UNITED STATES
SECURITIES 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 OF 1934 | |||||
For the quarterly period ended December 1, 2022
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number 1-10658
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
| (Registrant’s telephone number, including area code) | ( | |||||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
| 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. | ☒ | No | ☐ | |||||||||||||||||||||||
| Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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). | ☒ | No | ☐ | |||||||||||||||||||||||
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | ||||||||||||||||||||||||||
| 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. | ☐ | |||||||||||||||||||||||||
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | Yes | No | ☒ | |||||||||||||||||||||||
The number of outstanding shares of the registrant’s common stock as of December 16, 2022 was 1,091,176,552 .
| Micron Corporate Profile |  | |||||||
Founded on October 5, 1978 Headquartered in Boise, Idaho, USA 4th Largest semiconductor company in the world* 127 On the 2022 Fortune 500 ~52,000 Patents granted and growing** 17 Countries** 11 Manufacturing sites and 19 customer labs** ~49,000 Team members** | ||||||||
| It’s All About Data | ||||||||
Data is today’s new business currency, and memory and storage are a critical foundation for the data economy. Memory and storage innovations will help transform society and enable significant value for all. | ||||||||
| Who We Are | ||||||||
Micron designs, develops, and manufactures industry-leading memory and storage products. By providing foundational capability for AI and 5G across data center, the intelligent edge, and consumer devices, we unlock innovation across industries including healthcare, automotive and communications. Our technology and expertise are central to maximizing value from cutting-edge computing applications and new business models which disrupt and advance the industry. | ||||||||
| Our Vision | ||||||||
As a global leader in memory and storage solutions, we are transforming how the world uses information to enrich life for all. By advancing technologies to collect, store and manage data with unprecedented speed and efficiency, we lead the transformation of data to intelligence. In a world of change, we remain nimble, delivering products that help inspire the world to learn, communicate and advance faster than ever. | ||||||||
| Our Commitment | ||||||||
*Based on Gartner Market Share: Semiconductors by End Market, Worldwide, 2021 (April 2022), excluding IP/software revenue. **Micron data as of December 1, 2022. | Our customers depend on our innovative solutions every day. We dedicate ourselves to demonstrating our environmental conscience, an inclusive team culture where all voices are heard and respected, and engaging in our communities to enrich life for all. | |||||||
Media Inquiries mediarelations@micron.com Government Inquiries govaffairs@micron.com Investor Inquiries investorrelations@micron.com | Global Product Portfolio | |||||||
| DRAM | NAND | NOR | Solid-State Drives | Graphics and High Bandwidth Memory (HBM) | Managed NAND and Multichip Packages | ||||||||
| Connect with us on micron.com | ||||||||
© 2022 Micron Technology, Inc. Micron, the Micron orbit logo, the M orbit logo, Intelligence AcceleratedTM, and other Micron trademarks are the property of Micron Technology, Inc. All other trademarks are the property of their respective owners. Products and specifications are subject to change without notice. Rev 12/22. | ||||||||
Table of Contents
PART I. Financial Information | ||||||||
3Definitions of Commonly Used Terms
As used herein, “we,” “our,” “us,” and similar terms include Micron Technology, Inc. and its consolidated subsidiaries, unless the context indicates otherwise. Abbreviations, terms, or acronyms are commonly used or found in multiple locations throughout this report and include the following:
| Term | Definition | Term | Definition | |||||||||||
| 2023 Notes | 2.497% Senior Notes due April 2023, repaid November 2021 | DDR | Double data rate DRAM | |||||||||||
| 2024 Notes | 4.640% Senior Notes due February 2024, repaid November 2021 | EBITDA | Earnings before interest, taxes, depreciation, and amortization | |||||||||||
| 2024 Term Loan A | Senior Term Loan A due October 2024 | ESG | Environmental, social, and governance | |||||||||||
2025 Term Loan A | Senior Term Loan A due November 2025 | EUV | Extreme ultraviolet lithography | |||||||||||
