| [July 31, 2014] |
 |
Microchip Technology Announces Record Net Sales for First Quarter Fiscal Year 2015
CHANDLER, Ariz. --(Business Wire)--
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 June 30, 2014 as summarized
in the following table:
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|
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(in millions, except earnings per diluted share and percentages)
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Three Months Ended June 30, 2014
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GAAP
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% of Net
Sales
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Non-
GAAP1
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% of Net
Sales
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Net Sales
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$
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528.9
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|
|
|
$
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531.3
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|
|
|
Gross Margin
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$
|
306.5
|
|
58.0
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%
|
|
$
|
317.7
|
|
59.8
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%
|
|
Operating Income
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|
$
|
115.9
|
|
21.9
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%
|
|
$
|
176.3
|
|
33.2
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%
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Other Expense (including Gains/Losses on Equity Method Investments)
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$
|
9.0
|
|
|
|
$
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6.6
|
|
|
|
Income Tax Expense
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$
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17.1
|
|
|
|
$
|
18.1
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|
|
|
Net Income
|
|
$
|
89.9
|
|
17.0
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%
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$
|
151.6
|
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28.5
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%
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Earnings per Diluted Share
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40 cents
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68 cents
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1 See the "Use of Non-GAAP Financial Measures" section of
this release.
Consolidated GAAP net sales for the first quarter of fiscal 2015 were a
record $528.9 million, up 7.2% sequentially from net sales of $493.4
million in the immediately preceding quarter, and up 14.3% from net
sales of $462.8 million in the prior year's first quarter. Consolidated
GAAP net income for the first quarter of fiscal 2015 was $89.9 million,
or 40 cents per diluted share, down 19.4% from GAAP net income of $111.5
million, or 50 cents per diluted share, in the immediately preceding
quarter, and up 14.4% from GAAP net income of $78.6 million, or 37 cents
per diluted share, in the prior year's first quarter.
Consolidated non-GAAP net sales for the first quarter of fiscal 2015
were a record $531.3 million, up 7.7% sequentially from net sales of
$493.4 million in the immediately preceding quarter, and up 14.8% from
net sales of $462.8 million in the prior year's first quarter. Non-GAAP
net sales in the first quarter of fiscal 2015 were $2.5 million higher
than GAAP net sales due to the sell-through of inventory held by
distributors of Supertex at the date of our acquisition not being
included in our GAAP results. Consolidated non-GAAP net income for the
first quarter of fiscal 2015 was a record $151.6 million, or 68 cents
per diluted share, up 7.3% from non-GAAP net income of $141.3 million,
or 64 cents per diluted share, in the immediately preceding quarter, and
up 26.0% from non-GAAP net income of $120.4 million, or 57 cents per
diluted share, in the prior year's first quarter. For the first 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 35.6 cents per share. The
quarterly dividend is payable on September 4, 2014 to stockholders of
record on August 21, 2014.
"We are very pleased with our execution in the June quarter. All of our
non-GAAP financial metrics including net sales, gross margin percentage,
operating expense percentage, operating profit percentage and earnings
per share were better than the mid-point of our guidance provided on May
6," said Steve Sanghi, President and CEO. "Excluding the results of
Supertex, our non-GAAP gross margin was an outstanding 60%, and our
non-GAAP operating profit was 33.5%."
Mr. Sanghi added, "Including the results of Supertex, our consolidated
non-GAAP gross margin was 59.8% and our non-GAAP operating profit was
33.2%. We are making excellent progress towards our long term goal of
35% non-GAAP operating profit. Consolidated non-GAAP earnings per share
was a record 68 cents and was 2 cents better than the mid-point of our
guidance."
