What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-10-08 compared with 2020-10-19 · 320 added, 384 removed, 834 unchanged (46% of the section changed)

4 unchanged sentences

For the year ended September 2,

2020 August 29,

2021 September 3,

2020 August 29,

4 unchanged sentences

Selling, general, and administrative 894 881 836

Restructure and asset impairments 488 60 ( 29 )

Other operating (income) expense, net 95 8 78

21 unchanged sentences

For the year ended September 2,

2020 August 29,

2021 September 3,

2020 August 29,

2 unchanged sentences

Gains (losses) on derivative instruments ( 67 ) 46 ( 3 )

Pension liability adjustments 15 ( 6 ) ( 3 )

Gains (losses) on investments ( 7 ) 1 9

Pension liability adjustments 3 15 ( 6 )

Foreign currency translation adjustments 2 — ( 1 )

9 unchanged sentences

As of September 2,

2020 August 29,

2021 September 3,

Cash and equivalents $ 7,763 $ 7,624

2 unchanged sentences

Inventories 4,487 5,373

Assets held for sale 974 —

Other current assets 502 538

19 unchanged sentences

Commitments and contingencies

Redeemable noncontrolling interest — 98

Micron shareholders’ equity

Common stock, $ 0.10 par value, 3,000 shares authorized, 1,194 shares issued and 1,113 outstanding ( 1,182 shares issued and 1,106 outstanding as of August 29, 2019)

Common stock, $ 0.10 par value, 3,000 shares authorized, 1,216 shares issued and 1,119 outstanding ( 1,194 shares issued and 1,113 outstanding as of September 3, 2020)

Additional capital 9,453 8,917

Retained earnings 39,051 33,384

Treasury stock, 81 shares held ( 76 shares as of August 29, 2019)

Treasury stock, 97 shares held ( 81 shares as of September 3, 2020)

( 4,695 ) ( 3,495 )

Accumulated other comprehensive income (loss) 2 71

Total Micron shareholders’ equity 38,996 35,881

Noncontrolling interest in subsidiary — 889

Total equity 43,933 38,996

4 unchanged sentences

Consolidated Statements of Changes in Equity

(in millions)

(in millions, except per share amounts)

Micron Shareholders

3 unchanged sentences

Balance at August 30, 2018 1,170 $ 117 $ 8,201 $ 24,395 $ ( 429 ) $ 10 $ 32,294 $ 870 $ 33,164

— — — 14,135 — — 14,135 3 14,138

Cumulative effect from adoption of new accounting standards — — — 92 — — 92 — 92

Net income — — — 6,313 — — 6,313 36 6,349

Other comprehensive income (loss), net — — — — — ( 1 ) ( 1 ) — ( 1 )

— — — — — ( 19 ) ( 19 ) — ( 19 )

Stock issued in public offering

34 3 1,363 — — — 1,366 — 1,366

Stock issued under stock plans 14 1 178 — — — 179 — 179

22 2 287 — — — 289 — 289

Stock-based compensation expense — — 243 — — — 243 — 243

— — 198 — — — 198 — 198

Contributions from noncontrolling interest

— — — — — — — 18 18

Repurchase of stock ( 2 ) — 103 ( 39 ) ( 2,792 ) — ( 2,728 ) — ( 2,728 )

Settlement of capped calls

— — 429 — ( 429 ) — — — —

Acquisitions of noncontrolling interest — — 1 — — — 1 ( 17 ) ( 16 )

Reclassification of redeemable convertible notes, net — — 3 — — — 3 — 3

Cash settlement and repurchase of convertible notes

— — ( 2,310 ) — 67 — ( 2,243 ) — ( 2,243 )

Cash settlement of convertible notes — — ( 515 ) — — — ( 515 ) — ( 515 )

Balance at August 29, 2019 1,182 $ 118 $ 8,214 $ 30,761 $ ( 3,221 ) $ 9 $ 35,881 $ 889 $ 36,770

Cumulative effect from adoption of new accounting standards — — — 92 — — 92 — 92

Net income — — — 2,687 — — 2,687 15 2,702

3 unchanged sentences

Repurchase of stock ( 2 ) — ( 11 ) ( 64 ) ( 176 ) — ( 251 ) — ( 251 )

Settlement of capped calls — — 98 — ( 98 ) — — — —

Acquisitions of noncontrolling interest — — 120 — — — 120 ( 904 ) ( 784 )

— — 1 — — — 1 ( 17 ) ( 16 )

Reclassification of redeemable convertible notes, net — — 3 — — — 3 — 3

Cash settlement of convertible notes — — ( 56 ) — — — ( 56 ) — ( 56 )

Balance at August 29, 2019 1,182 $ 118 $ 8,214 $ 30,761 $ ( 3,221 ) $ 9 $ 35,881 $ 889 $ 36,770

Balance at September 3, 2020 1,194 $ 119 $ 8,917 $ 33,384 $ ( 3,495 ) $ 71 $ 38,996 $ — $ 38,996

Net income — — — 5,861 — — 5,861 — 5,861

3 unchanged sentences

Repurchase of stock ( 2 ) — ( 12 ) ( 82 ) ( 1,200 ) — ( 1,294 ) — ( 1,294 )

Settlement of capped calls — — 98 — ( 98 ) — — — —

Acquisitions of noncontrolling interests — — 120 — — — 120 ( 904 ) ( 784 )

Stock issued for convertible notes 11 1 ( 1 ) — — — — — —

Cash settlement of convertible notes — — ( 52 ) — — — ( 52 ) — ( 52 )

Cash dividends declared ($ 0.10 per share)

— — — ( 112 ) — — ( 112 ) — ( 112 )

Balance at September 2, 2021 1,216 $ 122 $ 9,453 $ 39,051 $ ( 4,695 ) $ 2 $ 43,933 $ — $ 43,933

4 unchanged sentences

For the year ended September 2,

2020 August 29,

2021 September 3,

2020 August 29,

4 unchanged sentences

Amortization of debt discount and other costs 30 26 49

Restructure and asset impairments 454 40 ( 97 )

Stock-based compensation 378 328 243

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Purchases of available-for-sale securities ( 3,163 ) ( 1,857 ) ( 4,218 )

Proceeds from sales of available-for-sale securities 1,458 1,504 604

Proceeds from maturities of available-for-sale securities 1,250 814 1,541

Proceeds from sales of available-for-sale securities 856 1,458 1,504

Proceeds from government incentives 495 262 748

3 unchanged sentences

Repayments of debt ( 1,520 ) ( 4,366 ) ( 3,340 )

Acquisition of noncontrolling interest in IMFT ( 744 ) — —

Payments to acquire treasury stock ( 1,294 ) ( 251 ) ( 2,729 )

Payments on equipment purchase contracts ( 295 ) ( 63 ) ( 75 )

Acquisition of noncontrolling interest in IMFT — ( 744 ) —

Proceeds from issuance of debt 1,188 5,000 3,550

Proceeds from issuance of stock 225 179 1,655

Other 140 107 156

7 unchanged sentences

Interest paid, net of amounts capitalized ( 171 ) ( 165 ) ( 53 )

Noncash equipment acquisitions on contracts payable 278 119 84

Noncash equipment acquisitions on contracts payable and finance leases 684 278 119

See accompanying notes to consolidated financial statements.

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Basis of Presentation

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 for all .

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.

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.

Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory and storage solutions transforming how the world uses information to enrich life for all .

With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron® and Crucial® brands.

Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence and 5G applications that unleash opportunities — from the data center to the intelligent edge and across the client and mobile user experience.

The accompanying consolidated financial statements include the accounts of Micron Technology, Inc.

and our consolidated subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America.

Intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to prior period amounts to conform to current period presentation.

See “Recently Adopted Accounting Standards.”

“Inventories” below for changes to our significant accounting policies, and the “Inventories” note for additional

Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31.

Fiscal 2020 contained 53 weeks and fiscal 2019 and 2018 each contained 52 weeks.

Our fourth quarter of fiscal 2020 contained 14 weeks.

Fiscal 2021 contained 52 weeks, fiscal 2020 contained 53 weeks, and fiscal 2019 contained 52 weeks.

Our fourth quarter of fiscal 2020 contained 14 weeks and all other fiscal quarters in the years presented contained 13 weeks.

All period references are to our fiscal periods unless otherwise indicated.

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dollar and (2) forecasted cash flows for certain capital expenditures and manufacturing costs.

We also use derivative instruments to manage our exposure to changes in commodity prices for manufacturing supplies and to minimize certain exposures to changes in the fair value of fixed-rate debt that result from fluctuations in benchmark interest rates.

Derivative instruments are measured at their fair values and recognized as either assets or liabilities.

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For derivative instruments designated as cash flow hedges, gains or losses are included as a component of accumulated other comprehensive income and reclassified into earnings in the same line items and in the same periods in which the underlying transactions affect earnings.

For derivative instruments designated as cash flow hedges, time value is excluded from the assessment of effectiveness and the gains and losses attributable to time value are recognized in earnings.

For derivative instruments designated as fair value hedges, changes in the fair values of the derivative instruments and the offsetting changes in the fair values of the underlying hedged items are both recognized in earnings.

We enter into master netting arrangements with our counterparties to mitigate credit risk in derivative hedge transactions.

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dollar is the functional currency for us and all of our consolidated subsidiaries.

Goodwill and Non-Amortizing Intangible Assets

We perform an annual impairment assessment for goodwill and non-amortizing intangible assets in our fourth quarter each year.

