North Coast Solar Stocks

October 22, 2009

SunPower Reports Third-Quarter 2009 Results

Filed under: SPWR — Tags: , , , , , — Jason @ 4:05 pm

– Record Q3 2009 revenue of $466 million, record production of 110 megawatts
– GAAP EPS of $0.13 and non-GAAP EPS of $0.42
– 24 megawatt Montalto power plant in Italy financed – expected completion Q4 2009
– Grew global dealer network to approximately 900 partners
– Signed a 14-megawatt supply agreement with Casino Group in France
– Commissioned 25-megawatt project for Florida Power & Light and began construction of an additional 10-megawatt power plant
– Fab 3 construction in Malaysia on plan; production scheduled for the second half of 2010
– Further strengthened balance sheet – more than $800 million in cash and investments

4:05 pm EDT, Thursday October 22, 2009

SAN JOSE, Calif., Oct. 22 /PRNewswire-FirstCall/ — SunPower Corp. (SPWRA, SPWRB) today announced financial results for its 2009 third quarter which ended September 27, 2009. Revenue for the 2009 third quarter was $466 million which compares to $298 million in the second quarter of 2009 and $378 million in the third quarter of 2008. The company’s Components and Systems segments accounted for 64% and 36% of third-quarter 2009 revenue, respectively.

“Our third-quarter results demonstrate the value of our diversified market and vertical integration strategy as we benefitted from our growing dealer channel and successfully executed on our large scale project commitments,” said Tom Werner, SunPower’s CEO. “We further expanded our dealer partner network into countries such as France, Korea and Canada, and added new partners to our existing markets. As we build our utility and power plant business around the world, our superior technology performance and rapid deployment capability continues to make SunPower a preferred partner with customers and financiers.

“Operationally, our global Engineering, Procurement and Construction team achieved a new record in the third quarter with more than 60 megawatts (MW) of SunPower power plants under construction. The 25-MW DeSoto power plant, commissioned for Florida Power & Light, has now surpassed Nellis Air Force Base as the largest operating solar photovoltaic power plant in North America. In Europe, the financing of our Montalto project, the largest power plant in Italy, demonstrates SunPower’s bankability as a fully integrated supplier. With strong market demand continuing, all of our manufacturing facilities are now fully operational, resulting in unit cost reductions in line with our plan,” concluded Werner.

On a Generally Accepted Accounting Principles (GAAP) basis for the 2009 third quarter, SunPower reported gross margin of 19.1%, operating income of $34.6 million and net income per diluted share of $0.13. GAAP net income per share for the third quarter of 2009 includes $5.3 million, or $0.03 per share, of non-cash interest charges associated with the adoption of the new accounting guidance, which impacts how companies account for interest expense on convertible bonds.

On a non-GAAP basis, adjusted to exclude non-cash charges for amortization of intangible assets of $4.1 million, stock-based compensation of $13.1 million and non-cash interest expense of $5.3 million, SunPower reported total gross margin of 20.7%. Operating income for the quarter was $52.1 million and net income per share was $0.42. This compares with second-quarter 2009 non-GAAP gross margin of 22.6%, operating income of $26.8 million and $0.24 net income per share. For the 2009 third quarter, the Components segment non-GAAP gross margin was 23.4% and Systems segment gross margin was 16.0%.

2009 Guidance

The company updated its fiscal year 2009 total company non-GAAP guidance as follows: total revenue of $1.425 billion to $1.50 billion, net income per diluted share of $1.15 to $1.25, capital expenditures of $200 million to $225 million, and production of approximately 400 MW.

“The company’s continued focus on working capital management is showing positive results as we successfully managed inventory levels and ended the quarter with a stronger balance sheet and more than $800 million in cash and investments,” said Dennis Arriola, SunPower’s CFO. “Although the financing markets remain challenging, we’re starting to see some improvement in the availability of financing for our projects. By starting the fourth quarter with a solid backlog of business and a growing pipeline of opportunities, we are confident that SunPower will finish the year strongly and is well positioned for growth in 2010.”

