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FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

For the quarterly period ended November 28, 2002

OR

Commission File Number: 1-10658

Micron Technology, Inc.
(Exact name of registrant as specified in its charter)

State or other jurisdiction of incorporation or organization: Delaware

Internal Revenue Service—Employer Identification No. 75-1618004

8000 S. Federal Way, P.O. Box 6, Boise, Idaho 83707-0006
(Address of principal executive offices)

(208) 368-4000
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No  o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  ý    No  o

        The number of outstanding shares of the registrant's common stock as of January 8, 2003 was 607,592,779.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

MICRON TECHNOLOGY, INC.

Consolidated Statements of Operations
(Amounts in millions except per share amounts)
(Unaudited)

See accompanying notes to consolidated financial statements.

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MICRON TECHNOLOGY, INC.

Consolidated Balance Sheets
(Amounts in millions except par value amounts)
(Unaudited)

See accompanying notes to consolidated financial statements.

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MICRON TECHNOLOGY, INC.

Consolidated Statements of Cash Flows
(Amounts in millions)
(Unaudited)

See accompanying notes to consolidated financial statements.

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MICRON TECHNOLOGY, INC.

Notes to Consolidated Financial Statements
(All tabular amounts in millions except per share amounts)

Unaudited Interim Financial Statements

        Basis of presentation:    Micron Technology, Inc., and its subsidiaries (hereinafter referred to collectively as the "Company") principally design, develop, manufacture and market semiconductor memory products. All significant intercompany accounts and transactions have been eliminated. The Company's fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. The Company's first quarter of fiscal 2003 and 2002 ended on November 28, 2002 and November 29, 2001, respectively. The Company's fiscal 2002 ended on August 29, 2002. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company, and its consolidated results of operations and cash flows.

        These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Form 10-K for the year ended August 29, 2002.

        Recently issued accounting standards:    In December 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123." SFAS No. 148 amends FASB Statement No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 is effective for the Company in the third quarter of 2003. The Company does not expect to effect a voluntary change in accounting to the fair value method, and, accordingly, does not expect the adoption of SFAS No. 148 to have a significant impact on the Company's future results of operations or financial position.

        In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." Interpretation No. 45 requires a Company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantee and elaborates on existing disclosure requirements. The initial recognition requirements of Interpretation No. 45 are effective for guarantees issued or modified after December 31, 2002 and adoption of disclosure requirements is effective for the Company in the second quarter of 2003. The Company does not expect the adoption of Interpretation No. 45 to have a significant impact on the Company's future results of operations or financial position.

        In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities. The adoption of SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002, and nullifies Emerging Issues Task Force ("EITF"), Issue No. 94-3. The Company does not expect the adoption of SFAS No. 146 to have a significant impact on the Company's future results of operations or financial position.

        Segment information:    The Company has determined, based on the nature of its operations and products offered to customers, that its only reportable segment is Semiconductor Operations. The Semiconductor Operations segment's primary product is DRAM.

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Supplemental Balance Sheet Information

        In the first quarter of 2003, the Company recognized a write-down of $90.8 million to record work in process and finished goods inventories of semiconductor products at their estimated market values.

        In the fourth, third, second and first quarters of 2002, the Company recognized write-downs of $173.6 million, $25.9 million, $3.8 million and $172.8 million, respectively, to record work in process and finished goods inventories of semiconductor products at their estimated market values.

        The Company's Lehi, Utah facility, the construction of which was initiated in 1995, is at present only partially utilized by the Company for component test operations. As of November 28, 2002, construction in progress included costs of $197.0 million related to its Lehi facilities, which are not ready for their intended use and are not being depreciated. Timing for completion of the Lehi facility is dependent upon market conditions, including, but not limited to, worldwide market supply of, and demand for, semiconductor products and the Company's operations, cash flows and alternative capacity expansion opportunities. As of November 28, 2002, the Company had assets in Lehi with a net book value of approximately $181.5 million, which were not in use but were being depreciated.

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        Depreciation expense was $287.1 million and $284.8 million for the first quarter of 2003 and 2002, respectively.

