10-Q 1 mchp-20220630.htm 10-Q mchp-20220630
0000827054March 312023Q1FALSE00008270542022-04-012022-06-3000008270542022-07-27xbrli:shares00008270542022-06-30iso4217:USD00008270542022-03-31iso4217:USDxbrli:shares00008270542021-04-012021-06-300000827054us-gaap:RevolvingCreditFacilityMember2022-04-012022-06-300000827054us-gaap:RevolvingCreditFacilityMember2021-04-012021-06-3000008270542021-03-3100008270542021-06-300000827054us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-03-310000827054us-gaap:TreasuryStockMember2021-03-310000827054us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000827054us-gaap:RetainedEarningsMember2021-03-310000827054us-gaap:RetainedEarningsMember2021-04-012021-06-300000827054us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-04-012021-06-300000827054us-gaap:TreasuryStockMember2021-04-012021-06-300000827054us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-06-300000827054us-gaap:TreasuryStockMember2021-06-300000827054us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000827054us-gaap:RetainedEarningsMember2021-06-300000827054us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-03-310000827054us-gaap:TreasuryStockMember2022-03-310000827054us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000827054us-gaap:RetainedEarningsMember2022-03-310000827054us-gaap:RetainedEarningsMember2022-04-012022-06-300000827054us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000827054us-gaap:AccountingStandardsUpdate202006Memberus-gaap:CommonStockIncludingAdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-03-310000827054us-gaap:RetainedEarningsMemberus-gaap:AccountingStandardsUpdate202006Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-03-310000827054us-gaap:AccountingStandardsUpdate202006Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-03-310000827054us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-04-012022-06-300000827054us-gaap:TreasuryStockMember2022-04-012022-06-300000827054us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-06-300000827054us-gaap:TreasuryStockMember2022-06-300000827054us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000827054us-gaap:RetainedEarningsMember2022-06-3000008270542021-08-242021-08-24xbrli:pure00008270542021-08-2300008270542021-08-2400008270542021-10-040000827054us-gaap:AccountingStandardsUpdate202006RetrospectiveMemberus-gaap:ConvertibleDebtMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-03-312022-03-310000827054us-gaap:AccountingStandardsUpdate202006RetrospectiveMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-03-310000827054mchp:SemiconductorProductsMember2022-04-012022-06-300000827054mchp:TechnologyLicensingMember2022-04-012022-06-300000827054mchp:SemiconductorProductsMember2021-04-012021-06-300000827054mchp:TechnologyLicensingMember2021-04-012021-06-300000827054mchp:MicrocontrollersMember2022-04-012022-06-300000827054mchp:MicrocontrollersMember2021-04-012021-06-300000827054mchp:AnalogMember2022-04-012022-06-300000827054mchp:AnalogMember2021-04-012021-06-300000827054mchp:OtherProductLineMember2022-04-012022-06-300000827054mchp:OtherProductLineMember2021-04-012021-06-300000827054us-gaap:SalesChannelThroughIntermediaryMember2022-04-012022-06-300000827054us-gaap:SalesChannelThroughIntermediaryMember2021-04-012021-06-300000827054us-gaap:SalesChannelDirectlyToConsumerMember2022-04-012022-06-300000827054us-gaap:SalesChannelDirectlyToConsumerMember2021-04-012021-06-300000827054mchp:TechnologyLicensesMember2022-04-012022-06-300000827054mchp:TechnologyLicensesMember2021-04-012021-06-300000827054mchp:SemiconductorProductsMember2022-06-300000827054mchp:SemiconductorProductsMemberus-gaap:AccruedLiabilitiesMember2022-06-300000827054mchp:SemiconductorProductsMember2022-03-310000827054mchp:SemiconductorProductsMemberus-gaap:AccruedLiabilitiesMember2022-03-310000827054mchp:A2015SeniorSubordinatedConvertibleDebtMember2022-04-012022-06-300000827054mchp:A2015SeniorSubordinatedConvertibleDebtMember2021-04-012021-06-300000827054mchp:A2017SeniorSubordinatedConvertibleDebtMember2022-04-012022-06-300000827054mchp:A2017SeniorSubordinatedConvertibleDebtMember2021-04-012021-06-300000827054mchp:A2017JuniorSubordinatedConvertibleDebtMember2022-04-012022-06-300000827054mchp:A2017JuniorSubordinatedConvertibleDebtMember2021-04-012021-06-300000827054srt:WeightedAverageMembermchp:A2015SeniorSubordinatedConvertibleDebtMember2022-04-012022-06-300000827054srt:WeightedAverageMembermchp:A2015SeniorSubordinatedConvertibleDebtMember2021-04-012021-06-300000827054mchp:A2017SeniorSubordinatedConvertibleDebtMembersrt:WeightedAverageMember2022-04-012022-06-300000827054mchp:A2017SeniorSubordinatedConvertibleDebtMembersrt:WeightedAverageMember2021-04-012021-06-300000827054mchp:A2020SeniorSubordinatedConvertibleDebtMembersrt:WeightedAverageMember2022-04-012022-06-300000827054mchp:A2020SeniorSubordinatedConvertibleDebtMembersrt:WeightedAverageMember2021-04-012021-06-300000827054mchp:A2017JuniorSubordinatedConvertibleDebtMembersrt:WeightedAverageMember2022-04-012022-06-300000827054mchp:A2017JuniorSubordinatedConvertibleDebtMembersrt:WeightedAverageMember2021-04-012021-06-300000827054us