For fiscal year 2009, the company expects the following total company GAAP results: revenue of $1.425 billion to $1.50 billion and net income per diluted share of $0.50 to $0.60. GAAP earnings per share guidance for 2009 includes a $0.21 per share one-time, non-taxable gain related to the company’s second-quarter 2009 capital raise and approximately $0.13 per share for non-cash charges related to the company’s adoption of new accounting guidance.

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 2009 performance on the Events and Presentations section of the SunPower Investor Relations page at http://investors.sunpowercorp.com/events.cfm. The capacity of power plants in this release is described in approximate MW on an alternating current (ac) basis.

Segment Reporting Information

For third quarter 2009 reporting purposes, the Systems segment generally represents products and services sold directly to the system owner. Additionally, both SunPower and third-party solar panels sold through the Systems segment channels are recorded as Systems segment revenue. The Components segment primarily represents products sold to installers and resellers.

Non-GAAP Measures

To supplement the consolidated financial results prepared under GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude non-cash charges related to amortization of intangible assets, stock-based compensation, impairment of long-lived assets and interest expense, non-cash gain on purchased options related to the company’s convertible debt offering, and its related tax effects. Management does not consider these charges in evaluating the core operational activities of SunPower. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate SunPower’s current performance. Most analysts covering SunPower use the non-GAAP measures as well. Given management’s use of these non-GAAP measures, SunPower believes these measures are important to investors in understanding SunPower’s current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in SunPower’s core business across different time periods. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data and may be different from non-GAAP measures used by other companies.

Fiscal Periods

The Company reports on a fiscal-year basis and ends its quarters on the Sunday closest to the end of the applicable calendar quarter, except in a 53-week fiscal year, in which case the additional week falls into the fourth quarter of that fiscal year. Fiscal year 2009 consists of 53 weeks while fiscal year 2008 consists of 52 weeks. The third quarter of fiscal 2009 ended on September 27, 2009 and the third quarter of fiscal 2008 ended on September 29, 2008.

SunPower is a registered trademark of SunPower Corp. All other trademarks are the property of their respective owners.

                              SUNPOWER CORPORATION
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                  (Unaudited)

                                                    Sep. 27,     Dec. 28,
                                                      2009         2008
                                                      ----         ----
                        ASSETS

    Cash and cash equivalents                       $472,126     $202,331
    Restricted cash                                  320,788      175,277
    Investments                                        9,222       40,756
    Accounts receivable, net                         243,528      194,222
    Costs and estimated earnings in
     excess of billings                               73,519       30,326
    Inventories                                      239,211      251,542
    Prepaid expenses and other assets                197,131      175,005
    Advances to suppliers                            137,853      162,610
    Property, plant and equipment, net               695,409      629,247
    Goodwill and other intangible assets, net        227,444      236,210
                                                   ---------    ---------
         Total assets                             $2,616,231   $2,097,526
                                                   =========    =========
              LIABILITIES AND STOCKHOLDERS' EQUITY

    Accounts payable                                $232,547     $263,241
    Accrued and other liabilities                    195,561      191,140
    Long-term debt                                   188,915       54,598
    Convertible debt                                 530,956      357,173
    Billings in excess of costs and
     estimated earnings                               17,484       11,806
    Customer advances                                 97,142      110,394
                                                   ---------    ---------
         Total liabilities                         1,262,605      988,352

    Stockholders' equity                           1,353,626    1,109,174
                                                   ---------    ---------
         Total liabilities and
          stockholders' equity                    $2,616,231   $2,097,526
                                                   =========    =========
                                 SUNPOWER CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In thousands, except per share data)

                                   (Unaudited)

                                 THREE MONTHS ENDED       NINE MONTHS ENDED
                            ---------------------------   ------------------
                            Sep. 27,  Jun. 28,  Sep. 28,  Sep. 27,  Sep. 28,
                              2009      2009      2008      2009      2008
                              ----      ----      ----      ----      ----
    Revenue:
        Systems             $168,412  $108,724  $193,330  $383,233  $642,774
        Components           297,895   188,920   184,170   594,505   391,178
                             -------   -------   -------   -------   -------
                             466,307   297,644   377,500   977,738 1,033,952

