FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1995
------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- -------------------
Commission File Number: 1-10658
-------------------------------------------------
Micron Technology, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-1618004
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 S. Federal Way, P.O. Box 6, Boise, Idaho 83707-0006
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 368-4000
---------------
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of outstanding shares of the registrant's Common
Stock as of December 14, 1995 was 207,004,357.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
MICRON TECHNOLOGY, INC.
Consolidated Balance Sheets
(Dollars in millions, except for par value amount)
<TABLE>
<CAPTION>
November 30, August 31,
As of 1995 1995
- ---------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and equivalents $ 172.8 $ 128.1
Liquid investments 434.2 427.7
Receivables 576.7 455.4
Inventories 266.3 204.8
Prepaid expenses 15.7 9.1
Deferred income taxes 64.0 49.0
-------- --------
Total current assets 1,529.7 1,274.1
Product and process technology, net 48.0 41.6
Property, plant, and equipment, net 1,834.3 1,385.6
Other assets 66.9 73.6
-------- --------
Total assets $3,478.9 $2,774.9
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 808.0 $ 502.3
Deferred income 20.5 16.4
Equipment purchase contracts 95.3 59.6
Current portion of long-term debt 28.9 26.5
-------- --------
Total current liabilities 952.7 604.8
Long-term debt 121.8 129.4
Deferred income taxes 119.8 93.3
Other liabilities 57.2 51.2
-------- --------
Total liabilities 1,251.5 878.7
-------- --------
Commitments and contingencies
Common stock, $0.10 par value, authorized
300.0 million shares, issued and
outstanding 207.0 million and 206.4
million shares, respectively 20.7 20.6
Additional capital 404.5 391.5
Retained earnings 1,802.2 1,484.1
-------- --------
Total shareholders' equity 2,227.4 1,896.2
-------- --------
Total liabilities and shareholders' equity $3,478.9 $2,774.9
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
MICRON TECHNOLOGY, INC.
Consolidated Statements of Operations
(Amounts in millions, except for per share data)
(Unaudited)
<TABLE>
<CAPTION>
November 30, December 1,
For the quarter ended 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
Net sales $1,185.8 $ 535.0
-------- --------
Costs and expenses:
Cost of goods sold 538.1 224.5
Selling, general, and administrative 76.4 38.2
Research and development 46.6 27.0
-------- --------
Total costs and expenses 661.1 289.7
-------- --------
Operating income 524.7 245.3
Interest income, net 8.4 3.6
-------- --------
Income before income taxes 533.1 248.9
Income tax provision 204.6 89.6
-------- --------
Net income $ 328.5 $ 159.3
======== ========
Earnings per share:
Primary $1.51 $0.76
Fully diluted 1.51 0.75
Number of shares used in per share calculations:
Primary 217.2 210.8
Fully diluted 217.2 211.1
Cash dividend declared per share $0.05 $0.025
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
MICRON TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
(Dollars in millions)
(Unaudited)
<TABLE>
<CAPTION>
November 30, December 1,
For the quarter ended 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS OF OPERATING ACTIVITIES
Net income $ 328.5 $ 159.3
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 73.2 41.7
Increase in receivables (121.2) (48.3)
Increase in inventories (61.4) (21.6)
Increase in accounts payable and
accrued expenses 304.6 103.1
Other 11.7 1.8
-------- --------
Net cash provided by operating activities 535.4 236.0
-------- --------
CASH FLOWS OF INVESTING ACTIVITIES
Purchase of held to maturity securities (184.5) (143.6)
Proceeds from sales and maturities of
securities 179.1 77.5
Expenditures for property, plant, and
equipment (426.7) (90.8)
Other (3.9) 4.1
-------- --------
Net cash used for investing activities (436.0) (152.8)
-------- --------
CASH FLOWS OF FINANCING ACTIVITIES
Payments on equipment purchase contracts (55.1) (42.4)
Repayments of debt (6.6) (14.7)
Proceeds from issuance of debt -- 38.0
Other 7.0 (4.0)
-------- --------
Net cash used for financing activities (54.7) (23.1)
-------- --------
Net increase in cash and equivalents 44.7 60.1
Cash and equivalents at beginning of period 128.1 78.4
-------- --------
Cash and equivalents at end of period $ 172.8 $ 138.5
======== ========
SUPPLEMENTAL DISCLOSURES
Income taxes paid, net $ (44.1) $ (25.3)
Interest paid (2.3) (2.0)
Noncash investing and financing activities:
Equipment acquisitions on contracts payable
and capital leases 90.8 36.2
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Notes to Consolidated Financial Statements
(All tabular dollar amounts are stated in millions)
1. Unaudited Interim Financial Statements
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting solely of normal recurring adjustments) necessary to
present fairly the consolidated financial position of Micron
Technology, Inc., and subsidiaries (the "Company"), and their
consolidated results of operations and cash flows.
