Micron: Fiscal 2Q13 Financial Results

Micron Technology, Inc. announced results of operations for its second quarter of fiscal 2013, which ended February 28, 2013.

                     2Q13 Revenue by Category

For the second quarter, the company had a net loss attributable to Micron shareholders of $286 million, or $0.28 per diluted share, on net sales of $2.1 billion. The results for the second quarter of fiscal 2013 compare to a net loss of $275 million, or $0.27 per diluted share, on net sales of $1.8 billion for the first quarter of fiscal 2013, and a net loss of $282 million, or $0.29 per diluted share, on net sales of $2.0 billion for the second quarter of fiscal 2012.

Results of operations for the second quarter of fiscal 2013 include losses of $120 million from changes in the market value of the company’s currency hedges entered into in connection with its planned acquisition of Elpida Memory, Inc. and Rexchip Electronics Corporation. The results also include a loss of $62 million associated with the expected sale of the company’s 200 mm wafer fabrication facility in Avezzano, Italy, in the first half of calendar 2013.

The company’s consolidated gross margin improved to 18% in the second quarter of fiscal 2013 compared to 12% in the first quarter of fiscal 2013. Gross margin improvements were realized from sales of NAND flash products and from sales of DRAM products due to decreases in manufacturing costs.

"We were pleased with the overall improvement in our operational performance and excited to see the effects of our restructured partnership with Inotera drive bit shipment growth during the quarter. We believe the resultant increase in capacity from existing industry production will provide us the scale we need to reinforce our leadership position," said Micron CEO Mark Durcan.

Revenues from sales of DRAM products in the second quarter of fiscal 2013 were 24% higher compared to the first quarter of fiscal 2013, due to a 38% increase in sales volume partially offset by a 10% decrease in ASPs. Revenues from sales of NAND flash products were 8% higher in the second quarter of fiscal 2013 compared to the first quarter of fiscal 2013, primarily due to a 13% increase in Trade NAND Flash sales volume. Sales of NOR flash products were 14% lower in the second quarter of fiscal 2013, compared to the first quarter of fiscal 2013, due to decreases in sales volumes and ASPs.

Cash flows from operations for the first six months of fiscal 2013 were $470 million, while investments in capital expenditures were $891 million. In the second quarter of fiscal 2013, the company issued $600 million of convertible senior notes. In connection therewith, the company used $477 million to repurchase a portion of its 2014 notes. The company ended the quarter with cash and investments of $2.8 billion.

On February 25, 2013, the company entered into an agreement to sell Micron Technology Italia, Srl., a wholly-owned subsidiary, including its 200 mm semiconductor wafer fabrication facility assets in Avezzeno, Italy, to LFoundry Marsica S.R.L. As consideration for the shares of MIT, the company expects to receive a long-term note from LFoundry. Under the terms of the agreements, the company will assign to LFoundry its supply agreement with Aptina Imaging Corporation for CMOS image sensors manufactured at the Avezzano facility. The assets and liabilities of MIT were classified as held for sale in the second quarter of fiscal 2013 and were written down to their estimated fair values. As a result, in the second quarter of fiscal 2013, the company recorded an impairment loss of $62 million.

Gain (loss) from changes in currency exchange rates in the second quarter and first six months of fiscal 2013 included currency losses of $120 million and $178 million, respectively, from changes in the market value of currency hedges executed in connection with the company’s planned acquisition of Elpida Memory, Inc. and Rexchip Electronics Corporation. Loss from extinguishment of debt for the second quarter of fiscal 2013 included a $31 million loss recognized in connection with the partial repurchase of the 2014 Notes.