filings.toolsItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
58
Micron Technology, Inc.
Consolidated Statements of Operations
(In millions, except per share amounts)
| For the year ended | August 29, 2024 | August 31, 2023 | September 1, 2022 | ||||||||
| Revenue | $ | 25,111 | $ | 15,540 | $ | 30,758 | |||||
| Cost of goods sold | 19,498 | 16,956 | 16,860 | ||||||||
| Gross margin | 5,613 | (1,416) | 13,898 | ||||||||
| Research and development | 3,430 | 3,114 | 3,116 | ||||||||
| Selling, general, and administrative | 1,129 | 920 | 1,066 | ||||||||
| Restructure and asset impairments | 1 | 171 | 48 | ||||||||
| Other operating (income) expense, net | (251) | 124 | (34) | ||||||||
| Operating income (loss) | 1,304 | (5,745) | 9,702 | ||||||||
| Interest income | 529 | 468 | 96 | ||||||||
| Interest expense | (562) | (388) | (189) | ||||||||
| Other non-operating income (expense), net | (31) | 7 | (38) | ||||||||
| 1,240 | (5,658) | 9,571 | |||||||||
| Income tax (provision) benefit | (451) | (177) | (888) | ||||||||
| Equity in net income (loss) of equity method investees | (11) | 2 | 4 | ||||||||
| Net income (loss) | $ | 778 | $ | (5,833) | $ | 8,687 | |||||
| Earnings (loss) per share | |||||||||||
| Basic | $ | 0.70 | $ | (5.34) | $ | 7.81 | |||||
| Diluted | 0.70 | (5.34) | 7.75 | ||||||||
| Number of shares used in per share calculations | |||||||||||
| Basic | 1,105 | 1,093 | 1,112 | ||||||||
| Diluted | 1,118 | 1,093 | 1,122 |
See accompanying notes to consolidated financial statements.
59 | 2024 10-K
Micron Technology, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In millions)
| For the year ended | August 29, 2024 | August 31, 2023 | September 1, 2022 | ||||||||
| Net income (loss) | $ | 778 | $ | (5,833) | $ | 8,687 | |||||
| Other comprehensive income (loss), net of tax | |||||||||||
| Gains (losses) on derivative instruments | 142 | 234 | (516) | ||||||||
| Unrealized gains (losses) on investments | 33 | 6 | (48) | ||||||||
| Pension liability adjustments | 3 | 11 | 3 | ||||||||
| Foreign currency translation adjustments | — | (3) | (1) | ||||||||
| Other comprehensive income (loss) | 178 | 248 | (562) | ||||||||
| Total comprehensive income (loss) | $ | 956 | $ | (5,585) | $ | 8,125 |
See accompanying notes to consolidated financial statements.
60
Micron Technology, Inc.
Consolidated Balance Sheets
(In millions, except par value amounts)
| As of | August 29, 2024 | August 31, 2023 | ||||||
| Assets | ||||||||
| Cash and equivalents | $ | 7,041 | $ | 8,577 | ||||
| Short-term investments | 1,065 | 1,017 | ||||||
| Receivables | 6,615 | 2,443 | ||||||
| Inventories | 8,875 | 8,387 | ||||||
| Other current assets | 776 | 820 | ||||||
| Total current assets | 24,372 | 21,244 | ||||||
| Long-term marketable investments | 1,046 | 844 | ||||||
| Property, plant, and equipment | 39,749 | 37,928 | ||||||
| Operating lease right-of-use assets | 645 | 666 | ||||||
| Intangible assets | 416 | 404 | ||||||
| Deferred tax assets | 520 | 756 | ||||||
| Goodwill | 1,150 | 1,150 | ||||||
| Other noncurrent assets | 1,518 | 1,262 | ||||||
| Total assets | $ | 69,416 | $ | 64,254 | ||||
| Liabilities and equity | ||||||||
| Accounts payable and accrued expenses | $ | 7,299 | $ | 3,958 | ||||
| Current debt | 431 | 278 | ||||||
| Other current liabilities | 1,518 | 529 | ||||||
| Total current liabilities | 9,248 | 4,765 | ||||||
| Long-term debt | 12,966 | 13,052 | ||||||
| Noncurrent operating lease liabilities | 610 | 603 | ||||||
| Noncurrent unearned government incentives | 550 | 727 | ||||||
| Other noncurrent liabilities | 911 | 987 | ||||||
| Total liabilities | 24,285 | 20,134 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Common stock, $0.10 par value, 3,000 shares authorized, 1,253 shares issued and 1,109 outstanding (1,239 shares issued and 1,098 outstanding as of August 31, 2023) | 125 | 124 | ||||||
| Additional capital | 12,115 | 11,036 | ||||||
| Retained earnings | 40,877 | 40,824 | ||||||
| Treasury stock, 144 shares held (141 shares as of August 31, 2023) | (7,852) | (7,552) | ||||||
| Accumulated other comprehensive income (loss) | (134) | (312) | ||||||
| Total equity | 45,131 | 44,120 | ||||||
| Total liabilities and equity | $ | 69,416 | $ | 64,254 |
See accompanying notes to consolidated financial statements.
61 | 2024 10-K
Micron Technology, Inc.
Consolidated Statements of Changes in Equity
(In millions, except per share amounts)
| Common Stock | Additional Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||||
| Number of Shares | Amount | ||||||||||||||||||||||
| Balance at September 2, 2021 | 1,216 | $ | 122 | $ | 9,453 | $ | 39,051 | $ | (4,695) | $ | 2 | $ | 43,933 | ||||||||||
| Net income (loss) | — | — | — | 8,687 | — | — | 8,687 | ||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | (562) | (562) | ||||||||||||||||
| Stock issued under equity compensation plans | 12 | 1 | 244 | — | — | — | 245 | ||||||||||||||||
| Stock-based compensation expense | — | — | 514 | — | — | — | 514 | ||||||||||||||||
| Repurchase of stock - repurchase program | — | — | — | — | (2,432) | — | (2,432) | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | (2) | — | (14) | (112) | — | — | (126) | ||||||||||||||||
| Dividends and dividend equivalents declared ($0.315 per share) | — | — | — | (352) | — | — | (352) | ||||||||||||||||
| Balance at September 1, 2022 | 1,226 | $ | 123 | $ | 10,197 | $ | 47,274 | $ | (7,127) | $ | (560) | $ | 49,907 | ||||||||||
| Net income (loss) | — | — | — | (5,833) | — | — | (5,833) | ||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | 248 | 248 | ||||||||||||||||
| Stock issued under equity compensation plans | 15 | 1 | 262 | — | — | — | 263 | ||||||||||||||||
| Stock-based compensation expense | — | — | 596 | — | — | — | 596 | ||||||||||||||||
| Repurchase of stock - repurchase program | — | — | — | — | (425) | — | (425) | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | (2) | — | (19) | (108) | — | — | (127) | ||||||||||||||||
| Dividends and dividend equivalents declared ($0.460 per share) | — | — | — | (509) | — | — | (509) | ||||||||||||||||
| Balance at August 31, 2023 | 1,239 | $ | 124 | $ | 11,036 | $ | 40,824 | $ | (7,552) | $ | (312) | $ | 44,120 | ||||||||||
| Net income (loss) | — | — | — | 778 | — | — | 778 | ||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | 178 | 178 | ||||||||||||||||
| Stock issued under equity compensation plans | 17 | 1 | 271 | — | — | — | 272 | ||||||||||||||||
| Stock-based compensation expense | — | — | 833 | — | — | — | 833 | ||||||||||||||||
| Repurchase of stock - repurchase program | — | — | — | — | (300) | — | (300) | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | (3) | — | (25) | (207) | — | — | (232) | ||||||||||||||||
| Dividends and dividend equivalents declared ($0.460 per share) | — | — | — | (518) | — | — | (518) | ||||||||||||||||
| Balance at August 29, 2024 | 1,253 | $ | 125 | $ | 12,115 | $ | 40,877 | $ | (7,852) | $ | (134) | $ | 45,131 |
See accompanying notes to consolidated financial statements.
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Micron Technology, Inc.