This report on Form 10-Q for the quarter ended November 30,
1995, should be read in conjunction with the Company's Annual
Report to Shareholders and/or Form 10-K for the year ended August
31, 1995.
<TABLE>
<CAPTION>
2. Receivables November 30, August 31,
1995 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Trade receivables $ 583.7 $ 457.4
Other 15.2 14.6
Allowance for returns and discounts (13.5) (9.2)
Allowance for doubtful accounts (8.7) (7.4)
-------- --------
$ 576.7 $ 455.4
======== ========
</TABLE>
<TABLE>
<CAPTION>
3. Inventories November 30, August 31,
1995 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 28.2 $ 17.8
Work in progress 130.7 99.1
Raw materials and supplies 107.4 87.9
-------- --------
$ 266.3 $ 204.8
======== ========
</TABLE>
<TABLE>
<CAPTION>
4. Product and process technology, net November 30, August 31,
1995 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Product and process technology, at cost $ 161.2 $ 152.3
Less accumulated amortization (113.2) (110.7)
-------- --------
$ 48.0 $ 41.6
======== ========
</TABLE>
<TABLE>
<CAPTION>
5. Property, plant, and equipment, net November 30, August 31,
1995 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Land $ 36.2 $ 34.4
Buildings 477.5 392.0
Machinery and equipment 1,579.4 1,338.4
Construction in progress 439.0 259.2
-------- --------
2,532.1 2,024.0
Less accumulated depreciation and
amortization (697.8) (638.4)
-------- --------
$1,834.3 $1,385.6
======== ========
</TABLE>
4
<PAGE>
Notes to Consolidated Financial Statements, continued
<TABLE>
<CAPTION>
6. Accounts payable and accrued expenses November 30, August 31,
1995 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Accounts payable $ 290.6 $ 193.2
Salaries, wages, and benefits 103.0 103.2
Dividends payable 10.3 --
Product and process technology 133.6 91.5
Income taxes payable 216.6 72.7
Other 53.9 41.7
-------- --------
$ 808.0 $ 502.3
======== ========
</TABLE>
<TABLE>
<CAPTION>
7. Long-term debt November 30, August 31,
1995 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Notes payable in periodic installments
through July 2015, weighted average
interest rate of 6.74% and 6.82%,
respectively $ 84.5 $ 89.3
Noninterest bearing obligations, $19.8
million due June 1997, $3 million due
October 1997, and $20.5 million due
December 1997, weighted average
imputed interest rate of 6.85% 38.5 37.8
Notes payable, due at maturity ranging
from December 1996 to December 1997,
weighted average interest rate of 5.30%
and 5.49%, respectively 20.0 20.0
Capitalized lease obligations payable in
monthly installments through April 1998,
weighted average interest rate of
7.87% and 8.94%, respectively 7.7 8.8
-------- --------
150.7 155.9
Less current portion (28.9) (26.5)
-------- --------
$ 121.8 $ 129.4
======== ========
</TABLE>
8. Earnings per share
Earnings per share is 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. Per share amounts for the first quarter
of fiscal 1995 have been restated to reflect retroactively a 2
for 1 stock split effected in the form of a stock dividend to
shareholders of record on May 4, 1995.
