Crucial 2011 Annual Report Download - page 54

MP Mask – MP Mask Technology Center, LLC ("MP Mask") is a VIE because all of its costs are passed to us and our partner, Photronics,
Inc. ("Photronics"), through product purchase agreements and it is dependent upon us and Photronics for any additional cash requirements. We
determined that we have the power to direct the activities of MP Mask that most significantly impact its economic performance, primarily due to
(1) our tie-breaking voting rights over key operating decisions and (2) that nearly all key MP Mask activities are driven by our supply needs. We
also determined that we have the obligation to absorb losses and the right to receive benefits from MP Mask that could potentially be significant to
MP Mask. Therefore, we consolidate MP Mask.
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 ordinary shares of Tower. In addition, we will receive an aggregate
of $ 20 million in twelve equal monthly installments beginning in the second quarter of 2012. The net carrying value of assets sold and liabilities
transferred to Tower on the transaction date prior to the effects of the transaction was $23 million and 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.
Numonyx
On May 7, 2010 , we acquired Numonyx Holdings B.V. ("Numonyx"), which manufactured and sold primarily NOR Flash and NAND Flash
memory products. We acquired Numonyx to further strengthen our portfolio of memory products, increase manufacturing and revenue scale,
access Numonyx's customer base and provide opportunities to increase multi-chip offerings in the embedded and mobile markets. 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.
We determined the fair value of the assets and liabilities of Numonyx as of May 7, 2010 using an in-exchange model. 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. We
believe the gain realized in acquisition accounting was the result of a number of factors, including the following: significant losses recognized by
Numonyx during the recent downturn in the semiconductor memory industry; substantial volatility in Numonyx's primary markets; market
perceptions that future opportunities for Numonyx products in certain markets were limited; the liquidity afforded to the sellers as a result of the
limited opportunities to realize the value of their investment in Numonyx; and potential gains to the sellers through their investment in our equity
from synergies we realize with Numonyx. In addition, we recognized a $51 million income tax benefit in connection with the acquisition. The
results of operations for 2010 include $635 million of net sales and $14 million of operating losses from the Numonyx operations after the May 7,
2010 acquisition date. The consideration and valuation of assets acquired and liabilities assumed were as follows:
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