Microchip Technology Announces Record Financial Results For Fourth Quarter And Fiscal Year 2016

 

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands except per share amounts and percentages)
(Unaudited)





RECONCILIATION OF GAAP NET SALES TO NON-GAAP NET SALES


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015


Net sales, as reported

$

557,647



$

543,207



$

2,173,334



$

2,147,036


Distributor revenue recognition adjustment

10,791



3,983



40,501



13,570


Non-GAAP net sales

$

568,438



$

547,190



$

2,213,835



$

2,160,606



RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015


Gross profit, as reported

$

302,779



$

313,632



$

1,205,464



$

1,229,564


Distributor revenue recognition adjustment, net of product cost

5,395



1,792



23,794



6,357


Share-based compensation expense

1,927



2,025



8,252



9,010


Manufacturing excursion

3,624





3,624




Acquisition-related restructuring and acquired inventory valuation costs

18,197



1,511



45,646



26,203


Non-GAAP gross profit

$

331,922



$

318,960



$

1,286,780



$

1,271,134


Non-GAAP gross profit percentage

58.4

%


58.3

%


58.1

%


58.8

%





RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015

Research and development expenses, as reported

$

95,638



$

87,662



$

372,596



$

349,543


Share-based compensation expense

(8,399)



(7,519)



(32,022)



(28,164)


Non-GAAP research and development expenses

$

87,239



$

80,143



$

340,574



$

321,379


Non-GAAP research and development expenses as a percentage of net sales

15.3

%


14.6

%


15.4

%


14.9

%





RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015

Selling, general and administrative expenses, as reported

$

78,293



$

67,778



$

301,670



$

274,815


Share-based compensation expense

(6,991)



(5,639)



(31,146)



(21,422)


Acquisition-related costs

(5,040)



(741)



(9,738)



(4,001)


Non-GAAP selling, general and administrative expenses

$

66,262



$

61,398



$

260,786



$

249,392


Non-GAAP selling, general and administrative expenses as a percentage of net sales

11.7

%


11.2

%


11.8

%


11.5

%





RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015

Operating expenses, as reported

$

222,833



$

203,285



$

853,119



$

803,944


Share-based compensation expense

(15,390)



(13,158)



(63,168)



(49,586)


Acquisition-related costs

(5,040)



(741)



(9,738)



(4,001)


Amortization of acquired intangible assets

(48,132)



(47,087)



(174,896)



(176,746)


Special charges, net

(770)



(758)



(3,957)



(2,840)


Non-GAAP operating expenses

$

153,501



$

141,541



$

601,360



$

570,771


Non-GAAP operating expenses as a percentage of net sales

27.0

%


25.9

%


27.2

%


26.4

%





RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015

Operating income, as reported

$

79,946



$

110,347



$

352,345



$

425,620


Distributor revenue recognition adjustment

5,395



1,792



23,794



6,357


Share-based compensation expense

17,317



15,183



71,420



58,596


Manufacturing excursion

3,624





3,624




Acquisition-related restructuring, acquired inventory valuation and other costs

23,237



2,252



55,384



30,204


Amortization of acquired intangible assets

48,132



47,087



174,896



176,746


Special charges, net

770



758



3,957



2,840


Non-GAAP operating income

$

178,421



$

177,419



$

685,420



$

700,363


Non-GAAP operating income as a percentage of net sales

31.4

%


32.4

%


31.0

%


32.4

%





RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER EXPENSE, NET


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015

Other expense, net, as reported

$

(22,277)



$

(48,138)



$

(70,707)



$

(79,396)


Loss on retirement of convertible debentures



50,631





50,631


Gain on equity securities and equity method investment



(18,469)



(16,147)



(18,469)


Non-cash other expense, net

15,920



6,854



53,005



14,165


Impairment on available-for-sale investment





3,995




Other expenses on acquisition restructuring





501




Non-GAAP other expense, net

$

(6,357)



$

(9,122)



$

(29,353)



$

(33,069)


Non-GAAP other expense, net, as a percentage of net sales

(1.1)

%


(1.7)

%


(1.3)

%


(1.5)

%





RECONCILIATION OF GAAP INCOME TAX BENEFIT TO NON-GAAP INCOME TAX PROVISION


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015

Income tax benefit, as reported

$

(9,742)



$

(36,559)



$

(42,632)



$

(19,418)


Income tax rate, as reported

(16.9)%



(58.9)%



(15.2)%



(5.6)%


Distributor revenue recognition adjustment

1,911



251



8,721



1,074


Share-based compensation expense

5,446



3,755



23,012



10,640


Manufacturing excursion

1,324





1,324




Acquisition-related restructuring, acquired inventory valuation costs, intangible asset amortization and other costs

2,018



3,365



34,799



18,061


Special charges, net

31



239



1,445



962


Loss on retirement of convertible debentures



18,809





18,809


Non-cash other expense, net

5,692



2,546



19,426



5,262


Gain on equity securities and equity method investment





(31)




Impairment on available-for-sale investment





1,472




Non-recurring tax events

12,300



26,735



24,706



36,718


Non-GAAP income tax provision

$

18,980



$

19,141



$

72,242



$

72,108


Non-GAAP income tax rate

11.0

%


11.4

%


11.0

%


10.8

%





RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO MICROCHIP TECHNOLOGY AND GAAP DILUTED NET INCOME PER COMMON SHARE ATTRIBUTABLE TO MICROCHIP TECHNOLOGY STOCKHOLDERS TO NON-GAAP NET INCOME ATTRIBUTABLE TO MICROCHIP TECHNOLOGY AND NON-GAAP DILUTED NET INCOME PER COMMON SHARE ATTRIBUTABLE TO MICROCHIP TECHNOLOGY STOCKHOLDERS


Three months ended


Twelve months ended


March 31,


March 31,


2016


2015


2016


2015

Net income attributable to Microchip Technology, as reported

$

67,355



$

99,402



$

324,132



$

369,009


Noncontrolling interests



(995)



(375)



(4,618)


Distributor revenue recognition adjustment, net of tax effect

3,484



1,541



15,073



5,283


Share-based compensation expense, net of tax effect

11,871



11,428



48,408



47,956


Manufacturing excursion, net of tax effect

2,300





2,300




Acquisition-related restructuring, acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect

69,351



45,974



195,982



188,889


Special charges, net of tax effect

739



519



2,512



1,878


Loss on retirement of convertible debentures, net of tax effect



31,822





31,822


Non-cash other expense, net of tax effect

10,228



4,308



33,579



8,903


Gain on equity securities and equity method investment, net of tax effect



(18,469)



(16,116)



(18,469)


Impairment on available-for-sale investment, net of tax effect





2,523




Non-recurring tax events

(12,300)



(26,735)



(24,706)



(36,718)


Non-GAAP net income attributable to Microchip Technology

$

153,028



$

148,795



$

583,312



$

593,935


Non-GAAP net income attributable to Microchip Technology as a percentage of net sales

26.9

%


27.2

%


26.3

%


27.5

%









Diluted net income per common share attributable to Microchip Technology stockholders, as reported

$

0.31



$

0.45



$

1.49



$

1.65


Non-GAAP diluted net income per common share attributable to Microchip Technology stockholders

$

0.70



$

0.68



$

2.68



$

2.66


Diluted common shares outstanding, as reported

217,711



220,947



217,388



223,561


Diluted common shares outstanding Non-GAAP

217,711



220,420



217,260



223,017



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