Item 1. FINANCIAL STATEMENTS

89K characters. Original on sec.gov · Markdown

Item 1. FINANCIAL STATEMENTS

Micron Technology, Inc.

Consolidated Statements of Operations

(In millions, except per share amounts)

(Unaudited)


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Revenue	$	3,752	$	8,642	$	11,530	$	24,115
Cost of goods sold	4,420		4,607		12,511		12,839
Gross margin	(668)		4,035		(981)		11,276

Research and development	758		773		2,395		2,277
Selling, general, and administrative	219		264		701		786
Restructure and asset impairments	68		—		167		43
Other operating (income) expense, net	48		(6)		29		(11)
Operating income (loss)	(1,761)		3,004		(4,273)		8,181

Interest income	127		20		334		42
Interest expense	(119)		(44)		(259)		(144)
Other non-operating income (expense), net	—		8		(2)		(61)
	(1,753)		2,988		(4,200)		8,018

Income tax (provision) benefit	(139)		(358)		(201)		(832)
Equity in net income (loss) of equity method investees	(4)		(4)		(2)		9
Net income (loss)	$	(1,896)	$	2,626	$	(4,403)	$	7,195

Earnings (loss) per share
Basic	$	(1.73)	$	2.36	$	(4.03)	$	6.44
Diluted	(1.73)		2.34		(4.03)		6.38

Number of shares used in per share calculations
Basic	1,094		1,112		1,092		1,117
Diluted	1,094		1,121		1,092		1,127

See accompanying notes to consolidated financial statements.

Table of Contents

Micron Technology, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Net income (loss)	$	(1,896)	$	2,626	$	(4,403)	$	7,195

Other comprehensive income (loss), net of tax
Gains (losses) on derivative instruments	22		(210)		222		(330)
Gains (losses) on investments	12		(18)		—		(38)
Foreign currency translation adjustments	1		—		(1)		1
Pension liability adjustments	(2)		2		(1)		1
Other comprehensive income (loss)	33		(226)		220		(366)
Total comprehensive income (loss)	$	(1,863)	$	2,400	$	(4,183)	$	6,829

See accompanying notes to consolidated financial statements.

6 | 2023 Q3 10-Q

Table of Contents

Micron Technology, Inc.

Consolidated Balance Sheets

(In millions, except par value amounts)

(Unaudited)


As of	June 1, 2023		September 1, 2022

Assets
Cash and equivalents	$	9,298	$	8,262
Short-term investments	1,054		1,069
Receivables	2,429		5,130
Inventories	8,238		6,663
Other current assets	715		657
Total current assets	21,734		21,781
Long-term marketable investments	973		1,647
Property, plant, and equipment	38,727		38,549
Operating lease right-of-use assets	655		678
Intangible assets	410		421
Deferred tax assets	708		702
Goodwill	1,252		1,228
Other noncurrent assets	1,221		1,277
Total assets	$	65,680	$	66,283

Liabilities and equity
Accounts payable and accrued expenses	$	4,177	$	6,090
Current debt	259		103
Other current liabilities	668		1,346
Total current liabilities	5,104		7,539
Long-term debt	12,986		6,803
Noncurrent operating lease liabilities	603		610
Noncurrent unearned government incentives	632		589
Other noncurrent liabilities	950		835
Total liabilities	20,275		16,376

Commitments and contingencies

Shareholders’ equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,236 shares issued and 1,095 outstanding (1,226 shares issued and 1,094 outstanding as of September 1, 2022)	124		123
Additional capital	10,782		10,197
Retained earnings	42,391		47,274
Treasury stock, 141 shares held (132 shares as of September 1, 2022)	(7,552)		(7,127)
Accumulated other comprehensive income (loss)	(340)		(560)
Total equity	45,405		49,907
Total liabilities and equity	$	65,680	$	66,283

See accompanying notes to consolidated financial statements.

Table of Contents

Micron Technology, Inc.

Consolidated Statements of Changes in Equity

(In millions, except per share amounts)

(Unaudited)


	Common Stock			Additional Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Number of Shares	Amount

Balance at September 1, 2022	1,226	$	123	$	10,197	$	47,274	$	(7,127)	$	(560)	$	49,907
Net income (loss)	—	—		—		(195)		—		—		(195)
Other comprehensive income (loss), net	—	—		—		—		—		87		87
Stock issued under stock plans	8	—		7		—		—		—		7
Stock-based compensation expense	—	—		146		—		—		—		146
Repurchase of stock - repurchase program	—	—		—		—		(425)		—		(425)
Repurchase of stock - withholdings on employee equity awards	(2)	—		(15)		(80)		—		—		(95)
Dividends and dividend equivalents declared ($0.115 per share)	—	—		—		(126)		—		—		(126)
Balance at December 1, 2022	1,232	$	123	$	10,335	$	46,873	$	(7,552)	$	(473)	$	49,306
Net income (loss)	—	—		—		(2,312)		—		—		(2,312)
Other comprehensive income (loss), net	—	—		—		—		—		100		100
Stock issued under stock plans	3	—		142		—		—		—		142
Stock-based compensation expense	—	—		157		—		—		—		157
Repurchase of stock - withholdings on employee equity awards	—	—		(1)		(7)		—		—		(8)
Dividends and dividend equivalents declared ($0.115 per share)	—	—		—		(128)		—		—		(128)
Balance at March 2, 2023	1,235	$	123	$	10,633	$	44,426	$	(7,552)	$	(373)	$	47,257
Net income (loss)	—	—		—		(1,896)		—		—		(1,896)
Other comprehensive income (loss), net	—	—		—		—		—		33		33
Stock issued under stock plans	1	1		6		—		—		—		7
Stock-based compensation expense	—	—		145		—		—		—		145
Repurchase of stock - withholdings on employee equity awards	—	—		(2)		(11)		—		—		(13)
Dividends and dividend equivalents declared ($0.115 per share)	—	—		—		(128)		—		—		(128)
Balance at June 1, 2023	1,236	$	124	$	10,782	$	42,391	$	(7,552)	$	(340)	$	45,405

See accompanying notes to consolidated financial statements.

