic and management stake in 8point3 Holding Company, LLC (“Holdings”), the parent company of the general partner of 8point3 Energy Partners and the owner of incentive distribution rights in OpCo. Holdings, OpCo, 8point3 Energy Partners and their respective subsidiaries are referred to herein as the “8point3 Group” or “8point3.”

The company includes adjustments related to the sales of projects contributed to 8point3 based on the difference between the fair market value of the consideration received and the net carrying value of the projects contributed, of which, a portion is deferred in proportion to the company’s retained equity stake in 8point3. The deferred profit is subsequently recognized over time. This treatment is consistent with the accounting rules relating to the sale of such projects under International Financial Reporting Standards (“IFRS”). Under these rules, with certain exceptions such as for projects already in operation, the company’s revenue is equal to the fair market value of the consideration received, and cost of goods sold is equal to the net carrying value plus a partial deferral of profit proportionate with the retained equity stake. Under GAAP, these sales are recognized under either real estate, lease, or consolidation accounting rules depending upon the nature of the individual asset contributed, with outcomes ranging from no profit recognition to full profit recognition. IFRS profit, less deferrals associated with retained equity, is recognized for sales related to the residential lease portfolio. Revenue recognition for other projects sold to 8point3 is deferred until these projects reach commercial operations consistent with IFRS rules. Equity in earnings of unconsolidated investees includes the impact of the company’s share of 8point3’s earnings related to sales of projects receiving sales recognition under IFRS but not GAAP. Management believes that these adjustments for the impact of 8point3 enable investors to better evaluate the company's revenue and profit generation performance.





•
Utility and power plant projects. The company includes adjustments related to the revenue recognition of utility and power plant projects based on the separately-identifiable components of transactions in order to reflect the substance of the transactions. This treatment is consistent with accounting rules relating to such projects under IFRS. On a GAAP basis, such projects are accounted for under U.S. GAAP real estate accounting guidance. Management calculates separate revenue and cost of revenue amounts each fiscal period in accordance with the two treatments above and the aggregate difference for the company’s affected projects is included in the relevant reconciliation tables below. Over the life of each project, cumulative revenue and gross margin will be equivalent under the two treatments; however, revenue and gross margin will generally be recognized earlier under the company’s non-GAAP treatment than under the company’s GAAP treatment. Among other factors, this is due to the attribution of non-GAAP revenue and margin to the company’s project development efforts at the time of initial project sale as required under IFRS accounting rules, whereas no separate attribution to this element occurs under U.S. GAAP real estate accounting guidance. Within each project, the relationship between the adjustments to revenue and gross margins is generally consistent. However, as the company may have multiple utility and power plant projects in progress at any given time, the relationship in the aggregate will occasionally appear otherwise. Management believes that this adjustment for utility and power plant projects enables investors to evaluate the company's revenue generation performance relative to the direct costs of revenue of its core businesses.

•
Sale of operating lease assets. The company includes adjustments related to the revenue recognition of the sale of certain property subject to an operating lease (or of property that is leased by or intended to be leased by the third-party purchaser to another party). This treatment is consistent with accounting rules relating to the sale of such property under IFRS. On a GAAP basis, these sales are accounted for as borrowing transactions in accordance with lease accounting guidance. Management believes that these adjustments for the sale of operating lease assets enables investors to better evaluate the company’s revenue and profit generation performance.

•
FPSC arbitration ruling. On January 28, 2015, an arbitral tribunal of the International Court of Arbitration of the International Chamber of Commerce declared a binding partial award in the matter of an arbitration between First Philippine Electric Corporation (“FPEC”) and First Philippine Solar Corporation (“FPSC”) against SunPower Philippines Manufacturing, Ltd. (“SPML”), the company’s wholly-owned subsidiary. The tribunal found SPML in breach of its obligations under its supply agreement with FPSC, and in breach of its joint venture agreement with FPEC. The second partial and final awards received on July 17, 2015 and October 19, 2015, respectively, reduced the estimated amounts to be paid to FPEC. As a result, the company recorded its best estimate of probable loss related to this case. As this loss is nonrecurring in nature, excluding this data provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.

