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Debt | 3 Months Ended
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Nov. 28, 2013
Disclosure Text Block [Abstract] |
Debt | Debt
As of |  | November 28, 2013 |  | August 29, 2013
Capital lease obligations |  | $ | 1,107 |  |  | $ | 1,252 |
Elpida creditor installment payments |  | 1,095 |  |  | 1,644 |
2014 convertible senior notes, due June 2014(1) |  | 471 |  |  | 465 |
2027 convertible senior notes, due June 2027 |  | 160 |  |  | 147 |
2031A convertible senior notes, due August 2031 |  | 284 |  |  | 277 |
2031B convertible senior notes, due August 2031 |  | 104 |  |  | 253 |
2032C convertible senior notes, due May 2032(1) |  | 467 |  |  | 463 |
2032D convertible senior notes, due May 2032(1) |  | 371 |  |  | 369 |
2033E convertible senior notes, due February 2033 |  | 273 |  |  | 272 |
2033F convertible senior notes, due February 2033 |  | 261 |  |  | 260 |
2043G convertible senior notes, due November 2043(1) |  | 628 |  |  | — |
Other notes payable |  | 582 |  |  | 635 |
|  | 5,803 |  |  | 6,037 |
Less current portion |  | 1,543 |  |  | 1,585 |
|  | $ | 4,260 |  |  | $ | 4,452 |
(1) For these notes, we have the option to pay cash for the aggregate amount due upon conversion. It is our current intent to settle the principal amount of these notes in cash upon conversion. As a result, the notes are considered in diluted earnings per share under the treasury stock method. Elpida Creditor Installment Payments As of November 28, 2013, under the terms and conditions of the respective plans of reorganization of Elpida and Akita Elpida Memory, Inc. ("Akita" and, together with Elpida, the "Elpida Companies"), we are obligated to pay 142 billion yen (or the equivalent of $1,388 million based on exchange rates as of November 28, 2013) to the external creditors of the Elpida Companies (the "Elpida Creditor Installment Payments"). In October 2013, we made the first installment payments of $534 million to the external creditors of the Elpida Companies from funds that had been held in a restricted cash account since the acquisition date. The remaining payments are payable at the end of each calendar year beginning in 2014 through 2019. Debt Restructure In November 2013, we initiated a series of actions resulting in the restructure of certain of our series of convertible notes as follows: Exchange Transactions: On November 12, 2013, we exchanged with various note holders in a series of separate non-cash transactions an aggregate principal amount of $440 million of 2027 Notes, 2031A Notes and 2031B Notes (the "Exchanged Notes") into 3.00% Convertible Senior Notes due 2043 (the "2043G Notes") (the "Exchange Transactions"). In the Exchange Transactions, we exchanged $80 million in principal amount of our 2027 Notes, $155 million in principal amount of our 2031A Notes and $205 million in principal amount of our 2031B Notes into $820 million aggregate issue price of 2043G Notes. The principal amount of 2043G Notes will accrete from their issue price to an aggregate principal amount at maturity of $1,025 million. The liability and equity components of the Exchanged Notes had previously been stated separately within debt and additional capital in our consolidated balance sheet. Accordingly, the Exchange Transaction resulted in derecognition for the Exchanged Notes of $345 million of carrying value of debt (which was the aggregate principal amount of $440 million, net of $95 million of unamortized debt discount) and $411 million of additional capital. In connection with the Exchange Transactions, we recognized a loss of $38 million based on the difference between the fair value and carrying value of the debt component of the Exchanged Notes (Level 2 fair value measurements). In addition, we recognized $11 million of interest expense to pay a "make-whole premium," which was included in the non-cash exchanges into 2043G Notes. Termination of Conversion Rights: On November 7, 2013, we gave notice to (1) terminate the conversion rights of the remaining 2027 Notes, not participating in the Exchange Transactions, effective as of December 13, 2013 and (2) settle entirely in cash any conversions of the 2027 Notes that occur prior to the conversion right termination date (the "Termination of Conversion Rights"). Through December 13, 2013, all holders of the 2027 Notes notified us of the exercise of their option to convert their 2027 Notes entirely (convertible into approximately 9 million shares of our common stock). Based on our notice to settle entirely in cash any conversions of the remaining 2027 Notes, the settlement obligation constituted a derivative instrument subject to mark-to-market accounting treatment. Therefore, we reclassified the $58 million fair value (Level 2 fair value measurement) of the equity component of the remaining 2027 Notes from additional capital to a derivative debt liability as of November 7, 2013, which resulted in an aggregate carrying value of the remaining 2027 Notes on that date of $138 million. Under the terms of the indenture of the 2027 Notes, the final cash settlement amount is determined based on the shares underlying the remaining 2027 Notes multiplied by the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Through the end of our first quarter of 2014, we recognized a loss of $22 million, included in other non-operating expense, on our derivative settlement obligations based on an increase in the settlement amounts. The carrying value of the remaining 2027 Notes was $160 million as of November 28, 2013. Subsequent to the end of our first quarter of 2014, due to a further increase in the settlement amounts, we paid the holders of the remaining 2027 Notes $179 million to settle our conversion obligations. As a result, our second quarter of 2014 will include an additional loss of $19 million in other non-operating expense related to the Termination of Conversion Rights. Redemption Notice: On November 7, 2013, we gave notice of our intent to redeem the remaining 2031A Notes, not participating in the Exchange Transactions, on December 7, 2013 (the "Redemption Notice"). In connection therewith, we recognized $5 million of interest expense to pay a "make-whole premium" upon redemption of the remaining 2031A Notes. From November 7, 2013 through the end of our first quarter of 2014, holders of $112 million principal amount of 2031A Notes (convertible into approximately 12 million shares of our common stock) notified us of the exercise of their option to convert their 2031A Notes entirely. For each of these conversion notices, we elected to settle the conversions entirely in cash. Based on our elections to settle amounts in cash, the settlement obligations became derivative instruments subject to mark-to-market accounting treatment and we therefore reclassified an aggregate of $115 million of fair value (Level 2 fair value measurements) of the equity components from additional capital to a derivative debt liability. Under the terms of the indenture of the 2031A Notes, the final cash settlement amount is determined based on the underlying shares multiplied by the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Through the end of our first quarter of 2014, we recognized a loss of $15 million, included in other non-operating expense, on our derivative settlement obligations based on an increase in the settlement amounts. The carrying value of the remaining 2031A Notes was $284 million as of November 28, 2013. Subsequent to the end of our first quarter of 2014, holders of the remaining $78 million principal amount of the 2031A Notes (convertible into approximately 8 million shares of our common stock) notified us of the exercise of their option to convert their 2031A Notes entirely. For each of these conversion notices, we elected to settle the conversions entirely in cash. Based on our elections to settle amounts in cash, the settlement obligations became derivative instruments and we therefore reclassified the $102 million fair value of the equity component from additional capital to a derivative debt liability. As a result, we estimate that our second quarter of 2014 will include an additional loss of $49 million in other non-operating expense related to conversions effective in the first quarter in response to the Redemption Notice. 2043G Notes In connection with the Exchange Transactions, on November 12, 2013, we issued $1,025 million of 2043G Notes. Each $1,000 principal amount at maturity has an issue price of $800 for purposes of the indenture. An amount equal to the difference between the issue price and the principal amount at maturity will accrete in accordance with a schedule set forth in the indenture. The issue price plus such accretion is the accreted principal amount. The initial conversion rate for the 2043 Notes is 34.2936 shares of common stock per $1,000 principal amount at maturity, equivalent to an initial conversion price of approximately $29.16 per share of common stock. Issuance costs for the 2043 Notes totaled $7 million. Interest is payable in May and November of each year. Upon issuance of the 2043G Notes, we recorded $627 million of debt, $173 million of additional capital and $5 million of deferred debt issuance costs (included in other noncurrent assets). The amount recorded as debt was based on the fair value of the debt component as a standalone instrument and was determined using an average interest rate for similar nonconvertible debt issued by entities with credit ratings comparable to ours at the time of issuance (Level 2 fair value measurements). We recorded a debt discount of $398 million for the difference between the debt recorded at inception and the principal amount at maturity. Holders of the 2043G Notes have the right to require us to repurchase all or a portion of their notes in November 2028 at the accreted principal amount which is scheduled to be $917 million. Conversion Rights: Holders may convert their 2043G Notes under the following circumstances: (1) if the 2043G Notes are called for redemption; (2) during any calendar quarter if the closing price of our common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is more than 130% of the conversion price (approximately $37.91 per share) of the 2043G Notes; (3) if the trading price of the 2043G Notes is less than 98% of the product of the closing price of our common stock and the conversion rate of the 2043G Notes during the periods specified in the indenture; (4) if specified distributions or corporate events occur, as set forth in the indenture for the 2043G Notes; or (5) at any time after August 15, 2043. We have the option to pay cash, issue shares of common stock or any combination thereof for the aggregate amount due upon conversion. It is our intent to settle the principal amount of the 2043G Notes in cash upon conversion. As a result, upon conversion of the 2043G Notes, only the amounts payable in excess of the principal amounts of the 2043G Notes are considered in diluted earnings per share under the treasury stock method. Cash Redemption at Our Option: We may redeem for cash the 2043G Notes prior to November 20, 2018 if the closing price of our common stock is more than 130% of the conversion price for at least 20 trading days in the 30 consecutive trading days ending within five trading days prior to the date on which we provide notice of redemption. The redemption price will equal the principal amount at maturity plus accrued and unpaid interest. We may redeem for cash the 2043G Notes on or after November 20, 2018 without regard to the closing price of our common stock. The redemption price will equal the accreted principal amount plus accrued and unpaid interest. If we redeem the 2043G Notes prior to November 20, 2018, we will also pay a make-whole premium in cash, as specified in the indenture to the 2043G Notes. Cash Repurchase at the Option of the Holder: We may be required by the holders of the 2043G Notes to repurchase for cash all or a portion of the 2043G Notes on November 15, 2028. The repurchase price is equal to the accreted principal amount plus accrued and unpaid interest. Upon a change in control or a termination of trading, as defined in the indenture, holders of the 2043G Notes may require us to repurchase for cash all or a portion of their 2043G Notes at a repurchase price equal to the accreted principal amount plus accrued and unpaid interest. Convertible Notes With Debt and Equity Components The accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion require the debt and equity components to be separately accounted for in a manner that reflects our nonconvertible borrowing rate when interest expense is recognized in subsequent periods. The amount recorded as debt is based on the fair value of the debt component as a standalone instrument, determined using an average interest rate for similar nonconvertible debt issued by entities with credit ratings comparable to ours at the time of issuance. The difference between the debt recorded at inception and its principal amount is to be accreted to principal through interest expense through the estimated life of the note.
|  |  |  | Date Holders Can Put Back to Us(2) |  | Interest Rate |  | Discount as of
|  | Term (Years)(1) |  |  | Stated |  | Effective |  | November 28, 2013 |  | August 29, 2013
2014 Notes |  | Less than 1 |  | — |  |  | 1.875 | % |  | 7.9 | % |  | $ | 14 |  |  | $ | 20 |
2027 Notes(3) |  | Less than 1 |  | N/A |  |  | 1.875 | % |  | 6.9 | % |  | 14 |  |  | 28 |
2031A Notes(3) |  | Less than 1 |  | N/A |  |  | 1.500 | % |  | 6.5 | % |  | 36 |  |  | 68 |
2031B Notes |  | 7 |  | August 2020 |  |  | 1.875 | % |  | 7.0 | % |  | 36 |  |  | 92 |
2032C Notes |  | 5 |  | May 2019 |  |  | 2.375 | % |  | 6.0 | % |  | 83 |  |  | 87 |
2032D Notes |  | 7 |  | May 2021 |  |  | 3.125 | % |  | 6.3 | % |  | 79 |  |  | 81 |
2033E Notes |  | 4 |  | February 2018 |  |  | 1.625 | % |  | 4.5 | % |  | 27 |  |  | 28 |
2033F Notes |  | 6 |  | February 2020 |  |  | 2.125 | % |  | 4.9 | % |  | 39 |  |  | 40 |
2043G Notes |  | 15 |  | November 2028 |  |  | 3.000 | % |  | 6.8 | % |  | 397 |  |  | — |
(1) Expected term for amortization of the remaining debt discount as of November 28, 2013. For the 2043G Notes, $289 million of debt discount is expected to be amortized over the 15-year expected term. See "2043G Notes" above. (2) Holders of these notes have the right to require us to repurchase all or a portion of their notes on the dates specified. (3) In connection with the November 2013 debt restructure transactions, all holders exercised their option to convert their notes in the second quarter of 2014. Conversion prices per share and the conversion value in excess of principal for our convertible notes were as follows:
|  | Initial Conversion |  | Conversion Price Per Share Threshold(2) |  | Conversion Value in Excess of Principal
|  | Outstanding Principal |  | Price Per Share |  | Number of Shares(1) |  |  | November 28, 2013(3) |  | August 29, 2013(4)
2014 Notes |  | $ | 485 |  |  | 14.23 |  | 34 |  |  | 18.50 |  | $ | 237 |  |  | $ | — |
2027 Notes |  | 95 |  |  | 10.90 |  | 9 |  |  | 14.17 |  | 89 |  |  | 43 |
2031A Notes |  | 190 |  |  | 9.50 |  | 20 |  |  | 12.35 |  | 233 |  |  | 148 |
2031B Notes |  | 140 |  |  | 9.50 |  | 15 |  |  | 12.35 |  | 172 |  |  | 148 |
2032C Notes |  | 550 |  |  | 9.63 |  | 57 |  |  | 12.52 |  | 659 |  |  | 225 |
2032D Notes |  | 450 |  |  | 9.98 |  | 45 |  |  | 12.97 |  | 504 |  |  | 162 |
2033E Notes |  | 300 |  |  | 10.93 |  | 27 |  |  | 14.21 |  | 281 |  |  | 72 |
2033F Notes |  | 300 |  |  | 10.93 |  | 27 |  |  | 14.21 |  | 281 |  |  | 72 |
2043G Notes |  | 1,025 |  |  | 29.16 |  | 35 |  |  | 37.91 |  | — |  |  | — |
|  | $ | 3,535 |  |  |  |  | 269 |  |  |  |  | $ | 2,456 |  |  | $ | 870 |
(1)Shares issuable, upon conversion, for the principal amount of the notes. (2)Holders may convert their notes during any calendar quarter if the closing price of our common stock for at least 20 trading days in a 30 trading day period ending on the last trading day of the immediately preceding calendar quarter is 130% of the initial conversion price per share. (3)Based on our closing share price of $21.17 and outstanding principal balances as of November 28, 2013. (4)Based on our closing share price of $13.57 and outstanding principal balances as of August 29, 2013. The principal balances were not reduced by the amount of the Exchange Transactions that occurred in the first quarter of 2014 as described below. Subsequent Event - Financing On December 20, 2013, we issued $462 million in aggregate principal amount of 1.258% Secured Notes due 2019 (the "2019 Notes"). The 2019 Notes mature on January 15, 2019 and bear interest at a rate of 1.258% per annum, payable semi-annually in arrears in January and July of each year, commencing in January 2014. The principal amount of the 2019 Notes are payable in 10 consecutive semi-annual installments payable in arrears in January and July of each year, commencing in July 2014. The Notes are collateralized by certain equipment. The Export-Import Bank of the United States ("Ex-Im Bank") guaranteed payment of all regularly scheduled installment payments of principal of, and interest on, the 2019 Notes. We paid $23 million to Ex-Im Bank for their guarantee upon issuance of the 2019 Notes. At any time prior to the maturity date of the 2019 Notes, we may redeem the 2019 Notes, in whole or in part, at a price equal to the principal amount of the 2019 Notes to be redeemed plus a "make-whole premium" as described in the indenture, together with accrued and unpaid interest and any other unpaid amounts then due under the indenture, to the date of redemption. If we or certain related persons described in the indenture are or become a person to whom Ex-Im Bank is prohibited by law from providing financing or other credit support, we will be required to redeem the 2019 Notes in whole, at a price equal to the principal amount of the 2019 Notes plus a "make-whole premium," together with accrued and unpaid interest and any other unpaid amounts then due to the date of redemption. The indenture for the 2019 Notes contains covenants which are customary for financings of this type, including negative covenants that limit or restrict our ability to create liens or dispose of the equipment securing the 2019 Notes. Events of default also include, among others, the occurrence of any event or circumstance that, in the reasonable judgment of Ex-Im Bank, is likely materially and adversely to affect our ability to perform any payment obligation, or all or any of our other obligations which are material obligations, under the indenture, the 2019 Notes or under any other related transaction documents to which it is a party. Maturities of Notes Payable and Future Minimum Lease Payments As of November 28, 2013, maturities of notes payable, excluding the 2019 Notes which were issued subsequent to November 28, 2013, were as follows:
As of November 28, 2013 |  | Notes Payable
Remainder of 2014 |  | $ | 1,110 |
2015 |  | 359 |
2016 |  | 348 |
2017 |  | 317 |
2018 |  | 516 |
2019 and thereafter(1) |  | 2,960 |
Discounts(1) |  | (914 | )
|  | $ | 4,696 |
(1) Includes $917 million of scheduled accreted principal amount and $289 million of discount for the 2043G Notes. See "2043G Notes" above.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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