Micron Technology, Inc.
MICRON TECHNOLOGY INC (Form: 8-K, Received: 03/22/2018 16:03:15)


 
 
 
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

March 22, 2018
Date of Report (date of earliest event reported)

MICRON TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
1-10658
 
75-1618004
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)

8000 South Federal Way
Boise, Idaho 83716-9632
(Address of principal executive offices)

(208) 368-4000
(Registrant’s telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 
 
 
 
 





Item 2.02.
Results of Operations and Financial Condition.

On March 22, 2018 , we announced the financial results for our second quarter of fiscal year 2018 ended March 1, 2018 . The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in Item 2.02 of this Current Report on Form 8-K shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing or document.

Item 7.01.
Regulation FD Disclosure.

We are furnishing certain information regarding our business on Exhibit 99.2 to this report.

The information in Item 7.01 of this Current Report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. In addition, this information shall not be incorporated by reference into any filing or other document pursuant to the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing or document.

Item 9.01.
Financial Statements and Exhibits.
 
 
 
(d) Exhibits.










SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
MICRON TECHNOLOGY, INC.
 
 
 
 
 
 
 
 
Date:
March 22, 2018
By:
/s/ David A. Zinsner
 
 
Name:
David A. Zinsner
 
 
Title:
Senior Vice President and Chief Financial Officer






Exhibit 99.1
FOR IMMEDIATE RELEASE

Contacts:
Shanye Hudson
David Oro
 
Investor Relations
Media Relations
 
shudson@micron.com
davidoro@micron.com
 
(208) 492-1205
(707) 558-8585

MICRON TECHNOLOGY, INC., REPORTS RESULTS FOR THE
SECOND QUARTER OF FISCAL 2018

Record revenue and profitability supported by solid execution and
broad demand for Micron’s products

BOISE, Idaho, March 22, 2018 – Micron Technology, Inc., (NASDAQ: MU) today announced results of operations for its second quarter of fiscal 2018 , which ended March 1, 2018 .

Fiscal Q2 2018 Highlights
Revenues of $7.35 billion , up 58 percent compared with the same period last year
GAAP net income of $3.31 billion , or $2.67 per diluted share
Non-GAAP net income of $3.50 billion , or $2.82 per diluted share
Operating cash flow of $4.35 billion , compared with $1.77 billion for the same period last year (adjusted for the Inotera acquisition)

"Micron executed exceptionally well in the second quarter, delivering record results and strong free cash flow driven by broad-based demand for our memory and storage solutions. Our performance was accentuated by an ongoing shift to high-value solutions as we grew sales to our cloud, mobile and automotive customers and set new records for SSDs and graphics memory," said Micron President and CEO Sanjay Mehrotra. "Secular technology trends are driving robust demand for memory and storage, and Micron is well-positioned to address these growing opportunities."

Quarterly Financial Results
(in millions except per share amounts)
GAAP (1)
 
Non-GAAP (2)
FQ2-18
FQ1-18
FQ2-17
 
FQ2-18
FQ1-18
FQ2-17
Net sales
$
7,351
 
$
6,803
 
$
4,648
 
 
$
7,351
 
$
6,803
 
$
4,648
 
Gross margin
$
4,270
 
$
3,747
 
$
1,704
 
 
$
4,296
 
$
3,769
 
$
1,789
 
percent of net sales
58.1
%
 
55.1
%
 
36.7
%
 
 
58.4
%
 
55.4
%
 
38.5
%
 
Operating income
$
3,567
 
$
3,097
 
$
1,044
 
 
$
3,630
 
$
3,157
 
$
1,177
 
percent of net sales
48.5
%
 
45.5
%
 
22.5
%
 
 
49.4
%
 
46.4
%
 
25.3
%
 
Net income attributable to Micron
$
3,309
 
$
2,678
 
$
894
 
 
$
3,495
 
$
2,994
 
$
1,031
 
Diluted earnings per share
$
2.67
 
$
2.19
 
$
0.77
 
 
$
2.82
 
$
2.45
 
$
0.90
 

Revenues for the second quarter of 2018 were 8 percent higher compared to the first quarter of 2018, reflecting increased demand broadly across our products and end markets. Our overall consolidated gross margin of 58.1 percent for the second quarter of 2018 was higher compared to 55.1 percent for the first quarter of 2018 primarily due to execution across our product portfolio.