•
Stock-based compensation. Stock-based compensation relates primarily to the company’s equity incentive awards. Stock-based compensation is a non-cash expense that varies from period to period and is dependent on market forces that are difficult to predict. Due to this unpredictability, management excludes this item from its internal operating forecasts and models. Management believes that this adjustment for stock-based compensation provides investors with a basis to measure the company's core performance, including compared with the performance of other companies, without the period-to-period variability created by stock-based compensation.

•
IPO-related costs. Costs incurred related to the IPO of 8point3 included legal, accounting, advisory, valuation, and other expenses, as well as modifications to or terminations of certain existing financing structures in preparation for the sale to 8point3. As these costs are non-recurring in nature, excluding this data provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.

•
Other. The company combines amounts previously disclosed under separate captions into “Other” when amounts do not have a significant impact on the current fiscal period. Management believes that these adjustments provide investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.

The amounts recorded in “Other” during the fourth quarter of fiscal 2015 are driven by adjustments which would have previously been disclosed under other non-GAAP adjustment captions, including “Amortization of intangible assets,” “Non-cash interest expense,” and “Restructuring.”

•
Tax effect. This amount is used to present each of the adjustments described above on an after-tax basis in connection with the presentation of non-GAAP net income and non-GAAP net income per diluted share. The company's non-GAAP tax amount is based on estimated cash tax expense and reserves. The company forecasts its annual cash tax




liability and allocates the tax to each quarter in proportion to earnings for that period. This approach is designed to enhance investors’ ability to understand the impact of the company's tax expense on its current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments, which may not reflect actual cash tax expense.

•
EBITDA adjustments. When calculating EBITDA, in addition to adjustments described above, the company excludes the impact during the period of the following items:

•
Cash interest expense, net of interest income
•
Provision for income taxes
•
Depreciation

Management presents this non-GAAP financial measure to give investors a basis to evaluate the company's performance, including compared with the performance of other companies.

•
Free cash flow adjustments. When calculating free cash flow, the company includes the impact during the period of the following items:

•
Net cash provided by (used in) investing activities
•
Proceeds from issuance of non-recourse debt financing, net of issuance costs
•
Repayment of non-recourse debt financing
•
Proceeds from residential lease financing
•
Repayment of residential lease financing
•
Proceeds from sale-leaseback financing
•
Repayment of sale-leaseback financing
•
Proceeds from 8point3 Energy Partners attributable to operating leases and unguaranteed sales-type lease residual values
•
Contributions from noncontrolling interests attributable to real estate projects
•
Contributions from noncontrolling interests and redeemable noncontrolling interests
•
Distributions to noncontrolling interests and redeemable noncontrolling interests

Management presents this non-GAAP financial measure to enable investors to evaluate the company's performance, including compared with the performance of other companies.

For more information about these non-GAAP financial measures, please see the tables captioned "Reconciliations of GAAP Measures to Non-GAAP Measures" set forth at the end of this release, which should be read together with the preceding financial statements prepared in accordance with GAAP.









SUNPOWER CORPORATION
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except percentages and per share data)
(Unaudited)

Adjustments to Revenue: 
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 3, 2016
 
Sept. 27, 2015
 
Dec. 28, 2014
 
Jan. 3, 2016
 
Dec. 28, 2014
GAAP revenue
 
$
374,364

 
$
380,218

 
$
1,164,238

 
$
1,576,473

 
$
3,027,265

8point3
 
952,115

 
59,619

 
—

 
1,011,734

 
—

Utility and power plant projects
 
31,012

 
1,567

 
(554,577
)
 
17,996

 
(408,616
)
Sale of operating lease assets
 
6,447

 
—

 
—

 
6,447

 
—

Non-GAAP revenue
 
$
1,363,938

 
$
441,404

 
$
609,661

 
$
2,612,650

 
$
2,618,649


Adjustments to Gross margin: 
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 3, 2016
 
Sept. 27, 2015
 
Dec. 28, 2014
 
Jan. 3, 2016
 
Dec. 28, 2014
GAAP gross margin
 
$
20,303

 
$
62,644

 
$
259,479

 
$
244,646

 
$
625,127

8point3
 
351,661

 
18,296

 
—

 
369,957

 
—

Utility and power plant projects
 
13,079

 
(516
)
 
