SunPower Announces 2011 Guidance

SAN JOSE, Calif., Nov. 18, 2010 /PRNewswire-FirstCall/ -- SunPower Corp. (Nasdaq: SPWRA, SPWRB) today announced its financial guidance for its 2011 fiscal year which it will discuss during its 2010 Analyst Day starting at 10:00 a.m. Eastern Time.  Analyst Day presentations will be available via webcast from the company's investor relations website at http://investors.sunpowercorp.com/events.cfm at 8:00 a.m. Eastern Time.

For fiscal year 2011, the company projects revenues to be in the range of $2.65 to $2.85 billion with non-GAAP diluted earnings per share of $1.75 - $2.05.  Additional details on 2011 guidance will be made available through the company's webcast and posted presentations during the Analyst Day event.

SunPower also announced today that Allianz Renewable Energy Partners IV Ltd. (a wholly owned subsidiary of Allianz SE) has signed a definitive sale and purchase agreement to acquire 100 percent of the equity in SunPower's wholly owned subsidiary, Orsa Maggiore PV Srl, which owns the 15-megawatt (MWp) Solare Roma photovoltaic power plant.  The power plant is located in the municipality of Anguillara, Province of Rome, Lazio region, Italy. The transaction is expected to be completed by the end of 2010, subject to the fulfillment of standard closing conditions.  SunPower designed and is building the power plant and will provide ongoing operations and maintenance services for the new owner.

"The definitive sale agreement signed with Allianz Renewable Energy Partners for the sale of our 15-MWp Solare Roma Italian power plant is an important milestone in reaching our 2010 financial goals," said Tom Werner, SunPower CEO.  "This agreement is a direct result of our ability to offer sophisticated financial customers a reliable, turnkey operating power plant built with our bankable technology. We remain confident that we will complete the financing and sale of the final phases of our Montalto solar parks by year's end and meet our fourth quarter 2010 guidance."

This press release contains both GAAP and non-GAAP financial information.  Non-GAAP historical 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 2010 Analyst Day on the Events and Presentations section of the SunPower Investor Relations page at http://investors.sunpowercorp.com/events.cfm.  

Editors' Note:

The capacity of power plants in this release is described in approximate megawatts on a direct current (DC) basis unless otherwise noted.  On an alternating current (AC) basis, the Solare Roma power plants is approximately 13-megawatts in total, and the final phases of the Montalto solar park is 44 megawatts.

About SunPower

Founded in 1985, SunPower Corp. (Nasdaq: SPWRA, SPWRB) designs, manufactures and delivers the planet's most powerful solar technology broadly available today. Residential, business, government and utility customers rely on the company's experience and proven results to maximize return on investment. With headquarters in San Jose, Calif., SunPower has offices in North America, Europe, Australia and Asia. For more information, visit www.sunpowercorp.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements that do not represent historical facts and may be based on underlying assumptions. The company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and similar expressions to identify forward-looking statements in this press release, including forward-looking statements regarding:  (a) the forecasted revenues, GAAP and non-GAAP gross margin, and GAAP and non-GAAP EPS for 2011; (b) sale of Solare Roma power plant expected to be completed by the end of 2010 and the company's providing ongoing operations and maintenance services; (c) the completion of financing of the final phase of Montalto solar plants by the end of 2010; and (d) the company meeting its fourth quarter 2010 guidance.  Such forward-looking statements are based on information available to the company as of the date of this release and involve a number of risks and uncertainties, some beyond the company's control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including risks and uncertainties such as:  (i) potential difficulties associated with operating the joint venture with AUO and integrating the SunRay business, and the company's ability to achieve the anticipated synergies and manufacturing benefits from these transactions; (ii) the company's ability to obtain and maintain an adequate supply of raw materials, components, and solar panels, as well as the price it pays for such items; (iii) general business and economic conditions, including seasonality of the industry; (iv) growth trends in the solar power industry; (v) the continuation of governmental and related economic incentives promoting the use of solar power, particularly such incentives affecting the markets in which the company sells solar panels and constructs commercial systems and power plants; (vi) the significant investment required to construct power plants and the company's ability to sell or otherwise monetize power plants; (vii) the improved availability of financing arrangements for the company's utilities projects, including for the Montalto power plants, and the company's customers; (viii) construction difficulties or potential delays, including obtaining land use rights, permits, license, other governmental approvals, and transmission access and upgrades; (ix) increasing competition in the industry and lower average selling prices; (x) the joint venture's ability to ramp new production lines in Fab 3 and the company's ability to realize expected manufacturing efficiencies throughout its manufacturing operations; (xi) manufacturing difficulties that could arise; (xii) the success of the company's ongoing research and development efforts and the acceptance of the company's new products and services;  (xiii) the company's international operations; (xiv) the company's liquidity, substantial indebtedness, and its ability to obtain additional financing; (xv) the company's ability to protect its intellectual property; (xvi) evolving regional permitting, financing, grid interconnection, technical, and other customer or regulatory requirements, and the company's ability to satisfy such requirements; (xvii) unanticipated problems with deploying solar systems on the sites; (xviii) possible impairment of goodwill; (xix) possible consolidation of the joint venture AUO SunPower; and (xx) other risks described in the company's Annual Report on Form 10-K for the year ended January 3, 2010 and Quarterly Report on Form 10-Q for the quarter ended October 3, 2010, and other filings with the Securities and Exchange Commission.  These forward-looking statements should not be relied upon as representing the company's views as of any subsequent date, and the company is under no obligation to, and expressly disclaims any responsibility to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

About SunPower's Non-GAAP Financial Measures

To supplement its consolidated financial forecasts presented in accordance with GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP forecasts to exclude non-cash charges related to amortization of intangible assets and promissory notes, stock-based compensation and interest expense, and the related tax effects of these adjustments.  The specific non-GAAP measures listed below are gross margin and net income per share. Management believes that each of these non-GAAP measures (gross margin 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 and promissory notes, stock-based compensation and interest expense. 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 forecasts should be reviewed together with the GAAP forecasts and are not intended to serve as a substitute for forecasts 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 charges including amortization of intangible assets, stock-based compensation and interest expense. This non-GAAP financial measure 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 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 and promissory notes, stock-based compensation, interest expense, 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.

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, patents, project assets, purchased technology and trade names. 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  Amortization of promissory notes. Included in the total consideration for the acquisition of SunRay completed on March 26, 2010 is $14 million in promissory notes to SunRay's management shareholders issued by SunPower. Since the vesting and payment of the promissory notes are contingent on future employment, the promissory notes are considered deferred compensation and therefore are not included in the purchase price allocated to the net assets acquired. SunPower excludes this non-cash charge over the service period required under the terms of the promissory notes 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  Non-cash interest expense. SunPower separately accounted for the liability and equity components of its convertible debt issued in 2007 in a manner that reflected interest expense equal to its non-convertible debt borrowing rate. Under new accounting guidance effective in the first quarter of 2010, SunPower measured the existing share lending arrangements entered into in connection with its convertible debt issued in 2007 at fair value and amortized the imputed share lending costs in current and prior periods. As a result, SunPower incurs interest expense that is substantially higher than interest payable on its 1.25% senior convertible debentures. 

In addition, SunPower separately accounted for the fair value liabilities of the embedded cash conversion option and the over-allotment option on its 4.5% senior cash convertible debentures issued in April 2010 as an original issue discount and a corresponding derivative conversion liability. As a result, SunPower incurs interest expense that is substantially higher than interest payable on its 4.5% senior cash 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  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 Forecast to Non-GAAP Forecast" set forth at the end of this release.

SOURCE SunPower Corp.

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