- In the third quarter of 2018, we prepaid debt with an aggregate principal amount of $2.08 billion for cash of $2.11 billion and recognized non-operating losses of $42 million. We repurchased or settled convertible notes with an aggregate principal amount of $228 million for cash of $1.11 billion and recognized non-operating losses of $32 million. Additionally, as of May 31, 2018, $101 million of aggregate principal amount of our convertible notes had converted but will not settle until the fourth quarter of 2018. As a result of the unsettled conversions, the carrying values increased by $456 million as of May 31, 2018 and we recognized non-operating losses of $94 million in the third quarter of 2018. In the second quarter of 2018, we settled convertible notes with an aggregate principal amount of $65 million for cash of $295 million. In the first quarter of 2018, we redeemed notes with an aggregate principal amount of $2.25 billion for cash of $2.42 billion and recognized non-operating losses of $190 million.
In the first nine months of 2018, Intel Corporation provided non-interest bearing convertible debt financing of $969 million to IM Flash Technologies, LLC ("IMFT") pursuant to the terms of the IMFT joint venture agreement.
- On December 22, 2017, the United States enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act") that lowers the U.S. corporate income tax rate from 35% to 21% and significantly affects how income from foreign operations is taxed in the United States. As a result of our fiscal year-end, our U.S. statutory federal rate will be 25.7% for 2018 (based on the 35% corporate rate through December 31, 2017 and 21% from that date through the end of fiscal year 2018) and 21% for subsequent years. The Tax Act imposes a one-time transition tax in 2018 on the higher of our accumulated foreign income, as determined as of November 2, 2017 or December 31, 2017 (the "Repatriation Tax"); provides a U.S. federal tax exemption on foreign earnings distributed to the United States; and, beginning in 2019, creates a new minimum tax on certain foreign earnings in excess of a deemed return on tangible assets (the "Foreign Minimum Tax"). The Tax Act allows us to elect to pay any Repatriation Tax due in eight annual interest-free payments in increasing amounts beginning in December 2018. In connection with the provisions of the Tax Act, we are continuing to evaluate whether to account for the Foreign Minimum Tax provisions that begin for us in 2019 as a period cost or in our measurement of deferred taxes.
The Securities and Exchange Commission Staff Accounting Bulletin No. 118 allows the use of provisional amounts (reasonable estimates) if our analyses of the impacts of the Tax Act has not been completed when our financial statements are issued. Provisional amounts may be adjusted during a one-year measurement period as accounting for the income tax effects of the Tax Act are completed or as estimates are revised. Our income tax (provision) benefit consisted of the following:
| 3rd Qtr. | 2nd Qtr. | 3rd Qtr. | Nine Months Ended | ||||||||||||||||
| May 31, 2018 | March 1, 2018 | June 1, 2017 | May 31, 2018 | June 1, 2017 | |||||||||||||||
| Provisional estimate for the Repatriation Tax, net of adjustments related to uncertain tax positions | $ | 222 | $ | (1,335 | ) | $ | — | $ | (1,113 | ) | $ | — | |||||||
| Remeasurement of deferred tax assets and liabilities reflecting the lower U.S. corporate tax rates | — | (133 | ) | — | (133 | ) | — | ||||||||||||
| Provisional estimate for the release of the valuation allowance on the net deferred tax assets of our U.S. operations | — | 1,337 | — | 1,337 | — | ||||||||||||||
| Utilization of and other changes in net deferred tax assets of MMJ, MMT, and MTTW | (35 | ) | (17 | ) | (31 | ) | (78 | ) | (52 | ) | |||||||||
| Other income tax (provision) benefit | (78 | ) | 5 | (61 | ) | (161 | ) | (109 | ) | ||||||||||
| $ | 109 | $ | (143 | ) | $ | (92 | ) | $ | (148 | ) | $ | (161 | ) | ||||||
- In October 2017, we issued 34 million shares of our common stock for $41.00 per share in a public offering, for proceeds of $1.36 billion, net of underwriting fees and other offering costs.
