8-K
MICRON TECHNOLOGY INC (MU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
September 29, 2020
Date of Report (date of earliest event reported)
| MICRON TECHNOLOGY, INC. | ||
|---|---|---|
| (Exact name of registrant as specified in its charter) | ||
| Delaware | 1-10658 | 75-1618004 |
| --- | --- | --- |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| 8000 South Federal Way | ||
| --- | ||
| Boise, Idaho 83716-9632 | ||
| (Address of principal executive offices) | ||
| (208) 368-4000 | ||
| --- | ||
| (Registrant’s telephone number, including area code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.10 per share | MU | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On September 29, 2020, we announced the financial results for our fourth quarter and full year of fiscal 2020 ended September 3, 2020. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 2.02 of this Current Report on Form 8-K shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing or document.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (d) Exhibits. | |
| Exhibit No. | Description |
| --- | --- |
| 99.1 | Press Release issued on September 29, 2020 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MICRON TECHNOLOGY, INC. | |||
|---|---|---|---|
| Date: | September 29, 2020 | By: | /s/ David A. Zinsner |
| Name: | David A. Zinsner | ||
| Title: | Senior Vice President and Chief Financial Officer |
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
| Contacts: | Farhan Ahmad | Erica Rodriguez Pompen |
|---|---|---|
| Investor Relations | Media Relations | |
| farhanahmad@micron.com | epompen@micron.com | |
| (408) 834-1927 | (408) 834-1873 |
MICRON TECHNOLOGY, INC. REPORTS RESULTS FOR THE
FOURTH QUARTER AND FULL YEAR OF FISCAL 2020
DRAM portfolio strengthened with 1z ramp; High-value NAND shipments reach record levels in FY20
BOISE, Idaho, Sept. 29, 2020 – Micron Technology, Inc. (Nasdaq: MU) today announced results for its fourth quarter and full year of fiscal 2020, which ended Sept. 3, 2020.
Fiscal Q4 2020 highlights
•Revenue of $6.06 billion versus $5.44 billion for the prior quarter and $4.87 billion for the same period last year
•GAAP net income of $988 million, or $0.87 per diluted share
•Non-GAAP net income of $1.23 billion, or $1.08 per diluted share
•Operating cash flow of $2.27 billion versus $2.02 billion for the prior quarter and $2.23 billion for the same period last year
Fiscal 2020 highlights
•Revenue of $21.44 billion versus $23.41 billion for the prior year
•GAAP net income of $2.69 billion, or $2.37 per diluted share
•Non-GAAP net income of $3.24 billion, or $2.83 per diluted share
•Operating cash flow of $8.31 billion versus $13.19 billion for the prior year
“Micron delivered solid fiscal fourth quarter revenue and EPS resulting from strong DRAM sales in cloud, PC and gaming consoles and an extraordinary increase in QLC NAND shipments,” said Micron Technology President and CEO Sanjay Mehrotra. “We look forward to improving market conditions throughout calendar 2021, driven by 5G, cloud and automotive growth, and we are excited by the continued momentum in our product portfolio.”