9. Income taxes
The estimated effective income tax rate for the fiscal 1996 is
38.4%. The effective income tax rate principally reflects the
statutory corporate income tax rate and the net effect of state
taxation.
5
<PAGE>
Notes to Consolidated Financial Statements, continued
10. Commitments
As of November 30, 1995, the Company had commitments extending
into fiscal 1998 of approximately $865 million for equipment
purchases and $80 million for the construction of buildings.
11. 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 had various product and
process technology agreements expire in calendar 1995 and is not
able to predict whether these license agreements can be renewed
on terms acceptable to the Company.
The Company is a party to various legal actions arising out of
the normal course of business, none of which is expected to have
a material effect on the Company's financial position or results
of operations.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
All period references are to the Company's fiscal periods ended
November 30, 1995, and December 1, 1994, unless otherwise
indicated. Share and per share amounts for the first quarter of
1995 have been restated to reflect a 2 for 1 stock split effected
in the form of a stock dividend to shareholders of record on May
4, 1995. Quarterly financial results may not be indicative of
the financial results for any future period. All tabular dollar
amounts are stated in millions.
Net income for the first quarter of 1996 was $328 million, or
$1.51 per fully diluted share, on net sales of $1,186 million.
For the first quarter of 1995 net income was $159 million, or
$0.75 per fully diluted share, on net sales of $535 million.
The Company's higher level of net income and net sales in the
first quarter of 1996 resulted primarily from a substantial increase
in volume of semiconductor memory sold, favorable market conditions
and lower manufacturing costs per unit for the Company's primary
semiconductor memory products, and a higher level of sales of PC
systems. Average selling prices for the Company's primary
semiconductor memory products have been relatively stable for
approximately the past three and-a-half years. Customer demand
for semiconductor memory continues to increase. However, in
recent weeks, the industry has experienced downward pressure on
prices for DRAM products. Based on negotiations with certain
major customers, the Company believes pricing for memory products
delivered in the first calendar quarter of 1996 is likely to be
modestly lower than for comparable deliveries in the first fiscal
quarter of 1996. A substantial decrease in average selling
prices for the Company's memory products would have a material
adverse effect on the Company's results of operations.
The Company's product and process technology cross-license
agreements with Motorola, Inc., and IBM expired on June 30, 1995
and November 1, 1995, respectively. Failure to renew license
agreements could result in litigation, and its attendant cost and
diversion of resources, and could also result in material changes
in the Company's production processes or products. Any such
litigation or changes could have a material adverse effect on the
Company's results of operations.
Substantially all of the Company's near-term cash flows from
operations is expected to be dedicated to capacity improvement
programs. The Company is evaluating debt financing as a source
of additional funds that may be needed for timely completion of
these projects. Should the Company be unable to obtain financing
on acceptable terms, the Company's expansion and capital
improvement programs as currently scheduled could be
significantly delayed.
7
<PAGE>
Results of Operations
Net Sales
The following table presents the Company's net sales by related
products or services. The value of the Company's semiconductor
memory products included in PC systems and other products is
included in the caption "Semiconductor memory products". The
caption "Other" includes revenue from contract manufacturing and
module assembly services, construction management services,
government contracts, and licensing fees.