We perform an annual impairment assessment for goodwill in our fourth quarter each year.

Government Incentives

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Cash received from government incentives related to operating expenses is included as an operating activity in the statement of cash flows, whereas cash received from incentives related to the acquisition of property, plant, and equipment is included as an investing activity.

Inventories are stated at the lower of average cost or net realizable value.

Effective as of the beginning of the second quarter of 2021, we changed the method of inventory costing from average cost to FIFO.

The difference between average cost and FIFO was not material to any previously reported financial statements.

Therefore, we have recognized the cumulative effect of the change as a reduction of inventories and a charge to cost of goods sold of $ 133 million as of the beginning of the second quarter of 2021.

Inventories are stated at the lower of cost or net realizable value, with cost being determined on a FIFO basis.

Cost includes depreciation, labor, material, and overhead costs, including product and process technology costs.

When net realizable value (which requires projecting future average selling prices, sales volumes, and costs to complete products in work in process inventories) is below cost, we record a charge to cost of goods sold to write down inventories to their estimated net realizable value in advance of when inventories are actually sold.

We review the major characteristics of product type and markets in determining the unit of account for which we perform the lower of average cost or net realizable value analysis and categorize all inventories (including DRAM, NAND, and other memory) as a single group.

We remove amounts from inventory and charge such amounts to cost of goods sold on an average cost basis.

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 a 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.

We review the major characteristics of product type and markets in determining the unit of account for which we perform the lower of cost or net realizable value analysis and categorize all inventories (including DRAM, NAND, and other memory) as a single group.

We remove amounts from inventory and charge such amounts to cost of goods sold on a FIFO basis.

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We adopted ASC 842 in the first quarter of 2020 under the modified retrospective method and elected to not recast prior periods.

We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an operating lease or a finance lease at the commencement date.

We recognize right-of-use assets and lease liabilities for operating and finance leases with terms greater than 12 months.

Right-of-use assets represent our right to use an asset for the lease term, while lease liabilities represent our obligation to make lease payments.

We do not separate lease and non-lease components for real-estate and gas plant leases.

Sublease income is presented within lease expense.

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We generally provide a limited warranty that our products are in compliance with applicable specifications existing at the time of delivery.

Under our standard terms and conditions of sale, liability for certain failures of product during a stated warranty period is usually limited to repair or replacement of defective items or return of, or a credit with

53 | 2020 10-K

respect to, amounts paid for such items.

Under certain circumstances, we provide more extensive limited warranty coverage than that provided under our standard terms and conditions.

2 unchanged sentences

Property, plant, and equipment is stated at cost and depreciated using the straight-line method over estimated useful lives of generally 10 to 30 years for buildings, 5 to 7 years for equipment, and 3 to 5 years for software.

Assets held for sale are carried at the lower of cost or estimated fair value and are included in other noncurrent assets.

Assets held for sale are carried at the lower of estimated fair value or carrying value and are included in current assets.

When property, plant, or equipment is retired or otherwise disposed, the net book value is removed and we recognize any gain or loss in results of operations.

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Contracts with our customers are generally short-term in duration at fixed, negotiated prices with payment generally due shortly after delivery.

We estimate a liability for returns using the expected value method based on historical rates of return.

We estimate a liability for returns using the expected value method based on historical returns.

In addition, we generally offer price protection to our distributors, which is a form of variable consideration that decreases the transaction price.

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Actual results could differ from estimates.

Recently Adopted Accounting Standards

In November 2018, the Financial Accounting Standards Board (“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.

We adopted ASU 2018-18 in the first quarter of 2021 under the retrospective adoption method to the date we adopted ASC 606, which was August 31, 2018.

The adoption of this ASU did not have a significant 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.

We adopted ASU 2016-13 in the first quarter of 2021 under the modified retrospective adoption method.

The adoption of this ASU did not have a significant impact on our financial statements.

Lehi, Utah Fab and 3D XPoint

In the second quarter of 2021, we updated our portfolio strategy to further strengthen our focus on memory and storage innovations for the data center market.

In connection therewith, we determined that there was insufficient market validation to justify the ongoing investments required to commercialize 3D XPoint at scale.

Accordingly, we ceased development of 3D XPoint technology and engaged in discussions with potential buyers for the sale of our facility located in Lehi that was dedicated to 3D XPoint production.

As a result, we classified the property, plant, and equipment as held for sale and ceased depreciating the assets.

On June 30, 2021, we announced a definitive agreement to sell our Lehi facility to TI for cash consideration of $ 900 million.

The sale is anticipated to close in the first quarter of 2022.

56 | 2021 10-K

In the third quarter of 2021, we recognized a charge of $ 435 million included in restructure and asset impairments (and a tax benefit of $ 104 million included in income tax (provision) benefit) to write down the assets held for sale to the expected consideration, net of estimated selling costs, to be realized from the sale of these assets and liabilities.

The impairment charge was based on Level 3 inputs including expected consideration and the composition of assets included in the sale, which were derived from the agreement with TI.

In the second quarter of 2021, we also recognized a charge of $ 49 million to cost of goods sold to write down 3D XPoint inventory due to our decision to cease further development of this technology.

As of September 2, 2021, the significant balances of assets held for sale in connection with our Lehi facility were as follows:

As of September 2,

Property, plant, and equipment $ 1,334

Other current assets 50

Impairment ( 435 )

Lehi assets held for sale $ 949

As of September 2, 2021, we also had a $ 50 million finance lease obligation included in the current portion of long-term debt and $ 11 million of other liabilities that we expect to transfer with the sale.

The expected cash consideration, net of estimated selling expenses, approximates the carrying value of the net assets and liabilities expected to transfer in the sale, after giving effect to the impairment charge discussed above.

Variable Interest Entities

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Our assessments of whether we are the primary beneficiary of our VIEs require significant assumptions and judgments.

Unconsolidated VIE

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.

Our agreement for PTI to provide assembly services to us is deemed to contain an embedded lease for accounting purposes.

As a result, as of September 3, 2020 and August 29, 2019, the accompanying consolidated balance sheets included net property, plant, and equipment of $ 38 million and $ 50 million, respectively, and finance lease obligations of $ 35 million and $ 47 million, respectively, in connection with this agreement.

Consolidated VIE

Through October 31, 2019, 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.

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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.

We acquired Intel’s interest in IMFT on October 31, 2019, at which time IMFT, now known as MTU, became a wholly-owned subsidiary.

(See “Equity – Noncontrolling Interest in Subsidiary.”)

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.

55 | 2020 10-K

Recently Issued Accounting Standards

In August 2020, the FASB issued ASU 2020-06 – Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity , which simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract.

This ASU requires a convertible debt instrument to be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives.

This ASU requires an entity to use the if-converted method in the diluted earnings per share calculation for convertible instruments.

This ASU will be effective for us in the first quarter of 2023, with early adoption permitted beginning in the first quarter of 2022, and permits the use of either the modified retrospective or fully retrospective method of transition.

We are evaluating the timing and effects of our adoption of this ASU on our financial statements.

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 is effective for us in the first quarter of 2021 and 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 significant impact on our financial statements.

This ASU is effective for us in the first quarter of 2021 and 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 do not anticipate the adoption of this ASU will have a significant impact on our financial statements.

On October 31, 2019, we paid $ 1.25 billion to acquire Intel’s noncontrolling interest in IMFT and settle IMFT’s debt obligations to Intel, at which time IMFT (now known as MTU) became a wholly-owned subsidiary.

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.

IMFT manufactured semiconductor products exclusively for its members under a long-term supply agreement at prices approximating cost.

In 2018, IMFT discontinued production of NAND and subsequent to that time manufactured 3D XPoint memory.

IMFT sales to Intel were $ 158 million through the date of our purchase of Intel’s noncontrolling interest in 2020, and $ 731 million in 2019.

Cash and Investments

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Corporate bonds 9 429 1,134 1,572 3 266 592 861

Government securities 6 115 243 364 36 149 232 417

Asset-backed securities 8 95 509 612 1 31 211 243

Government securities 1 190 122 313 6 115 243 364

Commercial paper 4 87 — 91 50 96 — 146

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We perform supplemental analysis to validate information obtained from these pricing services.

No adjustments were made to the fair values indicated by such pricing information as of September 3, 2020 or August 29, 2019.

No adjustments were made to the fair values indicated by such pricing information as of September 2, 2021 or September 3, 2020.

(4) Restricted cash is included in other noncurrent assets and primarily relates to certain government incentives received prior to being earned and for which 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 September 3, 2020, there were no available-for-sale securities that had been in a loss position for longer than 12 months.

In addition to the amounts included in the table above, we had $ 153 million and $ 92 million of non-marketable equity investments without a readily determinable fair value that were included in other noncurrent assets as of September 2, 2021 and September 3, 2020, respectively.

We recognized gains in other non-operating income on these non-marketable investments of $ 70 million and $ 13 million for 2021 and 2020, respectively.

These gains primarily resulted from adjustments of these investments to the value indicated by transactions in the same or similar investments.

As of 2021 2020

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$ 4,487 $ 5,373

Effective as of the beginning of the second quarter of 2021, we changed our method of inventory costing from average cost to FIFO.

This change in accounting principle is preferable because in an environment with continuously changing production costs FIFO more closely matches the actual cost of goods sold with the revenues from sales of those specific units, better represents the actual cost of inventories remaining on hand at any period-end, and improves comparability with our semiconductor industry peers.