    Cost of revenue:
        Cost of systems
         revenue             144,859    91,793   158,829   325,003   511,316
        Cost of components
         revenue             232,164   147,388   113,358   457,240   271,288
                             -------   -------   -------   -------   -------
                             377,023   239,181   272,187   782,243   782,604

    Gross margin              89,284    58,463   105,313   195,495   251,348

    Operating expenses:
      Research and
       Development             8,250     6,853     6,049    23,067    15,504
      Selling, general
       and administrative     46,473    41,755    46,075   130,511   123,141
                             -------   -------   -------   -------   -------

           Total operating
            expenses          54,723    48,608    52,124   153,578   138,645
                             -------   -------   -------   -------   -------

    Operating income          34,561     9,855    53,189    41,917   112,703

    Other income (expense):
      Gain on purchased
       options                     -    21,193         -    21,193         -
      Interest and other
       income (expense),
       net                    (9,269)   (5,956)   (8,784)  (27,319)  (17,597)
                             -------   -------   -------   -------   -------

           Other income
            (expense), net    (9,269)   15,237    (8,784)   (6,126)  (17,597)
                             -------   -------   -------   -------   -------

    Income before income
     taxes and equity in
     earnings of
     unconsolidated
     investees                25,292    25,092    44,405    35,791    95,106

    Income tax provision      15,088     4,054    21,856    10,580    31,275
                             -------   -------   -------   -------   -------

    Income before equity
     in earnings of
     unconsolidated
     investees                10,204    21,038    22,549    25,211    63,831

    Equity in earnings of
     unconsolidated
     investees,
     net of taxes              2,627     3,133     2,132     7,005     4,006
                             -------   -------   -------   -------   -------

    Net income               $12,831   $24,171   $24,681   $32,216   $67,837
                             =======   =======   =======   =======   =======

    Net income per share of
     class A and class B
     common stock:
       - Basic                 $0.14     $0.27     $0.30     $0.36     $0.84
       - Diluted               $0.13     $0.26     $0.29     $0.35     $0.80

    Weighted-average shares:
       - Basic                94,668    90,873    80,465    89,764    79,614
       - Diluted              96,319    98,412    84,064    91,513    83,477
                                SUNPOWER CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

                                 (Unaudited)

                                 THREE MONTHS ENDED       NINE MONTHS ENDED
                            ---------------------------   -----------------
                            Sep. 27,  Jun. 28,  Sep. 28,  Sep. 27, Sep. 28,
                              2009      2009      2008      2009     2008
                              ----      ----      ----      ----     ----
    Cash flows from
     operating activities:
      Net income             $12,831   $24,171   $24,681   $32,216  $67,837
      Adjustments to
       reconcile net income
       to net cash provided
       by operating activities:
        Stock-based
         compensation         13,074    11,647    18,911    34,204   52,026
        Depreciation          21,414    20,569    13,688    60,348   35,741
        Amortization of
         other intangible
         assets                4,146     4,098     4,201    12,296   12,552
        Impairment of
         long-lived assets       190       489    (2,353)    1,997    3,136
        Non-cash interest
         expense               5,250     5,915     4,038    16,186   12,717
        Amortization of
         debt issuance costs     733     1,184       537     2,454    1,611
        Gain on purchased
         options                   -   (21,193)        -   (21,193)       -
        Equity in earnings of
         unconsolidated
         investees            (2,627)   (3,133)   (2,132)   (7,005)  (4,006)
        Excess tax benefits
         from stock-based
         award activity      (12,134)   (2,610)  (19,260)  (14,744) (33,899)
        Deferred income
         taxes and other
         tax liabilities      10,151    (3,505)   19,658       277   29,738
        Changes in operating
         assets and
         liabilities, net of
         effect of
         acquisitions:
          Accounts
           receivable        (18,794)  (65,422)   47,808   (43,285) (55,324)
          Costs and
           estimated
           earnings in
           excess of
           billings          (60,787)   23,168    (7,556)  (41,416) (17,700)
          Inventories         28,977    87,807    19,498    20,914  (48,301)
          Prepaid expenses
           and other assets   13,938   (35,291)   (4,604)   (9,440) (29,636)
          Advances to
           suppliers           3,435    13,449    15,461    24,877   19,102
          Accounts payable
           and other accrued
           liabilities        98,997  (101,114)   (5,853)  (31,345)  76,513
          Billings in excess
           of costs and
           estimated
           earnings          (33,479)   42,968   (21,178)    4,877  (60,064)
          Customer advances   (5,553)      774    41,754   (13,639)  45,884
                             -------   -------   -------   -------  -------
            Net cash
             provided by
             operating
             activities       79,762     3,971   147,299    28,579  107,927

