01—Abstract
Summary
Summary of the 10-K filed October 28, 2013. Cited figures are marked; the original filing is the authoritative source.
Micron Technology, Inc.'s 2013 10-K filing details a transformative year, highlighted by the significant acquisition of Elpida Memory, Inc. This strategic move aimed to bolster Micron's market position by expanding its DRAM product portfolio and manufacturing scale.
The company reported increased net sales driven by higher DRAM and NAND Flash volumes, although this was partially offset by declining average selling prices. Micron continued its focus on technological advancements, investing heavily in R&D for next-generation memory products, including DDR4 and advanced NAND Flash technologies. Financially, the company navigated a challenging market characterized by price volatility, but the Elpida acquisition, despite its complexities and associated risks, was expected to provide substantial benefits.
The company also managed its debt and capital structure actively throughout the year. Investors would be closely watching the integration of Elpida, the ongoing market dynamics for memory products, and Micron's ability to manage its costs while continuing to innovate.
02—Key points
Key Highlights
- Completed the acquisition of Elpida Memory, Inc. for $615 million and a 24% interest in Rexchip Electronics Corporation for $334 million, significantly expanding Micron's DRAM capacity and product offerings.
- Reported a net income of $1.19 billion for the fiscal year 2013, a substantial turnaround from a net loss of $1.03 billion in the prior year, largely influenced by a $1.48 billion gain on the acquisition of Elpida.
- Total net sales increased by 10% to $9.07 billion from $8.23 billion in fiscal year 2012, driven by higher DRAM and NAND Flash sales volumes.
- DRAM sales increased by 37% due to higher volumes and the inclusion of Elpida's operations, while NAND Flash sales remained relatively flat.
- The company continued to invest in R&D, with R&D expenses increasing slightly to $931 million, focusing on process technology advancements and new product development.
- Micron continued to manage significant debt levels, with total long-term debt increasing to $4.45 billion.
- The company faced ongoing risks related to competitive pricing, technological transitions, currency fluctuations (especially with the yen post-Elpida acquisition), and legal proceedings, including patent litigation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Micron Technology Inc kept $0.13.
- Revenue$9.07B100.0%
- Cost of revenue−$7.23B79.6%
- Gross profit$1.85B20.4%
- Operating costs−$1.61B17.8%
- Operating income$236.0M2.6%
- Interest, other & tax$954.0M10.5%
- Net income$1.19B13.1%
Where FY2013 revenue went
$9.07B- Cost of revenue: $7.23B, 80% of revenue
- Operating income: $236.0M, 2.6% of revenue
- R&D: $931.0M, 10% of revenue
- SG&A: $562.0M, 6.2% of revenue
- Other operating costs: $118.0M, 1.3% of revenue
Kept 2.6% as operating incomeOperating income $236.0M · 2.6%Other operating costs $118.0M · 1.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed October 28, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $9.07B$8.23B | +10.2% |
| Cost of Revenue | $7.23B$7.27B | −0.6% |
| Gross Profit | $1.85B$968.00M | +90.8% |
| R&D Expenses | $931.00M$918.00M | +1.4% |
| SG&A Expenses | $562.00M$620.00M | −9.4% |
| Operating Income | $236.00M-$612.00M | +138.6% |
| Interest Expense | $231.00M$179.00M | +29.1% |
| Net Income | $1.19B-$1.03B | +215.3% |
| EPS (Basic) | $1.16$-1.04 | +211.5% |
| EPS (Diluted) | $1.13$-1.04 | +208.7% |
| Shares Outstanding (Basic) | 1.02B991.00M | +3.1% |
| Shares Outstanding (Diluted) | 1.06B991.00M | +6.7% |
05—Questions
Frequently Asked Questions
What was the most significant event for Micron in fiscal year 2013?
The most significant event was the completion of the acquisition of Elpida Memory, Inc. on July 31, 2013, for $615 million, along with a 24% interest in Rexchip Electronics Corporation for $334 million. This acquisition substantially expanded Micron's DRAM manufacturing capacity and product portfolio.
How did the Elpida acquisition impact Micron's financial results?
The acquisition led to a reported gain of $1.48 billion in 2013 due to the fair value of net assets acquired exceeding the purchase price. It also contributed $355 million in net sales and $46 million in operating income (loss) for the partial period included in fiscal year 2013, and significantly increased total assets and debt.
What is Micron's outlook regarding product demand and pricing?
Micron reported increased sales volumes for DRAM and NAND Flash products, driven by higher demand in computing, mobile, and SSD markets. However, the company noted that declines in average selling prices (ASPs) for its memory products continued, impacting gross margins, and expected these market conditions to persist, leading to a focus on cost reductions and manufacturing efficiencies.
What are the key risks identified by Micron in this filing?
Key risks include intense competition leading to price declines, the inability to reduce per-gigabit manufacturing costs in line with ASP declines, significant risks associated with the Elpida acquisition (integration challenges, leverage, currency exposure), potential disruptions in manufacturing, intellectual property litigation (particularly with Rambus), and broader economic downturns affecting demand for electronic devices.
06—Continue