Mr. Sanghi added further, "We are seeing a seasonally normal business
environment with strengths in many of our end markets like industrial,
automotive, housing, consumer electronics and personal computing. We are
seeing exceptional strength in some of our new products and technologies
which are growing revenue at double digit percentages sequentially. As a
result, our product delivery lead times have stretched out and we are
selectively capacity constrained in fab, wafer sort, assembly and test
operations particularly on our newest products and technologies. Our
inventory of 108 days is below our targeted level of 115 and is expected
to go lower this quarter. We are ramping all of our factories, but are
limited by equipment lead times. We have increased our planned capital
expenditures for fiscal year 2015 to $175 million."
"Our overall microcontroller revenue grew strongly at 5.3% sequentially
in the June quarter and was up 14.5% versus the year ago quarter,
achieving a new revenue record," said Ganesh Moorthy, Chief Operating
Officer. "All three microcontroller product lines, 8-bit, 16-bit and
32-bit experienced sequential revenue growth in the June quarter, and
all three microcontroller lines achieved record revenue in the June
quarter."
Mr. Moorthy added, "We are excited to have closed our tender offer for
ISSC in which we acquired 83.5% of the outstanding common shares on July
17, 2014. We believe that combining ISSC's strengths in wireless
products and technology with Microchip's brand, channel and operational
scale will drive future growth and profitability for the combined
companies. Microchip expects to acquire the rest of the outstanding ISSC
shares in late December 2014."
Rich Simoncic, Vice President, Analog and Interface Products Division
said, "Our analog business revenue excluding the results of Supertex
grew 2.6% sequentially and 6.8% over the year ago quarter. Including
Supertex, the analog business grew 18.9% sequentially in the June
quarter and was up 23.8% from the year ago quarter. Including the analog
products revenue of Supertex, our analog business represented 24% of
Microchip's overall revenue in the June quarter. We continue to develop
and introduce a wide range of innovative and proprietary new products to
fuel the future growth of our analog business."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "The increase
in our net cash and investment balance in the June quarter excluding our
acquisition of Supertex and our dividend payment was $121.3 million. As
of June 30, 2014, our consolidated cash and total investment position
was approximately $2.29 billion and we had $980 million in borrowings
under our revolving line of credit. The dividend that we announced today
marks the 42nd occasion that we have increased our dividend
payment, and cumulative dividends paid are $2.3 billion."
Mr. Sanghi concluded, "Taking our backlog, low inventory and lead times
into consideration and being mindful that the September quarter is
usually a weak quarter in Europe due to the summer holidays, we expect
our non-GAAP revenue to be up 5.4% to 8.4% sequentially in the September
quarter. This guidance includes approximately $18 million in revenue
from the acquisition of ISSC."
Microchip's Recent Highlights:
-
Microchip further enabled both the Internet of Things (IoT) and the
general proliferation of connectivity in embedded designs, with two
recent announcements. The agency-certified RN4020 Bluetooth®
Smart Low Energy Module makes it easy to add basic wireless
connectivity, either standalone or in conjunction with any
microcontroller that has a UART interface, which most PIC®
microcontrollers do. The PIC24F GB2 family of MCUs was also
introduced, for IoT and many other embedded applications requiring the
combination of eXtreme Low Power consumption and integrated hardware
encryption security.
-
The Company also continued to rapidly expand its 32-bit MCU portfolio,
with a new PIC32MX1/2 family that adds larger Flash and RAM memory at
a lower cost, along with a small footprint and high level of feature
integration. This combination is ideal for consumer, medical and
industrial applications that need Bluetooth digital audio,
graphics, USB audio, touch sensing and general-purpose embedded
control.
-
On the high end of digital audio, Microchip made it easy to add Spotify®
Connect via firmware upgrades for the more than 8 million audio
products based on Microchip's JukeBlox® Platform, including
its network audio processors and modules.
-
In the area of infotainment, Daimler AG was the latest automotive
company to adopt the latest-generation MOST150 standard, using
Microchip's Intelligent Network Interface Controllers (INICs) for its
flagship Mercedes-Benz S-Class sedan's next-generation infotainment
system.