| Quarterly Financial Results | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except per share amounts) | GAAP^(1)^ | Non-GAAP^(2)^ | ||||||||||||||||
| FQ4-20 | FQ3-20 | FQ4-19 | FQ4-20 | FQ3-20 | FQ4-19 | |||||||||||||
| Revenue | $ | 6,056 | $ | 5,438 | $ | 4,870 | $ | 6,056 | $ | 5,438 | $ | 4,870 | ||||||
| Gross margin | 2,068 | 1,763 | 1,395 | 2,111 | 1,804 | 1,491 | ||||||||||||
| percent of revenue | 34.1 | % | 32.4 | % | 28.6 | % | 34.9 | % | 33.2 | % | 30.6 | % | ||||||
| Operating expenses | 911 | 875 | 745 | 809 | 823 | 797 | ||||||||||||
| Operating income | 1,157 | 888 | 650 | 1,302 | 981 | 694 | ||||||||||||
| percent of revenue | 19.1 | % | 16.3 | % | 13.3 | % | 21.5 | % | 18.0 | % | 14.3 | % | ||||||
| Net income attributable to Micron | 988 | 803 | 561 | 1,229 | 941 | 637 | ||||||||||||
| Diluted earnings per share | 0.87 | 0.71 | 0.49 | 1.08 | 0.82 | 0.56 | ||||||||||||
| Annual Financial Results | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| (in millions, except per share amounts) | GAAP^(1)^ | Non-GAAP^(2)^ | ||||||||||||||||
| FY 20 | FY 19 | FY 20 | FY 19 | |||||||||||||||
| Revenue | $ | 21,435 | $ | 23,406 | $ | 21,435 | $ | 23,406 | ||||||||||
| Gross margin | 6,552 | 10,702 | 6,718 | 10,973 | ||||||||||||||
| percent of revenue | 30.6 | % | 45.7 | % | 31.3 | % | 46.9 | % | ||||||||||
| Operating expenses | 3,549 | 3,326 | 3,299 | 3,172 | ||||||||||||||
| Operating income | 3,003 | 7,376 | 3,419 | 7,801 | ||||||||||||||
| percent of revenue | 14.0 | % | 31.5 | % | 16.0 | % | 33.3 | % | ||||||||||
| Net income attributable to Micron | 2,687 | 6,313 | 3,235 | 7,314 | ||||||||||||||
| Diluted earnings per share | 2.37 | 5.51 | 2.83 | 6.35 |
Investments in capital expenditures, net^(2)^ were $2.16 billion for the fourth quarter of 2020 and $7.95 billion for the full year of 2020, which resulted in adjusted free cash flows^(2)^ of $111 million for the fourth quarter of 2020 and $361 million for the full year of 2020. Micron repurchased approximately 824,000 shares of its common stock for $41 million during the fourth quarter of 2020 and 3.6 million shares of its common stock for $176 million during the full year of 2020 and ended the year with cash, marketable investments, and restricted cash of $9.26 billion, for a net cash^(2)^ position of $2.61 billion.
Business Outlook
The following table presents Micron’s guidance for the first quarter of 2021:
| FQ1-21 | GAAP^(1)^ Outlook | Non-GAAP^(2)^ Outlook |
|---|---|---|
| Revenue | $5.2 billion ± $200 million | $5.2 billion ± $200 million |
| Gross margin | 26.5% ± 1% | 27.5% ± 1% |
| Operating expenses | $873 million ± $25 million | $825 million ± $25 million |
| Interest (income) expense, net | $37 million | $35 million |
| Diluted earnings per share | $0.39 ± $0.07 | $0.47 ± $0.07 |
Further information regarding Micron’s business outlook is included in the prepared remarks and slides, which have been posted at investors.micron.com.
Investor Webcast
Micron will host a conference call on Tuesday, Sept. 29, 2020 at 2:30 p.m. MT to discuss its fourth quarter financial results and provide forward-looking guidance for its first quarter. A live webcast of the call will be available online at investors.micron.com. A webcast replay will be available for one year after the call. For Investor Relations and other company updates, follow @MicronTech on Twitter at twitter.com/MicronTech.
About Micron Technology, Inc.
We are an industry leader in innovative memory and storage solutions. Through our global brands — Micron^®^ and Crucial^®^ — our broad portfolio of high-performance memory and storage technologies, including DRAM, NAND, 3D XPoint™ memory, and NOR, is transforming how the world uses information to enrich life for all. Backed by more than 40 years of technology leadership, our memory and storage solutions enable disruptive trends, including artificial intelligence, 5G, machine learning, and autonomous vehicles, in key market segments like mobile, data center, client, consumer, industrial, graphics, automotive, and networking. Our common stock is traded on Nasdaq under the MU symbol. To learn more about Micron Technology, Inc., visit micron.com.
Micron and the Micron orbit logo are trademarks of Micron Technology, Inc. All other trademarks are the property of their respective owners.
