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)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits | |
99.1 | Microchip Technology Announces Financial Results for Third Quarter Fiscal Year 2014 |
Dated: January 30, 2014 | 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 Financial Results for Third Quarter Fiscal Year 2014 |
![]() | EXHIBIT 99.1 NEWS RELEASE INVESTOR RELATIONS CONTACT: J. Eric Bjornholt -- CFO..... (480) 792-7804 |
▪ | Net sales of $482.4 million, down 2.1% sequentially and up 15.9% from net sales in the year ago quarter. |
▪ | On a non-GAAP basis: gross margins of 59.0%; operating income of $153.8 million; net income of $132.9 million; and EPS of 61 cents per diluted share. The First Call published estimate for non-GAAP diluted EPS was 60 cents. |
▪ | On a GAAP basis: gross margins of 58.6%; operating income of $116.9 million; net income of $105.4 million; and EPS of 48 cents per diluted share. There was no published First Call estimate for GAAP EPS. |
▪ | Record net sales of analog products of $108.9 million |
(in millions, except earnings per diluted share and percentages) | Three Months Ended December 31, 2013 | |||
GAAP1 | % of Net Sales | Non-GAAP1 | % of Net Sales | |
Net Sales | $482.4 | $482.4 | ||
Gross Margin | $282.7 | 58.6% | $284.6 | 59.0% |
Operating Income | $116.9 | 24.2% | $153.8 | 31.9% |
Other Expense (including Gains/Losses on Equity Method Investments) | $4.3 | $4.5 | ||
Income Tax Expense | $7.2 | $16.4 | ||
Net Income | $105.4 | 21.9% | $132.9 | 27.5% |
Earnings per Diluted Share | 48 cents | 61 cents |
1 | See the “Use of Non-GAAP Financial Measures” section of this release. |
• | Microchip took its 32-bit MCU portfolio to new heights with the new 24-member PIC32MZ family, featuring class-leading performance of 330 DMIPS and 3.28 CoreMarks™/MHz. It also has code density that is 30% better than the competition and a high level of integrated memory and peripherals, including a hardware crypto engine. Already, the PIC32MZ has won two prestigious industry awards-EDN Magazine’s Hot 100 and Embedded Computing Design’s Editor’s Choice. |
• | The Company also introduced MPLAB Harmony to help developers greatly simplify their PIC32 MCU code development process by reducing common integration bugs, thus accelerating time to market. Harmony is the industry’s first embedded firmware development framework to integrate the licensing, resale and support of both Microchip and third-party middleware, drivers, libraries and real-time operating systems. |
• | In the area of motor control and drivers, Microchip made two additions to its comprehensive product line. On the analog side, the MCP8024 three-phase BLDC motor gate driver with power module includes functions that power dsPIC® DSCs and PIC MCUs with capabilities to drive motors in a robust and highly efficient manner. On the digital side, Microchip’s latest dsPIC33 family of DSCs enables efficient dual motor control via a high level of advanced peripheral integration. |
• | Microchip continued to expand its human-interface portfolio, with two new offerings. The MGC3130 Hillstar Development Kit provides designers with an easy, step-by-step approach to developing 3D gesturing systems using Microchip’s GestIC® Technology, including the MGC3130 and electrodes that meet their specific space requirements. The CAP12XX family of turnkey capacitive-touch controllers expands the RightTouch® product portfolio, enabling a wide variety of slider, button and proximity functionality. |
• | GestIC Technology and the MGC3130-the world’s first e-field-based 3D gesture controller-also continue to win awards from across the globe. In Asia, Microchip added awards from EDN China and EEPW. The latest U.S. award came from Electronic Products Magazine, and the MGC3130 earned the industry’s highest honor in Europe-a prestigious Elektra Award. |
