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MICRON TECHNOLOGY INC
FORM 10-K
(Annual Report)
Filed 10/25/11 for the Period Ending 09/01/11
Address 8000 S FEDERAL WAY
PO BOX 6
BOISE, ID 83716-9632
Telephone 2083684000
CIK 0000723125
Symbol MU
SIC Code 3674 - Semiconductors and Related Devices
Industry Semiconductors
Sector Technology
Fiscal Year 08/30
http://www.edgar-online.com
© Copyright 2011, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ... INC FORM 10-K (Annual Report) Filed 10/25/11 for the Period Ending 09/01/11 Address 8000 S FEDERAL WAY PO BOX 6 BOISE, ID 83716-9632 2083684000 0000723125 MU 3674 - Semiconductors and Related Devices Semiconductors Technology 08/30 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year...

  • Page 2
    ... No  Large Accelerated Filer  Accelerated Filer 3 Smaller Reporting Company 3 The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing price of such stock on March 3, 2011, as reported by the NASDAQ Global Select Market, was approximately...

  • Page 3
    ... does not form a part of this Annual Report on Form 10-K. Overview We are a global manufacturer and marketer of semiconductor devices, principally DRAM, NAND Flash and NOR Flash memory, as well as other innovative memory technologies, packaging solutions and semiconductor systems for use in leading...

  • Page 4
    ... memory product and process technologies ...2011, we reorganized our business to better align with the markets we serve. All prior period amounts have been retrospectively adjusted to reflect this reorganization. After the reorganization, we have the following four reportable segments: DRAM Solutions...

  • Page 5
    ... our patented controller technology. Other products, including SD memory cards and some JumpDriveâ„¢ products, incorporate third party controllers. We sell products under our Lexarâ„¢ brand and manufacture products that are sold under other brand names. We also resell flash memory products that are...

  • Page 6
    ... formed two joint ventures with Intel to manufacture NAND Flash memory products for the exclusive benefit of the partners: IM Flash Technologies, LLC ("IMFT") and IM Flash Singapore LLP ("IMFS") (collectively, "IM Flash"). As of September 1, 2011, we owned an approximate 51% interest in IMFT and an...

  • Page 7
    ...technology. In connection therewith, we have partnered with Nanya in two Taiwan DRAM memory companies, Inotera Memories, Inc. ("Inotera") and MeiYa Technology... a fully-paid lease to a portion of our Boise, Idaho manufacturing facilities. Transform develops and manufactures photovoltaic solar panels...

  • Page 8
    ...factors and higher memory densities and provide superior flexibility for use in packaging technologies such as ...to manufacture Lexar-brand flash media products such as memory cards and USB ...in IM Flash. In 2011, IM Flash began ramping production at a new Singapore wafer fabrication facility and ...

  • Page 9
    ...limited number of suppliers are capable of...Company, primarily of DRAM, were 9% of our net sales in 2011 and 13% of our net sales in 2010. Our semiconductor memory products are offered under the Micron, Lexar®, Crucial...customer. Distributors carry...succeeding period. Product Warranty Because the design...

  • Page 10
    ... semiconductor product offerings is necessary to meet expected market demand for specific memory solutions. Our process development center and largest design center are located at our corporate headquarters in Boise, Idaho. In 2011, we began construction of a new 450mm-wafer capable R&D facility in...

  • Page 11
    ...of patents issued. As of September 1, 2011, we owned approximately 17,100 U.S. patents ... of our investment in technology through sales or licenses of...located in the United States and Singapore. Our employment levels can vary ...annually by the Board of Directors and our directors are elected annually...

  • Page 12
    ...2011, the following executive officers and directors were subject to the reporting...Solutions Director Director Director Director Director Director Director Mark W. Adams joined us in June 2006. From January 2006, until he joined us, Mr. Adams was the Chief Operating Officer of Lexar Media...from Boise ...

  • Page 13
    ... Memory in February 2006 and has served as Vice President of DRAM Solutions ...Research Corporation ("Lam"), a supplier of semiconductor manufacturing equipment, in... ("PMC") from 2005 until May 2011 and also served as PMC's Chairman... Technologies Inc., a bioanalytical and electronic measurement company,...

  • Page 14
    ... Vice President and Chief Financial Officer of Avago Technologies Limited, a supplier of analog interface components for communications, industrial and...Ltd. acquired ADC. Mr. Switz joined ADC in 1994 and throughout his career there held numerous leadership positions. Mr. Switz holds an MBA from the...

  • Page 15
    ...suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus DRAM ("RDRAM") by eliminating competition and stifling innovation in the market for computer memory technology and computer memory chips. Rambus' complaint...September 1, 2011, financial ...

  • Page 16
    ...California. The complaint alleges DRAM...memory industry is highly competitive. We face intense competition in the semiconductor memory market from a number of companies, including Elpida Memory... technology... memory cards ...reported a loss for its quarter ended September 30, 2011 of an additional New Taiwan...

  • Page 17
    ... we purchased all of Qimonda's shares of Inotera Memories, Inc. and seeks an order requiring us to retransfer the Inotera shares to the Qimonda estate. The complaint also seeks to terminate under Sections 103 or 133 of the German Insolvency Code a patent cross license between us and Qimonda entered...

  • Page 18
    ...may experience difficulties in transferring technology to joint ventures; we... our contributions to IM Flash Singapore in 2011 and 2010 totaled $ 1,580 .... Rambus alleges that certain of our DDR2, DDR3, RLDRAM, and RLDRAM II ...Rambus matters pending in the U.S. and Europe.) We are unable to predict the...

  • Page 19
    ...technologies and products of acquired or newly formed entities into our operations; increasing capital expenditures to upgrade..., or alliances with, high-technology companies are inherently risky, and future.... However, only a limited number of suppliers are capable of delivering certain raw materials ...

  • Page 20
    ...memory products or leverage their underlying design or process technology. We have made significant investments in product and process technologies.... As of September 1, 2011, our federal and state tax...of the Internal Revenue Code and some portion or... reporting currency), primarily the Singapore dollar...

  • Page 21
    ...technologically... from other suppliers. This could...the semiconductor memory industry and...headquarters are located in Boise, Idaho. The following is a summary of our principal facilities as of September 1, 2011: Location Boise, Idaho Lehi, Utah Manassas, Virginia Singapore Avezzano, Italy Nampa, Idaho...

  • Page 22
    ... in Singapore are ...suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus DRAM ("RDRAM") by eliminating competition and stifling innovation in the market for computer memory technology and computer memory chips. Rambus' complaint...1, 2011,...

  • Page 23
    ... class action suit that was settled. The complaints allege, among other things, violations of federal...' fees, costs, and injunctive relief. On July 11, 2011, we made a collective payment to the three plaintiffs to ... the Ministry of Justice ("SDE") announced that it had initiated an investigation ...

