Microchip Technology Announces Record Net Sales and Fourth Quarter and Fiscal Year 2013 Financial Results

  Microchip Technology Announces Record Net Sales and Fourth Quarter and
  Fiscal Year 2013 Financial Results

  *FOR FISCAL YEAR 2013:

       *RECORD NON-GAAP NET SALES OF $1.606 BILLION
       *RECORD GAAP NET SALES OF $1.582 BILLION
       *ON A NON-GAAP BASIS:

            *GROSS MARGIN OF 57.2%; OPERATING INCOME OF $459.5 MILLION; NET
              INCOME OF $388.5 MILLION AND 24.2% OF NET SALES; EPS OF $1.89
              PER DILUTED SHARE

       *ON A GAAP BASIS:

            *NET GROSS MARGIN OF 53%; OPERATING INCOME OF $178.6 MILLION; NET
              INCOME OF $127.4 MILLION AND 8.1% OF NET SALES; EPS OF 62 CENTS
              PER DILUTED SHARE

  *FOR THE QUARTER ENDING MARCH 31, 2013:

       *RECORD NET SALES OF $430.1 MILLION ON BOTH A NON-GAAP AND GAAP BASIS
       *ON A NON-GAAP BASIS: GROSS MARGINS OF 56.4%; OPERATING INCOME OF
         $119.5 MILLION; NET INCOME OF $109.3 MILLION; AND EPS OF 52 CENTS PER
         DILUTED SHARE INCLUDING A 3 CENTS BENEFIT FROM THE RETROACTIVE
         REINSTATEMENT OF THE R&D TAX CREDIT. THE FIRST CALL PUBLISHED
         ESTIMATE FOR NON-GAAP EPS WAS 47 CENTS.
       *ON A GAAP BASIS: GROSS MARGINS OF 55.6%; OPERATING INCOME OF $56.7
         MILLION; NET INCOME OF $59.7 MILLION; AND EPS OF 28 CENTS PER DILUTED
         SHARE INCLUDING A 3 CENTS BENEFIT FROM THE RETROACTIVE REINSTATEMENT
         OF THE R&D TAX CREDIT. THERE WAS NO PUBLISHED FIRST CALL ESTIMATE FOR
         GAAP EPS.
       *RECORD NET SALES FOR OVERALL MICROCONTROLLERS, 16-BIT
         MICROCONTROLLERS AND ANALOG PRODUCTS
       *LICENSING NET SALES OF $22.1 MILLION, UP 3.4% SEQUENTIALLY

Business Wire

CHANDLER, Ariz. -- May 02, 2013

Microchip Technology Incorporated (NASDAQ: MCHP), a leading provider of
microcontroller, mixed-signal, analog and Flash-IP solutions, today reported
results for the three months and fiscal year ended March 31, 2013 as
summarized in the following table:

                                                               
                   Three Months Ended March 31, 2013               Year Ended March 31, 2013                     
(in
millions,
except                           % of       Non-        % of                      % of       Non-          % of
earnings per                 Net      GAAP^1    Net                   Net      GAAP^1      Net    
diluted            GAAP           Sales                  Sales        GAAP          Sales                    Sales
share and
percentages)
Net Sales       $  430.1            $ 430.1            $ 1,581.6           $ 1,606.4         
Gross Margin    $  239.0    55.6 %   $ 242.6   56.4 %    $ 838.5     53.0 %   $ 918.6     57.2 % 
Operating       $  56.7     13.2 %   $ 119.5   27.8 %    $ 178.6     11.3 %   $ 459.5     28.6 % 
Income
Other
Expense
including
Gains/Losses    $  7.2              $ 5.1              $ 26.4              $ 18.2            
on Equity
Method
Investments
Income Tax
(Benefit)       ($ 10.2  )           $ 5.1              $ 24.8              $ 52.9            
Expense
Net Income      $  59.7     13.9 %   $ 109.3   25.4 %    $ 127.4     8.1  %   $ 388.5     24.2 % 
Earnings per          28                       52                       62
Diluted           cents             cents             cents             $ 1.89            
Share^2

^1  See the “Use of Non-GAAP Financial Measures” section of this release.

