EX-99.1 2 a2018q1exhibit991-pressrel.htm 2018 Q1 EXHIBIT 99.1 EARNINGS RELEASE Exhibit


Exhibit 99.1
FOR IMMEDIATE RELEASE

Contacts:
Shanye Hudson
Marc Musgrove
 
Investor Relations
Media Relations
 
shudson@micron.com
mmusgrove@micron.com
 
(208) 492-1205
(208) 363-2405


MICRON TECHNOLOGY, INC., REPORTS RESULTS FOR THE
FIRST QUARTER OF FISCAL 2018

Robust revenue and profitability growth supported by
focused execution on strategic priorities

BOISE, Idaho, December 19, 2017 – Micron Technology, Inc., (NASDAQ: MU) today announced results of operations for its first quarter of fiscal 2018, which ended November 30, 2017.

Fiscal Q1 2018 Highlights
•Revenues of $6.80 billion, 71 percent higher compared with the same period last year
•GAAP net income of $2.68 billion, or $2.19 per diluted share
•Non-GAAP net income of $2.99 billion, or $2.45 per diluted share
•
Operating cash flow of $3.64 billion, 220 percent higher compared with the same period last year

"Micron's strong results were driven by double-digit sequential revenue growth in mobile, server and SSD applications, with expanded gross margins and improved profitability," said Micron President and CEO Sanjay Mehrotra.

"We are making solid progress on our strategic priorities to drive cost competitiveness, deploy high value solutions and strengthen our balance sheet.  We believe these actions will position Micron to benefit from the broad demand trends ahead of us."

Quarterly Financial Results
(in millions except per share amounts)
GAAP (1)
 
Non-GAAP (2)
FQ1-18
FQ4-17
FQ1-17
 
FQ1-18
FQ4-17
FQ1-17
Net sales
$
6,803
 
$
6,138
 
$
3,970
 
 
$
6,803
 
$
6,138
 
$
3,970
 
Gross margin
$
3,747
 
$
3,112
 
$
1,011
 
 
$
3,769
 
$
3,147
 
$
1,032
 
percent of net sales
55.1
%
 
50.7
%
 
25.5
%
 
 
55.4
%
 
51.3
%
 
26.0
%
 
Operating income
$
3,097
 
$
2,502
 
$
359
 
 
$
3,157
 
$
2,546
 
$
438
 
percent of net sales
45.5
%
 
40.8
%
 
9.0
%
 
 
46.4
%
 
41.5
%
 
11.0
%
 
Net income attributable to Micron
$
2,678
 
$
2,368
 
$
180
 
 
$
2,994
 
$
2,386
 
$
335
 
Diluted earnings per share
$
2.19
 
$
1.99
 
$
0.16
 
 
$
2.45
 
$
2.02
 
$
0.32
 

Revenues for the first quarter of 2018 were 11 percent higher compared to the fourth quarter of 2017, reflecting increased demand for our mobile, server, and SSD products. Our overall consolidated gross margin of 55.1 percent for the first quarter of 2018 was higher compared to 50.7 percent for the fourth




quarter of 2017 and reflects margin expansion for both DRAM and Trade NAND products supported by ongoing strength in the pricing environment and a favorable product mix.

Investments in capital expenditures, net of amounts funded by partners, were $1.92 billion for the first quarter of 2018. During the quarter, we raised $1.36 billion from an equity offering and repurchased or converted $2.36 billion principal amount of our debt, lowering our total face value debt to $9.34 billion exiting the quarter. We ended the first quarter with cash, marketable investments, and restricted cash of $6.61 billion.

We will host a conference call on Tuesday, December 19, 2017 at 2:30 p.m. MT to discuss our financial results. The call, audio, and slides will be available online at investors.micron.com. A webcast replay will be available on our website until December 19, 2018. A taped audio replay of the conference call will also be available at 1-404-537-3406 or 1-855-859-2056 (conference number: 2696628) beginning at 5:30 p.m. MT, Tuesday, December 19, 2017 and continuing through Tuesday, December 26, 2017. For Investor Relations and other company updates, follow @MicronTech on Twitter at twitter.com/MicronTech.

