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To: Thomas G. Busillo who wrote (44898)	4/7/1999 7:30:00 PM
From: DJBEINO	Respond to of 53903

Rambus DRAM With an Error in Design Step 04/07, 16:35 The most promising next generation memory, rambus dynamic RAM(DRAM) is reported to have born a mistake in designing level. According to industry official, Intel is known to have found the error the memory misunderstands '1' as '0' due to the shortage of register capacity when it reads the last bit information stored at direct rambus DRAM. Intel is reported to have sent official requiring letters to the chip makers to ask to solve the error. With this bug, the commercialization of the chip is expected to be postponed, which is originally scheduled to be marketed around the coming September. Internal chip makers, such as Samsung Electronics and LG Semicon revealed that the error could be corrected in software and the chip could be released in September.

To: Thomas G. Busillo who wrote (44898)	4/7/1999 9:36:00 PM
From: Thomas G. Busillo	Respond to of 53903

On second thought, did we get a better idea of what they actually did re: production factoring for the pop out of the bottleneck and the 124.5% increase in goods from their JV's ? I haven't adjusted for the MUEI component of finished goods, their SRAM and flash are a big grey area for me, and I don't know the GM's on the chips from their JV's, but what if you set up the problem this way: 99Q1 production = 100 (base) 99Q2 production = 190 (90% increase) 99Q1 COGS for mem. chip shipments = 372.645 99Q2 COGS for mem. chip shipment = 474.028 99Q1 change in finished goods = 28.6 (which would be at COGS) 99Q2 change in finished goods = 37.3 """" 99Q1 cost of goods produced = 401.245 99Q2 cost of goods produced = 511.328 99Q1 COGP from JV's = 46.1 99Q2 COGP from JV's = 103.5 99Q1 % COGP from JV's = 11.48% 99Q2 % COGP from JV's = 20.24% Again, considering they mention the JV's have higher production costs, the following is going to be inaccurate (adding to the inaccuracy of the MUEI FG and lack of good data on SRAM and flash) , but it's way of getting a useful metric (the metric itself has no real meaning outside of the problem). COGP/production 99Q1 401.245/100 = 4.01245 99Q2 511.328/190 = 2.6912 That's a 32.92% cost reduction. Maybe a little high, but in the ballpark. So the 10-Q states that one third of the increase in production came from resolving the bottleneck issue. 90 x 1/3 = 30 30 X 2.6912 = 80.736 of COGP came from resolution of the bottleneck And we know that the JV's accounted for 103.5. 511.328 - 80.736 - 103.5 = 327.092 (which would be the COGP not related to JV's or bottlenck issues) Divide that by the 2.6912 to convert it to the production 327.092 X 2.6912 = 121.54 So without the additional goods coming from the JV's and the pop coming from unclogging the bottleneck, "normal" production was really 121.54 v. 100 or 21.54% But then if you go back and adjust for the JV's in Q1 to get the % of the base 100 they had 46.1/4.01245 = 11.48 100 - 11.48 = 88.52 So that 121.54 from 88.52 is a 37.3% change. Are these numbers accurate? No. There are obvious flaws: not adjusting for MUEI's FG, not knowing the SRAM and flash, not knowing gross margins on the goods from the JV's (which skews the conversion back into production). The 37.3% is probably too low and looking at it another way, it's in the past and the bottom line is that they did have phenomenal bit production growth. But I think the framework used to solve the problem given the right data would get you close and I also think it sheds some light (an imperfect light) on how the 90% increase in production breaks down. The only reason I wanted to attempt to get closer to the answer is because of whoever it was on the conference call who dodged the question when it was asked. In edit mode: Another flaw - shipments out of finished goods v. production going in at a lower cost?

To: Thomas G. Busillo who wrote (44898)	4/7/1999 10:15:00 PM
From: Carl R.	Read Replies (1) \| Respond to of 53903

Tom, the clause: The Company purchases assembled and tested components from the joint ventures at prices determined quarterly and generally representing discounts from the Company's average sales prices. These discounts were lower than gross margins realized by the Company in the second quarter of 1999 on similar products manufactured in the Company's wholly-owned facilities, but were higher than gross margins historically realized in periods of excess supply. In any future reporting period, gross margins resulting from the Company's purchase of joint venture products may positively or negatively impact gross margins otherwise realized for semiconductor memory products manufactured in the Company's wholly-owned facilities. is fairly clear. The price that the company pays the JV for the memory is a percentage of the selling price. In times of shortage, this reduces the margin and profit, but it also assures that in times when prices suck, the margin will always be positive. This should tend to reduce the size of loss that MU will report if prices keep falling, and decrease the size of profits if a shortage develops. Carl

To: Thomas G. Busillo who wrote (44898)	4/8/1999 1:31:00 AM
From: S. maltophilia	Respond to of 53903

<<RE: Capital Structure . The Company has an aggregate of $500 million in revolving credit agreements, including a $400 million agreement expiring in May 2000, which contains certain restrictive covenants pertaining to the Company's semiconductor memory operations, including a maximum total debt to equity ratio. There can be no assurance that the Company will continue to...>>>> From recent 10K: sec.gov 7.14 Combined Tangible Net Worth. The Company shall not permit, --------------------------- as of the last day of any fiscal quarter, Combined Tangible Net Worth to be less than an amount equal to $1,900,000,000, plus the sum of (a) 75% of ---- Combined Net Income (not reduced by Combined Net Loss for any period) earned in each fiscal quarterly accounting period commencing with the fiscal quarter ending September 3, 1998, and (b) 50% of the amount by which Combined Tangible Net Worth increases as a result of any secondary public or private offering of equity securities by the Company and its Semiconductor Operations Subsidiaries (not in connection with an Acquisition or employee stock option or purchase plans or the TI Acquisition) after the Closing Date. 7.15 Leverage Ratio. The Company shall not permit, as of the last -------------- day of any fiscal quarter, the Leverage Ratio to exceed 1.00 to 1.00. 7.16 Maximum Indebtedness to Capitalization. The Company shall -------------------------------------- not permit, as of the last day of any fiscal quarter, the aggregate amount of all Indebtedness of the Company and the Semiconductor Operations Subsidiaries on a combined basis to be an amount which exceeds 60% of Capitalization........ [This is about 40% of the way into the 10K, found shortly after the "incorporated by reference" list.]