| Contacts: | Kipp A. Bedard | Daniel Francisco |
| Investor Relations | Media Relations | |
| kbedard@micron.com | dfrancisco@micron.com | |
| (208) 368-4465 | (208) 368-5584 |
| 2nd Qtr. | 1st Qtr. | 2nd Qtr. | Six Months Ended | |||||||||||||||||
| Feb. 28, | Nov. 29, | Mar. 1, | Feb. 28, | Mar. 1, | ||||||||||||||||
2013 | 2012 | 2012 | 2013 | 2012 | ||||||||||||||||
| Net sales | $ | 2,078 | $ | 1,834 | $ | 2,009 | $ | 3,912 | $ | 4,099 | ||||||||||
| Cost of goods sold | 1,712 | 1,617 | 1,799 | 3,329 | 3,584 | |||||||||||||||
Gross margin | 366 | 217 | 210 | 583 | 515 | |||||||||||||||
| Selling, general and administrative | 123 | 119 | 174 | 242 | 325 | |||||||||||||||
| Research and development | 214 | 224 | 222 | 438 | 452 | |||||||||||||||
| Other operating (income) expense, net (1)(2) | 52 | (29 | ) | 18 | 23 | 13 | ||||||||||||||
Operating loss | (23 | ) | (97 | ) | (204 | ) | (120 | ) | (275 | ) | ||||||||||
| Interest income (expense), net | (53 | ) | (54 | ) | (33 | ) | (107 | ) | (66 | ) | ||||||||||
| Other non-operating income (expense), net (2) | (159 | ) | (59 | ) | 37 | (218 | ) | 26 | ||||||||||||
| Income tax (provision) benefit (3) | 9 | (13 | ) | (9 | ) | (4 | ) | (7 | ) | |||||||||||
| Equity in net losses of equity method investees | (58 | ) | (52 | ) | (73 | ) | (110 | ) | (147 | ) | ||||||||||
| Net income attributable to noncontrolling interests | (2 | ) | -- | -- | (2 | ) | -- | |||||||||||||
Net loss attributable to Micron | $ | (286 | ) | $ | (275 | ) | $ | (282 | ) | $ | (561 | ) | $ | (469 | ) | |||||
| Loss per share: | ||||||||||||||||||||
Basic | $ | (0.28 | ) | $ | (0.27 | ) | $ | (0.29 | ) | $ | (0.55 | ) | $ | (0.48 | ) | |||||
Diluted | (0.28 | ) | (0.27 | ) | (0.29 | ) | (0.55 | ) | (0.48 | ) | ||||||||||
| Number of shares used in per share calculations: | ||||||||||||||||||||
Basic | 1,016.0 | 1,013.7 | 982.8 | 1,014.9 | 982.1 | |||||||||||||||
Diluted | 1,016.0 | 1,013.7 | 982.8 | 1,014.9 | 982.1 | |||||||||||||||
As of | ||||||||||||
| Feb. 28, | Nov. 29, | Aug. 30, | ||||||||||
2013 | 2012 | 2012 | ||||||||||
| Cash and short-term investments | $ | 2,228 | $ | 2,271 | $ | 2,559 | ||||||
| Receivables | 1,226 | 1,139 | 1,289 | |||||||||
| Inventories | 1,721 | 1,831 | 1,812 | |||||||||
| Total current assets | 5,364 | 5,315 | 5,758 | |||||||||
| Long-term marketable investments | 546 | 527 | 374 | |||||||||
| Property, plant and equipment, net | 6,973 | 7,199 | 7,103 | |||||||||
| Total assets | 13,912 | 14,067 | 14,328 | |||||||||
| Accounts payable and accrued expenses | 1,498 | 1,584 | 1,641 | |||||||||
| Current portion of long-term debt | 350 | 266 | 224 | |||||||||
| Total current liabilities | 2,117 | 2,138 | 2,243 | |||||||||
| Long-term debt (4)(5) | 3,301 | 3,169 | 3,038 | |||||||||
| Total Micron shareholders’ equity | 7,231 | 7,469 | 7,700 | |||||||||
| Noncontrolling interests in subsidiaries | 729 | 717 | 717 | |||||||||
| Total equity (4)(5) | 7,960 | 8,186 | 8,417 | |||||||||
| Six Months Ended | ||||||||
| Feb. 28, | Mar. 1, | |||||||
2013 | 2012 | |||||||
| Net cash provided by operating activities | $ | 470 | $ | 978 | ||||
| Net cash used for investing activities | (999 | ) | (1,183 | ) | ||||
| Net cash provided by financing activities | 131 | 139 | ||||||
| Depreciation and amortization | 970 | 1,167 | ||||||
| Expenditures for property, plant and equipment | (761 | ) | (1,089 | ) | ||||
| Payments on equipment purchase contracts | (130 | ) | (86 | ) | ||||
| (1) | Other operating (income) expense consisted of the following: |
| 2nd Qtr. | 1st Qtr. | 2nd Qtr. | Six Months Ended | |||||||||||||||||
| Feb. 28, | Nov. 29, | Mar. 1, | Feb. 28, | Mar. 1, | ||||||||||||||||
2013 | 2012 | 2012 | 2013 | 2012 | ||||||||||||||||
| Loss on impairment of MIT | $ | 62 | $ | -- | $ | -- | $ | 62 | $ | -- | ||||||||||
| (Gain) loss on disposition of property, plant and equipment | (10 | ) | (5 | ) | 5 | (15 | ) | 6 | ||||||||||||
| Other | -- | (24 | ) | 13 | (24 | ) | 7 | |||||||||||||
| $ | 52 | $ | (29 | ) | $ | 18 | $ | 23 | $ | 13 | ||||||||||
| On February 25, 2013, the company entered into an agreement to sell Micron Technology Italia, Srl., (“MIT”) a wholly-owned subsidiary, including its 200 millimeter semiconductor wafer fabrication facility assets in Avezzeno, Italy, to LFoundry Marsica S.R.L. (“LFoundry”). As consideration for the shares of MIT, the company expects to receive a long-term note from LFoundry. Under the terms of the agreements, the company will assign to LFoundry its supply agreement with Aptina Imaging Corporation (“Aptina”) for CMOS image sensors manufactured at the Avezzano facility. The assets and liabilities of MIT were classified as held for sale in the second quarter of fiscal 2013 and were written down to their estimated fair values. As a result, in the second quarter of fiscal 2013, the company recorded an impairment loss of $62 million. |
| Other operating income for the first quarter of fiscal 2013 included a gain of $25 million resulting from the termination of a lease by Transform Solar to a portion of the company’s manufacturing facilities in Boise, Idaho. |