Forward-Looking Statements
This press release contains forward-looking statements regarding the industry, our strategic position, and our financial and operating results. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially. Please refer to the documents we file with the Securities and Exchange Commission, specifically our most recent Form 10-K and Form 10-Q. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in these forward-looking statements. These certain factors can be found at www.micron.com/certainfactors. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this release to conform these statements to actual results.
^(1)^GAAP represents U.S. Generally Accepted Accounting Principles.
^(2)^Non-GAAP represents GAAP excluding the impact of certain activities, which management excludes in analyzing our operating results and understanding trends in our earnings, adjusted free cash flow, net cash, and business outlook. Further information regarding Micron’s use of non-GAAP measures and reconciliations between GAAP and non-GAAP measures are included within this press release.
MICRON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
| 4th Qtr. | 3rd Qtr. | 4th Qtr. | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 3,<br>2020 | May 28,<br>2020 | August 29,<br>2019 | September 3,<br>2020 | August 29,<br>2019 | ||||||
| Revenue | $ | 6,056 | $ | 5,438 | $ | 4,870 | $ | 21,435 | $ | 23,406 |
| Cost of goods sold | 3,988 | 3,675 | 3,475 | 14,883 | 12,704 | |||||
| Gross margin | 2,068 | 1,763 | 1,395 | 6,552 | 10,702 | |||||
| Selling, general, and administrative | 231 | 216 | 212 | 881 | 836 | |||||
| Research and development | 630 | 649 | 623 | 2,600 | 2,441 | |||||
| Other operating (income) expense, net | 50 | 10 | (90) | 68 | 49 | |||||
| Operating income | 1,157 | 888 | 650 | 3,003 | 7,376 | |||||
| Interest income | 13 | 23 | 57 | 114 | 205 | |||||
| Interest expense | (50) | (51) | (39) | (194) | (128) | |||||
| Other non-operating income (expense), net | 5 | 10 | (13) | 60 | (405) | |||||
| 1,125 | 870 | 655 | 2,983 | 7,048 | ||||||
| Income tax (provision) benefit | (136) | (68) | (71) | (280) | (693) | |||||
| Equity in net income (loss) of equity method investees | 1 | 3 | 2 | 7 | 3 | |||||
| Net income | 990 | 805 | 586 | 2,710 | 6,358 | |||||
| Net income attributable to noncontrolling interests | (2) | (2) | (25) | (23) | (45) | |||||
| Net income attributable to Micron | $ | 988 | $ | 803 | $ | 561 | $ | 2,687 | $ | 6,313 |
| Earnings per share | ||||||||||
| Basic | $ | 0.89 | $ | 0.72 | $ | 0.51 | $ | 2.42 | $ | 5.67 |
| Diluted | 0.87 | 0.71 | 0.49 | 2.37 | 5.51 | |||||
| Number of shares used in per share calculations | ||||||||||
| Basic | 1,111 | 1,111 | 1,104 | 1,110 | 1,114 | |||||
| Diluted | 1,131 | 1,129 | 1,128 | 1,131 | 1,143 |
MICRON TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
| As of | September 3,<br>2020 | May 28,<br>2020 | August 29,<br>2019 | |||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Cash and equivalents | $ | 7,624 | $ | 8,267 | $ | 7,152 |
| Short-term investments | 518 | 391 | 803 | |||
| Receivables | 3,912 | 3,603 | 3,195 | |||
| Inventories | 5,607 | 5,405 | 5,118 | |||
| Other current assets | 304 | 233 | 235 | |||
| Total current assets | 17,965 | 17,899 | 16,503 | |||
| Long-term marketable investments | 1,048 | 577 | 1,164 | |||
| Property, plant, and equipment | 31,031 | 30,081 | 28,240 | |||
| Intangible assets | 334 | 332 | 340 | |||
| Deferred tax assets | 707 | 775 | 837 | |||
| Goodwill | 1,228 | 1,228 | 1,228 | |||
| Operating lease right-of-use assets | 584 | 599 | — | |||
