run-10q_20170331.htm

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

As of May 8, 2017, the number of shares of the registrant’s common stock outstanding was 105,444,765.

	March 31, 2017		December 31, 2016
	(Unaudited)
Assets
Current assets:
Cash	$	203,791	$	206,364
Restricted cash		12,030		11,882
Accounts receivable (net of allowances for doubtful accounts of $1,088 and $1,166 as of March 31, 2017 and December 31, 2016, respectively)		54,065		60,258
State tax credits receivable		—		13,713
Inventories		59,603		67,326
Prepaid expenses and other current assets		11,585		9,802
Total current assets		341,074		369,345
Restricted cash		6,117		6,117
Solar energy systems, net		2,790,424		2,629,366
Property and equipment, net		44,925		48,471
Intangible assets, net		17,448		18,499
Goodwill		87,543		87,543
Prepaid tax asset		—		378,541
Other assets		31,497		34,936
Total assets ⁽¹⁾	$	3,319,028	$	3,572,818
Liabilities and total equity
Current liabilities:
Accounts payable	$	65,520	$	66,018
Distributions payable to noncontrolling interests and redeemable noncontrolling interests		11,157		10,654
Accrued expenses and other liabilities		48,675		59,261
Deferred revenue, current portion		74,284		70,849
Deferred grants, current portion		8,394		8,011
Capital lease obligations, current portion		9,198		10,015
Long-term non-recourse debt, current portion		15,797		14,153
Lease pass-through financing obligation, current portion		5,872		5,823
Total current liabilities		238,897		244,784
Deferred revenue, net of current portion		578,425		583,401
Deferred grants, net of current portion		224,217		226,893
Capital lease obligations, net of current portion		10,701		12,965
Recourse debt		247,400		244,000
Long-term non-recourse debt, net of current portion		686,078		639,870
Lease pass-through financing obligation, net of current portion		138,050		137,958
Other liabilities		5,646		5,457
Deferred tax liabilities		41,068		415,397
Total liabilities ⁽¹⁾		2,170,482		2,510,725
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests		142,012		137,907
Stockholders’ equity:
Preferred stock, $0.0001 par value—authorized, 200,000 shares as of March 31, 2017 and December 31, 2016; no shares issued and outstanding as of March 31, 2017 and December 31, 2016		—		—
Common stock, $0.0001 par value—authorized, 2,000,000 shares as of March 31, 2017 and December 31, 2016; issued and outstanding, 104,643 and 104,321 shares as of March 31, 2017 and December 31, 2016, respectively		10		10
Additional paid-in capital		672,896		668,076
Accumulated other comprehensive income		236		437
Retained earnings		20,161		4,438
Total stockholders’ equity		693,303		672,961
Noncontrolling interests		313,231		251,225
Total equity		1,006,534		924,186
Total liabilities, redeemable noncontrolling interests and total equity	$	3,319,028	$	3,572,818

The accompanying notes are an integral part of these consolidated financial statements.

	Three Months Ended March 31,
	2017			2016
Revenue:
Operating leases and incentives	$	48,098		$	34,540
Solar energy systems and product sales		56,019			64,203
Total revenue		104,117			98,743
Operating expenses:
Cost of operating leases and incentives		44,336			38,100
Cost of solar energy systems and product sales		49,431			57,512
Sales and marketing		31,676			43,188
Research and development		2,996			2,463
General and administrative		24,621			23,248
Amortization of intangible assets		1,051			1,052
Total operating expenses		154,111			165,563
Loss from operations		(49,994	)		(66,820	)
Interest expense, net		15,277			11,515
Other expenses (income), net		475			(532	)
Loss before income taxes		(65,746	)		(77,803	)
Income tax expense		7,338			—
Net loss		(73,084	)		(77,803	)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests		(85,811	)		(90,937	)
Net income available to common stockholders	$	12,727		$	13,134

Net income per share available to common stockholders
Basic	$	0.12		$	0.13
Diluted	$	0.12		$	0.13
Weighted average shares used to compute net income per share available to common stockholders
Basic		104,038			101,273
Diluted		106,469			104,219

The accompanying notes are an integral part of these consolidated financial statements.

