UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2019
OR
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 001-34756
Tesla, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
|
91-2197729 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
3500 Deer Creek Road Palo Alto, California |
|
94304 |
(Address of principal executive offices) |
|
(Zip Code) |
(650) 681-5000
(Registrant’s telephone number, including area code)
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 (“Exchange Act”) 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 every Interactive Data File required to be submitted 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 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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer |
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☒ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
|
☐ |
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Smaller reporting company |
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☐ |
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Emerging growth company |
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☐ |
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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 April 22, 2019, there were 173,720,801 shares of the registrant’s common stock outstanding.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2019
INDEX
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Page |
PART I. |
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Item 1. |
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4 |
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4 |
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5 |
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6 |
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Consolidated Statements of Redeemable Noncontrolling Interests and Equity |
|
7 |
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8 |
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9 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
33 |
Item 3. |
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44 |
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Item 4. |
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45 |
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PART II. |
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Item 1. |
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46 |
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Item 1A. |
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47 |
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Item 2. |
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66 |
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Item 3. |
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66 |
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Item 4. |
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66 |
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Item 5. |
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66 |
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Item 6. |
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66 |
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68 |
The discussions in this Quarterly Report on Form 10-Q contain forward-looking statements reflecting our current expectations that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, profitability, expected cost reductions, capital adequacy, expectations regarding demand and acceptance for our technologies, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements.
Tesla, Inc.
(in thousands, except for par values)
(unaudited)
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2019 |
|
|
2018 |
|
||
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,198,169 |
|
|
$ |
3,685,618 |
|
Restricted cash |
|
|
130,950 |
|
|
|
192,551 |
|
Accounts receivable, net |
|
|
1,046,945 |
|
|
|
949,022 |
|
Inventory |
|
|
3,836,850 |
|
|
|
3,113,446 |
|
Prepaid expenses and other current assets |
|
|
464,908 |
|
|
|
365,671 |
|
Total current assets |
|
|
7,677,822 |
|
|
|
8,306,308 |
|
Operating lease vehicles, net |
|
|
1,972,502 |
|
|
|
2,089,758 |
|
Solar energy systems, net |
|
|
6,241,637 |
|
|
|
6,271,396 |
|
Property, plant and equipment, net |
|
|
9,850,929 |
|
|
|
11,330,077 |
|
Operating lease right-of-use assets |
|
|
1,253,027 |
|
|
|
— |
|
Intangible assets, net |
|
|
273,568 |
|
|
|
282,492 |
|
Goodwill |
|
|
74,312 |
|
|
|
68,159 |
|
MyPower customer notes receivable, net of current portion |
|
|
413,181 |
|
|
|
421,548 |
|
Restricted cash, net of current portion |
|
|
353,679 |
|
|
|
398,219 |
|
Other assets |
|
|
801,867 |
|
|
|
571,657 |
|
Total assets |
|
$ |
28,912,524 |
|
|
$ |
29,739,614 |
|
Liabilities |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,248,827 |
|
|
$ |
3,404,451 |
|
Accrued liabilities and other |
|
|
2,276,951 |
|
|
|
2,094,253 |
|
Deferred revenue |
|
|
762,810 |
|
|
|
630,292 |
|
Resale value guarantees |
|
|
480,225 |
|
|
|
502,840 |
|
Customer deposits |
|
|
768,276 |
|
|
|
792,601 |
|
Current portion of long-term debt and finance leases |
|
|
1,705,711 |
|
|
|
2,567,699 |
|
Total current liabilities |
|
|
9,242,800 |
|
|
|
9,992,136 |
|
Long-term debt and finance leases, net of current portion |
|
|
9,787,950 |
|
|
|
9,403,672 |
|
Deferred revenue, net of current portion |
|
|
1,157,343 |
|
|
|
990,873 |
|
Resale value guarantees, net of current portion |
|
|
211,390 |
|
|
|
328,926 |
|
Other long-term liabilities |
|
|
2,475,135 |
|
|
|
2,710,403 |
|
Total liabilities |
|
|
22,874,618 |
|
|
|
23,426,010 |
|
Commitments and contingencies (Note 13) |
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests in subsidiaries |
|
|
570,284 |
|
|
|
555,964 |
|
Equity |
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Preferred stock; $0.001 par value; 100,000 shares authorized; no shares issued and outstanding |
|
|
— |
|
|
|
— |
|
Common stock; $0.001 par value; 2,000,000 shares authorized; 173,682 and 172,603 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively |
|
|
174 |
|
|
|
173 |
|
Additional paid-in capital |
|
|
10,563,746 |
|
|
|
10,249,120 |
|
Accumulated other comprehensive loss |
|
|
(35,019 |
) |
|
|
(8,218 |
) |
Accumulated deficit |
|
|
(5,923,305 |
) |
|
|
(5,317,832 |
) |
Total stockholders' equity |
|
|
4,605,596 |
|
|
|
4,923,243 |
|
Noncontrolling interests in subsidiaries |
|
|
862,026 |
|
|
|
834,397 |
|
Total liabilities and equity |
|
$ |
28,912,524 |
|
|
$ |
29,739,614 |
|
The accompanying notes are an integral part of these consolidated financial statements.
4
Tesla, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Revenues |
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|
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|
|
|
Automotive sales |
|
$ |
3,508,741 |
|
|
$ |
2,561,881 |
|
Automotive leasing |
|
|
215,120 |
|
|
|
173,436 |
|
Total automotive revenues |
|
|
3,723,861 |
|
|
|
2,735,317 |
|
Energy generation and storage |
|
|
324,661 |
|
|
|
410,022 |
|
Services and other |
|
|
492,942 |
|
|
|
263,412 |
|
Total revenues |
|
|
4,541,464 |
|
|
|
3,408,751 |
|
Cost of revenues |
|
|
|
|
|
|
|
|
Automotive sales |
|
|
2,856,209 |
|
|
|
2,091,397 |
|
Automotive leasing |
|
|
117,092 |
|
|
|
104,496 |
|
Total automotive cost of revenues |
|
|
2,973,301 |
|
|
|
2,195,893 |
|
Energy generation and storage |
|
|
316,887 |
|
|
|
375,363 |
|
Services and other |
|
|
685,533 |
|
|
|
380,969 |
|
Total cost of revenues |
|
|
3,975,721 |
|
|
|
2,952,225 |
|
Gross profit |
|
|
565,743 |
|
|
|
456,526 |
|
Operating expenses |
|
|
|
|
|
|
|
|
Research and development |
|
|
340,174 |
|
|
|
367,096 |
|
Selling, general and administrative |
|
|
703,929 |
|
|
|
686,404 |
|
Restructuring and other |
|
|
43,471 |
|
|
|
— |
|
Total operating expenses |
|
|
1,087,574 |
|
|
|
1,053,500 |
|
Loss from operations |
|
|
(521,831 |
) |
|
|
(596,974 |
) |
Interest income |
|
|
8,762 |
|
|
|
5,214 |
|
Interest expense |
|
|
(157,453 |
) |
|
|
(149,546 |
) |
Other income (expense), net |
|
|
25,750 |
|
|
|
(37,716 |
) |
Loss before income taxes |
|
|
(644,772 |
) |
|
|
(779,022 |
) |
Provision for income taxes |
|
|
22,873 |
|
|
|
5,605 |
|
Net loss |
|
|
(667,645 |
) |
|
|
(784,627 |
) |
Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries |
|
|
34,490 |
|
|
|
(75,076 |
) |
Net loss attributable to common stockholders |
|
$ |
(702,135 |
) |
|
$ |
(709,551 |
) |
Net loss per share of common stock attributable to common stockholders |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(4.10 |
) |
|
$ |
(4.19 |
) |
Diluted |
|
$ |
(4.10 |
) |
|
$ |
(4.19 |
) |
Weighted average shares used in computing net loss per share of common stock |
|
|
|
|
|
|
|
|
Basic |
|
|
172,989 |
|
|
|
169,146 |
|
Diluted |
|
|
172,989 |
|
|
|
169,146 |
|
The accompanying notes are an integral part of these consolidated financial statements.
5
Tesla, Inc.
Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Net loss attributable to common stockholders |
|
$ |
(702,135 |
) |
|
$ |
(709,551 |
) |
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(26,801 |
) |
|
|
49,573 |
|
Comprehensive loss |
|
$ |
(728,936 |
) |
|
$ |
(659,978 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
6
Tesla, Inc.
