Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

Micron Technology, Inc.

Consolidated Statements of Operations

(In millions, except per share amounts)

(Unaudited)


	Quarter ended				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

Revenue	$	5,824	$	3,693	$	10,550	$	7,778
Cost of goods sold	4,745		4,899		9,506		8,091
Gross margin	1,079		(1,206)		1,044		(313)

Research and development	832		788		1,677		1,637
Selling, general, and administrative	280		231		543		482
Restructure and asset impairments	—		86		—		99
Other operating (income) expense, net	(224)		(8)		(239)		(19)
Operating income (loss)	191		(2,303)		(937)		(2,512)

Interest income	130		119		262		207
Interest expense	(144)		(89)		(276)		(140)
Other non-operating income (expense), net	(7)		2		(34)		(2)
	170		(2,271)		(985)		(2,447)

Income tax (provision) benefit	622		(54)		549		(62)
Equity in net income (loss) of equity method investees	1		13		(5)		2
Net income (loss)	$	793	$	(2,312)	$	(441)	$	(2,507)

Earnings (loss) per share
Basic	$	0.72	$	(2.12)	$	(0.40)	$	(2.30)
Diluted	0.71		(2.12)		(0.40)		(2.30)

Number of shares used in per share calculations
Basic	1,104		1,091		1,102		1,091
Diluted	1,114		1,091		1,102		1,091

See accompanying notes to consolidated financial statements.

5 | 2024 Q2 10-Q

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Micron Technology, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)


	Quarter ended				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

Net income (loss)	$	793	$	(2,312)	$	(441)	$	(2,507)

Other comprehensive income (loss), net of tax
Gains (losses) on derivative instruments	(11)		92		33		200
Pension liability adjustments	(3)		—		(1)		1
Unrealized gains (losses) on investments	9		7		16		(12)
Foreign currency translation adjustments	1		1		—		(2)
Other comprehensive income (loss)	(4)		100		48		187
Total comprehensive income (loss)	$	789	$	(2,212)	$	(393)	$	(2,320)

See accompanying notes to consolidated financial statements.

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Micron Technology, Inc.

Consolidated Balance Sheets

(In millions, except par value amounts)

(Unaudited)


As of	February 29, 2024		August 31, 2023

Assets
Cash and equivalents	$	8,016	$	8,577
Short-term investments	990		1,017
Receivables	4,296		2,443
Inventories	8,443		8,387
Other current assets	1,690		820
Total current assets	23,435		21,244
Long-term marketable investments	627		844
Property, plant, and equipment	37,587		37,928
Operating lease right-of-use assets	642		666
Intangible assets	414		404
Deferred tax assets	664		756
Goodwill	1,150		1,150
Other noncurrent assets	1,199		1,262
Total assets	$	65,718	$	64,254

Liabilities and equity
Accounts payable and accrued expenses	$	4,680	$	3,958
Current debt	344		278
Other current liabilities	1,235		529
Total current liabilities	6,259		4,765
Long-term debt	13,378		13,052
Noncurrent operating lease liabilities	593		603
Noncurrent unearned government incentives	662		727
Other noncurrent liabilities	956		987
Total liabilities	21,848		20,134

Commitments and contingencies

Shareholders’ equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,248 shares issued and 1,107 outstanding (1,239 shares issued and 1,098 outstanding as of August 31, 2023)	125		124
Additional capital	11,564		11,036
Retained earnings	39,997		40,824
Treasury stock, 141 shares held (141 shares as of August 31, 2023)	(7,552)		(7,552)
Accumulated other comprehensive income (loss)	(264)		(312)
Total equity	43,870		44,120
Total liabilities and equity	$	65,718	$	64,254

See accompanying notes to consolidated financial statements.