	Three Months Ended March 31,
	2017			2016
Operating activities:
Net loss	$	(73,084	)	$	(77,803	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization, net of amortization of deferred grants		31,710			21,596
Deferred income taxes		7,337			—
Stock-based compensation expense		5,874			3,809
Noncash interest expense		5,931			3,502
Interest on lease pass-through financing obligations		2,961			3,002
Reduction in lease pass-through financing obligations		(4,546	)		(4,236	)
Other noncash losses and expenses		2,898			1,657
Changes in operating assets and liabilities:
Accounts receivable		6,362			3,595
Inventories		7,723			(23,314	)
Prepaid and other assets		(1,441	)		(4,355	)
Accounts payable		(4,357	)		(10,103	)
Accrued expenses and other liabilities		(15,445	)		(317	)
Deferred revenue		(1,030	)		5,572
Net cash used in operating activities		(29,107	)		(77,395	)

Investing activities:
Payments for the costs of solar energy systems, leased and to be leased		(168,149	)		(164,629	)
Purchases of property and equipment		(2,610	)		(5,023	)
Net cash used in investing activities		(170,759	)		(169,652	)

Financing activities:
Proceeds from state tax credits, net of recapture		13,388			9,202
Proceeds from issuance of recourse debt		57,400			141,000
Repayment of recourse debt		(54,000	)		(147,000	)
Proceeds from issuance of non-recourse debt		38,225			106,400
Repayment of non-recourse debt		(4,904	)		(2,160	)
Payment of debt fees		—			(9,369	)
Proceeds from lease pass-through financing obligations		1,448			9,746
Contributions received from noncontrolling interests and redeemable noncontrolling interests		162,565			154,944
Distributions paid to noncontrolling interests and redeemable noncontrolling interests		(12,887	)		(9,986	)
(Payments) proceeds from exercises of stock options, net of withholding taxes on restricted stock units		(1,067	)		452
Offering costs paid related to initial public offering		—			(437	)
Payment of capital lease obligations		(2,749	)		(3,115	)
Change in restricted cash		(126	)		1,819
Net cash provided by financing activities		197,293			251,496

Net change in cash		(2,573	)		4,449
Cash, beginning of period		206,364			203,864
Cash, end of period	$	203,791		$	208,313

Supplemental disclosures of cash flow information
Cash paid for interest	$	9,347		$	4,681

Supplemental disclosures of noncash investing and financing activities
Purchases of solar energy systems and property and equipment included in accounts payable and accrued expenses	$	22,468		$	15,769
Purchases of solar energy systems included in non-recourse debt	$	12,873		$	—
Distributions payable to noncontrolling interests and redeemable noncontrolling interests	$	11,157		$	7,368
Vehicles acquired under capital leases	$	76		$	7,318

The accompanying notes are an integral part of these consolidated financial statements.

Sunrun Inc. (“Sunrun” or the “Company”) was originally formed in 2007 as a California limited liability company and was converted into a Delaware corporation in 2008. The Company is engaged in the design, development, installation, sale, ownership and maintenance of residential solar energy systems (“Projects”) in the United States.

Sunrun acquires customers directly and through relationships with various solar and strategic partners (“Partners”). The Projects are constructed either by Sunrun or by Sunrun’s Partners and are owned by the Company. Sunrun’s customers enter into a power purchase agreement (“PPA”) or a lease (each, a “Customer Agreement”) which typically has a term of 20 years. Sunrun monitors, maintains and insures the Projects. The Company also sells solar energy systems and products, such as panels and racking and solar leads generated to customers.

