Tesla 2016 Annual Report Download - page 43

Inconnectionwiththeofferingofthesenotesin2014,wepurchasedconvertiblenotehedgesfor$603.4millioninaggregateandsoldwarrantsfor$389.2
millioninaggregate.Takentogether,thepurchaseoftheconvertiblenotehedgesandthesaleofwarrantsareintendedtooffsetanyactualdilutionfromthe
conversionofthe2019Notesand2021Notes.
Duringthefourthquarterof2015,theclosingpriceofourcommonstockdidnotmeetorexceed130%oftheapplicableconversionpriceofour2019Notes
and2021Notesonatleast20ofthelast30consecutivetradingdaysofthequarter;furthermore,nootherconditionsallowingholdersofthesenotestoconverthave
beenmetasofDecember31,2015.Therefore,the2019Notesand2021Notesarenotconvertibleduringthefirstquarterof2016andareclassifiedaslong-term
debt.Shouldtheclosingpriceconditionsbemetinthefirstquarterof2016orafuturequarter,the2019Notesand/orthe2021Noteswillbeconvertibleattheir
holders’optionduringtheimmediatelyfollowingquarter.
1.50%ConvertibleSeniorNotesandBondHedgeandWarrantTransactions
InMay2013,weissued$660.0millionaggregateprincipalamountof1.50%convertibleseniornotesdue2018(theNotes)inapublicoffering.Thenet
proceedsfromtheoffering,afterdeductingtransactioncosts,wereapproximately$648.0million.TheinterestundertheNotesisfixedat1.50%perannumandis
payablesemi-annuallyinarrearsonJune1andDecember1ofeachyear,commencingonDecember1,2013.
Inconnectionwiththeofferingofthe2018Notes,wepurchasedconvertiblenotehedgesfor$177.5millioninaggregateandsoldwarrantsfor$120.3
millioninaggregate.Takentogether,thepurchaseoftheconvertiblenotehedgesandthesaleofwarrantsareintendedtooffsetanyactualdilutionfromthe
conversionofthe2018Notes.
Duringthefourthquarterof2015,theclosingpriceofourcommonstockexceeded130%oftheapplicableconversionpriceofour2018Notesonatleast20
ofthelast30consecutivetradingdaysofthequarter;therefore,holdersof2018Notesmayconverttheirnotesduringthefirstquarterof2016.Assuch,we
classifiedthe$617.7millioncarryingvalueofour2018Notesascurrentliabilitiesandclassified$42.1million,representingthedifferencebetweentheaggregate
principalofour2018Notesof$659.8millionandthecarryingvalueof2018Notes,asmezzanineequityonourconsolidatedbalancesheetasofDecember31,
2015.Similarly,debtissuancecostswereclassifiedasothercurrentassetsasofDecember31,2015.Shouldtheclosingpriceconditionsbemetinthefirstquarter
of2016orafuturequarter,the2018Noteswillbeconvertibleattheirholders’optionduringtheimmediatelyfollowingquarter.
Formoreinformationonthe2018Notes,2019Notes,and2021NotesseePartII-Item8-FinancialStatementsandSupplementaryData,Note8-
ConvertibleNotesandLong-TermDebtObligations.
Common Stock Offering and Concurrent Private Placement
Concurrentwiththeexecutionofthe2018NotesandrelatedtransactionsinMay2013,wealsocompletedapublicofferingofcommonstockandsolda
totalof3,902,862sharesofourcommonstockfortotalcashproceedsofapproximately$355.1million(whichincludes487,857sharesor$45.0millionsoldtoour
ChiefExecutiveOfficer(CEO)),netofunderwritingdiscountsandofferingcosts.Wealsosold596,272sharesofourcommonstocktoourCEOandreceivedtotal
cashproceedsof$55.0millioninaprivateplacementatthepublicofferingprice.
InAugust2015,wecompletedapublicofferingofcommonstockandsoldatotalof3,099,173sharesofourcommonstockfortotalcashproceedsof
approximately$738.3million(whichincludes82,645sharesor$20.0millionsoldtoElonMusk,ourChiefExecutiveOfficer(CEO)),netofunderwriting
discountsandofferingcosts.
Contractual Obligations
Wearepartytocontractualobligationsinvolvingcommitmentstomakepaymentstothirdparties,includingcertaindebtfinancingarrangementsandleases,
primarilyforstores,servicecenters,certainmanufacturingandcorporateoffices.Thesealsoinclude,aspartofournormalbusinesspractices,contractswith
suppliersforpurchasesofcertainrawmaterials,components,andservicestofacilitateadequatesupplyofthesematerialsandservicesandcapacityreservation
contracts.Wehavethefollowingcontractualobligations,includingfirmpurchaseobligations.Apurchaseobligationisdefinedasanagreementtopurchasegoods
orservicesthatisenforceableandlegallybindingonusandthatspecifiesallsignificantterms.Forobligationswithcancellationprovisions,theamountsincluded
inthetablebelowwerelimitedtothenon-cancelableportionoftheagreementterms.Theexpectedtimingofpaymentsoftheobligationsintheprecedingtableis
estimatedbasedoncurrentinformation.Timingofpaymentsandactualamountspaidmaybedifferent,dependingonthetimeofreceiptofgoodsorservices,or
changestoagreed-uponamountsforsomeobligations.Openpurchaseordersaregenerallycancellableinfullorinpartatourdiscretionandarethereforenot
consideredfirmpurchaseobligations.
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