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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 September 30, 2023

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

mlogoa10.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 October 26, 2023 was 541,045,298.





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, matured on June 1, 2023
2.670% 2023 Notes2023 Senior Unsecured Notes, matured on September 1, 2023
0.972% 2024 Notes2024 Senior Unsecured Notes, maturing on February 15, 2024
0.983% 2024 Notes2024 Senior Unsecured Notes, maturing on September 1, 2024
4.250% 2025 Notes2025 Senior Unsecured Notes, maturing on September 1, 2025
2015 Senior Convertible Debt2015 Senior Convertible Debt, maturing on February 15, 2025
2017 Senior Convertible Debt2017 Senior Convertible Debt, maturing on February 15, 2027
2020 Senior Convertible Debt2020 Senior Convertible Debt, maturing on November 15, 2024
2017 Junior Convertible Debt2017 Junior Convertible Debt which was fully settled in May 2023
2025 Term Loan Facility$750.0 million term loan facility created pursuant to the amended Credit Agreement
ASUAccounting Standards Update
ASU 2020-06ASU 2020-06 - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity
CEMsClient engagement managers
CHIPS ActCHIPS and Science Act of 2022
Commercial PaperShort-term unsecured promissory notes, of up to $2.75 billion outstanding at any one time
Convertible Debt2015 Senior Convertible Debt, 2017 Senior Convertible Debt, 2020 Senior Convertible Debt, and 2017 Junior Convertible Debt prior to the May 2023 settlement
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, as amended by the First Incremental Term Loan Amendment, dated as of August 31, 2023
EARExport Administration Regulation
ESEsEmbedded solutions engineers
ESGEnvironmental, social and governance
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FPGAField-programmable gate array
LTSAsLong-term supply agreements
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
SECU.S. Securities and Exchange Commission
Senior Credit FacilitiesRevolving Credit Facility and 2025 Term Loan Facility
Senior IndebtednessRevolving Credit Facility, 2025 Term Loan Facility, Commercial Paper, 4.333% 2023 Notes, 2.670% 2023 Notes, 0.972% 2024 Notes, 0.983% 2024 Notes, and 4.250% 2025 Notes
Senior Notes4.333% 2023 Notes, 2.670% 2023 Notes, 0.972% 2024 Notes, 0.983% 2024 Notes, and 4.250% 2025 Notes
SiCSilicon Carbide
SOFRSecured Overnight Financing Rate
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
September 30,March 31,
 20232023
Cash and cash equivalents$256.6 $234.0 
Accounts receivable, net1,706.2 1,305.3 
Inventories1,330.9 1,324.9 
Other current assets232.7 205.1 
Total current assets3,526.4 3,069.3 
Property, plant and equipment, net1,206.9 1,177.9 
Goodwill6,675.4 6,673.6 
Intangible assets, net3,088.8 3,369.0 
Long-term deferred tax assets1,576.0 1,623.3 
Other assets527.9 457.2 
Total assets$16,601.4 $16,370.3 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$283.5 $396.9 
Accrued liabilities1,468.0 1,323.5 
Current portion of long-term debt1,661.1 1,398.2 
Total current liabilities3,412.6 3,118.6 
Long-term debt4,414.7 5,041.7 
Long-term income tax payable678.5 705.7 
Long-term deferred tax liability34.1 42.7 
Other long-term liabilities1,093.0 948.0 
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; 577,806,238 shares issued and 541,044,229 shares outstanding at September 30, 2023; 577,805,623 shares issued and 545,459,814 shares outstanding at March 31, 2023
0.5 0.5 
Additional paid-in capital2,414.6 2,413.3 
Common stock held in treasury: 36,762,009 shares at September 30, 2023; 32,345,809 shares at March 31, 2023
(2,109.3)(1,660.2)
Accumulated other comprehensive loss(2.8)(4.1)
Retained earnings6,665.5 5,764.1 
Total stockholders' equity6,968.5 6,513.6 
Total liabilities and stockholders' equity$16,601.4 $16,370.3 