| (2) | Other non-operating income (expense) consisted of the following: |
| 2nd Qtr. | 1st Qtr. | 2nd Qtr. | Six Months Ended | |||||||||||||||||
| Feb. 28, | Nov. 29, | Mar. 1, | Feb. 28, | Mar. 1, | ||||||||||||||||
2013 | 2012 | 2012 | 2013 | 2012 | ||||||||||||||||
| Gain (loss) from changes in currency exchange rates | $ | (127 | ) | $ | (59 | ) | $ | (2 | ) | $ | (186 | ) | $ | (13 | ) | |||||
| Loss on extinguishment of debt | (31 | ) | -- | -- | (31 | ) | -- | |||||||||||||
| Gain from disposition of investments | -- | -- | 39 | -- | 39 | |||||||||||||||
| Other | (1 | ) | -- | -- | (1 | ) | -- | |||||||||||||
| $ | (159 | ) | $ | (59 | ) | $ | 37 | $ | (218 | ) | $ | 26 | ||||||||
| Gain (loss) from changes in currency exchange rates in the second quarter and first six months of fiscal 2013 included currency losses of $120 million and $178 million, respectively, from changes in the market value of currency hedges executed in connection with the company’s planned acquisition of Elpida Memory, Inc. and Rexchip Electronics Corporation. Loss from extinguishment of debt for the second quarter of fiscal 2013 included a $31 million loss recognized in connection with the partial repurchase of the 2014 Notes. |
In order to improve comparability with the company’s industry peers, gains and losses from currency exchange rates have been reclassified to from operating to non-operating. As a result, $59 million of losses for the first quarter of fiscal 2013 and $2 million and $13 million of losses for the second quarter and first six months of fiscal 2012, respectively, were reclassified from the amounts previously reported in other operating (income) expense to other non-operating income (expense). |
| (3) | Income taxes for the second quarter of fiscal 2013 included tax benefits of $19 million related to favorable adjustments in certain jurisdictions. Income taxes for the first six months of fiscal 2012 included a tax benefit of $14 million related to the favorable resolution of certain prior year tax matters. Remaining taxes in fiscal 2013 and 2012 primarily reflected taxes on the company’s non-U.S. operations. The company has a valuation allowance for its net deferred tax asset associated with its U.S. operations. Taxes attributable to the company’s U.S. operations in fiscal 2013 and 2012 were substantially offset by changes in the valuation allowance. |
| (4) | On February 12, 2013, the company issued $300 million of 1.625% Convertible Senior Notes with a stated maturity of February 2033 (the “2033E Notes”) and $300 million of 2.125% Convertible Senior Notes with a stated maturity of February 2033 (the “2033F Notes” and, together with the 2033E Notes, the “2033 Notes”). Issuance costs for the 2033 Notes totaled $16 million. The initial conversion rates for the 2033 Notes are 91.4808 shares of common stock per $1,000 principal amount, equivalent to initial conversion prices of approximately $10.93 per share of common stock. Upon the issuance of the 2033 Notes, the company recorded $526 million of debt, $72 million of additional capital and $14 million of deferred debt issuance costs (included in other noncurrent assets). The difference between the debt recorded at inception and the principal amount ($31 million for the 2033E Notes and $43 million for the 2033F Notes) is being accreted to principal through interest expense through February 2018 for the 2033E Notes and February 2020 for the 2033F Notes, the expected life of the notes. |
| Concurrent with the offering of the 2033 Notes, the company entered into capped call transactions (the “2013E Capped Calls” and “2013F Capped Calls”) that have initial strike prices of approximately $10.93 per share, subject to certain adjustments, which are equal to the initial conversion prices of the 2033 Notes. The Capped Calls have cap prices of $14.51 per share and are intended to reduce the potential dilution upon conversion of the 2033E and 2033F Notes. The Capped Calls are considered capital transactions and the related cost of $48 million was recorded as a charge to additional capital. |
During the first quarter of fiscal 2013, the company entered into two credit facilities. The first was a revolving credit facility providing for borrowings of up to $255 million. Amounts drawn under the facility would be collateralized by certain accounts receivable. As of the end of the second quarter of fiscal 2013, no amounts had been drawn under the facility. The second was a term note providing for borrowings of up to $214 million. Amounts drawn under the facility are collateralized by semiconductor production equipment. As of the end of the second quarter of fiscal 2013, the note was fully drawn. |
| (5) | In connection with the offering of the 2033 Notes, the company repurchased $464 million in aggregate principal amount of its 2014 Notes for $477 million in cash in the second quarter of fiscal 2013. As a result, the company reduced debt, accrued interest and debt issuance costs by an aggregate of $431 million; reduced equity by $15 million for the equity component of the 2014 Notes; and recognized a loss of $31 million. |
