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

FORM 10-Q(Mark One)☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT IF 1934
For the quarterly period ended November 28, 2019
OR☐

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)
Delaware(State or other jurisdiction of incorporation or organization)
8000 S. Federal Way, Boise, Idaho(Address of principal executive offices)
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.10 per share

75-1618004(IRS Employer Identification No.)
83716-9632(Zip Code)(208) 368-4000
Trading Symbol
MU

Name of each exchange on which registered
NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None
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 x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted 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 such files).
Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, asmaller 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

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company

☒

☐

☐

☐

☐

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 ☐ No x
The number of outstanding shares of the registrant's common stock as of December 13, 2019 was 1,110,873,554.

MicronCompany
ProfileFounded over 40 years ago
on October 5, 1978
Headquartered in
Boise, Idaho, USA

4th

Largest semiconductor company
in the world*

18

Countries*

13

Manufacturing sites and
13 customer labs*

37,000Team members*

It’s All About Data
Data is today’s new business currency, andmemory and storage are emerging as
strategic differentiators that will redefine
how we extract value from data to learn,
explore, communicate, and experience.

Who We Are
For over 40 years, Micron’s memory and storage solutions have beenfoundational to innovations that have transformed the world in countless
ways. Our technology and expertise are core to computers that boot up
in an instant and work harder and faster; mobile phones with brilliant
screen resolution and longer battery life; and new business models thatare disrupting entire industries faster than ever – such as entertainment,
manufacturing, and finance.

Our Vision
As a global leader in memory and storage solutions, we are transforming
how the world uses information to enrich life by enabling technologies tocollect, store, and manage data with unprecedented speed andefficiency. We are accelerating the transformation of information into
intelligence – inspiring the world to learn, communicate, and advance
faster than ever.

Our Commitment*Micron data as of August 29, 2019.
Gartner Market Share: Semiconductors by End
Market, Worldwide, 2018 (April 2019)

Media Inquiries
mediarelations@micron.com
Government Inquiries
govaffairs@micron.com
Investor Inquiries
investorrelations@micron.com

Micron’s dedication to employee health and safety, environmental
quality, diversity and inclusion, and community engagement is part of ourcommitment worldwide. This dedication includes working toward building
and maintaining sustainable operations, products, and supply chainsaround the globe. Through the Micron Foundation, we provide
opportunities for learning and enrichment by sharing our resources andpeople in the communities where our team members live and work.

Global Product Portfolio
TM

DRAM | NAND | 3D XPoint Memory | NOR | Solid-State Drives
Multichip Packages | Advanced Solutions | High Bandwidth Memory (HBM)

Connect with us on micron.com© 2019 Micron Technology, Inc. All rights reserved. Micron and the Micron logo are trademarks of Micron Technology, Inc. All other trademarks
are the property of their respective owners. Products are warranted only to meet Micron’s production data sheet specifications. Products andspecifications are subject to change without notice. Rev 10/19

Table of Contents
Introduction
Part I. Financial Statements

2

Item 1.

Financial Statements:
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Liquidity and Capital Resources
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and ProceduresPart II. Other Information

3
4
5
6
7
8
25
26
29
31
31

Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.
Exhibits
Signatures

31
32
48
48
49

1

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 indicates otherwise. Abbreviations, terms, or acronyms are commonly used or foundin multiple locations throughout this report and include the following:
Term

Definition

2022 Term Loan B
2024 Term Loan A
2024 Notes
2025 Notes
2026 Notes
2027 Notes
2029 Notes
2030 Notes
2032D Notes
2033F Notes
DDR
GDDR

Senior Secured Term Loan B due 2022
Senior Term Loan A due 2024
5.25% Senior Notes due 2024
5.50% Senior Notes due 2025
5.63% Senior Notes due 2026
4.19% Senior Notes due 2027
5.33% Senior Notes due 2029
4.66% Senior Notes due 2030
3.13% Convertible Senior Notes due 2032
2.13% Convertible Senior Notes due 2033
Double Data Rate
Graphics Double Data Rate

Term

IMFT
Intel
MCP
Micron
MMJ
MMT
MTTW
MTU
QimondaSSD
VIE

Definition

IM Flash Technologies, LLC
Intel Corporation
Multi-Chip Package
Micron Technology, Inc. (Parent Company)
Micron Memory Japan, G.K.
Micron Memory Taiwan Co., Ltd.
Micron Technology Taiwan, Inc.
Micron Technology Utah, LLC
Qimonda AG
Solid State Drive
Variable Interest Entity

Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory andstorage solutions. Through our global brands — Micron, Crucial, and Ballistix — our broad portfolio of highperformance memory and storage technologies, including DRAM, NAND, 3D XPoint memory, and NOR, istransforming how the world uses information to enrich life. Backed by 40 years of technology leadership, ourmemory and storage solutions enable disruptive trends, including artificial intelligence, 5G, machine learning, andautonomous vehicles, in key market segments like mobile, data center, client, consumer, industrial, graphics,
automotive, and networking.
Micron and the Micron orbit logo are trademarks of Micron Technology, Inc. 3D XPoint is a trademark of Intel in the
United States and/or other countries. All other trademarks are the property 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 anduncertainties. Forward-looking statements include, but are not limited to, statements such as those made regarding
changes in underutilization of our Lehi, Utah manufacturing capacity (previously known as IMFT and now known asMTU); the sufficiency of our cash and investments, cash flows from operations, and available financing; and capitalspending in 2020. We are under no obligation to update these forward-looking statements. Our actual results could
differ materially from our historical results and those discussed in the forward-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.”

2 | 2020 Q1 10-Q

PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS

Micron Technology, Inc.
Consolidated Statements of Operations(In millions, except per share amounts)(Unaudited)
November 28,
2019

Three months ended
Revenue
Cost of goods sold
Gross margin$

November 29,
2018

5,144 $
3,778
1,366

7,913
3,298
4,615

Selling, general, and administrative
Research and development
Other operating (income) expense, net
Operating income

211
640
(3)
518

209
611
36
3,759

Interest income
Interest expense
Other non-operating income (expense), net

44
(47)
46
561

38
(33)
9
3,773

Income tax (provision) benefit
Equity in net income (loss) of equity method investees
Net income

(55)
2
508

(477)
—
3,296

(17)
491 $

(3)
3,293

0.44 $
0.43

2.91
2.81

1,107
1,129

1,133
1,174

Net income attributable to noncontrolling interests
Net income attributable to Micron
Earnings per share
Basic
Diluted$$Number of shares used in per share calculations
Basic
DilutedSee accompanying notes to consolidated financial statements.
3

Micron Technology, Inc.
Consolidated Statements of Comprehensive Income(In millions)(Unaudited)
November 28,
2019

Three months ended
Net income
Other comprehensive income (loss), net of tax
Gains (losses) on investments
Pension liability adjustments
Gains (losses) on derivative instruments
Other comprehensive income (loss)
Total comprehensive income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Micron

$

508 $

3,296

$

(5)
(1)
3
(3)
505
(17)
488 $

(3)
—
(12)
(15)
3,281
(3)
3,278

See accompanying notes to consolidated financial statements.

4 | 2020 Q1 10-Q

November 29,
2018Micron Technology, Inc.
Consolidated Balance Sheets(In millions, except par value amounts)(Unaudited)
November 28,
2019

As of
AssetsCash and equivalents
Short-term investments
Receivables
Inventories
Other current assets
Total current assets
Long-term marketable investments
Property, plant, and equipment
Intangible assets
Deferred tax assets
Goodwill
Operating lease right-of-use assets
Other noncurrent assets
Total assets
Liabilities and equity
Accounts payable and accrued expenses
Current debt
Other current liabilities
Total current liabilities
Long-term debt
Noncurrent operating lease liabilities
Noncurrent unearned government incentives
Other noncurrent liabilities
Total liabilities

$

$

$

August 29,
2019

6,969 $
619
3,419
4,943
217
16,167599
29,352
333
783
1,228
608
579
49,649 $

7,152
803
3,195
5,118
235
16,503
1,164
28,240
340
837
1,228
—
575
48,887

5,408 $
462
447
6,317
5,188
511
609
426
13,051

4,626
1,310
454
6,390
4,541
—
636
452
12,019Commitments and contingencies
Redeemable noncontrolling interest
Micron shareholders’ equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,185 shares issued and 1,108 outstanding(1,182 shares issued and 1,106 outstanding as of August 29, 2019)
Additional capital
Retained earnings
Treasury stock, 77 shares held (76 shares as of August 29, 2019)
Accumulated other comprehensive income
Total Micron shareholders’ equity
Noncontrolling interest in subsidiary
Total equity
Total liabilities and equity
$

98

98

119
8,428
31,218(3,271)
6
36,500—36,50049,649 $118
8,214
30,761(3,221)935,881889
36,77048,887

See accompanying notes to consolidated financial statements.
5

Micron Technology, Inc.
Consolidated Statements of Changes in Equity(In millions)(Unaudited)
Micron Shareholders
Common Stock
Accumulated
Number
Other
Total Micron Noncontrollingof
Additional Retained Treasury Comprehensive Shareholders’Interest in
Shares Amount Capital Earnings Stock
Income (Loss)
EquitySubsidiary
Balance at August 29, 2019

1,182 $

118 $

8,214 $ 30,761 $ (3,221) $Net income

9 $

491

491

Other comprehensive income (loss), net
Stock issued under stock plans

(3)
3

1

Stock-based compensation expense
Repurchase of stock——

35,881 $

506

31

32

32

72

72

72

(90)

(90)

(6)

(34)

(50)

123

123

(6)

(6)

119 $

15

(3)

Conversion and repurchase of convertible
notes
1,185 $

889 $ 36,770(3)Acquisition of noncontrolling interest

Balance at November 28, 2019

Total
Equity8,428 $ 31,218 $ (3,271) $6 $36,500 $

(904)

(781)
(6)

— $ 36,500

Micron Shareholders
Common Stock
Accumulated
Number
Other
Total Micron Noncontrollingof
Additional Retained Treasury Comprehensive Shareholders’ Interests in
Shares Amount Capital Earnings Stock
Income (Loss)
EquitySubsidiaries
Balance at August 30, 2018

1,170 $

117 $8,201 $ 24,395 $Cumulative effect of adopting new
accounting standards(429) $

10 $92

Net income

3,293

3,293
(15)

3

—

Stock-based compensation expense
Repurchase of stock(1)—

870 $ 33,164

92

Other comprehensive income (loss), net
Stock issued under stock plans

32,294 $Total
Equity

92
—

3,293

(15)

(15)

15

15

15

61

61

61

(1,836)(1,836)108(11)(1,933)

Reclassification of redeemable convertible
notes, net

1

1

1

Conversion and repurchase of convertible
notes

(36)

(36)

(36)

Balance at November 29, 2018

1,172 $

117 $

8,350 $ 27,769 $ (2,362) $(5) $See accompanying notes to consolidated financial statements.
6 | 2020 Q1 10-Q

33,869 $870 $ 34,739

Micron Technology, Inc.
Consolidated Statements of Cash Flows(In millions)(Unaudited)
November 28,
2019

Three months ended
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense and amortization of intangible assets
Amortization of debt discount and other costs
Stock-based compensation
Gain on debt prepayments, repurchases, and conversions
Change in operating assets and liabilities
Receivables
Inventories
Accounts payable and accrued expenses
Deferred income taxes, net
OtherNet cash provided by operating activities$

November 29,
2018

508 $

3,296

1,296
10
72
(42)

1,335
18
61
(14)

(208)
175
178
19
3
2,011

189
(286)
(46)
192
65
4,810

Cash flows from investing activities
Expenditures for property, plant, and equipment
Purchases of available-for-sale securities
Proceeds from sales of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Proceeds from government incentives
Other
Net cash provided by (used for) investing activities(1,943)
(407)
988
163
22
(12)
(1,189)(2,700)(2,047)
77
60
236
(53)
(4,427)

Cash flows from financing activities
Repayments of debt
Acquisition of noncontrolling interest in IMFT
Payments to acquire treasury stock
Payments on equipment purchase contracts
Proceeds from issuance of debt
Other
Net cash provided by (used for) financing activities(1,415)
(744)
(89)
(11)
1,250
17
(992)

(577)
—
(1,836)(20)—(2)(2,435)

(14)

(10)

(184)
7,279
7,095 $

(2,062)
6,587
4,525

Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash
Net decrease in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period$

See accompanying notes to consolidated financial statements.

7

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 in accordance with accounting principles generally accepted in the UnitedStates of America consistent in all material respects with those applied in our Annual Report on Form 10-K for theyear ended August 29, 2019, except for changes related to recently adopted accounting standards. See “Recently
Adopted Accounting Standards” note. Prior year information is presented in accordance with the accounting
guidance in effect during that period and has not been recast for recently adopted accounting standards. In theopinion 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 year 2020 contains
53 weeks and the fourth quarter of 2020 will contain 14 weeks. The first quarters of fiscal 2020 and 2019 eachcontained 13 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 29, 2019.

Significant Accounting Policies
For a discussion of our significant accounting policies, see "Part I – Item 8. Financial Statements andSupplementary Data – Notes to Consolidated Financial Statements – Significant Accounting Policies" of our Annual
Report on Form 10-K for the year ended August 29, 2019. Except for the significant accounting policy associatedwith leases as discussed below, there have been no material changes to our significant accounting policies since
our Annual Report on Form 10-K for the year ended August 29, 2019.

LeasesIn the first quarter of 2020, we elected new accounting policies in connection with the adoption of ASC 842 –Leases. We do not recognize a right-of-use asset or lease liability for leases with a term of 12 months or less. For
real estate and gas plant leases entered into after adoption, we do not separate lease and non-lease components.
Sublease income is presented within lease expense.

