UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
April
2, 2008
Date of
Report (date of earliest event reported)
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MICRON
TECHNOLOGY, INC.
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(Exact
name of registrant as specified in its
charter)
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Delaware
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1-10658
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75-1618004
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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8000
South Federal Way
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Boise,
Idaho 83716-9632
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(Address
of principal executive offices)
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(208)
368-4000
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(Registrant’s
telephone number, including area code)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4c))
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Item
1.01.
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Entry
into a Material Definitive
Agreement.
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On March
31, 2008, the Company’s joint venture subsidiary, TECH Semiconductor Singapore
Pte. Ltd. ("TECH") entered into a new credit facility that enables it to borrow
up to $600 million at SIBOR plus 2.5%, subject to customary covenants (the
“Credit Facility”). In addition to TECH, the parties to the Credit
Facility are ABN AMRO Bank N.V., Singapore Branch, Citibank, N.A., Singapore
Branch / Citigroup Global Markets Singapore Pte Ltd, DBS Bank Ltd and
Oversea-Chinese Banking Corporation Limited as Original Mandated Lead Arrangers
and a syndicate of banks (collectively the “Banks”). The Credit
Facility is available for drawdown from March 31, 2008 to December 31, 2008.
TECH is expected to draw $220 million under the new credit facility on April 7,
2008 and retire the amount outstanding under its previous credit facility by
paying off $240 million. Payments under the new facility are due in
13 quarterly installments commencing in May 2009. The Credit Facility
is secured by all of the assets of TECH and contains customary affirmative,
negative and financial covenants, including, among other requirements, negative
covenants that restrict TECH’s ability to create liens, incur indebtedness,
merge or consolidate, acquire or dispose of assets, make distributions, enter
into transactions with affiliates, enter into restrictive agreements and
financial covenants that establish applicable liquidity ratios, debt service
coverage ratios and limit the maximum leverage ratios that TECH can maintain at
any one time.
In
addition, the Credit Facility contains events of default, that include, among
others, non-payment of principal, interest or fees, violation of covenants,
inaccuracy of representations or statements, cross-defaults to certain other
indebtedness by TECH or the Company, bankruptcy and insolvency defaults of TECH
or the Company, material adverse change to the business of
TECH, specific ownership requirements, material judgments, and
non-extension of the term of the TECH joint venture. The occurrence
of an event of default could result in an increased interest rate, the
acceleration of TECH’s obligations under the Credit Facility and an obligation
of TECH or the Company, under certain circumstances to repay the full amount of
TECH’s borrowings under the Credit Facility.
In
connection with the Credit Facility, on March 31, 2008, the Company entered into
a Guarantee with ABN AMRO Bank B.V., Singapore Branch, as security agent for the
Banks (the “Guarantee”). Pursuant to the terms of the Guarantee, the
Company has guaranteed approximately 73% of the outstanding amount of the Credit
Facility, with the Company’s obligations increasing to 100% of the outstanding
amount of the Credit Facility upon the occurrence of certain
conditions. As a condition to granting the Guarantee, the Company has
a second position priority interest in all of the assets of TECH behind the
Banks. Certain limited events of default under the Credit Facility
will apply to the Company for as long as the Guarantee remains in place,
including inaccuracy of representations and statements the Company, violation of
covenants of the Company under the Guarantee, and material adverse change to the
business of the Company. In addition, the Guarantee contains a limited number of
covenants including requiring the obligations under the Guarantee to be pari passu with all other
indebtedness of the Company, making no substantial changes to the business, and
not entering into a merger where the Company is not the surviving entity or that
has a material adverse affect on its ability to repay the
Guarantee.
The
foregoing descriptions of the Credit Facility and Guarantee are only
summaries and do not purport to be complete. The summaries are
qualified in their entirety by reference to the actual agreements, which will be
filed as exhibits to a future periodic or current report.
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Item
2.02.
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Results
of Operations and Financial
Condition.
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On April
2, 2008, the Company announced its financial results for the quarter ended
February 28, 2008. The full text of the press release issued in
connection with the announcement is attached as Exhibit 99.1 to this Current
Report on Form 8-K.