    Cash flows from
     investing activities:
      Increase in restricted
       cash and cash
       equivalents          (103,247)  (33,151)  (26,202) (145,583) (42,153)

      Purchases of
       property, plant
       and equipment         (38,426)  (59,566)  (55,224) (150,093)(150,302)
      Proceeds from
       sale of
       equipment
       to third-party          1,976     7,902         -     9,878        -
      Purchases of
       available-for-sale
       securities                  -         -   (14,778)        -  (65,748)
      Proceeds from sales
       or maturities of
       available-for-sale
       securities              9,867     1,501    12,027    29,545  133,948
      Cash paid for
       acquisitions, net of
       cash acquired               -         -    (4,827)        -  (18,311)
      Cash paid for
       investments in joint
       ventures and other
       non-public companies        -         -    (2,000)        -  (24,625)
                             -------   -------   -------   -------  -------
            Net cash used in
             investing
             activities     (129,830)  (83,314)  (91,004) (256,253)(167,191)

    Cash flows from
     financing activities:
      Proceeds from
       issuance of
       long-term debt,
       net of issuance
       costs                  54,701    29,773         -   137,735        -
      Proceeds from
       issuance of
       convertible debt,
       net of issuance
       costs                       -   225,018         -   225,018        -
      Proceeds from
       offering of class A
       common stock, net of
       offering expenses        (114)  218,895         -   218,781        -
      Cash paid for
       repurchased
       convertible debt       (7,687)  (67,949)        -   (75,636)       -
      Cash paid for
       purchased options           -   (97,336)        -   (97,336)       -
      Proceeds from
       warrant transactions        -    71,001         -    71,001        -
      Proceeds from
       exercise of
       stock options             570       442     1,451     1,408    3,786
      Excess tax benefits
       from stock-based
       award activity         12,134     2,610    19,260    14,744   33,899
      Purchases of stock
       for tax withholding
       obligations on vested
       restricted stock         (586)     (763)   (1,659)   (3,708)  (5,853)
                             -------   -------   -------   -------  -------
            Net cash provided
             by financing
             activities       59,018   381,691    19,052   492,007   31,832

    Effects of exchange rate
     changes on cash and
     equivalents               6,341     5,377    (8,273)    5,462   (1,166)
                             -------   -------   -------   -------  -------
    Net increase (decrease)
     in cash and cash
     equivalents              15,291   307,725    67,074   269,795  (28,598)
    Cash and cash
     equivalents
     at beginning of period  456,835   149,110   189,542   202,331  285,214
                             -------   -------   -------   -------  -------
    Cash and cash
     equivalents
     at end of period       $472,126  $456,835  $256,616  $472,126 $256,616
                             =======   =======   =======   =======  =======

