[October 30, 2014] |
|
Microchip Technology Announces Financial Results for Second Quarter Fiscal Year 2015
CHANDLER, Ariz. --(Business Wire)--
Microchip Technology Incorporated (NASDAQ: MCHP)
-
Record net sales of $546.2 million, up 3.3% sequentially on a GAAP
basis, including $16.9 million of revenue from the ISSC acquisition.
-
Record net sales in each of our 8-bit, 16-bit and 32-bit
microcontrollers.
-
On a non-GAAP basis: gross margins of 59.1%; record operating
income of $177.3 million, net income of $150.2 million; and EPS of 67
cents per diluted share.
-
On a GAAP basis: gross margins of 56.3%; operating income of $101.3
million; net income of $93.6 million; and EPS of 42 cents per diluted
share.
Microchip Technology Incorporated (NASDAQ: MCHP), a leading provider of
microcontroller, mixed signal, analog and Flash-IP solutions, today
reported results for the three months ended September 30, 2014 as
summarized in the following table:
(in millions, except earnings per diluted share and percentages)
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Three Months Ended September 30, 2014
|
|
|
|
GAAP
|
|
% of Net Sales
|
|
Non- GAAP1
|
|
% of Net Sales
|
Net Sales
|
|
|
$546.2
|
|
|
|
$546.2
|
|
|
Gross Margin
|
|
|
$307.5
|
|
56.3%
|
|
$322.8
|
|
59.1%
|
Operating Income
|
|
|
$101.3
|
|
18.5%
|
|
$177.3
|
|
32.5%
|
Other Expense (including Gains/Losses on Equity Method Investments)
|
|
|
$10.6
|
|
|
|
$8.2
|
|
|
Income Tax Provision (benefit)
|
|
|
$(1.3)
|
|
|
|
$18.4
|
|
|
Net Income before non-controlling interest
|
|
|
$92.0
|
|
16.8%
|
|
$150.7
|
|
27.6%
|
Net Income (loss) from non-controlling interest
|
|
|
$(1.6)
|
|
|
|
$0.5
|
|
|
Net Income Attributable to Microchip
|
|
|
$93.6
|
|
17.1%
|
|
$150.2
|
|
27.5%
|
Earnings per Diluted Share
|
|
|
42 cents
|
|
|
|
67 cents
|
|
|
1
|
|
See the "Use of Non-GAAP Financial Measures" section of this release.
|
GAAP net sales for the second quarter of fiscal 2015 were
$546.2 million, up 3.3% sequentially from net sales of $528.9 million in
the immediately preceding quarter, and up 10.9% from GAAP net sales of
$492.7 million in the prior year's second fiscal quarter. GAAP net
income for the second quarter of fiscal 2015 was $93.6 million, or
42 cents per diluted share, up 4.2% from GAAP net income of
$89.9 million, or 40 cents per diluted share, in the immediately
preceding quarter, and down 6.2% from GAAP net income of $99.8 million,
or 46 cents per diluted share, in the prior year's second fiscal quarter.
Non-GAAP net sales for the second quarter of fiscal 2015 were $546.2
million, up 2.8% sequentially from non-GAAP net sales of $531.3 million
in the immediately preceding quarter, and up 10.9% from non-GAAP net
sales of $492.7 million in the prior year's second fiscal quarter.
Non-GAAP net income for the second quarter of fiscal 2015 was
$150.2 million, or 67 cents per diluted share, down 0.9% from non-GAAP
net income of $151.6 million, or 68 cents per diluted share, in the
immediately preceding quarter, and up 10.2% from non-GAAP net income of
$136.4 million, or 63 cents per diluted share, in the prior year's
second fiscal quarter. For the second quarters of fiscal 2015 and fiscal
2014, our non-GAAP results exclude the effect of share-based
compensation, expenses related to our acquisition activities (including
intangible asset amortization, inventory valuation costs, severance
costs, and legal and other general and administrative expenses
associated with acquisitions), non-cash interest expense on our
convertible debentures, and non-recurring tax events. A reconciliation
of our non-GAAP and GAAP results is included in this press release.
Microchip also announced today that its Board of Directors declared a
quarterly cash dividend on its common stock of 35.65 cents per share.
The quarterly dividend is payable on December 5, 2014 to stockholders of
record on November 21, 2014.
"We were disappointed with the level of business activity in the
September quarter. The September quarter is usually a back-end weighted
quarter because of a traditional weak August due to holidays in various
parts of the world," said Steve Sanghi, President and CEO. "The month of
September is usually a strong month for our revenue after the summer
holiday period. This time, the September sales did not materialize to
our expectations leading us to pre-announce our net sales for the
quarter on October 9, 2014."
Mr. Sanghi added, "Our net sales, excluding ISSC, were down 0.4%
sequentially compared to net sales in the June 2014 quarter. Including
the ISSC results for the portion of the time we owned the majority of
their outstanding shares added another $16.9 million to revenue pushing
the September quarter revenue to an all time record."
"Including revenue from ISSC which will be reported as part of our
microcontroller revenue, our overall microcontroller revenue grew 5.2%
sequentially in the September quarter and was up 12.7% versus the year
ago quarter, achieving a new revenue record," said Ganesh Moorthy, Chief
Operating Officer. "Excluding ISSC revenue, microcontroller revenue grew
0.3% sequentially in the September quarter, was up 7.4% from the year
ago quarter, and also achieved a new revenue record. Microcontroller
revenue represented 66.2% of Microchip's overall revenue in the
September quarter."
Mr. Moorthy added, "Excluding revenue from ISSC, our 16-bit
microcontroller business was up 8.3% sequentially in the September
quarter, also achieving a new record for revenue. 16-bit microcontroller
revenue was up 23.3% versus the year ago quarter. This business
continues to be an important engine of ongoing growth for us, as we
continue to find and serve new customers and new applications with our
expanding product portfolio. Excluding any revenue from ISSC, our 32-bit
microcontroller business was up 7.6% sequentially in the September
quarter, also achieving a new record for revenue. 32-bit microcontroller
revenue was also up 38.6% versus the year ago quarter. We are continuing
to rapidly expand our new product portfolio, win new designs and expand
our presence in new applications to enable further growth in revenue and
market share. Our 16-bit and 32-bit businesses are now at a size and
growth rate where they are making a meaningful contribution to our
overall growth."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "Our net cash
generation in the September quarter excluding our acquisition of ISSC,
our dividend payment, and our reduction in borrowings was
$156.2 million. As of September 30, 2014, our consolidated cash and
total investment position was approximately $2.124 billion. The dividend
that we announced today marks the 43rd occasion that we have
increased our dividend payment, and cumulative dividends paid are
$2.37 billion."
Mr. Sanghi concluded, "Having seen most of the market correction in the
September quarter, we expect December quarter revenue to be only
slightly below typical seasonal levels. We expect our non-GAAP revenue
to be down 2% to 7% sequentially in the December quarter."
Microchip's Highlights for the Quarter Ended
September 30, 2014:
-
Version 1.0 of Microchip's award-winning MPLAB® Harmony
Firmware Development Framework was released. It supports development
with all 32-bit PIC32 MCUs, and demonstrates that Microchip stands
alone in offering embedded designers the production-ready software
they need to help ensure that their products ship on time and at top
quality. Harmony integrates Microchip and third-party middleware,
drivers, peripheral libraries and RTOSs, while accelerating and
simplifying the code-development process.
-
Microchip demonstrated its continuing 8-bit innovation leadership,
with its latest family of low-cost PIC® microcontrollers.
The PIC16LF1554/9 MCUs combine low power and dual ADCs with hardware
support for advanced touch-sensing and general-purpose sensor
applications.
-
The Company also expanded its Human Interface Input Sensing Solutions
portfolio with the introduction of its 3DTouchPad, which is both a
PC-peripheral reference design and the world's first development
platform for 2D multi-touch and 3D air gestures. It provides robust
and innovative 3D gesture recognition utilizing Microchip's GestIC®
technology, which offers a detection range of up to 10 cm for
touchless air gestures, along with Microchip's highly responsive
projected-capacitive 2D multi-touch solution supporting up to 10 touch
points and multi-finger surface gestures.
-
Microchip continued to enable the rapid growth of embedded wireless
connectivity and the Internet of Things, with two new offerings. The
PIC32 Bluetooth® Starter Kit eases the development of
Bluetooth enabled products using Microchip's 32-bit microcontrollers,
such as thermostats, gaming controllers, barcode scanners and
diagnostic systems. Microchip also announced its latest 2.4 GHz
256-QAM RF high-power amplifier-the SST12CP21-which helps Wi-Fi®
access-point, router and set-top-box system designers achieve the
maximum data rate and longest range while minimizing current
consumption.
-
The Company's first Mobile App Developer Specialist, WillowTree Apps,
is the latest company to join Microchip's world-class Design Partner
Network. WillowTree is an award-winning and experienced iOS, Android™
and Mobile-Web app developer that enables Microchip's customers to
focus on the core of their Internet of Things designs and expedite
development cycles, while ensuring an excellent mobile-interface
experience for their users.
