MICRON TECHNOLOGY, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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1-10658
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75-1618004
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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8000 South Federal Way
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Boise, Idaho 83716-9632
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(Address of principal executive offices)
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(208) 368-4000
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(Registrant’s telephone number, including area code)
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Item 2.02.
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Results of Operations and Financial Condition.
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Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits.
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Exhibit No.
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Description
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99.1
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Press Release issued on January 7, 2014
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MICRON TECHNOLOGY, INC.
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Date:
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January 7, 2014
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By:
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/s/ Ronald C. Foster
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Name:
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Ronald C. Foster
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Title:
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Chief Financial Officer and
Vice President of Finance
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Exhibit
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Description
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99.1
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Press Release issued on January 7, 2014
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Contacts:
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Kipp A. Bedard
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Daniel Francisco
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Investor Relations
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Media Relations
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kbedard@micron.com
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dfrancisco@micron.com
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(208) 368-4465
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(208) 368-5584
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1st Qtr.
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4th Qtr.
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1st Qtr.
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||||||||||
Nov. 28,
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Aug. 29,
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Nov. 29,
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||||||||||
2013
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2013
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2012
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||||||||||
Net sales
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$ | 4,042 | $ | 2,843 | $ | 1,834 | ||||||
Cost of goods sold
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2,761 | 2,135 | 1,617 | |||||||||
Gross margin
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1,281 | 708 | 217 | |||||||||
Selling, general and administrative
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176 | 193 | 119 | |||||||||
Research and development
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320 | 267 | 224 | |||||||||
Restructure and asset impairments (1)
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(3 | ) | 32 | (21 | ) | |||||||
Other operating (income) expense, net (2)
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237 | 9 | (8 | ) | ||||||||
Operating income (loss)
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551 | 207 | (97 | ) | ||||||||
Interest income (expense), net
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(96 | ) | (58 | ) | (54 | ) | ||||||
Gain on acquisition of Elpida (3)
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-- | 1,484 | -- | |||||||||
Other non-operating income (expense), net (4)
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(80 | ) | 45 | (59 | ) | |||||||
Income tax (provision) (5)
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(80 | ) | (5 | ) | (13 | ) | ||||||
Equity in net income (loss) of equity method investees
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86 | 37 | (52 | ) | ||||||||
Net income attributable to noncontrolling interests
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(23 | ) | (2 | ) | -- | |||||||
Net income (loss) attributable to Micron
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$ | 358 | $ | 1,708 | $ | (275 | ) | |||||
Earnings (loss) per share:
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Basic
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$ | 0.34 | $ | 1.65 | $ | (0.27 | ) | |||||
Diluted
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0.30 | 1.51 | (0.27 | ) | ||||||||
Number of shares used in per share calculations:
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Basic
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1,046 | 1,033 | 1,014 | |||||||||
Diluted
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1,196 | 1,129 | 1,014 |
As of
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Nov. 28,
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Aug. 29,
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|||||||
2013
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2013
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Cash and short-term investments
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$ | 3,870 | $ | 3,101 | ||||
Receivables
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2,833 | 2,329 | ||||||
Inventories
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2,459 | 2,649 | ||||||
Current restricted cash (6)
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-- | 556 | ||||||
Total current assets
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9,369 | 8,911 | ||||||
Long-term marketable investments
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538 | 499 | ||||||
Property, plant and equipment, net
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7,733 | 7,626 | ||||||
Total assets
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19,794 | 19,118 | ||||||
Accounts payable and accrued expenses
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2,630 | 2,115 | ||||||
Current portion of long-term debt (4)(6)
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1,543 | 1,585 | ||||||
Total current liabilities
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4,513 | 4,125 | ||||||
Long-term debt (4)
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4,260 | 4,452 | ||||||
Total Micron shareholders’ equity (4)
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9,219 | 9,142 | ||||||
Noncontrolling interests in subsidiaries
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927 | 864 | ||||||
Total equity
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10,146 | 10,006 |
Three Months Ended
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Nov. 28,
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Nov. 29,
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|||||||
2013
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2012
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Net cash provided by operating activities
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$ | 1,507 | $ | 236 | ||||
Net cash provided by (used for) investing activities
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21 | (639 | ) | |||||
Net cash provided by (used for) financing activities
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(735 | ) | 46 | |||||
Depreciation and amortization
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541 | 485 | ||||||
Expenditures for property, plant and equipment
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(526 | ) | (434 | ) | ||||
Payments on equipment purchase contracts
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(143 | ) | (104 | ) | ||||
Net contributions from (distributions to/acquisitions of) noncontrolling interests
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49 | -- | ||||||
Noncash equipment acquisitions on contracts payable and capital leases
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80 | 59 |
(1)
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Restructure and asset impairments consisted of the following:
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1st Qtr.