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 the primary beneficiary, we evaluate whether we have the power to direct the activities thatmost significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive
benefits of the VIE that could potentially be significant to the VIE. Our evaluation includes identification of significant
activities and an assessment of our ability to direct those activities based on governance provisions andarrangements to provide or receive product and process technology, product supply, operations services, equity
funding, financing, and other applicable agreements and circumstances. Our assessments of whether we are theprimary beneficiary of our VIEs require significant assumptions and judgments.

8 | 2020 Q1 10-Q

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 to provide assembly services to us at our manufacturing site in Xi’an, China. We do nothave an equity interest in PTI Xi’an. PTI Xi’an is a VIE because of the terms of its service agreement with us and its
dependency on PTI to finance its operations. We do not have the power to direct the activities of PTI Xi’an that mostsignificantly impact its economic performance, primarily because we do not have governance rights. Therefore, we
do not consolidate PTI Xi’an. In connection with our assembly services with PTI, as of November 28, 2019 andAugust 29, 2019, we had net property, plant, and equipment of $47 million and $50 million, respectively, and capitallease obligations of $44 million and $47 million, respectively.

Consolidated VIE
IMFT: Through the date we acquired Intel's noncontrolling interest in IMFT, IMFT was a VIE because all of its costs
were passed to us and its other member, Intel, through product purchase agreements and because IMFT was
dependent upon us or Intel for additional cash requirements. The primary activities of IMFT were driven by theconstant introduction of product and process technology. Because we performed a significant majority of thetechnology development, we had the power to direct its key activities. Prior to October 31, 2019, we consolidated
IMFT because we had the power to direct the activities of IMFT that most significantly impacted its economic
performance and because we had the obligation to absorb losses and the right to receive benefits from IMFT that
could have been potentially significant to it. On October 31, 2019, we acquired Intel’s interest in IMFT at which time
IMFT, now known as MTU, became a wholly-owned subsidiary. (See “Equity – Noncontrolling Interest in Subsidiary”
note.)

Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02 – Leases (as amended,“ASC 842”), which amends a number of aspects of lease accounting, including requiring lessees to recognize
operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding
lease liability, measured at the present value of lease payments. We adopted ASC 842 in the first quarter of 2020
under the modified retrospective method and elected to not recast prior periods. We elected the practical expedientsavailable under the transition guidance, including but not limited to, not reassessing past lease accounting or using
hindsight to evaluate lease term. In addition, we elected to not separate lease and non-lease components for realestate or gas plant leases. As a result of adopting ASC 842, we recognized $567 million for operating lease liabilities
and right-of-use assets and reclassified an additional $66 million of other balances to right-of-use assets to conformto the new presentation requirements of ASC 842.

Recently Issued Accounting Standards
In November 2018, the FASB issued ASU 2018-18 – Collaborative Arrangements, which clarifies that certaintransactions between collaborative arrangement participants should be accounted for as revenue when thecollaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as
revenue consideration received from a collaborative arrangement participant if the participant is not a customer.
This ASU will be effective for us in the first quarter of 2021 with early adoption permitted. This ASU requires
retrospective adoption to the date we adopted ASC 606, which was August 31, 2018, by recognizing a cumulativeeffect adjustment to the opening balance of retained earnings of the earliest annual period presented. We do not
anticipate the adoption of this ASU will have a material impact 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 of financial 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 measurementof credit losses for newly recognized financial assets as well as the increases or decreases of expected credit
losses that have taken place during the period. This ASU requires that credit losses of debt securities designated as9available-for-sale be recorded through an allowance for credit losses and limits the credit loss to the amount bywhich fair value is below amortized cost. This ASU will be effective for us in the first quarter of 2021 with early
adoption permitted. 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 thetiming and effects of our adoption of this ASU on our financial statements.

Cash and Investments
Substantially all of our marketable debt and equity investments were classified as available-for-sale as of the dates
noted below. Cash and equivalents and the fair values of our available-for-sale investments, which approximatedamortized costs, were as follows:

As ofAugust 29, 2019

Long-term
Cash and
Short-termMarketable (1) Total Fair
Equivalents Investments Investments
Value

Long-term
Cash and
Short-termMarketable (1) Total Fair
Equivalents Investments Investments
Value

$

Cash
Level 1

November 28, 2019

Money market funds
Level 2

2,319 $

— $— $ 2,319 $2,388 $

— $— $ 2,388

2,565

—

—

3,418

—

—

2,063
—
—
—
22
6,969 $
126

223
271
80
30
15
619 $

5
2,291
299
570
159
239
136
166
—
37
599 $ 8,187

1,292
—
36
—
18
7,152 $
127

13
550
149
67
24
803 $

(2)

2,565

3,418

(3)

Certificates of deposits
Corporate bonds
Government securities
Asset-backed securities
Commercial paper
Restricted cash

(4)

Cash, cash equivalents, andrestricted cash

$

7,095

$

1
1,306
689
1,239
232
417
242
309
—
42
1,164 $ 9,119

7,279

(1)

The maturities of long-term marketable investments range from one year to four years.
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 byobservable market data, or various other methodologies, to determine the appropriate 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 November 28, 2019 orAugust 29, 2019.
(4)
Restricted cash is included in other noncurrent assets and primarily relates to the MMJ Creditor Payments andcertain government incentives received prior to being earned. The restrictions lapse on the MMJ Creditor
Payments upon approval by the trustees and/or Tokyo District Court and for the government incentives uponachieving certain performance conditions.
(2)

Gross realized gains and losses from sales of available-for-sale securities were not significant for any period
presented. As of November 28, 2019, there were no available-for-sale securities that had been in a loss position for
longer than 12 months.

10 | 2020 Q1 10-Q

Receivables
November 28,
2019

As of
Trade receivables
Income and other taxes
Other

$

$

3,030 $
194
195
3,419 $

August 29,
2019
2,778
242
175
3,195

Inventories
November 28,
2019

As of
Finished goods
Work in process
Raw materials and supplies

$

$

630 $
3,724
589
4,943 $

August 29,
2019
757
3,825
536
5,118

Property, Plant, and Equipment
November 28,
2019

As of
Land
Buildings
Equipment (1)Construction in progress (2)Software$Accumulated depreciation$

352 $11,441
45,6371,795
793
60,018(30,666)
29,352 $August 29,
2019352
10,93144,051
1,700
790
57,824(29,584)
28,240(1)

Included costs related to equipment not placed into service of $1.80 billion as of November 28, 2019 and$2.33 billion as of August 29, 2019.
(2)
Included building-related construction, tool installation, and software costs for assets not placed into service.
We periodically assess the estimated useful lives of our property, plant, and equipment. Based on our assessmentof planned technology node transitions, capital spending, and re-use rates, we revised the estimated useful lives ofequipment in our NAND wafer fabrication facilities and our research and development ("R&D") facilities from five
years to seven years as of the beginning in the first quarter of 2020. As a result, we estimate the reduction in noncash depreciation expense benefited operating income and net income by approximately $74 million and diluted
earnings per share by approximately $0.07 for the first quarter of 2020.

Intangible Assets and Goodwill
November 28, 2019
Gross
Accumulated
AmountAmortization

As of
Product and process technology
Goodwill

$

584 $
1,228

(251) $
N/A

August 29, 2019
Gross
Accumulated
AmountAmortization
583 $
1,228

(243)
N/A
11

In the first quarters of 2020 and 2019, we capitalized $12 million and $49 million, respectively, for product andprocess technology with weighted-average useful lives of 11 years and 7 years, respectively. Expected amortization
expense for our intangible assets is $56 million for the remainder of 2020, $63 million for 2021, $51 million for 2022,$45 million for 2023, and $41 million for 2024.

LeasesWe have finance and operating leases through which we acquire or utilize equipment and facilities in our
manufacturing operations and R&D activities as well as office space and other facilities used in our selling, general,and administrative ("SG&A") functions.
Our finance leases consist primarily of equipment used in our manufacturing operations and gas or other supply
agreements that are deemed to be embedded leases in which we effectively control the underlying gas plants orother assets used to fulfill the supply agreements.
Our operating leases consist primarily of offices, other facilities, and land used in SG&A, R&D, and certain of ourmanufacturing operations. Certain of our operating leases include one or more options to extend the lease term forperiods from one year to 10 years for real estate and one year to 30 years for land.
Certain supply or service agreements require us to exercise significant judgment to determine whether theagreement contains a lease of a right-of-use asset. Our assessment includes determining whether we or the
supplier control the assets used to fulfill the supply or service agreement by identifying whether we or the supplier
have the right to change the type, quantity, timing, or location of the output of the assets. In determining the leaseterm, we assess whether we are reasonably certain to exercise options to renew or terminate a lease, and when orwhether we would exercise an option to purchase the right-of-use asset. Measuring the present value of the initiallease liability requires exercising judgment to determine the discount rate, which we base on interest rates for
similar borrowings issued by entities with credit ratings similar to ours at the time of issuance.
Measuring the initial lease liability and corresponding right-of-use asset also requires us to exercise judgment toestimate the present value of lease payments.
Short-term and variable lease expenses were not significant and are presented within operating lease costs in thetable below. Sublease income was not significant in the period presented below. The components of lease
expenses are presented below:
Three months ended

November 28,
2019

Finance lease cost
Amortization of right-of-use asset$

40

Interest on lease liability

6

Operating lease cost24$

12 | 2020 Q1 10-Q

70

Other information related to our leases were as follows:
November 28,
2019

Three months ended
Cash flows used for operating activities
Finance leases
Operating leases
Cash flows used for financing activities
Finance leases (1)Noncash acquisitions of right of use assets
Operating leases
(1)

$

6
17
64
13

Included in repayments of debt in the accompanying statement of cash flows.
November 28,
2019

As of
Weighted-average remaining lease term (in years)
Finance leases
Operating leases
Weighted-average discount rate
Finance leases
Operating leases

3.6
7.8
4.84 %
2.66 %

Maturities of lease liabilities were as follows:
Operating
LeasesFor the year ending
Remainder of 2020
2021
2022
2023
2024
2025 and thereafterLess imputed interest and reimbursement of tenant improvements (1)

$

$
(1)

Finance
Leases

49 $
66
64
61
52
436
(178)
550 $

174
107
75
48
37
191
(103)
529

Includes $50 million under operating leases for the reimbursement due in 2020 of tenant improvements.

Prior to adopting ASC 842, future minimum operating lease commitments under all noncancelable operating leases
with an initial term in excess of one year as of August 29, 2019 were as follows:
Operating
LeasesFor the year ending
2020
2021
2022
2023
2024
2025 and thereafter

$

$

54
64
63
59
53
459
752

13

Accounts Payable and Accrued Expenses
November 28,
2019

As of
Accounts payable
Property, plant, and equipment
Salaries, wages, and benefits
Income and other taxes
Other

$

August 29,
20191,879 $
2,425
557
336
211
5,408 $

$

1,677
1,782
695
309
163
4,626

Debt
As of
Finance lease obligations
MMJ Creditor Payments
2024 Notes
2024 Term Loan A
2026 Notes
2027 Notes
2029 Notes
2030 Notes
2032D Notes (1)2033F Notes (1)IMFT Member Debt
2025 Notes(1)

November 28, 2019
Net Carrying Amount
Effective
Stated Rate
Current Long-Term
Total
Rate
N/A
N/A
4.64 %
3.05 %
4.98 %
4.19 %
5.33 %
4.66 %
3.13 %
2.13 %
N/A
5.50 %

4.84 % $9.76 %
4.76 %
3.10 %
5.07 %
4.27 %
5.40 %
4.73 %
6.33 %
4.93 %
N/A
5.56 %
$

185 $
197
—
62
—
—
—
—
—
18
—
—
462 $

344 $
—
597
1,186
497
895
696
845
128
—
—
—
5,188 $

529 $
197
597
1,248
497
895
696
845
128
18
—
—
5,650 $

August 29, 2019
Net Carrying AmountCurrent

Long-Term

223 $
198
—
—
—
—
—
—
—
196
693
—
1,310 $

368 $
—
597
—
497
895
696
845
127
—
—
516
4,541 $

Total
591
198
597
—
497
895
696
845
127
196
693
516
5,851

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 September 30, 2019, these notes are convertible by theholders through the calendar quarter ended December 31, 2019. Additionally, the closing price of our common
stock also exceeded the thresholds for the calendar quarter ended December 31, 2019; therefore, these notes
are convertible by the holders at any time through March 31, 2020.

IMFT Member Debt
In connection with our purchase of Intel's noncontrolling interest in IMFT on October 31, 2019, we extinguished theremaining IMFT Member Debt as a component of the cash consideration paid to Intel for their interest in IMFT andrecognized a non-operating gain of $72 million for the difference between the $505 million of cash consideration
allocated to the extinguishment of IMFT Member Debt and its $577 million carrying value. (See "Equity –Noncontrolling Interest in Subsidiary" note for the cash consideration allocated to the repurchase of noncontrollinginterest.) Prior to our acquisition of Intel's interests in IMFT, IMFT repaid Intel $116 million of IMFT Member Debt in
the first quarter of fiscal 2020.

14 | 2020 Q1 10-Q

Convertible Senior Notes
As of November 28, 2019, the $48.16 trading price of our common stock was higher than the conversion prices ofour convertible notes and, as a result, the aggregate conversion value of $718 million exceeded the aggregate
principal amount of $151 million by $567 million.

Credit Facility
Our credit facility provides for a term loan and a committed revolving credit facility. On October 30, 2019, we drew allof the $1.25 billion available under our term loan credit facility. Principal payments are due annually in an amountequal to 5.0% of the initial principal amount with the balance due at maturity in October 2024. The term loan facility
generally bears interest at a rate equal to LIBOR plus 1.25% to 2.00%, depending on our corporate credit ratings orleverage ratio. Our revolving credit facility provides for borrowings of up to $2.50 billion at the same rates as theterm loan credit facility and matures in July 2023. As of November 28, 2019, there were no outstanding amounts
drawn under our revolving credit facility.
Under the terms of the credit facility, we must maintain ratios, calculated as of the last day of each fiscal quarter, of
total indebtedness to adjusted EBITDA and adjusted EBITDA to net interest expense.

