UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q(Mark One)x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2018
ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromtoCommission file number 1-10658

Micron Technology, Inc.
(Exact name of registrant as specified in its charter)
Delaware75-1618004(State or other jurisdiction of(IRS Employer Identification No.)

incorporation or organization)
8000 S. Federal Way, Boise, Idaho

83716-9632(Address of principal executive offices)(Zip Code)Registrant's telephone number, including area code(208) 368-4000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes T No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes T No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer x

Accelerated Filer o

Non-Accelerated Filer o(Do not check if a smaller reporting
company)

Smaller Reporting Company oEmerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of outstanding shares of the registrant's common stock as of June 15, 2018 was 1,159,810,627.

Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory and storage solutions. Through our global
brands – Micron®, Crucial®, and Ballistix® – our broad portfolio of high-performance memory and storage technologies, including DRAM, NAND, NOR
Flash, and 3D XPointTM memory, is transforming how the world uses information to enrich life. Backed by nearly 40 years of technology leadership, ourmemory and storage solutions enable disruptive trends, including artificial intelligence, machine learning, and autonomous vehicles, in key market segments
like cloud, data center, networking, and mobile.
Micron, Crucial, Ballistix, any associated logos, and all other Micron trademarks are the property of Micron. 3D XPoint is a trademark of Intel in the
United States and/or other countries. Other product names or trademarks that are not owned by Micron are for identification purposes only and may be theregistered or unregistered trademarks of their respective owners.
Forward-Looking Statements
This Form 10-Q contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Forward-looking
statements include, but are not limited to, statements such as those made regarding timing of product introductions; our expected NAND development
activities with Intel; the effect of U.S. tax reform; our expectation to engage, from time to time, in additional financing transactions; the sufficiency of our
cash and investments, cash flows from operations, and available financing to meet our requirements for at least the next 12 months; capital spending in 2018;
and the timing of completing construction of additional clean-room space and initial wafer output from our Singapore NAND fabrication facility. We areunder no obligation to update these forward-looking statements. Our actual results could differ materially from our historical results and those discussed in theforward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those identified in "Part II, Other
Information – Item 1A. Risk Factors."
Definitions of Commonly Used Terms
As used herein, "we," "our," "us," and similar terms include Micron Technology, Inc. and our consolidated subsidiaries, unless the context indicatesotherwise. Abbreviations, terms, or acronyms are commonly used or found in multiple locations throughout this report and include the following:
Term

Definition

Term

Definition

2021 MSAC Term Loan

Variable Rate MSAC Senior Secured Term Loan due
2021

Intel

Intel Corporation

2021 MSTW Term Loan

Variable Rate MSTW Senior Secured Term Loan due
2021

Japan Court

Tokyo District Court

2022 Term Loan B

Senior Secured Term Loan B due 2022

MicronMicron Technology, Inc. (Parent Company)

2023 Notes

5.25% Senior Notes due 2023

MMJ

Micron Memory Japan, Inc.

2023 Secured Notes

7.50% Senior Secured Notes due 2023

MMJ Group

MMJ and its subsidiaries

2024 Notes

5.25% Senior Notes due 2024

MMT

Micron Memory Taiwan Co., Ltd.

2025 Notes

5.50% Senior Notes due 2025

MSTW

Micron Semiconductor Taiwan Co., Ltd.

2026 Notes

5.63% Senior Notes due 2026

MTTW

Micron Technology Taiwan, Inc.

2032C Notes

2.38% Convertible Senior Notes due 2032

QimondaQimonda AG

2032D Notes

3.13% Convertible Senior Notes due 2032

R&D

Research and Development

2033E Notes

1.63% Convertible Senior Notes due 2033

SG&A

Selling, General, and Administrative

2033F Notes

2.13% Convertible Senior Notes due 2033

SSD

Solid-State Drive

2043G Notes

3.00% Convertible Senior Notes due 2043

TLC

Triple-Level Cell

IMFT

IM Flash Technologies, LLC

VIE

Variable Interest Entity

InoteraInotera Memories, Inc.

1

PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
MICRON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS(in millions except per share amounts)(Unaudited)
Quarter ended
May 31,
2018
Net sales$

Nine months ended

June 1,
2017

7,797

$

May 31,
2018

5,566

$

June 1,
2017

21,951$

14,184

Cost of goods sold

3,074

2,957

9,211

8,860

Gross margin

4,723

2,609

12,7405,324

Selling, general, and administrative

211

204

598

550

Research and development

603

434

1,574

1,377

Other operating (income) expense, net

(44)

8

(49)

31

3,953

1,963

10,617

3,366

Operating income
Interest income

36

10

86

25

Interest expense

(80)

(153)

(292)

(453)

Other non-operating income (expense), net

Income tax (provision) benefit
Equity in net income (loss) of equity method investees
Net income
Net (income) attributable to noncontrolling interests
Net income attributable to Micron

(193)

(83)

(450)

(63)

3,716

1,737

9,961

2,875

109

(92)

(148)

(161)

(2)

2

(1)

7

3,823

1,647

9,812

2,721

—

—

(2)

—

$

3,823

$

1,647

$

9,810

$

2,721

$

3.30

$

1.49

$

8.53

$

2.52

Earnings per share
Basic
Diluted

3.10

1.40

7.96

2.38

Basic

1,159

1,106

1,150

1,082

Diluted

1,235

1,177

1,233

1,142

Number of shares used in per share calculations

See accompanying notes to consolidated financial statements.
2

MICRON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in millions)(Unaudited)
Quarter ended
May 31,
2018
Net income$

Nine months ended

June 1,
2017

3,823

$

May 31,
2018

1,647

$

June 1,
2017

9,812

$

2,721

Other comprehensive income (loss), net of tax
Gains (losses) on derivative instruments

(21)

6

(6)

(1)

Pension liability adjustments

(1)

1

—

—

Unrealized gains (losses) on investments

—

1

(2)

—

Foreign currency translation adjustments

1

11

1

48

Other comprehensive income (loss)

(21)

19

(7)

47

3,802

1,666

9,805

2,768

—

—

(2)

—

Total comprehensive income
Comprehensive (income) attributable to noncontrolling interests
Comprehensive income attributable to Micron

$

3,802

$

See accompanying notes to consolidated financial statements.
3

1,666

$

9,803

$

2,768

MICRON TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS(in millions except par value amounts)(Unaudited)
May 31,
2018

As of

August 31,
2017

AssetsCash and equivalents$

Short-term investments

6,808

$

5,109

263

319

Receivables

4,912

3,759

Inventories

3,369

3,123

147

147

15,49912,457

Other current assets
Total current assets
Long-term marketable investments

487

617

Property, plant, and equipment, net

22,705

19,431Intangible assets, net

334

387

Deferred tax assets

989

766

1,228

1,228

Goodwill
Other noncurrent assets

603

Total assets

450$

41,845$35,336

$

3,998

$

3,664

Liabilities and equity
Accounts payable and accrued expenses
Deferred income

431

408

1,454

1,262

5,883

5,334

5,890

9,872

Other noncurrent liabilities

549

639

Total liabilities

12,322

15,845

5

21

Current debt
Total current liabilities
Long-term debt

Commitments and contingencies
Redeemable convertible notes
Micron shareholders' equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,169 shares issued and 1,160 outstanding (1,116
shares issued and 1,112 outstanding as of August 31, 2017)

117

112

Additional capital

8,869

8,287

Retained earnings

20,07010,260

(429)

(67)

22

29

Total Micron shareholders' equity

28,64918,621

Noncontrolling interests in subsidiaries

869

849

29,51819,470Treasury stock, 9 shares (4 shares as of August 31, 2017)
Accumulated other comprehensive income

Total equity$

Total liabilities and equity

See accompanying notes to consolidated financial statements.
441,845$35,336MICRON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions)(Unaudited)
May 31,
2018

Nine months ended

June 1,
2017

Cash flows from operating activities
Net income

$

9,812

$

2,721

Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense and amortization of intangible assets

3,474

2,795

Amortization of debt discount and other costs

78

93

Loss on debt prepayments, repurchases, and conversions

386

62

Stock-based compensation

151

158

Gain on remeasurement of previously-held equity interest in Inotera

—

(71)

Receivables(1,177)(1,338)Inventories

(246)

108

Change in operating assets and liabilities

Accounts payable and accrued expenses

38

511

Payments attributed to intercompany balances with Inotera

—

(361)

(216)

80

Deferred income taxes, net
OtherNet cash provided by operating activities

(55)

192

12,245

4,950

Cash flows from investing activities
Expenditures for property, plant, and equipment(6,628)(3,469)Purchases of available-for-sale securities

(606)

(943)

Payments to settle hedging activities

(84)

(267)

Acquisition of Inotera—(2,634)

Proceeds from sales of available-for-sale securities

569

742

Proceeds from maturities of available-for-sale securities

219

115

Proceeds from settlement of hedging activities

151

146

Other
Net cash provided by (used for) investing activities

292

51

(6,087)(6,259)Cash flows from financing activities
Repayments of debt

(6,767)(1,774)

Payments on equipment purchase contracts

(170)

(261)

Proceeds from issuance of stock

1,636

108

Proceeds from issuance of debt

969

3,136

Other

(111)

(2)

(4,443)

1,207

(4)

(15)

1,711

(117)

Net cash provided by (used for) financing activities
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash
Net increase (decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period

5,216
$

Cash, cash equivalents, and restricted cash at end of period

See accompanying notes to consolidated financial statements.
5

6,927

4,263
$

4,146

MICRON TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(All tabular amounts in millions except per share amounts)(Unaudited)

Basis of Presentation
The accompanying consolidated financial statements include the accounts of Micron and our consolidated subsidiaries and have been prepared inaccordance with accounting principles generally accepted in the United States of America consistent in all material respects with those applied in our Annual
Report on Form 10-K for the year ended August 31, 2017. 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 2018 and 2017 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, 2017.

Significant Accounting Policies
Our significant accounting policies include those described in our Annual Report on Form 10-K for the year ended August 31, 2017 as well as the policy
below.
Government Incentives: We receive incentives from governmental entities related to expenses, assets, and other activities. Our government incentives
may require that we meet or maintain specified spending levels and other operational metrics and may be subject to reimbursement if such conditions are not
met or maintained. Government incentives are recorded in the financial statements in accordance with their purpose: as a reduction of expenses, a reduction ofasset costs, or other income. Incentives related to specific operating activities are offset against the related expense in the period the expense is incurred.
Incentives related to the acquisition or construction of fixed assets are recognized as a reduction in the carrying amounts of the related assets and reduce
depreciation expense over the useful lives of the assets. Other incentives are recognized as other operating income. Government incentives received prior tobeing earned are recognized in current or noncurrent deferred income, whereas government incentives earned prior to being received are recognized in current
or noncurrent receivables. Cash received from government incentives related to operating expenses are included as an operating activity in the statement ofcash flows, whereas incentives related to the acquisition of property, plant, and equipment are included as an investing activity.

Variable Interest Entities
We have interests in entities that are VIEs. If we are the primary beneficiary of a VIE, we are required to consolidate it. To determine if we are theprimary beneficiary, we evaluate whether we have the power to direct the activities that most significantly impact the VIE's economic performance and theobligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our evaluation includes identification ofsignificant activities and an assessment of our ability to direct those activities based on governance provisions and arrangements to provide or receive productand process technology, product supply, operations services, equity funding, financing, and other applicable agreements and circumstances. Our assessmentsof whether we are the primary beneficiary of our VIEs require significant assumptions and judgments.
Unconsolidated VIE
PTI Xi'an: Powertech Technology Inc. Xi'an ("PTI Xi'an") is a wholly-owned subsidiary of Powertech Technology Inc. ("PTI") and was created toprovide assembly services to us at our manufacturing site in Xi'an, China. We do not have an equity interest in PTI Xi'an. PTI Xi'an is a VIE because of theterms of its service agreement with us and its dependency on PTI to finance its operations. We have determined that we do not have the power to direct theactivities of PTI Xi'an that most significantly impact its economic performance, primarily because we have no governance rights. Therefore, we do not6consolidate PTI Xi'an. In connection with our assembly services with PTI, we had capital lease obligations and net property, plant, and equipment of $72
million and $69 million, respectively, as of May 31, 2018, and $80 million and $76 million, respectively, as of August 31, 2017.
Consolidated VIE
IMFT: IMFT is a VIE because all of its costs are passed to us and its other member, Intel, through product purchase agreements and because IMFT isdependent upon us or Intel for additional cash requirements. The primary activities of IMFT are driven by the constant introduction of product and process
technology. Because we perform a significant majority of the technology development, we have the power to direct its key activities. We consolidate IMFT
because we have the power to direct the activities of IMFT that most significantly impact its economic performance and because we have the obligation toabsorb losses and the right to receive benefits from IMFT that could potentially be significant to it. (See "Equity – Noncontrolling Interests in Subsidiaries –IMFT" note.)

Recently Issued Accounting Standards
In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-16 – Intra-Entity Transfers
Other Than Inventory, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when thetransfer occurs. This ASU will be effective for us in the first quarter of 2019 and requires modified retrospective adoption. We are evaluating the effects of
our adoption of this ASU on our financial statements.
In June 2016, the FASB issued ASU 2016-13 – Measurement of Credit Losses on Financial Instruments, which requires a financial asset (or a group offinancial assets) measured on the basis of amortized cost to be presented at the net amount expected to be collected. This ASU requires that the income
statement reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit
losses that have taken place during the period. This ASU requires that credit losses of debt securities designated as available-for-sale be recorded through anallowance for credit losses and limits the credit loss to the amount by which fair value is below amortized cost. This ASU will be effective for us in the firstquarter of 2021 with adoption permitted as early as the first quarter of 2020. This ASU requires modified retrospective adoption, with prospective adoption
for debt securities for which an other-than-temporary impairment had been recognized before the effective date. We are evaluating the timing and effects of
our adoption of this ASU on our financial statements.
In February 2016, the FASB issued ASU 2016-02 – Leases, which amends a number of aspects of lease accounting, including requiring lessees torecognize operating leases with a term greater than one year on their balance sheet as a right-of- use asset and corresponding liability, measured at the present
value of the lease payments. This ASU will be effective for us in the first quarter of 2020 with early adoption permitted and requires modified retrospective
adoption. The adoption of this ASU will result in an increase in right-of-use assets and corresponding liabilities. We are evaluating the timing and othereffects of our adoption of this ASU on our financial statements.
In January 2016, the FASB issued ASU 2016-01 – Recognition and Measurement of Financial Assets and Financial Liabilities, which provides guidance
for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. This ASU will be effective for us in the first quarter of 2019and requires modified retrospective adoption, with prospective adoption for amendments related to equity securities without readily determinable fair values.
Our assets and liabilities subject to this standard are not material.
In May 2014, the FASB issued ASU 2014-09 – Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition
guidance under generally accepted accounting principles in the United States. The core principal of this ASU, as amended, is that an entity should recognize
revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash
flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or
fulfill a contract. This ASU will be effective for us in the first quarter of 2019 and we expect to elect the modified retrospective adoption method.
As a result of the adoption of this ASU, we expect to recognize revenue from sales of products to our distributors (which generally have agreementsallowing rights of return or price protection) at the time control transfers to our distributors, which is
7generally earlier than recognizing revenue only upon resale by our distributors under existing revenue recognition guidance. Revenue recognized upon resaleby our distributors under these arrangements was 19% of our consolidated revenue for the third quarter and first nine months of 2018, and 19% and 21% of
our consolidated revenue for the third quarter and first nine months of 2017, respectively. On the date of initial application of this ASU, we will derecognize
the deferred income on sales made to our distributors through a cumulative adjustment to retained earnings. We expect the revenue deferral, historicallyrecognized in the following period, to be offset by the earlier recognition of revenue as described above as control of product transfers to our distributors. As
a result of the adoption of this ASU, we expect to recognize interest expense from the financing component for contracts with advanced payments underwhich we transfer control of our products to our customers for periods extending beyond one year, although historically such arrangements would not haveresulted in significant amounts of interest expense. As a result of the adoption of this ASU, we expect that revenue recognized under our current license
agreements will not change materially.

Acquisition of Inotera
Through December 6, 2016, we held a 33% ownership interest in Inotera, now known as Micron Technology Taiwan, Inc. ("MTTW") and accounted forour ownership interest under the equity method. On December 6, 2016, we acquired the remaining 67% ownership interest in Inotera not owned by us (the"Inotera Acquisition") and began consolidating Inotera's operating results. Inotera manufactures DRAM products at its 300mm wafer fabrication facility in
Taoyuan City, Taiwan, and previously sold such products exclusively to us through supply agreements, under which we purchased $504 million of DRAM
products in the first quarter of 2017, based on a pricing formula that equally shared margin between Inotera and us.
Pro Forma Financial Information
The following pro forma financial information presents the combined results of operations as if the Inotera Acquisition had occurred on September 4,
2015. The pro forma financial information includes the accounting effects of the business combination, including adjustments for depreciation of property,
plant, and equipment, interest expense, elimination of intercompany activities, and revaluation of inventories. The pro forma financial information below is
not necessarily indicative of either future results of operations or results that might have been achieved had the Inotera Acquisition occurred on September 4,
2015.

Net sales$

Quarter ended

Nine months
ended

June 1,
2017

June 1,
2017

5,566

$

14,179Net income

1,696

2,776

Net income attributable to Micron

1,696

2,776

Basic

1.53

2.52

Diluted

1.44

2.39

Earnings per share

The pro forma financial information includes our results for the quarter and nine months ended June 1, 2017 (which includes the results of Inotera since
our acquisition of Inotera on December 6, 2016), the results of Inotera for the three months ended November 30, 2016, and the adjustments described above.

8

Cash and Investments
Cash and equivalents and the fair values of our available-for-sale investments, which approximated amortized costs, were as follows:
As of

May 31, 2018
Cash andEquivalents

Cash

$

3,452

Short-term
Investments$—

August 31, 2017

Long-termMarketable
Investments(1)$Total Fair
Value

—

$

3,452

Cash andEquivalents

$

2,237

Long-termMarketable
Investments(1)Short-term
Investments

$

—

$

Total Fair
Value

—

$

2,237

Level 1(2)Money market funds

3,061

—

—

3,061

2,332

—

—

2,332

Level 2(3)Corporate bonds

2

151

269

422

—

193

315

508

Certificates of deposit

259

10

2

271

483

24

3

510

Government securities

—

62

99

161

1

90

126

217

Asset-backed securities

—

14

117

131

—

2

173

175

Commercial paper

34

26

—

60

56

10

—

66

7,558

5,109

6,808
Restricted cash(4)Cash, cash equivalents, andrestricted cash

$

263

$

487

$

119
$

$

319

$

617

$

6,045

107

6,927

$

5,216

(1)

The maturities of long-term marketable securities range from one to four years.
(2) The fair value of Level 1 securities is measured based on quoted prices in active markets for identical assets.
(3) The fair value of Level 2 securities is measured using information obtained from pricing services, which obtain quoted market prices for similar
instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine theappropriate value at the measurement date. We perform supplemental analyses to validate information obtained from these pricing services. No
adjustments were made to the fair values indicated by such pricing information as of May 31, 2018 or August 31, 2017.
(4) Restricted cash is included in other noncurrent assets and primarily represents balances related to the MMJ Creditor Payments and interest reservebalances related to the 2021 MSTW Term Loan.
Gross realized gains and losses from sales of available-for-sale securities were not material for any period presented. As of May 31, 2018, there were noavailable-for-sale securities that had been in a loss position for longer than 12 months.

Receivables
May 31,2018

As of
Trade receivables$

August 31,
2017

4,513

$

3,490

Income and other taxes

142

100

Other

257

169

$

9

4,912

$

3,759

Inventories
May 31,2018

As ofFinished goods$

Work in process

August 31,
2017
828

$

856

2,168

Raw materials and supplies

1,968

373
$

3,369

299
$

3,123

Property, Plant, and Equipment
May 31,
2018

As of
Land

$

August 31,
2017
345

$

345

Buildings

8,560

7,958

Equipment(1)36,90932,187

Construction in progress(2)

826

499

Software

624

544

Accumulated depreciation$

47,264

41,533(24,559)(22,102)22,705$

19,431(1)

Included costs related to equipment not placed into service of $1.41 billion and $994 million, as of May 31, 2018 and August 31, 2017, respectively.
(2) Includes building-related construction and tool installation costs for assets not placed into service.

Intangible Assets and Goodwill
As of

May 31, 2018
Gross
AmountAugust 31, 2017

Accumulated
Amortization

Gross
AmountAccumulated
Amortization

Amortizing assets
Product and process technology

$

573

$

(347)

$

756

$

(477)

Non-amortizing assets
In-process R&D
Total intangible assets
Goodwill

108
$

681

$

1,228

—
$

(347)

108
$

864

$

1,228

—
$

(477)

During the first nine months of 2018 and 2017, we capitalized $27 million and $22 million, respectively, for product and process technology withweighted-average useful lives of 11 years and 10 years, respectively. Expected amortization expense is $20 million for the remainder of 2018, $52 million for
2019, $37 million for 2020, $30 million for 2021, and $20 million for 2022.

10

Accounts Payable and Accrued Expenses
May 31,2018

As ofAccounts payable$

August 31,
2017

1,360

Property, plant, and equipment payables

$

1,333

1,143

1,018

Salaries, wages, and benefits

692

603

Income and other taxes

311

163

Customer advances

181

197

Other

311
$

3,998

350
$

3,664

Debt
As of
Instrument

May 31, 2018
Stated Rate

Effective
Rate

August 31, 2017
LongTerm

Current

MMJ Creditor Payments

N/A

6.52% $

237

Capital lease obligations

N/A

3.80%

346

$

259

2021 MSAC Term Loan

4.42%

4.65%

—

2021 MSTW Term Loan

2.85%

3.01%

—

2022 Term Loan B

3.74%

4.15%

5

721

2023 Notes

5.25%

5.43%

—

—

2023 Secured Notes

7.50%

7.69%

—

—

2024 Notes

5.25%

5.38%

—

2025 Notes

5.50%

5.56%

—

2026 Notes

5.63%

5.73%

—

2032C Notes(1)(2)

2.38%

5.95%

2032D Notes(1)

3.13%

6.33%

2033E Notes(1)1.63%2033F Notes(1)2.13%2043G Notes(1)

Total
$

496

$

157

$

474

Total
$

357

—

—

99

697

796

1,993

1,993

—

2,640

2,640

726

5

725

730

—

—

991

991

—

—

1,238

1,238

—

—

—

546

546

515

515

—

515

515

—

—

—

128

128

504

—

504

—

211

211

77

149

226

—

159

159

1.63%

43

—

43

202

—

202

4.93%

123

—

123

278

—

278

3.00%

6.76%

10

679

689

—

671

671

IMFT Member Debt

0.00%

0.00%

—

969

969

—

—

—

Other notes

1.84%

2.46%

109

—

109

164

44

208

1,454

$

5,890

$

7,344

$

1,262

833

631

951

$

605

LongTerm

Current

$

9,872

1,190

$

11,134(1)

Since the closing price of our common stock exceeded 130% of the conversion price per share for at least 20 trading days in the 30 trading day
period ended on March 31, 2018, these notes are convertible by the holders at any time through the calendar quarter ended June 30, 2018. Current
debt as of May 31, 2018 included an aggregate of $553 million for the settlement obligation (including principal and amounts in excess of principal)
for conversions of certain convertible notes that will settle in cash in the fourth quarter of 2018. Additionally, the closing price of our common stock
also exceeded the thresholds for the calendar quarter ended June 30, 2018; therefore, these notes are convertible by the holders at any time throughSeptember 30, 2018.
(2) The 2032C Notes were classified as current as of May 31, 2018 because the holders can require us to repurchase for cash all or a portion of the2032C Notes on May 1, 2019.
The carrying values in the table above as of May 31, 2018 include $4 million of principal amount of our 2033E Notes for which we announced we would
redeem on June 15, 2018 and $553 million for the aggregate settlement obligation of certain convertible notes that had been converted but not settled.
Additionally, in June 2018, we made an irrevocable election under the terms of the 2021 MSTW Term Loan to prepay principal of 25 billion New Taiwan
dollars (equivalent to $836 million as of May 31, 2018) on July 6, 2018. These items had an aggregate carrying value of $1.39 billion as of May 31, 2018 thatwill settle in the fourth quarter of 2018 and reduce the carrying value of our debt.