Consolidated Statements of Cash Flows
(In millions)
| For the year ended | August 29, 2024 | August 31, 2023 | September 1, 2022 | ||||||||||||||
| Cash flows from operating activities | |||||||||||||||||
| Net income (loss) | $ | 778 | $ | (5,833) | $ | 8,687 | |||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||
| Depreciation expense and amortization of intangible assets | 7,780 | 7,756 | 7,116 | ||||||||||||||
| Stock-based compensation | 833 | 596 | 514 | ||||||||||||||
| Provision to write down inventories to net realizable value | — | 1,831 | — | ||||||||||||||
| Goodwill impairment | — | 101 | — | ||||||||||||||
| Change in operating assets and liabilities: | |||||||||||||||||
| Receivables | (3,581) | 2,763 | 190 | ||||||||||||||
| Inventories | (488) | (3,555) | (2,179) | ||||||||||||||
| Accounts payable and accrued expenses | 1,915 | (1,302) | 334 | ||||||||||||||
| Other current liabilities | 989 | (817) | 400 | ||||||||||||||
| Other | 281 | 19 | 119 | ||||||||||||||
| Net cash provided by operating activities | 8,507 | 1,559 | 15,181 | ||||||||||||||
| Cash flows from investing activities | |||||||||||||||||
| Expenditures for property, plant, and equipment | (8,386) | (7,676) | (12,067) | ||||||||||||||
| Purchases of available-for-sale securities | (1,999) | (723) | (1,770) | ||||||||||||||
| Proceeds from maturities and sales of available-for-sale securities | 1,794 | 1,591 | 1,615 | ||||||||||||||
| Proceeds from government incentives | 315 | 710 | 115 | ||||||||||||||
| Proceeds from sale of Lehi, Utah fab | — | — | 888 | ||||||||||||||
| Other | (33) | (93) | (366) | ||||||||||||||
| Net cash provided by (used for) investing activities | (8,309) | (6,191) | (11,585) | ||||||||||||||
| Cash flows from financing activities | |||||||||||||||||
| Repayments of debt | (1,897) | (761) | (2,032) | ||||||||||||||
| Payments of dividends to shareholders | (513) | (504) | (461) | ||||||||||||||
| Repurchases of common stock - repurchase program | (300) | (425) | (2,432) | ||||||||||||||
| Payments on equipment purchase contracts | (149) | (138) | (141) | ||||||||||||||
| Proceeds from issuance of debt | 999 | 6,716 | 2,000 | ||||||||||||||
| Other | 18 | 95 | 86 | ||||||||||||||
| Net cash provided by (used for) financing activities | (1,842) | 4,983 | (2,980) | ||||||||||||||
| Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash | 40 | (34) | (106) | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (1,604) | 317 | 510 | ||||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 8,656 | 8,339 | 7,829 | ||||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 7,052 | $ | 8,656 | $ | 8,339 | |||||||||||
| Supplemental disclosures | |||||||||||||||||
| Income taxes paid, net | $ | (338) | $ | (532) | $ | (493) | |||||||||||
| Interest paid, net of amounts capitalized | (503) | (323) | (154) | ||||||||||||||
| Noncash equipment acquisitions on contracts payable | 118 | 165 | 157 |
See accompanying notes to consolidated financial statements.
63 | 2024 10-K
Micron Technology, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tabular amounts in millions, except per share amounts)
Significant Accounting Policies
Basis of Presentation
We are an industry leader in innovative memory and storage solutions transforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence (AI) and compute-intensive 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.
Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal 2024, 2023, and 2022 each contained 52 weeks. All period references are to our fiscal periods unless otherwise indicated.
Derivative and Hedging Instruments
We use derivative instruments to manage our exposure to changes in currency exchange rates from (1) our monetary assets and liabilities denominated in currencies other than the U.S. dollar, (2) non-U.S.-dollar-denominated investments in debt instruments, and (3) 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.
The accounting for changes in the fair value of derivative instruments is based on the intended use of the derivative and the resulting designation. For derivative instruments that are not designated for hedge accounting, gains or losses from changes in fair values are recognized in other non-operating income (expense) and cash flows are classified as investing activities in the statement of cash flows. 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 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. For foreign currency and commodity derivative instruments designated as cash flow hedges or fair value hedges, time value is excluded from the assessment of effectiveness and the gains and losses attributable to time value are recognized in earnings through an amortization approach. Cash flows from derivative instruments designated as cash flow hedges or fair value hedges are classified in the same category as the items being hedged.
We enter into master netting arrangements with our counterparties to mitigate credit risk in derivative hedge transactions. These master netting arrangements allow us and our counterparties to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled with each counterparty have been presented in our consolidated balance sheet on a net basis.
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Financial Instruments
Cash equivalents include highly liquid short-term investments with original maturities at the time of purchase of three months or less that are readily convertible to known amounts of cash. Other investments with remaining maturities of less than one year are included in short-term investments. Investments with remaining maturities greater than one year are included in long-term marketable investments. The carrying value of investment securities sold is determined using the specific identification method.
Functional Currency
The U.S. dollar is the functional currency for us and all of our consolidated subsidiaries.
Goodwill
We perform an annual impairment assessment for goodwill in our fourth quarter each year.
Government Incentives
We receive incentives from governmental entities related to capital expenditures, expenses, and other activities. Our government incentives may require that we meet or maintain specified spending levels and other operational metrics and may be subject to reimbursement if such conditions are not met or maintained. Government incentives are recorded in the financial statements in accordance with their purpose: as a reduction of asset costs or a reduction of expenses. Incentives related to the acquisition or construction of fixed assets are recognized as a reduction in the carrying amounts of the related assets and as a reduction to depreciation expense over the useful lives of the assets. Incentives related to specific operating activities are offset against the related expense in the period the expense is incurred. Government incentives received prior to being earned are recognized in current or noncurrent deferred income, whereas government incentives earned prior to being received are recognized in current or noncurrent receivables. 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
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. Determining net realizable value of finished goods and work in process inventories requires projecting future average selling prices, sales volumes, and costs per part. When net realizable value 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 cost or net realizable value analysis and categorize all inventories (including DRAM, NAND, and other memory) as a single group.
Leases
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 included within lease expense.
65 | 2024 10-K
Product and Process Technology
Costs incurred to (1) acquire product and process technology, (2) patent technology, and (3) keep patents in force, are capitalized and amortized on a straight-line basis over periods ranging up to 12.5 years. We capitalize a portion of costs incurred to patent technology based on historical data of patents issued as a percent of patents we file. Product and process technology costs are amortized over the shorter of (1) the estimated useful life of the technology, (2) the patent term, or (3) the term of the technology agreement. Fully-amortized assets are removed from product and process technology and accumulated amortization.
Product Warranty
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 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. Our warranty obligations are not material.
Property, Plant, and Equipment
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, 7 years for production equipment, up to 7 years for other equipment, and 3 to 5 years for software. 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.
We capitalize interest on borrowings during the period of time we carry out the activities necessary to bring assets to the condition of their intended use and location. We utilize a weighted average capitalization rate that is based on our consolidated debt portfolio. Capitalized interest becomes part of the cost of assets.
Research and Development
Costs related to the conceptual formulation and design of products and processes are charged to R&D expense as incurred. Development of a product is deemed complete when it is qualified through reviews and tests for performance and reliability. Subsequent to product qualification, product costs are included in cost of goods sold.
Revenue Recognition
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. 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 returns. In addition, we generally offer price protection to our distributors, which is a form of variable consideration that decreases the transaction price. We use the expected value method, based on historical price adjustments and current pricing trends, to estimate the amount of revenue recognized from sales to distributors. Differences between the estimated and actual amounts are recognized as adjustments to revenue.
Stock-based Compensation
Stock-based compensation is measured at the grant date, based on the fair value of the award, and recognized as expense under the straight-line attribution method over the requisite service period. We account for forfeitures as they occur. We issue new shares upon the exercise of stock options, conversion of share units, or issuance of shares under our ESPP.
Treasury Stock
Treasury stock is carried at cost. When we retire our treasury stock, any excess of the repurchase price paid over par value is allocated between additional capital and retained earnings.
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Use of Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and judgments may differ under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis. Actual results could differ from estimates.
Recently Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 (ASC Topic 280), Improvements to Reportable Segment Disclosures. This ASU expands on existing reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU is effective for our annual reporting for 2025 on a retrospective basis. This standard will impact our disclosures and will not impact our financial statements.
In December 2023, the FASB issued ASU 2023-09 (ASC Topic 740), Improvements to Income Tax Disclosures. This ASU requires disaggregated income tax disclosures on the rate reconciliation and income taxes paid. This ASU will be effective for our annual reporting for 2026 on a prospective basis, with retrospective application permitted. This standard will impact our disclosures and will not impact our financial statements.
Variable Interest Entities
A number of special purpose entities (the "Lease SPEs") were created by a third-party to facilitate equipment lease financing transactions between us and financial institutions that fund the lease financing transactions ("Financing Entities"). Neither we nor the Financing Entities have an equity interest in the Lease SPEs. The Lease SPEs are variable interest entities because their equity is not sufficient to permit them to finance their activities without additional support from the Financing Entities and because the third-party equity holder lacks characteristics of a controlling financial interest. By design, the arrangements with the Lease SPEs are merely financing vehicles and we do not bear any significant risks from variable interests with the Lease SPEs. We have determined that we do not have the power to direct the activities of the Lease SPEs that most significantly impact their economic performance and we do not consolidate the Lease SPEs. As of August 29, 2024, we had approximately $680 million of financial lease liabilities and right-of-use assets under these arrangements.
67 | 2024 10-K
Cash and Investments
All of our short-term investments and long-term marketable investments were classified as available-for-sale as of the dates noted below. Cash and equivalents and the fair values of our available-for-sale investments, which approximated amortized costs, were as follows:
| As of August 29, 2024 | As of August 31, 2023 | ||||||||||||||||||||||||||||
| Cash and Equivalents | Short-term Investments | Long-term Marketable Investments(1) | Total Fair Value | Cash and Equivalents | Short-term Investments | Long-term Marketable Investments(1) | Total Fair Value | ||||||||||||||||||||||
| Cash | $ | 6,654 | $ | — | $ | — | $ | 6,654 | $ | 5,771 | $ | — | $ | — | $ | 5,771 | |||||||||||||
| Level 1(2) | |||||||||||||||||||||||||||||
| Money market funds | 20 | — | — | 20 | 1,629 | — | — | 1,629 | |||||||||||||||||||||
| Level 2(3) | |||||||||||||||||||||||||||||
| Certificates of deposit | 316 | 6 | — | 322 | 1,172 | 25 | — | 1,197 | |||||||||||||||||||||
| Corporate bonds | — | 771 | 571 | 1,342 | — | 737 | 437 | 1,174 | |||||||||||||||||||||
| Asset-backed securities | — | 46 | 433 | 479 | — | 15 | 387 | 402 | |||||||||||||||||||||
| Commercial paper | 16 | 160 | — | 176 | — | 109 | — | 109 | |||||||||||||||||||||
| Government securities | 35 | 82 | 42 | 159 | 5 | 131 | 20 | 156 | |||||||||||||||||||||
| 7,041 | $ | 1,065 | $ | 1,046 | $ | 9,152 | 8,577 | $ | 1,017 | $ | 844 | $ | 10,438 | ||||||||||||||||
| Restricted cash(4) | 11 | 79 | |||||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash | $ | 7,052 | $ | 8,656 |
*(1)*The maturities of long-term marketable investments primarily range from one to five years, except for asset-backed securities which are not due at a single maturity date.