Debt Activity
The table below presents the effects of issuances, prepayments, and conversions of debt in the first quarter of2020. 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-weighted-average
price of our common stock over a period of 20 consecutive trading days. Accordingly, at the date of our election tosettle a conversion in cash, we reclassify the fair value of the equity component of the converted notes fromadditional capital to derivative debt liability within current debt in our consolidated balance sheet.

Three months ended November 28, 2019
Issuances2024 Term Loan A
Prepayments
2025 Notes
IMFT Member Debt
Settled conversions
2033F Notes
Conversions not settled
2033F Notes

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

$

Decrease in
EquityGain (Loss)

1,250 $

1,248 $

1,248 $

— $

—

(519)
(693)

(516)
(693)

(534)
(621)

—
—

(18)
72

(45)

(180)

(196)

(5)

(12)

—
(7) $

1
(140) $—
(103) $

(1)
(6) $

—
42

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, none of which is expected tohave a material adverse effect on our business, results of operations, or financial condition.

15

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 August 12, 2014, MLC Intellectual Property, LLC filed a patent infringement action against Micron in the UnitedStates District Court for the Northern District of California. The complaint alleges that Micron infringes a single U.S.
patent and seeks damages, attorneys’ fees, and costs.
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 Districtof 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. (“IMS”) filed a patent infringement action against Micronin the U.S. District Court for the District of Delaware. The complaint alleges that a variety of our NAND products
infringe eight U.S. patents and seeks damages, attorneys’ fees, and costs. On July 23, 2018, IMS served a patent
infringement complaint on Micron Semiconductor (Deutschland) GmbH and Micron Europe Limited in the Regional
Court, Mannheim, Germany alleging that products including our SSDs infringe a European patent. The complaintseeks unspecified damages and an order forbidding Micron Semiconductor (Deutschland) GmbH and Micron
Europe Limited from offering to sell, using, and importing the accused products. On June 7, 2019, the Regional
Court found no infringement and dismissed the case. On August 31, 2018, Micron was served with a complaint filed
by IMS in Shenzhen Intermediate People’s Court in Guangdong Province, China. On November 12, 2019 , IMS filed
an amended complaint in the same court. The amended complaint alleges that certain of our NAND flash products
infringe a Chinese patent. The complaint seeks an order requiring Micron to stop manufacturing, using, selling, andoffering for sale the accused products in China, and to pay damages and costs of 21 million Chinese yuan.
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 inFujian Province, China (the “Fuzhou Court”). On April 3, 2018, Micron Semiconductor (Shanghai) Co. Ltd. (“MSS”)
was served with the same complaint. The complaint alleges that MXA and MSS infringe a Chinese patent by
manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring MXA andMSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China;
to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of
98 million Chinese yuan plus court fees incurred.
On March 21, 2018, MXA was served with a patent infringement complaint filed by United Microelectronics
Corporation (“UMC”) in the Fuzhou Court. On April 3, 2018, MSS was served with the same complaint. The
complaint alleges that MXA and MSS infringe a Chinese patent by manufacturing and selling certain Crucial DDR4
DRAM modules. The complaint seeks an order requiring MXA and MSS to destroy inventory of the accused
products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, andoffering 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 Court. The three additional complaints allege that MSS infringes three
Chinese patents by manufacturing and selling certain Crucial MX300 SSDs and certain GDDR5 memory chips. The
two complaints filed by UMC each seek an order requiring MSS to destroy inventory of the accused products andequipment for manufacturing the accused products in China, to stop manufacturing, using, selling, and offering forsale the accused products in China, and to pay damages for each complaint of 90 million Chinese yuan plus court
fees incurred. The complaint filed by Jinhua seeks an order requiring MSS to destroy inventory of the accused
products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, andoffering for sale the accused products in China; and to pay damages of 98 million Chinese yuan plus court fees
incurred. On October 9, 2018, UMC withdrew its complaint that alleged MSS infringed a Chinese patent by
manufacturing and selling certain GDDR5 memory chips.

16 | 2020 Q1 10-Q

On July 5, 2018, MXA and MSS were notified that the Fuzhou Court granted a preliminary injunction against thoseentities that enjoins them from manufacturing, selling, or importing certain Crucial and Ballistic-branded DRAM
modules and solid-state drives in China. The affected products make up slightly more than 1% of our annualized
revenues. We are complying with the ruling and have requested the Fuzhou Court to reconsider or stay its decision.
Among other things, the above lawsuits pertain to substantially all of our DRAM, NAND, and other memory andstorage products we manufacture, which account for a significant portion of our revenue.

QimondaOn January 20, 2011, Dr. Michael Jaffé, administrator for Qimonda’s insolvency proceedings, filed suit against
Micron and Micron Semiconductor B.V., (“Micron B.V.”), in the District Court of Munich, Civil Chamber. The
complaint seeks to void, under Section 133 of the German Insolvency Act, a share purchase agreement between
Micron B.V. and Qimonda signed in fall 2008, pursuant to which Micron B.V. purchased substantially all of
Qimonda’s shares of Inotera (the “Inotera Shares”), representing approximately 18% of Inotera’s outstanding sharesat that time, and seeks an order requiring us to re-transfer those shares to the Qimonda estate. The complaint alsoseeks, among other things, to recover damages for the alleged value of the joint venture relationship with Inotera
and to terminate, under Sections 103 or 133 of the German Insolvency Code, a patent cross-license between us
and Qimonda entered into at the same time as the share purchase agreement.
Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March
13, 2014, the court issued judgments: (1) ordering Micron B.V. to pay approximately $1 million in respect of certain
Inotera Shares sold in connection with the original share purchase; (2) ordering Micron B.V. to disclose certain
information with respect to any Inotera Shares sold by it to third parties; (3) ordering Micron B.V. to disclose 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 thejoint 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. fromownership 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. On April 17, 2014, Micron and Micron B.V. filed a notice of appeal with the German
Appeals Court challenging the District Court’s decision. After opening briefs, the Appeals Court held a hearing on
the matter on July 9, 2015, and thereafter appointed two independent experts to perform an evaluation of Dr. Jaffé’s
claims that the amount Micron paid for Qimonda was less than fair market value. On January 25, 2018, the courtappointed experts issued their report concluding that the amount paid by Micron was within an acceptable fair-value
range. The Appeals Court held a subsequent hearing on April 30, 2019, and on May 28, 2019, the Appeals Court
remanded the case to the experts for supplemental expert opinion.

Antitrust Matters
On April 27, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the
Northern District of California. Subsequently, two substantially identical cases were filed in the same court. The
lawsuits purported to be on behalf of a nationwide class of indirect purchasers of DRAM products. On September 3,
2019, the District Court granted Micron’s motion to dismiss and allowed plaintiffs the opportunity to file a
consolidated, amended complaint. On October 28, 2019, the plaintiffs filed a consolidated amended complaint that
purports to be on behalf of a nationwide class of indirect purchasers of DRAM products. The amended complaint
asserts claims based on alleged price-fixing of DRAM products under federal and state law during the period from
June 1, 2016 to at least February 1, 2018, and seeks treble monetary damages, costs, interest, attorneys' fees, andother injunctive and equitable relief.
On June 26, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the
Northern District of California. Subsequently, four substantially identical cases were filed in the same court. On
October 28, 2019, the plaintiffs filed a consolidated complaint. The consolidated complaint purports to be on behalfof a nationwide class of direct purchasers of DRAM products. The complaints assert claims based on alleged pricefixing of DRAM products under federal and state law during the period from June 1, 2016 through at least February17

1, 2018, and seek treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitablerelief.
Additionally, six cases have been filed in the following Canadian courts: Superior Court of Quebec, the Federal
Court of Canada, the Ontario Superior Court of Justice, and the Supreme Court of British Columbia. The
substantive allegations in these cases are similar to those asserted in the cases filed in the United States.
On May 15, 2018, the Chinese State Administration for Market Regulation (“SAMR”) notified Micron that it wasinvestigating potential collusion and other anticompetitive conduct by DRAM suppliers in China. On May 31, 2018,
SAMR made unannounced visits to our sales offices in Beijing, Shanghai, and Shenzhen to seek certain informationas part of its investigation. We are cooperating with SAMR in its investigation.

Securities Matters
On January 23, 2019, a complaint was filed against Micron and two of our officers, Sanjay Mehrotra and David
Zinsner, in the U.S. District Court for the Southern District of New York. The lawsuit purports to be brought on behalfof a class of purchasers of our stock during the period from June 22, 2018 through November 19, 2018.
Subsequently two substantially similar cases were filed in the same court adding one of our former officers, Ernie
Maddock, as a defendant and alleging a class action period from September 26, 2017 through November 19, 2018.
The separate cases were joined, and a consolidated amended complaint was filed on June 15, 2019. The
consolidated amended complaint alleges that defendants committed securities fraud through misrepresentations
and omissions about purported anticompetitive behavior in the DRAM industry and seek compensatory and punitive
damages, fees, interest, costs, and other appropriate relief. On October 2, 2019, the parties submitted a joint
stipulation to dismiss the complaint. The Court approved the stipulation and dismissed the complaint on October 3,
2019. On March 5, 2019, a derivative complaint was filed by a shareholder in the U.S. District Court for the Districtof Delaware, based on similar allegations to the securities fraud cases, allegedly on behalf of and for the benefit ofMicron, against certain current and former officers and directors of Micron for alleged breaches of their fiduciary
duties and other violations of law. The complaint seeks damages, fees, interest, costs, and other appropriate relief.
Similar shareholder derivative complaints were subsequently filed in the U.S. District Court for the District ofDelaware and the U.S. District Court for the District of Idaho. On November 20, 2019, the plaintiff in the second
action filed in the U.S. District Court for the District of Delaware voluntarily dismissed his complaint.

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, and California’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 June 13, 2019, current Micron employee Chris Manning filed a putative class action lawsuit on behalf of Micron
employees subject to the Idaho Wage Claim Act who earned a performance-based bonus after the conclusion of
fiscal year 2018 whose performance rating was calculated based upon a mandatory percentage distribution rangeof performance ratings. On behalf of himself and the putative class, Manning asserts claims for violation of the
Idaho Wage Claim Act, breach of contract, breach of the covenant of good faith and fair dealing, and fraud.
In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligatedto indemnify the other party. It is not possible to predict the maximum potential amount of future payments underthese types of agreements due to the conditional nature of our obligations and the unique facts and circumstances
involved in each particular agreement. Historically, our payments under these types of agreements have not had amaterial adverse effect on our business, results of operations, or financial condition.
We are unable to predict the outcome of the patent matters, the Qimonda matter, antitrust matters, securities
matters, and other matters noted above and therefore cannot estimate the range of possible loss. A determinationthat our products or manufacturing processes infringe the intellectual property rights of others or entering into alicense agreement covering such intellectual property could result in significant liability and/or require us to makematerial changes to our products and/or manufacturing processes. Any of the foregoing, as well as the resolution of

18 | 2020 Q1 10-Qany other legal matter noted above, could have a material adverse effect on our business, results of operations, or
financial condition.

EquityMicron Shareholders’ Equity
Common Stock Repurchases: Our Board of Directors has authorized the discretionary repurchase of up to $10
billion of our outstanding common stock through open-market purchases, block trades, privately-negotiatedtransactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans. The repurchase authorization
does not obligate us to acquire any common stock and is subject to market conditions and our ongoing
determination of the best use of available cash. In the first quarters of 2020 and 2019, we repurchased 1 million
shares of our common stock for $50 million, and 42 million shares of our common stock for $1.8 billion, respectively.
Through November 28, 2019, we had repurchased an aggregate of $2.71 billion under the authorization. The
shares were recorded as treasury stock.

Noncontrolling Interest in Subsidiary
November 28, 2019
Balance
Percentage

As of
IMFT

$

—

August 29, 2019
Balance
Percentage

—% $

889

49 %

On October 31, 2019, we purchased Intel’s noncontrolling interest in IMFT, now known as MTU, and IMFT Member
Debt for $1.25 billion. In connection therewith, we recognized a $160 million adjustment to equity for the difference
between the $744 million of cash consideration allocated to Intel’s noncontrolling interest and its $904 million
carrying value. (See "Debt" note for the cash consideration allocated to, and extinguishment of, IMFT Member
Debt.)
Pursuant to the terms of the IMFT wafer supply agreement, Intel will receive supply from MTU from November 2019
through April 2020 at a volume equal to approximately 50% of their volume from IMFT in the six-month period prior
to closing. IMFT sales to Intel in the first quarter of 2020 through the date of our acquisition of Intel's noncontrollinginterest in IMFT were $158 million. IMFT sales to Intel in the first quarter of 2019 were $175 million.

Fair Value Measurements
The estimated fair values of our convertible and other notes were determined based on Level 2 inputs and, together
with the carrying value of our outstanding debt instruments (excluding the carrying value of equity components ofour convertible notes), were as follows:
November 28, 2019
Fair
Carrying
Value
Value

As of
Notes and MMJ Creditor Payments
Convertible notes$

5,294 $
719

4,975 $
146

August 29, 2019
Fair
Carrying
Value
Value
5,194 $
852

4,937
323

The fair values of our convertible notes in the table above were determined based on Level 2 inputs, including the
trading price of our convertible notes when available, our stock 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 estimatedbased on Level 2 inputs, including discounted cash flows, the trading price of our notes, when available, andinterest rates based on similar debt issued by parties with credit ratings similar to ours.

19Derivative Instruments
Fair Value of
Current
Current
Assets (1)Liabilities (2)GrossNotional
AmountAs of November 28, 2019
Derivative instruments with hedge accounting designation
Cash flow currency hedges$

Derivative instruments without hedge accounting designation
Non-designated currency hedges
Convertible notes settlement obligation (3)As of August 29, 2019
Derivative instruments with hedge accounting designation
Cash flow currency hedges$

Derivative instruments without hedge accounting designation
Non-designated currency hedges
Convertible notes settlement obligation (3)

553 $

4 $

(2)

1,864

2
—
2

(3)
(2)
(5)

$

6 $

(7)

146 $

1 $

—

1,871

1
—
1

(9)
(179)
(188)

2 $

(188)

$
(1)
(2)

(3)

Included in receivables – other.
Included in accounts payable and accrued expenses – other for forward contracts and in current debt for
convertible notes settlement obligations.
Notional amounts of convertible notes settlement obligations were not significant as of November 28, 2019 andwere 4 million shares of our common stock as of August 29, 2019.

