0000723125--09-032020Q2FALSE111318112111981198119011909011901111811211416121111P6M00007231252019-08-302020-02-27xbrli:shares00007231252020-03-19iso4217:USD00007231252019-11-292020-02-2700007231252018-11-302019-02-2800007231252018-08-312019-02-28iso4217:USDxbrli:shares00007231252020-02-2700007231252019-08-290000723125us-gaap:CommonStockMember2019-08-290000723125us-gaap:AdditionalPaidInCapitalMember2019-08-290000723125us-gaap:RetainedEarningsMember2019-08-290000723125us-gaap:TreasuryStockMember2019-08-290000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-08-290000723125us-gaap:ParentMember2019-08-290000723125us-gaap:NoncontrollingInterestMember2019-08-290000723125us-gaap:RetainedEarningsMember2019-08-302019-11-280000723125us-gaap:ParentMember2019-08-302019-11-280000723125us-gaap:NoncontrollingInterestMember2019-08-302019-11-2800007231252019-08-302019-11-280000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-08-302019-11-280000723125us-gaap:CommonStockMember2019-08-302019-11-280000723125us-gaap:AdditionalPaidInCapitalMember2019-08-302019-11-280000723125us-gaap:TreasuryStockMember2019-08-302019-11-280000723125us-gaap:CommonStockMember2019-11-280000723125us-gaap:AdditionalPaidInCapitalMember2019-11-280000723125us-gaap:RetainedEarningsMember2019-11-280000723125us-gaap:TreasuryStockMember2019-11-280000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-11-280000723125us-gaap:ParentMember2019-11-280000723125us-gaap:NoncontrollingInterestMember2019-11-2800007231252019-11-280000723125us-gaap:RetainedEarningsMember2019-11-292020-02-270000723125us-gaap:ParentMember2019-11-292020-02-270000723125us-gaap:NoncontrollingInterestMember2019-11-292020-02-270000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-11-292020-02-270000723125us-gaap:CommonStockMember2019-11-292020-02-270000723125us-gaap:AdditionalPaidInCapitalMember2019-11-292020-02-270000723125us-gaap:TreasuryStockMember2019-11-292020-02-270000723125us-gaap:CommonStockMember2020-02-270000723125us-gaap:AdditionalPaidInCapitalMember2020-02-270000723125us-gaap:RetainedEarningsMember2020-02-270000723125us-gaap:TreasuryStockMember2020-02-270000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-02-270000723125us-gaap:ParentMember2020-02-270000723125us-gaap:NoncontrollingInterestMember2020-02-270000723125us-gaap:CommonStockMember2018-08-300000723125us-gaap:AdditionalPaidInCapitalMember2018-08-300000723125us-gaap:RetainedEarningsMember2018-08-300000723125us-gaap:TreasuryStockMember2018-08-300000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-08-300000723125us-gaap:ParentMember2018-08-300000723125us-gaap:NoncontrollingInterestMember2018-08-3000007231252018-08-300000723125us-gaap:RetainedEarningsMembermu:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-08-300000723125us-gaap:ParentMembermu:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-08-300000723125mu:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-08-300000723125us-gaap:RetainedEarningsMember2018-08-312018-11-290000723125us-gaap:ParentMember2018-08-312018-11-290000723125us-gaap:NoncontrollingInterestMember2018-08-312018-11-2900007231252018-08-312018-11-290000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-08-312018-11-290000723125us-gaap:CommonStockMember2018-08-312018-11-290000723125us-gaap:AdditionalPaidInCapitalMember2018-08-312018-11-290000723125us-gaap:TreasuryStockMember2018-08-312018-11-290000723125us-gaap:CommonStockMember2018-11-290000723125us-gaap:AdditionalPaidInCapitalMember2018-11-290000723125us-gaap:RetainedEarningsMember2018-11-290000723125us-gaap:TreasuryStockMember2018-11-290000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-11-290000723125us-gaap:ParentMember2018-11-290000723125us-gaap:NoncontrollingInterestMember2018-11-2900007231252018-11-290000723125us-gaap:RetainedEarningsMember2018-11-302019-02-280000723125us-gaap:ParentMember2018-11-302019-02-280000723125us-gaap:NoncontrollingInterestMember2018-11-302019-02-280000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-11-302019-02-280000723125us-gaap:CommonStockMember2018-11-302019-02-280000723125us-gaap:AdditionalPaidInCapitalMember2018-11-302019-02-280000723125us-gaap:TreasuryStockMember2018-11-302019-02-280000723125us-gaap:CommonStockMember2019-02-280000723125us-gaap:AdditionalPaidInCapitalMember2019-02-280000723125us-gaap:RetainedEarningsMember2019-02-280000723125us-gaap:TreasuryStockMember2019-02-280000723125us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-02-280000723125us-gaap:ParentMember2019-02-280000723125us-gaap:NoncontrollingInterestMember2019-02-2800007231252019-02-280000723125us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2020-02-270000723125us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2019-08-290000723125us-gaap:AccountingStandardsUpdate201602Member2019-08-300000723125us-gaap:AccountingStandardsUpdate201602Member2019-08-302019-08-300000723125us-gaap:CashMember2020-02-270000723125us-gaap:CashMember2019-08-290000723125us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2020-02-270000723125us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2019-08-290000723125us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2020-02-270000723125us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2019-08-290000723125us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-02-270000723125us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-08-290000723125us-gaap:SovereignDebtMemberus-gaap:FairValueInputsLevel2Member2020-02-270000723125us-gaap:SovereignDebtMemberus-gaap:FairValueInputsLevel2Member2019-08-290000723125us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-02-270000723125us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-08-290000723125us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2020-02-270000723125us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2019-08-290000723125srt:MinimumMember2019-08-302020-02-270000723125srt:MaximumMember2019-08-302020-02-270000723125us-gaap:LandMember2020-02-270000723125us-gaap:LandMember2019-08-290000723125us-gaap:BuildingAndBuildingImprovementsMember2020-02-270000723125us-gaap:BuildingAndBuildingImprovementsMember2019-08-290000723125us-gaap:EquipmentMember2020-02-270000723125us-gaap:EquipmentMember2019-08-290000723125us-gaap:ConstructionInProgressMember2020-02-270000723125us-gaap:ConstructionInProgressMember2019-08-290000723125us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-02-270000723125us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2019-08-290000723125mu:EquipmentnotplacedintoserviceMember2020-02-270000723125mu:EquipmentnotplacedintoserviceMember2019-08-290000723125us-gaap:ServiceLifeMembermu:NANDAndRDEquipmentMember2018-08-312019-08-290000723125us-gaap:ServiceLifeMembermu:NANDAndRDEquipmentMember2019-08-302020-02-270000723125us-gaap:ServiceLifeMembermu:NANDAndRDEquipmentMember2019-11-292020-02-270000723125us-gaap:RealEstateMembersrt:MinimumMember2020-02-270000723125us-gaap:RealEstateMembersrt:MaximumMember2020-02-270000723125us-gaap:LandMembersrt:MinimumMember2020-02-270000723125srt:MaximumMemberus-gaap:LandMember2020-02-27xbrli:pure0000723125srt:WeightedAverageMember2020-02-270000723125us-gaap:CorporateDebtSecuritiesMembermu:UnsecuredSeniorCorporateDebtdue2024_2Member2020-02-270000723125us-gaap:CorporateDebtSecuritiesMembermu:UnsecuredSeniorCorporateDebtdue2024_2Member2019-08-290000723125mu:TermLoanFacilityComponentMemberus-gaap:NotesPayableOtherPayablesMember2020-02-270000723125mu:TermLoanFacilityComponentMemberus-gaap:NotesPayableOtherPayablesMember2019-08-290000723125us-gaap:CorporateDebtSecuritiesMembermu:UnsecuredSeniorCorporateDebtDue2026_2Member2020-02-270000723125us-gaap:CorporateDebtSecuritiesMembermu:UnsecuredSeniorCorporateDebtDue2026_2Member2019-08-290000723125us-gaap:CorporateDebtSecuritiesMembermu:UnsecuredSeniorCorporateDebtDue2027Member2020-02-270000723125us-gaap:CorporateDebtSecuritiesMembermu:UnsecuredSeniorCorporateDebtDue2027Member2019-08-290000723125us-gaap:CorporateDebtSecuritiesMembermu:UnsecuredSeniorCorporateDebtDue2029Member2020-02-270000723125us-gaap:CorporateDebtSecuritiesMembermu:UnsecuredSeniorCorporateDebtDue2029Member2019-08-290000723125mu:UnsecuredSeniorCorporateDebtDue2030Memberus-gaap:CorporateDebtSecuritiesMember2020-02-270000723125mu:UnsecuredSeniorCorporateDebtDue2030Memberus-gaap:CorporateDebtSecuritiesMember2019-08-290000723125us-gaap:ConvertibleDebtMembermu:ConvertibleSeniorNotesDue2032DMember2020-02-270000723125us-gaap:ConvertibleDebtMembermu:ConvertibleSeniorNotesDue2032DMember2019-08-290000723125us-gaap:ConvertibleDebtMembermu:ConvertibleSeniorNoteDue2033FMember2020-02-270000723125us-gaap:ConvertibleDebtMembermu:ConvertibleSeniorNoteDue2033FMember2019-08-290000723125mu:ReorganizationobligationMember2020-02-270000723125mu:ReorganizationobligationMember2019-08-290000723125us-gaap:ConvertibleDebtMembermu:IMFTMemberDebtMember2020-02-270000723125us-gaap:ConvertibleDebtMembermu:IMFTMemberDebtMember2019-08-290000723125us-gaap:CorporateDebtSecuritiesMembermu:Unsecuredseniorcorporatedebtdue2025Member2020-02-270000723125us-gaap:CorporateDebtSecuritiesMembermu:Unsecuredseniorcorporatedebtdue2025Member2019-08-290000723125us-gaap:ConvertibleDebtMember2019-08-302020-02-27utr:D0000723125mu:IMFTMemberDebtMemberus-gaap:ConvertibleDebtMember2019-08-302019-11-280000723125mu:IMFTMemberDebtMemberus-gaap:ConvertibleDebtMember2019-10-312019-10-310000723125mu:IMFTMemberDebtMemberus-gaap:ConvertibleDebtMember2019-08-302019-10-300000723125us-gaap:ConvertibleDebtMember2020-02-270000723125us-gaap:NotesPayableOtherPayablesMemberus-gaap:LondonInterbankOfferedRateLIBORMembermu:RevolvingCreditFacilityComponentMembersrt:MinimumMember2019-08-302020-02-270000723125mu:TermLoanFacilityComponentMemberus-gaap:NotesPayableOtherPayablesMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMember2019-08-302020-02-270000723125srt:MaximumMemberus-gaap:NotesPayableOtherPayablesMemberus-gaap:LondonInterbankOfferedRateLIBORMembermu:RevolvingCreditFacilityComponentMember2019-08-302020-02-270000723125srt:MaximumMembermu:TermLoanFacilityComponentMemberus-gaap:NotesPayableOtherPayablesMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-08-302020-02-270000723125mu:TermLoanFacilityComponentMemberus-gaap:NotesPayableOtherPayablesMember2019-10-302019-10-300000723125mu:TermLoanFacilityComponentMemberus-gaap:NotesPayableOtherPayablesMember2019-08-302020-02-270000723125us-gaap:NotesPayableOtherPayablesMembermu:RevolvingCreditFacilityComponentMemberus-gaap:SubsequentEventMember2020-03-132020-03-130000723125us-gaap:ConvertibleDebtMember2019-08-302020-02-270000723125mu:Unsecuredseniorcorporatedebtdue2025Memberus-gaap:CorporateDebtSecuritiesMember2019-08-302020-02-270000723125mu:IMFTMemberDebtMemberus-gaap:ConvertibleDebtMember2019-08-302020-02-270000723125us-gaap:ConvertibleDebtMembermu:ConvertibleSeniorNoteDue2033FMember2019-08-302020-02-270000723125us-gaap:ConvertibleDebtMembermu:ConvertibleSeniorNoteDue2033FMembermu:TransactionsNotYetSettledMember2019-08-302020-02-27mu:patent0000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:Elm3DSInnovationsLLCMember2019-08-302020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:InnovativeMemorySolutionsInc.Member2019-08-302020-02-27iso4217:CNY0000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:InnovativeMemorySolutionsInc.Complaint3Member2019-08-302020-02-270000723125mu:FujianJinhuaIntegratedCircuitCo.Ltd.Membermu:PatentMattersMemberus-gaap:PendingLitigationMember2019-08-302020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:UnitedMicroelectronicsCorporationMember2019-08-302020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:UnitedMicroelectronicsCorporationComplaint2Member2019-08-302020-02-270000723125mu:PatentMattersMembermu:WithdrawnLitigationMembermu:UnitedMicroelectronicsCorporationComplaint3Member2019-08-302020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:FujianJinhuaIntegratedCircuitCo.Ltd.Complaint2Member2019-08-302020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:FuzhouCourtMember2019-08