UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q
(Mark One) 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterlyquarter period ended June 3,December 2, 2010

OR


oTRANSITION 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)

Delaware75-1618004
(State or other jurisdiction of(IRS Employer
incorporation or organization)Identification No.)
  
8000 S. Federal Way, Boise, Idaho83716-9632
(Address of principal executive offices)(Zip Code)
  
Registrant’sRegistrant's telephone number, including area code(208) 368-4000


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  x   No  o¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes  ox   No  o¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitiondefinitions of “large"large accelerated filer,” “accelerated filer”" "accelerated filer" and “smaller"smaller reporting company”company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large Accelerated Filer x
Accelerated Filer o
Non-Accelerated Filer o
(Do not check if a smaller reporting company)
Smaller Reporting Company o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o¨  No x

The number of outstanding shares of the registrant’sregistrant's common stock as of July 8, 2010January 4, 2011, was 994,171,461.997,289,280.
 

 
 
 


PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

MICRON TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions except per share amounts)
(Unaudited)

  Quarter Ended  Nine Months Ended 
  
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
             
             
Net sales $2,288  $1,106  $5,989  $3,501 
Cost of goods sold  1,440   999   4,056   4,110 
Gross margin
  848   107   1,933   (609)
                 
Selling, general and administrative  190   80   387   272 
Research and development  142   162   427   508 
Restructure  (5)  19   (7)  58 
Goodwill impairment  --   --   --   58 
Other operating (income) expense, net  (19)  92   (30)  122 
Operating income (loss)
  540   (246)  1,156   (1,627)
                 
Gain from acquisition of Numonyx  437   --   437   -- 
Interest income  4   6   8   20 
Interest expense  (44)  (49)  (137)  (137)
Other non-operating income (expense), net  1   (4)  56   (15)
   938   (293)  1,520   (1,759)
                 
Income tax (provision) benefit  41   4   44   (14)
Equity in net income (losses) of equity method investees, net of tax  (19)  (45)  (23)  (106)
Net income (loss)
  960   (334)  1,541   (1,879)
                 
Net (income) loss attributable to noncontrolling interests  (21)  33   (33)  97 
Net income (loss) attributable to Micron
 $939  $(301) $1,508  $(1,782)
                 
Earnings (loss) per share:                
Basic
 $1.06  $(0.37) $1.75  $(2.27)
Diluted
  0.92   (0.37)  1.55   (2.27)
                 
Number of shares used in per share calculations:                
Basic
  885.4   813.3   860.0   786.5 
Diluted
  1,049.4   813.3   1,019.7   786.5 


 
Quarter ended
 
December 2,
2010
  
December 3,
2009
 
       
Net sales $2,252  $1,740 
Cost of goods sold  1,728   1,297 
Gross margin  524   443 
         
Selling, general and administrative  140   97 
Research and development  185   137 
Other operating (income) expense, net  (191)  8 
Operating income  390   201 
         
Interest income  8   2 
Interest expense  (38)  (47)
Other non-operating income (expense), net  (114)  56 
   246   212 
         
Income tax (provision) benefit  (48)  7 
Equity in net income (loss) of equity method investees, net of tax  (26)  (17)
Net income  172   202 
         
Net (income) loss attributable to noncontrolling interests  (17)  2 
Net income attributable to Micron $155  $204 
         
Earnings per share:        
Basic $0.16  $0.24 
Diluted  0.15   0.23 
         
Number of shares used in per share calculations:        
Basic  972.9   846.3 
Diluted  1,031.3   1,000.7 


See accompanying notes to consolidated financial statements.

 
1
 

MICRON TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS
(in millions except par value amounts)
(Unaudited)

As of
 
June 3,
2010
  
September 3,
2009
  
December 2,
2010
  
September 2,
2010
 
            
Assets            
Cash and equivalents $2,313  $1,485  $2,411  $2,913 
Receivables  1,568   798   1,362   1,531 
Inventories  1,747   987   1,892   1,770 
Other current assets  96   74   118   119 
Total current assets
  5,724   3,344   5,783   6,333 
Intangible assets, net  341   344   312   323 
Property, plant and equipment, net  6,635   7,089   7,044   6,601 
Equity method investments  1,010   315   581   582 
Restricted cash  337   335 
Other noncurrent assets  667   367   560   519 
Total assets
 $14,377  $11,459  $14,617  $14,693 
                
Liabilities and equity                
Accounts payable and accrued expenses $1,492  $1,037  $1,823  $1,509 
Deferred income  244   209   325   298 
Equipment purchase contracts  223   222   142   183 
Current portion of long-term debt  652   424   468   712 
Total current liabilities
  2,611   1,892   2,758   2,702 
Long-term debt  1,717   2,379   1,348   1,648 
Other noncurrent liabilities  582   249   517   527 
Total liabilities
  4,910   4,520   4,623   4,877 
                
Commitments and contingencies                
                
Micron shareholders’ equity:        
Common stock, $0.10 par value, authorized 3,000 million shares, issued and outstanding 993.9 million and 848.7 million shares, respectively
  99   85 
Micron shareholders' equity:        
Common stock, $0.10 par value, 3,000 shares authorized, 996.8 shares issued and outstanding (994.5 as of September 2, 2010)   100    99 
Additional capital
  8,441   7,257   8,472   8,446 
Accumulated deficit
  (877)  (2,385)  (381)  (536)
Accumulated other comprehensive income (loss)
  17   (4)
Total Micron shareholders’ equity
  7,680   4,953 
Accumulated other comprehensive income  35   11 
Total Micron shareholders' equity  8,226   8,020 
Noncontrolling interests in subsidiaries  1,787   1,986   1,768   1,796 
Total equity
  9,467   6,939   9,994   9,816 
Total liabilities and equity
 $14,377  $11,459  $14,617  $14,693 




See accompanying notes to consolidated financial statements.

 
2
 

MICRON TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Nine months ended 
June 3,
2010
  
June 4,
2009
 
Quarter ended
 
December 2,
2010
  
December 3,
2009
 
            
Cash flows from operating activities            
Net income (loss) $1,541  $(1,879)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Net income $172  $202 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization
  1,474   1,683   517   491 
Loss on extinguishment of debt  111   -- 
Equity in net (income) losses of equity method investees, net of tax  26   17 
Stock-based compensation
  73   34   19   31 
Equity in net losses of equity method investees
  23   106 
Provision to write down inventories to estimated market values
  16   603 
Gain from acquisition of Numonyx
  (437)  -- 
Gain from Inotera stock issuance
  (56)  --   --   (56)
Noncash restructure charges (credits)
  (14)  157 
(Gain) loss from disposition of property, plant and equipment, net
  (10)  55 
Goodwill impairment
  --   58 
Loss on write-down of Aptina imaging assets
  --   53 
Change in operating assets and liabilities:
                
(Increase) decrease in receivables
  (556)  224   173   (324)
Increase in inventories
  (88)  (311)  (128)  (59)
Increase (decrease) in accounts payable and accrued expenses
  165   (6)  (192)  66 
Decrease in customer prepayments
  (143)  (44)  --   (60)
Increase in deferred income
  28   71   29   -- 
Other
  3   45   5   18 
Net cash provided by operating activities
  2,019   849   732   326 
                
Cash flows from investing activities                
Expenditures for property, plant and equipment  (269)  (439)  (465)  (62)
Acquisitions of equity method investments  (151)  (408)
Cash acquired from acquisition of Numonyx  95   -- 
Proceeds from sales of property, plant and equipment  86   13   34   31 
(Increase) decrease in restricted cash  10   (57)
Proceeds from maturities of available-for-sale securities  --   130 
Other  10   80   (5)  6 
Net cash used for investing activities
  (219)  (681)  (436)  (25)
                
Cash flows from financing activities                
Repayments of debt  (748)  (373)  (635)  (280)
Payments on equipment purchase contracts  (105)  (49)
Distributions to noncontrolling interests  (244)  (592)  (49)  (88)
Payments on equipment purchase contracts  (199)  (127)
Proceeds from debt  200   716   --   200 
Cash received from noncontrolling interests  24   24 
Proceeds from issuance of common stock, net of costs  7   276 
Other  (12)  (29)  (9)  (4)
Net cash used for financing activities
  (972)  (105)  (798)  (221)
                
Net increase in cash and equivalents
  828   63 
Net increase (decrease) in cash and equivalents  (502)  80 
Cash and equivalents at beginning of period  1,485   1,243   2,913   1,485 
Cash and equivalents at end of period $2,313  $1,306  $2,411  $1,565 
                
Supplemental disclosures                
Income taxes refunded (paid), net $11  $(14) $(46) $(2)
Interest paid, net of amounts capitalized  (85)  (87)  (27)  (36)
Noncash investing and financing activities:                
Stock and restricted stock units issued in acquisition of Numonyx
  1,112   -- 
Equipment acquisitions on contracts payable and capital leases
  281   305   63   176 
Acquisition of interest in Transform
  65   -- 
Exchange of convertible notes  175   -- 




See accompanying notes to consolidated financial statements.

 
3
 

MICRON TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tabular amounts in millions except per share amounts)
(Unaudited)

Business and Significant Accounting PoliciesBasis of Presentation

Basis of presentation:Micron Technology, Inc. and its consolidated subsidiaries (hereinafter referred to collectively as "we," "our," "us," and similar terms unless the “Company”)context indicates otherwise) is a global manufacturer and marketer of semiconductor devices, principally DRAM, NAND Flash and NOR Flash memory, as well as other innovative memory technologies, packaging solutions and semiconductor systems for use in leading-edge computing, consumer, networking, embedded and mobile products.  In addition, the Company manufactureswe manufacture CMOS image sensors and other semiconductor products.  The accompanying consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and have been prepared in accordance with accounting p rinciplesprinciples generally accepted in the United States of America consistent in all material respects with those applied in the Company’s Annualour A nnual Report on Form 10-K for the year ended September 3, 2009, except for changes resulting from the adoption of new accounting standards for convertible debt and noncontrolling interests.  Prior year amounts and balances have been retrospectively adjusted to reflect the adoption of these new accounting standards.2, 2010.  In the opinion of our management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly theour consolidated financial position of the Company and itsour consolidated results of operations and cash flows.  (See “Adjustments for Retrospective Application of New Accounting Standards” note.)

In the third quarter of 2010, the Companywe added a new reportable segment as a result of the acquisition of Numonyx Holdings B.V.  ("Numonyx") and, hasas of December 2, 2010, have two reportable segments,segments: Memory and Numonyx.  The Company included the former Numonyx business has been included as a reportable segment since its acquisition on May 7, 2010.  The primary products of the Memory segment are DRAM and NAND Flash memory and the primary products of the Numonyx segment are NOR Flash and NAND Flash DRAM and Phase Change non-volatile memory.

The Company’sOur fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31.  The Company’sOur fiscal 2011 and 2010 containseach contain 52 weeks and the thirdfirst quarter of fiscal 2011, which ended on December 2, 2010, and the first nine monthsquarter of fiscal 2010, which ended on JuneDecember 3, 2010,2009, each contained 13 weeks and 39 weeks, respectively.  The Company’s fiscal 2009, which ended on September 3, 2009, contained 53 weeks and the third quarter and first nine months of fiscal 2009 contained 13 weeks and 40 weeks, respectively.weeks.  All period references are to the Company’sour fiscal periods unless otherwise indicated.  These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’sour Annual Report on Fo rmForm 10-K for the year ended September 3, 2009 and in the Company’s report on Form 8-K filed on March 4,2, 2010.


Variable Interest Entities

Recently adopted accounting standards:  In May 2008,We have interests in joint venture entities that are variable interest entities ("VIEs").  If we are the Financial Accounting Standards Board (“FASB”) issued a new accounting standard for convertible debt instrumentsprimary beneficiary of the VIE, we are required to consolidate it.  To determine if we are the primary beneficiary, we evaluate whether we have the power to direct the activities that maymost significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be settled in cash upon conversion, including partial cash settlement.  This standardsignificant to the VIE.  Our evaluation includes identification of significant activities and an assessment of our ability to direct those activities based on governance provisions and arrangements to provide or receive product and process technology, product supply, operations services, equity funding, financing and other applicable agreements and circumstances.  Our assessments of whether we are the primary beneficiary of our VIEs requires significant assumptions and judgment.  For further information regarding our VIEs that issuers of these types of convertible debt instruments separatelywe account for the liability and equity components of such instruments in a manner such that interest cost is recognized at the entity’s nonconvertible debt borrowing rate in subsequent periods.  The Company adopted this standard as of the beginning of 2010 and retrospectively accounted for its $1.3 billion 1.875% convertible senior notes under the provi sions of this guidance from the May 2007 issuance date of the notes.  As a result, prior financial statement amounts were recast.  (See “Adjustments for Retrospective Application of New Accounting Standards”equity method, see "Equity Method Investments" note.)  For further information regarding our consolidated VIEs, see "Consolidated Variable Interest Entities" note.

In December 2007,Unconsolidated Variable Interest Entities

Inotera and MeiYa – Inotera Memories, Inc. ("Inotera") and MeiYa Technology Corporation ("MeiYa") are VIEs because of the FASB issued a new accounting standardterms of their supply agreements with us and our partner, Nanya Technology Corporation ("Nanya").  We have determined that we do not have power to direct the activities of Inotera and MeiYa that most significantly impacts their economic performance, primarily due to (1) limitations on noncontrollingour governance rights that require the consent of other parties for key operating decisions and (2) our dependence on our joint venture partner for financing and the ability to operate in Taiwan.  Therefore, we account for our interests in consolidated financial statements.  This standard requires that (1) noncontrolling interests be reported as a separate component ofthese entities under the equity (2) net income attributable to the parent and to the noncontrolling interest be separately identified in the statement of operations, (3) changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions and (4) any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value.  The Company adopted this standard as of the beginning of 2010.  As a result, prior financial statement amounts were recast.  60;(See “Adjustments for Retrospective Application of New Accounting Standards” note.)method.


 
4
 

Transform – Transform Solar Pty Ltd. ("Transform") is a VIE because its equity is not sufficient to permit Transform to finance its activities without additional subordinated financial support from us or our partner, Origin Energy Limited ("Origin").  We have determined that we do not have power to direct the activities of Transform that most significantly impacts their economic performance, primarily due to limitations on our governance rights that require the consent of other parties for key operating decisions.  Therefore, we account for our interest in Transform under the equity method.

Consolidated Variable Interest Entities

IMFT and IMFS – IM Flash Technologies, LLC ("IMFT") and IM Flash Singapore LLP ("IMFS") are both VIEs because all of their costs are passed to us and our partner, Intel Corporation ("Intel"), through product purchase agreements and they are dependent upon us and Intel for any additional cash requirements.  For both IM Flash entities (i.e., IMFT and IMFS), we determined that we have the power to direct the activities of the entities that most significantly impacts their economic performance.  The primary activities of the IM Flash entities are driven by the constant introduction of product and process technology.  Because we perform a significant majority of the technology development, we hav e the power to direct key activities of the entities.  In addition, IMFT manufactures certain products exclusively for us using our technology.  As a result of our 71% ownership interest in IMFS, we have significantly greater economic exposure than Intel.  We also determined that we have the obligation to absorb losses and the right to receive benefits from the IM Flash entities that could potentially be significant to these entities.  Therefore, we consolidate the IM Flash entities.

MP Mask – MP Mask Technology Center, LLC ("MP Mask") is a VIE because all of its costs are passed on to us and our partner, Photronics, Inc. ("Photronics"), through product purchase agreements and it is dependent upon us and Photronics for any additional cash requirements.  We determined that we have the power to direct the activities of MP Mask that most significantly impacts their economic performance, primarily due to (1) our tie-breaking voting rights over key operating decisions and (2) the fact that nearly all key MP Mask activities are driven by our supply needs.  We also determined that we have the obligation to absorb losses and the right to receive benefits from MP Mask that could potentiall y be significant to MP Mask.  Therefore, we consolidate MP Mask.


Recently Adopted Accounting Standards

In December 2007,June 2009, the FASBFinancial Accounting Standards Board ("FASB") issued a new accounting standard on business combinations, which establishes the principles and requirements for how an acquirer (1) recognizes and measures in its financial statements identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree, (2) recognizes and measures goodwill acquired in the business combination or a gain from a bargain purchase and (3) determines what information to disclose.  The Company adopted this standard effective as of the beginning of 2010.  The initial adoption did not have a significant impact on the Company’s financial statements.  The acquisition of Numonyx was accounted for under the provisions of this new standard.

In September 2006, the FASB issued a new accounting standard on fair value measurements and disclosures, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  The Company adopted this standard effective as of the beginning of 2009 for financial assets and financial liabilities.  The Company adopted this standard effective as of the beginning of 2010 for all other assets and liabilities.  The adoptions did not have a significant impact on the Company’s financial statements.

Recently issued accounting standards:  In June 2009, the FASB issued a new accounting standard on variable interest entitiesVIEs which (1) replaces the quantitative-based risks and rewards calculation for determining whether an enterprise is the primary beneficiary in a variable interest entityVIE with an approach that is primarily qualitative, (2) requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entityVIE and (3) requires additional disclosures about an enterprise’senterprise's involvement in variable interest entities.  The Company is required to adoptVIE.  We adopted this standard as of the beginning of 2011 .2011.  The Company is evaluating the impact theinitial adoption of this standard did not have a significant impact on our financial statements as of the adoption date.  The impact on future periods will havedepend on its financial statements.changes in the nature and composition of our VIEs.


Numonyx Holdings B.V.

On May 7, 2010, the Company completed its acquisition ofwe acquired Numonyx, Holdings B.V. (“Numonyx”), which manufactures and sells primarily NOR Flash and NAND Flash DRAM and Phase Change non-volatile memory technologies and products.  The Company acquired Numonyx to further strengthen the Company’s portfolio of memory products, increase manufacturing and revenue scale, access Numonyx’s customer base and provide opportunities to increase multi-chip offerings in the embedded and mobile markets.  In connection therewith, the Company issued 137.7 million shares of the Company’s common stock in exchange for all of the outstanding Numonyx capital stock and issued 4.8 million restricted stock units to employees of Numonyx in exchange for all of their outstanding restricted stock units.  The total fair value of the consideration the Company paid for Numonyx was $1,112 million and consisted of $1,091137.7 million for the shares of our common stock issued to the Numonyx shareholders and $214.8 million for the restricted stock units issued to employees of Numonyx.  TheIn connection with the acquisition, we recorded net assets of $1,549 million.  Because the fair value of the consideration was determined based on the trading price of the Company’s common shares on the acquisition date discounted for the resale restrictions on the shares.  Of the shares issued to the Numonyx shareholders, 21.0 million were placed in escrow as partial security for the Numonyx shareholders’ indemnity obligations resulting from the acquisition.  The shares in escrow may be sold after November 6, 2010, but the proceeds from any sale remain in escrow until May 7, 2011, at which time the escrownet assets are payable to the Numonyx shareholders, net of any indemnification claims from the Company.&# 160; Included in the selling, general and administrative expenses in the results of operations for the third quarter and first nine months of 2010 are transaction costs of $12 million and $19 million, respectively, incurred in connection with this acquisition.

The Company provisionally determined the assets and liabilities of Numonyx based on fair values as of May 7, 2010 utilizing an in-exchange model.  Becauseacquired exceeded the purchase price, was less than the fair value of net assets of Numonyx, the Companywe recognized a preliminary gain on the acquisition of $437 million.  The Company believes the gain realizedmillion in acquisition accounting was the result of a number of factors, including the following: significant losses recognized by Numonyx during the recent downturn in the semiconductor memory industry; substantial volatility in Numonyx’s primary markets; market perceptions that future opportunities for Numonyx products in certain markets are limited; the liquidity afforded to the sellers as a result of the limited opportunities to realize the value of their investment in Numonyx; and potential gains to the sellers through their investment in the Company’s equity from synergies between Numonyx and the Company.  The consideration and provisional valuation of assets acquired and liabilities assumed were as follows:

5
Consideration:   
Fair value of common stock issued
 $1,091 
Fair value of restricted stock units issued
  21 
  $1,112 
     
Recognized amounts of identifiable assets acquired and liabilities assumed:    
Cash and equivalents
 $95 
Receivables
  256 
Inventories
  689 
Other current assets
  28 
Intangible assets
  29 
Property, plant and equipment
  344 
Equity method investment
  414 
Other noncurrent assets
  307 
     
Accounts payable and accrued expenses
  (310)
Other current liabilities
  (5)
Other noncurrent liabilities
  (298)
Total net assets acquired
  1,549 
Gain on acquisition
  (437)
  $1,112 

Other noncurrent liabilities in the table above include contingent liabilities of $66 million for uncertain tax positions (a significant portion for which the Company has recorded an indemnification asset in other noncurrent assets in the table above) and $15 million for the Company’s obligation, subject to certain conditions, to guarantee certain debt of Hynix-Numonyx Semiconductor Ltd., an acquired equity method investment.  These amounts were estimated based on the present value of probability-weighted cash flows. The Company’s results of operations for the third quarter and first nine months of 2010 include $802010.  In addition, we recognized a $51 million of net sales and $21 million of operating losses fromincome tax benefit in connection with the Numonyx operations after the May 7, 2010 acquisition date.  (See “Equity M ethod Investments – Hynix JV” note.)acquisition.

The following unaudited pro forma financial information presents the combined results of operations of the Company and Numonyx as if the companies wereNumonyx had been combined with us as of the beginning of 2009.  The pro forma financial information includes the accounting affects of the business combination, including the adjustment of amortization of intangible assets, depreciation of property, plant and equipment, interest expense and elimination of intercompany sales, as if the companies were actually combined as of the beginning of 2009.sales.  The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the companiesNumonyx been combined with us as of the beginning of 2009.

  Quarter ended  Nine months ended 
  
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
             
Net sales $2,781  $1,447  $7,489  $4,873 
Net income (loss)  987   (402)  1,538   (2,045)
Net income (loss) attributable to Micron  966   (368)  1,505   (1,948)
Earnings (loss) per share:                
Basic
 $0.98  $(0.40) $1.53  $(2.16)
Diluted
  0.86   (0.40)  1.38   (2.16)
5
Quarter Ended December 3, 2009 
    
Net sales $2,211 
Net income  192 
Net income attributable to Micron  194 
Earnings per share:    
Basic
 $0.20 
Diluted
  0.19 

The unaudited pro forma financial information for the three and nine month periodsquarter ended JuneDecember 3, 20102009 includes theour results of the Company for the periods ended June 3, 2010 and the results of Numonyx, including the adjustments described above, for the three and nine month periodsmonths ended March 27, 2010.  The three and nine month periods ended June 4, 2009 includes the results of the Company for the periods ended June 4,December 3, 2009 and the results of Numonyx, including the adjustments described above, for the three and nine month periodsmonths ended March 28,September 26, 2009.


6


Receivables
Supplemental Balance Sheet Information

Receivables 
June 3,
2010
  
September 3,
2009
 
       
Trade receivables (net of allowance for doubtful accounts of $5 million and $5 million, respectively)
 $1,237  $591 
Income and other taxes receivable
  117   49 
Related party receivables
  65   70 
Other
  149   88 
  $1,568  $798 
As of December 2, 2010  September 2, 2010 
       
Trade receivables (net of allowance for doubtful accounts of $3 million and $4 million, respectively)
 $1,086  $1,238 
Income and other taxes
  126   115 
Related party receivables
  42   64 
Other
  108   114 
  $1,362  $1,531 

As of June 3,December 2, 2010 and September 2, 2010, related party receivables included $60$39 million and $57 million, respectively, due from Aptina Imaging Corporation (“Aptina”("Aptina") under a wafer supply agreement for image sensor products, $3 million due from Inotera Memories, Inc. (“Inotera”) for reimbursement of expenses incurred under a technology transfer and cost sharing agreement and $2 million due from Transform Solar Pty Limited for transition services and photovoltaic product development activities.  As of September 3, 2009, related party receivables included $69 million due from Aptina under a wafer supply agreement for image sensor products and $1 million due from Inotera for reimbursement of expenses incurred under a technology transfer agreement.products.

As of June 3,December 2, 2010 and September 3, 2009,2, 2010, other receivables included $30$29 million and $29$30 million, respectively, due from Intel Corporation (“Intel”) for amounts related to NAND Flash product design and process development activities.activities under cost-sharing agreements.  As of December 2, 2010 and September 2, 2010, other receivables also included $21 million and $17 million, respectively, from Nanya in connection with a DRAM development cost-sharing agreement.  (See "Equity Method Investments" note and "Consolidated Variable Interest Entity" note.)

Inventories 
June 3,
2010
  
September 3,
2009
 
       
Finished goods
 $475  $233 
Work in process
  1,161   649 
Raw materials and supplies
  111   105 
  $1,747  $987 

Inventories
As of December 2, 2010  September 2, 2010 
       
Finished goods
 $613  $623 
Work in process
  1,165   1,031 
Raw materials and supplies
  114   116 
  $1,892  $1,770 

The Company’s results of operations for the second and first quarters of 2009 included charges of $234 million and $369 million, respectively, to write down the carrying value of work in process and finished goods inventories of memory products (both DRAM and NAND Flash) to their estimated market values.

Intangible Assets            
             
  June 3, 2010  September 3, 2009 
  
Gross
Amount
  
Accumulated
Amortization
  
Gross
Amount
  
Accumulated
Amortization
 
             
Product and process technology
 $420  $(171) $439  $(181)
Customer relationships
  127   (62)  127   (50)
Other
  51   (24)  28   (19)
  $598  $(257) $594  $(250)
Intangible Assets

             
As of December 2, 2010  September 2, 2010 
  
Gross
Amount
  
Accumulated
Amortization
  
Gross
Amount
  
Accumulated
Amortization
 
             
Product and process technology
 $444  $(192) $439  $(181)
Customer relationships
  127   (70)  127   (66)
Other
  23   (20)  23   (19)
  $594  $(282) $589  $(266)
6
During the first nine monthsquarter of 2011 and 2010, and 2009, the Companywe capitalized $27$8 million and $82$7 million, respectively, for product and process technology with weighted-average useful lives of 910 years.  In addition, in connection with the acquisition of Numonyx, the Company recorded other intangible assets of $29 million related to a supply agreement, which is being amortized through the expected remaining term of the agreement of August 2010.  (See “Numonyx Holdings B.V.” note.)

Amortization expense for intangible assets was $23$19 million and $57$17 million for the thirdfirst quarter of 2011 and first nine months of 2010, respectively, and $18 million and $58 million for the third quarter and first nine months of 2009, respectively.  Annual amortization expense for intangible assets is estimated to be $96 million for 2010, $65$72 million for 2011, $63 million for 2012, $57 million for 2012, $532013, $49 million for 20132014 and $45$30 million for 2014.2015.


Property, Plant and Equipment
As of December 2, 2010  September 2, 2010 
       
Land
 $95  $95 
Buildings
  4,402   4,394 
Equipment
  13,796   12,970 
Construction in progress
  140   73 
Software
  285   281 
   18,718   17,813 
Accumulated depreciation
  (11,674)  (11,212)
  $7,044  $6,601 

Depreciation expense was $481 million and $454 million for the first quarter of 2011 and 2010, respectively.

As of December 2, 2010, property, plant and equipment with a carrying value of $1,029 million was collateral under the TECH credit facility.  (See "TECH Semiconductor Singapore Pte. Ltd." Note.)

Other noncurrent assets included buildings, equipment, and other assets classified as held for sale of $88 million as of December 2, 2010 and $56 million as of September 2, 2010.


Equity Method Investments
       
As of December 2, 2010  September 2, 2010 
  Carrying Value  Ownership Percentage  Carrying Value  Ownership Percentage 
             
Inotera
 $436   29.9% $434   29.9%
MeiYa
  46   50.0%  44   50.0%
Transform
  84   50.0%  82   50.0%
Aptina
  15   35.0%  22   35.0%
  $581      $582     

We recognize our share of earnings or losses from these entities under the equity method on a two-month lag.  Equity in net income (loss) of equity method investees, net of tax, included the following:

Quarter ended December 2, 2010  December 3, 2009 
       
Inotera:      
Equity method losses
 $(26) $(26)
Inotera Amortization
  12   13 
Other
  --   (1)
   (14)  (14)
Transform  (7)  -- 
Aptina  (5)  (3)
  $(26) $(17)

 
7
 


Property, Plant and Equipment 
June 3,
2010
  
September 3,
2009
 
       
Land
 $95  $96 
Buildings
  4,391   4,473 
Equipment
  12,630   11,834 
Construction in progress
  62   47 
Software
  269   268 
   17,447   16,718 
Accumulated depreciation
  (10,812)  (9,629)
  $6,635  $7,089 
Our maximum exposure to loss from our involvement with our equity method investments that are VIEs was as follows:

Depreciation expense was $453 million and $1,356 million for the third quarter and first nine months of 2010, respectively, and $488 million and $1,572 million for the third quarter and first nine months of 2009, respectively.
As of December 2, 2010 
    
Inotera $414 
MeiYa  49 
Transform  87 

The Company, through its IM Flash joint venture, has an unequippedmaximum exposure to loss primarily included the carrying value of our investment as well as related translation adjustments in accumulated other comprehensive income and receivables, if any.  We may also incur losses in connection with our obligations under a supply agreement with Inotera (the "Inotera Supply Agreement") for rights and obligations to purchase up to 50% of Inotera's wafer fabrication facility in Singapore that was completed in the first quarterproduction capacity of 2009 but had been idle through the first quarter of 2010.  The Company has been recording depreciation expense for the facility since its completion and its net book value was $605 million as of June 3, 2010.  In the second quarter of 2010, IM Flash began moving forward with start-up activities at the Singapore wafer fabrication facility, including placing purchase orders and preparing the facility for tool installations expected to commence in 2011.DRAM products.

As of June 3, 2010 and September 3, 2009, other noncurrent assets included $137 million and $81 million, respectively, for buildings, equipment and related assets classified as held for sale.  Assets held for sale as of June 3, 2010 include a facility in Catania, Italy acquired in connection with the Numonyx acquisition.  In July 2010, the Company transferred title to the Catania facility to STMicroelectronics N.V. in exchange for consideration of $78 million.

