MICROCHIP TECHNOLOGY INCORPORATED (Exact Name Of Registrant As Specified In Its Charter) |
Delaware | 0-21184 | 86-0629024 |
(State Or Other Jurisdiction Of Incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
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: |
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits | |
99.1 | Microchip Technology Announces 85th Consecutive Quarter of Profitability and Third Quarter Fiscal Year 2012 Financial Results |
Microchip Technology Incorporated (Registrant) | |
Dated: February 2, 2012 | |
By: /s/ J. Eric Bjornholt | |
J. Eric Bjornholt Vice President, Chief Financial Officer (Principal Accounting and Financial Officer) |
99.1 | Microchip Technology Announces 85th Consecutive Quarter of Profitability and Third Quarter Fiscal Year 2012 Financial Results |
EXHIBIT 99.1 | |
NEWS RELEASE | |
INVESTOR RELATIONS CONTACTS: | |
J. Eric Bjornholt -- CFO..... (480) 792-7804 | |
Gordon W. Parnell -- Vice President of Business Development and Investor Relations.....(480) 792-7374 |
| NET SALES OF $329.2 MILLION, DOWN 3.4% SEQUENTIALLY AND DOWN 10.5% YEAR-OVER-YEAR |
| A GAAP BASIS: GROSS MARGIN OF 55.8%; OPERATING INCOME OF $88.1 MILLION; NET INCOME OF $77.5 MILLION; AND EPS OF 38 CENTS PER DILUTED SHARE |
| ON A NON-GAAP BASIS: GROSS MARGIN OF 56.8%; OPERATING INCOME OF $100.3 MILLION; NET INCOME OF $85.4 MILLION; AND EPS OF 42 CENTS PER DILUTED SHARE |
| RECORD 32-BIT REVENUE, UP 33.7% SEQUENTIALLY |
| RECORD LICENSING REVENUE OF $23.1 MILLION, UP 4.9% SEQUENTIALLY |
(in millions, except earnings per diluted share and percentages) | Three Months Ended December 31, 2011 | |||
GAAP | % of Net Sales | Non-GAAP1 | % of Net Sales | |
Net Sales | $329.2 | $329.2 | ||
Gross Margin | $183.8 | 55.8% | $186.9 | 56.8% |
Operating Income | $88.1 | 26.8% | $100.3 | 30.5% |
Other Expense including Gains/Losses on Equity Method Investment | $(4.5) | $(2.5) | ||
Income Tax Expense | $6.2 | $12.4 | ||
Net Income | $77.5 | 23.5% | $85.4 | 26% |
Earnings per Diluted Share2 | 38 cents | 42 cents |
1 | See the “Use of Non-GAAP Financial Measures” section of this release. |
2 | Earnings per share has been calculated based on the diluted shares outstanding of Microchip on a consolidated basis. |
• | Microchip released Version 1 of its next-generation MPLAB® X IDE, which recently won four prestigious industry awards—while still in Beta—from ECN Magazine and the EDN Hot 100 in the Americas, the Elektra Awards in Europe, and an EDN China Innovation Award. Each cited Microchip’s industry-leading position in universally supporting all of its 800+ PIC® MCUs from one integrated development environment, while adding cross-platform support for development with the Linux, Mac OS® and Windows® operating systems, and many other advanced design features. MPLAB X is based on the open-source NetBeans platform, which enables users to take advantage of existing community plug-ins while creating new ones. |
• | Microchip’s growing PIC32 portfolio of 32-bit microcontrollers built on its best-in-class performance with the smallest and lowest-cost family to date. This family also integrates new peripherals for audio and touch sensing. All PIC32s were recently qualified for an expanded operating temperature range of - 40°C to 105°C, enabling their use in a wider range of robust applications. And, Microchip introduced the lowest-cost development tool for all of its 3.3V 16- and 32-bit MCUs and DSCs that come in 28-pin SPDIP packages. |
• | Microchip shipped 43,146 development systems during the quarter, demonstrating the continued strong interest in its products. The total cumulative number of development systems shipped now stands at 1,243,361. |
• | In the 16-bit arena, Microchip introduced two new families. The first expanded its eXtreme Low Power (XLP) portfolio with the industry’s lowest 16-bit MCU active current consumption, as well as several new low-power sleep modes. The second added to Microchip’s highest-performing, 70 MIPS architecture with cost-effective new MCUs and DSCs that feature on-chip operational amplifiers and touch-sensing peripherals, enabling advanced features in user-interface, intelligent-sensing, general-purpose and motor-control applications. |