  • Page 24
    ... filed a complaint against us and Reptronic (a distributor of our products...alleges that certain of our DDR2, DDR3, RLDRAM, and ...Company and seven other defendants. The complaint alleges that certain Company DRAM products infringe a single U.S. patent. On September 14, 2011, Smart Memory Solutions...

  • Page 25
    ...but reducing the class period to purchasers of our stock during the period from February 24, 2001 to ...Memories, Inc. and seeks an order requiring us to retransfer the Inotera shares to the Qimonda estate. The complaint also seeks to terminate under Sections 103 or 133 of the German Insolvency Code...

  • Page 26
    ... of this Annual Report on Form 10-K. Issuer Sales of Unregistered Securities On May 7, 2010, we issued an aggregate of 137.7 million unregistered shares of common stock (with a fair value of $1,091 million on the issuance date) to Intel Corporation, Intel Technology Asia Pte Ltd, STMicroelectronics...

  • Page 27
    ... performance graph assuming an August 31 year end. The performance graph assumes $100 was invested on August 31, 2006 in common stock of Micron Technology, Inc., the S&P 500 Composite Index and the Philadelphia Semiconductor Index (SOX). Any dividends paid during the period presented were assumed to...

  • Page 28
    ... note.) We have two joint ventures with Intel Corporation: IM Flash Technologies, LLC ("IMFT"), formed in January, 2006, and IM Flash Singapore LLP ("IMFS"), formed in February, 2007 (collectively "IM Flash"), to manufacture NAND Flash memory products for the exclusive benefit of the partners. As of...

  • Page 29
    ... other DRAM suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus DRAM ("RDRAM") by eliminating competition and stifling innovation in the market for computer memory technology and computer memory chips. Rambus' complaint alleges various...

  • Page 30
    ...memory...the sale of the Japan Fab. We also ...2011, we reorganized our business to better align with the markets we serve. All prior period amounts have been retrospectively adjusted to reflect this reorganization. After the reorganization, we have the following four reportable segments: DRAM Solutions...

  • Page 31
    ...247 178 531 4,803 2009 44% 36% 5% 4% 11% 100% $ $ $ Total net sales for 2011 increased 4%, as compared to 2010 primarily due to increases in WSG and ESG sales as a result of the ...to 2009 as a result of improved sales across all reportable segments. Increases in DSG and NSG sales for 2010 ...

  • Page 32
    ... are sold, gross margins in subsequent reporting periods are higher than they otherwise would...Operating Results by Business Segments DRAM Solutions Group ("DSG") 2011 Net sales Operating income (loss)...technology to other parties. DSG recognized royalty and license revenue of $25 million in 2011...

  • Page 33
    ... our other DSG products. NAND Solutions Group ("NSG") 2011 Net sales Operating income (loss)... of NAND Flash products to our OEM, reseller and retail customers decreased 2% for 2011 as compared to 2010 primarily due to declines...'s wafer fabrication facility in Singapore. We expect that the ...

  • Page 34
    ... for 2009 included a $144 million gain from termination of a supply agreement with Intel. Wireless Solutions Group ("WSG") 2011 Net sales Operating income (loss) $ 1,959 20 $ 2010 778 $ (23) 2009 247 (63) In 2011, WSG sales were composed of NOR Flash, NAND Flash and DRAM in decreasing order of...

  • Page 35
    ... marks the first time in our history that the primary product by revenue was not DRAM. DRAM 2011 2010 (percentage change from prior year...and DDR2 DRAM, were 51% and 25%, respectively, of total DRAM sales for 2011 and ...reported a loss for its quarter ended September 30, 2011 of an additional New Taiwan...

  • Page 36
    ...Our sales of MCPs and other system solution NAND Flash products increased in 2011 from 2010 due primarily to our ...Singapore also contributed to the increase in production for 2011. Our acquisition of Numonyx in May 2010 also contributed to increases in sales volumes to trade customers in 2011...

  • Page 37
    ...DDR2 Mobile Low Power DRAM products as well as high density and mobile NAND Flash memory (including multi-level cell technology), NOR Flash memory, specialty memory, phase change and memory systems. Interest Income (Expense) Interest expense for 2011... Singapore Pte. Ltd. Income Taxes ...

  • Page 38
    ... period. Depending on conditions in the semiconductor memory market, our cash flows from operations and current... to invest in manufacturing technologies, facilities and capital equipment...vary depending on market conditions. As of September 1, 2011, we had commitments of approximately $600 million for ...

  • Page 39
    ... was set to equal initial conversion price of the 2031 Notes. On July 26, 2011, we paid $150 million to repurchase 19.7 million shares of common stock at $7.60 per share. In the third quarter of 2011, we prepaid the remaining $250 million outstanding under our TECH subsidiary's credit facility. On...

  • Page 40
    ...obligation to purchase 50% of Inotera's semiconductor memory capacity subject to specific terms and conditions. As... common stock. The 2011 Capped Calls expire on various dates between July 2014 and February 2016. The 2011 Capped ... and judgments that affect the reported amounts of assets, liabilities, ...

  • Page 41
    ... of memory products to their estimated market values. Cost includes labor, material and overhead costs, including product and process technology costs... of our memory inventory by approximately $143 million at September 1, 2011. Due to the volatile nature of the semiconductor memory industry, actual...

  • Page 42
    ... the Black-Scholes option valuation model to value employee stock awards. We estimate stock price volatility based on an average of its historical ... to have a material impact on our financial statements. In June 2011, the FASB issued a new accounting standard on the presentation of comprehensive...

  • Page 43
    ...As of September 1, 2011 , $ 51 million of the debt had variable interest rates and a 1% increase in the rates would increase annual interest expense by approximately...the U.S. dollar (our reporting currency) were as follows (in U.S. dollar equivalents): 2011 Singapore Dollars Cash and cash equivalents...

  • Page 44
    ... years ended September 1, 2011, September 2, 2010 and September 3, 2009: Consolidated Statements of Operations Consolidated Balance Sheets Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Registered...

  • Page 45
    MICRON TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions except ... (loss) Gain on acquisition of Numonyx Interest income Interest expense Other non-operating income (expense), net $ September 1, 2011 8,788 7,030 1,758 592 791 (380) 755 - 23 (124) (103) 551 $ September 2, 2010 8,...

  • Page 46
    MICRON TECHNOLOGY, INC... liabilities Commitments and contingencies Micron shareholders' equity: Common stock, $0.10 par value, 3,000 shares authorized, 984... Noncontrolling interests in subsidiaries Total equity Total liabilities and equity September 1, 2011 $ 2,160 1,497 2,080 95 5,832 414 7,555 483 8...

  • Page 47
    MICRON TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in millions) Micron Shareholders Common Stock Number of Shares Amount Additional Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Micron Shareholders' Equity Noncontrolling Interests in Subsidiaries...