The change to FIFO was not material to any prior periods, nor was the cumulative effect of $ 133 million material to the second quarter of 2021.

As such, prior periods were not retrospectively adjusted, and the cumulative effect was reported as an increase to cost of goods sold for the second quarter of 2021 of $ 133 million, with an offsetting reduction to beginning inventories.

This charge resulted in a corresponding reduction to operating income, a $ 128 million reduction to net income, and an $ 0.11 reduction to diluted earnings per share for both the second quarter and the year ended 2021.

Beginning in the second quarter of 2021, we changed the classification of spare parts for equipment to better align with the manner in which they are used in operations.

As a result, we now present spare parts as other current assets and no longer as a component of raw materials inventories.

This reclassification was applied on a retrospective basis.

As a result, $ 254 million of spare parts were presented in other current assets as of September 2, 2021, and we reclassified $ 234 million of spare parts from inventories to other current assets in the accompanying balance sheet as of September 3, 2020.

Property, Plant, and Equipment

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$ 33,213 $ 31,031

(1) Included costs related to equipment not placed into service of $ 1.63 billion as of September 3, 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.

(1) Includes costs related to equipment not placed into service of $ 1.99 billion as of September 2, 2021 and $ 1.63 billion as of September 3, 2020.

(2) Includes building-related construction, tool installation, and software costs for assets not placed into service.

Depreciation expense was $ 6.13 billion, $ 5.57 billion, and $ 5.34 billion for 2021, 2020, and 2019, respectively.

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This revision reduced our aggregate depreciation expense by approximately $ 675 million in 2020, of which approximately $ 165 million remained capitalized in inventory as of the end of 2020.

After adjusting for the effect of the reduced amount of depreciation expense remaining in inventory, the revision in estimated useful lives benefited both operating income and net income by approximately $ 510 million and diluted earnings per share by approximately $ 0.45 for 2020.

After adjusting for the effect of the reduced amount of depreciation

expense remaining in inventory, the revision in estimated useful lives benefited both operating income and net income by approximately $ 510 million and diluted earnings per share by approximately $ 0.45 for 2020.

Intangible Assets and Goodwill

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In 2021, 2020, and 2019, we capitalized $ 106 million, $ 73 million, and $ 91 million, respectively, for product and process technology with weighted-average useful lives of 9 years, 10 years, and 8 years, respectively.

In 2019, we placed $ 108 million of in-process R&D in service and began amortizing it on a straight-line basis over six years .

Amortization expense was $ 82 million, $ 78 million, and $ 82 million for 2021, 2020, and 2019, respectively.

Expected amortization expense is $ 72 million for 2022, $ 61 million for 2023, $ 55 million for 2024, $ 34 million for 2025, and $ 26 million for 2026.

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 SG&A functions.

We have finance and operating leases through which we obtain the right to use equipment and facilities in our manufacturing operations and R&D activities as well as office space and other facilities used in our SG&A functions.

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

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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.

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 2020.

Measuring the present value of the initial lease liability requires judgment to determine the discount rate, which we base on interest rates for borrowings with similar terms and collateral issued by entities with credit ratings similar to ours.

Operating lease costs include short-term and variable lease expenses.

Short-term, variable leases, and sublease income are not material for the periods presented.

The components of lease expense are presented below:

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Operating lease cost 108 102

Other information related to our leases were as follows:

Operating lease expense under the previous ASC 840 lease accounting guidance was $ 93 million for 2019.

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Supplemental cash flow information related to leases was as follows:

For the year ended 2021 2020

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Operating leases

(1) Included $ 48 million of reimbursements received for tenant improvements.

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Finance lease right-of-use asset (included in property, plant, and equipment) ( 1)

(1) Includes $ 48 million of reimbursements received for tenant improvements for 2020.

Supplemental balance sheet information related to leases was as follows:

As of 2021 2020

Finance lease right-of-use assets (included in property, plant, and equipment and assets held for sale) $ 766 $ 426

Current operating lease liabilities (included in accounts payable and accrued expenses) 55 54

Weighted-average remaining lease term (in years)

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Finance leases

3.14 % 4.51 %

Operating leases

(1) As of August 29, 2019, prior to our adoption of ASC 842, property, plant, and equipment included $ 700 million for finance leases.

2.63 % 2.67 %

Maturities of lease liabilities existing as of September 2, 2021 were as follows:

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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 our adoption of 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, $ 53 million for 2024, and $ 459 million in 2025 and thereafter.

Accounts Payable and Accrued Expenses

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4.975 % 5.07 % 500 — 498 498 500 — 498 498

4.185 % 4.27 % 900 — 895 895 900 — 895 895

5.327 % 5.40 % 700 — 696 696 700 — 696 696

2027 Notes (1)

4.185 % 4.27 % 900 — 901 901 900 — 895 895

5.327 % 5.40 % 700 — 696 696 700 — 696 696

MMJ Creditor Payments N/A N/A 1 1 — 1 206 198 — 198

IMFT Member Debt N/A N/A — — — — 693 693 — 693

2025 Notes 5.500 % 5.56 % — — — — 519 — 516 516

4.663 % 4.73 % 850 — 846 846 850 — 845 845

N/A N/A — — — — 134 131 — 131

Extinguished 2024 Term Loan A N/A N/A — — — — 1,250 62 1,186 1,248

Other N/A N/A 1 1 — 1 1 1 — 1

$ 6,792 $ 155 $ 6,621 $ 6,776 $ 6,671 $ 270 $ 6,373 $ 6,643

(1) In 2021, we entered into fixed-to-floating interest rate swaps on the 2027 Notes with an aggregate $ 900 million notional amount equal to the principal amount of the 2027 Notes.

The resulting variable interest paid is at a rate equal to SOFR plus approximately 3.33 %.

The fixed-to-floating interest rate swaps are accounted for as fair value hedges, as a result, the carrying value of our 2027 Notes reflects adjustments in fair value.

As of September 2, 2021, all of our debt, other than our finance leases, are unsecured obligations that rank equally in right of payment with all of our other existing and future unsecured indebtedness and are effectively subordinated to all of our other existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness.

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and (3) consolidate with or merge with or into, or convey, transfer, or lease all or substantially all of our properties and assets, to another entity.

These covenants are subject to a number of limitations and exceptions.

Additionally, if a change of control triggering event occurs, as defined in the indentures governing our senior unsecured notes, we will be required to offer to purchase such notes at 101 % of the outstanding aggregate principal amount plus accrued interest up to the purchase date.

Credit Facility

Our credit facility provides for our Revolving Credit Facility and our 2024 Term Loan A, each of which generally bears interest at a rate equal to LIBOR plus 1.25 % to 2.00 %, depending on our corporate credit ratings or 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 not to exceed 2.75 to 1.00 and adjusted EBITDA to net interest expense of not less than 3.50 to 1.00.

These covenants

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As of September 3, 2020, borrowings under the credit facility were unsecured;

however, a security interest may be automatically instated upon a decline below a certain level in our corporate credit rating.

If the security interest is instated, any amounts drawn under the credit agreement would be collateralized by substantially all of the assets of Micron and MSP, subject to certain permitted liens.

The credit agreement contains other covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our restricted subsidiaries to (1) create or incur certain liens and enter into sale and lease-back transactions, (2) create, assume, incur, or guarantee certain additional secured indebtedness and unsecured indebtedness of our restricted subsidiaries, and (3) consolidate with or merge with or into, or convey, transfer, lease, or otherwise dispose of all or substantially all of our assets, to another entity.

These covenants are subject to a number of limitations, exceptions, and qualifications.

are subject to a number of limitations and exceptions.

Revolving Credit Facility

On March 13, 2020, we drew the $ 2.50 billion available under our Revolving Credit Facility and on April 24, 2020, we repaid the $ 2.50 billion.

On May 14, 2021, we terminated our existing undrawn credit facility and entered into a new five -year unsecured Revolving Credit Facility.

Under the Revolving Credit Facility, we can draw up to $ 2.50 billion which would generally bear interest at a rate equal to LIBOR plus 1.00 % to 1.75 %, depending on our corporate credit ratings.

Any amounts outstanding under the Revolving Credit Facility would mature in May 2026 and amounts borrowed may be prepaid without penalty.

As of September 2, 2021, no amounts were outstanding under the Revolving Credit Facility and $ 2.50 billion was available to us.

Any amounts outstanding under the Revolving Credit Facility would mature in July 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.

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.

2032D Convertible Senior Notes

Conversion Rights :

Holders of the 2032D Notes may convert them under the following circumstances:

(1) if the notes are called for redemption;

(2) during any calendar quarter if the closing price of our common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is more than 130 % of the conversion price (approximately $ 12.97 per share);

(3) if the trading price of the 2032D Notes is less than 98 % of the product of the closing price of our common stock and the conversion rate of the notes during the period specified in the indenture;

(4) if specified distributions or corporate events occur, as set forth in the indenture for the notes;

or (5) at any time on or after February 1, 2032.

The closing price of our common stock exceeded 130 % of the conversion price for the 2032D Notes for at least 20 trading days in the 30 consecutive trading days ending on September 30, 2020.

As a result, the 2032D Notes are convertible by the holders through December 31, 2020.

As of September 3, 2020, the $ 46.33 trading price of our common stock was higher than the conversion price of our 2032D Notes and, as a result, the aggregate conversion value of $ 620 million exceeded the aggregate principal amount of $ 134 million by $ 486 million.

It is our current intent to settle in cash the principal amount of our 2032D Notes upon conversion.

