MICRON TECHNOLOGY INC, 10-K405, 1999-11-09

MICRON TECHNOLOGY INC
10-K405, 1999-11-09
SEMICONDUCTORS & RELATED DEVICES

Previous: IMMUNOMEDICS INC, S-3, 1999-11-09

Next: IMAGE SOFTWARE INC, 10-Q, 1999-11-09

<PAGE>

FORM 10-K

UNITED STATES
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

For the fiscal year ended September 2, 1999

[_] 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 (IRS 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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
Common Stock, par value $.10 per share registered New York Stock
Exchange

Securities registered pursuant to Section 12(g) of the Act:
None
(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 [_]

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 registrants 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. [X]

The aggregate market value of the voting stock held by nonaffiliates of the
registrant, based upon the closing price of such stock on September 2, 1999, as
reported by the New York Stock Exchange, was approximately $13.4 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
October 29, 1999, was 253,628,373 shares of common stock and 15,810,277 shares
of Class A Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for registrant's 1999 Annual Meeting of
Shareholders to be held on January 18, 2000, are incorporated by reference into
Part III of this Annual Report on Form 10-K.

1/57
<PAGE>

PART I

Item 1. Business

The following discussion may contain trend information and other forward-
looking statements (including, for example, statements regarding future
operating results, future capital expenditures and facility expansion, new
product introductions, technological developments and industry trends) that
involve a number of risks and uncertainties. The Company's actual results could
differ materially from the Company's historical results of operations and those
discussed in the forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, those identified
in "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Certain Factors." All period references are to the
Company's fiscal periods ended September 2, 1999, September 3, 1998, or August
28, 1997, unless otherwise indicated. All 1998 and 1997 financial data of the
Company has been restated to include the results of operations of Rendition,
Inc., which was merged into the Company on September 11, 1998.

General

Micron Technology, Inc. and its subsidiaries (hereinafter referred to
collectively as the "Company") principally design, develop, manufacture and
market semiconductor memory products and personal computer ("PC") systems.
Micron Technology, Inc. and its wholly-owned subsidiaries are hereinafter
referred to collectively as "MTI." The Company's PC operations are operated
through Micron Electronics, Inc. ("MEI"), a 63% owned, publicly-traded
subsidiary of MTI.

On September 30, 1998, MTI completed the acquisition of substantially all of
the semiconductor memory operations of Texas Instruments Incorporated ("TI").
As a result of the acquisition, the Company now operates a fabrication facility
in Avezzano, Italy, an assembly and test facility in Singapore and a design
engineering center in Richardson, Texas. MTI also has interests in two joint
venture wafer fabrication facilities in Singapore and Japan. The Company's
results of operations for fiscal 1999 reflect eleven months results of
operations for the acquired operations.

MTI, a Delaware corporation, was incorporated in 1978. MTI's executive
offices are located at 8000 South Federal Way, Boise, Idaho 83716-9632 and its
telephone number is (208) 368-4000. MEI's executive offices are located at 900
East Karcher Road, Nampa, Idaho 83687-3045 and its telephone number is (208)
898-3434.

In connection with the preparation of its Consolidated Financial Statements
for 1999, the Company implemented a recently issued accounting standard which
calls for information regarding the Company's operations to be reported by
segments. The Company is organized into two primary operating segments pursuant
to its primary product categories: "Semiconductor operations" and "PC
operations." Reference is made to the information regarding net sales,
operating profit and identifiable assets by reportable segments and net sales by
geographic region, under the heading "Operating Segment and Geographic
Information" in the "Notes to Consolidated Financial Statements."

Products and Services

Semiconductor operations

The Company's semiconductor operations focus primarily on the design,
development and manufacture of leading edge semiconductor memory products. In
recent periods, the Company's customers have demanded a wider variety of
packaging and configuration options, architectures and performance
characteristics to meet their particular needs. Industry experts expect this
proliferation of products to continue as technological advances in the PC and
electronics industries require different memory solutions.

Dynamic Random Access Memory ("DRAM"). DRAM is the Company's primary
semiconductor memory product. A DRAM is a high density, low-cost-per-bit,
random access memory component which stores digital

2/57
<PAGE>

information in the form of bits and provides high-speed storage and retrieval of
data. DRAMs are the most widely used semiconductor memory component in PC
systems. The DRAM market is diversifying, with customers demanding specific
memory solutions to meet their particular memory needs. The Company is
committed to offering customers multiple DRAM solutions and maintaining long-
term support of those solutions. DRAM sales (exclusive of intersegment sales)
represented approximately 64%, 42% and 45% of the Company's total net sales in
1999, 1998 and 1997, respectively.

Synchronous DRAMs ("SDRAMs") are memory components which operate faster
than standard DRAMs, due in part to the addition of a clock input that
synchronizes all operations and allows PC systems to transfer data at faster
rates, allowing subsystems to maintain pace with high speed CPUs and graphics
engines. The Company's primary product during 1999 was the 64 Meg SDRAM,
available in multiple configurations, speeds and package types. The Company is
in the process of ramping volume production of the 128 Meg SDRAM and expects to
transition to the 128 Meg SDRAM as its primary product by the end of calendar
2000. The Company offers PC100 and PC133 64 Meg and 128 Meg SDRAMs. These
devices, which in some cases have the same functionality as higher bandwidth
DRAMS, are primarily used in high-performance PCs. PC133 is a faster speed
grade SDRAM and is a cost-effective, incremental technology improvement over
PC100.

The Company has developed higher bandwidth DRAM products such as Double
Date Rate ("DDR") SDRAM and Direct Rambus(TM) DRAM ("RDRAM(R)"). DDR SDRAM is a
wide-bus memory solution that leverages off of existing SDRAM technology by
supporting data transfers on both edges of each clock cycle effectively doubling
the memory chip's data throughput. The Company anticipates that DDR SDRAM will
be widely used in high-end server, workstation and desktop applications. The
Company expects to offer DDR SDRAM in 64 Meg and 128 Meg configurations in
fiscal 2000. RDRAM is a technology that uses a narrow bus, high speed memory
interface and is expected to be used in high-performance PC applications and
servers. The Company announced sampling of RDRAM products in August 1999 and
expects to be positioned to meet the demand for RDRAM as the market for RDRAM
develops.

The Company continues to produce lower bandwidth DRAM products such as
extended data out ("EDO") and fast page mode ("FPM") and earlier generation
products such as the 16 Meg DRAM in order to support major OEM customer needs.

Other Semiconductor Memory Products. Other semiconductor memory products
produced by the Company include Static Random Access Memory ("SRAM") and Flash
("Flash") memory devices. SRAM is a semiconductor device which performs memory
functions much the same as DRAM, but does not require memory cells to be
electronically refreshed and operates faster than DRAM. The Company produces
SRAMs for the high-performance, or "Very Fast," sector which are used in
applications that require a "buffer" or "cache" of high speed memory between the
CPU and main DRAM memory. Flash components are non-volatile semiconductor
devices that retain memory content when the power is turned off and are
electrically erasable and reprogrammable. Flash devices are used in digital
cellular phones, networking applications, workstations, servers and PCs. Sales
of SRAM and Flash products together represented less than 3% of the Company's
total net sales in each of 1999, 1998 and 1997.

PC operations

PC Systems and Services. The Company's PC operations develop, market,
manufacture, sell and support a wide range of desktop and notebook PC systems
and network servers and sell, resell and support a variety of additional
peripherals, software and services. These PC systems use microprocessors
manufactured by Intel Corporation ("Intel"). The Company's PC systems are
assembled to order with differing processing and memory configurations as well
as various operating systems and application software. The Company's
Mservices(TM) line is a portfolio of enhanced support and professional services.

The Company's current product lines include: the high-performance
Millennia line of PC systems targeted for consumer, business and government
users; the ClientPro(TM), which is a scalable and affordable line of managed PCs
designed as a network solution for businesses demanding computing stability and
performance; the Transport Trek2(TM) notebook, designed for affordable desktop-
like performance for business applications; the TransPort NX, designed for
ultimate desktop-like performance for small business and Small-Office-Home-
Office "SOHO" applications and NetFRAME(R) series workgroup servers which
provide server solutions specifically

3/57
<PAGE>

designed for small to medium sized businesses and for decentralized remote
locations and departments. Net sales of PC systems (exclusive of intersegment
sales) represented 33%, 49% and 43% of the Company's total net sales for 1999,
1998 and 1997, respectively.

E-Services. The Company offers a variety of e-services to its customers.
Through Micron Internet Services, the Company provides internet access,
including integrated information systems solutions encompassing data, video,
voice and software applications. Through HostPro, the Company offers a full
range of web-hosting services ranging from e-commerce solutions to multimedia
technologies.

Subsequent to the end to the fiscal year, the Company's PC operations
announced the introduction of "Subscription Computing." Through Subscription
Computing, customers receive one monthly bill for a customized combination of
hardware, hardware and software services, internet access, web hosting and e-
commerce services. The Company anticipates making significant strategic
investments during fiscal 2000 in support of e-services and Subscription
Computing.

Manufacturing

Semiconductor operations

The Company is a global leader in the manufacture of semiconductor memory
products. The Company's manufacturing process technology is developed at its
research and development wafer fabrication facility in Boise, Idaho and then
deployed to its two manufacturing fabs in Boise, its Avezzano, Italy fab and its
two joint venture fabs, TECH Semiconductor Singapore Pte. Ltd. ("TECH") and KMT
Semiconductor Limited ("KMT"). (TECH and KMT are collectively referred to
herein as the "JVs.") The Company focuses on developing leading edge
manufacturing processes that maximize throughput of high quality memory
components.

The manufacturing 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. Efficient production of the Company's semiconductor
memory products requires utilization of advanced semiconductor manufacturing
techniques and the effective deployment of these techniques across multiple
facilities. Cost per unit is primarily a function of die size (since the
potential number of good die per wafer increases with reduced die size), number
of mask layers, the yield of acceptable die produced on each wafer and labor
productivity. Product costs are also affected by MTI's arrangements with the
JVs, including supply agreements which allow MTI to purchase JV products at a
discount to its average selling prices. Other factors which contribute to
manufacturing costs are wafer size, number of fabrication steps, cost and
sophistication of the manufacturing equipment, equipment utilization, process
complexity, package type and cleanliness. The Company is continuously enhancing
its production processes, reducing the die size of existing products and
increasing capacity utilization throughout its worldwide operations. The
Company is in the process of transferring its .18 micron(u) product and process
technology capability to Avezzano, TECH and KMT and expects the transfer to be
substantially complete by the end of calendar 1999.

Wafer fabrication occurs in a highly controlled, clean environment to minimize
dust and other yield- and quality-limiting contaminants. Despite stringent
manufacturing controls, 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 scrapped or
individual circuits to be nonfunctional. The success of the Company's
manufacturing operations is largely dependent on its ability to minimize such
impurities and to maximize its yield of acceptable, high-quality circuits. In
this regard, the Company employs rigorous quality controls throughout the
manufacturing, screening and testing processes. The Company is able to recover
certain nonstandard devices by testing and grading them to their highest level
of functionality.

After fabrication, each silicon wafer is separated into individual die.
Functional die 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 semi-automatic 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

4/57
<PAGE>

during the burn-in process, capturing quality and reliability data and reducing
testing time and cost. Assembly and test of the Company's products is completed
at its Boise and Singapore facilities. All the Company's manufacturing
facilities operate 24 hours per day, 7 days per week.

Joint Ventures. In connection with the acquisition of substantially all of
TI's memory operations in September 1998, MTI acquired interests in TECH and
KMT. TECH and KMT operate wafer fabrication facilities for the manufacture of
DRAM products. TECH, which operates in Singapore, is a joint venture between
MTI, the Singapore Economic Development Board, Canon Inc. and Hewlett-Packard
Company. KMT, which operates in Japan, is a joint venture between MTI and Kobe
Steel, Ltd.

MTI has made significant progress in the transfer of its product and
process technology to the JVs and expects to complete the transfer of its .18
(u) product and process technology capability in late calendar 1999. Subject
to certain terms and conditions, MTI has agreed to purchase all of the JV
production. Certain joint venture partners have the right to buy a portion of
TECH's output from the Company. MTI is a party to various agreements with the
JVs whereby MTI provides technology, engineering support and training to the
JVs. MTI also performs assembly and test services on products manufactured by
the JVs. The net cost of products purchased from the JVs, amounting to $322
million in 1999, reflects all transactions with the JVs.

Historically the JVs have required external financing to transition to the
latest generation technologies. In the event either the JVs are unable to
secure adequate financing, the Company's results of operations and cash flows
could be adversely affected.

PC operations

The Company's PC manufacturing process is designed to provide custom-
configured products to its customers and includes assembling components, loading
software and testing each system prior to shipment. The Company's PC systems
are generally assembled to order ("ATO") based on customer specifications. Most
components are held by suppliers in a third-party logistics providers' warehouse
and delivered as order flow demands. The Company's ATO manufacturing process
promotes rapid inventory turnover and reduced inventory levels, while allowing
the Company to efficiently manufacture customized computer systems. The
Company's desktop PC systems and servers are generally assembled in the
Company's facility. The Company's notebook PC systems, which are designed to
include feature sets defined by the Company, are assembled by third party
suppliers and tested according to the Company's standards.

Availability of Raw Materials

Semiconductor operations

The raw materials utilized by the Company's semiconductor operations generally
must meet exacting product specifications. The Company generally uses multiple
sources of supply, but the number of suppliers capable of delivering certain raw
materials is very limited. The availability of raw materials, such as silicon
wafers, certain chemicals, lead frames and molding compound, may decline due to
the increase in worldwide semiconductor manufacturing. Although shortages have
occurred from time to time and lead times in the industry have been extended on
occasion, to date the Company has not experienced any significant interruption
in operations as a result of a difficulty in obtaining raw materials for its
semiconductor operations. Interruption of any one raw material source could
adversely affect the Company's semiconductor operations.

PC operations

The Company relies on third-party suppliers for its PC system components and
seeks to identify suppliers able to provide state-of-the-art technology, product
quality and prompt delivery at competitive prices. The Company purchases
substantially all of its PC components, subassemblies and software from
suppliers on a purchase order basis and generally does not have long-term supply
arrangements with its suppliers. Although the Company attempts to use standard
components, subassemblies and software available from multiple suppliers,
certain of its components, subassemblies and software are available only from
sole suppliers or a limited number of suppliers. The microprocessors used in
the Company's PC systems are manufactured exclusively by Intel. From time to
time,

5/57
<PAGE>

the Company has been unable to obtain a sufficient supply of certain Intel
microprocessors. Any interruption in the supply of any of the components,
subassemblies and software currently obtained from a single source or relatively
few sources, or a decrease in the general availability of any other components,
subassemblies or software used in the Company's PC systems, could result in
production delays and adversely affect the Company's PC systems business and
results of operations.

Marketing and Customers

Semiconductor operations

The Company's semiconductor memory products are sold primarily to PC
manufacturers. The Company has a significant market share with several large PC
OEMs and intends to expand its customer base in the telecommunications and
networking hardware markets in the next year.

The Company markets its semiconductor memory products primarily through its
own direct sales force. The Company also sells products through its retail sales
division, Crucial Technology, independent sales representatives and
distributors. The Company maintains semiconductor sales offices in North
America, Europe and Asia. The Company's global presence promotes sales and
marketing functions by facilitating international customer service and allowing
for expedient shipping and billing worldwide. Sales representatives are
compensated on a commission basis and obtain orders subject to final acceptance
by the Company. The Company makes shipments against these orders directly to
the customer. Distributors carry the Company's products in inventory and
typically sell a variety of other semiconductor products, including competitors'
products. Semiconductor memory products sold through distributors approximated
11%, 11% and 7% of semiconductor net sales in 1999, 1998 and 1997, respectively.
The Company also markets application specific DRAM under the SpecTek brand name.

The semiconductor memory industry is characterized by rapid technological
change, relatively short product life cycles, frequent product introductions and
enhancements, difficult product transitions and volatile market conditions.
Historically, the semiconductor industry and the DRAM market in particular, has
been highly cyclical. DRAMs have typically been considered commodity products
as most suppliers have historically produced large volumes of the most cost-
effective density. The Company's primary semiconductor memory products are
essentially interchangeable with, and have similar functionality to, products
offered by the Company's competition. The DRAM market is currently in the
process of segmenting, with diverse memory needs being driven by the different
requirements of low-end, mid-range and high-end PC's, servers, workstations,
notebooks, hand-helds, communications, industrial and other applications that
are demanding specific memory solutions.

As manufacturers expand their business to include a wider variety of products,
the Company expects to expand its memory product offerings to meet the needs of
these products, as is evidenced by the Company's development of DDR SDRAM and
RDRAM products. The Company is dedicated to offering customers multiple DRAM
solutions and maintaining long-term support of those solutions.

Many of the Company's customers require a thorough review or "qualification"
of new semiconductor memory products and processes each of which may take
several months. As the Company further diversifies its product lines and
reduces the die sizes of existing memory products, acceptance of these products
and processes is subject to this qualification procedure. There can be no
assurance that new products or processes will be qualified for purchase by
existing or potential customers.

Sales to Dell Computer Corporation represented approximately 13%, 15% and 11%
of the Company's net sales of semiconductor memory products in 1999, 1998 and
1997, respectively. Sales to Compaq Computer Corporation represented
approximately 10% of the Company's net sales of semiconductor memory products in
1999. No other customer individually accounted for 10% or more of the Company's
net sales of semiconductor memory products in 1999, 1998 or 1997.

PC operations

The Company's direct marketing approach is aimed toward PC users and companies
who evaluate products based on performance, price, reliability and service and
support. The Company markets its PC systems primarily by

6/57
<PAGE>

strategically placing advertisements in personal computer trade publications,
submitting its products for review and evaluation by these publications and
advertising its products in certain newspapers and other publications and on its
home page on the internet. The Company also markets its PC systems through
direct-mail campaigns and sells a limited number of PCs through its factory
outlet store located in Boise, Idaho. In addition, the Company sells PC systems
through strategic relationships with third parties having large government
procurement contracts. Pricing and terms for such procurement contracts are
generally subject to re-negotiation or termination by third parties and
governmental entities. The Company's field sales force focuses primarily on
soliciting and servicing the emerging "mid market" comprised of medium and small
sized businesses and on sales to public entities.

By focusing on the direct sales channel, the Company can avoid dealer markups
typically experienced in the retail sales channel, limit inventory carrying
costs and maintain closer contact with its target markets. Direct sales orders
are received primarily via telephone, facsimile, the internet and through its
direct sales force. The Company's sales representatives assist customers in
determining system configuration, compatibility and current pricing. Customers
generally order systems configured with varying feature sets differentiated by
microprocessor speed, hard drive capacity, amount of memory, monitor size and
resolution and bundled software, as well as other features.

The Company also applies the direct marketing approach to its e-services and
Subscription Computing offerings by advertising in traditional media
publications augmented by online marketing programs. In connection with its
Subscription Computing initiative, the Company is conducting television and
radio advertising in selected markets. The Company is creating an integrated
marketing program under the brand name of "micronpc.com(TM)" to effect its e-
services and Subscription Computing strategies.

International Sales

International sales totaled $1.1 billion for 1999 and included approximately
$464 million in sales to Europe and $420 million in sales to Asia Pacific.
International sales approximated $599 million and $708 million for 1998 and
1997, respectively. The Company expects international sales to continue to
increase as a result of increased production from its worldwide operations.

Backlog

Semiconductor operations

Cyclical industry conditions make it difficult for many customers to enter
into long-term, fixed-price contracts and, accordingly, new order volumes for
the Company's semiconductor memory products fluctuate significantly. Orders
are typically accepted with acknowledgment that the terms may be adjusted to
reflect market conditions at the delivery date. For the foregoing reasons as
well as the possibility of customer changes in delivery schedules or
cancellation of orders without significant penalty, the Company does not believe
that its backlog of semiconductor memory products as of any particular date is
firm or a reliable indicator of actual sales for any succeeding period.

PC operations

Levels of unfilled orders for PC systems fluctuate depending upon component
availability, demand for certain products, the timing of large volume customer
orders and the Company's production schedules. Customers frequently change
delivery schedules and orders depending on market conditions and other reasons
and the Company generally allows the cancellation of unfilled PC orders without
penalty any time prior to shipment. As of September 2, 1999, the Company had
unfilled orders for PC systems of approximately $15.6 million compared to $22.0
million as of September 3, 1998. The Company anticipates that substantially all
of the unfilled PC orders as of September 2, 1999, other than those subsequently
canceled, will be shipped within 30 days. The Company believes that PC backlog
is not indicative of actual sales of any succeeding period.

7/57
<PAGE>

Product Warranty

Semiconductor operations

Consistent with semiconductor memory industry practice, the Company generally
provides a limited warranty that its semiconductor memory products are in
compliance with specifications existing at the time of delivery. Liability for
a stated warranty period is usually limited to replacement of defective items or
return of amounts paid.

PC operations

Customers may generally return PC products purchased from the Company within a
limited period of time after shipment. Specifically, consumer customers may
return PC products within 15 days for a full refund of the purchase price, while
commercial and government customers will receive a full refund if they return
the product within 30 days. The Company sells desktop and notebook PC systems
and servers with the Micron Power(SM) limited warranty, consisting of a five-
year limited warranty on the microprocessor and main memory, a three-year
limited warranty on the hardware and one year on-site service provided by a
third party. The Micron Power Limited Warranty covers repair or replacement for
defects in workmanship or materials.

Competition

Semiconductor operations

The Company's semiconductor operations experience intense competition from a
number of companies, including Hyundai Electronics Industries Co., Ltd.,
Infineon Technologies AG, NEC Corporation and Samsung Semiconductor, Inc. Some
of the Company's competitors are very large corporations or conglomerates, which
may have greater resources for research and new product development and a
greater ability to withstand current or future downturns in the semiconductor
memory market. The Company's competitors are also aggressively seeking improved
yields, smaller die size and fewer mask levels in their product designs. These
improvements could result in a significant increase in worldwide capacity
leading to downward pressures on prices.

PC operations

The PC industry is highly competitive and has been characterized by intense
pricing pressure, generally low gross margin percentages, rapid technological
advances in hardware and software, frequent introduction of new products and
declining component costs. Competition in the PC industry is based primarily
upon brand name recognition, performance, price, reliability and service and
support. The Company's sales of PC systems have historically benefited from
awards received from trade publications recognizing the price and performance
characteristics of the Company's PC systems and its service and support
functions. The Company competes with a number of PC manufacturers, which sell
their products primarily through direct channels, including Dell Computer
Corporation and Gateway, Inc.

The Company also competes with PC manufacturers, such as Apple Computer, Inc.,
Compaq Computer Corporation, Hewlett-Packard Company, International Business
Machines Corporation ("IBM"), NEC Corporation and Toshiba Corporation among
others. Several of these manufacturers, which have traditionally sold their
products through national and regional distributors, dealers and value-added
resellers and retail stores, now sell their products through the direct channel.
In addition, the Company expects to face increased competition in the U.S.
direct sales market from foreign PC suppliers and from foreign and domestic
suppliers of PC products that decide to implement, or devote additional
resources to, a direct sales strategy.

The Company's initiatives in Subscription Computing and e-services face
intense competition. A significant number of enterprises have targeted the e-
commerce opportunity and it is too early to determine what capabilities the
marketplace will dictate as critical for success. A large number of companies,
including Verio Inc. ("Verio") and Concentric Network Corporation
("Concentric"), offer e-services similar to those provided and anticipated to be
provided by the Company. Further, a large number of diversified companies, such
as Intel, IBM and AT&T Corp. ("AT&T"), have indicated an intent to compete in e-
services markets. Many companies competing for leadership in

8/57
<PAGE>

the e-services marketplace already have capabilities and strategic relationships
that may prove critical for success in the e-services marketplace.

Research and Development

Rapid technological change and intense price competition place a premium on
both new product and new process development efforts. Substantially all the
Company's research and development efforts relate to its semiconductor
operations. The Company's continued ability to compete in the semiconductor
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. The Company believes that the expansion of semiconductor product
offerings is necessary to meet expected market demand for specific memory
solutions and to support the customer base required for sale of the Company's
increased production. Research and development is being performed in strategic
areas related to the Company's semiconductor expertise and market requirements.
Total research and development expenditures for the Company were $322 million,
$286 million and $224 million in 1999, 1998 and 1997, respectively.

