VIVINT SOLAR, INC., 10-Q filed on 11/16/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2015
Nov. 2, 2015
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
VSLR 
 
Entity Registrant Name
Vivint Solar, Inc. 
 
Entity Central Index Key
0001607716 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Non-accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
106,537,391 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 81,755 
$ 261,649 
Accounts receivable, net
5,464 
1,837 
Inventories
472 
774 
Prepaid expenses and other current assets
20,861 
16,806 
Total current assets
108,552 
281,066 
Restricted cash and cash equivalents
13,172 
6,516 
Solar energy systems, net
986,908 
588,167 
Property and equipment, net
34,048 
13,024 
Intangible assets, net
4,462 
18,487 
Goodwill
36,601 
36,601 
Prepaid tax asset, net
247,861 
111,910 
Other non-current assets, net
9,409 
8,553 
TOTAL ASSETS
1,441,013 1
1,064,324 1
Current liabilities:
 
 
Accounts payable
87,890 
51,354 
Accounts payable—related party
1,544 
2,132 
Distributions payable to non-controlling interests and redeemable non-controlling interests
8,316 
6,780 
Accrued compensation
21,102 
16,794 
Current portion of deferred revenue
423 
314 
Current portion of capital lease obligation
5,147 
3,502 
Accrued and other current liabilities
34,286 
14,016 
Total current liabilities
158,708 
94,892 
Capital lease obligation, net of current portion
9,801 
6,176 
Long-term debt
253,000 
105,000 
Deferred tax liability, net
193,692 
112,227 
Deferred revenue, net of current portion
30,118 
4,466 
Other non-current liabilities
15,255 
 
Total liabilities
660,574 1
322,761 1
Commitments and contingencies (Note 15)
   
   
Redeemable non-controlling interests
171,179 
128,427 
Stockholders' equity:
 
 
Common stock, $0.01 par value—1,000,000 authorized, 106,537 shares issued and outstanding as of September 30, 2015; 1,000,000 authorized, 105,303 shares issued and outstanding as of December 31, 2014
1,065 
1,053 
Additional paid-in capital
528,252 
502,785 
Retained earnings (accumulated deficit)
421 
(25,849)
Total stockholders' equity
529,738 
477,989 
Non-controlling interests
79,522 
135,147 
Total equity
609,260 
613,136 
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY
$ 1,441,013 
$ 1,064,324 
[1] The Company’s assets as of September 30, 2015 and December 31, 2014 include $914.1 million and $540.1 million consisting of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, of $883.0 million and $525.9 million as of September 30, 2015 and December 31, 2014; cash and cash equivalents of $25.9 million and $12.6 million as of September 30, 2015 and December 31, 2014; and accounts receivable, net, of $5.3 million and $1.5 million as of September 30, 2015 and December 31, 2014. The Company’s liabilities as of September 30, 2015 and December 31, 2014 included $42.8 million and $11.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $8.3 million and $6.8 million as of September 30, 2015 and December 31, 2014; deferred revenue of $30.5 million and $4.6 million as of September 30, 2015 and December 31, 2014; accrued and other current liabilities of $0.9 million and $0 as of September 30, 2015 and December 31, 2014; and other non-current liabilities of $3.1 million and $0 as of September 30, 2015 and December 31, 2014. For further information see Note 10—Investment Funds.
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Sep. 30, 2015
Dec. 31, 2014
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
1,000,000,000 
1,000,000,000 
Common stock, shares issued
106,537,000 
105,303,000 
Common stock, shares outstanding
106,537,000 
105,303,000 
Total assets
$ 1,441,013,000 1
$ 1,064,324,000 1
Solar energy systems, net
986,908,000 
588,167,000 
Cash and cash equivalents
81,755,000 
261,649,000 
Accounts receivable, net
5,464,000 
1,837,000 
Total liabilities
660,574,000 1
322,761,000 1
Distributions payable to non-controlling interests and redeemable non-controlling interests
8,316,000 
6,780,000 
Accrued and other current liabilities
34,286,000 
14,016,000 
Other non-current liabilities
15,255,000 
 
Variable Interest Entities
 
 
Total assets
914,149,000 
540,086,000 
Solar energy systems, net
882,961,000 
525,903,000 
Cash and cash equivalents
25,924,000 
12,641,000 
Accounts receivable, net
5,264,000 
1,542,000 
Total liabilities
42,810,000 
11,352,000 
Distributions payable to non-controlling interests and redeemable non-controlling interests
8,316,000 
6,780,000 
Deferred revenue
30,500,000 
4,600,000 
Accrued and other current liabilities
930,000 
Other non-current liabilities
$ 3,104,000 
$ 0 
[1] The Company’s assets as of September 30, 2015 and December 31, 2014 include $914.1 million and $540.1 million consisting of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, of $883.0 million and $525.9 million as of September 30, 2015 and December 31, 2014; cash and cash equivalents of $25.9 million and $12.6 million as of September 30, 2015 and December 31, 2014; and accounts receivable, net, of $5.3 million and $1.5 million as of September 30, 2015 and December 31, 2014. The Company’s liabilities as of September 30, 2015 and December 31, 2014 included $42.8 million and $11.4 million of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $8.3 million and $6.8 million as of September 30, 2015 and December 31, 2014; deferred revenue of $30.5 million and $4.6 million as of September 30, 2015 and December 31, 2014; accrued and other current liabilities of $0.9 million and $0 as of September 30, 2015 and December 31, 2014; and other non-current liabilities of $3.1 million and $0 as of September 30, 2015 and December 31, 2014. For further information see Note 10—Investment Funds.
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Revenue:
 
 
 
 
Operating leases and incentives
$ 21,781 
$ 7,131 
$ 45,662 
$ 15,798 
Solar energy system and product sales
693 
1,202 
2,492 
2,600 
Total revenue
22,474 
8,333 
48,154 
18,398 
Operating expenses:
 
 
 
 
Cost of revenue—operating leases and incentives
37,624 
19,515 
94,799 
47,161 
Cost of revenue—solar energy system and product sales
470 
627 
1,384 
1,510 
Sales and marketing
12,051 
5,220 
37,181 
16,229 
Research and development
1,047 
431 
2,549 
1,403 
General and administrative
21,954 
37,170 
71,948 
63,276 
Amortization of intangible assets
3,711 
3,727 
11,195 
11,155 
Impairment of intangible assets
 
 
4,506 
 
Total operating expenses
76,857 
66,690 
223,562 
140,734 
Loss from operations
(54,383)
(58,357)
(175,408)
(122,336)
Interest expense
3,351 
3,261 
8,208 
7,335 
Other expense
26 
297 
399 
1,462 
Loss before income taxes
(57,760)
(61,915)
(184,015)
(131,133)
Income tax (benefit) expense
(7,448)
(10,222)
15,977 
(3,286)
Net loss
(50,312)
(51,693)
(199,992)
(127,847)
Net loss attributable to non-controlling interests and redeemable non-controlling interests
(50,780)
(16,415)
(226,262)
(105,103)
Net income available (loss attributable) to common stockholders
$ 468 
$ (35,278)
$ 26,270 
$ (22,744)
Net income available (loss attributable) per share to common stockholders:
 
 
 
 
Basic
$ 0.00 
$ (0.45)
$ 0.25 
$ (0.30)
Diluted
$ 0.00 
$ (0.45)
$ 0.24 
$ (0.30)
Weighted-average shares used in computing net income available (loss attributable) per share to common stockholders:
 
 
 
 
Basic
106,492 
78,428 
105,932 
76,160 
Diluted
110,223 
78,428 
109,694 
76,160 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
Net loss
$ (199,992)
$ (127,847)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
16,771 
5,435 
Amortization of intangible assets
11,195 
11,270 
Impairment of intangible assets
4,506 
 
Loss on removal of solar energy systems
1,169 
 
Stock-based compensation
23,206 
20,846 
Amortization of deferred financing costs
2,557 
1,522 
Noncash contributions for services
 
181 
Noncash interest expense
 
4,280 
Deferred income taxes
77,480 
45,567 
Changes in operating assets and liabilities, net of acquisitions:
 
