Restatement of Previously Issued Condensed Consolidated Financial Statements (Tables)

3 Months Ended

Sep. 30, 2019

Accounting Changes and Error Corrections [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

Bloom Energy Corporation

Condensed Consolidated Balance Sheet

(in thousands)

	September 30, 2019
	As Previously Reported		Restatement Impacts		Restatement Reference	ASC 606 Adoption Impacts		As Restated
Assets
Current assets:
Cash and cash equivalents	$	226,499	$	—		$	—	$	226,499
Restricted cash	14,486		—			—		14,486
Accounts receivable	26,737		4,216		1	(4,600)		26,353
Inventories	140,372		(7,765)		2	—		132,607
Deferred cost of revenue	50,707		(9,665)		3	—		41,042
Customer financing receivable	5,919		—			—		5,919
Prepaid expenses and other current assets	25,639		2,830		4	173		28,642
Total current assets	490,359		(10,384)			(4,427)		475,548
Property, plant and equipment, net	384,377		243,008		5	—		627,385
Customer financing receivable, non-current	62,615		—			—		62,615
Restricted cash, non-current	116,890		—			—		116,890
Deferred cost of revenue, non-current	57,286		(53,562)		3	—		3,724
Other long-term assets	58,400		9,319		6	3,232		70,951
Total assets	$	1,169,927	$	188,381		$	(1,195)	$	1,357,113
Liabilities, Redeemable Noncontrolling Interest, Stockholders’ Deficit and Noncontrolling Interests
Current liabilities:
Accounts payable	$	81,060	$	—		$	—	$	81,060
Accrued warranty	15,295		(1,159)		7	(1,274)		12,862
Accrued expenses and other current liabilities	82,150		(2,534)		8	—		79,616
Financing obligations	—		10,420		9	—		10,420
Deferred revenue and customer deposits	88,060		(13,856)		10	3,347		77,551
Current portion of recourse debt	15,678		—			—		15,678
Current portion of non-recourse debt	7,983		—			—		7,983
Current portion of non-recourse debt from related parties	3,500		—			—		3,500
Total current liabilities	293,726		(7,129)			2,073		288,670
Derivative liabilities	14,648		5,636		11	—		20,284
Deferred revenue and customer deposits, net of current portion	179,712		(92,390)		10	34,954		122,276
Financing obligations, non-current	—		397,272		9	—		397,272
Long-term portion of recourse debt	359,959		—			—		359,959
Long-term portion of non-recourse debt	217,334		—			—		217,334
Long-term portion of recourse debt from related parties	27,734		—			—		27,734
Long-term portion of non-recourse debt from related parties	31,781		—			—		31,781
Other long-term liabilities	56,117		(27,264)		8	(1)		28,852
Total liabilities	1,181,011		276,125			37,026		1,494,162
Redeemable noncontrolling interest	557		—			—		557
Stockholders’ deficit:
Preferred stock	—		—			—		—
Common stock	12		—			—		12
Additional paid-in capital	2,647,118		756		12	—		2,647,874
Accumulated other comprehensive loss	(147)		—			—		(147)
Accumulated deficit	(2,753,830)		(88,500)			(38,221)		(2,880,551)
Total stockholders’ deficit	(106,847)		(87,744)			(38,221)		(232,812)
Noncontrolling interest	95,206		—			—		95,206
Total liabilities, redeemable noncontrolling interest, stockholders' deficit and noncontrolling interest	$	1,169,927	$	188,381		$	(1,195)	$	1,357,113

1 Accounts receivable — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements, for which the amount recorded to accounts receivable represents amounts invoiced for capacity billings to end customers which have not yet been collected by the financing entity as of the period end.

2 Inventories — The correction of these misstatements resulted from the change of accounting for inventory, including net capitalization of stock-based compensation cost of $3.7 million.

3 Deferred cost of revenue, current and non-current — The correction of these misstatements resulted from reclassifying deferred cost of revenue to property, plant and equipment, net, for the leased Energy Servers under the Managed Services Agreements and similar sale-leaseback arrangements of $7.4 million (short-term) and $53.6 million (long-term), net capitalization of stock-based compensation costs of $0.8 million into current deferred cost of revenue, and the correction of certain other immaterial misstatements identified to relieve installation deferred cost of revenue of $3.1 million.

