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Microchip Technology Announces Fourth Quarter and Fiscal Year 2012 Results

May 02, 2012 by Jeff Shepard

Microchip Technology Inc. reported results for the three months and fiscal year ended March 31, 2012.

Net sales for the fourth quarter of fiscal year 2012 were $338.9 million, up 3.0% sequentially from net sales of $329.2 million in the immediately preceding quarter, and down 10.8% from net sales of $380.0 million in the prior year’s fourth quarter. GAAP net income for the fourth quarter of fiscal year 2012 was $80.6 million, or 39 cents per diluted share, up 4.1% from GAAP net income of $77.5 million, or 38 cents per diluted share, in the immediately preceding quarter, and down 38.3% from GAAP net income from continuing operations of $130.6 million, or 65 cents per diluted share, in the prior year’s fourth quarter. In the fourth quarter of fiscal 2012, GAAP net income includes a special charge for a patent license settlement of $1.5 million. In the fourth quarter of fiscal 2011, GAAP net income includes a special charge of $0.2 million and a one-time favorable tax benefit of $24.4 million which includes the settlement of an IRS audit for tax years through March 31, 2008, and other one¬time tax events.

Non-GAAP net income for the fourth quarter of fiscal year 2012 was $94.3 million, or 46 cents per diluted share, up 10.4% from non-GAAP net income of $85.4 million, or 42 cents per diluted share, in the immediately preceding quarter, and down 20.7% from non-GAAP net income from continuing operations of $119.0 million, or 59 cents per diluted share, in the prior year’s fourth quarter.

Net sales for the fiscal year ended March 31, 2012 were $1.383 billion, a decrease of 7.0% from net sales of $1.487 billion in the prior fiscal year. On a GAAP basis, net income for the fiscal year ended March 31, 2012 was $336.7 million, or $1.65 per diluted share, a decrease of 21.5% from net income from continuing operations of $429.2 million, or $2.20 per diluted share in the prior fiscal year.

On a non-GAAP basis, consolidated net income for the fiscal year ended March 31, 2012 was $383.7 million, or $1.89 per diluted share, a decrease of 17.0% from net income from continuing operations of $462.3 million, or $2.39 per diluted share, in the prior fiscal year.

"Our March quarter results were consistent with the guidance we provided on February 2, 2012 and marked our 86th consecutive quarter of profitability," said Steve Sanghi, President and CEO. "The March quarter was a transitional quarter for us as we returned to sequential growth in revenue, gross margin and profits. We went into this down cycle one quarter earlier than most of the semiconductor industry and we predicted we would come out of this cycle a quarter earlier than most. Based on the results of many of our industry peers, this prediction has played out exactly as we expected."

Mr. Sanghi added, "With revenue up sequentially 3% in the March quarter, our results turned out to be good in an otherwise seasonally weak period impacted by the Lunar New Year holidays in Asia. On a Non-GAAP basis, gross margin improved by 133 basis points sequentially, operating profit was up by 7.6% sequentially and operating profit percentage was 31.9% of sales. This was an excellent result for a transitional quarter and we believe the results will continue to improve in fiscal 2013. We believe our inventory levels and short lead times, combined with our strong product portfolio have positioned us well to gain market share in our microcontroller and analog product lines."

"Our microcontroller business was up 5.5% on a sequential basis in the March quarter, with both 8-bit and 16-bit product line revenue up sequentially," said Ganesh Moorthy, Chief Operating Officer. "Our 16-bit business was up 19.3% sequentially in the March quarter, as our business recovered sharply from the inventory correction many of our customers went through over the last three quarters. Despite the broad-based market weakness, our strong design win momentum enabled us to overcome the macro trend and significantly outgrow the market."

Microchip also announced today that its Board of Directors has declared a quarterly cash dividend on its common stock of 35 cents per share. The quarterly dividend is payable on May 31, 2012 to stockholders of record on May 17, 2012.