filings.toolsItem 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 | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Revenue | $ | 6,811 | $ | 3,752 | $ | 17,361 | $ | 11,530 | |||||||||
| Cost of goods sold | 4,979 | 4,420 | 14,485 | 12,511 | |||||||||||||
| Gross margin | 1,832 | (668) | 2,876 | (981) | |||||||||||||
| Research and development | 850 | 758 | 2,527 | 2,395 | |||||||||||||
| Selling, general, and administrative | 291 | 219 | 834 | 701 | |||||||||||||
| Restructure and asset impairments | — | 68 | — | 167 | |||||||||||||
| Other operating (income) expense, net | (28) | 48 | (267) | 29 | |||||||||||||
| Operating income (loss) | 719 | (1,761) | (218) | (4,273) | |||||||||||||
| Interest income | 136 | 127 | 398 | 334 | |||||||||||||
| Interest expense | (150) | (119) | (426) | (259) | |||||||||||||
| Other non-operating income (expense), net | 10 | — | (24) | (2) | |||||||||||||
| 715 | (1,753) | (270) | (4,200) | ||||||||||||||
| Income tax (provision) benefit | (377) | (139) | 172 | (201) | |||||||||||||
| Equity in net income (loss) of equity method investees | (6) | (4) | (11) | (2) | |||||||||||||
| Net income (loss) | $ | 332 | $ | (1,896) | $ | (109) | $ | (4,403) | |||||||||
| Earnings (loss) per share | |||||||||||||||||
| Basic | $ | 0.30 | $ | (1.73) | $ | (0.10) | $ | (4.03) | |||||||||
| Diluted | 0.30 | (1.73) | (0.10) | (4.03) | |||||||||||||
| Number of shares used in per share calculations | |||||||||||||||||
| Basic | 1,107 | 1,094 | 1,104 | 1,092 | |||||||||||||
| Diluted | 1,123 | 1,094 | 1,104 | 1,092 |
See accompanying notes to consolidated financial statements.
5 | 2024 Q3 10-Q
Micron Technology, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Net income (loss) | $ | 332 | $ | (1,896) | $ | (109) | $ | (4,403) | |||||||||
| Other comprehensive income (loss), net of tax | |||||||||||||||||
| Gains (losses) on derivative instruments | (47) | 22 | (14) | 222 | |||||||||||||
| Pension liability adjustments | (1) | (2) | (2) | (1) | |||||||||||||
| Unrealized gains (losses) on investments | 1 | 12 | 17 | — | |||||||||||||
| Foreign currency translation adjustments | — | 1 | — | (1) | |||||||||||||
| Other comprehensive income (loss) | (47) | 33 | 1 | 220 | |||||||||||||
| Total comprehensive income (loss) | $ | 285 | $ | (1,863) | $ | (108) | $ | (4,183) |
See accompanying notes to consolidated financial statements.
6
Micron Technology, Inc.
Consolidated Balance Sheets
(In millions, except par value amounts)
(Unaudited)
| As of | May 30, 2024 | August 31, 2023 | ||||||
| Assets | ||||||||
| Cash and equivalents | $ | 7,594 | $ | 8,577 | ||||
| Short-term investments | 785 | 1,017 | ||||||
| Receivables | 5,131 | 2,443 | ||||||
| Inventories | 8,512 | 8,387 | ||||||
| Other current assets | 1,297 | 820 | ||||||
| Total current assets | 23,319 | 21,244 | ||||||
| Long-term marketable investments | 775 | 844 | ||||||
| Property, plant, and equipment | 37,926 | 37,928 | ||||||
| Operating lease right-of-use assets | 660 | 666 | ||||||
| Intangible assets | 413 | 404 | ||||||
| Deferred tax assets | 597 | 756 | ||||||
| Goodwill | 1,150 | 1,150 | ||||||
| Other noncurrent assets | 1,415 | 1,262 | ||||||
| Total assets | $ | 66,255 | $ | 64,254 | ||||
| Liabilities and equity | ||||||||
| Accounts payable and accrued expenses | $ | 5,145 | $ | 3,958 | ||||
| Current debt | 398 | 278 | ||||||
| Other current liabilities | 1,297 | 529 | ||||||
| Total current liabilities | 6,840 | 4,765 | ||||||
| Long-term debt | 12,860 | 13,052 | ||||||
| Noncurrent operating lease liabilities | 609 | 603 | ||||||
| Noncurrent unearned government incentives | 672 | 727 | ||||||
| Other noncurrent liabilities | 1,049 | 987 | ||||||
| Total liabilities | 22,030 | 20,134 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Common stock, $0.10 par value, 3,000 shares authorized, 1,250 shares issued and 1,109 outstanding (1,239 shares issued and 1,098 outstanding as of August 31, 2023) | 125 | 124 | ||||||
| Additional capital | 11,794 | 11,036 | ||||||
| Retained earnings | 40,169 | 40,824 | ||||||
| Treasury stock, 141 shares held (141 shares as of August 31, 2023) | (7,552) | (7,552) | ||||||
| Accumulated other comprehensive income (loss) | (311) | (312) | ||||||
| Total equity | 44,225 | 44,120 | ||||||
| Total liabilities and equity | $ | 66,255 | $ | 64,254 |
See accompanying notes to consolidated financial statements.