-302020-02-270000723125mu:QimondaAgInoteraSharePurchaseProceedingsMemberus-gaap:PendingLitigationMember2020-02-270000723125mu:QimondaAgInoteraSharePurchaseProceedingsMemberus-gaap:PendingLitigationMember2019-08-302020-02-27mu:lawsuit0000723125mu:SubsequentindirectDRAMPurchasersUnitedStatesMemberMembermu:AntitrustMattersMembermu:JoinedLitigationMember2019-08-302020-02-270000723125mu:SubsequentdirectDRAMPurchasersUnitedStatesMemberMembermu:AntitrustMattersMembermu:JoinedLitigationMember2019-08-302020-02-270000723125us-gaap:PendingLitigationMembermu:DRAMPurchasersCanadaMembermu:AntitrustMattersMember2020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:MLCIntellectualPropertyLLC.Member2019-08-302020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:MLCIntellectualPropertyLLC.Member2020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:Elm3DSInnovationsLLCMember2020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:InnovativeMemorySolutionsInc.Member2020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:InnovativeMemorySolutionsInc.Complaint3Member2020-02-270000723125mu:FujianJinhuaIntegratedCircuitCo.Ltd.Membermu:PatentMattersMemberus-gaap:PendingLitigationMember2020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:FujianJinhuaIntegratedCircuitCo.Ltd.Complaint2Member2020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:UnitedMicroelectronicsCorporationMember2020-02-270000723125mu:PatentMattersMemberus-gaap:PendingLitigationMembermu:UnitedMicroelectronicsCorporationComplaint2Member2020-02-270000723125mu:InitialindirectDRAMPurchasersUnitedStatesMembermu:AntitrustMattersMembermu:JoinedLitigationMember2019-08-302020-02-270000723125mu:ConsolidatedAmendedIndirectPurchasersCAMemberus-gaap:PendingLitigationMembermu:AntitrustMattersMember2020-02-270000723125mu:InitialdirectDRAMPurchasersUnitedStatesMembermu:AntitrustMattersMembermu:JoinedLitigationMember2019-08-302020-02-270000723125us-gaap:PendingLitigationMembermu:AntitrustMattersMembermu:ConsolidatedAmendedDirectPurchasersCAMember2020-02-270000723125mu:SecuritiesMattersMembermu:OriginalShareholderActionNewYorkMembermu:JoinedLitigationMember2019-08-302020-02-270000723125mu:SecuritiesMattersMembermu:SubsequentShareholderActionNewYorkMembermu:JoinedLitigationMember2019-08-302020-02-270000723125mu:DismissedLitigationMembermu:SecuritiesMattersMembermu:ConsolidatedShareholderClassActionNewYorkCourtMember2019-08-302020-02-270000723125mu:DismissedLitigationMembermu:ShareholderClassActionDelawareCourtMembermu:SecuritiesMattersMember2019-08-302020-02-270000723125us-gaap:PendingLitigationMembermu:MicronvsUnitedMicroelectronicsCorpandFujianJinhuaIntegratedCircuitCoMember2020-02-270000723125us-gaap:PendingLitigationMembermu:EmployeeClassActionMember2020-02-270000723125mu:StockRepurchasesAuthorizedMay2018ByTheBoardOfDirectorsMember2020-02-270000723125mu:StockRepurchasesAuthorizedMay2018ByTheBoardOfDirectorsMember2019-11-292020-02-270000723125mu:StockRepurchasesAuthorizedMay2018ByTheBoardOfDirectorsMember2019-08-302020-02-270000723125mu:StockRepurchasesAuthorizedMay2018ByTheBoardOfDirectorsMember2018-11-302019-02-280000723125mu:StockRepurchasesAuthorizedMay2018ByTheBoardOfDirectorsMember2018-08-312019-02-280000723125mu:StockRepurchasesAuthorizedMay2018ByTheBoardOfDirectorsMember2018-08-312020-02-270000723125us-gaap:TreasuryStockMemberus-gaap:LongMemberus-gaap:CallOptionMember2019-11-292020-02-270000723125mu:ImFlashTechnologiesLlcMember2020-02-270000723125mu:ImFlashTechnologiesLlcMember2019-08-290000723125mu:ImFlashTechnologiesLlcMember2019-10-312019-10-310000723125mu:ImFlashTechnologiesLlcMemberus-gaap:NoncontrollingInterestMember2019-10-312019-10-310000723125mu:ImFlashTechnologiesLlcMemberus-gaap:SubsequentEventMember2019-11-012020-03-060000723125mu:ImFlashTechnologiesLlcMembermu:IntelMember2019-08-302019-10-300000723125mu:ImFlashTechnologiesLlcMembermu:IntelMember2018-11-302019-02-280000723125mu:ImFlashTechnologiesLlcMembermu:IntelMember2018-08-312019-02-280000723125mu:ReorganizationObligationAndOtherNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-02-270000723125mu:ReorganizationObligationAndOtherNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-02-270000723125mu:ReorganizationObligationAndOtherNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-08-290000723125mu:ReorganizationObligationAndOtherNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2019-08-290000723125us-gaap:ConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-02-270000723125us-gaap:ConvertibleDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-02-270000723125us-gaap:ConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-08-290000723125us-gaap:ConvertibleDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2019-08-290000723125us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2020-02-270000723125us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2020-02-270000723125us-gaap:NondesignatedMemberus-gaap:EquityContractMember2020-02-270000723125us-gaap:NondesignatedMember2020-02-270000723125us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2019-08-290000723125us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2019-08-290000723125us-gaap:NondesignatedMemberus-gaap:EquityContractMember2019-08-290000723125us-gaap:NondesignatedMember2019-08-290000723125us-gaap:DesignatedAsHedgingInstrumentMember2019-08-302020-02-270000723125us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2019-11-292020-02-270000723125us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2019-08-302020-02-270000723125us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2018-11-302019-02-280000723125us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2018-08-312019-02-280000723125us-gaap:NondesignatedMember2019-08-302020-02-270000723125us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2019-11-292020-02-270000723125us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2019-08-302020-02-270000723125us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2018-11-302019-02-280000723125us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2018-08-312018-11-290000723125us-gaap:NondesignatedMemberus-gaap:EquityContractMember2019-08-302020-02-270000723125us-gaap:NondesignatedMemberus-gaap:EquityContractMember2018-11-302019-02-280000723125us-gaap:NondesignatedMemberus-gaap:EquityContractMember2018-08-312019-02-280000723125mu:RestrictedstockawardMember2019-11-292020-02-270000723125mu:RestrictedstockawardMember2018-11-302019-02-280000723125mu:RestrictedstockawardMember2019-08-302020-02-270000723125mu:RestrictedstockawardMember2018-08-312019-02-280000723125us-gaap:EmployeeStockMember2020-01-012020-01-310000723125us-gaap:EmployeeStockMember2019-01-012019-01-310000723125us-gaap:EmployeeStockMember2020-01-310000723125us-gaap:EmployeeStockMember2019-01-310000723125us-gaap:EmployeeStockMember2020-02-012020-02-270000723125us-gaap:EmployeeStockMember2019-02-012019-02-280000723125us-gaap:CostOfSalesMember2019-11-292020-02-270000723125us-gaap:CostOfSalesMember2018-11-302019-02-280000723125us-gaap:CostOfSalesMember2019-08-302020-02-270000723125us-gaap:CostOfSalesMember2018-08-312019-02-280000723125us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-11-292020-02-270000723125us-gaap:SellingGeneralAndAdministrativeExpensesMember2018-11-302019-02-280000723125us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-08-302020-02-270000723125us-gaap:SellingGeneralAndAdministrativeExpensesMember2018-08-312019-02-280000723125us-gaap:ResearchAndDevelopmentExpenseMember2019-11-292020-02-270000723125us-gaap:ResearchAndDevelopmentExpenseMember2018-11-302019-02-280000723125us-gaap:ResearchAndDevelopmentExpenseMember2019-08-302020-02-270000723125us-gaap:ResearchAndDevelopmentExpenseMember2018-08-312019-02-280000723125us-gaap:EmployeeStockMember2019-11-292020-02-270000723125us-gaap:EmployeeStockMember2018-11-302019-02-280000723125us-gaap:EmployeeStockMember2019-08-302020-02-270000723125us-gaap:EmployeeStockMember2018-08-312019-02-280000723125us-gaap:EmployeeStockOptionMember2019-11-292020-02-270000723125us-gaap:EmployeeStockOptionMember2018-11-302019-02-280000723125us-gaap:EmployeeStockOptionMember2019-08-302020-02-270000723125us-gaap:EmployeeStockOptionMember2018-08-312019-02-280000723125mu:DRAMProductsMember2019-11-292020-02-270000723125mu:DRAMProductsMember2018-11-302019-02-280000723125mu:DRAMProductsMember2019-08-302020-02-270000723125mu:DRAMProductsMember2018-08-312019-02-280000723125mu:NANDProductsMember2019-11-292020-02-270000723125mu:NANDProductsMember2018-11-302019-02-280000723125mu:NANDProductsMember2019-08-302020-02-270000723125mu:NANDProductsMember2018-08-312019-02-280000723125mu:OtherProductSalesMember2019-11-292020-02-270000723125mu:OtherProductSalesMember2018-11-302019-02-280000723125mu:OtherProductSalesMember2019-08-302020-02-270000723125mu:OtherProductSalesMember2018-08-312019-02-280000723125us-gaap:ProductMember2020-02-270000723125us-gaap:ProductMember2019-08-290000723125mu:ServicesandOtherArrangementsMember2020-02-270000723125mu:ServicesandOtherArrangementsMember2019-08-29mu:segment0000723125mu:CNBUMember2019-11-292020-02-270000723125mu:CNBUMember2018-11-302019-02-280000723125mu:CNBUMember2019-08-302020-02-270000723125mu:CNBUMember2018-08-312019-02-280000723125mu:MBUMember2019-11-292020-02-270000723125mu:MBUMember2018-11-302019-02-280000723125mu:MBUMember2019-08-302020-02-270000723125mu:MBUMember2018-08-312019-02-280000723125mu:SBUMember2019-11-292020-02-270000723125mu:SBUMember2018-11-302019-02-280000723125mu:SBUMember2019-08-302020-02-270000723125mu:SBUMember2018-08-312019-02-280000723125mu:EBUMember2019-11-292020-02-270000723125mu:EBUMember2018-11-302019-02-280000723125mu:EBUMember2019-08-302020-02-270000723125mu:EBUMember2018-08-312019-02-280000723125us-gaap:AllOtherSegmentsMember2019-11-292020-02-270000723125us-gaap:AllOtherSegmentsMember2018-11-302019-02-280000723125us-gaap:AllOtherSegmentsMember2019-08-302020-02-270000723125us-gaap:AllOtherSegmentsMember2018-08-312019-02-280000723125mu:CNBUMemberus-gaap:OperatingSegmentsMember2019-11-292020-02-270000723125mu:CNBUMemberus-gaap:OperatingSegmentsMember2018-11-302019-02-280000723125mu:CNBUMemberus-gaap:OperatingSegmentsMember2019-08-302020-02-270000723125mu:CNBUMemberus-gaap:OperatingSegmentsMember2018-08-312019-02-280000723125us-gaap:OperatingSegmentsMembermu:MBUMember2019-11-292020-02-270000723125us-gaap:OperatingSegmentsMembermu:MBUMember2018-11-302019-02-280000723125us-gaap:OperatingSegmentsMembermu:MBUMember2019-08-302020-02-270000723125us-gaap:OperatingSegmentsMembermu:MBUMember2018-08-312019-02-280000723125mu:SBUMemberus-gaap:OperatingSegmentsMember2019-11-292020-02-270000723125mu:SBUMemberus-gaap:OperatingSegmentsMember2018-11-302019-02-280000723125mu:SBUMemberus-gaap:OperatingSegmentsMember2019-08-302020-02-270000723125mu:SBUMemberus-gaap:OperatingSegmentsMember2018-08-312019-02-280000723125us-gaap:OperatingSegmentsMembermu:EBUMember2019-11-292020-02-270000723125us-gaap:OperatingSegmentsMembermu:EBUMember2018-11-302019-02-280000723125us-gaap:OperatingSegmentsMembermu:EBUMember2019-08-302020-02-270000723125us-gaap:OperatingSegmentsMembermu:EBUMember2018-08-312019-02-280000723125us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2019-11-292020-02-270000723125us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2018-11-302019-02-280000723125us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2019-08-302020-02-270000723125us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2018-08-312019-02-280000723125us-gaap:OperatingSegmentsMember2019-11-292020-02-270000723125us-gaap:OperatingSegmentsMember2018-11-302019-02-280000723125us-gaap:OperatingSegmentsMember2019-08-302020-02-270000723125us-gaap:OperatingSegmentsMember2018-08-312019-02-280000723125us-gaap:MaterialReconcilingItemsMember2019-11-292020-02-270000723125us-gaap:MaterialReconcilingItemsMember2018-11-302019-02-280000723125us-gaap:MaterialReconcilingItemsMember2019-08-302020-02-270000723125us-gaap:MaterialReconcilingItemsMember2018-08-312019-02-28

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 27, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to
Commission file number 1-10658
MU-20200227_G1.JPG
Micron Technology, Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-1618004
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
8000 S. Federal Way, Boise, Idaho
83716-9632
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code
(208) 368-4000
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated Filer Non-Accelerated Filer Smaller Reporting Company 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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The number of outstanding shares of the registrants common stock as of March 19, 2020 was 1,112,186,006.





Micron
Company
Profile
MU-20200227_G2.JPG
Founded over 40 years ago
on October 5, 1978
  
Headquartered in
Boise, Idaho, USA
  
4th
Largest semiconductor company
in the world*
    
18
Countries*
    
13
Manufacturing sites and
13 customer labs*
  
37,000
Team members*
Redefining
What’s Possible
The world is moving to a new economic model, where data is driving value creation in ways nobody had imagined just a few years ago.
Who We Are
Data is today’s new business currency, and memory and storage are emerging as strategic differentiators that will redefine how we extract value from data to learn, explore, communicate, and experience. Our more than 37,000 team members, in 18 different countries, work with countless customers to innovate every day and pursue the products that will shape how we live and work tomorrow.
Our Vision
As a global leader in memory and storage solutions, we are transforming how the world uses information to enrich life by enabling technologies to collect, store, and manage data with unprecedented speed and efficiency. We are accelerating the transformation of information into intelligence – inspiring the world to learn, communicate, and advance faster than ever.
Our Commitment
*Micron data as of August 29, 2019.
Gartner Market Share: Semiconductors by End Market, Worldwide, 2018 (April 2019)
Our day-to-day operations wouldn’t be possible without our team members’ commitment to business integrity and environmental sustainability. Whether it’s adhering to our professional values or valuing the communities we work in, for us, doing business better means doing business right.
Media Inquiries
mediarelations@micron.com

Government Inquiries
govaffairs@micron.com

Investor Inquiries
investorrelations@micron.com
Global Product Portfolio
DRAM | NAND | 3D XPointTM Memory | NOR | Solid-State Drives
High Bandwidth Memory (HBM) | Multichip Packages | Advanced Solutions
Connect with us on micron.com
© 2020 Micron Technology, Inc. Micron, the Micron logo, the M orbit logo, Intelligence AcceleratedTM, and other Micron trademarks are the property of Micron Technology, Inc. All other trademarks are the property of their respective owners. Products and specifications are subject to change without notice. Rev 03/20



