Microchip Technology Announces Record Net Sales and Earnings for First Quarter of Fiscal Year 2018

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 has been calculated based on the diluted shares outstanding of Microchip on a consolidated basis.

  • Microchip's inventory days at September 30, 2017 are expected to be 99 to 101 days.  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 September 30, 2017 are expected to be approximately $70 million.  Capital expenditures for all of fiscal year 2018 are expected to be approximately $180 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.

Use of Non-GAAP Financial Measures:  Our non-GAAP adjustments, where applicable, include the effect of discontinued operations, 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), preclusion of revenue recognition under GAAP for inventory in the distribution channel on the acquisition dates of our acquisitions, revenue recognition changes related to Atmel and Micrel distributors resulting from changes to business practices with those distributors, a loss on the settlement of our convertible debentures, non-cash interest expense on our convertible debentures, a gain on an equity method investment, the related income tax implications of these items, tax adjustments in accordance with ASC 740-270 and non-recurring tax events.  Our non-GAAP results for the three month periods ended June 30, 2017 and June 30, 2016 reflect an adjustment for a manufacturing excursion issue with one of our suppliers.  We believe that our disclosure of non-GAAP net sales provides investors with useful information regarding the actual end market demand for our products.

We are required to estimate the cost of certain forms of share-based compensation, including employee stock options, restricted stock units and our employee stock purchase plan, and to record a commensurate expense in our income statement.  Share-based compensation expense is a non-cash expense that varies in amount from period to period and is affected by the price of our stock at the date of grant.  The price of our stock is affected by market forces that are difficult to predict and are not within the control of management.  Our other non-GAAP adjustments are either non-cash expenses, unusual or infrequent items or other expenses related to transactions.  Management excludes all of these items from its internal operating forecasts and models.

We are using non-GAAP net sales, non-GAAP gross profit, non-GAAP gross profit percentage, non-GAAP operating expenses in dollars and as a percentage of sales including non-GAAP research and development expenses and non-GAAP selling, general and administrative expenses, non-GAAP operating income, non-GAAP other expense, net, non-GAAP income tax rate, non-GAAP net income from continuing operations, and non-GAAP diluted earnings per share from continuing operations which exclude the items noted above, as applicable, to permit additional analysis of our performance.

Management believes these non-GAAP measures are useful to investors because they enhance the understanding of our historical financial performance and comparability between periods.  Many of our investors have requested that we disclose this non-GAAP information because they believe it is useful in understanding our performance as it excludes non-cash and other charges that many investors feel may obscure our underlying operating results.  Management uses these non-GAAP measures to manage and assess the profitability of our business.  Specifically, we do not consider such items when developing and monitoring our budgets and spending.  Our determination of the above non-GAAP measures might not be the same as similarly titled measures used by other companies, and it should not be construed as a substitute for amounts determined in accordance with GAAP.  There are limitations associated with using non-GAAP measures, including that they exclude financial information that some may consider important in evaluating our performance.  Management compensates for this by presenting information on both a GAAP and non-GAAP basis for investors and providing reconciliations of the GAAP and non-GAAP results.

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 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 repurchases or issuances of shares of our common stock.  The diluted common shares outstanding presented in the guidance table above assumes an average Microchip stock price in the September 2017 quarter between $81and $84 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).

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)  
   
  Three Months ended
  June 30,
  2017 2016
     
Net sales
 $972,141  $799,411 
Cost of sales 387,702  450,921 
Gross profit 584,439  348,490 
     
Research and development 130,480  147,883 
Selling, general and administrative 114,272  157,505 
Amortization of acquired intangible assets 120,845  80,171 
Special (income) charges and other, net (2,756) 22,035 
Operating expenses   362,841     407,594  
         
Operating income (loss)   221,598     (59,104 )
Losses on equity method investments   (55 )   (56 )
Other expense, net   (55,338 )   (31,587 )
         
Income (loss) before income taxes   166,205     (90,747 )
Income tax (benefit) provision   (4,382 )   18,478  
Net income from continuing operations   170,587     (109,225 )
Discontinued operations:        
Loss from discontinued operations       (5,473 )
Income tax benefit       (1,335 )
Net loss from discontinued operations       (4,138 )
         
Net income (loss)   $ 170,587     $ (113,363 )
         
Basic net income (loss) per common share        
Net income (loss) from continuing operations   $ 0.74     $ (0.51 )
Net loss from discontinued operations       (0.02 )
Net income (loss)   $ 0.74     $ (0.53 )
Diluted net income (loss) per common share        
Net income (loss) from continuing operations   $ 0.70     $ (0.51 )
Net loss from discontinued operations       (0.02 )
Net income (loss)   $ 0.70     $ (0.53 )
         
Basic common shares outstanding   229,429     214,345  
Diluted common shares outstanding   242,902     214,345  
             



« Previous Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8  Next Page »



© 2024 Internet Business Systems, Inc.
670 Aberdeen Way, Milpitas, CA 95035
+1 (408) 882-6554 — Contact Us
ShareCG™ is a trademark of Internet Business Systems, Inc.

Report a Bug Report Abuse Make a Suggestion About Privacy Policy Contact Us User Agreement Advertise