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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 1, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-10658
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Micron Technology, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 75-1618004
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2805 East Columbia Road, Boise, Idaho 83706-9698
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 368-4000
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.10 per share New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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
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Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[ ]
The aggregate market value of the voting stock held by nonaffiliates
of the registrant, based upon the closing price of such stock on
September 1, 1994, as reported by the New York Stock Exchange, was
approximately $3.1 billion. Shares of Common Stock held by each officer
and director and by each person who owns 5% or more of the outstanding
Common Stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
The number of outstanding shares of the registrant's Common Stock as of
September 1, 1994, was 101,896,582.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for registrant's 1994 Annual Meeting
of Shareholders to be held on January 30, 1995, are incorporated by
reference to Part III of this Annual Report on Form 10-K.
PART I
Item 1. Business
General
Micron Technology, Inc., is a Delaware holding company with the
following principal operating subsidiaries: Micron Semiconductor, Inc.,
Micron Custom Manufacturing Services, Inc., and Micron Computer, Inc.
These subsidiaries' operations principally serve the computer,
telecommunications, and office automation industries. As used in this
Annual report on Form 10-K, the term "company" means Micron Technology,
Inc., and its subsidiaries.
Micron Semiconductor, Inc. ("MSI"), the primary operating subsidiary of
Micron Technology, Inc., designs, manufactures, and markets
semiconductor memory components primarily for use in various computer
applications. MSI's products include Dynamic Random Access Memories
("DRAM"s), Static RAMs ("SRAM"s), specialty DRAMs, and specialty SRAMs.
Micron Custom Manufacturing Services, Inc., specializes in the custom
manufacture of complex circuit board assemblies and the recovery and
test of nonstandard semiconductor memory components. Micron Computer,
Inc., develops, assembles, and markets high-performance, memory-
intensive personal computers.
Additional subsidiaries include: Micron Communications, Inc., which is
engaged in research and development of technologies related to radio
frequency identification products; Micron Construction, Inc., which
provides construction management services for facility owners and
developers; Micron Display Technology, Inc., which is engaged in
research and development of technologies related to flat panel field
emission displays; Micron Investments, Inc., which makes investments in
publicly held securities; Micron Quantum Devices, Inc., which is engaged
in research and development of nonvolatile semiconductor memory devices;
and Micron Systems Integration, Inc., which designs, manufactures, and
markets semiconductor testing equipment, including AMBYX(registered)
Intelligent Test and Burn-in systems, and high throughput device loading and
unloading equipment.
Products
The company's product strategy is focused primarily on the design,
development, and manufacture of semiconductor memory products for
standard and custom memory applications, with various packaging and
configuration options, architectures, and performance characteristics.
(a) Dynamic Random Access Memory. DRAMs are semiconductor devices which
store digital information in the form of bits and provide high speed
storage and retrieval of data. Manufacture of the company's DRAM
products utilizes proprietary advanced complimentary metal-oxide-silicon
("CMOS") process technologies. DRAMs are the highest density, lowest
cost per bit, random access memory component available, and are the most
widely used semiconductor memory components in most computer systems.
Demand for the company's products has recently benefited primarily from
strong market conditions for personal computers and increasingly memory-
intensive software applications. The company's primary product during
1994 was the 4 Meg DRAM, which sells in multiple configurations, speeds,
and package types. The company is currently pursuing internal qualification
of its 16 Meg DRAM in a 300 mil package, which is expected to be the preferred
market package, and is beginning to transfer the 64 Meg DRAM from the pilot
line to the manufacturing area. The 256 Meg DRAM is in the early stages
of development (see "Research and Development"). Efficient DRAM
production requires utilization of advanced semiconductor manufacturing
techniques. The company is engaged in an ongoing effort to enhance its
production processes to reduce the die size of existing products and
increase capacity utilization. Smaller die sizes and higher production
yields reduce manufacturing costs. Development of Video RAMs beyond the
company's current 2 Meg generation has been terminated, as the company
pursues development of more cost-effective memory products for graphics
applications. DRAM sales, including specialty DRAMs, represented
approximately 73%, 72%, and 79% of total company net sales in fiscal
1994, 1993, and 1992, respectively.
(b) Static Random Access Memory. SRAMs perform memory functions much the
same as DRAMs; however, unlike DRAMs, SRAM memory cells are not required
to be electronically refreshed, which generally increases the speed at
which they operate and simplifies system designs. The company's SRAM
family focuses on the high-performance sector of the SRAM market, which
requires very high speed access to memory. SRAMs include more complex
electronic circuitry than DRAMs, resulting in higher per bit production
costs. The market for high-performance SRAMs has grown with the number
of applications that require a "buffer" or "cache" of high speed memory
between the central processing unit and the main DRAM-based memory. The
company manufactures its current SRAM products utilizing CMOS process
technologies. The company currently sells 64K, 256K, and 1 Meg SRAMs in
a variety of configurations, speeds, and package types, and has a 4 Meg
SRAM under development. SRAM sales represented approximately 8%, 14%,
and 18% of total company net sales in fiscal 1994, 1993, and 1992,
respectively.
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(c) Board-level products. The company manufactures and markets a
variety of memory-intensive module and complex printed circuit board
products, all of which utilize semiconductor memory components. The
company's custom manufacturing efforts are focused on providing a full
range of turnkey manufacturing services, including design layout and
product engineering, materials procurement, inventory management,
quality assurance, and just-in-time delivery. The company's board-level
products are assembled utilizing surface mount technology ("SMT") that
can accommodate a high density of memory components. Revenue from sales
of board-level products reached approximately 7% of consolidated net
sales in fiscal 1994.
(d) Personal Computers. The company established a personal computer
manufacturing operation in fiscal 1992 focusing on high-performance,
memory-intensive personal computer systems. Revenue from sales of
personal computers constitute an increasing percentage of total net
sales and comprised approximately 8% of consolidated net sales in fiscal
1994.
Marketing and Customers
The semiconductor memory industry is characterized by rapid
technological change, frequent product introductions and enhancements,
difficult product transitions, relatively short product life cycles, and
volatile market conditions. These circumstances historically have made
the semiconductor industry highly cyclical, particularly in the market
for DRAMs, which are the company's primary products.
The company's products are essentially interchangeable with, and have
similar functionality to, products offered by the company's competition.
Customers for the company's semiconductor memory products include most
major domestic computer manufacturers and other customers in the
computer, telecommunications, and office automation industries. The
company markets products worldwide through independent sales
representatives, distributors, and direct sales personnel.
Sales representatives serve on a commission basis and obtain orders
subject to final acceptance by the company. Shipments against accepted
orders are made directly to the customer by the company. Distributors
carry the company's products in inventory and typically sell a variety
of products, including competitors' products. Under the company's
distribution agreements, distributors may be entitled to price rebates
on inventory if the company lowers the price of its products, and to
rights to return certain company products.
Many of the company's customers require a thorough review or
"qualification" of new products and processes. In some instances,
qualification may take six months or longer. As the company diversifies
its product lines and reduces the die sizes of existing products,
acceptance of these products and processes may be inhibited by this
qualification procedure.There can be no assurance that new products or
processes will be qualified for purchase by existing customers.
The company sells products in both domestic and international markets.
Sales to Compaq Computer Corporation approximated 11% of net sales in
fiscal 1994 and 10% in fiscal 1993. No customer's sales individually
comprised 10% or more of net sales in fiscal 1992. Export sales totaled
approximately $471 million for fiscal 1994, including approximately $248
million to the Far East and $159 million to Europe. Export sales
approximated $251 million and $162 million for fiscal years 1993 and
1992, respectively. Export sales are primarily in United States
currency. The company incurs import duties on sales into Europe of up to
14% of the product value. The company's subsidiaries have sales offices
in the United Kingdom, Germany, Singapore, and Taiwan.
The company markets its custom manufacturing services through a direct
sales force that interfaces with independent sales representatives and,
to a lesser extent, original equipment manufacturers. Board level
products are also marketed directly to existing DRAM and SRAM component
customers.
The company's personal computers are marketed primarily through direct
advertising. Sales have historically been made through mail and
telephone orders and through a single retail outlet. Increasingly, sales
are made through industrial distributors and value-added resellers.
Consistent with industry practice, the company typically provides a
limited warranty that its products are in compliance with specifications
existing at the time of delivery. All other warranties are typically
disclaimed. Liability for a stated warranty period is usually limited to
replacement of defective items or return of amounts paid.
Backlog
The rate of booking new orders varies from month to month and depends
upon the scheduling practices of individual customers. Cyclical industry
conditions make it difficult for many customers to enter into long-term,
fixed-price contracts. Orders for the company's primary products are
typically entered into with acknowledgment that the terms may be adjusted to
reflect market conditions at the delivery date. For the foregoing reasons,
and because of the possibility of
2
customer changes in delivery schedules or cancellation of orders
without significant penalty, the company does not believe that its
backlog, as of any particular date, is firm or that it is a reliable
indicator of actual sales for any succeeding period.
Research and Development
Rapid technological change and intense price competition place a premium
on new product and process development efforts. The company's continued
ability to compete in the memory market will depend in part on its
ability to continue to develop technologically advanced products and
processes, of which there can be no assurance. Research and development
is being performed in strategic areas related to the company's
historical semiconductor expertise. See "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations - Certain
Factors" and "Item 8. Financial Statements and Supplementary Data - Notes to
Consolidated Financial Statements - Contingencies".
Internal qualification is under way on the 16 Meg DRAM in a 300 mil
package, which is expected to be the preferred market package. Internal
qualification typically occurs at the end of the development cycle
before initial production quantities are released for qualification by
major customers. The company's research and development efforts on the
64 Meg DRAM have progressed and the company is beginning to transfer a
prototype part from the pilot line to the manufacturing area for further
product development and evaluation. Additional research and development
efforts are focused primarily on design and development of the 256 Meg
DRAM and 4 Meg SRAM. Manufacturing efficiencies from new product and
process development are incorporated into the manufacture of existing
products where cost reductions can be realized.
The company has entered into various research and development cost-
sharing contracts with the Advanced Research Projects Agency ("ARPA")
aggregating approximately $21 million to pursue multi-year development
of an advanced 16 Meg SRAM process, a flat panel field emission display,
and alternative semiconductor materials. The company is also researching
and developing technologies related to radio frequency identification
products and nonvolatile memory devices. Research and development
expenditures were $83 million, $57 million, and $48 million in 1994,
1993, and 1992, respectively.
Patents and Licenses
As of September 1, 1994, the company owned 557 United States patents
relating to the use of its products and processes. In addition, the
company has numerous United States and foreign patent applications
pending. There can be no assurance that patents will ever be issued for
such applications or that any issued patents will be determined to be
valid. The company intends to continue to seek patent protection on any
of its significant patentable technology.
