Crucial 2013 Annual Report Download - page 45

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Equity in Net Loss of Equity Method Investees
We recognize our share of earnings or losses from these entities under the equity method, generally on a two-month
lag. Equity in net loss of equity method investees, net of tax, included the following:
For the year ended 2013 2012 2011
Inotera $ (79) $ (189) $ (112)
Other (4)(105)(46)
$ (83) $ (294) $ (158)
Our equity in net income (loss) of Inotera improved for 2013 as compared to 2012 primarily due to Inotera's improved
operating results as a result of higher average selling prices and lower manufacturing costs. On May 28, 2013, Inotera issued
634 million common shares to Nanya and certain of its affiliates in a private placement at a price equal to 9.47 New Taiwan
dollars per common share (approximately $0.32 U.S. dollars as of May 28, 2013), which was in excess of our carrying value
per share. As a result of the issuance, our ownership interest decreased from 40% to 35% and we recognized a gain of
approximately $48 million in 2013. The change in ownership interest does not change our obligation to purchase substantially
all of Inotera's output. Losses in 2012 for our other equity method investments were primarily attributable to Transform Solar
Pty Ltd. which ceased operations in 2012 and has essentially been liquidated. (See "Item 8. Financial Statements and
Supplementary Data – Notes to Consolidated Financial Statements – Equity Method Investments.")
Other
Further discussion of other operating and non-operating income and expenses can be found in the following notes
contained in "Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements":
• Equity Plans
• Other Operating (Income) Expense, Net
• Other Non-Operating Income (Expense), Net
• Income Taxes
Fair Values – Elpida Acquisition
The provisional fair values of assets and liabilities acquired in the acquisition of Elpida is based on estimates using
information available at the closing of the acquisition. We estimated the provisional fair value of the assets and liabilities of
Elpida as of July 31, 2013 using an in-use model, which reflects its value through its use in combination with other assets as a
group. These provisional amounts could change as additional information become available. These changes could result in
material variances between the combined entity's future financial results including variances in fair values recorded, as well as
expenses associated with these items.
Determination of provisional fair values for the assets and liabilities acquired in the Elpida acquisition required significant
assumptions, estimates and judgments. Many of the measurements involved significant inputs that are not observable in the
market and thus represent a Level 3 measurement as defined in ASC 820. Changes in assumptions, estimates and judgments
could significantly impact the asset and liabilities recorded as well as the gain recognized in the acquisition. The items
involving the most significant assumptions, estimates and judgments included determining the fair value of the following:
• Property, plant and equipment, including determination of values in a continued-use model;
• Deferred tax assets, including projections of future taxable income and tax rates;
• Inventory, including estimated future selling prices, timing of product sales and completion costs for work in process;
and
• Debt, including discount rate and timing of payments.