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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): August 1, 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 August 1, 2017, SunPower Corporation (the "Company") issued a press release, included as Exhibit 99.1 hereto, announcing its results of operations for its second fiscal quarter ended July 2, 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 August 1, 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
 
 
 
August 1, 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 August 1, 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 Second Quarter 2017 Results


SAN JOSE, Calif., Aug. 1, 2017 - SunPower Corp. (NASDAQ:SPWR) today announced financial results for its second quarter ended July 2, 2017.

($ Millions, except percentages and per-share data)
2nd Quarter 2017
1st Quarter 2017
2nd Quarter 2016
GAAP revenue
$337.4
$399.1
$420.5
GAAP gross margin
4.5%
(7.8)%
9.8%
GAAP net loss
$(93.8)
$(134.5)
$(70.0)
GAAP net loss per diluted share
$(0.67)
$(0.97)
$(0.51)
Non-GAAP revenue1
$341.5
$429.5
$401.8
Non-GAAP gross margin1,2
12.2%
6.5%
17.0%
Non-GAAP net loss1,2
$(49.3)
$(50.4)
$(14.2)
Non-GAAP net loss per diluted share1,2
$(0.35)
$(0.36)
$(0.10)
Adjusted EBITDA1,2
$13.5
$8.6
$45.8
Operating cash flow
$(161.8)
$(126.9)
$(300.1)
1Information 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.
2Excludes polysilicon costs related to its above market polysilicon contracts.

“Our strong execution enabled us to meet our financial goals for the quarter despite the continued challenging industry conditions,” said Tom Werner, SunPower president and CEO. “Our distributed generation business remains a key driver of our performance as demand for our complete solution products in both our residential and commercial segments remains robust. In power plant, we expect to deliver more than 500 MW of projects in the second half of this year. We are also seeing growing traction in our global SunPower® Solutions business as we booked or contracted more than 250 megawatts (MW) of agreements in the quarter. Operationally, we achieved our cost reduction targets for the quarter. Fab utilization is at 100 percent and we expect to remain fully utilized for the balance of the year. We also continued the successful ramp of our P-Series product in Mexico while starting initial P-Series production at our recently announced Chinese joint venture facility. Finally, we are benefitting from our investments in our next generation cell and module technology as we recently produced our first panels utilizing this technology on our new, leading-edge manufacturing line at our Silicon Valley research facility.

“Strategically, we continue to believe that our restructuring program will enable us to successfully navigate the current market transition while positioning us for improved financial performance. In the near-term, our focus remains on maximizing cash flow through project sales, lower operating expenses, and the potential monetization of non-core assets. In relation to 8point3 Energy Partners, our strategic review process is continuing, but we have received significant initial interest in the acquisition of our general partnership stake or in the sale of the entire partnership. Thus, we have made the decision not to actively seek a




replacement partner for First Solar and to focus our efforts on the monetization of our ownership stake in the partnership. In the event we complete a sale of our ownership stake in 8point3, we believe the proceeds will provide us with additional resources to deleverage our balance sheet and retire our 2018 convertible bonds to minimize shareholder dilution and continue to execute on our restructuring plan. Additionally, depending on market conditions, we may have the opportunity to refinance our 2018 convertible bonds as well. We have also recently offered our Boulder Solar 1 project to 8point3 and potentially will offer other Right of First Offer (ROFO) projects to the partnership as well. In the event the partnership waives its rights to acquire these projects, we would sell them to third parties. In either case, we expect the sale of these ROFO projects to generate additional cash proceeds to fund our growth initiatives.

“Looking forward, we will continue to invest in innovative technologies and allocate resources to those areas that offer significant growth opportunities including our next generation cell and module technology, our complete solution product suite, energy storage, digital platforms and Smart Energy strategy, as we believe these initiatives will best position the company for long-term success. Also, our more focused approach to our power plant development activities will allow us to further invest in our leadership position in our distributed generation segments while building continuing momentum in our SunPower Solutions business. We expect these initiatives will improve our competitive position, strengthen our balance sheet and enable us to return to long-term sustained profitability.” concluded Werner.

“Our second quarter results reflect our ability to execute on our diversified model in a challenging industry environment while benefitting from our corporate restructuring initiatives,” said Chuck Boynton, SunPower chief financial officer. “In the near term, we continue to remain focused on prudently managing our working capital and strengthening our balance sheet. With our decision to monetize our ownership of 8point3 and expected additional non-core asset sales, we anticipate having the resources to retire our 2018 convertible bond while continuing to invest in our strategic initiatives. Given our restructuring, flexible business model and demonstrated continued support from Total, we believe we are well positioned for the future.”

Second quarter fiscal 2017 non-GAAP results include net adjustments that, in the aggregate, decreased (increased) non-GAAP net loss by $44.5 million, including $2.5 million related to 8point3 Energy Partners, $2.4 million related to utility and power plant projects, $8.6 million related to stock-based compensation expense, $4.2 million related to amortization of intangible assets, $5.0 million related to restructuring expense, $21.8 million related to cost of above-market polysilicon, $(0.4) million related to other adjustments, and $0.4 million related to tax effect.

