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Microchip Technology Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: May 30, 2012 01:22PM
Microchip Technology Inc. (MCHP) filed Annual Report for the period ended 2012-03-31. Microchip Tech has a market cap of $5.94 billion; its shares were traded at around $31.33 with a P/E ratio of 18.1 and P/S ratio of 4.3. The dividend yield of Microchip Tech stocks is 4.5%. Microchip Tech had an annual average earning growth of 6.8% over the past 10 years. GuruFocus rated Microchip Tech the business predictability rank of 3-star.
Highlight of Business Operations:We measure at fair value and recognize compensation expense for all share-based payment awards, including grants of employee stock options, restricted stock units (RSUs) and employee stock purchase rights, to be recognized in our financial statements based on their respective grant date fair values. Total share-based compensation in fiscal 2012 was $38.3 million, of which $32.7 million was reflected in operating expenses. Total share-based compensation included in cost of sales in fiscal 2012 was $5.6 million. Total share-based compensation included in our inventory balance was $4.6 million at March 31, 2012.
Our microcontroller product line represents the largest component of our total net sales. Microcontrollers and associated application development systems accounted for approximately 67.1% of our total net sales in fiscal 2012, approximately 68.2% of our total net sales in fiscal 2011 and 81.0% of our total net sales in fiscal 2010. The primary reason for the decrease in our microcontroller net sales as a percentage of our total net sales in fiscal 2011 compared to fiscal 2010 was our acquisition of SST which resulted in an increase in our memory product and technology licensing sales.
Sales of our memory products accounted for approximately 13.0% of our total net sales in fiscal 2012, approximately 14.9% of our total net sales in fiscal 2011 and approximately 8.5% of our total net sales in fiscal 2010. The primary reason for the increase in our memory product net sales as a percentage of our total net sales in fiscal 2011 compared to the prior fiscal year was our acquisition of SST s SuperFlash memory products.
R&D expenses for fiscal 2012 were $182.7 million, or 13.2% of sales, compared to $170.6 million, or 11.5% of sales, for fiscal 2011 and $120.8 million, or 12.8% of sales, for fiscal 2010. We are committed to investing in new and enhanced products, including development systems software, and in our design and manufacturing process technologies. We believe these investments are significant factors in maintaining our competitive position. R&D costs are expensed as incurred. Assets purchased to support our ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their expected useful lives. R&D expenses include labor, depreciation, masks, prototype wafers, and expenses for the development of process technologies, new packages, and software to support new products and design environments.
Selling, general and administrative expenses for fiscal 2012 were $212.4 million, or 15.3% of sales, compared to $227.8 million, or 15.3% of sales, for fiscal 2011, and $167.2 million, or 17.7% of sales, for fiscal 2010. Selling, general and administrative expenses include salary expenses related to field sales, marketing and administrative personnel, advertising and promotional expenditures and legal expenses. Selling, general and administrative expenses also include costs related to our direct sales force and field applications engineers who work in sales offices worldwide to stimulate demand by assisting customers in the selection and use of our products.
Stocks Discussed: MCHP,