Results

Microchip Technology Incorporated

02/05/2026 | Press release | Distributed by Public on 02/05/2026 15:19

Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Note Regarding Forward-looking Statements
This report, including "Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Part II - Item 1A. Risk Factors" contains certain forward-looking statements that involve risks and uncertainties, including statements regarding our strategy, financial performance and revenue sources. We use words such as "anticipate," "believe," "can," "continue," "could," "expect," "future," "intend," "plan," and similar expressions to identify forward-looking statements. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors including those set forth under "Risk Factors," beginning at page 41 and elsewhere in this Form 10-Q. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements. We disclaim any obligation to update information contained in any forward-looking statement. These forward-looking statements include, without limitation, statements regarding the following:
•Our expectation that we will experience period-to-period fluctuations in operating results, gross margins, and product mix;
•The effects that uncertain global economic conditions and fluctuations in the global credit and equity markets may have on our financial condition and results of operations;
•The effects and amount of competitive pricing pressure on our product lines and modest pricing declines in certain of our more mature proprietary product lines;
•Our ability to moderate future average selling price declines;
•The amount of, and changes in, demand for our products and those of our customers;
•The impact of national security protections, trade restrictions and changes in tariffs, including those impacting China;
•Our intent to vigorously defend our legal positions and our expectations of the impact of litigation on our operations;
•The future impact on our business in response to public health concerns;
•Our goal to continue to be more efficient with our selling, general and administrative expenses;
•Our belief that customers recognize our products and brand name and our use of distributors as an effective supply channel;
•The accuracy of our estimates of the useful life and values of our property, assets and other liabilities;
•The possibility of future pricing fluctuations in our analog product line;
•The impact of any supply disruption we may experience;
•Our ability to effectively utilize our facilities at appropriate capacity levels or obtain sufficient capacity from our manufacturing sub-contractors;
•Our ability to maintain manufacturing yields;
•The maintenance of our competitive position based on our investments in new and enhanced products;
•The cost effectiveness of using our own assembly and test operations;
•Our plans to continue to transition certain outsourced assembly and test capacity to our internal facilities;
•Our expectations regarding investments in equipment and facilities and the timeline of expansions of our manufacturing capacity;
•The continued development of the embedded control market based on our strong technical service presence;
•Our anticipated level of capital expenditures;
•The possibility that loss of, or disruption in the operations of, one or more of our distributors could reduce our future net sales and/or increase our inventory returns;
•Our intent, including length, timing, planned closure days, to reduce production levels at global fabrication facilities, or closure of facilities completely and its impact on inventory levels and estimated cash savings;
•Our expectations regarding LTSAs and the realization of deferred revenue;
•The continuation and amount of quarterly cash dividends;
•The sufficiency of our existing sources of liquidity to finance anticipated capital expenditures and otherwise meet our anticipated cash requirements, and the effects that our contractual obligations are expected to have on them;
•Our belief that the capital expenditures to be incurred over the next 12 months will provide sufficient manufacturing capacity to support the growth of our production capabilities for our new products and technologies and to bring in-house more of the production requirements that are currently outsourced;
•Our belief that our IT system compromise will not have a material adverse effect on our business or result in any material damage to us;
•Our expectation that we will continue to be the target of cyber-attacks, computer viruses, unauthorized access and other attempts to breach or otherwise compromise the security of our IT systems and data;
•Our plans to modify and enhance our cybersecurity risk management processes and strategy;
•The benefits and risks of the use of artificial intelligence by us, our partners and customers, or malicious third parties and its impact on our products, our labor and technological needs, and regulatory or intellectual property compliance;
•The impact of the resolution of legal actions on our business, and the accuracy of our assessment of the probability of loss and range of potential loss;
•The amounts and timing, and our plans and expectations relating to the U.S. Statutory Notice of Deficiencies, and proposed income adjustment from the Malaysian Inland Revenue Board, and taxation assessments from the German Tax Authorities;
