filings.toolsItem 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
55K characters. Original on sec.gov · Markdown
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
| 1. | Financial Statements: See Index to Consolidated Financial Statements under Item 8. | |
| 2. | Financial Statement Schedules: Schedule I – Condensed Financial Information of the Registrant Schedule II – Valuation and Qualifying Accounts Certain Financial Statement Schedules have been omitted since they are either not required, not applicable, or the information is otherwise included. | |
| 3. | Exhibits. |
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
MICRON TECHNOLOGY, INC.
(Parent Company Only)
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in millions)
| For the year ended | August 31, 2017 | September 1, 2016 | September 3, 2015 | |||||||||
| Net sales | $ | 5,652 | $ | 5,529 | $ | 5,547 | ||||||
| Costs and expenses | ||||||||||||
| Cost of goods sold | 3,478 | 3,625 | 3,329 | |||||||||
| Selling, general, and administrative | 331 | 266 | 299 | |||||||||
| Research and development | 1,551 | 1,500 | 1,483 | |||||||||
| Other operating (income) expense, net | — | 26 | (12 | ) | ||||||||
| Total costs and expenses | 5,360 | 5,417 | 5,099 | |||||||||
| Operating income | 292 | 112 | 448 | |||||||||
| Interest income (expense), net | (366 | ) | (348 | ) | (273 | ) | ||||||
| Other non-operating income (expense), net | (69 | ) | 182 | (85 | ) | |||||||
| (143 | ) | (54 | ) | 90 | ||||||||
| Income tax (provision) benefit | 22 | 10 | 38 | |||||||||
| Equity in earnings (loss) of subsidiaries | 5,210 | (224 | ) | 2,773 | ||||||||
| Equity in net loss of equity method investees | — | (8 | ) | (2 | ) | |||||||
| Net income (loss) attributable to Micron | 5,089 | (276 | ) | 2,899 | ||||||||
| Other comprehensive income (loss) | 64 | (48 | ) | (43 | ) | |||||||
| Comprehensive income (loss) attributable to Micron | $ | 5,153 | $ | (324 | ) | $ | 2,856 |
See accompanying notes to condensed financial statements.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
MICRON TECHNOLOGY, INC.
(Parent Company Only)
CONDENSED BALANCE SHEETS
(in millions except par value amounts)
| As of | August 31, 2017 | September 1, 2016 | ||||||
| Assets | ||||||||
| Cash and equivalents | $ | 2,197 | $ | 2,716 | ||||
| Short-term investments | 319 | 258 | ||||||
| Receivables | 112 | 102 | ||||||
| Notes and accounts receivable from subsidiaries | 1,470 | 1,159 | ||||||
| Finished goods | 47 | 49 | ||||||
| Work in process | 215 | 244 | ||||||
| Raw materials and supplies | 89 | 91 | ||||||
| Other current assets | 42 | 54 | ||||||
| Total current assets | 4,491 | 4,673 | ||||||
| Investment in subsidiaries | 18,169 | 12,897 | ||||||
| Long-term marketable investments | 617 | 414 | ||||||
| Noncurrent notes receivable from and prepaid expenses to subsidiaries | 616 | 709 | ||||||
| Property, plant, and equipment, net | 2,330 | 2,026 | ||||||
| Other noncurrent assets | 335 | 412 | ||||||
| Total assets | $ | 26,558 | $ | 21,131 | ||||
| Liabilities and equity | ||||||||
| Accounts payable and accrued expenses | $ | 929 | $ | 916 | ||||
| Short-term debt and accounts payable to subsidiaries | 700 | 314 | ||||||
| Current debt | 530 | 75 | ||||||
| Other current liabilities | 9 | 16 | ||||||
| Total current liabilities | 2,168 | 1,321 | ||||||
| Long-term debt | 5,320 | 7,313 | ||||||
| Other noncurrent liabilities | 428 | 417 | ||||||
| Total liabilities | 7,916 | 9,051 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable convertible notes | 21 | — | ||||||
| Micron shareholders' equity | ||||||||
| Common stock, $0.10 par value, 3,000 shares authorized, 1,116 shares issued and 1,112 outstanding (1,094 issued and 1,040 outstanding as of September 1, 2016) | 112 | 109 | ||||||
| Other equity | 18,509 | 11,971 | ||||||
| Total Micron shareholders' equity | 18,621 | 12,080 | ||||||
| Total liabilities and equity | $ | 26,558 | $ | 21,131 |
See accompanying notes to condensed financial statements.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
MICRON TECHNOLOGY, INC.
