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) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||
Common Stock, par value $0.10 per share | MU | NASDAQ Global Select Market | ||
Common Stock Purchase Rights | MU | NASDAQ Global Select Market |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits. |
Exhibit No. | Description | |
99.1 |
MICRON TECHNOLOGY, INC. | |||
Date: | June 25, 2019 | By: | /s/ David A. Zinsner |
Name: | David A. Zinsner | ||
Title: | Senior Vice President and Chief Financial Officer |
Contacts: | Farhan Ahmad | Erica Rodriguez Pompen |
Investor Relations | Media Relations | |
farhanahmad@micron.com | epompen@micron.com | |
(408) 834-1927 | (408) 834-1873 |
• | Share repurchases of $2.66 billion under the authorized buyback program in the first nine months of 2019 |
Quarterly Financial Results | |||||||||||||||||||||||||||||||
(in millions, except per share amounts) | GAAP (1) | Non-GAAP (2) | |||||||||||||||||||||||||||||
FQ3-19 | FQ2-19 | FQ3-18 | FQ3-19 | FQ2-19 | FQ3-18 | ||||||||||||||||||||||||||
Revenue | $ | 4,788 | $ | 5,835 | $ | 7,797 | $ | 4,788 | $ | 5,835 | $ | 7,797 | |||||||||||||||||||
Gross margin | $ | 1,828 | $ | 2,864 | $ | 4,723 | $ | 1,884 | $ | 2,928 | $ | 4,750 | |||||||||||||||||||
percent of revenue | 38.2 | % | 49.1 | % | 60.6 | % | 39.3 | % | 50.2 | % | 60.9 | % | |||||||||||||||||||
Operating income | $ | 1,010 | $ | 1,957 | $ | 3,953 | $ | 1,110 | $ | 2,110 | $ | 4,017 | |||||||||||||||||||
percent of revenue | 21.1 | % | 33.5 | % | 50.7 | % | 23.2 | % | 36.2 | % | 51.5 | % | |||||||||||||||||||
Net income attributable to Micron | $ | 840 | $ | 1,619 | $ | 3,823 | $ | 1,198 | $ | 1,971 | $ | 3,898 | |||||||||||||||||||
Diluted earnings per share | $ | 0.74 | $ | 1.42 | $ | 3.10 | $ | 1.05 | $ | 1.71 | $ | 3.15 |
3rd Qtr. | 2nd Qtr. | 3rd Qtr. | Nine Months Ended | |||||||||||||||||
May 30, 2019 | February 28, 2019 | May 31, 2018 | May 30, 2019 | May 31, 2018 | ||||||||||||||||
Revenue (1) | $ | 4,788 | $ | 5,835 | $ | 7,797 | $ | 18,536 | $ | 21,951 | ||||||||||
Cost of goods sold | 2,960 | 2,971 | 3,074 | 9,229 | 9,211 | |||||||||||||||
Gross margin | 1,828 | 2,864 | 4,723 | 9,307 | 12,740 | |||||||||||||||
Selling, general, and administrative | 206 | 209 | 211 | 624 | 598 | |||||||||||||||
Research and development | 606 | 601 | 603 | 1,818 | 1,574 | |||||||||||||||
Other operating (income) expense, net | 6 | 97 | (44 | ) | 139 | (49 | ) | |||||||||||||
Operating income | 1,010 | 1,957 | 3,953 | 6,726 | 10,617 | |||||||||||||||
Interest income (expense), net | 23 | 31 | (44 | ) | 59 | (206 | ) | |||||||||||||
Other non-operating income (expense), net (2) | (317 | ) | (84 | ) | (193 | ) | (392 | ) | (450 | ) | ||||||||||
Income tax (provision) benefit (3) | 135 | (280 | ) | 109 | (622 | ) | (148 | ) | ||||||||||||
Equity in net income (loss) of equity method investees | — | 1 | (2 | ) | 1 | (1 | ) | |||||||||||||
Net income attributable to noncontrolling interests | (11 | ) | (6 | ) | — | (20 | ) | (2 | ) | |||||||||||
Net income attributable to Micron | $ | 840 | $ | 1,619 | $ | 3,823 | $ | 5,752 | $ | 9,810 | ||||||||||
Earnings per share | ||||||||||||||||||||
Basic | $ | 0.76 | $ | 1.45 | $ | 3.30 | $ | 5.15 | $ | 8.53 | ||||||||||
Diluted | 0.74 | 1.42 | 3.10 | 5.01 | 7.96 | |||||||||||||||
Number of shares used in per share calculations | ||||||||||||||||||||
Basic | 1,105 | 1,114 | 1,159 | 1,117 | 1,150 | |||||||||||||||
Diluted | 1,129 | 1,141 | 1,235 | 1,148 | 1,233 |
As of | May 30, 2019 | February 28, 2019 | August 30, 2018 | |||||||||
Cash and short-term investments | $ | 6,689 | $ | 7,533 | $ | 6,802 | ||||||
Receivables (1) | 3,257 | 4,416 | 5,478 | |||||||||
Inventories | 4,905 | 4,390 | 3,595 | |||||||||
Total current assets (1) | 15,066 | 16,550 | 16,039 | |||||||||
Long-term marketable investments | 1,167 | 1,614 | 473 | |||||||||
