2016 Q2 Form 10-Q Financial Statement

#000072312516000201 Filed on July 06, 2016

View on sec.gov

Income Statement

Concept 2016 Q2 2015 Q3 2015 Q2
Revenue $2.898B $3.600B $3.853B
YoY Change -24.79% -14.83% -3.24%
Cost Of Revenue $2.400B $2.630B $2.651B
YoY Change -9.47% -7.46% 1.42%
Gross Profit $498.0M $970.0M $1.202B
YoY Change -58.57% -29.96% -12.13%
Gross Profit Margin 17.18% 26.94% 31.2%
Selling, General & Admin $148.0M $170.0M $169.0M
YoY Change -12.43% -5.56% -2.87%
% of Gross Profit 29.72% 17.53% 14.06%
Research & Development $382.0M $379.0M $406.0M
YoY Change -5.91% 5.87% 16.33%
% of Gross Profit 76.71% 39.07% 33.78%
Depreciation & Amortization $725.0M $710.0M $644.0M
YoY Change 12.58% 28.39% 26.77%
% of Gross Profit 145.58% 73.2% 53.58%
Operating Expenses $530.0M $543.0M $575.0M
YoY Change -7.83% 85.96% 9.94%
Operating Profit -$27.00M $427.0M $631.0M
YoY Change -104.28% -48.43% -24.79%
Interest Expense $109.0M -$91.00M $97.00M
YoY Change 12.37% 8.33% 21.25%
% of Operating Profit -21.31% 15.37%
Other Income/Expense, Net -$34.00M $19.00M -$16.00M
YoY Change 112.5% -45.71% -23.81%
Pretax Income -$160.0M $355.0M $527.0M
YoY Change -130.36% -62.43% -29.07%
Income Tax $15.00M -$69.00M $104.0M
% Of Pretax Income -19.44% 19.73%
Net Earnings -$215.0M $471.0M $491.0M
YoY Change -143.79% -59.04% -39.08%
Net Earnings / Revenue -7.42% 13.08% 12.74%
Basic Earnings Per Share -$0.21 $0.44 $0.46
Diluted Earnings Per Share -$0.21 $0.42 $0.42
COMMON SHARES
Basic Shares Outstanding 1.036B shares 1.083B shares 1.073B shares
Diluted Shares Outstanding 1.036B shares 1.170B shares

