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, 2021

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

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 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 filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller 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).  (Check One)

Yes    ☐ No   ☒

Shares Outstanding of Registrant's Common Stock

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered	July 28, 2021
Common Stock, $0.001 par value	MCHP	NASDAQ Stock Market LLC	274,040,171 shares
		(Nasdaq Global Select Market)

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

INDEX

PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets – June 30, 2021 and March 31, 2021	4
	Condensed Consolidated Statements of Income – Three Months Ended June 30, 2021 and 2020	5
	Condensed Consolidated Statements of Comprehensive Income – Three Months Ended June 30, 2021 and 2020	6
	Condensed Consolidated Statements of Cash Flows – Three Months Ended June 30, 2021 and 2020	7
	Condensed Consolidated Statements of Changes in Equity - Three Months Ended June 30, 2021 and 2020	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 6.	Exhibits	54
	Signatures
	Certifications
	Exhibits

2

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

Defined Terms(1)

Term	Definition
3.922% 2021 Notes	2021 Senior Secured Notes, maturing June 1, 2021
4.333% 2023 Notes	2023 Senior Secured Notes, maturing June 1, 2023
2.670% 2023 Notes	2023 Senior Secured Notes, maturing September 1, 2023
0.972% 2024 Notes	2024 Senior Secured Notes, maturing February 15, 2024
0.983% 2024 Notes	2024 Senior Secured Notes, maturing September 1, 2024
4.250% 2025 Notes	2025 Senior Unsecured Notes, maturing September 1, 2025
2015 Senior Convertible Debt	2015 Senior Convertible Debt, maturing February 15, 2025
2017 Senior Convertible Debt	2017 Senior Convertible Debt, maturing February 15, 2027
2020 Senior Convertible Debt	2020 Senior Convertible Debt, maturing November 15, 2024
2017 Junior Convertible Debt	2017 Junior Convertible Debt, maturing February 15, 2037
ASU	Accounting Standards Update
Bridge Loan Facility	364-Day Senior Secured bridge credit agreement which provides for a term loan facility
CEMs	Client engagement managers
Convertible Debt	2015 Senior Convertible Debt, 2017 Senior Convertible Debt, 2020 Senior Convertible Debt, and 2017 Junior Convertible Debt
Credit Agreement	Credit agreement, dated as of May 29, 2018, as subsequently amended, among the Company, as borrower, the lenders from time to time party thereto, J.P.Morgan Chase Bank, N.A., as administrative agent, providing for the Revolving Credit Facility and the Term Loan Facility
EAR	Export Administration Regulation
ESEs	Embedded solutions engineers
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
FPGA	Field-programmable gate array
LIBOR	London Interbank Offered Rate
OEMs	Original equipment manufacturers
R&D	Research and development
Revolving Credit Facility	$3.57 billion revolving credit facility created pursuant to the Credit Agreement
RSUs	Restricted stock units
SEC	U.S. Securities and Exchange Commission
Senior Indebtedness	Revolving Credit Facility, Term Loan Facility, Bridge Loan 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 Notes	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
SARs	Stock appreciation rights
TCJA	Tax Cuts and Jobs Act of 2017
Term Loan Facility	$3.00 billion term loan facility created pursuant to the Credit Agreement
U.S. GAAP	U.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,
	2021		2021
Cash and cash equivalents	$	277.7	$	280.0
Short-term investments	2.0		2.0
Accounts receivable, net	1,000.7		997.7
Inventories	683.8		665.0
Other current assets	192.9		200.5
Total current assets	2,157.1		2,145.2
Property, plant and equipment, net	892.2		854.7
Goodwill	6,670.6		6,670.6
Intangible assets, net	4,581.4		4,794.8
Long-term deferred tax assets	1,719.5		1,749.2
Other assets	257.0		264.3
Total assets	$	16,277.8	$	16,478.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	284.4	$	292.4
Accrued liabilities	804.7		794.3
Current portion of long-term debt	—		1,322.9
Total current liabilities	1,089.1		2,409.6
Long-term debt	8,527.4		7,581.2
Long-term income tax payable	687.3		689.9
Long-term deferred tax liability	43.1		43.9
Other long-term liabilities	411.0		417.1
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; 284,479,079 shares issued and 274,040,144 shares outstanding at June 30, 2021; 284,479,079 shares issued and 273,528,594 shares outstanding at March 31, 2021	0.3		0.3
Additional paid-in capital	2,430.1		2,403.3
Common stock held in treasury: 10,438,935 shares at June 30, 2021; 10,950,485 shares at March 31, 2021	(417.5)		(433.8)
Accumulated other comprehensive loss	(26.2)		(26.2)
Retained earnings	3,533.2		3,393.5
Total stockholders' equity	5,519.9		5,337.1
Total liabilities and stockholders' equity	$	16,277.8	$	16,478.8

