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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 December 31, 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-20221231_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 January 26, 2023 was 547,795,897.





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
CHIPS ActCHIPS and Science Act of 2022
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
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

Table of Contents
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; unaudited)

ASSETS
December 31,March 31,
 20222022
Cash and cash equivalents$288.9 $317.4 
Short-term investments 2.0 
Accounts receivable, net1,175.0 1,072.6 
Inventories1,165.4 854.4 
Other current assets204.4 206.2 
Total current assets2,833.7 2,452.6 
Property, plant and equipment, net1,113.7 967.9 
Goodwill6,673.6 6,673.6 
Intangible assets, net3,544.8 4,043.1 
Long-term deferred tax assets1,630.0 1,797.1 
Other assets320.3 265.2 
Total assets$16,116.1 $16,199.5 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$354.8 $344.7 
Accrued liabilities1,256.3 1,054.3 
Total current liabilities1,611.1 1,399.0 
Long-term debt6,588.7 7,687.4 
Long-term income tax payable660.3 704.6 
Long-term deferred tax liability40.3 39.8 
Other long-term liabilities904.1 473.9 
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; 577,805,496 shares issued and 547,792,012 shares outstanding at December 31, 2022; 577,805,396 shares issued and 554,500,524 shares outstanding at March 31, 2022
0.5 0.6 
Additional paid-in capital2,380.4 2,535.9 
Common stock held in treasury: 30,013,484 shares at December 31, 2022; 23,304,872 shares at March 31, 2022
(1,407.8)(796.3)
Accumulated other comprehensive loss(17.5)(20.6)
Retained earnings5,356.0 4,175.2 
Total stockholders' equity6,311.6 5,894.8 
Total liabilities and stockholders' equity$16,116.1 $16,199.5 

See accompanying notes to condensed consolidated financial statements
4

Table of Contents
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts; unaudited)

Three Months Ended December 31,Nine Months Ended December 31,
 2022202120222021
Net sales$2,169.2 $1,757.5 $6,206.0 $4,976.7 
Cost of sales698.4 604.2 2,027.4 1,747.5 
Gross profit1,470.8 1,153.3 4,178.6 3,229.2 
Research and development282.4 245.4 820.0 730.0 
Selling, general and administrative202.9 177.5 594.2 531.7 
Amortization of acquired intangible assets167.4 215.7 502.5 647.0 
Special charges (income) and other, net6.5 (0.3)(6.1)20.4 
Operating expenses659.2 638.3 1,910.6 1,929.1 
Operating income811.6 515.0 2,268.0 1,300.1 
Interest income0.8 0.1 1.1 0.5 
Interest expense(52.8)(62.1)(156.4)(199.2)
Loss on settlement of debt (16.1)(8.3)(101.6)
Other income, net2.6 4.6 3.5 3.5 
Income before income taxes762.2 441.5 2,107.9 1,003.3 
Income tax provision181.9 88.7 474.2 155.7 
Net income$580.3 $352.8 $1,633.7 $847.6 
Basic net income per common share$1.06 $0.64 $2.96 $1.54 
Diluted net income per common share$1.04 $0.62 $2.93 $1.50 
Dividends declared per common share$0.3280 $0.2320 $0.9050 $0.6570 
Basic common shares outstanding549.2 554.9 551.5 551.2 
Diluted common shares outstanding555.4 567.3 558.4 566.1 

See accompanying notes to condensed consolidated financial statements
5

Table of Contents
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions; unaudited)

Three Months Ended December 31,Nine Months Ended December 31,
2022202120222021
Net income$580.3 $352.8 $1,633.7 $847.6 
Components of other comprehensive (loss) income:
Defined benefit plans:
Actuarial (losses) gains related to defined benefit pension plans, net of tax effect(6.0)2.1 2.9 2.8 
Reclassification of realized transactions, net of tax effect0.1 0.6 0.3 1.8 
Change in net foreign currency translation adjustment (1.6)(0.1)(1.7)
Other comprehensive (loss) income, net of tax effect(5.9)1.1 3.1 2.9 
Comprehensive income$574.4 $353.9 $1,636.8 $850.5 

See accompanying notes to condensed consolidated financial statements

6

Table of Contents
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)

