Tesla 2016 Annual Report Download - page 64
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Please find page 64 of the 2016 Tesla annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.InconnectionwiththeofferingofthesenotesinMarch2014,weenteredintoconvertiblenotehedgetransactionswherebywehavetheoptiontopurchase
initially(subjecttoadjustmentforcertainspecifiedevents)atotalofapproximately5.6millionsharesofourcommonstockatapriceofapproximately$359.87
pershare.Thetotalcostoftheconvertiblenotehedgetransactionswas$524.7million.Inaddition,wesoldwarrantswherebytheholdersofthewarrantshavetheo
ptiontopurchaseinitially(subjecttoadjustmentforcertainspecifiedevents)atotalofapproximately2.2millionsharesofourcommonstockatapriceof$512.66
forthe2019Notesandatotalofapproximately3.3millionsharesofourcommonstockatapriceof$560.64persharefor2021Notes.Wereceived$338.4million
incashproceedsfromthesaleofthesewarrants.Similarly,inconnectionwiththeissuanceofadditionalnotesinApril2014,weenteredintoconvertiblenote
hedgetransactionsandpaidanaggregate$78.7million.Inaddition,wesoldwarrantstopurchase(subjecttoadjustmentforcertainspecifiedevents)atotalof
approximately0.3millionsharesofourcommonstockatastrikepriceof$512.66pershareforthewarrantsrelatingto2019Notes,andatotalofapproximately
0.5millionsharesofourcommonstockatastrikepriceof$560.64pershareforthewarrantsrelatingto2021Notes.Wereceivedaggregateproceedsof
approximately$50.8millionfromthesaleofthewarrants.Takentogether,thepurchaseoftheconvertiblenotehedgesandthesaleofwarrantsareintendedto
offsetanyactualdilutionfromtheconversionofthesenotesandtoeffectivelyincreasetheoverallconversionpricefrom$359.87to$512.66pershareinthecase
ofwarrantsrelatingto2019Notesandfrom$359.87to$560.64inthecaseofwarrantsrelatingto2021Notes.Asthesetransactionsmeetcertainaccounting
criteria,theconvertiblenotehedgesandwarrantsarerecordedinstockholders’equityandarenotaccountedforasderivatives.Thenetcostincurredinconnection
withtheconvertiblenotehedgeandwarranttransactionswasrecordedasareductiontoadditionalpaid-incapitalontheconsolidatedbalancesheetasof
December31,2015.
1.50% Convertible Senior Notes and Bond Hedge and Warrant Transactions
InMay2013,weissued$660.0millionaggregateprincipalamountof2018Notesinapublicoffering.Thenetproceedsfromtheoffering,afterdeducting
transactioncosts,wereapproximately$648.0million.Weincurred$12.0millionofdebtissuancecostsinconnectionwiththeissuanceofthe2018Noteswhichwe
recordedinotherassetsandareamortizingtointerestexpenseusingtheeffectiveinterestmethodoverthecontractualtermofthe2018Notes.Theinterestunder
the2018Notesisfixedat1.50%perannumandispayablesemi-annuallyinarrearsonJune1andDecember1ofeachyear,commencingonDecember1,2013.
Each$1,000ofprincipalofthe2018Noteswillinitiallybeconvertibleinto8.0306sharesofourcommonstock,whichisequivalenttoaninitialconversion
priceofapproximately$124.52pershare,subjecttoadjustmentupontheoccurrenceofspecifiedevents.Holdersofthe2018Notesmayconverttheir2018Notes
attheiroptiononorafterMarch1,2018.Further,holdersofthe2018Notesmayconverttheir2018NotesattheiroptionpriortoMarch1,2018,onlyunderthe
followingcircumstances:(1)duringanyfiscalquarterbeginningafterthefiscalquarterendingSeptember30,2013,ifthelastreportedsalepriceofourcommon
stockforatleast20tradingdays(whetherornotconsecutive)duringthelast30consecutivetradingdaysoftheimmediatelyprecedingfiscalquarterisgreaterthan
orequalto130%oftheconversionpriceoneachapplicabletradingday;(2)duringthefivebusinessdayperiodfollowinganyfiveconsecutivetradingdayperiod
inwhichthetradingpriceforthe2018Notesislessthan98%oftheaverageoftheclosingsalepriceofourcommonstockforeachdayduringsuchfivetrading
dayperiod;or(3)ifwemakespecifieddistributionstoholdersofourcommonstockorifspecifiedcorporatetransactionsoccur.Uponconversion,wewouldpay
theholdersincashfortheprincipalamountofthe2018Notesand,ifapplicable,sharesofourcommonstock(subjecttoourrighttodelivercashinlieuofallora
portionofsuchsharesofourcommonstock)basedonacalculateddailyconversionvalue.Ifafundamentalchangeoccurspriortothematuritydate,holdersofthe
2018Notesmayrequireustorepurchasealloraportionoftheir2018Notesforcashatarepurchasepriceequalto100%oftheprincipalamountofthe2018
Notes,plusanyaccruedandunpaidinterest.Inaddition,ifspecificcorporateeventsoccurpriortothematuritydate,wewillincreasetheconversionratefora
holderwhoelectstoconvertits2018Notesinconnectionwithsuchacorporateeventincertaincircumstances.
Inaccordancewithaccountingguidanceonembeddedconversionfeatures,wevaluedandbifurcatedtheconversionoptionassociatedwiththe2018Notes
fromthehostdebtinstrumentandrecordedtheconversionoptionof$82.8millioninstockholders’equity.Theresultingdebtdiscountonthe2018Notesisbeing
amortizedtointerestexpenseataneffectiveinterestrateof4.29%overthecontractualtermofthe2018Notes.
Inconnectionwiththeofferingofthe2018Notes,weenteredintoconvertiblenotehedgetransactionswherebywehavetheoptiontopurchaseinitially
(subjecttocertainspecifiedevents)atotalofapproximately5.3millionsharesofourcommonstockatapriceofapproximately$124.52pershare.Thecostofthe
convertiblenotehedgetransactionswas$177.5million.Inaddition,wesoldwarrantswherebytheholdersofthewarrantshavetheoptiontopurchaseinitially
(subjecttocertainspecifiedevents)atotalofapproximately5.3millionsharesofourcommonstockatapriceof$184.48pershare.Wereceived$120.3millionin
cashproceedsfromthesaleofthesewarrants.Takentogether,thepurchaseoftheconvertiblenotehedgesandthesaleofwarrantsareintendedtooffsetanyactual
dilutionfromtheconversionofthe2018Notesandtoeffectivelyincreasetheoverallconversionpricefrom$124.52to$184.48pershare.Asthesetransactions
meetcertainaccountingcriteria,theconvertiblenotehedgesandwarrantsarerecordedinstockholders’equityandarenotaccountedforasderivatives.Thenetcost
incurredinconnectionwiththeconvertiblenotehedgeandwarranttransactionswasrecordedasareductiontoadditionalpaid-incapitalontheconsolidated
balancesheetasofDecember31,2015.
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