(Parent Company Only)
CONDENSED STATEMENTS OF CASH FLOWS
(in millions)
| For the year ended | August 31, 2017 | September 1, 2016 | September 3, 2015 | |||||||||
| Net cash provided by operating activities | $ | 1,073 | $ | 836 | $ | 995 | ||||||
| Cash flows from investing activities | ||||||||||||
| Purchases of available-for-sale securities | (1,239 | ) | (859 | ) | (1,799 | ) | ||||||
| Expenditures for property, plant, and equipment | (694 | ) | (651 | ) | (609 | ) | ||||||
| Payments to settle hedging activities | (279 | ) | (155 | ) | (135 | ) | ||||||
| Cash contributions to subsidiaries | (2 | ) | (111 | ) | (151 | ) | ||||||
| Cash paid for acquisitions | — | (216 | ) | (57 | ) | |||||||
| Proceeds from sales of available-for-sale securities | 776 | 1,015 | 1,045 | |||||||||
| Proceeds from settlement of hedging activities | 195 | 337 | 78 | |||||||||
| Proceeds from maturities of available-for-sale securities | 194 | 582 | 536 | |||||||||
| (Payments) proceeds on loans to subsidiaries, net | 54 | (550 | ) | 65 | ||||||||
| Cash distributions from subsidiaries | 33 | 47 | 33 | |||||||||
| Other | 7 | 72 | (7 | ) | ||||||||
| Net cash provided by (used for) investing activities | (955 | ) | (489 | ) | (1,001 | ) | ||||||
| Cash flows from financing activities | ||||||||||||
| Repayments of debt | (1,711 | ) | (332 | ) | (1,645 | ) | ||||||
| Payments of licensing obligations | (83 | ) | (83 | ) | (82 | ) | ||||||
| Cash paid to acquire treasury stock | (35 | ) | (148 | ) | (884 | ) | ||||||
| Proceeds from issuance of stock to Nanya | 986 | — | — | |||||||||
| Proceeds from issuance of stock under equity plans | 142 | 48 | 74 | |||||||||
| Proceeds from settlement of capped calls | 125 | — | — | |||||||||
| Proceeds from issuance of debt | — | 1,993 | 2,050 | |||||||||
| Proceeds from equipment sale-leaseback transactions | — | 216 | — | |||||||||
| Other | (69 | ) | (46 | ) | (36 | ) | ||||||
| Net cash provided by (used for) financing activities | (645 | ) | 1,648 | (523 | ) | |||||||
| Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash | 8 | — | — | |||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (519 | ) | 1,995 | (529 | ) | |||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 2,716 | 721 | 1,250 | |||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 2,197 | $ | 2,716 | $ | 721 |
See accompanying notes to condensed financial statements.
MICRON TECHNOLOGY, INC.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NOTES TO CONDENSED FINANCIAL STATEMENTS
(All tabular amounts in millions)
Basis of Presentation
Micron, a Delaware corporation, was incorporated in 1978. Micron is the parent company of its consolidated subsidiaries and, together with its consolidated subsidiaries, is a global leader in advanced semiconductor systems. These condensed financial statements have been prepared on a parent-only basis, and as such, reflect transactions in a manner that may be different than the consolidated financial statements. Under this parent-only presentation, Micron's investments in its consolidated subsidiaries are presented under the equity method of accounting. In accordance with Rule 12-04 of Regulation S-X, these parent-only financial statements do not include all of the information and footnotes required by Generally Accepted Accounting Principles (GAAP) in the United States for annual financial statements. Because these parent-only financial statements and notes do not include all of the information and footnotes required by GAAP in the United States for annual financial statements, they should be read in conjunction with Micron's audited Consolidated Financial Statements contained within Part II, Item 8 of this Annual Report on Form 10-K for the year ended August 31, 2017.