Table of Contents

Introduction
2
Part I. Financial Statements
Item 1. Financial Statements:
Consolidated Statements of Operations
3
Consolidated Statements of Comprehensive Income
4
Consolidated Balance Sheets
5
Consolidated Statements of Changes in Equity
6
Consolidated Statements of Cash Flows
8
Notes to Consolidated Financial Statements
9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
26
Results of Operations
28
Liquidity and Capital Resources
32
Item 3. Quantitative and Qualitative Disclosures about Market Risk
34
Item 4. Controls and Procedures
34
Part II. Other Information
Item 1. Legal Proceedings
34
Item 1A. Risk Factors
35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
52
Item 6. Exhibits
52
Signatures
53


MU-20200227_G3.JPG 1


Definitions of Commonly Used Terms

As used herein, “we,” “our,” “us,” and similar terms include Micron Technology, Inc. and our consolidated subsidiaries, unless the context indicates otherwise. Abbreviations, terms, or acronyms are commonly used or found in multiple locations throughout this report and include the following:
Term Definition Term Definition
2024 Term Loan A Senior Term Loan A due 2024 IMFT IM Flash Technologies, LLC
2024 Notes
5.25% Senior Notes due 2024
Intel
Intel Corporation
2025 Notes
5.50% Senior Notes due 2025
MCP
Multi-Chip Package
2026 Notes
5.63% Senior Notes due 2026
Micron
Micron Technology, Inc. (Parent Company)
2027 Notes
4.19% Senior Notes due 2027
MMJ
Micron Memory Japan, G.K.
2029 Notes
5.33% Senior Notes due 2029
MMT
Micron Memory Taiwan Co., Ltd.
2030 Notes
4.66% Senior Notes due 2030
MTTW
Micron Technology Taiwan, Inc.
2032D Notes
3.13% Convertible Senior Notes due 2032
MTU Micron Technology Utah, LLC
2033F Notes
2.13% Convertible Senior Notes due 2033
Qimonda
Qimonda AG
DDR Double Data Rate
SSD
Solid State Drive
GDDR
Graphics Double Data Rate
VIE
Variable Interest Entity

Micron Technology, Inc., including its consolidated subsidiaries, is 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. 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.

Micron and the Micron orbit logo are trademarks of Micron Technology, Inc. 3D XPoint is a trademark of Intel in the United States and/or other countries. All other trademarks are the property of their respective owners.

Forward-Looking Statements

This Form 10-Q contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements include, but are not limited to, statements such as those made regarding underutilization of our Lehi, Utah manufacturing capacity (previously known as IMFT and now known as MTU); the sufficiency of our cash and investments, cash flows from operations, and available financing; and capital spending in 2020. We are under no obligation to update these forward-looking statements. Our actual results could differ materially from our historical results and those discussed in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those identified in “Part II, Other Information – Item 1A. Risk Factors.”
2 | 2020 Q2 10-Q


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

Micron Technology, Inc.
Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)

Quarter ended Six months ended
February 27,
2020
February 28,
2019
February 27,
2020
February 28,
2019
Revenue $ 4,797    $ 5,835    $ 9,941    $ 13,748   
Cost of goods sold 3,442    2,971    7,220    6,269   
Gross margin 1,355    2,864    2,721    7,479   
Selling, general, and administrative 223    209    434    418   
Research and development 681    601    1,321    1,212   
Other operating (income) expense, net 11    97      133   
Operating income 440    1,957    958    5,716   
Interest income 34    58    78    96   
Interest expense (46)   (27)   (93)   (60)  
Other non-operating income (expense), net (1)   (84)   45    (75)  
427    1,904    988    5,677   
Income tax (provision) benefit (21)   (280)   (76)   (757)  
Equity in net income (loss) of equity method investees        
Net income 407    1,625    915    4,921   
Net income attributable to noncontrolling interests (2)   (6)   (19)   (9)  
Net income attributable to Micron $ 405    $ 1,619    $ 896    $ 4,912   
Earnings per share
Basic $ 0.37    $ 1.45    $ 0.81    $ 4.37   
Diluted 0.36    1.42    0.79    4.24   
Number of shares used in per share calculations
Basic 1,111    1,114    1,109    1,123   
Diluted 1,133    1,141    1,131    1,157   









See accompanying notes to consolidated financial statements.
MU-20200227_G4.JPG 3


Micron Technology, Inc.
Consolidated Statements of Comprehensive Income
(In millions)
(Unaudited)

Quarter ended Six months ended
February 27,
2020
February 28,
2019
February 27,
2020
February 28,
2019
Net income $ 407    $ 1,625    $ 915    4,921   
Other comprehensive income (loss), net of tax
Gains (losses) on derivative instruments (18)     (15)   (6)  
Gains (losses) on investments     (2)    
Foreign currency translation adjustments —    (1)   —    (1)  
Pension liability adjustments —    —    (1)   —   
Other comprehensive income (loss) (15)   11    (18)   (4)  
Total comprehensive income 392    1,636    897    4,917   
Comprehensive income attributable to noncontrolling interests
(2)   (6)   (19)   (9)  
Comprehensive income attributable to Micron $ 390    $ 1,630    $ 878    $ 4,908   

































See accompanying notes to consolidated financial statements.
4 | 2020 Q2 10-Q


Micron Technology, Inc.
Consolidated Balance Sheets
(In millions, except par value amounts)
(Unaudited)
As of February 27,
2020
August 29,
2019
Assets
Cash and equivalents $ 7,118    $ 7,152   
Short-term investments 363    803   
Receivables 3,049    3,195   
Inventories 5,208    5,118   
Other current assets 238    235   
Total current assets 15,976    16,503   
Long-term marketable investments 586    1,164   
Property, plant, and equipment 29,647    28,240   
Intangible assets 332    340   
Deferred tax assets 764    837   
Goodwill 1,228    1,228   
Operating lease right-of-use assets 605    —   
Other noncurrent assets 510    575   
Total assets $ 49,648    $ 48,887   
Liabilities and equity
Accounts payable and accrued expenses $ 5,077    $ 4,626   
Current debt 237    1,310   
Other current liabilities 508    454   
Total current liabilities 5,822    6,390   
Long-term debt 5,188    4,541   
Noncurrent operating lease liabilities 548    —   
Noncurrent unearned government incentives 586    636   
Other noncurrent liabilities 383    452   
Total liabilities 12,527    12,019   
Commitments and contingencies
Redeemable noncontrolling interest 98    98   
Micron shareholders’ equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,191 shares issued and 1,112 outstanding (1,182 shares issued and 1,106 outstanding as of August 29, 2019)
119    118   
Additional capital 8,725    8,214   
Retained earnings 31,602    30,761   
Treasury stock, 79 shares held (76 shares as of August 29, 2019)
(3,414)   (3,221)  
Accumulated other comprehensive income (9)    
Total Micron shareholders’ equity 37,023    35,881   
Noncontrolling interest in subsidiary —    889   
Total equity 37,023    36,770   
Total liabilities and equity $ 49,648    $ 48,887   
See accompanying notes to consolidated financial statements.
MU-20200227_G5.JPG 5


Micron Technology, Inc.
Consolidated Statements of Changes in Equity
(In millions)
(Unaudited)

Micron Shareholders    
Common Stock Additional Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive
Income (Loss)
Total Micron Shareholders’ Equity Noncontrolling Interest in Subsidiary Total Equity
Number
of Shares
Amount
Balance at August 29, 2019 1,182    $ 118    $ 8,214    $ 30,761    $ (3,221)   $   $ 35,881    $ 889    $ 36,770   
Net income 491    491    15    506   
Other comprehensive income (loss), net
(3)   (3)   (3)  
Stock issued under stock plans     31    32    32   
Stock-based compensation expense
72    72    72   
Repurchase of stock —    —    (6)   (34)   (50)   (90)   (90)  
Acquisition of noncontrolling interest
123    123    (904)   (781)  
Conversion and repurchase of convertible notes
(6)   (6)   (6)  
Balance at November 28, 2019 1,185    $ 119    $ 8,428    $ 31,218    $ (3,271)   $   $ 36,500    $ —    $ 36,500   
Net income 405    405    —    405   
Other comprehensive income (loss), net
(15)   (15)   (15)  
Stock issued under stock plans   —    121    121    121   
Stock-based compensation expense
85    85    85   
Repurchase of stock (1)   —    (4)   (21)   (45)   (70)   (70)  
Settlement of capped calls 98    (98)   —    —   
Conversion and repurchase of convertible notes
(3)   (3)   (3)  
Balance at February 27, 2020 1,191    $ 119    $ 8,725    $ 31,602    $ (3,414)   $ (9)   $ 37,023    $ —    $ 37,023   























See accompanying notes to consolidated financial statements.
6 | 2020 Q2 10-Q


Micron Technology, Inc.
Consolidated Statements of Changes in Equity
(In millions)
(Unaudited)


Micron Shareholders
Common Stock Additional Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Micron Shareholders’ Equity Noncontrolling Interest in Subsidiary Total Equity
Number of Shares Amount
Balance at August 30, 2018 1,170    $ 117    $ 8,201    $ 24,395    $ (429)   $ 10    $ 32,294    $ 870    $ 33,164   
Cumulative effect of adoption new accounting standard
92    92    92   
Net income 3,293    3,293    —    3,293   
Other comprehensive income (loss), net (15)   (15)   (15)  
Stock issued under stock plans   —    15    15    15   
Stock-based compensation expense 61    61    61   
Repurchase of stock (1)   —    108    (11)   (1,933)   (1,836)   (1,836)  
Reclassification of redeemable convertible notes, net
     
