SunPower Reports Fourth Quarter and Year End 2005 Results
PRNewswire-FirstCall
SUNNYVALE, Calif.

SUNNYVALE, Calif., Jan. 26, 2006  /PRNewswire/ -- SunPower Corporation (NASDAQ: SPWR) today announced that revenue for the fourth quarter ended December 31, 2005, was $29.3 million, up 34% from the prior quarter's revenue of $21.9 million and up 523% from the year-ago fourth quarter combined(1) revenue of $4.7 million. The Company's fiscal 2005 revenue was $78.7 million.

GAAP net loss for the 2005 fourth quarter was $0.6 million, or $0.01 loss per share, compared to last quarter's net loss of $1.6 million or $0.06 loss per share and the year-ago fourth quarter combined(1) net loss of $10.4 million.

On a non-GAAP basis -- excluding amortization of intangible assets and stock-based compensation -- the 2005 fourth quarter net income was $1.5 million or diluted earnings per share of $0.02, compared to the prior quarter's breakeven results and the year-ago fourth quarter combined(1) net loss of $9.1 million.

  Other Q4 highlights included:
  -- The Company completed its Initial Public Offering, selling 8.83 million
     shares of common stock raising net proceeds of $145.6 million.
     SunPower priced its shares at the top end of its announced range.
  -- SunPower announced a $330 million multi-year supply agreement with
     PowerLight Corporation.  This agreement covers the supply of solar
     panels on a global basis through 2009 for commercial, government, and
     new home residential customers worldwide.
  -- SunPower installed its third 25-megawatt solar cell manufacturing line
     at SPML, the company's Philippine factory.  The new line, which began
     ramping in the first quarter 2006, will increase SunPower's
     manufacturing capacity to 75 megawatts.
  -- SunPower received approval from its Board of Directors to increase its
     capacity to up to 300 megawatts, which will necessitate a second solar
     cell manufacturing facility.  The second facility will be designed to
     house six production lines capable of producing incremental capacity of
     200 megawatts.  The company has commenced engineering design of the new
     facility and is planning to begin production in the new facility as
     early as the first quarter 2007.

Tom Werner, SunPower CEO, said, "We are pleased to report very solid results from our initial quarter as a public company. Our operations team continued to demonstrate their ability to rapidly ramp capacity by starting up our second 25-megawatt solar cell line ahead of plan. Line 2 contributed meaningfully to our Q4 results and achieved productivity metrics in some areas that already rivaled Line 1."

"The outlook for the first quarter of 2006 is equally exciting," continued Werner. "Our operations team will continue to ramp Line 2 and also start up Line 3. We expect that this incremental capacity will allow us to achieve another significant quarter-on-quarter top line revenue increase to between $38 - $40 million, with expected Q1 non-GAAP diluted earnings per share of $0.02 - $0.04(2). As we continue to build out SPML's capacity over the course of the year, we expect 2006 revenues in excess of $210 million."

Werner added, "It is well known that the availability and price of poly-silicon raw material are critical challenges in today's solar power business. We believe that SunPower's high-efficiency technology gives us a clear advantage in this environment by allowing us to produce more watts of solar power per kilogram of poly-silicon raw material than our competitors. In Q4 we implemented improvements on our manufacturing process to further increase our silicon utilization efficiency and we will continue to push hard for yet more progress on this metric over the course of 2006."

About SunPower

SunPower Corp. designs and manufactures high-efficiency silicon solar cells and solar panels based on an all-back-contact cell design. SunPower's solar cells and panels generate up to 50 percent more power per unit area than conventional solar technologies and have a uniquely attractive, all-black appearance. For more information on SunPower or solar technology, please visit the SunPower website at http://www.sunpowercorp.com/. SunPower is a majority owned subsidiary of Cypress Semiconductor Corp. (NYSE: CY).

Forward Looking Statements

Statements herein that are not historical facts and that refer to SunPower's plans and expectations for revenue and income for the first quarter and the full year of 2006 and the future, and for construction of its second manufacturing facility, are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Such statements are based on our current expectations as of the date of the release, which could change or not materialize as expected. Our actual results may differ materially due to a variety of uncertainties and risk factors, including but not limited to business and economic conditions and growth trends in the solar power industry, our ability to obtain adequate supply of poly-silicon and silicon ingots to manufacture our products and the price we pay for such material, our ability to ramp new production lines, our ability to realize expected manufacturing efficiencies, production difficulties that could arise and other risks described in our Form S-1 registration statement and other filings with the Securities and Exchange Commission. Except as required by law, we assume no obligation to update any such forward-looking statements. We use words such as "believes" and "expects" and similar expressions to identify forward- looking statements that include, but are not limited to, statements related to future demand for our products, our expected revenue growth, our production capabilities, profit and incremental capacity.

To supplement the consolidated financial results prepared under GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude items related to amortization of intangibles and stock-based compensation. Management does not consider these charges in evaluating the core operational activities of the Company. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate the Company's current performance. Most analysts covering SunPower use the non-GAAP measures as well. Given management's use of these non-GAAP measures, SunPower believes these measures are important to investors in understanding the Company's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in SunPower's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data and may be different from non-GAAP measures used by other companies.

Fiscal Periods

The company operates on a fiscal calendar comprised of four thirteen-week quarters that end at midnight Pacific Time on the Sunday nearest the calendar quarter-end. For simplicity, the company labels its fiscal quarters as ending on the calendar quarter date.

NOTE: SunPower is a registered trademark of SunPower Corp. Cypress is a registered trademark of Cypress Semiconductor Corp. All other trademarks are the property of their respective owners.

(1) Results for the three months ended Dec. 31, 2004 reflect the combined results of the predecessor and successor company. Please refer to the attached financial statements.

(2) For the first quarter of 2006, the estimated equivalent GAAP net loss per share is $0.02 to breakeven, inclusive of amortization of intangible assets and stock-based compensation.

                            SUNPOWER CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                    (In thousands, except per share data)

                                 (Unaudited)

                                                 Dec. 31,          Dec. 31,
                                                  2005              2004
                          ASSETS

  Cash and cash equivalents                     $143,592            $3,776
  Accounts receivable, net                        25,498             4,558
  Inventories                                     13,147             4,416
  Prepaid expenses and other assets                3,236             3,021
  Property and equipment, net                    110,559            47,549
  Goodwill and other intangible assets, net       21,622            26,326

       Total assets                             $317,654           $89,646

     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

  Accounts payable and accrued liabilities       $21,604           $39,061
  Notes payable to Cypress                            --            52,697
  Customer advances                               37,400                --
       Total liabilities                          59,004            91,758

  Convertible preferred stock                         --             8,552

  Stockholders' equity (deficit)                 258,650           (10,664)

       Total liabilities and
        stockholders' equity                    $317,654           $89,646


                           SUNPOWER CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                            (On a GAAP basis)
                  (In thousands, except per share data)

                                 (Unaudited)


                                THREE MONTHS ENDED      TWELVE MONTHS ENDED
                            Dec. 31,  Dec. 31, Sep. 30,  Dec. 31,  Dec. 31,
                              2005     2004**    2005      2005     2004*

  Revenues                  $29,341    $4,740  $21,903   $78,736   $10,885

  Cost of revenues           24,720     8,869   18,955    74,353    15,577

  Gross margin                4,621    (4,129)   2,948     4,383    (4,692)

  Operating expenses:
    Research and
     development              1,981     2,501    1,480     6,488    13,535
    Selling, general and
     administrative           4,000     1,827    2,877    10,880     5,824

         Total operating
          expenses            5,981     4,328    4,357    17,368    19,359

  Operating loss             (1,360)   (8,457)  (1,409)  (12,985)  (24,051)

