<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MICRON ELECTRONICS, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
MICRON ELECTRONICS, INC.
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
MONDAY, NOVEMBER 20, 1995
------------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Shareholders of Micron
Electronics, Inc., a Minnesota corporation (the "Company"), will be held on
Monday, November 20, 1995, at 9:00 a.m., Mountain Standard Time, at the
Company's corporate offices, 900 East Karcher Road, Nampa, Idaho 83687, for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
accountants of the Company for the fiscal year ending August 29, 1996.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Shareholders of record at the close of business on October 9, 1995 are
entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to vote,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. The shareholders attending
the meeting may vote in person even if they have returned a Proxy.
By Order of the Board of Directors
RODERIC W. LEWIS
VICE PRESIDENT, GENERAL COUNSEL
AND CORPORATE SECRETARY
Nampa, Idaho
October 23, 1995
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed Proxy, sign and
date it, and return it in the postage-prepaid envelope provided, which is
addressed for your convenience. No postage is required if the Proxy is mailed in
the United States.
PLEASE MAIL YOUR PROXY PROMPTLY
<PAGE>
MICRON ELECTRONICS, INC.
900 EAST KARCHER ROAD
NAMPA, IDAHO 83687
---------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Micron Electronics, Inc., a Minnesota corporation (the "Company"), for use at
the 1995 Annual Meeting of Shareholders to be held on November 20, 1995, at 9:00
a.m., Mountain Standard Time, or at any adjournment(s) thereof (the "Annual
Meeting"). The purposes of the Annual Meeting are set forth herein and in the
accompanying Notice of 1995 Annual Meeting of Shareholders. The Annual Meeting
will be held at the Company's corporate offices, 900 East Karcher Road, Nampa,
Idaho 83687. This Proxy Statement and the enclosed Proxy were mailed on or
about October 23, 1995 to all shareholders entitled to vote at the Annual
Meeting.
The Company's principal executive offices are located at 900 East Karcher
Road, Nampa, Idaho, 83687 and its telephone number is (208) 465-3434.
RECORD DATE
Shareholders of record at the close of business on October 9, 1995 (the
"Record Date"), are entitled to notice of and to vote at the Annual Meeting.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING OF
SHAREHOLDERS
In order to be included in the proxy statement and form of proxy relating
to the Company's 1996 Annual Meeting of Shareholders, proposals of shareholders
of the Company which are intended to be presented at such meeting must be
received by the Company no later than June 25, 1996, and must be otherwise in
compliance with applicable laws and regulations and the bylaws of the Company.
REVOCABILITY OF PROXIES
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed Proxy bearing a later date or by
attending the Annual Meeting and voting in person.
SOLICITATION
The cost of soliciting Proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by the Company's
directors, officers and employees, without additional compensation, personally
or by telephone or telegram.
1
<PAGE>
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of shares of Common
Stock (as defined below) issued and outstanding on the Record Date. Shares that
are voted "FOR," "AGAINST" or "ABSTAIN" are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting with respect to such matter. Shares
represented by proxies as to which the authority to vote for a nominee has been
withheld will be deemed present and entitled to vote for purposes of determining
the existence of a quorum and calculating the votes cast, but will be deemed not
to have been voted in favor of the candidate with respect to whom the proxy
authority has been withheld.
VOTING SECURITIES AND PRINCIPAL HOLDERS
OUTSTANDING SHARES
The Company has only one class of stock outstanding, the Company's common
stock, $.01 par value per share (the "Common Stock"). At the Record Date,
91,331,028 shares of the Company's Common Stock were issued and outstanding.
VOTING RIGHTS
Each shareholder will be entitled to one vote for each share of Common
Stock held at the Record Date for all matters, including the election of
directors. Shareholders do not have the right to cumulate their votes in the
election of directors.
CHANGE IN CONTROL OF THE COMPANY
Pursuant to an Agreement of Merger dated October 30, 1994, as amended (the
"Merger Agreement"), by and among the Company, Micron Computer, Inc., an Idaho
corporation, and Micron Custom Manufacturing Services, Inc., an Idaho
corporation, on April 7, 1995, Micron Computer, Inc. and Micron Custom
Manufacturing Services, Inc., subsidiaries of Micron Technology, Inc., a
Delaware corporation, were merged with and into the Company (the "Merger"). Upon
the Merger, the separate existence of Micron Computer, Inc. and Micron Custom
Manufacturing Services, Inc. ceased, the Company remained as the surviving
corporation, the name of the Company was changed from "ZEOS International, Ltd."
to "Micron Electronics, Inc.", and all of the rights, privileges, powers,
franchises, properties, assets, liabilities and obligations of Micron Computer,
Inc. and Micron Custom Manufacturing Services, Inc. were vested in the Company.
Upon the effective time of the Merger (the "Effective Time of the Merger"),
in accordance with formulas set forth in the Merger Agreement, each outstanding
share of Micron Computer, Inc. Class A Common Stock was converted into 42.316865
shares of the Company's Common Stock, each outstanding share of Micron Computer,
Inc. Class B Common Stock was converted into 9.057555 shares of the Company's
Common Stock and each outstanding share of Micron Custom Manufacturing Services,
Inc. Common Stock was converted into 20.475586 shares of the Company's Common
Stock. After giving effect to the Merger, assuming the exercise of all
outstanding options and rights to purchase the Company's Common Stock, the
shares of the Company's Common Stock owned by Micron Technology, Inc.
represented approximately 79% of the outstanding shares of the Company's Common
Stock, shares owned by shareholders of the Company immediately prior to the
Merger represented approximately 11% of the outstanding shares of the Company's
Common Stock, and shares owned by former shareholders of Micron Computer, Inc.
and Micron Custom Manufacturing Services, Inc. represented approximately 10% of
the outstanding shares of the Company's Common Stock.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth ownership information with respect to the
Common Stock of the Company and the common stock, $.10 par value per share, of
Micron Technology, Inc., the parent corporation of the Company, (the "Micron
Technology, Inc. Common Stock") as of October 11, 1995, with respect to
(i) persons known by the Company to beneficially own more than five
percent (5%) of the Company's Common Stock, (ii) each director,
(iii) each Named Executive Officer listed in the "SUMMARY COMPENSATION
TABLE" below, and (iv) all directors and executive officers of the Company
as a group:
<TABLE>
<CAPTION>
MICRON ELECTRONICS, INC. MICRON TECHNOLOGY, INC.
