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 Record Net Sales |
Dated: February 7, 2013 | 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 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 OF $416 MILLION |
▪ | ON A NON-GAAP BASIS: GROSS MARGINS OF 56.0%; OPERATING INCOME OF $105.6 MILLION; NET INCOME OF $84.5 MILLION; AND EPS OF 41 CENTS PER DILUTED SHARE. THE FIRST CALL PUBLISHED ESTIMATE FOR NON-GAAP EPS WAS 39 CENTS. |
▪ | ON A GAAP BASIS: GROSS MARGINS OF 48.2%; OPERATING INCOME OF $17.4 MILLION; NET INCOME OF $10.2 MILLION; AND EPS OF 5 CENTS PER DILUTED SHARE. THERE WAS NO PUBLISHED FIRST CALL ESTIMATE FOR GAAP EPS. |
▪ | RECORD NET SALES FOR MICROCONTROLLERS |
▪ | RECORD NET SALES OF 16-BIT MICROCONTROLLERS, 32-BIT MICROCONTROLLERS AND ANALOG PRODUCTS |
▪ | LICENSING NET SALES OF $21.3 MILLION, UP 6% SEQUENTIALLY |
(in millions, except earnings per diluted share and percentages) | Three Months Ended December 31, 2012 | |||
GAAP1 | % of Net Sales | Non- GAAP | % of Net Sales | |
Net Sales | $416.0 | $416.0 | ||
Gross Margin | $200.4 | 48.2% | $233.1 | 56.0% |
Operating Income | $17.4 | 4.2% | $105.6 | 25.4% |
Other Expense | $7.7 | $5.6 | ||
Income Tax Provision (Benefit) | ($0.5) | $15.5 | ||
Net Income | $10.2 | 2.4% | $84.5 | 20.3% |
Earnings per Diluted Share | 5 cents | 41 cents |
• | Microchip introduced the world’s first electrical-field-based 3D gesture controller, featuring its patented GestIC® technology, which enables the next dimension in intuitive, gesture-based, non-contact and mobile-friendly 3D user interfaces for a broad range of end products. The configurable MGC3130 3D gesture controller provides low-power, precise, fast and robust hand position tracking, along with free-space gesture recognition. |
• | Continuing its string of recent innovations, Microchip launched the world’s first analog-based power management controller with an integrated MCU, for flexible, efficient power conversion. This followed announcements of a high-voltage analog buck PWM controller with integrated MOSFET drivers, and Microchip’s first family of high-speed, low figure-of-merit MOSFETs. Together, these new offerings |
• | In the 32-bit microcontroller arena, Microchip boosted performance by 25%, on its low-cost, small-package PIC32 MX1/MX2 series. These feature-packed MCUs include I2S for audio applications, along with capacitive touch and USB OTG. To enable cost-effective multitouch displays, Microchip also introduced the PIC32 GUI Development Board with Projected-Capacitive Touch. This board demonstrates how the high-performance PIC32 eliminates the cost and complexity of an external graphics controller. |
• | The Company also announced the expansion of its mTouch™ Sensing Solutions portfolio, with four turnkey controllers for multitouch projected-capacitive touchscreens and touchpads, proximity detection, and haptic touch feedback. |
• | On the wireless front, Microchip launched the world’s first wireless-audio solution for iOS, Android™, Windows® 8 and Mac®—the new JukeBlox® 3.2 platform and software development kit. This platform expansion added seamless integration of cloud-based music services and simultaneous Wi-Fi® audio streaming to multiple home-audio products. |
• | Microchip also introduced a Bluetooth® module for streaming audio. This pre-certified module builds on the portfolio’s data capabilities with added support for streaming music and voice, while maintaining low power consumption and a small form factor. |
• | The Company’s industry-leading memory catalog continued its steady expansion, with three new SPI SuperFlash® memory devices that feature low power consumption and an extended operating-voltage range. |
