The tables above reconcile GAAP to non-GAAP measures of gross margin, operating expenses, operating income, net income attributable to Micron, diluted shares, diluted earnings per share, adjusted free cash flow, and net cash. The non-GAAP adjustments above may or may not be infrequent or nonrecurring in nature, but are a result of periodic or non-core operating activities. We believe this non-GAAP information is helpful in understanding trends and in analyzing our operating results and earnings. We are providing this information to investors to assist in performing analysis of our operating results. When evaluating performance and making decisions on how to allocate our resources, management uses this non-GAAP information and believes investors should have access to similar data when making their investment decisions. We believe these non-GAAP financial measures increase transparency by providing investors with useful supplemental information about the financial performance of our business, enabling enhanced comparison of our operating results between periods and with peer companies. The presentation of these adjusted amounts varies from amounts presented in accordance with U.S. GAAP and therefore may not be comparable to amounts reported by other companies. Our management excludes the following items in analyzing our operating results and understanding trends in our earnings:

• Stock-based compensation;
• Flow-through of business acquisition-related inventory adjustments;
• Acquisition-related costs;
• Start-up and preproduction costs;
• Employee severance;
• Restructure and asset impairments;
• Amortization of debt discount and other costs, including the accretion of non-cash interest expense associated with our convertible notes and other debt;
• Gains and losses from debt repurchases and conversions;
• Gains and losses from business acquisition activities;
• Initial impact of inventory accounting policy change to FIFO and change in inventory cost absorption in the second quarter of 2021; and
• The estimated tax effects of above, non-cash changes in net deferred income taxes, assessments of tax exposures, and significant changes in tax law.
  

Non-GAAP diluted shares are adjusted for the impact of additional shares resulting from the exclusion of stock-based compensation from non-GAAP income. Non-GAAP diluted shares also include the impact of capped calls, which are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of convertible notes, based on the average share price for the period the capped calls were outstanding.

MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK

		GAAP Outlook		Adjustments			Non-GAAP Outlook
Revenue		$5.8 billion ± $200 million		—			$5.8 billion ± $200 million
Gross margin		25% ± 1%		6%	A		31% ± 1%
Operating expenses		$882 million ± $25 million		$57 million	B		$825 million ± $25 million
Interest (income) expense, net		$37 million		$2 million	C		$35 million
Diluted earnings per share(1)		$0.41 ± $0.07		$0.34	A, B, C, D		$0.75 ± $0.07

Non-GAAP Adjustments (in millions)
A	Inventory accounting policy change to FIFO – cost of goods sold						$	135
A	Change in inventory cost absorption – cost of goods sold						165
A	Stock-based compensation – cost of goods sold						54
A	Other – cost of goods sold						7
B	Stock-based compensation – research and development						30
B	Stock-based compensation – sales, general, and administrative						27
C	Amortization of debt discount and other costs						2
D	Tax effects of the above items and non-cash changes in net deferred income taxes						(27		)
							$	393

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