BALANCE SHEET COMPONENTS



	As of
(In thousands)	June 30, 2013			December 30, 2012
Accounts receivable, net:
Accounts receivable, gross (1)	$	492,704		$	429,977
Less: allowance for doubtful accounts	(30,763		)	(26,773		)
Less: allowance for sales returns	(2,568		)	(5,054		)
	$	459,373		$	398,150


(1)	Includes short-term finance receivables associated with solar power systems leased of $5.5 million and $4.5 million as of June 30, 2013 and December 30, 2012, respectively.



Inventories:
Raw materials	$	52,178	$	89,331
Work-in-process	53,130		50,627
Finished goods	129,848		151,428
	$	235,156	$	291,386



Prepaid expenses and other current assets:
VAT receivables, current portion	$	98,080	$	97,041
Foreign currency derivatives	3,314		1,275
Deferred project costs	187,938		305,980
Deferred costs for solar power systems to be leased	24,207		31,419
Other receivables (2)	92,291		104,640
Other prepaid expenses	39,395		25,230
Other current assets	67,883		47,468
	$	513,108	$	613,053


(2)	Includes tolling agreements with suppliers in which the Company provides polysilicon required for silicon ingot manufacturing and procures the manufactured silicon ingots from the suppliers (see Notes 7 and 8).



	As of
(In thousands)	June 30, 2013		December 30, 2012
Project assets - plants and land:
Project assets — plants	$	77,259	$	61,862
Project assets — land	13,406		21,645
	$	90,665	$	83,507
Project assets - plants and land, current portion	$	87,430	$	75,911
Project assets - plants and land, net of current portion	$	3,235	$	7,596



Property, plant and equipment, net:
Land and buildings	$	26,004		$	20,109
Leasehold improvements	228,525			221,378
Manufacturing equipment (3)	546,092			531,289
Computer equipment	77,226			75,438
Furniture and fixtures	8,470			8,178
Solar power systems (4)	51,517			12,501
Solar power systems leased	254,515			163,003
Solar power systems to be leased	57,760			89,423
Construction-in-process	10,363			34,110
	1,260,472			1,155,429
Less: accumulated depreciation (5)	(422,298		)	(380,520		)
	$	838,174		$	774,909

(3)

The Company's mortgage loan agreement with International Finance Corporation ("IFC") is collateralized by certain manufacturing equipment with a net book value of $161.1 million and $152.9 million as of June 30, 2013 and December 30, 2012, respectively. The Company also provided security for advance payments received from a third party in the form of collateralized manufacturing equipment with a net book value of $18.1 million and $16.5 million as of June 30, 2013 and December 30, 2012, respectively.


(4)	Includes $24.4 million of solar power systems associated with sale-leaseback transactions under the financing method (see Note 7).


(5)	Total depreciation expense was $24.6 million and $48.2 million for the three and six months ended June 30, 2013, respectively and $29.3 million and $58.4 million for the three and six months ended July 1, 2012, respectively.



Property, plant and equipment, net by geography (6):
Philippines	$	347,407	$	367,708
United States	431,249		343,710
Mexico	32,994		32,409
Europe	26,057		29,292
Other	467		1,790
	$	838,174	$	774,909


(6)	Property, plant and equipment, net are based on the physical location of the assets.

The below table presents the cash and non-cash interest expense capitalized to property, plant and equipment and project assets during the three and six months ended June 30, 2013 and July 1, 2012, respectively.



	Three Months Ended						Six Months Ended
(In thousands)	June 30, 2013			July 1, 2012			June 30, 2013			July 1, 2012
Interest expense:
Interest cost incurred	$	(25,208	)	$	(20,356	)	$	(52,752	)	$	(39,987	)
Cash interest cost capitalized - property, plant and equipment	—			299			228			587
Non-cash interest cost capitalized - property, plant and equipment	—			169			57			302
Cash interest cost capitalized - project assets - plant and land	176			271			299			549
Non-cash interest cost capitalized - project assets - plant and land	162			217			264			448
Interest expense	$	(24,870	)	$	(19,400	)	$	(51,904	)	$	(38,101	)



