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): October 18,
2007
SUNPOWER
CORPORATION
(Exact
Name of Registrant as Specified in Charter)
|
Delaware
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000-51593
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94-3008969
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File No.)
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|
(I.R.S.
Employer
Identification
No.)
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3939
North First Street, San Jose, California 95134
(Address
of Principal Executive Offices) (Zip Code)
Registrant’s
telephone number, including area code: (408) 240-5500
N/A
(Former
Name or Former Address, if Changed Since Last Report)
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:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item 2.02.
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Results
of Operations and Financial Condition.
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On
October 18, 2007, SunPower Corporation (the "Registrant") issued the press
release attached as Exhibit 99.1 hereto announcing its results of operations
for
the third quarter of 2007.
The
information contained in this 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.
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Item 9.01.
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Financial
Statements and Exhibits.
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(d)
Exhibits
The
following exhibit is furnished with this report on Form 8-K:
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Exhibit No.
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Description
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99.1
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SunPower
Corporation Press Release dated October 18,
2007
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SIGNATURES
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.
Date:
October 18, 2007
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SunPower
Corporation
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|||
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By:
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/s/
Emmanuel Hernandez
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Name:
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Emmanuel
Hernandez
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Title:
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Chief
Financial Officer
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EXHIBIT
INDEX
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Exhibit No.
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Description
|
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99.1
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SunPower
Corporation Press Release dated October 18,
2007
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FOR
IMMEDIATE RELEASE
Contacts:
Julie
Blunden
SunPower
Corporation
408-240-5577
Manny
Hernandez
SunPower
Corporation
408-240-5560
SunPower
Reports Third-Quarter 2007 Results
| · |
Q3
2007 revenue of $234.3 million, up 258.6 percent year on
year
|
| · |
466-megawatt
solar cell Fab 2 dedicated and production ramping on first two
lines
|
| · |
Achieved
20.1 percent efficiency world record for mass produced solar panel
|
| · |
$24.7
million, three-year Solar American Initiative agreement signed with
U.S.
Department of Energy
|
| · |
Dedication
of first of 28 Macy’s solar electric systems in
California
|
| · |
18-megawatt
Olivenza Spanish solar power plant order booked in
October
|
SAN
JOSE, Calif., October 18, 2007
-
SunPower Corporation (NASDAQ: SPWR) today announced financial results for the
2007 third quarter, which ended September 30, 2007. This press release contains
both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled
to
the closest GAAP equivalent figures on the final page of this press
release.
Revenue
for the 2007 third quarter was $234.3 million, up 34.9 percent from
prior-quarter revenue of $173.8 million and up 258.6 percent from year ago
third-quarter revenue of $65.3 million. The Components segment accounted for
$76.6 million of third-quarter revenue, a 9.9 percent increase from the prior
quarter revenue of $69.7 million. The Systems segment accounted for $157.7
million of third-quarter revenue, a 51.6 percent increase from prior-quarter
revenue of $104.0 million. 2007 third-quarter revenue growth was primarily
driven by continued strong demand for SunPower products and by
faster-than-anticipated completion of certain projects in the Systems segment.
For reporting purposes, the Systems segment generally represents products and
services sold directly to the system owner, while the Components segment
includes products sold to installers and resellers. Revenue associated with
SunPower solar panels sold through the Systems segment is recorded in the
Systems segment.
On
a GAAP
basis, SunPower reported total operating income of $6.8 million and diluted
net
income per share of $0.10. These figures include operating expenses for
amortization of purchase accounting intangible assets of $6.9 million and
non-cash, stock-based compensation of $13.4 million.
On
a
non-GAAP basis, adjusted to exclude non-cash charges for amortization of
intangible assets, stock-based compensation and the related tax effects,
SunPower reported total operating income of $27.0 million and diluted net income
per share of $0.33. This compares with the prior quarter’s total operating
income of $22.0 million and $0.25 diluted net income per share.
Also
on a
non-GAAP basis, SunPower reported total gross margin for the 2007 third quarter
of 20.4 percent, compared with total gross margin of 23.0 percent in the prior
quarter. Third-quarter non-GAAP total gross margin was influenced by the higher
mix of revenue in the Systems segment, which achieved gross margin of 18.7
percent, while the Components segment reported gross margin of 24.1 percent.
“SunPower
delivered another quarter of strong financial performance,” said Tom Werner,
SunPower’s CEO. “This was made possible by continued strong customer demand for
our high-performance solar technology and excellent execution by both our
Systems and Components business segments. The overall solar business environment
continues to be characterized by rapid and dynamic growth, particularly with
respect to the ongoing evolution of country-specific customer incentive
programs. We believe that SunPower’s broad value-chain footprint and global
geographic reach provide a diversified business portfolio while enabling rapid
access to and participation in a variety of promising new growth markets.
“During
the quarter, SunPower signed a three-year Solar America Initiative (SAI)
agreement with the U.S. Department of Energy, which is the solar industry’s
largest U.S. government research and development contract. Our business model
allows us to directly effect cost reduction and process efficiency improvements
across the entire value chain from ingot growing to wafering, solar cell and
panel manufacturing, product design and customer delivery infrastructure. With
this degree of vertical integration, we believe that SunPower is uniquely well
positioned to leverage work under the SAI program to accelerate reduction in
installed solar system costs.
