-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CA8AfKBxJ/U4TOnIz+gxBxrTqZ1LGy4Fq0kTcwqsbrHdO12EBZjBtieTmVG3ROyc GsdyC1kqMBbV4E9d+xMJHA== 0001012870-00-001592.txt : 20000327 0001012870-00-001592.hdr.sgml : 20000327 ACCESSION NUMBER: 0001012870-00-001592 CONFORMED SUBMISSION TYPE: 424B4 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICROCHIP TECHNOLOGY INC CENTRAL INDEX KEY: 0000827054 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 860629024 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 424B4 SEC ACT: SEC FILE NUMBER: 333-92323 FILM NUMBER: 578522 BUSINESS ADDRESS: STREET 1: 2355 W CHANDLER BLVD CITY: CHANDLER STATE: AZ ZIP: 85224-6199 BUSINESS PHONE: 4807867200 MAIL ADDRESS: STREET 1: 2355 WEST CHANDLER BLVD CITY: CHANDLER STATE: AZ ZIP: 85224-6199 424B4 1 FINAL PROSPECTUS DATED 03/23/2000 Filed Pursuant to Rule 424(b)4 Registration No. 333-92323 1,650,000 Shares [MICROCHIP LOGO] Common Stock ------------ Our common stock is traded on The Nasdaq Stock Market's National Market under the symbol "MCHP." On March 22, 2000, the last reported sale price for our common stock on The Nasdaq National Market was $65.1875 per share. The underwriters have an option to purchase a maximum of 247,500 additional shares to cover over-allotments of shares. Investing in our common stock involves risks. See "Risk Factors" on page 4.
Underwriting Price to Discounts and Proceeds to Public Commissions Microchip ------------- ------------- ------------- Per Share................................... $63.50 $3.175 $60.325 Total....................................... $104,775,000 $5,238,750 $99,536,250
Delivery of the shares of common stock will be made on or about March 28, 2000. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Credit Suisse First Boston Merrill Lynch & Co. Prudential Volpe Technology a unit of Prudential Securities Robertson Stephens The date of this prospectus is March 23, 2000. ------------ TABLE OF CONTENTS
Page ---- Prospectus Summary............... 1 Risk Factors..................... 4 Dividend Policy.................. 8 Use of Proceeds.................. 8 Capitalization................... 9 Selected Consolidated Financial Data............................ 10
Page ---- Underwriting.................. 11 Notice to Canadian Residents.. 13 Where You Can Find More Information.................. 14 Legal Matters................. 15 Experts....................... 15
------------ You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terms such as may, will, should, expect, plan, intend, forecast, anticipate, believe, estimate, predict, potential, continue or the negative of these terms or other comparable terminology. The forward-looking statements contained in this prospectus involve known and unknown risks, uncertainties and situations that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. These factors include those listed under "Risk Factors" and elsewhere in this prospectus. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements. PROSPECTUS SUMMARY You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering and our consolidated financial statements and related notes appearing elsewhere in this prospectus or incorporated by reference into this prospectus. In this prospectus, "we," "us" and "our" each refers to Microchip Technology Incorporated and not to the underwriters. Microchip Technology Incorporated Overview of Our Business Our Products We develop and manufacture microcontrollers, application-specific standard products, referred to as ASSPs, and related memory products for high-volume embedded control applications. We market our products to the consumer, automotive, office automation, communications and industrial markets. We provide highly cost-effective embedded control products for a wide variety of applications and believe that our PIC(R) product family is a price/performance leader in the worldwide microcontroller market. Our embedded control products also offer the advantages of small size, low voltage operation and ease of development, enabling timely and cost-effective product integration by our customers. Our ASSP products include a variety of specialized integrated circuits, including our family of KEELOQ(R) security products for wireless communications. Our memory products are primarily comprised of serial electrically erasable programmable read-only memory, referred to as EEPROMs. Serial EEPROMs are used primarily to provide non-volatile memory storage in embedded control systems. Embedded control systems typically incorporate a microcontroller as the principal active, and sometimes sole, component. A microcontroller is a self- contained