• | For Windows® 8 systems that need sensor fusion-such as tablets, laptops, ultrabooks and smart phones, which make use of the data from multiple sensors simultaneously-Microchip introduced a low-power, flexible and turnkey sensor hub. The SSC7102 makes implementing sensor fusion easy, provides a large selection of supported sensors, and is extremely efficient for longer battery life. |
• | As part of the continuing effort to accelerate customer development using its vast portfolio of 8-bit PIC® microcontrollers, Microchip introduced the MPLAB® Code Configurator. This free plug-in for the MPLAB X IDE makes it easier and faster to develop firmware. |
• | Microchip acquired EqcoLogic to add coaxial equalizer and transceiver products and technologies to its offerings for higher-speed automotive and industrial communications, such as MOST® and Ethernet networks. These networks need to reliably transmit data over longer distances using standard coaxial cables, and EqcoLogic’s solutions are tailor-made to address these needs for embedded applications. |
• | Microchip made available for license, on a royalty-bearing basis, its proprietary MOST150 Data Link Layer Specification. By making the key technologies available for the lower layers of MOST150, other semiconductor companies now have the opportunity to develop, manufacture and supply chips with a MOST150 interface. |
• | Finally, the Company grew its wireless portfolio with two RF Front End Modules for Bluetooth® connectivity and Wi-Fi® applications such as mobile devices, multi-channel access point/routers and set-top boxes. |
Microchip Consolidated Guidance | |||
GAAP | Non-GAAP Adjustments | Non-GAAP1 | |
Net Sales | $482.4 to $496.8 million | $482.4 to $496.8 million | |
Gross Margin2 | 58.55% to 58.75% | $2.2 million | 59.0% to 59.2% |
Operating Expenses2 | 33.45% to 33.85% | $32.1 to $33.0 million | 26.8% to 27.2% |
Other Expense | $7.8 million | $2.3 million | $5.5 million |
Income Tax Expense | 11.8% to 12.8% | $2.4 to $2.7 million | 10.5% to 11.5% |
Net Income | $97.1 to $104.0 million | $33.8 to $35.2 million | $130.9 to $139.2 million |
Diluted Common Shares Outstanding3 | Approximately 221.7 million shares | Approximately 0.6 million shares | Approximately 221.1 million shares |
Earnings per Diluted Share | 43 to 47 cents | Approximately 16 cents | 59 to 63 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, 2014 are expected to be about 119 to 125 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, 2014 are expected to be approximately $30 million. Capital expenditures for all of fiscal year 2014 are anticipated to be approximately $115 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 $135 million to $155 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, restructuring costs, severance costs, earn-out adjustments and legal and |
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 2014 quarter of $45 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 December 31, | Nine Months Ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net sales | $ | 482,372 | $ | 416,047 | $ | 1,437,833 | $ | 1,151,479 | ||||||||
Cost of sales | 199,652 | 215,619 | 599,676 | 552,059 | ||||||||||||
Gross profit | 282,720 | 200,428 | 838,157 | 599,420 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 76,341 | 71,377 | 227,680 | 184,285 | ||||||||||||
Selling, general and administrative | 66,856 | 69,368 | 201,934 | 196,727 | ||||||||||||
Amortization of acquired intangible assets | 21,804 | 39,711 | 73,225 | 71,615 | ||||||||||||
Special charges | 801 | 2,559 | 2,491 | 24,953 | ||||||||||||
165,802 | 183,015 | 505,330 | 477,580 | |||||||||||||
Operating income | 116,918 | 17,413 | 332,827 | 121,840 | ||||||||||||
Gains (losses) on equity method investments | 150 | (229 | ) | (211 | ) | (382 | ) | |||||||||
Other expense, net | (4,480 | ) | (7,492 | ) | (18,486 | ) | (18,783 | ) | ||||||||
Income before income taxes | 112,588 | 9,692 | 314,130 | 102,675 | ||||||||||||
Income tax provision (benefit) | 7,187 | (481 | ) | 30,344 | 34,976 | |||||||||||
Net income | $ | 105,401 | $ | 10,173 | $ | 283,786 | $ | 67,699 | ||||||||