COMMON STOCK COMMON STOCK
-------------------------- --------------------------
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
BENEFICIAL PERCENT OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS OWNERSHIP CLASS
------------------------ --------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83707 ................. 73,312,863 80.27% N/A N/A
Joseph M. Daltoso .................... 1,075,234 1.18% 27,600 (1) *
T. Erik Oaas ......................... 635,357 * 14,430 (1) *
Gregory D. Stevenson ................. 635,357 * 7,300 (1) *
Robert F. Subia ...................... 123,353 (2) * -- --
Steven R. Appleton ................... -- (3) -- 145,466 (1) *
Jerry M. Hess ........................ -- -- 22,000 (4) *
Robert A. Lothrop .................... -- -- 40,049 (5) *
John R. Simplot ...................... -- -- 17,955,200 (6)(7) 8.69%
Gregory E. Herrick ................... 1,732,236 (8)(9) 1.88% 5,000 *
Chase S. Mart ........................ 323,452 * -- --
Steven L. Schmidt .................... 566,097 * -- --
All directors and executive officers as a
group (20 persons)(1), (2), (3), (4),
(5), (6), (7), (8), (9) ............. 6,485,017 7.04% 8,239,535 8.82%
</TABLE>
- ------------------------
* Less than 1%.
(1) Includes options to purchase shares of Micron Technology, Inc. Common Stock
exercisable within 60 days of October 11, 1995 in the following amounts:
Mr. Daltoso, 13,580; Mr. Oaas, 14,430; Mr. Stevenson, 7,300; Mr. Appleton,
87,706, and all officers and directors as a group (20 persons), 135,196.
(2) Includes 300 shares of the Company's Common Stock held by Mr. Subia's
spouse and 200 shares held by Mr. Subia's son.
(3) Mr. Appleton, director of the Company, serves as Chairman, President and
Chief Executive Officer of Micron Technology, Inc. In addition to the
shares indicated in the above table, Mr. Appleton may be deemed the
beneficial owner of 73,312,863 shares of the Company's Common Stock held by
Micron Technology, Inc. Mr. Appleton disclaims beneficial ownership of all
of the shares of the Company's Common Stock held by Micron Technology, Inc.
(4) Includes 2,000 shares of Micron Technology, Inc. Common Stock held by J.M.
Hess Construction Co., Inc., a company owned solely by Mr. Hess.
3
<PAGE>
(5) Includes 424 shares of Micron Technology, Inc. Stock held by Mr. Lothrop's
spouse.
(6) Includes 12,067,600 shares of Micron Technology, Inc. Common Stock held in
the J.R. Simplot Self Declaration of Revocable Trust, dated December 21,
1989, and 15,200 shares held by Mr. Simplot's spouse.
(7) Mr. Simplot, a director of the Company, currently serves as Chairman
Emeritus and is a shareholder of the J.R. Simplot Company. In addition to
the shares indicated in the above table, Mr. Simplot may be deemed to be
the beneficial owner of 23,699,000 shares of Micron Technology, Inc. Common
Stock held by the J.R. Simplot Company and 2,600,000 shares of Micron
Technology, Inc. Common Stock held by Simplot Canada Limited, a wholly-
owned subsidiary of the J.R. Simplot Company.
(8) Includes options to purchase shares of the Company's Common Stock
exercisable within 60 days of October 11, 1995: Mr. Herrick, 800,076, and
all officers and directors as a group (20 persons), 815,076.
(9) Includes 628,000 shares of the Company's Common Stock held by Herrick
Family Partners, Ltd. (the "Partnership Shares"), for which Mr. Herrick is
general partner. Mr. Herrick disclaims beneficial ownership as to all but
6,280 of the Partnership Shares.
4
<PAGE>
PROPOSAL ONE:
ELECTION OF DIRECTORS
NOMINEES
The Company's Board of Directors has fixed the number of directors at eight
(8), and it is contemplated that a board of eight (8) directors will be elected
at the Annual Meeting. Unless otherwise instructed, the proxy holders will vote
the Proxies received by them for management's eight (8) nominees named below,
all of whom are presently directors of the Company. In the event that any
management nominee is unable or declines to serve as a director at the time of
the Annual Meeting, the Proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. In the event
that additional persons are nominated for election as directors, the Proxy
Holders intend to vote all Proxies received by them in such a manner as will
ensure the election of as many of the nominees listed below as possible. It is
not expected that any nominee will be unable or will decline to serve as a
director. The term of office of each person elected as a director will continue
until the next annual meeting of shareholders and until such person's successor
has been elected and qualified, or until such person's death, resignation,
removal, or disqualification. Officers are appointed by the Board of Directors
and serve at the discretion of the Board.
The names of the eight (8) nominees and certain information about them are
set forth below:
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- -----
Steven R. Appleton ..... 35 Chairman of the Board, President and
Chief Executive Officer of 1995
Micron Technology, Inc.
Joseph M. Daltoso ...... 33 Chairman of the Board, President and
Chief Executive Officer of the 1995
Company
Jerry M. Hess .......... 57 Chairman and Chief Executive Officer of
the J.M. Hess Construction 1995
Co., Inc.
Robert A. Lothrop ...... 69 Retired, former Senior Vice President of
the J.R. Simplot Company 1995
T. Erik Oaas ........... 42 Vice President, Finance and Chief
Financial Officer of the Company 1995
John R. Simplot ........ 86 Retired, former Chairman of the Board of
the J.R. Simplot Company 1995
Gregory D. Stevenson ... 34 Executive Vice President, Operations of
the Company 1995
Robert F. Subia ........ 33 Chairman, President and Chief Executive
Officer of Micron Custom 1995
Custom Manufacturing Services, Inc., a
wholly-owned subsidiary
of the Company
STEVEN R. APPLETON served as Vice President, Manufacturing of Micron
Technology, Inc. from August 1989 until April 1991, when he was appointed
President and Chief Operating Officer and a director of Micron Technology, Inc.
In July 1992, he assumed responsibilities as Chairman of the Board, President
and Chief Executive Officer of Micron Semiconductor, Inc. (then a wholly-owned
subsidiary of Micron Technology, Inc.) and resigned as a director and an officer
of Micron Technology, Inc. In May 1994, Mr. Appleton was re-elected to Micron
Technology, Inc.'s Board of Directors. He was named Chairman of the Board,
President and Chief Executive Officer of Micron Technology, Inc. in September
1994. At the Effective Time of the Merger, Mr. Appleton was named Chairman of
the Board, President and Chief Executive Officer of the Company. He resigned
from these positions on April 17, 1995, but continued as a director of the
Company.
