Document


 

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): July 30, 2018
 
 
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))
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 







Item 2.02.
Results of Operations and Financial Condition.

On July 30, 2018, SunPower Corporation, a Delaware 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 1, 2018.

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
Press release dated July 30, 2018





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
 
 
 
July 30, 2018
By:
/S/ MANAVENDRA S. SIAL
 
Name:
Manavendra S. Sial
 
Title:
Executive Vice President and
Chief Financial Officer




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 Results
Significant Progress on Strategic Plan to Simplify and Delever Business Model

SAN JOSE, Calif., July 30, 2018 - SunPower Corp. (NASDAQ:SPWR) today announced financial results for its second quarter ended July 1, 2018.

Second Quarter Highlights
Exceeded Non-GAAP Revenue, Margin and Adjusted EBITDA forecasts
Year over year Distributed Generation (DG) volume growth of 45%, US residential up 15%
Strong continued interest in Helix commercial storage application - 35% attach rate
Record bookings quarter for SunPower Solutions group - shipments rose 37% sequentially
Increasing focus on Next Generation Technology (NGT) scale-up, volume production planned in Q4'18
$369.2 million non-cash impairment of legacy manufacturing assets

($ Millions, except percentages and per-share data)
2nd Quarter 2018
1st Quarter 2018
2nd Quarter 20173
GAAP revenue
$449.1
$391.9
$328.0
GAAP gross margin4
(69.1)%
2.6%
4.9%
GAAP net loss4
$(447.1)
$(116.0)
$(90.5)
GAAP net loss per diluted share4
$(3.17)
$(0.83)
$(0.65)
Non-GAAP revenue1
$447.2
$398.9
$341.5
Non-GAAP gross margin1,2
11.7%
6.5%
12.2%
Non-GAAP net income (loss)1,2
$(1.9)
$(28.2)
$(49.3)
Non-GAAP net income (loss) per diluted share1,2
$(0.01)
$(0.20)
$(0.35)
Adjusted EBITDA1,2
$58.6
$32.3
$13.5
Net Debt
$1,082.6
$1,347.3
$1,466.0
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.
3The company adopted the new revenue recognition standard effective January 1, 2018. The prior periods presented here have been restated to reflect adoption of the new standard.
4Includes impairment charges of approximately $369.2 million for legacy manufacturing assets of which $355.1 million is recorded in GAAP gross margin.

“Strong customer demand in our global DG business, combined with our continuing cost control initiatives, enabled us to exceed our forecasts for the quarter,” said Tom Werner, SunPower CEO and chairman of the board. “We also made significant progress on our previously announced efforts to delever our balance sheet and simplify our business model with the monetization of our ownership stake in 8point3 Energy Partners and the planned sale of our microinverter assets to Enphase, as





previously announced. Strategically, we remain committed to achieving sustainable profitability, scaling our NGT and improving cash flow.

“We expect to transition to our new upstream and downstream segmentation by the first quarter of 2019. This decision will allow us to focus our downstream efforts on the higher-margin U.S. DG business while growing global sales of our upstream solar panel business through our SunPower Solutions group. Also, this structure will provide the resources to invest in those areas that offer the highest differentiation and growth potential including our industry-leading NGT cell and panel technology, solar-plus-storage solutions, as well as expanding our grid-services offerings,” concluded Werner.

“Demand for our industry-leading solutions, as well as the prudent management of our expenses, enabled us to surpass our forecasts,” said Manavendra Sial, SunPower chief financial officer. “We were also pleased with the completion of the first phase of our asset monetization strategy as we expect these transactions, as well as others, will provide us with the resources we need to invest in our core growth opportunities that especially enhance our DG business. Additionally, in preparation for our new segmentation, we successfully implemented several lean corporate expense initiatives which will streamline our decision-making processes and reduce future corporate run rate costs. With our cash flow focused strategy, improved balance sheet and the benefits of the transition to our new segmentation in the fourth quarter, we are well positioned to achieve our financial goals this year.”

Also, the company continues to execute on its technology roadmaps, including the ramp of its NGT cell and panel technology which is ahead of plan. As a result of this progress the company has made the decision to transition its existing interdigitated back contact (IBC) capacity to NGT cell and panel technology. Accordingly, the company expects to upgrade certain equipment associated with its manufacturing operations for the production of NGT over the next several years. In connection with this evaluation, and other factors, the company recognized non-cash impairment charges of approximately $369.2 million in the second quarter related to the value of its legacy manufacturing assets. Additionally, SunPower remains committed to expanding its U.S. manufacturing footprint and is continuing to work to complete its planned acquisition of SolarWorld Americas. Following closing, which is subject to certain conditions, the company plans to manufacture its proprietary P-Series technology at the SolarWorld Americas Oregon plant.