(2)The fair value of Level 1 securities is measured based on quoted prices in active markets for identical assets.
*(3)*The fair value of Level 2 securities is measured using information obtained from pricing services, which obtain quoted market prices for similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine the appropriate value at the measurement date. We perform supplemental analysis to validate information obtained from these pricing services. No adjustments were made to the fair values indicated by such pricing information as of August 29, 2024 or August 31, 2023.
*(4)*Restricted cash is included in other current assets and 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 or which will be returned if performance conditions are not met.
Gross realized gains and losses from sales of available-for-sale securities were not significant for any period presented.
Non-marketable Equity Investments
In addition to the amounts included in the table above, we had $190 million and $218 million of non-marketable equity investments without a readily determinable fair value that were included in other noncurrent assets as of August 29, 2024 and August 31, 2023, respectively. For non-marketable investments, we recognized in other non-operating income (expense) a net loss of $32 million for 2024 and $7 million for 2023 and a net gain of $36 million for 2022. Our non-marketable equity investments are recorded at fair value on a non-recurring basis and classified as Level 3.
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Receivables
| As of | August 29, 2024 | August 31, 2023 | ||||||
| Trade receivables | $ | 5,419 | $ | 2,048 | ||||
| Government incentives | 834 | 105 | ||||||
| Income and other taxes | 268 | 194 | ||||||
| Other | 94 | 96 | ||||||
| $ | 6,615 | $ | 2,443 |
Inventories
| As of | August 29, 2024 | August 31, 2023 | ||||||
| Finished goods | $ | 1,308 | $ | 1,616 | ||||
| Work in process | 6,774 | 6,111 | ||||||
| Raw materials and supplies | 793 | 660 | ||||||
| $ | 8,875 | $ | 8,387 |
In 2023, we recorded charges of $1.83 billion to cost of goods sold to write down the carrying value of work in process and finished goods inventories to their estimated net realizable value.
Property, Plant, and Equipment
| As of | August 29, 2024 | August 31, 2023 | ||||||
| Land | $ | 284 | $ | 283 | ||||
| Buildings | 20,141 | 17,967 | ||||||
| Equipment(1) | 70,813 | 65,555 | ||||||
| Construction in progress(2) | 3,444 | 2,464 | ||||||
| Software | 1,365 | 1,316 | ||||||
| 96,047 | 87,585 | |||||||
| Accumulated depreciation | (56,298) | (49,657) | ||||||
| $ | 39,749 | $ | 37,928 |
*(1)*Includes costs related to equipment not placed into service of $3.10 billion as of August 29, 2024 and $2.91 billion as of August 31, 2023.
*(2)*Primarily includes building-related construction and tool installation.
Depreciation expense was $7.70 billion, $7.67 billion, and $7.03 billion for 2024, 2023, and 2022, respectively. Interest capitalized as part of the cost of property, plant, and equipment was $225 million, $208 million, and $77 million for 2024, 2023, and 2022, respectively.
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Leases
We have finance and operating leases through which we obtain the right to use facilities, land, and equipment that support our business operations. Our finance leases consist primarily of (i) gas and other supply agreements that are deemed to contain embedded leases and (ii) equipment leases. Our operating leases consist primarily of offices, laboratories, other facilities, and land. Certain of our operating leases include one or more options to extend the lease term for periods from one year to 10 years for real estate and one year to 99 years for land.
Certain supply or service agreements require us to exercise significant judgment to determine whether the agreement contains a lease. Our assessment includes determining whether we or the supplier control the assets used to fulfill the agreements by identifying whether we or the supplier have the right to change the type, quantity, timing, or location of the output of the assets. Our gas supply arrangements generally are deemed to contain a lease because we have the right to substantially all of the output of the assets used to produce the supply and we have the right to change the quantity and timing of the output of those assets. In determining the lease term, we assess whether we are reasonably certain to exercise any options to renew or terminate a lease or to purchase the right-of-use asset. 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.
The components of lease cost are presented below:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Finance lease cost | |||||||||||
| Amortization of right-of-use asset | $ | 176 | $ | 105 | $ | 99 | |||||
| Interest on lease liability | 70 | 24 | 24 | ||||||||
| Operating lease cost(1) | 140 | 137 | 125 | ||||||||
| $ | 386 | $ | 266 | $ | 248 |
*(1)*Operating lease cost includes short-term and variable lease expenses, which were not material for the periods presented.
Supplemental cash flow information related to leases was as follows:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Cash flows used for operating activities | |||||||||||
| Finance leases | $ | 61 | $ | 24 | $ | 23 | |||||
| Operating leases | 132 | 139 | 110 | ||||||||
| Cash flows used for financing activities – Finance leases | 155 | 109 | 103 | ||||||||
| Noncash acquisitions of right-of-use assets | |||||||||||
| Finance leases | 905 | 508 | 309 | ||||||||
| Operating leases | 54 | 57 | 197 |
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Supplemental balance sheet information related to leases was as follows:
| As of | August 29, 2024 | August 31, 2023 | ||||||
| Finance lease right-of-use assets (included in property, plant, and equipment) | $ | 2,038 | $ | 1,311 | ||||
| Current operating lease liabilities (included in accounts payable and accrued expenses) | 71 | 66 | ||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Finance leases | 8 | 9 | ||||||
| Operating leases | 10 | 11 | ||||||
| Weighted-average discount rate | ||||||||
| Finance leases | 4.91 | % | 3.86 | % | ||||
| Operating leases | 3.42 | % | 3.21 | % |
As of August 29, 2024, maturities of lease liabilities by fiscal year were as follows:
| Finance Leases | Operating Leases | |||||||
| 2025 | $ | 400 | $ | 93 | ||||
| 2026 | 380 | 82 | ||||||
| 2027 | 373 | 87 | ||||||
| 2028 | 362 | 82 | ||||||
| 2029 | 279 | 76 | ||||||
| 2030 and thereafter | 568 | 398 | ||||||
| Less imputed interest | (308) | (137) | ||||||
| $ | 2,054 | $ | 681 |
The table above excludes obligations for leases that have been executed but have not yet commenced. As of August 29, 2024, excluded obligations consisted of $835 million of finance lease obligations over a weighted-average period of 13 years for gas supply arrangements deemed to contain embedded leases and equipment leases. We will recognize right-of-use assets and associated lease liabilities at the time such assets become available for our use.
Intangible Assets
| As of August 29, 2024 | As of August 31, 2023 | ||||||||||||||||||||||
| Gross Amount | Accumulated Amortization | Net Carrying Amount | Gross Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Product and process technology | $ | 683 | $ | (278) | $ | 405 | $ | 613 | $ | (209) | $ | 404 | |||||||||||
| Other | 11 | — | 11 | — | — | — | |||||||||||||||||
| $ | 694 | $ | (278) | $ | 416 | $ | 613 | $ | (209) | $ | 404 |
In 2024, 2023, and 2022, we capitalized $84 million, $87 million, and $158 million, respectively, for product and process technology with weighted-average useful lives of 10 years, 9 years, and 9 years, respectively. Amortization expense was $82 million, $86 million, and $85 million for 2024, 2023, and 2022, respectively. Expected amortization expense is $67 million for 2025, $56 million for 2026, $52 million for 2027, $49 million for 2028, and $42 million for 2029.
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Accounts Payable and Accrued Expenses
| As of | August 29, 2024 | August 31, 2023 | ||||||
| Accounts payable | $ | 2,726 | $ | 1,725 | ||||
| Property, plant, and equipment | 2,925 | 1,419 | ||||||
| Salaries, wages, and benefits | 1,117 | 367 | ||||||
| Income and other taxes | 218 | 67 | ||||||
| Other | 313 | 380 | ||||||
| $ | 7,299 | $ | 3,958 |
Debt
| As of August 29, 2024 | As of August 31, 2023 | ||||||||||||||||||||||||||||||||||
| Net Carrying Amount | Net Carrying Amount | ||||||||||||||||||||||||||||||||||
| Stated Rate | Effective Rate | Principal | Current | Long-Term | Total | Principal | Current | Long-Term | Total | ||||||||||||||||||||||||||
| 2026 Term Loan A | 6.819 | % | 6.95 | % | $ | 922 | $ | 49 | $ | 872 | $ | 921 | $ | 971 | $ | 49 | $ | 921 | $ | 970 | |||||||||||||||
| 2027 Term Loan A | 6.944 | % | 7.08 | % | 1,065 | 57 | 1,006 | 1,063 | 1,123 | 57 | 1,063 | 1,120 | |||||||||||||||||||||||
| 2026 Notes | 4.975 | % | 5.07 | % | 500 | — | 499 | 499 | 500 | — | 499 | 499 | |||||||||||||||||||||||
| 2027 Notes(1) | 4.185 | % | 4.27 | % | 900 | — | 838 | 838 | 900 | — | 798 | 798 | |||||||||||||||||||||||
| 2028 Notes | 5.375 | % | 5.52 | % | 600 | — | 597 | 597 | 600 | — | 596 | 596 | |||||||||||||||||||||||
| 2029 A Notes | 5.327 | % | 5.40 | % | 700 | — | 698 | 698 | 700 | — | 697 | 697 | |||||||||||||||||||||||
| 2029 B Notes | 6.750 | % | 6.54 | % | 1,250 | — | 1,261 | 1,261 | 1,250 | — | 1,263 | 1,263 | |||||||||||||||||||||||
| 2030 Notes | 4.663 | % | 4.73 | % | 850 | — | 847 | 847 | 850 | — | 846 | 846 | |||||||||||||||||||||||
| 2031 Notes | 5.300 | % | 5.41 | % | 1,000 | — | 994 | 994 | — | — | — | — | |||||||||||||||||||||||
| 2032 Green Bonds | 2.703 | % | 2.77 | % | 1,000 | — | 996 | 996 | 1,000 | — | 995 | 995 | |||||||||||||||||||||||
| 2033 A Notes | 5.875 | % | 5.96 | % | 750 | — | 745 | 745 | 750 | — | 745 | 745 | |||||||||||||||||||||||
| 2033 B Notes | 5.875 | % | 6.01 | % | 900 | — | 891 | 891 | 900 | — | 890 | 890 | |||||||||||||||||||||||
| 2041 Notes | 3.366 | % | 3.41 | % | 500 | — | 497 | 497 | 500 | — | 497 | 497 | |||||||||||||||||||||||
| 2051 Notes | 3.477 | % | 3.52 | % | 500 | — | 496 | 496 | 500 | — | 496 | 496 | |||||||||||||||||||||||
| 2024 Term Loan A | N/A | N/A | — | — | — | — | 588 | — | 587 | 587 | |||||||||||||||||||||||||
| 2025 Term Loan A | N/A | N/A | — | — | — | — | 1,052 | — | 1,050 | 1,050 | |||||||||||||||||||||||||
| Finance lease obligations | N/A | 4.91 | % | 2,054 | 325 | 1,729 | 2,054 | 1,281 | 172 | 1,109 | 1,281 | ||||||||||||||||||||||||
| $ | 13,491 | $ | 431 | $ | 12,966 | $ | 13,397 | $ | 13,465 | $ | 278 | $ | 13,052 | $ | 13,330 |
(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, and as a result, the carrying values of our 2027 Notes reflect adjustments in fair value.