5
<PAGE>
JOSEPH M. DALTOSO served as Micron Technology, Inc.'s Memory Applications
Group Manager from May 1990 until April 1992, when he was named President and a
director of Micron Custom Manufacturing Services, Inc., then a wholly-owned
subsidiary of Micron Technology, Inc. In July 1992, Mr. Daltoso was named
Chairman of the Board of Micron Custom Manufacturing Services, Inc., and in
August 1994, he was also named Chief Executive Officer of Micron Custom
Manufacturing Services, Inc. At the Effective Time of the Merger, Mr. Daltoso
was appointed Executive Vice President, Operations and a director of the
Company. He was named Chairman of the Board, President and Chief Executive
Officer of the Company on April 17, 1995.
JERRY M. HESS has served as Chairman and Chief Executive Officer of the
J.M. Hess Construction Co., Inc. since 1959. Mr. Hess has served on Micron
Technology, Inc.'s Board of Directors since 1994. At the Effective Time of the
Merger, Mr. Hess was appointed a director of the Company.
ROBERT A. LOTHROP served as the Senior Vice President of the J.R. Simplot
Company from January 1986 until his retirement in January 1991. The J.R.
Simplot Company is a privately held company involved in food processing and in
manufacturing and marketing fertilizers and agricultural chemicals. Mr. Lothrop
was elected to Micron Technology, Inc.'s Board of Directors in 1986. In 1992,
he was elected to the Board of Directors of Micron Semiconductor, Inc., then a
wholly-owned subsidiary of Micron Technology, Inc., and resigned as a director
of Micron Technology, Inc. Mr. Lothrop was re-elected to Micron Technology,
Inc.'s Board of Directors in 1994. At the Effective Time of the Merger, Mr.
Lothrop was appointed a director of the Company.
T. ERIK OAAS served as the Administration Manager of Micron Technology,
Inc.'s Memory Applications Group from July 1988 to April 1992, and as the
Administration Manager of Micron Custom Manufacturing Services, Inc., then a
wholly-owned subsidiary of Micron Technology, Inc., until July 1992, when he was
named Vice President, Finance and Treasurer and a director of Micron Custom
Manufacturing Services, Inc. At the Effective Time of the Merger, Mr. Oaas was
appointed Vice President, Finance and Chief Financial Officer and a director of
the Company.
JOHN R. SIMPLOT founded the J.R. Simplot Company and served as the
Chairman of the Board of Directors until his retirement in April 1994. Mr.
Simplot currently serves as Chairman Emeritus of the J.R. Simplot Company. Mr.
Simplot has served on Micron Technology, Inc.'s Board of Directors since 1980.
At the Effective Time of the Merger, Mr. Simplot was appointed a director of the
Company.
GREGORY D. STEVENSON served as Micron Technology, Inc.'s Test Manufacturing
Manager from October 1989 to April 1990 and served as Micron Technology, Inc.'s
Partials Business Unit Manager from April 1990 until April 1992. In April 1992,
Mr. Stevenson joined Micron Custom Manufacturing Services, Inc., then a wholly-
owned subsidiary of Micron Technology, Inc., as Component Recovery Business Unit
Manager. In July 1992, he was appointed Vice President, Component Recovery, and
in September 1992, he was also appointed a director of Micron Custom
Manufacturing Services, Inc. In August 1993, Mr. Stevenson was appointed Vice
President, Operations. At the Effective Time of the Merger, Mr. Stevenson was
appointed Vice President, Nampa Operations and served in that position until
July 1995 when he was appointed Executive Vice President, Operations and a
director of the Company.
ROBERT F. SUBIA was employed by Micron Technology, Inc. from 1986 to 1993,
where he held various sales management responsibilities, including IBM Account
Manager and Regional Sales Manager. In February 1993, Mr. Subia joined Micron
Custom Manufacturing Services, Inc., then a wholly-owned subsidiary of Micron
Technology, Inc., as Director of Sales and held this position until August 1994,
when he was appointed Vice President, Sales. On April 17, 1995, Mr. Subia was
appointed Chairman, President and Chief Executive Officer of Micron Custom
Manufacturing Services, Inc., a wholly-owned subsidiary of the Company, and was
appointed a director of the Company on October 2, 1995.
There is no family relationship between any director or executive officer
of the Company.
6
<PAGE>
VOTE REQUIRED
The eight nominees receiving the highest number of affirmative votes of the
shares entitled to vote on this matter shall be elected as the directors.
EXECUTIVE OFFICERS
The following table names the executive officers of the Company (other than
the directors named above) as of October 11, 1995:
NAME OF EXECUTIVE OFFICER AGE PRINCIPAL OCCUPATION
- ------------------------- --- --------------------
Jess Asla ................. 33 Vice President, Operations of Micron
Custom Manufacturing Services, Inc., a
wholly-owned subsidiary of the Company
Kenneth C. Birch .......... 31 Vice President, PC Engineering
George A. Haneke .......... 47 Vice President, Chief Information Officer
Nelson L. Hanks ........... 43 Vice President, Purchasing
Dean A. Klein ............. 38 Vice President, Research and Development
Brian C. Klene ............ 38 Executive Vice President, Sales and
Marketing
Roderic W. Lewis .......... 40 Vice President, General Counsel and
Corporate Secretary
Pete J. Scamardo .......... 32 Vice President, Product Marketing
Steven L. Schmidt ......... 33 Vice President, Alternate Sales
Gene P. Thomas, Jr. ....... 34 Vice President, Direct Sales
JESS ASLA served as the Process Engineer Manager for Micron Technology,
Inc.'s Memory Applications Group from 1988 until July 1994, when he was named
Director of Engineering for Micron Custom Manufacturing Services, Inc. On April
17, 1995, Mr. Asla was appointed Vice President, Operations of Micron Custom
Manufacturing Services, Inc., a wholly-owned subsidiary of the Company.
KENNETH C. BIRCH served as an Applications Engineer for Micron Technology,
Inc.'s Memory Applications Group from 1989 to 1990, when he was named PC Product
Manager. Mr. Birch served in this position until August 1991, when he joined
Micron Computer, Inc. as Vice President, Operations and Engineering. Mr. Birch
was appointed a director of Micron Computer, Inc. in April 1993, and in February
1994, Mr. Birch was appointed Vice President, Engineering. At the Effective
Time of the Merger, Mr. Birch was appointed Vice President, PC Engineering of
the Company.