(195,997
)
 
(3,016
)
 
(190,712
)
Sale of operating lease assets
 
2,000

 
—

 
—

 
2,000

 
—

FPSC arbitration ruling
 
—

 
(7,500
)
 
56,806

 
(14,600
)
 
56,806

Stock-based compensation expense
 
3,308

 
4,210

 
3,443

 
13,343

 
14,321

Other
 
2,124

 
1,088

 
661

 
12,671

 
8,003

Non-GAAP gross margin
 
$
392,475

 
$
78,222

 
$
124,392

 
$
625,001

 
$
513,545

 
 
 
 
 
 
 
 
 
 
 
GAAP gross margin (%)
 
5.4
%
 
16.5
%
 
22.3
%
 
15.5
%
 
20.6
%
Non-GAAP gross margin (%)
 
28.8
%
 
17.7
%
 
20.4
%
 
23.9
%
 
19.6
%

Adjustments to Net income (loss): 




 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 3, 2016
 
Sept. 27, 2015
 
Dec. 28, 2014
 
Jan. 3, 2016
 
Dec. 28, 2014
GAAP net income (loss) attributable to stockholders
 
$
(127,621
)
 
$
(56,326
)
 
$
134,715

 
$
(187,019
)
 
$
245,894

8point3
 
394,097

 
19,371

 
—

 
408,780

 
—

Utility and power plant projects
 
13,079

 
(516
)
 
(195,997
)
 
(3,016
)
 
(190,712
)
Sale of operating lease assets
 
2,000

 
—

 
—

 
2,000

 
—

FPSC arbitration ruling
 
—

 
(7,500
)
 
56,806

 
(14,600
)
 
56,806

Stock-based compensation expense
 
16,476

 
14,898

 
13,652

 
58,960

 
55,592

IPO-related costs
 
1,669

 
1,233

 
—

 
28,033

 
—

Other
 
3,361

 
2,357

 
20,814

 
25,595

 
41,813

Tax effect
 
(32,663
)
 
46,959

 
9,424

 
19,033

 
(4,282
)
Non-GAAP net income attributable to stockholders
 
$
270,398

 
$
20,476

 
$
39,414

 
$
337,766

 
$
205,111






Adjustments to Net income (loss) per diluted share:
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 3, 2016
 
Sept. 27, 2015
 
Dec. 28, 2014
 
Jan. 3, 2016
 
Dec. 28, 2014
Net income (loss) per diluted share
 
 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) available to common stockholders1
 
$
(127,621
)
 
$
(56,326
)
 
$
136,124

 
$
(187,019
)
 
$
252,524

Non-GAAP net income available to common stockholders1
 
$
270,731

 
$
20,808

 
$
39,964

 
$
339,492

 
$
209,843

 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
 
GAAP weighted-average shares
 
136,653

 
136,473

 
164,075

 
134,884

 
162,751

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
Stock options
 
2

 
18

 
—

 
24

 
—

Restricted stock units
 
1,478

 
1,170

 
—

 
1,781

 
—

Upfront Warrants (held by Total)
 
6,564

 
6,531

 
—

 
6,801

 
—

Warrants (under the CSO2015)
 
—

 
—

 
—

 
913

 
—

0.75% debentures due 2018
 
12,026

 
12,026

 
—

 
12,026

 
—

0.875% debentures due 2021
 
—

 
—

 
(8,203
)
 
—

 
(4,530
)
Non-GAAP weighted-average shares1
 
156,723

 
156,218

 
155,872

 
156,429

 
158,221

 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) per diluted share
 
$
(0.93
)
 
$
(0.41
)
 
$
0.83

 
$
(1.39
)
 
$
1.55

Non-GAAP net income per diluted share
 
$
1.73

 
$
0.13

 
$
0.26

 
$
2.17

 
$
1.33

1 
In accordance with the if-converted method, net income (loss) available to common stockholders excludes interest expense related to the 0.75%, 0.875% and 4.0% debentures if the debentures are considered converted in the calculation of net income (loss) per diluted share. If the conversion option for a debenture is not in the money for the relevant period, the potential conversion of the debenture under the if-converted method is excluded from the calculation of non-GAAP net income per diluted share.