Balance Sheet

Concept 2016 Q2 2015 Q3 2015 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $4.981B $3.521B $4.860B
YoY Change 2.49% -22.34% 13.98%
Cash & Equivalents $4.627B $2.287B $3.694B
Short-Term Investments $354.0M $1.234B $1.166B
Other Short-Term Assets $136.0M $228.0M $237.0M
YoY Change -42.62% -34.86% 22.16%
Inventory $2.920B $2.340B $2.381B
Prepaid Expenses
Receivables $1.752B $2.188B $2.261B
Other Receivables $306.0M $319.0M $269.0M
Total Short-Term Assets $10.11B $8.596B $10.01B
YoY Change 1.02% -16.1% 3.12%
LONG-TERM ASSETS
Property, Plant & Equipment $13.21B $10.55B $9.857B
YoY Change 34.01% 21.56% 22.89%
Goodwill
YoY Change
Intangibles $491.0M $449.0M
YoY Change
Long-Term Investments $1.361B $1.379B $1.324B
YoY Change 2.79% 42.02% 77.96%
Other Assets $528.0M $455.0M $493.0M
YoY Change 7.1% 9.64% 11.04%
Total Long-Term Assets $16.89B $15.55B $15.13B
YoY Change 11.65% 27.74% 40.2%
TOTAL ASSETS
Total Short-Term Assets $10.11B $8.596B $10.01B
Total Long-Term Assets $16.89B $15.55B $15.13B
Total Assets $27.00B $24.14B $25.14B
YoY Change 7.42% 7.7% 22.64%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $1.105B $1.020B $1.000B
YoY Change 10.5% 2.41% -25.82%
Accrued Expenses $292.0M $321.0M $340.0M
YoY Change -14.12% -29.61% -17.07%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $712.0M $1.089B $1.148B
YoY Change -37.98% -33.52% -23.87%
Total Short-Term Liabilities $4.500B $3.905B $4.566B
YoY Change -1.45% -18.49% -4.08%
LONG-TERM LIABILITIES
Long-Term Debt $8.919B $6.301B $6.451B
YoY Change 38.26% 25.72% 52.69%
Other Long-Term Liabilities $548.0M $698.0M $764.0M
YoY Change -28.27% -36.66% -6.03%
Total Long-Term Liabilities $548.0M $698.0M $764.0M
YoY Change -28.27% -36.66% -6.03%
TOTAL LIABILITIES
Total Short-Term Liabilities $4.500B $3.905B $4.566B
Total Long-Term Liabilities $548.0M $698.0M $764.0M
Total Liabilities $13.97B $10.86B $11.73B
YoY Change 19.04% 0.64% 20.83%
SHAREHOLDERS EQUITY
Retained Earnings $5.470B $5.588B $5.117B
YoY Change 6.9% 104.76% 224.07%
Common Stock $7.784B $7.582B $7.536B
YoY Change 3.29% -4.93% -9.39%
Preferred Stock
YoY Change
Treasury Stock (at cost) $1.029B $881.0M $192.0M
YoY Change 435.94%
Treasury Stock Shares 54.00M shares 45.00M shares
Shareholders Equity $12.19B $12.30B $12.46B
YoY Change
Total Liabilities & Shareholders Equity $27.00B $24.14B $25.14B
YoY Change 7.42% 7.7% 22.64%

Cashflow Statement

Concept 2016 Q2 2015 Q3 2015 Q2
OPERATING ACTIVITIES
Net Income -$215.0M $471.0M $491.0M
YoY Change -143.79% -59.04% -39.08%
Depreciation, Depletion And Amortization $725.0M $710.0M $644.0M
YoY Change 12.58% 28.39% 26.77%
Cash From Operating Activities $389.0M $1.030B $1.335B
YoY Change -70.86% -23.53% -8.25%
INVESTING ACTIVITIES
Capital Expenditures -$1.685B -$1.765B -$734.0M
YoY Change 129.56% 35.04% 29.68%
Acquisitions
YoY Change
Other Investing Activities $1.069B $255.0M -$786.0M
YoY Change -236.01% -165.22% -5340.0%
Cash From Investing Activities -$616.0M -$1.510B -$1.520B
YoY Change -59.47% -11.07% 175.86%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 1.771B -933.0M 359.0M
YoY Change 393.31% -305.51% -131.24%
NET CHANGE
Cash From Operating Activities 389.0M 1.030B 1.335B
Cash From Investing Activities -616.0M -1.510B -1.520B
Cash From Financing Activities 1.771B -933.0M 359.0M
Net Change In Cash 1.544B -1.413B 174.0M
YoY Change 787.36% -1471.84% -171.02%
FREE CASH FLOW
Cash From Operating Activities $389.0M $1.030B $1.335B
Capital Expenditures -$1.685B -$1.765B -$734.0M
Free Cash Flow $2.074B $2.795B $2.069B
YoY Change 0.24% 5.31% 2.38%

