false--03-31Q120200000827054P1M00000.0010.00145000000045000000025323290925323290923758950123803481920000000066447000001920000010.0010.0015000000500000000001564340815198090<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The following table sets forth the applicable Conversion Rates adjusted for dividends declared since issuance of such series of Convertible Debt and the applicable Incremental Share Factors and Maximum Conversion Rates as adjusted for dividends paid since the applicable issuance date:</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:center;padding-left:0px;text-indent:0px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:99.90243902439025%;border-collapse:collapse;text-align:left;"><tr><td colspan="13" rowspan="1"></td></tr><tr><td style="width:33%;" rowspan="1" colspan="1"></td><td style="width:15%;" rowspan="1" colspan="1"></td><td style="width:1%;" rowspan="1" colspan="1"></td><td style="width:1%;" rowspan="1" colspan="1"></td><td style="width:1%;" rowspan="1" colspan="1"></td><td style="width:14%;" rowspan="1" colspan="1"></td><td style="width:1%;" rowspan="1" colspan="1"></td><td style="width:1%;" rowspan="1" colspan="1"></td><td style="width:15%;" rowspan="1" colspan="1"></td><td style="width:1%;" rowspan="1" colspan="1"></td><td style="width:1%;" rowspan="1" colspan="1"></td><td style="width:15%;" rowspan="1" colspan="1"></td><td style="width:1%;" rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="12" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Dividend adjusted rates as of June 30, 2019</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Conversion Rate</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Approximate Conversion Price</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Incremental Share Factor</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Maximum Conversion Rate</font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2017 Senior Convertible&#160;Debt </font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">(1)</sup></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">10.3379</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">96.73</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">5.1689</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">14.7315</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2015 Senior Convertible Debt </font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">(1)</sup></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">16.1212</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">62.03</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">8.0606</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">22.5696</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2017 Junior Convertible Debt </font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">(1)</sup></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">10.5225</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">95.03</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">5.2613</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">14.7315</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr></table></div><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">(1) </sup></font><font style="font-family:inherit;font-size:10pt;">As of </font><font style="font-family:inherit;font-size:10pt;">June&#160;30, 2019</font><font style="font-family:inherit;font-size:10pt;">, the 2017 Senior Convertible Debt and the 2017 Junior Convertible Debt were not convertible. As of </font><font style="font-family:inherit;font-size:10pt;">June&#160;30, 2019</font><font style="font-family:inherit;font-size:10pt;">, the holders of the </font><font style="font-family:Times New Roman;font-size:10pt;">2015 Senior </font><font style="font-family:Times New Roman;font-size:10pt;">Convertible </font><font style="font-family:Times New Roman;font-size:10pt;">Debt</font><font style="font-family:inherit;font-size:10pt;"> have the right to convert their debentures between </font><font style="font-family:inherit;font-size:10pt;">July 1, 2019</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">September&#160;30, 2019</font><font style="font-family:inherit;font-size:10pt;"> because the Company's common stock price has exceeded the Conversion Price by </font><font style="font-family:inherit;font-size:10pt;">130%</font><font style="font-family:inherit;font-size:10pt;"> for the specified period of time during the quarter ended </font><font style="font-family:inherit;font-size:10pt;">June&#160;30, 2019</font><font style="font-family:inherit;font-size:10pt;">. If a holder of </font><font style="font-family:Times New Roman;font-size:10pt;">2015 Senior </font><font style="font-family:Times New Roman;font-size:10pt;">Convertible </font><font style="font-family:Times New Roman;font-size:10pt;">Debt</font><font style="font-family:inherit;font-size:10pt;"> were to convert their debentures on July 1, 2019, the adjusted Conversion Rate would be increased to </font><font style="font-family:inherit;font-size:10pt;">18.7316</font><font style="font-family:inherit;font-size:10pt;"> to include an additional maximum incremental share rate per the terms of the indenture. As of </font><font style="font-family:inherit;font-size:10pt;">June&#160;30, 2019</font><font style="font-family:inherit;font-size:10pt;">, the </font><font style="font-family:Times New Roman;font-size:10pt;">2015 Senior </font><font style="font-family:Times New Roman;font-size:10pt;">Convertible </font><font style="font-family:Times New Roman;font-size:10pt;">Debt</font><font style="font-family:inherit;font-size:10pt;"> had a value if converted above par of </font><font style="font-family:inherit;font-size:10pt;">$1.03 billion</font><font style="font-family:inherit;font-size:10pt;">.</font></div></div>(1) Includes share-based compensation expense as follows: Cost of sales$4.9 $3.6Research and development$19.5 $14.1Selling, general and administrative$16.3 $11.7Special charges and other, net$— $15.9 0000827054 2019-04-01 2019-06-30 0000827054 mchp:MicrosemiCorporationMember 2019-04-01 2019-06-30 0000827054 2019-08-05 0000827054 2019-06-30 0000827054 2019-03-31 0000827054 2018-04-01 2018-06-30 0000827054 us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0000827054 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-04-01 2018-06-30 0000827054 us-gaap:CostOfSalesMember 2018-04-01 2018-06-30 0000827054 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-04-01 2019-06-30 0000827054 us-gaap:ResearchAndDevelopmentExpenseMember 2018-04-01 2018-06-30 0000827054 us-gaap:ResearchAndDevelopmentExpenseMember 2019-04-01 2019-06-30 0000827054 mchp:SpecialChargesIncomeAndOtherNetMember 2018-04-01 2018-06-30 0000827054 mchp:SpecialChargesIncomeAndOtherNetMember 2019-04-01 2019-06-30 0000827054 2018-03-31 0000827054 mchp:TermLoanFacilityMember 2019-04-01 2019-06-30 0000827054 us-gaap:RevolvingCreditFacilityMember 2018-04-01 2018-06-30 0000827054 us-gaap:RevolvingCreditFacilityMember 2019-04-01 2019-06-30 0000827054 mchp:TermLoanFacilityMember 2018-04-01 2018-06-30 0000827054 2018-06-30 0000827054 us-gaap:TreasuryStockMember 2018-06-30 0000827054 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0000827054 us-gaap:RetainedEarningsMember 2018-06-30 0000827054 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000827054 us-gaap:TreasuryStockMember 2019-06-30 0000827054 us-gaap:TreasuryStockMember 2018-03-31 0000827054 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-06-30 0000827054 us-gaap:RetainedEarningsMember 2019-03-31 0000827054 us-gaap:TreasuryStockMember 2019-03-31 0000827054 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000827054 us-gaap:AccountingStandardsUpdate201616Member us-gaap:RetainedEarningsMember 2018-04-01 0000827054 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000827054 us-gaap:TreasuryStockMember 2018-04-01 2018-06-30 0000827054 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2018-03-31 0000827054 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000827054 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-03-31 0000827054 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0000827054 us-gaap:RetainedEarningsMember 2019-06-30 0000827054 us-gaap:AccountingStandardsUpdate201601Member 2018-04-01 0000827054 us-gaap:AccountingStandardsUpdate201409Member 2018-04-01 0000827054 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2018-06-30 0000827054 us-gaap:AccountingStandardsUpdate201616Member 2018-04-01 0000827054 us-gaap:RetainedEarningsMember 2018-03-31 0000827054 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0000827054 