Consolidated Statements of Redeemable Noncontrolling Interests and Equity
(in thousands, except for par values)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable |
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
Other |
|
|
Total |
|
|
Noncontrolling |
|
|
|
|
|
|||||
|
|
Noncontrolling |
|
|
|
Common Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
Interests in |
|
|
Total |
|
||||||||||||
|
|
Interests |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Income |
|
|
Equity |
|
|
Subsidiaries |
|
|
Equity |
|
|||||||||
Balance as of December 31, 2017 |
|
$ |
397,734 |
|
|
|
|
168,797 |
|
|
$ |
169 |
|
|
$ |
9,178,024 |
|
|
$ |
(4,974,299 |
) |
|
$ |
33,348 |
|
|
$ |
4,237,242 |
|
|
$ |
997,346 |
|
|
$ |
5,234,588 |
|
Adjustments for prior periods from adopting ASC 606 |
|
|
8,101 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
623,172 |
|
|
|
— |
|
|
|
623,172 |
|
|
|
(89,084 |
) |
|
|
534,088 |
|
Adjustments for prior periods from adopting Accounting Standards Update No. 2017-05 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,386 |
|
|
|
— |
|
|
|
9,386 |
|
|
|
— |
|
|
|
9,386 |
|
Reclass from mezzanine equity to equity for Convertible Senior Notes due in 2018 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
68 |
|
|
|
— |
|
|
|
— |
|
|
|
68 |
|
|
|
— |
|
|
|
68 |
|
Exercises of conversion feature of convertible senior notes |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
(38 |
) |
|
|
— |
|
|
|
— |
|
|
|
(38 |
) |
|
|
— |
|
|
|
(38 |
) |
Common stock issued, net of shares withheld for employee taxes |
|
|
— |
|
|
|
|
953 |
|
|
|
1 |
|
|
|
94,017 |
|
|
|
— |
|
|
|
— |
|
|
|
94,018 |
|
|
|
— |
|
|
|
94,018 |
|
Stock-based compensation |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
146,825 |
|
|
|
— |
|
|
|
— |
|
|
|
146,825 |
|
|
|
— |
|
|
|
146,825 |
|
Contributions from noncontrolling interests |
|
|
38,126 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
35,578 |
|
|
|
35,578 |
|
Distributions to noncontrolling interests |
|
|
(10,960 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(32,054 |
) |
|
|
(32,054 |
) |
Net loss |
|
|
(27,166 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(709,551 |
) |
|
|
— |
|
|
|
(709,551 |
) |
|
|
(47,910 |
) |
|
|
(757,461 |
) |
Other comprehensive income |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49,573 |
|
|
|
49,573 |
|
|
|
— |
|
|
|
49,573 |
|
Balance as of March 31, 2018 |
|
$ |
405,835 |
|
|
|
|
169,750 |
|
|
$ |
170 |
|
|
$ |
9,418,896 |
|
|
$ |
(5,051,292 |
) |
|
$ |
82,921 |
|
|
$ |
4,450,695 |
|
|
$ |
863,876 |
|
|
$ |
5,314,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable |
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
Other |
|
|
Total |
|
|
Noncontrolling |
|
|
|
|
|
|||||
|
|
Noncontrolling |
|
|
|
Common Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
Interests in |
|
|
Total |
|
||||||||||||
|
|
Interests |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
|
Subsidiaries |
|
|
Equity |
|
|||||||||
Balance as of December 31, 2018 |
|
$ |
555,964 |
|
|
|
|
172,603 |
|
|
$ |
173 |
|
|
$ |
10,249,120 |
|
|
$ |
(5,317,832 |
) |
|
$ |
(8,218 |
) |
|
$ |
4,923,243 |
|
|
$ |
834,397 |
|
|
$ |
5,757,640 |
|
Adjustments for prior periods from adopting ASC 842 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
96,662 |
|
|
|
— |
|
|
|
96,662 |
|
|
|
— |
|
|
|
96,662 |
|
Exercises of conversion feature of convertible senior notes |
|
|
— |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
Common stock issued, net of shares withheld for employee taxes |
|
|
— |
|
|
|
|
1,029 |
|
|
|
1 |
|
|
|
77,952 |
|
|
|
— |
|
|
|
— |
|
|
|
77,953 |
|
|
|
— |
|
|
|
77,953 |
|
Issuance of common stock upon acquisitions and assumed awards |
|
|
— |
|
|
|
|
50 |
|
|
|
0 |
|
|
|
14,536 |
|
|
|
— |
|
|
|
— |
|
|
|
14,536 |
|
|
|
— |
|
|
|
14,536 |
|
Stock-based compensation |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
229,724 |
|
|
|
— |
|
|
|
— |
|
|
|
229,724 |
|
|
|
— |
|
|
|
229,724 |
|
Contributions from noncontrolling interests |
|
|
30,420 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,401 |
|
|
|
16,401 |
|
Distributions to noncontrolling interests |
|
|
(10,797 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(28,565 |
