Form 8-K filed 04-25-06 (Q4FY06 Earnings Release)

Form 8-K filed 04-25-06 (Q4FY06 Earnings Release)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
April 25, 2006
MICROCHIP TECHNOLOGY INCORPORATED
(Exact Name Of Registrant As Specified In Its Charter)
Delaware
(State Or Other Jurisdiction Of
Incorporation)
0-21184
(Commission File No.)
86-0629024
(IRS Employer Identification
No.)
2355 West Chandler Boulevard, Chandler, Arizona 85224-6199
(Address Of Principal Executive Offices)
(480) 792-7200
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On February 17, 2005, Microchip Technology Incorporated (the “Company”) announced the
acceleration of the vesting of certain Company stock options to enable the Company to avoid
recognizing in its income statement compensation expense associated with these options in future
periods upon the adoption of FASB Statement No. 123R (Share-Based Payment). In connection with
the vesting acceleration, the Company required that any shares received through the exercise of the
accelerated options not be sold by the option holder until the first to occur of the original vesting date of
the accelerated option or the termination of the employment of the option holder. On April 25, 2006, in
order to alleviate administrative burdens, the Company waived this requirement as to approximately
1,012,098 option shares held by those employees who are not executive officers, appointed officers or
director-level employees of the Company.
Item 2.02. Results of Operations and Financial Condition.
The information pursuant to Item 2.02 in this report on Form 8-K is being furnished as contemplated
by General Instruction B(2) to Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.
On April 25, 2006, the Company announced the results of its operations for the fiscal year ended
March 31, 2006. The complete release is attached to this report as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(c)
Exhibits
99.1
April 25, 2006 Press Release: Microchip Technology Announces Record Sales and Net
Income for Fourth Quarter and Fiscal Year 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Microchip Technology Incorporated
(Registrant)
Dated April 25, 2006
By:
/s/ Gordon W. Parnell
Gordon W. Parnell
Vice President, Chief Financial Officer
(Principal Accounting and Financial Officer)
EXHIBITS
99.1
April 25, 2006 Press Release: Microchip Technology Announces Record Sales and Net
Income for Fourth Quarter and Fiscal Year 2006
E x h i b i t
9 9 . 1
NEWS RELEASE
INVESTOR RELATIONS CONTACT:
Gordon Parnell - CFO . . . (480) 792-7374
MICROCHIP TECHNOLOGY ANNOUNCES RECORD SALES AND
NET INCOME FOR FOURTH QUARTER AND FISCAL YEAR 2006
•
FOR THE QUARTER ENDING MARCH 31, 2006:
ƒ
RECORD NET SALES OF $247.2 MILLION, UP 5.2% SEQUENTIALLY AND UP 18.8%
FROM THE YEAR AGO QUARTER
ƒ
ƒ
ƒ
ƒ
RECORD GROSS MARGIN OF 60.1%
RECORD OPERATING PROFIT OF 36.2%
RECORD GAAP NET INCOME OF 30.6% AND $75.6 MILLION
NET CASH GENERATED OF $110 MILLION BEFORE DIVIDEND PAYMENT OF $40.5
MILLION
•
ƒ
INCREASED DIVIDEND BY 13.2% SEQUENTIALLY TO A RECORD 21.5 CENTS PER
SHARE
ƒ
RECORD NEW BOOKINGS, WITH BOOK-TO-BILL RATIO OF 1.07 AND
SEQUENTIALLY STRONGER BACKLOG FOR THE JUNE QUARTER
FOR FISCAL YEAR 2006:
ƒ
ƒ
ƒ
ƒ
RECORD NET SALES OF $927.9 MILLION, UP 9.6% FROM FISCAL YEAR 2005
RECORD NON-GAAP NET INCOME OF $273 MILLION, EXCLUDING THE TAX
EFFECT OF FOREIGN EARNINGS REPATRIATION. RECORD GAAP NET INCOME OF
$242.4 MILLION.
RECORD NON-GAAP EPS OF $1.27. RECORD GAAP EPS OF $1.13.
