(Unaudited)
Property, Plant, and Equipment
We periodically assess the estimated useful lives of our property, plant, and equipment. Based on our assessment of planned technology node transitions, capital spending, and re-use rates, we revised the estimated useful lives of equipment in our NAND wafer fabrication facilities and our research and development facilities from five years to seven years as of the beginning of the first quarter of fiscal 2020. As a result, we estimate the reduction in non-cash depreciation expense for assets existing at that time benefited operating income and net income by approximately $125 million and diluted earnings per share by approximately $0.11 for the second quarter of fiscal 2020, and benefited operating income and net income by approximately $200 million and diluted earnings per share by approximately $0.17 for the first six months of fiscal 2020.
Adoption of Lease Accounting Standard
In the first quarter of fiscal 2020, we adopted ASU 2016-02 – Leases (as amended, “ASC 842”), which amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of lease payments. In adoption, we applied the modified retrospective method and elected to not recast prior periods. As a result, we recognized $567 million for operating lease liabilities and right-of-use assets and reclassified an additional $66 million of other balances to right-of-use assets to conform to the new presentation requirements of ASC 842.
Debt Activity
Subsequent to the second quarter of fiscal 2020, on March 13, 2020, we drew the $2.5 billion available under our revolving credit facility. Borrowings under the revolving credit facility are scheduled to mature on July 3, 2023, and we may repay amounts borrowed any time without penalty. The revolving credit facility bears interest at a rate equal to LIBOR plus 1.25% based on our current corporate credit rating and leverage ratio.
MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In millions, except per share amounts)
| 2nd Qtr. | 1st Qtr. | 2nd Qtr. | ||||||||||
|
February 27,
2020 |
November 28,
2019 |
February 28,
2019 | ||||||||||
| GAAP gross margin | $ | 1,355 | $ | 1,366 | $ | 2,864 | ||||||
| Stock-based compensation | 37 | 31 | 23 | |||||||||
| Start-up and preproduction costs | — | — | 15 | |||||||||
| Employee severance | — | 1 | 13 | |||||||||
| Other | 6 | 7 | 13 | |||||||||
| Non-GAAP gross margin | $ | 1,398 | $ | 1,405 | $ | 2,928 | ||||||
| GAAP operating expenses | $ | 915 | $ | 848 | $ | 907 | ||||||
| Stock-based compensation | (48 | ) | (41 | ) | (34 | ) | ||||||
| Employee severance | — | — | (4 | ) | ||||||||
| Restructure and asset impairments | (10 | ) | 4 | (51 | ) | |||||||
| Other | (1 | ) | — | — | ||||||||
| Non-GAAP operating expenses | $ | 856 | $ | 811 | $ | 818 | ||||||
| GAAP operating income | $ | 440 | $ | 518 | $ | 1,957 | ||||||
| Stock-based compensation | 85 | 72 | 57 | |||||||||
| Start-up and preproduction costs | — | — | 15 | |||||||||
| Employee severance | — | 1 | 17 | |||||||||
| Restructure and asset impairments | 10 | (4 | ) | 51 | ||||||||
| Other | 7 | 7 | 13 | |||||||||
| Non-GAAP operating income | $ | 542 | $ | 594 | $ | 2,110 | ||||||
| GAAP net income attributable to Micron | $ | 405 | $ | 491 | $ | 1,619 | ||||||
| Stock-based compensation | 85 | 72 | 57 | |||||||||
| Start-up and preproduction costs | — | — | 15 | |||||||||
| Employee severance | — | 1 | 17 | |||||||||
| Restructure and asset impairments | 10 | (4 | ) | 51 | ||||||||
| Amortization of debt discount and other costs | 6 | 10 | 11 | |||||||||
| (Gain) loss on debt repurchases and conversions | — | (42 | ) | 83 | ||||||||
| Other | 7 | 7 | 16 | |||||||||
| Impact of U.S. income tax reform | — | — | (14 | ) | ||||||||
| Estimated tax effects of above, non-cash changes in net deferred income taxes, and assessments of tax exposures | 4 | 13 | 116 | |||||||||
| Non-GAAP net income attributable to Micron | $ | 517 | $ | 548 | $ | 1,971 | ||||||
| GAAP weighted-average common shares outstanding - Diluted | 1,133 | 1,129 | 1,141 | |||||||||
| Adjustment for capped calls and stock-based compensation | 11 | 9 | 8 | |||||||||
| Non-GAAP weighted-average common shares outstanding - Diluted | 1,144 | 1,138 | 1,149 | |||||||||
| GAAP diluted earnings per share | $ | 0.36 | $ | 0.43 | $ | 1.42 | ||||||
| Effects of the above adjustments | 0.09 | 0.05 | 0.29 | |||||||||
| Non-GAAP diluted earnings per share | $ | 0.45 | $ | 0.48 | $ | 1.71 | ||||||
