10-KPeriod: FY2015

MICRON TECHNOLOGY INC Annual Report, Year Ended Sep 3, 2015

Filed October 27, 2015For Securities:MU

Summary

Micron Technology, Inc. reported net sales of $16.19 billion for the fiscal year ended September 3, 2015, a slight decrease from the previous year. The company's gross margin was 32%, down from 33% in 2014, primarily due to declines in average selling prices for its memory products, which outpaced manufacturing cost reductions. The company is navigating a highly competitive semiconductor memory market, facing pressure from significant price declines. To address this, Micron is focusing on technological advancements, including the development of 3D NAND Flash and 3D XPoint™ memory, and leveraging strategic partnerships like the IMFT joint venture with Intel. Despite the challenging market conditions, Micron reported a net income of $2.9 billion for the fiscal year, demonstrating resilience and continued investment in its product roadmap and manufacturing capabilities.

Financial Highlights

54 data points
Beta

Revenue

$16.19B

32.2% Gross Margin

Net Income

$2.90B

17.9% Net Margin

EPS (Diluted)

$2.47

Total Assets

$24.14B

Cash & Equivalents

$2.29B

Free Cash Flow

$1.19B

Financial Statements
Beta
Revenue$16.19B
Cost of Revenue$10.98B
Gross Profit$5.21B
R&D Expenses$1.54B
SG&A Expenses$719.00M
Operating Income$3.00B
Interest Expense$371.00M
Net Income$2.90B
EPS (Basic)$2.71
EPS (Diluted)$2.47
Shares Outstanding (Basic)1.07B
Shares Outstanding (Diluted)1.17B

Key Highlights

  • 1Net sales for fiscal year 2015 were $16.19 billion, a slight decrease from $16.36 billion in 2014.
  • 2Gross margin decreased to 32% in 2015 from 33% in 2014, primarily due to lower average selling prices outstripping manufacturing cost reductions.
  • 3The company is actively investing in next-generation technologies, including 3D NAND Flash and 3D XPoint™ memory, indicating a focus on future product development.
  • 4Micron operates through four business segments: Compute and Networking (CNBU), Mobile (MBU), Storage (SBU), and Embedded (EBU), with CNBU being the largest segment by revenue.
  • 5The company faces intense competition, with significant price declines impacting its memory products, a key risk factor highlighted in the report.
  • 6Micron's financial results were significantly influenced by the acquisition of Elpida (MMJ) in 2013, which increased its manufacturing capacity and product diversity.
  • 7Significant R&D expenses were incurred, totaling $1.54 billion in 2015, reflecting continued investment in innovation and process technology.

Frequently Asked Questions

Micron's primary revenue driver was DRAM products, accounting for 64% of total net sales. Non-Volatile Memory, primarily NAND Flash, represented 33% of net sales. The Compute and Networking Business Unit (CNBU) was the largest segment, contributing 42% of net sales, driven by DRAM products.

Key risks include dramatic declines in average selling prices for memory products, the ability to maintain or improve gross margins amidst increasing manufacturing complexity and transition to new process technologies, and intense competition from larger players. The company also highlighted risks associated with debt obligations, potential disruptions in manufacturing processes, and risks related to its joint ventures and international operations.

Micron is significantly investing in and developing new memory technologies, notably 3D NAND Flash, which stacks layers of data storage cells for higher capacity and efficiency, and 3D XPoint™ memory, a new class of non-volatile memory with an innovative cross-point architecture aimed at fast and efficient read/write processes. The company is also transitioning to smaller line-width process technologies for its DRAM products.

The acquisition of Elpida (MMJ) in July 2013 significantly increased Micron's manufacturing scale and product diversity. It added a 300mm DRAM wafer fabrication facility in Japan, another in Taiwan, and an assembly and test facility in Japan, contributing approximately 30% to Micron's total wafer capacity. The acquired operations primarily supported the Mobile Business Unit (MBU) and Compute and Networking Business Unit (CNBU).