SunPower Internal Review Identifies Unsubstantiated Accounting Entries
Based upon the preliminary findings of the ongoing investigation, the Audit Committee to date has identified accounting entries in the Philippines that may have overstated expenses in its cost of goods sold of approximately $1 million in the first quarter ending March 29, 2009, and understated expenses in its cost of goods sold of approximately $14 million in the second quarter ending June 28, 2009 and approximately $2 million in the third quarter ending September 27, 2009. The company previously reported 2009 quarterly revenues and operating income under Generally Accepted Accounting Principles (GAAP) of $213.8 million and a loss of $2.5 million, respectively, in the first quarter, $297.6 million and $9.9 million, respectively, in the second quarter and $466.3 million and $34.6 million, respectively, in the third quarter. Full-year 2008 revenues were reported of $1,434.9 million and GAAP operating income of $167.5 million.
If the preliminary investigation findings prove to be final, they could impact the company's previously reported interim 2009 financial results. The company is also in the process of evaluating the financial impact of these adjustments on its previously reported results for the fiscal year and interim periods ended December 28, 2008. The company currently estimates that approximately $9 million of the identified accounting entries should have been recorded in 2008.
The company is working with the Audit Committee, the Committee's outside experts, and with the company's independent auditors to determine if any restatements of the 2009 interim financial reports and the 2008 annual report will be necessary. Until the investigation is complete and such a determination is made, there can be no assurance that broader issues do not exist. Therefore, the company's previously issued interim financial statements for each of the 2009 quarterly periods, the previously reported financial results for the fiscal year ending December 28, 2008, the financial information in its quarterly reports on Form 10-Q for the 2009 quarters, the financial information in the 2008 annual report on Form 10-K, and the guidance provided by the company for the 2009 fiscal year, should no longer be relied upon. The company anticipates providing an update on the investigation within the next 30 days.
Operationally, the company's outlook for the fourth quarter of 2009 remains consistent with its previous expectations for sales and operating income, subject to any costs, charges, and tax-related impacts relating to the ongoing investigation.