computer-on-a-chip consisting of a central processing unit, non- volatile program memory, random access memory for data storage and various input/output capabilities. In addition to the microcontroller, a complete embedded control system incorporates application-specific software and may include specialized peripheral device controllers and external non-volatile memory components, such as EEPROMs to store additional program software. Embedded control systems enable our customers to: . differentiate their products . replace less efficient electromechanical control devices . add product functionality, and . significantly reduce product cost. Embedded control solutions have been incorporated into thousands of products and subassemblies in a wide variety of markets worldwide, including: . automotive air bag systems . remote control devices . handheld tools . appliances . portable computers . cordless and cellular telephones . motor controls, and . security systems. 1 Our Strategy Our strategy is to provide embedded control solutions that combine time-to- market advantages with high performance and increased functionality. With our field programmable microcontrollers and easy-to-use development systems, customers can typically design and produce new products or new product features in a few days. In addition, our reduced instruction set computing, referred to as RISC, architecture provides faster performance than competing microcontrollers. Using advanced design and manufacturing technology, we can provide products that have some of the smallest package sizes and that operate at voltage levels and power requirements that are among the lowest in the embedded control industry. Our Customers We sell our products to a geographically diverse base of customers across a broad and growing range of market applications, reducing our dependence on any single industry, market or customer. We sell to more than 600 original equipment manufacturer, referred to as OEM, customers directly. We also sell to more than 20,000 other customers worldwide through our distributors. To date, we have sold more than 160,000 application development systems, providing a broad foundation for future microcontroller sales. Our Manufacturing Capabilities We design and fabricate wafers at our facilities in Chandler and Tempe, Arizona. We continue to transition products to smaller geometries and to larger wafer sizes to reduce future manufacturing costs. Our current manufacturing geometries range from 0.7 to 1.2 microns, with all new products produced on the smallest 0.7 micron process. We currently produce our products on 6-inch and 8- inch wafers, with all incremental production on the larger 8-inch wafers. The ownership of our manufacturing resources is an important component of our business strategy, enabling us to maintain a high level of manufacturing control and to be one of the lowest cost producers in the embedded control industry. Direct control over wafer fabrication also enables us to shorten our design and production cycles. We perform product packaging and testing at our facilities located near Bangkok, Thailand. We also use third-party assembly and test contractors in several Asian countries. Our executive offices are located at 2355 West Chandler Boulevard, Chandler, Arizona 85224-6199, and our telephone number is (480) 786-7200. Our web site address is www.microchip.com. Information contained on our web site should not be considered a part of this prospectus. The Offering The following information is based on the number of shares outstanding at December 31, 1999, excluding outstanding options to purchase 10,268,288 shares of common stock under our stock option plans and a warrant to purchase 450,000 shares of common stock. Common stock offered.............. 1,650,000 shares Common stock to be outstanding 78,169,871 shares after this offering.............. Use of proceeds................... We will use the proceeds from this offering to fund capital expansion activities. Nasdaq National Market symbol..... MCHP
Unless we indicate otherwise, the information in this prospectus assumes the underwriters will not exercise their over-allotment option and reflects a 3- for-2 split of our common stock effected on February 8, 2000. 2 SUMMARY CONSOLIDATED FINANCIAL DATA (in thousands, except per share data) The information in the as adjusted column included below is calculated to reflect the issuance of 1,650,000 shares of common stock offered under this prospectus at an offering price of $63.50 per share, after deducting the underwriter discounts and commissions and estimated expenses payable by us in connection with the offering.