    Non-cash transactions:
      Additions to property,
       plant and equipment
       included in accounts
       payable and other
       accrued liabilities        $-        $-   $42,942        $-  $46,780
      Non-cash interest
       expense capitalized
       and added to the
       cost of qualified
       assets                    873     1,510     2,547     4,456    6,367
      Issuance of common
       stock for purchase
       acquisition                 -     1,471     3,054     1,471    3,054
      Change in goodwill
       relating to adjustments
       to acquired net assets      -         -         -         -      231
    (In thousands, except per share data)
                                  THREE MONTHS            NINE MONTHS
                                      ENDED                  ENDED
                          ---------------------------   -----------------
                          Sep. 27,  Jun. 28,  Sep. 28,  Sep. 27,  Sep. 28,
                            2009      2009      2008      2009      2008
                            ----      ----      ----      ----      ----
                                  (Presented on a GAAP Basis)
    Gross margin          $89,284   $58,463  $105,313  $195,495  $251,348
    Operating income      $34,561    $9,855   $53,189   $41,917  $112,703
    Net income per share
     of class A and
     class B common stock:
      -Basic                $0.14     $0.27     $0.30     $0.36     $0.84
      -Diluted              $0.13     $0.26     $0.29     $0.35     $0.80

                                  THREE MONTHS            NINE MONTHS
                                      ENDED                  ENDED
                          ---------------------------   -----------------
                          Sep. 27,  Jun. 28,  Sep. 28,  Sep. 27,  Sep. 28,
                            2009      2009      2008      2009      2008
                            ----      ----      ----      ----      ----
                                 (Presented on a non-GAAP Basis)
    Gross margin          $96,753   $67,128  $110,093  $215,745  $276,812
    Operating income      $52,146   $26,840   $73,259   $90,522  $179,961
    Net income per share
     of class A and
     class B common stock:
      -Basic                $0.42     $0.25     $0.59     $0.75     $1.62
      -Diluted              $0.42     $0.24     $0.57     $0.73     $1.55

About SunPower’s Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude non-cash charges related to amortization of intangible assets, stock-based compensation, impairment of long-lived assets and interest expense, non-cash gain on purchased options related to its convertible debt offering, and the related tax effects of these non-GAAP adjustments. The specific non-GAAP measures listed below are gross margin, operating income and net income per share. Management believes that each of these non-GAAP measures (gross margin, operating income and net income per share) are useful to investors by enabling them to better assess changes in each of these key elements of SunPower’s results of operations across different reporting periods on a consistent basis, independent of these non-cash items. Thus, each of these non-GAAP financial measures provides investors with another method for assessing SunPower’s operating results in a manner that is focused on its ongoing core operating performance, absent the effects of amortization of intangible assets, stock-based compensation, impairment of long-lived assets, interest expense and a gain on purchased options related to its convertible debt offering. Management also uses these non-GAAP measures internally to assess the business and financial performance of current and historical results, for strategic decision making, forecasting future results and evaluating the company’s current performance. Many of the analysts covering SunPower also use these non-GAAP measures in their analyses. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data, the non-GAAP results should be reviewed together with the GAAP results and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

o Non-GAAP gross margin. The use of this non-GAAP financial measure allows management to evaluate the gross margin of the company’s core businesses and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation, impairment of long-lived assets and interest expense. In addition, it is an important component of management’s internal performance measurement process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents this non-GAAP financial measure to enable investors and analysts to evaluate SunPower’s revenue generation performance relative to the direct costs of revenue of its core businesses.

o Non-GAAP operating income. The use of this non-GAAP financial measure allows management to evaluate the operating results of the company’s core businesses and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation, impairment of long-lived assets and interest expense. In addition, it is an important component of management’s internal performance measurement process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents this non-GAAP financial measure to enable investors and analysts to understand the results of operations of the company’s core businesses and to compare results of operations on a more consistent basis against that of other companies in the industry.

o Non-GAAP net income per share. Management presents this non-GAAP financial measure to enable investors and analysts to assess the company’s operating results and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation, impairment of long-lived assets, interest expense, a gain on purchased options related to its convertible debt offering and the tax effects of these non-GAAP adjustments. In addition, investors and analysts can compare SunPower’s operating results on a more consistent basis against that of other companies in the industry. It should be noted that diluted weighted-average shares are determined on a GAAP basis and the resulting share count is used for computing both GAAP and Non-GAAP diluted net income per share.

