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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 15, 2017
 
 
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 2.02.
Results of Operations and Financial Condition.

On February 15, 2017, SunPower Corporation (the "Company") issued a press release, included as Exhibit 99.1 hereto, announcing its results of operations for its fourth fiscal quarter ended January 1, 2017.

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 9.01.
Financial Statements and Exhibits.

(d) Exhibits
 
Exhibit No.
Description
 
 
99.1
Press release dated February 15, 2017




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 15, 2017
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 15, 2017



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 2016 Results
FY 2017 Restructuring Initiatives on Track
Company Generates $485 Million in Operating Cash Flow

SAN JOSE, Calif., Feb. 15, 2017 - SunPower Corp. (NASDAQ:SPWR) today announced financial results for its fourth quarter ended January 1, 2017.

($ Millions, except percentages and per-share data)2
4th Quarter 2016
3rd Quarter 2016
4th Quarter 2015
FY 2016
FY 2015
GAAP revenue
$1,024.9
$729.3
$374.4
$2,559.6
$1,576.5
GAAP gross margin1
(3.1)%
17.7%
5.4%
7.4%
15.5%
GAAP net loss1
$(275.1)
$(40.5)
$(127.6)
$(471.1)
$(187.0)
GAAP net loss per diluted share1
$(1.99)
$(0.29)
$(0.93)
$(3.41)
$(1.39)
Non-GAAP revenue2
$1,097.3
$770.1
$1,363.9
$2,702.9
$2,612.7
Non-GAAP gross margin1,2
(2.0)%
20.0%
28.8%
9.0%
23.9%
Non-GAAP net income (loss)1,2
$(89.0)
$97.0
$270.4
$(63.2)
$337.8
Non-GAAP net income (loss) per diluted share1,2
$(0.64)
$0.68
$1.73
$(0.46)
$2.17
Adjusted EBITDA1,2
$(20.8)
$148.2
$379.9
$163.6
$556.5
Operating cash flow
$484.8
$(128.3)
$(296.9)
$(312.3)
$(726.2)
1Fourth quarter and fiscal year 2016 GAAP and non-GAAP financial results include a charge of $61 million for sale of above market polysilicon
2Information about SunPower's use of non-GAAP financial information, including a reconciliation to U.S. GAAP, is provided under "Use of Non-GAAP Financial Measures" below.

“SunPower’s diversified business model enabled us to meet our revenue plan and exceed our operating cash flow target in the fourth quarter,” said Tom Werner, SunPower president and CEO. “While overall industry conditions remain challenging, we are encouraged to see continued solid demand for our complete solutions offerings in all three end segments. In our upstream solar cell and panel manufacturing operations, we met our yield and cost reduction targets for the quarter, continued the ramp of our P-Series product and completed our capacity reduction with the shutdown of Fab 2. Financially, we significantly improved our cash flow as we executed on major project milestones, and we are on track with respect to our 2017 restructuring initiatives. We remain highly focused on maximizing near-term cash flow.”

“Despite the difficult industry environment, our solid execution enabled us to achieve our key financial metrics for the quarter, including generating $485 million in operating cash flow, which we used to reduce our debt by approximately $500 million,” said Chuck Boynton, SunPower chief financial officer. “Our focus this year remains on improving cash flow, prudently managing our working capital and deleveraging the balance sheet. We believe that this will position us well for success as the solar industry transitions through the current challenges to sustainable profitability.”





The company’s fourth quarter and fiscal year 2016 GAAP and non-GAAP results included a charge of approximately $61 million due to the sale of above market polysilicon as well as a GAAP restructuring charge of $176 million. As previously disclosed, the company’s 2016 fiscal year guidance did not include these charges.

Also, fourth quarter fiscal 2016 non-GAAP results include net adjustments that, in the aggregate, decreased (increased) non-GAAP net loss by $186.1 million, including $6.3 million related to 8point3 Energy Partners, $2.5 million related to utility and power plant projects, $(10.1) million related to sale of operating lease assets, $8.4 million related to sale-leaseback transactions, $12.6 million related to stock-based compensation expense, $3.0 million related to amortization of intangible assets, $175.8 million related to restructuring expense, $(0.2) million related to other adjustments, and $(12.2) million related to tax effect.

Financial Outlook
The company is reiterating the following key financial metrics for 2017.
Revenue of $1.8 billion to $2.3 billion on a GAAP basis and $2.1 billion to $2.6 billion on a non-GAAP basis, non-GAAP operational expenses of less than $350 million, capital expenditures of approximately $120 million, and gigawatts (GW) deployed in the range of 1.3 GW to 1.6 GW. Also, the company expects to record GAAP restructuring charges totaling $50 million to $100 million in fiscal year 2017.

The company expects to generate positive operating cash flow through the end of fiscal year 2017 and exit the year with approximately $300 million in cash. Despite current industry conditions the company is forecasting positive Adjusted EBITDA for the full year 2017, weighted toward the second half of the year. The company believes that cash flow and liquidity are the key evaluation metrics for investors in the near term.

The company’s first quarter fiscal 2017 GAAP guidance is as follows: revenue of $315 million to $365 million, gross margin of (2) percent to 0 percent and net loss of $175 million to $150 million. First quarter 2017 GAAP guidance includes the impact of the company’s HoldCo asset strategy and revenue and timing deferrals due to real estate accounting as well as the impact of charges related to the company’s restructuring initiatives. On a non-GAAP basis, the company expects revenue of $370 million to $420 million, gross margin of 0 percent to 2 percent, Adjusted EBITDA of ($45) million to ($20) million and megawatts deployed in the range of 150 MW to 180 MW.

