UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 4, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

Commission file number 1-10658

Micron Technology, Inc.

(Exact name of registrant as specified in its charter)

Delaware		75-1618004
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
8000 S. Federal Way, Boise, Idaho		83716-9632
(Address of principal executive offices)		(Zip Code)
(Registrant’s telephone number, including area code)		(208) 368-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	MU	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.					Yes	☒	No	☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).					Yes	☒	No	☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer	Accelerated Filer	Non-Accelerated Filer	Smaller Reporting Company	Emerging Growth Company
☒	☐	☐	☐	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.								☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).					Yes	☐	No	☒

The number of outstanding shares of the registrant’s common stock as of March 25, 2021 was 1,121,415,561.

Micron Corporate Profile
Founded on October 5, 1978 Headquartered in Boise, Idaho, USA 4th Largest semiconductor company in the world* 134 On the 2020 Fortune 500 44,000 Patents granted and growing** 17 Countries** 13 Manufacturing sites and 14 customer labs** 40,000 Team members**	It’s All About Data
	Data is today’s new business currency, and memory and storage are emerging as strategic differentiators which will redefine how we extract value from data to learn, explore, communicate, and navigate our world.
	Who We Are
	Micron designs, develops, and manufactures industry-leading memory and storage products. By creating rapid advancements in artificial intelligence, 5G, machine learning, and autonomous vehicles, we unlock innovation in key market segments like mobile, data center, healthcare, automotive, and cloud networking. Our technology and expertise are central to cutting-edge computing applications and new business models which disrupt and advance the industry.
	Our Vision
	As a global leader in memory and storage solutions, we are transforming how the world uses information to enrich life for all. By advancing technologies to collect, store, and manage data with unprecedented speed and efficiency, we continue to lead the transformation of information intelligence. In a world of change, we remain nimble, allowing our products to continue inspiring the world to learn, communicate, and advance faster than ever.
	Our Commitment
*Based on Gartner Market Share: Semiconductors by End Market, Worldwide, 2019 (April 2020), excluding IP/software revenue **Micron data as of September 3, 2020.	The world has come to expect our commitment to innovative solutions and people depend on our integrity. We rededicate ourselves daily to demonstrating our environmental conscience, an inclusive team culture where all voices are heard and respected, and sharing our philanthropic social giving for good.
Media Inquiries mediarelations@micron.com Government Inquiries govaffairs@micron.com Investor Inquiries investorrelations@micron.com	Global Product Portfolio
	DRAM | NAND | NOR | Solid-State Drives High Bandwidth Memory (HBM) | Multichip Packages
	Connect with us on micron.com

© 2021 Micron Technology, Inc. Micron, the Micron orbit logo, the M orbit logo, Intelligence AcceleratedTM, and other Micron trademarks are the property of Micron Technology, Inc. All other trademarks are the property of their respective owners. Products and specifications are subject to change without notice. Rev 03/21 CCMMD-1707390403-3712

Table of Contents

Introduction		2
Part I. Financial Information
Item 1.	Financial Statements:
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Changes in Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Results of Operations	29
	Liquidity and Capital Resources	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35
Part II. Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 6.	Exhibits	55
Signatures		56

1

Definitions of Commonly Used Terms

As used herein, “we,” “our,” “us,” and similar terms include Micron Technology, Inc. and its consolidated subsidiaries, unless the context indicates otherwise. Abbreviations, terms, or acronyms are commonly used or found in multiple locations throughout this report and include the following:

Term	Definition	Term	Definition
2023 Notes	2.497% Senior Notes due 2023	GDDR	Graphics Double Data Rate
2024 Notes	4.640% Senior Notes due 2024	IMFT	IM Flash Technologies, LLC
2024 Term Loan A	Senior Term Loan A due 2024	Inotera	Inotera Memories, Inc.
2025 Notes	5.500% Senior Notes due 2025	Intel	Intel Corporation
2026 Notes	4.975% Senior Notes due 2026	MCP	Multi-Chip Package
2027 Notes	4.185% Senior Notes due 2027	Micron	Micron Technology, Inc. (Parent Company)
2029 Notes	5.327% Senior Notes due 2029	MMJ	Micron Memory Japan, G.K.
2030 Notes	4.663% Senior Notes due 2030	Revolving Credit Facility	$2.5 billion Revolving Credit Facility due July 2023
2032D Notes	3.125% Convertible Senior Notes due 2032	SSD	Solid State Drive
DDR	Double Data Rate

Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory and storage solutions transforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence and 5G applications that unleash opportunities — from the data center to the intelligent edge and across the client and mobile user experience.

Micron, Crucial, any associated logos, and all other Micron trademarks are the property of Micron. Intel and 3D XPoint are trademarks of Intel Corporation or its subsidiaries. Other product names or trademarks that are not owned by Micron are for identification purposes only and may be the trademarks of their respective owners.

Available Information

Investors and others should note that we announce material financial information about our business and products through a variety of means, including our investor relations website (investors.micron.com), filings with the U.S. Securities and Exchange Commission (the “SEC”), press releases, public conference calls, and webcasts. We use these channels to achieve broad, non-exclusionary distribution of information to the public and for complying with our disclosure obligations under Regulation FD. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on such channels.

Forward-Looking Statements

This Form 10-Q contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements may be identified by words such as "anticipate," "expect," "intend," "pledge," "committed," "plans," "opportunities," "future," "believe," "target," "on track," "estimate," "continue," "likely," "may," "will," "would," "should," "could," and variations of such words and similar expressions. Specific forward-looking statements include, but are not limited to, statements such as those made regarding the impact of coronavirus disease 2019 (“COVID-19”) to our business; the planned sale of our facility located in Lehi, Utah, and effect on depreciation expense; the sufficiency of our cash and investments; and capital spending in 2021. Our actual results could differ materially from our historical results and those discussed in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those identified in “Part II. Other Information – Item 1A. Risk Factors.”

2 | 2021 Q2 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Micron Technology, Inc.

Consolidated Statements of Operations

(In millions, except per share amounts)

(Unaudited)

	Quarter ended				Six months ended
	March 4, 2021		February 27, 2020		March 4, 2021		February 27, 2020
Revenue	$	6,236	$	4,797	$	12,009	$	9,941
Cost of goods sold	4,587		3,442		8,624		7,220
Gross margin	1,649		1,355		3,385		2,721
Research and development	641		681		1,288		1,321
Selling, general, and administrative	214		223		428		434
Other operating (income) expense, net	131		11		140		8
Operating income	663		440		1,529		958
Interest income	10		34		20		78
Interest expense	(42)		(46)		(90)		(93)
Other non-operating income (expense), net	4		(1)		17		45
	635		427		1,476		988
Income tax (provision) benefit	(48)		(21)		(99)		(76)
Equity in net income (loss) of equity method investees	16		1		29		3
Net income	603		407		1,406		915
Net income attributable to noncontrolling interests	—		(2)		—		(19)
Net income attributable to Micron	$	603	$	405	$	1,406	$	896
Earnings per share
Basic	$	0.54	$	0.37	$	1.26	$	0.81
Diluted	0.53		0.36		1.23		0.79
Number of shares used in per share calculations
Basic	1,120		1,111		1,118		1,109
Diluted	1,144		1,133		1,139		1,131

See accompanying notes to consolidated financial statements.

3

Micron Technology, Inc.

Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)

	Quarter ended				Six months ended
	March 4, 2021		February 27, 2020		March 4, 2021		February 27, 2020
Net income	$	603	$	407	$	1,406	$	915
Other comprehensive income (loss), net of tax
Gains (losses) on derivative instruments	(28)		(18)		12		(15)
Gains (losses) on investments	(3)		3		(4)		(2)
Pension liability adjustments	1		—		1		(1)
Cumulative translation adjustments	1		—		1		—
Other comprehensive income (loss)	(29)		(15)		10		(18)
Total comprehensive income	574		392		1,416		897
Comprehensive income attributable to noncontrolling interests	—		(2)		—		(19)
Comprehensive income attributable to Micron	$	574	$	390	$	1,416	$	878

See accompanying notes to consolidated financial statements.

4 | 2021 Q2 10-Q

Micron Technology, Inc.

Consolidated Balance Sheets

(In millions, except par value amounts)

(Unaudited)