Consolidated net sales for the fourth quarter of fiscal year 2013 were $430.1
million, up 3.4% sequentially from net sales of $416.0 million in the
immediately preceding quarter, and up 26.9% from net sales of $338.9 million
in the prior year’s fourth quarter. Consolidated GAAP net income for the
fourth quarter of fiscal year 2013 was $59.7 million, or 28 cents per diluted
share, up 486.7% from GAAP net income of $10.2 million, or 5 cents per diluted
share, in the immediately preceding quarter, and down 26.0% from GAAP net
income of $80.6 million, or 39 cents per diluted share, in the prior year’s
fourth quarter. In the fourth quarter of fiscal 2013, GAAP net income includes
amortization of acquired intangibles of $39.9 million, special charges of $7.2
million and various non-recurring tax benefits of $9.5 million. In the fourth
quarter of fiscal 2012, GAAP net income includes amortization of acquired
intangibles of $2.8 million and special charges of $1.5 million.

Consolidated non-GAAP net income for the fourth quarter of fiscal year 2013
was $109.3 million, or 52 cents per diluted share, up 29.3% from non-GAAP net
income of $84.5 million, or 41 cents per diluted share, in the immediately
preceding quarter, and up 15.9% from non-GAAP net income of $94.3 million, or
46 cents per diluted share, in the prior year’s fourth quarter. Fourth quarter
GAAP and non-GAAP net income included a one-time tax benefit of $6.5 million
for the retroactive reinstatement of the R&D tax credit for calendar year
2012. Additionally, for the fourth quarters of fiscal 2013 and fiscal 2012,
our non-GAAP results exclude the effect of share-based compensation, expenses
related to our acquisition activities (including intangible asset
amortization, inventory valuation costs, severance costs, earn out adjustments
and legal and other general and administrative expenses associated with
acquisitions), non-recurring tax events and non-cash interest expense on our
convertible debentures. A reconciliation of our non-GAAP and GAAP results is
included in this press release.

Consolidated GAAP net sales for the fiscal year ended March 31, 2013 were
$1.582 billion, an increase of 14.4% from net sales of $1.383 billion in the
prior fiscal year. On a GAAP basis, consolidated net income for the fiscal
year ended March 31, 2013 was $127.4 million, or 62 cents per diluted share, a
decrease of 62.2% from net income of $336.7 million, or $1.65 per diluted
share in the prior fiscal year.

On a non-GAAP basis, consolidated net sales for the fiscal year ended March
31, 2013 were $1.606 billion, an increase of 16.1% from net sales of $1.383
billion in the prior fiscal year. Non-GAAP consolidated net income for the
fiscal year ended March 31, 2013 was $388.5 million, or $1.89 per diluted
share, an increase of 1.2% from net income of $383.7 million, or $1.89 per
diluted share, in the prior fiscal year.

Microchip also announced today that its Board of Directors declared a
quarterly cash dividend on its common stock of 35.35 cents per share. The
quarterly dividend is payable on June 4, 2013 to stockholders of record on May
21, 2013.

“We were very pleased with our execution in the March quarter,” said Steve
Sanghi, President and CEO. “Our net sales were above the midpoint of our
guidance and our gross margin, operating income and earnings per share all
exceeded the high end of our guidance, as we more than delivered on our
expectation that the December quarter would mark the bottom for this cycle.”

Mr. Sanghi added, “Our net sales were up sequentially by 3.4%, fueled by broad
based growth across our product lines. Our overall March quarter results were
excellent and I thank all the employees of Microchip for their contributions
to our success.”

“Our microcontroller revenue grew 3.7% sequentially in the March quarter to
achieve an all time record of $275.8 million,” said Ganesh Moorthy, Chief
Operating Officer. “Microcontroller revenue was also up 20.5% compared to the
year ago quarter and for fiscal year 2013 our microcontroller business was up
12.4% compared to fiscal year 2012.”