8 | 2023 Q3 10-Q

Table of Contents

Micron Technology, Inc.

Consolidated Statements of Changes in Equity

(In millions, except per share amounts)

(Unaudited)


	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)	—	—		—		2,306		—		—		2,306
Other comprehensive income (loss), net	—	—		—		—		—		(93)		(93)
Stock issued under stock plans	5	—		5		—		—		—		5
Stock-based compensation expense	—	—		118		—		—		—		118
Repurchase of stock - repurchase program	—	—		—		—		(259)		—		(259)
Repurchase of stock - withholdings on employee equity awards	(1)	—		(12)		(90)		—		—		(102)
Balance at December 2, 2021	1,220	$	122	$	9,564	$	41,267	$	(4,954)	$	(91)	$	45,908
Net income (loss)	—	—		—		2,263		—		—		2,263
Other comprehensive income (loss), net	—	—		—		—		—		(47)		(47)
Stock issued under stock plans	4	—		124		—		—		—		124
Stock-based compensation expense	—	—		129		—		—		—		129
Repurchase of stock - repurchase program	—	—		—		—		(408)		—		(408)
Repurchase of stock - withholdings on employee equity awards	(1)	—		(1)		(10)		—		—		(11)
Dividends and dividend equivalents declared ($0.10 per share)	—	—		—		(113)		—		—		(113)
Balance at March 3, 2022	1,223	$	122	$	9,816	$	43,407	$	(5,362)	$	(138)	$	47,845
Net income (loss)	—	—		—		2,626		—		—		2,626
Other comprehensive income (loss), net	—	—		—		—		—		(226)		(226)
Stock issued under stock plans	—	—		3		—		—		—		3
Stock-based compensation expense	—	—		131		—		—		—		131
Repurchase of stock - repurchase program	—	—		—		—		(981)		—		(981)
Repurchase of stock - withholdings on employee equity awards	—	—		—		(5)		—		—		(5)
Dividends and dividend equivalents declared ($0.10 per share)	—	—		—		(112)		—		—		(112)
Balance at June 2, 2022	1,223	$	122	$	9,950	$	45,916	$	(6,343)	$	(364)	$	49,281

See accompanying notes to consolidated financial statements.

Table of Contents

Micron Technology, Inc.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


Nine months ended	June 1, 2023		June 2, 2022

Cash flows from operating activities
Net income (loss)	$	(4,403)	$	7,195
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense and amortization of intangible assets	5,819		5,234
Provision to write down inventories to net realizable value	1,831		—
Stock-based compensation	448		378
(Gain) loss on debt repurchases	—		83

Change in operating assets and liabilities:
Receivables	2,728		(906)
Inventories	(3,406)		(1,146)
Accounts payable and accrued expenses	(1,764)		382
Other	57		184
Net cash provided by operating activities	1,310		11,404

Cash flows from investing activities
Expenditures for property, plant, and equipment	(6,215)		(8,454)
Purchases of available-for-sale securities	(496)		(1,359)
Proceeds from maturities of available-for-sale securities	1,170		964
Proceeds from government incentives	248		104
Proceeds from sales of available-for-sale securities	22		258
Proceeds from sale of Lehi, Utah fab	—		888
Other	(90)		(162)
Net cash provided by (used for) investing activities	(5,361)		(7,761)

Cash flows from financing activities
Proceeds from issuance of debt	6,716		2,000
Repayments of debt	(706)		(2,008)
Repurchases of common stock - repurchase program	(425)		(1,648)
Payments of dividends to shareholders	(378)		(335)
Payments on equipment purchase contracts	(112)		(132)
Other	—		(17)
Net cash provided by (used for) financing activities	5,095		(2,140)

Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash	(13)		(71)

Net increase (decrease) in cash, cash equivalents, and restricted cash	1,031		1,432
Cash, cash equivalents, and restricted cash at beginning of period	8,339		7,829
Cash, cash equivalents, and restricted cash at end of period	$	9,370	$	9,261

See accompanying notes to consolidated financial statements.

10 | 2023 Q3 10-Q

Table of Contents

Micron Technology, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(All tabular amounts in millions, except per share amounts)

(Unaudited)

Significant Accounting Policies

For a discussion of our significant accounting policies, see “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended September 1, 2022. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended September 1, 2022.

Basis of Presentation

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 (“U.S. GAAP”) consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended September 1, 2022.

In the opinion of our management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, consisting of a normal recurring nature, to fairly state the financial information set forth herein. Certain reclassifications have been made to prior period amounts to conform to current period presentation.

Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal years 2023 and 2022 each contain 52 weeks. All period references are to our fiscal periods unless otherwise indicated. These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended September 1, 2022.