As a result, only the amounts payable in excess of the principal amounts upon conversion of our 2032D Notes are considered in diluted earnings per share under the treasury stock method.

We may elect to settle any amounts in excess of the principal in cash, shares of our common stock, or a combination thereof.

Cash Redemption at Our Option :

We may redeem for cash the 2032D Notes if the volume weighted average price of our common stock has been at least 130 % of the conversion price (approximately $ 12.97 per share) for at least 20 trading days during any 30 consecutive trading day period.

The redemption price will equal the principal amount plus accrued and unpaid interest.

If we redeem the 2032D Notes prior to May 4, 2021, we will also pay a make-whole premium in cash equal to the present value of the remaining scheduled interest payments from the redemption date to May 4, 2021.

Cash Repurchase at the Option of the Holders :

Holders of our 2032D Notes have the right to require us to repurchase for cash all or a portion of the notes on May 1, 2021.

As a result, our 2032D Notes are classified as current liabilities as of September 3, 2020.

Debt discount and issuance costs are amortized through the holder put date.

The repurchase price would equal the principal amount plus accrued and unpaid interest.

Also, upon a change in control or a termination of trading, as defined in the indenture, holders of our 2032D Notes may require us to repurchase for cash all or a portion of their notes at a repurchase price equal to the principal amount plus accrued and unpaid interest.

Interest expense for all our convertible notes consisted of contractual interest of $ 4 million, $ 21 million, and $ 44 million for 2020, 2019, and 2018, respectively, and amortization of discount and issuance costs of $ 4 million, $ 14 million, and $ 32 million for 2020, 2019, and 2018, respectively.

As of September 3, 2020 and August 29, 2019, the carrying amounts of the equity components of our convertible notes, which are included in additional capital, were $ 27 million and $ 29 million, respectively.

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” for the cash consideration allocated to the repurchase of noncontrolling interest.) Prior to our acquisition of Intel’s interests in IMFT, IMFT repaid to Intel $ 116 million of IMFT Member Debt in the first quarter of 2020.

Under the terms of the Revolving Credit Facility, we must maintain a leverage ratio, calculated as of the last day of each fiscal quarter, of total indebtedness to adjusted EBITDA not to exceed 3.25 to 1.00.

The Revolving Credit Facility contains other covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our restricted subsidiaries to (1) create or incur certain liens and enter into sale and lease-back transactions, (2) create, assume, incur, or guarantee certain additional secured indebtedness and unsecured indebtedness of our restricted subsidiaries, and (3) consolidate with or merge with or into, or convey, transfer, lease, or otherwise dispose of all or substantially all of our assets, to another entity.

These covenants are subject to a number of limitations, exceptions, and qualifications.

2024 Term Loans

On May 14, 2021, we drew $ 1.19 billion under an unsecured 2024 Term Loan A and used the proceeds to repay the $ 1.19 billion Extinguished 2024 Term Loan A.

The 2024 Term Loan A bears interest at a rate equal to LIBOR plus 0.625 % to 1.375 % based on our current corporate credit ratings.

The principal amount is due October 2024 and may be prepaid without penalty.

The 2024 Term Loan A contains the same leverage ratio and substantially the same other covenants as the Revolving Credit Facility.

Debt Activity

The table below presents the effects of issuances, prepayments, and conversions of debt in 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.

The table below presents the effects of issuances, prepayments, and settlements of debt conversions in 2021.

Increase (Decrease) in Principal Increase (Decrease) in Carrying Value Increase (Decrease) in Cash Decrease in Equity Gain (Loss)

Revolving Credit Facility $ 2,500 $ 2,493 $ 2,500 $ — $ —

2023 Notes (1)

1,250 1,245 1,245 — —

2024 Term Loan A 1,250 1,248 1,248 — —

Revolving Credit Facility ( 2,500 ) ( 2,493 ) ( 2,500 ) — —

IMFT Member Debt ( 693 ) ( 693 ) ( 621 ) — 72

2025 Notes ( 519 ) ( 516 ) ( 534 ) — ( 18 )

Settled conversions

2033F Notes (2)

Issuance of 2024 Term Loan A $ 1,188 $ 1,186 $ 1,186 $ — $ —

Prepayment of Extinguished 2024 Term Loan A ( 1,188 ) ( 1,186 ) ( 1,188 ) — ( 2 )

Settlement of Conversions of 2032D Notes (1)

( 134 ) ( 134 ) ( 185 ) ( 52 ) 1

$ ( 134 ) $ ( 134 ) $ ( 187 ) $ ( 52 ) $ ( 1 )

(1) Issued April 24, 2020 and due April 24, 2023.

(2) On March 27, 2020, we notified holders of our 2033F Notes that we would redeem all of the outstanding 2033F Notes on May 5, 2020.

Holders could elect to convert these notes through May 4, 2020, at a conversion rate of 91.4808 shares of our common stock per $1,000 of principal amount.

In connection with our notice, we made an irrevocable election to settle any conversions in cash.

Holders converted all of the 2033F Notes and on May 5, 2020, we paid $ 64 million to settle the conversions.

(1) In 2021, substantially all holders of our 2032D Notes converted their notes.

We settled these conversions and all remaining 2032D Notes with $ 185 million in cash and 11.1 million shares of our stock.

In 2020, we recognized aggregate non-operating gains of $ 40 million in connection with debt prepayments and conversions of $ 3.77 billion of principal amount of notes (carrying value of $ 3.90 billion) for an aggregate of $ 3.92 billion in cash.

In 2019, we recognized aggregate non-operating losses of $ 396 million in connection with debt prepayments, repurchases, and conversions of $ 1.80 billion of principal amount of notes (carrying value of $ 1.60 billion) for an aggregate of $ 2.38 billion in cash.

As of August 29, 2019, an aggregate of $ 44 million principal amount of our 2033F Notes (with a carrying value of $ 179 million) had converted but not settled.

These notes settled in 2020 for $ 192 million in cash and the effect of the settlement is included in the table above.

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In 2018, we recognized aggregate non-operating losses of $ 385 million in connection with debt prepayments, repurchases, and conversions of $ 6.96 billion of principal amount of notes (carrying value of $ 6.93 billion) for an aggregate of $ 9.42 billion in cash and 4 million shares of our treasury stock.

As of August 30, 2018, an aggregate of $ 35 million principal amount of our 2033F Notes (with a carrying value of $ 165 million) had converted but not settled.

These notes settled in 2019 for $ 153 million in cash and the effect of the settlement is included in the amounts in the paragraph above.

Maturities of Notes Payable

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Unamortized discounts ( 21 )

As of September 3, 2020, we had commitments of approximately $ 5.2 billion for purchase obligations, a substantial majority of which will be due within one year .

As of September 2, 2021, we had commitments of approximately $ 6.5 billion for purchase obligations, of which approximately $ 5.0 billion will be due within one year.

Purchase obligations include payments for the acquisition of property, plant, and equipment, and other goods or services of either a fixed or minimum quantity and exclude any lease payments for leases that have been executed but have not yet commenced.

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patents and seeks damages, attorneys’ fees, and costs.

On July 14, 2021, the action was dismissed with prejudice pursuant to a stipulation of dismissal filed by the parties.

On December 15, 2014, Innovative Memory Solutions, Inc.

(“IMS”) filed a patent infringement action against Micron in the U.S.

filed a patent infringement action against Micron in the U.S.

District Court for the District of Delaware.

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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.

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 August 4, 2020, the China National Intellectual Property Administration ruled invalid each of the asserted claims in the Chinese patent matter.

On August 17, 2020, IMS withdrew its complaint filed in Shenzhen Intermediate People’s Court.

Subsequently, six patents were invalidated or withdrawn, leaving two asserted patents in the District Court.

On March 19, 2018, Micron Semiconductor (Xi’an) Co., Ltd.

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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;

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to stop manufacturing, using, selling, and offering for sale the accused products in China;

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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;

On April 3, 2018, MSS was served with another patent infringement complaint filed by Jinhua and an additional complaint filed by UMC in the Fuzhou Court.

The additional complaints allege that MSS infringes two Chinese patents by manufacturing and selling certain Crucial MX300 SSDs.

The complaint filed by UMC 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 for each complaint of 90 million Chinese yuan plus court fees incurred.

and to pay damages 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;

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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 Ballistix-branded DRAM modules and solid-state drives in China.

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We are complying with the ruling and have requested the Fuzhou Court to reconsider or stay its decision.

On May 4, 2020, Flash-Control, LLC (“Flash-Control”) filed a patent infringement action against Micron in the U.S.

On May 4, 2020, Flash-Control, LLC filed a patent infringement action against Micron in the U.S.

District Court for the Western District of Texas.

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The complaint seeks damages, attorneys’ fees, and costs.

On July 21, 2020, in a separate matter, the District Court ruled that two of the four asserted patents are invalid, and on July 14, 2021, the U.S.

Court of Appeals for the Federal Circuit affirmed the ruling of invalidity.

On April 28, 2021, Netlist, Inc.

filed two patent infringement actions against Micron, Micron Semiconductor Products, Inc.

and Micron Technology Texas, LLC in the U.S.

District Court for the Western District of Texas.

The first complaint alleges that a single U.S.

patent is infringed by certain of our non-volatile dual in-line memory modules.

The second complaint alleges that three U.S.

patents are infringed by certain of our load-reduced dual in-line memory modules.

Each complaint seeks injunctive relief, damages, attorneys’ fees, and costs.

