Crucial 2013 Annual Report Download - page 47

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Cash generated by operations is our primary source of liquidity. Our liquidity is highly dependent on selling prices for our
products and the timing and level of our capital expenditures, both of which can vary significantly from period to period.
Depending on conditions in the semiconductor memory market, our cash flows from operations and current holdings of cash
and investments may not be adequate to meet our needs for capital expenditures and operations. In 2013 we obtained $1,121
million of proceeds from issuance of debt and $126 million of proceeds from equipment sale-leaseback financing. As of
August 29, 2013, we had credit facilities available that provides for up to $408 million of additional financing, subject to
outstanding balances of trade receivables and other conditions (See "Item 8. Financial Statements and Supplementary Data –
Notes to Consolidated Financial Statements – Debt – Revolving Credit Facilities"). We have in the past and expect in the
future to continue to incur additional debt to finance our capital investments, including debt incurred in connection with asset-
backed financing. We expect our cash and investments, cash flows from operations and available financing will be sufficient to
meet our requirements at least through 2014.
Holders of our outstanding convertible notes can convert the notes during any calendar quarter if the closing price of our
common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding
calendar quarter is more than 130% of the conversion price. As of August 29, 2013, convertible notes with an aggregate
principal amount of $1,465 million, contained contractual terms that require us to pay cash up to the principal amount of the
notes upon conversion. These notes become convertible at the option of the holders if the closing price of our common stock
for the required periods is above prices ranging from $12.35 to $14.21. None of these convertible notes met the conversion
criteria through the calendar quarter ended June 30, 2013. Of the notes that require us to pay cash up to the principal amount
upon conversion, only the 2031A and 2031B Notes, with an aggregate principle amount of $690 million and carrying value of
$530 million as of August 29, 2013, met the conversion criteria during September 2013. Through October 28, 2013, none of
the 2031A or 2031B Notes had been converted by holders. We do not believe the amounts converted, if any, would be
significant since the note holders would forgo the time value of the embedded conversion option. We may elect in future
periods to redeem convertible notes eligible for redemption.
Operating Activities
Net cash provided by operating activities was $1,811 million for 2013, which reflected approximately $2,177 million
generated from the production and sales of our products net of a $366 million effect from increases in the amount invested in
net working capital. The increase in net working capital was primarily due to an increase in accounts receivable of $409
million as a result of increases in sales activities.
Investing Activities
Net cash used for investing activities was $1,712 million for 2013, which consisted primarily of cash expenditures of
$1,244 million for property, plant and equipment, $246 million for the acquisition of available-for-sale securities (net of
proceeds from sales and maturities of $678 million), and $226 million for the settlement of hedging activities (net of proceeds
from the settlement of hedging activities of $27 million). We believe that to develop new product and process technologies,
support future growth, achieve operating efficiencies and maintain product quality, we must continue to invest in manufacturing
technologies, facilities and capital equipment and R&D. We estimate that capital spending for 2014 will be approximately $2.6
billion to $3.2 billion. The actual amounts for 2014 will vary depending on market conditions. As of August 29, 2013, we had
commitments of approximately $775 million for the acquisition of property, plant and equipment, substantially all of which is
expected to be paid within one year.
In connection with the sale of our 200mm Avezzano facility to LFoundry, on May 22, 2013, we entered into a short-term,
interest-free, unsecured loan agreement with Aptina that allowed Aptina to borrow up to $45 million, drawn at their option,
in three equal tranches through July 2013. Principal amounts drawn are due in three equal payments from September 2013 to
January 2014. As of August 29, 2013, other current assets included $45 million for amounts due under the short-term loan
agreement.
Financing Activities
Net cash provided by financing activities was $322 million for 2013, which included $1,121 million of proceeds from
issuance of debt, $126 million of proceeds from equipment sale-leaseback financing transactions partially offset by
$743 million for repayments of debt, $214 million of payments on equipment purchase contracts and $26 million of net
distributions to noncontrolling interests.