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 September 30,Six Months Ended September 30,
 2023202220232022
Net sales$2,254.3 $2,073.2 $4,542.9 $4,036.8 
Cost of sales726.9 675.3 1,457.1 1,329.0 
Gross profit1,527.4 1,397.9 3,085.8 2,707.8 
Research and development292.6 268.6 591.1 537.6 
Selling, general and administrative196.6 202.4 400.2 391.3 
Amortization of acquired intangible assets151.4 167.5 302.9 335.1 
Special charges (income) and other, net1.8 4.3 3.5 (12.6)
Operating expenses642.4 642.8 1,297.7 1,251.4 
Operating income885.0 755.1 1,788.1 1,456.4 
Interest income1.6 0.2 3.1 0.3 
Interest expense(46.8)(53.3)(94.0)(103.6)
Loss on settlement of debt(3.1)(2.1)(12.2)(8.3)
Other (loss) income, net(3.1)(0.8)(3.1)0.9 
Income before income taxes833.6 699.1 1,681.9 1,345.7 
Income tax provision167.0 152.9 348.9 292.3 
Net income$666.6 $546.2 $1,333.0 $1,053.4 
Basic net income per common share$1.23 $0.99 $2.45 $1.91 
Diluted net income per common share$1.21 $0.98 $2.42 $1.88 
Dividends declared per common share$0.410 $0.301 $0.793 $0.577 
Basic common shares outstanding543.1 551.5 544.1 552.7 
Diluted common shares outstanding549.2 558.3 550.3 559.9 

See accompanying notes to condensed consolidated financial statements
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MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions; unaudited)

Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Net income$666.6 $546.2 $1,333.0 $1,053.4 
Components of other comprehensive income (loss):
Actuarial gains related to defined benefit pension plans, net of tax effect1.6 5.1 1.3 9.1 
Change in net foreign currency translation adjustment (0.1) (0.1)
Other comprehensive income, net of tax effect1.6 5.0 1.3 9.0 
Comprehensive income$668.2 $551.2 $1,334.3 $1,062.4 

See accompanying notes to condensed consolidated financial statements

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

 Six Months Ended September 30,
 20232022
Cash flows from operating activities:  
Net income$1,333.0 $1,053.4 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization441.9 511.2 
Deferred income taxes27.0 131.3 
Share-based compensation expense related to equity incentive plans89.9 82.5 
Loss on settlement of debt12.2 8.3 
Amortization of debt discount4.8 3.6 
Amortization of debt issuance costs4.0 4.7 
Impairment of intangible assets1.1  
Other non-cash adjustment(0.1)(2.3)
Changes in operating assets and liabilities, excluding impact of acquisitions:
Increase in accounts receivable(400.9)(60.6)
Increase in inventories(5.1)(190.2)
Increase in accounts payable and accrued liabilities64.0 144.3 
Change in other assets and liabilities63.9 (10.6)
Change in income tax payable(26.3)(42.0)
Net cash provided by operating activities1,609.4 1,633.6 
Cash flows from investing activities:  
Proceeds from sales of assets0.4 0.4 
Investments in other assets(49.6)(52.8)
Capital expenditures(185.5)(232.2)
Net cash used in investing activities(234.7)(284.6)
Cash flows from financing activities:  
Proceeds from borrowings on Revolving Credit Facility5,551.0 2,765.0 
Repayments of Revolving Credit Facility(5,612.0)(3,192.0)
Proceeds from borrowings on 2025 Term Loan Facility750.0  
Proceeds from issuance of Commercial Paper995.0  
Repayment of senior notes(2,000.0) 
Payments on settlement of convertible debt(132.8)(170.4)
Deferred financing costs(1.0) 
Proceeds from sale of common stock40.6 37.8 
Tax payments related to shares withheld for vested RSUs(30.4)(40.1)
Repurchase of common stock(480.1)(442.4)
Payment of cash dividends(431.6)(319.1)
Capital lease payments(0.8)(0.4)
Net cash used in financing activities(1,352.1)(1,361.6)
Net increase (decrease) in cash and cash equivalents22.6 (12.6)
Cash and cash equivalents, and restricted cash at beginning of period234.0 317.4 
Cash and cash equivalents, and restricted cash at end of period$256.6 $304.8 
    

