(Unaudited)
Lehi, Utah Fab and 3D XPoint
In the second quarter of 2021, we updated our portfolio strategy to further strengthen our focus on memory and storage innovations for the data center market. In connection therewith, we determined that there was insufficient market validation to justify the ongoing investments required to commercialize 3D XPoint at scale. Accordingly, we ceased development of 3D XPoint technology and engaged in discussions with potential buyers for the sale of our facility located in Lehi that was dedicated to 3D XPoint production. As a result, we classified the property, plant, and equipment as held for sale and ceased depreciating the assets. On June 30, 2021, we announced a definitive agreement to sell our Lehi facility to Texas Instruments Incorporated (“TI”) and closed the sale on October 22, 2021.
In the first quarter of 2022, we received $893 million from TI for the sale of the Lehi facility and disposed of $918 million of net assets, consisting primarily of property, plant, and equipment of $921 million; $55 million of other assets, consisting primarily of a receivable for reimbursement of property taxes, equipment spare parts, and raw materials; and $58 million of liabilities, consisting primarily of a finance lease obligation. As a result of the disposition of the Lehi facility, we recognized a loss of $23 million included in restructure and asset impairments in the first quarter of 2022.
In the third quarter of 2021, we recognized a charge of $435 million included in restructure and asset impairments in connection with the definitive agreement with TI (and a tax benefit of $104 million included in income tax (provision) benefit) to write down the assets held for sale to the expected consideration, net of estimated selling costs. In the second quarter of 2021, we also recognized a charge of $49 million in cost of goods sold to write down 3D XPoint inventory in connection with our decision to cease further development of this technology.
Debt Activity
On November 1, 2021, we issued in a public offering $1.00 billion in principal amount of 2.703% senior notes due 2032 (green bonds), $500 million in principal amount of 3.366% senior notes due 2041, and $500 million in principal amount of 3.477% senior notes due 2051, and received aggregate net proceeds of $1.99 billion.
On November 17, 2021, we redeemed $1.25 billion in principal amount of our 2.497% senior notes due 2023 and $600 million in principal amount of our 4.640% senior notes due 2024 for $1.93 billion in cash and recognized a non-operating loss of $83 million.
| MICRON TECHNOLOGY, INC. | |||||||||
| RECONCILIATION OF GAAP TO NON-GAAP MEASURES | |||||||||
| (In millions, except per share amounts) | |||||||||
| 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||||
|
December 2,
2021 |
September 2,
2021 |
December 3,
2020 | |||||||
| GAAP gross margin | $ | 3,565 | $ | 3,912 | $ | 1,736 | |||
| Stock-based compensation | 43 | 43 | 41 | ||||||
| Other | 8 | 9 | 7 | ||||||
| Non-GAAP gross margin | $ | 3,616 | $ | 3,964 | $ | 1,784 | |||
| GAAP operating expenses | $ | 934 | $ | 957 | $ | 870 | |||
| Stock-based compensation | (73 | ) | (50 | ) | (51 | ) | |||
| Restructure and asset impairments | (38 | ) | (22 | ) | (8 | ) | |||
| Other | 68 | 6 | — | ||||||
| Non-GAAP operating expenses | $ | 891 | $ | 891 | $ | 811 | |||
| GAAP operating income | $ | 2,631 | $ | 2,955 | $ | 866 | |||
| Stock-based compensation | 116 | 93 | 92 | ||||||
| Restructure and asset impairments | 38 | 22 | 8 | ||||||
| Other | (60 | ) | 3 | 7 | |||||
| Non-GAAP operating income | $ | 2,725 | $ | 3,073 | $ | 973 | |||
| GAAP net income | $ | 2,306 | $ | 2,720 | $ | 803 | |||
| Stock-based compensation | 116 | 93 | 92 | ||||||
| Restructure and asset impairments | 38 | 22 | 8 | ||||||
| Amortization of debt discount and other costs | 9 | 8 | 7 | ||||||
| (Gain) loss on debt repurchases and conversions | 83 | — | — | ||||||
| Other | (60
| )
| 3 | 7 | |||||
| Estimated tax effects of above and other tax adjustments | (21 | ) | (68 | ) | (20 | ) | |||
| Non-GAAP net income | $ | 2,471 | $ | 2,778 | $ | 897 | |||
| GAAP weighted-average common shares outstanding - Diluted | 1,130 | 1,138 | 1,135 | ||||||
| Adjustment for stock-based compensation | 11 | 9 | 11 | ||||||
| Non-GAAP weighted-average common shares outstanding - Diluted | 1,141 | 1,147 | 1,146 | ||||||
| GAAP diluted earnings per share | $ | 2.04 | $ | 2.39 | $ | 0.71 | |||
| Effects of the above adjustments | 0.12 | 0.03 | 0.07 | ||||||
| Non-GAAP diluted earnings per share | $ | 2.16 | $ | 2.42 | $ | 0.78 | |||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued
