(2) On February 6, 2019, we issued $600 million, $500 million, and $700 million in principal of senior unsecured notes due in 2024, 2026, and 2029, respectively. On February 8, 2019, we notified the holders of our convertible senior notes due in 2043 ("2043G Notes") that we would redeem all of the outstanding 2043G Notes on March 13, 2019. In connection with our notice, we made an irrevocable election to settle any conversions in cash. As a result, we reclassified $336 million from equity to a derivative debt liability. As of February 28, 2019, current debt included an aggregate of $1.11 billion for the settlement obligation (including principal and amounts in excess of principal) of all of our 2043G Notes. In the second quarter of 2019, we recognized non-operating losses of $84 million related to the redemption of the 2043G notes. On March 13, 2019, we paid $1.43 billion to settle the conversions.
(3) On December 22, 2017, the United States enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"), which imposed a one-time transition tax in 2018 (the "Repatriation Tax") and created a new minimum tax on certain foreign earnings. Our income tax provision consisted of the following:
| 2nd Qtr. | 1st Qtr. | 2nd Qtr. | Six Months Ended | |||||||||||||||||
|
February 28,
2019 |
November 29,
2018 |
March 1,
2018 |
February 28,
2019 |
March 1,
2018 | ||||||||||||||||
| Income tax (provision) benefit, excluding items below | $ | (216 | ) | $ | (378 | ) | $ | 5 | $ | (594 | ) | $ | (83 | ) | ||||||
| Utilization of and other changes in net deferred tax assets of MMJ, MMT, and MTTW | (78 | ) | (52 | ) | (17 | ) | (130 | ) | (43 | ) | ||||||||||
| Repatriation Tax, net of adjustments related to uncertain tax positions | 14 | (47 | ) | (1,335 | ) | (33 | ) | (1,335 | ) | |||||||||||
| Release of the valuation allowance on the net deferred tax assets of our U.S. operations | — | — | 1,337 | — | 1,337 | |||||||||||||||
| Remeasurement of deferred tax assets and liabilities reflecting the lower U.S. corporate tax rates | — | — | (133 | ) | — | (133 | ) | |||||||||||||
| $ | (280 | ) | $ | (477 | ) | $ | (143 | ) | $ | (757 | ) | $ | (257 | ) | ||||||
(4) On January 14, 2019, we exercised our option to acquire Intel's interest in our joint venture, IM Flash Technologies, LLC ("IMFT"). Intel can elect to set the closing date of the transaction to be any time between approximately six months to one year from the date we exercised our call option. At the time of closing, we expect to pay Intel approximately $1.5 billion in cash for Intel's noncontrolling interest in IMFT and IMFT member debt. Current debt as of February 28, 2019 included $1.0 billion for IMFT member debt.
(5) In the second quarter of 2019, we repurchased 21 million shares of our common stock for $702 million through a Rule 10b5-1 plan. The shares were recorded as treasury stock. In the first quarter of 2019, we repurchased 42 million shares of our common stock for $1.80 billion.
MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in millions except per share amounts)
| 2nd Qtr. | 1st Qtr. | 2nd Qtr. | ||||||||||
|
February 28,
2019 |
November 29,
2018 |
March 1,
2018 | ||||||||||
| GAAP gross margin | $ | 2,864 | $ | 4,615 | $ | 4,270 | ||||||
| Stock-based compensation | 23 | 26 | 22 | |||||||||
| Start-up and preproduction costs | 15 | 8 | — | |||||||||
| Employee severance | 13 | 13 | — | |||||||||
| Other | 13 | 8 | 4 | |||||||||
| Non-GAAP gross margin | $ | 2,928 | $ | 4,670 | $ | 4,296 | ||||||
| GAAP operating income | $ | 1,957 | $ | 3,759 | $ | 3,567 | ||||||
| Stock-based compensation | 57 | 61 | 52 | |||||||||
| Start-up and preproduction costs | 15 | 8 | — | |||||||||
| Employee severance | 17 | 20 | — | |||||||||
| Restructure and asset impairments | 51 | 30 | 7 | |||||||||
| Other | 13 | 9 | 4 | |||||||||
| Non-GAAP operating income | $ | 2,110 | $ | 3,887 | $ | 3,630 | ||||||
| GAAP net income attributable to Micron | $ | 1,619 | $ | 3,293 | $ | 3,309 | ||||||
| Stock-based compensation | 57 | 61 | 52 | |||||||||
| Start-up and preproduction costs | 15 | 8 | — | |||||||||
| Employee severance | 17 | 20 | — | |||||||||
| Restructure and asset impairments | 51 | 30 | 7 | |||||||||
| Amortization of debt discount and other costs | 11 | 18 | 26 | |||||||||
| (Gain) loss on debt repurchases and conversions | 83 | (14 | ) | 23 | ||||||||
| (Gain) loss from changes in currency exchange rates | 3 | 5 | 27 | |||||||||
| Other | 13 | 10 | 7 | |||||||||
| Impact of U.S. income tax reform | (14 | ) | 47 | 131 | ||||||||
| Estimated tax effects of above, non-cash changes in net deferred income taxes, and assessments of tax exposures | 116 | 30 | (87 | ) | ||||||||
| Non-GAAP net income attributable to Micron | $ | 1,971 | $ | 3,508 | $ | 3,495 | ||||||
| GAAP weighted-average common shares outstanding - Diluted | 1,141 | 1,174 | 1,238 | |||||||||
| Adjustment for capped calls and stock-based compensation | 8 | 5 | 2 | |||||||||
| Non-GAAP weighted-average common shares outstanding - Diluted | 1,149 | 1,179 | 1,240 | |||||||||
| GAAP diluted earnings per share | $ | 1.42 | $ | 2.81 | $ | 2.67 | ||||||
| Effects of the above adjustments | 0.29 | 0.16 | 0.15 | |||||||||
| Non-GAAP diluted earnings per share | $ | 1.71 | $ | 2.97 | $ | 2.82 | ||||||