 
Accounts receivable, net
(3,627)
(1,893)
Inventories
302 
21 
Prepaid expenses and other current assets
1,498 
(11,610)
Prepaid tax asset, net
(135,951)
(45,817)
Other non-current assets, net
(990)
(11,350)
Accounts payable
6,570 
1,243 
Accounts payable—related party
(588)
(3,061)
Accrued compensation
3,713 
(2,786)
Deferred revenue
25,761 
1,340 
Accrued and other current liabilities
21,785 
7,788 
Net cash used in operating activities
(144,635)
(104,871)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
Payments for the cost of solar energy systems
(383,674)
(249,612)
Payment in connection with business acquisition, net of cash acquired
 
(12,040)
Payments for property and equipment
(5,282)
(3,056)
Change in restricted cash and cash equivalents
(6,656)
(1,516)
Purchase of intangible assets
(1,675)
(269)
Proceeds from U.S. Treasury grants
 
190 
Net cash used in investing activities
(397,287)
(266,303)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
Proceeds from investment by non-controlling interests and redeemable non-controlling interests
232,071 
240,863 
Distributions paid to non-controlling interests and redeemable non-controlling interests
(17,146)
(5,484)
Proceeds from long-term debt
148,000 
87,000 
Proceeds from short-term debt
 
75,500 
Payments on short-term debt
 
(75,500)
Payments for debt issuance costs
(3,078)
 
Proceeds from lease pass-through financing obligation
4,005 
 
Proceeds from revolving lines of credit—related party
 
154,500 
Payments on revolving lines of credit—related party
 
(141,500)
Principal payments on capital lease obligations
(3,600)
(1,810)
Proceeds from issuance of common stock
648 
103,500 
Payments for deferred offering costs
(589)
(5,784)
Excess tax effects from stock-based compensation
1,717 
 
Net cash provided by financing activities
362,028 
431,285 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(179,894)
60,111 
CASH AND CASH EQUIVALENTS—Beginning of period
261,649 
6,038 
CASH AND CASH EQUIVALENTS—End of period
81,755 
66,149 
NONCASH INVESTING AND FINANCING ACTIVITIES:
 
 
Costs of solar energy systems included in accounts payable, accrued compensation and other accrued liabilities
28,619 
33,596 
Property acquired under build-to-suit agreements
12,250 
 
Vehicles acquired under capital leases
8,882 
6,421 
Accrued distributions to non-controlling interests and redeemable non-controlling interests
1,536 
2,302 
Solar energy system sales
 
 
NONCASH INVESTING AND FINANCING ACTIVITIES:
 
 
Receivable for tax credit recorded as a reduction to solar energy system costs
$ 914 
$ 3,380 
Organization
Organization

1.

Organization

Vivint Solar, Inc. was incorporated as a Delaware corporation on August 12, 2011. Vivint Solar, Inc. and its subsidiaries are collectively referred to as the “Company.” The Company commenced operations in May 2011. The Company offers solar energy to residential customers through long-term customer contracts, such as power purchase agreements and solar energy system leases. The Company enters into these long-term customer contracts and legal-form leases through a sales organization that primarily uses a direct-to-home sales model. The long-term customer contracts are typically for 20 years and require the customer to make monthly payments to the Company. In May 2015, the Company began offering solar energy systems to commercial and industrial (“C&I”) customers through long-term customer contracts. On July 20, 2015, the Company entered into an Agreement and Plan of Merger with SunEdison, the world’s largest renewable energy development company, and SEV Merger Sub, Inc., a wholly-owned subsidiary of SunEdison.

The Company has formed various investment funds to monetize the recurring customer payments under its long-term customer contracts and the investment tax credits, accelerated tax depreciation and other incentives associated with residential solar energy systems. The Company uses the cash received from the investment funds to finance a portion of the Company’s variable and fixed costs associated with installing the residential solar energy systems.

 

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

2.

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K filed with the SEC on March 13, 2015. The unaudited condensed consolidated financial statements are prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (all of which are considered of normal recurring nature) considered necessary to present fairly the Company’s financial results. The results of the nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2015 or for any other interim period or other future year.

The condensed consolidated financial statements reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities (“VIEs”). This approach focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The Company has determined that it is the primary beneficiary in all but one of its operational VIEs, which are consolidated by the Company. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. For additional information, see Note 10—Investment Funds.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company regularly makes significant estimates and assumptions including, but not limited to, estimates that affect the Company’s principles of consolidation, revenue recognition, the useful lives of solar energy systems, the valuation and recoverability of intangible assets and goodwill acquired, useful lives of intangible assets, recoverability of long-lived assets, the recognition and measurement of loss contingencies, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, and the valuation of non-controlling interests and redeemable non-controlling interests. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

Comprehensive Income (Loss)

As the Company has no other comprehensive income or loss, comprehensive income (loss) is the same as net income available (loss attributable) to common stockholders for all periods presented.

Other Changes

During the nine months ended September 30, 2015, the Company reassessed its reportable segments as discussed in Note 17—Segment Information. There have been no other changes to the Company’s significant accounting policies as described in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

Recent Accounting Pronouncements

In September 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-16, Business Combinations – Simplifying the Accounting for Measurement-Period Adjustments. Under current GAAP, an acquirer is required to retrospectively adjust any provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. To simplify the accounting for adjustments to provisional amounts, the update eliminates the requirement to retrospectively account for those adjustments. This update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company does not currently have acquisitions which would be affected by this update.

In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest (Subtopic 835-30) – Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which addresses an omission in ASU 2015-03. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented as a direct reduction from the carrying amount of that debt liability similar to debt discounts. Existing recognition and measurement guidance is not impacted. However, ASU 2015-15 acknowledges that ASU 2015-03 does not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Per ASU 2015-15, an entity may defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU 2015-15 is effective immediately. ASU 2015-03 is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company has debt issuance costs related to line-of-credit arrangements and has adopted ASU 2015-15, which resulted in no change of presentation. If the Company enters into other debt arrangements that fall under ASU 2015-03, the Company will account for any related debt issuance costs per the update upon its effectiveness in the first quarter of 2016.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which defers the effective date of ASU 2014-09. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2015-14 defers the effective date of ASU 2014-09 for one year, and the standard is now effective for the Company on January 1, 2018. The deferral allows for early adoption of the standard, which for the Company would be on January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Customers Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance regarding the accounting for fees paid by a customer in cloud computing arrangements. If a cloud computing arrangement includes a software license, the payment of fees should be accounted for in the same manner as the acquisition of other software licenses. If there is no software license, the fees should be accounted for as a service contract. The update is effective in fiscal years beginning after December 15, 2015 and early adoption is permitted. An entity can elect to adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. The Company is evaluating the impact this update will have on its consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update makes some targeted changes to current consolidation guidance. These changes impact both the voting and the variable interest consolidation models. In particular, the update will change how companies determine whether limited partnerships or similar entities are VIEs. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption is permitted. The Company currently consolidates all but one of its VIEs and does not anticipate that ASU 2015-02 will have a significant impact on its consolidated financial statements and related disclosures.

Fair Value Measurements
Fair Value Measurements

3.

Fair Value Measurements

The Company measures and reports its cash equivalents at fair value. The following tables set forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy (in thousands):

 

 

September 30, 2015

 

 

Level I

 

 

Level II

 

 

Level III

 

 

Total

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time deposits

$

 

 

$

1,900

 

 

$

 

 

$

1,900

 

Total financial assets

$

 

 

$

1,900

 

 

$

 

 

$

1,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

 

Level I

 

 

Level II

 

 

Level III

 

 

Total

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time deposits

$

 

 

$

1,900

 

 

$

 

 

$

1,900

 

Money market funds

 

607

 

 

 

 

 

 

 

 

 

607

 

Total financial assets

$

607

 

 

$

1,900

 

 

$

 

 

$

2,507

 

 

The carrying amounts of certain financial instruments of the Company, consisting of cash and cash equivalents excluding time deposits, accounts receivable, accounts payable, accounts payable—related party and distributions payable to redeemable non-controlling interests (all Level I) approximate fair value due to their relatively short maturities. Time deposits (Level II) approximate fair value due to their short-term nature (30 days) and, upon renewal, the interest rate is adjusted based on current market rates. The Company’s long-term debt is carried at cost and was $253.0 million and $105.0 million as of September 30, 2015 and December 31, 2014. The Company estimated the fair values of long-term debt to approximate its carrying values as interest accrues at a floating rate based on market rates. The Company did not realize gains or losses related to financial assets for any of the periods presented.

