Related Parties and Strategic Investments

12 Months Ended

Dec. 28, 2014

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 Flash Ventures’ master lease agreements, take-or-pay supply arrangements and R&D cost sharing are described in Note 14, “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. Entities within Flash Ventures are 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, the voting structure and the manner in which the day-to-day operations are conducted for each entity within Flash Ventures, that the Company lacked the power to direct most of the activities that most significantly impact the economic performance of each entity within Flash Ventures.

The Company purchased NAND flash memory wafers from Flash Ventures and made prepayments, investments and loans to Flash Ventures, totaling $1.91 billion, $1.87 billion and $2.71 billion during the fiscal years ended December 28, 2014, December 29, 2013 and December 30, 2012, respectively. The Company received loan repayments from Flash Ventures of $231.4 million, $124.8 million and $511.3 million during the fiscal years ended December 28, 2014, December 29, 2013 and December 30, 2012, respectively. At December 28, 2014 and December 29, 2013, the Company had accounts payable balances due to Flash Ventures of $136.1 million and $146.0 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). Flash Ventures’ 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 28, 2014		December 29, 2013
Notes receivable	$	467	$	593
Equity investments	496		541
Operating lease guarantees	551		492
Prepayments	—		5
Maximum estimable loss exposure	$	1,514	$	1,631

As of both December 28, 2014 and December 29, 2013, the Company’s retained earnings included undistributed earnings of Flash Ventures of $8.1 million.

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



	December 28, 2014		December 29, 2013
	(Unaudited)
Current assets	$	494	$	631
Property, plant, equipment, net and other assets	2,602		2,802
Total assets	$	3,096	$	3,433
Current liabilities	$	1,160	$	1,144
Long-term liabilities	934		1,186

The following summarizes the aggregated financial information for Flash Ventures, which includes both the Company and Toshiba’s portions, for fiscal years 2014, 2013 and 2012, 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 28, 2014		December 29, 2013		December 30, 2012
	(Unaudited)
Net sales⁽¹⁾	$	3,296	$	3,589	$	4,787
Gross profit	18		31		8
Net income (loss)	—		28		(15		)


⁽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 IP. S4 qualifies as a VIE. 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 28, 2014 and December 29, 2013.

- 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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