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: |
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ 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 Second Quarter Fiscal Year 2013 Financial Results, Including Record Net Sales |
Dated: November 8, 2012 | Microchip Technology Incorporated (Registrant) |
By: /s/ J. Eric Bjornholt | |
J. Eric Bjornholt Vice President, Chief Financial Officer (Principal Accounting and Financial Officer) |
99.1 | Microchip Technology Announces Second Quarter Fiscal Year 2013 Financial Results, Including Record Net Sales |
![]() | 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 |
▪ | RECORD NET SALES INCLUDING NET SALES FROM THE ACQUISITION OF SMSC WHICH WAS COMPLETED ON AUGUST 2, 2012 |
▪ | NON-GAAP NET SALES OF $407.8 MILLION, UP 15.7% SEQUENTIALLY |
▪ | GAAP NET SALES OF $383.3 MILLION, UP 8.9% SEQUENTIALLY |
▪ | ON A NON-GAAP BASIS: GROSS MARGIN OF 57.7%; OPERATING INCOME OF $119.1 MILLION; NET INCOME OF $97.7 MILLION; AND EPS OF 48 CENTS PER DILUTED SHARE. THE FIRST CALL PUBLISHED ESTIMATE FOR NON-GAAP EPS WAS 51 CENTS. |
▪ | ON A GAAP BASIS: GROSS MARGIN OF 50.7%; OPERATING INCOME OF $8.1 MILLION; NET LOSS OF $21.2 MILLION; AND NET LOSS OF 11 CENTS PER DILUTED SHARE. THERE WAS NO PUBLISHED FIRST CALL ESTIMATE FOR GAAP EPS. |
(in millions, except earnings per diluted share and percentages) | Three Months Ended September 30, 2012 | |||
Non- GAAP1 | % of Net Sales | GAAP | % of Net Sales | |
Net Sales | $407.8 | $383.3 | ||
Gross Margin | $235.2 | 57.7% | $194.2 | 50.7% |
Operating Income | $119.1 | 29.2% | $8.1 | 2.1% |
Other Expense | ($3.9) | ($6.0) | ||
Income Tax Provision | $17.5 | $23.3 | ||
Net Income (Loss) | $97.7 | 24.0% | ($21.2) | (5.5)% |
Earnings (Loss) per Diluted Share | 48 cents | (11 cents) |
1 | See the “Use of Non-GAAP Financial Measures” section of this release. |
• | Microchip and Arrow Electronics, Inc. announced a global distribution agreement to sell Microchip’s entire product offerings through Arrow’s components portfolio and through Nu Horizons Electronics, an Arrow company. |
• | Microchip closed its acquisition of SMSC, to expand Microchip’s smart mixed-signal connectivity solutions for embedded applications in markets such as automotive, industrial, computing, consumer and wireless audio. Microchip also announced its first new SMSC products—the JukeBlox® 3.1 Software Development Kit and CX875 Wi-Fi® Network Media Module, which provide the easiest and most cost-effective solution for creating AirPlay® compatible wireless audio streaming systems. |
• | The Company also integrated its agency pre-certified Wi-Fi modules from the recent Roving Networks acquisition into Microchip’s flexible and modular Explorer development systems that support all of its 8, 16 and 32-bit PIC® microcontrollers. The RN-131 and RN-171 PICtail™/PICtail Plus daughter boards integrate these modules, which use a simple serial interface to connect with any PIC microcontroller and expand Microchip’s wireless portfolio with the industry’s lowest power consumption and an integrated TCP/IP stack. |
• | In other wireless news, Microchip added a 5 GHz RF power amplifier for the new IEEE 802.11ac Wi-Fi standard that delivers low EVM at high power for WLAN applications. |
• | Microchip shipped 46,957 development systems during the quarter, demonstrating the continued strong interest in its products. The total cumulative number of development systems shipped now stands at 1,387,893. |
• | Microchip’s latest world-class development tool offerings include the MPLAB® XC32++ compiler for its 32-bit PIC32 microcontrollers. |
• | Further expanding its industry-leadership position in 8-bit, Microchip added 15 new USB PIC MCUs that span 14 to 100 pins and eliminate the cost of an external crystal via its latest integrated technology called “Active Clock Tuning.” Additionally, Microchip announced two new MCUs that combine high integration, eXtreme Low Power technology and a highly efficient method to implement mTouch™ capacitive sensing. |
