2017 Q4 Form 10-Q Financial Statement

#000072312517000166 Filed on December 20, 2017

View on sec.gov

Income Statement

Concept 2017 Q4 2016 Q4
Revenue $6.803B $3.970B
YoY Change 71.36% 18.51%
Cost Of Revenue $3.056B $2.959B
YoY Change 3.28% 18.31%
Gross Profit $3.747B $1.011B
YoY Change 270.62% 19.08%
Gross Profit Margin 55.08% 25.47%
Selling, General & Admin $191.0M $159.0M
YoY Change 20.13% -11.17%
% of Gross Profit 5.1% 15.73%
Research & Development $448.0M $470.0M
YoY Change -4.68% 11.64%
% of Gross Profit 11.96% 46.49%
Depreciation & Amortization $1.090B $744.0M
YoY Change 46.51% 5.38%
% of Gross Profit 29.09% 73.59%
Operating Expenses $639.0M $629.0M
YoY Change 1.59% 4.83%
Operating Profit $3.097B $359.0M
YoY Change 762.67% 54.74%
Interest Expense $124.0M $139.0M
YoY Change -10.79% 44.79%
% of Operating Profit 4.0% 38.72%
Other Income/Expense, Net -$204.0M -$14.00M
YoY Change 1357.14% 250.0%
Pretax Income $2.792B $213.0M
YoY Change 1210.8% 48.95%
Income Tax $114.0M $31.00M
% Of Pretax Income 4.08% 14.55%
Net Earnings $2.678B $180.0M
YoY Change 1387.78% -12.62%
Net Earnings / Revenue 39.36% 4.53%
Basic Earnings Per Share $2.36 $0.17
Diluted Earnings Per Share $2.19 $0.16
COMMON SHARES
Basic Shares Outstanding 1.134B shares 1.040B shares
Diluted Shares Outstanding 1.225B shares 1.091B shares

Balance Sheet

Concept 2017 Q4 2016 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $6.174B $4.169B
YoY Change 48.09% 14.5%
Cash & Equivalents $6.008B $4.139B
Short-Term Investments $166.0M $30.00M
Other Short-Term Assets $148.0M $132.0M
YoY Change 12.12% -37.44%
Inventory $3.160B $2.750B
Prepaid Expenses
Receivables $3.603B $2.162B
Other Receivables $167.0M $291.0M
Total Short-Term Assets $13.36B $9.504B
YoY Change 40.55% 11.68%
LONG-TERM ASSETS
Property, Plant & Equipment $20.72B $15.32B
YoY Change 35.26% 38.53%
Goodwill $1.228B
YoY Change
Intangibles $368.0M $445.0M
YoY Change -17.3% -16.98%
Long-Term Investments $314.0M $1.401B
YoY Change -77.59% 3.7%
Other Assets $469.0M $411.0M
YoY Change 14.11% -27.26%
Total Long-Term Assets $23.83B $18.33B
YoY Change 30.01% 15.46%
TOTAL ASSETS
Total Short-Term Assets $13.36B $9.504B
Total Long-Term Assets $23.83B $18.33B
Total Assets $37.19B $27.84B
YoY Change 33.61% 14.14%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $1.209B $1.304B
YoY Change -7.29% 28.6%
Accrued Expenses $460.0M $351.0M
YoY Change 31.05% 4.78%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $1.401B $1.155B
YoY Change 21.3% 9.9%
Total Short-Term Liabilities $5.583B $5.546B
YoY Change 0.67% 37.79%
LONG-TERM LIABILITIES
Long-Term Debt $7.662B $8.521B
YoY Change -10.08% 33.81%
Other Long-Term Liabilities $553.0M $601.0M
YoY Change -7.99% -16.53%
Total Long-Term Liabilities $553.0M $601.0M
YoY Change -7.99% -16.53%
TOTAL LIABILITIES
Total Short-Term Liabilities $5.583B $5.546B
Total Long-Term Liabilities $553.0M $601.0M
Total Liabilities $13.78B $14.64B
YoY Change -5.86% 32.21%
SHAREHOLDERS EQUITY
Retained Earnings $12.94B $5.469B
YoY Change 136.57% -5.51%
Common Stock $9.564B $7.887B
YoY Change 21.26% 3.65%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $22.53B $12.32B
YoY Change
Total Liabilities & Shareholders Equity $37.19B $27.84B
YoY Change 33.61% 14.14%