2026 Term Loan A | Senior Term Loan A due November 2026 | GDDR | Graphics double data rate | |||||||||||
2027 Term Loan A | Senior Term Loan A due November 2027 | HBM | High-bandwidth memory, a stacked DRAM technology optimized for memory-bandwidth intensive applications | |||||||||||
| 2026 Notes | 4.975% Senior Notes due February 2026 | Inotera | Inotera Memories, Inc. | |||||||||||
| 2027 Notes | 4.185% Senior Notes due February 2027 | LIBOR | London Interbank Offered Rate | |||||||||||
2029 A Notes | 5.327% Senior Notes due February 2029 | LPDRAM | Low-power DRAM | |||||||||||
2029 B Notes | 6.750% Senior Notes due November 2029 | MCP | Multichip packaged solutions with managed NAND and LPDRAM | |||||||||||
| 2030 Notes | 4.663% Senior Notes due February 2030 | Micron | Micron Technology, Inc. (Parent Company) | |||||||||||
| 2032 Green Bonds | 2.703% Senior Notes due April 2032 | Qimonda | Qimonda AG | |||||||||||
| 2041 Notes | 3.366% Senior Notes due November 2041 | Revolving Credit Facility | $2.5 billion Revolving Credit Facility due May 2026 | |||||||||||
| 2051 Notes | 3.477% Senior Notes due November 2051 | SOFR | Secured Overnight Financing Rate | |||||||||||
| AI | Artificial intelligence | SSD | Solid state drive | |||||||||||
We are an industry leader in innovative memory and storage solutions transforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence and 5G applications that unleash opportunities — from the data center to the intelligent edge and across the client and mobile user experience.
Micron, Crucial, any associated logos, and all other Micron trademarks are the property of Micron. Intel and 3D XPoint are trademarks of Intel Corporation or its subsidiaries. Other product names or trademarks that are not owned by Micron are for identification purposes only and may be the trademarks of their respective owners.
Available Information
Investors and others should note that we announce material financial information about our business and products through a variety of means, including our investor relations website (investors.micron.com), filings with the U.S. Securities and Exchange Commission (“SEC”), press releases, public conference calls, blog posts (micron.com/about/blog), and webcasts. We use these channels to achieve broad, non-exclusionary distribution of information to the public and for complying with our disclosure obligations under Regulation FD. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on such channels.
4 | 2023 Q1 10-Q
Forward-Looking Statements
This Form 10-Q contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements may be identified by words such as "anticipate," "expect," "intend," "pledge," "committed," "plan," "opportunities," "future," "believe," "target," "on track," "estimate," "continue," "likely," "may," "will," "would," "should," "could," and variations of such words and similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Specific forward-looking statements include, but are not limited to, statements such as those made regarding restructure plans and related charges; market conditions and profitability in our industry; reductions in our wafer starts and the corresponding impact on our costs in 2023; the timing for construction and ramping of production for new memory manufacturing fabs in the United States; the receipt of government grants and investment tax credits; the sufficiency of our cash and investments; capital spending in 2023; funding of sustainability-focused projects; and allocation and dispersal of the net proceeds of our 2032 Green Bonds. 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.”
5PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Micron Technology, Inc.
Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
| Three months ended | December 1, 2022 | December 2, 2021 | ||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross margin | ||||||||
| Research and development | ||||||||
| Selling, general, and administrative | ||||||||
| Restructure and asset impairments | ||||||||
| Other operating (income) expense, net | ( | ( | ||||||
| Operating income (loss) | ( | |||||||
| Interest income | ||||||||
| Interest expense | ( | ( | ||||||
| Other non-operating income (expense), net | ( | ( | ||||||
| ( | ||||||||
| Income tax (provision) benefit | ( | ( | ||||||
Equity in net income (loss) of equity method investees | ( | |||||||
| Net income (loss) | $ | ( | $ | |||||
| Earnings (loss) per share | ||||||||
| Basic | $ | ( | $ | |||||
| Diluted | ( | |||||||
| Number of shares used in per share calculations | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
See accompanying notes to consolidated financial statements.
