During the course of this meeting, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company and the industry. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to the documents the company files on a consolidated basis from time to time with the Securities and Exchange Commission, specifically the company's most recent Form 10-K and Form 10-Q. These documents contain and identify important factors that could cause the actual results for the company, on a consolidated basis, to differ materially from those contained in our projections or forward-looking statements. These certain factors can be found in the investor relations section of micron.com. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.
We are under no duty to update any of the forward-looking statements after the date of the presentation to conform these statements to actual results.
Good morning, welcome to the Micron Technology 2014 Shareholder Meeting. I think before we get started with the formal business, I'd like to take a brief opportunity to introduce the directors of the company who are with us here today. First, if you'd just stand when I call your name. Bob Bailey, Rich Beyer, Pat Byrne, Mark Durcan, Warren East, Mercedes Johnson, and Larry Mondry. Thank you all. Now we'll move quickly to the formal business of today's meeting. I've received an affidavit stating that the notice of this meeting and a proxy statement have been given to all shareholders of record as of November 21st, 2014. The Inspector of Election, John Seaman, if he's in the audience, maybe he could just stand. Thank you, John. Of D.F. King, has signed the oath of Inspector of Election.
The Inspector of Election has reported to me that we have present, in person or by proxy, not less than 85% of the outstanding shares entitled to vote at this meeting, which does constitute a quorum. I therefore declare this meeting duly convened. We will vote by ballot today. If you've 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 and we will distribute a ballot to you for your vote. Let's move to the voting. The first item of business is the election of directors.
Robert L. Bailey, Richard M. Beyer, Patrick J. Byrne, Mark Durcan, Warren East, Mercedes Johnson, Larry Mondry, and I have been nominated to serve until the next annual meeting or until our successors are duly elected and qualified. Is there any discussion? Okay. Seeing no discussion, please mark your ballots. The second item of business is the approval of the amended and restated 2007 Equity Incentive Plan. Is there any discussion on this item? Okay. Seeing none, please mark your ballots. The third item of business is the ratification of the appointment of PricewaterhouseCoopers as the independent registered public accounting firm of the company for fiscal 2015. We have a representative of PwC here today, I believe, Larry Westall. Okay. Thank you, Larry. Is there any discussion on this item? Okay. Seeing none, please mark your ballots.
The fourth item of business is the approval of an amendment to our restated certificate of incorporation to eliminate cumulative voting. Is there any discussion on this issue? Okay. Seeing none again, please mark your ballots. The fifth item of business is to approve the material terms of the performance goals under our Executive Officer Performance Incentive Plan. Is there any discussion on this item? Okay. Seeing none, once again, please mark your ballots. The sixth 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. Is there any discussion on this item? Okay. Seeing none, please mark your ballots. The company has not received notice of any other matter to be presented and voted upon at this meeting. This concludes the voting.
Please, if you will, pass your ballots to the aisles for pickup. There being no other formal business to be presented at this meeting, I now declare the meeting adjourned. I will step down, and I'd like to welcome Mark Durcan up to the podium.
Thank you, Bob, and thank you everyone for coming to join us here today. I have a brief company update, and Mark Adams will also speak to you a little bit about what's going on in operations and with our products and customers. Before I jump into that, I'd like to recognize a few folks. Larry Westall, can you stand again? Larry, the lead partner for PwC on the Micron account. Thank you, Larry. Some of the officers here at Micron that are in attendance today, Scott DeBoer, Vice President of Research and Development. Mike Sadler, Vice President of Corporate Development. Steve Thorsen, Vice President of Sales. Darren Thomas, Vice President of Storage Solutions. Brian Shirley, Vice President of Memory Products. Joel Poppen, General Counsel. Kipp Bedard, VP Investor Relations. Sorry, I can't see back there. Oh, Steve Casper, Vice President of Non-Volatile Engineering.
John Schreck, Vice President of DRAM. Rod Morgan, Vice President of Procurement. John Waite, Vice President of Supply Chain. Now coming back to the front row, Mark Adams, President. Finally, I'd like Ron Foster, our CFO, to stand up. Ron, just stand for a minute while I try and embarrass the unembarrassable. Ron Foster has been a wonderful CFO for Micron and team member, former board member, is retiring in about a month. I just want to take the opportunity in front of our shareholders here to thank Ron for the really phenomenal job he's done for the company as CFO and prior to that as a director of the company.