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, 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 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 
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 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 
Balance at March 31, 2023577.8 $2,413.8 32.3 $(1,660.2)$(4.1)$5,764.1 $6,513.6 
Net income— — — — — 666.4 666.4 
Other comprehensive loss— — — — (0.3)— (0.3)
Proceeds from sales of common stock through employee equity incentive plans0.9 15.3 — — — — 15.3 
RSU withholdings(0.3)(15.7)— — — — (15.7)
Treasury stock used for new issuances(0.6)(14.7)(0.6)14.7 — —  
Repurchase of common stock— — 1.8 (141.2)— — (141.2)
Settlement of convertible debt— (43.3)— — — — (43.3)
Share-based compensation— 45.4 — — — — 45.4 
Cash dividend— — — — — (208.9)(208.9)
Balance at June 30, 2023577.8 2,400.8 33.5 (1,786.7)(4.4)6,221.6 6,831.3 
Net Income— — — — — 666.6 666.6 
Other comprehensive income— — — — 1.6 — 1.6 
Proceeds from sales of common stock through employee equity incentive plans1.1 25.3 — — — — 25.3 
RSU withholdings(0.2)(14.7)— — — — (14.7)
Treasury stock used for new issuances(0.9)(19.7)(0.9)19.7 — —  
Repurchase of common stock— — 4.2 (342.3)— — (342.3)
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Common Stock and Additional Paid-in-CapitalCommon Stock Held in TreasuryAccumulated Other Comprehensive LossRetained EarningsTotal Equity
SharesAmountSharesAmount
Settlement of convertible debt— (22.0)— — — — (22.0)
Share-based compensation— 45.4 — — — — 45.4 
Cash dividend— — — — — (222.7)(222.7)
Balance at September 30, 2023577.8 $2,415.1 36.8 $(2,109.3)$(2.8)$6,665.5 $6,968.5 

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, 2023.  The results of operations for the three and six months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2024 or for any other period.

Note 2. 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 September 30, 2023Six Months Ended September 30, 2023
Net SalesGross ProfitNet SalesGross Profit
Semiconductor products$2,227.7 $1,500.8 $4,482.5 $3,025.4 
Technology licensing26.6 26.6 60.4 60.4 
Total$2,254.3 $1,527.4 $4,542.9 $3,085.8 

Three Months Ended September 30, 2022Six Months Ended September 30, 2022
Net SalesGross ProfitNet SalesGross Profit
Semiconductor products$2,028.2 $1,352.9 $3,953.9 $2,624.9 
Technology licensing45.0 45.0 82.9 82.9 
Total$2,073.2 $1,397.9 $4,036.8 $2,707.8 

Note 3. Net Sales

The following table represents the Company's net sales by product line (in millions):
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Mixed-signal Microcontrollers$1,280.1 $1,179.5 $2,581.8 $2,242.5 
Analog623.0 572.5 1,256.6 1,152.5 
Other351.2 321.2 704.5 641.8 
Total net sales$2,254.3 $2,073.2 $4,542.9 $4,036.8 

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.