Investments in capital expenditures, net of amounts funded by partners, were $2.11 billion , which resulted in adjusted free cash flows of $2.2 billion for the second quarter of 2018. We ended the second quarter with cash, marketable investments, and restricted cash of $8.68 billion .

We will host a conference call on Thursday, March 22, 2018 at 2:30 p.m. MT to discuss our financial results. The call, audio, and slides will be available online at investors.micron.com . A webcast replay will be available on our website until March 22, 2019. A taped audio replay of the conference call will also be available at 1-404-537-3406 or 1-855-859-2056 (conference number: 4687088) beginning at 5:30 p.m. MT, Thursday, March 22, 2018 and continuing through Thursday, March 29, 2018. For Investor Relations and other company updates, follow @MicronTech on Twitter at twitter.com/MicronTech .

We are an industry leader in innovative memory and storage solutions. Through our global brands – Micron®, Crucial®, and Ballistix® – our broad portfolio of high-performance memory and storage technologies, including DRAM, NAND, NOR Flash, and 3D XPoint™ memory, is transforming how the world uses information to enrich life. Backed by nearly 40 years of technology leadership, our memory and storage solutions enable disruptive trends, including artificial intelligence, machine learning, and autonomous vehicles in key market segments like cloud, data center, networking, and mobile. Our common stock is traded on the NASDAQ under the MU symbol. To learn more about Micron Technology, Inc., visit micron.com .

The Micron logo and Micron symbol are trademarks of Micron Technology, Inc. All other trademarks are the property of their respective owners.

This press release contains forward-looking statements regarding the industry and our strategic position and financial results. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially. Please refer to the documents we file with the Securities and Exchange Commission, specifically our most recent Form 10-K and Form 10-Q. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in these forward-looking statements. These certain factors can be found at www.micron.com/certainfactors . Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this release to conform these statements to actual results.

(1) GAAP represents U.S. Generally Accepted Accounting Principles.
(2) Non-GAAP represents GAAP excluding the impact of certain activities which our management excludes in analyzing our operating results and understanding trends in our earnings. Non-GAAP also includes the impact on shares used in per share calculations of our outstanding capped call transactions and from the exclusion of stock-based compensation. For a reconciliation of GAAP to non-GAAP results, see the accompanying financial tables and footnotes.






MICRON TECHNOLOGY, INC.
CONSOLIDATED FINANCIAL SUMMARY
(in millions except per share amounts)

 
2nd Qtr.
 
1st Qtr.
 
2nd Qtr.
 
Six Months Ended
 
March 1,
2018
 
November 30,
2017
 
March 2,
2017
 
March 1,
2018
 
March 2,
2017
Net sales
$
7,351

 
$
6,803

 
$
4,648

 
$
14,154

 
$
8,618

Cost of goods sold
3,081

 
3,056

 
2,944

 
6,137

 
5,903

Gross margin
4,270

 
3,747

 
1,704

 
8,017

 
2,715

Selling, general, and administrative
196

 
191

 
187

 
387

 
346

Research and development
523

 
448

 
473

 
971

 
943

Other operating (income) expense, net
(16
)
 
11

 

 
(5
)
 
23

Operating income
3,567

 
3,097

 
1,044

 
6,664

 
1,403

Interest income (expense), net (1)
(61
)
 
(101
)
 
(153
)
 
(162
)
 
(285
)
Other non-operating income (expense), net (1)
(53
)
 
(204
)
 
34

 
(257
)
 
20

Income tax (provision) benefit (2)
(143
)
 
(114
)
 
(38
)
 
(257
)
 
(69
)
Equity in net income (loss) of equity method investees
1

 

 
7

 
1

 
5

Net (income) attributable to noncontrolling interests
(2
)
 

 

 
(2
)
 

Net income attributable to Micron
$
3,309

 
$
2,678

 
$
894

 
$
5,987

 
$
1,074

 
 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
 
Basic
$
2.86

 
$
2.36

 
$
0.81

 
$
5.23

 
$
1.00

Diluted
2.67

 
2.19

 
0.77

 
4.86

 
0.95

 
 