“A
core
element of our cost reduction plan is achieving manufacturing scale. We are
currently ramping production on the first two lines in Fab 2. We are confident
that equipment design improvements will allow increased throughput on our Gen
2
cell lines beginning with Line 7, which we expect to begin ramping
in the fourth quarter of 2007. In addition, our recently announced wafering
joint venture will allow us to use space previously dedicated to wafering in
Fab
2 for two more cell manufacturing lines. Combining these benefits, Fab 2 will
have a total of 12 lines and a nameplate capacity of 466 megawatts, allowing
SunPower to capture significant economies of scale as we continue to build
out
more production lines through 2009.”
“Our
Gen
2 solar cell technology is now in volume production and achieving median solar
cell efficiencies above 22 percent,” continued Werner. “During the third
quarter, we were pleased to receive test results from Sandia National Laboratory
confirming measurement of a SunPower production solar panel with a total-area
solar panel efficiency of 20.1 percent. We believe that this is a world record
for mass-produced solar panels, and the first time that a commercially available
solar panel has breached the 20 percent efficiency barrier. Higher solar panel
efficiency yields important benefits to our customers and our internal systems
supply chain by reducing the amount of land, material and site work needed
to
install a given capacity solar system, and/or by enabling significantly higher
capacity systems to be installed within given site constraints.
“We
believe that combining our high-efficiency solar cell technology with thinner
wafers will allow us to achieve powerful cost leverage by further reducing
the
silicon consumption required to produce a given energy production output. During
the third quarter, we successfully processed sample lots of 145 micron thick
wafers through our standard solar cell production lines. When implemented in
production, this wafer thickness improvement has the potential to reduce
SunPower’s polysilicon consumption to less than 6- grams-per-watt in the
future.”
“We
expect tight global polysilicon supply to ease for SunPower in 2008 as new
polysilicon capacity comes on line,” said Werner. “As our long-term silicon
supply contracts go into effect over the next year, we expect SunPower's
average silicon costs to improve compared to current short-term pricing. We
are very actively managing our silicon supply as new polysilicon producers
begin
production and we ramp Fab 2.
“SunPower
is also actively engaged in setting up the supporting infrastructure to
complement our growing portfolio of silicon agreements. We have recently entered
into a series of agreements that illustrate the comprehensive approach that
SunPower uses to manage the growth of our silicon supply over the near-term
and
long-term.”
Agreements
SunPower entered into in the third quarter include:
| · |
Hemlock
Semiconductor Corp.:
Signed a 2-gigawatt, 10-year polysilicon supply agreement under which
SunPower will begin taking deliveries in 2010,
|
| · |
Wacker
Chemie AG:
Expanded our relationship with a 53-megawatt-equivalent, three-year
polysilicon supply agreement under which SunPower will begin taking
deliveries in 2010,
|
| · |
NorSun
AS:
Signed agreements beginning in 2007 and extending through 2019 under
which
SunPower will deliver polysilicon to NorSun and receive up to
approximately two gigawatts of ingots and/or wafers,
|
| · |
First
Philec Solar:
Signed an agreement with First Philippine Electric Corp. to establish
a
new joint venture, named First Philec Solar Corp., which will perform
wafer slicing services in the Philippines for SunPower.
|
SunPower’s
Silicon Supply Agreement Position and Capacity Expansion Plan
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2008
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2009
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2010
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Beginning
of Year, Nameplate Capacity (megawatts)
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214
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414
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574
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Annual
Production Capacity Supported by Silicon Agreements to Date
(megawatts)
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250+
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430+
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600+
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Annual
Cash Required for Silicon Prepayments in Advance of Delivery ($
millions)
|
$58.4
|
$48.8
|
$11.1
|
“SunPower’s
sales and marketing teams continue to build out a broadly diversified customer
and application base in key markets around the world,” continued Werner. “We are
actively engaged in the residential, commercial and power-plant markets in
North
America, Europe and Asia.” Third-quarter
highlights on the outbound side of SunPower’s business
included:
| · |
Spain:
Signed an agreement to design and construct an 18-megawatt solar
power
plant in Olivenza where SunPower will use its T20 Tracker solar-tracking
system,
|
| · |
United
States:
Expanded SunPower’s residential/small commercial dealer network to 125
dealers in 25 states with more than 400 installers now trained through
the
SunPower dealer training program,
|
| · |
California:
Announced large-scale solar systems using the SunPower Access power
purchase agreement program by AC Transit, Agilent Technologies and
the San
Jose Tech Museum of Innovation, as well as the dedication of the
first of
28 Macy’s solar systems,
|
| · |
Nevada:
Construction on schedule at the approximately 15-megawatt rated solar
power plant located at Nellis Air Force Base outside of Las Vegas,
Nev.,
|
| · |
Korea:
Announced agreement to construct the 2-megawatt Jeonju solar power
plant
with EnE Systems,
|
| · |
Homebuilders:
Hugh Futrell Corp., Meritage Homes and Tim Lewis Communities announced
new
solar home communities using SunPower solar
systems.
|
“Our
strong revenue performance in the third quarter of 2007 reflected faster than
anticipated completion of certain systems in our project pipeline,” said Werner.
“We reiterate our guidance for the fourth quarter and expect the following
non-GAAP results: Revenue of $210 million to $220 million; total gross margin
of
24 percent to 25 percent and diluted net income per share of $0.33 to $0.37.