Mr. Moorthy continued, “Our 16-bit microcontroller revenue was up 7.7%
sequentially in the March quarter, achieving a new record. For fiscal year
2013, our 16-bit microcontroller revenue was up 74% compared to fiscal year
2012. Fiscal year 2013 also marks the 8^th consecutive year of revenue growth
and new revenue records for our 16-bit microcontroller business. We continue
to expand the breadth of innovative 16-bit solutions that we are offering, and
customers that we are serving, as we continue to gain share in this market.”

Mr. Moorthy concluded, “Our analog revenue grew 4.1% sequentially in the March
quarter to achieve a new record, and continues to perform exceptionally well.
For fiscal year 2013, our analog revenue was up 89.4% compared to fiscal year
2012, easily one of the best performing analog businesses in the industry.
Analog revenue represented 22.6% of our overall revenue in the March quarter,
the highest proportion we have ever achieved.”

Eric Bjornholt, Microchip’s Chief Financial Officer, said, “We made great
progress in reducing our inventory position in the March quarter. We ended the
March quarter with 116 days of inventory which is in line with our target
model. However, our internally produced inventory is still a bit high and the
inventory we purchase from foundries is low. We will continue to work on
right-sizing the various components of our inventory holdings in the June
quarter.”

Mr. Bjornholt added, “We had strong free cash flow generation in the March
quarter at $123.3 million prior to our dividend payment of $69.2 million. We
ended the quarter with $1.84 billion in cash and investments on the balance
sheet.”

Mr. Sanghi concluded, “We have continued to see exceptionally strong bookings
and expedite requests in our business driven by strong demand and our design
win pipeline. The bookings were an all time record in the March quarter. The
starting backlog for the June quarter was significantly higher than the
starting backlog for the March quarter. However, because of lead-times, many
new bookings will be scheduled beyond the end of this quarter. Taking all
these factors into account, we expect Microchip’s total net sales in the June
quarter to be up between 2% and 6% sequentially.”

Microchip’s Recent Highlights:

  *The Company made a major expansion of its embedded wireless portfolio with
    new Bluetooth^®, Wi-Fi^® and ZigBee^® products. Included was a PIC32
    Bluetooth Digital Audio Kit that showcases Microchip’s 32-bit MCU
    capabilities, feature-rich Wi-Fi modules, an IEEE 802.15.4 and proprietary
    networking radio, and XBee^® compatible Bluetooth and Wi-Fi modules.
  *In partnership with Digilent^®, Microchip added the Arduino™ compatible
    chipKIT™ uC32™ development platform and Wi-Fi shield for its 32-bit PIC32
    microcontrollers.
  *The latest microcontroller introductions included an expansion of the
    16-bit PIC24 Lite portfolio with advanced analog integration, 5V operation
    and eXtreme Low Power Technology for cost-sensitive automotive, consumer,
    medical and industrial applications. Adding to Microchip’s 8-bit portfolio
    is the smallest and lowest-cost PIC MCU with I^2C™. In combination with
    low power consumption and a hardware CVD peripheral in an 8-pin package,
    this PIC12LF1552 MCU is ideal for general-purpose and touch-sensing
    applications.
  *In development-tool news, the Graphics Display Designer X is an enhanced
    visual design utility that provides a quick and easy way of creating
    Graphical User Interface screens for applications using 16 or 32-bit PIC
    MCUs. Additionally, it allows designers to work within the operating
    system of their choice, including Windows^®, Linux or Mac OS^®.
  *Microchip recently shipped its 12 billionth PIC^® microcontroller,
    approximately 10 months after delivering its 11 billionth. This milestone
    demonstrates the industry’s continued acceptance of Microchip’s 8, 16 and
    32-bit PIC microcontrollers as the high-performance, low-power,
    cost-effective solution for embedded-control designs.
  *Building on its SMSC acquisition, Microchip announced the world’s first
    MOST150 Intelligent Network Interface Controller (INIC) with a USB 2.0
    high-speed device port and an integrated coax transceiver. With this USB
    2.0 port, including USB PHY and High-Speed Inter-Chip interface (HSIC),
    the OS81118 allows designers to create in-car mobile and Wi-Fi
    connectivity applications on the MOST150 network by connecting a standard
    Wi-Fi/3G/LTE module via USB.
  *Microchip introduced BodyCom™ technology, which is the world’s first to
    use the human body as a secure, low-power communication channel. The
    BodyCom framework provides a short-range, low-data-rate communication
    solution for securely connecting to a wide range of wireless applications.