11

Debt Prepayments, Repurchases, and Conversions
During the first nine months of 2018, we prepaid, repurchased, and settled conversions of debt with an aggregate of $4.73 billion principal amount. When
we receive a notice of conversion for any of our convertible notes and elect to settle in cash any amount of the conversion obligation in excess of the principal
amount, the cash settlement obligations become derivative debt liabilities subject to mark-to-market accounting treatment based on the volume-weightedaverage price of our common stock over a period of 20 consecutive trading days. Accordingly, at the date of our election to settle a conversion in cash, we
reclassify the fair value of the equity component of the converted notes from additional capital to derivative debt liability within current debt in ourconsolidated balance sheet.
The following table presents the effects of prepayments, repurchases, and conversions of debt in the first nine months of 2018:
Increase(Decrease) in
Carrying Value

Decrease in
Principal

Nine months ended May 31, 2018

Decrease in
EquityDecrease in CashGain (Loss)

Prepayments and repurchases
2021 MSAC Term Loan$

2021 MSTW Term Loan

(730)

$

(727)

(671)

$

(730)

$

—

(668)

(671)

—

$

(3)
(3)

2023 Notes(1,000)(991)(1,046)—(55)2023 Secured Notes(1,250)(1,238)(1,373)—(135)2024 Notes

(550)

(546)

(572)

—

(25)

2026 Notes

(129)

(129)

(139)

—

(11)

2033F Notes

(66)

(63)

(316)

(252)

(1)

Settled conversions
2032C Notes

(52)

(49)

(240)

(195)

4

2033E Notes(1)

(161)

(191)

(491)

(251)

(49)

2033F Notes

(119)

(114)

(575)

(447)

(14)

2032C Notes

—

338

—

(264)

(74)

2032D Notes

—

64

—

(51)

(13)

2033E Notes

—

31

—

(29)

(3)

2033F Notes

—

17

—

(14)

(3)

2043G Notes

—

6

—

(5)

(1)

Conversions not settled(2)$(4,728)$(4,260)$(6,153)$(1,508)

$

(386)

(1)

Settlement included issuance of 4 million shares of our treasury stock in addition to payment of cash.
(2) As of May 31, 2018, an aggregate of $101 million in principal amount of our convertible notes (with a carrying value of $553 million) had converted
but not settled. These notes will settle in cash in the fourth quarter of 2018.
IMFT Member Debt
In the first nine months of 2018, Intel provided debt financing ("IMFT Member Debt") of $969 million to IMFT pursuant to the terms of the IMFT joint
venture agreement. IMFT Member Debt bears no interest, matures upon the completion of an auction and sale of assets of IMFT prior to the dissolution,liquidation, or other wind-up of IMFT, and is convertible, at the election of Intel, in whole or in part, into a capital contribution to IMFT. Additionally, to theextent IMFT distributes cash to its members under the terms of the IMFT joint venture agreement, Intel may, at its option, designate any portion of the
distribution to be a repayment of the IMFT Member Debt. In the event Intel exercises its right to put its interest in IMFT to us, or if we exercise our right tocall from Intel its interest in IMFT, Intel will transfer to Micron any IMFT Member Debt outstanding at the time of the closing of the put or call transaction.
(See "Equity – Noncontrolling Interest in Subsidiaries – IMFT" note.)

122022 Senior Secured Term Loan B Repricing Amendment
On October 26, 2017 and April 27, 2018, we amended our 2022 Term Loan B, substantially all of which was treated as a debt modification, to reduce theinterest rate margins. As of May 31, 2018, the 2022 Term Loan B bears interest at LIBOR plus 1.75%.
Convertible Senior Notes
As of May 31, 2018, the trading price of our common stock was higher than the initial conversion prices of our convertible notes. As a result, theconversion values for these notes exceeded the principal amounts by $3.21 billion as of May 31, 2018.

Contingencies
We have accrued a liability and charged operations for the estimated costs of adjudication or settlement of various asserted and unasserted claims existing
as of the balance sheet date, including those described below. We are currently a party to other legal actions arising from the normal course of business, noneof which are expected to have a material adverse effect on our business, results of operations, or financial condition.
Patent Matters
As is typical in the semiconductor and other high-tech industries, from time to time, others have asserted, and may in the future assert, that our products
or manufacturing processes infringe upon their intellectual property rights.
On November 21, 2014, Elm 3DS Innovations, LLC ("Elm") filed a patent infringement action against Micron, Micron Semiconductor Products, Inc.,and Micron Consumer Products Group, Inc. in the U.S. District Court for the District of Delaware. On March 27, 2015, Elm filed an amended complaint
against the same entities. The amended complaint alleges that unspecified semiconductor products of ours that incorporate multiple stacked die infringe 13
U.S. patents and seeks damages, attorneys' fees, and costs.
On December 15, 2014, Innovative Memory Solutions, Inc. filed a patent infringement action against Micron in the U.S. District Court for the District ofDelaware. The complaint alleges that a variety of our NAND products infringe eight U.S. patents and seeks damages, attorneys' fees, and costs.
On June 24, 2016, the President and Fellows of Harvard University filed a patent infringement action against Micron in the U.S. District Court for theDistrict of Massachusetts. The complaint alleged that a variety of our DRAM products infringed two U.S. patents and sought damages, injunctive relief, andother unspecified relief. On March 1, 2018, we executed a settlement agreement resolving this litigation. The settlement amount did not have a material effecton our business, results of operations, or financial condition.
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. On April 3, 2018, Micron Semiconductor(Shanghai) Co. Ltd. ("MSS") was served with the same complaint. The complaint alleges that MXA and MSS infringe a Chinese patent by manufacturing andselling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring the defendants to destroy inventory of the accused products andequipment for manufacturing the accused products in China, to stop manufacturing, using, selling, and offering for sale the accused products in China, and topay damages of 98 million Chinese yuan plus court fees incurred.
On March 21, 2018, MXA was served with a patent infringement complaint filed by United Microelectronics Corporation ("UMC") in the Fuzhou
Intermediate People's Court in Fujian Province, China. On April 3, 2018, MSS was served with the same complaint. The complaint alleges that MXA andMSS infringe a Chinese patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring the defendants todestroy 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 April 3, 2018, MSS was served with another patent infringement complaint filed by Jinhua and two additional complaints filed by UMC in the
Fuzhou Intermediate People's Court in Fujian Province, China. The three additional complaints allege that MSS infringes three Chinese patents by
manufacturing and selling certain Crucial MX300 SSDs and certain GDDR5
13

memory chips. The two complaints filed by UMC each seek an order requiring the defendant 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 damagesof 90 million Chinese yuan plus court fees incurred. The complaint filed by Jinhua seeks an order requiring the defendants 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.
Among other things, the above lawsuits pertain to certain of our DDR DRAM, DDR2 DRAM, DDR3 DRAM, DDR4 DRAM, SDR SDRAM, PSRAM,RLDRAM, LPDRAM, NAND, and certain other memory products we manufacture, which account for a significant portion of our net sales.
We are unable to predict the outcome of assertions of infringement made against us and therefore cannot estimate the range of possible loss. A
determination that our products or manufacturing processes infringe the intellectual property rights of others or entering into a license agreement coveringsuch intellectual property could result in significant liability and/or require us to make material changes to our products and/or manufacturing processes. Anyof the foregoing could have a material adverse effect on our business, results of operations, or financial condition.
QimondaOn January 20, 2011, Dr. Michael Jaffé, administrator for Qimonda's insolvency proceedings, filed suit against Micron and Micron Semiconductor B.V.,
our Netherlands subsidiary ("Micron B.V."), in the District Court of Munich, Civil Chamber. The complaint seeks to void, under Section 133 of the German
Insolvency Act, a share purchase agreement between Micron B.V. and Qimonda signed in fall 2008, pursuant to which Micron B.V. purchased substantiallyall of Qimonda's shares of Inotera (the "Inotera Shares"), representing approximately 18% of Inotera's outstanding shares as of May 31, 2018, and seeks anorder requiring us to re-transfer those shares to the Qimonda estate. The complaint also seeks, among other things, to recover damages for the alleged value ofthe joint venture relationship with Inotera and to terminate, under Sections 103 or 133 of the German Insolvency Code, a patent cross-license between us andQimonda entered into at the same time as the share purchase agreement.
Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March 13, 2014, the court issued
judgments: (1) ordering Micron B.V. to pay approximately $1 million in respect of certain Inotera Shares sold in connection with the original share purchase;(2) ordering Micron B.V. to disclose certain information with respect to any Inotera Shares sold by it to third parties; (3) ordering Micron B.V. to disclose thebenefits derived by it from ownership of the Inotera Shares, including in particular, any profits distributed on the Inotera Shares and all other benefits; (4)denying Qimonda's claims against Micron for any damages relating to the joint venture relationship with Inotera; and (5) determining that Qimonda's
obligations under the patent cross-license agreement are canceled. In addition, the court issued interlocutory judgments ordering, among other things: (1) that
Micron B.V. transfer to the Qimonda estate the Inotera Shares still owned by Micron B.V. and pay to the Qimonda estate compensation in an amount to be
specified for any Inotera Shares sold to third parties; and (2) that Micron B.V. pay the Qimonda estate as compensation an amount to be specified for benefits
derived by Micron B.V. from ownership of the Inotera Shares. The interlocutory judgments have no immediate, enforceable effect on us, and, accordingly, we
expect to be able to continue to operate with full control of the Inotera Shares subject to further developments in the case. We have filed a notice of appeal,
and the parties have submitted briefs to the appeals court.
We are unable to predict the outcome of the matter and therefore cannot estimate the range of possible loss. The final resolution of this lawsuit could
result in the loss of the Inotera Shares or monetary damages, unspecified damages based on the benefits derived by Micron B.V. from the ownership of the
Inotera Shares, and/or the termination of the patent cross-license, which could have a material adverse effect on our business, results of operation, or financial
condition.
Other
On December 5, 2017, Micron filed a complaint against UMC and Jinhua in the U.S. District Court for the Northern District of California. The complaint
alleges that UMC and Jinhua violated the Defend Trade Secrets Act, the civil provisions of the Racketeer Influenced and Corrupt Organizations Act, andCalifornia's Uniform Trade Secrets Act by misappropriating Micron's trade secrets and other misconduct. Micron's complaint seeks damages, restitution,
disgorgement of profits, injunctive relief, and other appropriate relief.
On April 27, 2018, a purported class-action lawsuit was filed against Micron and other DRAM suppliers in the U.S. District Court for the Northern
District of California asserting claims based on alleged price-fixing of DRAM products during
14

the period from June 1, 2016 to February 1, 2018. Similar cases were subsequently filed in Canadian courts in Quebec, Montreal and Toronto, Ontario. The
complaints seek treble monetary damages, costs, interest, attorneys' fees, and other injunctive and equitable relief. We are unable to predict the outcome ofthese matters and therefore cannot estimate the range of possible loss. The final resolution of these matters could result in significant liability and could havea material adverse effect on our business, results of operations, or financial condition.
In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify the other party. It is notpossible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations and theunique 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.

EquityMicron Shareholders' Equity
Common Stock Issuance: In October 2017, we issued 34 million shares of our common stock for $41.00 per share in a public offering for proceeds of$1.36 billion, net of underwriting fees and other offering costs.
Outstanding Capped Calls: In connection with certain of our convertible notes, we entered into capped call transactions, which are intended to reduce
the effect of potential dilution. The capped calls provide for our receipt of cash or shares, at our election, from our counterparties if the trading price of ourstock is above the strike prices on the expiration dates. As of May 31, 2018, the dollar value of cash or shares that we would receive from our outstanding
capped calls upon their expiration dates range from $0, if the trading price of our stock is below the strike prices for all capped calls at expiration, to $98
million, if the trading price of our stock is at or above the cap prices for all capped calls. Settlement of the capped calls prior to the expiration dates may be foran amount less than the maximum value at expiration.
Settlement of Capped Calls: During the first nine months of 2018, we share-settled portions of our capped calls upon expiration, and received 9 million
shares (equal to a value of $429 million) based on the volume-weighted trading stock prices at the expiration dates. Shares received were recorded as treasury
stock.
Common Stock Repurchase Authorization: In May 2018, we announced that our Board of Directors had authorized the discretionary repurchase of up to$10 billion of our outstanding common stock beginning in 2019. We may purchase shares on a discretionary basis through open-market purchases, blocktrades, privately-negotiated transactions, and/or derivative transactions, subject to market conditions and our ongoing determination of the best use ofavailable cash. The repurchase authorization does not obligate us to acquire any common stock.
Noncontrolling Interests in Subsidiaries
As of

May 31, 2018
Balance

IMFT$

Percentage
852

Other

17
$

August 31, 2017869

Balance49% $Various

Percentage
832
17

$

49%
Various849

IMFT: Since 2006, we have owned 51% of IMFT, a joint venture between us and Intel. IMFT is governed by a Board of Managers, for which thenumber of managers appointed by each member varies based on the members' respective ownership interests. IMFT manufactures semiconductor products
exclusively for its members under a long-term supply agreement at prices approximating cost.
IMFT's capital requirements are generally determined based on an annual plan approved by the members, and capital contributions to IMFT arerequested as needed. Capital requests are made to the members in proportion to their then-current ownership interest. Members may elect to not contribute
their proportional share, and in such event, the contributing member may elect to contribute any amount of the remaining capital request, either in the form ofan equity contribution or member debt financing. Under the supply agreement, the members have rights and obligations to the capacity of IMFT in proportion
to their15

investment, including member debt financing. Any capital contribution or member debt financing results in a proportionate adjustment to the sharing of
output on an eight-month lag. Members pay their proportionate share of fixed costs associated with IMFT's capacity.
IMFT sales to Intel were $114 million and $341 million for the third quarter and first nine months of 2018, respectively, and $123 million and $375
million for the third quarter and first nine months of 2017, respectively. In the first quarter of 2018, IMFT discontinued production of NAND and subsequent
to that time is entirely focused on 3D XPoint memory production.
The IMFT joint venture agreement extends through 2024 and includes certain buy-sell rights. At any time through December 2018, Intel can put to us,
and from January 2019 through December 2021, we can call from Intel, Intel's interest in IMFT, in either case, for a price that approximates Intel's interest in
the net book value of IMFT plus member debt at the time of the closing. If Intel exercises its put right, we can elect to set the closing date of the transaction
any time between six months and two years following such election by Intel and we can elect to receive financing of the purchase price from Intel for one to
two years from the closing date. If we exercise our call right, Intel can elect to set the closing date of the transaction to be any time between six months andone year following such election. Following the closing date resulting from exercise of either the put or the call, we will continue to supply to Intel for aperiod of one year between 50% and 100%, at Intel's choice, of Intel's immediately preceding six-month period pre-closing volumes of IMFT products for the
first six-month period following the closing and between 0% and 100%, at Intel's choice, of Intel's first six-month period following the closing volumes of
IMFT products for the second six-month period following the closing, at a margin that varies depending on whether the put or call was exercised.
Creditors of IMFT have recourse only to IMFT's assets and do not have recourse to any other of our assets. The following table presents the assets andliabilities of IMFT included in our consolidated balance sheets:
May 31,
2018

As of

August 31,
2017

AssetsCash and equivalents

$

109

$

87

Receivables

86

81

Inventories

119

128

Other current assets

6

7

Total current assets

320

303

2,706

1,852

46

49

Property, plant, and equipment, net
Other noncurrent assets
Total assets

$

3,072

$

2,204

$

200

$

299

Liabilities
Accounts payable and accrued expenses
Deferred income

96Current debt

20

19

229

324

1,029

75

Total current liabilities
Long-term debt
Other noncurrent liabilities

77$

Total liabilities

1,335

88
$

487

Amounts exclude intercompany balances that were eliminated in our consolidated balance sheets.
Restrictions on Net Assets
As a result of the corporate reorganization proceedings of MMJ, the 2021 MSTW Term Loan covenants, and the IMFT joint venture agreement, our total
restricted net assets (excluding intercompany balances and noncontrolling interests) as of May 31, 2018 were $3.98 billion for the MMJ Group, $4.06 billion
for MSTW and MTTW, and $885 million for IMFT.

16

Fair Value Measurements
All of our marketable debt and equity investments were classified as available-for-sale and carried at fair value. Amounts reported as cash andequivalents, receivables, and accounts payable and accrued expenses approximate fair value. The estimated fair value and carrying value of our outstanding
debt instruments (excluding the carrying value of equity and mezzanine equity components of our convertible notes) were as follows:
As of

May 31, 2018
Fair
Value

Notes and MMJ Creditor Payments

$

4,870

Convertible notes

4,734

August 31, 2017

Carrying
Value
$

4,808
1,585

Fair
Value
$

8,793
3,901

Carrying
Value
$

8,423
1,521

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

17Derivative Instruments
Fair Value ofGross Notional
Amount(1)Current
Assets(2)Current
Liabilities(3)Noncurrent
Assets(4)As of May 31, 2018
Derivative instruments with hedge accounting designation
Cash flow currency hedges$

Fair value currency hedges

822

$

239

2

$

(15)

$

—

—

(10)

—

2

(25)

—

Derivative instruments without hedge accounting designation
Non-designated currency hedges

4,989

Convertible notes settlement obligation(5)

8

(25)

—

—

(558)

—

8

(583)

—

$

10

$

(608)

$

—

$

17

$

—

$

—

As of August 31, 2017
Derivative instruments with hedge accounting designation
Cash flow currency hedges$

456

Derivative instruments without hedge accounting designation
Non-designated currency hedges

4,847

Convertible notes settlement obligation(5)

$

34

(5)

1

—

(47)

—

34

(52)

1

51

$

(52)

$

1

(1)

Notional amounts of currency hedge contracts in U.S. dollars.
Included in receivables – other.
(3) Included in accounts payable and accrued expenses – other for forward contracts and in current debt for convertible notes settlement obligations.
(4) Included in other noncurrent assets.
(5) Notional amounts of convertible notes settlement obligations as of May 31, 2018 and August 31, 2017 were 10 million and 2 million shares of ourcommon stock, respectively.
(2)

Derivative Instruments with Hedge Accounting Designation
We utilize currency forward contracts that generally mature within twelve months to hedge our exposure to changes in currency exchange rates. Currency
forward contracts are measured at fair value based on market-based observable inputs including currency exchange spot and forward rates, interest rates, andcredit-risk spreads (Level 2).
Cash Flow Hedges: We utilize cash flow hedges for our exposure from changes in currency exchange rates for certain capital expenditures. For
derivative instruments designated as cash flow hedges, the effective portion of the realized and unrealized gains or losses on derivatives is included as acomponent of accumulated other comprehensive income. Amounts in accumulated other comprehensive income are reclassified into earnings in the same line
items and in the same periods in which the underlying transactions affect earnings. For the periods presented prior to the second quarter of 2018, theineffective and excluded portion of the realized and unrealized gain or loss was included in other non-operating income (expense). As a result of adopting
ASU 2017-12, beginning in the second quarter of 2018, such amounts are included in the same line item in which the underlying transactions affect earnings.
We recognized losses in accumulated other comprehensive income from the effective portion of cash flow hedges of $23 million and $6 million for thethird quarter and first nine months of 2018, respectively, and gains of $6 million and losses of $3 million for the third quarter and first nine months of 2017,
respectively. Neither the amount excluded from hedge effectiveness18

nor the reclassifications from accumulated other comprehensive income to earnings were material in the third quarters or first nine months of 2018 and2017. The amounts from cash flow hedges included in accumulated other comprehensive income that are expected to be reclassified into earnings in the next
12 months were also not material.
Fair Value Hedges: We utilize fair value hedges for our exposure from changes in currency exchange rates for certain monetary assets and liabilities. For
derivative forward contracts designated as fair value hedges, hedge effectiveness is determined by the change in the fair value of the undiscounted spot rate of
the forward contract. The changes in fair values of hedge instruments attributed to changes in undiscounted spot rates are recognized in other non-operating
income (expense). The time value associated with hedge instruments is excluded from the assessment of the effectiveness of hedges and is recognized on astraight-line basis over the life of hedges to other non-operating income (expense). Amounts recorded to other comprehensive income (loss) for the third
quarter and first nine months of 2018 were not material. The effects of fair value hedges on our consolidated statements of operations were as follows:
Quarter ended

Nine months ended

May 31, 2018

May 31, 2018

Other Non-Operating Income (Expense)
Gain (loss) on remeasurement of hedged assets and liabilities

$

28

$

(28)

Gain (loss) on derivatives designated as hedging instruments

(28)

28

Amortization of amounts excluded from hedge effectiveness

(13)

(32)

$

(13)

$

(32)

Derivative Instruments without Hedge Accounting Designation
Currency Derivatives: Except for certain assets and liabilities hedged using fair value hedges, we generally utilize a rolling hedge strategy with currency
forward contracts that mature within nine months to hedge our exposures of monetary assets and liabilities from changes in currency exchange rates. At theend of each reporting period, monetary assets and liabilities denominated in currencies other than the U.S. dollar are remeasured into U.S. dollars and theassociated 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 wellas the changes in the underlying monetary assets and liabilities from changes in currency exchange rates are included in other non-operating income(expense). For derivative instruments without hedge accounting designation, we recognized losses of $52 million for the third quarter, which offset $52
million of gains recognized during the first six months of 2018, and we recognized gains of $70 million and losses of $47 million for the third quarter andfirst nine months of 2017, respectively.
Convertible Note Settlement Obligations: For settlement obligations associated with our convertible notes subject to mark-to-market accounting
treatment, the fair values of the underlying derivative settlement obligations were initially determined using the Black-Scholes option valuation model (Level2), which requires inputs of stock price, expected stock-price volatility, estimated option life, risk-free interest rate, and dividend rate. The subsequent
measurement amounts were based on the volume-weighted-average price of our common stock (Level 2). (See "Debt" note.) We recognized losses of $119
million and $143 million for the third quarter and first nine months of 2018, respectively, in other non-operating income (expense), net for the changes in fairvalue of the derivative settlement obligations.

Equity Plans
As of May 31, 2018, 127 million shares of our common stock were available for future awards under our equity plans, including 33 million shares
approved for issuance under our employee stock purchase plan ("ESPP").
Employee Stock Purchase PlanOur ESPP was approved by shareholders at our 2017 Annual Shareholder Meeting and will be offered to substantially all employees beginning in August
2018. The ESPP permits eligible employees to purchase shares of our common stock through payroll deductions of up to 10% of their eligible compensation,subject to certain limitations. The purchase price of the shares under the ESPP equals 85% of the lower of the fair market value of our common stock oneither the first or last trading day of each six-month offering period.

19

Stock Options
Quarter ended
May 31, 2018
Stock options granted
Weighted-average grant-date fair value per share

Nine months ended

June 1, 2017—$

May 31, 2018
1

24.14

$

June 1, 2017

2

11.64

$

7

18.61

$

8.59

Average expected life in years

5.4

5.5

5.5

5.5

Weighted-average expected volatility

45%

44%

44%

46%

Weighted-average risk-free interest rate

2.8%

2.0%

2.2%

1.8%

Expected dividend yield

0.0%

0.0%

0.0%

0.0%

Restricted Stock and Restricted Stock Units ("Restricted Stock Awards")
Quarter ended
May 31,
2018
Restricted stock award shares granted
Weighted-average grant-date fair value per share

Nine months ended

June 1,
2017
—

$

53.77

May 31,
2018
—

$

27.75

June 1,
2017
4

$

42.14

8
$

19.10

Stock-based Compensation Expense
Quarter ended
May 31,
2018

Nine months ended

June 1,
2017

May 31,
2018

June 1,
2017

Stock-based compensation expense by caption
Cost of goods sold$

20

Selling, general, and administrative$

14

Research and development

24

$

20

14

62

$

48

13

53

41

$

48

$

57

$

$

13

$

19

$

66
39

151

$

44

$

158

Stock-based compensation expense by type of award
Stock options
Restricted stock awards

35
$

48

38
$

57

107
$

151

54
104

$

158

The income tax benefit related to share-based compensation was $26 million and $142 million for the third quarter and first nine months of 2018,
respectively, and $17 million and $80 million for the third quarter and first nine months of 2017, respectively. The income tax benefits related to share-based
compensation for the periods presented prior to the second quarter of 2018 were offset by an increase in the U.S. valuation allowance. As of May 31, 2018,$364 million of total unrecognized compensation costs for unvested awards was expected to be recognized through the third quarter of 2022, resulting in aweighted-average period of 1.3 years.

Research and Development
We share the cost of certain product and process development activities with development partners. Our R&D expenses were reduced by reimbursements
under these arrangements of $53 million and $167 million for the third quarter and first nine months of 2018, respectively, and $47 million and $162 million
for the third quarter and first nine months of 2017, respectively.

20

Other Non-Operating Income (Expense), Net
Quarter ended
May 31,
2018
Loss on debt prepayments, repurchases, and conversions$

Nine months ended

June 1,
2017
(168)

$

May 31,
2018
(61)

$

June 1,
2017
(386)

$

(63)

Loss from changes in currency exchange rates

(24)

(22)

(60)

(62)

Gain on remeasurement of previously-held equity interest in Inotera

—

—

—

71

Other

(1)
$

—

(193)

$

(4)

(83)

$

(450)

(9)
$

(63)

In connection with the Inotera Acquisition, we revalued our previously-held 33% equity interest to its fair value. In determining the fair value, we usedvarious valuation techniques, including the share price of Inotera prior to the announcement of the acquisition and discounted cash flow projections using
inputs including discount rate and terminal growth rate (Level 3). As a result, we recognized a non-operating gain of $71 million in the second quarter of
2017.