Second quarter fiscal year (FY) 2018 non-GAAP results exclude net adjustments that, in the aggregate, improved non-GAAP earnings by $445.2 million, including $369.2 million related to the impairment of property, plant and equipment, $50.4 million related to impairment of residential lease assets, $16.7 million related to cost of above market polysilicon, $6.6 million related to stock-based compensation expense, $4.2 million related to sale-leaseback transactions, $3.5 million related to restructuring expense, $2.4 million related to intangibles, and $1.1 million related to tax effect, partially offset by $8.3 million related to 8point3 Energy Partners tax indemnifications and $0.6 million related to utility and power plant projects.

Financial Outlook

The company's third quarter and FY 2018 GAAP and non-GAAP guidance reflects the impact related to the section 201 trade case.

The company’s third quarter GAAP guidance is as follows: revenue of $425 million to $475 million, gross margin of negative 1.0 percent to positive 1.0 percent and a net loss of $215 million to $195 million. Third quarter 2018 GAAP guidance includes the impact of revenue and timing deferrals due to sale-leaseback transactions as well as charges related to the company’s restructuring initiatives. On a non-GAAP basis, the company expects revenue of $450 million to $500 million, gross margin of 6 percent to 8 percent, Adjusted EBITDA of negative $10 million to positive $10 million and megawatts (MW) deployed in the range of 400 MW to 430 MW. Third quarter guidance excludes the impact of the company's proposed acquisition of SolarWorld Americas as well as the potential financial impact of timing differences related to its previously announced proposed asset sales. Additionally, third quarter Adjusted EBITDA guidance assumes an approximate $10 million inventory charge related to the company's second quarter impairment of legacy manufacturing assets.

For FY 2018, the company now expects Adjusted EBITDA to be in the range of $95 million to $125 million compared to its previous guidance of $75 million to $125 million. Additionally, as a result of the asset impairment charge in the second quarter of 2018, the company expects its FY 2018 GAAP net loss to be in the range of $830 million to $860 million. The balance of the company’s FY 2018 non-GAAP guidance remains unchanged.

The company will host a conference call for investors this afternoon to discuss its second quarter 2018 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 second quarter 2018 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 MW on a direct current (dc) basis unless otherwise noted.

About SunPower
As one of the world's most innovative and sustainable energy companies, SunPower Corporation (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 superb performance throughout the long life of every solar system. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, 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 plans and expectations regarding manufacturing expansion, production goals and production ramps, including the timing of our planned ramp of NGT production, and cost reduction efforts; (b) our plans to delever our balance sheet, simplify our business model, achieve sustainable profitability, provide corporate transparency, streamline decision making, and the impact of these initiatives on our liquidity, financial performance, cash flow, and operating expenses; (c) our plans to invest in technologies and strategic initiatives and allocate resources; (d) our ability to successfully complete key strategic transactions, including the sale of our remaining power plant development assets, our planned monetization of our lease portfolio and associated accounting charges, the sale of our microinverter business, and our expectations regarding the timing and proceeds of such transactions, and their impact on our financial statements; (e) our plans to align into upstream and downstream business units and transition our segmentation accordingly, and the timing and financial impacts of such plans; (f) our strategic goals and plans, and our ability to achieve them, including our plans to expand of our U.S. distributed generation and SunPower Solutions business lines, and our ability to meet global demand; (g) our expectations and plans regarding product focus, growth and market share, profitability, margins, and financial performance in each of our business lines;(h) our ability to fund our planned growth initiatives; (i) the effect of our corporate initiatives to streamline decision-making and reduce costs; (j) our positioning for future success, long-term competitiveness, and our ability to achieve our financial goals; (k) our plans and expectations with respect to acquisition and expansion activities, including the planned SolarWorld Americas acquisition and the planned sale of our microinverter assets to Enphase; (l) our third quarter fiscal 2018 guidance, including GAAP revenue, gross margin, and net loss, as well as non-GAAP revenue, gross margin, Adjusted EBITDA, and MW deployed, including related assumptions; and (m) fiscal year 2018 guidance, including Adjusted EBITDA, including related assumptions and projected year over year growth. 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) changes in public policy, including the imposition and applicability of tariffs pursuant to the Section 201 trade action and the process for exemptions; (4) regulatory changes and the availability of economic incentives promoting use of solar energy; (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 and logistics difficulties that could arise; (8) challenges managing our joint ventures and partnerships; (9) challenges in executing transactions key to our strategic plans; and (10) our ability to successfully implement 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, and streamline our business and focus.  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.


©2018 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)


 
July 1, 2018
 
December 31, 2017
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
256,689

 
$
435,097

Restricted cash and cash equivalents, current portion
36,941

 
43,709

Accounts receivable, net
205,795

 
204,966

Contract assets
70,449

 
35,074

Inventories
368,407

 
352,829

Advances to suppliers, current portion
83,771

 
30,689

Project assets - plants and land, current portion
76,347

 
103,063

Prepaid expenses and other current assets
121,348

 
146,209

Total current assets
1,219,747

 
1,351,636

 
 
 
 
Restricted cash and cash equivalents, net of current portion
70,970

 
65,531

Restricted long-term marketable securities
5,838

 
6,238

Property, plant and equipment, net
757,071

 
1,147,845

Solar power systems leased and to be leased, net
359,095

 
369,218

Advances to suppliers, net of current portion
117,096

 
185,299

Long-term financing receivables, net
379,076

 
330,672

Other intangible assets, net
20,878

 
25,519

Other long-term assets
140,039

 
546,698

Total assets
$
3,069,810

 
$
4,028,656

 
 
 
 
Liabilities and Equity
 
 
 

Current liabilities:
 
 
 

Accounts payable
$
349,819

 
$
406,902

Accrued liabilities
196,405

 
229,208

Contract liabilities, current portion
91,794

 
104,286

Short-term debt
58,194

 
58,131

Convertible debt, current portion

 
299,685

Total current liabilities
696,212

 
1,098,212

 
 
 
 
Long-term debt
463,696

 
430,634

Convertible debt, net of current portion
817,405

 
816,454

Contract liabilities, net of current portion
148,182

 
171,610

Other long-term liabilities
799,339

 
804,122

Total liabilities
2,924,834

 
3,321,032

 
 
 
 
Redeemable noncontrolling interests in subsidiaries
14,335

 
15,236

 
 
 
 
Equity:
 
 
 

Preferred stock

 






Common stock
141

 
140

Additional paid-in capital
2,455,813

 
2,442,513

Accumulated deficit
(2,232,988
)
 
(1,669,897
)
Accumulated other comprehensive loss
(1,676
)
 
(3,008
)
Treasury stock, at cost
(186,439
)
 
(181,539
)
Total stockholders' equity
34,851

 
588,209

Noncontrolling interests in subsidiaries
95,790

 
104,179

Total equity
130,641

 
692,388

Total liabilities and equity
$
3,069,810

 
$
4,028,656







SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
July 1, 2018
 
April 1, 2018
 
July 2, 2017
 
July 1, 2018
 
July 2, 2017
Revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
$
205,181

 
$
169,432

 
$
155,806

 
$
374,613

 
$
290,500

Commercial
 
127,872

 
123,336

 
91,826

 
251,208

 
197,272

Power Plant
 
116,044

 
99,120

 
80,349

 
215,164

 
169,304

Total revenue
 
449,097

 
391,888

 
327,981

 
840,985

 
657,076

Cost of revenue:
 
 
 
 
 
 
 
 
 
 
Residential
 
254,451

 
141,390

 
130,143

 
395,841

 
250,063

Commercial
 
229,013

 
118,023

 
88,616

 
347,036

 
194,216

Power Plant
 
275,848

 
122,227

 
93,055

 
398,075

 
242,214

Total cost of revenue
 
759,312

 
381,640

 
311,814

 
1,140,952

 
686,493

Gross profit (loss)
 
(310,215
)
 
10,248

 
16,167

 
(299,967
)
 
(29,417
)
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
31,210

 
18,891

 
19,754

 
50,101

 
40,269

Selling, general and administrative
 
64,719

 
65,130

 
68,703

 
129,849

 
136,106

Restructuring charges
 
3,504

 
11,177

 
4,969

 
14,681

 
14,759

Impairment of residential lease assets
 
68,269

 
49,092

 

 
117,361

 

Total operating expenses
 
167,702

 
144,290

 
93,426

 
311,992

 
191,134

Operating loss
 
(477,917
)
 
(134,042
)
 
(77,259
)
 
(611,959
)
 
(220,551
)
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
Interest income
 
664

 
529

 
387

 
1,193

 
1,325

Interest expense
 
(26,718
)
 
(25,106
)
 
(22,505
)
 
(51,824
)
 
(43,407
)
Other, net
 
36,624

 
15,794

 
(14,684
)
 
52,418

 
(88,772
)
Other income (expense), net
 
10,570

 
(8,783
)
 
(36,802
)
 
1,787

 
(130,854
)
Loss before income taxes and equity in earnings (losses) of unconsolidated investees
 
(467,347
)
 
(142,825
)
 
(114,061
)
 
(610,172
)
 
(351,405
)
Provision for income taxes
 
(3,081
)
 
(2,628
)
 
(2,353
)
 
(5,709
)
 
(4,384
)
Equity in earnings (losses) of unconsolidated investees
 
(13,415
)
 
(2,144
)
 
6,837

 
(15,559
)
 
9,325

Net loss
 
(483,843
)
 
(147,597
)
 
(109,577
)
 
(631,440
)
 
(346,464
)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
36,726

 
31,623

 
19,062

 
68,349

 
36,223

Net loss attributable to stockholders
 
$
(447,117
)
 
$
(115,974
)
 
$
(90,515
)
 
$
(563,091
)
 
$
(310,241
)






Net loss per share attributable to stockholders:
 
 
 
 
 
 
 
 
 
 
- Basic
 
$
(3.17
)
 
$
(0.83
)
 
$
(0.65
)
 
$
(4.01
)
 
$
(2.23
)
- Diluted
 
$
(3.17
)
 
$
(0.83
)
 
$
(0.65
)
 
$
(4.01
)
 
$
(2.23
)
Weighted-average shares:
 
 
 
 
 
 
 
 
 
 
- Basic
 
140,926

 
140,212

 
139,448

 
140,569

 
139,175

- Diluted
 
140,926

 
140,212

 
139,448

 
140,569

 
139,175







SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
July 1, 2018
 
April 1, 2018
 
July 2, 2017
 
July 1, 2018
 
July 2, 2017
 
 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(483,843
)
 
$
(147,597
)
 
$
(109,577
)
 
$
(631,440
)
 
$
(346,464
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
38,568

 
39,833

 
44,424

 
78,401

 
85,671

Stock-based compensation
 
6,644

 
7,053

 
8,606

 
13,697

 
15,981

Non-cash interest expense
 
3,819

 
4,443

 
4,777

 
8,262

 
7,735

Dividend from 8point3 Energy Partners LP
 
(1,452
)
 
5,399

 
7,409

 
3,947

 
14,601

Equity in (earnings) losses of unconsolidated investees
 
13,414

 
2,144

 
(6,836
)
 
15,559

 
(9,325
)
Gain on sale of equity method investment
 
(34,449
)
 
(15,576
)
 

 
(50,025
)
 

Deferred income taxes
 
1,775

 
(344
)
 
1,058

 
1,431

 
1,285

Impairment of equity method investment
 

 

 
8,607

 

 
81,571

Impairment of property, plant and equipment
 
369,168

 

 

 
369,168

 

Impairment of residential lease assets
 
68,269

 
49,092

 

 
117,361

 

Other, net
 
(3,415
)
 
972

 
(617
)
 
(2,443
)
 
4,160

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
(17,957
)
 
13,924

 
(23,169
)
 
(4,033
)
 
27,482

Contract assets
 
(11,814
)
 
(23,561
)
 
(2,220
)
 
(35,375
)
 
10,181

Inventories
 
(41,654
)
 
(34,195
)
 
(36,440
)
 
(75,849
)
 
(76,444
)
Project assets
 
(9,398
)
 
20,484

 
(105,957
)
 
11,086

 
(73,697
)
Prepaid expenses and other assets
 
23,423

 
10,885

 
52,101

 
34,308

 
85,365

Long-term financing receivables, net
 
(71,042
)
 
(38,114
)
 
(31,821
)
 
(109,156
)
 
(62,405
)
Advances to suppliers
 
9,973

 
5,149

 
19,081

 
15,122

 
32,782

Accounts payable and other accrued liabilities
 
20,713

 
(100,156
)
 
5,296

 
(79,444
)
 
(193,612
)
Contract liabilities
 
(2,822
)
 
(33,097
)
 
3,479

 
(35,919
)
 
106,441

Net cash used in operating activities
 
(122,080
)
 
(233,262
)
 
(161,799
)
 
(355,342
)
 
(288,692
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
 
(16,503
)
 
(8,859
)
 
(17,246
)
 
(25,362
)
 
(45,123
)





Cash paid for solar power systems, leased and to be leased
 
(14,901
)
 
(23,787
)
 
(22,811
)
 
(38,688
)
 
(41,028
)
Cash paid for solar power systems
 
(832
)
 
(2,604
)
 
(3,407
)
 
(3,436
)
 
(8,012
)
Dividend from equity method investees
 
10,258

 
2,694

 
1,421

 
12,952

 
1,421

Proceeds from sale of equity method investment
 
390,484

 
27,282

 

 
417,766

 

Cash paid for investments in unconsolidated investees
 
(7,712
)
 
(6,349
)
 
(1,461
)
 
(14,061
)
 
(11,603
)
Net cash provided by (used in) investing activities
 
360,794

 
(11,623
)
 
(43,504
)
 
349,171

 
(104,345
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
Proceeds from bank loans and other debt
 
66,665

 
49,794

 
90,637

 
116,459

 
201,400

Repayment of 0.75% debentures due 2018, bank loans and other debt
 
(368,475
)
 
(51,052
)
 
(99,913
)
 
(419,527
)
 
(228,940
)
Proceeds from issuance of non-recourse residential financing, net of issuance costs
 
