Micron Technology, Inc. Reports Results for the Third Quarter of Fiscal 2016

BOISE, Idaho, June 30, 2016 (GLOBE NEWSWIRE) — Micron Technology, Inc., (NASDAQ:MU) today announced results of operations for its third quarter of fiscal 2016, which ended June 2, 2016. Revenues for the third quarter of fiscal 2016 were $2.90 billion and were slightly lower compared to the second quarter of fiscal 2016 and 25 percent lower compared to the third quarter of fiscal 2015. Cash flows from operations were $389 million for the third quarter of fiscal 2016.

GAAP Income and Per Share Data – On a GAAP(1) basis, net loss attributable to Micron shareholders for the third quarter of fiscal 2016 was $215 million, or ($0.21) per diluted share, compared to net loss of $97 million, or ($0.09) per diluted share, for the second quarter of fiscal 2016.

Non-GAAP Income and Per Share Data – On a non-GAAP(2) basis, net loss attributable to Micron shareholders for the third quarter of fiscal 2016 was $79 million, or ($0.08) per diluted share, compared to net loss of $48 million, or ($0.05) per diluted share, for the second quarter of fiscal 2016. For a reconciliation of GAAP to non-GAAP results, see the accompanying financial tables and footnotes.

“Although we have made good progress in deploying our advanced DRAM and NAND technologies, we continue to face challenging market conditions,” said Micron CEO Mark Durcan. “To address the current market environment and strengthen our competitive position, we are implementing a number of initiatives to reduce costs, drive greater efficiencies, and increase focus on our strategic priorities.”

The initiatives, which include a global workforce reduction, are expected to save the company over $300 million in fiscal 2017.

Revenues for the third quarter of fiscal 2016 were slightly lower compared to the second quarter of fiscal 2016 as increases in sales of DRAM products were offset by decreases in sales of trade Non-Volatile products. DRAM revenues increased in the third quarter of fiscal 2016 as a result of a 22 percent increase in unit sales partially offset by an 11 percent decline in average selling prices. Sales of trade Non-Volatile products decreased due to a 10 percent decrease in units sales and a six percent decline in average selling prices. The company’s overall consolidated gross margin of 17 percent for the third quarter of fiscal 2016 was three percent lower compared to the second quarter primarily due to lower average selling prices partially offset by manufacturing cost reductions.

Investments in capital expenditures for the third quarter of fiscal 2016 were $1.69 billion. The company ended the third quarter of fiscal 2016 with cash and marketable investments of $5.65 billion.

The company will host a conference call Thursday, June 30, 2016 at 2:30 p.m. MT to discuss its financial results. The call, audio, and slides will be available online at http://edge.media-server.com/m/p/4thwofg6. A webcast replay will be available on the company’s website until June 30, 2017. A taped audio replay of the conference call will also be available at 1-404-537-3406 or 1-855-859-2056 (conference number: 29438318) beginning at 5:30 p.m. MT, Thursday, June 30, 2016 and continuing through Friday, July 8, 2016. For Investor Relations and other company updates, follow @MicronTech on Twitter at https://twitter.com/MicronTech.

Micron Technology, Inc., is a global leader in advanced semiconductor systems. Micron’s broad portfolio of high-performance memory technologies—including DRAM, NAND, and NOR Flash—is the basis for solid state drives, modules, multichip packages, and other system solutions. Backed by more than 35 years of technology leadership, Micron’s memory solutions enable the world’s most innovative computing, consumer, enterprise storage, networking, mobile, embedded, and automotive applications. Micron’s common stock is traded on the NASDAQ under the MU symbol. To learn more about Micron Technology, Inc., visit www.micron.com.

(1) GAAP represents U.S. Generally Accepted Accounting Principles.
(2) Non-GAAP represents GAAP excluding the impact of certain activities which the company’s management excludes in analyzing the company’s operating results and understanding trends in the company’s earnings. Non-GAAP also includes the impact on shares used in per share calculations of the company’s outstanding capped call transactions. For a reconciliation of GAAP to non-GAAP results, see the accompanying financial tables and footnotes.