Basic net income per common share | $ | 0.53 | $ | 0.05 | $ | 1.43 | $ | 0.35 | ||||||||
Diluted net income per common share | $ | 0.48 | $ | 0.05 | $ | 1.31 | $ | 0.33 | ||||||||
Basic common shares outstanding | 198,759 | 194,958 | 197,845 | 194,157 | ||||||||||||
Diluted common shares outstanding | 219,089 | 204,405 | 215,943 | 204,553 | ||||||||||||
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | |||||||||
ASSETS | |||||||||
December 31, | March 31, | ||||||||
2013 | 2013 | ||||||||
(Unaudited) | |||||||||
Cash and short-term investments | $ | 1,307,402 | $ | 1,578,597 | |||||
Accounts receivable, net | 224,273 | 229,955 | |||||||
Inventories | 274,629 | 242,334 | |||||||
Other current assets | 162,724 | 185,484 | |||||||
Total current assets | 1,969,028 | 2,236,370 | |||||||
Property, plant & equipment, net | 520,565 | 514,544 | |||||||
Long-term investments | 723,925 | 257,450 | |||||||
Other assets | 789,590 | 843,041 | |||||||
Total assets | $ | 4,003,108 | $ | 3,851,405 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Accounts payable and other current liabilities | $ | 158,926 | $ | 202,659 | |||||
Short-term borrowings | 9,409 | - | |||||||
Deferred income on shipments to distributors | 143,315 | 138,952 | |||||||
Total current liabilities | 311,650 | 341,611 | |||||||
Long-term line of credit | 300,000 | 620,000 | |||||||
Long-term borrowings, net | 340,444 | - | |||||||
Convertible debentures | 369,618 | 363,385 | |||||||
Long-term income tax payable | 179,246 | 182,723 | |||||||
Deferred tax liability | 388,620 | 388,250 | |||||||
Other long-term liabilities | 38,422 | 21,966 | |||||||
Stockholders’ equity | 2,075,108 | 1,933,470 | |||||||
Total liabilities and stockholders’ equity | $ | 4,003,108 | $ | 3,851,405 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales, as reported | $ | 482,372 | $ | 416,047 | $ | 1,437,833 | $ | 1,151,479 | |||||||
Distributor revenue recognition adjustment | - | - | - | 24,748 | |||||||||||
Non-GAAP net sales | $ | 482,372 | $ | 416,047 | $ | 1,437,833 | $ | 1,176,227 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Gross profit, as reported | $ | 282,720 | $ | 200,428 | $ | 838,157 | $ | 599,420 | |||||||
Distributor revenue recognition adjustment | - | - | - | 15,868 | |||||||||||
Share-based compensation expense | 1,841 | 1,834 | 5,674 | 5,758 | |||||||||||
Acquisition-related acquired inventory valuation and other costs | 42 | 30,808 | 42 | 54,958 | |||||||||||
Non-GAAP gross profit | $ | 284,603 | $ | 233,070 | $ | 843,873 | $ | 676,004 | |||||||
Non-GAAP gross profit percentage | 59.0 | % | 56.0 | % | 58.7 | % | 57.5 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Research and development expenses, as reported | $ | 76,341 | $ | 71,377 | $ | 227,680 | $ | 184,285 | |||||||
Share-based compensation expense | (6,141 | ) | (6,172 | ) | (18,762 | ) | (16,562 | ) | |||||||
Acquisition-related costs | - | - | - | (17 | ) | ||||||||||
Non-GAAP research and development expenses | $ | 70,200 | $ | 65,205 | $ | 208,918 | $ | 167,706 | |||||||
Non-GAAP research and development expenses as a percentage of net sales | 14.6 | % | 15.7 | % | 14.5 | % | 14.3 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Selling, general and administrative expenses, as reported | $ | 66,856 | $ | 69,368 | $ | 201,934 | $ | 196,727 | |||||||
Share-based compensation expense | (5,737 | ) | (6,114 | ) | (16,939 | ) | (22,339 | ) | |||||||
Acquisition-related costs | (503 | ) | (1,035 | ) | (1,774 | ) | (6,054 | ) | |||||||
Non-GAAP selling, general and administrative expenses | $ | 60,616 | $ | 62,219 | $ | 183,221 | $ | 168,334 | |||||||
Non-GAAP selling, general and administrative expenses as a percentage of net sales | 12.6 | % | 15.0 | % | 12.7 | % | 14.3 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Operating expenses, as reported | $ | 165,802 | $ | 183,015 | $ | 505,330 | $ | 477,580 | |||||||
Share-based compensation expense | (11,878 | ) | (12,286 | ) | (35,701 | ) | (38,901 | ) | |||||||
Acquisition-related costs | (503 | ) | (1,035 | ) | (1,774 | ) | (6,071 | ) | |||||||
Amortization of acquired intangible assets | (21,804 | ) | (39,711 | ) | (73,225 | ) | (71,615 | ) | |||||||
Special charges | (801 | ) | (2,559 | ) | (2,491 | ) | (24,953 | ) | |||||||
Non-GAAP operating expenses | $ | 130,816 | $ | 127,424 | $ | 392,139 | $ | 336,040 | |||||||
Non-GAAP operating expenses as a percentage of net sales | 27.1 | % | 30.6 | % | 27.3 | % | 28.6 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Operating income, as reported | $ | 116,918 | $ | 17,413 | $ | 332,827 | $ | 121,840 | |||||||
Distributor revenue recognition adjustment | - | - | - | 15,868 | |||||||||||
Share-based compensation expense | 13,719 | 14,120 | 41,375 | 44,659 | |||||||||||
Acquisition-related acquired inventory valuation and other costs | 545 | 31,843 | 1,816 | 61,029 | |||||||||||
Amortization of acquired intangible assets | 21,804 | 39,711 | 73,225 | 71,615 | |||||||||||
Special charges | 801 | 2,559 | 2,491 | 24,953 | |||||||||||
Non-GAAP operating income | $ | 153,787 | $ | 105,646 | $ | 451,734 | $ | 339,964 | |||||||
Non-GAAP operating income as a percentage of net sales | 31.9 | % | 25.4 | % | 31.4 | % | 28.9 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Other expense, net, as reported | $ | (4,480 | ) | $ | (7,492 | ) | $ | (18,486 | ) | $ | (18,783 | ) | |||
Convertible debt non-cash interest expense | 2,286 | 2,089 | 6,682 | 6,106 | |||||||||||
Gain on shares of acquired company | (2,438 | ) | - | (2,438 | ) | - | |||||||||
Non-GAAP other expense, net | $ | (4,632 | ) | $ | (5,403 | ) | $ | (14,242 | ) | $ | (12,677 | ) | |||
Non-GAAP other expense, net, as a percentage of net sales | -1.0 | % | -1.3 | % | -1.0 | % | -1.1 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Income tax provision (benefit), as reported | $ | 7,187 | $ | (481 | ) | $ | 30,344 | $ | 34,976 | ||||||
Income tax rate, as reported | 6.4 | % | -5.0 | % | 9.7 | % | 34.1 | % | |||||||
Distributor revenue recognition adjustment | - | - | - | 3,404 | |||||||||||
Share-based compensation expense | 1,510 | 2,755 | 4,501 | 7,496 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs | 392 | 7,416 | 1,172 | 12,803 | |||||||||||
Special charges | 300 | 1,367 | 933 | 12,843 | |||||||||||
Convertible debt non-cash interest expense | 856 | 784 | 2,502 | 2,291 | |||||||||||
Non-recurring tax events | 6,172 | 3,645 | 8,167 | (26,071 | ) | ||||||||||
Non-GAAP income tax provision | $ | 16,417 | $ | 15,486 | $ | 47,619 | $ | 47,742 | |||||||
Non-GAAP income tax rate | 11.0 | % | 15.5 | % | 10.9 | % | 14.6 | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income, as reported | $ | 105,401 | $ | 10,173 | $ | 283,786 | $ | 67,699 | |||||||
Distributor revenue recognition adjustment, net of tax effect | - | - | - | 12,464 | |||||||||||
Share-based compensation expense, net of tax effect | 12,209 | 11,365 | 36,874 | 37,163 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect | 21,957 | 64,138 | 73,869 | 119,841 | |||||||||||
Special charges, net of tax effect | 501 | 1,192 | 1,558 | 12,110 | |||||||||||
Gain on shares of acquired company | (2,438 | ) | - | (2,438 | ) | - | |||||||||
Convertible debt non-cash interest expense, net of tax effect | 1,430 | 1,305 | 4,180 | 3,815 | |||||||||||
Non-recurring tax events | (6,172 | ) | (3,645 | ) | (8,167 | ) | 26,071 | ||||||||
Non-GAAP net income | $ | 132,888 | $ | 84,528 | $ | 389,662 | $ | 279,163 | |||||||
Non-GAAP net income as a percentage of net sales | 27.5 | % | 20.3 | % | 27.1 | % | 23.7 | % | |||||||
Diluted net income per share, as reported | $ | 0.48 | $ | 0.05 | $ | 1.31 | $ | 0.33 | |||||||
Non-GAAP diluted net income per share | $ | 0.61 | $ | 0.41 | $ | 1.81 | $ | 1.37 | |||||||
Diluted common shares outstanding, as reported | 219,089 | 204,405 | 215,943 | 204,553 | |||||||||||
Diluted common shares outstanding Non-GAAP | 218,371 | 204,123 | 215,251 | 204,231 |