Income Taxes
On December 22, 2017, the United States enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act") thatlowers the U.S. corporate income tax rate from 35% to 21% and significantly affects how income from foreign operations is taxed in the United States. As aresult of our fiscal year-end, our U.S. statutory federal rate will be 25.7% for 2018 (based on the 35% corporate rate through December 31, 2017 and 21%
from that date through the end of fiscal year 2018) and 21% for subsequent years. The Tax Act imposes a one-time transition tax in 2018 on the higher of ouraccumulated foreign income, as determined as of November 2, 2017 or December 31, 2017 (the "Repatriation Tax"); provides a U.S. federal tax exemption on
foreign earnings distributed to the United States; and, beginning in 2019, creates a new minimum tax on certain foreign earnings in excess of a deemed returnon tangible assets (the "Foreign Minimum Tax"). The Tax Act allows us to elect to pay any Repatriation Tax due in eight annual interest-free payments inincreasing amounts beginning in December 2018. In connection with the provisions of the Tax Act, we are continuing to evaluate whether to account for theForeign Minimum Tax provisions that begin for us in 2019 as a period cost or in our measurement of deferred taxes.
The Securities and Exchange Commission Staff Accounting Bulletin No. 118 ("SAB 118") allows the use of provisional amounts (reasonable estimates)
if our analyses of the impacts of the Tax Act has not been completed when our financial statements are issued. Provisional amounts may be adjusted during a
one-year measurement period as accounting for the income tax effects of the Tax Act are completed or as estimates are revised.
In accordance with SAB 118, we recorded certain provisional estimates included in the table below. Although the provisional estimates are based on thebest available interpretations of the Tax Act, the final impacts may differ from the estimates due to, among other things, the issuance of additional regulatory
and legislative guidance related to the Tax Act. Our income tax (provision) benefit consisted of the following:
Quarter ended
May 31, 2018
Provisional estimate for the Repatriation Tax, net of adjustments related to
uncertain tax positions$

222

Nine months ended

June 1, 2017$—

May 31, 2018$

(1,113)June 1, 2017$—

Remeasurement of deferred tax assets and liabilities reflecting the lower
U.S. corporate tax rates

—

—

(133)

—

Provisional estimate for the release of the valuation allowance on the net
deferred tax assets of our U.S. operations

—

—

1,337

—

Utilization of and other changes in net deferred tax assets of MMJ, MMT,
and MTTW

(35)

(31)

(78)

(52)

Other income tax (provision) benefit

(78)
$

21

109

(61)
$

(92)

(161)
$

(148)

(109)
$

(161)

As noted above, provisional estimates were recorded for the Repatriation Tax and the release of the valuation allowance on the net deferred tax assets of
our U.S. operations. To determine the amount of the Repatriation Tax, we must determine the accumulated foreign earnings of our foreign subsidiaries and theamount of foreign income tax paid on such earnings. The provisional estimate of the Repatriation Tax is also based, in part, on the amount of cash and otherspecified assets anticipated to be held by our foreign subsidiaries as of August 30, 2018, the end of our fiscal year 2018, which will determine the portion of
the accumulated foreign earnings taxed at an effective rate of 15.5% or 8%. The provisional estimate for the Repatriation Tax was revised in the third quarterof 2018, and may continue to be revised as amounts are finalized. The U.S. Department of Treasury has issued interpretive guidance regarding theRepatriation Tax and we expect that it will issue additional guidance. Based on the information available, we can reasonably estimate the Repatriation Tax
and therefore recorded a provisional amount; however, we are continuing to gather additional information and analyze authoritative guidance to finalize thecomputation of the Repatriation Tax as well as the impacts on the valuation allowance release of the Repatriation Tax and the Tax Act.
During the third quarter of 2018, we reassessed our capital structure, including our Board of Directors' authorization to repurchase up to $10 billion of
our outstanding common stock beginning in 2019, the future cash needs of our global operations, and the effects of the Tax Act. As a result of thisreassessment, we deemed a portion of our foreign earnings to be no longer indefinitely invested. As a result of the Repatriation Tax, substantially all of ouraccumulated foreign earnings prior to December 31, 2017 were subject to U.S. federal taxation. Although we have provided for U.S. federal income tax onthese earnings, the repatriation to the United States of all or a portion of these earnings would be subject to foreign and state income tax. As a result, in thethird quarter of 2018, we recognized income tax provision of $68 million for deferred tax liabilities associated with our reassessment of our indefinitely
reinvested earnings, which was substantially offset by a reduction in valuation allowances.
As of May 31, 2018, we had gross unrecognized income tax benefits of $202 million, of which $196 million would affect our effective tax rate in the
future, if recognized. In 2018, the Tax Act reduced unrecognized tax benefits by $126 million. The amount accrued for interest and penalties related to
uncertain tax positions was not material for any period presented.
We operate in a number of tax jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements that areconditional, in part, upon meeting certain business operations and employment thresholds. The effect of tax incentive arrangements, which expire in whole orin part at various dates through 2030, reduced our tax provision by $527 million (benefitting our diluted earnings per share by $0.43) and $1.35 billion ($1.10
per diluted share) for the third quarter and first nine months of 2018, respectively, and $250 million ($0.21 per diluted share) and $422 million ($0.37 perdiluted share), for the third quarter and first nine months of 2017, respectively.

Earnings Per Share
Quarter ended
May 31,
2018
Net income attributable to Micron – Basic and Diluted$

Nine months ended

June 1,
2017

3,823

$

May 31,
2018

1,647

$

June 1,
2017

9,810

$

2,721

Weighted-average common shares outstanding – Basic

1,159

1,106

1,150

1,082

Dilutive effect of equity plans and convertible notes

76

71

83

60

1,235

1,177

1,233

1,142

Weighted-average common shares outstanding – Diluted
Earnings per share
Basic

$

3.30

Diluted

3.10

$

1.49
1.40

$

8.53
7.96

$

2.52
2.38

Antidilutive potential common shares that could dilute basic earnings per share in the future were 2 million and 3 million for the third quarter and firstnine months of 2018, respectively, and 52 million and 59 million for the third quarter and first nine months of 2017, respectively.

22

Segment Information
Segment information reported herein is consistent with how it is reviewed and evaluated by our chief operating decision maker. We have the following
four business units, which are our reportable segments:
Compute and Networking Business Unit ("CNBU"): Includes memory products sold into compute, networking, graphics, and cloud server markets.
Mobile Business Unit ("MBU"): Includes memory products sold into smartphone, tablet, and other mobile-device markets.
Storage Business Unit ("SBU"): Includes memory and storage products sold into enterprise, client, cloud, and removable storage markets.
Embedded Business Unit ("EBU"): Includes memory products sold into automotive, industrial, connected home, and consumer electronics markets.
Certain operating expenses directly associated with the activities of a specific segment are charged to that segment. Other indirect operating income andexpenses are generally allocated to segments based on their respective percentage of cost of goods sold or forecasted wafer production. We do not identify orreport 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 expenses, or taxes to segments.
Quarter ended
May 31,
2018

Nine months ended

June 1,
2017

May 31,
2018

June 1,
2017

Net sales
CNBU

$

3,988

$

2,389

$

10,891

$

5,776

MBU

1,753

1,129

4,684

3,243

SBU

1,143

1,316

3,780

3,217

EBU

897

700

2,556

1,868

All Other

16

32

40

80

$

7,797

$

5,566

$

21,951$

14,184

$

2,615

$

1,219

$

6,858

$

2,159

Operating income (loss)
CNBU
MBU

860

304

2,054

563

SBU

156

EBU

386

276

807

302

256

1,091

All Other

627

—

16

(6)

35

4,017

2,071

10,804

3,686

Stock-based compensation

(48)

(57)

(151)

(158)

Restructure and asset impairments

(8)

(12)

(21)

(45)

Flow-through of Inotera inventory step-up

—

(36)

—

(96)

Unallocated

Other

Operating income

$

(8)

(3)

(15)

(21)

(64)

(108)

(187)

(320)

3,953

23

$

1,963

$

10,617$

3,366

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONSThis discussion should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended August 31, 2017. All
period references are to our fiscal periods unless otherwise indicated. Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August
31. Our fiscal 2018 and 2017 each contain 52 weeks. All production data includes the production of IMFT and Inotera. All tabular dollar amounts are in
millions, except per share amounts.
Our Management's Discussion and Analysis is provided in addition to the accompanying consolidated financial statements and notes to assist readers inunderstanding our results of operations, financial condition, and cash flows. This discussion is organized as follows:
•
•

•
•
•

Overview: Overview of our operations and business.
Results of Operations: An analysis of our financial results consisting of the following:◦ Consolidated results;◦ Operating results by business segment;◦ Operating results by product type; and◦ Operating expenses and other.
Liquidity and Capital Resources: An analysis of changes in our balance sheet and cash flows and discussion of our financial condition and liquidity.
Critical Accounting Estimates
Recently Issued Accounting Standards

Overview
Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory and storage solutions. Through our global
brands – Micron, Crucial, and Ballistix – our broad portfolio of high-performance memory and storage technologies, including DRAM, NAND, NOR Flash,and 3D XPoint memory, is transforming how the world uses information to enrich life. Backed by nearly 40 years of technology leadership, our memory andstorage solutions enable disruptive trends, including artificial intelligence, machine learning, and autonomous vehicles in key market segments like cloud,data center, networking, and mobile.
We manufacture our products at our worldwide wholly-owned and joint venture facilities. In recent years, we have increased our manufacturing scale andproduct diversity through strategic acquisitions, expansion, and various partnering arrangements.
We make significant investments to develop proprietary product and process technology, which is implemented in our manufacturing facilities. We
generally increase the density per wafer and reduce manufacturing costs of each generation of product through advancements in product and process
technology, such as our leading-edge line-width process technology and 3D NAND architecture. We continue to introduce new generations of products thatoffer improved performance characteristics, including higher data transfer rates, reduced package size, lower power consumption, improved read/write
reliability, and increased memory density. Storage products incorporating NAND, a controller, and firmware constitute a significant portion of our sales. We
generally develop firmware and expect to introduce proprietary controllers into our SSDs in new products starting in 2018. Development of advanced
technologies enables us to diversify our product portfolio toward a richer mix of differentiated, high-value solutions and target high-growth markets.
We market our products through our internal sales force, independent sales representatives, and distributors primarily to original equipment
manufacturers and retailers around the world. We face intense competition in the semiconductor memory and storage markets and, in order to remaincompetitive, we must continuously develop and implement new products and technologies and decrease manufacturing costs. Our success is largely
dependent on market acceptance of our diversified portfolio of semiconductor-based memory and storage solutions, efficient utilization of our manufacturing
infrastructure, successful ongoing development and integration of advanced product and process technology, return-driven capital spending, and successful
R&D investments.
To leverage our significant investments in R&D, we have formed, and may continue to form, strategic joint ventures that allow us to share the costs ofdeveloping memory and storage product and process technology with third parties. In addition,24

from time to time, we also sell and/or license technology to other parties. We continue to pursue additional opportunities to monetize our investment in
intellectual property through partnering and other arrangements.

Results of Operations
Consolidated Results
Third Quarter2018% of Net
Sales$ 7,797

Cost of goods sold
Gross margin

Second Quarter2017% of Net
Sales

100 %

$ 5,566

3,074

39 %

4,723

61 %

SG&A

211

R&D

603

Net sales

Other operating (income)expense, net

2018% of Net
Sales

100 %

$ 7,351

100 %

2,957

53 %

3,081

2,609

47 %

4,270

3%

204

4%

8%

434

8%

Nine Months
2018% of Net
Sales

2017

% of NetSales$ 21,951

100 %$ 14,184

100 %

42 %

9,211

42 %

8,860

62 %

58 %

12,740

58 %

5,324

38 %

196

3%

598

3%

550

4%

523

7%

1,574

7%

1,377

10 %

(44)

(1)%

8

—%

(16)

—%

(49)

—%

31

—%

3,953

51 %

1,963

35 %

3,567

49 %

10,617

48 %

3,366

24 %

Interest income (expense), net

(44)

(1)%

(143)

(3)%

(61)

(1)%

(206)

(1)%

(428)

(3)%

Other non-operating income(expense), net

(193)

(2)%

(83)

(1)%

(53)

(1)%

(450)

(2)%

(63)

—%

Income tax (provision) benefit

109

1%

(92)

(2)%

(143)

(2)%

(148)

(1)%

(161)

(1)%

Equity in net income (loss) ofequity method investees

(2)

—%

2

—%

1

—%

(1)

—%

7

—%

Net income attributable tononcontrolling interests

—

—%

—

—%

(2)

—%

(2)

—%

—

—%

Net income attributable to
Micron$ 3,82349 %$ 1,64730 %$ 3,309

45 %

9,810

45 %

2,721

19 %

2018

% of
Total

Operating income$$

Net Sales
Third Quarter

CNBU$ 3,988

MBU
SBU

2017

Second Quarter
% of
Total

2018

Nine Months

% of
Total

2018

% of
Total

2017

% of
Total

51% $ 2,389

43% $ 3,691

50% $

10,891

50% $

5,776

41%

1,753

22%

1,129

20%

1,566

21%

4,684

21%

3,243

23%

1,143

15%

1,316

24%

1,254

17%

3,780

17%

3,217

23%

EBU

897

12%

700

13%

829

11%

2,556

12%

1,868

13%

All Other

16

—%

32

1%

11

—%

40

—%

80

1%

$ 7,797$ 5,566$ 7,351$

21,951$

14,184

Percentages of total net sales reflect rounding and may not total 100%.
Total net sales for the third quarter of 2018 increased 6% as compared to the second quarter of 2018 due to continued execution in delivering high-value
products and strong market conditions across our primary markets, particularly for cloud server, enterprise server, and mobile markets, that drove increases insales for our CNBU, MBU, and EBU segments.
Total net sales for the third quarter and first nine months of 2018 increased 40% and 55%, respectively, as compared to the corresponding periods of2017. Solid execution and strong demand for products across our primary markets, particularly in mobile, cloud server, client, and enterprise server, drove
higher sales for all operating segments in the first nine months of 2018 as compared to the first nine months of 2017. CNBU, MBU, and EBU sales increasedin the third quarter of 2018 as compared to the third quarter of 2017.

25

Gross Margin
Our overall gross margin percentage increased to 61% for the third quarter of 2018 from 58% for the second quarter of 2018 primarily due to strong
market conditions for our CNBU, MBU, and EBU operating segments that drove favorable pricing conditions, combined with overall reductions in
manufacturing costs. Cost reductions for the third quarter of 2018 were enabled by strong execution and the continued growth in product offerings and sales
for server and mobile products featuring our 1X nm DRAM technology as well as SSD and managed NAND products featuring our TLC 3D NAND.
Our overall gross margin percentage increased to 61% for the third quarter of 2018 from 47% for the third quarter of 2017 and increased to 58% for the
first nine months of 2018 from 38% for the first nine months of 2017, reflecting increases in the gross margin percentages for CNBU, MBU, and EBU,
primarily due to favorable market conditions combined with strong execution in delivering high-value products featuring our 1X nm DRAM and TLC 3D
NAND technologies that enabled manufacturing cost reductions. From January 2016 through December 6, 2016, the date we acquired the remaining interest
in Inotera, we purchased all of Inotera's DRAM output under supply agreements at prices based on a formula that equally shared margin between Inotera andus. For the first quarter of 2017, we purchased $504 million of DRAM products from Inotera under these agreements, representing 37% of our aggregate
DRAM bit production.
Operating Results by Business Segments
CNBU
Third Quarter2018
Net sales

$

2017
3,988

Operating income

Second Quarter

$

2018
2,389

2,615

Nine Months

$

2018
3,691

1,219

$

2017

10,891

2,329

$

5,776

6,858

2,159

CNBU sales for the third quarter of 2018 increased 8% as compared to the second quarter of 2018 primarily due to higher sales into high value cloudserver, enterprise server, and graphics markets. CNBU operating income improved for the third quarter of 2018 compared to the second quarter of 2018
primarily due to strong demand and manufacturing cost reductions. See "Operating Results by Product – DRAM" for further detail.
CNBU sales for the third quarter and first nine months of 2018 increased 67% and 89%, respectively, as compared to the corresponding periods of 2017
due to strong market conditions and demand in key markets including cloud server, client, and enterprise server markets, which drove increases in pricing andsales volumes. CNBU operating income for the third quarter and first nine months of 2018 improved from the corresponding periods of 2017 primarily due toimproved pricing and manufacturing cost reductions.
MBU
Third Quarter2018
Net sales
Operating income$

Second Quarter
2017

1,753

$

1,129

860

Nine Months

2018
304

$

2018
1,566
689

$

2017
4,684
2,054

$

3,243
563

MBU sales are comprised primarily of mobile LPDRAM and managed NAND products. MBU sales for the third quarter of 2018 increased 12% ascompared to the second quarter of 2018 primarily due to significant increases in high-value managed NAND products driven by strong acceptance of ourTLC managed NAND product in smartphone markets. MBU operating income for the third quarter of 2018 improved from the second quarter of 2018
primarily due to improved pricing resulting from strong demand for our products, manufacturing cost reductions, and increases in sales of managed NAND
products.
MBU sales for the third quarter and first nine months of 2018 increased 55% and 44%, respectively, as compared to the corresponding periods of 2017
primarily due to customer qualifications for LPDRAM and managed NAND products, which combined with higher memory content in smartphones to drive
improvements in DRAM pricing and increases in sales volumes. MBU operating income for the third quarter and first nine months of 2018 improved fromthe corresponding periods of 2017 primarily due to increases in pricing for LPDRAM products, manufacturing cost reductions, and higher sales volumes.

26

SBU
Third Quarter2018
Net sales

$

2017
1,143

Operating income

Second Quarter

$

2018
1,316

156

Nine Months

$

2018
1,254

276

$

2017
3,780

251

$

3,217

807

302

SBU sales of Trade NAND products for the third quarter of 2018 decreased 9% as compared to the second quarter of 2018 due to lower NAND
component sales as a result of declines in selling prices and a reallocation of supply to mobile managed NAND products, partially offset by increases in SSD
sales driven by strong demand in cloud and enterprise markets for products incorporating our TLC 3D NAND technology. SBU Non-Trade sales were $122
million for the third quarter of 2018 as compared to $136 million for the second quarter of 2018 and $138 million for the third quarter of 2017. SBU operating
income for the third quarter of 2018 decreased from the second quarter of 2018 primarily due to declining prices, higher R&D costs, and higher costs
associated with IMFT's production of 3D XPoint products at less than full capacity, partially offset by manufacturing cost reductions enabled by our execution
in transitioning to TLC 3D NAND products. See "Operating Results by Product – Trade NAND" for further details.
SBU sales of Trade NAND products for the third quarter 2018 decreased 13% as compared to the third quarter of 2017 despite increases in sales volumes
from strong demand, particularly for sales of SSD products into the cloud market, due to declines in component NAND sales. SBU sales of Trade NAND
products for the first nine months of 2018 increased 19% as compared to the first nine months of 2017 primarily due to increases in sales volumes from strong
demand, particularly for sales of SSD products into the cloud market. SBU sales of SSD storage products for the third quarter and first nine months of 2018
increased by 37% and 74%, respectively, as compared to the corresponding periods of 2017 driven by strong demand in cloud and client markets for products
incorporating our TLC 3D NAND technology. SBU operating income for the third quarter of 2018 declined from the third quarter of 2017 primarily due todeclining prices, higher costs associated with IMFT's production of 3D XPoint products at less than full capacity, and higher R&D costs, partially offset by
manufacturing cost reductions. SBU operating income for the first nine months of 2018 improved from the first nine months of 2017 primarily due tomanufacturing cost reductions and improvements in product mix.
EBU
Third Quarter2018
Net sales
Operating income$

Second Quarter
2017

897

$

2018
700

386

Nine Months

256

$

2018
829
363

$

2017
2,556
1,091

$

1,868
627

EBU sales are comprised of products incorporating DRAM, NAND, and NOR Flash in decreasing order of revenue. EBU sales for the third quarter of2018 increased 8% from the second quarter of 2018 due to higher sales across all EBU markets including consumer, automotive, and industrial multimarkets.
EBU operating income for the third quarter of 2018 increased from the second quarter of 2018 primarily due to strong demand.
EBU sales for the third quarter and first nine months of 2018 increased 28% and 37%, respectively, as compared to the corresponding periods of 2017
primarily due to strong demand across EBU's primary markets including consumer, industrial multimarkets, and automotive. EBU operating income for thethird quarter and first nine months of 2018 increased as compared to the corresponding periods of 2017 as a result of increases in average selling prices,manufacturing cost reductions, and increases in sales volumes, partially offset by higher R&D costs.

27

Operating Results by ProductNet Sales by Product Type
Third Quarter
2018
DRAM

$ 5,541

% of
Total

2017

Second Quarter
% of
Total

Nine Months

% of
Total

2018

2018

% of
Total

2017

% of
Total

71% $ 3,559

64% $ 5,213

71% $

15,316

70% $

8,940

63%

Trade NAND

1,943

25%

1,706

31%

1,805

25%

5,614

26%

4,390

31%

Non-Trade

121

2%

138

2%

136

2%

379

2%

419

3%

192

2%

163

3%

197

3%

642

3%

435

3%

Other

$ 7,797$ 5,566$ 7,351$

21,951$

14,184

Percentages of total net sales reflect rounding and may not total 100%.
Non-Trade consists of NAND and 3D XPoint products manufactured and sold to Intel through IMFT under a long-term supply agreement at prices
approximating cost. Information regarding products that combine both NAND and DRAM components is reported within Trade NAND. Other includes salesof NOR and trade 3D XPoint products.
DRAM
Third Quarter 2018 Versus
Second Quarter 2018

Third Quarter 2017

First Nine Months 2018 Versus
First Nine Months 2017

(percentage change)
Average selling prices per gigabit
Gigabits soldincreased mid-to-upper single digit

increased mid 30% range

increased low 40% range

relatively flatincreased mid-teens range

increased low 20% range

Increases in DRAM product revenue for the third quarter of 2018 as compared to the second quarter of 2018 resulted from strong market conditions,particularly for high-value cloud and enterprise server markets. Increases in DRAM product revenue for the third quarter and first nine months of 2018 ascompared to the corresponding periods of 2017 resulted from strong conditions across key markets, particularly for cloud, enterprise, mobile, and graphics
markets. Our gross margin percentage on sales of DRAM products for the third quarter and first nine months of 2018 improved from the second quarter of2018 and corresponding periods of 2017 primarily due to strong demand as a result of favorable market conditions, shifts in mix to higher value markets, andmanufacturing cost reductions resulting from strong execution on our implementation of new technology.
Trade NAND
Third Quarter 2018 Versus
Second Quarter 2018

Third Quarter 2017

First Nine Months 2018 Versus
First Nine Months 2017

(percentage change)
Average selling prices per gigabyte
Gigabytes soldincreased mid-to-upper single digit

decreased mid single digit

decreased mid single digit

relatively flatincreased low 20% range

increased mid 30% range

Increases in NAND product revenue for the third quarter of 2018 as compared to the second quarter of 2018 resulted from strong demand for mobile
managed NAND products and cloud and client SSD products, partially offset by lower component sales. The increase in average selling prices for the third
quarter of 2018 as compared to the second quarter of 2018 was due to an increase in sales of our managed NAND products, which generally havesignificantly higher selling prices than other NAND products, partially offset by modest declines in market pricing for our trade NAND products. Increases in
NAND revenue for the third quarter and first nine months of 2018 as compared to the corresponding periods of 2017 primarily resulted from increases insales of managed NAND and SSD products. Our gross margin percentage on sales of NAND products for the third quarter and first nine months of 2018
improved from the second quarter of 2018 and corresponding periods of 2017 primarily due to manufacturing cost reductions resulting from strong execution
on our ramp of 3D NAND production.

28

Operating Expenses and Other
Selling, General, and Administrative
SG&A expenses for the third quarter of 2018 were 8% higher than the second quarter of 2018 primarily due to increases in legal costs. SG&A expenses
for the third quarter of 2018 were relatively unchanged as compared to the third quarter of 2017. SG&A expenses for the first nine months of 2018 were 9%
higher than the first nine months of 2017 primarily due to increases in performance-based compensation and legal costs.
Research and Development
R&D expenses for the third quarter of 2018 were 15% higher than the second quarter of 2018 primarily due to increased volumes of development andpre-qualification wafers and increases in performance-based compensation. R&D expenses for the third quarter of 2018 were 39% higher than the third
quarter of 2017 primarily due to increased volumes of development and pre-qualification wafers and increases in performance-based compensation andpayroll and related costs. R&D expenses for the first nine months of 2018 were 14% higher than the first nine months of 2017 primarily due to increases inpayroll and related costs, performance-based compensation, and volumes of development and pre-qualification wafers.
We share the cost of certain product and process development activities with development partners, including Intel. We expect to continue to jointly
develop NAND technologies with Intel through the third generation of 3D NAND, which is expected to be completed in 2019. In the second quarter of 2018,
we and Intel mutually agreed to independently develop subsequent generations of 3D NAND in order to better optimize the technology and products for eachindividual business' needs. Our R&D expenses were reduced by reimbursements under our arrangements by $53 million for the third quarter of 2018, $58
million for the second quarter of 2018, and $47 million for the third quarter of 2017.
Income Taxes
Income tax (provision) benefit consisted of the following:
Third Quarter
2018
Provisional estimate for the Repatriation Tax, net ofadjustments related to uncertain tax positions$

Second Quarter
2017

222

$

Nine Months

2018
—

$

2018

(1,335)$2017(1,113)$—Remeasurement of deferred tax assets and liabilities
reflecting lower U.S. corporate tax rates

—

—

(133)

(133)

—

Provisional estimate for the release of the valuation
allowance on the net deferred tax assets of our U.S.
operations

—

—

1,337

1,337

—

Utilization of and other changes in net deferred tax
assets of MMJ, MMT, and MTTW

(35)

(31)

(17)

(78)

(52)

Other income tax (provision) benefit

(78)

(61)

5

(161)

(109)

$
Effective tax rate

109

$

(92)

(2.9)%

5.3%

$

(143)
4.1%

$

(148)
1.5%

$

(161)
5.6%

Our income taxes reflect the following:••

various provisional estimates for the impacts of the Tax Act, including the Repatriation Tax, the remeasurement of deferred tax assets and liabilities
at the lower U.S. corporate rate of 25.7% for 2018 and 21% for subsequent years, and the release of a substantial portion of the valuation allowanceon the net deferred tax assets of our U.S. operations; andoperations outside the United States, including Singapore, where we have tax incentive arrangements that further decrease our effective tax rates.