        As of November 28, 2002, notes payable and capital lease obligations of $179.4 million and $17.2 million, respectively, were denominated in Japanese Yen and had weighted average interest rates of 1.5% and 1.8%, respectively.

        The Company has pledged $50.0 million, which is included in other noncurrent assets in the accompanying consolidated balance sheet, as cash collateral for a fully-drawn revolving line of credit for TECH Semiconductor Singapore Pte. Ltd. (See "Joint Venture" note.)

        In December 2002, the Company entered into financing arrangements aggregating $70.0 million payable in periodic installments through January 2007.

Intangible Assets

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        During the first quarter of 2003, the Company expended $8.3 million for product and process technology with a weighted average useful life of ten years. During the first quarter of 2002, the Company expended $24.9 million for product and process technology and $3.8 million of other intangible assets with weighted average useful lives of nine and two years, respectively.

        Amortization expense for intangible assets was $12.6 million and $11.0 million for the first quarter of 2003 and 2002, respectively. Annual amortization expense for intangible assets held as of November 28, 2002 is estimated to be $50.5 million for 2003, $47.3 million in 2004, $44.0 million in 2005, $42.1 million in 2006, and $41.2 million in 2007.

Contingencies

        As is typical in the semiconductor and other high technology industries, from time to time, others have asserted, and may in the future assert, that the Company's products or its processes infringe their product or process technology rights. The Company is currently engaged in litigation with Rambus, Inc. ("Rambus") relating to certain patents of Rambus and certain of the Company's claims and defenses. Lawsuits between Rambus and the Company are pending in the United States, Germany, France, the United Kingdom and Italy. The Company is unable to predict the outcome of the Rambus suits or of other assertions of infringements made against the Company. A court determination that the Company's manufacturing processes or products infringe the product or process rights of others could result in significant liability and/or require the Company to make material changes to its products and/or manufacturing processes. Any of the foregoing results could have a material adverse effect on the Company's business, results of operations or financial condition.

        On June 17, 2002, the Company received a grand jury subpoena from the U.S. District Court for the Northern District of California seeking information regarding an investigation by the Antitrust Division of the Department of Justice (the "DOJ") into possible antitrust violations in the "Dynamic Random Access Memory" or "DRAM" industry. The Company is cooperating fully with the DOJ in its investigation. Subsequent to the commencement of the DOJ investigation, 23 purported class action lawsuits were filed against the Company and other DRAM suppliers in various federal and state courts alleging violations of the Federal Sherman Antitrust Act or California's Cartwright Antitrust Act and Unfair Competition Law relating to the sale and pricing of DRAM products. The complaints seek treble damages for the alleged damages sustained by purported class members, in addition to restitution, costs and attorneys' fees, as well as an injunction against the allegedly unlawful conduct. The Company is unable to predict the outcome of these suits. Based upon the Company's analysis of the claims made and the nature of the DRAM industry, the Company believes that class treatment of these cases is not appropriate and that any purported injury alleged by plaintiffs would be more appropriately resolved on a customer-by-customer basis. A court determination that the Company has violated federal or state antitrust laws could result in significant liability and could have a material adverse effect on the Company's results of operations and financial condition.

        The Company has accrued a liability and charged operations for the estimated costs of adjudication or settlement, as appropriate, of asserted and unasserted contingencies existing as of the balance sheet date.

        The Company is currently a party to various other legal actions arising out of the normal course of business, none of which is expected to have a material adverse effect on the Company's financial position or results of operations.

Redeemable Common Stock

        In connection with the issuance of the 1.5 million shares of common stock for the Toshiba DRAM Acquisition, the Company granted Toshiba an option to require the Company to repurchase on October 21, 2003, all of these shares for $67.5 million in cash. The option expires if the closing price of

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the Company's common stock is at or above $45.05 per share for 20 consecutive trading days. The carrying value of the redeemable common stock is accreted to its redemption amount of $67.5 million by a charge directly to retained earnings and is included in the computations of earning per share. Accretion of redeemable common stock was $1.5 million in the first quarter of 2003. (See "Acquisition of Toshiba Corporation DRAM Assets" note.)