Goodwill

In the second quarter of 2009, the Company’s imaging operations (the primary component of All Other segment) experienced a severe decline in sales, margins and profitability due to a significant decline in demand as a result of the downturn in global economic conditions.  The drop in market demand resulted in significant declines in average selling prices and unit sales.  Due to these market and economic conditions, the Company’s imaging operations and its competitors experienced significant declines in market value.  Accordingly, in the second quarter of 2009, the Company performed an assessment of its imaging operations segment goodwill for impairment.  Based on this assessment, the Company wrote off all of the $58 million of goodwill as sociated with its imaging operations as of March 5, 2009.

Equity Method Investments            
             
  June 3, 2010  September 3, 2009 
  Carrying Value  Ownership Percentage  Carrying Value  Ownership Percentage 
             
Inotera
 $442   29.9% $229   29.8%
MeiYa
  45   50.0%  42   50.0%
Hynix JV
  417   20.7%  --   -- 
Transform
  74   50.0%  --   -- 
Aptina
  32   35.0%  44   35.0%
  $1,010      $315     

The Company has partnered with Nanya Technology Corporation (“Nanya”) in two Taiwan DRAM memory companies, Inotera Memories, Inc. (“Inotera”) and MeiYa Technology Corporation (“MeiYa”), which are accounted for by the Company as equity method investments.  In connection with the Numonyx acquisition on May 7, 2010, the Company acquired an equity method investment in Hynix-Numonyx Semiconductor Ltd. (the “Hynix JV”), a manufacturer of semiconductor memory products.  Additionally, the Company has equity method investments in Aptina Imaging Corporation (“Aptina”), a CMOS imaging company, and in Transform Solar Pty Limited (“Transform”), a joint venture to develop and manufacture photovoltaic products.


8


DRAM joint ventures with Nanya:  The Company hasWe have partnered with Nanya in two Taiwanese DRAM memory companies, Inotera and MeiYa.  Under a partneringlicensing arrangement with Nanya, pursuant to which the Company and Nanya jointly develop process technology and designs to manufacture stack DRAM products.  In addition, the Company has deployed and licensed certain intellectual property related to the manufacture of stack DRAM products to Nanya and licensed certain intellectual property from Nanya.  The Companywe recognized $13 million and $65$26 million of license revenue from this arrangement during the thirdfirst quarter and first nine months of 2010 respectively, and had recognized $25 million and $79 million during the third quarter and first nine monthsa total of 2009, respectively.  The Company has recognized $207 million through the completion of cumulative license revenue from thisthe arrangement from May 2008 throughin April 2010.  UnderBeginning in April 2010 under a cost sharing arrangement, effective in April, 2010, the Company and Nanya began sharingwe share equally in DRAM development costs with Nanya and, the Company’sas a result, our research and development costs were reduced by $24$30 million in the thirdfirst quarter of 2010 due to this cost sharing agreement.2011.  In addition, we received $7 million of royalty revenue in the thirdfirst quarter of 2010, the Company received $2 million of royalties2011 from Nanya for saless ales of stack DRAM products manufactured by or for Nanya on process nodes of 50nm or higher and will continue to receive royalties from Nanya associated with previously developed technology.

The Company has concluded that both Inotera and MeiYa are variable interest entities because of the Inotera and MeiYa supply agreements with the Company and Nanya.  Nanya and the Company are considered related parties under the accounting standards for consolidating variable interest entities.  The Company reviewed several factors to determine whether it is the primary beneficiary of Inotera and MeiYa, including the size and nature of the entities’ operations relative to Nanya and the Company, the nature of day-to-day operations and certain other factors.  Based on those factors, the Company determined that Nanya is more closely associated with, and therefore the primary beneficiary of, Inotera and MeiYa.  The Company accounts for its interests using the equity method of accounting and does not consolidate these entities.  The Company recognizes its share of earnings or losses from these entities on a two-month lag.

Inotera:  In the first quarter of 2009, the Companywe acquired a 35.5% ownership interest in Inotera, a publicly-traded entity in Taiwan, from Qimonda AG (“Qimonda”).  OnInotera.  In August, 3, 2009, Inotera sold 640 million common shares in a public offering at a price equal to 16.02 New Taiwan dollars per common share (approximately $0.49 U.S. dollars on August 3, 2009).offering.  As a result, of the share issuance, the Company’sour equity ownership interest in Inotera decreased from 35.5% to 29.8% and the Companywe recognized a gain of $56 million in the first quarter of 2010.  On February 6, 2010, as part of another offering of 640 million common shares, the Companywe and Nanya each paid $138 million to purchase approximately 196 million shares each,in the offering, slightly increasing the Company’sour equity ownership interest in Inotera from 29.8% to 29.9%.  As of June 3,December 2, 2010, thewe held a 29.9% ownership ofinterest in Inotera, wasNanya held a 30.0% by Nanya, 29.9% by the Companyownership interest, and the balancebala nce was publicly held.

The Company’s carrying value of itsour initial investment in Inotera is less than itsour proportionate share of Inotera’sInotera's equity.  This difference is being amortized as a credit to earnings in the Company’s statement of operations through equity in net income (losses) of equity method investees (the “Inotera Amortization”"Inotera Amortization").  The Company’s results of operations for the third quarter and first nine months of 2010 include $14 million and $38 million, respectively, of Inotera Amortization and its results of operations for the third quarter and first nine months of 2009 include $15 million and $23 million, respectively, of Inotera Amortization.  During the third quarter of 2009, the Company received $50 million from Inotera pursuant to the terms of a technology transfer agreement and, in connection therewith, recognized $3 million and $13 million of revenue in the third quarter and first nine months of 2010, respectively.  The $56 million gain recognized in the first quarter of 2010 on Inotera’s issuance of shares included $33 million of accelerated Inotera Amortization.  As of June 3,December 2, 2010, $138$109 million of Inotera Amortization remained to be recognized over a weighted-average period of 4 years.  The $56 million gain recognized in the first quarter of 2010 on Inotera's issuance of shares included $33 million of accelerated Inotera Amortization.

In connection with the Company’s initial acquisition of our shares in Inotera, the Companywe and Nanya entered into a supply agreement withthe Inotera (the “Inotera Supply Agreement”) pursuant to which Inotera will sell trench and stack DRAM products toAgreement.  Our cost of the Company and Nanya.  The cost to the Company of wafers purchased under the Inotera Supply Agreement is based on a margin sharingmargin-sharing formula among the Company, Nanya and Inotera.  Under such formula,that considers all parties’parties' manufacturing costs related to wafers supplied bypurchased from Inotera, as well as the Company’s and Nanya’s selling prices for the resale of our and Nanya's products from wafers supplied by Inotera, are considered in determining costs for wafers from Inotera.  The Company has rights and obligations to pur chase up to 50% of Inotera’s wafer production capacity.  In the third quarter and first nine months of 2010, the Company purchased $188 million and $543 million, respectively, of DRAM products (substantially all of which were trench technologies) from Inotera under the Inotera Supply Agreement.

During the second quarter of 2009, Qimonda filed for bankruptcy and defaulted on its obligations to purchase trench DRAM products from Inotera under a separate supply agreement between Inotera and Qimonda (“the Qimonda Supply Agreement”).  Pursuant to the Company’s obligations underthese wafers.  Under the Inotera Supply Agreement, the Company’s purchase obligation includes purchasing Inotera’s trench DRAM capacity, less any trenchwe purchased $137 million and $168 million of DRAM products sold to Qimonda pursuant to the Qimonda Supply Agreement.  As a result, the Company recorded $14 million and $65 million in cost of goods sold in the third quarterfirst quarters of 2011 and first nine months of 2009 for its obligations to Inotera as a result of Qimonda’s default.

9


The Company’s results of operations for the third quarter and first nine months of 2010, include losses of $4 million and $3 million, respectively, and its results of operations for the third quarter and first nine months of 2009 include losses of $43 million and $99 million, respectively, from its equity interest in Inotera.respectively.

The Company recordedAs of December 2, 2010 and September 2, 2010, there were gains (losses) to other comprehensive income (loss) for translation adjustments on its investment in Inotera of $23 million and $7 million, and $17 million for the third quarter and first nine months of 2010, respectively, and $(19) million and $(18) million for the third quarter and first nine months of 2009, respectively.  As of June 3, 2010, there was a gain of $14 million in accumulated other comprehensive income (loss) in the accompanying consolidated balance sheet for cumulative translation adjustments on the Company’s equity interestfrom our investment in Inotera.  Based on the closing trading price of Inotera’sInotera's shares in an active market on June 3,December 2, 2010, the market value of the Company’sour equity interest in Inotera was $819$612 million.

As of June 3, 2010, the Company’s maximum exposure to loss on its equity interest in Inotera equaled the $428 million recorded in the consolidated balance sheet for its investment in Inotera (which includes the $14 million gain in accumulated other comprehensive income (loss)).  The Company may also incur losses in connection with its obligations under the Inotera Supply Agreement to purchase up to 50% of Inotera’s wafer production under a long-term pricing arrangement.

MeiYa:  The Company and Nanya  We formed MeiYa with Nanya in the fourth quarter of 2008.  In connection with theour acquisition of itsan equity interest in Inotera, the Companywe entered into a series of agreements with Nanya pursuant to which both parties ceased future funding of, and resource commitments to, MeiYa.  In addition,Additionally, MeiYa has sold substantially all of its assets to Inotera.  As of June 3,December 2, 2010, we held 50% of the ownership of MeiYa wasand Nanya held 50% by Nanya.  As of December 2, 2010 and 50% by the Company.  The Company’s results of operations for the third quarter and first nine months ofSeptember 2, 2010, include gains of $1 million and its results of operation s for the third quarter and first nine months of 2009 includethere were losses of $2 million and $7 million, respectively, from its equity interest in MeiYa.  The Company recorded gains (losses) to other comprehensive income (loss) for translation adjustments on its investment in MeiYa of $1 million and $2 million for the third quarter and first nine months of 2010, respectively, and $(3) million and $(8)$(5) million, for the third quarter and first nine months of 2009, respectively.  As of June 3, 2010, there was $(4) millionrespectively, in accumulated other comprehensive income (loss) in the accompanying consolidated balance sheet for cumulative translation adjustments onfrom MeiYa.  In the Company’s equity interest in MeiYa.

Assecond quarter of June 3, 2010, the Company’s maximum exposure to loss on its2011, we and Nanya received a distribution from MeiYa equity interest equaled the $49of $48 million recorded in the Company’s consolidated balance sheet for its investment in MeiYa (which includes the $(4) million loss in accumulated other comprehensive income (loss)).

Hynix JV: In connection with the Company’s acquisitioneach as a return of Numonyx, the Company acquired a 20.7% noncontrolling interest in Hynix-Numonyx Semiconductor Ltd. (the “Hynix JV”), a joint venture with Hynix Semiconductor, Inc. (“Hynix”) and Hynix Semiconductor (WUXI) Limited.  The Hynix JV was formed pursuant to a joint venture agreement originally entered into between STMicroelectronics N.V. (“ST”) and Hynix prior to the formation of Numonyx (as amended and restated, the “JV Agreement”).  (See “Numonyx Holdings B.V.” note.)

Under the terms of the JV Agreement, the change in control of Numonyx due to its acquisition by the Company gave rise to certain rights of the parties to the JV Agreement to buy or sell or cause the other party to buy or sell their equity interests in the Hynix JV, including the right of Hynix to purchasecapital, representing substantially all of the Company’s equity interest in the Hynix JV (the “Hynix Call Option”).  Pursuant to the JV Agreement, the exercise price of the Hynix Call Option is an amount equal to the positive difference between the book value of the Hynix JV’s total assets and the book value of the Hynix JV’s total liabilities, multiplied by the Company’s percentage ownership in the Hynix JV, estimated to be approximately $425 million.  On May 28, 2010, Hynix gave notice to the Company of its exercise of the Hynix Call Option to acquire the Company’s 20.7% interest in the Hynix JV, subject to regulatory approval.  The consummation of the equity transfer is expected to take place prior to the end of the first quarter of fiscal 2011.

HynixJV Supply Agreement:  Pursuant to the terms of a supply agreement with the Hynix JV, the Company purchased $29 million of memory products from the Hynix JV in the third quarter of 2010.  The Hynix JV is permitted to terminate the supply agreement upon exercise of the Hynix Call Option and the consummation of the equity transfer.  On May 28, 2010, the Hynix JV delivered notice to the Company of its intent to terminate the JV supply agreement concurrent with the consum mation of the equity transfer.  A significant portion of Numonyx’s net sales is dependent upon sales of products supplied to it by the Hynix JV pursuant to the JV supply agreement.  The Company and the Hynix JV are currently in discussions to enter into a new supply agreement.  If the parties are unable to reach agreement and the JV supply agreement is terminated, the Hynix JV will have no further supply obligations to the Company.


10


DBS Loan Arrangements:  Concurrent with the completion of the Company’s acquisition of Numonyx, the Company and ST entered into a framework agreement (the “Framework Agreement”) that provides that the Company is required to take certain actions in connection with an outstanding $250 million loan (the “Loan”), due in periodic installments from 2014 through 2016, made by DBS Bank Ltd. (“DBS”) to the Hynix JV.  In particular, the Company has agreed that, subject to certain conditions, within two business days after receipt of the proceeds from the equity transfer, it will deposit $250 million of such proceeds into a pledged account at DBS.  The funds deposited into such account will collateralize the Company’s obligations under a guarantee of the Loan, which guarantee is to be entered into by the Company concurrent with such deposit.  The amount on deposit in the DBS account will be accounted for as restricted cash in other noncurrent assets in the accompanying consolidated balance sheet.  The amount on deposit and the Company’s guarantee decrease as payments are made by the Hynix JV against the Loan.  As of June 3, 2010, other noncurrent liabilities included $15 million for the fair value of the Company’s obligations under the Framework Agreement.MeiYa's assets.

Transform: On December 18, 2009, the Companywe acquired a 50% interest in Transform, a subsidiary of Origin Energy Limited (“Origin”), which is a public company in Australia.Transform.  In exchange for itsthe equity interest in Transform, the Companywe contributed nonmonetary assets, from its Memory segment with a fair value of $65 million, consistingwhich consisted of manufacturing facilities, equipment, intellectual property
8
and a fully-paid lease to a portion of itsour Boise, Idaho manufacturing facilities.  The carrying valueAs of the nonmonetary assets was approximately equal to the fair value of the Company’s equityDecember 2, 2010, we and Origin both held a 50% ownership interest in Transform and no gain or loss was recognized on the contribution.  As of June 3, 2010, the ownership of Transform was held 50% by the Company and 50% by Origin.Transform.  During the second quarter and thirdfirst quarter of 2010, the Company2011, we and Origin each contributed $5$7 million and $8 million, respectively, of cash to Transform.  The Company recognizes its share of earnings or losses from Transform on a two-month lag.

The Company’ carrying value of its equity interest in Transform exceeds its proportionate share of Transform’s equity.  This difference is being amortized as a charge to earnings in the Company’s statement of operations through equity in net income (losses) of equity method investees (the “Transform Amortization”).  As of June 3, 2010, $28 million of Transform Amortization remained to be recognized over a weighted-average period of 7 years.

The Company’s results of operations for the third quarter of 2010 include losses of $6 million from its equity interest in Transform.  The Company’sOur results of operations for the first nine monthsquarter of 2010 include $92011 included $5 million of net sales, which approximates itsour cost, for transition services provided to Transform.

As of June 3, 2010, other noncurrent assets included $34 million for the manufacturing facilities leased to Transform and liabilities included $34 million for deferred rent revenue on the fully-paid lease.  Additionally, as of June 3, 2010, other noncurrent assets and liabilities included $6 million for the value of certain equipment and intangible assets, which the Company was obligated to contribute to Transform.

The Company has concluded that Transform is a variable interest entity because the Company’s equity investment at risk is not sufficient to permit Transform to finance its activities without additional subordinated financial support from its investors.  Origin and the Company are considered related parties under the accounting standards for consolidating variable interest entities.  The Company reviewed several factors to determine whether it is the primary beneficiary of Transform, including the relationships and significance of Transform’s activities and operations relative to Origin and the Company and certain other factors.  Based on those factors, the Company determined that Origin is more closely associated with, and therefore the primary bene ficiary of, Transform.  The Company accounts for its interest using the equity method of accounting and does not consolidate the entity.

As of June 3, 2010, the Company’s maximum exposure loss on its equity interest in Transform equaled $74 million.

Aptina:  In the fourth quarter of 2009, the Companywe sold a 65% interest in Aptina, previously a wholly-owned subsidiary, to Acquisition L.P. (owned primarily by Riverwood Capital LLC and TPG Partners VI, L.P.).subsidiary.  A portion of the 65% interest held by Acquisition L.P.we sold is in the form of convertible preferred shares that have a liquidation preference over the common shares.  As a result, aswe recognize our share of June 3, 2010, the Company’s remaining interest represented 64% of Aptina’s common stock, and Acquisition L.P. held 36% of Aptina’s common stock.  The Company recognizes its share ofAptina's earnings or losses from Aptinabased on a two-month lag.  The Company’s resultsour common stock ownership percentage, which was 64% as of operations for the third quarter and first nine months of 2010 include losses of $11 million and $16 million, respectively, for its equity interest in Aptina.December 2, 2010.

The Company manufactures imaging productsWe manufacture components for CMOS image sensors for Aptina under a wafer supply agreement.  In the thirdfirst quarter of 2011 and first nine months of 2010, the Companywe recognized sales of $92$59 million and $280$108 million, respectively, and cost of goods sold of $89$72 million and $283$109 million, respectively, from products sold to Aptina.

11



Accounts Payable and Accrued Expenses 
June 3,
2010
  
September 3,
2009
 
       
Accounts payable
 $844  $526 
Salaries, wages and benefits
  278   147 
Related party payables
  203   83 
Income and other taxes
  54   32 
Customer advances
  7   150 
Other
  106   99 
  $1,492  $1,037 
Accounts Payable and Accrued Expenses
As of December 2, 2010  September 2, 2010 
       
Accounts payable
 $1,273  $799 
Salaries, wages and benefits
  255   346 
Related party payables
  98   194 
Income and other taxes
  40   51 
Other
  157   119 
  $1,823  $1,509 

Related party payables consistedincluded of amounts primarily due to Inotera under the Inotera Supply Agreement consisting of $136$95 million and $51$105 million as of June 3,December 2, 2010 and September 3, 2009,2, 2010, respectively, for the purchase of DRAM products and $32 million as of September 3, 2009 for underutilized capacity.products.  Related party payables as of June 3,September 2, 2010 also included $65$86 million for amounts due for the purchase of memory products related to the Hynix JVunder a supply agreement.  (See “Equity Method Investments” note.)agreement with Hynix.

As of September 3, 2009, customer advances included $142 million to provide certain NAND Flash memory products to Apple Computer, Inc. (“Apple”) through December 31, 2010 pursuant to a prepaid NAND Flash supply agreement.  As of June 3,2, 2010 and September 3, 2009,2, 2010, other accounts payable and accrued expenses included $11$12 million and $24$16 million, respectively, for amounts due to Intel for NAND Flash product design and process development and licensing fees pursuant to a product designs development agreement.

Debt 
June 3,
2010
  
September 3,
2009
 
       
Convertible senior notes, stated interest rate of 1.875%, effective interest rate of 7.9%, net of discount of $255 million and $295 million, respectively, due June 2014
 $1,045  $1,005 
Capital lease obligations, weighted-average imputed interest rates of 6.7%, due in monthly installments through February 2023
  503   559 
TECH credit facility, effective interest rate of 4.0% and 3.6% , respectively, net of discount of $2 million and $2 million, respectively, due in periodic installments through May 2012
  398   548 
Convertible senior notes, interest rate of 4.25%, due October 2013
  230   230 
EDB note, denominated in Singapore dollars, interest rate of 5.4%
  --   208 
Mai-Liao Power note, stated interest rate of 2.5% and 2.4%, respectively, effective interest rate of 12.1%, net of discount of $7 million and $18 million, respectively, due November 2010
  193   182 
Convertible subordinated notes, interest rate of 5.6%, due April 2010
  --   70 
Other notes
  --   1 
   2,369   2,803 
Less current portion
  (652)  (424)
  $1,717  $2,379 

In the first quarter of 2010, the Company adopted a new accounting standard for certain convertible debt.  The new standard was applicable to the Company’s 1.875% convertible senior notes with an aggregate principal amount of $1.3 billion issued in May 2007 (the “Convertible Notes”) and required the liability and equity components of the Convertible Notes to be accounted for separately.cost-sharing agreements.  (See “Adjustments for Retrospective Application of New Accounting Standards”"Consolidated Variable Interest Entities" note.)

In the third quarter of 2010, the Company recorded $13 million in capital lease obligations with a weighted-average imputed interest rate of 9.6%, payable in periodic installments through May 2013.  As of June 3, 2010, $34 million of the Company’s total capital lease obligations contained covenants that require minimum levels of tangible net worth, cash and investments.  On May 13, 2010, the Company modified a loan agreement with a lender and, as a result, $21 million of previously restricted cash became available to the Company.  The Company was in compliance with its covenants related to capital lease obligations as of June 3, 2010.
Debt
As of December 2, 2010  September 2, 2010 
       
Convertible senior notes, stated interest rate of 1.875%, effective interest rate of 7.9%, net of discount of $166 million and $242 million, respectively, due June 2014
 $783  $1,058 
Capital lease obligations, weighted-average effective interest rate of 7.1% and 7.2%, respectively, due in monthly installments through February 2023
  464   527 
TECH credit facility, effective interest rates of 3.9% net of discount of $1 million and $2 million, respectively, due in periodic installments through May 2012
  299   348 
Convertible senior notes, interest rate of 4.25%, due October 2013
  139   230 
Convertible senior notes, stated interest rate of 1.875%, effective interest rate of 7.0%, net of discount of $44 million, due June 2027
  131   -- 
Mai-Liao Power note, effective interest rate of 12.1%, net of discount of $4 million as of September 2, 2010
  --   196 
Other notes
  --   1 
   1,816   2,360 
Less current portion
  (468)  (712)
  $1,348  $1,648 

 
129
 

The TECH credit facility is collateralized by substantially all of the assets of TECH (approximately $1,700$1,777 million as of June 3,December 2, 2010) and contains covenants that, among other requirements, establish certain liquidity, debt service coverage and leverage ratios, and restrict TECH’sTECH's ability to incur indebtedness, create liens and acquire or dispose of assets.  In the first quarterAs of 2010, the covenants were modified and as of June 3,December 2, 2010, TECH was in compliance with the covenants.  The Company hasWe have guaranteed 100% of the outstanding amount of the TECH credit facility.  Under(See "TECH Semiconductor Singapore Pte. Ltd." note.)

Debt Restructure:  On November 3, 2010, we completed the following series of debt restructure transactions in connection with separate privately negotiated agreements entered into on October 28, 2010 with certain holders of our convertible notes:

-  Exchanged $175 million in aggregate principal amount of our 1.875% Convertible Senior Notes due 2014 (the "2014 Notes") for $175 million in aggregate principal amount of new 1.875% Convertible Senior Notes due 2027 (the "2027 Notes") (the "Exchange Transaction").

-  Repurchased $176 million in aggregate principal amount of our 2014 Notes for $171 million in cash (the "Partial Repurchase of 2014 Notes").

-  Repurchased $91 million in aggregate principal amount of our 4.25% Convertible Senior Notes due 2013 (the "2013 Notes") for $166 million in cash (the "Partial Repurchase of 2013 Notes").

Exchange Transaction:  In the Exchange Transaction, $175 million in aggregate face value of our 2014 Notes were extinguished.  The liability and equity components of the 2014 Notes were stated separately pursuant to the accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion.  Accordingly, the extinguishment resulted in the derecognition of $144 million in debt for the principal of the 2014 Notes (net of $31 million of debt discount) and $13 million of additional capital.  We recognized a loss of $15 million on the exchange based on the estimated $157 million fair value of the debt component of the 2014 Notes exchanged and thei r $142 million carrying value (net of unamortized issuance costs).

The liability and equity components of the 2027 Notes issued in the Exchange Transaction were also stated separately pursuant to the accounting standards.  As of the issuance date of the 2027 Notes, we recorded $130 million as debt, $40 million as additional capital and $2 million for deferred debt issuance costs (included in other noncurrent assets).  The amount recorded as debt is based on the fair value of the debt component as a standalone instrument, which was determined using an interest rate for similar nonconvertible debt issued by entities with credit ratings comparable to ours at the time of issuance.  The $45 million difference between the debt recorded at inception and its principal amount will be accreted to principal through interest expense to th e notes' estimated maturity in June 2017.  The fair value of the 2027 Notes was based on the trading price on the exchange date (Level 1).  The fair value of the debt components of the 2014 Notes and the 2027 Notes were estimated using an interest rate for nonconvertible debt, with terms similar to the debt components of the notes on a stand-alone basis, issued by entities with credit ratings comparable to ours at the exchange date (Level 2).

The 2027 Notes have an initial conversion rate of 91.7431 shares of common stock per $1,000 principal amount, subject to adjustment upon certain events specified in the indenture, and are convertible, subject to the conditions specified below, into (1) cash up to the aggregate principal amount of 2027 Notes, and (2) shares of our common stock or cash, at our election, for the remainder, if any, of our conversion obligation.  As a result of these settlement terms upon conversion, only the amounts payable in excess of the principal amounts of the 2027 Notes are considered in diluted earnings per share under the treasury stock method.
The 2027 Notes may be converted by their holders on or after March 1, 2027 until June 1, 2027.  Prior to March 1, 2027, the notes may be converted by their holders under any of the following circumstances: (1) during any calendar quarter beginning after December 31, 2010 (and only during such 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 immediately preceding calendar quarter is more than 130% of the conversion price (approximately $14.17); (2) the notes have been called for redemption; (3) specified distributions to holders of our common stock are made, or specified corporate events occur; (4) during the five business days after any five consecutive trading day perio d in which the trading price per $1,000 principal amount of notes for each trading day of that period is less than 98% of the product of the closing price of our common stock and the conversion rate of the notes; or (5) upon our election to terminate the conversion right of the notes.
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If the 2027 Notes are converted by their holders in connection with a make-whole change in control (as defined in the indenture), we may, under certain circumstances, be required to pay a make-whole premium in the form of an increase in the conversion rate.  Additionally, in the event of (1) a change in control or (2) on June 1, 2017, we may be required to repurchase all or a portion of the notes at a repurchase price equal to 100% of the principal amount, plus accrued interest.  We may elect to redeem all or any portion of the notes on or after June 1, 2014, at a redemption price equal to 100% of the principal amount, plus accrued interest.
We may elect to terminate the conversion right of the 2027 Notes if the daily volume weighted average price of our common stock is greater than or equal to 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period.  If we terminate the conversion right prior to June 1, 2014 and any 2027 Notes are converted in connection with the termination, we will pay a make-whole premium equal to the accrued interest as of the conversion date plus the interest that would have been paid through May 31, 2014.  Subject to the terms of the credit facility, TECH had $60 millionindenture, we may, at our election, deliver shares of common stock in restrictedlieu of cash as of June 3, 2010.with respect to this make-whole payment.

On June 1, 2010,Partial Repurchase of the Company repaid2014 Notes:  Because the liability and equity components of the 2014 Notes were stated separately, the repurchase of $176 million aggregate principal amount resulted in the derecognition of $144 million in debt (net of $32 million of debt discount) and $13 million of additional capital.  We recognized a loss of $17 million (including transaction fees) on the repurchase based on the estimated $158 million fair value of the debt components of the 2014 Notes repurchased.  The fair value of the debt component of the 2014 Notes was estimated using an interest rate for nonconvertible debt, with terms similar to the debt component of the notes on a stand-alone basis, issued by e ntities with credit ratings comparable to ours at the exchange date (Level 2).

Partial repurchase of the 2013 Notes:  We recognized a loss of $79 million (including transaction fees) in the repurchase of the 2013 Notes.

Debt Guarantee:  Concurrent with the Numonyx acquisition, we entered into agreements with STMicroelectronics N.V. and DBS Bank Ltd. ("DBS") that require us to guarantee an outstanding loan, made by DBS to Hynix-Numonyx Semiconductor Ltd. (the "Hynix JV").  The outstanding balance of $213the Hynix JV loan was $250 million as of the acquisition date and is due in periodic installments from 2014 through 2016.  Under the agreements, we deposited $250 million into a pledged account at DBS to collateralize the Singapore Economic Development Board that was due February 2012.guarantee of the loan, accounted for as restricted cash.  The amount on deposit and our guarantee decrease as payments are made by the Hynix JV against the loan.  As of December 2, 2010, we had a liability of $15 million for the guarantee.

In the first quarter of 2010, the Company’s note payable to Nan Ya Plastics was replaced with a note payable to Mai-Liao Power Corporation, an affiliate of Nan Ya Plastics.  Nan Ya Plastics and Mai-Liao Power Corporation are subsidiaries of Formosa Plastics Corporation.  The note to Mai-Liao Power Corporation has the same terms and remaining maturity as the previous note to Nan Ya Plastics.  The Company’s note to Mai-Liao Power Corporation is collateralized by a first-priority security interest in certain of the Inotera shares owned by the Company aggregating a maximum market value of $250 million.  Based on Inotera’s share price as of June 3, 2010 and the number of shares underlying the collateral, the carrying value of the collater al was $135 million.  (See “Equity Method Investments – DRAM joint ventures with Nanya – Inotera” note.)

On April 1, 2010, the Company repaid the $70 million outstanding principal balance and accrued interest on the 5.6% convertible subordinated notes.  The conversion option of these notes expired unexercised.