Conversion and repurchase of convertible notes
(36)   (36)   (36)  
Balance at November 29, 2018 1,172    $ 117    $ 8,350    $ 27,769    $ (2,362)   $ (5)   $ 33,869    $ 870    $ 34,739   
Net income 1,619    1,619    5 1,624   
Other comprehensive income (loss), net 11 11    11   
Stock issued under stock plans     76    77    77   
Stock-based compensation expense 57    57    57   
Repurchase of stock (1)   —    (5)   (24)   (702)   (731)   (731)  
Acquisition of noncontrolling interest —    (12)   (12)  
Reclassification of redeemable convertible notes, net
     
Conversion and repurchase of convertible notes
(336)   (336)   (336)  
Balance at February 28, 2019 1,178    $ 118    $ 8,143    $ 29,364    $ (3,064)   $   $ 34,567    $ 863    $ 35,430   
















See accompanying notes to consolidated financial statements.
MU-20200227_G6.JPG 7


Micron Technology, Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)

Six months ended February 27,
2020
February 28,
2019
Cash flows from operating activities
Net income $ 915    $ 4,921   
Adjustments to reconcile net income to net cash provided by operating activities
   
Depreciation expense and amortization of intangible assets 2,661    2,648   
Amortization of debt discount and other costs 16    29   
Stock-based compensation 157    118   
(Gain) loss on debt prepayments, repurchases, and conversions (42)   69   
Change in operating assets and liabilities
   
Receivables 104    1,202   
Inventories (90)   (800)  
Accounts payable and accrued expenses 257    (326)  
Deferred income taxes, net 38    320   
Other (4)   64   
Net cash provided by operating activities 4,012    8,245   
Cash flows from investing activities    
Expenditures for property, plant, and equipment (3,999)   (5,349)  
Purchases of available-for-sale securities (566)   (2,566)  
Proceeds from sales of available-for-sale securities 1,059    160   
Proceeds from maturities of available-for-sale securities 523    391   
Proceeds from government incentives 105    455   
Other (21)   (10)  
Net cash provided by (used for) investing activities (2,899)   (6,919)  
Cash flows from financing activities    
Repayments of debt (1,676)   (705)  
Acquisition of noncontrolling interest in IMFT (744)   —   
Payments to acquire treasury stock (159)   (2,568)  
Payments on equipment purchase contracts (29)   (37)  
Proceeds from issuance of debt 1,250    1,800   
Other 151    27   
Net cash provided by (used for) financing activities (1,207)   (1,483)  
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash
(14)   (1)  
Net decrease in cash, cash equivalents, and restricted cash (108)   (158)  
Cash, cash equivalents, and restricted cash at beginning of period 7,279    6,587   
Cash, cash equivalents, and restricted cash at end of period $ 7,171    $ 6,429   


See accompanying notes to consolidated financial statements.
8 | 2020 Q2 10-Q


Micron Technology, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tabular amounts in millions, except per share amounts)
(Unaudited)


Basis of Presentation

The accompanying consolidated financial statements include the accounts of Micron and our consolidated subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended August 29, 2019, except for changes related to recently adopted accounting standards. See “Recently Adopted Accounting Standards” note. Prior year information is presented in accordance with the accounting guidance in effect during that period and has not been recast for recently adopted accounting standards. In the opinion of our management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, consisting of a normal recurring nature, to fairly state the financial information set forth herein. Certain reclassifications have been made to prior period amounts to conform to current period presentation.

Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal year 2020 contains 53 weeks and the fourth quarter of 2020 will contain 14 weeks. All period references are to our fiscal periods unless otherwise indicated. These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended August 29, 2019.


Significant Accounting Policies

For a discussion of our significant accounting policies, see “Part I – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended August 29, 2019. Except for the significant accounting policy associated with leases as discussed below, there have been no material changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended August 29, 2019.

Leases

In the first quarter of 2020, we elected new accounting policies in connection with the adoption of ASC 842 – Leases. We do not recognize a right-of-use asset or lease liability for leases with a term of 12 months or less. For real estate and gas plant leases entered into after adoption, we do not separate lease and non-lease components. Sublease income is presented within lease expense.


Variable Interest Entities

We have interests in entities that are VIEs. If we are the primary beneficiary of a VIE, we are required to consolidate it. To determine if we are the primary beneficiary, we evaluate whether we have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our evaluation includes identification of significant activities and an assessment of our ability to direct those activities based on governance provisions and arrangements to provide or receive product and process technology, product supply, operations services, equity funding, financing, and other applicable agreements and circumstances. Our assessments of whether we are the primary beneficiary of our VIEs require significant assumptions and judgments.

MU-20200227_G6.JPG 9


Unconsolidated VIE

PTI Xi’an: Powertech Technology Inc. Xi’an (“PTI Xi’an”) is a wholly-owned subsidiary of Powertech Technology Inc. (“PTI”) and was created to provide assembly services to us at our manufacturing site in Xi’an, China. We do not have an equity interest in PTI Xi’an. PTI Xi’an is a VIE because of the terms of its service agreement with us and its dependency on PTI to finance its operations. We do not have the power to direct the activities of PTI Xi’an that most significantly impact its economic performance, primarily because we do not have governance rights. Therefore, we do not consolidate PTI Xi’an. In connection with our assembly services with PTI, as of February 27, 2020 and August 29, 2019, we had net property, plant, and equipment of $44 million and $50 million, respectively, and finance lease obligations of $41 million and $47 million, respectively.

Consolidated VIE

IMFT: Through the date we acquired Intel’s noncontrolling interest in IMFT, IMFT was a VIE because all of its costs were passed to us and its other member, Intel, through product purchase agreements and because IMFT was dependent upon us or Intel for additional cash requirements. The primary activities of IMFT were driven by the constant introduction of product and process technology. Because we performed a significant majority of the technology development we had the power to direct its key activities. We consolidated IMFT due to this power and our obligation to absorb losses and the right to receive benefits from IMFT that could have been potentially significant to it. On October 31, 2019, we acquired Intel’s interest in IMFT at which time IMFT, now known as MTU, became a wholly-owned subsidiary. (See “Equity – Noncontrolling Interest in Subsidiary” note.)


Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued 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. We adopted ASC 842 in the first quarter of 2020 under the modified retrospective method and elected to not recast prior periods. We elected the practical expedients available under the transition guidance, including but not limited to, not reassessing past lease accounting or using hindsight to evaluate lease term. In addition, we elected to not separate lease and non-lease components for real estate or gas plant leases. As a result of adopting ASC 842, 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.


Recently Issued Accounting Standards

In November 2018, the FASB issued ASU 2018-18 – Collaborative Arrangements, which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. This ASU will be effective for us in the first quarter of 2021 with early adoption permitted. This ASU requires retrospective adoption to the date we adopted ASC 606, which was August 31, 2018, by recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the earliest annual period presented. We do not anticipate the adoption of this ASU will have a material impact on our financial statements.

In June 2016, the FASB issued ASU 2016-13 – Measurement of Credit Losses on Financial Instruments, which requires a financial asset (or a group of financial assets) measured on the basis of amortized cost to be presented at the net amount expected to be collected. This ASU requires that the income statement reflect the measurement of credit losses for newly recognized financial assets as well as the increases or decreases of expected credit losses that have taken place during the period. This ASU requires that credit losses of debt securities designated as available-for-sale be recorded through an allowance for credit losses and limits the credit loss to the amount by which fair value is below amortized cost. This ASU will be effective for us in the first quarter of 2021 with early
10 | 2020 Q2 10-Q


adoption permitted. This ASU requires modified retrospective adoption, with prospective adoption for debt securities for which an other-than-temporary impairment had been recognized before the effective date. We are evaluating the timing and effects of our adoption of this ASU on our financial statements.


Cash and Investments
Substantially all of our marketable debt and equity investments were classified as available-for-sale as of the dates noted below. Cash and equivalents and the fair values of our available-for-sale investments, which approximated amortized costs, were as follows:
February 27, 2020 August 29, 2019
As of Cash and Equivalents    Short-term Investments   
Long-term Marketable Investments (1)
Total Fair Value    Cash and Equivalents    Short-term Investments   
Long-term Marketable Investments (1)
Total Fair Value   
Cash $ 3,146    $ —    $ —    $ 3,146    $ 2,388    $ —    $ —    $ 2,388   
Level 1 (2)
Money market funds
1,894    —    —    1,894    3,418    —    —    3,418   
Level 2 (3)
Certificates of deposits
2,019        2,035    1,292    13      1,306   
Corporate bonds
—    239    270    509    —    550    689    1,239   
Government securities
17    67    189    273    36    149    232    417   
Asset-backed securities
—    34    120    154    —    67    242    309   
Commercial paper
42    14    —    56    18    24    —    42   
7,118    $ 363    $ 586    $ 8,067    7,152    $ 803    $ 1,164    $ 9,119   
Restricted cash (4)
53    127   
Cash, cash equivalents, and restricted cash
$ 7,171    $ 7,279   
(1)The maturities of long-term marketable investments range from one year to four years.
(2)The fair value of Level 1 securities is measured based on quoted prices in active markets for identical assets.
(3)The fair value of Level 2 securities is measured using information obtained from pricing services, which obtain quoted market prices for similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine the appropriate value at the measurement date. We perform supplemental analyses to validate information obtained from these pricing services. No adjustments were made to the fair values indicated by such pricing information as of February 27, 2020 or August 29, 2019.
(4)Restricted cash is included in other noncurrent assets and primarily relates to certain government incentives received prior to being earned. The restrictions lapse upon achieving certain performance conditions. Restricted cash as of August 29, 2019 also included amounts related to the corporate reorganization proceedings of MMJ.

