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Segment and Geographical Information
 12 Months Ended
Dec. 30, 2018
Segment Reporting [Abstract]  
Segment and Geographical Information
SEGMENT AND GEOGRAPHICAL INFORMATION

In the fourth quarter of fiscal 2018, in connection with a reorganization of our business to better align and focus resources towards an upstream and downstream business unit structure, we changed our segment reporting from three end-customer segments to upstream and downstream segments: (i) SunPower Technologies and (ii) SunPower Energy Services (see Note 1. Organization and Summary of Significant Accounting Policies). Reclassifications of prior period segment information have been made to conform to the current period presentation. These changes did not materially affect our previously reported Consolidated Financial Statements.

Adjustments Made for Segment Purposes

Intersegment Gross Margin

To increase efficiencies and the competitive advantage of our technologies, SunPower Technologies sells solar modules to SunPower Energy Services based on transfer prices determined based on management's assessment of market-based pricing terms. Such intersegment sales and related costs are eliminated at the corporate level to derive our consolidated financial results.

8point3 Energy Partners

We include adjustments related to the sales of projects contributed to 8point3 Energy Partners 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 our retained equity interest in 8point3 Energy Partners. Prior to the adoption of ASC 606, these sales were 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. We adopted ASC 606 on January 1, 2018, using the full retrospective method, which required us to restate each prior period presented. We recorded a material amount of deferred profit associated with projects sold to 8point3 Energy Partners in 2015, the majority of which had previously been deferred under real estate accounting. Accordingly, our carrying value in the 8point3 Group materially increased upon adoption which required us to evaluate our investment in 8point3 Energy Partners for other-than-temporary impairment ("OTTI"). In accordance with such evaluation, we recognized an OTTI charge on the 8point3 investment balance in fiscal 2017. On June 19, 2018, we sold our equity interest in the 8point3 Group.

Legacy utility and power plant projects

We include adjustments related to the revenue recognition of certain legacy utility and power plant projects based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations and, when relevant, the allocation of revenue and margin to our project development efforts at the time of initial project sale. Prior to the adoption of ASC 606, such projects were accounted for under real estate accounting guidance, under which no separate allocation to our project development efforts occurs and the amount of revenue and margin that is recognized may be limited in circumstances where we have certain forms of continuing involvement in the project. Under ASC 606, such projects are accounted for when the customer obtains control of the promised goods or services which generally results in earlier recognition of revenue and profit than previous U.S. GAAP. Over the life of each project, cumulative revenue and gross profit will eventually be equivalent under both ASC 606 and segment treatments once these projects are completed.

Sale-leaseback transactions

We include adjustments related to the revenue recognition on certain sale-leaseback transactions based on the net proceeds received from the buyer-lessor. Under U.S. 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 our incremental borrowing rate adjusted solely to prevent negative amortization.

Impairment of property, plant and equipment

In the second quarter of fiscal 2018, we announced our proposed plan to change our corporate structure into upstream and downstream business units, and our long-term strategy to upgrade our existing integrated back connectivity, or IBC, technology to our NGT, or Maxeon 5. Accordingly, we expect to upgrade the equipment associated with our manufacturing operations for the production of Maxeon 5 over the next several years. In connection with these planned changes that will impact the utilization of our manufacturing assets as well as continued pricing challenges in the industry, we determined indicators of impairment existed and therefore performed a recoverability test by estimating future undiscounted net cash flows expected to be generated from the use of these assets groups. Based on the test performed, we determined that our estimate of future undiscounted net cash flows was insufficient to recover the carrying value of the upstream business unit’s assets and consequently performed an impairment analysis by comparing the carrying value of the asset group to its estimated fair value. In accordance with such evaluation, we recognized a non-cash impairment charge on our property, plant and equipment. Such asset impairment is excluded from our segment results as it is non-cash in nature and not reflective of ongoing segment results.

Impairment and sale of residential lease assets

In the fourth quarter of fiscal 2017, we made the decision to sell or refinance our interest in our Residential Lease Portfolio and as a result, determined it was necessary to evaluate the recoverability of the carrying amount of the Residential Lease Portfolio. In accordance with such evaluation, we recognized a non-cash impairment charge on our solar power systems leased and to be leased and an allowance for losses related to financing receivables. In connection with the impairment loss, the carrying values of our solar power systems leased and to be leased were reduced which resulted in lower depreciation charges. Such asset impairment and its corresponding depreciation savings are excluded from the Company’s segment results as they are non-cash in nature and not reflective of ongoing segment results.

In the fourth quarter of fiscal 2018, we entered into a joint venture with HA SunStrong Capital LLC (“HA SunStrong Parent”), an affiliate of Hannon Armstrong Sustainable Infrastructure Capital, Inc., to acquire, own, manage, operate, finance, and maintain a portfolio of residential rooftop or ground-mounted solar photovoltaic electric generating systems ("Solar Assets"). Pursuant to the terms of the Purchase and Sale Agreement (the “PSA"), we sold to HA SunStrong Parent, in exchange for consideration of $10.0 million, membership units representing a 49.0% membership interest in SunStrong Capital Holdings, LLC (“SunStrong”), formerly our wholly-owned subsidiary. Following the closing of the PSA, we deconsolidated certain entities that have historically held the assets and liabilities comprising our residential lease business (the "Residential Lease Portfolio"), as part of our previously announced decision to sell a portion of our interest in the Residential Lease Portfolio, and retained membership units representing a 51% membership interest in SunStrong. The loss on divestment and the remaining unsold residential lease asset impairment with its corresponding depreciation savings are excluded from our segment results as they are non-cash in nature and not reflective of ongoing operating results.

Cost of above-market polysilicon

As described in "Note 10. Commitments and Contingencies," we have entered into multiple long-term, fixed-price supply agreements to purchase polysilicon for periods of up to ten years. The prices in select legacy supply agreements, which include a cash portion and a non-cash portion attributable to the amortization of prepayments made under the agreements, significantly exceed current market prices. Additionally, in order to reduce inventory and improve working capital, we have periodically elected to sell polysilicon inventory in the marketplace at prices below our purchase price, thereby incurring a loss. Starting in the first quarter of fiscal 2017, we have excluded the impact of our 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 recorded as a result of above-market polysilicon, from our segment results.

Stock-based compensation

We incur stock-based compensation expense related primarily to our equity incentive awards. We exclude this expense from our segment results.

Amortization of intangible assets

We incur amortization expense on intangible assets as a result of acquisitions, which include patents, project assets, purchased technology, in-process research and development and trade names. We exclude this expense from our segment results.

Depreciation of idle equipment

In the fourth quarter of 2017, we changed the deployment plan for our next generation of solar cell technology, and revised our depreciation estimates to reflect the use of certain assets over their shortened useful life. Such asset depreciation is excluded from our non-GAAP financial measures as it is non-cash in nature and not reflective of ongoing operating results.

Gain on business divestiture

In the third quarter of fiscal 2018, we entered into a transaction pursuant to which the Company sold certain assets and intellectual property related to the production of microinverters for purchase consideration comprised of both cash and stock. In connection with this sale, the Company recognized a gain relating to this business divestiture. Management believes that it is appropriate to exclude this gain from the Company’s Non-GAAP financial measures as it is non-cash in nature and not reflective of ongoing operating results.

Unrealized loss on equity investments

In connection with the divestment of the Company's microinverters business in the third quarter of fiscal 2018, the Company received a portion of the consideration in the form of common stock. The Company recognizes adjustments related to the fair value of equity investments with readily determinable fair value based on the changes in the stock price of these equity investments at every reporting period. Under GAAP, unrealized gains and losses due to changes in stock prices for these securities are recorded in earnings while under International Financial Reporting Standards ("IFRS"), an election can be made to recognize such gains and losses in other comprehensive income. Such an election was made by Total S.A., a foreign registrant which reports under the IFRS. Management believes that excluding the unrealized gain or loss on the equity investments is consistent with the Company's reporting process as part of its status as a consolidated subsidiary of Total S.A. and better reflects the Company's ongoing segment results.