Contingencies

The Company hasWe have accrued a liability and charged operations for the estimated costs of adjudication or settlement of various asserted and unasserted claims existing as of the balance sheet date, including those described below.  The Company isWe are currently a party to other legal actions arising out of the normal course of business, none of which is expected to have a material adverse effect on the Company’sour business, results of operations or financial condition.

In the normal course of business, the Company iswe are a party to a variety of agreements pursuant to which itwe may be obligated to indemnify the other party.  It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of the Company’sour obligations and the unique facts and circumstances involved in each particular agreement.  Historically, our payments made by the Company under these types of agreements have not had a material adverse effect on the Company’sour business, results of operations or financial condition.

The Company isWe are involved in the following antitrust, patent and securities matters.

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Antitrust matters:  On May 5, 2004, Rambus, Inc. (“Rambus”("Rambus") filed a complaint in the Superior Court of the State of California (San Francisco County) against the Companyus and other DRAM suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus DRAM (“RDRAM”("RDRAM") by eliminating competition and stifling innovation in the market for computer memory technology and computer memory chips.  Rambus’Rambus' complaint alleges various causes of action under California state law including, among other things, a conspiracy to restrict output and fix prices, a conspiracy to monopolize, intentional interference with prospective economic advantage, and unfair competition. 0; Rambus alleges that it is entitled to actual damages of more than a billion dollars and seeks joint and several liability, treble damages, punitive damages, a permanent injunction enjoining the defendants from the conduct alleged in the complaint, interest, and attorneys’attorneys' fees and costs.  ANo definitive trial date has notyet been scheduled.scheduled, but the Court indicates it is targeting either a February or June 2011 start date.


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At least sixty-eight purported class action price-fixing lawsuits have been filed against the Companyus and other DRAM suppliers in various federal and state courts in the United States and in Puerto Rico on behalf of indirect purchasers alleging price-fixing in violation of federal and state antitrust laws, violations of state unfair competition law, and/or unjust enrichment relating to the sale and pricing of DRAM products during the period from April 1999 through at least June 2002.  The complaints seek joint and several damages, trebled, in addition to restitution, costs and attorneys’attorneys' fees.  A number of these cases have been removed to federal court and transferred to the U.S. District Court for the Northern District of California for consolidated pre-trial proc eedings.  On January 29, 2008,proceedings. & #160;In July, 2006, the Northern District of California court granted in part and denied in part the Company’s motion to dismiss plaintiffs’ second amended consolidated complaint.  Plaintiffs subsequently filed a motion seeking certification for interlocutory appeal of the decision.  On February 27, 2008, plaintiffs filed a third amended complaint.  On June 26, 2008, the United States Court of Appeals for the Ninth Circuit agreed to consider plaintiffs’ interlocutory appeal.  In addition, various states, through their Attorneys General have filed suit against the Companyfor approximately forty U.S. states and other DRAM manufacturers.  On July 14, 2006, and on September 8, 2006 in an amended complaint, the following Attorneys Generalterritories filed suit in the U.S. District Court for the Northern District of California:  Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Kentucky, Louisiana, Maine, Marylan d, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and the Commonwealth of the Northern Mariana Islands.  Thereafter, three states, Ohio, New Hampshire, and Texas, voluntarily dismissed their claims.California.  The remaining states filed a third amended complaint on October 1, 2007.  Alaska, Delaware, Kentucky, and Vermont subsequently voluntarily dismissed their claims.  The amended complaint alleges,complaints allege, among other things, violations of the Sherman Act, Cartwright Act, and certain other states’states' consumer protection and antitrust laws and seeksseek joint and several damages, trebled, as well as injunctive and other relief.  Additionally, on July 13, 2006, the State of New York filed a similar suit in the U.S. District Court for the Southern District of New York.  That case was subsequently transferred to the U.S. District Court for the Northern District of California for pre-trial purposes.  The State of New York filed an amended complaint on October 1, 2007.  On October 3, 2008, the California Attorney General filed a similar lawsuit in California Superior Court, purportedly on behalf of local California government entities, alleging, among other things, violations of the Cartwright Act and state unfair competition law.  On June 23, 2010, the Companywe executed a settlement agreement resolving these purported class-action indirect purchaser cases and the pending cases of the Attorneys General relating to alleged DRAM price-fixing in the United States.  Subject to certain conditions, including final court approval of the class settlements, the Companys ettlements, we agreed to pay a total of approximately $67 million in three equal installments over a two-year period.

Three purported class action lawsuits alleging price-fixing of DRAM lawsuitsproducts also have been filed against the Companyus in Quebec, Ontario, and British Columbia, Canada, on behalf of direct and indirect purchasers, allegingasserting violations of the Canadian Competition Act.  The substantive allegations in these cases are similar to those asserted in the DRAM antitrust cases filed in the United States.  Plaintiffs’Plaintiffs' motion for class certification was denied in the British Columbia and Quebec cases in May and June 2008, respectively.  Plaintiffs subsequently filed an appeal of each of those decisions.  On November 12, 2009, the British Columbia Court of Appeal reversed the denial of class certification and remanded the case for further proceedings.  The appeal of the Quebec case i sis still pending.

In February and March 2007, All American Semiconductor, Inc., Jaco Electronics, Inc., and the DRAM Claims Liquidation Trust each filed suit against the Companyus and other DRAM suppliers in the U.S. District Court for the Northern District of California after opting-out of a direct purchaser class action suit that was settled.  The complaints allege, among other things, violations of federal and state antitrust and competition laws in the DRAM industry, and seek joint and several damages, trebled, as well as restitution, attorneys’attorneys' fees, costs and injunctive relief.

On June 21, 2010, the Brazil Secretariat of Economic Law of the Ministry of Justice (“SDE”("SDE") announced that it had initiated an investigation relating to alleged anticompetitive activities within the DRAM industry.  industry.  The SDE’sSDE's Notice of Investigation names various DRAM manufacturers and certain executives, including the Company,us, and focuses on the period from July 1998 to June 2002.  The Company has not yet been served with the investigation.

Three purportedOn September 24, 2010, Oracle America Inc. ("Oracle"), successor to Sun Microsystems, a DRAM purchaser that opted-out of a direct purchaser class action lawsuits allegingsuit that was settled, filed suit against us in U.S. District Court for the Northern District of California.  The complaint alleges DRAM price-fixing of SRAM products have been filed in Canada, assertingand other violations of federal and state antitrust and unfair competition laws based on purported conduct for the Canadian Competition Act.  These cases assert claims on behalf of a purported class of individualsperiod from August 1, 1998 through at least June 15, 2002.  Oracle is seeking joint and entities that purchased SRAM products directly or indirectly from various SRAM suppliers.several damages, trebled, as well as restitution, disgorgement, attorneys' fees, costs and injunctive relief.

In addition, three purported class action lawsuits alleging price-fixing of Flash products have been filed in Canada, asserting violations of the Canadian Competition Act.  These cases assert claims on behalf of a purported class of individuals and entities that purchased Flash memory directly and indirectly from various Flash memory suppliers.

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The Company isWe are unable to predict the outcome of these lawsuits and therefore cannot estimate the range of possible loss.loss, except as noted above.  The final resolution of these alleged violations of antitrust laws could result in significant liability and could have a material adverse effect on the Company’sour business, results of operations or financial condition.

12
Patent matters:  As is typical in the semiconductor and other high technology industries, from time to time, others have asserted, and may in the future assert, that the Company’sour products or manufacturing processes infringe their intellectual property rights.  In this regard, the Company iswe are engaged in litigation with Rambus relating to certain of Rambus’Rambus' patents and certain of the Company’sour claims and defenses.  Lawsuits betweenOur lawsuits with Rambus and the Company are pending in the U.S. District Court for the District of Delaware, U.S. District Court for the Northern District of California, Germany, France, and Italy.

On August 28, 2000, we filed a complaint against Rambus in the U.S. District Court for the District of Delaware seeking monetary damages and declaratory and injunctive relief.  The complaint alleges, among other things, various anticompetitive activities and also seeks a declaratory judgment that certain Rambus patents are invalid or unenforceable.  Rambus subsequently filed an answer and counterclaim in Delaware alleging, among other things, infringement of twelve Rambus patents and seeking monetary damages and injunctive relief.  We subsequently added claims and defenses based on Rambus' alleged spoliation of evidence and litigation misconduct.  The spoliation and litigation misconduct claims and defenses were heard in a bench trial before Judge Rob inson in October 2007.  On January 9, 2009, the Delaware CourtJudge Robinson entered an o pinionopinion in our favor of the Company holding that Rambus had engaged in spoliation and that the twelve Rambus patents in the suit were unenforceable against the Company.us.  Rambus subsequently appealed the decision to the U.S. Court of Appeals for the Federal Circuit.  That appeal is pending.  In the U.S. District Court for the Northern District of California, Rambus' complaint alleges that certain of our DDR2, DDR3, RLDRAM, and RLDRAM II products infringe as many as fourteen Rambus patents and seeks monetary damages, treble damages, and injunctive relief.  The trial on athe patent phase of thethat case has been stayed pending resolution of Rambus’Rambus' appeal of the Delaware spoliation decision or further order of the California Federal Court.

On March 6, 2009, Panavision Imaging, LLC filed suit against the Companyus and Aptina Imaging Corporation, then a wholly-owned subsidiary of the Company (“Aptina”("Aptina"), in the U.S. District Court for the Central District of California.  The complaint alleges that certain of the Companyour and Aptina’sAptina's image sensor products infringe four Panavision Imaging U.S. patents and seeks injunctive relief, damages, attorneys’attorneys' fees, and costs.

On December 11, 2009, Ring Technology Enterprises of Texas LLC (“Ring”) filed suit against the Company in the U.S. District Court for the Eastern District of Texas alleging that certain of the Company’s memory products infringe one Ring Technology U.S. patent.  On June 26, 2010, the Company executed a settlement agreement with Ring resolving the dispute.

Among other things, the above lawsuits pertain to certain of the Company’sour SDRAM, DDR SDRAM, DDR2 SDRAM, DDR3 SDRAM, RLDRAM and image sensor products, which account for a significant portion of net sales.

The Company isWe are unable to predict the outcome of assertions of infringement made against the Companyus and therefore cannot estimate the range of possible loss.  A court determination that the Company’sour products or manufacturing processes infringe the intellectual property rights of others could result in significant liability and/or require the Companyus to make material changes to itsour products and/or manufacturing processes.  Any of the foregoing could have a material adverse effect on the Company’sour business, results of operations or financial condition.

Securities matters:  On February 24, 2006, a putative class action complaint was filed against the Companyus and certain of itsour officers in the U.S. District Court for the District of Idaho alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder.  Four substantially similar complaints subsequently were filed in the same Court.  The cases purport to be brought on behalf of a class of purchasers of the Company’sour stock during the period February 24, 2001 to February 13, 2003.  The five lawsuits have been consolidated and a consolidated amended class action complaint was filed on July 24, 2006. 0;  The complaint generallygen erally alleges violations of federal securities laws based on, among other things, claimed misstatements or omissions regarding alleged illegal price-fixing conduct.  The complaint seeks unspecified damages, interest, attorneys’attorneys' fees, costs, and expenses.  On December 19, 2007, the Court issued an order certifying the class but reducing the class period to purchasers of the Company’sour stock during the period from February 24, 2001 to September 18, 2002.

The Company is unable  On August 24, 2010, we executed a settlement agreement resolving these purported class-action cases.  Subject to predict the outcome of these cases and therefore cannot estimate the range of possible loss.  Acertain conditions, including final court determination in any of these actions against the Company could result in significant liability and could have a material adverse effect on the Company’s business, results of operations or financial condition.


Adjustments for Retrospective Application of New Accounting Standards

Effective asapproval of the beginning of 2010, the Company adopted new accounting standards for noncontrolling interests and certain convertible debt instruments.  These new accounting standards required retrospective application and the Company’s financial statements contained herein have been adjustedclass settlement, we agreed to reflect the impact of adopting these new accounting standards.  The impact of the retrospective adoption is summarized below.


15


Noncontrolling interests in subsidiaries:  Under the new standard, noncontrolling interests in subsidiaries is (1) reportedpay $6 million as a separate component of equity in the consolidated balance sheets and (2) included in net income in the consolidated statement of operations.

Convertible debt instruments:  The new standard applies to convertible debt instruments that may be fully or partially settled in cash upon conversion and is applicableour contribution to the Company’s 1.875% convertible senior notes with an aggregate principal amount of $1.3 billion issued in May 2007 (the “Convertible Notes”).  The standard requires the liability and equity components of convertible notes to be accounted for separately, whereby the liability component recognized at the issuance of convertible notes equals the estimated fair value of a similar liability without a conversion option and the remainder of the proceeds received at issuance is allocated to equity.  In subs equent periods, the liability component recognized at issuance is amortized or accreted to the principal amount through interest expense.  The adoption of the new standard for the May 2007 Convertible Notes resulted in a $402 million decrease in debt, a $394 million increase in additional capital and an $8 million decrease in deferred debt issuance costs (included in other noncurrent assets).  Information related to the equity and debt components of the Convertible Notes is as follows:settlement.

As of 
June 3,
2010
  
September 3,
2009
 
       
Principal amount of the Convertible Notes
 $1,300  $1,300 
Unamortized discount
  (255)  (295)
Carrying amount of the Convertible Notes
 $1,045  $1,005 
         
Carrying amount of the equity component
 $394  $394 

The unamortized discount as of June 3, 2010 will be recognized as interest expense over approximately 4 years through the June 2014 maturity date of the Convertible Notes.

Information related to interest rates and expenses is as follows:

  Quarter Ended  Nine Months Ended 
  
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
             
Effective interest rate  7.9%  7.9%  7.9%  7.9%
Interest expense:                
Contractual interest coupon
 $6  $6  $18  $19 
Amortization of discount and issuance costs
  14   13   41   39 

Effect of adjustments for retrospective application of new accounting standards on financial statements:  The following tables set forth the financial statement line items affected by the retrospective application of the new accounting standards for noncontrolling interests and certain convertible debt as of and for the periods indicated:


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  Consolidated Statement of Operations 
  As Previously Reported  Effects of Adoption  As Retrospectively Adjusted 
  Noncontrolling Interests  Convertible Debt 
             
Quarter ended June 4, 2009:            
Other operating (income) expense, net $92  $--  $--  $92 
Interest expense  (37)  --   (12)  (49)
Other non-operating income (expense), net  (3)  --   (1)  (4)
Income tax (provision) benefit  2   --   2   4 
Net loss  (290)  (33)  (11)  (334)
Net loss attributable to Micron  --   (290)  (11)  (301)
Net loss per share:                
Basic and diluted
 $(0.36) $--  $(0.01) $(0.37)
                 
Nine months ended June 4, 2009:                
Other operating (income) expense, net $121  $--  $1  $122 
Interest expense  (102)  --   (35)  (137)
Income tax (provision) benefit  (15)  --   1   (14)
Net loss  (1,747)  (97)  (35)  (1,879)
Net loss attributable to Micron  --   (1,747)  (35)  (1,782)
Net loss per share:                
Basic and diluted
 $(2.22) $--  $(0.05) $(2.27)

  Consolidated Balance Sheet 
  As Previously Reported  Effects of Adoption  As Retrospectively Adjusted 
As of September 3, 2009 Noncontrolling Interests  Convertible Debt 
             
Assets            
Property, plant and equipment, net $7,081  $--  $8  $7,089 
Other noncurrent assets  371   --   (4)  367 
Total assets  11,455   --   4   11,459 
                 
Liabilities and equity                
Long-term debt $2,674  $--  $(295) $2,379 
Total liabilities  4,815   --   (295)  4,520 
                 
Micron shareholders’ equity:                
Additional capital
 $6,863  $--  $394  $7,257 
Accumulated deficit
  (2,291)  --   (94)  (2,385)
Accumulated other comprehensive (loss)
  (3)  --   (1)  (4)
Total Micron shareholders’ equity
  --   4,654   299   4,953 
Total equity  4,654   1,986   299   6,939 
Total liabilities and equity  11,455   --   4   11,459 


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  Consolidated Statement of Cash Flows 
  As Previously Reported  Effects of Adoption  As Retrospectively Adjusted 
  Noncontrolling Interests  Convertible Debt 
             
Nine Months Ended June 4, 2009:            
Cash flows from operating activities:            
Net loss
 $(1,747) $(97) $(35) $(1,879)
Depreciation and amortization
  1,648   --   35   1,683 
Noncontrolling interests in net income (loss)
  (97)  97   --   -- 


Derivative Financial Instruments

The Company isWe are exposed to currency exchange rate risk for monetary assets and liabilities held or denominated in foreign currencies, primarily the Singapore dollar, euro and yen.  The Company usesWe are also exposed to currency exchange rate risk for capital expenditures denominated in foreign currency, primarily the euro and yen.  We use derivative instruments to manage our exposures to foreign currency.  The Company’sFor exposures associated with our monetary assets and liabilities, our primary objective in entering into thesecurrency derivatives is to reduce the volatility of earnings associated withthat changes in foreign currency.  The Company’s derivatives consist primarily of forward contracts that are designed to reduce the impact that changes in foreigncurrency exchange rates have on earnings attributable to Micronour shareholders.  For exposures associated with capital expenditures, our primary objective in entering into currency derivatives is to re duce the volatility that changes in foreign currency exchange rates have on future cash flows.

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Our derivatives consist primarily of currency forward contracts.  The Company utilizesderivatives expose us to credit risk to the extent the counterparties may be unable to meet the terms of the derivative instrument.  Our maximum exposure to loss due to credit risk that we would incur if parties to the forward contracts failed completely to perform according to the terms of the contracts was equal to our carrying value of the forward contracts as of December 2, 2010.  We seek to mitigate such risk by limiting our counterparties to major financial institutions and by spreading risk across multiple major financial institutions.  In addition, we monitor the potential risk of loss with any one counterparty resulting from this type of credit risk on an ongoing basis. 0; We have the following currency risk management programs:

Currency derivatives without hedge accounting designation:  We utilize a rolling hedge strategy with currency forward contracts that generally mature within 35 days.  The curre ncy forward contracts are not designated fordays to hedge accounting.our foreign currency exposure in monetary assets and liabilities.  At the end of each reporting period, monetary assets and liabilities held or denominated in foreign currencies are remeasured in U.S. dollars and the associated outstanding forward contracts are marked-to-market.  Foreign currency forward contracts are valued at fair values based on bid prices of dealerdealers or exchange quotations (referred to as Level 2).  Realized and unrealized foreign currency gains and losses on derivative instruments and the underlying monetary assets are included in other operating income (expense).

The derivatives expose the Company to credit risk to the extent the counterparties may be unable to meet the terms  As of the derivative instrument.  The Company seeks to mitigate such risk by limiting its counterparties to major financial institutionsDecember 2, 2010 and by spreading risk across multiple major financial institutions.  In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis.

TotalSeptember 2, 2010, total gross notional amounts and fair values for derivative currency forward contracts outstanding as of June 3, 2010, presented by currency,derivatives without hedge accounting designation were as follows:

 
Notional Amount1
  Fair Value of 
Currency 
Notional Amount Outstanding
(in U.S. Dollars)
 Balance Sheet Line Item 
Fair Value
of Asset (Liability)
  (in U.S. Dollars)  
Asset 2
  
(Liability) 3
 
               
As of December 2, 2010         
Euro $251 Accounts payable and accrued expenses $(9) $320  $4  $(8)
Singapore dollar  154 Accounts payable and accrued expenses  (1)  207   --   (2)
Yen  60 Receivables  1   207   --   (4)
Other  8 Accounts payable and accrued expenses  -- 
 $473   $(9) $734  $4  $(14)
            
As of September 2, 2010            
Euro
 $260  $--  $(5)
Singapore dollar
  157   --   -- 
Yen
  104   1   -- 
 $521  $1  $(5)
            
1 Represents the face value of outstanding contracts
            
2 Included in receivables
            
3 Included in accounts payable and accrued expenses
            

For the third quarter and first nine months of 2010, the Companycurrency forward contracts not designated as hedging instruments, we recognized losses of $23$2 million and $38gains of $9 million in the first quarter of 2011 and 2010, respectively, which was included in other operating income (expense), on.

Currency derivatives with cash flow hedge accounting designation:  We utilize currency forward contracts.contracts that mature within 12 months to hedge the foreign currency exposures of cash flow for some forecasted capital expenditures.  Foreign currency forward contracts are valued at fair values based on market-based observable inputs including foreign exchange spot and forward rates, interest rate and credit risk spread (referred to as Level 2).  For those derivatives designated as cash flow hedges, the effective portion of the realized and unrealized gain or loss on the derivatives was included as a component of accumulated other comprehens ive income (loss) in shareholders' equity.  The amount in the accumulated other comprehensive income (loss) for those cash flow hedges are reclassified into earnings in the same line items of consolidated statements of operations and in the same periods in which the underlying transaction affects earnings.  The ineffective or excluded portion of the realized and unrealized gain or loss was included in other operating income (expense).  As of December 2, 2010 and September 2, 2010, total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting designation were as follows:

14
  
Notional Amount 1
  Fair Value of 
Currency (in U.S. Dollars)  
Asset 2
  
(Liability) 3
 
          
As of December 2, 2010         
Euro
 $354  $3  $(4)
Yen
  34   --   -- 
  $388  $3  $(4)
             
As of September 2, 2010            
Euro
 $196  $1  $-- 
Yen
  81   1   -- 
  $277  $2  $-- 
             
1Represents the face value of outstanding contracts
            
2 Included in receivables
            
3 Included in accounts payable and accrued expenses
            

For the first quarter of 2011, we recognized $6 million of net derivative gains in other comprehensive income from the effective portion of cash flow hedges.  The ineffective and excluded portions of cash flow hedges recognized in other operating income (expense) were not material in the first quarter of 2011.  In the first quarter of 2011, no amounts were reclassified from other comprehensive income (loss) to earnings and the amount of net derivative gains included in other accumulated comprehensive income (loss) to be reclassified into earnings within the next 12 months is not expected to be material.


Fair Value Measurements

Accounting standards establish three levels of inputs that may be used to measure fair value: quoted prices in active markets for identical assets or liabilities (referred to as Level 1), observable inputs other than Level 1 that are observable for the asset or liability either directly or indirectly (referred to as Level 2) and unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities (referred to as Level 3).


18


Fair value measurements on a recurring basis: Assets measured at fair value on a recurring basis as of June 3, 2010 and September 3, 2009 were as follows:

 As of June 3, 2010  As of September 3, 2009  December 2, 2010  September 2, 2010 
 Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total 
                                                
Money market(1)
 $1,710  $--  $--  $1,710  $1,184  $--  $--  $1,184  $1,387  $--  $--  $1,387  $2,170  $--  $--  $2,170 
Certificates of deposit(2)
  --   379   --   379   --   217   --   217   --   581   --   581   --   705   --   705 
Marketable equity investments(3)
  17   --   --   17   15   --   --   15   24   --   --   24   19   --   --   19 
Assets held for sale(4)(3)
  --   --   137   137   --   --   --   --   --   8   80   88   --   --   56   56 
 $1,727  $379  $137  $2,243  $1,199  $217  $--  $1,416  $1,411  $589  $80  $2,080  $2,189  $705  $56  $2,950 
                                                                
(1)Included in cash and equivalents.
(1)Included in cash and equivalents.
 
(1)Included in cash and equivalents.
 
(2)$297 million and $82 million included in cash and equivalents and other noncurrent assets, respectively, as of June 3, 2010 and $187 million and $30 million, respectively, as of September 3, 2009.
 
(2) Cash and equivalents and restricted cash included $247 million and $334 million, respectively, as of December 2, 2010 and $371 million and $334 million, respectively, as of September 2, 2010.
(2) Cash and equivalents and restricted cash included $247 million and $334 million, respectively, as of December 2, 2010 and $371 million and $334 million, respectively, as of September 2, 2010.
 
(3)Included in other noncurrent assets.
(3)Included in other noncurrent assets.
 
(3)Included in other noncurrent assets.
 
(4) The Company adopted the accounting standard for fair value measurements of nonfinancial assets and nonfinancial liabilities as of the beginning of 2010.
 

Certificates of deposit assets are valued using observable inputs in active markets for similar assets or alternative pricing sources and models utilizing observable market inputs (Level 2).

Assets held for sale are primarily comprised ofincluded semiconductor equipment and are valuedbuildings.  Fair value for the semiconductor equipment is based on inputsquotations obtained from equipment dealers, that require assumptions includingwhich consider the remaining useful life and configuration of the equipment (Level 3)and fair value of the real estate is determined based on sales of similar facilities and/or properties in comparable markets (Level3).  Losses recognized in the thirdfirst quarter of 2011 and first nine months of 2010 due to fair value measurements using Level 3 inputs were de minimis.

15
Fair value of financial instruments: As of June 3, 2010, theThe estimated aggregate fair value of the Company’s convertible debt instruments was $1,624 million compared to their aggregateand carrying value of $1,275 million (the carryingdebt instruments (carrying value excludes the equity component of the Convertible2014 Notes and the 2027 Notes which is classified in equity).  As of September 3, 2009, the estimated aggregate fair value of the Company’s convertible debt instruments was $1,410 million compared to their aggregate carrying value of $1,305 million (the carrying value excludes the equity component of the Convertible Notes which is classified in equity).  were as follows:

  December 2, 2010  September 2, 2010 
  
Fair
Value
  Carrying Value  
Fair
Value
  Carrying Value 
             
Convertible debt instruments $1,284  $1,053  $1,494  $1,288 
Other debt instruments  765   763   1,071   1,072 

The fair value of the Company’sour convertible debt instruments as of the above dates is based on quoted market prices in active markets (Level 1).  As, with the exception of June 3, 2010 and September 3, 2009, the aggregate fair valueour 2013 Notes as of the Company’s other debt instruments was $1,087 million and $1,458 million, respectively, as compared to their aggregate carrying value of $1,094 million and $1,498 million, respectively.December 2, 2010.  The fair value of the Company’s2013 notes of $238 million as of December 2, 2010 was determined based on observable inputs of quoted market prices in an inactive market and our stock price.  The fair value of our other debt instruments was estimated based on discounted cash flows using inputs that are observable in the market or that could be derived from or corroborated with observable market data, including interest rates based on yield curves of similar debt issues fromissued by parties with similar credit ratings as the Companysimilar to ours (Level 2).  Amounts reported as cash and equivalents, short-termshort-ter m investments, receivables, other current assets, and accounts payable and accrued expenses approximate their fair values.

Fair value measurements on a nonrecurring basis: In connection with the implementation of the new accounting standard for certain convertible debt instruments in the first quarter of 2010, the Company determined the $898 million fair value for the liability component of its Convertible Notes as of their May 2007 issuance date using a market interest rate for similar nonconvertible debt issued at that time by entities with credit ratings comparable to those of the Company (Level 2).  (See “Adjustments for Retrospective Application of New Accounting Standards” note.)value.


Equity Plans

As of June 3,December 2, 2010, the Companyunder our equity plans, we had an aggregate of 190.5168.9 million shares of its common stock reserved for issuance offor stock options and restricted stock awards, of which 132.9109.1 million shares were subject to outstanding awards and 57.659.8 million shares were available for future grants.awards.  Awards are subject to terms and conditions as determined by the Company’sour Board of Directors.

Stock options:  The CompanyWe granted 0.14.1 million and 15.814.1 million stock options during the thirdfirst quarter of 2011 and first nine months of 2010, respectively, with weighted-average grant-date fair values per share of $5.17$3.82 and $4.13, respectively.  The Company granted 0.3 million and 21.1 million stock options during the third quarter and first nine months of 2009, respectively, with weighted-average grant-date fair values per share of $2.70 and $1.67,$4.02, respectively.

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The fair values of option awards were estimated as of the date of grant using the Black-Scholes option valuation model.  The Black-Scholes model requires the input of assumptions, including the expected stock price volatility and estimated option life.  The expected volatilities utilized were based on implied volatilities from traded options on the Company’sour stock and on historical volatility.  TheBeginning in 2009, the expected lives of options granted subsequent to 2008 were based, in part, on historical experience and on the terms and conditions of the options.  ThePrior to 2009, the expected lives of options granted prior to 2009 were based on the simplified method provided by the Securities and Exchange Commission.  The risk-free interest rates utilized were based on th ethe U.S. Treasury yield in effect at the time of the grant.  No dividends were assumed in estimated option values.  Assumptions used in the Black-Scholes model are presented below:

 Quarter ended  Nine months ended 
 
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
Quarter ended December 2, 2010  December 3, 2009 
                  
Average expected life in years
  5.08   5.02   5.11   4.91   5.2   5.1 
Weighted-average expected volatility
  57%  71%  60%  73%
Weighted-average volatility  58%  61%
Weighted-average risk-free interest rate
  2.4%  1.9%  2.3%  1.9%  1.2%  2.3%

Restricted stock and restricted stock units (“("Restricted Stock Awards”Awards"):  As of June 3,December 2, 2010, there were 14.18.0 million shares of Restricted Stock Awards outstanding, of which 4.91.4 million were performance-based Restricted Stock Awards.  For service-based Restricted Stock Awards, restrictions generally lapse either in one-fourth or one-third increments during each year of employment after the grant date.  For performance-based Restricted Stock Awards, vesting is contingent upon meeting certain performance goals.