• | Microchip’s 8-bit MCU family with integrated configurable logic in 2x3 mm packages continued to win awards, including Electronic Design Magazine’s Best Digital Electronic Design for 2011. Microchip also introduced a new device that combines an XLP 8-bit MCU with a sub-GHz RF transmitter in a single package, for a broad range of remote-access applications. |
• | On the analog front, Microchip continued to grow its broad catalog with five new products: the industry’s first and only standalone, resistor-programmable fan motor driver; the Company’s first instrumentation amplifier, which provides low power consumption and on-chip calibration for enhanced performance; the world’s first ionization smoke-detector IC with programmable calibration and feature selection, and the first with horn synchronization and auto alarm locate; a USB to SPI protocol converter that provides the simplest, smallest and most cost-effective way to add USB to existing designs; and, finally, a silicon temperature sensor that guarantees high accuracy and resolution across a wide temperature range in small packages. |
• | The Company’s memory portfolio also expanded, including two new compact, low-power parallel NOR Flash devices, and a new family of battery-backed Real-Time Clock/Calendars with more memory and a faster interface. |
Microchip Guidance | |||
GAAP | Non-GAAP Adjustments1 | Non-GAAP1 | |
Results from Continuing Operations: | |||
Net Sales | $332.4 to $345.6 million | $332.4 to $345.6 million | |
Gross Margin3 | 56.7% to 57.2% | $3.5 to $3.6 million | 57.75% to 58.25% |
Operating Expenses3 | 28.75% to 29.25% | $10.0 to $10.4 million | 25.75% to 26.25% |
Other Income (Expense) | ($4.5) million | $1.9 million | ($2.6) million |
Tax Rate | 12.5% to 13% | $2.0 million | 12.5% to 13% |
Net Income | $75.5 to $82.1 million | $13.4 to $13.9 million | $88.8 to $96.0 million |
Diluted Common Shares Outstanding2 | 207 million shares | 0.5 million shares | 206.5 million shares |
Earnings per Diluted Share | 36 to 40 cents | about 7 cents | 43 to 47 cents |
• | Microchip’s inventory days at March 31, 2012 are expected to be about flat from the December quarter. Our inventory position enables us to continue to service our customers with very short lead times while allowing us to control future capital expenditures. 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. |
• | Capital expenditures for the quarter ending March 31, 2012 are expected to be approximately $9 million. Capital expenditures for all of fiscal year 2012 are anticipated to be approximately $68 million. We are continuing to take actions to invest in the equipment needed to support the expected growth of our new products and technologies. |
• | We expect net cash generation during the March quarter of approximately $80 million to $90 million prior to the dividend payment. |
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 |
2 | 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 March 2012 quarter of $38 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). |
3 | 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. |
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share amounts) (Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Net sales | $ | 329,156 | $ | 367,824 | $ | 1,044,265 | $ | 1,107,220 | |||||||
Cost of sales | 145,377 | 151,427 | 445,744 | 458,375 | |||||||||||
Gross profit | 183,779 | 216,397 | 598,521 | 648,845 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 44,256 | 42,198 | 134,937 | 126,448 | |||||||||||
Selling, general and administrative | 52,056 | 56,100 | 161,637 | 170,896 | |||||||||||
Special (income) charges | (660 | ) | 646 | (660 | ) | 1,679 | |||||||||
95,652 | 98,944 | 295,914 | 299,023 | ||||||||||||
Operating income | 88,127 | 117,453 | 302,607 | 349,822 | |||||||||||
Gains (losses) on equity method investments | 14 | 280 | (60 | ) | 185 | ||||||||||
Other expense, net | (4,464 | ) | (3,342 | ) | (14,774 | ) | (9,338 | ) | |||||||
Income from continuing operations before income taxes | 83,677 | 114,391 | 287,773 | 340,669 | |||||||||||
