MICRON TECHNOLOGY, INC.
NOTES
(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, Utah that was dedicated to 3D XPoint production. As a result, we classified the property, plant, and equipment as held for sale as of the second quarter of 2021 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 and other related adjustments, we recognized a loss of $23 million included in restructure and asset impairments in the first quarter of 2022.
In 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. The impairment charge was based on Level 3 inputs including expected consideration and the composition of assets included in the sale, which were derived from the agreement with TI. We also recognized a charge of $49 million to cost of goods sold in 2021 to write down 3D XPoint inventory due to our decision to cease further development of this technology. Our 3D XPoint technology development and Lehi facility operations were primarily included in our CNBU segment results.
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)
| 4th Qtr. | 3rd Qtr. | 4th Qtr. | Year Ended | ||||||||||||
|
September 1,
2022 |
June 2,
2022 |
September 2,
2021 |
September 1,
2022 |
September 2,
2021 | |||||||||||
| GAAP gross margin | $ | 2,622 | $ | 4,035 | $ | 3,912 | $ | 13,898 | $ | 10,423 | |||||
| Stock-based compensation | 49 | 57 | 43 | 193 | 186 | ||||||||||
| Inventory accounting policy change to FIFO | — | — | — | — | 133 | ||||||||||
| Change in inventory cost absorption | — | — | — | — | 160 | ||||||||||
| 3D XPoint inventory write-down | — | — | — | — | 49 | ||||||||||
| Other | 5 | 5 | 9 | 22 | 36 | ||||||||||
| Non-GAAP gross margin | $ | 2,676 | $ | 4,097 | $ | 3,964 | $ | 14,113 | $ | 10,987 | |||||
| GAAP operating expenses | $ | 1,101 | $ | 1,031 | $ | 957 | $ | 4,196 | $ | 4,140 | |||||
| Stock-based compensation | (82 | ) | (78 | ) | (50 | ) | (308 | ) | (209 | ) | |||||
| Restructure and asset impairments | (5 | ) | — | (22 | ) | (48 | ) | (488 | ) | ||||||
| Patent license charges | — | — | — | — | (128 | ) | |||||||||
| Other | — | — | 6 | (8 | ) | 5 | |||||||||
| Non-GAAP operating expenses | $ | 1,014 | $ | 953 | $ | 891 | $ | 3,832 | $ | 3,320 | |||||
| GAAP operating income | $ | 1,521 | $ | 3,004 | $ | 2,955 | $ | 9,702 | $ | 6,283 | |||||
| Stock-based compensation | 131 | 135 | 93 | 501 | 395 | ||||||||||
| Inventory accounting policy change to FIFO | — | — | — | — | 133 | ||||||||||
| Change in inventory cost absorption | — | — | — | — | 160 | ||||||||||
| 3D XPoint inventory write-down | — | — | — | — | 49 | ||||||||||
| Restructure and asset impairments | 5 | — | 22 | 48 | 488 | ||||||||||
| Patent license charges | — | — | — | — | 128 | ||||||||||
| Other | 5 | 5 | 3 | 30 | 31 | ||||||||||
| Non-GAAP operating income | $ | 1,662 | $ | 3,144 | $ | 3,073 | $ | 10,281 | $ | 7,667 | |||||
| GAAP net income | $ | 1,492 | $ | 2,626 | $ | 2,720 | $ | 8,687 | $ | 5,861 | |||||
| Stock-based compensation | 131 | 135 | 93 | 501 | 395 | ||||||||||
| Inventory accounting policy change to FIFO | — | — | — | — | 133 | ||||||||||
| Change in inventory cost absorption | — | — | — | — | 160 | ||||||||||
| 3D XPoint inventory write-down | — | — | — | — | 49 | ||||||||||
| Restructure and asset impairments | 5 | — | 22 | 48 | 488 | ||||||||||
| Patent license charges | — | — | — | — | 128 | ||||||||||
| Amortization of debt discount | 6 | 8 | 8 | 31 | 30 | ||||||||||
| (Gain) loss on debt repurchases and conversions | — | — | — | 83 | 1 | ||||||||||
| Other | 5 | 5 | 3 | 30 | 31 | ||||||||||
| Impact of Idaho income tax reform | — | 189 | — | 189 | — | ||||||||||
| Estimated tax effects of above and other tax adjustments | (18 | ) | (24 | ) | (68 | ) | (94 | ) | (300 | ) | |||||
| Non-GAAP net income | $ | 1,621 | $ | 2,939 | $ | 2,778 | $ | 9,475 | $ | 6,976 | |||||
| GAAP weighted-average common shares outstanding - Diluted | 1,106 | 1,121 | 1,138 | 1,122 | 1,141 | ||||||||||
| Adjustment for stock-based compensation | 15 | 15 | 9 | 13 | 10 | ||||||||||
| Non-GAAP weighted-average common shares outstanding - Diluted | 1,121 | 1,136 | 1,147 | 1,135 | 1,151 | ||||||||||
| GAAP diluted earnings per share | $ | 1.35 | $ | 2.34 | $ | 2.39 | $ | 7.75 | $ | 5.14 | |||||
| Effects of the above adjustments | 0.10 | 0.25 | 0.03 | 0.60 | 0.92 | ||||||||||
| Non-GAAP diluted earnings per share | $ | 1.45 | $ | 2.59 | $ | 2.42 | $ | 8.35 | $ | 6.06 | |||||