As of August 29, 2024, all of our debt, other than finance lease obligations, were unsecured obligations that rank equally in right of payment with all of our other existing and future unsecured indebtedness and were effectively subordinated to all future secured indebtedness, to the extent of the value of the assets securing such indebtedness. All our unsecured debt were obligations of our parent company, Micron, and were structurally subordinated to all liabilities of its subsidiaries, including trade payables. The terms of our indebtedness generally contain cross payment default and cross acceleration provisions. Micron’s guarantees of certain liabilities of its subsidiaries are unsecured obligations ranking equally in right of payment with all of Micron’s other existing and future unsecured indebtedness.
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Debt Activity
The table below presents the effects of debt financing and prepayment activities in 2024:
| Transaction Date | Increase (Decrease) in Principal | Increase (Decrease) in Carrying Value | Increase (Decrease) in Cash | |||||||||||
| Issuances | ||||||||||||||
| 2031 Notes | January 12, 2024 | $ | 1,000 | $ | 993 | $ | 993 | |||||||
| Prepayments | ||||||||||||||
| 2024 Term Loan A | January 12, 2024 | (588) | (587) | (588) | ||||||||||
| 2025 Term Loan A | January 12, 2024 | (402) | (401) | (402) | ||||||||||
| 2025 Term Loan A | May 29, 2024 | (650) | (649) | (650) | ||||||||||
| $ | (640) | $ | (644) | $ | (647) |
In 2023, we issued $6.70 billion of senior unsecured notes and term loan agreements and received cash of $6.69 billion. We prepaid $600 million of principal amount of the 2024 Term Loan A.
In 2022, we issued $2.00 billion of senior unsecured notes and received cash of $1.99 billion. We prepaid $1.85 billion of principal amount of notes for $1.93 billion in cash. We recognized losses of $83 million in connection with these prepayments.
Senior Unsecured Notes
We may redeem our 2026 Notes, 2027 Notes, 2028 Notes, 2029 A Notes, 2029 B Notes, 2030 Notes, 2031 Notes, 2032 Green Bonds, 2033 A Notes, 2033 B Notes, 2041 Notes, and 2051 Notes (the “Senior Unsecured Notes”), in whole or in part, at our option prior to their respective maturity dates at a redemption price equal to the greater of (i) 100% of the principal amount of the Senior Unsecured Notes to be redeemed and (ii) the present value of the remaining scheduled payments of principal and interest, in each case plus accrued interest. We may also redeem any series of our Senior Unsecured Notes, in whole or in part, at a price equal to par between one and six months prior to maturity in accordance with the respective terms of such series.
Each series of Senior Unsecured Notes contains covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our restricted subsidiaries (which are generally domestic subsidiaries in which we own at least 80% of the voting stock and which own principal property, as defined in the indenture governing such series) to (1) create or incur certain liens; (2) enter into certain sale and lease-back transactions; 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, as defined in the indentures governing our Senior Unsecured Notes, occurs with respect to a series of Senior Unsecured Notes, we will be required to offer to purchase such Senior Unsecured Notes at 101% of the outstanding aggregate principal amount plus accrued interest up to the purchase date.
Multi-Tranche Term Loan Agreement
The 2026 Term Loan A and 2027 Term Loan A (the “Multi-Tranche Term Loan Agreement”) require equal quarterly installment payments in an amount equal to 1.25% of the original principal amount. Borrowings under the Multi-Tranche Term Loan Agreement will generally bear interest at adjusted term SOFR plus an applicable interest rate margin ranging from 1.00% to 2.00%, varying by tranche and depending on our corporate credit ratings. Adjusted term SOFR for the Multi-Tranche Term Loan Agreement is the SOFR benchmark plus 0.10%.
The Multi-Tranche Term Loan Agreement requires us to maintain, on a consolidated basis, a leverage ratio of total indebtedness to adjusted EBITDA, as defined in the Multi-Tranche Term Loan Agreement and calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00, subject to a temporary four quarter increase in such ratio to 3.75 to 1.00 following certain material acquisitions.
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The Multi-Tranche Term Loan 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. Our obligations under the Multi-Tranche Term Loan Agreement are unsecured.
Revolving Credit Facility
As of August 29, 2024, no amounts were outstanding under the Revolving Credit Facility and $2.50 billion was available to us. Under the Revolving Credit Facility, borrowings would generally bear interest at a rate equal to adjusted term SOFR plus 1.00% to 1.75%, depending on our corporate credit ratings. Adjusted term SOFR for the Revolving Credit Facility agreement is the SOFR benchmark plus a credit spread adjustment ranging from approximately 0.11% to 0.43% depending on the applicable interest period selected. Any amounts outstanding under the Revolving Credit Facility would mature in May 2026 and amounts borrowed may be prepaid without penalty.
The Revolving Credit Facility contains the same leverage ratio and substantially the same other covenants as the Multi-Tranche Term Loan Agreement.
Maturities of Notes Payable
As of August 29, 2024, maturities of notes payable by fiscal year were as follows:
| 2025 | $ | 107 | |||
| 2026 | 607 | ||||
| 2027 | 1,780 | ||||
| 2028 | 1,493 | ||||
| 2029 | 700 | ||||
| 2030 and thereafter | 6,750 | ||||
| Unamortized issuance costs, discounts, and premium, net | (34) | ||||
| Hedge accounting fair value adjustment | (60) | ||||
| $ | 11,343 |
Commitments
As of August 29, 2024, we had noncancelable commitments with remaining contractual terms in excess of one year of approximately $6.7 billion for purchase obligations, of which approximately $1.7 billion will be due in 2025, $1.7 billion due in 2026, $1.0 billion due in 2027, $800 million due in 2028, $200 million due in 2029, and $1.3 billion due in 2030 and thereafter. Purchase obligations primarily include payments for goods or services with either a fixed or minimum quantity and price, which includes payments for the acquisition of property, plant, and equipment. Payments for leases that have been executed but have not yet commenced are excluded.
In 2023, we entered into an 18-year power purchase agreement in Singapore to purchase up to 450 megawatts of power at predominantly variable prices. This contract is expected to supply the majority of our power consumption needs in Singapore with more favorable pricing than our previous supply arrangements.
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Contingencies
We are currently a party to legal actions other than those described below 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.
Patent Matters
As is typical in the semiconductor and other high-tech industries, from time to time, others have asserted, and may in the future assert, that our products or manufacturing processes infringe upon their intellectual property rights. A description of certain claims is below.
On April 28, 2021, Netlist, Inc. (“Netlist”) filed two patent infringement actions against Micron, Micron Semiconductor Products, Inc. (“MSP”), and Micron Technology Texas, LLC (“MTEC”) in the U.S. District Court for the Western District of Texas. The first complaint alleges that one 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 (“LRDIMMs”). Each complaint seeks injunctive relief, damages, attorneys’ fees, and costs. On March 31, 2022, Netlist filed a patent infringement complaint against Micron and Micron Semiconductor Germany, GmbH in Dusseldorf Regional Court alleging that two German patents are infringed by certain of our LRDIMMs. The complaint seeks damages, costs, and injunctive relief.