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The following table represents the Company's net sales by customer type (in millions):
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Distributors$1,126.1 $958.3 $2,234.0 $1,871.4 
Direct customers1,101.6 1,069.9 2,248.5 2,082.5 
Licensees26.6 45.0 60.4 82.9 
Total net sales$2,254.3 $2,073.2 $4,542.9 $4,036.8 

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 licensees, 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 September 30, 2023, the Company had approximately $899.0 million of deferred revenue, of which $175.7 million is included within accrued liabilities and the remaining $723.3 million is included within other long-term liabilities on the Company's condensed consolidated balance sheet. As of March 31, 2023, the Company had approximately $757.7 million of deferred revenue in the semiconductor product segment, of which $121.4 million is included within accrued liabilities and the remaining $636.3 million is included within other long-term liabilities on the Company's condensed consolidated balance sheets. Deferred revenue represents amounts that have been invoiced in advance which are expected to be recognized as revenue in future periods. Approximately $62.6 million of deferred revenue recorded on the Company's consolidated balance sheets as of March 31, 2023, was recognized as revenue during the six months ended September 30, 2023. This amount was immaterial for the six months ended September 30, 2022.

Of the $899.0 million of deferred revenue as of September 30, 2023, $857.7 million is cash collected from customers under LTSAs, of which $138.4 million is included within accrued liabilities and $719.3 million is included within other long-term liabilities. Under these LTSAs, 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. If the Company fails to assure supply as defined in the contract, the deposit, or portions of it, will be returned to the customer. The remaining performance obligations for the LTSAs were approximately $4.12 billion as of September 30, 2023, of which approximately 22% 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 LTSAs, 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 conditions. Accordingly, the amount may not be indicative of net sales in future periods. The remaining $41.3 million of deferred revenue as of September 30, 2023 is related to other cash payments received from customers in advance of the Company’s performance obligations being satisfied. Most of the $41.3 million will be recognized as net sales within the next 12 months.

In addition to LTSAs, 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 September 30, 2023, for orders with initial durations in excess of 12 months, approximates 20% of fiscal 2023 net sales, of which approximately 85% 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 conditions. Accordingly, the amount may not be indicative of net sales in future periods.

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Note 4. 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 September 30,Six Months Ended September 30,
2023202220232022
Net income$666.6 $546.2 $1,333.0 $1,053.4 
Basic weighted average common shares outstanding543.1 551.5 544.1 552.7 
Dilutive effect of stock options and RSUs5.1 5.1 5.0 5.2 
Dilutive effect of 2015 Senior Convertible Debt0.2 0.7 0.3 0.9 
Dilutive effect of 2017 Senior Convertible Debt0.8 0.9 0.9 1.0 
Dilutive effect of 2017 Junior Convertible Debt 0.1  0.1 
Diluted weighted average common shares outstanding549.2 558.3 550.3 559.9 
Basic net income per common share$1.23 $0.99 $2.45 $1.91 
Diluted net income per common share$1.21 $0.98 $2.42 $1.88 

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. 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 5 for details on the Convertible Debt):
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
2015 Senior Convertible Debt$29.10 $29.65 $29.18 $29.71 
2017 Senior Convertible Debt$45.38 $46.24 $45.50 $46.34 
2020 Senior Convertible Debt$92.05 $92.92 $92.19 $93.00 
2017 Junior Convertible Debt(1)
$ $45.42 $44.81 $45.52 
(1) The weighted average conversion price per share for the 2017 Junior Convertible Debt was prior to the settlement of the outstanding principal amount in May 2023.
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Note 5. Debt

Debt obligations included in the condensed consolidated balance sheets consisted of the following (in millions):
Coupon Interest RateEffective Interest Rate
September 30,March 31,
20232023
Revolving Credit Facility$39.0 $100.0 
2025 Term Loan Facility750.0  
Commercial Paper1,000.0  
4.333% 2023 Notes4.333%4.7% 1,000.0 
2.670% 2023 Notes2.670%2.8% 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 Indebtedness5,389.0 5,700.0 
Senior Subordinated Convertible Debt - Principal Outstanding
2015 Senior Convertible Debt1.625%1.8%6.7 12.4 
2017 Senior Convertible Debt1.625%1.8%38.0 82.2 
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 
Total Convertible Debt710.2 766.6 
Gross long-term debt including current maturities6,099.2 6,466.6 
Less: Debt discount(1)
(10.6)(10.4)
Less: Debt issuance costs(2)
(12.8)(16.3)
Net long-term debt including current maturities6,075.8 6,439.9 
Less: Current maturities(3)
(1,661.1)(1,398.2)
Net long-term debt$4,414.7 $5,041.7 

