Analysis of Debt
Total Debt (Carrying Amount)
Microchip Technology Inc., balance sheet: debt
US$ in thousands
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
The analysis of the debt profile reveals a significant expansion in leverage during the 2019 fiscal year, followed by a consistent period of deleveraging through 2022. Total debt remained relatively stable between March 31, 2017, and March 31, 2018, before experiencing a substantial increase that peaked in March 31, 2019.
- Total Debt Trajectory
- Total debt and credit facilities rose from approximately 2.95 billion US dollars in 2017 to a peak of 10.31 billion US dollars in 2019. This represents a growth of roughly 249% over two years. Following this peak, a sustained downward trend is observed, with the total carrying amount decreasing to 9.48 billion US dollars in 2020, 8.90 billion US dollars in 2021, and finally to 7.69 billion US dollars by March 31, 2022.
- Debt Composition and Maturity Structure
- The composition of debt shifted dramatically in 2018 and 2019. The current portion of long-term debt jumped from 49.95 million US dollars in 2017 to 1.31 billion US dollars in 2018, remaining elevated at 1.36 billion US dollars in 2019. Long-term debt excluding current maturities saw a massive surge in 2019, reaching 8.95 billion US dollars from 1.76 billion US dollars the previous year. By March 31, 2022, the total debt consists entirely of long-term obligations totaling 7.69 billion US dollars, with no recorded current portion for that period.
- Deleveraging Patterns
- Starting from the 2019 peak, the reduction in total debt was driven primarily by a decrease in the long-term debt component. Between March 31, 2019, and March 31, 2022, total debt decreased by approximately 2.62 billion US dollars. The reduction was most pronounced between 2021 and 2022, where total debt fell from 8.90 billion US dollars to 7.69 billion US dollars.
Overall, the financial data indicates a cycle of aggressive capital expansion or acquisition-related financing in 2019, succeeded by a strategic and steady reduction of the total debt burden over the subsequent three fiscal years.
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Total Debt (Fair Value)
| Mar 31, 2022 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Total debt and Credit Facility (fair value) | 8,105,900) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 1.05 |
Based on: 10-K (reporting date: 2022-03-31).
Weighted-average Interest Rate on Debt
Weighted-average effective interest rate on debt: 3.12%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 4.70% | 1,000,000) | 47,000) | |
| 2.80% | 1,000,000) | 28,000) | |
| 1.10% | 1,400,000) | 15,400) | |
| 1.10% | 1,000,000) | 11,000) | |
| 4.60% | 1,200,000) | 55,200) | |
| 5.90% | 34,400) | 2,030) | |
| 6.00% | 128,100) | 7,686) | |
| 5.10% | 665,500) | 33,941) | |
| 7.40% | 10,100) | 747) | |
| Total | 6,438,100) | 201,004) | |
| 3.12% | |||
Based on: 10-K (reporting date: 2022-03-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × 201,004 ÷ 6,438,100 = 3.12%