Research and development expenses relating to the Company's semiconductor
operations vary primarily with personnel costs, the cost of advanced equipment
dedicated to new product and process development and the number of wafers
processed. Research and development efforts are focused on advanced process
technology, which is the primary determinant in transitioning to next generation
products. Simultaneous research and development efforts across multiple
products prepare the Company for future product introductions and allow current
products to utilize the advanced process technology to achieve higher
performance at lower production costs. Application of advanced process
technology currently is concentrated on design of shrink versions of the
Company's 64 Meg and 128 Meg SDRAMs and on design and development of the
Company's 256 Meg SDRAM and RDRAM, DDR SDRAM, Flash and SRAM memory products.

In 1999, the Company substantially transitioned all operations from .25 (u) to
.21 (u) process technology capability. The Company expects the transition to .18
(u) capability to be substantially complete in late calendar 1999. The Company
anticipates that process technology will move to .15 (u) line widths in the
next few years as needed for the development of future generation semiconductor
products. Transitions to smaller line widths at the Company's international
operations are expected to lag behind transitions at the Boise site by several
months as process technology development and initial manufacturing are expected
to be completed first at the Boise site.

Patents and Licenses

As of September 2, 1999, the Company owned approximately 2,800 United States
patents and 220 foreign patents relating to the use of its products and
processes. In addition, the Company has numerous United States and
international patent applications pending.

The Company has entered into a number of cross-license agreements with third
parties. The agreements may require one-time and/or periodic royalty payments
and expire at various times. One-time payments are typically capitalized and
amortized over the shorter of the estimated useful life of the technology, the
patent term or the term of the agreement. In the future, it may be necessary or
advantageous for the Company to obtain additional patent licenses or to renew
existing license agreements. The Company is unable to predict whether these
license agreements can be obtained or renewed on terms acceptable to the
Company. Adverse determinations that the Company's manufacturing processes or
products have infringed on the product or process rights held by others could
subject the Company to significant liabilities to third parties or require
material changes in production processes or products, any of which could have a
material adverse effect on the Company's business, results of operations and
financial condition. (See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Certain Factors.")

Employees

As of September 2, 1999, the Company had approximately 15,700 full-time
employees, including approximately 13,500 in semiconductor operations and 2,200
in PC operations. The Company has approximately

9/57
<PAGE>

2,400 and 1,300 employees in Singapore and Italy, respectively. The Company's
Italian employees are represented by labor organizations that have entered into
national and local labor contracts with the Company. The Company's employment
levels can vary depending on market conditions and the level of the Company's
production, research and product and process development and administrative
support activities. Many of the Company's employees are highly skilled and the
Company's continued success depends in part upon its ability to attract and
retain such employees. The loss of key Company personnel could have an adverse
effect on the Company's results of operations.

Environmental Compliance

Government regulations impose various environmental controls on discharges,
emissions and solid wastes from the Company's manufacturing processes. The
Company believes that its activities conform to present environmental
regulations. In 1999, MTI continued to conform to the requirements of ISO 14001
certification including a successful independent surveillance audit. To
continue certification, MTI met requirements in environmental policy, planning,
management, structure and responsibility, training, communication, document
control, operational control, emergency preparedness and response, record
keeping and management review. While the Company has not experienced any
materially adverse effects on its operations from environmental or other
government 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.

10/57
<PAGE>

Officers and Directors of the Registrant

Officers of the Company are appointed annually by the Board of Directors.
Directors of the Company are elected annually by the shareholders of the
Company. Any directors appointed by the Board of Directors to fill vacancies on
the Board serve until the next election by the shareholders. All officers and
directors serve until their successors are duly chosen or elected and qualified,
except in the case of earlier death, resignation or removal.

As of November 1, 1999, the following executive officer and directors of the
Company were subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended.

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Steven R. Appleton................ 39 Chairman, Chief Executive Officer and President
Donald D. Baldwin................. 39 Vice President of Sales and Marketing
Kipp A. Bedard.................... 40 Vice President of Corporate Affairs
Robert M. Donnelly................ 60 Vice President of Memory Products
D. Mark Durcan.................... 38 Chief Technical Officer and Vice President of Research
& Development
Jay L. Hawkins.................... 39 Vice President of Operations
Joel J. Kocher.................... 43 Chairman and Chief Executive Officer of Micron
Electronics, Inc.
Roderic W. Lewis.................. 44 Vice President of Legal Affairs, General Counsel and
Corporate Secretary
Wilbur G. Stover, Jr.............. 46 Vice President of Finance and Chief Financial Officer
James W. Bagley................... 60 Director
Robert A. Lothrop................. 73 Director
Thomas T. Nicholson............... 63 Director
Don J. Simplot.................... 64 Director
Gordon C. Smith................... 70 Director
William P. Weber.................. 59 Director
</TABLE>

Steven R. Appleton joined MTI in February 1983 and has served in various
capacities with the Company and its subsidiaries. Mr. Appleton first became an
officer of MTI in August 1989 and has served in various officer positions,
including overseeing the Company's semiconductor operations as President, Chief
Executive Officer and Director of Micron Semiconductor, Inc. ("MSI"), then a
wholly-owned subsidiary of MTI, from July 1992 to November 1994. From April
1991 until July 1992 and since May 1994, Mr. Appleton has served on MTI's Board
of Directors. Since September 1994, Mr. Appleton has served as the Chief
Executive Officer, President and Chairman of the Board of Directors of MTI. Mr.
Appleton also serves as a Director of MEI. Mr. Appleton holds a BA in Business
Management from Boise State University.

Donald D. Baldwin joined MTI in April 1984 and has served in various
capacities with the Company and its subsidiaries. Mr. Baldwin first became an
officer of MTI in May 1991 and has served in various officer positions,
including Vice President, Sales of MSI from July 1992 to November 1994. Mr.
Baldwin served as Vice President, Sales for MTI from November 1994 through June
1997, at which time he became Vice President of Sales and Marketing. Mr.
Baldwin holds a BA in Marketing from Boise State University.

Kipp A. Bedard joined MTI in November 1983 and has served in various
capacities with the Company and its subsidiaries. Mr. Bedard first became an
officer of MTI in April 1990 and has served in various officer positions,
including Vice President, Corporate Affairs of MSI from July 1992 to January
1994. Since January 1994, Mr. Bedard has served as Vice President of Corporate
Affairs for MTI. Mr. Bedard holds a BBA in Accounting from Boise State
University.

Robert M. Donnelly joined MTI in September 1988 and has served in various
technical positions with the Company and its subsidiaries. Mr. Donnelly first
became an officer of MTI in August 1989 and has served in various officer
positions, including Vice President, SRAM Products Group of MSI from July 1992
to November 1994. Mr. Donnelly was named Vice President, SRAM Products Group
for MTI in November 1994. Mr. Donnelly served as Vice President, SRAM Design
and Product Engineering for MTI from October 1995 through November

11/57
<PAGE>

1996, at which time he became Vice President of Memory Products. Mr. Donnelly
holds a BS in Electrical Engineering from the University of Louisville.

D. Mark Durcan joined MTI in 1984 and has served in various technical
positions with the Company and its subsidiaries, including Process Integration
Manager from December 1989 until May 1995 and Manager of Process Research and
Development from May 1995 until June 1996. Mr. Durcan served as Vice President,
Process Research and Development from June 1996 through June 1997, at which time
he became Chief Technical Officer and Vice President of Research & Development.
Mr. Durcan holds a BS and MS in Chemical Engineering from Rice University.

Jay L. Hawkins joined MTI in March 1984 and has served in various
manufacturing positions for the Company and its subsidiaries, including Director
of Manufacturing for MSI from July 1992 to November 1994 and Director of
Manufacturing for MTI from November 1994 to February 1996. Mr. Hawkins served
as Vice President, Manufacturing Administration from February 1996 through June
1997, at which time he became Vice President of Operations. Mr. Hawkins holds a
BBA in Marketing from Boise State University.

Joel J. Kocher joined MEI in January 1998. Prior to joining MEI, Mr. Kocher
was employed by Dell Computer Corporation from 1987 until September 1994, most
recently serving as President of Worldwide Marketing, Sales and Service. In
October 1994, Mr. Kocher joined Artistsoft, where he initially served as
Executive Vice President and Chief Operating Officer and subsequently served
from October 1995 until December 1996 as President, Chief Operating Officer and
Director of Artistsoft. From December 1996 until August 1997, Mr. Kocher served
as President and Chief Operating Officer at Power Computing Corporation. Since
January 1998, Mr. Kocher has served as the President of MEI and since June 1998
has also served as Chairman and Chief Executive Officer of MEI. Mr. Kocher
holds a BBA in Marketing from the University of Florida.

Roderic W. Lewis joined MTI in 1991 and has served in various capacities with
the Company and its subsidiaries, including Assistant General Counsel for MTI
from August 1993 to April 1995. From April 1995 to July 1996, Mr. Lewis served
as Vice President, General Counsel and Corporate Secretary for MEI. Mr. Lewis
served as Vice President, General Counsel and Corporate Secretary for MTI from
July 1996 until November 1996, at which time he became Vice President of Legal
Affairs, General Counsel and Corporate Secretary. Mr. Lewis holds a BA in
Economics and Asian Studies from Brigham Young University and a JD from Columbia
University School of Law.

Wilbur G. Stover, Jr. joined MTI in June 1989 and has served in various
financial positions with the Company and its subsidiaries, including Vice
President, Finance and Chief Financial Officer of MSI from August 1992 to
September 1994. Since September 1994, Mr. Stover has served as MTI's Chief
Financial Officer and Vice President of Finance. From October 1994 through
September 1996, Mr. Stover served on MTI's Board of Directors. Mr. Stover holds
a BA in Business Administration from Washington State University.

James W. Bagley became the Chairman and Chief Executive Officer of Lam
Research Corporation ("Lam") in August 1997, upon consummation of a merger of
OnTrak Systems, Inc. ("OnTrak") into Lam. From June 1996 to August 1997, Mr.
Bagley served as the Chairman and Chief Executive Officer of OnTrak. Prior to
joining OnTrak, Mr. Bagley was employed by Applied Materials, Inc. for 15 years
in various senior management positions, including Chief Operating Officer and
Vice Chairman of the Board. Mr. Bagley currently is a Director of KLA-Tencor
Corporation, Teradyne, Inc. and Kulicke & Soffe Industries, Inc. He has served
on MTI's Board of Directors since June 1997. Mr. Bagley holds a BS in
Electrical Engineering and MS in Electrical Engineering from Mississippi State
University.

Robert A. Lothrop served as Senior Vice President of the J.R. Simplot Company
from January 1986 until his retirement in January 1991. From August 1986 until
July 1992 and since May 1994, Mr. Lothrop has served on the Board of Directors
of MTI. From July 1992 until November 1994, he served as a Director of MSI.
Mr. Lothrop also serves as a Director of MEI. Mr. Lothrop holds a BS in
Engineering from the University of Idaho.

Thomas T. Nicholson has served as Vice President and a Director of Honda of
Seattle and Toyota of Seattle since 1988. Mr. Nicholson has also served since
1982 as President of Mountain View Equipment Company and since 1962 has been a
partner of CCT Land & Cattle. He has served on MTI's Board of Directors since
May 1980. Mr. Nicholson holds a BS in Agriculture from the University of Idaho.

12/57
<PAGE>

Don J. Simplot served as the President of Simplot Financial Corporation, a
wholly-owned subsidiary of the J.R. Simplot Company, from February 1985 until
January 1992. Since 1955, Mr. Don J. Simplot has served in various capacities
with the J.R. Simplot Company and presently serves as a Corporate Vice
President. Since April 1994, he has also served as a member of the Office of
the Chairman of the J.R. Simplot Company. He has served on MTI's Board of
Directors since February 1982. Mr. Don Simplot is also a Director of
AirSensors, Inc.

Gordon C. Smith has served as President of Wesmar, Inc. since September 1996
and has served as Secretary and Treasurer of SSI Management Corp. since
September 1994. Mr. Smith served in various management positions from July 1980
until January 1992 for Simplot Financial Corporation, a wholly-owned subsidiary
of the J.R. Simplot Company. From May 1988 until his retirement in March 1994,
Mr. Smith served as the President and Chief Executive Officer of the J.R.
Simplot Company. From February 1982 until February 1984 and since September
1990, he has served on MTI's Board of Directors. Mr. Smith holds a bachelor's
degree in Accounting from Idaho State University.

William P. Weber served in various capacities with Texas Instruments
Incorporated and its subsidiaries from 1962 until April 1998. From December
1986 until December 1993 he served as the President of Texas Instrument's
worldwide semiconductor operations and from December 1993 until his retirement
in April 1998, he served as Vice Chairman of Texas Instruments Incorporated. He
is a member of the Board of Directors of Kmart Corporation and Unigraphics
Solutions, Inc. He has served on MTI's Board of Directors since July 1998. Mr.
Weber holds a BS in Engineering from Lamar University and a MS in Engineering
from Southern Methodist University.

There is no family relationship between any director or executive officer of
the Company.

13/57
<PAGE>

Item 2. Properties

Semiconductor operations

The Company's corporate headquarters and principal semiconductor
manufacturing, engineering, administrative and support facilities are located on
an approximately 830 acre site in Boise, Idaho. All facilities have been
constructed since 1981 and are owned by the Company. The Company has
approximately 1.9 million square feet of building space at this primary site.
Of the total, approximately 494,000 square feet is production space, 633,000
square feet is facility support space and 770,000 square feet is office and
other space.

The Company also has a number of additional properties including a 590,000
square foot wafer fabrication facility located on 61 acres in Avezzano, Italy
and a 532,000 square foot assembly and test facility located on 7 acres in
Singapore. The Avezzano facility is comprised of 115,000 square feet of
production space, 251,000 square feet of facility support space and 224,000 of
office and other space. The Singapore assembly and test facility is comprised
of 205,000 square feet of production space, 186,000 square feet of facility
support space and 141,000 square feet of office and other space. Approximately
15,000 square feet out of a total 418,000 square foot wafer fabrication facility
at the Richardson facility is being used for design engineering.

In 1995, the Company initiated construction of an approximate 2 million square
foot semiconductor memory manufacturing facility located on 2,400 acres in Lehi,
Utah. Completion of this facility was suspended in February 1996 as a result of
the decline in average selling prices for semiconductor memory products. As of
September 2, 1999, the Company had incurred construction costs of $707 million
to build the existing structure. Market conditions for semiconductor memory
products will dictate when the Lehi complex is completed.

Equipment with a net book value of approximately $200 million was pledged as
collateral for outstanding debt and capital leases as of September 2, 1999.
Substantially all of the Company's facilities and equipment at the Boise and
Lehi sites not otherwise collateralized for outstanding debt and capital leases
is pledged as collateral for MTI's $400 million credit agreement.

PC Operations

The Company's PC operations are based in a number of MEI-owned or leased
facilities aggregating approximately 625,000 square feet located in Nampa,
Idaho. Approximately 215,000 square feet of the Nampa facilities are dedicated
to PC manufacturing. The balance of the Nampa facilities is dedicated to sales,
technical support, customer service, administrative functions, semiconductor
operations and warehouse space. MEI leases a 81,000 square foot facility in
Minneapolis, Minnesota, dedicated primarily to PC sales, technical support and
administrative functions and a 74,000 square foot facility in Meridian, Idaho,
dedicated to a PC call center.

Item 3. Legal Proceedings

The Company is a party in various legal actions arising out of the normal
course of business. (See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations-Certain Factors.")

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 1999.

14/57
<PAGE>

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Market for Common Stock

MTI'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 closing
sales prices for MTI's common stock for each quarter of 1999 and 1998, as
reported by The Wall Street Journal.

<TABLE>
<CAPTION>
High Low
------- -------
1999:
<S> <C> <C>
4th quarter................. $75.250 $38.063
3rd quarter................. 59.937 34.500
2nd quarter................. 79.500 46.875
1st quarter................. 47.625 25.062
1998:
4th quarter................. $35.250 $20.125
3rd quarter................. 34.938 23.813
2nd quarter................. 38.000 22.000
1st quarter................. 45.312 23.125
</TABLE>

Holders of Record

As of October 29, 1999, there were 4,955 shareholders of record of MTI's
common stock and one shareholder of record of MTI's Class A Common Stock.

Dividends

MTI did not declare or pay any dividends during 1999 or 1998. Future
dividends, if any, will vary depending on MTI's profitability and anticipated
capital requirements.

Item 6. Selected Financial Data
<TABLE>
<CAPTION> 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(Amunts in millions, except for per share data)
<S> <C> <C> <C> <C>
Net sales................................... $3,764.0 $3,025.3 $3,523.2 $3,653.8 $2,952.7
Gross margin................................ 813.6 280.4 974.8 1,455.4 1,624.0
Operating income (loss)..................... (47.0) (516.4) 374.1 940.5 1,307.8
Net income (loss)........................... (68.9) (247.1) 315.0 593.5 844.1
Diluted earnings (loss) per share........... (0.26) (1.15) 1.44 2.78 4.00
Cash dividend declared per share............ -- -- -- 0.15 0.15
Current assets.............................. 2,830.0 1,500.9 1,983.4 964.0 1,274.1
Property, plant and equipment, net.......... 3,799.6 3,035.3 2,763.9 2,708.1 1,385.6
Total assets................................ 6,965.2 4,703.5 4,876.9 3,751.5 2,774.9
Current liabilities......................... 922.0 745.7 753.2 664.5 604.8
Long-term debt.............................. 1,527.5 758.8 762.3 314.6 129.4
Shareholders' equity........................ 3,964.1 2,701.3 2,904.2 2,502.0 1,896.2
</TABLE>

Certain Fiscal 1998 and 1997 amounts have been restated as a result of a
merger with Rendition, Inc. which was accounted for as a business combination
using the pooling-of-interests method.

See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations-Certain Factors."

15/57
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

On September 30, 1998, MTI completed the acquisition of substantially all of
the semiconductor memory operations of Texas Instruments Incorporated ("TI").
As a result of the acquisition, the Company now operates a wafer fabrication
facility in Avezzano, Italy, an assembly and test facility in Singapore and a
design engineering center in Richardson, Texas. MTI also has interests in two
joint venture wafer fabrication facilities located in Singapore and Japan. The
Company's results of operations for fiscal 1999 reflect eleven months results of
operations for the acquired operations.

The following discussion contains trend information and other forward-looking
statements (including, for example, statements regarding future operating
results, future capital expenditures and facility expansion, new product
introductions, technological developments, acquisitions and the effect thereof
and industry trends) that involve a number of risks and uncertainties. The
Company's actual results could differ materially from the Company's historical
results of operations and those discussed in the forward-looking statements.
Factors that could cause actual results to differ materially include, but are
not limited to, those identified in "Certain Factors." This discussion should
be read in conjunction with the Consolidated Financial Statements and
accompanying notes. All period references are to the Company's fiscal periods
ended September 2, 1999, September 3, 1998, or August 28, 1997, unless otherwise
indicated. All per share amounts are presented on a diluted basis unless
otherwise stated. All 1998 and 1997 financial data of the Company has been
restated to include the results of operations of Rendition, Inc., which was
merged with the Company on September 11, 1998.

16/57
<PAGE>

Results of Operations
<TABLE>
<CAPTION>
1999 1998 1997
--------------- ------------------- -----------------
(dollars in millions)
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Semiconductor operations..................... $2,569.7 68% $1,421.2 47% $1,772.4 50%
PC operations................................ 1,239.9 33% 1,497.6 50% 1,529.3 44%
All other.................................... 5.2 0% 167.3 5% 387.8 11%
Intersegment................................. (50.8) (1)% (60.8) (2)% (166.3) (5)%
-------- --- -------- --- -------- ---

Consolidated net sales........................ $3,764.0 100% $3,025.3 100% $3,523.2 100%
======== ======== ========

Operating income (loss):
Semiconductor operations..................... 42.8 (370.6) 311.7
PC operations................................ (32.3) (108.8) 76.2
All other.................................... (58.3) (36.9) (13.8)
Intersegment................................. 0.8 (0.1) 0.0
-------- -------- --------

Consolidated operating income (loss).......... (47.0) (516.4) 374.1

Net income (loss)............................. (68.9) (247.1) 315.0

Earnings (loss) per share..................... (0.26) (1.15) 1.44
</TABLE>

Financial information for "All other" segments of the Company in 1999
primarily reflects the operating results for the Company's flat panel and radio
frequency identification ("RFID") operations. Financial information for "All
other" segments in 1998 and 1997 also reflects operating results for the
Company's former contract manufacturing and construction subsidiaries. Results
of operations for 1999 were adversely affected by $24 million in combined
charges related to the Company's flat panel display and RFID operations. In the
third quarter of 1999, the Company sold certain of its flat panel display assets
to PixTech, Inc. In the fourth quarter of 1999, the Company's majority owned
RFID subsidiary, Micron Communications, Inc., ceased operations. (See "Other
Operating Expense (Income).")

Intersegment sales represent sales between different segments of the Company
and are eliminated to arrive at consolidated net sales. Intersegment sales for
1999 and 1998 are primarily comprised of sales from the Company's semiconductor
operations segment to the Company's PC operations segment. Intersegment sales
for 1998 and 1997 also include intersegment sales generated by the Company's
construction and contract manufacturing subsidiaries, both of which have been
sold. All other net sales for 1998 and 1997 include sales of $145.7 million and
$292.4 million, respectively, from MEI's contract manufacturing subsidiary,
which was sold in February 1998. (See "Notes to Consolidated Financial
Statements - Operating Segment and Geographic Information.")

Net Sales

Consolidated net sales for 1999 increased by 24% compared to 1998, principally
due to an increase in the volume of semiconductor memory sold, partially offset
by an approximate 37% decline in average selling prices of semiconductor memory
products. Consolidated net sales in 1998 decreased by 14% compared to 1997,
principally due to an approximate 60% decline in average selling prices of
semiconductor memory products.

Net sales from the Company's semiconductor operations for 1999 increased by
81% as compared to 1998, due primarily to a 187% increase in total megabits of
semiconductor memory shipped, partially offset by the 37% decline in average
selling prices of semiconductor memory products. This increase in shipments
occurred as a result of increased product availability from continued
improvements in manufacturing efficiencies due to shifts in the Company's mix of
semiconductor memory products to higher average density products, ongoing
transitions to successive reduced die size ("shrink") versions of existing
memory products and, to a lesser extent, additional output from the Company's
acquired international operations and joint ventures.

17/57
<PAGE>

The Company's primary memory product in 1999 was the 64 Meg Synchronous DRAM
("SDRAM"), which comprised approximately 68% of the net sales of semiconductor
memory for the period. The Company's primary memory product in 1998 and 1997
was the 16 Meg DRAM (inclusive of both EDO DRAM and SDRAM), which comprised
approximately 74% and 80%, respectively, of net sales of semiconductor memory.
Average selling prices for the Company's primary product, the 64 Meg SDRAM,
declined by 22% for 1999 as compared to 1998.

Net sales from semiconductor operations for 1998 decreased by 20% compared to
1997, primarily due to an approximate 60% decline in average selling prices of
semiconductor memory products for the year, partially offset by a 110% increase
in total megabits of semiconductor memory shipped. The increase in megabits
shipped was principally a result of shifts in the Company's mix of semiconductor
memory products to a higher average density, transitions to successive shrink
versions of existing products and improved manufacturing yields on existing
products.

Net sales from the Company's PC operations for 1999 were 17% lower compared to
1998 primarily due to a 12% decrease in average selling prices for the Company's
PC systems and to a lesser extent, a 2% decrease in unit sales. The decline in
average selling prices for the Company's desktop, notebook and server system
sales, was 11%, 16% and 15%, respectively. The decline in average selling
prices for the Company's PC systems was primarily a result of continued price
competition in the PC industry. The 2% decrease in unit sales in 1999 is
primarily attributed to a 3% decrease in sales of the Company's desktop computer
systems, which was partially offset by a 30% increase in sales of the Company's
server systems.

Net sales from PC operations for 1998 were flat compared to 1997 primarily due
to a 11% decrease in average selling prices for the Company's PC systems offset
by an increase in unit sales and a higher level of non-system revenue. The
decline in average selling prices was primarily attributable to a 12% decrease
in the selling prices for the Company's desktop PC systems and a 24% decline in
selling prices for notebook systems. Lower prices were largely the result of
industry price competitiveness, particularly for notebook products and to the
Company's efforts to price its products more in line with its competition. Unit
sales were 5% higher in 1998 compared to 1997 due primarily to a 49% increase in
unit sales of the Company's notebook products.