EBITDA:
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 3, 2016
 
Sept. 27, 2015
 
Dec. 28, 2014
 
Jan. 3, 2016
 
Dec. 28, 2014
GAAP net income (loss) attributable to stockholders
 
$
(127,621
)
 
$
(56,326
)
 
$
134,715

 
$
(187,019
)
 
$
245,894

8point3
 
394,097

 
19,371

 
—

 
408,780

 
—

Utility and power plant projects
 
13,079

 
(516
)
 
(195,997
)
 
(3,016
)
 
(190,712
)
Sale of operating lease assets
 
2,000

 
—

 
—

 
2,000

 
—

FPSC arbitration ruling
 
—

 
(7,500
)
 
56,806

 
(14,600
)
 
56,806

Stock-based compensation expense
 
16,476

 
14,898

 
13,652

 
58,960

 
55,592

IPO-related costs
 
1,669

 
1,233

 
—

 
28,033

 
—

Other
 
3,361

 
2,357

 
20,814

 
25,595

 
41,813

Cash interest expense, net of interest income
 
10,180

 
8,348

 
11,006

 
37,643

 
48,364

Provision for income taxes
 
28,778

 
36,224

 
11,628

 
66,694

 
8,760

Depreciation
 
37,890

 
36,142

 
32,282

 
133,456

 
107,406

EBITDA
 
$
379,909

 
$
54,231

 
$
84,906

 
$
556,526

 
$
373,923











Free Cash Flow:
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 3, 2016
 
Sept. 27, 2015
 
Dec. 28, 2014
 
Jan. 3, 2016
 
Dec. 28, 2014
Net cash provided by (used in) operating activities
 
$
(296,871
)
 
$
(103,919
)
 
$
122,349

 
$
(726,231
)
 
$
8,360

Net cash provided by (used in) investing activities
 
46,422

 
(121,555
)
 
(203,148
)
 
109,399

 
(309,239
)
Proceeds from issuance of non-recourse debt financing, net of issuance costs
 
11,684

 
25,615

 
7,086

 
92,129

 
81,926

Repayment of non-recourse debt financing
 
(445
)
 
(256
)
 
(244
)
 
(1,528
)
 
(244
)
Proceeds from residential lease financing
 
5,760

 
2,219

 
—

 
7,979

 
—

Repayment of residential lease financing
 
—

 
—

 
—

 
(39,975
)
 
(15,686
)
Proceeds from sale-leaseback financing
 
—

 
—

 
27,022

 
17,219

 
50,600

Repayment of sale-leaseback financing
 
—

 
—

 
(2,856
)
 
(2,237
)
 
(4,216
)
Proceeds from 8point3 Energy Partners LP attributable to operating leases and unguaranteed sales-type lease residual values
 
—

 
—

 
—

 
29,300

 
—

Contributions from noncontrolling interests attributable to real estate projects
 
12,410

 
—

 
—

 
12,410

 
—

Contributions from noncontrolling interests and redeemable noncontrolling interests
 
47,149

 
41,796

 
25,371

 
180,881

 
100,683

Distributions to noncontrolling interests and redeemable noncontrolling interests
 
(3,501
)
 
(2,223
)
 
(2,285
)
 
(10,291
)
 
(5,093
)
Free cash flow
 
$
(177,392
)
 
$
(158,323
)
 
$
(26,705
)
 
$
(330,945
)
 
$
(92,909
)






Q1 2016 and FY 2016 GUIDANCE
(in thousands except percentages)
Q1 2016
FY 2016
Revenue (GAAP)
$280,000-$330,000
$2,200,000-$2,400,000
Revenue (non-GAAP)1
$290,000-$340,000
$3,200,000-$3,400,000
Gross margin (GAAP)
11%-12%
17%-19%
Gross margin (non-GAAP)2
12%-13%
14%-16%
Net income (loss) (GAAP)
($115,000)-($90,000)
$0-$50,000
EBITDA3
$0-$25,000
$450,000-$500,000

1.
Estimated non-GAAP amounts above for Q1 2016 include net adjustments that increase revenue by approximately $10 million of revenue related to 8point3. Estimated non-GAAP amounts above for fiscal 2016 include net adjustments that increase revenue by approximately $1,000 million of revenue related to 8point3.