We are an industry leader in innovative memory and storage solutions. Through our global brands – Micron®, Crucial®, and Ballistix® – our broad portfolio of high-performance memory and storage technologies, including DRAM, NAND, NOR Flash, and 3D XPoint™ memory, is transforming how the world uses information to enrich life. Backed by nearly 40 years of technology leadership, our memory and storage solutions enable disruptive trends, including artificial intelligence, machine learning, and autonomous vehicles in key market segments like cloud, data center, networking, and mobile. Our common stock is traded on the NASDAQ under the MU symbol. To learn more about Micron Technology, Inc., visit micron.com.

The Micron logo and Micron symbol are trademarks of Micron Technology, Inc. All other trademarks are the property of their respective owners.

This press release contains forward-looking statements regarding the industry and our strategic position and financial results. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially. Please refer to the documents we file with the Securities and Exchange Commission, specifically our most recent Form 10-K. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in these forward-looking statements. These certain factors can be found at www.micron.com/certainfactors. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this release to conform these statements to actual results.

(1) GAAP represents U.S. Generally Accepted Accounting Principles.
(2) Non-GAAP represents GAAP excluding the impact of certain activities which our management excludes in analyzing our operating results and understanding trends in our earnings. Non-GAAP also includes the impact on shares used in per share calculations of our outstanding capped call transactions and from the exclusion of stock-based compensation. 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)

 
 
1st Qtr.
 
4th Qtr.
 
1st Qtr.
 
 
November 30,
2017
 
August 31,
2017
 
December 1,
2016
Net sales
 
$
6,803

 
$
6,138

 
$
3,970

Cost of goods sold
 
3,056

 
3,026

 
2,959

Gross margin
 
3,747

 
3,112

 
1,011

Selling, general, and administrative
 
191

 
193

 
159

Research and development
 
448

 
447

 
470

Other operating (income) expense, net
 
11

 
(30
)
 
23

Operating income
 
3,097

 
2,502

 
359

Interest income (expense), net (1)
 
(101
)
 
(132
)
 
(132
)
Other non-operating income (expense), net (1)
 
(204
)
 
(49
)
 
(14
)
Income tax (provision) benefit (2)
 
(114
)
 
47

 
(31
)
Equity in net income (loss) of equity method investees
 
—

 
1

 
(2
)
Net (income) attributable to noncontrolling interests
 
—

 
(1
)
 
—

Net income attributable to Micron
 
$
2,678

 
$
2,368

 
$
180

 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
Basic
 
$
2.36

 
$
2.13

 
$
0.17

Diluted
 
2.19

 
1.99

 
0.16

 
 
 
 
 
 
 
Number of shares used in per share calculations
 
 
 
 
 
 
Basic
 
1,134

 
1,109

 
1,040

Diluted
 
1,225

 
1,187

 
1,091





CONSOLIDATED FINANCIAL SUMMARY, Continued
As of
 
November 30,
2017
 
August 31,
2017
Cash and short-term investments
 
$
6,174

 
$
5,428

Receivables
 
3,876

 
3,759

Inventories
 
3,160

 
3,123

Total current assets
 
13,358

 
12,457

Long-term marketable investments
 
314

 
617

Property, plant, and equipment, net
 
20,723

 
19,431

Total assets
 
37,191

 
35,336

 
 
 
 
 
Accounts payable and accrued expenses
 
3,766

 
3,664

Current debt (1)
 
1,401

 
1,262

Total current liabilities
 
5,583

 
5,334

Long-term debt (1)
 
7,644

 
9,872

 
 
 
 
 
Total Micron shareholders' equity (3)
 
22,526

 
18,621

Noncontrolling interests in subsidiaries
 
867

 
849

Total equity
 
23,393

 
19,470


 
 
Quarter Ended
 
 
November 30,
2017
 
December 1,
2016
Net cash provided by operating activities
 
$
3,636

 
$
1,138

Net cash provided by (used for) investing activities (a)
 
(1,434
)
 
(936
)
Net cash provided by (used for) financing activities
 
(1,282
)
 
(212
)
 
 
 
 
 
Depreciation and amortization
 
1,119

 
803

Investments in capital expenditures
 
(2,089
)
 
(1,288
)
Proceeds from issuance of debt
 
150

 
16

Repayments of debt
 
(2,744
)
 
(188
)
(a) December 1, 2016 amount adjusted for the retrospective adoption of ASU 2016-18 – Restricted Cash.