<TABLE>
<CAPTION>
First Quarter
-----------------------------
1996 Change 1995
-----------------------------
<S> <C> <C> <C>
Semiconductor memory products $ 884.5 90.5% $ 464.3
Personal computer systems 219.1 394.6% 44.3
Other 82.2 211.4% 26.4
-------- --------
Total sales $1,185.8 121.6% $ 535.0
======== ========
</TABLE>
The substantial increase in net sales in the first quarter of
1996 compared to the first quarter of 1995 was principally due to
increased production and favorable market conditions for the
Company's semiconductor memory products, in particular the 4 Meg
DRAM, and, to a lesser extent, a higher level of sales of PC
systems. The volume of semiconductor memory sold, as measured in
megabits, more than doubled in the first quarter of 1996 compared
to the first quarter of 1995 and increased approximately 29%
compared to the fourth quarter of 1995. The increase in volume
of semiconductor memory sold was principally due to transitions
to successive shrink versions of existing memory products,
particularly the 4 Meg DRAM, and increased wafer output. In
addition, the higher volume of semiconductor memory was also a
result of a transition to a product mix with a slightly higher
average density without a corresponding decrease in throughput.
Prices for the Company's primary semiconductor memory products
remained relatively stable for approximately the past three
and-a-half years, which represented a deviation from the
historical long-term trend of declining DRAM prices per megabit.
Customer demand for semiconductor memory products continues to
increase. However, in recent weeks the industry has experienced
downward pressure on pricing for DRAM products. Based on
negotiations with certain major customers, the Company believes
pricing for memory products delivered in the first calendar
quarter of 1996 is likely to be modestly lower than for
comparable deliveries in the first fiscal quarter of 1996. The
Company is unable to predict when a combination of product
shrinks, yield improvements, and capacity expansions will allow
world-wide supply to equal or exceed demand, or to predict
changes in demand and quantify the effects on pricing for the
Company's products. A shift in the relationship between supply
and demand resulting in increased downward pressure on prices for
the Company's products would have a material adverse effect on
the Company's results of operations.
The 4 Meg DRAM comprised approximately 87% of sales of
semiconductor memory products in the first quarter of 1996.
Sales of SRAM products were higher in the first quarter of 1996
compared to the first quarter of 1995, but declined as a
percentage of the net sales of semiconductor memory products to
approximately 5% in the first quarter of 1996 due to the
Company's production emphasis on the 4 Meg DRAM. SRAM sales were
approximately 8% of the net sales of semiconductor products in
the first quarter of 1995.
8
<PAGE>
Sales of PC systems, excluding the value of the Company's
semiconductor memory included therein, increased to approximately
18% of the Company's total net sales for the first quarter of
1996 from approximately 8% in the first quarter of 1995. The
significant increase in unit sales of Micron brand PC systems in
the first quarter of 1996 compared to the first quarter of 1995
resulted primarily from a significant increase in direct unit
sales of Micron brand PC systems and an increase in government
unit sales. The increase in direct unit sales of Micron brand
PC systems was principally a result of enhanced name recognition
and market acceptance of Micron brand PC systems. Enhanced name
recognition and market acceptance resulted primarily from the
receipt of a number of awards from computer trade magazines
relating to the performance characteristics of Micron brand PC
systems and to the Company's service and support functions. In
the event the Company is unsuccessful in winning awards from
computer trade magazines in the future, consumer interest in its
PC systems could decline materially. In general, sales of Micron
and ZEOS brand PC systems benefited from continued strong demand
in the market for PC products during both periods reported.
Slightly higher overall average selling prices of the Company's
PC systems in the first quarter of 1996 compared to the first
quarter of 1995 resulted primarily from the shift to PC systems
with higher speed microprocessors and increased demand for PC
systems with greater amounts of main memory.
<TABLE>
<CAPTION>
First Quarter
-----------------------------
1996 Change 1995
-----------------------------
<S> <C> <C> <C>
Cost of goods sold $ 538.1 139.7% $ 224.5
Gross margin % 54.6% 58.0%
</TABLE>
The Company's gross margin percentage was lower in the first
quarter of 1996 than in the first quarter of 1995 primarily as a
result of the effect of the increased sales of PC systems which
generally have a lower gross margin percentage compared to the
balance of the Company's products. The Company's gross margin
percentage on sales of semiconductor memory products increased to
approximately 70% in the first quarter of 1996, compared to
approximately 68% and 64% for the fourth quarter and first quarter
of 1995, respectively. The Company's gross margin percentage on
sales of PC systems remained fairly stable in the first quarter of
1996 compared to fourth the quarter of 1995. The higher gross margin
percentage for semiconductor memory products in the first quarter of
1996 was principally due to relatively stable selling prices for such
products and decreased per unit manufacturing costs. Decreases
in per unit manufacturing costs were principally due to
transitions to shrink versions of existing products, which have a
greater number of potential die per wafer, and increased wafer
output. In addition, the higher volume of semiconductor memory
was also a result of a transition to a product mix with a
slightly higher average density without a corresponding decrease
in throughput.