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-06-300000827054us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-03-310000827054mchp:SeniorSecuredNotes2023Memberus-gaap:SeniorNotesMember2022-06-300000827054mchp:SeniorSecuredNotes2023Memberus-gaap:SeniorNotesMember2022-03-310000827054mchp:SeniorSecuredNotes2.6702023Memberus-gaap:SeniorNotesMember2022-06-300000827054mchp:SeniorSecuredNotes2.6702023Memberus-gaap:SeniorNotesMember2022-03-310000827054mchp:SeniorSecuredNotes09722024Memberus-gaap:SeniorNotesMember2022-06-300000827054mchp:SeniorSecuredNotes09722024Memberus-gaap:SeniorNotesMember2022-03-310000827054mchp:SeniorSecuredNotes09832024Memberus-gaap:SeniorNotesMember2022-06-300000827054mchp:SeniorSecuredNotes09832024Memberus-gaap:SeniorNotesMember2022-03-310000827054mchp:SeniorUnsecuredNotes2025Memberus-gaap:SeniorNotesMember2022-06-300000827054mchp:SeniorUnsecuredNotes2025Memberus-gaap:SeniorNotesMember2022-03-310000827054us-gaap:SeniorNotesMember2022-06-300000827054us-gaap:SeniorNotesMember2022-03-310000827054us-gaap:ConvertibleSubordinatedDebtMembermchp:A2015SeniorSubordinatedConvertibleDebtMember2022-06-300000827054us-gaap:ConvertibleSubordinatedDebtMembermchp:A2015SeniorSubordinatedConvertibleDebtMember2022-03-310000827054us-gaap:ConvertibleSubordinatedDebtMembermchp:A2017SeniorSubordinatedConvertibleDebtMember2022-06-300000827054us-gaap:ConvertibleSubordinatedDebtMembermchp:A2017SeniorSubordinatedConvertibleDebtMember2022-03-310000827054mchp:A2020SeniorSubordinatedConvertibleDebtMemberus-gaap:ConvertibleSubordinatedDebtMember2022-06-300000827054mchp:A2020SeniorSubordinatedConvertibleDebtMemberus-gaap:ConvertibleSubordinatedDebtMember2022-03-310000827054mchp:A2017JuniorSubordinatedConvertibleDebtMemberus-gaap:JuniorSubordinatedDebtMember2022-06-300000827054mchp:A2017JuniorSubordinatedConvertibleDebtMemberus-gaap:JuniorSubordinatedDebtMember2022-03-310000827054us-gaap:ConvertibleDebtMember2022-06-300000827054us-gaap:ConvertibleDebtMember2022-03-310000827054us-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:ConvertibleDebtMember2022-04-012022-06-30mchp:day0000827054us-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:ConvertibleDebtMember2022-04-012022-06-300000827054us-gaap:ConvertibleSubordinatedDebtMembermchp:A2015SeniorSubordinatedConvertibleDebtMember2022-04-012022-06-300000827054us-gaap:ConvertibleSubordinatedDebtMembermchp:A2017SeniorSubordinatedConvertibleDebtMember2022-04-012022-06-300000827054mchp:A2020SeniorSubordinatedConvertibleDebtMemberus-gaap:ConvertibleSubordinatedDebtMember2022-04-012022-06-300000827054mchp:A2017JuniorSubordinatedConvertibleDebtMemberus-gaap:JuniorSubordinatedDebtMember2022-04-012022-06-300000827054us-gaap:ConvertibleSubordinatedDebtMembermchp:A2017JuniorSubordinatedConvertibleDebtMember2022-04-012022-06-300000827054us-gaap:CommonStockMember2022-06-300000827054us-gaap:ConvertibleDebtMember2022-04-012022-06-300000827054us-gaap:SecuredDebtMember2022-04-012022-06-300000827054us-gaap:SecuredDebtMember2021-04-012021-06-300000827054us-gaap:ConvertibleDebtMember2021-04-012021-06-300000827054us-gaap:ConvertibleSubordinatedDebtMembermchp:A2017SeniorSubordinatedConvertibleDebtMemberus-gaap:LongTermDebtMember2022-05-012022-05-310000827054mchp:A2017JuniorSubordinatedConvertibleDebtMemberus-gaap:JuniorSubordinatedDebtMemberus-gaap:LongTermDebtMember2022-05-012022-05-310000827054us-gaap:RevolvingCreditFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054us-gaap:RevolvingCreditFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054us-gaap:RevolvingCreditFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054us-gaap:RevolvingCreditFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054mchp:SeniorSecuredNotes2023Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054mchp:SeniorSecuredNotes2023Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054mchp:SeniorSecuredNotes2023Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054mchp:SeniorSecuredNotes2023Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054mchp:SeniorSecuredNotes2.6702023Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054mchp:SeniorSecuredNotes2.6702023Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054mchp:SeniorSecuredNotes2.6702023Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054mchp:SeniorSecuredNotes2.6702023Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054mchp:SeniorSecuredNotes09722024Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054mchp:SeniorSecuredNotes09722024Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054mchp:SeniorSecuredNotes09722024Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054mchp:SeniorSecuredNotes09722024Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054mchp:SeniorSecuredNotes09832024Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054mchp:SeniorSecuredNotes09832024Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054mchp:SeniorSecuredNotes09832024Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054mchp:SeniorSecuredNotes09832024Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054mchp:SeniorUnsecuredNotes2025Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054mchp:SeniorUnsecuredNotes2025Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054mchp:SeniorUnsecuredNotes2025Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054mchp:SeniorUnsecuredNotes2025Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054us-gaap:CarryingReportedAmountFairValueDisclosureMembermchp:A2015SeniorSubordinatedConvertibleDebtMember2022-06-300000827054mchp:A2015SeniorSubordinatedConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054us-gaap:CarryingReportedAmountFairValueDisclosureMembermchp:A2015SeniorSubordinatedConvertibleDebtMember2022-03-310000827054mchp:A2015SeniorSubordinatedConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054mchp:A2017SeniorSubordinatedConvertibleDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054mchp:A2017SeniorSubordinatedConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054mchp:A2017SeniorSubordinatedConvertibleDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054mchp:A2017SeniorSubordinatedConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054mchp:A2020SeniorSubordinatedConvertibleDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054mchp:A2020SeniorSubordinatedConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054mchp:A2020SeniorSubordinatedConvertibleDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054mchp:A2020SeniorSubordinatedConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054mchp:A2017JuniorSubordinatedConvertibleDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054mchp:A2017JuniorSubordinatedConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054mchp:A2017JuniorSubordinatedConvertibleDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054mchp:A2017JuniorSubordinatedConvertibleDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000827054us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000827054us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000827054us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000827054us-gaap:DevelopedTechnologyRightsMember2022-06-300000827054us-gaap:CustomerRelatedIntangibleAssetsMember2022-06-300000827054us-gaap:InProcessResearchAndDevelopmentMember2022-06-300000827054us-gaap:LicensingAgreementsMember2022-06-300000827054us-gaap:DistributionRightsMember2022-06-300000827054us-gaap:DevelopedTechnologyRightsMember2022-03-310000827054us-gaap:CustomerRelatedIntangibleAssetsMember2022-03-310000827054us-gaap:InProcessResearchAndDevelopmentMember2022-03-310000827054us-gaap:LicensingAgreementsMember2022-03-310000827054us-gaap:DistributionRightsMember2022-03-310000827054srt:MinimumMember2022-04-012022-06-300000827054srt:MaximumMember2022-04-012022-06-300000827054us-gaap:CostOfSalesMember2022-04-012022-06-300000827054us-gaap:CostOfSalesMember2021-04-012021-06-300000827054us-gaap:OperatingExpenseMember2022-04-012022-06-300000827054us-gaap:OperatingExpenseMember2021-04-012021-06-300000827054mchp:SemiconductorProductsMember2022-06-300000827054mchp:TechnologyLicensingMember2022-06-30mchp:unit0000827054us-gaap:TradeAccountsReceivableMember2022-06-300000827054us-gaap:TradeAccountsReceivableMember2022-03-310000827054mchp:OtherReceivablesMember2022-06-300000827054mchp:OtherReceivablesMember2022-03-310000827054us-gaap:TradeAccountsReceivableMember2022-04-012022-06-300000827054us-gaap:TradeAccountsReceivableMember2021-04-012021-06-300000827054us-gaap:LandMember2022-06-300000827054us-gaap:LandMember2022-03-310000827054us-gaap:BuildingAndBuildingImprovementsMember2022-06-300000827054us-gaap:BuildingAndBuildingImprovementsMember2022-03-310000827054us-gaap:MachineryAndEquipmentMember2022-06-300000827054us-gaap:MachineryAndEquipmentMember2022-03-310000827054us-gaap:ConstructionInProgressMember2022-06-300000827054us-gaap:ConstructionInProgressMember2022-03-310000827054us-gaap:IndemnificationGuaranteeMember2022-06-300000827054mchp:FederalShareholderClassActionLitigationMember2018-09-14mchp:lawsuit0000827054us-gaap:DamagesFromProductDefectsMembermchp:ContinentalClaimICCArbitration.Member2022-06-300000827054mchp:ContinentalClaimICCArbitration.Member2022-04-012022-06-300000827054mchp:IndividualLaborActionsbyformerLFREmployees.Member2010-06-012010-06-30mchp:plaintiff0000827054us-gaap:ResearchAndDevelopmentExpenseMember2022-04-012022-06-300000827054us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300000827054us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-04-012022-06-300000827054us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-04-012021-06-300000827054us-gaap:InventoriesMember2022-04-012022-06-300000827054us-gaap:InventoriesMember2021-04-012021-06-3000008270542021-11-300000827054us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-03-310000827054us-gaap:AccumulatedTranslationAdjustmentMember2022-03-310000827054us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-04-012022-06-300000827054us-gaap:AccumulatedTranslationAdjustmentMember2022-04-012022-06-300000827054us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-06-300000827054us-gaap:AccumulatedTranslationAdjustmentMember2022-06-3000008270542022-06-032022-06-030000827054us-gaap:SubsequentEventMember2022-08-022022-08-020000827054srt:ScenarioForecastMember2022-09-022022-09-02