Facts In Submission

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us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Recently Issued Accounting Standards</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In February 2016, the FASB issued ASU 2016-02 </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">&#8211;</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Leases</font><font style="font-family:inherit;font-size:10pt;">, which amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding liability, measured at the present value of the lease payments. This ASU will be effective for us beginning in our first quarter of 2020 and early adoption is permitted.&#160; This ASU is required to be adopted using a modified retrospective approach. We are evaluating the timing of our adoption and the effects of the adoption of this ASU on our financial statements.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2016, the FASB issued ASU 2016-01 </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">&#8211;</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Recognition and Measurement of Financial Assets and Financial Liabilities</font><font style="font-family:inherit;font-size:10pt;">, which provides guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities.&#160; This ASU will be effective for us beginning in our first quarter of 2019 and requires modified-retrospective adoption.&#160; We are evaluating the effects of the adoption of this ASU on our financial statements.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In April 2015, the FASB issued ASU 2015-05 </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">&#8211; Customer's Accounting for Fees Paid in a Cloud Computing Arrangement</font><font style="font-family:inherit;font-size:10pt;">, which provides additional guidance to customers about whether a cloud computing arrangement includes a software license. Under ASU 2015-05, if a cloud computing arrangement contains a software license, customers should account for the license element of the arrangement in a manner consistent with the acquisition of other software licenses. If the arrangement does not contain a software license, customers should account for the arrangement as a service contract. ASU 2015-05 also removes the requirement to analogize to ASC 840-10 </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">&#8211;</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Leases,</font><font style="font-family:inherit;font-size:10pt;"> to determine the asset acquired in a software licensing arrangement. This ASU will be effective for us beginning in our first quarter of 2017 and early adoption is permitted.&#160; This ASU allows for either prospective or retrospective adoption. We are evaluating the timing and method of our adoption and the effects of the adoption of this ASU on our financial statements.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In February 2015, the FASB issued ASU 2015-02 &#8211; </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Amendments to the Consolidation Analysis</font><font style="font-family:inherit;font-size:10pt;">, which amends the consolidation requirements in Accounting Standards Codification 810 </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">&#8211;</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Consolidation</font><font style="font-family:inherit;font-size:10pt;">.&#160; ASU 2015-02 makes targeted amendments to the consolidation guidance for VIEs, which could change consolidation conclusions.&#160; This ASU will be effective for us beginning in our first quarter of 2017 and early adoption is permitted.&#160; This ASU allows for either retrospective or modified-retrospective adoption. We are evaluating the timing and method of our adoption and the effects of the adoption of this ASU on our financial statements.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2014, the FASB issued ASU 2014-09 &#8211; </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenue from Contracts with Customers</font><font style="font-family:inherit;font-size:10pt;">, which supersedes nearly all existing revenue recognition guidance under generally accepted accounting principles in the U.S.&#160; The core principal of this ASU, as amended, is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.&#160; This ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.&#160; We are required to adopt this ASU beginning in our first quarter of 2019; however, we are permitted to adopt this ASU as early as our first quarter of 2018. This ASU allows for either full-retrospective or modified-retrospective adoption. We are evaluating the timing and method of our adoption and the effects of the adoption of this ASU on our financial statements.</font></div></div>
us-gaap Fiscal Period
FiscalPeriod
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal year 2016 contains 52 weeks and fiscal year 2015 contained 53 weeks. The first quarter of 53-week years contains 14 weeks. All period references are to our fiscal periods unless otherwise indicated.</font></div></div>
us-gaap Loss Contingency Disclosures
LossContingencyDisclosures
