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 Record Net Sales and Fourth Quarter and Fiscal Year 2014 Financial Results |
Dated: May 6, 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 Record Net Sales and Fourth Quarter and Fiscal Year 2014 Financial Results |
![]() | EXHIBIT 99.1 NEWS RELEASE INVESTOR RELATIONS CONTACT: J. Eric Bjornholt -- CFO..... (480) 792-7804 |
• | For Fiscal Year 2014: |
▪ | Record net sales of $1.931 billion, up 22.1% year-over-year |
▪ | On a non-GAAP basis: |
• | Gross margin of 58.8%; record operating income of $613.2 million; record net income of $531.0 million and 27.5% of net sales; record EPS of $2.45 per diluted share |
▪ | On a GAAP basis: |
• | Gross margin of 58.4%; operating income of $458.9 million; net income of $395.3 million and 20.5% of net sales; EPS of $1.82 per diluted share |
▪ | Record fiscal year net sales of total microcontrollers, 8-bit microcontrollers, 16-bit microcontrollers, 32-bit microcontrollers, analog products and licensing |
▪ | Record shipments of development systems |
• | For the quarter ending March 31, 2014: |
▪ | Record net sales of $493.4 million, up 14.7% year-over-year |
▪ | On a non-GAAP basis: gross margins of 59.3%; record operating income of $161.5 million; record net income of $141.3 million; and record EPS of 64 cents per diluted share. The first call published estimate for non-GAAP EPS was 61 cents. |
▪ | On a GAAP basis: gross margins of 58.9%; operating income of $126.0 million; net income of $111.5 million; and EPS of 50 cents per diluted share. There was no published first call estimate for GAAP EPS. |
▪ | Record quarterly net sales for total microcontrollers, 16-bit microcontrollers and 32-bit microcontrollers |
Three Months Ended March 31, 2014 | Year Ended March 31, 2014 | |||||||||||||||
(in millions, except earnings per diluted share and percentages) | GAAP | % of Net Sales | Non-GAAP1 | % of Net Sales | GAAP | % of Net Sales | Non-GAAP1 | % of Net Sales | ||||||||
Net Sales | $ | 493.4 | $ | 493.4 | $ | 1,931.2 | $ | 1,931.2 | ||||||||
Gross Margin | $ | 290.6 | 58.9% | $ | 292.6 | 59.3% | $ | 1,128.7 | 58.4% | $ | 1,136.4 | 58.8% | ||||
Operating Income | $ | 126.0 | 25.5% | $ | 161.5 | 32.7% | $ | 458.9 | 23.8% | $ | 613.2 | 31.8% | ||||
Other Expense including Gains/Losses on Equity Method Investments | $ | 7.8 | $ | 4.8 | $ | 26.5 | $ | 19.2 | ||||||||
Income Tax Expense | $ | 6.7 | $ | 15.4 | $ | 37.1 | $ | 63.0 | ||||||||
Net Income | $ | 111.5 | 22.6% | $ | 141.3 | 28.6% | $ | 395.3 | 20.5% | $ | 531.0 | 27.5% | ||||
Earnings per Diluted Share | 50 cents | 64 cents | $ | 1.82 | $ | 2.45 |
• | UBM Tech's (EETimes/EDN) 2014 Embedded Market Survey of design engineers once again ranked Microchip #1 for 8-, 16- and 32-bit MCUs, as well as DSPs, in answer to, "Which chip family would you consider for your next project?" (For respondents using processor speeds under 100 MHz.) |
• | Microchip continued to lead the industry in 8-bit microcontroller innovation, announcing three new families of 8-bit PIC® MCUs during the quarter. In fact, the Company won EE Live!/ESC’s annual Best of Show “Embeddy” award in the Hardware category, for its new PIC16F170X/171X MCUs. This family combines a large amount of integrated intelligent analog and Core Independent Peripherals, which can operate while the core is sleeping. More work can be done with this integrated peripheral hardware, which requires no code to operate, dramatically reducing current consumption, cost, board space and memory size. The end result is substantially lower development and system costs for a broad range of applications, in markets such as consumer, portable medical, LED lighting, battery charging, power supplies and motor control. |