29

On December 22, 2017, the United States enacted the Tax Act which lowers the U.S. corporate income tax rate from 35% to 21% and significantly
affects how income from foreign operations is taxed in the United States. As a result of our fiscal year-end, our U.S. statutory federal rate will be 25.7% for2018 (based on the 35% corporate rate through December 31, 2017 and 21% from that date through the end of fiscal year 2018) and 21% for subsequent
years. The Tax Act imposes a Repatriation Tax in 2018; provides a U.S. federal tax exemption on foreign earnings distributed to the United States; and,beginning in 2019, creates a Foreign Minimum Tax. The Tax Act allows us to elect to pay any Repatriation Tax due in eight annual interest-free payments inincreasing amounts beginning in December 2018. In connection with the provisions of the Tax Act, we are continuing to evaluate whether to account for theForeign Minimum Tax provisions that begin for us in 2019 as a period cost or in our measurement of deferred taxes.
SAB 118 allows the use of provisional amounts (reasonable estimates) if our analyses of the impacts of the Tax Act has not been completed when our
financial statements are issued. Provisional amounts may be adjusted during a one-year measurement period as accounting for the income tax effects of theTax Act are completed or as estimates are revised.
In accordance with SAB 118, we recorded certain provisional estimates included in the table above. Although the provisional estimates are based on thebest available interpretations of the Tax Act, the final impacts may differ from the estimates due to, among other things, the issuance of additional regulatory
and legislative guidance related to the Tax Act.
As noted above, provisional estimates were recorded for the Repatriation Tax and the release of the valuation allowance on the net deferred tax assets of
our U.S. operations. To determine the amount of the Repatriation Tax, we must determine the accumulated foreign earnings of our foreign subsidiaries and theamount of foreign income tax paid on such earnings. The provisional estimate of the Repatriation Tax is also based, in part, on the amount of cash and otherspecified assets anticipated to be held by our foreign subsidiaries as of August 30, 2018, the end of our fiscal year 2018, which will determine the portion of
the accumulated foreign earnings taxed at an effective rate of 15.5% or 8%. The provisional estimate for the Repatriation Tax was revised in the third quarterof 2018, and may continue to be revised as amounts are finalized. The U.S. Department of Treasury has issued interpretive guidance regarding theRepatriation Tax and we expect that it will issue additional guidance. Based on the information available, we can reasonably estimate the Repatriation Tax
and therefore recorded a provisional amount; however, we are continuing to gather additional information and analyze authoritative guidance to finalize thecomputation of the Repatriation Tax as well as the impacts on the valuation allowance release of the Repatriation Tax and the Tax Act.
During the third quarter of 2018, we reassessed our capital structure, including our Board of Directors' authorization to repurchase up to $10 billion of
our outstanding common stock beginning in 2019, the future cash needs of our global operations, and the effects of the Tax Act. As a result of thisreassessment, we deemed a portion of our foreign earnings to be no longer indefinitely invested. As a result of the Repatriation Tax, substantially all of ouraccumulated foreign earnings prior to December 31, 2017 were subject to U.S. federal taxation. Although we have provided for U.S. federal income tax onthese earnings, the repatriation to the United States of all or a portion of these earnings would be subject to foreign and state income tax. As a result, in thethird quarter of 2018, we recognized income tax provision of $68 million for deferred tax liabilities associated with our reassessment of our indefinitely
reinvested earnings, which was substantially offset by a reduction in valuation allowances.
We operate in a number of locations outside the Unites States, including Singapore, where we have tax incentive arrangements that are conditional, inpart, upon meeting certain business operations and employment thresholds. The effect of tax incentive arrangements, which expire in whole or in part at
various dates through 2030, reduced our tax provision by $527 million (benefiting our diluted earnings per share by $0.43) for the third quarter of 2018, by$436 million ($0.35 per diluted share) in the second quarter of 2018, and by $250 million ($0.21 per diluted share) for the third quarter of 2017. The Tax Act
establishes a new provision designed to impose the Foreign Minimum Tax beginning in 2019. Consequently, we may incur additional U.S. tax expense on
income of our foreign subsidiaries that could offset a significant portion of the benefits realized from our tax incentive arrangements. Beginning in 2019, oureffective tax rate may increase to the low teens percentage depending on profitability.

30

Other
Net interest expense decreased 28% for the third quarter of 2018 as compared to the second quarter of 2018 primarily due to decreases in debt obligationsin the first nine months of 2018. Net interest expense decreased 69% for the third quarter of 2018 as compared to the third quarter of 2017 primarily due todecreases in debt obligations, as well as an increase in capitalized interest from higher levels of capital spending. Interest income also increased in the third
quarter of 2018 as compared to the third quarter of 2017 primarily due to increases in our aggregate cash and investments. Net interest expense decreased
52% for the first nine months of 2018 as compared to the first nine months of 2017 primarily due to decreases in debt obligations, increases in interest income
as a result of increases in our aggregate cash and investments, and increases in capitalized interest.
Further discussion of other operating and non-operating income and expenses can be found in "Item 1. Financial Statements – Notes to Consolidated
Financial Statements – Equity Plans and Other Non-Operating Income (Expense), Net" notes.

Liquidity and Capital Resources
Our primary sources of liquidity are cash generated from operations and financing obtained from capital markets and financial institutions. Cashgenerated from operations is highly dependent on selling prices for our products, which can vary significantly from period to period. We are continuously
evaluating alternatives for efficiently funding our capital expenditures and ongoing operations. We expect, from time to time in the future, to engage in avariety of financing transactions for such purposes, including the issuance of securities. We have an undrawn revolving credit facility that expires in February2020 and provides for additional borrowings of up to $750 million based on eligible receivables. We expect that our cash and investments, cash flows fromoperations, and available financing will be sufficient to meet our requirements at least through the next 12 months.
To develop new product and process technology, support future growth, achieve operating efficiencies, and maintain product quality, we must continue toinvest in manufacturing technologies, facilities and equipment, and R&D. We estimate that expenditures in 2018 for property, plant, and equipment, net ofpartner contributions, to be approximately $8 billion, focused on technology transitions and product enablement. The actual amounts for 2018 will varydepending on market conditions. As of May 31, 2018, we had commitments of approximately $1.6 billion for the acquisition of property, plant, andequipment, substantially all of which is expected to be paid within one year.
As the cost and complexity of DRAM and NAND scaling increases with each subsequent technology node, additional space and equipment is required to
manufacture the increasingly complex architectures of these leading technologies to maintain wafer capacity and meet market demand. In March 2018, weannounced plans to add clean-room space in our NAND and DRAM fabrication network and commenced activities to build additional clean-room space inSingapore, adjacent to our existing NAND facility, which enables the transition of our existing wafer capacity to future 3D NAND nodes. We expect to build
out this facility in phases aligned with our manufacturing requirements and market demands, with the first phase of the clean room expected to be completed
by the summer of 2019 and initial wafer output from the facility expected in the fourth quarter of calendar 2019.
In May 2018, we announced that our Board of Directors had authorized the discretionary repurchase of up to $10 billion of our outstanding common
stock beginning in 2019. We may purchase shares on a discretionary basis through open-market purchases, block trades, privately-negotiated transactions,
and/or derivative transactions, subject to market conditions and our ongoing determination of the best use of available cash. The repurchase authorization
does not obligate us to acquire any common stock.
Cash and marketable investments totaled $7.56 billion and $6.05 billion as of May 31, 2018 and August 31, 2017, respectively. Our investments consist
primarily of money market funds and liquid investment-grade fixed-income securities, diversified among industries and individual issuers. To mitigate credit
risk, we invest through high-credit-quality financial institutions and by policy generally limit the concentration of credit exposure by restricting the amount ofinvestments with any single obligor. As of May 31, 2018, $4.60 billion of our cash and marketable investments was held by our foreign subsidiaries.
In October 2017, we issued 34 million shares of our common stock for $41.00 per share in a public offering for proceeds of $1.36 billion, net ofunderwriting fees and other offering costs. In the first nine months of 2018, we paid $6.15 billion in cash to prepay, repurchase, and settle conversions of debt
with an aggregate principal amount of $4.73 billion. See "Item 1. Financial
31

Statements – Notes to Consolidated Financial Statements – Debt." We may redeem, repurchase, or otherwise retire additional debt in the future.
Limitations on the Use of Cash and Investments
MMJ Group: Cash and marketable investments as of May 31, 2018 included $443 million held by the MMJ Group. As a result of the corporate
reorganization proceedings of MMJ initiated in March 2012, and for so long as such proceedings are continuing, the MMJ Group is prohibited from paying
dividends to us. In addition, pursuant to an order of the Japan Court, the MMJ Group cannot make loans or advances, other than certain ordinary course
advances, to us without the consent of the Japan Court and may, under certain circumstances, be subject to the approval of the legal trustee. As a result, theassets of the MMJ Group are not available for use by us in our other operations. Furthermore, certain uses of the assets of the MMJ Group, including
investments in certain capital expenditures and in MMT, may require consent of MMJ's trustees and/or the Japan Court.
MSTW and MTTW: Cash and marketable investments as of May 31, 2018 included $876 million held by MSTW and MTTW. The 2021 MSTW Term
Loan contains covenants that limit or restrict the ability of MSTW and MTTW to pay dividends. As a result, the assets of MSTW and MTTW are notavailable for use by us in our other operations. In June 2018, we made an irrevocable election under the terms of the 2021 MSTW Term Loan to prepay
principal of 25 billion New Taiwan dollars (equivalent to $836 million as of May 31, 2018) on July 6, 2018.
IMFT: Cash and marketable investments as of May 31, 2018 included $109 million held by IMFT. Our ability to access funds held by IMFT to financeour other operations is subject to agreement by Intel and contractual limitations. Amounts held by IMFT are not anticipated to be available to finance ourother operations.
Indefinitely Reinvested: As of May 31, 2018, $1.28 billion of cash and marketable investments, including substantially all of the amounts held by MMJ,MSTW, and MTTW, was held by certain foreign subsidiaries whose earnings were considered to be indefinitely reinvested. Determination of the amount of
unrecognized deferred tax liabilities related to investments in these foreign subsidiaries is not practicable.
During the third quarter of 2018, we reassessed our capital structure, including our Board of Directors' authorization to repurchase up to $10 billion of
our outstanding common stock beginning in 2019, the future cash needs of our global operations, and the effects of the Tax Act. As a result of thisreassessment, we deemed a portion of our foreign earnings to be no longer indefinitely invested. As a result of the Repatriation Tax, substantially all of ouraccumulated foreign earnings prior to December 31, 2017 were subject to U.S. federal taxation. Although we have provided for U.S. federal income tax onthese earnings, the repatriation to the United States of all or a portion of these earnings would be subject to foreign and state income tax. As a result, in thethird quarter of 2018, we recognized income tax provision of $68 million for deferred tax liabilities associated with our reassessment of our indefinitely
reinvested earnings, which was substantially offset by a reduction in valuation allowances. In addition, beginning in 2019, our effective tax rate may increase
to the low teens percentage depending on profitability.
Cash FlowsFirst Nine Months
2018
Net cash provided by operating activities

$

2017

12,245$

4,950

Net cash provided by (used for) investing activities(6,087)(6,259)Net cash provided by (used for) financing activities(4,443)

1,207

(4)

(15)

Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash$

Net increase (decrease) in cash, cash equivalents, and restricted cash

1,711

$

(117)

Operating Activities: For the first nine months of 2018, cash provided by operating activities was due primarily to cash generated by our operations andthe effect of working capital adjustments, which included $1.18 billion of cash used for increases in receivables. For the first nine months of 2017, cash
provided by operating activities was due primarily to cash generated by our operations and the effect of working capital adjustments, which included $1.34
billion of cash used for increases in receivables, $361 million of payments attributed to intercompany balances in connection with the Inotera Acquisition,
partially offset by $511 million of cash provided from increases in accounts payable and accrued expenses.

32

Investing Activities: For the first nine months of 2018, net cash used for investing activities consisted primarily of $6.63 billion of expenditures forproperty, plant, and equipment, partially offset by $182 million of net inflows from sales, maturities, and purchases of available-for-sale securities. For the
first nine months of 2017, net cash used for investing activities consisted primarily of $3.47 billion of expenditures for property, plant, and equipment and$2.63 billion of net cash paid for the Inotera Acquisition (net of $361 million of payments attributed to intercompany balances with Inotera included inoperating activities).
Financing Activities: For the first nine months of 2018, net cash used for financing activities consisted primarily of cash payments of $6.15 billion to
reduce our debt, including $4.85 billion to prepay or repurchase our debt and $1.31 billion to settle conversions of notes, and $614 million for repayments ofother notes and capital leases. Cash paid for financing activities was partially offset by net proceeds of $1.36 billion from the issuance of 34 million shares ofour common stock for $41.00 per share in a public offering and $969 million of proceeds from IMFT Member Debt. For the first nine months of 2017, net
cash provided by financing activities consisted primarily of $2.48 billion of proceeds from the 2021 MSTW Term Loan, $620 million of proceeds from the2021 MSAC Term Loan, partially offset by repurchases of $952 million in aggregate principal of our 2025 Notes and 2026 Notes for an aggregate of $1.00
billion in cash and repayments of $774 million of other debt. See "Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt."
Additionally, in June 2018, we made an irrevocable election under the terms of the 2021 MSTW Term Loan to prepay 25 billion New Taiwan dollars(equivalent to $836 million as of May 31, 2018) of principal amount on July 6, 2018.
Potential Settlement Obligations of Convertible Notes
Since the closing price of our common stock exceeded 130% of the conversion price per share of all our convertible notes for at least 20 trading days inthe 30 trading day period ended on June 30, 2018, holders may convert their notes at any time through the calendar quarter ended September 30, 2018. The
following table summarizes the potential settlements that we could be required to make related to the calendar quarter ending September 30, 2018 if all
holders converted their notes. The amounts in the table below are based on our closing share price of $57.59 as of May 31, 2018.
If Settled With Minimum Cash
Required

Settlement Option
Convertible Notes

Amount in Excess ofPrincipal

Principal AmountUnderlying
SharesRemainder inSharesCash

2032C Notes

Cash and/or shares

Cash and/or shares

18

408

11

2032D Notes

Cash and/or shares

Cash and/or shares

18

78

16

1,019

2033E Notes

Cash

Cash and/or shares

1

43

—

61

2033F Notes

Cash

Cash and/or shares

10

128

8

586

2043G Notes

Cash and/or shares

Cash and/or shares

35

12

35

2,025

669

70

82

$

If Settled Entirely
With Cash

$

$

$

1,016

4,707

As of May 31, 2018, convertible notes in the table above included an aggregate of $553 million for the settlement obligation (including principal andamounts in excess of principal) for conversions of certain convertible notes that will settle in cash in the fourth quarter of 2018.
Contractual Obligations
Payments Due by Period
As of May 31, 2018
Notes payable(1)(2)

Total
$

Capital lease obligations(2)Operating leases(3)Total

Remainder of
2018

$

7,481

$

2019 - 2020

664$

2023 and
thereafter

2021 - 2022

2,420

$

1,728

$

2,669

1,083

106

577

167

233

628

9

80

101

438

9,192

$

779

(1)

$

3,077

$

1,996

$

3,340

Amounts include MMJ Creditor Payments, convertible notes, and other notes.
(2) Amounts include principal and interest.
(3) Amounts include contractually obligated minimum lease payments for operating leases having an initial noncancelable term in excess of one year.

33

Critical Accounting Estimates
For a discussion of our critical accounting estimates, see "Part I – Item 7. Management's Discussion and Analysis of Financial Condition and Results ofOperations" of our Annual Report on Form 10-K for the year ended August 31, 2017. Except for the critical accounting estimates associated with our income
taxes as discussed below, there have been no material changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended
August 31, 2017.
Income taxes: We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions
around the world. These estimates involve significant judgment and interpretations of regulations and are inherently complex. Resolution of income tax
treatments in individual jurisdictions may not be known for many years after completion of any fiscal year. We are also required to evaluate the realizabilityof our deferred tax assets on an ongoing basis in accordance with U.S. GAAP, which requires the assessment of our performance and other relevant factors.
Realization of deferred tax assets is dependent on our ability to generate future taxable income. In recent periods, our results of operations have benefitted
from increases in the amount of deferred taxes we expect to realize, primarily from the levels of capital spending and increases in the amount of taxable
income we expect to realize in Japan and Taiwan. Our income tax provision or benefit is dependent, in part, on our ability to forecast future taxable income inthese and other jurisdictions. Such forecasts are inherently difficult and involve significant judgments including, among others, projecting future average
selling prices and sales volumes, manufacturing and overhead costs, levels of capital spending, and other factors that significantly impact our analyses of theamount of net deferred tax assets that are more likely than not to be realized.
In the first nine months of 2018, we recognized a benefit for income taxes of $91 million as a result of the Tax Act, which included a $224 million
provisional estimate for income tax benefits, offset by $133 million of income tax provision related to the impact of remeasuring our deferred tax assets andliabilities to reflect the lower tax rate pursuant to the Tax Act. The provisional estimate included $1.11 billion of expense associated with the Repatriation Tax
and a benefit of $1.34 billion for the release of the valuation allowance on the net deferred tax assets of our U.S. operations. Based on the information
available, we can reasonably estimate the Repatriation Tax and therefore recorded a provisional amount; however, we are continuing to gather additional
information and analyze authoritative guidance to finalize the computation of the Repatriation Tax as well as the impacts on the valuation allowance releaseof the Repatriation Tax and the Tax Act. The provisional estimate for the Repatriation Tax was revised in the third quarter of 2018, and may continue to berevised as amounts are finalized.

Recently Issued Accounting Standards
See "Item 1. Financial Statements – Notes to Consolidated Financial Statements – Recently Issued Accounting Standards."

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe are affected by changes in currency exchange and interest rates. See discussion regarding certain interest rate risks below. For further discussion
about market risk and sensitivity analysis related to changes in currency exchange rates, see "Part II – Item 7A. Quantitative and Qualitative Disclosures
About Market Risk" of our Annual Report on Form 10-K for the year ended August 31, 2017.

Interest Rate Risk
We are exposed to interest rate risk related to our indebtedness and our investment portfolio. As of May 31, 2018 and August 31, 2017, the carrying valueof our debt with fixed interest rates was $3.7 billion and $5.7 billion, respectively, and as a result, the fair value of our debt fluctuates with changes in market
interest rates. We estimate that, as of May 31, 2018 and August 31, 2017, a decrease in market interest rates of 1% would increase the fair value of our fixedrate debt by approximately $83 million and $273 million, respectively.

34

ITEM 4. CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the principal executive officer andprincipal financial officer concluded that those disclosure controls and procedures were effective to ensure that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in theCommission's rules and forms and that such information is accumulated and communicated to our management, including the principal executive officer andprincipal financial officer, to allow timely decision regarding disclosure.
During the third quarter of 2018, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSFor a discussion of legal proceedings, see "Part I – Item 3. Legal Proceedings" of our Annual Report on Form 10-K for the year ended August 31, 2017and "Part I. Financial Information – Item 1. Financial Statements – Notes to Consolidated Financial Statements – Contingencies" and "Item 1A. Risk Factors"
herein.

ITEM 1A. RISK FACTORSIn addition to the factors discussed elsewhere in this Form 10-Q, the following are important factors, the order of which is not necessarily indicative ofthe level of risk that each poses to us, which could cause actual results or events to differ materially from those contained in any forward-looking statements
made by us. Our operations could also be affected by other factors that are presently unknown to us or not considered significant. Any of the factors below
could have a material adverse effect on our business, results of operations, financial condition, or stock price.
We have experienced volatility in average selling prices for our semiconductor memory and storage products which may adversely affect ourbusiness.
We have experienced significant volatility in our average selling prices, including dramatic declines, as noted in the table below, and may continue toexperience such volatility in the future. In some prior periods, average selling prices for our products have been below our manufacturing costs and we may
experience such circumstances in the future. Decreases in average selling prices for our products that decline faster than our costs could have a material
adverse effect on our business, results of operations, or financial condition.
DRAM

Trade NAND

(percentage change in average selling prices)2017 from 2016

19 %

(9)%

2016 from 2015

(35)%

(20)%

2015 from 2014

(11)%

(17)%

2014 from 2013

6%

(23)%

2013 from 2012

(11)%

(18)%

35

We may be unable to maintain or improve gross margins.
Our gross margins are dependent in part upon continuing decreases in per gigabit manufacturing costs achieved through improvements in our
manufacturing processes and product designs, including, but not limited to, process line-width, additional 3D memory layers, additional bits per cell (i.e., celllevels), architecture, number of mask layers, number of fabrication steps, and yield. In future periods, we may be unable to reduce our per gigabit
manufacturing costs at sufficient levels to maintain or improve gross margins. Factors that may limit our ability to reduce costs include, but are not limited to,
strategic product diversification decisions affecting product mix, the increasing complexity of manufacturing processes, difficulties in transitioning to smaller
line-width process technologies, 3D memory layers, NAND cell levels, process complexity including number of mask layers and fabrication steps,
manufacturing yield, technological barriers, changes in process technologies, and new products that may require relatively larger die sizes. Per gigabit
manufacturing costs may also be affected by a broader product portfolio, which may have smaller production quantities and shorter product lifecycles. Ourinability to maintain or improve gross margins could have a material adverse effect on our business, results of operations, or financial condition.
The semiconductor memory and storage markets are highly competitive.
We face intense competition in the semiconductor memory and storage markets from a number of companies, including Intel; Samsung Electronics Co.,
Ltd.; SK Hynix Inc.; Toshiba Memory Corporation; and Western Digital Corporation. Some of our competitors are large corporations or conglomerates that
may have greater resources to invest in technology, capitalize on growth opportunities, and withstand downturns in the semiconductor markets in which wecompete. Consolidation of industry competitors could put us at a competitive disadvantage. In addition, some governments have provided, and may continue
to provide, significant assistance, financial or otherwise, to some of our competitors or to new entrants and may intervene in support of national industries
and/or competitors. In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the
Chinese government and various state-owned or affiliated entities that is intended to advance China's stated national policy objectives. The activities by the
Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies.
Our competitors generally seek to increase silicon capacity, improve yields, and reduce die size in their product designs which may result in significant
increases in worldwide supply and downward pressure on prices. Increases in worldwide supply of semiconductor memory and storage also result fromfabrication capacity expansions, either by way of new facilities, increased capacity utilization, or reallocation of other semiconductor production tosemiconductor memory and storage production. Our competitors may increase capital expenditures resulting in future increases in worldwide supply. We andsome of our competitors have plans to ramp, or are constructing or ramping, production at new fabrication facilities. Increases in worldwide supply ofsemiconductor memory and storage, if not accompanied by commensurate increases in demand, would lead to further declines in average selling prices forour products and would materially adversely affect our business, results of operations, or financial condition. If competitors are more successful at developing
or implementing new product or process technology, their products could have cost or performance advantages.
The competitive nature of our industry could have a material adverse effect on our business, results of operations, or financial condition.
Debt obligations could adversely affect our financial condition.
As of May 31, 2018, we had debt with a carrying value of $7.34 billion. In addition, the conversion value in excess of principal of our convertible notes
as of May 31, 2018 was $3.21 billion. In the first nine months of 2018, and full years of 2017 and 2016, we paid $6.15 billion and issued 4 million shares of
our treasury stock, $1.63 billion, and $94 million, respectively, to prepay, repurchase, and settle conversions of debt with principal amounts of $4.73 billion,$1.55 billion, and $57 million, respectively. As of May 31, 2018, we had an undrawn revolving credit facility that provided for additional borrowings of up to$750 million based on eligible receivables. Events and circumstances may occur which could cause us to not be able to satisfy applicable draw-down
conditions and utilize this revolving credit facility. We have incurred in the past, and expect to incur in the future, debt to finance our capital investments,
business acquisitions, and restructuring of our capital structure.
Our debt obligations could adversely impact us. For example, these obligations could:••

require us to use a large portion of our cash flow to pay principal and interest on debt, which will reduce the amount of cash flow available to fundworking capital, capital expenditures, acquisitions, R&D expenditures, and other business activities;
require us to use cash and/or issue shares of our common stock to settle any conversion obligations of our convertible notes;
36

•
•
•
•
•
•
•
•
•
•

result in certain of our debt instruments being accelerated to be immediately due and payable or being deemed to be in default if certain terms ofdefault are triggered, such as applicable cross payment default and/or cross-acceleration provisions;
result in all obligations owing under the 2021 MSTW Term Loan being accelerated to be immediately due and payable if MSTW fails to comply
with certain covenants, including financial covenants;
increase the interest rate under the 2021 MSTW Term Loan if we or MSTW fails to maintain certain financial covenants;
adversely impact our credit rating, which could increase future borrowing costs;
limit our future ability to raise funds for capital expenditures, strategic acquisitions or business opportunities, R&D, and other general corporate
requirements;
restrict our ability to incur specified indebtedness, create or incur certain liens, and enter into sale-leaseback financing transactions;increase our vulnerability to adverse economic and semiconductor memory and storage industry conditions;increase our exposure to interest rate risk from variable rate indebtedness;
continue to dilute our earnings per share as a result of the conversion provisions in our convertible notes; andrequire us to continue to pay cash amounts substantially in excess of the principal amounts upon settlement of our convertible notes to minimize
dilution of our earnings per share.