 Nine Months Ended December 31,
 20222021
Cash flows from operating activities:  
Net income$1,633.7 $847.6 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization755.2 850.3 
Deferred income taxes185.4 6.1 
Share-based compensation expense related to equity incentive plans126.5 163.2 
Loss on settlement of debt8.3 101.6 
Amortization of debt discount5.4 34.9 
Amortization of debt issuance costs7.1 9.2 
Impairment of intangible assets1.4  
Other non-cash adjustment(1.8)(9.5)
Changes in operating assets and liabilities, excluding impact of acquisitions:
(Increase) decrease in accounts receivable(102.4)67.6 
Increase in inventories(324.8)(105.0)
Increase in accounts payable and accrued liabilities225.5 73.8 
Change in other assets and liabilities408.0 30.3 
Change in income tax payable(16.0)24.9 
Net cash provided by operating activities2,911.5 2,095.0 
Cash flows from investing activities:  
Proceeds from sales of assets0.4 12.2 
Investments in other assets(75.6)(91.7)
Capital expenditures(373.5)(255.5)
Net cash used in investing activities(448.7)(335.0)
Cash flows from financing activities:  
Proceeds from borrowings on Revolving Credit Facility4,021.0 2,947.0 
Repayments of Revolving Credit Facility(5,167.1)(3,753.5)
Proceeds from issuance of senior notes 997.0 
Repayment of senior notes (1,000.0)
Payments on settlement of convertible debt(170.4)(359.8)
Deferred financing costs (7.8)
Proceeds from sale of common stock54.3 47.1 
Tax payments related to shares withheld for vested RSUs(57.2)(66.9)
Repurchase of common stock(671.9)(166.0)
Payment of cash dividends(499.4)(363.0)
Capital lease payments(0.6)(0.6)
Net cash used in financing activities(2,491.3)(1,726.5)
Net (decrease) increase in cash and cash equivalents(28.5)33.5 
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$288.9 $313.5 

See accompanying notes to condensed consolidated financial statements
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MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions; unaudited)
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 
Net Income— — — — — 242.0 242.0 
Other comprehensive income— — — — 1.8 — 1.8 
Proceeds from sales of common stock through employee equity incentive plans1.6 21.2 — — — — 21.2 
RSU and SAR withholdings(0.3)(23.8)— — — — (23.8)
Treasury stock used for new issuances(1.3)(19.6)(1.3)19.6 — —  
Shares issued to settle convertible debt5.4 399.2 — — — — 399.2 
Settlement of convertible debt— (391.1)— — — — (391.1)
Share-based compensation— 54.9 — — — — 54.9 
Cash dividend— — — — — (121.2)(121.2)
Balance at September 30, 2021574.4 2,471.2 19.6 (397.9)(24.4)3,654.0 5,702.9 
Net income— — — — — 352.8 352.8 
Other comprehensive income— — — — 1.1 — 1.1 
Proceeds from sales of common stock through employee equity incentive plans1.0 13.7 — — — — 13.7 
RSU and SAR withholdings(0.2)(17.8)— — — — (17.8)
Treasury stock used for new issuances(0.8)(11.2)(0.8)11.2 — —  
Repurchase of common stock2.0 (166.0)(166.0)
Shares issued to settle convertible debt2.4 196.9 — — — — 196.9 
Settlement of convertible debt— (201.9)— — — — (201.9)
Share-based compensation— 50.3 — — — — 50.3 
Cash dividend— — — — — (128.7)(128.7)
Balance at December 31, 2021576.8 $2,501.2 20.8 $(552.7)$(23.3)$3,878.1 $5,803.3 
Balance at March 31, 2022577.8 $2,536.5 23.3 $(796.3)$(20.6)$4,175.2 $5,894.8 
Adoption of ASU 2020-06, cumulative adjustment— (128.3)— — — 46.5 (81.8)
Net income— — — — — 507.2 507.2 
Other comprehensive income— — — — 4.0 — 4.0 
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 — —  
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Common Stock and Additional Paid-in-CapitalCommon Stock Held in TreasuryAccumulated Other Comprehensive LossRetained EarningsTotal Equity
SharesAmountSharesAmount
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 
Net Income— — — — — 546.2 546.2 
Other comprehensive income— — — — 5.0 — 5.0 
Proceeds from sales of common stock through employee equity incentive plans1.4 24.4 — — — — 24.4 
RSU and SAR withholdings(0.3)(20.7)— — — — (20.7)
Treasury stock used for new issuances(1.1)(24.8)(1.1)24.8 — —  
Repurchase of common stock— — 3.6 (247.2)— — (247.2)
Settlement of convertible debt— (58.2)— — — — (58.2)
Share-based compensation— 41.8 — — — — 41.8 
Cash dividend— — — — — (166.1)(166.1)
Balance at September 30, 2022577.8 2,356.1 27.8 (1,197.4)(11.6)4,956.0 6,103.1 
Net income— — — — — 580.3 580.3 
Other comprehensive loss— — — — (5.9)— (5.9)
Proceeds from sales of common stock through employee equity incentive plans1.1 16.5 — — — — 16.5 
RSU and SAR withholdings(0.2)(17.1)— — — — (17.1)
Treasury stock used for new issuances(0.9)(19.1)(0.9)19.1 — —  
Repurchase of common stock— — 3.1 (229.5)— — (229.5)
Share-based compensation— 44.5 — — — — 44.5 
Cash dividend— — — — — (180.3)(180.3)
Balance at December 31, 2022577.8 $2,380.9 30.0 $(1,407.8)$(17.5)$5,356.0 $6,311.6 

