BALANCE SHEET COMPONENTS



	As of
(In thousands)	September 29, 2013			December 30, 2012
Accounts receivable, net:
Accounts receivable, gross¹	$	407,680		$	429,977
Less: allowance for doubtful accounts	(27,476		)	(26,773		)
Less: allowance for sales returns	(2,380		)	(5,054		)
	$	377,824		$	398,150


¹	Includes short-term finance receivables associated with solar power systems leased of $6.0 million and $4.5 million as of September 29, 2013 and December 30, 2012, respectively.



Inventories:
Raw materials	$	79,272	$	89,331
Work-in-process	47,212		50,627
Finished goods	161,565		151,428
	$	288,049	$	291,386



	As of
(In thousands)	September 29, 2013		December 30, 2012
Prepaid expenses and other current assets:
VAT receivables, current portion	$	99,899	$	97,041
Foreign currency derivatives	2,198		1,275
Deferred project costs	172,679		305,980
Deferred costs for solar power systems to be leased	25,264		31,419
Other receivables	78,336		104,640
Other prepaid expenses	28,905		25,230
Other current assets	46,314		47,468
	$	453,595	$	613,053



Project assets - plants and land:
Project assets — plants	$	91,911	$	61,862
Project assets — land	9,653		21,645
	$	101,564	$	83,507
Project assets - plants and land, current portion	$	98,005	$	75,911
Project assets - plants and land, net of current portion	$	3,559	$	7,596



Property, plant and equipment, net:
Land and buildings	$	26,080		$	20,109
Leasehold improvements	229,817			221,378
Manufacturing equipment²	545,174			531,289
Computer equipment	77,087			75,438
Furniture and fixtures	8,262			8,178
Solar power systems³	54,585			12,501
Solar power systems leased	290,388			163,003
Solar power systems to be leased	52,936			89,423
Construction-in-process	9,001			34,110
	1,293,330			1,155,429
Less: accumulated depreciation	(441,986		)	(380,520		)
	$	851,344		$	774,909

The Company's mortgage loan agreement with International Finance Corporation ("IFC") is collateralized by certain manufacturing equipment with a net book value of $153.5 million and $152.9 million as of September 29, 2013 and December 30, 2012, respectively. The Company also provided security for advance payments received from a third-party supplier in the form of collateralized manufacturing equipment with a net book value of $16.5 million as of December 30, 2012.


³	Includes $25.3 million of solar power systems associated with sale-leaseback transactions under the financing method as of September 29, 2013 (see Note 7).



Property, plant and equipment, net by geography⁴:
Philippines	$	333,959	$	367,708
United States	458,825		343,710
Mexico	32,377		32,409
Europe	25,681		29,292
Other	502		1,790
	$	851,344	$	774,909


⁴	Property, plant and equipment, net are based on the physical location of the assets.

The table below presents the cash and non-cash interest expense capitalized to property, plant and equipment and project assets during the three and nine months ended September 29, 2013 and September 30, 2012, respectively.



	Three Months Ended						Nine Months Ended
(In thousands)	September 29, 2013			September 30, 2012			September 29, 2013			September 30, 2012
Interest expense:
Interest cost incurred	$	(29,075	)	$	(26,912	)	$	(81,827	)	$	(66,899	)
Cash interest cost capitalized - property, plant and equipment	39			272			267			859
Non-cash interest cost capitalized - property, plant and equipment	—			142			57			444
Cash interest cost capitalized - project assets - plant and land	96			395			395			944
Non-cash interest cost capitalized - project assets - plant and land	79			269			343			717
Interest expense	$	(28,861	)	$	(25,834	)	$	(80,765	)	$	(63,935	)



	As of
(In thousands)	September 29, 2013		December 30, 2012
Other long-term assets:
Equity method investments	$	113,778	$	111,516
Bond hedge derivative	96,635		2,327
Cost method investments	12,374		14,918
Long-term financing receivables	139,177		67,742
Long-term debt issuance costs	18,153		38,185
Other	113,608		41,375
	$	493,725	$	276,063



Accrued liabilities:
VAT payables	$	5,456	$	2,049
Foreign currency derivatives	7,250		4,891
Short-term warranty reserves	9,468		9,054
Interest payable	10,840		9,672
Deferred revenue	25,521		32,507
Employee compensation and employee benefits	48,024		40,750
Restructuring reserve	11,935		29,477
Short-term residential lease financing	28,471		25,153
Other	109,489		93,819
	$	256,454	$	247,372



	As of
(In thousands)	September 29, 2013		December 30, 2012
Other long-term liabilities:
Embedded conversion option derivatives	$	96,665	$	2,327
Long-term warranty reserves	125,307		107,803
Deferred revenue	157,395		128,936
Unrecognized tax benefits	25,193		35,022
Long-term residential lease financing	28,788		11,411
Long-term sale-leaseback financing (Note 7)	36,575		—
Other	50,337		50,120
	$	520,260	$	335,619



Accumulated other comprehensive loss:
Cumulative translation adjustment	$	(4,322	)	$	(2,319	)
Net unrealized loss on derivatives	(767		)	(243		)
Deferred taxes	141			41
	$	(4,948	)	$	(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 September 29, 2013 and December 30, 2012, solar power systems leased under operating leases, presented in "Property, plant and equipment, net" in the Company's Condensed Consolidated Balance Sheets was $290.4 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 $52.9 million and $89.4 million, respectively. As of September 29, 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 $6.0 million and $139.2 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 September 29, 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 $57.3 million and $36.6 million, respectively. As of September 29, 2013 and December 30, 2012, the Company has pledged solar assets with an aggregate book value of $228.3 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 hold 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).