As of	March 4, 2021		September 3, 2020
Assets
Cash and equivalents	$	6,507	$	7,624
Short-term investments	677		518
Receivables	3,353		3,912
Inventories	4,743		5,373
Assets held for sale	1,461		—
Other current assets	538		538
Total current assets	17,279		17,965
Long-term marketable investments	1,316		1,048
Property, plant, and equipment	31,848		31,031
Operating lease right-of-use assets	575		584
Intangible assets	342		334
Deferred tax assets	726		707
Goodwill	1,228		1,228
Other noncurrent assets	821		781
Total assets	$	54,135	$	53,678
Liabilities and equity
Accounts payable and accrued expenses	$	4,550	$	5,817
Current debt	323		270
Other current liabilities	560		548
Total current liabilities	5,433		6,635
Long-term debt	6,298		6,373
Noncurrent operating lease liabilities	528		533
Noncurrent unearned government incentives	661		643
Other noncurrent liabilities	552		498
Total liabilities	13,472		14,682
Commitments and contingencies
Shareholders’ equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,202 shares issued and 1,121 outstanding (1,194 shares issued and 1,113 outstanding as of September 3, 2020)	120		119
Additional capital	9,234		8,917
Retained earnings	34,723		33,384
Treasury stock, 81 shares held (81 shares held as of September 3, 2020)	(3,495)		(3,495)
Accumulated other comprehensive income (loss)	81		71
Total equity	40,663		38,996
Total liabilities and equity	$	54,135	$	53,678

See accompanying notes to consolidated financial statements.

5

Micron Technology, Inc.

Consolidated Statements of Changes in Equity

(In millions)

(Unaudited)

	Common Stock			Additional Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Number of Shares	Amount
Balance at September 3, 2020	1,194	$	119	$	8,917	$	33,384	$	(3,495)	$	71	$	38,996
Net income	—	—		—		803		—		—		803
Other comprehensive income (loss), net	—	—		—		—		—		39		39
Stock issued under stock plans	5	1		33		—		—		—		34
Stock-based compensation expense	—	—		92		—		—		—		92
Repurchase of stock	(1)	—		(8)		(49)		—		—		(57)
Balance at December 3, 2020	1,198	$	120	$	9,034	$	34,138	$	(3,495)	$	110	$	39,907
Net income	—	—		—		603		—		—		603
Other comprehensive income (loss), net	—	—		—		—		—		(29)		(29)
Stock issued under stock plans	4	—		105		—		—		—		105
Stock-based compensation expense	—	—		97		—		—		—		97
Repurchase of stock	—	—		(2)		(18)		—		—		(20)
Balance at March 4, 2021	1,202	$	120	$	9,234	$	34,723	$	(3,495)	$	81	$	40,663

See accompanying notes to consolidated financial statements.

6 | 2021 Q2 10-Q

Micron Technology, Inc.

Consolidated Statements of Changes in Equity

(In millions)

(Unaudited)

	Micron Shareholders
	Common Stock			Additional Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Micron Shareholders’ Equity		Noncontrolling Interest in Subsidiary		Total Equity
	Number of Shares	Amount
Balance at August 29, 2019	1,182	$	118	$	8,214	$	30,761	$	(3,221)	$	9	$	35,881	$	889	$	36,770
Net income	—	—		—		491		—		—		491		15		506
Other comprehensive income (loss), net	—	—		—		—		—		(3)		(3)		—		(3)
Stock issued under stock plans	3	1		31		—		—		—		32		—		32
Stock-based compensation expense	—	—		72		—		—		—		72		—		72
Repurchase of stock	—	—		(6)		(34)		(50)		—		(90)		—		(90)
Acquisition of noncontrolling interest	—	—		123		—		—		—		123		(904)		(781)
Cash settlement of convertible notes	—	—		(6)		—		—		—		(6)		—		(6)
Balance at November 28, 2019	1,185	$	119	$	8,428	$	31,218	$	(3,271)	$	6	$	36,500	$	—	$	36,500
Net income	—	—		—		405		—		—		405		—		405
Other comprehensive income (loss), net	—	—		—		—		—		(15)		(15)		—		(15)
Stock issued under stock plans	7	—		121		—		—		—		121		—		121
Stock-based compensation expense	—	—		85		—		—		—		85		—		85
Repurchase of stock	(1)	—		(4)		(21)		(45)		—		(70)		—		(70)
Settlement of capped calls	—	—		98		—		(98)		—		—		—		—
Cash settlement of convertible notes	—	—		(3)		—		—		—		(3)		—		(3)
Balance at February 27, 2020	1,191	$	119	$	8,725	$	31,602	$	(3,414)	$	(9)	$	37,023	$	—	$	37,023

See accompanying notes to consolidated financial statements.