See accompanying notes to condensed consolidated financial statements
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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 and nine months ended December 31, 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.

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 the Company's 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.

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

Three Months Ended December 31, 2022Nine Months Ended December 31, 2022
Net SalesGross ProfitNet SalesGross Profit
Semiconductor products$2,124.8 $1,426.4 $6,078.7 $4,051.3 
Technology licensing44.4 44.4 127.3 127.3 
Total$2,169.2 $1,470.8 $6,206.0 $4,178.6 

Three Months Ended December 31, 2021Nine Months Ended December 31, 2021
Net SalesGross ProfitNet SalesGross Profit
Semiconductor products$1,725.5 $1,121.3 $4,884.5 $3,137.0 
Technology licensing32.0 32.0 92.2 92.2 
Total$1,757.5 $1,153.3 $4,976.7 $3,229.2 

Note 4. Net Sales

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

Three Months Ended December 31,Nine Months Ended December 31,
2022202120222021
Microcontrollers$1,221.3 $972.2 $3,463.8 $2,768.7 
Analog606.5 500.5 1,759.0 1,423.5 
Other341.4 284.8 983.2 784.5 
Total net sales$2,169.2 $1,757.5 $6,206.0 $4,976.7 

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 customer type (in millions):

Three Months Ended December 31,Nine Months Ended December 31,
2022202120222021
Distributors$1,032.3 $787.1 $2,903.7 $2,387.2 
Direct customers1,092.5 938.4 3,175.0 2,497.3 
Licensees44.4 32.0 127.3 92.2 
Total net sales$2,169.2 $1,757.5 $6,206.0 $4,976.7 

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 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.

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 December 31, 2022, the Company had approximately $673.3 million of deferred revenue in the semiconductor product segment, of which $111.2 million is included within accrued liabilities and the remaining is included within other long-term liabilities on the Company's condensed consolidated balance sheet. 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.
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Of the $673.3 million of deferred revenue as of December 31, 2022, $585.7 million is cash collected from customers under long-term supply agreements (LTSA's) of which $27.7 million is included within accrued liabilities and $558.0 million is included within other long-term liabilities. Under these LTSA's, the Company receives an upfront deposit from the customer in exchange for assured supply over the contract period, which typically ranges from three to five years. If the customer does not meet the minimum purchase commitments defined in the contract, the Company may retain all, or portions of, the deposit as revenue. The remaining performance obligations for the LTSA's were approximately $4 billion as of December 31, 2022, of which approximately 10% is expected to be recognized as net sales during the next 12 months. The amount and timing of such net sales is uncertain because it depends on the satisfaction of commitments made in the LTSA's, which may be affected by the timing and amount of orders placed by customers, contract modifications, variable consideration, sales channels, and manufacturing and supply chain challenges. The remaining $87.6 million of deferred revenue as of December 31, 2022 is related to other cash payments received from customers in advance of the Company’s performance obligations being satisfied. Nearly all the $87.6 million will be recognized as net sales within the next 12 months.

In addition to the LTSA's, a portion of the Company's non-LTSA customer contracts contain firmly committed orders beyond 12 months at the time of order. The transaction price for these orders with remaining performance obligations as of December 31, 2022 for orders with initial durations in excess of 12 months approximates 80% of fiscal 2022 net sales and does not include estimates of variable consideration. Approximately 80% of which is expected to be recognized over the next 12 months. The amount and timing of such net sales is inherently uncertain because the ultimate transaction prices will be affected by variable consideration which is subject to change based upon market conditions at the time of the sale, contract modifications, and manufacturing and supply chain challenges. Accordingly, the amount 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 December 31,Nine Months Ended December 31,
2022202120222021
Net income$580.3 $352.8 $1,633.7 $847.6 
Basic weighted average common shares outstanding549.2 554.9 551.5 551.2 
Dilutive effect of stock options and RSUs4.8