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Consolidated Variable Interest Entities | 6 Months Ended
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Mar. 01, 2012
Notes to Financial Statements [Abstract] |
Consolidated Variable Interest Entities | Consolidated Variable Interest Entities IM Flash Through the second quarter of 2012, we had two joint ventures with Intel: IMFT, formed in 2006 and IMFS, formed in 2007, to manufacture NAND Flash memory products for the exclusive benefit of the partners. On February 27, 2012, we entered into agreements with Intel relating to our IMFS and IMFT joint ventures. The transactions contemplated by such agreements became effective on April 6, 2012. For further information regarding the effect of these agreements, see "IM Flash Agreements" note. Through the second quarter of 2012, IMFT and IMFS were each governed by a Board of Managers, the number of which adjusted depending on the parties' respective ownership interests. We and Intel initially appointed an equal number of managers to each of the boards. IMFT and IMFS are aggregated as IM Flash in the following disclosure due to the similarity of their function, operations and the way our management reviews the results of their operations. The partners' ownership percentages are based on contributions to the partnership. As of March 1, 2012, we owned 51% and Intel owned 49% of IMFT and we owned 82% and Intel owned 18% of IMFS. On April 6, 2012, we acquired Intel's 18% ownership interest in IMFS. The IMFT joint venture arrangement extends through 2024 (as a result of the April 6, 2012 agreements) but is subject to prior termination under certain terms and conditions. The following table presents IM Flash's distributions to and contributions from its shareholders:
|  | Quarter Ended |  | Six Months Ended
|  | March 1, 2012 |  | March 3, 2011 |  | March 1, 2012 |  | March 3, 2011
IM Flash distributions to Micron |  | $ | 67 |  |  | $ | 53 |  |  | $ | 153 |  |  | $ | 104 |
IM Flash distributions to Intel |  | 64 |  |  | 50 |  |  | 147 |  |  | 99 |
Micron contributions to IM Flash |  | — |  |  | 343 |  |  | 103 |  |  | 735 |
Intel contributions to IM Flash |  | — |  |  | — |  |  | 131 |  |  | — |
IM Flash sold products to the joint venture partners generally in proportion to their ownership interests at long-term negotiated prices approximating cost. IM Flash sales to Intel were $255 million and $516 million for the second quarter and first six months of 2012, respectively, and were $202 million and $411 million for the second quarter and first six months 2011, respectively. As of March 1, 2012 and September 1, 2011, IM Flash had receivables of $145 million and $165 million, respectively, from Intel. Through the second quarter of 2012, our share of the operating costs and supply of NAND Flash from IMFS was adjusted for changes in our ownership share in IMFS. Accordingly, our share of IMFS output grew from 51% in the first quarter of 2011 to 78% in the second quarter of 2012. As a result of the April 6, 2012 agreements with Intel, we acquired Intel's 18% interest in IMFS and the assets of IMFT located at our Virginia wafer fabrication facility. Accordingly, Intel has no continuing rights to the output from the IMFS and Virginia facilities and, subsequent to April 6, 2012, purchases NAND Flash products from us under a cost-plus supply arrangement. In addition, Intel continues to receive output from the remaining IMFT fabrication facility in proportion to its ownership interest at long-term negotiated prices approximating cost. Total IM Flash assets and liabilities included in our consolidated balance sheets were as follows:
As of |  | March 1, 2012 |  | September 1, 2011
Assets |  |  |  |
Cash and equivalents |  | $ | 171 |  |  | $ | 327 |
Receivables |  | 217 |  |  | 252 |
Inventories |  | 240 |  |  | 227 |
Other current assets |  | 14 |  |  | 11 |
Total current assets |  | 642 |  |  | 817 |
Property, plant and equipment, net |  | 3,991 |  |  | 4,121 |
Other noncurrent assets |  | 66 |  |  | 66 |
Total assets |  | $ | 4,699 |  |  | $ | 5,004 |
Liabilities |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 194 |  |  | $ | 458 |
Deferred income |  | 122 |  |  | 125 |
Equipment purchase contracts |  | 93 |  |  | 37 |
Current portion of long-term debt |  | 10 |  |  | 8 |
Total current liabilities |  | 419 |  |  | 628 |
Long-term debt |  | 78 |  |  | 58 |
Other noncurrent liabilities |  | 4 |  |  | 4 |
Total liabilities |  | $ | 501 |  |  | $ | 690 |
Amounts exclude intercompany balances that were eliminated in our consolidated balance sheets. The table above included, as of March 1, 2012, assets of $2,880 million and liabilities of $193 million, and as of September 1, 2011, assets of $2,999 million and liabilities of $433 million, related to our IM Flash entities that, subsequent to the April 6, 2012 agreements with Intel, were wholly-owned by us. See "IM Flash Agreements" note. Our ability to access IMFT's cash and marketable investment securities subsequent to April 6, 2012 to finance our other operations is subject to agreement by our joint venture partner. Prior to April 6, 2012, the creditors of each IM Flash entity had recourse only to the assets of the respective IM Flash entities and did not have recourse to any other of our assets. Subsequent to April 6, 2012, the creditors of IMFT have recourse only to its assets and do not have recourse to any other of our assets. IM Flash manufactures NAND Flash memory products using designs and technology we develop with Intel. We generally share product design and other NAND Flash R&D costs equally with Intel. As a result, R&D expenses were reduced by reimbursements from Intel of $20 million and $42 million for the second quarter and first six months of 2012, respectively, and $23 million and $46 million for the second quarter and first six months of 2011, respectively. The April 6, 2012 agreements with Intel expanded our NAND Flash R&D cost-sharing agreement with Intel to include certain emerging memory technologies, but did not change the cost-sharing percentage. MP Mask In 2006, we formed a joint venture with Photronics to produce photomasks for leading-edge and advanced next generation semiconductors. At inception and through March 1, 2012, we owned 50.01% and Photronics owned 49.99% of MP Mask. In the first quarter of 2012, we contributed $8 million and Photronics contributed $7 million to MP Mask. In connection with the formation of the joint venture, we received $72 million in 2006 in exchange for entering into a license agreement with Photronics, which is being recognized over the term of the 10-year agreement. Deferred income and other noncurrent liabilities included an aggregate of $30 million and $34 million as of March 1, 2012 and September 1, 2011, respectively, related to this agreement. We purchase a substantial majority of the reticles produced by MP Mask pursuant to a supply arrangement. Total MP Mask assets and liabilities included in our consolidated balance sheets were as follows:
As of |  | March 1, 2012 |  | September 1, 2011
Current assets |  | $ | 20 |  |  | $ | 24 |
Noncurrent assets (primarily property, plant and equipment) |  | 184 |  |  | 143 |
Current liabilities |  | 51 |  |  | 31 |
Amounts exclude intercompany balances that were eliminated in our consolidated balance sheets. The creditors of MP Mask have recourse only to the assets of MP Mask and do not have recourse to any other of our assets. Through February 24, 2012, we leased to Photronics a facility to produce photomasks under an operating lease. On February 24, 2012, we sold the facility to Photronics for $35 million. The proceeds were equal to our net carrying value and no gain or loss was realized from the sale.

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- Definition Disclosure of variable interest entities (VIE), including, but not limited to the nature, purpose, size, and activities of the VIE, the carrying amount and classification of consolidated assets that are collateral for the VIE's obligations, lack of recourse if creditors (or beneficial interest holders) of a consolidated VIE have no recourse to the general credit of the primary beneficiary. An enterprise that holds a significant variable interest in a VIE but is not the primary beneficiary may disclose the nature of its involvement with the VIE and when that involvement began, the nature, purpose, size, and activities of the VIE and the enterprise's maximum exposure to loss as a result of its involvement with the VIE. + References No definition available. + Details
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