Financial Outlook
The company is updating its fiscal year 2017 revenue and gigawatt (GW) deployed guidance. The company now expects revenue of $1.9 billion to $2.1 billion on a GAAP basis and $2.1 billion to $2.3 billion on a non-GAAP basis with GW deployed in the range of 1.3 GW to 1.45 GW. This change is due to project schedule adjustments in Mexico to allow for improved project economics. Additionally, the company now expects lower than forecasted GAAP restructuring charges which will be in the range of $20 million to $60 million for the year. The balance of the company’s previously disclosed fiscal year 2017 guidance remains unchanged: non-GAAP operational expenses of less than $350 million and capital expenditures of approximately $120 million. Additionally, the company continues to expect to generate positive operating cash flow through the end of fiscal year 2017 and exit the year with approximately $300 million in cash excluding any proceeds from the potential divestiture of non-core assets. The company is also forecasting positive Adjusted EBITDA for the full year 2017 and continues to believe that cash flow and liquidity remain the key evaluation metrics for investors in the near term.

The company’s third quarter fiscal 2017 GAAP guidance is as follows: revenue of $300 million to $350 million, gross margin of negative 3 percent to negative 1 percent and net loss of $120 million to $100 million. Third 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 $320 million to $370 million, gross margin of 5 percent to 7 percent, Adjusted EBITDA of breakeven to $20 million and megawatts deployed in the range of 405 MW to 435 MW.

The company expects to deliver more than 500 MW of power plant projects in the second half of the year with a significant majority to be recognized in the fourth quarter of 2017.

The company will host a conference call for investors this afternoon to discuss its second quarter 2017 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 first quarter 2017 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
With more than 30 years of proven experience, SunPower is a global leader in solar innovation and sustainability. Our unique approach emphasizes the seamless integration of advanced SunPower technologies, delivering The Power of One® complete solar solutions and lasting customer value. SunPower provides outstanding service and impressive electricity cost savings for residential, commercial and power plant customers. At SunPower, we are passionately committed to changing the way our world is powered. And as we continue shaping the future of Smart Energy, we are guided by our legacy of innovation, optimism, perseverance and integrity. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, North America and South America. Since 2011, we’ve been majority-owned by Total, the fourth largest publicly-listed energy company in the world. For more information, 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) anticipated project timelines; (b) expected fab utilization; (c) our expectations for the timing, success, and financial impact of our restructuring plan and associated initiatives, including plans to sell projects and monetize certain non-core assets, and the impact of these initiatives on our financial performance, cash flow, and operating expenses; (c) the outcome of our ongoing strategic review of options for 8point3, our ability to complete a sale of our ownership stake in 8point3, and our plans for the proceeds of such a sale; (d) our ability to complete planned project sales, deleverage our balance sheet, retire our 2018 convertible bonds, strengthen our balance sheet, and generate additional cash proceeds to fund our planned growth initiatives; (e) our plans to invest in technologies and strategic initiatives and allocate resources; (f) our positioning for future success, long-term competitiveness, and our ability to return to sustained profitability; (g) our expectations regarding future support from Total; (h) our expectations for the solar industry and the markets we serve, including market conditions, recovery, and long-term prospects for improvement; (i) full year fiscal 2017 guidance, including GAAP and non-GAAP revenue, gigawatts deployed, operational expenditures, capital expenditures, restructuring charges, cash flow and ending cash, and Adjusted EBITDA; and (j) our third 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, or that we may not be able to successfully monetize our interest in 8point3 Energy Partners; (10) fluctuations or declines in the performance of our solar panels and other products and solutions; and (11) our ability to identify and successfully implement concrete actions to meet our cost reduction targets, reduce capital expenditures, and implement our restructuring plan and associated initiatives, including plans to sell projects, monetize assets, streamline our business and focus investment and resources.  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, EQUINOX and HELIX are trademarks or registered trademarks of SunPower Corporation in the U.S. and other countries as well.









 





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


 
Jul. 2, 2017
 
Jan. 1, 2017
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
327,281

 
$
425,309

Restricted cash and cash equivalents, current portion
20,313

 
33,657

Accounts receivable, net
195,871

 
219,638

Costs and estimated earnings in excess of billings
19,623

 
32,780

Inventories
444,990

 
401,707

Advances to suppliers, current portion
106,820

 
111,479

Project assets - plants and land, current portion
373,751

 
374,459

Prepaid expenses and other current assets
175,005

 
315,670

Total current assets
1,663,654

 
1,914,699

 
 
 
 
Restricted cash and cash equivalents, net of current portion
53,429

 
55,246

Restricted long-term marketable securities
4,860

 
4,971

Property, plant and equipment, net
1,049,856

 
1,027,066

Solar power systems leased and to be leased, net
677,515

 
621,267

Project assets - plants and land, net of current portion
40,771

 
33,571

Advances to suppliers, net of current portion
145,154

 
173,277

Long-term financing receivables, net
569,848

 
507,333

Goodwill and other intangible assets, net
36,713

 
44,218

Other long-term assets
114,920

 
185,519

Total assets
$
4,356,720

 
$
4,567,167

 
 
 
 
Liabilities and Equity
 
 
 

Current liabilities:
 
 
 