  • Page 48
    Distributions to noncontrolling interests, net Repurchase and retirement of common stock Acquisition of noncontrolling interests in TECH Purchase of capped calls Balance at September 1, 2011 984.3 $ 98 $ (21.3) (2) (160) 67 (57) 8,610 $ (370) $ 132 $ (1) - (163) 67 (57) 8,470 $ (217) (217) (163)...

  • Page 49
    ...on extinguishment of debt Stock-based compensation Provision to write-down inventories to estimated market values Gain from disposition of Japan Fab Restructure charges (credits...(437) (52) 2,114 72 140 - 44 603 - 156 54 - - $ 190 $ 1,900 $ (1,993) September 1, 2011 September 2, 2010 September 3, 2009

  • Page 50
    ... capitalized Noncash investing and financing activities: Equipment acquisitions on contracts payable and capital leases Exchange of convertible notes Stock and restricted stock units issued in acquisition of Numonyx Acquisition of interest in Transform $ $ (753) 2,913 2,160 $ 1,428 1,485 2,913...

  • Page 51
    ...memory, as well as other innovative memory technologies, packaging solutions...closest to August 31. Our fiscal 2011 and 2010 contained 52 weeks and ... the reported amounts... of product during a stated warranty period is usually limited to ...Intel" notes.) Stock-based compensation : Stock-based compensation ...

  • Page 52
    ... costs, including product and process technology costs. Determining market values of inventories... are actually sold. Inventories are categorized as memory (primarily DRAM and NAND Flash and NOR .... We adopted this standard as of the beginning of 2011. The initial adoption of this standard did not have ...

  • Page 53
    ...on our financial statements. In June 2011, the FASB issued a new accounting...Inotera Memories, Inc. ("Inotera") and MeiYa Technology ... financing and the ability to operate in Taiwan. Therefore, we account for our interests...IMFS - IM Flash Technologies, LLC ("IMFT") and IM Flash Singapore LLP ("IMFS") ...

  • Page 54
    ...Mask. Japan Fabrication Facility On June 2, 2011, we sold our wafer fabrication facility in Japan (the "Japan Fab")... of our common stock issued to the Numonyx shareholders and 4.8 million restricted stock units issued to ... downturn in the semiconductor memory industry; substantial volatility in...

  • Page 55
    Consideration: Fair value of common stock issued Fair value of restricted stock units issued Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and equivalents Receivables Inventories Other current assets Intangible assets Property, plant and equipment ...

  • Page 56
    ...million and $ 48 million , respectively, for product and process technology with weightedaverage useful lives of 7 years. Amortization expense was $ 79 million , $ 96 million and $ 75 million for 2011 , 2010 and 2009, respectively. Annual amortization expense for intangible assets is estimated to be...

  • Page 57
    ... 7,555 $ 2010 95 4,394 12,970 73 281 17,813 (11,212) 6,601 Depreciation expense was $ 2,026 million , $ 1,826 million and $ 2,039 million for 2011 , 2010 and 2009 , respectively. Other noncurrent assets included buildings, equipment and other assets classified as held for sale of $ 35 million as of...

  • Page 58
    ...ventures with Nanya We have partnered with Nanya in two Taiwanese DRAM memory companies, Inotera and MeiYa. Under a licensing arrangement with Nanya, we ...29.9% . In 2011, our ownership interest was reduced by shares issued under Inotera's employee stock plans and as of September 1, 2011 , we held ...

  • Page 59
    ...we received $50 million from Inotera pursuant to the terms of a technology transfer agreement and, in connection therewith, recognized $13 million and $...our Boise, Idaho manufacturing facilities. As of September 1, 2011 , we and Origin each held a 50% ownership interest in Transform. During 2011 and...

  • Page 60
    ... earnings or losses based on our common stock ownership percentage, which was 64% as of September 1, 2011 . We manufacture components for CMOS image sensors...2010 also included $ 86 million for amounts due for the purchase of memory products under a supply agreement with the Hynix JV, a subsidiary of ...

  • Page 61
    ...our common stock upon conversion. Information related to our convertible notes with debt and equity components is as follows: As of 2011 Outstanding ... and equity components is as follows: For the year ended 2011 Effective interest rate Interest cost related to contractual interest rate Interest...

  • Page 62
    ... : We may redeem for cash the 2014 Notes if the last reported sale price of our common stock has been at least 130% of the conversion price (approximately $ ...at weighted-average effective interest rates of 6.1% as of 2011 and 7.2% as of 2010. In 2011, we received $ 268 million in proceeds from sales-...

  • Page 63
    ...2011 , we issued $ 345 million of the 2031A Notes and $ 345 million of 2031B Notes, each due August 1, 2031 . Issuance costs for the 2031 Notes totaled $ 18 million . The initial conversion rate for the 2031 Notes is 105.2632 shares of common stock... last reported sale price of our common stock has ...

  • Page 64
    ... at our election, deliver shares of common stock in lieu of cash with respect to this make-whole payment. TECH Credit Facility In the third quarter of 2011, we repaid the remaining $ 250 million ... previously restricted was released to us. (See "TECH Semiconductor Singapore Pte. Ltd." note.) 61

  • Page 65
    ...$ 250 million , accounted for as restricted cash, into a pledged account at DBS to collateralize the guarantee of the loan. In the third quarter of 2011, the Hynix JV repaid the $ 250 million outstanding principal balance of the loan before the scheduled due dates, and accordingly, our obligation to...

  • Page 66
    ...suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus DRAM ("RDRAM") by eliminating competition and stifling innovation in the market for computer memory technology and computer memory chips. Rambus' complaint...September 1, 2011, financial ...

  • Page 67
    ... against us and other DRAM suppliers in the U.S. District Court...costs and injunctive relief. On July 11, 2011, we made a collective payment to the... Justice ("SDE") announced that it had ...of California. The complaint alleges DRAM price-fixing...semiconductor and other high technology industries, from time ...

  • Page 68
    ...Company and seven other defendants. The complaint alleges that certain Company DRAM products infringe a single U.S. patent. On September 14, 2011, Smart Memory Solutions...complaint was filed against us and certain of our officers in the U.S. District Court for the District of Idaho...of our stock during ...

  • Page 69
    ... similar to those contained in the 2014 Notes, an approximate combined total of 91.3 million shares of common stock. The 2007 Capped Calls expire on various dates between November 2011 and December 2012 . The 2007 Capped Calls are intended to reduce the potential dilution upon conversion of the...

  • Page 70
    ... in foreign currencies, primarily the euro, Singapore dollar and yen. We are also exposed... value of the forward contracts as of September 1, 2011 , as listed in the tables below under fair values...currency exchange rates. At the end of each reporting period, monetary assets and liabilities held or ...

  • Page 71
    Currency As of September 1, 2011: Euro Singapore dollar Yen Other Notional Amount (1) (in U.S. Dollars) $ 301 210 165 148 824 $ Asset (2) Fair Value (Liability) 3 - 3 - 6 $ (3) $ As of September 2, 2010: Euro Singapore dollar Yen (1) (2) (3) $ $ - - - (2) (2) $ $ Represents the face value...

  • Page 72
    ...sales of our marketable equity investments were not material for 2011, 2010 or 2009. Marketable equity investments as of September 1, 2011 included approximately 20 million ordinary shares of Tower received in connection with our sale of the Japan Fab, which were valued using quoted market prices in...

  • Page 73
    ...by parties with credit ratings similar to ours (Level 2). Amounts reported as cash and equivalents, receivables, and accounts payable and accrued ...of September 1, 2011 , we had an aggregate of 177.9 million shares of common stock reserved for issuance of stock options and restricted stock awards, of...

  • Page 74
    ... Weighted-average expected volatility Weighted-average risk-free interest rate Restricted Stock and Restricted Stock Units ("Restricted Stock Awards") As of September 1, 2011 , there were 8.8 million shares of Restricted Stock Awards outstanding, of which 1.2 million were performancebased Restricted...

  • Page 75
    ... at September 2, 2010 Granted Restrictions lapsed Cancelled Outstanding at September 1, 2011 Expected to vest after September 1, 2011 Restricted Stock Awards granted for 2011 , 2010 and 2009 were as follows: 2011 Service-based awards Performance-based awards Weighted-average grant-date fair values...

  • Page 76
    ...subject to IRS annual contribution limits) to various savings alternatives, none of which include direct investment in our common stock. In 2011 we reinstated our...expense consisted of the following: 2011 Samsung patent cross-license agreement Gain from disposition of Japan Fab Restructure (Gain) loss...

  • Page 77
    ...terminated an agreement to obtain NAND Flash memory supply from our Boise facility. In connection therewith, Intel paid ... remaining 200mm DRAM wafer manufacturing operations in Boise, Idaho in the second half of 2009. As...non-operating income (expense), net for 2011, included $113 million for losses ...

  • Page 78
    ...of the following as of the end of the periods shown below: 2011 Deferred tax assets: Net operating loss and credit carryforwards Inventories Accrued ...and equipment Product and process technology Intangible assets Other Deferred tax liabilities Net deferred tax assets Reported as: Current deferred tax...

  • Page 79
    ... is subject to limitations imposed by Section 382 of the Internal Revenue Code and some portion or all of these carryforwards may not be available to... such companies are expected to result in additional tax liability. Remaining undistributed earnings of $631 million as of September 1, 2011 have ...

  • Page 80
    ...been antidilutive: 2011 Employee stock plans Convertible ...stock method. (See "Debt" note.) Consolidated Variable Interest Entities NAND Flash Joint Ventures with Intel ("IM Flash") We have two joint ventures with Intel: IMFT, formed in 2006 and IMFS, formed in 2007, to manufacture NAND Flash memory...

  • Page 81
    ... shareholders: For the year ended IM Flash distributions to Micron IM Flash distributions to Intel Micron contributions to IM Flash Intel contributions to IM Flash 2011 $ 234 225 1,580 - $ 2010 278 267 128 38 $ 2009 723 695 25 24 IM Flash sells products to the joint venture partners generally in...

  • Page 82
    ... $ 107 million for 2011 , 2010 and 2009 , respectively. MP Mask Technology Center, LLC ("MP...Singapore Pte. Ltd. ("TECH"), a semiconductor memory manufacturing joint venture in Singapore with Canon Inc. ("Canon") and Hewlett-Packard Singapore (Private) Limited ("HP"). In December 2010 and January 2011...

  • Page 83
    ..., among others, products, technologies and customers. Segment information reported herein is consistent with how it is reviewed and evaluated by our chief operating decision makers. After our reorganization, we have the following four reportable segments: DRAM Solutions Group ("DSG"): Includes DRAM...

  • Page 84
    ...with Intel. Substantially all of our sales to Intel in 2011 and 2009 were included in the NSG and WSG segments ... however, only a limited number of suppliers are capable of delivering certain raw materials ...a substantial portion of our customers are affiliated with the computing industry. We perform ...

  • Page 85
    ... 470 447 542 184 4,803 China Asia Pacific (excluding China, Taiwan and Malaysia) United States Europe Taiwan Malaysia Other $ $ $ $ Net property, plant and equipment by geographic area were as follows: $ $ 2011 Singapore United States Italy China Israel Japan Other $ 3,569 3,487 190 179 94...

  • Page 86
    ... 172 155 $ (0.14) $ (0.14) 0.07 0.07 $ 0.07 0.07 $ 0.16 0.15 The results of operations for the third quarter of 2011 included a gain of $54 million in connection with the sale of the Japan Fab. In addition, we recorded a tax provision of $74 million related to the gain on the sale and to...

  • Page 87
    ...in all material respects, the financial position of Micron Technology, Inc. and its subsidiaries at September 1, 2011 and September 2, 2010, and the results of their..., the Company maintained, in all material respects, effective internal control over financial reporting as of September 1, 2011, based ...

  • Page 88
    ... officer and principal financial officer, to allow timely decision regarding disclosure. During the fourth quarter of 2011, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over...

  • Page 89
    ...Registrant," in Part I, Item 1 of this report. Other information required by Items 10, 11,...Company and Wells Fargo Bank, National Association, dated as of April 15, 2009 (6) Form of 4.25% Convertible Senior Note due October 15, 2013 (6) Indenture, dated July 26, 2011, by and between Micron Technology...

  • Page 90
    ... 27, 2007, between Micron Semiconductor Asia Pte. Ltd. and Intel Technology Asia Pte. Ltd. (13) Supply Agreement dated as of February 27, 2007, between Micron Semiconductor Asia Pte. Ltd. and IM Flash Singapore, LLP (13) Amended and Restated Limited Liability Company Operating Agreement of IM Flash...

  • Page 91
    ...Technology, Inc. as Guarantor in favor of ABN Amro Bank N.V., Singapore Branch acting as Security Trustee (21) Form of Severance Agreement (22) Lexar Media, Inc. 1996 Stock... Technology, Inc., Micron Semiconductor B.V., Nanya Technology Corporation, MeiYa Technology Corporation and Inotera Memories,...

  • Page 92
    ..., Inc., Intel Corporation, Intel Technology Asia Pte Ltd, STMicroelectronics N.V., Redwood Blocker S.a.r.l. and PK Flash LLC, dated as of May 7, 2010 (26) Second Amended and Restated Technology Transfer and License Agreement between MTI and Nanya Technology Corp. (NTC) dated July 2, 2010 (27...

  • Page 93
    ...Report on Form 8-K/A dated April 7, 2011 Incorporated by reference to Current Report on Form 8-K dated November 3, 2010 Incorporated by reference to Current Report...reference to Quarterly Report on Form 10-Q for the fiscal quarter ended June 3, 2010 Incorporated by reference to Annual Report on Form ...

