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 Non-GAAP Earnings per Share for First Quarter Fiscal Year 2016 |
Dated: August 3, 2015 | 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 Non-GAAP Earnings per Share for First Quarter Fiscal Year 2016 |
![]() | EXHIBIT 99.1 NEWS RELEASE INVESTOR RELATIONS CONTACT: J. Eric Bjornholt -- CFO..... (480) 792-7804 |
• | Net sales of $534.0 million. |
• | On a non-GAAP basis: gross margins of 58.3%; operating income of $174.3 million; net income of $148.9 million and record EPS of 69 cents per diluted share. |
• | On a GAAP basis: gross margins of 57.9%; operating income of $121.3 million; net income of $130.7 million; and EPS of 60 cents per diluted share. |
• | Record quarterly dividend declared of 35.8 cents per share. |
• | Completed acquisition of Micrel Incorporated. |
(in millions, except earnings per diluted share and percentages) | Three months ended June 30, 2015 | |||
GAAP | % of Net Sales | Non-GAAP1 | % of Net Sales | |
Net Sales | $534.0 | $534.0 | ||
Gross Margin | $309.0 | 57.9% | $311.2 | 58.3% |
Operating Income | $121.3 | 22.7% | $174.3 | 32.6% |
Other Expense | $(1.8) | $(6.0) | ||
Income Tax Provision (Benefit) | $(10.9) | $19.2 | ||
Net Income Before Noncontrolling Interest | $130.5 | $149.1 | ||
Net Income (Loss) from Noncontrolling Interest | $(0.2) | $0.2 | ||
Net Income Attributable to Microchip | $130.7 | 24.5% | $148.9 | 27.9% |
Earnings per Diluted Share | 60 Cents | 69 Cents |
• | Microchip reclaimed the #1 position in 8-bit microcontroller revenue in 2014, while growing its market share in 8, 16 and 32-bit MCUs and breaking into the top 10 for 32-bit MCUs, according to Gartner. Microchip has continued to innovate across all of its 8-bit, 16-bit and 32-bit product lines. |
• | As an example of that innovation, Microchip continued to expand its offering of 8-bit PIC® microcontrollers with two new families that integrate Core Independent Peripherals (CIPs), which combine to perform functions autonomously, without the core. Because these functions are deterministically and reliably performed in hardware instead of software, CIPs enable system performance that is far beyond typical 8-bit MCUs while simplifying the design experience and reducing memory cost. |
• | Microchip’s MOST® technology devices continued to win new designs in automotive infotainment networks, with fresh deployments in Volvo's XC90 and Kia's K900 models. More than 170 million MOST devices have been installed in 184 car models, since 2001. Additionally, Microchip recently shipped the 25 millionth device |
• | On the technology side, designers using the Automotive Open System Architecture (AUTOSAR) to develop and reuse their in-vehicle software can now connect their systems to not only networking technologies such as CAN and LIN, but also to MOST networking technology. This means that Microchip's MOST devices can be used for cross-domain communication in an AUTOSAR system, such as Advanced Driver Assistance Systems (ADAS), which simplifies automotive networking and diagnostics. |
• | Microchip subsidiary Silicon Storage Technology (SST) further strengthened its market leadership in embedded Flash-based devices, by expanding its partnership with GLOBALFOUNDRIES to include an automotive-grade 55nm embedded SuperFlash® memory platform. To date, more than 50 billion devices have shipped with SST's SuperFlash technology. |
• | In the growing digital power market, Microchip introduced its third-generation 16-bit dsPIC33EP "GS" family, which features higher performance, more integration, lower power consumption, smaller footprints and the unique Live Update capability. |
• | For analog power designs, Microchip announced the world's first high-side current/power sensor to feature both a configurable analog output and a 2-wire digital bus, which maximizes data and diagnostic reporting while minimizing data latency. Additionally, the Company added a power-monitoring IC with advanced features for high-accuracy power measurement in commercial and industrial designs. |