For
the full year 2007, we expect to generate non-GAAP revenue of $760 million
to
$770 million and non-GAAP diluted net income per share of $1.20 to
$1.24.1
“On
a
business segment basis, we expect the following non-GAAP results for the fourth
quarter: Components segment revenue of $90 million to $95 million and gross
margin of 25 percent to 26 percent; Systems segment revenue of $120 million
to
$125 million and gross margin of 23 percent to 24 percent. We expect the
Componets segment to benefit from the continued manufacturing ramp of our
next-generation technology and the Systems segment to benefit from a favorable
mix of balance of system sales during the quarter.2
“In
2008,
we expect to achieve revenue of approximately $1.1 billion to $1.25 billion
and
a non-GAAP diluted net income per share of approximately $1.90 to $2.05, as
we
add five more solar cell manufacturing lines and respond to the expanding solar
market across three continents.” 3
About
SunPower
SunPower
Corporation (Nasdaq: SPWR) designs, manufactures and delivers high-performance
solar- electric systems worldwide for residential, commercial and utility-scale
power plant customers. SunPower high-efficiency solar cells and solar
panels generate up to 50 percent more power than conventional solar technologies
and have a uniquely attractive, all-black appearance. With headquarters in
San
Jose, Calif., SunPower has offices in North America, Europe and Asia. For more
information, visit www.sunpowercorp.com.
SunPower is a majority-owned subsidiary of Cypress Semiconductor Corp. (NYSE:
CY).
1
For
the
fourth quarter of 2007, we expect the following total company GAAP results:
Revenue of $210 million to $220 million; gross margin of approximately 20
percent to 21 percent and diluted net income per share of $0.11 to $0.15. For
the full year 2007, we expect the following total company GAAP results: Revenue
of $759 million to $769 million and diluted net income
per share of $0.17 to $0.21.
2
For
the
fourth quarter of 2007, we expect the Systems business segment to generate
GAAP
gross margin of approximately 17 percent to 18 percent and the Components
business segment to generate GAAP gross margin of approximately 22 percent
to 23
percent.
3 For
the
full year 2008, we expect the following total company GAAP results: Revenue
of
$1.1 billion to $1.25 billion and diluted net income
per share of $0.85 to $1.00.
Forward-Looking
Statements
This
press release contains forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
statements that do not represent historical facts. We use words such as
“believe,” “will,” potential,” “expect,” “plan” and similar expressions to
identify forward-looking statements. Forward-looking statements in this press
release include, but are not limited to, the company’s plans and expectations
regarding (a) SunPower’s position to leverage work under the SAI program to
accelerate reduction in installed solar system costs, (b) increased throughput
on our Gen 2 cell lines and expected Line 7 ramping in the fourth quarter 2007,
(c) our use of space previously dedicated to wafering in Fab 2 for two more
cell
manufacturing lines, (d) Fab 2’s twelve lines and nameplate capacity of 466
megawatts, (e) our ability to capture significant economies of scale as we
continue to build out more production lines through 2009, (f) our ability to
achieve cost leverage by further reducing the silicon consumption required
to
produce a given energy production output, (g) our potential to reduce
polysilicon consumption to less than 6 grams per watt in the future, (h) the
easing of global
polysilicon supply as new polysilicon capacity comes on line, (i) our average
silicon costs to improve compared to current short-term pricing, (j) delivery
volumes and schedules under our silicon agreements with Hemlock, Wacker, NorSun,
and under our wafering services agreement with First Philec Solar, (k) our
silicon supply position and production capacity expansion plan, (l) the use
of
our T20 Tracker solar tracking system in Olivenza (Spain), (m) expected
consolidated non-GAAP and GAAP results, including revenue, gross margin, and
diluted net income per share for the fourth quarter 2007, (n) consolidated
non-GAAP and GAAP results, including revenue and diluted net income per share,
for the full year 2007, (o) Components and Systems segment GAAP revenues
and non-GAAP gross margins for the fourth quarter 2007, (p) the impact of the
continued manufacturing ramp of our next generation technology and the favorable
mix of balance of system sales during the fourth quarter, (q) revenue and GAAP
and non-GAAP diluted net income per share for the full year 2008. These
forward-looking statements are based on information available to us as of the
date of this release and current
expectations, forecasts and assumptions and involve a number of risks and
uncertainties that could cause actual results to differ materially from those
anticipated by these forward-looking statements. Such risks and uncertainties
include a variety of factors, some of which are beyond our control. In
particular, risks and uncertainties that could cause actual results to differ
include risks
associated with (i) our ability to ramp new production lines; (ii) our ability
to realize expected manufacturing efficiencies; (iii) our ability to reduce
kerf
loss and otherwise achieve anticipated reductions in polysilicon usage
efficiency (iv) production difficulties that could arise; (v) the success of
our
ongoing research and development efforts; (vi) our ability to obtain adequate
supply of polysilicon, ingots and wafers to manufacture our products and the
price we pay for such materials; (vii) the price and availability of cells
and
solar panels; (viii) business and economic conditions and growth trends in
the
solar power industry; (ix) the continuation of governmental and related economic
incentives promoting the use of solar power; (x) our ability to compete with
other companies and competing technologies; (xi) the potential renegotiation
of
or non-performance by parties to our supply and customer contracts; (xii)
unforeseen manufacturing equipment delays at our fabrication facilities and
panel factories; (xiii) unanticipated problems with the T20 Tracker deployment
on the project site; (xiv) unanticipated changes in the mix of balance of
systems sales during the fourth quarter; and ( xv) other risks described in
our
Quarterly Report on Form 10-Q for the quarter ended July 1, 2007, and other
filings with the Securities and Exchange Commission. These forward-looking
statements should not be relied upon as representing our views as of any
subsequent date, and we are under no obligation to, and expressly disclaim
any
responsibility to, update or alter our forward-looking statements, whether
as a
result of new information, future events or otherwise.
Non-GAAP
Measures
To
supplement the consolidated financial results prepared under GAAP, SunPower
uses
non-GAAP measures which are adjusted from the most directly comparable GAAP
results to exclude items related to stock-based compensation, amortization
of
intangible assets, impairment of acquisition-related intangibles, fair value
adjustments to deferred revenue, purchasing in-process research and development
expenses, and their related tax effects. Management does not consider these
charges in evaluating the core operational activities of SunPower. Management
uses these non-GAAP measures internally to make strategic decisions, forecast
future results and evaluate SunPower’s current performance. Most analysts
covering SunPower use the non-GAAP measures as well. Given management’s use of
these non-GAAP measures, SunPower believes these measures are important to
investors in understanding SunPower’s current and future operating results as
seen through the eyes of management. In addition, management believes these
non-GAAP measures are useful to investors in enabling them to better assess
changes in SunPower’s core business across different time periods. These
non-GAAP measures are not in accordance with or an alternative for GAAP
financial data and may be different from non-GAAP measures used by other
companies.
Fiscal
Periods
The
company operates on a fiscal calendar comprised of four thirteen-week quarters
that end at midnight Pacific Time on the Sunday nearest the calendar
quarter-end.
# # #
SunPower
is a registered trademark of SunPower Corp. Cypress is a registered trademark
of
Cypress Semiconductor Corp. All other trademarks are the property of their
respective owners.
|
SUNPOWER
CORPORATION
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In
thousands)
|
|
(Unaudited)
|
|||||||
|
Sept.
30,
|
Dec.
31,
|
||||||
|
2007
|
2006
|
||||||
|
ASSETS
|
|||||||
|
Cash
and cash equivalents
|
$
|
395,881
|
$
|
165,596
|
|||
|
Restricted
cash
|
40,499
|
-
|
|||||
|
Investments
|
58,570
|
16,496
|
|||||
|
Accounts
receivable, net
|
82,794
|
51,680
|
|||||
|
Costs
and estimated earnings in excess of billings
|
79,410
|
-
|
|||||
|
Inventories
|
99,940
|
22,780
|
|||||
|
Deferred
project costs
|
11,474
|
-
|
|||||
|
Prepaid
expenses and other assets
|
70,888
|
23,288
|
|||||
|
Advances
to suppliers
|
111,196
|
77,636
|
|||||
|
Property,
plant and equipment, net
|
348,189
|
202,428
|
|||||
|
Goodwill
and other intangible assets, net
|
237,921
|
16,932
|
|||||
|
Total
assets
|
$
|
1,536,762
|
$
|
576,836
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Accounts
payable
|
$
|
102,841
|
$
|
26,534
|
|||
|
Accrued
and other liabilities
|
77,533
|
21,540
|
|||||
|
Convertible
debt
|
425,000
|
-
|
|||||
|
Billings
in excess of costs and estimated earnings
|
19,997
|
-
|
|||||
|
Customer
advances
|
69,794
|
39,991
|
|||||
|
Total
liabilities
|
695,165
|
88,065
|
|||||
|
Stockholders'
equity
|
841,597
|
488,771
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
1,536,762
|
$
|
576,836
|
|||
|
SUNPOWER
CORPORATION
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In
thousands, except per share data)
|
|
(Unaudited)
|
|
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
|
Sept.
30,
|
|
Jul.
1,
|
|
Oct.
1,
|
|
Sept.
30,
|
|
Oct.