-
Microchip's high-growth analog business continued to be fueled by
innovative new products, such as the expansion of its Digitally
Enhanced Power Analog controller portfolio, which offers the
power-conversion performance typical of an analog-based controller
with an integrated MCU for flexibility approaching a fully digital
solution. The two new MCP19114/5 devices integrate several new
features that support three additional power-conversion topologies,
expanding Microchip's reach even further into automotive and consumer
power applications.
-
The Company also added the industry's first 5 kohm digital
potentiometers with a specified 36V operating voltage and support of
wide signal swings. This, along with a host of other integrated
features, makes these mixed-signal MCP45HV31-51 devices well suited
for a broad range of high-voltage and high-temperature applications,
including those in the industrial, automotive and audio markets.
-
For computer and peripheral power-supply and battery-charging designs,
Microchip introduced its family of USB power delivery (UPD)
controllers. With these standards-compliant UPD100X devices, a single
USB cable and port can be used for data while simultaneously
delivering up to 100W of power, which is 40 times the power of USB 2.0.
-
Microchip also grew its portfolio of world-leading reliable memory,
including four new SuperFlash® embedded devices. With its
64-Mbits of parallel Flash memory on Microchip's advanced process
technology, the SST38VF6401B delivers ultra-fast performance and rich
security features. The SPI Serial Flash SST25WF020A, SST25WF040B and
SST25WF080B devices offer 2-, 4- and 8-Mbit of memory, and feature a
low operating-voltage range from 1.65 to 1.95V, extremely low power
consumption, and small-footprint, low-profile packaging.
-
Newsweek ranked Microchip in the top 50%, for its 2014 Newsweek Green
Rankings of the 500 largest publicly-traded companies in the United
States (the U.S. 500), based on overall environmental performance
using eight clearly defined key performance indicators.
-
Microchip President and CEO Steve Sanghi recently received four
separate honors. Bloomberg named him to its Top 10 lists of both the
lowest-paid CEOs and longest-serving tech CEOs. Embedded Computing
Design Magazine named him to its 2014 list of the Top Embedded
Innovators, while AZ Business Magazine named Sanghi one of its 25 Most
Influential Minority Business Leaders in Arizona of 2014.
Second Quarter Fiscal Year 2015 Outlook:
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially. Due to the closing of our tender offer of ISSC on July 17,
2014, we are not able to provide GAAP guidance at this time, as the
purchase accounting valuation adjustments related to the acquisition
including acquired intangibles and inventory write-up as well as other
acquisition-related charges are not yet known. We are able to provide
the following Non-GAAP guidance which includes ISSC:
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Microchip Consolidated Guidance - Non-GAAP1
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Net Sales
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$560.0 million to $575.9 million
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Gross Margin3
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59.2% to 59.6%
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Operating Expenses3
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26.3% to 26.7%
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Other Expense
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$7.4 million
|
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Income Tax Expense
|
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10.5% to 10.7%
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Net Income
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$156.2 million to $165.3 million
|
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Less: Net Income from Noncontrolling Interest
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$0.5 million
|
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Net Income attributable to Microchip
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$155.7 million to $164.8 million
|
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Diluted Common Shares Outstanding2
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223.8 million shares
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Earnings per Diluted Share2
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70 cents to 74 cents
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1
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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.
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3
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See Footnote 3 under the "Use of Non-GAAP Financial Measures"
section of this release.
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-
Excluding the ISSC acquisition and any purchase accounting impacts
from the Supertex acquisition, Microchip's inventory days at September
30, 2014 are expected to be reduced to between 103 days and 108 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 September 30, 2014 are
expected to be approximately $50 million and capital expenditures for
all of fiscal year 2015 are anticipated to be approximately $175
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.
-
Excluding the ISSC acquisition, we expect net cash generation during
the September quarter of $160 million to $180 million prior to the
dividend payment and our acquisition related activities.
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1
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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, restructuring 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/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 September 2014 quarter of $46 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.
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MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
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|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
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(in thousands except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
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|
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June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
528,876
|
|
|
|
$
|
462,792
|
|
|
Cost of sales
|
|
222,357
|
|
|
|
196,218
|
|
|
Gross profit
|
|
306,519
|
|
|
|
266,574
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
84,370
|
|
|
|
73,085
|
|
|
Selling, general and administrative
|
|
69,255
|
|
|
|
65,710
|
|
|
Amortization of acquired intangible assets
|
|
36,644
|
|
|
|
27,677
|
|
|
Special charges
|
|
304
|
|
|
|
1,701
|
|
|
|
|
190,573
|
|
|
|
168,173
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
115,946
|
|
|
|
98,401
|
|
|
Losses on equity method investments
|
|
(32
|
)
|
|
|
(260
|
)
|
|
Other expense, net
|
|
(8,923
|
)
|
|
|
(7,805
|
)
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
106,991
|
|
|
|
90,336
|
|
|
Income tax provision
|
|
17,082
|
|
|
|
11,757
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
89,909
|
|
|
|
$
|
78,579
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
$
|
0.45
|
|
|
|
$
|
0.40
|
|
|
Diluted net income per common share
|
|
$
|
0.40
|
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
|
|
Basic common shares outstanding
|
|
200,187
|
|
|
|
196,950
|
|
|
Diluted common shares outstanding
|
|
224,527
|
|
|
|
212,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2014
|
|
|
2014
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Cash and short-term investments
|
|
|
$
|
1,759,861
|
|
|
|
$
|
1,344,785
|
|
Accounts receivable, net
|
|
|
286,699
|
|
|
|
242,405
|
|
Inventories
|
|
|
264,505
|
|
|
|
262,725
|
|
Other current assets
|
|
|
139,286
|
|
|
|
119,484
|
|
Total current assets
|
|
|
2,450,351
|
|
|
|
1,969,399
|
|
|
|
|
|
|
|
|
|
|
Property, plant & equipment, net
|
|
|
569,908
|
|
|
|
531,967
|
|
Long-term investments
|
|
|
527,539
|
|
|
|
798,712
|
|
Other assets
|
|
|
953,945
|
|
|
|
767,552
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
$
|
4,501,743
|
|
|
|
$
|
4,067,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
|
|
$
|
195,607
|
|
|
|
$
|
170,781
|
|
Short-term borrowings
|
|
|
17,500
|
|
|
|
17,500
|
|
Deferred income on shipments to distributors
|
|
|
146,583
|
|
|
|
147,798
|
|
Total current liabilities
|
|
|
359,690
|
|
|
|
336,079
|
|
|
|
|
|
|
|
|
|
|
Long-term line of credit
|
|
|
634,375
|
|
|
|
300,000
|
|
Long-term borrowings, net
|
|
|
327,076
|
|
|
|
331,385
|
|
Convertible debentures
|
|
|
374,227
|
|
|
|
371,873
|
|
Long-term income tax payable
|
|
|
144,549
|
|
|
|
179,966
|
|
Deferred tax liability
|
|
|
453,069
|
|
|
|
375,316
|
|
Other long-term liabilities
|
|
|
39,112
|
|
|
|
37,550
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
2,169,645
|
|
|
|
2,135,461
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
4,501,743
|
|
|
|
$
|
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
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Net sales, as reported
|
|
$
|
528,876
|
|
|
|
$
|
462,792
|
|
Distributor revenue recognition adjustment
|
|
2,469
|
|
|
|
-
|
|
Non-GAAP net sales
|
|
$
|
531,345
|
|
|
|
$
|
462,792
|
|
|
|
|
|
RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Gross profit, as reported
|
|
$
|
306,519
|
|
|
|
$
|
266,574
|
|
|
Distributor revenue recognition adjustment
|
|
1,362
|
|
|
|
-
|
|
|
Share-based compensation expense
|
|
2,055
|
|
|
|
1,969
|
|
|
Acquisition-related acquired inventory valuation
