Micron Technology Inc. 10-Q Summary
Business Context and Reporting Period
This is a quarterly report (Form 10-Q) for Micron Technology, Inc., covering the period ended November 28, 1996. The company is incorporated in Delaware and is a manufacturer of semiconductor memory products. The financial statements are unaudited.
Key Financial Metrics
| Metric | Q3 1996 | Q3 1995 |
|---|---|---|
| Net Sales | $728.1 million | $1,185.8 million |
| Operating Income | $41.4 million | $528.4 million |
| Net Income | $20.6 million | $328.5 million |
| Earnings Per Share (Diluted) | $0.10 | $1.51 |
| Operating Cash Flow | $147.9 million | $535.4 million |
| Cash and Equivalents (End of Period) | $222.3 million | $172.8 million |
| Total Debt (Short-term + Long-term) | $409.4 million | Filing text does not provide a clear comparative total for Q3 1995 |
Margins: Operating margin for the quarter was approximately 5.7% ($41.4m / $728.1m), a significant decline from the prior year. Net income margin was approximately 2.8%.
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased by approximately 38.6% year-over-year, dropping from $1,185.8 million to $728.1 million.
- Profitability Collapse: Operating income fell by 92.2% to $41.4 million, and net income dropped by 93.7% to $20.6 million.
- Inventory Build-up: Inventories increased by $52.7 million (from $251.4 million to $304.1 million) during the quarter, contributing to a negative cash flow impact from working capital.
- Debt Structure: Short-term debt was fully repaid ($90.0 million reduction), while long-term debt increased slightly due to new issuances ($37.6 million) partially offset by repayments.
- Cash Flow: Net cash provided by operating activities decreased significantly to $147.9 million from $535.4 million in the prior year.
Outlook, Risks, and Unusual Items
- Dividends: No cash dividend was declared for the quarter ended November 28, 1996, compared to $0.05 per share in the prior year.
- Capital Expenditures: Expenditures for property, plant, and equipment were $84.6 million, a substantial reduction from $426.7 million in the prior year, indicating a slowdown in expansion or a shift in capital strategy.
- Unusual Items: The company recorded a $10.1 million gain on the sale of an investment, which was deducted from net income to reconcile to operating cash flow.
- Risks/Contingencies: The filing notes "Commitments and contingencies" but does not provide specific details on material legal or operational risks in the provided text.
Investor Verification Checklist
- Verify the specific market conditions or product mix changes causing the 38.6% revenue decline.
- Confirm the reasons for the significant inventory increase ($52.7 million) and potential obsolescence risks.
- Review the full 10-K for details on the "Commitments and contingencies" referenced in the balance sheet.
- Assess the sustainability of the reduced capital expenditure rate ($84.6 million) relative to future growth plans.
- Check subsequent filings for the resumption of dividends or further guidance on earnings recovery.