Derivative Instruments with Hedge Accounting Designation
We utilize currency forward contracts that generally mature within 13 months to hedge our exposure to changes incurrency 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, and credit-risk spreads (Level
2). We do not use derivative instruments for speculative purposes.
Cash Flow Hedges: We utilize cash flow hedges for our exposure from changes in currency exchange rates forcertain capital expenditures and manufacturing costs. We recognized gains of $3 million and losses of $13 million
for the first quarters of 2020 and 2019, respectively, in accumulated other comprehensive income from the effective
portion of cash flow hedges. Neither the amount excluded from hedge effectiveness nor the reclassifications fromaccumulated other comprehensive income to earnings were material in the first quarters of 2020 or 2019. The
amounts from cash flow hedges included in accumulated other comprehensive income that are expected to bereclassified into earnings in the next 12 months were also not significant.

20 | 2020 Q1 10-Q

Derivative Instruments without Hedge Accounting Designation
Currency Derivatives: We generally utilize a rolling hedge strategy with currency forward contracts that mature
within three months to hedge our exposures of monetary assets and liabilities from changes in currency exchange
rates. At the end of each reporting period, monetary assets and liabilities denominated in currencies other than the
U.S. dollar are remeasured into U.S. dollars and the associated outstanding forward contracts are marked tomarket. Currency forward contracts are valued at fair values based on the middle of bid and ask prices of dealers or
exchange quotations (Level 2). Realized and unrealized gains and losses on derivative instruments without hedge
accounting designation as well as the changes in the underlying monetary assets and liabilities from changes incurrency exchange rates are included in other non-operating income (expense). For derivative instruments without
hedge accounting designation, we recognized gains of $5 million and losses of $11 million in the first quarters of2020 and 2019, respectively.
Convertible Notes 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 (Level 2), 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 trading price of our common stock (Level 2).
(See “Debt” note.) We recognized losses of $12 million and gains of $16 million for the first quarters of 2020 and
2019, respectively, in other non-operating income (expense), net for the changes in fair value of the derivative
settlement obligations.

Equity Plans
As of November 28, 2019, 94 million shares of our common stock were available for future awards under our equity
plans.

Restricted Stock and Restricted Stock Units (“Restricted Stock Awards”)
Restricted Stock Awards activity is summarized as follows:
Three months ended

November 28, November 29,
2019
2018

Restricted stock award shares granted
Weighted-average grant-date fair value per share$8
46.16 $

6
39.02

Stock-based Compensation ExpenseThree months ended
Stock-based compensation expense by caption
Cost of goods soldSelling, general, and administrative
Research and development

November 28, November 29,
2019
2018
$

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

$

$

31 $
22
19
72 $

26
19
16
61

57 $
8
7
72 $

41
8
12
61

21

The income tax benefits related to share-based compensation were $26 million and $23 million for the first quartersof 2020 and 2019, respectively. As of November 28, 2019, $719 million of total unrecognized compensation costs
for unvested awards, before the effect of any future forfeitures, was expected to be recognized through the firstquarter of 2024, resulting in a weighted-average period of 1.5 years.

Revenue and Contract Liabilities
Revenue by technology is presented in the table below. (See "Segment and Other Information" note for disclosureof disaggregated revenue by market segments.)
Three months ended
DRAM
NAND
Other (primarily 3D XPoint memory and NOR)

November 28, November 29,
2019
2018
$

$

3,469 $
1,422
253
5,144 $

5,893
1,660
360
7,913

Revenue for MCPs and SSDs, which contain both DRAM and NAND, are disaggregated into DRAM and NAND in
the table above based on the relative values of each component. The three months ended November 29, 2018 havebeen conformed to current period presentation.
Our contract liabilities from customer advances are for advance payments received from customers to secure
product in future periods. Other contract liabilities consist of amounts received in advance of satisfying performanceobligations. These balances are reported within other current liabilities and other noncurrent liabilities. Revenue andinterest expense associated with contract liabilities for the time value of advance payments was not significant inany period presented. As of November 28, 2019, our future performance obligations beyond one year were notsignificant. Contract liabilities were as follows:
As ofContract liabilities from customer advances
Other contract liabilities

November 28,
2019
$
$

August 29,
2019

39 $
49
88 $

61
69
130

Revenue recognized during the first quarter of 2020 from the beginning balance as of August 29, 2019 included $24
million from meeting performance obligations of other contract liabilities and shipments against customer advances.
Contract liabilities from customer advances also decreased $22 million due to the return of unutilized customer
advances upon expiration of the contract.
As of November 28, 2019, other current liabilities included $363 million for estimates of consideration payable tocustomers, including estimates for pricing adjustments and returns.

Other Operating (Income) Expense, Net
Three months ended
Restructure and asset impairments
Other

November 28, November 29,
2019
2018
$
$

22 | 2020 Q1 10-Q

(4) $
1
(3) $

33
3
36

Other Non-Operating Income (Expense), Net
Three months ended
Gain on debt prepayments, repurchases, and conversions
Loss from changes in currency exchange rates
Other

November 28, November 29,
2019
2018
$

$

42 $
(2)
6
46 $

14
(5)
—
9

Income Taxes
Our income tax (provision) benefit consisted of the following:Three months ended
Income tax provision, excluding items below
Utilization of and other changes in net deferred tax assets of MMJ, MMT, and MTTW
Repatriation tax, net of adjustments related to uncertain tax positions

November 28, November 29,
2019
2018
$

$

(31) $(24)—(55) $

(378)
(52)
(47)
(477)

The decrease in our income tax provision in the first quarter of 2020 was due primarily to reductions in profit before
tax and the foreign minimum tax.
As of November 28, 2019, gross unrecognized tax benefits were $385 million, substantially all of which would affectour effective tax rate in the future, if recognized. The amount accrued for interest and penalties related to uncertain
tax positions was not significant for any period presented.
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive
arrangements, which expire in whole or in part at various dates through 2034, that are conditional, in part, upon
meeting certain business operations and employment thresholds. The effect of tax incentive arrangements were notsignificant to our tax provision for the first quarter of 2020. These arrangements reduced our tax provision for the
first quarter of 2019 by $427 million (benefiting our diluted earnings per share by $0.36).

Earnings Per ShareThree months ended
Net income attributable to Micron – Basic
Assumed conversion of debt
Net income attributable to Micron – Diluted

November 28, November 29,
2019
2018
$
$

Weighted-average common shares outstanding – Basic
Dilutive effect of equity plans and convertible notes
Weighted-average common shares outstanding – Diluted
Earnings per share
Basic
Diluted

$

491 $
(4)
487 $

3,293
—
3,293

1,107
22
1,129

1,133
41
1,174

0.44 $
0.43

2.91
2.81

23

Antidilutive potential common stock shares that could dilute basic earnings per share in the future were 6 million for
the first quarters of 2020 and 2019.

Segment and Other Information
Segment information reported herein is consistent with how it is reviewed and evaluated by our chief operating
decision maker. We have the following four business units, which are our reportable segments:
Compute and Networking Business Unit (“CNBU”): Includes memory products sold into client, cloud server,
enterprise, graphics, and networking markets and sales of certain 3D XPoint products.
Mobile Business Unit (“MBU”): Includes memory products sold into smartphone and other mobile-device markets.
Storage Business Unit (“SBU”): Includes SSDs and component-level solutions sold into enterprise and cloud,client, and consumer storage markets, other discrete storage products sold in component and wafer form to theremovable storage market, and sales of certain 3D XPoint products.
Embedded Business Unit (“EBU”): Includes memory and storage products sold into automotive, industrial, andconsumer markets.
Certain operating expenses directly associated with the activities of a specific segment are charged to that segment.
Other indirect operating income and expenses are generally allocated to segments based on their respective
percentage of cost of goods sold or forecasted wafer production. We do not identify or report internally our assets(other than goodwill) or capital expenditures by segment, nor do we allocate gains and losses from equity method
investments, interest, other non-operating income or expense items, or taxes to segments.
Three months ended
Revenue
CNBU
MBU
SBU
EBU
All Other

November 28, November 29,
2019
2018
$

$
Operating income (loss)
CNBU
MBU
SBU
EBU
All Other$

Unallocated
Stock-based compensation
Employee severance
Restructure and asset impairments
Other

Operating income

24 | 2020 Q1 10-Q$

1,979 $
1,457
968
734
6
5,144 $

3,604
2,212
1,143
933
21
7,913

401 $
295
(217)
113
2
594

2,211
1,203
80
387
6
3,887

(72)
(1)
4
(7)
(76)

(61)
(20)
(30)
(17)
(128)

518 $

3,759

Certain Concentrations
Revenue from Kingston Technology Company, Inc. was 11% of total revenue for the first quarter of 2020. No othercustomer exceeded 10% of our total revenue for the first quarter of 2020.

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
included in our Annual Report on Form 10-K for the year ended August 29, 2019. All period references are to ourfiscal periods unless otherwise indicated. Our fiscal year is the 52 or 53-week period ending on the Thursday
closest to August 31. Fiscal year 2020 contains 53 weeks and the fourth quarter of 2020 will contain 14 weeks. The
first quarters of fiscal 2020 and 2019 each contained 13 weeks. All tabular dollar amounts are in millions, except per
share amounts.

Overview
Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory andstorage solutions. Through our global brands — Micron, Crucial, and Ballistix — our broad portfolio of highperformance memory and storage technologies, including DRAM, NAND, 3D XPoint memory, and NOR, istransforming how the world uses information to enrich life. Backed by 40 years of technology leadership, ourmemory and storage solutions enable disruptive trends, including artificial intelligence, 5G, machine learning, andautonomous vehicles, in key market segments like mobile, data center, client, consumer, industrial, graphics,
automotive, and networking.
We manufacture our products at our wholly-owned facilities and also utilize subcontractors to perform certain
manufacturing processes. In recent years, we have increased our manufacturing scale and product diversity
through strategic acquisitions, expansion, and various partnering arrangements. On October 31, 2019, wepurchased Intel’s noncontrolling interest in IMFT and IMFT Member Debt for $1.25 billion, at which time IMFT, now
known as MTU, became a wholly-owned subsidiary.
We make significant investments to develop proprietary product and process technology, which are implemented in
our manufacturing facilities. We generally increase the density per wafer and reduce manufacturing costs of eachgeneration of product through advancements in product and process technology, such as our leading-edge linewidth process technology and 3D NAND architecture. We continue to introduce new generations of products thatoffer improved performance characteristics, including higher data transfer rates, advanced packaging solutions tomeet industry standards, lower power consumption, improved read/write reliability, and increased memory density.
Our managed NAND and SSD storage products, which incorporate NAND, a controller, and firmware, constitute asignificant portion of our revenues. We have developed proprietary firmware and controllers, which are included incertain of our SSDs. Development of advanced technologies enables us to diversify our product portfolio toward aricher mix of differentiated, high-value solutions and to 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 located around the world. We face intense competition in
the semiconductor memory and storage markets and, to remain competitive, we must continuously develop andimplement new products and technologies and decrease manufacturing costs. Our success is largely dependent on
obtaining returns on our R&D investments, efficient utilization of our manufacturing infrastructure, development andintegration of advanced product and process technologies, market acceptance of our diversified portfolio of
semiconductor-based memory and storage solutions, and return-driven capital spending.

25

Results of Operations
Consolidated Results
First Quarter
2020
Revenue
Cost of goods sold
Gross margin$

Fourth Quarter
2019

First Quarter
2019

5,144 100 % $3,778 73 %
1,366 27 %

4,870 100 % $3,475 71 %1,395 29 %7,913 100 %3,298 42 %4,615 58 %Selling, general, and administrative
Research and development
Other operating (income) expense, net
Operating income

211
640
(3)
518

4%
12 %
—%
10 %

212
623
(90)
650

4%
13 %
(2)%
13 %

209
611
36
3,759

3%
8%
—%
48 %

Interest income (expense), net
Other non-operating income (expense), net
Income tax (provision) benefit
Equity in net income (loss) of equity method investees
Net income attributable to noncontrolling interests
Net income attributable to Micron

(3)
46
(55)
2
(17)
491

—%
1%
(1)%
—%
—%
10 % $

18
(13)
(71)
2
(25)
561

—%
—%
(1)%
—%
(1)%
12 % $

5
9
(477)
—
(3)
3,293

—%
—%
(6)%
—%
—%
42 %

$

Total Revenue: Total revenue for the first quarter of 2020 increased 6% as compared to the fourth quarter of 2019as a result of increases in sales of both DRAM and NAND products. Sales of DRAM products for the first quarter of2020 increased 2% from the fourth quarter of 2019 primarily due to an approximate 10% increase in bit shipments,
partially offset by an upper-single-digit percentage decline in average selling prices. Sales of NAND products for the
first quarter of 2020 increased 18% from the fourth quarter of 2019 primarily due to a mid-teen percentage increasein bit shipments driven by increases in sales of high-value SSD and mobile managed NAND products enabled bystrong market demand and our transition to NVMe SSDs. NAND average selling prices for the first quarter of 2020
increased in the low-single digits from the fourth quarter of 2019.
Total revenue for the first quarter of 2020 decreased 35% as compared to the first quarter 2019 primarily due toprice declines resulting from imbalances between supply and market demand over the last several quarters. Salesof DRAM products for the first quarter of 2020 decreased 41% as compared to the first quarter of 2019 primarily due
to declines in average selling prices in the low-50-percent range, partially offset by growth in bit shipments in the
mid-20-percent range. Sales of NAND products for the first quarter of 2020 decreased 14% as compared to the firstquarter of 2019 primarily due to declines in average selling prices in the mid-30-percent range, partially offset byincreases in bit shipments in the mid-30-percent range.
Overall Gross Margin: Our overall gross margin percentage decreased to 27% for the first quarter of 2020 from
29% for the fourth quarter of 2019 primarily due to decreases in DRAM margins as a result of declines in selling
prices, partially offset by higher NAND margins from increases in selling prices. Gross margin for the first quarter of2020 included an impact of approximately $125 million due to underutilization costs at MTU. MTU underutilization
costs are expected to ramp higher in the second quarter of 2020 as production volumes decline. We expect thesecharges to average $150 million per quarter in the first half of fiscal 2020.
We periodically assess the estimated useful lives of our property, plant, and equipment. Based on our assessmentof planned technology node transitions, capital spending, and re-use rates, we revised the estimated useful lives ofequipment in our NAND wafer fabrication facilities from five years to seven years as of the beginning of the firstquarter of 2020. This change reduced our NAND manufacturing non-cash depreciation expense for the first quarterof 2020 by approximately $150 million, which resulted in reductions of approximately $40 million in cost of goods
sold and approximately $110 million in the cost of our inventories at the end of the first quarter of 2020.