1,
|
|
|||||||
|
|
|
2007
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
||||||
|
Revenue
|
||||||||||||||||
|
Systems
|
$
|
157,734
|
$
|
104,037
|
$
|
-
|
$
|
340,266
|
$
|
-
|
||||||
|
Components
|
76,600
|
69,729
|
65,348
|
210,181
|
162,001
|
|||||||||||
|
|
234,334
|
173,766
|
65,348
|
550,447
|
162,001
|
|||||||||||
|
Cost
of systems revenue
|
135,111
|
91,518
|
-
|
289,095
|
-
|
|||||||||||
|
Cost
of components revenue
|
60,818
|
52,456
|
50,164
|
160,730
|
129,678
|
|||||||||||
|
195,929
|
143,974
|
50,164
|
449,825
|
129,678
|
||||||||||||
|
Gross
margin
|
38,405
|
29,792
|
15,184
|
100,622
|
32,323
|
|||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Research
and development
|
3,902
|
2,821
|
2,536
|
9,659
|
7,120
|
|||||||||||
|
Selling,
general and administrative
|
27,708
|
26,109
|
6,206
|
76,188
|
15,572
|
|||||||||||
|
Purchased
in-process research and development
|
-
|
-
|
-
|
9,575
|
-
|
|||||||||||
|
Impairment
of acquisition-related intangibles
|
-
|
14,068
|
-
|
14,068
|
-
|
|||||||||||
|
Total
operating expenses
|
31,610
|
42,998
|
8,742
|
109,490
|
22,692
|
|||||||||||
|
Operating
income (loss)
|
6,795
|
(13,206
|
)
|
6,442
|
(8,868
|
)
|
9,631
|
|||||||||
|
Interest
and other income, net
|
3,032
|
594
|
3,958
|
4,765
|
6,851
|
|||||||||||
|
Income
(loss) before income taxes
|
9,827
|
(12,612
|
)
|
10,400
|
(4,103
|
)
|
16,482
|
|||||||||
|
Income
tax provision (benefit)
|
1,396
|
(7,267
|
)
|
832
|
(8,429
|
)
|
1,275
|
|||||||||
|
Net
income (loss)
|
$
|
8,431
|
$
|
(5,345
|
)
|
$
|
9,568
|
$
|
4,326
|
$
|
15,207
|
|||||
|
Net
income (loss) per share:
|
||||||||||||||||
|
-
Basic
|
$
|
0.11
|
($0.07
|
)
|
$
|
0.14
|
$
|
0.06
|
$
|
0.24
|
||||||
|
-
Diluted
|
$
|
0.10
|
($0.07
|
)
|
$
|
0.13
|
$
|
0.05
|
$
|
0.22
|
||||||
|
Shares
used in calculation of net income (loss) per share:
|
||||||||||||||||
|
-
Basic
|
77,693
|
75,123
|
68,947
|
75,516
|
64,704
|
|||||||||||
|
-
Diluted
|
82,610
|
75,123
|
73,899
|
80,526
|
70,080
|
|||||||||||
|
(In
thousands, except per share data)
|
|||||||||||||||||||||||||||||||||
|
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
||||||||||||||||||||||||||||||
|
Sept.
30,
|
|
Jul.
1,
|
|
Oct.
1,
|
|
Sept.
30,
|
|
Oct.
1,
|
|
Sept.
30,
|
|
Jul.
1,
|
|
Oct.
1,
|
|
Sept.
30,
|
|
Oct.
1,
|
|
||||||||||||||
|
|
|
2007
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
2007
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||||||||||
|
(Presented
on a GAAP Basis)
|
(Presented
on a non-GAAP Basis)*
|
||||||||||||||||||||||||||||||||
|
Gross
margin
|
38,405
|
29,792
|
15,184
|
100,622
|
32,323
|
47,904
|
39,986
|
16,560
|
129,468
|
36,477
|
|||||||||||||||||||||||
|
Operating
income (loss)
|
6,795
|
(13,206
|
)
|
6,442
|
(8,868
|
)
|
9,631
|
27,017
|
22,041
|
8,775
|
74,522
|
16,863
|
|||||||||||||||||||||
|
Net
income (loss) per share:
|
|||||||||||||||||||||||||||||||||
|
-Basic
|
0.11
|
(0.07
|
)
|
0.14
|
0.06
|
0.24
|
0.35
|
0.26
|
0.18
|
0.93
|
0.35
|
||||||||||||||||||||||
|
-Diluted
|
0.10
|
(0.07
|
)
|
0.13
|
0.05
|
0.22
|
0.33
|
0.25
|
0.16
|
0.87
|
0.32
|
||||||||||||||||||||||
About
SunPower’s Non-GAAP Financial Measures
To
supplement its consolidated financial results presented in accordance with
GAAP,
SunPower uses non-GAAP measures which are adjusted from the most directly
comparable GAAP results to exclude non-cash items related to stock-based
compensation expenses, amortization of intangibles, impairment of
acquisition-related intangibles, fair value adjustments to deferred revenue,
purchased in-process research and development expenses, and their related tax
effects. The non-GAAP adjustments included herein are primarily the result
of
our acquisition of SunPower Corporation, Systems or SP Systems (formerly known
as PowerLight Corporation) on January 10, 2007. The specific non-GAAP measures
listed below are gross margin, operating income (loss) and net income (loss)
per
share. Management believes that each of these non-GAAP measures (gross margin,
operating income (loss) and net income (loss) per share) are useful to investors
by enabling them to better assess changes in each of these key elements of
SunPower's results of operations across different reporting periods on a
consistent basis, independent of these non-cash items. Thus, each of these
non-GAAP financial measures provides investors with another method for assessing
SunPower's operating results in a manner that is focused on its ongoing core
operating performance, absent the effects of purchase accounting and stock-based
compensation charges. Management also uses these non-GAAP measures internally
to
assess the business and financial performance of current and historical results,
for strategic decision making, forecasting future results and evaluating the
Company's current performance. Many of the analysts covering SunPower also
use
these non-GAAP measures in their analyses. These non-GAAP measures are not
in
accordance with or an alternative for GAAP financial data, the non-GAAP results
should be reviewed together with the GAAP results 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.
| o |
Non-GAAP
gross margin. The use of this non-GAAP financial measure allows management
to evaluate the gross margin of the Company's core businesses and
trends
across different reporting periods on a consistent basis, independent
of
non-cash items including stock-based compensation expenses, amortization
of intangibles and fair value adjustments to deferred revenue. In
addition, it is an important component of management's internal
performance measurement process as it is used to assess the current
and
historical financial results of the business, for strategic decision
making, preparing budgets and forecasting future results. Management
presents this non-GAAP financial measure to enable investors and
analysts
to evaluate our revenue generation performance relative to the direct
costs of revenue of SunPower’s
core businesses.