4 Prepaid expenses and other current assets — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements, whereby prepaid property tax and insurance payments are now classified within prepaid expenses, rather than offset against deferred revenue.

5 Property, plant and equipment, net — The correction of these misstatements resulted from the change of accounting for Managed Services transactions and similar arrangements, whereby product and install cost of revenue are now recorded as property, plant and equipment, net in the cases where the risks of ownership have not completely transferred to the financing party of $239.3 million. This includes a net capitalization of stock-based compensation cost for these assets of $3.7 million

6 Other long-term assets — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements, whereby the timing difference of capacity billings to end customers and the payments received from the financing entity is recorded within long term receivables and prepaid property tax and insurance payments are now classified within other long-term assets, rather than offset against long-term deferred revenue.

7 Accrued warranty — The correction of these misstatements resulted from the change of accounting for accrued warranty, which is now recorded on an as-incurred basis for our Managed Services Agreements and similar arrangements, reducing accrued warranty by $0.1 million and the change of accounting for the grid pricing escalation guarantees we provided in some of our sales arrangements, which are now recorded as derivative liabilities, reducing accrued warranty by $1.1 million

8 Accrued expense and other current liabilities and other long-term liabilities — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements, for which historical accrued liabilities recorded at inception of the agreements, as well as subsequent reductions of those liabilities, were reversed.

9 Financing obligations, current and non-current — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements, whereby instead of recognizing the upfront proceeds received from the bank as revenue, the proceeds received are classified as financing obligations.

10Deferred revenue and customer deposits, current and non-current — The correction of these misstatements resulted from the change of accounting for the recognition of product and installation revenue from upfront or ratable recognition to recognition of the capacity payments received from the end customer as power is generated by the Energy Servers as electricity revenue.

11 Derivative liabilities — The correction of these misstatements resulted from the change of accounting for embedded derivatives related to grid pricing escalation guarantees we provided in some of our sales arrangements. These are now recorded as derivative liabilities and were previously treated as an accrued liability.

12 Additional paid-in capital — Relates to the correction of an unadjusted misstatement in the valuation of our 6% Notes derivative, resulting in a credit to additional paid-in capital and additional expense of $0.8 million recorded within other expense, net.

.

Bloom Energy Corporation

Condensed Consolidated Statement of Operations

(in thousands)

	Three Months Ended September 30, 2019
	As Previously Reported		Restatement Impacts		Restatement Reference	ASC 606 Adoption Impacts		As Restated
Revenue:
Product	$	182,616	$	(1,292)	a	$	(17,422)	$	163,902
Installation	19,010		(460)		a	2,552		21,102
Service	23,597		(779)		a	847		23,665
Electricity	8,248		7,390		a	—		15,638
Total revenue	233,471		4,859			(14,023)		224,307
Cost of revenue:
Product	94,056		(2,085)		c, d	(274)		91,697
Installation	26,162		(21)		c	—		26,141
Service	36,539		2,073		b, d	(2,185)		36,427
Electricity	23,249		4,068		c	—		27,317
Total cost of revenue	180,006		4,035			(2,459)		181,582
Gross profit	53,465		824			(11,564)		42,725
Operating expenses:
Research and development	23,389		—			—		23,389
Sales and marketing	18,125		43		e	(519)		17,649
General and administrative	36,599		—			—		36,599
Total operating expenses	78,113		43			(519)		77,637
Loss from operations	(24,648)		781			(11,045)		(34,912)
Interest income	1,214		—			—		1,214
Interest expense	(15,280)		(6,043)		f	—		(21,323)
Interest expense to related parties	(1,605)		—			—		(1,605)
Other expense, net	525		—			—		525
Loss on revaluation of warrant liabilities and embedded derivatives	—		(540)		g	—		(540)
Loss before income taxes	(39,794)		(5,802)			(11,045)		(56,641)
Income tax provision	136		—			—		136
Net loss	(39,930)		(5,802)			(11,045)		(56,777)
Less: net loss attributable to noncontrolling interests and redeemable noncontrolling interests	(5,027)		—			—		(5,027)
Net loss attributable to Class A and Class B common stockholders	$	(34,903)	$	(5,802)		$	(11,045)	$	(51,750)

a Revenue impacted by Managed Services restatements — The correction of these misstatements resulted from the change from upfront recognition of product and installation revenue to recognition of the capacity payments received from the end customer as power is generated by the Energy Servers as electricity revenue over the term of our Managed Services Agreements and similar sale-leaseback arrangements, which also impacted our service revenue allocation.