The company will host a conference call for investors this afternoon to discuss its fourth quarter 2016 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 third quarter 2016 performance on the Events and Presentations section of SunPower’s 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) our expectations for the timing, success and financial impact of our restructuring plan and associated initiatives, including impact on our balance sheet, long-term cash flow and annual operating expenses; (b) our ability to improve cash flow, manage our working capital, and deleverage our balance sheet; (c) our positioning for future success and profitability; (d) our expectations for the solar industry and the markets we serve, including market conditions, recovery, and long-term prospects for improvement; (e) full year fiscal 2017 guidance, including GAAP and non-GAAP revenue, operational expenditures, capital expenditures, gigawatts deployed, cash flow and ending cash, and Adjusted EBITDA; and (f) our first quarter fiscal 2017 guidance, including GAAP revenue, gross margin, and net loss, as well as non-GAAP revenue, gross margin, Adjusted EBITDA, cash flow, and MW deployed. 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 solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (2) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (3) regulatory changes and the availability of economic incentives promoting use of solar energy; (4) challenges inherent in constructing certain of our large




projects; (5) 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; (6) fluctuations in our operating results; (7) appropriately sizing our manufacturing capacity and containing manufacturing difficulties that could arise; (8) challenges managing our joint ventures and partnerships; (9) challenges executing on our HoldCo and YieldCo strategies, including the risk that 8point3 Energy Partners may be unsuccessful; (10) fluctuations or declines in the performance of our solar panels and other products and solutions; (11) our ability to identify and successfully implement concrete actions to meet our cost reduction targets, reduce capital expenditures, and implement our restructuring initiatives, including the planned realignment of our manufacturing operations and power plant segment; and (12) the outcomes of previously disclosed litigation.  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.


©2017 SunPower Corporation. All rights reserved. SUNPOWER, the SUNPOWER logo, HELIX and OASIS are trademarks or registered trademarks of SunPower Corporation in the U.S. and other countries as well. Other marks are the property of their respective owners.





 





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


 
Jan. 1, 2017
 
Jan. 3, 2016
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
425,309

 
$
954,528

Restricted cash and cash equivalents, current portion
33,657

 
24,488

Accounts receivable, net
219,638

 
190,448

Costs and estimated earnings in excess of billings
32,780

 
38,685

Inventories
401,707

 
382,390

Advances to suppliers, current portion
111,479

 
85,012

Project assets - plants and land, current portion
374,459

 
479,452

Prepaid expenses and other current assets
315,670

 
359,517

Total current assets
1,914,699

 
2,514,520

 
 
 
 
Restricted cash and cash equivalents, net of current portion
55,246

 
41,748

Restricted long-term marketable securities
4,971

 
6,475

Property, plant and equipment, net
1,027,066

 
731,230

Solar power systems leased and to be leased, net
621,267

 
531,520

Project assets - plants and land, net of current portion
33,571

 
5,072

Advances to suppliers, net of current portion
173,277

 
274,085

Long-term financing receivables, net
507,333

 
334,791

Goodwill and other intangible assets, net
44,218

 
119,577

Other long-term assets
185,519

 
297,975

Total assets
$
4,567,167

 
$
4,856,993

 
 
 
 
Liabilities and Equity
 
 
 

Current liabilities:
 
 
 

Accounts payable
$
540,295

 
$
514,654

Accrued liabilities
391,226

 
313,497

Billings in excess of costs and estimated earnings
77,140

 
115,739

Short-term debt
71,376

 
21,041

Customer advances, current portion
10,138

 
33,671

Total current liabilities
1,090,175

 
998,602

 
 
 
 
Long-term debt
451,243

 
478,948

Convertible debt
1,113,478

 
1,110,960

Customer advances, net of current portion
298

 
126,183

Other long-term liabilities
721,032

 
564,557

Total liabilities
3,376,226

 
3,279,250

 
 
 
 
Redeemable noncontrolling interests in subsidiaries
103,621

 
69,104

 
 
 
 
Equity:
 
 
 





Preferred stock
—

 
—

Common stock
139

 
137

Additional paid-in capital
2,410,395

 
2,359,917

Accumulated deficit
(1,218,681
)
 
(747,617
)
Accumulated other comprehensive loss
(7,238
)
 
(8,023
)
Treasury stock, at cost
(176,783
)
 
(155,265
)
Total stockholders' equity
1,007,832

 
1,449,149

Noncontrolling interests in subsidiaries
79,488

 
59,490

Total equity
1,087,320

 
1,508,639

Total liabilities and equity
$
4,567,167

 
$
4,856,993






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 1, 2017
 
Oct. 2, 2016
 
Jan. 3, 2016
 
Jan. 1, 2017
 
Jan. 3, 2016
Revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
$
220,464

 
$
170,345

 
$
172,428

 
$
720,331

 
$
643,520

Commercial
 
146,874

 
139,954

 
80,113

 
436,915

 
277,143

Power Plant
 
657,551

 
419,047

 
121,823

 
1,402,316

 
655,810

Total revenue
 
1,024,889

 
729,346

 
374,364

 
2,559,562

 
1,576,473

Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
207,604

 
138,836

 
142,287

 
603,559

 
508,449

Commercial
 
171,344

 
132,618

 
81,541

 
438,711

 
259,600

Power Plant
 
678,014

 
328,684

 
130,233

 
1,327,326

 
563,778

Total cost of revenue
 
1,056,962

 
600,138

 
354,061

 
2,369,596

 
1,331,827

Gross margin
 
(32,073
)
 
129,208

 
20,303

 
189,966

 
244,646

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
23,860

 
28,153

 
32,362

 
116,130

 
99,063

Selling, general and administrative
 
66,517

 
80,070

 
105,643

 
329,061

 
345,486

Restructuring charges
 
175,774

 
31,202

 
335

 
207,189

 
6,391

Total operating expenses
 
266,151

 
139,425

 
138,340

 
652,380

 
450,940

Operating loss
 
(298,224
)
 
