Tesla 2015 Annual Report Download - page 58

Cash Flows from Investing Activities
Cash flows from investing activities primarily relate to capital expenditures to support our growth in operations, including investments in
Model S manufacturing equipment and tooling and our stores, service centers and Supercharger network infrastructure. Cash used in investing
activities was $990.4 million, $249.4 million and $206.9 million in 2014, 2013 and 2012. Cash flows from investing activities and variability
between each year related primarily to capital expenditures, which were $969.9 million, $264.2 million, and $239.2 million in 2014, 2013, and
2012. Expenditures in all years consisted primarily of purchases of capital equipment, tooling, and facilities to support our Model S and Model X
manufacturing.
In 2014, we began construction of our Gigafactory facility in Nevada. Tesla’s contribution to total capital expenditures are expected to be
about $2.0 billion over the next 5 years. In 2014, we used cash of $62.2 million towards the construction of the first stage of this project and
expect to spend up to $300 million over the next 12 months.
Cash Flows from Financing Activities
Net cash provided by financing activities was $2.14 billion, $635.4 million, and $419.6 million in 2014, 2013 and 2012, respectively. The
increase in cash provided from financing in 2014 and compared to 2013 was primarily due to $2.1 billion net proceeds from the issuance of our
2019 and 2021 Notes, including the associated hedge and warrant transactions, representing a $1.5 billion increase in debt financing as compared
to 2013. Cash flows from financing in 2013 that did not recur in 2014 included proceeds of $415.0 million from the issuance of common stock in
public and private offerings and $452.3 million used to repay our DOE loans.
The increase in cash provided from financing in 2013 and compared to 2012 was primarily due to $585.9 million net proceeds from the
issuance of our 2018 Notes, including the associated hedge and warrant transactions, and a $193.5 million increase in proceeds from public and
private equity issuances. In 2013 we used $452.3 million to repay our DOA loans as compared to proceeds of $188.8 million received during
2012 under these loans.
0.25% and 1.25% Convertible Senior Notes and Bond Hedge and Warrant Transactions
In 2014, we issued $920.0 million principal amount of 0.25% convertible senior notes due 2019 (2019 Notes) and $1.38 billion principal
amount of 1.25% convertible senior notes due 2021 (2021 Notes) in a public offering. The total net proceeds from these offerings, after
deducting transaction costs, were approximately 905.8 million from 2019 Notes and $1.36 billion from 2021 Notes, respectively. The interest
rates are fixed at 0.25% and 1.25% per annum for the 2019 and 2021 Notes, respectively, and are payable semi-annually in arrears on March 1
and September 1 of each year, commencing on September 1, 2014.
In connection with the offering of these notes in 2014, we purchased a convertible note hedges for $603.4 million and sold warrants
$389.2 million. Taken together, the purchase of the convertible note hedges and the sale of warrants are intended to offset any actual dilution
from the conversion of the 2019 Notes and 2021 Notes.
During the fourth quarter of 2014, the closing price of our common stock did not meet or exceed 130% of the applicable conversion price
of our 2019 Notes and 2021 Notes on at least 20 of the last 30 consecutive trading days of the quarter; furthermore, no other conditions allowing
holders of these notes to convert have been met as of December 31, 2014. Therefore, the 2019 Notes and 2021 Notes are not convertible during
the first quarter of 2015 and are classified as long-term debt. Should the closing price conditions be met in the first quarter of 2015 or a future
quarter, the Notes will be convertible at their holders’ option during the immediately following quarter.
1.50% Convertible Senior Notes and Bond Hedge and Warrant Transactions
In May 2013, we issued $660.0 million aggregate principal amount of 1.50% convertible senior notes due 2018 (the Notes) in a public
offering. The net proceeds from the offering, after deducting transaction costs, were approximately $648.0 million. The interest under the Notes
is fixed at 1.50% per annum and is payable semi-
annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2013.
In connection with the offering of the 2018 Notes, we purchased a convertible note hedge for $177.5 million and sold warrants for $120.3
million. Taken together, the purchase of the convertible note hedges and the sale of warrants are intended to offset any actual dilution from the
conversion of the 2018 Notes.
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