United States securities and exchange commission logo
July 22, 2020
Eric Bjornholt
Senior Vice President and Chief Financial Officer
MICROCHIP TECHNOLOGY INC
2355 W. Chandler Blvd
Chandler, AZ 85224
Re: MICROCHIP
TECHNOLOGY INC
Form 10-K for the
fiscal year ended March 31, 2020
Filed May 22, 2020
File No. 000-21184
Dear Mr. Bjornholt:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the fiscal year ended March 31, 2020
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 43
1. We note your
disclosures regarding the factors for which fluctuations in income statement
line items are
attributed. In addition to discussing the reasons for the change (or lack
thereof), revise your
disclosures in future filings to quantify the reasons for the change in
order for an investor
to discern the relative contribution of each of the multiple
components cited to the
total change. As part of your response, please provide us with an
example of the
disclosure to be included in future filings based on current results.
2. We note your discussion
of gross profit and the factors affecting it and it appears to be
difficult for an
investor to discern the relative contribution of each of multiple components
to the total change in
cost of revenues and the resultant gross profit. Given this and the
significance of cost of
sales, please revise future filings to separately quantify and discuss
Eric Bjornholt
FirstName LastNameEric Bjornholt
MICROCHIP TECHNOLOGY INC
Comapany
July NameMICROCHIP TECHNOLOGY INC
22, 2020
July 22,
Page 2 2020 Page 2
FirstName LastName
factors responsible for changes in the levels of cost of sales on a
consolidated basis and by
segment. Please note that even when total amounts of costs of sales do
not materially vary
from period to period, the impacts of material variances in components
that offset each
other should be separately disclosed, quantified, and discussed rather
than netting them.
Please also consider FR-72 to make your disclosures user-friendly and
clear. As part of
your response, please provide us with examples of your intended
disclosures based on
current financial results.
Item 9A. Controls and Procedures, page 53
3. We note that two material weaknesses were remediated as of March 31,
2020 and your
internal controls over financial reporting were effective. On page 18,
you disclose that
recent system improvements have not been fully effective in preventing
attacks on your
data and breaches to your security. Considering that you expect to
transition more of
Microsemi's processes throughout the remainder of calendar year 2020,
and that you
require most team members to work from home to the extent possible,
please consider the
need to disclose any changes in internal controls over financial
reporting in future periodic
reports. Please refer to Corporation Finance Disclosure Topics 9 and
9A.
Note 12. Commitments and Contingencies, page F-41
4. Please expand your disclosure for your pending cases (e.g.,the Federal
Shareholder Class
Action Litigation, the State Derivative Litigation, and Continental),
to comply with the
requirements of ASC 450. Pursuant to ASC 450-20-30-1 and ASC
450-20-50-3, revise
your disclosures to indicate the nature of the contingency and shall
give an estimate of the
possible loss or range of loss or state that such an estimate cannot
be made.
Notes to Consolidated Financial Statements
Note 13. Income Taxes, page F-44
5. We note that your effective tax rate for fiscal 2020 includes a $334.8
million tax benefit
related to intra-group transfers of certain intellectual property
rights which reduced your
effective tax rate by 222.9%. In addition, you disclosed on page F-48
that "In April 2020,
the Company became aware of a withholding tax regulation that could be
interpreted to
apply to certain of its previous intra-group transactions." To enable
an investor to better
understand your disclosure, please provide some detail on the scope of
the transactions
covered by the withholding tax regulation. For example, quantify what
portion of the
$334.8 million tax benefit may be impacted by the regulation as well
as the approximate
size of any other previously recorded transfers, if material.
Form 8-K furnished on May 7, 2020
Exhibit 99.1
Use of Non-GAAP Financial Measures, page 7
6. Please clarify the nature of the adjustment titled COVID-19 shelter
in place restrictions
Eric Bjornholt
MICROCHIP TECHNOLOGY INC
July 22, 2020
Page 3
on manufacturing activities. In your response, tell us how you
reasonably quantified this
adjustment, the length of time within the quarter that applied to its
calculation, and the
related amount applicable to the quarter ended June 30, 2020. We may
have further
comment upon reviewing your response.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Charles Eastman, Staff Accountant at (703) 551-3794 or
Effie Simpson,
Staff Accountant at (202) 551-3346 if you have any questions.
FirstName LastNameEric Bjornholt Sincerely,
Comapany NameMICROCHIP TECHNOLOGY INC
Division of
Corporation Finance
July 22, 2020 Page 3 Office of
Manufacturing
FirstName LastName