Nine Months Ended Year Ended March 31, December 31, -------------------------- ----------------- 1997 1998 1999 1998 1999 -------- -------- -------- -------- -------- (unaudited) Statement of Operations Data: Net sales....................... $334,252 $396,894 $406,460 $303,436 $354,918 Operating income................ 71,057 86,445 70,156 67,272 96,800 Income before income taxes...... 69,493 88,167 68,611 66,014 97,910 Net income...................... 51,132 64,368 50,088 48,191 71,476 Basic net income per share...... $ 0.66 $ 0.80 $ 0.65 $ 0.62 $ 0.94 Diluted net income per share.... $ 0.62 $ 0.76 $ 0.62 $ 0.60 $ 0.88 Basic common shares outstanding.................... 77,354 80,364 76,704 77,133 76,355 Diluted common shares outstanding.................... 82,025 84,470 80,292 80,729 81,074
Quarter Ended ------------------------------------------------------------- June Sept. Sept. 30, 30, Dec. 31, Mar. 31, June 30, 30, Dec. 31, 1998 1998 1998 1999 1999 1999 1999 ------- -------- -------- -------- -------- -------- -------- (unaudited) Net sales............. $99,489 $103,780 $100,167 $103,024 $107,710 $118,021 $129,187 Operating income...... 17,488 24,664 25,120 2,884 27,582 33,449 35,769 Income before income taxes................ 17,499 24,059 24,456 2,597 27,669 34,026 36,215 Net income............ 12,774 17,563 17,854 1,897 20,199 24,846 26,437 Basic net income per share................ $ 0.16 $ 0.22 $ 0.24 $ 0.02 $ 0.27 $ 0.33 $ 0.35 Diluted net income per share................ $ 0.16 $ 0.22 $ 0.23 $ 0.02 $ 0.26 $ 0.31 $ 0.32 Basic common shares outstanding.......... 78,227 76,445 75,971 76,382 76,071 76,181 76,425 Diluted common shares outstanding.......... 81,729 80,037 79,788 80,048 80,681 80,874 81,516
December 31, 1999 ----------------- As Actual adjusted -------- -------- (unaudited) Balance Sheet Data: Working capital............................................. $ 76,503 $175,639 Total assets................................................ 632,131 731,267 Stockholders' equity........................................ 458,147 557,283
3 RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the following factors before deciding to purchase shares of our common stock. The trading price of our common stock could decline due to any of these risks, in which case you could lose all or part of your investment. In assessing these risks, you should also refer to the other information in this prospectus, including our financial statements and the related notes. This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as "anticipate," "believe," "plan," "expect," "future," "intend" and similar expressions to identify forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this prospectus. We disclaim any obligation to update information contained in any forward-looking statement. Our quarterly operating results may fluctuate due to factors that could reduce our net sales and profitability. Our quarterly operating results are affected by a wide variety of factors that could reduce our net sales and profitability, many of which are beyond our control. Some of the factors that may affect our operating results include: . the level of orders that are received and can be shipped in a quarter . market acceptance of both our products and our customers' products . customer order patterns and seasonality . availability of manufacturing capacity and fluctuations in manufacturing yield . the availability and cost of raw materials, equipment and other supplies, and . economic, political and other conditions in the worldwide markets served by us. We believe that period-to-period comparisons of our operating results are not necessarily meaningful and that you should not rely upon any comparisons as indications of future performance. In future periods our operating results may fall below the expectations of public market analysts and investors, which would likely have a negative effect on the price of our common stock. If we fail to maintain manufacturing yields as we increase our capacity, we may not be able to produce sufficient quantities of integrated circuits to meet customer demand, which would harm our business. The manufacture and assembly of integrated circuits, particularly non- volatile, erasable memory and logic devices such as those that we produce, are complex processes. These processes are sensitive to a wide variety of factors, including the level of contaminants in the manufacturing environment, impurities in the materials used and the performance of our fabrication personnel and equipment. As is typical in the semiconductor industry, we have from time to time experienced lower than anticipated manufacturing yields. Our operating results will suffer if we are unable to maintain yields at approximately current levels. We believe that expansion of our manufacturing capacity is important to enable us to respond to increased sales opportunities and maintain satisfactory delivery schedules. Our business could suffer if the expansion of manufacturing capacity is delayed or inefficiently implemented. Other companies in the industry have experienced difficulty in expanding manufacturing capacity, resulting in reduced yields or delays in product deliveries. We may experience manufacturing yield or delivery problems in the future, which could harm our operating results. 4 We depend on orders that are received and shipped in the same quarter and therefore have limited visibility of future product shipments. Our net sales in any given quarter depend upon a combination of orders received in that quarter for shipment in that quarter, which we refer to as turns orders, and shipments from backlog. If we do not achieve a sufficient level of turns orders in a particular quarter, our net sales and operating results will suffer. We have emphasized our ability to respond quickly to customer orders as part of our competitive strategy. From fiscal 1994 through fiscal 1999, this strategy resulted in customers placing orders with increasingly shorter delivery schedules. This had the effect of increasing turns orders as a portion of our business in any given quarter and reducing our visibility on future product shipments. The percentage of turns orders has decreased substantially for the first three quarters of fiscal 2000, but may return to higher levels in the future. Because turns orders are difficult to predict, increased levels of turns orders make our net sales more difficult to predict. Intense competition in our markets may lead to reduced sales of our products and reduced market share. The semiconductor industry is intensely competitive and has been characterized by price