GEORGE A. HANEKE joined Micron Technology, Inc. in May 1988 as an
Accounting Manager. Mr. Haneke joined Micron Computer, Inc. as its Vice
President, Finance, Treasurer and Chief Financial Officer in September 1993 and
served in that position until the Effective Time of the Merger. At the
Effective Time of the Merger, Mr. Haneke was appointed Vice President, Chief
Information Officer of the Company.
7
<PAGE>
NELSON L. HANKS joined Micron Technology, Inc. in 1989 as a consultant. In
1991, Mr. Hanks was named Managing Director of Micron Europe Limited, a wholly-
owned subsidiary of Micron Technology, Inc., and served in that position until
1993. From 1993 until the Effective Time of the Merger, Mr. Hanks served as
Special Projects Manager for Micron Technology, Inc. At the Effective Time of
the Merger, Mr. Hanks was appointed Vice President, Purchasing of the Company.
BRIAN C. KLENE joined Micron Technology, Inc. in January 1989 as Director,
Sales and Marketing of the Memory Applications Group and served in that position
until July 1990 when he was named a Regional Sales Manager for Micron
Technology, Inc. He served in that position until January 1991 when he was
named National Sales Manager of Micron Technology, Inc. Mr. Klene joined the
Company in July 1995 and was named Executive Vice President, Sales and Marketing
of the Company.
DEAN A. KLEIN was the co-founder of PC Tech, Inc. in 1984 and has served as
President of PC Tech, Inc. from its inception to the present. Since the
acquisition of PC Tech, Inc. by the Company in February 1992, Mr. Klein has also
served as Vice President, Research and Development of the Company.
RODERIC W. LEWIS practiced corporate and securities law with the law firms
of LeBoeuf, Lamb, Leiby & MacRae and Rogers, Mackey, Price & Anderson prior to
joining Micron Technology, Inc. in 1991 as Associate General Counsel. Mr. Lewis
was appointed Assistant General Counsel for Micron Technology, Inc. in 1993. At
the Effective Time of the Merger, Mr. Lewis was appointed Vice President,
General Counsel and Corporate Secretary of the Company.
PETE J. SCAMARDO served in various sales and marketing related management
positions with CompuAdd, Inc. prior to joining Micron Computer, Inc. in November
1991 as Director of Marketing and Strategic Relations. Mr. Scamardo was
appointed Vice President, Product Marketing of the Company on July 31, 1995.
STEVEN L. SCHMIDT was employed by Micron Technology, Inc. as a Regional
Sales Manager from 1989 until August 1991 when he was named Vice President,
Sales and Marketing of Micron Computer, Inc. In 1992, Mr. Schmidt was appointed
Executive Vice President and a director of Micron Computer, Inc. At the
Effective Time of the Merger, Mr. Schmidt was appointed Vice President. On July
31, 1995, Mr. Schmidt was appointed Vice President, Alternate Sales of the
Company.
GENE P. THOMAS, JR. served in various sales managerial roles with Polaroid
Corporation and CompuAdd Computer before being appointed Director of Marketing
for CompuAdd in 1993. Mr. Thomas joined Micron Computer, Inc. as Director of
Sales in March 1993 and was appointed Vice President, Sales and Marketing in
December 1993. At the Effective Time of the Merger, Mr. Thomas was appointed
Vice President, Micron Sales and Marketing. On July 31, 1995, Mr. Thomas was
appointed Vice President, Direct Sales of the Company.
SECTION 16(A) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own beneficially more than ten percent
(10%) of the Common Stock of the Company, to file reports of ownership and
changes of ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers. Copies of all filed reports are
required to be furnished to the Company pursuant to Section 16(a). Based solely
on the reports received by the Company and on written representations from
reporting persons, the Company believes that the directors, officers, and
greater than ten percent (10%) beneficial owners complied with all applicable
Section 16(a) filing requirements during the fiscal year ended August 31, 1995,
except for Dean A. Klein, an executive officer of the Company, who was late in
filing a Form 4 for the month of March 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Micron Technology, Inc. owns approximately 80% of the outstanding Common
Stock of the Company, and four (4) of the eight (8) nominees for director of the
Company are also directors of Micron Technology, Inc.
8
<PAGE>
Micron Technology, Inc. and its subsidiaries supply and purchase a substantial
amount of products and services used and produced by the Company.
During fiscal 1995, Micron Technology, Inc. supplied a substantial portion
of the full specification random access memory ("RAM") components used in the
Company's operations. Purchases of these components from Micron Technology,
Inc., completed upon market terms and conditions, amounted to approximately
$177,402,000 for fiscal 1995.
Pursuant to a revenue sharing agreement, Micron Technology, Inc. delivers
to the Company all of the nonstandard RAM components produced at its
operations. Under this agreement, the Company is obligated to pay to Micron
Technology, Inc. an amount equal to one-half of the net sales realized from
sales of these nonstandard RAM components to third parties and one-half of the
transfer price for these nonstandard RAM components identified for internal use
by the Company. In fiscal 1995, the Company paid $72,889,000 to Micron
Technology, Inc. under this revenue sharing agreement.
In fiscal 1995, Micron Technology, Inc. paid approximately $28,160,000 to
the Company for contract manufacturing services and approximately $4,257,000 for
purchases of PC systems. During fiscal 1995, the Company paid Micron
Technology, Inc. $5,647,000 for equipment and $872,000 for construction
management services.
The Company relies on Micron Technology, Inc. for certain information
systems, payroll, employee benefits, risk management and administrative
services. In fiscal 1995, the Company paid $917,000 to Micron Technology, Inc.
for such services.
In 1992, Micron Custom Manufacturing Services, Inc. was formed as a wholly-
owned subsidiary of Micron Technology, Inc. At formation, Micron Technology,
Inc. transferred the assets and liabilities related to its contract
manufacturing and component recovery operations to Micron Custom Manufacturing
Services, Inc. in exchange for 1,591,304 shares of Micron Custom Manufacturing
Services, Inc. Common Stock and promissory notes in the aggregate amount of
approximately $9.6 million (the "Notes"). The Notes and related interest are
payable over ten years with the final payment due in March 2002. As of August
31, 1995, the Company had $6.7 million in indebtedness remaining on the Notes.
The amounts owing under the Notes are collateralized by a security interest in
the Company's personal property and general intangibles and by a deed of trust
on the Company's contract manufacturing facilities in Boise, Idaho and related
real property. Aggregate principal and interest payments during fiscal 1995
amounted to $1,504,000.
At various times between January 1994 and April 1994, Joseph M. Daltoso, T.
