Tesla Motors
TESLA MOTORS INC (Form: 8-K, Received: 02/19/2014 16:07:03)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

February 19, 2014

 

 

Tesla Motors, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   001-34756   91-2197729

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

3500 Deer Creek Road

Palo Alto, California 94304

(Address of principal executive offices, including zip code)

(650) 681-5000

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On February 19, 2014, Tesla Motors, Inc. released its financial results for the quarter and fiscal year ended December 31, 2013 by posting its Fourth Quarter and Full Year 2013 Shareholder Letter on its website. The full text of the shareholder letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

This information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
No.

  

Description

99.1    Tesla Motors, Inc. Fourth Quarter and Full Year 2013 Shareholder Letter dated February 19, 2014.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  TESLA MOTORS, INC.
By:  

/s/ Deepak Ahuja

  Deepak Ahuja
  Chief Financial Officer

Date: February 19, 2014


EXHIBIT INDEX

 

Exhibit
No.

  

Description

99.1    Tesla Motors, Inc. Fourth Quarter and Full Year 2013 Shareholder Letter dated February 19, 2014

Exhibit 99.1

 

LOGO   

Tesla Motors, Inc. – Fourth Quarter & Full Year 2013 Shareholder Letter

 

•    Record 6,892 Model S vehicles sold and delivered in Q4

 

•    World’s highest Consumer Reports customer satisfaction score of 99/100

 

•    Q4 auto gross margin of 25% with no zero emission vehicle (ZEV) credit revenue

 

•    Supercharger network built across most of USA and Northwest Europe

 

•    Net income of $46M and $0.33 EPS (non-GAAP), loss of $16M and $(0.13) EPS (GAAP) in Q4

 

•    Positive free cash flow of $40M in Q4

 

•    Expecting over 55% vehicle delivery growth in 2014 and 28% auto GM by Q4

 

February 19, 2014

Dear Fellow Shareholders:

Last quarter, we had record deliveries of 6,892 vehicles and exceeded our target automotive gross margin of 25%, achieving 25.2% on a non-GAAP basis and 25.8% on a GAAP basis. This capped a year in which we delivered 22,477 vehicles, resulting in almost $2.5 billion in sales on a non-GAAP basis and over $2 billion in sales on a GAAP basis. It is important to note that the differences between GAAP and non-GAAP are primarily due to lease accounting for our resale value guarantee (RVG) and employee stock based compensation as a result of the increase in our stock price last year. With 20 months since delivery of the first vehicles to customers, Model S continues to track to an outstanding residual value, with very few cars available for resale. If current trends continue, the average price of a used Model S should be meaningfully above our resale value guarantee.

For the year, Model S was the top selling vehicle in North America among comparably priced cars. Nonetheless, we believe there is room to improve in 2014 as we complete the Supercharger network and enable vehicle service almost anywhere in North America. The potential in Europe and Asia is even more significant. Towards the end of the year, we expect sales in those regions combined to be almost twice that of North America.

As volume increases, additional economies of scale will come into play, resulting in further improvements in gross margin. We think an automotive gross margin of 28%, excluding potential ZEV credit sales, is a reasonable target for Q4 2014, even if a lower option take rate is assumed. Please note that Tesla is not trying to achieve the absolute highest possible gross margin, as this would require following the industry practice of charging excessive prices to customers in certain markets, which we believe is inconsistent with building long term loyalty.

Enhancing the Customer Experience

 

Model S customers are proving that owning a well-engineered electric vehicle can be a superior ownership experience over a gasoline-powered car. Our rapidly growing customer base has driven Model S almost 200 million cumulative miles, and we believe that more than 80% of our customers are using their Model S as their primary vehicle.

 

Our goal is to deliver the highest possible level of ownership satisfaction in every way. For example, in Q4 we rapidly expanded our service locations and reduced repair turnaround time. One measure of customer satisfaction is a survey completed after each service in which almost 90% of customers rate our service at 9 or better on a 10 point scale, where 10 is best and 1 is worst. We also recently made several enhancements to the Model S through software updates and added small, but important, features such as power folding mirrors and parking sensors.

 

LOGO

Tesla Coast-to-Coast Supercharger Rally


Our efforts were validated in November by Consumer Reports’ owner satisfaction survey, which gave Model S a score of 99 out of 100, the highest satisfaction score of any car in the world. The next highest score was 95.