On May 10, 2021, Vervain, LLC filed a patent infringement action against Micron, Micron Semiconductor Products, Inc., and Micron Technology Texas, LLC in the U.S.

District Court for the Western District of Texas.

The complaint alleges that four U.S.

patents are infringed by certain SSD products.

The complaint seeks injunctive relief, damages, attorneys’ fees, and costs.

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 substantially all of our revenue.

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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

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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.

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.

Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March 13, 2014, the court issued judgments:

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On March 31, 2020, the expert presented a revised opinion to the Appeals Court which reaffirmed the earlier view that the amount paid by Micron was still within an acceptable range of fair value.

On March 4, 2021, the Appeals Court issued an order setting forth a new legal view that whether the 2008 sale of Inotera Shares is voidable depends on the question whether, in October 2008, Qimonda had a restructuring plan in place, and whether Micron was aware of and reasonably relied on that restructuring plan sufficient to form a belief that Qimonda was not imminently illiquid.

Antitrust Matters

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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 September 3, 2019, the District Court granted Micron’s motion to dismiss and allowed the plaintiffs the opportunity to file a consolidated, amended complaint.

On October 28, 2019, the plaintiffs filed a consolidated, amended complaint that purported to be on behalf of a nationwide class of indirect purchasers of DRAM products.

The amended complaint asserted 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 sought treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.

On December 21, 2020, the District Court dismissed the plaintiffs’ claims and entered judgment against them.

On January 19, 2021, the plaintiffs filed a notice of appeal to the U.S.

Court of Appeals for the Ninth Circuit.

On May 3, 2021, several plaintiffs filed a substantially identical complaint in the U.S.

District Court for the Northern District of California purportedly on behalf of a nationwide class of indirect purchasers of DRAM products.

On July 19, 2021, the District Court dismissed the May 3, 2021 complaint pursuant to an agreement between the plaintiffs and Micron providing that the plaintiffs may refile the complaint if the District Court’s December 21, 2020 dismissal order is not affirmed on appeal.

On June 26, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S.

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On October 28, 2019, the plaintiffs filed a consolidated, amended complaint.

The consolidated complaint purports to be on behalf of a nationwide class of direct purchasers of DRAM products.

The consolidated complaint asserts 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 seeks treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.

The consolidated complaint purported to be on behalf of a nationwide class of direct purchasers of DRAM products.

The consolidated complaint asserted 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 sought treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.

On December 21, 2020, the District Court granted Micron’s motion to dismiss and granted the plaintiffs permission to file a further amended complaint.

On January 11, 2021, the plaintiffs filed a further amended complaint asserting substantially the same claims and seeking the same relief.

On September 3, 2021, the District Court granted Micron’s motion to dismiss the further amended complaint with prejudice.

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Additionally, six cases have been filed in the following Canadian courts:

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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 purported 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 alleged that defendants committed securities fraud through misrepresentations and omissions about purported anticompetitive behavior in the DRAM industry and sought 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.

On March 5, 2019, a derivative complaint was filed by a shareholder against certain current and former officers and directors of Micron, allegedly on behalf of and for the benefit of Micron, in the U.S.

District Court for the District of Delaware alleging securities fraud, breaches of fiduciary duties, and other violations of law involving misrepresentations about purported anticompetitive behavior in the DRAM industry.

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.

On February 9, 2021, a derivative complaint was filed by a shareholder against Sanjay Mehrotra and other current and former directors of Micron, allegedly on behalf of and for the benefit of Micron, in the U.S.

District Court for the District of Delaware alleging violations of securities laws, breaches of fiduciary duties, and other violations of law involving allegedly false and misleading statements about Micron’s commitment to diversity and progress in diversifying its workforce, executive leadership, and Board of Directors.

The complaint seeks damages, fees, interest, costs, and an order requiring Micron to take various actions to allegedly improve its corporate governance and internal procedures.

On December 5, 2017, Micron filed a complaint against UMC and Jinhua in the U.S.

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Each party alleges that the other owes damages relating to allegations of breach of one or more agreements.

On July 13, 2015, Allied Telesis, Inc.

and Allied Telesis International (Asia) Pte Ltd.

filed a complaint against Micron in the Superior Court of California in Santa Clara alleging breach of implied and express warranties and fraudulent inducement to contract arising from plaintiffs’ purchase of certain allegedly defective DDR1 products between 2008 and 2010.

Through subsequent amendments to the complaint, the plaintiffs substituted Allied Telesis K.K.

as plaintiff, withdrew the warranty claims, and added claims of fraudulent concealment, negligent misrepresentation, negligence, and strict products liability.

The plaintiff’s amended complaint seeks an unspecified award of damages, including punitive damages and lost profits.

On September 3, 2020, the Superior Court granted summary judgment dismissing the claims for negligence and strict products liability and denied summary judgment as to the claims for negligent misrepresentation, fraudulent concealment, and fraudulent inducement to contract.

A trial is scheduled to begin on January 10, 2022.

In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify another party.

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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, Qimonda matter, antitrust matters, securities matter, binding arbitration with Intel, or any other matters noted above, and therefore cannot estimate the range of possible loss.

We are unable to predict the outcome of the patent matters, Qimonda matter, antitrust matters, securities matters, binding arbitration with Intel, or any other matters noted above, and cannot make a reasonable estimate of the potential loss or range of possible losses.

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

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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.

Redeemable Noncontrolling Interest

Redeemable noncontrolling interest as of August 29, 2019 reflected 100,000 preferred shares authorized and issued by Micron Semiconductor Asia Operations Pte.

(“MSAO”) in 2018 for net proceeds of $ 97 million.

Holders of the preferred shares were entitled to receive a cumulative dividend of 7.75 % per annum.

On August 31, 2020, we redeemed the shares for $ 102 million.

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.

We are currently a party to legal actions other than those described in this note arising from the normal course of business, none of which are expected to have a material adverse effect on our business, results of operations, or financial condition.

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 beginning in 2019.

We may purchase shares through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans.

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 has no expiration date, 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.

We repurchased 3.6 million shares of our common stock for $ 176 million in 2020 and 66.4 million shares for $ 2.66 billion in 2019.

We repurchased 15.6 million shares of our common stock for $ 1.20 billion in 2021 and 3.6 million shares for $ 176 million in 2020.

Through September 2, 2021, we had repurchased an aggregate of $ 4.04 billion under the authorization.

The repurchased shares were recorded as treasury stock.

Common Stock Issuance :

In 2018, we issued 34 million shares of our common stock for $ 41.00 per share in a public offering, for net proceeds of $ 1.36 billion, net of underwriting fees and other offering costs.

Capped Calls :

In 2020, we share-settled all outstanding 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.

In 2018, we share-settled certain other capped calls upon their expirations, and received 9.2 million shares, equal to a value of $ 429 million.

Amounts received upon settlement were based on volume-weighted-average trading prices of our stock at the expiration dates.

The shares received in all periods were recorded as treasury stock.

Amounts repurchased are included in treasury stock.

On August 2, 2021, we announced that our Board of Directors had declared a quarterly dividend of $ 0.10 per share, payable in cash on October 18, 2021 , to shareholders of record as of the close of business on October 1, 2021 .

Accumulated Other Comprehensive Income :

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Gains (Losses) on Derivative Instruments Pension Liability Adjustments Unrealized Gains (Losses) on Investments Cumulative Foreign Currency Translation Adjustment Total

As of August 29, 2019 $ ( 1 ) $ 4 $ 7 $ ( 1 ) $ 9

As of September 3, 2020 $ 45 $ 19 $ 8 $ ( 1 ) $ 71

Other comprehensive income before reclassifications ( 52 ) 8 ( 6 ) 2 ( 48 )

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As of September 2, 2021 $ ( 22 ) $ 22 $ 1 $ 1 $ 2

Noncontrolling Interest in Subsidiary

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.

(See “Debt” for the cash consideration allocated to, and extinguishment of, IMFT Member Debt.)

IMFT manufactured semiconductor products exclusively for its members under a long-term supply agreement at prices approximating cost.

In 2018, IMFT discontinued production of NAND and subsequent to that time manufactured 3D XPoint memory.

IMFT sales to Intel were $ 158 million through the date of our purchase of Intel’s noncontrolling interest in 2020, $ 731 million in 2019, and $ 507 million in 2018.

68 | 2021 10-K

Fair Value Measurements

2 unchanged sentences

Value Carrying

Notes and MMJ Creditor Payments $ 6,710 $ 6,026 $ 5,194 $ 4,937

Notes $ 6,584 $ 5,973 $ 6,710 $ 6,026

Convertible notes — — 634 131

The fair values of our convertible notes 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.

Other operating (income) expense, net included unrealized losses primarily from semiconductor equipment held for sale of $ 71 million and $ 82 million in 2020 and 2019, respectively.

The fair values were based on quotations obtained from equipment dealers, which consider the remaining useful life and configuration of the equipment (Level 3).

Assets held for sale were not significant as of the end of either period reported.

69 | 2020 10-K

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

Assets classified as held for sale are carried at the lower of estimated fair value or carrying value.

Significant judgments and assumptions are required to estimate their fair values.

Actual selling prices could vary significantly from our estimated fair value and we could recognize additional losses in the event that the sales prices of assets classified as held for sale are lower than their carrying values.