 
 
 
 
 
 
 
 
Number of shares used in per share calculations
 
 
 
 
 
 
 
 
 
Basic
1,156

 
1,134

 
1,099

 
1,145

 
1,070

Diluted
1,238

 
1,225

 
1,160

 
1,232

 
1,125







CONSOLIDATED FINANCIAL SUMMARY, Continued
As of
 
March 1,
2018
 
November 30,
2017
 
August 31,
2017
Cash and short-term investments
 
$
8,042

 
$
6,174

 
$
5,428

Receivables
 
4,437

 
3,876

 
3,759

Inventories
 
3,184

 
3,160

 
3,123

Total current assets
 
15,836

 
13,358

 
12,457

Long-term marketable investments
 
520

 
314

 
617

Property, plant, and equipment, net
 
21,864

 
20,723

 
19,431

Total assets
 
41,263

 
37,191

 
35,336

 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
4,194

 
3,766

 
3,664

Current debt (1)
 
1,514

 
1,401

 
1,262

Total current liabilities
 
6,135

 
5,583

 
5,334

Long-term debt (1)
 
7,802

 
7,644

 
9,872

 
 
 
 
 
 
 
Total Micron shareholders' equity (3)
 
25,697

 
22,526

 
18,621

Noncontrolling interests in subsidiaries
 
869

 
867

 
849

Total equity
 
26,566

 
23,393

 
19,470


 
 
Six Months Ended
 
 
March 1,
2018
 
March 2,
2017
Net cash provided by operating activities
 
$
7,984

 
$
2,543

Net cash provided by (used for) investing activities (a)
 
(3,843
)
 
(5,385
)
Net cash provided by (used for) financing activities
 
(1,420
)
 
2,341

 
 
 
 
 
Depreciation and amortization
 
2,296

 
1,837

Investments in capital expenditures
 
(4,370
)
 
(2,461
)
Acquisition of Inotera
 

 
(2,634
)
Repayments of debt
 
(3,379
)
 
(556
)
Proceeds from issuance of stock
 
1,554

 
68

Proceeds from issuance of debt
 
650

 
2,961

(a) March 2, 2017 amount adjusted for the retrospective adoption of ASU 2016-18 – Restricted Cash.






(1)
In the first and second quarters of 2018, Intel Corporation provided non-interest bearing convertible debt financing of $150 million and $500 million , respectively, to IM Flash Technologies, LLC ("IMFT") pursuant to the terms of the IMFT joint venture agreement.

In the second quarter of 2018, we settled convertible notes with aggregate principal amount of $65 million for cash of $295 million. Additionally, holders converted $71 million of aggregate principal amount of our convertible notes in the second quarter of 2018, which resulted in an increase to the carrying value of $238 million. As a result of the conversions, we recognized non-operating losses of $23 million in the second quarter of 2018. We will settle the conversions entirely in cash in the third quarter of 2018. In the first quarter of 2018, we redeemed notes with an aggregate principal amount of $2.25 billion for cash of $2.42 billion and recognized non-operating losses of $190 million.

(2)
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act") that lowers the U.S. corporate income tax rate from 35% to 21% and significantly affects how income from foreign operations is taxed in the United States. As a result of our fiscal year-end, our U.S. statutory federal rate will be 25.7% for 2018 (based on the 35% corporate rate through December 31, 2017 and 21% from that date through the end of fiscal year 2018) and 21% for subsequent years. The Tax Act imposes a one-time transition tax in 2018 on the higher of our accumulated foreign income, as determined as of November 2, 2017 or December 31, 2017 (the "Repatriation Tax"); provides a U.S. federal tax exemption on foreign earnings distributed to the United States; and, beginning in 2019, creates a new minimum tax on certain foreign earnings in excess of a deemed return on tangible assets (the "Foreign Minimum Tax"). The Tax Act allows us to elect to pay any Repatriation Tax due in eight annual interest-free payments in increasing amounts beginning in December 2018. In connection with the provisions of the Tax Act, we are continuing to evaluate whether to account for the Foreign Minimum Tax provisions that begin for us in 2019 as a period cost or in our measurement of deferred taxes.