We would not have had the progress we've had over the years, be the company we are today, without Ron's leadership on the finance side, but also in terms of building the executive team, the skills of the executive team, and the collaborative culture we have today. Ron, thank you so much. All right. 2014 was I think, another very solid year for Micron. We worked hard on innovative products for our customers. You can see here, a lot of activity throughout the year, delivering not only leading-edge storage solutions in terms of SSDs for the client, for the data center, and other storage solutions in the mobile space, but also innovative products for computing. Whether it's in more client-oriented activity or for high-performance computing in Intel next-generation processors or in package memory for high-performance products out in the years beyond that.
We introduced innovative new non-memory products, like the Automata Processor. We're recognized by many customers and industry pundits for the quality of some of the technology we deployed as well, including our 16 nanometer NAND technology and the underlying technology in our storage solutions. I think really a very productive year for Micron in terms of getting new products into the marketplace to support our customers. It shows up in the financial results. Really, if you look at Micron's performance for 2014 versus 2013, across every line item but one here, which was the contribution from the Elpida purchase in 2013. A dramatic improvement in revenue, in operating income, in net income. It showed up in cash flow as well, much of which we put back to work in the business investing in our capital equipment and people.
Also finding a lot of cash to return to the shareholders through our repurchase of convertible debt. I think the team here at Micron executed well and is very focused on doing the same for you in 2015. We also spent time positioning the company for the future, as you think about some of the moves we made as we moved through the year, investing in our people and organizing the company to deliver the products and the solutions we need to in the future, you can see that we weren't standing still there either. In the March timeframe, we reorganized the company into 4 different BUs and added talent. For the storage BU, promoted from within. For the embedded business unit, continue to invest in personnel, to drive advanced technology solutions into the compute space with Steve Pawlowski in the middle of the year.
Continue to invest in the infrastructure here in the community, in Boise and around the world, to make sure that our employees continue to develop and get the training they need and have access to the education that'll help them succeed and develop into the future. Near the end of the year, we made a couple of announcements relative to infrastructure for the company to make sure we have the clean room space to deliver next-generation technology products to the marketplace in 2016 and beyond. As well as in partnership in back-end manufacturing capacity to give us the flexibility and efficiency we need as we continue to grow the business around the world. Many of you shareholders in the room know that we have significant investments in Singapore. In fact, we run our operations out of Singapore.
We have three existing fabrication facilities there, including two large 300-millimeter non-volatile memory fabs. At the end of the year, we announced a decision to increase the size of that manufacturing facility there to enable us to deploy 3D NAND technology, which I will come back to here in a couple of minutes. The growth of the manufacturing footprint in Singapore allows us to really effectively and efficiently, and gradually as market demands, increase the scope of our manufacturing there while leveraging the existing equipment for greater efficiency, the existing trained workforce to lower risk, and to make sure that we get the most effective deployment of this really game-changing non-volatile memory technology out in the future. It also allows us to leverage all the engineering resources and infrastructure we have there as we think about other future technologies like storage class memory moving into the future.
The memory market conditions, I think remain very robust. I think generally speaking, when we think about the memory industry today, we think it is one of the best segments, if not the best segment, to think about investment in the semiconductor industry. That's because when we look at what our customers are seeing and demanding, we see growth across a broad swath of applications that Mark Adams will talk about here in a minute. We see the rest of the pieces that go to the puzzle in terms of enabling us to generate return for our shareholders as we invest in that market. We see good growth, but we also see a marketplace that has a rational response to demand. Rational in the sense that we don't have to overinvest just to stay at the efficient operating frontier.
As technology migration has slowed, we choose to invest when we see demand in the marketplace. Micron doesn't have to invest just to stay up in a rat race relative to deployment of that technology. We see a really robust unit growth per application, whether it's in automobiles for infotainment and safety or in medical devices of the future or wearables technology, advanced solid-state storage for the data centers, servers of the future. Very strong growth across a broad swath of markets. That allows us, as we think about tuning our capacity and delivering it to the marketplace, to make sure that we really are building products and shipping them into markets that have the demand for them. We continue to position the company with a strong balance sheet and a flexible business model.
I think we've done a good job over the last number of years putting capacity in place in a capital-efficient manner, either through partnerships or through acquisition at the right time so that the Micron capacity has a relatively low fixed cost, gives us the flexibility to dial our capacity appropriately for market conditions, and generate a high return on assets and a high return on invested capital as we move forward. We also have, I think, a very flexible balance sheet. We've taken a lot of activity through the years and through the last couple of years to restructure that as market conditions have changed and as our internal cash flow has become more robust.
We will continue to dial the knobs on our balance sheet to access capital in all the markets around the world that we have access to, and to return capital to shareholders in ways that make sense given our internal growth profile and internal investment profile. I think the table is well set as we move into 2015 from a product introduction perspective, from a technology positioning perspective, and from a market robustness and financial balance sheet and engineering perspective. 2015 will be all about technology deployment for us. We have a lot of work to do in 2015. These new technologies, whether it's 20 nanometer NAND that's going into manufacturing in our fab in Japan and in our joint venture in Taiwan, or 3D NAND going into existing fab, and then beyond that into the new fab in Singapore.