2.
Estimated non-GAAP amounts above for Q1 2016 include net adjustments that increase gross margin by approximately $3 million related to 8point3, $3 million related to stock-based compensation expense, and $1 million related to other items. Estimated non-GAAP amounts above for fiscal 2016 include net adjustments that increase gross margin by approximately $60 million related to 8point3, $15 million related to stock-based compensation expense, and $10 million related to other items.

3.
Estimated EBITDA amounts above for Q1 2016 include net adjustments that decrease net loss by approximately $8 million related to 8point3, $17 million related to stock-based compensation expense, $5 million related to other items, $15 million related to interest expense, $35 million related to income taxes and $35 million related to depreciation. Estimated EBITDA amounts above for fiscal 2016 include net adjustments that increase net income by approximately $100 million related to 8point3, $70 million related to stock-based compensation expense, $10 million related to other items, $60 million related to interest expense, $40 million related to income taxes and $170 million related to depreciation.







SUPPLEMENTAL DATA
(In thousands, except percentages)

The following supplemental data represent the adjustments, individual charges and credits that are included or excluded from SunPower's non-GAAP revenue, gross margin, net income and net income per diluted share measures for each period presented in the Consolidated Statements of Operations contained herein.


THREE MONTHS ENDED
 
 
January 3, 2016
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
172,428

 
$
80,113

 
$
121,823

 
$
30,141

 
17.5
%
 
$
(1,428
)
 
(1.8
)%
 
$
(8,410
)
 
(6.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(127,621
)
8point3
 
(1,443
)
 
54,793

 
898,765

 
(640
)
 
 
 
13,930

 
 
 
338,371

 
 
 
—

 
—

 
—

 
1,057

 
—

 
41,379

 
394,097

Utility and power plant projects
 
—

 
—

 
31,012

 
—

 
 
 
—

 
 
 
13,079

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
13,079

Sale of operating lease assets
 
6,447

 
—

 
—

 
2,000

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2,000

Stock-based compensation expense
 
—

 
—

 
—

 
1,089

 
 
 
840

 
 
 
1,379

 
 
 
3,113

 
10,055

 
—

 
—

 
—

 
—

 
16,476

IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
1,669

 
—

 
—

 
—

 
—

 
1,669

Other
 
—

 
—

 
—

 
651

 
 
 
425

 
 
 
1,048

 
 
 
705

 
210

 
335

 
(13
)
 
—

 
—

 
3,361

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
(32,663
)
 
—

 
(32,663
)
Non-GAAP
 
$
177,432

 
$
134,906

 
$
1,051,600

 
$
33,241

 
18.7
%
 
$
13,767

 
10.2
 %
 
$
345,467

 
32.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
$
270,398






 
 
September 27, 2015
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
163,563

 
$
84,983

 
$
131,672

 
$
37,152

 
22.7
%
 
$
12,646

 
14.9
%
 
$
12,846

 
9.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(56,326
)
8point3
 
(1,311
)
 
60,930

 
—

 
(508
)
 
 
 
18,804

 
 
 
—

 
 
 
—

 
—

 
—

 
993

 
—

 
82

 
19,371

Utility and power plant projects
 
—

 
—

 
1,567

 
—

 
 
 
—

 
 
 
(516
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(516
)
FPSC arbitration ruling
 
—

 
—

 
—

 
(2,456
)
 
 
 
(1,299
)
 
 
 
(3,745
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(7,500
)
Stock-based compensation expense
 
—

 
—

 
—

 
1,541

 
 
 
917

 
 
 
1,752

 
 
 
2,172

 
8,516

 
—

 
—

 
—

 
—

 
14,898

IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
1,233

 
—

 
—

 
—

 
—

 
1,233

Other
 
—

 
—

 
—

 
352

 
 
 
194

 
 
 
542

 
 
