(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 fiscal 2020. This revision reduced our aggregate depreciation expense by approximately $510 million in the first nine months of fiscal 2020, of which approximately $150 million remained capitalized in inventory as of the end of the third quarter of fiscal 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 $160 million and diluted earnings per share by approximately $0.14 for the third quarter of fiscal 2020, and benefited both operating income and net income by approximately $360 million and diluted earnings per share by approximately $0.32 for the first nine 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
On April 24, 2020, we issued $1.25 billion aggregate principal amount of our 2.497% senior notes due 2023 in a public offering.
On March 13, 2020, we drew the $2.50 billion available under our revolving credit facility and on April 24, 2020, we repaid the $2.50 billion outstanding principal amount under our revolving credit facility. As of May 28, 2020, $2.50 billion was available to us under the revolving credit facility.
MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In millions, except per share amounts)
| 3rd Qtr. | 2nd Qtr. | 3rd Qtr. | |||||||||
|
May 28,
2020 |
February 27,
2020 |
May 30,
2019 | |||||||||
| GAAP gross margin | $ | 1,763 | $ | 1,355 | $ | 1,828 | |||||
| Stock-based compensation | 34 | 37 | 24 | ||||||||
| Start-up and preproduction costs | — | — | 23 | ||||||||
| Other | 7 | 6 | 9 | ||||||||
| Non-GAAP gross margin | $ | 1,804 | $ | 1,398 | $ | 1,884 | |||||
| GAAP operating expenses | $ | 875 | $ | 915 | $ | 818 | |||||
| Stock-based compensation | (48 | ) | (48 | ) | (34 | ) | |||||
| Restructure and asset impairments | (4 | ) | (10 | ) | (9 | ) | |||||
| Other | — | (1 | ) | (1 | ) | ||||||
| Non-GAAP operating expenses | $ | 823 | $ | 856 | $ | 774 | |||||
| GAAP operating income | $ | 888 | $ | 440 | $ | 1,010 | |||||
| Stock-based compensation | 82 | 85 | 58 | ||||||||
| Start-up and preproduction costs | — | — | 23 | ||||||||
| Restructure and asset impairments | 4 | 10 | 9 | ||||||||
| Other | 7 | 7 | 10 | ||||||||
| Non-GAAP operating income | $ | 981 | $ | 542 | $ | 1,110 | |||||
| GAAP net income attributable to Micron | $ | 803 | $ | 405 | $ | 840 | |||||
| Stock-based compensation | 82 | 85 | 58 | ||||||||
| Start-up and preproduction costs | — | — | 23 | ||||||||
| Restructure and asset impairments | 4 | 10 | 9 | ||||||||
| Amortization of debt discount and other costs | 4 | 6 | 10 | ||||||||
| (Gain) loss on debt repurchases and conversions | 2 | — | 317 | ||||||||
| Other | 7 | 7 | 13 | ||||||||
| Impact of U.S. income tax reform | — | — | (42 | ) | |||||||
| Estimated tax effects of above, non-cash changes in net deferred income taxes, and assessments of tax exposures | 39 | 4 | (30 | ) | |||||||
| Non-GAAP net income attributable to Micron | $ | 941 | $ | 517 | $ | 1,198 | |||||
| GAAP weighted-average common shares outstanding - Diluted | 1,129 | 1,133 | 1,129 | ||||||||
| Adjustment for stock-based compensation and capped calls | 13 | 11 | 6 | ||||||||
| Non-GAAP weighted-average common shares outstanding - Diluted | 1,142 | 1,144 | 1,135 | ||||||||
| GAAP diluted earnings per share | $ | 0.71 | $ | 0.36 | $ | 0.74 | |||||
| Effects of the above adjustments | 0.11 | 0.09 | 0.31 | ||||||||
| Non-GAAP diluted earnings per share | $ | 0.82 | $ | 0.45 | $ | 1.05 | |||||
