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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 8-K

 
 
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 24, 2019
 
 
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. ☐





Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Common Stock
SPWR
NASDAQ
 

Item 2.01
Completion of Acquisition or Disposition of Assets

As previously announced, on March 26, 2019, SunPower Corporation (the “Company”) and its wholly-owned subsidiary, SunPower AssetCo, LLC (“SunPower AssetCo”), entered into a Membership Interest Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Elizabeth Cady Lessee Holdco LLC (“Buyer”), an indirect wholly-owned subsidiary of Goldman Sachs Renewable Power LLC.

Pursuant to the Purchase and Sale Agreement, SunPower AssetCo agreed to sell to Buyer membership interests owned by SunPower AssetCo in certain holding company subsidiaries (the “HoldCos”) that, in turn, own, directly or indirectly, the membership interests in one or more limited liability companies (together with other related subsidiaries, the “Related Subsidiaries”) that own leasehold interests in operating solar photovoltaic electric generating projects (the “Projects”) subject to sale-leaseback financing arrangements.
    
On June 24, 2019 and on June 26, 2019, SunPower AssetCo completed the sale to Buyer of membership interests in certain HoldCos and Related Subsidiaries pursuant to the Purchase and Sale Agreement. The June 24, 2019 and June 26, 2019 sales, together with sales previously completed on March 29, 2019, April 30, 2019 and May 3, 2019, constituted the disposition of a "significant" portion of the Company's assets within the meaning of, and in accordance with, the standards set forth in Item 2.01 of Form 8-K. The completed transactions represent the sale of all Projects contemplated by the Purchase and Sale Agreement. The aggregate amount of consideration received for the sale of all of the membership interests pursuant to the Purchase and Sale Agreement is $79.8 million in cash, net of fees, expenses and $5.4 million in holdbacks pertaining to certain retained obligations. Prior to consummation of the sale on June 24, 2019, the aggregate amount of assets sold did not constitute a significant disposition for purposes of Item 2.01 of Form 8-K.


Item 9.01
Financial Statements and Exhibits
    
(b) Pro Forma Financial Information.

The unaudited pro forma consolidated financial information of the Company giving effect to the Transaction, and the related notes thereto, have been derived from its historical consolidated financial statements and are attached hereto as Exhibit 99.1.

(d) Exhibits
 
Exhibit No.
Description
Unaudited pro forma condensed consolidated financial statements and explanatory notes for the Company as of March 31, 2019, for the quarter ended March 31, 2019 and for the year ended December 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
 
 
 
June 27, 2019
By:
/S/ MANAVENDRA S. SIAL
 
Name:
Manavendra S. Sial
 
Title:
Executive Vice President and
Chief Financial Officer




Exhibit


Unaudited Pro Forma Condensed Consolidated Financial Information

On March 26, 2019, SunPower Corporation (the “Company”) and its wholly-owned subsidiary, SunPower AssetCo, LLC (“SunPower AssetCo”), entered into a Membership Interest Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Elizabeth Cady Lessee Holdco LLC (“Buyer”), an indirect wholly-owned subsidiary of Goldman Sachs Renewable Power LLC. Pursuant to the Purchase and Sale Agreement, SunPower AssetCo agreed to sell to Buyer membership interests owned by SunPower AssetCo in certain holding company subsidiaries (the “HoldCos”) that, in turn, own, directly or indirectly, the membership interests in one or more limited liability companies (together with other related subsidiaries, the “Related Subsidiaries”) that own leasehold interests in operating solar photovoltaic electric generating projects (the “Projects”) subject to sale-leaseback financing arrangements with one or more financiers (each a “Lessor”).The Projects are located at approximately 200 sites across the United States, and represent in aggregate, approximately 233 MW of generating capacity. The portfolio of Projects financed by each Lessor represents a separate asset (“Portfolio”) for which the price is separately agreed and stated in the Purchase and Sale Agreement. Upon the sale of the applicable membership interests, the related assets are deconsolidated from the Company’s balance sheet.

The consummation of the sale and purchase of each Portfolio, pursuant to the Purchase and Sale Agreement, which occurred in multiple closings, was subject to a number of customary conditions precedent, including receipt of certain third-party consents and approvals, including those of the applicable Lessor, absence of material adverse changes, and expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (collectively, the “Transactions”).

On June 24, 2019 and on June 26, 2019, SunPower AssetCo completed the sale to Buyer of membership interests in certain HoldCos and Related Subsidiaries pursuant to the Purchase and Sale Agreement. The June 24, 2019 and June 26, 2019 sales, together with sales previously completed on March 29, 2019, April 30, 2019 and May 3, 2019, constituted the disposition of a "significant" portion of the Company's assets within the meaning of, and in accordance with, the standards set forth in Item 2.01 of Form 8-K. As such, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X. The aggregate amount of consideration received for the sale of all of the membership interests pursuant to the Purchase and Sale Agreement was $79.8 million in cash, net of fees, expenses, and $5.4 million in holdbacks pertaining to certain retained obligations. Prior to consummation of the sale on June 24, 2019, the aggregate amount of assets sold did not constitute a significant disposition for purposes of Item 2.01 of Form 8-K.

The following unaudited pro forma condensed consolidated financial information of the Company is derived from the Company's historical consolidated financial statements and should be read in conjunction with the audited financial statements and notes thereto appearing in the Company's Annual Report on Form 10-K for the year ended December 30, 2018 and the unaudited financial statements and notes thereto appearing in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2019. The accompanying unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2019 and the fiscal year ended December 30, 2018 are presented as if the Transactions had been completed as of January 1, 2019 and January 1, 2018, respectively. The unaudited pro forma condensed consolidated balance sheet is presented after giving effect as if the Transactions had occurred on March 31, 2019.

The unaudited pro forma condensed consolidated financial information has been presented for informational purposes only and is not indicative of any future results of operations or the results that might have occurred if the disposition had actually been completed on the indicated dates. The unaudited pro forma condensed consolidated financial statements are based on management's estimate of the effects on the financial statements of the Transactions. Pro forma adjustments are based on currently available information, historical results and certain assumptions that management believes are reasonable and described in the accompanying notes.





SUNPOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2019
(In thousands)

 
Historical
 
Pro forma Adjustments
 
Proforma
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
185,554

 
$
73,109

(a)
$
258,663

Restricted cash and cash equivalents, current portion
864

 
—

 
864

Accounts receivable, net
156,445

 
8,739

(b) (n)
165,184

Contract assets
57,282

 
—

 
57,282

Inventories
334,390

 
—

 
334,390

Advances to suppliers, current portion
95,603

 
—

 
95,603

Project assets - plants and land, current portion
10,246

 
—

 
10,246

Prepaid expenses and other current assets
99,675

 
—

 
99,675

Assets held for sale
550,073

 
(550,073
)
(b)
—

Total current assets
1,490,132

 
(468,225
)
 
1,021,907

 
 
 
 
 
 
Restricted cash and cash equivalents, net of current portion
13,345

 
—

 
13,345

Restricted long-term marketable securities
5,948

 
—

 
5,948

Property, plant and equipment, net
413,347

 
—

 
413,347

Operating lease right-of-use assets
32,638

 
—

 
32,638

Solar power systems leased and to be leased, net
74,134

 
—

 
74,134

Advances to suppliers, net of current portion
62,914

 
—

 
62,914

Long-term financing receivables, net - held for sale
19,044

 
—

 
19,044

Other intangible assets, net
10,858

 
2,850

(c)
13,708

Other long-term assets
185,371

 
—

 
185,371

Total assets
$
2,307,731


$
(465,375
)
 
$
1,842,356

 
 
 
 
 
 
Liabilities and Equity
 
 
 

 
 
Current liabilities:
 
 
 

 
 
Accounts payable
$
347,233

 
$
—

 
$
347,233

Accrued liabilities
190,095

 
(19,593
)
(d)
170,502

Operating lease liabilities, current portion
8,502

 
—

 
8,502

Contract liabilities, current portion
92,621

 
—

 
92,621

Short-term debt
41,838

 
—

 
41,838

Liabilities held for sale
619,538

 
(619,538
)
(b)
—

Total current liabilities
1,299,827

 
(639,131
)
 
660,696

 
 
 
 
 
 
Long-term debt
71,593

 
—

 
71,593

Convertible debt
818,832

 
—

 
818,832

Operating lease liabilities, net of current portion
29,490

 
—

 
29,490

Contract liabilities, net of current portion
75,059

 
—

 
75,059

Other long-term liabilities
234,386

 
1,400

(e)
235,786

Total liabilities
2,529,187

 
(637,731
)
 
1,891,456





 
 
 
 
 
 
Equity:
 
 
 

 
 
Preferred stock
—

 
—

 
—

Common stock
142

 
—

 
142

Additional paid-in capital
2,469,998

 
—

 
2,469,998

Accumulated deficit
(2,561,561
)
 
172,356

(b), (f)
(2,389,205
)
Accumulated other comprehensive loss
(4,051
)
 
—

 
(4,051
)
Treasury stock, at cost
(190,940
)
 
—

 
(190,940
)
Total stockholders' equity
(286,412
)
 
172,356

 
(114,056
)
Noncontrolling interests in subsidiaries
64,956

 
—

 
64,956

Total equity
(221,456
)
 
172,356

 
(49,100
)
Total liabilities and equity
$
2,307,731

 
$
(465,375
)
 
$
1,842,356


See accompanying notes to unaudited pro forma condensed consolidated financial information.




SUNPOWER CORPORATION
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2019
(In thousands)

 
Historical
 
Pro forma Adjustments
 
Pro forma
Revenue:
 
 
 
 
 
Solar power systems, components, and other
$
341,442

 
$
(7,167
)
(f), (g)
$
334,275

Residential leasing
3,884

 
—

 
3,884

Solar services
2,899

 
—

 
2,899

Total revenue
348,225

 
(7,167
)
 
341,058

Cost of revenue:
 
 
 
 
 
Solar power systems, components, and other
380,906

 
(6,504
)
(g), (h)
374,402

Residential leasing
3,022

 
—

 
3,022

Solar services
1,582

 
—

 
1,582

Total cost of revenue
385,510

 
(6,504
)
 
379,006

Gross loss
(37,285
)
 
(663
)
 
(37,948
)
Operating expenses:
 
 
 
 
 
Research and development
14,993

 
—

 
14,993

Sales, general and administrative
62,857

 
(1,598
)
(i), (l)
61,259

Restructuring credits
(665
)
 
—

 
(665
)
Impairment of residential lease assets
9,226

 
—

 
9,226

Gain on business divestiture
(6,114
)
 
—

 
(6,114
)
Total operating expenses
80,297

 
(1,598
)
 
78,699

Operating loss
(117,582
)
 
935

 
(116,647
)
Other income (expense), net:
 
 
 
 
 
Interest income
852

 
(92
)
(j)
760

Interest expense
(16,791
)
 
7,825

(k)
(8,966
)
Other, net
33,073

 
—

 
33,073

Other income (expense), net
17,134

 
7,733

 
24,867

Loss before income taxes and equity in earnings of unconsolidated investees
(100,448
)
 
8,668

 
(91,780
)
Provision for income taxes
(5,797
)
 
—

 
(5,797
)
Equity in earnings of unconsolidated investees
1,680

 
—

 
1,680

Net loss
(104,565
)
 
8,668

 
(95,897
)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
14,841

 
—

 
14,841

Net loss attributable to stockholders
$
(89,724
)
 
$
8,668

 
$
(81,056
)
 
 
 
 
 
 
Basic and diluted net loss per share attributable to stock holders
$
(0.63
)
 
$
0.06

 
$
(0.57
)
 

 
 
 
 
Basic and diluted weighted-average shares
141,720

 
141,720

 
141,720

See accompanying notes to unaudited pro forma condensed consolidated financial information.





SUNPOWER CORPORATION
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 30, 2018
(In thousands)

 
Historical
 
Pro forma Adjustments
 
Pro forma
Revenue:
 
 
 
 
 
Solar power systems, components, and other
$
1,453,876

 
$
(34,509
)
(f), (g)
$
1,419,367

Residential leasing
272,209

 
—

 
272,209

Total revenue
1,726,085

 
(34,509
)
 
1,691,576

Cost of revenue:
 
 
 
 
 
Solar power systems, components, and other
1,843,150

 
(25,545
)
(h), (g)
1,817,605

Residential leasing
180,016

 
—

 
180,016

Total cost of revenue
2,023,166

 
(25,545
)
 
1,997,621

Gross profit (loss)
(297,081
)
 
(8,964
)
 
(306,045
)
Operating expenses:
 
 
 
 
 
Research and development
81,705

 
—

 
81,705

Sales, general and administrative
260,111

 
(1,641
)
(i)
258,470

Restructuring charges
17,497

 
—

 
17,497

Impairment of residential lease assets
251,984

 
—

 
251,984

Gain on business divestitures
(59,347
)
 
—

 
(59,347
)
Total operating expenses
551,950

 
(1,641
)
 
550,309

Operating profit (loss)
(849,031
)
 
(7,323
)
 
(856,354
)
Other income (expense), net:
 
 
 
 
 
Interest income
3,057

 
(193
)
(j)
2,864

Interest expense
(108,011
)
 
26,834

(k)
(81,177
)
Other, net
55,314

 
—

 
55,314

Other expense, net
(49,640
)
 
26,641

 
(22,999
)
Loss before income taxes and equity in losses of unconsolidated investees
(898,671
)
 
19,318

 
(879,353
)
Provision for income taxes
(1,010
)
 
—

 
(1,010
)
Equity in losses of unconsolidated investees
(17,815
)
 
—

 
(17,815
)
Net loss
(917,496
)
 
19,318

 
(898,178
)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
106,405

 
—

 
106,405

Net loss attributable to stockholders
$
(811,091
)
 
$
19,318

 
$
(791,773
)
 
 
 
 
 
 
Basic and diluted net loss per share attributable to stock holders
$
(5.76
)
 
$
0.14

 
$
(5.62
)
 

 
 
 
 
Basic and diluted weighted-average shares
140,825

 
140,825

 
140,825

See accompanying notes to unaudited pro forma condensed consolidated financial information.










NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The unaudited condensed consolidated financial information reflect the following adjustments:

Unaudited Pro Forma Condensed Consolidated Balance Sheet

"Historical" - represents the historical consolidated balance sheet of the Company as of March 31, 2019.

(a) This adjustment represents the cash received from the Transaction, net of fees, expenses and holdback amounts pertaining to certain retained obligations.

(b) This adjustment represents the elimination of historical assets and liabilities associated with the sale-leaseback entities being deconsolidated as a result of the Transaction and includes the gain on sale. A summary of the gain on sale is calculated as follows ($ in thousands):
Cash received from sale
 
$
73,876

Assets held for sale
 
 
Restricted cash and cash equivalents, current portion
 
(37,141
)
Accounts receivable, net
 
(5,355
)
Prepaid expenses and other current assets
 
(754
)
Property, plant and equipment, net
 
(477,409
)
Operating lease right-of-use assets
 
(29,414
)
Total assets related to sale
 
(550,073
)
Liabilities related to sale
 
 
Accounts payable
 
(181
)
Accrued liabilities
 
(1,449
)
Operating lease liabilities, current portion
 
(1,041
)
Operating lease liabilities, net of current portion
 
(21,700
)
Other long-term liabilities
 
(595,167
)
Total liabilities related to sale
 
(619,538
)
Receivables
(m)
1,892

Other intangible assets
(c)
2,850

Retained indemnities
(e)
1,400

Retained warranty obligation
(d)
1,546

Net gain on sale
 
145,137

Transaction costs
 
767

Net adjustment to Accumulated deficit
 
$
144,370


(c) This adjustment represents above-market pricing associated with certain Operations and Maintenance ("O&M") contracts retained by the Company relating to sold Portfolios .

(d) This adjustment represents an estimated liability associated with warranty obligations retained by the Company for defects in materials and workmanship related to underlying Projects.

(e) This adjustment represents the fair value of the Company’s obligations associated with indemnities provided by the Company as part of the sale for any future claims for investment tax credits and property taxes related to the underlying Projects.






Unaudited Pro Forma Condensed Consolidated Statement of Operations

"Historical" - represents the historical condensed consolidated statement of operations of the Company for the three months ended March 31, 2019 and the year ended December 30, 2018.

(f) This adjustment represents elimination of historical revenues of $8.5 million and $40.1 million for the three months ended March 31, 2019 and the year ended December 30, 2018, respectively, from power purchase agreements ("PPAs") associated with the Projects sold.

(g) The adjustments represent the O&M and Asset Management revenue expected to be earned and cost of revenue expected to be incurred in the future, as the Company continues to provide O&M and Asset Management services to the Projects after completion of the sale.

 ($ in thousands)
Historical Adjustments
 
 
Three months ended March 31, 2019
Twelve months ended December 30, 2018
 
Basis
Total O&M and Asset Management revenue
$
1,301

$
5,546

 
O&M and Asset Management Revenue for services provided specifically to the Portfolio
Total cost of O&M and Asset Management revenue
(201
)
(865
)
 
Cost of O&M and Asset Management services provided specifically to the Portfolio
Gross profit
$
1,100

$
4,681

 
 

(h) This adjustment represents elimination of historical cost of revenues of $6.7 million and $26.4 million for the three months ended March 31, 2019 and the year ended December 30, 2018, respectively, associated with the Projects sold.
 
(i) This adjustment represents sales, general and administrative expenses directly attributable to the Projects.

(j) This adjustment represents interest income generated from cash reserved in accordance with the sale-leaseback financing arrangements for the Projects.

(k) This adjustment represents elimination of historical interest expense associated with financing obligations of the Projects sold.

(l) This adjustment represents elimination of transaction costs of $0.8 million incurred to-date that are directly related to this Transaction.

(m) This adjustment represents the holdback amount pertaining to certain potential tax and contractual liabilities.

(n) This adjustment represents the holdback amount in addition to the O&M and Asset Management revenue expected to be earned.