Solar Energy Systems
Solar Energy Systems

4.

Solar Energy Systems

Solar energy systems, net consisted of the following (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

System equipment costs

$

784,725

 

 

$

478,502

 

Initial direct costs related to solar energy systems

 

147,098

 

 

 

75,349

 

 

 

931,823

 

 

 

553,851

 

Less: Accumulated depreciation and amortization

 

(25,173

)

 

 

(10,186

)

 

 

906,650

 

 

 

543,665

 

Solar energy system inventory

 

80,258

 

 

 

44,502

 

Solar energy systems, net

$

986,908

 

 

$

588,167

 

 

The Company recorded depreciation and amortization expense related to solar energy systems of $6.3 million and $2.0 million for the three months ended September 30, 2015 and 2014. Depreciation and amortization expense related to solar energy systems of $15.0 million and $5.1 million was recorded for the nine months ended September 30, 2015 and 2014.


Property and Equipment
Property and Equipment

5.

Property and Equipment

Property and equipment, net consisted of the following (in thousands):

 

 

 

Estimated

 

September 30,

 

 

December 31,

 

 

 

Useful Lives

 

2015

 

 

2014

 

Vehicles acquired under capital leases

 

3 years

 

$

22,034

 

 

$

13,351

 

Furniture and computer and other equipment

 

3 years

 

 

5,730

 

 

 

2,183

 

Leasehold improvements

 

1-3 years

 

 

3,933

 

 

 

2,088

 

 

 

 

 

 

31,697

 

 

 

17,622

 

Less: Accumulated depreciation and amortization

 

 

 

 

(9,899

)

 

 

(4,598

)

 

 

 

 

 

21,798

 

 

 

13,024

 

Build-to-suit assets

 

 

 

 

12,250

 

 

 

 

Property and equipment, net

 

 

 

$

34,048

 

 

$

13,024

 

 

The Company recorded depreciation and amortization expense related to property and equipment of $2.2 million and $1.0 million for the three months ended September 30, 2015 and 2014. Depreciation and amortization expense related to property and equipment of $5.6 million and $2.2 million was recorded for the nine months ended September 30, 2015 and 2014.

The Company leases fleet vehicles that are accounted for as capital leases. Depreciation on vehicles under capital leases totaling $1.4 million and $0.8 million was capitalized in solar energy systems, net for the three months ended September 30, 2015 and 2014. Depreciation on vehicles under capital leases totaling $3.8 million and $2.0 million was capitalized in solar energy systems, net for the nine months ended September 30, 2015 and 2014. For the three and nine months ended September 30, 2015 and 2014, a de minimis amount of depreciation was also expensed.

Because of its involvement in certain aspects of the construction of a new headquarters building in Lehi, UT, the Company is deemed the owner of the building for accounting purposes during the construction period. Accordingly, the Company recorded a build-to-suit asset of $12.3 million as of September 30, 2015. See Note 15—Commitments and Contingencies.

Intangible Assets
Intangible Assets

6.

Intangible Assets

Intangible assets consisted of the following (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Cost:

 

 

 

 

 

 

 

Customer contracts

$

43,783

 

 

$

43,783

 

Customer relationships

 

164

 

 

 

738

 

Trademarks/trade names

 

201

 

 

 

1,664

 

Developed technology

 

522

 

 

 

1,295

 

In-process research and development

 

 

 

 

2,097

 

Internal-use software

 

2,038

 

 

 

370

 

Total carrying value

 

46,708

 

 

 

49,947

 

Accumulated amortization:

 

 

 

 

 

 

 

Customer contracts

 

(41,959

)

 

 

(31,013

)

Customer relationships

 

(55

)

 

 

(135

)

Trademarks/trade names

 

(33

)

 

 

(152

)

Developed technology

 

(109

)

 

 

(160

)

Internal-use software

 

(90

)

 

 

 

Total accumulated amortization

 

(42,246

)

 

 

(31,460

)

Total intangible assets, net

$

4,462

 

 

$

18,487

 

 

The Company recorded amortization expense of $3.7 million for the three months ended September 30, 2015 and 2014, which was included in amortization of intangible assets in the condensed consolidated statements of operations. The Company recorded amortization expense of $11.2 million for the nine months ended September 30, 2015. Amortization expense was $11.3 million for the nine months ended September 30, 2014, of which $0.1 million was recorded in cost of revenue-solar energy system and product sales.

In February 2015, the Company decided to discontinue the external sales of the SunEye and PV Designer products, the rights to which the Company acquired when it acquired Solmetric Corporation, or Solmetric, in January 2014. This discontinuance was considered an indicator of impairment, and a review regarding the recoverability of the carrying value of the related intangible assets was performed. In-process research and development, which was intended to generate Solmetric product sales in the residential market, was discontinued and deemed fully impaired resulting in a charge of $2.1 million. The Solmetric, SunEye and PV Designer trade names will no longer be utilized and were deemed fully impaired resulting in a charge of $1.3 million. The SunEye and PV Designer developed technology assets were deemed fully impaired resulting in a charge of $0.7 million. Customer relationships were deemed partially impaired by $0.4 million due to the loss of external customers who purchased the discontinued products. As a result of this review, the Company recorded a total impairment charge of $4.5 million for the nine months ended September 30, 2015.

Accrued Compensation
Accrued Compensation

7.

Accrued Compensation

Accrued compensation consisted of the following (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Accrued payroll

$

12,915

 

 

$

10,219

 

Accrued commissions

 

8,187

 

 

 

6,575

 

Total accrued compensation

$

21,102

 

 

$

16,794

 

 

Accrued and Other Current Liabilities
Accrued and Other Current Liabilities

8.

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Income tax payable

$

19,031

 

 

$

4,097

 

Accrued professional fees

 

4,593

 

 

 

1,289

 

Sales and use tax payable

 

3,023

 

 

 

5,052

 

Accrued litigation settlements

 

2,215

 

 

 

450

 

Deferred rent

 

1,173

 

 

 

1,090

 

Current portion of lease pass-through financing obligation

 

901

 

 

 

 

Accrued unused commitment fees and interest

 

582

 

 

 

478

 

Fleet expenses

 

558

 

 

 

470

 

Other accrued expenses

 

2,210

 

 

 

1,090

 

Total accrued and other current liabilities

$

34,286

 

 

$

14,016

 

 

Debt Obligations
Debt Obligations

9.

Debt Obligations

Debt obligations consisted of the following (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Aggregation credit facility

$

183,000

 

 

$

105,000

 

Working capital credit facility

 

70,000

 

 

 

 

Total debt

 

253,000

 

 

 

105,000

 

 


Working Capital Credit Facility

In March 2015, the Company entered into a revolving credit agreement (the “Working Capital Facility”) pursuant to which the Company may borrow up to an aggregate principal amount of $131.0 million from certain financial institutions for which Goldman Sachs Lending Partners LLC is acting as administrative agent and collateral agent. In May 2015, certain conditions were satisfied and the aggregate amount of available revolver borrowings was increased to $150.0 million. Loans under the Working Capital Facility will be used to pay for the costs incurred in connection with the design and construction of solar energy systems, and letters of credit may be issued for working capital and general corporate purposes. As of September 30, 2015, the Company had incurred an aggregate of $70.0 million in borrowings under the Working Capital Facility. Further, the Company established a letter of credit under the Working Capital Facility for $3.3 million related to an insurance contract. As such, the remaining borrowing capacity was $76.7 million as of September 30, 2015.

