United states

TPI COMPOSITES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

The Company also maintains cash in bank deposit accounts outside the U.S. with no insurance. At December 31, 2016, this includes $2.5 million in Turkey, $12.3 million in China and $0.9 million in Mexico. The Company has not experienced losses in these accounts. The Company also has long-term deposits in interest bearing accounts of $8.1 million in Mexico. See Note 9, Other Noncurrent Assets.

Note 3. Related-Party Transactions

Related party transactions include transactions between the Company and certain of its affiliates. The following transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.

The Company has historically entered into several agreements with subsidiaries of General Electric Company and its consolidated affiliates (GE) relating to the operation of its business. As a result of these agreements, GE has been a debtor, creditor, holder of preferred shares and now a holder of common shares.

The Company has entered into five separate supply agreements with GE to manufacture wind blades in Newton, Iowa; Taicang Port, China; Juárez, Mexico (2) and Izmir, Turkey. As a result of the supply agreements, GE is the Company’s largest customer. As disclosed at note 18, Concentration of Customers , for the years ended December 31, 2016, 2015 and 2014, the Company recorded related-party sales with GE of $379.9 million, $312.5 million and $234.8 million, respectively. As of December 31, 2016 and 2015, the Company had accounts receivables related to sales to GE of approximately $16.6 million and $19.0 million, respectively.

Since 2007, the Company had issued multiple series of preferred shares, including several preferred share issuances to GE. Immediately prior to the closing of the IPO, all shares of the then-outstanding preferred shares were converted into shares of common stock. As a result of these transactions, GE owns 8.4% of the Company’s outstanding common stock as of December 31, 2016. See Note 14, Convertible and Senior Redeemable Preferred Shares and Warrants.

In January 2016, the Company entered into an agreement with GE and received an advance of $2.0 million, which the Company repaid in full in August 2016. See Note 11, Customer Deposits and Customer Advances.

Certain of the Company’s existing stockholders, consisting of entities associated with Element Partners, Angeleno Group and Landmark Partners, each of which is an affiliate of a member of the board of directors, as well as certain executive officers and a director, purchased an aggregate of 1,250,000 shares of common stock in the IPO. In addition, all outstanding obligations under the Company’s subordinated convertible promissory notes, including accrued interest, held by certain existing stockholders, including Element Partners, Angeleno Group and Landmark Partners, were converted into an aggregate of 1,079,749 shares of common stock concurrent with the closing of the IPO at the public offering price of $11.00 per share.

Note 4. Accounts Receivable

Accounts receivable at December 31 consisted of the following (in thousands):

 

		2016				2015
Trade accounts receivable		$	66,612			$	71,588
Other accounts receivable			1,230				1,325
Total accounts receivable		$	67,842			$	72,913

 

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TPI COMPOSITES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 5. Inventories

Inventories at December 31 consisted of the following (in thousands):

 

		2016				2015
Raw materials		$	29,278			$	29,022
Work in process			21,169				16,630
Finished goods			2,648				5,189
Total inventories		$	53,095			$	50,841

Note 6. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets at December 31 consisted of the following (in thousands):

 

		2016				2015
Refundable value-added tax		$	5,229			$	12,052
Prepaid customs and duty charges			8,289				5,891
Deposits			8,135				3,140
Deferred expenses			—				2,807
Prepaid rebates			519				523
Other prepaid expenses			8,130				5,531
Other current assets			355				1,393
Total prepaid expenses and other current assets		$	30,657			$	31,337

Note 7. Property, Plant, and Equipment, Net

Property, plant, and equipment, net at December 31 consisted of the following (in thousands):

 

		2016				2015
Machinery and equipment		$	70,481			$	49,078
Buildings			13,449				14,047
Leasehold improvements			16,818				14,259
Office equipment and software			6,403				3,691
Furniture			15,883				15,140
Vehicles			342				279
Construction in progress			11,592				4,660
Total			134,968				101,154
Accumulated depreciation			(43,802	)			(33,422	)
Property, plant and equipment, net		$	91,166			$	67,732

As of December 31, 2016, the Company had undertaken projects including the construction and outfitting of its second and third wind blade production facilities in Juárez, Mexico, facility improvements to certain of our wind blade production facilities, as well as the purchase of equipment and machinery across all facilities and the Corporate office.

 

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