Beginning with the fiscal quarter ending March 31, 2019, we changed the information included in our financial guidance in response to comments from and discussions with the Staff of the Securities and Exchange Commission. We are now providing net sales guidance based on sell-in revenue recognition under the new GAAP standard. We are also providing guidance and reporting non-GAAP gross margin percentage, operating expense percentage, operating profit percentages and diluted earnings per share based on sell-in GAAP revenue. We are also providing information on end-market demand so that investors will have information on the consumption in the marketplace of our products by our customers or our distributors. We do not use end-market demand for any of our non-GAAP income statement calculations. Please see "Use of End-Market Demand Metric" below for information on how we calculate end-market demand.
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. We are not able to predict whether inventory at our distributors will increase or decrease and are therefore providing a range of GAAP net sales guidance. In recent years, we have seen net inventory at our distributors increase or decrease by a significant amount in a single quarter.
| Microchip Consolidated Guidance | |||
| Net Sales | $1.194 to $1.300 billion | ||
| GAAP | Non-GAAP Adjustments | Non-GAAP1 | |
| Gross Margin | 59.8% to 60.6% | $7.6 to $8.4 million | 60.4% to 61.2% |
| Operating Expenses2 | 46.5% to 48.9% | $283.0 to $287.0 million | 24.4% to 25.2% |
| Operating Income | 10.9% to 14.1% | $290.6 to $295.4 million | 35.2% to 36.8% |
| Other Expense, net | $106.0 to $108.0 million | $27.0 million | $79.0 to $81.0 million |
| Income Tax Provision (Benefit) | ($4.0) to ($10.0) million3 | $27.8 to $34.2 million | $23.8 to $24.2 million4 |
| Net Income | $33.6 to $78.9 million | $283.7 to $294.6 million | $317.3 to $373.5 million |
| Diluted Common Shares
Outstanding | Approximately 254.5 to 257.2 million shares | Approximately 254.5 to 257.2 million shares | |
| Earnings per Diluted Share | $0.13 to $0.31 | $1.12 to $1.14 | $1.25 to $1.45 |
1 See the "Use of Non-GAAP Financial Measures" section of this release for information regarding our non-GAAP guidance.
2 We are not able to estimate the amount of certain Special Charges and Other, net that may be incurred during the quarter ending June 30, 2020. Therefore, our estimate of GAAP operating expenses excludes certain amounts that may be recognized as Special Charges and Other, net in the quarter ending June 30, 2020.
3 The forecast for GAAP tax expense excludes any unexpected tax events that may occur during the quarter, as these amounts cannot be forecasted.
4 Represents expected cash tax rate for fiscal 2021 excluding any transition tax payments associated with the Tax Cuts and Jobs Act.
- Microchip's inventory days in the June 2020 quarter are expected to be in the range of 116 to 130 days, compared to 122 days at March 31, 2020. Our actual inventory level will depend on the inventory that our distributors decide to hold to support their customers, overall demand for our products and our production levels.
- Capital expenditures for the quarter ending June 30, 2020 are expected to be between $12 million and $18 million. Capital expenditures for all of fiscal 2021 are expected to be between $50 million and $70 million. We are continuing to invest in the equipment needed to support the growth of our production capabilities for fast-growing new products and technologies and to bring in-house more of the assembly and test operations that are currently outsourced.