•Our expectation regarding the treatment of our unrecognized tax benefits in the next 12 months;
•Our belief that the expiration of any tax holidays will not have a material impact on our effective tax rate;
•Our expectations regarding our tax expense, cash taxes and effective tax rate;
•Our expectation that the global minimum tax (GMT) will not have a material impact on our fiscal 2026 results;
•Our belief that the estimates used in preparing our condensed consolidated financial statements are reasonable;
•Our actions to vigorously and aggressively defend and protect our intellectual property on a worldwide basis;
•Our ability to obtain and maintain patents and intellectual property licenses and minimize the effects of litigation or other disputes or the loss of patent protection;
•The level of risk we are exposed to for product liability claims or indemnification claims;
•The effect of fluctuations in market interest rates on our income and/or cash flows;
•The effect of fluctuations in currency rates;
•The impact of inflation on our business;
•Our ability to increase our borrowings or seek additional equity or debt financing to maintain or expand our facilities, or to fund cash dividends, share repurchases, acquisitions or other corporate activities, and that the timing and amount of such financing requirements will depend on a number of factors;
•Our expected debt obligation maturities, including the conversion of debt, Depositary Shares, and Series A Preferred Stock, and plans to refinance or repay our existing debt;
•Our expectations regarding the amounts and timing of repurchases under our stock repurchase program;
•Our expectation that our reliance on third-party contractors may increase over time as our business grows;
•Our ability to collect accounts receivable;
•The impact of the legislative and policy changes implemented or which may be implemented by the current administration on our business and the trading price of our stock;
•Our belief that our culture, values, and organizational development and training programs will continue to provide a work environment where our employees are empowered and engaged to deliver the best embedded control solutions;
•Our belief that our continued success is driven by the skills, knowledge, and innovative capabilities of our personnel, a strong technical service presence, and our ability to rapidly commercialize new and enhanced products;
•The potential impact of changes in regulations or in their enforcement, including with respect to the capital expenditures or other costs or expenses;
•The impact of any failure by us to adequately control the storage, use, discharge and disposal of regulated substances;
•Estimates and plans regarding pension liability and payments expected to be made for benefits earned;
•Our expectations regarding the amount, timing, and future applications for investment tax credits under the CHIPS Act;
•Our expectations regarding past or potential future acquisitions, joint development agreements or other strategic relationships and any related benefits; and
•The impact on our business stemming from Russia's invasion of Ukraine.
Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors including those set forth in "Item 1A. Risk Factors," and elsewhere in this Form 10-Q. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements. We disclaim any obligation to update the information contained in any forward-looking statement.
Introduction
The following discussion should be read in conjunction with the condensed consolidated financial statements and the related notes that appear elsewhere in this document.
We begin our Management's Discussion and Analysis of Financial Condition and Results of Operations with a summary of business and macroeconomic developments followed by a summary of our overall business strategy to provide an overview of the goals and overall direction of our business. This is followed by a discussion of the Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. We then discuss our Results of Operations for the three and nine months ended December 31, 2025 compared to the three and nine months ended December 31, 2024, followed by an analysis of changes in our balance sheet and cash flows, and discuss our financial commitments in the section titled "Liquidity and Capital Resources."
Business and Macroeconomic Environment
During most of fiscal 2025, our overall business was weak as we navigated through a large inventory correction. However, in the first nine months of fiscal 2026, we saw a significant improvement in our overall business compared to the fourth quarter of fiscal 2025. Net sales in our mixed-signal microcontroller and analog product lines increased sequentially in the December 2025 quarter compared to the September 2025 quarter. Net sales were up sequentially in the Americas and Europe and were essentially flat in Asia in the December 2025 quarter compared to the September 2025 quarter. Consistent with the business recovery plan which we implemented in March 2025, we continued to reduce inventory in the December 2025 quarter compared to the September 2025 quarter. Most of our factory expansion activity remains paused as we continue to execute our recovery plan and take actions to further reduce inventory.