Gross realized gains and losses from sales of available-for-sale securities were not significant for any period presented. As of February 27, 2020, there were no available-for-sale securities that had been in a loss position for longer than 12 months.


Receivables
As of February 27,
2020
August 29,
2019
Trade receivables $ 2,695    $ 2,778   
Income and other taxes 186    242   
Other 168    175   
$ 3,049    $ 3,195   

MU-20200227_G6.JPG 11



Inventories
As of February 27,
2020
August 29,
2019
Finished goods $ 802    $ 757   
Work in process 3,756    3,825   
Raw materials and supplies 650    536   
$ 5,208    $ 5,118   

Property, Plant, and Equipment
As of February 27,
2020
August 29,
2019
Land $ 352    $ 352   
Buildings 11,682    10,931   
Equipment (1)
46,577    44,051   
Construction in progress (2)
2,119    1,700   
Software 811    790   
  61,541    57,824   
Accumulated depreciation (31,894)   (29,584)  
  $ 29,647    $ 28,240   
(1)Included costs related to equipment not placed into service of $1.38 billion as of February 27, 2020 and $2.33 billion as of August 29, 2019.
(2)Included building-related construction, tool installation, and software costs for assets not placed into service.

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 (“R&D”) facilities from five years to seven years as of the beginning of the first quarter of 2020. As a result, we estimate the reduction in non-cash depreciation expense for these assets benefited operating income and net income by approximately $125 million and diluted earnings per share by approximately $0.11 for the second quarter of 2020, and benefited operating income and net income by approximately $200 million and diluted earnings per share by approximately $0.17 for the first six months of 2020.


Intangible Assets and Goodwill
February 27, 2020 August 29, 2019
As of
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
Product and process technology $ 595    $ (263)   $ 583    $ (243)  
Goodwill 1,228    N/A 1,228    N/A

In the first six months of 2020 and 2019, we capitalized $30 million and $64 million, respectively, for product and process technology with weighted-average useful lives of 11 years and 8 years, respectively. Expected amortization expense is $39 million for the remainder of 2020, $65 million for 2021, $53 million for 2022, $47 million for 2023, and $41 million for 2024.


12 | 2020 Q2 10-Q


Leases

We have finance and operating leases through which we acquire or utilize equipment and facilities in our manufacturing operations and R&D activities as well as office space and other facilities used in our selling, general, and administrative (“SG&A”) functions.

Our finance leases consist primarily of equipment used in our manufacturing operations and gas or other supply agreements that are deemed to be embedded leases in which we effectively control the underlying gas plants or other assets used to fulfill the supply agreements.

Our operating leases consist primarily of offices, other facilities, and land used in SG&A, R&D, and certain of our manufacturing operations. Certain of our operating leases include one or more options to extend the lease term for periods from one year to 10 years for real estate and one year to 30 years for land.

Certain supply or service agreements require us to exercise significant judgment to determine whether the agreement contains a lease of a right-of-use asset. Our assessment includes determining whether we or the supplier control the assets used to fulfill the supply or service agreement by identifying whether we or the supplier have the right to change the type, quantity, timing, or location of the output of the assets. In determining the lease term, we assess whether we are reasonably certain to exercise options to renew or terminate a lease, and when or whether we would exercise an option to purchase the right-of-use asset. Measuring the present value of the initial lease liability requires exercising judgment to determine the discount rate, which we base on interest rates for similar borrowings issued by entities with credit ratings similar to ours at the time of issuance.

Short-term and variable lease expenses were not significant and are presented within operating lease costs in the table below. Sublease income was not significant in any period presented. The components of lease expenses are presented below:
Quarter ended Six months ended
February 27,
2020
February 27,
2020
Finance lease cost
Amortization of right-of-use asset $ 39    $ 79   
Interest on lease liability   11   
Operating lease cost 24    48   
$ 68    $ 138   

Other information related to our leases were as follows:
Six months ended February 27,
2020
Cash flows used for operating activities
Finance leases
$ 12   
Operating leases (1)
(10)  
Cash flows used for financing activities
Finance leases 129   
Noncash acquisitions of right of use assets
Operating leases
24   
(1)Included $48 million of reimbursements received for tenant improvements.

MU-20200227_G6.JPG 13


As of February 27,
2020
Weighted-average remaining lease term (in years)
Finance leases
4.1
Operating leases
7.2
Weighted-average discount rate
Finance leases
4.95  %
Operating leases
2.67  %

Maturities of lease liabilities existing as of February 27, 2020 were as follows:
For the year ending Operating Leases Finance Leases
Remainder of 2020    $ 33    $ 100   
2021    68    109   
2022    66    76   
2023    62    50   
2024    53    40   
2025 and thereafter 442    213   
Less imputed interest (126)   (92)  
$ 598    $ 496   

The table above excludes lease liabilities for those leases that have been signed but have not yet commenced. As of February 27, 2020, we had such lease liabilities relating to 1) operating lease payment obligations of $157 million for the initial 10-year lease term for a building, which may, at our election, be terminated after 3 years or extended for an additional 10 years, and 2) finance lease obligations of $907 million over a weighted-average period of 15 years for gas supply arrangements deemed to be embedded leases. We will recognize right-of-use assets and associated lease liabilities at the time such assets become available for our use.

As of August 29, 2019, prior to adopting ASC 842, future minimum operating lease commitments with an initial term in excess of one year were $54 million for 2020, $64 million for 2021, $63 million for 2022, $59 million for 2023, and $53 million for 2024 and $459 million in 2025 and thereafter.


Accounts Payable and Accrued Expenses
As of February 27,
2020
August 29,
2019
Accounts payable $ 2,054    $ 1,677   
Property, plant, and equipment 2,057    1,782   
Salaries, wages, and benefits 566    695   
Income and other taxes 209    309   
Other 191    163   
$ 5,077    $ 4,626   

14 | 2020 Q2 10-Q


Debt
February 27, 2020 August 29, 2019
Net Carrying Amount    Net Carrying Amount   
As of Stated Rate    Effective Rate    Current    Long-Term    Total    Current    Long-Term    Total   
Finance lease obligations
N/A    4.95  % $ 153    $ 343    $ 496    $ 223    $ 368    $ 591   
2024 Notes
4.64  % 4.76  % —    597    597    —    597    597   
2024 Term Loan A
2.90  % 2.95  % 62    1,186    1,248    —    —    —   
2026 Notes
4.98  % 5.07  % —    497    497    —    497    497   
2027 Notes
4.19  % 4.27  % —    895    895    —    895    895   
2029 Notes
5.33  % 5.40  % —    696    696    —    696    696   
2030 Notes
4.66  % 4.73  % —    845    845    —    845    845   
2032D Notes (1)
3.13  % 6.33  % —    129    129    —    127    127   
2033F Notes (1)
2.13  % 2.13  % 19    —    19    196    —    196   
MMJ Creditor Payments N/A    —  %   —      198    —    198   
IMFT Member Debt
N/A    N/A    —    —    —    693    —    693   
2025 Notes
5.50  % 5.56  % —    —    —    —    516    516   
 
$ 237    $ 5,188    $ 5,425    $ 1,310    $ 4,541    $ 5,851   
(1)Since the closing price of our common stock exceeded 130% of the conversion price per share for at least 20 trading days in the 30 trading day period ended on December 31, 2019, these notes are convertible by the holders through the calendar quarter ended March 31, 2020. Additionally, the closing price of our common stock also exceeded the thresholds for the calendar quarter ended March 31, 2020; therefore, these notes are convertible by the holders at any time through June 30, 2020.

IMFT Member Debt

In connection with our purchase of Intel’s noncontrolling interest in IMFT on October 31, 2019, we extinguished the remaining IMFT Member Debt as a component of the cash consideration paid to Intel for their interest in IMFT and 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. (See “Equity – Noncontrolling Interest in Subsidiary” note for the cash consideration allocated to the repurchase of noncontrolling interest.) 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.

Convertible Senior Notes

As of February 27, 2020, the $50.58 trading price of our common stock was higher than the conversion prices of our convertible notes and, as a result, the aggregate conversion value of $752 million exceeded the aggregate principal amount of $150 million by $602 million.

Credit Facility

Our credit facility provides for our 2024 Term Loan A and a committed revolving credit facility. The 2024 Term Loan A and revolving credit facility generally bear interest at rates equal to LIBOR plus 1.25% to 2.00%, depending on our corporate credit rating and leverage ratio. Under the terms of the credit facility, we must maintain ratios, calculated as of the last day of each fiscal quarter, of total indebtedness to adjusted EBITDA and adjusted EBITDA to net interest expense.

2024 Term Loan A: On October 30, 2019, we drew the $1.25 billion available under our 2024 Term Loan A credit facility. Principal payments are due annually in an amount equal to 5.0% of the initial principal amount with the balance due at maturity in October 2024. The 2024 Term Loan A facility bears interest at a rate equal to LIBOR plus 1.25% based on our current corporate credit rating and leverage ratio.

MU-20200227_G6.JPG 15


Revolving Credit Facility: Subsequent to the second quarter of 2020, on March 13, 2020, we drew the $2.50 billion available under our revolving credit facility. Borrowings under the revolving credit facility are scheduled to mature on July 3, 2023 and we may repay amounts borrowed any time without penalty. The revolving credit facility bears interest at a rate equal to LIBOR plus 1.25% based on our current corporate credit rating and leverage ratio.