The Company limited production of its 16 Meg DRAM in the first
quarter of 1996 to a level only sufficient to continue
development of process efficiencies. The Company continued to
maximize its production of the 4 Meg DRAM, which is currently the
most profitable product offered by the Company. The Company
believes the market transition to the 16 Meg DRAM as the primary
DRAM product will be largely driven by the timing of increases in
demand for main memory in PC systems, which the Company is unable
to predict. The Company's transition to the 16 Meg DRAM as its
principal memory product could have a negative impact on the
Company's results of operations.
The Company's gross margin percentage for PC systems remained
relatively stable in the first quarter of 1996 compared to both
the first quarter and fourth quarter of 1995. The Company
continues to experience significant pressure on its gross margin
percentage realized for sales of PC systems as a result of intense
competition in the PC industry and consumer expectations of more
powerful PC systems at lower prices. Many of the Company's
competitors have substantial resources and purchasing power
relative to those which the Company has dedicated to its PC
operations. Although the Company has begun to realize reduction in
costs of raw materials for PC systems in recent periods, the Company's
gross margin percentage on sales of PC systems continues to be lower
than those of its primary PC competitors. In the event that sales
of PC systems continue to increase as a percentage of total net
sales, the Company's overall gross margin percentage will be adversely
affected.
9
<PAGE>
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. Charges
for product and process technology remained fairly constant as a
percentage of net sales in the first quarter of 1996 compared to
both the first quarter of 1995 and the fourth quarter of 1995.
Future product and process technology charges may fluctuate in
absolute dollars and as a percentage of net sales, however, as a
result of claims that may be asserted in the future, and as a
result of future license arrangement. See "Certain Factors."
<TABLE>
<CAPTION>
First Quarter
-----------------------------
1996 Change 1995
-----------------------------
<S> <C> <C> <C>
Selling, general, and administrative $ 76.4 100.0% $ 38.2
as a % of net sales 6.4% 7.1%
</TABLE>
The higher level of selling, general, and administrative
expenses during the first quarter of 1996 as compared to the
first quarter of 1995 resulted primarily from personnel costs
associated with the administrative and information systems
support for the Company's ongoing expansion plans and the
Company's profit sharing programs, and the higher level of
advertising and credit card processing fees associated with the
increased sales of PC systems.
<TABLE>
<CAPTION>
First Quarter
-----------------------------
1996 Change 1995
-----------------------------
<S> <C> <C> <C>
Research and development $ 46.6 72.6% $ 27.0
as a % of net sales 3.9% 5.0%
</TABLE>
Research and development expenses vary primarily with the
number of wafers and personnel dedicated to new product and
process development. Research and development efforts in the
first quarter of 1996 were focused primarily on further
development of 16 Meg and 4 Meg DRAM shrinks, and 32K x 36
synchronous SRAM and design and development of next generation
DRAM densities. The Company expects research and development
expenses in the remainder of 1996 to be higher than comparable
periods in 1995 as additional resources are dedicated to the
development of 16 Meg and 4 Meg DRAM shrinks, design and
development of next generation DRAM densities, and new technologies
including radio frequency identification systems, non-volatile
semiconductor memory devices, and field emission flat panel displays.