Our ability to meet our payment obligations under our debt instruments depends on our ability to generate significant cash flows in the future. This, tosome extent, is subject to market, economic, financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control.
There can be no assurance that our business will generate cash flow from operations, or that additional capital will be available to us, in amounts sufficient toenable us to meet our debt payment obligations and to fund other liquidity needs. If we are unable to generate sufficient cash flows to service our debt
payment obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If
we are unable to implement one or more of these alternatives, we may be unable to meet our debt payment obligations, which could have a material adverse
effect on our business, results of operations, or financial condition.
We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund our operations, make scheduled debt
payments, and make adequate capital investments.
Our cash flows from operations depend primarily on the volume of semiconductor memory and storage products sold, average selling prices, andmanufacturing costs. To develop new product and process technology, support future growth, achieve operating efficiencies, and maintain product quality, wemust make significant capital investments in manufacturing technology, capital equipment, facilities, R&D, and product and process technology. We estimatethat net cash expenditures in 2018 for property, plant, and equipment will be approximately $8 billion, which reflects the offset of amounts we expect to be
funded by our partners. Investments in capital expenditures, offset by amounts funded by our partners, were $2.10 billion in the third quarter of 2018. As of
May 31, 2018, we had cash and marketable investments of $7.56 billion. As of May 31, 2018, $1.28 billion of cash and marketable investments, including
substantially all of the cash held by the MMJ Group, MSTW, and MTTW, was held by foreign subsidiaries whose earnings were considered to be indefinitely
reinvested. As a result of the Tax Act, substantially all of our accumulated foreign earnings prior to December 31, 2017 were treated as taxable; however, therepatriation of all or a portion of these earnings would continue to be subject to foreign and state tax upon repatriation to the United States. In addition, cashof $109 million held by IMFT was generally not available to finance our other operations.
The 2021 MSTW Term Loan contains covenants that limit or restrict MSTW's ability to create liens in or dispose of collateral securing obligations underthe 2021 MSTW Term Loan, mergers involving MSTW and/or MTTW, loans or guarantees to third parties by MTTW and/or MSTW, and MSTW's and/or
MTTW's distribution of cash dividends. As a result, the assets of MSTW and/or MTTW are not available for use by us in our other operations.
As a result of the corporate reorganization proceedings of MMJ initiated in 2012, and for so long as such proceedings are continuing, MMJ is prohibitedfrom paying dividends, including any cash dividends, to us and such proceedings require that excess earnings be used in MMJ's business or to fund the MMJ
creditor payments. In addition, pursuant to an order of the Japan Court, MMJ cannot make loans or advances, other than certain ordinary course advances, tous without the consent of the Japan Court and may, under certain circumstances, be subject to approval of the legal trustee. As a result, the assets of MMJ are
not available for use by us in our other operations. Furthermore, certain uses of the assets of MMJ, including certain capital expenditures of MMJ and MMT
or further investments in MMT, may require consent of MMJ's trustees and/or the Japan Court.
In the past we have utilized external sources of financing when needed. As a result of our debt levels, expected debt amortization, and general economic
conditions, it may be difficult for us to obtain financing on terms acceptable to us. There can be no assurance that we will be able to generate sufficient cash
flows, use cash held by MMJ to fund its capital
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expenditures, access capital markets or find other sources of financing to fund our operations, make debt payments, and make adequate capital investments toremain competitive in terms of technology development and cost efficiency. Our inability to do any of the foregoing could have a material adverse effect on
our business, results of operations, or financial condition.
Our future success depends on our ability to develop and produce competitive new memory and storage technologies.
Our key semiconductor memory and storage products and technologies face technological barriers to continue to meet long-term customer needs. Thesebarriers include potential limitations on stacking additional 3D memory layers, increasing bits per cell (i.e., cell levels), shrinking products in order to reduce
costs, meeting higher density requirements, and improving power consumption and reliability. To meet these requirements, we expect that new memory
technologies will be developed by the semiconductor memory and storage industry. Our competitors are working to develop new memory and storage
technologies that may offer performance and/or cost advantages to existing technologies and render existing technologies obsolete. Accordingly, our future
success may depend on our ability to develop and produce viable and competitive new memory and storage technologies. There can be no assurance of thefollowing:••••that we will be successful in developing competitive new semiconductor memory and storage technologies;that we will be able to cost-effectively manufacture new products;that we will be able to successfully market these technologies; andthat margins generated from sales of these products will allow us to recover costs of development efforts.

We develop and produce advanced memory technologies, including 3D XPoint memory, a new class of non-volatile technology. There is no assurance
that our efforts to develop and market new product technologies will be successful. Unsuccessful efforts to develop new semiconductor memory and storage
technologies could have a material adverse effect on our business, results of operations, or financial condition.
New product development may be unsuccessful.
We are developing new products, including system-level memory and storage products and solutions, which complement our traditional products orleverage their underlying design or process technology. We have made significant investments in product and process technology and anticipate expending
significant resources for new semiconductor product and system-level solution development over the next several years. The process to develop new products
requires us to demonstrate advanced functionality and performance, often well in advance of a planned ramp of production, in order to secure design winswith our customers. There can be no assurance of the following:
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that our product development efforts will be successful;that we will be able to cost-effectively manufacture new products;that we will be able to successfully market these products;that we will be able to establish or maintain key relationships with customers with specific chip set or design requirements;that we will be able to introduce new products into the market and qualify them with our customers on a timely basis; orthat margins generated from sales of these products will allow us to recover costs of development efforts.

Our unsuccessful efforts to develop new products and solutions could have a material adverse effect on our business, results of operations, or financial
condition.
Our joint ventures and strategic relationships involve numerous risks.
We have entered into strategic relationships, including our joint development partnership and our IMFT joint venture with Intel, to develop new
manufacturing process technologies and products and to manufacture certain products. These joint ventures and strategic relationships are subject to various
risks that could adversely affect the value of our investments and our results of operations. These risks include the following:•••

our interests could diverge from our partners' interests or we may not be able to agree with our partners on:◦ ongoing or future development, manufacturing, or operational activities;◦ the amount, timing, or nature of further investments; or◦ commercial terms in our joint ventures or strategic relationships;
our joint venture partners' products may compete with our products;
we may experience difficulties in transferring technology to joint ventures;
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we may experience difficulties and delays in ramping production at joint ventures;
our control over the operations of our joint ventures is limited;
due to financial constraints, our joint venture partners may be unable to meet their commitments to us or our joint ventures and may pose credit risks
for our transactions with them;
due to differing business models or long-term business goals, we and our partners may not participate to the same extent on funding capital
investments in our joint ventures;
cash flows may be inadequate to fund increased capital requirements of our joint ventures;
we may experience difficulties or delays in collecting amounts due to us from our joint ventures and partners;
the terms of our partnering arrangements may turn out to be unfavorable; andchanges in tax, legal, or regulatory requirements may necessitate changes in the agreements with our partners.

Our joint ventures and strategic relationships, if unsuccessful, could have a material adverse effect on our business, results of operations, or financial
condition.
A significant concentration of our net sales is to a select number of customers.
In each of the last three years, approximately one-half of our total net sales were to our top ten customers. A disruption in our relationship with any ofthese customers could adversely affect our business. We could experience fluctuations in our customer base or the mix of revenue by customer as markets andstrategies evolve. In addition, any consolidation of our customers could reduce the number of customers to whom our products could be sold. Our inability tomeet our customers' requirements or to qualify our products with them could adversely impact our sales. The loss of one or more of our major customers or
any significant reduction in orders from, or a shift in product mix by, these customers could have a material adverse effect on our business, results ofoperations, or financial condition.
Increases in sales of system solutions may increase our dependency upon specific customers and our costs to develop and qualify our systemsolutions.
Our development of system-level memory and storage products is dependent, in part, upon successfully identifying and meeting our customers'
specifications of those products. Developing and manufacturing system-level products with specifications unique to a customer increases our reliance uponthat customer for purchasing our products in sufficient volume, quantity, and in a timely manner. If we fail to identify or develop products on a timely basis,or at all, that comply with our customers' specifications or achieve design wins with our customers, we may experience a significant adverse impact on oursales and margins. Even if our products meet customer specifications, our sales of system-level solutions are dependent upon our customers choosing our
products over those of our competitors and purchasing our products at sufficient volumes and prices. Our competitors' products may be less costly, provide
better performance, or include additional features when compared to our products. Our long-term ability to sell system-level memory and storage products isreliant upon our customer's ability to create, market, and sell their products containing our system-level solutions at sufficient volumes and prices in a timely
manner. If we fail to successfully develop and market system-level products, our business, results of operations, or financial condition may be materiallyadversely affected.
Even if we are successful in selling system-level solutions to our customers in sufficient volume, we may be unable to generate sufficient profit if our
per-unit manufacturing costs exceed our per-unit selling prices. Manufacturing system-level solutions to customer specifications requires a longer
development cycle, as compared to discrete products, to design, test, and qualify, which may increase our costs. Additionally, some of our system solutions
are increasingly dependent on sophisticated firmware that may require significant customization to meet customer specifications, which increases our costs
and time to market. Additionally, we may update our firmware or develop new firmware as a result of new product introductions or changes in customer
specifications and/or industry standards, which increases our costs. System complexities and extended warranties for system-level products could also
increase our warranty costs. Our failure to cost-effectively manufacture system-level solutions and/or firmware in a timely manner, may result in reduced
demand for our system-level products, and could have a material adverse effect on our business, results of operations, or financial condition.

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Products that fail to meet specifications, are defective, or that are otherwise incompatible with end uses could impose significant costs on us.
Products that do not meet specifications or that contain, or are perceived by our customers to contain, defects or that are otherwise incompatible with end
uses could impose significant costs on us or otherwise materially adversely affect our business, results of operations, or financial condition. From time totime, we experience problems with nonconforming, defective, or incompatible products after we have shipped such products. In recent periods, we havefurther diversified and expanded our product offerings, which could potentially increase the chance that one or more of our products could fail to meet
specifications in a particular application. As a result, we could be adversely affected in several ways, including the following:•••

we may be required or agree to compensate customers for costs incurred or damages caused by defective or incompatible products and to replace
products;
we could incur a decrease in revenue or adjustment to pricing commensurate with the reimbursement of such costs or alleged damages; andwe may encounter adverse publicity, which could cause a decrease in sales of our products or harm our relationships with existing or potential
customers.

Any of the foregoing items could have a material adverse effect on our business, results of operations, or financial condition.
We may be unable to protect our intellectual property or retain key employees who are knowledgeable of and develop our intellectual property.
We maintain a system of controls over our intellectual property, including U.S. and foreign patents, trademarks, copyrights, trade secret laws, licensing
arrangements, confidentiality procedures, non-disclosure agreements with employees, consultants, and vendors, and a general system of internal controls.
Despite our system of controls over our intellectual property, it may be possible for our current or future competitors to obtain, copy, use, or disclose, illegallyor otherwise, our product and process technology. The laws of some foreign countries may not protect our intellectual property to the same degree as do U.S.
laws and our confidentiality, non-disclosure, and non-compete agreements may be unenforceable or difficult and costly to enforce.
Additionally, our ability to maintain and develop intellectual property is dependent upon our ability to attract, develop, and retain highly skilledemployees. Global competition for such skilled employees in our industry is intense. Due to the volatile nature of our industry and our operating results, adecline in our operating results and/or stock price may adversely affect our ability to retain key employees whose compensation is dependent, in part, upon
the market price of our common stock, achieving certain performance metrics, levels of company profitability, or other financial or company-wide
performance. If our competitors or future entrants into our industry are successful in hiring our employees, they may directly benefit from the knowledge
these employees gained while they were under our employment.
Our inability to protect our intellectual property or retain key employees who are knowledgeable of and develop our intellectual property could have amaterial adverse effect on our business, results of operations, or financial condition.
Claims that our products or manufacturing processes infringe or otherwise violate the intellectual property rights of others, or failure to obtain or
renew license agreements covering such intellectual property, could materially adversely affect our business, results of operations, or financial
condition.
As is typical in the semiconductor and other high technology industries, from time to time others have asserted, and may in the future assert, that our
products or manufacturing processes infringe upon, misappropriate, misuse, or otherwise violate their intellectual property rights. We are unable to predict theoutcome of these assertions made against us. Any of these types of claims, regardless of the merits, could subject us to significant costs to defend or resolve
such claims and may consume a substantial portion of management's time and attention. As a result of these claims, we may be required to:••••

pay significant monetary damages, fines, royalties, or penalties;
enter into license or settlement agreements covering such intellectual property rights;
make material changes to or redesign our products and/or manufacturing processes; and/or
cease manufacturing, having made, selling, offering for sale, importing, marketing, or using products and/or manufacturing processes in certain
jurisdictions.

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We may not be able to take any of the actions described above on commercially reasonable terms and any of the foregoing results could have a material
adverse effect on our business, results of operations, or financial condition. (See "Part I. Financial Information – Item 1. Financial Statements – Notes toConsolidated Financial Statements – Contingencies.")
We have a number of intellectual property license agreements. Some of these license agreements require us to make one-time or periodic payments. We
may need to obtain additional licenses or renew existing license agreements in the future. We are unable to predict whether these license agreements can beobtained or renewed on terms acceptable to us. The failure to obtain or renew licenses as necessary could have a material adverse effect on our business,
results of operations, or financial condition.
We have been served with several complaints in a Chinese court alleging patent infringement.
We have been served with several complaints in a Chinese court alleging we infringe certain Chinese patents by manufacturing and selling certain
products in China. The complaints seek orders requiring us 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 plus court fees.
We are unable to predict the outcome of these assertions of infringement made against us and therefore cannot estimate the range of possible loss. A
determination that our products or manufacturing processes infringe the intellectual property rights of others or entering into a license agreement coveringsuch intellectual property could result in significant liability and/or require us to make material changes to our operations in China, products, and/or
manufacturing processes. Any of the foregoing could have a material adverse effect on our business, results of operations, or financial condition. (See also
"Part I. Financial Information – Item 1. Financial Statements – Notes to Consolidated Financial Statements – Contingencies.")
Litigation could have a material adverse effect on our business, results of operations, or financial condition.
From time to time we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business or otherwise, both
domestically and internationally. Any claim, with or without merit, could result in significant legal fees that could negatively impact our financial results,
disrupt our operations, and require significant attention from our management. We could be subject to litigation or arbitration disputes arising from ourrelationships with vendors or customers, supply agreements, or contractual obligations with our subcontractors or business partners. We may also be
associated with and subject to litigation arising from the actions of our subcontractors or business partners. We may also be subject to litigation as a result ofindemnities we issue, primarily with our customers, the terms of our product warranties, and from product liability claims. There can be no assurance that weare adequately insured to protect against all claims and potential liabilities, and we may elect to self-insure with respect to certain matters. Exposures tovarious litigation could lead to significant costs and expenses as we defend claims, be required to pay damage awards, or enter into settlement agreements,
any of which could have a material adverse effect on our business, results of operations, or financial condition.
If our manufacturing process is disrupted, our business, results of operations, or financial condition could be materially adversely affected.
We and our subcontractors manufacture products using highly complex processes that require technologically advanced equipment and continuous
modification to improve yields and performance. Difficulties in the manufacturing process or the effects from a shift in product mix can reduce yields or
disrupt production and may increase our per gigabit manufacturing costs. We and our subcontractors maintain operations and continuously implement new
product and process technology at manufacturing facilities, which are widely dispersed in multiple locations in several countries including the United States,
Singapore, Taiwan, Japan, Malaysia, and China. Additionally, our control over operations at IMFT is limited by our agreements with Intel. From time to time,
there have been disruptions in the manufacturing process as a result of power outages, improperly functioning equipment, equipment failures, earthquakes, orother environmental events. If production is disrupted for any reason, manufacturing yields may be adversely affected or we may be unable to meet ourcustomers' requirements and they may purchase products from other suppliers. This could result in a significant increase in manufacturing costs, loss ofrevenues, or damage to customer relationships, any of which could have a material adverse effect on our business, results of operations, or financial condition.

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The acquisition of our ownership interest in Inotera from Qimonda has been challenged by the administrator of the insolvency proceedings for
Qimonda.
On January 20, 2011, Dr. Michael Jaffé, administrator for Qimonda's insolvency proceedings, filed suit against Micron and Micron Semiconductor B.V.,
our Netherlands subsidiary ("Micron B.V."), in the District Court of Munich, Civil Chamber. The complaint seeks to void, under Section 133 of the German
Insolvency Act, a share purchase agreement between Micron B.V. and Qimonda signed in fall 2008, pursuant to which Micron B.V. purchased substantiallyall of Qimonda's shares of Inotera (the "Inotera Shares"), representing approximately 18% of Inotera's outstanding shares as of May 31, 2018, and seeks anorder requiring us to re-transfer those shares to the Qimonda estate. The complaint also seeks, among other things, to recover damages for the alleged value ofthe joint venture relationship with Inotera and to terminate, under Sections 103 or 133 of the German Insolvency Code, a patent cross-license between us andQimonda entered into at the same time as the share purchase agreement.
Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March 13, 2014, the court issued
judgments: (1) ordering Micron B.V. to pay approximately $1 million in respect of certain Inotera Shares sold in connection with the original share purchase;(2) ordering Micron B.V. to disclose certain information with respect to any Inotera Shares sold by it to third parties; (3) ordering Micron B.V. to disclose thebenefits derived by it from ownership of the Inotera Shares, including in particular, any profits distributed on the Inotera Shares and all other benefits; (4)denying Qimonda’s claims against Micron for any damages relating to the joint venture relationship with Inotera; and (5) determining that Qimonda's
obligations under the patent cross-license agreement are canceled. In addition, the Court issued interlocutory judgments ordering, among other things: (1) that
Micron B.V. transfer to the Qimonda estate the Inotera Shares still owned by Micron B.V. and pay to the Qimonda estate compensation in an amount to be
specified for any Inotera Shares sold to third parties; and (2) that Micron B.V. pay the Qimonda estate as compensation an amount to be specified for benefits
derived by Micron B.V. from ownership of the Inotera Shares. The interlocutory judgments have no immediate, enforceable effect on us, and, accordingly, we
expect to be able to continue to operate with full control of the Inotera Shares subject to further developments in the case. We have filed a notice of appeal,
and the parties have submitted briefs to the appeals court.
We are unable to predict the outcome of the matter and, therefore, cannot estimate the range of possible loss. The final resolution of this lawsuit could
result in the loss of the Inotera Shares or monetary damages, unspecified damages based on the benefits derived by Micron B.V. from the ownership of the
Inotera Shares, and/or the termination of the patent cross-license, which could have a material adverse effect on our business, results of operations, or
financial condition.
We may incur additional restructuring charges in future periods.
In separate transactions in 2017, we sold our assembly and test facility located in Akita, Japan and our 40% ownership interest in Tera Probe, Inc.; assets
associated with our 200mm fabrication facility in Singapore; and assets related to our Lexar brand. In 2016, we initiated a restructure plan in response tobusiness conditions and the need to accelerate focus on our key priorities. The plan included the elimination of certain projects and programs, the permanent
closure of a number of open headcount requisitions, workforce reductions in certain areas of our business, and other non-headcount related spending
reductions. As a result of these and other actions, we incurred charges of $18 million, $67 million, and $3 million for 2017, 2016, and 2015, respectively.
We may not realize expected savings or other benefits from our restructure activities and may incur additional restructure charges or other losses in future
periods associated with other initiatives. In connection with any restructure initiatives, we could incur restructure charges, loss of production output, loss of
key personnel, disruptions in our operations, and difficulties in the timely delivery of products, which could have a material adverse effect on our business,
results of operations, or financial condition.

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Breaches of our security systems could expose us to losses.
We maintain a system of controls over the physical security of our facilities. We also manage and store various proprietary information and sensitive or
confidential data relating to our operations. In addition, we process, store, and transmit large amounts of data relating to our customers and employees,
including sensitive personal information. Unauthorized persons or employees may gain access to our facilities or network systems to steal trade secrets orother proprietary information, compromise confidential information, create system disruptions, or cause shutdowns. These parties may also be able to develop
and deploy viruses, worms, and other malicious software programs that disrupt our operations and create security vulnerabilities. Breaches of our physicalsecurity and attacks on our network systems could result in significant losses and damage our reputation with customers and suppliers and may expose us tolitigation if the confidential information of our customers, suppliers, or employees is compromised, which could have a material adverse effect on ourbusiness, results of operations, or financial condition.
Changes in foreign currency exchange rates could materially adversely affect our business, results of operations, or financial condition.
Across our global operations, significant transactions and balances are denominated in currencies other than the U.S. dollar (our reporting currency),
primarily the euro, Singapore dollar, New Taiwan dollar, and yen. We recorded net losses from changes in currency exchange rates of $60 million for the firstnine months of 2018, $74 million for 2017, and $24 million for 2016. Based on our foreign currency balances of monetary assets and liabilities, as of May 31,
2018, we estimate that a 10% adverse change in exchange rates versus the U.S. dollar would result in losses of approximately $303 million. Although wehedge our primary exposures to changes in currency exchange rates from our monetary assets and liabilities, the effectiveness of these hedges is dependent
upon our ability to accurately forecast our monetary assets and liabilities. In addition, a significant portion of our manufacturing costs are denominated inforeign currencies. Exchange rates for some of these currencies against the U.S. dollar, particularly the yen, have been volatile in recent periods. If thesecurrencies strengthen against the U.S. dollar, our manufacturing costs could significantly increase. Exchange rates for the U.S. dollar that adversely change
against our foreign currency exposures could have a material adverse effect on our business, results of operations, or financial condition.
We may make future acquisitions and/or alliances, which involve numerous risks.
Acquisitions and the formation or operation of alliances, such as joint ventures and other partnering arrangements, involve numerous risks, including thefollowing:
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integrating the operations, technologies, and products of acquired or newly formed entities into our operations;increasing capital expenditures to upgrade and maintain facilities;
increased debt levels;
the assumption of unknown or underestimated liabilities;
the use of cash to finance a transaction, which may reduce the availability of cash to fund working capital, capital expenditures, R&D expenditures,and other business activities;
diverting management's attention from daily operations;managing larger or more complex operations and facilities and employees in separate and diverse geographic areas;hiring and retaining key employees;
requirements imposed by governmental authorities in connection with the regulatory review of a transaction, which may include, among otherthings, divestitures or restrictions on the conduct of our business or the acquired business;inability to realize synergies or other expected benefits;
failure to maintain customer, vendor, and other relationships;
inadequacy or ineffectiveness of an acquired company's internal financial controls, disclosure controls and procedures, and/or environmental, healthand safety, anti-corruption, human resource, or other policies or practices; andimpairment of acquired intangible assets, goodwill, or other assets as a result of changing business conditions, technological advancements, orworse-than-expected performance of the acquired business.

In previous years, supply of memory and storage products has significantly exceeded customer demand resulting in significant declines in average selling
prices. The global memory and storage industry has experienced consolidation and may continue to consolidate. We engage, from time to time, in discussions
regarding potential acquisitions and similar opportunities. To the extent we are successful in completing any such transactions, we could be subject to some or
all of the risks described above, including the risks pertaining to funding, assumption of liabilities, integration challenges, and increases in debt that may
accompany such transactions. Acquisitions of, or alliances with, technology companies are inherently risky and may not be successful and could have amaterial adverse effect on our business, results of operations, or financial condition.

