10-QPeriod: Q3 FY2012

MICROCHIP TECHNOLOGY INC Quarterly Report for Q3 Ended Dec 31, 2011

Filed February 6, 2012For Securities:MCHPMCHPP

Summary

Microchip Technology Inc.'s quarterly report for the period ending December 31, 2011, indicates a challenging quarter with a 10.5% year-over-year decline in net sales, primarily attributed to general economic and semiconductor industry conditions. Despite the sales dip, the company maintained a healthy gross profit margin of 55.8% for the quarter. The company's strategic focus remains on specialized semiconductor products for embedded control applications, with microcontrollers constituting the largest segment of sales. Financially, Microchip ended the quarter with a robust cash position of $605.7 million and total assets of $3.02 billion. While net income saw a decrease compared to the prior year, the company demonstrated effective cost management, with selling, general, and administrative expenses decreasing by 7.2% year-over-year. The company also continued its commitment to innovation through consistent investment in research and development, which increased by 4.9% year-over-year. Microchip also reaffirmed its dividend policy, indicating a commitment to returning value to shareholders.

Financial Highlights

51 data points
Beta

Revenue

$329.16M

56.4% Gross Margin

Net Income

$77.49M

23.5% Net Margin

EPS (Diluted)

$0.19

Total Assets

$3.02B

Cash & Equivalents

$605.73M

Free Cash Flow

$55.94M

Financial Statements
Beta
Revenue$329.16M
Cost of Revenue$145.38M
Gross Profit$185.49M
R&D Expenses$44.26M
SG&A Expenses$51.09M
Operating Expenses$97.36M
Operating Income$88.13M
Interest Expense$8.99M
Net Income$77.49M
EPS (Basic)$0.20
EPS (Diluted)$0.19
Shares Outstanding (Basic)383.28M
Shares Outstanding (Diluted)406.58M

Key Highlights

  • 1Net sales decreased by 10.5% year-over-year to $329.2 million for the three months ended December 31, 2011.
  • 2Gross profit margin remained strong at 55.8% for the quarter.
  • 3Research and development expenses increased by 4.9% year-over-year to $44.3 million, reflecting continued investment in innovation.
  • 4Selling, general, and administrative expenses decreased by 7.2% year-over-year to $52.1 million, demonstrating cost control.
  • 5The company maintained a healthy cash and cash equivalents balance of $605.7 million as of December 31, 2011.
  • 6Net income from continuing operations for the quarter was $77.5 million, down from $101.9 million in the prior year.
  • 7The company declared and paid quarterly dividends, demonstrating a commitment to shareholder returns.

Frequently Asked Questions

The decrease in net sales was primarily attributed to general economic and semiconductor industry conditions impacting the end markets served by Microchip.

Microchip demonstrated effective cost management by reducing selling, general, and administrative expenses by 7.2% year-over-year, while continuing to invest in research and development.

Microchip expects inventory levels to remain about flat in the March 2012 quarter compared to the December 2011 quarter, which they believe will allow them to maintain competitive lead times.

The company maintains a high-quality investment portfolio to preserve principal and meet liquidity needs. As of December 31, 2011, Microchip held $1.77 billion in cash, cash equivalents, and investments, indicating strong liquidity.