us-gaap:AccountingStandardsUpdate201601Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 0000827054 us-gaap:AccountingStandardsUpdate201409Member us-gaap:RetainedEarningsMember 2018-04-01 0000827054 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000827054 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0000827054 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000827054 us-gaap:AccountingStandardsUpdate201601Member us-gaap:RetainedEarningsMember 2018-04-01 0000827054 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000827054 mchp:AccountingStandardsUpdate201802Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 0000827054 mchp:AccountingStandardsUpdate201802Member us-gaap:RetainedEarningsMember 2019-04-01 0000827054 us-gaap:AccountingStandardsUpdate201602Member 2019-03-31 0000827054 mchp:MicrosemiCorporationMember 2019-06-30 0000827054 mchp:MicrosemiCorporationMember mchp:SeniorSecuredNotesMember 2018-05-29 2018-05-29 0000827054 mchp:MicrosemiCorporationMember 2018-05-29 2018-05-29 0000827054 mchp:MicrosemiCorporationMember us-gaap:RevolvingCreditFacilityMember 2018-05-29 2018-05-29 0000827054 mchp:MicrosemiCorporationMember 2018-05-29 0000827054 mchp:MicrosemiCorporationMember mchp:TermLoanFacilityMember 2018-05-29 2018-05-29 0000827054 us-gaap:OtherLiabilitiesMember mchp:MicrosemiCorporationMember 2018-05-29 2018-05-29 0000827054 mchp:MicrosemiCorporationMember us-gaap:OrderOrProductionBacklogMember 2018-05-29 2018-05-29 0000827054 mchp:MicrosemiCorporationMember us-gaap:DevelopedTechnologyRightsMember 2018-05-29 2018-05-29 0000827054 mchp:MicrosemiCorporationMember us-gaap:OtherIntangibleAssetsMember 2018-05-29 2018-05-29 0000827054 mchp:MicrosemiCorporationMember us-gaap:CustomerRelatedIntangibleAssetsMember 2018-05-29 2018-05-29 0000827054 mchp:MicrosemiCorporationMember us-gaap:InProcessResearchAndDevelopmentMember 2018-05-29 2018-05-29 0000827054 mchp:SemiconductorProductsMember 2019-04-01 2019-06-30 0000827054 mchp:TechnologyLicensingMember 2019-04-01 2019-06-30 0000827054 mchp:SemiconductorProductsMember 2018-04-01 2018-06-30 0000827054 mchp:TechnologyLicensingMember 2018-04-01 2018-06-30 0000827054 mchp:AnalogInterfaceMixedSignalandTimingProductsMember 2018-04-01 2018-06-30 0000827054 mchp:LicensingMemoryandOtherMember 2018-04-01 2018-06-30 0000827054 mchp:AnalogInterfaceMixedSignalandTimingProductsMember 2019-04-01 2019-06-30 0000827054 mchp:MicrocontrollersMember 2018-04-01 2018-06-30 0000827054 mchp:FieldprogrammableGateArrayProductsMember 2018-04-01 2018-06-30 0000827054 mchp:FieldprogrammableGateArrayProductsMember 2019-04-01 2019-06-30 0000827054 mchp:LicensingMemoryandOtherMember 2019-04-01 2019-06-30 0000827054 mchp:MicrocontrollersMember 2019-04-01 2019-06-30 0000827054 mchp:TechnologyLicensesMember 2018-04-01 2018-06-30 0000827054 us-gaap:SalesChannelThroughIntermediaryMember 2019-04-01 2019-06-30 0000827054 mchp:TechnologyLicensesMember 2019-04-01 2019-06-30 0000827054 us-gaap:SalesChannelDirectlyToConsumerMember 2018-04-01 2018-06-30 0000827054 us-gaap:SalesChannelDirectlyToConsumerMember 2019-04-01 2019-06-30 0000827054 us-gaap:SalesChannelThroughIntermediaryMember 2018-04-01 2018-06-30 0000827054 us-gaap:OtherRestructuringMember 2019-06-30 0000827054 us-gaap:OtherRestructuringMember 2019-03-31 0000827054 us-gaap:OtherRestructuringMember 2019-04-01 2019-06-30 0000827054 us-gaap:EmployeeSeveranceMember 2019-06-30 0000827054 us-gaap:FacilityClosingMember 2019-06-30 0000827054 us-gaap:EmployeeSeveranceMember 2019-04-01 2019-06-30 0000827054 us-gaap:FacilityClosingMember 2019-04-01 2019-06-30 0000827054 us-gaap:FacilityClosingMember 2019-03-31 0000827054 us-gaap:EmployeeSeveranceMember 2019-03-31 0000827054 us-gaap:EmployeeSeveranceMember mchp:SemiconductorProductsMember 2018-04-01 2018-06-30 0000827054 us-gaap:ContractTerminationMember mchp:SemiconductorProductsMember 2019-06-30 0000827054 us-gaap:EmployeeSeveranceMember mchp:SemiconductorProductsMember 2019-06-30 0000827054 us-gaap:EmployeeSeveranceMember mchp:SemiconductorProductsMember 2019-04-01 2019-06-30 0000827054 2018-04-01 2019-03-31 0000827054 us-gaap:FairValueInputsLevel3Member 2019-04-01 2019-06-30 0000827054 us-gaap:ShortTermInvestmentsMember us-gaap:EquitySecuritiesMember 2019-06-30 0000827054 us-gaap:FairValueInputsLevel2Member 2019-06-30 0000827054 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2019-06-30 0000827054 us-gaap:MoneyMarketFundsMember 2019-06-30 0000827054 us-gaap:FairValueInputsLevel2Member us-gaap:MoneyMarketFundsMember 2019-06-30 0000827054 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:EquitySecuritiesMember 2019-06-30 0000827054 us-gaap:FairValueInputsLevel1Member 2019-06-30 0000827054 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:EquitySecuritiesMember 2019-06-30 0000827054 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:EquitySecuritiesMember 2019-03-31 0000827054 us-gaap:MoneyMarketFundsMember 2019-03-31 0000827054 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:EquitySecuritiesMember 2019-03-31 0000827054 us-gaap:FairValueInputsLevel2Member 2019-03-31 0000827054 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2019-03-31 0000827054 us-gaap:ShortTermInvestmentsMember us-gaap:EquitySecuritiesMember 2019-03-31 0000827054 us-gaap:FairValueInputsLevel1Member 2019-03-31 0000827054 us-gaap:FairValueInputsLevel2Member us-gaap:MoneyMarketFundsMember 2019-03-31 0000827054 us-gaap:FairValueInputsLevel3Member 2019-03-31 0000827054 us-gaap:FairValueInputsLevel3Member 2018-04-01 2018-06-30 0000827054 mchp:SeniorSecuredNotes2021Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0000827054 mchp:A2017JuniorSubordinatedConvertibleDebtMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-06-30 0000827054 mchp:SeniorSecuredNotes2023Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0000827054 mchp:A2017SeniorSubordinatedConvertibleDebtMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-06-30 0000827054 mchp:TermLoanFacilityMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31 0000827054 mchp:SeniorSecuredNotes2023Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-06-30 0000827054 mchp:A2017SeniorSubordinatedConvertibleDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31 0000827054 mchp:A2015SeniorSubordinatedConvertibleDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0000827054 mchp:A2015SeniorSubordinatedConvertibleDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31 0000827054 mchp:SeniorSecuredNotes2023Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31 0000827054 mchp:A2015SeniorSubordinatedConvertibleDebtMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-06-30 0000827054 mchp:A2017SeniorSubordinatedConvertibleDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0000827054 mchp:TermLoanFacilityMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-03-31 0000827054 mchp:SeniorSecuredNotes2021Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-06-30 0000827054 mchp:SeniorSecuredNotes2021Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-03-31 0000827054 mchp:TermLoanFacilityMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0000827054 mchp:A2015SeniorSubordinatedConvertibleDebtMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-03-31 0000827054 mchp:A2017JuniorSubordinatedConvertibleDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31 0000827054 mchp:SeniorSecuredNotes2023Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-03-31 0000827054 mchp:SeniorSecuredNotes2021Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31 0000827054 mchp:TermLoanFacilityMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-06-30 0000827054 mchp:A2017JuniorSubordinatedConvertibleDebtMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-03-31 0000827054 mchp:A2017JuniorSubordinatedConvertibleDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0000827054 mchp:A2017SeniorSubordinatedConvertibleDebtMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-03-31 0000827054 us-gaap:LandMember 2019-06-30 0000827054 us-gaap:ConstructionInProgressMember 2019-06-30 0000827054 us-gaap:LandMember 2019-03-31 0000827054 us-gaap:ConstructionInProgressMember 2019-03-31 0000827054 us-gaap:BuildingAndBuildingImprovementsMember 2019-03-31 0000827054 us-gaap:MachineryAndEquipmentMember 2019-06-30 0000827054 us-gaap:MachineryAndEquipmentMember 2019-03-31 0000827054 us-gaap:BuildingAndBuildingImprovementsMember 2019-06-30 0000827054 us-gaap:TradeAccountsReceivableMember 2019-06-30 0000827054 mchp:OtherReceivablesMember 2019-03-31 0000827054 mchp:OtherReceivablesMember 2019-06-30 0000827054 us-gaap:TradeAccountsReceivableMember 2019-03-31 0000827054 us-gaap:OperatingExpenseMember 2019-04-01 