-
Microchip continued to expand its comprehensive analog and interface
portfolio with two new product families. The zero-drift MCP6N16 grew
its instrumentation amplifier product line, and is ideal for
applications that require a combination of high performance and
precision, low power consumption, and low-voltage operation. The
MCP8025/6 three-phase BLDC motor gate drivers grew Microchip's
complete motor system solutions, and serve a broad range of automotive
and industrial applications.
-
In the automotive arena, Microchip introduced its MOST®
ToGo Reference Designs in order to make it easy for designers to learn
and implement the proven MOST technology in their infotainment
systems. They enable designers to leverage Microchip's extensive
experience and focus on their application software development, rather
than studying the vast MOST specifications.
-
Microchip recently won three prestigious corporate awards. Electronic
Design Magazine ranked Microchip #3 in its 2013 list of the "Top 50
Employers in Electronic Design." Selling Power Magazine named
Microchip to its annual "50 Best Companies to Sell For" for the second
time - remaining the only semiconductor company on the list. Finally,
Microchip won the Alfred P. Sloan Award for Excellence in Workplace
Effectiveness and Flexibility for the eighth straight year.
Third Quarter Fiscal Year 2015 Outlook:
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ materially.
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Microchip Consolidated Guidance
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GAAP
|
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Non-GAAP Adjustments
|
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|
Non-GAAP1
|
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|
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|
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Net Sales
|
|
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$500.9 to $528.2 million
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|
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$7.1 million
|
|
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$508.0 to $535.3 million
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Gross Margin2
|
|
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56.5% to 56.7%
|
|
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$11.6 to $12.1 million
|
|
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58.0% to 58.2%
|
Operating Expenses2
|
|
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39.55% to 40.05%
|
|
|
$60.9 to $64.4 million
|
|
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27.0% to 27.5%
|
Other Expense
|
|
|
$9.8 million
|
|
|
$2.5 million
|
|
|
$7.3 million
|
Income Tax Expense
|
|
|
11.4% to 11.8%
|
|
|
$7.7 million
|
|
|
10.6% to 11.0%
|
Net Income before noncontrolling interest
|
|
|
$64.0 to $71.6 million
|
|
|
$67.4 to $71.2 million
|
|
|
$131.4 to $142.8 million
|
Less Net Income (Loss) from
noncontrolling interest
|
|
|
($1.5 million)
|
|
|
$1.9 million
|
|
|
$0.3 million
|
Net Income
|
|
|
$65.5 to $73.1 million
|
|
|
$65.5 to $69.3 million
|
|
|
$131.1 to $142.5 million
|
Diluted Common Shares Outstanding3
|
|
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Approximately 222.7 million shares
|
|
|
Approximately 0.7 million shares
|
|
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Approximately 222 million shares
|
Earnings per Diluted Share
|
|
|
29 to 33 cents
|
|
|
30 to 31 cents
|
|
|
59 to 64 cents
|
1
|
|
See the "Use of Non-GAAP Financial Measures" section of this release.
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2
|
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Earnings per share have been calculated based on the diluted shares
outstanding of Microchip on a consolidated basis.
|
3
|
|
See Footnote 3 under the "Use of Non-GAAP Financial Measures"
section of this release.
|
-
Excluding any purchase accounting impacts from the Supertex and ISSC
acquisitions, Microchip's inventory days at December 31, 2014 are
expected to increase to between 2 days and 13 days. Our actual
inventory level will depend on the inventory that our distributors
decide to hold to support their customers, overall demand for our
products and our production levels.
-
Capital expenditures for the quarter ending December 31, 2014 are
expected to be approximately $40 million and capital expenditures for
all of fiscal year 2015 are anticipated to be approximately
$150 million. We are continuing to take actions to selectively invest
in the equipment needed to support the expected growth of our new
products and technologies.
-
We expect net cash generation during the December quarter of
$110 million to $140 million prior to the dividend payment and our
acquisition related activities.
1
|
|
Use of non-GAAP Financial Measures: Our non-GAAP adjustments, where
applicable, include the effect of share-based compensation, expenses
related to our acquisition activities (including intangible asset
amortization, inventory valuation costs, severance costs, and legal
and other general and administrative expenses associated with
acquisitions), non-cash interest expense on our convertible
debentures, the related income tax implications of these items and
non-recurring tax events. Our non-GAAP net sales reflect revenue
from product in the acquired companies' distribution channel at the
acquisition date that is not included in GAAP net sales.
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We are required to estimate the cost of certain forms of share-based
compensation, including employee stock options, restricted stock
units and our employee stock purchase plan, and to record a
commensurate expense in our income statement. Share-based
compensation expense is a non-cash expense that varies in amount
from period to period and is affected by the price of our stock at
the date of grant. The price of our stock is affected by market
forces that are difficult to predict and are not within the control
of management. Our other non-GAAP adjustments are either non-cash
expenses or non-recurring expenses related to such transactions.