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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 August 31, 2023	1,239	$	124	$	11,036	$	40,824	$	(7,552)	$	(312)	$	44,120
Net income (loss)	—	—		—		(1,234)		—		—		(1,234)
Other comprehensive income (loss), net	—	—		—		—		—		52		52
Stock issued under stock plans	8	—		9		—		—		—		9
Stock-based compensation expense	—	—		188		—		—		—		188
Repurchase of stock - withholdings on employee equity awards	(2)	—		(16)		(105)		—		—		(121)
Dividends and dividend equivalents declared ($0.115 per share)	—	—		—		(129)		—		—		(129)
Balance at November 30, 2023	1,245	$	124	$	11,217	$	39,356	$	(7,552)	$	(260)	$	42,885
Net income (loss)	—	—		—		793		—		—		793
Other comprehensive income (loss), net	—	—		—		—		—		(4)		(4)
Stock issued under stock plans	3	1		136		—		—		—		137
Stock-based compensation expense	—	—		213		—		—		—		213
Repurchase of stock - withholdings on employee equity awards	—	—		(2)		(22)		—		—		(24)
Dividends and dividend equivalents declared ($0.115 per share)	—	—		—		(130)		—		—		(130)
Balance at February 29, 2024	1,248	$	125	$	11,564	$	39,997	$	(7,552)	$	(264)	$	43,870

See accompanying notes to consolidated financial statements.

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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

See accompanying notes to consolidated financial statements.

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Micron Technology, Inc.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


Six months ended	February 29, 2024		March 2, 2023

Cash flows from operating activities
Net income (loss)	$	(441)	$	(2,507)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense and amortization of intangible assets	3,839		3,863
Stock-based compensation	401		303
Provision to write-down inventories to net realizable value	—		1,430
Change in operating assets and liabilities:
Receivables	(1,759)		2,910
Inventories	(57)		(2,896)
Other current assets	(799)		4
Accounts payable and accrued expenses	573		(1,144)
Other current liabilities	706		(638)
Other	157		(39)
Net cash provided by operating activities	2,620		1,286

Cash flows from investing activities
Expenditures for property, plant, and equipment	(3,180)		(4,654)
Purchases of available-for-sale securities	(465)		(293)
Proceeds from maturities and sales of available-for-sale securities	726		773
Proceeds from government incentives	234		64
Other	(24)		(71)
Net cash provided by (used for) investing activities	(2,709)		(4,181)

Cash flows from financing activities
Repayments of debt	(1,101)		(53)
Payments of dividends to shareholders	(256)		(252)
Payments on equipment purchase contracts	(82)		(76)
Repurchases of common stock - repurchase program	—		(425)
Proceeds from issuance of debt	999		5,221
Other	(18)		19
Net cash provided by (used for) financing activities	(458)		4,434

Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash	(8)		9

Net increase (decrease) in cash, cash equivalents, and restricted cash	(555)		1,548
Cash, cash equivalents, and restricted cash at beginning of period	8,656		8,339
Cash, cash equivalents, and restricted cash at end of period	$	8,101	$	9,887

See accompanying notes to consolidated financial statements.

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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 August 31, 2023. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended August 31, 2023.

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 August 31, 2023.

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 2024 and 2023 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 August 31, 2023.

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 February 29, 2024, we had approximately $370 million of financial lease liabilities and right-of-use assets under these arrangements.

11 | 2024 Q2 10-Q

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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 February 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	$	5,588	$	—	$	—	$	5,588	$	5,771	$	—	$	—	$	5,771
Level 1(2)
Money market funds	1,204		—		—		1,204		1,629		—		—		1,629
Level 2(3)
Certificates of deposit	1,220		11		—		1,231		1,172		25		—		1,197
Corporate bonds	—		606		286		892		—		737		437		1,174
Asset-backed securities	—		17		330		347		—		15		387		402
Commercial paper	3		183		—		186		—		109		—		109
Government securities	1		173		11		185		5		131		20		156
	8,016		$	990	$	627	$	9,633	8,577		$	1,017	$	844	$	10,438
Restricted cash(4)	85								79
Cash, cash equivalents, and restricted cash	$	8,101							$	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 February 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 $189 million and $218 million of non-marketable equity investments without a readily determinable fair value that were included in other noncurrent assets as of February 29, 2024 and August 31, 2023, respectively. We recognized a loss in other non-operating income (expense) on our non-marketable investments of $31 million for the first quarter of 2024. The amounts recognized for the other periods presented were not significant. 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	February 29, 2024		August 31, 2023

Trade receivables	$	3,648	$	2,048
Income and other taxes	188		194
Other	460		201
	$	4,296	$	2,443

Inventories


As of	February 29, 2024		August 31, 2023

Finished goods	$	1,132	$	1,616
Work in process	6,622		6,111
Raw materials and supplies	689		660
	$	8,443	$	8,387

Property, Plant, and Equipment


As of	February 29, 2024		August 31, 2023

Land	$	283	$	283
Buildings	18,963		17,967
Equipment(1)	67,273		65,555
Construction in progress(2)	2,636		2,464
Software	1,393		1,316
	90,548		87,585
Accumulated depreciation	(52,961)		(49,657)
	$	37,587	$	37,928

*(1)*Includes costs related to equipment not placed into service of $2.27 billion as of February 29, 2024 and $2.91 billion as of August 31, 2023.