34,422

 
32,687

 
10,062

 
67,109

 
30,642

Repayment of non-recourse residential financing
 
(6,118
)
 
(3,781
)
 
(1,726
)
 
(9,899
)
 
(3,024
)
Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
36,564

 
36,726

 
47,595

 
73,290

 
96,625

Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
(7,160
)
 
(5,422
)
 
(4,691
)
 
(12,582
)
 
(8,454
)
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs
 
13,182

 
9,104

 
104,843

 
22,286

 
226,661

Repayment of non-recourse power plant and commercial financing
 
(3,788
)
 
(890
)
 
(3,057
)
 
(4,678
)
 
(32,021
)
Purchases of stock for tax withholding obligations on vested restricted stock
 
(374
)
 
(4,526
)
 
(153
)
 
(4,900
)
 
(4,215
)
Net cash (used in) provided by financing activities
 
(235,082
)
 
62,640

 
143,597

 
(172,442
)
 
278,674

Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
 
(1,601
)
 
477

 
386

 
(1,124
)
 
1,174

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
 
2,031

 
(181,768
)
 
(61,320
)
 
(179,737
)
 
(113,189
)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
 
362,569

 
544,337

 
462,343

 
544,337

 
514,212






Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
 
$
364,600

 
$
362,569

 
$
401,023

 
$
364,600

 
$
401,023

 
 
 
 
 
 
 
 
 
 
 
Non-cash transactions:
 
 
 
 
 
 
 
 
 
 
Transaction fees funded by liability related to the sale of equity method investees
 
$
3,911

 
$

 
$

 
$
3,911

 
$

Costs of solar power systems, leased and to be leased, sourced from existing inventory
 
$
7,286

 
$
14,354

 
$
14,078

 
$
21,640

 
$
27,467

Costs of solar power systems, leased and to be leased, funded by liabilities
 
$
5,166

 
$
5,835

 
$
7,016

 
$
5,166

 
$
7,016

Costs of solar power systems under sale-leaseback financing arrangements, sourced from project assets
 
$
5,789

 
$
9,791

 
$
2,702

 
$
15,580

 
$
55,619

Property, plant and equipment acquisitions funded by liabilities
 
$
15,954

 
$
17,218

 
$
40,669

 
$
15,954

 
$
40,669

Contractual obligations satisfied with inventory
 
$
23,364

 
$
17,517

 
$

 
$
40,881

 
$
6,668

Assumption of debt by buyer upon sale of equity interest
 
$

 
$
27,321

 
$

 
$
27,321

 
$






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 profit/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, and sale-leaseback transactions, each as described below. In addition to those same adjustments, Non-GAAP gross profit/margin includes adjustments relating to impairment of property, plant and equipment, impairment of residential lease assets, cost of above-market polysilicon, stock-based compensation, amortization of intangible assets, depreciation of idle equipment, and non-cash interest expense, 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, the tax effect of these non-GAAP adjustments, and other items, each 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% (since reduced to 36.5% via a secondary issuance of shares in fiscal 2016) 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 previously 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. Prior to the adoption of ASC 606, 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. The company adopted ASC 606 on January 1, 2018, using the full retrospective method, which required the company to restate each prior period presented. The company recorded a material amount of deferred profit associated with projects sold to 8point3 in 2015, the majority of which had previously been deferred under real estate accounting. Accordingly, the company's carrying value in the 8point3 materially increased upon adoption which required the company to evaluate its investment in 8point3 for other-than-temporary impairment ("OTTI"). In accordance with such evaluation, the company recognized a non-cash impairment charge on the 8point3 investment balance in the prior periods that were affected. On June 19, 2018, the company sold its equity interest in 8point3.

Utility and power plant projects. The company includes adjustments related to the revenue recognition of certain utility and power plant projects based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations and, when relevant, the allocation of revenue and margin to the company’s project development efforts at the time of initial project sale. Prior to the adoption of ASC 606, 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. Under ASC 606, such projects are accounted for when the customer obtains control of the promised goods or services which generally results in earlier recognition of revenue and profit than previous GAAP. Over the life of each project, cumulative revenue and gross profit will eventually be equivalent under both ASC 606 and non-GAAP once these projects are completed.

Sale-leaseback transactions. The company includes adjustments primarily 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

Impairment of property, plant, and equipment. In the second quarter of fiscal 2018, the company announced its proposed plan to change the corporate structure into the Upstream business unit and Downstream business unit, and long-term strategy to replace IBC technology to NGT. Accordingly, the company expects to upgrade the equipment associated with our manufacturing operations for the production of NGT over the next several years. In connection with these events, the company determined indicators of impairment existed and therefore performed an evaluation of the recoverability of the asset group. In accordance with such evaluation, the company recognized a non-cash impairment charge on its property, plant and equipment. Such asset impairment is excluded from the company’s segment results as it is non-cash in nature and not reflective of ongoing segment results.

