(2) See the "Use of Non-GAAP Financial Measures" section of this release.
GAAP net sales for the fourth quarter of fiscal 2021 were a record $1.467 billion, up 10.6% from net sales of $1.326 billion in the prior year's fourth fiscal quarter.
GAAP net income for the fourth quarter of fiscal 2021 was $116.0 million, or $0.41 per diluted share, up from GAAP net income of $99.9 million, or $0.39 per diluted share, in the prior year's fourth fiscal quarter. For the fourth quarters of fiscal 2021 and fiscal 2020, GAAP net income was significantly adversely impacted by purchase accounting adjustments associated with our acquisitions. For the fourth quarter of fiscal 2021, GAAP net income was also significantly adversely impacted by a loss on debt settlement.
Non-GAAP net income for the fourth quarter of fiscal 2021 was a record at $521.4 million, or $1.85 per diluted share, up from non-GAAP net income of $375.5 million, or $1.46 per diluted share, in the prior year's fourth fiscal quarter. For the fourth quarters of fiscal 2021 and fiscal 2020, our non-GAAP results exclude the effect of share-based compensation, COVID-19 shelter-in-place restrictions on manufacturing activities, manufacturing excursion, expenses related to our acquisition activities (including intangible asset amortization, severance and other restructuring costs, and legal and other general and administrative expenses associated with acquisitions including legal fees and expenses for litigation and investigations related to our Microsemi acquisition), professional services associated with certain legal matters, IT security remediation costs, non-cash interest expense on our convertible debentures, losses on the settlement of debt, and gains related to equity investments. For the fourth quarters of fiscal 2021 and fiscal 2020, our non-GAAP income tax expense is presented based on projected cash taxes for the applicable fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act. A reconciliation of our non-GAAP and GAAP results is included in this press release.
GAAP net sales for the fiscal year ended March 31, 2021 were a record $5.438 billion, an increase of 3.1% from net sales of $5.274 billion in the prior fiscal year.
GAAP net income for the fiscal year ended March 31, 2021 was $349.4 million, or $1.29 per diluted share, a decrease of 38.8% from net income of $570.6 million, or $2.23 per diluted share in the prior fiscal year. Fiscal 2021 and fiscal 2020 GAAP net income were significantly adversely impacted by purchase accounting adjustments associated with our acquisitions. GAAP net income for fiscal 2021 was adversely impacted by the loss on debt settlement associated with our debt refinancing activities. GAAP net income for fiscal 2020 was significantly positively impacted by the tax benefit related to the intra-group transfer of certain intellectual property rights.
Non-GAAP net income for the fiscal year ended March 31, 2021 was a record $1.78 billion, or $6.59 per diluted share, an increase of 24.0% from net income of $1.44 billion, or $5.62 per diluted share, in the prior fiscal year. See the "Use of Non-GAAP Financial Measures" section of this release.
Microchip announced today that its Board of Directors has declared a record quarterly cash dividend on its common stock of 41.3 cents per share, up 5.9% from the cash dividend paid last quarter. The quarterly dividend is payable on June 4, 2021 to stockholders of record on May 21, 2021.
"Our March quarter results were strong by every key metric, closing out a tumultuous fiscal year on a very positive note, which was otherwise dominated by the effects of the COVID-19 pandemic," said Ganesh Moorthy, President and Chief Executive Officer. "March quarter revenue, non-GAAP gross margin, non-GAAP operating margin, non-GAAP EPS and EBITDA were all records, as every aspect of our business over-performed. Our journey towards our long-term operating model of 65% non-GAAP gross margin and 42% non-GAAP operating margin is off to a good start."
Mr. Moorthy added, "Business conditions remained exceptionally strong through the March quarter with record bookings and backlog for product to be shipped over multiple quarters. Demand outpaced the capacity improvements we implemented, resulting in lead times continuing to extend out. In my 40 years in the semiconductor industry, I cannot recall a time when the imbalance between supply and demand has been more acute. In response, we launched our Preferred Supply Program (PSP) to provide customers with supply priority beginning 6 months after their order in exchange for at least 12 months of non-cancellable orders. Customer response to the program has exceeded our expectations with direct customers and distributors alike. About 44% of our backlog is now in the PSP category, although it is almost 100% of our backlog in some of the most constrained capacity areas. This gives us a solid foundation to enable us to prudently acquire constrained raw materials, invest in expanding factory capacity, and hire employees to support our factory ramps."