The Company granted 5.9 million and 1.8 million shares of service-based and performance-based Restricted Stock Awards, respectively, during the first nine months of 2010, including 4.1 million of service-based and 0.7 million of performance-based Restricted Stock Awards as part of the Company’s acquisition of Numonyx.  During the first nine months of 2009, the Company granted 1.9 million and 1.7 million shares of service-based and performance-based Restricted Stock Awards, respectively.  The weighted-average grant-date fair values per share were $8.75 and $8.29 for  Restricted Stock Awards granted during the third quarter and first nine months of 2010, respectively, and was $4.40 for Restricted Stock Awards granted duringin the first nine monthsquarter of 2009.2011 and 2010 were as follows:

16
Quarter ended December 2, 2010  December 3, 2009 
       
Service-based awards  1.2   1.8 
Performance-based awards  1.2   1.1 
Weighted-average grant-date fair values per share $7.58  $7.51 

Stock-based compensation expense:  Total compensation costs for the Company’sour equity plans were as follows:

 Quarter ended  Nine months ended 
 
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
Quarter ended December 2, 2010  December 3, 2009 
                  
Stock-based compensation expense by caption:                  
Cost of goods sold
 $5  $4  $18  $12  $4  $7 
Selling, general and administrative
  9   4   39   12   11   19 
Research and development
  4   4   14   10   4   5 
Equity in net income (losses) of equity method investees
  2   --   2   -- 
 $20  $12  $73  $34  $19  $31 
                        
Stock-based compensation expense by type of award:                        
Stock options
 $9  $7  $28  $22  $10  $8 
Restricted stock
  11   5   45   12 
Restricted stock awards
  9   23 
 $20  $12  $73  $34  $19  $31 

During the first quarter of 2010, the Company determined that certain performance-based restricted stock that previously had not been expensed met the probability threshold for expense recognition due to improved operating results.  As of June 3,December 2, 2010, $127$125 million of total unrecognized compensation costs, net of estimated forfeitures, related to non-vested awards was expected to be recognized through the thirdfirst quarter of 2014,2015, resulting in a weighted-average period of 1.241.3 years.  Stock-based compensation expense in the above presentation does not reflect any significant income tax benefits, which is consistent with the Company’sCompany's treatment of income or loss from its U.S. operations.  (See “Income Taxes”"Income Taxes" note.)

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Restructure

In response to a severe downturn in the semiconductor memory industry and global economic conditions, the Company initiated a restructure plan in 2009 primarily within the Company’s Memory segment.  In the first quarter of 2009, IM Flash, a joint venture between the Company and Intel, terminated its agreement with the Company to obtain NAND Flash memory supply from the Company’s Boise facility.  Also, the Company and Intel agreed to suspend tooling and the ramp of NAND Flash production at IM Flash’s Singapore wafer fabrication facility in the first quarter of 2009.  In addition, the Company phased out all remaining 200mm DRAM wafer manufacturing operations in Boise, Idaho in the second half of 2009.  The following table summarizes re structure charges (credits) resulting from the restructure activities:

  Quarter ended  Nine months ended 
  
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
             
(Gain) loss from disposition of equipment $(4) $7  $(9) $150 
Severance and other termination benefits  --   11   1   50 
Gain from termination of NAND Flash supply agreement  --   --   --   (144)
Other  (1)  1   1   2 
  $(5) $19  $(7) $58 

During the third quarter and first nine months of 2010, the Company made cash payments of $1 million and $7 million, respectively, for severance and related termination benefits and costs to decommission production facilities.  As of June 3, 2010, all amounts related to the restructure plan initiated in 2009 had been paid and as of September 3, 2009, $5 million of restructure costs, primarily related to severance and other termination benefits, were unpaid.  The Company does not expect to incur any additional material restructure charges related to the plan initiated in 2009.


Other Operating (Income) Expense, Net

Other operating (income) expense consisted of the following:

Quarter ended December 2, 2010  December 3, 2009 
 Quarter ended  Nine months ended       
 
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
            
Samsung patent cross-license agreement $(200) $-- 
(Gain) loss from changes in currency exchange rates  7   21 
Government grants in connection with operations in China  --   (8)
(Gain) loss on disposition of property, plant and equipment $(1) $12  $(10) $55   --   (2)
(Gain) loss from changes in currency exchange rates  1   28   20   25 
Other  (19)  52   (40)  42   2   (3)
 $(19) $92  $(30) $122  $(191) $8 

OtherOn October 1, 2010, we entered into a 10-year patent cross-license agreement with Samsung Electronics Co. Ltd. ("Samsung").  For the first quarter of 2011, other operating income inincluded a gain of $200 million for cash received from Samsung under the third quarteragreement.  An additional $40 million is due from this agreement on January 31, 2011 and first nine months of 2010 includes $16$35 million is due on March 31, 2011.  The license is a life-of-patents license for existing patents and $24 million, respectively, of grant income related to the Company’s operations in China.  Other operating income in the first nine months of 2010 also includes $11 million of receipts from the U.S. government in connection with anti-dumping tariffs which is reflected inapplications, and a 10-year term license for all other in the table above.  Other operating expense for the third quarter of 2009 includes a loss of $53 million to write down the carrying value of certain long-lived assets in connection with the Company’s sale of a majority interest in its Aptina imaging solutions business.patents.



21


Income Taxes

Income taxes infor the thirdfirst quarter of 2010 include2011 included a benefitcharge of $51$33 million from reduction of a portion of the deferred tax asset valuation allowance in connection with the expected salereceipt of $200 million from Samsung for a 10-year patent cross-license agreement, and also included taxes on our non-U.S. operations.  Income taxes for the Company's equity interest in the Hynix JV that was acquired as partfirst quarter of the Numonyx acquisition.  Except for this benefit, taxes in 2010 and 2009 primarily reflect taxes on the Company’sour non-U.S. operations and U.S. alternative minimum tax.  The Company hasWe have a valuation allowance for a substantial portion of itsour net deferred tax asset associated with itsour U.S. operations.  Taxes attributable toThe provision (benefit) for taxes on U.S. operations in the first quarters of 2011 and 2010 and 2009 werewas substantially offset by changes in the valuation allowance.

In connection with the acquisition of Numonyx, the Company accrued a $66 million liability related to uncertain tax positions on the tax years of Numonyx open to examination.  The Company has recorded an indemnification asset for a significant portion of these unrecognized income tax benefits related to uncertain tax positions.

17

Earnings Per Share

Basic earnings per share is computed based on the weighted-average number of common shares and stock rights outstanding.  Diluted earnings per share is computed based on the weighted-average number of common shares and stock rights outstanding plus the dilutive effects of stock options and convertible notes and restricted shares.notes.  Potential common shares that would increase earnings per share amounts or decrease loss per share amounts are antidilutive and are therefore excluded from diluted earnings per share calculations.  Antidilutive potential common shares that could dilute basic earnings per share in the future were 93.1162.2 million and 94.799.8 million for the thirdfirst quarter of 2011 and first nine months of 2010, respectively, and were 271.2 million for the third quarter and first nine months of 2009.respectively.

During the third quarter of 2010, in connection with the acquisition of Numonyx, the Company issued 137.7 million shares of common stock and issued 4.8 million restricted stock units.  Of the restricted stock units issued, 1.6 million were vested as of the time of issuance on May 7, 2010.  In connection with the Numonyx acquisition, as of June 3, 2010, there were 21.0 million shares of stock in escrow as partial security for Numonyx shareholders’ indemnity obligations.  The shares held in escrow were included in diluted earnings per share but were excluded from basic earnings per share.  (See “Numonyx Holdings B.V.” note.)

Quarter ended December 2, 2010  December 3, 2009 
 Quarter ended  Nine months ended       
 
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
            
Net income (loss) available to Micron’s shareholders – Basic $939  $(301) $1,508  $(1,782)
Net income available to Micron's shareholders – Basic $155  $204 
Net effect of assumed conversion of debt  24   --   70   --   2   23 
Net income (loss) available to Micron’s shareholders – Diluted $963  $(301) $1,578  $(1,782)
Net income available to Micron's shareholders – Diluted $157  $227 
                        
Weighted-average common shares outstanding – Basic  885.4   813.3   860.0   786.5   972.9   846.3 
Net effect of dilutive equity awards, escrow shares and assumed conversion of debt  164.0   --   159.7   --   58.4   154.4 
Weighted-average common shares outstanding – Diluted  1,049.4   813.3   1,019.7   786.5   1,031.3   1,000.7 
                        
Earnings (loss) per share:                
Earnings per share:        
Basic
 $1.06  $(0.37) $1.75  $(2.27) $0.16  $0.24 
Diluted
  0.92   (0.37)  1.55   (2.27)  0.15   0.23 



22


Comprehensive Income (Loss)

The components of comprehensive income (loss) and comprehensive income (loss) attributable to Micron were as follows:

  Quarter Ended  Nine Months Ended 
  
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
             
Net income (loss) $960  $(334) $1,541  $(1,879)
Other comprehensive income (loss), net of tax:                
Accumulated translation adjustment
  8   (22)  19   (26)
Unrealized gain on investment
  (3)  3   1   7 
Other
  --   --   1   1 
Total other comprehensive income (loss)  5   (19)  21   (18)
Comprehensive income (loss)  965   (353)  1,562   (1,897)
Comprehensive (income) loss attributable to noncontrolling interests
  (21)  33   (33)  97 
Comprehensive income (loss) attributable to Micron $944  $(320) $1,529  $(1,800)
Quarter ended December 2, 2010  December 3, 2009 
       
Net income $172  $202 
Other comprehensive income (loss), net of tax:        
Net gain (loss) on foreign currency translation adjustment
  18   8 
Net unrealized gain (loss) on investments
  3   -- 
Net gain (loss) on derivatives
  6   -- 
Pension liability adjustment
  1   -- 
Total other comprehensive income (loss)  28   8 
Comprehensive income (loss)  200   210 
Comprehensive income (loss) attributable to noncontrolling interests
  (21)  2 
Comprehensive income (loss) attributable to Micron $179  $212 



18


Consolidated Variable Interest Entities

NAND Flash joint ventures with Intel (“("IM Flash”Flash"):  The Company has formedWe have two joint ventures with Intel (IM Flash Technologies, LLCIntel: IMFT, formed in January 2006 and IM Flash Singapore, LLPIMFS, formed in February 2007)2007, to manufacture NAND Flash memory products for the exclusive benefit of the partners.  IMFT and IMFS are each governed by a Board of Managers, with the Companynumber of which adjusts depending on the parties' respective ownership interests.  We and Intel initially appointingappointed an equal number of managers to each of the boards.  The number of managers appointed by each party adjusts depending on the parties’ ownership interests.  These ventures will operate until 2016 but are subject to prior termination under certain terms and conditions.  &# 160;IMFT and IMFS are aggregated as IM Flash in the following disclosuresdisclosure due to the similarity of their ownership structure, function, operations and the way the Company’sour management reviews the results of their operations.  The partner’spartners' ownership percentages are based on contributions to the partnership.  As of June 3,December 2, 2010, the Companywe owned approximately 51% and Intel owned approximately 49% of IM Flash.

IM Flash is a variable interest entity because all costsIMFT.  In the first quarter of IM Flash are passed2011, we contributed $392 million to the CompanyIMFS and Intel through product purchase agreements and IM Flash is dependent upondid not make any contribution, increasing our ownership interest in IMFS to 71% from 57%.  In the Companysecond quarter of 2011, we contributed $343 million to IMFS and Intel fordid not make any additional cash requirements.  The Company and Intel are considered related parties under the accounting standards for consolidating variablecontribution, increasing our ownership interest entities duein IMFS to restrictions on transfers of ownership interests.  As a result, the primary beneficiary of IM Flash is the entity that is most closely associated with IM Flash.  The Company considered several factors to determine whether it or Intel is more closely associated with IM Flash, including the size and nature of IM Flash’s operations relative to the Company and Intel and which entity had the majori ty of economic exposure under the purchase agreements.  Based on those factors, the Company determined that it is more closely associated with IM Flash and is therefore the primary beneficiary.  Accordingly, the financial results of IM Flash are included in the Company’s consolidated financial statements and all amounts pertaining to Intel’s interests in IM Flash are reported as noncontrolling interests in subsidiaries.78%.

IM Flash manufactures NAND Flash memory products using designs we developed bywith Intel.  We generally share equally with Intel the Company and Intel.  Productproduct design and other research and development (“("R&D”&D") costs for NAND Flash are generally shared equally between the Company and Intel.costs.  As a result, of reimbursements received from Intel under a NAND Flash R&D cost-sharing arrangement, the Company’s R&D expenses were reduced by $24reimbursements from Intel of $23 million and $79$26 million for the thirdfirst quarter in 2011 and first nine months of 2010, respectively, and by $26 million and $83 million for the third quarter and first nine months of 2009, respectively.


23


IM Flash sells products to the joint venture partners generally in proportion to their ownership interests at long-term negotiated prices approximating cost.  IM Flash sales to Intel were $204$209 million and $569$193 million forin the thirdfirst quarter of 2011 and first nine months of 2010, respectively, and were $195 million and $728 million for the third quarter and first nine months of 2009, respectively.  As of June 3, 2010 and September 3, 2009,  IM Flash had receivables from Intel primarily for sales of NAND Flash products of $117 million and $95 million, respectively.  In addition, as of June 3, 2010 and September 3, 2009, the Company had receivables from Intel of $30 million and $29 million, respectively,payables related to NAND Flash product designIntel were as follows:

As of December 2, 2010  September 2, 2010 
       
Receivables from Intel for net sales $130  $128 
Payables to Intel for various services  1   2 

The following table presents IM Flash's distributions to, and process development activitie s.  As of June 3, 2010 and September 3, 2009, IM Flash had payables to Intel of $2 million and $3 million, respectively, for various services.contributions from, its shareholders:

Quarter ended December 2, 2010  December 3, 2009 
       
IM Flash distributions to Micron $51  $91 
IM Flash distributions to Intel  49   88 
Micron contributions to IM Flash  392   -- 

In the first quarter of 2009, IM Flash substantially completed construction of a new 300mm wafer fabrication facility structure in Singapore and the CompanySingapore.  Shortly afterwards, we and Intel agreed to suspend tooling and the ramp of production at this facility through the first quarter of 2010.due to industry conditions.  In the second quarter of 2010, IM Flash began moving forward with start-up activities in the Singapore wafer fabrication facility, including placing purchase orders and preparing the facility for tool installations that will commencecommenced in the first quarter of 2011.  The level of the Company’sour future capital contributions to IM Flash will depend on the extent to which Intel participates with the Company in future IM Flash capital calls.  Although our ownership interest in IMFS changed at the time we made such contributions, our share of the operating costs and supply from IMFS adjusts to changes in our ownership share, with generally a 12-month lag (depending on the status of IMFS as of such date) from the date of the applicable ownership change.  Accordingly, we anticipate that our share of IMFS costs and supply will increase from 51% as of December 2, 2010 to our ownership interest in IMFS.  Changes in IMFS ownership interests do not affect our NAND Flash R&D cost-sharing agreement with Intel.

The following table presents IM Flash’s distributions to, and contributions from, shareholders:

19
  Quarter Ended  Nine Months Ended 
  
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
             
IM Flash distributions to the Company $75  $124  $254  $606 
IM Flash distributions to Intel  72   119   244   582 
                 
Company contributions to IM Flash $26  $--  $51  $25 
Intel contributions to IM Flash  24   --   24   24 

Total IM Flash assets and liabilities included in the Company’sour consolidated balance sheets are as follows:

As of 
June 3,
2010
  
September 3,
2009
  December 2, 2010  September 2, 2010 
            
Assets            
Cash and equivalents $206  $114  $481  $246 
Receivables  132   111   171   154 
Inventories  146   161   167   160 
Other current assets  5   8   9   8 
Total current assets
  489   394   828   568 
Property, plant and equipment, net  2,957   3,377   3,392   2,894 
Other noncurrent assets  52   63   63   57 
Total assets
 $3,498  $3,834  $4,283  $3,519 
                
Liabilities                
Accounts payable and accrued expenses $151  $93  $587  $140 
Deferred income  133   137   127   127 
Equipment purchase contracts  11   1   31   8 
Current portion of long-term debt  7   6   7   7 
Total current liabilities
  302   237   752   282 
Long-term debt  63   66   61   62 
Other noncurrent liabilities  4   4   2   4 
Total liabilities
 $369  $307  $815  $348 
                
Amounts exclude intercompany balances that are eliminated in the Company’s consolidated balance sheets. 
Amounts exclude intercompany balances that are eliminated in our consolidated balance sheets.Amounts exclude intercompany balances that are eliminated in our consolidated balance sheets. 

The Company’sOur ability to access IM Flash’sFlash's cash and marketable investment securities to finance the Company’sour other operations is subject to agreement by the joint venture partners.  The creditors of each IM Flash entity have recourse only to the assets of each of the respective IM Flash entities and do not have recourse to any other assets of the Company.our assets.

24
MP Mask Technology Center, LLC (“("MP Mask”Mask"):  In 2006, the Companywe formed a joint venture, MP Mask, with Photronics Inc. (“Photronics”) to produce photomasks for leading-edge and advanced next generation semiconductors.  At inception and through June 3,December 2, 2010, the Companywe owned 50.01% and Photronics owned 49.99% of MP Mask.  The Company purchasesWe purchase a substantial majority of the reticles produced by MP Mask pursuant to a supply agreement.arrangement.  In connection with the formation of the joint venture, the Companywe received $72 million in 2006 in exchange for entering into a license agreement with Photronics, which is being recognized over the term of the 10-year agr eement.agreement.  As of June 3,December 2, 2010, deferred income and other noncurrentnoncurr ent liabilities included an aggregate of $43$39 million related to this agreement.  MP Mask made distributions to both the Company and Photronics of $5 million and $10 million each in the third quarter and first nine months of 2009.

MP Mask is a variable interest entity because all costs of MP Mask are passed on to the Company and Photronics through product purchase agreements and MP Mask is dependent upon the Company and Photronics for any additional cash requirements.  The Company and Photronics are also considered related parties under the accounting standards for consolidating variable interest entities due to restrictions on transfers of ownership interests.  As a result, the primary beneficiary of MP Mask is the entity that is more closely associated with MP Mask.  The Company considered several factors to determine whether it or Photronics is more closely associated with the joint venture.  The most important factor was the nature of the joint venture’s operations re lative to the Company and Photronics.  Based on those factors, the Company determined that it is more closely associated with the joint venture and is therefore the primary beneficiary.  Accordingly, the financial results of MP Mask are included in the Company’s consolidated financial statements and all amounts pertaining to Photonics’ interest in MP Mask are reported as noncontrolling interests in subsidiaries.

Total MP Mask assets and liabilities included in the Company’sour consolidated balance sheets are as follows:

As of 
June 3,
2010
  
September 3,
2009
  December 2, 2010  September 2, 2010 
            
Current assets $36  $25  $27  $35 
Noncurrent assets (primarily property, plant and equipment)  82   97   125   85 
Current liabilities  4   8   38   6 
                
Amounts exclude intercompany balances that are eliminated in the Company’s consolidated balance sheets. 
Amounts exclude intercompany balances that are eliminated in our consolidated balance sheets.Amounts exclude intercompany balances that are eliminated in our consolidated balance sheets. 

The creditors of MP Mask have recourse only to the assets of MP Mask and do not have recourse to any other assets of the Company.

Since the third quarter of 2009, the Company has leased to Photronics a facility to produce photomasks.  In the third quarter and first nine months of 2010, the Company received $2 million and $5 million, respectively, in lease payments from Photronics.our assets.



20


TECH Semiconductor Singapore Pte. Ltd.

Since 1998, the Company haswe have participated in TECH Semiconductor Singapore Pte. Ltd. (“TECH”("TECH"), a semiconductor memory manufacturing joint venture in Singapore among the Company,with Canon Inc. (“Canon”("Canon") and until December 17, 2010, Hewlett-Packard Company (“HP”Singapore (Private) Limited ("HP").  The financial results of TECH are included in the Company’sour consolidated financial statements and all amounts pertaining to the equity interests of Canon and, until December 17, 2010, HP, are reported as noncontrolling interests in subsidiaries.  On January 27, 2010, the Company purchased shares of TECH for $80 million, which increased the Company’s ownership from approximately 85% to approximately 87% and increased additional capital of Micron shareholders by $10 million.  As of June 3,December 2, 2010, the Companywe held an approximate 87% interest in TECH.  TECH's cash and marketable investment securities ($385 million as of December 2, 2010) are not anticipated to be available to pay dividends or finance our other operations.

The shareholders’shareholders' agreement for the TECH joint venture expires in April 2011.2011, but automatically extends for 10 years unless one or more of the shareholders provides a non-extension notification.  In September 2009, TECH received a notice from HP that it doesdid not intend to extend the TECH joint venture beyond April 2011.  The Company isOn December 17, 2010, we acquired HP's interest in TECH for $38 million, increasing our ownership interest to 90%.  We are in discussions with HP and Canon to reach a resolution of the matter.acquire their 10% interest.  The parties’parties' inability to reach a resolution of this matter prior to April 2011 could result in the dissolutionsale of TECH.


25


TECH’s cashTECH's assets and marketable investment securitiescould require repayment of TECH's credit facility ($278299 million outstanding as of June 3,December 2, 2010) are not anticipated to be available to pay dividends to the Company or finance its other operations..  As of June 3,December 2, 2010, TECH had $398 million outstanding under a credit facility which is collateralized by substantially all of the assets of TECH (carryingcarryin g value of approximately $1,700 million asTECH's net assets was $1.3 billion.  TECH accounted for 37% of June 3, 2010) and contains covenants that, among other requirements, establish certain liquidity, debt service coverage and leverage ratios, and restrict TECH’s ability to incur indebtedness, create liens and acquire or dispose of assets.  Inour total DRAM wafer production in the first quarter of 2010, the covenants were modified and as of June 3, 2010, TECH was in compliance with the covenants.  The Compa ny has guaranteed 100% of the outstanding amount of the TECH credit facility.  (See “Debt” note.)2011.


Segment Information

In the third quarter of 2010, the Companywe added a new reportable segment as a result of the acquisition of Numonyx and hashave two reportable segments, Memory and Numonyx.  The Company included the former Numonyx business has been included as a reportable segment since its acquisition on May 7, 2010.  The primary products of the Memory segment are DRAM and NAND Flash memory and the primary products of the Numonyx segment are NOR Flash and NAND Flash DRAM and Phase Change non-volatile memory.

In 2009, the Company’s two reportable segments were Memory and Imaging.  In the first quarter of 2010, Imaging no longer met the quantitative thresholds of a reportable segment and management does not expect that Imaging will meet the quantitative thresholds in future years.  As a result, Imaging is no longer considered a reportable segment and is included in the All Other nonreportable segments.  Prior period amounts have been recast to reflect Imaging in All Other.  Operating results of All Other reflect the activities of our nonreportable segments, primarily reflect activity of Imaging and also include activity ofCMOS image sensor, microdisplay, solar and other operations.  Segment information reported below is consistent with how it is reviewed and evaluated by the Company’sour chief operating decis iondecision makers and is based on the nature of the Company’sour operations and products offered to customers.  The Company doesWe do not identify or report depreciation and amortization, capital expenditures or assets by segment.

  Quarter ended  Nine months ended 
  
June 3,
2010
  
June 4,
2009
  
June 3,
2010
  
June 4,
2009
 
             
Net sales:            
Memory
            
External
 $2,097  $979  $5,592  $3,111 
Intersegment
  6   --   6   -- 
   2,103   979   5,598   3,111 
Numonyx
  80   --   80   -- 
All Other
  111   127   317   390 
Total segments
  2,294   1,106   5,995   3,501 
Elimination of intersegment
  (6)  --   (6)  -- 
Consolidated net sales
 $2,288  $1,106  $5,989  $3,501 
                 
Operating income (loss):                
Memory
                
External
 $569  $(149) $1,210  $(1,431)
Intersegment
  1   --   1   -- 
   570   (149)  1,211   (1,431)
Numonyx
  (21)  --   (21)  -- 
All Other
  (8)  (97)  (33)  (196)
Total segments
  541   (246)  1,157   (1,627)
Elimination of intersegment
  (1)  --   (1)  -- 
Consolidated operating income (loss)
 $540  $(246) $1,156  $(1,627)
  Quarter ended 
  December 2, 2010  December 3, 2009 
       
Net sales:      
Memory
 $1,611  $1,623 
Numonyx
  573   -- 
All Other
  68   117 
Total consolidated net sales
 $2,252  $1,740 
         
Operating income (loss):        
Memory
 $408  $213 
Numonyx
  17   -- 
All Other
  (35)  (12)
Consolidated operating income
 $390  $201 


Certain Concentrations

Sales to HP, Apple and Intel were 16%, 11% and 9%, respectively,Approximately 30% of net sales infor the thirdfirst quarter of 2010,2011 were to the computing market (including desktop PCs, servers, notebooks and workstations) and 25% were 14%, 10% and 10%, respectively, of net sales into the first nine months of 2010.  Sales to Intel were 18% and 22% of net sales in the third quarter and first nine months of 2009, respectively.  Substantially all of these sales were included in the Memory segment.mobile market.

 
2621
 


Item 2.  Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations

As used herein, "we," "our," "us" and similar terms include Micron Technology, Inc. and its subsidiaries, unless the context indicates otherwise.  The following discussion contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements include, but are not limited to, statements such as those made  in “Results"Results of Operations”Operations" regarding the future composition of the Company’s reportable segments; "Net Sales" regarding DRAM production received from Inotera in “Net Sales” regarding2011 and future royalty and other paymentsincreases in NAND Flash production resulting from Nanya;the production ramp of IM Flash's new fabrication facility; in “Gross Margin” regarding future charges for inventory write-downs regarding future margins on sales of Numonyx products; in “Selling,"Selling, General and Administrative”Administrative" re garding SG&A costs for the second quarter of 2011; in "Research and Development" regarding future legal expensesR&D costs for the second quarter of 2011 and increased expenses resulting from the acquisition of Numonyx; and in “Research and De velopment” regarding increased expenses resulting from the acquisition of Numonyx; in “Liquidity"Liquidity and Capital Resources”Resources" regarding capital spending in 2010 and 2011, future distributions from IM Flash to Intel and  future contribution by the Companyus to IM Flash; and in “Recently Issued Accounting Standards” regarding the impact from the adoption of new accounting standards.   The Company’sFlash.  Our actual results could differ materially from the Company’sour 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"Part II.  OTHER INFORMATIONOther Information – Item 1A.  Risk Factors.”"  This discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes and with the Company’sour Annual Report on Form 10-K for the year ended September 3, 20 09and Form 8-K filed on March 3,2, 2010.  All period references are to the Company’sour fiscal periods unless otherwise indicated. The Company’sOur fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31.  The Company’sOur fiscal 2010,2011, which ends on September 2, 2010,1, 2011, contains 52 weeks.  All tabular dollar amounts are in millions.  All production data includes the production of the Company and itsour consolidated joint ventures and the Company’s supply from Inotera.our other partnering arrangements.


Overview

The Company isWe are a global manufacturer and marketer of semiconductor devices, principally DRAM, NAND Flash and NOR Flash memory, as well as other innovative memory technologies, packaging solutions and semiconductor systems for use in leading-edge computing, consumer, networking, embedded and mobile products.  In addition, the Company manufactureswe manufacture semiconductor components for CMOS image sensors and other semiconductor products.  Its products are used in a broad range of electronic applications including personal computers, workstations, network servers, mobile phones and other consumer applications including Flash memory cards, USB storage devices, digital still cameras, MP3/4 players and in automotive applications.  The Company markets itsWe market our products through its i nternalour internal sales force, independent sales representatives and distributors primarily to original equipment manufacturers and retailers located around the world.  The Company’sOur success is largely dependent on the market acceptance of itsour diversified portfolio of semiconductor products, efficient utilization of the Company’sour manufacturing infrastructure,infras tructure, successful ongoing development of advanced process technologies and the return on research and development investments.

The Company hasWe obtain product for sale through two primary channels:  (1) production from wholly-owned manufacturing facilities and (2) production from our joint venture manufacturing facilities.  In recent years, we have obtained additional manufacturing scale and diversity of products through strategic acquisitions and various partnering arrangements, including joint ventures which have helped us to attain lower cash costs than we could otherwise achieve through internal investments alone.  In addition, we have leveraged our significant investments in research and development by sharing costs of developing memory product and process technologies with our joint venture partners.

We have made significant investments to develop the proprietary product and process technology that is implemented in itsour worldwide manufacturing facilities and through itsour joint ventures to enable the production of semiconductor products with increasing functionality and performance at lower costs.  The CompanyWe generally reducesreduce the manufacturing cost of each generation of product through advancements in product and process technology such as itsour leading-edge line-width process technology and innovative array architecture.  The Company continuesWe continue to introduce new generations of products that offer improved performance characteristics, such as higher data transfer rates, reduced package size, lower power consumption and increased memory density.  To leve rage itsleverage our significant investmentsinvestm ents in research and development, the Company haswe have formed various strategic joint ventures under which costs of developing memory product and process technologies are shared with itsour joint venture partners.  In addition, from time to time, the Company haswe have also sold and/or licensed technology to other parties.  The Company continuesWe continue to pursue additional opportunities to recover itsmonetize our investment in intellectual property through partnering and other arrangements.


 
2722
 


 
Numonyx Holdings B.V. (“Numonyx”("Numonyx"):On May 7, 2010, the Company completed its acquisition ofwe acquired Numonyx, Holdings B.V. (“Numonyx”), which manufactures and sells primarily NOR Flash and NAND Flash DRAM and Phase Change non-volatile memory technologies and products.  The Company acquired Numonyx to further strengthen the Company’s portfolio of memory products, increase manufacturing and revenue scale, access Numonyx’s customer base and provide opportunities to increase multi-chip offerings in the embedded and mobile markets.  In connection therewith, the Company issued 137.7 million shares of the Company̵ 7;s common stock in exchange for all of the outstanding Numonyx capital stock and issued 4.8 million restricted stock units to the employees of Numonyx in exchange for all of their outstanding restricted stock units.  The total fair value of the consideration the Company paid for Numonyx was $1,112 million and consisted of 137.7 million shares of our common stock issued to the Numonyx shareholders and 4.8 million restricted stock units issued to employees of Numonyx.  In connection with the acquisition, we recorded net assets of $1,549 million.  Because the fair value of the net assets acquired were valued at $1,549 million resulting inexceeded the purchase price, we recognized a gain on the acquisition of $437 million.million in the third quarter of 2010.  In addition, the Companywe recognized a $51 million income tax benefit in connection with the acquisition.  The Company’sOur results of operations for the thirdfirst quarter and first nine months of 20102011 include $80$573 million of net sales and $21$17 million of operating income from the Numonyx operations.   Our results of operations for 2010 included $635 million of net sales and $13 million of operating losses from the Numonyx operations after the May 7, 2010 acquisition date.  The Company incurred transaction costs of $19 million in the first nine months of 2010 in connection with the acquisition.