• | The industry continued to recognize Microchip’s technology leadership and innovation, in the form of prestigious annual awards from top publications. EDN Magazine named six of Microchip’s products to its 2012 Hot 100 list, across five categories. Included in that list was the brand-new GestIC® Technology, which was also selected by Electronic Design Magazine for their 2012 “Best of” awards, in the Digital category. The readers of ECN Magazine chose Microchip’s JukeBlox Wireless Audio Platform for a Readers Choice Tech Award, in the “Boards & Modules” category. Finally, Microchip’s 8-bit PIC® MCUs with Configurable Logic were named finalists by the editors of Design News Magazine, in their Golden Mousetrap Awards. |
Microchip Consolidated Guidance | |||
GAAP | Non-GAAP Adjustments | Non-GAAP1 | |
Net Sales | $420.2 to $432.7 million | $420.2 to $432.7 million | |
Gross Margin2 | 55.0% to 55.5% | $3.1 to $3.3 million | 55.75% to 56.25% |
Operating Expenses2 | 42.25% to 43.25% | $54.6 to $56.3 million | 29.25% to 30.25% |
Other Expense | $6.7 million | $2.1 million | $4.6 million |
Income Tax Expense | $4.9 to $6.1 million | $3.8 to $3.9 million | $8.7 to $10.0 million |
Net Income | $37.7 to $44.5 million | $56.1 to $57.7 million | $93.8 to $102.2 million |
Diluted Common Shares Outstanding3 | Approximately 209 million shares | Approximately 0.3 million shares | Approximately 208.7 million shares |
Earnings per Diluted Share | 18 to 21 cents | 27 to 28 cents | 45 to 49 cents |
1 | See the “Use of Non-GAAP Financial Measures” section of this release. |
2 | Earnings per share have been calculated based on the diluted shares outstanding of Microchip on a consolidated basis. |
3 | See Footnote 2 under the “Use of Non-GAAP Financial Measures” section of this release. |
• | Microchip’s inventory days at March 31, 2013 are expected to be about 123 to 129 days. 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 March 31, 2013 are expected to be approximately $24 million. Capital expenditures for all of fiscal year 2013 are anticipated to be approximately $60 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 March quarter of approximately $110 million to $130 million prior to the dividend payment and our acquisition related activities. |
• | Included in the GAAP and non-GAAP income tax expense guidance for the quarter ended March 31, 2013 is a $5.6 million favorable impact from the retroactive reinstatement of the Research and Experimentation Tax Credit. |
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, restructuring costs, severance costs, earn-out adjustments and legal and other general and administrative expenses associated with acquisitions), losses on equity securities, 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 March 2013 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). |
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, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net sales | $ | 416,047 | $ | 329,156 | $ | 1,151,479 | $ | 1,044,265 | |||||||
Cost of sales | 215,619 | 143,668 | 552,059 | 440,617 | |||||||||||
Gross profit | 200,428 | 185,488 | 599,420 | 603,648 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 71,377 | 44,256 | 184,285 | 134,937 | |||||||||||
Selling, general and administrative | 69,368 | 51,087 | 196,727 | 158,603 | |||||||||||
Amortization of acquired intangible assets | 39,711 | 2,678 | 71,615 | 8,161 | |||||||||||
Special charges (income) | 2,559 | (660) | 24,953 | (660) | |||||||||||
183,015 | 97,361 | 477,580 | 301,041 | ||||||||||||
Operating income | 17,413 | 88,127 | 121,840 | 302,607 | |||||||||||
(Losses) gains on equity method investments | (229) | 14 | (382) | (60) | |||||||||||