Debt Activity

The table below presents the effects of issuances, prepayments, and conversions of debt in the first six months of 2020. When we receive a notice of conversion for any of our convertible notes and elect to settle in cash any amount of the conversion obligation in excess of the principal amount, the cash settlement obligations become derivative debt liabilities subject to mark-to-market accounting treatment based on the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Accordingly, at the date of our election to settle a conversion in cash, we reclassify the fair value of the equity component of the converted notes from additional capital to derivative debt liability within current debt in our consolidated balance sheet.

Six months ended February 27, 2020 Increase (Decrease) in Principal Increase (Decrease) in Carrying Value Increase (Decrease) in Cash Decrease in Equity Gain (Loss)
Issuances
2024 Term Loan A $ 1,250    $ 1,248    $ 1,248    $ —    $ —   
Prepayments
2025 Notes
(519)   (516)   (534)   —    (18)  
IMFT Member Debt (693)   (693)   (621)   —    72   
Settled conversions
2033F Notes
(46)   (180)   (198)   (6)   (12)  
Conversions not settled
2033F Notes —      —    (3)   —   
$ (8)   $ (138)   $ (105)   $ (9)   $ 42   


Contingencies

We have accrued a liability and charged operations for the estimated costs of adjudication or settlement of various asserted and unasserted claims existing as of the balance sheet date, including those described below. We are currently a party to other legal actions arising from the normal course of business, none of which is expected to have a material adverse effect on our business, results of operations, or financial condition.

Patent Matters

As is typical in the semiconductor and other high-tech industries, from time to time, others have asserted, and may in the future assert, that our products or manufacturing processes infringe upon their intellectual property rights.

On August 12, 2014, MLC Intellectual Property, LLC filed a patent infringement action against Micron in the United States District Court for the Northern District of California. The complaint alleges that Micron infringes a single U.S. patent and seeks damages, attorneys’ fees, and costs.

On November 21, 2014, Elm 3DS Innovations, LLC (“Elm”) filed a patent infringement action against Micron; Micron Semiconductor Products, Inc.; and Micron Consumer Products Group, Inc. in the U.S. District Court for the District of Delaware. On March 27, 2015, Elm filed an amended complaint against the same entities. The amended complaint alleges that unspecified semiconductor products of ours that incorporate multiple stacked die infringe 13 U.S. patents and seeks damages, attorneys’ fees, and costs.

16 | 2020 Q2 10-Q


On December 15, 2014, Innovative Memory Solutions, Inc. (“IMS”) filed a patent infringement action against Micron in the U.S. District Court for the District of Delaware. The complaint alleges that a variety of our NAND products infringe eight U.S. patents and seeks damages, attorneys’ fees, and costs. On August 31, 2018, Micron was served with a complaint filed by IMS in Shenzhen Intermediate People’s Court in Guangdong Province, China. On November 12, 2019, IMS filed an amended complaint in the same court. The amended complaint alleges that certain of our NAND flash products infringe a Chinese patent. The complaint seeks an order requiring Micron to stop manufacturing, using, selling, and offering for sale the accused products in China, and to pay damages and costs of 21 million Chinese yuan.

On March 19, 2018, Micron Semiconductor (Xi’an) Co., Ltd. (“MXA”) was served with a patent infringement complaint filed by Fujian Jinhua Integrated Circuit Co., Ltd. (“Jinhua”) in the Fuzhou Intermediate People’s Court in Fujian Province, China (the “Fuzhou Court”). On April 3, 2018, Micron Semiconductor (Shanghai) Co. Ltd. (“MSS”) was served with the same complaint. The complaint alleges that MXA and MSS infringe a Chinese patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring MXA and MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 98 million Chinese yuan plus court fees incurred.

On March 21, 2018, MXA was served with a patent infringement complaint filed by United Microelectronics Corporation (“UMC”) in the Fuzhou Court. On April 3, 2018, MSS was served with the same complaint. The complaint alleges that MXA and MSS infringe a Chinese patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring MXA and MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 90 million Chinese yuan plus court fees incurred.

On April 3, 2018, MSS was served with another patent infringement complaint filed by Jinhua and two additional complaints filed by UMC in the Fuzhou Court. The three additional complaints allege that MSS infringes three Chinese patents by manufacturing and selling certain Crucial MX300 SSDs and certain GDDR5 memory chips. The two complaints filed by UMC each seek an order requiring MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China, to stop manufacturing, using, selling, and offering for sale the accused products in China, and to pay damages for each complaint of 90 million Chinese yuan plus court fees incurred. The complaint filed by Jinhua seeks an order requiring MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 98 million Chinese yuan plus court fees incurred. On October 9, 2018, UMC withdrew its complaint that alleged MSS infringed a Chinese patent by manufacturing and selling certain GDDR5 memory chips.

On July 5, 2018, MXA and MSS were notified that the Fuzhou Court granted a preliminary injunction against those entities that enjoins them from manufacturing, selling, or importing certain Crucial and Ballistic-branded DRAM modules and solid-state drives in China. The affected products make up slightly more than 1% of our annualized revenue. We are complying with the ruling and have requested the Fuzhou Court to reconsider or stay its decision.

Among other things, the above lawsuits pertain to substantially all of our DRAM, NAND, and other memory and storage products we manufacture, which account for a significant portion of our revenue.

Qimonda

On January 20, 2011, Dr. Michael Jaffé, administrator for Qimonda’s insolvency proceedings, filed suit against Micron and Micron Semiconductor B.V., (“Micron B.V.”), in the District Court of Munich, Civil Chamber. The complaint seeks to void, under Section 133 of the German Insolvency Act, a share purchase agreement between Micron B.V. and Qimonda signed in fall 2008, pursuant to which Micron B.V. purchased substantially all of Qimonda’s shares of Inotera (the “Inotera Shares”), representing approximately 18% of Inotera’s outstanding shares at that time, and seeks an order requiring us to re-transfer those shares to the Qimonda estate. The complaint also seeks, among other things, to recover damages for the alleged value of the joint venture relationship with Inotera and to terminate, under Sections 103 or 133 of the German Insolvency Code, a patent cross-license between us and Qimonda entered into at the same time as the share purchase agreement.

MU-20200227_G6.JPG 17


Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March 13, 2014, the court issued judgments: (1) ordering Micron B.V. to pay approximately $1 million in respect of certain Inotera Shares sold in connection with the original share purchase; (2) ordering Micron B.V. to disclose certain information with respect to any Inotera Shares sold by it to third parties; (3) ordering Micron B.V. to disclose the benefits derived by it from ownership of the Inotera Shares, including in particular, any profits distributed on the Inotera Shares and all other benefits; (4) denying Qimonda’s claims against Micron for any damages relating to the joint venture relationship with Inotera; and (5) determining that Qimonda’s obligations under the patent cross-license agreement are canceled. In addition, the court issued interlocutory judgments ordering, among other things: (1) that Micron B.V. transfer to the Qimonda estate the Inotera Shares still owned by Micron B.V. and pay to the Qimonda estate compensation in an amount to be specified for any Inotera Shares sold to third parties; and (2) that Micron B.V. pay the Qimonda estate as compensation an amount to be specified for benefits derived by Micron B.V. from ownership of the Inotera Shares. The interlocutory judgments have no immediate, enforceable effect on us, and, accordingly, we expect to be able to continue to operate with full control of the Inotera Shares subject to further developments in the case. On April 17, 2014, Micron and Micron B.V. filed a notice of appeal with the German Appeals Court challenging the District Court’s decision. After opening briefs, the Appeals Court held a hearing on the matter on July 9, 2015, and thereafter appointed two independent experts to perform an evaluation of Dr. Jaffé’s claims that the amount Micron paid for Qimonda was less than fair market value. On January 25, 2018, the court-appointed experts issued their report concluding that the amount paid by Micron was within an acceptable fair-value range. The Appeals Court held a subsequent hearing on April 30, 2019, and on May 28, 2019, the Appeals Court remanded the case to the experts for supplemental expert opinion.

Antitrust Matters

On April 27, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the Northern District of California. Subsequently, two substantially identical cases were filed in the same court. The lawsuits purported to be on behalf of a nationwide class of indirect purchasers of DRAM products. On September 3, 2019, the District Court granted Micron’s motion to dismiss and allowed plaintiffs the opportunity to file a consolidated, amended complaint. On October 28, 2019, the plaintiffs filed a consolidated amended complaint that purports to be on behalf of a nationwide class of indirect purchasers of DRAM products. The amended complaint asserts claims based on alleged price-fixing of DRAM products under federal and state law during the period from June 1, 2016 to at least February 1, 2018, and seeks treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.

On June 26, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the Northern District of California. Subsequently, four substantially identical cases were filed in the same court. On October 28, 2019, the plaintiffs filed a consolidated complaint. The consolidated complaint purports to be on behalf of a nationwide class of direct purchasers of DRAM products. The complaints assert claims based on alleged price-fixing of DRAM products under federal and state law during the period from June 1, 2016 through at least February 1, 2018, and seek treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.

Additionally, six cases have been filed in the following Canadian courts: Superior Court of Quebec, the Federal Court of Canada, the Ontario Superior Court of Justice, and the Supreme Court of British Columbia. The substantive allegations in these cases are similar to those asserted in the cases filed in the United States.

On May 15, 2018, the Chinese State Administration for Market Regulation (“SAMR”) notified Micron that it was investigating potential collusion and other anticompetitive conduct by DRAM suppliers in China. On May 31, 2018, SAMR made unannounced visits to our sales offices in Beijing, Shanghai, and Shenzhen to seek certain information as part of its investigation. We are cooperating with SAMR in its investigation.