Gross Margin

<TABLE>
<CAPTION>
1999 % Change 1998 % Change 1997
-------- --------- ------- --------- -------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Gross margin....................................... $813.6 190.2% $280.4 (71.2)% $974.8
as a % of net sales................................ 21.6% 9.3% 27.7%
</TABLE>

The increase in the Company's overall gross margin for 1999 as compared to
1998 is primarily attributable to the Company's semiconductor operations and is
principally the result of decreases in per megabit manufacturing costs,
partially offset by a 37% decline in average selling prices. The decrease in
gross margin percentage for 1998 compared to 1997 was principally the result of
lower gross margin percentages on sales of the Company's semiconductor memory
products resulting primarily from a 60% decline in average selling prices.

The gross margin percentage for the Company's semiconductor operations for
1999 was 25%, compared to 6% for 1998. The gross margin increase was due to
comparative decreases in per megabit manufacturing costs which were achieved
primarily through continued improvements in manufacturing efficiencies
principally due to shifts in the Company's mix of semiconductor memory products
to a higher average density and transitions to shrink versions of existing
products. The effect of these factors was partially offset by the 37% overall
decrease in average selling prices for 1999 as compared to 1998 and, to a lesser
extent, the inclusion of eleven months of results for the acquired international
operations which had higher per unit manufacturing costs.

In connection with the acquisition of substantially all of TI's memory
operations in September 1998, subject to certain terms and conditions, MTI has
agreed to purchase all of the production from two joint venture wafer
fabrication facilities, TECH Semiconductor Singapore Pte. Ltd. ("TECH") and
KMT Semiconductor Limited ("KMT"). TECH and KMT are collectively referred to
herein as the "JVs." MTI purchases semiconductor memory products from the JVs
at prices generally determined quarterly and based on a discount from the
Company's average selling prices. MTI is a party to various agreements with
the JVs whereby MTI provides technology, engineering support and training to
the JVs. MTI also performs assembly and test services on product

18/57
<PAGE>

manufactured by the JVs. All transactions with the JVs are recognized as part
of the net cost of products purchased from the JVs. The Company realized
substantially lower gross margins for sales of JV products than for products
manufactured by its wholly-owned facilities in 1999.

The gross margin percentage for the Company's semiconductor operations for
1997 was 39%. The decrease in the gross margin percentage for the Company's
semiconductor operations for 1998 compared to 1997 was primarily the result of
the 60% decline in average selling prices for the year, partially offset by a
decline in per megabit manufacturing costs. Decreases in per megabit
manufacturing costs resulted principally from shifts in the Company's mix of
semiconductor memory products to a higher average density, transitions to
successive shrink versions of existing products and improved manufacturing
yields.

The gross margin percentage for the Company's PC operations was 15% in 1999 as
compared to 12% in 1998. The increase for the PC operations gross margin is
principally due to lower component costs and a change in the sales mix towards
higher margin systems, partially offset by a decline in average selling prices.
The Company continues to experience significant pressure on its gross margins as
a result of intense competition in the PC industry and consumer expectations
of more powerful PC systems at lower prices. In addition, the Company's gross
margin percentage will continue to depend in large part on its ability to
effectively manage its inventories of PC system components.

The gross margin percentage for the Company's PC operations for 1997 was 17%.
The gross margin percentage for PC operations decreased in 1998 compared to 1997
primarily as a result of significantly lower margins realized on sales of the
Company's notebook systems as a result of intense price pressure on these
products during the year and due to losses realized from disposition of PC
component inventories. The Company's gross margin in 1998 was favorably
affected, however, by an adjustment made in the fourth quarter of $12 million
related to revisions of estimates for certain contingencies for product and
process technology costs.

Selling, General and Administrative

<TABLE>
<CAPTION>
1999 % Change 1998 % Change 1997
-------- --------- -------- --------- --------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Selling, general and administrative................ $486.0 2.1% $476.1 24.4% $382.7
as a % of net sales................................ 12.9% 15.7% 10.9%
</TABLE>

Selling, general and administrative expenses were relatively flat in 1999 as
compared to 1998. Selling, general and administrative expenses associated with
the Company's semiconductor operations increased significantly for 1999 as
compared to 1998 and include approximately $43 million in expenses associated
with the international operations acquired from TI. Selling, general and
administrative expenses for the Company's PC operations decreased substantially
for these comparative periods primarily as a result of enhanced operational
efficiencies and cost reductions and the sale of 90% of MEI's interest in its
contract manufacturing subsidiary in 1998. As the Company's semiconductor
operations and PC operations grow, selling, general and administrative expenses
are expected to increase in future periods as a result of increased personnel,
advertising and other costs necessary to support the expanding operations.

Selling, general and administrative expenses were higher in 1998 as compared
to 1997 primarily due to increased expenses associated with the Company's PC
operations. The higher level of selling, general and administrative expenses
for the Company's PC operations was principally due to higher levels of
personnel, advertising and technical and professional fees associated with
information technology consulting services. The higher selling, general and
administrative expenses for 1998 were partially offset by a lower level of
performance based compensation than in 1997.

Research and Development

<TABLE>
<CAPTION>
1999 % Change 1998 % Change 1997
-------- --------- -------- --------- --------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Research and development........................... $322.1 12.5% $286.4 27.9% $223.9
as a % of net sales................................ 8.6% 9.5% 6.4%
</TABLE>

19/57
<PAGE>

Substantially all the Company's research and development efforts relate to its
semiconductor operations. Research and development expenses vary primarily with
personnel costs, the cost of advanced equipment dedicated to new product and
process development and the number of wafers processed. The increase in
research and development expenses in 1999 as compared to 1998 is primarily due
to increased personnel costs. Research and development efforts are focused on
advanced process technology, which is the primary determinant in transitioning
to next generation and future products. Simultaneous research and development
efforts across multiple products prepare the Company for future product
introductions and allow current products to utilize the advanced process
technology to achieve higher performance at lower production costs. Application
of advanced process technology currently is concentrated on design of shrink
versions of the Company's 64 Meg and 128 Meg SDRAMs and on design and
development of the Company's 256 Meg SDRAM and direct Rambus DRAM ("RDRAM"),
Double Data Rate ("DDR") SDRAM, Flash and SRAM memory products. Other research
and development efforts are currently devoted to the design and development of
embedded memory products and PC core logic.

In 1999, the Company substantially completed the transition of its operations
from .25 (u) to .21 (u) process technology. The Company expects the transition
to .18 (u) capability to be substantially complete in late calendar 1999. The
Company anticipates that process technology will move to .15 (u) line widths in
the next few years as needed for the development of future generation
semiconductor products. Transitions to smaller line widths at the Company's
international operations are expected to lag behind transitions at the Boise
site by several months as process technology development and initial
manufacturing are expected to be completed first at the Boise sit e.

Other Operating Expense (Income)

Other operating expense for 1999 includes a $15 million charge from the write
down and disposal of flat panel display assets, a loss of $12 million from the
write down and disposal of semiconductor operations equipment, a $9 million
charge resulting from the discontinuation of the Company's RFID efforts and $6
million in employee stock compensation expense related to the 1999 acquisition
of substantially all of the semiconductor memory operations of TI and the 1998
purchase of the minority interest in the Company's subsidiary, Micron Quantum
Devices, Inc.

Other operating expense for 1998 includes a loss of $14 million from the write
down and disposal of semiconductor manufacturing equipment and charges
associated with the Company's PC operations of $11 million resulting from
employee termination benefits and consolidation of domestic and international
operations and $5 million from the write off of software development costs.

Gain on Sale of Investments and Subsidiary Stock

In February 1998, MEI sold 90% of its interest in its contract manufacturing
subsidiary, Micron Custom Manufacturing Services, Inc. for cash proceeds of $249
million, resulting in a pre-tax gain to the Company of $157 million
(approximately $38 million or $0.18 per share after taxes and minority
interests).

In a public offering in February 1997, MTI sold 12.4 million shares of MEI
common stock for net proceeds of $200 million and MEI sold 3 million newly
issued shares for net proceeds of $48 million, resulting in a consolidated pre-
tax gain of $190 million. The sales reduced the Company's ownership of the
outstanding MEI common stock from approximately 79% to approximately 64%. The
Company also recorded pre-tax gains totaling $22 million for 1997 relating to
sales of investments. Diluted earnings per share for 1997 benefited by $0.50
from these gain transactions.

Income Tax Provision (Benefit)

The effective tax rate for 1999, 1998 and 1997 was 39%, 36% and 43%,
respectively. The effective tax rate primarily reflects the following: (i) the
statutory corporate income tax rate and the net effect of state taxation, (ii)
the effect of taxes on the parent of the earnings or loss of domestic
subsidiaries not consolidated with the Company for federal income tax purposes,
(iii) in 1999, the impact of a $10 million valuation allowance recorded for a
deferred tax asset relating to realizability of certain tax credit carryforwards
and (iv) in 1998, the impact of a $4 million valuation allowance recorded for a
deferred tax asset relating to MEI's consolidation of its NetFRAME enterprise
server operations. The relatively higher effective tax rate in 1997 was
principally due to the provision for

20/57
<PAGE>

income taxes by the Company on earnings of its domestic subsidiaries and the
gain on the sale of MEI common stock by the Company and the issuance of common
stock by MEI in 1997. Taxes on earnings of domestic subsidiaries not
consolidated for tax purposes may cause the effective tax rate to vary
significantly from period to period. In 1999, certain of the Company's foreign
operations were granted favorable tax treatment. The Company expects to
permanently reinvest earnings from these foreign operations and anticipates a
favorable impact on its effective tax rate in future periods as a result.

Recently Issued Accounting Standards

Recently issued accounting standards include Statement of Position ("SOP") 98-
1 "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use," issued by the AICPA in March 1998 and Statement of Financial
Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and
Hedging Activities," issued by the FASB in June 1998.

SOP 98-1 requires companies to capitalize certain costs of computer software
developed or obtained for internal use. The Company, which currently
capitalizes costs of purchased internal-use computer software and expenses costs
of internally developed internal-use software as incurred, is adopting the
standard in the first quarter of fiscal 2000 for developmental costs incurred in
that quarter and thereafter. The adoption is expected to result in an initial
decrease in selling, general and administrative expense due to the
capitalization of certain business system software costs that were not
capitalized under the Company's past practice. Subsequent period expenses are
expected to reflect a higher level of depreciation expense resulting from the
relatively higher carrying value of the Company's capitalized software accounted
for under SOP 98-1.

SFAS No. 133 requires that all derivatives be recorded as either assets or
liabilities in the balance sheet and marked to market on an ongoing basis. SFAS
No. 133 applies to all derivatives including stand-alone instruments, such as
forward currency exchange contracts and interest rate swaps, or embedded
derivatives, such as call options contained in convertible debt investments.
The underlying hedged items are to be marked to market on an ongoing basis along
with the derivatives. These market value adjustments are to be included either
in the statement of operations or as a component of comprehensive income,
depending on the nature of the transaction. Implementation of SFAS No. 133 is
required for the Company by the first quarter of 2001. Given the Company's
current business practices, the implementation of SFAS 133 is not expected to
have a significant impact on the Company's future results of operations or
financial position.

Liquidity and Capital Resources

As of September 2, 1999, the Company had cash and liquid investments totaling
$1.6 billion, representing an increase of $1.0 billion during 1999. In the
first quarter of 1999, the Company received $681 million in conjunction with the
acquisition of substantially all of TI's memory operations and $500 million from
the sale of stock to Intel Corporation. The Company's other principal source of
liquidity during 1999 was net cash flow from operations of $848 million. The
principal uses of funds during 1999 were $804 million for property, plant and
equipment expenditures and $421 million for repayments of equipment contracts
and debt.

The Company believes that in order to develop new product and process
technologies, support future growth, achieve operating efficiencies and maintain
product quality, it must continue to invest in manufacturing technology,
facilities and capital equipment, research and development, and product and
process technology. The Company currently estimates it will spend approximately
$1.1 billion in the next fiscal year for purchases of equipment and for
construction and improvement of buildings. As of September 2, 1999, the Company
had entered into contracts extending into 2003 for approximately $720 million
for equipment purchases and approximately $40 million for the construction of
facilities.

The Company has an aggregate of $500 million in revolving credit agreements,
including a $400 million secured agreement expiring in May 2000 which contains
certain restrictive covenants pertaining to the Company's semiconductor
operations, including a maximum total debt-to-equity ratio. As of September 2,
1999, the Company was in compliance with all covenants under the facilities and
had no borrowings outstanding under the agreements.

21/57
<PAGE>

There can be no assurance that the Company will continue to be able to meet the
terms of the covenants and conditions in the agreements, borrow under the
agreements or negotiate satisfactory successor agreements.

As of September 2, 1999, approximately $340 million of the Company's
consolidated cash and liquid investments were held by MEI. Cash generated by
MEI is not readily available to finance operations or other expenditures of
MTI's semiconductor operations.

Year 2000

Like many other companies, the Year 2000 computer issue creates risks for the
Company. If internal systems do not correctly recognize and process date
information beyond the year 1999, the Company's operations could be adversely
impacted as a result of system failures and business interruption.

The Company began addressing the Year 2000 computer issue in early 1996. To
manage its Year 2000 program, the Company divided its efforts into the primary
program areas of: (i) information technology ("IT"), which includes computer
and network hardware, operating systems, purchased development tools, third-
party and internally developed software, files and databases, end-user extracts
and electronic interfaces, (ii) embedded technology within manufacturing and
facilitation equipment and (iii) external dependencies, which include
relationships with suppliers and customers.

The Company followed four general steps for each of these program areas:
"Ownership," wherein each department manager was assigned ownership for the
various Year 2000 issues to be tested; "Identification" of systems and equipment
and collection of Year 2000 data in a centralized place to track results of
compliance testing and subsequent remediation; "Compliance Testing," which
included the determination of the specific test routine to be performed on the
software or equipment and determination of Year 2000 compliance for the item
being tested and "Remediation," which involves implementation of corrective
action, verification of successful implementation, finalization of and, if need
be, execution of contingency plans.

As of September 2, 1999, the Ownership and Identification steps were complete
for all three program areas: IT, manufacturing and facilitation equipment and
external dependencies. The Company is relying in part on TI computer networks,
information technology services and licensed software with respect to certain of
its international semiconductor operations. In September 1999, the Company
implemented new business systems which have eliminated much of the Company's
dependence on TI systems and the Company is working aggressively to remove any
remaining dependence on TI systems by the end of calendar 1999. However, some
dependency upon TI systems may continue into calendar year 2000 and Year 2000
issues could arise.

Compliance Testing and Remediation efforts for the Company's manufacturing and
facilitation equipment are substantially complete. The Company is working with
suppliers of products and services to determine and monitor their level of
compliance and Compliance Testing. Year 2000 readiness of significant customers
is also being assessed. The Company's evaluation of Year 2000 compliance as it
relates to the Company's external dependencies is substantially complete.

As of September 2, 1999, the Company had incurred aggregate incremental costs
of approximately $5.5 million and estimates it will spend an additional $500,000
to $1 million to address the Year 2000 issue.

With respect to Remediation, the Company has prepared various types of
contingency plans to address potential problem areas with internal systems and
with suppliers and other third parties. Internally, each software and hardware
system has been assigned to on-call personnel who are responsible for bringing
the system back on line in the event of a failure. Externally, the Company's
Year 2000 plans include identification of alternate sources for providers of
goods and services. The Company's internal contingency plans are complete and
its external contingency plans are substantially complete.

All PC hardware products shipped by the Company since August 26, 1996 are Year
2000 compliant.

22/57
<PAGE>

Certain Factors

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

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 semiconductor industry has a history of
declining average sales prices as products mature. Long-term average decreases
in sales prices for semiconductor memory products approximate 30% on an
annualized basis; however, significant fluctuations from this rate have occurred
from time to time, including in recent years.

The selling prices for the Company's semiconductor memory products fluctuate
significantly with real and perceived changes in the balance of supply and
demand for these commodity products. Growth in worldwide supply outpaced growth
in worldwide demand in recent years, resulting in a significant decrease in
average selling prices for the Company's semiconductor memory products. The
semiconductor industry in general and the DRAM market, in particular,
experienced a severe downturn. Average per megabit prices declined approximately
37% comparing 1999 to 1998, following a 60% decline comparing 1998 to 1997 and a
75% decline comparing 1997 to 1996. Although the Company has experienced
improvements in per megabit prices beginning late in the fourth quarter of 1999
and continuing into the first weeks of fiscal 2000, the Company is unable to
predict pricing conditions for future periods. In the event that average selling
prices decline at a faster rate than the rate at which the Company is able to
decrease per unit manufacturing costs, the Company's operations, cash flows and
financial condition would be adversely affected.

The Company and its competitors are seeking improved yields, smaller die size
and fewer mask levels in their product designs. These improvements could result
in a significant increase in worldwide capacity leading to further downward
pressures on prices. The increase in worldwide semiconductor memory production
resulting from the Company's full utilization of its international wafer
fabrication operations and the transfer of its product and process technology to
these operations may result in further downward pricing pressure on
semiconductor memory products. In addition, consolidation by competitors in the
semiconductor memory industry could provide competitors with greater capital
resources and create the potential for greater worldwide investment in
semiconductor memory capacity, which could exert further downward pressure on
prices. Many of the Company's Asian semiconductor memory competitors have been
impacted by deteriorating economic conditions in Asia, resulting in decreased
capital investment by Asian DRAM manufacturers. Increased sources of capital in
Asia to finance technology advancements and expansion projects could result in a
significant increase in worldwide supply leading to further downward pricing
pressure.

The PC market continues to consume the majority of the Company's semiconductor
production. In 1999, approximately 81% of the Company's sales of semiconductor
memory products were into the PC or peripheral markets. DRAMs are the most
widely used semiconductor memory component in most PC systems. Should the rate
of growth for PC industry units decrease or the rate of growth in the amount of
memory per PC system decrease, the growth rate for sales of semiconductor memory
could also decrease, placing further downward pressure on selling prices for the
Company's semiconductor memory products. While the economic impact has not yet
been fully determined, the recent earthquake disaster in Taiwan could disrupt
the supply of PC components, thereby slowing production in the PC industry and
possibly slowing near-term demand for memory. The Company is unable to predict
changes in industry supply, major customer marketing or inventory management
strategies or end user demand, which are significant factors that influence
prices for the Company's semiconductor memory products.

Over the past several years, the Company's productivity gains have continued
to increase its semiconductor memory output. In recent periods, the Company has
sold this additional semiconductor memory output by increasing its market share
with several of the Company's larger OEM customers and through sales to a
broader customer base including accounts of lesser size and potentially lesser
financial stability. In the event the Company is unable to further increase its
market share with OEM customers, broaden its customer base, or if the Company

23/57
<PAGE>

experiences reductions in the level of OEM orders, the Company's results of
operations and cash flows could be adversely affected.

The Company's semiconductor operations experience intense competition from a
number of companies, including Hyundai Electronics Industries Co., Ltd.,
Infineon Ltd., NEC Corporation and Samsung Semiconductor, Inc. Some of the
Company's competitors may have long-term advantages in research and development
and in their ability to withstand current or future downturns in the
semiconductor memory market.

The semiconductor memory industry is characterized by frequent product
introductions and enhancements. The Company's ability to reduce per unit
manufacturing costs of its semiconductor memory products is largely dependent on
its ability to design and develop new generation products and shrink versions of
existing products and its ability to ramp such products at acceptable rates to
acceptable yields, of which there can be no assurance. As the semiconductor
industry transitions to higher bandwidth products including DDR SDRAM and RDRAM,
the Company may encounter difficulties in achieving the semiconductor
manufacturing efficiencies that it has historically achieved. The Company's
productivity levels, die per wafer yields and in particular, backend assembly
and test equipment requirements are expected to be affected by a transition to
higher bandwidth products, likely resulting in higher per megabit production
costs. There can be no assurance that the Company will successfully transition
to these products or that it will be able to achieve its historical rate of cost
per megabit reductions.

The Company is engaged in ongoing efforts to enhance its production processes
to reduce per unit costs by reducing the die size of existing products. The
result of such efforts has generally led to significant increases in megabit
production. There can be no assurance that the Company will be able to maintain
or approximate the rate of increase in megabit production at a level approaching
that experienced in recent years or that the Company will not experience
decreases in manufacturing yield or production as it attempts to implement
future technologies. Further, from time to time, the Company experiences
volatility in its manufacturing yields, as it is not unusual to encounter
difficulties in ramping latest shrink versions of existing devices or new
generation devices to commercial volumes.

MTI expects to complete the transfer of its .18 (u) product and process
technology capability to the JVs in late calendar 1999. Subject to certain terms
and conditions, MTI has agreed to purchase all of the JV production.
Historically, the JVs have required external financing to fund operations and to
transition to the latest generation technologies in a timely or efficient
manner. The JVs are also dependent on certain key personnel and on a limited
number of sources for certain raw materials. In the event either of the JVs are
unable to secure required external financing, experience a loss of key
personnel, or incur significant interruption in the delivery of raw materials,
the Company would experience a reduction in supply of product from the JVs. Any
reduction of supply could adversely affect the Company's results of operations
and cash flows.

The Company's operating results are significantly impacted by the operating
results of MEI. MEI's past operating results have been, and its future
operating results may be, subject to seasonality and other fluctuations, on a
quarterly and an annual basis, as a result of a wide variety of factors,
including, but not limited to, industry competition, MEI's ability to accurately
forecast demand and selling prices for its PC products, declining PC prices,
seasonal government purchasing cycles, inventory obsolescence, MEI's ability to
effectively manage inventory levels, changes in product mix, manufacturing and
production constraints, fluctuating component costs, the effects of product
reviews and industry awards, critical component availability, seasonal cycles
common in the PC industry, the timing of new product introductions by MEI and
its competitors and global market and economic conditions.

24/57
<PAGE>

recognition and market share, offer broader product lines and have substantially
greater financial, technical, marketing and other resources than the Company.
The Company's PC competitors may also benefit from component volume purchasing
and product and process technology license arrangements that are more favorable
in terms of pricing and availability than the Company's arrangements. In
addition, the Company may be at a relative cost disadvantage to certain of its
competitors as a result of the Company's U.S. dollar denominated purchases of PC
components during a period of relative weakening of the U.S. dollar. The
failure of the Company to compete effectively in the PC marketplace could have a
material adverse effect on the Company's business, financial position, results
of operations and cash flows.

The Company's PC operations compete with a number of PC manufacturers, which
sell their products primarily through direct channels, including Dell Computer
Corporation and Gateway 2000, Inc. The Company also competes with PC
manufacturers, such as Apple Computer, Inc., Compaq Computer Corporation,
Hewlett-Packard Company, International Business Machines Corporation, NEC
Corporation and Toshiba Corporation among others. Several of these
manufacturers, which have traditionally sold their products through national and
regional distributors, dealers and value added resellers, retail stores and
direct sales forces, now sell their products through the direct channel. In
addition, the Company expects to face increased competition in the U.S. direct
sales market from foreign PC suppliers and from foreign and domestic suppliers
of PC products that decide to implement, or devote additional resources to, a
direct sales strategy. In order to gain an increased share of the United States
PC direct sales market, these competitors may effect a pricing strategy that is
more aggressive than the current pricing in the direct sales market or may have
pricing strategies influenced by relative fluctuations in the U.S. dollar
compared to other currencies. The Company continues to experience significant
pressure on its PC operating results as a result of intense competition in the
PC industry and consumer expectations of more powerful PC systems at lower
prices.

In the fourth quarter of 1999, MEI acquired 100% of the outstanding stock of
NetLimited, Inc., d.b.a. HostPro ("HostPro"), a web and applications provider.
MEI also acquired the property and equipment of Micron Internet Services
("MIS"), formerly a division of MTI, a provider of dedicated dial-up and
broadband internet access, virtual private network solutions and e-commerce
services. Subsequent to the Company's year end, the Company's PC operations
announced the introduction of a "Subscription Computing" initiative, under which
the Company anticipates making substantial additional strategic investments to
build its e-services infrastructure and deliver customized computing solutions
to customers. The acquisitions of HostPro and MIS, as well as the introduction
of the Subscription Computing initiative, increase the complexity of the
Company's PC operations. This increased complexity has resulted in new and
increased responsibilities on management and there can be no assurance that
management and other resources will be adequate to support the operations of the
Company's PC operations. In addition, the Company's initiatives in the area of
Subscription Computing and provision of e-services face severe competition. A
significant number of enterprises have targeted the e-commerce opportunity and
it is too early to determine what capabilities the marketplace will dictate as
critical for success. A large number of companies, including Verio and
Concentric, offer e-services similar to those provided by the Company. Further,
a large number of diversified companies, such as Intel, IBM and AT&T, have
indicated an intent to compete in e-services markets. Many companies competing
for leadership in the e-services marketplace already have capabilities and
strategic relationships that may prove critical for success in the e-services
and Subscription Computing marketplace. There can be no assurance that the
Company's PC operations will either effectively compete against companies with
greater capital resources, capabilities or strategic relationships or that the
Company's PC operations will realize the anticipated benefits of the
acquisitions of HostPro and MIS, including the retention of key personnel, or
that the market will receive positively the Subscription Computing initiative.
Any failure of the Company's PC operations to realize the anticipated benefits
of the acquisitions or failure of the market to receive positively the
Subscription Computing initiative could have a material adverse effect on the
Company's business, results of operations and financial condition.