MICRON TECHNOLOGY, INC.
CONSOLIDATED FINANCIAL SUMMARY
(in millions except per share amounts)

3rd Qtr. 2nd Qtr. 3rd Qtr. Nine Months Ended
June 2,
2016
March 3,
2016
June 4,
2015
June 2,
2016
June 4,
2015
Net sales $ 2,898 $ 2,934 $ 3,853 $ 9,182 $ 12,592
Cost of goods sold 2,400 2,355 2,651 7,256 8,347
Gross margin 498 579 1,202 1,926 4,245
Selling, general, and administrative 148 175 169 502 549
Research and development 382 403 406 1,206 1,161
Other operating (income) expense, net (5 ) 6 (4 ) 18 (36 )
Operating income (loss) (27 ) (5 ) 631 200 2,571
Interest income (expense), net (99 ) (85 ) (88 ) (269 ) (246 )
Other non-operating income (expense), net (1) (34 ) (6 ) (16 ) (44 ) (71 )
Income tax (provision) benefit (2) (15 ) (5 ) (104 ) (16 ) (226 )
Equity in net income (loss) of equity method investees (40 ) 5 68 24 400
Net (income) loss attributable to noncontrolling interests (1 ) (1 )
Net income (loss) attributable to Micron $ (215 ) $ (97 ) $ 491 $ (106 ) $ 2,428
Earnings (loss) per share:
Basic $ (0.21 ) $ (0.09 ) $ 0.46 $ (0.10 ) $ 2.26
Diluted (0.21 ) (0.09 ) 0.42 (0.10 ) 2.05
Number of shares used in per share calculations:
Basic 1,036 1,036 1,073 1,035 1,072
Diluted 1,036 1,036 1,170 1,035 1,185

CONSOLIDATED FINANCIAL SUMMARY, Continued

As of June 2,
2016
March 3,
2016
September 3,
2015
Cash and short-term investments $ 4,981 $ 4,035 $ 3,521
Receivables 2,073 1,984 2,507
Inventories 2,920 2,608 2,340
Total current assets 10,110 8,805 8,596
Long-term marketable investments 671 1,108 2,113
Property, plant, and equipment, net 13,209 11,819 10,554
Total assets 27,001 24,819 24,143
Accounts payable and accrued expenses 3,599 3,087 2,611
Current debt (1)(3) 712 1,125 1,089
Total current liabilities 4,500 4,411 3,905
Long-term debt (1)(3) 8,919 6,494 6,252
Total Micron shareholders’ equity 12,187 12,264 12,302
Noncontrolling interests in subsidiaries 847 975 937
Total equity 13,034 13,239 13,239

 

Nine Months Ended
June 2,
2016
June 4,
2015
Net cash provided by operating activities $ 2,272 $ 4,178
Net cash provided by (used for) investing activities (1,642 ) (4,722 )
Net cash provided by (used for) financing activities 1,703 215
Depreciation and amortization 2,360 2,062
Expenditures for property, plant, and equipment (3,894 ) (2,256 )
Proceeds from issuance of debt and equipment sale-leaseback transactions 2,704 2,463
Repayments of debt (689 ) (2,051 )
Cash paid to acquire treasury stock (147 ) (245 )

(1) Other non-operating income (expense) consisted of the following:

3rd Qtr. 2nd Qtr. 3rd Qtr. Nine Months Ended
June 2,
2016
March 3,
2016
June 4,
2015
June 2,
2016
June 4,
2015
Loss from changes in currency exchange rates $ (5 ) $ (5 ) $ 1 $ (13 ) $ (26 )
Loss on restructure of debt (3 ) (18 ) (4 ) (48 )
Other (26 ) (1 ) 1 (27 ) 3
$ (34 ) $ (6 ) $ (16 ) $ (44 ) $ (71 )

In the third quarter of fiscal 2016, the company recognized other non-operating expense of $30 million to write off indemnification receivables upon the resolution of uncertain tax positions. In the first nine months of fiscal 2015, the company recognized losses of $48 million from transactions to restructure its debt, including conversions, settlements, and repurchases of convertible notes, and the early repayment of a note.

(2) Income taxes for the third quarter of fiscal 2016, second quarter of fiscal 2016, and third quarter of fiscal 2015 included provisions of $71 million, $10 million and $67 million, respectively, related to utilization of, and other changes in, deferred tax assets of MMJ and MMT. Income taxes for the third and second quarters of fiscal 2016 also included

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