On June 10, 2022, Netlist filed a patent infringement complaint against Micron, MSP, and MTEC in the U.S. District Court for the Eastern District of Texas (“E.D. Tex.”) alleging that six U.S. patents are infringed by certain of our memory modules and HBM products. On August 1, 2022, Netlist filed a second patent infringement complaint against the same defendants in E.D. Tex. alleging that one U.S. patent is infringed by certain of our LRDIMMs. On August 15, 2022, Netlist amended the second complaint to assert that two additional U.S. patents are infringed by certain of our LRDIMMs. The complaints in E.D. Tex. seek injunctive relief, damages, and attorneys’ fees. On May 23, 2024, following a four-day trial regarding the second complaint filed by Netlist in the E.D. Tex., a jury rendered a verdict that Micron’s memory modules infringe two asserted patents — U.S. Patent No. 7,619,912 (“the ‘912 patent”) and U.S. Patent No. 11,093,417 (“the ‘417 patent”) — and found that Micron should pay $425 million for infringement of the ‘912 patent and $20 million for infringement of the ‘417 patent. Micron expects to appeal the verdict. On April 17, 2024, the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”) issued a final written decision (“FWD”) finding unpatentable the sole asserted claim of the ‘912 patent. Netlist sought review of that ruling by the Director of the USPTO, which was denied on July 10, 2024. On July 30, 2024, the USPTO issued a FWD finding unpatentable all asserted claims of the ‘417 patent. In the case of each of the ‘912 and ‘417 patents, if the United States Court of Appeals for the Federal Circuit affirms the FWD, then the affirmed FWD will preclude any pending actions asserting infringement of such patent (including any infringement verdict that is subject to an ongoing appeal).
On August 16, 2022, Sonrai Memory Ltd. filed a patent infringement complaint against Micron in the U.S. District Court for the Western District of Texas. The complaint alleged that two U.S. patents are infringed by certain SSD and NAND flash products. The complaint sought damages, attorneys’ fees, and costs. On September 6, 2024, pursuant to a motion jointly filed by the parties, the court dismissed Sonrai’s complaint.
On January 23, 2023, Besang Inc. filed a patent infringement complaint against Micron in the U.S. District Court for the E.D. Tex. The complaint alleges that one U.S. patent is infringed by certain of our 3D NAND and SSD products. The complaint seeks an injunction, damages, attorneys’ fees, and costs.
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On November 9, 2023, Yangtze Memory Technologies Company, Ltd. (“YMTC”) filed a patent infringement complaint against Micron and one of its subsidiaries in the U.S. District Court for the Northern District of California (“N.D. Cal.”). The complaint alleges that eight U.S. patents are infringed by certain of our 3D NAND products. The complaint seeks an injunction, damages, attorneys’ fees, and costs. On January 22, 2024, Micron Semiconductor (Shanghai) Co., Ltd. (“MSS”) was served with three patent infringement complaints filed by YMTC in Beijing Intellectual Property Court and on February 27, 2024, Micron Technology, Inc. (“MTI”) was served with the same complaints. The complaints assert that MTI and MSS infringed three Chinese patents owned by YMTC by importing, selling, offering for sale, and assisting others to sell certain 3D NAND products and SSDs in China. The complaint seeks an injunction, damages, attorneys’ fees, and costs. On July 12, 2024, YMTC filed a second complaint against the Company and its subsidiary in N.D. Cal. The second complaint alleges that eleven U.S. patents are infringed by certain of our 3D NAND and DDR5 DRAM products. The complaint seeks an injunction, damages, attorneys’ fees, and costs. On September 11, 2024, MSS was served with five patent infringement complaints filed by YMTC in Shanghai Intellectual Property Court. The complaints assert that MTI and MSS infringed five Chinese patents owned by YMTC by importing, selling, offering for sale, and assisting others to sell certain 3D NAND products and SSDs in China. The complaint seeks an injunction, damages, attorneys’ fees, and costs.
On June 3, 2024, MimirIP LLC (“MimirIP”) submitted a complaint to the United States International Trade Commission (“ITC”) alleging that certain of Micron’s DRAM and NAND products infringe six patents owned by MimirIP. The complaint requested the ITC to institute an investigation of such alleged infringement pursuant to Section 337 of the Tariff Act of 1930 and to issue a permanent limited exclusion order barring from entry into the United States such allegedly infringing DRAM and NAND devices and electronic devices containing the same produced by several alleged customers of Micron. On August 27, 2024, MimirIP and the Company filed a joint motion to terminate the ITC investigation, which was granted on September 12, 2024.
On June 3, 2024, MimirIP filed a complaint against Micron, two of its subsidiaries, and certain alleged customers of Micron in the E.D. Tex. alleging that the same six patents as are asserted in the ITC are infringed by certain of Micron’s DRAM and NAND products. The complaint sought damages, attorneys’ fees, and costs. On August 30, 2024, the court dismissed the complaint pursuant to a notice of voluntary dismissal filed by MimirIP.
On June 4, 2024, MimirIP filed a second complaint against Micron, two of its subsidiaries, and certain alleged customers of Micron in the E.D. Tex. alleging that six additional patents are infringed by certain of Micron’s DRAM and NAND products. The complaint sought damages, attorneys’ fees, and costs. On August 30, 2024, the court dismissed the complaint pursuant to a notice of voluntary dismissal filed by MimirIP.
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.
Antitrust Matters
On May 15, 2018, the Chinese State Administration for Market Regulation (“SAMR”) notified Micron that it was investigating potential collusion and other anticompetitive conduct by DRAM suppliers in China. On May 31, 2018, SAMR made unannounced visits to our sales offices in Beijing, Shanghai, and Shenzhen to seek certain information as part of its investigation. We are cooperating with SAMR in its investigation.
Other Matters
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. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, our payments under these types of agreements have not had a material adverse effect on our business, results of operations, or financial condition.
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Contingency Assessment
We are unable to predict the outcome of any of the 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 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.
Equity
Common Stock Repurchases
Our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding common stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans. The repurchase authorization 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 3.2 million shares of our common stock for $300 million in 2024 and 8.6 million shares for $425 million in 2023. Through August 29, 2024, we had repurchased an aggregate of $7.19 billion under the authorization. Amounts repurchased are included in treasury stock.
Dividends
In each quarter of 2024, we declared and paid dividends of $0.115 per share. On September 25, 2024, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on October 23, 2024, to shareholders of record as of the close of business on October 7, 2024.
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component for the year ended August 29, 2024 were as follows:
| Gains (Losses) on Derivative Instruments | Unrealized Gains (Losses) on Investments | Pension Liability Adjustments | Cumulative Foreign Currency Translation Adjustment | Total | |||||||||||||
| As of August 31, 2023 | $ | (304) | $ | (41) | $ | 36 | $ | (3) | $ | (312) | |||||||
| Other comprehensive income (loss) before reclassifications | 34 | 33 | 7 | — | 74 | ||||||||||||
| Amount reclassified out of accumulated other comprehensive income (loss) | 172 | — | (3) | — | 169 | ||||||||||||
| Tax effects | (64) | — | (1) | — | (65) | ||||||||||||
| Other comprehensive income (loss) | 142 | 33 | 3 | — | 178 | ||||||||||||
| As of August 29, 2024 | $ | (162) | $ | (8) | $ | 39 | $ | (3) | $ | (134) |
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Fair Value Measurements
The estimated fair values and carrying values of our outstanding debt instruments were as follows:
| As of August 29, 2024 | As of August 31, 2023 | ||||||||||||||||
| Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||||
| Notes | $ | 11,316 | $ | 11,343 | $ | 11,549 | $ | 12,049 |
The fair values of our 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.
Derivative Instruments
| Notional or Contractual Amount | Fair Value**(1)** of | ||||||||||
| Assets**(2)** | Liabilities**(3)** | ||||||||||
| As of August 29, 2024 | |||||||||||
| Derivative instruments with hedge accounting designation | |||||||||||
| Cash flow currency hedges | $ | 3,724 | $ | 57 | $ | (71) | |||||
| Cash flow commodity hedges | 471 | 20 | (7) | ||||||||
| Fair value currency hedges | 2,511 | — | (41) | ||||||||
| Fair value interest rate hedges | 900 | — | (60) | ||||||||
| Derivative instruments without hedge accounting designation | |||||||||||
| Non-designated currency hedges | 2,393 | 18 | (3) | ||||||||
| $ | 95 | $ | (182) | ||||||||
| As of August 31, 2023 | |||||||||||
| Derivative instruments with hedge accounting designation | |||||||||||
| Cash flow currency hedges | $ | 3,873 | $ | 16 | $ | (180) | |||||
| Cash flow commodity hedges | 331 | 45 | — | ||||||||
| Fair value interest rate hedges | 900 | — | (100) | ||||||||
| Derivative instruments without hedge accounting designation | |||||||||||
| Non-designated currency hedges | 1,839 | 2 | (17) | ||||||||
| $ | 63 | $ | (297) |
*(1)*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).
*(2)*Included in receivables and other noncurrent assets.
*(3)*Included in accounts payable and accrued expenses and other noncurrent liabilities.
Derivative Instruments with Hedge Accounting Designation
Cash Flow Hedges**:** We utilize forward and swap contracts that generally mature within two years designated as cash flow hedges to minimize our exposure to changes in currency exchange rates or commodity prices for certain capital expenditures and manufacturing costs.
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The effects of cash flow hedging activities were as follows:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Gain (loss) from cash flow hedges in accumulated other comprehensive income (loss) | $ | 33 | $ | 30 | $ | (735) | |||||
| Gain (loss) excluded from effectiveness testing in cost of goods sold | (135) | (101) | (32) | ||||||||
| Gain (loss) reclassified from accumulated other comprehensive income (loss) to earnings, primarily to cost of goods sold | (172) | (261) | (53) |
As of August 29, 2024, we expect to reclassify $89 million of pre-tax losses related to cash flow hedges from accumulated other comprehensive income (loss) into earnings in the next 12 months.
Fair Value Hedges**:** We utilize currency forward contracts that generally mature within one year designated as fair value hedges to minimize our exposure to changes in currency exchange rates for non-U.S.-dollar-denominated cash and investments in debt securities. The fair value of our hedged cash and investments in debt securities was $2.58 billion as of August 29, 2024. 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. The effects of fair value currency hedges on our consolidated statements of operations, recognized in other non-operating income (expense), net, were not significant for the periods presented.