6 | 2023 Q1 10-Q
Micron Technology, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)
| Three months ended | December 1, 2022 | December 2, 2021 | ||||||
| Net income (loss) | $ | ( | $ | |||||
| Other comprehensive income (loss), net of tax | ||||||||
| Gains (losses) on derivative instruments | ( | |||||||
| Pension liability adjustments | ||||||||
| Gains (losses) on investments | ( | ( | ||||||
| Foreign currency translation adjustments | ( | |||||||
| Other comprehensive income (loss) | ( | |||||||
| Total comprehensive income (loss) | $ | ( | $ | |||||
See accompanying notes to consolidated financial statements.
7Micron Technology, Inc.
Consolidated Balance Sheets
(In millions, except par value amounts)
(Unaudited)
| As of | December 1, 2022 | September 1, 2022 | ||||||
| Assets | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Receivables | ||||||||
| Inventories | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Long-term marketable investments | ||||||||
| Property, plant, and equipment | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible assets | ||||||||
| Deferred tax assets | ||||||||
| Goodwill | ||||||||
| 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 | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
Common stock, $ | ||||||||
| Additional capital | ||||||||
| Retained earnings | ||||||||
Treasury stock, | ( | ( | ||||||
| Accumulated other comprehensive income (loss) | ( | ( | ||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
8 | 2023 Q1 10-Q
Micron Technology, Inc.
Consolidated Statements of Changes in Equity
(In millions, except per share amounts)
(Unaudited)
| Common Stock | Additional Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||||
| Number of Shares | Amount | ||||||||||||||||||||||
| Balance at September 1, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | ||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | ||||||||||||||||||
| Stock issued under stock plans | — | — | — | ||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||
| Repurchase of stock - repurchase program | — | — | — | — | ( | — | ( | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | ( | ( | ( | — | — | ( | |||||||||||||||||
Dividends and dividend equivalents declared ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
| Balance at December 1, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
| Common Stock | Additional Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||||
| Number of Shares | Amount | ||||||||||||||||||||||
| Balance at September 2, 2021 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||
| Net income (loss) | — | — | — | — | — | ||||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | ( | ( | ||||||||||||||||
| Stock issued under stock plans | — | — | — | ||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||
| Repurchase of stock - repurchase program | — | — | — | — | ( | — | ( | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | ( | ( | ( | — | — | ( | |||||||||||||||||
| Balance at December 2, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
See accompanying notes to consolidated financial statements.
9Micron Technology, Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
| Three months ended | December 1, 2022 | December 2, 2021 | ||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | ( | $ | |||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation expense and amortization of intangible assets | ||||||||
| Stock-based compensation | ||||||||
| (Gain) loss on debt repurchases | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Receivables | ||||||||
| Inventories | ( | ( | ||||||
| Accounts payable and accrued expenses | ( | ( | ||||||
| Other | ( | |||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Expenditures for property, plant, and equipment | ( | ( | ||||||
| Purchases of available-for-sale securities | ( | ( | ||||||
| Proceeds from maturities of available-for-sale securities | ||||||||
| Proceeds from sales of available-for-sale securities | ||||||||
| Proceeds from government incentives | ||||||||
| Proceeds from sale of Lehi, Utah fab | ||||||||
| Other | ( | ( | ||||||
| Net cash provided by (used for) investing activities | ( | ( | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of debt | ||||||||
| Repurchases of common stock - repurchase program | ( | ( | ||||||
| Payments of dividends to shareholders | ( | ( | ||||||
| Payments on equipment purchase contracts | ( | ( | ||||||
| Repayments of debt | ( | ( | ||||||
| Other | ( | ( | ||||||
| Net cash provided by (used for) financing activities | ( | |||||||
| Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash | ( | ( | ||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | ||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
10 | 2023 Q1 10-Q
Micron Technology, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tabular amounts in millions, except per share amounts)
(Unaudited)
Significant Accounting Policies
For a discussion of our significant accounting policies, see “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended September 1, 2022. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended September 1, 2022.