Impairment of residential lease assets. In the fourth quarter of fiscal 2017, the company made the decision to sell or refinance its interest in the residential lease portfolio and as a result of this triggering event, determined it was necessary to evaluate the potential for impairment in its ability to recover the carrying amount of the residential lease portfolio. In accordance with such evaluation, the company recognized a





non-cash impairment charge on its solar power systems leased and to be leased and an allowance for losses related financing receivables. In connection with the impairment loss, the carrying values of the company's solar power systems leased and to be leased were reduced which resulted in lower depreciation charges. Such asset impairment and its corresponding depreciation savings are excluded from the company’s segment results as they are non-cash in nature and not reflective of ongoing segment results.

Cost of above-market polysilicon. The company has entered into multiple long-term, fixed-price supply agreements to purchase polysilicon for periods of up to 10 years. The prices in select legacy supply agreements, which incorporate a cash portion and a non-cash portion attributable to the amortization of prepayments made under the agreements, significantly exceed current 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 do not contribute to a meaningful evaluation of a company's past operating performance.

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.

Depreciation of idle equipment. In the fourth quarter of 2017, the company changed the deployment plan for its next generation of solar cell technology, and revised its depreciation estimates to reflect the use of certain assets over its shortened useful life. Such asset depreciation is excluded from the company's non-GAAP financial measures as it is non-cash in nature and not reflective of ongoing operating results. Excluding this data provides investors with a basis to compare the company's performance against the performance of other companies without such charges.

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.

IPO-related costs. Costs incurred related to the IPO of 8point3 included legal, accounting, advisory, valuation, and other expenses. 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.

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
 
 
July 1, 2018
 
April 1, 2018
 
July 2, 2017
 
July 1, 2018
 
July 2, 2017
GAAP revenue
 
$
449,097

 
$
391,888

 
$
327,981

 
$
840,985

 
$
657,076

Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
(8,337
)
 

 
8,126

 
(8,337
)
 
13,644

Utility and power plant projects
 
(1,301
)
 
(2,043
)
 
1,451

 
(3,344
)
 
42,847

Sale-leaseback transactions
 
7,695

 
9,103

 
3,927

 
16,798

 
57,405

Non-GAAP revenue
 
$
447,154

 
$
398,948

 
$
341,485

 
$
846,102

 
$
770,972


Adjustments to Gross Profit (Loss) / Margin: 
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
July 1, 2018
 
April 1, 2018
 
July 2, 2017
 
July 1, 2018
 
July 2, 2017
GAAP gross profit (loss)
 
$
(310,215
)
 
$
10,248

 
$
16,167

 
$
(299,967
)
 
$
(29,417
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
(8,337
)
 

 
(831
)
 
(8,337
)
 
(507
)
Utility and power plant projects
 
(569
)
 
(268
)
 
3,147

 
(837
)
 
45,838

Sale-leaseback transactions
 
(359
)
 
(3,039
)
 
(2,270
)
 
(3,398
)
 
(5,414
)
Other adjustments:
 
 
 
 
 
 
 
 
 
 
Impairment of property, plant and equipment
 
355,106

 

 

 
355,106

 

Impairment of residential lease assets
 
(4,151
)
 
(3,853
)
 

 
(8,004
)
 

Cost of above-market polysilicon
 
16,669

 
18,700

 
21,826

 
35,369

 
51,641

Stock-based compensation expense
 
1,627

 
1,057

 
1,052

 
2,684

 
2,236

Amortization of intangible assets
 
2,443

 
2,492

 
2,567

 
4,935

 
5,134

Depreciation of idle equipment
 

 
721

 

 
721

 

Non-cash interest expense
 

 

 
10

 

 
20

Non-GAAP gross profit
 
$
52,214

 
$
26,058

 
$
41,668

 
$
78,272

 
$
69,531

 
 
 
 
 
 
 
 
 
 
 
GAAP gross margin (%)
 
(69.1
)%
 
2.6
%
 
4.9
%
 
(35.7
)%
 
(4.5
)%
Non-GAAP gross margin (%)
 
11.7
 %
 
6.5
%
 
12.2
%
 
9.3
 %
 
9.0
 %














Adjustments to Net income (loss): 
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
July 1, 2018
 
April 1, 2018
 
July 2, 2017
 
July 1, 2018
 
July 2, 2017
GAAP net loss attributable to stockholders
 
$
(447,117
)
 
$
(115,974
)
 
$
(90,515
)
 
$
(563,091
)
 
$
(310,241
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
(8,308
)
 
(177
)
 
(1,691
)
 
(8,485
)
 
76,007

Utility and power plant projects
 
(569
)
 
(268
)
 
3,147

 
(837
)
 
