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Debt | 12 Months Ended
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Aug. 29, 2019
Debt Disclosure [Abstract] |
Debt | Debt
As of |  | 2019 |  | 2018
|  |  |  |  |  |  |  | Net Carrying Amount |  |  |  | Net Carrying Amount
Instrument |  | Stated Rate |  | Effective Rate |  | Principal |  | Current |  | Long-Term |  | Total(1) |  | Principal |  | Current |  | Long-Term |  | Total(1)
IMFT Member Debt |  | N/A |  |  | N/A |  |  | $ | 693 |  |  | $ | 693 |  |  | $ | — |  |  | $ | 693 |  |  | $ | 1,009 |  |  | $ | — |  |  | $ | 1,009 |  |  | $ | 1,009 |
Capital lease obligations |  | N/A |  |  | 4.30 | % |  | 591 |  |  | 223 |  |  | 368 |  |  | 591 |  |  | 846 |  |  | 310 |  |  | 536 |  |  | 846 |
MMJ Creditor Payments |  | N/A |  |  | 9.76 | % |  | 206 |  |  | 198 |  |  | — |  |  | 198 |  |  | 520 |  |  | $ | 309 |  |  | 183 |  |  | 492 |
2024 Notes |  | 4.64 | % |  | 4.76 | % |  | 600 |  |  | — |  |  | 597 |  |  | 597 |  |  | — |  |  | — |  |  | — |  |  | — |
2025 Notes |  | 5.50 | % |  | 5.56 | % |  | 519 |  |  | — |  |  | 516 |  |  | 516 |  |  | 519 |  |  | — |  |  | 515 |  |  | 515 |
2026 Notes |  | 4.98 | % |  | 5.07 | % |  | 500 |  |  | — |  |  | 497 |  |  | 497 |  |  | — |  |  | — |  |  | — |  |  | — |
2027 Notes |  | 4.19 | % |  | 4.27 | % |  | 900 |  |  | — |  |  | 895 |  |  | 895 |  |  | — |  |  | — |  |  | — |  |  | — |
2029 Notes |  | 5.33 | % |  | 5.40 | % |  | 700 |  |  | — |  |  | 696 |  |  | 696 |  |  | — |  |  | — |  |  | — |  |  | — |
2030 Notes |  | 4.66 | % |  | 4.73 | % |  | 850 |  |  | — |  |  | 845 |  |  | 845 |  |  | — |  |  | — |  |  | — |  |  | — |
2032D Notes(2) |  | 3.13 | % |  | 6.33 | % |  | 134 |  |  | — |  |  | 127 |  |  | 127 |  |  | 143 |  |  | — |  |  | 132 |  |  | 132 |
2033F Notes(2)(3) |  | 2.13 | % |  | 4.93 | % |  | 62 |  |  | 196 |  |  | — |  |  | 196 |  |  | 107 |  |  | 235 |  |  | — |  |  | 235 |
2043G Notes |  | 3.00 | % |  | 6.76 | % |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,019 |  |  | — |  |  | 682 |  |  | 682 |
2022 Term Loan B |  | 4.24 | % |  | 4.65 | % |  | — |  |  | — |  |  | — |  |  | — |  |  | 735 |  |  | 5 |  |  | 720 |  |  | 725 |
|  |  |  |  |  | $ | 5,755 |  |  | $ | 1,310 |  |  | $ | 4,541 |  |  | $ | 5,851 |  |  | $ | 4,898 |  |  | $ | 859 |  |  | $ | 3,777 |  |  | $ | 4,636 |
(1) | Net carrying amount is the principal amount less unamortized debt discount and issuance costs. In addition, the net carrying amount as of August 29, 2019 and August 30, 2018 included $135 million and $132 million, respectively, of derivative debt liabilities recognized as a result of our election to settle entirely in cash converted notes with an aggregate principal amount of $44 million and $35 million, respectively.
(2) | Since the closing price of our common stock exceeded 130% of the conversion price per share for at least 20 trading days in the 30 trading day period ended on June 30, 2019, these notes are convertible by the holders through the calendar quarter ended September 30, 2019. Additionally, the closing price of our common stock also exceeded the thresholds for the calendar quarter ended September 30, 2019; therefore, these notes are convertible by the holders at any time through December 31, 2019.
(3) | Current debt as of August 29, 2019 included an aggregate of $179 million for the settlement obligation (including principal and amounts in excess of principal) for conversions of our 2033F Notes that settled in cash in the first quarter of 2020. The remainder of the 2033F Notes were classified as current as of August 29, 2019 because the terms of these notes require us to pay cash for the principal amount of any converted notes and holders of these notes had the right to convert their notes as of that date.