erosion and rapid technological change. We compete with major domestic and international semiconductor companies, many of which have greater market recognition and substantially greater financial, technical, marketing, distribution and other resources than we with which to pursue engineering, manufacturing, marketing and distribution of their products. Emerging companies are also increasing their participation in the market for embedded control applications. In addition, our ability to compete successfully depends on a number of factors both within and outside our control, including: . the quality, performance, reliability, features, ease of use, pricing and diversity of our products . the quality of our customer services and our ability to address the needs of our customers . our success in designing and manufacturing new products including those implementing new technologies . efficiency of production . the rate at which customers incorporate our products into their own products . product introductions by our competitors, and . protection of our products and processes by effective utilization of intellectual property laws. Historically, average selling prices in the semiconductor industry decrease over the life of any particular product. The overall average selling prices of our microcontroller products have remained relatively constant, while average selling prices of our memory products have declined over time. We have experienced, and expect to continue to experience, pricing pressure in certain microcontroller product lines, due primarily to competitive conditions. We may be unable to maintain average selling prices for our microcontroller or other products as a result of increased pricing pressure in the future. An increase in pricing pressure could force us to reduce our average selling prices, which would reduce our operating results. We may be unable to compete successfully in the future, which could harm our business. We may lose sales if our suppliers of raw materials and equipment fail to meet our needs. Our semiconductor manufacturing operations require raw materials and equipment that must meet exacting standards. We generally have more than one source for these supplies, but there are only a limited number of suppliers capable of delivering various raw materials and equipment that meet our standards. In addition, the raw materials and equipment necessary for our business could become more difficult to obtain as worldwide use of semiconductors increases. An interruption of any raw materials or equipment sources could harm our business. We have faced supply shortages from time to time in the past, and on occasion our suppliers have told us they need more time than expected to fill our orders. 5 Our business is highly dependent on selling through distributors. Distributors accounted for 63% of our net sales to customers for the nine months ended December 31, 1999. Our largest distributor accounted for 14% of our total net sales for the nine months ended December 31, 1999. Generally, we do not have long-term agreements with our distributors and our distributors may terminate their relationship with us with little or no advanced notice. The loss of, or a disruption in the operations of, one or more of our distributors could reduce our net sales in a given quarter and could result in an increase in inventory returns. Our operating results may be impacted by the wide fluctuations of supply and demand in the semiconductor industry. The semiconductor industry has been characterized by wide fluctuations of supply and demand. The industry has experienced significant economic downturns at various times, characterized by diminished product demand, accelerated erosion of average selling prices and production over-capacity. We have sought to reduce our exposure to industry cyclicality by selling products to a geographically diverse base of customers across a broad range of market applications. However, we may experience substantial period-to-period fluctuations in future operating results due to general industry or economic conditions. If we are unable to adequately protect or enforce our intellectual property rights, we could lose market share, incur costly litigation expenses or lose valuable assets. Our success depends in part on our ability to obtain patents, licenses and other intellectual property rights covering our products and manufacturing processes. To that end, we have acquired certain patents and patent licenses and intend to continue to seek patents on our inventions and manufacturing processes. The process of seeking patent protection can be long and expensive, and patents may not be issued from currently pending or future applications. In addition, our existing patents and any new patents that are issued may not be of sufficient scope or strength to provide meaningful protection or any commercial advantage to us. We may be subject to or may initiate interference proceedings in the U.S. Patent and Trademark Office, which can require significant financial and management resources. In addition, the laws of certain foreign countries do not protect our intellectual property rights to the same extent as the laws of the United States. As is typical in the semiconductor industry, we have from time to time received, and may in the future receive, communications alleging possible infringement of patents or other intellectual property rights of others. We investigate all infringement notices and respond as we believe is appropriate. Based on industry practice, we believe that in most cases we can obtain any necessary licenses or other rights on commercially reasonable terms, but we cannot assure that licenses would be available on acceptable terms, that litigation would not ensue or that damages for any past infringement would not be assessed. Litigation, which could result in substantial cost to us and diversion of management effort, may be necessary to enforce our patents or other intellectual property rights or to defend us against claimed infringement of the rights of others. The failure to obtain necessary licenses or other rights or litigation arising out of infringement claims could harm our business. We are highly dependent on foreign sales and operations, which exposes us to foreign political and economic risks. Sales to foreign customers account for a substantial portion of our net sales. During the nine months ended December 31, 1999, 68% of our net sales were made to foreign customers. We purchase a substantial portion of our raw materials and equipment from foreign suppliers. In addition, we own product packaging and testing facilities located near Bangkok, Thailand. We also use various third-party contractors located throughout Asia for a portion of our packaging and testing requirements. 6 Our reliance on foreign sales and operations exposes us to foreign political and economic risks, including: . political, social and economic instability . trade restrictions and changes in tariffs . import and export license requirements and restrictions . difficulties in staffing and managing international operations . disruptions in international transport or delivery . fluctuations in currency exchange rates . difficulties in collecting receivables, and . potentially adverse tax consequences. If any of these risks materialize, our foreign sales could decrease and our foreign operations could suffer. Various Asian countries recently experienced significant economic difficulties. These difficulties included business failures and a generally depressed business climate, particularly in the semiconductor industry. Because of our reliance on Asian facilities, any further economic crisis in Asia may harm our business. We are subject to stringent environmental regulation, which may force us to incur significant expenses. We must comply with many different federal, state and local governmental regulations related to the use, storage, discharge and disposal of toxic, volatile or otherwise hazardous chemicals used in our manufacturing process. Although we believe that our activities conform to presently applicable environmental regulations, our failure to comply with present or future regulations could result in the imposition of fines, suspension of production or a cessation of operation. Any regulation could require us to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. Any failure by us to control the use of or adequately restrict the discharge of hazardous substances could subject us to future liabilities. Environmental problems may occur that could subject us to future costs or liabilities. We must attract and retain qualified personnel to be successful, and competition for qualified personnel is intense in our market. Our success depends to a significant extent upon the efforts and abilities of our senior management, engineering and other personnel. The competition for qualified engineering and management personnel is intense. We may be unsuccessful in retaining our existing key personnel or in attracting and retaining additional key personnel that we require. The loss of the services of one or more of our key personnel or the inability to add key personnel could harm our business. We have no employment agreements with any member of our senior management team. The year 2000 problem may adversely affect us by causing failures in our internal systems or in systems used by our suppliers, distributors or customers. The year 2000 problem is the potential for system and processing failure of date-related data as a result of computer-controlled systems that use two digits rather than four to define a year in the date field. Many computer hardware systems and software applications could fail or create erroneous results unless corrected so that they can correctly process data related to the year 2000 and beyond. Failures by our internal systems, or by systems used by our suppliers, distributors or customers, could seriously harm our business. In particular, the infrastructure of foreign countries where our products are manufactured or our customers are located may be subject to disruption or failure as a result of the year 2000 problem. 7 The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors. The market price of our common stock has fluctuated significantly in the past and is likely to fluctuate in the future. The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors, many of which are beyond our control, including: . quarterly variations in our operating results and the operating results of other semiconductor companies . actual or anticipated announcements of technical innovations or new products by us or our competitors . changes in analysts' estimates of our financial performance or buy/sell recommendations . general conditions in the semiconductor industry, and . worldwide economic and financial conditions. In addition, the stock market has experienced significant price and volume fluctuations that have particularly affected the market prices for many high technology companies and that often have been unrelated to the operating performance of such companies. These broad market fluctuations and other factors may harm the market price of our common stock. Provisions in our charter may have anti-takeover effects. Provisions in our certificate of incorporation allow us to issue preferred stock with voting, liquidation and dividend rights senior to those of our common stock without the approval of our stockholders. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions or other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of our outstanding stock. We have no present plans to issue shares of preferred stock. DIVIDEND POLICY We have not paid any cash dividends since our inception. We currently anticipate that we will retain all of our future earnings for use in the expansion and operation of our business. Thus, we do not anticipate paying any cash dividends on our capital stock in the foreseeable future. USE OF PROCEEDS The net proceeds to us from the sale of the 1,650,000 shares being offered under this prospectus at a price per share of $63.50 will be approximately $99,136,250, or $114,066,688 if the underwriters' over-allotment option is exercised in full, after deducting the underwriter discounts and commissions and estimated expenses payable by us in connection with the offering. We intend to use the net proceeds to purchase additional wafer fabrication and final test equipment and to fund the construction of additional office building space. Pending these uses, we intend to invest the net proceeds in investment grade, interest bearing securities. 8 CAPITALIZATION The following table sets forth our capitalization as of December 31, 1999 and is based on the number of shares outstanding at that date, excluding outstanding options to purchase 10,268,288 shares of common stock under our stock option plans and a warrant to purchase 450,000 shares of common stock. The information in the as adjusted column included below is calculated to reflect the issuance of 1,650,000 shares of common stock offered under this prospectus at an offering price of $63.50 per share, after deducting the underwriter discounts and commissions and estimated expenses payable by us in connection with this offering.