45,838

Sale-leaseback transactions
 
4,187

 
1,373

 
(38
)
 
5,560

 
(1,747
)
Other adjustments:
 
 
 
 
 
 
 
 
 
 
Impairment of property, plant and equipment
 
369,168

 

 

 
369,168

 

Impairment of residential lease assets
 
50,360

 
45,139

 

 
95,499

 

Cost of above-market polysilicon
 
16,669

 
18,700

 
21,826

 
35,369

 
51,641

Stock-based compensation expense
 
6,643

 
8,758

 
8,606

 
15,401

 
15,981

Amortization of intangible assets
 
2,443

 
2,492

 
4,227

 
4,935

 
7,253

Depreciation of idle equipment
 

 
721

 

 
721

 

Non-cash interest expense
 
23

 
22

 
35

 
45

 
70

Restructuring expense
 
3,504

 
11,177

 
4,969

 
14,681

 
14,759

IPO-related costs
 

 

 
(196
)
 

 
(82
)
Tax effect
 
1,072

 
(170
)
 
350

 
902

 
863

Non-GAAP net income (loss) attributable to stockholders
 
$
(1,925
)
 
$
(28,207
)
 
$
(49,280
)
 
$
(30,132
)
 
$
(99,658
)






Adjustments to Net income (loss) per diluted share:
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
 
July 1, 2018
 
April 1, 2018
 
July 2, 2017
 
July 1, 2018
 
July 2, 2017
Net income (loss) per diluted share
 
 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
 
 
GAAP net loss available to common stockholders1
 
$
(447,117
)
 
$
(115,974
)
 
$
(90,515
)
 
$
(563,091
)
 
$
(310,241
)
Non-GAAP net income (loss) available to common stockholders1
 
$
(1,925
)
 
$
(28,207
)
 
$
(49,280
)
 
$
(30,132
)
 
$
(99,658
)
 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
 
GAAP weighted-average shares
 
140,926

 
140,212

 
139,448

 
140,569

 
139,175

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
 
140,926

 
140,212

 
139,448

 
140,569

 
139,175

 
 
 
 
 
 
 
 
 
 
 
GAAP net loss per diluted share
 
$
(3.17
)
 
$
(0.83
)
 
$
(0.65
)
 
$
(4.01
)
 
$
(2.23
)
Non-GAAP net income (loss) per diluted share
 
$
(0.01
)
 
$
(0.20
)
 
$
(0.35
)
 
$
(0.21
)
 
$
(0.72
)
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
 
 
July 1, 2018
 
April 1, 2018
 
July 2, 2017
 
July 1, 2018
 
July 2, 2017
GAAP net loss attributable to stockholders
 
$
(447,117
)
 
$
(115,974
)
 
$
(90,515
)
 
$
(563,091
)
 
$
(310,241
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
8point3
 
(8,308
)
 
(177
)
 
(1,691
)
 
(8,485
)
 
76,007

Utility and power plant projects
 
(569
)
 
(268
)
 
3,147

 
(837
)
 
45,838

Sale-leaseback transactions
 
4,187

 
1,373

 
(38
)
 
5,560

 
(1,747
)
Other adjustments:
 
 
 
 
 
 
 
 
 
 
Impairment of property, plant and equipment
 
369,168

 

 

 
369,168

 

Impairment of residential lease assets
 
50,360

 
45,139

 

 
95,499

 

Cost of above-market polysilicon
 
16,669

 
18,700

 
21,826

 
35,369

 
51,641

Stock-based compensation expense
 
6,643

 
8,758

 
8,606

 
15,401

 
15,981

Amortization of intangible assets
 
2,443

 
2,492

 
4,227

 
4,935

 
7,253

Depreciation of idle equipment
 

 
721

 

 
721

 

Non-cash interest expense
 
23

 
22

 
35

 
45

 
70

Restructuring expense
 
3,504

 
11,177

 
4,969

 
14,681

 
14,759

IPO-related costs
 

 

 
(196
)
 

 
(82
)
Cash interest expense, net of interest income
 
21,509

 
20,165

 
19,886

 
41,674

 
38,415

Provision for (benefit from) income taxes
 
3,081

 
2,628

 
2,353

 
5,709

 
4,384

Depreciation
 
36,983

 
37,576

 
40,917

 
74,559

 
79,849

Adjusted EBITDA
 
$
58,576

 
$
32,332

 
$
13,526

 
$
90,908

 
$
22,127










Q3 2018 and FY 2018 GUIDANCE
(in thousands except percentages)
Q3 2018
FY 2018
Revenue (GAAP)
$425,000-$475,000
$1,600,000-$2,000,000
Revenue (non-GAAP)1
$450,000-$500,000
$1,800,000-$2,200,000
Gross margin (GAAP)
(1)% - 1%
N/A
Gross margin (non-GAAP)2
6%-8%
N/A
Net loss (GAAP)
$195,000-$215,000
$830,000-$860,000
Adjusted EBITDA3
$(10,000)-$10,000
$95,000-$125,000

1.
Estimated non-GAAP amounts above for Q3 2018 include net adjustments that increase revenue by approximately $25 million related to sale-leaseback transactions. Estimated non-GAAP amounts above for fiscal 2018 include net adjustments that increase (decrease) revenue by approximately $210 million related to sale-leaseback transactions, $(8) million related to 8point3 tax indemnifications and $(2) million related to utility and power plant projects.