Accounts payable
$
425,909

 
$
540,295

Accrued liabilities
243,254

 
391,226

Billings in excess of costs and estimated earnings
11,707

 
77,140

Short-term debt
127,565

 
71,376

Convertible debt, current portion
299,235

 
—

Customer advances, current portion
41,261

 
10,138

Total current liabilities
1,148,931

 
1,090,175

 
 
 
 
Long-term debt
550,973

 
451,243

Convertible debt
815,503

 
1,113,478

Customer advances, net of current portion
74,331

 
298

Other long-term liabilities
785,549

 
721,032

Total liabilities
3,375,287

 
3,376,226

 
 
 
 
Redeemable noncontrolling interests in subsidiaries
114,045

 
103,621

 
 
 
 




Equity:
 
 
 

Preferred stock
—

 
—

Common stock
139

 
139

Additional paid-in capital
2,426,134

 
2,410,395

Accumulated deficit
(1,492,264
)
 
(1,218,681
)
Accumulated other comprehensive loss
(6,635
)
 
(7,238
)
Treasury stock, at cost
(180,998
)
 
(176,783
)
Total stockholders' equity
746,376

 
1,007,832

Noncontrolling interests in subsidiaries
121,012

 
79,488

Total equity
867,388

 
1,087,320

Total liabilities and equity
$
4,356,720

 
$
4,567,167






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 2, 2017
 
Apr. 2, 2017
 
Jul. 3, 2016
 
Jul. 2, 2017
 
Jul. 3, 2016
Revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
$
157,125

 
$
136,031

 
$
177,715

 
$
293,156

 
$
329,522

Commercial
 
100,105

 
108,263

 
97,846

 
208,368

 
150,087

Power Plant
 
80,216

 
154,782

 
144,891

 
234,998

 
325,718

Total revenue
 
337,446

 
399,076

 
420,452

 
736,522

 
805,327

Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
130,987

 
120,757

 
138,959

 
251,744

 
257,119

Commercial
 
97,530

 
110,629

 
89,523

 
208,159

 
134,749

Power Plant
 
93,694

 
198,622

 
150,676

 
292,316

 
320,628

Total cost of revenue
 
322,211

 
430,008

 
379,158

 
752,219

 
712,496

Gross margin
 
15,235

 
(30,932
)
 
41,294

 
(15,697
)
 
92,831

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
19,754

 
20,515

 
31,411

 
40,269

 
64,117

Selling, general and administrative
 
68,703

 
67,403

 
84,683

 
136,106

 
182,474

Restructuring charges
 
4,969

 
9,790

 
117

 
14,759

 
213

Total operating expenses
 
93,426

 
97,708

 
116,211

 
191,134

 
246,804

Operating loss
 
(78,191
)
 
(128,640
)
 
(74,917
)
 
(206,831
)
 
(153,973
)
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
Interest income
 
387

 
938

 
806

 
1,325

 
1,503

Interest expense
 
(22,370
)
 
(20,769
)
 
(13,950
)
 
(43,139
)
 
(26,831
)
Other, net
 
(15,744
)
 
(2,190
)
 
(5,822
)
 
(17,934
)
 
(12,054
)
Other expense, net
 
(37,727
)
 
(22,021
)
 
(18,966
)
 
(59,748
)
 
(37,382
)
Loss before income taxes and equity in earnings of unconsolidated investees
 
(115,918
)
 
(150,661
)
 
(93,883
)
 
(266,579
)
 
(191,355
)
Provision for income taxes
 
(2,353
)
 
(2,031
)
 
(6,648
)
 
(4,384
)
 
(9,829
)
Equity in earnings of unconsolidated investees
 
5,449

 
1,052

 
8,350

 
6,501

 
7,586

Net loss
 
(112,822
)
 
(151,640
)
 
(92,181
)
 
(264,462
)
 
(193,598
)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
19,062

 
17,161

 
22,189

 
36,223

 
38,197

Net loss attributable to stockholders
 
$
(93,760
)
 
$
(134,479
)
 
$
(69,992
)
 
$
(228,239
)
 
$
(155,401
)





Net loss per share attributable to stockholders:
 
 
 
 
 
 
 
 
 
 
- Basic
 
$
(0.67
)
 
$
(0.97
)
 
$
(0.51
)
 
$
(1.64
)
 
$
(1.13
)
- Diluted
 
$
(0.67
)
 
$
(0.97
)
 
$
(0.51
)
 
$
(1.64
)
 
$
(1.13
)
Weighted-average shares:
 
 
 
 
 
 
 
 
 
 
- Basic
 
139,448

 
138,902

 
138,084

 
139,175

 
137,644

- Diluted
 
139,448

 
138,902

 
138,084

 
139,175

 
137,644





SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 2, 2017
 
Apr. 2, 2017
 
Jul. 3, 2016
 
Jul. 2, 2017
 
Jul. 3, 2016
 
 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(112,822
)
 
$
(151,640
)
 
$
(92,181
)
 
$
(264,462
)
 
$
(193,598
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
45,269

 
42,084

 
40,898

 
87,353

 
83,015

Stock-based compensation
 
8,606

 
7,375

 
16,475

 
15,981

 
32,995

Non-cash interest expense
 
4,777

 
2,958

 
309

 
7,735

 
655

Impairment of equity method investment
 
8,607

 
—

 
—

 
8,607

 
—

Dividend from 8point3 Energy Partners LP
 
7,409

 
7,192

 
—

 
14,601

 
—

Equity in loss of unconsolidated investees
 
(5,449
)
 
