Edgar Filing: SUNPOWER CORP

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



T	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 3, 2016



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 001-34166

SunPower Corporation

(Exact Name of Registrant as Specified in Its Charter)



Delaware		94-3008969
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

77 Rio Robles, San Jose, California 95134

(Address of Principal Executive Offices and Zip Code)

(408) 240-5500

(Registrant's Telephone Number, Including Area Code)

_________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes T No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes T No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No T

The total number of outstanding shares of the registrant’s common stock as of April 29, 2016 was 138,046,057.

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TABLE OF CONTENTS

		Page
Part I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Operations	4

	Consolidated Statements of Comprehensive Loss	5

	Consolidated Statements of Equity	6

	Consolidated Statements of Cash Flows	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41

Item 3.	Quantitative and Qualitative Disclosure About Market Risks	59

Item 4.	Controls and Procedures	61

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings	61

Item 1A.	Risk Factors	61

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63

Item 6.	Exhibits	64

Signatures		65

Index to Exhibits		66

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SunPower Corporation

Consolidated Balance Sheets

(In thousands, except share data)

(unaudited)



	April 3, 2016			January 3, 2016
Assets
Current assets:
Cash and cash equivalents	$	555,178		$	954,528
Restricted cash and cash equivalents, current portion	24,572			24,488
Accounts receivable, net¹	177,443			190,448
Costs and estimated earnings in excess of billings¹	56,503			38,685
Inventories	386,787			382,390
Advances to suppliers, current portion	95,421			85,012
Project assets - plants and land, current portion¹	662,868			479,452
Prepaid expenses and other current assets¹	415,128			359,517
Total current assets	2,373,900			2,514,520

Restricted cash and cash equivalents, net of current portion	43,470			41,748
Restricted long-term marketable securities	6,560			6,475
Property, plant and equipment, net	802,944			731,230
Solar power systems leased and to be leased, net	561,534			531,520
Project assets - plants and land, net of current portion	5,900			5,072
Advances to suppliers, net of current portion	251,763			274,085
Long-term financing receivables, net	378,802			334,791
Goodwill and other intangible assets, net	110,715			119,577
Other long-term assets¹	299,267			297,975
Total assets	$	4,834,855		$	4,856,993

Liabilities and Equity
Current liabilities:
Accounts payable¹	$	530,178		$	514,654
Accrued liabilities¹	283,502			313,497
Billings in excess of costs and estimated earnings	142,210			115,739
Short-term debt	63,348			21,041
Customer advances, current portion¹	35,307			33,671
Total current liabilities	1,054,545			998,602

Long-term debt	498,197			478,948
Convertible debt¹	1,111,466			1,110,960
Customer advances, net of current portion¹	119,423			126,183
Other long-term liabilities¹	562,723			564,557
Total liabilities	3,346,354			3,279,250
Commitments and contingencies (Note 8)
Redeemable noncontrolling interests in subsidiaries	78,818			69,104
Equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding as of both April 3, 2016 and January 3, 2016	—			—
Common stock, $0.001 par value, 367,500,000 shares authorized; 147,356,818 shares issued, and 138,027,294 outstanding as of April 3, 2016; 145,242,705 shares issued, and 136,712,339 outstanding as of January 3, 2016	138			137
Additional paid-in capital	2,376,771			2,359,917
Accumulated deficit	(833,026		)	(747,617		)
Accumulated other comprehensive loss	(12,599		)	(8,023		)
Treasury stock, at cost; 9,329,524 shares of common stock as of April 3, 2016; 8,530,366 shares of common stock as of January 3, 2016	(174,142		)	(155,265		)
Total stockholders' equity	1,357,142			1,449,149
Noncontrolling interests in subsidiaries	52,541			59,490
Total equity	1,409,683			1,508,639
Total liabilities and equity	$	4,834,855		$	4,856,993

The Company has related-party balances for transactions made with Total and its affiliates as well as unconsolidated entities in which the Company has a direct equity investment. These related-party balances are recorded within the "Accounts Receivable, net," "Costs and estimated earnings in excess of billings," "Project assets - plants and land, current portion," "Prepaid expenses and other current assets," "Other long-term assets," "Accounts payable," "Accrued Liabilities", "Customer advances, current portion," "Convertible debt, net of current portion," and "Customer advances, net of current portion" financial statement line items in the Consolidated Balance Sheets (see Note 2, Note 6, Note 9, Note 10, and Note 11).

The accompanying notes are an integral part of these consolidated financial statements.

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SunPower Corporation

Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)



	Three Months Ended
	April 3, 2016			March 29, 2015

Revenue¹
Solar power systems, components, and other	$	328,700		$	401,213
Residential leasing	56,175			39,658
	$	384,875		$	440,871
Cost of revenue¹
Solar power systems, components, and other	290,241			319,648
Residential leasing	43,097			30,405
	333,338			350,053
Gross margin	51,537			90,818
Operating expenses:
Research and development¹	32,706			21,168
Sales, general and administrative¹	97,791			77,214
Restructuring charges	96			3,581
Total operating expenses	130,593			101,963
Operating loss	(79,056		)	(11,145		)
Other income (expense), net:
Interest income	697			556
Interest expense¹	(12,881		)	(15,681		)
Other, net	(6,232		)	(2,620		)
Other expense, net	(18,416		)	(17,745		)
Loss before income taxes and equity in earnings (loss) of unconsolidated investees	(97,472		)	(28,890		)
Provision for income taxes	(3,181		)	(2,351		)
Equity in earnings (loss) of unconsolidated investees	(764		)	2,191
Net loss	(101,417		)	(29,050		)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests	16,008			19,469
Net loss attributable to stockholders	$	(85,409	)	$	(9,581	)

Net loss per share attributable to stockholders:
Basic	$	(0.62	)	$	(0.07	)
Diluted	$	(0.62	)	$	(0.07	)
Weighted-average shares:
Basic	137,203			132,033
Diluted	137,203			132,033

The Company has related-party transactions with Total and its affiliates as well as unconsolidated entities in which the Company has a direct equity investment. These related-party transactions are recorded within "Revenue: Solar power systems and components," "Cost of revenue: Solar power systems and components," "Operating expenses: Research and development," "Operating expenses: Sales, general and administrative," and "Other income (expense), net: Interest expense" financial statement line items in the Consolidated Statements of Operations (see Note 2 and Note 9).

The accompanying notes are an integral part of these consolidated financial statements.

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SunPower Corporation

Consolidated Statements of Comprehensive Loss

(In thousands)

(unaudited)



	Three Months Ended
	April 3, 2016			March 29, 2015
Net loss	$	(101,417	)	$	(29,050	)
Components of comprehensive loss:
Translation adjustment	1,419			(2,003		)
Net change in derivatives (Note 11)	(6,745		)	(4,188		)
Income taxes	750			111
Net change in accumulated other comprehensive loss	(4,576		)	(6,080		)
Total comprehensive loss	(105,993		)	(35,130		)
Comprehensive loss attributable to noncontrolling interests and redeemable noncontrolling interests	16,008			19,469
Comprehensive loss attributable to stockholders	$	(89,985	)	$	(15,661	)

The accompanying notes are an integral part of these consolidated financial statements.

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SunPower Corporation

Consolidated Statements of Equity

(In thousands)

(unaudited)



				Common Stock
	Redeemable Noncontrolling Interests			Shares		Value			Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balances at January 3, 2016	$	69,104		136,711		$	137		$	2,359,917	$	(155,265	)	$	(8,023	)	$	(747,617	)	$	1,449,149		$	59,490		$	1,508,639
Net loss	(14,960		)	—		—			—		—			—			(85,409		)	(85,409		)	(1,048		)	(86,457		)
Other comprehensive loss	—			—		—			—		—			(4,576		)	—			(4,576		)	—			(4,576		)
Issuance of restricted stock to employees, net of cancellations	—			2,114		2			—		—			—			—			2			—			2
Stock-based compensation expense	—			—		—			16,854		—			—			—			16,854			—			16,854
Contributions from noncontrolling interests	26,216			—		—			—		—			—			—			—			(2,134		)	(2,134		)
Distributions to noncontrolling interests	(1,542		)	—		—			—		—			—			—			—			(3,767		)	(3,767		)
Purchases of treasury stock	—			(799	)	(1		)	—		(18,877		)	—			—			(18,878		)	—			(18,878		)
Balances at April 3, 2016	$	78,818		138,026		$	138		$	2,376,771	$	(174,142	)	$	(12,599	)	$	(833,026	)	$	1,357,142		$	52,541		$	1,409,683

The accompanying notes are an integral part of these consolidated financial statements.