• | Microchip added three new families to its large 16-bit portfolio, including a new dsPIC33GS family that adds lower-cost options for digital power conversion and lighting; an expansion of its 70 MIPS dsPIC33E DSCs and PIC24E MCUs with more memory and specialized peripherals for motor-control and general-purpose applications that require op amps, temperature sensing and touch interfaces; and lower-cost, lower pin count dsPIC33 DSCs and PIC24F MCUs for motor-control, consumer, medical and industrial applications. |
• | In other 32-bit tool news, Microchip further enabled the fast-growing population of PIC32 MCU designers with two new development kits that make it easy to create 24-bit audio designs, and are the industry’s first audio mixer development boards. Additionally, Microchip launched a new development board for creating applications with Low Cost Controllerless Graphics (LCCG) displays and projected-capacitive multi touch user interfaces. |
• | Microchip expanded its mTouch sensing portfolio with turnkey devices for projected-capacitive multi touch, haptic feedback, and proximity detection. |
• | Two new product lines were added to Microchip’s vast and diverse analog portfolio, including a low-power, low-cost 6-bit Volatile DAC, and an expansion of its low-power op amps into higher voltages with three new 9V and 12V families that enable a wider signal input range. |
Microchip Consolidated Guidance | |||
GAAP | Non-GAAP Adjustments | Non-GAAP1 | |
Net Sales | $396 to $426 million | $396 to $426 million | |
Gross Margin2 | 47.9% to 48.4% | $30.1 to $32.4 million | 55.5% to 56.0% |
Operating Expenses2 | 44.0% to 44.5% | $53.4 to $57.5 million | 30.5% to 31.0% |
Other Income (Expense) | ($9.4) million | ($2.1) million | ($7.3) million |
Income Tax Expense | $4 to $5 million | $11 to $12 million | $14 to $16 million |
Net Income | $0.1 to $4.4 million | $75.6 to $80.9 million | $75.7 to $85.3 million |
Diluted Common Shares Outstanding3 | Approximately 205.7 million shares | Approximately 0.3 million shares | Approximately 205.4 million shares |
Earnings per Diluted Share | 0 to 2 cents | 37 to 39 cents | 37 to 41 cents |
2 | 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. |
• | Microchip’s inventory days at December 31, 2012 are expected to decline by 15 to 20 days from the September quarter due to the impacts of purchase accounting that results in SMSC written-up inventory that will be sold in the December quarter being removed from inventory and being reflected in cost of goods sold. Our inventory position enables us to continue to service our customers with very short lead times while allowing us to control future capital expenditures. 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, 2012 are expected to be approximately $15 million. Capital expenditures for all of fiscal year 2013 are anticipated to be approximately $50 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 approximately $80 million to $100 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, earn-out adjustments and legal and other general and administrative expenses associated with acquisitions), legal settlements, and non-cash interest expense on our convertible debentures, the related income tax implications of these items and nonrecurring tax events. |
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 December 2012 quarter of $33 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 | Six Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net sales | $ | 383,298 | $ | 340,602 | $ | 735,432 | $ | 715,109 | |||||||
Cost of sales | 189,103 | 143,899 | 336,440 | 296,949 | |||||||||||
Gross profit | 194,195 | 196,703 | 398,992 | 418,160 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 64,082 | 45,383 | 112,908 | 90,681 | |||||||||||
Selling, general and administrative | 71,767 | 50,997 | 127,359 | 107,516 | |||||||||||
Amortization of acquired intangible assets | 27,858 | 2,703 | 31,904 | 5,483 | |||||||||||
Special charges | 22,394 | - | 22,394 | - | |||||||||||
186,101 | 99,083 | 294,565 | 203,680 | ||||||||||||
Operating income | 8,094 | 97,620 | 104,427 | 214,480 | |||||||||||
Losses on equity method investments | (32) | (13) | (153) | (74) | |||||||||||
Other expense, net | (5,943) | (7,337) | (11,291) | (10,310) | |||||||||||
Income before income taxes | 2,119 | 90,270 | 92,983 | 204,096 | |||||||||||
Income tax provision | 23,303 | 10,983 | 35,457 | 25,516 | |||||||||||
Net (loss) income | $ | (21,184 | ) | $ | 79,287 | $ | 57,526 | $ | 178,580 | ||||||
Basic net (loss) income per common share | $ | (0.11 | ) | $ | 0.42 | $ | 0.30 | $ | 0.94 | ||||||
Diluted net (loss) income per common share | $ | (0.11 | ) | $ | 0.40 | $ | 0.28 | $ | 0.88 | ||||||
Basic common shares outstanding | 194,060 | 190,809 | 193,756 | 190,461 | |||||||||||
Diluted common shares outstanding | 194,060 | 200,199 | 204,627 | 202,383 |
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | |||||||
ASSETS | |||||||
September 30, | March 31, | ||||||
2012 | 2012 | ||||||
(Unaudited) | |||||||
Cash and short-term investments | $ | 1,553,410 | $ | 1,459,009 | |||
Accounts receivable, net | 230,457 | 170,201 | |||||
Inventories | 289,526 | 217,278 | |||||
Other current assets | 215,885 | 169,373 | |||||
Total current assets | 2,289,278 | 2,015,861 | |||||
Property, plant & equipment, net | 536,727 | 516,611 | |||||
Long-term investments | 154,002 | 328,586 | |||||
Other assets | 908,369 | 222,718 | |||||
Total assets | $ | 3,888,376 | $ | 3,083,776 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable and other current liabilities | $ | 202,351 | $ | 139,164 | |||
Deferred income on shipments to distributors | 123,122 | 108,709 | |||||
Total current liabilities | 325,473 | 247,873 | |||||
Long-term line of credit | 600,000 | - | |||||
Convertible debentures | 359,656 | 355,050 | |||||
Long-term income tax payable | 179,807 | 70,490 | |||||
Deferred tax liability | 434,603 | 411,368 | |||||
Other long-term liabilities | 24,739 | 8,322 | |||||
Stockholders’ equity | 1,964,098 | 1,990,673 | |||||
Total liabilities and stockholders’ equity | $ | 3,888,376 | $ | 3,083,776 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net sales, as reported | $ | 383,298 | $ | 340,602 | $ | 735,432 | $ | 715,109 | |||||||
Distributor revenue recognition adjustment | 24,496 | - | 24,748 | - | |||||||||||
Non-GAAP net sales | $ | 407,794 | $ | 340,602 | $ | 760,180 | $ | 715,109 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Gross profit, as reported | $ | 194,195 | $ | 196,703 | $ | 398,992 | $ | 418,160 | |||||||
Distributor revenue recognition adjustment | 15,737 | - | 15,868 | - | |||||||||||
Share-based compensation expense | 2,614 | 1,608 | 3,924 | 3,007 | |||||||||||
Acquisition-related acquired inventory valuation and other costs | 22,650 | - | 24,150 | - | |||||||||||
Non-GAAP gross profit | $ | 235,196 | $ | 198,311 | $ | 442,934 | $ | 421,167 | |||||||
Non-GAAP gross profit percentage | 57.7 | % | 58.2 | % | 58.3 | % | 58.9 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Research and development expenses, as reported | $ | 64,082 | $ | 45,383 | 112,908 | $ | 90,681 | ||||||||
Share-based compensation expense | (6,358 | ) | (3,556 | ) | (10,390 | ) | (6,969 | ) | |||||||
Acquisition-related costs | (17 | ) | - | (17 | ) | - | |||||||||
Non-GAAP research and development expenses | $ | 57,707 | $ | 41,827 | $ | 102,501 | $ | 83,712 | |||||||
Non-GAAP research and development expenses as a percentage of net sales | 14.2 | % | 12.3 | % | 13.5 | % | 11.7 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Selling, general and administrative expenses, as reported | $ | 71,767 | $ | 50,997 | $ | 127,359 | $ | 107,516 | |||||||
