Crucial 2011 Annual Report Download - page 30

damages. In the event of an adverse judgment, we would anticipate filing appropriate post-
judgment motions and appeals. We may be required to
post a bond or other security to stay enforcement of an adverse judgment pending appeal. Depending on the amount required, there can be no
assurance we would be able to obtain sufficient security to pursue an appeal. We are unable to predict the outcome of this lawsuit and therefore
cannot determine the likelihood of loss nor estimate a range of possible loss. Accordingly, we have not provided an accrual for an adverse
judgment in the September 1, 2011, financial statements. However, we have accrued a liability and charged operations for estimated costs to
successfully defend the matter. An adverse judgment may have a material impact on our business, results of operations and financial condition,
including liquidity.
Numonyx Holdings B.V. ("Numonyx")
On May 7, 2010, we acquired Numonyx, which manufactured and sold primarily NOR Flash and NAND Flash memory products. The total
fair value of the consideration paid for Numonyx was $1,112 million and consisted of 137.7 million shares of our common stock issued to the
Numonyx shareholders and 4.8 million restricted stock units issued to employees of Numonyx. In connection with the acquisition, we recorded
net assets of $1,549 million. Because the fair value of the net assets acquired exceeded the purchase price, we recognized a gain on the acquisition
of $437 million in the third quarter of 2010. In addition, we recognized a $51 million income tax benefit in connection with the acquisition. (See
"Item 8. Financial Statements – Notes to Consolidated Financial Statements – Numonyx" note.)
Japan Fabrication Facility
On June 2, 2011, we sold our wafer fabrication facility in Japan (the "Japan Fab") to Tower Semiconductor Ltd. ("Tower"). Under the
arrangement, Tower paid $ 40 million in cash and approximately 20 million of Tower ordinary shares. In addition, we will receive an aggregate
amount of $ 20 million in twelve equal monthly installments beginning in the second quarter of 2012. We recorded a gain of $ 54 million (net of
transaction costs of $ 3 million ) in connection with the sale of the Japan Fab. We also recorded a tax provision of $ 74 million related to the gain
on the sale and to write down certain deferred tax assets associated with the Japan Fab. In connection with the sale of the Japan Fab, we entered
into a supply agreement for Tower to manufacture products for us in the facility through approximately May 2014.
Business Segments
In the second quarter of 2011, we reorganized our business to better align with the markets we serve. All prior period amounts have been
retrospectively adjusted to reflect this reorganization. After the reorganization, we have the following four reportable segments:
DRAM Solutions Group ("DSG"): Includes DRAM products sold to the PC, consumer electronics, networking and server markets.
NAND Solutions Group ("NSG"): Includes high-volume NAND Flash products sold into data storage, personal music players, and the
high-density computing markets, as well as NAND Flash products sold to Intel through our consolidated IM Flash joint ventures.
Wireless Solutions Group ("WSG"): Includes DRAM, NAND Flash and NOR Flash products, including multi-chip packages, sold to
the mobile device market.
Embedded Solutions Group ("ESG"): Includes DRAM, NAND Flash and NOR Flash products sold into automotive and industrial
applications, as well as NOR and NAND flash sold to consumer electronics, networking, PC and server markets.
Our other operations do not meet the quantitative thresholds of a reportable segment and are reported under All Other. All Other includes our
CMOS image sensor, LED, microdisplay and solar operations.
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