The company has entered into several cross-license agreements with
third parties. The agreements require one-time and/or periodic royalty
payments and expire at various times. A significant portion of the one-
time payments were capitalized and are being amortized over the shorter
of the estimated useful life of the technology, the patent term, or the
term of the agreement. Royalty and other product and process technology
expenses were $128 million, $78 million, and $45 million in fiscal 1994,
1993, and 1992, respectively. It may be necessary or advantageous in the
future for the company to obtain additional patent licenses or to renew
existing license agreements, several of which expire in the next fiscal
year. The company is unable to predict whether these license agreements
can be obtained or renewed on terms acceptable to the company.
Periodically, the company is made aware that technology used by the
company in the manufacture of some or all of its products may infringe
on product or process technology rights held by others. An adverse
decision on infringement of patents may have a material adverse effect
on the company's financial position or results of operations, and may
require material changes in production processes or products. For
additional discussion of product and process technology issues, see
"Item 8. Financial Statements and Supplementary Data - Notes to
Consolidated Financial Statements - Contingencies".
Competition
The company's semiconductor memory operations experience intense
competition from a number of substantially larger foreign and domestic
companies, including Fujitsu, Ltd., Goldstar Electron, Co., Ltd.,
Hitachi, Ltd., Hyundai Electronics, Co., Ltd., Mitsubishi Electric
Corp., Motorola, Inc., NEC Corp., Samsung Semiconductor, Inc., Texas
Instruments, Inc., and Toshiba Corporation. The company has captured a
very small percentage of the semiconductor memory market and may be at a
disadvantage in competing against these larger manufacturers with
significantly greater capital resources, larger engineer/employee bases,
and more diversified product lines which may provide long-term
advantages in research and new product development and better enable
them to withstand periodic downturns in the semiconductor market. In
addition, the company believes its competition has sufficient resources
and manufacturing capacity to influence market pricing.
3
As has occurred in the past in reaction to improved market conditions,
many of the company's competitors are adding new facilities designed to
use 8-inch wafers, which have approximately 84% greater usable surface
area than the 6-inch wafer currently used by the company. The company
believes many competitors are currently achieving significantly lower
yields for their 16 Meg DRAM products than would be expected when such
products mature. Yield improvements by these competitors would
dramatically increase worldwide semiconductor memory capacity. Excess
supply as a result of increased semiconductor manufacturing capacity,
adverse market conditions, or currency fluctuations resulting in a
strengthening dollar against the yen, could result in downward pricing
pressure. A decline in the current favorable product pricing would have
a material adverse effect on the company's results of operations.
The company's custom manufacturing operations compete against numerous
domestic and offshore contract manufacturers, including such companies
as Avex, Benchmark, DOVAtron, Jabil, SCI, and Solectron. In addition,
the company competes against the in-house manufacturing capabilities of
its existing customers as well as with certain large computer
manufacturers, including DEC and IBM. Many of the company's custom
manufacturing competitors have substantially greater manufacturing,
financial, and marketing resources dedicated to custom manufacturing.
These resources and the competitors' multiple domestic and overseas
manufacturing locations in close geographic proximity to the customer
base, may place the company's limited custom manufacturing operations at
a competitive disadvantage.
The company's personal computer operations experience intense
competition from a number of domestic and foreign personal computer
manufacturers, particularly from those who also market personal computer
systems through direct distribution channels. The company's principal
personal computer competitors include Compaq Computer Corporation, Dell
Computer Corporation, and Gateway 2000, Inc. Personal computer products
are differentiated based primarily on price, performance, reliability,
service and support. As a result of competitive pricing pressures, the
margins realized on the company's personal computer products are
substantially lower than the margins currently realized by the company's
primary semiconductor memory products.
Manufacturing
Semiconductor memory manufacturing cost is primarily a function of
circuit size (since the potential number of good circuits per wafer
increases with reduced circuit size), number of mask layers, and the
yield of acceptable die produced on each wafer. Other contributing
factors are wafer size, number of fabrication steps, costs and
sophistication of the manufacturing equipment, package type, equipment
up time, process complexity, and cleanliness. The manufacture of the
company's semiconductor products is a complex process and involves a
number of precise steps, including wafer fabrication, assembly, burn-in,
and final test.
The company's principal semiconductor memory manufacturing facility
includes two 6-inch wafer fabrication lines equipped with diffusion
tubes, photolithography systems, ion implant equipment, chemical vapor
deposition reactors, sputtering systems, plasma and wet etchers, and
automated mask inspection systems. The production facility operates in
12-hour shifts, 24 hours per day, and 7 days per week (in three or four
day shift cycles) to reduce down time during shift changes, and seeks to
reduce fabrication costs further through 100% utilization of fabrication
capacity. Wafer fabrication occurs in a highly controlled, clean
environment to minimize dust and other yield- and quality-limiting
contaminants. Notwithstanding the highly controlled manufacturing operation,
equipment does not consistently perform flawlessly, and minute impurities,
defects in the photomasks, or other difficulties in the process may cause a
substantial percentage of the wafers to be rejected or individual
circuits to be nonfunctional. The success of the company's manufacturing
operations will be dependent largely on the ability to minimize such
impurities and to maximize yield of acceptable, high-quality circuits.
In this regard, the company employs rigorous quality controls throughout
the manufacturing, screening, and testing processes.
After fabrication, each silicon wafer is separated into individual
circuits. Functional circuits are connected to external leads by
extremely fine wire and are assembled into plastic packages. Each
completed package is then inspected, sealed, and tested. The assembly
process uses high speed automatic systems such as wire bonders, as well
as semiautomatic plastic encapsulation and solder systems. The company
tests its products at various stages in the manufacturing process,
performs high temperature burn-in on finished products, and conducts
numerous quality control inspections throughout the entire production
flow. In addition, through the utilization of its proprietary AMBYX line
of intelligent test and burn-in systems, the company simultaneously
conducts circuit testing of all die during the burn-in process, thereby
providing improved quality and reliability data and reduced time and
cost of testing.
4
The company may convert some or all of its 6-inch wafer fabrication
lines to 8-inch processing capabilities over the next several years.
Significant capital expenditures would be required for the conversion
and there can be no assurance that the conversion can be accomplished
without disruption of production. Several other semiconductor
manufacturers are also adding significant manufacturing capacity. All
semiconductor memory manufacturers compete for and are dependent upon a
limited number of sophisticated equipment suppliers. The cyclical nature
of the industry often results in extended lead times for equipment
deliveries. There can be no assurance the company will not encounter
delays in the company's currently planned expansion as a result of
limited availability of equipment.
The company's custom manufacture of board-level products involves the
attachment of various electronic components, such as memory components
and processors, to a printed circuit board. Nearly all of the board-
level products assembled by the company are assembled utilizing SMT, in
which the component leads are soldered to the printed circuit board
rather than being inserted into holes as in pin-through-hole technology.
In-circuit testing verifies that components have been properly inserted
and that the electrical circuits are complete. Functional and
environmental tests determine if the board or system assembly is
performing to customer specifications.
Component recovery efforts conducted by the company's custom
manufacturing operations involve the testing and grading of components
not meeting full industry specifications to determine their highest
level of functionality. These devices are placed in applications in
which the functionality meets or exceeds customer requirements, such as
PCs and peripherals, telephone answering machines, electronic games,
laser printers, facsimile machines, and cellular telephones.
The company's personal computers are designed to maximize performance of
each system utilizing extensive DRAM and SRAM memory. Personal computers
are assembled to standard and unique customer specifications on an
integrated production line. Components, subassemblies, and software are
obtained from a wide range of PC industry suppliers. Each personal
computer is subjected to a burn-in and test process to ensure high-
quality performance on delivery.
Availability of Raw Materials
Raw materials utilized by the company generally must meet exacting
product specifications. The company is generally able to arrange for
multiple sources of supply, but the number of suppliers capable of
delivering certain raw materials is very limited. Many semiconductor
manufacturers are adding new facilities designed to use 8-inch wafers.
The level of both 6-inch and 8-inch wafers available for semiconductor
memory production is partially dependent on how readily wafer suppliers
can increase capacity or create additional capacity to match the demand
for 8-inch wafers without creating shortages in the supply of 6-inch
wafers. Other materials used in the manufacture of the company's
products may experience declines in availability due to the overall
increase in worldwide semiconductor manufacturing. Although shortages
have occurred from time to time and lead times have been extended on
occasion in the industry, the company has not experienced any
significant production interruption as a result of difficulty in
obtaining raw materials to date. Interruption of any one raw material
source could negatively impact the company's operations.
Environmental Compliance
Government regulations impose various environmental controls on the
discharge of chemicals and gasses used in the manufacturing process. The
company believes that its activities conform to present environmental
regulations. While the company has not experienced any materially
adverse effects on its operations from environmental regulations, there
can be no assurance that changes in such regulations will not impose the
need for additional capital equipment or other compliance requirements.
Additionally, the extensive process required to obtain permits for
expansion of the company's facilities may impact how quickly the company
can respond to increases in market demand.
Employees
As of September 1, 1994, the company had approximately 5,450 full-time
employees, including approximately 4,530 in the semiconductor memory
manufacturing operations, 440 in the custom manufacturing services
operations, and 270 in the personal computer manufacturing operations.
Employment levels can vary depending on market conditions and the level
of utilization of the company's fabrication, assembly, and test
facilities, as well as on research and development and product and
process development activities. Many of the company's employees are
highly-skilled, and the company's continued success will depend in part
upon its ability to retain such employees. None of the company's
employees are represented by a labor organization, the company has never
had a work stoppage, and the company considers its employee relations to
be satisfactory.
5
Executive Officers of the Registrant
The executive officers of the company and their ages as of September 1,
1994 are as follows:
Name Position Age Officer Since
- - --------------------- ---------------------------------- --- -------------
Joseph L. Parkinson Chairman of the Board of 49 1980
Directors and Chief Executive
Officer; Micron Technology, Inc.
James W. Garrett President, Chief Operating 46 1986
Officer, and Director;
Micron Technology, Inc.
Reid N. Langrill Vice President, Finance, 34 1988
Treasurer, Chief Financial
Officer, and Director;
Micron Technology, Inc.
Kipp A. Bedard Vice President, Investor 35 1990
Relations;
Micron Technology, Inc.
Nancy M. Self Vice President, Administration; 40 1993
Micron Technology, Inc.
Steven R. Appleton Chairman of the Board of 34 1989
Directors, President,
and Chief Executive Officer;
Micron Semiconductor, Inc.
Director; Micron Technology, Inc.
Tyler A. Lowrey Vice President, Chief Technical 41 1986
Officer, and Director;
Micron Semiconductor, Inc.
