MICROCHIP TECHNOLOGY INCORPORATED
(Exact Name Of Registrant As Specified In Its Charter)
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Delaware
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0-21184
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86-0629024
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(State Or Other Jurisdiction Of Incorporation)
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(Commission File No.)
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(IRS Employer Identification No.)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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(d)
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Exhibits
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99.1
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Microchip Technology Announces First Quarter Fiscal Year 2012 Financial Results
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Dated: August 4, 2011
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Microchip Technology Incorporated
(Registrant)
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By: /s/ J. Eric Bjornholt
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J. Eric Bjornholt
Vice President, Chief Financial Officer
(Principal Accounting and Financial Officer)
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EXHIBITS
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99.1
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Microchip Technology Announces Announces First Quarter Fiscal 2012 Financial Results
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EXHIBIT 99.1
NEWS RELEASE
INVESTOR RELATIONS CONTACTS:
J. Eric Bjornholt – CFO (480) 792-7804
Gordon Parnell – Vice President of Business
Development and Investor Relations (480) 792-7374
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§
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Net Sales of $374.5 million, down 1.4% sequentially and up 4.9% year-over-year
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§
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On a GAAP basis: gross margin of 58.7%; operating income of $116.9 million; net income of $99.3 million; and EPS of 49 cents per diluted share
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§
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On a non-GAAP basis: gross margin of 59.5%; operating income of $129.1 million; net income of $111.4 million; and EPS of 55 cents per diluted share
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§
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Record 32-bit revenue, up 18.7% sequentially
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§
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Record licensing revenue of $20.6 million
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§
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83rd Consecutive quarter of profitability
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(in millions, except earnings per diluted share and percentages)
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Three Months Ended June 30, 2011
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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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$374.5
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$374.5
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Gross Margin
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$219.7
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58.7%
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$222.9
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59.5%
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Operating Income
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$116.9
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31.2%
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$129.1
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34.5%
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Other Expense including Gains/Losses on Equity Method Investment
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($3.0)
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($1.2)
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Income Tax Expense (Benefit)
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$14.5
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$16.6
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Net Income from Continuing Operations
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$99.3
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26.5%
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$111.4
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29.7%
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Earnings per Diluted Share from Continuing Operations2
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49 cents
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55 cents
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2
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Earnings per share has been calculated based on the diluted shares outstanding of Microchip on a consolidated basis.
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·
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Building on its leadership position as the only company to support all of its 8, 16 and 32-bit MCUs and DSCs from a single integrated development environment, Microchip introduced the next-generation MPLAB® X IDE, which is built on the open-source NetBeans platform and enables development using the Linux, Mac OS® and Windows operating systems.
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·
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Microchip announced industry firsts for two other open-source projects: the first and only Arduino™ compatible 32-bit MCU development system, called the chipKIT™ platform, enabling hobbyists and academics to easily and inexpensively integrate high-performance electronics into their projects, even if they do not have an electronic-engineering background. Likewise, Microchip’s Accessory Development Starter Kits for Android™ are the first to enable smartphone/tablet accessory development using Google’s new Android accessory framework.
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·
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The MPLAB X IDE and Android kits earned the top two spots on EE Times’ May 2011 “Top 10 Products of the Month,” based on reader views of all new-product articles during the month. Additionally, the chipKIT development platform won an Editor’s Choice Award at the 2011 Bay Area Maker Faire.
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·
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Spurred, in part, by these groundbreaking new platforms Microchip shipped 43,932 development systems during the June 2011 quarter, demonstrating the continued strong interest in its products. The total cumulative number of development systems shipped now stands at 1,157,131.
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To further enable the rapidly growing wireless connectivity of MCU-based embedded systems, Microchip’s Wireless Products Division announced the expanded MiWi™ Development Environment, which is a complete ecosystem for designing star and mesh wireless networking products that includes a host of new hardware and software tools.
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As part of Microchip’s ongoing commitment to enable the smarter use of energy in a broad range of applications, it added two new families of analog power products, including low-side MOSFET drivers with power-conservation features, and a 30V buck switching regulator with up to 95 percent efficiency.
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·
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On the digital side, Microchip undertook a significant expansion of its 16-bit MCU and DSC portfolio, including products that provide greater energy efficiency. To enable energy savings through advanced motor control for cost-sensitive applications, Microchip introduced a new series of low-cost PIC24F MCUs and dsPIC33 DSCs that support sensorless motor control and a wide range of motor-control algorithms. Microchip also announced its first 60 MIPS dsPIC33E DSCs and PIC24E MCUs, based on its next-generation 16-bit Enhanced Core. These devices offer larger (536 KB) Flash memory, more RAM (52 KB), greater I/O capability with 144-pin packages, a USB 2.0 OTG interface, and expanded motor-control, graphics, audio, and real-time embedded-control capabilities.
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·
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In the 8-bit arena, Microchip added two new eXtreme Low Power families of battery-friendly PIC® MCUs. The first included six low-cost, Enhanced Mid-range (EMR) Core MCUs with numerous integrated peripherals and mTouch™ capacitive touch sensing. This was followed by two additional peripheral-rich, EMR-Core MCUs that offer the largest memory of any PIC MCUs in 8- and 18-pin packages.
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Microchip Guidance
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GAAP
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Non-GAAP Adjustments1
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Non-GAAP1
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Results from Continuing Operations:
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Net Sales
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$352.0 to $370.8 million
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$352.0 to $370.8 million
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Gross Margin3
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58.4% to 58.8%
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$3.2 to $3.3 million
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59.3% to 59.7%
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Operating Expenses3
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27.25% to 27.75%
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$7.9 to $8.3 million
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25% to 25.5%
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Other Income (Expense)
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($4.9) million
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$1.9 million
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($3.0) million
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Tax Rate
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12.75% to 13.25%
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$1.7 million
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12.75% to 13.25%
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Net Income
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$89.4 to $97.8 million
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$11.2 to $11.8 million
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$100.6 to $109.6 million
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Diluted Common Shares Outstanding2
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201.2 million shares
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0.6 million shares
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200.6 million shares
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Earnings per Diluted Share From Continuing Operations
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44 to 48 cents
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about 6 cents
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50 to 54 cents
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·
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Microchip’s inventory at September 30, 2011 is expected to be about 130 days and will enable us to appropriately service our customers with very short lead times while allowing us to push out future capital investments. The 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.
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Capital expenditures for the quarter ending September 30, 2011 are expected to be approximately $25 million. Capital expenditures for all of fiscal year 2012 are anticipated to be approximately $75 million. We are continuing to take actions to invest in the equipment needed to support the expected growth of our new products and technologies.
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·
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The diluted common shares outstanding presented in the guidance table above assumes an average Microchip stock price in the September 2011 quarter of $35 per share.
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We expect net cash generation during the September quarter of approximately $90 million to $100 million prior to the dividend payment. The amount of expected net cash generation is also before the effect of any stock buy back activity.
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Microchip’s Board of Directors authorized a stock buy back of up to 10.0 million shares in December 2007. At March 31, 2011, approximately 2.5 million shares remained available for purchase under this program. Future purchases will depend upon market conditions, interest rates and corporate considerations.
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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, severance costs and legal and other general and administrative expenses associated with acquisitions), non-recurring tax events and non-cash interest expense on our convertible debentures and the related income tax implications of these items.
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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 2011 quarter of $35 per share (however, we make no prediction as to what our actual share price will be for such period or any other period and we cannot estimate what our stock option exercise activity will be during the quarter).
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3
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Generally, gross margin fluctuates over time, driven primarily by the mix of microcontrollers, analog products and memory products sold and licensing revenue; variances in manufacturing yields; fixed cost absorption; wafer fab loading levels; inventory reserves; pricing pressures in our non-proprietary product lines; and competitive and economic conditions. Operating expenses fluctuate over time, primarily due to net sales and profit levels.
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MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(in thousands except share amounts)
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(Unaudited)
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Three Months Ended June 30,
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2011
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2010
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Net sales
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$ | 374,507 | $ | 357,125 | ||||
Cost of sales
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154,759 | 149,682 | ||||||
Gross profit
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219,748 | 207,443 | ||||||
Operating expenses:
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Research and development
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45,298 | 40,530 | ||||||
Selling, general and administrative
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57,590 | 57,212 | ||||||
Special charges
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- | 475 | ||||||
102,888 | 98,217 | |||||||
Operating income
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116,860 | 109,226 | ||||||
Losses on equity method investments
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(61 | ) | (52 | ) | ||||
Other expense, net
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(2,973 | ) | (3,894 | ) | ||||
Income from continuing operations before income taxes
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113,826 | 105,280 | ||||||
Income tax provision
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14,533 | 13,403 | ||||||
Net income from continuing operations
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99,293 | 91,877 | ||||||
Discontinued operations:
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Loss from discontinued operations before income taxes
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- | (2,299 | ) | |||||
Income tax provision
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- | 12 | ||||||
Net loss from discontinued operations
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- | (2,311 | ) | |||||
Net income
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$ | 99,293 | $ | 89,566 | ||||
Basic income per common share continuing operations
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$ | 0.52 | $ | 0.50 | ||||
Basic net loss per common share discontinued operations
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- | (0.02 | ) | |||||
Basic net income per common share
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$ | 0.52 | $ | 0.48 | ||||
Diluted net income per common share continuing operations
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$ | 0.49 | $ | 0.48 | ||||
Diluted net loss per common share discontinued operations
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- | (0.01 | ) | |||||
Diluted net income per common share
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$ | 0.49 | $ | 0.47 | ||||
Basic common shares outstanding
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190,112 | 185,540 | ||||||
Diluted common shares outstanding
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204,567 | 190,072 | ||||||
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MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
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ASSETS
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June 30,
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March 31,
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2011
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2011
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(Unaudited)
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Cash and short-term investments
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$ | 1,517,752 | $ | 1,243,496 | ||||
Accounts receivable, net
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196,254 | 181,202 | ||||||
Inventories
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202,455 | 180,800 | ||||||
Other current assets
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179,226 | 169,485 | ||||||
Total current assets
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2,095,687 | 1,774,983 | ||||||
Property, plant & equipment, net
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545,703 | 540,513 | ||||||
Long-term investments
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199,550 | 464,838 | ||||||
Other assets
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188,359 | 187,724 | ||||||
Total assets
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$ | 3,029,299 | $ | 2,968,058 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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Accounts payable and other current liabilities
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$ | 182,485 | $ | 200,272 | ||||
Deferred income on shipments to distributors
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145,598 | 140,044 | ||||||
Total current liabilities
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328,083 | 340,316 | ||||||
Convertible debentures
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349,109 | 347,334 | ||||||
Long-term income tax payable
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61,742 | 58,125 | ||||||
Deferred tax liability
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401,126 | 399,527 | ||||||
Other long-term liabilities
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10,017 | 10,318 | ||||||
Stockholders’ equity
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1,879,222 | 1,812,438 | ||||||
Total liabilities and stockholders’ equity
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$ | 3,029,299 | $ | 2,968,058 |
Three Months Ended
June 30,
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2011
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2010
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Gross profit, as reported
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$ | 219,748 | $ | 207,443 | ||||
Share-based compensation expense
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1,399 | 1,965 | ||||||
Acquisition-related acquired inventory valuation costs and intangible asset amortization
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1,709 | 5,910 | ||||||
Non-GAAP gross profit
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$ | 222,856 | $ | 215,318 | ||||
Non-GAAP gross profit percentage
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59.5 | % | 60.3 | % |
Three Months Ended
June 30,
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2011
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2010
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Research and development expenses, as reported
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$ | 45,298 | $ | 40,530 | ||||
Share-based compensation expense