The Company has pledged the interests in the assets of the Company and its subsidiaries, excluding Vivint Solar Financing I, LLC, as security for its obligations under the Working Capital Facility. Prepayments are permitted under the Working Capital Facility, and the principal and accrued interest on any outstanding loans mature in March 2020. Interest accrues on borrowings at a floating rate equal to, dependent on the type of borrowing, (1) a rate equal to the Eurodollar Rate for the interest period divided by one minus the Eurodollar Reserve Percentage, plus a margin of 3.25%; or (2) the highest of (a) the Federal Funds Rate plus 0.50%, (b) the Citibank prime rate and (c) the one-month interest period Eurodollar rate plus 1.00%, plus a margin of 2.25%. Interest is payable dependent on the type of borrowing at the end of (1) the interest period that the Company may elect as a term and not to exceed three months, (2) quarterly or (3) at maturity of the Working Capital Facility.

The Working Capital Facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the Company’s ability to incur indebtedness, incur liens, make investments, make fundamental changes to its business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the Working Capital Facility provides that the Company may not incur any indebtedness other than that related to the Working Capital Facility or in respect of permitted swap agreements. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those entered into previously. The Company is also required to maintain $25.0 million in cash and cash equivalents and certain investments as of the last day of each quarter. As of September 30, 2015, the Company was in compliance with such covenants.

The Working Capital Facility also contains certain customary events of default. If an event of default occurs, lenders under the Working Capital Facility will be entitled to take various actions, including the acceleration of amounts then outstanding.

Interest expense for this facility was approximately $0.7 million and $1.1 million for the three and nine months ended September 30, 2015. No interest expense was recorded for the three and nine months ended September 30, 2014. As of September 30, 2015, the current portion of deferred debt issuance costs of $0.5 million was recorded in prepaid expenses and other current assets, and the long-term portion of deferred debt issuance costs of $1.9 million was recorded in other non-current assets, net in the condensed consolidated balance sheet.

Bank of America, N.A. Aggregation Credit Facility

In September 2014, the Company entered into an aggregation credit facility (the “Aggregation Facility”), which was subsequently amended in February 2015, pursuant to which the Company may borrow up to an aggregate principal amount of $375.0 million and, for which Bank of America, N.A. is acting as administrative agent. Upon the satisfaction of certain conditions and the approval of the lenders, the Company may increase the aggregate amount of principal borrowings to $550.0 million.

As of September 30, 2015, the Company had incurred an aggregate of $183.0 million in term loan borrowings under the Aggregation Facility. The remaining borrowing capacity was $192.0 million as of September 30, 2015. However, the Company does not have immediate access to the remaining $192.0 million balance as future borrowings are dependent on when it has solar energy system revenue to collateralize the borrowings.

The borrower under the Aggregation Facility is Vivint Solar Financing I, LLC, one of the Company’s indirect wholly owned subsidiaries, that in turn holds the Company’s interests in the majority of the managing members of the Company’s existing investment funds. These managing members guarantee the borrower’s obligations under the Aggregation Facility. In addition, Vivint Solar Holdings, Inc. has pledged its interests in the borrower, and the borrower has pledged its interests in the guarantors as security for the borrower’s obligations under the Aggregation Facility. The related solar energy systems are not subject to any security interest of the lenders, and there is no recourse to the Company in the case of a default.


Prepayments are permitted under the Aggregation Facility, and the principal and accrued interest on any outstanding loans mature in March 2018. Interest accrues on borrowings at a floating rate equal to either (1)(a) the London Interbank Offer Rate (“LIBOR”) or (b) the greatest of (i) the Federal Funds Rate plus 0.5%, (ii) the administrative agent’s prime rate and (iii) LIBOR plus 1% and (2) a margin that varies between 3.25% during the period during which the Company may incur borrowings and 3.50% after such period. Interest is payable at the end of each interest period that the Company may elect as a term of either one, two or three months.

The Aggregation Facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the borrower’s, and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the Aggregation Facility provides that the borrower may not incur any indebtedness other than that related to the Aggregation Facility or in respect of permitted swap agreements, and that the guarantors may not incur any indebtedness other than that related to the Aggregation Facility or as permitted under existing investment fund transaction documents. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those entered into previously. As of September 30, 2015, the Company was in compliance with such covenants.

The Aggregation Facility also contains certain customary events of default. If an event of default occurs, lenders under the Aggregation Facility will be entitled to take various actions, including the acceleration of amounts due under the Aggregation Facility and foreclosure on the interests of the borrower and the guarantors that have been pledged to the lenders.

Interest expense for this facility was approximately $2.6 million and $0.3 million for the three months ended September 30, 2015 and 2014. Interest expense for this facility was approximately $7.0 million and $0.3 million for the nine months ended September 30, 2015 and 2014. As of September 30, 2015, the current portion of deferred debt issuance costs of $3.0 million was recorded in prepaid expenses and other current assets, and the long-term portion of deferred debt issuance costs of $4.4 million was recorded in other non-current assets, net in the condensed consolidated balance sheet. In addition, an interest reserve of $3.2 million was held in an account with the administrative agent and was included in restricted cash and cash equivalents. The interest reserve increases as borrowings increase under the Aggregation Facility.

Bank of America, N.A. Term Loan Credit Facility

In May 2014, the Company entered into a term loan credit facility for an aggregate principal amount of $75.5 million with certain financial institutions for which Bank of America, N.A. acted as administrative agent. In September 2014 and in connection with the closing of the Aggregation Facility, the Company repaid the then outstanding $75.5 million in aggregate borrowings and terminated the agreement. There was no interest expense incurred for the three and nine months ended September 30, 2015 under this agreement. Interest expense from inception of the Term Facility in May 2014 through payoff in September 2014 was approximately $1.3 million.

Revolving Lines of CreditRelated Party

On October 9, 2014, the Company repaid $58.8 million in aggregate borrowings and interest owed to Vivint under two loan agreements, which were terminated upon repayment. There was no interest expense incurred for the three and nine months ended September 30, 2015 under these agreements. Interest expense was $1.4 million and $4.2 million for the three and nine months ended September 30, 2014 under these agreements.

Investment Funds
Investment Funds

10.

Investment Funds

As of September 30, 2015, the Company had formed 17 investment funds for the purpose of funding the purchase of solar energy systems. The aggregate carrying value of these funds’ assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s condensed consolidated balance sheets were as follows (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

25,924

 

 

$

12,641

 

Accounts receivable, net

 

5,264

 

 

 

1,542

 

Total current assets

 

31,188

 

 

 

14,183

 

Solar energy systems, net

 

882,961

 

 

 

525,903

 

Total assets

$

914,149

 

 

$

540,086

 

Liabilities

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Distributions payable to non-controlling interests and redeemable non-controlling

   interests

$

8,316

 

 

$

6,780

 

Current portion of deferred revenue

 

413

 

 

 

237

 

Accrued and other current liabilities

 

930

 

 

 

 

Total current liabilities

 

9,659

 

 

 

7,017

 

Deferred revenue, net of current portion

 

30,047

 

 

 

4,335

 

Other non-current liabilities

 

3,104

 

 

 

 

Total liabilities

$

42,810

 

 

$

11,352

 

 

Residential Investment Funds

As of September 30, 2015, the Company had formed 16 residential investment funds. Fund investors for three of the funds are managed indirectly by The Blackstone Group L.P. (the “Sponsor”) and are considered related parties. As of September 30, 2015 and December 31, 2014, the cumulative total of contributions into the VIEs by all investors was $712.3 million and $480.2 million. Of these contributions, a cumulative total of $110.0 million was contributed by related parties in prior periods.

All residential investment funds except for one were operational as of September 30, 2015. The Company did not have any assets, liabilities or activity associated with that fund. Total available committed capital under that fund was $175.0 million as of September 30, 2015.

C&I Investment Fund

In May 2015, a wholly owned subsidiary of the Company entered into a C&I solar investment fund arrangement with a fund investor. The fund was not operational as of September 30, 2015, and as such, the Company did not have any assets or liabilities associated with the fund. The total available committed capital under the fund is $150.0 million, which is expected to be contributed through 2016.