Acquisition-related and other costs

In connection with the acquisition of certain assets of SolarWorld Americas, Inc. ("SolarWorld Americas"), which closed on October 1, 2018, the Company incurred legal and accounting fees. In addition to the legal and accounting fees incurred. Management believes that it is appropriate to exclude these from the Company’s Non-GAAP financial measures as they would not have otherwise been incurred as part of its business operations and are therefore not reflective of ongoing operating results.

Business reorganization costs

In connection with the reorganization of our business into an upstream and downstream business unit structure, we incurred and expect to continue incurring expenses in the upcoming quarters associated with reclassifying prior period segment information, reorganization of corporate functions and responsibilities to the business units, updating accounting policies and processes and implementing systems to fulfill the requirements of the master supply agreement between the segments. Management believes that it is appropriate to exclude these from the Company’s Non-GAAP financial measures as they would not have otherwise been incurred as part of its business operations and are therefore not reflective of ongoing operating results.

Non-cash interest expense

We incur non-cash interest expense related to the amortization of items such as original issuance discounts on certain of our convertible debt. We exclude this expense from our segment results.

Restructuring expense

We incur restructuring expense related to reorganization plans aimed towards realigning resources consistent with our global strategy and improving our overall operating efficiency and cost structure. We exclude this expense from our segment results.

IPO-related costs

We incurred legal, accounting, advisory, valuation, and other costs related to the IPO of 8point3 Energy Partners. We exclude these costs from our segment results.

Other

We combine amounts previously disclosed under separate captions into “Other” when amounts do not have a significant impact on the presented fiscal periods.
Reconciliation of Segment Revenue to Consolidated GAAP Revenue

Fiscal Year Ended
(In thousands):

2018
 
2017
 
2016
Total segment revenue as reviewed by CODM

$
2,203,473

 
2,595,507

 
3,149,397

Adjustments to segment revenue:
 
 
 
 
 
 
Intersegment elimination

(388,539
)
 
(466,949
)
 
(446,537
)
8point3 Energy Partners

8,588

 
(7,198
)
 
(29,614
)
Utility and power plant projects

4,145

 
(54,659
)
 
(13,981
)
Sale of operating lease assets

—

 
—

 
(28,096
)
Sale-leaseback transactions

(101,582
)
 
(272,654
)
 
(78,532
)
Consolidated GAAP revenue

$
1,726,085

 
$
1,794,047

 
$
2,552,637





Reconciliation of Segment Gross Profit to Consolidated GAAP Gross Profit
 
Fiscal Year Ended
(In thousands):
 
2018
 
2017
 
2016
Segment gross profit
 
$
161,137

 
$
261,623

 
$
410,816

Adjustments to segment gross profit:
 
 
 
 
 
 
Intersegment elimination
 
(25,386
)
 
(25,151
)
 
(18,045
)
8point3 Energy Partners
 
8,337

 
2,656

 
23,157

Utility and power plant projects
 
1,244

 
(41,746
)
 
(6,064
)
Sale of operating lease assets
 
—

 
—

 
(8,554
)
Sale-leaseback transactions
 
(242
)
 
(31,094
)
 
(11,352
)
Impairment of property, plant and equipment
 
(355,107
)
 
—

 
—

Impairment of residential lease assets1
 
14,847

 
—

 
—

Arbitration ruling
 
—

 
—

 
5,852

Cost of above-market polysilicon
 
(87,228
)
 
(166,906
)
 
(148,265
)
Stock-based compensation expense
 
(4,996
)
 
(5,489
)
 
(17,090
)
Amortization of intangible assets
 
(8,966
)
 
(10,206
)
 
(7,680
)
Depreciation of idle equipment
 
(721
)
 
(2,300
)
 
—

Non-cash interest expense
 
—

 
(32
)
 
(956
)
Consolidated GAAP gross profit
 
$
(297,081
)
 
$
(18,645
)
 
$
221,819





Reconciliation of Segments EBITDA to Loss before income taxes and equity in earnings (losses) of unconsolidated investees
 
Fiscal Year Ended
(In thousands):
 