7 | 2024 Q3 10-Q
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 | ||||||||||
| Net income (loss) | — | — | — | 332 | — | — | 332 | ||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | (47) | (47) | ||||||||||||||||
| Stock issued under stock plans | 2 | — | 14 | — | — | — | 14 | ||||||||||||||||
| Stock-based compensation expense | — | — | 219 | — | — | — | 219 | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | — | — | (3) | (30) | — | — | (33) | ||||||||||||||||
| Dividends and dividend equivalents declared ($0.115 per share) | — | — | — | (130) | — | — | (130) | ||||||||||||||||
| Balance at May 30, 2024 | 1,250 | $ | 125 | $ | 11,794 | $ | 40,169 | $ | (7,552) | $ | (311) | $ | 44,225 |
See accompanying notes to consolidated financial statements.
8
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.
9 | 2024 Q3 10-Q
Micron Technology, Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
| Nine months ended | May 30, 2024 | June 1, 2023 | ||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Net income (loss) | $ | (109) | $ | (4,403) | ||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||
| Depreciation expense and amortization of intangible assets | 5,794 | 5,819 | ||||||||||||
| Stock-based compensation | 620 | 448 | ||||||||||||
| Provision to write-down inventories to net realizable value | — | 1,831 | ||||||||||||
| Change in operating assets and liabilities: | ||||||||||||||
| Receivables | (2,562) | 2,728 | ||||||||||||
| Inventories | (125) | (3,406) | ||||||||||||
| Other current assets | (435) | (35) | ||||||||||||
| Accounts payable and accrued expenses | 846 | (1,113) | ||||||||||||
| Other current liabilities | 769 | (677) | ||||||||||||
| Other | 304 | 118 | ||||||||||||
| Net cash provided by operating activities | 5,102 | 1,310 | ||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Expenditures for property, plant, and equipment | (5,266) | (6,215) | ||||||||||||
| Purchases of available-for-sale securities | (1,110) | (496) | ||||||||||||
| Proceeds from maturities and sales of available-for-sale securities | 1,433 | 1,192 | ||||||||||||
| Proceeds from government incentives | 267 | 248 | ||||||||||||
| Other | (35) | (90) | ||||||||||||
| Net cash provided by (used for) investing activities | (4,711) | (5,361) | ||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Repayments of debt | (1,816) | (706) | ||||||||||||
| Payments of dividends to shareholders | (384) | (378) | ||||||||||||
| Payments on equipment purchase contracts | (127) | (112) | ||||||||||||
| Repurchases of common stock - repurchase program | — | (425) | ||||||||||||
| Proceeds from issuance of debt | 999 | 6,716 | ||||||||||||
| Other | (40) | — | ||||||||||||
| Net cash provided by (used for) financing activities | (1,368) | 5,095 | ||||||||||||
| Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash | (15) | (13) | ||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (992) | 1,031 | ||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 8,656 | 8,339 | ||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 7,664 | $ | 9,370 |
See accompanying notes to consolidated financial statements.