| Other noncurrent assets | 781 | 514 | 575 | |||
| Total assets | $ | 53,678 | $ | 52,005 | $ | 48,887 |
| Liabilities and equity | ||||||
| Accounts payable and accrued expenses | $ | 5,817 | $ | 5,364 | $ | 4,626 |
| Current debt | 270 | 330 | 1,310 | |||
| Other current liabilities | 548 | 491 | 454 | |||
| Total current liabilities | 6,635 | 6,185 | 6,390 | |||
| Long-term debt | 6,373 | 6,356 | 4,541 | |||
| Noncurrent operating lease liabilities | 533 | 540 | — | |||
| Noncurrent unearned government incentives | 643 | 553 | 636 | |||
| Other noncurrent liabilities | 498 | 453 | 452 | |||
| Total liabilities | 14,682 | 14,087 | 12,019 | |||
| Commitments and contingencies | ||||||
| Redeemable noncontrolling interest | — | 98 | 98 | |||
| Micron shareholders’ equity | ||||||
| Common stock | 119 | 119 | 118 | |||
| Additional capital | 8,917 | 8,764 | 8,214 | |||
| Retained earnings | 33,384 | 32,402 | 30,761 | |||
| Treasury stock | (3,495) | (3,454) | (3,221) | |||
| Accumulated other comprehensive income (loss) | 71 | (11) | 9 | |||
| Total Micron shareholders’ equity | 38,996 | 37,820 | 35,881 | |||
| Noncontrolling interest in subsidiary | — | — | 889 | |||
| Total equity | 38,996 | 37,820 | 36,770 | |||
| Total liabilities and equity | $ | 53,678 | $ | 52,005 | $ | 48,887 |
MICRON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| For the year ended | September 3,<br>2020 | August 29,<br>2019 | ||
|---|---|---|---|---|
| Cash flows from operating activities | ||||
| Net income | $ | 2,710 | $ | 6,358 |
| Adjustments to reconcile net income to net cash provided by operating activities | ||||
| Depreciation expense and amortization of intangible assets | 5,650 | 5,424 | ||
| Amortization of debt discount and other costs | 26 | 49 | ||
| Stock-based compensation | 328 | 243 | ||
| (Gain) loss on debt prepayments, repurchases, and conversions | (40) | 396 | ||
| Change in operating assets and liabilities | ||||
| Receivables | (723) | 2,431 | ||
| Inventories | (489) | (1,528) | ||
| Accounts payable and accrued expenses | 725 | (174) | ||
| Deferred income taxes, net | 79 | 150 | ||
| Other | 40 | (160) | ||
| Net cash provided by operating activities | 8,306 | 13,189 | ||
| Cash flows from investing activities | ||||
| Expenditures for property, plant, and equipment | (8,223) | (9,780) | ||
| Purchases of available-for-sale securities | (1,857) | (4,218) | ||
| Proceeds from sales of available-for-sale securities | 1,458 | 1,504 | ||
| Proceeds from maturities of available-for-sale securities | 814 | 1,541 | ||
| Proceeds from government incentives | 262 | 748 | ||
| Other | (43) | 120 | ||
| Net cash provided by (used for) investing activities | (7,589) | (10,085) | ||
| Cash flows from financing activities | ||||
| Repayments of debt | (4,366) | (3,340) | ||
| Acquisition of noncontrolling interest in IMFT | (744) | — | ||
| Payments to acquire treasury stock | (251) | (2,729) | ||
| Payments on equipment purchase contracts | (63) | (75) | ||
| Proceeds from issuance of debt | 5,000 | 3,550 | ||
| Proceeds from issuance of stock | 225 | 179 | ||
| Other | (118) | (23) | ||
| Net cash provided by (used for) financing activities | (317) | (2,438) | ||
| Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash | 11 | 26 | ||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 411 | 692 | ||
| Cash, cash equivalents, and restricted cash at beginning of period | 7,279 | 6,587 | ||
| Cash, cash equivalents, and restricted cash at end of period | $ | 7,690 | $ | 7,279 |
MICRON TECHNOLOGY, INC.