Lease Pass-Through Financing Obligation

In the three months ended September 30, 2015, a new lease pass-through fund arrangement became operational under which the Company contributes solar energy systems and the investor contributes cash. Contemporaneously, a subsidiary of the Company entered into a master lease arrangement to lease the solar energy systems and the associated customer lease or power purchase agreements to the fund investor. The Company’s subsidiary makes a tax election to pass-through the investment tax credits (“ITCs”) that accrue to the solar energy systems to the fund investor, who as the legal lessee of the property is allowed to claim the ITCs under Section 50(d)(5) of the Internal Revenue Code and the related regulations. The solar energy systems are included under solar energy systems, net in the condensed consolidated balance sheets, and as of September 30, 2015, the net carrying value of the solar energy systems was $36.5 million.


Under the arrangement, the fund investor makes a large upfront payment to the Company’s subsidiary and subsequent periodic payments. The Company allocates a portion of the aggregate payments received from the fund investor to the estimated fair value of the assigned ITCs, and the balance to the future customer lease payments that are also assigned to the investor. The Company’s subsidiary has an obligation to ensure the solar energy system is in service and operational for a term of five years to avoid any recapture of the ITCs. Accordingly, the Company recognizes revenue as the recapture provisions lapse assuming all other revenue recognition criteria have been met. The amounts allocated to ITCs are initially recorded as deferred revenue in the condensed consolidated balance sheet, and subsequently, one-fifth of the amounts allocated to ITCs is recognized as revenue from operating leases and solar energy systems incentives in the condensed consolidated statements of operations based on the anniversary of each solar energy system’s placed in service date over the next five years.

The Company accounts for the residual of the payments received from the fund investor, net of amounts allocated to ITCs, as a borrowing by recording the proceeds received as a lease pass-through financing obligation, which will be repaid through customer payments that will be received by the investor. Under this approach, the Company continues to account for the arrangement with the customers in its condensed consolidated financial statements, whether the cash generated from the customer arrangements is received by the lessor or paid directly to the fund investor. A portion of the amounts received by the fund investor from customer payments is applied to reduce the lease pass-through financing obligation, and the balance is allocated to interest expense. The customer payments are recognized into revenue based on cash receipts during the period as required by GAAP. Interest is calculated on the lease pass-through financing obligation using the effective interest rate method. The effective interest rate is the interest rate that equates the present value of the cash amounts to be received by a fund investor over the master lease term with the present value of the cash amounts paid by the investor to the Company, adjusted for any payments made by the Company. The lease pass-through financing obligation is nonrecourse once the associated assets have been placed in service and all the customer arrangements have been assigned to the fund investor.

The fund investor is responsible for services such as warranty support, accounting, lease servicing and performance reporting, which have been outsourced to the Company under administrative and maintenance service agreements.

Guarantees

With respect to the investment funds, the Company and the fund investors have entered into guaranty agreements under which the Company guarantees the performance of certain obligations of its subsidiaries to the investment funds. These guarantees do not result in the Company being required to make payments to the fund investors unless such payments are mandated by the investment fund governing documents and the investment fund fails to make such payment. The Company is also contractually obligated to make certain VIE investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of ITCs.

As of December 31, 2014, the Company accrued an estimated $4.0 million distribution to reimburse a fund investor a portion of its capital contribution in order to true-up the investor’s expected rate of return primarily due to a delay in solar energy systems being interconnected to the utility grid and other factors. During the nine months ended September 30, 2015, the Company accrued an additional $1.0 million and paid the contractually agreed upon distribution of $5.0 million to the fund investor.

As a result of the guaranty arrangements in certain funds, the Company is required to hold minimum cash balances of $10.0 million and $5.0 million as of September 30, 2015 and December 31, 2014, which are classified as restricted cash and cash equivalents on the condensed consolidated balance sheets.


Redeemable Non-Controlling Interests and Equity
Redeemable Non-Controlling Interests and Equity

11.Redeemable Non-Controlling Interests and Equity

Common Stock

The Company had reserved shares of common stock for issuance as follows (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Stock options issued and outstanding

 

9,284

 

 

 

10,053

 

Restricted stock units issued and outstanding

 

983

 

 

 

22

 

Shares available for grant under equity incentive plans

 

12,245

 

 

 

8,783

 

Long-term incentive plan

 

3,382

 

 

 

4,059

 

Total

 

25,894

 

 

 

22,917

 

Redeemable Non-Controlling Interests, Equity and Non-Controlling Interests

The changes in redeemable non-controlling interests were as follows (in thousands):

 

Balance as of December 31, 2014

$

128,427

 

Contributions from redeemable non-controlling interests

 

79,356

 

Distributions to redeemable non-controlling interests

 

(5,099

)

Net loss

 

(31,505

)

Balance as of September 30, 2015

$

171,179

 

 

The changes in stockholders’ equity and non-controlling interests were as follows (in thousands):

 

 

Total

 

 

 

 

 

 

 

 

 

 

Stockholders'

 

 

Non-Controlling

 

 

 

 

 

 

Equity

 

 

Interests

 

 

Total Equity

 

Balance as of December 31, 2014

$

477,989

 

 

$

135,147

 

 

$

613,136

 

Stock-based compensation expense

 

23,206

 

 

 

 

 

 

23,206

 

Excess tax effects from stock-based compensation

 

1,717

 

 

 

 

 

 

1,717

 

Issuance of common stock

 

556

 

 

 

 

 

 

556

 

Contributions from non-controlling interests

 

 

 

 

152,715

 

 

 

152,715

 

Distributions to non-controlling interests

 

 

 

 

(13,583

)

 

 

(13,583

)

Net income (loss)

 

26,270

 

 

 

(194,757

)

 

 

(168,487

)

Balance as of September 30, 2015

$

529,738

 

 

$

79,522

 

 

$

609,260

 

 

Seven of the investment funds include a right for the non-controlling interest holder to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund after a stated period of time (each, a “Put Option”). In one of the investment funds, the Company’s wholly owned subsidiary has the right to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary (a “Call Option”) after the expiration of the non-controlling interest holder’s Put Option. In the six other investment funds that have Put Options, the Company’s wholly owned subsidiary has a Call Option for a stated period prior to the effectiveness of the Put Option. In nine other investment funds there is a Call Option which is exercisable after a stated period of time. One investment fund has neither a Put Option nor a Call Option.

 

The purchase price for the fund investor’s interest in the seven investment funds under the Put Options is the greater of fair market value at the time the option is exercised and a specified amount, ranging from $0.7 million to $4.1 million. The Put Options for these seven investment funds are exercisable beginning on the date that specified conditions are met for each respective fund. None of the Put Options are expected to become exercisable prior to 2019.

Because the Put Options represent redemption features that are not solely within the control of the Company, the non-controlling interests in these investment funds are presented outside of permanent equity. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date (which is impacted by attribution under the hypothetical liquidation at book value method) or their estimated redemption value in each reporting period. The carrying values of redeemable non-controlling interests at September 30, 2015 and December 31, 2014 was greater than the redemption values.

 

The purchase price for the fund investors’ interests under the Call Options varies by fund, but is generally the greater of a specified amount, which ranges from approximately $0.7 million to $7.0 million, the fair market value of such interest at the time the option is exercised, or an amount that causes the fund investor to achieve a specified return on investment. The Call Options are exercisable beginning on the date that specified conditions are met for each respective fund. None of the Call Options are expected to become exercisable prior to 2019.

Equity Compensation Plans
Equity Compensation Plans

12.

Equity Compensation Plans

Equity Incentive Plans

2014 Equity Incentive Plan

The Company adopted the 2014 Equity Incentive Plan (the “2014 Plan”) in September 2014. Under the 2014 Plan, the Company may grant stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares and performance awards to its employees, directors and consultants, and its parent and subsidiary corporations’ employees and consultants.

Under the 2014 Plan, a total of 8.8 million shares of common stock initially were reserved for issuance, subject to adjustment in the case of certain events. In addition, any shares that otherwise would be returned to the Omnibus Plan (as defined below) as the result of the expiration or termination of stock options may be added to the 2014 Plan. The number of shares available for issuance under the 2014 Plan is subject to an annual increase on the first day of each year, equal to the least of 8.8 million shares, 4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year and an amount of shares as determined by the Company. In accordance with the annual increase, an additional 4.2 million shares were reserved for issuance in 2015 under the 2014 Plan.