(1,052
)
 
(8,350
)
 
(6,501
)
 
(7,586
)
Deferred income taxes
 
1,058

 
227

 
1,701

 
1,285

 
939

Other, net
 
(617
)
 
4,777

 
909

 
4,160

 
1,799

Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
(27,224
)
 
51,669

 
(35,856
)
 
24,445

 
(23,295
)
Costs and estimated earnings in excess of billings
 
1,859

 
11,298

 
23,826

 
13,157

 
6,301

Inventories
 
(29,772
)
 
(40,004
)
 
(96,799
)
 
(69,776
)
 
(115,047
)
Project assets
 
(97,022
)
 
37,192

 
(254,007
)
 
(59,830
)
 
(433,383
)
Prepaid expenses and other assets
 
53,852

 
85,251

 
94,060

 
139,103

 
48,619

Long-term financing receivables, net
 
(31,872
)
 
(30,643
)
 
(51,108
)
 
(62,515
)
 
(95,119
)
Advances to suppliers
 
19,081

 
13,701

 
28,656

 
32,782

 
40,569

Accounts payable and other accrued liabilities
 
(16,422
)
 
(198,119
)
 
82,051

 
(214,541
)
 
12,077

Billings in excess of costs and estimated earnings
 
(4,411
)
 
(61,022
)
 
(49,915
)
 
(65,433
)
 
(23,049
)
Customer advances
 
13,294

 
91,863

 
(760
)
 
105,157

 
(5,884
)
Net cash used in operating activities
 
(161,799
)
 
(126,893
)
 
(300,091
)
 
(288,692
)
 
(669,992
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
 
(17,246
)
 
(27,877
)
 
(46,281
)
 
(45,123
)
 
(93,325
)
Cash paid for solar power systems, leased and to be leased
 
(22,811
)
 
(18,217
)
 
(22,918
)
 
(41,028
)
 
(46,156
)




Cash paid for solar power systems
 
(3,407
)
 
(4,605
)
 
(2,282
)
 
(8,012
)
 
(2,282
)
Payments to 8point3 Energy Partners LP attributable to real estate projects and residential lease portfolio
 
—

 
—

 
130

 
—

 
(9,838
)
Dividend from equity method investees
 
1,421

 
—

 
—

 
1,421

 
—

Cash paid for investments in unconsolidated investees
 
(1,461
)
 
(10,142
)
 
(557
)
 
(11,603
)
 
(10,309
)
Net cash used in investing activities
 
(43,504
)
 
(60,841
)
 
(71,908
)
 
(104,345
)
 
(161,910
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
Proceeds from bank loans and other debt
 
90,637

 
110,763

 
—

 
201,400

 
—

Repayment of bank loans and other debt
 
(99,913
)
 
(129,027
)
 
(162
)
 
(228,940
)
 
(7,887
)
Proceeds from issuance of non-recourse residential financing, net of issuance costs
 
10,062

 
20,580

 
24,889

 
30,642

 
53,228

Repayment of non-recourse residential financing
 
(1,726
)
 
(1,298
)
 
(1,101
)
 
(3,024
)
 
(2,166
)
Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
47,595

 
49,030

 
33,083

 
96,625

 
57,165

Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
(4,691
)
 
(3,763
)
 
(1,596
)
 
(8,454
)
 
(6,905
)
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs
 
104,843

 
121,818

 
354,052

 
226,661

 
433,492

Repayment of non-recourse power plant and commercial financing
 
(3,057
)
 
(28,964
)
 
(51
)
 
(32,021
)
 
(37,352
)
Purchases of stock for tax withholding obligations on vested restricted stock
 
(153
)
 
(4,062
)
 
(795
)
 
(4,215
)
 
(19,671
)
Net cash provided by financing activities
 
143,597

 
135,077

 
408,319

 
278,674

 
469,904

Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
 
386

 
788

 
(467
)
 
1,174

 
307

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
 
(61,320
)
 
(51,869
)
 
35,853

 
(113,189
)
 
(361,691
)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
 
462,343

 
514,212

 
623,220

 
514,212

 
1,020,764





Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
 
$
401,023

 
$
462,343

 
$
659,073

 
$
401,023

 
$
659,073

 
 
 
 
 
 
 
 
 
 
 
Non-cash transactions:
 
 
 
 
 
 
 
 
 
 
Assignment of residential lease receivables to third parties
 
$
7

 
$
18

 
$
1,379

 
$
25

 
$
2,476

Costs of solar power systems, leased and to be leased, sourced from existing inventory
 
$
14,078

 
$
13,389

 
$
14,806

 
$
27,467

 
$
29,891

Costs of solar power systems, leased and to be leased, funded by liabilities
 
$
7,016

 
$
3,169

 
$
6,282

 
$
7,016

 
$
6,282

Costs of solar power systems under sale-leaseback financing arrangements sourced from project assets
 
$
2,702

 
$
52,917

 
$
7,375

 
$
55,619

 
$
7,375

Property, plant and equipment acquisitions funded by liabilities
 
$
40,669

 
$
44,966

 
$
73,247

 
$
40,669

 
$
73,247

Net reclassification of cash proceeds offset by project assets in connection with the deconsolidation of assets sold to the 8point3 Group
 
$
1,858

 
$
2,615

 
$
—

 
$
4,473

 
$
8,726

Exchange of receivables for an investment in an unconsolidated investee
 
$
—

 
$
—

 
$
2,890

 
$
—

 
$
2,890







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, cost of above-market polysilicon, 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 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.