The semiconductor and PC industries have experienced a substantial amount of
litigation regarding patent and other intellectual property rights. In the
future, litigation may be necessary to enforce patents issued to the Company, to
protect trade secrets or know-how owned by the Company, or to defend the Company
against claimed infringement of the rights of others. The Company has from time
to time received, and may in the future receive, communications alleging that
its products or its processes may infringe product or process technology rights
held by others. The Company has entered into a number of patent and
intellectual property license agreements with third parties from time to time,
some of which may require one-time or periodic royalty payments. It may be
necessary or advantageous in the future for the Company to obtain additional
patent licenses or to renew existing license agreements. The Company is unable
to predict whether these license agreements can be obtained or renewed on terms
acceptable to the Company. Adverse determinations that the Company's
manufacturing processes or products have infringed on the product or process
rights held by others could subject the Company to significant liabilities to

25/57
<PAGE>

third parties or require material changes in production processes or products,
any of which could have a material adverse effect on the Company's business,
results of operations and financial condition.

The Company is dependent upon a limited number of key management and technical
personnel. In addition, the Company's future success will depend in part upon
its ability to attract and retain highly qualified personnel, particularly as
the Company engages in worldwide operations and adds different product types to
its product line, which will require parallel design efforts and significantly
increase the need for highly skilled technical personnel. The Company competes
for such personnel with other companies, academic institutions, government
entities and other organizations. The Company has experienced, and expects to
continue to experience, increased recruitment of its existing personnel by other
employers. There can be no assurance that the Company will be successful in
hiring or retaining qualified personnel. Any loss of key personnel or the
inability to hire or retain qualified personnel could have a material adverse
effect on the Company's business and results of operations.

International sales comprised approximately 29%, 20% and 20% of the Company's
consolidated net sales in 1999, 1998 and 1997, respectively. The Company
expects international sales to continue to increase as a result of the acquired
operations. International sales and operations are subject to a variety of
risks, including those arising from currency fluctuations, export duties,
changes to import and export regulations, possible restrictions on the transfer
of funds, employee turnover, labor unrest, longer payment cycles, greater
difficulty in collecting accounts receivable, the burdens and costs of
compliance with a variety of international laws and, in certain parts of the
world, political and economic instability. While to date these factors have not
had a significant adverse impact on the Company's results of operations, there
can be no assurance that there will not be such an impact in the future.

Historically, the Company has reinvested substantially all cash flow from its
semiconductor operations in capacity expansion and enhancement programs. The
Company's cash flow from operations depends primarily on average selling prices
and per unit manufacturing costs of the Company's semiconductor memory products.
If for any extended period of time average selling prices decline faster than
the rate at which the Company is able to decrease per unit manufacturing costs,
the Company may not be able to generate sufficient cash flows from operations to
sustain operations. Cash generated by MEI is not readily available to finance
operations or other expenditures of MTI's semiconductor operations. The Company
has an aggregate of $500 million in revolving credit agreements, $100 million of
which is available to PC operations and $400 million of which is available to
semiconductor operations. The $400 million facility expires in May 2000 and the
$100 million facility expires in June 2001. There can be no assurance that
either or both of the facilities will be renewed. Each of the respective
facilities contains certain financial and other restrictive covenants pertaining
to the Company's operations. There can be no assurance that the Company will
continue to be able to meet the terms of the covenants or be able to borrow the
full amount of the credit facilities. There can be no assurance that, if
needed, external sources of liquidity will be available to fund the Company's
operations or its capacity and product and process technology enhancement
programs. Failure to obtain financing could hinder the Company's ability to
make continued investments in such programs, which could materially adversely
affect the Company's business, results of operations and financial condition.

As of September 2, 1999, TI and Intel held an aggregate of 44,743,369 shares
of common stock, representing 17% of the Company's total outstanding common
stock. These shares have not been registered with the Securities and Exchange
Commission ("SEC"), however TI and Intel each have registration rights. Until
such time as TI and Intel substantially reduce their holdings of Company common
stock, the Company may be hindered in obtaining new equity capital. As of
September 2, 1999, the Company also had outstanding $500 million of convertible
subordinated notes that were issued in an SEC registered offering in June 1997
that are convertible into 7,413,997 shares of common stock. TI holds notes with
a face value of $740 million which are convertible into 12,333,333 shares of
common stock. TI's resale of these notes could limit the Company's ability to
raise capital through the issuance of additional convertible debt instruments.

In accordance with a transition services agreement, the Company continues to
rely in part on TI computer networks and information technology services with
respect to certain of the acquired international operations. In September 1999,
the Company implemented new business systems which have eliminated much of the
Company's dependence on TI systems and the Company is working aggressively to
remove any remaining dependence on TI systems by the end of calendar 1999.
However, some dependency upon TI systems may continue into calendar year 2000,
during which period Year 2000 issues could arise.

26/57
<PAGE>

Completion of the Company's semiconductor manufacturing facility in Lehi,
Utah, was suspended in February 1996, as a result of the decline in average
selling prices for semiconductor memory products. As of September 2, 1999, the
Company had invested approximately $700 million in the Lehi facility. Timing of
completion of the remainder of the Lehi production facilities is dependent upon
market conditions. Market conditions which the Company expects to evaluate
include, but are not limited to, worldwide market supply and demand of
semiconductor products and the Company's operations, cash flows and alternative
uses of capital. There can be no assurance that the Company will be able to
fund the completion of the Lehi manufacturing facility. The failure by the
Company to complete the facility would likely result in the Company being
required to write off all or a portion of the facility's cost, which could have
a material adverse effect on the Company's business and results of operations.
In addition, in the event that market conditions improve, there can be no
assurance that the Company can commence manufacturing at the Lehi facility in a
timely, cost effective manner that enables it to take advantage of the improved
market conditions.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Substantially all of the Company's liquid investments and long-term debt are
at fixed interest rates; therefore, the fair value of these instruments is
affected by changes in market interest rates. However, substantially all of the
Company's liquid investments mature within one year. As a result, the Company
believes that the market risk arising from its holdings of financial instruments
is minimal. The Company's results of operations and financial position for 1999
reflect a higher volume of foreign currency transactions and account balances
than in previous periods related to the acquired international operations. As of
September 2, 1999, the Company held aggregate cash and receivables in foreign
currency valued at approximately US $58 million and aggregate foreign currency
payables valued at approximately US $129 million (including long-term
liabilities denominated in Italian Lira valued at approximately US $18 million).
Foreign currency receivables and payables are comprised primarily of Italian
Lira, Singapore Dollars and Japanese Yen.

27/57
<PAGE>

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
Page
--------
<S> <C>
Consolidated Financial Statements as of September 2, 1999, and September 3, 1998, and for fiscal
years ended September 2, 1999, September 3, 1998, and August 28, 1997:

Consolidated Statements of Operations................................................................ 29

Consolidated Balance Sheets.......................................................................... 30

Consolidated Statements of Shareholders' Equity...................................................... 31

Consolidated Statements of Cash Flows................................................................ 32

Consolidated Statements of Comprehensive Income (Loss)............................................... 33

Notes to Consolidated Financial Statements........................................................... 34

Report of Independent Accountants.................................................................... 51

Financial Statement Schedule:

Schedule II - Valuation and Qualifying Accounts for the Fiscal Years Ended September 2, 1999,
September 3, 1998, and August 28, 1997.............................................................. 57
</TABLE>

28/57
<PAGE>

MICRON TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in millions, except for earnings per share data)

<TABLE>
<CAPTION>
Fiscal year ended
-------------------------------------------
September 2, September 3, August 28,
1999 1998 1997
------------ ------------ ----------
<S> <C> <C> <C>
Net sales................................................ $3,764.0 $3,025.3 $3,523.2
Costs and expenses:
Cost of goods sold.................................... 2,950.4 2,744.9 2,548.4
Selling, general and administrative................... 486.0 476.1 382.7
Research and development.............................. 322.1 286.4 223.9
Other operating expense (income), net................. 52.5 34.3 (5.9)
-------- -------- --------
Total costs and expenses............................ 3,811.0 3,541.7 3,149.1
-------- -------- --------

Operating income (loss).................................. (47.0) (516.4) 374.1
Gain (loss) on sale of investments and subsidiary stock, (0.1) 157.0 186.7
net.....................................................
Gain on issuance of subsidiary stock, net................ 2.1 1.3 29.1
Interest income.......................................... 83.6 49.7 32.9
Interest expense......................................... (130.1) (50.5) (32.4)
-------- -------- --------
Income (loss) before income taxes and minority
interests............................................... (91.5) (358.9) 590.4

Income tax benefit (provision)........................... 36.0 129.1 (255.8)
Minority interests in net income......................... (13.4) (17.3) (19.6)
-------- -------- --------
Net income (loss)........................................ $ (68.9) $ (247.1) $ 315.0
======== ======== ========

Earnings (loss) per share:
Basic................................................. $ (0.26) $ (1.15) $ 1.49
Diluted............................................... (0.26) (1.15) 1.44
Number of shares used in per share calculation:
Basic................................................. 260.7 215.6 211.9
Diluted............................................... 260.7 215.6 219.3
</TABLE>

Certain Fiscal 1998 and 1997 amounts have been restated as a result of a
pooling-of-interests merger.
See accompanying notes to consolidated financial statements.

29/57
<PAGE>

MICRON TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except for par value data)

<TABLE>
<CAPTION>
As of
-------------------------------------
September 2, September 3,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS

Cash and equivalents.................................................. $ 294.6 $ 558.8
Liquid investments.................................................... 1,318.9 90.8
Receivables........................................................... 692.6 489.5
Inventories........................................................... 365.7 291.6
Prepaid expenses...................................................... 38.3 8.5
Deferred income taxes................................................. 119.9 61.7
-------- --------
Total current assets................................................ 2,830.0 1,500.9
Product and process technology, net................................... 212.6 84.9
Property, plant and equipment, net.................................... 3,799.6 3,035.3
Other assets.......................................................... 123.0 82.4
-------- --------
Total assets..................................................... $6,965.2 $4,703.5
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable and accrued expenses................................. $ 705.4 $ 460.7
Short-term debt....................................................... -- 10.1
Deferred income....................................................... 23.4 7.5
Equipment purchase contracts.......................................... 81.5 168.8
Current portion of long-term debt..................................... 111.7 98.6
-------- --------
Total current liabilities........................................... 922.0 745.7
Long-term debt........................................................ 1,527.5 758.8
Deferred income taxes................................................. 309.1 284.2
Other liabilities..................................................... 74.2 61.4
-------- --------
Total liabilities................................................ 2,832.8 1,850.1
-------- --------

Minority interests.................................................... 168.3 152.1

Commitments and contingencies

Common stock, $0.10 par value, authorized 1.0 billion shares, issued
and outstanding 252.2 million and 217.1 million shares, respectively. 25.2 21.7
Class A Common Stock, $0.10 par value, authorized 32 million shares,
issued and outstanding 15.8 million shares........................... 1.6 --
Additional capital.................................................... 1,894.0 565.4
Retained earnings..................................................... 2,045.4 2,114.3
Accumulated other comprehensive loss.................................. (2.1) (0.1)
-------- --------
Total shareholders' equity.......................................... 3,964.1 2,701.3
-------- --------
Total liabilities and shareholders' equity....................... $6,965.2 $4,703.5
======== ========
</TABLE>

Certain Fiscal 1998 and 1997 amounts have been restated as a result of a
pooling-of-interests merger.
See accompanying notes to consolidated financial statements.

30/57
<PAGE>

MICRON TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars and shares in millions)

<TABLE>
<CAPTION>
Fiscal year ended
---------------------------------------------------------------------------
September 2, 1999 September 3, 1998 August 28, 1997
----------------------- ----------------------- -----------------------
Shares Amount Shares Amount Shares Amount
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Common stock
Balance at beginning of year........ 217.1 $ 21.7 214.5 $ 21.4 210.6 $ 21.1
Stock issued under stock plans...... 6.2 0.6 1.6 0.2 2.5 0.2
Stock issued in conjunction with
mergers and acquisitions........... 28.9 2.9 1.0 0.1 1.4 0.1
----- -------- ----- -------- ----- --------
Balance at end of year.............. 252.2 $ 25.2 217.1 21.7 214.5 $ 21.4
===== ======== ======= ======== ===== ========

Class A Common Stock
Balance at beginning of year........ -- $ -- -- -- -- $ --
Stock issued to Intel............... 15.8 1.6 -- -- -- --
----- -------- ------- -------- ----- --------
Balance at end of year.............. 15.8 $ 1.6 -- -- -- $ --
===== ======== ======= ======== ===== ========

Additional capital
Balance at beginning of year........ $ 565.4 $ 521.9 $ 450.4
Stock issued to Intel............... 498.4 -- --
Stock issued in conjunction with
mergers and acquisitions........... 653.5 17.8 22.4

Stock issued under stock plans...... 121.8 20.5 34.6
Tax effect of stock purchase plans.. 54.9 5.2 14.5
-------- -------- --------
Balance at end of year.............. $1,894.0 $ 565.4 $ 521.9
======== ======== ========

Retained earnings
Balance at beginning of year........ $2,114.3 $2,361.4 $2,046.4
Net income (loss)................... (68.9) (247.1) 315.0
-------- -------- --------
Balance at end of year.............. $2,045.4 $2,114.3 $2,361.4
======== ======== ========

Accumulated other comprehensive
income (loss)
Balance at beginning of year........ $ (0.1) $ (0.5) $ --
Foreign currency translation........ -- 0.4 (0.5)
Unrealized loss on investments...... (2.0) -- --
-------- -------- --------
Balance at end of year.............. $ (2.1) $ (0.1) $ (0.5)
======== ======== ========
</TABLE>

Certain Fiscal 1998 and 1997 amounts have been restated as a result of a
pooling-of-interests merger.
See accompanying notes to consolidated financial statements.

31/57
<PAGE>

MICRON TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
<TABLE>
<CAPTION>
Fiscal year ended
-------------------------------------------
September 2, September 3, August 28,
1999 1998 1997
------------ ------------ ----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss)........................................................... $ (68.9) $ (247.1) $ 315.0
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization.............................................. 843.3 606.6 476.3
Gain on sale and issuance of investments and subsidiary stock, net......... (2.1) (157.0) (186.6)
Additional paid in capital tax effect from stock purchase plans............ 54.9 5.2 14.5
Change in assets and liabilities, net of effects of acquisition and sale of
MCMS in 1998:
Increase in receivables.................................................. (98.9) (73.8) (97.7)
Decrease (increase) in inventories....................................... (42.8) 140.0 (194.2)
Increase (decrease) in accounts payable and accrued expenses,
net of plant and equipment purchases................................... 142.4 (86.1) 143.7
Other...................................................................... 20.0 (22.4) 105.3
--------- -------- --------
Net cash provided by operating activities................................... 847.9 165.4 576.3

Cash flows from investing activities
Expenditures for property, plant and equipment.............................. (803.9) (707.1) (516.9)
Purchase of available-for-sale securities................................... (2,683.4) (601.1) (436.7)
Purchase of held-to-maturity securities..................................... (205.3) (52.5) (10.1)
Proceeds from maturities of available-for-sale securities................... 1,437.5 892.5 80.6
Proceeds from sales of available-for-sale securities........................ 154.1 23.6 33.2
Proceeds from maturities of held-to-maturity securities..................... 98.4 34.0 --
Proceeds from sale of subsidiary stock, net of MCMS cash.................... -- 235.9 199.9
Proceeds from sale of equipment............................................. 41.2 33.4 15.5
Other....................................................................... (66.6) (24.8) (55.8)
--------- -------- --------
Net cash used for investing activities...................................... (2,028.0) (166.1) (690.3)

Cash flows from financing activities
Cash received in conjunction with acquisition............................... 681.1 -- --
Proceeds from issuance of common stock...................................... 617.2 20.6 34.8
Proceeds from issuance of debt.............................................. 34.0 102.9 587.8
Net repayments of borrowings on lines of credit............................. (11.1) -- (90.0)
Payments on equipment purchase contracts.................................... (302.9) (63.5) (53.9)
Repayments of debt.......................................................... (106.7) (125.7) (101.1)
Proceeds from issuance of stock by subsidiaries............................. 4.7 3.4 55.4
Other....................................................................... (0.4) 0.3 26.4
--------- -------- --------
Net cash provided by (used for) financing activities........................ 915.9 (62.0) 459.4
--------- -------- --------
Net increase (decrease) in cash and equivalents............................. (264.2) (62.7) 345.4
Cash and equivalents at beginning of year................................... 558.8 621.5 276.1
--------- -------- --------

Cash and equivalents at end of year......................................... $ 294.6 $ 558.8 $ 621.5
========= ======== ========

Supplemental disclosures:
Income taxes refunded (paid), net........................................... $ 185.6 $ (21.7) $ (122.9)
Interest paid, net of amounts capitalized................................... (90.2) (59.9) (27.9)
Noncash investing and financing activities:
Equipment acquisitions on contracts payable and capital leases............. 219.3 212.6 41.5
Cash received in conjunction with acquisition:
Fair value of assets acquired.............................................. $ 949.3 $ -- $ --
Liabilities assumed........................................................ (138.0) -- --
Debt issued................................................................ (836.0) -- --
Stock issued............................................................... (656.4) -- --
--------- -------- --------
$ (681.1) $ -- $ --
========= ======== ========
</TABLE>
Certain Fiscal 1998 and 1997 amounts have been restated as a result of a
pooling-of-interests merger.
See accompanying notes to consolidated financial statements.

32/57
<PAGE>

MICRON TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in millions)

<TABLE>
<CAPTION>
Fiscal year ended
------------------------------------------
September 2, September 3, August 28,
1999 1998 1997
------------ ------------ ----------
<S> <C> <C> <C>
Net income (loss)............................. $ (68.9) $ (247.1) $ 315.0
Foreign currency translation adjustment....... -- (0.4) (0.5)
Unrealized loss in investments................ (2.0) -- --
-------- -------- -------
Total comprehensive income (loss)............ $ (70.9) $ (246.7) $ 314.5
======== ======== =======
</TABLE>

Certain Fiscal 1998 and 1997 amounts have been restated as a result of a
pooling-of-interests merger.
See accompanying notes to consolidated financial statements.

33/57
<PAGE>

MICRON TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tabular dollars in millions except for per share data)

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 designs, develops, manufactures and markets
semiconductor memory products, primarily DRAM, principally for use in personal
computers ("PCs"). Through Micron Electronics, Inc. ("MEI"), the Company offers
PC systems, notebooks and servers. MEI is a 63% owned subsidiary of the
Company. Micron Technology, Inc. and its wholly-owned subsidiaries are
hereinafter referred to collectively as "MTI." All significant intercompany
accounts and transactions have been eliminated. The Company's fiscal year is
the 52 or 53 week period ending on the Thursday closest to August 31. The
fiscal years ended September 2, 1999, and August 28, 1997, contained 52 weeks
compared to 53 weeks in fiscal year ended September 3, 1998.

Certain concentrations and estimates: Approximately 81% of the Company's
sales of semiconductor memory products are to the PC or peripheral markets.
Certain components used by the Company in manufacturing of PC systems are
purchased from a limited number of suppliers.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

Revenue recognition: Revenue from product sales to direct customers is
recognized when title transfers to the customer, primarily 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 PC operations revenue from web services, service and support
contracts and sales of third party services contracts. Revenue from web
services is recognized as the services are performed. Revenue from service and
support contracts for which the Company is primarily obligated is recognized
over the term of the contract. Revenue from sales of third party service
contracts for which the Company is not obligated is recognized at the time of
sale.

Earnings (loss) per share: Basic earnings per share is calculated using the
average number of shares of common stock outstanding during the year. Diluted
earnings per share is computed on the basis of the average number of common
shares outstanding plus the effect of outstanding stock options using the
"treasury stock method" and convertible debentures using the "if-converted"
method. Common stock equivalents consist of stock options. Diluted earnings per
share further assumes the conversion of the Company's convertible subordinated
notes for the period they were outstanding, unless such assumed conversion would
result in anti-dilution.

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 of the Company's
long-term debt as of September 2, 1999, and September 3, 1998, approximated
$1,636.8 million and $790.4 million, respectively. The fair value estimates
presented herein were based on market interest rates and other market
information available to management as of each balance sheet date presented.
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 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 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. A concentration of credit risk may exist with respect to trade
receivables, as a substantial portion of the Company's customers are affiliated
with the computer, telecommunications and office automation industries. The
Company performs ongoing credit evaluations of customers worldwide and generally
does not require collateral from its customers. Historically, the Company has
not experienced significant losses on receivables.

34/57
<PAGE>

Inventories: Inventories are stated at the lower of average cost or market.
Cost includes 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 20 years for
equipment. When property or equipment is retired or otherwise disposed of, the
net book value of the asset is removed from the Company's books and the net gain
or loss is included in the determination of income.

The Company capitalizes interest on borrowings during the active construction
period of major capital projects. Capitalized interest is added to the cost of
the underlying assets and is amortized over the useful lives of the assets. For
1999, 1998 and 1997, the Company capitalized $2.2 million, $15.5 million and
$6.0 million of interest, respectively, in connection with various capital
expansion projects.

The Company reviews the carrying value of property, plant and equipment for
impairment whenever events and circumstances indicate that the carrying value of
an asset may not be recoverable from the estimated future cash flows expected to
result from its use and eventual disposition. In cases where undiscounted
expected future cash flows are less than the carrying value, an impairment loss
is recognized equal to an amount by which the carrying value exceeds the fair
value of assets.

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 straight-line method
over the shorter of the estimated useful life of the technology, the patent term
or the agreement, ranging up to 10 years. The Company has license agreements
that allow it to manufacture and sell semiconductor memory devices, PC hardware
and software.

Subsidiary stock sales: Gains and losses on issuance of stock by a subsidiary
are recognized in the Company's results of operations.

Advertising: Advertising costs are charged to operations as incurred.
Advertising costs expensed in 1999, 1998 and 1997 were $41.3 million, $70.8
million and $35.7 million, respectively.

Recently issued accounting standards: In March 1998, the AICPA issued
Statement of Position ("SOP") 98-1 "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 requires companies
to capitalize certain costs of computer software developed or obtained for
internal use. The Company, which currently capitalizes costs of purchased
internal-use computer software and expenses costs of internally developed
internal-use software as incurred, is adopting the standard in the first quarter
of 2000 for developmental costs incurred in that quarter and thereafter. The
adoption is expected to result in an initial decrease in selling, general and
administrative expense due to the capitalization of certain business system
software costs that are not being capitalized under the Company's current
practice. Subsequent period expenses are expected to reflect a higher level of
depreciation expense resulting from the relatively higher carrying value of the
Company's capitalized software accounted for under SOP 98-1.

In June 1998, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 133 requires that all derivatives be recorded as either assets or
liabilities in the balance sheet and marked to market on an ongoing basis. SFAS
No. 133 applies to all derivatives including stand-alone instruments, such as
forward currency exchange contracts and interest rate swaps, or embedded
derivatives, such as call options contained in convertible debt investments.
Along with the derivatives, the underlying hedged items are also to be marked to
market on an ongoing basis. These market value adjustments are to be included
either in the statement of operations or as a component of comprehensive income,
depending on the nature of the transaction. Implementation of SFAS No. 133 is
required for the Company by the first quarter of 2001. Given the Company's
current business practice, the implementation of SFAS 133 is not expected to
have a significant impact on the Company's future results of operations or
financial position.

Foreign currency: The U.S. dollar is the Company's functional currency for
substantially all of its operations. For international operations where the
local currency is the functional currency, assets and liabilities are translated
into U.S. dollars at exchange rates in effect at the balance sheet date and
income and expense items are translated at the average exchange rates prevailing
during the period.