Strategy
We develop, manufacture and sell smart, connected and secure embedded control solutions used by our customers for a wide variety of applications. Our strategic focus includes general purpose and specialized 8-bit, 16-bit, and 32-bit mixed-signal microcontrollers, microprocessors, analog, FPGA, and memory products. In July 2024, we entered the 64-bit mixed-signal microprocessor market, furthering our expansion beyond 32-bit architecture. With over 35 years of technology leadership, our broad product portfolio is a Total System Solution (TSS) for our customers that can provide a large portion of the silicon requirements in their applications. TSS is a combination of hardware, software and services which help our customers increase their revenue, reduce their costs and manage their risks compared to other solutions. Our synergistic product portfolio empowers disruptive growth trends, including AI/ML, data centers, edge computing and Internet of Things (IoT), E-mobility, networking and connectivity, and sustainability, in key end markets such as automotive, aerospace and defense, communications, consumer appliances, data centers and computing, and industrial.
Our manufacturing operations include wafer fabrication, wafer probe, assembly and test. Due to high inventory levels and ample capacity, on December 2, 2024, we announced our decision to close our Tempe, Arizona wafer fabrication facility that we refer to as Fab 2 and the closure of Fab 2 was completed in May 2025. We entered into an agreement to sell Fab 2 to a third party in October 2025 and the closing of the sale is still pending. Many of the process technologies that ran in Fab 2 also run in our Oregon and Colorado factories, which both have ample clean room space for expansion, and we are transferring production of many devices from Fab 2 to our Oregon and Colorado locations. The ownership of a substantial portion of our manufacturing resources is an important component of our business strategy, enabling us to maintain a high level of manufacturing control, resulting in us being one of the lowest cost producers in the embedded control industry. By owning wafer fabrication facilities and our assembly and test operations, and by employing statistical techniques (statistical process control, designed experiments and wafer level monitoring), we have been able to achieve and maintain high production yields. Direct control over manufacturing resources allows us to shorten our design and production cycles and capture a portion of the wafer manufacturing and assembly and testing profit margin.
We employ proprietary design and manufacturing processes in developing our embedded control products. We believe our processes afford us both cost-effective designs in existing and derivative products and greater functionality in new product designs. While many of our competitors develop and optimize separate processes for their logic and memory product lines, we use a common process technology for both mixed-signal microcontroller and non-volatile memory products. This allows us to more fully leverage our process research and development costs and to deliver new products to market more rapidly. Our engineers utilize advanced computer-aided design tools and software to perform circuit design, simulation and layout, and our in-house photomask and wafer fabrication facilities enable us to rapidly verify design techniques by processing test wafers quickly and efficiently.
We are committed to continuing our investment in new and enhanced products, including development systems, and in our design and manufacturing process technologies. We believe these investments are significant factors in maintaining our competitive position. Our current research and development activities focus on the design of new mixed-signal microcontrollers, digital signal controllers, memory, analog and mixed-signal products, FPGAs, timing systems, Flash-IP, development systems, software and application-specific software libraries. We are also developing new design and process technologies to achieve further cost reductions and performance improvements in our products.
We market and sell our products worldwide primarily through a network of direct sales personnel and distributors. Our direct sales force focuses on a wide variety of strategic accounts in three geographical markets: the Americas, Europe and Asia. We currently maintain sales and technical support centers in major metropolitan areas in all three geographic markets. We believe that a strong technical service presence is essential to the continued development of the embedded control market. Many of our CEMs, FAEs, and sales managers have technical degrees or backgrounds and have been previously employed in high technology environments. We believe that the technical and business knowledge of our sales force is a key competitive advantage in the sale of our products. The primary mission of our FAEs team is to provide technical assistance to customers and to conduct periodic training sessions for our sales team. FAEs also frequently conduct technical seminars and workshops in major cities around the world or through online webcasts. Our licensing division has dedicated sales, technology, design, product, test and reliability personnel that support the requirements of our licensees.