(10,217
)
 
(118,037
)
 
(462,414
)
 
(206,294
)
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
Interest income
 
519

 
630

 
622

 
2,652

 
2,120

Interest expense
 
(18,091
)
 
(15,813
)
 
(10,802
)
 
(60,735
)
 
(43,796
)
Gain on settlement of preexisting relationships in connection with acquisition
 
—

 
203,252

 
—

 
203,252

 
—

Loss on equity method investment in connection with acquisition
 
—

 
(90,946
)
 
—

 
(90,946
)
 
—

Goodwill impairment
 
—

 
(147,365
)
 
—

 
(147,365
)
 
—

Other, net
 
8,184

 
(5,169
)
 
(3,102
)
 
(9,039
)
 
5,659

Other expense, net
 
(9,388
)
 
(55,411
)
 
(13,282
)
 
(102,181
)
 
(36,017
)
Loss before income taxes and equity in earnings of unconsolidated investees
 
(307,612
)
 
(65,628
)
 
(131,319
)
 
(564,595
)
 
(242,311
)
Benefit from (provision for) income taxes
 
9,559

 
(7,049
)
 
(28,778
)
 
(7,319
)
 
(66,694
)
Equity in earnings of unconsolidated investees
 
3,714

 
16,770

 
462

 
28,070

 
9,569

Net loss
 
(294,339
)
 
(55,907
)
 
(159,635
)
 
(543,844
)
 
(299,436
)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
19,221

 
15,362

 
32,014

 
72,780

 
112,417

Net loss attributable to stockholders
 
$
(275,118
)
 
$
(40,545
)
 
$
(127,621
)
 
$
(471,064
)
 
$
(187,019
)
 
 
 
 
 
 
 
 
 
 
 




Net loss per share attributable to stockholders:
 
 
 
 
 
 
 
 
 
 
- Basic
 
$
(1.99
)
 
$
(0.29
)
 
$
(0.93
)
 
$
(3.41
)
 
$
(1.39
)
- Diluted
 
$
(1.99
)
 
$
(0.29
)
 
$
(0.93
)
 
$
(3.41
)
 
$
(1.39
)
Weighted-average shares:
 
 
 
 
 
 
 
 
 
 
- Basic
 
138,442

 
138,209

 
136,653

 
137,985

 
134,884

- Diluted
 
138,442

 
138,209

 
136,653

 
137,985

 
134,884






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 1, 2017
 
Oct. 2, 2016
 
Jan. 3, 2016
 
Jan. 1, 2017
 
Jan. 3, 2016
 
 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(294,339
)
 
$
(55,907
)
 
$
(159,635
)
 
$
(543,844
)
 
$
(299,436
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
51,367

 
39,827

 
40,638

 
174,209

 
138,007

Stock-based compensation
 
12,596

 
15,907

 
16,476

 
61,498

 
58,960

Non-cash interest expense
 
94

 
308

 
416

 
1,057

 
6,184

Non-cash restructuring charges
 
148,791

 
17,926

 
—

 
166,717

 
—

Gain on settlement of preexisting relationships in connection with acquisition
 
—

 
(203,252
)
 
—

 
(203,252
)
 
—

Loss on equity method investment in connection with acquisition
 
—

 
90,946

 
—

 
90,946

 
—

Goodwill impairment
 
—

 
147,365

 
—

 
147,365

 
—

Dividend from 8point3 Energy Partners LP
 
6,949

 
—

 
—

 
6,949

 
—

Equity in earnings of unconsolidated investees
 
(3,714
)
 
(16,770
)
 
(462
)
 
(28,070
)
 
(9,569
)
Excess tax benefit from stock-based compensation
 
(4,032
)
 
(1,222
)
 
(14,285
)
 
(2,810
)
 
(39,375
)
Deferred income taxes
 
(9,402
)
 
1,852

 
28,711

 
(6,611
)
 
50,238

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

 
—

 
—

 
—

 
(27,915
)
Other, net
 
988

 
2,006

 
649

 
4,793

 
2,589

Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
3,097

 
(13,268
)
 
19,641

 
(33,466
)
 
311,743

Costs and estimated earnings in excess of billings
 
(7,381
)
 
7,278

 
408

 
6,198

 
148,426

Inventories
 
30,698

 
13,901

 
(50,611
)
 
(70,448
)
 
(237,764
)
Project assets
 
467,893

 
(1,262
)
 
(263,218
)
 
33,248

 
(763,065
)
Prepaid expenses and other assets
 
(20,535
)
 
20,674

 
(96,966
)
 
48,758

 
(80,105
)
Long-term financing receivables, net
 
(35,999
)
 
(41,424
)
 
(34,555
)
 
(172,542
)
 
(142,973
)
Advances to suppliers
 
29,338

 
4,434

 
20,760

 
74,341

 
50,560

Accounts payable and other accrued liabilities
 
133,278

 
(156,279
)
 
160,354

 
(12,146
)
 
97,433





Billings in excess of costs and estimated earnings
 
(22,325
)
 
7,170

 
34,629

 
(38,204
)
 
30,661

Customer advances
 
(2,529
)
 
(8,556
)
 
179

 
(16,969
)
 
(20,830
)
Net cash provided by (used in) operating activities
 
484,833

 
(128,346
)
 
(296,871
)
 
(312,283
)
 
(726,231
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
Decrease (increase) in restricted cash and cash equivalents
 
(9,812
)
 
(10,108
)
 
4,485

 
(22,667
)
 
(23,174
)
Purchases of property, plant and equipment
 
(37,619
)
 
(56,151
)
 
(97,699
)
 
(187,094
)
 
(230,051
)
Cash paid for solar power systems, leased and to be leased
 
(19,872
)
 