b Service cost of revenue impacted by grid pricing escalation guarantees — The correction of these misstatements resulted in a change in the accounting for our grid escalation guarantees that resulted in a decrease in service cost of revenue of $0.1 million.

c Cost of revenue impacted by Managed Services restatements — The correction of these misstatements resulted from the change from upfront recognition of product and installation cost of revenue to recognition of the depreciation expense on the capitalized Energy Servers over their useful life of 21 years for our Managed Services Agreements and similar sale-leaseback transactions, resulting in a decrease in product cost of revenue of $1.1 million and installation cost of revenue of $0.6 million, offset by an increase in electricity cost of revenue of $4.0 million together with the correction of certain other immaterial misstatements identified to record installation cost of revenue of $0.6 million.

d Cost of revenue impacted by stock-based compensation allocation — The correction of these misstatements resulted from the capitalization of stock-based compensation costs, with a net benefit to product cost of revenue of $1.0 million, and an increase in service cost of revenue of $2.2 million due to the expensing of stock-based compensation related to field replacement units.

e Sales and marketing and general and administrative expenses — The correction of these misstatements primarily resulted from the change of accounting for sales commission expense on an as earned basis, to accounting for the expense over the term of our Managed Services Agreements and similar sale-leaseback arrangements.

f Interest expense — The correction of these misstatements resulted from the change of accounting for sales that should have been accounted for as financing transactions, in which the upfront consideration received from the financing party is accounted for as a financing obligation and interest expense is recognized over the term of the Managed Services Agreement using the effective interest method.

g Gain (loss) on revaluation of warrant liabilities and embedded derivatives — The correction of these misstatements resulted from the change of accounting for the grid pricing escalation guarantees we provided in some of our sales arrangements which is now recorded as a derivative liability that needs to be fair valued each period end. The fair value increased in the period, resulting in a loss of $0.5 million.

Bloom Energy Corporation

Condensed Consolidated Statement of Operations

(in thousands)

	Nine Months Ended September 30, 2019
	As Previously Reported		Restatement Impacts		Restatement Reference	ASC 606 Adoption Impacts		As Restated
Revenue:
Product	$	504,249	$	(72,220)	a	$	(33,120)	$	398,909
Installation	58,553		(17,555)		a	5,399		46,397
Service	70,546		(1,939)		a	1,551		70,158
Electricity	34,612		21,558		a	—		56,170
Total revenue	667,960		(70,156)			(26,170)		571,634
Cost of revenue:
Product	350,008		(56,070)		c, d	(241)		293,697
Installation	72,444		(12,858)		c	—		59,586
Service	83,695		4,324		b, d	(4,908)		83,111
Electricity	50,920		11,681		c	—		62,601
Total cost of revenue	557,067		(52,923)			(5,149)		498,995
Gross profit	110,893		(17,233)			(21,021)		72,639
Operating expenses:
Research and development	82,020		—			—		82,020
Sales and marketing	56,947		62		e	(793)		56,216
General and administrative	119,335		—			—		119,335
Total operating expenses	258,302		62			(793)		257,571
Loss from operations	(147,409)		(17,295)			(20,228)		(184,932)
Interest income	4,799		—			—		4,799
Interest expense	(47,967)		(17,878)		f	—		(65,845)
Interest expense to related parties	(4,823)		—			—		(4,823)
Other expense, net	568		—			—		568
Loss on revaluation of warrant liabilities and embedded derivatives	—		(1,620)		g	—		(1,620)
Loss before income taxes	(194,832)		(36,793)			(20,228)		(251,853)
Income tax provision	602		—			—		602
Net loss	(195,434)		(36,793)			(20,228)		(252,455)
Less: net loss attributable to noncontrolling interests and redeemable noncontrolling interests	(13,874)		—			—		(13,874)
Net loss attributable to Class A and Class B common stockholders	$	(181,560)	$	(36,793)		$	(20,228)	$	(238,581)

a Revenue impacted by Managed Services restatements — The correction of these misstatements resulted from the change from upfront recognition of product and installation revenue to recognition of the capacity payments received from the end customer as power is generated by the Energy Servers as electricity revenue over the term of our Managed Services Agreements and similar sale-leaseback arrangements, which also impacted our service revenue allocation.