See the risk factor captioned "Our operating results are impacted by seasonality and wide fluctuations of supply and demand in the industry" on page 49 for discussion of the impact of seasonality on our business.
Critical Accounting Policies and Estimates
There were no changes to our critical accounting policies and estimates during the first nine months of the fiscal year ending March 31, 2026 compared to our "Critical Accounting Policies and Estimates" as previously described in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.
Results of Operations
The following table sets forth certain operational data as a percentage of net sales for the periods covered by this report:
Three Months Ended December 31, Nine Months Ended December 31,
2025 2024 2025 2024
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 40.4 45.3 43.5 42.7
Gross profit 59.6 54.7 56.5 57.3
Research and development 23.1 24.0 23.3 21.2
Selling, general and administrative 14.2 15.4 14.7 13.6
Amortization of acquired intangible assets 9.1 12.0 9.5 10.7
Special charges and other, net 0.4 0.3 1.0 0.2
Operating income 12.8 % 3.0 % 8.0 % 11.6 %
Net Sales
We operate in two industry segments and engage primarily in the design, development, manufacture and sale of semiconductor products as well as the licensing of our SuperFlash and other technologies. We sell our products to distributors and OEMs in a broad range of markets, perform ongoing credit evaluations of our customers and generally require no collateral. In certain circumstances, a customer's financial condition may require collateral, and, in such cases, the collateral would be typically provided in the form of letters of credit.
The following table summarizes our net sales for the periods covered by this report (dollars in millions):
Three Months Ended December 31, Nine Months Ended December 31,
2025 2024 Change 2025 2024 Change
Net sales $ 1,186.0 $ 1,026.0 15.6 % $ 3,401.9 $ 3,431.1 (0.9) %
The increase in net sales in the three months ended December 31, 2025 compared to the three months ended December 31, 2024 was primarily due to increased customer purchases as they worked through excess inventory levels as well as new customer design win activity coming to production. The decrease in net sales in the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024 was primarily due to many customers having high levels of inventory and delaying or reducing orders. Due to the size, complexity and diversity of our customer base, we are not able to quantify any material factor contributing to the changes in net sales. See our "Business and Macroeconomic Environment" discussion above for further information on our business outlook.
Other factors that we believe contributed to the changes in our reported net sales for the three and nine months ended December 31, 2025 compared to the three and nine months ended December 31, 2024 and which are drivers of long-term trends in our net sales but which factors we are not able to quantify include:
•economic and competitive conditions in the semiconductor industry;
•our various new product offerings that have increased our served available market;
•intense competition in our key markets;
•customers' needs for the flexibility offered by our programmable solutions;
•increasing semiconductor content in our customers' products; and
•geopolitical conditions, tariffs and other trade restrictions.
We sell a large number of products to a large and diverse customer base and there was not any single product or customer that accounted for a material portion of the changes in our net sales in the three and nine months ended December 31, 2025 or the three and nine months ended December 31, 2024.
Net sales by product line for the periods covered by this report were as follows (dollars in millions):
Three Months Ended December 31, Nine Months Ended December 31,
2025 % 2024 % 2025 % 2024 %
Mixed-signal Microcontrollers $ 586.5 49.5 $ 533.2 52.0 $ 1,703.6 50.1 $ 1,772.5 51.7
Analog 322.9 27.2 272.7 26.6 960.6 28.2 895.4 26.1
Other 276.6 23.3 220.1 21.4 737.7 21.7 763.2 22.2
Total net sales $ 1,186.0 100.0 $ 1,026.0 100.0 $ 3,401.9 100.0 $ 3,431.1 100.0
Mixed-signal Microcontrollers
Our mixed-signal microcontroller product line represents the largest component of our total net sales. Mixed-signal microcontrollers and associated application development systems accounted for approximately 49.5% and 50.1% of our net sales in the three and nine months ended December 31, 2025, respectively, compared to approximately 52.0% and 51.7% of our net sales in the three and nine months ended December 31, 2024, respectively.