2013 Omnibus Incentive Plan; Non-plan Option Grant

In July 2013, the Company adopted the 2013 Omnibus Incentive Plan (the “Omnibus Plan”), which was terminated in connection with the adoption of the 2014 Plan in September 2014, and accordingly no additional shares are available for issuance under the Omnibus Plan. The Omnibus Plan will continue to govern outstanding awards granted under this plan. In August 2013, the Company granted an option to purchase 0.6 million shares of common stock outside of the Omnibus Plan; however the provisions of this option were substantially similar to those of the options granted pursuant to the Omnibus Plan.

During 2014 and 2013, the Company granted stock options of which one-third are subject to ratable time-based vesting over a five year period and two-thirds are subject to vesting upon certain performance conditions and the achievement of certain investment return thresholds by 313 Acquisition LLC, a subsidiary of the Company’s Sponsor. The stock options have a ten-year contractual period.

During the nine months ended September 30, 2015, the first performance condition was met and 3.3 million performance-based options immediately vested and became exercisable during the second quarter of 2015. The Company accelerated all remaining expense related to the vested options for the first performance condition, resulting in additional stock-based compensation expense of approximately $7.4 million in the second quarter of 2015.

Long-term Incentive Plan

In July 2013, the Company’s board of directors approved 4.1 million shares of common stock for six Long-term Incentive Plan Pools (“LTIP Pools”) that comprise the 2013 Long-term Incentive Plan (the “LTIP”). The purpose of the LTIP is to attract and retain key service providers and strengthen their commitment to the Company by providing incentive compensation measured by reference to the value of the shares of the Company’s common stock. Eligible participants include nonemployee direct sales personnel who sell the solar energy system contracts, employees that install and maintain the solar energy systems and employees that recruit new employees to the Company. During the nine months ended September 30, 2015, 0.6 million shares of common stock were awarded to participants under the LTIP. As of September 30, 2015, 3.4 million shares remained outstanding, as 0.1 million shares represented the exercise price that were returned to the 2014 Plan. The Company recognized zero and $8.3 million of expense related to these shares in the three and nine months ended September 30, 2015. No shares were awarded and no expense was recognized under the LTIP prior to the nine months ended September 30, 2015.

Stock Options

Stock Option Activity

Stock options are granted under the 2014 Plan and Omnibus Plan as described above. Stock option activity for the nine months ended September 30, 2015 was as follows (in thousands, except term and per share amounts):

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

Average

 

 

 

 

 

 

Shares

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

Underlying

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

 

Options

 

 

Price

 

 

Term

 

 

Value

 

Outstanding—December 31, 2014

 

10,053

 

 

$

1.21

 

 

 

 

 

 

$

80,790

 

Granted

 

114

 

 

 

12.56

 

 

 

 

 

 

 

 

 

Exercised

 

(595

)

 

 

1.09

 

 

 

 

 

 

 

 

 

Cancelled

 

(288

)

 

 

1.00

 

 

 

 

 

 

 

 

 

Outstanding—September 30, 2015

 

9,284

 

 

$

1.37

 

 

 

8.1

 

 

$

84,912

 

Options vested and exercisable—September 30, 2015

 

3,858

 

 

$

1.21

 

 

 

8.1

 

 

$

35,787

 

Options vested and expected to vest—September 30, 2015

 

8,899

 

 

$

1.36

 

 

 

8.1

 

 

$

81,452

 

 

The weighted-average grant date fair value of time-based stock options granted during the nine months ended September 30, 2015 and 2014 was $9.39 and $4.69 per share. No performance-based stock options were granted during the nine months ended September 30, 2015. The weighted-average grant date fair value of performance-based stock options granted during the nine months ended September 30, 2014 was $2.80 per share. The weighted-average grant date fair value of time-based stock options exercised during the nine months ended September 30, 2015 was $2.34 per share. The weighted-average grant date fair value of performance-based options exercised during the nine months ended September 30, 2015 was $6.92 per share. There were no options exercised for the nine months ended September 30, 2014. Intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock.

As of September 30, 2015, there was approximately $5.4 million of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to nonvested time-based and performance condition stock options. As of September 30, 2015, the time-based awards are expected to be recognized over the weighted-average period of 3.2 years. As of September 30, 2015, the performance-based awards are expected to be recognized over a weighted-average period of 1.4 years.

The total fair value of stock options vested for the nine months ended September 30, 2015 and 2014 was $14.1 million and $0.3 million.

Determination of Fair Value of Stock Options

The Company estimates the fair value of the time-based stock options granted on each grant date using the Black-Scholes-Merton option pricing model and applies the accelerated attribution method for expense recognition. The fair values using the Black-Scholes-Merton method were estimated on each grant date using the following weighted-average assumptions:

 

 

Nine Months Ended

 

 

September 30,

 

 

2015

 

 

2014

 

Expected term (in years)

 

6.2

 

 

 

6.2

 

Volatility

 

89.0

%

 

 

87.1

%

Risk-free interest rate

 

1.8

%

 

 

1.9

%

Dividend yield

 

0.0

%

 

 

0.0

%

 

Restricted Stock Units

Restricted stock units, or RSUs, are granted under the 2014 Plan and the LTIP as described above. RSU activity for the nine months ended September 30, 2015 was as follows (awards in thousands):

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Average

 

 

Number of

 

 

Grant Date

 

 

Awards

 

 

Fair Value

 

Outstanding at December 31, 2014

 

22

 

 

$

16.00

 

Granted

 

1,623

 

 

 

13.06

 

Vested

 

(648

)

 

 

13.42

 

Forfeited

 

(14

)

 

 

12.97

 

Outstanding at September 30, 2015

 

983

 

 

 

12.89

 

 

The total grant date fair value of RSUs vested was $8.7 million for the nine months ended September 30, 2015. No RSUs vested in the nine months ended September 30, 2014. The Company determines the fair value of RSUs granted on each grant date based on the fair value of the Company’s common stock on the grant date. As of September 30, 2015, there was approximately $8.8 million of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to RSUs, which is expected to be recognized over the weighted-average period of 3.0 years.

Stock-Based Compensation Expense

Stock-based compensation was included in operating expenses as follows (in thousands):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Cost of revenue—operating leases and incentives

$

181

 

 

$

710

 

 

$

2,754

 

 

$

765

 

Sales and marketing

 

751

 

 

 

421

 

 

 

10,054

 

 

 

611

 

General and administrative

 

1,512

 

 

 

18,899

 

 

 

10,122

 

 

 

19,470

 

Research and development

 

152

 

 

 

 

 

 

276

 

 

 

 

Total stock-based compensation

$

2,596

 

 

$

20,030

 

 

$

23,206

 

 

$

20,846

 

 

Income Taxes
Income Taxes

13.

Income Taxes

The income tax expense for the three months ended September 30, 2015 and 2014 was calculated on a discrete basis resulting in a consolidated quarterly effective income tax rate of 12.9% and 16.5%. For the nine months ended September 30, 2015 and 2014, the Company’s consolidated effective income tax rate was (8.7)% and 2.5%. The variations between the consolidated effective income tax rates and the U.S. federal statutory rate for the three and nine months ended September 30, 2015 were primarily attributable to the effect of non-controlling interests and redeemable non-controlling interests, the domestic production activities deduction and to reduced ITC allocations to the Company. The variations between the consolidated effective income tax rates and the U.S. federal statutory rate for the three and nine months ended September 30, 2014 were primarily attributable to the effect of non-controlling interests and redeemable non-controlling interests, nondeductible expenses and ITC allocations to the Company.

The Company recognizes sales of solar energy systems to the investment funds for income tax purposes. As the investment funds are consolidated by the Company, the gain on the sale of the assets has been eliminated in the condensed consolidated financial statements. These transactions are treated as intercompany sales and any tax expense incurred related to these sales is being deferred and amortized over the estimated useful life of the underlying systems which has been estimated to be 30 years. The deferral of the tax expense results in recording of a prepaid tax asset. As of September 30, 2015 and December 31, 2014, the Company recorded a long-term prepaid tax asset of $247.9 million and $111.9 million, net of amortization.