• | The peripheral-rich, low pin count PIC16(L)F161X family further expands Microchip’s Core Independent Peripheral offerings, which offload timing-critical and core-intensive tasks from the CPU, allowing it to focus on other application tasks. Additionally, this family integrates fault-detecting hardware features to assist engineers in developing safety-critical applications. |
• | The PIC12(L)F157X 8-bit MCU family features multiple 16-bit PWMs with an assortment of analog peripherals and serial communications in an 8-pin package. These MCUs deliver three full-featured 16-bit PWMs with independent timers, for applications where high resolution is needed, such as LED lighting, stepper motors, battery charging and other general-purpose applications. |
• | To make it even easier for developers to create complex designs using its 16-bit dsPIC30 and dsPIC33 digital signal controllers (DSCs), such as sophisticated motor-control systems, Microchip updated its MPLAB® Device Blocks for Simulink® with multi-rate and interrupt capabilities. This software provides a set of user interfaces to MathWorks’ Simulink graphical environment for simulation and model-based design, where code for the application is generated, compiled and loaded onto a target dsPIC® DSC in a single, one-click step. |
• | Microchip also expanded its very broad Analog & Interface portfolio with two new device families for the growing energy-measurement market, as well as a new motor driver. The MCP39F501 power-monitoring IC offers high-accuracy signal acquisition and power calculations, providing a complete power-monitor solution for consumer, commercial and industrial products. |
• | The MCP3913 and MCP3914 energy-measurement Analog Front Ends (AFEs) offer industry-leading accuracy for three-phase smart meters and multiple-load power monitoring applications. As the energy-metering infrastructure is being upgraded worldwide, designers are demanding increased AFE accuracy, performance and flexibility to develop the latest generation of smart meters. These features are also required by the designers of advanced power-monitoring systems for applications such as server power supplies and power distribution units, uninterruptible power supplies, smart power strips and data-acquisition products in the industrial and commercial markets. |
• | The MCP8063 is a highly integrated, cost-effective, automotive AEC-Q100-qualified motor driver that delivers superior performance in a small, 8-pin, 4x4 mm DFN package. It is also the world’s first to combine all of those features with 1.5A peak phase current for the 180-degree sinusoidal drive of a variety of three-phase brushless DC motor and fan applications. These features are ideal for a broad range of motor applications in markets such as the automotive, IT, industrial and home-appliance sectors, which are faced with increasing regulatory and consumer demands for continued reductions in cost, space, noise and power consumption; with better performance and safety. |
• | To enable the continued proliferation of modern user interfaces in embedded systems, Microchip introduced the new MTCH6102 family of projected-capacitive touch controllers with the industry’s lowest power consumption. These turnkey controllers make it easy for designers to add contemporary touch and gesture interfaces in cost-sensitive applications. |
• | Microchip also grew its portfolio of the world’s most reliable memory, with the 34AA04 Serial Presence Detect (SPD) EEPROM. This device is designed to work with the next generation of Double Data Rate 4 (DDR4) SDRAM modules used in high-speed PCs and laptops, while also supporting the older DDR2/3 platforms. |
Microchip Guidance - Non-GAAP1 | |