Net sales of our mixed-signal microcontroller products increased 10.0% in the three months ended December 31, 2025, compared to the three months ended December 31, 2024 primarily due to increased customer purchases as they worked through excess inventory levels as well as new customer design win activity coming to production. Net sales of our mixed-signal microcontroller products decreased 3.9% in the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024 primarily due to many customers having high levels of inventory and delaying or reducing orders.
Historically, average selling prices in the semiconductor industry decrease over the life of any particular product. However, the overall average selling prices of our mixed-signal microcontroller products have remained relatively stable in recent periods due to the proprietary nature of these products. We have in the past been able to moderate average selling price declines in our mixed-signal microcontroller product lines by introducing new products with more features and higher prices.
Analog
Our analog product line includes analog, interface, mixed-signal and timing products. Our analog product line accounted for approximately 27.2% and 28.2% of our net sales in the three and nine months ended December 31, 2025, respectively, compared to approximately 26.6% and 26.1% of our net sales in the three and nine months ended December 31, 2024, respectively.
Net sales from our analog product line increased 18.4% and 7.3% in the three and nine months ended December 31, 2025, respectively, compared to the three and nine months ended December 31, 2024, primarily due to a portion of our customer base having worked through their previous high inventory balances and needing to purchase products at a higher level to support demand as well as new customer design win activity coming to production.
We consider a majority of the products in our analog product line to be proprietary in nature, where prices are relatively stable, similar to the pricing stability experienced in our mixed-signal microcontroller products. The non-proprietary portion of our analog product line will experience price fluctuations, driven primarily by the current supply and demand for those products.
Other
Our other product line includes FPGA products, royalties associated with licenses for the use of our SuperFlash and other technologies, sales of our intellectual property, fees for engineering services, memory products, timing systems, manufacturing services (wafer foundry and assembly and test subcontracting), legacy application specific integrated circuits, and certain products for aerospace applications. Revenue from these services and products accounted for approximately 23.3% and 21.7% of our net sales in the three and nine months ended December 31, 2025, respectively, compared to approximately 21.4% and 22.2% of our net sales in the three and nine months ended December 31, 2024, respectively.
Net sales related to these services and products increased 25.7% in the three months ended December 31, 2025 compared to the three months ended December 31, 2024 primarily due to sales of certain of our intellectual property rights. Net sales related to these services and products decreased 3.3% in the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024 primarily due to many customers having high levels of inventory and delaying or reducing orders. Net sales of our other product line can fluctuate over time based on general economic and semiconductor industry conditions as well as changes in demand for our FPGA products, licenses, engineering services, memory products, timing systems, and manufacturing services (wafer foundry and assembly and test subcontracting).
Distribution
Distributors accounted for approximately 47% of our net sales in each of the three and nine months ended December 31, 2025, respectively, and approximately 43% and 45% of our net sales in the three and nine months ended December 31, 2024, respectively. With the exception of Arrow Electronics, our largest distributor, which accounted for 12% and 10% of our net sales in the nine months ended December 31, 2025 and December 31, 2024, respectively, no other distributor or direct customer accounted for more than 10% of our net sales during these periods. Our distributors focus primarily on servicing the product requirements of a broad base of diverse customers. We believe that distributors provide an effective means of reaching this broad and diverse customer base and that customers recognize Microchip for its products and brand name and use distributors as an effective supply channel.
Generally, we do not have long-term agreements with our distributors and we, or our distributors, may terminate our relationships with each other with little or no advance notice. The loss of, or the disruption in the operations of, one or more of our distributors could reduce our future net sales in a given quarter and could result in an increase in inventory returns.
At December 31, 2025, our distributors maintained 28 days of inventory of our products compared to 33 days at March 31, 2025. Over the past ten fiscal years, the days of inventory maintained by our distributors have fluctuated between approximately 17 days and 43 days. Inventory holding patterns at our distributors have had a material adverse impact on our net sales in recent periods. For example, when our distributors hold relatively high levels of inventory, they are likely to purchase fewer products from us.