 
330

 
197

 
726

 
16

 
—

 
—

 
2,357

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
46,959

 
—

 
46,959

Non-GAAP
 
$
162,252

 
$
145,913

 
$
133,239

 
$
36,081

 
22.2
%
 
$
31,262

 
21.4
%
 
$
10,879

 
8.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
20,476






 
 
December 28, 2014
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
181,137

 
$
105,407

 
$
877,694

 
$
23,566

 
13.0
%
 
$
(434
)
 
(0.4
)%
 
$
236,347

 
26.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
134,715

Utility and power plant projects
 
—

 
—

 
(554,577
)
 
—

 
 
 
—

 
 
 
(195,997
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(195,997
)
FPSC arbitration ruling
 
—

 
—

 
—

 
18,684

 
 
 
9,660

 
 
 
28,462

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
56,806

Stock-based compensation expense
 
—

 
—

 
—

 
1,068

 
 
 
483

 
 
 
1,892

 
 
 
1,983

 
8,226

 
—

 
—

 
—

 
—

 
13,652

Other
 
—

 
—

 
—

 
218

 
 
 
112

 
 
 
331

 
 
 
220

 
257

 
13,213

 
6,463

 
—

 
—

 
20,814

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
9,424

 
—

 
9,424

Non-GAAP
 
$
181,137

 
$
105,407

 
$
323,117

 
$
43,536

 
24.0
%
 
$
9,821

 
9.3
 %
 
$
71,035

 
22.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
39,414







TWELVE MONTHS ENDED
 
 
January 3, 2016
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
643,520

 
$
277,143

 
$
655,810

 
$
135,071

 
21.0
%
 
$
17,543

 
6.3
%
 
$
92,032

 
14.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(187,019
)
8point3
 
(2,754
)
 
115,723

 
898,765

 
(1,148
)
 
 
 
32,734

 
 
 
338,371

 
 
 
—

 
—

 
—

 
(2,638
)
 
—

 
41,461

 
408,780

Utility and power plant projects
 
—

 
—

 
17,996

 
—

 
 
 
—

 
 
 
(3,016
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(3,016
)
Sale of operating lease assets
 
6,447

 
—

 
—

 
2,000

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2,000

FPSC arbitration ruling
 
—

 
—

 
—

 
(4,425
)
 
 
 
(2,593
)
 
 
 
(7,582
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(14,600
)
Stock-based compensation expense
 
—

 
—

 
—

 
4,764

 
 
 
2,676

 
 
 
5,903

 
 
 
9,938

 
35,679

 
—

 
—

 
—

 
—

 
58,960

IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
12,837

 
—

 
15,196

 
—

 
—

 
28,033

Other
 
—

 
—

 
—

 
3,748

 
 
 
1,710

 
 
 
7,213

 
 
 
1,695

 
803

 
6,391

 
4,035

 
—

 
—

 
25,595

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
19,033

 
—

 
19,033

Non-GAAP
 
$
647,213

 
$
392,866

 
$
1,572,571

 
$
140,010

 
21.6
%
 
$
52,070

 
13.3
%
 
$
432,921

 
27.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
337,766


    




 
 
December 28, 2014
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
655,936

 
$
361,828

 
$
2,009,501

 
$
114,124

 
17.4
%
 
$
35,504

 
9.8
%
 
$
475,499

 
23.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
245,894

Utility and power plant projects
 
—

 
—

 
(408,616
)
 
—

 
 
 
—

 
 
 
(190,712
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(190,712
)
FPSC arbitration ruling
 
—

 
—

 
—

 
18,684

 
 
 
9,660

 
 
 
28,462

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
56,806

Stock-based compensation expense
 
—

 
—

 
—

 
3,959

 
 
 
1,954

 
 
 
8,408

 
 
 
7,714

 
33,557

 
—

 
—

 
—

 
—

 
55,592

Other
 
—

 
—

 
—

 
765

 
 
 
379

 
 
 
6,859

 
 
 
239

 
1,053

 
12,223

 
20,295

 
—

 
—

 
41,813

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
(4,282
)
 
—

 
(4,282
)
Non-GAAP
 
$
655,936

 
$
361,828

 
$
1,600,885

 
$
137,532

 
21.0
%
 
$
47,497

 
13.1
%
 
$
328,516

 
20.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
205,111