Tesla : Form 10-Q

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 September 30, 2018

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	(I.R.S. Employer
incorporation or organization)	Identification No.)
3500 Deer Creek Road
Palo Alto, California	94304
(Address of principal executive offices)	(Zip Code)

[phone]

(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 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	☒	Accelerated filer ☐
Non-accelerated filer	☐	Smaller reporting company ☐
Emerging growth company	☐

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). As of October 26, 2018, there were 171,732,775 shares of the registrant's common stock outstanding.

Yes ☐

No ☒

TESLA, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2018

INDEX

Page

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Consolidated Statements of Comprehensive Income (Loss)	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	70
72

SIGNATURES

Forward-Looking Statements

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.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Tesla, Inc.

Consolidated Balance Sheets

(in thousands, except for par values)

(unaudited)

September 30, 2018

Assets Current assets

Cash and cash equivalents Restricted cash

Accounts receivable, net Inventory

Prepaid expenses and other current assets

Total current assets

Operating lease vehicles, net

Solar energy systems, leased and to be leased, net Property, plant and equipment, net

Intangible assets, net

Goodwill

MyPower customer notes receivable, net of current portion Restricted cash, net of current portion

Other assets

Total assets Liabilities

Current liabilities

Accounts payable

Accrued liabilities and other Deferred revenue

Resale value guarantees Customer deposits

Current portion of long-term debt and capital leases Current portion of promissory notes issued to related parties

Total current liabilities

Long-term debt and capital leases, net of current portion Solar bonds issued to related parties, net of current portion Convertible senior notes issued to related parties

Deferred revenue, net of current portion

Resale value guarantees, net of current portion Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 12) Redeemable noncontrolling interests in subsidiaries Convertible senior notes (Note 10)

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; 171,578 and 168,797 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively

Additional paid-in capital

Accumulated other comprehensive income Accumulated deficit

Total stockholders' equity Noncontrolling interests in subsidiaries

Total liabilities and equity

$

2,967,504$

158,627155,323

1,155,001515,381

3,314,127325,232

7,920,4916,570,520

2,186,1374,116,604

6,301,5376,347,490

11,246,29510,027,522

291,476361,502

65,22660,237

422,897456,652

396,835441,722

431,819273,123

$

29,262,713$ 28,655,372

$

3,596,984$ 2,390,250

1,990,0951,731,366

570,9201,015,253

604,949787,333

905,838853,919

2,106,538796,549

-100,000

9,775,3247,674,670

9,669,8799,415,700

1002,634

950,1261,177,799

455,7622,309,222

2,555,3192,442,970

23,409,14423,022,980

551,264-

9,957,711

8,271

(5,457,315 )

4,508,838

793,467

$

29,262,713$

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

December 31, 2017

3,367,914

2,263,537268,365

1002,519

397,73470

-

-

171

169

9,178,024

33,348

(4,974,299 )

4,237,242

997,346

28,655,372

4

Tesla, Inc.

Consolidated Statements of Operations (in thousands, except per share data)

(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2017
Revenues
Automotive sales	$	$	$	$	6,125,643
Automotive leasing	220,461	286,158	633,713	813,462
Total automotive revenues	6,098,766	2,362,889	12,191,764	6,939,105
Energy generation and storage	399,317	317,505	1,183,747	818,229
Services and other	326,330	304,281	859,884	713,168
Total revenues	6,824,413	2,984,675	14,235,395	8,470,502
Cost of revenues
Automotive sales	4,405,919	1,755,622	9,027,055	4,724,849
Automotive leasing	119,283	175,224	360,694	516,683
Total automotive cost of revenues	4,525,202	1,930,846	9,387,749	5,241,532
Energy generation and storage	330,554	237,288	1,036,190	592,823
Services and other	444,992	367,401	1,212,335	852,446
Total cost of revenues	5,300,748	2,535,535	11,636,274	6,686,801
Gross profit	1,523,665	449,140	2,599,121	1,783,701
Operating expenses
Research and development	350,848	331,622	1,104,073	1,023,436
Selling, general and administrative	729,876	652,998	2,167,039	1,794,210
Restructuring and other	26,184	-	129,618	-
Total operating expenses	1,106,908	984,620	3,400,730	2,817,646
Income (loss) from operations	416,757	(5 3 5 ,4 8 0 )	(8 0 1 ,6 0 9 )	(1 ,0 3 3 ,9 4 5 )
Interest income	6,907	5,531	17,185	13,406
Interest expense	(1 7 5 ,2 2 0 )	(1 1 7 ,1 0 9 )	(4 8 8 ,3 4 8 )	(3 2 4 ,8 9 6 )
Other income (expense), net	22,876	(2 4 ,3 9 0 )	36,071	(8 3 ,6 9 6 )
Income (loss) before income taxes	271,320	(6 7 1 ,4 4 8 )	(1 ,2 3 6 ,7 0 1 )	(1 ,4 2 9 ,1 3 1 )
Provision (benefit) for income taxes	16,647	(2 8 5 )	35,959	40,640
Net income (loss)	254,673	(6 7 1 ,1 6 3 )	(1 ,2 7 2 ,6 6 0 )	(1 ,4 6 9 ,7 7 1 )
Net loss attributable to noncontrolling interests and
redeemable noncontrolling interests in subsidiaries	(5 6 ,8 4 3 )	(5 1 ,7 8 7 )	(1 5 7 ,0 8 6 )	(1 8 3 ,7 2 1 )
Net income (loss) attributable to common stockholders	$	(1 ,2 8 6 ,0 5 0 )
Net income (loss) per share of common stock attributable
to common stockholders, basic and diluted
Basic	$	(7 .8 0 )
Diluted	$	(7 .8 0 )
Weighted average shares used in computing net income
(loss) per share of common stock
Basic	164,897
Diluted	164,897

2018

2017

5,878,305

2,076,731

311,516$

(6 1 9 ,3 7 6 )$

1.82$ 1.75$

(3 .7 0 )$ (3 .7 0 )$

170,893178,196

167,294167,294

170,019170,019

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

2018

11,558,051

(1 ,1 1 5 ,5 7 4 )$

(6 .5 6 )$ (6 .5 6 )$

5