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Press Release: Microchip Technology Announces -3-

· 02/04/2021 15:50
ASSETS December 31, March 31, 2020 2020 -------------- ----------- (Unaudited) Cash and short-term investments $ 372.7 $ 403.0 Accounts receivable, net 893.8 934.0 Inventories 666.1 685.7 Other current assets 219.9 194.5 -------------- --------- Total current assets 2,152.5 2,217.2 Property, plant and equipment, net 827.4 876.1 Other assets 13,596.2 14,332.8 -------------- --------- Total assets $ 16,576.1 $17,426.1 ========== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities $ 1,029.0 $ 1,028.6 Current portion of long-term debt 1,493.2 608.8 -------------- --------- Total current liabilities 2,522.2 1,637.4 Long-term debt 7,647.8 8,873.4 Long-term income tax payable 669.6 668.4 Long-term deferred tax liability 9.9 318.5 Other long-term liabilities 429.6 342.9 Stockholders' equity 5,297.0 5,585.5 -------------- --------- Total liabilities and stockholders' equity $ 16,576.1 $17,426.1 ========== ========Three Months Ended Nine Months Ended December 31, December 31, -------------------- ---------------------- 2020 2019 2020 2019 --------- --------- --------- ----------- Net sales $1,352.1 $1,287.4 $3,971.3 $3,947.8 Cost of sales 506.3 501.9 1,519.3 1,519.6 -------- -------- -------- -------- Gross profit 845.8 785.5 2,452.0 2,428.2 Research and development 210.1 217.1 607.9 656.0 Selling, general and administrative 154.2 170.7 445.2 510.9 Amortization of acquired intangible assets 231.6 248.7 699.9 745.4 Special charges and other, net 4.3 17.8 8.9 29.5 -------- -------- -------- -------- Operating expenses 600.2 654.3 1,761.9 1,941.8 -------- -------- -------- -------- Operating income 245.6 131.2 690.1 486.4 Other expense, net (228.8) (120.6) (495.0) (381.8) Income before income taxes 16.8 10.6 195.1 104.6 Income tax benefit (19.4) (300.5) (38.3) (366.1) Net income $ 36.2 $ 311.1 $ 233.4 $ 470.7 ======= ======= ======= ======= Basic net income per common share $ 0.14 $ 1.30 $ 0.91 $ 1.97 Diluted net income per common share $ 0.13 $ 1.20 $ 0.87 $ 1.84 ------- ------- ------- ------- Basic common shares outstanding 263.4 239.2 255.7 238.5 ======== ======== ======== ======== Diluted common shares outstanding 275.4 258.3 267.0 255.8 ======== ======== ======== ========

believe it is useful in understanding our performance as it provides better information regarding end-market demand for our products. Therefore, we believe that it is useful to investors for us to disclose end-market demand. Our determination of end-market demand metric might not be the same as similarly titled measures used by other companies.

Use of Non-GAAP Financial Measures: Our non-GAAP adjustments, where applicable, include the effect of share-based compensation, COVID-19 shelter-in-place restrictions on manufacturing activities, 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 third quarters of fiscal 2021 and fiscal 2020, our non-GAAP income tax expense is presented based on projected cash taxes for the fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act.

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 operating expenses in dollars including non-GAAP research and development expenses and non-GAAP selling, general and administrative expenses, non-GAAP other expense, net, and non-GAAP income tax rate, 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 non-GAAP measures to manage and assess the profitability of our business and for compensation purposes. We also use our non-GAAP results when developing and monitoring our budgets and spending. Our determination of these 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 these 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.

Generally, gross margin fluctuates over time, driven primarily by the mix of 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.

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 March 2021 quarter between $140 and $150 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 INCOME

(in millions, except per share amounts)

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(in millions except per share amounts and percentages)

(unaudited)

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February 04, 2021 15:50 ET (20:50 GMT)