Non-Cash Items

o Amortization of intangible assets. SunPower incurs amortization of intangible assets as a result of acquisitions, which includes in-process research and development, purchased technology, patents and tradenames. SunPower excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from prior acquisitions and have no direct correlation to the operation of SunPower’s core businesses.

o Stock-based compensation. Stock-based compensation relates primarily to SunPower stock awards such as stock options and restricted stock. Stock-based compensation is a non-cash expense that varies in amount from period to period and is dependent on market forces that are difficult to predict. As a result of this unpredictability, management excludes this item from its internal operating forecasts and models. Management believes that non-GAAP measures adjusted for stock-based compensation provide investors with a basis to measure the company’s core performance against the performance of other companies without the variability created by stock-based compensation.

o Impairment of long-lived assets. SunPower incurred an impairment of long-lived assets in the first quarter of fiscal 2008 totaling $5.5 million, which relates to the discontinuation of its imaging detector product line and for the write-off of certain solar manufacturing equipment which became obsolete due to new processes. The costs associated with a $3.3 million write-off of certain solar product manufacturing equipment were recovered from the vendor in the third quarter of fiscal 2008. SunPower excluded this item because the expense is not reflective of its ongoing operating results in the period incurred. Excluding this data provides investors with a basis to compare the company’s performance against the performance of other companies without non-cash expenses such as impairment of long-lived assets.

o Non-cash interest expense. Under new accounting guidance, SunPower separately accounts for the liability and equity components of its convertible debt in a manner that reflects interest expense equal to its non-convertible debt borrowing rate. As a result, SunPower incurs interest expense that is substantially higher than interest payable on its 1.25% senior convertible debentures and 0.75% senior convertible debentures. SunPower excludes non-cash interest expense because the expense is not reflective of its ongoing financial results in the period incurred. Excluding this data provides investors with a basis to compare the company’s performance against the performance of other companies without non-cash interest expense.

o Gain on purchased options related to SunPower’s convertible debt offering. In connection with the issuance of its 4.75% senior convertible debentures in May 2009, SunPower entered into certain convertible debenture hedge transactions with respect to its class A common stock intended to reduce the potential dilution that would occur upon conversion of the debentures. The convertible debenture hedge transactions consisting of call option instruments are deemed to be a mark-to-market derivative during the period in which the over-allotment option in favor of the debenture underwriters is unexercised. SunPower entered into the underwriting agreement on April 28, 2009 and the debenture underwriters exercised the over-allotment option on April 29, 2009. During the one-day period that the underwriters’ over-allotment option was outstanding, SunPower’s class A common stock price increased substantially. SunPower excluded the $21.2 million gain relating to the purchased options from its non-GAAP results because it was not realized in cash and it is not reflective of the company’s ongoing financial results. Excluding this data provides investors with a basis to compare the company’s performance against the performance of other companies without non-cash income from a gain on purchased options.

o Tax effect. This amount is used to present each of the amounts described above on an after-tax basis with the presentation of non-GAAP net income per share.

For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of GAAP results of operations measures to non-GAAP measures” set forth at the end of this release and which should be read together with the preceding financial statements prepared in accordance with GAAP.

                              SUNPOWER CORPORATION
               RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
                                  (Unaudited)
                      (In thousands, except per share data)