First Quarter Fiscal Year 2014 Outlook:

The following statements are based on current expectations. These statements
are forward-looking, and actual results may differ materially.

                   
                       Microchip Consolidated Guidance
                   GAAP              Non-GAAP          Non-GAAP^1
                                           Adjustments
                                                     
Net Sales           $438.7 to $456                     $438.7 to $456
                       million                                 million
Gross Margin^2      56.0% to 56.5%    $2.2 to $2.3      56.5% to 57.0%
                                           million
Operating           36.65% to         $39 to $40.6      27.75% to
Expenses^2             37.15%              million             28.25%
Other Expense       $8.0 million      $2.2 million      $5.8 million
Income Tax          13.1% to 14.1%    $2.6 to $3.1      10.5% to 11.5%
Expense                                    million
Net Income          $64.2 to $71.5    $40.4 to $42.5    $104.6 to
                       million             million             $114.2 million
Diluted Common         Approximately       Approximately       Approximately
Shares              212.0             0.3               211.7
Outstanding^3          million shares      million shares      million shares
Earnings per        30 to 34 cents    about 20 cents    50 to 54 cents
Diluted Share

^1  See the “Use of Non-GAAP Financial Measures” section of this release.
^2   Earnings per share have been calculated based on the diluted shares
     outstanding of Microchip on a consolidated basis.
^3   See Footnote 2 under the “Use of Non-GAAP Financial Measures” section of
     this release.

  *Microchip’s inventory days at June 30, 2013 are expected to be flat to up
    a few days. Our inventory position enables us to continue to service our
    customers with very short lead times while allowing us to control future
    capital expenditures. Our actual inventory level will depend on the
    inventory that our distributors decide to hold to support their customers,
    overall demand for our products and our production levels.
  *Capital expenditures for the quarter ending June 30, 2013 are expected to
    be approximately $35 million. Capital expenditures for all of fiscal year
    2014 are anticipated to be approximately $80 million. We are continuing to
    take actions to selectively invest in the equipment needed to support the
    expected growth of our new products and technologies.
  *We expect net cash generation during the June quarter of approximately
    $100 million to $120 million prior to the dividend payment.

     Use of Non-GAAP Financial Measures: Our Non-GAAP adjustments, where
     applicable, include the effect of share-based compensation, expenses
     related to our acquisition activities (including intangible asset
^1  amortization, inventory valuation costs, restructuring costs, severance
     costs, earn-out adjustments and legal and other general and
     administrative expenses associated with acquisitions), and non-cash
     interest expense on our convertible debentures, the related income tax
     implications of these items and nonrecurring tax events.
     
     We are required to estimate the cost of certain forms of share-based
     compensation, including employee stock options, restricted stock units
     and our employee stock purchase plan, and to record a commensurate
     expense in our income statement. Share-based compensation expense is a
     non-cash expense that varies in amount from period to period and is
     affected by the price of our stock at the date of grant. The price of our
     stock is affected by market forces that are difficult to predict and are
     not within the control of management. The value of our equity securities
     varies in amount from period to period and is affected by fluctuations in
     the market prices of such securities that we cannot predict and are not
     within the control of management. The non-GAAP adjustments related to the
     impact of our acquisitions, legal settlements, nonrecurring tax events
     and a portion of our interest expense related to our convertible
     debentures are either non-cash expenses or non-recurring expenses related
     to such transactions. Accordingly, management excludes all of these items
     from its internal operating forecasts and models.
     
