8-KMaterial Agreements

MICRON TECHNOLOGY INC 8-K Report, Agreement Terminated (Aug 28, 2013)

Filed August 28, 2013For Securities:MU

Summary

Micron Technology Inc. (MU) has filed an 8-K report detailing the early termination of several currency exchange transactions. These transactions involved forward contracts to purchase Japanese Yen and put options to sell Japanese Yen, with a significant notional value of 80 billion Yen each. The termination was directly linked to and occurred in connection with the company's acquisition of Elpida Memory, Inc., which closed shortly before this filing. This termination suggests a strategic adjustment by Micron in its hedging strategies, likely to align with the financial implications and operational integration following the Elpida acquisition. Investors should note that the early termination of these derivative instruments, which had specific expiration dates in September 2013, indicates a proactive management approach to financial risk and a potential recalibration of currency exposure in light of the new corporate structure. The details provided, such as the weighted-average prices and strike prices, offer insight into the specific terms of the terminated agreements.

Key Highlights

  • 1Micron Technology Inc. terminated material definitive agreements related to currency exchange transactions on August 20, 2013.
  • 2The terminated agreements included forward contracts to buy 80 billion Yen and put options to sell 80 billion Yen.
  • 3These transactions were with notable financial institutions: Deutsche Bank AG, Morgan Stanley, and J. Aron & Company (an affiliate of Goldman Sachs Group, Inc.).
  • 4The forward contracts were set to buy Yen at a weighted-average price of 91.000 Yen per dollar.
  • 5The put options had a weighted-average strike price of 94.238 Yen per dollar for selling Yen.
  • 6The early termination was directly related to the closing of Micron's acquisition of Elpida Memory, Inc.
  • 7The terminated contracts were originally scheduled to expire on September 25, 2013.

Frequently Asked Questions

Micron terminated these currency exchange transactions early as a direct consequence of the closing of its acquisition of Elpida Memory, Inc. The acquisition likely altered the company's overall financial exposure and hedging needs, necessitating the termination of these specific derivative contracts.

The transactions involved a substantial notional value of 80 billion Japanese Yen each, encompassing both forward contracts to buy Yen and put options to sell Yen. This indicates Micron was actively managing its exposure to currency fluctuations related to the Yen.

This action suggests that Micron's management is proactively adjusting its financial strategies in response to major corporate events like the Elpida acquisition. It may indicate a shift in currency risk management priorities or the integration of Elpida's financial structures into Micron's overall hedging approach. Investors should monitor how Micron's currency exposure evolves post-acquisition.

The 8-K filing does not explicitly detail any costs or gains/losses incurred from the early termination of these agreements. However, early termination of derivative contracts can sometimes involve financial settlements or adjustments, the specifics of which are not provided in this particular filing.