Microchip Reports Revenues of $161.3 Million for Most Recent Quarter
7/21/2003 - Microchip Technology Incorporated, a leading provider of microcontroller and analog semiconductors, reported results for the three months ended June 30, 2003. Net sales for the first quarter of fiscal year 2004 were $161.3 million, up 1% sequentially from $159.7 million in the immediately preceding quarter, and up 2% from sales of $157.5 million in the prior year’s first quarter. Pro forma net income for the first quarter of fiscal 2004 was $33.5 million or 16 cents per diluted share, up 2% from net income of $33.0 million or 16 cents per diluted share in the immediately preceding quarter, and up 12% from pro forma net income of $30.1 million or 14 cents per diluted share in the prior year’s first quarter. On a GAAP basis, net income for the first quarter of fiscal 2004 was $13.5 million, or 6 cents per diluted share. Pro forma diluted earnings per share for the first quarter of fiscal 2004 excludes the effects of special charges of $33.4 million which consisted of $30.6 million of accelerated depreciation relating to the closure of Fab 1 and $2.8 million of additional charges principally for contract cancellation, severance, and other related costs. A reconciliation of the Company’s GAAP results to its pro forma results is included later in this press release.
The Company expects to declare a quarterly cash dividend within the next week. Microchip initiated quarterly cash dividend payments in the third quarter of fiscal year 2003 and increased the cash dividend amount in the fourth quarter of fiscal year 2003.
“I was pleased that Microchip returned to a pattern of revenue growth in the June quarter, especially given the backdrop of current business challenges, particularly in Asia, that we have been experiencing,” said Steve Sanghi, Microchip’s President and CEO.
“The closure of Fab 1 and consolidation with Fab 2 was achieved flawlessly by our manufacturing team, establishing fab capacity levels that will reduce our future inventory levels. We closed the June quarter with 134 days of inventory, and anticipate being at the top end of our target range of 110 days by the end of the fiscal year,” Mr. Sanghi continued.
“From a market presence standpoint we were delighted to achieve our goal of reaching the number one position for 8-bit microcontroller shipments. The market share gains we achieved in calendar year 2002 reflect the strength of our brand name and the broad product offering that supports our customers,” said Mr. Sanghi.
“We anticipate improvement of our business model in the September quarter, with Asia and the Americas being our strongest geographies. We expect net sales to grow sequentially between 1 to 6% in the September quarter,” Mr. Sanghi concluded.
Microchip’s First Quarter Fiscal Year 2004 Highlights:
- Microchip achieved the number one position in worldwide 8-bit microcontroller unit shipments, according to industry analyst Gartner Dataquest’s recently released 2002 Microcontroller Market Share and Unit Shipments report*. From 2001 to 2002, unit sales for Microchip’s PIC® microcontrollers grew 30 percent, despite challenging business conditions, enabling us to attain the number one ranking.
- Microchip set a new quarterly record for shipments of development tools with 12,187 shipped. Sales were led by strong contributions from MPLAB In Circuit Debugger (ICD) 2 and PICkit 1 Flash Starter Kit. Total cumulative development system shipments now stand at 274,181.
- Microchip was named a finalist in the Best Sales Organization category for the American Business Awards. Nicknamed the Stevies, The American Business Awards are the first national, all-encompassing business awards program honoring great performances in the workplace.
- Microchip announced the PICDEMTM 4 Demonstration Board for the Company’s low pin-count PIC® Flash microcontrollers, including the recently launched PIC16F and PIC18F microcontroller families that feature nanoWatt Technology. For $129, designers receive a demonstration tool that offers multiple socket options for increased flexibility and immediate programming and debugging.
- Microchip introduced three microcontrollers with integrated transmitters and two receivers, which offers a complete system solution for short-range, uni-directional RF communication supporting frequency bands ranging from 260 – 930 MHz. By combining the rfPIC12F675 microcontroller/transmitters with either the rfRXD0420 receiver or rfRDX0920 receiver, users can easily create a wireless uni-directional communication link for embedded control applications, which can also be combined with the Company’s existing rfPICTM devices and KEELOQ® encoders to create remote sense and control applications.
- At the April Embedded Systems Conference in San Francisco, Microchip demonstrated the following products: the PS401/2 PowerSmart Smart Battery System; its first Programmable Gain Amplifier (MCP6S2X); the fixed speed 9600-Baud Infrared Data Association®-Standard protocol stack controller (MCP2140); PIC16F microcontrollers featuring nanoWatt Technology; rfPIC transmitters/receivers; PICDEMTM4 Demonstration Board; Application MaestroTM Software; the MPLAB® In-Circuit Emulator (ICE) 4000; and the PICkitTM 1 Starter Kit.
- The Company expanded its fan-speed control and fan-fault detection family, which features a proprietary fan auto-restart functionality that enables the device to continuously initiate a restart during a fan-fault condition. In addition to simplifying system design by eliminating the need for resetting the fan after a fan-fault condition occurs, the TC64xB devices also enable the user to set a minimum fan speed threshold (TC642B and TC647B) or an auto-shutdown threshold (TC646B, TC648B, and TC649B) to control fan operation when the operating temperature falls to lower levels. The TC642/6/8B devices assert an over-temperature signal to indicate a possible over-heating condition.
- Microchip unveiled the low-cost PIC18FXX20 64- and 80-pin TQFP Demonstration Board, the Company’s first demonstration board designed for its high pin-count PIC18F Flash microcontrollers. Fully functional right out of the box, the tool demonstrates the digital and analog peripherals of the PIC18FXX20 Flash microcontrollers, and allows for rapid and easy prototyping without the need to design a printed circuit board to support the included PIC18F8720 Flash microcontroller.
- Expanding its popular PIC18F Flash family, Microchip introduced the PIC18F6520 and PIC18F8520 microcontrollers in 64- and 80-pin TQFP packages with a low-cost 32Kb memory device featuring Microchip’s PMOS Electrically Erasable Cell (PEEC) process technology that provides best-in-class erase/write endurance, retention, and disturb reliability for both program and on-chip data EEPROM memory. These new devices are also code-compatible with Microchip’s PIC18F452 and PIC18F8720 families of Flash devices, enabling designers to re-use software and hardware in existing platforms, thus lowering overall development costs and time-to-market issues.
- Microchip revealed the TC1017 150mA low dropout regulator (LDO) in a tiny, space-saving SC-70 package. Designers can now replace SOT-23 LDOs with a 50 percent smaller footprint solution without compromising performance. The features of this new device improve system performance, reduce board space and minimize system cost, which makes the TC1017 one of the best SC-70 LDO choices for any battery-operated application.
Second Quarter Fiscal Year 2004 Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
Continuing low visibility in the global semiconductor industry makes it very difficult to predict demand and other related matters. Microchip will make available a Mid-Quarter Update on September 16, 2003 after market close by posting the information on the Company’s web site. The information will not be contained in a press release sent over the wire services, and will only be posted to the Company’s web site at www.microchip.com. Those who do not have Internet access may call Microchip’s Investor Relations Hotline at 480-792-7761 for a recorded summary of the Mid-Quarter Update. See “Conference Call and Updates” section below for details.
- Net sales for the second fiscal quarter ending September 30, 2003 are currently anticipated to be between $163 and $171 million (up approximately 1% to 6% sequentially).
- Gross margins for the second fiscal quarter ending September 30, 2003 are expected to be approximately 54%. Generally, gross margins will fluctuate over time, driven primarily by the mix of microcontrollers, analog products and memory products sold; manufacturing yields; fixed cost absorption; wafer fab loading levels; pricing pressures in our non-proprietary product lines; and competitive and economic conditions.
- Operating expenses for the second fiscal quarter ending September 30, 2003 are expected to be between $42.7 and $43.4 million. Operating expenses fluctuate over time, primarily due to revenue and profit levels.
- The tax rate for the second fiscal quarter ending September 30, 2003 is anticipated to be approximately 25.5%.
- Earnings per diluted share for the second fiscal quarter ending September 30, 2003 are anticipated to be between 16 and 18 cents.
- Inventories at September 30, 2003 are anticipated to be approximately 124 days. The level of inventories fluctuates over time, primarily due to sales volume and overall capacity utilization.
- Capital expenditures for the quarter ending September 30, 2003 are expected to be approximately $10 million, and capital expenditures for fiscal year 2004 are expected to total approximately $40 to $45 million. The level of capital expenditures varies from time to time as a result of actual and anticipated business conditions.
- Based on cash projected to be generated from operations and current projected capital expenditure levels, we expect to add approximately $50 million to our existing cash balances during the quarter ending September 30, 2003, subject to stock repurchases, if any.
- Microchip announced on August 7, 2002 that its Board of Directors had authorized a stock buy-back of up to 2.5 million shares. Microchip has been buying stock in the open market since that date. To date, 1,392,200 shares have been repurchased at a cost of $29.6 million. Future purchases will depend upon market conditions and corporate considerations.
Microchip Technology Inc. is a leading provider of microcontroller and analog semiconductors, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide. Headquartered in Chandler, Arizona, Microchip offers outstanding technical support along with dependable delivery and quality. For more information, visit the Microchip website at www.microchip.com.
* Gartner Dataquest, 2002 Microcontroller Market Share and Unit Shipments, Tom Starnes, June 2003.
The Microchip logo and name, PIC, PICmicro, KEELOQ , MPLAB, and PowerSmart are registered trademarks of Microchip Technology Incorporated. rfPIC, PICkit, PICDEM and Application Maestro are trademarks of Microchip Technology Incorporated. All rights reserved. The Stevie award is a trademark of Stevie Awards Inc. Infrared Data Association (IRDA) is a registered trademark with the Infrared Data Association.
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