  • Page 94
    ... 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 25th day of October, 2011. Micron Technology, Inc. By: /s/ Ronald C. Foster Ronald C. Foster Vice President of...

  • Page 95
    MICRON TECHNOLOGY, INC. SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (in millions) Charged (Credited) to Costs and Expenses $ - - 5 $ Balance at Beginning of Year Allowance for Doubtful Accounts Year ended September 1, 2011 Year ended September 2, 2010 Year ended September 3, 2009 Deferred Tax ...

  • Page 96
    EXHIBIT 10.102 Opening Transaction To: Micron Technology, Inc. 8000 S. Federal Way Boise, Idaho 83716-9632 Société Générale 1221 Avenue of the Americas New York, NY 10020 Issuer Capped Share Call Option Transaction From: Re: Ref. No: Date: July 20, 2011 Dear Sir(s): The purpose of this ...

  • Page 97
    ... were a separate Transaction under the Agreement. European Call Dealer Counterparty Common Stock (par value $0.10 per Share) of Counterparty (Ticker: "MU")... such amount shall be deemed to be zero. The Effective Date July 26, 2011 or such other date as agreed by the parties. Option Style: Option Type...

  • Page 98
    Exchange: Related Exchange: Procedures for Exercise: Expiration Time: Expiration Date: The NASDAQ Global Select Market All Exchanges located in the United States on which the equity securities or equity-linked securities of Counterparty are traded. Valuation Time As provided in Annex A to this ...

  • Page 99
    Exchange Business Day; Disrupted Day: Sections 1.29 and 6.4 of the Equity Definitions are hereby amended by adding ", unless the Calculation Agent reasonably determines that any failure of such Exchange or Related Exchange to open does not have a material effect on the trading market for the Shares...

  • Page 100
    Electing Party: Settlement Method Election Date: Default Settlement Method: Settlement Currency: VWAP Price: Counterparty The fifth Scheduled Trading Day prior to the scheduled Expiration Date for the first Component. Net Share Settlement USD For any Expiration Date or other Exchange Business Day, ...

  • Page 101
    Other Applicable Provisions: The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12 of the Equity Definitions will be applicable, as if Physical Settlement applied to the Transaction; provided that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall ...

  • Page 102
    ... the text in subsection (i) shall be deleted in its entirety and replaced with: "publicly quoted, traded or listed on any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or their respective successors)." Consequences of Merger Events: (a) Share-for-Share...

  • Page 103
    ... re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or their..."the interpretation" in the third line thereof with the phrase "or announcement or statement of the formal or informal interpretation", and (ii) immediately ...

  • Page 104
    ...mail address provided by Counterparty in such a prior written request a report (in a commonly used file format for the storage and manipulation...to: To: Attn: Telephone: Facsimile: and To: Micron Technology, Inc. 8000 South Federal Way Boise, Idaho 83716 General Counsel (208) 368-4000 (208) 368-4540...

  • Page 105
    ... nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange... Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under any ...

  • Page 106
    ...not be, an "investment company" as such term is defined in the Investment Company Act of 1940, as amended... neither Counterparty nor any "affiliate" or "affiliated purchaser" (each as defined ... of Title 11 of the United States Code (the " Bankruptcy Code "). The parties hereto further agree and ...

  • Page 107
    ...manner specified in this Section 7, then Counterparty to the extent permitted by law agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an " Indemnified Person ") from and...

  • Page 108
    .... The " Equity Percentage " as of any day is the fraction (A) the numerator of which is the number of Shares that Dealer or any of its affiliates that are subject to aggregation with Dealer beneficially own (within the meaning of Section 13 of the Exchange Act) on such day and (B) the denominator...

  • Page 109
    ...New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or other date of termination, as applicable ...apply any obligation of X under an Equity Contract owed to Y (or any Affiliate of Y) (whether or not matured or contingent and whether or not arising under ...

  • Page 110
    ...this Section 6(f) any transaction relating to Shares between X and Y (or any Affiliate of Y) that qualifies as 'equity' under applicable accounting rules. Amounts (or the... any reason by the close of business in New York on July 26, 2011 (or such later date as agreed upon by the parties which in no ...

  • Page 111
    ... OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES OR COUNTERPARTY OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF. 23. Governing Law . THE AGREEMENT... LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS. 16

  • Page 112
    24. Regulatory Provisions . Counterparty represents and warrants that it has received and read and understands the Notice of Regulatory Treatment and the OTC Option Risk Disclosure Statement. 25. Terms relating to the Agent . Dealer is not registered as a broker or dealer under the Exchange Act. ...

  • Page 113
    Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement ...

  • Page 114
    Agreed and Accepted By: MICRON TECHNOLOGY, INC. By: Name: Title:

  • Page 115
    ...Technology, Inc. 8000 S. Federal Way Boise, Idaho 83716-9632 A/C: From: Re: Ref. No: Date: [_____] Issuer Capped Share Call Option Transaction [_____] July 22, 2011...and Micron Technology, Inc. (" Issuer " or " Counterparty "). Dealer is acting as principal and [_____] (" Agent "), its affiliate, is ...

  • Page 116
    ... were a separate Transaction under the Agreement. European Call Dealer Counterparty Common Stock (par value $0.10 per Share) of Counterparty (Ticker: "MU")... such amount shall be deemed to be zero. The Effective Date July 26, 2011 or such other date as agreed by the parties. 2 Option Style: Option ...

  • Page 117
    Exchange: Related Exchange: Procedures for Exercise: Expiration Time: Expiration Date: The NASDAQ Global Select Market All Exchanges located in the United States on which the equity securities or equity-linked securities of Counterparty are traded. Valuation Time As provided in Annex A to this ...

  • Page 118
    Exchange Business Day; Disrupted Day: Sections 1.29 and 6.4 of the Equity Definitions are hereby amended by adding ", unless the Calculation Agent reasonably determines that any failure of such Exchange or Related Exchange to open does not have a material effect on the trading market for the Shares...

  • Page 119
    as determined by Calculation Agent. If no price is available, or there is a Market Disruption Event on such Expiration Date or other Exchange Business Day, the Calculation Agent shall determine the VWAP Price in a commercially reasonable manner. Net Share Settlement: Settlement Date: The Settlement ...

  • Page 120
    ... the text in subsection (i) shall be deleted in its entirety and replaced with: "publicly quoted, traded or listed on any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or their respective successors)." Consequences of Merger Events: (a) Share-for-Share...

  • Page 121
    ... re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or their..."the interpretation" in the third line thereof with the phrase "or announcement or statement of the formal or informal interpretation", and (ii) immediately ...

  • Page 122
    ...mail address provided by Counterparty in such a prior written request a report (in a commonly used file format for the storage and manipulation...The Office of Counterparty for the Transaction is: 8000 S. Federal Way, Boise, Idaho 83716-9632. 5. Notices : For purposes of this Confirmation: (a) Address ...