Net Sales | $519.8 million to $534.6 million |
Gross Margin3 | 59.3% to 59.5% |
Operating Expenses3 | 26.6% to 27% |
Other Income (Expense) | ($6.9) million |
Tax rate | 10.2% to 10.6% |
Net Income | $143.7 million to $151.7 million |
Diluted Common Shares Outstanding2 | 224 million shares |
Earnings per Diluted Share2 | 64 cents to 68 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 3 under the “Use of Non-GAAP Financial Measures” section of this release. |
• | Excluding the Supertex acquisition, Microchip’s inventory days at June 30, 2014 are expected to be reduced to between 107 days and 111 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. |
• | Excluding Supertex, capital expenditures for the quarter ending June 30, 2014 are expected to be approximately $40 million and capital expenditures for all of fiscal year 2015 are anticipated to be approximately $125 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. |
• | Excluding Supertex, we expect net cash generation during the June quarter of $140 million to $160 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 other general and administrative expenses associated with acquisitions), non-cash interest expense on our convertible debentures, gains on strategic investments, the related income tax implications of these items and non-recurring tax events. Our non-GAAP net sales reflect revenue from product in the acquired companies' distribution channel at the acquisition date that is not included in GAAP net sales. |
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 June 2014 quarter of $48 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; costs of wafers from foundries; 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 March 31, | Twelve Months Ended March 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net sales | $ | 493,384 | $ | 430,144 | $ | 1,931,217 | $ | 1,581,623 | ||||||||
Cost of sales | 202,798 | 191,105 | 802,474 | 743,164 | ||||||||||||
Gross profit | 290,586 | 239,039 | 1,128,743 | 838,459 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 77,363 | 70,438 | 305,043 | 254,723 | ||||||||||||
Selling, general and administrative | 65,344 | 64,744 | 267,278 | 261,471 | ||||||||||||
Amortization of acquired intangible assets | 21,309 | 39,922 | 94,534 | 111,537 | ||||||||||||
Special charges | 533 | 7,222 | 3,024 | 32,175 | ||||||||||||
164,549 | 182,326 | 669,879 | 659,906 | |||||||||||||
Operating income | 126,037 | 56,713 | 458,864 | 178,553 | ||||||||||||
Gains (losses) on equity method investments | 34 | (235 | ) | (177 | ) | (617 | ) | |||||||||
Other expense, net | (7,847 | ) | (6,976 | ) | (26,333 | ) | (25,759 | ) | ||||||||
Income before income taxes | 118,224 | 49,502 | 432,354 | 152,177 | ||||||||||||
Income tax provision (benefit) | 6,729 | (10,188 | ) | 37,073 | 24,788 | |||||||||||
Net income | $ | 111,495 | $ | 59,690 | $ | 395,281 | $ | 127,389 | ||||||||
Basic net income per common share | $ | 0.56 | $ | 0.30 | $ | 1.99 | $ | 0.65 | ||||||||
Diluted net income per common share | $ | 0.50 | $ | 0.28 | $ | 1.82 | $ | 0.62 | ||||||||
Basic common shares outstanding | 199,630 | 195,908 | 198,291 | 194,595 | ||||||||||||
Diluted common shares outstanding | 222,689 | 209,446 | 217,630 | 205,776 | ||||||||||||
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | |||||||||
ASSETS | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
(Unaudited) | |||||||||
Cash and short-term investments | $ | 1,344,785 | $ | 1,578,597 | |||||
Accounts receivable, net | 242,405 | 229,955 | |||||||
Inventories | 262,725 | 242,334 | |||||||
Other current assets | 119,484 | 185,484 | |||||||
Total current assets | 1,969,399 | 2,236,370 | |||||||
Property, plant & equipment, net | 531,967 | 514,544 | |||||||