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

Intangible Assets


	As of February 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	$	646	$	(243)	$	403	$	613	$	(209)	$	404
Other	11		—		11		—		—		—
	$	657	$	(243)	$	414	$	613	$	(209)	$	404

In the first six months of 2024 and 2023, we capitalized $40 million and $51 million, respectively, for product and process technology with weighted-average useful lives of 9 years and 10 years, respectively. Amortization expense was $41 million and $45 million for the first six months of 2024 and 2023, respectively. Expected amortization expense is $44 million for the remainder of 2024, $57 million for 2025, $51 million for 2026, $47 million for 2027, and $45 million for 2028.

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Leases

The components of lease cost are presented below:


	Quarter ended				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

Finance lease cost
Amortization of right-of-use asset	$	37	$	25	$	69	$	49
Interest on lease liability	24		6		30		12
Operating lease cost(1)	35		31		68		67
	$	96	$	62	$	167	$	128

*(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:


Six months ended	February 29, 2024		March 2, 2023

Cash flows used for operating activities
Finance leases	$	25	$	11
Operating leases	66		60
Cash flows used for financing activities – Finance leases	60		53
Noncash acquisitions of right-of-use assets
Finance leases	483		225
Operating leases	12		35

Supplemental balance sheet information related to leases was as follows:


As of	February 29, 2024			August 31, 2023

Finance lease right-of-use assets (included in property, plant, and equipment)	$	1,725		$	1,311
Current operating lease liabilities (included in accounts payable and accrued expenses)	65			66

Weighted-average remaining lease term (in years)
Finance leases	11			9
Operating leases	11			11
Weighted-average discount rate
Finance leases	4.48		%	3.86		%
Operating leases	3.27		%	3.21		%

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As of February 29, 2024, maturities of lease liabilities by fiscal year were as follows:


For the year ending	Finance Leases		Operating Leases

Remainder of 2024	$	152	$	31
2025	299		83
2026	285		80
2027	277		77
2028	267		74
2029 and thereafter	721		452
Less imputed interest	(297)		(139)
	$	1,704	$	658

The table above excludes obligations for leases that have been executed but have not yet commenced. As of February 29, 2024, excluded obligations consisted of $670 million of finance lease obligations over a weighted-average period of 14 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	February 29, 2024		August 31, 2023

Accounts payable	$	1,913	$	1,725
Property, plant, and equipment	1,528		1,419
Salaries, wages, and benefits	637		367
Income and other taxes	188		67
Other	414		380
	$	4,680	$	3,958

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Debt


	As of February 29, 2024										As of August 31, 2023
					Net Carrying Amount						Net Carrying Amount
	Stated Rate		Effective Rate		Current		Long-Term		Total		Current		Long-Term		Total

2025 Term Loan A	6.676	%	6.81	%	$	—	$	649	$	649	$	—	$	1,050	$	1,050
2026 Term Loan A	6.801	%	6.94	%	49		896		945		49		921		970
2027 Term Loan A	6.926	%	7.06	%	57		1,035		1,092		57		1,063		1,120
2026 Notes	4.975	%	5.07	%	—		499		499		—		499		499
2027 Notes(1)	4.185	%	4.27	%	—		812		812		—		798		798
2028 Notes	5.375	%	5.52	%	—		597		597		—		596		596
2029 A Notes	5.327	%	5.40	%	—		698		698		—		697		697
2029 B Notes	6.750	%	6.54	%	—		1,262		1,262		—		1,263		1,263
2030 Notes	4.663	%	4.73	%	—		847		847		—		846		846
2031 Notes	5.300	%	5.41	%	—		993		993		—		—		—
2032 Green Bonds	2.703	%	2.77	%	—		995		995		—		995		995
2033 A Notes	5.875	%	5.96	%	—		745		745		—		745		745
2033 B Notes	5.875	%	6.01	%	—		891		891		—		890		890
2041 Notes	3.366	%	3.41	%	—		497		497		—		497		497
2051 Notes	3.477	%	3.52	%	—		496		496		—		496		496
2024 Term Loan A	N/A		N/A		—		—		—		—		587		587
Finance lease obligations	N/A		4.48	%	238		1,466		1,704		172		1,109		1,281
					$	344	$	13,378	$	13,722	$	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.