) |
|
|
(28,565 |
) |
Buy-outs of noncontrolling interests |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
(7,589 |
) |
|
|
— |
|
|
|
— |
|
|
|
(7,589 |
) |
|
|
— |
|
|
|
(7,589 |
) |
Net income (loss) |
|
|
(5,303 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(702,135 |
) |
|
|
— |
|
|
|
(702,135 |
) |
|
|
39,793 |
|
|
|
(662,342 |
) |
Other comprehensive loss |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26,801 |
) |
|
|
(26,801 |
) |
|
|
— |
|
|
|
(26,801 |
) |
Balance as of March 31, 2019 |
|
$ |
570,284 |
|
|
|
|
173,682 |
|
|
$ |
174 |
|
|
$ |
10,563,746 |
|
|
$ |
(5,923,305 |
) |
|
$ |
(35,019 |
) |
|
$ |
4,605,596 |
|
|
$ |
862,026 |
|
|
$ |
5,467,622 |
|
The accompanying notes are an integral part of these consolidated financial statements.
7
Tesla, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(667,645 |
) |
|
$ |
(784,627 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation, amortization and impairment |
|
|
467,577 |
|
|
|
416,233 |
|
Stock-based compensation |
|
|
208,378 |
|
|
|
141,639 |
|
Amortization of debt discounts and issuance costs |
|
|
40,108 |
|
|
|
39,345 |
|
Inventory write-downs |
|
|
80,843 |
|
|
|
18,546 |
|
Loss on disposals of fixed assets |
|
|
18,421 |
|
|
|
52,237 |
|
Foreign currency transaction (gains) losses |
|
|
(39,130 |
) |
|
|
47,661 |
|
Non-cash interest and other operating activities |
|
|
116,050 |
|
|
|
(3,984 |
) |
Operating cash flow related to repayment of discounted convertible notes |
|
|
(188,107 |
) |
|
|
— |
|
Changes in operating assets and liabilities, net of effect of business combinations: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(99,640 |
) |
|
|
(169,142 |
) |
Inventory |
|
|
(809,152 |
) |
|
|
(322,081 |
) |
Operating lease vehicles |
|
|
13,012 |
|
|
|
(97,196 |
) |
Prepaid expenses and other current assets |
|
|
(46,103 |
) |
|
|
(50,001 |
) |
Other non-current assets |
|
|
28,064 |
|
|
|
(57,583 |
) |
Accounts payable and accrued liabilities |
|
|
(27,577 |
) |
|
|
317,983 |
|
Deferred revenue |
|
|
317,888 |
|
|
|
45,795 |
|
Customer deposits |
|
|
(25,173 |
) |
|
|
67,359 |
|
Resale value guarantee |
|
|
(47,394 |
) |
|
|
— |
|
Other long-term liabilities |
|
|
19,974 |
|
|
|
(60,560 |
) |
Net cash used in operating activities |
|
|
(639,606 |
) |
|
|
(398,376 |
) |
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
Purchases of property and equipment excluding finance leases, net of sales |
|
|
(279,932 |
) |
|
|
(655,662 |
) |
Purchases of solar energy systems |
|
|
(25,261 |
) |
|
|
(72,975 |
) |
Business combinations, net of cash acquired |
|
|
(650 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(305,843 |
) |
|
|
(728,637 |
) |
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from issuances of convertible and other debt |
|
|
1,494,066 |
|
|
|
1,775,481 |
|
Repayments of convertible and other debt |
|
|
(1,970,709 |
) |
|
|
(1,389,388 |
) |
Repayments of borrowings issued to related parties |
|
|
— |
|
|
|
(17,500 |
) |
Collateralized lease (repayments) borrowings |
|
|
(133,891 |
) |
|
|
(87,092 |
) |
Proceeds from exercises of stock options and other stock issuances |
|
|
77,953 |
|
|
|
94,018 |
|
Principal payments on finance leases |
|
|
(66,656 |
) |
|
|
(18,787 |
) |
Common stock and debt issuance costs |
|
|
(7,757 |
) |
|
|
(2,913 |
) |
Proceeds from investments by noncontrolling interests in subsidiaries |
|
|
46,821 |
|
|
|
73,704 |
|
Distributions paid to noncontrolling interests in subsidiaries |
|
|
(85,257 |
) |
|
|
(52,942 |
) |
Payments for buy-outs of noncontrolling interests in subsidiaries |
|
|
(7,589 |
) |
|
|
(2,921 |
) |
Net cash (used in) provided by financing activities |
|
|
(653,019 |
) |
|
|
371,660 |
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
|
|
4,878 |
|
|
|
10,102 |
|
Net decrease in cash and cash equivalents and restricted cash |
|
|
(1,593,590 |
) |
|
|
(745,251 |
) |
Cash and cash equivalents and restricted cash, beginning of period |
|
|
4,276,388 |
|
|
|
3,964,959 |
|
Cash and cash equivalents and restricted cash, end of period |
|
$ |
2,682,798 |
|
|
$ |
3,219,708 |
|
Supplemental Non-Cash Investing and Financing Activities |
|
|
|
|
|
|
|
|