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, 2022

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

mchp-20220630_g1.jpg
  
MICROCHIP TECHNOLOGY INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)

Delaware86-0629024
(State or Other Jurisdiction of Incorporation or Organization)(IRS Employer Identification No.)

2355 W. Chandler Blvd., Chandler, AZ  85224-6199
(Address of Registrant's Principal Executive Offices)

(480) 792-7200
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.001 par valueMCHPNASDAQ Stock Market LLC
(Nasdaq Global Select Market)

Indicate by check mark 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  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Yes  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 filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth 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).  
Yes     No   

The number of shares outstanding of the registrant's Common Stock, $0.001 par value, as of July 27, 2022 was 552,484,192.





MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

INDEX

PART I.  FINANCIAL INFORMATION
PART II.  OTHER INFORMATION

2


MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
Defined Terms(1)
TermDefinition
4.333% 2023 Notes2023 Senior Unsecured Notes, maturing June 1, 2023
2.670% 2023 Notes2023 Senior Unsecured Notes, maturing September 1, 2023
0.972% 2024 Notes2024 Senior Unsecured Notes, maturing February 15, 2024
0.983% 2024 Notes2024 Senior Unsecured Notes, maturing September 1, 2024
4.250% 2025 Notes2025 Senior Unsecured Notes, maturing September 1, 2025
2015 Senior Convertible Debt2015 Senior Convertible Debt, maturing February 15, 2025
2017 Senior Convertible Debt2017 Senior Convertible Debt, maturing February 15, 2027
2020 Senior Convertible Debt2020 Senior Convertible Debt, maturing November 15, 2024
2017 Junior Convertible Debt2017 Junior Convertible Debt, maturing February 15, 2037
ASUAccounting Standards Update
CEMsClient engagement managers
Convertible Debt2015 Senior Convertible Debt, 2017 Senior Convertible Debt, 2020 Senior Convertible Debt, and 2017 Junior Convertible Debt
Credit AgreementAmended and Restated Credit Agreement, dated as of December 16, 2021, among the Company, as borrower, the lenders from time to time party thereto, and J.P.Morgan Chase Bank, N.A., as administrative agent
EARExport Administration Regulation
ESEsEmbedded solutions engineers
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FPGAField-programmable gate array
OEMsOriginal equipment manufacturers
PSUsRSUs with a market condition or a performance condition, and a service condition
R&DResearch and development
Revolving Credit Facility$2.75 billion revolving credit facility created pursuant to the Credit Agreement
RSUsRestricted stock units
SARsStock appreciation rights
SECU.S. Securities and Exchange Commission
Senior IndebtednessRevolving Credit Facility, 3.922% 2021 Notes, 4.333% 2023 Notes, 2.670% 2023 Notes, 0.972% 2024 Notes, 0.983% 2024 Notes, and 4.250% 2025 Notes
Senior Notes3.922% 2021 Notes, 4.333% 2023 Notes, 2.670% 2023 Notes, 0.972% 2024 Notes, 0.983% 2024 Notes, and 4.250% 2025 Notes
TCJATax Cuts and Jobs Act of 2017
U.S. GAAPU.S. Generally Accepted Accounting Principles

(1) Certain terms used within this Form 10-Q are defined in the above table.






3

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)

ASSETS
June 30,March 31,
 20222022
Cash and cash equivalents$377.1 $317.4 
Short-term investments2.0 2.0 
Accounts receivable, net1,145.0 1,072.6 
Inventories911.8 854.4 
Other current assets207.3 206.2 
Total current assets2,643.2 2,452.6 
Property, plant and equipment, net994.9 967.9 
Goodwill6,673.6 6,673.6 
Intangible assets, net3,869.4 4,043.1 
Long-term deferred tax assets1,747.7 1,797.1 
Other assets279.6 265.2 
Total assets$16,208.4 $16,199.5 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$304.7 $344.7 
Accrued liabilities1,180.7 1,054.3 
Total current liabilities1,485.4 1,399.0 
Long-term debt7,563.9 7,687.4 
Long-term income tax payable706.3 704.6 
Long-term deferred tax liability40.7 39.8 
Other long-term liabilities434.2 473.9 
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 900,000,000 shares; 577,805,396 shares issued and 552,484,192 shares outstanding at June 30, 2022; 577,805,396 shares issued and 554,500,524 shares outstanding at March 31, 2022
0.6 0.6 
Additional paid-in capital2,393.0 2,535.9 
Common stock held in treasury: 25,321,204 shares at June 30, 2022; 23,304,872 shares at March 31, 2022
(975.0)(796.3)
Accumulated other comprehensive loss(16.6)(20.6)
Retained earnings4,575.9 4,175.2 
Total stockholders' equity5,977.9 5,894.8 
Total liabilities and stockholders' equity$16,208.4 $16,199.5 

See accompanying notes to condensed consolidated financial statements
4

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)

Three Months Ended June 30,
 20222021
Net sales$1,963.6 $1,569.4 
Cost of sales653.7 561.8 
Gross profit1,309.9 1,007.6 
Research and development269.0 238.4 
Selling, general and administrative188.9 174.3 
Amortization of acquired intangible assets167.6 215.6 
Special (income) charges and other, net(16.9)10.5 
Operating expenses608.6 638.8 
Operating income701.3 368.8 
Other income (expense):
Interest income0.1 0.3 
Interest expense(50.3)(72.3)
Loss on settlement of debt(6.2)(0.3)
Other income, net1.7 0.5 
Income before income taxes646.6 297.0 
Income tax provision139.4 44.2 
Net income$507.2 $252.8 
Basic net income per common share$0.92 $0.46 
Diluted net income per common share$0.90 $0.45 
Dividends declared per common share$0.2760 $0.2065 
Basic common shares outstanding553.8 547.5 
Diluted common shares outstanding561.5 565.1 