The Company has formed various subsidiaries (“Funds”) to finance the development of Projects. These Funds, structured as limited liability companies, obtain financing from outside investors and purchase or lease Projects from Sunrun under master purchase or master lease agreements. The Company currently utilizes three legal structures in its investment Funds, which are referred to as: (i) lease pass-throughs, (ii) partnership-flips and (iii) joint venture (“JV”) inverted leases.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2016. The unaudited consolidated financial statements are prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (all of which are considered of normal recurring nature) considered necessary to present fairly the Company’s financial results. The results of the three months ended March 30, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or other future periods.

The consolidated financial statements reflect the accounts and operations of the Company and those of its subsidiaries, including Funds, in which the Company has a controlling financial interest. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity. However, a controlling financial interest may also exist in entities, such as variable interest entities (“VIEs”), through arrangements that do not involve controlling voting interests. In accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 810 (“ASC 810”) Consolidation, the Company consolidates any VIE of which it is the primary beneficiary. The primary beneficiary, as defined in ASC 810, is the party that has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb the losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it continues to be the primary beneficiary. The consolidated financial statements reflect the assets and liabilities of VIEs that are consolidated. All intercompany transactions and balances have been eliminated in consolidation.

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly makes significant estimates and assumptions, including, but not limited to, the estimates that affect the collectability of accounts receivable, the valuation of inventories, the useful lives of solar energy systems, the useful lives of property and equipment, the valuation and useful lives of intangible assets, the fair value of assets acquired and liabilities assumed in business combinations, the effective interest rate used to amortize lease pass-through financing

obligations, the fair value used to value solar energy systems, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, the fair value of debt instruments disclosed and the redemption value of redeemable noncontrolling interests. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Actual results may differ from such estimates.

The Company has one operating segment with one business activity, providing solar energy services and products to customers. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who manages operations on a consolidated basis for purposes of allocating resources. When evaluating performance and allocating resources, the CODM reviews financial information presented on a consolidated basis.

Revenues from external customers (including, but not limited to homeowners) for each group of similar products and services are as follows (in thousands):

The Company defines fair value as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses valuation approaches to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. The FASB establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

The Company’s financial instruments include cash, receivables, accounts payable, accrued expenses, distributions payable to noncontrolling interests, derivatives, and recourse and non-recourse debt.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 Revenue from Contracts with Customers (Topic 606), to replace the existing revenue recognition criteria for contracts with customers and to establish the disclosure requirements for revenue from contracts with customers. The core principle of this standard is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The FASB has issued several updates to the standard which (i) clarify the application of the principal versus agent guidance; (ii) clarify the guidance relating to performance obligations and licensing; and (iii) clarify assessment of the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transition. This ASU is effective for the Company for annual reporting

periods beginning after December 15, 2017 including the interim reporting periods within that fiscal year. Adoption of this ASU is either retrospective to each prior period presented or retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company is evaluating whether certain of its Customer Agreements will no longer meet the definition of a lease under ASU 842, Leases, and whether such arrangements would then need to be accounted for under ASC 606. The Company is continuing to assess the impact of such a change, as well as other potential impacts of the standard on its various revenue streams, including Customer Agreements. The Company has a project plan in place to meet the requirements of this standard using internal resources by the effective date. The Company has completed its initial assessment and is currently performing contract reviews and developing a preliminary accounting policy.