7

Micron Technology, Inc.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

Six months ended	March 4, 2021		February 27, 2020
Cash flows from operating activities
Net income	$	1,406	$	915
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense and amortization of intangible assets	3,036		2,661
Amortization of debt discount and other costs	15		16
Stock-based compensation	189		157
(Gain) loss on debt prepayments, repurchases, and conversions	—		(42)
Change in operating assets and liabilities
Receivables	533		104
Inventories	629		(69)
Accounts payable and accrued expenses	(777)		257
Deferred income taxes, net	(11)		38
Other	4		(25)
Net cash provided by operating activities	5,024		4,012
Cash flows from investing activities
Expenditures for property, plant, and equipment	(5,756)		(3,999)
Purchases of available-for-sale securities	(1,349)		(566)
Proceeds from maturities of available-for-sale securities	746		523
Proceeds from sales of available-for-sale securities	178		1,059
Proceeds from government incentives	176		105
Other	31		(21)
Net cash provided by (used for) investing activities	(5,974)		(2,899)
Cash flows from financing activities
Payments on equipment purchase contracts	(123)		(29)
Repayments of debt	(103)		(1,676)
Acquisition of noncontrolling interest in IMFT	—		(744)
Proceeds from issuance of debt	—		1,250
Other	17		(8)
Net cash provided by (used for) financing activities	(209)		(1,207)
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash	43		(14)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(1,116)		(108)
Cash, cash equivalents, and restricted cash at beginning of period	7,690		7,279
Cash, cash equivalents, and restricted cash at end of period	$	6,574	$	7,171

See accompanying notes to consolidated financial statements.

8 | 2021 Q2 10-Q

Micron Technology, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(All tabular amounts in millions, except per share amounts)

(Unaudited)

Significant Accounting Policies

For a discussion of our significant accounting policies, see “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended September 3, 2020. Except for the significant accounting policy associated with inventories as discussed below, there have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended September 3, 2020.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Micron and our consolidated subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended September 3, 2020, except for changes in accounting and presentation of inventories. See “Inventories” below for changes to our significant accounting policies, and the “Inventories” note for additional information.

In the opinion of our management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, consisting of a normal recurring nature, to fairly state the financial information set forth herein. Certain reclassifications have been made to prior period amounts to conform to current period presentation.

Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal 2021 contains 52 weeks and our fiscal 2020 contained 53 weeks. The first and second quarters of fiscal 2021 and 2020 each contained 13 weeks. All period references are to our fiscal periods unless otherwise indicated. These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended September 3, 2020.

Through October 31, 2019, IMFT was a consolidated variable interest entity. We acquired Intel’s noncontrolling interest in IMFT on October 31, 2019, at which time IMFT became a wholly-owned subsidiary.

Inventories

Effective as of the beginning of the second quarter of 2021, we changed the method of inventory costing from average cost to first-in, first-out (“FIFO”). The difference between average cost and FIFO was not material to any previously reported financial statements. Therefore, we have recognized the cumulative effect of the change as a reduction of inventories and a charge to cost of goods sold of $133 million as of the beginning of the second quarter of 2021.

Inventories are stated at the lower of cost or net realizable value, with cost being determined on a FIFO basis. Cost includes depreciation, labor, material, and overhead costs, including product and process technology costs. When net realizable value (which requires projecting future average selling prices, sales volumes, and costs to complete products in work in process inventories) is below cost, we record a charge to cost of goods sold to write down inventories to their estimated net realizable value in advance of when inventories are actually sold. We review the major characteristics of product type and markets in determining the unit of account for which we perform the lower of average cost or net realizable value analysis and categorize all inventories (including DRAM, NAND, and other memory) as a single group. We remove amounts from inventory and charge such amounts to cost of goods sold on a FIFO basis.

9

Recently Adopted Accounting Standards

In November 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-18 – Collaborative Arrangements, which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. We adopted ASU 2018-18 in the first quarter of 2021 under the retrospective adoption method to the date we adopted ASC 606, which was August 31, 2018. The adoption of this ASU did not have a significant impact on our financial statements.

In June 2016, the FASB issued ASU 2016-13 – Measurement of Credit Losses on Financial Instruments, which requires a financial asset (or a group of financial assets) measured on the basis of amortized cost to be presented at the net amount expected to be collected. This ASU requires that the income statement reflect the measurement of credit losses for newly recognized financial assets as well as the increases or decreases of expected credit losses that have taken place during the period. This ASU requires that credit losses of debt securities designated as available-for-sale be recorded through an allowance for credit losses and limits the credit loss to the amount by which fair value is below amortized cost. We adopted ASU 2016-13 in the first quarter of 2021 under the modified retrospective adoption method. The adoption of this ASU did not have a significant impact on our financial statements.