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,
	2021		2020
Net sales	$	1,569.4	$	1,309.7
Cost of sales	561.8		511.4
Gross profit	1,007.6		798.3
Research and development	238.4		198.0
Selling, general and administrative	174.3		146.3
Amortization of acquired intangible assets	215.6		235.4
Special charges and other, net	10.5		0.3
Operating expenses	638.8		580.0
Operating income	368.8		218.3
Other income (expense):
Interest income	0.3		0.3
Interest expense	(72.3)		(99.1)
Loss on settlement of debt	(0.3)		(26.8)
Other income (loss), net	0.5		(3.2)
Income before income taxes	297.0		89.5
Income tax provision (benefit)	44.2		(34.1)
Net income	$	252.8	$	123.6
Basic net income per common share	$	0.92	$	0.50
Diluted net income per common share	$	0.89	$	0.48
Dividends declared per common share	$	0.4130	$	0.3675
Basic common shares outstanding	273.8		247.7
Diluted common shares outstanding	282.6		257.8

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,
	2021		2020
Net income	$	252.8	$	123.6
Components of other comprehensive (loss) income:
Defined benefit plans:
Actuarial losses related to defined benefit pension plans, net of tax effect	(1.1)		(0.8)
Reclassification of realized transactions, net of tax effect	0.6		0.3
Change in net foreign currency translation adjustment	0.5		1.0
Other comprehensive income, net of tax effect	—		0.5
Comprehensive income	$	252.8	$	124.1

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,
	2021		2020
Cash flows from operating activities:
Net income	$	252.8	$	123.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	272.2		292.8
Deferred income taxes	20.1		(49.4)
Share-based compensation expense related to equity incentive plans	56.6		42.4
Loss on settlement of debt	0.3		26.8
Amortization of debt discount	12.6		25.3
Amortization of debt issuance costs	3.5		4.8
Other non-cash adjustment	0.9		(0.6)
Changes in operating assets and liabilities, excluding impact of acquisitions:
(Increase) decrease in accounts receivable	(3.0)		39.7
(Increase) decrease in inventories	(19.2)		24.9
Decrease in accounts payable and accrued liabilities	(0.9)		(46.6)
Change in other assets and liabilities	27.5		1.4
Change in income tax payable	6.5		16.7
Net cash provided by operating activities	629.9		501.8
Cash flows from investing activities:
Proceeds from sale of assets	—		0.2
Investments in other assets	(26.4)		(7.6)
Capital expenditures	(86.3)		(9.5)
Net cash used in investing activities	(112.7)		(16.9)
Cash flows from financing activities:
Proceeds from borrowings on revolving loan under credit facility	775.0		1,238.0
Repayments of revolving loan under credit facility	(1,163.0)		(2,171.9)
Proceeds from issuance of senior notes	997.0		2,182.0
Repayment of senior notes	(1,000.0)		—
Repayment of bridge loan facility	—		(615.0)
Repayments of term loan facility	—		(17.8)
Payments on settlement of convertible debt	—		(1,027.2)
Deferred financing costs	(2.1)		(5.2)
Payment of cash dividends	(113.1)		(90.4)
Proceeds from sale of common stock	12.2		11.0
Tax payments related to shares withheld for vested restricted stock units	(25.3)		(11.0)
Capital lease payments	(0.2)		(0.2)
Net cash used in financing activities	(519.5)		(507.7)
Net decrease in cash and cash equivalents	(2.3)		(22.8)
Cash and cash equivalents, and restricted cash at beginning of period	280.0		401.0
Cash and cash equivalents, and restricted cash at end of period	$	277.7	$	378.2