In February 2016, the FASB issued ASU No. 2016-02 to replace existing lease guidance with ASC 842, Leases. Entities are required to determine whether a contract is a lease or contains a lease at the inception of the contract. Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The accounting for lessors is largely unchanged. This ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. Adoption of this ASU is applied using a modified retrospective approach. The Company currently accounts for Customer Agreements pursuant to ASC 840, Leases. The Company is evaluating whether the Customer Agreements will continue to meet the definition of a lease pursuant to ASC 842, Leases, or whether such agreements will be accounted for in accordance with ASC 606, Revenue from Contracts with Customers. The Company is continuing to assess all potential impacts of this standard, including the timing of adoption and the potential application of the standard’s practical expedients.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation. The new guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also requires the Company to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. The Company adopted the new ASU effective January 1, 2017. The Company elected to continue to estimate the number of awards that are expected to vest. Upon the adoption, deferred tax liabilities decreased by $3.3 million, and retained earnings increased by $3.3 million as of January 1, 2017.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which replaces the current incurred loss impairment methodology with a current expected credit losses model. The amendment applies to entities which hold financial assets and net investment in leases that are not accounted for at fair value through net income as well as loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from the scope that have the contractual right to receive cash. This ASU is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. Adoption of this ASU is applied using a modified retrospective approach, with certain aspects requiring a prospective approach. The Company is currently evaluating this guidance and the impact it may have on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. As a result, a reporting entity will recognize the tax expense from the sale of assets in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of the transaction are eliminated in the consolidated financial statements. Any deferred tax asset that arises in the buyer’s jurisdiction will also be recognized at the time of the transfer. The Company adopted the standard effective January 1, 2017. As the Company sells solar energy systems to Funds, the Company will record the current tax effects of the gain on such sales as well as a deferred tax asset related to the Company’s increased tax basis in the partnership as a result of such sales. As a result of the adoption, the Company reversed net prepaid tax assets of $378.5 million, recognized gross deferred tax assets of $378.2 million and recorded a cumulative adjustment decreasing retained earnings by $0.3 million as of January 1, 2017.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, which require a statement of cash flows to present the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. This ASU is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. Adoption of this ASU is applied using a retrospective approach. As a result, the Company will no longer present transfers between cash and restricted cash in the consolidated cash flow statements upon adoption in the first quarter of 2018.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. Instead, under this amendment, an entity shall perform its annual, or interim, goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The ASU is effective for annual or any interim goodwill impairment tests beginning in fiscal years after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard would only have an effect on the Company’s consolidated financial statements if it failed Step 1 of the goodwill impairment test, which has not occurred to date.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendments in this update provide a screen to determine when a set of operations is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The Company early adopted the new ASU effective January 1, 2017 on a prospective basis.

At March 31, 2017 and December 31, 2016, the carrying value of receivables, accounts payable, accrued expenses and distributions payable to noncontrolling interests approximates fair value due to their short-term nature. The carrying values and fair values of debt instruments are as follows (in thousands):

	March 31, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Lines of credit	$	526,300	$	526,300	$	489,200	$	489,200
Syndicated term loans		189,163		189,165		189,989		189,989
Bank term loans		96,258		95,450		81,307		80,542
Note payable		37,363		36,404		36,232		35,396
Solar asset-backed notes		100,191		104,599		101,295		102,869
Total	$	949,275	$	951,918	$	898,023	$	897,996

At March 31, 2017 and December 31, 2016, the fair value of the Company’s lines of credit, syndicated term loans and certain bank term loans approximate their carrying values because their interest rates are variable rates that approximate rates currently available to the Company. At March 31, 2017 and December 31, 2016, the fair value of the Company’s other debt instruments are based on rates currently offered for debt with similar maturities and terms. The Company’s fair value of the debt instruments fell under the Level 3 hierarchy. These valuation approaches involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market.

The Company determines the fair value of its interest rate swaps using a discounted cash flow model which incorporates an assessment of the risk of non-performance by the interest rate swap counterparty and an evaluation of the Company’s credit risk in valuing derivative instruments. The valuation model uses various inputs including contractual terms, interest rate curves, credit spreads and measures of volatility.

The Company determines the fair value of its warrants issued using the Black-Scholes option-pricing model. The significant unobservable input used in the fair value measurement of the warrant liability was the expected volatility of the Company. Generally, increases (decreases) in the expected volatility of the Company would result in a directionally similar impact to the measurement of the Company’s warrants.