•
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.

•
Cost of above-market polysilicon. The Company has entered in previous years into multiple long-term, fixed-price supply agreements to purchase polysilicon for periods of up to 10 years. The prices in these supply agreements, which incorporate a cash portion and a non-cash portion attributable to the amortization of prepayments made under the agreements, significantly exceed market prices. Additionally, in order to reduce inventory and improve working capital, the Company has periodically elected to sell polysilicon inventory in the marketplace at prices below the Company’s purchase price, thereby incurring a loss. Management believes that it is appropriate to exclude the impact of its above-market cost of polysilicon, including the effect of above-market polysilicon on product costs, losses incurred on sales of polysilicon to third parties, and inventory reserves and project asset impairments from the company's non-GAAP financial measures as they are not reflective of ongoing operating results and does not contribute to a meaningful evaluation of a company's past operating performance.





•
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 (loss) and non-GAAP net income (loss) 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
 
SIX MONTHS ENDED
 
 
Jul. 2, 2017
 
Apr. 2, 2017
 
Jul. 3, 2016
 
Jul. 2, 2017
 
Jul. 3, 2016
GAAP revenue
 
$
337,446

 
$
399,076

 
$
420,452

 
$
736,522

 
$
805,327

Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
(223
)
 
713

 
(1,400
)
 
490

 
(16,574
)
Utility and power plant projects
 
335

 
(23,780
)
 
(40,085
)
 
(23,445
)
 
13,453

Sale of operating lease assets
 
—

 
—

 
10,183

 
—

 
20,586

Sale-leaseback transactions
 
3,927

 
53,478

 
12,646

 
57,405

 
12,646

Non-GAAP revenue
 
$
341,485

 
$
429,487

 
$
401,796

 
$
770,972

 
$
835,438


Adjustments to Gross margin: 
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 2, 2017
 
Apr. 2, 2017
 
Jul. 3, 2016
 
Jul. 2, 2017
 
Jul. 3, 2016
GAAP gross margin
 
$
15,235

 
$
(30,932
)
 
$
41,294

 
$
(15,697
)
 
$
92,831

Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
870

 
1,189

 
(210
)
 
2,059

 
(4,852
)
Utility and power plant projects
 
2,378

 
27,174

 
4,128

 
29,552

 
7,685

Sale of operating lease assets
 
—

 
—

 
2,966

 
—

 
6,078

Sale-leaseback transactions
 
(2,270
)
 
(3,144
)
 
2,988

 
(5,414
)
 
2,988

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
1,052

 
1,184

 
5,464

 
2,236

 
9,589

Amortization of intangible assets
 
2,567

 
2,567

 
1,530

 
5,134

 
2,544

Non-cash interest expense
 
10

 
10

 
284

 
20

 
603

Cost of above-market polysilicon
 
21,826

 
29,815

 
15,901

 
51,641

 
28,615

Arbitration ruling
 
—

 
—

 
(5,852
)
 
—

 
(5,852
)
Non-GAAP gross margin
 
$
41,668

 
$
27,863

 
$
68,493

 
$
69,531

 
$
140,229

 
 
 
 
 
 
 
 
 
 
 
GAAP gross margin (%)
 
4.5
%
 
(7.8
)%
 
9.8
%
 
(2.1
)%
 
11.5
%
Non-GAAP gross margin (%)
 
12.2
%
 
6.5
 %
 
17.0
%
 
9.0
 %
 
16.8
%





Adjustments to Net income (loss): 
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 2, 2017
 
Apr. 2, 2017
 
Jul. 3, 2016
 
Jul. 2, 2017
 
Jul. 3, 2016
GAAP net loss attributable to stockholders
 
$
(93,760
)
 
$
(134,479
)
 
$
(69,992
)
 
$
(228,239
)
 
$
(155,401
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
2,458

 
8,101

 
18,039

 
10,559

 
28,758

Utility and power plant projects
 
2,378

 
27,174

 
4,128

 
29,552

 
7,685

Sale of operating lease assets
 
—

 
—

 
2,979

 
—

 
6,099

Sale-leaseback transactions
 
(173
)
 
(1,842
)
 
2,988

 
(2,015
)
 
2,988

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
8,606

 
7,375

 
16,475

 
15,981

 
32,995

Amortization of intangible assets
 
4,227

 
3,026

 
3,168

 
7,253

 
11,333

Non-cash interest expense
 
35

 
35

 
309

 
70

 
655

Restructuring expense
 
4,969

 
9,790

 
117

 
14,759

 
213

Arbitration ruling
 
—

 
—

 
(5,852
)
 
—

 
(5,852
)
IPO-related costs
 
(196
)
 
114

 
35

 
(82
)
 
35

Cost of above-market polysilicon
 
21,826

 
29,815

 
15,901

 
51,641

 
28,615

Other
 
—

 
—

 
(12
)
 