  • Page 123
    ...: Telephone: Facsimile: and To: Micron Technology, Inc. 8000 South Federal Way Boise, Idaho 83716 General Counsel (208) 368-4000 ...Counterparty or the Shares and (B) all reports and other documents filed by Counterparty ...is not making any representations or warranties with respect to the treatment of ...

  • Page 124

  • Page 125
    ...transactions contemplated hereby will not be, an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. (vii) On...[_____]. Counterparty represents and warrants that neither it nor any affiliated purchaser has made any purchases of blocks pursuant to the proviso...

  • Page 126
    ...53C) and 101(22A) of Title 11 of the United States Code (the " Bankruptcy Code "). The parties hereto further agree and acknowledge (A) that this ... by law agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling ...

  • Page 127
    .... The " Equity Percentage " as of any day is the fraction (A) the numerator of which is the number of Shares that Dealer or any of its affiliates that are subject to aggregation with Dealer beneficially own (within the meaning of Section 13 of the Exchange Act) on such day and (B) the denominator...

  • Page 128
    ... manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be compliant with applicable legal and regulatory... P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or other date of termination, as applicable (" Notice...

  • Page 129
    ... obliged) without prior notice to X or any other person to set-off or apply any obligation of X under an Equity Contract owed to Y (or any Affiliate of Y) (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking...

  • Page 130
    ...for any reason by the close of business in New York on July 26, 2011 (or such later date as agreed upon by the parties which in no event... shall be later than the third Scheduled Trading Day following July 26, 2011) (such date or such later date as agreed upon being the " Accelerated Unwind...

  • Page 131
    ... OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES OR COUNTERPARTY OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF. 23. Governing Law . THE AGREEMENT... LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS. 16

  • Page 132
    24. Regulatory Provisions . Counterparty represents and warrants that it has received and read and understands the Notice of Regulatory Treatment and the OTC Option Risk Disclosure Statement. 25. Role of Agent . Each party agrees and acknowledges that: (i) Agent is acting as agent for both parties ...

  • Page 133
    Please confirm that the foregoing correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and...

  • Page 134
    Agreed and Accepted By: MICRON TECHNOLOGY, INC. By: Name: Title:

  • Page 135
    ... Delaware Singapore Delaware United Kingdom Japan Singapore Netherlands Cayman Islands Israel Italy Malaysia Idaho China Italy Netherlands Netherlands Name IM Flash Technologies, LLC IM Flash Singapore, LLP Lexar Media, Inc. Micron Europe Limited (1) Micron Japan, Ltd. (1) Micron Semiconductor Asia...

  • Page 136
    ..., 333-120620, 333-133667, 333-135459, 333-140091, 333148357, 333-159711, 333-167536, 333-167536a, 333-171717) of Micron Technology, Inc. of our report dated October 25, 2011, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial...

  • Page 137
    ...years then ended, which report appears in the September 1, 2011 annual report on Form 10-K of Micron Technology, Inc. Our report contains an explanatory paragraph that states Inotera Memories Inc. did not ... year ended December 31, 2010. KPMG October 25, 2011 Taipei, Taiwan (the Republic of China)

  • Page 138
    ...: 1. 2. I have reviewed this annual report on Form 10-K of Micron Technology, Inc.; Based on my knowledge, this report does not contain any untrue statement of...in the registrant's internal control over financial reporting. b. Date: October 25, 2011 /s/ Steven R. Appleton Steven R. Appleton ...

  • Page 139
    ...: 1. 2. I have reviewed this annual report on Form 10-K of Micron Technology, Inc.; Based on my knowledge, this report does not contain any untrue statement of...role in the registrant's internal control over financial reporting. b. Date: October 25, 2011 /s/ Ronald C. Foster Ronald C. Foster Vice ...

  • Page 140
    ... to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Micron Technology, Inc. on Form 10-K for the period ended September 1, 2011, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and...

  • Page 141
    ... to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Micron Technology, Inc. on Form 10-K for the period ended September 1, 2011, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and...

  • Page 142
    EXHIBIT 99.1 INOTERA MEMORIES, INC. FINANCIAL STATEMENTS DECEMBER 31, 2008, 2009 and 2010 (With Report of Independent Registered Public Accounting Firm)

  • Page 143
    Report of Independent Registered Public Accounting Firm The Board of Directors Inotera Memories, Inc. We have audited the accompanying balance sheets of Inotera Memories, Inc. (the "Company... ratios. As the Company is required to cure these breaches no later than the end of June 2011, it will prepare ...

  • Page 144
    As described in Note 3 to the financial statements, effective January 1, 2009, the Company adopted the newly revised SFAS No. 10 "Inventories", under which, the unallocated fixed...such differences is presented in Note 27 to the financial statements. KPMG Taipei, Taiwan (the Republic of China) March 28...

  • Page 145
    ...MEMORIES, INC. BALANCE SHEETS DECEMBER 31, 2009 and 2010 (Expressed in thousands of New Taiwan...20) Accrued expenses (note 15) Financial liabilities reported at fair value through profit or loss (notes ... $ 120,395,706 142,269,290 Common stock Capital collected in advance Capital surplus Legal reserve ...

  • Page 146
    INOTERA MEMORIES, INC. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010 (Expressed in thousands of New Taiwan Dollars, except for loss per share) For the years ended December 31, 2008 Operating revenues Sales revenue Sales returns Sales allowances Net operating revenues...

  • Page 147
    INOTERA MEMORIES, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31 , 2008, 2009 AND 2010 (Expressed in thousands of New Taiwan Dollars) Retained earnings Common stock Capital collected in advance Capital surplus Legal reserve Special reserve Accumulated deficit ...

  • Page 148
    INOTERA MEMORIES, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 2008, 2009 and 2010 (Expressed in thousands of New Taiwan Dollars) For the years ...operating assets and liabilities: Increase (decrease) in financial liabilities reported at fair value through profit or loss, net Increase ...

  • Page 149
    Cash flows from financing activities: Increase (decrease) in short-term loans Proceeds from long-term loans Repayment of long-term loans Decrease in bonds payable (Decrease) increase in guarantee deposits (Decrease) increase in lending from related parties Decrease in lease payables Capital ...

  • Page 150
    ...lease Investing activities affecting both cash and non-cash items: Acquisition of property, plant and equipment Decrease (increase) in payables to equipment suppliers Cash paid for acquisition of property, plant and equipment $ $ 2,424,746 67,259 1,305,269 18,596 1,298,445 1,329 $ $ $ $ 15,844...

  • Page 151
    ...January 2006, the Company was granted approval of its application to list its shares on the Taiwan Stock Exchange (TSE). The Company's shares were initially...currency transactions and translation The Company's reporting and functional currency is New Taiwan Dollar. Foreign currency transactions during...