26 | 2020 Q1 10-Q

Our overall gross margin percentage decreased to 27% for the first quarter of 2020 from 58% for the first quarter of2019 primarily due to declines in average selling prices, partially offset by the effect of a decrease in non-cash
depreciation expense from the revision in estimated useful lives of equipment in our NAND wafer fabrication
facilities, cost reductions resulting from strong execution in delivering products featuring advanced technologies,
and continuous improvement initiatives to reduce production costs.

Revenue by Business Unit

CNBU
MBU
SBU
EBU
All Other$$

First Quarter
2020

Fourth Quarter
2019

First Quarter
2019

1,979
1,457
968
734
6
5,144

1,903
1,406
848
705
8
4,870

3,604
2,212
1,143
933
21
7,913

38 % $
28 %
19 %
14 %
—%
$

39 % $
29 %
17 %
14 %
—%
$

46 %
28 %
14 %
12 %
—%

Percentages of total revenue may not total 100% due to rounding.
Changes in revenue for each business unit for the first quarter of 2020 as compared to the fourth quarter of 2019were as follows:••••

CNBU revenue increased 4% as bit demand growth drove higher sales volumes offset by price declines.
MBU revenue increased 4% primarily due to strong bit sales growth driven by high-value managed NAND
products, partially offset by price declines.
SBU revenue increased 14% primarily due to significant growth in SSD shipment volumes, enabled by ourcontinuing transition to NVMe SSD products, and improved pricing.
EBU revenue increased 4% primarily due to strong shipment growth in automotive and consumer markets.

Changes in revenue for each business unit for the first quarter of 2020 as compared to the first quarter of 2019 wereas follows:••••

CNBU revenue decreased 45% primarily due to price declines driven by imbalances in supply and demand,
partially offset by bit sales growth.
MBU revenue decreased 34% primarily due to price declines, partially offset by bit sales growth driven by
execution in developing and qualifying mobile managed NAND products.
SBU revenue decreased 15% primarily due to price declines, partially offset by bit sales growth.
EBU revenue decreased 21% primarily due to lower sales to consumer and industrial multi-markets.

Operating Income (Loss) by Business UnitFirst Quarter
2020
CNBU
MBU
SBU
EBU
All Other$$401 20 % $295 20 %(217) (22)%113 15 %2 33 %
594$

Fourth Quarter2019
474 25 % $365 26 %(248) (29)%
101 14 %2 25 %
694$

First Quarter
2019
2,211
1,203
80
387
6
3,887

61 %
54 %
7%
41 %
29 %

Percentages reflect operating income (loss) as a percentage of revenue for each business unit.
Changes in operating income or loss for each business unit for the first quarter of 2020 as compared to the fourth
quarter of 2019 were as follows:••

CNBU operating income decreased primarily due to declines in DRAM pricing.
MBU operating income decreased primarily due to declines in low-power DRAM pricing.

27

•
•

SBU operating margin improved primarily due to increases in NAND pricing and sales volumes. SBU
operating results for the first quarter of 2020 were adversely impacted by an increase in underutilization
costs at MTU.
EBU operating income increased primarily as a result of a reduction in product write-downs and increases
in sales volumes.

Changes in operating income or loss for each business unit for the first quarter of 2020 as compared to the firstquarter of 2019 were as follows:••••

CNBU operating income decreased primarily due to declines in DRAM pricing, partially offset by cost
reductions.
MBU operating income decreased primarily due to declines in low-power DRAM and NAND pricing, partially
offset by increases in sales of high-value managed NAND products and manufacturing cost reductions.
SBU operating margin declined primarily due to declines in NAND pricing, partially offset by manufacturing
cost reductions and increases in sales volumes.
EBU operating income decreased as a result of declines in pricing, partially offset by increases in sales
volumes.

Operating Expenses and Other
Selling, General, and Administrative: SG&A expenses for the first quarter of 2020 were relatively unchanged ascompared to the fourth quarter of 2019 and the first quarter of 2019.
Research and Development: R&D expenses vary primarily with the number of development and pre-qualification
wafers processed, amounts reimbursed under R&D cost-sharing agreements, the cost of advanced equipment
dedicated to new product and process development, and personnel costs. Because of the lead times necessary to
manufacture our products, we typically begin to process wafers before completion of performance and reliability
testing. Development of a product is deemed complete when it is qualified through reviews and tests for
performance and reliability. R&D expenses can vary significantly depending on the timing of product qualification.
R&D expenses for the first quarter of 2020 were 3% higher than the fourth quarter of 2019 primarily due toincreases in volumes of development and pre-qualification wafers, partially offset by a $33 million reduction in noncash depreciation expense from the revision of the estimated useful lives of equipment in our R&D facilities and our
NAND wafer fabrication facilities from five years to seven years in the first quarter of 2020.
R&D expenses for the first quarter of 2020 were 5% higher than the first quarter of 2019 primarily due to a reductionof R&D reimbursements from our partners and increases in volumes of development and pre-qualification wafers,
partially offset by lower depreciation expense from the revision of the estimated useful lives of equipment. R&D
expenses were reduced by $30 million in the first quarter of 2019 due to reimbursements, primarily from our joint
development activities with Intel for 3D NAND and 3D XPoint technologies, which were substantially completed in
the third quarter of 2019 and first quarter of 2020, respectively.
Income Taxes: Our income tax (provision) benefit consisted of the following:First Quarter
2020
Income tax (provision) benefit, excluding items below
Utilization of and other changes in net deferred tax assets of MMJ, MMT, and
MTTW
Repatriation tax, net of adjustments related to uncertain tax positions

Effective tax rate

Fourth Quarter
2019

First Quarter2019$(31) $(61) $

(378)

$

(24)
—
(55) $(11)1(71) $

(52)
(47)
(477)

9.8 %

10.8 %

12.6 %The decrease in our income tax provision in the first quarter of 2020 as compared to the fourth and first quarters of2019 was due primarily to reductions in our profit before tax and the foreign minimum tax. Our income taxes include

28 | 2020 Q1 10-Q

the effect of operations outside the United States, including Singapore, where we have tax incentive arrangementsthat further decrease our effective tax rates.
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive
arrangements, which expire in whole or in part at various dates through 2034, that are conditional, in part, upon
meeting certain business operations and employment thresholds. The effects of tax incentive arrangements were
not significant to our tax provision for the first quarter of 2020 or the fourth quarter of 2019. These arrangements
reduced our tax provision for the first quarter of 2019 by $427 million (benefiting our diluted earnings per share by$0.36).
Other: Interest expense for the first quarter of 2020 increased 21% as compared to the fourth quarter of 2019
primarily due to debt issuances in the first quarter of 2020 and fourth quarter of 2019. Interest income for the firstquarter of 2020 decreased 23% as compared to the fourth quarter of 2019 primarily due to decreases in interest
rates and our cash and investment balances.
Interest expense for the first quarter of 2020 increased 42% as compared to the first quarter of 2020 primarily due toincreases in debt obligations. Interest income for the first quarter of 2020 increased 16% as compared to the firstquarter of 2019 as a result of increases in our cash and investment balances.
Further discussion of other operating and non-operating income and expenses can be found in the notes contained
in “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity Plans, Other Operating
Income (Expense), Net, 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. Cash generated 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, to engage in a variety of financing
transactions for such purposes, including the issuance of securities. As of November 28, 2019, we had an undrawn
revolving credit facility that provides for borrowings of up to $2.50 billion and matures in July 2023. We expect that
our cash and investments, cash flows from operations, and available financing will be sufficient to meet ourrequirements at least through the next 12 months.
To develop new product and process technology, support future growth, achieve operating efficiencies, and maintainproduct quality, we must continue to invest in manufacturing technologies, facilities and equipment, and R&D. We
estimate that capital expenditures in 2020 for property, plant, and equipment, net of partner contributions, to be $7
billion to $8 billion, focused on technology transitions and product enablement. The actual amounts for 2020 willvary depending on market conditions. As of November 28, 2019, we had commitments of approximately $3.1 billion
for the acquisition of property, plant, and equipment, of which approximately $2.5 billion is expected to be paid
within one year.
Our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding common
stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans. The repurchase authorization does not obligate us to acquire any
common stock and is subject to market conditions and our ongoing determination of the best use of available cash.
Through November 28, 2019, we had repurchased an aggregate of $2.71 billion of the authorized amount. See“Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Equity.”
Cash and marketable investments totaled $8.19 billion as of November 28, 2019 and $9.12 billion as of August 29,
2019. Our investments consist primarily of bank deposits, money market funds, and liquid investment grade, fixedincome securities, diversified among industries and individual issuers. To mitigate credit risk, we invest throughhigh-credit-quality financial institutions and by policy generally limit the concentration of credit exposure by
restricting the amount of investments with any single obligor. As of November 28, 2019, $3.2 billion of our cash andmarketable investments was held by our foreign subsidiaries.

29

Limitations on the Use of Cash and Investments: Cash and marketable investments as of November 28, 2019
included $463 million held by MMJ. As a result of the corporate reorganization proceedings of MMJ initiated in
March 2012, and for so long as such proceedings are continuing, MMJ is prohibited from paying dividends to us. In
addition, pursuant to an order of the Tokyo District Court, MMJ cannot make loans or advances, other than certain
ordinary course advances, to us without the consent of the Tokyo District Court and may, under certain
circumstances, be subject to the approval of the legal trustee. As a result, the assets of MMJ are not available foruse by us in our other operations. Furthermore, certain uses of the assets of MMJ, including investments in certain
capital expenditures, may require consent of MMJ’s trustees and/or the Tokyo District Court.
Cash Flows:First Quarter
2020
2019
Net cash provided by operating activities
Net cash provided by (used for) investing activities
Net cash provided by (used for) financing activities
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash
Net increase in cash, cash equivalents, and restricted cash$$

2,011 $
(1,189)(992)(14)(184) $

4,810
(4,427)(2,435)(10)(2,062)

Operating Activities: For the first quarter of 2020, cash provided by operating activities was due primarily to cash
generated by our operations and working capital adjustments, which included the effects of 1) an increase inaccounts payable and accrued expenses from timing of payments and 2) a decrease in inventories, partially offset
by the effects of an increase in receivables due to a higher level of revenue. For the first quarter of 2019, cash
provided by operating activities was due primarily to net income and the effect of working capital adjustments, which
included the effects of 1) a decrease in net deferred tax assets and 2) a decrease in receivables due to a lower levelof revenue, partially offset by the effects of an increase in inventories.
Investing Activities: For the first quarter of 2020, net cash used for investing activities consisted primarily of$1.93 billion of expenditures for property, plant, and equipment (net of partner contributions) partially offset by $744
million of net inflows from sales, maturities, and purchases of available-for-sale securities. For the first quarter of
2019, net cash used for investing activities consisted primarily of $2.46 billion of expenditures for property, plant,
and equipment (net of partner contributions) and $1.91 billion of net outflows from sales, maturities, and purchasesof available-for-sale securities.
Financing Activities: For the first quarter of 2020, net cash used for financing activities consisted primarily of$1.42 billion cash payments to reduce our debt, including $621 million for IMFT Member Debt repayments,$534 million to prepay the 2025 Notes, $196 million to settle conversions of notes, $64 million for scheduled
repayment of finance leases, $744 million for the acquisition of noncontrolling interest in IMFT, and $50 million for
the acquisition of 1 million shares of treasury stock under our $10 billion share repurchase authorization. Cash used
for financing activities was partially offset by net proceeds of $1.25 billion from borrowing the 2024 Term Loan A. For
the first quarter of 2019, net cash used for financing activities consisted primarily of $1.80 billion for the acquisitionof 42 million shares of treasury stock and cash payments to reduce our debt, including $413 million for scheduled
repayment of other notes and capital leases and $164 million to settle conversions of notes.
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 in the 30 trading day
period ended on September 30, 2019, holders may convert these notes through the calendar quarter ended
December 31, 2019. Additionally, the closing price of our common stock also exceeded the thresholds for thecalendar quarter ended December 31, 2019; therefore, such notes are convertible by the holders at any timethrough March 31, 2020. The following table summarizes the potential settlements that we could be required tomake for the calendar quarter ending December 31, 2019 if all holders converted their notes. The amounts in thetable below are based on our closing share price of $48.16 as of November 28, 2019.

30 | 2020 Q1 10-Q

If Settled With Minimum
Cash Required

Settlement Option
Amount in Excess ofPrincipal

Principal Amount2032D Notes
2033F Notes

Cash and/or shares
Cash

Cash and/or shares
Cash and/or shares

Underlying
Shares

13 $
2
15 $

Remainder inShares

Cash

—
18
18

If Settled
Entirely With
Cash

13 $
1
14 $

645
73
718

Contractual Obligations:
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Leases" and "– Debt."