• | In other analog news, Microchip expanded its high-speed analog-to-digital converter portfolio with high-integration, low-power 14-/12-bit, 200 Msps stand-alone ADCs. These devices are targeted for applications in the communications markets, such as base stations, test equipment, and IF receivers, among others. |
• | Microchip also unveiled the world's first USB3.0 Smart Hubs, which enable host and device port swapping, I/O bridging and various other serial communication interfaces. These Smart Hubs simplify system design, reduce board area, are USB-IF logo certified and deliver Microchip's proven USB hub interoperability for a wide range of applications in the computing, embedded, medical, industrial and networking markets. |
• | In the high-growth area of human interface, Microchip expanded its portfolio of projected-capacitive touch screen controllers with a noise-robust, advanced multi-touch and gesture device that supports screens up to 10". It provides multi-touch coordinates as well as a readymade multi-finger surface gesture suite that brings modern user-interface elements-such as pinch and zoom, multi-finger scrolling, and swipes-to any embedded design, with minimal host requirements. |
• | To ease the development of consumer audio products with its 32-bit MCUs, Microchip introduced the PIC32 Harmony Software Decoder Framework and Microsoft WMA Decoder Library. Example applications include audio docks, automotive head units and home-audio platforms. |
Microchip Consolidated Guidance - Non-GAAP1 | |
Net Sales | $532 million to $569 million |
Gross Margin2 | 57.6% to 57.8% |
Operating Expenses | 27.7% to 28.9% |
Other Expense | $7.9 million |
Income Tax Expense | 11.1% to 12.1% |
Net Income | $127.3 million to $145.4 million |
Diluted Common Shares Outstanding3 | 220 million shares |
Earnings per Diluted Share3 | 58 cents to 66 cents |
1 | See the "Use of Non-GAAP Financial Measures" section of this release. |
2 | See Footnote 2 under the "Use of Non-GAAP Financial Measures" section of this release. |
3 | Earnings per share have been calculated based on the diluted shares outstanding of Microchip on a consolidated basis. |
• | There is about 1.5 cents of non-GAAP earnings per diluted share dilution reflected in the table above from the Micrel transaction. |
• | Excluding the Micrel acquisition and any purchase accounting impacts from the Micrel acquisition, Microchip's inventory days at September 30, 2015 are expected to increase by 2 to 17 days to be between 125 days and 140 days. |
• | Capital expenditures for the quarter ending September 30, 2015 are expected to be approximately $35 million. We have brought down the capital expenditures for all of fiscal year 2016 to be approximately $125 million. We are continuing to invest in the equipment needed to support the growth of our production capabilities for fast growing new products and technologies. |
• | Excluding the Micrel acquisition, we expect net cash generation during the September quarter of $100 million to $120 million prior to the dividend payment, changes in borrowing levels, 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, and legal and other general and administrative expenses associated with acquisitions), gains from equity securities and equity method investment, non-cash interest expense on our convertible debentures, the related income tax implications of these items and non-recurring tax events. Our non-GAAP net sales outlook for the September 2015 quarter reflects revenue from the sell-through of products from Micrel's distributors that the distributors own as of the acquisition date that is not recognized for GAAP purposes. We believe that our disclosure of non-GAAP net sales provides investors with information regarding the actual end market demand for our products. |
2 | Generally, gross margin fluctuates over time, driven primarily by the mix of microcontrollers, mixed-signal products, 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. |