Other expense, net | (7,492) | (4,464) | (18,783) | (14,774) | |||||||||||
Income before income taxes | 9,692 | 83,677 | 102,675 | 287,773 | |||||||||||
Income tax (benefit) provision | (481) | 6,188 | 34,976 | 31,704 | |||||||||||
Net income | $ | 10,173 | $ | 77,489 | $ | 67,699 | $ | 256,069 | |||||||
Basic net income per common share | $ | 0.05 | $ | 0.40 | $ | 0.35 | $ | 1.34 | |||||||
Diluted net income per common share | $ | 0.05 | $ | 0.38 | $ | 0.33 | $ | 1.26 | |||||||
Basic common shares outstanding | 194,958 | 191,640 | 194,157 | 190,854 | |||||||||||
Diluted common shares outstanding | 204,405 | 203,291 | 204,553 | 202,686 |
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | |||||||
ASSETS | |||||||
December 31, | March 31, | ||||||
2012 | 2012 | ||||||
(Unaudited) | |||||||
Cash and short-term investments | $ | 1,622,303 | $ | 1,459,009 | |||
Accounts receivable, net | 177,502 | 170,201 | |||||
Inventories | 261,594 | 217,278 | |||||
Other current assets | 235,184 | 169,373 | |||||
Total current assets | 2,296,583 | 2,015,861 | |||||
Property, plant & equipment, net | 522,737 | 516,611 | |||||
Long-term investments | 149,662 | 328,586 | |||||
Other assets | 874,542 | 222,718 | |||||
Total assets | $ | 3,843,524 | $ | 3,083,776 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable and other current liabilities | $ | 173,668 | $ | 139,164 | |||
Deferred income on shipments to distributors | 122,611 | 108,709 | |||||
Total current liabilities | 296,279 | 247,873 | |||||
Long-term line of credit | 610,000 | - | |||||
Convertible debentures | 361,409 | 355,050 | |||||
Long-term income tax payable | 181,418 | 70,490 | |||||
Deferred tax liability | 445,492 | 411,368 | |||||
Other long-term liabilities | 21,840 | 8,322 | |||||
Stockholders’ equity | 1,927,086 | 1,990,673 | |||||
Total liabilities and stockholders’ equity | $ | 3,843,524 | $ | 3,083,776 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net sales, as reported | $ | 416,047 | $ | 329,156 | $ | 1,151,479 | $ | 1,044,265 | |||||||
Distributor revenue recognition adjustment | - | - | 24,748 | - | |||||||||||
Non-GAAP net sales | $ | 416,047 | $ | 329,156 | $ | 1,176,227 | $ | 1,044,265 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Gross profit, as reported | $ | 200,428 | $ | 185,488 | $ | 599,420 | $ | 603,648 | |||||||
Distributor revenue recognition adjustment | - | - | 15,868 | - | |||||||||||
Share-based compensation expense | 1,834 | 1,369 | 5,758 | 4,376 | |||||||||||
Acquisition-related acquired inventory valuation and other costs | 30,808 | - | 54,958 | - | |||||||||||
Non-GAAP gross profit | $ | 233,070 | $ | 186,857 | $ | 676,004 | $ | 608,024 | |||||||
Non-GAAP gross profit percentage | 56.0 | % | 56.8 | % | 57.5 | % | 58.2 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Research and development expenses, as reported | $ | 71,377 | $ | 44,256 | $ | 184,285 | $ | 134,937 | |||||||
Share-based compensation expense | (6,172 | ) | (3,851 | ) | (16,562 | ) | (10,820 | ) | |||||||
Acquisition-related costs | - | - | (17 | ) | - | ||||||||||
Non-GAAP research and development expenses | $ | 65,205 | $ | 40,405 | $ | 167,706 | $ | 124,117 | |||||||
Non-GAAP research and development expenses as a percentage of net sales | 15.7 | % | 12.3 | % | 14.3 | % | 11.9 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Selling, general and administrative expenses, as reported | $ | 69,368 | $ | 51,087 | $ | 196,727 | $ | 158,603 | |||||||
Share-based compensation expense | (6,114 | ) | (4,742 | ) | (22,339 | ) | (13,274 | ) | |||||||
Acquisition-related costs | (1,035 | ) | (241 | ) | (6,054 | ) | (863 | ) | |||||||