(18,261
)
 
(23,957
)
 
(84,289
)
 
(88,376
)
Cash paid for solar power systems
 
(36,464
)
 
—

 
—

 
(38,746
)
 
(10,007
)
Proceeds from sales or maturities of marketable securities
 
—

 
6,210

 
—

 
6,210

 
—

Proceeds from (payments to) 8point3 Energy Partners LP attributable to real estate projects and residential lease portfolio
 
—

 
—

 
175,863

 
(9,838
)
 
539,791

Purchases of marketable securities
 
(4,955
)
 
—

 
—

 
(4,955
)
 
—

Cash paid for acquisitions, net of cash acquired
 
—

 
(24,003
)
 
(5,735
)
 
(24,003
)
 
(64,756
)
Cash paid for investments in unconsolidated investees
 
(501
)
 
(737
)
 
—

 
(11,547
)
 
(4,092
)
Cash paid for intangibles
 
(521
)
 
—

 
(6,535
)
 
(521
)
 
(9,936
)
Net cash provided by (used in) investing activities
 
(109,744
)
 
(103,050
)
 
46,422

 
(377,450
)
 
109,399

Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
Proceeds from issuance of convertible debt, net of issuance costs
 
—

 
—

 
416,305

 
—

 
416,305

Cash paid for repurchase of convertible debt
 
—

 
—

 
—

 
—

 
(324,352
)
Proceeds from settlement of 4.50% Bond Hedge
 
—

 
—

 
—

 
—

 
74,628

Payments to settle 4.50% Warrants
 
—

 
—

 
—

 
—

 
(574
)
Cash paid for acquisitions
 
(5,714
)
 
—

 
—

 
(5,714
)
 
—

Proceeds from bank loans and other debt
 
113,645

 
—

 
—

 
113,645

 
—

Repayment of bank loans and other debt
 
(128,029
)
 
(7,685
)
 
(231
)
 
(143,601
)
 
(16,088
)
Proceeds from issuance of non-recourse residential financing, net of issuance costs
 
41,128

 
89,634

 
17,444

 
183,990

 
100,108

Repayment of non-recourse residential financing
 
(1,225
)
 
(34,541
)
 
(445
)
 
(37,932
)
 
(41,503
)




Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
54,611

 
34,558

 
47,149

 
146,334

 
180,881

Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
(5,620
)
 
(6,514
)
 
(3,501
)
 
(19,039
)
 
(10,291
)
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs
 
136,536

 
168,794

 
212,709

 
738,822

 
441,775

Repayment of non-recourse power plant and commercial financing
 
(537,671
)
 
(220,186
)
 
(12,166
)
 
(795,209
)
 
(238,744
)
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

Proceeds from exercise of stock options
 
—

 
—

 
50

 
—

 
517

Excess tax benefit from stock-based compensation
 
—

 
1,222

 
14,285

 
—

 
39,375

Purchases of stock for tax withholding obligations on vested restricted stock
 
(564
)
 
(1,282
)
 
(1,373
)
 
(21,517
)
 
(43,780
)
Net cash provided by (used in) financing activities
 
(332,903
)
 
24,000

 
702,636

 
159,779

 
619,967

Effect of exchange rate changes on cash and cash equivalents
 
(745
)
 
1,173

 
(540
)
 
735

 
(4,782
)
Net increase (decrease) in cash and cash equivalents
 
41,441

 
(206,223
)
 
451,647

 
(529,219
)
 
(1,647
)
Cash and cash equivalents, beginning of period
 
383,868

 
590,091

 
502,881

 
954,528

 
956,175

Cash and cash equivalents, end of period
 
$
425,309

 
$
383,868

 
$
954,528

 
$
425,309

 
$
954,528

 
 
 
 
 
 
 
 
 
 
 
Non-cash transactions:
 
 
 
 
 
 
 
 
 
 
Assignment of residential lease receivables to third parties
 
$
568

 
$
1,246

 
$
573

 
$
4,290

 
$
3,315

Costs of solar power systems, leased and to be leased, sourced from existing inventory
 
13,439

 
14,092

 
19,309

 
57,422

 
66,604

Costs of solar power systems, leased and to be leased, funded by liabilities
 
3,026

 
6,226

 
10,972

 
3,026

 
10,972





Costs of solar power systems under sale-leaseback financing arrangements sourced from project assets
 
20,596

 
—

 
—

 
27,971

 
6,076

Property, plant and equipment acquisitions funded by liabilities
 
55,374

 
85,994

 
28,950

 
55,374

 
28,950

Net reclassification of cash proceeds offset by project assets in connection with the deconsolidation of assets sold to the 8point3 Group
 
2,274

 
34,862

 
97,272

 
45,862

 
102,333

Exchange of receivables for an investment in an unconsolidated investee
 
—

 
—

 
—

 
2,890

 
—

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

 
—

 
—

 
—

 
68,273

Acquisition funded by liabilities
 
103,354

 
100,550

 
—

 
103,354

 
—







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 (loss); net income (loss) per diluted share; and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). 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, the sale of operating lease assets, and sale-leaseback transactions, each as described below. In addition to those same adjustments, Non-GAAP gross margin includes adjustments relating to stock-based compensation, amortization of intangible assets, non-cash interest expense, arbitration ruling, and other items, each as described below. In addition to those same adjustments, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share are adjusted for adjustments relating to goodwill impairment, restructuring expense, 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 (loss), Adjusted EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for (benefit from) income taxes, and depreciation.

Non-GAAP Adjustments Based on International Financial Reporting Standards (“IFRS”)

The company’s non-GAAP results include adjustments to recognize revenue and profit under IFRS that are consistent with the adjustments made in connection with the company’s reporting process as part of its status as a consolidated subsidiary of Total S.A., a foreign public registrant which reports under IFRS. Differences between GAAP and IFRS reflected in the company’s non-GAAP results are further described below. In these situations, management believes that IFRS enables investors to better evaluate the company’s revenue and profit generation performance, and assists in aligning the perspectives of our management and noncontrolling shareholders with those of Total S.A., our controlling shareholder.