|
| o |
Non-GAAP
operating income (loss). The use of this non-GAAP financial measure
allows
management to evaluate the operating results of the Company's core
businesses and trends across different reporting periods on a consistent
basis, independent of non-cash items including stock-based compensation
expenses, amortization of intangibles, impairment of acquisition-related
intangibles, and all other purchase accounting charges. In addition,
it is
an important component of management's internal performance measurement
process as it is used to assess the current and historical financial
results of the business, for strategic decision making, preparing
budgets
and forecasting future results. Management presents this non-GAAP
financial measure to enable investors and analysts to understand
the
results of operations of the Company’s core businesses and to compare our
results of operations on a more consistent basis against that of
other
companies in our industry.
|
| o |
Non-GAAP
net income (loss) per share. Management presents this non-GAAP financial
measure to enable investors and analysts to assess the Company's
operating
results and trends across different reporting periods on a consistent
basis, independent of non-cash items including stock-based compensation
expenses, amortization of intangibles, impairment of acquisition-related
intangibles, all other purchase accounting charges and the tax effects
of
these non-GAAP adjustments. In addition, investors and analysts can
compare the Company's operating results on a more consistent basis
against
that of other companies in our
industry.
|
Non-Cash
Items
| o |
Stock-based
compensation. Stock-based compensation relates primarily to SunPower
stock
awards such as stock options and restricted stock. Stock-based
compensation is a non-cash expense that varies in amount from period
to
period and is dependent on market forces that are difficult to predict.
As
a result of this unpredictability, management excludes this item
from its
internal operating forecasts and models. Management believes that
non-GAAP
measures adjusted for stock-based compensation provide investors
with a
basis to measure the company’s core performance against the performance of
other companies without the variability created by stock-based
compensation.
|
| o |
Amortization
of intangibles. SunPower incurs amortization of intangibles as a
result of
Cypress acquiring the Company in November 2004, in which Cypress’ cost of
purchased technology, patents, trademarks and a distribution agreement
is
reflected in our financial statements. In addition, SunPower incurs
amortization of intangibles as a result of our acquisition of SP
Systems,
which includes purchased technology such as existing technology,
patents,
brand names and trademarks. SunPower excludes these items because
these
expenses are not reflective of ongoing operating results in the period
incurred. These amounts arise from prior acquisitions and have no
direct
correlation to the operation of SunPower’s core businesses.
|
| o |
Impairment
of acquisition-related intangibles. SunPower incurred an impairment
of
acquisition-related intangibles in June 2007, which relates to the
net
book value of the PowerLight tradename being written off in its entirety
as a result of the change in branding strategy. SunPower excluded
this
item because the expense is not reflective of its core operating
performance after completion of its acquisition of SP Systems. Excluding
this data provides investors with a basis to compare the company’s
performance against the performance of other companies without non-cash
expenses such as impairment of acquisition-related
intangibles.
|
| o |
Purchase
accounting charges. Purchase accounting charges as a result of the
acquisition of SP Systems include: (1) amortization of intangibles,
which
includes purchased technology related to acquisitions such as existing
technology, patents, brand names and trademarks; (2) fair value
adjustments to deferred revenue, which is an acquisition-related
adjustment that results in certain revenues never being recognized
under
GAAP by either the acquiring company or the company being acquired
and (3)
purchased in-process research and development expenses, which relates
to
projects in process as of the acquisition date that have not reached
technological feasibility and are immediately expensed. These
acquisition-related charges are not factored into management’s evaluation
of potential acquisitions or its performance after completion of
acquisitions, because they are not related to our core operating
performance, and the frequency and amount of such charges can vary
significantly based on the size and timing of acquisitions and the
maturities of the businesses being acquired. Excluding this data
provides
investors with a basis to compare SunPower’s
performance against the performance of other companies without the
variability caused by purchase
accounting.
|
| o |
Tax
effect. This amount is used to present each of the amounts described
above
on an after-tax basis with the presentation of non-GAAP net income
(loss)
per share.
|
For
more
information on these non-GAAP financial measures, please see the tables
captioned "Reconciliations of GAAP results of operations measures to non-GAAP
measures" set forth at the end of this release and 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
|
|
(Unaudited)
|
|
(In
thousands, except per share
data)
|
|
STATEMENT
OF OPERATIONS DATA:
|
||||||||||||||||
|
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
|
Sept.
30,
|
|
Jul.
1,
|
|
Oct.
1,
|
|
Sept.
30,
|
|
Oct.