Larry L. Grant Vice President, General Counsel, 48 1985
and Secretary;
Micron Semiconductor, Inc.
Thomas M. Trent Vice President; 48 1986
Micron Semiconductor, Inc.
Edward J. Heitzeberg Vice President, Quality; 48 1986
Micron Semiconductor, Inc.
Norman L. Schlachter Vice President and Treasurer; 36 1989
Micron Semiconductor, Inc.
Robert M. Donnelly Vice President, SRAM Products 55 1989
Group;
Micron Semiconductor, Inc.
Eugene H. Cloud Vice President, Marketing; 52 1990
Micron Semiconductor, Inc.
Donald D. Baldwin Vice President, Sales; 34 1991
Micron Semiconductor, Inc.
Kenneth G. Smith Vice President, Operations; 45 1992
Micron Semiconductor, Inc.
Wilbur G. Stover, Jr. Vice President, Finance, and 41 1992
Chief Financial Officer;
Micron Semiconductor, Inc.
6
Background of Executive Officers
Joseph L. Parkinson, a co-founder of Micron Technology, Inc., served as
its President and a director from July 1980 through January 1986, when
he was named Chairman of the Board and Chief Executive Officer.
James W. Garrett joined Micron Technology, Inc., in April 1985 as Sales
Manager. In January 1986, he became Vice President, Sales and Marketing
and held that position until July 1988, when he was named Executive Vice
President. He was elected to the Board of Directors in August 1988, and
served as Vice Chairman of the Board from April 1991 until July 1992,
when he was named President and Chief Operating Officer.
Reid N. Langrill joined Micron Technology, Inc., in March 1984 as a
financial planner. From December 1986 until July 1988, he served as
Controller. In July 1988, he was named Vice President, Finance,
Treasurer, and Chief Financial Officer and served in that position until
May 1989. He served as Vice President, Business Units from August 1989
until December 1989 when he was named Vice President, Finance, and Chief
Financial Officer. In July 1992, Mr. Langrill was elected to the Board
of Directors and was also named Treasurer.
Kipp A. Bedard joined Micron Technology, Inc., in November 1983 as an
accountant and held various management responsibilities until he was
appointed Manager of Investor Relations in June 1988. Mr. Bedard held
that position until April 1990 when he was named Vice President and
Manager of Investor Relations. From July 1992 to January 1994, Mr.
Bedard served as Vice President, Public Relations for Micron
Semiconductor, Inc. In January 1994, he was named Vice President,
Investor Relations for Micron Technology, Inc.
Nancy M. Self joined Micron Technology, Inc., in February 1988 as a
benefits specialist. In July 1988, she was named Benefits Manager and
served in that position until July 1989, when she was named Risk
Manager. In March 1993, she was named Vice President, Administration.
Steven R. Appleton joined Micron Technology, Inc., in February 1983 and
served in various manufacturing management positions until April 1988
when he was named Director of Manufacturing. He was appointed Vice
President, Manufacturing in August 1989 and served in that position
until April 1991 when he was appointed President and Chief Operating
Officer of Micron Technology, Inc. He was elected to the Board of
Directors in April 1991. Mr. Appleton served in these positions until
July 1992, when he assumed responsibilities as Chairman of the Board,
President, and Chief Executive Officer for Micron Semiconductor, Inc. In
May 1994, Mr. Appleton was re-elected to the Board of Directors of
Micron Technology, Inc.
Tyler A. Lowrey joined Micron Technology, Inc., in July 1984 as a senior
process engineer. In March 1986, he became a Process Research
Development/Device Group Manager and was promoted to Vice President,
Process Research and Development, and Assistant Technical Officer in
September 1986. In April 1990, he was named Vice President, Research and
Development. Mr. Lowrey was appointed to the Board of Directors of
Micron Technology, Inc., in August 1990. Mr. Lowrey served in these
positions until July 1992, when he was elected a director and named Vice
President, Chief Technical Officer for Micron Semiconductor, Inc.
Larry L. Grant joined Micron Technology, Inc., in January 1985 and
served as General Counsel until July 1985, when he was named Vice
President and General Counsel. Mr. Grant served in this position until
July 1992, when he was named Vice President, General Counsel and
Secretary for Micron Semiconductor, Inc.
Thomas M. Trent joined Micron Technology, Inc., in July 1980 as a senior
design engineer. From August 1986 to April 1990, Mr. Trent served as
Vice President, Research and Development, and Chief Technical Officer,
at which time he was named Vice President and Manager of DRAM Design. In
June 1991, he assumed responsibilities of all DRAM products and was
named Vice President and Manager of DRAM Products Group. Mr. Trent
served in these positions until July 1992, when he was named Vice
President, DRAM Products Group for Micron Semiconductor, Inc. In April
1993, he was named Vice President for Micron Semiconductor, Inc.
Edward J. Heitzeberg joined Micron Technology, Inc., in January 1984 as
Information Systems Manager. In March 1986, he became Senior Staff
Engineer and served in that capacity until June 1986, when he was named
Vice President, Quality. Mr. Heitzeberg served in this position until
July 1992, when he was named Vice President, Quality for Micron
Semiconductor, Inc.
Norman L. Schlachter joined Micron Technology, Inc., in March 1987 as
Treasury Manager. From October 1988 until May 1989, he served as
Assistant Treasurer, at which time he was named Vice President, Finance,
and Treasurer, and Chief Financial Officer. In December 1989, he was
named Vice President and Treasurer. Mr. Schlachter served in these
positions until July 1992, when he was named Vice President and
Treasurer for Micron Semiconductor, Inc.
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Robert M. Donnelly joined Micron Technology, Inc., in September 1988
and served in various manufacturing management positions until August
1989, at which time he was appointed Vice President, Business Units.
From April 1990 to June 1991, Mr. Donnelly served as Vice President and
Manager of DRAM Products Group. In June 1991, he was named Vice
President and Manager of SRAM Products Group. Mr. Donnelly served in
this position until July 1992, when he was named Vice President, SRAM
Products Group for Micron Semiconductor, Inc.
Eugene H. Cloud joined Micron Technology, Inc., in January 1985 as an
applications engineer. In June 1985, he was named Applications Manager.
He served in that position until June 1986, when he was named Marketing
Manager. In April 1990, he was named Vice President, Semiconductor
Marketing. Mr. Cloud served in this position until July 1992, when he
was named Vice President, Marketing for Micron Semiconductor, Inc.
Donald D. Baldwin joined Micron Technology, Inc., in April 1984 and
served in various manufacturing and sales positions until April 1987,
when he was named Key Accounts Manager. From April 1990 to May 1991, he
served as Manager of North American Sales. In May 1991, he was named
Vice President, Sales. Mr. Baldwin served in this position until July
1992, when he was named Vice President, Sales for Micron Semiconductor,
Inc.
Kenneth G. Smith joined Micron Technology, Inc., in November 1987 as a
senior diffusion engineer and held various positions in manufacturing
until he was named Fab I/II Manager in May 1989. In July 1992, Mr. Smith
was named Vice President, Operations for Micron Semiconductor, Inc.
Wilbur G. Stover, Jr., joined Micron Technology, Inc., in June 1989 as
an accounting manager. In February 1990, Mr. Stover was named Controller
where he served until July 1992, when he was named Vice President, Finance,
and Chief Financial Officer of Micron Semiconductor, Inc.
Item 2. Properties
The company's principal semiconductor manufacturing, engineering,
administrative, and support facilities are located on a 665 acre site in
Boise, Idaho. All facilities have been constructed since 1981 and are
owned by the company. The company has 1,245,000 square feet of building
space at this primary site. Of the total, 263,000 square feet are
production space, 506,000 square feet are facility support space, and
476,000 square feet are office and other space. The company's custom
manufacturing and component recovery operations are housed in a 52,000
square foot facility also located in Boise, Idaho. In addition, the
company owns a 128,000 square foot facility and approximately 30 acres
of land in Nampa, Idaho, housing the company's personal computer
manufacturing operations.
The company is in the process of qualifying its newly-constructed
central implant building at the main Boise site. This facility is
expected to be qualified for the production of commercial volumes in
early fiscal 1995. In addition, the company has initiated construction
of a .25 micron, 8-inch development facility, and an additional assembly
and test facility encompassing a total of approximately 340,000 square
feet. The development facility and additional assembly and test facility
are expected to be operational in fiscal 1995.
Fixed assets with a book value of approximately $74 million are pledged
as collateral for outstanding debt and capital leases as of September 1,
1994. Substantially all of the tangible assets of the company's
semiconductor memory, and custom manufacturing and component recovery
operations not otherwise pledged as collateral for other notes payable
and capital leases are pledged as collateral under the company's bank
credit agreements.
A utility-owned power substation and a vendor-owned and operated
nitrogen production plant, each of which is dedicated for the company's
use, were constructed on land owned by the company.
Item 3. Legal Proceedings
As of September 1, 1994, there were no material pending lawsuits to
which the company is a party.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1994.
8
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Market for Common Stock
Micron Technology, Inc.'s common stock is listed on the New York Stock
Exchange and is traded under the symbol MU. The following table
represents the high and low sales prices for the company's common stock
for each quarter of fiscal 1994 and 1993, as reported by The Wall Street
Journal. All stock prices presented have been restated to reflect a 5
for 2 stock split effected in the form of a stock dividend to
shareholders of record as of April 1, 1994.
High Low
------ ------
1994:
4th quarter $44.88 $30.63
3rd quarter 39.90 28.25
2nd quarter 30.60 17.45
1st quarter 25.45 15.15
1993:
4th quarter $22.10 $11.95
3rd quarter 12.60 7.95
2nd quarter 10.30 6.80
1st quarter 8.85 5.80
Holders of Record
As of September 1, 1994, there were 2,843 shareholders of record of the
company's Common Stock.
Dividends
The company declared and paid cash dividends totaling $0.12 during
fiscal 1994, and $0.02 during each of fiscal 1993 and 1992. The
company's Board of Directors further approved a $0.05 per share cash
dividend to shareholders of record as of September 30, 1994, for payment
on October 24, 1994. Future dividends, if any, will vary depending on
the company's profitability and anticipated capital requirements.
Item 6. Selected Financial Data
(Amounts in millions, except for per share amounts)
1994 1993 1992 1991 1990
-------- ------ ------ ------ ------
Net sales $1,628.6 $828.3 $506.3 $425.4 $333.3
Operating income 620.1 165.9 13.7 11.8 3.8
Net income 400.5 104.1 6.6 5.1 4.9
Fully diluted earnings per share 3.80 1.03 0.07 0.05 0.05
Cash dividend declared per share 0.12 0.02 0.02 -- --
Current assets 793.2 440.1 227.0 213.2 198.1
Total assets 1,529.7 965.7 724.5 705.9 697.3
Long-term debt 124.7 54.4 61.6 69.6 74.1
Shareholders' equity 1,049.3 639.5 511.2 494.8 484.2
See "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations - Certain Factors" for a discussion of
material uncertainties which might cause the data reflected herein not
to be indicative of the company's future financial condition or results
of operations.