To further enhance the driver experience, new Model S customers will now receive free data connectivity and Internet radio for four years. As an added benefit to our existing Model S customers, the free four year period starts on January 1, 2014. To be fair to all, in rare cases a customer may be charged for extreme data use.

The ability of our customers to charge for free with our Supercharger network is another core element of the Tesla experience. It is now possible for Model S owners to make convenient long distance trips along the west or east coasts and from Los Angeles to New York without ever taking out their wallets. In late January, one of our customers made the first Supercharged Model S trip from New York to Los Angeles in the dead of winter, encountering temperatures as low as -22 o F. He and his daughter completed the trip in just six days. Shortly thereafter, a Tesla team completed the coast-to-coast trip using only the Supercharger network in just over 76 hours, despite encountering blizzards, road closures and a sand storm on various parts of the journey.

Expanding Tesla Globally

The first Model S deliveries to China are scheduled for this spring. We plan to make substantial investments in China this year as we add new stores, service centers and a Supercharger network. Already, the Beijing store is our largest and most active retail location in the world.

 

LOGO

A Model S Test Drive in China

  

We strive for transparent and fair pricing in every market. Consistent with this goal, the price for a Model S in China is the same as the price for a Model S in the US, adding only unavoidable taxes, customs duties and transportation costs. We are taking a risk with this strategy, because it is counter to prevailing auto industry practices. Still, we believe it is the right thing to do. It also means that in China the Model S is priced comparable to a mid-sized premium vehicle, instead of a large luxury vehicle.

 

In Germany and other European markets, we recently announced new, highly competitive leasing and financing options in collaboration with our growing team of global financial partners.

Expansion into the right hand drive markets such as the United Kingdom, Japan, Hong Kong and Australia will occur gradually over the year starting this spring.

Quarterly Results

As usual, this letter includes both GAAP and non-GAAP financial information, because we consider non-GAAP information in our planning and management processes. Non-GAAP financials exclude stock-based compensation and non-cash interest expense, and add back the deferred revenue and related costs for cars sold with an RVG. Obtaining financing via our bank partners and getting an RVG from us continues to remain popular with our U.S. customers, as we delivered 1,667 cars with an RVG in Q4.

For the quarter, non-GAAP revenue was $761 million, up 26% from Q3. GAAP revenue for Q4 was $615 million, up 43% from Q3. We produced more cars than originally expected in the quarter, aided by manufacturing, design


and quality improvements, but also strong efforts from our supply chain. Both Toyota and Daimler powertrain programs remain on plan and contributed $13 million of revenue in the quarter. Q4 sales also included $15 million of regulatory credits revenue, but no zero emission vehicle (ZEV) credit sales.

During Q4, we achieved non-GAAP automotive gross margin of 25.2%, and 25.8% on a GAAP basis. We did this by reducing vehicle cost, primarily through component cost reductions as well as increased manufacturing and supply chain efficiency. Average pricing also remained strong due to a richer mix of 85 kWh cars and a high option take rate.

Research and development (R&D) expenses were $58 million non-GAAP and $68 million on a GAAP basis. Non-GAAP R&D was up 21% from Q3, as engineering work accelerated on Model X and efforts continued for the adaptation of Model S in international markets.

Selling, general and administrative (SG&A) expenses were $87 million non-GAAP and $101 million on a GAAP basis. Much of the 30% sequential increase in non-GAAP SG&A was driven by the expansion of our customer infrastructure.

 

Q4 non-GAAP net income was $46 million, or $0.33 per share, while Q4 GAAP net loss was $16 million or $(0.13) per share. Both results include a $4.6 million net gain, or $0.03 per share from a favorable foreign currency impact.

 

Cash on hand increased to $846 million as of December 31, 2013, as we generated $130 million of operating cash flow (cash flow from operations less capital expenditures) and $40 million of positive free cash flow in the quarter.

   LOGO
     Model S Conquers the Cold

2014 Outlook

We expect to deliver over 35,000 Model S vehicles in 2014, representing a 55+% increase over 2013. Production is expected to increase from 600 cars/week presently to about 1,000 cars/week by end of the year as we expand our factory capacity and address supplier bottlenecks. Battery cell supply will continue to constrain our production in the first half of the year, but will improve significantly in the second half of 2014.

