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 17, 2008
___________________
|
SunPower
Corporation
|
|
(Exact
Name of Registrant as Specified in
Charter)
|
___________________
|
Delaware
|
000-51593
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94-3008969
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(State
or Other Jurisdiction
|
(Commission
|
(IRS
Employer
|
|
of
Incorporation)
|
File
No.)
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Identification
No.)
|
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3939
North First Street, San Jose, California 95134
|
|
(Address
of Principal Executive Offices) (Zip
Code)
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Registrant’s
telephone number, including area code: (408) 240-5500
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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 (see General Instruction
A.2. below):
|
|
|
r
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
r
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
r
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
r
|
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. Results of Operations and
Financial Condition.
On July
17, 2008, SunPower Corporation issued the press release attached as Exhibit 99.1
hereto announcing its results of operations for the second quarter of
2008.
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.
Item 9.01. Financial
Statements and Exhibits.
(d)
Exhibits
|
Exhibit No.
|
Description
|
|
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99.1
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Press
Release dated July 17, 2008
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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.
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SUNPOWER
CORPORATION
|
|
|
Date:
July 17, 2008
|
By:
/s/ Emmanuel Hernandez
|
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Name:
Emmanuel Hernandez
|
|
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Title: Chief
Financial Officer
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Exhibit No.
|
Description
|
|
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99.1
|
Press
Release dated July 17, 2008
|
FOR
IMMEDIATE RELEASE
Contacts:
Bob
Okunski
SunPower
Corporation
408-240-5447
Manny
Hernandez
SunPower
Corporation
408-240-5560
SunPower
Reports Record Second-Quarter 2008 Results
Company
Raises FY 2008 and FY 2009 Guidance
|
·
|
Generated
second quarter 2008 revenue of $382.8 million, up 120%
year-on-year
|
|
·
|
Achieved
$0.34 GAAP net income per share, $0.61
non-GAAP
|
|
·
|
Announced
agreement with Florida Power & Light in July for two projects totaling
35 megawatts
|
|
·
|
Began
site preparation for a 1 gigawatt solar cell fab in
Malaysia
|
|
·
|
On
track with 50% cost reduction plan, Q2 reductions in cell, module,
materials and systems costs
|
|
·
|
More
than 300 dealers worldwide serving the residential and small-commercial
rooftop market
|
|
·
|
Announced
world-record 23.4% efficient, full-scale prototype Gen 3 solar
cell
|
|
·
|
Announced
the appointment of Marty Neese as chief operating
officer
|
SAN JOSE, Calif., July 17,
2008 – SunPower Corporation (NASDAQ: SPWR) today announced financial
results for the second quarter 2008, which ended June 29, 2008. 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. Please
note that the company has posted additional, supplemental information related to
its second quarter 2008 performance on the Events and Presentations section of
the Investor Relations page on the SunPower website at www.sunpowercorp.com.
Revenue
for the 2008 second quarter was $382.8 million, up 40% from prior-quarter
revenue of $273.7 million and up 120% from year-ago second-quarter revenue of
$173.8 million. The Components and Systems segments accounted for 29%
and 71% of second quarter revenue, respectively.
For
reporting purposes, the Systems segment generally represents products and
services sold directly to the system owner. Additionally, both
SunPower and third-party solar panels sold through the Systems segment channels
are recorded as Systems segment revenue. The Components segment primarily
represents products sold to installers and resellers.
On a GAAP
basis, for the 2008 second quarter, SunPower reported gross margin of 24.3%,
total operating income of $45.0 million and diluted net income per share of
$0.34. These figures include non-cash operating expenses for
amortization of purchase accounting intangible assets of $4.0 million and
non-cash, stock-based compensation of $18.6 million.
On a
non-GAAP basis, adjusted to exclude non-cash charges for amortization of
intangible assets and stock-based compensation, SunPower reported total gross
margin of 26.4%, operating income of $67.6 million and diluted net income per
share of $0.61. This compares with prior-quarter non-GAAP gross
margin of 24.0%, total operating income of $39.1 million and $0.39 diluted net
income per share. Overall gross margin rose sequentially benefitting
from a 630 basis point improvement in the Components
segment. Components gross margin rose to 31.7% due to lower silicon
costs, higher volume and stable to slightly higher average selling
prices. Additionally, the systems segment posted a gross margin of
24.2% reflecting a higher percentage of SunPower panels and cost reduction in
field construction. Looking forward to the third and fourth quarter,
the company expects continued improvement in company gross margin.