(1)
In the first quarter of 2018, we redeemed our 2023 Secured Notes and 2023 Notes with an aggregate principal amount of $2.25 billion for cash of $2.42 billion and recognized non-operating losses of $190 million. In the fourth quarter of 2017, we redeemed our 2022 Notes with a principal amount of $600 million and recognized a non-operating loss of $34 million.

(2)
Our income taxes reflect operations in tax jurisdictions, including Singapore and Taiwan, where our earnings are indefinitely reinvested and the tax rates are significantly lower than the U.S. statutory rate; operations outside the United States, including Singapore, where we have tax incentive arrangements that further decrease our effective tax rates; and a valuation allowance against substantially all of our net deferred tax assets in the United States. Income tax (provision) benefit consisted of the following (in millions):
 
 
1st Qtr.
 
4th Qtr.
 
1st Qtr.
 
 
November 30,
2017
 
August 31,
2017
 
December 1,
2016
Utilization of and other changes in net deferred tax assets of MMJ, MMT, and MTTW
 
$
(26
)
 
$
106

 
$
(13
)
Other income tax (provision) benefit, primarily other non-U.S. operations
 
(88
)
 
(59
)
 
(18
)
 
 
$
(114
)
 
$
47

 
$
(31
)

We have a full valuation allowance for our net deferred tax asset associated with our U.S. operations. The amount of the deferred tax asset considered realizable could be adjusted if significant positive evidence increases. Income taxes on U.S. operations in the first quarters of 2018 and 2017 were substantially offset by changes in the valuation allowance.

(3)
In October 2017, we issued 34 million shares of our common stock for $41.00 per share in a public offering, for proceeds of $1.36 billion, net of underwriting fees and other offering costs.




MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in millions except per share amounts)
 
1st Qtr.
 
4th Qtr.
 
1st Qtr.
 
November 30, 2017
 
August 31, 2017
 
December 1, 2016
 
GAAP
Adj
Non-GAAP
 
GAAP
Adj
Non-GAAP
 
 
GAAP
Adj
Non-GAAP
Net sales
$
6,803
 
$
—

$
6,803
 
 
$
6,138
 
$
—

$
6,138
 
 
$
3,970
 
$
—

$
3,970
 
Cost of goods sold
3,056
 
(22
)
3,034
 
 
3,026
 
(35
)
2,991
 
 
2,959
 
(21
)
2,938
 
Gross margin
3,747
 
22

3,769
 
 
3,112
 
35

3,147
 
 
1,011
 
21

1,032
 
percent of net sales
55.1
%
 
 
55.4
%
 
 
50.7
%
 
 
51.3
%
 
 
25.5
%
 
 
26.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general, and administrative
191
 
(18
)
173
 
 
193
 
(22
)
171
 
 
159
 
(16
)
143
 
Research and development
448
 
(14
)
434
 
 
447
 
(14
)
433
 
 
470
 
(13
)
457
 
Other operating (income) expense, net
11
 
(6
)
5
 
 
(30
)
27

(3
)
 
23
 
(29
)
(6
)
Operating expenses
650
 
(38
)
612
 
 
610
 
(9
)
601
 
 
652
 
(58
)
594
 
Operating income
3,097
 
60

3,157
 
 
2,502
 
44

2,546
 
 
359
 
79

438
 
percent of net sales
45.5
%
 
 
46.4
%
 
 
40.8
%
 
 
41.5
%
 
 
9.0
%
 
 
11.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income (expense), net
(101
)
29

(72
)
 
(132
)
32

(100
)
 
(132
)
32

(100
)
Other non-operating income (expense), net
(204
)
204

—
 
 
(49
)
49

—
 
 
(14
)
14

—
 
 
2,792
 
293

3,085
 
 
2,321
 
125

2,446
 
 
213
 
125

338
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax (provision) benefit
(114
)
23

(91
)
 
47
 
(107
)
(60
)
 
(31
)
13

(18
)
Equity in net income (loss) of equity method investees
—
 
—

—
 
 
1
 
—

1
 
 
(2
)
17

15
 
Net income
2,678
 
316

2,994
 
 
2,369
 
18

2,387
 
 
180
 
155

335
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to noncontrolling interests
—
 