Non-GAAP selling, general and administrative expenses | $ | 62,219 | $ | 46,104 | $ | 168,334 | $ | 144,466 | |||||||
Non-GAAP selling, general and administrative expenses as a percentage of net sales | 15.0 | % | 14.0 | % | 14.3 | % | 13.8 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Operating income, as reported | $ | 17,413 | $ | 88,127 | $ | 121,840 | $ | 302,607 | |||||||
Distributor revenue recognition adjustment | - | - | 15,868 | - | |||||||||||
Share-based compensation expense | 14,120 | 9,962 | 44,659 | 28,470 | |||||||||||
Acquisition-related acquired inventory valuation and other costs | 31,843 | 241 | 61,029 | 863 | |||||||||||
Amortization of acquired intangible assets | 39,711 | 2,678 | 71,615 | 8,161 | |||||||||||
Special charges (income) | 2,559 | (660 | ) | 24,953 | (660 | ) | |||||||||
Non-GAAP operating income | $ | 105,646 | $ | 100,348 | $ | 339,964 | $ | 339,441 | |||||||
Non-GAAP operating income as a percentage of net sales | 25.4 | % | 30.5 | % | 28.9 | % | 32.5 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Other expense, net, as reported | $ | (7,492 | ) | $ | (4,464 | ) | $ | (18,783 | ) | $ | (14,774 | ) | |||
Convertible debt non-cash interest expense | 2,089 | 1,909 | 6,106 | 5,580 | |||||||||||
Losses on equity securities | - | - | - | 1,878 | |||||||||||
Non-GAAP other expense, net | $ | (5,403 | ) | $ | (2,555 | ) | $ | (12,677 | ) | $ | (7,316 | ) | |||
Non-GAAP other expense, net, as a percentage of net sales | -1.3 | % | -0.8 | % | -1.1 | % | -0.7 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Income tax (benefit) provision, as reported | $ | (481 | ) | $ | 6,188 | $ | 34,976 | $ | 31,704 | ||||||
Income tax rate, as reported | -5.0 | % | 7.4 | % | 34.1 | % | 11.0 | % | |||||||
Distributor revenue recognition adjustment | - | - | 3,404 | - | |||||||||||
Share-based compensation expense | 2,755 | 1,261 | 7,496 | 3,655 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs | 7,416 | 143 | 12,803 | 464 | |||||||||||
Special charges | 1,367 | - | 12,843 | - | |||||||||||
Convertible debt non-cash interest expense | 784 | 716 | 2,291 | 2,093 | |||||||||||
Non-recurring tax event | 3,645 | 4,075 | (26,071 | ) | 4,075 | ||||||||||
Losses on equity securities | - | - | - | 704 | |||||||||||
Non-GAAP income tax provision | $ | 15,486 | $ | 12,383 | $ | 47,742 | $ | 42,695 | |||||||
Non-GAAP income tax rate | 15.5 | % | 12.7 | % | 14.6 | % | 12.9 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net income, as reported | $ | 10,173 | $ | 77,489 | $ | 67,699 | $ | 256,069 | |||||||
Distributor revenue recognition adjustment, net of tax effect | - | - | 12,464 | - | |||||||||||
Share-based compensation expense, net of tax effect | 11,365 | 8,701 | 37,163 | 24,815 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect | 64,138 | 2,776 | 119,841 | 8,560 | |||||||||||
Special charges (income), net of tax effect | 1,192 | (660 | ) | 12,110 | (660 | ) | |||||||||
Convertible debt non-cash interest expense, net of tax effect | 1,305 | 1,193 | 3,815 | 3,487 | |||||||||||
Non-recurring tax events | (3,645 | ) | (4,075 | ) | 26,071 | (4,075 | ) | ||||||||
Losses on equity securities, net of tax effect | - | - | - | 1,174 | |||||||||||
Non-GAAP net income | $ | 84,528 | $ | 85,424 | $ | 279,163 | $ | 289,370 | |||||||
Non-GAAP net income as a percentage of net sales | 20.3 | % | 26.0 | % | 23.7 | % | 27.7 | % | |||||||
Diluted net income per share, as reported | $ | 0.05 | $ | 0.38 | $ | 0.33 | $ | 1.26 | |||||||
Non-GAAP diluted net income per share | $ | 0.41 | $ | 0.42 | $ | 1.37 | $ | 1.43 | |||||||
Diluted common shares outstanding, non-GAAP | 204,123 | 202,749 | 204,231 | 202,090 |