See accompanying notes to condensed consolidated financial statements
5

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

Three Months Ended June 30,
20222021
Net income$507.2 $252.8 
Components of other comprehensive income (loss):
Defined benefit plans:
Actuarial gains (losses) related to defined benefit pension plans, net of tax effect3.9 (1.1)
Reclassification of realized transactions, net of tax effect0.1 0.6 
Change in net foreign currency translation adjustment 0.5 
Other comprehensive income, net of tax effect4.0  
Comprehensive income$511.2 $252.8 

See accompanying notes to condensed consolidated financial statements

6

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

 Three Months Ended June 30,
 20222021
Cash flows from operating activities:  
Net income$507.2 $252.8 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization259.4 272.2 
Deferred income taxes74.7 20.1 
Share-based compensation expense related to equity incentive plans41.2 56.6 
Loss on settlement of debt6.2 0.3 
Amortization of debt discount1.8 12.6 
Amortization of debt issuance costs2.3 3.5 
Other non-cash adjustment(0.2)0.9 
Changes in operating assets and liabilities, excluding impact of acquisitions:
Increase in accounts receivable(72.4)(3.0)
Increase in inventories(65.0)(19.2)
Increase (decrease) in accounts payable and accrued liabilities152.4 (0.9)
Change in other assets and liabilities(42.8)27.5 
Change in income tax payable(24.4)6.5 
Net cash provided by operating activities840.4 629.9 
Cash flows from investing activities:  
Proceeds from sales of assets0.4  
Investments in other assets(32.3)(26.4)
Capital expenditures(121.9)(86.3)
Net cash used in investing activities(153.8)(112.7)
Cash flows from financing activities:  
Proceeds from borrowings on Revolving Credit Facility1,306.0 775.0 
Repayments of Revolving Credit Facility(1,505.0)(1,163.0)
Proceeds from issuance of senior notes 997.0 
Repayment of senior notes (1,000.0)
Payments on settlement of convertible debt(73.5) 
Deferred financing costs (2.1)
Proceeds from sale of common stock13.4 12.2 
Tax payments related to shares withheld for vested RSUs(19.4)(25.3)
Repurchase of common stock(195.2) 
Payment of cash dividends(153.0)(113.1)
Capital lease payments(0.2)(0.2)
Net cash used in financing activities(626.9)(519.5)
Net increase (decrease) in cash and cash equivalents59.7 (2.3)
Cash and cash equivalents, and restricted cash at beginning of period317.4 280.0 
Cash and cash equivalents, and restricted cash at end of period$377.1 $277.7 

See accompanying notes to condensed consolidated financial statements
7

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Common Stock and Additional Paid-in-CapitalCommon Stock Held in TreasuryAccumulated Other Comprehensive LossRetained EarningsTotal Equity
SharesAmountSharesAmount
Balance at March 31, 2021569.0 $2,403.6 21.9 $(433.8)$(26.2)$3,393.5 $5,337.1 
Net income— — — — — 252.8 252.8 
Other comprehensive income— — — — — — — 
Proceeds from sales of common stock through employee equity incentive plans1.4 12.2 — — — — 12.2 
RSU and SAR withholdings(0.4)(25.3)— — — — (25.3)
Treasury stock used for new issuances(1.0)(16.3)(1.0)16.3 — —  
Share-based compensation— 56.2 — — — — 56.2 
Cash dividend— — — — — (113.1)(113.1)
Balance at June 30, 2021569.0 $2,430.4 20.9 $(417.5)$(26.2)$3,533.2 $5,519.9 
Balance at March 31, 2022577.8 $2,536.5 23.3 $(796.3)$(20.6)$4,175.2 $5,894.8 
Net income— — — — — 507.2 507.2 
Other comprehensive income— — — — 4.0 — 4.0 
Adoption of ASU 2020-06, cumulative adjustment— (128.3)— — — 46.5 (81.8)
Proceeds from sales of common stock through employee equity incentive plans1.2 13.4 — — — — 13.4 
RSU and SAR withholdings(0.3)(19.4)— — — — (19.4)
Treasury stock used for new issuances(0.9)(16.5)(0.9)16.5 — —  
Repurchase of common stock— — 2.9 (195.2)— — (195.2)
Settlement of convertible debt— (32.9)— — — — (32.9)
Share-based compensation— 40.8 — — — — 40.8 
Cash dividend— — — — — (153.0)(153.0)
Balance at June 30, 2022577.8 $2,393.6 25.3 $(975.0)$(16.6)$4,575.9 $5,977.9 

See accompanying notes to condensed consolidated financial statements
8

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 significant intercompany accounts 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 U.S. GAAP, pursuant to the rules and regulations of 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, 2022.  The results of operations for the three months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2023 or for any other period.

On August 24, 2021, at our Annual Meeting of Stockholders, our stockholders approved a two-for-one forward stock split and the amendment and restatement of the Company's Certificate of Incorporation to increase the number of authorized shares of common stock from 450.0 million shares to 900.0 million shares. As a result, each stockholder of record at the close of market on October 4, 2021 received one additional share of common stock for every share held. Such shares were distributed after the close of trading on October 12, 2021. All share, equity award, and per share amounts and related shareholders' equity balances presented herein have been adjusted to reflect the stock split.