Erik Oaas, Gregory D. Stevenson, Robert F. Subia and Jess Asla purchased 52,513,
31,030, 31,030, 6,000 and 14,363 shares, respectively, of Micron Custom
Manufacturing Services, Inc. Common Stock pursuant to the Micron Custom
Manufacturing Services, Inc. 1994 Stock Purchase Plan for $786,120, $464,519,
$511,166, $89,820 and $223,489, respectively. The purchase prices represented
the fair market value of the Micron Custom Manufacturing Services, Inc. Common
Stock on the date of purchase as determined by the Micron Custom Manufacturing
Services, Inc. Board of Directors. Upon the Effective Time of the Merger, the
shares of Micron Custom Manufacturing Services, Inc. Common Stock owned by
Messrs. Daltoso, Oaas, Stevenson, Subia and Asla were converted into 1,075,234,
635,357, 635,357, 122,853 and 294,090 shares, respectively, of the Company's
Common Stock. See "VOTING SECURITIES AND PRINCIPAL HOLDERS - Change in Control
of the Company." Messrs. Daltoso, Oaas, and Stevenson were officers and
directors, Mr. Subia was an officer, and Mr. Asla was Director of Engineering,
of Micron Custom Manufacturing Services, Inc. Eighty percent (80%) of the funds
used by Messrs. Daltoso, Oaas, Stevenson, Subia and Asla to purchase the Common
Stock was obtained through loans from Micron Technology, Inc. The loans were
made pursuant to full recourse promissory notes issued in favor of Micron
Technology, Inc. The notes bear interest at a rate of 7.5% per annum, which the
parties believed represented a commercially reasonable interest rate at the time
of the loans. Principal and interest on the notes are payable, in full, five
years from the date of each note. Each note is secured by the purchased stock.
The principal and accrued interest on the notes at October 11, 1995 for Messrs.
Daltoso, Oaas, Stevenson, Subia and Asla were $713,937, $421,867, $460,376,
$81,573 and $202,260, respectively, and the maximum
9
<PAGE>
principal and accrued interest outstanding during the Company's 1995 fiscal year
were $708,157, $418,451, $456,617, $80,912 and $200,616 respectively.
At various times between August 1991 and April 1994, Chase S. Mart, Steve
L. Schmidt, Kenneth C. Birch, George A. Haneke, Pete J. Scamardo and Gene P.
Thomas, Jr. purchased 75,000, 62,500, 43,750, 25,000, 25,000 and 12,500 shares,
respectively of Micron Computer, Inc. Class B Common Stock pursuant to
restricted stock purchase agreements for $6,000, $5,000, $6,810, $140,750,
$5,116 and $13,675, respectively. The purchase prices represented the fair
market value of the Micron Computer, Inc. Class B Common Stock on the date of
purchase as determined by the Micron Computer, Inc. Board of Directors. In
addition, pursuant to an agreement with Mr. Thomas, Micron Computer, Inc. issued
an additional 12,500 shares of Class B Common Stock to Mr. Thomas at no
additional cost to him upon the one year anniversary of the commencement of his
employment with Micron Computer, Inc. Upon the Effective Time of the Merger,
the shares of Micron Computer, Inc. Class B Common Stock of Messrs. Mart,
Schmidt, Birch, Haneke, Scamardo and Thomas were converted into 679,316,
566,097, 396,268, 226,438, 226,438 and 226,438 shares, respectively, of the
Company's Common Stock. See "VOTING SECURITIES AND PRINCIPAL HOLDERS - Change in
Control of the Company." Messrs. Mart, Schmidt and Birch were officers and
directors, Messrs. Haneke and Thomas were officers, and Mr. Scamardo was
Director of Marketing and Strategic Relations, of Micron Computer, Inc. Eighty
percent (80%) of the funds used by Mr. Haneke to purchase the Common Stock was
obtained through a loan from Micron Technology, Inc. The loan was made pursuant
to a full recourse promissory note issued in favor of Micron Technology, Inc.
The note bears interest at a rate of 7.5% per annum, which the parties believed
represented a commercially reasonable interest rate at the time of the loan.
Principal and interest on the note are payable, in full, five years from the
date of the note. The note is secured by the purchased stock. The principal
and accrued interest on the note at October 11, 1995 was $126,229 and the
maximum principal and accrued interest outstanding during the Company's 1995
fiscal year was $125,268.
BOARD MEETINGS AND COMMITTEES
Prior to the Effective Time of the Merger, the Board of Directors of the
Company was comprised of Gregory E. Herrick, Kenneth F. Gudorf, John P. Schinas
and Jeffrey C. Schopf. Messrs. Gudorf, Schinas and Schopf resigned as directors
of the Company effective upon the closing of the Merger, and Mr. Herrick
resigned as a director of the Company on July 31, 1995.
The Board of Directors of the Company held a total of eleven meetings
during the fiscal year ended August 31, 1995. The Board of Directors has formed
an Audit Committee and a Compensation Committee. A Nominating Committee of the
Board of Directors has not been formed.
Messrs. Gudorf, Schinas and Schopf comprised the Audit Committee prior to
the Effective Time of the Merger. On April 7, 1995, Messrs. Hess, Lothrop and
Simplot were appointed to serve as members of the Audit Committee to replace
Messrs. Gudorf, Schinas and Schopf, who resigned. There were no Audit Committee
meetings held during fiscal year 1995. The Audit Committee is primarily
responsible for reviewing the services performed by the Company's independent
accountants and evaluating the Company's accounting principles and system of
internal accounting controls.
Messrs. Gudorf, Schinas and Schopf comprised the Compensation Committee
prior to the Effective Time of the Merger. On April 7, 1995, Messrs. Hess,
Lothrop and Simplot were appointed to serve as members of the Compensation
Committee to replace Messrs. Gudorf, Schinas and Schopf, who resigned. The
Compensation Committee held five meetings during fiscal year 1995. The
Compensation Committee is primarily responsible for reviewing and approving the
compensation for the Company's officers.
During fiscal year 1995, all directors attended 75% or more of the total
number of meetings of the Board of Directors and of meetings of all committees
of the Board on which they served, except for John R. Simplot who attended 63%
of the total number of meetings of the Board of Directors and of meetings of the
committees of the Board on which he served held subsequent to his appointment.
