Crucial 2011 Annual Report Download - page 143

Report of Independent Registered Public Accounting Firm
The Board of Directors
Inotera Memories, Inc.
We have audited the accompanying balance sheets of Inotera Memories, Inc. (the “Company”)
as of December 31, 2009 and 2010,
and the related statements of operations, changes in stockholders’
equity, and cash flows for each of the years then ended. These
financial statements are the responsibility of the Company’
s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Inotera
Memories, Inc. as of December 31, 2009 and 2010, and the results of its operations and its cash flows for the years then ended, in
conformity with the accounting principles generally accepted in the Republic of China.
As disclosed further in Notes 14 and 27(i) to the financial statements, the Company did not maintain a minimum current ratio of 1:1
and a maximum debt to equity ratio of 1.5:1 at December 31, 2010, as part of the financial covenants originally required of the
Company under its syndicated bank loan agreements. On October 21, 2010, however, the syndicate banks formally agreed to waive
the requirement of the Company to comply with its financial loan covenants for the financial statement period ended June 30, 2010.
As of December 31, 2010, the Company was still in breach of the financial covenants to maintain a minimum current and leverage
ratios. As the Company is required to cure these breaches no later than the end of June 2011, it will prepare to submit a formal letter
to the managing bank to request for a waiver from complying with these financial covenants, so that the managing
bank can convene
a meeting of the Banks to discuss the aforesaid breach and to resolve before the expiration of the Remedial Period on whether a
waiver of the breach will be granted. The potential consequences to the Company of a breach of any of its financial covenants
pursuant to its syndicated bank loan agreements are also described in Notes 19(b)(iii) and 27(i) to the financial statements.