Table of Contents

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:


	June 1, 2023								September 1, 2022
As of	Cash and Equivalents		Short-term Investments		Long-term Marketable Investments(1)		Total Fair Value		Cash and Equivalents		Short-term Investments		Long-term Marketable Investments(1)		Total Fair Value

Cash	$	6,834	$	—	$	—	$	6,834	$	6,055	$	—	$	—	$	6,055
Level 1(2)
Money market funds	1,132		—		—		1,132		1,196		—		—		1,196
Level 2(3)
Certificates of deposit	1,326		50		—		1,376		976		50		—		1,026
Corporate bonds	1		776		507		1,284		—		759		995		1,754
Asset-backed securities	—		17		435		452		—		20		608		628
Government securities	5		111		31		147		2		155		44		201
Commercial paper	—		100		—		100		33		85		—		118
	9,298		$	1,054	$	973	$	11,325	8,262		$	1,069	$	1,647	$	10,978
Restricted cash(4)	72								77
Cash, cash equivalents, and restricted cash	$	9,370							$	8,339

*(1)*The maturities of long-term marketable securities primarily range from one to four years.

(2)The fair value of Level 1 securities is measured based on quoted prices in active markets for identical assets.

*(3)*The fair value of Level 2 securities is measured using information obtained from pricing services, which obtain quoted market prices for similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine the appropriate value at the measurement date. We perform supplemental analysis to validate information obtained from these pricing services. No adjustments were made to the fair values indicated by such pricing information as of June 1, 2023 or September 1, 2022.

*(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 $217 million and $222 million of non-marketable equity investments without a readily determinable fair value that were included in other noncurrent assets as of June 1, 2023 and September 1, 2022, respectively.

12 | 2023 Q3 10-Q

Table of Contents

Receivables


As of	June 1, 2023		September 1, 2022

Trade receivables	$	2,042	$	4,765
Income and other taxes	244		251
Other	143		114
	$	2,429	$	5,130

Inventories


As of	June 1, 2023		September 1, 2022

Finished goods	$	1,775	$	1,028
Work in process	5,722		4,830
Raw materials and supplies	741		805
	$	8,238	$	6,663

The third quarter and first nine months of 2023, included charges of $401 million and $1.83 billion, respectively, 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	June 1, 2023		September 1, 2022

Land	$	279	$	280
Buildings	17,622		16,676
Equipment(1)	65,175		61,354
Construction in progress(2)	2,398		1,897
Software	1,251		1,124
	86,725		81,331
Accumulated depreciation	(47,998)		(42,782)
	$	38,727	$	38,549

*(1)*Includes costs related to equipment not placed into service of $3.33 billion as of June 1, 2023 and $3.35 billion as of September 1, 2022.

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

Table of Contents

Intangible Assets


	June 1, 2023						September 1, 2022
As of	Gross Amount		Accumulated Amortization		Net Carrying Amount		Gross Amount		Accumulated Amortization		Net Carrying Amount

Product and process technology	$	622	$	(212)	$	410	$	742	$	(321)	$	421

In the first nine months of 2023 and 2022, we capitalized $72 million and $130 million, respectively, for product and process technology with weighted-average useful lives of 9 years. Amortization expense was $66 million and $63 million for the first nine months of 2023 and 2022, respectively. Expected amortization expense is $19 million for the remainder of 2023, $72 million for 2024, $50 million for 2025, $46 million for 2026, and $42 million for 2027.

Leases

The components of lease cost are presented below:


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Finance lease cost
Amortization of right-of-use assets	$	28	$	23	$	77	$	75
Interest on lease liabilities	6		6		18		18
Operating lease cost(1)	34		32		101		91
	$	68	$	61	$	196	$	184

*(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:


Nine months ended	June 1, 2023		June 2, 2022

Cash flows used for operating activities
Finance leases	$	17	$	18
Operating leases	91		81
Cash flows used for financing activities – Finance leases	79		79
Noncash acquisitions of right-of-use assets
Finance leases	354		304
Operating leases	35		190

14 | 2023 Q3 10-Q

Table of Contents

Supplemental balance sheet information related to leases was as follows:


As of	June 1, 2023			September 1, 2022

Finance lease right-of-use assets (included in property, plant, and equipment)	$	1,187		$	904
Current operating lease liabilities (included in accounts payable and accrued expenses)	62			60

Weighted-average remaining lease term (in years)
Finance leases	10			12
Operating leases	11			12
Weighted-average discount rate
Finance leases	3.48		%	2.65		%
Operating leases	3.11		%	2.90		%

As of June 1, 2023, maturities of lease liabilities by fiscal year were as follows:


For the year ending	Finance Leases		Operating Leases

Remainder of 2023	$	49	$	3
2024	184		73
2025	169		73
2026	159		72
2027	154		72
2028 and thereafter	641		524
Less imputed interest	(185)		(152)
	$	1,171	$	665

The table above excludes obligations for leases that have been executed but have not yet commenced. As of June 1, 2023, excluded obligations consisted of $175 million of estimated finance lease payments over a weighted-average period of 11 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.