Accordingly, management excludes all of these items from its
internal operating forecasts and models.
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We are using non-GAAP net sales, non-GAAP gross profit, non-GAAP
gross profit percentage, non-GAAP operating expenses in dollars and
as a percentage of sales including non-GAAP research and development
expenses and non-GAAP selling, general and administrative expenses,
non-GAAP operating income, non-GAAP other expense, net, non-GAAP
income tax (benefit)/tax rate, non-GAAP net income, and non-GAAP
diluted earnings per share which exclude the items noted above, as
applicable, to permit additional analysis of our performance.
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Management believes these non-GAAP measures are useful to investors
because they enhance the understanding of our historical financial
performance and comparability between periods. Many of our investors
have requested that we disclose this non-GAAP information because
they believe it is useful in understanding our performance as it
excludes non-cash and other charges that many investors feel may
obscure our underlying operating results. Management uses these
non-GAAP measures to manage and assess the profitability of our
business. Specifically, we do not consider such items when
developing and monitoring our budgets and spending. Our
determination of the above non-GAAP measures might not be the same
as similarly titled measures used by other companies, and it should
not be construed as a substitute for amounts determined in
accordance with GAAP. There are limitations associated with using
non-GAAP measures, including that they exclude financial information
that some may consider important in evaluating our performance.
Management compensates for this by presenting information on both a
GAAP and non-GAAP basis for investors and providing reconciliations
of the GAAP and non-GAAP results.
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2
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Diluted Common Shares Outstanding can vary for, among other things,
the trading price of our common stock, the actual exercise of
options or vesting of restricted stock units, the potential for
incremental dilutive shares from our convertible debentures
(additional information regarding our share count is available in
the investor relations section of our website under the heading
"Supplemental Financial Information"), and the repurchase or the
issuance of stock. The diluted common shares outstanding presented
in the guidance table above assumes an average Microchip stock price
in the December 2014 quarter of $43 per share (however, we make no
prediction as to what our actual share price will be for such period
or any other period and we cannot estimate what our stock option
exercise activity will be during the quarter).
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3
|
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Generally, gross margin fluctuates over time, driven primarily by
the mix of microcontrollers, mixed-signal products, analog products
and memory products sold and licensing revenue; variances in
manufacturing yields; fixed cost absorption; wafer fab loading
levels; costs of wafers from foundries; inventory reserves; pricing
pressures in our non-proprietary product lines; and competitive and
economic conditions. Operating expenses fluctuate over time,
primarily due to net sales and profit levels.
|
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
(in thousands except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
546,243
|
|
|
$
|
492,669
|
|
|
|
$
|
1,075,119
|
|
|
$
|
955,461
|
|
Cost of sales
|
|
|
238,789
|
|
|
203,806
|
|
|
|
461,146
|
|
|
400,024
|
|
Gross profit
|
|
|
307,454
|
|
|
288,863
|
|
|
|
613,973
|
|
|
555,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
88,814
|
|
|
78,254
|
|
|
|
173,184
|
|
|
151,339
|
|
Selling, general and administrative
|
|
|
71,114
|
|
|
69,368
|
|
|
|
140,369
|
|
|
135,078
|
|
Amortization of acquired intangible assets
|
|
|
45,433
|
|
|
23,744
|
|
|
|
82,077
|
|
|
51,421
|
|
Special charges (income)
|
|
|
775
|
|
|
(11
|
)
|
|
|
1,079
|
|
|
1,690
|
|
|
|
|
206,136
|
|
|
171,355
|
|
|
|
396,709
|
|
|
339,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
101,318
|
|
|
117,508
|
|
|
|
217,264
|
|
|
215,909
|
|
Losses on equity method investments
|
|
|
(35
|
)
|
|
(101
|
)
|
|
|
(67
|
)
|
|
(361
|
)
|
Other expense, net
|
|
|
(10,579
|
)
|
|
(6,201
|
)
|
|
|
(19,502
|
)
|
|
(14,006
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
90,704
|
|
|
111,206
|
|
|
|
197,695
|
|
|
201,542
|
|
Income tax (benefit) provision
|
|
|
(1,334
|
)
|
|
11,400
|
|
|
|
15,748
|
|
|
23,157
|
|
Net income
|
|
|
92,038
|
|
|
99,806
|
|
|
|
181,947
|
|
|
178,385
|
|
Less: Net loss attributable to noncontrolling interests
|
|
|
1,603
|
|
|
-
|
|
|
|
1,603
|
|
|
-
|
|
Net income attributable to Microchip Technology
|
|
|
$
|
93,641
|
|
|
$
|
99,806
|
|
|
|
$
|
183,550
|
|
|
$
|
178,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share attributable to Microchip
Technology stockholders
|
|
|
$
|
0.47
|
|
|
$
|
0.50
|
|
|
|
$
|
0.92
|
|
|
$
|
0.90
|
|
Diluted net income per common share attributable to Microchip
Technology stockholders
|
|
|
$
|
0.42
|
|
|
$
|
0.46
|
|
|
|
$
|
0.82
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic common shares outstanding
|
|
|
200,629
|
|
|
197,825
|
|
|
|
200,408
|
|
|
197,388
|
|
Diluted common shares outstanding
|
|
|
225,284
|
|
|
216,475
|
|
|
|
224,906
|
|
|
214,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
March 31,
|
|
|
|
2014
|
|
2014
|
|
|
|
(Unaudited)
|
|
|
Cash and short-term investments
|
|
|
$
|
1,283,109
|
|
|
$
|
1,344,785
|
Accounts receivable, net
|
|
|
287,473
|
|
|
242,405
|
Inventories
|
|
|
275,746
|
|
|
262,725
|
Deferred tax assets
|
|
|
62,411
|
|
|
67,490
|
Other current assets
|
|
|
70,226
|
|
|
51,994
|
Total current assets
|
|
|
1,978,965
|
|
|
1,969,399
|
|
|
|
|
|
|
|
Property, plant & equipment, net
|
|
|
585,102
|
|
|
531,967
|
Long-term investments
|
|
|
841,277
|
|
|
798,712
|
Other assets
|
|
|
1,205,283
|
|
|
767,552
|
Total assets
|
|
|
$
|
4,610,627
|
|
|
$
|
4,067,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
|
|
$
|
208,399
|
|
|
$
|
170,781
|
Short-term borrowings
|
|
|
17,500
|
|
|
17,500
|
Deferred income on shipments to distributors
|
|
|
159,585
|
|
|
147,798
|
Total current liabilities
|
|
|
385,484
|
|
|
336,079
|
|
|
|
|
|
|
|
Long-term line of credit
|
|
|
624,375
|
|
|
300,000
|
Long-term borrowings, net
|
|
|
322,767
|
|
|
331,385
|
Convertible debentures
|
|
|
376,729
|
|
|
371,873
|
Long-term income tax payable
|
|
|
139,343
|
|
|
179,966
|
Long-term deferred tax liability
|
|
|
469,370
|
|
|
375,316
|
Other long-term liabilities
|
|
|
40,351
|
|
|
37,550
|
|
|
|
|
|
|
|
Microchip Technology stockholders' equity
|
|
|
2,203,421
|
|
|
2,135,461
|
Noncontrolling interests
|
|
|
48,787
|
|
|
-
|
Total equity
|
|
|
2,252,208
|
|
|
2,135,461
|
Total liabilities and stockholders' equity
|
|
|
$
|
4,610,627
|
|
|
$
|
4,067,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES RECONCILIATION
OF GAAP TO NON-GAAP MEASURES (in thousands except per
share amounts and percentages) (Unaudited)
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NET SALES TO NON-GAAP NET SALES
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Net sales, as reported
|
|
|
$
|
546,243
|
|
|
$
|
492,669
|
|
|
|
$
|
1,075,119
|
|
|
$
|
955,461
|
Distributor revenue recognition adjustment
|
|
|
-
|
|
|
-
|
|
|