10
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 May 30, 2024, we had approximately $600 million of financial lease liabilities and right-of-use assets under these arrangements.
11 | 2024 Q3 10-Q
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 May 30, 2024 | As of August 31, 2023 | ||||||||||||||||||||||||||||
| Cash and Equivalents | Short-term Investments | Long-term Marketable Investments(1) | Total Fair Value | Cash and Equivalents | Short-term Investments | Long-term Marketable Investments(1) | Total Fair Value | ||||||||||||||||||||||
| Cash | $ | 6,355 | $ | — | $ | — | $ | 6,355 | $ | 5,771 | $ | — | $ | — | $ | 5,771 | |||||||||||||
| Level 1(2) | |||||||||||||||||||||||||||||
| Money market funds | 570 | — | — | 570 | 1,629 | — | — | 1,629 | |||||||||||||||||||||
| Level 2(3) | |||||||||||||||||||||||||||||
| Certificates of deposit | 554 | 6 | — | 560 | 1,172 | 25 | — | 1,197 | |||||||||||||||||||||
| Corporate bonds | — | 454 | 418 | 872 | — | 737 | 437 | 1,174 | |||||||||||||||||||||
| Asset-backed securities | — | 42 | 337 | 379 | — | 15 | 387 | 402 | |||||||||||||||||||||
| Commercial paper | 56 | 130 | — | 186 | — | 109 | — | 109 | |||||||||||||||||||||
| Government securities | 59 | 153 | 20 | 232 | 5 | 131 | 20 | 156 | |||||||||||||||||||||
| 7,594 | $ | 785 | $ | 775 | $ | 9,154 | 8,577 | $ | 1,017 | $ | 844 | $ | 10,438 | ||||||||||||||||
| Restricted cash(4) | 70 | 79 | |||||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash | $ | 7,664 | $ | 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 May 30, 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 $192 million and $218 million of non-marketable equity investments without a readily determinable fair value that were included in other noncurrent assets as of May 30, 2024 and August 31, 2023, respectively. We recognized a net loss in other non-operating income (expense) on our non-marketable investments of $29 million for the first nine months 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.
12
Receivables
| As of | May 30, 2024 | August 31, 2023 | ||||||
| Trade receivables | $ | 4,416 | $ | 2,048 | ||||
| Government incentives | 340 | 105 | ||||||
| Income and other taxes | 208 | 194 | ||||||
| Other | 167 | 96 | ||||||
| $ | 5,131 | $ | 2,443 |
Inventories
| As of | May 30, 2024 | August 31, 2023 | ||||||
| Finished goods | $ | 1,280 | $ | 1,616 | ||||
| Work in process | 6,542 | 6,111 | ||||||
| Raw materials and supplies | 690 | 660 | ||||||
| $ | 8,512 | $ | 8,387 |
Property, Plant, and Equipment
| As of | May 30, 2024 | August 31, 2023 | ||||||
| Land | $ | 284 | $ | 283 | ||||
| Buildings | 19,134 | 17,967 | ||||||
| Equipment(1) | 68,426 | 65,555 | ||||||
| Construction in progress(2) | 3,351 | 2,464 | ||||||
| Software | 1,346 | 1,316 | ||||||
| 92,541 | 87,585 | |||||||
| Accumulated depreciation | (54,615) | (49,657) | ||||||
| $ | 37,926 | $ | 37,928 |
*(1)*Includes costs related to equipment not placed into service of $1.77 billion as of May 30, 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 May 30, 2024 | As of August 31, 2023 | ||||||||||||||||||||||
| Gross Amount | Accumulated Amortization | Net Carrying Amount | Gross Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Product and process technology | $ | 662 | $ | (260) | $ | 402 | $ | 613 | $ | (209) | $ | 404 | |||||||||||
| Other | 11 | — | 11 | — | — | — | |||||||||||||||||
| $ | 673 | $ | (260) | $ | 413 | $ | 613 | $ | (209) | $ | 404 |
13 | 2024 Q3 10-Q
In the first nine months of 2024 and 2023, we capitalized $60 million and $72 million, respectively, for product and process technology with weighted-average useful lives of 10 years and 9 years, respectively. Amortization expense was $61 million and $66 million for the first nine months of 2024 and 2023, respectively. Expected amortization expense is $21 million for the remainder of 2024, $63 million for 2025, $53 million for 2026, $49 million for 2027, and $47 million for 2028.