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Contingencies</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We have accrued a liability and charged operations for the estimated costs of adjudication or settlement of various asserted and unasserted claims existing as of the applicable balance sheet dates, including those described below. We are currently a party to other legal actions arising from the normal course of business, none of which is expected to have a material adverse effect on our business, results of operations, or financial condition.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;text-decoration:underline;">Patent Matters</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">As is typical in the semiconductor and other high-tech industries, from time to time others have asserted, and may in the future assert, that our products or manufacturing processes infringe their intellectual property rights.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On November 21, 2014, Elm 3DS Innovations, LLC ("Elm") filed a patent infringement action against Micron, MSP, and Micron Consumer Products Group, Inc. in the U.S. District Court for the District of Delaware. On March 27, 2015, Elm filed an amended complaint against the same entities. The amended complaint alleges that unspecified semiconductor products of ours that incorporate multiple stacked die infringe thirteen U.S. patents and seeks damages, attorneys' fees, and costs.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On December 15, 2014, Innovative Memory Solutions, Inc. filed a patent infringement action against us in the U.S. District Court for the District of Delaware.&#160; The complaint alleges that a variety of our NAND Flash products infringe eight U.S. patents and seeks damages, attorneys' fees, and costs.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Among other things, the above lawsuits pertain to certain of our DDR DRAM, DDR2 DRAM, DDR3 DRAM, DDR4 DRAM, SDR SDRAM, PSRAM, RLDRAM, LPDRAM, NAND Flash, and certain other memory products we manufacture, which account for a significant portion of our net sales.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We are unable to predict the outcome of assertions of infringement made against us and therefore cannot estimate the range of possible loss. A determination that our products or manufacturing processes infringe the intellectual property rights of others or entering into a license agreement covering such intellectual property could result in significant liability and/or require us to make material changes to our products and/or manufacturing processes. Any of the foregoing could have a material adverse effect on our business, results of operations, or financial condition.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;text-decoration:underline;">Qimonda</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On January 20, 2011, Dr. Michael Jaff&#233;, administrator for Qimonda insolvency proceedings, filed suit against Micron and Micron Semiconductor B.V., our Netherlands subsidiary ("Micron B.V."), in the District Court of Munich, Civil Chamber. The complaint seeks to void under Section 133 of the German Insolvency Act a share purchase agreement between Micron B.V. and Qimonda signed in fall 2008 pursuant to which Micron B.V. purchased substantially all of Qimonda's shares of Inotera Memories, Inc. (the "Inotera Shares"), which represents approximately 55% of our total shares in Inotera as of </font><font style="font-family:inherit;font-size:10pt;">June&#160;2, 2016</font><font style="font-family:inherit;font-size:10pt;">, and seeks an order requiring us to re-transfer those shares to the Qimonda estate. The complaint also seeks, among other things, to recover damages for the alleged value of the joint venture relationship with Inotera and to terminate under Sections 103 or 133 of the German Insolvency Code a patent cross-license between us and Qimonda entered into at the same time as the share purchase agreement.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March 13, 2014, the Court issued judgments:&#160; (1) ordering Micron B.V. to pay approximately $1 million in respect of certain Inotera shares sold in connection with the original share purchase; (2) ordering Micron B.V. to disclose certain information with respect to any Inotera Shares sold by it to third parties; (3) ordering Micron B.V. to disclose the benefits derived by it from ownership of the Inotera Shares, including in particular, any profits distributed on such shares and all other benefits; (4) denying Qimonda's claims against Micron for any damages relating to the joint venture relationship with Inotera; and (5) determining that Qimonda's obligations under the patent cross-license agreement are canceled. In addition, the Court issued interlocutory judgments ordering, among other things:&#160; (1) that Micron B.V. transfer to the Qimonda estate the Inotera Shares still owned by it and pay to the Qimonda estate compensation in an amount to be specified for any Inotera Shares sold to third parties; and (2) that Micron B.V. pay the Qimonda estate as compensation an amount to be specified for benefits derived by it from ownership of the Inotera Shares. The interlocutory judgments have no immediate, enforceable effect on us, and, accordingly, we expect to be able to continue to operate with full control of the Inotera Shares subject to further developments in the case. We have filed a notice of appeal, and the parties have submitted briefs to the appeals court.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We are unable to predict the outcome of the matter and therefore cannot estimate the range of possible loss. The final resolution of this lawsuit could result in the loss of the Inotera Shares or monetary damages, unspecified damages based on the benefits derived by Micron B.V. from the ownership of the Inotera Shares, and/or the termination of the patent cross-license, which could have a material adverse effect on our business, results of operation, or financial condition.&#160; As of </font><font style="font-family:inherit;font-size:10pt;">June&#160;2, 2016</font><font style="font-family:inherit;font-size:10pt;">, the Inotera Shares had a carrying value in equity method investments of $677 million and a market value of $1.07 billion.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;text-decoration:underline;">Other</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify the other party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, our payments under these types of agreements have not had a material adverse effect on our business, results of operations, or financial condition.</font></div></div>
us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Certain reclassifications have been made to prior period amounts to conform to current period presentation.</font></div></div>

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