We also 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. We recognized interest expense of $96 million for changes in the fair value of our interest rate swaps in 2022 and the impact to interest expense was not significant for 2024 or 2023. We also recognized offsetting reductions in interest expense of the same amounts related to the changes in the fair value of the hedged portion of the underlying debt for these periods.
Derivative Instruments without Hedge Accounting Designation
Currency Derivatives**:** We generally utilize a rolling hedge strategy with currency forward contracts that mature within three months to hedge our exposures of monetary assets and liabilities from changes in currency exchange rates. At the end of each reporting period, monetary assets and liabilities denominated in currencies other than the U.S. dollar are remeasured into U.S. dollars and the associated outstanding forward contracts are marked to market. 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. The amounts recognized for derivative instruments without hedge accounting designation were not significant for the periods presented. We do not use derivative instruments for speculative purposes.
Derivative Counterparty Credit Risk and Master Netting Arrangements
Our derivative instruments expose us to credit risk to the extent counterparties may be unable to meet the terms of the contracts. Our maximum exposure to loss due to credit risk if counterparties fail completely to perform according to the terms of the contracts would generally equal the fair value of assets for these contracts as listed in the tables above. We seek to mitigate such risk by limiting our counterparties to major financial institutions and by spreading risk across multiple financial institutions. As of August 29, 2024 and August 31, 2023, amounts netted under our master netting arrangements were not significant.
Equity Compensation Plans
As of August 29, 2024, 69 million shares of our common stock were available for future awards under our equity compensation plans, including 11 million shares approved for issuance under our employee stock purchase plan (“ESPP”).
79 | 2024 10-K
Restricted Stock and Restricted Stock Units (“Restricted Stock Awards”)
As of August 29, 2024, there were 28 million shares of Restricted Stock Awards outstanding, 24 million of which are only subject to service-based vesting conditions. Service-based Restricted Stock Awards granted through October 2021 generally vest in one-fourth or one-third increments during each year of employment after the grant date. Service-based Restricted Stock Awards granted after October 2021 generally vest on 25% or 33% of the units granted after the first year and on 6.25% or 8.33% each quarter thereafter over the remaining three or two years of employment. Restricted Stock Awards with performance or market-based vesting conditions vest over a 3-year period as conditions are met. 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. In 2022, our Board of Directors approved dividend equivalent rights for unvested restricted stock units awarded on or after October 13, 2021.
Restricted Stock Awards activity for 2024 is summarized as follows:
| Number of Shares | Weighted-Average Grant Date Fair Value Per Share | |||||||
| Outstanding as of August 31, 2023 | 29 | $ | 59.11 | |||||
| Granted | 13 | 72.72 | ||||||
| Vested | (12) | 57.92 | ||||||
| Forfeited | (2) | 60.42 | ||||||
| Outstanding as of August 29, 2024 | 28 | 65.82 |
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Restricted stock award shares granted | 13 | 17 | 13 | ||||||||
| Weighted-average grant-date fair value per share | $ | 72.72 | $ | 55.99 | $ | 70.81 | |||||
| Aggregate vesting-date fair value of shares vested | $ | 1,008 | $ | 514 | $ | 498 |
Employee Stock Purchase Plan (“ESPP”)
Our ESPP is offered to substantially all employees and permitted eligible employees to purchase shares of our common stock through payroll deductions of up to 15% of their eligible compensation, subject to certain limitations. 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. Compensation expense is calculated as of the beginning of the offering period as the fair value of the employees’ purchase rights utilizing the Black-Scholes option valuation model and is recognized over the offering period. Grant-date fair value and assumptions used in the Black-Scholes option valuation model were as follows:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Weighted-average grant-date fair value per share | $ | 26.82 | $ | 17.06 | $ | 18.87 | |||||
| Average expected life in years | 0.5 | 0.5 | 0.5 | ||||||||
| Weighted-average expected volatility (based on implied volatility) | 41 | % | 37 | % | 43 | % | |||||
| Weighted-average risk-free interest rate | 5.2 | % | 5.1 | % | 2.0 | % | |||||
| Expected dividend yield | 0.5 | % | 0.7 | % | 0.6 | % |
Under the ESPP, employees purchased 4 million, 5 million, and 4 million shares of common stock in 2024, 2023, and 2022, respectively, at a per share weighted average price of $65.72, $51.93, and $58.52, respectively.
Stock Options
We last granted stock options in September 2018 and as of August 29, 2024, our outstanding stock options were not material. Stock options of 1.3 million shares were exercised in 2024. The total intrinsic value for options exercised was $92 million, $30 million, and $54 million in 2024, 2023, and 2022, respectively.
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Stock-based Compensation Expense
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Stock-based compensation expense by caption | |||||||||||
| Cost of goods sold | $ | 312 | $ | 201 | $ | 193 | |||||
| Research and development | 296 | 226 | 175 | ||||||||
| Selling, general, and administrative | 213 | 137 | 133 | ||||||||
| Restructure | — | (7) | (5) | ||||||||
| $ | 821 | $ | 557 | $ | 496 | ||||||
| Stock-based compensation expense by type of award | |||||||||||
| Restricted stock awards | $ | 749 | $ | 488 | $ | 429 | |||||
| ESPP | 72 | 69 | 66 | ||||||||
| Stock options | — | — | 1 | ||||||||
| $ | 821 | $ | 557 | $ | 496 |
Income tax benefits related to the tax deductions for share-based awards are recognized only upon the settlement of the related share-based awards. Income tax benefits for share-based awards were $140 million, $68 million, and $77 million for 2024, 2023, and 2022, respectively. Stock-based compensation expense of $99 million and $88 million was capitalized and remained in inventory as of August 29, 2024 and August 31, 2023, respectively. As of August 29, 2024, $1.44 billion 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 2028, resulting in a weighted-average period of 1.2 years.
Employee Benefit Plans
We have employee retirement plans at our U.S. and international sites. Details of significant plans are as follows:
Employee Savings Plan for U.S. Employees
We have a 401(k) retirement plan under which U.S. employees may contribute up to 75% of their eligible pay, subject to Internal Revenue Service annual contribution limits, to various savings alternatives, none of which include direct investment in our stock. We match in cash eligible contributions from employees up to 5% of the employee’s annual eligible earnings. Contribution expense for the 401(k) plan was $66 million, $59 million, and $66 million in 2024, 2023, and 2022, respectively.
Retirement Plans
We have pension plans available to employees at various foreign sites. As of August 29, 2024, the projected benefit obligations of our plans were $191 million and plan assets were $261 million. As of August 31, 2023, the projected benefit obligations of our plans were $175 million and plan assets were $232 million. Pension expense was not material for 2024, 2023, or 2022.
81 | 2024 10-K
Government Incentives
We receive incentives from governmental entities primarily in India, Japan, Singapore, Taiwan, and the United States principally in the form of cash grants and tax credits. These incentives primarily relate to capital expenditures, have initial terms ranging from one year to 15 years, and may be subject to reimbursement if certain conditions are not met or maintained. The conditions attached to these incentives require us to incur expenditures related to the construction of new manufacturing facilities, the purchase and installation of specialized tools and equipment, R&D expenditures, and/or maintain certain levels of fixed asset investment or employee headcount during the incentive terms.
The line items on the balance sheet affected by government incentives were as follows:
| As of | August 29, 2024 | ||||
| Receivables | $ | 834 | |||
| Other noncurrent assets | 188 | ||||
| Noncurrent unearned government incentives | 550 |
Beginning in 2023, we receive a 25% investment tax credit on qualified investments in U.S. semiconductor manufacturing under the CHIPS Act. As qualified investments are made, we recognize investment tax credits in receivables or other noncurrent assets.
We have signed a non-binding preliminary memorandum of terms with the U.S. Department of Commerce for up to $6.1 billion in direct funding under the CHIPS Act for our planned fab in Boise, Idaho and the first two planned fabs in Clay, New York. We are also eligible for federal loans up to $7.5 billion. We have also signed a non-binding term sheet with the state of New York that provides up to $5.5 billion in funding for the planned four-fab facility over the next 20-plus years through a combination of tax credits for qualified capital investments and incentives for eligible new job wages.
In addition to the receivables and other noncurrent assets in the table above, as of August 29, 2024, we had aggregate commitments from various governmental entities of up to $3.4 billion to be received through 2033, subject to achievement of certain performance conditions. The commitment amount includes $1.8 billion (150 billion Indian rupees) for the construction of a new assembly and test facility in Gujarat, India. We will receive incentives representing 50% of the total project cost from the Indian central government and 20% of the total project cost from the state of Gujarat. The commitment amount also includes up to $1.3 billion (188 billion Japanese yen) from the Japanese Ministry of Economy, Trade and Industry to support the production of DRAM using EUV lithography in Hiroshima, Japan.
Government incentives related to capital expenditures have reduced property, plant and equipment by $2.34 billion as of August 29, 2024, of which $1.10 billion pertained to 2024 expenditures.
In 2024, operating income (loss) benefited by $588 million (approximately 85% in COGS and 15% in R&D) from government incentives recognized as a reduction of expense.
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Revenue and Customer Contract Liabilities
Revenue by Technology
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| DRAM | $ | 17,603 | $ | 10,978 | $ | 22,386 | |||||
| NAND | 7,227 | 4,206 | 7,811 | ||||||||
| Other (primarily NOR) | 281 | 356 | 561 | ||||||||
| $ | 25,111 | $ | 15,540 | $ | 30,758 |
See “Segment and Other Information” for disclosure of disaggregated revenue by market segment.