In connection with the Numonyx acquisition, the Company acquired a 20.7% noncontrolling interest in Hynix-Numonyx Semiconductor Ltd. (the “Hynix JV”), a joint venture with Hynix Semiconductor, Inc. (“Hynix”) and Hynix Semiconductor (WUXI) Limited.  Subsequent to the acquisition, Hynix gave notice of its exercise of an option to purchase the Company’s equity interest in the Hynix JV for approximately $425 million, subject to regulatory approval. Pursuant to the terms of a supply agreement with the Hynix JV, the Company purchased $29 million of memory products from the Hynix JV in the third quarter of 2010.  The Hynix JV is permitted to terminate the supply agreement upon exercise of the Hynix Call Option and the consummation of the equit y transfer.  On May 28, 2010, the Hynix JV delivered notice to the Company of its intent to terminate the JV supply agreement concurrent with the consummation of the equity transfer.  A significant portion of Numonyx’s net sales is dependent upon sales of products supplied to it by the Hynix JV pursuant to the JV supply agreement.  The Company and the Hynix JV are currently in discussions to enter into a new supply agreement.  If the parties are unable to reach agreement and the existing JV supply agreement is terminated, the Hynix JV will have no further supply obligations to the Company.  Even if the parties are able to reach agreement on a new supply agreement, it is anticipated that the existing JV supply agreement will be terminated, in which case the favorable pricing under the existing JV supply agreement will end at that time. There can be no assurance that the Company will reach agreement with the Hynix JV on a new supply agreement or that it will be able to do so on commercially acceptable terms.  Accordingly, the Company may be required to purchase certain products at market rates or forgo sales of these products to end customers.

 (See “Item(See "Item 1. Financial Statements – Notes to Consolidated Financial Statements – Numonyx Holdings B.V.”  note and “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity Method Investments – Hynix JV”"  note.)


28


Results of Operations

  Third Quarter   Second Quarter   Nine Months  
  2010  % of net sales   2009  % of net sales   2010  % of net sales   2010  % of net sales   2009  % of net sales  
  (amounts in millions and as a percent of net sales)  
Net sales:                                   
Memory
 $2,103   92 % $979   89 % $1,872   95 % $5,598   93 % $3,111   89 %
Numonyx
  80   3 %  --   --    --   --    80   1 %  --   --  
All Other
  111   5 %  127   11 %  89   5 %  317   6 %  390   11 %
Intersegment
  (6)  (0)%  --   --    --   --    (6)  (0)%  --   --  
  $2,288   100 % $1,106   100 % $1,961   100 % $5,989   100 % $3,501   100 %
                                              
Gross margin:                                             
Memory
 $839   40 % $104   11 % $649   35 % $1,930   34 % $(667)  (21)%
Numonyx
  5   6 %  --   --    --   --    5   6 %  --   --  
All Other
  5   5 %  3   2 %  (7)  (8)%  (1)  (0)%  58   15 %
Intersegment
  (1)  17 %  --   --    --   --    (1)  17 %  --   --  
  $848   37 % $107   10 % $642   33 % $1,933   32 % $(609)  (17)%
                                              
SG&A $190   8 % $80   7 % $100   5 % $387   6 % $272   8 %
R&D  142   6 %  162   15 %  148   8 %  427   7 %  508   15 %
Restructure  (5)  (0)%  19   2 %  (1)  (0)%  (7)  (0)%  58   2 %
Goodwill impairment  --   --    --   --    --   --    --   --    58   2 %
Other operating (income) expense, net  (19)  (1)%  92   8 %  (20)  (1)%  (30)  (1)%  122   3 %
Gain from acquisition of Numonyx  437   19 %  --   --    --   --    437   7 %  --   --  
Equity in net income (losses) of equity method investees  (19)  (1)%  (45)  (4)%  13   1 %  (23)  (0)%  (106)  (3)%
Net income (loss) attributable to Micron  939   41 %  (301)  (27)%  365   19 %  1,508   25 %  (1,782)  (51)%
  First Quarter   Fourth Quarter  
  2011  % of net sales   2010  % of net sales   2010  % of net sales  
                      
Net sales $2,252   100 % $1,740   100 % $2,493   100 %
Cost of goods sold  1,728   77 %  1,297   75 %  1,712   69 %
Gross margin
  524   23 %  443   25 %  781   31 %
                            
Selling, general and administrative  140   6 %  97   6 %  141   6 %
Research and development  185   8 %  137   8 %  197   8 %
Other operating (income) expense, net  (191)  (8)%  8   0 %  10   0 %
Operating income
  390   17 %  201   12 %  433   17 %
                            
Interest income (expense), net  (30)  (1)%  (45)  (3)%  (31)  (1)%
Other non-operating income (expense), net  (114)  (5)%  56   3 %  (2)  (0)%
Income tax (provision) benefit  (48)  (2)%  7   0 %  (25)  (1)%
Equity in net income (loss) of equity method investees  (26)  (1)%  (17)  (1)%  (16)  (1)%
Net (income) loss attributable to noncontrolling interests  (17)  (1)%  2   0 %  (17)  (1)%
Net income (loss) attributable to Micron
 $155   7 % $204   12 % $342   14 %

The Company’s thirdOur first quarter of 2010, second2011, fourth quarter of 2010 and thirdfirst quarter of 2009,2010 all contained 13 weeks.  The Company’s first nine months of 2010 contained 39 weeks as compared to 40 weeks for the first nine months of 2009.

In the third quarter of 2010, the Companywe added a new reportable segment as a result of the acquisition of Numonyx and hashad two reportable segments, Memory and Numonyx.  The CompanyWe included the former Numonyx business as a reportable segment since its acquisition on May 7, 2010.  In 2009, the Company had two reportable segments, Memory and Imaging.  In the first quarter of 2010, Imaging no longer met the quantitative thresholds of a reportable segment and management does not expect that Imaging will meet the quantitative thresholds in future years.  As a result, Imaging is no longer considered a reportable segment and is included in the Company’s All Other nonreportable segments.  Prior period amounts have been recast to reflect Imagin g in All Other.  Operating results of All Other reflect the activities of our nonreportable segments, primarily reflect activity of Imaging and also include activity of the Company’sCMOS image sensor, microdisplay, solar and other operations.  The continued integration of Numonyx into our operations will likely result in the re-definition of our reportable segments in the second quarter of 2011.

Net Sales

  First Quarter  Fourth Quarter 
  2011  % of net sales  2010  % of net sales  2010  % of net sales 
                   
Memory
 $1,611   72% $1,623   93% $1,832   73%
Numonyx
  573   25%  --   --   555   22%
All Other
  68   3%  117   7%  106   5%
  $2,252   100% $1,740   100% $2,493   100%

23
MemoryTotal net sales for the thirdfirst quarter of 2010 increased 12% from2011 decreased 10% as compared to the secondfourth quarter of 2010 primarily due to a 10% increasedecrease in Memory sales as a result of DRAM products and a 16% increasedeclines in average selling prices.  Total net sales for the first quarter of NAND Flash products.


29


Sales2011 increased 29% as compared to the first quarter of DRAM products for2010 primarily due to the acquisition of Numonyx in the third quarter of 2010 increased from2010.
Memory:  Memory sales for the secondfirst quarter of 2011 decreased 12% as compared to the fourth quarter of 2010 primarily due to a 9% increasedecrease in sales of DRAM products.

Sales of DRAM products decreased 19% from the fourth quarter of 2010 primarily due to a 23% decline in average selling prices andpartially offset by a 2%5% increase in gigabits sold.  Gigabit production of DRAM products increased 2%decreased 3% for the thirdfirst quarter of 2010 from2011 as compared to the secondfourth quarter of 2010, primarily due to a build-up in work in process inventory.  DRAM products acquired from our Inotera Memories, Inc. ("Inotera") joint venture decreased to 3% of our total net sales in the first quarter of 2011 as compared to 7% for the fourth quarter of 2010 and 10% for the first quarter of 2010 as a result of production declines during its transition to our DRAM technology.  We have rights and obligations to purchase 50% of Inotera's wafer production capacity under a supply agreement with Inotera (the "Inotera Supply Agreement").  We expect that our DRAM supply from Inotera will increase significantly in the second half of 2011 due to Inotera's completion of its transition to our DRAM technology.

Sales of DDR2 and DDR3 DRAM, our highest volume products, were 34% of our total net sales for the first quarter of 2011 as compared to 38% of total net sales for the fourth quarter of 2010 and 45% for the first quarter of 2010.  The decrease in DDR2 and DDR3 DRAM sales for the first quarter of 2011 as compared to 2010 was primarily attributable to declines in average selling prices.

 Aggregate sales of NAND Flash products in the Memory segment for the first quarter of 2011 increased 2% from the fourth quarter of 2010 primarily due to a 20% increase in units sold partially offset by a 15% decline in average selling prices.  We sell NAND Flash products in the Memory segment through three principal channels:  (1) to Intel Corporation ("Intel") through our IM Flash consolidated joint ventures at long-term negotiated prices approximating cost, (2) to original equipment manufacturers ("OEMs") and other resellers and (3) to retailers.

Sales through IM Flash to Intel were $209 million for the first quarter of 2011, $195 million for the fourth quarter of 2010 and $193 million for the first quarter of 2010.  Gigabit sales to Intel were 17% higher for the first quarter of 2011 as compared to the fourth quarter of 2010 primarily due to an 8% increase in gigabit production of NAND Flash products over the same period.  Production increases for NAND Flash were primarily due to improved productionmanufacturing efficiencies achieved primarily through transitions to higher density, advanced geometry devices.  DRAM products acquiredWe expect that the ramp of production at IMFS's new wafer fabrication facility in Singapore will begin to increase our NAND Flash production in the second half of 2011.  Our share of the operating costs and supply from IMFS adjusts to changes in our ownership interest, with generally a 12-month lag (depending on the status of IMFS as of such date) from the Company’s Inotera Memories, Inc. (“Inotera”) joint venture accounted for 11% and 13%date of the Company total net salesapplicable ownership change.  Accordingly, we anticipate that our share of IMFS costs and supply will increase from 51% as of December 2, 2010 to our ownership interest in IMFS.  For the third and second quarters of 2010, respectively.  The Company has rights and obligations to purchase up to 50% of Inotera’s wafer production capacity under a supply agreement with Inotera (the “Inotera Supply Agreement”).  Sales of DDR2 and DDR3 DRAM, the Company’s highest volume products, were 50% of the Company’s total net sales for the thirdfirst quarter of 2010, 52% of total net sales for the second quarter of 2010 and 30% of net sales for the third quarter of 2009.  The increase in DDR2 and DDR3 DRAM sales in third quarter of 2010 as compared to the third quarter of 2009 was primarily attributable to higher increases in average selling prices relative to the Company’s other products and the increased supply from Inotera.

The Company sells NAND Flash products in three principal channels:  (1) to Intel Corporation (“Intel”) through its IM Flash consolidated joint venture at long-term negotiated prices approximating cost, (2) to original equipment manufacturers (“OEMs”) and other resellers and (3) to retail customers.  Aggregate sales of NAND Flash products for the third quarter of 2010 increased 16% from the second quarter of 2010 due to a 21% increase in units sold partially offset by a 4% decrease in average selling prices.  Sales of NAND Flash products represented 28% of the Company’s total net sales for the third quarter of 2010, 29% of the Company’s total net sales for the second quarter of 2010 and 39% of net sales for the third quarter o f 2009.

Sales through IM Flash to Intel were $204 million for the third quarter of 2010, $172 million for the second quarter of 2010 and $195 million for the third quarter of 2009.  Gigabit sales to Intel were 22% higher in the third quarter of 2010 as compared to the second quarter of 2010 primarily due to a 30% increase in gigabit production of NAND Flash products over the same period primarily due to the completion of additional testing on products that were held in work in process inventories at the end of the second quarter of 2010 and improved production efficiencies achieved primarily through transitions to higher density, advanced geometry devices.  For the third quarter of 2010,2011, average selling prices for IM Flash sales to Intel decreased 2%8% as compared to the second qu arterfourth quarter of 2010 due to reductions in costs per gigabit.

Aggregate sales of NAND Flash products to the Company’sour OEM, reseller and retail customers were 15% higherrelatively unchanged for the thirdfirst quarter of 2011 as compared to the fourth quarter of 2010 as compared to the second quarter of 2010 primarily due to a 20% decrease in average selling prices was mitigated by a 24% increase in gigabit sales.  Average selling prices to the Company’sour OEM and reseller customers for the thirdfirst quarter of 20102011 decreased 5%24% as compared to the secondfourth quarter of 2010, andwhile average selling prices of the Company’sour Lexar brand, which is directed primarily at the retail market, decreased slightly.

The Company has formed partnering arrangements under which it has sold and/or licensed technology to other parties.  The Company’s Memory segment recognized royalty and license revenue of $21 million in the third quarter of 2010, $34 million in the second quarter of 2010 and $32 million in the third quarter of 2009.  The Company has a partnering arrangement with Nanya pursuant to which the Company and Nanya jointly develop process technology and designs to manufacture stack DRAM products.  In addition, the Company has deployed and licensed certain intellectual property related to the manufacture of stack DRAM products to Nanya and licensed certain intellectual property from Nanya.  The Company recognized $13 million, $26 million and $65 million, respectively, of license revenue in net sales from this arrangement during the third quarter, second quarter and first nine months of 2010, respectively, and recognized $25 million and $79 million during the third quarter and first nine months of 2009, respectively.  The Company recognized $207 million of cumulative license revenue from this arrangement from May 2008 through April 2010.  Effective April, 2010, the Company and Nanya began sharing equally in DRAM development costs and the Company’s research and development costs were reduced by $24 million in the third quarter of 2010 due to this cost sharing arrangement.  In addition, in the third quarter of 2010, the Company received $2 million of royalties from Nanya for sales of stack DRAM products manufactured by or for Nanya on process nodes of 50nm or higher and will continue to receive royalties from Nanya associated with previously developed technology.8%.

Memory sales for the thirdfirst quarter of 2010 increased 114% from2011 decreased 1% as compared to the thirdfirst quarter of 20092010 primarily due to a 162% increase4% decrease in sales of DRAM products andpartially offset by a 53%6% increase in sales of NAND Flash products.  Memory sales for the first nine monthsSales of 2010 increased 80%DRAM products decreased from the first nine monthsquarter of 20092010 primarily due to a 122% increase in sales of DRAM products and a 28% increase in sales of NAND Flash products.


30


Sales of DRAM products for the third quarter and first nine months of 2010 increased from the corresponding period of 2009 primarily due to increases of 78% and 85%, respectively, in gigabits sold and increases12% decline in average selling prices of 54% and 24%, respectively.  Increases in average selling prices on sales of DRAM products as a result of improved market conditions were partially offset by a shiftan 11% increase in product mix to a higher proportion of DDR2 and DDR3 DRAM products that realize significantly lower average selling prices per gigabit than sales of specialty DRAM products.gigabits sold.  Gigabit production of DRAM products increased approximately 80% and 82%10% for the thirdfirst quarter and first nine months of 2010, respectively, primarily due to additional supply received from the Company ’s Inotera joint venture and production efficiencies from improvements in product and process technologies.

Sales of NAND Flash products for the third quarter and first nine months of 2010 increased 53% and 28%, respectively, from the corresponding periods of 2009 primarily due to increases in gigabits sold of 72% and 67%, respectively, as a result of production increases.  The increases in NAND Flash gigabits sold were partially offset by declines of 11% and 23% in average selling prices per gigabit for the third quarter and first nine months of 2010, respectively.  Gigabit production of NAND Flash products for the third quarter and first nine months of 2010 increased 64% and 73%, respectively,2011 as compared to the corresponding periodsfirst quarter of 2009,2010, primarily due to transitions to higher density, advanced geometry devices.  TheAggregate sales of NAND Flash products for the first quarter of 2011 increased from the first quarter of 2010 primarily due to a 35% increase in units sold partially offset by a 21% decline in average selling prices.  Gigabit production increases were achieved despite t he shutdown of NAND Flash products increased 18% for the Boise fabrication facility infirst quarter of 2011 as compared to the second halffirst quarter of 2009.2010 primarily due to improved manufacturing efficiencies.

Numonyx:  Sales of Numonyx segment salesproducts for the thirdfirst quarter of 2011 increased 3% from the fourth quarter of 2010 reflectprimarily due to a 9% increase in average selling prices partially offset by a 5% decrease in gigabits sold.  Numonyx sales subsequent to the May 7, 2010 acquisition datewere composed primarily of Numonyx.  Under business acquisition accounting, the Company is unable to recognize revenue on sales of Numonyx products that at the acquisition date were in the distribution channelNOR Flash and accounted for on a sell-through basis.NAND Flash products.

24
Gross Margin

  First Quarter   Fourth Quarter  
  2011  % of net sales   2010  % of net sales   2010  % of net sales  
                      
Memory
 $426   26 % $442   27 % $672   37 %
Numonyx
  113   20 %  --   -- %  118   21 %
All Other
  (15)  (22)%  1   1 %  (9)  (8)%
  $524   23 % $443   25 % $781   31 %

The Company’sOur overall gross margin percentage declined from 31% for the fourth quarter of 2010 to 23% for the first quarter of 2011 primarily due to declines in the gross margin for Memory as a result of lower pricing mitigated by cost reductions.  Our overall gross margin percentage declined from 25% for the first quarter of 2010 to 23% for the first quarter of 2011 primarily due to declines in the gross margin for Memory and the acquisition of Numonyx.

Memory:  Our gross margin percentage for Memory products declined from 37% for the thirdfourth quarter of 2010 improved to 40% from 35%26% for the secondfirst quarter of 20102011 primarily due to improvementsdeclines in the gross margins foron sales of both DRAM and NAND Flash products.�� Our gross margin percentage for Memory products declined from 27% for the first quarter of 2010 to 26% for the first quarter of 2011 primarily due to a slight decline in the gross margins on sales of NAND Flash products.

The Company’s gross margins are impacted by charges to write down inventories to their estimated market values as a result of the significant decreases in average selling prices for both DRAM and NAND Flash products.  As charges to write down inventories are recorded in advance of when inventories are sold, gross margins in subsequent reporting periods are higher than they otherwise would be.  The impact of inventory write-downs on gross margins for all periods reflects inventory write-downs less the estimated net effect of prior period write-downs.  The effects of inventory write-downs on Memory gross margins by period were as follows:

  Third Quarter  Second Quarter  Nine Months 
  2010  2009  2010  2010  2009 
  (amounts in millions) 
                
Inventory write-downs $--  $--  $--  $--  $(603)
Estimated effect of previous inventory write-downs  4   242   9   35   676 
Net effect of inventory write-downs
 $4  $242  $9  $35  $73 

In future periods, the Company will be required to record additional inventory write-downs if estimated average selling prices of products held in finished goods and work in process inventories at a quarter-end date are below the manufacturing cost of those products.


31


Improvementsdecline in gross margins on sales of DRAM products for the thirdfirst quarter of 20102011 as compared to the secondfourth quarter of 2010 werewas primarily due to the 9% increase23% decrease in average selling prices.  DRAMprices mitigated by a 10% reduction in costs per gigabit for the third quarterprimarily as a result of 2010 were relatively unchanged from the second quarter of 2010 as cost reduction from improved production efficiencies was offset by higher costs of product purchased from the Company’s Inotera joint venture.manufacturing efficiencies.  DRAM products acquired from the Company’s Inotera joint venture accounted for 11% and 13%3% of the Company total net sales infor the third and second quartersfirst quarter of 2010, respectively.  The2011.  Our cost to the Company of wafers purchased under the Inotera Supply Agreement is based on a margin sharingmargin-sharing formula among the Com pany, Nanya, Inotera, and Inotera.ourselves.  Under such formula, all parties’parties' manufacturing costs related to wafers supplied by Inotera, as well as the Company’sour and Nanya’sNanya's selling prices for the resale of products from wafers supplied by Inotera, are considered in determining costs forthe cost of wafers acquired from Inotera.  For the thirdfirst quarter of 2011 and first nine months offor 2010, we realized significantly lower gross margins realized by the Company on sales of Inotera DRAM products were significantly lower than margins realized by the Company on thefor sales of itsour other DRAM products.  Gross margins on sales of DRAM products for the first quarter of 2011 were relatively unchanged as compared to the first quarter of 2010 as a 12% decrease in average selling prices was mitigated by a 17% reduction in costs per gigabit primarily as a result of improved production efficiencies.

The Company’sdecline in gross marginmargins on sales of NAND Flash products in Memory for the thirdfirst quarter of 2011 as compared to the fourth quarter of 2010 improved from the second quarter of 2010are primarily due to a 9% reductiondeclines in average selling prices per gigabit of 15%, mitigated by reductions in costs per gigabit partially offset by the 4% decrease in average selling prices.  The reduction in NAND Flash costs per gigabit was primarily dueof 10% as a $41 million recoveryresult of price adjustments for NAND Flash products purchased from other suppliers in prior periods as well as lower manufacturing costs as a result offrom increased production of higher-density, advanced-geometry devices.  Gross margins on sales of NAND Flash products reflect sales of approximately half of IM Flash’sFlash's output to Intel at long-term negotiated prices approximating cost.

The Company’s gross margin percentage for Memory products improved to 40% for the third quarter  Our cost of 2010 from 11% for the third quarter of 2009 primarily due to significant improvements in the gross margins on sales of both DRAM and NAND Flash products.  The Company’s gross margin percentage for Memory products improved to 34% for the first nine months of 2010 from negative 21% for the first nine months of 2009 primarily due to significant improvements on sales of both DRAM and NAND Flash products.

The Company’s gross margin on sales of DRAM products for the third quarter and first nine months of 2010 improved from the corresponding periods of 2009 primarily due to increases in average selling prices of 54% and 24%, respectively, and reductions in costs per gigabit of approximately 6% and 41%, respectively.

The Company’s gross margingoods sold on sales of NAND Flash products for the thirdfirst quarter of 2011, fourth quarter of 2010 and first nine monthsquarter of 2010 improvedincluded $44 million, $31 million and $9 million, respectively, of idle capacity costs from the corresponding periods of 2009 primarily due to reductionsIM Fl ash's wafer fabrication facility in costs per gigabit of 26% and 50%, respectively, as a result of lower manufacturing costs.Singapore.  The reductionsslight decline in costs per gigabitgross margins on sales of NAND Flash products for the thirdfirst quarter andof 2011 as compared to the first nine monthsquarter of 2010 were partially offset by thewas primarily due to declines in average selling prices per gigabit of 11% and 23%, respectively.21% mitigated by reductions in costs per gigabit of 21%.

Numonyx segmentNumonyx:  Our gross margin percentage for Numonyx products declined from 21% for the thirdfourth quarter of 2010 reflects operations subsequent to 20% for the first quarter of 2011 primarily due to a decline in the gross margins on sales of NAND Flash product partially offset by an increase in the gross margin on sales of NOR Flash products.  Gross margins on sales of NOR Flash product for the first quarter of 2011 improved from the fourth quarter of 2010 primarily due to a 4% reduction in costs and a 2% increase in average selling prices.  Gross margins on sales of NAND Flash products in Numonyx for the first quarter of 2011 declined from the fourth quarter of 2010 primarily due to an increase in costs as a result of sup ply from the Hynix-Numonyx Semiconductor  joint venture converting to market-based pricing in connection with Hynix's acquisition of Numonyx's interest in the joint venture in August 2010.  Numonyx was acquired on May 7, 2010 acquisition date of Numonyx.  Inand in acquisition accounting, Numonyx’sNumonyx's inventory was recorded at fair value reflecting its estimated selling price at the time of the acquisition, which was approximately $185 million higher than the cost of inventory recorded by Numonyx at the acquisition date.  Accordingly, Numonyx’s marginsThe adjustments to inventory costs in acquisition accounting reduced Numonyx's gross margin for both the thirdfirst quarter of 20102011 and future periods will be reduced by the amount of the adjustment to fair value until this inventory is sold.  The Company expects that the majority of the acquired inventory will be sold in the fourth quarter of 2010.2010 by approximately 10%.  Substantially all of the remaining costs of Numonyx inventory written up in the acquisition is expected to be reflected in cost of goods sold as the products are sold through the remainder of 2011.

25
Selling, General and Administrative

  
First Quarter
2011
  
Fourth Quarter
2010
  
First Quarter
2010
 
          
Memory
 $98  $88  $90 
Numonyx
  34   48   -- 
All Other
  8   5   7 
  $140  $141  $97 

Selling, general and administrative (“("SG&A”&A") expenses for the thirdfirst quarter of 2010 included charges2011 were relatively unchanged as compared to the fourth quarter of $64 million relating to accruals for estimated settlements in the indirect purchasers antitrust case and other matters and $10 million of SG&A costs incurred by Numonyx following the acquisition.2010.  SG&A expenses for the thirdfirst quarter and first nine months of 2010 include $12 million and $19 million, respectively, of Numonyx acquisition-related costs and also include higher payroll expenses resulting2011 increased 44% from the accrual of incentive-based compensation costs as compared to the corresponding periods of 2009.  The Company expects to incur increased SG&A expenses from Numonyx operations in the fourthfirst quarter of 2010 primarily due to increased costs associated with the Numonyx acquisition and to a lesser extent higher payroll expenses.  As a result of the acquisition of Numonyx, we expect to incur higher SG&A expenses for 2011 as compared to the third quarter o f 2010, which only reflected Numonyx’sNumonyx's operations from the May 7, 2010 acquisition date.  FutureWe expect that SG&A expense is expectedexpenses will approximate $140 million to vary, potentially significantly, depending on, among other things,$150 million for the numbersecond quarter of legal matters that are resolved relatively early in their life-cycle and the number of legal matters that progress to trial.2011.


32


Research and Development

  
First Quarter
2011
  
Fourth Quarter
2010
  
First Quarter
2010
 
          
Memory
 $111  $125  $133 
Numonyx
  62   64   -- 
All Other
  12   8   4 
  $185  $197  $137 

Research and development (“("R&D”&D") expenses vary primarily with the number of development wafers processed, the cost of advanced equipment dedicated to new product and process development and personnel costs.  Because of the lead times necessary to manufacture itsour products, the Companywe typically beginsbegin to process wafers before completion of performance and reliability testing.  The Company deemsWe deem development of a product complete once the product has been thoroughly reviewed and tested for performance and reliability.  R&D expenses can vary significantly depending on the timing of product qualification as costs incurred in production prior to qualification are charged to R&D.

R&D expenses for the thirdfirst quarter of 20102011 decreased 4%6% from the secondfourth quarter of 2010 primarily due to lower wafer processing costs in connection with the qualification of a decreasenumber of products.  R&D expenses for the first quarter of 2011 increased 35% from the first quarter of 2010 primarily due to costs associated with the Numonyx operations, partially offset by a DRAM cost-sharing arrangement with Nanya that commenced in the numberthird quarter of development wafers processed.2010.  As a result of amounts reimbursable from Nanya under the DRAM R&D cost-sharing arrangement, R&D expenses were reduced by $24$30 million infor the thirdfirst quarter of 2010, $292011 and $28 million infor the secondfourth quarter of 2010 and $26 million in the third quarter2010.  As a result of 2009 for amounts reimbursable from Intel under a NAND Flash R&D cost-sharing arrangement.arrangement, R&D expenses were reduced by $24$23 million infor the thirdfirst quarter of 20102011, $25 million for amounts reimbursable from Nanya under a DRAM R&D cost-sharing arrangement that commenced in the third quarter of 2010.  R&D expenses for the third quarter and first nine months of 2010 decreased 12% and 16%, respectively, from the corresponding periods of 2009 prim arily due to a reduction in R&D costs for imaging products as a result of the sale of a 65% interest in Aptina Imaging Corporation (“Aptina”) in the fourth quarter of 2009, partially offset by higher payroll expenses resulting from the accrual of incentive-based compensation costs.  The Company expects to incur increased R&D expenses from Numonyx’s operations in the fourth quarter of 2010 as compared toand $26 million for the thirdfirst quarter of 2010, which only reflected Numonyx’s operations2010.  We expect that R&D expenses, net of amounts reimbursable from our R&D partners, will approximate $195 million to $205 million for the May 7, 2010 acquisition date.second quarter of 2011.

The Company’sOur process technology R&D efforts are focused primarily on development of successively smaller line-width process technologies which are designed to facilitate the Company’sour transition to next generation memory products.  Additional process technology R&D efforts focus on the enablement of advanced computing and mobile memory architectures, the investigation of new opportunities that leverage the Company’sour core semiconductor expertise and the development of new manufacturing materials.  Product design and development efforts are concentrated on the Company’sour high density DDR3 DRAM and LP-DDR2 mobile Low Power DRAM  products as well as high density and mobile NAND Flash memory (including multi-level cell technology), NOR Flash memory, specialty memory, phase change memory and memory systems.system s.


26


Other Operating (Income) Expense, Net

Other operating (income) expense consisted of the following:

 Quarter ended  Quarter ended  Nine months ended  
First Quarter
2011
  
Fourth Quarter
2010
  
First Quarter
2010
 
 
June 3,
 2010
  
June 4,
 2009
  March 4, 2010  
June 3,
 2010
  
June 4,
 2009
          
               
Samsung patent cross-license agreement $(200) $--  $-- 
(Gain) loss from changes in currency exchange rates  7   3   21 
Government grants in connection with operations in China  --   --   (8)
(Gain) loss on disposition of property, plant and equipment $(1) $12  $(7) $(10) $55   --   9   (2)
(Gain) loss from changes in currency exchange rates  1   28   (2)  20   25 
Other  (19)  52   (11)  (40)  42   2   (2)  (3)
 $(19) $92  $(20) $(30) $122  $(191) $10  $8 

OtherOn October 1, 2010, we entered into a 10-year patent cross-license agreement with Samsung Electronics Co. Ltd. ("Samsung").  For the first quarter of 2011, other operating income inincluded a gain of $200 million for cash received from Samsung under the third quarteragreement.  An additional $40 million is due from this agreement on January 31, 2011 and first nine months of 2010 includes $16$35 million is due on March 31, 2011.  The license is a life-of-patents license for existing patents and $24 million, respectively, of grant income related to the Company’s operations in China.  Other operating income in the second quarter of 2010 includes $11 million of receipts from the U.S. government in connection with anti-dumping tariffs which is reflected inapplications, and a 10-year term license for all other in the table above.  Other operating expense for the third quarter of 2009 includes a loss of $53 million to write down the carrying value of certain long-lived assets in connection with the Company’s sale of a majority interest in its Aptina imaging solutions business.patents.