(1) The unamortized discount consists of the following (in millions):
September 30,March 31,
20232023
Commercial Paper$(3.3)$ 
4.333% 2023 Notes (0.2)
2.670% 2023 Notes (0.4)
0.972% 2024 Notes(0.5)(1.2)
0.983% 2024 Notes(0.9)(1.3)
4.250% 2025 Notes(5.9)(7.3)
Total unamortized discount$(10.6)$(10.4)

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(2) Debt issuance costs consist of the following (in millions):
September 30,March 31,
20232023
Revolving Credit Facility$(7.1)$(8.6)
2025 Term Loan Facility(0.9) 
4.333% 2023 Notes (0.4)
2.670% 2023 Notes (0.2)
0.972% 2024 Notes(0.3)(0.6)
0.983% 2024 Notes(0.4)(0.8)
4.250% 2025 Notes(0.8)(0.9)
2017 Senior Convertible Debt(0.2)(0.4)
2020 Senior Convertible Debt(3.1)(4.4)
Total debt issuance costs$(12.8)$(16.3)

(3) As of September 30, 2023, current maturities consisted of the 2020 Senior Convertible Debt which will be convertible on August 15, 2024, and the 0.983% 2024 Notes which mature on September 1, 2024. As of September 30, 2023, the outstanding Commercial Paper, and the 0.972% 2024 Notes which mature on February 15, 2024 were excluded from current maturities as the Company has the intent and ability to utilize proceeds from its Revolving Credit Facility to refinance such notes on a long-term basis. As of September 30, 2023, the 2015 Senior Convertible Debt and the 2017 Senior Convertible Debt were convertible and 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. As of March 31, 2023, current maturities consisted of the 0.972% 2024 Notes which mature on February 15, 2024. As of March 31, 2023, the 2.670% 2023 Notes, which matured on September 1, 2023, and the 4.333% 2023 Notes, which matured on June 1, 2023 were excluded from current maturities as the Company had the intent and ability to utilize proceeds from its Revolving Credit Facility to refinance such notes on a long-term basis. As of March 31, 2023, the 2015 Senior Convertible Debt, the 2017 Senior Convertible Debt and the 2017 Junior Convertible Debt were excluded from current maturities as the Company had 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 September 30, 2023, are as follows (in millions):
Fiscal year ending March 31,Amount
2024$2,400.0 
20251,672.2 
20261,950.0 
202777.0 
Total$6,099.2 

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 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; 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 trading 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
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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.

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 September 30, 2023
Conversion RateApproximate Conversion PriceIncremental Share FactorMaximum Conversion Rate
2015 Senior Convertible Debt(1)
34.3667 $29.10 17.1851 48.1125 
2017 Senior Convertible Debt(1)
22.0373 $45.38 11.0194 31.4033 
2020 Senior Convertible Debt(1)
10.8633 $92.05  15.2086 

(1) As of September 30, 2023, the 2020 Senior Convertible Debt was not convertible. As of September 30, 2023, the holders of each of the 2015 Senior Convertible Debt and 2017 Senior Convertible Debt have the right to convert their notes between October 1, 2023 and December 31, 2023 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 September 30, 2023. As of September 30, 2023, the adjusted conversion rate for the 2015 Senior Convertible Debt and the 2017 Senior Convertible Debt would be increased to 45.1450 shares of common stock and 26.6501 shares of common stock, respectively, per $1,000 principal amount of notes based on the closing price of $78.05 per share of common stock to include an additional maximum incremental share rate per the terms of the applicable indenture. As of September 30, 2023, each of the 2015 Senior Convertible Debt and 2017 Senior Convertible Debt had a conversion value in excess of par of $17.0 million and $41.1 million, respectively.