10
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years, for services rendered to Micron Computer, Inc.,
Micron Custom Manufacturing Services, Inc. and the Company, awarded to or earned
by any individual who served as Chief Executive Officer of the Company during
fiscal 1995 and each of the other four most highly compensated executive
officers of the Company who were serving as executive officers at the end of
fiscal 1995, whose salary and bonus earned in fiscal 1995 exceeded $100,000 (the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION (1) COMPENSATION
------------------------------------------ ------------
FISCAL OTHER ANNUAL OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION(2) YEAR SALARY BONUS (3)(4) COMPENSATION GRANTED(#) COMPENSATION (5)
- ------------------------------ ------ ------ ------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. Daltoso 1995 $ 165,865 $ 180,979 $ 0 0 $ 11,450
Current Chairman, President 1994 104,261 76,239 0 75,000 (6) 7,289
and Chief Executive Officer 1993 95,154 20,027 0 50,000 (6) 4,447
T. Erik Oaas 1995 108,750 135,614 0 0 10,301
Vice President, Finance and 1994 82,556 58,552 0 32,630 (6) 8,848
Chief Financial Officer 1993 72,389 15,664 0 34,534 (6) 4,866
Gregory D. Stevenson 1995 102,500 135,614 0 0 9,120
Executive Vice President, 1994 82,556 58,565 0 32,630 (6) 8,406
Operations 1993 71,577 16,164 0 28,854 (6) 6,423
Chase S. Mart (7) 1995 125,235 94,150 0 0 9,746
Executive Vice President, 1994 115,689 86,607 0 0 11,202
Business Development 1993 105,093 87,399 0 0 8,843
Steven L. Schmidt 1995 114,962 73,584 0 0 10,860
Vice President, Alternate Sales 1994 106,188 77,618 0 0 7,271
1993 92,306 58,574 0 0 1,619
Gregory E. Herrick (8) 1995 142,750 296 0 0 9,379
Former Chairman, President 1994 140,000 0 0 0 0
and Chief Executive Officer 1993 140,000 0 0 0 0
- ----------------------------
</TABLE>
(1) Excludes certain perquisites and other amounts which in the aggregate did
not exceed the lesser of $50,000 or 10% of the total annual salary and
bonuses for the officer.
(2) At the Effective Time of the Merger, Mr. Steven R. Appleton was appointed
Chairman, President and Chief Executive Officer of the Company. He
resigned from these positions on April 17, 1995 and received no
compensation from the Company or Micron Technology, Inc. for his services
rendered to the Company during this transition period.
(3) Includes amounts paid under Micron Computer, Inc.'s, Micron Custom
Manufacturing Services, Inc.'s and the Company's sabbatical plans, profit
sharing plans, and patent bonus programs and amounts paid for achievement
of certain performance milestones.
(4) Includes bonuses earned and paid during each fiscal year under executive
bonus programs established in previous years. See "REPORT OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS REGARDING EXECUTIVE
COMPENSATION".
(5) Consists of Micron Computer, Inc., Micron Custom Manufacturing Services,
Inc. and Company contributions under their respective qualified 401(k)
retirement plans and cash paid under their respective time-off plans.
(6) Consists of options to purchase shares of Micron Technology, Inc. Common
Stock. Option amounts reflect a 5-for-2 and a 2-for-1 stock split of
Micron Technology, Inc. Common Stock outstanding, effected in the form of a
stock dividend, as of April 1, 1994 and May 4, 1995, respectively.
11
<PAGE>
(7) Mr. Mart resigned from his position as an officer and director of the
Company, effective as of September 8, 1995.
(8) At the Effective Time of the Merger, Mr. Herrick resigned from his position
as Chairman, President and Chief Executive Officer of the Company and was
appointed Executive Vice President, Sales and Marketing and a director.
Mr. Herrick resigned as an officer and director of the Company, effective
as of July 31, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to Company and Micron
Technology, Inc. stock options granted during fiscal year 1995 to the Named
Executive Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------
POTENTIAL REALIZABLE
SHARES OF PERCENT OF VALUE AT
COMMON TOTAL ASSUMED ANNUAL RATES
STOCK OPTIONS EXERCISE OF STOCK
UNDERLYING GRANTED TO OR BASE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES PRICE OPTION TERM
GRANTED IN PER EXPIRATION ----------------------
NAME (#) FISCAL YEAR SHARE DATE 5% 10%
- ---- --------- ----------- --------- ---------- --- ---
<S> <C> <C> <C> <C> <C> <C>
N/A N/A N/A N/A N/A N/A N/A
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information regarding Company and Micron
Technology, Inc. stock option exercises during fiscal year 1995 by the Named
Executive Officers and the value of such officers' unexercised options at
August 31, 1995:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
UNEXERCISED UNEXERCISED
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END
----------------- -----------------
NUMBER OF SHARES VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME ACQUIRED ON EXERCISE REALIZED UNEXERCISABLE (U) UNEXERCISABLE (U)
---- -------------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Joseph M. Daltoso (1) 25,000 $487,946 0 (E) $ 0 (E)
90,000 (U) 6,156,154 (U)
T. Erik Oaas (1) 10,828 122,210 5,000 (E) 360,825 (E)
46,832 (U) 3,202,234 (U)
Gregory D. Stevenson (1) 12,296 214,967 4 (E) 267 (E)
43,414 (U) 2,953,477 (U)
Chase S. Mart 0 0 0 0
Steven L. Schmidt 0 0 0 0
Gregory E. Herrick 0 0 800,076 (E) 14,137,343 (E)
0 (U) 0 (U)
</TABLE>
(1) Reflects options to purchase Micron Technology, Inc. Common Stock.
Shares and option amounts reflect a 5-for-2 and 2-for-1 stock split of
Micron Technology, Inc. Common Stock outstanding, effected in the form of
a stock dividend, as of April 1, 1994 and May 4, 1995, respectively.
12
<PAGE>
COMPENSATION OF DIRECTORS
DIRECTORS' FEES
Directors of the Company receive no remuneration for their service as
directors of the Company. The Company reimburses directors for travel and
lodging expenses, if any, incurred in connection with attendance at Board
meetings.
EMPLOYMENT TERMINATION AGREEMENTS AND ARRANGEMENTS
Subsequent to the merger, the Company entered into separate agreements with
each executive officer and certain other key employees of the Company (the
"Executives") relating to notice of termination and to compensation upon
termination or death. Each agreement requires that the Company or the Executive
give six (6) months advance written notice of the termination of the Executive's
employment, regardless of the reason or justification for termination. The
Company or the Executive may discontinue the Executive's active duties at any
time following notice; however, subject to the discretion of the Board of
Directors, employment for purposes of salary, bonuses, benefits, stock and
option vesting, and for determining conflicts of interest continues for six (6)
months from the date of notice. There were no amounts paid by the Company
during fiscal year 1995 pursuant to these agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John P. Schinas, Jeffrey C. Schopf and Kenneth F. Gudorf comprised the
Compensation Committee until the Effective Time of the Merger. On April 7,
1995, the Board of Directors appointed Jerry M. Hess, Robert A. Lothrop and John
R. Simplot, none of whom is an officer or employee of the Company or any
subsidiary, as members of the Compensation Committee to replace Messrs. Schinas,
Schopf and Gudorf, who resigned at the Effective Time of the Merger.