<TABLE>
<CAPTION>
First Quarter
-----------------------------
1996 Change 1995
-----------------------------
<S> <C> <C> <C>
Income tax provision $ 204.6 128.3% $ 89.6
</TABLE>
The effective income tax rate for the first quarter of 1996 of
38.4% represents a slight increase compared to the 37.5% rate for
fiscal 1995 principally due to a change in the mix of sales among
taxing jurisdictions and the decreased effect of state tax
credits. The effective tax rate for the first quarter of 1995
was 36.0%.
Liquidity and Capital Resources
The Company had cash and liquid investments of $607 million as
of November 30, 1995, representing an increase of $51 million
during the first quarter of 1996. While cash and liquid
investments have generally increased since the fourth quarter of
fiscal 1992, the Company expects such balances to decline
significantly as funds are required for the Company's capital
improvement programs and to support the Company's growth. The
Company's principal sources of liquidity during the first quarter
of 1996 were cash flows from operations of $535 million and
equipment financing of $91 million. The principal uses of funds
in the first quarter of 1996 were $518 million for property,
plant, and equipment, $55 million for repayments of equipment
contracts, and $7 million for payments on long-term debt.
The Company paid a $0.05 per share cash dividend on December 1,
1995, aggregating approximately $10 million to shareholders of
record on November 10, 1995.
10
<PAGE>
As of November, 30, 1995, the Company had contractual
commitments extending through calendar 1998 of approximately $865
million for equipment purchases and approximately $80 million for
the construction of facilities. The Company believes continuing
investments in manufacturing technology, facilities and
equipment, research and development, and product and process
technology are necessary to support growth, achieve operating
efficiencies, and enhance product quality.
The Company periodically evaluates various alternatives to
improve and expand its production capacity and evaluates
opportunities for product diversification. The Company's current
expansion and capital improvement projects, including the Utah
manufacturing facility and the conversion of the Boise Fabs to
process 8-inch wafers, are currently estimated to aggregate
approximately $4 billion in remaining cash outlays, the majority
of which is expected to be incurred prior to the end of fiscal
1997. Substantially all of the Company's near-term cash flow
from operations is expected to be dedicated to capacity
improvement programs. The Company is evaluating debt financing
as a source of additional funds that may be needed for timely
completion of these projects. Should the Company be unable to
obtain financing on acceptable terms, the Company's expansion and
capital improvement programs as currently scheduled could be
significantly delayed. There can be no assurance that the
expansion and capital improvement programs will be completed as
currently scheduled or within current cost estimates.
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
characteristics historically have made the semiconductor industry
highly cyclical, particularly in the market for DRAMs, which are
the Company's primary products. The Company and many of its
competitors are adding new facilities designed to process 8-inch
wafers, which have approximately 84% greater usable surface area
than 6-inch wafers. The amount of capacity to be placed into
production and future yield improvements by these competitors
would dramatically increase world-wide supply of semiconductor
memory. Excess supply of semiconductor memory, or currency
fluctuation resulting in a strengthening dollar against the yen,
could result in downward pricing pressure on the Company's
products. A decline in product pricing would have a material
adverse effect on the Company's results of operations.
DRAMs are the most widely used semiconductor memory component
in most PC systems. Approximately 64% of the Company's sales of
semiconductor memory products during the first quarter of 1995
were directly into the personal computer or peripheral markets.
Demand for semiconductor memory products, and DRAMs in
particular, has grown in recent periods fueled primarily by
growth in the personal computer industry. In addition to an
increased sales volume of PC systems, most PC systems are being
shipped with greater amounts of memory, principally as a result
of more powerful microprocessors, more memory-intensive software
applications, and enhanced system architectures. Should the
demand for PC systems decrease, a corresponding decrease in
demand for semiconductor memory products would also occur, which
would likely have a material adverse effect on the Company's
results of operations.