—

—
 
 
(1
)
—

(1
)
 
—
 
—

—
 
Net income attributable to Micron
$
2,678
 
$
316

$
2,994
 
 
$
2,368
 
$
18

$
2,386
 
 
$
180
 
$
155

$
335
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares used in calculations
1,225
 
(5
)
1,220
 
 
1,187
 
(6
)
1,181
 
 
1,091
 
(29
)
1,062
 
Diluted earnings per share
$
2.19
 
$
0.26

$
2.45
 
 
$
1.99
 
$
0.03

$
2.02
 
 
$
0.16
 
$
0.16

$
0.32
 





MICRON TECHNOLOGY, INC.
NON-GAAP ADJUSTMENTS
(in millions)

 
1st Qtr.
 
4th Qtr.
 
1st Qtr.
 
November 30, 2017
 
August 31, 2017
 
December 1, 2016
Non-GAAP adjustments
 
 
 
 
 
Cost of goods sold
 
 
 
 
 
Stock-based compensation
$
20

 
$
22

 
$
19

Flow-through of Inotera inventory step up
—

 
11

 
—

Other
2

 
2

 
2

 
22

 
35

 
21

 
 
 
 
 
 
Selling, general, and administrative
 
 
 
 
 
Stock-based compensation
18

 
22

 
15

Other
—

 
—

 
1

 
18

 
22

 
16

 
 
 
 
 
 
Research and development
 
 
 
 
 
Stock-based compensation
13

 
13

 
12

Other
1

 
1

 
1

 
14

 
14

 
13

 
 
 
 
 
 
Other operating (income) expense, net
 
 
 
 
 
Restructure and asset impairments
6

 
(27
)
 
29

 
 
 
 
 
 
Interest income (expense), net
 
 
 
 
 
Amortization of debt discount and other costs
29

 
32

 
32

 
 
 
 
 
 
Other non-operating income (expense)
 
 
 
 
 
Loss on debt repurchases and conversions
195

 
37

 
2

(Gain) loss from changes in currency exchange rates
9

 
12

 
12

 
204

 
49

 
14

 
 
 
 
 
 
Income taxes
 
 
 
 
 
Estimated tax effects of above and non-cash changes in net deferred income taxes
23

 
(107
)
 
13

 
 
 
 
 
 
Equity in net income (loss) of equity method investments
 
 
 
 
 
Impairment of equity method investments
—

 
—

 
16

Other
—

 
—

 
1

 
—

 
—

 
17

 
$
316

 
$
18

 
$
155


The tables above reconcile GAAP to non-GAAP results, diluted shares, and diluted earnings per share. The non-GAAP adjustments above may or may not be infrequent or nonrecurring in nature but are a result of periodic or non-core operating activities. We believe this non-GAAP information is helpful to understanding trends and in analyzing our operating results and earnings. We are providing this information to investors to assist in performing analysis of our operating results. When evaluating performance and making decisions on how to allocate our resources, management uses this non-GAAP information and believes investors should have access to similar data when making their investment decisions. We believe these non-GAAP financial measures increase transparency by providing investors with useful supplemental information about the financial




performance of our business, enabling enhanced comparison of our operating results between periods and with peer companies. The presentation of these adjusted amounts vary from numbers presented in accordance with U.S. GAAP and therefore may not be comparable to amounts reported by other companies.

Our management excludes the following items in analyzing our operating results and understanding trends in our earnings:

•
Stock-based compensation;
•
Flow-through of business acquisition-related inventory adjustments;
•
Restructure and asset impairments;
•
Amortization of debt discount and other costs, including the accretion of non-cash interest expense associated with our convertible debt and MMJ installment debt;
•
Losses from debt repurchases and conversions;
•
Gains and losses from changes in currency exchange rates;
•
The estimated tax effects of above and non-cash changes in net deferred income taxes; and
•
Impairments of equity method investments.

Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible notes. In periods with non-GAAP income attributable to Micron, non-GAAP diluted shares include the impact of the capped calls, based on the average share price for the period the capped calls are outstanding. Non-GAAP diluted shares are also adjusted for the impact of additional shares resulting from the exclusion of stock-based compensation from non-GAAP income.