Debt Activity

The table below presents the effects of debt financing and prepayment activities in the first six months of 2024:


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

Issuance
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)
		$	10	$	5	$	3

2031 Notes

On January 12, 2024, we issued $1.00 billion principal amount of senior unsecured 2031 Notes in a public offering. The 2031 Notes bear interest at a rate of 5.300% per year and will mature on January 15, 2031. Issuance costs and debt discount for the 2031 Notes were $7 million.

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We may redeem the 2031 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 2031 Notes, in whole or in part, at a price equal to par two months prior to maturity in accordance with the terms of the 2031 Notes.

The 2031 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 the 2031 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 occurs, as defined in the indenture governing the 2031 Notes, we will be required to offer to purchase the 2031 Notes at 101% of the outstanding aggregate principal amount plus accrued interest up to the purchase date.

Revolving Credit Facility

As of February 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 requires us to maintain, on a consolidated basis, a leverage ratio of total indebtedness to adjusted EBITDA, as defined in the Revolving Credit Facility and calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00. On March 27, 2023, we amended the Revolving Credit Facility 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 Revolving Credit Facility and calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00. Alternatively, for up to three of such five quarters, we may elect to comply with a requirement of minimum liquidity, as defined in the Revolving Credit Facility, of not less than $5.0 billion. Through the second quarter of 2024, we complied with the net leverage ratio requirement. 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.

Maturities of Notes Payable

As of February 29, 2024, maturities of notes payable by fiscal year were as follows:


Remainder of 2024	$	54
2025	107
2026	1,257
2027	1,780
2028	1,493
2029 and thereafter	7,450
Unamortized issuance costs, discounts, and premium, net	(37)
Hedge accounting fair value adjustment	(86)
	$	12,018

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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 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 alleged that MXA and MSS infringed one Chinese patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint sought 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 December 4, 2023, Micron and Jinhua entered a settlement agreement under which Jinhua filed an application to the Fuzhou Court to withdraw its complaints against MXA and MSS.

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.

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 alleged that MSS infringed two Chinese patents by manufacturing and selling certain Crucial MX300 SSDs. The complaint filed by UMC sought 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 sought 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 December 4, 2023, Micron and Jinhua entered a settlement agreement under which Jinhua 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. On December 4, 2023, Micron and Jinhua entered a settlement agreement under which Jinhua filed an application to the Fuzhou Court to withdraw the injunction.

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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 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 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 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.

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. 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.

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

Six cases were 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. Certification of class action status was denied in two of the cases. All six cases are now either inactive or have been dismissed.

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.

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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

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

In May 2018, our Board of Directors 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 first six months of 2024. Through February 29, 2024, we had repurchased an aggregate of $6.89 billion under the authorization. Amounts repurchased are included in treasury stock.

Dividends

We paid dividends of $127 million ($0.115 per share) and $129 million ($0.115 per share) in the second and first quarters of 2024, respectively. On March 20, 2024, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on April 16, 2024, to shareholders of record as of the close of business on April 1, 2024.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component for the six months ended February 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	(50)		16		—		—		(34)
Amount reclassified out of accumulated other comprehensive income (loss)	100		—		(2)		—		98
Tax effects	(17)		—		1		—		(16)
Other comprehensive income (loss)	33		16		(1)		—		48
As of February 29, 2024	$	(271)	$	(25)	$	35	$	(3)	$	(264)

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Fair Value Measurements

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


	As of February 29, 2024				As of August 31, 2023
	Fair Value		Carrying Value		Fair Value		Carrying Value

Notes	$	11,733	$	12,018	$	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 of
Assets(1)	Liabilities(2)

As of February 29, 2024
Derivative instruments with hedge accounting designation
Cash flow currency hedges	$	4,028	$	8	$	(173)
Cash flow commodity hedges	393		25		(1)
Fair value interest rate hedges	900		—		(86)

Derivative instruments without hedge accounting designation
Non-designated currency hedges	2,061		3		(15)
			$	36	$	(275)

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)*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 gains from cash flow hedges of $75 million and $128 million for the second quarter and first six months of 2023, respectively, in accumulated other comprehensive income (loss). The amounts recognized for the second quarter and first six months of 2024 were not significant.