	As of
(In thousands)	June 30, 2013		December 30, 2012
Other long-term assets:
Equity method investments	$	112,193	$	111,516
Bond hedge derivative	60,627		2,327
Cost method investments	12,651		14,918
Long-term financing receivables	117,234		67,742
Long-term debt issuance costs	25,380		38,185
Other	88,061		41,375
	$	416,146	$	276,063



Accrued liabilities:
VAT payables	$	3,442	$	2,049
Foreign currency derivatives	5,115		4,891
Short-term warranty reserves	9,183		9,054
Interest payable	9,587		9,672
Deferred revenue	23,796		32,507
Employee compensation and employee benefits	41,282		40,750
Restructuring reserve	17,356		29,477
Short-term residential lease financing	28,758		25,153
Short-term sale-leaseback financing (Note 7)	2,530		—
Other	112,215		93,819
	$	253,264	$	247,372



	As of
(In thousands)	June 30, 2013		December 30, 2012
Other long-term liabilities:
Embedded conversion option derivatives	$	60,655	$	2,327
Long-term warranty reserves	117,110		107,803
Deferred revenue	155,929		128,936
Unrecognized tax benefits	32,975		35,022
Long-term residential lease financing	21,966		11,411
Long-term sale-leaseback financing (Note 7)	33,106		—
Other	65,455		50,120
	$	487,196	$	335,619



Accumulated other comprehensive loss:
Cumulative translation adjustment	$	(6,245	)	$	(2,319	)
Net unrealized gain on derivatives	1,238			(243		)
Unrealized loss on investments	(7		)	—
Deferred taxes	(238		)	41
	$	(5,252	)	$	(2,521	)

Solar Power Systems Leased and to be Leased

The Company leases solar systems to residential customers under both operating and sales-type leases. As of June 30, 2013 and December 30, 2012, solar power systems leased out under operating leases, presented in "Property, plant and equipment, net" in the Company's Condensed Consolidated Balance Sheets was $254.5 million and $163.0 million, respectively, and solar power systems to be leased under operating leases, presented in "Property, plant and equipment, net" in the Company's Condensed Consolidated Balance Sheets was $57.8 million and $89.4 million, respectively. As of June 30, 2013, financing receivables for sales-type leases, presented in "Accounts receivable, net" and "Other long-term assets" in the Company's Condensed Consolidated Balance Sheets was $5.5 million and $117.2 million, respectively. As of December 30, 2012, financing receivables for sales-type leases, presented in "Accounts receivable, net" and "Other long-term assets" in the Company's Condensed Consolidated Balance Sheets was $4.5 million and $67.7 million, respectively. Amounts recognized in the Company's Condensed Consolidated Statement of Operations are not significant in any period presented.

The Company has entered into multiple facilities under which solar power systems are financed with third-party investors. Under the terms of certain programs the investors make upfront payments to the Company, which the Company recognizes as a non-recourse liability that will be reduced over the specified term of the program as customer receivables and government incentives are received by the third party investors. As the non-recourse liability is reduced over time, the Company makes a corresponding reduction in customer and government incentive receivables on its balance sheet. Under this approach, for both operating and sales-type leases the Company continues to account for these arrangements with its residential lease customers in the condensed consolidated financial statements.

As of June 30, 2013 and December 30, 2012, the remaining liability to the third-party investors, presented in Accrued liabilities and Other long-term liabilities on the Company's Condensed Consolidated Balance Sheets, was $50.7 million and $36.6 million, respectively. As of June 30, 2013 and December 30, 2012, the Company has pledged solar assets with an aggregate book value of $249.0 million and $280.8 million, respectively, to the third-party investors as security for its obligations under the contractual arrangements.

Beginning in the first quarter of fiscal 2013, the Company has entered into facilities with third-party investors under which the parties will invest in entities which holds SunPower solar power systems and leases with residential customers. The Company was determined to hold controlling interests in these less than wholly owned entities and has fully consolidated these entities as a result. The Company accounts for the portion of net assets in the consolidated entities attributable to the investors as Noncontrolling interests in its condensed consolidated financial statements (see Note 1).