Crucial 2012 Annual Report Download - page 31

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Certain creditors of Elpida are challenging the proposed plan of reorganization submitted by the trustees and have
proposed an alternative plan of reorganization. An examiner appointed by the court has reviewed both plans and is currently
expected to make a recommendation to the court, on or about October 29, 2012, regarding whether to submit one or both plans
of reorganization to creditors for approval.
The consummation of the Sponsor Agreement is subject to various closing conditions, including but not limited to approval
by the Tokyo District Court, requisite creditor approval, receipt of approvals in bankruptcy proceedings in other jurisdictions
and receipt of regulatory approvals, including the People's Republic of China. The transaction is currently anticipated to close
in the first half of calendar 2013.
Rexchip Share Purchase Agreement
On July 2, 2012, we entered into a Share Purchase Agreement with Powerchip and certain of its affiliates (the "Rexchip
Share Purchase Agreement"), under which we agreed to purchase approximately 714 million shares of Rexchip common stock,
which represents approximately 24% of Rexchip's outstanding common stock, for approximately 10 billion New Taiwan dollars
(or approximately $334 million). The consummation of this Rexchip Share Purchase Agreement is subject to various closing
conditions, including the closing of the transactions contemplated by the Elpida Sponsor Agreement. At the closing of the
Elpida Sponsor Agreement and the Rexchip share purchase agreement, our aggregate beneficial ownership interest in Rexchip
will approximate 89%.
Currency Hedging
Elpida Hedges: On July 2, 2012, we executed a series of separate currency exchange transactions pursuant to which
we purchased call options to buy 200 billion yen with a weighted-average strike price of 79.15 (yen per U.S. dollar). In
addition, to reduce the cost of these call options, we sold put options to sell 100 billion yen with a strike price of 83.32 and we
sold call options to buy 100 billion yen with a strike price of 75.57. The net cost of these call and put options, which expire on
April 3, 2013, of $49 million is payable upon settlement. These currency options mitigate the risk of a strengthening yen for
our yen-denominated payments under the sponsor agreement while preserving some ability for us to benefit if the value of the
yen weakens relative to the U.S. dollar. These option contracts were not designated for hedge accounting and are remeasured
at fair value each period with gains and losses reflected in our results of operations.
Rexchip Hedges: On July 25, 2012, we executed a series of separate currency exchange transactions pursuant to
which we purchased call options to buy 10 billion New Taiwan dollars with a weighted-average strike price of 29.21 (New
Taiwan dollar per U.S. dollar). The cost of these options, which expire on April 2, 2013, of $3 million is payable upon
settlement. These currency options mitigate the risk of a strengthening New Taiwan dollar for our payments under the Rexchip
share purchase agreement. These option contracts were not designated for hedge accounting and are remeasured at fair value
each period with gains and losses reflected in our results of operations.