Crucial 2012 Annual Report Download - page 38

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Liquidity and Capital Resources
As of 2012 2011
Cash and equivalents and short-term investments:
Money market funds $ 2,159 $ 1,462
Bank deposits 239 543
Government securities 56 —
Corporate bonds 31 —
Commercial paper 39 —
Certificates of deposit 31 155
Asset-backed securities 4 —
$ 2,559 $ 2,160
Long-term marketable investments $ 374 $ 52
Cash and equivalents in the table above included $157 million held by IMFT as of August 30, 2012 and $327 million held
by both IMFT and IMFS as of September 1, 2011. Our ability to access funds held by IMFT to finance our other operations is
subject to agreement by the other member and contractual limitations. Amounts held by IMFT are not anticipated to be
available to finance our other operations.
To mitigate credit risk, we invest through high-credit-quality financial institutions and, by policy, generally limit the
concentration of credit exposure by restricting investments with any single obligor. As of August 30, 2012, the effect of
repatriating cash held by foreign subsidiaries where undistributed earnings have been indefinitely reinvested would not be
significant.
Cash generated by operations is our primary source of liquidity. Our liquidity is highly dependent on selling prices for our
products and the timing and level of our capital expenditures, both of which can vary significantly from period to period.
Depending on conditions in the semiconductor memory market, our cash flows from operations and current holdings of cash
and investments may not be adequate to meet our needs for capital expenditures and operations. In 2012 we obtained $1,065
million of proceeds from issuance of debt and $609 million of proceeds from equipment sale-leaseback financing. In the first
quarter of 2013 we entered into additional financing arrangements as detailed under "Financing Activities" below and we
expect to pursue additional financing in the future as cost effective and strategic opportunities arise. We expect our cash and
investments, cash flows from operations and available financing, will be sufficient to meet our requirements at least through
2013.
Operating Activities
Net cash provided by operating activities was $2,114 million for 2012, which reflected approximately $1,572 million
generated from the production and sales of our products and a net $542 million effect from changes in the amount invested in
net working capital. For 2012, inventories decreased by $258 million due to our efforts to manage our business at a lower level
of inventories and negotiated changes in the IM Flash wafer supply agreement with Intel.
Investing Activities
Net cash used for investing activities was $2,312 million for 2012, which consisted primarily of cash expenditures of
$1,699 million for property, plant and equipment and $412 million for the acquisition of available-for-sale securities (net of
proceeds from sales and maturities of $152 million). We believe that to develop new product and process technologies, support
future growth, achieve operating efficiencies and maintain product quality, we must continue to invest in manufacturing
technologies, facilities and capital equipment and R&D. We estimate that capital spending for 2013 will be approximately $1.6
billion to $1.9 billion. The actual amounts for 2013 will vary depending on market conditions. As of August 30, 2012, we had
commitments of approximately $550 million for the acquisition of property, plant and equipment, substantially all of which is
expected to be paid within one year.