Accounts Payable and Accrued Expenses


As of	June 1, 2023		September 1, 2022

Accounts payable	$	1,640	$	2,142
Property, plant, and equipment	1,523		2,170
Salaries, wages, and benefits	412		877
Income and other taxes	148		420
Other	454		481
	$	4,177	$	6,090

Table of Contents

Debt


	June 1, 2023										September 1, 2022
					Net Carrying Amount						Net Carrying Amount
As of	Stated Rate		Effective Rate		Current		Long-Term		Total		Current		Long-Term		Total

2024 Term Loan A	5.860	%	5.90	%	$	—	$	587	$	587	$	—	$	1,187	$	1,187
2025 Term Loan A	6.503	%	6.64	%	—		1,050		1,050		—		—		—
2026 Term Loan A	6.628	%	6.76	%	49		933		982		—		—		—
2027 Term Loan A	6.753	%	6.89	%	57		1,078		1,135		—		—		—
2026 Notes	4.975	%	5.07	%	—		499		499		—		498		498
2027 Notes(1)	4.185	%	4.27	%	—		796		796		—		806		806
2028 Notes	5.375	%	5.52	%	—		596		596		—		—		—
2029 A Notes	5.327	%	5.40	%	—		697		697		—		697		697
2029 B Notes	6.750	%	6.54	%	—		1,263		1,263		—		—		—
2030 Notes	4.663	%	4.73	%	—		846		846		—		846		846
2032 Green Bonds	2.703	%	2.77	%	—		995		995		—		994		994
2033 A Notes	5.875	%	5.96	%	—		745		745		—		—		—
2033 B Notes	5.875	%	6.01	%	—		890		890		—		—		—
2041 Notes	3.366	%	3.41	%	—		497		497		—		496		496
2051 Notes	3.477	%	3.52	%	—		496		496		—		496		496
Finance lease obligations	N/A		3.48	%	153		1,018		1,171		103		783		886
					$	259	$	12,986	$	13,245	$	103	$	6,803	$	6,906

(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.

Debt Activity

The table below presents the effects of debt financing and prepayment activities in the first nine months of 2023.


	Increase (Decrease) in Principal		Increase (Decrease) in Carrying Value		Increase (Decrease) in Cash

Issuances
2025 Term Loan A	$	1,052	$	1,050	$	1,050
2026 Term Loan A	996		994		994
2027 Term Loan A	1,152		1,149		1,149
2028 Notes	600		596		596
2029 B Notes	1,250		1,264		1,264
2033 A Notes	750		745		745
2033 B Notes	900		890		890
Prepayments
2024 Term Loan A	(600)		(600)		(600)
	$	6,100	$	6,088	$	6,088

16 | 2023 Q3 10-Q

Table of Contents

Term Loan Agreement

On November 3, 2022, we entered into a term loan agreement consisting of three tranches and borrowed $2.60 billion in aggregate principal amount, including $927 million due November 3, 2025; $746 million due November 3, 2026; and $927 million due November 3, 2027 (the “Term Loan Agreement”). We incurred aggregate fees of $6 million in connection with these borrowings.

On January 5, 2023, we amended the Term Loan Agreement and borrowed an additional $600 million in aggregate principal amount, including $125 million due November 3, 2025, $250 million due November 3, 2026, and $225 million due November 3, 2027. The additional borrowings have terms that are identical to, and will be treated as a single class with, the three original tranches.

The 2026 Term Loan A and 2027 Term Loan A each require equal quarterly installment payments in an amount equal to 1.25% of the original principal amount. The 2025 Term Loan A does not require quarterly installment payments. Borrowings under the 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 Term Loan Agreement is the SOFR benchmark plus 0.10%. The Term Loan Agreement requires us to maintain, on a consolidated basis, a leverage ratio of total indebtedness to adjusted EBITDA, as defined in the Term Loan Agreement and calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00, except as described below.

On March 27, 2023, we further amended the Term Loan Agreement to provide that in lieu of the foregoing leverage ratio, during the fourth quarter of 2023 and each quarter of 2024, we will be required to maintain, on a consolidated basis, a net leverage ratio of total net indebtedness to adjusted EBITDA, as defined in the Term Loan Agreement and calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00, or alternatively, for up to three of such five quarters, we may elect to comply with a requirement of minimum liquidity, as defined in the Term Loan Agreement, of not less than $5.0 billion. Each of the leverage ratio and net leverage ratio maximums, as applicable, is subject to a temporary four quarter increase in such ratio to 3.75 to 1.00 following certain material acquisitions. Our obligations under the Term Loan Agreement are unsecured.

2024 Term Loan A

On March 27, 2023, we also amended the agreement governing the 2024 Term Loan A to align the leverage ratio covenant with the corresponding covenant in the Term Loan Agreement described above.

On April 13, 2023, we used a portion of the proceeds from our April 11, 2023 issuance of senior unsecured notes to prepay $600 million principal amount of our 2024 Term Loan A.

On June 7, 2023, the 2024 Term Loan A agreement was amended, pursuant to its transition provisions, to replace LIBOR-based benchmark rates with SOFR-based benchmark rates effective July 1, 2023. After giving effect to this amendment, borrowings under the 2024 Term Loan A will generally bear interest at adjusted term SOFR plus an applicable interest rate margin ranging from 0.625% to 1.375% depending on our corporate credit ratings. Adjusted term SOFR for the 2024 Term Loan A is the SOFR benchmark plus a credit spread adjustment ranging from approximately 0.11% to 0.43% depending on the applicable interest period selected.

Table of Contents

Senior Unsecured Notes

On October 31, 2022, we issued $750 million principal amount of senior unsecured 2029 B Notes. The 2029 B Notes bear interest at a rate of 6.750% per year and will mature on November 1, 2029. Aggregate issuance costs and debt discount for these notes were $6 million.