9
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
All yearly references are to the company's fiscal years ended September
1, 1994, September 2, 1993, and September 3, 1992, unless otherwise
indicated. Fiscal year 1992 contained fifty-three weeks compared to
fifty-two weeks in fiscal years 1994 and 1993. All tabular dollar
amounts are stated in millions.
Overview
The company achieved record sales and net income in 1994 primarily as a
result of favorable market conditions and increased production of
semiconductor memory. Net income for 1994 was $400.5 million, or $3.80
per fully diluted share, on net sales of $1,628.6 million. Fiscal year
1993's net income was $104.1 million, or $1.03 per fully diluted share,
on net sales of $828.3 million. Historical per share amounts have been
restated to reflect a 5 for 2 stock split effected in the form of a
stock dividend to shareholders of record as of April 1, 1994. During
fiscal year 1994, the company paid cash dividends totaling $0.12 per
share. The company's Board of Directors further approved a $0.05 per
share cash dividend to shareholders of record as of September 30, 1994
for payment on October 24, 1994. Future dividends, if any, will vary
depending on the company's profitability and anticipated capital
requirements.
Results of Operations
1994 % Change 1993 % Change 1992
Net sales $1,628.6 96.6% $828.3 63.6% $506.3
The company's overall success continues to be dependent on the memory
operations of the company's wholly-owned subsidiary, Micron
Semiconductor, Inc. Favorable market conditions for memory products in
1994 resulted in relatively stable pricing. In addition, the company's
production of semiconductor memory, as measured in megabits, nearly
doubled in 1994 compared to 1993. The increase in volume of
semiconductor memory during 1994 was principally due to increased wafer
capacity, principally as a result of continued expenditures on equipment
and facilities; improved manufacturing yields resulting from increased
manufacturing efficiencies; and conversion to further shrinks of
existing products.
The company has benefited from market supply and demand relationships
resulting in relatively stable product pricing for approximately the
past nine quarters. Pricing per megabit for DRAM products has
historically declined approximately 30% per year on a long-term trend
line. While the company expects average selling prices to return to
their historical long-term declining trend line, market dynamics make
it difficult to forecast when or how quickly average selling prices will
fall.
The company's principal product in 1994 was the 4 Meg DRAM. Volumes for
specialty DRAMs decreased during 1994 as compared to 1993 as the company
dedicated more production resources to the 4 Meg DRAM. SRAM net sales
were higher in 1994 as compared to 1993, but declined as a percentage of
total net sales to approximately 8% in 1994. SRAM net sales were 14% and
18% of total net sales in 1993 and 1992, respectively.
Similar to the factors leading to the increase in net sales comparing
1994 to 1993, the increase in net sales for 1993 as compared to 1992 was
principally due to higher volumes of semiconductor memory sold and
slightly higher average selling prices. Volume increases were achieved
through die-size reductions and increased manufacturing yields. Selling
prices, on average, were higher in 1993 as compared to 1992 for 4 Meg
and 1 Meg DRAM products, but were lower for specialty DRAM and SRAM
products.
1994 % Change 1993 % Change 1992
Cost of goods sold $789.4 52.6% $517.2 32.5% $390.3
Gross margin % 51.5% 37.6% 22.9%
The company's overall gross margin percentage improved significantly in
1994 as compared to 1993 due to relatively stable selling prices and
reductions in cost per unit of memory sold for DRAM products. Reductions
in costs per unit sold were realized primarily from a combination of
increased wafer output, yield improvements, die shrinks, and transitions
to higher density memory products.
Internal qualification is under way on the 16 Meg DRAM in a 300 mil
package, which is expected to be the preferred market package.
Manufacturing yields associated with the 16 Meg DRAM are currently lower
than those for the company's more mature products. A shift to the 300
mil package 16 Meg DRAM as the industry's primary product without
significant improvement in the company's manufacturing yields would have
a negative impact on the results of operations.
10
Sales of personal computers, and custom modules and boards accounted
for approximately 8% and 7%, respectively, of total net sales for 1994.
Gross margin percentages for such products are substantially lower than
the gross margins currently realized for the company's primary
semiconductor products. Should sales of personal computers and custom
modules and boards increase as a percentage of total net sales, the
company's overall gross margin percentage would decrease. Sales of
personal computers for 1993 and 1992 were approximately 4% and 2%,
respectively. Net sales for custom modules and boards for 1993 and 1992
were approximately 7% and 8%, respectively.
Cost of goods sold includes estimated costs of settlement or
adjudication of asserted and unasserted claims for patent infringement
prior to the balance sheet date, and costs of product and process
technology licensing arrangements. The charges for product and process
technology have remained relatively constant as a percentage of net
sales across all periods presented. Future product and process
technology charges may increase, however, as a result of claims that may
be asserted in the future. See "Certain Factors".
Similar to the factors leading to the increase in gross margin comparing
1994 to 1993, the increase in gross margin in 1993 as compared to 1992
was primarily due to reductions in cost per unit of memory sold realized
primarily from die shrinks and yield improvements, and slightly higher
average selling prices for DRAM products. These factors were partially
offset by increases in amortization of product and process technology
associated with a higher level of net sales, and by generally lower
average selling prices for SRAM and specialty DRAM products.
1994 % Change 1993 % Change 1992
Selling, general, and
administrative $135.7 54.4% $87.9 60.7% $54.7
as a % of net sales 8.3% 10.6% 10.8%
Selling, general, and administrative expenses increased in 1994 as
compared to 1993, but decreased as a percentage of net sales. The higher
level of selling, general, and administrative expenses for 1994 as
compared to 1993 was principally due to higher personnel costs;
increased costs incurred in conjunction with the company's action before
the International Trade Commission and patent litigation, each of which
has been settled; increased sales commissions based on a higher level of
net sales; and a higher level of state sales tax. The higher personnel
costs in 1994 were principally due to an increase in amounts paid under
the company's profit sharing programs. The increase in selling, general,
and administrative expenses for 1993 compared to 1992 was principally
due to a combination of higher personnel costs, increased sales
commissions, settlement costs for the shareholders' class action
lawsuit, legal fees associated with the shareholders' suit, and patent
litigation.
1994 % Change 1993 % Change 1992
Research and development $83.4 45.5% $57.3 20.4% $47.6
as a % of net sales 5.1% 6.9% 9.4%
Research and development expenses, which vary primarily with the number
of wafers and personnel dedicated to new product and process
development, were higher for 1994 compared to 1993, but decreased as a
percentage of net sales. Efforts in 1994 were focused primarily on
development of the 16 Meg DRAM, and design and development of the 64 Meg
DRAM and the 4 Meg and 16 Meg SRAMs. Development of VRAMs beyond the
company's current 2 Meg generation has been terminated as the company
pursues development of more cost-effective alternatives for graphics
applications. The company expects research and development expense in the
next year to be higher than 1994 as additional resources are dedicated to
development of the 16 Meg and 64 Meg DRAMs and to design and develop the 256
Meg DRAM, as well as design and development of new technologies related to
radio frequency identification products, nonvolatile semiconductor memory
devices, and flat panel field emission displays.
1994 % Change 1993 % Change 1992
Income tax provision $225.3 285% $58.5 1,850% $3.0
The effective tax rate for 1994 was 36% which primarily reflects the
statutory corporate tax rate and the net effect of state taxation. State
taxes reflect the utilization of $20 million of investment tax credits.
The effective tax rate for 1993 and 1992 was 36% and 31%, respectively.
Effective September 3, 1993, the company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Adoption of SFAS No. 109 did not have a material effect on the company's
financial position or results of operations.
11
Liquidity and Capital Resources
The company had cash and liquid investments of $433 million as of
September 1, 1994, representing an increase of $247 million during 1994.
The company's principal sources of liquidity during 1994 were cash flows
from operations of $558 million, equipment financing of $126 million,
issuance of long-term debt of $119 million, and proceeds of $12 million
from the issuance of common stock in connection with the company's
employee stock purchase and stock option plans. The principal uses of
funds in 1994 were $251 million for property, plant, and equipment, $119
million for repayments of equipment contracts, $46 million for payments
on long-term debt, $18 million for acquisition and license of product
and process technology, and $12 million for payments of cash dividends.
As of September 1, 1994, the company had commitments of approximately
$290 million for equipment purchases and approximately $28 million for
the construction of buildings. Anticipated capital expenditures are
primarily for remodels and upgrades of existing fabrication facilities
and equipment, including upgrading manufacturing equipment to 8-inch
wafer processing capability, qualification of a newly constructed
central implant facility and a .25 micron 8-inch research and
development facility, and construction of an additional assembly and
test facility. Completion of these and future projects as currently
anticipated will require substantial cash resources including
significant payments out of the company's cash flow from near-term
operations.
The company's bank credit agreements provide for borrowings of up to
$130 million under revolving loans expiring through May 1997.
Substantially all of the tangible assets of the company's semiconductor
memory, and custom manufacturing and component recovery operations not
otherwise pledged as collateral for other notes payable and capital
leases are pledged as collateral under the agreements. The agreements
contain certain financial covenants, including a limitation on the
transfer of funds from consolidated subsidiaries to Micron Technology,
Inc. The limitation on transfer of funds is not expected to impair the
ability of the company to meet its cash obligations. As of September 1,
1994, the company had no borrowings outstanding under the agreements.
The company believes continuing investments in manufacturing technology,
facilities and capital equipment, research and development, and product
and process technology are necessary to support future growth, achieve
operating efficiencies, and maintain product quality. Although external
sources of cash have been required historically to supplement the
company's cash flows from operations to fund these ongoing investments,
the company currently expects that it will be able to fund its near-term
liquidity needs through cash flows from operations, existing cash and
liquid investment balances, and equipment financings. Depending on
overall market conditions, the company may borrow amounts available
under the bank credit agreements or pursue other external sources of
liquidity.
12
Certain Factors
The semiconductor memory industry is characterized by rapid
technological change, frequent product introductions and enhancements,
difficult product transitions, relatively short product life cycles, and
volatile market conditions. These circumstances historically have made
the semiconductor industry highly cyclical, particularly in the market
for DRAMs, which are the company's primary products. Demand for
semiconductor memory products has grown, fueled primarily by growth in
the personal computer industry. Many of the company's competitors are
adding new facilities designed to process 8-inch wafers which have
approximately 84% greater usable surface area than the 6-inch wafer
currently used by the company. Many competitors are believed to be
running their 16 Meg DRAM manufacturing operations at significantly
lower yields than would be expected when such products mature. Yield
improvements by these competitors would dramatically increase
semiconductor memory capacity. Excess supply as a result of increased
semiconductor manufacturing capacity, adverse market conditions, or
currency fluctuations resulting in a strengthening dollar against the
yen, could result in downward pricing pressure. A decline in the current
favorable product pricing would have a material adverse effect on the
company's results of operations.