Uncertain Tax Positions

As of September 30, 2015 and December 31, 2014, the Company had no unrecognized tax benefits. There was no interest and penalties accrued for any uncertain tax positions as of September 30, 2015 and December 31, 2014. The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized benefits will increase or decrease within the next 12 months. The Company is subject to taxation and files income tax returns in the United States, and various state and local jurisdictions. Due to the Company’s net losses, substantially all of its federal, state and local income tax returns since inception are still subject to audit.

Related Party Transactions
Related Party Transactions

14.

Related Party Transactions

The Company’s operations included the following related party transactions (in thousands):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Cost of revenue—operating leases and incentives

$

1,447

 

 

$

2,139

 

 

$

4,376

 

 

$

5,524

 

Sales and marketing

 

328

 

 

 

610

 

 

 

1,589

 

 

 

956

 

General and administrative

 

211

 

 

 

310

 

 

 

5,013

 

 

 

3,220

 

Interest expense(1)

 

 

 

 

1,460

 

 

 

 

 

 

4,338

 

 

 

(1)

Includes revolving lines of credit—related party. See Note 9—Debt Obligations.

Vivint Services

In 2014, the Company negotiated and entered into a number of agreements with its sister company, Vivint Inc. (“Vivint”), related to services and other support that Vivint provides to the Company. Under the terms of these agreements, Vivint provides the Company with information technology and infrastructure, employee benefits and certain other services. Prior to the new agreements, under full service sublease and trademark agreements, Vivint provided to the Company various administrative services, such as management, human resources, information technology, facilities and use of corporate office space, and rights to use certain trademarks. The Company incurred fees under these agreements of $1.8 million and $2.4 million for the three months ended September 30, 2015 and 2014, which reflect the amount of services provided by Vivint on behalf of the Company. The Company incurred fees under these agreements of $5.3 million and $6.6 million for the nine months ended September 30, 2015 and 2014.

Payables to Vivint recorded in accounts payable—related party were $1.5 million and $2.1 million as of September 30, 2015 and December 31, 2014. These payables include amounts due to Vivint related to the services agreements and other miscellaneous intercompany payables including freight, healthcare cost reimbursements and ancillary purchases.

Advances ReceivableRelated Party

Net amounts due from direct-sales personnel were $1.6 million and $1.2 million as of September 30, 2015 and December 31, 2014. The Company provided a reserve of $1.2 million and $0.9 million as of September 30, 2015 and December 31, 2014 related to advances to direct-sales personnel who have terminated their employment agreement with the Company.

Advisory Agreements

In May 2014, the Company entered into an advisory agreement with Blackstone Advisory Partners L.P., an affiliate of the Sponsor (“BAP”), under which BAP will provide financial advisory and placement services related to the Company’s financing of residential solar energy systems. In February 2015, the Company provided BAP a notice to terminate the agreement, which remains in effect for six months following the date of such notice. Under the agreement, the Company is required under certain circumstances to pay a placement fee to BAP ranging from 0.75% to 1.5% of the transaction capital, depending on the identity of the investor and whether the financing relates to residential or commercial projects. This agreement replaced the 2013 advisory agreement described below.    

Effective May 2013, the Company entered into an advisory agreement with BAP that provided financial advisory and placement services related to the Company’s financing of residential solar energy systems. Under the agreement, BAP was paid a placement fee ranging from 0% to 2% of the transaction capital, depending on the identity of the investor and how contact with the investor is established.

No fees were incurred under these agreements for the three months ended September 30, 2015 and 2014. The Company incurred fees of $4.4 million and $2.2 million for the nine months ended September 30, 2015 and 2014. This amount was recorded in general and administrative expense in the Company’s condensed consolidated statements of operations.

Investment Funds

Fund investors for three of the investment funds are indirectly managed by the Sponsor and accordingly are considered related parties. See Note 10—Investment Funds. In July 2014, the Company also entered into a Backup Maintenance Servicing Agreement with Vivint in which Vivint will provide maintenance servicing of the investment fund assets in the event that the Company is removed as the service provider for certain of the investment funds. No services have been performed by Vivint under this agreement.

Commitments and Contingencies
Commitments and Contingencies

15.

Commitments and Contingencies

Non-Cancellable Leases

The Company has entered into operating lease agreements for corporate and operating facilities, warehouses and related equipment in states in which the Company conducts operations. The aggregate expense incurred under these operating leases was $3.0 million and $1.2 million for the three months ended September 30, 2015 and 2014. The aggregate expense incurred under these operating leases was $9.4 million and $2.6 million for the nine months ended September 30, 2015 and 2014.

In September 2014, the Company entered into a non-cancellable lease whereby the Company will terminate the current lease for its corporate headquarters in Lehi, UT and move into another building being constructed in the same general location. In July 2015, the Company amended the new lease for its new corporate headquarters building that is under construction. These amendments included an extension of the lease term to 12 years from five years with the option to extend for two additional periods of five years, an increase in the leased premises by approximately 32,000 square feet and a change in the base rent that will commence at approximately $0.3 million per month and increase over the term of the lease, as amended, at a rate of 2.5% annually. As a result of the amendment, the Company expects to make additional lease payments of $36.1 million over the initial term of the lease.

The Company also entered into new non-cancellable leases for the construction of a second office building and a studio building on the corporate headquarters campus that will increase the leased premises by approximately 160,000 square feet. The studio building is expected to be available in the second quarter 2016. The second office building is expected to be available in the first quarter of 2018, and the Company has the option to move the commencement date forward by providing a 12-month notice. Both leases have a term of 12 years with the option to extend for two additional periods of five years. The aggregate monthly rent payments under both leases will commence at approximately $0.4 million and increase at a rate of 2.5% annually. As a result of these new leases, the Company expects to make additional lease payments of $57.5 million over the initial terms of the leases.

Build-to-Suit Lease Arrangements

As discussed in Non-Cancellable Leases above, in September 2014, the Company entered into a non-cancellable lease whereby the Company will terminate the current lease for its corporate headquarters in Lehi, UT and move into another building being constructed in the same general location. Because of its involvement in certain aspects of the construction per the terms of the lease, the Company is deemed the owner of the building for accounting purposes during the construction period. Accordingly, as of September 30, 2015, the Company recorded a build-to-suit asset of $12.3 million included in property and equipment, net, which also includes $0.1 million in capitalized interest, and a $12.2 million build-to-suit lease liability included in other non-current liabilities.

Long-Term Purchase Agreements

In 2015, the Company entered into long term purchase agreements with certain key suppliers. These agreements require the Company to make minimum volume purchases on a quarterly basis. As of September 30, 2015, the Company has met these minimum purchase requirements, and no additional liability has been incurred or recorded.

Indemnification Obligations

From time to time, the Company enters into contracts that contingently require it to indemnify parties against claims. These contracts primarily relate to provisions in the Company’s services agreements with related parties that may require the Company to indemnify the related parties against services rendered; and certain agreements with the Company’s officers and directors under which the Company may be required to indemnify such persons for liabilities. In addition, under the terms of the agreements related to the Company’s investment funds and other material contracts, the Company may also be required to indemnify fund investors and other third parties for liabilities. The Company has not recorded a liability related to these indemnification provisions and the indemnification agreements have not had any significant impact to the Company’s condensed consolidated financial statements to date.

Legal Proceedings

In December 2013, one of the Company’s former sales representatives, on behalf of himself and a purported class, filed a complaint for unspecified damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against Vivint Solar Developer, LLC, one of the Company’s subsidiaries, and unnamed John Doe defendants alleging violations of the California Labor Code and the California Business and Professions Code and seeking penalties of an unspecified amount, interest on all economic damages and reasonable attorney’s fees and costs. In January 2014, the Company filed an answer denying the allegations in the complaint and asserting various affirmative defenses. In late 2014, the parties agreed to preliminary terms of settlement, which were subsequently revised in mid-2015. The proposed settlement agreement contemplates a settlement payment from the Company in the amount of $0.4 million. On October 30, 2015, the Court entered a final order approving the settlement agreement. The Company has recorded a $0.4 million reserve related to this proceeding in its consolidated financial statements.