The Company had previously anticipated Fab III to be
substantially converted to 8-inch wafer processing by the end of
calendar 1995. While considerable progress has been made, the
Company does not expect substantial conversion of Fab III before
the middle of fiscal 1996. Conversion requires expansion of
portions of the Company's facilities and modifications,
enhancements, or replacement of a significant portion of the
Company's wafer processing equipment. There can be no assurance
that the Company will not experience an interruption of its
manufacturing process or experience decreased manufacturing
yields as a result of the conversion. An interruption of the
manufacturing process or decreased manufacturing yields could
have a material adverse effect on the Company's results of
operations.
11
<PAGE>
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, such as the 16 Meg
DRAM, to commercial volumes. 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's product and process technology cross-license
agreements with Motorola, Inc., and IBM expired on June 30, 1995,
and November 1, 1995, respectively, and the agreement with AT&T
expires in December 1996. Failure to renew license agreements
could result in litigation, and its attendant cost and diversion
of resources, and could also result in material changes in the
Company's production processes. Any such litigation or changes
could have a material adverse effect on the Company's results of
operations.
In June 1995, the Company began construction of an additional
manufacturing facility in Utah which represents a significant
capital investment by the Company. While the Company has at
times conducted certain assembly and test operations at sites
remote to its primary manufacturing operation, the Utah facility
will be the Company's first remote fabrication facility. The
success of the Utah operation will largely depend on the
Company's ability to achieve manufacturing efficiencies
comparable to those of the Boise facility, of which there can be
no assurance. In addition to the hiring needs of the expansion
plan at the Boise site, it is anticipated that the Utah site will
employ approximately 3,500 full-time employees. The inability of
the Company to retain a qualified work force or to locate and
hire qualified candidates or failure of the Utah facility to
achieve manufacturing efficiencies comparable to the Boise
facility would have a negative affect on existing operations.
12
<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following are filed as a part of this report:
Exhibit Page
Number Description of Exhibit Number
------- -------------------------------------------------- ------
11 Computation of per share earnings for the quarters
ended November 30, 1995 and December 1, 1994 15
(b) The registrant did not file any reports on Form 8-K during
the quarter ended November 30, 1995.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Micron Technology, Inc.
----------------------------------
(Registrant)
Dated: December 20, 1995 /s/ Wilbur G. Stover, Jr.
----------------------------------
Wilbur G. Stover, Jr. Vice
President, Finance, and Chief
Financial Officer (Principal
Financial and Accounting Officer)
14
Exhibit 11
MICRON TECHNOLOGY, INC.
Computation of Per Share Earnings
(Amounts in millions except for per share amounts)
<TABLE>
<CAPTION>
November 30, December 1,
Quarter Ended 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
PRIMARY
Weighted average shares outstanding 206.7 204.0
Net effect of dilutive stock options 10.5 6.8
-------- --------
Total shares 217.2 210.8
======== ========
Net income $ 328.5 $ 159.3
======== ========
Primary earnings per share $1.51 $0.76
===== =====
FULLY DILUTED
Weighted average shares outstanding 206.7 204.0
Net effect of dilutive stock options 10.5 7.1
-------- --------
Total shares 217.2 211.1
======== ========
Net income $ 328.5 $ 159.3
======== ========
Fully diluted earnings per share $1.51 $0.75
===== =====
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the accompanying financial statements and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-30-1996
<PERIOD-END> NOV-30-1995
<CASH> 173
<SECURITIES> 434
<RECEIVABLES> 599
<ALLOWANCES> 22
<INVENTORY> 266
<CURRENT-ASSETS> 1,530
<PP&E> 2,532
<DEPRECIATION> 698
<TOTAL-ASSETS> 3,479
<CURRENT-LIABILITIES> 953
<BONDS> 122
<COMMON> 21
0
0
<OTHER-SE> 2,207
<TOTAL-LIABILITY-AND-EQUITY> 3,479
<SALES> 1,186
<TOTAL-REVENUES> 1,186
<CGS> 538
<TOTAL-COSTS> 661
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8)
<INCOME-PRETAX> 533
<INCOME-TAX> 205
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 328
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
</TABLE>