Debt
| 2017 | 2016 | |||||||||||||||||||||||||||||
| Instrument | Stated Rate | Effective Rate | Current | Long-Term | Total | Current | Long-Term | Total | ||||||||||||||||||||||
| Capital lease obligations | N/A | 3.34 | % | $ | 45 | $ | 126 | $ | 171 | $ | 70 | $ | 171 | $ | 241 | |||||||||||||||
| 2022 Notes | 5.88 | % | 6.14 | % | — | — | — | — | 590 | 590 | ||||||||||||||||||||
| 2022 Term Loan B | 3.80 | % | 4.22 | % | 5 | 725 | 730 | 5 | 730 | 735 | ||||||||||||||||||||
| 2023 Notes | 5.25 | % | 5.43 | % | — | 991 | 991 | — | 990 | 990 | ||||||||||||||||||||
| 2023 Secured Notes | 7.50 | % | 7.69 | % | — | 1,238 | 1,238 | — | 1,237 | 1,237 | ||||||||||||||||||||
| 2024 Notes | 5.25 | % | 5.38 | % | — | 546 | 546 | — | 546 | 546 | ||||||||||||||||||||
| 2025 Notes | 5.50 | % | 5.56 | % | — | 515 | 515 | — | 1,139 | 1,139 | ||||||||||||||||||||
| 2026 Notes | 5.63 | % | 5.73 | % | — | 128 | 128 | — | 446 | 446 | ||||||||||||||||||||
| 2032C Notes(1) | 2.38 | % | 5.95 | % | — | 211 | 211 | — | 204 | 204 | ||||||||||||||||||||
| 2032D Notes(1) | 3.13 | % | 6.33 | % | — | 159 | 159 | — | 154 | 154 | ||||||||||||||||||||
| 2033E Notes(1)(2) | 1.63 | % | 4.50 | % | 202 | — | 202 | — | 168 | 168 | ||||||||||||||||||||
| 2033F Notes(1) | 2.13 | % | 4.93 | % | 278 | — | 278 | — | 271 | 271 | ||||||||||||||||||||
| 2043G Notes(3) | 3.00 | % | 6.76 | % | — | 671 | 671 | — | 657 | 657 | ||||||||||||||||||||
| Other notes | 1.65 | % | 1.65 | % | — | 10 | 10 | — | 10 | 10 | ||||||||||||||||||||
| $ | 530 | $ | 5,320 | $ | 5,850 | $ | 75 | $ | 7,313 | $ | 7,388 |
| (1) | Since the closing price of Micron's common stock exceeded 130% of the conversion price per share for at least 20 trading days in the 30 trading-day period ended on June 30, 2017, these notes are convertible by the holders through the calendar quarter ended September 30, 2017. The closing price of Micron's common stock also exceeded the thresholds for the calendar quarter ended September 30, 2017; therefore, these notes are convertible by the holders through December 31, 2017. The 2033 Notes were classified as current as of August 31, 2017 because the terms of these notes require us to pay cash for the principal amount of any converted notes and holders of these notes had the right to convert their notes as of that date. |
| (2) | The net carrying amount for 2017 included $31 million of derivative debt liabilities recognized as a result of our election to settle entirely in cash converted notes with an aggregate principal amount of $16 million. See "Convertible Senior Notes" below. |
| (3) | The 2043G Notes have an original principal amount of $820 million that accretes up to $917 million through the expected term in November 2028 and $1.03 billion at maturity in 2043. |
Micron's convertible and other senior notes are unsecured obligations that rank equally in right of payment with all of Micron's other existing and future unsecured indebtedness, and are effectively subordinated to all of its other existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness. As of August 31, 2017, Micron had $3.70 billion of unsecured debt (net of unamortized discount and debt issuance costs), including all of its convertible notes and the 2023 Notes, 2024 Notes, 2025 Notes, and 2026 Notes, that was structurally subordinated to all liabilities of its subsidiaries, including trade payables. The terms of all of Micron's indebtedness generally contain cross payment and cross acceleration provisions. As of August 31, 2017, Micron had guaranteed $4.16 billion of certain debt obligations of its subsidiaries, but does not guarantee the MMJ Creditor Payments (see "Commitments" below.) Micron's guarantees of its subsidiary debt obligations are unsecured obligations ranking equally in right of payment with all of Micron's other existing and future unsecured indebtedness.
The 2022 Term Loan B and 2023 Secured Notes are collateralized by substantially all of the assets of Micron and MSP, a subsidiary of Micron, subject to certain permitted liens on such assets. Included in Micron's balance sheet as of August 31, 2017 were $8.36 billion of assets which collateralize these notes, which includes $2.14 billion investment in subsidiaries. The 2022 Term Loan B Notes and 2023 Secured Notes are structurally subordinated to the indebtedness and other liabilities of all of Micron's subsidiaries that do not guarantee these debt obligations. MSP guarantees both of these notes.
Capital Lease Obligations
As of August 31, 2017 and September 1, 2016, Micron had production equipment with carrying values of $155 million and $226 million, respectively, under capital leases.
Convertible Senior Notes, Senior Secured Notes, and Unsecured Senior Notes
For further information, see "Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt."
Maturities of Notes Payable and Future Minimum Lease Payments
As of August 31, 2017, maturities of notes payable and future minimum lease payments under capital lease obligations were as follows:
| Notes Payable | Capital Lease Obligations | |||||||
| 2018 | $ | 211 | $ | 51 | ||||
| 2019 | 231 | 44 | ||||||
| 2020 | 305 | 56 | ||||||
| 2021 | 195 | 32 | ||||||
| 2022 | 713 | — | ||||||
| 2023 and thereafter | 4,365 | — | ||||||
| Unamortized discounts and interest, respectively | (341 | ) | (12 | ) | ||||
| $ | 5,679 | $ | 171 |
Commitments
Micron has provided various financial guarantees issued in the normal course of business on behalf of its subsidiaries. These contracts include debt guarantees and guarantees of certain banking facilities. Micron enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. Micron has entered into agreements covering certain activities of its subsidiaries, and occasionally Micron may be required to perform under such agreements on behalf of its subsidiaries.
