ANALYZE, THINK, COMMUNICATE ATC 14-1 Real-World Case Following the cash Tesla Motors Company, Inc. began operations in 2003 but did not begin selling its stock to the pub lic until June 28, 2010. It has lost money every year it has been in existence, and by December 31, 2013. it had total lifetime losses of approximately 1.1 billion. The company makes the Tesla Model S. and it supplies electric car components to Daimler and Toyota, Tesla's statements of cash flows for 2011, 2012, and 2013 follow. TESLA MOTORS, INC. Consolidated Statements of Cash Flows (in thousands) For the Years Ended December 31 2013 2012 2011 $ (74,014) $(396.213) $1254,419) Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization Stock-based compensation Amortization of discount on convertible debt Inventory write-downs Write-off of Department of Energy (DOE) loan origination costs Change in fair value of DOE warrant liabilities 28,825 50.145 16-919 29,419 106,083 80.737 9.143 8,918 5.558 (10,692) 4,929 1,828 1.854 2.750 Counting For the Years Ended December 31 2013 2012 3.611 1.560 3.655 (21.917) (463.270 (17.466) (342) (243) 66,567 268,153 24,243 236.299 32.971 257,994 (17.303 $194,726) 1.121 (482) 187,821 9,603 (526) 47,056 2325 113.633 1243) (283) 19,891 10,620 1.927) 61,006 10,255 (266.081) 2.641 (123.034) Other noncash operating activities Foreign currency transaction guin Change in operating assets and liabilities Account receivables Inventories and operating lease vehicles Prepaid expenses and other current assets Other assets Accounts payable Accrued liabilities Deferred revenue Customer deposits Resale value guarantee Other long-term liabilities Net cash provided by (used in) operating activities Cash flows from investing activities: Purchases of property and equipment excluding capital cases Withdrawals out of our dedicated DOE account, net (Increase) decrease in other restricted cash Purchase of marketable securities Maturities of short-term marketable securities Net cash provided by investing activities Cash flows from financing activities Proceeds from convertible debt Proceeds from issuance of common stock in public offering Proceeds from issuance of warrants Proceeds from exercise of stock options and other stock ances Proceeds from issuance of common stock in private placement Principal payments on DOE loans Purchase of convertible note hedges Common stock and convertible debt issuance costs Principal payments on capital leases and other debt E (264,224) 14,752 (239.228) 8.620 (1.330) (14,992 40,000 (206,930 (184.226) 50.121 13,201) 164.952) 40.000 (162.258) 249.417) 221,496 172,410 660.000 360,000 120,318 95.307 55.000 M452,337) (177.540) (16.901) 24.885 10,525 59,058 (12,719 (2,832 (416) w tullachicule 2421 HTT 202.153 24.243 236.299 131921 9603 5261 47056 10.62 (1.927 61.003 257.994 10.255 (266.081 (128.034 (184.226 (264,224) 14.252 239.228 8520 (1.330 1549521 40,000 (162.258 40.000 206.930 Account payable Accuedab Deferred revenue Customer deposits Real value guarantee Other long-term bites Netcash provided by wiedni operating activities Cash flows from investing activities: Purchases of property and equipment excluding capital lases Withdrawal out of our dedicated DOE account, net increase decrease in other restricted cash Purchase of marketable securities Matur ties of short-term marketable securities Net cash provided by investing activities Cash flows from financing activities Proceeds from convertible debt Proceeds from issuance of common stock in public offering Proceeds tom e of war Proceeds from evercise of stock options and other stock dances Proceeds from issuance of common stock in private placement Principal payments on DOE loans Purchase of convertible note hedges Common stock and convertible de tissuance costs Principal payments on a leaves and other deb Proceeds from Dolar Net cash provided by mancing activities Net increase decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (249,417 221,496 172.410 660,000 360 000 20313 95 307 55.000 45223271 (177.540 24,885 10.525 59,058 (12,710 201.50 $255.266 Recured us Vients at beginning of period Cash and cash equivalents at end of period 20.89 S 845,889 Required a. As this chapter explained, many companies that report net losses on their earnings statements re port positive cash flows from operating activities. How do Tesla's net incomes compare to its cash flows from operating activities? S b. Based only on the information in the statements of cash flows, does Tesla appear to be growing the capacity of its business? Explain. c. In 2013 Tesla paid off $452.3 million on Department of Energy (DOE) loans and $8.4 million of capital leases and other debt. Where did