35/57
<PAGE>

Restatements and reclassifications: The Company has restated the consolidated
financial statements for fiscal years 1998 and 1997 as a result of the merger
with Rendition, Inc. ("Rendition") which was accounted for as a business
combination using the pooling-of-interests method. Certain other
reclassifications have been made, none of which affected the results of
operations, to present the financial statements on a consistent basis.
<TABLE>
<CAPTION>

Supplemental Balance Sheet Information 9/2/99 9/3/98
- -----------------------------------------------------------------------------
<S> <C> <C>

Liquid Investments
- -----------------------------------------------------------------------------

Available-for-sale securities:
Commercial paper.............................. $ 636.0 $ 228.4
U.S. Government agency........................ 279.7 25.9
Bankers' acceptances.......................... 13.0 --
Certificates of deposit....................... 220.7 --
Corporate notes............................... 35.0 --
-------- --------
1,184.4 254.3
Held-to-maturity securities:
Commercial paper.............................. 115.6 70.4
State and local governments................... 80.8 37.4
U.S. Government agency........................ 109.8 205.0
-------- --------
306.2 312.8
-------- --------
Total investments................................ 1,490.6 567.1
Less cash equivalents............................ (171.7) (476.3)
-------- --------
$1,318.9 $ 90.8
======== ========
</TABLE>

Management determines the appropriate classification of its investments in
marketable securities at the time of purchase and reevaluates such determination
at each balance sheet date. Securities classified as available-for-sale are
stated at current market value. Securities classified as held-to-maturity are
stated at amortized cost. As of September 2, 1999, the total amount of
securities mature within one year.

Receivables
- -----------------------------------------------------------------------------
<S> <C> <C>
Trade receivables................................ $ 542.4 $ 294.4
Income taxes receivable.......................... 100.8 191.9
Allowance for returns and discounts.............. (38.2) (11.9)
Allowance for doubtful accounts.................. (9.8) (6.5)
Other receivables................................ 97.4 21.6
------- --------
$ 692.6 $ 489.5
======= ========
<CAPTION>

Inventories
- -----------------------------------------------------------------------------

<S> <C> <C>
Finished goods................................... $ 136.3 $ 106.7
Work in progress................................. 173.6 139.6
Raw materials and supplies....................... 71.5 65.1
Allowance for obsolescence....................... (15.7) (19.8)
------- --------
$ 365.7 $ 291.6
======= ========
<CAPTION>

Product and Process Technology
- -----------------------------------------------------------------------------
<S> <C> <C>
Product and process technology, at cost.......... $ 325.2 $ 161.7
Less accumulated amortization.................... (112.6) (76.8)
------- --------
$ 212.6 $ 84.9
======= ========
</TABLE>

In September 1998, the Company and Texas Instruments Incorporated ("TI")
entered into a ten-year, royalty free, life of patents, patent cross license,
which accounts for the majority of the increase in the Company's capitalized
product and process technology cost at the end of 1999 compared to the end of
1998. (See "Acquisition" note.) Amortization of capitalized product and process
technology costs was $37.6 million in 1999, $23.1 million in 1998 and $11.4
million in 1997.

36/57
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Supplemental Balance Sheet Information (continued) 9/2/99 9/3/98
- ----------------------------------------------------- ------ ------
</TABLE>

Property, Plant and Equipment
- -----------------------------
<TABLE>
<S> <C> <C>
Land................................................................................ $ 42.2 $ 34.8
Buildings........................................................................... 1,172.4 915.5
Equipment........................................................................... 4,074.4 3,025.7
Construction in progress............................................................ 726.0 704.6
---------- --------
6,015.0 4,680.6
Less accumulated depreciation and amortization...................................... (2,215.4) (1,645.3)
---------- ---------
$ 3,799.6 $ 3,035.3
========== =========
</TABLE>

As of September 2, 1999, property, plant and equipment included unamortized
costs of $707.3 million for the semiconductor operations facility in Lehi,
Utah, of which $646.7 million has not been placed in service and is not being
depreciated. Timing of the completion of the remainder of the Lehi facilities
is dependent upon market conditions. Market conditions which the Company
expects to evaluate include, but are not limited to, worldwide market supply and
demand of semiconductor products and the Company's operations, cash flows and
alternative uses of capital. The Company continues to evaluate the carrying
value of the facility and as of September 2, 1999, it was determined to have no
impairment.

Depreciation expense was $767.4 million, $569.7 million and $462.5 million for
1999, 1998 and 1997, respectively.

Accounts Payable and Accrued Expenses
- -------------------------------------
<TABLE>
<S> <C> <C>
Accounts payable.................................................................... $453.1 $235.6
Salaries, wages and benefits........................................................ 95.4 85.6
Product and process technology payable.............................................. 24.0 46.4
Taxes payable other than income..................................................... 33.4 44.5
Interest payable.................................................................... 33.9 7.7
Other............................................................................... 65.6 40.9
------ ------
$705.4 $460.7
====== ======
</TABLE>

Debt
- ----
<TABLE>
<S> <C> <C>
Convertible subordinated notes payable, due October 2005, with an effective yield
to maturity of 8.4%, net of unamortized discount of $64.8 million................... $ 675.2 $ --

Convertible subordinated notes payable, due July 2004, interest rate of 7%........... 500.0 500.0

Subordinated notes payable, due October 2005, with an effective yield to maturity
of 10.7%, net of unamortized discount of $38.1 million.............................. 171.9 --

Notes payable in periodic installments through July 2015, weighted average
interest rate of 7.37% and 7.38%, respectively..................................... 259.0 315.2

Capitalized lease obligations payable in monthly installments through August 2004,
weighted average interest rate of 7.52% and 7.61%, respectively..................... 33.1 42.2
-------- -------
1,639.2 857.4

Less current portion................................................................. (111.7) (98.6)
-------- -------
$1,527.5 $ 758.8
======== =======
</TABLE>

The convertible subordinated notes due October 2005 (the "Convertible Notes")
with an effective yield-to-maturity of 8.4% have a face value of $740 million, a
stated interest rate of 6.5% and are convertible into shares of MTI's common
stock at $60 per share. The Convertible Notes were subject to redemption as of
October 2000 and are redeemable from that date through October 2002 if the
common stock price is at least $78 for a specified trading period. The
Convertible Notes have not been registered with the Securities and Exchange
Commission, however, the holder has registration rights. (See "Acquisition"
note)

The 7% convertible subordinated notes due July 2004 are convertible into
shares of MTI's common stock at $67.44 per share. The notes are redeemable
through July 2001 if the common stock price is at least $87.67 for a specified
trading period.

37/57
<PAGE>

Supplemental Balance Sheet Information (continued)
- --------------------------------------------------

The subordinated notes due October 2005 with a yield to maturity of 10.7% have
a face value of $210 million and a stated interest rate of 6.5%.

MTI has a $400 million secured revolving credit agreement which expires May
2000. The interest rate on borrowed funds is based on various pricing options
at the time of borrowing. The agreement contains certain restrictive covenants
pertaining to the Company's semiconductor operations, including a maximum debt-
to-equity covenant. As of September 2, 1999, MTI had no borrowings outstanding
under the agreement.

MEI has a $100 million unsecured credit agreement expiring in June 2001.
Under the credit agreement, MEI is subject to certain financial and other
covenants including certain financial ratios and limitations on the amount of
dividends paid by MEI. As of September 2, 1999, MEI had no borrowings
outstanding.

Certain notes payable are collateralized by plant and equipment with a total
cost of approximately $448.5 million and accumulated depreciation of
approximately $270.4 million as of September 2, 1999. Equipment under capital
leases, and the accumulated depreciation thereon, were approximately $45.7
million and $23.8 million, respectively, as of September 2, 1999, and $45.0
million and $15.4 million, respectively, as of September 3, 1998.

The Company leases certain facilities and equipment under operating leases.
Total rental expense on all operating leases was $21.8 million, $17.5 million
and $8.4 million for 1999, 1998 and 1997, respectively. Minimum future rental
commitments under operating leases aggregate $38.3 million as of September 2,
1999, and are payable as follows (in millions): 2000, $11.2; 2001, $8.5; 2002,
$6.8; 2003, $5.8; and 2004 thereafter, $6.0.

Maturities of long-tem debt are as follows:

<TABLE>
<CAPTION>
Notes Capital
payable leases
------- -------
<S> <C> <C>
Fiscal year
----------
2000............................................. $ 104.4 $ 11.8
2001............................................. 90.2 17.5
2002............................................. 36.1 4.9
2003............................................. 26.0 1.2
2004............................................. 502.9 1.2
2005 and thereafter.............................. 951.0 1.1
Less discount and interest....................... (104.5) (4.6)
-------- ------
$1,606.1 $ 33.1
======== ======
</TABLE>

Stock Purchase Plans

MTI Stock Plans
- ---------------
As of September 2, 1999, MTI had an aggregate of 44.8 million shares of MTI's
common stock authorized for issuance under its various stock option plans.
Options are subject to terms and conditions determined by the Board of
Directors. Stock options granted after June 16, 1999, are exercisable in
increments of 25% during each year of employment beginning one year from the
date of grant. Stock options granted prior to June 16, 1999, are exercisable in
increments of 20% during each year of employment beginning one year from the
date of grant. All stock options issued prior to January 19, 1998, expire six
years from the date of grant and all subsequent options granted expire 10 years
from the date of grant.

38/57
<PAGE>

Option activity under MTI's stock option plans is summarized as follows:

<TABLE>
<CAPTION>
Fiscal year ended
-------------------------------------------------------------------------
September 2, 1999 September 3, 1998 August 28, 1997
----------------------- ----------------------- ---------------------
Weighted Weighted Weighted
average average average
Number exercise Number exercise Number exercise
of shares price of shares price of shares price
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year.... 22.1 $29.59 21.7 $28.85 14.5 $29.38
Options granted in conjunction with
mergers and acquisitions........... 0.6 3.93 0.3 1.74 -- --
Granted............................. 9.0 31.10 2.0 30.37 14.3 36.57
Terminated or cancelled............. (1.1) 32.10 (0.6) 32.58 (4.9) 49.28
Exercised........................... (5.9) 18.99 (1.3) 9.96 (2.2) 11.94
---- ---- ----
Outstanding at end of year.......... 24.7 32.00 22.1 29.59 21.7 28.85
==== ==== ====
Exercisable at end of year.......... 7.4 30.00 8.9 22.80 5.3 17.63
Shares available for future grants.. 19.1 -- 26.4 -- 2.9 --
</TABLE>

Options outstanding as of September 2, 1999, were at per share prices ranging
from $0.55 to $69.75. Options exercised were at per share prices ranging from
$0.55 to $45.78 in 1999, $1.50 to $31.65 in 1998 and $1.72 to $37.87 in 1997.

The following table summarizes information about MTI options outstanding as of
September 2, 1999:

<TABLE>
<CAPTION>
MTI Outstanding options MTI Exercisable options
- --------------------------------------------------------------------------------------------------------------
Weighted
average
remaining Weighted Weighted
contractual average average
Number life (in exercise Number exercise
Range of exercise prices of shares years) price of shares price
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0.55 - $9.60 0.7 5.0 $ 3.53 0.5 $ 3.87
$9.63 - $19.98 1.3 2.8 16.05 0.8 15.90
$20.03 - $29.94 12.3 6.7 27.40 2.4 25.82
$30.25 - $69.75 10.4 4.4 41.40 3.7 39.37
---- ---
24.7 7.4
==== ===
</TABLE>

As of September 2, 1999, an aggregate of 320,645 shares were authorized for
issuance under MTI's stock plans. Shares are issued under these plans either as
compensation to non-employee members of MTI's Board of Directors or to employees
upon the achievement of certain milestones. As of September 2, 1999, a total of
15,934 shares had been issued under the stock plans.

MTI's 1989 Employee Stock Purchase Plan ("ESPP") allows eligible employees to
purchase shares of the Company's common stock through payroll deductions. The
shares can be purchased for 85% of the lower of the beginning or ending stock
closing price of each offering period and are restricted from resale for a
period of one year from the date of purchase. Purchases are limited to 20% of
an employee's eligible compensation. A total of 9.3 million shares of MTI
common stock are reserved for issuance under the ESPP, of which 6.8 million
shares have been issued as of September 2, 1999.

MEI Stock Plans
- ---------------
MEI's 1995 Stock Option Plan provides for the granting of incentive and
nonstatutory stock options. As of September 2, 1999, there were 10 million
shares of common stock reserved for issuance under the option plan. Exercise
prices of the incentive and nonstatutory stock options are 100% of the fair
market value of MEI's common stock on the date of grant. Prior to April 28,
1999, exercise prices of the incentive and non-statutory stock options were
generally issued at 100% and 85%, respectively, of the fair market value of
MEI's common stock on the date of grant. Stock options granted to employees and
executive officers after April 28, 1999, typically have a term of 10 years and
vest 25% percent each year for four years from the date of grant. Stock options
granted to employees and executive officers prior to April 28, 1999, typically
have a term of six years and vest 20% each year for five years from the date of
grant.

39/57
<PAGE>

On March 19, 1998, the MEI Board of Directors approved an option repricing
program pursuant to which essentially all MEI employees could exchange
outstanding options under the option plan for new options having an exercise
price equal to the average closing price of MEI's common stock for the five
business days preceding April 3, 1998, and having generally the same terms and
conditions, including vesting and expiration terms, as the options exchanged.
The exercise price of the options reissued under MEI's option re-pricing program
is $13.06 per share.

Option activity under MEI's 1995 Stock Option Plan is summarized as follows:

<TABLE>
<CAPTION>
Fiscal year ended
-------------------------------------------------------------------------------------
September 2, 1999 September 3, 1998 August 28, 1997
----------------- ----------------- ---------------
Weighted Weighted Weighted
average average average
Number exercise Number exercise Number exercise
of shares price of shares price of shares price
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year.... 5.3 $12.56 3.6 $16.98 1.9 $13.70
Granted............................. 3.7 12.77 5.8 13.20 1.9 19.90
Terminated or cancelled............. (1.4) 13.21 (4.0) 17.40 (0.2) 16.52
Exercised........................... (0.2) 12.28 (0.1) 11.37 -- 9.49
----- ----- -----
Outstanding at end of year.......... 7.4 12.56 5.3 12.56 3.6 16.98
===== ===== =====
Exercisable at end of year.......... 1.4 12.86 0.7 13.24 0.5 14.45
Shares available for future grants.. 2.4 -- 4.8 -- 1.4 --
</TABLE>

The following table summarizes information about MEI options outstanding under
the MEI 1995 Stock Option Plan as of September 2, 1999:

<TABLE>
<CAPTION>
MEI Outstanding options MEI Exercisable options
- ---------------------------------------------------------------------------------------------------
Weighted
average Weighted
Number remaining Weighted average
of contractual average Number exercise
Range of exercise prices shares life (in years) price of shares price
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
below $10.00 1.0 5.96 $ 9.42 0.2 $ 9.11
$10.01 - $15.00 5.5 5.80 12.35 1.0 12.47
$15.01 - $20.00 0.7 5.04 17.25 0.2 17.60
above $20.00 0.2 5.43 21.99 -- 22.42
--- ---
7.4 1.4
=== ===
</TABLE>

MEI's 1995 Employee Stock Purchase Plan ("MEI ESPP") allows eligible employees
to purchase shares of MEI's common stock pursuant to the same terms as MTI's
ESPP. A total of 2.5 million shares of MEI common stock are reserved for
issuance under the MEI ESPP, of which approximately 692,000 shares had been
issued as of September 2, 1999.

Pro forma Disclosure
- --------------------

The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," issued in October 1995. Accordingly, compensation cost has been
recorded based on the intrinsic value of the option only. The Company recognized
$8.3 million, $3.4 million and $8.4 million of compensation cost in 1999, 1998
and 1997, respectively, for stock-based employee compensation awards. If the
Company had elected to recognize compensation cost based on the fair value of
the options granted at grant date as prescribed by SFAS

40/57
<PAGE>

No. 123, net income (loss) and earnings (loss) per share would have been changed
to the pro forma amounts indicated in the table below:
<TABLE>
<CAPTION>

(Dollars in millions 1999 1998 1997
except per share amounts) As reported Pro forma As reported Pro forma As Reported Pro forma
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)................... $(68.9) $(144.2) $(247.1) $(314.7) $315.0 $276.0
Diluted earnings (loss) per share... $(0.26) $ (0.55) $ (1.15) $ (1.46) $ 1.44 $ 1.26
</TABLE>

The above pro forma amounts, for purposes of SFAS No. 123, reflect the portion
of the estimated fair value of awards earned in 1999, 1998 and 1997. For
purposes of pro forma disclosures, the estimated fair value of the options is
amortized over the options' vesting period (for stock options) and over the
offering period for stock purchases under the Employee Stock Purchase Plans.
The effects on pro forma disclosures of applying SFAS No. 123 are not likely to
be representative of the effects on pro forma disclosures of future years.
Because SFAS No. 123 is applicable only to options granted subsequent to August
31, 1995, the effect will not be fully reflected until 2000.

The Company used the Black-Scholes model to value stock options for pro forma
presentation. The assumptions used to estimate the value of the MTI options
included in the pro forma amounts and the weighted average estimated fair value
and exercise price of MTI options granted are as follows:
<TABLE>
<CAPTION>
Stock Option Employee Stock
Plan Shares Purchase Plan Shares
------------------------- --------------------------
1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average expected life (years).......................... 3.5 3.5 3.5 0.25 0.25 0.25
Expected volatility.................................... 59% 60% 58% 59% 60% 58%
Risk-free interest rate (zero coupon U.S. Treasury 5.0% 5.6% 6.2% 4.4% 5.1% 5.0%
note).................................................
Weighted average fair value at grant
Exercise price equal to market price................. $14.92 $14.70 $15.17 -- -- --
Exercise price less than market price................ $17.81 $27.77 $21.26 $14.42 $ 9.68 $ 6.61
Weighted average exercise price
Exercise price equal to market price................. $31.94 $30.45 $38.40 -- -- --
Exercise price less than market price................ $20.91 $ 1.74 $17.61 $29.99 $23.03 $26.55
</TABLE>

The assumptions used to estimate the value of the MEI options included in the
pro forma amounts and the weighted average estimated fair value of MEI options
granted are as follows:
<TABLE>
<CAPTION>
Stock Option Employee Stock
Plan Shares Purchase Plan Shares
------------------------- --------------------------
1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average expected life (years).......................... 3.5 3.3 3.5 0.5 0.5 0.5
Expected volatility.................................... 70% 70% 70% 70% 70% 70%
Risk-free interest rate (zero coupon U.S. Treasury
note)................................................. 5.0% 5.6% 6.2% 4.5% 5.1% 5.0%
Weighted average fair value at grant
Exercise price equal to market price................. $ 6.88 $ 6.57 $10.68 -- -- --
Exercise price less than market price................ $ 8.46 $ 9.25 $11.41 $4.79 $3.78 $ 5.39
Weighted average exercise price
Exercise price equal to market price................. $12.65 $13.20 $20.29 -- -- --
Exercise price less than market price................ $12.46 $13.63 $18.07 $9.60 $7.74 $12.51
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, the Black-Scholes model requires the input of
highly subjective assumptions, including the expected stock price volatility and
option life. Because the Company's stock options granted to employees have
characteristics significantly different from those of traded options and because
changes in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, existing models do not necessarily provide a
reliable measure of the fair value of its stock options granted to employees.
For purposes of this model no dividends have been assumed.

41/57
<PAGE>

Employee Savings Plan

The Company has 401(k) profit-sharing plans ("RAM Plans") under which
employees may contribute from 2% to 16% of their eligible pay to various savings
alternatives in the RAM Plans. The Company's contribution provides for an
annual match of the first $1,500 of eligible employee contributions, in addition
to contributions based on the Company's financial performance. The Company's
RAM Plans expenses were $12.5 million, $11.3 million and $18.9 million in 1999,
1998 and 1997, respectively.

Other Operating Expense, net

Other operating expense for 1999 includes a $15.0 million charge from the
write down and disposal of flat panel display assets (see "Asset Sale" note), a
loss of $12.1 million from the write down and disposal of semiconductor
operations equipment, an $8.9 million charge resulting from the discontinuation
of the Company's RFID efforts and $5.7 million in employee stock compensation
expense related to the 1999 acquisition of substantially all of the
semiconductor memory operations of TI and the 1998 purchase of the minority
interest in the Company's subsidiary, Micron Quantum Devices, Inc.

Other operating expense includes a loss of $13.9 million and $2.6 million from
the write down and disposal of semiconductor manufacturing equipment in 1998 and
1997, respectively, charges associated with PC systems of $11.1 million
resulting from employee termination benefits consolidation of domestic and
international operations and $5.3 million from the write off of software
development costs in 1998.

Gains on Investments and Subsidiary Stock Transactions

On February 26, 1998, MEI completed the sale of 90% of its interest in MCMS,
Inc. ("MCMS"), formerly Micron Custom Manufacturing Services, Inc. and a wholly-
owned subsidiary of MEI, resulting in a consolidated pre-tax gain of $157.0
million (approximately $37.8 million or $0.18 per share after taxes and minority
interests). In exchange for the 90% interest in MCMS, MEI received $249.2
million in cash. The sale was structured as a recapitalization of MCMS, whereby
Cornerstone Equity Investors IV, L.P., other investors and certain members of
MCMS management, including Robert F. Subia, then a Director of MEI, acquired the
90% interest in MCMS.

In a public offering in February 1997, MTI sold 12.4 million shares of MEI
common stock for net proceeds of $200.0 million and MEI sold 3 million newly
issued shares for net proceeds of $48.2 million, resulting in consolidated pre-
tax gains of $164.6 million and $25.3 million, respectively (for a total of
approximately $93.7 million or $0.44 per share after taxes). The sales reduced
MTI's ownership of the outstanding MEI common stock from approximately 79% to
approximately 64%. The Company also recorded pre-tax gains totaling $22.1
million for 1997 relating to sales of investments. The Company recognized a
deferred tax liability on the resultant gain from the sale of MEI common stock
in the second quarter of 1997.

Income Taxes

The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
9/2/99 9/3/98 8/28/97
------- -------- --------
<S> <C> <C> <C>
Current:
U.S. federal........................ $ (47.6) $ (156.1) $ 152.1
State............................... 4.4 0.1 21.1
Foreign............................. 10.0 1.7 1.5
------- -------- --------
(33.2) (154.3) 174.7
------- -------- --------
Deferred:
U.S. federal........................ 19.7 69.3 79.5
State............................... (19.9) (44.1) 1.6
Foreign............................. (2.6) -- --
------- -------- --------
(2.8) 25.2 81.1
------- -------- --------
Income tax provision (benefit).......... $ (36.0) $ (129.1) $ 255.8
======= ======== ========
</TABLE>

42/57
<PAGE>

The tax benefit associated with the exercise of nonstatutory stock options and
disqualifying dispositions by employees of shares issued in the Company's stock
option and purchase plans reduced taxes payable by $54.9 million, $5.2 million
and $14.5 million for 1999, 1998 and 1997, respectively. Such benefits are
reflected as additional capital.

A reconciliation between income tax computed using the federal statutory rate
and the income tax provision (benefit) follows:
<TABLE>
<CAPTION>
9/2/99 9/3/98 8/28/97
-------- -------- --------
<S> <C> <C> <C>
U.S. federal income tax at statutory rate... $ (32.0) $ (125.6) $ 206.7
State taxes, net of federal benefit......... (13.9) (27.9) 12.6
Change in valuation allowance............... 10.5 4.1 --
Basis difference in domestic subsidiaries... 1.6 11.6 24.8
Foreign income at other than U.S. rates..... (2.6) -- --
Other....................................... 0.4 8.7 11.7
------- -------- --------
Income tax provision (benefit).............. $ (36.0) $ (129.1) $ 255.8
======== ======== ========
</TABLE>

State taxes reflect investment tax credits of $15.7 million, $21.1 million and
$15.3 million for 1999, 1998 and 1997, respectively.