December 31, 1999 --------------------- Actual As Adjusted -------- ----------- (in thousands) (unaudited) Long-term obligations, less current portion.............. $ -- $ -- -------- -------- Stockholders' equity: Preferred Stock, $0.001 par value; 5,000,000 shares authorized, no shares issued and outstanding.......... -- -- Common Stock, $0.001 par value, 100,000,000 shares authorized, 80,822,013 shares issued and 76,519,871 shares outstanding; 80,822,013 shares issued and 78,169,871 shares outstanding as adjusted............. 54 54 Additional paid-in capital............................. 217,403 290,388 Retained earnings...................................... 335,757 335,757 Less shares of common stock held in treasury........... (95,067) (68,916) -------- -------- Net stockholders' equity............................... 458,147 557,283 -------- -------- Total capitalization................................. $458,147 $557,283 ======== ========
9 SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the documents incorporated herein by reference. Our consolidated statement of operations data for each of the years in the five- year period ended March 31, 1999, and the balance sheet data as of March 31, 1999, 1998, 1997, 1996 and 1995 are derived from and are qualified by reference to our audited consolidated financial statements. The selected consolidated statement of operations data for the nine months ended December 31, 1998 and 1999 and the balance sheet data as of December 31, 1999 have been derived from unaudited consolidated financial statements which include, in the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the financial data for such periods. The results of operations for the nine months ended December 31, 1999, are not necessarily indicative of the results to be expected for any future interim or annual period.
Nine Months Ended Year Ended March 31, December 31, ----------------------------------------------- ------------------ 1995 1996 1997 1998 1999 1998 1999 -------- -------- -------- -------- -------- -------- -------- (in thousands, except per share data) (unaudited) Statement of Operations Data: Net sales............... $207,961 $285,888 $334,252 $396,894 $406,460 $303,436 $354,918 Cost of sales........... 101,039 137,708 167,330 199,538 203,574 152,043 171,953 -------- -------- -------- -------- -------- -------- -------- Gross profit............ 106,922 148,180 166,922 197,356 202,886 151,373 182,965 Research and development............ 20,746 27,517 32,073 38,362 40,787 31,098 33,089 Selling, general and administrative......... 36,975 48,903 56,248 67,549 63,006 47,503 55,476 Special charges......... -- 11,448 7,544 5,000 28,937 5,500 (2,400) -------- -------- -------- -------- -------- -------- -------- Operating income........ 49,201 60,312 71,057 86,445 70,156 67,272 86,165 Interest income (expense), net......... (881) (947) (1,852) 1,505 (2,210) (1,844) 598 Other, net.............. 808 569 288 217 665 586 512 -------- -------- -------- -------- -------- -------- -------- Income before income taxes.................. 49,128 59,934 69,493 88,167 68,611 66,014 97,910 Provision for income taxes.................. 12,829 16,182 18,361 23,799 18,523 17,823 26,434 -------- -------- -------- -------- -------- -------- -------- Net income.............. 36,299 43,752 51,132 64,368 50,088 48,191 71,476 ======== ======== ======== ======== ======== ======== ======== Basic net income per share.................. $ 0.51 $ 0.57 $ 0.66 $ 0.80 $ 0.65 $ 0.62 $ 0.94 ======== ======== ======== ======== ======== ======== ======== Diluted net income per share.................. $ 0.47 $ 0.53 $ 0.62 $ 0.76 $ 0.62 $ 0.60 $ 0.88 ======== ======== ======== ======== ======== ======== ======== Basic common shares outstanding............ 71,288 76,125 77,354 80,064 76,704 77,133 76,355 ======== ======== ======== ======== ======== ======== ======== Diluted common shares outstanding............ 77,462 81,800 82,025 84,470 80,292 80,729 81,074 ======== ======== ======== ======== ======== ======== ========
As of March 31, -------------------------------------------- December 31, 1995 1996 1997 1998 1999 1999 -------- -------- -------- -------- -------- ------------ (in thousands) (unaudited) Balance Sheet Data: Working capital........ $ 71,307 $ 55,855 $ 91,176 $ 55,171 $ 93,295 $ 76,503 Total assets........... 249,480 358,187 428,092 524,743 505,230 632,131 Long-term obligations, less current portion.. 15,340 33,250 5,999 8,768 25,000 -- Stockholders' equity... 161,825 219,632 316,584 367,308 358,797 458,147
10 UNDERWRITING Under the terms and subject to the conditions contained in an underwriting agreement dated March 23, 2000, we have agreed to sell to the underwriters named below, for whom Credit Suisse First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Prudential Securities Incorporated and FleetBoston Robertson Stephens Inc. are acting as representatives, the following respective numbers of shares of common stock:
Number of Underwriters Shares ------------ --------- Credit Suisse First Boston Corporation............................ 660,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated............................................. 297,000 Prudential Securities Incorporated................................ 297,000 FleetBoston Robertson Stephens Inc................................ 297,000 Morgan Stanley & Co. Incorporated................................. 82,500 William Blair & Company, L.L.C.................................... 16,500 --------- Total......................................................... 1,650,000 =========
