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Published by: melaniel_co on Mar 27, 2012
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In February 2011, Solyndra consummated a restructuring based on a new forecast (the

“Restructuring Plan”) and operations limited to Fab 2 Phase I.

By this time, Solyndra had a total net loss of approximately $501.1 million for years 2009

and 2010. Sales for the same two-year time period were approximately $242.4 million.

The existence of a net operating loss is not unusual for development stage companies

such as Solyndra. It is also not unusual for revenues to increase dramatically as time progresses.

Solyndra’s revenues for the first quarter of 2009 started slowly at approximately $8.2 million.

Revenues for the fourth quarter 2010 were approximately $41.0 million, a five-fold increase over

the first quarter 2009. However, even with a five-fold increase in revenues, Solyndra’s quarterly

net loss of approximately $46.4 million during the first quarter of 2009 widened to a quarterly

net loss of $77.7 million by the fourth quarter 2010.

Chart #1 below illustrates the actual results of operations for the months of March 2009

through November 2010. As can be seen in the chart below, revenues are sporadic while net

operating lossed are relatively consistent.


As illustrated in the table below, for the period fiscal year 2009 through July 2, 2011,

Solyndra ultimately lost $3.92 for every watt of solar energy it produced and sold. The average

revenue per watt for this period was $2.56, while the combined manufacturing and operating

costs were approximately $6.48 per watt. This is illustrated in Table #2 below:

Table #2


Revenues and Expenses on a per Watt Basis

For Fiscal Year 2009 Through July 2, 2011

Revenue per Watt

$ 2.56

Manufacturing Costs


Operating Expenses


Total Costs per Watt


Net Operating Loss per Watt

$ (3.92)

The results included herein are a reflection of the fact that Solyndra needed to produce

and sell at full capacity to minimize the impact of its relative fixed costs and to do so in a more

attractive pricing environment for solar cells.


The need to achieve full capacity and the controlling element of fixed costs is illustrated

by the break-even analysis below which provides the amount of revenue required to break even

on a cost revenue basis for the fourth quarter of 2010. During the fourth quarter 2010, Solyndra

produced approximately 89,704 solar panels or approximately 16.5 million watts and sold 88,154

solar panels, or 16.2 million watts at an average sales price of $2.43 per watt.

In order to break-even during the fourth quarter 2010, Solyndra would need to increase

sales by 212% to approximately 274,826 solar panels in order for the operating margin to break-

even. By way of comparison, the Restructuring Plan projects that Solyndra achieves this level of

production during the first quarter of 2013.335


Management was clearly aware of actual results and what was needed to achieve improved results. These
improvements included (1) higher panel power, (2) higher yields, (3) adjusting warranty and other costs of sales, and
(4) reductions to R&D expense. As such, many of these were included in the Restructuring Plan.


Table #26

Break-even Analysis - Fourth Quarter 2010

(In thousands)

4th Quarter

4th Quarter








Total Revenue

$ 41,014 $ 127,864 $ 86,850 211.76%

Cost of Sales

Direct materials

18,618 57,040 38,422 206.37%

Direct Labor & Related Costs

16,184 16,184 -


Direct Overhead

9,427 9,427 -



9,807 9,807 -


Warranty and Other COGS*

11,647 3,836 (7,811) -67.07%

Total Cost of Sales

65,683 96,294 30,611

Gross Margin

(24,669) 31,570 56,239

Operating Expenses

Research & Development

15,498 15,498 -


Sales & Marketing

6,178 6,178 -


General & Administrative

9,894 9,894 -


Total Pre-production Start-up

10,654 - (10,654) 100.00%

Total Operating Expenses

42,224 31,570 (10,654)

Operating Margin

$ (66,893) $ 0 $ 66,893 100.00%





$ 2.53 $ 2.53

Direct material Cost per Watt

$ 1.13 $ 1.13

Panels Shipped

88,154 274,826 186,672 211.76%

* Assumed to be 3% of total revenues for purposes of the breakeven analysis

The data supporting Chart #27 and Chart #28 detailed below was included in

Restructuring Plan and contain four or five months of additional data based on actual

performance. Given external market pressures, ASP’s (average sales price per watt) were in a

state of decline. Solyndra also was limited in the changes that could be effectuated in the

company’s production process. One component that could be improved with appreciable effect

was watts per panel. Solyndra was continually striving to increase its watts per panel and was

successful in doing so to a limited degree. If the Wp could be increased, there would be a


corresponding increase in sales without having to adjust the ASP of the panels or the production

output. As detailed below in Chart #27, from the fourth quarter 2010 to the fourth quarter 2012,

the Restructuring Plan envisioned that the average Wp would increase from 184 to 244, a 33%


The Restructuring Plan recognized that ASPs would continue to decrease and included

further erosion of prices throughout the restructuring forecast as detailed in Chart #28 below:


Portions of the revenue stream included in the Restructuring Plan were based on sales and

marketing changes implemented by Harrison, who assumed the role of Chief Executive Officer

of Solyndra on July 29, 2010. Prior to Harrison’s arrival, Solyndra had been in the process of

analyzing the effectiveness of the sales program instituted during Gronet’s tenure as CEO, which

was somewhat loosely based on the assumed superiority of the Solyndra product and its

capability to “sell itself” when placed into the hands of knowledgeable middlemen, such as

integrators and installers. However, those middlemen were most often driven by price, in which

area Solyndra consistently did not excel. Further, integrators and installers did not have

sufficient capital to pay for the panels without securing an end-buyer for the sale. Accordingly,

there was not a great deal of loyalty to the Solyndra product, which had a detrimental effect on

sales. Harrison and management undertook an extensive analysis of the company’s operations,

business models and sales and marketing strategies at the same time Navigant was preparing the

market study for the Fab 2 Phase II application. As a result of these analyses, Harrison

redirected the marketing and sales structure of Solyndra to focus more directly on the end users

such as Wal-Mart, Target, Coca-Cola and other flat roof customers. The availability of


thousands of large flat roofs and the creation of a dedicated sales staff committed to extolling the

singular virtues of the Solyndra product was the genesis for new sales projections as outlined in

the Restructuring Plan. Unfortunately, the change in strategy came too late to overcome the

market pressures. As a result, the liquidity issues faced by Solyndra forced the company to file

for bankruptcy on September 6, 2011.



The CRO has analyzed the disposition of the various loan and investment funds obtained

by Solyndra, focusing on the period December 30, 2007 (first day of the 2008 fiscal year)

through September 6, 2011 (bankruptcy petition). The period between December 30, 2007 and

September 6, 2011, covers the funding of the DOE Loan Guarantee, construction of Fab 2 Phase

I, closure of Fab 1, and all commercial production and related sales activities of the company.

As part of his analysis, the CRO has prepared a summary of Solyndra’s sources and uses

of cash based on available financial records. Actual sources and uses may vary slightly from the

amounts included below due to various accruals and payables and other non-cash items. To the

extent any such variations exist, they are considered immaterial for purposes of this analysis.

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