SunPower : Quarterly report which provides a continuing view of a company's financial position

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 29, 2019

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 001-34166

SunPower Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware	94-3008969
(State or Other Jurisdiction of Incorporation or
Organization)	(I.R.S. Employer Identification No.)
51 Rio Robles	95134
San Jose
California
(Address of Principal Executive Offices)	(Zip Code)
[phone]
(Registrant's Telephone Number, Including Area Code)
_________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

				Smaller
Large accelerated	x			reporting	Emerging
filer	Accelerated filer	Non-accelerated filer	company	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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

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

The total number of outstanding shares of the registrant's common stock as ofOctober 25, 2019 was 142,612,199.

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	TABLE OF CONTENTS
		Page
Part I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Equity (Deficit)	6
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	55
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	72
Item 4.	Controls and Procedures	75
Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	75
Item 1A.	Risk Factors	76
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 6.	Exhibits	78
Signatures		79
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Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SunPower Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share par values)
(unaudited)
		September 29, 2019			December 30, 2018
Assets
Current assets:
Cash and cash equivalents	$	188,983	$	309,407
Restricted cash and cash equivalents, current portion		10,097			41,762
Restricted short-term marketable securities		6,033			-
Accounts receivable, net1		205,667			175,605
Contract assets1		78,868			58,994
Inventories		388,508			308,146
Advances to suppliers, current portion		75,366			37,878
Project assets - plants and land, current portion		20,260			10,796
Prepaid expenses and other current assets		132,643			131,183
Total current assets		1,106,425			1,073,771
Restricted cash and cash equivalents, net of current portion		11,655			12,594
Restricted long-term marketable securities		-			5,955
Property, plant and equipment, net		335,375			839,871
Operating lease right-of-use assets		46,283			-
Solar power systems leased and to be leased, net		55,444			92,557
Advances to suppliers, net of current portion		62,914			133,694
Long-term financing receivables, net - held for sale		-			19,592
Other intangible assets, net		9,504			12,582
Other long-term assets		262,072			162,033
Total assets	$	1,889,672	$	2,352,649
Liabilities and Equity
Current liabilities:
Accounts payable1	$	440,267	$	325,550
Accrued liabilities1		194,367			235,252
Operating lease liabilities, current portion		8,644			-
Contract liabilities, current portion1		118,644			104,130
Short-term debt		80,297			40,074
Total current liabilities		842,219			705,006
Long-term debt		48,460			40,528
Convertible debt1		819,783			818,356
Operating lease liabilities, net of current portion		44,807			-
Contract liabilities, net of current portion1		67,930			99,509
Other long-term liabilities		226,729			839,136
Total liabilities		2,049,928			2,502,535
Commitments and contingencies (Note 9)
Equity:
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued and outstanding as of
September 29, 2019 and December 30, 2018		-			-
Common stock, $0.001 par value, 367,500 shares authorized; 154,190 shares issued, and
142,577 shares outstanding as of September 29, 2019; 152,085 shares issued, and 141,180
shares outstanding as of December 30, 2018		143			141
Additional paid-in capital		2,483,815			2,463,370
Accumulated deficit		(2,455,119)			(2,480,988)
Accumulated other comprehensive loss		(3,791)			(4,150)

Treasury stock, at cost: 11,613 shares of common stock as of September 29, 2019; 10,905
shares of common stock as of December 30, 2018		(191,725)			(187,069)
Total stockholders' deficit		(166,677)			(208,696)
Noncontrolling interests in subsidiaries		6,421			58,810
Total deficit		(160,256)			(149,886)
Total liabilities and equity	$	1,889,672	$	2,352,649

1We have related-party balances for transactions made with Total S.A. and its affiliates as well as unconsolidated entities in which we have a direct equity investment. These related-party balances are recorded within the "accounts receivable, net," "contract assets," "accounts payable," "accrued liabilities," "contract liabilities, current portion," "convertible debt," and "contract liabilities, net of current portion," financial statement line items on our condensed consolidated balance sheets (see Note 2, Note 9, Note 10, and Note 11).

The accompanying notes are an integral part of these condensed consolidated financial statements.

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		SunPower Corporation
Condensed Consolidated Statements of Operations
	(In thousands, except per share data)
		(unaudited)
		Three Months Ended			Nine Months Ended
		September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
Revenue:
Solar power systems, components, and other1	$	467,196		$	358,403		$	1,235,479		$	1,041,043
Residential leasing		3,523			69,860			9,083			228,205
Solar services		5,239			-		15,902			-
		475,958			428,263			1,260,464			1,269,248
Cost of revenue:
Solar power systems, components, and other1		424,151			373,282			1,217,440			1,404,345
Residential leasing		1,567			45,104			5,939			154,413
Solar services		1,989			-		6,319			-
		427,707			418,386			1,229,698			1,558,758
Gross profit (loss)		48,251			9,877			30,766			(289,510)
Operating expenses:
Research and development1		16,101			15,898			49,253			66,225
Sales, general and administrative		64,734			76,069			189,569			206,272
Restructuring charges		4,283			3,923			6,071			18,604
Loss on sale and impairment of residential lease assets		10,756			53,537			28,283			170,898
Gain on business divestiture		-		(59,347)			(143,400)			(59,347)
Total operating expenses		95,874			90,080			129,776			402,652
Operating loss		(47,623)			(80,203)			(99,010)			(692,162)
Other income (expense), net:
Interest income		1,025			1,087			2,443			2,280
Interest expense1		(10,649)			(25,972)			(43,864)			(77,796)
Other, net		45,184			(3,643)			146,025			48,775
Other income (expense), net		35,560			(28,528)			104,604			(26,741)
Income (loss) before income taxes and equity in losses of
unconsolidated investees		(12,063)			(108,731)			5,594			(718,903)
Provision for income taxes		(5,378)			(3,680)			(17,243)			(9,389)
Equity in losses of unconsolidated investees		(1,767)			(1,500)			(2,050)			(17,059)
Net loss		(19,208)			(113,911)			(13,699)			(745,351)
Net loss attributable to noncontrolling interests and
redeemable noncontrolling interests		4,191			24,085			30,417			92,434
Net income (loss) attributable to stockholders	$	(15,017)		$	(89,826)		$	16,718		$	(652,917)

Net income (loss) per share attributable to stockholders:
Basic	$	(0.11)	$	(0.64)	$	0.12	$	(4.64)
Diluted	$	(0.11)	$	(0.64)	$	0.12	$	(4.64)
Weighted-average shares:
Basic		142,553		141,027		142,248		140,722
Diluted		142,553		141,027		144,736		140,722

1We have related-party transactions with Total S.A. and its affiliates as well as unconsolidated entities in which we have a direct equity investment. These related-party transactions are recorded within the "revenue: solar power systems, components, and other," "cost of revenue: solar power systems, components, and other," "operating expenses: research and development," and "other income (expense), net: interest expense" financial statement line items in our condensed consolidated statements of operations (see Note 2 and Note 10).

The accompanying notes are an integral part of these condensed consolidated financial statements.

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