AGM 2016

Jan 18, 2017

Slides

Good morning, everyone. I'm Bob Soad's Chairman of the Board of Micron, and I would like to welcome our shareholders here in Boise. Despite the weather, if you've come from any distance, I hope you get out. This morning, we'll first conduct the formal part of the meeting, followed by some remarks by our CEO, Mark Durkin. We will also allow some time for questions and answers. So first, I'd like to introduce the directors that are up for reelection. Bob Bailey, the former Chairman and CEO of PMC Sierra, Rich Bayer, former Chairman and CEO of Prescale Semiconductor Pat Burns, Senior Vice President of Fortive Corporation Mark Durkin, who you all know, CEO of the company. Mercedes Johnson, former, Senior VP and CFO of Evago Technologies And Lam Research, and Larry Mondry, President and Chief Executive Officer of Stream Gas And Electric Limited. In addition, members of our, excuse me, in addition, members of our independent public accounting firm, Pricewaterhouse Hooper's LP, are here as well. So I'd like to introduce Tim Carey and Wendy Jackson. Okay? I'd now like to, call the meeting, to order. So first, the formal part of the business meeting, I do have have received affidavits stating that notice of this meeting and a proxy statement have been given to all shareholders of record as of November 21, 2016. The Inspector of Election, John Seaman of D. F. King And Company has signed the oath of inspection of Election. Inspector of Election has reported to me that we have present in person or by proxy, not less than 84% of the outstanding shares entitled to vote at this Today, we will vote by ballot. If you have turned in a valid proxy and do not intend to change your vote today, it is not necessary for you to vote again. We will vote your proxy. If you did not turn in a proxy or wish to change your vote, Please raise your hand now, and we will distribute a ballot to you for your vote. Is there anybody that needs a ballot? Okay. The proxy statement describes the items to be voted on today. The first item of business is the election of directors. Bob Bailey, Rich Beyer, Pat Byrne, Mark Durkin, Mercedes Johnson, Larry Landry, and I have been nominated to serve until the next annual meeting any discussion on the is the approval of our amended and restated 2007 equity incentive plan, which among other things provides for an increase in the number of shares reserved for issuance by Third item of business is to ratify the adoption of our Section 382 rights plan. Any discussion on the of PricewaterhouseCoopers as the independent registered public accounting firm of the company for fiscal 2017. Any discussion. Okay. Our 5th item of business is to approve a non binding resolution to approve the compensation of our named executive officers, as described in our proxy statement. Any discussion. Okay. So the company has not received notice of any other matter to be presented and voted upon at this meeting. Therefore, Therefore, this concludes the voting for this session. There I will now declare the meeting adjourned, and I'd like to introduce Mark Durkin, who will provide a brief presentation, this morning. Thank you, Bob, and thank you all for coming today. It's a pleasure to see so many familiar faces, again, here in the room. Before I start, I'd like to, introduce, as a group, the executive team here at Micron, I see a large number of them here in the room. Rather than go through a person by person this year, if you guys could all just stand and be recognized by the shareholders. Thank you. Fantastic strong team here at Micron that's working hard for you every day. Before I get started, I may say, certain forward looking statements as I move through the presentation, although that's not my intent. Am I alright to do so, please take notice of the safe harbor, language here on the screen, which, informs you that I'm not but the company is not under any obligation to update, as time moves forward. 2016 was a, was a, was a, a trying year for the company. Certainly we faced strong headwinds in the markets and eroding ASPs throughout the year. And we worked hard as a team, for the shareholders to drive our cost structure and to drive manufacturing efficiency into the business. We took, we took significant actions to restructure a number of programs we were working on. We were, we were careful about costs. And we worked very, very hard on deploying leading edge technology, both in our DRAM, piece of our business as well as in NAND flash technology and 3 d crosspoints. We achieved a number of significant milestones in terms of the ramping of those technologies. And so as we move through the year, we were able to, drive to a point where, at year end, the despite the very challenging conditions we faced, we did post a non GAAP profit for the year, albeit a small one. So we, we, while we expect, that as we move forward in time, we will continue to build on the momentum that we started to generate in 2016. And deliver better results for the company as we move through 2017. We we are, we are happy that we were able to take the actions we were, in order to drive the positive result for the fiscal year as a whole. Finally, I mentioned that we, we also work throughout the year to, to close a transaction, which is of significance, the company. I'll come back to you in a minute. The Innoterra acquisition in Taiwan, which I think will drive significant shareholder value on a go forward basis. Looking at the numbers for fiscal 2016, you can see the challenge