    STATEMENT OF OPERATIONS DATA:
                                   THREE MONTHS ENDED     NINE MONTHS ENDED
                              --------------------------  -----------------
                              Sep. 27, Jun. 28,  Sep. 28, Sep. 27, Sep. 28,
                                 2009    2009      2008     2009     2008
                                 ----    ----      ----     ----     ----
    GAAP gross margin          $89,284 $58,463  $105,313 $195,495 $251,348
      Amortization of
       intangible assets         2,802   2,795     2,947    8,390    9,066
      Stock-based
       compensation expense      4,302   4,630     4,875    9,755   13,718
      Impairment of
       long-lived assets             -       -    (3,286)       -    2,203
      Non-cash interest expense    365   1,240       244    2,105      477
                                ------  ------   -------  -------  -------
    Non-GAAP gross margin      $96,753 $67,128  $110,093 $215,745 $276,812
                                ======  ======   =======  =======  =======
    GAAP operating income      $34,561  $9,855   $53,189  $41,917 $112,703
      Amortization of
       intangible assets         4,146   4,098     4,201   12,296   12,552
      Stock-based
       compensation expense     13,074  11,647    18,911   34,204   52,026
      Impairment of
       long-lived assets             -       -    (3,286)       -    2,203
      Non-cash interest expense    365   1,240       244    2,105      477
                                ------  ------   -------  -------  -------
    Non-GAAP operating income  $52,146 $26,840   $73,259  $90,522 $179,961
                                ======  ======   =======  =======  =======

    NET INCOME PER SHARE:
                                   THREE MONTHS ENDED     NINE MONTHS ENDED
                              --------------------------  ----------------
                              Sep. 27, Jun. 28,  Sep. 28, Sep. 27, Sep. 28,
                                 2009    2009      2008     2009     2008
                                 ----    ----      ----     ----     ----
    Basic:
    GAAP net income per share    $0.14   $0.27     $0.30    $0.36    $0.84
    Reconciling items:
      Amortization of
       intangible assets          0.04    0.04      0.05     0.14     0.16
      Stock-based
       compensation expense       0.13    0.13      0.23     0.38     0.64
      Impairment of
       long-lived assets             -       -     (0.04)       -     0.03
      Non-cash interest expense   0.06    0.06      0.05     0.18     0.16
      Gain on purchased options      -   (0.23)        -    (0.24)       -
      Tax effect                  0.05   (0.02)        -    (0.07)   (0.21)
                                ------  ------   -------  -------  -------
    Non-GAAP net
     income per share            $0.42   $0.25     $0.59    $0.75    $1.62
                                ======  ======   =======  =======  =======
    Diluted:
    GAAP net income per share    $0.13   $0.26     $0.29    $0.35    $0.80
    Reconciling items:
      Amortization of
       intangible assets          0.04    0.04      0.05     0.13     0.15
      Stock-based
       compensation expense       0.14    0.11      0.22     0.37     0.62
      Impairment of
       long-lived assets             -       -     (0.04)       -     0.03
      Non-cash interest expense   0.06    0.06      0.05     0.18     0.15
      Gain on purchased options      -   (0.21)        -    (0.23)       -
      Tax effect                  0.05   (0.02)        -    (0.07)   (0.20)
                                ------  ------   -------  -------  -------
    Non-GAAP net income
     per share                   $0.42   $0.24     $0.57    $0.73    $1.55
                                ======  ======   =======  =======  =======
    Weighted-average shares:

      GAAP net income per share:
       - Basic                  94,668  90,873    80,465   89,764   79,614
       - Diluted                96,319  98,412    84,064   91,513   83,477

      Non-GAAP net income per share:
       - Basic                  94,668  90,873    80,465   89,764   79,614
       - Diluted                96,319  98,412    84,064   91,513   83,477

The following supplemental data represents the individual charges and credits that are excluded from SunPower’s non-GAAP financial measures for each period presented in the Condensed Consolidated Statements of Operations contained herein.