With the exception of the 2020 Senior Convertible Debt, which became redeemable by the Company 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 or 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.

Interest expense consists of the following (in millions):
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Debt issuance cost amortization$1.1 $1.7 $2.6 $3.4 
Debt discount amortization3.1 1.8 4.8 3.6 
Interest expense40.4 47.2 81.9 91.0 
Total interest expense on Senior Indebtedness44.6 50.7 89.3 98.0 
Debt issuance cost amortization0.7 0.7 1.4 1.3 
Coupon interest expense0.4 0.7 0.9 1.7 
Total interest expense on Convertible Debt1.1 1.4 2.3 3.0 
Other interest expense1.1 1.2 2.4 2.6 
Total interest expense $46.8 $53.3 $94.0 $103.6 
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The Company's debt settlement transactions consists of the following (in millions):
Principal Amount SettledTotal Cash ConsiderationNet Loss on Inducements and Settlements
September 2023(1)
2.670% 2023 Notes$1,000.0 $1,000.0 $ 
August 2023(2)
2017 Senior Convertible Debt$18.2 $42.7 $3.1 
June 2023(3)
4.333% 2023 Notes$1,000.0 $1,000.0 $ 
May 2023(4)
2015 Senior Convertible Debt$5.6 $18.9 $0.4 
2017 Senior Convertible Debt$25.9 $56.3 $6.6 
2017 Junior Convertible Debt$6.5 $14.9 $2.1 

(1) The Company used borrowings under its 2025 Term Loan Facility and its Revolving Credit Facility to finance the settlement.
(2) The Company settled portions of its 2017 Senior Convertible Debt in privately negotiated transactions that are accounted for as induced conversions.
(3) The Company used borrowings under its Revolving Credit Facility to finance a portion of such settlement.
(4) The Company settled portions of its 2015 Senior Convertible Debt and 2017 Senior Convertible Debt, and the outstanding principal amount of its 2017 Junior Convertible Debt in privately negotiated transactions that are accounted for as induced conversions.

Senior Credit Facilities

In August 2023, the amended and restated Credit Agreement, dated as of December 16, 2021, was amended by the first incremental term loan amendment, dated as of August 31, 2023. Pursuant to this amendment, the Company borrowed an aggregate principal amount of $750.0 million under the new 2025 Term Loan Facility bearing interest at the Adjusted Term SOFR Rate, plus a margin of 1.125% to 1.5%, or Alternate Base Rate, plus a margin of 0.125% to 0.5%, with a maturity date of August 31, 2025. The interest rate margins are determined based on the Company's credit rating.

Commercial Paper

In September 2023, the Company established a commercial paper program under which the Company may issue short-term unsecured promissory notes up to a maximum principal amount outstanding at any time of $2.75 billion with a maturity of up to 397 days from the date of issue. The Company's obligations with respect to the payment of the Commercial Paper are guaranteed by certain of its subsidiaries. The Commercial Paper will be sold at a discount from par or alternatively, will be sold at par and bear interest rates that will vary based on market conditions and the time of issuance. Outstanding Commercial Paper reduces the amounts that would otherwise be available to borrow under the Company's Revolving Credit Facility. As of September 30, 2023, the Company had $1.00 billion of principal amount of Commercial Paper outstanding. The weighted-average interest rate of the Company's outstanding Commercial Paper was 5.64% as of September 30, 2023.

Note 6. 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.
 
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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 September 30, 2023 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, the 2025 Term Loan Facility, and the Commercial Paper, 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, the 2025 Term Loan Facility, and the Commercial Paper at September 30, 2023 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):
<
September 30, 2023March 31, 2023
Carrying Amount(1)
Fair Value
Carrying Amount(1)
Fair Value
Revolving Credit Facility$31.9 $39.0 $91.4 $100.0 
2025 Term Loan Facility749.1 750.0   
Commercial Paper996.7 1,000.0