we face as as sales eroded, in a very negative ASP environment. Notwithstanding that, as I mentioned, we cut costs, we drove efficiencies, and, maintained, a non GAAP, a positive situation in terms of a $0.06 per share non GAAP earning. Again, we established a lot of momentum, so that as we move into 2017, we believe you'll continue to see improved cash flow free cash flow from the company and improved operating earnings as we move through the year and reap the benefits of the technology work we've already done. The, the Innoterra, acquisition in Taiwan is something we've been working on for over a year. This is the culmination of a long, relationship with Foremosta Plastics And Nania Technology in Taiwan. An operation that already had a significant amount of Micron's advanced DRAM technology deployed in it. The acquisition is immediately accretive to the company and provides significant, enhancements in terms of our operational flexibility and our ability to deliver advanced products and different technologies to our customers on a go forward basis. So we're very gratified to have successfully completed that in the December timeframe. Moving forward, the company continues to be very, very focused on Advanced Technologies And Advanced Products for a for a differentiating and and diversifying set of end market segments and and a a product portfolio that increasingly is differentiated from our customers, more value add and, slightly stickier and potentially over time, less volatile and less subject to the vagaries of a commoditized marketplace. Memory, it really is, I believe, the best place to be in the semiconductor industry today. The demand for our products continues to grow, and diversify. And become increasingly important in terms of our customer's ability to drive, differentiated value for their customers. And so from a from a shareholder perspective, we believe we're in the right spot. We think we've got the right foundation and the right technology. And our job as we move through 2017 is to is to keep driving, now new advanced technologies into our manufacturing fabs, in order to drive enhanced manufacturing efficiency and lower costs, but also deliver these advanced products that are changing the world, whether it's in automotive or artificial intelligence or advanced data analytics. In summary, we think the memory market is the place to be. We have a, we executed well in 2016. And now as we move into 2017 and we are getting some relief in the end markets, you can see the shares starting to react. You know, our job as an executive team here at Micron is to make sure that we actually deliver the results. We generate the cash flow. We generate the return on equity, for the shareholders, and that's what we're very focused on doing as we move through the year. So with that, I'd like to, take any questions or on the room. For years, we were overbuilt. And too much capacity in that. Where do we stand today? Yeah, I think the situation is pretty good as we think about, at least 2017 and probably beyond. Our view of what will happen from a DRAM supply in 2017 is that it will grow from on a bit basis by between 15% 20%. Could be a little more than that if competitors add new wafers to the market, but otherwise it's going to be in that 15% to 20% range. As we look at demand, we think it grows faster than that. And then as we look at the marketplace overall with the segmentation that occurs and the time it takes to move supply from different market segments to different market segments and to get the balance just right, product by product and market segment by market segment, we think that leads to a pretty beneficial situation in 2017. Likewise, on NAND, really exploding demand. We see supply growing in the 35% to 40% range this year with demand north of 40%. So, can we get that exactly right all the time? It's very difficult to know exactly what the supply is going to be. It's very difficult to know exactly what the demand is going to be. But as we look at the marketplace today, we think, it's a positive situation for us. Any other questions? We have, we have people online listening as well. It seems that, That's the sort of supply demand equation is in your favor. And I noticed that, trip prices practically doubled in the last 4 or 5 months. It would seem that you're going to have an incredible year, So wouldn't this be a great opportunity for you to reward the loyalty of your investors and declare a dividend that year. The question is, have you considered this? You know, we, we've given guidance for the, 2nd fiscal quarter that we're in right now. And yes, that guidance is better than the 1st fiscal quarter, so we have some momentum. We do have a lot of demands, for the cash that we are generating in the business, whether it's reinvestment, for future earnings in order to maintain these advanced technology positions and build the products that the customers want next year. We do have debt on the balance sheet. So we've talked publicly about you know, the as we generate cash, the, the, one of the focuses of the company is to, de lever the company some extent, to pay down some of that debt. We'll also look at the investments we need to make in order to maintain a healthy company for the future. And yes, we talk about all the various possibilities, for the company's cash, but a dividend is not in the, in the offing this year. Alright. If there are no further questions, I'd like to, thank you all for coming. And, We'll go from there. Thank you very much.