Income Taxes

        Income taxes for the first quarter of 2003 do not reflect any tax benefit from losses on the Company's U.S. operations and primarily reflect taxes on the Company's non-U.S. operations. During the fourth quarter of 2002, the Company recorded a valuation allowance of $347.8 million against its net deferred tax asset in accordance with Statement of Financial Accounting Standards No. 109. Consistent with the treatment in the fourth quarter of 2002, the Company increased the valuation allowance in the first quarter of 2003 by $144.8 million against its U.S. deferred tax assets resulting from losses on the Company's U.S. operations. As of November 28, 2002, the Company's U.S. deferred tax assets consisted primarily of $1.5 billion of U.S. net operating loss carryforwards. Until the Company utilizes these operating loss carryforwards the income tax provision will only reflect modest levels of taxes from the Company's non-U.S. operations. The Company's effective tax rate excluding the valuation allowance, approximating 42% in the first quarter of 2003, primarily reflects the U.S. statutory income tax rate, the net effect of state taxes and the effect of income at non-U.S. tax rates.

Earnings (Loss) Per Share

        Basic earnings per share is computed based on the weighted average number of common shares outstanding. Diluted earnings per share is computed based on the weighted average number of common shares outstanding plus the dilutive effects of stock options and warrants. The potential common shares that were antidilutive for the first quarter of 2003 and 2002 amounted to 120.8 million shares and 64.7 million shares, respectively. Basic and diluted earnings per share computations reflect the effect of accretion of redeemable common stock.

Comprehensive Income (Loss)

        Comprehensive loss for the first quarter of 2003 and 2002 was $315.5 million and $260.4 million, respectively, and included $0.4 million and $5.5 million net of tax, respectively, of net unrealized gains on investments.

Acquisition of Toshiba Corporation DRAM Assets

        On April 22, 2002, the Company acquired substantially all of the assets of Toshiba Corporation's ("Toshiba") DRAM business as conducted by Dominion Semiconductor L.L.C., a wholly-owned subsidiary of Toshiba located in Virginia (the "Toshiba DRAM Acquisition"). The total purchase price

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of $327.9 million included cash and 1.5 million shares of the Company's common stock, which was valued at $58.1 million on the date of acquisition. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values. In connection with the purchase, the Company recorded total assets of $363.3 million, including property, plant and equipment of $292.8 million and intangible assets of $7.8 million, and total liabilities of $35.4 million. (See "Redeemable Common Stock" note.)

Joint Venture

        TECH Semiconductor Singapore Pte. Ltd. ("TECH") is a memory manufacturing joint venture in Singapore among Micron Technology, Inc., the Singapore Economic Development Board, Canon Inc. and Hewlett-Packard Company. TECH's semiconductor manufacturing facilities use the Company's product and process technology. Subject to specific terms and conditions, the Company has agreed to purchase all of the products manufactured by TECH. The Company generally purchases semiconductor memory products from TECH at prices determined quarterly, based on a discount from average selling prices realized by the Company for the immediately preceding quarter. The Company performs assembly and test services on product manufactured by TECH. The Company also provides certain technology, engineering and training to support TECH. All of these transactions with TECH are recognized as part of the net cost of products purchased from TECH. The net cost of products purchased from TECH amounted to $60.6 million and $26.0 million for the first quarter of 2003 and 2002, respectively. In 2000, as part of an equity capital infusion by the majority of TECH's shareholders, the Company funded TECH with $98.0 million as support for continuing the TECH supply arrangement. The Company amortizes the value of the TECH supply arrangement on a straight-line basis over the remaining contractual life of the TECH shareholders' agreement. Amortization expense resulting from the TECH supply arrangement, included in the cost of product purchased from TECH, was $2.4 million and $2.6 million for the first quarter of 2003 and 2002, respectively. Receivables from TECH were $26.5 million and payables to TECH were $40.1 million as of November 28, 2002. Receivables from TECH were $10.5 million and payables to TECH were $52.8 million as of August 29, 2002.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

        Micron Technology, Inc., and its subsidiaries (hereinafter referred to collectively as the "Company") principally design, develop, manufacture and market semiconductor products.