|
|
7,811
|
|
|
|
-
|
|
|
Non-GAAP gross profit
|
|
$
|
317,747
|
|
|
|
$
|
268,543
|
|
|
Non-GAAP gross profit percentage
|
|
59.8
|
%
|
|
|
58.0
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Research and development expenses, as reported
|
|
$
|
84,370
|
|
|
|
$
|
73,085
|
|
|
Share-based compensation expense
|
|
(6,309
|
)
|
|
|
(5,690
|
)
|
|
Non-GAAP research and development expenses
|
|
$
|
78,061
|
|
|
|
$
|
67,395
|
|
|
Non-GAAP research and development expenses as a percentage of net
sales
|
|
14.7
|
%
|
|
|
14.6
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Selling, general and administrative expenses, as reported
|
|
$
|
69,255
|
|
|
|
$
|
65,710
|
|
|
Share-based compensation expense
|
|
(4,957
|
)
|
|
|
(4,997
|
)
|
|
Acquisition-related costs
|
|
(936
|
)
|
|
|
(888
|
)
|
|
Non-GAAP selling, general and administrative expenses
|
|
$
|
63,362
|
|
|
|
$
|
59,825
|
|
|
Non-GAAP selling, general and administrative expenses as a
percentage of net sales
|
|
11.9
|
%
|
|
|
12.9
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Operating expenses, as reported
|
|
$
|
190,573
|
|
|
|
$
|
168,173
|
|
|
Share-based compensation expense
|
|
(11,266
|
)
|
|
|
(10,687
|
)
|
|
Acquisition-related costs
|
|
(936
|
)
|
|
|
(888
|
)
|
|
Amortization of acquired intangible assets
|
|
(36,644
|
)
|
|
|
(27,677
|
)
|
|
Special charges
|
|
(304
|
)
|
|
|
(1,701
|
)
|
|
Non-GAAP operating expenses
|
|
$
|
141,423
|
|
|
|
$
|
127,220
|
|
|
Non-GAAP operating expenses as a percentage of net sales
|
|
26.6
|
%
|
|
|
27.5
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING
INCOME
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Operating income, as reported
|
|
$
|
115,946
|
|
|
|
$
|
98,401
|
|
|
Distributor revenue recognition adjustment
|
|
1,362
|
|
|
|
-
|
|
|
Share-based compensation expense
|
|
13,321
|
|
|
|
12,656
|
|
|
Acquisition-related acquired inventory valuation and other costs
|
|
8,747
|
|
|
|
888
|
|
|
Amortization of acquired intangible assets
|
|
36,644
|
|
|
|
27,677
|
|
|
Special charges
|
|
304
|
|
|
|
1,701
|
|
|
Non-GAAP operating income
|
|
$
|
176,324
|
|
|
|
$
|
141,323
|
|
|
Non-GAAP operating income as a percentage of net sales
|
|
33.2
|
%
|
|
|
30.5
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER
EXPENSE, NET
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Other expense, net, as reported
|
|
$
|
(8,923
|
)
|
|
|
$
|
(7,805
|
)
|
|
Convertible debt non-cash interest expense
|
|
2,365
|
|
|
|
2,161
|
|
|
Non-GAAP other expense, net
|
|
$
|
(6,558
|
)
|
|
|
$
|
(5,644
|
)
|
|
Non-GAAP other expense, net, as a percentage of net sales
|
|
-1.2
|
%
|
|
|
-1.2
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP INCOME TAX PROVISION TO NON-GAAP INCOME
TAX PROVISION
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Income tax provision, as reported
|
|
$
|
17,082
|
|
|
|
$
|
11,757
|
|
|
Income tax rate, as reported
|
|
16.0
|
%
|
|
|
13.0
|
%
|
|
Distributor revenue recognition adjustment
|
|
375
|
|
|
|
-
|
|
|
Share-based compensation expense
|
|
1,420
|
|
|
|
1,402
|
|
|
Acquisition-related acquired inventory valuation costs, intangible
asset amortization and other costs
|
|
2,696
|
|
|
|
423
|
|
|
Special charges
|
|
113
|
|
|
|
637
|
|
|
Convertible debt non-cash interest expense
|
|
879
|
|
|
|
809
|
|
|
Non-recurring tax events
|
|
(4,465
|
)
|
|
|
-
|
|
|
Non-GAAP income tax provision
|
|
$
|
18,100
|
|
|
|
$
|
15,028
|
|
|
Non-GAAP income tax rate
|
|
10.7
|
%
|
|
|
11.1
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME AND GAAP DILUTED NET INCOME
PER SHARE TO NON-GAAP NET INCOME AND NON-GAAP DILUTED NET INCOME
PER SHARE
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Net income, as reported