Cashflow Statement

Concept 2017 Q4 2016 Q4
OPERATING ACTIVITIES
Net Income $2.678B $180.0M
YoY Change 1387.78% -12.62%
Depreciation, Depletion And Amortization $1.090B $744.0M
YoY Change 46.51% 5.38%
Cash From Operating Activities $3.636B $1.138B
YoY Change 219.51% 1.61%
INVESTING ACTIVITIES
Capital Expenditures $1.956B $1.264B
YoY Change 54.75% 27.68%
Acquisitions
YoY Change
Other Investing Activities -$69.00M -$11.00M
YoY Change 527.27% -106.96%
Cash From Investing Activities -$1.434B -$936.0M
YoY Change 53.21% 41.82%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net -$1.337B $13.00M
YoY Change -10384.62% -90.37%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -$1.282B -$212.0M
YoY Change 504.72% 51.43%
NET CHANGE
Cash From Operating Activities $3.636B $1.138B
Cash From Investing Activities -$1.434B -$936.0M
Cash From Financing Activities -$1.282B -$212.0M
Net Change In Cash $914.0M -$52.00M
YoY Change -1857.69% -116.25%
FREE CASH FLOW
Cash From Operating Activities $3.636B $1.138B
Capital Expenditures $1.956B $1.264B
Free Cash Flow $1.680B -$126.0M
YoY Change -1433.33% -196.92%

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CY2017Q4 us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
DescriptionOfNewAccountingPronouncementsNotYetAdopted
<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-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-16 &#8211; </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Intra-Entity Transfers Other Than Inventory</font><font style="font-family:inherit;font-size:10pt;">, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This ASU will be effective for us in the first quarter of 2019 and requires modified retrospective adoption. We are evaluating the effects of our 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 June 2016, the FASB issued ASU 2016-13 &#8211; </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Measurement of Credit Losses on Financial Instruments</font><font style="font-family:inherit;font-size:10pt;">, which requires a financial asset (or a group of financial assets) measured on the basis of amortized cost to be presented at the net amount expected to be collected. This ASU requires that the income statement reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This ASU requires that credit losses of debt securities designated as available-for-sale be recorded through an allowance for credit losses and limits the credit loss to the amount by which fair value is below amortized cost. This ASU will be effective for us in the first quarter of 2021 with adoption permitted as early as the first quarter of 2020. This ASU requires modified retrospective adoption, with prospective adoption for debt securities for which an other-than-temporary impairment had been recognized before the effective date. We are evaluating the timing and effects of our 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 February 2016, the FASB issued ASU 2016-02 &#8211; </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 in the first quarter of 2020 with early adoption permitted and requires modified retrospective adoption. The adoption of this ASU will result in an increase in right-of-use assets and corresponding liabilities. We are evaluating the timing and other effects of our 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 January 2016, the FASB issued ASU 2016-01 &#8211; </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. This ASU will be effective for us in the first quarter of 2019 and requires modified retrospective adoption. We are evaluating the effects of our 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 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 United States. 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. 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. This ASU will be effective for us in the first quarter of 2019 and allows for either full retrospective or modified retrospective adoption. We expect that, as a result of the adoption of this ASU, the timing of recognizing revenue from sales of products to our distributors under agreements allowing rights of return or price protection will be generally earlier than under the existing revenue recognition guidance. Revenue recognized upon resale by our customers under these arrangements was </font><font style="font-family:inherit;font-size:10pt;">22%</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">23%</font><font style="font-family:inherit;font-size:10pt;"> of our consolidated revenue for the first quarters of </font><font style="font-family:inherit;font-size:10pt;">2018</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">2017</font><font style="font-family:inherit;font-size:10pt;">, respectively. After adoption, the impact of this change in any reporting period would be the net effect of changes to revenue recognized as of the beginning and end of each period. We are evaluating the method and other effects of our adoption of this ASU on our financial statements.</font></div></div>
CY2017Q4 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 years 2018 and 2017 each contain 52 weeks. All period references are to our fiscal periods unless otherwise indicated.</font></div></div>
CY2017Q4 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 balance sheet date, including those described below. We are currently a party to other legal actions arising from the normal course of business, none of which are 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 upon 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 </font><font style="font-family:inherit;font-size:10pt;">13</font><font style="font-family:inherit;font-size:10pt;"> 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 Micron in the U.S. District Court for the District of Delaware. The complaint alleges that a variety of our NAND products infringe </font><font style="font-family:inherit;font-size:10pt;">eight</font><font style="font-family:inherit;font-size:10pt;"> 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 June 24, 2016, the President and Fellows of Harvard University filed a patent infringement action against Micron in the U.S. District Court for the District of Massachusetts. The complaint alleges that a variety of our DRAM products infringe </font><font style="font-family:inherit;font-size:10pt;">two</font><font style="font-family:inherit;font-size:10pt;"> U.S. patents and seeks damages, injunctive relief, and other unspecified relief.</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, 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's 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 (the "Inotera Shares"), representing approximately </font><font style="font-family:inherit;font-size:10pt;">18%</font><font style="font-family:inherit;font-size:10pt;"> of Inotera's outstanding shares as of </font><font style="font-family:inherit;font-size:10pt;">November&#160;30, 2017</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;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 </font><font style="font-family:inherit;font-size:10pt;">$1 million</font><font style="font-family:inherit;font-size:10pt;"> 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 the Inotera 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: (1) that Micron B.V. transfer to the Qimonda estate the Inotera Shares still owned by Micron B.V. 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 Micron B.V. 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.</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>
CY2017Q4 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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