Deferred income taxes reflect the net tax effects of temporary differences
between the basis of assets and liabilities for financial reporting and income
tax purposes. The approximate tax effects of temporary differences which give
rise to the net deferred tax liability (benefit) are as follows:

<TABLE>
<CAPTION>
9/2/99 9/3/98
-------- --------
<S> <C> <C>
Deferred tax asset:
Accrued product and process technology......... $ 1.6 $ 7.2
Inventory...................................... 9.8 15.0
Accrued compensation........................... 23.6 19.8
Deferred income................................ 8.1 3.1
Net operating loss and credit carryforwards.... 78.5 30.6
Other.......................................... 45.3 66.1
-------- --------
Gross deferred tax asset..................... 166.9 141.8
Less: Valuation allowance................... (14.6) (4.1)
-------- --------
Deferred tax asset........................... 152.3 137.7
-------- --------
Deferred tax liabilities:
Excess tax over book depreciation.............. (230.9) (240.7)
Accrued product and process technology......... (18.8) --
Investment in subsidiary....................... (57.4) (56.7)
Other.......................................... (34.4) (40.9)
-------- --------
Deferred tax liability....................... (341.5) (338.3)
-------- --------
Net deferred tax liability................... $ (189.2) $ (200.6)
======== ========
</TABLE>

At September 2, 1999, the Company had aggregate U.S. tax loss carryforwards of
$101.3 million and U.S. tax credit carryforwards of $22.2 million. Of these
amounts, $101.3 million of the tax loss carryforward expires in various years
through 2019, $15.0 million of the credit carryforward expires through 2019 and
$7.2 million of the credit carryforward has no expiration. The Company also has
unused state tax net operating loss carryforwards of $576.6 million for tax
purposes which expire through 2014 and unused state tax credits of $59.0 million
for tax and financial reporting purposes which expire through 2006. The change
in valuation allowance of $10.5 million in 1999 is due to the uncertainty of
realizing certain tax credit carryforwards. In 1998, the Company recorded a $4.1
million valuation allowance for a deferred tax asset relating to MEI's
consolidation of its NetFRAME enterprise server operations. Provision has been
made for deferred taxes on undistributed earnings of non-U.S. subsidiaries to
the extent that dividend payments from such companies are expected to result in
additional tax liability. The remaining undistributed earnings of $22.1 million
have been indefinitely reinvested; therefore, no provision has been made for
taxes due upon remittance of these earnings. Determination of the amount of
unrecognized deferred tax liability on these unremitted earnings is not
practicable.

43/57
<PAGE>

Purchase of Minority Interests

In the first quarter of 1998, MTI purchased the 12% minority interest in its
subsidiary, Micron Display Technology, Inc., for $20.6 million in cash. The cost
of the acquired interest was allocated primarily to intangible assets related to
field emission flat panel display technology, which is being amortized over a
three-year period. In May 1999, MTI sold certain of its flat panel display
assets to PixTech, Inc., however, MTI retained the associated technology rights.
(See "Asset Sale" note)

In the second quarter of 1998, MTI purchased the 11% minority interest in its
subsidiary, Micron Quantum Devices, Inc., for $26.2 million in stock and stock
options. The cost of the acquired interest was allocated primarily to intangible
assets related to flash semiconductor technology, which is being amortized over
a three-year period.

In conjunction with the discontinuation of its RFID efforts in the fourth
quarter of 1999, MTI purchased the 11% minority interest in its subsidiary,
Micron Communications, Inc. (See "Other Operating Expense, net" note).

Earnings (Loss) Per Share
<TABLE>
<CAPTION>

For the year ended 9/2/99 9/3/98 8/28/97
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income (loss) available for common shareholders,
Basic and Diluted...................................... $ (68.9) $ (247.1) $ 315.0

Weighted average common stock outstanding - Basic....... 260.7 215.6 211.9
Net effect of dilutive stock options.................... -- -- 7.4
------- -------- --------
Weighted average common stock and common stock
equivalents - Diluted.................................. 260.7 215.6 219.3
======= ======== ========

Basic earnings (loss) per share......................... $ 0.26) $ (1.15) $ 1.49
======= ======== ========
Diluted earnings (loss) per share....................... $ 0.26) $ (1.15) $ 1.44
======= ======== ========
</TABLE>

The average shares listed below were not included in the computation of
diluted earnings per share because to do so would have been antidilutive for the
periods presented:
<TABLE>
<CAPTION>
For the year ended 9/2/99 9/3/98 8/28/97
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>

Employee stock plans.................................... 23.8 21.0 10.7
8.4% convertible subordinated notes payable due 2005.... 11.6 -- --
7.0% convertible subordinated notes payable due 2004.... 7.4 7.4 1.4
</TABLE>

Comprehensive Income (Loss)

The FASB issued SFAS No. 130, "Reporting Comprehensive Income," in June 1997.
This statement establishes new standards for reporting and displaying
comprehensive income in the financial statements and was adopted by the Company
as of the first quarter of 1999. SFAS No. 130 requires reclassification of prior
periods financial statements to reflect application of the provisions of this
statement. In addition to net income, comprehensive income includes charges or
credits to equity that are not the result of transactions with shareholders.

The following table reflects the composition of accumulated other
comprehensive income:

Foreign currency translation adjustment............... $ (0.1) $ (0.1)
Unrealized loss on investments........................ (2.0) --
------- -------
Total accumulated other comprehensive income (loss)... $ (2.1) $ (0.1)
======= =======
</TABLE>

44/57
<PAGE>

Acquisition

On September 30, 1998, MTI completed its acquisition (the "Acquisition") of
substantially all of the memory operations of TI for a net purchase price of
approximately $832.8 million. The Acquisition was consummated through the
issuance of debt and equity securities. In connection with the transaction, MTI
issued 28.9 million shares of MTI common stock, $740 million principal amount of
Convertible Notes and $210 million principal amount of subordinated notes. In
addition to TI's net memory assets, MTI received $681.1 million in cash. The
Acquisition was accounted for as a business combination using the purchase
method of accounting. The purchase price was allocated to the assets acquired
and liabilities assumed based on their estimated fair values. MTI and TI also
entered into a ten-year, royalty-free, life-of-patents, patent cross license
that commenced on January 1, 1999. MTI made royalty payments to TI under a prior
cross license agreement for operations through December 31, 1998.

The following unaudited pro forma information presents the consolidated
results of operations of the Company as if the Acquisition had taken place at
the beginning of each period presented:

<TABLE>
<CAPTION>
For the year ended 9/2/99 9/3/98
- --------------------------------------------------------------
(unaudited)
<S> <C> <C>
Net sales.......................... $ 3,819.3 $ 3,743.7
Net loss........................... (86.1) (678.6)
Basic loss per share............... (0.33) (2.77)
Diluted loss per share............. (0.33) (2.77)
</TABLE>

These pro forma results of operations have been prepared for comparative
purposes only and do not purport to be indicative of the results of operations
which actually would have resulted had the Acquisition occurred on the dates
indicated, or which may result in the future.

Merger

On September 11, 1998, the Company completed its merger with Rendition, Inc.
("Rendition"). MTI issued approximately 3.6 million shares of MTI common stock
in exchange for all of the outstanding stock of Rendition. The merger qualified
as a tax-free exchange and was accounted for as a business combination using the
"pooling-of-interests" method. Accordingly, the Company's financial statements
have been restated to include the results of Rendition for all periods
presented. The following table presents a reconciliation of net sales and net
income (loss) as previously reported by the Company for the years ended
September 3, 1998, and August 27, 1997, to those presented in the accompanying
consolidated financial statements.

For the year ended 9/2/98 MTI Rendition Combined
- ---------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
Net sales................ $ 3,011.9 $ 13.4 $ 3,025.3

Net loss................. $ (233.7) $ (13.4) $ (247.1)

For the year ended 8/27/97 MTI Rendition Combined
- ---------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
Net sales................ $ 3,515.5 $ 7.7 $ 3,523.2

Net income (loss)........ $ 332.2 $ (17.2) $ 315.0
</TABLE>

Equity Investment

On October 19, 1998, Intel invested $500 million in the Company and as a
result now holds approximately 15.8 million shares of MTI's non-voting Class A
Common Stock. The Class A Common Stock represented approximately 6% of MTI's
outstanding common stock as of September 2, 1999. The Class A Common Stock will
automatically be converted into MTI's common stock, subject to certain
adjustments, upon a transfer to a holder other than Intel or a 90% owned
subsidiary of Intel. As of September 2, 1999, the Class A Common Stock was
convertible into common stock on a one-to-one basis. The Class A Common Stock
issued to Intel has not been

45/57
<PAGE>

registered under the Securities Act of 1933, as amended, and is therefore
subject to certain restrictions on resale. MTI and Intel entered into a
securities rights and restrictions agreement which provides Intel with certain
registration rights and places certain restrictions on Intel's voting rights and
other activities with respect to the shares of MTI Class A Common Stock or
common stock. Intel also has the right to designate a director nominee,
acceptable to MTI, to MTI's Board of Directors.

In consideration for Intel's investment, MTI agreed to commit to the
development of direct Rambus DRAM ("RDRAM") and to certain production and
capital expenditure milestones and to make available to Intel a certain
percentage of its semiconductor memory output over a five-year period, subject
to certain limitations. The conversion ratio of the Class A Common Stock is
subject to adjustment under certain formulae at the election of Intel in the
event MTI fails to meet the production or capital expenditure milestones. No
adjustment will occur to the conversion ratio under such formulae (i) unless the
price of MTI's common stock for a twenty day period ending two days prior to
such milestone dates is lower than $31.625 (the market price of MTI's common
stock at the time of investment), or (ii) if MTI achieves the production and
capital expenditure milestones. In addition, if an adjustment occurs, in no
event will MTI be obligated to issue more than: (a) a number of additional
shares having a value exceeding $150 million, or (b) 15,810,277 shares.

Joint Ventures

In connection with the acquisition of substantially all of TI's memory
operations in September 1998, MTI acquired interests in two joint venture wafer
fabrication facilities dedicated to the fabrication of DRAMs. MTI has interests
in TECH Semiconductor Singapore Pte. Ltd. ("TECH") and in KMT Semiconductor
Limited ("KMT"). TECH, which operates in Singapore, is a joint venture between
MTI, the Singapore Economic Development Board, Canon Inc. and Hewlett-Packard
Company. KMT, which operates in Japan, is a joint venture between MTI and Kobe
Steel, Ltd. TECH and KMT are collectively referred to herein as the "JVs."

Subject to certain terms and conditions, MTI has agreed to purchase all of the
JV production. MTI purchases semiconductor memory products from the JVs at
prices generally determined quarterly based on a discount from MTI's average
selling prices. MTI is a party to various agreements with the JVs whereby MTI
provides technology, engineering support and training to assist the JVs in
establishing and operating advanced wafer fabrication facilities to produce MTI
DRAM products. MTI also performs assembly and test services on product
manufactured by the JVs. The net cost of products purchased from the JVs,
amounting to $186.2 million and $135.3 million for KMT and TECH, respectively in
1999, reflects all transactions with the JVs.

MTI is amortizing the purchase price allocated to the JV supply arrangements
on a straight-line basis over the remaining contractual life of the shareholder
agreements. Amortization expense resulting from the JV supply arrangements,
included in the cost of product purchased from the JVs, was $2.6 million for
1999. Receivables from KMT and TECH were $19.1 million and $47.2 million and
payables were $24.4 million and $32.0 million, respectively, as of September 2,
1999.

Asset Sale

On May 19, 1999, MTI completed the sale of certain of its flat panel display
assets to PixTech, Inc. ("PixTech"). Pursuant to the terms of the transaction,
in exchange for the transfer of certain assets (including manufacturing
equipment and $4.4 million in cash) and liabilities to PixTech, MTI received
7,133,562 shares of PixTech common stock and warrants to purchase an additional
310,000 shares of PixTech common stock at an exercise price of $2.25. MTI
incurred a loss of $15.0 million during the second quarter of 1999 relating to
the disposition of its flat panel display assets.

Operating Segment and Geographic Information

The Company adopted SFAS 131, "Disclosures about Segments of an Enterprise and
Related Information" in 1999. The Company's reportable segments have been
determined based on the nature of its operations and products offered to
customers. The Company's two reportable segments are semiconductor operations
and PC operations. The semiconductor operations segment's primary product is
DRAM. The PC operations segment's primary products include desktop PC systems,
notebooks and servers. The "All other" segment, primarily reflects activity of
the Company's field emission display, RFID, construction and custom
manufacturing businesses. These businesses

46/57
<PAGE>

have been sold or discontinued. Consequently, the reported results and amounts
for the all other segment primarily represent historical activity of the
discontinued operations plus certain transactions and residual assets associated
with their sale or cessation.

The accounting policies of the segments are the same as those described in the
"Summary of Significant Accounting Policies" note. Segment operating results
are measured based on operating income (loss). Intersegment sales are measured
based on contract prices as internally reported. Intersegment sales primarily
reflect sales of memory products from the semiconductor operations segment to
the PC operations segment and, to a lesser extent, sales of computers from the
PC operations segment to the semiconductor operations segment. Segment assets
consist of assets that are identified to reportable segments and reviewed by the
chief operating decision makers. Included in segment assets are cash,
investments, accounts receivable, inventory and property, plant and equipment.

Net sales
- ---------
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- ----------
<S> <C> <C> <C>
Semiconductor operations
External.................................. $2,524.7 $1,380.5 $1,680.7
Intersegment.............................. 45.0 40.7 91.7
-------- -------- --------
2,569.7 1,421.2 1,772.4
PC operations
External.................................. 1,234.1 1,493.8 1,525.0
Intersegment.............................. 5.8 3.8 4.3
-------- -------- --------
1,239.9 1,497.6 1,529.3
All other
External.................................. 5.2 151.0 317.5
Intersegment.............................. -- 16.3 70.3
-------- -------- --------
5.2 167.3 387.8

Total segments............................. 3,814.8 3,086.1 3,689.5
Elimination of intersegment................ (50.8) (60.8) (166.3)
-------- -------- --------
Total consolidated net sales............... $3,764.0 $3,025.3 $3,523.2
======== ======== ========
</TABLE>

Operating income (loss)
- -----------------------
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Semiconductor operations................... $ 42.8 $ (370.6) $ 311.7
PC operations.............................. (32.3) (108.8) 76.2
All other.................................. (58.3) (36.9) (13.8)
-------- -------- -------
Total segments............................. (47.8) (516.3) 374.1

Elimination of intersegment................ 0.8 (0.1) --
-------- -------- -------
Total consolidated operating income (loss). $ (47.0) $ (516.4) $ 374.1
======== ======== =======
</TABLE>

Segment assets
- --------------
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Semiconductor operations................... $6,001.9 $3,928.3
PC operations.............................. 533.9 537.1
All other.................................. 15.5 57.2
-------- --------
Total segment assets...................... 6,551.3 4,522.6
Elimination of intersegment................ (74.8) (50.8)
-------- --------
Total segment assets...................... $6,476.5 $4,471.8
======== ========

Reconciliation to total assets:
Total segment assets....................... $6,476.5 $4,471.8
Prepaid expenses........................... 38.3 8.5
Deferred taxes............................. 119.9 61.7
Product and process technology............. 212.6 84.9
Other assets (net of segment assets)....... 117.9 76.6
-------- --------
Total consolidated assets................. $6,965.2 $4,703.5
======== ========
</TABLE>
47/57
<PAGE>

Capital expenditures for plant, property and equipment
- ------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Semiconductor operations....................... $755.5 $670.2 $405.8
PC operations.................................. 43.3 13.8 48.0
All other...................................... 5.3 22.3 72.3
------ ------ ------
Total segments................................. 804.1 706.3 526.1

Elimination of intersegment.................... (0.2) 0.8 (9.2)
------ ------ ------
Total consolidated capital expenditures........ $803.9 $707.1 $516.9
====== ====== ======
</TABLE>

Depreciation and amortization expense
- -------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Semiconductor operations....................... $816.0 $565.6 $449.6
PC operations.................................. 16.1 21.0 12.1
All other...................................... 12.9 21.6 14.3
------ ------ ------
Total segments................................. 845.0 608.2 476.0

Elimination of intersegment.................... (1.7) (1.6) 0.3
------ ------ ------
Total consolidated capital expenditures........ $843.3 $606.6 $476.3
====== ====== ======
</TABLE>

Investment in Equity Method Investees
- -------------------------------------

At September 2, 1999, the Company had $10.7 million in investments accounted
for by the equity method. These investments were held by non-reportable segments
included in the "All Other" segments category. The Company recorded losses
totaling $4.3 million on these investments in 1999. The Company held no equity
investments in 1998 or 1997.

Major Customers
- ---------------

No customer individually accounted for 10% or more of the Company's total net
sales in 1999, 1998 or 1997.

Geographic area net sales revenue
- ---------------------------------
(Based on customer location)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
United States............................. $2,685.8 $2,425.9 $2,814.9
Europe.................................... 464.1 275.3 293.4
Asia Pacific.............................. 420.4 180.3 242.7
Japan..................................... 81.8 42.9 51.6
Canada.................................... 32.5 47.4 65.1
Other..................................... 79.4 53.5 55.5
-------- -------- --------
Totals................................... $3,764.0 $3,025.3 $3,523.2
======== ======== ========
</TABLE>

Geographic area property, plant and equipment (net)
- ---------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
United States............................. $3,034.8 $3,031.1 $2,461.9
Singapore................................. 461.6 -- --
Italy..................................... 299.3 -- --
Other..................................... 3.9 4.2 2.1
-------- -------- --------
Totals................................... $3,799.6 $3,035.3 $2,464.0
======== ======== ========
</TABLE>

48/57
<PAGE>

Commitments and Contingencies

As of September 2, 1999, the Company had commitments of $719.4 million for
equipment purchases and $40.4 million for the construction of buildings.

The Company has from time to time received, and may in the future receive,
communications alleging that its products or its processes 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 alleged infringement prior to
the balance sheet date. Determination that the Company's manufacture of
products has infringed on valid rights held by others could have a material
adverse effect on the Company's financial position, results of operations or
cash flows and could require changes in production processes and products.

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.

49/57
<PAGE>

Quarterly Financial and Market Information (Unaudited)
(Dollars in millions, except for per share data)

<TABLE>
<CAPTION>
1999 Quarter 1st 2nd 3rd 4th
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales............................................... $ 793.6 $1,025.8 $ 863.8 $1,080.8
Costs and expenses:
Cost of goods sold.................................... 677.7 745.1 674.8 852.8
Selling, general and administrative................... 103.0 125.5 124.1 133.4
Research and development.............................. 67.7 85.5 81.6 87.3
Other operating expense, net.......................... 7.8 18.4 11.1 15.2
------- -------- ------- --------
Total costs and expenses........................... 856.2 974.5 891.6 1,088.7
------- -------- ------- --------

Operating income (loss)................................. (62.6) 51.3 (27.8) (7.9)
Loss on sale of investments and subsidiary
stock, net............................................. (0.1) -- -- --
Gain on issuance of subsidiary stock, net............... 1.1 0.4 -- 0.6
Interest expense, net................................... (7.9) (11.7) (14.4) (12.5)
------- -------- ------- --------
Income (loss) before income taxes....................... (69.5) 40.0 (42.2) (19.8)

Income tax benefit (provision).......................... 27.6 (16.1) 17.1 7.4
Minority interests...................................... (4.3) (1.5) (2.6) (5.0)
------- -------- ------- --------
Net income (loss)....................................... $ (46.2) $ 22.4 $ (27.7) $ (17.4)
======= ======== ======= ========
Diluted earnings (loss) per share....................... $ (0.19) $ 0.08 $ (0.10) $ (0.07)
Quarterly stock price:
High.................................................. $47.625 $ 79.500 $59.937 $ 75.250
Low................................................... 25.062 46.875 34.500 38.063
</TABLE>

<TABLE>
<CAPTION>
1998 Quarter 1st 2nd 3rd 4th
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales............................................... $ 957.3 $ 763.2 $ 612.7 $ 692.1
Costs and expenses:
Cost of goods sold.................................... 747.1 740.5 606.0 651.3
Selling, general and administrative................... 126.0 138.6 111.4 100.1
Research and development.............................. 67.2 72.0 70.7 76.5
Other operating expense, net.......................... 4.6 24.2 3.4 2.1
------- -------- -------- --------
Total costs and expenses........................... 944.9 975.3 791.5 830.0
------- -------- -------- --------

Operating income (loss)................................. 12.4 (212.1) (178.8) (137.9)
Gain (loss) on sale of investments and subsidiary
stock, net............................................. -- 157.1 -- (0.1)
Gain on issuance of subsidiary stock, net............... 0.1 0.5 0.2 0.5
Interest income (expense), net.......................... (1.3) 1.8 0.5 (1.8)
------- -------- -------- --------
Income (loss) before income taxes....................... 11.2 (52.7) (178.1) (139.3)

Income tax benefit (provision).......................... (4.5) 10.8 70.8 52.0
Minority interests...................................... (0.2) (9.0) (2.1) (6.0)
------- -------- -------- --------
Net income (loss)....................................... $ 6.5 $ (50.9) $ (109.4) $ (93.3)
======= ======== ======== ========
Diluted earnings (loss) per share....................... $ 0.03 $ (0.24) $ (0.51) $ (0.43)
Quarterly stock price:
High.................................................. $45.312 $ 38.000 $ 34.938 $ 35.250
Low................................................... 23.125 22.000 23.813 20.125
</TABLE>

As of October 29, 1999, there were 4,955 shareholders of record of MTI's
common stock and one holder of MTI's Class A Common Stock. The Company did not
declare or pay any dividends during 1999 or 1998.

Certain Fiscal 1998 amounts have been restated as a result of a pooling-of-
interests merger.

50/57

<PAGE>

Report of Independent Accountants

To the Board of Directors and
Shareholders of Micron Technology, Inc.

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Micron
Technology, Inc. and its subsidiaries at September 2, 1999, and September 3,
1998, and the results of their operations and their cash flows for each of the
three years in the period ended September 2, 1999, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule listed in the accompanying index presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and the financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards, which 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, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/PricewaterhouseCoopers LLP

Boise, Idaho
October 4, 1999

51/57
<PAGE>

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, "Officers and Directors 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 2, 1999,
and is incorporated herein by reference.