        The following discussion contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements include, but are not limited to, statements such as those made in "Critical Accounting Policies—Income Taxes" and "Income Taxes" regarding the modest levels of taxes from the Company's non-U.S. operations; in "Gross Margin" regarding the estimated amount of write-down remaining in inventory at the end of the second quarter of 2003, relative gross margins on TECH products in the second quarter of 2003, and timing of the Company's transition of product and process technology into its Virginia facility; in "Research and Development" regarding the level of research and development expense in future periods and "Liquidity and Capital Resources" regarding capital spending in 2003. The Company's actual results could differ materially from the Company's historical results and those discussed in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those identified in "Certain Factors." This discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes and with the Company's Annual Report on Form 10-K for the year ended August 29, 2002. All period references are to the Company's fiscal periods unless otherwise indicated. All per share amounts are presented on a diluted basis.

Critical Accounting Policies

        The preparation of financial statements and related disclosures in conformity with United States generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Estimates and judgments are based on historical experience, forecasted future events and various other assumptions that the Company believes to be reasonable under the circumstances. Estimates and judgments may differ under different assumptions or conditions. The Company evaluates its estimates and judgments on an ongoing basis. Management believes the critical accounting policies below are the most important to the portrayal of the Company's financial condition and results of operations and require management's most difficult, subjective or complex judgments.

        Income taxes:    The Company established a valuation allowance against its deferred tax assets arising from net operating loss carryforwards of its U.S. operations. The Company expects that until it utilizes these operating loss carryforwards the consolidated income tax provision will only reflect modest levels of taxes from the Company's non-U.S. operations. The Company evaluates the realizability of its deferred tax assets on an ongoing basis in accordance with U.S. GAAP, which requires the assessment of the Company's performance and other relevant factors when determining the need for a valuation allowance with respect to these deferred tax assets. The Company's ability to realize deferred tax assets is dependent on its ability to generate future taxable income sufficient to utilize loss carryforwards or tax credits before their expiration. In the evaluation of realizability of deferred tax assets, factors such as recent losses are given substantially more weight than forecasted future profitability.

        The Company is required to estimate its provision for income taxes and amounts ultimately payable or recoverable in numerous jurisdictions around the world. Such estimates involve interpretations of regulations and are inherently very complex. Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of any fiscal year.

        Inventories:    Inventories are stated at the lower of average cost or market value. Cost includes labor, material and overhead costs, including product and process technology costs. Determining market value of inventories involves judgment in that it requires the Company to project average selling prices, sales volumes for future periods and completion costs for products in work in process

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inventories. To project average selling prices and sales volumes for future periods, the Company reviews recent sales volumes, existing customer orders, current contract prices, industry analysis of supply and demand, seasonal factors, general economic trends and other information. When these analyses reflect market values that are below the Company's costs, the Company records a charge to cost of goods sold in advance of when the inventory is actually sold. Differences in forecasted average selling prices used in calculating lower of cost or market adjustments can result in significant changes in the estimated net realizable value of product inventories and accordingly the amount of write-down recorded. Due to the volatile nature of the semiconductor memory industry, actual selling prices and volumes often vary significantly from projected prices and volumes. As a result, the timing of when product costs are charged to operations can vary significantly.

        U.S. GAAP provides for products to be grouped into categories in order to compare costs to market values. The amount of any inventory write-down can vary significantly depending on the determination of inventory categories. A majority of the Company's inventory has been categorized as volatile (DRAM and SRAM) or non-volatile (Flash). The major characteristics the Company considers in determining inventory categories are product type and markets.

        Product and process technology:    Costs incurred to acquire product and process technology or to patent technology developed by the Company are capitalized and amortized on a straight-line basis over periods currently ranging up to 10 years. The Company capitalizes a portion of costs incurred based on its analysis of historical and projected patent issuance rates. Capitalized product and process technology costs are amortized over the shorter of (i) the estimated useful life of the technology, (ii) the patent term or (iii) the term of the technology agreement.