                                  SUPPLEMENTAL DATA
                                   (In thousands)

                                THREE MONTHS ENDED

                                 September 27, 2009
                                 ------------------
                     Gross Margin              Selling,  Interest
                                    Research   general  and other
                                       and       and      income
                             Compo-  develop-  admini-  (expense),  Income tax
                    Systems  nents    ment     strative    net      provision
                    -------  -----   ------    --------   ------    ---------
    Amortization
     of intangible
     assets         $1,841     $961      $-    $1,344         $-         $-
    Stock-based
     compensation
     expense         1,494    2,808   1,736     7,036          -          -
    Non-cash
     interest
     expense            87      278       -         -      4,885          -
    Tax effect           -        -       -         -          -      4,969
                     -----    -----   -----     -----      -----      -----
                    $3,422   $4,047  $1,736    $8,380     $4,885     $4,969
                     =====    =====   =====     =====      =====      =====

                                    June 28, 2009
                                    -------------
                     Gross Margin              Selling,  Interest
                                    Research   general  and other
                                       and       and      income
                             Compo-  develop-  admini-  (expense),  Income tax
                    Systems  nents    ment     strative    net      provision
                    -------  -----   ------    --------   ------    ---------
    Amortization
     of intangible
     assets         $1,841     $954      $-    $1,303         $-         $-
    Stock-based
     compensation
     expense         1,474    3,156   1,482     5,535          -          -
    Non-cash
     interest
     expense           347      893       -         -      4,675          -
    Gain on
     purchased
     options             -        -       -         -    (21,193)         -
    Tax effect           -        -       -         -          -     (1,873)
                     -----    -----   -----     -----      -----      -----
                    $3,662   $5,003  $1,482    $6,838   $(16,518)   $(1,873)
                     =====    =====   =====     =====      =====      =====

                                   September 28, 2008
                                   ------------------
                     Gross Margin              Selling,  Interest
                                    Research   general  and other
                                       and       and      income
                             Compo-  develop-  admini-  (expense),  Income tax
                    Systems  nents    ment     strative    net      provision
                    -------  -----   ------    --------   ------    ---------
    Amortization
     of intangible
     assets         $1,841   $1,106      $-    $1,254         $-         $-
    Stock-based
     compensation
     expense         2,911    1,964     987    13,049          -          -
    Impairment of
     long-lived
     assets         (1,343)  (1,943)      -         -          -          -
    Non-cash
     interest
     expense           100      144       -         -      3,794          -
    Tax effect           -        -       -         -          -       (337)
                     -----    -----   -----     -----      -----      -----
                    $3,509   $1,271    $987   $14,303     $3,794      $(337)
                     =====    =====   =====     =====      =====      =====

                                 NINE MONTHS ENDED

                                 September 27, 2009
                                 ------------------
                     Gross Margin              Selling,  Interest
                                    Research   general  and other
                                       and       and      income
                             Compo-  develop-  admini-  (expense),  Income tax
                    Systems  nents    ment     strative    net      provision
                    -------  -----   ------    --------   ------    ---------
    Amortization
     of intangible
     assets         $5,523   $2,867      $-    $3,906         $-         $-
    Stock-based
     compensation
     expense         3,266    6,489   4,649    19,800          -          -
    Non-cash
     interest
     expense           664    1,441       -         -     14,081          -
    Gain on
     purchased
     options             -        -       -         -    (21,193)         -
    Tax effect           -        -       -         -          -     (6,451)
                     -----    -----   -----     -----      -----      -----
                    $9,453  $10,797  $4,649   $23,706    $(7,112)   $(6,451)
                     =====    =====   =====     =====      =====      =====

                                 September 28, 2008
                                 ------------------
                     Gross Margin              Selling,  Interest
                                    Research   general  and other
                                       and       and      income
                             Compo-  develop-  admini-  (expense),  Income tax
                    Systems  nents    ment     strative    net      provision
                    -------  -----   ------    --------   ------    ---------
    Amortization
     of intangible
     assets         $5,850   $3,216      $-    $3,486         $-         $-
    Stock-based
     compensation
     expense         7,661    6,057   2,770    35,538          -          -
    Impairment of
     long-lived
     assets              -    2,203       -         -          -          -
    Non-cash
     interest
     expense           201      276       -         -     12,240          -
    Tax effect           -        -       -         -          -    (16,591)
                     -----    -----   -----     -----      -----      -----
                   $13,712  $11,752  $2,770   $39,024    $12,240   $(16,591)
                     =====    =====   =====     =====      =====      =====
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