|
|
$
|
89,909
|
|
|
|
$
|
78,579
|
|
|
Distributor revenue recognition adjustment, net of tax effect
|
|
987
|
|
|
|
-
|
|
|
Share-based compensation expense, net of tax effect
|
|
11,901
|
|
|
|
11,254
|
|
|
Acquisition-related acquired inventory valuation costs, intangible
asset amortization and other costs, net of tax effect
|
|
42,695
|
|
|
|
28,142
|
|
|
Special charges, net of tax effect
|
|
191
|
|
|
|
1,064
|
|
|
Convertible debt non-cash interest expense, net of tax effect
|
|
1,486
|
|
|
|
1,352
|
|
|
Non-recurring tax events
|
|
4,465
|
|
|
|
-
|
|
|
Non-GAAP net income
|
|
$
|
151,634
|
|
|
|
$
|
120,391
|
|
|
Non-GAAP net income as a percentage of net sales
|
|
28.5
|
%
|
|
|
26.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share, as reported
|
|
$
|
0.40
|
|
|
|
$
|
0.37
|
|
|
Non-GAAP diluted net income per share
|
|
$
|
0.68
|
|
|
|
$
|
0.57
|
|
|
Diluted common shares outstanding, as reported
|
|
224,527
|
|
|
|
212,266
|
|
|
Diluted common shares outstanding Non-GAAP
|
|
223,889
|
|
|
|
211,617
|
|
|
|
|
|
|
|
|
|
|
Microchip will host a conference call today, July 31, 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 August 7, 2014.
A telephonic replay of the conference call will be available at
approximately 8:00 p.m. (Eastern Time) July 31, 2014 and will remain
available until 8:00 p.m. (Eastern Time) on August 7, 2014. Interested
parties may listen to the replay by dialing 719-457-0820 and entering
access code 9158238.
Cautionary Statement:
The statements in this release relating to making excellent progress
towards our long-term goal of 35% non-GAAP operating profit, seeing a
seasonally normal business environment with strengths in many of our end
markets, seeing exceptional strength in some of our new products and
technologies which are growing at double digit percentages sequentially,
ramping our factories, being limited by equipment lead times, inventory
target of 115 days, expecting our inventory to go lower in the September
2014 quarter, that combining ISSC and Microchip will drive future growth
and profitability for the combined companies, Microchip expecting to
acquire the rest of ISSC's outstanding shares in late December 2014,
continuing to develop and introduce a range of new products to fuel the
future growth of our analog business, the September quarter being
usually a weak quarter in Europe, expecting non-GAAP revenue to be up
between 2% and 5% sequentially excluding ISSC, expecting $18 million in
revenue from ISSC, our high-growth analog business continuing to be
fueled by new products, our second quarter fiscal 2015 guidance
including net sales, gross margin, operating expenses, other expense,
income tax expense, net income, net income from noncontrolling interest,
net income attributable to Microchip, diluted common shares outstanding,
earnings per diluted share, inventory days, capital expenditures for the
September 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 September 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; any unexpected fluctuations or weakness
in the U.S. or 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; our ability to complete our
acquisition of the remaining shares of ISSC; our ability to realize the
expected benefits of our acquisitions (including our acquisitions of
Supertex and ISSC); competitive developments; 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 September 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, 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 July 31, 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, PIC, JukeBlox, and SuperFlash 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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