The Securities and Exchange Commission's Staff Accounting Bulletin No. 118 allows the use of provisional amounts (reasonable estimates) if our analyses of the impacts of the Tax Act has not been completed when our financial statements for the second quarter of fiscal year 2018 are issued. Provisional amounts may be adjusted during a one-year measurement period as accounting for the income tax effects of the Tax Act are completed or as estimates are revised. Our income tax (provision) benefit consisted of the following:

 
Second Quarter
 
First Quarter
 
Six Months
 
2018
 
2017
 
2018
 
2018
 
2017
Provisional estimate for the Repatriation Tax, on substantially all of our accumulated foreign earnings, net of adjustments related to uncertain tax positions
$
(1,335
)
 
$

 
$

 
$
(1,335
)
 
$

Remeasurement of deferred tax assets and liabilities reflecting the lower U.S. corporate tax rates
(133
)
 

 

 
(133
)
 

Provisional estimate for the release of the valuation allowance on the net deferred tax assets of our U.S. operations
1,337

 

 

 
1,337

 

Utilization of and other changes in net deferred tax assets of MMJ, MMT, and MTTW
(17
)
 
(8
)
 
(26
)
 
(43
)
 
(21
)
Other income tax (provision) benefit
5

 
(30
)
 
(88
)
 
(83
)
 
(48
)
 
$
(143
)
 
$
(38
)
 
$
(114
)
 
$
(257
)
 
$
(69
)

(3)
In October 2017, we issued 34 million shares of our common stock for $41.00 per share in a public offering, for proceeds of $1.36 billion , net of underwriting fees and other offering costs.






MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in millions except per share amounts)
 
2nd Qtr.
 
1st Qtr.
 
2nd Qtr.
 
March 1, 2018
 
November 30, 2017
 
March 2, 2017
 
GAAP
Adj
Non-GAAP
 
GAAP
Adj
Non-GAAP
 
 
GAAP
Adj
Non-GAAP
Net sales
$
7,351
 
$

$
7,351
 
 
$
6,803
 
$

$
6,803
 
 
$
4,648
 
$

$
4,648
 
Cost of goods sold
3,081
 
(26
)
3,055
 
 
3,056
 
(22
)
3,034
 
 
2,944
 
(85
)
2,859
 
Gross margin
4,270
 
26

4,296
 
 
3,747
 
22

3,769
 
 
1,704
 
85

1,789
 
percent of net sales
58.1
%
 
 
58.4
%
 
 
55.1
%
 
 
55.4
%
 
 
36.7
%
 
 
38.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general, and administrative
196
 
(16
)
180
 
 
191
 
(18
)
173
 
 
187
 
(30
)
157
 
Research and development
523
 
(14
)
509
 
 
448
 
(14
)
434
 
 
473
 
(14
)
459
 
Other operating (income) expense, net
(16
)
(7
)
(23
)
 
11
 
(6
)
5
 
 
 
(4
)
(4
)
Operating expenses
703
 
(37
)
666
 
 
650
 
(38
)
612
 
 
660
 
(48
)
612
 
Operating income
3,567
 
63

3,630
 
 
3,097
 
60

3,157
 
 
1,044
 
133

1,177
 
percent of net sales
48.5
%
 
 
49.4
%
 
 
45.5
%
 
 
46.4
%
 
 
22.5
%
 
 
25.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income (expense), net
(61
)
26

(35
)
 
(101
)
29

(72
)
 
(153
)
31

(122
)
Other non-operating income (expense), net
(53
)
53

 
 
(204
)
204

 
 
34
 
(34
)
 
 
3,453
 
142

3,595
 
 
2,792
 
293

3,085
 
 
925
 
130

1,055
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax (provision) benefit
(143
)
44

(99
)
 
(114
)
23

(91
)
 
(38
)
7

(31
)
Equity in net income (loss) of equity method investees
1
 

1
 
 
 

 
 
7
 

7
 
Net income
3,311
 
186

3,497
 
 
2,678
 
316

2,994
 
 
894
 
137

1,031
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to noncontrolling interests
(2
)

(2
)
 
 

 
 
 

 
Net income attributable to Micron
$
3,309
 
$
186

$
3,495
 
 
$
2,678
 
$
316

$
2,994
 
 
$
894
 
$
137

$
1,031
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares used in calculations
1,238
 
2

1,240
 
 
1,225
 
(5
)
1,220
 
 
1,160
 
(14
)
1,146
 
Diluted earnings per share
$
2.67
 
$
0.15

$
2.82
 
 
$
2.19
 
$
0.26

$
2.45
 
 
$
0.77
 
$
0.13

$
0.90
 







MICRON TECHNOLOGY, INC.
NON-GAAP ADJUSTMENTS
(in millions)

 
2nd Qtr.
 