Income tax provision | 6,188 | 12,461 | 31,704 | 42,114 | |||||||||||
Net income from continuing operations | 77,489 | 101,930 | 256,069 | 298,555 | |||||||||||
Discontinued operations: | |||||||||||||||
Loss from discontinued operations before income taxes | - | (1,317 | ) | - | (5,372 | ) | |||||||||
Income tax benefit | - | (163 | ) | - | (239 | ) | |||||||||
Net loss from discontinued operations | - | (1,154 | ) | - | (5,133 | ) | |||||||||
Net income | $ | 77,489 | $ | 100,776 | $ | 256,069 | $ | 293,422 | |||||||
Basic income per common share continuing operations | $ | 0.40 | $ | 0.54 | $ | 1.34 | $ | 1.60 | |||||||
Basic income per common share discontinued operations | - | (0.01 | ) | - | (0.03 | ) | |||||||||
Basic net income per common share | $ | 0.40 | $ | 0.54 | $ | 1.34 | $ | 1.57 | |||||||
Diluted income per common share continuing operations | $ | 0.38 | $ | 0.52 | $ | 1.26 | $ | 1.55 | |||||||
Diluted income per common share discontinued operations | - | (0.01 | ) | - | (0.03 | ) | |||||||||
Diluted net income per common share | $ | 0.38 | $ | 0.51 | $ | 1.26 | $ | 1.53 | |||||||
Basic common shares outstanding | 191,640 | 187,488 | 190,854 | 186,444 | |||||||||||
Diluted common shares outstanding | 203,291 | 196,255 | 202,686 | 192,344 |
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | |||||||
ASSETS | |||||||
December 31, | March 31, | ||||||
2011 | 2011 | ||||||
(Unaudited) | |||||||
Cash and short-term investments | $ | 1,302,273 | $ | 1,243,496 | |||
Accounts receivable, net | 149,277 | 181,202 | |||||
Inventories | 217,853 | 180,800 | |||||
Other current assets | 160,677 | 169,485 | |||||
Total current assets | 1,830,080 | 1,774,983 | |||||
Property, plant & equipment, net | 533,652 | 540,513 | |||||
Long-term investments | 468,086 | 464,838 | |||||
Other assets | 189,333 | 187,724 | |||||
Total assets | $ | 3,021,151 | $ | 2,968,058 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable and other current liabilities | $ | 132,780 | $ | 200,272 | |||
Deferred income on shipments to distributors | 115,786 | 140,044 | |||||
Total current liabilities | 248,566 | 340,316 | |||||
Convertible debentures | 353,341 | 347,334 | |||||
Long-term income tax payable | 71,386 | 58,125 | |||||
Deferred tax liability | 397,709 | 399,527 | |||||
Other long-term liabilities | 8,844 | 10,318 | |||||
Stockholders’ equity | 1,941,305 | 1,812,438 | |||||
Total liabilities and stockholders’ equity | $ | 3,021,151 | $ | 2,968,058 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Gross profit, as reported | $ | 183,779 | $ | 216,397 | $ | 598,521 | $ | 648,845 | |||||||
Share-based compensation expense | 1,369 | 1,708 | 4,376 | 5,416 | |||||||||||
Acquisition-related acquired inventory valuation costs and intangible asset amortization | 1,709 | 1,747 | 5,127 | 11,026 | |||||||||||
Non-GAAP gross profit | $ | 186,857 | $ | 219,852 | $ | 608,024 | $ | 665,287 | |||||||
Non-GAAP gross profit percentage | 56.8 | % | 59.8 | % | 58.2 | % | 60.1 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Research and development expenses, as reported | $ | 44,256 | $ | 42,198 | $ | 134,937 | $ | 126,448 | |||||||
Share-based compensation expense | (3,851 | ) | (3,324 | ) | (10,820 | ) | (9,516 | ) | |||||||
Non-GAAP research and development expenses | $ | 40,405 | $ | 38,874 | $ | 124,117 | $ | 116,932 | |||||||
Non-GAAP research and development expenses as a percentage of net sales | 12.3 | % | 10.6 | % | 11.9 | % | 10.6 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Selling, general and administrative expenses, as reported | $ | 52,056 | $ | 56,100 | $ | 161,637 | $ | 170,896 | |||||||
Share-based compensation expense | (4,742 | ) | (4,377 | ) | (13,274 | ) | (12,853 | ) | |||||||
Acquisition-related intangible asset amortization and other costs | (1,210 | ) | (1,861 | ) | (3,897 | ) | (6,732 | ) | |||||||
Non-GAAP selling, general and administrative expenses | $ | 46,104 | $ | 49,862 | $ | 144,466 | $ | 151,311 | |||||||