     We are using non-GAAP net sales, non-GAAP gross profit, non-GAAP gross
     profit percentage, non-GAAP operating expenses in dollars and as a
     percentage of sales including non-GAAP research and development expenses
     and non-GAAP selling, general and administrative expenses, non-GAAP
     operating income, non-GAAP other expense, net, non-GAAP income tax/tax
     rate, non-GAAP net income, and non-GAAP diluted earnings per share which
     exclude the items noted in the immediately preceding paragraph, as
     applicable, to permit additional analysis of our performance.
     
     Management believes these non-GAAP measures are useful to investors
     because they enhance the understanding of our historical financial
     performance and comparability between periods. Many of our investors have
     requested that we disclose this non-GAAP information because they believe
     it is useful in understanding our performance as it excludes non-cash and
     other charges that many investors feel may obscure our underlying
     operating results. Management uses these non-GAAP measures to manage and
     assess the profitability of its business. Specifically, we do not
     consider such items when developing and monitoring our budgets and
     spending. As described above, the economic substance behind our decision
     to exclude such items relates either to these charges being non-cash in
     nature, or to the one-time nature of the events, or in the case of
     distributor inventory acquired in an acquisition being recognized as net
     sales for non-GAAP purposes on sell-through to provide comparability
     between periods for the results of the acquired company, or in the case
     of our equity securities, because such item is difficult to predict and
     not within the control of management. Our determination of the above
     non-GAAP measures might not be the same as similarly titled measures used
     by other companies, and it should not be construed as a substitute for
     amounts determined in accordance with GAAP. There are limitations
     associated with using non-GAAP measures, including that they exclude
     financial information that some may consider important in evaluating our
     performance. Management compensates for this by presenting information on
     both a GAAP and non-GAAP basis for investors and providing
     reconciliations of the GAAP and non-GAAP results.
     
     Diluted Common Shares Outstanding can vary for, among other things, the
     trading price of our common stock, the actual exercise of options or
     vesting of restricted stock units, the potential for incremental dilutive
     shares from our convertible debentures (additional information regarding
     our share count is available in the investor relations section of our
^2   website under the heading “Supplemental Financial Information”), and the
     repurchase or the issuance of stock. The diluted common shares
     outstanding presented in the guidance table above assumes an average
     Microchip stock price in the June 2013 quarter of $37 per share (however,
     we make no prediction as to what our actual share price will be for such
     period or any other period and we cannot estimate what our stock option
     exercise activity will be during the quarter).
     
     Generally, gross margin fluctuates over time, driven primarily by the mix
     of microcontrollers, analog products and memory products sold and
     licensing revenue; variances in manufacturing yields; fixed cost
^3   absorption; wafer fab loading levels; inventory reserves; pricing
     pressures in our non-proprietary product lines; and competitive and
     economic conditions. Operating expenses fluctuate over time, primarily
     due to net sales and profit levels.

                                                              
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share amounts)

(Unaudited)
                                                                         
                     Three Months Ended                Twelve Months Ended
                     March 31,                         March 31,
                     2013            2012              2013              2012
Net sales            $ 430,144       $ 338,911         $ 1,581,623       $ 1,383,176
Cost of sales         191,105       143,265         743,164         583,882   
Gross profit           239,039         195,646           838,459           799,294
                                                                         
Operating
expenses:
Research and           70,438          47,713            254,723           182,650
development
Selling,
general and            64,744          49,725            261,471           208,328
administrative
Amortization
of acquired            39,922          2,802             111,537           10,963
intangible
assets
Special               7,222         1,497           32,175          837       
charges, net
                      182,326       101,737         659,906         402,778   
                                                                         
Operating              56,713          93,909            178,553           396,516
income
Losses on
equity method          (235    )       (135    )         (617      )       (195      )
investments
Other expense,        (6,976  )      (1,852  )        (25,759   )      (16,626   )
net
                                                                         
Income before          49,502          91,922            152,177           379,695
income taxes
Income tax
(benefit)             (10,188 )      11,286          24,788          42,990    
provision
                                                                         
Net income           $ 59,690       $ 80,636         $ 127,389        $ 336,705   
                                                                         
Basic net
income per           $ 0.30         $ 0.42           $ 0.65           $ 1.76      
common share
Diluted net
income per           $ 0.28         $ 0.39           $ 0.62           $ 1.65      
common share
                                                                         