b Service cost of revenue impacted by grid pricing escalation guarantees — The correction of these misstatements resulted in a change in the accounting for our grid escalation guarantees that resulted in a decrease in service cost of revenue of $0.3 million.

c Cost of revenue impacted by Managed Services restatements — The correction of these misstatements resulted from the change from upfront recognition of product and installation cost of revenue to recognition of the depreciation expense on the capitalized Energy Servers over their useful life of 21 years for our Managed Services Agreements and similar sale-leaseback transactions, resulting in a decrease in product cost of revenue of $56.7 million and installation cost of revenue of $15.0 million, offset by an increase in electricity cost of revenue of $11.6 million together with the correction of certain other immaterial misstatements identified to record installation cost of revenue of $2.1 million.

d Cost of revenue impacted by stock-based compensation allocation — The correction of these misstatements resulted from the capitalization of stock-based compensation costs, with a net benefit to product cost of revenue of $0.6 million, and an increase in service cost of revenue of $4.6 million due to the expensing of stock-based compensation related to field replacement units.

e Sales and marketing and general and administrative expenses — The correction of these misstatements primarily resulted from the change of accounting for sales commission expense on an as earned basis, to accounting for the expense over the term of our Managed Services Agreements and similar sale-leaseback arrangements.

f Interest expense — The correction of these misstatements resulted from the change of accounting for sales that should have been accounted for as financing transactions, in which the upfront consideration received from the financing party is accounted for as a financing obligation and interest expense is recognized over the term of the Managed Services Agreement using the effective interest method.

g Gain (loss) on revaluation of warrant liabilities and embedded derivatives — The correction of these misstatements resulted from the change of accounting for the grid pricing escalation guarantees we provided in some of our sales arrangements which is now recorded as a derivative liability that needs to be fair valued each period end. The fair value increased in the period, resulting in a loss of $1.6 million.

Bloom Energy Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Nine Months Ended September 30, 2019
	As Previously Reported		Restatement Impacts		Restatement Reference	ASC 606 Adoption Impacts		As Restated
Cash flows from operating activities:
Net loss	$	(195,434)	$	(36,793)		$	(20,228)	$	(252,455)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	55,816		9,132		A	—		64,948
Write-off of property, plant and equipment, net	2,987		—			—		2,987
Write-off of PPA II decommissioned costs	25,613		—			—		25,613
Debt make-whole payment	5,934		—			—		5,934
Revaluation of derivative contracts	1,335		1,620		B	—		2,955
Stock-based compensation	154,955		5,278		C	—		160,233
Loss on long-term REC purchase contract	61		—			—		61
Amortization of debt issuance cost	16,295		—			—		16,295
Changes in operating assets and liabilities:
Accounts receivable	58,150		(318)		D	5,594		63,426
Inventories	(7,896)		6,121		E	—		(1,775)
Deferred cost of revenue	56,854		(59,198)		F	—		(2,344)
Customer financing receivable and other	4,142		—			—		4,142
Prepaid expenses and other current assets	7,928		176		G	(33)		8,071
Other long-term assets	3,281		(1,229)		H	(758)		1,294
Accounts payable	14,171		—			—		14,171
Accrued warranty	(3,941)		109		I	(242)		(4,074)
Accrued expense and other current liabilities	5,029		162		J	—		5,191
Deferred managed services revenue	—		—			—		—
Deferred revenue and customer deposits	(68,180)		74,765		K	15,667		22,252
Other long-term liabilities	2,083		2,477		L	—		4,560
Net cash provided by operating activities	139,183		2,302			—		141,485
Cash flows from investing activities:
Purchase of property, plant and equipment	(23,474)		(16,216)		M	—		(39,690)
Payments for acquisition of intangible assets	(1,478)		—			—		(1,478)
Proceeds from maturity of marketable securities	104,500		—			—		104,500
Net cash provided by investing activities	79,548		(16,216)			—		63,332
Cash flows from financing activities:
Repayment of debt	(93,263)		—			—		(93,263)
Repayment of debt to related parties	(1,691)		—			—		(1,691)
Debt make-whole payment	(5,934)		—			—		(5,934)
Proceeds from financing obligations	—		20,333		N	—		20,333
Repayment of financing obligations	—		(6,419)		N	—		(6,419)
Payments to noncontrolling and redeemable noncontrolling interests	(43,713)		—			—		(43,713)
Distributions to noncontrolling and redeemable noncontrolling interests	(9,363)		—			—		(9,363)
Proceeds from issuance of common stock	12,623		—			—		12,623
Net cash used in financing activities	(141,341)		13,914			—		(127,427)
Net increase in cash, cash equivalents, and restricted cash	77,390		—			—		77,390
Cash, cash equivalents, and restricted cash:
Beginning of period	280,485		—			—		280,485
End of period	$	357,875	$	—		$	—	$	357,875
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	35,894	$	17,878	N	$	—	$	53,772
Cash paid during the period for taxes	715		—			—		715