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For forward points excluded from our effectiveness testing, we recognized losses of $34 million and $70 million for the second quarter and first six months of 2024, respectively, in cost of goods sold. The amounts recognized for the second quarter and first six months of 2023 were not significant.

We reclassified losses of $56 million and $100 million for the second quarter and first six months of 2024, respectively, and losses of $54 million and $122 million for the second quarter and first six months of 2023, respectively, from accumulated other comprehensive income (loss) to earnings, primarily to cost of goods sold. As of February 29, 2024, we expect to reclassify $126 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 fixed-to-floating interest rate swaps designated as fair value hedges to minimize certain exposures to changes in the fair value of fixed-rate debt that result from fluctuations in benchmark interest rates. Interest rate swaps are measured at fair value based on market-based observable inputs including interest rates and credit-risk spreads (Level 2). The changes in the fair values of derivatives designated as fair value hedges and the offsetting changes in the underlying fair values of the hedged items are both recognized in earnings. When a derivative is no longer designated as a fair value hedge for any reason, including termination and maturity, the remaining unamortized difference between the carrying value of the hedged item at that time and the face value of the hedged item is amortized to earnings over the remaining life of the hedged item, or immediately if the hedged item has matured or been extinguished. The effects of fair value hedges on our consolidated statements of operations, recognized in interest expense, were not significant for the periods presented.

Derivative Instruments without Hedge Accounting Designation

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 February 29, 2024, 72 million shares of our common stock were available for future awards under our equity plans, including 12 million shares approved for issuance under our employee stock purchase plan (“ESPP”).

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

Restricted Stock Awards activity is summarized as follows:


Six months ended	February 29, 2024		March 2, 2023

Restricted stock award shares granted	12		14
Weighted-average grant-date fair value per share	$	67.78	$	54.00

Employee Stock Purchase Plan (“ESPP”)

For each six-month ESPP offering period that ended in the second quarter of 2024 and 2023, employees purchased 2 million and 3 million shares, respectively, at a share price of $60.68 and $52.45, respectively.

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Stock-based Compensation Expense

Stock-based compensation expense recognized in our statements of operations is presented below. Stock-based compensation expense of $98 million and $88 million was capitalized and remained in inventory as of February 29, 2024 and August 31, 2023, respectively.


	Quarter ended				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

Stock-based compensation expense by caption
Cost of goods sold	$	80	$	40	$	147	$	76
Research and development	77		59		145		112
Selling, general, and administrative	52		36		99		73
Restructure	—		(2)		—		(2)
	$	209	$	133	$	391	$	259

Stock-based compensation expense by type of award
Restricted stock awards	$	191	$	116	$	354	$	225
ESPP	18		17		37		34
	$	209	$	133	$	391	$	259

As of February 29, 2024, $1.69 billion of total unrecognized compensation costs for unvested awards, before the effect of any future forfeitures, was expected to be recognized through the second quarter of 2028, resulting in a weighted-average period of 1.3 years.

Revenue and Customer Contract Liabilities

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 February 29, 2024, our future performance obligations beyond one year were not significant.

Revenue by Technology


	Quarter ended				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

DRAM	$	4,158	$	2,722	$	7,585	$	5,551
NAND	1,567		885		2,797		1,988
Other (primarily NOR)	99		86		168		239
	$	5,824	$	3,693	$	10,550	$	7,778

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

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Customer Contract Liabilities

Contract liabilities from customer prepayments made to secure product supply in future periods were approximately $600 million as of February 29, 2024 and were reported within other current liabilities.

As of February 29, 2024 and August 31, 2023, other current liabilities also included $562 million and $453 million, respectively, for estimates of consideration payable to customers including estimates for pricing adjustments and returns.