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 beyond one year. As of August 29, 2024, our future performance obligations beyond one year were $141 million, which included customer prepayments and other contract liabilities. Customer prepayments made to secure product supply in future periods and other contract liabilities were $907 million as of August 29, 2024, of which $766 million was reported in other current liabilities and the remainder in other noncurrent liabilities.
As of August 29, 2024 and August 31, 2023, other current liabilities included $718 million and $453 million, respectively, for estimates of consideration payable to customers including estimates for pricing adjustments and returns.
In 2023, we received an aggregate of $228 million from settlements of insurance claims involving a power disruption in 2022 and an operational disruption in 2017, of which $186 million was for business interruption and recognized in revenue.
Restructure and Asset Impairments
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Employee severance | $ | 1 | $ | 163 | $ | — | |||||
| Asset impairments and other asset-related costs | — | 14 | 63 | ||||||||
| Other | — | (6) | (15) | ||||||||
| $ | 1 | $ | 171 | $ | 48 |
In 2023, we initiated a restructure plan in response to challenging industry conditions (the “2023 Restructure Plan”). Under the 2023 Restructure Plan, we reduced our headcount by approximately 15% by the end of calendar 2023, through a combination of voluntary attrition and personnel reductions. The plan was substantially completed in 2023.
Restructure and asset impairments for 2022 primarily related to the sale of our Lehi, Utah facility to Texas Instruments Incorporated.
83 | 2024 10-K
Other Operating (Income) Expense, Net
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Patent cross-license agreement gain | $ | (200) | $ | — | $ | — | |||||
| (Gain) loss on disposition of property, plant, and equipment | (59) | (54) | (41) | ||||||||
| Goodwill impairment | — | 101 | — | ||||||||
| Litigation settlement | — | 68 | — | ||||||||
| Other | 8 | 9 | 7 | ||||||||
| $ | (251) | $ | 124 | $ | (34) |
We performed a qualitative assessment for goodwill impairment in 2024 and did not identify any impairment indicators for our reporting units.
Due to 2023 global and macroeconomic challenges, as well as lower expected demand resulting from customer actions to reduce elevated inventory levels, we performed a 2023 quantitative assessment for goodwill impairment for each of our reporting units. We evaluated the fair value of our reporting units based on an income approach, using a discounted cash flow methodology. We recognized a $101 million charge in 2023, included in other operating income (loss) to impair all of the goodwill assigned to our SBU reporting unit based on our best estimates of projected future cash flows at that time. The 2023 quantitative assessment for all of our other reporting units yielded fair values that substantially exceeded their carrying values.
Income Taxes
Our income tax (provision) benefit consisted of the following:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Income (loss) before income taxes and equity in net income (loss) of equity method investees | |||||||||||
| U.S. | $ | 544 | $ | 235 | $ | 112 | |||||
| Foreign | 696 | (5,893) | 9,459 | ||||||||
| $ | 1,240 | $ | (5,658) | $ | 9,571 | ||||||
| Income tax (provision) benefit | |||||||||||
| Current | |||||||||||
| U.S. federal | $ | (82) | $ | (5) | $ | (65) | |||||
| State | (1) | (1) | (1) | ||||||||
| Foreign | (333) | (178) | (528) | ||||||||
| (416) | (184) | (594) | |||||||||
| Deferred | |||||||||||
| U.S. federal | 18 | (84) | (166) | ||||||||
| State | — | — | (225) | ||||||||
| Foreign | (53) | 91 | 97 | ||||||||
| (35) | 7 | (294) | |||||||||
| Income tax (provision) benefit | $ | (451) | $ | (177) | $ | (888) |
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The table below reconciles our tax (provision) benefit based on the U.S. federal statutory rate to our effective rate:
| For the year ended | 2024 | 2023 | 2022 | |||||||||||||||||
| U.S. federal income tax (provision) benefit at statutory rate | $ | (260) | 21.0 | % | $ | 1,188 | 21.0 | % | $ | (2,010) | 21.0 | % | ||||||||
| U.S. tax on foreign operations | (7) | 0.6 | 6 | 0.1 | (322) | 3.4 | ||||||||||||||
| Change in valuation allowance | (59) | 4.8 | (50) | (0.9) | (241) | 2.5 | ||||||||||||||
| Change in unrecognized tax benefits | (41) | 3.3 | (30) | (0.5) | (67) | 0.7 | ||||||||||||||
| Foreign tax rate differential | (214) | 17.2 | (1,285) | (22.8) | 1,601 | (16.7) | ||||||||||||||
| Research and development tax credits | 76 | (6.1) | 43 | 0.8 | 66 | (0.7) | ||||||||||||||
| State taxes, net of federal benefit | 12 | (1.0) | 37 | 0.7 | — | — | ||||||||||||||
| Other | 42 | (3.4) | (86) | (1.5) | 85 | (0.9) | ||||||||||||||
| Income tax (provision) benefit | $ | (451) | 36.4 | % | $ | (177) | (3.1) | % | $ | (888) | 9.3 | % |
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. 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. As a result of low level of profitability and geographic mix of income, the benefit from tax incentive arrangements was not material for 2024 or 2023. These arrangements reduced our tax provision by $1.12 billion ($1.00 per diluted share) for 2022.
As of August 29, 2024, certain non-U.S. subsidiaries had cumulative undistributed earnings of $4.12 billion that were deemed to be indefinitely reinvested. A provision has not been recognized to the extent that distributions from such subsidiaries are subject to additional foreign withholding or state income tax. Determination of the amount of unrecognized deferred tax liabilities related to investments in these foreign subsidiaries is not practicable.
85 | 2024 10-K
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. Deferred tax assets and liabilities consist of the following:
| As of | August 29, 2024 | August 31, 2023 | ||||||
| Deferred tax assets | ||||||||
| Net operating loss and tax credit carryforwards | $ | 1,050 | $ | 1,112 | ||||
| Accrued salaries, wages, and benefits | 182 | 39 | ||||||
| Operating lease liabilities | 175 | 135 | ||||||
| Inventories | 4 | 52 | ||||||
| Other | 59 | 75 | ||||||
| Gross deferred tax assets | 1,470 | 1,413 | ||||||
| Less valuation allowance | (593) | (528) | ||||||
| Deferred tax assets, net of valuation allowance | 877 | 885 | ||||||
| Deferred tax liabilities | ||||||||
| Right-of-use assets | (152) | (115) | ||||||
| Property, plant, and equipment | (194) | (31) | ||||||
| Other | (70) | (100) | ||||||
| Deferred tax liabilities | (416) | (246) | ||||||
| Net deferred tax assets | $ | 461 | $ | 639 | ||||
| Reported as | ||||||||
| Deferred tax assets | $ | 520 | $ | 756 | ||||
| Deferred tax liabilities (included in other noncurrent liabilities) | (59) | (117) | ||||||
| Net deferred tax assets | $ | 461 | $ | 639 |
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 August 29, 2024, and August 31, 2023, we had a valuation allowance of $593 million and $528 million, respectively, against our net deferred tax assets, primarily related to carryforwards in U.S. states and Malaysia. Changes in 2024 in the valuation allowance were due to adjustments based on management's assessment of the realizability of tax credits, allowances and net operating losses based on a level that is more likely than not to be realized.
As of August 29, 2024, our net operating loss carryforward amounts and expiration periods, as reported to tax authorities, were as follows:
| Year of Expiration | Malaysia | Singapore | State | Japan | Other | Total | ||||||||||||||
| 2025 - 2029 | $ | — | $ | — | $ | 47 | $ | 144 | $ | 3 | $ | 194 | ||||||||
| 2030 - 2034 | — | — | 298 | 325 | 126 | 749 | ||||||||||||||
| 2035 - 2039 | — | — | 285 | — | — | 285 | ||||||||||||||
| 2040 - 2044 | — | — | 94 | — | — | 94 | ||||||||||||||
| Indefinite | 1,224 | 765 | — | — | — | 1,989 | ||||||||||||||
| $ | 1,224 | $ | 765 | $ | 724 | $ | 469 | $ | 129 | $ | 3,311 |
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As of August 29, 2024, our tax credit carryforward amounts and expiration periods, as reported to tax authorities, were as follows:
| Year of Tax Credit Expiration | U.S. Federal | State | Other | Total | ||||||||||
| 2025 - 2029 | $ | — | $ | 61 | $ | — | $ | 61 | ||||||
| 2030 - 2034 | 47 | 134 | 2 | 183 | ||||||||||
| 2035 - 2039 | 48 | 140 | 44 | 232 | ||||||||||
| 2040 - 2045 | 315 | 6 | — | 321 | ||||||||||
| Indefinite | — | 145 | — | 145 | ||||||||||
| $ | 410 | $ | 486 | $ | 46 | $ | 942 |
Below is a reconciliation of the beginning and ending amount of our unrecognized tax benefits:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Beginning unrecognized tax benefits | $ | 744 | $ | 731 | $ | 660 | |||||
| Increases related to tax positions from prior years | 2 | 2 | 14 | ||||||||
| Increases related to prior year tax positions taken in current year | 20 | 27 | — | ||||||||
| Increases related to tax positions taken in current year | 54 | 17 | 80 | ||||||||
| Decreases related to tax positions from prior years | (89) | (33) | (23) | ||||||||
| Decreases related to settlement with tax authorities | (15) | — | — | ||||||||
| Ending unrecognized tax benefits | $ | 716 | $ | 744 | $ | 731 |
As of August 29, 2024, gross unrecognized tax benefits were $716 million, which would have an impact of approximately $633 million on our effective tax rate in the future, if recognized. 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 significant.