First quarter production is expected to be about 7,400 vehicles, which is significantly higher than the prior quarter production of 6,587 cars. However, as the number of cars in transit to Europe and Asia must grow substantially to support those markets, we plan to deliver approximately 6,400 vehicles in Q1. Deliveries will grow dramatically in future quarters as the logistics pipeline fills.

This year, we expect automotive gross margin to increase to about 28% (non-GAAP and GAAP) in Q4 through a series of small design improvements, better supplier prices and economies of scale. Q1 gross margin should increase very slightly from Q4. For the remainder of the year, gross margin should improve at a faster pace.

Operating expenses and capital expenditures will increase significantly in 2014, as we plan to invest in the long term growth of Tesla. We plan to expand production capacity for Model S and Model X, invest in our store, service and Supercharger infrastructure, complete the development of Model X and start early design work on our third generation car.

In Q1, operating expenses are expected to grow roughly 15%. R&D expenses will increase as design and engineering work accelerates on Model X. We expect to have production design Model X prototypes on the road by end of year and begin volume deliveries to customers in the spring of 2015. SG&A spending will grow as we expand globally our retail presence and add more Superchargers.


Very shortly, we will be ready to share more information about the Tesla Gigafactory. This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation. Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years. This will also allow us to address the solar power industry’s need for a massive volume of stationary battery packs.

Looking forward to a very exciting 2014!

 

LOGO    LOGO
Elon Musk, Chairman & CEO    Deepak Ahuja, Chief Financial Officer


Webcast Information

Tesla will provide a live webcast of its fourth quarter and full year 2013 financial results conference call beginning at 2:30 p.m. PT on February 19, 2014, at ir.teslamotors.com. This webcast will also be available for replay for approximately one year thereafter.

Non-GAAP Financial Information

Consolidated financial information has been presented in accordance with GAAP as well as on a non-GAAP basis. On a non-GAAP basis, financial measures exclude non-cash items such as stock-based compensation, the change in fair value related to Tesla’s warrant liability, non-cash interest expense related to Tesla’s 1.5% convertible senior notes as well as one-time expenses associated with the early repayment of the Department of Energy Loan. Non-GAAP financial measures also exclude the impact of lease accounting on Model S related revenues and cost of revenues, as this perspective is useful in understanding the underlying cash flow activity and timing of vehicle deliveries. Management believes that it is useful to supplement its GAAP financial statements with this non-GAAP information because management uses such information internally for its operating, budgeting and financial planning purposes. These non-GAAP financial measures also facilitate management’s internal comparisons to Tesla’s historical performance as well as comparisons to the operating results of other companies. Non-GAAP information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction with financial information reported under U.S. GAAP when understanding Tesla’s operating performance. A reconciliation between GAAP and non-GAAP financial information is provided below.

Forward-Looking Statements

Certain statements in this shareholder letter, including statements in the “2014 Outlook” section of this Shareholder Letter; statements regarding profitability and free cash and cost reduction efforts; statements relating to the progress Tesla is making with respect to product development (including Model X and our third generation car), China and right hand drive market launch expectations, schedule for the introduction of future options and variants, quality improvements, delivery and volume expectations of Model S; the ability to achieve vehicle demand, volume, production, revenue, gross margin, spending, profitability and cash flow targets; future store, service center and Tesla Supercharger expected costs, openings and expansion plans and Tesla Gigafactory plans and expectations are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: Tesla’s future success depends on its ability to design and achieve market acceptance of Model S and other new vehicle models, specifically Model X; the risk of delays in the manufacture, production and delivery ramp of Model S vehicles; the ability of suppliers to meet quality and part delivery expectations at increasing volumes; Tesla’s ability to continue to reduce or control manufacutring and other costs; consumers’ willingness to adopt electric vehicles; competition in the automotive market generally and the alternative fuel vehicle market in particular; Tesla’s ability to establish, maintain and strengthen the Tesla brand; Tesla’s ability to manage future growth effectively as we rapidly grow, especially internationally; the unavailability, reduction or elimination of governmental and economic incentives for electric vehicles; Tesla’s ability to establish, maintain and strengthen its relationships with strategic partners such as Daimler, Toyota and Panasonic; and Tesla’s ability to execute on its retail strategy and for new store, service center and Tesla Supercharger openings. More information on potential factors that could affect the Company’s financial results is included from time to time in Tesla’s Securities and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in our quarterly report on Form 10-Q filed with the SEC on November 8, 2013. Tesla disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