Leases
The components of lease cost are presented below:
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Finance lease cost | |||||||||||||||||
| Amortization of right-of-use asset | $ | 52 | $ | 28 | $ | 121 | $ | 77 | |||||||||
| Interest on lease liability | 18 | 6 | 48 | 18 | |||||||||||||
| Operating lease cost(1) | 35 | 34 | 103 | 101 | |||||||||||||
| $ | 105 | $ | 68 | $ | 272 | $ | 196 |
*(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 | May 30, 2024 | June 1, 2023 | ||||||
| Cash flows used for operating activities | ||||||||
| Finance leases | $ | 41 | $ | 17 | ||||
| Operating leases | 98 | 91 | ||||||
| Cash flows used for financing activities – Finance leases | 99 | 79 | ||||||
| Noncash acquisitions of right-of-use assets | ||||||||
| Finance leases | 758 | 354 | ||||||
| Operating leases | 48 | 35 |
Supplemental balance sheet information related to leases was as follows:
| As of | May 30, 2024 | August 31, 2023 | ||||||
| Finance lease right-of-use assets (included in property, plant, and equipment) | $ | 1,944 | $ | 1,311 | ||||
| Current operating lease liabilities (included in accounts payable and accrued expenses) | 68 | 66 | ||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Finance leases | 8 | 9 | ||||||
| Operating leases | 10 | 11 | ||||||
| Weighted-average discount rate | ||||||||
| Finance leases | 4.78 | % | 3.86 | % | ||||
| Operating leases | 3.37 | % | 3.21 | % |
14
As of May 30, 2024, maturities of lease liabilities by fiscal year were as follows:
| For the year ending | Finance Leases | Operating Leases | ||||||
| Remainder of 2024 | $ | 95 | $ | 9 | ||||
| 2025 | 368 | 86 | ||||||
| 2026 | 351 | 88 | ||||||
| 2027 | 341 | 86 | ||||||
| 2028 | 328 | 80 | ||||||
| 2029 and thereafter | 778 | 468 | ||||||
| Less imputed interest | (335) | (140) | ||||||
| $ | 1,926 | $ | 677 |
The table above excludes obligations for leases that have been executed but have not yet commenced. As of May 30, 2024, excluded obligations consisted of $704 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 | May 30, 2024 | August 31, 2023 | ||||||
| Accounts payable | $ | 1,951 | $ | 1,725 | ||||
| Property, plant, and equipment | 1,663 | 1,419 | ||||||
| Salaries, wages, and benefits | 909 | 367 | ||||||
| Income and other taxes | 121 | 67 | ||||||
| Other | 501 | 380 | ||||||
| $ | 5,145 | $ | 3,958 |
15 | 2024 Q3 10-Q
Debt
| As of May 30, 2024 | As of August 31, 2023 | ||||||||||||||||||||||||||||
| Net Carrying Amount | Net Carrying Amount | ||||||||||||||||||||||||||||
| Stated Rate | Effective Rate | Current | Long-Term | Total | Current | Long-Term | Total | ||||||||||||||||||||||
| 2026 Term Loan A | 6.791 | % | 6.93 | % | $ | 49 | $ | 884 | $ | 933 | $ | 49 | $ | 921 | $ | 970 | |||||||||||||
| 2027 Term Loan A | 6.916 | % | 7.05 | % | 57 | 1,021 | 1,078 | 57 | 1,063 | 1,120 | |||||||||||||||||||
| 2026 Notes | 4.975 | % | 5.07 | % | — | 499 | 499 | — | 499 | 499 | |||||||||||||||||||
| 2027 Notes(1) | 4.185 | % | 4.27 | % | — | 800 | 800 | — | 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 | % | — | 994 | 994 | — | — | — | |||||||||||||||||||
| 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 | |||||||||||||||||||||
| 2025 Term Loan A | N/A | N/A | — | — | — | — | 1,050 | 1,050 | |||||||||||||||||||||
| Finance lease obligations | N/A | 4.78 | % | 292 | 1,634 | 1,926 | 172 | 1,109 | 1,281 | ||||||||||||||||||||
| $ | 398 | $ | 12,860 | $ | 13,258 | $ | 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 nine 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) | ||||||||||
| 2025 Term Loan A | May 29, 2024 | (650) | (649) | (650) | ||||||||||
| $ | (640) | $ | (644) | $ | (647) |
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 May 30, 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. 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. Through the third quarter of 2024, we complied with these requirements under the Revolving Credit Facility.