Basis of Presentation
In the opinion of our management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, consisting of a normal recurring nature, to fairly state the financial information set forth herein. Certain reclassifications have been made to prior period amounts to conform to current period presentation.
11Cash and Investments
All of our short-term investments and long-term marketable investments were classified as available-for-sale as of the dates noted below. Cash and equivalents and the fair values of our available-for-sale investments, which approximated amortized costs, were as follows:
| December 1, 2022 | September 1, 2022 | ||||||||||||||||||||||||||||
| As of | Cash and Equivalents | Short-term Investments | Long-term Marketable Investments(1) | Total Fair Value | Cash and Equivalents | Short-term Investments | Long-term Marketable Investments(1) | Total Fair Value | |||||||||||||||||||||
| Cash | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Level 1(2) | |||||||||||||||||||||||||||||
| Money market funds | |||||||||||||||||||||||||||||
Level 2(3) | |||||||||||||||||||||||||||||
| Certificates of deposit | |||||||||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||||||||
| Government securities | |||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Restricted cash(4) | |||||||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash | $ | $ | |||||||||||||||||||||||||||
(1)The maturities of long-term marketable securities primarily range from to four years .
(2)The fair value of Level 1 securities is measured based on quoted prices in active markets for identical assets.
(3)The fair value of Level 2 securities is measured using information obtained from pricing services, which obtain quoted market prices for similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine the appropriate value at the measurement date. We perform supplemental analysis to validate information obtained from these pricing services. No adjustments were made to the fair values indicated by such pricing information as of December 1, 2022 or September 1, 2022.
Gross realized gains and losses from sales of available-for-sale securities were not significant for any period presented.
Non-marketable Equity Investments
In addition to the amounts included in the table above, we had $218 million and $222 million of non-marketable equity investments without a readily determinable fair value that were included in other noncurrent assets as of December 1, 2022 and September 1, 2022, respectively.
12 | 2023 Q1 10-Q
Receivables
| As of | December 1, 2022 | September 1, 2022 | ||||||
| Trade receivables | $ | $ | ||||||
| Income and other taxes | ||||||||
| Other | ||||||||
| $ | $ | |||||||
Inventories
| As of | December 1, 2022 | September 1, 2022 | ||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials and supplies | ||||||||
| $ | $ | |||||||
Property, Plant, and Equipment
| As of | December 1, 2022 | September 1, 2022 | ||||||
| Land | $ | $ | ||||||
| Buildings | ||||||||
Equipment(1) | ||||||||
Construction in progress(2) | ||||||||
| Software | ||||||||
| Accumulated depreciation | ( | ( | ||||||
| $ | $ | |||||||
(1)Includes costs related to equipment not placed into service of $4.10 billion as of December 1, 2022 and $3.35 billion as of September 1, 2022.
(2)Includes building-related construction, tool installation, and software costs for assets not placed into service.
Intangible Assets and Goodwill
| December 1, 2022 | September 1, 2022 | ||||||||||||||||
| As of | Gross Amount | Accumulated Amortization | Gross Amount | Accumulated Amortization | |||||||||||||
| Product and process technology | $ | $ | ( | $ | $ | ( | |||||||||||
| Goodwill | |||||||||||||||||
In the first quarters of 2023 and 2022, we capitalized $30 million and $18 million, respectively, for product and process technology with weighted-average useful lives of 10 years, and 11 years, respectively. Amortization expense was $23 million and $20 million for the first three months of 2023 and 2022, respectively. Expected amortization expense is $65 million for the remainder of 2023, $76 million for 2024, $55 million for 2025, $46 million for 2026, and $39 million for 2027.
13Leases
The components of lease cost are presented below:
| Three months ended | December 1, 2022 | December 2, 2021 | ||||||
| Finance lease cost | ||||||||
| Amortization of right-of-use assets | $ | $ | ||||||
| Interest on lease liabilities | ||||||||
Operating lease cost(1) | ||||||||
| $ | $ | |||||||
(1)Operating lease cost includes short-term and variable lease expenses, which were not material for the periods presented.