Basic common
shares                195,908       192,570         194,595         191,283   
outstanding
Diluted common
shares                209,446       206,017         205,776         203,519   
outstanding
                                                                         
                                                                         


MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)
                                                             
                                                                   
ASSETS
                                                                   
                                                   March 31,       March 31,
                                                   2013            2012
                                                   (Unaudited)
Cash and short-term investments                    $ 1,578,597     $ 1,459,009
Accounts receivable, net                             229,955         170,201
Inventories                                          242,334         217,278
Other current assets                                260,396        169,373
Total current assets                                 2,311,282       2,015,861
                                                                   
Property, plant & equipment, net                     514,544         516,611
Long-term investments                                257,450         328,586
Other assets                                        841,962        222,718
                                                                   
Total assets                                       $ 3,925,238     $ 3,083,776
                                                                   
                                                                   
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                   
Accounts payable and other current                 $ 202,659       $ 139,164
liabilities
Deferred income on shipments to distributors        138,952        108,709
Total current liabilities                            341,611         247,873
                                                                   
Long-term line of credit                             620,000         -
Convertible debentures                               363,385         355,050
Long-term income tax payable                         182,723         70,490
Deferred tax liability                               462,083         411,368
Other long-term liabilities                          21,966          8,322
                                                                   
Stockholders’ equity                                1,933,470      1,990,673
                                                                   
Total liabilities and stockholders’ equity         $ 3,925,238     $ 3,083,776

                      
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,
                          2013            2012              2013              2012
Net sales, as             $ 430,144       $ 338,911         $ 1,581,623       $ 1,383,176
reported
Distributor revenue
recognition                -             -               24,748          -         
adjustment
Non-GAAP net sales        $ 430,144      $ 338,911        $ 1,606,371      $ 1,383,176 
                                                                              
RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
                          Three Months Ended                Twelve Months Ended
                          March 31,                         March 31,
                          2013            2012              2013              2012
Gross profit, as          $ 239,039       $ 195,646         $ 838,459         $ 799,294
reported
Distributor revenue
recognition                 -               -                 15,868            -
adjustment
Share-based
compensation                2,476           1,272             8,234             5,648
expense
Acquisition-related
acquired inventory         1,083         -               56,041          -         
valuation and other
costs
Non-GAAP gross            $ 242,598      $ 196,918        $ 918,602        $ 804,942   
profit
Non-GAAP gross              56.4    %       58.1    %         57.2      %       58.2      %
profit percentage
                                                                              
RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND
DEVELOPMENT EXPENSES
                          Three Months Ended                Twelve Months Ended
                          March 31,                         March 31,
                          2013            2012              2013              2012
Research and
development               $ 70,438        $ 47,713          $ 254,723         $ 182,650
expenses, as
reported
Share-based
compensation                (5,616  )       (3,899  )         (22,178   )       (14,719   )
expense
Acquisition-related        -             -               (17       )      -         
costs
Non-GAAP research
and development           $ 64,822       $ 43,814         $ 232,528        $ 167,931   
expenses
Non-GAAP research
and development
expenses as a               15.1    %       12.9    %         14.5      %       12.1      %
percentage of net
sales
                                                                              
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,
                          2013            2012              2013              2012
Selling, general
and administrative        $ 64,744        $ 49,725          $ 261,471         $ 208,328
expenses, as
reported
Share-based
compensation                (5,264  )       (4,648  )         (27,603   )       (17,922   )
expense
Acquisition-related        (1,248  )      46              (7,302    )      (817      )
costs
Non-GAAP selling,
general and               $ 58,232       $ 45,123         $ 226,566        $ 189,589   
administrative
expenses
Non-GAAP selling,
general and
administrative              13.5    %       13.3    %         14.1      %       13.7      %
expenses as a
percentage of net
sales
                                                                              