RECORD NET CASH GENERATION OF $450 MILLION BEFORE DIVIDEND PAYMENTS
OF $120 MILLION AND STOCK BUYBACK ACTIVITY OF $3 MILLION
CHANDLER, Arizona – April 25, 2006 – (NASDAQ: MCHP) – Microchip Technology Incorporated, a
leading provider of microcontroller and analog semiconductors, today reported unaudited results for the
three months ended March 31, 2006 and for the fiscal year ended March 31, 2006. Net sales for the
fourth quarter of fiscal 2006 were a record $247.2 million, up 5.2% sequentially from sales of $234.9
million in the immediately preceding quarter, and up 18.8% from sales of $208.1 million in the prior
year’s fourth quarter. GAAP net income for the fourth quarter of fiscal 2006 was a record $75.6 million,
or 35 cents per diluted share, up 6.8% from non-GAAP net income of $70.7 million, or 33 cents per
diluted share in the immediately preceding quarter, and up 34% from GAAP net income of $56.4 million,
or 27 cents per diluted share in the prior year’s fourth quarter. GAAP net income in the immediately
- - more - Microchip Technology Incorporated 2355 West Chandler Blvd. Chandler, AZ 85224-6199 Main Office 480•792•7200 FAX 480•899•9210
Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
preceding quarter was $40.1 million. Non-GAAP results exclude a tax charge in the third quarter of fiscal
2006 related to repatriation of foreign earnings under the American Jobs Creation Act of 2004. A
reconciliation of non-GAAP and GAAP results is included in this press release.
Net sales for the fiscal year ended March 31, 2006 were $927.9 million, an increase of 9.6% from net
sales of $846.9 million in the prior fiscal year. On a GAAP basis, net income for the fiscal year ended
March 31, 2006 was $242.4 million, or $1.13 per diluted share, an increase of 13.4% from net income of
$213.8 million, or $1.01 per diluted share in the prior year.
On a non-GAAP basis, net income for the fiscal year ended March 31, 2006 was $273 million, or $1.27
per diluted share, an increase of 20.4% from net income of $226.8 million, or $1.07 per diluted share in
the prior year. Non-GAAP diluted earnings per share for fiscal years 2006 and 2005 exclude a tax charge
related to repatriation of foreign earnings under the American Jobs Creation Act of 2004 and a special
charge related to the settlement of patent license litigation, respectively. A reconciliation of non-GAAP
and GAAP results is included in this press release.
Microchip also announced today that its Board of Directors has declared a quarterly cash dividend on its
common stock of 21.5 cents per share. The quarterly dividend is payable on May 23, 2006 to
stockholders of record on May 9, 2006. Microchip initiated quarterly cash dividend payments in the third
quarter of fiscal 2003.
“We are very pleased to have delivered another record quarter in nearly every respect. Both our
microcontroller and analog product revenues grew sequentially to record levels in the March 2006
quarter, allowing Microchip to achieve record net sales levels overall,” said Steve Sanghi, Microchip’s
President and CEO. “While our overall microcontroller revenue grew 4.9% sequentially and 17.8% from
the year ago quarter, our Flash microcontrollers were up a strong 9.6% sequentially and up 42%
compared to the same quarter last fiscal year.”
Mr. Sanghi stated, “Our 16-bit microcontroller revenue exhibited very strong sequential revenue growth,
increasing by approximately 46% to a new record, albeit from a small base. Microchip’s analog product
revenue also delivered robust performance, growing approximately 17% sequentially, and 52% over the
year ago quarter. In addition to continued healthy expansion in our core 8-bit microcontroller business,
Microchip is gaining a strong foothold in these two very important and strategic market segments.”
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
“Development systems continued to be shipped at a brisk pace during fiscal 2006, demonstrating strong
customer demand for our products,” said Ganesh Moorthy, Vice President, Advanced Microcontroller and
Memory Division. “During the fourth quarter of fiscal 2006 and for the fiscal year 2006 we shipped a
record 19,991 and 73,705 systems, respectively.”
“Our continued strong performance is also a tribute to several initiatives over the last two years, where
Microchip has taken increasingly higher levels of direct control of demand creation on our products,” Mr.
Sanghi continued. “While the fulfillment of orders continues to be through distributors, Microchip has
added significantly to direct sales, applications and training resources to accelerate design-in activity for
our products. We are definitely pleased with the results.”
Mr. Sanghi said, “From a geographic perspective, Europe led this quarter’s growth with net sales up
approximately 18% sequentially. The Americas delivered net sales growth of approximately 9%
sequentially, while Asia net sales were lower by approximately 4%, reflecting the seasonal factors in that
geography related to the Lunar New Year holidays.
“We achieved record gross and operating margins of 60.1% and 36.2% respectively in the March 2006
quarter, further evidencing our proprietary business model,” Mr. Sanghi added. “The record net sales as
well as operating margin percentage enabled Microchip to achieve record GAAP net income of $75.6
million for the period.”