1,
|
|
|||||||
|
|
|
2007
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
||||||
|
GAAP
gross margin
|
$
|
38,405
|
$
|
29,792
|
$
|
15,184
|
$
|
100,622
|
$
|
32,323
|
||||||
|
Fair
value adjustment to deferred revenue
|
-
|
309
|
-
|
1,142
|
-
|
|||||||||||
|
Amortization
of intangible assets
|
5,911
|
6,687
|
1,176
|
18,668
|
3,526
|
|||||||||||
|
Stock-based
compensation expense
|
3,588
|
3,198
|
200
|
9,036
|
628
|
|||||||||||
|
Non-GAAP
gross margin
|
$
|
47,904
|
$
|
39,986
|
$
|
16,560
|
$
|
129,468
|
$
|
36,477
|
||||||
|
GAAP
operating income (loss)
|
$
|
6,795
|
$
|
(13,206
|
)
|
$
|
6,442
|
$
|
(8,868
|
)
|
$
|
9,631
|
||||
|
Fair
value adjustment to deferred revenue
|
-
|
309
|
-
|
1,142
|
-
|
|||||||||||
|
Amortization
of intangible assets
|
6,858
|
7,640
|
1,176
|
21,408
|
3,526
|
|||||||||||
|
Stock-based
compensation expense
|
13,364
|
13,230
|
1,157
|
37,197
|
3,706
|
|||||||||||
|
Purchased
in-process research and development
|
-
|
-
|
-
|
9,575
|
-
|
|||||||||||
|
Impairment
of acquisition-related intangibles
|
-
|
14,068
|
-
|
14,068
|
-
|
|||||||||||
|
Non-GAAP
operating income
|
$
|
27,017
|
$
|
22,041
|
$
|
8,775
|
$
|
74,522
|
$
|
16,863
|
||||||
|
NET
INCOME PER SHARE:
|
||||||||||||||||
|
|
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
||||||||||||||
|
|
Sept.
30,
|
|
|
Jul.
1,
|
|
|
Oct.
1,
|
|
|
Sept.
30,
|
|
|
Oct.
1,
|
|
||
|
|
|
|
2007
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
Basic:
|
||||||||||||||||
|
GAAP
net income (loss) per share
|
$
|
0.11
|
($0.07
|
)
|
$
|
0.14
|
$
|
0.06
|
$
|
0.24
|
||||||
|
Reconciling
items:
|
||||||||||||||||
|
Stock-based
compensation expense
|
0.17
|
0.18
|
0.02
|
0.49
|
0.06
|
|||||||||||
|
Purchase
accounting:
|
||||||||||||||||
|
Fair
value adjustment to deferred revenue
|
-
|
-
|
-
|
0.02
|
-
|
|||||||||||
|
Amortization
of intangible assets
|
0.09
|
0.10
|
0.02
|
0.28
|
0.05
|
|||||||||||
|
Purchased
in-process research and development
|
-
|
-
|
-
|
0.13
|
-
|
|||||||||||
|
Impairment
of acquisition-related intangibles
|
-
|
0.18
|
-
|
0.19
|
-
|
|||||||||||
|
Tax
effect
|
(0.02
|
)
|
(0.13
|
)
|
-
|
(0.24
|
)
|
-
|
||||||||
|
Non-GAAP
net income per share
|
$
|
0.35
|
$
|
0.26
|
$
|
0.18
|
$
|
0.93
|
$
|
0.35
|
||||||
|
Diluted:
|
||||||||||||||||
|
GAAP
net income (loss) per share
|
$
|
0.10
|
($0.07
|
)
|
$
|
0.13
|
$
|
0.05
|
$
|
0.22
|
||||||
|
Reconciling
items:
|
||||||||||||||||
|
Stock-based
compensation expenses
|
0.16
|
0.17
|
0.01
|
0.46
|
0.05
|
|||||||||||
|
Purchase
accounting:
|
||||||||||||||||
|
Fair
value adjustment to deferred revenue
|
-
|
-
|
-
|
0.01
|
-
|
|||||||||||
|
Amortization
of intangible assets
|
0.09
|
0.10
|
0.02
|
0.27
|
0.05
|
|||||||||||
|
Purchased
in-process research and development
|
-
|
-
|
-
|
0.12
|
-
|
|||||||||||
|
Impairment
of acquisition-related intangibles
|
-
|
0.18
|
-
|
0.17
|
-
|
|||||||||||
|
Tax
effect
|
(0.02
|
)
|
(0.13
|
)
|
-
|
(0.21
|
)
|
-
|
||||||||
|
Non-GAAP
net income per share
|
$
|
0.33
|
$
|
0.25
|
$
|
0.16
|
$
|
0.87
|
$
|
0.32
|
||||||
|
Shares
used in calculation of GAAP net income (loss) per share:
|
||||||||||||||||
|
-
Basic
|
77,693
|
75,123
|
68,947
|
75,516
|
64,704
|
|||||||||||
|
-
Diluted
|
82,610
|
75,123
|
73,899
|
80,526
|
70,080
|
|||||||||||
|
Shares
used in calculation of non-GAAP net income per share:
|
||||||||||||||||
|
-Basic
|
77,693
|
75,123
|
68,947
|
75,516
|
64,704
|
|||||||||||
|
-Diluted
|
82,610
|
79,843
|
73,899
|
80,526
|
70,080
|
|||||||||||
The
following supplemental data represents the individual charges and credits that
are excluded from SunPower’s non-GAAP financial measures for each period
presented in the Condensed Consolidated Statements of Operations contained
herein.
