Crucial 2014 Annual Report Download - page 79

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Equity
Micron Shareholders' Equity
Capped Calls
Issued and Outstanding Capped Calls: We have entered into capped calls, which are intended to reduce the effect of
potential dilution from our convertible notes. The capped calls provide for our receipt of cash or shares, at our election, from
our counterparties if the trading price of our stock is above a specified initial strike price at the expiration date. The amount
receivable varies based on the trading price of our stock, up to a specified cap price. The dollar value of the cash or shares that
we would receive from the capped calls upon their expiration date ranges from $0 if the trading price of our stock is below the
initial strike price for all of the capped calls to $864 million if the trading price of our stock is at or above the cap price for all
of the capped calls. We paid $57 million in 2011 to purchase the 2031 Capped Calls, $103 million in 2012 to purchase the
2032 Capped Calls and $48 million in 2013 to purchase the 2033 Capped Calls. The amounts paid were recorded as charges to
additional capital.
The following table presents information related to the issued and outstanding capped calls as of August 28, 2014:
Capped
Calls Strike Price
Cap Price Range Underlying
Common
Shares
Value at Expiration(1)
Expiration Dates Low High Minimum Maximum
2031 Jul 2015 – Feb 2016 $ 9.50 $ 12.67 $ 13.17 34 $ — $ 117
2032C May 2016 – Nov 2017 9.80 14.26 15.69 56 — 307
2032D Nov 2016 – May 2018 10.16 14.62 16.04 44 — 244
2033E Jan 2018 – Feb 2018 10.93 14.51 14.51 27 — 98
2033F Jan 2020 – Feb 2020 10.93 14.51 14.51 27 — 98
188 $ — $ 864
(1) Settlement in cash on the respective expiration dates would result in us receiving an amount ranging from zero, if the
market price per share of our common stock is at or below the low strike price, to the maximum amount if the market
price per share of our common stock is at or above the high cap price. If share settlement were elected, the number of
shares received would be determined by the value of the capped calls at the time of settlement divided by the share
price on the settlement date. Settlement of the capped calls prior to the expiration dates may be for an amount less
than the maximum value at expiration.
Unwind of Capped Calls: In May 2014, we and the counterparties agreed to terminate and unwind a portion of our
2031 Capped Calls. We elected share settlement and received 3 million shares of our stock, equivalent to approximately $86
million based on the trading stock price at the time of the unwind. The shares were retired from treasury stock in 2014.
Restrictions on Net Assets
As a result of the Japan Proceedings, for so long as such proceedings are continuing, the MMJ Group is subject to certain
restrictions on dividends, loans and advances. In addition, our ability to access IMFT's cash and other assets through dividends,
loans or advances, including to finance our other operations, is subject to agreement by Intel. As a result, our total restricted
net assets (net assets less intercompany balances and noncontrolling interests) as of August 28, 2014 were $3.10 billion for the
MMJ Group, which included cash and equivalents of $1.60 billion, and $793 million for IMFT.
(See "Micron Memory Japan, Inc." note and "IMFT" below.)