Tesla 2011 Annual Report Download - page 97

Table of Contents
Other Expense, Net
Other expense, net consists primarily of the change in the fair value of our warrant liabilities and transaction gains and losses on our
foreign currency-denominated assets and liabilities. We expect our transaction gains and losses will vary depending upon movements in the
underlying exchange rates. Income or charges resulting from the change in the fair value of our convertible preferred stock warrant liability,
excluding the DOE warrant liability, was eliminated after July 2, 2010, as these warrants were net exercised at the completion of our IPO. The
DOE convertible preferred stock warrant which we issued in January 2010, became a common stock warrant on July 2 and is carried at its
estimated fair value with changes in its fair value continuing to be reflected in other expense, net, until its expiration or vesting.
Other expense, net, for the year ended December 31, 2010 was $6.6 million, an increase in expense compared to other expense, net, of $1.4
million for the year ended December 31, 2009. The increase in expense for the year ended December 31, 2010 was primarily due to the fair
value changes in our warrant liabilities as well as the liability related to common stock warrants to certain of our stockholders which we issued in
May 2010, both of which increased significantly in conjunction with the increase in our common stock valuation.
Other expense, net, for the year ended December 31, 2009 increased from $1.0 million for the year ended December 31, 2008. The increase
was primarily a result of a $1.8 million increase in foreign currency transaction losses associated with a higher level of foreign currency
denominated purchases as well as the strengthening of foreign currencies against the U.S. dollar, partially offset by a $1.6 million decrease in the
fair value change of our outstanding convertible preferred stock warrants during the year ended December 31, 2009.
Provision for Income Taxes
Our provision for income taxes for the year ended December 31, 2010 was $0.2 million, an increase from the provision for income taxes of
$26,000 during the year ended December 31, 2009. The increase was due primarily to the launch of the Tesla Roadster in Europe in July 2009
and the ensuing increase in taxable income in our international jurisdictions in subsequent periods. Additionally, during the year ended
December 31, 2009, we recognized research and development benefits from our foreign operations which decreased our provision for income
taxes.
Our provision for income taxes for the year ended December 31, 2009 decreased from the provision for income taxes of $0.1 million for
the year ended December 31, 2008. The decrease was due primarily to the research and development benefits that we recognized in 2009 from
our foreign operations.
Liquidity and Capital Resources
As of December 31, 2010, we had $566.4 million principal sources of liquidity available from our cash and cash equivalents, cash held in
our dedicated DOE account and the remaining amounts available under the DOE Loan Facility. This includes cash and cash equivalents in the
amount of $99.6 million which included investments in money market funds, cash of $73.6 million deposited in a dedicated DOE account in
accordance with the requirements of our DOE Loan Facility, and $393.2 million available under the DOE Loan Facility, which is primarily
intended to cover spending related to the development of the Model S and our powertrain activities.
Our primary source of cash historically has been proceeds from the sales of convertible preferred stock and convertible notes, and through
December 31, 2009, we had raised an aggregate of $319.2 million from convertible preferred stock and convertible note financings. During the
year ended December 31, 2010, we entered into our $465.0 million DOE Loan Facility from which we have begun to make draw downs, as well
as completing our IPO and private placements with Toyota and Panasonic. Other sources of cash have also included reservation payments from
customers for the Tesla Roadster and more recently from sales of the Tesla Roadster,
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