Crucial 2012 Annual Report Download - page 53

52
Unconsolidated Variable Interest Entities
Inotera: Inotera Memories, Inc. ("Inotera") is a VIE because (1) its equity is not sufficient to permit it to finance its
activities without additional support from its shareholders and (2) of the terms of its supply agreement with us and our partner,
Nanya Technology Corporation ("Nanya"). We have determined that we do not have the power to direct the activities of
Inotera that most significantly impact its economic performance, primarily due to (1) limitations on our governance rights that
require the consent of other parties for key operating decisions and (2) our dependence on our joint venture partner for
financing and the ability to operate in Taiwan. Therefore, we account for our interest in Inotera under the equity method.
Transform: Transform Solar Pty Ltd. ("Transform") is a VIE because its equity is not sufficient to permit it to finance its
activities without additional financial support from us or our partner, Origin Energy Limited ("Origin"). We have determined
that we do not have the power to direct the activities of Transform that most significantly impact its economic performance,
primarily due to limitations on our governance rights that require the consent of Origin for key operating decisions. Therefore,
we account for our interest in Transform under the equity method. On May 25, 2012, the Board of Directors of Transform
approved a liquidation plan. As of August 30, 2012, Transform's operations were substantially discontinued.
For further information regarding our VIEs that we account for under the equity method, see "Equity Method Investments"
note.
EQUVO Entities: EQUVO HK Limited and EQUVA Capital 1 Pte. Ltd. (together the "EQUVO Entities") are special
purpose entities created to facilitate equipment sale-leaseback financing transactions between us and a consortium of financial
institutions. Neither we nor the financial institutions have an equity interest in the EQUVO Entities. The EQUVO Entities are
VIEs because their equity is not sufficient to permit them to finance their activities without additional support from the
financial institutions and because the third-party equity holder lacks characteristics of a controlling financial interest. By
design, the arrangement with the EQUVO Entities is merely a financing vehicle and we do not bear any significant risks from
variable interests with the EQUVO Entities. Therefore, we have determined that we do not have the power to direct the
activities of the EQUVO Entities that impact their economic performance and we do not consolidate the EQUVO Entities.
Consolidated Variable Interest Entities
IMFT: IM Flash Technologies, LLC ("IMFT") is a VIE because all of its costs are passed to us and its other member, Intel
Corporation ("Intel"), through product purchase agreements and IMFT is dependent upon us or Intel for any additional cash
requirements. We determined that we have the power to direct the activities of IMFT that most significantly impact its
economic performance. The primary activities of IMFT are driven by the constant introduction of product and process
technology. Because we perform a significant majority of the technology development, we have the power to direct its key
activities. In addition, IMFT manufactures certain products exclusively for us using our technology. We also determined that
we have the obligation to absorb losses and the right to receive benefits from IMFT that could potentially be significant to
it. Therefore, we consolidate IMFT. In the third quarter of 2012, we entered into agreements with Intel to restructure IMFT.
IMFS: Prior to April 6, 2012, IM Flash Singapore, LLP ("IMFS") was a VIE because all of its costs were passed to us and
its other member, Intel, through product purchase agreements and IMFS was dependent upon us or Intel for any additional cash
requirements. Prior to April 6, 2012, we determined that we had the power to direct the activities of IMFS that most
significantly impacted its economic performance. Additionally, since 2010, we had significantly greater economic exposure
than Intel as a result of our significantly higher ownership interest in IMFS. Therefore, we consolidated IMFS. On April 6,
2012, we acquired Intel's remaining interests in IMFS and it ceased to be a VIE.
MP Mask: MP Mask Technology Center, LLC ("MP Mask") is a VIE because all of its costs are passed to us and its other
member, Photronics, Inc. ("Photronics"), through product purchase agreements and MP Mask is dependent upon us or
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 because (1) of our tie-breaking voting rights over key
operating decisions and (2) 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
it. Therefore, we consolidate MP Mask.
For further information regarding our consolidated VIEs, see "Consolidated Variable Interest Entities" note.