Property, plant, and equipment | 27,138 | 26,204 | 23,672 | |||||||||
Restricted cash | 77 | 76 | 81 | |||||||||
Total assets | 46,288 | 47,487 | 43,376 | |||||||||
Accounts payable and accrued expenses | 3,494 | 4,062 | 4,374 | |||||||||
Current debt (2)(4) | 1,346 | 2,634 | 859 | |||||||||
Total current liabilities | 5,397 | 7,361 | 5,754 | |||||||||
Long-term debt (2) | 3,563 | 3,604 | 3,777 | |||||||||
Total Micron shareholders' equity (1)(2)(5) | 35,323 | 34,567 | 32,294 | |||||||||
Noncontrolling interests in subsidiaries (4) | 867 | 863 | 870 | |||||||||
Total equity | 36,190 | 35,430 | 33,164 |
Nine Months Ended | ||||||||
May 30, 2019 | May 31, 2018 | |||||||
Net cash provided by operating activities | $ | 10,956 | $ | 12,245 | ||||
Net cash provided by (used for) investing activities | (8,985 | ) | (6,087 | ) | ||||
Net cash provided by (used for) financing activities | (3,330 | ) | (4,443 | ) | ||||
Depreciation and amortization | 4,047 | 3,552 | ||||||
Investments in capital expenditures | (7,806 | ) | (6,798 | ) | ||||
Repayments of debt | (2,376 | ) | (6,767 | ) | ||||
Payments to acquire treasury stock (5) | (2,727 | ) | (69 | ) | ||||
Proceeds from issuance of stock | 112 | 1,636 | ||||||
Proceeds from issuance of debt (2) | 1,800 | 969 |
(1) | In the first quarter of 2019, we adopted ASU 2014-09 – Revenue from Contracts with Customers (as amended, "ASC 606"), which supersedes nearly all existing revenue recognition guidance under generally accepted accounting principles in the United States. The core principal of ASC 606 is that an entity should recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted ASC 606 in the first quarter of 2019 under the modified retrospective method and, in connection therewith, made certain adjustments to our opening balances as of August 31, 2018. Adjustments to opening balances included an increase to receivables of $114 million, reduction of deferred tax assets of $92 million, increase of other current assets of $30 million, and an increase to retained earnings of $50 million. |
(2) | On February 6, 2019, we issued $600 million, $500 million, and $700 million in principal of senior unsecured notes due in 2024, 2026, and 2029, respectively. On February 8, 2019, we notified holders of our convertible senior notes due in 2043 ("2043G Notes") that we would redeem all of the outstanding 2043G Notes on March 13, 2019. In connection with our notice, we made an irrevocable election to settle any conversions in cash and, as a result, we reclassified $336 million from equity to a derivative debt liability. Holders converted substantially all of the 2043G Notes and, on March 13, 2019, we paid $1.43 billion to settle the conversions. We incurred losses of $316 million and $84 million in the third and second quarters of 2019, respectively, in connection with these transactions. |
(3) | On December 22, 2017, the United States enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"), which imposed a one-time transition tax in 2018 (the "Repatriation Tax") and created a new minimum tax on certain foreign earnings. Our income tax provision consisted of the following: |
3rd Qtr. | 2nd Qtr. | 3rd Qtr. | Nine Months Ended | |||||||||||||||||
May 30, 2019 | February 28, 2019 | May 31, 2018 | May 30, 2019 | May 31, 2018 | ||||||||||||||||
Income tax (provision) benefit, excluding items below | $ | 125 | $ | (216 | ) | $ | (78 | ) | $ | (469 | ) | $ | (161 | ) | ||||||
Utilization of and other changes in net deferred tax assets of MMJ, MMT, and MTTW | (32 | ) | (78 | ) | (35 | ) | (162 | ) | (78 | ) | ||||||||||
Repatriation Tax, net of adjustments related to uncertain tax positions | 42 | 14 | 222 | 9 | (1,113 | ) | ||||||||||||||
Release of the valuation allowance on net deferred tax assets of our U.S. operations | — | — | — | — | 1,337 | |||||||||||||||
