Tesla 2012 Annual Report Download - page 138

Table of Contents
Environmental Liabilities
In May 2010, we entered into an agreement to purchase an existing automobile production facility located in Fremont, California from
NUMMI (see Note 5). NUMMI has previously identified environmental conditions at the Fremont site which affect soil and groundwater, and
until recently, were undertaking efforts to address these conditions. These conditions are now being addressed by us and NUMMI. Although we
have been advised by NUMMI that it has documented and managed the environmental issues and we completed a reasonable level of diligence
on such environmental issues at the time we purchased the facility, we cannot determine the exact potential costs to remediate any pre-existing
contamination with any certainty. Based on management’s best estimate, we estimated the fair value of the environmental liabilities that we
assumed to be $5.3 million. The fair value of these liabilities was determined based on an expected value analysis of the related potential costs to
investigate, remediate and manage various environmental conditions that were identified as part of NUMMI’s facility decommissioning
activities as well as our own diligence efforts. As we continue with our construction and operating activities, it is reasonably possible that our
estimate of environmental liabilities may change materially.
We have reached an agreement with NUMMI under which, over a ten year period, we will pay the first $15.0 million of any costs of any
governmentally-required remediation activities for contamination that existed prior to the completion of the facility and land purchase for any
known or unknown environmental conditions, and NUMMI has agreed to pay the next $15.0 million for such remediation activities. Our
agreement provides, in part, that NUMMI will pay up to the first $15.0 million on our behalf if such expenses are incurred in the first four years
of our agreement, subject to our reimbursement of such costs on the fourth anniversary date of the closing.
On the ten-year anniversary of the closing or whenever $30.0 million has been spent on the remediation activities, whichever comes first,
NUMMI
’s liability to us with respect to remediation activities ceases, and we are responsible for any and all environmental conditions at the
Fremont site. At that point in time, we have agreed to indemnify, defend, and hold harmless NUMMI from all liability and we have released
NUMMI for any known or unknown claims except for NUMMI
’s obligations for representations and warranties under the agreement. As of
December 31, 2011, we have accrued $5.3 million related to these environmental liabilities.
16. Subsequent Events
DOE Loan Facility Draw-Down
In February 2012, we received additional loans under the DOE Loan Facility for $14.4 million at interest rates ranging from 0.9% to 1.4%.
17. Quarterly Results of Operations (Unaudited)
The following table includes selected quarterly results of operations data for the years ended December 31, 2011 and 2010 (in thousands,
except per share data):
Net loss per share, basic and diluted for the four quarters of each fiscal year may not sum to the total for the fiscal year because of the
different numbers of shares outstanding during each period.
137
Three months ended
March 31
June 30
September 30
December 31
2011
Total revenues
$
49,030
$
58,171
$
57,666
$
39,375
Gross profit
18,028
18,508
17,224
7,835
Net loss
(48,941
)
(58,903
)
(65,078
)
(81,488
)
Net loss per share, basic and diluted
(0.51
)
(0.60
)
(0.63
)
(0.78
)
2010
Total revenues
$
20,812
$
28,405
$
31,241
$
36,286
Gross profit
3,852
6,261
9,296
11,321
Net loss
(29,519
)
(38,517
)
(34,935
)
(51,358
)
Net loss per share, basic and diluted
(4.04
)
(5.04
)
(0.38
)
(0.54
)