Messrs. Hess, Lothrop and Simplot are currently directors of Micron
Technology, Inc. During the fiscal year, there were no other members of the
Compensation Committee who were officers or employees of the Company or any
of its subsidiaries or who had any relationship that would constitute an
interlocking relationship with executive officers or directors of
another entity.
13
<PAGE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE PERFORMANCE GRAPH ON PAGE 16 SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILINGS.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
REGARDING EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
Prior to the Merger, the Compensation Committee of the Board of Directors
of the Company (the "Committee") was comprised of Messrs. Kenneth F. Gudorf,
John P. Schinas and Jeffrey C. Schopf, each of whom resigned as directors at the
Effective Time of the Merger. Subsequent to the Merger, Messrs. Jerry M. Hess,
Robert A. Lothrop and John R. Simplot were appointed to serve on the Committee.
The Committee, as currently composed, met three times in fiscal 1995 and intends
to meet annually or more frequently as the Company's Board of Directors may
request.
The Committee's primary responsibility is to review the compensation,
including salary, bonuses, benefits and stock option grants, of the Company's
executive officers. The executive officers of the Company are individuals
employed by the Company and by Micron Custom Manufacturing Services, Inc., a
wholly-owned subsidiary of the Company.
EXECUTIVE OFFICER COMPENSATION
The Company's executive officer compensation programs are described below
for the purpose of providing a general understanding of the various components
of executive officer compensation. These executive officer compensation programs
are designed to attract, retain and reward highly qualified executive officers
who are important to the success of the Company and to provide incentives
relating directly to the financial performance and long-term growth of the
Company. The various components of the Company's executive officer compensation
programs are, in most cases, the same as those made available generally to
employees of the Company.
CASH COMPENSATION
BASE SALARY. The base salary of each executive officer is established
primarily upon a subjective evaluation of the officer's contribution to the
Company, including (i) individual performance, (ii) responsibility,
(iii) technical expertise, and (iv) length of service. Overall Company
performance and industry compensation levels are also evaluated.
COMPANY PERFORMANCE BONUSES. Cash bonuses to executive officers are
intended to reward officers for the Company's financial performance during the
fiscal year and are earned and paid pursuant to the Executive Bonus Plan, which
was approved by the Company's shareholders in June 1995. Accordingly, bonuses
are determined based on a performance criteria established at the beginning of
each fiscal year formulated primarily as a percentage of after-tax net profit
of the Company for the fiscal year. Performance bonus percentages are
established according to a subjective analysis by the Committee of each
officer according to criteria similar to those utilized to determine the
officers' base salaries. A total of $883,594 was earned and paid in fiscal
1995 under the Executive Bonus Program and under executive officer bonus
programs established by Micron Computer, Inc. and Micron Custom
Manufacturing Services, Inc.
PROFIT SHARING. The Company distributes approximately five percent (5%) of
its consolidated quarterly after-tax net profits equally to all eligible
employees (including executive officers) of the Company and its subsidiaries on
a quarterly basis.
14
<PAGE>
INCENTIVE BONUSES. From time to time, incentive cash bonuses are approved
for payment to employees (including executive officers) for the achievement of
milestones, the completion of projects identified as contributing substantially
to Company success and the attainment of technological advances.
EQUITY COMPENSATION
In order to provide long-term incentive to the executive officers and
employees of the Company and its subsidiaries related to long-term growth in the
value of the Company's Common Stock, the Company issues incentive and
nonstatutory stock options to such persons under the Company's 1995 Stock Option
Plan. Employees of the Company and its subsidiaries (including executive
officers) may participate in the Company's 1995 Employee Stock Purchase Plan.
OTHER COMPENSATION
In addition to cash and equity compensation programs, the executive
officers participate in various other employee benefit plans, including
but not limited to time-off plans made available by the Company. Under
these plans, all employees of the Company and its subsidiaries (including
executive officers) are allowed to use time off for time accumulated under
the plan or to receive cash in lieu thereof. Executive officer
participation in various clubs, organizations and associations may also
be funded by the Company and its subsidiaries.
PAYMENT/EXERCISE RESTRICTIONS
In an effort to encourage employees and executive officers to remain
employed and to promote the overall performance of the Company and its
subsidiaries, many compensation programs for employees and executive
officers contain provisions delaying payment and requiring continuing
profitability of the Company. In this regard, Company performance bonuses
to each executive officer are typically earned and paid in installments
over a five (5) year period provided that the Company is profitable on a
consolidated basis in the year of payment and that the individual remains
employed by the Company or a subsidiary of the Company and subject to
Board of Directors approval. Likewise, the Company expects that stock
options granted to executive officers will typically have a term of six
(6) years and vest twenty percent (20%) each year for a period of
five (5) years from the date of grant.
CEO COMPENSATION
Joseph M. Daltoso is the Chairman of the Board of Directors, President
and Chief Executive Officer of the Company. Prior to the Effective Time of
the Merger, Mr. Daltoso served as Chairman of the Board of Directors,
President and Chief Executive Officer of Micron Custom Manufacturing
Services, Inc. The Committee has fixed Mr. Daltoso's annual base salary
at $250,000 based on an analysis of compensation paid to chief executive
officers of comparable companies and on a subjective analysis of
Mr. Daltoso's level of responsibility, contribution and service to the
Company. The Committee expects to review Mr. Daltoso's salary, along with
those of the other executive officers, during fiscal year 1996.
Mr. Daltoso is eligible to participate in the 1995 Stock Option Plan and
the Executive Bonus Plan, and other executive officer compensation programs,
as outlined above, to the same extent as other executive officers of
the Company.
Jerry M. Hess
Robert A. Lothrop
John R. Simplot
15
<PAGE>
PERFORMANCE GRAPH
The following graph illustrates a five-year comparison of cumulative total
returns for the Company's Common Stock, the Center for Research in Securities
Prices (CRSP) Total Return Indices for The Nasdaq Stock Market (US Companies)
and the Nasdaq Computer Manufacturer Stocks from August 31, 1990 through
August 31, 1995. These indices are prepared and made available to the public
by the Center for Research in Securities Prices at the University of Chicago.