—

 
(11
)
Tax effect
 
350

 
513

 
(2,454
)
 
863

 
(770
)
Non-GAAP net loss attributable to stockholders
 
$
(49,280
)
 
$
(50,378
)
 
$
(14,171
)
 
$
(99,658
)
 
$
(42,658
)





Adjustments to Net income (loss) per diluted share:
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
Jul. 2, 2017
 
Apr. 2, 2017
 
Jul. 3, 2016
 
Jul. 2, 2017
 
Jul. 3, 2016
Net income (loss) per diluted share
 
 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
 
 
GAAP net loss available to common stockholders1
 
$
(93,760
)
 
$
(134,479
)
 
$
(69,992
)
 
$
(228,239
)
 
$
(155,401
)
Non-GAAP net loss available to common stockholders1
 
$
(49,280
)
 
$
(50,378
)
 
$
(14,171
)
 
$
(99,658
)
 
$
(42,658
)
 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
 
GAAP weighted-average shares
 
139,448

 
138,902

 
138,084

 
139,175

 
137,644

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
Stock options
 
—

 
—

 
—

 
—

 
—

Restricted stock units
 
—

 
—

 
—

 
—

 
—

Upfront Warrants (held by Total)
 
—

 
—

 
—

 
—

 
—

Warrants (under the CSO2015)
 
—

 
—

 
—

 
—

 
—

0.75% debentures due 2018
 
—

 
—

 
—

 
—

 
—

Non-GAAP weighted-average shares1
 
139,448

 
138,902

 
138,084

 
139,175

 
137,644

 
 
 
 
 
 
 
 
 
 
 
GAAP net loss per diluted share
 
$
(0.67
)
 
$
(0.97
)
 
$
(0.51
)
 
$
(1.64
)
 
$
(1.13
)
Non-GAAP net loss per diluted share
 
$
(0.35
)
 
$
(0.36
)
 
$
(0.10
)
 
$
(0.72
)
 
$
(0.31
)
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
 
SIX MONTHS ENDED
 
 
Jul. 2, 2017
 
Apr. 2, 2017
 
Jul. 3, 2016
 
Jul. 2, 2017
 
Jul. 3, 2016
GAAP net loss attributable to stockholders
 
$
(93,760
)
 
$
(134,479
)
 
$
(69,992
)
 
$
(228,239
)
 
$
(155,401
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
2,458

 
8,101

 
18,039

 
10,559

 
28,758

Utility and power plant projects
 
2,378

 
27,174

 
4,128

 
29,552

 
7,685

Sale of operating lease assets
 
—

 
—

 
2,979

 
—

 
6,099

Sale-leaseback transactions
 
(173
)
 
(1,842
)
 
2,988

 
(2,015
)
 
2,988

Other adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
8,606

 
7,375

 
16,475

 
15,981

 
32,995

Amortization of intangible assets
 
4,227

 
3,026

 
3,168

 
7,253

 
11,333

Non-cash interest expense
 
35

 
35

 
309

 
70

 
655

Restructuring expense
 
4,969

 
9,790

 
117

 
14,759

 
213

Arbitration ruling
 
—

 
—

 
(5,852
)
 
—

 
(5,852
)
IPO-related costs
 
(196
)
 
114

 
35

 
(82
)
 
35

Cost of above-market polysilicon
 
21,826

 
29,815

 
15,901

 
51,641

 
28,615

Other
 
—

 
—

 
(12
)
 
—

 
(11
)
Cash interest expense, net of interest income
 
19,886

 
18,529

 
13,144

 
38,415

 
25,328

Provision for income taxes
 
2,353

 
2,031

 
6,648

 
4,384

 
9,829

Depreciation
 
40,917

 
38,932

 
37,730

 
79,849

 
71,556

Adjusted EBITDA
 
$
13,526

 
$
8,601

 
$
45,805

 
$
22,127

 
$
64,825









Q3 2017 and FY 2017 GUIDANCE
(in thousands except percentages)
Q3 2017
FY 2017
Revenue (GAAP)
$300,000-$350,000
$1,850,000-$2,050,000
Revenue (non-GAAP)1
$320,000-$370,000
$2,100,000-$2,300,000
Gross margin (GAAP)
(3)%-(1)%
N/A
Gross margin (non-GAAP)2
5%-7%
N/A
Net loss (GAAP)
$(120,000)-$(100,000)
N/A
Adjusted EBITDA3
$0-20,000
N/A

1.
Estimated non-GAAP amounts above for Q3 2017 include net adjustments that increase revenue by approximately $20 million related to sale-leaseback transactions. Estimated non-GAAP amounts above for fiscal 2017 include net adjustments that increase (decrease) revenue by approximately $(60) million related to 8point3, and $310 million related to sale-leaseback transactions.


2.
Estimated non-GAAP amounts above for Q3 2017 include net adjustments that increase gross margin by approximately $6 million related to utility and power plant projects, $3 million related to sale-leaseback transactions, $3 million related to stock-based compensation expense, $1 million related to amortization of intangible assets, and $21 million related to cost of above-market polysilicon.


