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Micron Technology, Inc. F3Q10 (Qtr End 06/03/10) Earnings Call Transcript

Micron Technology, Inc. F3Q10 (Qtr End 06/03/10) Earnings Call Transcript

Micron Technology, Inc. (MU)

F3Q10 (Qtr End 06/03/10) Earnings Call Transcript

June 28, 2010 4:30 pm ET

Executives

Kipp Bedard – VP, IR

Ron Foster – CFO and VP, Finance

Mark Adams – VP, Worldwide Sales

Mark Durcan – President and COO

Analysts

Tim Luke – Barclays Capital

Daniel Berenbaum – Auriga USA

Kate Kotlarsky – Goldman Sachs

David Wong – Wells Fargo

Alex Gauna – JMP Securities

Glen Yeung – Citigroup

Daniel Amir – Lazard Capital Markets

Gary Hsueh – Oppenheimer & Co

Uche Orji – UBS

Kevin Cassidy – Thomas Weisel Partners

Bob Gujavarty – Deutsche Bank

TheStreet Recommends

Vipon Nyag [ph] – Macquarie Capital

Bill Dezellem – Tieton Capital Management

Presentation

Operator

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Good afternoon. My name is Patty, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Micron Technology’s third 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 period. (Operator instructions) Thank you. 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 third quarter 2010 financial release conference call. On the call today is 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 of Worldwide Sales.

This conference call, including audio and slides, is also available on Micron’s website at micron.com. If you have not had an opportunity to review the third quarter 2010 financial press release, it is available on our website again at micron.com. Our call will be approximately 60 minutes in length. There will be an audio replay of this call, accessed by dialing 706-645-9291 with a confirmation code of 81966928. This replay will run through Monday, July 5, 2010, at 5:30 PM Mountain Time. A web cast replay will be available on the company’s website until June 28, 2011.

We encourage you to monitor our website again at micron.com 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 under no duty to update any of the forward-looking statements after the date of the presentation to confirm these statements to actual results.

I’d now like to turn the call over to Mr. Ron Foster. Ron?

Ron Foster

Thanks, Kipp. Our press release is available on our website. It has been a busy quarter with the Numonyx acquisition and other items. Let me first set the stage with the financial summary for the quarter. Then I will review with you some of the significant or unusual items in the quarter before diving into the operating details.

The company’s third quarter fiscal 2010 ended June 3, 2010. The company reported net income of $939 million or $0.92 per diluted share on net sales of $2.3 billion. Included in net income are gains related to purchase accounting for the Numonyx acquisition aggregating to $488 million. Of that gain 437 million is presented on a separate line on the income statement and 51 million is reflected as a benefit on the income tax line. In computing earnings per share, the shares issued in the Numonyx acquisition are included only for the period they were outstanding, roughly 4 weeks out of the 13 week quarter.

Now let us look at some of the significant or unusual items that arose in the quarter starting with the Numonyx acquisition. The purchase price for Numonyx is based on 130 million shares issued to the Numonyx shareholders and consideration for the employee holders of restricted stock units that were assumed by Micron. The total purchase price was $1.1 billion.

The new purchase accounting rules under FAS141R were effective for Micron with the beginning of our current fiscal year. Under the new rules, the net assets are recognized on the opening balance sheet at their fair values and any excess over the purchase price is recorded as a gain in the period of the acquisition. That gain in the Numonyx acquisition was $488 million, which is included in the results for the third quarter. This purchase price allocation is preliminary. While we are not aware of any adjustments to the allocation, there could be adjustments in the fourth quarter.

There were no acquisition intangibles recognized in the purchase accounting, and the value of depreciating assets was just slightly lower than their historical cost reflected in the Numonyx financial statements before the acquisition. Now let us move on to a couple of other noteworthy items occurring in the quarter. During the second quarter the company accrued $64 million for estimated settlement costs for pending litigation, including the indirect purchasers’ antitrust case. Settlements to these matters are not final; however, we believe they will be finalized in the fourth quarter.

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