Name: Microchip Technology Inc. (NASDAQ:MCHP) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Microchip Technology Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020	Mar 31, 2019	Mar 31, 2018	Mar 31, 2017
Net income	1,285,500)	349,400)	570,600)	355,900)	255,400)	164,639)
Depreciation and amortization	1,143,500)	1,153,300)	1,215,600)	876,400)	615,900)	469,208)
Deferred income taxes	7,900)	(138,900)	(490,300)	(62,200)	51,200)	(126,888)
Share-based compensation expense related to equity incentive plans	210,200)	198,300)	170,200)	166,400)	93,200)	128,155)
Loss on settlement of debt	113,400)	299,600)	5,400)	12,600)	16,000)	43,879)
Amortization of debt discount	44,900)	71,100)	121,700)	114,600)	106,100)	56,075)
Amortization of debt issuance costs	11,500)	17,100)	17,100)	16,500)	6,600)	4,524)
Losses on equity method investments	—)	—)	—)	200)	200)	222)
Impairment of intangible assets	3,000)	—)	2,200)	3,100)	500)	11,904)
Realized gain on equity method investment	—)	—)	—)	—)	—)	(468)
Impairment of available-for-sale investment	—)	—)	—)	6,000)	15,500)	1,433)
Amortization of premium on available-for-sale investments	—)	—)	—)	(200)	300)	18)
Other non-cash adjustment	(11,400)	(6,400)	(2,000)	800)	(5,800)	2,582)
(Increase) decrease in accounts receivable	(74,900)	(63,700)	(53,300)	238,800)	(85,300)	(46,831)
(Increase) decrease in inventories	(177,800)	18,400)	28,800)	341,600)	(59,200)	223,711)
Increase (decrease) in deferred income on shipments to distributors	—)	—)	—)	—)	41,000)	109,383)
Increase (decrease) in accounts payable and accrued liabilities	192,700)	17,600)	11,400)	(180,700)	(13,900)	(16,070)
Change in other assets and liabilities	79,400)	(16,700)	(13,100)	(24,200)	14,000)	24,628)
Change in income tax payable	14,800)	17,400)	(40,500)	(190,800)	367,900)	—)
Changes in operating assets and liabilities, excluding impact of acquisitions	34,200)	(27,000)	(66,700)	184,700)	264,500)	294,821)
Adjustments to reconcile net income to net cash provided by operating activities	1,557,200)	1,567,100)	973,200)	1,318,900)	1,164,200)	885,465)
Net cash provided by operating activities	2,842,700)	1,916,500)	1,543,800)	1,674,800)	1,419,600)	1,050,104)
Purchases of available-for-sale investments	—)	—)	(2,000)	(167,700)	(1,594,800)	(500,309)
Maturities of available-for-sale investments	—)	—)	—)	78,000)	786,700)	400)
Sales of available-for-sale investments and marketable equity securities	—)	—)	4,700)	1,376,600)	—)	470,165)
Sale of equity method investment	—)	—)	—)	—)	—)	1,746)
Acquisition of Atmel, net of cash acquired	—)	—)	—)	—)	—)	(2,747,516)
Acquisition of Microsemi, net of cash acquired	—)	—)	—)	(7,850,600)	—)	—)
Proceeds from sales of assets	14,100)	8,300)	3,200)	200)	10,300)	23,069)
Investments in other assets	(121,700)	(89,000)	(71,500)	(18,600)	(7,100)	(10,218)
Capital expenditures	(370,100)	(92,600)	(67,600)	(228,900)	(206,800)	(75,310)
Net cash used in investing activities	(477,700)	(173,300)	(133,200)	(6,811,000)	(1,011,700)	(2,837,973)
Proceeds from borrowings on Revolving Credit Facility	4,176,000)	3,966,000)	1,026,000)	4,416,500)	187,000)	1,537,000)
Repayments of Revolving Credit Facility	(5,123,500)	(4,007,900)	(1,904,000)	(1,150,000)	(187,000)	(2,781,000)
Proceeds from issuance of senior notes	997,000)	3,577,800)	—)	1,989,500)	—)	2,645,000)
Repayment of senior notes	(1,000,000)	—)	—)	—)	—)	—)
Proceeds from borrowings on Bridge Loan Facility	—)	—)	611,900)	—)	—)	—)
Repayment of Bridge Loan Facility	—)	(615,000)	—)	—)	—)	—)
Proceeds from borrowings on Term Loan Facility	—)	—)	—)	3,000,000)	—)	—)
Repayments of Term Loan Facility	—)	(1,723,500)	(188,000)	(1,088,500)	—)	—)
Payments on settlement of convertible debt	(424,700)	(2,611,400)	(615,000)	—)	(73,400)	(436,205)
Repayment of debt assumed in Microsemi acquisition	—)	—)	—)	(2,056,900)	—)	—)
Deferred financing costs	(8,500)	(21,200)	(8,900)	(72,700)	(1,200)	(36,930)
Purchase of capped call options	—)	(35,800)	—)	—)	—)	—)
Proceeds from sale of common stock	70,500)	60,300)	58,800)	42,600)	42,000)	42,210)
Tax payments related to shares withheld for vested RSUs	(84,200)	(64,600)	(68,100)	(71,800)	(44,400)	(58,402)
Repurchase of common stock	(425,600)	—)	—)	—)	—)	—)
Payment of cash dividends	(503,800)	(388,300)	(350,100)	(344,400)	(337,500)	(315,429)
Capital lease payments	(800)	(600)	(800)	(800)	(800)	(783)
Net cash used in financing activities	(2,327,600)	(1,864,200)	(1,438,200)	4,663,500)	(415,300)	595,461)
Operating cash flows related to discontinued operations	—)	—)	—)	—)	—)	9,348)
Effect of foreign exchange rate changes on cash and cash equivalents	—)	—)	—)	—)	—)	(1,007)
Net increase (decrease) in cash and cash equivalents	37,400)	(121,000)	(27,600)	(472,700)	(7,400)	(1,184,067)
Cash and cash equivalents, and restricted cash at beginning of period	280,000)	401,000)	428,600)	901,300)	908,700)	2,092,751)
Cash and cash equivalents, and restricted cash at end of period	317,400)	280,000)	401,000)	428,600)	901,300)	908,684)