        Property, plant and equipment:    The Company reviews the carrying value of property, plant and equipment for impairment when events and circumstances indicate that the carrying value of an individual asset or groups of assets may not be recoverable from the estimated future cash flows expected to result from their use and/or eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss would be recognized equal to an amount by which the carrying value exceeds the indicated fair value of the assets. The estimation of future cash flows involves numerous assumptions which require judgment by the Company, including, but not limited to, future use of the assets for Company operations versus sale or disposal of the assets, future selling prices for the Company's products and future sales volumes.

        Research and development:    Costs related to the conceptual formulation and design of products and processes are expensed as research and development. Determining when product development is deemed complete requires judgment by the Company. The Company deems that development of a product is complete once the product has been thoroughly reviewed, tested for performance and reliability and is internally qualified for sale to customers. Subsequent to product qualification, product costs are valued in inventory.

        Contingencies:    The Company is subject to the possibility of various loss contingencies. The Company considers the likelihood of the loss or impairment of an asset or the incurrence of a liability as well as its ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. The Company has accrued a liability and charged operations for the estimated cost to resolve certain litigation and other contingency matters. The Company regularly evaluates current information available to determine whether such accruals should be adjusted.

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Results of Operations

        Results of operations include charges of $91 million for the first quarter of 2003, $173 million for the first quarter of 2002 and $174 million for the fourth quarter of 2002, for write-downs of inventories to their estimated market values. Absent the effect of these write-downs and the estimated offsetting effects of previous write-downs of products sold in these quarters, the Company's operating loss would have been $345 million for the first quarter of 2003, $592 million for the first quarter of 2002 and $337 million for the fourth quarter of 2002.

        Results of operations for the first quarter of 2002 do not reflect the assets of Toshiba Corporation's ("Toshiba") DRAM operations at Dominion Semiconductor L.L.C. in Virginia, which were acquired on April 22, 2002. The total purchase price of $328 million included cash and 1.5 million shares of the Company's common stock. (See "Item 1. Financial Statements—Notes to Consolidated Financial Statements—Acquisition of Toshiba Corporation DRAM Assets.")

Net Sales

        Net sales for the first quarter of 2003 decreased by 8% as compared to the fourth quarter of 2002 as a result of a 12% decrease in average selling prices for the Company's semiconductor memory products. The decrease in average selling prices reflects a decrease in average selling prices for the Company's Synchronous DRAM ("SDRAM") products, partially offset by an increase in the average selling prices for the Company's Double Data Rate ("DDR") SDRAM products. SDRAM products had generally lower selling prices than DDR SDRAMs in the first quarter of 2003. SDRAM products constituted approximately 60% of the first quarter sales as measured in megabits resulting in reduced inventories of SDRAM devices. First quarter sales as measured in dollars was comprised of 50% DDR SDRAM and 44% SDRAM as compared to 34% DDR SDRAM and 58% SDRAM in the fourth quarter of 2002. Overall megabit sales volumes increased by 3% comparing the first quarter to the immediately preceding quarter.

        Net sales for the first quarter of 2003 increased by 62% compared to the first quarter of 2002, primarily due to a 52% increase in average selling prices for the Company's semiconductor memory products and a 6% increase in total megabits of memory sold. The increase in average selling prices reflects generally higher prices for DRAM products as well as the Company's transition from SDRAM to higher priced DDR SDRAM.

Gross Margin

        The Company's gross margin has been significantly impacted by the timing of inventory write-downs. In recent periods, average selling prices for the Company's semiconductor products have been below manufacturing costs, and accordingly the Company's results of operations, cash flows and financial condition have been adversely affected. To the extent the estimated market values of products held in finished goods and work in process inventories at a quarter end date are below the cost of these products, the Company recognizes a charge to cost of goods sold to write down the carrying value of inventory to these estimated market values. In each of the last seven quarters, the Company recorded charges to cost of goods sold to write down the carrying value of its inventories to their

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estimated market values. As these charges are recorded in