  Net interest income
   (expense) and other          770    (1,897)    (221)   (2,808)   (4,860)

  Loss before income tax
   provision                   (590)  (10,354)  (1,630)  (15,793)  (28,911)

  Income tax provision           50        --       --        50        --

  Net loss                    $(640) $(10,354) $(1,630) $(15,843) $(28,911)

  Basic and diluted net loss
   per share                 $(0.01)            $(0.06)   $(0.68)

  Shares used in calculation
   of basic and diluted net
   loss per share            44,325             27,785    23,306

  Reconciliation of net loss
   to non-GAAP net income
   (loss):

  Net loss                    $(640) $(10,354) $(1,630) $(15,843) $(28,911)
  Reconciling items:
    Stock compensation
     expenses                   924       726      326     1,433       781
    Amortization of
     intangible assets        1,176       573    1,176     4,704       573
  Non-GAAP net income (loss) $1,460   $(9,055)   $(128)  $(9,706) $(27,557)

  Non-GAAP:
       Basic net income
        (loss) per share      $0.03                $--    $(0.42)
       Diluted net income
        (loss) per share      $0.02                $--    $(0.42)

  Shares used in calculation
   of non-GAAP:
       Basic net income
        (loss) per share     44,325             27,785    23,306
       Diluted net income
        (loss) per share     62,450             27,785    23,306

  * Results for the twelve months ended December 31, 2004 reflect the
  combined results of the Predecessor company for the period from January 1,
  2004 through November 8, 2004 and the results of the Successor Company
  from November 9, 2004 through December 31, 2004.  These figures are
  presented for convenience only. Share and per share figures are not
  presented because the capital structures of the Predecessor and Successor
  companies can not be combined in a meaningful way.

  **Results for the three months ended December 31, 2004 reflect the
  combined results of the Predecessor company for the period from October 1,
  2004 through November 8, 2004 and the results of the Successor Company
  from November 9, 2004 through December 31, 2004.  These figures are
  presented for convenience only.  Share and per share figures are not
  presented because the capital structures of the Predecessor and Successor
  companies can not be combined in a meaningful way.


                           SUNPOWER CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                          (On a non-GAAP basis)
                  (In thousands, except per share data)

                               (Unaudited)

                                  THREE MONTHS ENDED     TWELVE MONTHS ENDED
                               Dec. 31, Dec. 31, Sep. 30, Dec. 31,  Dec. 31,
                                 2005    2004**    2005     2005     2004*

  Revenues                     $29,341   $4,740  $21,903  $78,736   $10,885
  Cost of revenues              23,530    8,154   17,766   69,623    14,807

  Gross margin                   5,811   (3,414)   4,137    9,113    (3,922)

  Operating expenses:
  Research and development       1,793    2,185    1,318    6,138    13,219
  Selling, general and
   administrative                3,278    1,559    2,726    9,823     5,556

         Total operating
          expenses               5,071    3,744    4,044   15,961    18,775

  Operating income (loss)          740   (7,158)      93   (6,848)  (22,697)

  Net interest income
   (expense) and other             770   (1,897)    (221)  (2,808)   (4,860)

  Income (loss) before income
   tax provision                 1,510   (9,055)    (128)  (9,656)  (27,557)

  Income tax provision              50       --       --       50        --

  Net income (loss)             $1,460  $(9,055)   $(128) $(9,706) $(27,557)


  Basic net income (loss) per
   share                         $0.03              $-     $(0.42)
  Diluted net income (loss)
   per share                     $0.02              $-     $(0.42)

  Shares used in calculation:
       Basic                    44,325            27,785   23,306
       Diluted                  62,450            27,785   23,306

  See accompanying reconciliation of GAAP measures to non-GAAP measures and
                              related footnotes.