2019-06-30 0000827054 us-gaap:OperatingExpenseMember 2018-04-01 2018-06-30 0000827054 us-gaap:DistributionRightsMember 2019-06-30 0000827054 us-gaap:CustomerRelatedIntangibleAssetsMember 2019-06-30 0000827054 us-gaap:InProcessResearchAndDevelopmentMember 2019-06-30 0000827054 us-gaap:DevelopedTechnologyRightsMember 2019-06-30 0000827054 mchp:TechnologyLicensingMember 2019-06-30 0000827054 mchp:SemiconductorProductsMember 2019-06-30 0000827054 srt:MaximumMember 2019-04-01 2019-06-30 0000827054 srt:MinimumMember 2019-04-01 2019-06-30 0000827054 us-gaap:InProcessResearchAndDevelopmentMember 2019-03-31 0000827054 us-gaap:DistributionRightsMember 2019-03-31 0000827054 us-gaap:DevelopedTechnologyRightsMember 2019-03-31 0000827054 us-gaap:CustomerRelatedIntangibleAssetsMember 2019-03-31 0000827054 mchp:SemiconductorProductsMember 2019-03-31 0000827054 mchp:TechnologyLicensingMember 2019-03-31 0000827054 us-gaap:RevolvingCreditFacilityMember 2019-06-30 0000827054 mchp:A2015SeniorSubordinatedConvertibleDebtMember 2019-06-30 0000827054 mchp:SeniorSecuredNotes2021Member 2019-03-31 0000827054 mchp:A2017SeniorSubordinatedConvertibleDebtMember 2019-06-30 0000827054 mchp:A2017JuniorSubordinatedConvertibleDebtMember 2019-06-30 0000827054 us-gaap:SeniorNotesMember 2019-06-30 0000827054 mchp:TermLoanFacilityMember 2019-03-31 0000827054 mchp:SeniorSecuredNotes2023Member 2019-06-30 0000827054 mchp:SeniorSecuredNotes2021Member 2019-06-30 0000827054 mchp:TermLoanFacilityMember 2019-06-30 0000827054 us-gaap:SeniorNotesMember 2019-03-31 0000827054 mchp:SeniorSecuredNotes2023Member 2019-03-31 0000827054 mchp:A2017JuniorSubordinatedConvertibleDebtMember 2019-03-31 0000827054 us-gaap:RevolvingCreditFacilityMember 2019-03-31 0000827054 mchp:A2015SeniorSubordinatedConvertibleDebtMember 2019-03-31 0000827054 mchp:A2017SeniorSubordinatedConvertibleDebtMember 2019-03-31 0000827054 us-gaap:ConvertibleDebtMember 2018-04-01 2018-06-30 0000827054 us-gaap:SeniorDebtObligationsMember 2019-04-01 2019-06-30 0000827054 us-gaap:ConvertibleDebtMember 2019-04-01 2019-06-30 0000827054 us-gaap:SeniorDebtObligationsMember 2018-04-01 2018-06-30 0000827054 us-gaap:RevolvingCreditFacilityMember 2019-06-30 0000827054 mchp:LeverageRatioPercentOneMember mchp:TermLoanFacilityMember 2019-06-30 0000827054 us-gaap:SubsequentEventMember 2019-07-01 2019-07-01 0000827054 mchp:SeniorSecuredNotes2021Member 2018-05-31 0000827054 mchp:TermLoanFacilityMember 2018-04-01 2019-03-31 0000827054 mchp:SeniorSecuredNotes2023Member 2018-05-31 0000827054 mchp:A2015SeniorSubordinatedConvertibleDebtMember 2019-04-01 2019-06-30 0000827054 mchp:LeverageRatioPercentThreeMember mchp:TermLoanFacilityMember 2019-06-30 0000827054 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember mchp:A2023TrancheMember us-gaap:BaseRateMember 2019-04-01 2019-06-30 0000827054 mchp:LeverageRatioPercentOneMember us-gaap:RevolvingCreditFacilityMember 2019-06-30 0000827054 mchp:A2017JuniorSubordinatedConvertibleDebtMember 2019-04-01 2019-06-30 0000827054 mchp:TermLoanFacilityMember 2018-05-31 0000827054 us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:ConvertibleDebtMember 2019-04-01 2019-06-30 0000827054 mchp:SeniorSecuredNotes2023Member us-gaap:DebtInstrumentRedemptionPeriodOneMember 2019-04-01 2019-06-30 0000827054 us-gaap:RevolvingCreditFacilityMember 2018-03-31 0000827054 us-gaap:RevolvingCreditFacilityMember 2018-04-01 2019-03-31 0000827054 us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:ConvertibleDebtMember 2019-04-01 2019-06-30 0000827054 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember mchp:A2023TrancheMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2019-06-30 0000827054 us-gaap:StandbyLettersOfCreditMember 2019-06-30 0000827054 mchp:LeverageRatioPercentThreeMember us-gaap:RevolvingCreditFacilityMember 2019-06-30 0000827054 mchp:LineOfCreditFacilitySwinglineLoanSublimitMember 2019-06-30 0000827054 mchp:SeniorSecuredNotes2021Member 2019-04-01 2019-06-30 0000827054 us-gaap:RevolvingCreditFacilityMember 2018-05-31 0000827054 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember mchp:A2023TrancheMember us-gaap:BaseRateMember 2019-04-01 2019-06-30 0000827054 us-gaap:RevolvingCreditFacilityMember mchp:A2023TrancheMember 2019-06-30 0000827054 mchp:LeverageRatioPercentTwoMember us-gaap:RevolvingCreditFacilityMember 2019-06-30 0000827054 2018-05-31 0000827054 mchp:SeniorSecuredNotes2023Member us-gaap:DebtInstrumentRedemptionPeriodTwoMember 2019-04-01 2019-06-30 0000827054 us-gaap:ForeignLineOfCreditMember 2019-06-30 0000827054 us-gaap:RevolvingCreditFacilityMember 2019-03-31 0000827054 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember mchp:A2023TrancheMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-04-01 2019-06-30 0000827054 mchp:A2017SeniorSubordinatedConvertibleDebtMember 2019-04-01 2019-06-30 0000827054 mchp:LeverageRatioPercentTwoMember mchp:TermLoanFacilityMember 2019-06-30 0000827054 mchp:SeniorSecuredNotesMember 2019-04-01 2019-06-30 0000827054 mchp:TermLoanFacilityMember 2018-05-01 2018-05-31 0000827054 mchp:TermLoanFacilityMember 2019-06-30 0000827054 2018-10-09 2018-10-09 0000827054 srt:MaximumMember 2018-10-09 2018-10-09 0000827054 2018-09-14 0000827054 2010-06-01 2010-06-30 0000827054 us-gaap:DamagesFromProductDefectsMember 2019-06-30 0000827054 us-gaap:IndemnificationGuaranteeMember 2019-06-30 0000827054 srt:MinimumMember 2018-10-09 2018-10-09 0000827054 us-gaap:ForeignExchangeForwardMember 2019-06-30 0000827054 us-gaap:ForeignExchangeForwardMember 2018-04-01 2018-06-30 0000827054 us-gaap:ForeignExchangeForwardMember 2019-04-01 2019-06-30 0000827054 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0000827054 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-04-01 2019-06-30 0000827054 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 0000827054 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-31 0000827054 us-gaap:AccumulatedTranslationAdjustmentMember 2019-04-01 2019-06-30 0000827054 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 0000827054 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-06-30 0000827054 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-04-01 0000827054 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-04-01 0000827054 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-04-01 2019-06-30 0000827054 us-gaap:AccumulatedTranslationAdjustmentMember 2019-04-01 0000827054 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-30 0000827054 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-03-31 0000827054 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000827054 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-04-01 2019-06-30 0000827054 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-04-01 2018-06-30 0000827054 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-04-01 2019-06-30 0000827054 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0000827054 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-04-01 2018-06-30 0000827054 us-gaap:RestrictedStockUnitsRSUMember mchp:MicrosemiCorporationMember 2018-05-29 2018-05-29 0000827054 us-gaap:RestrictedStockUnitsRSUMember mchp:MicrosemiCorporationMember 2018-05-29 0000827054 us-gaap:RestrictedStockUnitsRSUMember mchp:MicrosemiCorporationMember 2018-04-01 2018-06-30 0000827054 us-gaap:InventoriesMember 2018-04-01 2018-06-30 0000827054 us-gaap:InventoriesMember 2019-04-01 2019-06-30 0000827054 us-gaap:RestrictedStockUnitsRSUMember us-gaap:InventoriesMember mchp:MicrosemiCorporationMember 2018-04-01 2018-06-30 0000827054 mchp:A2017JuniorSubordinatedConvertibleDebtMember 2018-04-01 2018-06-30 0000827054 mchp:A2017SeniorSubordinatedConvertibleDebtMember 2018-04-01 2018-06-30 0000827054 mchp:A2015SeniorSubordinatedConvertibleDebtMember 2018-04-01 2018-06-30 0000827054 srt:WeightedAverageMember mchp:A2017JuniorSubordinatedConvertibleDebtMember 2019-06-30 0000827054 srt:WeightedAverageMember mchp:A2015SeniorSubordinatedConvertibleDebtMember 2018-06-30 0000827054 srt:WeightedAverageMember mchp:A2015SeniorSubordinatedConvertibleDebtMember 2019-06-30 0000827054 srt:WeightedAverageMember mchp:A2017SeniorSubordinatedConvertibleDebtMember 2018-06-30 0000827054 srt:WeightedAverageMember mchp:A2017SeniorSubordinatedConvertibleDebtMember 2019-06-30 0000827054 srt:WeightedAverageMember mchp:A2017JuniorSubordinatedConvertibleDebtMember 2018-06-30 0000827054 2016-01-31 0000827054 us-gaap:ScenarioForecastMember 2019-09-01 2019-09-30 0000827054 2019-06-04 2019-06-04 0000827054 us-gaap:SubsequentEventMember 2019-08-06 2019-08-06 mchp:unit xbrli:pure iso4217:USD xbrli:shares iso4217:USD mchp:day xbrli:shares mchp:lawsuit mchp:plaintiff mchp:contract