Restructure and Asset Impairments


	Quarter ended				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

Employee severance	$	—	$	80	$	—	$	93
Asset impairments and other asset-related costs	—		8		—		8
Other	—		(2)		—		(2)
	$	—	$	86	$	—	$	99

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.

Other Operating (Income) Expense, Net


	Quarter ended				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

Patent cross-license agreement gain	$	(200)	$	—	$	(200)	$	—
(Gain) loss on disposition of property, plant, and equipment	(9)		(9)		(25)		(22)
Other	(15)		1		(14)		3
	$	(224)	$	(8)	$	(239)	$	(19)

Income Taxes

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


	Quarter ended						Six months ended
	February 29, 2024			March 2, 2023			February 29, 2024			March 2, 2023

Income (loss) before taxes	$	170		$	(2,271)		$	(985)		$	(2,447)
Income tax (provision) benefit	622			(54)			549			(62)
Effective tax rate	(365.9)		%	(2.4)		%	55.7		%	(2.5)		%

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In the first quarter of 2024, our tax expense was based on actual results for jurisdictions where small changes in our projected pre-tax income would have caused significant changes in the estimated annual effective tax rate. With our improved fiscal 2024 outlook, we can now estimate a more reliable annual effective tax rate and have reverted to a global annual effective tax rate method for all jurisdictions. Applying this updated rate to our year-to-date earnings resulted in the tax benefit of $622 million recognized in the second quarter of 2024.

The change in our effective tax rate for the second quarter of 2024 as compared to the first quarter of 2024 was primarily due to the use of the estimated annual effective tax rate for the quarter. The change in our effective tax rate for the first six months of 2024 as compared to the first six months of 2023 was primarily due to changes in levels of profitability and the geographic mix of earnings.

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 the low level of profitability and the geographic mix of income, the benefit from tax incentive arrangements was not material for the periods presented.

As of February 29, 2024, other current assets included $882 million related to income taxes.

Earnings Per Share


	Quarter ended				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

Net income (loss) – Basic and Diluted	$	793	$	(2,312)	$	(441)	$	(2,507)

Weighted-average common shares outstanding – Basic	1,104		1,091		1,102		1,091
Dilutive effect of equity plans	10		—		—		—
Weighted-average common shares outstanding – Diluted	1,114		1,091		1,102		1,091

Earnings (loss) per share
Basic	$	0.72	$	(2.12)	$	(0.40)	$	(2.30)
Diluted	0.71		(2.12)		(0.40)		(2.30)

Antidilutive potential common shares excluded from the computation of diluted earnings per share, that could dilute basic earnings per share in the future, were 4 million and 33 million for the second quarter and first six months of 2024, respectively, and were 33 million and 34 million for the second quarter and first six months of 2023, respectively.

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 client, cloud server, enterprise, 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 automotive, industrial, and consumer markets.

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

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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				Six months ended
	February 29, 2024		March 2, 2023		February 29, 2024		March 2, 2023

Revenue
CNBU	$	2,185	$	1,375	$	3,922	$	3,121
MBU	1,598		945		2,891		1,600
EBU	1,111		865		2,148		1,865
SBU	905		507		1,558		1,187
All Other	25		1		31		5
	$	5,824	$	3,693	$	10,550	$	7,778

Operating income (loss)
CNBU	$	28	$	(35)	$	(369)	$	155
MBU	(9)		(344)		(696)		(539)
EBU	(1)		88		9		282
SBU	(217)		(357)		(707)		(614)
All Other	21		1		25		4
	(178)		(647)		(1,738)		(712)

Unallocated
Lower costs from sale of inventory written down in prior periods	382		—		987		—
Patent cross-license agreement gain	200		—		200		—
Stock-based compensation	(209)		(136)		(391)		(262)
Restructure and asset impairments	—		(86)		—		(99)
Provision to write-down inventories to net realizable value	—		(1,430)		—		(1,430)
Other	(4)		(4)		5		(9)
	369		(1,656)		801		(1,800)

Operating income (loss)	$	191	$	(2,303)	$	(937)	$	(2,512)

Certain Concentrations

Revenue by end market as an approximate percent of total revenue is presented in the table below:


Six months ended	February 29, 2024		March 2, 2023

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

Revenue from one customer, which is a distributor, was 11% of total revenue for the first six months of 2024. No customer accounted for 10% or more of total revenue for the first six months of 2023.

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