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Item
2.03.
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Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
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The
information set forth under “Item 1.01, “Entry into a Material Definitive
Agreement,” is incorporated herein by reference.
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Item
2.05.
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Costs
Associated with Exit or Disposal
Activities.
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In the
fourth quarter of fiscal 2007, the Company began pursuing a number of
initiatives to drive greater cost efficiencies and revenue growth across its
operations. These initiatives include workforce reductions in certain
areas of the Company as the Company’s business is
realigned. Additional initiatives include establishing certain
operations closer in location to the Company’s global customers, evaluating
functions more efficiently performed through partnerships or other outside
relationships and reducing the Company’s overhead costs to meet or exceed
industry benchmarks.
During
the second quarter of fiscal 2008, the first quarter of fiscal 2008 and the
fourth quarter of fiscal 2007, the Company recorded restructure charges of $8
million, $13 million and $19 million, respectively, consisting primarily of
employee severance and related costs resulting from a reduction in the Company’s
workforce. The first quarter charge also included a write-down of the
carrying value of certain facilities to their estimated fair
values. The Company anticipates that it will incur some level of
restructure charges through the end of fiscal 2008 as it continues to implement
these initiatives, but is currently unable to estimate the aggregate amount of
the charges.
This
Current Report on Form 8-K contains forward-looking statements regarding the
date of the TECH drawdown and future restructure charges. Actual events or
results may differ materially from those contained in the forward-looking
statements. Please refer to the documents the Company files on a consolidated
basis from time to time with the Securities and Exchange Commission,
specifically the Company's most recent Form 10-K and Form 10-Q. These documents
contain and identify important factors that could cause the actual results for
the Company on a consolidated basis to differ materially from those contained in
our forward-looking statements (see Certain Factors). 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 report to conform to actual
results.
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Item
9.01.
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Financial
Statements and Exhibits.
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(d) Exhibits.
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The
following exhibits are filed
herewith:
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Exhibit No.
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Description
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99.1
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Press
Release issued on April 2, 2008
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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MICRON
TECHNOLOGY, INC.
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Date:
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April
2, 2008
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By:
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/s/
D. Mark Durcan
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Name:
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D.
Mark Durcan
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Title:
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President
and Chief Operating Officer
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INDEX
TO EXHIBITS FILED WITH
THE
CURRENT REPORT ON FORM 8-K DATED APRIL 2, 2008
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Exhibit
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Description
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99.1
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Press
Release issued on April 2, 2008
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FOR
IMMEDIATE RELEASE
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Contacts:
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Kipp
A. Bedard
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Daniel
Francisco
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Investor
Relations
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Media
Relations
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kbedard@micron.com
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dfrancisco@micron.com
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(208)
368-4400
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(208)
368-5584
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MICRON TECHNOLOGY, INC.,
REPORTS RESULTS FOR THE
SECOND QUARTER OF FISCAL
2008
BOISE, Idaho, April 2, 2008 –
Micron Technology, Inc., (NYSE: MU) today announced results of operations for
the company’s second quarter and first six months of fiscal 2008, which ended
February 28, 2008. Despite continued significant declines in average sales
prices for the company’s primary products, the company reported net sales of
$1.4 billion for the second quarter of fiscal 2008 compared to net sales of $1.5
billion for the previous quarter. The company also generated cash flow from
operations during the second quarter of fiscal 2008 of $282 million and ended
the quarter with cash and investments of $1.9 billion. As a result of the
company’s current market capitalization being below book value, the company was
required under FASB Statement No. 142, “Goodwill and Other Intangible Assets,”
to record a non-cash charge of $463 million in the second quarter of fiscal 2008
to write off all the carrying amount of goodwill previously recognized in the
company’s memory segment. The goodwill write-off does not affect the company’s
day-to-day business operations, cash balance or competitive position. Reflecting
the goodwill charge, the company reported a net loss for the second quarter of
$1.01 per diluted share. On a non-GAAP basis, without the effect of the charge,
the company’s net loss for the second quarter would have been $0.41 per diluted
share or $314 million. These results compare to a net loss of $262 million, or
$0.34 per diluted share, for the first quarter of fiscal 2008.