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The limited availability and quality of raw materials, supplies, or capital equipment could materially adversely affect our business, results ofoperations, or financial condition.
Our operations require raw materials, and in certain cases, third party services, that meet exacting standards. We generally have multiple sources ofsupply for our raw materials and services. However, only a limited number of suppliers are capable of delivering certain raw materials and services that meet
our standards. In some cases, materials, components, or services are provided by a single supplier. Various factors could reduce the availability and/or qualityof raw materials or components such as chemicals, silicon wafers, gases, photoresist, controllers, substrates, lead frames, printed circuit boards, subassemblies, targets, and reticle glass blanks. Shortages and/or quality issues may occur, from time to time, in the future. We and/or our suppliers could be
affected by laws and regulations enacted in response to concerns regarding climate change, which could increase the cost and limit the supply of our raw
materials. In addition, disruptions in transportation lines could delay our receipt of raw materials. Lead times for the supply of raw materials have been
extended in the past. The disruption of our supply or quality of raw materials or services or the extension of our lead times could have a material adverse
effect on our business, results of operations, or financial condition.
Our operations are dependent on our ability to procure advanced semiconductor manufacturing equipment that enables the transition to lower cost
manufacturing processes. For certain key types of equipment, including photolithography tools, we are sometimes dependent on a single supplier. From time
to time, we have experienced difficulties in obtaining some equipment on a timely basis due to suppliers' limited capacity. Our inability to obtain equipment
on a timely basis could adversely affect our ability to transition to next generation manufacturing processes and reduce our costs. Delays in obtaining
equipment could also impede our ability to ramp production at new facilities and could increase our overall costs of a ramp. Our inability to obtain advanced
semiconductor manufacturing equipment in a timely manner could have a material adverse effect on our business, results of operations, or financial condition.
Increases in tariffs or other taxes on our products or equipment and supplies could have an adverse impact on our operations.
We sell a significant majority of our products into countries outside the United States and we purchase a significant portion of equipment and supplies
from suppliers outside the United States. The United States and other countries have levied tariffs and taxes on certain goods. Further tariffs, additional taxes,
or trade barriers may increase our selling and/or manufacturing costs, decrease margins, reduce the competitiveness of our products, or inhibit our ability tosell products or purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of operations, or financial
conditions.
A downturn in the worldwide economy may harm our business.
Downturns in the worldwide economy have harmed our business in the past and future downturns could also adversely affect our business. Adverse
economic conditions affect demand for devices that incorporate our products, such as personal computers, mobile devices, SSDs, and servers. Reduced
demand for these products could result in significant decreases in our average selling prices and product sales. A deterioration of current conditions inworldwide credit markets could limit our ability to obtain external financing to fund our operations and capital expenditures. In addition, we may experiencelosses on our holdings of cash and investments due to failures of financial institutions and other parties. Difficult economic conditions may also result in ahigher rate of losses on our accounts receivables due to credit defaults. As a result, a downturn in the worldwide economy could have a material adverse
effect on our business, results of operations, or financial condition.
Our results of operations could be affected by natural disasters and other events in the locations in which we or our customers or suppliers operate.
We have manufacturing and other operations in locations subject to natural occurrences such as severe weather and geological events, such as
earthquakes or tsunamis, that could disrupt operations. In addition, our suppliers and customers also have operations in such locations. A natural disaster, fire,
explosion, or other event that results in a prolonged disruption to our operations, or the operations of our customers or suppliers, could have a material
adverse effect on our business, results of operations, or financial condition.

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Our incentives from various governments are conditional upon achieving or maintaining certain performance obligations and are subject toreduction, termination, or clawback.
We have received, and may in the future continue to receive, benefits and incentives from national, state, and local governments in various regions of theworld designed to encourage us to establish, maintain, or increase investment, workforce, or production in those regions. These incentives may take various
forms, including grants, loan subsidies, and tax arrangements, and typically require us to perform or maintain certain levels of investment, capital spending,employment, technology deployment, or research and development activities to qualify for such incentives. We cannot guarantee that we will successfully
achieve performance obligations required to qualify for these incentives or that the granting agencies will provide such funding. These incentive arrangements
typically provide the granting agencies with rights to audit our performance with the terms and obligations. Such audits could result in modifications to, or
termination of, the applicable incentive program. The incentives we receive could be subject to reduction, termination, or clawback, and any decrease or
clawback of government incentives could have a material adverse effect on our business, results of operations, or financial condition.
The operations of MMJ are subject to continued oversight by the Japan Court during the pendency of the corporate reorganization proceedings.
Because MMJ's plan of reorganization provides for ongoing payments to creditors following the closing of our acquisition of MMJ, the reorganization
proceedings in Japan (the "Japan Proceedings") are continuing and MMJ remains subject to the oversight of the Japan Court and of the trustees (including atrustee designated by us, who we refer to as the business trustee, and a trustee designated by the Japan Court, who we refer to as the legal trustee), pending
completion of the reorganization proceedings. The business trustee is responsible for overseeing the operation of the business of MMJ, other than oversight inrelation to acts that need to be carried out in connection with the Japan Proceedings, which are the responsibility of the legal trustee. MMJ's reorganization
proceedings in Japan, and oversight of the Japan Court, will continue until the final creditor payment is made under MMJ's plan of reorganization, which isscheduled to occur in December 2019, but may occur on a later date to the extent any claims of creditors remain unfixed on the final scheduled installment
payment date. MMJ may petition the Japan Court for an early termination of the reorganization proceedings once two-thirds of all payments under the plan ofreorganization are made. Although such early terminations are customarily granted, there can be no assurance that the Japan Court will grant any such petitionin this particular case.
During the pendency of the reorganization proceedings in Japan, MMJ is obligated to provide periodic financial reports to the Japan Court and may berequired to obtain the consent of the Japan Court prior to taking a number of significant actions relating to its businesses, including transferring or disposingof, or acquiring, certain material assets, incurring or guaranteeing material indebtedness, settling material disputes, or entering into certain material
agreements. The consent of the legal trustee may also be required for matters that would likely have a material impact on the operations or assets of MMJ or
for transfers of material assets, to the extent the matters or transfers would reasonably be expected to materially and adversely affect execution of MMJ's planof reorganization. Accordingly, during the pendency of the reorganization proceedings in Japan, our ability to operate MMJ as part of our global business or
to cause MMJ to take certain actions that we deem advisable for its business could be adversely affected if the Japan Court or the legal trustee is unwilling toconsent to various actions that we may wish to take with respect to MMJ.
The operations of MMJ being subject to the continued oversight by the Japan Court during the pendency of the corporate reorganization proceedings
could have a material adverse effect on our business, results of operations, or financial condition.
We may incur additional tax expense or become subject to additional tax exposure.
We operate in a number of locations outside the United States, including Singapore, where we have tax incentive arrangements that are conditional, inpart, upon meeting certain business operations and employment thresholds. Our domestic and international taxes are dependent upon the geographic mix of
our earnings among these jurisdictions. Our provision for income taxes and cash tax liabilities in the future could be adversely affected by numerous factors,
including challenges by tax authorities to our tax positions and intercompany transfer pricing agreements, income before taxes being lower than anticipated incountries with lower statutory tax rates and higher than anticipated in countries with higher statutory tax rates, changes in the valuation of deferred tax assets
and liabilities, failure to meet performance obligations with respect to tax incentive agreements, and changes in tax laws and regulations. We file income tax
returns with the U.S. federal government, various U.S. states, and various other jurisdictions throughout the world. Our U.S. federal and state tax returns
remain open to examination for 2013 through 2017. In addition, tax returns that remain open to examination in Japan range from the years 2012 to 2017, andin Singapore and Taiwan from 2013 to 2017. The results of audits and examinations of previously filed tax returns and continuing assessments of our tax
exposures may have an adverse effect on our provision for income taxes and cash tax liability. The foregoing items could have a material adverse effect on
our business, results of operations, or financial condition.
45

A change in tax laws in key jurisdictions could materially increase our tax expense.
On December 22, 2017, the United States enacted the Tax Act which lowers the U.S. corporate income tax rate from 35% to 21% and significantly
affects how income from our foreign operations are taxed in the United States. As a result of our fiscal year-end, our U.S. statutory federal rate will be 25.7%
for 2018, and 21% for subsequent years. Based on the information available, we recorded provisional amounts under SAB 118; however, we are continuing togather additional information and analyze authoritative guidance to finalize the computation of the Repatriation Tax as well as the impacts on the valuation
allowance release of the Repatriation Tax and the Tax Act. The final tax impacts may differ from estimates due to, among other things, the issuance ofadditional regulatory and legislative guidance. As a result of the Tax Act, our effective tax rate may increase to the low teens percentage depending on
profitability.
We may not utilize all of our net deferred tax assets.
We have substantial deferred tax assets, which include, among others, net operating loss and credit carryforwards. As of August 31, 2017, our U.S.
federal and state net operating loss carryforwards, including uncertain tax benefits, were $3.88 billion and $1.95 billion, respectively, which, if not utilized,
will expire at various dates from 2028 through 2037 and 2018 through 2037, respectively. As of August 31, 2017, our foreign net operating loss carryforwards
were $6.30 billion, which will, if not utilized, substantially all expire at various dates from 2019 through 2026. As of August 31, 2017, we had gross deferred
tax assets of $3.78 billion and valuation allowances of $2.32 billion against our deferred tax assets. As of May 31, 2018, after recording the provisional
estimated impact of the Tax Act, which includes the utilization of a substantial portion of our U.S. deferred tax assets, we had net deferred tax assets of $1.84
billion and valuation allowances of $855 million against our deferred tax assets. Utilization of all of our net operating loss and credit carryforwards would
increase the amount of our annual cash taxes reducing the overall amount of cash available to be used in other areas of the business and could have a material
adverse effect on our business, results of operations, or financial condition.
A change in ownership may limit our ability to utilize our net operating loss and credit carryforwards.
On January 18, 2017, our shareholders approved a Section 382 Rights Agreement (the "Rights Agreement"), under which our shareholders of record asof the close of business on August 1, 2016 received one right for each share of common stock outstanding, which entitles certain shareholders to purchaseadditional shares of our common stock at a significant discount in the event of certain transactions that may result in an ownership change, as defined by
Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"). In general, an ownership change will occur when the percentage of ourownership by one or more 5% shareholders has increased by more than 50% at any time during the prior three years. Rights will attach to all shares of theCompany’s common stock issued prior to the earlier of the rights' distribution date or expiration date as set forth in the Rights Agreement. Pursuant to the
Rights Agreement, if a shareholder (or group) acquires beneficial ownership of 4.99% or more of the outstanding shares of our common stock without priorapproval of our Board or without meeting certain customary exceptions, the rights (other than rights held by the acquiring shareholder (or group) and certain
related persons) would become exercisable. The Rights Agreement is intended to avoid an adverse ownership change, thereby preserving our current ability toutilize certain net operating loss and credit carryforwards; however, there is no assurance that the Rights Agreement will prevent all transfers that could resultin such an ownership change.
If we experience a 50% or greater change in ownership involving shareholders owning 5% or more of our common stock, it could adversely impact ourability to utilize our existing net operating loss and credit carryforwards. The inability to utilize existing net operating loss and credit carryforwards would
significantly increase the amount of our annual cash taxes and reduce the overall amount of cash available to be used in other areas of the business which
could have a material adverse effect on our business, results of operations, or financial condition.

46

Compliance with regulations regarding the use of conflict minerals could limit the supply and increase the cost of certain metals used in
manufacturing our products.
Increased focus on environmental protection and social responsibility initiatives led to the passage of Section 1502 of the Dodd-Frank Wall Street Reformand Consumer Protection Act of 2010 (the "Dodd-Frank Act") and its implementing SEC regulations. The Dodd-Frank Act imposes supply chain diligenceand disclosure requirements for certain manufacturers of products containing specific minerals that may originate in or near the Democratic Republic of theCongo (the "DRC") and finance or benefit local armed groups. These "conflict minerals" are commonly found in materials used in the manufacture ofsemiconductors. The implementation of these new regulations may limit the sourcing and availability of some of these materials. This in turn may affect ourability to obtain materials necessary for the manufacture of our products in sufficient quantities and may affect related material pricing. Some of ourcustomers may elect to disqualify us as a supplier or reduce purchases from us if we are unable to verify that our products are DRC conflict free. Our inability
to comply with the regulations regarding the use of conflict minerals could have a material adverse effect on our business, results of operations, or financial
condition.
We are subject to a variety of laws and regulations that may result in additional costs and liabilities.
The manufacturing of our products requires the use of facilities, equipment, and materials that are subject to a broad array of laws and regulations innumerous jurisdictions in which we operate. Additionally, we are subject to a variety of other laws and regulations relative to the construction, maintenance,and operations of our facilities. Any of these laws or regulations could cause us to incur additional direct costs, as well as increased indirect costs related toour relationships with our customers and suppliers, and otherwise harm our operations and financial condition. Any failure to comply with these laws or
regulations could adversely impact our reputation and our financial results. Additionally, we partner with other companies in our joint ventures, which arealso subject to a broad array of laws and regulations. Our ownership in these joint ventures may also expose us to risks associated with their respective
compliance with these laws and regulations. As a result of these items, we could experience the following:
•
•
•
•
•

suspension of production;
remediation costs;
alteration of our manufacturing processes;
regulatory penalties, fines, and legal liabilities; andreputational challenges.

Our failure, or the failure of our joint ventures, to comply with these laws and regulations could have a material adverse effect on our business, results ofoperations, or financial condition.
We face risks associated with our international sales and operations that could materially adversely affect our business, results of operations, or
financial condition.
Sales to customers outside the United States approximated 86% of our consolidated net sales for 2017. In addition, a substantial portion of ourmanufacturing operations are located outside the United States. In particular, a significant portion of our manufacturing operations are concentrated in
Singapore, Taiwan, Japan, and China. Our international sales and operations are subject to a variety of risks, including:
•
•
•
•
•
•
•
•
•
•
•
•

export and import duties, changes to import and export regulations, customs regulations and processes, and restrictions on the transfer of funds;
compliance with U.S. and international laws involving international operations, including the Foreign Corrupt Practices Act of 1977, as amended,
export and import laws, and similar rules and regulations;
theft of intellectual property;
political and economic instability;
problems with the transportation or delivery of products;
issues arising from cultural or language differences and labor unrest;
longer payment cycles and greater difficulty in collecting accounts receivable;
compliance with trade, technical standards, and other laws in a variety of jurisdictions;contractual and regulatory limitations on the ability to maintain flexibility with staffing levels;
disruptions to manufacturing operations as a result of actions imposed by foreign governments;changes in economic policies of foreign governments; anddifficulties in staffing and managing international operations.

47

Many of our customers, suppliers, and vendors operate internationally and are also subject to the foregoing risks. If we or our customers, suppliers, orvendors are impacted by these risks, it could have a material adverse effect on our business, results of operations, or financial condition.
We are subject to counterparty default risks.
We have numerous arrangements with financial institutions that subject us to counterparty default risks, including cash deposits, investments, capped call
contracts on our common stock, and derivative instruments. As a result, we are subject to the risk that the counterparty to one or more of these arrangements
will default on its performance obligations. A counterparty may not comply with their contractual commitments which could then lead to their defaulting on
their obligations with little or no notice to us, which could limit our ability to take action to mitigate our exposure. Additionally, our ability to mitigate our
exposures may be constrained by the terms of our contractual arrangements or because market conditions prevent us from taking effective action. If one of
our counterparties becomes insolvent or files for bankruptcy, our ability to recover any losses suffered as a result of that counterparty's default may be limitedby the liquidity of the counterparty or the applicable laws governing the bankruptcy proceedings. In the event of such default, we could incur significant
losses, which could have a material adverse effect on our business, results of operations, or financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSIn May 2018, we announced that our Board of Directors had authorized the discretionary repurchase of up to $10 billion of our outstanding common
stock beginning in 2019. We may purchase shares on a discretionary basis through open-market purchases, block trades, privately-negotiated transactions,
and/or derivative transactions, subject to market conditions and our ongoing determination of the best use of available cash. The repurchase authorization
does not obligate us to acquire any common stock.
During the third quarter of 2018, we share-settled all of our remaining 2033F Capped Calls and received 2,185,755 shares of our common stock.

Period(a) Total
number ofsharespurchased—(b) Average
price paid
per share

March 2, 2018

– April 5, 2018$

April 6, 2018

– May 3, 2018——

May 4, 2018

– May 31, 2018

2,185,755

52.95

2,185,755

52.95(c) Total number of shares(or units) purchased aspart of publicly announcedplans or programs(d) Maximum number (orapproximate dollar value) of shares(or units) that may yet bepurchased under publicly
announced plans or programs—$

10,000,000,000

Shares of common stock withheld as payment of withholding taxes and exercise prices in connection with the vesting or exercise of equity awards arealso treated as common stock repurchases. Those withheld shares of common stock are not considered common stock repurchases under an authorizedcommon stock repurchase plan and accordingly are excluded from the amounts in the table above.

48

ITEM 6. Exhibits
Exhibit
NumberFiled
Herewith

Description of Exhibit

Form

PeriodEndingExhibit/Appendix

FilingDate

3.1

Restated Certificate of Incorporation of the Registrant

8-K

99.2

1/26/15

3.2

Bylaws of the Registrant, Amended and Restated

8-K

99.1

4/15/14

10.64

Deferred Compensation Plan, as amended

ü

10.77

Fourth Amendment to the Credit Agreement, dated April 26, 2016, by and among
Micron Technology, Inc., as borrower, Morgan Stanley Senior Funding, Inc., asadministrative agent and collateral agent, and the other agents party thereto andeach financial institution party from time to time thereto

ü

31.1

Rule 13a-14(a) Certification of Chief Executive Officer

ü

31.2

Rule 13a-14(a) Certification of Chief Financial Officer

ü

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350

ü

32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350

ü

101.INSXBRL Instance Document

ü101.SCHXBRL Taxonomy Extension Schema Document

ü

101.CALXBRL Taxonomy Extension Calculation Linkbase Document

ü

101.DEFXBRL Taxonomy Extension Definition Linkbase Document

ü

101.LABXBRL Taxonomy Extension Label Linkbase Document

ü101.PREXBRL Taxonomy Extension Presentation Linkbase Document

ü49

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.
Micron Technology, Inc.
(Registrant)

Date:

June 22, 2018/s/ David A. Zinsner
David A. Zinsner
Senior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)
50

EXHIBIT 10.64

MICRON TECHNOLOGY, INC.
DEFERRED COMPENSATION PLAN

Effective March 1, 2017
As Amended on April 1, 2018

PREAMBLE
The Plan is intended to be a “plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for aselect group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement
Income Security Act of 1974, as amended, or an “excess benefit plan” within the meaning of Section 3(36) of the Employee Retirement Income Security Act
of 1974, as amended, or a combination of both. The Plan is further intended to conform with the requirements of Internal Revenue Code Section 409A and thefinal regulations issued thereunder and shall be interpreted, implemented and administered in a manner consistent therewith.

2

ARTICLE 1 - GENERAL
1.1

Purpose. The purpose of the Plan is to provide Eligible Employees an opportunity to defer to a future date the receipt of base and bonus
compensation for services performed for the Employer.

1.2

Effective Date. The Effective Date of the Plan is March 1, 2017.
ARTICLE 2 - DEFINITIONS

Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. Wherever used herein,
the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:
2.1“Account” means an account established for the purpose of recording amounts credited on behalf of a Participant and any income, expenses, gains,losses or distributions included thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurementand determination of the amounts to be paid to a Participant or to the Participant’s Beneficiary pursuant to the Plan.

2.2“Administrator” means, unless otherwise determined by the Plan Sponsor, the Micron Technology, Inc. Retirement at Micron (RAM) Committee.

2.3“Base Compensation” means the Participant’s base rate of compensation (including regular compensation, holiday, vacation, personal and sick pay)payable for services performed for the Employer for the Plan Year, as adjusted to reflect increases and decreases to the base rate during the Plan
Year.

2.4

“Beneficiary” means the persons, trusts, estates or other entities entitled under Section 8.2 to receive benefits under the Plan upon the death of a
Participant.

2.5“Board” or “Board of Directors” means the Board of Directors of the Plan Sponsor.

2.6“Bonus Compensation” means the Participant’s bonus or incentive compensation payable for services performed for the Employer for the Plan
Year pursuant to, among others designated by the Employer, the Micron Technology, Inc. Executive Incentive Plan, the Micron Technology, Inc.
Annual Incentive Plan, the Micron Technology, Inc. Incentive Pay Plan and/or the Micron Technology, Inc. Sales and Field Application Engineer
FAE Variable Incentive Plan.

2.7“Change in Control” means the occurrence of an event involving the Plan Sponsor that is described in Section 9.6.

2.8

“Code” means the Internal Revenue Code of 1986, as amended.

2.9“Compensation” means Base Compensation, Bonus Compensation and/or Performance-Based Compensation.

2.10“Disability” means a determination by the Administrator that the Participant is either (a) unable to engage in any substantial gainful activity byreason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for acontinuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be
expected to result in death or last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of notless than three months under an accident and health plan covering employees of the Employer. A Participant will be considered to have incurred a
Disability if he is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.

2.11“Discretionary Credits” has the meaning set forth in Section 5.1 hereof.

2.12“Distribution Date” means the earliest to occur of: (1) a Specified Payment Date elected by the Participant or (2) the Participant’s Separation from
Service for any reason (including death or Disability). Notwithstanding the foregoing, in the case of a distribution to a Specified Employee on
account of Separation from Service, the Distribution Date shall be the Specified Employee Delayed Payment Date.

2.13“Election Period” means the period established by the Administrator during which Participant deferral and distribution elections must be made inaccordance with the requirements of Code Section 409A. The Election Period for Base Compensation and for Bonus Compensation that does not
qualify as Performance-Based Compensation shall end no later3

than the last day of the Plan Year immediately preceding the Plan Year in which such Base Compensation or Bonus Compensation is earned, and theElection Period for Bonus Compensation qualifying as Performance-Based Compensation shall end no later than six (6) months before the end of the
fiscal year or other period in which the Performance-Based Compensation is earned; provided, that the Eligible Employee is employed continuously
from the later of the beginning of the performance period or the date the performance criteria are established through the date an election is made todefer such Performance-Based Compensation and the amount of such Performance-Based Compensation has not become readily ascertainable as ofthe date the election is made; and further provided, however, that the Election Period with respect to the first Plan Year in which an Eligible
Employee is eligible to participate in the Plan may, to the extent permitted under Code Section 409A, end no later than thirty (30) days after the
Eligible Employee first becomes eligible under the Plan and shall apply only to compensation earned after such election is made. A former Eligible
Employee who again becomes an Eligible Employee shall be treated as newly eligible to make deferrals under the Plan within thirty (30) days upon
return to eligible status if: (i) the former Eligible Employee has received distribution of the full amount of his or her Account balance attributable todeferral contributions and on or before the last such distribution was not eligible to make deferral contributions for periods after the last distribution
payment; or (ii) the former Eligible Employee has not been eligible to make deferral contributions at any time during the twenty-four (24)-month
period ending on the date he or she again becomes an Eligible Employee. In addition, if an Eligible Employee is or was eligible to participate inanother plan that is aggregated with the elective deferral portion of the Plan under Code Section 409A, participation in such plan shall be treated as
participation in the Plan for purposes of determining whether the Eligible Employee is treated as newly eligible under the Plan. Except in the case of
the first Plan Year in which an Eligible Employee is eligible to participate in the Plan, including a former Eligible Employee who is treated as newly
eligible to make deferrals, the effective date of elections to defer Base or Bonus Compensation shall be the first day of the calendar year following
such election and in the case of an election to defer Performance-Based Compensation, such election shall be effective with respect to PerformanceBased Compensation payable after the end of the applicable performance period.
2.14“Eligible Employee” means an employee of the Employer selected by the Employer for participation in the Plan.

2.15“Employer” means the Plan Sponsor and any other entity which is authorized by the Plan Sponsor to participate in and, in fact, does adopt the Plan.

2.16“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.17“Participant” means an Eligible Employee who commences participation in the Plan in accordance with Article 3.

2.18“Performance-Based Compensation” means any bonus, award or other compensation designated by the Employer, the amount of which, or theentitlement to which, is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance
period of at least twelve (12) consecutive months. For such bonus or award to be performance-based with respect to a Participant’s deferral election
with respect to such bonus or award, the following requirements must be met: (i) the performance criteria must be established in writing no later thanninety (90) days after the beginning of the applicable “performance period”; (ii) the outcome of the performance criteria must be substantiallyuncertain when the criteria are established; (iii) no bonus or award, or portion of any bonus or award, that will be paid either regardless of
performance, or based upon a level of performance that is substantially certain to be met at the time the criteria are established, shall be considered
Performance-Based Compensation; (iv) Performance-Based Compensation shall not include payments based upon subjective performance criteria
unless: (a) the subjective performance criteria are bona fide and relate to the Participant’s performance, the performance of a group of employees that
includes the Participant, or the performance of a business unit for which the Participant provides services (which may include the entire
organization); and (b) the determination that any subjective performance criteria have been met is not made by the Participant or a family member of
the Participant (as defined in Code Section 267(c)(4), applied as if the family of an individual includes the spouse of any member of the family), or aperson under the effective control of the Participant or such a family member, and no amount of the compensation of the person making suchdetermination is effectively controlled in whole or in part by the Participant or such a family member. A performance-based bonus that otherwise
meets the above criteria may provide for payment regardless of satisfaction of the performance criteria upon the Participant’s death, disability(defined as a medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her positionor any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of
not less than six (6) months), or a change in control event (as defined in Treasury Regulations Section 1.409A-3(i)(5)(i)). Any amount that actually
becomes payable upon such events without regard to the satisfaction of the performance criteria will not be considered Performance-Based
Compensation.

4

2.19

“Plan” means the unfunded plan of deferred compensation set forth herein, as adopted by the Plan Sponsor and as amended from time to time.

2.20“Plan Sponsor” means Micron Technology, Inc. or any successor by merger, consolidation or otherwise.

2.21“Plan Year” means the period commencing January 1 and ending on December 31.

2.22“Related Employer” means the Employer and (a) any corporation that is a member of a controlled group of corporations as defined in Code
Section 414(b) that includes the Employer and (b) any trade or business that is under common control as defined in Code Section 414(c) that
includes the Employer.