Non-GAAP selling, general and administrative expenses as a percentage of net sales | 14.0 | % | 13.6 | % | 13.8 | % | 13.7 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Operating income, as reported | $ | 88,127 | $ | 117,453 | $ | 302,607 | $ | 349,822 | |||||||
Share-based compensation expense | 9,962 | 9,409 | 28,470 | 27,785 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs | 2,919 | 3,608 | 9,024 | 17,758 | |||||||||||
Special (income) charges | (660 | ) | 646 | (660 | ) | 1,679 | |||||||||
Non-GAAP operating income | $ | 100,348 | $ | 131,116 | $ | 339,441 | $ | 397,044 | |||||||
Non-GAAP operating income as a percentage of net sales | 30.5 | % | 35.6 | % | 32.5 | % | 35.9 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Other expense, net, as reported | $ | (4,464 | ) | $ | (3,342 | ) | $ | (14,774 | ) | $ | (9,338 | ) | |||
Convertible debt non-cash interest expense | 1,909 | 1,745 | 5,580 | 5,100 | |||||||||||
Losses on equity securities | - | - | 1,878 | - | |||||||||||
Non-GAAP other expense, net | $ | (2,555 | ) | $ | (1,597 | ) | $ | (7,316 | ) | $ | (4,238 | ) | |||
Non-GAAP other expense, net, as a percentage of net sales | -0.8 | % | -0.4 | % | -0.7 | % | -0.4 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Income tax provision, as reported | $ | 6,188 | $ | 12,461 | $ | 31,704 | $ | 42,114 | |||||||
Income tax rate, as reported | 7.4 | % | 10.9 | % | 11.0 | % | 12.4 | % | |||||||
Share-based compensation expense | 1,261 | 1,166 | 3,655 | 3,442 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs | 143 | 146 | 464 | 563 | |||||||||||
Special charges | - | 80 | - | 137 | |||||||||||
Convertible debt non-cash interest expense | 716 | 654 | 2,093 | 1,912 | |||||||||||
Non-recurring tax events | 4,075 | - | 4,075 | - | |||||||||||
R&D tax credit reinstatement | - | 1,534 | - | 1,534 | |||||||||||
Losses on equity securities | - | - | 704 | - | |||||||||||
Non-GAAP income tax provision | $ | 12,383 | $ | 16,041 | $ | 42,695 | $ | 49,702 | |||||||
Non-GAAP income tax rate | 12.7 | % | 12.4 | % | 12.9 | % | 12.6 | % |
Three Months Ended December 31, 2011 | Three Months Ended December 31, 2010 | Nine Months Ended December 31, 2011 | Nine Months Ended December 31, 2010 | ||||||||||||||||||||||||||||
Consolidated Operations | Consolidated Operations | Continuing Operations | Discontinued Operations | Consolidated Operations | Consolidated Operations | Continuing Operations | Discontinued Operations | ||||||||||||||||||||||||
Net income (loss), as reported | $ | 77,489 | $ | 100,776 | $ | 101,930 | $ | (1,154 | ) | $ | 256,069 | $ | 293,422 | $ | 298,555 | $ | (5,133 | ) | |||||||||||||
Share-based compensation expense, net of tax effect | 8,701 | 8,243 | 8,243 | - | 24,815 | 24,343 | 24,343 | - | |||||||||||||||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect | 2,776 | 3,462 | 3,462 | - | 8,560 | 19,883 | 17,195 | 2,688 | |||||||||||||||||||||||
Special (income) charges, net of tax effect | (660 | ) | 566 | 566 | - | (660 | ) | 1,542 | 1,542 | - | |||||||||||||||||||||
Non-recurring tax events | (4,075 | ) | - | - | - | (4,075 | ) | - | - | - | |||||||||||||||||||||
R&D tax credit reinstatement | - | (1,534 | ) | (1,534 | ) | - | - | (1,534 | ) | (1,534 | ) | - | |||||||||||||||||||
Convertible debt non-cash interest expense, net of tax effect | 1,193 | 1,091 | 1,091 | - | 3,487 | 3,188 | 3,188 | - | |||||||||||||||||||||||
Losses on equity securities, net of tax effect | - | - | - | - | 1,174 | - | - | - | |||||||||||||||||||||||
Non-GAAP net income (loss) | $ | 85,424 | $ | 112,604 | $ | 113,758 | $ | (1,154 | ) | $ | 289,370 | $ | 340,844 | $ | 343,289 | $ | (2,445 | ) | |||||||||||||
Non-GAAP net income (loss) as a percentage of net sales | 26.0 | % | 30.9 | % | . | 27.7 | % | 31.0 | % | ||||||||||||||||||||||
Diluted net income (loss) per share, as reported | $ | 0.38 | $ | 0.51 | $ | 0.52 | $ | (0.01 | ) | $ | 1.26 | $ | 1.53 | $ | 1.55 | $ | (0.03 | ) | |||||||||||||
Non-GAAP diluted net income (loss) per share | $ | 0.42 | $ | 0.58 | $ | 0.58 | $ | (0.01 | ) | $ | 1.43 | $ | 1.78 | $ | 1.80 | $ | (0.01 | ) | |||||||||||||
Diluted common shares outstanding Non-GAAP | 202,749 | 195,332 | 195,332 | 195,332 | 202,090 | 191,175 | 191,175 | 191,175 |