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number:  0-21184

mlogo.jpg
 
  
MICROCHIP TECHNOLOGY INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
86-0629024
(State or Other Jurisdiction of Incorporation or Organization)
 
(IRS Employer Identification No.)

2355 W. Chandler Blvd., Chandler, AZ  85224-6199
(480) 792-7200
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's
Principal Executive Offices)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes  x No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer
x
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
 
 
 
Emerging growth company
(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  (Check One)
Yes     No   

Shares Outstanding of Registrant's Common Stock
Title of Each Class
 
 Trading Symbol
 
Name of Each Exchange on Which Registered
 
August 5, 2019
Common Stock, $0.001 par value
 
MCHP
 
NASDAQ
Stock Market LLC
 
238,043,610 shares
 
 
 
 
(Nasdaq Global Select Market)
 
 
 



Table of Contents

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

INDEX

 
 
 
Page
 
 
 
PART I.  FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II.  OTHER INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CERTIFICATIONS
 
 
 
EXHIBITS
 


2

Table of Contents

PART I.  FINANCIAL INFORMATION


Item 1. Financial Statements

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share amounts)
(unaudited)
ASSETS
 
June 30,
 
March 31,
 
2019
 
2019
Cash and cash equivalents
$
434.0

 
$
428.6

Short-term investments
3.1

 
2.3

Accounts receivable, net
936.8

 
880.6

Inventories
733.1

 
711.7

Other current assets
171.5

 
191.6

Total current assets
2,278.5

 
2,214.8

Property, plant and equipment, net
963.0

 
996.7

Goodwill
6,663.9

 
6,663.9

Intangible assets, net
6,428.7

 
6,685.6

Long-term deferred tax assets
1,680.0

 
1,677.2

Other assets
232.3

 
111.8

Total assets
$
18,246.4

 
$
18,350.0

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
$
245.7

 
$
226.4

Accrued liabilities
831.2

 
787.3

Current portion of long-term debt
1,373.9

 
1,360.8

Total current liabilities
2,450.8

 
2,374.5

Long-term debt
8,711.4

 
8,946.2

Long-term income tax payable
749.5

 
756.2

Long-term deferred tax liability
690.0

 
706.1

Other long-term liabilities
356.4

 
279.5

Stockholders' equity:
 
 
 
Preferred stock, $0.001 par value; authorized 5,000,000 shares; no shares issued or outstanding

 

Common stock, $0.001 par value; authorized 450,000,000 shares; 253,232,909 shares issued and 238,034,819 shares outstanding at June 30, 2019; 253,232,909 shares issued and 237,589,501 shares outstanding at March 31, 2019
0.2

 
0.2

Additional paid-in capital
2,703.3

 
2,679.6

Common stock held in treasury: 15,198,090 shares at June 30, 2019; 15,643,408 shares at March 31, 2019
(568.4
)
 
(582.2
)
Accumulated other comprehensive loss
(22.3
)
 
(20.7
)
Retained earnings
3,175.5

 
3,210.6

Total stockholders' equity
5,288.3

 
5,287.5

Total liabilities and stockholders' equity
$
18,246.4

 
$
18,350.0


See accompanying notes to condensed consolidated financial statements

3

Table of Contents


MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(unaudited)
 
Three Months Ended June 30,
 
2019
 
2018
Net sales
$
1,322.6

 
$
1,212.5

Cost of sales (1)
507.4

 
570.5

Gross profit
815.2

 
642.0

 
 
 
 
Research and development  (1)
219.1

 
171.9

Selling, general and administrative  (1)
167.9

 
164.0

Amortization of acquired intangible assets
248.5

 
133.7

Special charges and other, net (1)
8.1

 
40.1

Operating expenses
643.6

 
509.7

 
 
 
 
Operating income
171.6

 
132.3

Losses on equity method investments

 
(0.1
)
Other income (expense):
 
 
 
Interest income
0.7

 
5.7

Interest expense
(132.6
)
 
(90.4
)
Loss on settlement of debt
(1.9
)
 

Other income (loss), net
2.7

 
(9.8
)
Income before income taxes
40.5

 
37.7

Income tax (benefit) provision
(10.2
)
 
2.0

Net income
$
50.7

 
$
35.7

 
 
 
 
 
 
 
 
Basic net income per common share
$
0.21

 
$
0.15

Diluted net income per common share
$
0.20

 
$
0.14

Dividends declared per common share
$
0.3655

 
$
0.3635

Basic common shares outstanding
237.8

 
235.2

Diluted common shares outstanding
253.9

 
252.2

 
 
 
 
(1) Includes share-based compensation expense as follows:
 
 
 
Cost of sales
$
4.9

 
$
3.6

Research and development
$
19.5

 
$
14.1

Selling, general and administrative
$
16.3

 
$
11.7

Special charges and other, net
$

 
$
15.9


See accompanying notes to condensed consolidated financial statements

4

Table of Contents

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)

 
Three Months Ended June 30,
 
2019
 
2018
Net income
$
50.7

 
$
35.7

Components of other comprehensive (loss) income:
 
 
 
Available-for-sale securities:
 
 
 
Unrealized holding losses, net of tax effect

 
(5.6
)
Reclassification of realized transactions, net of tax effect

 
5.6

Defined benefit plans:
 
 
 
Actuarial (losses) gains related to defined benefit pension plans, net of tax (provision) benefit
(0.8
)
 