Supplemental cash flow information related to leases was as follows:
| Three months ended | December 1, 2022 | December 2, 2021 | ||||||
| Cash flows used for operating activities | ||||||||
Finance leases | $ | $ | ||||||
Operating leases | ||||||||
| Cash flows used for financing activities – Finance leases | ||||||||
| Noncash acquisitions of right-of-use assets | ||||||||
| Finance leases | ||||||||
Operating leases | ||||||||
Supplemental balance sheet information related to leases was as follows:
| As of | December 1, 2022 | September 1, 2022 | ||||||
| $ | $ | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
Finance leases | ||||||||
Operating leases | ||||||||
| Weighted-average discount rate | ||||||||
Finance leases | % | % | ||||||
Operating leases | % | % | ||||||
14 | 2023 Q1 10-Q
As of December 1, 2022, maturities of lease liabilities by fiscal year were as follows:
| For the year ending | Finance Leases | Operating Leases | ||||||
| Remainder of 2023 | $ | $ | ||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 and thereafter | ||||||||
| Less imputed interest | ( | ( | ||||||
| $ | $ | |||||||
The table above excludes obligations for leases that have been executed but have not yet commenced. As of December 1, 2022, excluded obligations consisted of $186 million of estimated finance lease payments over a weighted-average period of 13 years for gas supply arrangements deemed to contain embedded leases and equipment leases. We will recognize right-of-use assets and associated lease liabilities at the time such assets become available for our use.
Accounts Payable and Accrued Expenses
| As of | December 1, 2022 | September 1, 2022 | ||||||
| Accounts payable | $ | $ | ||||||
| Property, plant, and equipment | ||||||||
| Salaries, wages, and benefits | ||||||||
| Income and other taxes | ||||||||
| Other | ||||||||
| $ | $ | |||||||
15Debt
| December 1, 2022 | September 1, 2022 | ||||||||||||||||||||||||||||
| Net Carrying Amount | Net Carrying Amount | ||||||||||||||||||||||||||||
| As of | Stated Rate | Effective Rate | Current | Long-Term | Total | Current | Long-Term | Total | |||||||||||||||||||||
| 2024 Term Loan A | % | % | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| 2025 Term Loan A | % | % | |||||||||||||||||||||||||||
| 2026 Term Loan A | % | % | |||||||||||||||||||||||||||
| 2027 Term Loan A | % | % | |||||||||||||||||||||||||||
2026 Notes | % | % | |||||||||||||||||||||||||||
2027 Notes(1) | % | % | |||||||||||||||||||||||||||
| 2029 A Notes | % | % | |||||||||||||||||||||||||||
| 2029 B Notes | % | % | |||||||||||||||||||||||||||
2030 Notes | % | % | |||||||||||||||||||||||||||
| 2032 Green Bonds | % | % | |||||||||||||||||||||||||||
| 2041 Notes | % | % | |||||||||||||||||||||||||||
| 2051 Notes | % | % | |||||||||||||||||||||||||||
| N/A | % | ||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Debt Activity
The table below presents the effects of debt financing activities in the first quarter of 2023.
| Increase in Principal | Increase in Carrying Value | Increase in Cash | |||||||||
| 2025 Term Loan A | $ | $ | $ | ||||||||
| 2026 Term Loan A | |||||||||||
| 2027 Term Loan A | |||||||||||
| 2029 B Notes | |||||||||||
| $ | $ | $ | |||||||||
Term Loan Agreement
On November 3, 2022, we entered into a term loan agreement consisting of three tranches and borrowed $2.60 billion in aggregate principal amount, including $927 million due November 3, 2025; $746 million due November 3, 2026; and $927 million due November 3, 2027 (the “Term Loan Agreement”). We incurred aggregate fees of $6 million in connection with these borrowings. The 2026 Term Loan A and 2027 Term Loan A each require equal quarterly installment payments in an amount equal to 1.25 1.00 % to 2.00 %, varying by tranche and depending on our corporate credit ratings.
The Term Loan Agreement requires us to maintain, on a consolidated basis, a leverage ratio of total indebtedness to adjusted EBITDA, as defined in the Term Loan Agreement and calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00, subject to a temporary four fiscal quarter increase in such maximum ratio to 3.75 to 1.00 following certain material acquisitions. Our obligations under the Term Loan Agreement are unsecured.
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2029 B Notes
On October 31, 2022, we issued $750 million principal amount of senior unsecured 2029 B Notes in a public offering. The 2029 B Notes bear interest at a rate of 6.750 % per year and will mature on November 1, 2029. Issuance costs and debt discount for these notes were $6 million. We may redeem the 2029 B Notes, in whole or in part, at our option prior to their maturity date at a redemption price equal to the greater of (i) 100 % of the principal amount of the notes to be redeemed and (ii) the present value of the remaining scheduled payments of principal and interest, plus accrued interest in each case. We may also redeem the 2029 B Notes, in whole or in part, at a price equal to par two months prior to maturity in accordance with the terms of the 2029 B Notes.
The 2029 B Notes contain covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our restricted subsidiaries (which are generally domestic subsidiaries in which we own at least 80 % of the voting stock and which own principal property, as defined in the indenture governing such notes) to (1) create or incur certain liens; (2) enter into certain sale and lease-back transactions; and (3) consolidate with or merge with or into, or convey, transfer, or lease all or substantially all of our properties and assets, to another entity. These covenants are subject to a number of limitations and exceptions. Additionally, if a change of control triggering event occurs, as defined in the indenture governing our 2029 B Notes, we will be required to offer to purchase such notes at 101 % of the outstanding aggregate principal amount plus accrued interest up to the purchase date.
Revolving Credit Facility
As of December 1, 2022, $2.50 billion was available to us under the Revolving Credit Facility and no amounts were outstanding. Any amounts outstanding under the Revolving Credit Facility would mature in May 2026 and amounts borrowed may be prepaid any time without penalty. Any amounts drawn under the Revolving Credit Facility would generally bear interest at a rate equal to LIBOR plus 1.00 % to 1.75 %, depending on our corporate credit ratings. The credit facility agreement provides for a transition to SOFR or other alternate benchmark rate upon the retirement of LIBOR in 2023.
Maturities of Notes Payable
| Remainder of 2023 | $ | ||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 and thereafter | |||||
| Unamortized discounts | ( | ||||
| Hedge accounting fair value adjustment | ( | ||||
| $ | |||||
17Contingencies
We are currently a party to legal actions other than those described below arising from the normal course of business, none of which are expected to have a material adverse effect on our business, results of operations, or financial condition.
Patent Matters
As is typical in the semiconductor and other high-tech industries, from time to time, others have asserted, and may in the future assert, that our products or manufacturing processes infringe upon their intellectual property rights.
On December 15, 2014, Innovative Memory Solutions, Inc. filed a patent infringement action against Micron in 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. Subsequently, six patents were invalidated or withdrawn, leaving two asserted patents in the District Court. The complaint was dismissed on November 21, 2022 pursuant to an agreement between the parties.
On March 19, 2018, Micron Semiconductor (Xi’an) Co., Ltd. (“MXA”) was served with a patent infringement complaint filed by Fujian Jinhua Integrated Circuit Co., Ltd. (“Jinhua”) in the Fuzhou Intermediate People’s Court in Fujian Province, China (the “Fuzhou Court”). On April 3, 2018, Micron Semiconductor (Shanghai) Co. Ltd. (“MSS”) was served with the same complaint. The complaint alleges that MXA and MSS infringed one Chinese patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring MXA and MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 98 million Chinese yuan plus court fees incurred.