33


Interest Income/ExpenseIncome (Expense)

Interest expense for the thirdfirst quarter of 2010, second2011, fourth quarter of 2010 and thirdfirst quarter of 2009,2010, includes aggregate amounts of non-cash amortization of debt discount and issuance costs of $18 million, $19 million $20 million and $20$19 million, respectively.  As a result of the retrospective adoption of a new accounting standard for certain convertible debt, the Company modified its accounting for its $1.3 billionNet proceeds received at inception from our 1.875% convertible notes.  The Company retrospectivelynotes due June 2014 (the "2014 Notes") and 1.875% convertible notes due June 2027 (the "2027 Notes") (expected maturity date of June 2017) were allocated the $1.3 billion aggregate proceeds at inception between a liability component (issued at a discount) and an equity component.  The debt discount is being amortized from issuance through June 2014, the expected maturity datedates of the 1.875% convertible notes, with the amortization recorded as additional non-cash interest expense.  Included in the noncash interest expense aboveab ove is $13amortization on the convertible notes of $14 million infor the thirdfirst quarter of 2010, $13 million in the second2011 and fourth quarter of 2010 and $12$13 million infor the thirdfirst quarter of 2009 related to the amortization of the 1.875% convertible notes.2010.  (See “Item"Item 1. Financial Statements – Notes to Consolidated Financial Statements – Adjustments for Retrospective Application of New Accounting Standards.”Debt" note.)

Other Non-Operating Income (Expense), netNet

On August 3, 2009, Inotera sold common shares in a public offering at a price equal to 16.02 New Taiwan dollars per common share (approximately $0.49 U.S. dollars on August 3, 2009).  As a result of the issuance, the Company’s interest in Inotera decreased from 35.5% to 29.8% and the Company recognized a gain of $56 millionOther non-operating income in the first quarter of 2010.2011 included a $111 million loss in connection with a series of debt restructure transactions with certain holders of our convertible notes.  (See “Item"Item 1. Financial Statements – Notes to Consolidated Financial Statements – Supplemental Balance Sheet InformationDebt" note.)

Other non-operating income in the first quarter of 2010 included a gain of $56 million recognized in connection with an issuance of common shares in a public offering by Inotera.  As a result of the issuance, our interest in Inotera decreased from 35.5% to 29.8%.  (See "Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity Method Investments – Inotera and MeiYa DRAM joint ventures with Nanya – Inotera.”Nanya" note.)

Income Taxes

Income taxes infor the thirdfirst quarter of 2010 include2011 included a benefitcharge of $51$33 million from reduction of a portion of the deferred tax asset valuation allowance in connection with the expected salereceipt of $200 million from Samsung for a 10-year patent cross-license agreement, and also included taxes on our non-U.S. operations.  Income taxes for the Company's equity interest in the Hynix JV that was acquired as partfirst quarter of the Numonyx acquisition.  Except for this benefit, taxes in 2010 and 2009 primarily reflect taxes on the Company’sour non-U.S. operations and U.S. alternative minimum tax.  The Company hasWe have a valuation allowance for a substantial portion of itsour net deferred tax asset associated with itsour U.S. operations.  Taxes attributable toThe provision (benefit) for taxes on U.S. operations in the first quarters of 2011 and 2010 and 2009 werewas substantially offset by changes in the valuation allowance.


In connection with the acquisition of Numonyx, the Company accrued a $66 million liability related to uncertain tax positions on the tax years of Numonyx open to examination.  The Company has recorded an indemnification asset for a significant portion of these accrued liabilities related to these tax positions.

27
Equity in Net Income (Losses)Losses of Equity Method Investees

In connection with its DRAM partnering arrangements with Nanya, the Company has investments in two Taiwan DRAM memory companies accounted for as equity method investments:  Inotera and MeiYa Technology Corporation (“MeiYa”).  Inotera and MeiYa each have fiscal years that end on December 31.  The Company recognizes itsWe recognize our share of Inotera’s and MeiYa’s quarterly earnings or losses for all of our equity method investees on a two-month lag.  From its interestOur equity in thesenet income (loss) of equity method investments, the Company recognized a lossinvestees, net of $3 million for the third quarter of 2010, income of $15 million for the second quarter of 2010 and a loss of $45 million for the third quarter of 2009.tax, was as follows:

As a result of its sale of a 65% interest in its Aptina subsidiary on July 10, 2009, the Company’s investment in Aptina is accounted for as an equity method investment.  The Company’s shares in Aptina constitute 35% of Aptina’s total common and preferred stock and 64% of Aptina’s common stock.  Under the equity method, the Company recognizes its share of Aptina’s results of operations based on its 64% share of Aptina’s common stock on a two-month lag.  The Company recognized losses of $11 million and $16 million in the third quarter and first nine months of 2010, respectively, and $2 million in the second quarter of 2010.

In December 18, 2009, the Company acquired a 50% interest in Transform, a subsidiary of Origin Energy Limited (“Origin”), in exchange for the Company’s contribution to Transform of nonmonetary manufacturing assets with a fair value of $65 million.  The Company recognizes its 50% share of Transform’s results of operations on a two-month lag.  The Company’s results of operations for the third quarter of 2010 include losses of $6 million for its share of Transform’s results of operations from the acquisition date through March 31, 2010.
  
First Quarter
2011
  
Fourth Quarter
2010
  
First Quarter
2010
 
          
Inotera:         
Equity method losses
 $(26) $(18) $(26)
Inotera Amortization
  12   16   13 
Other
  --   (1)  (1)
   (14)  (3)  (14)
             
Transform  (7)  (6)  -- 
Aptina  (5)  (8)  (3)
Other  --   1   -- 
  $(26) $(16) $(17)

(See “Item"Item 1. Financial Statements – Notes to Consolidated Financial Statements – Supplemental Balance Sheet Information – Equity Method Investments.”Investments" note.)

34
Noncontrolling Interests in Net (Income) Loss

Noncontrolling interests for 20102011 and 20092010 primarily reflects the share of income or losses attributed to the noncontrolling interests in the Company’sour TECH joint venture.  The CompanyWe purchased $99 million of TECH shares on February 27, 2009, $99 million of TECH shares on June 2, 2009, and $60 million of TECH shares on August 27, 2009.  As a result, noncontrolling interests in TECH were reduced from approximately 27% as of August 28, 2008 to approximately 15% as of September 3, 2009.  The Company purchased an additional $80 million of TECH shares on January 27, 2010 and further reduced noncontrolling interest in TECH from approximately 15% to 13%.  On December 17, 2010, we acquired Hewlett-Packard Singapore (Private) Limited's interest in TECH for $38 million, further reducing noncontrolling interests in TECH to approximately 13%10%.  We are in discussions with Canon Inc. to acquire the remaining 10% noncontrolling interest in TECH.  (See “Item"Item 1. Financial Statements – Notes to Consolidated Financial Statements – TECH Semiconductor Singapore Pte. Ltd.”" note.)

Stock-based Compensation

Total compensation cost for the Company’sour equity plans for the thirdfirst quarter of 2010, second2011, fourth quarter of 2010 and thirdfirst quarter of 2009 was $20 million, $22 million and $12 million, respectively.  Stock-based compensation expenses of $73 million for the first nine months of 2010 was higher than the $34$19 million, expense for the first nine months of 2009 primarily due to the accrual of performance-based stock compensation costs as a result of improved operating results.$20 million and $31 million, respectively.  Stock compensation expenses fluctuate based on assessments of whether the achievement of performance conditions is probable for performance-based stock grants.


Liquidity and Capital Resources

As of June 3,December 2, 2010, the Companywe had cash and equivalents and short-term investments totaling $2,313$2,411 million compared to $1,485$2,913 million as of September 3, 2009.2, 2010.  The balance as of June 3,December 2, 2010 included $206$385 million held at the Company’sour TECH joint venture and $481 million held at our IM Flash joint ventures and $278 million held at the Company’s TECH joint venture.  The Company’sventures.  Our ability to access funds held by the joint ventures to finance the Company’sour other operations is subject to agreement by the joint venture partners, debt covenants and contractual limitations.  Amounts held by TECH and IM Flash are not anticipated to be available to finance the Company’sour other operations.

Our cash and equivalents were composed of the following as of December 2, 2010:

Bank deposit accounts $777 
Money market accounts  1,387 
Certificates of deposit  247 
  $2,411 

To mitigate credit risk we invest through high-credit-quality financial institutions and, by policy, generally limit the concentration of credit exposure by restricting investments with any single obligor.

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As of December 2, 2010, we had $337 million of restricted cash.  Included in restricted cash is $250 million on deposit as collateral for our guarantee of a loan to a former joint venture between Numonyx and Hynix Semiconductor (the "Hynix JV").  The Company’sHynix JV loan of $250 million is due in periodic installments from 2014 through 2016.  The amount on deposit and our guarantee decrease as payments are made by the Hynix JV against the loan.  Also, included in restricted cash is $60 million related to our TECH joint venture's credit facility, under which $299 million was outstanding as of December 2, 2010. This $60 million of restricted cash is expected to become available to TECH in 2012 when the credit facility is fully paid.

Our liquidity is highly dependent on average selling prices for itsour products and the timing of capital expenditures, both of which can vary significantly from period to period.  Depending on conditions in the semiconductor memory market, the Company’sour cash flows from operations and current holdings of cash and investments may not be adequate to meet itsour needs for capital expenditures and operations.  Historically, the Company haswe have used external sources of financing to fund these needs.  Due to conditions in the credit markets, it may be difficult to obtain financing on terms acceptable to the Company.us.

Operating activities:  Net cash provided by operating activities was $2,019$732 million for the first nine monthsquarter of 2010,2011, which reflected approximately $2,594$681 million generated from the production and sales of the Company’sour products, $167 million from a patent cross-license agreement (net of tax) and a $173 million decrease in accounts receivables, partially offset by a $556$192 million decrease in accounts payable and accrued expenses and a $128 million increase in accounts receivableinventories.

On October 1, 2010, we entered into a 10-year patent cross-license agreement with Samsung.  Under the agreement, Samsung will pay us $275 million, with $200 million paid on October 8, 2010, $40 million due to a higher level of sales.January 31, 2011 and $35 million due March 31, 2011.

Investing activities:  Net cash used for investing activities was $219$436 million for the first nine months 2010,quarter of 2011, which includedconsisted primarily of cash expenditures of $269$465 million for property, plant and equipment and $138 million for the acquisition of additional shares in Inotera.  A significant portion of the capital expenditures related to IM Flash and TECH operations.  The Company believesequipment.  We believe that to develop new product and process technologies, support future growth, achieve operating efficiencies and maintain product quality, itwe must continue to invest in manufacturing technologies, facilities and capital equipment and research and development.  The Company expectsWe expect that capital spending will be approximately $850 million$2.4 billion to $950 million$2.9 billion for 2010 and expects capital expenditures in 2011 to increase significantly compared to 2010.2011.  The actual amount in 2011 will vary depending on funding participation by joint venture partners and market conditions.con ditions.  As of June 3,December 2, 2010, the Companywe had commitments of approximately $800 million for the acquisition of property, plant and equipment, mostsubstantially all of which is expected to be paid within one year.


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In connection with the Numonyx acquisition, the Company acquired a 20.7% noncontrolling interest in the Hynix JV.  Subsequent to the acquisition, Hynix gave notice of its exercise of an option to purchase the Company’s equity interest in the Hynix JV for approximately $425 million, subject to regulatory approval.  Additionally, the Company and STMicroelectronics N.V. entered into an agreement that provides that the Company is required to take certain actions in connection with an outstanding $250 million loan, due in periodic installments from 2014 through 2016, made by DBS Bank Ltd. (“DBS”) to the Hynix JV.  In particular, the Company has agreed that, subject to certain conditions, within two business days after receipt of the proceeds from t he sale of its equity interest in the Hynix JV to Hynix, the Company will deposit $250 million of such proceeds into a pledged account at DBS.  The funds deposited into such account will collateralize the Company’s obligations under a guarantee of the loan, which guarantee is to be entered into by the Company concurrent with such deposit.  The amount on deposit in the DBS account will be accounted for as restricted cash in other noncurrent assets.  The amount on deposit and the Company’s guarantee decrease as payments are made by the Hynix JV against the loan.

Financing activities:  Net cash used for financing activities was $972$798 million for the first nine monthsquarter of 2010,2011, which includesincluded payments of debt net of proceeds received, of $548 million.  Debt payments included $213$635 million, to repay the EDB note and $70 million to repay the Lexar convertible notes.  (See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Supplemental Balance Sheet Information – Debt.”)  Cash used for financing activities also includes $220$105 million of netpayments on equipment purchase contracts and $49 million of distributions to joint venture partners and $199 million in payments on equipment purchase contracts.partners.

TECH’sOn November 3, 2010, we completed the following series of debt restructure transactions in connection with separate privately negotiated agreements entered into on October 28, 2010 with certain holders of our convertible notes:

·  Repurchased $176 million in aggregate principal amount of our 2014 Notes for $171 million in cash.

·  Repurchased $91 million in aggregate principal amount of our 4.25% Convertible Senior Notes due 2013 for $166 million in cash.

·  Exchanged $175 million in aggregate principal amount of our 2014 Notes for $175 million in aggregate principal amount of the 2027 Notes.   Holders of the 2027 Notes have an option to require us to purchase the 2027 Notes on June 1, 2017, and in certain other circumstances, at a price equal to 100 percent of the principal amount of notes plus accrued and unpaid interest.
Other debt payments included $200 million to repay our Mai Liao note on maturity and $50 million to reduce the amount outstanding under TECH's credit facility.  TECH's credit facility contains covenants that, among other requirements, establish certain liquidity, debt service coverage and leverage ratios, and restrict TECH’sits ability to incur indebtedness, create liens and acquire or dispose of assets.  In the first quarter of 2010, the covenants for TECH’s credit facility were modified and as of June 3,December 2, 2010, TECH was in compliance with the covenants.  The Company has guaranteedWe guarantee 100% of the outstanding amount borrowed under TECH’sthe TECH credit facility, which was $299 million as of June 3,December 2, 2010.  Under the terms of the credit facility, TECH had $60 million in restricted cash as of June 3,December 2, 2010.

(See "Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt" note.)

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Joint ventures:  In the first nine monthsquarter of 2010,2011, IM Flash distributed $244$49 million to Intel and the Company expects that it will make additionalIntel.  Timing of future distributions to Intel in the future.  Timing of these distributions and any future contributions, however, is subject to market conditions and approvalavailability of the partners.cash.  In the second quarter of 2010,2011, IM Flash began moving forward with start-up activities including placing purchase orders and preparing the facility for tool installationsinstalling tools at its new 300mm wafer fabrication facility in Singapore that will commence in 2011.Singapore.  In the first nine monthsquarter of 2010, the Company2011, we contributed $51 million and Intel contributed $24$392 million to IM F lash.  The Company expects itsFlash and in the second quarter of 2011 we made additional contributions of $343 million.  Intel did not make any contribution in either the first or second quarter of 2011.  We expect to make significant contributions to IM Flash to increase significantly in future periods in connection with thesethe tool installations and other start-up activities.a ctivities.  The level of the Company’sour future capital contributions to IM Flash will depend on market conditions and the extent to which Intel participates with the Companyus in future IM Flash capital calls.

The Company made capital contributions to TECH of $80 million in 2010 and $258 million in 2009.  The shareholders’shareholders' agreement for theour TECH joint venture expires in April 2011.  In September 2009,On December 17, 2010, we acquired HP's interest in TECH received a noticefor $38 million, increasing our ownership interest from Hewlett-Packard Company (“HP”) that it does not intendapproximately 87% to extend the TECH joint venture beyond April 2011.  The Company isapproximately 90%.  We are in discussions with HP and Canon Inc. (“Canon”) to reach a resolution ofacquire the matter.  The parties’remaining 10% interest in TECH.  Our inability to reach a resolution of this matterwith Canon prior to April 2011 could result in the dissolutionsale of TECH.

OnTECH's assets and could require repayment of TECH's credit facility ($299 million outstanding as of December 15, 2009, Inotera’s Board of Directors approved the issuance of 640 million common shares.  On February 6, 2010, the Company purchased approximately 196 million shares for $138 million under this offering, slightly increasing the Company’s equity interest in Inotera from 29.8% to 29.9%2, 2010).  (See "Part II. Other Information – Item 1A. Risk Factors.")

Contractual obligations:  As of June 3,December 2, 2010, contractual obligations for notes payable, capital lease obligations and operating leases were as follows:

 Total  Remainder of 2010  2011  2012  2013  2014  2015 and thereafter  Total  Remainder of 2011  2012  2013  2014  2015  2016 and thereafter 
 (amounts in millions)  (amounts in millions) 
Notes payable1
 $2,277  $54  $443  $186  $34  $1,560  $--  $1,672  $169  $179  $27  $1,113  $3  $181 
Capital lease obligations1
  574   49   324   56   23   22   100   531   268   84   50   24   20   85 
Operating leases
  122   6   23   18   17   12   46   127   25   21   18   13   8   42 
                                                        
1 Includes interest
                                                        



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Recently Adopted Accounting Standards

In May 2008,June 2009, the Financial Accounting Standards Board (“FASB”("FASB") issued a new accounting standard for convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement.  This standard requires that issuers of these types of convertible debt instruments separately account for the liability and equity components of such instruments in a manner such that interest cost is recognized at the entity’s nonconvertible debt borrowing rate in subsequent periods.  The Company adopted this standard as of the beginning of 2010 and retrospectively accounted for its $1.3 billion 1.875% convertible senior notes under the provisions of this guidance from the May 2007 issuance date of the notes.  As a result, prior financi al statement amounts were recast.  (See “Adjustments for Retrospective Application of New Accounting Standards” note.)

In December 2007, the FASB issued a new accounting standard on noncontrolling interests in consolidated financial statements.  This standard requires that (1) noncontrolling interests be reported as a separate component of equity, (2) net income attributable to the parent and to the noncontrolling interest be separately identified in the statement of operations, (3) changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions and (4) any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value.  The Company adopted this standard as of the beginning of 2010.  As a result, prior financial statement amounts were recast.  60;(See “Adjustments for Retrospective Application of New Accounting Standards” note.)

In December 2007, the FASB issued a new accounting standard on business combinations, which establishes the principles and requirements for how an acquirer (1) recognizes and measures in its financial statements identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree, (2) recognizes and measures goodwill acquired in the business combination or a gain from a bargain purchase and (3) determines what information to disclose.  The Company adopted this standard effective as of the beginning of 2010.  The initial adoption did not have a significant impact on the Company’s financial statements.  The acquisition of Numonyx was accounted for under the provisions of this new standard.

In September 2006, the FASB issued a new accounting standard on fair value measurements and disclosures, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  The Company adopted this standard effective as of the beginning of 2009 for financial assets and financial liabilities.  The Company adopted this standard effective as of the beginning of 2010 for all other assets and liabilities.  The adoptions did not have a significant impact on the Company’s financial statements.


Recently Issued Accounting Standards

In June 2009, the FASB issued a new accounting standard on variable interest entitiesVIEs which (1) replaces the quantitative-based risks and rewards calculation for determining whether an enterprise is the primary beneficiary in a variable interest entityVIE with an approach that is primarily qualitative, (2) requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entityVIE and (3) requires additional disclosures about an enterprise’senterprise's involvement in variable interest entities.  The Company is required to adoptVIE.  We adopted this standard as of the beginning of 2011.  The Company is evaluating the impact theinitial adoption of this standard did not have a significant impact on our financial statements as of the adoption date.  The impact on future periods will havedepend on its financia l statements.changes in the nature and composition of our VIEs.


Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures.  Estimates and judgments are based on historical experience, forecasted future events and various other assumptions that the Company believeswe believe to be reasonable under the circumstances.  Estimates and judgments may vary under different assumptions or conditions.  The Company evaluates itsWe evaluate our estimates and judgments on an ongoing basis.  ManagementOur management believes the accounting policies below are critical in the portrayal of the Company’sour financial condition and results of operations and requires management’smanagement's most difficult, subjective or complex judgments.


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Acquisitions and consolidations:Acquisitions:  Accounting for acquisitions and consolidations requires the Companyus to estimate the fair value of consideration paid and the individual assets and liabilities acquired as well as various forms of consideration given, which involves a number of judgments, assumptions and estimates that could materially affect the amount and timing of costs recognized.  The CompanyWe typically obtainsobtain independent third party valuation studies to assist in determining fair values, including assistance in determining future cash flows, appropriate discount rates and comparable market values.


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Consolidations:  We have interests in joint venture entities that are variable interest entities ("VIE").  Determining whether or not to consolidate a variable interest entity may require jud gmentjudgment in assessing (1) whether an entity is a variable interest entity and (2) if we are the Company isentity's primary beneficiary and thus required to consolidate the entity’sentity.  To determine if we are the primary beneficiary.beneficiary of a VIE, we evaluate whether we have (1) the power to direct the activities that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.  Our evaluati on includes identification of significant activities and an assessment of our ability to direct those activities based on governance provisions and arrangements to provide or receive product and process technology, product supply, operations services, equity funding and financing and other applicable agreements and circumstances.  Our assessment of whether we are the primary beneficiary of our VIEs requires significant assumptions and judgment.

Contingencies:  The Company isWe are subject to the possibility of losses from various contingencies.  Considerable judgment is necessary to estimate the probability and amount of any loss from such contingencies.  An accrual is made when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated.  The Company accruesWe accrue a liability and chargescharge operations for the estimated costs of adjudication or settlement of asserted and unasserted claims existing as of the balance sheet date.

Income taxes:  The Company isWe are required to estimate itsour provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions around the world.  Estimates involve interpretations of regulations and are inherently complex.  Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of any fiscal year.  The Company isWe are also required to evaluate the realizability of itsour deferred tax assets on an ongoing basis in accordance with U.S. GAAP, which requires the assessment of the Company’sour performance and other relevant factors.  Realization of deferred tax assets is dependent on the C ompany’sour ability to generate future taxabletaxabl e income.

Inventories:  Inventories are stated at the lower of average cost or market value and the Companywe recorded charges of $603 million in aggregate for 2009 and $282 million in aggregate for 2008 to write down the carrying value of inventories of memory products to their estimated market values.  Cost includes labor, material and overhead costs, including product and process technology costs.  Determining market value of inventories involves numerous judgments, including projecting average selling prices and sales volumes for future periods and costs to complete products in work in process inventories.  To project average selling prices and sales volumes, the Company reviews rece ntwe review recent sales volumes, existingex isting customer orders, current contract prices, industry analysis of supply and demand, seasonal factors, general economic trends and other information.  When these analyses reflect estimated market values below the Company’sour manufacturing costs, the Company recordswe record a charge to cost of goods sold in advance of when the inventory is actually sold.  Differences in forecasted average selling prices used in calculating lower of cost or market adjustments can result in significant changes in the estimated net realizable value of product inventories and accordingly the amount of write-down recorded.  For example, a 5% variance in the estimated selling prices would have changed the estimated market value of the Company’s semiconductor memoryour Memory segment inventory by approximately $105$100 million at June 3,December 2, 2010.  Due to the volatile nature of the semiconductor memory industry, actual selling prices and volumes often vary significantly from projected prices a ndand volumes and, as a result, the timing of when product costs arear e charged to operations can vary significantly.

U.S. GAAP provides for products to be grouped into categories in order to compare costs to market values.  The amount of any inventory write-down can vary significantly depending on the determination of inventory categories.  The Company’sOur inventories have been categorized as Memory, Numonyx, Imaging and Microdisplay products.  The major characteristics the Company considerswe consider in determining inventory categories are product type and markets.

Product and process technology:  Costs incurred to acquire product and process technology or to patent technology developed by the Companyourselves are capitalized and amortized on a straight-line basis over periods currently ranging up to 10 years.  The Company capitalizesWe capitalize a portion of costs incurred based on itsour analysis of historical and projected patents issued as a percent of patents filed.  Capitalized product and process technology costs are amortized over the shorter of (1) the estimated useful life of the technology, (2) the patent term or (3) the term of the technology agreement.

Property, plant and equipment:  The Company reviewsWe review the carrying value of property, plant and equipment for impairment when events and circumstances indicate that the carrying value of an asset or group of assets may not be recoverable from the estimated future cash flows expected to result from its use and/or disposition.  In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to the amount by which the carrying value exceeds the estimated fair value of the assets.  The estimation of future cash flows involves numerous assumptions which require judgment by the Company, including,us, include, but are not limited to, future use of the assets for Companyou r operations versus sale or disposal of the assets, future selling prices for the Company’sour products and future production and sales volumes.  In addition, judgment is required by the Companyus in determining the groups of assets for which impairment tests are separately performed.

 
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Research and development:  Costs related to the conceptual formulation and design of products and processes are expensed as research and development as incurred.  Determining when product development is complete requires judgment by the Company.  The Company deemsus.  We deem development of a product complete once the product has been thoroughly reviewed and tested for performance and reliability.  Subsequent to product qualification, product costs are valued in inventory.

Stock-based compensation:  Compensation cost for stock-based compensation is estimated at the grant date based on the fair-value of the award and is recognized as expense ratably over the requisite service period of the award.  For stock-based compensation awards with graded vesting that were granted after 2005, the Company recognizeswe recognize compensation expense using the straight-line amortization method.  For performance-based stock awards, the expense recognized is dependent on the probability of the performance measure being achieved.  The Company utilizesWe utilize forecasts of future performance to assess these probabilities and this assessment requires considerable judgment.

Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the grant date requires considerable judgment, including estimating stock price volatility, expected option life and forfeiture rates.  The Company developsWe develop its estimates based on historical data and market information which can change significantly over time.  A small change in the estimates used can result in a relatively large change in the estimated valuation.  The Company usesWe use the Black-Scholes option valuation model to value employee stock awards.  The Company estimatesWe estimate stock price volatility based on an average of its historical volatility and the implied volatility derived from traded options on the Company’sour stock.


 
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Item 3.  Quantitative and Qualitative Disclosures about Market Risk


Interest Rate Risk

As of June 3,December 2, 2010, $1,773$1,513 million of the Company’s $2,369our $1,816 million of debt was at fixed interest rates.  As a result, the fair value of the debt instruments fluctuates based on changes in market interest rates.  The estimated fair value of the Company’sour debt was $2,711$2,049 million as of June 3,December 2, 2010 and $2,868$2,565 million as of September 3, 2009.  The Company estimates2, 2010.  We estimate that, as of June 3,December 2, 2010, a 1% decrease in market interest rates would change the fair value of itsour fixed-rate debt instruments by approximately $52$44 million.  As of June 3,December 2, 2010, $596$303 million of the Company’s debt had variable interest rates and a 1% increase in the rates would increase annual interest expense by approximately $5$3 million.


Foreign Currency Exchange Rate Risk

The information in this section should be read in conjunction with the information related to changes in the exchange rates of foreign currency in “Item"Item 1A. Risk Factors.”"  Changes in foreign currency exchange rates could materially adversely affect the Company’sour results of operations or financial condition.

The functional currency for substantially all of the Company’sour operations is the U.S. dollar.  The CompanyWe held cash and other assets in foreign currencies valued at an aggregate of U.S. $469$653 million as of June 3,December 2, 2010 and U.S. $229$504 million as of September 3, 2009.  The Company2, 2010.  We also had foreign currency liabilities valued at an aggregate of U.S. $630$1,105 million as of June 3,December 2, 2010, and U.S. $742$901 million as of September 3, 2009.2, 2010.  Significant components of assets and liabilities denominated in foreign currencies were as follows (in U.S. dollar equivalents):

 June 3, 2010  September 3, 2009  December 2, 2010  September 1, 2010 
 Singapore Dollars  Yen  Euro  Singapore Dollars  Yen  Euro  Singapore Dollars  Yen  Euro  Singapore Dollars  Yen  Euro 
 (amounts in millions)  (amounts in millions) 
                                    
Cash and cash equivalents $61  $54  $44  $27  $27  $53 
Deferred tax assets $--  $107  $4  $--  $115  $4   1   113   6   --   115   6 
Receivables  60   7   65   52   15   77 
Other assets  99   78   130   25   17   40   14   9   85   9   13   66 
Accounts payable and accrued expenses  (100)  (158)  (142)  (68)  (141)  (99)  (109)  (305)  (216)  (158)  (186)  (168)
Debt  (76)  (9)  (3)  (289)  (25)  (4)  (78)  (9)  (59)  (78)  (9)  (61)
Other liabilities  (13)  (58)  (35)  (8)  (55)  (41)  (19)  (71)  (106)  (14)  (75)  (100)
Net assets (liabilities)
 $(90) $(40) $(46) $(340) $(89) $(100) $(70) $(202) $(181) $(162) $(100) $(127)

The Company estimatesWe estimate that, based on itsthe assets and liabilities denominated in currencies other than the U.S. dollar as of June 3,December 2, 2010, a 1% change in the exchange rate versus the U.S. dollar would expose the Companyus to foreign currency gains or losses of approximately U.S. $2 million for the yen and the euro and U.S. $1 million for the Singapore dollar.  During the first quarter of 2010, the Companywe began using derivative instruments to hedge itsour foreign currency exchange rate risk.  (See Item"Item 1. Financial Statements – “DerivativeNotes to Consolidated Financial Instruments”Statements – Derivative Financial Instruments" note.)