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SunPower Corporation

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)



	Three Months Ended
	April 3, 2016			March 29, 2015
Cash flows from operating activities:
Net loss	$	(101,417	)	$	(29,050	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	42,117			28,563
Stock-based compensation	16,520			13,546
Non-cash interest expense	346			4,680
Equity in loss (earnings) of unconsolidated investees	764			(2,191		)
Excess tax benefit from stock-based compensation	—			(572		)
Deferred income taxes	(1,169		)	(5,078		)
Other, net	890			855
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	12,561			32,735
Costs and estimated earnings in excess of billings	(17,525		)	140,970
Inventories	(18,248		)	(108,072		)
Project assets	(179,376		)	(93,150		)
Prepaid expenses and other assets	(45,034		)	(25,090		)
Long-term financing receivables, net	(44,011		)	(29,198		)
Advances to suppliers	11,913			13,903
Accounts payable and other accrued liabilities	(69,974		)	(51,781		)
Billings in excess of costs and estimated earnings	26,866			5,621
Customer advances	(5,124		)	(10,099		)
Net cash used in operating activities	(369,901		)	(113,408		)
Cash flows from investing activities:
Increase in restricted cash and cash equivalents	(1,806		)	(18,828		)
Purchases of property, plant and equipment	(47,044		)	(24,564		)
Cash paid for solar power systems, leased and to be leased	(23,238		)	(19,403		)
Payments to 8point3 Energy Partners LP	(9,968		)	—
Cash paid for investments in unconsolidated investees	(9,752		)	—
Cash paid for intangibles	—			(526		)
Net cash used in investing activities	(91,808		)	(63,321		)
Cash flows from financing activities:
Cash paid for repurchase of convertible debt	—			(324,273		)
Proceeds from settlement of 4.50% Bond Hedge	—			74,628
Repayment of bank loans and other debt	(7,725		)	(7,946		)
Proceeds from issuance of non-recourse residential financing, net of issuance costs	28,339			—
Repayment of non-recourse residential financing	(1,065		)	(10,944		)
Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects	24,082			45,890
Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects	(5,309		)	(2,260		)
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs	79,440			90,718
Repayment of non-recourse power plant and commercial financing	(37,301		)	(90		)
Proceeds from exercise of stock options	—			3
Excess tax benefit from stock-based compensation	—			572
Purchases of stock for tax withholding obligations on vested restricted stock	(18,876		)	(38,704		)
Net cash provided by (used in) financing activities	61,585			(172,406		)
Effect of exchange rate changes on cash and cash equivalents	774			(5,467		)
Net decrease in cash and cash equivalents	(399,350		)	(354,602		)
Cash and cash equivalents, beginning of period	954,528			956,175
Cash and cash equivalents, end of period	$	555,178		$	601,573

Non-cash transactions:
Assignment of residential lease receivables to third parties	$	1,097		$	1,307
Costs of solar power systems, leased and to be leased, sourced from existing inventory	$	15,085		$	14,664
Costs of solar power systems, leased and to be leased, funded by liabilities	$	9,050		$	6,388
Costs of solar power systems under sale-leaseback financing arrangements, sourced from project assets	$	—		$	1,050
Property, plant and equipment acquisitions funded by liabilities	$	81,369		$	20,185
Net reclassification of cash proceeds offset by project assets in connection with the deconsolidation of assets sold to the 8point3 Group	$	8,726		$	—

The accompanying notes are an integral part of these consolidated financial statements.

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Note 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

SunPower Corporation (together with its subsidiaries, the "Company" or "SunPower") is a leading global energy company that delivers complete solar solutions to residential, commercial, and power plant customers worldwide through an array of hardware, software, and financing options and through utility-scale solar power system construction and development capabilities, operations and maintenance ("O&M") services, and "Smart Energy" solutions. SunPower's Smart Energy initiative is designed to add layers of intelligent control to homes, buildings and grids—all personalized through easy-to-use customer interfaces. Of all the solar cells commercially available to the mass market, the Company believes its solar cells have the highest conversion efficiency, a measurement of the amount of sunlight converted by the solar cell into electricity. SunPower Corporation is a majority owned subsidiary of Total Energies Nouvelles Activités USA ("Total"), a subsidiary of Total S.A. ("Total S.A.") (see Note 2).

The Company's President and Chief Executive Officer, as the chief operating decision maker ("CODM"), has organized the Company, manages resource allocations and measures performance of the Company's activities among three end-customer segments: (i) Residential Segment, (ii) Commercial Segment and (iii) Power Plant Segment. The Residential and Commercial Segments combined are referred to as Distributed Generation.

The Company’s Residential Segment refers to sales of solar energy solutions to residential end customers through a variety of means, including cash sales and long-term leases directly to end customers, sales to resellers, including the Company's third-party global dealer network, and sales of the Company's O&M services. The Company’s Commercial Segment refers to sales of solar energy solutions to commercial and public entity end customers through a variety of means, including direct sales of turn-key engineering, procurement and construction ("EPC") services, sales to the Company's third-party global dealer network, sales of energy under power purchase agreements ("PPAs"), and sales of the Company's O&M services. The Power Plant Segment refers to the Company's large-scale solar products and systems business, which includes power plant project development and project sales, EPC services for power plant construction, power plant O&M services and component sales for power plants developed by third parties, sometimes on a multi-year, firm commitment basis.

Basis of Presentation and Preparation

Principles of Consolidation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("United States" or "U.S.") and include the accounts of the Company, all of its subsidiaries and special purpose entities, as appropriate under consolidation accounting guidelines. Intercompany transactions and balances have been eliminated in consolidation. The assets of the special purpose entities that the Company establishes in connection with certain project financing arrangements for customers are not designed to be available to service the general liabilities and obligations of the Company.

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation in the Company's consolidated financial statements and the accompanying notes. Such reclassifications had no effect on previously reported results of operations or accumulated deficit.

Fiscal Years

The Company has a 52-to-53-week fiscal year that ends on the Sunday closest to December 31. Accordingly, every fifth or sixth year will be a 53-week fiscal year. The current fiscal year, fiscal 2016, is a 52-week fiscal year, while fiscal year 2015 was a 53-week fiscal year and had a 14-week fourth fiscal quarter. The first quarter of fiscal 2016 ended on April 3, 2016, while the first quarter of fiscal 2015 ended on March 29, 2015. The first quarters of fiscal 2016 and fiscal 2015 were both 13-week quarters.

Management Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates in these consolidated financial statements

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include percentage-of-completion for construction projects; allowances for doubtful accounts receivable and sales returns; inventory and project asset write-downs; stock-based compensation; estimates for future cash flows and economic useful lives of property, plant and equipment, goodwill, valuations for business combinations, other intangible assets, investments, and other long-term assets; the fair value and residual value of solar power systems; fair value of financial instruments; valuation of contingencies and certain accrued liabilities such as accrued warranty; and income taxes and tax valuation allowances and indemnities. Actual results could materially differ from those estimates.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued an update to the standards to simplify the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Early adoption is permitted. The new guidance is effective for the Company no later than the first quarter of fiscal 2017. The Company is evaluating the potential impact of this standard on its consolidated financial statements and disclosures.

In February 2016, the FASB issued an update to the standards to require lessees to recognize a lease liability and a right-of-use asset for all leases (lease terms of more than 12 months) at the commencement date. The new guidance is effective for the Company no later than the first quarter of fiscal 2019 and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company is evaluating the potential impact of this standard on its consolidated financial statements and disclosures.

In January 2016, the FASB issued an update to the standards to require equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The new guidance is effective for the Company no later than the first quarter of fiscal 2018 and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is permitted for the accounting guidance on financial liabilities under the fair value option. The Company is evaluating the potential impact of this standard on its consolidated financial statements and disclosures.

In July 2015, the FASB issued an update to the standards to simplify the measurement of inventory. The updated standard more closely aligns the measurement of inventory with that of International Financial Reporting Standards (“IFRS”) and amends the measurement standard from lower of cost or market to lower of cost or net realizable value. The new guidance is effective for the Company no later than the first quarter of fiscal 2017 and requires a prospective approach to adoption. Early adoption is permitted. The Company is evaluating the potential impact of this standard on its consolidated financial statements and disclosures.