3.
Estimated Adjusted EBITDA amounts above for Q3 2017 include net adjustments that decrease net loss by approximately $6 million related to utility and power plant projects, $3 million related to sale-leaseback transactions, $10 million related to stock-based compensation expense, $3 million related to amortization of intangible assets, $1 million related to non-cash interest expense, $10 million related to restructuring, $21 million related to interest expense, $2 million related to income taxes, $43 million related to depreciation, and $21 million related to cost of above-market polysilicon.







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 (loss) and net income (loss) per diluted share measures for each period presented in the Consolidated Statements of Operations contained herein.

THREE MONTHS ENDED
 
 
July 2, 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
 
$
157,125

 
$
100,105

 
$
80,216

 
$
26,138

 
16.6
%
 
$
2,575

 
2.6
%
 
$
(13,478
)
 
(16.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(93,760
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(1,319
)
 
1,470

 
(374
)
 
(477
)
 
 
 
891

 
 
 
456

 
 
 
—

 
—

 
—

 
1,060

 
—

 
528

 
2,458

Utility and power plant projects
 
—

 
327

 
8

 
—

 
 
 
327

 
 
 
2,051

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2,378

Sale-leaseback transactions
 
—

 
3,927

 
—

 
—

 
 
 
(2,225
)
 
 
 
(45
)
 
 
 
—

 
—

 
—

 
2,097

 
—

 
—

 
(173
)
Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
314

 
 
 
293

 
 
 
445

 
 
 
1,036

 
6,518

 
—

 
—

 
—

 
—

 
8,606

Amortization of intangible assets
 
—

 
—

 
—

 
870

 
 
 
672

 
 
 
1,025

 
 
 
1,201

 
459

 
—

 
—

 
—

 
—

 
4,227

Non-cash interest expense
 
—

 
—

 
—

 
2

 
 
 
2

 
 
 
6

 
 
 
4

 
21

 
—

 
—

 
—

 
—

 
35

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
4,969

 
—

 
—

 
—

 
4,969

IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
(196
)
 
—

 
—

 
—

 
—

 
(196
)
Cost of above-market polysilicon
 
—

 
—

 
—

 
4,731

 
 
 
5,000

 
 
 
12,095

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
21,826

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
350

 
—

 
350

Non-GAAP
 
$
155,806

 
$
105,829

 
$
79,850

 
$
31,578

 
20.3
%
 
$
7,535

 
7.1
%
 
$
2,555

 
3.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(49,280
)






 
 
April 2, 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
 
$
136,031

 
$
108,263

 
$
154,782

 
$
15,274

 
11.2
%
 
$
(2,366
)
 
(2.2
)%
 
$
(43,840
)
 
(28.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(134,479
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(1,337
)
 
2,667

 
(617
)
 
(503
)
 
 
 
1,693

 
 
 
(1
)
 
 
 
—

 
—

 
—

 
6,066

 
—

 
846

 
8,101

Utility and power plant projects
 
—

 
—

 
(23,780
)
 
—

 
 
 
—

 
 
 
27,174

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
27,174

Sale-leaseback transactions
 
—

 
23,041

 
30,437

 
—

 
 
 
(2,665
)
 
 
 
(479
)
 
 
 
—

 
—

 
—

 
1,302

 
—

 
—

 
(1,842
)
Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
210

 
 
 
249

 
 
 
725

 
 
 
1,528

 
4,663

 
—

 
—

 
—

 
—

 
7,375

Amortization of intangible assets
 
—

 
—

 
—

 
1,214

 
 
 
836

 
 
 
517

 
 
 
—

 
459

 
—

 
—

 
—

 
—

 
3,026

Non-cash interest expense
 
—

 
—

 
—

 
4

 
 
 
3

 
 
 
3

 
 
 
4

 
21

 
—

 
—

 
—

 
—

 
35

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
9,790

 
—

 
—

 
—

 
9,790

IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
114

 
—

 
—

 
—

 
—

 
114

Cost of above-market polysilicon
 
—

 
—

 
—

 
4,351

 
 
 
7,132

 
 
 
18,332

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
29,815

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
513

 
—

 
513

Non-GAAP
 
$
134,694

 
$
133,971

 
$
160,822

 
$
20,550

 
15.3
%
 
$
4,882

 
3.6
 %
 
$
2,431

 
1.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(50,378
)







 
 
July 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 (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
177,715

 
$
97,846

 
$
144,891

 
$
38,756

 
21.8
%
 
$
8,323

 
8.5
%
 
$
(5,785
)
 
(4.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(69,992
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(1,287
)
 
—

 
(113
)
 
(419
)
 
 
 
179

 
 
 
30

 
 
 
—

 
—

 
—

 
1,061

 
—

 
17,188

 
18,039

Utility and power plant projects
 
—

 
—

 
(40,085
)
 
—

 
 
 
—

 
 
 
4,128

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
4,128

Sale of operating lease assets
 
10,183

 
—

 
—

 
2,966

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
13

 
—

 
—

 
2,979

Sale-leaseback transactions
 
—

 
12,646

 
—

 
—

 
 
 
2,988

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2,988

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
1,652

 
 
 
745

 
 
 
3,067

 
 
 
2,965

 
8,046

 
—

 
—

 
—

 
—

 
16,475

Amortization of intangible assets
 
—

 
—

 
—

 
576

 
 
