Crucial 2012 Annual Report Download - page 16

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The acquisition of our ownership interest in Inotera from Qimonda has been legally challenged by the administrator of
the insolvency proceedings for Qimonda.
On January 20, 2011, Dr. Michael Jaffé, administrator for Qimonda AG ("Qimonda") insolvency proceedings, filed suit
against us and Micron Semiconductor B.V., our Netherlands subsidiary, in the District Court of Munich, Civil Chamber. The
complaint seeks to void under Section 133 of the German Insolvency Act a share purchase agreement between us and Qimonda
signed in fall 2008 pursuant to which we purchased all of Qimonda's shares of Inotera Memories, Inc. and seeks an order
requiring us to retransfer the Inotera shares purchased from Qimonda to the Qimonda estate. The complaint also seeks to
terminate under Sections 103 or 133 of the German Insolvency Code a patent cross license between us and Qimonda entered
into at the same time as the share purchase agreement. A three-judge panel will render a decision after a series of hearings with
pleadings, arguments and witnesses. A first hearing was held on September 25, 2012. The next hearing is scheduled for
February 5, 2013. We are unable to predict the outcome of this lawsuit and therefore cannot estimate the range of possible loss.
The final resolution of this lawsuit could result in the loss of the Inotera shares or equivalent monetary damages and the
termination of the patent cross license, which could have a material adverse effect on our business, results of operation or
financial condition. As of August 30, 2012, the Inotera shares purchased from Qimonda had a net carrying value of $177
million.
Our future success may depend on our ability to develop and produce competitive new memory technologies.
Our key semiconductor memory technologies of DRAM, NAND Flash and NOR Flash face technological barriers to
continue to meet long-term customer needs. These barriers include potential limitations on the ability to shrink products in
order to reduce costs, meet higher density requirements and improve power consumption and reliability. To meet these
requirements, we expect that new memory technologies will be developed by the semiconductor memory industry. Our
competitors are working to develop new memory technologies that may offer performance and/or cost advantages to our
existing memory technologies and render existing technologies obsolete. Accordingly, our future success may depend on our
ability to develop and produce viable and competitive new memory technologies. There can be no assurance of the following:
• that we will be successful in developing competitive new semiconductor memory technologies;
• that we will be able to cost-effectively manufacture new products;
• that we will be able to successfully market these technologies; and
• that margins generated from sales of these products will allow us to recover costs of development efforts.
If our efforts to develop new semiconductor memory technologies are unsuccessful, our business, results of operations or
financial condition may be adversely affected.
We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund our
operations and make adequate capital investments.
Our cash flows from operations depend primarily on the volume of semiconductor memory sold, average selling prices and
per unit manufacturing costs. To develop new product and process technologies, support future growth, achieve operating
efficiencies and maintain product quality, we must make significant capital investments in manufacturing technology, capital
equipment, facilities, R&D and product and process technology. We estimate that capital spending for 2013 will be
approximately $1.6 billion to $1.9 billion. As of August 30, 2012, we had cash and equivalents of $2,459 million and short-
term investments of $100 million. Cash and investments included $157 million held by IMFT, which is generally not available
to finance our other operations. In the past we have utilized external sources of financing when needed. As a result of our
current debt levels, general economic conditions and adverse conditions in the credit markets, it may be difficult for us to obtain
financing on terms acceptable to us. There can be no assurance that we will be able to generate sufficient cash flows, access
capital markets or find other sources of financing to fund our operations, make adequate capital investments to remain
competitive in terms of technology development and cost efficiency. Our inability to do the foregoing could have a material
adverse effect on our business and results of operations.