52/57
<PAGE>

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
------- -----------
<C> <S>
2.1 Acquisition Agreement between the Registrant and Texas Instruments
Incorporated dated June 18, 1998 (1)

2.2 Second Amendment to Acquisition Agreement dated as of September
30, 1998, between the Registrant and Texas Instruments
Incorporated (2)

2.3 Agreement and Plan of Reorganization dated as of June 22, 1998,
between the Registrant and Rendition, Inc. (3)

3.1 Certificate of Incorporation of the Registrant, as amended

3.7 Bylaws of the Registrant, as amended (20)

4.1 Indenture dated as of June 15, 1997, between the Registrant and
Norwest Bank Minnesota, National Association (the "Trustee"),
relating to the issuance of 7% Convertible Subordinated Notes due
July 1, 2004 (the "Notes") (6)

4.2 Supplemental Trust Indenture dated as of June 15, 1997, between
the Registrant and the Trustee, relating to the Notes (including
the form of Note) (6)

4.3 Rendition Affiliate Agreement dated as of June 22, 1998, among the
Registrant, Rendition, Inc. and each of the affiliates of
Rendition (3)

4.8 Micron Quantum Devices Stock Bonus Plan (21)

10.6 Form of Micron Affiliate Agreement among the Registrant,
Rendition, Inc. and each of the affiliates of the Registrant (3)

10.82 Form of Indemnification Agreement between the Registrant and its
officers and directors (7)

10.91 Board Resolution regarding stock and bonus plan vesting schedules
in the event of change in control of the Registrant (8)

10.92 Additional provisions related to Management Bonus Arrangements for
Certain Executive Officers (8)

10.100 Amended and Restated 1985 Incentive Stock Option Plan (9)

10.109 Form of Management bonus arrangements for Executive Officers of
Micron Technology, Inc. and Micron Semiconductor, Inc., for 1994
(10)

10.110 1994 Stock Option Plan (20)

10.111 Executive Bonus Plan (4)

10.112 Forms of Severance Agreement (12)

10.116 Registration Rights Agreement dated as of June 28, 1996 between
the Registrant and Canadian Imperial Bank of Commerce (13)

10.117 Registration Rights Agreement dated as of July 29, 1996 between
the Registrant and Canadian Imperial Bank of Commerce (13)

10.118(a) Irrevocable Proxy dated June 28, 1996 by Canadian Imperial Bank of
Commerce in favor of the Registrant (13)

10.118(b) Irrevocable Proxy dated July 24, 1998, by the Registrant in favor
of the Canadian Imperial Bank of Commerce (18)
</TABLE>

53/57
<PAGE>

Exhibit Description
------- -----------
<C> <S>
10.119(a) Reformed Irrevocable Proxy dated July 23, 1998, by J.R. Simplot
Company in favor of the Registrant (18)

10.119(b) Irrevocable Proxy dated July 24, 1998, by the Registrant in favor
of the Canadian Imperial Bank of Commerce (18)

10.120 Form of Agreement and Amendment to Severance Agreement between the
Company and its executive officers (14)

10.125 Second Supplemental Trust Indenture dated as of September 30,
1998, between the Registrant and the Trustee, relating to the
issuance of 6 1/2% Convertible Subordinated Notes due October 2,
2003 (the "TI Notes") (including the form of TI Note) (2)

10.126 Subordinated Promissory Note dated September 30, 1998, issued by
the Registrant in the name of Texas Instruments Incorporated in
the amount of $210,000,000 (2)

10.127 Registration Rights Agreement dated as of July 20, 1998, between
the Registrant, Canadian Imperial Bank of Commerce and J.R.
Simplot Company (5)

10.128 Nonstatutory Stock Option Plan (20)

10.129 1997 Nonstatutory Stock Option Plan (16)

10.130 Micron Quantum Devices, Inc. 1996 Stock Option Plan (16)

10.131 Sample Stock Option Assumption Letter for Micron Quantum Devices,
Inc. 1996 Stock Option Plan (16)

10.132 1998 Nonstatutory Stock Option Plan (17)

10.133 Rendition, Inc. 1994 Equity Incentive Plan (17)

10.134 Sample Stock Option Assumption Letter for Rendition, Inc. 1994
Equity Incentive Plan (17)

10.135 Second Amended and Restated Revolving Credit Agreement dated as of
September 1, 1998, among the Registrant and several financial
institutions (18)

10.136 Securities Purchase Agreement dated as of October 15, 1998,
between the Registrant and Intel Corporation (Confidential
Treatment has been requested for a portion of this document) (18)

10.137 Securities Rights and Restrictions Agreement dated as of October
19, 1998, between the Registrant and Intel Corporation (18)

10.138 Stock Rights Agreement dated as of October 19, 1998, between the
Registrant and Intel Corporation (Confidential Treatment has been
requested for a portion of this document) (18)

10.139 1989 Employee Stock Purchase Plan (20)

10.140 1998 Non-Employee Director Stock Incentive Plan (20)

10.141 Purchase Agreement dated September 30, 1998, between the Company
and KTI Semiconductor Limited (19)

10.142 Purchase Agreement dated October 1, 1998, between the Company and
TECH Semiconductor Singapore Pte. Ltd. (19)

21.1 Subsidiaries of the Registrant

23.1 Consent of Independent Accountants

27.1 Financial Data Schedule

</TABLE>
- ---------
<TABLE>
<C> <S>
(1) Incorporated by Reference to Quarterly Report on Form 10-Q for the
fiscal quarter ended May 28, 1998

(2) Incorporated by Reference to Current Report on Form 8-K filed on
October 14, 1998, as amended on October 16, 1998

(3) Incorporated by Reference to Registration Statement on Form S-4 as
amended (Reg. No. 333-60129)
</TABLE>

54/57
<PAGE>

<TABLE>
<C> <S>
(4) Incorporated by Reference to Annual Report on Form 10-K as amended
for the fiscal year ended August 31, 1995

(5) Incorporated by Reference to Registration Statement on Form S-3 as
amended (Reg. No. 333-57973)

(6) Incorporated by Reference to Current Report on Form 8-K filed on July
3, 1997

(7) Incorporated by Reference to Proxy Statement for the 1986 Annual
Meeting of Shareholders

(8) Incorporated by Reference to Annual Report on Form 10-K for the
fiscal year ended August 31, 1989

(9) Incorporated by Reference to Registration Statements on Forms S-8
(Reg. Nos. 33-38665, 33-38926 and 33-52653)

(10) Incorporated by Reference to Annual Report on Form 10-K for the
fiscal year ended September 2, 1993

(11) Incorporated by Reference to Registration Statement on Form S-8 (Reg.
Nos. 33-57887, 333-07283 and 333-50353)

(12) Incorporated by Reference to Quarterly Report on Form 10-Q for the
fiscal quarter ended February 29, 1996

(13) Incorporated by Reference to Annual Report on Form 10-K for the
fiscal year ended August 29, 1996

(14) Incorporated by Reference to Quarterly Report on Form 10-Q for the
fiscal quarter ended February 27, 1997

(15) Incorporated by Reference to Registration Statement on Form S-8 (Reg.
Nos. 333-17073 and 333-50353)

(16) Incorporated by Reference to Registration Statement on Form S-8 (Reg.
No. 333-50353)

(17) Incorporated by Reference to Registration Statement on Form S-8 (Reg.
No. 333-65449)

(18) Incorporated by Reference to Annual Report on Form 10-K for the
fiscal year ended September 3, 1998

(19) Incorporated by Reference to Quarterly Report on Form 10-Q for the
fiscal quarter ended December 3, 1998

(20) Incorporated by Reference to Quarterly Report on Form 10-Q for the
fiscal quarter ended June 3, 1999

(21) Incorporated by Reference to Registration Statement on Form S-8 (Reg.
No. 333-82549)
</TABLE>

(b) The registrant filed the following report(s) on Form 8-K during the fiscal
quarter ended September 2, 1999:

<TABLE>
<CAPTION>
<S> <C>
Date Item
--------------------------- -----------------------------------
July 7, 1999 Item 5, Other Events
</TABLE>

Micron and micronpc.com are trademarks of MTI. Transport Trek2, Transport NX,
Mservices and HostPro are trademarks of MEI. Millennia, ClientPro and NetFRAME
are registered trademarks of MEI. Micron Power is a service mark of MEI. All
other product names appearing herein are for identification purposes only and
may be trademarks of their respective companies.

55/57
<PAGE>

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 9th day of November, 1999.

Micron Technology, Inc.

By: /S/ WILBUR G. STOVER, JR.
-----------------------------------
Wilbur G. Stover, Jr.,
Vice President of Finance, 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> <C> <C>
/S/ STEVEN R. APPLETON Chairman of the Board, November 9, 1999
- ---------------------- Chief Executive Officer
(Steven R. Appleton) and President

/S/ JAMES W. BAGLEY Director November 9, 1999
- -------------------
(James W. Bagley)

/S/ ROBERT A. LOTHROP Director November 9, 1999
- ---------------------
(Robert A. Lothrop)

/S/ THOMAS T. NICHOLSON Director November 9, 1999
- -----------------------
(Thomas T. Nicholson)

/S/ DON J. SIMPLOT Director November 9, 1999
- -------------------
(Don J. Simplot)

/S/ GORDON C. SMITH Director November 9, 1999
- -------------------
(Gordon C. Smith)

/S/ WILLIAM P. WEBER Director November 9, 1999
- ---------------------
(William P. Weber)

</TABLE>

56/57
<PAGE>

Schedule II

MICRON TECHNOLOGY, INC.
Valuation and Qualification Accounts
(dollars in millions)

Balance at Charged
Beginning of (Credited) to Deduction/ Balance at End
Period Costs and Expenses Write-Off of Period
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts
- -------------------------------
Year ended September 2, 1999 $ 6.5 $ 6.2 $ (2.9) $ 9.8
Year ended September 3, 1998 9.0 (2.2) (0.3) 6.5
Year ended August 28, 1997 9.0 0.2 (0.2) 9.0

Allowance for Obsolete Inventory
- --------------------------------
Year ended September 2, 1999 $19.8 $ 0.9 $ (5.0) $15.7
Year ended September 3, 1998 23.7 12.4 (16.3) 19.8
Year ended August 28, 1997 14.5 15.9 (6.7) 23.7

Deferred Tax Asset Valuation Allowance
- --------------------------------------
Year ended September 2, 1999 $ 4.1 $10.5 $ -- $14.6
Year ended September 3, 1998 -- 4.1 -- 4.1
Year ended August 28, 1997 -- -- -- --
</TABLE>

57/57

<PAGE>

EXHIBIT 3.1

CERTIFICATE OF INCORPORATION
OF
MICRON TECHNOLOGY, INC.
* * * * *

1. The name of the corporation is MICRON TECHNOLOGY, INC.

2. The address of its registered office in the State of Delaware is No. 100
West Tenth Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.

3. The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.

4. The total number of shares of stock which the corporation shall have
authority to issue is fifty million (50,000,000) and the par value of each of
such shares is Ten Cents ($0.10) amounting in the aggregate to Five Million
Dollars ($5,000,000.00).

At all elections of directors of the corporation, each stockholder shall be
entitled to as many votes as shall equal the number of votes which (except for
such provision as to cumulative voting) he would be entitled to cast for the
election of directors with respect to his shares of stock multiplied by the
number of directors to be elected by him, and he may cast all of such votes for
a single director or may distribute them among the number to be voted for, or
for any two or more of them as he may see fit.

5. The name and mailing address of each incorporator is as follows:

NAME MAILING ADDRESS
W. J. Reif 100 West Tenth Street
Wilmington, Delaware 19801

V. A. Brookens 100 West Tenth Street,
Wilmington, Delaware 19801

J. L. Austin 100 West Tenth Street,
Wilmington, Delaware 19801

6. The corporation is to have perpetual existence.

7. In furtherance and not in limitation of the powers conferred by statute, the
board of directors is expressly authorized to make, alter or repeal the by-laws
of the corporation.
<PAGE>

8. Elections of directors need not be by written ballot unless the by-laws of
the corporation shall so provide.

Meetings of stockholders may by held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.

9. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.

WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of

Delaware, do make this certificate, hereby declaring and certifying that this is
our act and deed and the facts herein stated are true, and accordingly have
hereunto set our hands this 6th day of April, 1984.

W. J. REIF
----------
W. J. REIF

V. A. BROOKENS
--------------
V. A. BROOKENS

J. L. AUSTIN
------------
J. L. AUSTIN
<PAGE>

CERTIFICATE OF FIRST AMENDMENT
TO THE CERTIFICATE OF INCORPORATION OF
MICRON TECHNOLOGY, INC.

The undersigned, Juan A. Benitez, President and Cathy L. Smith, Corporate
Secretary of Micron Technology, Inc. a Delaware corporation, hereby certify that
the following amendment to the Certificate of Incorporation of Micron
Technology, Inc. has been duly adopted in accordance with Section 242 of the
General Corporation Law of the State of Delaware, as amended. Said amendment
was adopted by a resolution of the Board of Directors on October 27, 1986 which
sets forth the proposed amendment, declared its advisability and directed that
at be considered at the Annual Meeting of Shareholders. At the regularly
scheduled Annual Meeting of Shareholders held on January 26, 1987, after due
notice thereof in accordance with the law, a majority of said shareholders
entitled to vote thereon has been voted in favor of said amendment. Said
amendment as adopted and approved adds the following provisions to the
Certificate of Incorporation:

10. Pursuant to, and to the full extent permitted by Section 102(b) and
any other relevant provisions of the General Corporation Law of the State of
Delaware, no director shall be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that this
provision shall not eliminate or limit the liability of a director (i) for any
breach of director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from which
the director derived an improper personal benefit.

11. Pursuant to, and to the full extent permitted by, Section 145 and any
other relevant provisions of the General Corporation Law of the State of
Delaware, the corporation shall, and is hereby obligated to, indemnify any
person, or the heirs, executors, or administrators of such person, who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, by reason of the fact that such person is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise. The
corporation shall, and is hereby obligated to, indemnify any of said persons in
each and every situation where the corporation is obligated to make such
indemnification pursuant to said statutory provisions. The corporation shall
also, and is hereby obligated to, indemnify any of said persons in each and
every situation where, under the aforesaid statutory provisions, the corporation
is not obligated, but is nevertheless permitted or empowered, to make such
indemnification, it being understood that, prior to making such indemnification,
the corporation shall make, or cause to be made, such determinations or
decisions, following such procedures or methods, as are required by said
statutes.
<PAGE>

IN WITNESS WHEREOF, we have hereunto set our hands and affixed the
corporate seal of said corporation as of this 28th of January 1987.

Juan A. Benitez
---------------
Juan A. Benitez, President

Cathy L. Smith
--------------
Cathy L. Smith, Secretary

ACKNOWLEDGMENT

STATE OF IDAHO

COUNTY OF ADA

The foregoing instrument was acknowledged before me this 28th day of
January, 1987 by Juan A. Benitez, as President and Cathy L. Smith, as Corporate
Secretary of Micron Technology, Inc., a Delaware corporation, on behalf of the
corporation and that the same is the act and deed of the corporation and the
facts stated therein are true.

Notary Public Jill L. Henson
--------------

My commission expires 7/88
----

(SEAL)
<PAGE>

CERTIFICATE OF SECOND AMENDMENT
TO THE CERTIFICATE OF INCORPORATION OF
MICRON TECHNOLOGY, INC.

The undersigned, Randal W. Chance, President and Chief Operating Officer
and Cathy L. Smith, Corporate Secretary of Micron Technology, Inc. a Delaware
corporation, hereby certify that the following amendment to the Certificate of
Incorporation of Micron Technology, Inc. has been duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware, as
amended. Said amendment was adopted by a resolution of the Board of Directors
on October 31, 1988 which sets forth the proposed amendment, declared its
advisability and directed that it be considered at the Company's Annual Meeting
of Shareholders. At the regularly scheduled 1988 Annual Meeting of Shareholders
held on January 30, 1989, after due notice thereof in accordance with the law, a
majority of the outstanding stock entitled to vote thereon has been voted in
favor of said amendment. Said amendment as adopted and approved amends paragraph
4 of the Certificate of Incorporation to read as follows:

4. The total number of shares of stock which the corporation shall have
authority to issue is one hundred million (100,000,000) and the par value of
each of such shares is Ten Cents ($0.10) amounting in the aggregate to Ten
Million Dollars ($10,000,000.00).

IN WITNESS WHEREOF, we have hereunto set our hands and affixed the
corporate seal of said corporation as of the 31st of January, 1989.

Randal W. Chance
----------------
Randal W. Chance, President and
Chief Operating Officer

Cathy L. Smith
- --------------
Cathy L. Smith, Corporate Secretary

ACKNOWLEDGEMENT

STATE OF IDAHO

COUNTY OF ADA

The foregoing instrument was acknowledged before me this 31st day
ofJanuary, 1989 by Randal W. Chance, as President and Chief Operation Officer
and Cathy L. Smith as Corporate Secretary of Micron Technology, Inc., a Delware
corporation, on behalf of the corporation and that the same is the act and deed
of the corporation and the facts stated thereinare true.

Benicia R. Morrison
-------------------
Notary Public
My Commission Expires 6-24-94
-------
(SEAL)
<PAGE>

CERTIFICATE OF THIRD AMENDMENT
TO THE CERTIFICATE OF INCORPORATION OF
MICRON TECHNOLOGY, INC.

The undersigned, James W. Garrett, President and Chief Operating Officer and
Jill L. Devereaux, Assistant Corporate Secretary of Micron Technology, Inc. a
Delaware corporation, hereby certify that the following amendment to the
Certificate of Incorporation of Micron Technology, Inc. has been duly adopted in
accordance with Section 242 of the General Corporation Law of the State of
Delaware, as amended. Said amendment was adopted by a resolution of the Board of
Directors on December 2, 1993 which set forth the proposed amendment, declared
its advisability and directed that it be considered at the Company's Annual
Meeting of Shareholders. At the regularly scheduled 1993 Annual Meeting of
Shareholders duly held on January 31, 1994, after due notice thereof in
accordance with applicable law, a majority of the outstanding stock entitled to
vote thereon voted in favor of said amendment. Said amendment as adopted and
approved amends paragraph 4 of the Certificate of Incorporation to read as
follows:

4. The total number of shares of stock which the corporation shall have
authority to issue is one hundred fifty million (150,000,000) and the par value
of each of such shares is Ten Cents ($0.10).

IN WITNESS WHEREOF, this Certificate of Third Amendment to the Company's
Certificate of Incorporation have been executed this 8th day of February, 1994.

James W. Garrett
----------------
James W. Garrett, President and
Chief Operating Officer

Jill L. Devereaux
- -----------------
Jill L. Devereaux, Assistant Corporate
Secretary

I, Sherilyn Maxfield, a notary public, do hereby certify that on this 8th day of
February, 1994, personally appeared before me James W. Garrett and Jill L.
Devereaux who, being by me first duly sworn, declared that they are the
President and Chief Operating Officer and Assistant Corporate Secretary,
respectively, of Micron Technology, Inc., that they signed the foregoing
document as President and Chief Operating Officer and Assistant Corporate
Secretary of the corporation, and that the statements therein contained are
true.

Sherilyn Maxfield
-----------------
Notary Public
Residing at Boise, Idaho
------------
Commission Expires 10/21/97
--------

(seal)
<PAGE>

CERTIFICATE OF FOURTH AMENDMENT
TO THE CERTIFICATE OF INCORPORATION OF
MICRON TECHNOLOGY, INC.

The undersigned, Steven R. Appleton, Chief Executive Officer and President
and Cathy L. Smith, Corporate Secretary of Micron Technology, Inc. a Delaware
corporation, hereby certify that the following amendment to the Certificate of
Incorporation of Micron Technology, Inc. has been duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware, as
amended. Said amendment was adopted by a resolution of the Board of Directors on
October 27, 1994 which set forth the proposed amendment, declared its
advisability and directed that it be considered at the Company's Annual Meeting
of Shareholders. At the regularly scheduled 1994 Annual Meeting of Shareholders
duly held on January 30, 1995, after due notice thereof in accordance with
applicable law, a majority of the outstanding stock entitled to vote thereon
voted in favor of said amendment. Said amendment as adopted and approved amends
paragraph 4 of the Certificate of Incorporation to read as follows:

4. The total number of shares of stock which the corporation shall have
authority to issue is three hundred million (300,000,000) and the par value of
each of such shares is Ten Cents ($0.10).

IN WITNESS WHEREOF, this Certificate of Fourth Amendment to the Company's
Certificate of Incorporation have been executed this 30th day of January, 1995.

Steven R. Appleton
------------------
Steven R. Appleton, Chairman,
Chief Executive Officer and
President

Cathy L. Smith
- --------------
Cathy L. Smith, Corporate Secretary

I, Sherilyn Maxfield, a notary public, do hereby certify that on this 30th
day of January, 1995, personally appeared before me Steven R. Appleton and Cathy
L. Smith who, being by me first duly sworn, declared that they are the Chairman,
Chief Executive Officer and President and Corporate Secretary, respectively, of
Micron Technology, Inc., that they signed the foregoing document as Chairman,
Chief Executive Officer and President and Corporate Secretary of the
corporation, and that the statements therein contained are true.

Sherilyn Maxfield
-----------------
Notary Public
Residing at Ada County
----------
Commission Expires 10/21/97
--------

(seal)
<PAGE>

CERTIFICATE OF FIFTH AMENDMENT
TO THE CERTIFICATE OF INCORPORATION OF
MICRON TECHNOLOGY, INC.

The undersigned, Steven R. Appleton, Chairman, Chief Executive Officer and
President of Micron Technology, Inc., a Delaware corporation, hereby certify
that the following amendment to the Certificate of Incorporation of Micron
Technology, Inc. has been duly adopted in accordance with Section 242 of the
General Corporation Law of the State of Delaware, as amended. Said amendment
was adopted by a resolution of the Board of Directors on October 2, 1995 which
set forth the proposed amendment, declared its advisability and directed that it
be considered at the Company's Annual Meeting of Shareholders. At the regularly
scheduled 1995 Annual Meeting of Shareholders duly held on January 29, 1996,
after due notice thereof in accordance with applicable law, a majority of the
outstanding stock entitled to vote thereon voted in favor of said amendment.
Said amendment as adopted and approved amends paragraph 4 of the Certificate of
Incorporation to read as follows:

4. The total number of shares of stock which the corporation shall have
authority to issue is one billion (1,000,000,000) and the par value of each of
such shares is Ten Cents ($0.10).

IN WITNESS WHEREOF, this Certificate of Fifth Amendment to the Certificate
of Incorporation of Micron Technology, Inc. has been executed this 7th day of
February, 1996.

/s/ Steven R. Appleton
- ----------------------
Steven R. Appleton, Chairman,
Chief Executive Officer and
President

I, Jan R. Reimer, a notary public, do hereby certify that on this 7th day
of February, 1996, personally appeared before me Steven R. Appleton who, being
by me first duly sworn, declared that he is Chairman, Chief Executive Officer
and President of Micron Technology, Inc., that he signed the foregoing document
on behalf of Micron Technology, Inc. in his capacity as Chairman, Chief
Executive Officer and President of the corporation, and that the facts stated
therein are true.

/s/ Jan R. Reimer
-----------------
Notary Public
Residing at Ada County
Commission Expires: 9/1/2001
--------

(seal)
<PAGE>

CERTIFICATE OF SIXTH AMENDMENT
TO THE CERTIFICATE OF INCORPORATION OF
MICRON TECHNOLOGY, INC.

The undersigned, Steven R. Appleton, Chairman, Chief Executive Officer and
President of Micron Technology, Inc. a Delaware corporation, hereby certifies
that the following amendment to the Certificate of Incorporation of Micron
Technology, Inc. has been duly adopted in accordance with Section 242 of the
General Corporation Law of the State of Delaware, as amended. Said amendment
was adopted by a resolution of the Board of Directors on November 23, 1998 which
set forth the proposed amendment, declared its advisability and directed that it
be considered at the Company's Annual Meeting of Shareholders. At the regularly
scheduled 1998 Annual Meeting of Shareholders duly held on January 14, 1999,
after due notice thereof in accordance with applicable law, a majority of the
outstanding stock entitled to vote thereon voted in favor of said amendment.
Said amendment as adopted and approved amends the first paragraph of Section 4
of the Certificate of Amendment to read as follows:

4. (a) Shares Authorized. The total number of shares of stock
-----------------
which the corporation shall have the authority to issue is one billion thirty
two million (1,032,000,000), consisting of (i) one billion (1,000,000,000)
shares of Common Stock, par value $0.10 per share (the "Common Stock") and (ii)
thirty two million (32,000,000) shares of Class A Common Stock, par value $0.10
per share (the "Class A Common Stock").

(b) Class A Common Stock.
--------------------

Section 1. Liquidation Rights. In the event of any voluntary or involuntary
--------- ------------------
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of each share of Class A Common Stock shall be entitled to share ratably
in any distribution of any of the assets or funds of the Corporation to the
holders of the Common Stock (each share of the Class A Common Stock being
treated as the number of shares of Common Stock into which it could then be
converted for such purpose).

Section 2. Transfer of Class A Common Stock. No person or entity holding
--------- --------------------------------
shares of Class A Common Stock may transfer, sell, assign, devise or bequeath
any of such holder's interest in his or its Class A Common Stock, and the
Corporation and the transfer agent for the Class A Common Stock shall not
register the transfer of such shares of Class A Common Stock, whether by sale,
assignment, gift, devise, bequest, appointment or otherwise, except to a
Permitted Transferee (as defined below) of such holder. For purposes of this
Section 2, the term "Permitted Transferee" with respect to any holder of Class A
--------------------
Common Stock shall mean (i) the Corporation, (ii) a Qualified Subsidiary
(provided that if at any time such Qualified Subsidiary ceases to be a Qualified
Subsidiary such Class A Common Stock will automatically convert into Common
Stock pursuant to Section 3.b) or (iii) Intel Corporation. Notwithstanding the
foregoing, the provisions of this Section 2 do not prohibit transfers that
result in automatic conversion pursuant to Section 3.b, provided, that the
transfer agent shall not register the transfer of such shares of Class A Common
Stock or the Common Stock into which they automatically convert unless
concurrently with such transfer, the certificate representing such shares of
Class A Common Stock to be so transferred shall be surrendered and exchanged for
a certificate
<PAGE>

representing the applicable number of shares of Common Stock into which such
shares of Class A Common Stock are automatically converted by virtue of such
transfer.