Recently Issued Accounting Standards

In August 2020, the FASB issued ASU 2020-06 – Debt – Debt with Conversion and Other Options and Derivatives and Hedging – Contracts in Entity’s Own Equity, which simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. This ASU requires a convertible debt instrument to be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. This ASU requires an entity to use the if-converted method in the diluted earnings per share calculation for convertible instruments. This ASU will be effective for us in the first quarter of 2023, with early adoption permitted beginning in the first quarter of 2022, and permits the use of either the modified retrospective or fully retrospective method of transition. We are evaluating the timing and effects of our adoption of this ASU on our financial statements.

10 | 2021 Q2 10-Q

Cash and Investments

Substantially all of our marketable debt and equity investments were classified as available-for-sale as of the dates noted below. Cash and equivalents and the fair values of our available-for-sale investments, which approximated amortized costs, were as follows:

	March 4, 2021								September 3, 2020
As of	Cash and Equivalents		Short-term Investments		Long-term Marketable Investments(1)		Total Fair Value		Cash and Equivalents		Short-term Investments		Long-term Marketable Investments(1)		Total Fair Value
Cash	$	3,747	$	—	$	—	$	3,747	$	3,996	$	—	$	—	$	3,996
Level 1(2)
Money market funds	1,332		—		—		1,332		1,828		—		—		1,828
Level 2(3)
Certificates of deposit	1,409		50		—		1,459		1,740		10		2		1,752
Corporate bonds	—		268		797		1,065		3		266		592		861
Government securities	—		204		137		341		6		115		243		364
Asset-backed securities	—		43		382		425		1		31		211		243
Commercial paper	19		112		—		131		50		96		—		146
	6,507		$	677	$	1,316	$	8,500	7,624		$	518	$	1,048	$	9,190
Restricted cash(4)	67								66
Cash, cash equivalents, and restricted cash	$	6,574							$	7,690

(1)The maturities of long-term marketable securities range from one to four years.

(2)The fair value of Level 1 securities is measured based on quoted prices in active markets for identical assets.

(3)The fair value of Level 2 securities is measured using information obtained from pricing services, which obtain quoted market prices for similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine the appropriate value at the measurement date. We perform supplemental analysis to validate information obtained from these pricing services. No adjustments were made to the fair values indicated by such pricing information as of March 4, 2021 or September 3, 2020.

(4)Restricted cash is included in other noncurrent assets and primarily relates to certain government incentives received prior to being earned and for which restrictions lapse upon achieving certain performance conditions.

Gross realized gains and losses from sales of available-for-sale securities were not significant for any period presented.

Receivables

As of	March 4, 2021		September 3, 2020
Trade receivables	$	3,007	$	3,494
Income and other taxes	176		232
Other	170		186
	$	3,353	$	3,912

11

Inventories

As of	March 4, 2021		September 3, 2020
Finished goods	$	736	$	1,001
Work in process	3,527		3,854
Raw materials and supplies	480		518
	$	4,743	$	5,373

Effective as of the beginning of the second quarter of 2021, we changed our method of inventory costing from average cost to FIFO. This change in accounting principle is preferable because in an environment with continuously changing production costs FIFO more closely matches the actual cost of goods sold with the revenues from sales of those specific units, better represents the actual cost of inventories remaining on hand at any period-end, and improves comparability with our semiconductor industry peers. The change to FIFO was not material to any prior periods, nor is the cumulative effect of $133 million material to the second quarter of 2021. As such, prior periods were not retrospectively adjusted, and the cumulative effect was reported as an increase to cost of goods sold for the second quarter of 2021 of $133 million, with an offsetting reduction to beginning inventories. This charge resulted in a corresponding reduction to operating income, a $128 million reduction to net income, and an $0.11 reduction to diluted earnings per share for the second quarter of 2021.

Beginning in the second quarter of 2021, we changed the classification of spare parts for equipment to better align with the manner in which they are used in operations. As a result, we now present spare parts as other current assets and no longer as a component of raw materials inventories. This reclassification was applied on a retrospective basis. As a result, $270 million of spare parts were presented in other current assets as of March 4, 2021, and we reclassified $234 million of spare parts from inventories to other current assets in the accompanying balance sheet as of September 3, 2020.