4.4

Reclassification of realized transactions, net of tax effect
0.2

 
0.3

Change in net foreign currency translation adjustment
0.3

 
(0.3
)
Other comprehensive (loss) income, net of tax effect
(0.3
)
 
4.4

Comprehensive income
$
50.4

 
$
40.1


See accompanying notes to condensed consolidated financial statements


5

Table of Contents

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 
Three Months Ended June 30,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Net income
$
50.7

 
$
35.7

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
307.1

 
172.8

Deferred income taxes
(16.8
)
 
87.2

Share-based compensation expense related to equity incentive plans
40.7

 
45.3

Loss on settlement of debt
1.9

 

Amortization of debt discount
29.9

 
27.7

Amortization of debt issuance costs
4.2

 
2.8

Losses on equity method investments

 
0.1

Impairment of intangible assets
0.5

 
2.0

(Gains) losses on available-for-sale investments and marketable equity securities, net
(0.8
)
 
5.2

Amortization of premium on available-for-sale investments

 
(0.2
)
Other non-cash adjustment
(0.1
)
 
(0.1
)
Changes in operating assets and liabilities, excluding impact of acquisitions:
 
 
 
Increase in accounts receivable
(56.2
)
 
(55.2
)
(Increase) decrease in inventories
(20.5
)
 
83.8

Increase (decrease) in accounts payable and accrued liabilities
49.7

 
(2.2
)
Change in other assets and liabilities
14.4

 
(88.6
)
Change in income tax payable
(24.1
)
 
(13.9
)
Net cash provided by operating activities
380.6

 
302.4

Cash flows from investing activities:
 
 
 
Purchases of available-for-sale investments

 
(167.7
)
Maturities of available-for-sale investments

 
66.7

Sales of available-for-sale investments

 
1,376.6

Acquisition of Microsemi, net of cash acquired

 
(7,851.2
)
Investments in other assets
(2.6
)
 
(1.6
)
Proceeds from sale of assets
0.2

 
0.1

Capital expenditures
(23.9
)
 
(89.4
)
Net cash used in investing activities
(26.3
)
 
(6,666.5
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of 2023 and 2021 Senior Notes

 
1,989.5

Proceeds from borrowings on term loan facility

 
3,000.0

Repayments of term loan facility
(188.0
)
 

Proceeds from borrowings on revolving loan under credit facility
204.0

 
3,485.5

Repayments of revolving loan under credit facility
(273.5
)
 
(151.5
)
Repayment of debt assumed in Microsemi acquisition

 
(2,056.9
)
Deferred financing costs

 
(72.6
)
Payment of cash dividends
(87.1
)
 
(85.5
)
Proceeds from sale of common stock
7.3

 
6.4

Tax payments related to shares withheld for vested restricted stock units
(11.4
)
 
(16.8
)
Capital lease payments
(0.2
)
 
(0.1
)
Net cash (used in) provided by financing activities
(348.9
)
 
6,098.0

Net increase (decrease) in cash and cash equivalents
5.4

 
(266.1
)
Cash and cash equivalents, and restricted cash at beginning of period (2)
428.6

 
901.3



6

Table of Contents

 
Three Months Ended June 30,
 
2019
 
2018
Cash and cash equivalents, and restricted cash at end of period (2)
$
434.0

 
$
635.2

 
 
 
 
Supplemental disclosure of cash flow information
 
 
 
Non-cash activities:
 
 
 
Right-of-use assets obtained in exchange of lease liabilities
$

 
$

Cash paid for:
 
 
 
Operating lease payments in operating cash flows
$
(14.8
)
 
$




(2) Schedule of restricted cash

The following table presents the balance of restricted cash which consists of cash denominated in a foreign currency and restricted in use due to a foreign taxing authority requirement (in millions):

 
June 30,
 
March 31,
 
2019
 
2019
Restricted cash
$
38.8

 
$
38.4



See accompanying notes to condensed consolidated financial statements

7

Table of Contents

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
(unaudited)
 
 
Common Stock and Additional Paid-in-Capital
 
Common Stock Held
 in Treasury
 
Accumulated Other Comprehensive Income
 
Retained
Earnings
 
Total Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance at March 31, 2018
 
253.2

 
$
2,562.7

 
18.2

 
$
(662.6
)
 
$
(17.6
)
 
$
1,397.3

 
$
3,279.8

Net income
 

 

 

 

 

 
35.7

 
35.7

Other comprehensive income
 

 

 

 

 
4.4

 

 
4.4

Adoption of ASU 2016-01, cumulative adjustment
 

 

 

 

 
(1.7
)
 
1.7

 

Adoption of ASU 2016-16, cumulative adjustment
 

 

 

 

 

 
1,558.1

 
1,558.1

Adoption of ASC 606, cumulative adjustment
 

 

 

 

 

 
241.9

 
241.9

Non-cash consideration, exchange of employee stock awards - Microsemi acquisition
 

 
53.9

 

 

 

 

 
53.9

Proceeds from sales of common stock through employee equity incentive plans
 
0.7

 
6.4

 


 

 

 

 
6.4

Restricted stock unit and stock appreciation right withholdings
 
(0.2
)
 
(16.8
)
 


 

 

 

 
(16.8
)
Treasury stock used for new issuances
 
(0.5
)
 
(14.9
)
 
(0.5
)
 
14.9

 

 

 

Share-based compensation
 

 
45.9

 

 

 

 

 
45.9

Cash dividend
 

 

 

 

 

 
(85.5
)
 
(85.5
)
Balance at June 30, 2018
 
253.2

 
$
2,637.2

 
17.7

 
$
(647.7
)
 
$
(14.9
)
 
$
3,149.2

 
$
5,123.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2019
 
253.2

 
$
2,679.8

 
15.6

 
$
(582.2
)
 
$
(20.7
)
 
$
3,210.6

 
$
5,287.5

Net income
 

 

 

 

 

 
50.7

 
50.7

Other comprehensive income
 

 

 

 

 
(0.3
)
 

 
(0.3
)
Adoption of ASU 2018-02, cumulative adjustment
 

 

 

 

 
(1.3
)
 
1.3

 

Proceeds from sales of common stock through employee equity incentive plans
 
0.5

 
7.3

 

 

 

 

 
7.3

Restricted stock unit and stock appreciation right withholdings
 
(0.1
)
 
(11.4
)
 

 

 

 

 
(11.4
)
Treasury stock used for new issuances
 
(0.4
)
 
(13.8
)
 
(0.4
)
 
13.8

 

 

 

Share-based compensation
 

 
41.6

 

 

 

 

 
41.6

Cash dividend
 

 

 

 

 

 
(87.1
)
 
(87.1
)
Balance at June 30, 2019
 
253.2

 
$
2,703.5

 
15.2

 
$
(568.4
)
 
$
(22.3
)
 
$
3,175.5

 
$
5,288.3


See accompanying notes to condensed consolidated financial statements


8

Table of Contents

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Microchip Technology Incorporated and its majority-owned and controlled subsidiaries (the Company).  All intercompany balances and transactions have been eliminated in consolidation. All dollar amounts in the financial statements and tables in these notes, except per share amounts, are stated in millions of U.S. dollars unless otherwise noted.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP), pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC).  The information furnished herein reflects all adjustments which are, in the opinion of management, of a normal recurring nature and necessary for a fair statement of the results for the interim periods reported. Certain information and footnote disclosures normally included in audited consolidated financial statements have been condensed or omitted pursuant to such SEC rules and regulations.  It is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019.  As further discussed in Note 3, on May 29, 2018, the Company completed its acquisition of Microsemi Corporation (Microsemi) and the Company's first quarter fiscal 2019 financial results include Microsemi's results beginning as of such acquisition date. The results of operations for the three months ended June 30, 2019 are not indicative of the results that may be expected for the fiscal year ending March 31, 2020 or for any other period.

