GlobeNewswire Inc | Jun 30, 2021 04:09PM EDT

June 30, 2021

BOISE, Idaho, June 30, 2021 (GLOBE NEWSWIRE) -- Micron Technology, Inc. (Nasdaq: MU) today announced results for its third quarter of fiscal 2021, which ended June 3, 2021.

Fiscal Q3 2021 highlights

-- Revenue of $7.42 billion versus $6.24 billion for the prior quarter and $5.44 billion for the same period last year -- GAAP net income of $1.74 billion, or $1.52 per diluted share -- Non-GAAP net income of $2.17 billion, or $1.88 per diluted share -- Operating cash flow of $3.56 billion versus $3.06 billion for the prior quarter and $2.02 billion for the same period last year

Micron set multiple market and product revenue records in our third quarter and achieved the largest sequential earnings improvement in our history, said Micron Technology President and CEO Sanjay Mehrotra. Our industry-leading 1 DRAM and 176-layer NAND now represent a meaningful portion of our production, and Micron is in the best position ever to capitalize on the long-term demand trends across the data center, intelligent edge and user devices.

QuarterlyFinancial Results GAAP^(1) Non-GAAP^ (2)(inmillions,except per FQ3-21 FQ2-21 FQ3-20 FQ3-21 FQ2-21 FQ3-20shareamounts)Revenue $ 7,422 $ 6,236 $ 5,438 $ 7,422 $ 6,236 $ 5,438 Gross margin 3,126 1,649 1,763 3,185 2,054 1,804 percent of 42.1 % 26.4 % 32.4 % 42.9 % 32.9 % 33.2 %revenueOperating 1,327 986 875 821 797 823 expensesOperating 1,799 663 888 2,364 1,257 981 incomepercent of 24.2 % 10.6 % 16.3 % 31.9 % 20.2 % 18.0 %revenueNet incomeattributable 1,735 603 803 2,173 1,128 941 to MicronDilutedearnings per 1.52 0.53 0.71 1.88 0.98 0.82 share

Investments in capital expenditures, net(2) were $2.04 billion for the third quarter of 2021, which resulted in adjusted free cash flows(2) of $1.52 billion. Micron ended the quarter with cash, marketable investments, and restricted cash of $9.82 billion, for a net cash(2) position of $3.10 billion.

Business Outlook

The following table presents Microns guidance for the fourth quarter of 2021:

FQ4-21 GAAP^(1) Outlook Non-GAAP^(2) OutlookRevenue $8.2 billion $200 $8.2 billion $200 million millionGross margin 46.0% 1% 47.0% 1%Operating expenses $955 million $25 $900 million $25 million millionDiluted earnings per $2.23 $0.10 $2.30 $0.10share

Further information regarding Microns 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 Wednesday, June 30, 2021, at 2:30 p.m. MT, to discuss its third quarter financial results and provide forward-looking guidance for its fourth 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 transforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron and Crucial brands. Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence and 5G applications that unleash opportunities from the data center to the intelligent edge and across the client and mobile user experience. To learn more about Micron Technology, Inc. (Nasdaq: MU), visit micron.com.

2021 Micron Technology, Inc. All rights reserved. Micron, the Micron logo, and all other Micron trademarks are the property 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 our industry, our strategic position, the completion of and timing for closing the pending sale of our Lehi facility, 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.

^ ^) GAAP represents U.S. Generally Accepted Accounting Principles.(1 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(2 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)

3rd Qtr. 2nd Qtr. 3rd Qtr. Nine Months Ended June 3, March 4, May 28, June 3, May 28, 2021 2021 2020 2021 2020 Revenue $ 7,422 $ 6,236 $ 5,438 $ 19,431 $ 15,379 Cost of goods sold 4,296 4,587 3,675 12,920 10,895 Gross margin 3,126 1,649 1,763 6,511 4,484 Research and development 670 641 649 1,958 1,970 Selling, general, and 230 214 216 658 650 administrativeRestructure and asset 453 5 4 466 10 impairmentsOther operating (income) (26 ) 126 6 101 8 expense, netOperating income 1,799 663 888 3,328 1,846 Interest income 8 10 23 28 101 Interest expense (46 ) (42 ) (51 ) (136 ) (144 )Other non-operating income 45 4 10 62 55 (expense), net 1,806 635 870 3,282 1,858 Income tax (provision) (65 ) (48 ) (68 ) (164 ) (144 )benefitEquity in net income (loss) (6 ) 16 3 23 6 of equity method investeesNet income 1,735 603 805 3,141 1,720 Net income attributable to ? ? (2 ) ? (21 )noncontrolling interestsNet income attributable to $ 1,735 $ 603 $ 803 $ 3,141 $ 1,699 Micron Earnings per shareBasic $ 1.55 $ 0.54 $ 0.72 $ 2.81 $ 1.53 Diluted 1.52 0.53 0.71 2.75 1.50 Number of shares used in per share calculationsBasic 1,121 1,120 1,111 1,119 1,110 Diluted 1,145 1,144 1,129 1,141 1,131

