Microchip Technology Incorporated reported results for the three months and year ended March 31, 2016, including; GAAP net sales for the fourth quarter of fiscal 2016 were $557.6 million, up 2.7% from GAAP net sales of $543.2 million in the prior year's fourth fiscal quarter. GAAP net income for the fourth quarter of fiscal 2016 was $67.4 million, or 31 cents per diluted share, down 32.2% from GAAP net income of $99.4 million, or 45 cents per diluted share, in the prior year's fourth fiscal quarter.
GAAP net sales for the fiscal year ended March 31, 2016 were $2.173 billion, an increase of 1.2% from net sales of $2.147 billion in the prior fiscal year. On a GAAP basis, consolidated net income for the fiscal year ended March 31, 2016 was $324.1 million, or $1.49 per diluted share, a decrease of 12.2% from net income of $369.0 million, or $1.65 per diluted share in the prior fiscal year.
On April 4, 2016, Microchip completed its acquisition of Atmel Corporation for $8.15 per share consisting of $7.00 in cash and $1.15 in shares of Microchip common stock. The acquisition price represented a total equity value of about $3.47 billion, and a total enterprise value of about $3.43 billion, after excluding Atmel's cash and investments net of debt on its balance sheet of approximately $39.3 million at the closing date.
"Our March quarter financial results were very strong amidst a weak semiconductor industry backdrop," said Steve Sanghi, Chairman and CEO. "We achieved the high end of our net sales guidance provided on April 4, 2016, establishing a new record in the process, and we exceeded the high end of our guidance for non-GAAP gross margin percentage, operating profit percentage and non-GAAP diluted earnings per share."
Mr. Sanghi added, "Our non-GAAP earnings per share was sequentially up 11% from the December 2015 quarter due to improving sales, gross margin and operating expense leverage, which we believe clearly demonstrates that there is still operating leverage in our premium business model."
"Our microcontroller revenue was up 5.5% sequentially in the March 2016 quarter compared to the December 2015 quarter as we experienced a broad-based recovery in our business," said Ganesh Moorthy, President and Chief Operating Officer. "All three of our microcontroller product lines, 8-bit, 16-bit and 32-bit, had revenue that was sequentially up, with our 16-bit and 32-bit product lines being up in double digit percentages. Microcontrollers represented 59.9% of Microchip's overall revenue in the March 2016 quarter."
Mr. Moorthy added, "Our analog business was about flat in the March 2016 quarter compared to the December 2015 quarter, and was up 34.6% compared to the year-ago quarter. In fiscal year 2016, our analog business was up 26.3% compared to fiscal year 2015. The strong growth and increase in market-share in fiscal year 2016 was the result of our organic growth efforts as well as our Micrel acquisition. Our analog business represented 30.2% of Microchip's overall revenue in the March 2016 quarter."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "The cash generation in the March quarter, excluding our acquisition activities, our dividend payment, and changes in borrowing levels under our revolving line of credit was a record $196.3 million, significantly above our guidance. At March 31, 2016, the consolidated cash and total investment position on our balance sheet was $2.565 billion."
Mr. Sanghi added, "We entered the June quarter with a stronger backlog than we had going into the March quarter and the bookings and turns for the quarter so far have been strong. In the June quarter our business is typically stronger in Asia with the Chinese New year behind us, but slower in Europe compared to the March quarter. Based on our analysis of economic and semiconductor industry conditions, as well as our own business indicators, we are guiding the June quarter net sales without Atmel to be up between 1% and 5% sequentially or between $574.1 million and $596.9 million.
“There are two items that investors need to be mindful of as we look at guidance for Atmel's net sales for the June quarter. First, while Atmel reported its net sales based on sell-in revenue recognition to distributors in Asia, Microchip will report Atmel's non-GAAP sales based on a sell-through revenue recognition worldwide. Secondly, Microchip will report the Mobile Touch portion of Atmel's business as an asset held for sale and will report this business unit's profit or loss below the net operating profit of Microchip for GAAP reporting purposes. The Mobile Touch portion of Atmel's business will be excluded from Microchip's non-GAAP results. Based on these factors, we expect Atmel to add approximately $225 million to $245 million in net sales from continuing operations in the June quarter. Therefore, we expect our consolidated non-GAAP revenue to be between $799.1 million and $841.9 million in the June quarter."
Mr. Sanghi concluded, "We expect Microchip's business without Atmel to contribute 70 cents to 74 cents to non-GAAP earnings per share for the June quarter, and we expect Atmel to contribute zero to five cents to our earnings on a non-GAAP basis. Therefore, we expect our consolidated non-GAAP earnings per share to be between 70 cents to 79 cents per share in the June quarter. We remain confident we can achieve 25 cents of accretion to non-GAAP diluted earnings per share from Atmel in fiscal 2017."
