MICRON TECHNOLOGY, INC.
NOTES
(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 the existing 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 2020. This revision reduced our aggregate depreciation expense by approximately $675 million in 2020, of which approximately $165 million remained capitalized in inventory as of the end of 2020. Adjusting for the effect of the reduced amount of depreciation expense remaining in inventory, the revision in estimated useful lives benefited both operating income and net income by approximately $150 million and diluted earnings per share by approximately $0.13 for the fourth quarter of 2020, and benefited both operating income and net income by approximately $510 million and diluted earnings per share by approximately $0.45 for 2020.
Adoption of Lease Accounting Standard
In the first quarter of 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.
MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In millions, except per share amounts)
| 4th Qtr. | 3rd Qtr. | 4th Qtr. | Year Ended | ||||||||||||
|
September 3,
2020 |
May 28,
2020 |
August 29,
2019 |
September 3,
2020 |
August 29,
2019 | |||||||||||
| GAAP gross margin | $ | 2,068 | $ | 1,763 | $ | 1,395 | $ | 6,552 | $ | 10,702 | |||||
| Stock-based compensation | 37 | 34 | 29 | 139 | 102 | ||||||||||
| Start-up and preproduction costs | — | — | 12 | — | 58 | ||||||||||
| Employee severance | (1) | — | 47 | — | 73 | ||||||||||
| Other | 7 | 7 | 8 | 27 | 38 | ||||||||||
| Non-GAAP gross margin | $ | 2,111 | $ | 1,804 | $ | 1,491 | $ | 6,718 | $ | 10,973 | |||||
| GAAP operating expenses | $ | 911 | $ | 875 | $ | 745 | $ | 3,549 | $ | 3,326 | |||||
| Stock-based compensation | (52) | (48) | (38) | (189) | (141) | ||||||||||
| Employee severance | — | — | (32) | — | (43) | ||||||||||
| Restructure and asset impairments | (50) | (4) | 122 | (60) | 32 | ||||||||||
| Other | — | — | — | (1) | (2) | ||||||||||
| Non-GAAP operating expenses | $ | 809 | $ | 823 | $ | 797 | $ | 3,299 | $ | 3,172 | |||||
| GAAP operating income | $ | 1,157 | $ | 888 | $ | 650 | $ | 3,003 | $ | 7,376 | |||||
| Stock-based compensation | 89 | 82 | 67 | 328 | 243 | ||||||||||
| Start-up and preproduction costs | — | — | 12 | — | 58 | ||||||||||
| Employee severance | (1) | — | 79 | — | 116 | ||||||||||
| Restructure and asset impairments | 50 | 4 | (122) | 60 | (32) | ||||||||||
| Other | 7 | 7 | 8 | 28 | 40 | ||||||||||
| Non-GAAP operating income | $ | 1,302 | $ | 981 | $ | 694 | $ | 3,419 | $ | 7,801 | |||||
| GAAP net income attributable to Micron | $ | 988 | $ | 803 | $ | 561 | $ | 2,687 | $ | 6,313 | |||||
| Stock-based compensation | 89 | 82 | 67 | 328 | 243 | ||||||||||
| Start-up and preproduction costs | — | — | 12 | — | 58 | ||||||||||
| Employee severance | (1) | — | 79 | — | 116 | ||||||||||
| Restructure and asset impairments | 50 | 4 | (122) | 60 | (32) | ||||||||||
| Amortization of debt discount and other costs | 6 | 4 | 10 | 26 | 49 | ||||||||||
| (Gain) loss on debt repurchases and conversions | — | 2 | 10 | (40) | 396 | ||||||||||
| Other | 7 | 7 | 13 | 28 | 57 | ||||||||||
| Estimated tax effects of above, non-cash changes in net deferred income taxes, assessments of tax exposures, and impact of U.S. income tax reform | 90 | 39 | 7 | 146 | 114 | ||||||||||
| Non-GAAP net income attributable to Micron | $ | 1,229 | $ | 941 | $ | 637 | $ | 3,235 | $ | 7,314 | |||||
| GAAP weighted-average common shares outstanding - Diluted | 1,131 | 1,129 | 1,128 | 1,131 | 1,143 | ||||||||||
| Adjustment for stock-based compensation and capped calls | 11 | 13 | 6 | 10 | 7 | ||||||||||
| Non-GAAP weighted-average common shares outstanding - Diluted | 1,142 | 1,142 | 1,134 | 1,141 | 1,150 | ||||||||||
| GAAP diluted earnings per share | $ | 0.87 | $ | 0.71 | $ | 0.49 | $ | 2.37 | $ | 5.51 | |||||
| Effects of the above adjustments | 0.21 | 0.11 | 0.07 | 0.46 | 0.84 | ||||||||||
| Non-GAAP diluted earnings per share | $ | 1.08 | $ | 0.82 | $ | 0.56 | $ | 2.83 | $ | 6.35 | |||||