Assets Held for Sale

In the second quarter of 2021, we updated our portfolio strategy to further strengthen our focus on memory and storage innovations for the data center market. In connection therewith, we determined that there was insufficient market validation to justify the ongoing investments required to commercialize 3D XPointTM at scale. Effective as of the end of the second quarter of 2021, we ceased development of 3D XPoint technology and engaged in discussions with potential buyers for the sale of our facility located in Lehi, Utah, that was dedicated to 3D XPoint production. As a result, we classified the property, plant, and equipment as held-for-sale and ceased depreciating the assets. As of March 4, 2021, the significant balances of assets and liabilities classified as held-for-sale in connection with our Lehi facility included $1.44 billion of property, plant, and equipment included in assets held for sale and $51 million of a finance lease obligation included in current portion of long-term debt. We also recognized a charge of $49 million to cost of goods sold in the second quarter of 2021 to write down 3D XPoint inventory due to our decision to cease further development of this technology. We expect to reach an agreement for the sale of our Lehi facility within calendar year 2021.

12 | 2021 Q2 10-Q

Property, Plant, and Equipment

As of	March 4, 2021		September 3, 2020
Land	$	279	$	352
Buildings	12,819		13,981
Equipment(1)	48,649		48,525
Construction in progress(2)	2,058		1,600
Software	920		873
	64,725		65,331
Accumulated depreciation	(32,877)		(34,300)
	$	31,848	$	31,031

(1)Included costs related to equipment not placed into service of $2.27 billion as of March 4, 2021 and $1.63 billion as of September 3, 2020.

(2)Included building-related construction, tool installation, and software costs for assets not placed into service.

Intangible Assets and Goodwill

	March 4, 2021				September 3, 2020
As of	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Product and process technology	$	646	$	(304)	$	616	$	(282)
Goodwill	1,228				1,228

In the first six months of 2021 and 2020, we capitalized $49 million and $30 million, respectively, for product and process technology with weighted-average useful lives of 9 years and 11 years, respectively. Expected amortization expense is $40 million for the remainder of 2021, $64 million for 2022, $56 million for 2023, $50 million for 2024, and $29 million for 2025.

Leases

Short-term and variable lease expenses were not significant and are presented within operating lease costs in the table below. Sublease income was not significant for any period presented. The components of lease expense are presented below:

	Quarter ended				Six months ended
	March 4, 2021		February 27, 2020		March 4, 2021		February 27, 2020
Finance lease cost
Amortization of right-of-use assets	$	17	$	39	$	33	$	79
Interest on lease liabilities	5		5		10		11
Operating lease cost	27		24		54		48
	$	49	$	68	$	97	$	138

13

Other information related to our leases was as follows:

Six months ended	March 4, 2021		February 27, 2020
Cash flows used for operating activities
Finance leases	$	11	$	12
Operating leases(1)	53		(10)
Cash flows used for financing activities from financing leases	41		129
Noncash acquisitions of right-of-use assets
Finance leases	68		5
Operating leases	21		24

(1) Included $48 million of reimbursements received for tenant improvements for the six months ended February 27, 2020.

As of	March 4, 2021			September 3, 2020
Finance lease right-of-use assets (included in property, plant, and equipment and assets held for sale)	$	461		$	426
Weighted-average remaining lease term (in years)
Finance leases	5			5
Operating leases	7			7
Weighted-average discount rate
Finance leases	4.09		%	4.51		%
Operating leases	2.63		%	2.67		%

Maturities of lease liabilities existing as of March 4, 2021 were as follows:

For the year ending	Finance Leases		Operating Leases
Remainder of 2021	$	48	$	33
2022	98		73
2023	86		68
2024	61		60
2025	45		49
2026 and thereafter	286		415
Less imputed interest	(102)		(114)
	$	522	$	584

The table above excludes any lease liabilities for leases that have been executed but have not yet commenced. As of March 4, 2021, we had such lease liabilities relating to 1) operating lease payment obligations of $147 million for the initial 10-year lease term for a building, which may, at our election, be terminated after 3 years or extended for an additional 10 years, and 2) finance lease obligations of $807 million over a weighted-average period of 15 years for leases embedded in gas supply arrangements. We will recognize right-of-use assets and associated lease liabilities at the time such assets become available for our use.

14 | 2021 Q2 10-Q

Accounts Payable and Accrued Expenses

As of	March 4, 2021		September 3, 2020
Accounts payable	$	1,628	$	2,191
Property, plant, and equipment	1,884		2,374
Salaries, wages, and benefits	645		849
Income and other taxes	145		237
Other	248		166
	$	4,550	$	5,817

Debt

	March 4, 2021										September 3, 2020
					Net Carrying Amount						Net Carrying Amount
As of	Stated Rate		Effective Rate		Current		Long-Term		Total		Current		Long-Term		Total
Finance lease obligations	N/A		4.09	%	$	127	$	395	$	522	$	76	$	410	$	486
2023 Notes	2.497	%	2.64