Microchip Technology Inc. reported results for the three months ended December 31, 2006. Net sales for the third quarter of fiscal 2007 were $251 million, down 6.3% sequentially from $267.9 million in the immediately preceding quarter, and up 6.9% from sales of $234.9 million in the prior year’s third fiscal quarter.
The company adopted SFAS No. 123 (revised 2004) "Share-Based Payment" at the beginning of the fiscal year 2007. As such, the company has included additional information in its disclosures to assist shareholders with appropriate comparative information. GAAP net income for the third quarter of fiscal 2007 was $72.8 million or 33 cents per diluted share, down 8.4% from GAAP net income of $79.5 million, or 36 cents per diluted share, in the immediately preceding quarter, and up 81.6% from GAAP net income of $40.1 million, or 19 cents per diluted share, in the prior year’s third fiscal quarter.
GAAP net income in the prior year’s third fiscal quarter was impacted by $30.6 million of additional tax expense as a result of a repatriation of $500 million of foreign earnings under the American Job Creation Act of 2004. Non-GAAP net income for the third quarter of fiscal 2007, which excludes the effect of all share-based compensation expense, was $78.7 million, or 36 cents per diluted share, down 6.5% from non-GAAP net income of $84.2 million, or 38 cents per diluted share, in the immediately preceding quarter, and up 11.3% from non-GAAP net income of $70.7 million, or 33 cents per diluted share, in the prior year’s third fiscal quarter.
Microchip also announced that its Board of Directors has declared a quarterly cash dividend on its common stock of 26.5 cents per share. The quarterly dividend is payable on February 28, 2007 to stockholders of record on February 14, 2007. Microchip initiated quarterly cash dividend payments in the third quarter of fiscal 2003.
"In difficult industry conditions, Microchip’s results for the December quarter were essentially in line with the guidance we provided on November 28, 2006. While sales were slightly lower than our guidance, our gross margin performance, net earnings, EPS per diluted share and cash flow met our prior guidance," said Steve Sanghi, Microchip’s President and CEO. "Gross margins on a non-GAAP basis were off our record highs by only 15 basis points, and operating margins on a non-GAAP basis reached 35.6% of sales."
"Sixteen-bit microcontrollers were essentially flat in the December quarter, and revenue from Flash-based microcontrollers declined 5.3% sequentially, both evidencing the market conditions we encountered in this quarter," said Ganesh Moorthy, Microchip’s Executive Vice President.