The manufacture of the company's semiconductor memory products is a
complex process and involves a number of precise steps, including wafer
fabrication, assembly in a variety of packages, burn-in, and final test.
From time to time, the company has experienced volatility in its
manufacturing yields, as it is not unusual to encounter difficulties in
ramping shrink versions of existing devices or new generation devices to
commercial volumes. The company continues to develop a reduced die size
16 Meg DRAM in a 300 mil package, which is expected to be the preferred
market package. The company's net sales and operating results are highly
dependent on increasing yields at an acceptable rate and to an
acceptable level, of which there can be no assurance. Future results of
operations may be adversely impacted if the company is unable to
transition to future generation products in a timely fashion or at gross
margin rates comparable to the company's current primary products.
Periodically, the company is made aware that technology used by the
company in the manufacture of some or all of its products may infringe
on product or process technology rights held by others. The company has
accrued a liability and charged operations for the estimated costs of
settlement or adjudication of asserted and unasserted claims for
infringement prior to the balance sheet date. Management can give no
assurance that the amounts accrued have been adequate and cannot
estimate the range of additional possible loss, if any, from resolution
of these uncertainties. Resolution of whether the company's manufacture
of products has infringed on valid rights held by others may have a
material adverse effect on the company's financial position or results
of operations, and may require material changes in production processes
and products. The company has various product and process technology
agreements expiring in the next fiscal year. The company is not able to
predict whether these license agreements can be renewed on terms
acceptable to the company.
13
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14
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page
Financial Statements:
Consolidated Statements of Operations for...........................16
Fiscal Years Ended September 1, 1994,
September 2, 1993, and September 3, 1992
Consolidated Balance Sheets as of September 1,.......................17
1994, and September 2, 1993
Consolidated Statements of Shareholders'.............................18
Equity for Fiscal Years Ended September 1,
1994, September 2, 1993, and September 3, 1992
Consolidated Statements of Cash Flows for............................19
Fiscal Years Ended September 1, 1994,
September 2, 1993, and September 3, 1992
Notes to Consolidated Financial Statements...........................20
Report of Independent Accountants....................................28
Financial Statement Schedules as of September 1, 1994, and for Fiscal
Years Ended September 1, 1994, September 2, 1993, and September 3, 1992,
are set forth as follows:
I. Marketable Securities............................................32
V. Property, Plant, and Equipment...................................33
VI. Accumulated Depreciation and Amortization of.....................34
Property, Plant, and Equipment
X. Supplementary Income Statement Information.......................35
Financial statement schedules and captions other than those included are
omitted because they are not required or are not applicable, or the
required information is given in the consolidated financial statements
including the notes thereto. Captions and column headings have been
omitted where not applicable.
15
Micron Technology, Inc.
Consolidated Statements of Operations
(Amounts in millions, except for per share amounts)
September 1, September 2, September 3,
Fiscal year ended 1994 1993 1992
- - --------------------------------------------------------------------------------
Net sales $1,628.6 $828.3 $506.3
-------- ------ ------
Costs and expenses:
Cost of goods sold 789.4 517.2 390.3
Selling, general, and administrative 135.7 87.9 54.7
Research and development 83.4 57.3 47.6
-------- ------ -----
Total costs and expenses 1,008.5 662.4 492.6
-------- ------ ------
Operating income 620.1 165.9 13.7
Interest income (expense), net 5.7 (3.3) (4.1)
-------- ------ ------
Income before income taxes 625.8 162.6 9.6
Income tax provision 225.3 58.5 3.0
-------- ------ ------
Net income $400.5 $104.1 $ 6.6
======== ====== ======
Earnings per share:
Primary $3.83 $1.04 $0.07
Fully diluted 3.80 1.03 0.07
Number of shares used in per share calculation:
Primary 104.5 100.2 97.3
Fully diluted 105.2 101.3 97.3
The accompanying notes are an integral part of the financial statements.
16
Micron Technology, Inc.
Consolidated Balance Sheets
(Dollars in millions, except for par value amount)
September 1, September 2,
Fiscal year ended 1994 1993
- - --------------------------------------------------------------------------------
Assets
Cash and equivalents $78.4 $47.5
Liquid investments 354.6 138.3
Receivables 235.7 154.7
Inventories 101.1 83.2
Prepaid expenses 3.3 1.5
Deferred income taxes 20.1 14.9
-------- -------
Total current assets 793.2 440.1
Product and process technology, net 48.2 69.7
Property, plant, and equipment, net 663.5 437.8
Other assets 24.8 18.1
-------- -------
Total assets $1,529.7 $965.7
======== =======
Liabilities and shareholders' equity
Accounts payable and accrued expenses $200.2 $155.0
Deferred income 13.0 5.5
Equipment purchase contracts 31.2 24.9
Current portion of long-term debt 29.8 25.4
-------- -------
Total current liabilities 274.2 210.8
Long-term debt 124.7 54.4
Deferred income taxes 54.1 46.2
Other liabilities 27.4 14.8
-------- -------
Total liabilities 480.4 326.2
-------- -------
Commitments and contingencies
Shareholders' equity
Common stock, $0.10 par value, authorized
150.0 million shares, issued and
outstanding 101.9 and 95.8 million shares 10.2 4.0
Additional paid-in capital 369.7 353.3
Retained earnings 670.8 282.5
Unamortized stock compensation (1.4) (0.3)
-------- -------
Total shareholders' equity 1,049.3 639.5
-------- -------
Total liabilities and shareholders' equity $1,529.7 $965.7
======== =======
The accompanying notes are an integral part of the financial statements.
17
Micron Technology, Inc.
Consolidated Statements of Shareholders' Equity
(Dollars and shares in millions)
September 1, September 2, September 3,
1994 1993 1992
Fiscal year ended Shares Amount Shares Amount Shares Amount
- - -------------------------------------------------------------------------------
Common stock
Balance at beginning of year 40.1 $ 4.0 38.3 $ 3.8 37.3 $ 3.7
Stock sold 0.9 0.1 1.8 0.2 1.1 0.1
Stock split 60.9 6.1 -- -- -- --
Treasury stock retired -- -- -- -- (0.1) --
------ ------ ----- ------ ----- ------
Balance at end of year 101.9 $ 10.2 40.1 $ 4.0 38.3 $ 3.8
====== ====== ===== ====== ===== ======
Additional paid-in capital
Balance at beginning of year $353.3 $327.2 $315.1
Stock sold 9.8 18.2 10.4
Stock option plan 2.1 0.2 0.1
Tax effect of stock purchase plans 10.6 7.7 2.7
Stock split (6.1) -- --
Treasury stock retired -- -- (1.1)
------ ------ ------
Balance at end of year $369.7 $353.3 $327.2
====== ====== ======
Retained earnings
Balance at beginning of year $282.5 $180.3 $176.4
Net income 400.5 104.1 6.6
Dividends paid (12.2) (1.9) (1.9)
Treasury stock retired -- -- (0.8)
------ ------ ------
Balance at end of year $670.8 $282.5 $180.3
====== ====== ======
Unamortized stock compensation
Balance at beginning of year $ (0.3) $ (0.2) $ (0.5)
Stock option plan (2.1) (0.2) (0.1)
Stock compensation amortization 1.0 0.1 0.4
------ ------ ------
Balance at end of year $ (1.4) $ (0.3) $ (0.2)
====== ====== ======
The accompanying notes are an integral part of the financial statements.
18
Micron Technology, Inc.
Consolidated Statements of Cash Flows
(Dollars in millions)
September 1, September 2, September 3,
Fiscal year ended 1994 1993 1992
- - -------------------------------------------------------------------------------
Cash flows from operating activities
Net income $400.5 $104.1 $ 6.6
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 138.8 111.9 94.2
Amortization 42.4 26.8 10.9
Increase in receivables (81.0) (76.7) (14.2)
Decrease (increase) in inventories (17.9) (8.7) 1.7
Increase (decrease) in accounts
payable and accrued expenses 45.2 96.2 (0.6)
Other 29.5 3.7 9.7
------- ------ ------
Net cash provided by operating activities 557.5 257.3 108.3
------- ------ ------
Cash flows from investing activities
Purchase of investments (403.6) (218.0) (96.9)
Proceeds from sale and maturity of
investments 185.3 114.7 105.7
Expenditures for property, plant, and
equipment (251.0) (83.4) (50.9)
Purchase of product and process technology (18.0) -- --
Other 7.5 (1.8) (4.8)
------- ------ ------
Net cash used for investing activities (479.8) (188.5) (46.9)
------- ------ ------
Cash flows from financing activities
Payments on equipment purchase contracts (119.3) (63.0) (44.5)
Proceeds from issuance of debt 119.2 41.7 18.8
Repayments of debt (46.2) (52.8) (28.9)
Proceeds from issuance of common stock 12.1 19.3 11.5
Payments of dividends (12.2) (1.9) (1.9)
Other (0.4) (0.3) (2.8)
------- ------ ------
Net cash used for financing activities (46.8) (57.0) (47.8)
------- ------ ------
Net increase in cash and equivalents 30.9 11.8 13.6
Cash and equivalents at beginning of year 47.5 35.7 22.1
------- ------ ------
Cash and equivalents at end of year $ 78.4 $ 47.5 $ 35.7
======= ====== ======
Supplemental disclosures
Income taxes (paid) refunded, net $(197.4) $(22.1) $ 3.2
Interest paid (6.6) (6.1) (5.5)
Noncash investing and financing activities:
Equipment acquisitions on contracts
payable and capital leases 125.6 71.0 51.4
Equipment acquisition in exchange for
license of product and process
technology -- 8.4 --
Acquisition of product and process
technology in exchange for dept -- -- 2.2
Treasury stock retired -- -- 2.0
The accompanying notes are an integral part of the financial statements.
19
Micron Technology, Inc.
Notes to Consolidated Financial Statements
(All tabular dollar and share amounts are stated in millions)
Significant Accounting Policies
Basis of presentation: The consolidated financial statements include the
accounts of Micron Technology, Inc., and its domestic and foreign
subsidiaries (the "company"). The company develops, manufactures, and
markets DRAMs, very fast SRAMs, other semiconductor components, board-
level and system-level products, and personal computers. All significant
intercompany accounts and transactions have been eliminated. Investments
in other entities in which the company does not have control are accounted
for by the cost method. The company's fiscal year ends on the Thursday
closest to August 31. Fiscal years 1994 and 1993 contained fifty-two weeks
compared to fifty-three weeks in 1992.