1st Qtr.
 
2nd Qtr.
 
March 1, 2018
 
November 30, 2017
 
March 2, 2017
Non-GAAP adjustments
 
 
 
 
 
Cost of goods sold
 
 
 
 
 
Stock-based compensation
$
22

 
$
20

 
$
23

Flow-through of Inotera inventory step up

 

 
60

Other
4

 
2

 
2

 
26

 
22

 
85

 
 
 
 
 
 
Selling, general, and administrative
 
 
 
 
 
Stock-based compensation
16

 
18

 
18

Other

 

 
12

 
16

 
18

 
30

 
 
 
 
 
 
Research and development
 
 
 
 
 
Stock-based compensation
14

 
13

 
14

Other

 
1

 

 
14

 
14

 
14

 
 
 
 
 
 
Other operating (income) expense, net
 
 
 
 
 
Restructure and asset impairments
7

 
6

 
4

 
 
 
 
 
 
Interest income (expense), net
 
 
 
 
 
Amortization of debt discount and other costs
26

 
29

 
31

 
 
 
 
 
 
Other non-operating income (expense)
 
 
 
 
 
Loss on debt repurchases and conversions
23

 
195

 

(Gain) loss from changes in currency exchange rates
27

 
9

 
28

(Gain) loss from business acquisition activities

 

 
(71
)
Other
3

 

 
9

 
53

 
204

 
(34
)
 
 
 
 
 
 
Income taxes
 
 
 
 
 
Impact of U.S. income tax reform
131

 

 

Estimated tax effects of above, including tax benefits from stock-based compensation, and non-cash changes in net deferred taxes
(87
)
 
23

 
7

 
44

 
23

 
7

 
$
186

 
$
316

 
$
137


The tables above reconcile GAAP to non-GAAP results, diluted shares, and diluted earnings per share. The non-GAAP adjustments above may or may not be infrequent or nonrecurring in nature but are a result of periodic or non-core operating activities. We believe this non-GAAP information is helpful to understanding trends and in analyzing our operating results and earnings. We are providing this information to investors to assist in performing analysis of our operating results. When evaluating performance and making decisions on how to allocate our resources, management uses this non-GAAP information and believes investors should have access to similar data when making their investment decisions. We believe these non-GAAP financial measures increase transparency by providing investors with useful supplemental information about the financial performance of our business, enabling enhanced comparison of our operating results between periods and with peer companies.






The presentation of these adjusted amounts vary from numbers presented in accordance with U.S. GAAP and therefore may not be comparable to amounts reported by other companies.

Our management excludes the following items in analyzing our operating results and understanding trends in our earnings:

Stock-based compensation;
Flow-through of business acquisition-related inventory adjustments;
Restructure and asset impairments;
Amortization of debt discount and other costs, including the accretion of non-cash interest expense associated with our convertible debt and MMJ installment debt;
Losses from debt repurchases and conversions;
Gains and losses from changes in currency exchange rates;
Gains and losses from business acquisition activities;
Impact of the U.S. income tax reform for provisional estimate of Repatriation Tax, release of U.S. valuation allowance, and remeasurement of net deferred taxes reflecting the lower U.S. corporate tax rates; and
The estimated tax effects of above, including tax benefits from stock-based compensation, and non-cash changes in net deferred taxes.

Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible notes. In periods with non-GAAP income attributable to Micron, non-GAAP diluted shares include the impact of the capped calls, based on the average share price for the period the capped calls are outstanding. Non-GAAP diluted shares are also adjusted for the impact of additional shares resulting from the exclusion of stock-based compensation from non-GAAP income.





Exhibit 99.2
Q22018ERQ3GUIDANCE.JPG