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-Capital			Common Stock Held in Treasury			Accumulated Other Comprehensive Loss		Retained Earnings		Total Equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2020	258.4	$	2,675.3	13.1	$	(500.6)	$	(21.6)	$	3,432.4	$	5,585.5
Net income	—	—		—	—		—		123.6		123.6
Other comprehensive income	—	—		—	—		0.5		—		0.5
Proceeds from sales of common stock through employee equity incentive plans	0.6	11.0		—	—		—		—		11.0
RSU and SAR withholdings	(0.1)	(11.0)		—	—		—		—		(11.0)
Treasury stock used for new issuances	(0.5)	(14.8)		(0.5)	14.8		—		—		—
Shares issued to settle convertible debt	6.6	651.5		—	—		—		—		651.5
Settlement of convertible debt	—	(810.7)		—	—		—		—		(810.7)
Share-based compensation	—	41.3		—	—		—		—		41.3
Cash dividend	—	—		—	—		—		(90.4)		(90.4)
Balance at June 30, 2020	265.0	$	2,542.6	12.6	$	(485.8)	$	(21.1)	$	3,465.6	$	5,501.3
Balance at March 31, 2021	284.5	$	2,403.6	11.0	$	(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 plans	0.8	12.2		—	—		—		—		12.2
RSU and SAR withholdings	(0.2)	(25.3)		—	—		—		—		(25.3)
Treasury stock used for new issuances	(0.6)	(16.3)		(0.6)	16.3		—		—		—
Share-based compensation	—	56.2		—	—		—		—		56.2
Cash dividend	—	—		—	—		—		(113.1)		(113.1)
Balance at June 30, 2021	284.5	$	2,430.4	10.4	$	(417.5)	$	(26.2)	$	3,533.2	$	5,519.9

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, 2021.  The results of operations for the three months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2022 or for any other period.

Note 2. Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

On April 1, 2021, the Company adopted ASU 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance enhances and simplifies various aspects of income tax accounting, including requirements related to hybrid tax regimes, the tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of entities not subject to tax, the intraperiod tax allocation exception to the incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim-period tax accounting. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued 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 will be 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 provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company expects the primary impacts of this new standard will be to increase the carrying value of its Convertible Debt and reduce its reported interest expense. In addition, the Company will be required to use the if-converted method for calculating diluted earnings per share. The Company is currently evaluating the impact the adoption of this standard will have on its condensed consolidated financial statements.

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.

9

The following table represents net sales and gross profit for each segment for the three months ended June 30, 2021 (in millions):

	Net Sales		Gross Profit
Semiconductor products	$	1,542.0	$	980.2
Technology licensing	27.4		27.4
Total	$	1,569.4	$	1,007.6

The following table represents net sales and gross profit for each segment for the three months ended June 30, 2020 (in millions):

	Net Sales		Gross Profit
Semiconductor products	$	1,287.8	$	776.4
Technology licensing	21.9		21.9
Total	$	1,309.7	$	798.3

Note 4. Net Sales

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

	Three Months Ended June 30,
	2021		2020
Microcontrollers	$	902.5	$	716.4
Analog	432.1		370.2
Other	234.8		223.1
Total net sales	$	1,569.4	$	1,309.7

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 contract type (in millions):

	Three Months Ended June 30,
	2021		2020
Distributors	$	783.4	$	658.9
Direct customers	758.6		628.9
Licensees	27.4		21.9
Total net sales	$	1,569.4	$	1,309.7

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 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 licenses, which is included in the technology licensing segment.

10

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,
	2021		2020
Net income	$	252.8	$	123.6
Basic weighted average common shares outstanding	273.8		247.7
Dilutive effect of stock options and RSUs	3.9		2.9
Dilutive effect of 2015 Senior Convertible Debt	2.1		7.2
Dilutive effect of 2017 Senior Convertible Debt	2.0		—
Dilutive effect of 2017 Junior Convertible Debt	0.8		—
Diluted weighted average common shares outstanding	282.6		257.8
Basic net income per common share	$	0.92	$	0.50
Diluted net income per common share	$	0.89	$	0.48

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. Weighted average common shares exclude the effect of option shares which are not dilutive.  There were no anti-dilutive option shares for each of the three months ended June 30, 2021 and 2020.

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 intends to settle the principal amount of the Convertible Debt in cash upon conversion.  Prior to conversion, 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 treasury stock method.  The following is the weighted average conversion price per share used in calculating the dilutive effect (see Note 6 for details on the Convertible Debt):

	Three Months Ended June 30,
	2021		2020
2015 Senior Convertible Debt	$	60.46	$	61.21
2017 Senior Convertible Debt	$	94.28	$	95.45
2020 Senior Convertible Debt	$	186.82	$	—
2017 Junior Convertible Debt	$	92.62	$	93.77

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Note 6. Debt

Debt obligations included in the condensed consolidated balance sheets consisted of the following (in millions):