 

Investor Relations Contact:     Press Contact:
Jeff Evanson     Liz Jarvis-Shean
VP Investor Relations – Tesla Motors     Communications – Tesla Motors
ir@teslamotors.com     ejs@teslamotors.com


Tesla Motors, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended     Year Ended  
     Dec 31,
2013
    Sep 30,
2013
    Dec 31,
2012
    Dec 31,
2013
    Dec 31,
2012
 

Revenues

          

Automotive sales (1A)

   $ 610,851      $ 430,196      $ 294,377      $ 1,997,786      $ 385,699   

Development services

     4,368        1,150        11,955        15,710        27,557   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     615,219        431,346        306,332        2,013,496        413,256   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues

          

Automotive sales (1B)

     453,578        324,883        278,710        1,543,878        371,658   

Development services

     5,051        3,595        3,765        13,356        11,531   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues (2)

     458,629        328,478        282,475        1,557,234        383,189   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     156,590        102,868        23,857        456,262        30,067   

Operating expenses

          

Research and development (2)

     68,454        56,351        68,832        231,976        273,978   

Selling, general and administrative (2)

     101,489        77,071        45,908        285,569        150,372   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     169,943        133,422        114,740        517,545        424,350   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (13,353     (30,554     (90,883     (61,283     (394,283

Interest income

     92        68        85        189        288   

Interest expense

     (6,229     (6,492     (27     (32,934     (254

Other income (expense), net (3)

     4,584        (740     746        22,602        (1,828
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (14,906     (37,718     (90,079     (71,426     (396,077

Provision for (benefit from) income taxes

     1,358        778        (147     2,588        136   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (16,264   $ (38,496   $ (89,932   $ (74,014   $ (396,213
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share, basic and diluted (4)

   $ (0.13   $ (0.32   $ (0.79   $ (0.62   $ (3.69
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in per share calculation, basic and diluted (4)

     122,802        121,862        113,763        119,421        107,349   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Notes:           

(1)     Due to the application of lease accounting for Model S vehicles with the resale value guarantee, the following is supplemental information for the periods presented:

          

(A)    Net increase in deferred revenue and other long-term liabilities as a result of lease accounting and therefore not recognized in automotive sales

   $ 146,125      $ 171,229        $ 464,166     
  

 

 

   

 

 

     

 

 

   

(B)    Net increase in operating lease vehicles as a result of lease accounting and therefore not recognized in automotive cost of sales

   $ 114,221      $ 138,839        $ 376,979     
  

 

 

   

 

 

     

 

 

   

          Under lease accounting, warranty costs are expensed as incurred instead of accrued at the time of sale.

          

(2)     Includes stock-based compensation expense of the following for the periods presented:

          

Cost of revenues

   $ 3,455      $ 3,017      $ 1,638      $ 9,071      $ 2,194   

Research and development

     10,578        8,707        7,159        35,494        26,580   

Selling, general and administrative

     14,056        9,715        5,619        39,090        21,371   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stock-based compensation expense

   $ 28,089      $ 21,439      $ 14,416      $ 83,655      $ 50,145   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(3)     Other income (expense), net, for the year ended December 31, 2013 includes the gain from the elimination of the $10.7 million Department of Energy (DoE) common stock warrant liability and an $11.9 million favorable foreign currency exchange impact. Other income (expense), net, for the three months ended December 31, 2013 includes a $4.6 million favorable foreign currency exchange impact.

(4)     In May 2013, the Company completed a public offering pursuant to which the Company sold 3,902,862 shares of common stock. Concurrent with the closing of the offering, the Company sold 596,272 shares of common stock to Elon Musk in a private placement at the public offering price.


