The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. We are not able to predict whether inventory at our distributors will increase or decrease and are therefore providing a range of GAAP net sales guidance. In recent years, we have seen net inventory at our distributors increase or decrease by a significant amount in a single quarter.
| Microchip Consolidated Guidance | |||
| Net Sales | $1.313 to $1.403 billion | ||
| GAAP | Non-GAAP Adjustments | Non-GAAP1 | |
| Gross Margin | 61.1% to 61.5% | $5.5 to $6.0 million | 61.5% to 61.9% |
| Operating Expenses2 | 46.9% to 49.3% | $303.0 to $307.0 million | 25.0% to 26.2% |
| Operating Income | 11.8% to 14.6% | $308.5 to $313.0 million | 35.3% to 36.9% |
| Other Expense, net | $117.0 to $119.0 million | $31.0 million | $86.0 to $88.0 million |
| Income Tax Provision | $2.0 to $19.0 million3 | $5.6 to $21.8 million | $23.8 to $24.6 million4 |
| Net Income | $36.0 to $66.8 million | $317.7 to $338.4 million | $353.7 to $405.2 million |
| Diluted Common Shares
Outstanding | Approximately 261.4 to 267.8 million shares | Approximately 261.4 to 267.8 million shares | |
| Earnings per Diluted Share | 14 to 25 cents | $1.21 to $1.26 | $1.35 to $1.51 |
| 1 | See the "Use of Non-GAAP Financial Measures" section of this release for information regarding our non-GAAP guidance. | ||
| 2 | We are not able to estimate the amount of certain Special Charges and Other, net that may be incurred during the quarter ending March 31, 2020. Therefore, our estimate of GAAP operating expenses excludes certain amounts that may be recognized as Special Charges and Other, net in the quarter ending March 31, 2020. | ||
| 3 | The forecast for GAAP tax expense excludes any unexpected tax events that may occur during the quarter, as these amounts cannot be forecasted. | ||
| 4 | Represents expected cash tax rate for fiscal 2020 excluding any transition tax payments associated with the Tax Cuts and Jobs Act. |
- Microchip's inventory days in the March 2020 quarter are expected to be in the range of 115 to 129 days, compared to 129 days at December 31, 2019. Our actual inventory level will depend on the inventory that our distributors decide to hold to support their customers, overall demand for our products and our production levels.
- Capital expenditures for the quarter ending March 31, 2020 are expected to be between $20 million and $25 million. Capital expenditures for all of fiscal 2020 are expected to be between $76 million and $81 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 and to bring in-house more of the assembly and test operations that are currently outsourced.
Use of End-Market Demand Metric: End-market demand is the net dollar amount of our products, licensing revenue and other services delivered to our direct (non-distributor) customers and by our distributors to their customers. We are able to calculate end-market demand based on information that our distributors provide us about their product shipments to their customers and inventory holdings. The value of end-market demand from our distributors is calculated as the net transaction value of these shipments. We believe that our end-market demand metric reflects true end-market demand based on when product is sold to direct customers or by our distributors to an end customer.
