Crucial 2012 Annual Report Download - page 240

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,
2010 and 2011, and the related statements of operations, changes in stockholders' equity, and cash flows for each of
the years in the three-year period ended December 31, 2011. 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 generally accepted auditing standards as established by the Auditing
Standards Board (United States) and in accordance with the auditing 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. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, 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, 2010 and 2011, and the results of its operations and its cash flows for
each of the years in the three-year period ended December 31, 2011, in conformity with the accounting principles
generally accepted in the Republic of China.
As further described in Notes 14 and 27(g) 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, 2011, as part of the financial covenants
originally required of the Company under its syndicated bank loan agreements. On June 8, 2012, the syndicate banks
formally agreed to waive the requirement of the Company to comply with its financial loan covenants for the financial
statement year ended December 31, 2011. However, the Company was unable to maintain the same ratios as of June
30, 2012 and has until November 30, 2012 to cure the breach. In July 2012, the Company has submitted a request for
a waiver from complying with these financial covenants, so that the managing bank can convene a meeting of the
Banks to consider whether to grant such waiver. The potential consequences to the Company of a violation of any of
its financial covenants pursuant to its syndicated bank loan agreements are also described in Notes 19(b)(iii) and 27
(g) to the financial statements.
As described in Note 3 to the financial statements, effective January 1, 2009, the Company adopted the newly revised