Long-term investments | 798,712 | 257,450 | |||||||
Other assets | 767,552 | 843,041 | |||||||
Total assets | $ | 4,067,630 | $ | 3,851,405 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Accounts payable and other current liabilities | $ | 170,781 | $ | 202,659 | |||||
Short-term borrowings | 17,500 | - | |||||||
Deferred income on shipments to distributors | 147,798 | 138,952 | |||||||
Total current liabilities | 336,079 | 341,611 | |||||||
Long-term line of credit | 300,000 | 620,000 | |||||||
Long-term borrowings, net | 331,385 | - | |||||||
Convertible debentures | 371,873 | 363,385 | |||||||
Long-term income tax payable | 179,966 | 182,723 | |||||||
Deferred tax liability | 375,316 | 388,250 | |||||||
Other long-term liabilities | 37,550 | 21,966 | |||||||
Stockholders’ equity | 2,135,461 | 1,933,470 | |||||||
Total liabilities and stockholders’ equity | $ | 4,067,630 | $ | 3,851,405 |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net sales, as reported | $ | 493,384 | $ | 430,144 | $ | 1,931,217 | $ | 1,581,623 | |||||||
Distributor revenue recognition adjustment | - | - | - | 24,748 | |||||||||||
Non-GAAP net sales | $ | 493,384 | $ | 430,144 | $ | 1,931,217 | $ | 1,606,371 |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Gross profit, as reported | $ | 290,586 | $ | 239,039 | $ | 1,128,743 | $ | 838,459 | |||||||
Distributor revenue recognition adjustment | - | - | - | 15,868 | |||||||||||
Share-based compensation expense | 1,666 | 2,476 | 7,340 | 8,234 | |||||||||||
Acquisition-related acquired inventory valuation and other costs | 320 | 1,083 | 362 | 56,041 | |||||||||||
Non-GAAP gross profit | $ | 292,572 | $ | 242,598 | $ | 1,136,445 | $ | 918,602 | |||||||
Non-GAAP gross profit percentage | 59.3 | % | 56.4 | % | 58.8 | % | 57.2 | % |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Research and development expenses, as reported | $ | 77,363 | $ | 70,438 | $ | 305,043 | $ | 254,723 | |||||||
Share-based compensation expense | (5,792 | ) | (5,616 | ) | (24,554 | ) | (22,178 | ) | |||||||
Acquisition-related costs | - | - | - | (17 | ) | ||||||||||
Non-GAAP research and development expenses | $ | 71,571 | $ | 64,822 | $ | 280,489 | $ | 232,528 | |||||||
Non-GAAP research and development expenses as a percentage of net sales | 14.5 | % | 15.1 | % | 14.5 | % | 14.5 | % |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Selling, general and administrative expenses, as reported | $ | 65,344 | $ | 64,744 | $ | 267,278 | $ | 261,471 | |||||||
Share-based compensation expense | (4,954 | ) | (5,264 | ) | (21,893 | ) | (27,603 | ) | |||||||
Acquisition-related costs | (880 | ) | (1,248 | ) | (2,654 | ) | (7,302 | ) | |||||||
Non-GAAP selling, general and administrative expenses | $ | 59,510 | $ | 58,232 | $ | 242,731 | $ | 226,566 | |||||||
Non-GAAP selling, general and administrative expenses as a percentage of net sales | 12.1 | % | 13.5 | % | 12.6 | % | 14.1 | % |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating expenses, as reported | $ | 164,549 | $ | 182,326 | $ | 669,879 | $ | 659,906 | |||||||
Share-based compensation expense | (10,746 | ) | (10,880 | ) | (46,447 | ) | (49,781 | ) | |||||||
Acquisition-related costs | (880 | ) | (1,248 | ) | (2,654 | ) | (7,319 | ) | |||||||
Amortization of acquired intangible assets | (21,309 | ) | (39,922 | ) | (94,534 | ) | (111,537 | ) | |||||||
Special charges | (533 | ) | (7,222 | ) | (3,024 | ) | (32,175 | ) | |||||||
Non-GAAP operating expenses | $ | 131,081 | $ | 123,054 | $ | 523,220 | $ | 459,094 | |||||||
Non-GAAP operating expenses as a percentage of net sales | 26.6 | % | 28.6 | % | 27.1 | % | 28.6 | % |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating income, as reported | $ | 126,037 | $ | 56,713 | $ | 458,864 | $ | 178,553 | |||||||