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4th Qtr.
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1st Qtr.
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||||||||||
Nov. 28,
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Aug. 29,
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Nov. 29,
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||||||||||
2013
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2013
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2012
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Loss from global workforce reduction
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$ | 2 | $ | 17 | $ | -- | ||||||
Loss (gain) on impairment of Israel assets
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(1 | ) | 14 | -- | ||||||||
Gain on termination of lease to Transform
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-- | -- | (25 | ) | ||||||||
Other
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(4 | ) | 1 | 4 | ||||||||
$ | (3 | ) | $ | 32 | $ | (21 | ) |
(2)
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Other operating (income) expense consisted of the following:
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1st Qtr.
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4th Qtr.
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1st Qtr.
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Nov. 28,
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Aug. 29,
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Nov. 29,
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2013
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2013
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2012
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Rambus settlement
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$ | 233 | $ | -- | $ | -- | ||||||
Other
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4 | 9 | (8 | ) | ||||||||
$ | 237 | $ | 9 | $ | (8 | ) |
(3)
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In connection with the company’s acquisition of Elpida, the company recorded net assets of $2,601 million and noncontrolling interests of $168 million. Because the fair value of the net assets acquired less noncontrolling interests exceeded the purchase price, the company recognized a gain on the acquisition of $1,484 million.
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(4)
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Other non-operating income (expense) consisted of the following:
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1st Qtr.
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4th Qtr.
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1st Qtr.
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Nov. 28,
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Aug. 29,
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Nov. 29,
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2013
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2013
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2012
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Loss on debt restructure
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$ | (75 | ) | $ | -- | $ | -- | |||||
Gain (loss) from changes in currency exchange rates
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(6 | ) | 2 | (59 | ) | |||||||
Gain on Inotera issuance of shares
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-- | 48 | -- | |||||||||
Other
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1 | (5 | ) | -- | ||||||||
$ | (80 | ) | $ | 45 | $ | (59 | ) |
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In November 2013, the company initiated a series of actions resulting in the restructure of certain of its convertible notes as follows:
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Exchange Transactions: On November 12, 2013, the company exchanged with various note holders, in a series of separate non-cash transactions, $80 million in principal amount of 2027 Notes, $155 million in principal amount of 2031A Notes and $205 million in principal amount of 2031B Notes (collectively, the “Exchanged Notes”) into $820 million aggregate issue price of 3.00% Convertible Senior Notes due 2043 (the “2043G Notes”) (the “Exchange Transactions”). The principal amount of 2043G Notes will accrete from their issue price to an aggregate principal amount at maturity of $1,025 million. The liability and equity components of the Exchanged Notes had previously been stated separately within debt and additional capital in the company’s consolidated balance sheet. Accordingly, the Exchange Transactions resulted in derecognition for the Exchanged Notes of $345 million of carrying value of debt (which was the aggregate principal amount of $440 million, net of $95 million of unamortized debt discount) and $411 million of additional capital. In connection with the Exchange Transactions, the company recognized a loss of $38 million, included in other non-operating expense, based on the difference between the fair value and carrying value of the debt component of the Exchanged Notes. In addition, the company recognized $11 million of interest expense for a make-whole premium.
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The initial conversion rate for the 2043G Notes is 34.2936 shares of common stock per $1,000 principal amount at maturity, equivalent to an initial conversion price of approximately $29.16 per share of common stock. Upon issuance of the 2043G Notes, the company recorded $627 million of debt, $173 million of additional capital and $5 million of deferred debt issuance costs (included in other noncurrent assets). The company recorded a debt discount of $398 million for the difference between the debt recorded at inception and the principal amount at maturity. Holders of the 2043G Notes have the right to require the company to repurchase all or a portion of their notes in November 2028 at the accreted principal amount, which is scheduled to be $917 million.
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Termination of Conversion Rights: On November 7, 2013, the company gave notice to (1) terminate the conversion rights of the remaining 2027 Notes, not participating in the Exchange Transactions, effective as of December 13, 2013 and (2) settle entirely in cash any conversions of the 2027 Notes that occur prior to the conversion right termination date (the “Termination of Conversion Rights”). Through December 13, 2013, all holders of the 2027 Notes notified the company of the exercise of their option to convert their 2027 Notes entirely (convertible into approximately 9 million shares of the company’s common stock). Based on the company’s notice to settle entirely in cash any conversions of the remaining 2027 Notes, the settlement obligation constituted a derivative instrument subject to mark-to-market accounting treatment. Therefore, the company reclassified the $58 million fair value of the equity component of the remaining 2027 Notes from additional capital to a derivative debt liability as of November 7, 2013. Under the terms of the indenture of the 2027 Notes, the final cash settlement amount is determined based on the shares underlying the remaining 2027 Notes multiplied by the volume-weighted average price of the company’s common stock over a period of 20 consecutive trading days. Through the end of the first quarter of fiscal 2014, the company recognized a loss of $22 million, included in other non-operating expense, on the company’s derivative settlement obligations based on an increase in the settlement amounts.