On February 9, 2023, we issued an additional $500 million principal amount of 2029 B Notes at a $22 million premium. The additional notes have terms that are identical to the terms of the original 2029 B Notes other than the original offering price. Also on February 9, 2023, we issued $750 million principal amount of senior unsecured 2033 A Notes. The 2033 A Notes bear interest at a rate of 5.875% per year and will mature on February 9, 2033. Aggregate issuance costs for these notes were $7 million.

On April 11, 2023, we issued $600 million principal amount of senior unsecured 2028 Notes and $900 million principal amount of senior unsecured 2033 B Notes. The 2028 Notes bear interest at a rate of 5.375% per year and will mature on April 15, 2028. The 2033 B Notes bear interest at a rate of 5.875% per year and will mature on September 15, 2033. Aggregate issuance costs and debt discount for these notes were $14 million.

We may redeem the 2028 Notes, the 2029 B Notes, the 2033 A Notes, and the 2033 B Notes (the “Notes”), in whole or in part, at our option prior to their maturity dates at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the present value of the remaining scheduled payments of principal and interest, plus accrued interest in each case. We may also redeem the Notes, in whole or in part, at a price equal to par either one, two, or three months prior to maturity in accordance with the terms of the Notes.

The Notes contain 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 notes) 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 indenture governing the Notes, occurs with respect to a series of Notes, we will be required to offer to purchase such Notes at 101% of the outstanding aggregate principal amount plus accrued interest up to the purchase date.

Revolving Credit Facility

As of June 1, 2023, $2.50 billion was available to us under the Revolving Credit Facility and no amounts were outstanding. Any amounts outstanding under the Revolving Credit Facility would mature in May 2026 and amounts borrowed may be prepaid any time without penalty. Under the transition provisions of the Revolving Credit Facility agreement, after the retirement of LIBOR on June 30, 2023, any amounts drawn under the Revolving Credit Facility 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.

On March 27, 2023, we amended the agreement governing the Revolving Credit Facility to align the leverage ratio covenant with the corresponding covenants in the Term Loan Agreement and 2024 Term Loan A described above.

On June 7, 2023, the Revolving Credit Facility agreement was amended, pursuant to its transition provisions, to replace LIBOR-based benchmark rates with SOFR-based benchmark rates effective July 1, 2023.

18 | 2023 Q3 10-Q

Table of Contents

Maturities of Notes Payable

As of June 1, 2023, maturities of notes payable by fiscal year were as follows:


Remainder of 2023	$	27
2024	107
2025	695
2026	1,659
2027	1,780
2028 and thereafter	7,942
Unamortized issuance costs, discounts, and premium, net	(35)
Hedge accounting fair value adjustment	(101)
	$	12,074

Commitments

In the second quarter of 2023, we entered into an 18-year power purchase agreement in Singapore to purchase up to 450 megawatts of power at variable prices. This contract, which begins in the fourth quarter of 2023, is expected to supply the majority of our power consumption needs in Singapore with more favorable pricing than our existing supply arrangements.

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.

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

On March 21, 2018, MXA was served with a patent infringement complaint filed by United Microelectronics Corporation (“UMC”) in the Fuzhou Court. On April 3, 2018, MSS was served with the same complaint. The complaint alleges that MXA and MSS infringed one Chinese patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring MXA and MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 90 million Chinese yuan plus court fees incurred. On November 26, 2021, pursuant to a settlement agreement between UMC and Micron, UMC filed an application to the Fuzhou Court to withdraw its complaints against MXA and MSS.

Table of Contents

On April 3, 2018, MSS was served with another patent infringement complaint filed by Jinhua and an additional complaint filed by UMC in the Fuzhou Court. The additional complaints allege that MSS infringes two Chinese patents by manufacturing and selling certain Crucial MX300 SSDs. The complaint filed by UMC seeks an order requiring MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 90 million Chinese yuan plus court fees incurred. The complaint filed by Jinhua seeks an order requiring MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 98 million Chinese yuan plus court fees incurred. On November 26, 2021, pursuant to a settlement agreement between UMC and Micron, UMC filed an application to the Fuzhou Court to withdraw its complaint against MSS.

On July 5, 2018, MXA and MSS were notified that the Fuzhou Court granted a preliminary injunction against those entities that enjoins them from manufacturing, selling, or importing certain Crucial and Ballistix-branded DRAM modules and solid-state drives in China. We are complying with the ruling and have requested the Fuzhou Court to reconsider or stay its decision.

On May 4, 2020, Flash-Control, LLC (“Flash-Control”) filed a patent infringement action against Micron in the U.S. District Court for the Western District of Texas. The complaint alleges that four U.S. patents are infringed by unspecified DDR4 SDRAM, NVRDIMM, NVDIMM, 3D XPoint, and/or SSD products that incorporate memory controllers and flash memory. The complaint seeks damages, attorneys’ fees, and costs. On July 21, 2020, in a separate matter, the District Court ruled that two of the four asserted patents are invalid, and on July 14, 2021, the U.S. Court of Appeals for the Federal Circuit affirmed the ruling of invalidity. On May 10, 2023, Flash-Control voluntarily dismissed its complaint with prejudice.

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 10, 2021, Vervain, LLC filed a patent infringement action against Micron, MSP, and MTEC in the U.S. District Court for the Western District of Texas. The complaint alleges that four U.S. patents are infringed by certain SSD products. The complaint seeks injunctive relief, damages, attorneys’ fees, and costs. On April 21, 2023, the complaint was dismissed with prejudice pursuant to an agreement between the parties.