2.23“Separation from Service” means the date that the Participant dies, retires or otherwise has a termination of employment with respect to all
entities comprising the Related Employer. A Separation from Service does not occur if the Participant is on military leave, sick leave or other bonafide leave of absence if the period of leave does not exceed six months or such longer period during which the Participant’s right to reemployment
is provided by statute or contract. If the period of leave exceeds six months and the Participant’s right to re-employment is not provided either bystatute or contract, a Separation from Service will be deemed to have occurred on the first day following the six-month period. If the period of leaveis due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for acontinuous period of not less than six months, where the impairment causes the Participant to be unable to perform the duties of his or her positionof employment or any substantially similar position of employment, a 29 month period of absence may be substituted for the six month period.
Whether a termination of employment has occurred is based on whether the facts and circumstances indicate that the Related Employer and
the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services
the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no
more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over theimmediately preceding 36 month period (or the full period of services to the Related Employer if the employee has been providing services
to the Related Employer for less than 36 months).
An independent contractor is considered to have experienced a Separation from Service with the Related Employer upon the expiration of
the contract (or, in the case of more than one contract, all contracts) under which services are performed for the Related Employer if the
expiration constitutes a good-faith and complete termination of the contractual relationship.
If a Participant provides services as both an employee and an independent contractor of the Related Employer, the Participant must separate
from service both as an employee and as an independent contractor to be treated as having incurred a Separation from Service. If a
Participant ceases providing services as an independent contractor and begins providing services as an employee, or ceases providing
services as an employee and begins providing services as an independent contractor, the Participant will not be considered to haveexperienced a Separation from Service until the Participant has ceased providing services in both capacities.
If a Participant provides services both as an employee and as a member of the board of directors of a corporate Related Employer (or ananalogous position with respect to a noncorporate Related Employer), the services provided as a director are not taken into account indetermining whether the Participant has incurred a Separation from Service as an employee for purposes of a nonqualified deferredcompensation plan in which the Participant participates as an employee that is not aggregated under Code Section 409A with any plan inwhich the Participant participates as a director.
If a Participant provides services both as an employee and as a member of the board of directors of a corporate related Employer (or ananalogous position with respect to a noncorporate Related Employer), the services provided as an employee are not taken into account indetermining whether the Participant has experienced a Separation from Service as a director for purposes of a nonqualified deferredcompensation plan in which the Participant participates as a director that is not aggregated under Code Section 409A with any plan in which
the Participant participates as an employee.
All determinations of whether a Separation from Service has occurred will be made in a manner consistent with Code Section 409A and thefinal regulations thereunder.

5

2.24

“Specified Employee” is an employee who on the date of his Separation from Service is a “specified employee” within the meaning given such term
under Code Section 409A and the regulations thereunder applying the default criteria.

2.25“Specified Employee Delayed Payment Date” means the first business day of the seventh month following the date of a Specified Employee’s
Separation from Service.

2.26“Specified Payment Date” means a calendar year elected by the Participant to receive his her deferrals that is after the Plan Year for which thedeferrals are made.

2.27“Valuation Date” means each business day of the Plan Year that the Nasdaq Global Stock Market is open.

2.28“Years of Service” shall be determined in accordance with the Participant’s Years of Service credited under the Micron Technology, Inc. Retirementat Micron (RAM) Plan.
ARTICLE 3 - PARTICIPATION

3.1

Participation. An Eligible Employee shall commence participation in the Plan upon the effectiveness of his first deferral election in accordance with
Section 4.1.

3.2

Termination of Participation. The Administrator may terminate a Participant’s participation in the Plan in a manner consistent with Code Section
409A. If the Employer terminates a Participant’s participation before the Participant experiences a Separation from Service the Participant’s vested
Accounts shall be paid in accordance with the provisions of Article 9.
ARTICLE 4 - PARTICIPANT ELECTIONS

4.1

Deferral Agreement. An Eligible Employee may elect during the applicable Election Period, by executing in writing or electronically a deferralagreement on form(s) approved by the Administrator, to defer the receipt of a designated percentage of Base Compensation per payroll period that isearned and payable after the effective date of such election, a designated percentage of Bonus Compensation per payroll period that is earned andpayable after the effective date of such election and a designated percentage of Performance-Based Compensation that is payable after the effective
date of such election and have such amount credited to the Participant’s Account pursuant to the terms of the Plan. The Participant shall make aseparate deferral election for Base, Bonus and Performance-Based Compensation deferrals for each Plan Year.
A new deferral election must be timely executed for each Plan Year during which the Eligible Employee desires to defer Compensation. An Eligible
Employee who does not timely execute a deferral election shall be deemed to have elected zero deferrals of Compensation for such Plan Year.

4.2

Revocation/Modification of Deferral Elections. Except as otherwise provided in Section 9.2, a Participant may not revoke or modify his deferralagreement after the Election Period. The Administrator in its discretion may cancel a deferral election if permitted under Code Section 409A (suchas upon disability), provided that the Participant shall not be provided an election with respect to such cancellation. Notwithstanding anything in thisPlan to the contrary, if a Participant receives a hardship distribution of elective deferrals from a qualified cash or deferred arrangement maintained by
the Employer, then such Participant’s deferral election shall be cancelled for the remainder of the calendar year in which he received such hardship
distribution, to the extent necessary to satisfy the requirements of Treas. Reg. Section 1.401(k)-1(d)(3).

4.3

Amount of Deferrals. An Eligible Employee is not required to make a deferral election for any Plan Year. However, if an Eligible Employee makes
a deferral election, the following minimums and maximums apply. These minimums and/or maximums may be modified by the Administrator for agiven Plan Year on the election forms for such Plan Year without the need of a formal plan amendment.
(a) Minimum Base Compensation Deferral Election. The minimum deferral election percentage an Eligible Employee may make for a Plan Yearwith respect to Base Compensation is 1% of Base Compensation.
(b) Minimum Bonus Compensation Deferral Election. The minimum deferral election percentage an Eligible Employee may make for a Plan
Year with respect to Bonus Compensation is 1% of such Eligible Employee’s Bonus for a Plan Year.
6

(c) Maximum Base Compensation Deferral Election. The maximum deferral election percentage an Eligible Employee may make for a Plan Yearwith respect to Base Compensation is 75% of Base Compensation.
(d) Maximum Bonus Compensation Deferral Election. The maximum deferral election percentage an Eligible Employee may make for a Plan
Year with respect to Bonus Compensation is 100% of such Eligible Employee’s Bonus for a Plan Year.
4.4

Timing of Election to Defer. Each Eligible Employee who desires to defer Compensation otherwise payable during a Plan Year must execute adeferral agreement within the Election Period.

4.5

Election of Payment Schedule and Form of Payment. All elections of a payment schedule and a form of payment will be made in accordance withrules and procedures established by the Administrator. At the time an Eligible Employee completes a deferral agreement during the Election Period,
the Eligible Employee must elect a form of payment in which to receive such deferrals in a payment schedule permitted under Section 9.3 and mayelect a Specified Payment Date that occurs during the Participant’s employment. If an Eligible Employee fails to elect a form of payment permitted
under Section 9.3, then he shall be deemed to have elected a lump sum form of payment.

4.6

No Deferrals from Severance. Deferral elections shall not apply to severance or other amounts payable after a Participant’s Separation from
Service.
ARTICLE 5 - EMPLOYER CONTRIBUTIONS

5.1

Employer Contributions. The Employer may, in its sole discretion, make discretionary Employer credits (“Discretionary Credits”) on behalf of any
Eligible Participant. In its sole discretion, the Employer shall determine the Eligible Participants to be credited with any Discretionary Credit, theamount of any such Discretionary Credit and the vesting schedule applicable thereto (including any accelerated vesting thereof and the events ofsuch acceleration). In addition, the Employer may permit the Participant to elect the timing and form of distribution of such Discretionary Credits,
provided that any such election shall be made no later than the latest time permitted by Code Section 409A.
ARTICLE 6 - ACCOUNTS AND CREDITS

6.1

Establishment of Account. For accounting and computational purposes only, the Administrator will establish and maintain an Account on behalf ofeach Participant which will reflect the credits made pursuant to Section 6.2, distributions or withdrawals, along with the earnings, expenses, gains
and losses allocated thereto, attributable to the hypothetical investments made with the amounts in the Account as provided in Article 7. The
Administrator will establish and maintain such other records and accounts, as it decides in its discretion to be reasonably required or appropriate todischarge its duties under the Plan.

6.2

Credits to Account. A Participant’s Account will be credited for each Plan Year with the amount of his elective deferrals under Section 4.1 at thetime the amount subject to the deferral election would otherwise have been payable to the Participant and the amount of Employer contributions
treated as allocated on his behalf under Article 5.
ARTICLE 7 - INVESTMENT OF CONTRIBUTIONS

7.1

Investment Options. The amount credited to each Account shall be treated as invested in the investment options selected in advance by the
Administrator. The Administrator, in its sole discretion, shall be permitted to add or remove investment options from the Plan menu from time totime, provided that any such additions or removals of investment options shall not be effective with respect to any period prior to the effective dateof such change.

7.2

Investment Allocations. A Participant’s investment allocation constitutes a deemed, not actual, investment among the investment options
comprising the investment menu. At no time shall a Participant have any real or beneficial ownership in any investment option included in theinvestment menu, nor shall the Employer or any trustee acting on its behalf have any obligation to purchase actual securities as a result of a
Participant’s investment allocation. A Participant’s investment allocation shall be used solely for purposes of adjusting the value of a Participant’s
Account.
(a) A Participant shall specify an investment allocation for each of his Accounts in accordance with procedures established by the Administrator.
Except as otherwise provided by the Administrator, the following provisions of this Section 7.2 shall apply to allocations under the Plan.
7

(i) Allocation among the investment options must be designated in increments of 1%. The Participant’s investment allocation will become
effective on the same business day or, in the case of investment allocations received after a time specified by the Administrator, the next
business day.
(ii) A Participant may change an investment allocation on any business day, both with respect to future credits to the Plan and with respect toexisting Accounts, in accordance with procedures adopted by the Administrator. Changes shall become effective on the same business dayor, in the case of investment allocations received after a time specified by the Administrator, the next business day, and shall be applied
prospectively.
7.3

Adjustment of Accounts. The amount credited to each Account shall be adjusted for hypothetical investment earnings, expenses, gains or losses inan amount equal to the earnings, expenses, gains or losses attributable to the investment options selected by the Participant from among theinvestment options provided in Section 7.1. A Participant (or the Participant’s Beneficiary after the death of the Participant) may, in accordance withrules and procedures established by the Administrator, select the investments from among the options provided in Section 7.1 to be used for the
purpose of calculating future hypothetical investment adjustments to the Account or to future credits to the Account under Section 6.2 effective as of
the Valuation Date coincident with or next following notice to the Administrator. Each Account shall be adjusted as of each Valuation Date to reflect:(a) the hypothetical earnings, expenses, gains and losses described above; (b) amounts credited pursuant to Section 6.2; and (c) distributions orwithdrawals. In addition, each Account may be adjusted for its allocable share of the hypothetical costs and expenses associated with themaintenance of the hypothetical investments provided in Section 7.1.

8.1

Vesting.

ARTICLE 8 - RIGHT TO BENEFITS(a) A Participant, at all times, has a 100% nonforfeitable interest in the amounts credited to his Account attributable to his elective deferrals made inaccordance with Section 4.1.
(b) A Participant’s right to the amounts credited to his Account attributable to Discretionary Credits made in accordance with Article 5, if any, shallvest at to 100% of the applicable Discretionary Credit on the date that such Participant achieves two Years of Service (each, an “Employer
Contribution Vesting Date”). Upon a Separation from Service prior to an Employer Contribution Vesting Date, the Participant shall forfeit thenonvested portion of his Account. Notwithstanding the foregoing, a Participant’s rights to the amounts credited to his Account attributable toDiscretionary Credits made in accordance with Article 5, if any, shall vest as to 100% of the applicable Discretionary Credit in the event of such
Participant’s death or Disability, or upon the occurrence of a Change in Control.
8.2

Death; Disability. A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries inaccordance with rules and procedures established by the Administrator.
A copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of theParticipant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant’s vested Account, such amountwill be paid to his estate (such estate shall be deemed to be the Beneficiary for purposes of the Plan) in accordance with the provisions of Article 9.
ARTICLE 9 - DISTRIBUTION OF BENEFITS

9.1

Amount of Benefits. The vested amount credited to a Participant’s Account as determined under Articles 6, 7 and 8 shall determine and constitutethe basis for the value of benefits payable to the Participant under the Plan.

9.2

Method and Timing of Distributions. Except as otherwise expressly provided herein, amounts credited to a Participant’s Account for each Plan
Year shall be paid to the Participant in accordance with the Participant’s distribution election under Article 4. Distributions shall commence to be
paid to the Participant as soon as administratively feasible following the Distribution Date, but in no event later than the time prescribed by Treas.
Reg. Section 1.409A-3(d). A Participant may make a one (1) time change to his or her distribution election for a Plan Year to elect a later Specified
Payment Date in accordance with this Section 9.2 and may make a one (1) time change to his or her distribution election for a Plan Year to elect a
different payment schedule in accordance with this Section 9.2; provided, however, that an election to defer payment or change the form of
distribution shall not take effect until at least 12 months after the date on which the election is made and shall be effective only if (i) the election ismade at least twelve (12) months before the Specified Payment Date or payment schedule would otherwise commence or occur, and (ii) the
Participant elects a new Specified Payment
8Date or payment schedule that delays the Specified Payment Date or payment schedule at least five (5) years. For purposes of this Section 9.2, aseries of installment payments is always treated as a single payment and not as a series of separate payments.
9.3

Form of Distribution. Vested amounts credited to a Participant’s Account shall, at the Participant’s election specified in his deferral agreement inaccordance with Article 4, be payable to the Participant in a single sum cash payment or in substantially equal annual cash installments over not lessthan two (2) years and not more than ten (10) years. Annual installment payments shall be calculated by dividing the Account balance by theremaining annual installments to be made.

9.4

Payment Election Overrides. Notwithstanding the Participant’s election as to the time and form of payment, upon the Participant’s death or
Disability, the Participant’s entire Account (including any amounts with respect to which installment payments have previously commenced) shall be
paid to the Participant or his Beneficiary in a single sum cash payment.

9.6

Change in Control. Notwithstanding the Participant’s election as to the time and form of payment, in the event of a Change in Control, theParticipant’s entire Account (including any amounts with respect to which installment payments have previously commenced) shall be paid to theParticipant in a single sum cash payment upon the Change in Control.
A Change in Control, for purposes of the Plan, will occur upon a change in the ownership of the Plan Sponsor, a change in the effective control of
the Plan Sponsor or a change in the ownership of a substantial portion of the assets of the Plan Sponsor. The Plan Sponsor, for this purpose, includes
any corporation identified in this Section 9.6.
If a Participant continues to make deferrals in accordance with Article 4 after he has received a distribution due to a Change in Control, the residual
amount payable to the Participant shall be paid at the time and in the form specified in the elections he makes in accordance with Article 4 or uponhis death or Disability as provided in Article 8.
Whether a Change in Control has occurred will be determined by the Administrator in accordance with the rules and definitions set forth in thisSection 9.6. A distribution to the Participant will be treated as occurring upon a Change in Control if the Plan Sponsor terminates the Plan inaccordance with Section 10.2 and distributes the Participant’s benefits within twelve months of a Change in Control as provided in Section 10.3.
(a) Relevant Corporations. To constitute a Change in Control for purposes of the Plan, the event must relate to (i) the corporation for whom theParticipant is performing services at the time of the Change in Control, (ii) the corporation that is liable for the payment of the Participant’s
benefits under the Plan (or all corporations liable if more than one corporation is liable) but only if either the deferred compensation is
attributable to the performance of services by the Participant for such corporation (or corporations) or there is a bona fide business purpose forsuch corporation (or corporations) to be liable for such payment and, in either case, no significant purpose of making such corporation (orcorporations) liable for such payment is the avoidance of federal income tax, or (iii) a corporation that is a majority shareholder of a corporation
identified in (i) or (ii), or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporationin the chain, ending in a corporation identified in (i) or (ii). A majority shareholder is defined as a shareholder owning more than fifty percent(50%) of the total fair market value and voting power of such corporation.
(b) Stock Ownership. Code Section 318(a) applies for purposes of determining stock ownership. Stock underlying a vested option is consideredowned by the individual who owns the vested option (and the stock underlying an unvested option is not considered owned by the individual
who holds the unvested option). If, however, a vested option is exercisable for stock that is not substantially vested (as defined by Treasury
Regulation Section 1.83-3(b) and (j)) the stock underlying the option is not treated as owned by the individual who holds the option.
(c) Change in the Ownership of a Corporation. A change in the ownership of a corporation occurs on the date that any one person or more than
one person acting as a group, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes
more than fifty percent (50%) of the total fair market value or total voting power of the stock of such corporation. If any one person or morethan one person acting as a group is considered to own more than fifty percent (50%) of the total fair market value or total voting power of thestock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership ofthe corporation (or to cause a change in the effective control of the corporation as discussed below in Section 9.6(d)). An increase in thepercentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its
stock in exchange for property will be treated as an acquisition of stock. Section 9.6(c) applies only when there is a transfer of stock of acorporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction. For
9purposes of this Section 9.6(c), persons will not be considered to be acting as a group solely because they purchase or own stock of the same
corporation at the same time or as a result of a public offering. Persons will, however, be considered to be acting as a group if they are owners ofa corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If aperson, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similartransaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to ownership in that
corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.
(d) Change in the effective control of a corporation. A change in the effective control of a corporation occurs on the date that either (i) any one
person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the mostrecent acquisition by such person or persons) ownership of stock of the corporation possessing thirty percent (30%) or more of the total voting
power of the stock of such corporation, or (ii) a majority of members of the corporation’s board of directors is replaced during any twelve month
period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors prior to
the date of the appointment or election, provided that for purposes of this paragraph (ii), the term corporation refers solely to the relevant
corporation identified in Section 9.6(a) for which no other corporation is a majority shareholder for purposes of Section 9.6(a). In the absence ofan event described in Section 9.6(d)(i) or (ii), a change in the effective control of a corporation will not have occurred. A change in effective
control may also occur in any transaction in which either of the two corporations involved in the transaction has a change in the ownership ofsuch corporation as described in Section 9.6(c) or a change in the ownership of a substantial portion of the assets of such corporation as
described in Section 9.6(e). If any one person, or more than one person acting as a group, is considered to effectively control a corporation
within the meaning of this Section 9.6(d), the acquisition of additional control of the corporation by the same person or persons is not considered
to cause a change in the effective control of the corporation or to cause a change in the ownership of the corporation within the meaning ofSection 9.6(c). For purposes of this Section 9.6(d), persons will or will not be considered to be acting as a group in accordance with rules similar
to those set forth in Section 9.6(c) with the following exception. If a person, including an entity, owns stock in both corporations that enter into amerger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with othershareholders in a corporation only with respect to the ownership in that corporation prior to the transaction giving rise to the change and not withrespect to the ownership interest in the other corporation.
(e) Change in the ownership of a substantial portion of a corporation’s assets. A change in the ownership of a substantial portion of acorporation’s assets occurs on the date that any one person, or more than one person acting as a group (as determined in accordance with rules
similar to those set forth in Section 9.6(d)), acquires (or has acquired during the twelve month period ending on the date of the most recent
acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent(40%) of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For thispurpose, gross fair market value means the value of the assets of the corporation or the value of the assets being disposed of determined without
regard to any liabilities associated with such assets. There is no Change in Control event under this Section 9.6(e) when there is a transfer to anentity that is controlled by the shareholders of the transferring corporation immediately after the transfer. A transfer of assets by a corporation is
not treated as a change in ownership of such assets if the assets are transferred to (i) a shareholder of the corporation (immediately before theasset transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the total value or voting power of which
is owned, directly or indirectly, by the corporation, (iii) a person, or more than one person acting as a group, that owns, directly or indirectly,
fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the corporation, or (iv) an entity, at least fifty (50%)
of the total value or voting power of which is owned, directly or indirectly, by a person described in Section 9.6(e)(iii). For purposes of theforegoing, and except as otherwise provided, a person’s status is determined immediately after the transfer of assets.
9.7

Permissible Delays in Payment. Distributions may be delayed beyond the date payment would otherwise occur in accordance with the provisions ofArticles 8 and 9 in any of the following circumstances as long as the Employer treats all payments to similarly situated Participants on a reasonably
consistent basis.
(a) The Employer may delay payment if it reasonably anticipates that its deduction with respect to such payment would be limited or eliminated by
the application of Code Section 162(m). Payment must be made during the Participant’s first taxable year in which the Employer reasonably
anticipates, or should reasonably anticipate, that if the payment is made during such year the deduction of such payment will not be barred by
the application of Code Section 162(m)10or during the period beginning with the Participant’s Separation from Service and ending on the later of the last day of the Employer’s taxable
year in which the Participant separates from service or the 15th day of the third month following the Participant’s Separation from Service. If ascheduled payment to a Participant is delayed in accordance with this Section 9.7(a), all scheduled payments to the Participant that could bedelayed in accordance with this Section 9.7(a) will also be delayed.
(b) The Employer may also delay payment if it reasonably anticipates that the making of the payment will violate federal securities laws or otherapplicable laws provided payment is made at the earliest date on which the Employer reasonably anticipates that the making of the payment will
not cause such violation.
(c) The Employer reserves the right to amend the Plan to provide for a delay in payment upon such other events and conditions as the Secretary of
the Treasury may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
9.8

Permitted Acceleration of Payment. The Employer may permit acceleration of the time or schedule of any payment or amount scheduled to be
paid pursuant to a payment under the Plan provided such acceleration would be permitted by the provisions of Reg. Sec. 1.409A-3(j)(4), including
the following events:(a) Domestic Relations Order. A payment may be accelerated if such payment is made to an alternate payee pursuant to and following the receipt
and qualification of a domestic relations order as defined in Code Section 414(p).
(b) Compliance with Ethics Agreements and Legal Requirements. A payment may be accelerated as may be necessary to comply with ethics
agreements with the Federal government or as may be reasonably necessary to avoid the violation of Federal, state, local or foreign ethics law orconflicts of laws, in accordance with the requirements of Code Section 409A.
(c) FICA Tax. A payment may be accelerated to the extent required to pay the Federal Insurance Contributions Act tax imposed under Code
Sections 3101, 3121(a) and 3121(v)(2) of the Code with respect to compensation deferred under the Plan (the “FICA Amount”). Additionally, apayment may be accelerated to pay the income tax on wages imposed under Code Section 3401 of the Code on the FICA Amount and to pay theadditional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes. The total payment under thissubsection (d) may not exceed the aggregate of the FICA Amount and the income tax withholding related to the FICA Amount.
(d) Section 409A Additional Tax. A payment may be accelerated if the Plan fails to meet the requirements of Code Section 409A; provided thatsuch payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code
Section 409A.
(e) Offset. A payment may be accelerated in the Employer’s discretion as satisfaction of a debt of the Participant to the Employer, where such debt
is incurred in the ordinary course of the service relationship between the Participant and the Employer, the entire amount of the reduction in anyof the Employer’s taxable years does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt
otherwise would have been due and collected from the Participant.
(f) Other Events. A payment may be accelerated in the Administrator’s discretion in connection with such other events and conditions as permitted
by Code Section 409A.
ARTICLE 10 - AMENDMENT AND TERMINATION

10.1

Amendment by Plan Sponsor. The Plan Sponsor reserves the right to amend the Plan (for itself and each Employer) through action of its Board of
Directors. No amendment can directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of his Accountwhich had accrued and vested prior to the amendment.

10.2

Plan Termination Following Change in Control or Corporate Dissolution. The Plan Sponsor reserves the right to terminate the Plan anddistribute all amounts credited to all Participant Accounts within the 30 days preceding or the twelve months following a Change in Control as
determined in accordance with the rules set forth in Section 9.6. For this purpose, the Plan will be treated as terminated only if all agreements,
methods, programs and other arrangements sponsored by the Related Employer immediately after the Change in Control which are treated as asingle plan under Reg. Sec. 1.409A-1(c)(2) are also terminated so that all participants under the Plan and all similar arrangements are required toreceive all amounts deferred under the terminated arrangements within twelve months of the date the Plan
11

Sponsor irrevocably takes all necessary action to terminate the arrangements. In addition, the Plan Sponsor reserves the right to terminate the Plan
within twelve months of a corporate dissolution taxed under Code Section 331 or with the approval of a bankruptcy court pursuant to 11 U. S. C.
Section 503(b)(1)(A) provided that amounts deferred under the Plan are included in the gross incomes of Participants in the latest of (a) the calendar
year in which the termination and liquidation occurs, (b) the first calendar year in which the amount is no longer subject to a substantial risk of
forfeiture, or (c) the first calendar year in which payment is administratively practicable.
10.3

Other Plan Terminations. The Plan Sponsor retains the discretion to terminate the Plan if (a) all arrangements sponsored by the Plan Sponsor thatwould be aggregated with any terminated arrangement under Code Section 409A and Reg. Sec. 1.409A-1(c)(2) are terminated, (b) no payments
other than payments that would be payable under the terms of the arrangements if the termination had not occurred are made within twelve monthsof the termination of the arrangements, (c) all payments are made within twenty-four months of the date the Plan Sponsor takes all necessary action
to irrevocably terminate and liquidate the arrangements, (d) the Plan Sponsor does not adopt a new arrangement that would be aggregated with any
terminated arrangement under Code Section 409A and the regulations thereunder at any time within the three year period following the date of
termination of the arrangement, and (e) the termination does not occur proximate to a downturn in the financial health of the Plan sponsor. The Plan
Sponsor also reserves the right to amend the Plan to provide that termination of the Plan will occur under such conditions and events as may beprescribed by the Secretary of the Treasury in generally applicable guidance published in the Internal Revenue Bulletin.
ARTICLE 11 - THE TRUST

11.1

Establishment of Trust. The Plan Sponsor may but is not required to establish a trust to hold amounts which the Plan Sponsor may contribute fromtime to time to correspond to some or all amounts credited to Participants under Section 6.2. In the event that the Plan Sponsor wishes to establish atrust to provide a source of funds for the payment of Plan benefits, any such trust shall be constructed to constitute an unfunded arrangement that
does not affect the status of the Plan as an unfunded plan for purposes of Title I of ERISA and the Code.