Maturities of Notes Payable
As of May 30, 2024, maturities of notes payable by fiscal year were as follows:
| Remainder of 2024 | $ | 27 | |||
| 2025 | 107 | ||||
| 2026 | 607 | ||||
| 2027 | 1,780 | ||||
| 2028 | 1,493 | ||||
| 2029 and thereafter | 7,450 | ||||
| Unamortized issuance costs, discounts, and premium, net | (34) | ||||
| Hedge accounting fair value adjustment | (98) | ||||
| $ | 11,332 |
17 | 2024 Q3 10-Q
Contingencies
We are currently a party to legal actions other than those described below arising from the normal course of business, none of which are expected to have a material adverse effect on our business, results of operations, or financial condition.
Patent Matters
As is typical in the semiconductor and other high-tech industries, from time to time, others have asserted, and may in the future assert, that our products or manufacturing processes infringe upon their intellectual property rights. A description of certain claims is below.
On April 28, 2021, Netlist, Inc. (“Netlist”) filed two patent infringement actions against Micron, Micron Semiconductor Products, Inc. (“MSP”), and Micron Technology Texas, LLC (“MTEC”) in the U.S. District Court for the Western District of Texas. The first complaint alleges that one U.S. patent is infringed by certain of our non-volatile dual in-line memory modules. The second complaint alleges that three U.S. patents are infringed by certain of our load-reduced dual in-line memory modules (“LRDIMMs”). Each complaint seeks injunctive relief, damages, attorneys’ fees, and costs. On March 31, 2022, Netlist filed a patent infringement complaint against Micron and Micron Semiconductor Germany, GmbH in Dusseldorf Regional Court alleging that two German patents are infringed by certain of our LRDIMMs. The complaint seeks damages, costs, and injunctive relief.
On June 10, 2022, Netlist filed a patent infringement complaint against Micron, MSP, and MTEC in the U.S. District Court for the Eastern District of Texas (“E.D. Tex.”) alleging that six U.S. patents are infringed by certain of our memory modules and HBM products. On August 1, 2022, Netlist filed a second patent infringement complaint against the same defendants in E.D. Tex. alleging that one U.S. patent is infringed by certain of our LRDIMMs. On August 15, 2022, Netlist amended the second complaint to assert that two additional U.S. patents are infringed by certain of our LRDIMMs. The complaints in E.D. Tex. seek injunctive relief, damages, and attorneys’ fees. On May 23, 2024, following a four-day trial regarding the second complaint filed by Netlist in the E.D. Tex., a jury rendered a verdict that Micron’s memory modules infringe two asserted patents — U.S. Patent No. 7,619,912 (“the ‘912 patent”) and U.S. Patent No. 11,093,417 (“the ‘417 patent”) — and found that Micron should pay $425 million for infringement of the ‘912 patent and $20 million for infringement of the ‘417 patent. Micron expects to appeal the verdict. On April 17, 2024, the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”) issued a final written decision (“FWD”) finding unpatentable the sole asserted claim of the ‘912 patent. Netlist has sought review of that ruling by the Director of the USPTO. If the Director upholds the FWD, and the United States Court of Appeals for the Federal Circuit subsequently affirms the FWD, then the affirmed FWD will preclude any pending actions asserting infringement of the ‘912 patent (including any infringement verdict that is subject to an ongoing appeal). The PTAB’s final written decision regarding whether all claims of the ‘417 patent are also unpatentable is expected to be issued on or before August 2, 2024.
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.