3 | 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 September 2015 quarter of $43 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). The diluted common shares outstanding number presented in the guidance table above includes the impact of the 8.6 million shares Microchip issued in the Micrel transaction but excludes any shares that Microchip may acquire under its share repurchase program in the September 2015 quarter. |
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(in thousands except per share amounts) | ||||||||
(Unaudited) | ||||||||
Three months ended | ||||||||
June 30, | ||||||||
2015 | 2014 | |||||||
Net sales | $ | 533,952 | $ | 528,876 | ||||
Cost of sales | 224,935 | 222,357 | ||||||
Gross profit | 309,017 | 306,519 | ||||||
Operating expenses: | ||||||||
Research and development | 84,680 | 84,370 | ||||||
Selling, general and administrative | 66,849 | 69,255 | ||||||
Amortization of acquired intangible assets | 34,612 | 36,644 | ||||||
Special charges, net | 1,557 | 304 | ||||||
187,698 | 190,573 | |||||||
Operating income | 121,319 | 115,946 | ||||||
Losses on equity method investments | (177 | ) | (32 | ) | ||||
Other expense, net | (1,577 | ) | (8,923 | ) | ||||
Income before income taxes | 119,565 | 106,991 | ||||||
Income tax (benefit) provision | (10,895 | ) | 17,082 | |||||
Net income | 130,460 | 89,909 | ||||||
Less: Net loss attributable to noncontrolling interests | 207 | — | ||||||
Net income attributable to Microchip Technology | $ | 130,667 | $ | 89,909 | ||||
Basic net income per common share attributable to Microchip Technology stockholders | $ | 0.65 | $ | 0.45 | ||||
Diluted net income per common share attributable to Microchip Technology stockholders | $ | 0.60 | $ | 0.40 | ||||
Basic common shares outstanding | 202,232 | 200,187 | ||||||
Diluted common shares outstanding | 216,767 | 224,527 | ||||||
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | |||||||
ASSETS | |||||||
June 30, | March 31, | ||||||
2015 | 2015 | ||||||
(Unaudited) | |||||||
Cash and short-term investments | $ | 1,532,550 | $ | 1,958,869 | |||
Accounts receivable, net | 277,033 | 273,937 | |||||
Inventories | 303,690 | 279,456 | |||||
Deferred tax assets | 71,045 | 71,045 | |||||
Assets held for sale | 13,669 | 13,989 | |||||
Other current assets | 57,627 | 67,321 | |||||
Total current assets | 2,255,614 | 2,664,617 | |||||
Property, plant & equipment, net | 595,247 | 581,572 | |||||
Long-term investments | 898,024 | 383,326 | |||||
Other assets | 1,108,100 | 1,151,198 | |||||
Total assets | $ | 4,856,985 | $ | 4,780,713 | |||
LIABILITIES AND EQUITY | |||||||
Accounts payable and other accrued liabilities | $ | 204,779 | $ | 187,844 | |||
Deferred income on shipments to distributors | 167,529 | 166,128 | |||||
Total current liabilities | 372,308 | 353,972 | |||||
Long-term line of credit | 496,952 | 461,952 | |||||
Senior convertible debentures | 1,169,583 | 1,174,036 | |||||
Junior convertible debentures | 192,162 | 190,870 | |||||
Long-term income tax payable | 98,001 | 114,336 | |||||
Long-term deferred tax liability | 380,403 | 381,192 | |||||
Other long-term liabilities | 48,694 | 43,329 | |||||
Microchip Technology stockholders' equity | 2,098,882 | 2,044,654 | |||||
Noncontrolling interests | — | 16,372 | |||||
Total equity | 2,098,882 | 2,061,026 | |||||
Total liabilities and equity | $ | 4,856,985 | $ | 4,780,713 |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Net sales, as reported | $ | 533,952 | $ | 528,876 | |||
Distributor revenue recognition adjustment | — | 2,469 | |||||
Non-GAAP net sales | $ | 533,952 | $ | 531,345 |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Gross profit, as reported | $ | 309,017 | $ | 306,519 | |||
Distributor revenue recognition adjustment, net of product cost | — | 1,362 | |||||
Share-based compensation expense | 1,657 | 2,055 | |||||
Acquisition-related restructuring and acquired inventory valuation costs | 543 | 7,811 | |||||
Non-GAAP gross profit | $ | 311,217 | $ | 317,747 | |||
Non-GAAP gross profit percentage | 58.3 | % | 59.8 | % |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Research and development expenses, as reported | $ | 84,680 | $ | 84,370 | |||
Share-based compensation expense | (7,098 | ) | (6,309 | ) | |||
Non-GAAP research and development expenses | $ | 77,582 | $ | 78,061 | |||