2.
Estimated non-GAAP amounts above for Q3 2018 include net adjustments that increase (decrease) gross margin by approximately $2 million related to sale-leaseback transactions, $31 million related to cost of above-market polysilicon, $(4) million related to impairment of lease assets, $2 million related to stock-based compensation expense, and $1 million related to amortization of intangible assets.

3.
Estimated Adjusted EBITDA amounts above for Q3 2018 include net adjustments that decrease net loss by approximately $5 million related to sale-leaseback transactions, $31 million related to cost of above-market polysilicon, $97 million related to impairment of lease assets, $7 million related to stock-based compensation expense, $26 million related to depreciation, $3 million related to amortization of intangible assets, $7 million related to restructuring, $24 million related to interest expense, and $5 million related to income taxes. Estimated non-GAAP amounts above for fiscal 2018 include net adjustments that decrease (increase) net loss by approximately $14 million related to sale-leaseback transactions, $(8) million related to 8point3 tax indemnifications, $(2) million related to utility and power plant projects, $364 million related to impairment of property, plant and equipment, $105 million related to cost of above-market polysilicon, $190 million related to impairment of lease assets, $32 million related to stock-based compensation expense, $110 million related to depreciation, $11 million related to amortization of intangible assets, $27 million related to restructuring, $93 million related to interest expense, and $19 million related to income taxes.









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 profit/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 1, 2018
 
 
 
 
Revenue
 
Gross Profit / Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in (earnings) losses of unconsolidated investees
 
Gain (Loss) attributable to non-controlling interests
 
Net income (loss) attributable to stockholders
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
$
205,181

 
$
127,872

 
$
116,044

 
$
(49,270
)
 
(24.0
)%
 
$
(101,141
)
 
(79.1
)%
 
$
(159,804
)
 
(137.7
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(447,117
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3

 
(2,149
)
 
(6,188
)
 

 
 
 
(2,149
)
 
 
 
(6,188
)
 
 
 

 

 

 

 

 
29

 

 
(8,308
)
Utility and power plant projects

 
(82
)
 
(1,219
)
 

 
 
 
(319
)
 
 
 
(250
)
 
 
 

 

 

 

 

 

 

 
(569
)
Sale-leaseback transactions

 
7,695

 

 

 
 
 
(398
)
 
 
 
39

 
 
 

 

 

 
4,546

 

 

 

 
4,187

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of property, plant and equipment

 

 

 
92,543

 
 
 
103,759

 
 
 
158,804

 
 
 
12,832

 
1,230

 

 

 

 

 

 
369,168

Impairment of residential lease assets

 

 

 
(4,151
)
 
 
 

 
 
 

 
 
 

 
68,269

 

 

 

 

 
(13,758
)
 
50,360

Cost of above-market polysilicon

 

 

 
4,276

 
 
 
7,043

 
 
 
5,350

 
 
 

 

 

 

 

 

 

 
16,669

Stock-based compensation expense

 

 

 
471

 
 
 
570

 
 
 
586

 
 
 
1,054

 
3,962

 

 

 

 

 

 
6,643

Amortization of intangible assets

 

 

 
922

 
 
 
698

 
 
 
823

 
 
 

 

 

 

 

 
 
 

 
2,443

Non-cash interest expense

 

 

 

 
 
 

 
 
 

 
 
 
3

 
20

 

 

 

 

 

 
23

Restructuring expense

 

 

 

 
 
 

 
 
 

 
 
 

 

 
3,504

 

 

 

 

 
3,504

Tax effect

 

 

 

 
 
 

 
 
 

 
 
 

 

 

 

 
1,072

 

 

 
1,072

Non-GAAP
$
205,181

 
$
133,336

 
$
108,637

 
$
44,791

 
21.8
 %
 
$
8,063

 
6.0
 %
 
$
(640
)
 
(0.6
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(1,925
)






 
April 1, 2018
 
 
 
 
Revenue
 
Gross Profit / Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in (earnings) losses of unconsolidated investees
 
Gain (Loss) attributable to non-controlling interests
 
Net income (loss) attributable to stockholders
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
$
169,432

 
$
123,336

 
$
99,120

 
$
28,042

 
16.6
%
 
$
5,313