11.2

Rabbi Trust. Any trust established by the Plan Sponsor shall be between the Plan Sponsor and a trustee pursuant to a separate written agreement
under which assets are held, administered and managed, subject to the claims of the Plan Sponsor’s creditors in the event of the Plan Sponsor’s
insolvency. The trust is intended to be treated as a rabbi trust in accordance with existing guidance of the Internal Revenue Service, and theestablishment of the trust shall not cause the Participant to realize current income on amounts contributed thereto. The Plan Sponsor must notify thetrustee in the event of a bankruptcy or insolvency.

11.3

Investment of Trust Funds. Any amounts contributed to the trust by the Plan Sponsor shall be invested by the trustee in accordance with theprovisions of the trust and the instructions of the Administrator. Trust investments need not reflect the hypothetical investments selected byParticipants under Section 7.1 for the purpose of adjusting Accounts and the earnings or investment results of the trust need not affect the
hypothetical investment adjustments to Participant Accounts under the Plan.
ARTICLE 12 - PLAN ADMINISTRATION

12.1

Powers and Responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in all of
its details, subject, however, to the applicable requirements of ERISA. The Administrator’s powers and responsibilities include, but are not limited
to, the following:(a) To make and enforce such rules and procedures as it deems necessary or proper for the efficient administration of the Plan;(b) To interpret the Plan, its interpretation thereof to be final, except as provided in Section 12.2, on all persons claiming benefits under the Plan;(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;(d) To administer the claims and review procedures specified in Section 12.2;(e) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisionsof the Plan;

12

(f) To determine the person or persons to whom such benefits will be paid;(g) To authorize the payment of benefits;(h) To comply with the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;(i) To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;(j) By written instrument, to allocate and delegate its responsibilities, including the formation of an administrative committee to administer the
Plan.
12.2

Claims and Review Procedures.
Claims Procedure. If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with
the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such
notification will be given within 90 days (45 days in the case of a claim regarding Disability) after the claim is received by the Administrator.
The Administrator may extend the period for providing the notification by 90 days (30 days in the case of a claim regarding Disability) if special
circumstances require an extension of time for processing the claim and if written notice of such extension and circumstance is given to such
person within the initial 90 day period (45 day period in the case of a claim regarding Disability). If such notification is not given within such
period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim. Such notification
will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material orinformation necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) a
description of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the person’s right to bringa civil action following an adverse decision on review. In addition, for a claim regarding Disability, such notification will be provided in a
culturally and linguistically appropriate manner and will contain (v) a discussion of the decision, including an explanation of the basis fordisagreeing with or not following: (a) the views provided by the claimant’s health care or vocation professionals who treated and evaluated theclaimant; (b) the views of medical or vocational experts whose advice was obtained by the plan, regardless of whether the advice was relied
upon in making the benefit determination; and (c) any disability determination made by the Social Security Administration, (vi) if the adverse
benefit determination is based on medical necessity, experimental treatment, or similar exclusion or limit, either an explanation of the scientificor clinical judgement for the determination, applying the terms of the plan to the claimant’s medical circumstances, or a statement that an
explanation will be provided free of charge upon request, (vii) the specific internal rules, guidelines, protocols, standards or other similar criteria(a “Guideline”) that were relied upon in making the adverse determination or a statement that such Guideline does not exist, and (viii) a
statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records,
and other information relevant to the claim for benefits.
Review Procedure. Within 60 days (180 days in the case of a claim regarding Disability) after the date on which a person receives a written
notification of denial of claim (or, if written notification is not provided, within 60 days (180 days in the case of a claim regarding Disability) of
the date denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the
Administrator for a review of his denied claim and of pertinent documents and (ii) submit written issues and comments to the Administrator.
The decision on review will be made within 60 days (45 days in the case of a claim regarding Disability). The Administrator may extend theperiod for making the decision on review by 60 days (45 days in the case of a claim regarding Disability) if special circumstances require an
extension of time for processing the request such as an election by the Administrator to hold a hearing, and if written notice of such extension
and circumstances is given to such person within the initial 60-day period (45 days in the case of a claim regarding Disability). If the decision onreview is not made within such period, the claim will be considered denied. In the case of a claim regarding Disability, before a final adverse
benefit determination is made, the Administrator will provide the claimant, free of charge, with any new or additional evidence or rationaleconsidered, relied upon, or generated by the plan in connection with the claim as soon as possible and sufficiently in advance of the final notice
to give the claimant a reasonable opportunity to respond prior to that date.
The Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood bysuch person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The notification will
explain that the person is entitled to receive, upon request and free of charge, reasonable access to and copies of all pertinent documents and has
the right to bring a civil action
13

following an adverse decision on review. In addition, for a claim regarding Disability, the notification will be provided in a culturally andlinguistically appropriate manner and will contain (i) a discussion of the decision, including an explanation of the basis for disagreeing with or
not following the views provided by the claimant’s health care or vocation professionals that treated and evaluated the claimant; the views of
medical or vocational experts whose advise was obtained by the plan, regardless of whether the advice was relied upon in making the benefit
determination; and any disability determination made by the Social Security Administration, (ii) if the adverse benefit determination is based on
medical necessity, experimental treatment, or similar exclusion or limit, either an explanation of the scientific or clinical judgement for thedetermination, applying the terms of the plan to the claimant’s medical circumstances, or a statement that explanation will be provided free ofcharge upon request, (iii) any Guideline that was relied upon in making the adverse determination or a statement that such Guideline does notexist.
Exhaustion of Claims Procedures and Right to Bring Legal Claim. No action at law or equity shall be brought more than one (1) year after
the Administrator’s affirmation of a denial of a claim, or, if earlier, more than four (4) years after the facts or events giving rising to theclaimant’s allegation(s) or claim(s) first occurred.
12.3

Plan Administrative Costs. All reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the
Administrator in administering the Plan shall be paid by the Plan to the extent not paid by the Employer.
ARTICLE 13 - MISCELLANEOUS

13.1

Unsecured General Creditor of the Employer. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitablerights, interests or claims in any property or assets of the Employer. For purposes of the payment of benefits under the Plan, any and all of the
Employer’s assets shall be, and shall remain, the general, unpledged, unrestricted assets of the Employer. Each Employer’s obligation under the Plan
shall be merely that of an unfunded and unsecured promise to pay money in the future.

13.2

Employer’s Liability. Each Employer’s liability for the payment of benefits under the Plan shall be defined only by the Plan and by the deferral
elections entered into between a Participant and the Employer. An Employer shall have no obligation or liability to a Participant under the Plan
except as provided by the Plan and a deferral election or agreements. An Employer shall have no liability to Participants employed by other
Employers.

13.3

Limitation of Rights. Neither the establishment of the Plan, nor any amendment thereof, nor the creation of any fund or account, nor the payment ofany benefits, will be construed as giving to the Participant or any other person any legal or equitable right against the Employer, the Plan or the
Administrator, except as provided herein; and in no event will the terms of employment or service of the Participant be modified or in any way
affected hereby.

13.4

Anti-Assignment. Except as may be necessary to fulfill a domestic relations order within the meaning of Code Section 414(p), none of the benefits
or rights of a Participant or any Beneficiary of a Participant shall be subject to the claim of any creditor. In particular, to the fullest extent permitted
by law, all such benefits and rights shall be free from attachment, garnishment, or any other legal or equitable process available to any creditor of theParticipant and his or her Beneficiary. Neither the Participant nor his or her Beneficiary shall have the right to alienate, anticipate, commute, pledge,
encumber, or assign any of the payments which he or she may expect to receive, contingently or otherwise, under the Plan, except the right todesignate a Beneficiary to receive death benefits provided hereunder. Notwithstanding the preceding, the benefit payable from a Participant’s
Account may be reduced, at the discretion of the administrator, to satisfy any debt or liability to the Employer.

13.5

Facility of Payment. If the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that therecipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, theAdministrator may direct the Employer to disburse such payments to a person or institution designated by a court which has jurisdiction over such
recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such
person or institution of any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of the Employer, thePlan and the Administrator for the payment of benefits hereunder to such recipient.

13.6

Notices. Any notice or other communication to the Employer or Administrator in connection with the Plan shall be deemed delivered in writing if
addressed to the Plan Sponsor at the following address: 8000 South Federal Way, Boise, ID 83707, and if either actually delivered at said address or,in the case or a letter, 5 business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage
prepaid and registered or certified.
14

13.7

Tax Withholding. If the Employer concludes that tax is owing with respect to any deferral or payment hereunder, the Employer shall withhold suchamounts from any payments due the Participant or from amounts deferred, as permitted by law, or otherwise make appropriate arrangements with theParticipant or his Beneficiary for satisfaction of such obligation. Tax, for purposes of this Section 13.7 means any federal, state, local or any othergovernmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts deferred, any
earnings thereon, and any payments made to Participants under the Plan.

13.8

Indemnification.
(a) Each Indemnitee (as defined in Section 13.8(e)) shall be indemnified and held harmless by the Employer for all actions taken by him and for all
failures to take action (regardless of the date of any such action or failure to take action), to the fullest extent permitted by the law of thejurisdiction in which the Employer is incorporated, against all expense, liability, and loss (including, without limitation, attorneys’ fees,
judgments, fines, taxes, penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Indemnitee in connection
with any Proceeding (as defined in Subsection (e)). No indemnification pursuant to this Section shall be made, however, in any case where (1)the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or
recklessness or (2) there is a settlement to which the Employer does not consent.
(b) The right to indemnification provided in this Section shall include the right to have the expenses incurred by the Indemnitee in defending any
Proceeding paid by the Employer in advance of the final disposition of the Proceeding, to the fullest extent permitted by the law of thejurisdiction in which the Employer is incorporated; provided that, if such law requires, the payment of such expenses incurred by the Indemnitee
in advance of the final disposition of a Proceeding shall be made only on delivery to the Employer of an undertaking, by or on behalf of theIndemnitee, to repay all amounts so advanced without interest if it shall ultimately be determined that the Indemnitee is not entitled to beindemnified under this Section or otherwise.
(c) Indemnification pursuant to this Section shall continue as to an Indemnitee who has ceased to be such and shall inure to the benefit of his heirs,
executors, and administrators. The Employer agrees that the undertakings made in this Section shall be binding on its successors or assigns andshall survive the termination, amendment or restatement of the Plan.
(d) The foregoing right to indemnification shall be in addition to such other rights as the Indemnitee may enjoy as a matter of law or by reason of
insurance coverage of any kind and is in addition to and not in lieu of any rights to indemnification to which the Indemnitee may be entitledpursuant to the by-laws of the Employer.
(e) For the purposes of this Section, the following definitions shall apply:(i) “Indemnitee” shall mean each person serving as an Administrator (or any other person who is an employee, director, or officer of the
Employer) who was or is a party to, or is threatened to be made a party to, or is otherwise involved in, any Proceeding, by reason of thefact that he is or was performing administrative functions under the Plan.
(ii) “Proceeding” shall mean any threatened, pending, or completed action, suit, or proceeding (including, without limitation, an action,
suit, or proceeding by or in the right of the Employer), whether civil, criminal, administrative, investigative, or through arbitration.

13.9

Successors. The provisions of the Plan shall bind and inure to the benefit of the Plan Sponsor, the Employer and their successors and assigns and theParticipant and the Participant’s designated Beneficiaries.

13.10

Disclaimer. It is the Plan Sponsor’s intention that the Plan comply with the requirements of Code Section 409A. Neither the Plan Sponsor nor the
Employer shall have any liability to any Participant should any provision of the Plan fail to satisfy the requirements of Code Section 409A.

13.11

Governing Law. The Plan will be construed, administered and enforced according to the laws of Delaware.

15

Executed this 11th day of April but effective April 1, 2018 except as otherwise expressly provided herein.

MICRON TECHNOLOGY, INC.

/s/ April Arnzen
By: April Arnzen
Its:SVP, Human Resources

16

EXHIBIT 10.77

FOURTH AMENDMENT TO THE CREDIT AGREEMENT

among

MICRON TECHNOLOGY, INC.,
as BorrowerandTHE LENDERS PARTY HERETO,andMORGAN STANLEY SENIOR FUNDING, INC.,
as Administrative Agent and as Collateral Agent

Dated as of April 27, 2018

MORGAN STANLEY SENIOR FUNDING, INC.,
as Lead Arranger and Bookrunner

1

FOURTH AMENDMENTFOURTH AMENDMENT, dated as of April 27, 2018 (this “Amendment”), to the CREDIT AGREEMENT, dated as of April 26, 2016 (asamended by the First Amendment, dated as of October 5, 2016, Second Amendment, dated as of April 26, 2017, Third Amendment, dated as of October 26,
2017 and as may be further amended, restated, supplemented or otherwise modified from time to time heretofore, the “Existing Credit Agreement” and as
amended by this Amendment, the “Amended Credit Agreement”) among MICRON TECHNOLOGY, INC., a Delaware corporation (the “Company”),
MORGAN STANLEY SENIOR FUNDING, INC., as administrative agent and as collateral agent (the “Administrative Agent”), the other agents party thereto
and each of the financial institutions from time to time party thereto.
WITNESSETH:
WHEREAS, the Company has requested that the Existing Credit Agreement be amended in the manner provided for herein; andWHEREAS, (a) existing Lenders which consent to this Amendment (the “Consenting Lenders”) shall have the pricing of all of their Term
Loans adjusted on the Fourth Repricing Date in accordance with this Amendment; (b) existing Lenders which do not consent to this Amendment (the “NonConsenting Lenders”) shall be paid all accrued and unpaid interest on their Term Loans and their Term Loans may be purchased or assumed by either a newlender (a “New Lender”) or an existing Lender which is willing to consent to the Amendment (an “Increasing Lender”) on the Fourth Repricing Date inaccordance with Section 2.26 of the Amended Credit Agreement and any such New Lender or Increasing Lender shall become a Lender under the Amended
Credit Agreement and hold a portion of the Term Loans (or, in the case of an Increasing Lender, hold a greater portion of the Term Loans), which Term Loansshall accrue interest on and after the Fourth Repricing Date at the pricing set forth in this Amendment and (c) the consent of the Required Lenders is required
pursuant to Section 2.26 of the Existing Credit Agreement to effectuate the assignment contemplated by the preceding clause (b);NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Amended Credit Agreement and used herein shallhave the meanings given to them in the Amended Credit Agreement.
SECTION 2. Amendments.
(a) Section 1.1 of the Existing Credit Agreement is hereby amended by adding the following definitions in proper alphabetical order:“Fourth Amendment”: means that certain Amendment to this Agreement, dated as of April 27, 2018, by and among the Company, theAdministrative Agent and the other parties thereto.
“Fourth Repricing Date”: as defined in the Fourth Amendment.
(b) Section 1.1 of the Existing Credit Agreement is hereby amended by deleting clauses (i) and (ii) of the definition of “Applicable
Margin” contained therein in their entirety and replacing them with the following:(i) Base Rate Loans, 0.75% and (ii) Eurodollar Loans, 1.75%(c) Section 2.13(b) of the Existing Credit Agreement is hereby amended by deleting the term “Third Repricing Date” in the first sentence
thereof and replacing it with the term “Fourth Repricing Date”.
(d) Section 2.17(b) of the Existing Credit Agreement is hereby amended by adding the following sentence after the last sentence:“Notwithstanding anything to the contrary contained herein, payments and prepayments of principal and interest on the Term Loans madeon the Fourth Repricing Date in connection with the replacement of Non-Consenting Lenders pursuant to Section 2.26 hereof may be
applied on a non-ratable basis as the Borrower may direct.”(e) Notwithstanding anything to the contrary in the Existing Credit Agreement and for the avoidance of doubt, all Term Loans held by
Non-Consenting Lenders that are assigned pursuant to this Amendment and for which accrued2and unpaid interest has been paid pursuant to Section 4(c) shall accrue interest solely on and after the Fourth Repricing Date. For the further avoidance of
doubt, nothing herein shall be deemed to modify the definition of “Applicable Margin” for any day in the relevant Interest Period prior to the Fourth
Repricing Date for purposes of calculating interest accrued prior to the Fourth Repricing Date.
SECTION 3. Conditions to Effectiveness. This Amendment (other than the amendments to be effectuated pursuant to Section 2 of thisAmendment) shall become effective on the date that each of the following conditions shall have been satisfied (or waived by the Required Lenders):(a) the Administrative Agent shall have received this Amendment, executed and delivered by a duly authorized officer of the Company
and acknowledged by the Administrative Agent;(b) the Administrative Agent shall have received counterparts of this Amendment executed and delivered by duly authorized officers of
the Required Lenders and all Consenting Lenders; and(c) the Administrative Agent shall have received the Acknowledgement and Confirmation, substantially in the form of Exhibit A hereto,
executed and delivered by a duly authorized officer of the Company.
SECTION 4. Conditions to Effectiveness of Section 2. Section 2 of this Amendment shall become effective on the date (the “Fourth
Repricing Date”) occurring on or after April 27, 2018 that each of the following conditions shall have been satisfied (or waived by the Required Lenders):(a) each New Lender, if any, has become a party to the Credit Agreement and this Amendment;(b) the Administrative Agent shall have received from the Company payment of all fees and expenses required to be paid to the
Administrative Agent on or before the Fourth Repricing Date for which written invoices in reasonable detail have been submitted at least two Business Daysprior to the Fourth Repricing Date;(c) the Administrative Agent shall have received from the Company, for the benefit of the Non-Consenting Lenders, payment of all
accrued interest through the Fourth Repricing Date with respect to the Term Loans held by the Non-Consenting Lenders and being assigned pursuant to thisAmendment;(d) immediately before and after giving effect to Section 2 of this Amendment, each of the representations and warranties made by the
Loan Parties and set forth in each Loan Document shall be true and correct in all material respects with the same effect as if made on the Fourth Repricing
Date (unless stated to relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects
as of such earlier date), in each case other than representations and warranties which are subject to a materiality qualifier, in which case such representations
and warranties shall be (or shall have been) true and correct; and(e) no Default or Event of Default shall have occurred and be continuing, or would result from the effectiveness of this Amendment on the
Fourth Repricing Date.
SECTION 5. New Lenders and Increasing Lenders. If any Lender becomes a Non-Consenting Lender, then pursuant to and in compliancewith the terms of Section 2.26 of the Amended Credit Agreement, such Lender may be replaced and its commitments and/or obligations purchased andassumed by either a New Lender or an Increasing Lender upon execution of this Amendment (which will also be deemed to be the execution of an
Assignment and Acceptance substantially in the form of Exhibit C to the Amended Credit Agreement). Each Non-Consenting Lender which does not executesuch Assignment and Acceptance shall be deemed to have executed and delivered such Assignment and Acceptance in accordance with Section 2.26 of theAmended Credit Agreement and shall be required to assign 100% of the outstanding principal amount of the Term Loans held by such Lender to one or moreassignees which have agreed to such assignment.
SECTION 6. No Other Amendment or Waivers; Confirmation. Except as expressly provided hereby, all of the terms and provisions of the
Existing Credit Agreement and the other Loan Documents are and shall remain in full force and effect. The amendments contained herein shall not be
construed as an amendment of any other provision of the Existing Credit Agreement or the other Loan Documents or for any purpose except as expressly set
forth herein or a consent to any further or future action on the part of any Loan Party that would require the waiver or consent of the Administrative Agent or
the Lenders. This Amendment shall constitute a Loan Document for purposes of the Amended Credit Agreement and from and after the Fourth Repricing
Date, all references to the Credit Agreement in any Loan Document and all references to “this3Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement in the Amended Credit Agreement shall, unless expressly
provided otherwise, refer to the Amended Credit Agreement.
SECTION 7. APPLICABLE LAW; WAIVER OF JURY TRIAL. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY AGREES AS SET FORTH
IN SECTION 9.16 OF THE EXISTING CREDIT AGREEMENT AS IF SUCH SECTION WERE SET FORTH IN FULL HEREIN.
SECTION 8. Miscellaneous. (a) This Amendment may be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executedcounterpart of a signature page of this Amendment by telecopy or other electronic imaging means shall be effective as delivery of a manually executedcounterpart of this Agreement.
(b) The provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns permitted hereby (including permitted assignees of its Term Loans in whole or in part prior to effectiveness hereof).
SECTION 9. Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part
hereof for any other purpose or be given any substantive effect.
[Signature Pages Follow]

4

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.

MICRON TECHNOLOGY, INC.

By: /s/ Donald E. Whitt, Jr.
Name: Donald E. Whitt, Jr.
Title: CVP, Tax & Treasury

5

MORGAN STANLEY SENIOR
FUNDING, INC., as Administrative Agent

By: /s/ Jonathon Rauen
Name: Jonathon Rauen
Title: Authorized Signatory

6

EXHIBIT A
FORM OF ACKNOWLEDGMENT AND CONFIRMATION
1. Reference is made to (i) the Fourth Amendment, dated as of April 27, 2018 (the “Fourth Amendment”) and (ii) the CREDITAGREEMENT, dated as of April 26, 2016 (as amended by the First Amendment, dated as of October 5, 2016, Second Amendment, dated as of April 26,
2017, Third Amendment, dated as of October 26, 2017 and as may be further amended, restated, supplemented or otherwise modified from time to time
heretofore, the “Existing Credit Agreement”) among MICRON TECHNOLOGY, INC., a Delaware corporation (the “Company”), MORGAN STANLEYSENIOR FUNDING, INC., as administrative agent and as collateral agent (the “Administrative Agent”), the other agents party thereto and each of thefinancial institutions from time to time party thereto.
2. The Existing Credit Agreement is being amended pursuant to the Fourth Amendment. The undersigned hereby agrees, with respect toeach Loan Document to which it is a party:(a) all of its obligations, liabilities and indebtedness under such Loan Document shall remain in full force and effect on acontinuous basis after giving effect to the Fourth Amendment; and(b) all of the Liens and security interests created and arising under such Loan Documents remain in full force and effect on acontinuous basis, and the perfected status and priority of each such Lien and security interest continues in full force and effect on a continuous basis,
unimpaired, uninterrupted and undischarged, after giving effect to the Fourth Amendment, as collateral security for its obligations, liabilities andindebtedness under the Existing Credit Agreement and under its guarantees in the Loan Documents.
3. THIS ACKNOWLEDGMENT AND CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
4. Delivery of an executed counterpart of a signature page of this Acknowledgment and Confirmation by telecopy or other electronic
imaging means shall be effective as delivery of a manually executed counterpart of this Acknowledgment and Confirmation.
[rest of page intentionally left blank]7

IN WITNESS WHEREOF, the undersigned has caused this Acknowledgement and Confirmation to be duly executed and delivered by its
proper and duly authorized officer as of the day and year first above written.

MICRON TECHNOLOGY, INC.

By:
Name:
Title:[Signature Page to Acknowledgement and Consent]
8

EXHIBIT 31.1
RULE 13a-14(a) CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
I, Sanjay Mehrotra, certify that:1.

I have reviewed this Quarterly Report on Form 10-Q of Micron Technology, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:

5.

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; andThe registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; andb.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.

Date:

June 22, 2018/s/ Sanjay Mehrotra
Sanjay Mehrotra
President and Chief Executive Officer and Director

EXHIBIT 31.2
RULE 13a-14(a) CERTIFICATION OF
CHIEF FINANCIAL OFFICER
I, David A. Zinsner, certify that:1.

I have reviewed this Quarterly Report on Form 10-Q of Micron Technology, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:

5.

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; andThe registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; andb.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.

Date:

June 22, 2018/s/ David A. Zinsner
David A. Zinsner
Senior Vice President and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. 1350
I, Sanjay Mehrotra, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Reportof Micron Technology, Inc. on Form 10-Q for the period ended May 31, 2018, fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition
and results of operations of Micron Technology, Inc.
Date:

June 22, 2018/s/ Sanjay Mehrotra
Sanjay Mehrotra
President and Chief Executive Officer and Director

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. 1350
I, David A. Zinsner, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Reportof Micron Technology, Inc. on Form 10-Q for the period ended May 31, 2018, fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition
and results of operations of Micron Technology, Inc.
Date:

June 22, 2018/s/ David A. Zinsner
David A. Zinsner
Senior Vice President and Chief Financial Officer