Note 2. Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

On April 1, 2022, the Company adopted ASU 2020-06-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity, which simplifies the guidance for certain convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature. As a result, convertible debt instruments are reported as a single liability instrument with no separate accounting for embedded conversion features. Additionally, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The Company adopted the standard under the modified retrospective transition method for fiscal 2023. The adoption of this standard resulted in an increase of $105.8 million to our Convertible Debt, to reflect the full principal amount of the Convertible Debt outstanding net of issuance costs, a reduction to additional paid-in capital of $128.3 million, net of estimated income tax effects, to remove the equity component separately recorded for the conversion features associated with the Convertible Debt, a decrease to deferred tax liabilities, and a cumulative-effect adjustment of $46.5 million, net of estimated income tax effects, to increase the opening balance of retained earnings as of April 1, 2022. In addition, the required use of the if-converted method in calculating diluted earnings per share is not expected to increase the number of potentially dilutive shares in fiscal 2023 as the Company irrevocably elected cash settlement for the principal amount of its Convertible Debt on April 1, 2022. The Company intends to settle any excess value in shares of its common stock in the event of a conversion.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2021, the FASB issued ASU 2021-10-Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance which aims at increasing the transparency of government assistance received by most business entities. The standard requires business entities to make annual disclosures about the nature of the transactions and the related accounting policy used to account for the transactions, the line items and applicable amounts on the balance sheet and income statement that are affected by the transactions, and significant terms and conditions of the transactions, including commitments and contingencies. If an entity omits any required disclosures because it is legally prohibited, it must
9

disclose that fact. ASU 2021-10 is effective for financial statements issued for annual periods beginning after December 15, 2021, and the Company is currently evaluating the applicable disclosures.

Note 3. 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 tables represent net sales and gross profit for each segment for the periods presented (in millions):

Three Months Ended June 30, 2022
Net SalesGross Profit
Semiconductor products$1,925.7 $1,272.0 
Technology licensing37.9 37.9 
Total$1,963.6 $1,309.9 

Three Months Ended June 30, 2021
Net SalesGross Profit
Semiconductor products$1,542.0 $980.2 
Technology licensing27.4 27.4 
Total$1,569.4 $1,007.6 

Note 4. Net Sales

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

Three Months Ended June 30,
20222021
Microcontrollers$1,063.0 $902.5 
Analog580.0 432.1 
Other320.6 234.8 
Total net sales$1,963.6 $1,569.4 

The product lines listed above are included entirely in the Company's semiconductor product segment with the exception of the 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 customer type (in millions):

Three Months Ended June 30,
20222021
Distributors$913.1 $783.4 
Direct customers1,012.6 758.6 
Licensees37.9 27.4 
Total net sales$1,963.6 $1,569.4 

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 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 technology. All of the customer types listed in the table above are included in the Company's semiconductor product segment with the exception of licenses, which is included in the technology licensing segment.
10


The Company collects amounts in advance for certain of its contracts with customers. These amounts are deferred until control of the product or service is transferred to the customer at which time it is recognized as revenue. As of June 30, 2022, the Company had approximately $172.1 million of deferred revenue in the semiconductor product segment, of which $81.6 million is included within accrued liabilities and the remaining is included within other long-term liabilities on the Company's condensed consolidated balance sheet. As of March 31, 2022, the Company had approximately $117.6 million of deferred revenue in the semiconductor product segment, of which $73.2 million is included within accrued liabilities and the remaining is included within other long-term liabilities on the Company's condensed consolidated balance sheet. Deferred revenue represents amounts that have been invoiced in advance which are expected to be recognized as revenue in future periods.

Many of the Company’s customer contracts have a duration of less than 12 months, however, a portion of the Company's customer contracts in the semiconductor product segment contain firmly committed orders beyond 12 months at the time of order. The transaction price the Company expects to receive for non-cancelable commitments in such contracts with remaining performance obligations as of June 30, 2022 for orders with initial durations in excess of 12 months approximates the Company’s fiscal 2022 net sales of which approximately 55% is expected to be recognized as net sales over the next 12 months. The amount and timing of such net sales is inherently uncertain because the transaction prices include variable consideration which is subject to change based upon market conditions at the time of the sale and may not be indicative of net sales in future periods.

Note 5. Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share (in millions, except per share amounts):
Three Months Ended June 30,
20222021
Net income$507.2 $252.8 
Basic weighted average common shares outstanding553.8 547.5 
Dilutive effect of stock options and RSUs5.5 7.8 
Dilutive effect of 2015 Senior Convertible Debt1.0 4.2 
Dilutive effect of 2017 Senior Convertible Debt1.1 4.0 
Dilutive effect of 2017 Junior Convertible Debt0.1 1.6 
Diluted weighted average common shares outstanding561.5 565.1 
Basic net income per common share$0.92 $0.46 
Diluted net income per common share$0.90 $0.45 

The Company computed basic net income per common share based on the weighted average number of common shares outstanding during the period. The Company computed diluted net income per common share based on the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding RSUs. Prior to conversion of its Convertible Debt, the Company will include, in the diluted net income per common share calculation, the effect of the additional shares that may be issued when the Company's common stock price exceeds the conversion price using the if-converted method beginning April 1, 2022 due to the adoption of ASU 2020-06 (see Note 2 for details on adoption of ASU 2020-06). The Company's Convertible Debt has no impact on diluted net income per common share unless the average price of the Company's common stock exceeds the conversion price because the Company is required to settle the principal amount of the Convertible Debt in cash upon conversion.  The following is the weighted average conversion price per share used in calculating the dilutive effect (see Note 7 for details on the Convertible Debt):

11

Three Months Ended June 30,
20222021
2015 Senior Convertible Debt$29.77 $30.23 
2017 Senior Convertible Debt$46.43 $47.14 
2020 Senior Convertible Debt$93.07 $93.41 
2017 Junior Convertible Debt$45.62 $46.31 

Note 6. Special (Income) Charges and Other, Net

During the three months ended June 30, 2022, the Company incurred special income and other, net of $16.9 million, compared to special charges and other, net of $10.5 million for the three months ended June 30, 2021. The income was primarily related to a favorable resolution of a previously accrued legal matter and the charges incurred were primarily related to restructuring of acquired and existing wafer fabrication operations to increase operational efficiency.