Note 2. Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

On April 1, 2019, the Company adopted Accounting Standards Codification Topic 842, Leases. This standard requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in Topic 606, Revenue from Contracts with Customers. Topic 842 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. The Company adopted Topic 842 using the retrospective cumulative effect adjustment transition method by recording right-of-use assets of $124.6 million, accrued lease liabilities of $39.4 million and other long-term liabilities of $97.9 million. Under this method, periods prior to fiscal 2020 remain unchanged. The Company applied the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. See Note 11 for further information and disclosures related to the adoption of this standard.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance provides an option to reclassify from accumulated other comprehensive income to retained earnings the stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Act”). This ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company adopted the standard and elected to reclassify the income tax effects of the Act from accumulated other comprehensive income to retained earnings effective April 1, 2019. The cumulative impact of adoption resulted in an immaterial change to retained earnings.

Recently Issued Accounting Pronouncements Not Yet Adopted

In January 2017, the FASB issued ASU 2017-04-Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The amendment is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2019, and early adoption is permitted. The Company does not expect this standard to have an impact on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13-Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments.  This standard requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses than under the

9

Table of Contents

current incurred loss approach, which required waiting to recognize a loss until it is probable of having been incurred. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually and can include forecasted information. There are other provisions within the standard affecting how impairments of other financial assets may be recorded and presented, as well as expanded disclosures. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019, and permits early adoption, but not before December 15, 2018. The standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact the adoption of this standard will have on its condensed consolidated financial statements.

Note 3. Business Acquisitions
Acquisition of Microsemi
On May 29, 2018, the Company completed its acquisition of Microsemi Corporation, a publicly traded company headquartered in Aliso Viejo, California. The Company paid an aggregate of approximately $8.19 billion in cash to the stockholders of Microsemi. The total consideration transferred in the acquisition, including approximately $53.9 million of non-cash consideration for the exchange of certain share-based payment awards of Microsemi for stock awards of the Company, was approximately $8.24 billion. In addition to the consideration transferred, the Company recognized in its consolidated financial statements $3.23 billion in liabilities of Microsemi consisting of debt, taxes payable and deferred, restructuring, and contingent and other liabilities of which $2.06 billion of existing debt was paid off. The Company financed the purchase price using approximately $8.10 billion of borrowings consisting of $3.10 billion under its amended and restated revolving line of credit (the "Revolving Credit Facility"), $3.00 billion of term loans ("Term Loan Facility") provided under the Company's amended and restated credit agreement (the "Credit Agreement"), and $2.00 billion in newly issued senior secured notes. The Company incurred $22.0 million in acquisition costs related to the acquisition. As a result of the acquisition, Microsemi became a wholly owned subsidiary of the Company. Microsemi offers a comprehensive portfolio of semiconductor and system solutions for aerospace and defense, communications, data center and industrial markets. The Company's primary reason for this acquisition was to expand the Company's range of solutions, products and capabilities by extending its served available market.
The acquisition was accounted for under the acquisition method of accounting, with the Company identified as the acquirer, and the operating results of Microsemi have been included in the Company's consolidated financial statements as of the closing date of the acquisition. Under the acquisition method of accounting, the aggregate amount of consideration paid by the Company was allocated to Microsemi's net tangible assets and intangible assets based on their estimated fair values as of May 29, 2018. The excess of the purchase price over the value of the net tangible assets and intangible assets was recorded to goodwill. The factors contributing to the recognition of goodwill were based upon the Company's conclusion that there are strategic and synergistic benefits that are expected to be realized from the acquisition. The goodwill has been allocated to the Company's semiconductor products reporting segment. None of the goodwill related to the Microsemi acquisition is deductible for tax purposes. The Company retained independent third-party appraisers to assist management in its valuation of the acquired assets and liabilities.

10

Table of Contents

The table below represents the allocation of the purchase price to the net assets acquired based on their estimated fair values, as well as the associated estimated useful lives of the acquired intangible assets (in millions).

Assets acquired
 
Cash and cash equivalents
$
340.0

Accounts receivable
215.6

Inventories
576.2

Other current assets
85.2

Property, plant and equipment
201.5

Goodwill
4,364.9

Purchased intangible assets
5,634.5

Long-term deferred tax assets
5.9

Other assets
53.3

Total assets acquired
11,477.1

 
 
Liabilities assumed
 
Accounts payable
(233.8
)
Other current liabilities
(149.3
)
Long-term debt
(2,056.9
)
Deferred tax liabilities
(565.1
)
Long-term income tax payable
(177.7
)
Other long-term liabilities
(49.8
)
Total liabilities assumed
(3,232.6
)
Purchase price allocated
$
8,244.5



Purchased Intangible Assets
Weighted Average
 
 
 
Useful Life
 
May 29, 2018
 
(in years)
 
(in millions)
Core and developed technology
15
 
$
4,569.1

In-process research and development
 
847.1

Customer-related
12
 
200.2

Backlog
1
 
12.3

Other
4
 
5.8

Total purchased intangible assets
 
 
$
5,634.5


Purchased intangible assets include core and developed technology, in-process research and development, customer-related intangibles, acquisition-date backlog and other intangible assets.

The estimated fair values of the core and developed technology and in-process research and development are being determined based on the present value of the expected cash flows to be generated by the respective existing technology or future technology. The core and developed technology intangible assets are being amortized in a manner based on the expected cash flows used in the initial determination of fair value.

In-process research and development is capitalized until such time as the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off.
Customer-related intangible assets consist of Microsemi's contractual relationships and customer loyalty related to its distributor and end-customer relationships. The fair values of the customer-related intangibles were determined using the distributor method, a form of the income approach based on distributor margin and expected attrition and revenue growth for Microsemi's existing customers as of the acquisition date.  Customer relationships are being amortized in a manner based on the estimated cash flows associated with the existing customers and anticipated retention rates.

11

Table of Contents


Backlog relates to the value of orders not yet shipped by Microsemi at the acquisition date, and the fair values are being determined based on the estimated profit associated with those orders. Backlog related assets have a one year useful life and are being amortized on a straight-line basis over that period.

The total weighted average amortization period of intangible assets acquired as a result of the Microsemi transaction is 13 years. Amortization expense associated with acquired intangible assets is not deductible for tax purposes.  Thus, approximately $856.7 million was established as a net deferred tax liability for the future amortization of the intangible assets.

Note 4. Segment Information

The Company's reportable segments are semiconductor products and technology licensing.  The Company does not allocate operating expenses, interest income, interest expense, other income or expense, or provision for or benefit from income taxes to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance.  Additionally, the Company does not allocate assets to segments for internal reporting purposes as it does not manage its segments by such metrics.

The following table represents net sales and gross profit for each segment for the three months ended June 30, 2019 (in millions):

 
Three Months Ended
 
June 30, 2019
 
Net Sales
 
Gross Profit
Semiconductor products
$
1,304.0

 
$
796.6

Technology licensing
18.6

 
18.6

Total
$
1,322.6

 
$
815.2


The following table represents net sales and gross profit for each segment for the three months ended June 30, 2018 (in millions):

 
Three Months Ended
 
June 30, 2018
 
Net Sales
 
Gross Profit
Semiconductor products
$
1,185.8

 
$
615.3

Technology licensing
26.7

 
26.7

Total
$
1,212.5

 
$
642.0



Note 5. Net Sales

The following table represents the Company's net sales by product line (in millions):

 
Three Months Ended
June 30,
 
2019
 
2018
Microcontrollers
$
708.3

 
$
722.5

Analog, interface, mixed signal and timing products
386.4

 
331.9

Field-programmable gate array products
91.0

 
37.8

Licensing, memory and other
136.9

 
120.3

Total net sales
$
1,322.6

 
$
1,212.5




12

Table of Contents

The product lines listed above are included entirely in the Company's semiconductor product segment with the exception of the licensing, memory and other product line, which includes products from both the semiconductor product and technology licensing segments.

The following table represents the Company's net sales by contract type (in millions).

 
Three Months Ended
June 30,
 
2019
 
2018
Distributors
$
665.1

 
$
645.7

Direct customers
638.9

 
540.1

Licensees
18.6

 
26.7

Total net sales
$
1,322.6

 
$
1,212.5



Distributors are customers that buy products with the intention of reselling them. Distributors generally have a distributor agreement with the Company to govern the terms of the relationship. Direct customers are non-distributor customers, which generally do not have a master sales agreement with the Company. The Company's direct customers primarily consist of original equipment manufacturers (OEMs) and, to a lesser extent, contract manufacturers. Licensees are customers of the Company's technology licensing segment, which include purchasers of intellectual property and customers that have licensing agreements to use the Company's SuperFlash® embedded flash and Smartbits® one time programmable NVM technologies. All of the contract types listed in the table above are included in the Company's semiconductor product segment with the exception of licensees, which is the technology licensing segment.

