LEASING

Residential Lease Program

The Company offers a solar lease program, which provides U.S. residential customers with SunPower systems under 20-year lease agreements that include system maintenance and warranty coverage. Leases are classified as either operating or sales-type leases in accordance with the relevant accounting guidelines.

Operating Leases

The following table summarizes "Solar power systems leased and to be leased, net" under operating leases on the Company's Consolidated Balance Sheets as of April 3, 2016 and January 3, 2016:



	As of
(In thousands)	April 3, 2016			January 3, 2016
Solar power systems leased and to be leased, net^1,2:
Solar power systems leased	$	573,628		$	543,358
Solar power systems to be leased	39,811			34,319
	613,439			577,677
Less: accumulated depreciation	(51,905		)	(46,157		)
	$	561,534		$	531,520


¹	Solar power systems leased and to be leased, net are physically located exclusively in the United States.


²	As of April 3, 2016 and January 3, 2016, the Company had pledged solar assets with an aggregate book value of $94.1 million and zero, respectively, to third-party investors as security for the Company's contractual obligations.

The following table presents the Company's minimum future rental receipts on operating leases placed in service as of April 3, 2016:



(In thousands)	Fiscal 2016 (remaining nine months)		Fiscal 2017	Fiscal 2018	Fiscal 2019	Fiscal 2020	Thereafter	Total
Minimum future rentals on operating leases placed in service¹	$	13,037	18,625	18,662	18,699	18,738	264,210	$	351,971


¹	Minimum future rentals on operating leases placed in service does not include contingent rentals that may be received from customers under agreements that include performance-based incentives nor does it include rent receivables on operating leases sold to the 8point3 Group.

Sales-Type Leases

As of April 3, 2016 and January 3, 2016, the Company's net investment in sales-type leases presented in "Accounts receivable, net" and "Long-term financing receivables, net" on the Company's Consolidated Balance Sheets was as follows:



	As of
(In thousands)	April 3, 2016			January 3, 2016
Financing receivables¹:
Minimum lease payments receivable²	$	416,559		$	366,759
Unguaranteed residual value	55,699			50,722
Unearned income	(79,385		)	(70,155		)
Net financing receivables	$	392,873		$	347,326
Current	$	14,071		$	12,535
Long-term	$	378,802		$	334,791


¹	As of April 3, 2016 and January 3, 2016, the Company had pledged financing receivables of $69.5 million and zero, respectively, to third-party investors as security for the Company's contractual obligations.


²	Net of allowance for doubtful accounts.

As of April 3, 2016, future maturities of net financing receivables for sales-type leases are as follows:



(In thousands)	Fiscal 2016 (remaining nine months)		Fiscal 2017	Fiscal 2018	Fiscal 2019	Fiscal 2020	Thereafter	Total
Scheduled maturities of minimum lease payments receivable¹	$	15,537	20,716	20,887	21,066	21,249	317,104	$	416,559


¹	Minimum future rentals on sales-type leases placed in service does not include contingent rentals that may be received from customers under agreements that include performance-based incentives.

Sale-Leaseback Arrangements

The Company enters into sale-leaseback arrangements under which solar power systems are sold to third parties and subsequently leased back by the Company over minimum lease terms of up to 20 years. Separately, the Company enters into PPAs with end customers, who host the leased solar power systems and buy the electricity directly from the Company under PPAs with terms of up to 25 years. At the end of the lease term, the Company has the option to purchase the systems at fair value or may be required to remove the systems and return them to the third parties.

The Company has classified its sale-leaseback arrangements of solar power systems not involving integral equipment as operating leases. The deferred profit on the sale of these systems is recognized over the term of the lease. As of April 3, 2016, future minimum lease obligations associated with these systems was $84.8 million, which will be recognized over the minimum lease terms. Future minimum payments to be received from customers under PPAs associated with the solar power systems under sale-leaseback arrangements classified as operating leases will be recognized over the lease terms of up to 20 years and are contingent upon the amounts of energy produced by the solar power systems.

The Company enters into certain sale-leaseback arrangements under which the systems subject to the sale-leaseback arrangements have been determined to be integral equipment as defined under the accounting guidance for such transactions. The Company has continuing involvement with the solar power systems throughout the lease due to purchase option rights in the arrangements. As a result of such continuing involvement, the Company accounts for each of these transactions as a financing. Under the financing method, the proceeds received from the sale of the solar power systems are recorded by the Company as financing liabilities. The financing liabilities are subsequently reduced by the Company's payments to lease back the solar power systems, less interest expense calculated based on the Company's incremental borrowing rate adjusted to the rate required to prevent negative amortization. The solar power systems under the sale-leaseback arrangements remain on the Company's balance sheet and are classified within "Property, plant and equipment, net" (see Note 4). As of April 3, 2016, future minimum lease obligations for the sale-leaseback arrangements accounted for under the financing method were $102.5 million, which will be recognized over the lease terms of up to 20 years. During the three months ended April 3, 2016 and March 29, 2015 the Company had net financing proceeds of zero and $0.6 million, respectively, in connection with these sale-leaseback arrangements. As of April 3, 2016 and January 3, 2016 the carrying amount of the sale-leaseback financing liabilities, presented in "Other long-term liabilities" on the Company's Consolidated Balance Sheets, was $126.2 million and $125.3 million, respectively (see Note 4).