On August 16, 2022, Sonrai Memory Ltd. filed a patent infringement action against Micron in the U.S. District Court for the Western District of Texas. The complaint alleges that two U.S. patents are infringed by certain SSD and NAND flash products. The complaint seeks damages, attorneys’ fees, and costs.

On January 23, 2023, Besang Inc. filed a patent infringement complaint against Micron, MSP, and MTEC in the U.S. District Court for the Eastern District of Texas. 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.

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

20 | 2023 Q3 10-Q

Table of Contents

Qimonda

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

Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March 13, 2014, the court issued judgments: (1) ordering Micron B.V. to pay approximately $1 million in respect of certain Inotera Shares sold in connection with the original share purchase; (2) ordering Micron B.V. to disclose certain information with respect to any Inotera Shares sold by it to third parties; (3) ordering Micron B.V. to disclose the benefits derived by it from ownership of the Inotera Shares, including in particular, any profits distributed on the Inotera Shares and all other benefits; (4) denying Qimonda’s claims against Micron for any damages relating to the joint venture relationship with Inotera; and (5) determining that Qimonda’s obligations under the patent cross-license agreement are canceled. In addition, the court issued interlocutory judgments ordering, among other things: (1) that Micron B.V. transfer to the Qimonda estate the Inotera Shares still owned by Micron B.V. and pay to the Qimonda estate compensation in an amount to be specified for any Inotera Shares sold to third parties; and (2) that Micron B.V. pay the Qimonda estate as compensation an amount to be specified for benefits derived by Micron B.V. from ownership of the Inotera Shares. The interlocutory judgments had no immediate, enforceable effect and Micron, accordingly, has been able to continue to operate with full control of the Inotera Shares subject to further developments in the case. Micron and Micron B.V. appealed the judgments to the German Appeals Court, which thereafter appointed an independent expert to perform an evaluation of Dr. Jaffé’s claims that the amount Micron paid for Qimonda was less than fair market value. On March 31, 2020, the expert presented an opinion to the Appeals Court concluding that the amount paid by Micron was within an acceptable range of fair value. On October 5, 2022, the Appeals Court ruled that the relevant issue to be addressed is whether Qimonda's creditors were prejudiced such that the original transaction should be voided.

On May 9, 2023, Micron and Dr. Jaffé reached an agreement in principle to dismiss the case in exchange for a one-time payment by Micron to the Qimonda estate and a waiver of each party’s claims. The agreement is expected to be formally entered by the Appeals Court in July 2023.

Antitrust Matters

Six cases have been filed against Micron alleging price fixing of DRAM products in the following Canadian courts on the dates indicated: Superior Court of Quebec (April 30, 2018 and May 3, 2018), the Federal Court of Canada (May 2, 2018), the Ontario Superior Court of Justice (May 15, 2018), and the Supreme Court of British Columbia (May 10, 2018). The plaintiffs in these cases are individuals seeking certification of class actions on behalf of direct and indirect purchasers of DRAM in Canada (or regions of Canada) between June 1, 2016 and February 1, 2018.

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.

Table of Contents

Securities Matters

On February 9, 2021, a derivative complaint was filed by a shareholder against Sanjay Mehrotra and other current and former directors of Micron, allegedly on behalf of and for the benefit of Micron, in the U.S. District Court for the District of Delaware alleging violations of securities laws, breaches of fiduciary duties, and other violations of law involving allegedly false and misleading statements about Micron’s commitment to diversity and progress in diversifying its workforce, executive leadership, and Board of Directors. The complaint seeks damages, fees, interest, costs, and an order requiring Micron to take various actions to allegedly improve its corporate governance and internal procedures.

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.

Contingency Assessment

Except for the expected one-time payment to the Qimonda estate described above, which is not material, 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. No shares were repurchased in the second or third quarters of 2023. In the first quarter of 2023, we repurchased 8.6 million shares of our common stock for $425 million. Through June 1, 2023, we had repurchased an aggregate of $6.89 billion under the authorization. Amounts repurchased are included in treasury stock.

Dividends**:** We declared and paid dividends of $126 million ($0.115 per share) in each of the first three quarters of 2023. On June 28, 2023, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on July 25, 2023, to shareholders of record as of the close of business on July 10, 2023.

22 | 2023 Q3 10-Q

Table of Contents

Accumulated Other Comprehensive Income (Loss)****: Changes in accumulated other comprehensive income (loss) by component for the nine months ended June 1, 2023 were as follows:


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

As of September 1, 2022	$	(538)	$	(47)	$	25	$	—	$	(560)
Other comprehensive income (loss) before reclassifications	84		12		—		(1)		95
Amount reclassified out of accumulated other comprehensive income (loss)	199		1		(2)		—		198
Tax effects	(61)		(13)		1		—		(73)
Other comprehensive income (loss)	222		—		(1)		(1)		220
As of June 1, 2023	$	(316)	$	(47)	$	24	$	(1)	$	(340)

Fair Value Measurements

The estimated fair values and carrying values of our outstanding debt instruments were as follows:


	June 1, 2023				September 1, 2022
As of	Fair Value		Carrying Value		Fair Value		Carrying Value

Notes	$	11,628	$	12,074	$	5,472	$	6,020

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.