| MICRON TECHNOLOGY, INC. | |||||||||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP RESULTS | |||||||||||||||||||||||||||||||||||
| (in millions except per share amounts) | |||||||||||||||||||||||||||||||||||
| 3rd Qtr. | 2nd Qtr. | 3rd Qtr. | |||||||||||||||||||||||||||||||||
| May 31, 2018 | March 1, 2018 | June 1, 2017 | |||||||||||||||||||||||||||||||||
| GAAP | Adj |
Non-
GAAP | GAAP | Adj |
Non-
GAAP | GAAP | Adj |
Non-
GAAP | |||||||||||||||||||||||||||
| Net sales | $ | 7,797 | $ | — | $ | 7,797 | $ | 7,351 | $ | — | $ | 7,351 | $ | 5,566 | $ | — | $ | 5,566 | |||||||||||||||||
| Cost of goods sold | 3,074 | (27 | ) | 3,047 | 3,081 | (26 | ) | 3,055 | 2,957 | (62 | ) | 2,895 | |||||||||||||||||||||||
| Gross margin | 4,723 | 27 | 4,750 | 4,270 | 26 | 4,296 | 2,609 | 62 | 2,671 | ||||||||||||||||||||||||||
| percent of net sales | 60.6 % | 60.9 % | 58.1 % | 58.4 % | 46.9 % | 48.0 % | |||||||||||||||||||||||||||||
| Selling, general, and administrative | 211 | (14 | ) | 197 | 196 | (16 | ) | 180 | 204 | (20 | ) | 184 | |||||||||||||||||||||||
| Research and development | 603 | (15 | ) | 588 | 523 | (14 | ) | 509 | 434 | (14 | ) | 420 | |||||||||||||||||||||||
| Other operating (income) expense, net | (44 | ) | (8 | ) | (52 | ) | (16 | ) | (7 | ) | (23 | ) | 8 | (12 | ) | (4 | ) | ||||||||||||||||||
| Operating expenses | 770 | (37 | ) | 733 | 703 | (37 | ) | 666 | 646 | (46 | ) | 600 | |||||||||||||||||||||||
| Operating income | 3,953 | 64 | 4,017 | 3,567 | 63 | 3,630 | 1,963 | 108 | 2,071 | ||||||||||||||||||||||||||
| percent of net sales | 50.7 % | 51.5 % | 48.5 % | 49.4 % | 35.3 % | 37.2 % | |||||||||||||||||||||||||||||
| Interest income (expense), net | (44 | ) | 23 | (21 | ) | (61 | ) | 26 | (35 | ) | (143 | ) | 30 | (113 | ) | ||||||||||||||||||||
| Other non-operating income (expense), net | (193 | ) | 194 | 1 | (53 | ) | 53 | — | (83 | ) | 83 | — | |||||||||||||||||||||||
| 3,716 | 281 | 3,997 | 3,453 | 142 | 3,595 | 1,737 | 221 | 1,958 | |||||||||||||||||||||||||||
| Income tax (provision) benefit | 109 | (206 | ) | (97 | ) | (143 | ) | 44 | (99 | ) | (92 | ) | 28 | (64 | ) | ||||||||||||||||||||
| Equity in net income (loss) of equity method investees | (2 | ) | — | (2 | ) | 1 | — | 1 | 2 | — | 2 | ||||||||||||||||||||||||
| Net income | 3,823 | 75 | 3,898 | 3,311 | 186 | 3,497 | 1,647 | 249 | 1,896 | ||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | — | — | — | (2 | ) | — | (2 | ) | — | — | — | ||||||||||||||||||||||||
| Net income attributable to Micron | $ | 3,823 | $ | 75 | $ | 3,898 | $ | 3,309 | $ | 186 | $ | 3,495 | $ | 1,647 | $ | 249 | $ | 1,896 | |||||||||||||||||
| Shares used in calculations | 1,235 | 3 | 1,238 | 1,238 | 2 | 1,240 | 1,177 | (8 | ) | 1,169 | |||||||||||||||||||||||||
| Diluted earnings per share | $ | 3.10 | $ | 0.05 | $ | 3.15 | $ | 2.67 | $ | 0.15 | $ | 2.82 | $ | 1.40 | $ | 0.22 | $ | 1.62 | |||||||||||||||||