 
608

 
 
 
346

 
 
 
1,187

 
451

 
—

 
—

 
—

 
—

 
3,168

Non-cash interest expense
 
—

 
—

 
—

 
63

 
 
 
52

 
 
 
169

 
 
 
3

 
22

 
—

 
—

 
—

 
—

 
309

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
117

 
—

 
—

 
—

 
117

Arbitration ruling
 
—

 
—

 
—

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

 
—

 
—

 
—

 
—

 
—

 
(5,852
)
IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
35

 
—

 
—

 
—

 
—

 
35

Cost of above-market polysilicon
 
—

 
—

 
—

 
3,619

 
 
 
2,531

 
 
 
9,751

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
15,901

Other
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
(12
)
 
—

 
—

 
(12
)
Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
(2,454
)
 
—

 
(2,454
)
Non-GAAP
 
$
186,611

 
$
110,492

 
$
104,693

 
$
45,868

 
24.6
%
 
$
14,504

 
13.1
%
 
$
8,121

 
7.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(14,171
)






SIX MONTHS ENDED
 
 
July 2, 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
 
$
293,156

 
$
208,368

 
$
234,998

 
$
41,412

 
14.1
%
 
$
209

 
0.1
%
 
$
(57,318
)
 
(24.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(228,239
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(2,656
)
 
4,137

 
(991
)
 
(980
)
 
 
 
2,584

 
 
 
455

 
 
 
—

 
—

 
—

 
7,126

 
—

 
1,374

 
10,559

Utility and power plant projects
 
—

 
327

 
(23,772
)
 
—

 
 
 
327

 
 
 
29,225

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
29,552

Sale-leaseback transactions
 
—

 
26,968

 
30,437

 
—

 
 
 
(4,890
)
 
 
 
(524
)
 
 
 
—

 
—

 
—

 
3,399

 
—

 
—

 
(2,015
)
Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
524

 
 
 
542

 
 
 
1,170

 
 
 
2,564

 
11,181

 
—

 
—

 
—

 
—

 
15,981

Amortization of intangible assets
 
—

 
—

 
—

 
2,084

 
 
 
1,508

 
 
 
1,542

 
 
 
1,201

 
918

 
—

 
—

 
—

 
—

 
7,253

Non-cash interest expense
 
—

 
—

 
—

 
6

 
 
 
5

 
 
 
9

 
 
 
8

 
42

 
—

 
—

 
—

 
—

 
70

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
14,759

 
—

 
—

 
—

 
14,759

IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
(82
)
 
—

 
—

 
—

 
—

 
(82
)
Cost of above-market polysilicon
 
—

 
—

 
—

 
9,082

 
 
 
12,132

 
 
 
30,427

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
51,641

Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
863

 
—

 
863

Non-GAAP
 
$
290,500

 
$
239,800

 
$
240,672

 
$
52,128

 
17.9
%
 
$
12,417

 
5.2
%
 
$
4,986

 
2.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(99,658
)





 
 
July 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 (loss) attributable to stockholders
 
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
 
$
329,522

 
$
150,087

 
$
325,718

 
$
72,403

 
22.0
%
 
$
15,338

 
10.2
%
 
$
5,090

 
1.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(155,401
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3
 
(2,599
)
 
—

 
(13,975
)
 
(904
)
 
 
 
179

 
 
 
(4,127
)
 
 
 
—

 
—

 
—

 
2,123

 
—

 
31,487

 
28,758

Utility and power plant projects
 
—

 
—

 
13,453

 
—

 
 
 
—

 
 
 
7,685

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
7,685

Sale of operating lease assets
 
20,586

 
—

 
—

 
6,078

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
21

 
—

 
—

 
6,099

Sale-leaseback transactions
 
—

 
12,646

 
—

 
—

 
 
 
2,988

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2,988

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
—

 
—

 
—

 
2,479

 
 
 
1,397

 
 
 
5,713

 
 
 
5,997

 
17,409

 
—

 
—

 
—

 
—

 
32,995

Amortization of intangible assets
 
—

 
—

 
—

 
987

 
 
 
1,234

 
 
 
323

 
 
 
3,007

 
5,782

 
—

 
—

 
—

 
—

 
11,333

Non-cash interest expense
 
—

 
—

 
—

 
134

 
 
 
91

 
 
 
378

 
 
 
10

 
42

 
—

 
—

 
—

 
—

 
655

Restructuring expense
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
213

 
—

 
—

 
—

 
213

Arbitration ruling
 
—

 
—

 
—

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

 
—

 
—

 
—

 
—

 
—

 
(5,852
)
IPO-related costs
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
35

 
—

 
—

 
—

 
—

 
35

Cost of above-market polysilicon
 
—

 
—

 
—

 
7,054

 
 
 
4,070

 
 
 
17,491

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
28,615

Other
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
1

 
—

 
(12
)
 
—

 
—

 
(11
)
Tax effect
 
—

 
—

 
—

 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
—

 
—

 
—

 
(770
)
 
—

 
(770
)
Non-GAAP
 
$
347,509

 
$
162,733

 
$
325,196

 
$
86,886

 
25.0
%
 
$
24,375

 
15.0
%
 
$
28,968

 
8.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(42,658
)