|
2,469
|
|
|
-
|
Non-GAAP net sales
|
|
|
$
|
546,243
|
|
|
$
|
492,669
|
|
|
|
$
|
1,077,588
|
|
|
$
|
955,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Gross profit, as reported
|
|
|
$
|
307,454
|
|
|
$
|
288,863
|
|
|
|
$
|
613,973
|
|
|
$
|
555,437
|
|
Distributor revenue recognition adjustment
|
|
|
-
|
|
|
-
|
|
|
|
1,362
|
|
|
-
|
|
Share-based compensation expense
|
|
|
2,640
|
|
|
1,864
|
|
|
|
4,695
|
|
|
3,833
|
|
Acquisition-related acquired inventory valuation costs
|
|
|
12,690
|
|
|
-
|
|
|
|
20,501
|
|
|
-
|
|
Non-GAAP gross profit
|
|
|
$
|
322,784
|
|
|
$
|
290,727
|
|
|
|
$
|
640,531
|
|
|
$
|
559,270
|
|
Non-GAAP gross profit percentage
|
|
|
59.1
|
%
|
|
59.0
|
%
|
|
|
59.4
|
%
|
|
58.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Research and development expenses, as reported
|
|
|
$
|
88,814
|
|
|
$
|
78,254
|
|
|
|
$
|
173,184
|
|
|
$
|
151,339
|
|
Share-based compensation expense
|
|
|
(7,261
|
)
|
|
(6,931
|
)
|
|
|
(13,570
|
)
|
|
(12,621
|
)
|
Non-GAAP research and development expenses
|
|
|
$
|
81,553
|
|
|
$
|
71,323
|
|
|
|
$
|
159,614
|
|
|
$
|
138,718
|
|
Non-GAAP research and development expenses as a percentage of net
sales
|
|
|
14.9
|
%
|
|
14.5
|
%
|
|
|
14.8
|
%
|
|
14.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Selling, general and administrative expenses, as reported
|
|
|
$
|
71,114
|
|
|
$
|
69,368
|
|
|
|
$
|
140,369
|
|
|
$
|
135,078
|
|
Share-based compensation expense
|
|
|
(5,372
|
)
|
|
(6,205
|
)
|
|
|
(10,329
|
)
|
|
(11,202
|
)
|
Acquisition-related costs
|
|
|
(1,801
|
)
|
|
(383
|
)
|
|
|
(2,737
|
)
|
|
(1,271
|
)
|
Non-GAAP selling, general and administrative expenses
|
|
|
$
|
63,941
|
|
|
$
|
62,780
|
|
|
|
$
|
127,303
|
|
|
$
|
122,605
|
|
Non-GAAP selling, general and administrative expenses as a
percentage of net sales
|
|
|
11.7
|
%
|
|
12.7
|
%
|
|
|
11.8
|
%
|
|
12.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Operating expenses, as reported
|
|
|
$
|
206,136
|
|
|
$
|
171,355
|
|
|
|
$
|
396,709
|
|
|
$
|
339,528
|
|
Share-based compensation expense
|
|
|
(12,633
|
)
|
|
(13,136
|
)
|
|
|
(23,899
|
)
|
|
(23,823
|
)
|
Acquisition-related costs
|
|
|
(1,801
|
)
|
|
(383
|
)
|
|
|
(2,737
|
)
|
|
(1,271
|
)
|
Amortization of acquired intangible assets
|
|
|
(45,433
|
)
|
|
(23,744
|
)
|
|
|
(82,077
|
)
|
|
(51,421
|
)
|
Special charges
|
|
|
(775
|
)
|
|
11
|
|
|
|
(1,079
|
)
|
|
(1,690
|
)
|
Non-GAAP operating expenses
|
|
|
$
|
145,494
|
|
|
$
|
134,103
|
|
|
|
$
|
286,917
|
|
|
$
|
261,323
|
|
Non-GAAP operating expenses as a percentage of net sales
|
|
|
26.6
|
%
|
|
27.2
|
%
|
|
|
26.6
|
%
|
|
27.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING
INCOME
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Operating income, as reported
|
|
|
$
|
101,318
|
|
|
$
|
117,508
|
|
|
|
$
|
217,264
|
|
|
$
|
215,909
|
|
Distributor revenue recognition adjustment
|
|
|
-
|
|
|
-
|
|
|
|
1,362
|
|
|
-
|
|
Share-based compensation expense
|
|
|
15,273
|
|
|
15,000
|
|
|
|
28,594
|
|
|
27,656
|
|
Acquisition-related acquired inventory valuation and other costs
|
|
|
14,491
|
|
|
383
|
|
|
|
23,238
|
|
|
1,271
|
|
Amortization of acquired intangible assets
|
|
|
45,433
|
|
|
23,744
|
|
|
|
82,077
|
|
|
51,421
|
|
Special charges (income)
|
|
|
775
|
|
|
(11
|
)
|
|
|
1,079
|
|
|
1,690
|
|
Non-GAAP operating income
|
|
|
$
|
177,290
|
|
|
$
|
156,624
|
|
|
|
$
|
353,614
|
|
|
$
|
297,947
|
|
Non-GAAP operating income as a percentage of net sales
|
|
|
32.5
|
%
|
|
31.8
|
%
|
|
|
32.8
|
%
|
|
31.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER
EXPENSE, NET
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Other expense, net, as reported
|
|
|
$
|
(10,579
|
)
|
|
$
|
(6,201
|
)
|
|
|
$
|
(19,502
|
)
|
|
$
|
(14,006
|
)
|