Table of Contents

Derivative Instruments


	Notional or Contractual Amount		Fair Value of
Assets(1)	Liabilities(2)

As of June 1, 2023
Derivative instruments with hedge accounting designation
Cash flow currency hedges	$	3,869	$	31	$	(122)
Cash flow commodity hedges	394		5		(4)
Fair value interest rate hedges	900		—		(101)

Derivative instruments without hedge accounting designation
Non-designated currency hedges	1,946		4		(19)
			$	40	$	(246)

As of September 1, 2022
Derivative instruments with hedge accounting designation
Cash flow currency hedges	$	5,427	$	—	$	(330)
Cash flow commodity hedges	97		1		(6)
Fair value interest rate hedges	900		—		(91)

Derivative instruments without hedge accounting designation
Non-designated currency hedges	2,821		7		(13)
			$	8	$	(440)

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

*(2)*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. Forward and swap contracts are measured at fair value based on market-based observable inputs including market spot and forward rates, interest rates, and credit-risk spreads (Level 2). We recognized losses from cash flow hedges of $40 million and gains of $88 million for the third quarter and first nine months of 2023, respectively, and losses of $299 million and $469 million for the third quarter and first nine months of 2022, respectively, in accumulated other comprehensive income (loss). We recognized losses related to amounts excluded from hedge effectiveness testing on our cash flow hedges of $26 million and $71 million for the third quarter and first nine months of 2023, respectively, in cost of goods sold through an amortization approach. The amounts for the third quarter and first nine months of 2022 were not significant. We reclassified losses of $77 million and $199 million for the third quarter and first nine months of 2023, respectively, from accumulated other comprehensive income (loss) to earnings, primarily to cost of goods sold. The reclassifications for the third quarter and first nine months of 2022 were not significant. As of June 1, 2023, we expect to reclassify $179 million of pre-tax losses related to cash flow hedges from accumulated other comprehensive income (loss) into earnings in the next 12 months.

24 | 2023 Q3 10-Q

Table of Contents

Fair Value Hedges**:** We utilize fixed-to-floating interest rate swaps designated as fair value hedges to minimize certain exposures to changes in the fair value of fixed-rate debt that result from fluctuations in benchmark interest rates. Interest rate swaps are measured at fair value based on market-based observable inputs including interest rates and credit-risk spreads (Level 2). The changes in the fair values of derivatives designated as fair value hedges and the offsetting changes in the underlying fair values of the hedged items are both recognized in earnings. When a derivative is no longer designated as a fair value hedge for any reason, including termination and maturity, the remaining unamortized difference between the carrying value of the hedged item at that time and the face value of the hedged item is amortized to earnings over the remaining life of the hedged item, or immediately if the hedged item has matured or been extinguished. The effects of fair value hedges on our consolidated statements of operations, recognized in interest expense, were not significant for the third quarter and first nine months of 2023. We recognized interest expense of $47 million and $81 million, respectively, for changes in the fair value of our interest rate swaps in the third quarter and first nine months of 2022. 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. Currency forward contracts are valued at fair values based on the middle of bid and ask prices of dealers or exchange quotations (Level 2). Realized and unrealized gains and losses on derivative instruments without hedge accounting designation as well as the changes in the underlying monetary assets and liabilities from changes in currency exchange rates are included in other non-operating income (expense), 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.

Equity Plans

As of June 1, 2023, 102 million shares of our common stock were available for future awards under our equity plans, including 16 million shares approved for issuance under our employee stock purchase plan.

Restricted Stock and Restricted Stock Units (“Restricted Stock Awards”)

Restricted Stock Awards activity is summarized as follows:


Nine months ended	June 1, 2023		June 2, 2022

Restricted stock award shares granted	14		12
Weighted-average grant-date fair value per share	$	54.13	$	71.31

Employee Stock Purchase Plan (“ESPP”)

For the six-month ESPP offering periods that ended in the second quarters of 2023 and 2022, employees purchased 3 million and 2 million shares, respectively, at a per share price of $52.45 and $65.94, respectively.

Table of Contents

Stock-based Compensation Expense

Stock-based compensation expense recognized in our statements of operations is presented below. Stock-based compensation expense of $89 million and $48 million was capitalized and remained in inventory as of June 1, 2023 and September 1, 2022, respectively.


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Stock-based compensation expense by caption
Cost of goods sold	$	61	$	57	$	137	$	145
Research and development	57		45		169		128
Selling, general, and administrative	34		33		107		98
Restructure	(4)		—		(6)		(5)
	$	148	$	135	$	407	$	366

Stock-based compensation expense by type of award
Restricted stock awards	$	129	$	116	$	354	$	316
ESPP	19		19		53		49
Stock options	—		—		—		1
	$	148	$	135	$	407	$	366

As of June 1, 2023, $1.23 billion of total unrecognized compensation costs for unvested awards, before the effect of any future forfeitures, was expected to be recognized through the third quarter of 2027, resulting in a weighted-average period of 1.3 years.

Revenue

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 June 1, 2023, our future performance obligations beyond one year were not significant.

As of June 1, 2023 and September 1, 2022, other current liabilities included $604 million and $1.26 billion, respectively, for estimates of consideration payable to customers including estimates for pricing adjustments and returns.

In the third quarter of 2023, we received $108 million from settlement of an insurance claim involving a power disruption in 2022, of which $72 million was for business interruption and recognized in revenue.