Revenue recognition: Revenue from product sales to direct customers is
recognized upon shipment. The company defers recognition of sales to
distributors, which allow certain rights of return and price protection,
until distributors have sold the products. Net sales include amounts earned
under cross-license agreements with third parties and amounts received
under government contracts.
Earnings per share: Earnings per share are computed using the weighted
average number of common and common equivalent shares outstanding. Common
equivalent shares result from the assumed exercise of outstanding stock
options and affect earnings per share when they have a dilutive effect. On
March 1, 1994, the company's board of directors announced a 5-for-2 stock
split effected in the form of a stock dividend to shareholders of record as
of April 1, 1994. A total of 60,942,448 additional shares were issued in
conjunction with the stock split. The company distributed cash in lieu of
fractional shares resulting from the stock split. The company's par value
of $0.10 per share remained unchanged. As a result, $6.1 million was
transferred from additional paid-in capital to common stock. All historical
share and per share amounts have been restated to reflect retroactively the
stock split.
Financial instruments: Cash equivalents include highly liquid short-term
investments with original maturities of three months or less, readily
convertible to known amounts of cash. The amounts reported as cash and
equivalents, liquid investments, receivables, other assets, accounts
payable and accrued expenses, and equipment purchase contracts are
considered to be reasonable approximations of their fair values. The fair
value estimates presented herein were based on market information available
to management as of September 1, 1994. The use of different market assumptions
and/or estimation methodologies could have a material effect on the estimated
fair value amounts. The reported fair values do not take into consideration
potential taxes or other expenses that would be incurred in an actual
settlement.
Financial instruments that potentially subject the company to concentrations
of credit risk, consist principally of cash, liquid investments, and trade
accounts receivable. The company invests its cash through high-credit-quality
financial institutions and performs periodic evaluations of the relative
credit standing of these financial institutions. The company, by policy,
limits the concentration of credit exposure by restricting investments with
any single obligor, instrument, or geographic area. A concentration of credit
risk may exist with respect to trade receivables, as substantially all
customers are affiliated with the computer, telecommunications, and office
automation industries. The company has a large number of customers worldwide
on which it performs ongoing credit evaluations and generally does not require
collateral from its customers. Historically, the company has not experienced
significant losses related to receivables for individual customers or groups
of customers in any particular industry or geographic area.
Inventories: Inventories are stated at the lower of average cost or market.
Costs include labor, material, and overhead costs, including product and
process technology costs.
Property, plant, and equipment: Property, plant, and equipment are stated
at cost. Depreciation is computed using the straight-line method over the
estimated useful lives of 5 to 30 years for buildings and 2 to 5 years for
equipment.
Product and process technology: Costs related to the conceptual formulation
and design of products and processes are expensed as research and development.
Costs incurred to establish patents and acquire product and process technology
are capitalized. Capitalized costs are amortized on the units-of-production
method and on the straight-line method over the shorter of the estimated
useful life of the technology, the patent term, or the agreement, ranging up
to 15 years.
Foreign currency: The U.S. dollar is the company's functional currency for
financial reporting.
20
Liquid Investments
The company adopted Statement of Financial Accounting Standards ("SFAS") No.
115 "Accounting for Certain Investments in Debt and Equity Securities" as of
September 1, 1994. Under SFAS No. 115, securities classified as held-
to-maturity are stated at amortized cost. Securities classified as
available-for-sale and trading are stated at their fair values which
approximate cost.
9/1/94
- - ----------------------------------------------------------------------------
Available-for-sale securities:
U.S. Government agency securities $ 36.9
State and local governments 2.1
Corporate notes 3.9
Held-to-maturity securities:
State and local governments 140.3
Commercial paper 76.9
U.S. Government agency securities 51.1
Corporate notes 28.8
Bankers' acceptances 42.5
Other 7.1
-------
389.6
Less cash equivalents (35.0)
-------
$354.6
=======
Securities classified as held-to-maturity have remaining maturities within
one year, and securities classified as available-for- sale mature within
one to three years.
Receivables
9/1/94 9/2/93
- - -----------------------------------------------------------------------------
Trade receivables $227.6 $155.0
Other 15.9 7.2
Allowance for returns and discounts (4.9) (5.7)
Allowance for doubtful accounts (2.9) (1.8)
------ ------
$235.7 $154.7
====== ======
Inventories
9/1/94 9/2/93
- - ----------------------------------------------------------------------------
Finished goods $ 5.2 $ 7.3
Work in progress 64.2 52.5
Raw materials and supplies 31.7 23.4
------ ------
$101.1 $ 83.2
====== ======
21
Product and Process Technology
Amortization of capitalized product and process technology costs charged to
operations was $40.9 million in 1994; $26.2 million in 1993; and $10.0
million in 1992. Accumulated amortization was $100.4 million and $59.5
million as of September 1, 1994, and September 2, 1993, respectively.
Property, Plant, and Equipment
9/1/94 9/2/93
- - -----------------------------------------------------------------------------
Land $ 7.9 $ 7.5
Buildings 260.0 217.6
Equipment 825.5 578.8
Construction in progress 68.7 24.7
------- ------
1,162.1 828.6
Less accumulated depreciation and amortization (498.6) (390.8)
------- ------
$663.5 $437.8
======= ======
Maintenance and repair expenses were $45.9 million in 1994; $38.8 million
in 1993; and $30.3 million in 1992.
In May 1994, the company purchased approximately 30 acres of land for
$258,000 for development and use by the company's personal computer
operation and obtained an option on an additional 40 acres from a director
of the company.
Accounts Payable and Accrued Expenses
9/1/94 9/2/93
- - -----------------------------------------------------------------------------
Accounts payable $ 55.3 $ 34.8
Salaries, wages, and benefits 63.5 28.8
Product and process technology payables 16.6 45.9
Income taxes payable 44.0 30.6
Commissions 4.5 4.7
Other 16.3 10.2
------ ------
$200.2 $155.0
====== ======
22
Long-Term Debt
9/1/94 9/2/93
- - -----------------------------------------------------------------------------
Notes payable in monthly installments
through May 1999, weighted average
interest rate 7.28% and 8.24%,
respectively $ 115.7 $ 31.2
Capitalized lease obligations payable in
monthly installments through April 1998,
weighted average interest rate 7.93%
and 8.79%, respectively 12.4 28.5
Noninterest bearing obligation, due June
1997, original face amount $19.8 million
(net of discount based on imputed
interest rate of 6.50%) 16.6 --
Noninterest bearing obligation, due in
annual installments through November 1994,
original face amount $50 million (net of
discount based on imputed interest rate
of 10.25%) 9.8 18.8
Noninterest bearing obligation, due in
annual installments through January 1994
(net of discount based on imputed interest
rate of 7.41%) -- 1.3
------- ------
154.5 79.8
Less current portion (29.8) (25.4)
------- ------
$124.7 $ 54.4
======= ======
The notes payable are collateralized by plant and equipment with a total
cost of approximately $91.2 million and accumulated depreciation of
approximately $25.3 million as of September 1, 1994. The company is required
to maintain certain financial ratios under loan agreements. Equipment
recorded under capital leases, and the accumulated depreciation thereon,
were approximately $16.9 million and $8.5 million as of September 1, 1994,
and $42.6 million and $20.4 million as of September 2, 1993. Maturities of
long-term debt are as follows:
Noninterest
Fiscal year Notes payable bearing obligations Capital leases
- - --------------------------------------------------------------------------------
1995 $ 16.3 $ 10.0 $ 4.5
1996 53.5 -- 5.7
1997 21.6 19.7 2.9
1998 17.4 -- 0.8
1999 6.9 -- --
Less discount and interest -- (3.3) (1.5)
-------- -------- --------
$ 115.7 $ 26.4 $ 12.4
The company's bank credit agreements provide for borrowings up to $130.0
million expiring through January 1997. Substantially all of the tangible
assets of the company's semiconductor manufacturing, and custom manufacturing
and component recovery operations not otherwise pledged as collateral for
other notes payable and capital leases are pledged as collateral under the
agreements. The agreements contain certain financial covenants, including a
limitation on the transfer of funds from consolidated subsidiaries to Micron
Technology, Inc. The limitation on transfer of funds is not expected to impair
the ability of the company to meet its cash obligations. As of September 1,
1994, the company had no borrowings outstanding under the agreements.
The estimated fair value of the company's long-term debt as of September 1,
1994 was $155.6 million, based on a discount rate of 6.50%. The estimated
fair value of long-term debt was based on interest rates available to the
company for issuance of debt with similar terms and remaining maturities.
Settlement at the estimated fair values may not be possible due to terms
and conditions of existing agreements, or may not be a prudent management
decision.
Interest income in 1994 is net of $5.8 million of interest expense. Interest
expense is net of $4.5 million and $4.2 million of interest income in 1993
and 1992, respectively. Construction period interest of $2.6 million; $0.3
million; and $0.2 million was capitalized in 1994, 1993, and 1992,
respectively.
23
Stock Purchase Plans
The company's 1985 Incentive Stock Option Plan ("ISO Plan") provides for
the granting of incentive or nonstatutory stock options. As of September 1,
1994, there was an aggregate of 12.4 million shares of common stock reserved
for issuance of which 9.5 million are committed under the plan. To date, the
exercise prices of the incentive and nonstatutory stock options have been
100% and 85%, respectively, of the fair market value of the company's common
stock on the date of grant. Options are subject to terms and conditions
determined by the Board of Directors, and generally are exercisable in
increments of 20% during each year of employment beginning one year from
date of grant and expire six years from date of grant.
Option activity under the ISO Plan is summarized as follows:
Fiscal year ended 9/1/94 9/2/93 9/3/92
- - ------------------------------------------------------------------------------
Outstanding at beginning of year 1.9 2.6 3.1
Granted 1.4 0.8 0.3
Stock split 3.3 -- --
Terminated or cancelled -- (0.1) --
Exercised (0.8) (1.4) (0.8)
----- ----- -----
Outstanding at end of year 5.8 1.9 2.6
===== ===== =====
Exercisable at end of year 3.3 0.3 1.2
===== ===== =====
Shares available for future grants 2.9 1.1 1.9
===== ===== =====
Options outstanding under the ISO Plan as of September 1, 1994, were at per
share prices ranging from $2.60 to $42.66. Options exercised were at per
share prices ranging from $2.60 to $23.55 in 1994, $4.25 to $20.28 in 1993,
and $4.25 to $19.48 in 1992.
The 1989 Employee Stock Purchase Plan allows eligible employees of the
company to purchase shares of common stock through payroll deductions.