In April 2015, the FASB issued an update to the standards to provide a practical expedient for the measurement date of defined benefit obligation and plan assets for reporting entities with fiscal year-ends that do not coincide with a month-end. The updated standard allows such entities to measure defined benefit plan assets and obligations using the month-end that is closest to the entity's fiscal year-end and apply that practical expedient consistently from year to year and to all plans, if an entity has more than one plan. The Company elected early adoption of the updated accounting standard, effective in the fourth quarter of fiscal 2015, and measured its defined benefit plan assets and obligations as of December 31, 2015, the calendar month-end closest to the Company’s fiscal year-end. The adoption of this updated accounting standard did not have a significant impact to the Company’s consolidated financial statements.

In February 2015, the FASB issued a new standard that modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The Company adopted the new accounting standard, effective in the first quarter of fiscal 2016. Adoption of the new accounting standard did not have a material impact to the Company's consolidated financial statements.

In May 2014, the FASB issued a new revenue recognition standard based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The FASB has issued several updates to the standard which i) clarify the application of the principal versus agent guidance; and ii) clarify the guidance relating to performance obligations and licensing. The new revenue recognition standard, amended by the updates, becomes effective for the Company in the first quarter of fiscal 2018 and is to be applied retrospectively using one of two prescribed methods. Early adoption is permitted. The Company is evaluating the available methods and the potential impact of this standard on its consolidated financial statements and disclosures.

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Other than as described above, there has been no issued accounting guidance not yet adopted by the Company that it believes is material or potentially material to its consolidated financial statements.

Note 2. TRANSACTIONS WITH TOTAL AND TOTAL S.A.

In June 2011, Total completed a cash tender offer to acquire 60% of the Company's then outstanding shares of common stock at a price of $23.25 per share, for a total cost of approximately $1.4 billion. In December 2011, the Company entered into a Private Placement Agreement with Total, under which Total purchased, and the Company issued and sold, 18.6 million shares of the Company's common stock for a purchase price of $8.80 per share, thereby increasing Total's ownership to approximately 66% of the Company's outstanding common stock as of that date. As of April 3, 2016, through the increase of the Company's total outstanding common stock due to the exercise of warrants and issuance of restricted and performance stock units, Total's ownership of the Company's outstanding common stock has decreased to approximately 57%.

Credit Support Agreement

On April 28, 2011, the Company and Total S.A. entered into a Credit Support Agreement (the "Credit Support Agreement") under which Total S.A. agreed to enter into one or more guarantee agreements (each a "Guaranty") with banks providing letter of credit facilities to the Company. Total S.A. will guarantee the Company's obligation to reimburse the applicable issuing bank for a draw on a letter of credit and pay interest thereon in accordance with the letter of credit facility between such bank and the Company. Under the Credit Support Agreement, the Company may also request that Total S.A. provide a Guaranty in support of the Company's payment obligations with respect to a letter of credit facility. The Company is required to pay Total S.A. a guarantee fee for each letter of credit that is the subject of a Guaranty under the Credit Support Agreement and was outstanding for all or part of the preceding calendar quarter. The Credit Support Agreement was amended on June 7, 2011, it became effective on June 28, 2011 in connection with the completion of the Tender Offer (the "CSA Effective Date"), and it was further amended on each of December 12, 2011 and December 14, 2012.

The Credit Support Agreement will terminate following the fifth anniversary of the CSA Effective Date, after the later of the payment in full of all obligations thereunder and the termination or expiration of each Guaranty provided thereunder.

Affiliation Agreement

The Company and Total have entered into an Affiliation Agreement that governs the relationship between Total and the Company (the "Affiliation Agreement"). Until the expiration of a standstill period specified in the Affiliation Agreement (the "Standstill Period"), and subject to certain exceptions, Total, Total S.A., any of their respective affiliates and certain other related parties (collectively the "Total Group") may not effect, seek, or enter into discussions with any third-party regarding any transaction that would result in the Total Group beneficially owning shares of the Company in excess of certain thresholds, or request the Company or the Company's independent directors, officers or employees, to amend or waive any of the standstill restrictions applicable to the Total Group.

The Affiliation Agreement imposes certain limitations on the Total Group's ability to seek to effect a tender offer or merger to acquire 100% of the outstanding voting power of the Company and imposes certain limitations on the Total Group's ability to transfer 40% or more of the outstanding shares or voting power of the Company to a single person or group that is not a direct or indirect subsidiary of Total S.A. During the Standstill Period, no member of the Total Group may, among other things, solicit proxies or become a participant in an election contest relating to the election of directors to the Company's Board of Directors.

The Affiliation Agreement provides Total with the right to maintain its percentage ownership in connection with any new securities issued by the Company, and Total may also purchase shares on the open market or in private transactions with disinterested stockholders, subject in each case to certain restrictions.

The Affiliation Agreement also imposes certain restrictions with respect to the Company's and its Board of Directors' ability to take certain actions, including specifying certain actions that require approval by the directors other than the directors appointed by Total and other actions that require stockholder approval by Total.

Research & Collaboration Agreement

Total and the Company have entered into a Research & Collaboration Agreement (the "R&D Agreement") that establishes a framework under which the parties engage in long-term research and development collaboration ("R&D Collaboration"). The R&D Collaboration encompasses a number of different projects, with a focus on advancing the

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Company's technology position in the crystalline silicon domain, as well as ensuring the Company's industrial competitiveness. The R&D Agreement enables a joint committee to identify, plan and manage the R&D Collaboration.

Compensation and Funding Agreement

In February 2012, the Company entered into a Compensation and Funding Agreement (the "Compensation and Funding Agreement") with Total S.A. that established the parameters for the terms of liquidity injections that may be required to be provided by Total S.A. to the Company from time to time. During the term of the Compensation and Funding Agreement, the Company is required to pay Total S.A. a guarantee fee in an amount equal to 2.75% per annum of the average amount of the Company's indebtedness that is guaranteed by Total S.A. pursuant to any guaranty issued in accordance with the terms of the Compensation and Funding Agreement during such quarter. Any payment obligations of the Company to Total S.A. under the Compensation and Funding Agreement that are not paid when due accrue interest until paid in full at a rate equal to 6-month U.S. LIBOR as in effect from time to time plus 5.00% per annum.

Upfront Warrant

In February 2012, the Company issued a warrant (the "Upfront Warrant") to Total S.A. to purchase 9,531,677 shares of the Company's common stock with an exercise price of $7.8685, subject to adjustment for customary anti-dilution and other events. The Upfront Warrant, which is governed by the Private Placement Agreement and the Compensation and Funding Agreement, is exercisable at any time for seven years after its issuance, provided that, so long as at least $25.0 million in aggregate of the Company's convertible debt remains outstanding, such exercise will not cause "any person," including Total S.A., to, directly or indirectly, including through one or more wholly-owned subsidiaries, become the "beneficial owner" (as such terms are defined in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934, as amended), of more than 74.99% of the voting power of the Company's common stock at such time, a circumstance which would trigger the repurchase or conversion of the Company's existing convertible debt.

0.75% Debentures Due 2018

In May 2013, the Company issued $300.0 million in principal amount of its 0.75% senior convertible debentures due 2018 (the "0.75% debentures due 2018"). $200.0 million in aggregate principal amount of the 0.75% debentures due 2018 were acquired by Total. The 0.75% debentures due 2018 are convertible into shares of the Company's common stock at any time based on an initial conversion price equal to $24.95 per share, which provides Total the right to acquire up to 8,017,420 shares of the Company's common stock. The applicable conversion rate may adjust in certain circumstances, including a fundamental change, as described in the indenture governing the 0.75% debentures due 2018 (see Note 10).

0.875% Debentures Due 2021

In June 2014, the Company issued $400.0 million in principal amount of its 0.875% senior convertible debentures due 2021 (the "0.875% debentures due 2021"). An aggregate principal amount of $250.0 million of the 0.875% debentures due 2021 were acquired by Total. The 0.875% debentures due 2021 are convertible into shares of the Company's common stock at any time based on an initial conversion price equal to $48.76 per share, which provides Total the right to acquire up to 5,126,775 shares of the Company's common stock. The applicable conversion rate may adjust in certain circumstances, including a fundamental change, as described in the indenture governing the 0.875% debentures due 2021 (see Note 10).

4.00% Debentures Due 2023

In December 2015, the Company issued $425.0 million in principal amount of its 4.00% senior convertible debentures due 2023 (the "4.00% debentures due 2023"). An aggregate principal amount of $100.0 million of the 4.00% debentures due 2023 were acquired by Total. The 4.00% debentures due 2023 are convertible into shares of the Company's common stock at any time based on an initial conversion price equal to $30.53 per share, which provides Total the right to acquire up to 3,275,680 shares of the Company's common stock. The applicable conversion rate may adjust in certain circumstances, including a fundamental change, as described in the indenture governing the 4.00% debentures due 2023 (see Note 10).

Joint Projects with Total and its Affiliates:

The Company enters into various EPC and O&M agreements relating to solar projects, including EPC and O&M services agreements relating to projects owned or partially owned by Total and its affiliates. As of April 3, 2016, the Company had $41.1 million of "Costs and estimated earnings in excess of billings" and $2.4 million of "Accounts receivable, net" on its Consolidated Balance Sheets related to projects in which Total and its affiliates have a direct or indirect material interest.

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Related-Party Transactions with Total and its Affiliates:



	Three Months Ended
(In thousands)	April 3, 2016		March 29, 2015
Revenue:
EPC, O&M, and components revenue under joint projects	$	40,927	$	755
Research and development expense:
Offsetting contributions received under the R&D Agreement	$	—	$	(422	)
Interest expense:
Guarantee fees incurred under the Credit Support Agreement	$	1,646	$	2,726
Interest expense incurred on the 0.75% debentures due 2018	$	375	$	375
Interest expense incurred on the 0.875% debentures due 2021	$	547	$	547
Interest expense incurred on the 4.00% debentures due 2023	$	1,000	n/a

Note 3. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table presents the changes in the carrying amount of goodwill under the Company's reportable business segments:



(In thousands)	Residential		Commercial			Power Plant		Total
As of January 3, 2016	$	32,180	$	10,314		$	15,641	$	58,135
Adjustments to goodwill	—		(570		)	—		(570		)
As of April 3, 2016	$	32,180	$	9,744		$	15,641	$	57,565

Other Intangible Assets

The following tables present details of the Company's acquired other intangible assets:



(In thousands)	Gross		Accumulated Amortization			Net
As of April 3, 2016
Patents and purchased technology	$	48,619	$	(8,504	)	$	40,115
Project pipeline assets	9,446		—			9,446
Purchased in-process research and development	3,700		(111		)	3,589
Other	500		(500		)	—
	$	62,265	$	(9,115	)	$	53,150

As of January 3, 2016
Patents and purchased technology	$	53,499	$	(5,328	)	$	48,171
Project pipeline assets	9,446		—			9,446
Purchased in-process research and development	3,700		—			3,700
Other	500		$	(375	)	125
	$	67,145	$	(5,703	)	$	61,442

Aggregate amortization expense for intangible assets totaled $8.3 million and $0.5 million for the three months ended April 3, 2016 and March 29, 2015, respectively.

As of April 3, 2016, the estimated future amortization expense related to intangible assets with finite useful lives is as follows:

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(In thousands)	Amount
Fiscal Year
2016 (remaining nine months)	$	12,844
2017	11,854
2018	12,014
2019	8,902
2020	6,317
	$	51,931

Note 4. BALANCE SHEET COMPONENTS



	As of
(In thousands)	April 3, 2016			January 3, 2016
Accounts receivable, net:
Accounts receivable, gross^1,2	$	196,720		$	207,860
Less: allowance for doubtful accounts	(17,493		)	(15,505		)
Less: allowance for sales returns	(1,784		)	(1,907		)
	$	177,443		$	190,448


¹	Includes short-term financing receivables associated with solar power systems leased of $14.1 million and $12.5 million as of April 3, 2016 and January 3, 2016, respectively (see Note 5).


²	Includes short-term retainage of $15.7 million and $11.8 million as of April 3, 2016 and January 3, 2016, respectively. Retainage refers to the earned, but unbilled, portion of a construction and development project for which payment is deferred by the customer until certain contractual milestones are met.



	As of
(In thousands)	April 3, 2016		January 3, 2016
Inventories:
Raw materials	$	104,177	$	124,297
Work-in-process	108,050		131,258
Finished goods	174,560		126,835
	$	386,787	$	382,390



	As of
(In thousands)	April 3, 2016		January 3, 2016
Prepaid expenses and other current assets:
Deferred project costs	$	117,027	$	67,479
VAT receivables, current portion	12,487		14,697
Deferred costs for solar power systems to be leased	46,032		40,988
Derivative financial instruments	5,819		8,734
Prepaid inventory	50,615		50,615
Other receivables	81,821		78,824
Other prepaid expenses	101,139		98,180
Other current assets	188		—
	$	415,128	$	359,517

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	As of
(In thousands)	April 3, 2016		January 3, 2016
Project assets - plants and land:
Project assets — plants	$	664,365	$	479,108
Project assets — land	4,403		5,416
	$	668,768	$	484,524
Project assets - plants and land, current portion	$	662,868	$	479,452
Project assets - plants and land, net of current portion	$	5,900	$	5,072



	As of
(In thousands)	April 3, 2016			January 3, 2016
Property, plant and equipment, net:
Manufacturing equipment¹	$	630,085		$	556,963
Land and buildings	32,134			32,090
Leasehold improvements	388,545			244,098
Solar power systems²	141,986			141,075
Computer equipment	109,090			103,443
Furniture and fixtures	11,216			10,640
Construction-in-process	116,828			247,511
	1,429,884			1,335,820
Less: accumulated depreciation	(626,940		)	(604,590		)
	$	802,944		$	731,230


¹	The Company's mortgage loan agreement with International Finance Corporation ("IFC") is collateralized by certain manufacturing equipment with a net book value of $77.2 million and $85.1 million as of April 3, 2016 and January 3, 2016, respectively.


²	Includes $110.4 million of solar power systems associated with sale-leaseback transactions under the financing method as of both April 3, 2016 and January 3, 2016, which are depreciated using the straight-line method to their estimated residual values over the lease terms of up to 20 years (see Note 5).



	As of
(In thousands)	April 3, 2016		January 3, 2016
Property, plant and equipment, net by geography¹:
Philippines	$	525,306	$	460,420
United States	204,402		201,419
Mexico	47,932		44,164
Europe	23,178		22,962
Other	2,126		2,265
	$	802,944	$	731,230


¹	Property, plant and equipment, net by geography is based on the physical location of the assets.



	As of
(In thousands)	April 3, 2016		January 3, 2016
Other long-term assets:
Equity method investments	$	177,534	$	186,405
Cost method investments	45,602		36,369
Other	76,131		75,201
	$	299,267	$	297,975

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	As of
(In thousands)	April 3, 2016		January 3, 2016
Accrued liabilities:
Employee compensation and employee benefits	41,019		59,476
Deferred revenue	19,393		19,887
Short-term residential lease financing	13,340		7,395
Interest payable	11,828		8,165
Short-term warranty reserves	8,971		16,639
Restructuring reserve	1,614		1,823
VAT payables	2,899		4,225
Derivative financial instruments	10,811		2,316
Inventory payable	50,615		50,615
Liability due to 8point3 Energy Partners	—		9,952
Proceeds from 8point3 Energy Partners attributable to pre-COD projects	4,887		—
Other	118,125		133,004
	$	283,502	$	313,497



	As of
(In thousands)	April 3, 2016		January 3, 2016
Other long-term liabilities:
Deferred revenue	$	178,903	$	179,779
Long-term warranty reserves	157,469		147,488
Long-term sale-leaseback financing	126,230		125,286
Long-term residential lease financing with 8point3 Energy Partners	29,400		29,389
Unrecognized tax benefits	42,839		43,297
Long-term pension liability	13,142		12,014
Derivative financial instruments	948		1,033
Other	13,792		26,271
	$	562,723	$	564,557



	As of
(In thousands)	April 3, 2016			January 3, 2016
Accumulated other comprehensive loss:
Cumulative translation adjustment	$	(9,745	)	$	(11,164	)
Net unrealized gain (loss) on derivatives	(803		)	5,942
Net loss on long-term pension liability adjustment	(2,055		)	(2,055		)
Deferred taxes	4			(746		)
	$	(12,599	)	$	(8,023	)

Note 5. 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.

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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:

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(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).

Note 6. FAIR VALUE MEASUREMENTS

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement (observable inputs are the preferred basis of valuation):


•	Level 1 — Quoted prices in active markets for identical assets or liabilities.


•	Level 2 — Measurements are inputs that are observable for assets or liabilities, either directly or indirectly, other than quoted prices included within Level 1.


•	Level 3 — Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company measures certain assets and liabilities at fair value on a recurring basis. There were no transfers between fair value measurement levels during any presented period. The Company did not have any assets or liabilities measured at fair value on a recurring basis requiring Level 3 inputs as of April 3, 2016 or January 3, 2016.

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The following table summarizes the Company's assets and liabilities measured and recorded at fair value on a recurring basis as of April 3, 2016 and January 3, 2016:



	April 3, 2016						January 3, 2016
(In thousands)	Total		Level 1		Level 2		Total		Level 1		Level 2
Assets
Cash and cash equivalents¹:
Money market funds	$	160,859	$	160,859	$	—	$	540,000	$	540,000	$	—
Prepaid expenses and other current assets:
Derivative financial instruments (Note 11)	5,819		—		5,819		8,734		—		8,734
Total assets	$	166,678	$	160,859	$	5,819	$	548,734	$	540,000	$	8,734
Liabilities
Accrued liabilities:
Derivative financial instruments (Note 11)	10,811		—		10,811		2,316		—		2,316
Other long-term liabilities:
Derivative financial instruments (Note 11)	948		—		948		1,033		—		1,033
Total liabilities	$	11,759	$	—	$	11,759	$	3,349	$	—	$	3,349

The Company's cash equivalents consist of money market fund instruments and commercial paper that are classified as available-for-sale and are highly liquid investments with original maturities of 90 days or less. The Company's money market fund instruments are categorized within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical instruments in active markets.

Other financial instruments, including the Company's accounts receivable, accounts payable and accrued liabilities, are carried at cost, which generally approximates fair value due to the short-term nature of these instruments.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company measures certain investments and non-financial assets (including project assets, property, plant and equipment, and other intangible assets) at fair value on a non-recurring basis in periods after initial measurement in circumstances when the fair value of such asset is impaired below its recorded cost.

Held-to-Maturity Debt Securities

The Company's debt securities, classified as held-to-maturity, are Philippine government bonds that the Company maintains as collateral for business transactions within the Philippines. These bonds have various maturity dates and are classified as "Restricted long-term marketable securities" on the Company's Consolidated Balance Sheets. As of April 3, 2016 and January 3, 2016 these bonds had a carrying value of $6.6 million and $6.5 million, respectively. The Company records such held-to-maturity investments at amortized cost based on its ability and intent to hold the securities until maturity. The Company monitors for changes in circumstances and events that would affect its ability and intent to hold such securities until the recorded amortized costs are recovered. No other-than-temporary impairment loss was incurred during any presented period. The held-to-maturity debt securities were categorized in Level 2 of the fair value hierarchy.

Equity and Cost Method Investments

The Company holds equity investments in non-consolidated entities that are accounted for under both the equity and cost method. The Company monitors these investments, which are included in "Other long-term assets" in its Consolidated Balance Sheets, for impairment and records reductions in the carrying values when necessary. Circumstances that indicate an other-than-temporary decline include Level 2 and Level 3 measurements such as the valuation ascribed to the issuing company in subsequent financing rounds, decreases in quoted market prices, and declines in the results of operations of the issuer.

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As of April 3, 2016 and January 3, 2016, the Company had $177.5 million and $186.4 million, respectively, in investments accounted for under the equity method (see Note 9). As of April 3, 2016 and January 3, 2016, the Company had $45.6 million and $36.4 million respectively, in investments accounted for under the cost method.

Note 7. RESTRUCTURING

During fiscal 2011, 2012 and 2014, the Company implemented approved restructuring plans, related to all segments, to align with changes in the global solar market which included the consolidation of the Company's Philippine manufacturing operations as well as actions to accelerate operating cost reduction and improve overall operating efficiency. These restructuring activities were substantially complete as of April 3, 2016; however, the Company expects to continue to incur costs as it finalizes previous estimates and actions in connection with these plans, primarily due to other costs, such as legal services.

The following table summarizes the restructuring charges recognized in the Company's Consolidated Statements of Operations:



	Three Months Ended
(In thousands)	April 3, 2016		March 29, 2015		Cumulative To Date
Non-cash impairment charges	$	—	$	—	$	61,320
Severance and benefits	—		1,931		61,599
Lease and related termination costs	—		—		6,984
Other costs¹	96		1,650		13,633
Total restructuring charges	$	96	$	3,581	$	143,536

The following table summarizes the restructuring reserve activity during the three months ended April 3, 2016:



	Three Months Ended
(In thousands)	January 3, 2016		Charges (Benefits)		Payments			April 3, 2016
Severance and benefits	$	395	$	—	$	16		$	411
Lease and related termination costs	743		—		(127		)	616
Other costs¹	685		96		(194		)	587
Total restructuring liability	$	1,823	$	96	$	(305	)	$	1,614


¹	Other costs primarily represent associated legal services and costs of relocating employees.

Note 8. COMMITMENTS AND CONTINGENCIES

Facility and Equipment Lease Commitments

The Company leases certain facilities under non-cancellable operating leases from unaffiliated third parties. As of April 3, 2016, future minimum lease payments for facilities under operating leases were $47.5 million, to be paid over the remaining contractual terms of up to 8 years. The Company also leases certain buildings, machinery and equipment under non-cancellable capital leases. As of April 3, 2016, future minimum lease payments for assets under capital leases were $5.9 million, to be paid over the remaining contractual terms of up to 7 years.

Purchase Commitments

The Company purchases raw materials for inventory and manufacturing equipment from a variety of vendors. During the normal course of business, in order to manage manufacturing lead times and help assure adequate supply, the Company enters into agreements with contract manufacturers and suppliers that either allow them to procure goods and services based on specifications defined by the Company, or that establish parameters defining the Company's requirements. In certain instances, these agreements allow the Company the option to cancel, reschedule or adjust the Company's requirements based on its business needs before firm orders are placed. Consequently, not all of the Company's disclosed purchase commitments arising from these agreements are firm, non-cancellable, and unconditional commitments.

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The Company also has agreements with several suppliers, including some of its non-consolidated investees, for the procurement of polysilicon, ingots, wafers, and Solar Renewable Energy Credits, among others, which specify future quantities and pricing of products to be supplied by the vendors for periods up to 10 years and provide for certain consequences, such as forfeiture of advanced deposits and liquidated damages relating to previous purchases, in the event that the Company terminates the arrangements.

Future purchase obligations under non-cancellable purchase orders and long-term supply agreements as of April 3, 2016 are as follows:



(In thousands)	Fiscal 2016 (remaining nine months)		Fiscal 2017	Fiscal 2018	Fiscal 2019	Fiscal 2020	Thereafter	Total^1,2,3
Future purchase obligations	$	839,386	350,325	200,475	175,696	161,832	3,000	$	1,730,714


¹	Total future purchase obligations as of April 3, 2016 include $181.2 million to related parties.


²	Total future purchase obligations were composed of $249.3 million related to non-cancellable purchase orders and $1.5 billion related to long-term supply agreements.

³During fiscal 2015, we did not fulfill all of the purchase commitments we were otherwise obligated to take by December 31, 2015, as specified in related contracts with a supplier. As of April 3, 2016, the Company has recorded an offsetting asset, recorded within "Prepaid expenses and other current assets," and liability, recorded within "Accrued liabilities," totaling $50.6 million. This amount represents the unfulfilled amount as of that date as the Company expects to satisfy the obligation via purchases of inventory in fiscal 2016, within the applicable contractual cure period.

The Company expects that all obligations related to non-cancellable purchase orders for manufacturing equipment will be recovered through future cash flows of the solar cell manufacturing lines and solar panel assembly lines when such long-lived assets are placed in service. Factors considered important that could result in an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of use of acquired assets, and significant negative industry or economic trends. Obligations related to non-cancellable purchase orders for inventories match current and forecasted sales orders that will consume these ordered materials and actual consumption of these ordered materials are compared to expected demand regularly. The Company anticipates total obligations related to long-term supply agreements for inventories will be recovered because quantities are less than management's expected demand for its solar power products. The terms of the long-term supply agreements are reviewed by management and the Company assesses the need for any accruals for estimated losses on adverse purchase commitments, such as lower of cost or market value adjustments that will not be recovered by future sales prices, forfeiture of advanced deposits and liquidated damages, as necessary.

Advances to Suppliers

As noted above, the Company has entered into agreements with various vendors, some of which are structured as "take or pay" contracts, that specify future quantities and pricing of products to be supplied. Certain agreements also provide for penalties or forfeiture of advanced deposits in the event the Company terminates the arrangements. Under certain agreements, the Company was required to make prepayments to the vendors over the terms of the arrangements. As of April 3, 2016 and January 3, 2016, advances to suppliers totaled $347.2 million and $359.1 million, respectively, of which $95.4 million and $85.0 million, respectively, is classified as short-term in the Company's Consolidated Balance Sheets. Two suppliers accounted for 84% and 15% of total advances to suppliers, respectively, as of April 3, 2016, and 82% and 16%, respectively, as of January 3, 2016.

Advances from Customers

The Company has entered into other agreements with customers who have made advance payments for solar power products and systems. These advances will be applied as shipments of product occur or upon completion of certain project milestones. The estimated utilization of advances from customers as of April 3, 2016 is as follows:

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(In thousands)	Fiscal 2016 (remaining nine months)		Fiscal 2017	Fiscal 2018	Fiscal 2019	Fiscal 2020	Thereafter	Total
Estimated utilization of advances from customers	$	19,267	36,319	27,039	28,842	43,263	—	$	154,730

In fiscal 2010, the Company and its joint venture, AUO SunPower Sdn. Bhd. ("AUOSP"), entered into an agreement under which the Company resells to AUOSP polysilicon purchased from a third-party supplier. Advance payments provided by AUOSP related to such polysilicon are then made by the Company to the third-party supplier. These advance payments are applied as a credit against AUOSP’s polysilicon purchases from the Company. Such polysilicon is used by AUOSP to manufacture solar cells that are sold to the Company on a "cost-plus" basis. As of April 3, 2016 and January 3, 2016, outstanding advance payments received from AUOSP totaled $143.2 million and $148.9 million, respectively, of which $23.8 million and $22.7 million, respectively, was classified as short-term in the Company's Consolidated Balance Sheets, based on projected product shipment dates.

Product Warranties

The following table summarizes accrued warranty activity for the three months ended April 3, 2016 and March 29, 2015, respectively:



	Three Months Ended
(In thousands)	April 3, 2016			March 29, 2015
Balance at the beginning of the period	$	164,127		$	154,648
Accruals for warranties issued during the period	5,879			8,161
Settlements and adjustments during the period	(3,566		)	(8,711		)
Balance at the end of the period	$	166,440		$	154,098

Contingent Obligations

Project agreements entered into with the Company's Commercial and Power Plant customers often require the Company to undertake obligations including: (i) system output performance warranties; (ii) system maintenance; (iii) penalty payments or customer termination rights if the system the Company is constructing is not commissioned within specified timeframes or other milestones are not achieved; and (iv) system put-rights whereby the Company could be required to buy back a customer's system at fair value on specified future dates if certain minimum performance thresholds are not met for specified periods. Historically, the Company's systems have performed significantly above the performance warranty thresholds, and there have been no cases in which the Company has had to buy back a system.

Future Financing Commitments

The Company is required to provide certain funding under the joint venture agreement with AU Optronics Singapore Pte. Ltd. ("AUO") and other unconsolidated investees, subject to certain conditions (see Note 9). As of April 3, 2016, the Company's financing obligations related to these agreements are as follows:



(In thousands)	Amount
Year
2016 (remaining 9 months)	179,632
2017	3,169
	$	182,801

Liabilities Associated with Uncertain Tax Positions

Total liabilities associated with uncertain tax positions were $42.8 million and $43.3 million as of April 3, 2016 and January 3, 2016, respectively. These amounts are included in "Other long-term liabilities" in the Company's Consolidated Balance Sheets in their respective periods as they are not expected to be paid within the next 12 months. Due to the complexity and uncertainty associated with its tax positions, the Company cannot make a reasonably reliable estimate of the period in

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which cash settlement, if any, would be made for its liabilities associated with uncertain tax positions in other long-term liabilities.

Indemnifications

The Company is a party to a variety of agreements under which it may be obligated to indemnify the counterparty with respect to certain matters. Typically, these obligations arise in connection with contracts and license agreements or the sale of assets, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of warranties, representations and covenants related to such matters as title to assets sold, negligent acts, damage to property, validity of certain intellectual property rights, non-infringement of third-party rights, and certain tax related matters including indemnification to customers under §48(c) solar commercial investment tax credit ("ITC") and U.S. Treasury Department ("Treasury Department") grant payments under Section 1603 of the American Recovery and Reinvestment Act (each a "Cash Grant"). In each of these circumstances, payment by the Company is typically subject to the other party making a claim to the Company that is contemplated by and valid under the indemnification provisions of the particular contract, which provisions are typically contract-specific, as well as bringing the claim under the procedures specified in the particular contract. These procedures usually allow the Company to challenge the other party's claims or, in case of breach of intellectual property representations or covenants, to control the defense or settlement of any third party claims brought against the other party. Further, the Company's obligations under these agreements may be limited in terms of activity (typically to replace or correct the products or terminate the agreement with a refund to the other party), duration and/or amounts. In some instances, the Company may have recourse against third parties and/or insurance covering certain payments made by the Company.

In certain circumstances the Company has provided indemnification to customers and investors under which the Company is contractually obligated to compensate these parties for losses they may suffer as a result of reductions in benefits received under ITC and Treasury Cash Grant programs. The Company applies for ITC and Cash Grant incentives based on guidance provided by the Internal Revenue Service ("IRS") and the Treasury Department, which include assumptions regarding the fair value of the qualified solar power systems, among others. Certain of the Company’s development agreements, sale-leaseback arrangements, and financing arrangements with tax equity investors, incorporate assumptions regarding the future level of incentives to be received, which in some instances may be claimed directly by its customers and investors. Generally, such obligations would arise as a result of reductions to the value of the underlying solar power systems as assessed by the IRS. At each balance sheet date, the Company assesses and recognizes, when applicable, the potential exposure from these obligations based on all the information available at that time, including any audits undertaken by the IRS. The maximum potential future payments that the Company could have to make under this obligation would depend on the difference between the eligible basis claimed on the tax filing for the solar energy systems sold or transferred to indemnified parties and the values that the IRS may redetermine as the eligible basis for the systems for purposes of claiming ITCs or U.S. Treasury grants. The Company uses eligible basis for tax filing purposes determined with the assistance of independent third-party appraisals to determine the ITCs that are passed-through to and claimed by the indemnified parties. Since the Company cannot determine future revisions to Treasury Department guidelines governing system values, how the IRS will evaluate system values used in claiming ITCs, or U.S. Treasury grants, or how its customers and investors have utilized these benefits in their own filings, the Company is unable to reliably estimate the maximum potential future payments that it could have to make under the Company’s contractual investor obligation as of each reporting date.

Defined Benefit Pension Plans

The Company maintains defined benefit pension plans for the majority of its non-U.S. employees. Benefits under these plans are generally based on an employee’s years of service and compensation. Funding requirements are determined on an individual country and plan basis and are subject to local country practices and market circumstances. The funded status of the pension plans, which represents the difference between the benefit obligation and fair value of plan assets, is calculated on a plan-by-plan basis. The benefit obligation and related funded status are determined using assumptions as of the end of each fiscal year. The Company recognizes the overfunded or underfunded status of its pension plans as an asset or liability on its Consolidated Balance Sheets. As of April 3, 2016 and January 3, 2016, the underfunded status of the Company’s pension plans, presented in "Other long-term liabilities" on the Company’s Consolidated Balance Sheets, was $13.1 million and $12.0 million, respectively. The impact of transition assets and obligations and actuarial gains and losses are recorded in "Accumulated other comprehensive loss", and are generally amortized as a component of net periodic cost over the average remaining service period of participating employees. Total other comprehensive gain related to the Company’s benefit plans was zero for the three months ended April 3, 2016.

Legal Matters

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Tax Benefit Indemnification Litigation

On March 19, 2014, a lawsuit was filed by NRG Solar LLC, now known as NRG Renew LLC (“NRG”), against SunPower Corporation, Systems, a wholly-owned subsidiary of the Company (“SunPower Systems”), in the Superior Court of Contra Costa County, California. The complaint asserts that, according to the indemnification provisions in the contract pertaining to SunPower Systems’ sale of a large California solar project to NRG, SunPower Systems owes NRG $75.0 million in connection with certain tax benefits associated with the project that were approved by the Treasury Department for an amount that was less than expected. The Company does not believe that the facts support NRG’s claim under the operative indemnification provisions and is vigorously contesting the claim. Additionally, SunPower Systems filed a cross-complaint against NRG seeking damages in excess of $7.5 million for breach of contract and related claims arising from NRG’s failure to fulfill its obligations under the contract, including its obligation to take “reasonable, available steps” to engage the Treasury Department. The Company is currently unable to determine if the resolution of this matter will have a material effect on the Company's consolidated financial statements.