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On June 3, 2024, MimirIP LLC (“MimirIP”) submitted a complaint to the United States International Trade Commission (“ITC”) alleging that certain of Micron’s DRAM and NAND products infringe six patents owned by MimirIP. The complaint requests the ITC to institute an investigation of such alleged infringement pursuant to Section 337 of the Tariff Act of 1930 and to issue a permanent limited exclusion order barring from entry into the United States such allegedly infringing DRAM and NAND devices and electronic devices containing the same produced by several alleged customers of Micron.
On June 3, 2024, MimirIP filed a complaint against Micron, two of its subsidiaries, and certain alleged customers of Micron in the E.D. Tex. alleging that the same six patents as are asserted in the ITC are infringed by certain of Micron’s DRAM and NAND products. The complaint seeks damages, attorneys’ fees, and costs.
On June 4, 2024, MimirIP filed a second complaint against Micron, two of its subsidiaries, and certain alleged customers of Micron in the E.D. Tex. alleging that six additional patents are infringed by certain of Micron’s DRAM and NAND products. The complaint seeks 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
On May 15, 2018, the Chinese State Administration for Market Regulation (“SAMR”) notified Micron that it was investigating potential collusion and other anticompetitive conduct by DRAM suppliers in China. On May 31, 2018, SAMR made unannounced visits to our sales offices in Beijing, Shanghai, and Shenzhen to seek certain information as part of its investigation. We are cooperating with SAMR in its investigation.
Other Matters
In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify another party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, our payments under these types of agreements have not had a material adverse effect on our business, results of operations, or financial condition.
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 under this authorization in the first nine months of 2024. Through May 30, 2024, we had repurchased an aggregate of $6.89 billion under the authorization. Amounts repurchased are included in treasury stock.
19 | 2024 Q3 10-Q
Dividends
We paid dividends of $128 million ($0.115 per share), $127 million ($0.115 per share), and $129 million ($0.115 per share) in the third, second, and first quarters of 2024, respectively. On June 26, 2024, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on July 23, 2024, to shareholders of record as of the close of business on July 8, 2024.
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component for the nine months ended May 30, 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 | (151) | 16 | — | — | (135) | ||||||||||||
| Amount reclassified out of accumulated other comprehensive income (loss) | 139 | — | (3) | — | 136 | ||||||||||||
| Tax effects | (2) | 1 | 1 | — | — | ||||||||||||
| Other comprehensive income (loss) | (14) | 17 | (2) | — | 1 | ||||||||||||
| As of May 30, 2024 | $ | (318) | $ | (24) | $ | 34 | $ | (3) | $ | (311) |
Fair Value Measurements
The estimated fair values and carrying values of our outstanding debt instruments were as follows:
| As of May 30, 2024 | As of August 31, 2023 | ||||||||||||||||
| Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||||
| Notes | $ | 11,037 | $ | 11,332 | $ | 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.
20
Derivative Instruments
| Notional or Contractual Amount | Fair Value of | ||||||||||
| Assets**(1)** | Liabilities**(2)** | ||||||||||
| As of May 30, 2024 | |||||||||||
| Derivative instruments with hedge accounting designation | |||||||||||
| Cash flow currency hedges | $ | 4,177 | $ | 2 | $ | (234) | |||||
| Cash flow commodity hedges | 458 | 25 | (4) | ||||||||
| Fair value interest rate hedges | 900 | — | (98) | ||||||||
| Derivative instruments without hedge accounting designation | |||||||||||
| Non-designated currency hedges | 1,964 | 4 | (12) | ||||||||
| $ | 31 | $ | (348) | ||||||||
| 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).
The effects of cash flow hedging activities were as follows:
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Gain (loss) from cash flow hedges in accumulated other comprehensive income (loss) | $ | (99) | $ | (40) | $ | (142) | $ | 88 | |||||||||
| Gain (loss) excluded from effectiveness testing in cost of goods sold | (35) | (26) | (105) | (71) | |||||||||||||
| Gain (loss) reclassified from accumulated other comprehensive income (loss) to earnings, primarily to cost of goods sold | (39) | (77) | (139) | (199) |
As of May 30, 2024, we expect to reclassify $168 million of pre-tax losses related to cash flow hedges from accumulated other comprehensive income (loss) into earnings in the next 12 months.
21 | 2024 Q3 10-Q
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 May 30, 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:
| Nine months ended | May 30, 2024 | June 1, 2023 | ||||||
| Restricted stock award shares granted | 12 | 14 | ||||||
| Weighted-average grant-date fair value per share | $ | 69.02 | $ | 54.13 |
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.
22
Stock-based Compensation Expense
Stock-based compensation expense recognized in our statements of operations is presented below. Stock-based compensation expense of $100 million and $88 million was capitalized and remained in inventory as of May 30, 2024 and August 31, 2023, respectively.
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Stock-based compensation expense by caption | |||||||||||||||||
| Cost of goods sold | $ | 80 | $ | 61 | $ | 227 | $ | 137 | |||||||||
| Research and development | 77 | 57 | 222 | 169 | |||||||||||||
| Selling, general, and administrative | 60 | 34 | 159 | 107 | |||||||||||||
| Restructure | — | (4) | — | (6) | |||||||||||||
| $ | 217 | $ | 148 | $ | 608 | $ | 407 | ||||||||||
| Stock-based compensation expense by type of award | |||||||||||||||||
| Restricted stock awards | $ | 201 | $ | 129 | $ | 555 | $ | 354 | |||||||||
| ESPP | 16 | 19 | 53 | 53 | |||||||||||||
| $ | 217 | $ | 148 | $ | 608 | $ | 407 |
As of May 30, 2024, $1.51 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 2028, resulting in a weighted-average period of 1.3 years.
23 | 2024 Q3 10-Q
Revenue and Customer Contract Liabilities
Revenue by Technology
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| DRAM | $ | 4,692 | $ | 2,672 | $ | 12,277 | $ | 8,223 | |||||||||
| NAND | 2,065 | 1,013 | 4,862 | 3,001 | |||||||||||||
| Other (primarily NOR) | 54 | 67 | 222 | 306 | |||||||||||||
| $ | 6,811 | $ | 3,752 | $ | 17,361 | $ | 11,530 |
See “Segment and Other Information” for disclosure of disaggregated revenue by market segment.
Revenue is primarily recognized at a point in time when control of the promised goods is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. Substantially all contracts with our customers are short-term in duration at fixed, negotiated prices with payment generally due shortly after delivery. From time to time, we have contracts with initial terms that include performance obligations that extend beyond one year. As of May 30, 2024, our future performance obligations beyond one year were $141 million, which included customer prepayments and other contract liabilities. Customer prepayments made to secure product supply in future periods and other contract liabilities were $756 million as of May 30, 2024, of which $615 million was reported in other current liabilities and the remainder in other noncurrent liabilities.
As of May 30, 2024 and August 31, 2023, other current liabilities also included $617 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 | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Employee severance | $ | — | $ | 70 | $ | — | $ | 163 | |||||||||
| Asset impairments and other asset-related costs | — | 1 | — | 9 | |||||||||||||
| Other | — | (3) | — | (5) | |||||||||||||
| $ | — | $ | 68 | $ | — | $ | 167 |
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.
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Other Operating (Income) Expense, Net
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| (Gain) loss on disposition of property, plant, and equipment | $ | (38) | $ | (24) | $ | (63) | $ | (46) | |||||||||
| Patent cross-license agreement gain | — | — | (200) | — | |||||||||||||
| Litigation settlement | — | 68 | — | 68 | |||||||||||||
| Other | 10 | 4 | (4) | 7 | |||||||||||||
| $ | (28) | $ | 48 | $ | (267) | $ | 29 |
Income Taxes
Our income tax (provision) benefit consisted of the following:
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Income (loss) before taxes | $ | 715 | $ | (1,753) | $ | (270) | $ | (4,200) | |||||||||
| Income tax (provision) benefit | (377) | (139) | 172 | (201) | |||||||||||||
| Effective tax rate | 52.7 | % | (7.9) | % | 63.7 | % | (4.8) | % |
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 were able to estimate a more reliable annual effective tax rate and have reverted to a global annual effective tax rate method for all jurisdictions beginning in the second quarter of 2024.