•
8point3. In 2015, 8point3 Energy Partners LP ("8point3 Energy Partners"), a joint YieldCo vehicle, was 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. Class A shares of 8point3 Energy Partners 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 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. 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 guidance depending upon the nature of the individual asset contributed, with outcomes ranging from no, partial, or 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. Equity in earnings of unconsolidated investees also 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.

•
Utility and power plant projects. The company includes adjustments related to the revenue recognition of certain utility and power plant projects based on percentage-of-completion accounting and, when relevant, the allocation of revenue and margin to the company’s project development efforts at the time of initial project sale. Under GAAP, such projects are accounted for under real estate accounting guidance, under which no separate allocation to the company’s project development efforts occurs and the amount of revenue and margin that is recognized may be limited in circumstances where the company has certain forms of continuing involvement in the project. Over the life of each project, cumulative revenue and gross margin will eventually be equivalent under both GAAP and IFRS; however, revenue and gross margin will generally be recognized earlier under IFRS. 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 differing stages of progress at any given time, the relationship in the aggregate will occasionally appear otherwise.

•
Sale of operating lease assets. The company includes adjustments related to the revenue recognition on the sale of certain solar assets subject to an operating lease (or of solar assets that are leased by or intended to be leased by the third-party purchaser to another party) based on the net proceeds received from the purchaser. Under GAAP, these sales are accounted for as borrowing transactions in accordance with lease accounting guidance. Under such guidance, revenue and profit recognition is based on rental payments made by the end lessee, and the net proceeds from the purchaser are recorded as a non-recourse borrowing liability, with imputed interest expense recorded on the liability. This treatment continues until the company has transferred the substantial risks of ownership, as defined by lease accounting guidance, to the purchaser, at which point the sale is recognized.

•
Sale-leaseback transactions. The company includes adjustments related to the revenue recognition on certain sale-leaseback transactions based on the net proceeds received from the buyer-lessor. Under GAAP, these transactions are accounted for under the financing method in accordance with real estate accounting guidance. Under such guidance, no revenue or profit is recognized at the inception of the transaction, and the net proceeds from the buyer-lessor are recorded as a financing liability. Imputed interest is recorded on the liability equal to the company’s incremental borrowing rate adjusted solely to prevent negative amortization.

Other Non-GAAP Adjustments

•
Stock-based compensation. Stock-based compensation relates primarily to the company’s equity incentive awards. Stock-based compensation is a non-cash expense that is dependent on market forces that are difficult to predict. 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.





•
Amortization of intangible assets. The company incurs amortization of intangible assets as a result of acquisitions, which includes patents, purchased technology, project pipeline assets, and in-process research and development. Management believes that it is appropriate to exclude these amortization charges from the company’s non-GAAP financial measures as they arise from prior acquisitions, are not reflective of ongoing operating results, and do not contribute to a meaningful evaluation of a company’s past operating performance.

•
Non-cash interest expense. The company incurs non-cash interest expense related to the amortization of items such as original issuance discounts on its debt. The company excludes non-cash interest expense because the expense does not reflect its financial results in the period incurred. Management believes that this adjustment for non-cash interest expense provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without non-cash interest expense.

•
Goodwill impairment. In the third quarter of 2016, the company performed an interim goodwill impairment evaluation, due to current market circumstances, including a decline in the company's stock price which resulted in the market capitalization of the company being below its book value. The company’s preliminary calculation determined that the implied fair value of goodwill for all reporting units was zero and therefore recorded a goodwill impairment loss of $147.4 million, which includes $89.6 million of goodwill recognized in the third quarter of 2016 in connection with the company’s acquisition of the remaining 50% of AUOSP, a joint venture for the purpose of manufacturing solar cells in which the company previously owned 50%. No adjustment to non-GAAP financial measures was made for the portion of the impairment charge derived from AUOSP, resulting in a non-GAAP adjustment of $57.8 million. Management believes that it is appropriate to exclude this impairment charge from the company’s non-GAAP financial measures as it arises from prior acquisitions, is not reflective of ongoing operating results, and does not contribute to a meaningful evaluation of a company’s past operating performance. The impact of the AUOSP acquisition to the company’s GAAP and non-GAAP income statements in the third quarter of 2016 was $22.7 million, including a $203.2 million gain on settling preexisting relationships offset by a $90.9 million loss on the prior equity method investment and $89.6 million of goodwill impairment.

•
Restructuring expense. The company incurs restructuring expenses related to reorganization plans aimed towards realigning resources consistent with the company’s global strategy and improving its overall operating efficiency and cost structure. Restructuring charges are excluded from non-GAAP financial measures because they are not considered core operating activities and such costs have historically occurred infrequently. Although the company has engaged in restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. As such, management believes that it is appropriate to exclude restructuring charges from the company's non-GAAP financial measures as they are not reflective of ongoing operating results or contribute to a meaningful evaluation of a company's past operating performance.

•
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 dated July 14, 2015 and September 30, 2015, respectively, reduced the estimated amounts to be paid to FPEC, and on July 22, 2016, SPML entered into a settlement with FPEC and FPSC and paid a total of $50.5 million in settlement of all claims between the parties. As a result, the Company recorded its best estimate of probable loss related to this case at the time of the initial ruling and updated the estimate as circumstances warranted. 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.





•
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 presented fiscal periods. 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.

•
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 a manner generally consistent with its GAAP methodology. 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.

•
Adjusted EBITDA adjustments. When calculating Adjusted 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 (benefit from) income taxes
•
Depreciation

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. 1, 2017
 
Oct. 2, 2016
 
Jan. 3, 2016
 
Jan. 1, 2017
 
Jan. 3, 2016
GAAP revenue
 
$
1,024,889

 
$
729,346

 
$
374,364

 
$
2,559,562

 
$
1,576,473

Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
44,991

 
33,301

 
952,115

 
61,718

 
1,011,734

Utility and power plant projects
 
(4,047
)
 
37

 
31,012

 
9,443

 
17,996

Sale of operating lease assets
 
(34,406
)
 
7,424

 
6,447

 
(6,396
)
 
6,447

Sale-leaseback transactions
 
65,887

 
—

 
—

 
78,533

 
—

Non-GAAP revenue
 
$
1,097,314

 
$
770,108

 
$
1,363,938

 
$
2,702,860

 
$
2,612,650


Adjustments to Gross margin: 
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 1, 2017
 
Oct. 2, 2016
 
Jan. 3, 2016
 
Jan. 1, 2017
 
Jan. 3, 2016
GAAP gross margin
 
$
(32,073
)
 
$
129,208

 
$
20,303

 
$
189,966

 
$
244,646

Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
1,576

 
13,788

 
351,661

 
10,512

 
369,957

Utility and power plant projects
 
2,542

 
47

 
13,079

 
10,274

 
(3,016
)
Sale of operating lease assets
 
(10,105
)
 
2,085

 
2,000

 
(1,942
)
 
2,000

Sale-leaseback transactions
 
8,278

 
85

 
—

 
11,351

 
—

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
4,959

 
6,029

 
3,308

 
20,577

 
13,343

Amortization of intangible assets
 
2,568

 
2,567

 
1,733

 
7,679

 
2,334

Non-cash interest expense
 
70

 
283

 
391

 
956

 
2,037

Arbitration ruling
 
—

 
—

 
—

 
(5,852
)
 
(6,459
)
Other
 
—

 
—

 
—

 
—

 
159

Non-GAAP gross margin
 
$
(22,185
)
 
$
154,092

 
$
392,475

 
$
243,521

 
$
625,001

 
 
 
 
 
 
 
 
 
 
 
GAAP gross margin (%)
 
(3.1
)%
 
17.7
%
 
5.4
%
 
7.4
%
 
15.5
%
Non-GAAP gross margin (%)
 
(2.0
)%
 
20.0
%
 
28.8
%
 
9.0
%
 
23.9
%





Adjustments to Net income (loss): 
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 1, 2017
 
Oct. 2, 2016
 
Jan. 3, 2016
 
Jan. 1, 2017
 
Jan. 3, 2016
GAAP net loss attributable to stockholders
 
$
(275,118
)
 
$
(40,545
)
 
$
(127,621
)
 
$
(471,064
)
 
$
(187,019
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
6,301

 
19,320

 
394,097

 
54,379

 
408,780

Utility and power plant projects
 
2,542

 
47

 
13,079

 
10,274

 
(3,016
)
Sale of operating lease assets
 
(10,086
)
 
2,098

 
2,000

 
(1,889
)
 
2,000

Sale-leaseback transactions
 
8,435

 
277

 
—

 
11,700

 
—

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
12,596

 
15,907

 
16,476

 
61,498

 
58,960

Amortization of intangible assets
 
3,018

 
3,018

 
2,623

 
17,369

 
4,717

Non-cash interest expense
 
94

 
308

 
416

 
1,057

 
6,184

Goodwill impairment
 
—

 
57,765

 
—

 
57,765

 
—

Restructuring expense
 
175,774

 
31,202

 
335

 
207,189

 
6,391

Arbitration ruling
 
—

 
—

 
—

 
(5,852
)
 
(6,459
)
IPO-related costs
 
(339
)
 
—

 
1,669

 
(304
)
 
28,033

Other
 
—

 
(20
)
 
(13
)
 
(31
)
 
162

Tax effect
 
(12,200
)
 
7,655

 
(32,663
)
 
(5,315
)
 
19,033

Non-GAAP net income (loss) attributable to stockholders
 
$
(88,983
)
 
$
97,032

 
$
270,398

 
$
(63,224
)
 
$
337,766






Adjustments to Net income (loss) per diluted share:
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 1, 2017
 
Oct. 2, 2016
 
Jan. 3, 2016
 
Jan. 1, 2017
 
Jan. 3, 2016
Net income (loss) per diluted share
 
 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
 
 
GAAP net loss available to common stockholders1
 
$
(275,118
)
 
$
(40,545
)
 
$
(127,621
)
 
$
(471,064
)
 
$
(187,019
)
Non-GAAP net income (loss) available to common stockholders1
 
$
(88,983
)
 
$
97,032

 
$
270,731

 
$
(63,224
)
 
$
339,492

 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
 
GAAP weighted-average shares
 
138,442

 
138,209

 
136,653

 
137,985

 
134,884

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
Stock options
 
—

 
—

 
2

 
—

 
24

Restricted stock units
 
—

 
384

 
1,478

 
—

 
1,781

Upfront Warrants (held by Total)
 
—

 
3,179

 
6,564

 
—

 
6,801

Warrants (under the CSO2015)
 
—

 
—

 
—

 
—

 
913

0.75% debentures due 2018
 
—

 
—

 
12,026

 
—

 
12,026

Non-GAAP weighted-average shares1
 
138,442

 
141,772

 
156,723

 
137,985

 
156,429

 
 
 
 
 
 
 
 
 
 
 
GAAP net loss per diluted share
 
$
(1.99
)
 
$
(0.29
)
 
$
(0.93
)
 
$
(3.41
)
 
$
(1.39
)
Non-GAAP net income (loss) per diluted share
 
$
(0.64
)
 
$
0.68

 
$
1.73

 
$
(0.46
)
 
$
2.17

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 (loss) per diluted share.






Adjusted EBITDA:
 
 
THREE MONTHS ENDED
 
TWELVE MONTHS ENDED
 
 
Jan. 1, 2017
 
Oct. 2, 2016
 
Jan. 3, 2016
 
Jan. 1, 2017
 
Jan. 3, 2016
GAAP net loss attributable to stockholders
 
$
(275,118
)
 
$
(40,545
)
 
$
(127,621
)
 
$
(471,064
)
 
$
(187,019
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
6,301

 
19,320

 
394,097

 
54,379

 
408,780

Utility and power plant projects
 
2,542

 
47

 
13,079

 
10,274

 
(3,016
)
Sale of operating lease assets
 
(10,086
)
 
2,098

 
2,000

 
(1,889
)
 
2,000

Sale-leaseback transactions
 
8,435

 
277

 
—

 
11,700

 
—

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
12,596

 
15,907

 
16,476

 
61,498

 
58,960

Amortization of intangible assets
 
3,018

 
3,018

 
2,623

 
17,369

 
4,717

Non-cash interest expense
 
94

 
308

 
416

 
1,057

 
6,184

Goodwill impairment
 
—

 
57,765

 
—

 
57,765

 
—

Restructuring expense
 
175,774

 
31,202

 
335

 
207,189

 
6,391

Arbitration ruling
 
—

 
—

 
—

 
(5,852
)
 
(6,459
)
IPO-related costs
 
(339
)
 
—

 
1,669

 
(304
)
 
28,033

Other
 
—

 
(20
)
 
(13
)
 
(31
)
 
162

Cash interest expense, net of interest income
 
17,416

 
14,990

 
10,180

 
57,734

 
37,643

Provision for (benefit from) income taxes
 
(9,559
)
 
7,049

 
28,778

 
7,319

 
66,694

Depreciation
 
48,099

 
36,809

 
37,890

 
156,464

 
133,456

Adjusted EBITDA
 
$
(20,827
)
 
$
148,225

 
$
379,909

 
$
163,608

 
$
556,526









Q1 2017 and FY 2017 GUIDANCE
(in thousands except percentages)
Q1 2017
FY 2017
Revenue (GAAP)
$315,000-$365,000
$1,800,000-$2,300,000
Revenue (non-GAAP)1
$370,000-$420,000
$2,100,000-$2,600,000
Gross margin (GAAP)
(2)%-0%
N/A
Gross margin (non-GAAP)2
0%-2%
N/A
Net loss (GAAP)
$(175,000)-$(150,000)
N/A
Adjusted EBITDA3
$(45,000)-$(20,000)
N/A

1.
Estimated non-GAAP amounts above for Q1 2017 include net adjustments that increase revenue by approximately $30 million related to utility and power plant projects and $25 million related to sale-leaseback transactions. Estimated non-GAAP amounts above for fiscal 2017 include net adjustments that increase revenue by approximately $300 million related to sale-leaseback transactions.


2.
Estimated non-GAAP amounts above for Q1 2017 include net adjustments that increase gross margin by approximately $3 million related to sale-leaseback transactions, $4 million related to stock-based compensation expense, and $1 million related to amortization of intangible assets.


3.
Estimated Adjusted EBITDA amounts above for Q1 2017 include net adjustments that decrease net loss by approximately $3 million related to sale-leaseback transactions, $13 million related to stock-based compensation expense, $3 million related to amortization of intangible assets, $1 million related to non-cash interest expense, $35 million related to restructuring, $20 million related to interest expense, $10 million related to income taxes, and $45 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 1, 2017
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
220,464

 
$
146,874

 
$
657,551

 
$
12,860

 
5.8
%
 
$
(24,470
)
 
(16.7
)%
 
$
(20,463
)
 
(3.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(275,118
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(1,313
)
 
2,189

 
44,115

 
(503
)
 
 
 
1,410

 
 
 
669

 
 
 
—

 
—

 
—

 
1,075

 
—

 
3,650

 
6,301

Utility and power plant projects
 
—

 
—

 
(4,047
)
 
—

 
 
 
—

 
 
 
2,542

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2,542

Sale of operating lease assets
 
(34,406
)
 
—

 
—

 
(10,105
)
 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
19

 
—

 
—

 
(10,086
)
Sale-leaseback transactions
 
—

 
65,887

 
—

 
—

 
 
 
8,278

 
 
 
—

 
 
 
—

 
—

 
—

 
157

 
—

 
—

 
8,435

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
902

 
 
 
1,093

 
 
 
2,964

 
 
 
2,141

 
5,496

 
—

 
—

 
—

 
—

 
12,596

Amortization of intangible assets
 
—

 
—

 
—

 
1,109

 
 
 
957

 
 
 
502

 
 
 
—

 
450

 
—

 
—

 
—

 
—

 
3,018

Non-cash interest expense
 
—

 
—

 
—

 
26

 
 
 
24

 
 
 
20

 
 
 
3

 
21

 
—

 
—

 
—

 
—

 
94

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
175,774

 
—

 
—

 
—

 
175,774

IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
(339
)
 
—

 
—

 
—

 
—

 
(339
)
Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
(12,200
)
 
—

 
(12,200
)
Non-GAAP
 
$
184,745

 
$
214,950

 
$
697,619

 
$
4,289

 
2.3
%
 
$
(12,708
)
 
(5.9
)%
 
$
(13,766
)
 
(2.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(88,983
)






 
 
October 2, 2016
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
170,345

 
$
139,954

 
$
419,047

 
$
31,509

 
18.5
%
 
$
7,336

 
5.2
%
 
$
90,363

 
21.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(40,545
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(1,336
)
 
3,181

 
31,456

 
(250
)
 