The
company’s net sales declined 11 percent in the second quarter of fiscal 2008
compared to the immediately preceding quarter primarily due to lower selling
prices partially offset by increased production of memory products. Average
selling prices for the company’s DRAM and NAND Flash memory products decreased
15 percent and 30 percent, respectively, in the second quarter compared to the
first quarter. Comparing the second quarter to the same quarter of the previous
fiscal year, average selling prices for the company’s DRAM and NAND Flash memory
products decreased approximately 60 percent and 70 percent,
respectively.
The
company achieved second quarter reductions in cost of goods sold per megabit of
approximately 15 percent and 25 percent for DRAM and NAND Flash memory products,
respectively, compared to the first quarter of fiscal 2008. These reductions
resulted from continuing advancements in our industry-leading process technology
and increased output from our 300mm operations.
The
company had capital expenditures of $693 million during the second quarter
bringing the expenditures for the first six months to $1.6 billion. The company
estimates capital expenditures aggregating between $2.5 billion and $3 billion
for the 2008 fiscal year. In the third quarter of fiscal 2008, TECH
Semiconductor, a consolidated joint venture, entered into a $600 million credit
facility to refinance its existing debt of $240 million and to finance future
capital expenditures.
The
company will host a conference call today at 2:30 p.m. MDT to discuss its
financial results. The call, audio and slides will be available online at
www.micron.com. A webcast replay will be available on the company’s Web site
until April 2, 2009. A taped audio replay of the conference call will also be
available at (706) 645-9291(conference number: 39996231) beginning at 5:30 p.m.
MDT today and continuing until 5:30 p.m. MDT on April 9, 2008.
Micron
Technology, Inc., is one of the world's leading providers of advanced
semiconductor solutions. Through its worldwide operations, Micron manufactures
and markets DRAMs, NAND flash memory, CMOS image sensors, other semiconductor
components, and memory modules for use in leading-edge computing, consumer,
networking and mobile products. Micron's common stock is traded on the New York
Stock Exchange (NYSE) under the MU symbol. To learn more about Micron visit
www.micron.com.
MICRON
TECHNOLOGY, INC.
CONSOLIDATED
FINANCIAL SUMMARY
(Amounts
in millions except per share data)
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2nd
Qtr.
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1st
Qtr.
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2nd
Qtr.
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Six
Months Ended
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|||||||||||||||||
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Feb.
28,
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Nov.
29,
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Mar.
1,
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Feb.
28,
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Mar.
1,
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||||||||||||||||
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2008
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2007
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2007
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2008
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2007
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Net
sales
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$ | 1,359 | $ | 1,535 | $ | 1,427 | $ | 2,894 | $ | 2,957 | ||||||||||
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Cost
of goods sold (1)
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1,402 | 1,530 | 1,070 | 2,932 | 2,158 | |||||||||||||||
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Gross
margin
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(43 | ) | 5 | 357 | (38 | ) | 799 | |||||||||||||
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Selling,
general and administrative
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120 | 112 | 153 | 232 | 333 | |||||||||||||||
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Research
and development
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180 | 163 | 243 | 343 | 426 | |||||||||||||||
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Goodwill
impairment (2)
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463 | -- | -- | 463 | -- | |||||||||||||||
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Restructure
(3)
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8 | 13 | -- | 21 | -- | |||||||||||||||
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Other
operating (income) expense (4)
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(42 | ) | (23 | ) | (5 | ) | (65 | ) | (36 | ) | ||||||||||
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Operating
income (loss)
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(772 | ) | (260 | ) | (34 | ) | (1,032 | ) | 76 | |||||||||||
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Interest
income (expense), net
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3 | 9 | 31 | 12 | 71 | |||||||||||||||
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Other
non-operating income (expense)
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(6 | ) | (1 | ) | 5 | (7 | ) | 8 | ||||||||||||
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Income
tax benefit (provision) (5)
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4 | (7 | ) | (6 | ) | (3 | ) | (15 | ) | |||||||||||
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Noncontrolling
interests in net income
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(6 | ) | (3 | ) | (48 | ) | (9 | ) | (77 | ) | ||||||||||
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Net
income (loss)
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$ | (777 | ) | $ | (262 | ) | $ | (52 | ) | $ | (1,039 | ) | $ | 63 | ||||||
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Earnings
(loss) per share:
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||||||||||||||||||||
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Basic
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$ | (1.01 | ) | $ | (0.34 | ) | $ | (0.07 | ) | $ | (1.35 | ) | $ | 0.08 | ||||||
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Diluted
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(1.01 | ) | (0.34 | ) | (0.07 | ) | (1.35 | ) | 0.08 | |||||||||||
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Number
of shares used in per share calculations:
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||||||||||||||||||||
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Basic