Recently Adopted Accounting Standards
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Recently Adopted AccountingStandards.”

Recently Issued Accounting Standards
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Recently Issued AccountingStandards.”

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe are affected by changes in currency exchange and interest rates. For further discussion about market risk andsensitivity analysis related to changes in currency exchange rates, see “Part II – Item 7A. Quantitative andQualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended August 29, 2019.

ITEM 4. CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the participation of our management, including ourprincipal executive officer and principal financial officer, of the effectiveness of the design and operation of ourdisclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Actof 1934) as of the end of the period covered by this report. Based upon that evaluation, the principal executive
officer and principal financial officer concluded that those disclosure controls and procedures were effective toensure 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 the Commission’s rules andforms and that such information is accumulated and communicated to our management, including the principal
executive officer and principal financial officer, to allow timely decision regarding disclosure.
During the first quarter of 2020, there were no changes in our internal control over financial reporting that havematerially 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 29, 2019 and “Part I. Financial Information – Item 1. Financial Statements – Notes toConsolidated Financial Statements – Contingencies” and “Item 1A. Risk Factors” herein.

31

ITEM 1A. RISK FACTORSIn addition to the factors discussed elsewhere in this Form 10-Q, the following are important factors, the order ofwhich is not necessarily indicative of the level of risk that each poses to us, which could cause actual results orevents to differ materially from those contained in any forward-looking statements made by us. Any of these factors
could have a material adverse effect on our business, results of operations, financial condition, or stock price. Ouroperations could also be affected by other factors that are presently unknown to us or not considered significant.
Volatility in average selling prices for our semiconductor memory and storage products may adversely
affect our business.
We have experienced significant volatility in our average selling prices, including dramatic declines as noted in thetable below, and may continue to experience 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. 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

NAND

(percentage change in average selling prices)2019 from 20182018 from 20172017 from 20162016 from 2015
2015 from 2014

(30)%
36 %
18 %
(34)%
(11)%

(47)%
(13)%
(10)%
(16)%
(20)%

Revenue and units for MCPs and SSDs, which contain both DRAM and NAND, are disaggregated in the abovetable based on the relative values of each component. Prior periods have been conformed to current period
presentation.
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, processline-width, additional 3D memory layers, additional bits per cell (i.e., cell levels), 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 tomaintain or reduce costs include, but are not limited to, strategic product diversification decisions affecting productmix, the increasing complexity of manufacturing processes, difficulties in transitioning to smaller line-width process
technologies, 3D memory layers, NAND cell levels, transitioning to replacement gate technology for NAND, processcomplexity 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.
Many factors may result in a reduction of our output or a delay in ramping production, which could lead tounderutilization of our production assets. These factors may include, among others, a weak demand environment,
industry oversupply, inventory surpluses, our ramp of emerging technologies in dedicated manufacturing capacity,
declining selling prices, and changes in supply agreements. A significant portion of our manufacturing costs are
fixed and do not vary proportionally with changes in production output. As a result, lower utilization and increases inour per gigabit manufacturing costs may adversely affect our gross margins, business, results of operations, or
financial condition.
In addition, per gigabit manufacturing costs may also be affected by a broader product portfolio, which may havesmaller production quantities and shorter product lifecycles. Our business and the markets we serve are subject torapid technological changes and material fluctuations in demand based on end-user preferences. As a result, we
may have work in process or finished goods inventories that could become obsolete or in amounts that are inexcess of our customers’ demand. As a result, we may incur charges in connection with obsolete or excess
inventories, which could have a material adverse effect on our business, results of operations, or financial condition.
In addition, due to the customized nature of certain of the products we manufacture, we may be unable to sell
32 | 2020 Q1 10-Q

certain finished goods inventory to alternative customers or manufacture in-process inventory to different
specifications, which may result in excess and obsolescence charges in future periods. Our inability 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.; Kioxia Holdings Corporation (formerly 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, andwithstand downturns in the semiconductor markets in which we compete. Consolidation of industry competitors
could put us at a competitive disadvantage. In addition, some governments have provided, and may continue toprovide, 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 andvarious state-owned or affiliated entities that is intended to advance China’s stated national policy objectives. In
addition, the Chinese government may restrict us from participating in the China market or may prevent us fromcompeting effectively with Chinese companies. Some of our competitors may use aggressive pricing to obtainmarket share or take business of our key customers.
Our competitors generally seek to increase wafer capacity, improve yields, and reduce die size in their productdesigns 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 from fabrication 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 and some of our competitors have plans to ramp, or are constructing or
ramping, production at new fabrication facilities. Increases in worldwide supply of semiconductor memory andstorage, if not accompanied by commensurate increases in demand, could lead to further declines in average
selling prices for our products and could 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.
We may be unable to generate sufficient cash flows or obtain access to external financing necessary tofund 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, and manufacturing costs. To develop new product and process technology, support
future growth, achieve operating efficiencies, and maintain product quality, we must make significant capital
investments in manufacturing technology, capital equipment, facilities, R&D, and product and process technology.
We estimate that capital expenditures in 2020 for property, plant, and equipment, net of partner contributions, will beapproximately $7 billion to $8 billion, focused on technology transitions and product enablement. Investments incapital expenditures may not generate expected returns or cash flows. Delays in completion and ramping of new
production facilities could significantly impact our ability to realize expected returns on our capital expenditures,
which could have a material adverse effect on our business, results of operations, or financial condition.
As a result of the corporate reorganization proceedings of MMJ initiated in 2012, and for so long as suchproceedings are continuing, MMJ is prohibited from paying dividends, including any cash dividends, to us and suchproceedings 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 Tokyo District Court, MMJ cannot make loans or advances, other than certain
ordinary course advances, to us without the consent of the Tokyo District 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 expendituresof MMJ, may require consent of MMJ’s trustees and/or the Tokyo District Court.

33

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 tous. We have experienced volatility in our cash flows and operating results and may continue to experience suchvolatility in the future, which may negatively affect our credit rating. Our credit rating may also be affected by our
liquidity, financial results, economic risk, or other factors, which may increase the cost of future borrowings andmake it difficult for us to obtain financing on terms acceptable to us. In 2019, we suspended the security interest in
the collateral under our credit facility upon achieving specified credit ratings and the prepayment of our 2022 Term
Loan B; however, the security interest would be automatically reinstated upon a decline in our corporate credit rating
below a certain level. There can be no assurance that we will be able to generate sufficient cash flows, use cash
held by MMJ to fund its capital expenditures, access capital markets or find other sources of financing to fund ouroperations, make debt payments, and make adequate capital investments to remain competitive in terms oftechnology 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.
Increases in tariffs or other trade restrictions or taxes on our or our customers’ products or equipment andsupplies could have an adverse impact on our operations.
In 2019, 89% of our revenue was from products shipped to customer locations outside the United States. We alsopurchase a significant portion of equipment and supplies from suppliers outside the United States. Additionally, asignificant portion of our facilities are located outside the United States, including in Taiwan, Singapore, Japan, andChina.
The United States and other countries have levied tariffs and taxes on certain goods. General trade tensions
between the U.S. and China have been escalating since 2018, with U.S. tariffs on Chinese goods and retaliatory
Chinese tariffs on U.S. goods. Some of our products are included in these tariffs. Higher duties on existing tariffs
and further rounds of tariffs have been announced or threatened by U.S. and Chinese leaders. Additionally, the U.S.
has threatened to impose tariffs on goods imported from other countries, which could also impact certain of ourcustomers’ or our operations. If the U.S. were to impose current or additional tariffs on components that we or our
suppliers source, our cost for such components would increase. We may also incur increases in manufacturingcosts and supply chain risks due to our efforts to mitigate the impact of tariffs on our customers and our operations.
Additionally, tariffs on our customers’ products could impact their sales of such end products, resulting in lower
demand for our products.
We cannot predict what further actions may ultimately be taken with respect to tariffs or trade relations between the
U.S. and other countries, what products may be subject to such actions, or what actions may be taken by othercountries in retaliation. Further changes in trade policy, tariffs, additional taxes, restrictions on exports or other tradebarriers, or restrictions on supplies, equipment, and raw materials including rare earth minerals, may limit our ability
to produce products, increase our selling and/or manufacturing costs, decrease margins, reduce thecompetitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment andsupplies, which could have a material adverse effect on our business, results of operations, or financial condition.
U.S. trade regulations have restricted our ability to sell our products to a significant customer and could
restrict our ability to sell our products to other customers.
On May 16, 2019, the Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce added Huawei
to the BIS’s Entity List, which imposes limitations on the supply of certain U.S. items and product support to Huawei.
In 2019, our sales to Huawei accounted for 12% of our total revenue. To ensure compliance with the Entity List
restrictions, we suspended shipments of all products to Huawei, effective May 16, 2019. We have determined thatcertain products Huawei purchases from us are not subject to the Export Administration Regulations andconsequently can be lawfully sold and shipped to Huawei. Accordingly, we resumed shipping certain products to
Huawei in the fourth quarter of 2019.
We applied for, and recently received, licenses that enable us to provide support for the products we sell that are
not subject to the Export Administration Regulations, as well as qualify new products for Huawei’s mobile and serverbusinesses. Additionally, these licenses allow us to ship previously restricted products that we manufacture in the
United States, which represent a very small portion of our sales. However, there are still some products outside of
the mobile and server markets that we are unable to sell to Huawei. While Huawei remains on the Entity List, and in

34 | 2020 Q1 10-Q

the absence of additional licenses from the BIS, we may be unable to work with Huawei on product development foruses other than in mobile and server end-products, which may have a negative effect on our ability to sell productsto Huawei in the future. Despite the receipt of licenses, Entity List restrictions may also encourage Huawei to seek
to obtain a greater supply of similar or substitute products from our competitors that are not subject to theserestrictions, thereby decreasing our long-term competitiveness as a supplier to Huawei. Moreover, although Huawei
is not prohibited from paying (and we are not restricted from collecting) accounts receivable for products we sell to
Huawei, the credit risks associated with these accounts may have increased as a result of the BIS’s actions.
We cannot predict what additional actions the U.S. government may take with respect to Huawei, including
modifications to, or interpretations of, Entity List restrictions, export restrictions, tariffs, or other trade limitations or
barriers. We may be unable to sell certain inventories to alternative customers, which may result in excess andobsolescence charges in future periods. The licenses we have received may not be effective against such additionalor heightened restrictions.
The Entity List trade restrictions enacted during our third quarter of 2019 had an adverse effect on our business.
Although we received licenses in the first quarter of fiscal 2020, we are unable to predict the impact these licenses
will have on our sales to Huawei, nor the impact existing or future trade restrictions may have on our business with
Huawei. Other companies may be added to the Entity List and/or subject to trade restrictions. For example, in
October 2019, the U.S. government added several additional Chinese organizations to the Entity List, effective
October 9, 2019. In addition, there may be indirect impacts to our business which we cannot reasonably quantify,
including that some of our other customer’s products which incorporate our solutions may also be impacted bythese and other trade restrictions that may be imposed by the U.S., China, or other countries. Restrictions on ourability to sell and ship our products to Huawei have had, and may continue to have, an adverse effect on ourbusiness, results of operations, or financial condition. In addition, if there are changes to Export Administration
Regulations or Entity List restrictions, our revenue with Huawei or other Chinese customers could be negatively
impacted, and the licenses we have received could be rendered ineffective. Any such changes may have a further
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 tomeet long-term customer needs. These barriers include potential limitations on stacking additional 3D memory
layers, increasing bits per cell (i.e., cell levels), meeting higher density requirements, and improving power
consumption and reliability. We may face technological barriers to continue to shrink our products at our current or
historical rate, which has generally reduced per-unit cost. We have invested and expect to continue to invest in R&D
for new and existing products, which involves significant risk and uncertainties. We may be unable to recover ourinvestment in R&D or otherwise realize the economic benefits of reducing die size or increasing memory andstorage densities. 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 newmemory and storage technologies. There can be no assurance of the following:••••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-volatiletechnology. 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 amaterial adverse effect on our business, results of operations, or financial condition.
A significant portion of our revenue is concentrated with a select number of customers.
In each of the last three fiscal years, approximately one-half of our total revenue was from our top ten customers. A
disruption in our relationship with any of these customers could adversely affect our business. We could experiencefluctuations in our customer base or the mix of revenue by customer as markets and strategies evolve. In addition,
any consolidation of our customers could reduce the number of customers to whom our products could be sold. Our
35

inability to meet our customers’ requirements or to qualify our products with them could adversely impact ourrevenue. Meaningful change in the inventory strategy of our customers, particularly those in China, could impact our
industry bit demand growth outlook. The loss of one or more of our major customers or any significant reduction inorders from, or a shift in product mix by, these customers could have a material adverse effect on our business,
results of operations, or financial condition.
We face risks associated with our international sales and operations that could materially adversely affectour business, results of operations, or financial condition.
In 2019, 53% of our revenue was to customers who have headquarters located in the United States. We ship our
products to the locations specified by our customers. Customers with global supply chains and operations may
request we deliver products to countries where they own or operate production facilities or to countries where theyutilize third-party subcontractors or warehouses. As a result, 89% of our revenue in 2019 was from products shipped
to customer locations outside the United States. In addition, a substantial portion of our manufacturing operations
are located outside the United States. In particular, a significant portion of our manufacturing operations areconcentrated in Singapore, Taiwan, Japan, and China. Many of our customers, suppliers, and vendors operateinternationally and are also subject to the risks described below. In addition, the U.S. government has in the past
restricted American firms from selling products and software to certain of our customers and may in the future
impose similar bans or other restrictions on sales to one or more of our significant customers. These restrictions
may not prohibit our competitors from selling similar products to our customers, which may result in our loss of sales
and market share. Even when such restrictions are lifted, financial or other penalties or continuing export restrictions
imposed with respect to our customers could have a continuing negative impact on our future revenue and results ofoperations, and we may not be able to recover any customers or market share we lose while complying with such
restrictions. We have experienced restrictions on our ability to sell products to certain foreign customers where
sales of products require export licenses or are prohibited by government action. Possible future U.S. government
actions could lead to additional or enhanced controls on exports from the United States to China or other countries,
bans on sales to other key customers, or other similar restrictions.
Trade-related government actions, by China or other countries, that impose barriers or restrictions that would impact
our ability to sell or ship products to Huawei or other customers may have a negative impact on our financial
condition and results of operations. We cannot predict the actions government entities may take in this context andmay be unable to quickly offset or effectively react to government actions that restrict our ability to sell to certain
customers or in certain jurisdictions. Government actions that affect our customers’ ability to sell products or accesscritical elements of their supply chains may result in a decreased demand for their products, which may
consequently reduce their demand for our products.
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;
imposition of bans on sales of goods or services to one or more of our significant foreign customers;
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;
government actions or civil unrest preventing the flow of products, including delays in shipping andobtaining products, cancellation of orders, or loss or damage of products;
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.