As of August 31, 2017, the maximum potential amount of future payments Micron could have been required to make under its debt guarantees was approximately $4.16 billion. Substantially all of this amount relates to guarantees for debt of wholly-owned entities whereby Micron would be obligated to perform under the guarantee if a subsidiary were to default on the terms of their debt arrangements. In the event of performance under the guarantee, Micron would be permitted to seek reimbursement from the subsidiary company(ies) through liquidation of the assets which were collateral under various debt instruments. At the
time these contracts were entered into, the collateralized assets approximated the value of the outstanding guarantees. The majority of these guarantees expire at various times between January 2019 and April 2022. Micron guarantees a subsidiary credit facility that provides for up to $750 million of financing. As of August 31, 2017, there were no outstanding amounts drawn under this facility.
Micron has guaranteed the obligations of Micron Semiconductor Asia Pte. Ltd. ("MSA") and Micron Semiconductor (Xi'an) Co. Ltd. ("MXA"), each wholly-owned subsidiaries of Micron, in connection with a service agreement with Powertech Technology Inc. Xi'an ("PTI Xi'an") to provide assembly services to us at our manufacturing site in Xi'an, China. Micron would be required to pay the financial obligations of MSA and/or MXA in the event MSA and/or MXA fail to pay PTI Xi'an for services performed under the assembly services agreement. Micron's guarantee of MSA and of MXA extends through March 2022, the term of the assembly service agreement, but may be further extended through March 2024 if any party extends the assembly services agreement. The maximum potential amount of future payments Micron may be required to pay under this guarantee is indeterminable because the pricing and volume under the assembly services agreement are variable.
Micron has guaranteed the obligations of MSA under the 2021 MSAC Term Loan and the obligations of MSTW under the 2021 MSTW Term Loan. For further information, see "Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – 2021 MSAC Senior Secured Term Loan and 2021 MSTW Senior Secured Term Loan."
Micron has guaranteed the obligations of certain of its subsidiaries to a supplier of capital equipment through June 2019. As of August 31, 2017, Micron had guaranteed $65 million of such payments.
Micron guarantees certain banking facilities for its wholly-owned consolidated entities. Substantially all of these guarantees relate to bank overdraft protections or issuance of commercial letters of credit/bank guarantees. The maximum potential amount of future payments Micron could be required to make under these guarantees of banking facilities varies based on the extent of potential credit exposure. Micron's business processes substantially mitigate the risk of wholly-owned subsidiaries overdrawing their bank accounts and the exposure under commercial letters of credit/bank guarantees is $35 million. The majority of these banking facility guarantees have no contractual expiration.
Contingencies
As is typical in the semiconductor and other high technology industries, from time to time others have asserted, and may in the future assert, that Micron and its subsidiaries' products or manufacturing processes infringe their intellectual property rights. Micron has 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. Micron is currently a party to various litigation regarding patent, commercial, and other matters. Micron is a party to the matters listed in the "Contingencies" note in the consolidated financial statements. For further information, see "Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Contingencies."
Redeemable Convertible Notes
For further information, see "Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Redeemable Convertible Notes."
Related Party Transactions
Substantially all of Micron's activities relate to manufacturing and R&D services performed for its subsidiaries and to royalties received for use of product and process technology. Micron's net sales to consolidated subsidiaries were $5.58 billion, $5.38 billion, and $5.42 billion for 2017, 2016, and 2015, respectively. Gross margins on manufacturing activities are commensurate with market rates for such services. Transactions between Micron and its consolidated subsidiaries are eliminated in consolidation.
Micron engages in various transactions with its equity method investees and eliminate the profits or losses on those transactions to the extent of its ownership interest until such time as the profits or losses are realized. For further information regarding transactions between Micron and its equity method investees, see "Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Equity Method Investments."
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in millions)
MICRON TECHNOLOGY, INC.
| Balance at Beginning of Year | Business Acquisitions | Charged (Credited) to Income Tax Provision | Currency Translation and Charges to Other Accounts | Balance at End of Year | |||||||||||||||
| Deferred Tax Asset Valuation Allowance | |||||||||||||||||||
| Year ended August 31, 2017 | $ | 2,107 | $ | — | $ | (64 | ) | $ | 278 | $ | 2,321 | ||||||||
| Year ended September 1, 2016 | 2,051 | 10 | (63 | ) | 109 | 2,107 | |||||||||||||
| Year ended September 3, 2015 | 2,443 | — | (260 | ) | (132 | ) | 2,051 |
Amounts charged to other accounts for the year ended August 31, 2017 includes $325 million as a result of the adoption of ASU 2016-09. See "Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Recently Adopted Accounting Standards."
- Exhibits.
- Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Commission.
Previous: Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES · Next: Item 16. 10-K SUMMARY