A Depreciation and amortization — The correction of these misstatements resulted from the change of accounting for Energy Servers under our Managed Services Program and similar arrangements that were previously expensed as product and install cost of revenue, but are now recorded as property, plant and equipment, net and depreciated over their useful lives of 21 years.

B Revaluation of derivative contracts — The correction of these misstatements resulted from the change of accounting for the grid pricing escalation guarantees we provided in some of our sales arrangements. These commitments were previously treated as an accrued liability. We now consider the commitments a derivative liability, with the initial value of recorded as a reduction in product revenue and then any changes in the value adjusted through other expense, net, each period thereafter.

C Stock-based compensation — The correction of these misstatements resulted from the change of accounting for stock-based compensation, including net capitalization of stock-based compensation cost into inventory of $5.9 million The correction of this misstatement also resulted in the capitalization of $0.6 million of stock-based compensation costs related to assets under the Managed Services Programs now recorded as construction in progress within property, plant and equipment, net.

D Accounts receivable — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements, for which the amount recorded to accounts receivable represents amounts invoiced for capacity billings to end customers which have not yet been collected by the financing entity as of the period end.

E Inventories — The correction of these misstatements resulted from the change of accounting for inventories held for shipments planned to customers under our Managed Services Program and similar arrangements now being accounted for as construction in progress within property, plant and equipment, net.

F Deferred cost of revenue, current and non-current — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements, whereby leased Energy Servers of $60.6 million previously classified as deferred cost of revenue is now recorded as construction in progress within property, plant and equipment, net, and the net release of stock-based compensation expenses of $1.4 million.

G Prepaid expenses and other current assets — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements, whereby prepaid property tax and insurance payments are now classified within prepaid expenses.

H Other long-term assets — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements, whereby the timing difference of capacity billings to end customers and the payments received from the financing entity is recorded within long term receivables and prepaid property tax and insurance payments are now classified within other long-term assets, rather than offset against long-term deferred revenue.

I Accrued warranty — The correction of these misstatements resulted from the change of accounting for accrued warranty which is now recorded on an as-incurred basis for our Managed Services Agreements and similar arrangements. The correction of these misstatements resulted from the change of accounting for the grid pricing escalation guarantees we've provided in some of our sales arrangements. These commitments were previously treated as a contingent liability that was considered remote. We now maintain a $0.4 million accrual, with the initial value treated as a reduction in product revenue and then any changes in the value adjusted through other expense, net each period thereafter.

J Accrued expense and other current liabilities and other long-term liabilities — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements whereby instead of recognizing the bank financing as revenue, the bank financing loan proceeds received and due are classified as a financing liability.

K Deferred revenue and customer deposits, current and non-current — The correction of these misstatements resulted from the change of accounting for the recognition of product and installation revenue from upfront or ratable recognition to the recognition of the capacity payments received from the end customer as power is generated by the Energy Servers as electricity revenue.

L Other long-term liabilities — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements whereby instead of recognizing the bank financing as revenue, the bank financing loan proceeds received and due beyond the next 12 months are classified as a financing obligation.

M Purchase of property, plant and equipment — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements, whereby costs previously recognized as product and installation cost of revenue are now recorded as property, plant and equipment, net, in the cases where the risks of ownership have not completely transferred to the financing party.

N Proceeds and repayments from financing obligations — The correction of these misstatements resulted from the change of accounting for Managed Services Agreements and similar arrangements, whereby instead of recognizing the upfront proceeds received from the bank as revenue, the proceeds received and due are classified as proceeds from financing obligations and the capacity payments received from the end customer are classified as repayment of financing obligations and interest paid.