Crucial 2012 Annual Report Download - page 62

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As of August 30, 2012 and September 1, 2011, related party payables included $130 million and $139 million,
respectively, due to Inotera primarily for the purchase of DRAM products under the Inotera Supply Agreement.
As of August 30, 2012, customer advances included $139 million for amounts received from Intel to be applied to Intel's
future purchases under a NAND Flash supply agreement. In addition, as of August 30, 2012, other noncurrent liabilities
included $120 million from this agreement. (See "Consolidated Variable Interest Entities – IM Flash" note.)
As of August 30, 2012, other accounts payable and accrued expenses included $51 million of amounts payable for
purchased currency options in connection with the Elpida Sponsor Agreement and Rexchip share purchase agreement. As of
August 30, 2012 and September 1, 2011, other accounts payable and accrued expenses included $14 million and $17 million,
respectively, due to Intel for NAND Flash product design and process development and licensing fees pursuant to cost-sharing
agreements. (See "Derivative Financial Instruments" and "Consolidated Variable Interest Entities – IM Flash" note.)
Debt
As of 2012 2011
Capital lease obligations $ 883 $ 423
2014 convertible senior notes 860 815
2032C convertible senior notes 451 —
2032D convertible senior notes 361 —
2031A convertible senior notes 265 255
2031B convertible senior notes 243 234
2027 convertible senior notes 141 135
Intel senior note 58 —
2013 convertible senior notes — 139
3,262 2,001
Less current portion (224)(140)
$ 3,038 $ 1,861
Our senior notes are unsecured obligations ranking equally in right of payment with all of our other existing and future
unsecured indebtedness, and are effectively subordinated to our capital lease obligations and all of our other existing and future
secured indebtedness, to the extent of the value of the assets securing such indebtedness. All of our debt obligations are
structurally subordinated to all indebtedness of our subsidiaries.
Convertible Notes With Debt and Equity Components
The accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion
require the debt and equity components to be separately accounted for in a manner that reflects our nonconvertible borrowing
rate when interest expense is recognized in subsequent periods. The amount recorded as debt is based on the fair value of the
debt component as a standalone instrument, determined using an average interest rate for similar nonconvertible debt issued by
entities with credit ratings comparable to ours at the time of issuance. The difference between the debt recorded at inception
and its principal amount is to be accreted to principal through interest expense through the estimated life of the note.
The debt and equity components of all of our convertible notes outstanding as of August 30, 2012 were required to be
accounted for separately. The debt and equity components of our 2013 Notes were not required to be stated separately.