Section 3. Conversion of Class A Common Stock.
--------- ----------------------------------

a. Voluntary Conversion. At any time and from time to time after the
--------------------
issuance of the Class A Common Stock, any holder of Class A Common Stock may
convert any or all of the shares of Class A Common Stock held by such holder
into shares of Common Stock at the then effective conversion ratio. The
conversion ratio at which shares of Common Stock shall be deliverable upon
conversion (the "Conversion Ratio") shall initially be one-for-one. Such
----------------
initial Conversion Ratio shall be subject to adjustment, in order to adjust the
number of shares of Common Stock into which the Class A Common Stock is
convertible, as hereinafter provided.

b. Automatic Conversion. Each share of Class A Common Stock shall
--------------------
automatically be converted into shares of Common Stock at the then effective
Conversion Ratio upon the transfer by any holder of Class A Common Stock to a
person or entity who is not a Permitted Transferee of such holder.

c. Mechanics of Conversion. No fractional shares of Common Stock shall
-----------------------
be issued upon conversion of the Class A Common Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then fair
market value of one share of Common Stock, as determined in good faith by the
Board of Directors. Before any holder of Class A Common Stock shall be entitled
to receive certificates for the shares of Common Stock issued upon conversion,
such holder shall surrender the certificate or certificates for such Class A
Common Stock, duly endorsed, at the principal office of the Corporation and
shall state therein his name or the name, or names, of his nominees in which he
wishes the certificate or certificates for shares of Common Stock to be issued.
No voluntary conversion shall be permitted unless and until the holder shall
submit to the Corporation either (i) evidence of compliance with the filing and
waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR Act") or (ii) a certificate of an officer of the
-------
holder that the conversion does not require any filing under the HSR Act. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Class A Common Stock or to such holder's nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which such holder or such holder's nominee shall be entitled as aforesaid,
together with cash in lieu of any fraction of a share. Subject to the
foregoing, in the case of automatic conversion under Section 3.b, such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such automatic conversion and upon surrender of the
certificate representing the Class A Common Stock to be converted in the case of
a voluntary conversion pursuant to Section 3.a above ( the "Conversion Date").
---------------
The person or persons entitled to receive the shares of Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date; provided that the
certificates representing the Class A Common Stock have been duly endorsed for
transfer and delivered to the Corporation or its transfer agent.
<PAGE>

d. Stock Splits, Mergers, etc. In case of any subdivision (by stock
---------------------------
split, stock dividend or otherwise) of the Common Stock or any combination of
the Class A Common Stock (by reverse stock split or otherwise), the Conversion
Ratio shall be proportionately increased, and conversely in the case of
combination of the Common Stock (by reverse stock split or otherwise) or any
subdivision of the Class A Common Stock (by stock split, stock dividend or
otherwise), the Conversion Ratio shall be proportionately decreased, with such
adjustment to the Conversion Ratio to be effective immediately after the opening
of business on the day following the day which such subdivision or combination,
as the case may be, becomes effective. In case of any reorganization,
reclassification or change of shares of the Common Stock (other than a change in
par value or from par value to no par value as a result of a subdivision or
combination), or in the case of any consolidation of the Corporation with one or
more corporations or a merger of the Corporation with another corporation (other
than a consolidation or merger in which the Corporation is the resulting or
surviving corporation and which does not result in any reclassification or
change of outstanding shares of Common Stock), provision shall be made so that
each holder of a share of Class A Common Stock shall have the right at any time
thereafter as nearly as practicable, so long as the conversion right hereunder
with respect to such share would exist had such event not occurred, to convert
such share into the kind and amount of shares of stock and other securities and
properties (including cash) receivable upon such reorganization,
reclassification, change, consolidation or merger by a holder of the number of
shares of Common Stock into which such shares of Class A Common Stock might have
been converted immediately prior to such reorganization, reclassification,
change, consolidation or merger. In the event of such a reorganization,
reclassification, change, consolidation or merger, effective provision shall be
made in the certificate of incorporation of the resulting or surviving
corporation or otherwise for the protection of the conversion rights of the
shares of Class A Common Stock that shall be applicable, as nearly as reasonably
may be, to any such other shares of stock and other securities and property
(including cash) deliverable upon conversion of shares of Common Stock into
which Class A Common Stock might have been converted immediately prior to such
event.

e. Special Conversion Adjustments. The number of shares of Common Stock
------------------------------
receivable upon conversion of a share of Class A Common Stock shall be adjusted
in the event that the Corporation fails to achieve any one or more of the
Qualified Expenditures Milestone, the First Minimum Production Milestone or the
Second Minimum Production Milestone on the applicable milestone dates in the
manner described below. On or prior to twenty five (25) days after an
applicable milestone date, the Corporation shall deliver to Intel Corporation a
certificate of an executive officer of the Corporation certifying whether the
applicable milestone has been achieved, and if such milestone has not been
achieved, such additional data (including, but not limited to the amount of
Qualified Expenditures made and actual RDRAM production during the applicable
period) required to calculate the appropriate conversion adjustment. Upon
receipt of such certificate with the required information, Intel Corporation
shall have thirty (30) days in which to notify the Corporation in writing of its
irrevocable election to exercise a Special Conversion Adjustment. If Intel
Corporation has not provided an irrevocable written notice electing to exercise
a Special Conversion Adjustment within the such period, then no there shall be
no Special Conversion Adjustment with respect to the applicable milestone.
Except as specifically provided herein, the failure to exercise a Special
Conversion Adjustment with
<PAGE>

respect to one milestone shall not impair Intel Corporation's ability to
exercise a Special Conversion Adjustment with respect to the failure to achieve
a different milestone.

f. Postponement of Milestone Dates; Modification of Milestones. (i) In
-----------------------------------------------------------
the event that the Corporation's ability to achieve the Qualified Expenditure
Milestone by the Qualified Expenditures Milestone Date is significantly impaired
by events or circumstances outside of its control, such as Force Majeure or
limited availability of required equipment or materials, the milestone date will
be appropriately postponed.

(ii) In the event that any of the events specified in Section 7(f)(ii) of
the Stock Rights Agreement occur, the First Minimum Production Milestone or the
Second Minimum Production Milestone shall be either postponed or waived,
respectively, as appropriate. In addition, if on the Maximum FGI Date, the
RDRAM device finished goods inventory of the Corporation and its subsidiaries
exceeds the Maximum FGI, the Second Minimum Production Milestone will be
modified, as appropriate.

(iii) In the event of the occurrence of any of the foregoing events or
circumstances, as a result of which either a milestone date or milestone is to
be postponed, waived or modified, no Special Conversion Adjustment shall occur
as a result of the failure to achieve the applicable milestone by the applicable
milestone date, unless and until the Corporation and Intel Corporation shall
have agreed upon the appropriate postponement, waiver or modification.
Notwithstanding the above, upon such agreement, the Special Conversion
Adjustment shall be applied as of the agreed upon date, notwithstanding that
such agreement is reached after such date. If no agreement can be reached, the
dispute will be settled in accordance with Section 8.12 of the Securities
Purchase Agreement.

g. Failure to Achieve Qualified Expenditures Milestone. Subject to the
---------------------------------------------------
provisions hereof:

(i) If the Corporation fails to make at least the Minimum Qualified
Expenditures on or prior to the Qualified Expenditures Milestone Date, the
Conversion Ratio shall be adjusted by multiplying the current Conversion Ratio
by a fraction, the numerator of which shall be the Initial Purchase Price and
the denominator of which shall be the greater of (i) the average closing sales
price on the New York Stock Exchange for the Common Stock during the 20 trading
day period ending two trading days prior to the Qualified Expenditures Milestone
Date, or (ii) 50% of the Initial Purchase Price.

(ii) If the Corporation makes Qualified Expenditures of more than the
Minimum Qualified Expenditures but less than the Required Qualified Expenditures
on or prior to the Qualified Expenditures Milestone Date, the Conversion Ratio
shall be increased. The amount of the increase in the Conversion Ratio
(expressed as a decimal) shall be determined by first (w) dividing the Initial
Purchase Price by the greater of (i) the average closing sales price on the New
York Stock Exchange for the Common Stock during the 20 trading day period ending
two trading days prior to the applicable milestone date, or (ii) 50% of the
Initial Purchase Price, then (x) subtracting 1.0 from the result, then (y)
multiplying this result by a fraction, the numerator of which shall be (A) the
Required Qualified Expenditures minus (B) the amount of Qualified
<PAGE>

Expenditures and the denominator of which shall be the Required Qualified
Expenditures, and (z) dividing the result by 2. The new Conversion Ratio shall
then be the result of the above calculation plus the prior Conversion Ratio.

h. Failure to Achieve First Minimum Production Milestone. Subject to the
-----------------------------------------------------
provisions hereof, if the Corporation fails to achieve the First Minimum
Production Milestone, the increase in the Conversion Ratio (expressed as a
decimal) shall be determined by first (w) dividing the Initial Purchase Price by
the greater of (i) the average closing sales price on the New York Stock
Exchange for the Common Stock during the 20 trading day period ending two
trading days prior to the applicable milestone date, or (ii) 50% of the Initial
Purchase Price, then (x) subtracting 1.0 from the result, then (y) multiplying
this result by a fraction, the numerator of which shall be the First Minimum
Production Milestone for the quarter minus the actual RDRAM production achieved
during the quarter and the denominator of which shall be the First Minimum
Production Milestone for the quarter, and (z) dividing the result by 2. The new
Conversion Ratio shall then be the result of the above calculation plus the
prior Conversion Ratio.

i. Failure to Achieve Second Minimum Production Milestone. Subject to
------------------------------------------------------
the provisions hereof, if the Corporation fails to achieve the Second Minimum
Production Milestone the increase in the Conversion Ratio (expressed as a
decimal) shall be determined by first (w) dividing the Initial Purchase Price by
greater of (A) the average closing sales price on the New York Stock Exchange
for the Common Stock during the 20 trading day period ending two trading days
prior to the applicable milestone date, or (ii) 50% of the Initial Purchase
Price, then (x) subtracting 1.0 from the result, then (y) multiplying this
result by a fraction, the numerator of which shall be the Second Minimum
Required Production for the quarter minus the actual RDRAM production achieved
during the quarter and the denominator of which shall be the Second Minimum
Required Production for the quarter and (z) dividing the result by 2. The new
Conversion Ratio shall then be the result of the above calculation plus the
prior Conversion Ratio.

j. Multiple Special Conversion Adjustments; Prior Adjustments. If more
----------------------------------------------------------
than one Special Conversion Adjustment occurs hereunder (or comparable
adjustments under the Stock Rights Agreement ("Rights Special Conversion
-------------------------
Adjustments"), subsequent Special Conversion Adjustments shall be calculated as
- -----------
provided herein, but only the number of additional shares in excess of the
number issuable using the Initial Conversion Ratio (as defined in this Section
3.j) (appropriately adjusted to reflect the effect of any stock splits,
reclassifications, stock dividends, recapitalizations, combinations or other
similar events affecting the Common Stock occurring after the creation of the
Class A Common Stock), shall be issuable in respect of such subsequent Special
Conversion Adjustment upon conversion of the Class A Common Stock. For purposes
of this Section 3.j, the "Initial Conversion Ratio" will be one-to-one
(appropriately adjusted to reflect the effect of any stock splits,
reclassifications, stock dividends, recapitalizations, combinations or other
similar events affecting the Common Stock occurring after the creation of the
Class A Common Stock), provided, however, that in the event of the occurrence of
-----------------
a Rights Special Conversion Adjustment that resulted in an adjustment to the
Exchange Ratio in accordance with the provisions of the Stock Rights Agreement
prior to the creation of the Class A Common Stock, the Initial Conversion Ratio
shall be equal to a fraction, the numerator of
<PAGE>

which shall be one (appropriately adjusted to reflect the effect of any stock
splits, reclassifications, stock dividends, recapitalizations, combinations or
other similar events affecting the Common Stock occurring after creation of the
Class A Common Stock), and the denominator of which shall be the exchange ratio
in effect under the Stock Rights Agreement immediately prior to the creation of
the Class A Common Stock. Notwithstanding anything else to the contrary set
forth herein, the Conversion Ratio shall not be adjusted for any events,
circumstances or milestones for which adjustments have been made (or may be made
as a result of completion of an audit or resolution of any dispute as to the
appropriate amount of an adjustment required thereunder) pursuant to the Stock
Rights Agreement.

k. Cash Option. In lieu of all or a portion of a Special Conversion
-----------
Adjustment, the Corporation may elect to make a cash payment in respect of all
or a portion of the dollar amount of the Special Conversion Adjustment (such
election to be made within five (5) business days of Intel Corporation's Special
Conversion Adjustment election, and such amount shall be paid within five (5)
business days of the Corporation's election). The dollar amount in respect of
any Special Conversion Adjustment to be paid in cash shall be calculated by
multiplying the additional shares issuable to Intel Corporation upon conversion
of the Class A Common Stock following the Special Conversion Adjustment by the
average closing sales price on the New York Stock Exchange for the Common Stock
during the 20 trading day period ending two trading days prior to the applicable
milestone date.

l. Limitations on Special Conversion Adjustments. Anything in Sections
---------------------------------------------
3.h and 3.j to the contrary notwithstanding, no Special Conversion Adjustment
will be made for failure to achieve the First Minimum Production Milestone or
Second Minimum Production Milestone if a Special Conversion Adjustment election
pursuant to clause (i) of Section 3.g above is made by Intel Corporation. In
addition, anything in Sections 3.e through 3.j notwithstanding, Special
Conversion Adjustments will be limited, and not given effect, to the extent
required to ensure (1) that the value of additional shares of Common Stock and
other securities or property and any related payments (including payments in
lieu of adjustments pursuant to Section 3.k hereof) issued or issuable or
payable as a result of such adjustments, together with any shares of Common
Stock and other securities or property and any related payments issued or
issuable or payable as a result of the Special Conversion Adjustments with
respect to the Rights, does not exceed the Maximum Adjustment Amount (with the
value of such additional shares, securities and property measured as of the
milestone date with respect to the applicable Special Conversion Adjustments
resulting in such additional shares, securities or property and any related
payments, which, in the case of the Common Stock, shall be based on the average
closing sales price on the New York Stock Exchange for the Common Stock during
the 20 trading day period ending two trading days prior to the milestone date
corresponding to such Special Conversion Adjustment); and (2) that the aggregate
number of shares of Common Stock issued or issuable upon exercise of Rights or
upon conversion of Class A Common Stock does not exceed the lesser of (i) the
Maximum Percentage and (ii) the Maximum Shares.

m. Existing Stock Certificates. Irrespective of any adjustments in the
---------------------------
number or kind of shares issuable upon the conversion of the Class A Common
Stock, certificates representing Class A Common Stock theretofore or thereafter
issued may continue to express the same number and kind of shares as are stated
in the certificates initially issuable pursuant hereto.
<PAGE>

n. Payment of Taxes. The Corporation will pay all documentary stamp taxes
----------------
and other governmental charges (excluding all foreign, federal, state or local
income, franchise, property, net worth, capital, estate, inheritance, gift or
similar taxes) in connection with the issuance or delivery of the Class A Common
Stock, as well as all such taxes attributable to the initial issuance or
delivery of Common Stock upon the conversion of Class A Common Stock. The
Corporation shall not, however, be required to pay any tax that may be payable
in respect of any subsequent transfer of the Class A Common Stock or any
transfer involved in the issuance and delivery of Common Stock in a name other
than that in which the Class A Common Stock or Common Stock to which such
issuance relates were registered, and, if any such tax would otherwise be
payable by the Corporation, no such issuance or delivery shall be made unless
and until the person requesting such issuance has paid to the Corporation the
amount of any such tax, or it is established to the reasonable satisfaction of
the Corporation that any such tax has been paid.

o. Common Stock Reserved. The Corporation shall reserve and keep
---------------------
available out of its authorized but not outstanding Common Stock such number of
shares of Common Stock as shall, from time to time be, sufficient for conversion
of the Class A Common Stock.

Section 4. No Redemption. The Class A Common Stock shall not be redeemable.
---------- -------------

Section 5. Voting Rights; Non-Voting Security. The holders of shares of
--------- ----------------------------------
Class A Common Stock shall have no voting rights except as provided in the
Certificate of Incorporation or by applicable law.

Section 6. Dividend Rights. In the event any dividend or other distribution
---------- ---------------
payable in cash or other property is declared on the Common Stock (excluding any
dividend or other distribution for which adjustment to the Conversion Ratio is
provided by Section 3.d hereof), each holder of shares of Class A Common Stock
on the record date for such dividend or distribution shall be entitled to
receive on the date of payment or distribution of such dividend or other
distribution the same cash or other property which such holder would have
received if on such record date such holder was the holder of record of the
number (including for purposes of this Section 6 any fraction) of shares of
Common Stock into which the shares of Class A Common Stock then held by such
holder are then convertible.

Section 7. Certain Definitions; Interpretation.
-----------------------------------

For purposes hereof the following terms shall have the meanings set forth
below.

First Minimum Production Milestone. The First Minimum Production Milestone
----------------------------------
shall have the meaning ascribed to such term in the Securities Purchase
Agreement.

First Minimum Required Production. First Minimum Required Production
---------------------------------
shall have the meaning ascribed to such term in the Securities Purchase
Agreement.

First Production Milestone Date. The First Production Milestone Date shall
-------------------------------
have the meaning ascribed to such term in the Securities Purchase Agreement.
<PAGE>

Force Majeure. Force Majeure shall mean an act of God, fire, flood,
-------------
accident, riot war, government intervention, embargoes, strikes, labor
difficulties, equipment failure, late delivery of supplies, supplier shortages
or other difficulties which are beyond the reasonable control and without the
fault or negligence of a party whose performance has been affected.

Initial Purchase Price. Initial Purchase Price means $31.625, appropriately
----------------------
adjusted to reflect the effect of any stock splits, reclassifications, stock
dividends, recapitalizations, combinations or other similar events affecting the
Common Stock occurring after October 19, 1998.

Maximum Adjustment Amount. Maximum Adjustment Amount shall have the meaning
-------------------------
ascribed to such term in the Securities Purchase Agreement.

Maximum FGI. Maximum FGI shall have the meaning ascribed to such term in the
-----------
Securities Purchase Agreement.

Maximum FGI Date. Maximum FGI Date shall have the meaning ascribed to such
----------------
term in the Securities Purchase Agreement.

Maximum Percentage. Maximum Percentage shall have the meaning ascribed to
------------------
such term in the Securities Purchase Agreement.

Maximum Shares. Maximum Shares shall have the meaning ascribed to such term
--------------
in the Securities Purchase Agreement.

Minimum Qualified Expenditures. Minimum Qualified Expenditures shall have the
------------------------------
meaning ascribed to such term in the Securities Purchase Agreement.

Qualified Expenditures. Qualified Expenditures shall have the meaning
----------------------
ascribed to such term in the Securities Purchase Agreement.

Qualified Expenditures Milestone. The Qualified Expenditures Milestone means
--------------------------------
the expenditure of at least the Required Qualified Expenditures on or before the
Qualified Expenditures Milestone Date.

Qualified Expenditures Milestone Date. The Qualified Expenditures Milestone
-------------------------------------
Date shall have the meaning ascribed to such term in the Securities Purchase
Agreement.

Qualified Subsidiary. Qualified Subsidiary shall have the meaning ascribed to
--------------------
such term in the Rights and Restrictions Agreement.

Rambus. Rambus means Rambus, Inc. , a Delaware corporation, and any successor
------
to all or substantially all of Rambus Inc.'s business (by acquisition or
otherwise).

RDRAM. RDRAM shall have the meaning ascribed to such term in the Supply
-----
Agreement.
<PAGE>

Required Qualified Expenditures. Required Qualified Expenditures shall have
-------------------------------
the meaning ascribed to such term in the Securities Purchase Agreement.

Rights. Rights shall have the meaning ascribed to such term in the Stock
------
Rights Agreement.

Rights and Restrictions Agreement. Rights and Restrictions Agreement shall
---------------------------------
mean that certain Securities Rights and Restrictions Agreement, dated as of
October 19, 1998, as amended from time to time, by and between the Corporation
and Intel Corporation.

Second Minimum Production Milestone. The Second Minimum Production Milestone
-----------------------------------
shall have the meaning ascribed to such term in the Securities Purchase
Agreement.

Second Minimum Required Production. Second Minimum Required Production shall
----------------------------------
have the meaning ascribed to such term in the Securities Purchase Agreement.

Second Production Milestone Date. The Second Production Milestone Date shall
--------------------------------
have the meaning ascribed to such term in the Securities Purchase Agreement.

Securities Purchase Agreement. Securities Purchase Agreement shall mean that
-----------------------------
certain Securities Purchase Agreement, dated October 15, 1998, as amended from
time to time, by and between the Corporation and Intel Corporation.

Special Conversion Adjustment. A Special Conversion Adjustment shall mean
-----------------------------
an adjustment to the number of shares of Common Stock receivable upon conversion
of Class A Common Stock, as provided in Section 3 hereof.

Stock Rights Agreement. Stock Rights Agreement shall mean that certain
----------------------
Stock Rights Agreement, dated as of October 19, 1998, as amended from time to
time, by and between the Corporation and Intel Corporation.

Supply Agreement. Supply Agreement shall mean that certain Supply
----------------
Agreement, dated as of October 19, 1998, as amended from time to time, by and
between the Corporation and Intel Corporation.

Volume Production. Volume Production shall have the meaning ascribed to
-----------------
such term in the Securities Purchase Agreement.

IN WITNESS WHEREOF, this Certificate of Sixth Amendment to the Certificate of
Incorporation of Micron Technology, Inc. has been executed this 27th day of
January, 1999.

/s/ Steven R. Appleton
- ----------------------
Steven R. Appleton, Chairman, Chief
Executive Officer and President

<PAGE>

EXHIBIT 21.1

MICRON TECHNOLOGY, INC.

SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<CAPTION>
State (or jurisdiction) in
Name which Incorporated
---- ------------------
<S> <C>
Micron Electronics, Inc.................................. Minnesota
MEI California, Inc.................................... California
Micron Commercial Computer Systems, Inc................ Delaware
Micron Computer of Canada, Inc......................... Canada
Micron Computer Services, Inc.......................... Delaware
Micron Electronics (H.K.) Limited...................... Hong Kong
Micron Electronics Asia-Pacific Holdings, Inc.......... B.V.I.
Micron Electronics Asia-Pacific Operations, Inc........ B.V.I.
Micron Electronics Asia-Pacific Trading, Ltd........... Hong Kong
Micron Electronics International, Inc.................. Delaware
Micron Electronics Japan K.K........................... Japan
Micron Government Computer Systems, Inc................ Delaware
Micron Internet Services, Inc.......................... Delaware
Micron Overseas Trading, Inc........................... Barbados
Micron PC Web Services, Inc............................ Delaware
Micron PC, Inc......................................... Delaware
NetLimited, Inc........................................ California
SpecTek Products, LLC.................................. Delaware
Micron Europe Limited.................................... United Kingdom
Micron International Sales, Inc.......................... Barbados
Micron Semiconductor Asia Pte. Ltd....................... Singapore
Micron Semiconductor Asia Pacific, Inc................... Idaho
Micron Semiconductor (Deutschland) GmbH.................. Germany
Micron Semiconductor Products, Inc....................... Idaho
Micron Technology Asia Pacific, Inc...................... Idaho
Micron Technology Italia S.r.l........................... Italy
Micron Technology Japan, K.K............................. Japan
Micron Technology Services, Inc.......................... Idaho
Micron Technology Texas, LLC............................. Idaho
</TABLE>

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 as amended (File No. 333-18441) and Forms S-8 (File Nos.
33-3686, 33-16832, 33-27078, 33-38665, 33-38926, 33-65050, 33-52653, 33-57887,
333-07283, 333-17073, 333-50323, 333-65449, 333-71249, 333-82549) of Micron
Technology, Inc. and subsidiaries of our report dated October 4, 1999, relating
to the financial statements and financial statement schedule, which appear in
this Form 10-K.

/s/PricewaterhouseCoopers LLP

Boise, Idaho
November 8, 1999

<PAGE>

<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> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> SEP-3-1998 SEP-2-1999
<PERIOD-START> AUG-29-1997 SEP-4-1998
<PERIOD-END> SEP-3-1998 SEP-2-1999
<CASH> 559 295
<SECURITIES> 91 1,319
<RECEIVABLES> 508 741
<ALLOWANCES> 19 48
<INVENTORY> 292 366
<CURRENT-ASSETS> 1,501 2,830
<PP&E> 4,681 6,015
<DEPRECIATION> 1,645 2,215
<TOTAL-ASSETS> 4,704 6,965
<CURRENT-LIABILITIES> 746 922
<BONDS> 0 0
0 0
0 0
<COMMON> 22 27
<OTHER-SE> 2,680 3,937
<TOTAL-LIABILITY-AND-EQUITY> 4,704 6,965
<SALES> 3,025 3,764
<TOTAL-REVENUES> 3,025 3,764
<CGS> 2,745 2,950
<TOTAL-COSTS> 3,542 3,811
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1 47
<INCOME-PRETAX> (359) (92)
<INCOME-TAX> (129) (36)
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (247) (69)
<EPS-BASIC> (1.15) (0.26)
<EPS-DILUTED> (1.15) (0.26)

</TABLE>