Our convertible and other 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. As of August 29, 2019, Micron had $4.37 billion of unsecured debt (net of unamortized discount and debt issuance costs), including the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes, 2029 Notes, 2030 Notes, 2032D Notes, and 2033F Notes that were structurally subordinated to all liabilities of its subsidiaries, including trade payables. The terms of our indebtedness generally contain cross payment default and cross acceleration provisions. Micron guarantees certain debt obligations of its subsidiaries but does not guarantee the MMJ Creditor 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. IMFT Member Debt Pursuant to the terms of the IMFT joint venture agreement, Intel provided debt financing ("IMFT Member Debt") of $1.01 billion to IMFT in 2018. IMFT Member Debt is non-interest bearing and is convertible, at the election of Intel, in whole or in part, into a capital contribution to IMFT. Additionally, to the extent IMFT distributes cash to its members under the terms of the IMFT joint venture agreement, Intel may, at its option, designate any portion of the distribution to be a repayment of IMFT Member Debt. The remaining balance of IMFT Member Debt on October 31, 2019 will be paid by Micron upon the closing of the IMFT transaction as a component of the consideration paid to Intel for their interest in IMFT. As a result, it was classified as current as of August 29, 2019. (See "Equity – Noncontrolling Interests in Subsidiaries – IMFT" note.) Capital Lease Obligations In 2019, we recorded capital lease obligations aggregating $53 million at a weighted-average effective interest rate of 5.4%, with a weighted-average expected term of ten years. In 2018, we recorded capital lease obligations aggregating $20 million. MMJ Creditor Payments Under the MMJ Companies' corporate reorganization proceedings, 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 seven annual installment payments (the "MMJ Creditor Payments"). The MMJ Creditor Payments do not provide for interest and, as a result of our acquisition of the MMJ Companies in 2013, we recorded the MMJ Creditor Payments at fair value. 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 recovered 100% of the amount of their fixed claims in six annual installment payments through October 2018 and the unsecured creditors will recover at least 17.4% of the amount of their fixed claims in seven annual installment payments through December 2019. The remaining portion of the unsecured claims of the creditors of MMJ not recovered pursuant to the corporate reorganization proceedings will be discharged, without payment, through December 2019. The following table presents the remaining MMJ Creditor Payment (stated in Japanese yen and U.S. dollars) as of August 29, 2019:
2020 |  | ¥ | 21,757 |  |  | $ | 206 |
Less unamortized discount |  | (709 | ) |  | (8 | )
|  | ¥ | 21,048 |  |  | $ | 198 |
In 2012, we entered into a series of agreements with the corporate reorganization trustees of the MMJ Companies and 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 Payments. Senior Unsecured Notes Our 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes, 2029 Notes, and 2030 Notes (the "Senior Unsecured Notes") each 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) to (1) create or incur certain liens, (2) enter into certain sale and lease-back transactions, (3) consolidate with or merge with or into, or convey, transfer or lease all or substantially all of our assets, to another entity, and (4) for our 2025 Notes, create, assume, incur, or guarantee certain additional secured indebtedness and unsecured indebtedness of our domestic restricted subsidiaries. These covenants are subject to a number of limitations and exceptions. If a change in control triggering event occurs, as defined in the indenture governing our Senior Unsecured 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. Redemption at Our Option: We may redeem the 2025 Notes, in whole or in part, at prices above the principal amount that decline over time, as specified in the indenture, together with accrued and unpaid interest. We may redeem all other Senior Unsecured Notes, in whole or in part, at our option prior to their maturity at a price equal to accrued interest plus the present value of the remaining scheduled payments and we may redeem, in whole or in part, at a price equal to par between one and three months prior to maturity. Convertible Senior Notes
|  | Holder Put Date(1) |  | Maturity Date |  | Conversion Price Per Share |  | Conversion Price Per Share Threshold(2) |  | Underlying Shares of Common Stock |  | Conversion Value in Excess of Principal(3) |  | Principal Settlement Option(4)
2032D Notes |  | May 2021 |  | May 2032 |  | $ | 9.98 |  |  | $ | 12.97 |  |  | 13 |  |  | $ | 464 |  |  | Cash and/or shares
2033F Notes(5) |  | Feb. 2020 |  | Feb. 2033 |  | 10.93 |  |  | 14.21 |  |  | 6 |  |  | 190 |  |  | Cash
|  |  |  |  |  |  |  |  |  | 19 |  |  | $ | 654 |  |  |
(1) | Debt discount and debt issuance costs are amortized through the earliest holder put date.
(2) | Represents 130% of the conversion price per share. If the trading price of our common stock exceeds such threshold for a specified period, holders may convert such notes during a specified period. See "Conversion Rights" below.
(3) | Based on the trading price of our common stock of $44.67 as of August 29, 2019.
(4) | It is our current intent to settle in cash the principal amount of our convertible notes upon conversion. As a result, only the amounts payable in excess of the principal amounts upon conversion of our convertible notes are considered in diluted earnings per share under the treasury stock method. For each of our convertible notes, we may elect to settle any amounts in excess of the principal in cash, shares of our common stock, or a combination thereof.
(5) | Holders may put their notes to us on February 15, 2020 and on February 15, 2023.
Conversion Rights: Holders of our convertible notes may convert their notes under the following circumstances: (1) if the 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 (see "Conversion Price Per Share Threshold" in the table above); (3) if the trading price of the notes is less than 98% of the product of the closing price of our common stock and the conversion rate of the notes during the periods specified in the indentures; (4) if specified distributions or corporate events occur, as set forth in the indenture for the notes; or (5) during the last three months prior to the maturity date of the notes. For the calendar quarter ended September 30, 2019, the closing price of our common stock exceeded 130% of the conversion price for each series of our convertible notes; therefore, those notes are convertible by the holders through December 31, 2019. In August 2019, holders of our 2033F Notes with an aggregate principal amount of $44 million converted their notes, which were settled in cash the first quarter of 2020. As a result of our election to settle all amounts due upon conversion in cash for these notes, such settlement obligations became derivative debt liabilities in 2019 subject to mark-to-market accounting treatment based on the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Accordingly, at the dates of our elections to settle the conversions 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. The net carrying amount for 2019 included $179 million for the fair values of the derivative debt liabilities as of August 29, 2019. The 20 consecutive trading day period ended in the first quarter of 2020, and we settled the conversion for $192 million in cash. Cash Redemption at Our Option: We may redeem our convertible notes under the circumstances listed in the table below. The redemption price for the notes will equal the principal amount at maturity plus accrued and unpaid interest.
|  | Conditional Redemption Period at Our Option(1) |  | Unconditional Redemption Period at Our Option |  | Redemption Period Requiring Make-Whole
2032D Notes |  | On or after May 1, 2017 |  | On or after May 4, 2021 |  | Prior to May 4, 2021(2)
2033F Notes |  | N/A |  | On or after Feb. 20, 2020 |  | N/A
(1) | We may redeem for cash on or after the applicable dates 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.
(2) | If we redeem prior to the applicable date, we will pay a make-whole premium in cash equal to the present value of the remaining scheduled interest payments from the redemption date to May 4, 2021.
Cash Repurchase at the Option of the Holders: We may be required by the holders of our convertible notes to repurchase for cash all or a portion of the notes on the "Holder Put Date" listed in the table above. The repurchase price would equal the principal amount plus accrued and unpaid interest. Also, upon a change in control or a termination of trading, as defined in the respective indentures, holders of our convertible notes may require us to repurchase for cash all or a portion of their notes. Other: Interest expense for our convertible notes consisted of contractual interest of $21 million, $44 million, and $51 million for 2019, 2018, and 2017, respectively, and amortization of discount and issuance costs of $14 million, $32 million, and $37 million for 2019, 2018, and 2017, respectively. As of August 29, 2019 and August 30, 2018, the carrying amounts of the equity components of our convertible notes, which are included in additional capital, were $29 million and $208 million, respectively. Credit Facility In July 2018, we entered into a credit agreement providing a committed revolving credit facility that matures in July 2023. On November 27, 2018, we amended the credit agreement to increase the amount available to draw under the revolving credit facility from $2.0 billion to $2.5 billion. On July 9, 2019, we entered into an incremental amendment to the credit agreement to obtain a term loan facility for up to $1.25 billion of financing. We suspended the security interest in the collateral under the credit agreement in 2019 upon satisfying the requirements under the credit agreement, including achieving specified credit ratings and prepayment of the 2022 Term Loan B; however, the security interest would be automatically reinstated upon a decline below a certain level in our corporate credit rating. If the security interest is reinstated, any amounts drawn under the credit agreement would be collateralized by substantially all of the assets of Micron and MSP, subject to certain permitted liens. Borrowings under either the revolving credit facility or the term loan facility will generally bear interest at a rate equal to LIBOR plus 1.25% to 2.00%, depending on our corporate credit ratings or leverage ratio. We may elect to convert outstanding revolving or term loan interest to other variable-rate indexes. The term loan facility may be drawn in a single advance prior to November 9, 2019. If drawn, the term loan matures on the fifth anniversary of the funding date of the term loan. Principal payments are due annually in an amount equal to 5.0% of the initial aggregate principal amount with the balance due at maturity. As of August 29, 2019, there were no outstanding amounts drawn under either the revolving credit facility or the term loan facility. Under the terms of the credit agreement, we must maintain ratios, calculated as of the last day of each fiscal quarter, of total indebtedness to adjusted EBITDA not to exceed 2.75 to 1.00 and adjusted EBITDA to net interest expense of not less than 3.50 to 1.00. The credit agreement contains other covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our restricted subsidiaries 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 restricted subsidiaries, and (3) consolidate with or merge with or into, or convey, transfer, lease, or otherwise dispose of all or substantially all of our assets, to another entity. These covenants are subject to a number of limitations, exceptions, and qualifications. Debt Activity The table below presents the effects of issuances, prepayments, and conversions of debt in 2019. When we receive a notice of conversion for any of our convertible notes and elect to settle in cash any amount of the conversion obligation in excess of the principal amount, the cash settlement obligations become derivative debt liabilities subject to mark-to-market accounting treatment based on the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Accordingly, at the date of our election to settle a conversion in cash, we reclassify the fair value of the equity component of the converted notes from additional capital to derivative debt liability within current debt in our consolidated balance sheet.
|  | Increase (Decrease) in Principal |  | Increase (Decrease) in Carrying Value |  | Increase (Decrease) in Cash |  | Decrease in Equity |  | Gain (Loss)
Issuances |  |  |  |  |  |  |  |  |  |
2024 Notes(1) |  | $ | 600 |  |  | $ | 597 |  |  | $ | 597 |  |  | $ | — |  |  | $ | — |
2026 Notes(1) |  | 500 |  |  | 497 |  |  | 497 |  |  | — |  |  | — |
2027 Notes(2) |  | 900 |  |  | 895 |  |  | 895 |  |  | — |  |  | — |
2029 Notes(1) |  | 700 |  |  | 695 |  |  | 695 |  |  | — |  |  | — |
2030 Notes(2) |  | 850 |  |  | 845 |  |  | 845 |  |  | — |  |  | — |
Prepayments |  |  |  |  |  |  |  |  |  |
2022 Term Loan B |  | (728 | ) |  | (721 | ) |  | (728 | ) |  | — |  |  | (7 | )
Settled conversions |  |  |  |  |  |  |  |  |  |
2032D Notes |  | (10 | ) |  | (9 | ) |  | (35 | ) |  | (28 | ) |  | 2 |
2033F Notes |  | (45 | ) |  | (175 | ) |  | (192 | ) |  | (28 | ) |  | 11 |
2043G Notes |  | (1,019 | ) |  | (691 | ) |  | (1,426 | ) |  | (326 | ) |  | (400 | )
Conversions not settled |  |  |  |  |  |  |  |  |  |
2033F Notes(3) |  | — |  |  | 135 |  |  | — |  |  | (133 | ) |  | (2 | )
|  | $ | 1,748 |  |  | $ | 2,068 |  |  | $ | 1,148 |  |  | $ | (515 | ) |  | $ | (396 | )
(1) | Issued February 6, 2019.
(2) | Issued July 12, 2019.
(3) | As of August 29, 2019, an aggregate of $44 million principal amount of our 2033F Notes (with a carrying value of $179 million) had converted but not settled. These notes settled in the first quarter of 2020 for $192 million in cash.
In 2018, we repurchased or redeemed $6.96 billion of principal amount of notes (carrying value of $6.93 billion) for an aggregate of $9.42 billion in cash and 4 million shares of our treasury stock. As of August 30, 2018, an aggregate of $35 million principal amount of our 2033F Notes (with a carrying value of $165 million) had converted but not settled. These notes settled in 2019 for $153 million in cash and the effect of the settlement is included in the table above. In connection with these transactions, we recognized aggregate non-operating losses of $385 million in 2018. In 2017, we repurchased or redeemed $1.55 billion of principal amount of notes (carrying value of $1.54 billion) for an aggregate of $1.63 billion in cash. In connection with these transactions, we recognized aggregate non-operating losses of $94 million in 2017. Maturities of Notes Payable and Future Minimum Lease Payments As of August 29, 2019, maturities of notes payable (including the MMJ Creditor Payments) and future minimum lease payments under capital lease obligations were as follows:
|  | Notes Payable |  | Capital Lease Obligations
2020 |  | $ | 1,095 |  |  | $ | 248 |
2021 |  | 134 |  |  | 107 |
2022 |  | — |  |  | 73 |
2023 |  | — |  |  | 48 |
2024 |  | 600 |  |  | 37 |
2025 and thereafter |  | 3,469 |  |  | 189 |
Unamortized discounts and interest, respectively |  | (38 | ) |  | (111 | )
|  | $ | 5,260 |  |  | $ | 591 |

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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