The underwriting agreement provides that the underwriters are obligated to purchase all of the shares of common stock in the offering if any are purchased, other than those shares covered by the over-allotment option described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of the non-defaulting underwriters may be increased or the offering of common stock may be terminated. We have granted to the underwriters a 30-day option to purchase on a pro- rata basis up to 247,500 additional shares at the public offering price less the underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of common stock. The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a concession of $1.905 per share. The underwriters and selling group members may allow a discount of $0.10 per share on sales to other broker/dealers. After the public offering of the common stock, the public offering price and concession and discount to broker/dealers may be changed by the underwriters. The following table summarizes the compensation and estimated expenses we will pay:
Per Share Total ------------------- --------------------- Without With Without Over- Over- Over- With Over- allotment allotment allotment allotment --------- --------- ---------- ---------- Underwriting Discounts and Commissions paid by us......... $3.175 $3.175 $5,238,750 $6,024,563 Expenses payable by us.......... $ .242 $ .211 $ 400,000 $ 400,000
We and our directors and executive officers have agreed that we and they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or enter into a transaction which would have the same effect or publicly disclose the intention to make any such offer, sale, pledge or disposal without the prior written consent of Credit Suisse First Boston Corporation for a period of 90 days after the date of this prospectus, except that our executive officers and directors may collectively sell up to 375,000 shares of our common stock in the open market without regard to the restrictions described in this paragraph. We have agreed to indemnify the underwriters against liabilities under the Securities Act or contribute to payments which the underwriters may be required to make in that respect. 11 Our common stock is listed on The Nasdaq National Market under the symbol MCHP. The representatives may engage in over-allotment, stabilizing transactions, syndicate covering transactions, penalty bids and "passive" market making in accordance with Regulation M under the Securities Exchange Act of 1934. . Over-allotment involves syndicate sales in excess of the offering size, which creates a syndicate short position. . Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. . Syndicate covering transactions involve purchases of the shares of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. . Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the shares of common stock originally sold by that syndicate member is purchased in a syndicate covering transaction to cover syndicate short positions. . In "passive" market making, market makers in the common stock who are underwriters or prospective underwriters may, subject to specific limitations, make bids for or purchases of the common stock until the time, if any, at which a stabilizing bid is made. These stabilizing transactions, syndicate covering transactions and penalty bids may cause the price of the common stock to be higher than it would otherwise be in the absence of these transactions. These transactions may be effected on The Nasdaq National Market or otherwise and, if commenced, may be discontinued at any time. A prospectus in electronic format will be made available on the websites maintained by one or more of the underwriters participating in this offering. The representatives may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters that will make internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information contained on any underwriter's website and any information contained on any other website maintained by an underwrite is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in its capacity as an underwriter and should not be relied upon by investors. 12 NOTICE TO CANADIAN RESIDENTS Resale Restrictions The distribution of the common stock in Canada is being made only on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of common stock are effected. Accordingly, any resale of the common stock in Canada must be made in accordance with applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made in accordance with available statutory exemptions or pursuant to a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common stock. Representations of Purchasers Each purchaser of common stock in Canada who receives a purchase confirmation will be deemed to represent to us and the dealer from whom such purchase confirmation is received that (i) such purchaser is entitled under applicable provincial securities laws to purchase such common stock without the benefit of a prospectus qualified under such securities laws, (ii) where required by law, that such purchaser is purchasing as principal and not as agent, and (iii) such purchaser has reviewed the text above under "Resale Restrictions". Rights of Actions (Ontario Purchasers) The securities being offered are those of a foreign issuer and Ontario purchasers will not receive the contractual right of action prescribed by Ontario securities law. As a result, Ontario purchasers must rely on other remedies that may be available, including common law rights of