Derivative Instruments

Gross Notional Amount Fair Value of

Notional or Contractual Amount Fair Value of

Liabilities (2)

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$ 3,601 $ 10 $ ( 66 )

Cash flow commodity hedges 45 2 —

Fair value interest rate hedges 900 5 —

Derivative instruments without hedge accounting designation

1 unchanged sentence

$ 20 $ ( 68 )

As of August 29, 2019

As of September 3, 2020

Derivative instruments with hedge accounting designation

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1,587 4 ( 1 )

Convertible notes settlement obligation (3)

$ 2 $ ( 188 )

(1) Included in receivables – other and other noncurrent assets.

(2) Included in accounts payable and accrued expenses – other for forward contracts and in current debt for convertible notes settlement obligations.

(3) As of August 29, 2019, the notional amount of settlement obligation for notes that had been converted was 4 million shares of our common stock.

(2) Included in accounts payable and accrued expenses – other and other noncurrent liabilities.

Derivative Instruments with Hedge Accounting Designation

We utilize currency forward contracts that generally mature within two years 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 gains of $ 51 million and losses of $ 3 million and $ 17 million for 2020, 2019, and 2018, respectively, in accumulated other comprehensive income from cash flow hedges.

The reclassifications from accumulated other comprehensive income to earnings were not significant in 2020, 2019, or 2018.

As of September 3, 2020, we expect to reclassify $ 24 million of pre-tax gains related to cash flow hedges from accumulated other comprehensive income into earnings in the next 12 months.

We utilize forward and swap contracts that generally mature within two years designated as cash flow hedges for our exposure to changes in currency exchange rates or commodity prices for certain capital expenditures and manufacturing costs.

Forward and swap contracts are measured at fair value based on market-

based observable inputs including market spot and forward rates, interest rates, and credit-risk spreads (Level 2).

We do not use derivative instruments for speculative purposes.

We recognized losses of $ 52 million and gains of $ 51 million for 2021 and 2020, respectively, in accumulated other comprehensive income from cash flow hedges.

The amounts recognized in 2019 were not significant.

We recognized losses of $ 14 million in 2021 in cost of goods sold related to the amounts excluded from hedge effectiveness testing.

The amounts recognized in 2020 and 2019 were not significant.

We reclassified $ 41 million of gains in 2021 from accumulated other comprehensive income to earnings, primarily to cost of goods sold.

The reclassifications were not significant in 2020 or 2019.

As of September 2, 2021, we expect to reclassify $ 12 million of pre-tax losses related to cash flow hedges from accumulated other comprehensive income into earnings in the next 12 months.

Substantially all of the cash flow hedging relates to foreign currency contracts for all periods presented, and the commodity hedges had an immaterial impact.

Fair Value Hedges :

We utilize fixed-to-floating interest rate swaps designated as fair value hedges to minimize certain exposures to changes in the fair value of fixed-rate debt that result from fluctuations in benchmark interest rates.

Interest rate swaps are measured at fair value based on market-based observable inputs including interest rates and credit-risk spreads (Level 2).

The changes in the fair values of derivatives designated as fair value hedges and the offsetting changes in the underlying fair values of the hedged items are both recognized in earnings.

When a derivative is no longer designated as a fair value hedge for any reason, including termination and maturity, the remaining unamortized difference between the carrying value of the hedged item at that time and the face value of the hedged item is amortized to earnings over the remaining life of the hedged item, or immediately if the hedged item has matured or been extinguished.

The effects of fair value hedges on our consolidated statements of operations, recognized in interest expense, were not significant for the periods presented.

Derivative Instruments without Hedge Accounting Designation

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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), net.

For derivative instruments

without hedge accounting designation, we recognized gains of $ 21 million, and losses of $ 32 million and $ 38 million for 2020, 2019, and 2018, respectively.

For derivative instruments without hedge accounting designation, we recognized gains of $ 21 million and losses of $ 32 million for 2020 and 2019, respectively.

The amounts recognized in 2021 were not significant.

Convertible Notes Settlement Obligations :

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The subsequent measurement amounts were based on the volume-weighted-average trading price of our common stock (Level 2).

(See “Debt.”) We recognized losses of $ 14 million, $ 58 million, and $ 124 million for 2020, 2019 and 2018, respectively, in other non-operating income (expense), net for the changes in fair value of the derivative settlement obligations.

(See “Debt.”) We recognized losses $ 14 million and $ 58 million for 2020 and 2019, respectively, in other non-operating income (expense), net for the changes in fair value of the derivative settlement obligations.

The amounts recognized in 2021 were not significant.

Derivative Counterparty Credit Risk and Master Netting Arrangements

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We seek to mitigate such risk by limiting our counterparties to major financial institutions and by spreading risk across multiple financial institutions.

As of September 3, 2020 and August 29, 2019, amounts netted under our master netting arrangements were not material.

As of September 2, 2021 and September 3, 2020, amounts netted under our master netting arrangements were not significant.

70 | 2021 10-K

As of September 2, 2021, 104 million shares of our common stock were available for future awards under our equity plans, including 23 million shares approved for issuance under our employee stock purchase plan (“ESPP”).

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For service-based Restricted Stock Awards, restrictions generally lapse in one-fourth or one-third increments during each year of employment after the grant date.

Restrictions lapse on Restricted Stock granted in 2020 with performance or market conditions over a three -year period if conditions are met.

Restrictions generally lapse on Restricted Stock with performance or market conditions as conditions are met over a 3 -year period.

At the end of the performance period, the number of actual shares to be awarded will vary between 0 % and 200 % of target amounts, depending upon the achievement level.

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Number of Shares Weighted-Average Grant Date Fair Value Per Share

Outstanding as of August 29, 2019 16 $ 34.72

Outstanding as of September 3, 2020 17 $ 42.13

Granted 11 53.58

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Aggregate vesting-date fair value of shares vested $ 385 $ 294 $ 248

71 | 2020 10-K

Employee Stock Purchase Plan

Our ESPP was offered to substantially all employees beginning in August 2018 and permits eligible employees to purchase shares of our common stock through payroll deductions of up to 10 % of their eligible compensation, subject to certain limitations.

Employee Stock Purchase Plan (“ESPP”)

Our ESPP was offered to substantially all employees beginning in August 2018 and permitted eligible employees to purchase shares of our common stock through payroll deductions of up to 10 % of their eligible compensation, subject to certain limitations prior to August 2021.

Beginning in August 2021, employees are permitted to deduct up to 15 % of their eligible compensation to purchase shares under the ESPP.

The purchase price of the shares under the ESPP equals 85 % of the lower of the fair market value of our common stock on either the first or last day of each six -month offering period.

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Stock Options

As of September 3, 2020, there were 7 million stock options outstanding, which are generally exercisable in increments of either one-fourth or one-third per year beginning one year from the date of grant.

As of September 2, 2021, stock options of 4 million shares were outstanding, which are generally exercisable in increments of either one-fourth or one-third per year beginning one year from the date of grant.

Stock options expire 8 years from the date of grant.

In 2020, we did not grant any stock options and 5 million stock options were exercised.

We did not grant any stock options in 2021 or 2020 and options granted in 2019 were not material.

Stock options of 3 million shares were exercised in 2021.

The total intrinsic value for options exercised was $ 143 million, $ 130 million, and $ 108 million in 2021, 2020, and 2019, respectively.

Stock options granted and assumptions used in the Black-Scholes option valuation model were as follows:

For the year ended 2019 2018

Stock options granted — 2

Weighted-average grant-date fair value per share $ 19.50 $ 18.65

Average expected life in years 5.4 5.5

Weighted-average expected volatility 44.0 % 44.0 %

Weighted-average risk-free interest rate 2.9 % 2.2 %

Expected dividend yield 0.0 % 0.0 %

Stock price volatility was based on an average of historical volatility and the implied volatility derived from traded options on our stock.

The expected lives of options granted were based, in part, on historical experience and on the terms and conditions of the options.

The risk-free interest rates utilized were based on the U.S.

Treasury yield in effect at each grant date.

Stock-based Compensation Expense

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Cost of goods sold $ 186 $ 139 $ 102

Selling, general, and administrative 103 73 61

Research and development 110 86 68

Selling, general, and administrative 99 103 73

$ 395 $ 328 $ 243

1 unchanged sentence

Restricted stock awards $ 333 $ 272 $ 178

ESPP 52 39 32

Stock options 10 17 33

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Income tax benefits for share-based awards were $ 83 million, $ 72 million, and $ 66 million for 2021, 2020, and 2019, respectively.

Stock-based compensation expense of $ 42 million and $ 30 million was capitalized and remained in inventory as of September 3, 2020 and August 29, 2019, respectively.

Stock-based compensation expense of $ 30 million and $ 42 million was capitalized and remained in inventory as of September 2, 2021 and September 3, 2020, respectively.

As of September 2, 2021, $ 691 million of total unrecognized compensation costs for unvested awards, before the effect of any future forfeitures, was expected to be recognized through the fourth quarter of 2025, resulting in a weighted-average period of 1.2 years.

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and international sites.

Details of the more significant plans are discussed as follows:

Details of significant plans are as follows:

Employee Savings Plan for U.S.

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As of September 2, 2021, the projected benefit obligations of our plans were $ 222 million and plan assets were $ 256 million.

As of August 29, 2019, the projected benefit obligations of our plans were $ 206 million and plan assets were $ 195 million.

As of September 3, 2020, the projected benefit obligations of our plans were $ 202 million and plan assets were $ 222 million.

Pension expense was not material for 2021, 2020, or 2019.