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Redemption Notice: On November 7, 2013, the company gave notice of its intent to redeem the remaining 2031A Notes, not participating in the Exchange Transactions, on December 7, 2013 (the “Redemption Notice”). In connection therewith, the company recognized $5 million of interest expense for a make-whole premium upon its notice of redemption of the remaining 2031A Notes. From November 7, 2013 through the end of the company’s first quarter of fiscal 2014, holders of $112 million principal amount of 2031A Notes (convertible into approximately 12 million shares of the company’s common stock) notified the company of the exercise of their option to convert their 2031A Notes entirely. For each of these conversion notices, the company elected to settle the conversions entirely in cash. Based on the company’s elections to settle amounts in cash, the settlement obligations became derivative instruments subject to mark-to-market accounting treatment and the company therefore reclassified an aggregate of $115 million of fair value of the equity components from additional capital to a derivative debt liability. Under the terms of the indenture of the 2031A Notes, the final cash settlement amount is determined based on the underlying shares multiplied by the volume-weighted average price of the company’s common stock over a period of 20 consecutive trading days. Through the end of the first quarter of fiscal 2014, the company recognized a loss of $15 million, included in other non-operating expense, on the company’s derivative settlement obligations based on an increase in the settlement amounts.
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(5)
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Income taxes for the first quarter of fiscal 2014 and the fourth quarter of fiscal 2013 included $73 million and $7 million, respectively, related to the utilization of deferred tax assets as a result of Elpida’s operations. Remaining taxes for fiscal 2014 and 2013 primarily reflect taxes on the company’s non-U.S. operations. The company has a full valuation allowance for its net deferred tax asset associated with its U.S. operations. The (provision) benefit for taxes on U.S. operations in fiscal 2014 and 2013 was substantially offset by changes in the valuation allowance.
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(6)
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During the first quarter of fiscal 2014, the company made the first installment payment to the external creditors of the Elpida companies from funds that had been held in current restricted cash since the acquisition date.
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1st Qtr.
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4th Qtr.
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Nov. 28,
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Aug. 29,
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2013
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2013
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GAAP net income attributable to Micron
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$ | 358 | $ | 1,708 | ||||
Non-GAAP adjustments:
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Rambus settlement
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233 | -- | ||||||
Flow-through of Elpida inventory step up
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111 | 41 | ||||||
Loss on debt restructure
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92 | -- | ||||||
Gain on acquisition of Elpida
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-- | (1,484 | ) | |||||
Gain on Inotera issuance of shares
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-- | (48 | ) | |||||
Elpida acquisition costs
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-- | 42 | ||||||
Restructure and asset impairments
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(3 | ) | 32 | |||||
Amortization of debt discount and other costs
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50 | 36 | ||||||
(Gain) loss from changes in currency exchange rates
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6 | (2 | ) | |||||
Estimated tax effects of above items
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(39 | ) | (15 | ) | ||||
Non-cash taxes from Elpida purchase accounting
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73 | 7 | ||||||
Total non-GAAP adjustments
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523 | (1,391 | ) | |||||
Non-GAAP net income attributable to Micron
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$ | 881 | $ | 317 | ||||
Number of shares used in diluted per share calculations:
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GAAP
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1,196 | 1,129 | ||||||
Effect of capped calls
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(54 | ) | (51 | ) | ||||
Non-GAAP
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1,142 | 1,078 | ||||||
Diluted earnings per share:
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GAAP
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$ | 0.30 | $ | 1.51 | ||||
Effects of above
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0.47 | (1.22 | ) | |||||
Non-GAAP
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$ | 0.77 | $ | 0.29 | ||||
·
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Rambus settlement;
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·
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Flow-through of inventory step up values recorded in connection with the company’s acquisition of Elpida;
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·
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Loss on debt restructure;
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·
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Gain on acquisition of Elpida and Elpida acquisition costs incurred in connection with the transaction;
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·
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Gain on Inotera issuance of shares;
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·
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Restructure and asset impairments;
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·
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Amortization of debt discount and other costs, including the accretion of non-cash interest expense associated with the company’s convertible debt and the Elpida installment debt;
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(Gain) loss from changes in currency exchange rates;
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·
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The estimated tax effects of above items; and
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·
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Non-cash taxes resulting from utilization of deferred tax assets recorded in connection with the company’s acquisition of Elpida.
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