Micron Technology, Inc. Reports Results for the Fourth Quarter and Full Year of Fiscal 2020

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 compensation37 34 29 139 102 
Start-up and preproduction costs  12  58 
Employee severance(1)  47  73 
Other7 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  

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