  • Page 152
    2 INOTERA MEMORIES, INC....are classified as non-current liabilities. (d) Asset impairment The Company assesses at each balance sheet date whether there is any ...from potential interest rate changes. (f) Financial assets / liabilities reported at fair value through profit or loss Derivatives that do...

  • Page 153
    3 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (g) Allowance for doubtful accounts Allowance for doubtful accounts is provided according to the status of collectability of each account. The ...

  • Page 154
    4 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (iv) Leased assets: over the lease term... less any accumulated amortization and any accumulated impairment losses. The amortizable amount of the Company's intangible asset is determined based on its initial cost. Amortization is recognized as an...

  • Page 155
    ...MEMORIES... lease, the Company, as the...The Company has..., the Company follows the New Act. The Company contributes monthly...Labor Insurance. The Company applies the guidance in...Company's pension obligation at the ...Company recognizes a minimum pension liability and net periodic pension costs. The Company...

  • Page 156
    ... INOTERA MEMORIES, INC.... issued by the ARDF are applied for those share-based payments under the employee stock option plans with grant dates before January 1, 2008. Under SFAS No. 39...dividends, and risk-free interest rate to the model. The Company is not required to apply SFAS No. 39 retroactively to...

  • Page 157
    7 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (p) Revenue recognition Revenue is generally... is reasonably assured. Rental income is recognized when services are provided. (q) Income tax The Company has adopted SFAS No. 22 "Income Taxes", under which, income taxes are accounted for using...

  • Page 158
    ... issued through the distribution of stock dividends out of unappropriated earnings and capital surplus. (3) Reasons for and Cumulative Effect of Accounting Principle Change (a) Effective January 1, 2008, the Company adopted SFAS No. 39 "Share-Based Payment" and Interpretation Rule (96) 052 issued...

  • Page 159
    9 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS ...reported at fair value with changes in fair value recorded through profit or loss as of December 31, 2009 and 2010, consisted of the following: December 31, 2009 Financial liabilities Interest rate swaps $ 567,642 2010 223,302 (a) The Company...

  • Page 160
    10 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS Notional amount (in thousands)... 4,919,468 (928,856) 3,990,612 513,213 (1,311) 511,902 3,150 4,505,664 $ The Company recognized the loss on obsolescence and the devaluation of inventories of $853,946 under non-operating expenses and losses for...

  • Page 161
    ... INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (7) Lease Receivables (a) The Company signed a long-term lease agreement with Nanya Technology Corp. (NTC) to lease out a portion of the building and land (including supplemental equipment) located at No. 667, Fuhsing 3rd Road, Hwa-Ya Technology...

  • Page 162
    ...MEMORIES...2011.12.31 2012.1.1~2012.12.31 2013.1.1~2013.12.31 2014.1.1~2014.12.31 On and after 2015.1.1 Total $ (8) Property, Plant and Equipment and Idle Assets (a) For the year ended December 31, 2010, the Company...,190 from the Taoyuan County Government. Asia Pacific Development Co. was engaged by ...

  • Page 163
    13 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (e) The bases for the capitalization of ...income and gains - others. (b) On June 18, 2009, the Company signed an amended long-term lease agreement with NTC and MeiYa Technology Corp. (MTC) which was originally contracted by NTC directly with ...

  • Page 164
    ...INOTERA MEMORIES, ...leased assets at the beginning of the lease period was $2,656,223. The Company recognized interest expenses from lease payables of $291,824 and $294,788, ...110,377 19,900 2,813,506 27,860 Duration 2011.1.1~2011.12.31 2012.1.1~2012.12.31 2013.1.1~2013.12.31 2014.1.1~2014.12.31 ...

  • Page 165
    15 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (10) Intangible Asset - Technical know-how The cost and accumulated...- overdue receivables. (12) Short-term Loans December 31, 2009 2010 - Short-term borrowing from credit facility Annual interest rate $ 5,930,000 0.53%~0.95% (Continued)

  • Page 166
    ...MEMORIES...portion) 2010.12.31 Current portion Par value Duration Coupon rate and interest payment Repayment term The second domestic...09 Interest payable annually at 2.20% Repayable on maturity date 2006.12.19 ~ 2011.12.19 Interest payable annually at 2.20% Repayable in three annual installments: at ...

  • Page 167
    17 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (14) Long-term Loans...52,378,153 Less: current portion of long-term loans $ (12,866,141) 39,512,012 (1) The Company signed a syndicated loan agreement with Mega International Commercial Bank, the managing bank of the syndicated loan, and 24 ...

  • Page 168
    ... not be lower than the minimum limit of 1.6%. (d) Duration: 5 years. (e) Repayment: The principal is payable in 7 semi-annual installments starting from 24 months after the first drawing date. (f) The Company has issued a promissory note for this syndicated loan. (g) The long-term loan is secured by...

  • Page 169
    ..., for a breach in respect of any semi-annual financial statements, and for a breach in respect of any annual financial statements, no later than the end of ...the Company, Nanya Technology Corporation (NTC), and Micron Technology Inc., and (ii) NTC and Micron Technology Inc. and their affiliates, taken...

  • Page 170
    20 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (3) On April 24, 2009, the Company contracted with Taichung Bank, under which, Taichung Bank granted mortgage loan and unsecured loan facility to the Company totaling $1,670,000. The mortgage loan is secured by a land (accounted for as idle ...

  • Page 171
    ... 25% before 2010. However, based on the amended Income Tax Act publicly announced on June 15, 2010, the statutory income tax rate has been reduced further from 20% to 17% commencing from 2010. In 2008, 2009 and 2010, the Company is subject to income tax at a statutory rate of 25%, 25% and...

  • Page 172
    22 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS The components of deferred income tax...at a statutory income tax rate on loss before income tax was reconciled with the income tax as reported in the accompanying financial statements for the years ended December 31, 2008, 2009 and 2010, as ...

  • Page 173
    23 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (c) As of December 31, 2009 and 2010, the components of deferred income tax assets or (liabilities) were as follows: December ...

  • Page 174
    24 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (d) Under the ROC Statute for Upgrading Industries, the Company's unused investment ... 2008 2009 2010 Expiry Year 2011 2012 2013 2014 $ ROC Income Tax Law provides an investment tax credit to companies that purchase certain types of equipment...

  • Page 175
    ... to May 2010 January 2006 to December 2010 January 2011 to December 2015 (17) Stockholders' Equity (a) Common stock On December 9, 2010, the board of directors approved to increase the Company's capital arising from the exercise by employees of the stock options granted to them under the Employee...

  • Page 176
    ... additional paid-in capital from issuance of common stock in excess of the common stock's par value, donation from others, and additional paid-in capital - treasury stock. The Company's paid-in capital in excess of par value is transferrable to common stock annually but shall not exceed 10% of total...