These are complicated, difficult technologies, but we have experienced teams in place. Really, we've done, I think, a very good job with the integration of the new team members over the last couple of years. We have a strong engineering base in Japan to tackle the 20 nanometer technology deployment. We've got a strong engineering workforce in Singapore running across two 300-millimeter fabs to deploy this 3D NAND. We're very bullish on the technology position of both of these technologies and the products that they will enable, I think will be the next leg up for Micron as we think about the future of memory. I'm going to stop here and hand it over to Mark Adams in a minute.
Before I do, I want to run a quick video for you and just let some of our customers tell you a little bit about how they are using the products Micron's building and how really they are changing the world with innovative new memory products. If we can roll that video.
The end applications where memory now exists. One simple way that Mark likes to refer to it internally is if it's powered by a battery or you're plugging it in, Micron memory is powering that application. That's a great example, those four examples, but there's many more. It's a dramatic shift from where this business has come over the last five to 10 years when you think about the memory business and the stereotype of the commodity memory business and the shift to where we see today and the promise of tomorrow. A number of different technology trends are leading us down this path, the capability to drive these applications, and the underlying foundation is memory. The difference for us is that the memory is not one industry-defined recipe on how memory gets applied.
The difference for us, whether it be mobility or machine-to-machine, enterprise big data applications, the difference for us is that the applications are defined specifically for that solution. That's an exciting differentiation from today's business model from where we came. In order to take advantage of that, as Mark mentioned, we have to set ourselves up for that success in a lot of different areas. First and foremost, we have to set the company up for success to understand that we're not just making chips for a big market that's going to be trading chips on pricing on a daily basis. We're engaging with customers one-to-one, as you can see in that video, on what their needs are and how we can configure these applications and technologies from Micron to empower their systems and solutions.
The networks of resources that we have from sales and engineering and marketing and what have you, are all part of a new structure that we put out, and implemented that last March into four business units. We say market-facing business units because we really drive our product roadmaps towards where the customers want Micron's technology to support their business. CNBU is an acronym that stands for Computer Networking Business Unit. That is a core operation that's solely focused on taking our DRAM technology and innovating around high bandwidth, high-performance compute, and transmission of data across networks. Our storage business unit is primarily our NAND technology and how it applies to both consumer and enterprise storage applications. A big growth opportunity for us in storage is in this evolving phenomena of solid-state drives.
That's the ability for us to use flash memory technology to add value and enhance storage capabilities, not just in consumer applications like PCs, tablets, and smartphones, but now evolving to applications in the enterprise. The idea that we develop solutions and technologies for leading financial institutions to store massive data to run their business is an exciting opportunity in its infancy. Our mobile business unit represents leading portable mobile applications such as smartphones and tablets, that leverage both NAND and DRAM technology and future emerging technologies, and how we can actually provide the capabilities to run these units that really now are configured like laptops of just a year or two ago. If you look in your pocket, you're probably holding a smartphone that has three gigabytes of DRAM and maybe 64 gigabytes of NAND storage. We're holding laptops in a smartphone configuration.
The power of the technology is allowing us to do so much more in terms of end application consumer support. Our embedded business unit, or EBU, is really a catalyst for how we think about the long-term applications of memory. Embedded has been historically a business where we work with customers for specific applications, whether it be gaming or they're an automotive customer or machine-to-machine type applications where it's very specific one-to-one design. As the memory business evolves, we're going to continue to grow that area of our business, and I think that will transcend in what our business looks like over the long term. These businesses, for us, represent a new approach of how we engage our customers, and we listen to them and understand how they impact our product development and our overall technology direction.
Mark mentioned 2015 is going to be an exciting year for Micron in terms of technology. Technology evolution that allows us both in DRAM and NAND flash to evolve and offer better performance, better power capabilities, more reliability. As we think about the technology that Micron has historically brought to market, we continue to push the envelope on not just that, but capabilities to take that technology and differentiate. If you think of the example of Hybrid Memory Cube, where we're not just innovating with silicon, we're also innovating how we actually package the silicon and offer a differentiated solution to a networking or high-performance computing company. This is how we see this. This one slide would tell you what we see in terms of our business and how it evolves.