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Revenue and Customer Contract Liabilities

Revenue by technology is presented in the table below (See “Segment and Other Information” for disclosure of disaggregated revenue by market segments.):

Revenue by Technology

Revenue by technology is presented in the table below:

For the year ended 2021 2020 2019

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Beginning in 2020, revenues for MCPs and SSDs, which contain both DRAM and NAND, are disaggregated into DRAM and NAND based on the relative values of each component.

The amounts for 2019 and 2018 in the table above have been conformed to current period presentation.

As of 2020 2019

Contract liabilities from customer advances $ 40 $ 61

Other contract liabilities 25 69

The amounts for 2019 in the table above have been conformed to the current period presentation.

See “Segment and Other Information” for disclosure of disaggregated revenue by market segment.

Customer Contract Liabilities

Our contract liabilities from customer advances are for advance payments received from customers to secure product in future periods.

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Revenue recognized during 2021 from the ending balance of 2020 included $ 64 million from meeting performance obligations of other contract liabilities and shipments against customer advances.

Contract liabilities from customer advances also decreased $ 22 million due to the return of an unutilized customer advance upon expiration of a contract.

The following table presents contract liabilities:

As of 2021 2020

Contract liabilities from customer advances $ 74 $ 40

Other contract liabilities — 25

Revenue is primarily recognized at a point in time when control of the promised goods is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods.

Substantially all contracts with our customers are short-term in duration at fixed, negotiated prices with payment generally due shortly after delivery.

From time to time, we have contracts with initial terms that include performance obligations that extend, in some cases, beyond one year.

As of September 3, 2020, we expect future revenue related to these longer-term contracts of approximately $ 498 million, of which approximately 72 % relates to performance obligations and product shipments we expect to satisfy within the next 12 months and 28 % beyond 12 months.

As of September 3, 2020, other current liabilities included $ 466 million for estimates of consideration payable to customers, including estimates for pricing adjustments and returns.

Research and Development

We shared the cost of certain product and process development activities with development partners, including agreements to jointly develop NAND and 3D XPoint technologies with Intel.

We substantially completed our cost-sharing agreements with Intel to develop 3D NAND and 3D XPoint technology in 2019 and 2020, respectively.

Our R&D expenses were reduced by $ 60 million and $ 201 million for 2019 and 2018, respectively, pursuant to reimbursements under these arrangements.

Reimbursements were not significant for 2020.

Other Operating (Income) Expense, Net

From time to time, we have contracts with initial terms that include performance obligations that extend beyond one year.

As of September 2, 2021, our future performance obligations were $ 117 million , substantially all of which are expected to be recognized as revenue within one year .

As of September 2, 2021 and September 3, 2020, other current liabilities included $ 846 million and $ 466 million for estimates of consideration payable to customers, respectively, including estimates for pricing adjustments and returns.

Restructure and Asset Impairments

For the year ended 2021 2020 2019

Restructure and asset impairments $ 488 $ 60 $ ( 29 )

Restructure and asset impairments for 2021 are primarily due to the planned sale of our Lehi, Utah facility.

(See “Lehi, Utah Fab and 3D XPoint.”) Restructure and asset impairments for 2020 primarily related to asset impairments and employee relocation and severance costs related to right-sizing our Lehi, Utah facility.

In 2019, we finalized the sale of our 200mm fabrication facility in Singapore and recognized restructure gains of $ 128 million.

Other restructure and asset impairments for 2019 primarily related to our continued emphasis to centralize certain key functions.

Other Operating (Income) Expense, Net

For the year ended 2021 2020 2019

Patent license charges $ 128 $ — $ —

(Gain) loss on disposition of property, plant, and equipment

2 unchanged sentences

$ 95 $ 8 $ 78

Restructure and asset impairments for 2020 primarily related to asset impairments and employee relocation and severance costs related to right-sizing our Lehi, Utah facility.

Restructure and asset impairments for 2019 and 2018 primarily related to our continued emphasis to centralize certain key functions.

In addition, in 2019, we finalized the sale of our 200mm fabrication facility in Singapore and recognized restructure gains of $ 128 million.

Other Non-Operating Income (Expense), Net

For the year ended 2021 2020 2019

Gain (loss) on investments $ 82 $ 22 $ ( 4 )

Gain (loss) on debt prepayments, repurchases, and conversions ( 1 ) 40 ( 396 )

Gain (loss) from changes in currency exchange rates ( 8 ) ( 9 ) ( 75 )

Other — ( 2 ) ( 5 )

$ 81 $ 60 $ ( 405 )

74 | 2021 10-K

Our income tax (provision) benefit consisted of the following:

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Income tax (provision) benefit $ ( 394 ) $ ( 280 ) $ ( 693 )

75 | 2020 10-K

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, beginning in 2019, created a new minimum tax on certain foreign earnings (the “Foreign Minimum Tax”).

We recognize the Foreign Minimum Tax in the period the tax is incurred.

Pursuant to SEC Staff Accounting Bulletin No.

118, measurement period adjustments in 2019 included $ 47 million of benefit for the Repatriation Tax, net of adjustments related to uncertain tax positions.

Provisional estimates in 2018 included $ 1.34 billion of benefit for the release of the valuation allowance on the net deferred tax assets of our U.S.

operations and $ 1.03 billion of provision for the Repatriation Tax, net of adjustments related to uncertain tax positions.

The table below reconciles our tax (provision) benefit based on the U.S.

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Change in unrecognized tax benefits ( 238 ) 3.8 % ( 33 ) 1.1 % ( 59 ) 0.8 %

Change in valuation allowance ( 20 ) 0.7 % ( 40 ) 0.6 % 2,079 ( 14.5 ) %

tax on foreign operations ( 226 ) 3.6 % ( 14 ) 0.5 % ( 327 ) 4.6 %

Foreign tax rate differential 951 ( 15.3 ) % 253 ( 8.5 ) % 993 ( 14.1 ) %

Foreign derived intangible income deduction 67 ( 2.2 ) % — — % — — %

Debt premium deductions 130 ( 2.1 ) % — — % — — %

Research and development tax credits 123 ( 2.0 ) % 62 ( 2.1 ) % 92 ( 1.3 ) %

Change in valuation allowance 54 ( 0.9 ) % ( 20 ) 0.7 % ( 40 ) 0.6 %

State taxes, net of federal benefit 59 ( 0.9 ) % 23 ( 0.8 ) % 102 ( 1.4 ) %

Repatriation Tax related to the Tax Act — — % ( 10 ) 0.1 % ( 1,049 ) 7.3 %

Remeasurement of deferred tax assets and liabilities related to the Tax Act — — % — — % ( 179 ) 1.3 %

Foreign derived intangible income deduction 18 ( 0.3 ) % 67 ( 2.2 ) % — — %

Other 41 ( 0.6 ) % 8 ( 0.3 ) % 26 ( 0.4 ) %

1 unchanged sentence

We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements.

These arrangements expire in whole or in part at various dates through 2034 and are conditional, in part, upon meeting certain business operations and employment thresholds.

The effect of tax incentive arrangements reduced our tax provision by $ 215 million (benefiting our diluted earnings per share by $ 0.19 ) for 2020, by $ 756 million ($ 0.66 per diluted share) for 2019, and by $ 1.96 billion ($ 1.59 per diluted share) for 2018.

These incentives expire, in whole or in part, at various dates through 2034 and are conditional, in part, upon meeting certain business operations and employment thresholds.

The effect of tax incentive arrangements reduced our tax provision by $ 758 million (benefiting our diluted earnings per share by $ 0.66 ) for 2021, by $ 215 million ($ 0.19 per diluted share) for 2020, and by $ 756 million ($ 0.66 per diluted share) for 2019.

As of September 2, 2021, certain non-U.S.

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Determination of the amount of unrecognized deferred tax liabilities related to investments in these foreign subsidiaries is not practicable.

Pursuant to SEC Staff Accounting Bulletin No.

118, measurement period adjustments in 2019 related to the Tax Cuts and Jobs Act included $ 47 million of benefit for the repatriation tax, net of adjustments related to uncertain tax positions.

We recognize the foreign minimum tax in the period the tax is incurred.

Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes as well as carryforwards.

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We assess positive and negative evidence for each jurisdiction to determine whether it is more likely than not that existing deferred tax assets will be realized.

As of September 3, 2020, and August 29, 2019, we had a valuation allowance of $ 294 million and $ 277 million, respectively, against our net deferred tax assets, primarily related to net operating loss carryforwards in Japan.

Changes in 2020 in the valuation allowance were due to adjustments based on management’s assessment of tax credits and net operating losses that are more likely than not to be realized.

As of September 2, 2021, and September 3, 2020, we had a valuation allowance of $ 233 million and $ 294 million, respectively, against our net deferred tax assets, primarily related to carryforwards in Malaysia and Japan.

Changes in 2021 in the valuation allowance were due to loss expirations during the year, offset by adjustments based on management’s assessment of tax credits, allowances and net operating losses that are more likely than not to be realized.

As of September 2, 2021, our net operating loss carryforward amounts and expiration periods, as reported to tax authorities, were as follows:

Year of Expiration State Japan Singapore Other Total

Year of Expiration State Japan Malaysia Singapore Other Total

2022 - 2026 $ 49 $ 617 $ — $ — $ 1 $ 667

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Decreases related to tax positions from prior years ( 13 ) ( 13 ) ( 46 )

Settlements with tax authorities — — ( 8 )

Ending unrecognized tax benefits $ 660 $ 411 $ 383

As of September 2, 2021, gross unrecognized tax benefits were $ 660 million, substantially all of which would affect our effective tax rate in the future, if recognized.

