Related Parties and Strategic Investments

12 Months Ended

Dec. 29, 2013

Flash Ventures with Toshiba. The Company owns 49.9% of each entity within Flash Ventures and accounts for its ownership position under the equity method of accounting. The Company’s obligations with respect to the Flash Ventures master lease agreements, take-or-pay supply arrangements and R&D cost sharing are described in Note 12, “Commitments, Contingencies and Guarantees.” The financial and other support provided by the Company in all periods presented was either contractually required or the result of a joint decision to expand wafer capacity, transition to new technologies or refinance existing equipment lease commitments. Flash Ventures are variable interest entities (“VIEs”). The Company evaluated whether it is the primary beneficiary of any of the entities within Flash Ventures for all periods presented and determined that it is not the primary beneficiary of any of the entities within Flash Ventures because it does not have a controlling financial interest in any of those entities. In determining whether the Company is the primary beneficiary, the Company analyzed the primary purpose and design of Flash Ventures, the activities that most significantly impact Flash Ventures’ economic performance, and whether the Company had the power to direct those activities. The Company concluded based upon its 49.9% ownership in Flash Ventures, the voting structure of Flash Ventures and the manner in which the day-to-day operations of Flash Ventures are conducted that the Company lacked the power to direct most of the activities that most significantly impact Flash Ventures’ economic performance.

The Company purchased NAND flash memory wafers from Flash Ventures and made prepayments, investments and loans to Flash Ventures totaling $1.87 billion, $2.71 billion and $2.95 billion during fiscal years 2013, 2012 and 2011, respectively. The Company received loan repayments from Flash Ventures of $124.8 million, $511.3 million and $416.3 million during fiscal years 2013, 2012 and 2011, respectively. At December 29, 2013 and December 30, 2012, the Company had accounts payable balances due to Flash Ventures of $146.0 million and $214.5 million, respectively.

The Company’s maximum reasonably estimable loss exposure (excluding lost profits), based upon the exchange rate at each respective balance sheet date, as a result of its involvement with Flash Ventures is presented below (in millions). The Flash Venture investments are denominated in Japanese yen and the maximum possible loss exposure excludes any cumulative translation adjustment due to revaluation from the Japanese yen to the U.S. dollar.



	December 29, 2013		December 30, 2012
Notes receivable	$	593	$	820
Equity investments	541		640
Operating lease guarantees	492		926
Prepayments	5		26
Maximum loss exposure	$	1,631	$	2,412

At December 29, 2013 and December 30, 2012, the Company’s retained earnings included approximately $8.1 million and ($0.6) million, respectively, of undistributed earnings (deficit) of Flash Ventures.

The following summarizes the aggregated financial information for Flash Ventures, which includes both the Company and Toshiba’s portions (in millions).



	December 29, 2013		December 30, 2012
	(Unaudited)
Current assets	$	631	$	683
Property, plant, equipment and other assets	2,802		2,902
Total assets	$	3,433	$	3,585
Current liabilities	$	1,144	$	653
Long-term liabilities	1,186		1,640

The following summarizes the aggregated financial information for Flash Ventures, which includes both the Company and Toshiba’s portions, for fiscal years 2013, 2012 and 2011, respectively (in millions). Flash Ventures’ year-ends are March 31, with quarters ending on March 31, June 30, September 30 and December 31.



	Fiscal years ended
	December 29, 2013		December 30, 2012			January 1, 2012
	(Unaudited)
Net sales⁽¹⁾	$	3,589	$	4,787		$	4,577
Gross profit (loss)	31		8			(2		)
Net income (loss)	28		(15		)	5


⁽¹⁾	Net sales represent sales to both the Company and Toshiba.

Solid State Storage Solutions, Inc. Solid State Storage Solutions, Inc. (“S4”) is a venture with third parties to license intellectual property. S4 qualifies as a variable interest entity. The Company is considered the primary beneficiary of S4 and the Company consolidates S4 in its Consolidated Financial Statements for all periods presented. The Company considered multiple factors in determining it was the primary beneficiary, including its overall involvement with the venture, contributions and participation in operating activities. S4’s assets and liabilities were not material to the Company’s Consolidated Balance Sheets as of December 29, 2013 and December 30, 2012.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

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