We and our subsidiaries file income tax returns with the U.S. federal government, various U.S. states, and various foreign jurisdictions throughout the world. We regularly engage in discussions and negotiations with tax authorities regarding tax matters, including transfer pricing, and we continue to defend any and all such claims presented. Our U.S. federal and state tax returns remain open to examination for 2018 through 2024. 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 2016 to 2024. 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.
Earnings Per Share
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Net income (loss) – Basic and Diluted | $ | 778 | $ | (5,833) | $ | 8,687 | |||||
| Weighted-average common shares outstanding – Basic | 1,105 | 1,093 | 1,112 | ||||||||
| Dilutive effect of equity compensation plans | 13 | — | 10 | ||||||||
| Weighted-average common shares outstanding – Diluted | 1,118 | 1,093 | 1,122 | ||||||||
| Earnings (loss) per share | |||||||||||
| Basic | $ | 0.70 | $ | (5.34) | $ | 7.81 | |||||
| Diluted | 0.70 | (5.34) | 7.75 |
87 | 2024 10-K
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 | 2024 | 2023 | 2022 | ||||||||
| Equity compensation plans | 3 | 33 | 5 |
Segment and Other Information
Segment information reported herein is consistent with how it is reviewed and evaluated by our chief operating decision maker. We have the following four business units, which are our reportable segments:
Compute and Networking Business Unit (“CNBU”)****: Includes memory products and solutions sold into the data center, PC, graphics, and networking markets.
Mobile Business Unit (“MBU”)****: Includes memory and storage products sold into the smartphone and other mobile-device markets.
Embedded Business Unit (“EBU”)****: Includes memory and storage products and solutions sold into the intelligent edge through the automotive, industrial, and consumer embedded markets.
Storage Business Unit (“SBU”)****: Includes SSDs and component-level storage solutions sold into the data center, PC, and consumer markets.
Certain operating expenses directly associated with the activities of a specific segment are charged to that segment. Other indirect operating income and expenses are generally allocated to segments based on their respective percentage of cost of goods sold or forecasted wafer production. 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 August 29, 2024 and August 31, 2023, CNBU, MBU, and EBU had goodwill of $855 million, $198 million, and $97 million, respectively.
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| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Revenue | |||||||||||
| CNBU | $ | 9,513 | $ | 5,710 | $ | 13,693 | |||||
| MBU | 6,354 | 3,630 | 7,260 | ||||||||
| EBU | 4,614 | 3,637 | 5,235 | ||||||||
| SBU | 4,592 | 2,553 | 4,553 | ||||||||
| All Other | 38 | 10 | 17 | ||||||||
| Total revenue | $ | 25,111 | $ | 15,540 | $ | 30,758 | |||||
| Operating income (loss) | |||||||||||
| CNBU | $ | 980 | $ | (585) | $ | 5,844 | |||||
| MBU | 114 | (1,750) | 2,160 | ||||||||
| EBU | 199 | 382 | 1,752 | ||||||||
| SBU | (362) | (1,887) | 513 | ||||||||
| All Other | 17 | 8 | 12 | ||||||||
| 948 | (3,832) | 10,281 | |||||||||
| Unallocated | |||||||||||
| Lower costs from sale of inventory written down in prior periods | 987 | 844 | — | ||||||||
| Patent cross-license agreement | 200 | — | — | ||||||||
| Stock-based compensation | (821) | (564) | (501) | ||||||||
| Restructure and asset impairment | (1) | (171) | (48) | ||||||||
| Provision to write down inventories to net realizable value | — | (1,831) | — | ||||||||
| Goodwill impairment | — | (101) | — | ||||||||
| Litigation settlement | — | (68) | — | ||||||||
| Other | (9) | (22) | (30) | ||||||||
| 356 | (1,913) | (579) | |||||||||
| Total operating income (loss) | $ | 1,304 | $ | (5,745) | $ | 9,702 |
Depreciation and amortization expense included in operating income (loss) was as follows:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| CNBU | $ | 2,760 | $ | 2,512 | $ | 2,766 | |||||
| MBU | 2,002 | 2,149 | 1,725 | ||||||||
| EBU | 1,491 | 1,324 | 1,280 | ||||||||
| SBU | 1,501 | 1,751 | 1,323 | ||||||||
| All Other | 8 | 1 | 2 | ||||||||
| Unallocated | 18 | 19 | 20 | ||||||||
| $ | 7,780 | $ | 7,756 | $ | 7,116 |
89 | 2024 10-K
Certain Concentrations
Revenue by market segment as a percent of total revenue, rounded to the nearest 5%, is presented in the table below:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| Data center and networking | 35 | % | 25 | % | 35 | % | |||||
| Mobile | 25 | % | 25 | % | 25 | % | |||||
| PC, graphics, and other | 25 | % | 30 | % | 25 | % | |||||
| Intelligent edge – automotive, industrial, and consumer embedded | 20 | % | 25 | % | 15 | % |
Percentages of total revenue may not total 100% due to rounding.
Revenue from one customer was 10% (primarily included in MBU, EBU, and CNBU segments) of total revenue for 2024. No customer accounted for 10% or more of total revenue in 2023. Revenue from one customer was 12% (primarily included in CNBU and SBU segments) and another customer was 11% (primarily included in MBU, CNBU, and EBU segments) of total revenue in 2022.
We generally have multiple sources of supply for our raw materials and production equipment; however, only a limited number of suppliers are capable of delivering certain raw materials and production equipment that meet our standards and, in some cases, materials or production equipment are provided by a single supplier.
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, money market accounts, certificates of deposit, fixed-rate debt securities, trade receivables, share repurchase, and derivative contracts. We invest through high-credit-quality financial institutions and, by policy, generally limit the concentration of credit exposure by restricting investments with any single obligor and monitor credit risk of bank counterparties on an ongoing basis. A concentration of credit risk may exist with respect to receivables of certain customers. We perform ongoing credit evaluations of customers worldwide and generally do not require collateral from our customers. Historically, we have not experienced material losses on receivables. A concentration of risk may also exist with respect to our derivative hedging programs as the number of counterparties to our hedges is limited and the notional amounts are relatively large. We seek to mitigate such risk by limiting our counterparties to major financial institutions and through entering into master netting arrangements.
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Geographic Information
Revenue based on the geographic location of our customers’ headquarters was as follows:
| For the year ended | 2024 | 2023 | 2022 | ||||||||
| United States | $ | 13,168 | $ | 7,805 | $ | 16,026 | |||||
| Taiwan | 4,708 | 2,697 | 6,185 | ||||||||
| Mainland China (excluding Hong Kong) | 3,045 | 2,181 | 3,311 | ||||||||
| Other Asia Pacific | 1,330 | 752 | 1,223 | ||||||||
| Hong Kong | 1,071 | 340 | 1,665 | ||||||||
| Japan | 840 | 987 | 1,696 | ||||||||
| Europe | 818 | 682 | 505 | ||||||||
| Other | 131 | 96 | 147 | ||||||||
| $ | 25,111 | $ | 15,540 | $ | 30,758 |
Long-lived assets by geographic area consisted of property, plant, and equipment and operating lease right-of-use assets and were as follows:
| As of | August 29, 2024 | August 31, 2023 | ||||||
| Taiwan | $ | 14,156 | $ | 12,926 | ||||
| Singapore | 10,588 | 11,283 | ||||||
| Japan | 7,085 | 7,323 | ||||||
| United States | 6,508 | 5,196 | ||||||
| Malaysia | 1,153 | 1,124 | ||||||
| China | 486 | 395 | ||||||
| India | 338 | 277 | ||||||
| Other | 80 | 70 | ||||||
| $ | 40,394 | $ | 38,594 |
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Micron Technology, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Micron Technology, Inc. and its subsidiaries (the “Company”) as of August 29, 2024 and August 31, 2023, and the related consolidated statements of operations, of comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended August 29, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended August 29, 2024 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 August 29, 2024, 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 August 29, 2024 and August 31, 2023**,** and the results of its operations and its cash flows for each of the three years in the period ended August 29, 2024 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 August 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
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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 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; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
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.
Net Realizable Value of Finished Goods and Work in Process Inventories
As described in the Inventories note to the consolidated financial statements, as of August 29, 2024, the Company had a net inventory balance for finished goods and work in process inventory totaling $8.1 billion. As disclosed by management, determining the net realizable value of the Company's finished goods and work in process inventories involves significant judgments, including projecting future average selling prices, future sales volumes, and future cost per part. Differences in future average selling prices used in calculating lower of cost or net realizable value adjustments can result in significant changes in the estimated net realizable value of finished goods and work in process inventories and accordingly the amount of write-down recorded.
The principal considerations for our determination that performing procedures relating to the net realizable value of finished goods and work in process inventories is a critical audit matter are (i) the significant judgment by management in determining the net realizable value of finished goods and work in process inventories and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumption related to future average selling prices.
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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 determination of the net realizable value of finished goods and work in process inventories. These procedures also included, among others (i) testing management's process for determining the net realizable value of finished goods and work in process inventories; (ii) evaluating the appropriateness of management’s methodology; (iii) testing the completeness and accuracy of underlying data used in determining the net realizable value; and (iv) evaluating the reasonableness of management's significant assumption related to future average selling prices. Evaluating management's assumption related to future average selling prices involved considering (i) current and past sales (ii) the consistency with external market and industry data; (iii) a comparison of the prior year estimates to actual average selling prices in the current fiscal year; and (iv) whether the assumption was consistent with evidence obtained in other areas of the audit.
/s/ PricewaterhouseCoopers LLP
San Jose, California
October 4, 2024
We have served as the Company’s auditor since 1984.
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