Non-GAAP research and development expenses as a percentage of net sales | 14.5 | % | 14.7 | % |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Selling, general and administrative expenses, as reported | $ | 66,849 | $ | 69,255 | |||
Share-based compensation expense | (5,357 | ) | (4,957 | ) | |||
Acquisition-related costs | (2,174 | ) | (936 | ) | |||
Non-GAAP selling, general and administrative expenses | $ | 59,318 | $ | 63,362 | |||
Non-GAAP selling, general and administrative expenses as a percentage of net sales | 11.1 | % | 11.9 | % |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Operating expenses, as reported | $ | 187,698 | $ | 190,573 | |||
Share-based compensation expense | (12,455 | ) | (11,266 | ) | |||
Acquisition-related costs | (2,174 | ) | (936 | ) | |||
Amortization of acquired intangible assets | (34,612 | ) | (36,644 | ) | |||
Special charges, net | (1,557 | ) | (304 | ) | |||
Non-GAAP operating expenses | $ | 136,900 | $ | 141,423 | |||
Non-GAAP operating expenses as a percentage of net sales | 25.6 | % | 26.6 | % |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Operating income, as reported | $ | 121,319 | $ | 115,946 | |||
Distributor revenue recognition adjustment | — | 1,362 | |||||
Share-based compensation expense | 14,112 | 13,321 | |||||
Acquisition-related restructuring, acquired inventory valuation and other costs | 2,717 | 8,747 | |||||
Amortization of acquired intangible assets | 34,612 | 36,644 | |||||
Special charges, net | 1,557 | 304 | |||||
Non-GAAP operating income | $ | 174,317 | $ | 176,324 | |||
Non-GAAP operating income as a percentage of net sales | 32.6 | % | 33.2 | % |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Other expense, net, as reported | $ | (1,577 | ) | $ | (8,923 | ) | |
Gain on equity securities and equity method investment | (16,064 | ) | — | ||||
Non-cash other expense, net | 11,812 | 2,365 | |||||
Non-GAAP other expense, net | $ | (5,829 | ) | $ | (6,558 | ) | |
Non-GAAP other expense, net, as a percentage of net sales | (1.1 | )% | (1.2 | )% |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Income tax (benefit) provision, as reported | $ | (10,895 | ) | $ | 17,082 | ||
Income tax rate, as reported | (9.1 | )% | 16.0 | % | |||
Distributor revenue recognition adjustment | — | 375 | |||||
Share-based compensation expense | 3,532 | 1,420 | |||||
Acquisition-related restructuring, acquired inventory valuation costs, intangible asset amortization and other costs | 3,038 | 2,696 | |||||
Special charges, net | 415 | 113 | |||||
Non-cash other expense, net | 4,388 | 879 | |||||
Non-recurring tax events | 18,723 | (4,465 | ) | ||||
Non-GAAP income tax provision | $ | 19,201 | $ | 18,100 | |||
Non-GAAP income tax rate | 11.4 | % | 10.7 | % |
Three months ended | |||||||
June 30, | |||||||
2015 | 2014 | ||||||
Net income attributable to Microchip Technology, as reported | $ | 130,667 | $ | 89,909 | |||
Noncontrolling interests | (375 | ) | — | ||||
Distributor revenue recognition adjustment, net of tax effect | — | 987 | |||||
Share-based compensation expense, net of tax effect | 10,580 | 11,901 | |||||
Acquisition-related restructuring, acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect | 34,291 | 42,695 | |||||
Special charges, net of tax effect | 1,142 | 191 | |||||
Gain on equity securities and equity method investment | (16,064 | ) | — | ||||
Non-cash other expense, net of tax effect | 7,424 | 1,486 | |||||
Non-recurring tax events | (18,723 | ) | 4,465 | ||||
Non-GAAP net income attributable to Microchip Technology | $ | 148,942 | $ | 151,634 | |||
Non-GAAP net income attributable to Microchip Technology as a percentage of net sales | 27.9 | % | 28.5 | % | |||
Diluted net income per common share attributable to Microchip Technology stockholders, as reported | $ | 0.60 | $ | 0.40 | |||
Non-GAAP diluted net income per common share attributable to Microchip Technology stockholders | $ | 0.69 | $ | 0.68 | |||
Diluted common shares outstanding, as reported | 216,767 | 224,527 | |||||
Diluted common shares outstanding Non-GAAP | 216,253 | 223,889 |