If we or our customers, suppliers, or vendors are impacted by these risks, it could have a material adverse effect on
our business, results of operations, or financial condition.

36 | 2020 Q1 10-Q

We have been served with complaints in Chinese courts alleging patent infringement.
We have been served with complaints in Chinese courts alleging that 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 theintellectual property rights of others or entering into a license agreement covering such intellectual property could
result in significant liability and/or require us to make material changes to our operations in China, products, and/or
manufacturing processes. Any of the foregoing could have a material adverse effect on our business, results ofoperations, or financial condition. (See “Part I. Financial Information – Item 1. Financial Statements – Notes toConsolidated Financial Statements – Contingencies.”)
We are subject to allegations of anticompetitive conduct.
On April 27, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the
Northern District of California. Subsequently, two substantially identical cases were filed in the same court. The
lawsuits purported to be on behalf of a nationwide class of indirect purchasers of DRAM products. On September 3,
2019, the District Court granted Micron’s motion to dismiss and allowed plaintiffs the opportunity to file a
consolidated, amended complaint. On October 28, 2019, the plaintiffs filed a consolidated amended complaint that
purports to be on be on behalf of a nationwide class of indirect purchasers of DRAM products. The amended
complaint asserts claims based on alleged price-fixing of DRAM products under federal and state law during theperiod from June 1, 2016 to at least February 1, 2018, and seeks treble monetary damages, costs, interest,
attorneys’ fees, and other injunctive and equitable relief.
On June 26, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the
Northern District of California. Subsequently, four substantially identical cases were filed in the same court. On
October 28, 2019, the plaintiffs filed a consolidated complaint. The consolidated complaint purports to be on behalfof a nationwide class of direct purchasers of DRAM products. The complaints assert claims based on alleged pricefixing of DRAM products under federal and state law during the period from June 1, 2016 through at least February
1, 2018, and seek treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitablerelief.
Additionally, six cases have been filed in the following Canadian courts: Superior Court of Quebec, the Federal
Court of Canada, the Ontario Superior Court of Justice, and the Supreme Court of British Columbia. The
substantive allegations in these cases are similar to those asserted in the cases filed in the United States.
On May 15, 2018, the Chinese State Administration for Market Regulation (“SAMR”) notified Micron that it wasinvestigating potential collusion and other anticompetitive conduct by DRAM suppliers in China. On May 31, 2018,
SAMR made unannounced visits to our sales offices in Beijing, Shanghai, and Shenzhen to seek certain informationas part of its investigation. We are cooperating with SAMR in its investigation.
We are unable to predict the outcome of these matters and therefore cannot estimate the range of possible loss.
The final resolution of these matters could result in significant liability and could have a material adverse effect on
our business, results of operations, or financial condition.
Our business, results of operations, or financial condition could be adversely affected by the limited
availability and quality of materials, supplies, and capital equipment, or the dependency on third-party
service providers.
Our supply chain and operations are dependent on the availability of materials that meet exacting standards and theuse of third parties to provide us with components and services. We generally have multiple sources of supply forour materials and services. However, only a limited number of suppliers are capable of delivering certain materials
and services that meet our standards and, in some cases, materials, components, or services are provided by asingle supplier. Various factors could reduce the availability of materials or components such as chemicals, siliconwafers, gases, photoresist, controllers, substrates, lead frames, printed circuit boards, targets, and reticle glass37

blanks. Shortages or increases in lead times may occur from time to time in the future. Our manufacturing
processes are also dependent on our relationships with third-party manufacturers of controllers used in a number ofour products and with outsourced semiconductor assembly and test providers, contract manufacturers, logistic
carriers, and other service providers.
Certain materials are primarily available in certain countries, including rare earth elements, minerals, and metals
available primarily from China. Trade disputes or other political or economic conditions may limit our availability toobtain such materials. Although these rare earth and other materials are generally available from multiple suppliers,
China is the predominant producer of certain of these materials. If China were to stop exporting these materials, oursuppliers’ ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or
obtain supply in a timely manner, or at a commercially reasonable cost. Constrained supply of rare earth elements,
minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or
impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantitiesof these materials from China.
We and/or our suppliers and service providers could be affected by tariffs, embargoes, or other trade restrictions, aswell as laws and regulations enacted in response to concerns regarding climate change, conflict minerals, andresponsible sourcing practices, which could limit the supply of our materials and/or increase the cost. Environmental
regulations could limit our ability to procure or use certain chemicals or materials in our operations or products. In
addition, disruptions in transportation lines could delay our receipt of materials. Lead times for the supply ofmaterials have been extended in the past. The disruption of our supply of materials, components, services, or theextension 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 thatenables 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 obtainequipment 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 ofoperations, or financial condition.
New product and market development may be unsuccessful.
We are developing new products, including system-level memory and storage products and solutions, which
complement our traditional products or leverage their underlying design or process technology. We have madesignificant 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. Additionally, we are
increasingly differentiating our products and solutions to meet the specific demands of our customers, which
increases our reliance on our customer’s ability to accurately forecast the end-customer’s needs and preferences.
As a result, our product demand forecasts may be impacted significantly by the strategic actions of our customers.
For certain of our markets, it is important that we deliver products in a timely manner with increasingly advanced
performance characteristics at the time our customers are designing and evaluating samples for their products. If
we do not meet their product design schedules, our customers may excluded us from further consideration as asupplier for those products. 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 wins with ourcustomers. In addition, some of our components have long lead-times, requiring us to place orders several months
in advance of anticipated demand. Such long lead-times increase the risk of excess inventory or loss of sales in theevent our forecasts vary substantially from actual demand. There can be no assurance of the following:••••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, or that we will not be
prohibited from working with certain customers, for specific chip set or design requirements;

38 | 2020 Q1 10-Q••that we will be able to introduce new products into the market and qualify them with our customers on atimely 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 ourbusiness, results of operations, or financial condition.
Increases in sales of system solutions may increase our dependency upon specific customers and ourcosts to develop and qualify our system solutions.
Our development of system-level memory and storage products is dependent, in part, upon successfully identifying
and meeting our customers’ specifications for those products. Developing and manufacturing system-level productswith specifications unique to a customer increases our reliance upon that customer for purchasing our products insufficient volume, quantity, and in a timely manner. If we fail to identify or develop products on a timely basis, or atall, that comply with our customers’ specifications or achieve design wins with our customers, we may experience asignificant adverse impact on our revenues and margins. Even if our products meet customer specifications, oursales of system-level solutions are dependent upon our customers choosing our products over those of ourcompetitors and purchasing our products at sufficient volumes and prices. Our competitors’ products may be lesscostly, provide better performance, or include additional features when compared to our products. Our long-term
ability to sell system-level memory and storage products is reliant upon our customers’ ability to create, market, andsell their products containing our system-level solutions at sufficient volumes and prices in a timely manner. If we failto successfully develop and market system-level products, our business, results of operations, or financial condition
may be materially adversely 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. Manufacturingsystem-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 need to update our firmware ordevelop 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.
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 orthat 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 to time, we experience problems with
nonconforming, defective, or incompatible products after we have shipped such products. In recent periods, wehave further diversified and expanded our product offerings, which could potentially increase the chance that one ormore of our products could fail to meet specifications in a particular application. Our products and solutions may bedeemed fully or partially responsible for functions in our customers’ products and may result in sharing or shifting ofproduct or financial liability from our customers to us for costs incurred by the end user as a result of our customers’
products failing to perform as specified. 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 ofsuch costs or alleged damages; andwe may encounter adverse publicity, which could cause a decrease in sales of our products or harm ourrelationships 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.

39

We may be unable to protect our intellectual property or retain key employees who are knowledgeable ofand develop our intellectual property.
We maintain a system of controls over our intellectual property, including U.S. and foreign patents, trademarks,
copyrights, trade secrets, 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,
illegally or otherwise, our product and process technology or other proprietary information. The laws of some foreigncountries may not protect our intellectual property to the same degree as do U.S. laws and our confidentiality, nondisclosure, 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 skilled employees. Global competition for such skilled employees in our industry is intense. Due tothe volatile nature of our industry and our operating results, a decline 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 a material 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, andmay in the future assert, that our products or manufacturing processes infringe upon, misappropriate, misuse, orotherwise violate their intellectual property rights. We are unable to predict the outcome of these assertions madeagainst 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.

We may not be able to take any of the actions described above on commercially reasonable terms and any of theforegoing 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 to Consolidated Financial Statements –Contingencies.”)
We have a number of intellectual property license agreements. Some of these license agreements require us tomake 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 be obtained or renewedon 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.
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 ofour business or otherwise, both domestically and internationally. Any claim, with or without merit, could result insignificant legal fees that could negatively impact our financial results, disrupt our operations, and require significant

40 | 2020 Q1 10-Q

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 orbusiness 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 of indemnities we issue,
primarily with our customers, the terms of our product warranties, and from product liability claims. As we continue
to focus on developing system solutions with manufacturers of consumer products, including autonomous driving,augmented reality, and others, we may be exposed to greater potential for personal liability claims against us as aresult of consumers’ use of those products. There can be no assurance that we are adequately insured to protect
against all claims and potential liabilities, and we may elect to self-insure with respect to certain matters. Exposures
to various litigation could lead to significant costs and expenses as we defend claims, are 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.
We are subject to allegations of securities violations and related wrongful acts.
On January 23, 2019, a complaint was filed against Micron and two of our officers, Sanjay Mehrotra and David
Zinsner, in the U.S. District Court for the Southern District of New York. The lawsuit purports to be brought on behalfof a class of purchasers of our stock during the period from June 22, 2018 through November 19, 2018.
Subsequently two substantially similar cases were filed in the same court adding one of our former officers, Ernie
Maddock, as a defendant and alleging a class action period from September 26, 2017 through November 19, 2018.
The separate cases were joined, and a consolidated amended complaint was filed on June 15, 2019. The
consolidated amended complaint alleges that defendants committed securities fraud through misrepresentations
and omissions about purported anticompetitive behavior in the DRAM industry and seek compensatory and punitive
damages, fees, interest, costs, and other appropriate relief. On October 2, 2019, the parties submitted a joint
stipulation to dismiss the complaint. The Court approved the stipulation and dismissed the complaint on October 3,
2019. On March 5, 2019, a derivative complaint was filed by a shareholder in the U.S. District Court for the Districtof Delaware, based on similar allegations to the securities fraud cases, allegedly on behalf of and for the benefit ofMicron, against certain current and former officers and directors of Micron for alleged breaches of their fiduciary
duties and other violations of law. The complaint seeks damages, fees, interest, costs, and other appropriate relief.
Similar shareholder derivative complaints were subsequently filed in the U.S. District Court for the District ofDelaware and the U.S. District Court for the District of Idaho. On November 20, 2019, the plaintiff in the second
action filed in the U.S. District Court for the District of Delaware voluntarily dismissed his complaint.
We are unable to predict the outcome of these matters and therefore cannot estimate the range of possible loss.
The final resolution of these matters could result in significant liability and could have a material adverse effect on
our business, results of operations, or financial condition.
If our manufacturing process is disrupted by operational issues, natural disasters, or other events, ourbusiness, results of operations, or financial condition could be materially adversely affected.
We and our subcontractors manufacture products using highly complex processes that require technologicallyadvanced 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.
From time to time, there have been disruptions in the manufacturing process as a result of power outages,
improperly functioning equipment, disruptions in supply of raw materials or components, or equipment failures. We
have manufacturing and other operations in locations subject to natural occurrences such as severe weather andgeological events, including earthquakes or tsunamis, that could disrupt operations. In addition, our suppliers andcustomers also have operations in such locations. The events noted above have occurred from time to time in thepast and may occur in the future. As a result, in addition to disruptions to operations, our insurance premiums may
increase or we may not be able to fully recover any sustained losses through insurance.
If production is disrupted for any reason, manufacturing yields may be adversely affected, or we may be unable tomeet our customers’ requirements and they may purchase products from other suppliers. This could result in a41

significant increase in manufacturing costs, loss of revenues, or damage to customer relationships, any of which
could have a material adverse effect on our business, results of operations, or financial condition.
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 in worldwide credit markets could limit our ability to obtain external financing to fund our operations andcapital expenditures. In addition, we may experience losses on our holdings of cash and investments due to failuresof financial institutions and other parties. Difficult economic conditions may also result in a higher rate of losses on
our accounts receivables due to credit defaults. As a result, a downturn in the worldwide economy could have amaterial adverse effect on our business, results of operations, or financial condition.
Breaches of our security systems, or those of our customers, suppliers, or business partners, 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 or other 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 physical security andattacks on our network systems, or breaches or attacks on our customers, suppliers, or business partners who haveconfidential or sensitive information regarding us and our customers and suppliers, could result in significant losses
and damage our reputation with customers and suppliers and may expose us to litigation if the confidential
information of our customers, suppliers, or employees is compromised. The foregoing could have a material
adverse effect on our business, results of operations, or financial condition.
Our acquisition of Intel's noncontrolling interest in IMFT involves numerous risks.
On October 31, 2019, we purchased Intel’s noncontrolling interest in IMFT, now known as MTU. Our acquisition
involves risks including, but not limited to, an inability to sell the product MTU produces, increases in underutilization
charges, increase in R&D expenses, retention of key employees, and successful integration of MTU. We may also
face risks from disputes in connection with joint venture activities, or difficulties or delays in collecting amounts due
to us. The foregoing could have a material adverse effect on our business, results of operations, or financial
condition.
Debt obligations could adversely affect our financial condition.
We have incurred in the past, and expect to incur in the future, debt to finance our capital investments, businessacquisitions, and restructure of our capital structure. As of November 28, 2019, we had debt with a carrying value of$5.65 billion. As of November 28, 2019, we also had an undrawn revolving credit facility that matures in July 2023
and provides for borrowings of up to $2.50 billion. As of November 28, 2019, the conversion value in excess ofprincipal of our convertible notes was $567 million, based on the trading price of our common stock of $48.16 pershare on such date.
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 theamount of cash flow available to fund working 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 ourconvertible notes;