Acquisitions of property and equipment included in liabilities |
|
$ |
119,903 |
|
|
$ |
286,975 |
|
Estimated fair value of facilities under build-to-suit leases |
|
$ |
— |
|
|
$ |
56,169 |
|
The accompanying notes are an integral part of these consolidated financial statements.
8
Tesla, Inc.
Notes to Consolidated Financial Statements
(unaudited)
Note 1 – Overview
Tesla, Inc. (“Tesla”, the “Company”, “we”, “us” or “our”) was incorporated in the State of Delaware on July 1, 2003. We design, develop, manufacture and sell high-performance fully electric vehicles and design, manufacture, install and sell solar energy generation and energy storage products. Our Chief Executive Officer, as the chief operating decision maker (“CODM”), organizes the Company, manages resource allocations and measures performance among two operating and reportable segments: (i) automotive and (ii) energy generation and storage.
Note 2 – Summary of Significant Accounting Policies
Unaudited Interim Financial Statements
The consolidated balance sheet as of March 31, 2019, the consolidated statements of operations, the consolidated statements of comprehensive loss , the consolidated statements of redeemable noncontrolling interests and equity and the consolidated statements of cash flows for the three months ended March 31, 2019 and 2018, as well as other information disclosed in the accompanying notes, are unaudited. The consolidated balance sheets as of December 31, 2018 was derived from the audited consolidated financial statements as of that date. The interim consolidated financial statements and the accompanying notes should be read in conjunction with the annual consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the year ended December 31, 2018.
The interim consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.
Revenue Recognition
Automotive Sales Revenue
Automotive Sales with and without Resale Value Guarantee
Automotive sales revenue includes revenues related to deliveries of new vehicles, and specific other features and services that meet the definition of a performance obligation include access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-air software updates. Deferred revenue activity related to the access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-air software updates on automotive sales with and without resale value guarantee amounted to $1.04 billion and $882.8 million as of March 31, 2019 and December 31, 2018, respectively. Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the balance sheet date. Revenue recognized from the deferred revenue balance as of December 31, 2018 was $37.4 million for the three months ended March 31, 2019. Of the total deferred revenue on automotive sales with and without resale value guarantees, we expect to recognize $462.3 million of revenue in the next 12 months. The remaining balance will be recognized over the various performance periods of the obligations, which is up to the eight-year life of the vehicle.
At the time of revenue recognition, we reduce the transaction price and record a sales return reserve against revenue for estimated variable consideration related to future product returns. Such estimates are based on historical experience. On a quarterly basis, we assess the estimated market values of vehicles under our buyback options program to determine whether there will be changes to future product returns. As we accumulate more data related to the buyback values of our vehicles or as market conditions change, there may be material changes to their estimated values. Due to price adjustments we made to our vehicle offerings during the three months ended March 31, 2019, we estimated that there is a greater likelihood that customers will exercise their buyback options. As a result, we adjusted our sales return reserve on vehicles previously sold under our buyback options program resulting in a reduction of automotive sales revenues of $500.5 million. If customers elect to exercise the buyback option, we expect to be able to subsequently resell the returned vehicles, which resulted in a corresponding reduction in automotive cost of sales of $408.8 million. The net impact was $91.7 million reduction in gross profit.
9
Automotive Regulatory Credits
We recognize revenue on the sale of regulatory credits at the time control of the regulatory credits is transferred to the purchasing party as automotive revenue in the consolidated statement of operations. Deferred revenue related to sales of automotive regulatory credits was $140.0 million and $0 as of March 31, 2019 and December 31, 2018, respectively. We expect to recognize the deferred revenue as of March 31, 2019 over the next 2 to 3 years.
Automotive Leasing Revenue
Automotive leasing revenue includes revenue recognized under lease accounting guidance for our direct leasing programs as well as the two programs with resale value guarantees described below.
Direct Vehicle Leasing Program
We have outstanding leases under our direct vehicle leasing programs in certain locations in the U.S., Canada and Europe. As of March 31, 2019, the direct vehicle leasing program is only offered for new Model S and Model X leases to qualified customers in the U.S. and Canada. Qualifying customers are permitted to lease a vehicle directly from Tesla for up to 48 months. At the end of the lease term, customers have the option of either returning the vehicle to us or purchasing it for a pre-determined residual value. We account for these leasing transactions as operating leases. We record leasing revenues to automotive leasing revenue on a straight-line basis over the contractual term, and we record the depreciation of these vehicles to cost of automotive leasing revenue.
We capitalize shipping costs and initial direct costs such as the incremental cost of contract administration, referral fees and sales commissions from the origination of automotive lease agreements as an element of operating lease vehicles, net, and subsequently amortize these costs over the term of the related lease agreement. Our policy is to exclude taxes collected from a customer from the transaction price of automotive contracts.
Vehicle Sales to Leasing Partners with a Resale Value Guarantee and a Buyback Option
We offer buyback options in connection with automotive sales with resale value guarantees with certain leasing partner sales in the United States. These transactions entail a transfer of leases, which we have originated with an end-customer, to our leasing partner. As control of the vehicles has not been transferred, these transactions were accounted for as interest bearing collateralized borrowings in accordance with ASC 840, Leases, prior to January 1, 2019. Under this program, cash is received for the full price of the vehicle and the collateralized borrowing value is generally recorded within resale value guarantees and the customer upfront deposit is recorded within deferred revenue. We amortize the deferred revenue amount to automotive leasing revenue on a straight-line basis over the option period and accrue interest expense based on our borrowing rate. We capitalize vehicles under this program to operating lease vehicles, net, on the consolidated balance sheet, and we record depreciation from these vehicles to cost of automotive leasing revenue during the period the vehicle is under a lease arrangement. Cash received for these vehicles, net of revenue recognized during the period, is classified as collateralized lease (repayments) borrowings within cash flows from financing activities in the consolidated statements of cash flows. With the adoption of ASC 842 on January 1, 2019, all new agreements under this program will be accounted for as operating leases under ASC 842 and there will be no material change in the timing and amount of revenue recognized over the term. Consequently, any cash flows for new agreements will be classified as operating cash activities on the consolidated statements of cash flows.
At the end of the lease term, we settle our liability in cash by either purchasing the vehicle from the leasing partner for the buyback option amount or paying a shortfall to the option amount the leasing partner may realize on the sale of the vehicle. Any remaining balances within deferred revenue and resale value guarantee will be settled to automotive leasing revenue. The end customers can extend the lease for a period of up to 6 months. In cases where the leasing partner retains ownership of the vehicle after the end of our option period, we expense the net value of the leased vehicle to cost of automotive leasing revenue. The maximum amount we could be required to pay under this program, should we decide to repurchase all vehicles, was $415.0 million and $479.8 million as of March 31, 2019 and December 31, 2018, respectively, including $301.2 million within a 12-month period from March 31, 2019. As of March 31, 2019 and December 31, 2018, we had $470.0 million and $558.3 million, respectively, of such borrowings recorded in resale value guarantees and $85.6 million and $92.5 million, respectively, recorded in deferred revenue liability. For the three months ended March 31, 2019 and 2018, we recognized $52.9 million and $82.5 million, respectively, of leasing revenue related to this program. The net carrying amount of operating lease vehicles under this program was $396.0 million and $468.5 million as of March 31, 2019 and December 31, 2018.
10
Vehicle Sales to Customers with a Resale Value Guarantee where Exercise is Probable
For certain international programs where we have offered resale value guarantees to certain customers who purchased vehicles and where we expect the customer has a significant economic incentive to exercise the resale value guarantee provided to them, we continue to recognize these transactions as operating leases. The process to determine whether there is a significant economic incentive includes a comparison of a vehicle’s estimated market value at the time the option is exercisable with the guaranteed resale value to determine the customer’s economic incentive to exercise. We have not sold any vehicles under this program since the first half of 2017 and all current period activity relates to the exercise or cancellation of active transactions. The amount of sale proceeds equal to the resale value guarantee is deferred until the guarantee expires or is exercised. The remaining sale proceeds are deferred and recognized on a straight-line basis over the stated guarantee period to automotive leasing revenue. The guarantee period expires at the earlier of the end of the guarantee period or the pay-off of the initial loan. We capitalize the cost of these vehicles on the consolidated balance sheet as operating lease vehicles, net, and depreciate their value, less salvage value, to cost of automotive leasing revenue over the same period.
In cases where a customer retains ownership of a vehicle at the end of the guarantee period, the resale value guarantee liability and any remaining deferred revenue balances related to the vehicle are settled to automotive leasing revenue, and the net book value of the leased vehicle is expensed to cost of automotive leasing revenue. If a customer returns the vehicle to us during the guarantee period, we purchase the vehicle from the customer in an amount equal to the resale value guarantee and settle any remaining deferred balances to automotive leasing revenue, and we reclassify the net book value of the vehicle on the consolidated balance sheet to used vehicle inventory. As of March 31, 2019 and December 31, 2018, $136.6 million and $149.7 million, respectively, of the guarantees were exercisable by customers within the next 12 months. For the three months ended March 31, 2019 and 2018, we recognized $47.5 million and $16.1 million, respectively, of leasing revenue related to this program. The net carrying amount of operating lease vehicles under this program was $169.2 million and $211.5 million as of March 31, 2019 and December 31, 2018.
Energy Generation and Storage Sales
Energy generation and storage sales revenues consists of the sale of solar energy systems and energy storage systems to residential, small commercial, and large commercial and utility grade customers. Upon adoption of the new lease standard (refer to Leases section below for details), energy generation and storage sales revenues will include agreements for solar energy systems and power purchase agreements (“PPAs”) that commence after January 1, 2019, as these are now accounted for under ASC 606. We record as deferred revenue any non-refundable amounts that are collected from customers related to fees charged for prepayments and remote monitoring service and operations and maintenance service, which is recognized as revenue ratably over the respective customer contract term. As of March 31, 2019 and December 31, 2018, deferred revenue related to such customer payments amounted to $155.8 million and $148.7 million, respectively. Revenue recognized from the deferred revenue balance as of December 31, 2018 was $16.6 million for the three months ended March 31, 2019. We have elected the practical expedient to omit disclosure of the amount of the transaction price allocated to remaining performance obligations for energy generation and storage sales with an original expected contract length of one year or less and the amount that we have the right to invoice when that amount corresponds directly with the value to the performance to date. As of March 31, 2019, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $102.3 million. Of this amount, we expect to recognize $4.7 million in the next 12 months and the remaining over a period up to 29 years.
Deferred revenue also includes the portion of rebates and incentives received from utility companies and various local and state government agencies, which is recognized as revenue over the lease term. As of March 31, 2019 and December 31, 2018, deferred revenue from rebates and incentives amounted to $35.3 million and $36.8 million, respectively.
We capitalize initial direct costs from the execution of solar energy system sales and PPAs, which include the referral fees and sales commissions, as an element of solar energy systems, net, and subsequently amortize these costs over the term of the related sale or PPA.
11
Revenue by source
The following table disaggregates our revenue by major source (in thousands):
|
|
Three Months Ended March 31, 2019 |
|
|
Three Months Ended March 31, 2018 |
|
||
Automotive sales without resale value guarantee |
|
$ |
3,683,381 |
|
|
$ |
2,182,514 |
|
Automotive sales with resale value guarantee (1) |
|
|
(390,621 |