10-QPeriod: Q2 FY2011

MICRON TECHNOLOGY INC Quarterly Report for Q1 Ended Dec 2, 2010

Filed January 11, 2011For Securities:MU

Summary

Micron Technology, Inc. reported net sales of $2,252 million for the quarter ended December 2, 2010, a significant increase from $1,740 million in the same quarter of the previous year. This growth was primarily driven by the integration of Numonyx Holdings B.V., acquired in May 2010, which contributed $573 million in net sales to the Numonyx segment. Despite the revenue increase, net income attributable to Micron decreased to $155 million ($0.15 per diluted share) from $204 million ($0.23 per diluted share) year-over-year. This was influenced by higher cost of goods sold, increased selling, general, and administrative expenses, and a substantial loss of $114 million in other non-operating income/expense. The company's balance sheet shows total assets remaining relatively stable at $14,617 million. Total liabilities decreased slightly to $4,623 million. Significant changes include a decrease in cash and equivalents to $2,411 million from $2,913 million, and an increase in accounts payable and accrued expenses. The company also executed a debt restructure in November 2010, exchanging and repurchasing convertible notes, which resulted in a loss of $111 million related to these transactions. Micron continues to invest heavily in property, plant, and equipment, with capital expenditures of $465 million in the quarter.

Financial Highlights

51 data points
Beta

Revenue

$2.26B

19.3% Gross Margin

Net Income

$72.00M

3.2% Net Margin

EPS (Diluted)

$0.07

Total Assets

$14.40B

Cash & Equivalents

$2.18B

Free Cash Flow

$85.00M

Financial Statements
Beta
Revenue$2.26B
Cost of Revenue$1.82B
Gross Profit$435.00M
R&D Expenses$186.00M
SG&A Expenses$146.00M
Operating Income$179.00M
Interest Expense$28.00M
Net Income$72.00M
EPS (Basic)$0.07
EPS (Diluted)$0.07
Shares Outstanding (Basic)988.10M
Shares Outstanding (Diluted)1.04B

Key Highlights

  • 1Net sales increased by 29% year-over-year to $2,252 million, driven by the Numonyx acquisition.
  • 2Net income attributable to Micron decreased by 24% year-over-year to $155 million, impacting earnings per diluted share to $0.15 from $0.23.
  • 3The company reported a significant gain of $200 million from a patent cross-license agreement with Samsung in the quarter.
  • 4Cash and equivalents decreased by $502 million sequentially to $2,411 million.
  • 5Micron completed a debt restructure involving convertible notes, resulting in a $111 million loss related to these transactions.
  • 6Capital expenditures for property, plant, and equipment totaled $465 million for the quarter, indicating continued investment in infrastructure.
  • 7The company faces ongoing legal proceedings, including antitrust and patent litigation, with potential material impacts on financial condition.

Frequently Asked Questions

The primary driver of the revenue increase was the acquisition and integration of Numonyx Holdings B.V., which contributed significantly to the newly formed Numonyx segment.

Net income decreased due to an increase in the cost of goods sold, higher selling, general, and administrative expenses, and a significant other non-operating expense of $114 million. Additionally, a debt restructure resulted in a $111 million loss.

Micron received a $200 million payment in this quarter from Samsung for a 10-year patent cross-license agreement, which significantly boosted operating income for the quarter. Additional payments are expected in early 2011.

Micron is involved in several significant legal proceedings, including antitrust cases related to DRAM price-fixing and patent litigation, most notably with Rambus. While the company has settled some indirect purchaser cases for approximately $67 million, adverse outcomes in ongoing litigation could result in significant liabilities and materially impact the company's financial condition and results of operations.