18 | 2020 Q2 10-Q


Securities Matters

On January 23, 2019, a complaint was filed against Micron and two of our officers, Sanjay Mehrotra and David Zinsner, in the U.S. District Court for the Southern District of New York. The lawsuit purports to be brought on behalf of a class of purchasers of our stock during the period from June 22, 2018 through November 19, 2018. Subsequently two substantially similar cases were filed in the same court adding one of our former officers, Ernie Maddock, as a defendant and alleging a class action period from September 26, 2017 through November 19, 2018. The separate cases were joined, and a consolidated amended complaint was filed on June 15, 2019. The consolidated amended complaint alleges that defendants committed securities fraud through misrepresentations and omissions about purported anticompetitive behavior in the DRAM industry and seeks compensatory and punitive damages, fees, interest, costs, and other appropriate relief. On October 2, 2019, the parties submitted a joint stipulation to dismiss the complaint. The Court approved the stipulation and dismissed the complaint on October 3, 2019. On March 5, 2019, a derivative complaint was filed by a shareholder in the U.S. District Court for the District of Delaware, based on similar allegations to the securities fraud cases, allegedly on behalf of and for the benefit of Micron, against certain current and former officers and directors of Micron for alleged breaches of their fiduciary duties and other violations of law. The complaint seeks damages, fees, interest, costs, and other appropriate relief. Similar shareholder derivative complaints were subsequently filed in the U.S. District Court for the District of Delaware and the U.S. District Court for the District of Idaho. On November 20, 2019, the plaintiff in the second action filed in the U.S. District Court for the District of Delaware voluntarily dismissed his complaint. On November 21, 2019, the plaintiff voluntarily dismissed his complaint that was filed in the U.S. District Court for the District of Idaho.

Other

On December 5, 2017, Micron filed a complaint against UMC and Jinhua in the U.S. District Court for the Northern District of California. The complaint alleges that UMC and Jinhua violated the Defend Trade Secrets Act, the civil provisions of the Racketeer Influenced and Corrupt Organizations Act, and California’s Uniform Trade Secrets Act by misappropriating Micron’s trade secrets and other misconduct. Micron’s complaint seeks damages, restitution, disgorgement of profits, injunctive relief, and other appropriate relief.

On June 13, 2019, current Micron employee Chris Manning filed a putative class action lawsuit on behalf of Micron employees subject to the Idaho Wage Claim Act who earned a performance-based bonus after the conclusion of fiscal year 2018 whose performance rating was calculated based upon a mandatory percentage distribution range of performance ratings. On behalf of himself and the putative class, Manning asserts claims for violation of the Idaho Wage Claim Act, breach of contract, breach of the covenant of good faith and fair dealing, and fraud.

In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify the other party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, our payments under these types of agreements have not had a material adverse effect on our business, results of operations, or financial condition.

We are unable to predict the outcome of the patent matters, the Qimonda matter, antitrust matters, securities matters, and other matters noted above and therefore cannot estimate the range of possible loss. A determination that our products or manufacturing processes infringe the intellectual property rights of others or entering into a license agreement covering such intellectual property could result in significant liability and/or require us to make material changes to our products and/or manufacturing processes. Any of the foregoing, as well as the resolution of any other legal matter noted above, could have a material adverse effect on our business, results of operations, or financial condition.


MU-20200227_G6.JPG 19


Equity

Micron Shareholders’ Equity

Common Stock Repurchases: Our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding common stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans. The repurchase authorization does not obligate us to acquire any common stock and is subject to market conditions and our ongoing determination of the best use of available cash. In the second quarter and first six months of 2020, we repurchased 0.8 million shares of our common stock for $44 million, and 1.9 million shares of our common stock for $94 million, respectively. In the second quarter and first six months of 2019, we repurchased 20.2 million shares of our common stock for $702 million, and 62.6 million shares of our common stock for $2.51 billion, respectively. Through February 27, 2020, we had repurchased an aggregate of $2.76 billion under the authorization. The shares were recorded as treasury stock.

Capped calls: In the second quarter of 2020, we share-settled certain capped calls upon their expiration and received an aggregate of 1.7 million shares of our common stock, equal to a value of $98 million.

Noncontrolling Interest in Subsidiary

February 27, 2020 August 29, 2019
As of Balance    Percentage    Balance    Percentage   
IMFT $ —    —  % $ 889    49  %

On October 31, 2019, we purchased Intel’s noncontrolling interest in IMFT, now known as MTU, and IMFT Member Debt for $1.25 billion. In connection therewith, we recognized a $160 million adjustment to equity for the difference between the $744 million of cash consideration allocated to Intel’s noncontrolling interest and its $904 million carrying value. (See “Debt” note for the cash consideration allocated to, and extinguishment of, IMFT Member Debt.)

Pursuant to the terms of the IMFT wafer supply agreement, Intel received supply from MTU from November 2019 through March 6, 2020, at a volume equal to approximately 50% of their volume from IMFT in the six-month period prior to closing. On March 9, 2020, we agreed with Intel to terminate such agreement and entered into a new 3D XPoint wafer supply agreement. IMFT sales to Intel in the first quarter of 2020 through the date of our acquisition of Intel’s noncontrolling interest in IMFT were $158 million. IMFT sales to Intel in the second quarter and first six months of 2019 were $172 million and $347 million, respectively.


Fair Value Measurements

The estimated fair values and carrying values of our outstanding debt instruments (excluding the carrying value of equity components of our convertible notes), were as follows:
February 27, 2020 August 29, 2019
As of
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
Notes and MMJ Creditor Payments $ 5,190    $ 4,781    $ 5,194    $ 4,937   
Convertible notes 776    148    852    323   

The fair values of our convertible notes in the table above were determined based on Level 2 inputs, including the trading price of our convertible notes when available, our stock price, and interest rates based on similar debt issued by parties with credit ratings similar to ours. The fair values of our other debt instruments were estimated based on Level 2 inputs, including discounted cash flows, the trading price of our notes when available, and interest rates based on similar debt issued by parties with credit ratings similar to ours.

20 | 2020 Q2 10-Q



Derivative Instruments
Gross Notional Amount    Fair Value of   
Current Assets (1)
Current Liabilities (2)
As of February 27, 2020
Derivative instruments with hedge accounting designation
Cash flow currency hedges
$ 586    $ —    $ (16)  
Derivative instruments without hedge accounting designation
Non-designated currency hedges
1,240      (3)  
Convertible notes settlement obligation (3)
—    (4)  
  (7)  
$   $ (23)  
As of August 29, 2019
Derivative instruments with hedge accounting designation
Cash flow currency hedges
$ 146    $   $ —   
Derivative instruments without hedge accounting designation
Non-designated currency hedges
1,871      (9)  
Convertible notes settlement obligation (3)
—    (179)  
  (188)  
$   $ (188)  
(1)Included in receivables – other.
(2)Included in accounts payable and accrued expenses – other for forward contracts and in current debt for convertible notes settlement obligations.
(3)Notional amounts of convertible notes settlement obligations were not significant as of February 27, 2020 and were 4 million shares of our common stock as of August 29, 2019.

Derivative Instruments with Hedge Accounting Designation

We utilize currency forward contracts that generally mature within 13 months to hedge our exposure to changes in currency exchange rates. Currency forward contracts are measured at fair value based on market-based observable inputs including currency exchange spot and forward rates, interest rates, and credit-risk spreads (Level 2). We do not use derivative instruments for speculative purposes.

Cash Flow Hedges: We utilize cash flow hedges for our exposure from changes in currency exchange rates for certain capital expenditures and manufacturing costs. We recognized losses of $17 million and $14 million in the second quarter and first six months of 2020, respectively, and gains of $7 million and losses of $6 million in the second quarter and first six months of 2019, respectively, in accumulated other comprehensive income from the effective portion of cash flow hedges. Neither the amount excluded from hedge effectiveness nor the reclassifications from accumulated other comprehensive income to earnings were significant in the second quarters or first six months of 2020 or 2019. The amounts from cash flow hedges included in accumulated other comprehensive income that are expected to be reclassified into earnings in the next 12 months were also not significant.

MU-20200227_G6.JPG 21


Derivative Instruments without Hedge Accounting Designation

Currency Derivatives: We generally utilize a rolling hedge strategy with currency forward contracts that mature within three months to hedge our exposures of monetary assets and liabilities from changes in currency exchange rates. At the end of each reporting period, monetary assets and liabilities denominated in currencies other than the U.S. dollar are remeasured into U.S. dollars and the associated outstanding forward contracts are marked to market. Currency forward contracts are valued at fair values based on the middle of bid and ask prices of dealers or exchange quotations (Level 2). Realized and unrealized gains and losses on derivative instruments without hedge accounting designation as well as the changes in the underlying monetary assets and liabilities from changes in currency exchange rates are included in other non-operating income (expense). For derivative instruments without hedge accounting designation, we recognized losses of $1 million and gains of $4 million in the second quarter and first six months of 2020, respectively, and gains of $11 million in the second quarter of 2019 and losses of $11 million in the first quarter of 2019.

Convertible Notes Settlement Obligations: For settlement obligations associated with our convertible notes subject to mark-to-market accounting treatment, the fair values of the underlying derivative settlement obligations were initially determined using the Black-Scholes option valuation model (Level 2), which requires inputs of stock price, expected stock-price volatility, estimated option life, risk-free interest rate, and dividend rate. The subsequent measurement amounts were based on the volume-weighted-average trading price of our common stock (Level 2). (See “Debt” note.) We recognized losses of $12 million in the first six months of 2020, and losses of $82 million and $66 million in the second quarter and first six months of 2019, respectively, in other non-operating income (expense), net for the changes in fair value of the derivative settlement obligations. The gains recognized in the second quarter of 2020 were not significant.


Equity Plans<