42 | 2020 Q1 10-Q

•
•
•
•
•
•
•
•

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 of default are triggered, such as applicable cross payment default
and/or cross-acceleration provisions;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 saleleaseback 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 settlementof 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 generatesignificant cash flows in the future. This, to some 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, inamounts sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs. Additionally,
events and circumstances may occur which would cause us to not be able to satisfy applicable draw-down
conditions and utilize our revolving credit facility. In 2019, we suspended the security interest in the collateral under
our credit facility upon achieving a specified credit rating and prepaying the 2022 Term Loan B; however, if ourcorporate credit rating were to decline below a certain level, the security interest would be automatically reinstated.
If we are unable to generate sufficient cash flows to service our debt payment obligations, we may need to refinanceor restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we areunable 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 must attract, retain, and motivate highly skilled employees.
To remain competitive, we must attract, retain, and motivate executives and other highly skilled employees.
Competition for experienced employees in our industry can be intense and hiring and retaining qualified executives,
engineers, technical staff, and sales representatives are critical to our business. Our inability to attract and retain
key employees may inhibit our ability to maintain or expand our business operations. Additionally, changes toimmigration policies in the numerous countries in which we operate, including the United States, may limit our ability
to hire and/or retain talent in specific locations. If our total compensation programs and workplace culture cease to
be viewed as competitive, our ability to attract, retain, and motivate employees could be weakened, which could
have a material adverse effect on our business, results of operations, or financial condition.
The acquisition of our ownership interest in Inotera from Qimonda has been challenged by theadministrator 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. (“Micron B.V.”), in the District Court of Munich, Civil Chamber. The complaintseeks to void, under Section 133 of the German Insolvency Act, a share purchase agreement between Micron B.V.
and Qimonda signed in fall 2008, pursuant to which Micron B.V. purchased substantially all of Qimonda’s shares of
Inotera (the “Inotera Shares”), representing approximately 18% of Inotera’s outstanding shares at that time, andseeks an order requiring us to re-transfer those shares to the Qimonda estate. The complaint also seeks, among
other things, to recover damages for the alleged value of the joint venture relationship with Inotera and to terminate,under Sections 103 or 133 of the German Insolvency Code, a patent cross-license between us and Qimonda
entered into at the same time as the share purchase agreement.
Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March
13, 2014, the court issued judgments: (1) ordering Micron B.V. to pay approximately $1 million in respect of certain
Inotera Shares sold in connection with the original share purchase; (2) ordering Micron B.V. to disclose certain
information with respect to any Inotera Shares sold by it to third parties; (3) ordering Micron B.V. to disclose thebenefits derived by it from ownership of the Inotera Shares, including in particular, any profits distributed on the43

Inotera Shares and all other benefits; (4) denying Qimonda’s claims against Micron for any damages relating to thejoint 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. fromownership 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. On April 17, 2014, Micron and Micron B.V. filed a notice of appeal with the German
Appeals Court challenging the District Court’s decision. After opening briefs, the Appeals Court held a hearing on
the matter on July 9, 2015, and thereafter appointed two independent experts to perform an evaluation of Dr. Jaffé’s
claims that the amount Micron paid for Qimonda was less than fair market value. On January 25, 2018, the courtappointed experts issued their report concluding that the amount paid by Micron was within an acceptable fair-value
range. The Appeals Court held a subsequent hearing on April 30, 2019, and on May 28, 2019, the Appeals Court
remanded the case to the experts for supplemental expert opinion.
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 thetermination of the patent cross-license, which could have a material adverse effect on our business, results ofoperations, 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, in part, upon meeting certain business operations and employment thresholds.
Our domestic and international taxes are dependent upon the geographic mix of our earnings among thesejurisdictions. Our provision for income taxes and cash tax liabilities in the future could be adversely affected bynumerous factors, including challenges by tax authorities to our tax positions and intercompany transfer pricing
arrangements, failure to meet performance obligations with respect to tax incentive agreements, expanding ouroperations in various countries, and changes in tax laws and regulations. Additionally, we file income tax returns
with the U.S. federal government, various U.S. states, and various other jurisdictions throughout the world andcertain tax returns may remain open to examination for several years. The results of audits and examinations ofpreviously 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 ourbusiness, results of operations, or financial condition.
A change in tax laws in key jurisdictions could materially increase our tax expense.
We are subject to income taxes in the U.S. and many foreign jurisdictions. Changes to income tax laws andregulations in any of the jurisdictions in which we operate, or in the interpretation of such laws, could significantly
increase our effective tax rate and ultimately reduce our cash flow from operating activities and otherwise have amaterial adverse effect on our financial condition. For example, our effective tax rate increased from 1.2% for 2018
to 9.8% for 2019 primarily as a result of the Tax Cuts and Jobs Act, enacted on December 22, 2017 by the UnitedStates and for which the U.S. Treasury Department continues to issue interpretive guidance. Additionally, various
levels of government are increasingly focused on tax reform and other legislative actions to increase tax revenue.
Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting
project undertaken by the Organization for Economic Co-operation and Development, which represents a coalitionof member countries and recommended changes to numerous long-standing tax principles. If adopted by countries,
such changes, as well as changes in U.S. federal and state tax laws or in taxing jurisdictions’ administrativeinterpretations, decisions, policies, and positions, could have a material adverse effect on our business, results ofoperations, or financial condition.
Our incentives from various governments are conditional upon achieving or maintaining certain
performance obligations and are subject to reduction, 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 the world designed to encourage us to establish, maintain, or increase44 | 2020 Q1 10-Q

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 suchincentives. We cannot guarantee that we will successfully achieve performance obligations required to qualify forthese incentives or that the granting agencies will provide such funding. These incentive arrangements typicallyprovide 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 havea 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 the following:
•
•
•
•
•
•
•
•
•
•
•
•
•

integrating the operations, technologies, and products of acquired or newly formed entities into ouroperations;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 other things, divestitures or restrictions on the conduct of our business or theacquired 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 andprocedures, compliance programs, and/or environmental, health and safety, anti-corruption, humanresource, or other policies or practices; andimpairment of acquired intangible assets, goodwill, or other assets as a result of changing businessconditions, technological advancements, or worse-than-expected performance of the acquired business.

In previous years, supply of memory and storage products has significantly exceeded customer demand resulting insignificant 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, oralliances with, technology companies are inherently risky and may not be successful and could have a material
adverse effect on our business, results of operations, or financial condition.
Changes in foreign currency exchange rates could materially adversely affect our business, results ofoperations, 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. In addition, asignificant portion of our manufacturing costs are denominated in foreign currencies. Exchange rates for some ofthese currencies against the U.S. dollar have been volatile and may be volatile in future periods. If these currencies
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 ourbusiness, results of operations, or financial condition.

45

We may incur additional restructuring charges in future periods.
From time to time, we have, and may in the future, enter into restructure initiatives in order to, among other items,
streamline our operations, respond to changes in business conditions, our markets or product offerings, or tocentralize certain key functions. 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 otherinitiatives. 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.
Compliance with customer and responsible sourcing requirements and related regulations could limit the
supply and increase the cost of certain materials, supplies, and services used in manufacturing our
products.
Many of our customers have adopted responsible sourcing programs that require us to periodically report on our
supply chain and responsible sourcing efforts to ensure we source the materials, supplies, and services we use andincorporate into the products we sell in a manner that is consistent with their programs. Some of our customers may
elect to disqualify us as a supplier or reduce purchases from us if we are unable to verify that our products meet the
specifications of their responsible sourcing programs. Meeting customer requirements may limit the sourcing andavailability of some of the materials, supplies, and services we use, particularly when the availability of such isconcentrated to a limited number of suppliers. This in turn may affect our ability and/or the cost to obtain materials,
supplies, and services necessary for the manufacture of our products in sufficient quantities.
This increased focus on environmental protection and social responsibility initiatives led to the passage of Section
1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and its implementing SEC
regulations. The act imposes supply chain diligence and disclosure requirements for certain manufacturers of
products containing specific minerals that may originate in or near the Democratic Republic of the Congo andfinance or benefit local armed groups. These conflict minerals are commonly found in materials used in the
manufacture of semiconductors.
Our inability to comply with customers’ requirements for responsible sourcing or with regulations could have amaterial adverse effect on our business, results of operations, or financial condition.
We and others are subject to a variety of laws, regulations, or industry standards 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 abroad array of laws and regulations in numerous jurisdictions in which we operate. Additionally, we are subject to avariety of other laws and regulations relative to the construction, maintenance, and operations of our facilities. Anychanges in laws, regulations, or industry standards could cause us to incur additional direct costs, as well as
increased indirect costs related to our relationships with our customers and suppliers, and otherwise harm ouroperations and financial condition. Any failure to comply with laws, regulations, or industry standards could
adversely impact our reputation and our financial results. Additionally, we engage various third parties to represent
us or otherwise act on our behalf who are also subject to a broad array of laws, regulations, and industry standards.
Our engagement with these third parties may also expose us to risks associated with their respective compliancewith 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 third-party agents, to comply with laws, regulations, or industry standards could havea material adverse effect on our business, results of operations, or financial condition.

46 | 2020 Q1 10-Q

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, weare subject to the risk that the counterparty to one or more of these arrangements will default on its performanceobligations. A counterparty may not comply with their contractual commitments which could then lead to theirdefaulting 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 limited by 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.
The operations of MMJ are subject to continued oversight by the Tokyo District Court during the pendencyof the corporate reorganization proceedings.
Because MMJ’s plan of reorganization provides for ongoing payments to creditors following the closing of the MMJ
acquisition, the reorganization proceedings in Japan (the “Japan Proceedings”) are continuing and MMJ remains
subject to the oversight of the Tokyo District Court and of the trustees (including a trustee designated by us, who werefer to as the business trustee, and a trustee designated by the Tokyo District 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 the MMJ, other than oversight in relation to acts that need to be carried out in
connection with the Japan Proceedings, which are the responsibility of the legal trustee. The final creditor payment
under MMJ’s plan of reorganization is scheduled to occur in December 2019. Following distribution of the final
payment and the Tokyo District Court’s approval and issuance of an order concluding the reorganization
proceedings, MMJ’s reorganization proceedings in Japan and oversight by the Tokyo District Court will terminate.
During the pendency of the reorganization proceedings in Japan, MMJ is obligated to provide periodic financial
reports to the Tokyo District Court and may be required to obtain the consent of the Tokyo District Court prior to
taking a number of significant actions relating to its businesses, including transferring or disposing of, 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 thematters or transfers would reasonably be expected to materially and adversely affect execution of MMJ’s plan ofreorganization. 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 businesscould be adversely affected if the Tokyo District Court or the legal trustee is unwilling to consent 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 Tokyo District Court during the pendency ofthe corporate reorganization proceedings could have a material adverse effect on our business, results ofoperations, or financial condition.

47

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding common
stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans. The repurchase authorization does not obligate us to acquire any
common stock and is subject to market conditions and our ongoing determination of the best use of available cash.

PeriodAugust 30, 2019– October 3, 2019

October 4, 2019– October 31, 2019

November 1, 2019– November 28, 2019

Total number of shares (or Maximum number (or approximate dollar
Total number Average units) purchased as part of value) of shares (or units) that may yet beof shares
price paid publicly announced planspurchased under publicly announced
purchased
per shareor programs
plans or programs— $659,192
417,688
1,076,880

—
45.52
47.89
46.44

—
—
—
$

7,287,838,276

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

ITEM 6. EXHIBITS
Exhibit
NumberDescription of Exhibit

Filed
Period Exhibit/
Herewith Form Ending Appendix

31.1

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

X

31.2

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

X

32.1

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

X

32.2

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

X

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48 | 2020 Q1 10-Q

Filing
Date

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

Date: December 20, 2019

By: /s/ David A. Zinsner
David A. Zinsner
Senior Vice President and Chief Financial Officer(Principal Financial Officer)/s/ Paul MarosvariPaul Marosvari
Vice President and Chief Accounting Officer(Principal Accounting Officer)

49

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 amaterial fact necessary to make the statements made, in light of the circumstances under which suchstatements 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 the financial condition, results of operations, and cash flows of the registrant asof, 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 overfinancial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that 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 offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of 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 anannual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant'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 overfinancial 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 over financial reporting.

Date: December 20, 2019/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 amaterial fact necessary to make the statements made, in light of the circumstances under which suchstatements 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 the financial condition, results of operations, and cash flows of the registrant asof, 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 overfinancial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that 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 offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of 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 anannual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant'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 overfinancial 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 over financial reporting.

Date: December 20, 2019/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 Report of Micron Technology, Inc. on Form 10-Q for the period ended November 28,
2019, 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: December 20, 2019/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 Report of Micron Technology, Inc. on Form 10-Q for the period ended November 28,
2019, 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: December 20, 2019/s/ David A. Zinsner
David A. Zinsner
Senior Vice President and Chief Financial Officer