Tesla Motors, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

     Dec 31,
2013
     Dec 31,
2012
 

Assets

     

Cash and cash equivalents

   $ 845,889       $ 201,890   

Restricted cash - current

     3,012         19,094   

Accounts receivable

     49,109         26,842   

Inventory

     340,355         268,504   

Prepaid expenses and other current assets

     27,574         8,438   

Operating lease vehicles, net (1)

     382,425         10,071   

Property and equipment, net

     738,494         552,229   

Restricted cash - noncurrent

     6,435         5,159   

Other assets

     23,637         21,963   
  

 

 

    

 

 

 

Total assets

   $ 2,416,930       $ 1,114,190   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Accounts payable and accrued liabilities

   $ 412,221       $ 343,180   

Deferred revenue (2)

     273,062         4,964   

Customer deposits

     163,153         138,817   

Common stock warrant liability

     —           10,692   

Capital lease obligations

     20,577         14,330   

Long-term debt

     586,301         452,337   

Other long-term liabilities (3)

     294,495         25,170   
  

 

 

    

 

 

 

Total liabilities

     1,749,809         989,490   

Stockholders’ equity

     667,121         124,700   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 2,416,930       $ 1,114,190   
  

 

 

    

 

 

 
Notes:      

(1)     Includes the following increase in operating lease vehicles related to deliveries of Model S with the resale value guarantee and subject to lease accounting, net of depreciation recognized in automotive cost of sales, for the following periods:

     

          Q2 2013

   $ 123,919      

          Q3 2013

     138,839      

          Q4 2013

     114,221      
  

 

 

    

          Net increase during the year ended December 31, 2013

   $ 376,979      
  

 

 

    

(2)     Includes the following increase in deferred revenue related to deliveries of Model S with the resale value guarantee and subject to lease accounting, net of revenue amortized to automotive sales for the following periods:

     

          Q2 2013

   $ 74,455      

          Q3 2013

     84,577      

          Q4 2013

     68,836      
  

 

 

    

          Net increase during the year ended December 31, 2013

   $ 227,868      
  

 

 

    

(3)     Includes the following increase in other long-term liabilities related to deliveries of Model S with the resale value guarantee and subject to lease accounting for the following periods:

     

          Q2 2013

   $ 72,357      

          Q3 2013

     86,652      

          Q4 2013

     77,289      
  

 

 

    

          Net increase during the year ended December 31, 2013

   $ 236,298      
  

 

 

    


Tesla Motors, Inc.

Supplemental Consolidated Financial Information

(Unaudited)

(In thousands)

 

     Three Months Ended     Year Ended  
     Dec 31,
2013
    Sep 30,
2013
    Dec 31,
2012
    Dec 31,
2013
    Dec 31,
2012
 

Selected Cash Flow Information

          

Cash flows provided by (used in) operating activities

   $ 129,763      $ 102,343      $ (37,489   $ 257,994      $ (266,081

Cash flows used in investing activities

     (89,507     (77,501     (60,758     (249,417     (206,930

Cash flows provided by financing activities

     10,517        24,216        214,444        635,422        419,635   

Other Selected Financial Information

          

Cash flows provided by (used in) operating activities

   $ 129,763      $ 102,343      $ (37,489   $ 257,994      $ (266,081

Capital expenditures

     (89,435     (76,548     (64,053     (264,224     (239,228
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow (cash flow from operations plus capital expenditures)

   $ 40,328      $ 25,795      $ (101,542   $ (6,230   $ (505,309
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization

   $ 37,585      $ 28,449      $ 12,793      $ 106,083      $ 28,825   
     Dec 31,
2013
    Sep 30,
2013
    Dec 31,
2012
       

Cash and Investments

        

Cash and cash equivalents

   $ 845,889      $ 795,116      $ 201,890     

Restricted cash - current

     3,012        1,265        19,094     

Restricted cash - noncurrent

     6,435        8,110        5,159     


Tesla Motors, Inc.

Reconciliation of GAAP to Non-GAAP Financial Information

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended     Year Ended  
     Dec 31,
2013
    Sep 30,
2013
    Dec 31,
2012
    Dec 31,
2013
    Dec 31,
2012
 

Net loss (GAAP)

   $ (16,264   $ (38,496   $ (89,932   $ (74,014   $ (396,213

Stock-based compensation expense

     28,089        21,439        14,416        83,655        50,145   

Change in fair value of warrant liability

     —          —          958        (10,692     1,854   

Non-cash interest expense related to convertible notes

     4,299        4,260        —          10,350        —     

Early extinguishment of DoE loans

     —          —          —          16,386        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) (Non-GAAP) including lease accounting

     16,124        (12,797     (74,558     25,685        (344,214
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Model S gross profit deferred due to lease accounting (1)

     29,796        28,732        —          77,878        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) (Non-GAAP)

   $ 45,920      $ 15,935      $ (74,558   $ 103,563      $ (344,214
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share, basic (GAAP)