Distributor revenue recognition adjustment | - | - | - | 15,868 | |||||||||||
Share-based compensation expense | 12,412 | 13,356 | 53,787 | 58,015 | |||||||||||
Acquisition-related acquired inventory valuation and other costs | 1,200 | 2,331 | 3,016 | 63,360 | |||||||||||
Amortization of acquired intangible assets | 21,309 | 39,922 | 94,534 | 111,537 | |||||||||||
Special charges | 533 | 7,222 | 3,024 | 32,175 | |||||||||||
Non-GAAP operating income | $ | 161,491 | $ | 119,544 | $ | 613,225 | $ | 459,508 | |||||||
Non-GAAP operating income as a percentage of net sales | 32.7 | % | 27.8 | % | 31.8 | % | 28.6 | % |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Other expense, net, as reported | $ | (7,847 | ) | $ | (6,976 | ) | $ | (26,333 | ) | $ | (25,759 | ) | |||
Convertible debt non-cash interest expense | 2,288 | 2,091 | 8,970 | 8,197 | |||||||||||
Gain on shares of acquired company | - | - | (2,438 | ) | - | ||||||||||
Impairment on non-marketable equity investment | 746 | - | 746 | - | |||||||||||
Non-GAAP other expense, net | $ | (4,813 | ) | $ | (4,885 | ) | $ | (19,055 | ) | $ | (17,562 | ) | |||
Non-GAAP other expense, net, as a percentage of net sales | -1.0 | % | -1.1 | % | -1.0 | % | -1.1 | % |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Income tax provision (benefit), as reported | $ | 6,729 | $ | (10,188 | ) | $ | 37,073 | $ | 24,788 | ||||||
Income tax rate, as reported | 5.7 | % | -20.6 | % | 8.6 | % | 16.3 | % | |||||||
Distributor revenue recognition adjustment | - | - | - | 3,404 | |||||||||||
Share-based compensation expense | 1,221 | 1,542 | 5,722 | 9,038 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs | 359 | 727 | 1,531 | 13,530 | |||||||||||
Special charges | 200 | 2,708 | 1,133 | 15,551 | |||||||||||
Impairment on non-marketable equity investment | 279 | - | 279 | - | |||||||||||
Convertible debt non-cash interest expense | 856 | 784 | 3,358 | 3,075 | |||||||||||
Non-recurring tax events | 5,769 | 9,539 | 13,936 | (16,532 | ) | ||||||||||
Non-GAAP income tax provision | $ | 15,413 | $ | 5,112 | $ | 63,032 | $ | 52,854 | |||||||
Non-GAAP income tax rate | 9.8 | % | 4.5 | % | 10.6 | % | 12.0 | % |
Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income, as reported | $ | 111,495 | $ | 59,690 | $ | 395,281 | $ | 127,389 | |||||||
Distributor revenue recognition adjustment, net of tax effect | - | - | - | 12,464 | |||||||||||
Share-based compensation expense, net of tax effect | 11,191 | 11,814 | 48,065 | 48,977 | |||||||||||
Acquisition-related acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect | 22,150 | 41,526 | 96,019 | 161,367 | |||||||||||
Special charges, net of tax effect | 333 | 4,514 | 1,891 | 16,624 | |||||||||||
Gain on shares of acquired company | - | - | (2,438 | ) | - | ||||||||||
Impairment on non-marketable equity investment, net of tax effect | 467 | - | 467 | - | |||||||||||
Convertible debt non-cash interest expense, net of tax effect | 1,432 | 1,307 | 5,612 | 5,122 | |||||||||||
Non-recurring tax events | (5,769 | ) | (9,539 | ) | (13,936 | ) | 16,532 | ||||||||
Non-GAAP net income | $ | 141,299 | $ | 109,312 | $ | 530,961 | $ | 388,475 | |||||||
Non-GAAP net income as a percentage of net sales | 28.6 | % | 25.4 | % | 27.5 | % | 24.2 | % | |||||||
Diluted net income per share, as reported | $ | 0.50 | $ | 0.28 | $ | 1.82 | $ | 0.62 | |||||||
Non-GAAP diluted net income per share | $ | 0.64 | $ | 0.52 | $ | 2.45 | $ | 1.89 | |||||||
Diluted common shares outstanding, as reported | 222,689 | 209,446 | 217,630 | 205,776 | |||||||||||
Diluted common shares outstanding Non-GAAP | 221,947 | 209,237 | 216,925 | 205,483 |