Crucial 2013 Annual Report Download - page 23

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Our operations are dependent on our ability to procure advanced semiconductor equipment that enables the transition to
lower cost manufacturing processes. For certain key types of equipment, including photolithography tools, we are sometimes
dependent on a single supplier. In recent periods we have experienced difficulties in obtaining some equipment on a timely
basis due to the supplier's limited capacity. Our inability to timely obtain this equipment could adversely affect our ability to
transition to next generation manufacturing processes and reduce costs. Delays in obtaining equipment could also impede our
ability to ramp production at new facilities and increase our overall costs of the ramp. If we are unable to timely obtain
advanced semiconductor equipment, our business, results of operations or financial condition could be materially adversely
affected.
Our results of operations could be affected by natural disasters and other events in the locations in which we or our
customers or suppliers operate.
We have manufacturing and other operations in locations subject to natural occurrences such as severe weather and
geological events including earthquakes or tsunamis that could disrupt operations. In addition, our suppliers and customers also
have operations in such locations. A natural disaster, fire, chemical explosion or other event that results in a prolonged
disruption to our operations, or the operations of our customers or suppliers, may adversely affect our business, results of
operations or financial condition.
Our net operating loss and tax credit carryforwards may be limited.
We have a valuation allowance against substantially all U.S. net deferred tax assets as well as $1.5 billion related to our
foreign subsidiaries. As of August 29, 2013, our federal and state net operating loss carryforwards were $4.2 billion and
$2.2 billion, respectively. If not utilized, our federal and state net operating loss carryforwards will expire at various dates
through 2033. As of August 29, 2013, our federal and state tax credit carryforwards were $238 million and $203 million,
respectively. If not utilized, our federal and state tax credit carryforwards will expire at various dates through 2033. As
of August 29, 2013, our foreign net operating loss carryforwards were $7.0 billion, of which $5.9 billion pertains to Elpida. We
have placed a valuation allowance against $4.7 billion of these foreign net operating loss carryforwards, of which $3.8 billion
pertains to Elpida. If not utilized, our foreign net operating loss carryforwards will expire at various dates through 2023.
We face risks associated with our international sales and operations that could materially adversely affect our business,
results of operations or financial condition.
Sales to customers outside the United States approximated 83% of our consolidated net sales for 2013. In addition, a
substantial portion of our manufacturing operations are located outside the United States. In particular, a significant portion of
our manufacturing operations are concentrated in Singapore. Our international sales and operations are subject to a variety of
risks, including:
• export and import duties, changes to import and export regulations, and restrictions on the transfer of funds;
• compliance with U.S. and international laws involving international operations, including the Foreign Corrupt
Practices Act, export control laws and similar rules and regulations;
• political and economic instability;
• problems with the transportation or delivery of our products;
• issues arising from cultural or language differences and labor unrest;
• longer payment cycles and greater difficulty in collecting accounts receivable;
• compliance with trade, technical standards and other laws in a variety of jurisdictions;
• contractual and regulatory limitations on our ability to maintain flexibility with our staffing levels;
• disruptions to our manufacturing operations as a result of actions imposed by foreign governments;
• changes in economic policies of foreign governments; and
• difficulties in staffing and managing international operations.
These factors may materially adversely affect our business, results of operations or financial condition.