Tesla 2016 Annual Report Download - page 65

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$659.8millionandthecarryingvalueof2018Notes,asmezzanineequityonourconsolidatedbalancesheetasofDecember31,
2015.Similarly,debtissuancecostswereclassifiedasothercurrentassetsasofDecember31,2015.Shouldtheclosingpriceconditionsbemetinthefirstquarter
of2016orafuturequarter,2018Noteswillbeconvertibleattheirholders’optionduringtheimmediatelyfollowingquarter.
Convertible Senior Notes Carrying Value and Interest Expense
Inaccordancewithaccountingguidanceonembeddedconversionfeatures,wevaluedandbifurcatedtheconversionoptionassociatedwiththeNotesfrom
therespectivehostdebtinstrumentandinitiallyrecordedtheconversionoptionforthe2018Notes,2019Notes,and2021Notesinstockholders’equity.The
resultingdebtdiscountsonthe2018Notes,2019Notes,and2021Notesarebeingamortizedtointerestexpenseattheeffectiveinterestrateoverthecontractual
termsoftheNotes.
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December 31, 2015 December 31, 2014
  2018 Notes 2019 Notes 2021 Notes 2018 Notes 2019 Notes 2021 Notes
  (in thousands, except years and percentages)
Carryingvalue $ 617,716 $ 795,405 $ 1,092,748 $ 601,566 $ 759,891 $ 1,046,627
Unamortizeddiscount  42,045  124,595  287,252  58,196  160,109  333,373
Principalamount $ 659,761 $ 920,000 $ 1,380,000 $ 659,762 $ 920,000 $ 1,380,000
Remainingamortizationperiod(years)  2.4  3.2  5.2      
Effectiveinterestrateonliabilitycomponent  4.29%  4.89%  5.96%      
Carryingamountofequitycomponent $ 82,800 $ 188,100 $ 369,400      
Ifconvertedvalueinexcessofparvalue $ 611,898          
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Full Repayment of Department of Energy Loan Facility
OnJanuary20,2010,weenteredintoaloanfacilitywiththeFederalFinancingBank(FFB),andtheDOE,pursuanttotheAdvancedTechnologyVehicles
Manufacturing(ATVM)IncentiveProgram.InMay2013,inconnectionwiththeclosingofourofferingsofcommonstockandNotes,wepaid$451.8millionto
settlealloutstandingloanamountsof$441.0million,includingprincipalandinterest,aswellasanearlyrepaymentpenaltyof$10.8millionwhichwasrecordedin
interestexpensefortheyearendedDecember31,2013.UponterminationoftheDOELoanFacility,$29.3millionheldinthisdedicatedaccountwasreleasedby
theDOE.
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AsaresultofourrepaymentofalloutstandingprincipalandinterestundertheDOELoanFacilityandtheterminationoftheDOELoanFacilityinMay
2013,theDOEwarrantexpired.Assuch,werecognizedotherincomeforthechangeinthefairvalueoftheDOEwarrantintheamountof$10.7millionforthe
yearendedDecember31,2013.Additionally,weamortizedallremainingunamortizeddebtissuancecostsof$5.8millionrelatedtotheDOELoanFacilityto
interestexpensefortheyearendedDecember31,2013.
Warehouse line of credit
InMarch2015,weenteredintoaloanandsecurityagreement(the“WarehouseFacility”)forasecuredassetbasedlineofcreditforaprincipalamountup
to$100million.InJune2015,weamendedtheWarehouseFacilityforanadditionalprincipalamountof$50million,foratotalofupto$150million.Obligations
undertheWarehouseFacilityweresecuredbycertainofourleasecontractswithTesladirectlyandtherelatedleasedvehicles.InconnectionwiththeWarehouse
Facility,wesoldthebeneficialinterestinsuchleasecontractsandrelatedvehiclestoawhollyownedspecialpurposeentitythatistheborrowerintheWarehouse
Facility,whichpledgedsuchbeneficialinterestintheunderlyingassetstothethird-partylenderundertheWarehouseFacility.BorrowingsundertheWarehouse
Facilityaregenerallylimitedtoupto72%ofthenetpresentvalueoftheremainingleasepaymentsandtheresidualvehiclevaluesundereligibleleasecontracts.
InterestwaspayablemonthlyonamountsborrowedundertheWarehouseFacilityatavariablerateofLIBORplus1.65%andonundrawnamountsatarate
of0.5%.TheWarehousefacilitywouldhavematuredinMarch2017,atwhichtimealloutstandingborrowingwouldbecomedue.Priortothatdate,principal
paymentsweredueintheamountthattheborrowinglimitdecreasedbelowouroutstandingprincipalbalance.AsofDecember31,2015,wehadrepaidall
borrowingsundertheWarehouseFacilityandterminatedit.
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