Crucial 2014 Annual Report Download - page 39

37
In order to optimize operations, improve efficiency and increase our focus on our core memory operations, we have
entered into various restructure activities. For 2014 and 2013, other restructure included charges associated with our efforts to
wind down our 200mm operations primarily in Agrate, Italy and Kiryat Gat, Israel and charges associated with workforce
optimization activities, primarily related to our MBU and EBU operating segments. As of August 28, 2014, we had accrued
$14 million for unpaid other restructure activities related to our workforce optimization activity. As of August 28, 2014, we do
not anticipate incurring any significant additional costs for these restructure activities. (See "Item 8. Financial Statements and
Supplementary Data – Notes to Consolidated Financial Statements – Restructure and Asset Impairments.")
Interest Income (Expense)
Net interest expense for 2014, 2013 and 2012, included aggregate amounts of amortization of debt discount and other costs
of $167 million, $122 million and $81 million, respectively.
Income Taxes
Income tax provision (benefit) for 2014 included $249 million of expenses related to the utilization of deferred tax assets
by the MMJ Group partially offset by a $190 million benefit from increases in amount of MMJ Group's deferred tax assets
expected to be realized based on our forecasted utilization of net operating losses. The remaining tax provision for 2014
primarily reflects taxes on our other non-U.S. operations. The provision (benefit) for taxes on U.S. operations for 2014 was
substantially offset by changes in the valuation allowance. As of August 28, 2014, we had valuation allowances of $1.29
billion against substantially all U.S. net deferred tax assets and $1.15 billion related to our foreign subsidiaries, primarily
related to net operating loss carryforwards. Our valuation allowance decreased $712 million for 2014 primarily due to the
utilization of U.S. and foreign net operating losses and due to the $190 million benefit to deferred tax assets of the MMJ Group.
The amount of the deferred tax asset considered realizable could be adjusted if significant positive evidence increases.
Management continues to evaluate future financial performance to determine whether such performance is sufficient evidence
to support reversal of the valuation allowances. Our unrecognized tax benefits increased $150 million in 2014, primarily due to
transfer pricing and other matters, which was substantially offset by changes in our deferred tax asset valuation allowance.
We currently operate in several tax jurisdictions where we have arrangements that allow us to compute our tax provision at
rates below the local statutory rates that expire in whole or in part at various dates through 2026. These arrangements
benefitted our tax provision in 2014, 2013 and 2012 by $286 million, $141 million and $52 million, respectively.
Income taxes for 2013 and 2012 primarily reflect taxes on our non-U.S. operations offset by benefits of $19 million and
$56 million, respectively, from the favorable resolution of prior year tax matters and a change in tax laws applicable to prior
years.
(See "Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Income
Taxes.")
Equity in Net Income (Loss) of Equity Method Investees
We recognize our share of earnings or losses from the entities listed below under the equity method, generally on a two-
month lag. Equity in net income (loss) of equity method investees, net of tax, included the following:
For the year ended 2014 2013 2012
Inotera $ 465 $ (79) $ (189)
Tera Probe 11 — —
Other (2)(4)(105)
$ 474 $ (83) $ (294)
Our equity in net income (loss) of Inotera improved for 2014 as compared to 2013 primarily due to Inotera's improved
operating results as a result of higher selling prices and lower manufacturing costs. Higher selling prices resulted from the new
Inotera Supply Agreement coupled with an improved market.
Losses in 2012 for our other equity method investments were primarily attributable to Transform Solar Pty Ltd. As of
August 30, 2012, Transform's operations were substantially discontinued. (See "Item 8. Financial Statements and
Supplementary Data – Notes to Consolidated Financial Statements – Equity Method Investments.")