action for damages or rescission or rights of action under the civil liability provisions of the U.S. federal securities laws. Enforcement of Legal Rights All of the issuer's directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon the issuer or such persons. All or a substantial portion of the assets of the issuer and such persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against the issuer or such persons in Canada or to enforce a judgment obtained in Canadian courts against such issuer or persons outside of Canada. Notice to British Columbia Residents A purchaser of common stock to whom the Securities Act (British Columbia) applies is advised that such purchaser is required to file with the British Columbia Securities Commission a report within ten days of the sale of any common stock acquired by such purchaser pursuant to this offering. Such report must be in the form attached to British Columbia Securities Commission Blanket Order BOR #95/17, a copy of which may be obtained from us. Only one such report must be filed in respect of common stock acquired on the same date and under the same prospectus exemption. Taxation and Eligibility for Investment Canadian purchasers of common stock should consult their own legal and tax advisors with respect to the tax consequences of an investment in the common stock in their particular circumstances and with respect to the eligibility of the common stock for investment by the purchaser under relevant Canadian legislation. 13 WHERE YOU CAN FIND MORE INFORMATION We have filed with the Securities and Exchange Commission a registration statement on Form S-3, of which this prospectus is a part, under the Securities Act with respect to the shares of common stock offered hereby. This prospectus does not contain all of the information included in the registration statement. Statements contained in this prospectus concerning the provisions of any document are not necessarily complete. You should refer to the copy of these documents filed as an exhibit to the registration statement or otherwise filed by us with the SEC for a more complete understanding of the matter involved. Each statement concerning these documents is qualified in its entirety by such reference. We are also subject to the informational requirements of the Securities Exchange Act of 1934. Under the Exchange Act, we file reports, proxy statements and other information with the SEC. The registration statement, including the attached exhibits and schedules, may be inspected and copied at the following public reference facilities maintained by the SEC: 450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Room 1024, Judiciary Plaza Suite 1300 Street Washington, D.C. 20549 New York, NY 10048 Suite 1400 Chicago, IL 60661- 2511 Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. The SEC maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. Copies of the registration statement and the reports, proxy and information statements and other information that we file with the SEC may be obtained from the SEC's Internet address at http://www.sec.gov. The SEC allows us to "incorporate by reference" into the prospectus the information we have filed with them. The information incorporated by reference is an important part of this prospectus and the information that we file subsequently with the SEC will automatically update this prospectus. The information incorporated by reference is considered to be part of this prospectus. We incorporate by reference the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the initial filing of this registration statement that contains this prospectus and prior to the time that we sell all the securities offered by this prospectus: . our annual report on Form 10-K for the fiscal year ended March 31, 1999 . our quarterly report on Form 10-Q for the quarter ended June 30, 1999 . our quarterly report on Form 10-Q for the quarter ended September 30, 1999 . our quarterly report on Form 10-Q for the quarter ended December 31, 1999 . our current reports on Form 8-K dated October 11, 1999 and January 13, 2000 . the description of our common stock contained in our Registration Statement on Form 8-A filed on February 5, 1993 under Section 12 of the Exchange Act, including any amendment or report updating such description, and . the description of our preferred share purchase rights contained in our Registration Statement on Form 8-A filed on February 14, 1995 under Section 12 of the Exchange Act, including any amendment or report updating such description. You may request a copy of these documents, at no cost, by writing or telephoning us at the following address: Microchip Technology Incorporated Attention: Investor Relations 2355 W. Chandler Blvd. Chandler, Arizona 85224-6199 (480) 786-7200 14 LEGAL MATTERS The validity of the shares of common stock offered under this prospectus will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Various legal matters in connection with this offering will be passed upon for the underwriters by Gray Cary Ware & Freidenrich LLP, Palo Alto, California. EXPERTS Our consolidated financial statements as of March 31, 1998 and 1999, and for each of the years in the three-year period ended March 31, 1999, have been incorporated herein by reference and in the registration statement in reliance upon the report of KPMG LLP, independent certified public accountants, incorporated herein by reference and upon the authority of such firm as experts in accounting and auditing. 15 [MICROCHIP LOGO] -----END PRIVACY-ENHANCED MESSAGE-----