Crucial 2012 Annual Report Download - page 297

52
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
As a result of the necessary investment in connection with the technology conversion from 70nm trench
to 50nm stack process technology, the company recorded annual capital expenditures of approximately
$55 billion in 2010. In contrast, the Company spent only $11.6 billion in 2011 for the conversion from
50nm to 42nm stack process technology. And the ongoing technology conversion to 30nm process
technology is expected to be of similarly low capital-intensity. 2012 capital expenditures for the planned
conversion of approximately 40% or more of the Company's capacity to the leading-edge 30nm
technology are expected to be approximately $4 billion. Consequently, management believes cash flows
provided by the Company's operation in 2012 will increase to $14.6 billion as compared to $11.4 billion
in 2011 based on the assumption that average prices of DRAM for 2012 will be 8% lower than average
price for 2011.
(iv) On March 7, 2012, the Company issued 763,359 thousand common shares to Numonyx Holding B.V.,
which is a subsidiary of Micron. The $5,000,002 cash proceeds of this private equity placement have
been fully collected.
(v) In April 2012, the Company obtained new borrowings from NPC and FPCC amounting to $7,000,000
and $3,000,000, respectively, which are repayable in April 2013.
(vi) In August 2012, NPC approved to issue a Letter of Understanding (LOU) for up to NT$10 billion in
order for the Company to obtain additional working capital financing with certain banks. In the LOU,
NPC issued a promise that it will take necessary actions to ensure that Inotera is able to continue to
honor its obligations with the banks, and if necessary, they will along with the Formosa Group, inject
additional capital, provide additional loans or take other measures so that Inotera will have adequate
liquidity to repay its obligations as they become due.
Although no assurances can be made that management will be able to successfully execute on these plans,
management believes the execution of these plans mitigates the facts and conditions that initially raises
substantial doubt about the Company's ability to continue as a going concern for a reasonable period of
time. The financial statements do not include any adjustments relating to the recoverability and classification
of recorded assets or the amounts and classification of liabilities or any other adjustments that might be
necessary upon the resolution of this going concern uncertainty.
(c) Date through Which Subsequent Events Have Been Evaluated
Management of the Company has evaluated subsequent events through October 9, 2012, which is when these
financial statements were made available for issue.
(29) Event (Unaudited) Subsequent to the Date of the Report of the Independent Registered Public Accounting
Firm
The Company's operations have been adversely affected by the continued unfavorable market conditions
particularly for the DRAM industry. For the nine month period ended September 30, 2012, the Company has
incurred an unaudited net loss of approximately $11.8 billion and its unaudited net cash provided from operating
activities approximated $9.8 billion compared to approximately $10 billion for the comparable period of the prior
year. As of September 30, 2012, the Company's unaudited current liabilities exceeded its unaudited current assets
by approximately $33.7 billion, its unaudited cash and equivalents amounted to $1.8 billion and it continues