Micron Technology, Inc. Reports Results for the First Quarter of Fiscal 2020
December 18, 2019
Solid results through challenging environment; well-positioned for anticipated recovery starting in the fiscal third quarter
BOISE, Idaho, Dec. 18, 2019 (GLOBE NEWSWIRE) -- Micron Technology, Inc. (Nasdaq: MU) today announced results for its first quarter of fiscal
2020, which ended November 28, 2019.
Fiscal Q1 2020 highlights

Revenues of $5.14 billion versus $4.87 billion for the prior quarter and $7.91 billion for the same period last year
GAAP net income of $491 million, or $0.43 per diluted share
Non-GAAP net income of $548 million, or $0.48 per diluted share
Operating cash flow of $2.01 billion versus $2.23 billion for the prior quarter and $4.81 billion for the same period last year
"Micron posted solid first quarter results, delivering good profitability and positive free cash flow. With our strong execution and improving industry
conditions, we are optimistic that Micron's fiscal second quarter will be the cyclical bottom for our financial performance," said Micron Technology
President and CEO Sanjay Mehrotra. "Our significantly improved competitive position, dramatically stronger product portfolio, structurally higher
profitability and investment-grade balance sheet position Micron very well to drive long-term shareholder value."
Quarterly Financial Results
GAAP (1)(in millions, except per share amounts)
Revenue
Gross margin
percent of revenue
Operating expenses
Operating income
percent of revenue
Net income attributable to Micron
Diluted earnings per share

FQ1-20
$

5,144
$
1,366
26.6 %
848
518
10.1 %
491
0.43

FQ4-19
4,870
$
1,395
28.6 %
745
650
13.3 %
561
0.49

Non-GAAP (2)FQ1-19

FQ1-207,913
4,615
58.3 %
856
3,759
47.5 %
3,293
2.81

$

5,144
$
1,405
27.3 %
811
594
11.5 %
548
0.48

FQ4-19
4,870
$
1,491
30.6 %
797
694
14.3 %
637
0.56

FQ1-197,913
4,670
59.0 %
783
3,88
49.1 %
3,508
2.97

Investments in capital expenditures, net of amounts funded by partners, were $1.93 billion for the first quarter of fiscal 2020, which resulted in adjusted
free cash flows(3) of $79 million. Micron repurchased an aggregate of 1 million shares of its common stock for $50 million during the first quarter offiscal 2020 and ended the quarter with cash, marketable investments, and restricted cash of $8.31 billion, for a net cash(4) position of $2.66 billion.
Business Outlook
The following table presents Micron’s guidance for the second quarter of fiscal 2020:
FQ2-20
Revenue
Gross margin
Operating expenses
Interest (income) expense, net
Diluted earnings per share

GAAP (1) Outlook

Non-GAAP (2) Outlook$4.5 billion - $4.8 billion
26% ± 1.5%$878 million ± $25 million$5 million$0.25 ± $0.06$4.5 billion - $4.8 billion
27% ± 1.5%$825 million ± $25 million$0 million$0.35 ± $0.06

Further information regarding Micron’s business outlook is included in the prepared remarks and slides, which have been posted atinvestors.micron.com.
Investor Webcast
Micron will host a conference call on Wednesday, December 18, 2019 at 2:30 p.m. MT to discuss its first fiscal quarter financial results and provide
forward-looking guidance for its second fiscal 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®, Crucial®, and Ballistix® — our broad
portfolio of high-performance memory and storage technologies, including DRAM, NAND, 3D XPoint™ memory, and NOR, is transforming how theworld uses information to enrich life. Backed by 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 the 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 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. 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 arereasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forwardlooking 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 andunderstanding trends in our earnings. Non-GAAP shares used in per share calculations also include the impact of our outstanding capped calltransactions and the effect of stock-based compensation.
(3) Adjusted free cash flow consists of cash provided by operating activities less investments in capital expenditures, net of amounts funded bypartners.
(4) Net cash consists of cash, marketable investments, and restricted cash less current and long-term debt.

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)
1st Qtr.
4th Qtr.
1st Qtr.
November 28, August 29, November 29,
2019
2019
2018
Revenue$

Cost of goods sold

Gross margin
Selling, general, and administrative
Research and development
Other operating (income) expense, net

Operating income
Interest income
Interest expense
Other non-operating income (expense), net

Income tax (provision) benefit
Equity in net income (loss) of equity method investees

Net income

$

4,870
3,475

$

7,913
3,298

1,366

1,395

4,615

211
640
(3)

212
623
(90)

209
611
36

518

650

3,759

44
(47)
46

57
(39)
(13)

38
(33)
9

561

655

3,773

(55)
2

(71)
2

(477)
—

508

586

3,296

(17)

Net income attributable to noncontrolling interests

Net income attributable to Micron

5,144
3,778

(25)

(3)

$

491

$

561

$

3,293

$

0.44

$

0.51 $

2.91

0.49

2.81

Earnings per share

Basic
DilutedNumber of shares used in per share calculations

0.43

BasicDiluted

1,107

1,104

1,133

1,129

1,128

1,174

MICRON TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS(In millions)(Unaudited)
November 28,
2019

As of
AssetsCash and equivalents
Short-term investments
Receivables
Inventories$

Other current assets

Total current assets

Other noncurrent assets

Liabilities and equity
Accounts payable and accrued expenses
Current debt$

16,167599
29,352
333
783
1,228
608
579

Long-term marketable investments
Property, plant, and equipment
Intangible assets
Deferred tax assets
Goodwill
Operating lease right-of-use assets

Total assets

6,969
619
3,419
4,943
217

August 29,
2019

7,152
803
3,195
5,118
235
16,503
1,164
28,240
340
837
1,228
—
575

$

49,649$48,887

$

5,408
462
447

$

4,626
1,310
454

Other current liabilities

Total current liabilities

Other noncurrent liabilities

6,317
5,188
511
609
426

6,390
4,541
—
636
452

Total liabilities

13,051

12,019

98

98

119

118

Long-term debt
Noncurrent operating lease liabilities
Noncurrent unearned government incentives

Commitments and contingencies
Redeemable noncontrolling interest
Micron shareholders’ equity

Common stock
Additional capital
Retained earnings
Treasury stock
Accumulated other comprehensive income
Total Micron shareholders’ equity
Noncontrolling interest in subsidiary

Total equity
Total liabilities and equity

8,428

8,214

31,21830,761(3,271)(3,221)6

936,500—35,881889

36,500$49,64936,770$48,887MICRON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)
November 28,
2019

Three months ended
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities$

Depreciation expense and amortization of intangible assets
Amortization of debt discount and other costs
Stock-based compensation
Gain on debt prepayments, repurchases, and conversions
Change in operating assets and liabilities
Receivables
Inventories
Accounts payable and accrued expenses
Deferred income taxes, net
OtherNet cash provided by operating activities
Cash flows from investing activities
Expenditures for property, plant, and equipment
Purchases of available-for-sale securities
Proceeds from sales of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Proceeds from government incentives
Other

Net cash provided by (used for) investing activities
Cash flows from financing activities
Repayments of debt
Acquisition of noncontrolling interest in IMFT
Payments to acquire treasury stock
Payments on equipment purchase contracts
Proceeds from issuance of debt
Other

Net cash provided by (used for) financing activities
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash
Net decrease in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period$

508

November 29,
2018

$

3,296

1,296

1,335

10

18

72

61

(42)

(14)

(208)

189

175

(286)

178

(46)

19

192

3

65

2,011

4,810

(1,943)
(407)
988
163
22
(12)

(2,700)(2,047)
77
60
236
(53)

(1,189)(4,427)(1,415)
(744)
(89)
(11)
1,250
17

(577)
—
(1,836)
(20)
—
(2)

(992)

(2,435)

(14)

(10)

(184)
7,279

(2,062)
6,587

7,095

$

4,525

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 nodetransitions, capital spending, and re-use rates, we revised the estimated useful lives of equipment in our NAND wafer fabrication facilities and our
research and development facilities from five years to seven years as of the beginning in the first quarter of fiscal 2020. As a result, we estimate thereduction in non-cash depreciation expense benefited operating income and net income by approximately $74 million and diluted earnings per shareby approximately $0.07 for the first quarter of fiscal 2020.

Acquisition of Intel's Interests in IMFT
On October 31, 2019, we purchased Intel’s noncontrolling interests in IMFT and IMFT member debt for $1.25 billion. We recognized a non-operating
gain of $72 million for the difference between the $505 million of cash consideration allocated to the extinguishment of IMFT member debt and its$577 million carrying value, and a $160 million adjustment to equity for the difference between the $744 million of cash consideration allocated to thepurchase of Intel’s noncontrolling interest and its $904 million carrying value.
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 leaseaccounting, 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 andelected 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 November 18, 2019, we prepaid $519 million of our 2025 Notes and recognized a loss of $18 million in other non-operating income (expense), net.
On October 30, 2019, we drew all of the $1.25 billion available under our term loan credit facility. Prior to our acquisition of Intel's interests in IMFT,
IMFT repaid Intel $116 million of IMFT member debt in the first quarter of fiscal 2020.

MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES(In millions, except per share amounts)
1st Qtr.
November 28,
2019
GAAP gross margin$

Stock-based compensation
Start-up and preproduction costs
Employee severance
Other

1,366

4th Qtr.
August 29,
2019
$

1,395

1st Qtr.
November 29,
2018
$

4,615

31

29

26

—

12

8

1

47

13

7

8

8

Non-GAAP gross margin

$

1,405

$

1,491

$

4,670

GAAP operating expenses

$

848

$

745

$

856

Stock-based compensation
Employee severance
Restructure and asset impairments
Other

(41)

(38)

(35)

—

(32)

(7)

4

122

(30)

—

—

(1)

Non-GAAP operating expenses

$

811

$

797

$

783

GAAP operating income

$

518

$

650

$

3,759

Stock-based compensation
Start-up and preproduction costs
Employee severance
Restructure and asset impairments
Other

72

67

61

—

12

8

1

79

20

(4)

(122)

30

7

8

9

Non-GAAP operating income

$

594

$

694

$

3,887

GAAP net income attributable to Micron

$

491

$

561

$

3,293

Stock-based compensation
Start-up and preproduction costs
Employee severance
Restructure and asset impairments
Amortization of debt discount and other costs(Gain) loss on debt repurchases and conversions

72

67

61

—

12

8

1

79

20

(4)

(122)

30

10

10

18

(42)

10

(14)

OtherImpact of U.S. income tax reform
Estimated tax effects of above, non-cash changes in net deferredincome taxes, and assessments of tax exposures
Non-GAAP net income attributable to Micron

15

—

—

47

548

7
$

1,129

Adjustment for capped calls and stock-based compensation
Non-GAAP weighted-average common shares outstanding - Diluted$

Effects of the above adjustments
Non-GAAP diluted earnings per share

13

13
$

GAAP weighted-average common shares outstanding - Diluted

GAAP diluted earnings per share

7

30
$

1,128

3,508
1,174

9

6

5

1,138

1,134

1,179

0.49 $

2.81

0.07

0.16

0.56 $

2.97

0.43

$

0.05
$

637

0.48

$

RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued
1st Qtr.
November 28,
2019
GAAP net cash provided by operating activities$

Expenditures for property, plant, and equipment
Payments on equipment purchase contracts
Amounts funded by partners
Adjusted free cash flow

2,011

4th Qtr.
August 29,
2019
$

2,233
(2,028)(2,700)

(21)

(20)

79

79
$

263

November 28,
2019

Net cash

4,810

(11)

As of

Cash and short-term investments
Current and noncurrent restricted cash
Long-term marketable investments
Current and long-term debt$

(1,943)22$

1st Qtr.
November 29,
2018

$

7,588

2,326

August 29,
2019

$

7,955

126

127

599

1,164

(5,650)
$

236
$

2,663

(5,851)$

3,395

The tables above reconcile GAAP to non-GAAP measures of gross margin, 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 inanalyzing 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 increasetransparency 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 numberspresented 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 ourconvertible 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 remeasurementof net deferred taxes reflecting lower U.S. corporate tax rates; andThe estimated tax effects of above, non-cash changes in net deferred income taxes, and assessments of tax exposures.
Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible
notes. In periods with non-GAAP income attributable to Micron, non-GAAP diluted shares include the impact of capped calls based on the average
share price for the period the capped calls are outstanding. Non-GAAP diluted shares are also adjusted for the impact of additional shares resulting
from the exclusion of stock-based compensation from non-GAAP income.

MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK(In millions, except per share amounts)
GAAP Outlook

Operating expenses
Interest (income) expense, net$4.5 billion - $4.8
billion26% ± 1.5%$878 million ± $25
million$5 million

Diluted earnings per share (1)$0.25 ± $0.06

Revenue
Gross margin

Adjustments

Non-GAAP Outlook—
1% A$53 million B$5 million C
A, B, C,
$0.10 D

$4.5 billion - $4.8
billion27% ± 1.5%$825 million ± $25
million$0 million$0.35 ± $0.06

Non-GAAP Adjustments
A Stock-based compensation – cost of goods sold
A Other – cost of goods sold
B Stock-based compensation – sales, general, and administrative
B Stock-based compensation – research and development
B Other - operating expenses
C Amortization of debt discount and other costs

$

32
7
20
21
12
5
14

$

111

D Tax effects of the above items and non-cash changes in net deferred income taxes(1) GAAP earnings per share based on approximately 1.13 billion diluted shares and non-GAAP earnings per share based on approximately 1.14
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 outsideof our control.
Contacts: Farhan Ahmad Investor Relations farhanahmad@micron.com (408) 834-1927 Erica Rodriguez Pompen Media Relations
epompen@micron.com (408) 834-1873