Share-based compensation expense | (11,581 | ) | (4,320 | ) | (16,225 | ) | (8,532 | ) | |||||||
Acquisition-related costs | (1,832 | ) | (143 | ) | (5,019 | ) | (622 | ) | |||||||
Non-GAAP selling, general and administrative expenses | $ | 58,354 | $ | 46,534 | $ | 106,115 | $ | 98,362 | |||||||
Non-GAAP selling, general and administrative expenses as a percentage of net sales | 14.3 | % | 13.7 | % | 14.0 | % | 13.8 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Operating income, as reported | $ | 8,094 | $ | 97,620 | $ | 104,427 | $ | 214,480 | |||||||
Distributor revenue recognition adjustment | 15,737 | - | 15,868 | - | |||||||||||
Share-based compensation expense | 20,553 | 9,484 | 30,539 | 18,508 | |||||||||||
Acquisition-related acquired inventory valuation and other costs | 24,499 | 143 | 29,186 | 622 | |||||||||||
Amortization of acquired intangible assets | 27,858 | 2,703 | 31,904 | 5,483 | |||||||||||
Special charges | 22,394 | - | 22,394 | - | |||||||||||
Non-GAAP operating income | $ | 119,135 | $ | 109,950 | $ | 234,318 | $ | 239,093 | |||||||
Non-GAAP operating income as a percentage of net sales | 29.2 | % | 32.3 | % | 30.8 | % | 33.4 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Other expense, net, as reported | $ | (5,943 | ) | $ | (7,337 | ) | $ | (11,291 | ) | $ | (10,310 | ) | |||
Convertible debt non-cash interest expense | 2,042 | 1,866 | 4,017 | 3,671 | |||||||||||
Losses on equity securities | - | 1,878 | - | 1,878 | |||||||||||
Non-GAAP other expense, net | $ | (3,901 | ) | $ | (3,593 | ) | $ | (7,274 | ) | $ | (4,761 | ) | |||
Non-GAAP other expense, net, as a percentage of net sales | -1.0 | % | -1.1 | % | -1.0 | % | -0.7 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Income tax provision, as reported | $ | 23,303 | $ | 10,983 | $ | 35,457 | $ | 25,516 | |||||||
Income tax rate, as reported | 1,099.7 | % | 12.2 | % | 38.1 | % | 12.5 | % | |||||||
Distributor revenue recognition adjustment | 3,387 | - | 3,404 | - | |||||||||||
Share-based compensation expense | 3,419 | 1,226 | 4,741 | 2,394 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs | 4,818 | 137 | 5,387 | 321 | |||||||||||
Special charges | 11,476 | - | 11,476 | - | |||||||||||
Convertible debt non-cash interest expense | 766 | 700 | 1,507 | 1,377 | |||||||||||
Non-recurring tax event | (29,716 | ) | - | (29,716 | ) | - | |||||||||
Losses on equity securities | - | 704 | - | 704 | |||||||||||
Non-GAAP income tax provision | $ | 17,453 | $ | 13,750 | $ | 32,256 | $ | 30,312 | |||||||
Non-GAAP income tax rate | 15.1 | % | 12.9 | % | 14.2 | % | 12.9 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net (loss) income, as reported | $ | (21,184 | ) | $ | 79,287 | $ | 57,526 | $ | 178,580 | ||||||
Distributor revenue recognition adjustment, net of tax effect | 12,350 | - | 12,464 | - | |||||||||||
Share-based compensation expense, net of tax effect | 17,134 | 8,258 | 25,798 | 16,114 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect | 47,539 | 2,709 | 55,703 | 5,784 | |||||||||||
Special charges, net of tax effect | 10,918 | - | 10,918 | - | |||||||||||
Convertible debt non-cash interest expense, net of tax effect | 1,276 | 1,166 | 2,510 | 2,294 | |||||||||||
Non-recurring tax event | 29,716 | - | 29,716 | - | |||||||||||
Losses on equity securities, net of tax effect | - | 1,174 | - | 1,174 | |||||||||||
Non-GAAP net income | $ | 97,749 | $ | 92,594 | $ | 194,635 | $ | 203,946 | |||||||
Non-GAAP net income as a percentage of net sales | 24.0 | % | 27.2 | % | 25.6 | % | 28.5 | % | |||||||
Diluted net (loss) income per share, as reported | (.11) | $ | 0.40 | $ | 0.28 | $ | 0.88 | ||||||||
Non-GAAP diluted net income per share | $ | 0.48 | $ | 0.46 | $ | 0.95 | $ | 1.01 | |||||||
Diluted common shares outstanding, non-GAAP | 205,286 | 199,537 | 204,285 | 201,761 |