|
SUPPLEMENTAL
DATA
|
|||||||||||||||||||
|
(In
thousands)
|
|||||||||||||||||||
|
THREE
MONTHS ENDED
|
|||||||||||||||||||
|
September
30, 2007
|
|||||||||||||||||||
|
Gross
Margin
|
|
Research
and
|
|
Selling,
general
|
|
Other
Acquisition
|
|
Income
tax
|
|
||||||||||
|
|
|
Systems
|
|
Components
|
|
development
|
|
and
administrative
|
|
Related
Charges
|
provision
(benefit)
|
||||||||
|
Amortization
of intangible assets
|
$
|
4,788
|
$
|
1,123
|
$
|
-
|
$
|
947
|
$
|
-
|
$
|
-
|
|||||||
|
Stock-based
compensation expense
|
2,049
|
1,539
|
404
|
9,372
|
-
|
-
|
|||||||||||||
|
Tax
effect
|
-
|
-
|
-
|
-
|
-
|
(1,786
|
)
|
||||||||||||
|
|
$
|
6,837
|
$
|
2,662
|
$
|
404
|
$
|
10,319
|
$
|
-
|
$
|
(1,786
|
)
|
||||||
|
|
|||||||||||||||||||
|
|
July
1, 2007
|
||||||||||||||||||
|
|
Gross
Margin
|
|
|
Research
and
|
|
|
Selling,
general
|
|
|
Other
Acquisition
|
|
|
Income
tax
|
|
|||||
|
|
|
|
Systems
|
|
|
Components
|
|
|
development
|
|
|
and
administrative
|
|
|
Related
Charges
|
|
|
provision
(benefit)
|
|
|
Fair
value adjustment to deferred revenue
|
$
|
309
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
|
Amortization
of intangible assets
|
5,564
|
1,123
|
-
|
953
|
-
|
-
|
|||||||||||||
|
Stock-based
compensation expense
|
2,189
|
1,009
|
348
|
9,684
|
-
|
-
|
|||||||||||||
|
Impairment
of acquisition-related intangibles
|
-
|
-
|
-
|
-
|
14,068
|
-
|
|||||||||||||
|
Tax
effect
|
-
|
-
|
-
|
-
|
-
|
(10,091
|
)
|
||||||||||||
|
|
$
|
8,062
|
$
|
2,132
|
$
|
348
|
$
|
10,637
|
$
|
14,068
|
$
|
(10,091
|
)
|
||||||
|
|
|||||||||||||||||||
|
|
October
1, 2006
|
||||||||||||||||||
|
|
Gross
Margin
|
|
|
Research
and
|
|
|
Selling,
general
|
|
|
Other
Acquisition
|
|
|
Income
tax
|
|
|||||
|
|
Systems
|
|
|
Components
|
development
|
and
administrative
|
Related
Charges
|
provision
(benefit)
|
|||||||||||
|
Amortization
of intangible assets
|
$
|
-
|
$
|
1,176
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
|
Stock-based
compensation expense
|
-
|
200
|
336
|
621
|
-
|
-
|
|||||||||||||
|
Tax
effect
|
-
|
-
|
-
|
-
|
-
|
195
|
|||||||||||||
|
|
$
|
-
|
$
|
1,376
|
$
|
336
|
$
|
621
|
$
|
-
|
$
|
195
|
|||||||
|
|
|||||||||||||||||||
|
|
|||||||||||||||||||
|
|
NINE
MONTHS ENDED
|
||||||||||||||||||
|
|
|||||||||||||||||||
|
|
September
30, 2007
|
||||||||||||||||||
|
|
Gross
Margin
|
|
|
Research
and
|
|
|
Selling,
general
|
|
|
Other Acquisition
|
|
|
Income
tax
|
|
|||||
|
|
|
|
Systems
|
|
|
Components
|
|
|
development
|
|
|
and
administrative
|
|
|
Related
Charges
|
provision
(benefit)
|
|||
|
Fair
value adjustment to deferred revenue
|
$
|
1,142
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
|
Amortization
of intangible assets
|
15,298
|
3,370
|
-
|
2,740
|
-
|
-
|
|||||||||||||
|
Stock-based
compensation expense
|
6,235
|
2,801
|
1,253
|
26,908
|
-
|
-
|
|||||||||||||
|
Purchased
in-process research and development
|
-
|
-
|
-
|
-
|
9,575
|
-
|
|||||||||||||
|
Impairment
of acquisition-related intangibles
|
-
|
-
|
-
|
-
|
14,068
|
-
|
|||||||||||||
|
Tax
effect
|
-
|
-
|
-
|
-
|
-
|
(17,761
|
)
|
||||||||||||
|
|
$
|
22,675
|
$
|
6,171
|
$
|
1,253
|
$
|
29,648
|
$
|
23,643
|
$
|
(17,761
|
)
|
||||||
|
|
|||||||||||||||||||
|
|
October
1, 2006
|
||||||||||||||||||
|
|
Gross
Margin
|
Research
and
|
Sellin
general
|
Other
Acquisition
|
Income
tax
|
|
|||||||||||||
|
|
Systems
|
Components
|
development
|
and
administrative
|
Related
Charges
|
provision
(benefit)
|
|||||||||||||
|
Amortization
of intangible assets
|
$
|
-
|
$
|
3,526
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
|
Stock-based
compensation expense
|
-
|
628
|
1,019
|
2,059
|
-
|
-
|
|||||||||||||
|
Tax
effect
|
-
|
-
|
-
|
-
|
-
|
33
|
|||||||||||||
|
$
|
-
|
$
|
4,154
|
$
|
1,019
|
$
|
2,059
|
$
|
-
|
$
|
33
|
||||||||