SunPower Corporation (NASDAQ:SPWR) Files An 8-K Costs Associated with Exit or Disposal Activities

On December 2, 2016, the Board of Directors of SunPower
Corporation (the Company) adopted, and the Company began
implementing, a restructuring plan to reduce costs and focus on
improving cash flow while positioning the Company to succeed in
the next phase of industry growth. As part of the plan, the Board
of Directors approved the closure of the Companys
Philippine-based Fab 2 manufacturing facility. In connection with
the plan, which is expected to be completed by the end of fiscal
2017, the Company expects approximately 2,500 employees to be
affected, primarily in the Philippines, representing
approximately 25% of the Companys global workforce. The Company
expects to incur restructuring charges in connection with the
plan totaling approximately $225 million to $275 million,
consisting primarily of asset impairments, severance benefits,
lease and related termination costs, and other associated costs.
At least $150 million of such charges are expected to be incurred
in the fourth quarter of fiscal 2016, and the Company expects
approximately 30% of such total restructuring charges to be cash.
The actual timing and costs of the plan may differ from the
Companys current expectations and estimates, and all headcount
numbers, charges, and amounts are additional to those under the
Companys previously announced restructuring plan dated as of
August 9, 2016.

The information set forth in Item 2.05 of this Current Report on
Form 8-K is incorporated by reference into this Item 2.06.

On December 2, 2016, the Compensation Committee of the Companys
Board of Directors approved an extension of the previously
approved reduction of the salary of Thomas Werner, the Companys
President and Chief Executive Officer, to $1, net of benefit
costs, through the end of the first quarter of fiscal 2017, with
such change to be re-evaluated quarterly. The extension was at
Mr. Werners request in light of continued market dislocation and
the need to reduce operating expenses.

On December 7, 2016, SunPower Corporation issued a press release,
included as Exhibit 99.1 hereto.

The information furnished in Item 7.01 and Item 9.01 of this
Current Report on Form 8-K and Exhibit 99.1 hereto shall not be
deemed filed for purposes of Section 18 of the Securities
Exchange Act of 1934 (the Exchange Act) or otherwise subject to
the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act
of 1933 or the Exchange Act, except as expressly set forth by
specific reference in such filing.

As previously disclosed in the Companys Annual Report on Form
10-K for the fiscal year ended January 3, 2016, the Company has
historically entered into multiple long-term fixed supply
agreements for polysilicon for periods of up to 10 years to match
its estimated customer demand forecasts and growth strategy for
the next several years. The long-term nature of these agreements,
which often provide for fixed or inflation-adjusted pricing, may
prevent the Company from benefiting from decreasing polysilicon
costs, may cause it to pay more at unfavorable payment terms than
the current market prices and payment terms available to its
competitors, and could cause the Company to record an impairment.

In the event that the Company has inventory in excess of
short-term requirements of polysilicon, in order to reduce
inventory or improve working capital, the Company may elect to
sell such inventory in the marketplace at prices below its
purchase price, thereby incurring a loss. In connection with the
Companys efforts to manage its supply arrangements and inventory
balances, the Company expects to record an estimated charge of
approximately $50 to $55 million during the three months ending
January 1, 2017, related to one or more contracts to sell
polysilicon at current market prices.

The above information contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including, but not limited to, statements regarding the
Companys expected charge during the three months ending January
1, 2017. These forward-looking statements are based on the
Companys current assumptions, expectations and beliefs and
involve substantial risks and uncertainties that may cause
results, performance or achievement to materially differ from
those expressed or implied by these forward-looking statements.
Factors that could cause or contribute to such differences
include, but are not limited to: (1) risks of negotiating the
pricing and quantities for the sale of polysilicon with
counterparties and (2) changes in market prices for polysilicon
and corresponding accounting charges. A detailed discussion of
these factors and other risks that affect the Companys business
is included in filings the Company makes with the Securities and
Exchange Commission (the SEC) from time to time, including the
Companys most recent reports on Form 10-K and Form 10-Q,
particularly under the heading Risk Factors. Copies of these
filings are available online from the SEC or on the SEC Filings
section of the Companys Investor Relations website at
investors.sunpower.com. All forward-looking statements in this
Current Report on Form 8-K are based on information currently
available to the Company, and the Company assumes no obligation
to update these forward-looking statements in light of new
information or future events.

(d) Exhibits