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).

Operating cash flow exhibits a consistent upward trajectory over the six-year period, growing from 1.05 billion US dollars in 2017 to 2.84 billion US dollars in 2022. This growth is supported by a significant increase in net income, which peaked at 1.29 billion US dollars in 2022, despite a notable fluctuation in 2021. A substantial portion of the cash provided by operations is derived from non-cash adjustments, particularly depreciation and amortization, which remained consistently high, exceeding 1.1 billion US dollars annually from 2020 through 2022.

Operating Cash Flow Dynamics: Net cash provided by operating activities has remained robustly positive, showing resilience even when net income varied. The gap between net income and operating cash flow is largely attributable to high depreciation and amortization charges and share-based compensation, which together act as significant add-backs to net income. Working capital movements have been volatile, with inventories showing a significant increase in cash usage of 177.8 million US dollars in 2022, contrasting with a cash inflow of 341.6 million US dollars in 2019.
Investing Activity and Strategic Acquisitions: Investing activities are characterized by periodic, large-scale capital outlays for strategic acquisitions. Significant cash outflows occurred in 2017 for the acquisition of Atmel (2.75 billion US dollars) and in 2019 for the acquisition of Microsemi (7.85 billion US dollars). Capital expenditures followed a generally increasing trend, rising from 75.3 million US dollars in 2017 to a peak of 370.1 million US dollars in 2022, indicating an intensification of investment in fixed assets.
Financing Strategy and Debt Management: Financing activities reflect a cycle of leveraging to fund acquisitions followed by debt repayment. The company frequently utilized revolving credit facilities and issued senior notes, with significant proceeds in 2019 and 2021. These were offset by aggressive repayments, including 5.12 billion US dollars paid toward the revolving credit facility in 2022. Shareholder returns have been prioritized through consistent dividend payments, which grew from 315.4 million US dollars in 2017 to 503.8 million US dollars in 2022, complemented by a new initiative of common stock repurchases totaling 425.6 million US dollars in 2022.
Liquidity and Cash Position: The overall cash and cash equivalents position experienced a long-term decline from a beginning balance of 2.09 billion US dollars in 2017 to a low of 280 million US dollars in 2021, before recovering slightly to 317.4 million US dollars by March 31, 2022. This reduction in liquidity is primarily the result of heavy investment in acquisitions and the systematic repayment of debt and shareholder distributions.

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