Upon the Effective Time of the Merger, the Company's fiscal year was changed
to a 52 or 53 week period ending on the Thursday closest to August 31, which
corresponds to the fiscal year of Micron Computer, Inc. and Micron Custom
Manufacturing Services, Inc. Accordingly, the Company's last trading day of
its fiscal year varies. For consistent presentation and comparison to
industry indices shown herein, the Company has calculated its stock
performance graph assuming an August 31 year-end. The performance
graph assumes $100 invested on August 31, 1990 in the Company's (ZEOS
International, Ltd.'s) Common Stock and the CRSP Total Return Indices
for The Nasdaq Stock Market (US Companies) and the Nasdaq Computer
Manufacturer Stocks. On October 17, 1994, the Company (ZEOS International,
Ltd.) announced its intent to merge with Micron Computer, Inc. and Micron
Custom Manufacturing Services, Inc. The Merger was effective on
April 7, 1995. Any dividends paid during the period presented are assumed
to be reinvested.
NOTE: MANAGEMENT CAUTIONS THAT THE STOCK PRICE PERFORMANCE INFORMATION
SHOWN IN THE GRAPH BELOW IS PROVIDED AS OF FISCAL YEAR-END AND MAY NOT BE
INDICATIVE OF CURRENT STOCK PRICE LEVELS OR FUTURE STOCK PRICE PERFORMANCE.
[GRAPH]
The performance graph was plotted using the following data:
<TABLE>
<CAPTION>
YEAR ENDING AUGUST 31
---------------------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
MICRON ELECTRONICS, INC. $ 100 $ 217 $ 35 $ 37 $ 35 $ 203
CRSP Total Return Indices for The Nasdaq Stock
Market (US Companies) 100 142 154 203 211 284
CRSP Total Return Indices for Nasdaq Computer
Manufacturer Stocks 100 140 138 159 166 290
</TABLE>
16
<PAGE>
PROPOSAL TWO:
TO RATIFY THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P., independent
accountants, to audit the consolidated financial statements of the Company for
the fiscal year ending August 29, 1996, and recommends that shareholders vote
"FOR" ratification of such appointment.
Ernst & Young LLP served as the independent accountants for ZEOS
International, Ltd. prior to its merger with Micron Computer, Inc., and Micron
Custom Manufacturing Services, Inc., on April 7, 1995. Coopers & Lybrand L.L.P.
serves as Micron Technology, Inc.'s independent accountants and has audited the
financial statements of both Micron Computer, Inc. and Micron Custom
Manufacturing Services, Inc. for the past three fiscal years. Because of
Coopers & Lybrand L.L.P.'s familiarity with the business and operations of
Micron Computer, Inc., Micron Custom Manufacturing Services, Inc. and Micron
Technology, Inc., the Company engaged Coopers & Lybrand L.L.P. as the auditors
of the Company following the merger.
The Company dismissed Ernst & Young LLP as its independent accountants on
April 7, 1995 following the Merger. The reports of Ernst & Young LLP on the
financial statements of ZEOS International, Ltd. for each of the past two fiscal
years (1994 and 1993) contained no adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting
principle. The decision to change independent accountants was approved by the
Company's Board of Directors, including the members of the Audit Committee.
During ZEOS International, Ltd.'s two most recent fiscal years and through the
date of the merger, ZEOS International, Ltd. had no reportable events (as
described in Item 304(a)(1)(v) of Regulation S-K).
The Company engaged Coopers & Lybrand L.L.P. as its new independent
accountants as of April 7, 1995. During the two most recent fiscal years and
through the date of this report, ZEOS International, Ltd. did not consult with
Coopers & Lybrand L.L.P. on either (1) the application of accounting principles
to a specified transaction or the type of opinion that might be rendered on ZEOS
International, Ltd.'s financial statements, or (2) items which concerned the
subject matter of a disagreement or reportable event with the former auditor (as
described in Item 304(a)(2) Regulation S-K).
The affirmative vote of the holders of a majority of the outstanding shares
of the Company's Common Stock present or represented and voting at the Annual
Meeting will be required for ratification of such appointment. In the event of a
negative vote on such ratification, the Board of Directors will reconsider its
selection.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting, will have the opportunity to make a statement if they so
desire and are expected to be available to respond to appropriate questions.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual Meeting.
If any other matters properly come before the Annual Meeting, the persons named
in the accompanying form of Proxy will vote, in their discretion, the shares
they represent.
THE BOARD OF DIRECTORS
Dated: October 23, 1995
17
<PAGE>
[LOGO OF MICRON ELECTRONICS, INC.]
900 East Karcher Road
Nampa, Idaho 83687
1995 ANNUAL MEETING OF SHAREHOLDERS
November 20, 1995
The undersigned shareholder(s) of Micron Electronics, Inc., a Minnesota
corporation, hereby acknowledges receipt of the Notice of 1995 Annual Meeting of
Shareholders and the Proxy Statement, each dated October 23, 1995, and hereby
appoints Joseph M. Daltoso and T. Erik Oaas, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1995 Annual Meeting
of Shareholders of Micron Electronics, Inc., to be held November 20, 1995, at
9:00 a.m., Mountain Standard Time, at the Company's corporate offices, 900 East
Karcher Road, Nampa, Idaho 83687 and at any adjournment(s) thereof (the "Annual
Meeting"), and to vote all shares of common stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
below:
1. ELECTION OF DIRECTORS:
/ / FOR nominees listed below / / WITHHOLD authority to vote for all
(except as indicated) nominees listed below
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME SET FORTH IN THE LIST BELOW:
Steven R. Appleton; Joseph M. Daltoso; Jerry M. Hess; Robert A. Lothrop; T.
Erik Oaas; John R. Simplot; Gregory D. Stevenson; Robert F. Subia
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS FOR FISCAL YEAR 1996:
/ / FOR / / AGAINST / / ABSTAIN
and in their discretion, upon such other matter or matters which may properly
come before the Annual Meeting.
The shares represented by this Proxy when properly executed will be voted in
the manner directed herein by the undersigned shareholder(s). If no direction is
made, this Proxy will be voted FOR items 1 and 2. If any other matters properly
come before the Annual Meeting, the persons named in this Proxy will vote in
their discretion.
Dated , 1995
---------------
-------------------------------------------
Signature
-------------------------------------------
Signature
(This Proxy should be voted, signed, and dated
by the shareholder(s) exactly as his or her name
appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a
fiduciary capacity should so indicate. If shares
are held by joint tenants or as community
property, all persons having an interest therein
should sign.)
19