Substantially all of the Company's net sales are recognized from contracts with customers.

Semiconductor Product Segment

For contracts related to the purchase of semiconductor products, the Company satisfies its performance obligation when control of the ordered product transfers to the customer. The timing of the transfer of control depends on the agreed upon shipping terms with the customer, but generally occurs upon shipment, which is when physical possession of the product has been transferred and legal title of the product transfers to the customer. Payment is generally due within 30 days of the ship date. Payment is generally collected after the Company satisfies its performance obligation, therefore contract liabilities are uncommon. Also, the Company usually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset. Refer to Note 10 for the opening and closing balances of the Company's receivables. As contracts with customers generally have an expected duration of one year or less, the balance of open performance obligations as of period end that will be recognized as revenue subsequent to June 30, 2020 is immaterial.

Generally, there is only a single performance obligation in the Company's contracts with customers for semiconductor products; as such, the entire transaction price is allocated to the single performance obligation and allocation of the transaction price to individual performance obligations is not necessary. The consideration received from customers is fixed, with the exception of consideration from certain distributors. Certain of the Company's distributors are granted price concessions and return rights, which result in variable consideration. The amount of revenue recognized for sales to these certain distributors is adjusted for estimates of the price concessions and return rights that are expected to be claimed. These estimates are based on the recent history of price concessions and stock rotations.

Technology Licensing Segment

The technology licensing segment includes sales and licensing of the Company's intellectual property. For contracts related to the sale of the Company's intellectual property, the Company satisfies its performance obligation and recognizes revenue when control of the intellectual property transfers to the customer. For contracts related to the licensing of the Company's technology, the Company satisfies its performance obligation and recognizes revenue as usage of the license occurs. The transaction price is fixed by the license agreement. Payment is collected after the Company satisfies its performance obligation, and therefore no contract liabilities are recorded. The Company does not record contract assets due to the fact that the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, the

13

Table of Contents

Company recognizes a receivable instead of a contract asset. Refer to Note 10 for the opening and closing balances of the Company's receivables.

Note 6. Special Charges and Other, Net
 
The following table summarizes activity included in the "special charges and other, net" caption on the Company's condensed consolidated statements of income (in millions):
 
Three Months Ended
June 30,
 
2019
 
2018
Restructuring
 
 
 
Employee separation costs
$
6.7

 
$
45.1

Impairment charges
0.5

 
2.0

Contract exit costs

 
(7.0
)
Other
0.9

 

Total
$
8.1

 
$
40.1



The Company continuously evaluates its existing operations in an attempt to identify and realize cost savings opportunities and operational efficiencies. This same approach is applied to businesses that are acquired by the Company and often the operating models of acquired companies are not as efficient as the Company's operating model which enables the Company to realize significant savings and efficiencies. As a result, following an acquisition, the Company will from time to time incur restructuring expenses; however, the Company is often not able to estimate the timing or amount of such costs in advance of the period in which they occur. The primary reason for this is that the Company regularly reviews and evaluates each position, contract and expense against the Company's strategic objectives, long-term operating targets and other operational priorities. Decisions related to restructuring activities are made on a "rolling basis" during the course of the integration of an acquisition whereby department managers, executives and other leaders work together to evaluate each of these expenses and make recommendations. As a result of this approach, at the time of an acquisition, the Company is not able to estimate the future amount of expected employee separation or exit costs that it will incur in connection with its restructuring activities.

The Company's restructuring expenses during the first quarter of fiscal 2020 and fiscal 2019 were primarily related to the Company's most recent business acquisitions, and resulted from workforce, property and other operating expense rationalizations as well as combining product roadmaps and manufacturing operations. These expenses were for employee separation costs and intangible asset impairment charges. The impairment charges in fiscal 2019 were primarily recognized as a result of writing off intangible assets purchased from Microsemi prior to the close of the acquisition and other intangible assets that were impaired as a result of changes in the combined product roadmaps after the acquisition that affected the use and life of the assets. Additional costs will be incurred in the future as additional synergies or operational efficiencies are identified in connection with the Microsemi transaction and other previous acquisitions. The Company is not able to estimate the amount of such future expenses at this time.

All of the Company's restructuring activities occurred in its semiconductor products segment. The Company incurred $112.3 million in costs since the start of fiscal 2017 in connection with employee separation activities, of which $6.7 million and $45.1 million were incurred during the three months ended June 30, 2019 and 2018, respectively. The Company could incur future expenses as additional synergies or operational efficiencies are identified. The Company is not able to estimate future expenses, if any, to be incurred in employee separation costs. The Company has incurred $40.1 million in costs in connection with contract exit activities since the start of fiscal 2017 which includes $7.0 million of income incurred for three months ended June 30, 2018. The $7.0 million income was attributable to changes in timing and amount of cash flows related to a vacated lease liability. There were no contract exit activities during the three months ended June 30, 2019.


14

Table of Contents

The following is a roll forward of accrued restructuring charges for the three months ended June 30, 2019 (in millions):
 
Restructuring
 
Non-Restructuring
 
 
 
Employee Separation Costs
 
Exit Costs
 
Exit Costs
 
Total
Balance at March 31, 2019
$
12.9

 
$
19.2

 
$
15.7

 
$
47.8

Charges
6.7

 

 

 
6.7

Payments
(7.2
)
 
(1.7
)
 
(1.3
)
 
(10.2
)
Non-cash - Other

 
0.2

 
0.1

 
0.3

Effect of adoption of ASC 842

 
(12.5
)
 

 
(12.5
)
Balance at June 30, 2019
$
12.4

 
$
5.2

 
$
14.5

 
$
32.1

Current
 
 
 
 
 
 
$
22.0

Non-current
 
 
 
 
 
 
10.1

Total
 
 
 
 
 
 
$
32.1



The liability for restructuring and other exit costs of $32.1 million is included in accrued liabilities and other long-term liabilities, on the Company's consolidated balance sheets as of June 30, 2019.

Note 7. Investments
 
The Company's investments are intended to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relationship to the Company's investment guidelines and market conditions. 

As of June 30, 2019 and March 31, 2019, the Company had short-term investments of $3.1 million and $2.3 million, respectively, consisting of marketable equity securities. The Company had no available-for-sale debt securities at June 30, 2019 and March 31, 2019.

There were no sales of available-for-sale debt securities during the three months ended June 30, 2019. The Company sold available-for-sale debt securities for proceeds of $1.38 billion during the year ended March 31, 2019 to help finance its acquisition of Microsemi. The Company recognized losses of $5.6 million on available-for-sale debt securities during the year ended March 31, 2019. The Company determines the cost of available-for-sale debt securities sold on a first-in first-out (FIFO) basis at the individual security level for sales from multiple lots. For sales of marketable equity securities, the Company uses an average cost basis at the individual security level. Gains and losses recognized in earnings are credited or charged to other income (loss), net on the condensed consolidated statements of income.

Note 8. Fair Value Measurements

Accounting rules for fair value clarify that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1-
Observable inputs such as quoted prices in active markets;
Level 2-
Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3-
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Marketable Debt Instruments

Marketable debt instruments include instruments such as corporate bonds and debt, government agency bonds, bank deposits, municipal bonds, and money market mutual funds. When the Company uses observable market prices for identical

15

Table of Contents

securities that are traded in less active markets, the Company classifies its marketable debt instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.
 