NOTES
(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 2020. This revision reduced our aggregate depreciation expense by approximately $675 million in 2020, of which approximately $165 million remained capitalized in inventory as of the end of 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 $150 million and diluted earnings per share by approximately $0.13 for the fourth quarter of 2020, and benefited both operating income and net income by approximately $510 million and diluted earnings per share by approximately $0.45 for 2020.
Adoption of Lease Accounting Standard
In the first quarter of 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.
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 3,<br>2020 | May 28,<br>2020 | August 29,<br>2019 | September 3,<br>2020 | August 29,<br>2019 | ||||||
| GAAP gross margin | $ | 2,068 | $ | 1,763 | $ | 1,395 | $ | 6,552 | $ | 10,702 |
| Stock-based compensation | 37 | 34 | 29 | 139 | 102 | |||||
| Start-up and preproduction costs | — | — | 12 | — | 58 | |||||
| Employee severance | (1) | — | 47 | — | 73 | |||||
| Other | 7 | 7 | 8 | 27 | 38 | |||||
| Non-GAAP gross margin | $ | 2,111 | $ | 1,804 | $ | 1,491 | $ | 6,718 | $ | 10,973 |
| GAAP operating expenses | $ | 911 | $ | 875 | $ | 745 | $ | 3,549 | $ | 3,326 |
| Stock-based compensation | (52) | (48) | (38) | (189) | (141) | |||||
| Employee severance | — | — | (32) | — | (43) | |||||
| Restructure and asset impairments | (50) | (4) | 122 | (60) | 32 | |||||
| Other | — | — | — | (1) | (2) | |||||
| Non-GAAP operating expenses | $ | 809 | $ | 823 | $ | 797 | $ | 3,299 | $ | 3,172 |
| GAAP operating income | $ | 1,157 | $ | 888 | $ | 650 | $ | 3,003 | $ | 7,376 |
| Stock-based compensation | 89 | 82 | 67 | 328 | 243 | |||||
| Start-up and preproduction costs | — | — | 12 | — | 58 | |||||
| Employee severance | (1) | — | 79 | — | 116 | |||||
| Restructure and asset impairments | 50 | 4 | (122) | 60 | (32) | |||||
| Other | 7 | 7 | 8 | 28 | 40 | |||||
| Non-GAAP operating income | $ | 1,302 | $ | 981 | $ | 694 | $ | 3,419 | $ | 7,801 |
| GAAP net income attributable to Micron | $ | 988 | $ | 803 | $ | 561 | $ | 2,687 | $ | 6,313 |
| Stock-based compensation | 89 | 82 | 67 | 328 | 243 | |||||
| Start-up and preproduction costs | — | — | 12 | — | 58 | |||||
| Employee severance | (1) | — | 79 | — | 116 | |||||
| Restructure and asset impairments | 50 | 4 | (122) | 60 | (32) | |||||
| Amortization of debt discount and other costs | 6 | 4 | 10 | 26 | 49 | |||||
| (Gain) loss on debt repurchases and conversions | — | 2 | 10 | (40) | 396 | |||||
| Other | 7 | 7 | 13 | 28 | 57 | |||||
| Estimated tax effects of above, non-cash changes in net deferred income taxes, assessments of tax exposures, and impact of U.S. income tax reform | 90 | 39 | 7 | 146 | 114 | |||||
| Non-GAAP net income attributable to Micron | $ | 1,229 | $ | 941 | $ | 637 | $ | 3,235 | $ | 7,314 |
| GAAP weighted-average common shares outstanding - Diluted | 1,131 | 1,129 | 1,128 | 1,131 | 1,143 | |||||
| Adjustment for stock-based compensation and capped calls | 11 | 13 | 6 | 10 | 7 | |||||
| Non-GAAP weighted-average common shares outstanding - Diluted | 1,142 | 1,142 | 1,134 | 1,141 | 1,150 | |||||
| GAAP diluted earnings per share | $ | 0.87 | $ | 0.71 | $ | 0.49 | $ | 2.37 | $ | 5.51 |
| Effects of the above adjustments | 0.21 | 0.11 | 0.07 | 0.46 | 0.84 | |||||
| Non-GAAP diluted earnings per share | $ | 1.08 | $ | 0.82 | $ | 0.56 | $ | 2.83 | $ | 6.35 |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued
| 4th Qtr. | 3rd Qtr. | 4th Qtr. | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 3,<br>2020 | May 28,<br>2020 | August 29,<br>2019 | September 3,<br>2020 | August 29,<br>2019 | ||||||
| GAAP net cash provided by operating activities | $ | 2,271 | $ | 2,023 | $ | 2,233 | $ | 8,306 | $ | 13,189 |
| Investments in capital expenditures, net | ||||||||||
| Expenditures for property, plant, and equipment, net^(1)^ | (2,268) | (1,937) | (1,983) | (8,154) | (9,634) | |||||
| Payments on equipment purchase contracts | (14) | (20) | (21) | (63) | (75) | |||||
| Amounts funded by partners | 122 | 35 | 80 | 272 | 754 | |||||
| Adjusted free cash flow | $ | 111 | $ | 101 | $ | 309 | $ | 361 | $ | 4,234 |
^(1)^Expenditures for property, plant, and equipment, net include proceeds from sales of property, plant, and equipment of $12 million for the fourth quarter of 2020, $7 million for the third quarter of 2020, $45 million for the fourth quarter of 2019, $69 million for the full year of 2020, and $146 million for the full year of 2019.
| As of | September 3,<br>2020 | May 28,<br>2020 | August 29,<br>2019 | |||
|---|---|---|---|---|---|---|
| Cash and short-term investments | $ | 8,142 | $ | 8,658 | $ | 7,955 |
| Current and noncurrent restricted cash | 66 | 53 | 127 | |||
| Long-term marketable investments | 1,048 | 577 | 1,164 | |||
| Current and long-term debt | (6,643) | (6,686) | (5,851) | |||
| Net cash | $ | 2,613 | $ | 2,602 | $ | 3,395 |
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 debt and MMJ creditor debt;
•Gains and losses from debt repurchases and conversions;
•Gains and losses from business acquisition activities;
•Impact of U.S. income tax reform for the one-time transition tax, release of U.S. valuation allowance, and remeasurement of net deferred taxes reflecting lower U.S. corporate tax rates; and
•The estimated tax effects of above, non-cash changes in net deferred income taxes, and assessments of tax exposures.
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 | Non-GAAP Outlook | ||||
|---|---|---|---|---|---|
| Revenue | 5.2 billion ± 200 million | — | $5.2 billion ± $200 million | ||
| Gross margin | 26.5% ± 1% | 1% | A | 27.5% ± 1% | |
| Operating expenses | 873 million ± 25 million | $48 million | B | $825 million ± $25 million | |
| Interest (income) expense, net | 37 million | $2 million | C | $35 million | |
| Diluted earnings per share^(1)^ | 0.39 ± 0.07 | $0.08 | A, B, C, D | $0.47 ± $0.07 |
All values are in US Dollars.
| Non-GAAP Adjustments<br><br>(in millions) | |||||
|---|---|---|---|---|---|
| A | Stock-based compensation – cost of goods sold | $ | 39 | ||
| A | Other – cost of goods sold | 7 | |||
| B | Stock-based compensation – sales, general, and administrative | 25 | |||
| B | Stock-based compensation – research and development | 23 | |||
| 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 | (1) | |||
| $ | 95 |
^(1)^GAAP earnings per share based on approximately 1.13 billion diluted shares and non-GAAP earnings per share based on approximately 1.15 billion diluted shares.
The tables above reconcile our GAAP to non-GAAP guidance based on the current outlook. The guidance does not incorporate the impact of any potential business combinations, divestitures, restructuring activities, balance sheet valuation adjustments, strategic investments, financing transactions, and other significant transactions. The timing and impact of such items are dependent on future events that may be uncertain or outside of our control.
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