v3.3.0.814
Debt
 12 Months Ended
Sep. 03, 2015
Debt Disclosure [Abstract]  
Debt
Debt

 
 
 
 
 
 
2015
 
2014
Instrument(1)
 
Stated Rate
 
Effective Rate
 
Current
 
Long-Term
 
Total
 
Current
 
Long-Term
 
Total
MMJ creditor installment payments
 
N/A

 
6.25
%
 
$
161

 
$
701

 
$
862

 
$
192

 
$
939

 
$
1,131

Capital lease obligations(2)
 
N/A

 
N/A

 
326

 
466

 
792

 
323

 
588

 
911

1.258% notes
 
1.258
%
 
1.97
%
 
87

 
217

 
304

 
86

 
305

 
391

2022 senior notes
 
5.875
%
 
6.14
%
 
—

 
589

 
589

 
—

 
587

 
587

2023 senior notes
 
5.250
%
 
5.43
%
 
—

 
988

 
988

 
—

 
—

 
—

2024 senior notes
 
5.250
%
 
5.38
%
 
—

 
545

 
545

 
—

 
—

 
—

2025 senior notes
 
5.500
%
 
5.56
%
 
—

 
1,138

 
1,138

 
—

 
1,137

 
1,137

2026 senior notes
 
5.625
%
 
5.73
%
 
—

 
446

 
446

 
—

 
—

 
—

2031B convertible senior notes(3)
 
1.875
%
 
6.98
%
 
—

 
—

 
—

 
361

 
—

 
361

2032C convertible senior notes(4)
 
2.375
%
 
5.95
%
 
—

 
197

 
197

 
—

 
309

 
309

2032D convertible senior notes(4)
 
3.125
%
 
6.33
%
 
—

 
150

 
150

 
—

 
284

 
284

2033E convertible senior notes(4)
 
1.625
%
 
4.50
%
 
217

 
—

 
217

 
272

 
—

 
272

2033F convertible senior notes(4)
 
2.125
%
 
4.93
%
 
264

 
—

 
264

 
260

 
—

 
260

2043G convertible senior notes
 
3.000
%
 
6.76
%
 
—

 
644

 
644

 
—

 
631

 
631

Other notes payable
 
2.209
%
 
2.38
%
 
34

 
171

 
205

 
124

 
113

 
237

 
 
 
 
 
 
$
1,089

 
$
6,252

 
$
7,341

 
$
1,618

 
$
4,893

 
$
6,511

(1) 
We have either the obligation or the option to pay cash for the principal amount due upon conversion for all of our convertible notes. Since it is our current intent to settle in cash the principal amount of all of our convertible notes upon conversion, the dilutive effect of such notes on earnings per share is computed under the treasury stock method.
(2) Weighted-average imputed rate of 3.7% and 4.3% as of September 3, 2015 and August 28, 2014, respectively.
(3) 
Amount recorded for 2014 included the debt and equity components. The equity component was reclassified to a debt liability as a result of our obligation to settle the conversions of the 2031B Notes in cash.
(4) 
Since the closing price of our common stock for at least 20 trading days in the 30 trading day period ending on June 30, 2015 exceeded 130% of the conversion price per share, holders had the right to convert their notes at any time during the calendar quarter ended September 30, 2015. The closing price of our common stock also exceeded the thresholds for the calendar quarter ended September 30, 2015; therefore, these notes are convertible by the holders through December 31, 2015. The 2033 Notes are classified as current because the terms of these notes require us to pay cash for the principal amount of any converted notes.

 
 
 
 
2015
 
2014
As of
 
Expected Remaining Term
(Years)(1)
 
Outstanding Principal
 
Unamortized Discount and Debt Issuance Costs
 
Net Carrying Amount
 
Outstanding Principal
 
Unamortized Discount and Debt Issuance Costs
 
Net Carrying Amount
MMJ creditor installment payments
 
4
 
$
1,012

 
$
(150
)
 
$
862

 
$
1,369

 
$
(238
)
 
$
1,131

Capital lease obligations
 
4
 
792

 
—

 
792

 
911

 
—

 
911

1.258% notes
 
3
 
323

 
(19
)
 
304

 
416

 
(25
)
 
391

2022 Notes
 
6
 
600

 
(11
)
 
589

 
600

 
(13
)
 
587

2023 Notes
 
8
 
1,000

 
(12
)
 
988

 
—

 
—

 
—

2024 Notes
 
8
 
550

 
(5
)
 
545

 
—

 
—

 
—

2025 Notes
 
9
 
1,150

 
(12
)
 
1,138

 
1,150

 
(13
)
 
1,137

2026 Notes
 
10
 
450

 
(4
)
 
446

 
—

 
—

 
—

2031B Notes(2)
 
N/A
 
—

 
—

 
—

 
114

 
(28
)
 
361

2032C Notes
 
4
 
224

 
(27
)
 
197

 
362

 
(53
)
 
309

2032D Notes
 
6
 
177

 
(27
)
 
150

 
344

 
(60
)
 
284

2033E Notes
 
2
 
233

 
(16
)
 
217

 
300

 
(28
)
 
272

2033F Notes
 
4
 
297

 
(33
)
 
264

 
300

 
(40
)
 
260

2043G Notes(3)
 
13
 
1,025

 
(381
)
 
644

 
1,025

 
(394
)
 
631

Other notes payable
 
4
 
205

 
—

 
205

 
243

 
(6
)
 
237

 
 
 
 
$
8,038

 
$
(697
)
 
$
7,341

 
$
7,134

 
$
(898
)
 
$
6,511

(1) 
Expected remaining term for amortization of the remaining unamortized discount and debt issuance costs as of September 3, 2015. The expected remaining term of the 2031B Notes was not applicable because the notes were not outstanding as of September 3, 2015. Expected remaining term for capital lease obligations is the weighted-average remaining term.
(2) As holders had elected to convert these notes and we elected to settle the conversions in cash, the net carrying amount for 2014 included the debt component and equity component, which were reclassified to a debt liability as a result of our obligation to settle the conversions of the 2031B Notes in cash, resulting in an aggregate liability of $389 million. The outstanding principal reflects the original principal of the 2031B Notes.
(3) The 2043G Notes have an original principal amount of $820 million that accretes up to $917 million through the expected term on November 15, 2028 and $1.03 billion at maturity in 2043. The discount is based on the principal at maturity. See "2043G Notes" below.

Our convertible and senior notes are unsecured obligations that rank equally in right of payment with all of our other existing and future unsecured indebtedness, and are effectively subordinated to all of our other existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness.  Our parent company, Micron, has $5.18 billion of debt (net of unamortized discount and debt issuance costs), including all of our convertible notes and the 2022 Notes, 2023 Notes, 2024 Notes, 2025 Notes, and 2026 Notes, that is structurally subordinated to all liabilities of its subsidiaries, including trade payables. Micron guarantees certain debt obligations of its subsidiaries. Micron does not guarantee the MMJ creditor installment payments.  Micron's guarantees of its subsidiary debt obligations are unsecured obligations ranking equally in right of payment with all of Micron's other existing and future unsecured indebtedness.

2015 Debt Restructure

In 2015, we consummated a number of transactions to restructure our debt, including conversions and settlements, repurchases of convertible notes, issuances of non-convertible notes, and the early repayment of a note. The following table presents the effect of each of the actions in 2015:

 
 
Increase (Decrease) in Principal
 
Increase (Decrease) in Carrying Value
 
Increase (Decrease) in Cash
 
(Decrease) in Equity
 
(Loss) Gain(1)
Conversions and settlements:
 
 
 
 
 
 
 
 
 
 
2031B Notes
 
$
(114
)
 
$
(361
)
 
$
(389
)
 
$
—

 
$
(24
)
2033E Notes
 
(7
)
 
(6
)
 
(19
)
 
(15
)
 
2

 
 
(121
)
 
(367
)
 
(408
)
 
(15
)
 
(22
)
 
 
 
 
 
 
 
 
 
 
 
Repurchases:
 
 
 
 
 
 
 
 
 
 
2032C Notes
 
(139
)
 
(121
)
 
(415
)
 
(283
)
 
(10
)
2032D Notes
 
(166
)
 
(140
)
 
(492
)
 
(341
)
 
(11
)
2033E Notes
 
(60
)
 
(56
)
 
(107
)
 
(49
)
 
(1
)
2033F Notes
 
(3
)
 
(2
)
 
(5
)
 
(3
)
 
—

 
 
(368
)
 
(319
)
 
(1,019
)
 
(676
)
 
(22
)
 
 
 
 
 
 
 
 
 
 
 
Issuances:
 
 
 
 
 
 
 
 
 
 
2023 Notes
 
1,000

 
988

 
988

 
—

 
—

2024 Notes
 
550

 
545

 
545

 
—

 
—

2026 Notes
 
450

 
446

 
446

 
—

 
—

 
 
2,000

 
1,979

 
1,979

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Early repayment
 
(121
)
 
(115
)
 
(122
)
 
—

 
(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,390

 
$
1,178

 
$
430

 
$
(691
)
 
$
(49
)
(1) 
Included in other non-operating expense.

Conversions and Settlements: During 2015, we had the following debt conversions and settlements:

2031B Notes: On July 23, 2014, we called for the redemption of our remaining 2031B Notes effective on August 22, 2014. Prior to such effective date, substantially all of the holders of our 2031B Notes exercised their option to convert their notes and, in each case, we elected to settle the amount due upon conversion entirely in cash. These notes were cash settled in 2015.

2033E Notes: During 2015, holders converted a portion of our 2033E Notes, and we elected to settle the amounts due upon conversion entirely in cash.

As a result of our elections to settle the amounts due upon conversion in cash, each of the settlement obligations became derivative debt liabilities subject to mark-to-market accounting treatment. Under the terms of the indentures for the above notes, cash settlement amounts for these derivative debt liabilities were determined based on the shares underlying the converted notes multiplied by the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Therefore, at the dates of our election to settle the conversion in cash, we reclassified the fair values of the equity components of each of the converted notes from additional capital to derivative debt liabilities within current debt in our consolidated balance sheet.

Repurchases: During 2015, we repurchased portions of our convertible 2032C Notes, 2032D Notes, 2033E Notes, and 2033F Notes. The liability and equity components of the repurchased notes had previously been stated separately within debt and additional capital in our consolidated balance sheet. As a result, our accounting for the repurchased notes affected debt and equity.

Issuances: On April 30, 2015, we issued $550 million in principal amount of 2024 Notes due January 2024 and $450 million in principal amount of 2026 Notes due January 2026. On February 3, 2015, we issued $1.00 billion in principal amount of 2023 Notes due August 2023. Issuance costs for these notes totaled $21 million. (See further discussion in "Senior Notes" below.)

Early Repayment: On October 17, 2014, we repaid a note prior to its scheduled maturity.

2014 Debt Restructure

In 2014, we consummated a number of transactions to restructure our debt, including exchanges, conversions and settlements, repurchases of convertible notes, issuances of non-convertible notes, and early repayments of notes. The following table presents the net effect of each of the actions:

 
 
Increase (Decrease) in Principal
 
Increase (Decrease) in Carrying Value
 
Increase (Decrease) in Cash
 
(Decrease) in Equity
 
Loss(1)
Exchanges
 
$
585

 
$
282

 
$
—

 
$
(238
)
 
$
49

Conversions and settlements
 
(770
)
 
(434
)
 
(1,446
)
 
(886
)
 
130

Repurchases
 
(320
)
 
(264
)
 
(857
)
 
(567
)
 
23

Issuances
 
2,212

 
2,157

 
2,157

 
—

 
—

Early repayments
 
(336
)
 
(332
)
 
(339
)
 
—

 
3

 
 
$
1,371

 
$
1,409

 
$
(485
)
 
$
(1,691
)
 
$
205

(1) 
$184 million included in other non-operating expense and $21 million included in interest expense

•
Exchanges: Exchanged $440 million in aggregate principal amount of our 2027 Notes, 2031A Notes, and 2031B Notes into $1.03 billion principal amount at maturity of 2043G Notes.
•
Conversions and Settlements: Holders of substantially all of our remaining 2014 Notes, 2027 Notes, and 2031A Notes (with an aggregate principal amount of $770 million) converted their notes and we settled the conversions in cash for $1.45 billion. Holders of substantially all of our remaining 2031B Notes converted their notes in August 2014. As a result of our election to settle the conversion amounts entirely in cash, the settlement obligations became derivative debt liabilities, increasing the carrying value of the 2031B Notes by $275 million in 2014 before being cash settled in 2015.
•
Repurchases: Repurchased $320 million in aggregate principal amount of our convertible 2031B Notes, 2032C Notes, and 2032D Notes for an aggregate of $857 million in cash.
•
Issuances: Issued $600 million in principal amount of the 2022 Notes and $1.15 billion in principal amount of the 2025 Notes, and issued $462 million in principal amount of the 1.258% senior notes due 2019.
•
Early Repayments: Repaid $332 million of notes and capital leases prior to their scheduled maturities.

2013 Debt Restructure

During 2013, we repurchased $464 million in aggregate principal amount of our 2014 Notes for $477 million in cash. The liability and equity components of the 2014 Notes had previously been stated separately within debt and additional capital in our consolidated balance sheet. As a result, the repurchase resulted in the derecognition of $430 million in debt for the principal amount (net of $34 million of debt discount) and $15 million in additional capital for the equity component. We recognized a loss of $31 million in 2013, which was included in other non-operating expense.

MMJ Creditor Installment Payments

Under the MMJ Companies' plans of reorganization, which set forth the treatment of the MMJ Companies' pre-petition creditors and their claims, the MMJ Companies were required to pay 200 billion yen, less certain expenses of the reorganization proceedings and other items, to their secured and unsecured creditors in 7 annual installment payments (the "MMJ Creditor Installment Payments"). The MMJ Creditor Installment Payments do not provide for interest and were recorded at fair value in the MMJ Acquisition. The fair-value discount is accreted to interest expense over the term of the installment payments.

Under the MMJ Companies' corporate reorganization proceedings, the secured creditors of MMJ will recover 100% of their amount of their fixed claims in 6 annual installment payments through December 2018 and the unsecured creditors will recover at least 17.4% of the amount of their fixed claims in 7 annual installment payments through December 2019. In December 2014, we paid the second installment payment of 21 billion yen to the reorganization creditors of the MMJ Companies. The secured creditors of MAI were paid in full with a portion of the first installment payment made in October 2013, while the unsecured creditors of MAI will recover at least 19% of the amount of their claims in 7 installment payments through December 2019. The remaining portion of the unsecured claims of the creditors of the MMJ Companies not recovered pursuant to the Reorganization Proceedings will be discharged, without payment, through December 2019.

The following table presents the remaining amounts of MMJ Creditor Installment Payments (stated in Japanese yen and U.S. dollars) and the amount of unamortized discount as of September 3, 2015:

2016
 
¥
19,813

 
$
165

2017
 
19,840

 
165

2018
 
19,762

 
164

2019
 
28,687

 
238

2020
 
33,642

 
280

 
 
121,744

 
1,012

Less unamortized discount
 
(17,981
)
 
(150
)
 
 
¥
103,763

 
$
862



Pursuant to the terms of the Sponsor Agreement, we entered into a series of agreements with the MMJ Companies, including supply agreements, research and development services agreements, and general services agreements, which are intended to generate operating cash flows to meet the requirements of the MMJ Companies' businesses, including the funding of the MMJ Creditor Installment Payments.

Capital Lease Obligations

In 2015, we recorded capital lease obligations aggregating $324 million, including $291 million related to equipment sale-leaseback transactions, at a weighted-average effective interest rate of 3.2%, payable in periodic installments through May 2019. In 2014, we recorded capital lease obligations aggregating $121 million at a weighted-average effective interest rate of 4.6%, payable in periodic installments through December 2023.

1.258% Notes

On December 20, 2013, we issued $462 million in principal amount of the 1.258% Notes. The 1.258% Notes mature on January 15, 2019 and are collateralized by certain equipment, which had a carrying value of $95 million as of September 3, 2015. The principal amount of the 1.258% Notes is payable in 10 semiannual installments in January and July of each year, commencing in July 2014. The Export-Import Bank of the United States (the "Ex-Im Bank") guaranteed payment of all regularly scheduled installment payments of principal and interest on the 1.258% Notes. We paid $23 million to Ex-Im Bank for its guarantee upon issuance of the 1.258% Notes.

The 1.258% Notes contain 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 1.258% 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 any of our other material obligations under the indenture, the 1.258% Notes, or under any other related transaction documents to which Ex-Im Bank is a party.

Cash Redemption at Our Option: At any time prior to the maturity date of the 1.258% Notes, we may redeem the 1.258% Notes, in whole or in part, at a price equal to the principal amount of the 1.258% Notes to be redeemed plus a make-whole premium as described in the indenture, together with accrued and unpaid interest.

Senior Notes

 
 
Issuance Date
 
Maturity Date
 
Principal Issued
2022 Notes
 
Feb 2014
 
Feb 2022
 
$
600

2023 Notes
 
Feb 2015
 
Aug 2023
 
1,000

2024 Notes
 
Apr 2015
 
Jan 2024
 
550

2025 Notes
 
Jul 2014
 
Feb 2025
 
1,150

2026 Notes
 
Apr 2015
 
Jan 2026
 
450


The senior notes above contain covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our domestic restricted subsidiaries (which are generally subsidiaries in the U.S. in which we own at least 80% of the voting stock) to (1) create or incur certain liens and enter into sale and lease-back transactions, (2) create, assume, incur, or guarantee certain additional secured indebtedness and unsecured indebtedness of our domestic restricted subsidiaries, and (3) consolidate with or merge with or into, or convey, transfer or lease all or substantially all of our assets, to another entity. These covenants are subject to a number of limitations, exceptions, and qualifications.

Cash Redemption at Our Option: We have the option to redeem these notes. The applicable redemption price will be determined as follows:
 
Redemption Period Requiring Payment of:
 
Redemption up to 35% Using Cash Proceeds From an Equity Offering(3)
 
Make-Whole(1)
 
Premium(2)
 
Date
 
Specified Price
2022 Notes
Prior to Feb 15, 2017
 
On or after Feb 15, 2017
 
Prior to Feb 15, 2017
 
105.875
%
2023 Notes
Prior to Feb 1, 2018
 
On or after Feb 1, 2018
 
Prior to Feb 1, 2018
 
105.250
%
2024 Notes
Prior to May 1, 2018
 
On or after May 1, 2018
 
Prior to May 1, 2018
 
105.250
%
2025 Notes
Prior to Aug 1, 2019
 
On or after Aug 1, 2019
 
Prior to Aug 1, 2017
 
105.500
%
2026 Notes
Prior to May 1, 2020
 
On or after May 1, 2020
 
Prior to May 1, 2018
 
105.625
%
(1) 
If we redeem prior to the applicable date, the price is principal plus a make-whole premium equal to the present value of the remaining scheduled interest payments as described in the applicable indenture, together with accrued and unpaid interest.
(2) 
If we redeem on or after the applicable date, the price is principal plus a premium which declines over time as specified in the applicable indenture, together with accrued and unpaid interest.
(3) 
If we redeem prior to the applicable date with net cash proceeds of one or more equity offerings, the price is equal to the amount specified above, together with accrued and unpaid interest, subject to a maximum redemption of 35% of the aggregate principal amount of the respective notes being redeemed.

Convertible Senior Notes

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 a nonconvertible borrowing rate when interest expense is recognized in subsequent periods. The amount initially recorded as debt is based on the fair value of the debt component as a standalone instrument, determined using an interest rate for similar nonconvertible debt issued by entities with credit ratings similar to ours at the time of issuance. The difference between the debt recorded at inception and its principal amount is accreted to principal through interest expense over the estimated life of the note.

As of September 3, 2015, the trading price of our common stock was higher than the initial conversion prices of our 2032 Notes and our 2033 Notes. As a result, the conversion values were in excess of principal amounts for such notes. The following table summarizes our convertible notes outstanding as of September 3, 2015:

 
 
Holder Put Date(1)
 
Outstanding Principal
 
Underlying Shares
 
Conversion Price Per Share
 
Conversion Price Per Share Threshold(2)
 
Conversion Value in Excess of Principal(3)
2032C Notes
 
May 2019
 
$
224

 
23

 
$
9.63

 
$
12.52

 
$
161

2032D Notes
 
May 2021
 
177

 
18

 
9.98

 
12.97

 
117

2033E Notes
 
February 2018
 
233

 
21

 
10.93

 
14.21

 
121

2033F Notes
 
February 2020
 
297

 
27

 
10.93

 
14.21

 
154

2043G Notes(4)
 
November 2028
 
1,025

 
35

 
29.16

 
37.91

 
—

 
 
 
 
$
1,956

 
124

 
 
 
 
 
$
553

(1) 
The terms of our convertible notes give holders the right to require us to repurchase all or a portion of their notes at a date prior to the contractual maturities of the notes at a price equal to the principal amount thereof plus accrued interest.
(2) 
Holders have the right to convert all or a portion of their notes at a date prior to the contractual maturity if, during any calendar quarter, 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. The closing price of our common stock exceeded the thresholds for the calendar quarter ended September 30, 2015 for our 2032 Notes and 2033 Notes; therefore, those notes are convertible by the holders through December 31, 2015.
(3) 
Based on our closing share price of $16.59 as of September 3, 2015.
(4) 
See "2043G Notes."

Carrying amounts of the equity components of our convertible notes, which are included in additional capital in the accompanying consolidated balance sheets were as follows:

As of
 
2015
 
2014
2032C Notes
 
$
41

 
$
67

2032D Notes
 
35

 
69

2033E Notes (excludes $16 and $27 million in mezzanine equity, respectively)
 
8

 
3

2033F Notes (excludes $33 and $41 million in mezzanine equity, respectively)
 
8

 
1

2043G Notes
 
173

 
173

 
 
$
265

 
$
313


Interest expense for our convertible notes, consisting of contractual interest and amortization of discount and issuance costs, aggregated $101 million, $132 million, and $156 million for 2015, 2014, and 2013, respectively. Interest expense by note was as follows:

 
 
Contractual Interest
 
Amortization of Discount and Issuance Costs
For the year ended
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
2032C Notes
 
$
8

 
$
11

 
$
13

 
$
9

 
$
12

 
$
14

2032D Notes
 
9

 
13

 
14

 
6

 
8

 
9

2033E Notes
 
5

 
5

 
3

 
7

 
7

 
4

2033F Notes
 
6

 
6

 
3

 
7

 
6

 
3

2043G Notes
 
31

 
24

 
—

 
13

 
9

 
—

Other notes(1)
 
—

 
7

 
27

 
—

 
24

 
66

 
 
$
59

 
$
66

 
$
60

 
$
42

 
$
66

 
$
96

(1)    Other notes include the 2014 Notes, 2027 Notes, 2031A Notes, and 2031B Notes.

2031B Notes: On July 26, 2011, we issued $345 million of 2031B Notes due August 2031. During 2014, we exchanged $205 million of aggregate principal amount of 2031B Notes for a portion of the 2043G Notes, repurchased $26 million of aggregate principal amount for cash, and called for the redemption of the remaining $114 million of aggregate principal amount effective on August 22, 2014. Prior to such effective date, substantially all of the holders of the 2031B Notes had converted their notes, which were settled in cash with payments of $389 million in 2015.

2032C and 2032D Notes: On April 18, 2012, we issued $550 million of the 2032C Notes and $450 million of the 2032D Notes, each due May 2032. The initial conversion rate for the 2032C Notes is 103.8907 shares of common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $9.63 per share of common stock. The initial conversion rate for the 2032D Notes is 100.1803 shares of common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $9.98 per share of common stock. Interest is payable in May and November of each year. During 2015 and 2014, we repurchased $139 million and $188 million, respectively of aggregate principal amounts of the 2032C Notes and $166 million and $106 million, respectively of aggregate principal amounts of the 2032D Notes, for cash.

Conversion Rights: Holders may convert their 2032 Notes under the following circumstances: (1) if the 2032 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 of the 2032 Notes (approximately $12.52 per share for the 2032C Notes and $12.97 per share for the 2032D Notes); (3) if the trading price of the 2032 Notes is less than 98% of the product of the closing price of our common stock and the conversion rate of the 2032 Notes during the periods specified in the indenture; (4) if specified distributions or corporate events occur, as set forth in the indenture for the 2032 Notes; or (5) at any time after February 1, 2032.

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 2032 Notes in cash upon any conversion. As a result, only the amounts payable in excess of the principal amounts upon conversion of the 2032 Notes are considered in diluted earnings per share under the treasury stock method.

Cash Redemption at Our Option: We may redeem for cash the 2032C Notes on or after May 1, 2016 and the 2032D Notes on or after May 1, 2017 if the volume weighted average price of our common stock has been at least 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period. The redemption price will equal the principal amount plus accrued and unpaid interest. If we redeem the 2032C Notes prior to May 4, 2019, or the 2032D Notes prior to May 4, 2021, we will also pay a make-whole premium in cash equal to the present value of all remaining scheduled payments of interest from the redemption date to May 4, 2019 for the 2032C Notes, or to May 4, 2021 for the 2032D Notes, using a discount rate equal to 1.5%.

Cash Repurchase at the Option of the Holder: We may be required by the holders of the 2032 Notes to repurchase for cash all or a portion of the 2032C Notes on May 1, 2019 and all or a portion of the 2032D Notes on May 1, 2021 at a price equal to the 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 2032 Notes may require us to repurchase for cash all or a portion of their 2032 Notes at a price equal to the principal amount plus accrued and unpaid interest.

2033E and 2033F Notes: On February 12, 2013, we issued $300 million of the 2033E Notes and $300 million of the 2033F Notes. The initial conversion rate for the 2033 Notes is 91.4808 shares of common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $10.93 per share of common stock. Interest is payable in February and August of each year. During 2015, holders converted $7 million of aggregate principal amounts of the 2033E Notes, and we elected to settle the amounts due upon conversion entirely in cash. During 2015, we repurchased $60 million of aggregate principal amounts of the 2033E Notes and $3 million of aggregate principal amounts of the 2033F Notes, for cash.

Conversion Rights: Holders may convert their 2033 Notes under the following circumstances: (1) if the 2033 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 of the 2033 Notes (approximately $14.21 per share); (3) if the trading price of the 2033 Notes is less than 98% of the product of the closing price of our common stock and the conversion rate of the 2033 Notes during the periods specified in the indenture; (4) if specified distributions or corporate events occur, as set forth in the indenture for the 2033 Notes; or (5) at any time after November 15, 2032.

Upon conversion, we will pay cash equal to the lesser of the aggregate principal amount and the conversion value of the notes being converted and cash, shares of common stock or a combination of cash and shares of common stock, at our option, for any remaining conversion obligation. As a result, only the amounts payable in excess of the principal amounts upon conversion of the 2033 Notes are considered in diluted earnings per share under the treasury stock method.

Cash Redemption at Our Option: We may redeem for cash the 2033E Notes on or after February 20, 2018 and the 2033F Notes on or after February 20, 2020 at a price equal the principal amount plus accrued and unpaid interest.

Cash Repurchase at the Option of the Holder: We may be required by the holders of the 2033 Notes to repurchase for cash all or a portion of the 2033E Notes on February 15, 2018 and on February 15, 2023 and all or a portion of the 2033F Notes on February 15, 2020 and on February 15, 2023 at a price equal to the 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 2033 Notes may require us to repurchase for cash all or a portion of their 2033 Notes at a price equal to the principal amount plus accrued and unpaid interest.

2043G Notes: On November 12, 2013, we issued $1.03 billion principal amount of the 2043G Notes in exchange for $440 million in aggregate principal amount of our 2027 Notes, 2031A Notes, and 2031B Notes. Each $1,000 of principal amount at maturity had an original issue price of $800. An amount equal to the difference between the original issue price and the principal amount at maturity will accrete in accordance with a schedule set forth in the indenture.  The original principal amount of $820 million accretes up to $1.03 billion at maturity in 2043. The initial conversion rate for the 2043G 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. Interest is payable in May and November of each year.

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 of the 2043G Notes (approximately $37.91 per share); (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; 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 current intent to settle in cash the principal amount of the 2043G Notes upon conversion. As a result, the dilutive effect of the 2043G Notes in earnings per share is computed under the treasury stock method.

Cash Redemption at Our Option: Prior to November 20, 2018, we may redeem for cash the 2043G Notes if the volume weighted average price of our common stock has been at least 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period. The redemption price will equal the principal amount at maturity plus accrued and unpaid interest. On or after November 20, 2018, we may redeem for cash the 2043G Notes without regard to the closing price of our common stock at a price equal the accreted principal amount plus accrued and unpaid interest. If we redeem the 2043G Notes prior to November 20, 2018, we are required to pay in cash a make-whole premium as specified in the indenture.

Cash Repurchase at the Option of the Holder: Holders of the 2043G Notes may require us to repurchase for cash all or a portion of the 2043G Notes on November 15, 2028 at a price equal to the accreted principal amount of $917 million plus accrued and unpaid interest. Holders of the 2043G Notes may also require us to repurchase for cash all or a portion of their 2043G Notes at a price 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.

Other Facilities

Revolving Credit Facilities: On February 12, 2015, we terminated our unused $255 million senior three-year revolving credit facility and entered into a senior five-year revolving credit facility. Under this credit facility, we can draw up to the lesser of $750 million or 80% of the net outstanding balance of certain trade receivables, as defined in the facility agreement. Any amounts drawn are collateralized by a security interest in such trade receivables.  The credit facility contains customary covenants and conditions, including as a funding condition the absence of any event or circumstance that has a material adverse effect on certain of our operations, assets, prospects, business, or condition, and including negative covenants that limit or restrict our ability to create liens on, or dispose of, the collateral underlying the obligations under this facility.  Interest is payable on any outstanding principal balance at a variable rate equal to the London Interbank Offered Rate ("LIBOR") plus an applicable margin ranging between 1.75% to 2.25%, depending upon the utilized portion of the facility.  On April 16, 2015, we drew $75 million under this facility at an interest rate equal to 2.15% per annum. As of September 3, 2015, $75 million of principal was outstanding under this facility and $572 million was available for us to draw.

On December 2, 2014, we terminated our unused $153 million senior three-year revolving credit facility and entered into a senior five-year revolving credit facility, collateralized by a security interest in certain trade receivables and inventory. The new credit facility has an aggregate revolving commitment which is subject to certain adjustments, including an availability block that effectively limits the maximum amount we could draw to $540 million. Additionally, the maximum amount we could draw may decrease further if the value, as defined, of our trade receivables and inventory collateralizing the credit facility decreases below a specified threshold. The credit facility contains customary covenants and conditions, including as a funding condition the absence of any event or circumstance that has a material adverse effect on our business or financial condition.  Generally, interest is payable on any outstanding principal balance at a variable rate not to exceed LIBOR plus an applicable margin ranging between 1.25% to 1.75%, depending upon the utilized portion of the facility. On April 16, 2015, we drew $50 million under this facility at an interest rate equal to 1.65% per annum. As of September 3, 2015, $50 million of principal was outstanding under this facility and $270 million was available for us to draw.

Other Facilities: On April 14, 2015, our IMFT joint venture entered into a commitment letter and progress payment agreement to obtain up to $275 million of financing collateralized by semiconductor production equipment. The facility was terminated in September 2015 and not utilized.

On May 28, 2015, we entered into a term loan agreement to obtain financing collateralized by certain property, plant, and equipment. Subject to customary conditions, we can draw up to 6.90 billion New Taiwan dollars or an equivalent amount in U.S. dollars (approximately $213 million as of September 3, 2015). On June 18, 2015, we drew $40 million under this arrangement. Subsequent draws must occur by December 18, 2015. Amounts drawn will be made subject to a three-year loan, with equal quarterly principal payments beginning six months after the initial draw. Amounts drawn in New Taiwan dollars will accrue interest at a variable rate equal to the three-month Taipei Interbank Offered Rate ("TAIBOR") plus a margin not to exceed 2.0%. Amounts drawn in U.S. dollars will accrue interest at a variable rate equal to the three-month LIBOR plus a margin not to exceed 2.2%. As of September 3, 2015, the outstanding balance was $40 million.

On March 13, 2015, we borrowed $47 million under a two-year note, collateralized by certain property, plant, and equipment. The note is payable in equal quarterly installments, plus interest at a variable rate equal to the 90-day TAIBOR plus 1.65% per annum. As of September 3, 2015, the outstanding balance was $40 million.

During 2015, we repaid, prior to their scheduled maturities, an aggregate of $159 million to close certain other notes payable with a weighted-average annual interest rate of 2.44% and repaid, according to the scheduled payment terms, another note payable of $127 million, which amount represented the present value of monthly installment payments for the acquisition of an additional 9.9% interest in MMT.

Maturities of Notes Payable and Future Minimum Lease Payments

As of September 3, 2015, maturities of notes payable (including the MMJ Creditor Installment Payments) and future minimum lease payments under capital lease obligations were as follows:

 
 
Notes Payable
 
Capital Lease Obligations
2016
 
$
291

 
$
349

2017
 
289

 
173

2018
 
504

 
131

2019
 
508

 
91

2020
 
702

 
32

2021 and thereafter
 
4,844

 
76

Unamortized discounts and interest, respectively
 
(589
)
 
(60
)
 
 
$
6,549

 
$
792



Retrospective Application of a New Accounting Standard

Effective in the fourth quarter of 2015, we adopted ASU 2015-03 – Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, as appropriate, consistent with debt discounts, as opposed to an asset. The new accounting standard required retrospective application; therefore, our financial statements and notes to these statements contained herein have been adjusted to reflect the impact of adopting this new accounting standard. The following table sets forth the financial statement line items affected by retrospective application of this new accounting standard:

As of August 28, 2014
 
Previously Reported
 
Effect of Adoption
 
Retrospectively Adjusted
Other noncurrent assets
 
$
497

 
$
(82
)
 
$
415

Current debt
 
1,638

 
(20
)
 
1,618

Long-term debt
 
4,955

 
(62
)
 
4,893

Redeemable convertible debt
 
57

 
11

 
68

Additional capital
 
7,879

 
(11
)
 
7,868