GAAP net sales for the fiscal year ended March 31, 2017 were $3.408 billion, an increase of 56.8% from net sales of $2.173 billion in the prior fiscal year.  On a GAAP basis, consolidated net income from continuing operations for the fiscal year ended March 31, 2017 was $170.6 million, or 73 cents per diluted share, a decrease of 47.4% from net income of $324.1 million, or $1.49 per diluted share in the prior fiscal year.

Non-GAAP net sales for the fiscal year ended March 31, 2017 were $3.502 billion, an increase of 58.2% from net sales of $2.214 billion in the prior fiscal year.  On a non-GAAP basis, net income from continuing operations for the fiscal year ended March 31, 2017 was $937.1 million, or $3.99 per diluted share, an increase of 60.6% from net income of $583.3 million, or $2.68 per diluted share, in the prior fiscal year.

Microchip announced today that its Board of Directors has declared a quarterly cash dividend on its common stock of 36.15 cents per share.  The quarterly dividend is payable on June 6, 2017 to stockholders of record on May 23, 2017.

"Our March quarter financial results were outstanding," said Steve Sanghi, Chief Executive Officer.  "Our net sales were near the high end of our updated guidance from February 28, 2017, while non-GAAP gross margin percentage, operating profit percentage and diluted earnings per share all exceeded the high end of our guidance.  We were not able to provide GAAP guidance for the March quarter due to our February 2017 convertible debt offering and the related GAAP accounting impact not being available at that time."

Mr. Sanghi added, “Non-GAAP earnings per share was an all-time record and was 10 cents per share better than the mid-point of our February 28, 2017 guidance, and up 64.7% from the March quarter of a year ago due to improving sales, gross margin percentage, operating expense leverage and the successful execution of our core business as well as accretion from our acquisitions.  GAAP earnings per share for the March quarter was heavily impacted by acquisition-related expenses and hence, not meaningfully comparable to the March quarter a year ago.”

"Microcontroller revenue was a record $580.5 million in the March quarter and represented 64.3% of Microchip's overall revenue," said Ganesh Moorthy, President and Chief Operating Officer.  "In March 2017, Gartner Dataquest released their microcontroller market share report for 2016 which showed Microchip had gained market share in each of the 8-bit, 16-bit and 32-bit product lines, and climbed to the number three overall microcontroller ranking in the industry by revenue.  We believe we have the new product momentum and customer engagement to continue to gain even more share, as we further build the best performing microcontroller franchise in the industry."

Mr. Moorthy added, "Our analog business was also at record levels of $230.5 million in the March quarter and represented 25.5% of Microchip's overall revenue.  We continue to develop and introduce a wide range of innovative and proprietary new linear, mixed-signal, power, interface, timing and security products to fuel the future growth of our analog business."

Eric Bjornholt, Microchip's Chief Financial Officer, said, "The cash flow from operations in the December quarter was a record $322.6 million.  As of March 31, 2017, the consolidated cash and total investment position on our balance sheet was $1.41 billion."

Mr. Sanghi added, "I want to thank all of the employees of Microchip, including employees who joined us from our acquisitions worldwide for delivering such a strong quarter, as well as an outstanding fiscal year 2017."

Commenting on the business environment, Mr. Sanghi added, "We are seeing a very strong business environment for our products worldwide.  Our bookings rate is extremely strong.  Our inventories at Microchip as well as at distributors are at the low end of the normal range.  Therefore, we are starting to see some lengthening of our lead times.  We are starting to see challenges in fab, foundry, probe, assembly, and test capacity.  We have increased wafer starts in our three internal fabs and we are adding capacity in our three assembly and test facilities.  Despite all this, we are seeing significant business that we are not able to support by the customer requested dates."

Mr. Sanghi concluded, "We expect total net sales to be between $920.7 million and $965.9 million in the June 2017 quarter.  Having achieved non-GAAP operating profit of 35.6% in the March quarter which is very close to our long-term target of 36% non-GAAP operating profit, and reflecting confidence in our planned business improvements, we are revising our long-term operating model.  Our long-term non-GAAP operating model used to be 60% gross margin, 24% operating expenses and 36% operating profit.  Today we are revising it upwards to 62.5% non-GAAP gross margin, 22.5% non-GAAP operating expenses and 40% non-GAAP operating profit.  Microchip does not utilize a GAAP long-term operating model.”

Microchip's Highlights for the Quarter Ended March 31, 2017:

• Microchip issued $2.645 billion in convertible bonds, paid down $1.683 billion of borrowings under its revolving line of credit, and extinguished $431.3 million of 2037 convertible bonds in a financially accretive transaction.
   
• Microchip released the GigEpack - a comprehensive portfolio of advanced Gigabit Ethernet products.  GigEpack is a suite of compliance-tested products and tools including the industry's first fault-tolerant Ethernet switch.
   
• The latest PIC^®18F MCU, the "K42," was announced which features a versatile array of Core Independent Peripherals (CIPs) to simplify complex designs.  The family also features high-resolution analog, on-chip Direct Access Memory (DMA) and vectored interrupts for fast processing.
   
• Microchip furthered expanded its family of tinyAVR^® MCUs with the new ATtiny1617 devices.  These latest tinyAVR MCUs increase system throughput while lowering power consumption in embedded applications.
  
  
• Microchip released the CEC1702, a hardware cryptography-enabled MCU to help simplify the development of smart, connected and secure solutions.  The CEC1702 is a feature-rich MCU that streamlines security implementation.
   
• The PIC1615386 family was released, easing the design process by offering more CIPs.  The PIC16F15386 family is the most powerful launching point into the 8-bit PIC^® MCU portfolio.
  
  
• Microchip's online store, microchipDIRECT, revolutionized the semiconductor purchasing process with the release of new features such as volume pricing and enhanced ordering flexibility on its mobile-optimized platform.  The full-service channel now also includes all former Atmel products.
  
  
• Industry's first 'zigbee PRO with Green Power Certified Platform' was unveiled by Microchip.  The BitCloud 4.0 complete zigbee^® software development kit is now available with features such as mesh networking and Green Power.
  
  
• Microchip continued to prove that MOST^® technology is still a leading standard for automotive infotainment, announcing several new design wins for the technology. 
  
  
• A new single-chip Digitally Enhanced Power Analog (DEPA) solution was announced.  The MCP19215 is ideal for DC-DC power conversion and offers flexible control for applications needing variable output power supplies and dynamic reconfiguration. 
  
  
• Microchip debuted the motorBench™ Development Suite, an advanced motor control software plug-in for Microchip's MPLAB® X Integrated Development Environment (IDE) with auto tuning and self-commissioning capabilities. 
  
  
• Silicon Storage Technology (SST), Microchip's licensing subsidiary, announced the qualification of embedded SuperFlash^® technology for the 110 nm CMOS process.  They also announced that StarChip's secure IC for bank cards is now enabled by SuperFlash technology. 
  
  
• Microchip announced the latest family of live updatable controllers for digital power.  The dsPIC33EP128GS808 digital signal controller family offers up to 128 KB of Flash while enabling firmware updates to power supplies with zero down-time. 
  
  
• Microchip was named one of the 2017 Best Companies to Work for in NY by Best Companies NY.

First Quarter Fiscal Year 2018 Outlook:

The following statements are based on current expectations.  These statements are forward-looking, and actual results may differ materially.  The table below provides our guidance on both a GAAP and non-GAAP basis for the June 30, 2017 quarter: