SunPower Reports Third Quarter 2017 Results

SAN JOSE, Calif., Nov. 2, 2017 /PRNewswire/ -- SunPower Corp. (NASDAQ:SPWR) today announced financial results for its third quarter ended October 1, 2017.


    ($
     Millions,
     except
     percentages
     and
     per-
     share
     data)       3rd Quarter         2nd Quarter           3rd Quarter

                                2017                  2017                   2016
    ---                         ----                  ----                   ----

    GAAP
     revenue                  $477.2                $337.4                 $729.3
    --------                  ------                ------                 ------

    GAAP
     gross
     margin                     3.3%                 4.5%                 17.7%
    -------                      ---                   ---                   ----

    GAAP
     net
     loss                    ($54.2)              ($93.8)               ($40.5)
    -----                     ------                ------                 ------

    GAAP
     net
     loss
     per
     diluted
     share                   ($0.39)              ($0.67)               ($0.29)
    --------                  ------                ------                 ------

    Non-
     GAAP
     revenue(1)               $533.6                $341.5                 $770.1
    -----------               ------                ------                 ------

    Non-
     GAAP
     gross
     margin1,2                 12.8%                12.2%                 23.6%
    ----------                  ----                  ----                   ----

    Non-
     GAAP
     net
     income
     (loss)1,2                 $29.5               ($49.3)                $124.4
    ----------                 -----                ------                 ------

    Non-
     GAAP
     net
     income
     (loss)
     per
     diluted
     share1,2                  $0.21               ($0.35)                 $0.88
    ---------                  -----                ------                  -----

     Adjusted
     EBITDA1,2                 $67.3                 $13.5                 $175.6
     ---------                 -----                 -----                 ------

     Operating
     cash
     flow                    ($26.6)             ($161.8)              ($128.3)
     ---------                ------               -------                -------


    (1) Information about SunPower's
     use of non-GAAP financial
     information, including a
     reconciliation to U.S. GAAP, is
     provided under "Use of Non-GAAP
     Financial Measures" below.

    2 Excludes polysilicon costs
     related to above market
     polysilicon contracts.

"We were pleased with our overall results as our diversified model and solid execution enabled us to exceed our financial forecasts for the quarter," said Tom Werner, SunPower president and CEO. "Our distributed generation business performed well as customer demand for our complete solution products remained strong. As expected, we are seeing continued momentum in our commercial segment as we are realizing the benefits from our investments over the last year. Our third quarter performance reflected the completion of our Toyota headquarters project while traction for our SunPower Helix product continued with bookings from both new and repeat customers. Demand for our high quality, industry leading solutions in our residential business remains robust and is supported by our ability to offer customers multiple financing alternatives for their systems. In power plant, we benefitted from the completion and sale of our 69-megawatt (MW) Gala project while executing on our commitments for the fourth quarter including our 100-MW El Pelicano project in Chile which we expect to be sold this year, and demand in our SunPower Solutions group remains strong, with bookings now exceeding 500 MW.

"Operationally, we achieved our cost reduction targets for the quarter and our Fabs remain 100 percent utilized. Also, we further invested in our next generation cell and module technology with the goal of volume production of these products in the second half of 2018. We remain committed to improving our competitive position, strengthening our balance sheet and returning to long-term sustained profitability starting in the second half of 2018."

"Strategically, we have made significant progress in our restructuring program which remains on track to be completed in the first half of next year. Our focus continues to be on maximizing cash flow through project sales, reducing operating expenses and the potential monetization of non-core assets. In relation to the 201 trade case proceedings, we remain committed to advocating our belief that SunPower should be differentially treated or excluded from all remedies as we are a U.S. based company with more than 1,000 direct employees and an employment network exceeding 17,500 people through our indirect dealer channel, supply chain partners, as well as site installation workers across 40 states. Additionally, our industry leading, high efficiency technology, the result of approximately $500 million in U.S. research and development spending, is fundamentally different than the industry standard. Also, our premium pricing and proprietary products serve a distinct subset of the market and do not compete directly with offerings from the petitioners so our exclusion will not hurt their ability to grow their business. We will continue to work with the Trump Administration to ensure all parties are aware of our consistent investment in U.S. jobs, product innovation and the U.S. solar industry and are confident that the President will take these facts into account in the final decision," concluded Werner.

"Our third quarter results reflect our continued ability to execute on our model while benefitting from our corporate restructuring and cash generating initiatives," said Chuck Boynton, SunPower chief financial officer. "Financially, our focus remains on prudently managing our working capital and strengthening our balance sheet. To that end, we were pleased to secure nearly $200 million in incremental financings to facilitate further growth in our residential and commercial businesses. Given our strong execution and focus on cash flow, we are well positioned to achieve our strategic goals."

Third quarter fiscal 2017 non-GAAP results exclude net adjustments that, in the aggregate, improved non-GAAP earnings by $83.7 million, including $12.4 million related to sale-leaseback transactions, $33.5 million related to cost of above market polysilicon, $9.4 million related to stock-based compensation expense, $19.4 million related to tax effect, and $9.0 million of other non-GAAP adjustments.

Financial Outlook

The company's fourth quarter 2017 guidance assumes the expected sale of the company's 100-MW El Pelicano project in Chile this year as well as the impact of the third quarter recognition of certain projects originally anticipated to close in the fourth quarter.

The company's fourth quarter GAAP guidance is as follows: revenue of $635 million to $685 million, gross margin of 6.5 percent to 8.5 percent and a net loss of $80 million to $55 million. Fourth quarter 2017 GAAP guidance includes the impact of the company's HoldCo asset strategy and revenue and timing deferrals due to real estate accounting as well as the impact of charges related to the company's restructuring initiatives. On a non-GAAP basis, the company expects revenue of $800 million to $850 million, gross margin of 13 percent to 15 percent, Adjusted EBITDA of $75 million to $100 million and megawatts deployed in the range of 420 MW to 450 MW.

For fiscal year 2017, the company expects revenue of $1.85 billion to $1.90 billion on a GAAP basis and $2.10 billion to $2.15 billion on a non-GAAP basis, gigawatts (GW) deployed in the range of 1.37 GW to 1.40 GW, non-GAAP operational expenses of $330 million to $340 million, lower capital expenditures now forecasted to be in the range of $100 million to $120 million and to exit the year with more than $300 million in cash excluding any proceeds from the potential divestiture of non-core assets.

Additionally, the company is now forecasting 2017 Adjusted EBITDA guidance to be in the range of $165 million to $190 million with positive operating cash flow for the full year 2017.

The company will host a conference call for investors this morning to discuss its third quarter 2017 performance at 5:30 a.m. Pacific Time. The call will be webcast and can be accessed from SunPower's website at http://investors.sunpower.com/events.cfm.

This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its third quarter 2017 performance on the Events and Presentations section of SunPower's Investor Relations page at http://investors.sunpower.com/events.cfm. The capacity of power plants in this release is described in approximate megawatts on a direct current (dc) basis unless otherwise noted.

About SunPower

With more than 30 years of proven experience, SunPower is a global leader in solar innovation and sustainability. Our unique approach emphasizes the seamless integration of advanced SunPower technologies, delivering The Power of One® complete solar solutions and lasting customer value. SunPower provides outstanding service and impressive electricity cost savings for residential, commercial and power plant customers. At SunPower, we are passionately committed to changing the way our world is powered. And as we continue shaping the future of Smart Energy, we are guided by our legacy of innovation, optimism, perseverance and integrity. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, North America and South America. Since 2011, we've been majority-owned by Total, the fourth largest publicly-listed energy company in the world. For more information, visit www.sunpower.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) anticipated project and sale timelines; (b) our product plans and production goals; (c) our positioning for future success, long-term competitiveness, and our ability to return to sustained profitability; (d) our expectations for the timing, success, and financial impact of our restructuring plan and associated initiatives, including plans to sell projects and monetize certain non-core assets, and the impact of these initiatives on our financial performance, cash flow, and operating expenses; (d) our expectations regarding the outcome of the Section 201 trade action, the impact of any remedies imposed thereunder, and our advocacy and response plans; (e) plans for growth in our residential and commercial businesses, and our ability to achieve our strategic goals; (f) our ability to complete planned project sales, deleverage our balance sheet, retire our 2018 convertible bonds, strengthen our balance sheet, and generate additional cash proceeds to fund our planned growth initiatives; (g) our plans to invest in technologies and strategic initiatives and allocate resources; (h) our expectations for the solar industry and the markets we serve, including market conditions, recovery, and long-term prospects for improvement; (i) our fourth quarter fiscal 2017 guidance, including GAAP revenue, gross margin, and net loss, as well as non-GAAP revenue, gross margin, Adjusted EBITDA, and MW deployed ;and (j) full year fiscal 2017 guidance, including GAAP and non-GAAP revenue, gigawatts deployed, operational expenditures, capital expenditures, ending cash, and Adjusted EBITDA, and cash flow. These forward-looking statements are based on our current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (1) competition in the solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (2) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (3) changes in public policy, including the imposition of remedies pursuant to the Section 201 trade action currently before the International Trade Commission; (4) regulatory changes and the availability of economic incentives promoting use of solar energy; (5) challenges inherent in constructing certain of our large projects; (6) the success of our ongoing research and development efforts and our ability to commercialize new products and services, including products and services developed through strategic partnerships; (7) fluctuations in our operating results; (8) appropriately sizing our manufacturing capacity and containing manufacturing difficulties that could arise; (9) challenges managing our joint ventures and partnerships; (10) challenges executing on our HoldCo and YieldCo strategies, including the risk that 8point3 Energy Partners may be unsuccessful, or that we may not be able to successfully monetize our interest in 8point3 Energy Partners; (11) fluctuations or declines in the performance of our solar panels and other products and solutions; and (12) our ability to successfully implement actions to meet our cost reduction targets, reduce capital expenditures, and implement our restructuring plan and associated initiatives, including plans to sell projects, monetize assets, streamline our business and focus.? A detailed discussion of these factors and other risks that affect our business is included in filings we make with the Securities and Exchange Commission (SEC) from time to time, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors."? Copies of these filings are available online from the SEC or on the SEC Filings section of our Investor Relations website at investors.sunpower.com.? All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events.

©2017 SunPower Corporation. All rights reserved. SUNPOWER, the SUNPOWER logo, EQUINOX and HELIX are trademarks or registered trademarks of SunPower Corporation in the U.S. and other countries as well.


                                                                    SUNPOWER CORPORATION

                                                                 CONSOLIDATED BALANCE SHEETS

                                                                       (In thousands)

                                                                         (Unaudited)


                                                                                             Oct. 1,             Jan. 1,

                                                                                                            2017                 2017
                                                                                                            ----                 ----

    Assets

    Current assets:

    Cash and cash equivalents                                                                           $275,004             $425,309

    Restricted cash and cash equivalents, current portion                                                 41,738               33,657

    Accounts receivable, net                                                                             186,230              219,638

    Costs and estimated earnings in excess of billings                                                    19,229               32,780

    Inventories                                                                                          408,212              401,707

    Advances to suppliers, current portion                                                                46,096              111,479

    Project assets - plants and land, current portion                                                    364,165              374,459

    Prepaid expenses and other current assets                                                            164,420              315,670
                                                                                                         -------              -------

    Total current assets                                                                               1,505,094            1,914,699


    Restricted cash and cash equivalents, net of current portion                                          61,211               55,246

    Restricted long-term marketable securities                                                             6,131                4,971

    Property, plant and equipment, net                                                                 1,052,834            1,027,066

    Solar power systems leased and to be leased, net                                                     707,534              621,267

    Project assets - plants and land, net of current portion                                              42,311               33,571

    Advances to suppliers, net of current portion                                                        185,968              173,277

    Long-term financing receivables, net                                                                 598,832              507,333

    Goodwill and other intangible assets, net                                                             33,686               44,218

    Other long-term assets                                                                               115,040              185,519

    Total assets                                                                                      $4,308,641           $4,567,167
                                                                                                      ==========           ==========


    Liabilities and Equity

    Current liabilities:

    Accounts payable                                                                                    $408,430             $540,295

    Accrued liabilities                                                                                  251,127              391,226

    Billings in excess of costs and estimated earnings                                                     8,438               77,140

    Short-term debt                                                                                       57,453               71,376

    Convertible debt, current portion                                                                    299,495                    -

    Customer advances, current portion                                                                    45,273               10,138
                                                                                                          ------               ------

    Total current liabilities                                                                          1,070,216            1,090,175


    Long-term debt                                                                                       601,070              451,243

    Convertible debt                                                                                     815,978            1,113,478

    Customer advances, net of current portion                                                             71,877                  298

    Other long-term liabilities                                                                          795,943              721,032

    Total liabilities                                                                                  3,355,084            3,376,226
                                                                                                       ---------            ---------


    Redeemable noncontrolling interests in subsidiaries                                                  125,860              103,621


    Equity:

    Preferred stock                                                                                            -                   -

    Common stock                                                                                             140                  139

    Additional paid-in capital                                                                         2,434,428            2,410,395

    Accumulated deficit                                                                              (1,546,511)         (1,218,681)

    Accumulated other comprehensive loss                                                                 (4,109)             (7,238)

    Treasury stock, at cost                                                                            (181,174)           (176,783)
                                                                                                        --------             --------

    Total stockholders' equity                                                                           702,774            1,007,832

    Noncontrolling interests in subsidiaries                                                             124,923               79,488

    Total equity                                                                                         827,697            1,087,320
                                                                                                         -------            ---------

    Total liabilities and equity                                                                      $4,308,641           $4,567,167
                                                                                                      ==========           ==========


                                                                                                        SUNPOWER CORPORATION

                                                                                                CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                (In thousands, except per share data)

                                                                                                             (Unaudited)


                                                                                                                 THREE MONTHS ENDED                        NINE MONTHS ENDED
                                                                                                               ------------------                       -----------------

                                                                                                                 Oct. 1,              Jul. 2,                                Oct. 2,             Oct. 1,               Oct. 2,

                                                                                                                                 2017               2017                                    2016                  2017                   2016
                                                                                                                                 ----               ----                                    ----                  ----                   ----


    Revenue:

    Residential                                                                                                              $153,258           $157,125                                $170,345              $446,414               $499,867

    Commercial                                                                                                                106,005            100,105                                 139,954               314,373                290,041

    Power Plant                                                                                                               217,928             80,216                                 419,047               452,926                744,765
                                                                                                                              -------             ------                                 -------               -------                -------

    Total revenue                                                                                                             477,191            337,446                                 729,346             1,213,713              1,534,673

    Cost of revenue:

    Residential                                                                                                               126,614            130,987                                 138,836               378,358                395,955

    Commercial                                                                                                                 99,988             97,530                                 132,618               308,147                267,367

    Power Plant                                                                                                               234,931             93,694                                 328,684               527,247                649,312
                                                                                                                              -------             ------                                 -------               -------                -------

    Total cost of revenue                                                                                                     461,533            322,211                                 600,138             1,213,752              1,312,634

    Gross margin                                                                                                               15,658             15,235                                 129,208                  (39)               222,039

    Operating expenses:

    Research and development                                                                                                   20,693             19,754                                  28,153                60,962                 92,270

    Selling, general and administrative                                                                                        68,401             68,703                                  80,070               204,507                262,544

    Restructuring charges                                                                                                       3,517              4,969                                  31,202                18,276                 31,415
                                                                                                                                -----              -----                                  ------                ------                 ------

      Total operating expenses                                                                                                 92,611             93,426                                 139,425               283,745                386,229
                                                                                                                               ------             ------                                 -------               -------                -------

    Operating loss                                                                                                           (76,953)          (78,191)                               (10,217)            (283,784)             (164,190)

    Other income (expense), net:

    Interest income                                                                                                               636                387                                     630                 1,961                  2,133

    Interest expense                                                                                                         (21,898)          (22,370)                               (15,813)             (65,037)              (42,644)

    Gain on settlement of preexisting relationships in connection with acquisition                                                  -                 -                                203,252                     -               203,252

    Loss on equity method investment in connection with acquisition                                                                 -                 -                               (90,946)                    -              (90,946)

    Goodwill impairment                                                                                                             -                 -                              (147,365)                    -             (147,365)

    Other, net                                                                                                                (1,406)          (15,744)                                (5,169)             (19,340)              (17,223)

      Other expense, net                                                                                                     (22,668)          (37,727)                               (55,411)             (82,416)              (92,793)
                                                                                                                              -------            -------                                 -------               -------                -------

    Loss before income taxes and equity in earnings of unconsolidated investees                                              (99,621)         (115,918)                               (65,628)            (366,200)             (256,983)

    Benefit from (provision for) income taxes                                                                                   5,457            (2,353)                                (7,049)                1,073               (16,878)

    Equity in earnings of unconsolidated investees                                                                             15,308              5,449                                  16,770                21,809                 24,356
                                                                                                                               ------              -----                                  ------                ------                 ------

    Net loss                                                                                                                 (78,856)         (112,822)                               (55,907)            (343,318)             (249,505)

      Net loss attributable to noncontrolling interests and redeemable noncontrolling interests                                24,609             19,062                                  15,362                60,832                 53,559


    Net loss attributable to stockholders                                                                                   $(54,247)         $(93,760)                              $(40,545)           $(282,486)            $(195,946)
                                                                                                                             ========           ========                                ========             =========              =========


    Net loss per share attributable to stockholders:

    - Basic                                                                                                                   $(0.39)           $(0.67)                                $(0.29)              $(2.03)               $(1.42)

    - Diluted                                                                                                                 $(0.39)           $(0.67)                                $(0.29)              $(2.03)               $(1.42)


    Weighted-average shares:

    - Basic                                                                                                                   139,517            139,448                                 138,209               139,289                137,832

    - Diluted                                                                                                                 139,517            139,448                                 138,209               139,289                137,832


                                                                                                                                                       SUNPOWER CORPORATION

                                                                                                                                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                                                                          (In thousands)

                                                                                                                                                           (Unaudited)


                                                                                                                                                                                        THREE MONTHS ENDED                        NINE MONTHS ENDED
                                                                                                                                                                                      ------------------                       -----------------

                                                                                                                                                                                    Oct. 1,                 Jul. 2,                                 Oct. 2,             Oct. 1,               Oct. 2,

                                                                                                                                                                                                       2017                2017                                    2016                  2017                   2016
                                                                                                                                                                                                       ----                ----                                    ----                  ----                   ----


    Cash flows from operating activities:

    Net loss                                                                                                                                                                                      $(78,856)         $(112,822)                              $(55,907)           $(343,318)            $(249,505)

    Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    Depreciation and amortization                                                                                                                                                                    46,188              45,269                                  39,827               133,541                122,842

    Stock-based compensation                                                                                                                                                                          9,399               8,606                                  15,907                25,380                 48,902

    Non-cash interest expense                                                                                                                                                                         4,818               4,777                                     308                12,553                    963

    Non-cash restructuring charges                                                                                                                                                                        -                  -                                 17,926                     -                17,926

    Gain on settlement of preexisting relationships in connection with acquisition                                                                                                                        -                  -                              (203,252)                    -             (203,252)

    Impairment of equity method investment                                                                                                                                                                -              8,607                                  90,946                 8,607                 90,946

    Goodwill impairment                                                                                                                                                                                   -                  -                                147,365                     -               147,365

    Dividend from 8point3 Energy Partners LP                                                                                                                                                          7,631               7,409                                       -               22,232                      -

    Equity in earnings of unconsolidated investees                                                                                                                                                 (15,308)            (5,449)                               (16,770)             (21,809)              (24,356)

    Excess tax benefit from stock-based compensation                                                                                                                                                      -                  -                                (1,222)                    -               (1,222)

    Deferred income taxes                                                                                                                                                                               290               1,058                                   1,852                 1,575                  2,791

    Other, net                                                                                                                                                                                        1,020               (617)                                  2,006                 5,180                  3,805

    Changes in operating assets and liabilities, net of effect of acquisitions:                                                                                                                                                                                                          -

    Accounts receivable                                                                                                                                                                              10,331            (27,224)                               (13,268)               34,776               (36,563)

    Costs and estimated earnings in excess of billings                                                                                                                                                  394               1,859                                   7,278                13,551                 13,579

    Inventories                                                                                                                                                                                       9,432            (36,440)                                 13,901              (67,012)             (101,146)

    Project assets                                                                                                                                                                                  (2,194)           (97,022)                                (1,262)             (62,024)             (434,645)

    Prepaid expenses and other assets                                                                                                                                                                11,525              53,852                                  20,674               150,628                 69,293

    Long-term financing receivables, net                                                                                                                                                           (28,984)           (31,872)                               (41,424)             (91,499)             (136,543)

    Advances to suppliers                                                                                                                                                                            19,910              19,081                                   4,434                52,692                 45,003

    Accounts payable and other accrued liabilities                                                                                                                                                 (20,495)            (9,754)                              (156,279)            (228,368)             (144,202)

    Billings in excess of costs and estimated earnings                                                                                                                                              (3,269)            (4,411)                                  7,170              (68,702)              (15,879)

    Customer advances                                                                                                                                                                                 1,556              13,294                                 (8,556)              106,713               (14,440)
                                                                                                                                                                                                                                                                                                         -------

    Net cash used in operating activities                                                                                                                                                          (26,612)          (161,799)                              (128,346)            (315,304)             (798,338)
                                                                                                                                                                                                    -------            --------                                --------              --------               --------

    Cash flows from investing activities:

    Purchases of property, plant and equipment                                                                                                                                                     (12,491)           (17,246)                               (56,150)             (57,614)             (149,475)

    Cash paid for solar power systems, leased and to be leased                                                                                                                                     (23,504)           (22,811)                               (18,261)             (64,532)              (64,417)

    Cash paid for solar power systems                                                                                                                                                              (30,230)            (3,407)                                      -             (38,242)               (2,282)

    Proceeds from sales or maturities marketable securities                                                                                                                                               -                  -                                  6,210                     -                 6,210

    Payments to 8point3 Energy Partners LP attributable to real estate projects and residential lease portfolio                                                                                           -                  -                                      -                    -               (9,838)

    Purchases of marketable securities                                                                                                                                                              (1,306)                  -                                      -              (1,306)                     -

    Cash paid for acquisitions, net of cash acquired                                                                                                                                                      -                  -                               (24,003)                    -              (24,003)

    Dividend from equity method investee                                                                                                                                                              1,470               1,421                                       -                2,891                      -

    Cash paid for investments in unconsolidated investees                                                                                                                                           (4,344)            (1,461)                                  (737)             (15,947)              (11,046)

    Net cash used in investing activities                                                                                                                                                          (70,405)           (43,504)                               (92,941)            (174,750)             (254,851)
                                                                                                                                                                                                    -------             -------                                 -------              --------               --------

    Cash flows from financing activities:

    Proceeds from bank loans and other debt                                                                                                                                                          81,749              90,637                                       -              283,149                      -

    Repayment of bank loans and other debt                                                                                                                                                         (74,622)           (99,913)                                (7,685)            (303,562)              (15,572)

    Proceeds from issuance of non-recourse residential financing, net of issuance costs                                                                                                              52,535              10,062                                  89,634                83,177                142,862

    Repayment of non-recourse residential financing                                                                                                                                                 (1,731)            (1,726)                               (34,541)              (4,755)              (36,707)

    Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects                                                                         44,412              47,595                                  34,558               141,037                 91,723

    Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects                                                                          (4,574)            (4,691)                                (6,514)             (13,028)              (13,419)

    Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs                                                                                               92,014             104,843                                 168,794               318,675                602,286

    Repayment of non-recourse power plant and commercial financing                                                                                                                                (116,585)            (3,057)                              (220,186)            (148,606)             (257,538)

    Contributions from noncontrolling interests attributable to power plant and commercial projects                                                                                                     800                   -                                      -                  800                      -

    Excess tax benefit from stock-based compensation                                                                                                                                                      -                  -                                  1,222                     -                 1,222

    Purchases of stock for tax withholding obligations on vested restricted stock                                                                                                                     (175)              (153)                                (1,282)              (4,390)              (20,953)

    Net cash provided by financing activities                                                                                                                                                        73,823             143,597                                  24,000               352,497                493,904
                                                                                                                                                                                                     ------             -------                                  ------               -------                -------

    Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents                                                                                          124                 386                                   1,173                 1,298                  1,480
                                                                                                                                                                                                        ---                 ---                                   -----                 -----                  -----

    Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents                                                                                                        (23,070)           (61,320)                              (196,114)            (136,259)             (557,805)

    Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period                                                                                                    401,023             462,343                                 659,073               514,212              1,020,764
                                                                                                                                                                                                    -------             -------                                 -------               -------              ---------

    Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period                                                                                                         $377,953            $401,023                                $462,959              $377,953               $462,959
                                                                                                                                                                                                   ========            ========                                ========              ========               ========


    Non-cash transactions:

    Assignment of residential lease receivables to third parties                                                                                                                                        $65                  $7                                  $1,246                   $90                 $3,722

    Costs of solar power systems, leased and to be leased, sourced from existing inventory                                                                                                          $14,925             $14,078                                 $14,092               $42,392                $43,983

    Costs of solar power systems, leased and to be leased, funded by liabilities                                                                                                                     $5,298              $7,016                                  $6,226                $5,298                 $6,226

    Costs of solar power systems under sale-leaseback financing arrangements, sourced from project assets                                                                                           $10,266              $2,702                        $              -              $65,885                 $7,375

    Property, plant and equipment acquisitions funded by liabilities                                                                                                                                $32,367             $40,669                                 $85,994               $32,367                $85,994

    Net reclassification of cash proceeds offset by project assets in connection with the deconsolidation of assets sold to the 8point3 Group                                                          $445              $1,858                                 $34,862                $4,918                $43,588

    Exchange of receivables for an investment in an unconsolidated investee                                                                                                            $                  -    $             -                       $              -     $              -                $2,890

    Contractual obligations satisfied with inventory                                                                                                                                                $13,187              $6,668                        $              -              $19,855      $               -

    Acquisition funded by liabilities                                                                                                                                                  $                  -    $             -                               $100,550      $              -              $100,550

Use of Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures, as described below. The specific non-GAAP measures listed below are: revenue; gross margin; net income (loss); net income (loss) per diluted share; and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). Management believes that each of these non-GAAP measures is useful to investors, enabling them to better assess changes in each of these key elements of the company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, each of these non-GAAP financial measures provides investors with another method to assess the company's operating results in a manner that is focused on its ongoing, core operating performance, absent the effects of these items. Management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Many of the analysts covering the company also use these non-GAAP measures in their analyses. Given management's use of these non-GAAP measures, the company believes these measures are important to investors in understanding the company's operating results as seen through the eyes of management. These non-GAAP measures are not prepared in accordance with GAAP or intended to be a replacement for GAAP financial data; the non-GAAP measures should be reviewed together with the GAAP measures and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

Non-GAAP revenue includes adjustments relating to 8point3, utility and power plant projects, the sale of operating lease assets, and sale-leaseback transactions, each as described below. In addition to those same adjustments, Non-GAAP gross margin includes adjustments relating to cost of above-market polysilicon, stock-based compensation, amortization of intangible assets, non-cash interest expense, and arbitration ruling, each as described below. In addition to those same adjustments, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share are adjusted for adjustments relating to goodwill impairment, restructuring expense, IPO-related costs, the tax effect of these non-GAAP adjustments, and other items, each as described below. In addition to the same adjustments as non-GAAP net income (loss), Adjusted EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for (benefit from) income taxes, and depreciation.

Non-GAAP Adjustments Based on International Financial Reporting Standards ("IFRS")

The company's non-GAAP results include adjustments to recognize revenue and profit under IFRS that are consistent with the adjustments made in connection with the company's reporting process as part of its status as a consolidated subsidiary of Total S.A., a foreign public registrant which reports under IFRS. Differences between GAAP and IFRS reflected in the company's non-GAAP results are further described below. In these situations, management believes that IFRS enables investors to better evaluate the company's revenue and profit generation performance, and assists in aligning the perspectives of our management and noncontrolling shareholders with those of Total S.A., our controlling shareholder.

    --  8point3. In 2015, 8point3 Energy Partners LP ("8point3 Energy
        Partners"), a joint YieldCo vehicle, was formed by the company and First
        Solar, Inc. ("First Solar" and, together with the company, the
        "Sponsors") to own, operate and acquire solar energy generation assets.
        Class A shares of 8point3 Energy Partners are now listed on the NASDAQ
        Global Select Market under the trading symbol "CAFD."  Immediately after
        the IPO, the company contributed a portfolio of 170 MW of its solar
        generation assets (the "SPWR Projects") to 8point3 Operating Company,
        LLC ("OpCo"), 8point3 Energy Partners' primary operating subsidiary.  In
        exchange for the SPWR Projects, the company received cash proceeds as
        well as equity interests in several 8point3 Energy Partners affiliated
        entities: primarily common and subordinated units representing a 40.7%
        stake in OpCo and a 50.0% economic and management stake in 8point3
        Holding Company, LLC ("Holdings"), the parent company of the general
        partner of 8point3 Energy Partners and the owner of incentive
        distribution rights in OpCo.  Holdings, OpCo, 8point3 Energy Partners
        and their respective subsidiaries are referred to herein as the "8point3
        Group" or "8point3." The company includes adjustments related to the
        sales of projects contributed to 8point3 based on the difference between
        the fair market value of the consideration received and the net carrying
        value of the projects contributed, of which, a portion is deferred in
        proportion to the company's retained equity stake in 8point3. The
        deferred profit is subsequently recognized over time. With certain
        exceptions such as for projects already in operation, the company's
        revenue is equal to the fair market value of the consideration received,
        and cost of goods sold is equal to the net carrying value plus a partial
        deferral of profit proportionate with the retained equity stake. Under
        GAAP, these sales are recognized under either real estate, lease, or
        consolidation accounting guidance depending upon the nature of the
        individual asset contributed, with outcomes ranging from no, partial, or
        full profit recognition. IFRS profit, less deferrals associated with
        retained equity, is recognized for sales related to the residential
        lease portfolio. Revenue recognition for other projects sold to 8point3
        is deferred until these projects reach commercial operations. Equity in
        earnings of unconsolidated investees also includes the impact of the
        company's share of 8point3's earnings related to sales of projects
        receiving sales recognition under IFRS but not GAAP.


    --  Utility and power plant projects. The company includes adjustments
        related to the revenue recognition of certain utility and power plant
        projects based on percentage-of-completion accounting and, when
        relevant, the allocation of revenue and margin to the company's project
        development efforts at the time of initial project sale. Under GAAP,
        such projects are accounted for under real estate accounting guidance,
        under which no separate allocation to the company's project development
        efforts occurs and the amount of revenue and margin that is recognized
        may be limited in circumstances where the company has certain forms of
        continuing involvement in the project. Over the life of each project,
        cumulative revenue and gross margin will eventually be equivalent under
        both GAAP and IFRS; however, revenue and gross margin will generally be
        recognized earlier under IFRS. Within each project, the relationship
        between the adjustments to revenue and gross margins is generally
        consistent. However, as the company may have multiple utility and power
        plant projects in differing stages of progress at any given time, the
        relationship in the aggregate will occasionally appear otherwise.


    --  Sale of operating lease assets. The company includes adjustments related
        to the revenue recognition on the sale of certain solar assets subject
        to an operating lease (or of solar assets that are leased by or intended
        to be leased by the third-party purchaser to another party) based on the
        net proceeds received from the purchaser. Under GAAP, these sales are
        accounted for as borrowing transactions in accordance with lease
        accounting guidance. Under such guidance, revenue and profit recognition
        is based on rental payments made by the end lessee, and the net proceeds
        from the purchaser are recorded as a non-recourse borrowing liability,
        with imputed interest expense recorded on the liability. This treatment
        continues until the company has transferred the substantial risks of
        ownership, as defined by lease accounting guidance, to the purchaser, at
        which point the sale is recognized.
    --  Sale-leaseback transactions. The company includes adjustments primarily
        related to the revenue recognition on certain sale-leaseback
        transactions based on the net proceeds received from the buyer-lessor.
        Under GAAP, these transactions are accounted for under the financing
        method in accordance with real estate accounting guidance. Under such
        guidance, no revenue or profit is recognized at the inception of the
        transaction, and the net proceeds from the buyer-lessor are recorded as
        a financing liability. Imputed interest is recorded on the liability
        equal to the company's incremental borrowing rate adjusted solely to
        prevent negative amortization.

Other Non-GAAP Adjustments

    --  Cost of above-market polysilicon. The Company has entered in previous
        years into multiple long-term, fixed-price supply agreements to purchase
        polysilicon for periods of up to 10 years. The prices in these supply
        agreements, which incorporate a cash portion and a non-cash portion
        attributable to the amortization of prepayments made under the
        agreements, significantly exceed market prices. Additionally, in order
        to reduce inventory and improve working capital, the Company has
        periodically elected to sell polysilicon inventory in the marketplace at
        prices below the Company's purchase price, thereby incurring a loss.
        Management believes that it is appropriate to exclude the impact of its
        above-market cost of polysilicon, including the effect of above-market
        polysilicon on product costs, losses incurred on sales of polysilicon to
        third parties, and inventory reserves and project asset impairments from
        the company's non-GAAP financial measures as they are not reflective of
        ongoing operating results and does not contribute to a meaningful
        evaluation of a company's past operating performance.


    --  Stock-based compensation. Stock-based compensation relates primarily to
        the company's equity incentive awards. Stock-based compensation is a
        non-cash expense that is dependent on market forces that are difficult
        to predict. Management believes that this adjustment for stock-based
        compensation provides investors with a basis to measure the company's
        core performance, including compared with the performance of other
        companies, without the period-to-period variability created by
        stock-based compensation.


    --  Amortization of intangible assets. The company incurs amortization of
        intangible assets as a result of acquisitions, which includes patents,
        purchased technology, project pipeline assets, and in-process research
        and development. Management believes that it is appropriate to exclude
        these amortization charges from the company's non-GAAP financial
        measures as they arise from prior acquisitions, are not reflective of
        ongoing operating results, and do not contribute to a meaningful
        evaluation of a company's past operating performance.


    --  Non-cash interest expense. The company incurs non-cash interest expense
        related to the amortization of items such as original issuance discounts
        on its debt.  The company excludes non-cash interest expense because the
        expense does not reflect its financial results in the period incurred.
        Management believes that this adjustment for non-cash interest expense
        provides investors with a basis to evaluate the company's performance,
        including compared with the performance of other companies, without
        non-cash interest expense.


    --  Goodwill impairment. In the third quarter of 2016, the company performed
        an interim goodwill impairment evaluation, due to current market
        circumstances, including a decline in the company's stock price which
        resulted in the market capitalization of the company being below its
        book value. The company's preliminary calculation determined that the
        implied fair value of goodwill for all reporting units was zero and
        therefore recorded a goodwill impairment loss of $147.4 million, which
        includes $89.6 million of goodwill recognized in the third quarter of
        2016 in connection with the company's acquisition of the remaining 50%
        of AUOSP, a joint venture for the purpose of manufacturing solar cells
        in which the company previously owned 50%. No adjustment to non-GAAP
        financial measures was made for the portion of the impairment charge
        derived from AUOSP, resulting in a non-GAAP adjustment of $57.8 million.
        Management believes that it is appropriate to exclude this impairment
        charge from the company's non-GAAP financial measures as it arises from
        prior acquisitions, is not reflective of ongoing operating results, and
        does not contribute to a meaningful evaluation of a company's past
        operating performance. The impact of the AUOSP acquisition to the
        company's GAAP and non-GAAP income statements in the third quarter of
        2016 was $22.7 million, including a $203.2 million gain on settling
        preexisting relationships offset by a $90.9 million loss on the prior
        equity method investment and $89.6 million of goodwill impairment.


    --  Restructuring expense. The company incurs restructuring expenses related
        to reorganization plans aimed towards realigning resources consistent
        with the company's global strategy and improving its overall operating
        efficiency and cost structure.  Restructuring charges are excluded from
        non-GAAP financial measures because they are not considered core
        operating activities and such costs have historically occurred
        infrequently. Although the company has engaged in restructuring
        activities in the past, each has been a discrete event based on a unique
        set of business objectives. As such, management believes that it is
        appropriate to exclude restructuring charges from the company's non-GAAP
        financial measures as they are not reflective of ongoing operating
        results or contribute to a meaningful evaluation of a company's past
        operating performance.


    --  Arbitration ruling. On January 28, 2015, an arbitral tribunal of the
        International Court of Arbitration of the International Chamber of
        Commerce declared a binding partial award in the matter of an
        arbitration between First Philippine Electric Corporation ("FPEC") and
        First Philippine Solar Corporation ("FPSC") against SunPower Philippines
        Manufacturing, Ltd. ("SPML"), the Company's wholly-owned subsidiary. The
        tribunal found SPML in breach of its obligations under its supply
        agreement with FPSC, and in breach of its joint venture agreement with
        FPEC. The second partial and final awards dated July 14, 2015 and
        September 30, 2015, respectively, reduced the estimated amounts to be
        paid to FPEC, and on July 22, 2016, SPML entered into a settlement with
        FPEC and FPSC and paid a total of $50.5 million in settlement of all
        claims between the parties. As a result, the Company recorded its best
        estimate of probable loss related to this case at the time of the
        initial ruling and updated the estimate as circumstances warranted. As
        this loss is nonrecurring in nature, excluding this data provides
        investors with a basis to evaluate the company's performance, including
        compared with the performance of other companies, without similar
        impacts.


    --  IPO-related costs. Costs incurred related to the IPO of 8point3 included
        legal, accounting, advisory, valuation, and other expenses, as well as
        modifications to or terminations of certain existing financing
        structures in preparation for the sale to 8point3.  As these costs are
        non-recurring in nature, excluding this data provides investors with a
        basis to evaluate the company's performance, including compared with the
        performance of other companies, without similar impacts.


    --  Other. The company combines amounts previously disclosed under separate
        captions into "Other" when amounts do not have a significant impact on
        the presented fiscal periods. Management believes that these adjustments
        provide investors with a basis to evaluate the company's performance,
        including compared with the performance of other companies, without
        similar impacts.


    --  Tax effect. This amount is used to present each of the adjustments
        described above on an after-tax basis in connection with the
        presentation of non-GAAP net income and non-GAAP net income per diluted
        share. The company's non-GAAP tax amount is based on estimated cash tax
        expense and reserves. The company forecasts its annual cash tax
        liability and allocates the tax to each quarter in a manner generally
        consistent with its GAAP methodology. This approach is designed to
        enhance investors' ability to understand the impact of the company's tax
        expense on its current operations, provide improved modeling accuracy,
        and substantially reduce fluctuations caused by GAAP to non-GAAP
        adjustments, which may not reflect actual cash tax expense.


    --  Adjusted EBITDA adjustments. When calculating Adjusted EBITDA, in
        addition to adjustments described above, the company excludes the impact
        during the period of the following items:
        --  Cash interest expense, net of interest income
        --  Provision for (benefit from) income taxes



        --  DepreciationManagement presents this non-GAAP financial measure to
            enable investors to evaluate the company's performance, including
            compared with the performance of other companies.

For more information about these non-GAAP financial measures, please see the tables captioned "Reconciliations of GAAP Measures to Non-GAAP Measures" set forth at the end of this release, which should be read together with the preceding financial statements prepared in accordance with GAAP.


                                                                                             SUNPOWER CORPORATION

                                                                            RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

                                                                            (In thousands, except percentages and per share data)

                                                                                                 (Unaudited)


    Adjustments to Revenue:

                                                                   THREE MONTHS ENDED                                                       NINE MONTHS ENDED
                                                                   ------------------                                                       -----------------

                                                                    Oct. 1,                                              Jul. 2,                              Oct. 2,             Oct. 1,               Oct. 2,

                                                                                     2017                                               2017                                 2016                  2017                   2016
                                                                                     ----                                               ----                                 ----                  ----                   ----

    GAAP revenue                                                                 $477,191                                           $337,446                             $729,346            $1,213,713             $1,534,673

    Adjustments based on IFRS:

    8point3                                                                         (899)                                             (223)                              33,301                 (409)                16,727

    Utility and power plant projects                                                5,887                                                335                                   37              (17,558)                13,490

    Sale of operating lease assets                                                      -                                                 -                               7,424                     -                28,010

    Sale-leaseback transactions                                                    51,412                                              3,927                                    -              108,817                 12,646

    Non-GAAP revenue                                                             $533,591                                           $341,485                             $770,108            $1,304,563             $1,605,546
                                                                                 ========                                           ========                             ========            ==========             ==========


    Adjustments to Gross Profit/Margin:

                                                                   THREE MONTHS ENDED                                                       NINE MONTHS ENDED
                                                                   ------------------                                                       -----------------

                                                                    Oct. 1,                                              Jul. 2,                              Oct. 2,             Oct. 1,               Oct. 2,

                                                                                     2017                                               2017                                 2016                  2017                   2016
                                                                                     ----                                               ----                                 ----                  ----                   ----

    GAAP gross profit                                                             $15,658                                            $15,235                             $129,208                 $(39)              $222,039

    Adjustments based on IFRS:

    8point3                                                                         (377)                                               870                               13,788                 1,682                  8,936

    Utility and power plant projects                                                3,367                                              2,378                                   47                32,919                  7,732

    Sale of operating lease assets                                                      -                                                 -                               2,085                     -                 8,163

    Sale-leaseback transactions                                                    10,669                                            (2,270)                                  85                 5,255                  3,073

    Other adjustments:

    Cost of above-market polysilicon                                               33,461                                             21,826                               27,415                85,102                 56,030

    Stock-based compensation expense                                                2,875                                              1,052                                6,029                 5,111                 15,618

    Amortization of intangible assets                                               2,567                                              2,567                                2,567                 7,701                  5,111

    Non-cash interest expense                                                          10                                                 10                                  283                    30                    886

    Arbitration ruling                                                                  -                                                 -                                   -                    -               (5,852)

    Non-GAAP gross profit                                                         $68,230                                            $41,668                             $181,507              $137,761               $321,736
                                                                                  =======                                            =======                             ========              ========               ========


    GAAP gross margin (%)                                                           3.3%                                              4.5%                               17.7%                 0.0%                 14.5%

    Non-GAAP gross margin (%)                                                      12.8%                                             12.2%                               23.6%                10.6%                 20.0%


    Adjustments to Net income (loss):

                                                                   THREE MONTHS ENDED                                                       NINE MONTHS ENDED
                                                                   ------------------                                                       -----------------

                                                                    Oct. 1,                                              Jul. 2,                              Oct. 2,             Oct. 1,               Oct. 2,

                                                                                     2017                                               2017                                 2016                  2017                   2016
                                                                                     ----                                               ----                                 ----                  ----                   ----

    GAAP net loss attributable to stockholders                                  $(54,247)                                         $(93,760)                           $(40,545)           $(282,486)            $(195,946)

    Adjustments based on IFRS:

    8point3                                                                         (916)                                             2,458                               19,320                 9,643                 48,078

    Utility and power plant projects                                                3,367                                              2,378                                   47                32,919                  7,732

    Sale of operating lease assets                                                      -                                                 -                               2,098                     -                 8,197

    Sale-leaseback transactions                                                    12,440                                              (173)                                 277                10,425                  3,265

    Other adjustments:

    Cost of above-market polysilicon                                               33,461                                             21,826                               27,415                85,102                 56,030

    Stock-based compensation expense                                                9,399                                              8,606                               15,907                25,380                 48,902

    Amortization of intangible assets                                               3,026                                              4,227                                3,018                10,279                 14,351

    Non-cash interest expense                                                          33                                                 35                                  308                   103                    963

    Goodwill impairment                                                                 -                                                 -                              57,765                     -                57,765

    Restructuring expense                                                           3,517                                              4,969                               31,202                18,276                 31,415

    Arbitration ruling                                                                  -                                                 -                                   -                    -               (5,852)

    IPO-related costs                                                                   -                                             (196)                                   -                 (82)                    35

    Other                                                                               -                                                 -                                (20)                    -                  (31)

    Tax effect                                                                     19,407                                                350                                7,655                20,270                  6,885

    Non-GAAP net income (loss) attributable to stockholders                       $29,487                                          $(49,280)                            $124,447             $(70,171)               $81,789
                                                                                  =======                                           ========                             ========              ========                =======



    Adjustments to Net income (loss) per diluted share:

                                                                   THREE MONTHS ENDED                                                       NINE MONTHS ENDED
                                                                   ------------------                                                       -----------------

                                                                    Oct. 1,                                              Jul. 2,                              Oct. 2,             Oct. 1,               Oct. 2,

                                                                                     2017                                               2017                                 2016                  2017                   2016
                                                                                     ----                                               ----                                 ----                  ----                   ----

    Net income (loss) per diluted share

    Numerator:

    GAAP net loss available to common stockholders(1)                           $(54,247)                                         $(93,760)                           $(40,545)           $(282,486)            $(195,946)
                                                                                 ========                                           ========                             ========             =========              =========

    Non-GAAP net income (loss) available to common stockholders(1)                $29,487                                          $(49,280)                            $124,447             $(70,171)               $81,789
                                                                                  =======                                           ========                             ========              ========                =======


    Denominator:

    GAAP weighted-average shares                                                  139,517                                            139,448                              138,209               139,289                137,832

    Effect of dilutive securities:

    Restricted stock units                                                          1,863                                                  -                                 384                     -                   684

    Upfront warrants (held by Total)                                                1,406                                                  -                               3,179                     -                 4,962

    0.75% debentures due 2018                                                           -                                                 -                                   -                    -                     -

    Non-GAAP weighted-average shares(1)                                           142,786                                            139,448                              141,772               139,289                143,478
                                                                                  =======                                            =======                              =======               =======                =======


    GAAP net loss per diluted share                                               $(0.39)                                           $(0.67)                             $(0.29)              $(2.03)               $(1.42)
                                                                                   ======                                             ======                               ======                ======                 ======

    Non-GAAP net income (loss) per diluted share                                    $0.21                                            $(0.35)                               $0.88               $(0.50)                 $0.57
                                                                                    =====                                             ======                                =====                ======                  =====


    (1)In accordance with the if-
     converted method, net income
     (loss) available to common
     stockholders excludes interest
     expense related to the 0.75%,
     0.875%, and 4.0% debentures if
     the debentures are considered
     converted in the calculation of
     net income (loss) per diluted
     share.  If the conversion
     option for a debenture is not
     in the money for the relevant
     period, the potential
     conversion of the debenture
     under the if-converted method
     is excluded from the
     calculation of non-GAAP net
     income (loss) per diluted
     share.


    Adjusted EBITDA:

                                                  THREE MONTHS ENDED                      NINE MONTHS ENDED
                                                  ------------------                      -----------------

                                                  Oct. 1,              Jul. 2,                              Oct. 2,             Oct. 1,               Oct. 2,

                                                                  2017               2017                                  2016                  2017                   2016
                                                                  ----               ----                                  ----                  ----                   ----

    GAAP net loss attributable to stockholders               $(54,247)         $(93,760)                            $(40,545)           $(282,486)            $(195,946)

    Adjustments based on IFRS:

    8point3                                                      (916)             2,458                                19,320                 9,643                 48,078

    Utility and power plant projects                             3,367              2,378                                    47                32,919                  7,732

    Sale of operating lease assets                                   -                 -                                2,098                     -                 8,197

    Sale-leaseback transactions                                 12,440              (173)                                  277                10,425                  3,265

    Other adjustments:

    Cost of above-market polysilicon                            33,461             21,826                                27,415                85,102                 56,030

    Stock-based compensation expense                             9,399              8,606                                15,907                25,380                 48,902

    Amortization of intangible assets                            3,026              4,227                                 3,018                10,279                 14,351

    Non-cash interest expense                                       33                 35                                   308                   103                    963

    Goodwill impairment                                              -                 -                               57,765                     -                57,765

    Restructuring expense                                        3,517              4,969                                31,202                18,276                 31,415

    Arbitration ruling                                               -                 -                                    -                    -               (5,852)

    IPO-related costs                                                -             (196)                                    -                 (82)                    35

    Other                                                            -                 -                                 (20)                    -                  (31)

    Cash interest expense, net of interest income               19,492             19,886                                14,990                57,907                 40,318

    Provision for (benefit from) income taxes                  (5,457)             2,353                                 7,049               (1,073)                16,878

    Depreciation                                                43,161             40,917                                36,809               123,010                108,365

    Adjusted EBITDA                                            $67,276            $13,526                              $175,640               $89,403               $240,465
                                                               =======            =======                              ========               =======               ========

Q4 2017 and FY 2017 GUIDANCE


    (in thousands
     except
     percentages)      Q4 2017                   FY 2017

    Revenue (GAAP)             $635,000-$685,000         $1,850,000-$1,900,000

    Revenue (non-
     GAAP) (1)                 $800,000-$850,000         $2,100,000-$2,150,000

    Gross margin
     (GAAP)                            6.5%-8.5%                          N/A

    Gross margin (non-
     GAAP) (2)                           13%-15%                          N/A

    Net loss (GAAP)              $55,000-$80,000             $337,000-$362,000

    Adjusted EBITDA
     (3)                       $75,000-$100,000             $165,000-$190,000


    (1)              Estimated non-GAAP amounts above
                     for Q4 2017 include net
                     adjustments that increase revenue
                     by approximately $165 million
                     related to sale-leaseback
                     transactions. Estimated non-GAAP
                     amounts above for fiscal 2017
                     include net adjustments that
                     increase (decrease) revenue by
                     approximately $(20) million
                     related to utility and power plant
                     projects, and $270 million related
                     to sale-leaseback transactions.


    (2)              Estimated non-GAAP amounts above
                     for Q4 2017 include net
                     adjustments that increase gross
                     margin by approximately $7 million
                     related to utility and power plant
                     projects, $21 million related to
                     sale-leaseback transactions, $36
                     million related to cost of above-
                     market polysilicon, $3 million
                     related to stock-based
                     compensation expense, and $1
                     million related to amortization of
                     intangible assets.


    (3)              Estimated Adjusted EBITDA amounts
                     above for Q4 2017 include net
                     adjustments that decrease net loss
                     by approximately $7 million
                     related to utility and power plant
                     projects, $21 million related to
                     sale-leaseback transactions, $36
                     million related to cost of above-
                     market polysilicon, $11 million
                     related to stock-based
                     compensation expense, $3 million
                     related to amortization of
                     intangible assets, $3 million
                     related to restructuring, $24
                     million related to interest
                     expense, $9 million related to
                     income taxes, and $41 million
                     related to depreciation. Estimated
                     Adjusted EBITDA amounts above for
                     fiscal 2017 include net
                     adjustments that decrease net loss
                     by approximately $41 million
                     related to utility and power plant
                     projects, $33 million related to
                     sale-leaseback transactions, $121
                     million related to cost of above-
                     market polysilicon, $36 million
                     related to stock-based
                     compensation expense, $13 million
                     related to amortization of
                     intangible assets, $24 million
                     related to restructuring, $90
                     million related to interest
                     expense, $7 million related to
                     income taxes, and $162 million
                     related to depreciation.

The following supplemental data represent the adjustments, individual charges and credits that are included or excluded from SunPower's non-GAAP revenue, gross margin, net income (loss) and net income (loss) per diluted share measures for each period presented in the Consolidated Statements of Operations contained herein.


                                                                                            SUPPLEMENTAL DATA

                                                                                   (In thousands, except percentages)


                                                                                           THREE MONTHS ENDED


                                                                                             October 1, 2017
                                                                                             ---------------

                                              Revenue                                                     Gross margin                                     Operating expenses                      Other income                Benefit from                        Equity in earnings              Net income (loss)
                                                                                                                                                                                                 (expense), net              (provision for)                       of unconsolidated                attributable to
                                                                                                                                                                                                                               income taxes                            investees                     stockholders
                                                                                                                                                                                                                               ------------                            ---------                     ------------

                                      Residential              Commercial                                     Power Plant           Residential                             Commercial                     Power Plant                 Research and                         Selling, general                 Restructuring
                                                                                                                                                                                                                                       development                        and administrative                    charges
                                                                                                                                                                                                                                       -----------                        ------------------                    -------

    GAAP                                              $153,258            $106,005                                         $217,928                $26,644                          17.4%     $6,017                    5.7%                           $(17,003)                            -7.8%                                                                                    $(54,247)

    Adjustments based on IFRS:

    8point3                                            (1,345)                334                                              112                  (480)                                      212                                                       (109)                                                 -                  -          -       1,070            -  (1,609)        (916)

    Utility and power plant projects                         -                  -                                           5,887                      -                                        -                                                      3,367                                                  -                  -          -           -           -        -        3,367

    Sale-leaseback transactions                              -             51,412                                                -                     -                                   10,701                                                        (32)                                                 -                  -          -       1,771            -        -       12,440

    Other adjustments:

    Cost of above-market polysilicon                         -                  -                                               -                 4,751                                     6,996                                                      21,714                                                  -                  -          -           -           -        -       33,461

    Stock-based compensation expense                         -                  -                                               -                   869                                       750                                                       1,256                                              1,661               4,863           -           -           -        -        9,399

    Amortization of intangible assets                        -                  -                                               -                   847                                       821                                                         899                                                  -                459           -           -           -        -        3,026

    Non-cash interest expense                                -                  -                                               -                     2                                         3                                                           5                                                  4                  19           -           -           -        -           33

    Restructuring expense                                    -                  -                                               -                     -                                        -                                                          -                                                 -                  -      3,517            -           -        -        3,517

    Tax effect                                               -                  -                                               -                     -                                        -                                                          -                                                 -                  -          -           -      19,407         -       19,407

    Non-GAAP                                          $151,913            $157,751                                         $223,927                $32,633                          21.5%    $25,500                   16.2%                             $10,097                              4.5%                                                                                      $29,487
                                                      ========            ========                                         ========                =======                                   =======                                                     =======                                                                                                                        =======



                                                                                         July 2, 2017
                                                                                         ------------

                                              Revenue                                                     Gross margin                                     Operating expenses                      Other income                Benefit from                        Equity in earnings              Net income (loss)
                                                                                                                                                                                                 (expense), net              (provision for)                       of unconsolidated                attributable to
                                                                                                                                                                                                                               income taxes                            investees                     stockholders
                                                                                                                                                                                                                               ------------                            ---------                     ------------

                                      Residential              Commercial                                     Power Plant           Residential                             Commercial                     Power Plant                 Research and                         Selling, general                 Restructuring
                                                                                                                                                                                                                                       development                        and administrative                    charges
                                                                                                                                                                                                                                       -----------                        ------------------                    -------

    GAAP                                              $157,125            $100,105                                          $80,216                $26,138                          16.6%     $2,575                    2.6%                           $(13,478)                           -16.8%                                                                                    $(93,760)

    Adjustments based on IFRS:

    8point3                                            (1,319)              1,470                                            (374)                 (477)                                      891                                                         456                                                  -                  -          -       1,060            -      528         2,458

    Utility and power plant projects                         -                327                                                8                      -                                      327                                                       2,051                                                  -                  -          -           -           -        -        2,378

    Sale-leaseback transactions                              -              3,927                                                -                     -                                  (2,225)                                                       (45)                                                 -                  -          -       2,097            -        -        (173)

    Other adjustments:

    Cost of above-market polysilicon                         -                  -                                               -                 4,731                                     5,000                                                      12,095                                                  -                  -          -           -           -        -       21,826

    Stock-based compensation expense                         -                  -                                               -                   314                                       293                                                         445                                              1,036               6,518           -           -           -        -        8,606

    Amortization of intangible assets                        -                  -                                               -                   870                                       672                                                       1,025                                              1,201                 459           -           -           -        -        4,227

    Non-cash interest expense                                -                  -                                               -                     2                                         2                                                           6                                                  4                  21           -           -           -        -           35

    Restructuring expense                                    -                  -                                               -                     -                                        -                                                          -                                                 -                  -      4,969            -           -        -        4,969

    IPO-related costs                                        -                  -                                               -                     -                                        -                                                          -                                                 -              (196)          -           -           -        -        (196)

    Tax effect                                               -                  -                                               -                     -                                        -                                                          -                                                 -                  -          -           -         350         -          350

    Non-GAAP                                          $155,806            $105,829                                          $79,850                $31,578                          20.3%     $7,535                    7.1%                              $2,555                              3.2%                                                                                    $(49,280)
                                                      ========            ========                                          =======                =======                                    ======                                                      ======                                                                                                                       ========



                                                                                        October 2, 2016
                                                                                        ---------------

                                              Revenue                                                     Gross margin                                     Operating expenses                      Other income                Benefit from                      Equity in earnings of             Net income (loss)
                                                                                                                                                                                                 (expense), net              (provision for)                        unconsolidated                  attributable to
                                                                                                                                                                                                                               income taxes                            investees                     stockholders
                                                                                                                                                                                                                               ------------                            ---------                     ------------

                                      Residential              Commercial                                     Power Plant           Residential                             Commercial                     Power Plant                 Research and                         Selling, general                 Restructuring
                                                                                                                                                                                                                                       development                        and administrative                    charges
                                                                                                                                                                                                                                       -----------                        ------------------                    -------

    GAAP                                              $170,345            $139,954                                         $419,047                $31,509                          18.5%     $7,336                    5.2%                             $90,363                             21.6%                                                                                    $(40,545)

    Adjustments based on IFRS:

    8point3                                            (1,336)              3,181                                           31,456                  (250)                                    2,162                                                      11,876                                                  -                  -          -       1,062            -    4,470        19,320

    Utility and power plant projects                         -                  -                                              37                      -                                        -                                                         47                                                  -                  -          -           -           -        -           47

    Sale of operating lease assets                       7,424                   -                                               -                 2,085                                         -                                                          -                                                 -                  -          -          13            -        -        2,098

    Sale-leaseback transactions                              -                  -                                               -                     -                                       85                                                           -                                                 -                  -          -         192            -        -          277

    Other adjustments:

    Cost of above-market polysilicon                         -                  -                                               -                 5,880                                     5,492                                                      16,043                                                  -                  -          -           -           -        -       27,415

    Stock-based compensation expense                         -                  -                                               -                 2,083                                     1,744                                                       2,202                                              2,935               6,943           -           -           -        -       15,907

    Amortization of intangible assets                        -                  -                                               -                   869                                       868                                                         830                                                  -                451           -           -           -        -        3,018

    Non-cash interest expense                                -                  -                                               -                    67                                        84                                                         132                                                  4                  21           -           -           -        -          308

    Goodwill impairment                                      -                  -                                               -                     -                                        -                                                          -                                                 -                  -          -      57,765            -        -       57,765

    Restructuring expense                                    -                  -                                               -                     -                                        -                                                          -                                                 -                  -     31,202            -           -        -       31,202

    Other                                                    -                  -                                               -                     -                                        -                                                          -                                                 -               (33)          -          13            -        -         (20)

    Tax effect                                               -                  -                                               -                     -                                        -                                                          -                                                 -                  -          -           -       7,655         -        7,655

    Non-GAAP                                          $176,433            $143,135                                         $450,540                $42,243                          23.9%    $17,771                   12.4%                            $121,493                             27.0%                                                                                     $124,447
                                                      ========            ========                                         ========                =======                                   =======                                                    ========                                                                                                                       ========



                                                                                       NINE MONTHS ENDED


                                                                                        October 1, 2017
                                                                                        ---------------

                                              Revenue                                                     Gross margin                                     Operating expenses                      Other income                Benefit from                      Equity in earnings of             Net income (loss)
                                                                                                                                                                                                 (expense), net              (provision for)                        unconsolidated                  attributable to
                                                                                                                                                                                                                               income taxes                            investees                     stockholders
                                                                                                                                                                                                                               ------------                            ---------                     ------------

                                      Residential              Commercial                                     Power Plant           Residential                             Commercial                     Power Plant                 Research and                         Selling, general                 Restructuring
                                                                                                                                                                                                                                       development                        and administrative                    charges
                                                                                                                                                                                                                                       -----------                        ------------------                    -------

    GAAP                                              $446,414            $314,373                                         $452,926                $68,056                          15.2%     $6,226                    2.0%                           $(74,321)                           -16.4%                                                                                   $(282,486)

    Adjustments based on IFRS:

    8point3                                            (4,001)              4,471                                            (879)               (1,460)                                    2,796                                                         346                                                  -                  -          -       8,196            -    (235)        9,643

    Utility and power plant projects                         -                327                                         (17,885)                     -                                      327                                                      32,592                                                  -                  -          -           -           -        -       32,919

    Sale-leaseback transactions                              -             78,380                                           30,437                      -                                    5,811                                                       (556)                                                 -                  -          -       5,170            -        -       10,425

    Other adjustments:

    Cost of above-market polysilicon                         -                  -                                               -                13,833                                    19,128                                                      52,141                                                  -                  -          -           -           -        -       85,102

    Stock-based compensation expense                         -                  -                                               -                 1,393                                     1,292                                                       2,426                                              4,225              16,044           -           -           -        -       25,380

    Amortization of intangible assets                        -                  -                                               -                 2,931                                     2,329                                                       2,441                                              1,201               1,377           -           -           -        -       10,279

    Non-cash interest expense                                -                  -                                               -                     8                                         8                                                          14                                                 12                  61           -           -           -        -          103

    Restructuring expense                                    -                  -                                               -                     -                                        -                                                          -                                                 -                  -     18,276            -           -        -       18,276

    IPO-related costs                                        -                  -                                               -                     -                                        -                                                          -                                                 -               (82)          -           -           -        -         (82)

    Tax effect                                               -                  -                                               -                     -                                        -                                                          -                                                 -                  -          -           -      20,270         -       20,270

    Non-GAAP                                          $442,413            $397,551                                         $464,599                $84,761                          19.2%    $37,917                    9.5%                             $15,083                              3.2%                                                                                    $(70,171)
                                                      ========            ========                                         ========                =======                                   =======                                                     =======                                                                                                                       ========



                                                                                        October 2, 2016
                                                                                        ---------------

                                              Revenue                                                     Gross margin                                     Operating expenses                      Other income                Benefit from                      Equity in earnings of             Net income (loss)
                                                                                                                                                                                                 (expense), net              (provision for)                        unconsolidated                  attributable to
                                                                                                                                                                                                                               income taxes                            investees                     stockholders
                                                                                                                                                                                                                               ------------                            ---------                     ------------

                                      Residential              Commercial                                     Power Plant           Residential                             Commercial                     Power Plant                 Research and                         Selling, general                 Restructuring
                                                                                                                                                                                                                                       development                        and administrative                    charges
                                                                                                                                                                                                                                       -----------                        ------------------                    -------

    GAAP                                              $499,867            $290,041                                         $744,765               $103,912                          20.8%    $22,674                    7.8%                             $95,453                             12.8%                                                                                   $(195,946)

    Adjustments based on IFRS:

    8point3                                            (3,935)              3,181                                           17,481                (1,154)                                    2,341                                                       7,749                                                  -                  -          -       3,185            -   35,957        48,078

    Utility and power plant projects                         -                  -                                          13,490                      -                                        -                                                      7,732                                                  -                  -          -           -           -        -        7,732

    Sale of operating lease assets                      28,010                   -                                               -                 8,163                                         -                                                          -                                                 -                  -          -          34            -        -        8,197

    Sale-leaseback transactions                              -             12,646                                                -                     -                                    3,073                                                           -                                                 -                  -          -         192            -        -        3,265

    Other adjustments:

    Cost of above-market polysilicon                         -                  -                                               -                12,934                                     9,562                                                      33,534                                                  -                  -          -           -           -        -       56,030

    Stock-based compensation expense                         -                  -                                               -                 4,562                                     3,141                                                       7,915                                              8,932              24,352           -           -           -        -       48,902

    Amortization of intangible assets                        -                  -                                               -                 1,856                                     2,102                                                       1,153                                              3,007               6,233           -           -           -        -       14,351

    Non-cash interest expense                                -                  -                                               -                   201                                       175                                                         510                                                 14                  63           -           -           -        -          963

    Goodwill impairment                                      -                  -                                               -                     -                                        -                                                          -                                                 -                  -          -      57,765            -        -       57,765

    Restructuring expense                                    -                  -                                               -                     -                                        -                                                          -                                                 -                  -     31,415            -           -        -       31,415

    Arbitration ruling                                       -                  -                                               -               (1,345)                                    (922)                                                    (3,585)                                                 -                  -          -           -           -        -      (5,852)

    IPO-related costs                                        -                  -                                               -                     -                                        -                                                          -                                                 -                 35           -           -           -        -           35

    Other                                                    -                  -                                               -                     -                                        -                                                          -                                                 -               (32)          -           1            -        -         (31)

    Tax effect                                               -                  -                                               -                     -                                        -                                                          -                                                 -                  -          -           -       6,885         -        6,885

    Non-GAAP                                          $523,942            $305,868                                         $775,736               $129,129                          24.6%    $42,146                   13.8%                            $150,461                             19.4%                                                                                      $81,789
                                                      ========            ========                                         ========               ========                                   =======                                                    ========                                                                                                                        =======

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SOURCE SunPower Corp.