Remeasurement of deferred tax assets and liabilities reflecting lower U.S. corporate tax rates | — | — | — | — | (133 | ) | ||||||||||||||
$ | 135 | $ | (280 | ) | $ | 109 | $ | (622 | ) | $ | (148 | ) |
(4) | In January 2019, we exercised our option to acquire Intel's interest in our joint venture, IM Flash Technologies, LLC ("IMFT") and, in the third quarter of 2019, Intel set the closing date of the transaction to occur on October 31, 2019. At closing, we expect to pay Intel approximately $1.4 billion in cash for Intel's noncontrolling interest in IMFT and IMFT member debt. As of May 30, 2019, current debt included $858 million of IMFT member debt. |
(5) | In the third quarter and first nine months of 2019, we repurchased 4 million shares of our common stock for $157 million and 67 million shares of our common stock for $2.66 billion, respectively, under an accelerated share repurchase agreement, Rule 10b5-1 plans, and through open market repurchases. The shares were recorded as treasury stock. |
3rd Qtr. | 2nd Qtr. | 3rd Qtr. | ||||||||||
May 30, 2019 | February 28, 2019 | May 31, 2018 | ||||||||||
GAAP gross margin | $ | 1,828 | $ | 2,864 | $ | 4,723 | ||||||
Stock-based compensation | 24 | 23 | 20 | |||||||||
Start-up and preproduction costs | 23 | 15 | — | |||||||||
Employee severance | — | 13 | — | |||||||||
Other | 9 | 13 | 7 | |||||||||
Non-GAAP gross margin | $ | 1,884 | $ | 2,928 | $ | 4,750 | ||||||
GAAP operating income | $ | 1,010 | $ | 1,957 | $ | 3,953 | ||||||
Stock-based compensation | 58 | 57 | 48 | |||||||||
Start-up and preproduction costs | 23 | 15 | — | |||||||||
Employee severance | — | 17 | — | |||||||||
Restructure and asset impairments | 9 | 51 | 8 | |||||||||
Other | 10 | 13 | 8 | |||||||||
Non-GAAP operating income | $ | 1,110 | $ | 2,110 | $ | 4,017 | ||||||
GAAP net income attributable to Micron | $ | 840 | $ | 1,619 | $ | 3,823 | ||||||
Stock-based compensation | 58 | 57 | 48 | |||||||||
Start-up and preproduction costs | 23 | 15 | — | |||||||||
Employee severance | — | 17 | — | |||||||||
Restructure and asset impairments | 9 | 51 | 8 | |||||||||
Amortization of debt discount and other costs | 10 | 11 | 23 | |||||||||
(Gain) loss on debt repurchases and conversions | 317 | 83 | 168 | |||||||||
(Gain) loss from changes in currency exchange rates | 1 | 3 | 24 | |||||||||
Other | 12 | 13 | 10 | |||||||||
Impact of U.S. income tax reform | (42 | ) | (14 | ) | (222 | ) | ||||||
Estimated tax effects of above, non-cash changes in net deferred income taxes, and assessments of tax exposures | (30 | ) | 116 | 16 | ||||||||
Non-GAAP net income attributable to Micron | $ | 1,198 | $ | 1,971 | $ | 3,898 | ||||||
GAAP weighted-average common shares outstanding - Diluted | 1,129 | 1,141 | 1,235 | |||||||||
Adjustment for capped calls and stock-based compensation | 6 | 8 | 3 | |||||||||
Non-GAAP weighted-average common shares outstanding - Diluted | 1,135 | 1,149 | 1,238 | |||||||||
GAAP diluted earnings per share | $ | 0.74 | $ | 1.42 | $ | 3.10 | ||||||
Effects of the above adjustments | 0.31 | 0.29 | 0.05 | |||||||||
Non-GAAP diluted earnings per share | $ | 1.05 | $ | 1.71 | $ | 3.15 |
• | Stock-based compensation; |
• | Flow-through of business acquisition-related inventory adjustments; |
• | Acquisition-related costs; |
• | Start-up and preproduction costs; |
• | Employee severance; |
• | 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 creditor debt; |
• | Gains and losses from debt repurchases and conversions; |
• | Gains and losses from changes in currency exchange rates; |
• | Gains and losses from business acquisition activities; |
• | Impact of U.S. income tax reform for the Repatriation Tax, release of U.S. valuation allowance, and remeasurement of net deferred taxes reflecting lower U.S. corporate tax rates; and |
• | The estimated tax effects of above, non-cash changes in net deferred income taxes, and assessments of tax exposures. |