2018
 
2017
 
2016
Segment adjusted EBITDA
 
$
179,075

 
$
255,559

 
$
384,924

Adjustments to segment adjusted EBITDA:
 
 
 
 
 
 
8point3 Energy Partners
 
8,485

 
(78,990
)
 
(25,127
)
Utility and power plant projects
 
1,244

 
(41,746
)
 
(6,602
)
Sale of operating lease assets
 
—

 
—

 
(8,607
)
Sale-leaseback transactions
 
(18,802
)
 
(39,318
)
 
(11,699
)
Impairment of property, plant and equipment
 
(369,168
)
 
—

 
—

Impairment of residential lease assets1
 
(227,507
)
 
(473,709
)
 
—

Cost of above-market polysilicon
 
(87,228
)
 
(166,906
)
 
(148,265
)
Stock-based compensation expense
 
(28,215
)
 
(34,674
)
 
(61,498
)
Amortization of intangible assets
 
(8,966
)
 
(19,048
)
 
(17,369
)
Depreciation of idle equipment
 
(721
)
 
(2,300
)
 
—

Arbitration ruling
 
—

 
—

 
5,852

IPO-related costs
 
—

 
82

 
304

Acquisition-related and other costs
 
(17,727
)
 
—

 
—

Gain on business divestiture
 
59,347

 
—

 
—

Restructuring expense
 
(17,497
)
 
(21,045
)
 
(207,189
)
Goodwill Impairment
 
—

 
—

 
(57,765
)
Unrealized loss on equity investments
 
(6,375
)
 
—

 
—

Non-cash interest expense
 
(68
)
 
(128
)
 
(1,057
)
Equity in earnings (losses) of unconsolidated investees
 
17,815

 
(25,938
)
 
(14,295
)
Net loss attributable to noncontrolling interests
 
(106,406
)
 
(241,747
)
 
(72,780
)
Cash interest expense, net of interest income
 
(86,394
)
 
(79,965
)
 
(57,734
)
Depreciation
 
(120,367
)
 
(164,970
)
 
(156,464
)
Corporate
 
(67,866
)
 
(65,907
)
 
(73,052
)
Business reorganization costs
 
(1,330
)
 
—

 
—

Other
 
—

 
—

 
31

Loss before income taxes and equity in earnings (losses) of unconsolidated investees
 
$
(898,671
)
 
$
(1,200,750
)
 
$
(528,392
)
1 For the year ended December 30, 2018 and December 31, 2017, we recorded in aggregate a loss on sale and impairment of residential lease assets of $252.0 million and $624.3 million, respectively. As a result of the partnership flip structures with noncontrolling interests where these assets are held in, we allocated an insignificant portion of the impairment charge to the noncontrolling interest using the HLBV method. The net impairment charges attributable to us totaled $227.5 million and $473.7 million for the year ended December 30, 2018 and December 31, 2017, respectively. During fiscal 2018, we also recorded $14.8 million of depreciation savings as a result of the impairment charge recognized in the prior period.


 
 
Fiscal Year
(As a percentage of total revenue):
 
2018
 
2017
 
2016
Significant Customers:
Business Segment
 
 
 
 
 
 
Actis GP LLP
Power Plant
 
*
 
13
%
 
n/a

8point3 Energy Partners
Power Plant
 
*
 
*

 
10
%
Southern Renewable Partnerships, LLC
Power Plant
 
n/a
 
*

 
15
%


 
 
Fiscal Year
(As a percentage of total revenue):
 
2018
 
2017
 
2016
Revenue by geography:
 
 
 
 
 
 
United States
 
68
%
 
79
%
 
85
%
Japan
 
5
%
 
6
%
 
6
%
Rest of World
 
27
%

15
%
 
9
%
 
 
100
%
 
100
%
 
100
%




 
 
Fiscal Year
(In thousands):
 
2018
 
2017
SunPower Energy Services
 
$
512,953

 
$
445,241

SunPower Technologies
 
323,941

 
698,553

Corporate
 
2,977

 
4,051

Property, plant and equipment, net
 
$
839,871

 
$
1,147,845