First Philec Arbitration

On January 28, 2015, an arbitral tribunal of the International Court of Arbitration of the International Chamber of Commerce issued a first 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"), our wholly-owned subsidiary. FPSC is a joint venture of FPEC and SPML for the purpose of slicing silicon wafers from ingots. 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. In its first partial award, the tribunal ordered that (i) SPML must purchase FPEC’s interests in FPSC for an aggregate of $30.3 million, and (ii) after completing the purchase of FPEC’s controlling interest in FPSC, SPML must pay FPSC damages in the amount of $25.2 million. The arbitral tribunal issued its second partial award dated July 14, 2015, which ordered that (i) the price payable by SPML to FPEC for its interests in FPSC be reduced from $30.3 million to $23.2 million, (ii) FPEC’s request for interest is refused, and (iii) the payment and transfer of shares between FPEC and SPML is to take place in accordance with the procedure agreed between the parties. The tribunal issued its final award dated September 30, 2015, which ordered that (i) each side should bear its own costs and attorneys' fees, and (ii) the arbitration costs should be split between the parties evenly.

SPML has filed a challenge to both the first and second partial awards with the High Court in Hong Kong. The hearing on the challenge is scheduled for June 14 and 15, 2016 in Hong Kong. SPML has also filed applications to the Court in the Philippines to: (i) prevent FPSC or FPEC from enforcing the awards pending the outcome of the challenge in Hong Kong; and (ii) gain access to FPSC's books and records. The application to prevent enforcement of the award has not been ruled on. The application for access was granted, and the inspection of FPSC's books is ongoing.

As of April 3, 2016, the Company recorded an accrual of $48.4 million related to this matter based on the Company's best estimate of probable loss.

AUO Arbitration

On April 17, 2015, SunPower Technology Ltd. ("SPTL"), a wholly-owned subsidiary, commenced an arbitration before the ICC International Court of Arbitration against AUO and AU Optronics Corporation, the ultimate parent company of AUO ("AUO Corp.," and together with AUO, the “AUO Group”), for breaches of the AUOSP Joint Venture Agreement and associated agreements (the "JVA"). SPTL’s claim alleges that, among other things, the AUO Group has sold solar modules containing cells manufactured by AUOSP in violation of provisions in the JVA that set geographical restrictions on sales activities as well as provisions that restrict each party’s use of the other’s confidential information. SPTL seeks approximately $23.0 million in damages, as well as the right to purchase AUO's shares in SPTL at 70% of “fair market value” determined as provided under the JVA.

On June 23, 2015, the AUO Group filed and served its formal Memorial of Claim and Counterclaims against SPTL and the Company (collectively, the "SunPower Group"). In its counterclaim, the AUO Group alleges breach of contract, breach of covenant of good faith and fair dealing, several tort causes of action, and improper use of the AUO Group’s proprietary manufacturing expertise. The AUO Group seeks $20.0 million in lost profits and $48.0 million in disgorgement from the SunPower Group, and an order requiring SPTL to purchase AUO’s shares in SPTL at 150% of “fair market value” determined as provided under the JVA. The hearing for the arbitration has not been set. Depending upon the outcome of this matter and other related factors, it is possible that SPTL's investment in AUOSP may not be fully recoverable. Based on the significant uncertainties that currently exist, the Company is currently unable to determine whether the resolution of this matter will have a material effect on the Company’s consolidated financial statements.

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Other Litigation

The Company is also a party to various other litigation matters and claims that arise from time to time in the ordinary course of its business. While the Company believes that the ultimate outcome of such matters will not have a material adverse effect on the Company, their outcomes are not determinable and negative outcomes may adversely affect the Company's financial position, liquidity or results of operations.

Note 9. EQUITY METHOD INVESTMENTS

As of April 3, 2016 and January 3, 2016, the Company's carrying value of its equity method investments totaled $177.5 million and $186.4 million, respectively, and is classified as "Other long-term assets" in its Consolidated Balance Sheets. The Company's share of its earnings (loss) from equity method investments is reflected as "Equity in earnings of unconsolidated investees" in its Consolidated Statements of Operations.

Equity Investment and Joint Venture with AUOSP

In fiscal 2010, the Company, AUO and AUO Corp. formed the joint venture AUOSP. The Company and AUO each own 50% of AUOSP. AUOSP owns a solar cell manufacturing facility in Malaysia and manufactures solar cells and sells them on a "cost-plus" basis to the Company and AUO.

In connection with the joint venture agreement, the Company and AUO also entered into licensing and joint development, supply, and other ancillary transaction agreements. Through the licensing agreement, the Company and AUO licensed to AUOSP, on a non-exclusive, royalty-free basis, certain background intellectual property related to solar cell manufacturing (in the case of the Company) and manufacturing processes (in the case of AUO). Under the seven-year supply agreement with AUOSP, renewable by the Company for one-year periods thereafter, the Company is committed to purchase 80% of AUOSP's total annual output allocated on a monthly basis to the Company. The Company and AUO have the right to reallocate supplies from time to time under a written agreement. In fiscal 2010, the Company and AUOSP entered into an agreement under which the Company will resell to AUOSP polysilicon purchased from a third-party supplier and AUOSP will provide prepayments to the Company related to such polysilicon, which prepayment will then be made by the Company to the third-party supplier.

The Company and AUO are not permitted to transfer any of AUOSP's shares held by them, except to each other. The Company and AUO agreed to each contribute additional amounts through fiscal 2016 amounting to $169.0 million, or such lesser amount as the parties may mutually agree. In addition, if AUOSP, the Company or AUO requests additional equity financing to AUOSP, then the Company and AUO will each be required to make additional cash contributions of up to $50.0 million in the aggregate.

The Company has concluded that it is not the primary beneficiary of AUOSP since, although the Company and AUO are both obligated to absorb losses or have the right to receive benefits, the Company alone does not have the power to direct the activities of AUOSP that most significantly impact its economic performance. In making this determination the Company considered the shared power arrangement, including equal board governance for significant decisions, elective appointment, and the fact that both parties contribute to the activities that most significantly impact the joint venture's economic performance. The Company accounts for its investment in AUOSP using the equity method as a result of the shared power arrangement. As of April 3, 2016, the Company's maximum exposure to loss as a result of its equity investment in AUOSP is limited to the carrying value of the investment. As of April 3, 2016 and January 3, 2016, the Company's investment in AUOSP had a carrying value of $205.1 million and $202.3 million, respectively.

Equity Investment in Huaxia CPV (Inner Mongolia) Power Co., Ltd. ("CCPV")

In December 2012, the Company entered into an agreement with Tianjin Zhonghuan Semiconductor Co. Ltd., Inner Mongolia Power Group Co. Ltd. and Hohhot Jinqiao City Development Company Co., Ltd. to form CCPV, a jointly owned entity to manufacture and deploy the Company's LCPV concentrator technology in Inner Mongolia and other regions in China. CCPV is based in Hohhot, Inner Mongolia. The establishment of the entity was subject to approval of the Chinese government, which was received in the fourth quarter of fiscal 2013. In December 2013, the Company made a $16.4 million equity investment in CCPV, for a 25% equity ownership.

The Company has concluded that it is not the primary beneficiary of CCPV since, although the Company is obligated to absorb losses and has the right to receive benefits, the Company alone does not have the power to direct the activities of CCPV

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that most significantly impact its economic performance. The Company accounts for its investment in CCPV using the equity method since the Company is able to exercise significant influence over CCPV due to its board position.

Equity Investment in Diamond Energy Pty Ltd. ("Diamond Energy")

In October 2012, the Company made a $3.0 million equity investment in Diamond Energy, an alternative energy project developer and clean electricity retailer headquartered in Melbourne, Australia, in exchange for a 25% equity ownership.

The Company has concluded that it is not the primary beneficiary of Diamond Energy since, although the Company is obligated to absorb losses and has the right to receive benefits, the Company alone does not have the power to direct the activities of Diamond that most significantly impact its economic performance. The Company accounts for its investment in Diamond using the equity method since the Company is able to exercise significant influence over Diamond due to its board position.

Equity Investment in 8point3 Energy Partners

In June 2015, 8point3 Energy Partners, a joint YieldCo vehicle 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, consummated its initial public offering ("IPO") and its Class A shares are now listed on the NASDAQ Global Select Market under the trading symbol “CAFD”.