On March 21, 2018, MXA was served with a patent infringement complaint filed by United Microelectronics Corporation (“UMC”) in the Fuzhou Court. On April 3, 2018, MSS was served with the same complaint. The complaint alleges that MXA and MSS infringed one Chinese patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring MXA and MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 90 million Chinese yuan plus court fees incurred. On November 26, 2021, pursuant to a settlement agreement between UMC and Micron, UMC filed an application to the Fuzhou Court to withdraw its complaints against MXA and MSS.
On April 3, 2018, MSS was served with another patent infringement complaint filed by Jinhua and an additional complaint filed by UMC in the Fuzhou Court. The additional complaints allege that MSS infringes two Chinese patents by manufacturing and selling certain Crucial MX300 SSDs. The complaint filed by UMC seeks an order requiring MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 90 million Chinese yuan plus court fees incurred. The complaint filed by Jinhua seeks an order requiring MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 98 million Chinese yuan plus court fees incurred. On November 26, 2021, pursuant to a settlement agreement between UMC and Micron, UMC filed an application to the Fuzhou Court to withdraw its complaint against MSS.
On July 5, 2018, MXA and MSS were notified that the Fuzhou Court granted a preliminary injunction against those entities that enjoins them from manufacturing, selling, or importing certain Crucial and Ballistix-branded DRAM modules and solid-state drives in China. We are complying with the ruling and have requested the Fuzhou Court to reconsider or stay its decision.
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On May 4, 2020, Flash-Control, LLC filed a patent infringement action against Micron in the U.S. District Court for the Western District of Texas. The complaint alleges that four U.S. patents are infringed by unspecified DDR4 SDRAM, NVRDIMM, NVDIMM, 3D XPoint, and/or SSD products that incorporate memory controllers and flash memory. The complaint seeks damages, attorneys’ fees, and costs. On July 21, 2020, in a separate matter, the District Court ruled that two of the four asserted patents are invalid, and on July 14, 2021, the U.S. Court of Appeals for the Federal Circuit affirmed the ruling of invalidity.
On April 28, 2021, Netlist, Inc. (“Netlist”) filed two patent infringement actions against Micron, Micron Semiconductor Products, Inc. (“MSP”) and Micron Technology Texas, LLC (“MTEC”) in the U.S. District Court for the Western District of Texas. The first complaint alleges that one U.S. patent is infringed by certain of our non-volatile dual in-line memory modules. The second complaint alleges that three U.S. patents are infringed by certain of our load-reduced dual in-line memory modules (“LRDIMMs”). Each complaint seeks injunctive relief, damages, attorneys’ fees, and costs. On March 31, 2022, Netlist filed a patent infringement complaint against Micron and Micron Semiconductor Germany, GmbH in Dusseldorf Regional Court alleging that two German patents are infringed by certain of our LRDIMMs. The complaint seeks damages and costs. On June 24, 2022, Netlist amended its complaint to also seek injunctive relief. On June 10, 2022, Netlist filed a patent infringement complaint against Micron, MSP, and MTEC in the U.S. District Court for the Eastern District of Texas (“E.D. Tex.”) alleging that six U.S. patents are infringed by certain of our memory modules and HBM products. The complaint seeks injunctive relief, damages, and attorneys’ fees. On August 1, 2022, Netlist filed a second patent infringement complaint against Micron, MSP, and MTEC in E.D. Tex. alleging that one U.S. patent is infringed by certain of our LRDIMMs. On August 15, 2022, Netlist amended the second complaint to assert that two additional U.S. patents are infringed by certain of our LRDIMMs. The second complaint in E.D. Tex. seeks injunctive relief, damages, and attorneys’ fees.
On May 10, 2021, Vervain, LLC filed a patent infringement action against Micron, MSP, and MTEC in the U.S. District Court for the Western District of Texas. The complaint alleges that four U.S. patents are infringed by certain SSD products. The complaint seeks injunctive relief, damages, attorneys’ fees, and costs.
Between April 27, 2022 and October 18, 2022, Bell Semiconductor, LLC (“B