Micron Technology, Inc. (MU)

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Micron Technology Inc. (MU)

F1Q10 Earnings Call

December 22, 2009 4:30 pm ET


Steve Appleton - Chief Executive Officer

Mark Durcan - President & Chief Operating Officer

Ron Foster - Chief Financial Officer & Vice President of Finance

Mark Adams - Vice President, Worldwide Sales

Kipp Bedard - Vice President, Investor Relations


Gary Hsueh - Oppenheimer

Daniel Amir - Lazard

Jay Lu - Auriga USA

Tim Luke - Barclays Capital

Jim Covello - Goldman Sachs

Uche Orji - UBS

David Wong - Wells Fargo

Vijay Rakesh - Thinkequity

Kevin Cassidy - Thomas Weisel

Hans Mosesmann - Raymond James

Bob Gujavarty - Deutsche Bank

Bill Dezellem - Titan Capital Management

Atif Malik - Morgan Stanley

Manish Goyal - CREF Investments



Good afternoon. My name is Julian and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Micron Technology’s first quarter 2010 financial release conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session period. (Operator Instructions)

It is now my pleasure to turn the floor over to your host, Kipp Bedard. Sir, you may begin your conference.

Kipp Bedard

Thank you very much and welcome to Micron Technology’s first quarter 2010 financial release conference call. On the call today are Steve Appleton, Chairman and CEO; Mark Durcan, President and Chief Operating Officer; Ron Foster, Chief Financial Officer and Vice President of Finance; and Mark Adams, Vice President, Worldwide Sales.

This conference call, including audio and slides, is also available on Micron’s website at If you have not had an opportunity to review the first quarter 2010 financial press release, it is available on our website at Our call will be approximately 60 minutes in length. There will be an audio replay of this call.

You may access that by dialing 706-645-9291 and use a confirmation code of 45034396 This replay will run through Tuesday, December 29, 2009, at 5:30 pm Mountain Time. A webcast replay will be available on the company’s website until December 22, 2010.

We encourage you to monitor our website again at throughout the quarter for the most current information on the company, including information on the various financial conferences that we will be attending.

Please note the following Safe Harbor statement. During the course of this meeting, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company and the industry. We wish to caution you that such statements are predictions, and that actual events or results may differ materially.

We refer you 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 projections or forward-looking statements. These certain factors can be found in the Investor Relations section of Micron’s website.

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 no duty to update any of the forward-looking statements after the date of the presentation to confirm these statements to actual results.

I’ll now turn the call over to Mr. Ron Foster. Ron.

Ron Foster

Our press release is available on our website. Let me start after the brief summary of the financial results of the first quarter of fiscal 2010, which ended December 3, 2009. The company reported net income of $204 million or $0.23 per diluted share, our net sales of $1.7 billion. This is our first quarter of profitability in the past 12 quarters and is our highest quarterly revenue since Q1 2001, with the profitability from the first quarter, a couple items are triggered.

First some potentially diluted securities become dilutive and are included in a number of shares used to compute EPS. This includes in the money stock options as well as our convertible debt securities. Second, certain accruals for variable pay programs were recognized in Q1, where payouts are tied to financial performance. This expense showed up primarily in SG&A.

In addition, with the beginning of this fiscal year, a couple of new accounting rules are effective for Micron; the cost is to recast prior financial statements to confirm to the new presentation format. First, to the FASB staff position on convertible debt instruments caused us to bifurcate the accounting for our 2007 $1.3 billion convertible security into their separate debt and equity components.

Accordingly, about $300 million was reclassified from debt into additional capital in the equity section as of the beginning of fiscal 2010. The remaining $1 billion balance classified to debt is accreted to the $1.3 billion face amount of the security to step up non-cash interest expense over the remaining term of the security. This resulted in an additional $13 million of non-cash interest expense in the first quarter and will be about the same amount in each of the remaining quarters in this fiscal year.

If you recall, our fourth quarter posted a net loss of $88 million, or $0.10 per diluted shares, our net sales of $1.3 billion. With this increase in non-cash interest expense, the Q4 net loss has been increased to $100 million and $0.12 diluted share. The second item is the reclassification of minority interest, or noncontrolling interest on both the balance sheet and income statement.

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