Crucial 2015 Annual Report Download - page 19

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Changes in foreign currency exchange rates could materially adversely affect our business, results of operations, or
financial condition.
Across our global operations, there are transactions and balances denominated in currencies other than the U.S. dollar (our
reporting currency), primarily the British pound, euro, shekel, Singapore dollar, New Taiwan dollar, yen, and yuan. We
recorded net losses from changes in currency exchange rates of $27 million for 2015, $28 million for 2014, and $229 million
for 2013. Based on our foreign currency exposures from monetary assets and liabilities, offset by balance sheet hedges, we
estimate that a 10% adverse change in exchange rates versus the U.S. dollar would result in losses of approximately $3 million
as of September 3, 2015. In addition, a significant portion of our manufacturing costs are denominated in foreign currencies.
Exchange rates for some of these currencies against the U.S. dollar, particularly the yen, have been volatile in recent periods. If
these currencies strengthen against the U.S. dollar, our manufacturing costs could significantly increase. In the event that
exchange rates for the U.S. dollar adversely change against our foreign currency exposures, our results of operations or
financial condition may be adversely affected.
We may make future acquisitions and/or alliances, which involve numerous risks.
Acquisitions and the formation or operation of alliances, such as joint ventures and other partnering arrangements, involve
numerous risks including the following:
• integrating the operations, technologies, and products of acquired or newly formed entities into our operations;
• increasing capital expenditures to upgrade and maintain facilities;
• increased debt levels;
• the assumption of unknown or underestimated liabilities;
• the use of cash to finance a transaction, which may reduce the availability of cash to fund working capital, capital
expenditures, R&D expenditures, and other business activities;
• diverting management's attention from daily operations;
• managing larger or more complex operations and facilities and employees in separate and diverse geographic areas;
• hiring and retaining key employees;
• requirements imposed by governmental authorities in connection with the regulatory review of a transaction, which
may include, among other things, divestitures or restrictions on the conduct of our business or the acquired business;
• inability to realize synergies or other expected benefits;
• failure to maintain customer, vendor, and other relationships;
• inadequacy or ineffectiveness of an acquired company's internal financial controls, disclosure controls and procedures,
and/or environmental, health and safety, anti-corruption, human resource, or other policies or practices; and
• impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological
advancements, or worse-than-expected performance of the acquired business.
In previous years, supply of memory products has significantly exceeded customer demand resulting in significant declines
in average selling prices for DRAM, NAND Flash, and NOR Flash products. Resulting operating losses have led to the
deterioration in the financial condition of a number of industry participants, including the liquidation of Qimonda and the 2012
bankruptcy filing by Elpida (now known as MMJ). These types of proceedings often lead to court-directed processes involving
the sale of related businesses or assets. We believe the global memory industry is experiencing a period of consolidation as a
result of these market conditions and other factors, and we may engage in discussions regarding potential acquisitions and
similar opportunities arising out of these industry conditions. To the extent we are successful in completing any such
transactions, we could be subject to some or all of the risks described above, including the risks pertaining to funding,
assumption of liabilities, integration challenges, and increases in debt that may accompany such transactions. Acquisitions of,
or alliances with, high-technology companies are inherently risky and may not be successful and may materially adversely
affect our business, results of operations, or financial condition.
Breaches of our network security could expose us to losses.
We manage and store on our network systems various proprietary information and sensitive or confidential data relating to
our operations. We also process, store, and transmit large amounts of data relating to our customers and employees, including
sensitive personal information. Unauthorized users may be able to gain access to our network system and steal proprietary
information, compromise confidential information, create system disruptions, or cause shutdowns. These parties may also be
able to develop and deploy viruses, worms, and other malicious software programs that disrupt our operations and create
security vulnerabilities. Attacks on our network systems could result in significant losses and damage our reputation with
customers, and could expose us to litigation if the confidential information of our customers, suppliers, or employees is
compromised.