“In 2008,
SunPower has achieved the geographic and market segment diversity that provides
us with tremendous flexibility to respond to new opportunities and minimize
risk, such as the uncertainty our industry currently faces in the U.S. and
Spanish markets,” said Tom Werner, SunPower’s CEO. “We have built the
infrastructure to deliver our high-efficiency solar technology to customers on
four continents from residential rooftops to large-scale utility
systems. With our Gen 2 cell lines ramping and further expansion of
our manufacturing capabilities, we are beginning to tap unserved demand for our
high-efficiency solar systems in Korea, Japan, Australia, Germany, Italy, and
neighboring areas in Europe. The overall global business environment remains
very favorable as we continue to execute on our long-term strategy focused on
brand, technology, cost and people. We are well-positioned for
success entering the second half of the year.
“In the
second quarter, SunPower benefitted from strong customer demand across multiple
geographies including our Systems business segment. In addition to
our power plant installations in Spain, we saw the dedication of a 1.4 megawatt
project in Korea as well as the announcement of our framework agreement with
Enfinity Management SPRL to supply 25 megawatts of projects in Italy by the end
of 2009. Demonstrating SunPower’s ability to offer solar at
utility-scale, we announced an agreement with Florida Power & Light (FPL)
for the largest photovoltaic power plant in the United States. Our
agreements with FPL include both a 25 megawatt plant in DeSoto County, Fla., as
well as a 10 megawatt plant at the Kennedy Space Center. Our power
plant customers value SunPower’s delivery of the highest-efficiency solar
panels, high-energy collection systems technology, a decade of large-scale
systems deployment experience, and a low levelized cost of energy
(LCOE).
“In our
Components business segment, we continued to see strong demand
worldwide. We more than doubled the number of our European
dealers and further grew our dealer base in the United
States. SunPower now has more than 300 dealers worldwide serving the
residential and small-commercial rooftop market. Our multi-channel
approach, vertically integrated business model and diversified customer base
gives us a competitive advantage and will enable us to capitalize on the further
adoption of solar as an alternative to conventional electricity
generation.
“SunPower
continued to extend its technology lead during the quarter as we announced our
world-record, 23.4 percent efficiency, prototype Generation 3 solar
cell. This technology, expected to be in production in approximately
two years, is a key element in our roadmap to reduce total systems costs to
compete with wholesale and retail electric rates by 2012. Also, in
order to meet expected future demand and scale economies to reach our cost
reduction goals, SunPower announced plans to build its third solar cell
manufacturing facility in Malaysia which, when completed, will have a nameplate
capacity in excess of 1 gigawatt.
“Our cost
reduction plans are on target for silicon procurement as well. We saw
our silicon unit costs materially decline in the second quarter as we started to
realize the benefit of our portfolio approach to silicon supply,” continued
Werner. “With all of our silicon suppliers delivering according to
contract, we expect our silicon supply costs to continue to decline and remain
fully contracted for our silicon needs through 2010. Per plan,
SunPower also benefitted from reductions in cell manufacturing and module costs,
improved materials sourcing and more efficient project management including the
deployment of our next-generation SunPower® T20 Tracker at our power plant
projects in Spain.
“With the
decline in our silicon costs, further improvements in our manufacturing
efficiency and continued progress in reducing downstream installation costs, we
remain on track to achieve our target financial model of 30% gross margin, 10%
operating expenses and 20% operating margin, on a non-GAAP basis, no later than
the first quarter of 2009. We are also on track to realize our
mission of reducing installed systems cost by 50% from 2006
to 2012.
“Based on
the strong demand trends in both existing and emerging markets and continued
progress on our 50 percent reduction in installed system costs, we are raising
our guidance for the fiscal year 2008 and expect the following non-GAAP
results: Total revenue of $1.39 billion to $1.44 billion and diluted
net income per share of $2.26 to $2.36. We also expect our 2009 total
revenue to be in of the range of $2.0 billion to $2.1 billion, production
capacity of 450+ megawatts and non-GAAP diluted net income per share of at least
$3.50. Consistent with our practice of offering guidance for the current
quarter, we expect third quarter 2008 non-GAAP total revenue of $340 million to
$355 million, company non-GAAP gross margin of 26.5% to 27.5% and non-GAAP
diluted net income per share of $0.53 to $0.57.1
“On a
business segment basis, we expect the following non-GAAP results for the third
quarter 2008: Components segment revenue of $155 million to $160 million, and
gross margin of 33.5% to 34.5%; Systems segment revenue of $185 million to $195
million and gross margin of 21.5% to 22%. We expect the Components
segment to benefit from the continued manufacturing ramp of our next-generation
technology and lower silicon cost and the Systems segment to reflect a
combination of changes in project and regional mix.2
“For the
fourth quarter of 2008, we expect non-GAAP total revenue of $395 million to $425
million, reflecting an anticipated increase in both our Components and Systems
segment revenue, company non-GAAP gross margin of 29% to 30%, in line with the
company’s long-term model, and non-GAAP diluted net income per share of $0.73 to
$0.80. For the fourth quarter 2008, we expect Components segment
revenue of $200 million to $210 million, and gross margin of 35% to 36% and
Systems segment revenue of $195 million to $215 million and gross margin of 23%
to 23.5%,” concluded Werner.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 full year 2008, we expect the following total company GAAP
results: Revenue of $1.39 billion to $1.44 billion and diluted net income per
share of $1.16 to $1.26. For the full year 2009, we expect the following total
company GAAP results: Revenue of $2.0 billion to $2.1 billion and diluted net
income per share of at least $2.36. For the third quarter of 2008, we
expect the following total company GAAP results: Revenue of $340 million to $355
million; gross margin of approximately 24.0 percent to 25.0 percent and diluted
net income per share of $0.26 to $0.30.
2
For the third quarter of 2008, we expect the Components business segment
to generate GAAP revenue of $155 million to $160 million and gross margin of
approximately 30.2 percent to 31.2 percent and the Systems business segment to
generate GAAP revenue of $185 million to $195 million and gross margin of
approximately 19.3 percent to 19.8 percent.
3
For the fourth quarter of 2008, we expect the following total company
GAAP results: Revenue of $395 million to $425 million; gross margin of
approximately 26.2 percent to 27.2 percent and diluted net income per share of
$0.40 to $0.47. For the fourth quarter of 2008, we expect the Components
business segment to generate GAAP revenue of $200 million to $210 million and
gross margin of approximately 31.8 percent to 32.8 percent and the Systems
business segment to generate GAAP revenue of $195 million to $215 million and
gross margin of approximately 20.7 percent to 21.2 percent.
Forward-Looking
Statements
This
press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking statements are statements that do not represent
historical facts. The company uses words and phrases such as “guidance,”
“looking forward,” “expects,” flexibility,” “further,” “to supply,” “to
compete,” “will,” “expected,” “roadmap,” “plans,” “continue,” “to achieve,”
“trends,” “to benefit,” “to reflect,” “anticipated,” 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) continued improvement in overall gross margin; (b)
flexibility to respond to new opportunities and minimize risk such as the
uncertainty our industry currently faces in the U.S. and Spanish markets; (c)
further expansion of our manufacturing capabilities; (d) unserved demand for our
high-efficiency solar systems in Korea, Japan, Australia, Germany, Italy and
neighboring areas in Europe; (e) the company’s future supply of 25 megawatts of
projects in Italy by the end of 2009 under its framework agreement with Enfinity
Management SPRL; (f) agreements with Florida Power and Light to build
photovoltaic power plants in DeSoto County and at the Kennedy Space Center; (g)
the company’s capitalizing on the further adoption of solar as an alternative to
traditional electricity generation; (h) Generation 3 solar cell technology being
in production in approximately two years, (i) reducing total system costs by 50%
from 2006 to 2012 to compete with wholesale and retail electric rates;(j) future
demand; (k) building the third solar cell manufacturing facility in Malaysia
which, when completed, will have a nameplate capacity in excess of 1 gigawatt;
(l) silicon supply costs continuing to decline; (m) remaining fully contracted
for our silicon needs through 2010; (n) achieving target financial model of 30%