Amounts accrued for interest and penalties related to uncertain tax positions were not material for any period presented.

Increases to unrecognized tax benefits were primarily due to tax return positions taken during 2021.

Amounts accrued for interest and penalties related to uncertain tax positions were not significant for any period presented.

The resolution of tax audits or expiration of statute of limitations could also reduce our unrecognized tax benefits.

Although the timing of final resolution is uncertain, the estimated potential reduction in our unrecognized tax benefits in the next 12 months would not be material.

Although the timing of final resolution is uncertain, the estimated potential reduction in our unrecognized tax benefits in the next 12 months would not be significant.

We and our subsidiaries file income tax returns with the U.S.

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federal and state tax returns remain open to examination for 2017 through 2021 .

In addition, tax returns that remain open to examination in Japan range from the years 2014 to 2020 and in Singapore and Taiwan from 2015 to 2020.

We are currently under audit by the Internal Revenue Service for our 2018 and 2019 tax years.

In addition, tax returns that remain open to examination in Singapore, Taiwan and Japan range from the years 2015 to 2021 .

We believe that adequate amounts of taxes and related interest and penalties have been provided, and any adjustments as a result of examinations are not expected to materially adversely affect our business, results of operations, or financial condition.

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Diluted 5.14 2.37 5.51

Listed below are the potential common shares, as of the end of the periods shown, that could dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been antidilutive:

Antidilutive potential common shares excluded from the computation of diluted earnings per share, that could dilute basic earnings per share in the future, were as follows at the end of the periods shown:

For the year ended 2021 2020 2019

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Compute and Networking Business Unit (“CNBU”) :

Includes memory products sold into client, cloud server, enterprise, graphics, and networking markets and sales of certain 3D XPoint products.

Includes memory products sold into client, cloud server, enterprise, graphics, and networking markets.

Mobile Business Unit (“MBU”) :

Includes memory products sold into smartphone and other mobile-device markets.

Includes memory and storage products sold into smartphone and other mobile-device markets.

Storage Business Unit (“SBU”) :

Includes SSDs and component-level solutions sold into enterprise and cloud, client, and consumer storage markets, other discrete storage products sold in component and wafer form to the removable storage market, and sales of certain 3D XPoint products.

Includes SSDs and component-level solutions sold into enterprise and cloud, client, and consumer storage markets, and other discrete storage products sold in component and wafer form.

Embedded Business Unit (“EBU”) :

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We do not identify or report internally our assets (other than goodwill) or capital expenditures by segment, nor do we allocate gains and losses from equity method investments, interest, other non-operating income or expense items, or taxes to segments.

As of September 3, 2020 and August 29, 2019, CNBU, MBU, SBU, and EBU had goodwill of $ 832 million, $ 198 million, $ 101 million, and $ 97 million, respectively.

As of September 2, 2021 and September 3, 2020, CNBU, MBU, SBU, and EBU had goodwill of $ 832 million, $ 198 million, $ 101 million, and $ 97 million, respectively.

78 | 2021 10-K

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Stock-based compensation ( 395 ) ( 328 ) ( 243 )

Inventory accounting policy change to FIFO ( 133 ) — —

Change in inventory cost absorption ( 160 ) — —

3D XPoint inventory write-down ( 49 ) — —

Restructure and asset impairments ( 488 ) ( 60 ) 32

Patent license charges ( 128 ) — —

Employee severance — — ( 116 )

Start-up and preproduction costs — ( 58 ) —

Other ( 31 ) ( 28 ) ( 98 )

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Automotive, industrial, and consumer 15 % 15 % 15 %

Revenue from WPG Holdings Limited was 13 % of total revenue in 2021.

Revenue from Kingston Technology Company, Inc.

was 11 %, 11 %, and 10 % of total revenue for 2020, 2019, and 2018, respectively.

was 11 % of total revenue for 2020 and 2019.

Revenue from Huawei Technologies Co.

was 12 % of total revenue for 2019.

Our sales to Kingston were included in our CNBU, MBU, and SBU segments and our sales to Huawei were included in our MBU, CNBU, SBU, and EBU segments.

Our sales to WPG were included in our MBU, CNBU, EBU, and SBU segments;

our sales to Kingston were included in our CNBU, MBU, and SBU segments;

and our sales to Huawei were included in our MBU, CNBU, SBU, and EBU segments.

We generally have multiple sources of supply for our raw materials and production equipment;

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United States (1)

Malaysia 757 385

China 436 478

1 unchanged sentence

$ 34,663 $ 31,615

Quarterly Financial Information

(in millions, except per share amounts)

Quarter Third

Quarter Second

Quarter First

Revenue $ 6,056 $ 5,438 $ 4,797 $ 5,144

Gross margin 2,068 1,763 1,355 1,366

Operating income 1,157 888 440 518

Net income 990 805 407 508

Net income attributable to Micron 988 803 405 491

Earnings per share

$ 0.89 $ 0.72 $ 0.37 $ 0.44

0.87 0.71 0.36 0.43

Quarter Third

Quarter Second

Quarter First

Revenue $ 4,870 $ 4,788 $ 5,835 $ 7,913

Gross margin 1,395 1,828 2,864 4,615

Operating income 650 1,010 1,957 3,759

Net income 586 851 1,625 3,296

Net income attributable to Micron 561 840 1,619 3,293

Earnings per share

$ 0.51 $ 0.76 $ 1.45 $ 2.91

0.49 0.74 1.42 2.81

(1) Included $ 899 million (net of impairment) as of September 2, 2021 of property, plant, and equipment for our Lehi facility that was classified as held for sale and presented in other current assets.

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Micron Technology, Inc.

and its subsidiaries (the “Company”) as of September 3, 2020 and August 29, 2019, and the related consolidated statements of operations, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended September 3, 2020, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended September 3, 2020 appearing under Item 15 (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of September 2, 2021 and September 3, 2020, and the related consolidated statements of operations, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended September 2, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended September 2, 2021 appearing under Item 15 (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of September 2, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 3, 2020 and August 29, 2019 , and the results of its operations and its cash flows for each of the three years in the period ended September 3, 2020 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 2, 2021 and September 3, 2020 , and the results of its operations and its cash flows for each of the three years in the period ended September 2, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 2, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in the Recently Adopted Accounting Standards note to the consolidated financial statements, the Company changed the manner in which it accounts for leases in the year ended September 3, 2020.

Changes in Accounting Principle

As discussed in the Significant Accounting Policies and Inventories notes to the consolidated financial statements, the Company changed the manner in which it accounts for inventory costing from the average cost inventory accounting method to the first-in, first-out inventory accounting method and the manner in which it classifies spare parts for equipment from raw materials inventories to other current assets in 2021, and the manner in which it accounts for leases in 2020.

Basis for Opinions

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We believe that our audits provide a reasonable basis for our opinions.

82 | 2021 10-K

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting

83 | 2020 10-K

includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revised Useful Lives of Equipment in the NAND Wafer Fabrication Facilities

As described in the Significant Accounting Policies and Property, Plant, and Equipment notes to the consolidated financial statements, the Company periodically assesses the estimated useful lives of its property, plant, and equipment.

The Company’s consolidated property, plant, and equipment, net balance as of September 3, 2020 was $31 billion.

Based on management’s assessment of planned technology node transitions, capital spending, and re-use rates, management revised the estimated useful lives of existing equipment in the NAND wafer fabrication facilities from five years to seven years as of the beginning of fiscal year 2020.

The principal considerations for our determination that performing procedures relating to the revised useful lives of equipment in the NAND wafer fabrication facilities is a critical audit matter are the significant judgment by management in developing the revised estimate of useful lives, which in turn led to significant auditor judgment, subjectivity and effort in performing procedures to evaluate the reasonableness of the significant assumptions used to estimate the revised useful lives of the equipment related to planned technology node transitions, capital spending, and re-use rates.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s assessment of the revised useful lives, significant assumptions, and data used to estimate the revised useful lives of equipment in the NAND wafer fabrication facilities.

These procedures also included, among others, (i) testing management’s process for developing the seven year useful life, (ii) testing the completeness, accuracy, and relevance of underlying data used in the assessment, and (iii) evaluating the reasonableness of the significant assumptions used by management related to planned technology node transitions, capital spending, and re-use rates.

Evaluating management’s assumptions related to planned technology node transitions, capital spending, and re-use rates involved evaluating whether the assumptions used by management were reasonable considering (i) planned technology node transitions based on industry data as compared to historical technology node transitions, (ii) historical trends of capital spending, and (iii) historical length of service of previously purchased equipment and re-use rates of equipment based on technology node transitions.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Inventories (Finished goods and Work in process)

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and evaluating the reasonableness of management's assumptions related to future average selling prices and future sales volumes.

Evaluating management’s assumptions related to future average selling prices and future sales volumes involved evaluating whether the assumptions used by management were reasonable considering (i) current and past results, including recent sales, (ii) the consistency with external market, industry data and current contract prices, (iii) a comparison of the prior year estimates to actual results in the current year, and (iv) and whether these assumptions were consistent with evidence obtained in other areas of the audit.

Evaluating management's assumptions related to future average selling prices and future sales volumes involved evaluating whether the assumptions used by management were reasonable considering (i) current and past results, including recent sales, (ii) the consistency with external market, industry data and current contract prices, (iii) a comparison of the prior year estimates to actual results in the current year, and (iv) whether these assumptions were consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data