Note 7. Debt

Debt obligations included in the condensed consolidated balance sheets consisted of the following (in millions):
Coupon Interest RateEffective Interest Rate
June 30, 2022March 31, 2022
Revolving Credit Facility$1,200.1 $1,399.1 
4.333% 2023 Notes4.333%4.7%1,000.0 1,000.0 
2.670% 2023 Notes2.670%2.8%1,000.0 1,000.0 
0.972% 2024 Notes0.972%1.1%1,400.0 1,400.0 
0.983% 2024 Notes0.983%1.1%1,000.0 1,000.0 
4.250% 2025 Notes4.250%4.6%1,200.0 1,200.0 
Total Senior Indebtedness6,800.1 6,999.1 
Senior Subordinated Convertible Debt - Principal Outstanding
2015 Senior Convertible Debt1.625%1.8%34.4 34.4 
2017 Senior Convertible Debt1.625%1.8%97.1 128.1 
2020 Senior Convertible Debt0.125%0.5%665.5 665.5 
Junior Subordinated Convertible Debt - Principal Outstanding
2017 Junior Convertible Debt2.250%2.3%6.5 10.1 
Total Convertible Debt803.5 838.1 
Gross long-term debt including current maturities7,603.6 7,837.2 
Less: Debt discount(1)
(15.9)(124.6)
Less: Debt issuance costs(2)
(23.8)(25.2)
Net long-term debt including current maturities7,563.9 7,687.4 
Less: Current maturities(3)
  
Net long-term debt$7,563.9 $7,687.4 

12

(1) The unamortized discount consists of the following (in millions):
June 30,March 31,
20222022
4.333% 2023 Notes$(1.1)$(1.3)
2.670% 2023 Notes(1.1)(1.3)
0.972% 2024 Notes(2.2)(2.5)
0.983% 2024 Notes(2.0)(2.2)
4.250% 2025 Notes(9.5)(10.2)
2015 Senior Convertible Debt (3.7)
2017 Senior Convertible Debt (23.4)
2020 Senior Convertible Debt (75.3)
2017 Junior Convertible Debt (4.7)
Total unamortized discount$(15.9)$(124.6)

As of June 30, 2022, the unamortized debt discount of the Convertible Debt was eliminated upon the Company's adoption of ASU 2020-06 on April 1, 2022 (See Note 2 for further information).

(2) Debt issuance costs consist of the following (in millions):
June 30,March 31,
20222022
Revolving Credit Facility$(10.1)$(10.6)
4.333% 2023 Notes(2.2)(2.9)
2.670% 2023 Notes(0.6)(0.8)
0.972% 2024 Notes(1.1)(1.3)
0.983% 2024 Notes(1.2)(1.4)
4.250% 2025 Notes(1.2)(1.3)
2015 Senior Convertible Debt(0.2)(0.1)
2017 Senior Convertible Debt(0.6)(0.6)
2020 Senior Convertible Debt(6.5)(6.2)
2017 Junior Convertible Debt(0.1) 
Total debt issuance costs$(23.8)$(25.2)

(3) As of June 30, 2022, the 4.333% 2023 Notes are excluded from current maturities as the Company has the intent and ability to utilize proceeds from its Revolving Credit Facility to refinance on a long-term basis. As of June 30, 2022 and March 31, 2022, the 2015 Senior Convertible Debt, the 2017 Senior Convertible Debt and the 2017 Junior Convertible Debt are excluded from current maturities as the Company has the intent and ability to utilize proceeds from its Revolving Credit Facility to settle the principal portion of its Convertible Debt upon conversion.

Expected maturities relating to the Company’s debt obligations as of June 30, 2022 are as follows (in millions):
Fiscal year ending March 31,Amount
2023$ 
20243,400.0 
20251,700.0 
20261,200.0 
20271,297.1 
Thereafter6.5 
Total$7,603.6 

Ranking of Convertible Debt - Each series of Convertible Debt is an unsecured obligation which is subordinated in right of payment to the amounts outstanding under the Company's Senior Indebtedness. The 2017 Junior Convertible Debt is expressly subordinated in right of payment to any existing and future senior debt of the Company (including the Senior Indebtedness and the Senior Subordinated Convertible Debt) and is structurally subordinated in right of payment to the liabilities of the Company's subsidiaries.  The Senior Subordinated Convertible Debt is subordinated to the Senior Indebtedness; ranks senior to the Company's indebtedness that is expressly subordinated in right of payment to it, including
13

the 2017 Junior Convertible Debt; ranks equal in right of payment to any of the Company's unsubordinated indebtedness that does not provide that it is senior to the Senior Subordinated Convertible Debt; ranks junior in right of payment to any of the Company's secured and unsecured unsubordinated indebtedness to the extent of the value of the assets securing such indebtedness; and is structurally subordinated to all indebtedness and other liabilities of the Company's subsidiaries.