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772.4 | 771.9 | 768.7 | 772.2 | 767.9 | |||||||||||||||
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Diluted
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772.4 | 771.9 | 768.7 | 772.2 | 776.3 | |||||||||||||||
Reconciliation
of GAAP to Non-GAAP Financial Measures (6)
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Net
income (loss):
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||||||||||||||||||||
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On
a GAAP basis
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$ | (777 | ) | $ | (262 | ) | $ | (52 | ) | $ | (1,039 | ) | $ | 63 | ||||||
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Goodwill
impairment
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463 | -- | -- | 463 | -- | |||||||||||||||
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On
a non-GAAP basis
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$ | (314 | ) | $ | (262 | ) | $ | (52 | ) | $ | (576 | ) | $ | 63 | ||||||
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Diluted
earnings (loss) per share:
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||||||||||||||||||||
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On
a GAAP basis
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$ | (1.01 | ) | $ | (0.34 | ) | $ | (0.07 | ) | $ | (1.35 | ) | $ | 0.08 | ||||||
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Goodwill
impairment
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0.60 | -- | -- | 0.60 | -- | |||||||||||||||
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On
a non-GAAP basis
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$ | (0.41 | ) | $ | (0.34 | ) | $ | (0.07 | ) | $ | (0.75 | ) | $ | 0.08 | ||||||
CONSOLIDATED
FINANCIAL SUMMARY, Continued
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As
of
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||||||||||||
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Feb.
28,
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Nov.
29,
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Aug.
30,
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||||||||||
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2008
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2007
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2007
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||||||||||
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Cash
and short-term investments
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$ | 1,853 | $ | 2,031 | $ | 2,616 | ||||||
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Receivables
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894 | 1,067 | 994 | |||||||||
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Inventories
(1)
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1,449 | 1,443 | 1,532 | |||||||||
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Total
current assets
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4,304 | 4,652 | 5,234 | |||||||||
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Property,
plant and equipment, net
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8,634 | 8,576 | 8,279 | |||||||||
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Goodwill
(2)
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58 | 515 | 515 | |||||||||
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Total
assets
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13,785 | 14,498 | 14,818 | |||||||||
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Accounts
payable and accrued expenses
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1,299 | 1,317 | 1,385 | |||||||||
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Current
portion of long-term debt
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244 | 281 | 423 | |||||||||
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Total
current liabilities
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1,720 | 1,852 | 2,026 | |||||||||
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Long-term
debt (7)
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2,162 | 1,936 | 1,987 | |||||||||
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Noncontrolling
interests in subsidiaries
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2,808 | 2,760 | 2,607 | |||||||||
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Total
shareholders’ equity
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6,738 | 7,501 | 7,752 | |||||||||
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Six
Months Ended
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||||||||
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Feb.
28,
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Mar.
1,
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|||||||
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2008
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2007
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|||||||
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Net
cash provided by operating activities
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$ | 558 | $ | 716 | ||||
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Net
cash used for investing activities
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(925 | ) | (1,195 | ) | ||||
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Net
cash provided by (used for) financing activities
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(117 | ) | 614 | |||||
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Depreciation
and amortization
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1,015 | 800 | ||||||
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Expenditures
for property, plant and equipment
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(1,306 | ) | (2,180 | ) | ||||
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Cash
received from noncontrolling interests
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192 | 647 | ||||||
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Payments
on equipment purchase contracts
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(274 | ) | (287 | ) | ||||
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Noncash
equipment acquisitions on contracts payable and capital
leases
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297 | 667 | ||||||
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(1)
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The
results for the second and first quarters of fiscal 2008 include charges
of $15 million and $62 million, respectively, to write down the carrying
value of work in process and finished goods inventories of memory products
to their estimated fair market
values.
