Micron Technology, Inc., Reports Results for the Fourth Quarter and 2016 Fiscal Year

(2) Other non-operating income (expense) consisted of the following:

   4th Qtr.  3rd Qtr.  4th Qtr.  Year Ended
   September 1,  June 2,  September 3,  September 1,  September 3,
   2016  2016  2015  2016  2015
Gain (loss) from changes in currency exchange rates $(11) $(5) $(1) $(24) $(27)
Loss on restructure of debt   (3) (1) (4) (49)
Other 1  (26) 20  (26) 23 
  $(10) $(34) $18  $(54) $(53)
                     

In fiscal 2016, the company recognized other non-operating expense of $30 million to write off indemnification receivables upon the resolution of uncertain tax positions.

(3) Income taxes for the fourth quarter of fiscal 2016 and fiscal year 2016 included expense of $12 million and $114 million, respectively, related to changes in amounts of net deferred tax assets associated with the company's MMJ and MMT operations. Income taxes for fiscal 2016 also included tax benefits of $52 million related to the favorable resolution of certain prior year tax matters and $41 million from business acquisition activities. Income taxes for the fourth quarter of fiscal 2015 and fiscal year 2015 included a benefit of $58 million and expense of $80 million, respectively, related to changes in amounts of net deferred tax assets associated with the company's MMJ and MMT operations. Remaining taxes for fiscal 2016 and 2015 primarily reflect taxes on the company's other non-U.S. operations. The company has a full valuation allowance for its net deferred tax asset associated with its U.S. operations. The provision (benefit) for taxes on U.S. operations for fiscal 2016 and 2015 was substantially offset by changes in the valuation allowance.

(4) On April 26, 2016, the company entered into the 2022 Term Loan B and drew an aggregate principal amount of $750 million due April 2022. The 2022 Term Loan B is collateralized by substantially all of the assets of Micron Technology, Inc. (the parent company) and Micron Semiconductor Products, Inc. ("MSP"), a subsidiary of the parent company, subject to certain exceptions and permitted liens on such assets. The assets collateralizing the 2022 Term Loan B also collateralize the 2023 Secured Notes, described below, on an equal and ratable basis, subject to certain limitations. Issuance costs for the 2022 Term Loan B totaled $16 million, which included an original issue discount of 1% of the initial aggregate principal amount.

On April 26, 2016, the company issued $1.25 billion in principal amount of 2023 Secured Notes due September 2023. The 2023 Secured Notes are collateralized by substantially all of the assets of Micron Technology, Inc. and MSP, subject to certain exceptions and permitted liens on such assets, on an equal and ratable right with the 2022 Term Loan B described above, subject to certain exceptions. Issuance costs for the 2023 Secured Notes totaled $13 million.

In the fourth quarter of fiscal 2016 and in fiscal year 2016, the company recorded capital lease obligations aggregating $308 million and $882 million, respectively, at weighted-average effective interest rates of 3.4% and 3.1%, respectively. In the first quarter of fiscal 2016, the company drew the remaining $174 million of financing under a term loan agreement, collateralized by certain property, plant, and equipment.

 
MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in millions except per share amounts)
 
   4th Qtr.  3rd Qtr.  4th Qtr.  Year Ended
   September 1,   June 2,   September 3,   September 1,
    2016   2016   2015   2016
GAAP net income (loss) attributable to Micron   $ (170 )   $ (215 )   $ 471     $ (276 )
Non-GAAP adjustments:                
Restructure and asset impairments   51     25         92  
Amortization of debt discount and other costs   32     30     33     126  
(Gain) loss from changes in currency exchange rates   11     5     1     24  
(Gain) loss from business acquisition activities       (5 )   (21 )   (5 )
Other   1     10     1     12  
Estimated tax effects of above items   (1 )       (13 )    
Non-cash changes in net deferred income taxes   20     71     (52 )   134  
Non-cash taxes from business acquisition activities           (21 )   (41 )
Total non-GAAP adjustments   114     136     (72 )   342  
Non-GAAP net income (loss) attributable to Micron   $ (56 )   $ (79 )   $ 399     $ 66  
                 
Number of shares used in diluted per share calculations:                
GAAP   1,037     1,036     1,124     1,036  
Effect of capped calls and other adjustments           (44 )   (1 )
Non-GAAP   1,037     1,036     1,080     1,035  
                 
Diluted earnings (loss) per share:                
GAAP   $ (0.16 )   $ (0.21 )   $ 0.42     $ (0.27 )
Effects of above   0.11     0.13     (0.05 )   0.33  
Non-GAAP   $ (0.05 )   $ (0.08 )   $ 0.37     $ 0.06  
                                 

The table above sets forth non-GAAP net income (loss) attributable to Micron, diluted shares, and diluted earnings (loss) per share. The adjustments above may or may not be infrequent or nonrecurring in nature but are a result of periodic or non-core operating activities of the company. The company believes this non-GAAP information is helpful to understanding trends and in analyzing the company's operating results and earnings. The company is providing this information to investors to assist in performing analyses of the company's operating results. When evaluating performance and making decisions on how to allocate company resources, management uses this non-GAAP information and believes investors should have access to similar data when making their investment decisions. The presentation of these adjusted amounts vary from numbers presented in accordance with U.S. GAAP and therefore may not be comparable to amounts reported by other companies.

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