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Item 4.  Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’sCompany's management, including its principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’sCompany's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report.  Based upon that evaluation, the principal executive officer and principal financial officer concluded that those disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the ti metime periods specifieds pecified in the Commission’sCommission's rules and forms and that such information is accumulated and communicated to the Company’sCompany's management, including the principal executive officer and principal financial officer, to allow timely decision regarding disclosure.

During the quarterly period covered by this report, there were no changes in the Company’sCompany's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’sCompany's internal control over financial reporting.

 
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PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings


Antitrust Matters

On May 5, 2004, Rambus, Inc. (“Rambus”("Rambus") filed a complaint in the Superior Court of the State of California (San Francisco County) against the Companyus and other DRAM suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus DRAM (“RDRAM”("RDRAM") by eliminating competition and stifling innovation in the market for computer memory technology and computer memory chips.  Rambus’Rambus' complaint alleges various causes of action under California state law including, among other things, a conspiracy to restrict output and fix prices, a conspiracy to monopolize, intentional interference with prospective economic advantage, and unfair competition.  Rambus alleges that it is entitled to actual damages of mor emore than a billion dollars and seeks jointjoin t and several liability, treble damages, punitive damages, a permanent injunction enjoining the defendants from the conduct alleged in the complaint, interest, and attorneys’attorneys' fees and costs.  ANo definitive trial date has notyet been scheduled.scheduled, but the Court indicates it is targeting either a February or June 2011 start date.

A number of purported class action price-fixing lawsuits have been filed against the Companyus and other DRAM suppliers.  Four cases have been filed in the U.S. District Court for the Northern District of California asserting claims on behalf of a purported class of individuals and entities that indirectly purchased DRAM and/or products containing DRAM from various DRAM suppliers during the time period from April 1, 1999 through at least June 30, 2002.  The complaints allege price fixing in violation of federal antitrust laws and various state antitrust and unfair competition laws and seek treble monetary damages, restitution, costs, interest and attorneys’attorneys' fees.  In addition, at least sixty-four cases have been filed in various state courts asserting claim sclaims on behalf of a purported class of indirect purchasers of DRAM.  Cases have been filed inIn July 2006, the following states:  Arkansas, Arizona, California, Florida, Hawaii, Iowa, Kansas, Massachusetts, Maine, Michigan, Minnesota, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Pennsylvania, South Dakota, Tennessee, Utah, Vermont, Virginia, Wisconsin, and West Virginia, and also in the District of Columbia and Puerto Rico.  The complaints purport to be on behalf of a class of individuals and entities that indirectly purchased DRAM and/or products containing DRAM in the respective jurisdictions during various time periods ranging from April 1999 through at least June 2002.  The complaints allege violations of the various jurisdictions’ antitrust, consumer protection and/or unfair competition laws relating to the sale and pricing of DRAM products and seek joint and several damages, trebled, as well as restitution, costs, interest and attorneys’ fees.  A number of these cases have been removed to federal court and transferred to the U.S. District Court for the Northern District of California (San Francisco) for consolidated pre-trial proceedings.  On January 29, 2008, the Northern District of California Court granted in part and denied in part the Company’s motion to dismiss plaintiff’s second amended consolidated complaint.  Plaintiffs subsequently filed a motion seeking certification for interlocutory appeal of the decision.  On February 27, 2008, plaintiffs filed a third amended complaint.  On June 26, 2008, the United States Court of Appeals for the Ninth Circuit agreed to consider plaintiffs’ interlocutory appeal.  In addition, various states, through their Attorneys General have filed suit against the Companyfor approximately forty U.S. states and other DRAM manufacturers.  On July 14, 2006, and on September 8, 2006 in an amended complaint, the following Attorneys Generalterritories filed suit in the U.S. District Court for the Northern District of California:  Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and the Commonwealth of the Northern Mariana Islands.  Thereafter, three states, Ohio, New Hampshire, and Texas, voluntarily dismissed their claims.California.  The remaining states filed a third amended complaint on October 1, 2007.  Alaska, Delaware, Kentucky, and Vermont subsequently voluntarily dismissed their claims.  The amended complaint alleges,complaints allege, among other things, violations of the Sherman Act, Cartwright Act, and certain other states’ consume rstates' consumer protection and antitrust laws and seeksseek joint and several damages, trebled, as well as injunctive and other relief.  Additionally, on July 13, 2006, the State of New York filed a similar suit in the U.S. District Court for the Southern District of New York.  That case was subsequently transferred to the U.S. District Court for the Northern District of California for pre-trial purposes.  The State of New York filed an amended complaint on October 1, 2007.  On October 3, 2008, the California Attorney General filed a similar lawsuit in California Superior Court, purportedly on behalf of local California government entities, alleging, among other things, violations of the Cartwright Act and state unfair competition law.  On June 23, 2010, the Companywe executed a settlement agreement resolving these purported class-action indirect purchaser cases and the pending cases of the Attorneys General relating to alleged DRAM price-fixing in the United States.  Subject to certain conditions,co nditions, including final court approval of the class settlements, the Companywe agreed to pay a total of approximately $67 million in three equal installments over a two-year period.

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Additionally, threeThree purported class action cases alleging price-fixing of DRAM products have been filed against the Companyus in the following Canadian courts:  Superior Court, District of Montreal, Province of Quebec; Ontario Superior Court of Justice, Ontario; and Supreme Court of British Columbia, Vancouver Registry, British Columbia.  The substantive allegations in these cases are similar to those asserted in the DRAM antitrust cases filed in the United States.  Plaintiffs’Plaintiffs' motion for class certification was denied in the British Columbia and Quebec cases in May and June 2008, respectively.  Plaintiffs have filed an appeal of each of those decisions.  On November 12, 2009, the British Columbia Court of Appeal reversed the denial of class certification and remandedremand ed the case for further proceedin gs.proceedings.  The appeal of the Quebec case is still pending.

On February 28, 2007, February 28, 2007 and March 8, 2007, cases were filed against the Companyus and other manufacturers of DRAM in the U.S. District Court for the Northern District of California by All American Semiconductor, Inc., Jaco Electronics, Inc. and DRAM Claims Liquidation Trust, respectively, that opted-out of a direct purchaser class action suit that was settled.  The complaints allege, among other things, violations of federal and state antitrust and competition laws in the DRAM industry, and seek joint and several damages, trebled, as well as restitution, attorneys’attorneys' fees, costs, and injunctive relief.

On June 21, 2010, the Brazil Secretariat of Economic Law of the Ministry of Justice (“SDE”("SDE") announced that it had initiated an investigation relating to alleged anticompetitive activities within the DRAM industry.  industry.  The SDE’sSDE's Notice of Investigation names various DRAM manufacturers and certain executives, including the Company,ours, and focuses on the period from July 1998 to June 2002.


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On September 24, 2010, Oracle America Inc. ("Oracle"), successor to Sun Microsystems, a DRAM purchaser that opted-out of a direct purchaser class action suit that was settled, filed suit against us in U.S. District Court for the Northern District of California.  The Company has not yet been served withcomplaint alleges DRAM price-fixing and other violations of federal and state antitrust and unfair competition laws based on purported conduct for the investigation.period from August 1, 1998 through at least June 15, 2002.  Oracle is seeking joint and several damages, trebled, as well as restitution, disgorgement, attorneys' fees, costs and injunctive relief.

Three purported class action lawsuits alleging price-fixing of “Static Random Access Memory” or “SRAM” products have been filed in Canada, asserting violations of the Canadian Competition Act.  These cases assert claims on behalf of a purported class of individuals and entities that purchased SRAM products directly or indirectly from various SRAM suppliers.

In addition, three purported class action lawsuits alleging price-fixing of Flash products have been filed in Canada, asserting violations of the Canadian Competition Act.  These cases assert claims on behalf of a purported class of individuals and entities that purchased Flash memory directly and indirectly from various Flash memory suppliers.

The Company isWe are unable to predict the outcome of these lawsuits.lawsuits, except as noted above.  The final resolution of these alleged violations of antitrust laws could result in significant liability and could have a material adverse effect on the Company’sour business, results of operations or financial condition.


Patent Matters

On August 28, 2000, the Companywe filed a complaint against Rambus in the U.S. District Court for the District of Delaware seeking monetary damages and declaratory and injunctive relief.  Among other things, the Company’sour complaint (as amended) alleges violation of federal antitrust laws, breach of contract, fraud, deceptive trade practices, and negligent misrepresentation.  The complaint also seeks a declaratory judgment (a)(1) that we did not infringe on certain Rambusof Rambus' patents, are not infringed by the Company, are invalid, and/or are unenforceable, (b)(2) that the Company haswe have an implied license to those patents, and (c)(3) that Rambus is estopped from enforcing those patents against the Company.us.  On February 15, 2001, Rambus filed an answer and counterclaim in Delaware denying that the Company iswe are entitled to relief, alleging infringement of the eight Rambus patents (later amended to add four additional patents) named in the Company’sour declaratory judgment claim, and seeking monetary damages and injunctive relief.  In the Delaware action, the Companywe subsequently added claims and defenses based on Rambus’Rambus' alleged spoliation of evidence and litigation misconduct.  The spoliation and litigation misconduct claims and defenses were heard in a bench trial before Judge Robinson in October 2007.  On January 9, 2009, Judge Robinson entered an opinion in favor of the Companyus holding that Rambus had engaged in spoliation and that the twelve Rambus patents in the suit were unenforceable against the Company.us.  Rambus subsequently appealed the decision to the U.S. Court of Appeals for the Federal Circuit.  That appeal is pending.


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A number of other suits involving Rambus are currently pending in Europe alleging that certain of the Company’sour SDRAM and DDR SDRAM products infringe various of Rambus’Rambus' country counterparts to its European patent 525 068, including: on September 1, 2000, Rambus filed suit against Micron Semiconductor (Deutschland) GmbH in the District Court of Mannheim, Germany; on September 22, 2000, Rambus filed a complaint against the Companyus and Reptronic (a distributor of the Company’sour products) in the Court of First Instance of Paris, France; on September 29, 2000, the Companywe filed suit against Rambus in the Civil Court of Milan, Italy, alleging invalidity and non-infringement.  In addition, on December 29, 2000, the Companywe filed suit against Rambus in the Civil Court of Avezzano, Italy, alleging invalidity and non-infringement of the Italian counterpart to European patent 1 004 956.  Additionally, on August 14, 2001, Rambus filed suit against Micron Semiconductor (Deutschland) GmbH in the District Court of Mannheim, Germany alleging that certain of the Company’sour DDR SDRAM products infringe Rambus’Rambus' country counterparts to its European patent 1 022 642.  In the European suits against the Company,us, Rambus is seeking monetary damages and injunctive relief.  Subsequent to the filing of the various European suits, the European Patent Office (the “EPO”"EPO") declared Rambus’Rambus' 525 068 and 1 004 956 European patents invalid and revoked the patents.  The declaration of invalidity with respect to the ‘068'068 patent was upheld on appeal.  The original claims of the '956 patent also were declared invalid on appeal, but the EPO ultimately granted a Rambus request to amend the claims by adding a number of limitati ons.limitations.

On January 13, 2006, Rambus filed a lawsuit against the Companyus in the U.S. District Court for the Northern District of California. Rambus alleges that certain of the Company’sour DDR2, DDR3, RLDRAM, and RLDRAM II products infringe as many as fourteen Rambus patents and seeks monetary damages, treble damages, and injunctive relief. The accused products account for a significant portion of the Company’sour net sales.  On June 2, 2006, the Companywe filed an answer and counterclaim against Rambus alleging, among other things, antitrust and fraud claims.  On January 9, 2009, in another lawsuit involving the Companyus and Rambus and involving allegations by Rambus of patent infringement against the Companyus in the U.S. District Court for the District of Delaware, Judge Robi nsonRobinson entered an opinion in favor of the Companyus holding that Rambus had engagedengag ed in spoliation and that the twelve Rambus patents in the suit were unenforceable against the Company.us.  Rambus subsequently appealed the Delaware Court’sCourt's decision to the U.S. Court of Appeals for the Federal Circuit.  Subsequently, the Northern District of California Court stayed a trial of the patent phase of the Northern District of California case pending the outcome of the appeal of the Delaware Court’sCourt's spoliation decision or further order of the California Court.


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On March 6, 2009, Panavision Imaging, LLC filed suit against the Companyus and Aptina Imaging Corporation, then aour wholly-owned subsidiary of the Company (“Aptina”("Aptina"), in the U.S. District Court for the Central District of California.  The complaint alleges that certain of the Companyours and Aptina’sAptina's image sensor products infringe four Panavision Imaging U.S. patents and seeks injunctive relief, damages, attorneys’attorneys' fees, and costs.

On December 11, 2009, Ring Technology Enterprises of Texas LLC (“Ring”) filed suit against the Company in the U.S. District Court for the Eastern District of Texas alleging that certain of the Company’s memory products infringe one Ring Technology U.S. patent.  The complaint sought injunctive relief, damages, attorneys’ fees, and costs.  On June 26, 2010, the Company executed a settlement agreement with Ring resolving the dispute.

The Company isWe are unable to predict the outcome of these suits.  A court determination that the Company’sour products or manufacturing processes infringe the product or process intellectual property rights of others could result in significant liability and/or require the Companyus to make material changes to itsour products and/or manufacturing processes.  Any of the foregoing results could have a material adverse effect on the Company’sour business, results of operations or financial condition.


Securities Matters

On February 24, 2006, a putative class action complaint was filed against the Companyus and certain of itsour officers in the U.S. District Court for the District of Idaho alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder.  Four substantially similar complaints subsequently were filed in the same Court.  The cases purport to be brought on behalf of a class of purchasers of the Company’sour stock during the period February 24, 2001 to February 13, 2003.  The five lawsuits have been consolidated and a consolidated amended class action complaint was filed on July 24, 2006.  The complaint generally alleges violations of federal securities laws based on, among other things, claimed misstatements or omissions regarding alleged illegal price-fixing conduct or the Company’sour operations and financial results.  The complaint seeks unspecified damages, interest, attorneys’attorneys' fees, costs, and expenses.  On December 19, 2007, the Court issued an order certifying the class but reducing the class period to purchasers of the Company’sour stock during the period from February 24, 2001 to September 18, 2002.  On August 24, 2010, we executed a settlement agreement resolving these purported class-action cases.  Subject to certain conditions, including final court approval of the class settlement, we agreed to pay $6 million as our contribution to the settlement.

(See "Item 1A. Risk Factors.")


 
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The Company is unable to predict the outcome of these cases.  A court determination in any of these actions against the Company could result in significant liability and could have a material adverse effect on the Company’s business, results of operations or financial condition.

(See “Item 1A. Risk Factors.”)


Item 1A.  Risk Factors

In addition to the factors discussed elsewhere in this Form 10-Q, the following are important factors which could cause actual results or events to differ materially from those contained in any forward-looking statements made by or on behalf of the Company.us.

We have experienced dramatic declines in average selling prices for our semiconductor memory products which have adversely affected our business.

For the first quarter of 2011, average selling prices of DRAM and NAND Flash products decreased 23% and 15%, respectively, as compared to the fourth quarter of 2010.  For 2010 average selling prices of NAND products decreased 18% and average selling prices of DRAM products increased 28%.  The increase in average selling prices for DRAM products in 2010 was the first annual increase since 2004.  For 2009, average selling prices of DRAM and NAND Flash products decreased 52% and 56%, respectively, as compared to 2008.  For 2008, average selling prices of DRAM and NAND Flash products decreased 51% and 67%, respectively, as compared to 2007.  For 2007, average selling prices of DRAM and NAND Flash products decreased 23% and 56%, respectively, as compared to 2006.  In some prior periods, average selling prices for our memory products have been below our manufacturing costs.  If average selling prices for our memory products decrease faster than we can decrease per gigabit costs, our business, results of operations or financial condition could be materially adversely affected.

We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund our operations and make adequate capital investments.

Our cash flows from operations depend primarily on the volume of semiconductor memory sold, average selling prices and per unit manufacturing costs.  To develop new product and process technologies, support future growth, achieve operating efficiencies and maintain product quality, we must make significant capital investments in manufacturing technology, facilities and capital equipment, research and development, and product and process technology.  We currently estimate our capital spending to be between $850 million and $950 million for 2010.  We expect capital expenditures in 2011 to increase significantly compared to 2010.  The actual amount will vary depending on funding participation by joint venture partners.  As of June 3, 2010, we h ad cash and equivalents of $2,313 million, of which $484 million consisted of cash and investments of IM Flash and TECH that would generally not be available to finance our other operations.  In the past we have utilized external sources of financing when needed.  As a result of the severe downturn in the semiconductor memory market, the downturn in general economic conditions, and the adverse conditions in the credit markets, it may be difficult to obtain financing on terms acceptable to us.  There can be no assurance that we will be able to generate sufficient cash flows or find other sources of financing to fund our operations; make adequate capital investments to remain competitive in terms of technology development and cost efficiency; or access capital markets.  Our inability to do the foregoing could have a material adverse effect on our business and results of operations.

We may be unable to reduce our per gigabit manufacturing costs at the rate average selling prices decline.

Our gross margins are dependent upon continuing decreases in per gigabit manufacturing costs achieved through improvements in our manufacturing processes, including reducing the die size of our existing products.  In future periods, we may be unable to reduce our per gigabit manufacturing costs at sufficient levels to improve or maintain gross margins.  Factors that manymay limit our ability to reduce costs include, but are not limited to, strategic product diversification decisions affecting product mix, the increasing complexity of manufacturing processes, technological barriers and changes in process technologies or products that inherently may require relatively larger die sizes.  Per gigabit manufacturing costs may also be affected by the relatively smaller productionpr oduction quantities and sh ortershorter product lifecycles of certain specialty memory products.


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The semiconductor memory industry is highly competitive.

We face intense competition in the semiconductor memory market from a number of companies, including Elpida Memory, Inc.; Hynix Semiconductor Inc.; Samsung Electronics Co., Ltd.; SanDisk Corporation; Spansion Inc. and Toshiba Corporation.  Some of our competitors are large corporations or conglomerates that may have greater resources or greater access to resources, including governmental resources to withstand downturns in the semiconductor markets in which we compete, invest in technology and capitalize on growth opportunities.  Our competitors seek to increase silicon capacity, improve yields, reduce die size and minimize mask levels in their product designs.  The transitions to smaller line-width process technologies and 300mm wafers in the industry have resulted in sign ificantsignificant increases in the worldwide supply of semiconductorsemicon ductor memory.  Increases in worldwide supply of semiconductor memory also result from semiconductor memory fab capacity expansions, either by way of new facilities, increased capacity utilization or reallocation of other semiconductor production to semiconductor memory production.  As a result of improving conditions in the semiconductor memory market in recent periods, our competitors may increase capital expenditures resulting in future increases in worldwide supply.  Increases in worldwide supply of semiconductor memory, if not accompanied with commensurate increases in demand, would lead to further declines in average selling prices for our products and would materially adversely affect our business, results of operations or financial condition

We may not realize the anticipated benefits of the Numonyx acquisition because of significant challenges.

The failure to combine the operations of Micron and Numonyx successfully or otherwise to realize any of the anticipated benefits of the proposed acquisition could seriously harm the financial condition and results of operations of the combined company.  Realizing the anticipated benefits of the acquisition will depend in part on the timely integration of technology, operations, and personnel.  The combination of the companies will be a complex, time-consuming and expensive process that, even with proper planning and implementation, could significantly disrupt the businesses of Micron and Numonyx.  The challenges involved in this integration include the following:
·  combining product and service offerings;
·  coordinating research and development activities to enhance the development and introduction of new products and services;
·  preserving customer, supplier and other important relationships of both Micron and Numonyx and resolving potential conflicts that may arise;
·  managing supply chains and product channels effectively during the period of combining operations;
·  minimizing the diversion of management attention from ongoing business concerns;
·  additional expenses associated with the acquisition and integration of Numonyx;
·  retaining key employees; and
·  coordinating and combining overseas operations, relationships and facilities, which may be subject to additional constraints imposed by geographic distance and local laws and regulations.

We may not be successful in our efforts to integrate the technology, operations and personnel of Numonyx in a timely manner, or at all, and the combined company may not realize the anticipated benefits or synergies of the acquisition to the extent, or in the timeframe, anticipated.  The anticipated benefits of the acquisition assume a successful combination.  In addition to the risks discussed above, our ability to realize the anticipated benefits of the acquisition could be adversely affected by practical or legal constraints on our ability to combine operations.


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There are a number of risks and uncertainties related to Numonyx’s joint venture with Hynix.

In connection with our purchase of Numonyx on May 7, 2010, we acquired a 20.7% noncontrolling equity interest in Hynix-Numonyx Semiconductor Ltd. (the “Hynix JV”), a joint venture with Hynix Semiconductor, Inc. (“Hynix”) and Hynix Semiconductor (WUXI) Limited.  The Hynix JV was formed pursuant to a joint venture agreement originally entered into between STMicroelectronics N.V. (“ST”) and Hynix prior to the formation of Numonyx (as amended and restated, the “JV Agreement”).

Under the terms of the JV Agreement, the change in control of Numonyx due to its acquisition by us gave rise to certain rights of the parties to the JV Agreement to buy or sell or cause the other party to buy or sell their equity interests in the Hynix JV, including the right of Hynix to purchase all of our equity interests in the Hynix JV (the “Hynix Call Option”).  Pursuant to the JV Agreement, the exercise price of the Hynix Call Option is an amount equal to the positive difference between the book value of the Hynix JV’s total assets and the book value of the Hynix JV’s total liabilities, multiplied by our percentage ownership in the Hynix JV estimated to be approximately $425 million.  On May 28, 2010, Hynix gave notice to us of its exercise of the Hynix Call Option to acquire our 20.7% interest in the Hynix JV.  The closing of the equity transfer is expected to take place prior to the end of the first quarter of fiscal 2011.

Pursuant to the terms of a supply agreement with the Hynix JV, we purchased $29 million of memory products from the Hynix JV in the third quarter of 2010.  The Hynix JV is permitted to terminate the supply agreement upon exercise of the Hynix Call Option and the consummation of the equity transfer.  On May 28, 2010, the Hynix JV delivered notice to us of its intent to terminate the JV supply agreement concurrent with the consummation of the equity transfer.  A significant portion of Numonyx's net sales is dependent upon sales of products supplied to us by the Hynix JV pursuant to the JV supply agreement.  We and the Hynix JV are currently in discussions to enter into a n ew supply agreement.  If the parties are unable to reach agreement and the existing JV supply agreement is terminated, the Hynix JV will have no further supply obligations to us.  Even if the parties are able to reach agreement on a new supply agreement, it is anticipated that the existing JV supply agreement will be terminated, in which case the favorable pricing under the existing JV supply agreement will end at that time.  There can be no assurance that we will reach agreement with the Hynix JV on a new supply agreement or that we will be able to do so on commercially acceptable terms.  Accordingly, we may be required to purchase certain products at market rates or forgo sales of these products to end customers.
Concurrent with the acquisition of Numonyx, we and STMicroelectronics entered into an agreement that provides that we are required to take certain actions in connection with an outstanding $250 million loan, due in periodic installments from 2014 through 2016, made by DBS Bank Ltd. (“DBS”) to the Hynix JV.  In particular, we have agreed that, subject to certain conditions, within two business days after receipt of the proceeds from the sale of our equity interest in the Hynix JV to Hynix, we will deposit $250 million of such proceeds into a pledged account at DBS.  The funds deposited into such account will collateralize our obligations under a guarantee of the loan, which guarantee is to be entered into by us concurrent with such deposit.  0;The amount on deposit in the DBS account will be accounted for as restricted cash in other noncurrent assets.  The amount on deposit and our guarantee decrease as payments are made by the Hynix JV against the loan.condition.

The recent economic downturn in the worldwide economy and the semiconductor memory industry may harm our business.

The downturn in the worldwide economy had an adverse effect on our business.  A continuation or deterioration of depressed economic conditions could have an even greater adverse effect on our business.  Adverse economic conditions affect demand for devices that incorporate our products, such as personal computers and other computing and networking products, mobile devices, Flash memory cards and USB devices.  Reduced demand for our products could result in continued market oversupply and significant decreases in our average selling prices.  A continuation of current negative conditions in worldwide credit markets would limit our ability to obtain external financing to fund our operations and capital expenditures.  In addition, we may experienceexperie nce losses on our holdings of cash and investments due to failures of financial institutions and other parties.  Difficult ec onomiceconomic conditions may also result in a higher rate of losses on our accounts receivables due to credit defaults.  As a result, our business, results of operations or financial condition could be materially adversely affected.
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Our ownership interest in Inotera involves numerous risks.

Our 29.9% ownership interest in Inotera involves numerous risks including the following:

·  we have experienced difficulties and delays in ramping production at Inotera on our technology and may continue to experience difficulties and delays in the future;

·  we may experience continued difficulties in transferring technology to Inotera;

·  Inotera's ability to meet its ongoing obligations;

·  costs associated with manufacturing inefficiencies resulting from underutilized capacity;

·  difficulties in obtaining high yield and throughput due to differences in Inotera's manufacturing processes from our other fabrication facilities;

·  uncertainties around the timing and amount of wafer supply we will receive under the supply agreement; and

·  obligations during the technology transition period to procure product based on a competitor's technology which may be difficult to sell and to provide support for such product, with respect to which we have limited technological understanding.

In connection with our ownership equity interest in Inotera, we have rights and obligations to purchase 50% of the wafer production of Inotera.  In the first quarter of 2011, we purchased $137 million of DRAM products from Inotera.

The Company has received correspondence from, and has been engaged in discussions with, Qimonda AG’s bankruptcy administrator (the “Administrator”) relating to Qimonda’s transfer to us of its Inotera shares.  The Administrator has stated his belief that the share transfer and related transactions are voidable and accordingly is seeking additional compensation relating to such transfer.  To date, we have been unable to resolve these issues.  The resolution of these issues could result in significant liability and could have a material adverse effect on our business, results of operations or financial condition.

An adverse outcome relating to allegations of anticompetitive conduct could materially adversely affect our business, results of operations or financial condition.

On May 5, 2004, Rambus, Inc. ("Rambus") filed a complaint in the Superior Court of the State of California (San Francisco County) against us and other DRAM suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus DRAM ("RDRAM") by eliminating competition and stifling innovation in the market for computer memory technology and computer memory chips.  Rambus' complaint alleges various causes of action under California state law including, among other things, a conspiracy to restrict output and fix prices, a conspiracy to monopolize, intentional interference with prospective economic advantage, and unfair competition.  Rambus alleges that it is entitled to actual damages of more than a billion dollars and seeks join t and several liability, treble damages, punitive damages, a permanent injunction enjoining the defendants from the conduct alleged in the complaint, interest, and attorneys' fees and costs.  No definitive trial date has yet been scheduled, but the Court indicates it is targeting either a February or June 2011 start date.   (See "Item 1.  Legal Proceedings" for additional details on this case and other Rambus matters pending in the U.S. and Europe.)

On September 24, 2010, Oracle America Inc. ("Oracle"), successor to Sun Microsystems, a DRAM purchaser that opted-out of a direct purchaser class action suit that was settled, filed suit against us in U.S. District Court for the Northern District of California.  The complaint alleges DRAM price-fixing and other violations of federal and state antitrust and unfair competition laws based on purported conduct for the period from August 1, 1998 through at least June 15, 2002.  Oracle is seeking joint and several damages, trebled, as well as restitution, disgorgement, attorneys' fees, costs and injunctive relief.

We are unable to predict the outcome of these lawsuits.  An adverse court determination in any of these lawsuits alleging violations of antitrust laws could result in significant liability and could have a material adverse effect on our business, results of operations or financial condition.

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We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund our operations and make adequate capital investments.

Our cash flows from operations depend primarily on the volume of semiconductor memory sold, average selling prices and per unit manufacturing costs.  To develop new product and process technologies, support future growth, achieve operating efficiencies and maintain product quality, we must make significant capital investments in manufacturing technology, facilities and capital equipment, research and development, and product and process technology.  We expect that capital spending will be approximately $2.4 billion to $2.9 billion for 2011.  The actual amount in 2011 will vary depending on funding participation by joint venture partners and market conditions.  As of December 2, 2010, we had cash and equivalents of $2,411 million, of which $866 million consisted of cash and investments of IM Flash and TECH that would generally not be available to finance our other operations.  In the past we have utilized external sources of financing when needed.  As a result of the downturn in general economic conditions, and the adverse conditions in the credit markets, it may be difficult to obtain financing on terms acceptable to us.  There can be no assurance that we will be able to generate sufficient cash flows or find other sources of financing to fund our operations; make adequate capital investments to remain competitive in terms of technology development and cost efficiency; or access capital markets.  Our inability to do the foregoing could have a material adverse effect on our business and results of operations.

Our joint ventures and strategic partnerships involve numerous risks.

We have entered into partnering arrangements to manufacture products and develop new manufacturing process technologies and products.  These arrangements include our IM Flash NAND Flash joint ventures with Intel, our Inotera DRAM joint venture with Nanya, our TECH DRAM joint venture, our MP Mask joint venture with Photronics, our Transform joint venture with Origin Energy and our CMOS image sensor wafer supply agreement with Aptina.  These joint ventures and strategic partnerships are subject to various risks that could adversely affect the value of our investments and our results of operations.  These risks include the following:

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·  our interests could diverge from our partners in the future or we may not be able to agree with partners on ongoing manufacturing and operational activities, or on the amount, timing or nature of further investments in our joint venture;

·  we may experience difficulties in transferring technology to joint ventures;

·  we may experience difficulties and delays in ramping production at joint ventures;

·  our control over the operations of our joint ventures is limited;

·  recognition of our share of potential Inotera, Aptina and Transform losses in our results of operation;

·  due to financial constraints, our partners may be unable to meet their commitments to us or our joint ventures and may pose credit risks for our transactions with them;

·  due to differing business models or long-term business goals, our partners may decide not to join us in capital contributions to our joint ventures which may result in us increasing our capital contributions to such ventures, resulting in additional cash expenditures by us; for example, our contributions to IM Flash Singapore in 2010 and the first four months of 2011 totaled $128 million and $735 million, respectively, while Intel's contributions totaled $38 million and $0, respectively;

·  the terms of our arrangements may turn out to be unfavorable;

·  cash flows may be inadequate to fund increased capital requirements;

·  we may experience difficulties in transferring technology to joint ventures;

·  we may experience difficulties and delays in ramping production at joint ventures;

·  these operations may be less cost-efficient as a result of underutilized capacity;

·  changes in tax, legal or regulatory requirements may necessitate changes in the agreements with our partners; and

·  political or economic instability may occur in the countries where our joint ventures and/or partners are located.

