MICRON TECHNOLOGY, INC. REPORTS RESULTS FOR THE SECOND QUARTER OF FISCAL 2020

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 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 compensation37  31  23  
Start-up and preproduction costs    15  
Employee severance  1  13  
Other6  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    

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