At March 31, 2017 and December 31, 2016, financial instruments measured at fair value on a recurring basis, based upon the fair value hierarchy are as follows (in thousands):

	March 31, 2017
	Level 1		Level 2		Level 3		Total
Derivative assets:
Interest rate swaps	$	—	$	804	$	—	$	804
Total	$	—	$	804	$	—	$	804

Derivative liabilities:
Warrants	$	—	$	—	$	27	$	27
Total	$	—	$	—	$	27	$	27

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Derivative assets:
Interest rate swaps	$	—	$	1,632	$	—	$	1,632
Total	$	—	$	1,632	$	—	$	1,632

Derivative liabilities:
Warrants	$	—	$	—	$	20	$	20
Total	$	—	$	—	$	20	$	20

All solar energy systems, construction-in-progress and inverters have been leased to or are subject to signed Customer Agreements with customers. The Company recorded depreciation expense related to solar energy systems of $27.6 million and $20.4 million for the three months ended March 31, 2017 and 2016, respectively. The depreciation expense was reduced by the amortization of deferred grants of $2.0 million and $4.0 million for the three months ended March 31, 2017 and 2016, respectively.

As of March 31, 2017, debt consisted of the following (in thousands, except percentages):

							Unused		Annual
	Carrying Values, net of						Borrowing		Contractual	Interest			Maturity
	debt discount						Capacity		Interest Rate	Rate			Date
	Current		Long Term		Total
Recourse debt:
Bank line of credit	$	—	$	247,400	$	247,400	$	6	Varies ⁽¹⁾	4.19% - 6.25%			April 2018
Total recourse debt	$	—	$	247,400	$	247,400	$	6

Non-recourse debt:
Line of credit (Aggregation Facility)		—		278,900		278,900		5,200	Varies ⁽²⁾	3.35% - 3.54%			December 2020
Term Loan A		575		145,854		146,429		5,000	LIBOR + 2.75%		3.79	%	December 2021
Bank term loans due in September 2022		1,504		33,015		34,519		—	LIBOR + 2.25%		3.03	%	September 2022
									LIBOR + 3.00%		4.03	%	September 2022
Bank term loan due in April 2022		1,372		25,886		27,258		—	4.50%		4.50	%	April 2022
Solar asset-backed notes		3,789		96,402		100,191		—	4.40% - Class A		4.40	%	July 2024
									5.38% - Class B		5.38	%	July 2024
Term Loan and Term Loan B		116		42,618		42,734		—	LIBOR + 5.00%		6.04	%	December 2020 and 2021
Bank term loan due in July 2021		8,441		26,040		34,481		—	Varies ⁽³⁾	6.55% - 10.05%			July 2021
Note payable		—		37,363		37,363		—	12.00%		12.00	%	December 2018
Total non-recourse debt		15,797		686,078		701,875		10,200
Total debt	$	15,797	$	933,478	$	949,275	$	10,206

As of December 31, 2016, debt consisted of the following (in thousands, except percentages):

Unused

Annual

Carrying Values, net of

Borrowing

Contractual

Interest

Maturity

debt discount

Capacity

Interest Rate

Rate

Date

Current

Long Term

Total

Recourse debt:

Bank line of credit

—

244,000

Large accelerated filer	☐		Accelerated filer	☒

Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐

			Emerging growth company	☒

		Page
Item 1	Financial Statements (Unaudited)	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 5.	Other Information	62
Item 6.	Exhibits	62
	Signatures	63

	Three Months Ended March 31,
	2017			2016
Net income attributable to common stockholders	$	12,727		$	13,134
Other comprehensive income:
Unrealized loss on derivatives, net of income taxes		(764	)		(5,798	)
Less: Interest expense on derivatives recognized into earnings, net of income taxes		(563	)		(525	)
Comprehensive income	$	12,526		$	7,861

	March 31, 2017		December 31, 2016
Raw materials	$	56,290	$	62,037
Work-in-process		3,313		5,289
Total	$	59,603	$	67,326

	March 31, 2017			December 31, 2016
Solar energy system equipment costs	$	2,637,668		$	2,459,856
Inverters		275,267			260,011
Initial direct costs		125,980			117,587
Total solar energy systems		3,038,915			2,837,454
Less: accumulated depreciation and amortization		(330,427	)		(303,305	)
Add: construction-in-progress		81,936			95,217
Total solar energy systems, net	$	2,790,424		$	2,629,366