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME
                          Three Months Ended                Twelve Months Ended
                          March 31,                         March 31,
                          2013            2012              2013              2012
Operating income,         $ 56,713        $ 93,909          $ 178,553         $ 396,516
as reported
Distributor revenue
recognition                 -               -                 15,868            -
adjustment
Share-based
compensation                13,356          9,819             58,015            38,289
expense
Acquisition-related
acquired inventory          2,331           (46     )         63,360            817
valuation and other
costs
Amortization of
acquired intangible         39,922          2,802             111,537           10,963
assets
Special charges,           7,222         1,497           32,175          837       
net
Non-GAAP operating        $ 119,544      $ 107,981        $ 459,508        $ 447,422   
income
Non-GAAP operating
income as a                 27.8    %       31.9    %         28.6      %       32.3      %
percentage of net
sales
                                                                              
RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER (EXPENSE) INCOME, NET
                          Three Months Ended                Twelve Months Ended
                          March 31,                         March 31,
                          2013            2012              2013              2012
Other expense, net,       $ (6,976  )     $ (1,852  )       $ (25,759   )     $ (16,626   )
as reported
Convertible debt
non-cash interest           2,091           1,932             8,197             7,512
expense
Losses on equity           -             -               -               1,878     
securities
Non-GAAP other
(expense) income,         $ (4,885  )     $ 80             $ (17,562   )     $ (7,236    )
net
Non-GAAP other
(expense) income,
net, as a                   -1.1    %       0.0     %         -1.1      %       -0.5      %
percentage of net
sales
                                                                              
RECONCILIATION OF GAAP INCOME TAX (BENEFIT) PROVISION TO NON-GAAP INCOME TAX PROVISION
                          Three Months Ended                Twelve Months Ended
                          March 31,                         March 31,
                          2013            2012              2013              2012
Income tax
(benefit)                 $ (10,188 )     $ 11,286          $ 24,788          $ 42,990
provision, as
reported
Income tax rate, as         -20.6   %       12.3    %         16.3      %       11.3      %
reported
Distributor revenue
recognition                 -               -                 3,404             -
adjustment
Share-based
compensation                1,542           1,234             9,038             4,889
expense
Acquisition-related
acquired inventory
valuation costs,            727             192               13,530            656
intangible asset
amortization and
other costs
Special charges             2,708           146               15,551            146
Convertible debt
non-cash interest           784             724               3,075             2,817
expense
Non-recurring tax           9,539           -                 (16,532   )       4,075
events
Losses on equity           -             -               -               704       
securities
Non-GAAP income tax       $ 5,112        $ 13,582         $ 52,854         $ 56,277    
provision
Non-GAAP income tax         4.5     %       12.6    %         12.0      %       12.8      %
rate
                                                                              
RECONCILIATION OF GAAP NET INCOME AND GAAP DILUTED NET INCOME PER SHARE TO NON-GAAP NET
INCOME AND NON-GAAP DILUTED NET INCOME PER SHARE
                          Three Months Ended                Twelve Months Ended
                          March 31,                         March 31,
                          2013            2012              2013              2012
Net income, as            $ 59,690        $ 80,636          $ 127,389         $ 336,705
reported
Distributor revenue
recognition                 -               -                 12,464            -
adjustment, net of
tax effect
Share-based
compensation                11,814          8,585             48,977            33,400
expense, net of tax
effect
Acquisition-related
acquired inventory
valuation costs,
intangible asset            41,526          2,564             161,367           11,124
amortization and
other costs, net of
tax effect
Special charges,            4,514           1,351             16,624            691
net of tax effect
Convertible debt
non-cash interest           1,307           1,208             5,122             4,695
expense, net of tax
effect
Non-recurring tax           (9,539  )       -                 16,532            (4,075    )
events
Losses on equity
securities, net of         -             -               -               1,174     
tax effect
Non-GAAP net income       $ 109,312      $ 94,344         $ 388,475        $ 383,714   
Non-GAAP net income
as a percentage of          25.4    %       27.8    %         24.2      %       27.7      %
net sales
                                                                              
Diluted net income
per share, as             $ 0.28         $ 0.39           $ 0.62           $ 1.65      
reported
Non-GAAP diluted
net income per            $ 0.52         $ 0.46           $ 1.89           $ 1.89      
share
Diluted common
shares outstanding,        209,237       205,603         205,483         202,969   
non-GAAP
                                                                              

Microchip will host a conference call today, May 2, 2013 at 5:00 p.m. (Eastern
Time) to discuss this release. This call will be simulcast over the Internet
at www.microchip.com. The webcast will be available for replay until May 9,
2013.