Convertible debt non-cash interest expense
|
|
|
2,445
|
|
|
2,235
|
|
|
|
4,810
|
|
|
4,396
|
|
Non-GAAP other expense, net
|
|
|
$
|
(8,134
|
)
|
|
$
|
(3,966
|
)
|
|
|
$
|
(14,692
|
)
|
|
$
|
(9,610
|
)
|
Non-GAAP other expense, net, as a percentage of net sales
|
|
|
-1.5
|
%
|
|
-0.8
|
%
|
|
|
-1.4
|
%
|
|
-1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP INCOME TAX (BENEFIT) PROVISION TO
NON-GAAP INCOME TAX PROVISION
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Income tax (benefit) provision, as reported
|
|
|
$
|
(1,334
|
)
|
|
$
|
11,400
|
|
|
|
$
|
15,748
|
|
|
$
|
23,157
|
|
Income tax rate, as reported
|
|
|
-1.5
|
%
|
|
10.3
|
%
|
|
|
8.0
|
%
|
|
11.5
|
%
|
Distributor revenue recognition adjustment
|
|
|
-
|
|
|
-
|
|
|
|
375
|
|
|
-
|
|
Share-based compensation expense
|
|
|
1,833
|
|
|
1,589
|
|
|
|
3,253
|
|
|
2,991
|
|
Acquisition-related acquired inventory valuation costs, intangible
asset amortization and other costs
|
|
|
6,201
|
|
|
357
|
|
|
|
8,897
|
|
|
780
|
|
Special charges (income)
|
|
|
271
|
|
|
(4
|
)
|
|
|
384
|
|
|
633
|
|
Convertible debt non-cash interest expense
|
|
|
908
|
|
|
837
|
|
|
|
1,787
|
|
|
1,646
|
|
Non-recurring tax events
|
|
|
10,517
|
|
|
1,995
|
|
|
|
6,052
|
|
|
1,995
|
|
Non-GAAP income tax provision
|
|
|
$
|
18,396
|
|
|
$
|
16,174
|
|
|
|
$
|
36,496
|
|
|
$
|
31,202
|
|
Non-GAAP income tax rate
|
|
|
10.9
|
%
|
|
10.6
|
%
|
|
|
10.8
|
%
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO MICROCHIP
TECHNOLOGY AND GAAP DILUTED NET INCOME PER COMMON SHARE
ATTRIBUTABLE TO MICROCHIP TECHNOLOGY STOCKHOLDERS TO NON-GAAP NET
INCOME ATTRIBUTABLE TO MICROCHIP TECHNOLOGY AND NON-GAAP DILUTED
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO MICROCHIP TECHNOLOGY
STOCKHOLDERS
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Net income attributable to Microchip Technology, as reported
|
|
|
$
|
93,641
|
|
|
$
|
99,806
|
|
|
|
$
|
183,550
|
|
|
$
|
178,385
|
|
Noncontrolling interests
|
|
|
(2,090
|
)
|
|
-
|
|
|
|
(2,090
|
)
|
|
-
|
|
Distributor revenue recognition adjustment, net of tax effect
|
|
|
-
|
|
|
-
|
|
|
|
987
|
|
|
-
|
|
Share-based compensation expense, net of tax effect
|
|
|
13,440
|
|
|
13,411
|
|
|
|
25,341
|
|
|
24,665
|
|
Acquisition-related acquired inventory valuation costs, intangible
asset amortization and other costs, net of tax effect
|
|
|
53,723
|
|
|
23,770
|
|
|
|
96,418
|
|
|
51,912
|
|
Special charges (income), net of tax effect
|
|
|
504
|
|
|
(7
|
)
|
|
|
695
|
|
|
1,057
|
|
Convertible debt non-cash interest expense, net of tax effect
|
|
|
1,537
|
|
|
1,398
|
|
|
|
3,023
|
|
|
2,750
|
|
Non-recurring tax events
|
|
|
(10,517
|
)
|
|
(1,995
|
)
|
|
|
(6,052
|
)
|
|
(1,995
|
)
|
Non-GAAP net income attributable to Microchip Technology
|
|
|
$
|
150,238
|
|
|
$
|
136,383
|
|
|
|
$
|
301,872
|
|
|
$
|
256,774
|
|
Non-GAAP net income attributable to Microchip Technology as a
percentage of net sales
|
|
|
27.5
|
%
|
|
27.7
|
%
|
|
|
28.0
|
%
|
|
26.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common share attributable to Microchip
Technology stockholders, as reported
|
|
|
$
|
0.42
|
|
|
$
|
0.46
|
|
|
|
$
|
0.82
|
|
|
$
|
0.83
|
|
Non-GAAP diluted net income per common share attributable to
Microchip Technology stockholders
|
|
|
$
|
0.67
|
|
|
$
|
0.63
|
|
|
|
$
|
1.35
|
|
|
$
|
1.20
|
|
Diluted common shares outstanding, as reported
|
|
|
225,284
|
|
|
216,475
|
|
|
|
224,906
|
|
|
214,371
|
|
Diluted common shares outstanding Non-GAAP
|
|
|
224,682
|
|
|
215,764
|
|
|
|
224,286
|
|
|
213,691
|
|
|
|
|
|
|
|
|
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Microchip will host a conference call today, October 30, 2014 at 5:00
p.m. (Eastern Time) to discuss this release. This call will be simulcast
over the Internet at www.microchip.com.