	Coupon Interest Rate	Effective Interest Rate	Fair Value of Liability Component at Issuance(1)
					June 30, 2021		March 31, 2021
Senior Secured Indebtedness
Revolving Credit Facility					$	1,958.6	$	2,346.6
3.922% 2021 Notes	3.922%	4.5%			—		1,000.0
4.333% 2023 Notes	4.333%	4.7%			1,000.0		1,000.0
2.670% 2023 Notes	2.670%	2.8%			1,000.0		1,000.0
0.972% 2024 Notes	0.972%	1.1%			1,400.0		1,400.0
0.983% 2024 Notes(2)	0.983%	1.1%			1,000.0		—
Senior Unsecured Indebtedness
4.250% 2025 Notes	4.250%	4.6%			1,200.0		1,200.0
Total Senior Indebtedness					7,558.6		7,946.6
Senior Subordinated Convertible Debt - Principal Outstanding
2015 Senior Convertible Debt	1.625%	5.9%	$	120.9	141.4		141.4
2017 Senior Convertible Debt	1.625%	6.0%	$	260.9	333.3		333.3
2020 Senior Convertible Debt	0.125%	5.1%	$	555.5	665.5		665.5
Junior Subordinated Convertible Debt - Principal Outstanding
2017 Junior Convertible Debt	2.250%	7.4%	$	64.0	122.6		122.6
Total Convertible Debt					1,262.8		1,262.8
Gross long-term debt including current maturities					8,821.4		9,209.4
Less: Debt discount(3)					(263.4)		(273.0)
Less: Debt issuance costs(4)					(30.6)		(32.3)
Net long-term debt including current maturities					8,527.4		8,904.1
Less: Current maturities(5)					—		(1,322.9)
Net long-term debt					$	8,527.4	$	7,581.2

(1) As each of the convertible debt instruments may be settled in cash upon conversion, for accounting purposes, they were bifurcated into a liability component and an equity component.  The amount allocated to the equity component is the difference between the principal value of the instrument and the fair value of the liability component at issuance.  The resulting debt discount is being amortized to interest expense at the respective effective interest rate over the contractual term of the debt.

(2) The 0.983% 2024 Notes mature on September 1, 2024, and interest is payable semi-annually in arrears on March 1 and September 1 of each year.

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(3) The unamortized discount consists of the following (in millions):

	June 30,		March 31,
	2021		2021
3.922% 2021 Notes	$	—	$	(0.3)
4.333% 2023 Notes	(2.2)		(2.4)
2.670% 2023 Notes	(2.0)		(2.3)
0.972% 2024 Notes	(3.5)		(3.8)
0.983% 2024 Notes	(2.9)		—
4.250% 2025 Notes	(12.2)		(12.8)
2015 Senior Convertible Debt	(18.9)		(20.1)
2017 Senior Convertible Debt	(68.7)		(71.3)
2020 Senior Convertible Debt	(95.1)		(101.6)
2017 Junior Convertible Debt	(57.9)		(58.4)
Total unamortized discount	$	(263.4)	$	(273.0)

(4) Debt issuance costs consist of the following (in millions):

	June 30,		March 31,
	2021		2021
Revolving Credit Facility	$	(8.8)	$	(10.0)
3.922% 2021 Notes	—		(0.7)
4.333% 2023 Notes	(4.7)		(5.3)
2.670% 2023 Notes	(1.2)		(1.3)
0.972% 2024 Notes	(1.8)		(2.0)
0.983% 2024 Notes	(1.8)		—
4.250% 2025 Notes	(1.6)		(1.7)
2015 Senior Convertible Debt	(0.7)		(0.7)
2017 Senior Convertible Debt	(1.7)		(1.8)
2020 Senior Convertible Debt	(7.8)		(8.3)
2017 Junior Convertible Debt	(0.5)		(0.5)
Total debt issuance costs	$	(30.6)	$	(32.3)

(5) As of March 31, 2021, current maturities consisted of the liability component of the 2017 Senior Convertible Debt and the 2017 Junior Convertible Debt, and the 3.922% 2021 Notes which were due June 1, 2021.

Expected maturities relating to the Company’s debt obligations as of June 30, 2021 are as follows (in millions):

Fiscal year ending March 31,	Expected Maturities
2022	$	—
2023	—
2024	5,358.6
2025	1,806.9
2026	1,200.0
Thereafter	455.9
Total	$	8,821.4

Ranking of Convertible Debt - The Convertible Debt are unsecured obligations which are 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 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

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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 or (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).