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(3,413 | ) | (3,167 | ) | ||||
Non-GAAP research and development expenses
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$ | 41,885 | $ | 37,363 | ||||
Non-GAAP research and development expenses as a percentage of net sales
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11.2 | % | 10.5 | % |
Three Months Ended
June 30,
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2011
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2010
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Selling, general and administrative expenses, as reported
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$ | 57,590 | $ | 57,212 | ||||
Share-based compensation expense
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(4,212 | ) | (4,319 | ) | ||||
Acquisition-related intangible asset amortization and other costs
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(1,550 | ) | (2,660 | ) | ||||
Non-GAAP selling, general and administrative expenses
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$ | 51,828 | $ | 50,233 | ||||
Non-GAAP selling, general and administrative expenses as a percentage of net sales
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13.8 | % | 14.1 | % |
Three Months Ended
June 30,
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2011
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2010
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Operating income, as reported
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$ | 116,860 | $ | 109,226 | ||||
Share-based compensation expense
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9,024 | 9,451 | ||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs
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3,259 | 8,570 | ||||||
Special charge – SST severance costs
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- | 475 | ||||||
Non-GAAP operating income
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$ | 129,143 | $ | 127,722 | ||||
Non-GAAP operating income as a percentage of net sales
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34.5 | % | 35.8 | % |
Three Months Ended
June 30,
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2011
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2010
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Other expense, net, as reported
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$ | (2,973 | ) | $ | (3,894 | ) | ||
Convertible debt non-cash interest expense
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1,805 | 1,649 | ||||||
Non-GAAP other expense, net
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$ | (1,168 | ) | $ | (2,245 | ) | ||
Non-GAAP other expense, net, as a percentage of net sales
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-0.3 | % | -0.6 | % |
Three Months Ended
June 30,
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2011
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2010
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Income tax provision, as reported
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$ | 14,533 | $ | 13,403 | ||||
Income tax rate, as reported
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12.8 | % | 12.7 | % | ||||
Share-based compensation expense
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1,168 | 1,162 | ||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs
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184 | 270 | ||||||
Special charge – SST severance costs
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- | 26 | ||||||
Convertible debt non-cash interest expense
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677 | 618 | ||||||
Non-GAAP income tax provision
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$ | 16,562 | $ | 15,479 | ||||
Non-GAAP income tax rate
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12.9 | % | 12.3 | % |
Three Months Ended
June 30, 2011
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Three Months Ended
June 30, 2010
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Three Months Ended
March 31, 2011
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Consolidated Operations
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Continuing Operations
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Discontinued Operations
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Consolidated Operations
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Continuing Operations
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Discontinued Operations
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Consolidated Operations
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Continuing Operations
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Discontinued Operations
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Net income (loss), as reported
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$ | 99,293 | $ | 99,293 | $ | - | $ | 89,566 | $ | 91,877 | $ | (2,311 | ) | $ | 125,528 | $ | 130,612 | $ | (5,084 | ) | ||||||||||||||||
Share-based compensation expenses, net of tax effect
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7,856 | 7,856 | - | 8,289 | 8,289 | - | 7,976 | 7,976 | - | |||||||||||||||||||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect
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3,075 | 3,075 | - | 10,823 | 8,300 | 2,523 | 3,571 | 3,571 | - | |||||||||||||||||||||||||||
Special charge – SST severance costs, net of tax effect
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- | - | - | 449 | 449 | - | 164 | 164 | - | |||||||||||||||||||||||||||
Net tax benefit of IRS settlement, R&D tax credit reinstatement, and other tax matters
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- | - | - | - | - | - | (24,395 | ) | (24,395 | ) | - | |||||||||||||||||||||||||
Convertible debt non-cash interest expense, net of tax effect
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1,128 | 1,128 | - | 1,031 | 1,031 | - | 1,091 | 1,091 | - | |||||||||||||||||||||||||||
Non-GAAP net income (loss)
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$ | 111,352 | $ | 111,352 | - | $ | 110,158 | $ | 109,946 | $ | 212 | $ | 113,935 | $ | 119,019 | $ | (5,084 | ) | ||||||||||||||||||
Non-GAAP net income (loss) as a percentage of net sales
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29.7 | % | 30.8 | % | 31.3 | % | ||||||||||||||||||||||||||||||
Diluted net income (loss) per share,
as reported
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$ | 0.49 | $ | 0.49 | $ | - | $ | 0.47 | $ | 0.48 | $ | (0.01 | ) | $ | 0.62 | $ | 0.65 | $ | (0.03 | ) | ||||||||||||||||
Non-GAAP diluted net income (loss) per share
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$ | 0.55 | $ | 0.55 | $ | - | $ | 0.58 | $ | 0.58 | $ | - | $ | 0.57 | $ | 0.59 | $ | (0.02 | ) | |||||||||||||||||
Diluted common shares outstanding
Non-GAAP
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203,985 | 203,985 | 203,985 | 188,724 | 188,724 | 188,724 | 201,133 | 201,133 | 201,133 |