The webcast will be available for replay until November 6, 2014.
A telephonic replay of the conference call will be available at
approximately 8:00 p.m. (Eastern Time) October 30, 2014 and will remain
available until 8:00 p.m. (Eastern Time) on November 6, 2014. Interested
parties may listen to the replay by dialing 719-457-0820 and entering
access code 2015520.
Cautionary Statement:
The statements in this release relating to the September quarter usually
being back-end weighted, traditional weak August, the month of September
usually being a strong month for revenue, 16-bit business continuing to
be an important engine of growth, continuing to rapidly expand our
32-bit product portfolio, enabling further growth in revenue and market
share, 16-bit and 32-bit businesses making a meaningful contribution to
our overall growth, having seen most of the market correction in the
September quarter and expecting the December quarter revenue to be only
slightly below seasonal levels, expecting GAAP revenue to be down 2% to
7% sequentially in the December quarter, our third quarter fiscal 2015
guidance (GAAP and Non-GAAP as applicable) including net sales, gross
margin, operating expenses, other expense, income tax expense, net
income, net income before noncontrolling interest, net income (loss)
from noncontrolling interest, diluted common shares outstanding,
earnings per diluted share, inventory days, capital expenditures for the
December 2014 quarter and for fiscal 2015, selectively investing to
support the expected growth of our new products and technologies, net
cash generation and assumed average stock price in the December 2014
quarter are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties that could cause our
actual results to differ materially, including, but not limited to: any
continued economic uncertainty due to U.S. monetary policy, political or
other issues, any unexpected fluctuations or weakness in the U.S. and
global economies, changes in demand or market acceptance of our products
and the products of our customers; the mix of inventory we hold and our
ability to satisfy short-term orders from our inventory; changes in
utilization of our manufacturing capacity and our ability to effectively
manage our production levels; competitive developments including pricing
pressures; the level of orders that are received and can be shipped in a
quarter; the level of sell-through of our products through distribution;
changes or fluctuations in customer order patterns and seasonality;
foreign currency effects on our business; our ability to continue to
realize the expected benefits of our acquisitions; the impact of any
other significant acquisitions that we may make; our ability to obtain a
sufficient supply of wafers from third party wafer foundries and the
cost of such wafers, the costs and outcome of any current or future tax
audit or any litigation involving intellectual property, customers or
other issues; our actual average stock price in the December 2014
quarter and the impact such price will have on our share count;
disruptions in our business or the businesses of our customers or
suppliers due to natural disasters (including any floods in Thailand),
terrorist activity, armed conflict, war, worldwide oil prices and
supply, ebola or other public health concerns or disruptions in the
transportation system; and general economic, industry or political
conditions in the United States or internationally.
For a detailed discussion of these and other risk factors, please refer
to Microchip's filings on Forms 10-K and 10-Q. You can obtain copies of
Forms 10-K and 10-Q and other relevant documents for free at Microchip's
website (www.microchip.com)
or the SEC's website (www.sec.gov)
or from commercial document retrieval services.
Stockholders of Microchip are cautioned not to place undue reliance on
our forward-looking statements, which speak only as of the date such
statements are made. Microchip does not undertake any obligation to
publicly update any forward-looking statements to reflect events,
circumstances or new information after this October 30, 2014 press
release, or to reflect the occurrence of unanticipated events.
About Microchip:
Microchip Technology Incorporated is a leading provider of
microcontroller, mixed-signal, analog and Flash-IP solutions, providing
low-risk product development, lower total system cost and faster time to
market for thousands of diverse customer applications worldwide.
Headquartered in Chandler, Arizona, Microchip offers outstanding
technical support along with dependable delivery and quality. For more
information, visit the Microchip website at www.microchip.com.
Note: The Microchip name and logo, MPLAB, PIC, GestIC, and MOST are
registered trademarks of Microchip Technology Inc. in the USA and other
countries. All other trademarks mentioned herein are the property of
their respective companies.
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