A telephonic replay of the conference call will be available at approximately
8:00 p.m. (Eastern Time) May 2, 2013 and will remain available until 8:00 p.m.
(Eastern Time) on May 9, 2013. Interested parties may listen to the replay by
dialing 719-457-0820 and entering access code 6836779.

Cautionary Statement:

The statements in this release relating to the December quarter marking the
bottom for this cycle, continuing to expand the breadth of our 16-bit
solutions and customers that we are serving, continuing to gain share in the
16-bit market, continuing to perform exceptionally well, right-sizing the
various components of our inventory holdings, exceptionally strong bookings
and expedite requests in our business, strong demand and design win pipeline,
expecting total net sales in the June 2013 quarter to be up between 2% and 6%
percent sequentially, continued acceptance of our 8, 16 and 32-bit
microcontrollers, our first quarter fiscal 2014 guidance (GAAP and Non-GAAP as
applicable) including net sales, gross margin, operating expenses, other
expense, income tax expense, net income, diluted common shares outstanding,
earnings per diluted share, inventory days, ability to continue to service our
customers with very short lead times while allowing us to control capital
expenditures, capital expenditures for the June 2013 quarter and for fiscal
2014, expected growth of our new products and technologies, net cash
generation and assumed average stock price in the June 2013 quarter are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These statements involve
risks and uncertainties that could cause our actual results to differ
materially, including, but not limited to: the continued economic uncertainty
or any unexpected fluctuations or weakness in the U.S. and global economies,
changes in demand or market acceptance of our products and the products of our
customers; the mix of inventory we hold and our ability to satisfy short-term
orders from our inventory; changes in utilization of our manufacturing
capacity and our ability to effectively manage our production levels;
competitive developments including pricing pressures; the level of orders that
are received and can be shipped in a quarter; the level of sell-through of our
products through distribution; changes or fluctuations in customer order
patterns and seasonality; foreign currency effects on our business; our
ability to continue to realize the expected benefits of our SMSC acquisition;
the impact of any other significant acquisitions that we may make; costs and
outcome of any current or future tax audit or any litigation involving
intellectual property, customers or other issues; our actual average stock
price in the June 2013 quarter and the impact such price will have on our
share count; disruptions in our business or the businesses of our customers or
suppliers due to natural disasters (including any floods in Thailand),
terrorist activity, armed conflict, war, worldwide oil prices and supply,
public health concerns or disruptions in the transportation system; and
general economic, industry or political conditions in the United States or
internationally.

For a detailed discussion of these and other risk factors, please refer to
Microchip's filings on Forms 10-K and 10-Q. You can obtain copies of Forms
10-K and 10-Q and other relevant documents for free at Microchip’s website
(www.microchip.com) or the SEC's website (www.sec.gov) or from commercial
document retrieval services.

Stockholders of Microchip are cautioned not to place undue reliance on our
forward-looking statements, which speak only as of the date such statements
are made. Microchip does not undertake any obligation to publicly update any
forward-looking statements to reflect events, circumstances or new information
after this May 2, 2013 press release, or to reflect the occurrence of
unanticipated events.

About Microchip:

Microchip Technology Incorporated is a leading provider of microcontroller,
mixed-signal, analog and Flash-IP solutions, 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.

   Note: The Microchip name and logo, PIC, MPLAB, and GestIC are registered
   trademarks of Microchip Technology Inc. in the USA and other countries.
BodyCom, and chipKIT are trademarks of Microchip Technology Inc. in the U.S.A.
and other countries. All other trademarks mentioned herein are the property of
                         their respective companies.

Contact:

Microchip Technology Incorporated
INVESTOR RELATIONS CONTACTS:
J. Eric Bjornholt, 480-792-7804
CFO
 
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