 
 
2,162

 
 
 
11,876

 
 
 
—

 
—

 
—

 
1,062

 
—

 
4,470

 
19,320

Utility and power plant projects
 
—

 
—

 
37

 
—

 
 
 
—

 
 
 
47

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
47

Sale of operating lease assets
 
7,424

 
—

 
—

 
2,085

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
13

 
—

 
—

 
2,098

Sale-leaseback transactions
 
—

 
—

 
—

 
—

 
 
 
85

 
 
 
—

 
 
 
—

 
—

 
—

 
192

 
—

 
—

 
277

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
2,083

 
 
 
1,744

 
 
 
2,202

 
 
 
2,935

 
6,943

 
—

 
—

 
—

 
—

 
15,907

Amortization of intangible assets
 
—

 
—

 
—

 
869

 
 
 
868

 
 
 
830

 
 
 
—

 
451

 
—

 
—

 
—

 
—

 
3,018

Non-cash interest expense
 
—

 
—

 
—

 
67

 
 
 
84

 
 
 
132

 
 
 
4

 
21

 
—

 
—

 
—

 
—

 
308

Goodwill impairment
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
57,765

 
—

 
—

 
57,765

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
31,202

 
—

 
—

 
—

 
31,202

Other
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
(33
)
 
—

 
13

 
—

 
—

 
(20
)
Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
7,655

 
—

 
7,655

Non-GAAP
 
$
176,433

 
$
143,135

 
$
450,540

 
$
36,363

 
20.6
%
 
$
12,279

 
8.6
%
 
$
105,450

 
23.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
97,032






 
 
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
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
1,089

 
 
 
840

 
 
 
1,379

 
 
 
3,113

 
10,055

 
—

 
—

 
—

 
—

 
16,476

Amortization of intangible assets
 
—

 
—

 
—

 
531

 
 
 
347

 
 
 
855

 
 
 
701

 
189

 
—

 
—

 
—

 
—

 
2,623

Non-cash interest expense
 
—

 
—

 
—

 
120

 
 
 
78

 
 
 
193

 
 
 
4

 
21

 
—

 
—

 
—

 
—

 
416

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
335

 
—

 
—

 
—

 
335

IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
1,669

 
—

 
—

 
—

 
—

 
1,669

Other
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
(13
)
 
—

 
—

 
(13
)
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






TWELVE MONTHS ENDED
 
 
January 1, 2017
 
 
 
 
 
 
Revenue
 
Gross Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Net income (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
720,331

 
$
436,915

 
$
1,402,316

 
$
116,772

 
16.2
%
 
$
(1,796
)
 
(0.4
)%
 
$
74,990

 
5.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(471,064
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(5,248
)
 
5,370

 
61,596

 
(1,657
)
 
 
 
3,751

 
 
 
8,418

 
 
 
—

 
—

 
—

 
4,260

 
—

 
39,607

 
54,379

Utility and power plant projects
 
—

 
—

 
9,443

 
—

 
 
 
—

 
 
 
10,274

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
10,274

Sale of operating lease assets
 
(6,396
)
 
—

 
—

 
(1,942
)
 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
53

 
—

 
—

 
(1,889
)
Sale-leaseback transactions
 
—

 
78,533

 
—

 
—

 
 
 
11,351

 
 
 
—

 
 
 
—

 
—

 
—

 
349

 
—

 
—

 
11,700

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
5,464

 
 
 
4,234

 
 
 
10,879

 
 
 
11,073

 
29,848

 
—

 
—

 
—

 
—

 
61,498

Amortization of intangible assets
 
—

 
—

 
—

 
2,965

 
 
 
3,059

 
 
 
1,655

 
 
 
3,007

 
6,683

 
—

 
—

 
—

 
—

 
17,369

Non-cash interest expense
 
—

 
—

 
—

 
227

 
 
 
199

 
 
 
530

 
 
 
17

 
84

 
—

 
—

 
—

 
—

 
1,057

Goodwill impairment
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
57,765

 
—

 
—

 
57,765

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
207,189

 
—

 
—

 
—

 
207,189

Arbitration ruling
 
—

 
—

 
—

 
(1,345
)
 
 
 
(922
)
 
 
 
(3,585
)
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(5,852
)
IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
(304
)
 
—

 
—

 
—

 
—

 
(304
)
Other
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
(32
)
 
—

 
1

 
—

 
—

 
(31
)
Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
(5,315
)
 
—

 
(5,315
)
Non-GAAP
 
$
708,687

 
$
520,818

 
$
1,473,355

 
$
120,484

 
17.0
%
 
$
19,876

 
3.8
 %
 
$
103,161

 
7.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(63,224
)





 
 
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
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
4,764

 
 
 
2,676

 
 
 
5,903

 
 
 
9,938

 
35,679

 
—

 
—

 
—

 
—

 
58,960

Amortization of intangible assets
 
—

 
—

 
—

 
728

 
 
 
451

 
 
 
1,155

 
 
 
1,664

 
719

 
—

 
—

 
—

 
—

 
4,717

Non-cash interest expense
 
—

 
—

 
—

 
638

 
 
 
330

 
 
 
1,069

 
 
 
31

 
84

 
—

 
4,032

 
—

 
—

 
6,184

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
6,391

 
—

 
—

 
—

 
6,391

Arbitration ruling
 
—

 
—

 
—

 
(2,084
)
 
 
 
(1,697
)
 
 
 
(2,678
)
 
 
 
—

 
—

 
 
 
—

 
—

 
—

 
(6,459
)
IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
12,837

 
—

 
15,196

 
—

 
—

 
28,033

Other
 
—

 
—

 
—

 
41

 
 
 
33

 
 
 
85

 
 
 
—

 
—

 
—

 
3

 
—

 
—

 
162

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