The shares can be purchased for 85% of the lower of the beginning or ending
fair market value of each three-month offering period and are restricted
from resale for a period of one year from purchase. Purchases are limited
to 20% of an employee's eligible compensation. A total of 1.8 million shares
are reserved for issuance under the plan, of which 1.0 million shares have
been issued as of September 1, 1994.
Employee Savings Plan
The company has a 401(k) profit-sharing plan ("RAM Plan") in which
substantially all employees are participants. Employees may contribute
from 2 to 16 percent of their eligible pay to various savings alternatives
in the RAM Plan. In fiscal 1994, the company modified the plan to provide
for an annual match of the first $1,500 of eligible employee contributions,
and for additional contributions based on the company's financial performance.
The company's RAM Plan expense was $4.6 million in 1994, $2.4 million in
1993, and $2.0 million in 1992.
Commitments
As of September 1, 1994, the company had commitments of $289.7 million for
equipment purchases and $27.9 million for the construction of buildings.
Future obligations under operating leases are not material to the company's
operations.
Income Taxes
Effective the first day of fiscal 1994, the company adopted SFAS No. 109,
"Accounting for Income Taxes", which prescribes the liability method of
accounting for income taxes. Adoption of SFAS No. 109 did not have a material
effect on the company's financial position or results of operations. Prior
years accounted for under SFAS No. 96 have not been restated.
24
The provision for income taxes consists of the following:
1994 1993 1992
- - -----------------------------------------------------------------------------
Current:
U.S. federal $192.4 57.9 (3.1)
State 25.2 4.8 (0.8)
Foreign 5.0 1.0 0.1
------ ------ -----
222.6 63.7 (3.8)
------ ------ -----
Deferred:
U.S. federal $ 2.3 (6.5) 6.1
State 0.4 1.4 0.6
Foreign -- (0.1) 0.1
------ ------ -----
2.7 (5.2) 6.8
------ ------ -----
Income tax provision $225.3 $ 58.5 $ 3.0
====== ====== =====
The tax benefit associated with disqualifying dispositions by employees of
shares issued in the company's stock purchase plans reduced taxes payable
by $10.7 million for 1994. Such benefits are credited to additional paid-in
capital.
A reconciliation between the income tax provision and income tax computed
using the federal statutory rate follows:
U.S. federal income tax at statutory rate $219.0 $ 56.4 $ 3.3
State taxes, net of federal benefit 16.7 4.0 0.5
Other (10.4) (1.9) (0.8)
------ ------ -----
Income tax provision $225.3 $ 58.5 $ 3.0
====== ====== =====
State taxes reflect utilization of $20.1 million of investment tax credits.
As of September 1, 1994, the company had unused state credits of
approximately $2.8 million for tax and financial reporting purposes which
expire through 1999.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The approximate tax
effect of temporary differences and carryforwards which give rise to the net
deferred tax liability are as follows:
1994
------
Current deferred tax asset:
Accrued compensation $ 5.8
Deferred income 3.7
Inventory 2.3
Other 8.3
------
Net deferred tax asset 20.1
------
Noncurrent deferred tax asset (liability):
Excess tax over book depreciation (58.2)
Product and process technology amortization 7.9
Accrued compensation 4.8
Deferred internal patent charges (2.4)
Other (6.2)
------
Net deferred tax liability (54.1)
------
Total net deferred tax liability $(34.0)
======
During 1993 and 1992, in accordance with SFAS No. 96, deferred income taxes
were provided for significant temporary differences. The significant
components of the 1993 deferred tax benefit were $14.5 million for product and
process technology, reduced by $2.8 million for depreciation and $6.5 million
for other items. Deferred tax expense for 1992 included product and process
technology of $3.2 million, depreciation of $1.6 million, and other items of
$2.0 million.
25
Export Sales and Major Customers
Export sales were $471.0 million, $250.9 million, and $161.7 million in 1994,
1993, and 1992, respectively. Sales to one personal computer manufacturing
customer approximated 11% of total net sales in 1994 and 10% of total net
sales in 1993.
Contingencies
Periodically, the company is made aware that technology used by the company
in the manufacture of some or all of its products may infringe on product or
process technology rights held by others. The company has accrued a liability
and charged operations for the estimated costs of settlement or adjudication
of asserted and unasserted claims for infringement prior to the balance sheet
date. Management can give no assurance that the amounts accrued have been
adequate and cannot estimate the range of additional possible loss, if any,
from resolution of these uncertainties. Resolution of whether the company's
manufacture of products has infringed on valid rights held by others may have
a material adverse effect on the company's financial position or results of
operations, and may require material changes in production processes and
products. The company has various product and process technology agreements
expiring in the next fiscal year. The company is not able to predict whether
these license agreements can be renewed on terms acceptable to the company.
On March 9, 1994, the company entered into a patent cross-license agreement
with Texas Instruments, Inc. ("TI"). As a result of this agreement, the
various patent lawsuits between Micron Semiconductor, Inc., and TI in Idaho,
Texas, and Delaware were settled. Similar to a prior cross-license agreement
between the parties which expired in 1992, the company will pay ongoing
royalties to TI based on sales of DRAMs and other semiconductor devices.
The company accrued a sufficient amount to pay the royalties related to sales
for periods from expiration of the previous cross-license to the date of the
settlement.
On November 13, 1992, Micron Semiconductor, Inc., filed a patent infringement
action with the United States International Trade Commission ("ITC") against
Goldstar Electron Company, Ltd., and Goldstar Electron America, Inc.
(collectively, "Goldstar"), and Hyundai Electronics Industries Co., Ltd.,
and Hyundai Electronics America, Inc. (collectively, "Hyundai"). The company
has since entered into patent cross-license agreements with Goldstar and with
Hyundai. The ITC action against Goldstar and Hyundai was dismissed.
On November 20, 1992, Thorn EMI North America, Inc. ("Thorn"), filed suit
against Micron Technology, Inc., and MSI in the federal district court in
Wilmington, Delaware, alleging infringement of four of Thorn's patents. On
December 4, 1993, the parties entered into a settlement agreement dismissing
the lawsuit.
The company is currently a party to various other legal actions arising out
of the normal course of business, none of which are expected to have a
material effect on the company's financial position or results of operations.
26
Quarterly Financial and Market Information (Unaudited)
(Dollars in millions, except for per share amounts)
1994 Quarter 1st 2nd 3rd 4th
Net sales $320.1 $390.5 $426.4 $491.6
------ ------ ------ ------
Costs and expenses:
Cost of goods sold 166.6 204.1 207.0 211.7
Selling, general, and administrative 34.1 33.1 35.8 32.7
Research and development 14.3 18.7 22.9 27.5
------ ------ ------ ------
Total costs and expenses 215.0 255.9 265.7 271.9
------ ------ ------ ------
Operating income 105.1 134.6 160.7 219.7
Interest income, net 0.4 1.0 2.3 2.0
------ ------ ------ ------
Income before income taxes 105.5 135.6 163.0 221.7
Income tax provision 38.0 48.8 58.7 79.8
------ ------ ------ ------
Net income $ 67.5 $ 86.8 $104.3 $141.9
====== ====== ====== ======
Fully diluted earnings per share $0.65 $ 0.83 $ 0.99 $1.34
Quarterly stock price:
High $25.45 $ 30.60 $ 39.90 $44.88
Low 15.15 17.45 28.25 30.63
Dividends per share 0.02 -- 0.05 0.05
1993 Quarter 1st 2nd 3rd 4th
Net sales $131.0 $176.4 $214.9 $306.0
------ ------ ------ ------
Costs and expenses:
Cost of goods sold 97.8 123.7 132.3 163.4
Selling, general, and administrative 16.3 23.5 21.0 27.1
Research and development 11.6 13.9 14.7 17.1
------ ------ ------ ------
Total costs and expenses 125.7 161.1 168.0 207.6
------ ------ ------ ------
Operating income 5.3 15.3 46.9 98.4
Interest expense, net (1.1) (1.2) (0.8) (0.2)
------ ------ ------ ------
Income before income taxes 4.2 14.1 46.1 98.2
Income tax provision 1.5 5.1 16.6 35.3
------ ------ ------ ------
Net income $2.7 $ 9.0 $ 29.5 $ 62.9
====== ====== ====== ======
Fully diluted earnings per share $0.03 $ 0.09 $ 0.29 $ 0.61
Quarterly stock price:
High $8.85 $ 10.30 $ 12.60 $ 22.10
Low 5.80 6.80 7.95 11.95
Dividends per share 0.02 -- -- --
The company declared and paid cash dividends totaling $0.12 and $0.02 per
share in fiscal years 1994 and 1993, respectively. The company's Board of
Directors further approved a $0.05 per share cash dividend to shareholders of
record as of September 30, 1994, for payment on October 24, 1994. Future
dividends, if any, will vary depending on the company's profitability and
anticipated capital requirements. As of September 1, 1994, the company had
2,843 shareholders of record.
Net sales for the fourth quarter of 1993 includes $8.4 million from licensing
product and process technology.
27
Report of Independent Accountants
The Shareholders and Board of Directors
Micron Technology, Inc.
We have audited the consolidated financial statements and financial statement
schedules of Micron Technology, Inc., and subsidiaries listed in the index on
page 15 of this Form 10-K. These financial statements and financial statement
schedules are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Micron
Technology, Inc., and subsidiaries as of September 1, 1994, and September 2,
1993, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended September 1, 1994, in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedules referred to above, when considered
in relation to the basic financial statements taken as a whole, present
fairly, in all material respects, the information required to be included
therein.
As discussed in the contingencies note to the consolidated financial
statements, management can give no assurance that the amounts accrued as of
September 1, 1994, for estimated costs of settlement or adjudication of
asserted and unasserted claims for infringement of product and process
technology rights held by others, have been adequate, nor can management
estimate the range of additional possible loss, if any, from resolution of
these uncertainties.
Coopers & Lybrand L.L.P.
Boise, Idaho
September 22, 1994
28
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Certain information concerning the registrant's executive officers is
included under the caption "Executive Officers of the Registrant"
following Part I, Item 1 of this report. Other information required by
Items 10, 11, 12 and 13 will be contained in the registrant's Proxy
Statement which will be filed with the Securities and Exchange
Commission within 120 days after September 1, 1994, and is incorporated
herein by reference.
29
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
Consolidated financial statements and financial statement schedules --
see "Item 8. Financial Statements and Supplementary Data - Notes to
Consolidated Financial Statements - Contingencies".
Exhibit Description
- - ------- ----------------------------------------------------------------
3.1 Certificate of Incorporation of the Registrant, as amended.
3.7 Bylaws of the Registrant, as amended.
10.82 Form of Indemnification Agreement between the Registrant and its
officers and directors.
10.91 Board Resolution regarding stock and bonus plan vesting schedules
in the event of change in control of the Registrant.