The changes in our effective tax rate for the third quarter and first nine months of 2024 as compared to the third quarter and first nine months of 2023 were primarily due to changes in profitability and discrete items primarily related to tax return filings.
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 May 30, 2024, other current assets included $539 million related to income taxes.
25 | 2024 Q3 10-Q
Earnings Per Share
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Net income (loss) – Basic and Diluted | $ | 332 | $ | (1,896) | $ | (109) | $ | (4,403) | |||||||||
| Weighted-average common shares outstanding – Basic | 1,107 | 1,094 | 1,104 | 1,092 | |||||||||||||
| Dilutive effect of equity plans | 16 | — | — | — | |||||||||||||
| Weighted-average common shares outstanding – Diluted | 1,123 | 1,094 | 1,104 | 1,092 | |||||||||||||
| Earnings (loss) per share | |||||||||||||||||
| Basic | $ | 0.30 | $ | (1.73) | $ | (0.10) | $ | (4.03) | |||||||||
| Diluted | 0.30 | (1.73) | (0.10) | (4.03) |
Antidilutive potential common shares excluded from the computation of diluted earnings per share, that could dilute basic earnings per share in the future, were 1 million and 31 million for the third quarter and first nine months of 2024, respectively, and were 31 million and 33 million for the third quarter and first nine 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.
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.
26
| Quarter ended | Nine months ended | ||||||||||||||||
| May 30, 2024 | June 1, 2023 | May 30, 2024 | June 1, 2023 | ||||||||||||||
| Revenue | |||||||||||||||||
| CNBU | $ | 2,573 | $ | 1,389 | $ | 6,495 | $ | 4,510 | |||||||||
| MBU | 1,588 | 819 | 4,479 | 2,419 | |||||||||||||
| EBU | 1,294 | 912 | 3,442 | 2,777 | |||||||||||||
| SBU | 1,353 | 627 | 2,911 | 1,814 | |||||||||||||
| All Other | 3 | 5 | 34 | 10 | |||||||||||||
| $ | 6,811 | $ | 3,752 | $ | 17,361 | $ | 11,530 | ||||||||||
| Operating income (loss) | |||||||||||||||||
| CNBU | $ | 442 | $ | (337) | $ | 73 | $ | (182) | |||||||||
| MBU | 301 | (478) | (395) | (1,017) | |||||||||||||
| EBU | 124 | 65 | 133 | 347 | |||||||||||||
| SBU | 76 | (601) | (631) | (1,215) | |||||||||||||
| All Other | (2) | 2 | 23 | 6 | |||||||||||||
| 941 | (1,349) | (797) | (2,061) | ||||||||||||||
| Unallocated | |||||||||||||||||
| Stock-based compensation | (217) | (151) | (608) | (413) | |||||||||||||
| Restructure and asset impairments | — | (68) | — | (167) | |||||||||||||
| Provision to write-down inventories to net realizable value | — | (401) | — | (1,831) | |||||||||||||
| Lower costs from sale of inventory written down in prior periods | — | 281 | 987 | 281 | |||||||||||||
| Patent cross-license agreement gain | — | — | 200 | — | |||||||||||||
| Litigation settlement | — | (68) | — | (68) | |||||||||||||
| Other | (5) | (5) | — | (14) | |||||||||||||
| (222) | (412) | 579 | (2,212) | ||||||||||||||
| Operating income (loss) | $ | 719 | $ | (1,761) | $ | (218) | $ | (4,273) |
Certain Concentrations
Revenue by end market as an approximate percentage of total revenue is presented in the table below:
| Nine months ended | May 30, 2024 | June 1, 2023 | ||||||
| Mobile | 25 | % | 20 | % | ||||
| Automotive, industrial, and consumer | 20 | % | 25 | % | ||||
| Enterprise and cloud server | 20 | % | 20 | % | ||||
| Client and graphics | 15 | % | 20 | % | ||||
| SSDs and other storage | 15 | % | 15 | % |
Revenue from one customer, which is a distributor, was 11% of total revenue for the first nine months of 2024. No customer accounted for 10% or more of total revenue for the first nine months of 2023.
27 | 2024 Q3 10-Q
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