Summary of Conversion Features - Each series of Convertible Debt is convertible, subject to certain conditions, into cash, shares of the Company's common stock or a combination thereof, at the Company's election, at specified conversion rates (see table below), adjusted for certain events including the declaration of cash dividends. Except during the three-month period immediately preceding the maturity date of the applicable series of Convertible Debt, each series of Convertible Debt is convertible only upon the occurrence of (i) such time as the closing price of the Company's common stock exceeds the applicable conversion price (see table below) by 130% for 20 days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter, (ii) during the 5 business day period after any 10 consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of notes of a given series for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the applicable conversion rate on each such trading day or (iii) upon the occurrence of certain corporate events specified in the indenture of such series of Convertible Debt. In addition, for each series, with the exception of the 2020 Senior Convertible Debt, if at the time of conversion the applicable price of the Company's common stock exceeds the applicable conversion price at such time, the applicable conversion rate will be increased by up to an additional maximum incremental shares rate, as determined pursuant to a formula specified in the indenture for the applicable series of Convertible Debt, and as adjusted for cash dividends paid since the issuance of such series of Convertible Debt. However, in no event will the applicable conversion rate exceed the applicable maximum conversion rate specified in the indenture for the applicable series of Convertible Debt (see table below). On April 1, 2022, the Company irrevocably elected cash settlement for the principal amount of its Convertible Debt. See Note 2 for further information.

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:
Dividend adjusted rates as of June 30, 2022
Conversion RateApproximate Conversion PriceIncremental Share FactorMaximum Conversion Rate
2015 Senior Convertible Debt(1)
33.5868 $29.77 16.7951 47.0205 
2017 Senior Convertible Debt(1)
21.5371 $46.43 10.7692 30.6906 
2020 Senior Convertible Debt(1)
10.7441 $93.07  15.0417 
2017 Junior Convertible Debt(1)
21.9220 $45.62 10.9621 30.6906 

(1) As of June 30, 2022, the 2020 Senior Convertible Debt was not convertible. As of June 30, 2022, the holders of each of the 2015 Senior Convertible Debt, 2017 Senior Convertible Debt, and 2017 Junior Convertible Debt have the right to convert their notes between July 1, 2022 and September 30, 2022 because the Company's common stock price has exceeded the applicable conversion price for such series by 130% for the specified period of time during the quarter ended June 30, 2022. As of June 30, 2022, the adjusted conversion rate for the 2015 Senior Convertible Debt, 2017 Senior Convertible Debt, and 2017 Junior Convertible Debt would be increased to 41.7722 shares of common stock, 23.6970 shares of common stock, and 24.2744 shares of common stock, respectively, per $1,000 principal amount of notes based on the closing price of $58.08 per share of common stock to include an additional maximum incremental share rate per the terms of the applicable indenture. As of June 30, 2022, each of the 2015 Senior Convertible Debt, 2017 Senior Convertible Debt, and 2017 Junior Convertible Debt had a conversion value in excess of par of $49.1 million, $36.5 million, and $2.7 million, respectively.

With the exception of the 2020 Senior Convertible Debt, which may be redeemed by the Company on or after November 20, 2022, the Company may not redeem any series of Convertible Debt prior to the relevant maturity date and no sinking fund is provided for any series of Convertible Debt. Under the terms of the applicable indenture, the Company may repurchase any series of Convertible Debt in the open market through privately negotiated exchange offers. Upon the occurrence of a fundamental change, as defined in the applicable indenture of such series of Convertible Debt, holders of such series may require the Company to purchase all or a portion of their Convertible Debt for cash at a price equal to 100% of the principal amount plus any accrued and unpaid interest.
14


Interest expense consists of the following (in millions):
Three Months Ended June 30,
20222021
Debt issuance cost amortization$1.7 $2.9 
Debt discount amortization1.8 1.9 
Interest expense43.8 52.7 
Total interest expense on Senior Indebtedness47.3 57.5 
Debt issuance cost amortization0.6 0.6 
Debt discount amortization 10.7 
Coupon interest expense1.0 2.8 
Total interest expense on Convertible Debt1.6 14.1 
Other interest expense1.4 0.7 
Total interest expense $50.3 $72.3 

The Company's debt settlement transactions consists of the following (in millions)(1):
Principal Amount SettledTotal Cash ConsiderationNet Loss on Inducements and Settlements
May 2022
2017 Senior Convertible Debt$31.0 $65.3 $5.9 
2017 Junior Convertible Debt$3.6 $8.2 $0.3 

(1) The Company settled portions of its convertible debt in open market repurchases that are accounted for as induced conversions.

Note 8. Fair Value of Financial Instruments

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.
 
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 investments materially approximated fair value at June 30, 2022 based upon unobservable inputs. The fair values of these investments have been determined as Level 3 fair value measurements. 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.  

The fair value of the Company's Revolving Credit Facility is estimated using discounted cash flow analysis, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. 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 Revolving Credit Facility at June 30, 2022 approximated the carrying value excluding debt discounts and debt issuance costs and are considered Level 2 in the fair value hierarchy. The Company measures the fair value of its Convertible Debt and Senior 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.
15


The following table shows the carrying amounts and fair values of the Company's debt obligations (in millions):
June 30, 2022March 31, 2022