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

June 3, March 4, September 3, As of 2021 2021 2020 Assets Cash and equivalents $ 7,759 $ 6,507 $ 7,624 Short-term 590 677 518 investmentsReceivables 4,231 3,353 3,912 Inventories 4,537 4,743 5,373 Assets held for sale 966 1,461 ? Other current assets 478 538 538 Total current assets 18,561 17,279 17,965 Long-term marketable 1,399 1,316 1,048 investmentsProperty, plant, and 32,209 31,848 31,031 equipmentOperating lease 558 575 584 right-of-use assetsIntangible assets 350 342 334 Deferred tax assets 822 726 707 Goodwill 1,228 1,228 1,228 Other noncurrent 816 821 781 assetsTotal assets $ 55,943 $ 54,135 $ 53,678 Liabilities and equityAccounts payable and $ 4,427 $ 4,550 $ 5,817 accrued expensesCurrent debt 297 323 270 Other current 738 560 548 liabilitiesTotal current 5,462 5,433 6,635 liabilitiesLong-term debt 6,418 6,298 6,373 Noncurrent operating 513 528 533 lease liabilitiesNoncurrent unearned 722 661 643 government incentivesOther noncurrent 569 552 498 liabilitiesTotal liabilities 13,684 13,472 14,682 Commitments and contingenciesShareholders? equityCommon stock 120 120 119 Additional capital 9,285 9,234 8,917 Retained earnings 36,452 34,723 33,384 Treasury stock (3,645 ) (3,495 ) (3,495 )Accumulated othercomprehensive income 47 81 71 (loss)Total equity 42,259 40,663 38,996 Total liabilities and $ $ 54,135 $ 53,678 equity 55,943

MICRON TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions) (Unaudited)

June May 3, 28,Nine months ended 2021 2020 Cash flows from operating activities Net income $ 3,141 $ 1,720 Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation expense and amortization of intangible assets 4,593 4,083 Amortization of debt discount and other costs 22 20 Noncash restructure and asset impairment 446 (7 )Stock-based compensation 285 239 (Gain) loss on debt prepayments, repurchases, and 1 (40 )conversionsChange in operating assets and liabilities Receivables (340 ) (461 )Inventories 814 (248 )Accounts payable and accrued expenses (309 ) 700 Deferred income taxes, net (94 ) 26 Other 25 3 Net cash provided by operating activities 8,584 6,035 Cash flows from investing activities Expenditures for property, plant, and equipment (8,015 ) (5,943 )Purchases of available-for-sale securities (1,919 ) (793 )Proceeds from maturities of available-for-sale securities 1,024 636 Proceeds from sales of available-for-sale securities 473 1,157 Proceeds from government incentives 335 140 Other 47 (48 )Net cash provided by (used for) investing activities (8,055 ) (4,851 ) Cash flows from financing activities Repayments of debt (1,344 ) (4,286 )Payments on equipment purchase contracts (139 ) (49 )Acquisition of noncontrolling interest in IMFT ? (744 )Proceeds from issuance of debt 1,188 5,000 Other (142 ) (56 )Net cash provided by (used for) financing activities (437 ) (135 ) Effect of changes in currency exchange rates on cash, cash 44 (8 )equivalents, and restricted cash Net increase (decrease) in cash, cash equivalents, and 136 1,041 restricted cashCash, cash equivalents, and restricted cash at beginning 7,690 7,279 of periodCash, cash equivalents, and restricted cash at end of $ 7,826 $ 8,320 period

MICRON TECHNOLOGY, INC. NOTES (Unaudited)

Inventory

Effective as of the beginning of the second quarter of 2021, we changed our method of inventory costing from average cost to FIFO. This change in accounting principle is preferable because in an environment with continuously changing production costs FIFO more closely matches the actual cost of goods sold with the revenues from sales of those specific units, better represents the actual cost of inventories remaining on hand at any period- end, and improves comparability with our semiconductor industry peers. The change to FIFO was not material to any prior periods, nor was the cumulative effect of $133 million material to the second quarter of 2021. As such, prior periods were not retrospectively adjusted, and the cumulative effect was reported as an increase to cost of goods sold for the second quarter of 2021 of $133 million, with an offsetting reduction to beginning inventories. This charge resulted in a corresponding reduction to operating income, a $128 million reduction to net income, and an $0.11 reduction to diluted earnings per share for both the second quarter and first nine months of 2021.

Beginning in the second quarter of 2021, we changed the classification of spare parts for equipment to better align with the manner in which they are used in operations. As a result, we now present spare parts as other current assets and no longer as a component of raw materials inventories. This reclassification was applied on a retrospective basis. As a result, $256 million of spare parts were presented in other current assets as of June 3, 2021, and we reclassified spare parts from inventories to other current assets of $270 million and $234 million in the accompanying balance sheets as of March 4, 2021 and September 3, 2020, respectively.

Lehi, Utah, Fab and 3D XPointChange

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 XPointTM 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 that we have entered into a definitive agreement to sell our Lehi facility to Texas Instruments for cash consideration of $900 million. The sale is anticipated to close later this calendar year.