gross margin, 10% operating expenses and 20% operating margin, on a non-GAAP
basis, no later than the first quarter of 2009; (o) demand trends; (p) the
company achieving certain GAAP and non-GAAP results, including (1) total revenue
and diluted net income per share for fiscal year 2008 and 2009, (2) total
revenue, gross margin, and diluted net income per share for the third quarter of
fiscal year 2008, (3) Components segment and Systems segment revenue and gross
margin for the third quarter of fiscal year 2008, (4) total revenue, gross
margin, and diluted net income per share for the fourth quarter of fiscal year
2008, and (5) Components segment and Systems segment revenue and gross margin
for the fourth quarter of fiscal year 2008; and (q) production capacity of 450+
megawatts for 2009. These forward-looking statements are based on
information available to the company as of the date of this release and
management’s 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
the company's control. In particular, risks and uncertainties that could cause
actual results to differ include: (i) the company’s ability to obtain
an adequate supply of polysilicon, ingots and wafers to manufacture its products
and the price it pays for such materials; (ii) business and economic conditions
and growth trends in the solar power industry; (iii) the continuation of
governmental and related economic incentives promoting the use of solar power;
(iv) the continued availability of third-party financing arrangements for the
company’s customers; (v) construction difficulties or potential delays in the
project implementation process; (vi) unanticipated delays or difficulties
securing necessary permits, licenses or other governmental approvals; (vii) the
risk of continuation of supply of products and components from suppliers; (viii)
unanticipated problems with deploying the system on the sites; (ix) the
company’s ability to ramp new production lines and realize expected
manufacturing efficiencies; (x) unforeseen manufacturing equipment delays at the
company’s fabrication facilities and panel factories; (xi) the company’s ability
to utilize thinner wafers, reduce kerf loss and otherwise achieve anticipated
improvements in polysilicon usage efficiency; (xii) production difficulties that
could arise; (xiii) the success of the company’s ongoing research and
development efforts; (xiv) the company’s ability to compete with other companies
and competing technologies;
(xv)
the potential renegotiation of or non-performance by parties to the company’s
supply and customer contracts; (xvi) the price and availability of third-party
cells and solar panels; (xvii) liquidated damages or customer refunds for late
installations arising on large scale solar projects (xviii) unanticipated
changes in the mix of balance of systems sales; and (xix) other risks described
in the company’s Quarterly Report on Form 10-Q for the quarter ended March 30,
2008, and other filings with the Securities and Exchange
Commission. These forward-looking statements should not be relied
upon as representing the company's views as of any subsequent date, and the
company is under no obligation to, and expressly disclaims any responsibility
to, update or alter its 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, impairment of
long-lived assets, fair value adjustments to deferred revenue, purchased
in-process research and development expenses, write-off of unamortized debt
issuance costs, 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
SunPower
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)
|
||||||||
|
Jun.
29,
|
Dec.
30,
|
|||||||
|
2008
|
2007
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$
|
189,542
|
$
|
285,214
|
||||
|
Restricted
cash
|
83,838
|
67,887
|
||||||
|
Investments
|
62,319
|
134,503
|
||||||
|
Accounts
receivable, net
|
249,459
|
138,250
|
||||||
|
Costs
and estimated earnings in excess of billings
|
50,784
|
39,136
|
||||||
|
Inventories
|
200,268
|
140,504
|
||||||
|
Deferred
project costs
|
23,067
|
8,316
|
||||||
|
Prepaid
expenses and other assets
|
116,686
|
65,084
|
||||||
|
Advances
to suppliers
|
158,478
|
161,220
|
||||||
|
Property,
plant and equipment, net
|
451,969
|
377,994
|
||||||
|
Goodwill
and other intangible assets, net
|
241,553
|
235,630
|
||||||
|
Total
assets
|
$
|
1,827,963
|
$
|
1,653,738
|
||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Accounts
payable
|
$
|
187,847
|
$
|
119,869
|
||||
|
Accrued
and other liabilities
|
138,859
|
105,476
|
||||||
|
Convertible
debt
|
425,000
|
425,000
|
||||||
|
Billings
in excess of costs and estimated earnings
|
33,074
|
69,900
|
||||||
|
Customer
advances
|
75,005
|
69,403
|
||||||
|
Total
liabilities
|
859,785
|
789,648
|
||||||
|
Stockholders'
equity
|
968,178
|
864,090
|
||||||
|
Total
liabilities and stockholders' equity
|
$
|
1,827,963
|
$
|
1,653,738
|
||||
|
SUNPOWER
CORPORATION
|
||||||||||||||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||||||
|
(In
thousands, except per share data)
|
||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||
|
THREE
MONTHS ENDED
|
SIX
MONTHS ENDED
|
|||||||||||||||||||
|
Jun.
29,
|
Mar.
30,
|
Jul.
1,
|
Jun.
29,
|
Jul.
1,
|
||||||||||||||||
|
2008
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||
|
Revenue
|
||||||||||||||||||||
|
Systems
|
$
|
270,593
|
$
|
178,851
|
$
|
104,037
|
$
|
449,444
|
$
|
182,532
|
||||||||||
|
Components
|
112,158
|
94,850
|
69,729
|
207,008
|
133,581
|
|||||||||||||||
|
382,751
|
273,701
|
173,766
|
656,452
|
316,113
|
||||||||||||||||
|
Cost
of systems revenue
|
209,137
|
143,213
|
91,518
|
352,350
|
153,984
|
|||||||||||||||
|
Cost
of components revenue
|
80,584
|
77,168
|
52,456
|
157,752
|
99,912
|
|||||||||||||||
|
289,721
|
220,381
|
143,974
|
510,102
|
253,896
|
||||||||||||||||
|
Gross
margin
|
93,030
|
53,320
|
29,792
|
146,350
|
62,217
|
|||||||||||||||
|
Operating
expenses:
|
||||||||||||||||||||
|
Research
and development
|
4,813
|
4,642
|
2,821
|
9,455
|
5,757
|
|||||||||||||||
|
Selling,
general and administrative
|
43,208
|
33,858
|
26,109
|
77,066
|
48,480
|
|||||||||||||||
|
Purchased
in-process research and development
|
—
|
—
|
—
|
—
|
9,575
|
|||||||||||||||
|
Impairment
of acquisition-related intangibles
|
—
|
—
|
14,068
|
—
|
14,068
|
|||||||||||||||
|
Total
operating expenses
|
48,021
|
38,500
|
42,998
|
86,521
|
77,880
|
|||||||||||||||
|
Operating
income (loss)
|
45,009
|
14,820
|
(13,206
|
)
|
59,829
|
(15,663
|
)
|
|||||||||||||
|
Interest
and other income (expense), net
|
(1,362
|
)
|
2,970
|
594
|
1,608
|
1,733
|
||||||||||||||
|
Income
(loss) before income taxes
|
43,647
|
17,790
|
(12,612
|
)
|
61,437
|
(13,930
|
)
|
|||||||||||||
|
Income
tax provision (benefit)
|
15,039
|
5,033
|
(7,267
|
)
|
20,072
|
(9,825
|
)
|
|||||||||||||
|
Net
income (loss)
|
$
|
28,608
|
$
|
12,757
|
$
|
(5,345
|
)
|
$
|
41,365
|
$
|
(4,105
|
)
|
||||||||
|
Net
income (loss) per share:
|
||||||||||||||||||||
|
-
Basic
|
$
|
0.36
|
$
|
0.16
|
$
|
(0.07
|
)
|
$
|
0.52
|
$
|
(0.06
|
)
|
||||||||
|
-
Diluted
|
$
|
0.34
|
$
|
0.15
|
$
|
(0.07
|
)
|
$
|
0.49
|
$
|
(0.06
|
)
|
||||||||
|
Shares
used in calculation of net income (loss) per share:
|
||||||||||||||||||||
|
-
Basic
|
79,412
|
78,965
|
75,123
|
79,188
|
74,428
|
|||||||||||||||
|
-
Diluted
|
84,036
|
83,661
|
75,123
|
83,848
|
74,428
|
|||||||||||||||
|
(In thousands, except per share
data)
|
|||||||||||||||||||||||||||||||||||||||||
|
THREE
MONTHS ENDED
|
SIX
MONTHS ENDED
|
THREE
MONTHS ENDED
|
SIX
MONTHS ENDED
|
||||||||||||||||||||||||||||||||||||||
|
Jun.
29,
|
Mar.
30,
|
Jul.
1,
|
Jun.
29,
|
Jul.
1,
|
Jun.
29,
|
Mar.
30,
|
Jul.
1,
|
Jun.
29,
|
Jul.
1,
|
||||||||||||||||||||||||||||||||
|
2008
|
2008
|
2007
|
2008
|
2007
|
2008
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||||||||||||||||||
|
(Presented
on a GAAP Basis)
|
(Presented
on a non-GAAP Basis)
|
||||||||||||||||||||||||||||||||||||||||
|
Gross
margin
|
$
|
93,030
|
$
|
53,320
|
$
|
29,792
|
$
|
146,350
|
$
|
62,217
|
$
|
101,066
|
$
|
65,735
|
$
|
39,986
|
$
|
166,801
|
$
|
81,563
|
|||||||||||||||||||||
|
Operating
income (loss)
|
45,009
|
14,820
|
(13,206
|
)
|
59,829
|
(15,663
|
)
|
67,650
|
39,134
|
22,041
|
106,784
|
47,506
|
|||||||||||||||||||||||||||||
|
Net
income (loss) per share:
|
|||||||||||||||||||||||||||||||||||||||||
|
-Basic
|
|
0.36
|
|
0.16
|
|
(0.07
|
)
|
|
0.52
|
|
(0.06
|
)
|
0.64
|
0.41
|
0.26
|
1.06
|
0.58
|
||||||||||||||||||||||||
|
-Diluted
|
|
0.34
|
|
0.15
|
|
(0.07
|
)
|
|
0.49
|
|
(0.06
|
)
|
0.61
|
0.39
|
0.25
|
1.00
|
0.54
|
||||||||||||||||||||||||
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, impairment of long-lived assets, fair value
adjustments to deferred revenue, purchased in-process research and development
expenses, write-off of unamortized debt issuance costs, 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 and net
income per share. Management believes that each of these non-GAAP measures
(gross margin, operating income and net income 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, stock-based
compensation charges, impairment of long-lived assets and write-off of
unamortized debt issuance costs. 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,
impairment of long-lived assets 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. 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, impairment of
long-lived assets, 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 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, impairment of
long-lived assets, write-off of unamortized debt issuance
costs, 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 Impairment
of long-lived assets. SunPower incurred an impairment of long-lived assets in
the first quarter of fiscal 2008, which relates to the discontinuation of our
imaging detector product line and for the write-off of certain solar
manufacturing equipment which became obsolete due to new processes. SunPower
excluded this item because the expense is not reflective of its ongoing
operating results in the period incurred. 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 long-lived
assets.
o Write-off
of unamortized debt issuance costs. The market price trigger condition was
met for our senior convertible debentures in late December 2007, giving holders
of the convertible debt the right to convert the convertible debt in the first
quarter of fiscal 2008. As a result, SunPower accelerated the
amortization of deferred debt issuance costs. Excluding this non-cash charge
provides investors with a basis to compare SunPower’s period-over-period
operating results because the charge is not reflective of SunPower’s historical
results or its expected future expenses after such costs were fully amortized on
January 2, 2008.
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 acquisitions, 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 prior
acquisitions 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 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
|
SIX
MONTHS ENDED
|
|||||||||||||||||||
|
Jun.
29,
|
Mar.
30,
|
Jul.
1,
|
Jun.
29,
|
Jul.
1,
|
||||||||||||||||
|
2008
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||
|
GAAP
gross margin
|
$
|
93,030
|
$
|
53,320
|
$
|
29,792
|
$
|
146,350
|
$
|
62,217
|
||||||||||
|
Fair
value adjustment to deferred revenue
|
—
|
—
|
309
|
—
|
1,142
|
|||||||||||||||
|
Amortization
of intangible assets
|
2,907
|
3,212
|
6,687
|
6,119
|
12,756
|
|||||||||||||||
|
Stock-based
compensation expense
|
5,129
|
3,714
|
3,198
|
8,843
|
5,448
|
|||||||||||||||
|
Impairment
of long-lived assets
|
—
|
5,489
|
—
|
5,489
|
—
|
|||||||||||||||
|
Non-GAAP
gross margin
|
$
|
101,066
|
$
|
65,735
|
$
|
39,986
|
$
|
166,801
|
$
|
81,563
|
||||||||||
|
GAAP
operating income (loss)
|
$
|
45,009
|
$
|
14,820
|
$
|
(13,206
|
)
|
$
|
59,829
|
$
|
(15,663
|
)
|
||||||||
|
Fair
value adjustment to deferred revenue
|
—
|
—
|
309
|
—
|
1,142
|
|||||||||||||||
|
Amortization
of intangible assets
|
4,034
|
4,317
|
7,640
|
8,351
|
14,551
|
|||||||||||||||
|
Stock-based
compensation expense
|
18,607
|
14,508
|
13,230
|
33,115
|
23,833
|
|||||||||||||||
|
Purchased
in-process research and development
|
—
|
—
|
—
|
—
|
9,575
|
|||||||||||||||
|
Impairment
of acquisition-related intangibles
|
—
|
—
|
14,068
|
—
|
14,068
|
|||||||||||||||
|
Impairment
of long-lived assets
|
—
|
5,489
|
—
|
5,489
|
—
|
|||||||||||||||
|
Non-GAAP
operating income
|
$
|
67,650
|
$
|
39,134
|
$
|
22,041
|
$
|
106,784
|
$
|
47,506
|
||||||||||
|
NET
INCOME (LOSS) PER SHARE:
|
||||||||||||||||||||
|
THREE
MONTHS ENDED
|
SIX
MONTHS ENDED
|
|||||||||||||||||||
|
Jun.
29,
|
Mar.
30,
|
Jul.
1,
|
Jun.
29,
|
Jul.
1,
|
||||||||||||||||
|
2008
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||
|
Basic:
|
||||||||||||||||||||
|
GAAP
net income (loss) per share
|
$
|
0.36
|
$
|
0.16
|
$
|
(0.07
|
)
|
$
|
0.52
|
$
|
(0.06
|
)
|
||||||||
|
Reconciling
items:
|
||||||||||||||||||||
|
Stock-based
compensation expense
|
0.23
|
0.18
|
0.18
|
0.42
|
0.33
|
|||||||||||||||
|
Impairment
of long-lived assets
|
—
|
0.07
|
—
|
0.07
|
—
|
|||||||||||||||
|
Purchase
accounting:
|
||||||||||||||||||||
|
Fair
value adjustment to deferred revenue
|
—
|
—
|
—
|
—
|
0.01
|
|||||||||||||||
|
Amortization
of intangible assets
|
0.05
|
0.06
|
0.10
|
0.11
|
0.19
|
|||||||||||||||
|
Purchased
in-process research and development
|
—
|
—
|
—
|
—
|
0.13
|
|||||||||||||||
|
Impairment
of acquisition-related intangibles
|
—
|
—
|
0.18
|
—
|
0.18
|
|||||||||||||||
|
Write-off
of unamortized debt issuance costs
|
—
|
0.01
|
—
|
0.01
|
—
|
|||||||||||||||
|
Tax
effect
|
—
|
(0.07
|
)
|
(0.13
|
)
|
(0.07
|
)
|
(0.20
|
)
|
|||||||||||
|
Non-GAAP
net income per share
|
$
|
0.64
|
$
|
0.41
|
$
|
0.26
|
$
|
1.06
|
$
|
0.58
|
||||||||||
|
Diluted:
|
||||||||||||||||||||
|
GAAP
net income (loss) per share
|
$
|
0.34
|
$
|
0.15
|
$
|
(0.07
|
)
|
$
|
0.49
|
$
|
(0.06
|
)
|
||||||||
|
Reconciling
items:
|
||||||||||||||||||||
|
Stock-based
compensation expenses
|
0.22
|
0.18
|
0.17
|
|
0.40
|
0.30
|
||||||||||||||
|
Impairment
of long-lived assets
|
—
|
0.07
|
—
|
|
0.07
|
—
|
||||||||||||||
|
Purchase
accounting:
|
||||||||||||||||||||
|
Fair
value adjustment to deferred revenue
|
—
|
—
|
—
|
|
—
|
0.01
|
||||||||||||||
|
Amortization
of intangible assets
|
0.05
|
0.05
|
0.10
|
|
0.10
|
0.19
|
||||||||||||||
|
Purchased
in-process research and development
|
—
|
—
|
—
|
—
|
0.12
|
|||||||||||||||
|
Impairment
of acquisition-related intangibles
|
—
|
—
|
0.18
|
|
—
|
0.18
|
||||||||||||||
|
Write-off
of unamortized debt issuance costs
|
—
|
0.01
|
—
|
|
0.01
|
—
|
||||||||||||||
|
Tax
effect
|
—
|
(0.07
|
)
|
(0.13
|
)
|
|
(0.07
|
)
|
(0.20
|
)
|
||||||||||
|
Non-GAAP
net income per share
|
$
|
0.61
|
$
|
0.39
|
$
|
0.25
|
$
|
1.00
|
$
|
0.54
|
||||||||||
|
Shares
used in calculation of GAAP net income (loss) per share:
|
||||||||||||||||||||
|
-
Basic
|
79,412
|
78,965
|
75,123
|
79,188
|
74,428
|
|||||||||||||||
|
-
Diluted
|
84,036
|
83,661
|
75,123
|
83,848
|
74,428
|
|||||||||||||||
|
Shares
used in calculation of non-GAAP net income per share:
|
||||||||||||||||||||
|
-Basic
|
79,412
|
78,965
|
75,123
|
79,188
|
74,428
|
|||||||||||||||
|
-Diluted
|
84,036
|
83,661
|
79,843
|
83,848
|
79,485
|
|||||||||||||||
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
|
||||||||||||||||||||||||||||
|
June
29, 2008
|
||||||||||||||||||||||||||||
|
Gross
Margin
|
Research
and
development
|
Selling,
general
and
administrative
|
Other
Acquisition Related Charges
|
Interest
and other income, net
|
Income
tax provision (benefit)
|
|||||||||||||||||||||||
|
Systems
|
Components
|
|||||||||||||||||||||||||||
|
Amortization
of intangible assets
|
$
|
1,841
|
$
|
1,066
|
$
|
—
|
$
|
1,127
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||
|
Stock-based
compensation expense
|
2,239
|
2,890
|
972
|
12,506
|
—
|
—
|
—
|
|||||||||||||||||||||
|
Tax
effect
|
—
|
—
|
—
|
—
|
—
|
—
|
(118
|
)
|
||||||||||||||||||||
|
$
|
4,080
|
$
|
3,956
|
$
|
972
|
$
|
13,633
|
$
|
—
|
$
|
—
|
$
|
(118
|
)
|
||||||||||||||
|
March
30, 2008
|
||||||||||||||||||||||||||||
|
Gross
Margin
|
Research
and
development
|
Selling,
general
and
administrative
|
Other
Acquisition Related Charges
|
Interest
and other income, net
|
Income
tax provision (benefit)
|
|||||||||||||||||||||||
|
Systems
|
Components
|
|||||||||||||||||||||||||||
|
Amortization
of intangible assets
|
$
|
2,168
|
$
|
1,044
|
$
|
—
|
$
|
1,105
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||
|
Stock-based
compensation expense
|
2,511
|
1,203
|
811
|
9,983
|
—
|
—
|
—
|
|||||||||||||||||||||
|
Impairment
of long-lived assets
|
1,343
|
4,146
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
|
Write-off
of unamortized debt issuance costs
|
—
|
—
|
—
|
—
|
—
|
972
|
—
|
|||||||||||||||||||||
|
Tax
effect
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,483
|
)
|
||||||||||||||||||||
|
$
|
6,022
|
$
|
6,393
|
$
|
811
|
$
|
11,088
|
$
|
—
|
$
|
972
|
$
|
(5,483
|
)
|
||||||||||||||
|
July
1, 2007
|
||||||||||||||||||||||||||||
|
Gross
Margin
|
Research
and
development
|
Selling,
general
and
administrative
|
Other
Acquisition Related Charges
|
Interest
and other income, net
|
Income
tax provision (benefit)
|
|||||||||||||||||||||||
|
Systems
|
Components
|
|||||||||||||||||||||||||||
|
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
|
)
|
||||||||||||||
|
SIX
MONTHS ENDED
|
||||||||||||||||||||||||||||
|
June
29, 2008
|
||||||||||||||||||||||||||||
|
Gross
Margin
|
Research
and
development
|
Selling,
general
and
administrative
|
Other
Acquisition Related Charges
|
Interest
and other income, net
|
Income
tax provision (benefit)
|
|||||||||||||||||||||||
|
Systems
|
Components
|
|||||||||||||||||||||||||||
|
Amortization
of intangible assets
|
$
|
4,009
|
$
|
2,110
|
$
|
—
|
$
|
2,232
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||
|
Stock-based
compensation expense
|
4,750
|
4,093
|
1,783
|
22,489
|
—
|
—
|
—
|
|||||||||||||||||||||
|
Impairment
of long-lived assets
|
1,343
|
4,146
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
|
Write-off
of unamortized debt issuance costs
|
—
|
—
|
—
|
—
|
—
|
972
|
—
|
|||||||||||||||||||||
|
Tax
effect
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,601
|
)
|
||||||||||||||||||||
|
$
|
10,102
|
$
|
10,349
|
$
|
1,783
|
$
|
24,721
|
$
|
-
|
$
|
972
|
$
|
(5,601
|
)
|
||||||||||||||
|
July
1, 2007
|
||||||||||||||||||||||||||||
|
Gross
Margin
|
Research
and
development
|
Selling,
general
and
administrative
|
Other
Acquisition Related Charges
|
Interest
and other income, net
|
Income
tax provision (benefit)
|
|||||||||||||||||||||||
|
Systems
|
Components
|
|||||||||||||||||||||||||||
|
Fair
value adjustment to deferred revenue
|
$
|
1,142
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||
|
Amortization
of intangible assets
|
10,510
|
2,246
|
—
|
1,795
|
—
|
—
|
—
|
|||||||||||||||||||||
|
Stock-based
compensation expense
|
4,186
|
1,262
|
848
|
17,537
|
—
|
—
|
—
|
|||||||||||||||||||||
|
Purchased
in-process research and development
|
—
|
—
|
—
|
—
|
9,575
|
—
|
—
|
|||||||||||||||||||||
|
Impairment
of acquisition-related intangibles
|
—
|
—
|
—
|
—
|
14,068
|
—
|
—
|
|||||||||||||||||||||
|
Tax
effect
|
—
|
—
|
—
|
—
|
—
|
—
|
(15,975
|
)
|
||||||||||||||||||||
|
$
|
15,838
|
$
|
3,508
|
$
|
848
|
$
|
19,332
|
$
|
23,643
|
$
|
—
|
$
|
(15,975
|
)
|
||||||||||||||