   $ (0.13   $ (0.32   $ (0.79   $ (0.62   $ (3.69

Stock-based compensation expense

     0.23        0.18        0.13        0.70        0.47   

Change in fair value of warrant liability

     —          —          0.01        (0.09     0.02   

Non-cash interest expense related to convertible notes

     0.03        0.03        —          0.09        —     

Early extinguishment of DoE loans

     —          —          —          0.14        —     

Model S gross profit deferred due to lease accounting (1)

     0.24        0.24        —          0.65        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share, basic (Non-GAAP)

   $ 0.37      $ 0.13      $ (0.65   $ 0.87      $ (3.20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in per share calculation, basic (GAAP and Non-GAAP)

     122,802        121,862        113,763        119,421        107,349   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share, diluted (GAAP)

   $ (0.12   $ (0.28   $ (0.79   $ (0.55   $ (3.69

Stock-based compensation expense

     0.20        0.16        0.13        0.63        0.47   

Change in fair value of warrant liability

     —          —          0.01        (0.08     0.02   

Non-cash interest expense related to convertible notes

     0.03        0.03        —          0.08        —     

Early extinguishment of DoE loans

     —          —          —          0.12        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) (Non-GAAP) including lease accounting

     0.11        (0.09     (0.65     0.20        (3.20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Model S gross profit deferred due to lease accounting (1)

     0.22        0.21        —          0.58        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share, diluted (Non-GAAP)

   $ 0.33      $ 0.12      $ (0.65   $ 0.78      $ (3.20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in per share calculation, diluted (Non-GAAP)

     137,784        137,131        113,763        133,546        107,349   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Under GAAP, warranty costs are expensed as incurred for Model S vehicle deliveries with lease accounting. For Non-GAAP purposes, an estimated incremental warranty reserve of $3.2 million, $5.0 million and $12.2 million is included for the three months ended December 31 and September 30, 2013 and the year ended December 31, 2013, respectively. Additionally, stock-based compensation of $1.1 million, $1.3 million and $2.9 million is excluded for non-GAAP purposes for the three months ended December 31 and September 30, 2013 and the year ended December 31, 2013, respectively.


Tesla Motors, Inc.

Reconciliation of GAAP to Non-GAAP Financial Information

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended     Year Ended  
     Dec 31,
2013
    Sep 30,
2013
    Dec 31,
2012
    Dec 31,
2013
    Dec 31,
2012
 

Revenues (GAAP)

   $ 615,219      $ 431,346      $ 306,332      $ 2,013,496      $ 413,256   

Model S revenue deferred due to lease accounting

     146,125        171,229        —          464,166        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenues (Non-GAAP)

   $ 761,344      $ 602,575      $ 306,332      $ 2,477,662      $ 413,256   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit (GAAP)

   $ 156,590      $ 102,868      $ 23,857      $ 456,262      $ 30,067   

Model S gross profit deferred due to lease accounting (1)

     29,796        28,732        —          77,878        —     

Stock-based compensation expense

     3,455        3,017        1,638        9,071        2,194   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit (Non-GAAP)

   $ 189,841      $ 134,617      $ 25,495      $ 543,211      $ 32,261   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Research and development expenses (GAAP)

   $ 68,454      $ 56,351      $ 68,832      $ 231,976      $ 273,978   

Stock-based compensation expense

     (10,578     (8,707     (7,159     (35,494     (26,580
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Research and development expenses (Non-GAAP)

   $ 57,876      $ 47,644      $ 61,673      $ 196,482      $ 247,398   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative expenses (GAAP)

   $ 101,489      $ 77,071      $ 45,908      $ 285,569      $ 150,372   

Stock-based compensation expense

     (14,056     (9,715     (5,619     (39,090     (21,371
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative expenses (Non-GAAP)

   $ 87,433      $ 67,356      $ 40,289      $ 246,479      $ 129,001   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Under GAAP, warranty costs are expensed as incurred for Model S vehicle deliveries with lease accounting. For Non-GAAP purposes, an estimated incremental warranty reserve of $3.2 million, $5.0 million and $12.2 million is included for the three months ended December 31 and September 30, 2013 and the year ended December 31, 2013, respectively. Additionally, stock-based compensation of $1.1 million, $1.3 million and $2.9 million is excluded for non-GAAP purposes for the three months ended December 31 and September 30, 2013 and the year ended December 31, 2013, respectively.