Immediately after the IPO, the Company contributed a portfolio of 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 of $371 million 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 (“IDRs”) in OpCo. Holdings, OpCo, 8point3 Energy Partners and their respective subsidiaries are referred to herein as the “8point3 Group.” Additionally, pursuant to a Right of First Offer Agreement between the Company and OpCo, the 8point3 Group has rights of first offer on interests in an additional portfolio of the Company’s solar energy projects that are currently contracted or are expected to be contracted before being sold by the Company to other parties (the “ROFO Projects”). In connection with the IPO, the Company also entered into O&M, asset management and management services agreements with the 8point3 Group. The services the Company provides under these agreements are priced consistently with market rates for such services and the agreements are terminable by the 8point3 Group for convenience.

The Company has concluded that it is not the primary beneficiary of the 8point3 Group or any of its individual subsidiaries since, although the Sponsors are both obligated to absorb losses or have the right to receive benefits, the Company alone does not have the power to direct the activities of the 8point3 Group that most significantly impact its economic performance. In making this determination the Company considered, among other factors, the equal division between the Sponsors of management rights in the 8point3 Group and the corresponding equal influence over its significant decisions, the role and influence of the independent directors on the board of directors of the general partner of 8point3 Energy Partners, and how both Sponsors contribute to the activities that most significantly impact the 8point3 Group's economic performance. The Company accounts for its investment in the 8point3 Group using the equity method because the Company determined that, notwithstanding the division of management and ownership interests between the Sponsors, the Company exercises significant influence over the operations of the 8point3 Group.

Future quarterly distributions from OpCo are subject to certain forbearance and subordination periods. During the forbearance period, the Sponsors have agreed to forego any distributions declared on their common and subordinated units. The forbearance period will end when, on or after March 1, 2016, the board of directors of the general partner of 8point3 Energy Partners, with the concurrence of its conflicts committee, determines that OpCo will be able to earn and pay at least the minimum quarterly distribution on each of its outstanding common and subordinated units for such quarter and the successive quarter. As of April 3, 2016, the forbearance period remained in effect.

During the subordination period, holders of the subordinated units are not entitled to receive any distributions until the common units have received their minimum quarterly distribution plus any arrearages in the payment of minimum distributions from prior quarters. Approximately 70% of the Company’s OpCo units are subject to subordination. The subordination period will end after OpCo has earned and paid minimum quarterly distributions for three years ending on or after August 31, 2018 and there are no outstanding arrearages on common units. Notwithstanding the foregoing, the subordination period could end after OpCo has earned and paid 150% of minimum quarterly distributions, plus the related distribution on the incentive

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distribution rights, for one year ending on or after August 31, 2016 and there are no outstanding arrearages on common units. At the end of the subordination period, all subordinated units will convert to common units on a one-for-one basis. The Company also, through its interests in Holdings, holds IDRs in OpCo, which represent rights to incremental distributions after certain distribution thresholds are met.

In June 2015, OpCo entered into a $525.0 million senior secured credit facility, consisting of a $300.0 million term loan facility, a $25.0 million delayed draw term loan facility, and a $200.0 million revolving credit facility (the “8point3 Credit Facility”). Proceeds from the term loan were used to make initial distributions to the Sponsors. The 8point3 Credit Facility is secured by a pledge of the Sponsors’ equity interests in OpCo.

Under relevant guidance for leasing transactions, the Company treated the portion of the sale of the residential lease portfolio originally sold to the 8point3 Group in connection with the IPO transaction, composed of operating leases and unguaranteed sales-type lease residual values, as a borrowing and reflected the cash proceeds attributable to this portion of the residential lease portfolio as liabilities recorded within “Accrued liabilities” and “Other long-term liabilities” in the Consolidated Balance Sheets (see Note 4). As of April 3, 2016 and January 3, 2016 the operating leases and the unguaranteed sales-type lease residual values which were sold to the 8point3 Group had an aggregate carrying value of $77 million and $78 million, respectively, on the Company's Consolidated Balance Sheets.

During the first quarter of fiscal 2016, the Company sold its first two ROFO Projects to 8point3 Energy Partners, comprised of the 60 MW Hooper utility-scale power plant in Colorado and a 20 MW commercial project. The Company accounted for the sale of Hooper as a partial sale of real estate and recognized revenue equal to its total project costs. No profit on the sale of Hooper was recognized as unconditional cash proceeds did not exceed total project costs, and the derecognition resulted in a net $8.7 million reduction in the carrying value of the Company’s investments in the 8point3 Group. The remaining project has not yet reached its commercial operations date and therefore, the Company continues to record the project on its Consolidated Balance Sheet as of April 3, 2016. Please refer to the treatment outlined in "Item 1. Financial Statements—Notes to Consolidated Financial Statements—Note 3. 8point3 Energy Partners LP" in our Annual Report on Form 10-K for the fiscal year ended January 3, 2016 for further information related to the Company's accounting for transactions with the 8point3 Group. The net cash proceeds from the sales of these projects to the 8point3 Group as well as related proceeds from tax equity investors were classified as operating cash inflows in the Consolidated Statement of Cash Flows.

As of April 3, 2016 and January 3, 2016, the Company's investment in the 8point3 Group had a negative carrying value of $41.0 million and $30.9 million, respectively, resulting from the continued deferral of profit recognition for projects sold to the 8point3 Group that included the sale or lease of real estate.

Related-Party Transactions with Investees:



	As of
(In thousands)	April 3, 2016		January 3, 2016
Accounts receivable	$	19,116	$	32,389
Other long-term assets	$	1,534	$	1,455
Accounts payable	$	40,032	$	42,080
Accrued liabilities	$	4,887	$	9,952
Customer advances	$	—	$	710
Other long-term liabilities	$	29,400	$	29,389



	Three Months Ended
(In thousands)	April 3, 2016		March 29, 2015
Payments made to investees for products/services	$	123,630	$	119,177
Revenues and fees received from investees for products/services¹	$	114,645	$	5,603


¹	Includes a portion of proceeds received from tax equity investors in connection with 8point3 transactions.

Cost Method Investment in Tendril Networks, Inc.

In November 2014, the Company purchased $20.0 million of preferred stock constituting a minority stake in Tendril Networks, Inc. ("Tendril"), accounted for under the cost method because the preferred stock was deemed not to be in-substance common stock. In connection with the investment, the Company acquired warrants to purchase up to approximately 14 million

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shares of Tendril common stock exercisable through November 23, 2024. The number of shares of Tendril common stock that may be purchased pursuant to the warrants is subject to the Company's and Tendril's achievement of certain financial and operational milestones and other conditions.

In connection with the initial investment in Tendril, the Company also entered into commercial agreements with Tendril under a Master Services Agreement and related Statements of Work. Under these commercial agreements, Tendril will use up to $13.0 million of the Company's initial investment to develop, jointly with the Company, certain solar software solution products.

Note 10. DEBT AND CREDIT SOURCES

The following table summarizes the Company's outstanding debt on its Consolidated Balance Sheets:



	April 3, 2016								January 3, 2016
(In thousands)	Face Value		Short-term		Long-term		Total		Face Value		Short-term		Long-term		Total
Convertible debt:
4.00% debentures due 2023	$	425,000	$	—	$	416,525	$	416,525	$	425,000	$	—	$	416,369	$	416,369
0.875% debentures due 2021	400,000		—		396,584		396,584		400,000		—		396,424		396,424
0.75% debentures due 2018	300,000		—		298,357		298,357		300,000		—		298,167		298,167
IFC mortgage loan	25,000		14,993		9,366		24,359		32,500		14,994		16,778		31,772
CEDA loan	30,000		—		27,898		27,898		30,000		—		27,778		27,778
Non-recourse financing and other debt¹	506,713		47,214		456,181		503,395		435,963		4,642		429,981		434,623
	$	1,686,713	$	62,207	$	1,604,911	$	1,667,118	$	1,623,463	$	19,636	$	1,585,497	$	1,605,133


¹	Other debt excludes payments related to capital leases, which are disclosed in Note 8.

As of April 3, 2016, the aggregate future contractual maturities of the Company's outstanding debt, at face value, were as follows:



(In thousands)	Fiscal 2016 (remaining nine months)		Fiscal 2017	Fiscal 2018	Fiscal 2019	Fiscal 2020	Thereafter	Total
Aggregate future maturities of outstanding debt	$	53,391	34,564	334,750	20,198	29,841	1,213,969