it get the funds to repay this debt? d. All things considered, based on the information in its statements of cash flows, does Tesla's cash position appear to be improving or deteriorating? HONC COME IS New MN OP GOOG me.net rad360 defaut aspx? Section D-743&ta bide 155/unit/3/Read ATC 14-1 Real-World Case Following the cash Tesla Motors Company, Inc. began operations in 2003 but did not beginselling lic until June 28, 2010. It has lost money every year it has been in existence, and by Den 2013. it had total lifetime losses of approximately SLI billion. The company makes the ILMNE S. and it supplies electric car components to Daimler and Toyota. Tesla's statements of cash 2011, 2012, and 2013 follow. TESLA MOTORS, INC. Consolidated Statements of Cash Flows (in thousands) For the Years Ended December 31 2 2013 2012 201 $ 14,014 $(396,213) $(254,411) sh flows from operating activities: et loss djustments to reconcile net loss to net cash used in operating activities Depreciation and amortization Stock-based compensation Amortization of discount on convertible debt Inventory write downs Write-oll of Department of Energy (DOE) loan origination costs Change in fair value of DOE warrant liabilities 106 083 80.737 9.143 8.918 28.825 50,145 15.919 29.419 4.929 1.828 (10,692 2.750 CHICCOHERES New MNC sityonine.net 360 defaut Section 7433 155 DRONE rum as 2013 2012 1.560 2011 233 3.611 3.655 (21,917) (463.270 (17.466 (342) 117,303 (194.726 1,121 2.529 113.633 (243 2243 187.821 9.603 1526 47,056 19,891 10.620 11.927 61,006 Other noncash operating activities Foreign currency transaction gain Change in operating assets and liabilities Account receivables Inventories and operating lease vehicles Prepaid expenses and other current assets Other assets Accounts payable Accrued liabilities Deferred revenue Customer deposits Resale value guarantee Other long-term liabilities Net cash provided by used in operating activities Cash flows from Investing activities Purchases of property and equipment excluding capital lenses Withdrawals out of our dedicated DOE account, net increase decrease in other restricted cash Purchase of marketable securities Maturities of short-term marketable securities Net cash provided by investing activities Cash flows from financing activities: Proceeds from convertible debt Proceeds from issuance of common stock in public offering Process from issuance of w atts 66.567 262 153 24,243 236 299 32.971 257,994 2641 10.255 266.081) (128034 (184.226) 264.224 14.752 SO.121 (239,228 8.620 (1.330 (14.992 40,000 (206.930 3.200) (54.952 40.000 (162.258 (249.417 6600 360,000 221,496 172.410 D ONC COMBI New MNCPCC. OG tyonine.net 2d360 defautspx?Section D-7436ta bide 155873 Reso moncay Proceeds from convertible debt 660.000 Proceeds from issuance of common stock in public offering 360,000 221.496 Proceeds from issuance of warrants 120,318 Proceeds from exercise of stock options and other stock issuances 95.307 24.885 10.525 Proceeds from issuance of common stock in private placement 55,000 59.058 Principal payments on DOE loans (452,337 (12.710 Purchase of convertible note hedges (177.540 Common stock and convertible debt issuance costs (16.901) Principal payments on capital leases and other debt (8.425) 1915 Proceeds from DOE loans 204.423 Net cash provided by financing activities 635,422 446.000 Net increase (decrease in cash and cash equivalents 643,999 155.709 Cash and cash equivalents at beginning of period 201.890 Cash and cash equivalents at end of period $ 845,889 $201.890 $255.266 558 equired As this chapter explained, many companies that report net losses on their earnings statements re- port positive cash flows from operating activities. How do Tesla's met incomes compare to its cash flows from operating activities? Based only on the information in the Matements of cash flows, does Tesla appear to be growing the capit a lin Las and Cash equivalents al beginning of period Cash and cash equivalents at end of period 5845.889 co Required a. As this chapter explained, many companies that report net losses on their earnings statements re port positive cash flows from operating activities. How do Tesla's net incomes compare to its cash flows from operating activities? h Based only on the information in the statements of cash flows, does Tesla appear to be growing the capacity of its business? Explain. c. In 2013 Tesla paid off $452.3 million on Department of Enerty (DOE) loans and $8.4 million of capital leases and other debt. Where did it get the funds to repay this debe? d. All things considered, based on the information in its statements of cash flows, does Tesla's cash position appear to be improving or deteriorating