Assets Measured at Fair Value on a Recurring Basis
 
Assets measured at fair value on a recurring basis at June 30, 2019 are as follows (amounts in millions):
 
Quoted Prices
in Active
Markets for
 Identical
Instruments
(Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Total Balance
Assets
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Money market mutual funds
$
3.8

 
$

 
$
3.8

Short-term investments:
 
 
 
 
 
Marketable equity securities
3.1

 

 
3.1

Total assets measured at fair value
$
6.9

 
$

 
$
6.9

  
Assets measured at fair value on a recurring basis at March 31, 2019 are as follows (amounts in millions):
 
Quoted Prices
in Active
Markets for
 Identical
Instruments
(Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Total Balance
Assets
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Money market mutual funds
$
8.3

 
$

 
$
8.3

Short-term investments:
 
 
 
 
 
Marketable equity securities
2.3

 

 
2.3

Total assets measured at fair value
$
10.6

 
$

 
$
10.6


 
There were no transfers between Level 1 or Level 2 during the three months ended June 30, 2019 or fiscal year ended March 31, 2019. There were no assets measured on a recurring basis during the three months ended June 30, 2019 or fiscal year ended March 31, 2019 using significant unobservable inputs (Level 3).

Assets and Liabilities Measured and Recorded at Fair Value on a Non-Recurring Basis
 
The Company's non-marketable equity, cost method investments, certain acquired liabilities and non-financial assets, such as intangible assets, assets held for sale and property, plant and equipment, are recorded at fair value on a non-recurring basis. These assets are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment.  

The Company's non-marketable and cost method investments are monitored on a quarterly basis for impairment charges.  The fair values of these investments have been determined as Level 3 fair value measurements because the valuations

16

Table of Contents

use unobservable inputs that require management's judgment due to the absence of quoted market prices. There were no impairment charges recognized on these investments during the three months ended June 30, 2019 and June 30, 2018. These investments are included in other assets on the consolidated balance sheets.

The fair value measurements related to the Company's non-financial assets, such as intangible assets, assets held for sale and property, plant and equipment are based on available market prices at the measurement date based on transactions of similar assets and third-party independent appraisals, less costs to sell where appropriate. The Company classifies these measurements as Level 2.

Note 9. Fair Value of Financial Instruments
 
The carrying amount of cash equivalents approximates fair value because their maturity is less than three months. Management believes the carrying amount of the equity and cost-method investments materially approximated fair value at June 30, 2019 based upon unobservable inputs. The fair values of these investments have been determined as Level 3 fair value measurements. The fair values of the Company's line of credit borrowings are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements and approximate carrying value excluding debt issuance costs. Based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the fair value of the Company's line of credit borrowings at June 30, 2019 approximated the carrying value and are considered Level 2 in the fair value hierarchy described in Note 8. The carrying amount of accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short-term maturity of the amounts and are considered Level 2 in the fair value hierarchy.  

Fair Value of Subordinated Convertible Debt, Senior Secured Notes, and Term Loan Facility

The Company measures the fair value of its senior and junior subordinated convertible debt and senior secured notes for disclosure purposes. These fair values are based on observable market prices for this debt, which is traded in less active markets and are therefore classified as a Level 2 fair value measurement.

The following table shows the carrying amounts and fair values of the Company's senior and junior subordinated convertible debt, senior secured notes, and term loan facility as of June 30, 2019 and March 31, 2019 (in millions).

 
June 30, 2019
 
March 31, 2019
 
 
 
Carrying Amount (1)
 
Fair Value
 
Carrying Amount (1)
 
Fair Value
2023 Senior Secured Notes
$
986.2

 
$
1,053.0

 
$
985.4

 
$
1,020.1

2021 Senior Secured Notes
$
988.8

 
$
1,035.1

 
$
987.4

 
$
1,008.1

Term Loan Facility
$
1,706.7

 
$
1,723.5

 
$
1,892.1

 
$
1,911.5

2017 Senior Convertible Debt
$
1,508.0

 
$
2,489.0

 
$
1,493.6

 
$
2,285.4

2015 Senior Convertible Debt
$
1,373.9

 
$
3,066.8

 
$
1,360.8

 
$
2,810.6

2017 Junior Convertible Debt
$
338.3

 
$
803.1

 
$
335.9

 
$
740.8


(1) The carrying amounts presented are net of debt discounts and debt issuance costs (see Note 14 Debt and Credit Facility for further information).

Note 10. Other Financial Statement Details

Accounts Receivable
 
Accounts receivable consists of the following (in millions):

17

Table of Contents

 
June 30, 2019
 
March 31, 2019
 
 
Trade accounts receivable
$
932.1

 
$
875.8

Other
7.7

 
6.8

 Total accounts receivable, gross
939.8

 
882.6

Less allowance for doubtful accounts
3.0

 
2.0

 Total accounts receivable, net
$
936.8

 
$
880.6



Inventories

The components of inventories consist of the following (in millions):
 
June 30, 2019
 
March 31, 2019
 
 
Raw materials
$
78.7

 
$
74.5

Work in process
439.7

 
413.0

Finished goods
214.7

 
224.2

Total inventories
$
733.1

 
$
711.7


Inventories are valued at the lower of cost and net realizable value using the first-in, first-out method. Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable.

Property, Plant and Equipment

Property, plant and equipment consists of the following (in millions):
 
June 30, 2019
 
March 31, 2019
 
 
Land
$
83.4

 
$
83.4

Building and building improvements
638.6

 
647.6

Machinery and equipment
2,108.5

 
2,095.5

Projects in process
125.5

 
119.2

Total property, plant and equipment, gross
2,956.0

 
2,945.7

Less accumulated depreciation and amortization
1,993.0

 
1,949.0

Total property, plant and equipment, net
$
963.0

 
$
996.7


 
Depreciation expense attributed to property, plant and equipment was $46.2 million and $38.0 million for the three months ended June 30, 2019 and 2018, respectively.

Accrued Liabilities

Accrued liabilities consists of the following (in millions):

18

Table of Contents

 
June 30, 2019
 
March 31, 2019
 
 
Accrued compensation and benefits
$
132.6

 
$
133.2

Income taxes payable
28.7

 
46.9

Sales related reserves
359.0

 
366.9

Current portion of lease liabilities
38.7

 

Accrued expenses and other liabilities
272.2

 
240.3

Total accrued liabilities
$
831.2

 
$
787.3



Note 11. Leases

Effective April 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective approach. The Company elected the package of practical expedients permitted under the transition guidance with the new standard, which among other things, allows the Company to carry forward historical lease classification. The Company elected to apply the short-term measurement and recognition exemption in which right-of-use (“ROU”) assets and lease liabilities are not recognized for short-term leases. Adoption of this standard resulted in recording of net operating lease ROU assets and corresponding operating lease liabilities of $124.6 million and $137.3 million, respectively. The net ROU asset includes the effect of reclassifying a portion of facilities-related restructuring reserves as an offset in accordance with the transition guidance. The standard did not materially affect the condensed consolidated statements of income and had no impact on the condensed consolidated statements of cash flows.

The Company determines if an arrangement is a lease at its inception. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets also include any initial direct costs and prepayments less lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. As the Company's leases generally do not provide an implicit rate, the Company uses its collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Operating lease arrangements are comprised primarily of real estate and equipment agreements for which the right-of-use assets are included in other assets and the corresponding lease liabilities, depending on their maturity, are included in accrued liabilities or other long-term liabilities in the condensed consolidated balance sheets. There are certain immaterial finance leases recorded in the condensed consolidated balance sheets. The Company has elected to account for the lease and non-lease components as a single lease component.

The details of the Company's operating leases are as follows (in millions):

 
Three Months Ended
June 30,
 
2019
Operating lease expense
$
13.2

Variable lease expense
2.8

Short-term lease expense
2.2

Total lease expense
$
18.2


The Company's leases are included as a component of the following balance sheet lines (in millions):


19

Table of Contents

 
June 30,
2019
Other assets:
 
Right-of-use assets
$
122.1

Total lease assets
$
122.1

Accrued liabilities:
 
Current portion of lease liabilities
$
38.7

Other long-term liabilities:
 
Non-current portion of lease liabilities
100.6

Total lease liabilities
$
139.3



The following table presents the maturities of lease liabilities as of June 30, 2019 (in millions):

Fiscal year ending March 31,
Operating Leases
2020
$
34.0

2021