  • Page 177
    ...MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS As it belongs to a highly capital-intensive industry with strong growth potential, the Company...17.2 per share, respectively, according to its employee stock option plan rules. Also, as the Company issued additional shares from capital increase in cash on ...

  • Page 178
    28 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS The details of these employee stock option plans for the ...00 17.79 18.95 As of December 31, 2009 and 2010, the details of the Company's outstanding stock options, which were treated as a compensatory plan, were as a follows: December 31, 2009 ...

  • Page 179
    (Continued)

  • Page 180
    ... Pro forma results of the Company for the years ended December 31, 2008, 2009 and 2010, assuming employee stock options granted before January 1, 2008 were accounted for under SFAS No. 39, were as follows: For the years ended December 31, 2008 2009 Net loss As reported Pro forma Basic after income...

  • Page 181
    30 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (19) Financial Instrument Information (a) Fair ... from the balance sheet date. As of December 31, 2009 and 2010, the fair value of Company's financial assets and liabilities were as follows: December 31, 2009 Fair value Market value in active ...

  • Page 182
    31 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (ii) The discounted present value of anticipated cash flows is adopted as the fair value of long-term debt. The discounting rates used in calculating the present value are similar to those of the Company's existing long-term loans (including ...

  • Page 183
    ...Corp. (NTC) MeiYa Technology Corp. (MTC) Micron Technology, Inc. (Micron) (note) Micron Semiconductor Asia Pte. Ltd. (MSA) Qimonda AG (note) All board of directors, supervisors, president and vice presidents Relationship with the Company Common director Common director One of the major stockholders...

  • Page 184
    33 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (b) Significant related-party transactions (i) Sales revenue and accounts receivable Significant sales to related parties for the years ended December 31, ...

  • Page 185
    34 INOTERA MEMORIES, INC. ...49,254 1,382 62,244 112,880 0.45 0.01 0.57 1.03 $ The Company pays NPC and NTC on the 15th of the month following the month of purchase and...are not materially different from those of non-related general suppliers. (iii) Financing to/from related parties Financing to/...

  • Page 186
    35 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2009 Maximum balance Micron $ 2,989,790 Balance as of December 31, 2009 Interest rate 3.2488%~4.1575% Interest income 41,608 Interest receivables as of December 31, 2009 - The Company signed a "Loan Agreement" ...

  • Page 187
    36 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (iv) (1) Transactions of property, plant and equipment On May 1, 2009, the Company formally contracted with MTC to buy MTC's machinery and equipment of $2,593,000, which is payable in two installments. The first installment of $689,500 ...

  • Page 188
    37 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (2) Other payables-related parties arising from...is terminated. The Company signed a "Technology Transfer Agreement" with NTC and Micron. Under this agreement, these entities allowed the Company to utilize their technology in the semiconductor ...

  • Page 189
    38 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS The Company signed a service contract with NTC. Under this...2008, the Company signed a "Technology Transfer Agreement for 68-50 nm Process Nodes" with Micron. Under this agreement, the Company is required to pay Micron technology transfer fee of...

  • Page 190
    ...the potential impact on the Company as a result of the March 11, 2011 earthquake that occurred in Japan. The Company is sourcing partially some material and parts of equipment from Japanese vendors. However, management believes the Company has sufficient safety stock and alternative sources to limit...

  • Page 191
    40 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (25) Others (a) The Company's personnel, depreciation, and amortization expenses, categorized by function, were as follows: For the year ended December 31, 2008 Cost of goods sold Operating expenses Total ...

  • Page 192
    41 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS For the year ended ... 31,137,115 731,481 (b) As discussed in note 20(b)(vii) to the financial statements, the Company signed a service contract with NTC, under which, the General Administrative Office of General Administrative Office of ...

  • Page 193
    42 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (c) The Company's significant foreign currency financial assets and liabilities ...financial statements. (26) Segment Information (a) Industrial information The Company's main operating activities are to manufacture and to sell semiconductor...

  • Page 194
    ...MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (c) Export sales information Export sales by geographic areas in 2008, 2009 and 2010 were as follows: For the years ended December 31, 2008 Destination Area Asia Europe...(d) Major customers The major customers of the Company in 2008, 2009 and 2010, were as...

  • Page 195
    44 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (27)Summary of Significant Differences between... foreign joint venture partner would be recorded as expense and treated as capital surplus in the Company. (b) Lease Under ROC GAAP, the estimated fair value of a partially leased building used in...

  • Page 196
    45 INOTERA MEMORIES, INC. NOTES...calculation. Under the ARDF Interpretation No. 97-169 "Impacts of Employee Stock Bonuses on Earnings Per Share" which took effect in 2008, the ...is not considered. (e) Pension Under ROC GAAP, the Company's unrecognized actuarial gains and losses are not recognized as ...

  • Page 197
    46 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (f) Statement of cash flows ...recorded as additional paid-in capital. Distribution in excess of 20% or 25% is generally considered as a stock split. (h) Write-down and valuation of inventory Under ROC GAAP, inventory is valued at the lower of ...

  • Page 198
    47 INOTERA MEMORIES, INC. NOTES TO...annual financial statements, respectively. As of December 31, 2010, the Company was still in breach of the requirement to maintain minimum current and leverage ratios. As the Company is required to cure this breach no later than the end of June 30, 2011, the Company...

  • Page 199
    48 INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (ii) For long-term obligations ... than not of being sustained upon examination, based on the technical merits of the position. The Company's accounting policy is to accrue interest and penalties related to unrecognized tax benefits, if and when ...

  • Page 200
    ...INOTERA MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (m) Employee Stock Options Prior to January 1, 2008, the employee stock options...the year 2010 are adopted for both periods between annual financial statements and interim quarterly financial statements. Companies in the ROC are subject to a 10% ...

  • Page 201
    ...MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS Under U.S. GAAP, a valuation allowance is not provided on tax assets to the extent that it is not "more likely than not" that such deferred tax assets will be realized. Also, if a company... the period of enactment and is reported as part of the results of ...

  • Page 202
    ... MEMORIES,...,034 15,527,792 $ According to originally amended Income Tax Act publicly announced on May 27, 2009, the statutory income tax rate has been reduced from...20% to 17% commencing from 2010. For these reasons, the Company had written down the deferred tax assets of approximately $1,046,077 and...

  • Page 203
    ...Company due partly to the Company's affiliation ...technology, the company reached a historical high in annual capital expenditures of approximately $55,000,000 in 2010. With this capex behind it, upcoming technology conversions are expected to be less capital-intensive for the foreseeable future. 2011...

  • Page 204
    ... MEMORIES, INC. NOTES TO FINANCIAL STATEMENTS (3) Date through Which Subsequent Events Have Been Evaluated The management of the Company has evaluated the subsequent events as disclosed in the financial statements through March 28, 2011. (28) Event (Unaudited) Subsequent to the Date of the Report...