26 | 2023 Q3 10-Q

Table of Contents

Revenue by Technology


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

DRAM	$	2,672	$	6,271	$	8,223	$	17,577
NAND	1,013		2,288		3,001		6,123
Other (primarily NOR)	67		83		306		415
	$	3,752	$	8,642	$	11,530	$	24,115

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

Restructure and Asset Impairments


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Employee severance	$	70	$	—	$	163	$	—
Asset impairments and other asset-related costs	1		—		9		59
Other	(3)		—		(5)		(16)
Restructure and asset impairments	$	68	$	—	$	167	$	43

In 2023, we initiated a restructure plan in response to challenging industry conditions (the “2023 Restructure Plan”). Under the 2023 Restructure Plan, we expect our headcount reduction to approach 15% by the end of calendar 2023, through a combination of voluntary attrition and personnel reductions. In connection with the plan, we incurred restructure charges of $68 million and $167 million in the third quarter and first nine months of 2023 respectively, primarily related to employee severance costs. As of June 1, 2023, total costs expected to be incurred under the 2023 Restructure Plan were approximately $170 million and the plan was substantially completed.

Changes in our restructure liability (included in accounts payable and accrued expenses) for the nine months ended June 1, 2023 were as follows:


	Employee Severance

Restructure liability as of September 1, 2022	$	—
Costs incurred and charged to expense	163
Costs paid or otherwise settled	(117)
Restructure liability as of June 1, 2023	$	46

Table of Contents

Other Operating (Income) Expense, Net


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Litigation contingency accrual	$	68	$	—	$	68	$	—
(Gain) loss on disposition of property, plant, and equipment	(24)		(5)		(46)		(16)
Other	4		(1)		7		5
	$	48	$	(6)	$	29	$	(11)

Other Non-Operating Income (Expense), Net


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Gain (loss) on debt repurchases	$	—	$	—	$	—	$	(83)
Other	—		8		(2)		22
	$	—	$	8	$	(2)	$	(61)

Income Taxes

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


	Quarter ended						Nine months ended
	June 1, 2023			June 2, 2022			June 1, 2023			June 2, 2022

Income (loss) before taxes	$	(1,753)		$	2,988		$	(4,200)		$	8,018
Income tax (provision) benefit	(139)			(358)			(201)			(832)
Effective tax rate	(7.9)		%	12.0		%	(4.8)		%	10.4		%

The changes in our effective tax rate for the third quarter and first nine months of 2023 as compared to the corresponding periods of 2022 were primarily due to pre-tax losses incurred in the first nine months of 2023. Despite a consolidated pre-tax loss on a worldwide basis, we have taxes payable in certain geographies due to minimum taxable income reportable in those geographies.

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 a loss before taxes and geographic mix of income, the benefit from tax incentive arrangements was not material for the third quarter and first nine months of 2023. These arrangements reduced our tax provision by $361 million (benefiting our diluted earnings per share by $0.32) and $955 million ($0.85 per diluted share) for the third quarter and first nine months of 2022, respectively.

28 | 2023 Q3 10-Q

Table of Contents

Earnings Per Share


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Net income (loss) – Basic and Diluted	$	(1,896)	$	2,626	$	(4,403)	$	7,195

Weighted-average common shares outstanding – Basic	1,094		1,112		1,092		1,117
Dilutive effect of equity plans	—		9		—		10
Weighted-average common shares outstanding – Diluted	1,094		1,121		1,092		1,127

Earnings (loss) per share
Basic	$	(1.73)	$	2.36	$	(4.03)	$	6.44
Diluted	(1.73)		2.34		(4.03)		6.38

Antidilutive potential common shares excluded from the computation of diluted earnings per share, that could dilute basic earnings per share in the future, were 31 million and 33 million for the third quarter and first nine months of 2023, respectively, and were 4 million and 3 million for the third quarter and first nine months of 2022.

Table of Contents

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

Mobile Business Unit (“MBU”)****: Includes memory and storage products sold into smartphone and other mobile-device markets.

Embedded Business Unit (“EBU”)****: Includes memory and storage products sold into automotive, industrial, and consumer markets.

Storage Business Unit (“SBU”)****: Includes SSDs and component-level solutions sold into enterprise and cloud, client, and consumer storage 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.


	Quarter ended				Nine months ended
	June 1, 2023		June 2, 2022		June 1, 2023		June 2, 2022

Revenue
CNBU	$	1,389	$	3,895	$	4,510	$	10,762
MBU	819		1,967		2,419		5,749
EBU	912		1,435		2,777		3,932
SBU	627		1,341		1,814		3,662
All Other	5		4		10		10
	$	3,752	$	8,642	$	11,530	$	24,115

Operating income (loss)
CNBU	$	(337)	$	1,778	$	(182)	$	4,864
MBU	(478)		640		(1,017)		1,852
EBU	65		504		347		1,347
SBU	(601)		221		(1,215)		551
All Other	2		1		6		5
	(1,349)		3,144		(2,061)		8,619

Unallocated
Provision to write down inventories to net realizable value	(401)		—		(1,831)		—
Lower costs from sale of inventory written down in prior periods	281		—		281		—
Stock-based compensation	(151)		(135)		(413)		(370)
Restructure and asset impairments	(68)		—		(167)		(43)
Litigation contingency accrual	(68)		—		(68)		—
Other	(5)		(5)		(14)		(25)
	(412)		(140)		(2,212)		(438)

Operating income (loss)	$	(1,761)	$	3,004	$	(4,273)	$	8,181

30 | 2023 Q3 10-Q

Table of Contents

Certain Concentrations

Revenue for key market segments as an approximate percent of total revenue is presented in the table below:


Nine months ended	June 1, 2023		June 2, 2022

Automotive, industrial, and consumer	25	%	15	%
Enterprise and cloud server	20	%	20	%
Client and graphics	20	%	20	%
Mobile	20	%	25	%
SSDs and other storage	15	%	15	%

Table of Contents

Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS