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Debt | 12 Months Ended
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Sep. 03, 2020
Debt Disclosure [Abstract] |
Debt | Debt
| 2020 |  |  |  |  |  |  | 2019 |  |  |
|  |  |  | Net Carrying Amount |  |  |  |  | Net Carrying Amount |  |
As of | Stated Rate | Effective Rate | Principal | Current | Long-Term | Total |  | Principal | Current | Long-Term | Total
Finance lease obligations | N/A | 4.51 | % | $ | 486 |  | $ | 76 |  | $ | 410 |  | $ | 486 |  |  | $ | 591 |  | $ | 223 |  | $ | 368 |  | $ | 591 |
2023 Notes | 2.497 | % | 2.64 | % | 1,250 |  | — |  | 1,245 |  | 1,245 |  |  | — |  | — |  | — |  | — |
2024 Notes | 4.640 | % | 4.76 | % | 600 |  | — |  | 598 |  | 598 |  |  | 600 |  | — |  | 597 |  | 597 |
2024 Term Loan A | 1.420 | % | 1.47 | % | 1,250 |  | 62 |  | 1,186 |  | 1,248 |  |  | — |  | — |  | — |  | — |
2026 Notes | 4.975 | % | 5.07 | % | 500 |  | — |  | 498 |  | 498 |  |  | 500 |  | — |  | 497 |  | 497 |
2027 Notes | 4.185 | % | 4.27 | % | 900 |  | — |  | 895 |  | 895 |  |  | 900 |  | — |  | 895 |  | 895 |
2029 Notes | 5.327 | % | 5.40 | % | 700 |  | — |  | 696 |  | 696 |  |  | 700 |  | — |  | 696 |  | 696 |
2030 Notes | 4.663 | % | 4.73 | % | 850 |  | — |  | 845 |  | 845 |  |  | 850 |  | — |  | 845 |  | 845 |
2032D Notes | 3.125 | % | 6.33 | % | 134 |  | 131 |  | — |  | 131 |  |  | 134 |  | — |  | 127 |  | 127 |
MMJ Creditor Payments | N/A | N/A | 1 |  | 1 |  | — |  | 1 |  |  | 206 |  | 198 |  | — |  | 198 |
IMFT Member Debt | N/A | N/A | — |  | — |  | — |  | — |  |  | 693 |  | 693 |  | — |  | 693 |
2025 Notes | 5.500 | % | 5.56 | % | — |  | — |  | — |  | — |  |  | 519 |  | — |  | 516 |  | 516 |
2033F Notes | 2.125 | % | 2.13 | % | — |  | — |  | — |  | — |  |  | 62 |  | 196 |  | — |  | 196 |
|  |  | $ | 6,671 |  | $ | 270 |  | $ | 6,373 |  | $ | 6,643 |  |  | $ | 5,755 |  | $ | 1,310 |  | $ | 4,541 |  | $ | 5,851 |
As of September 3, 2020, all of our debt, other than our finance leases, 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 September 3, 2020, Micron had $6.16 billion of unsecured debt (net of unamortized discount and debt issuance costs) that was 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’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. Senior Unsecured Notes Our 2023 Notes, 2024 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 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 indentures 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. Credit Facility Our credit facility provides for our Revolving Credit Facility and our 2024 Term Loan A, each of which generally bears interest at a rate equal to LIBOR plus 1.25% to 2.00%, depending on our corporate credit ratings or leverage ratio. Under the terms of the credit facility, 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. As of September 3, 2020, borrowings under the credit facility were unsecured; however, a security interest may be automatically instated upon a decline below a certain level in our corporate credit rating. If the security interest is instated, 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. 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. Revolving Credit Facility: On March 13, 2020, we drew the $2.50 billion available under our Revolving Credit Facility and on April 24, 2020, we repaid the $2.50 billion. As of September 3, 2020, no amounts were outstanding under the Revolving Credit Facility and $2.50 billion was available to us. Any amounts outstanding under the Revolving Credit Facility would mature in July 2023 and we may repay amounts borrowed any time without penalty. The Revolving Credit Facility bears interest at a rate equal to LIBOR plus 1.25% based on our current corporate credit rating and leverage ratio. 2024 Term Loan A: On October 30, 2019, we drew the $1.25 billion available under our 2024 Term Loan A credit facility. Principal payments are due annually in an amount equal to 5.0% of the initial principal amount with the balance due at maturity in October 2024. The 2024 Term Loan A facility bears interest at a rate equal to LIBOR plus 1.25% based on our current corporate credit rating and leverage ratio. 2032D Convertible Senior Notes Conversion Rights: Holders of the 2032D Notes may convert them 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 (approximately $12.97 per share); (3) if the trading price of the 2032D 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 period specified in the indenture; (4) if specified distributions or corporate events occur, as set forth in the indenture for the notes; or (5) at any time on or after February 1, 2032. The closing price of our common stock exceeded 130% of the conversion price for the 2032D Notes for at least 20 trading days in the 30 consecutive trading days ending on September 30, 2020. As a result, the 2032D Notes are convertible by the holders through December 31, 2020. As of September 3, 2020, the $46.33 trading price of our common stock was higher than the conversion price of our 2032D Notes and, as a result, the aggregate conversion value of $620 million exceeded the aggregate principal amount of $134 million by $486 million. It is our current intent to settle in cash the principal amount of our 2032D Notes upon conversion. As a result, only the amounts payable in excess of the principal amounts upon conversion of our 2032D Notes are considered in diluted earnings per share under the treasury stock method. We may elect to settle any amounts in excess of the principal in cash, shares of our common stock, or a combination thereof. Cash Redemption at Our Option: We may redeem for cash the 2032D Notes if the volume weighted average price of our common stock has been at least 130% of the conversion price (approximately $12.97 per share) 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 2032D Notes prior to May 4, 2021, we will also 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: Holders of our 2032D Notes have the right to require us to repurchase for cash all or a portion of the notes on May 1, 2021. As a result, our 2032D Notes are classified as current liabilities as of September 3, 2020. Debt discount and issuance costs are amortized through the holder put date. 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 indenture, holders of our 2032D Notes may require us to repurchase for cash all or a portion of their notes at a repurchase price equal to the principal amount plus accrued and unpaid interest. Other: Interest expense for all our convertible notes consisted of contractual interest of $4 million, $21 million, and $44 million for 2020, 2019, and 2018, respectively, and amortization of discount and issuance costs of $4 million, $14 million, and $32 million for 2020, 2019, and 2018, respectively. As of September 3, 2020 and August 29, 2019, the carrying amounts of the equity components of our convertible notes, which are included in additional capital, were $27 million and $29 million, respectively. IMFT Member Debt In connection with our purchase of Intel’s noncontrolling interest in IMFT on October 31, 2019, we extinguished the remaining IMFT Member Debt as a component of the cash consideration paid to Intel for their interest in IMFT and recognized a non-operating gain of $72 million for the difference between the $505 million of cash consideration allocated to the extinguishment of IMFT Member Debt and its $577 million carrying value. (See “Equity – Noncontrolling Interest in Subsidiary” for the cash consideration allocated to the repurchase of noncontrolling interest.) Prior to our acquisition of Intel’s interests in IMFT, IMFT repaid to Intel $116 million of IMFT Member Debt in the first quarter of 2020. Debt Activity The table below presents the effects of issuances, prepayments, and conversions of debt in 2020. 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 |  |  |  |  |
Revolving Credit Facility | $ | 2,500 |  | $ | 2,493 |  | $ | 2,500 |  | $ | — |  | $ | — |
2023 Notes(1) | 1,250 |  | 1,245 |  | 1,245 |  | — |  | — |
2024 Term Loan A | 1,250 |  | 1,248 |  | 1,248 |  | — |  | — |
Prepayments |  |  |  |  |
Revolving Credit Facility | (2,500) |  | (2,493) |  | (2,500) |  | — |  | — |
IMFT Member Debt | (693) |  | (693) |  | (621) |  | — |  | 72 |
2025 Notes | (519) |  | (516) |  | (534) |  | — |  | (18) |
Settled conversions |  |  |  |  |
2033F Notes(2) | (62) |  | (196) |  | (266) |  | (56) |  | (14) |
| $ | 1,226 |  | $ | 1,088 |  | $ | 1,072 |  | $ | (56) |  | $ | 40 |
(1)Issued April 24, 2020 and due April 24, 2023. (2)On March 27, 2020, we notified holders of our 2033F Notes that we would redeem all of the outstanding 2033F Notes on May 5, 2020. Holders could elect to convert these notes through May 4, 2020, at a conversion rate of 91.4808 shares of our common stock per $1,000 of principal amount. In connection with our notice, we made an irrevocable election to settle any conversions in cash. Holders converted all of the 2033F Notes and on May 5, 2020, we paid $64 million to settle the conversions. In 2019, we recognized aggregate non-operating losses of $396 million in connection with debt prepayments, repurchases, and conversions of $1.80 billion of principal amount of notes (carrying value of $1.60 billion) for an aggregate of $2.38 billion in cash. 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 2020 for $192 million in cash and the effect of the settlement is included in the table above. In 2018, we recognized aggregate non-operating losses of $385 million in connection with debt prepayments, repurchases, and conversions of $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 amounts in the paragraph above. Maturities of Notes Payable As of September 3, 2020, maturities of notes payable were as follows:
2021 | $ | 197 |
2022 | 63 |
2023 | 1,313 |
2024 | 662 |
2025 | 1,000 |
2026 and thereafter | 2,950 |
Unamortized discounts | (28) |
| $ | 6,157 |

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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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