Steve Sanghi, Microchip's Executive Chairman, said, "Microchip's Board of Directors initiated a path to higher dividends in our February 2021 dividend announcement with a sequential increase in our dividend of 5.8%. We are continuing on this path as we announced today that the Board of Directors have approved a sequential increase in our dividend of 5.9%, to 41.3 cents per share, up from 39 cents previously. We expect to continue to increase dividends quarterly as part of our cash return strategy."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "We continued to aggressively pay down our debt with another $369.2 million of payments during the March quarter, reflecting a cumulative debt pay down of $3.61 billion over the past 11 quarters, as we have actively managed the working capital requirements for the business. In the March quarter, we exchanged $359.2 million of our convertible subordinated notes for cash and shares of common stock. While these transactions did not impact the overall level of debt on our balance sheet, we believe that these convertible debt exchanges will benefit stockholders by significantly reducing share count dilution to the extent our stock price appreciates over time. The principal amount of convertible debt on our balance sheet at the end of fiscal year 2021 is $1.263 billion compared to $4.481 billion at the beginning of calendar year 2020, putting our overall capital structure in a much better long-term position."
Mr. Moorthy concluded, "Our backlog for the June quarter is very strong. In addition, we have considerable backlog requested by customers in the June quarter that currently cannot be fulfilled until later quarters despite us growing capacity from the last quarter. This is because the entire semiconductor supply chain remains constrained. Given this backdrop, we expect our net sales in the June quarter to be up between 3.5% and 7.5% sequentially."
Microchip's Highlights for the Quarter Ended March 31, 2021:
- Unveiled the LAN9360 AVB audio endpoint, the first fully integrated solution for vehicle Ethernet Audio Video Bridging (AVB), which helps to reduce development time and eliminates the need for stack integration and additional software and firmware development.
- Introduced the first IEEE 802.3bt Power over Ethernet to USB Type-C Power and Data Adapter, enabling extended installation reach of USB Type-C devices while supporting a variety of input PoE standards up to 90W and output power up to 60W.
- Announced the integration of our BlueSky™ signal-anomaly detection software into the Microchip SyncServer S600 Series network time server and instruments as the first solution to fully integrate GPS jamming and spoofing detection and protection, in combination with local Radio Frequency (RF) data logging and analysis, inside a time server.
- Announced AEC-Q100 qualified and defense-grade PolarFire® FPGAs availability in volume production, expanding its product offering with robust device certification and characterization and providing customers with programmable logic solutions for thermally challenging environments.
- Introduced the Switchtec™ PFX PCIe® Gen 5 high-performance switches that double the data rate of PCIe Gen 4.0 solutions while delivering ultra-low latency and advanced diagnostics.
- Expanded our SA50-120 power converter family with nine new units based on our Commercial Off-the-Shelf (COTS) technology, providing developers with space-qualified power converters that help to minimize risk and lower development costs.
- Announced the production release of the Smart Storage PCIe® Gen 4 Tri-Mode SmartROC (RAID-on-Chip) 3200 and SmartIOC (I/O Controller) 2200 storage controllers, providing proven security and manageability features for the most demanding server storage applications.
- Introduced the MCP6C02 amplifiers featuring the industry’s lowest offset for AEC-Q100 Grade 0 qualified high-side current sense amplifier devices, enabling a more accurate and energy-efficient current measurement solution for applications exposed to extreme temperatures.
- Unveiled our SparX-5i family of Ethernet switches providing the industry’s most complete time-sensitive networking feature set, enabling increased connectivity and network optimization while lowering costs for industrial automation networks.
- Introduced the MCP1012 high-voltage auxiliary AC-DC controller, providing the ability to remove the independent bias power supply in many applications, along with a new AC-DC controller plus Inde-Flux™ transformer technology licensed to Würth Elektronik eiSos.
- Unveiled its TimeProvider ® 4100 Release 2.2 grandmaster, providing a new level of resiliency with the introduction of an innovative redundancy architecture in addition to support for a multiband Global Navigation Satellite System (GNSS) receiver and enhanced security to ensure always-on precise timing and synchronization.