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If our joint ventures and strategic partnerships are unsuccessful, our business, results of operations or financial condition may be adversely affected.

Our ownership interest in Inotera involves numerous risks.

Our 29.9% ownership interest in Inotera involves numerous risks including the following:

·  risks relating to actions that may be taken or initiated by Qimonda AG’s (“Qimonda”) bankruptcy administrator relating to Qimonda’s transfer to us of its Inotera shares and to the possible rejection of or election of non-performance under certain patent and technology license agreements between us and Qimonda;

·  Inotera’s ability to meet its ongoing obligations;

·  costs associated with manufacturing inefficiencies resulting from underutilized capacity;

·  difficulties in converting Inotera production from Qimonda’s trench technology to our stack technology;

·  difficulties in obtaining financing for capital expenditures necessary to convert Inotera production to our stack technology;

·  uncertainties around the timing and amount of wafer supply we will receive under the supply agreement;

·  obligations during the technology transition period to procure product based on a competitor’s technology which may be difficult to sell and to provide support for such product, with respect to which we have limited technological understanding; and

·  the effect on our margins associated with our obligation to purchase product utilizing Qimonda’s trench technology at a relatively higher cost than other products manufactured by us and selling them potentially at a lower price than other products produced by us.
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In connection with our ownership equity interest in Inotera, we have rights and obligations to purchase up to 50% of the wafer production of Inotera.  In the third quarter of 2010, we purchased $188 million of DRAM products (substantially all of which were trench technology) from Inotera.

An adverse outcome relating to allegations of anticompetitive conduct could materially adversely affect our business, results of operations or financial condition.

On May 5, 2004, Rambus, Inc. (“Rambus”) filed a complaint in the Superior Court of the State of California (San Francisco County) against us and other DRAM suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus DRAM (“RDRAM”) by eliminating competition and stifling innovation in the market for computer memory technology and computer memory chips.  Rambus’ complaint alleges various causes of action under California state law including, among other things, a conspiracy to restrict output and fix prices, a conspiracy to monopolize, intentional interference with prospective economic advantage, and unfair competition.  Rambus alleges that it is entitled to actual damages of more than a billion dollars and seeks joint and several liability, treble damages, punitive damages, a permanent injunction enjoining the defendants from the conduct alleged in the complaint, interest, and attorneys’ fees and costs.   A trial date has not been scheduled.  (See “Item 1.  Legal Proceedings” for additional details on this case and other Rambus matters pending in the U.S. and Europe.)

A number of purported class action price-fixing lawsuits have been filed against us and other DRAM suppliers.  Numerous cases have been filed in various state and federal courts asserting claims on behalf of a purported class of individuals and entities that indirectly purchased DRAM and/or products containing DRAM from various DRAM suppliers during the time period from April 1, 1999 through at least June 30, 2002.  The complaints allege violations of the various jurisdictions’ antitrust, consumer protection and/or unfair competition laws relating to the sale and pricing of DRAM products and seek joint and several damages, trebled, restitution, costs, interest and attorneys’ fees.  A number of these cases have been removed to federal court and trans ferred to the U.S. District Court for the Northern District of California (San Francisco) for consolidated pre-trial proceedings.  On January 29, 2008, the Northern District of California Court granted in part and denied in part our motion to dismiss the plaintiff’s second amended consolidated complaint.  The District Court subsequently certified the decision for interlocutory appeal.  On February 27, 2008, plaintiffs filed a third amended complaint.  On June 26, 2008, the United States Court of Appeals for the Ninth Circuit agreed to consider plaintiffs’ interlocutory appeal.  In addition, various states, through their Attorneys General, have filed suit against us and other DRAM manufacturers alleging violations of state and federal competition laws.  The amended complaint alleges, among other things, violations of the Sherman Act, Cartwright Act, and certain other states’ consumer protection and antitrust laws and seeks damages, and injunctive and other relief.  On October 3, 2008, the California Attorney General filed a similar lawsuit in California Superior Court, purportedly on behalf of local California government entities, alleging, among other things, violations of the Cartwright Act and state unfair competition law.  On June 23, 2010, we executed a settlement agreement resolving these purported class-action indirect purchaser cases and the pending cases of the Attorneys General relating to alleged DRAM price-fixing in the United States.  Subject to certain conditions, including final court approval of the class settlements, we agreed to pay a total of approximately $67 million in three equal installments over a two-year period.  (See “Item 1.  Legal Proceedings” for additional details on these cases and related matters.)

Three purported class action lawsuits alleging price-fixing of Flash products have been filed against us in Canada asserting violations of the Canadian Competition Act.  These cases assert claims on behalf of a purported class of individuals and entities that purchased Flash memory directly and indirectly from various Flash memory suppliers.  (See “Item 1.  Legal Proceedings” for additional details on these cases and related matters.)

We are unable to predict the outcome of these lawsuits.  An adverse court determination in any of these lawsuits alleging violations of antitrust laws could result in significant liability and could have a material adverse effect on our business, results of operations or financial condition.


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An adverse determination that our products or manufacturing processes infringe the intellectual property rights of others could materially adversely affect our business, results of operations or financial condition.

On January 13, 2006, Rambus filed a lawsuit against us in the U.S. District Court for the Northern District of California. Rambus alleges that certain of our DDR2, DDR3, RLDRAM, and RLDRAM II products infringe as many as fourteen Rambus patents and seeks monetary damages, treble damages, and injunctive relief.  The accused products account for a significant portion of our net sales.  On June 2, 2006, we filed an answer and counterclaim against Rambus alleging, among other things, antitrust and fraud claims.  On January 9, 2009, in another lawsuit involving us and Rambus and involving allegations by Rambus of patent infringement against us in the U.S. District Court for the District of Delaware, Judge Robinson entered an opinion in favor of us holding that Rambu s had engaged in spoliation and that the twelve Rambus patents in the suit were unenforceable against us.  Rambus subsequently appealed the Delaware Court’sCourt's decision to the U.S. Court of Appeals for the Federal Circuit.  That appeal is pending.  Subsequently, the Northern District of California Court stayed a trial of the patent phase of the Northern District of California case pending the outcome of the appeal of the Delaware Court’sCourt's spoliation decision or further order of the California Court.  (See “Item"Item 1. Legal Proceedings”Proceedings" for additional details on this lawsuit and other Rambus matters pending in the U.S. and Europe.)

On March 6, 2009, Panavision Imaging LLC filed suit against us and Aptina Imaging Corporation, then a wholly-owned subsidiary of ours, in the U.S. District Court for the Central District of California.  The complaint alleges that certain of our and Aptina’sAptina's image sensor products infringe four Panavision Imaging U.S. patents and seeks injunctive relief, damages, attorneys’attorneys' fees, and costs.

We are unable to predict the outcome of assertions of infringement made against us.  A court determination that our products or manufacturing processes infringe the intellectual property rights of others could result in significant liability and/or require us to make material changes to our products and/or manufacturing processes.  Any of the foregoing results could have a material adverse effect on our business, results of operations or financial condition.

We have a number of patent and intellectual property license agreements.  Some of these license agreements require us to make one time or periodic payments.  We may need to obtain additional patent licenses or renew existing license agreements in the future.  We are unable to predict whether these license agreements can be obtained or renewed on acceptable terms.

An adverse outcome relatingIntegration of our acquired Numonyx business may disrupt operations and result in significant costs.

The integration of our acquired Numonyx business is a complex, time-consuming and expensive process that, even with proper planning and implementation, could significantly disrupt the business of Numonyx and our other operations.  Realizing the anticipated benefits of the acquisition will depend in part on the timely integration of technology, operations, and personnel.  If we are unable to allegations of violations of securities laws could materially adversely affectsuccessfully integrate Numonyx with our business,operations in a timely manner our financial condition and results of operations or financial condition.

On February 24, 2006, a number of purported class action complaints were filed against us and certain of our officerscould be adversely affected.  The challenges involved in this integration include the U.S. District Court for the District of Idaho alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder.  The cases purport to be brought on behalf of a class of purchasers of our stock during the period February 24, 2001 to February 13, 2003.  The five lawsuits have been consolidated and a consolidated amended class action complaint was filed on July 24, 2006.  The complaint generally alleges violations of federal securities laws based on, among other things, claimed misstatements or omissions regarding alleged illegal price-fixing conduct.  The compl aint seeks unspecified damages, interest, attorneys’ fees, costs, and expenses.  On December 19, 2007, the Court issued an order certifying the class but reducing the class period to purchasers of our stock during the period from February 24, 2001 to September 18, 2002.  (See “Item 1.  Legal Proceedings” for additional details on these cases and related matters.)

We are unable to predict the outcome of these cases.  An adverse court determination in any of the class action lawsuits against us could result in significant liability and could have a material adverse effect on our business, results of operations or financial condition.

Our debt level is higher than compared to historical periods.

We currently have a higher level of debt compared to historical periods.  As of June 3, 2010 we had $2.4 billion of debt, net of discounts of $264 million.  We may need to incur additional debt in the future. Our debt level could adversely impact us.  For example it could:following:

·  make it more difficult for us to make payments on our debt;combining product and service offerings;

·  require uscoordinating research and development activities to dedicate a substantial portionenhance the development and introduction of our cash flow from operationsnew products and services;

·  preserving customer, supplier and other capital resources to debt service;important relationships of both Micron and Numonyx and resolving potential conflicts that may arise;

·  managing supply chains and product channels effectively during the period of combining operations;

·  minimizing the diversion of management attention from ongoing business concerns;

·  additional expenses associated with the acquisition and integration of Numonyx;

·  retaining key employees;

 
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·  limit our future ability to raise funds for capital expenditures, acquisitions, research and development and other general corporate requirements;

·  increase our vulnerability to adverse economic and semiconductor memory industry conditions;

·  expose us to fluctuations in interest rates with respect to that portion of our debt which is at a variable rate of interest;managing new business structures; and

·  require uscoordinating and combining overseas operations, relationships and facilities, which may be subject to make additional investments in joint ventures to maintain compliance with financial covenants.constraints imposed by geographic distance and local laws and regulations.

Several of our credit facilities, one of which was modified during 2009 and another which was modified in 2010, have covenants that require us to maintain minimum levels of tangible net worth and cash and investments.  As of June 3, 2010, we were in compliance with our debt covenants.  If we are unable to continue to be in compliance with our debt covenants, or obtain waivers, an event of default could be triggered, which, if not cured, could cause the maturity of other borrowings to be accelerated and become due and currently payable.

Covenants in our debt instruments may obligate us to repay debt, increase contributions to our TECH joint venture and limit our ability to obtain financing.

Our ability to comply with the financial and other covenants contained in our debt may be affected by economic or business conditions or other events.  As of June 3, 2010, our 87% owned TECH Semiconductor Singapore Pte. Ltd., (“TECH”) subsidiary, had $398 million outstanding under a credit facility with covenants that, among other requirements, establish certain liquidity, debt service coverage and leverage ratios for TECH and restrict TECH’s ability to incur indebtedness, create liens and acquire or dispose of assets.  If TECH does not comply with these debt covenants and restrictions, this debt may be deemed to be in default and the debt declared payable.  There can be no assurance that TECH will be able to comply with its covenants. &# 160;Additionally, if TECH is unable to repay its borrowings when due, the lenders under TECH’s credit facility could proceed against substantially all of TECH’s assets.  In the first quarter of 2010, TECH amended certain of its debt covenants under the credit facility.  We have guaranteed 100% of the outstanding amount borrowed under TECH’s credit facility.  If TECH’s debt is accelerated, we may not have sufficient assets to repay amounts due.  Existing covenant restrictions may limit our ability to obtain additional debt financing.  To avoid covenant defaults we may be required to repay debt obligations and/or make additional contributions to TECH, all of which could adversely affect our liquidity and financial condition.

The inability to reach an acceptable agreement with our TECH joint venture partnerspartner regarding the future of TECH after its shareholders’shareholders' agreement expires in April 2011 could have a significant adverse effect on our DRAM production and results of operation.

Since 1998, we have participated in TECH, a semiconductor memory manufacturing joint venture in Singapore among us, Canon Inc. (“Canon”("Canon") and, until December 17, 2010, Hewlett-Packard Company (“HP”Singapore (Private) Limited ("HP").  As of June 3,December 2, 2010, the ownership of TECH was held approximately 87% by us, approximately 10% by Canon and approximately 3% by HP.  The financial results of TECH are included in our consolidated financial statements.  In the thirdfirst quarter of 2010,2011, TECH accounted for 36%37% of our total DRAM wafer production.  The shareholders’shareholders' agreement for TECH expires in April 2011.  In the first quarter ofOn December 17, 2010, we acquired HP's interest in TECH received a notice from HP that it does not intendfor $38 million, which increased our ownership interest to extend the TECH joint venture beyond April 2011.90%.  We are in discussions with HP and Canon to reach a resolution ofacquire the matter.  The parties’remaining 10% interest in TECH.  Our inability to reach a resolution of this matter with Canon prior to April 2011 couldwould, per the terms of the shareholders' agreement, result in the sale of TECH's assets and dissolution of TECH andTECH.  The sale of TECH's assets pursuant to the terms of the shareholders' agreement may have a significant adverse impact on our DRAM production and results of operation.

We may make future acquisitions  As of December 2, 2010, the carrying value of TECH's net assets was $1.3 billion and alliances, which involve numerous risks.

Acquisitions andin the formationevent of alliances, suchdissolution, our loss could be a significant portion of this amount.  In addition, our inability to reach a resolution with Canon prior to April 2011 could require repayment of TECH's credit facility ($299 million outstanding as joint ventures and other partnering arrangements, involve numerous risks including the following:

·  difficulties in integrating the operations, technologies and products of acquired or newly formed entities;

·  increasing capital expenditures to upgrade and maintain facilities;

·  increasing debt to finance any acquisition or formation of a new business;

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·  diverting management’s attention from normal daily operations;

·  managing larger or more complex operations and facilities and employees in separate geographic areas; and

·  hiring and retaining key employees.

Acquisitions of or alliances with, high-technology companies are inherently risky, and any future transactions may not be successful and may materially adversely affect our business, results of operations or financial condition.December 2, 2010).

New product development may be unsuccessful.

We are developing new products that complement our traditional memory products or leverage their underlying design or process technology.  We have made significant investments in product and process technologies and anticipate expending significant resources for new semiconductor product development over the next several years.  The process to develop DRAM, NAND Flash and certain specialty memory products requires us to demonstrate advanced functionality and performance, many times well in advance of a planned ramp of production, in order to secure design wins with our customers.  There can be no assurance that our product development efforts will be successful, that we will be able to cost-effectively manufacture new products, that we will be able to successfu lly market these products or that margins generated from sales of these products will recover costs of development efforts.

The future success of our Imaging foundry business is dependent on Aptina’s market success and customer demand.

In recent quarters, Aptina’s net sales and gross margins decreased due to declining demand and increased competition.  There can be no assurance that Aptina will be able to grow or maintain its market share or gross margins.  Any reduction in Aptina’s market share could adversely affect the operating results of our Imaging foundry business.  Aptina’s success depends on a number of factors, including:

·  development of products that maintain a technological advantage over the products of our competitors;

·  accurate prediction of market requirements and evolving standards, including pixel resolution, output interface standards, power requirements, optical lens size, input standards and other requirements;

·  timely completion and introduction of new imaging products that satisfy customer requirements; and

·  timely achievement of design wins with prospective customers, as manufacturers may be reluctant to change their source of components due to the significant costs, time, effort and risk associated with qualifying a new supplier.

Products that fail to meet specifications, are defective or that are otherwise incompatible with end uses could impose significant costs on us.

Products that do not meet specifications or that contain, or are perceived by our customers to contain, defects or that are otherwise incompatible with end uses could impose significant costs on us or otherwise materially adversely affect our business, results of operations or financial condition.

Because the design and production process for semiconductor memory is highly complex, it is possible that we may produce products that do not comply with customer specifications, contain defects or are otherwise incompatible with end uses.  If, despite design review, quality control and product qualification procedures, problems with nonconforming, defective or incompatible products occur after we have shipped such products, we could be adversely affected in several ways, including the following:

·  we may be required to replace product or otherwise compensate customers for costs incurred or damages caused by defective or incompatible product, and

·  we may encounter adverse publicity, which could cause a decrease in sales of our products.
 
We may make future acquisitions and alliances, which involve numerous risks.

Acquisitions and the formation of alliances, such as joint ventures and other partnering arrangements, involve numerous risks including the following:

·  difficulties in integrating the operations, technologies and products of acquired or newly formed entities;

·  increasing capital expenditures to upgrade and maintain facilities;

·  increasing debt to finance an acquisition or formation of a new business;

·  diverting management's attention from normal daily operations;

·  managing larger or more complex operations and facilities and employees in separate and diverse geographic areas; and

·  hiring and retaining key employees.

 
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Acquisitions of, or alliances with, high-technology companies are inherently risky, and future transactions may not be successful and may materially adversely affect our business, results of operations or financial condition.

New product development may be unsuccessful.

We are developing new products that complement our traditional memory products or leverage their underlying design or process technology.  We have made significant investments in product and process technologies and anticipate expending significant resources for new semiconductor product development over the next several years.  The process to develop DRAM, NAND Flash, NOR Flash and certain specialty memory products requires us to demonstrate advanced functionality and performance, many times well in advance of a planned ramp of production, in order to secure design wins with our customers.  There can be no assurance that our product development efforts will be successful, that we will be able to cost-effectively manufacture new products, that we will be able t o successfully market these products or that margins generated from sales of these products will allow us to recover costs of development efforts.

Changes in foreign currency exchange rates could materially adversely affect our business, results of operations or financial condition.
 
Our financial statements are prepared in accordance with U.S. GAAP and are reported in U.S. dollars.  Across our multi-national operations, there are transactions and balances denominated in other currencies, primarily the Singapore dollar, euro and yen.  We recorded net losses from changes in currency exchange rates of $20$7 million for the first nine monthsquarter of 2010, $302011 and $23 million for 2009 and of $25 million for 2008.  We estimate that, based on2010.  To the extent our assets and liabilities denominated in currencies other than the U.S. dollar as of June 3,December 2, 2010 are not hedged, we estimate that a 1% change in the exchange rate versus the U.S. dollar would expose us to foreign currency gains or losses of approximately U.S. $2 million for the yen and the euro and U.S. $1 million for the Singapore dollar.&# 160;  In the event that the U.S. dollar weakens significantly compared to the Singapore dollar, euro and yen, our results of operations or financial condition may be adversely affected.

The limited availability certain raw materials or capital equipment could materially adversely affect our business, results of operations or financial condition.

Our operations require raw materials that meet exacting standards.  We generally have multiple sources of supply for our raw materials.  However, only a limited number of suppliers are capable of delivering certain raw materials that meet our standards.  In some cases, materials are provided by a single supplier.  Various factors could reduce the availability of raw materials such as silicon wafers, photomasks, chemicals, gases, lead frames and molding compound.  Shortages may occur from time to time in the future.  In addition, disruptions in transportation lines could delay our receipt of raw materials.  Lead times for the supply of raw materials have been extended in the past.  If our supply of raw materials is disrupted or our lead times extended, our business, results of operations or financial condition could be materially adversely affected.

Our operations are dependent on our ability to procure advanced semiconductor equipment that enables the transition to lower cost manufacturing processes.  For certain key types of equipment, including photolithography tools, we are dependent on a single supplier.  In recent periods we have experienced difficulties in obtaining some equipment on a timely basis due to the supplier's limited capacity.  Our inability to obtain this equipment timely could adversely affect our ability to transition to next generation manufacturing processes and reduce costs.  Delays in obtaining equipment could also impede our ability to ramp production at new facilities and increase our overall costs of the ramp.  If we are unable to obtain advanced semiconducto r equipment timely, our business, results of operations or financial condition could be materially adversely affected.


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We may incur losses in connection with our guarantee of Hynix-Numonyx Semiconductor Ltd. debt.

In connection with our acquisition of Numonyx on May 7, 2010, we acquired a 20.7% noncontrolling equity interest in Hynix-Numonyx Semiconductor Ltd. (the "Hynix JV"), a joint venture with Hynix Semiconductor, Inc. ("Hynix") and Hynix Semiconductor (WUXI) Limited.  The change in control of Numonyx gave Hynix the right to purchase all of our equity interests in the Hynix JV, and Hynix completed the acquisition of our interest on August 31, 2010.  Concurrent with our acquisition of Numonyx, we entered into agreements with STMicroelectronics N.V. and DBS Bank Ltd. ("DBS") that require us to guarantee an outstanding $250 million loan, due in periodic installments from 2014 through 2016, made by DBS to the Hynix JV.& #160; Pursuant to the agreements, on August 31, 2010, we deposited $250 million of proceeds from the sale of our interest in the Hynix JV into a pledged account at DBS to collateralize our obligations under the guarantee of the loan.  The amount on deposit in the DBS account is accounted for as restricted cash on our balance sheet.  The amount on deposit and our guarantee decrease as payments are made by the Hynix JV against the loan.  There can be no assurance that the Hynix JV will not default under such loan.

We may incur additional material restructure charges in future periods.

In response to a severe downturn in the semiconductor memory industry and global economic conditions, we implemented restructure initiatives in 2009, 2008 and 2007 that resulted in net charges of $70 million in 2009 and $33 million and $19 million, respectively.  The restructure initiatives included shutting down our 200mm wafer fabrication facility in Boise, suspending the production ramp of a new fabrication facility in Singapore and other personnel cost reductions.2008.  We may need to implement further restructure initiatives in future periods.  As a result of these initiatives, we could incur restructure charges, lose production output, lose key personnel and experience disruptions in our operations and difficulties in delivering products timely.

We face risks associated with our international sales and operations that could materially adversely affect our business, results of operations or financial condition.

Sales to customers outside the United States approximated 84% of our consolidated net sales for the thirdfirst quarter of 2010.2011.  In addition, a substantial portion of our manufacturing operations are located outside the United States.  In particular, a significant portion of our manufacturing operations are concentrated in Singapore.  Our international sales and operations are subject to a variety of risks, including:

·  currency exchange rate fluctuations;

·  export and import duties, changes to import and export regulations, and restrictions on the transfer of funds;

·  political and economic instability;

·  problems with the transportation or delivery of our products;

·  issues arising from cultural or language differences and labor unrest;

·  longer payment cycles and greater difficulty in collecting accounts receivable;

·  compliance with trade, technical standards and other laws in a variety of jurisdictions;

·  disruptions to our manufacturing operations as a result of actions imposed by foreign governments;

·  changes in economic policies of foreign governments; and

·  difficulties in staffing and managing international operations.

These factors may materially adversely affect our business, results of operations or financial condition.


 
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Our net operating loss and tax credit carryforwards may be limited.

We have a valuation allowance against substantially all of our U.S. net deferred tax assets.  As of September 3, 2009, we had aggregate U.S. tax2, 2010, our federal, state and foreign net operating loss carryforwards of $4.2were $2.4 billion, $2.0 billion and unused U.S. tax credit carryforwards$290 million, respectively.  If not utilized, substantially all of $212 million.  We also had unusedour federal and state tax net operating loss carryforwards of $2.6 billion and unused state tax credits of $198 million.  Substantially all of the net operating loss carryforwardswill expire in 2022 to 2029 and the foreign net operating loss carryforwards will begin to expire in 2015.  As of September 2, 2010, our federal and state tax credit carryforwards were $188 million and $204 million respectively.  If not utilized, substantially all of theour federal and state tax credit carryforwards will expire in 2013 to 2029.  Utilization of these net operating losses and credit carryforwards is dependent upon us achieving sustained profitability.2030.  As a consequence of prior business acquisitions, utilization of the tax benefits for some of the tax carryforwards is subject to limitations imposed by Section 382 of the Internal Revenue Code and some portion or all of these carryforwards may not be available to offset any future taxable income.  The determination of the limitations is complex and requires significant judgment and analysis of past transactions.

If our manufacturing process is disrupted, our business, results of operations or financial condition could be materially adversely affected.

We manufacture products using highly complex processes that require technologically advanced equipment and continuous modification to improve yields and performance.  Difficulties in the manufacturing process or the effects from a shift in product mix can reduce yields or disrupt production and may increase our per gigabit manufacturing costs.  Additionally, our control over operations at our IM Flash, TECH, Inotera, and MP Mask and Transform joint ventures may beis limited by our agreements with our partners.  From time to time, we have experienced minor disruptions in our manufacturing process as a result of power outages, improperly functioning equipment and equipment failures.  If production at a fabrication facility is disrupted for any reason, manufacturing yiel dsyie lds may be adversely affected or we may be unable to meet our customers’customers' requirements and they may purchase products from other suppliers.  This could result in a significant increase in manufacturing costs or loss of revenues or damage to customer relationships, which could materially adversely affect our business, results of operations or financial condition.

Disruptions in our supply of raw materials could materially adversely affect our business, results of operations or financial condition.

Our operations require raw materials that meet exacting standards.  We generally have multiple sources of supply for our raw materials.  However, only a limited number of suppliers are capable of delivering certain raw materials that meet our standards.  Various factors could reduce the availability of raw materials such as silicon wafers, photomasks, chemicals, gases, lead frames and molding compound.  Shortages may occur from time to time in the future.  In addition, disruptions in transportation lines could delay our receipt of raw materials.  Lead times for the supply of raw materials have been extended in the past.  If our supply of raw materials is disrupted or our lead times extended, our business, results of opera tions or financial condition could be materially adversely affected.

Consolidation of industry participants and governmental assistance to some of our competitors may contribute to uncertainty in the semiconductor memory industry and negatively impact our ability to compete.

In recent years, manufacturing supply of memory products has significantly exceeded customer demand resulting in significant declines in average selling prices of DRAM, NAND Flash and NANDNOR Flash products and substantial operating losses by us and our competitors.  The operating losses as well as limited access to sources of financing have led to the deterioration in the financial condition of a number of industry participants.  Some of our competitors may try to enhance their capacity and lower their cost structure through consolidation.  Consolidation of industry competitors could put us at a competitive disadvantage.  In addition, some governments have provided, or are considering providing, significant financial assistance forto some of our competitors.



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Item 2.  Issuer Purchases of Equity Securities, Unregistered Sales of Equity Securities and Use of Proceeds

During the thirdfirst quarter of 2010, the Company2011, we acquired, as payment of withholding taxes in connection with the vesting of restricted stock and restricted stock unit awards, 38,192979,635 shares of itsour common stock at an average price per share of $9.76.  The Company$7.41.  We retired the 38,192these shares in the thirdfirst quarter of 2010.2011.

Period (a) Total number of shares purchased  (b) Average price paid per share  (c) Total number of shares (or units) purchased as part of publicly announced plans or programs  (d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs 
             
March 5, 2010     –      April 8, 2010  10,942  $10.30   N/A   N/A 
April 9, 2010        –      May 6, 2010  800   11.02   N/A   N/A 
May 7, 2010        –      June 3, 2010  26,450   9.50   N/A   N/A 
   38,192   9.76         
Period (a) Total number of shares purchased  (b) Average price paid per share  (c) Total number of shares (or units) purchased as part of publicly announced plans or programs  (d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs 
             
September 3, 2010      –    October 7, 2010  348,014  $7.15   N/A   N/A 
October 8, 2010          –    November 4, 2010  577,479   7.52   N/A   N/A 
November 5, 2010      –    December 2, 2010  54,142   7.85   N/A   N/A 
   979,635   7.41         

On May 7, 2010 the Company issued 137.7 million unregistered shares of common stock to Intel Corporation, Intel Technology Asia Pte Ltd, STMicroelectronics N.V., Redwood Blocker S.a.r.l. and PK Flash, LLC as consideration with a fair value of $1,091 million for all the outstanding shares of Numonyx Holdings, B.V.  The shares issued by the Company were exempt from registration under Section 4(2) of the Securities Act of 1933.

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Item 6.  Exhibits

 Exhibit  
 Number Description of Exhibit
    
 3.1 Restated Certificate of Incorporation of the Registrant (1)
 3.2 Bylaws of the Registrant, as amended (2)
 10.904.1 Stockholder Rights and Restrictions AgreementIndenture, dated November 3, 2010, by and amongbetween Micron Technology, Inc., Intel Corporation, Intel Technology Asia Pte. Ltd., STMicroelectronics N.V., Redwood Blocker S.a.r.l. and PK Flash LLC, dated asWells Fargo Bank, National Association (3)
4.2Form of May 7, 2010, 2010New Note (included in Exhibit 4.1 hereto) (3)
 31.1 Rule 13a-14(a) Certification of Chief Executive Officer
 31.2 Rule 13a-14(a) Certification of Chief Financial Officer
 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350
 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
_________________________________
(1)Incorporated by reference to Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2001
(2)Incorporated by reference to Current Report on Form 8-K dated December 10, 2009
(3)Incorporated by reference to Current Report on Form 8-K dated November 3, 2010


 
5446
 


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 Micron Technology, Inc.                                                                 
 (Registrant)
  
  
Date:  July 13, 2010January 11, 2011/s/ Ronald C. Foster                                                                
 
Ronald C. Foster
Vice President of Finance and Chief Financial Officer (Principal Financial and Accounting Officer)
 
 

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