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Microchip Technology Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 9, 2012 07:26PM
Microchip Technology Inc. (MCHP) filed Quarterly Report for the period ended 2012-06-30. Microchip Technology Inc. has a market cap of $6.72 billion; its shares were traded at around $35.0016 with a P/E ratio of 21 and P/S ratio of 4.9. The dividend yield of Microchip Technology Inc. stocks is 4%. Microchip Technology Inc. had an annual average earning growth of 7.6% over the past 10 years. GuruFocus rated Microchip Technology Inc. the business predictability rank of 3.5-star.
Highlight of Business Operations:We measure fair value and recognize compensation expense for all share-based payment awards, including grants of employee stock options, 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 during the three months ended June 30, 2012 was $10.4 million, of which $1.7 million was capitalized to inventory and $8.7 million was reflected in operating expenses. Total share-based compensation reflected in cost of sales during the three months ended June 30, 2012 was $1.3 million. Total share-based compensation included in our inventory balance was $4.9 million at June 30, 2012.
Our net sales for the quarter ended June 30, 2012 were $352.1 million, an increase of 3.9% from the previous quarter's sales of $338.9 million, and a decrease of 6.0% from net sales of $374.5 million in the quarter ended June 30, 2011. The increase in net sales in the quarter ended June 30, 2012 over the previous quarter, and the decrease in net sales in the quarter ended June 30, 2012 compared to the quarter ended June 30, 2011, were due primarily to general economic and semiconductor industry conditions. Average selling prices for our semiconductor products were down approximately 4% for the three-month period ended June 30, 2012 over the corresponding period of the previous fiscal year. The number of units of our semiconductor products sold was down approximately 3% for the three-month period ended June 30, 2012 over the corresponding period of the previous fiscal year.
R&D expenses for the three months ended June 30, 2012 were $48.8 million, or 13.9% of net sales, compared to $45.3 million, or 12.1% of net sales, for the three months ended June 30, 2011. 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 the three months ended June 30, 2012 were $57.9 million, or 16.4% of net sales, compared to $57.6 million, or 15.4% of net sales, for the three months ended June 30, 2011. Selling, general and administrative expenses include salary and other 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.
Our total cash, cash equivalents, short-term investments and long-term investments held by our foreign subsidiaries was $1,474.5 million at June 30, 2012 and $1,381.1 million at March 31, 2012. Under current tax laws and regulations, if cash and cash equivalents and investments held by our foreign subsidiaries were to be distributed to the U.S. in the form of dividends or otherwise, we would be subject to additional U.S. income taxes and foreign withholding taxes. The balance of cash, cash equivalents, short-term investments and long-term investments available in the U.S. as of June 30, 2012 and March 31, 2012 was $346.7 million and $406.5 million, respectively. We utilize a variety of tax planning and financing strategies with the objective of having our worldwide cash available in the locations in which it is needed; however, there can be no assurance that we will not determine to repatriate some of our offshore earnings in future periods to fund stockholder dividends, share repurchases, acquisitions or other corporate activities. We expect that a significant portion of our future cash generation will be in our foreign subsidiaries.
Stocks Discussed: MCHP,