Equity Investments

3 Months Ended

Apr. 04, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity Investments

EQUITY INVESTMENTSOur equity investments consist of equity investments with readily determinable fair value, investments without readily determinable fair value, equity investments accounted for using the fair value option, and equity method investments.

Our share of earnings (losses) from equity investments accounted for under the equity method is reflected as "Equity in earnings (losses) of unconsolidated investees" in our condensed consolidated statements of operations. Mark-to-market gains and losses on equity investments are reflected as "other, net" under other income (expense), net in our condensed consolidated statements of operations. The carrying value of our equity investments, classified as "other long-term assets" on our condensed consolidated balance sheets, are as follows:

	As of
(In thousands)	April 4, 2021		January 3, 2021
Equity investments with readily determinable fair value:
Enphase Energy, Inc.	$	569,418	$	614,148
Total equity investments with readily determinable fair value 1	569,418		614,148
Equity investments without readily determinable fair value:
Project entities	122		122
Other equity investments without readily determinable fair value	679		679
Total equity investments without readily determinable fair value	801		801
Equity investments with fair value option:
SunStrong Capital Holdings, LLC	7,645		7,645
SunStrong Partners, LLC	2,279		2,279
Total equity investment with fair value option	9,924		9,924
Total equity investments	$	580,143	$	624,873

1 As of April 4, 2021, two million shares of Enphase common stock have been reclassified from long-term to current assets as short-term investments.

Variable Interest Entities ("VIEs")

A VIE is an entity that has either (i) insufficient equity to permit the entity to finance its activities without additional subordinated financial support, or (ii) equity investors who lack the characteristics of a controlling financial interest.

We follow guidance on the consolidation of VIEs that requires companies to utilize a qualitative approach to determine whether it is the primary beneficiary of a VIE. The process for identifying the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct activities that most significantly impact the investees' economic performance, including powers granted to the investees' governing board and, to a certain extent, a company's economic interest in the investee. We analyze our investments in VIEs and classify them as either unconsolidated VIEs or consolidated VIEs (Refer to our Form 10K for the fiscal year ended January 3, 2021 for further details on our various VIE arrangements).

Unconsolidated VIEs    

We have elected the FVO in accordance with the guidance in ASC 825, Financial Instruments, for our investments in SunStrong, SunStrong Partners, and 8point3 Holdings, our unconsolidated VIEs. Refer to Note 6. Fair Value Measurements.

Summarized Financial Information of Unconsolidated VIEs

The following table presents summarized financial statements for SunStrong, a significant investee, based on unaudited information provided to us by the investee:1

	Three Months Ended
(In thousands)	April 4, 2021		March 29, 2020
Summarized statements of operations information:
Revenue	$	33,097	$	29,464
Gross income (loss)	1,214		(1,438)
Net (loss) income	(45,789)		21,640

	As of
(In thousands)	April 4, 2021		January 3, 2021
Summarized balance sheet information:
Current assets	$	92,493	$	93,752
Long-term assets	1,439,119		1,378,382
Current liabilities	47,859		48,126
Long-term liabilities	1,168,705		1,130,484

1 Note that amounts are reported one quarter in arrears as permitted by applicable guidance.

Related-Party Transactions with Investees

Related-party transactions with SunStrong and SunStrong Partners are as follows:

	As of
(In thousands)	April 4, 2021		January 3, 2021
Accounts receivable	$	18,313	$	16,767
Other long-term assets	11,000		—
Accrued liabilities	216		7,996
Contract liabilities	22,844		27,426

	Three Months Ended
(In thousands)	April 4, 2021	March 29, 2020
Revenues and fees received from investees for products/services	49,647	55,935

Consolidated VIEs

For Solar Sail LLC ("Solar Sail") and Solar Sail Commercial Holdings, LLC ("Solar Sail Commercial"), joint ventures with Hannon Armstrong Sustainable Infrastructure Capital, Inc. (“Hannon Armstrong”), our consolidated VIEs, total revenue was $3.6 million and $0.7 million for the three months ended April 4, 2021 and March 29, 2020, respectively. The assets of these consolidated VIEs are restricted for use only by the particular investee and are not available for our general operations. As of April 4, 2021, we had $79.1 million of assets from the consolidated VIEs.