10.92 Additional provisions related to Management Bonus Arrangements for
Certain Executive Officers.
10.96 Form of Termination Agreement for members of the Registrant's
Operations Committee and other Officers of the Company.
10.100 Amended and Restated 1985 Incentive Stock Option Plan.
10.103 Real Estate Agreement and Addendum dated May 29, 1991
between the Registrant and Thomas T. Nicholson, Allen T.
Noble, Don J. Simplot, J. R. Simplot, Ronald C. Yanke,
Semienterprises, a partnership and Macron, a partnership.
10.105 Form of Management bonus arrangements for Executive Officers
of Micron Technology, Inc., and Micron Semiconductor, Inc.,
for 1993.
10.109 Form of Management bonus arrangements for Executive Officers
of Micron Technology, Inc., and Micron Semiconductor, Inc.,
for 1994.
11.1 Computation of Per Share Earnings.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Public Accountants.
27.1 Financial Data Schedule
- - --------------------------------------------
Incorporated by Reference to Proxy Statement for the 1986 Annual
Meeting of Shareholders.
Incorporated by Reference to Annual Report on Form 10-K for the
fiscal year ended August 31, 1989.
Incorporated by Reference to Annual Report on Form 10-K for the
fiscal year ended August 30, 1990.
Incorporated by Reference to Registration Statements on Forms S-8
(Reg. Nos. 33-38665, 33-38926, and 33-52653).
Incorporated by Reference to Annual Report on Form 10-K for the
fiscal year ended September 3, 1992.
Incorporated by Reference to Annual Report on Form 10-K for the
fiscal year ended September 2, 1993.
Exhibit numbers from Registration Statement on Form S-1 (Reg. No. 2-93343)
retained, where applicable.
(b)Reports on Form 8-K:
The registrant did not file any Reports on Form 8-K during the quarter
ended September 1, 1994.
30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in
the City of Boise, State of Idaho, on the 22nd day of September, 1994.
MICRON TECHNOLOGY, INC.
By /s/ Reid N. Langrill
-----------------------
Reid N. Langrill, Vice President,
Finance, Treasurer, and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Signature Title Date
- - ------------------------ ------------------------------- ------------------
/s/ Joseph L. Parkinson Chairman of the Board and Chief September 22, 1994
- - ----------------------- Executive Officer
(Joseph L. Parkinson) (Principal Executive Officer)
/s/ James W. Garrett Director, President, and Chief September 22, 1994
- - ----------------------- Operating Officer
(James W. Garrett)
/s/ Reid N. Langrill Director; Vice President, September 22, 1994
- - ----------------------- Finance, Treasurer, and Chief
(Reid N. Langrill) Financial Officer (Principal
Financial and Accounting Officer)
/s/ Steven R. Appleton Director; Chairman, President, September 22, 1994
- - ---------------------- and Chief Executive Officer,
(Steven R. Appleton) Micron Semiconductor, Inc.
/s/ Jerry M. Hess Director September 22, 1994
- - ----------------------
(Jerry M. Hess)
/s/ Robert A. Lothrop Director September 22, 1994
- - -----------------------
(Robert A. Lothrop)
/s/ Thomas T. Nicholson Director September 22, 1994
- - -----------------------
(Thomas T. Nicholson)
/s/ Allen T. Noble Director September 22, 1994
- - -----------------------
(Allen T. Noble)
/s/ Don J. Simplot Director September 22, 1994
- - -----------------------
(Don J. Simplot)
/s/ John R. Simplot Director September 22, 1994
- - -----------------------
(John R. Simplot)
/s/ Gordon C. Smith Director September 22, 1994
- - -----------------------
(Gordon C. Smith)
31
MICRON TECHNOLOGY, INC.
Schedule I
Marketable Securities
(Dollars in millions)
Principal Amortized Market Carrying
Issuer Amount Cost Value Value
--------- --------- ------ --------
U.S. Government and agencies $ 87.9 $ 88.0 $ 87.3 $ 88.0
------ ------ ------ ------
Local governments and agencies:
Intermountain Power Agency 7.3 7.6 7.6 7.6
Temple University 5.0 5.0 5.0 5.0
Maricopa County, Arizona 4.3 4.2 4.2 4.2
Long Beach Calif Hbr Dept 3.0 3.0 3.0 3.0
Boise City 4.9 4.9 4.9 4.9
North Little Rock Ark Elect. 3.1 3.3 3.3 3.3
Atlanta GA Wtr and Swr 3.0 3.1 3.1 3.1
Clark County, Nevada 3.0 3.1 3.1 3.1
Port Authority Allegheny Cnty 2.6 2.6 2.6 2.6
North Carolina Muni Power Authority 2.5 2.6 2.6 2.6
North Carolina Eastern Muni Power 2.4 2.5 2.5 2.5
New York St Dorm Auth Rev 2.2 2.3 2.3 2.3
San Marcos Calif Pub Facs Auth 2.2 2.1 2.1 2.1
Shelby Cnty Tennessee 2.0 2.1 2.1 2.1
Other local governmentals and agencies 27.2 27.7 27.7 27.7
------ ------ ------ ------
Total local governments and agencies 74.7 76.1 76.1 76.1
------ ------ ------ ------
Commercial paper:
Transamerica Finance Corp. 15.0 14.7 14.7 14.7
Bankers Trust Co. 5.0 4.9 4.9 4.9
General Electric Co. 11.0 10.8 10.8 10.8
American Express 10.0 10.0 10.0 10.0
Chemical Bank 8.0 7.9 7.9 7.9
Other commercial paper 28.9 28.6 28.6 28.6
------ ------ ------ ------
Total commercial paper 77.9 76.9 76.9 76.9
------ ------ ------ ------
State governments and agencies:
State of Idaho 10.0 10.1 10.0 10.1
State of Washington 4.4 4.5 4.4 4.5
State of Iowa 4.0 4.0 4.0 4.0
State of Wisconsin 3.0 3.0 3.0 3.0
Other State governments and agencies 26.8 27.8 27.8 27.8
------ ------ ------ ------
Total State governments and agencies 48.2 49.4 49.2 49.4
------ ------ ------ ------
Bankers' acceptances:
Chemical Bank 5.0 4.9 4.9 4.9
U.S. Bank of Washington 9.0 8.8 8.8 8.8
Other bankers' acceptances 29.1 28.8 28.8 28.8
------ ------ ------ ------
Total bankers' acceptances 43.1 42.5 42.5 42.5
------ ------ ------ ------
Corporate notes:
General Electric Co. 5.1 5.1 5.1 5.1
Other corporate notes 27.4 27.6 27.5 27.6
------ ------ ------ ------
Total corporate notes 32.5 32.7 32.6 32.7
------ ------ ------ ------
Muni preferred funds 16.9 16.9 16.9 16.9
------ ------ ------ ------
Other 7.1 7.1 7.1 7.1
------ ------ ------ ------
$388.3 $389.6 $388.6 $389.6
====== ====== ====== ======
32
MICRON TECHNOLOGY, INC.
Schedule V
Property, Plant, and Equipment
(Dollars in millions)
Balance at Balance
Beginning Additions at End
of Period at Cost Retirements Other of Period
---------- --------- ----------- ----- ----------
Year ended September 1, 1994:
Land $ 7.5 $ 0.4 $ -- $ -- $ 7.9
Buildings 217.7 0.6 (0.5) 42.2 260.0
Equipment 578.8 275.9 (36.4) 7.2 825.5
Construction 24.6 93.5 -- (49.4) 68.7
------- ------- ------ ------- --------
Totals $ 828.6 $ 370.4 $(36.9) $ 0.0 $1,162.1
======= ======= ====== ======= ========
Year ended September 2, 1993:
Land $ 7.0 $ 0.5 $ -- $ -- $ 7.5
Buildings 212.6 0.1 (1.0) 6.0 217.7
Equipment 471.2 118.4 (20.0) 9.2 578.8
Construction 3.3 36.5 -- (15.2) 24.6
------- ------- ------ ------- --------
Totals $ 694.1 $ 155.5 $(21.0) $ 0.0 $ 828.6
======= ======= ====== ======= ========
Year ended September 3, 1992:
Land $ 5.7 $ 1.3 $ -- $ -- $ 7.0
Buildings 207.2 -- (0.3) 5.7 212.6
Equipment 400.1 85.4 (20.3) 6.0 471.2
Construction 2.7 12.3 -- (11.7) 3.3
------- ------- ------ ------- --------
Totals $ 615.7 $ 99.0 $(20.6) $ 0.0 $ 694.1
======= ======= ====== ======= ========
33
MICRON TECHNOLOGY, INC.
Schedule VI
Accumulated Depreciation and Amortization of
Property, Plant, and Equipment
(Dollars in millions)
Additions
Balance at Charged to
Beginning of Costs and Balance at
Period Expenses Retirements End of Period
------------ ---------- ----------- -------------
Year ended September 1, 1994:
Buildings $ 72.8 $ 14.2 $ -- $ 87.0
Equipment 318.0 124.6 (31.1) 411.5
--------- --------- -------- ---------
Totals $ 390.8 $ 138.8 $ (31.1) $ 498.5
========= ========= ======== =========
Year ended September 2, 1993:
Buildings $ 59.8 $ 13.9 $ (0.9) $ 72.8
Equipment 238.0 98.0 (18.0) 318.0
--------- --------- -------- ---------
Totals $ 297.8 $ 111.9 $ (18.9) $ 390.8
========= ========= ======== =========
Year ended September 3, 1992:
Buildings $ 46.3 $ 13.7 $ (0.2) $ 59.8
Equipment 180.0 80.5 (22.5) 238.0
--------- --------- -------- ---------
Totals $ 226.3 $ 94.2 $ (22.7) $ 297.8
========= ========= ======== =========
34
MICRON TECHNOLOGY, INC.
Schedule X
Supplementary Income Statement Information
(Dollars in millions)
Charged to
Costs and
Item Expenses
- - ---------------------------------------------- ----------
Year-ended September 1, 1994:
3. Taxes, other than payroll and income taxes:
Property taxes $ 8.7
4. Royalties 128.3
Year-ended September 2, 1993:
3. Taxes, other than payroll and income taxes:
Property taxes $ 7.9
4. Royalties 77.8
Year-ended September 3, 1992:
3. Taxes, other than payroll and income taxes:
Property taxes $ 6.9
4. Royalties 45.2
35
INDEX TO EXHIBITS
Exhibit Description
- - ------- -------------------------------------------
3.1 Certificate of Incorportation of Registrant
3.7 Bylaws of the Registrant as amended
11.1 Computation of Per Share Earnings
21.1 Subsidiaries of the Registrant
23.1 Consent of Independent Accountants
27.1 Financial Data Schedule