                           SUNPOWER CORPORATION
          RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
                               (Unaudited)

  NET INCOME (LOSS) PER SHARE:
                                            THREE MONTHS ENDED    YEAR ENDED
                                           Dec. 31,    Sep. 30,    Dec. 31,
                                             2005        2005        2005
  Basic:
  GAAP net loss per share                   $(0.01)     $(0.06)     $(0.68)
  Reconciling items:
    Amortization of intangible assets        $0.02        0.02        0.06
    Stock-based compensation expense         $0.02        0.04        0.20
  Non-GAAP net income (loss) per share       $0.03        $-        $(0.42)

  Diluted:
  GAAP net loss per share                   $(0.01)     $(0.06)     $(0.68)
  Reconciling items:
    Amortization of intangible assets         0.01        0.02        0.06
    Stock-based compensation expense          0.02        0.04        0.20
  Non-GAAP net income (loss) per share       $0.02        $-        $(0.42)



  STATEMENT OF OPERATIONS DATA:
                                 THREE MONTHS ENDED         YEARS ENDED
                            Dec. 31,  Dec. 31, Sep. 30,  Dec. 31,  Dec. 31,
                              2005     2004**    2005      2005     2004*

  GAAP cost of revenue       $24,720    $8,869  $18,955   $74,353   $15,577
  Amotization of intangible
   assets                     (1,176)     (573)  (1,176)   (4,704)     (573)
  Stock-based compensation       (15)     (142)     (12)      (27)     (197)
  Non-GAAP cost of revenue   $23,529    $8,154  $17,767   $69,622   $14,807

  GAAP research and
   development expense        $1,981    $2,501   $1,480    $6,488   $13,535
  Stock-based compensation      (187)     (316)    (162)     (349)     (316)
  Non-GAAP research and
   development expense        $1,794    $2,185   $1,318    $6,139   $13,219

   GAAP selling, general and
    administrative expense    $4,000    $1,827   $2,877   $10,880    $5,824
  Stock-based compensation      (722)     (268)    (152)   (1,057)     (268)
   Non-GAAP selling, general
    and administrative
    expense                   $3,278    $1,559   $2,725    $9,823    $5,556

  GAAP operating loss        $(1,360)  $(8,457) $(1,409) $(12,985) $(24,051)
  Amotization of intangible
   assets                      1,176       573    1,176     4,704       573
  Stock-based compensation       924       726      326     1,433       781
  Non-GAAP operating income
   (loss)                       $740   $(7,158)     $93   $(6,848) $(22,697)

  GAAP loss before income
   tax provision               $(590) $(10,354) $(1,630) $(15,793) $(28,911)
  Amotization of intangible
   assets                      1,176       573    1,176     4,704       573
  Stock-based compensation       924       726      326     1,433       781
  Non-GAAP loss before
   income tax provision       $1,510   $(9,055)   $(128)  $(9,656) $(27,557)

  * Results for the twelve months ended December 31, 2004 reflect the
  combined results of the Predecessor company for the period from January 1,
  2004 through November 8, 2004 and the results of the Successor Company
  from November 9, 2004 through December 31, 2004.  These figures are
  presented for convenience only. Share and per share figures are not
  presented because the capital structures of the Predecessor and Successor
  companies can not be combined in a meaningful way.

  **Results for the three months ended December 31, 2004 reflect the
  combined results of the Predecessor company for the period from October 1,
  2004 through November 8, 2004 and the results of the Successor Company
  from November 9, 2004 through December 31, 2004.  These figures are
  presented for convenience only.  Share and per share figures are not
  presented because the capital structures of the Predecessor and Successor
  companies can not be combined in a meaningful way.

SOURCE: SunPower Corporation

CONTACT: Julie Blunden, +1-408-470-4277, or
Julie.blunden@sunpowercorp.com, or Manny Hernandez, +1-408-470-4274, or
Manny.hernandez@sunpowercorp.com, both of SunPower Corporation

Web site: http://www.sunpowercorp.com/