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(2)
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In
the second quarter of fiscal 2008, in accordance with FASB Statement No.
142, “Goodwill and Other Intangible Assets,” the company performed a test
to determine whether or not its goodwill was impaired. Based on the
results of the test, the company wrote off all of the $463 million of
goodwill associated with its Memory segment as of February 28, 2008. Final
determination of the fair value of goodwill is expected to be completed in
the third quarter of fiscal 2008 and any adjustments to reach the final
amount will be included in that
period.
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(3)
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Other
operating (income) expense for the second quarter of fiscal 2008 includes
gains of $47 million on disposals of semiconductor equipment. Other
operating (income) expense for the first quarter of fiscal 2008 includes
$38 million in receipts from the U.S. government in connection with
anti-dumping tariffs, losses of $27 million from changes in currency
exchange rates and gains of $10 million on disposals of semiconductor
equipment. Other operating expense for the first six months of fiscal 2007
includes a gain of $30 million from the sale of certain intellectual
property to Toshiba Corporation and $10 million from gains on disposals of
semiconductor equipment.
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(4)
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In
the fourth quarter of fiscal 2007, the company announced it was pursuing a
number of initiatives to drive greater cost efficiencies and revenue
growth across its operations. During the second and first quarters of
fiscal 2008 and the fourth quarter of fiscal 2007, the company recorded
restructure charges of $8 million, $13 million and $19 million,
respectively, consisting primarily of employee severance and related costs
resulting from a reduction in the company’s workforce. The first quarter
charge also included a write-down of the carrying value of certain
facilities to their estimated fair values. At the end of the second
quarter of fiscal 2008, liabilities for unpaid portions of the restructure
charge were $6 million.
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(5)
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Income
taxes for fiscal 2008 and 2007 primarily reflect taxes on the company’s
non-U.S. operations and U.S. alternative minimum tax. The company has a
valuation allowance for its net deferred tax asset associated with its
U.S. operations. Tax attributable to U.S. operations in fiscal 2008 and
2007 were substantially offset by changes in the valuation
allowance.
Effective
at the beginning of the first quarter of fiscal 2008, the company adopted
the provisions of FIN 48. In connection with the adoption of FIN 48, the
company increased its liability and decreased retained earnings by $1
million for net unrecognized tax benefits at August 31, 2007. Due to
certain foreign statutes of limitations which expired on December 31,
2007, the company recognized approximately $15 million of previously
unrecognized tax benefits in the second quarter of fiscal 2008. The
company does not expect to recognize any additional previously
unrecognized tax benefits during fiscal
2008.
|
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(6)
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To
supplement our consolidated financial statements presented on a GAAP
basis, the company uses non-GAAP measures of net income and earnings per
share, which are adjusted to exclude goodwill impairment charges.
Management does not consider these charges in evaluating the core
operational activities of the company. In addition, management
believes these non-GAAP measures are useful to investors in enabling them
to better assess changes in the company’s operating results across
different time periods. These measures should be considered in addition to
results prepared in accordance with GAAP, but should not be considered a
substitute for or superior to GAAP results. The non-GAAP financial
measures presented by the company may be different than the non-GAAP
financial measures presented by other
companies.
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(7)
|
In
the second quarter of fiscal 2008, the company’s TECH subsidiary borrowed
$240 million against a credit facility at Singapore Interbank Offered Rate
("SIBOR") plus 2.5%, subject to customary covenants. On March 31, 2008,
TECH entered into a new credit facility that enables it to borrow up to
$600 million at SIBOR plus 2.5%, subject to customary covenants. Payments
under the new facility are due in approximately equal installments over 13
quarters commencing in May 2009. Commencing in May 2009, the amount
available under the credit facility declines quarterly through May 2012.
The company has guaranteed approximately 73% of the outstanding facility,
which will increase to 100% upon the occurrence of certain
conditions.
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