Restructuring

3 Months Ended

Mar. 29, 2020

Restructuring and Related Activities [Abstract]

RESTRUCTURING

December 2019 Restructuring Plan

During the fourth quarter of fiscal 2019, we adopted a restructuring plan to realign and optimize workforce requirements in light of recent changes to our business, including the previously announced planned spin-off of Maxeon Solar Technologies, Pte. Ltd. (the “Spin-Off”). In connection with the restructuring plan, which includes actions implemented in the fourth quarter of 2019 and is expected to be substantially completed by the end of 2022, we expect between 145 and 160 non-manufacturing employees, representing approximately 3% of our global workforce, to exit over a period of approximately 12 to 18 months. Between 65 and 70 of these employees in the SunPower Technologies business unit and corporate have largely been informed and are expected to exit our company following the Spin-Off and completion of transition services. As the SunPower Energy Services business unit refines its focus on distributed generation, storage, and energy services, 80 to 90 employees exited or are expected to exit during the fourth fiscal quarter of 2019 and the first half of 2020. We expect to incur restructuring charges totaling approximately $16 million to $22 million, consisting primarily of severance benefits (between $8 million and $11 million) and retention benefits (between $8 million and $11 million) primarily associated with the retention of employees impacted by the Spin-Off transaction and certain key research and development employees. A substantial portion of such charges was incurred in the fourth quarter of fiscal 2019 and is expected to be incurred in fiscal 2020, and we expect between $14 million and $19 million of the charges to be cash. As of March 29, 2020, we have incurred cumulative costs of approximately $9 million in restructuring charges.

February 2018 Restructuring Plan

During the first quarter of fiscal 2018, we adopted a restructuring plan and began implementing initiatives to reduce operating expenses and cost of revenue overhead in light of the known shorter-term impact of U.S. tariffs imposed on PV solar cells and modules pursuant to Section 201 of the Trade Act of 1974 and our broader initiatives to control costs and improve cash flow. In connection with the plan, we expected between 150 and 250 non-manufacturing employees to be affected, representing approximately 3% of our global workforce, with a portion of those employees exiting from us as part of a voluntary departure program. The changes to our workforce varied by country, based on local legal requirements and consultations with employee works councils and other employee representatives, as appropriate. We expected to incur restructuring charges totaling between $20 million to $30 million, consisting primarily of severance benefits (between $11 million and $16 million) and real estate lease termination and other associated costs (between $9 million and $14 million). We expected between $12 million and $20 million of the charges to be paid in cash. This restructuring plan is substantially complete.

Legacy Restructuring Plans

Prior to fiscal 2018, we implemented approved restructuring plans, related to all segments, to reduce costs and focus on improving cash flow, to realign our legacy power plant business unit, to align with changes in the global solar market, as well as actions to accelerate operating cost reduction and improve overall operating efficiency. These restructuring activities were substantially complete as of December 30, 2018, and any remaining costs to be incurred are not expected to be material.

The following table summarizes the comparative periods-to-date restructuring charges by plan recognized in our condensed consolidated statements of operations:


	Three Months Ended
(In thousands)	March 29, 2020		March 31, 2019		Cumulative To Date
December 2019 Restructuring Plan:

Severance and benefits	$	1,639	$	—	$	8,994

Other costs¹	—		—		41
Total December 2019 Restructuring Plan	1,639		—		9,035

February 2018 Restructuring Plan:
Non-cash asset impairment charges	—		—		5,874
Severance and benefits	—		(349)		11,797
Lease and related termination costs	—		—		554
Other costs¹	2		(227)		816
Total February 2018 Restructuring Plan	2		(576)		$	19,041

Legacy Restructuring Plan:
Non-cash impairment charges	—		—		228,184
Severance and benefits	(65)		(17)		100,688
Lease and related termination costs	—		—		8,085
Other costs¹	—		(72)		39,807
Total Legacy Restructuring Plan	(65)		(89)		376,764
Total restructuring charges (credits)	$	1,576	$	(665)	$	404,840

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

The following table summarizes the restructuring reserve activities during the three months ended March 29, 2020:


	Three Months Ended
(In thousands)	December 29, 2019		Charges (Benefits)		(Payments) Recoveries		March 29, 2020
December 2019 Restructuring Plan:

Severance and benefits	$	5,822	$	1,639	$	(1,432)	$	6,029


Total December 2019 Restructuring Plan	5,822		1,639		(1,432)		6,029

February 2018 Restructuring Plan:
Non-cash asset impairment charges	—		—		—		—
Severance and benefits	296		—		(32)		264
Lease and related termination costs	—		—		—		—
Other costs¹	—		2		(2)		—
Total February 2018 Restructuring Plan	296		2		(34)		264

Legacy Restructuring Plans	483		(65)		(7)		411
Total restructuring reserve activities	$	6,601	$	1,576	$	(1,473)	$	6,704

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