We have to continue to be the best in the industry at innovation at the core silicon level. The opportunity to differentiate long term really revolves around our ability to take that core technology where we lead and add value, whether it be through packaging or controller development, firmware or software, or even develop end systems. You think about storage opportunities where we can actually bundle all this into leading-edge all-flash array technology. That is the opportunity. That is the path for our company going forward, and that is what we're investing from a competency in our overall organization structure, our capabilities in our design and research and engineering, the ability to integrate all this and serve our customers. That's the excitement that is around our business today. While we do that, we continue to maintain a rigid focus on being the best in operating efficiency.
I would say that in 2014, our manufacturing, back-end test and assembly, our supply chain operations, they all contributed to world-class performance. Cycle time reduction, inventory management, customer delivery performance. These type of metrics that we run our business on day to day, team did a fantastic job, but we have a lot of room to grow because as you might imagine, as we think about changing from a commodity business to end-to-end customer solutions one to one. That puts a whole set of new demands on our supply chain and how we serve our customers. That's what we're focused on every day of our lives, is how we can take this technology, provide differentiation, and then give the customer the reliability and confidence that Micron will deliver. The evolution, what's the output for us? How do we think about success?
Well, in addition to customer feedback and customer service and our results with gaining new wins with our relationships and our partners, we look internally to say, are we taking advantage of this wonderful opportunity that Micron has in terms of providing differentiated solutions to more attractive markets? As I said, what a difference 10 years makes. The capacity that we're using, our precious capacity that we've invested in, now we're taking this and evolving this to new market applications that are both allowing us to differentiate and play a more important role with our customers, but also drive better performance and better return for our shareholders. You can see that 2014, we made a lot of progress, but there's a lot of work, as Mark said, to be done, and we're committed to that as a team.
With that, I want to hand it back over for Mark for closing comments and Q&A. Thank you.
Thanks, Mark. Let me just wrap by saying, this team is very focused. We're focused on value-added products and solutions for our customers. We're going to continue investing in advanced technology and advanced manufacturing capacity so we can deliver those products and enable not only the most differentiated and performance differentiated solutions to the marketplace, but also do it in a cost-effective and efficient manner. We're going to keep driving internally on operational improvements across a broad swath of areas and technologies. We really have, as the world's only truly global memory manufacturer, I think access to the best and brightest around the world. We're investing in that team, developing that team, and they're responding and driving operational excellence moving forward.
We're going to continue developing really innovative leading-edge technologies, whether it's things like 3D NAND or other storage class memories, or whether it's new ways of thinking about using memory technology to bring processing and memory closer together. We're going to keep working on a strong financial model that recognizes the growth opportunities the company can invest in, as well as returning value to our shareholders. When you put it all together, we're going to optimize this business for the long term, for the future, and with shareholder and customers worldwide in mind. When you look at this little drawing we've had on the right on all these slides, and you talk about what is Micron, innovative, trusted, collaborative, driven. That's what we are. That's what we're going to do for you as shareholders and move this company forward into the future.
With that, I want to stop and answer a few questions. There's a microphone. If you just raise your hand, someone will bring you a mic, and that way everyone in the room and online can hear you.
Is the video that you showed going to be available online after the meeting?
I don't know the answer to that question. I don't know any reason why we couldn't make that available online. It probably already is on micron.com.
As one of the longest shareholders in both time and perspective, I'm proud of our accomplishments in helping to bring computers to the world through memory excellence. I think Micron has demonstrated excellence throughout their history. As we've seen, this commodity has been, and probably will continue to be cyclical, and has fostered both financial and personal success, followed by hardship. My recommendation to help Micron prosper is to diversify when we're strong into something that will inspire our customers, team members, partners, and yes, all of us stockholders. I would propose that you and the board seriously consider partnering with other leading companies in the consumer medical technology field. We're at a unique point in time where small sensors, memory, and big data are poised to help solve many of mankind's health issues, and memory is going to play a key role in that.
This paradigm shift in healthcare is driven by personal computing products, data, and services, not institutionalized medicine. Since Micron has a unique ability to respond to this market with small, low-cost technology, I believe we also have the responsibility to deliver. If we put our people, memory, and capital to a higher use, they will achieve higher returns. The key to any business is its people. My question is, what do you plan to do this year to retain, attract, and inspire our team members to produce products that improve the quality of life of our customers, partners, and stockholders? Thanks.
Well, there's a lot in there. I think certainly relative to the diversification issue. In particular, medical market segment. We're very engaged in all those things. Micron, our business is about memory and memory solutions. We don't want to be a medical device provider, we want to make sure we've got the right memory solution subsystem to power all those end applications, and we're very engaged in all of those things. When you get to the question about what are we doing to inspire our team and to develop our team to make sure we're ready for the future, we continue to invest heavily in internal training.
We have, boy, hundreds and hundreds of folks now through our technical and engineering internal program, where we take incoming technicians and engineers and provide them with advanced training to help make sure they continue to develop their technical skills and have the wherewithal to develop these advanced products. We continue to invest with our university partners here in Idaho and around the world. We spend a lot of time talking to our team members about these end applications, how what they're doing really is changing the world. They get it. This team at Micron, whether it's here in Boise, Idaho or in Singapore or in Taiwan or in Japan, is highly energized to make sure that we continue to innovate and think about end customer markets and the things that Micron can do to add value for our customers.
It's about communication, it's about training, it's about education, and it's about hiring and retaining the best and brightest. As a management team, we're very focused on all of those things. Thanks for the question. We got one right here. Yeah.
Prior to the meeting, I asked you a question about the Automata, you said that Mark Adams was going to answer that one. I don't see him on the stage.
You know what? Go ahead. Why don't you restate your question for the room, I'll take a stab at it. If Mark wants to say something, we'll let him say that, too.
My question is, the Automata chip is just now coming out for early adopters. I was wondering some of the functions that we would see this fulfilling in the memory market, the timeline for it being a commodity, not commodity, but on production at a fairly high level.
Yeah. Let me answer that, actually, I think, Brian Shirley, if you want to add something, I think that would be appropriate. The Automata Processor is a highly disruptive way of thinking about computing and dealing with data. At its core, what it really is a very, very fast and adaptable, customizable pattern recognition engine. That's going to be used over time as people learn how to use this technology and write the software code, and understand how it can be used in their applications. It can be used for all sorts of different things. I think an early application will be virus detection in networking.
I think it can be used for real-time medical applications, like we were talking about a while ago, for DNA sequencing and understanding very quick analysis of samples of biological material, whether it's blood or saliva or sweat or whatever, to understand what's going on in chemistry and chemical environments and genetic environments. Beyond that, I think it can be used for facial recognition and speech recognition. Lots of different ways to take this and use it really not probably as a system main processor, but as a co-processor to perform specific applications that we can't even dream of doing today. When will it be significant? Well, we're just rolling out now into the development community development boards where they can take this technology on a board that enables them to actually program it and play with it and understand what is achievable with this.
It's the type of disruptive innovation that's going to take people a while to figure out and to understand. We're not looking for a huge revenue this year or next year or probably even the year after that. Over time, I'm a real believer it's going to have significant impact on the way people think about data and what's possible with big data sets and real-time analytics. Brian, did you want to add anything to that?
Mark, I think that's very well said. This is pretty revolutionary technology, incredibly powerful technology, and we're pretty excited about it. It's revolutionary enough that it takes some time to show the world how to use this and for the world to figure out how to use it. Really, in terms of the initial applications, be thinking on the infrastructure side in particular. I think Mark said it well, the networking space specifically, really what this technology is optimized for is very massive parallel real-time data pattern recognition. The best example I can think of for that is analyzing traffic coming over a network, looking for viruses, specific patterns, potentially even what they call deduplication inside of storage systems, and really just revolutionizing how data analysis happens. Think of that as really the tip-of-the-spear application. The applications beyond that, frankly, are infinite.
Really probably the most excited communities are actually even on the academic side, where they're looking into ways to truly transform the way computing happens inside of big data.
All right. Maybe one more if there's a quick one. Yeah, right there in the third row.
Yes, Mark, you are to be complimented on the way in the last few years you've grown this company. Many investors are wondering why it's trading at an 8:1 P/E ratio. Of course, the answer to that is that everyone's looking forward to the declaration of a dividend, which will push you up to the proper valuation of your company. Can you tell us anything that you have planned for the future in that regard?
Yeah. Thanks. Appreciate the support. The way we've used our free cash flow over the last year, a lot of it has been used to return value to the shareholders through repurchase of convertible bonds that had the potential, as the stock price continues to rise, to dilute future earnings. We want to take care of some of that first, and I think over time, at some point in the future, I have no timeline for this at all, and I don't believe our board has a timeline for this today. We will look at what other ways to return value to the shareholders might be. I think that the most important thing for us to do today is to continue to restructure the balance sheet relative to those convertible bonds and maybe move more of our debt over time into high-yield straight debt.
As we think about the future and we have continued sustained high performance, as we believe we've done over the last couple of years, I think over time, investors will look at this company and begin to value us more appropriately. If at some point in the future we think the dividend is the best way to return capital to shareholders, we'll certainly consider that as well. That's not likely to happen this year. All right. I want to thank everyone for coming. We're working hard on your behalf. We think we've got a bright future and a great opportunity, and this team is very focused on delivering on it. Thank you for your support.