Mr. Sanghi continued, “We are also pleased to be increasing our quarterly dividend payment to our
shareholders by 13.2% sequentially, to a record 21.5 cents per share. We continue to believe, based on
investor feedback, that increasing dividends is a highly desirable way of returning additional value to our
shareholders.”
“On a full fiscal year basis, we achieved record net sales in microcontrollers, analog products, gross
margin percentage, operating margin percentage, earnings per share, net cash generation, and dividend
payments,” Mr. Sanghi added.
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
Mr. Gordon Parnell, Microchip’s Chief Financial Officer said, “Inventory days on our balance sheet at the
end of March were at 106 days, down 5 days from inventory levels at December 31, 2005. Inventory in
the distribution channel at the end of March was 2.0 months, which is in the same range as it was at the
end of December.”
“We generated net cash for the fourth quarter of fiscal 2006 of $110 million, before the payment of $40.5
million in dividends. For fiscal 2006, we generated net cash flow of approximately $450 million, before
dividend payments of $120 million and stock buyback activity of $3 million,” Mr. Parnell added.
Mr. Sanghi concluded, “We achieved record bookings in the March quarter with an overall book-to-bill
ratio of 1.07. Our starting backlog in the June quarter is higher than the levels entering the March quarter.
Based on our assessment of the business, we expect net sales in the June 2006 quarter to be up 5% to 6%
sequentially. Earnings per share are expected to be about 37 cents on a non-GAAP basis, excluding the
effect of all stock-based compensation expense. EPS on a GAAP basis is expected to be about 35 cents.”
Microchip’s Recent Highlights:
•
Microchip's relentless production rollout of its 16-bit PIC24 microcontrollers and dsPIC® digital
signal controllers (DSCs) continued with approximately 49 devices in four product families released
to volume production.
•
The Company introduced a new software library for its dsPIC DSCs. The G.168-standard compliant
Line Echo Cancellation Library (SW300080-EVAL) offers telecom designers improved integration
possibilities and the ability to reduce costs, due to Microchip’s unique licensing structure.
•
The Company unveiled a new Production Programming Service for Microchip’s PIC®
microcontrollers. In conjunction with its microchipDIRECT online purchasing site, all customers,
regardless of order size, can now have their application code programmed into a PIC microcontroller
prior to delivery.
•
Microchip announced the signing of a patent license agreement with the German auto maker BMW
AG. The agreement provides BMW access to Microchip-owned patents covering the use of
microcontrollers/microprocessors in battery-monitoring sensors, including conventional 12V vehicles.
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
•
The Company continued to achieve recognition as a business and product leader, including the
following awards:
1. IEEE Phoenix’s “2005 Large Company of the Year”.
2. Design News magazine named Microchip’s ENC28J60 Ethernet Controller the winner of their
“Best Product, 2005 Golden Mousetrap Awards” in the Electronics, Digital Control/Embedded
Computing category.
3. Steve Sanghi was named “2006 Person of the Year” by the IndUS Business Journal.
4. In the Design News 2005 Readers’ Choice Awards, Microchip was voted “Best Value,
Electronics”.
•
During the quarter, Microchip shipped 19,991 new development systems. This brisk pace
demonstrates the continued strong acceptance of Microchip’s products. The total cumulative number
of development systems shipped now stands at 432,016, and there was an increase of over 20,000
tools shipped in fiscal 2006 over fiscal 2005 -- for a total of 73,705 shipped during the 2006 fiscal
year.
•
Microchip announced the new PIC18F45J10 family, which are some of the fastest 8-bit
microcontrollers in the world to provide 32 Kbytes of Flash program memory in 28-pin packages.
•
Microchip introduced new Flash PIC microcontrollers with certified Full-Speed USB 2.0 connectivity
and 48 megahertz (MHz) operation, for 12 megabits-per-second (Mbps) data-transfer rates.
•
Microchip now provides read-only-memory (ROM) PIC microcontrollers in the PIC16 family. The
PIC16CR73, PIC16CR74, PIC16CR76 and PIC16CR77 (PIC16CR7X) general-purpose ROM
microcontrollers are the first in a new series of ROM microcontrollers in the PIC16 and PIC18
families from Microchip. Manufacturers now have the option of switching between Flash and ROM
memory types throughout development and production, which results in shorter time-to-market,
reduced scrap and lower overall costs.
•
The Company announced the world’s first SPI serial EEPROM memory products in a miniature,
SOT-23 package. The 25xx010A, 25xx020A and 25xx040A EEPROMs extend Microchip’s SPI
serial EEPROM product line into high-speed (10 MHz), low-density (1 - 2 Kb) applications.
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
•
Microchip announced an addition to its low-power, high-resolution delta-sigma A/D converter family.
The MCP3550 joins the recently announced MCP3551 and MCP3553 A/D converters as one of the
lowest power, smallest A/D converters on the market with greater than 16-bit resolution.
•
The Company introduced the TC4451 and TC4452 Metal Oxide Semiconductor Field Effect
Transistor (MOSFET) driver circuits. The new drivers offer peak output currents of 12 amperes,
making them the highest-current MOSFET drivers offered by Microchip, and among the highest in
the industry.
•
Microchip unveiled a family of ten new voltage supervisors. The MCP13XX voltage supervisors
offer a watchdog timer, manual reset, multiple combinations of push-pull or open-drain reset outputs,
and factory trip-points from 2.0V to 4.7V in 100 mV increments, all in a small, 5-pin SOT-23
package.
•
Microchip introduced a new family of positively regulated charge pump DC/DC converters that are
among the most highly efficient charge pumps in the industry. The first fractional charge pumps in
Microchip’s portfolio, the MCP1256, MCP1257, MCP1258 and MCP1259 devices consume very
little power and help designers build more energy-efficient, longer-lasting dual-cell alkaline, Ni-Cd,
Ni-MH, single-cell Mn02 and similar coin-cell battery systems.
•
The Company announced a new family of low-power, low-voltage, 6-bit digital potentiometers. The
MCP4011-MCP4014 digital potentiometers provide engineers with a digitally controlled solution that
is cost- and size-competitive with current mechanical potentiometer solutions.
•
The Company was named to the Sierra Club Mutual Funds’ approved list of Environmentally
Qualified Investment companies. In order to be accepted into this select group of U.S.-based
companies, which are qualified for investments by the Sierra Club Mutual Funds, Microchip had to
pass more than 20 environmental and social screens.
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
First Quarter Fiscal 2007 Outlook:
The following statements are based on current expectations. These statements are forward-looking, and
actual results may differ materially.
•
Net sales for the quarter ending June 30, 2006 are currently anticipated to be up approximately 5% to
6% from the March 2006 quarter.
•
Gross margins for the quarter ending June 30, 2006 are expected to be approximately 60.3% to
60.5%. Generally, gross margins fluctuate over time, driven primarily by the mix of microcontrollers,
analog products and memory products sold; variances in manufacturing yields; fixed cost absorption;
wafer fab loading levels; pricing pressures in our non-proprietary product lines; and competitive and
economic conditions.
•
Operating expenses for the quarter ending June 30, 2006 are expected to be approximately 24.0% of
net sales, prior to the effects of all stock-based compensation expense. Operating expenses fluctuate
over time, primarily due to revenue and profit levels.
•
The tax rate for the quarter ending June 30, 2006 is anticipated to be approximately 24%.
•
Earnings per diluted share for the quarter ending June 30, 2006 are anticipated to be approximately 35
cents on a GAAP basis, excluding the effect of all stock-based compensation expense, and about 37
cents on a non-GAAP basis.
•
Inventories at June 30, 2006 are anticipated to be approximately 103 days, down approximately three
days compared with the March 2006 quarter. The level of inventories fluctuates over time, primarily
due to sales volume and overall capacity utilization.
•
Capital expenditures for fiscal year 2007 are expected to total approximately $80 million. The level
of capital expenditures varies from time to time as a result of actual and anticipated business
conditions.
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
•
Based on cash projected to be generated from operations and current projected capital expenditure
levels, we expect net cash generation during the June quarter of approximately $120 million before
the dividend payment of approximately $46 million announced today. The amount of expected cash
generation is before the effect of any stock buy-back activity.
•
Microchip announced on April 22, 2004 that its Board of Directors had authorized a stock buy-back
of up to 2.5 million shares. At March 31, 2006, approximately 1.5 million shares remained available
for purchase under this program. Future purchases will depend upon market conditions, interest rates
and corporate considerations.
Use of Non-GAAP Financial Measures:
We provide non-GAAP financial information in order to provide meaningful supplemental information
regarding our operational performance and to enhance our investors’ overall understanding of our core
financial performance. We believe that our investors benefit from seeing our results “through the eyes”
of management in addition to the GAAP presentation. Management measures enterprise performance
using non-GAAP financial measures such as those that are disclosed in this press release. This
information facilitates management’s internal comparisons to the Company’s historical core operating
results and comparisons to competitors’ core operating results as determined by management.
Management believes that non-GAAP information allows for additional transparency and such
information is used by management in its financial and operational decision making. The non-GAAP
measures that management determines as being informative to investors focuses on the ongoing
operations and the core results of our business. In the past, we have reported non-GAAP information to
our investors and believe that the inclusion of comparative numbers provides consistency in our financial
reporting. This information is not in accordance with, or an alternative for, information prepared using
generally accepted accounting principles (GAAP) in the United States. The historical non-GAAP
information in this press release excludes items such as a special charge for a litigation settlement and a
tax charge associated with the repatriation of foreign earnings under the America Jobs Creation Act of
2004, which may have a material effect on our net income (loss) and net income (loss) per share
calculated in accordance with GAAP. We exclude these charges and the related tax benefit from the
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
charges when analyzing our financial results as the items are distinguishable events and have no impact to
our ongoing results of operations. We believe that by viewing our results of operations excluding these
charges, investors are given an indication of the ongoing results of our operations. In addition, in this
press release we have provided EPS guidance on a non-GAAP basis to exclude the effects of share-based
compensation and the requirements of SFAS No. 123R, "Share-based Payment" ("123R"). This nonGAAP financial measure excludes the income statement effects of all forms of share-based compensation
and the effects of 123R upon the number of diluted shares used in calculating non-GAAP earnings per
share. We plan to report our future results on a GAAP basis and on a non-GAAP basis to exclude such
123R effects and will include a reconciliation of such non-GAAP financial measures to the most directly
comparable GAAP financial measures in our future announcements. We are disclosing this non-GAAP
information to the public to enable investors to more easily assess our performance on the same basis
applied by management and to ease comparison on both a GAAP and non-GAAP basis with other
companies that separately identify share-based compensation expenses. In particular, as we begin to apply
123R, we believe it is useful to investors to understand how the expenses and other adjustments
associated with the application of 123R are being reflected on our income statements.
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
March 31,
Twelve Months Ended
December 31,
2006
2005
2006
2005
$ 247,172
$ 208,083
$ 927,893
$ 846,936
98,626
88,732
377,016
362,961
148,546
119,351
550,877
483,975
Research and development
24,517
23,331
94,926
93,040
Selling, general and administrative
34,577
27,900
129,587
111,188
0
0
0
21,100
59,094
51,231
224,513
225,328
Operating income
89,452
68,120
326,364
258,647
Other income, net
9,980
6,094
32,821
18,621
Income before income taxes
99,432
74,214
359,185
277,268
Income taxes
23,864
17,811
116,816
63,483
$ 242,369
$ 213,785
Net sales
Cost of sales
Gross profit
Operating expenses:
Special charges
Net income
$
75,568
$
56,403
Basic net income per share
$
0.36
$
0.27
$
1.15
$
1.03
Diluted net income per share
$
0.35
$
0.27
$
1.13
$
1.01
Basic shares used in calculation
211,781
207,385
210,104
206,740
Diluted shares used in calculation
217,111
211,778
215,024
211,962
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
March 31,
2006
(Unaudited)
Cash and short-term investments
$
764,764
March 31,
2005
$
734,604
Accounts receivable, net
139,361
113,088
Inventories
115,024
103,728
99,680
123,928
1,118,829
1,075,348
Property, plant & equipment, net
659,972
693,302
Long-term investments
520,360
0
51,435
48,904
$ 2,350,596
$ 1,817,554
Other current assets
Total current assets
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt
$
268,954
$
45,454
Accounts payable and other accrued liabilities
240,534
169,481
Deferred income on shipments to distributors
99,481
91,730
608,969
306,665
801
599
Deferred tax liability
14,637
24,556
Stockholders' equity
1,726,189
1,485,734
$ 2,350,596
$ 1,817,554
Total current liabilities
Pension accrual
Total liabilities and stockholders' equity
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF GAAP INFORMATION TO NON-GAAP INFORMATION
(Unaudited)
(in thousands except per share amounts)
Three Months Ended
March 31,
2006
GAAP net income
$
Special charges, net of tax
(1) Tax charge on repatriation
(2) Philips royalty settlement
Twelve Months Ended
March 31,
2005
75,568
$
0
0
2006
2005
56,403
$ 242,369
$ 213,785
0
0
30,610
0
0
12,976
$ 272,979
$ 226,761
Non-GAAP net income
$
75,568
$
56,403
Diluted GAAP net income per share
$
0.35
$
0.27
$
1.13
$
1.01
Diluted non-GAAP net income per share
$
0.35
$
0.27
$
1.27
$
1.07
Diluted shares used in calculation
(1)
(2)
217,111
211,778
215,024
211,962
In the three-month period ended December 31, 2005, we recorded a tax charge of $30.6 million
associated with the repatriation of foreign earnings under the America Jobs Creation Act of 2004.
In the three-month period ended June 30, 2004, we recorded a special charge of $21.1 million with a
related tax benefit of $8.1 million for a patent license litigation settlement with U.S. Philips Corporation
and Philips Electronics North America Corp. (together “Philips”) which had been ongoing for the past
several years. The settlement included a dismissal of the pending litigation and the cross-license of
certain patents between Philips and Microchip.
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
The financial results included in this release are unaudited. The complete, audited financial
statements of the company for the year ended March 31, 2006 will be included in Microchip’s
Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on or
about June 25, 2006.
Conference Call and Updates:
Microchip will host a conference call today April 25, 2006 at 6:00 p.m. (Eastern Time) to discuss this
release. This call will be simulcast over the Internet at www.microchip.com. The webcast will be
available for replay until May 2, 2006.
A telephonic replay of the conference call will be available at approximately 8:00 p.m. (Eastern Time)
April 25, 2006 and will remain available until 5:00 p.m. (Eastern Time) on May 2, 2006. Interested
parties may listen to the replay by dialing 719-457-0820 and entering access code 1432882.
Cautionary Statement:
The statements in this release relating to gaining a strong foothold in our analog and 16-bit
microcontroller business, that increasing dividends is a highly desirable way of returning increasing value
to our shareholders, our expectation of net sales growth of 5% to 6% sequentially and for GAAP EPS of
approximately 35 cents and non-GAAP EPS of approximately 37 cents for the June 30, 2006 quarter, the
continued strong acceptance of and strong customer demand for Microchip’s products, and the statements
containing our guidance for the quarter ending June 30, 2006 with respect to net sales, gross margins,
operating expenses, tax rate, earnings per diluted share, days of inventory, capital expenditures for the
quarter ending June 30, 2006 and for fiscal 2007, net cash generation and future stock repurchases are
forward-looking statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our
actual results to differ materially, including, but not limited to: changes in demand or market acceptance
of our products and the products of our customers; the mix of inventory we hold and our ability to satisfy
short-term orders from our inventory; changes in utilization of our manufacturing capacity; our ability to
continue to secure sufficient assembly and testing capacity; competitive developments including pricing
pressures; the level of orders that are received and can be shipped in a quarter; the level of sell-through of
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Microchip Technology
Reports Fourth Quarter and
Fiscal Year 2006 Results
our products through distribution; changes or fluctuations in customer order patterns and seasonality;
foreign currency effects on our business; costs and outcome of any tax audit or any litigation involving
intellectual property, customers or other issues; disruptions in our business or the businesses of our
customers or suppliers due to natural disasters, terrorist activity, armed conflict, war, worldwide oil prices
and supply, public health concerns or disruptions in the transportation system; and general economic,
industry or political conditions in the United States or internationally.
For a detailed discussion of these and other risk factors, please refer to Microchip's filings on Forms 10-K
and 10-Q. You can obtain copies of Forms 10-K and 10-Q and other relevant documents for free at
Microchip’s Web site (www.microchip.com) or the SEC's Web site (www.sec.gov) or from commercial
document retrieval services.
Stockholders of Microchip are cautioned not to place undue reliance on our forward-looking statements,
which speak only as of the date such statements are made. Microchip does not undertake any obligation
to publicly update any forward-looking statements to reflect events, circumstances or new information
after this April 25, 2006 press release, or to reflect the occurrence of unanticipated events.
About Microchip:
Microchip Technology Inc. is a leading provider of microcontroller and analog semiconductors, providing
low-risk product development, lower total system cost and faster time to market for thousands of diverse
customer applications worldwide. Headquartered in Chandler, Arizona, Microchip offers outstanding
technical support along with dependable delivery and quality. For more information, visit the Microchip
Web site at www.microchip.com.
The Microchip name and logo, PIC, dsPIC and MPLAB are registered trademarks of Microchip Technology
Incorporated in the U.S.A. and in other countries. I2C is a trademark of Philips. All other trademarks mentioned
herein are property of their respective companies.
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