In May 2014, Vivint made the Company aware that the U.S. Attorney’s office for the State of Utah is engaged in an investigation that Vivint believes relates to certain political contributions made by some of Vivint’s executive officers that are directors of the Company and some of Vivint’s employees. The Company has no reason to believe that it, the executive officers or employees are targets of such investigation.

In September 2014, two former installation technicians of the Company, on behalf of themselves and a purported class, filed a complaint for damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against the Company and unnamed John Doe defendants. The complaint alleges certain violations of the California Labor Code and the California Business and Professions Code based on, among other things, alleged improper classification of installer technicians, installer helpers, electrician technicians and electrician helpers, failure to pay minimum and overtime wages, failure to provide accurate itemized wage statements, and failure to provide wages on termination. In December 2014, the original plaintiffs and three additional plaintiffs filed an amended complaint with essentially the same allegations. On November 5, 2015, the parties agreed to preliminary terms of a settlement of all claims related to allegations in the complaint in return for the Company’s payment of $1.7 million to be paid out to the purported class members. The settlement agreement must be approved by the Court, after notice to the purported class. A $1.7 million reserve was recorded related to this proceeding in the Company’s condensed consolidated financial statements.

In November and December 2014, two putative class action lawsuits were filed in the U.S. District Court for the Southern District of New York against the Company, its directors, certain of its officers and the underwriters of the Company’s initial public offering of common stock alleging violation of securities laws and seeking unspecified damages. In January 2015, the Court ordered these cases to be consolidated into the earlier filed case, Hyatt v. Vivint Solar, Inc. et al., 14-cv-9283 (KBF). The plaintiffs filed a consolidated amended complaint in February 2015. On May 6, 2015, the Company filed a motion to dismiss the complaint. The Company believes this lawsuit is without merit and intends to defend the case vigorously. The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in this case, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.

On July 31, 2015, a putative class action lawsuit was filed in the Court of Chancery State of Delaware against the Company’s directors, SunEdison Inc. (“SunEdison”), and TerraForm Power (“TerraForm”), alleging that the proposed acquisition by SunEdison is unfair to the Company’s stockholders. On August 7, 2015, a second putative class action lawsuit was filed in the same court alleging similar claims, and including 313, Acquisition, LLC as a named defendant. Both complaints seek injunctive relief and unspecified damages. On or about September 10, 2015, two purported class action lawsuits were also filed in Utah's Fourth District State Court (the "Utah Actions"), alleging similar claims to the complaints previously filed in the Delaware Chancery Court. On September 22, 2015, the Company, through counsel notified plaintiff's counsel in the Utah Actions that pursuant to the Company's Articles of Incorporation, any such derivative action was subject to exclusive jurisdiction in the Delaware Chancery Court, and accordingly, the Utah Actions should be dismissed. In the event the Utah Actions are not voluntarily dismissed, the Company anticipates the cases will ultimately be consolidated into one case. In view of the Company’s indemnification obligation to its directors, the Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision. If an unfavorable outcome were to occur in these cases, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.


In September 2015, a putative class action lawsuit was filed in the Kern County Superior Court of the State of California, seeking declaratory and injunctive relief with regard to the Company’s customer agreements in California. The complaint essentially alleges that certain versions of customer contracts fail to satisfy California Code provisions including home solicitation and home improvement laws. The Company believes that it has strong defenses to the claims asserted in this matter. Although the Company cannot predict with certainty the ultimate resolution of this suit, it does not believe this matter will have a material adverse effect on the Company’s business, results of operations, cash flows or financial condition. It is not possible to estimate the amount or range of potential loss, if any, at this time.

In addition to the matters discussed above, in the normal course of business, the Company has from time to time been named as a party to various legal claims, actions and complaints. While the outcome of these matters cannot be predicted with certainty, the Company does not currently believe that the outcome of any of these claims will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations or cash flows.

The Company accrues for losses that are probable and can be reasonably estimated. The Company evaluates the adequacy of its legal reserves based on its assessment of many factors, including interpretations of the law and assumptions about the future outcome of each case based on available information.

Basic and Diluted Net Income (Loss) Per Share
Basic and Diluted Net Income (Loss) Per Share

16.

Basic and Diluted Net Income Per Share

The Company computes basic net income per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding plus the effect of potentially dilutive shares to purchase common stock.

The following table sets forth the computation of the Company’s basic and diluted net income available per share to common stockholders for the three and nine months ended September 30, 2015 and 2014 (in thousands, except per share amounts):  

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available (loss attributable) to common

   stockholders

$

468

 

 

$

(35,278

)

 

$

26,270

 

 

$

(22,744

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income available

   (loss attributable) per share to common stockholders, basic

 

106,492

 

 

 

78,428

 

 

 

105,932

 

 

 

76,160

 

Weighted-average effect of potentially dilutive shares to

   purchase common stock

 

3,731

 

 

 

 

 

 

3,762

 

 

 

 

Shares used in computing net income available

   (loss attributable) per share to common stockholders, diluted

 

110,223

 

 

 

78,428

 

 

 

109,694

 

 

 

76,160

 

Net income available (loss attributable) per share to common

   stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.00

 

 

$

(0.45

)

 

$

0.25

 

 

$

(0.30

)

Diluted

$

0.00

 

 

$

(0.45

)

 

$

0.24

 

 

$

(0.30

)

 

As of September 30, 2015, stock-based awards for 3.4 million underlying shares of common stock were subject to performance conditions which had not yet been met. Accordingly, these performance-based stock awards were not included in the computation of diluted net income per share for the three and nine months ended September 30, 2015. In addition, options remaining to be granted under the LTIP Pools were not included in the computation of diluted net income per share as these shares had not been granted as of September 30, 2015. For the three and nine months ended September 30, 2015, a de minimis number of shares was excluded from the dilutive share calculations as the effect on net income per share would have been antidilutive. For the three and nine months ended September 30, 2014, the Company incurred net losses attributable to common stockholders. As such, the potentially dilutive shares were anti-dilutive and were not considered in the weighted average number of common shares outstanding for those periods.

Segment Information
Segment Information

17.

Segment Information

Prior to the second quarter 2015, the Company had one business activity that was focused primarily on providing service to customers in the residential market. During the second quarter of 2015, the Company closed its first C&I investment fund with plans to service customers in the C&I market. As of September 30, 2015, the C&I fund was not operational, i.e., no projects had been initiated within the fund. During the nine months ended September 30, 2015, the Company has aligned its operations as two reporting segments: (1) Residential and (2) C&I.

As of September 30, 2015, the Company recorded no assets related to the C&I segment. Segment loss from operations is comprised of operating unit revenue less operating expenses attributable to each operating segment. For the three and nine months ended September 30, 2015, no revenue was recognized in the C&I segment as the C&I investment fund was not operational. Operating expenses in the C&I segment included fees related to the closing of the C&I fund and personnel costs of employees directly involved in the development of C&I. Prior to the three months ended June 30, 2015, all reported results related to the Residential segment, and as such, no restatement of prior period segment results was necessary. Operating results by reporting segment in 2015 were as follows:

 

 

Three Months Ended

 

 

September 30, 2015

 

 

Residential

 

 

C&I

 

 

Total

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Operating leases and incentives

$

21,781

 

 

$

 

 

$

21,781

 

Solar energy system and product sales

 

693

 

 

 

 

 

 

693

 

Total revenue

 

22,474

 

 

 

 

 

 

22,474

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue—operating leases and incentives

 

37,624

 

 

 

 

 

 

37,624

 

Cost of revenue—solar energy system and product sales

 

470

 

 

 

 

 

 

470

 

Sales and marketing

 

11,802

 

 

 

249

 

 

 

12,051

 

Research and development

 

1,047

 

 

 

 

 

 

1,047

 

General and administrative

 

21,850

 

 

 

104

 

 

 

21,954

 

Amortization of intangible assets

 

3,711

 

 

 

 

 

 

3,711

 

Total operating expenses

 

76,504

 

 

 

353

 

 

 

76,857

 

Loss from operations

 

(54,030

)

 

 

(353

)

 

 

(54,383

)

 

 

 

Nine Months Ended

 

 

September 30, 2015