In the third quarter of 2021, we recognized a charge of $435 million included in restructure and asset impairments (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, to be realized from the sale of these assets and liabilities. 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. In the second quarter of 2021, we also recognized a charge of $49 million to cost of goods sold to write down 3D XPoint inventory due to our decision to cease further development of this technology.

As of June 3, 2021, the significant balances of assets held-for-sale in connection with our Lehi facility were as follows:

June 3, As of 2021 Property, plant, and equipment $ 1,343 Other current assets 52 Impairment (435 )Lehi assets held for sale $ 960

As of June 3, 2021, we also had a $51 million finance lease obligation included in the current portion of long-term debt and $12 million of other liabilities that we expect to transfer with the sale. The expected cash consideration, net of estimated selling expenses, approximates the carrying value of the net assets and liabilities expected to transfer in the sale, after giving effect to the impairment charge discussed above.

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

3rd Qtr. 2nd Qtr. 3rd Qtr. June 3, March 4, May 28, 2021 2021 2020GAAP gross margin $ 3,126 $ 1,649 $ 1,763 Stock-based compensation 45 57 34 Inventory accounting policy change to FIFO ? 133 ? Change in inventory cost absorption ? 160 ? 3D XPoint inventory write-down ? 49 ? Other 14 6 7 Non-GAAP gross margin $ 3,185 $ 2,054 $ 1,804 GAAP operating expenses $ 1,327 $ 986 $ 875 Stock-based compensation (53 ) (55 ) (48 )Patent license charges ? (128 ) ? Restructure and asset impairments (453 ) (5 ) (4 )Other ? (1 ) ? Non-GAAP operating expenses $ 821 $ 797 $ 823 GAAP operating income $ 1,799 $ 663 $ 888 Stock-based compensation 98 112 82 Inventory accounting policy change to FIFO ? 133 ? Change in inventory cost absorption ? 160 ? 3D XPoint inventory write-down ? 49 ? Patent license charges ? 128 ? Restructure and asset impairments 453 5 4 Other 14 7 7 Non-GAAP operating income $ 2,364 $ 1,257 $ 981 GAAP net income attributable to Micron $ 1,735 $ 603 $ 803 Stock-based compensation 98 112 82 Inventory accounting policy change to FIFO ? 133 ? Change in inventory cost absorption ? 160 ? 3D XPoint inventory write-down ? 49 ? Patent license charges ? 128 ? Restructure and asset impairments 453 5 4 Amortization of debt discount and other costs 7 8 4 Other 15 7 9 Estimated tax effects of above and other tax (135 ) (77 ) 39 adjustmentsNon-GAAP net income attributable to Micron $ 2,173 $ 1,128 $ 941 GAAP weighted-average common shares outstanding - 1,145 1,144 1,129 DilutedAdjustment for stock-based compensation and capped 9 10 13 callsNon-GAAP weighted-average common shares 1,154 1,154 1,142 outstanding - Diluted GAAP diluted earnings per share $ 1.52 $ 0.53 $ 0.71 Effects of the above adjustments 0.36 0.45 0.11 Non-GAAP diluted earnings per share $ 1.88 $ 0.98 $ 0.82

RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued

3rd Qtr. 2nd Qtr. 3rd Qtr. June March 4, May 28, 3, 2021 2020 2021 GAAP net cash provided by operating $ 3,560 $ 3,057 $ 2,023 activitiesInvestments in capital expenditures, net Expenditures for property, plant, and (2,185 ) (3,000 ) (1,937 )equipment, net^(1)Payments on equipment purchase contracts (16 ) (26 ) (20 )Amounts funded by partners 159 143 35 Adjusted free cash flow $ 1,518 $ 174 $ 101

(1) Expenditures for property, plant, and equipment, net include proceeds from sales of property, plant, and equipment of $74 million for the third quarter of 2021, $18 million for the second quarter of 2021, and $7 million for the third quarter of 2020.

June March September 3, 4, 3,As of 2021 2021 2020 Cash and short-term investments $ 8,349 $ 7,184 $ 8,142 Current and noncurrent restricted 67 67 66 cashLong-term marketable investments 1,399 1,316 1,048 Current and long-term debt (6,715 ) (6,621 ) (6,643 )Net cash $ 3,100 $ 1,946 $ 2,613

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; -- Patent license charges; -- 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, certain tax matters related to prior fiscal periods, 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

FQ4-21 GAAP Outlook Adjustments Non-GAAP OutlookRevenue $8.2 billion $200 million ? $8.2 billion $200 millionGross margin 46.0% 1% 1% A 47.0% 1%Operating $955 million $25 million $55 B $900 million $25expenses million millionDiluted earnings A,per share^(1) $2.23 $0.10 $0.07 B, $2.30 $0.10 C Non-GAAP Adjustments (in millions) AStock-based compensation ? cost of goods sold $ 45AOther ? cost of goods sold 6B Stock-based compensation ? research and development 30B Stock-based compensation ? sales, general, and 25administrativeC Tax effects of the above items andnon-cash changes in net deferred income (25)taxes $ 81

(1) GAAP 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.

Contacts:

Farhan AhmadInvestor Relationsfarhanahmad@micron.com(408) 834-1927

Erica Rodriguez Pompen Media Relations epompen@micron.com(408) 834-1873