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, 2021
	Conversion Rate	Approximate Conversion Price		Incremental Share Factor	Maximum Conversion Rate
2015 Senior Convertible Debt(1)	16.5663	$	60.36	8.2831	23.1927
2017 Senior Convertible Debt(1)	10.6233	$	94.13	5.3116	15.1382
2020 Senior Convertible Debt(1)	5.3538	$	186.78	—	7.4952
2017 Junior Convertible Debt(1)	10.8130	$	92.48	5.4066	15.1382

(1) As of June 30, 2021, the 2020 Senior Convertible Debt was not convertible. As of June 30, 2021, 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, 2021 and September 30, 2021 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, 2021. As of June 30, 2021, the adjusted conversion rate for the 2015 Senior Convertible Debt, 2017 Senior Convertible Debt, and 2017 Junior Convertible Debt would be increased to 21.5103 shares of common stock, 12.5958 shares of common stock, and 12.8804 shares of common stock, respectively, per $1,000 principal amount of notes based on the closing price of $149.74 per share of common stock to include an additional maximum incremental share rate per the terms of the applicable indenture. As of June 30, 2021, 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 $314.2 million, $295.4 million, and $113.8 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.

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Interest expense consists of the following (in millions):

	Three Months Ended June 30,
	2021		2020
Debt issuance cost amortization	$	2.9	$	4.1
Debt discount amortization	1.9		1.5
Interest expense	52.7		52.7
Total interest expense on Senior Indebtedness	57.5		58.3
Debt issuance cost amortization	0.6		0.7
Debt discount amortization	10.7		23.8
Coupon interest expense	2.8		15.3
Total interest expense on Convertible Debt	14.1		39.8
Other interest expense	0.7		1.0
Total interest expense	$	72.3	$	99.1

The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 3.6 years, 5.6 years, 3.4 years, and 15.6 years for the 2015 Senior Convertible Debt, 2017 Senior Convertible Debt, 2020 Senior Convertible Debt, and 2017 Junior Convertible Debt, respectively.  

The Company's settlement transactions consist of the following (in millions):

	Principal Amount Settled		Consideration								Net Loss on Inducements and Settlements
			Cash Paid		Value of Shares Issued		Debt Issued		Total
June 2021(1)
3.922% 2021 Notes	$	1,000.0	$	1,000.0	$	—	$	—	$	1,000.0	$	0.3

(1) The Company used proceeds from the issuance of the 0.983% 2024 Notes to finance such settlement.

0.983% 2024 Notes

The Company may, at its option, redeem some or all of the 0.983% 2024 Notes in the manner set forth in the 0.983% 2024 Notes indenture. If the Company experiences a specified change of control triggering event set forth in the 0.983% 2024 Notes indenture the Company must offer to repurchase the 0.983% 2024 Notes at a price equal to 101% of the principal amount of the note repurchased, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The 0.983% 2024 Notes indenture contains certain customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries' ability to, among other things, create or incur certain liens, and enter into sale and leaseback transactions, sell or otherwise dispose of any assets constituting collateral securing the 0.983% 2024 Notes, and consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets, to another person. These covenants are subject to a number of limitations and exceptions set forth in the 0.983% 2024 Notes indenture.

The 0.983% 2024 Notes are guaranteed by certain of the Company's subsidiaries that have also guaranteed the obligations under the Credit Agreement and under the Company’s existing Senior Indebtedness. In the future, each subsidiary of the Company that is a guarantor or other obligor of the Credit Agreement is required to guarantee the 0.983% 2024 Notes.

The 0.983% 2024 Notes and the 0.983% 2024 Notes guarantees are secured, on a pari passu first lien basis with the Credit Agreement, by substantially all of the tangible and intangible assets (other than certain excluded assets) of the Company and the guarantors that secure obligations under the Credit Agreement, in each case subject to certain thresholds, exceptions and permitted liens, as set forth in the respective security agreement, by and among the Company, the subsidiary guarantors party thereto and the collateral agent.

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Note 7. 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 and cost-method investments materially approximated fair value at June 30, 2021 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, 2021 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.

The following table shows the carrying amounts and fair values of the Company's debt obligations (in millions):

	June 30, 2021				March 31, 2021
	Carrying Amount(1)		Fair Value		Carrying Amount(1)		Fair Value
Revolving Credit Facility	$	1,949.8	$	1,958.6	$	2,336.6	$	2,346.6
3.922% 2021 Notes	—		—		999.0		1,004.3
4.333% 2023 Notes	993.1		1,062.1		992.3		1,022.4
2.670% 2023 Notes	996.8		1,041.4		996.4		1,040.8
0.972% 2024 Notes	1,394.7		1,396.6		1,394.2