Sales by Geography
Sales by geography for the periods covered by this report were as follows (dollars in millions):
Three Months Ended December 31, Nine Months Ended December 31,
2025 % 2024 % 2025 % 2024 %
Americas $ 366.7 30.9 $ 297.4 29.0 $ 1,013.1 29.8 $ 1,041.8 30.3
Europe 246.2 20.8 183.9 17.9 696.5 20.5 668.6 19.5
Asia 573.1 48.3 544.7 53.1 1,692.3 49.7 1,720.7 50.2
Total net sales $ 1,186.0 100.0 $ 1,026.0 100.0 $ 3,401.9 100.0 $ 3,431.1 100.0
Americas sales include sales to customers in the U.S., Canada, Central America and South America. Sales to foreign customers accounted for approximately 72% and 75% of our total net sales in the three and nine months ended December 31, 2025, respectively, compared to approximately 76% and 75% of our total net sales in the three and nine months ended December 31, 2024, respectively. Net sales increased in all geographies in the three months ended December 31, 2025, compared to the three months ended December 31, 2024, primarily due to increased customer purchases as they worked through excess inventory levels as well as new customer design win activity coming to production. The decreases in net sales in the Americas and in Asia in the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024, were primarily due to many customers having high levels of inventory and delaying or reducing orders. Substantially all of our foreign sales are U.S. dollar denominated. Our sales force in the Americas and Europe supports a significant portion of the design activity for products which are ultimately shipped to Asia.
Gross Profit
Our gross profit in the three months ended December 31, 2025 was $706.9 million, or 59.6% of net sales, compared to $561.4 million, or 54.7% of net sales, in the three months ended December 31, 2024. Our gross profit in the nine months ended December 31, 2025 was $1.92 billion, or 56.5% of net sales, compared to $1.97 billion, or 57.3% of net sales, in the nine months ended December 31, 2024.
The primary reasons for the increase in gross profit of $145.5 million in the three months ended December 31, 2025 compared to the three months ended December 31, 2024 were changes in product mix, including higher sales of networking, data center and FPGA products, and higher licensing revenue and lower inventory reserves. The primary reasons for the decreases in gross profit of $45.3 million in the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024 were the impact of sales volume, product mix, and geographic mix. The net impact of product mix may fluctuate over time due to the mix of sales volumes of lower or higher margin products, changes in selling prices, and fluctuations in product costs. We are not able to separately quantify these impacts on our gross profit. The impact of unabsorbed capacity charges was an unfavorable impact of $9.1 million and $35.7 million in the three and nine months ended December 31, 2025, respectively, compared to the three and nine months ended December 31, 2024, respectively. Unabsorbed capacity charges are expensed as incurred when we operate our manufacturing facilities below normal levels. The net impact to our gross profit from inventory reserve charges was a favorable impact of $34.6 million and $39.7 million in the three and nine months ended December 31, 2025, respectively, compared to the three and nine months ended December 31, 2024, respectively. The gross margin impact of changes in licensing revenue, which has no associated cost of sales, was a favorable impact of $27.9 million and $32.4 million in the three and nine months ended December 31, 2025, respectively, compared to the three and nine months ended December 31, 2024, respectively.
Our overall inventory levels were $1.06 billion at December 31, 2025, compared to $1.29 billion at March 31, 2025. We maintained 201 days of inventory on our balance sheet at December 31, 2025 compared to 251 days of inventory at March 31, 2025. Our overall inventory level in dollars and days decreased as a result of our efforts to balance manufacturing production, customer demand and inventory levels. Our inventory amounts are impacted by timing of shipment activity in the quarter, the timing of receipt of raw materials, foundry wafers, and strategic last time buy materials and completion of finished goods. We believe that our current inventory and production capacity are adequate to fulfill the projected requirements of our customers and our levels of inventory will continue to be lower over the next several quarters based on the actions we have taken.
We operate assembly and test facilities in Thailand and the Philippines. Approximately 64% and 67% of our assembly requirements were performed in our internal assembly facilities during the three and nine months ended December 31, 2025, respectively, compared to approximately 67% during each of the three and nine months ended December 31, 2024. Approximately 68% and 69% of our test requirements were performed in our internal facilities during the three and nine
months ended December 31, 2025, respectively, compared to approximately 67% during each of the three and nine months ended December 31, 2024. The percentage of our assembly and test operations that are performed internally fluctuates over time based on supply and demand conditions in the semiconductor industry, our internal capacity capabilities and our acquisition activities. We believe that the assembly and test operations performed at our internal facilities provide us with significant cost savings compared to third-party contractor assembly and test costs, as well as increased control over these portions of the manufacturing process. In addition, we have specialized assembly and test facilities dedicated to our aerospace and defense products in Germany, France, Ireland, the United Kingdom, the Philippines, Thailand, and the United States. These facilities are designed to support the unique requirements of these sectors, helping to accelerate time to market and ensure consistent, high-quality products. We plan to continue to selectively invest in assembly and test equipment to increase our internal capacity capabilities and transition certain outsourced assembly and test capacity to our internal facilities.
We rely on outside wafer foundries for a significant portion of our wafer fabrication requirements. Approximately 65% of our net sales came from products that were produced at outside wafer foundries during each of the three and nine months ended December 31, 2025, compared to approximately 64% during each of the three and nine months ended December 31, 2024. This percentage may vary based on supply and demand conditions in the market.
We anticipate that our gross margins will fluctuate over time, driven primarily by capacity utilization levels, the overall mix of products sold during the period, as well as manufacturing yields, unabsorbed capacity charges, and competitive and economic conditions in the markets we serve. We continue to transition products to more advanced process technologies to reduce future manufacturing costs.
Research and Development
R&D expenses for the three months ended December 31, 2025 were $274.3 million, or 23.1% of net sales, compared to $246.2 million, or 24.0% of net sales, for the three months ended December 31, 2024. R&D expenses for the nine months ended December 31, 2025 were $792.1 million, or 23.3% of net sales, compared to $728.6 million, or 21.2% of net sales, for the nine months ended December 31, 2024. We are committed to investing in new and enhanced products, including development systems software, and in our design and manufacturing process technologies. We believe these investments are significant factors in maintaining our competitive position. R&D costs are expensed as incurred. Assets purchased to support our ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their expected useful lives. R&D expenses include labor, depreciation, masks, prototype wafers, and expenses for the development of process technologies, new packages, and software to support new products and design environments.
R&D expenses increased $28.1 million, or 11.4%, for the three months ended December 31, 2025 over the same period last year. R&D expenses increased $63.5 million, or 8.7%, for the nine months ended December 31, 2025 over the same period last year. The primary reasons for the increases in R&D expenses were higher employee compensation costs, including higher share-based compensation partially offset by our restructuring efforts.
R&D expenses fluctuate over time, primarily due to revenue and operating expense investment levels.
Selling, General and Administrative
Selling, general and administrative expenses for the three months ended December 31, 2025 were $168.5 million, or 14.2% of net sales, compared to $158.2 million, or 15.4% of net sales, for the three months ended December 31, 2024. Selling, general and administrative expenses for the nine months ended December 31, 2025 were $500.1 million, or 14.7% of net sales, compared to $465.7 million, or 13.6% of net sales, for the nine months ended December 31, 2024. Our goal is to continue to be more efficient with our selling, general and administrative expenses. Selling, general and administrative expenses include salary expenses related to field sales, marketing and administrative personnel, advertising and promotional expenditures and legal expenses as well as costs related to our direct sales force, CEMs and FAEs who work to stimulate demand from sales offices worldwide by assisting customers in the selection and use of our products.
Selling, general and administrative expenses increased $10.3 million, or 6.5%, for the three months ended December 31, 2025 over the same period last year primarily due to higher employee compensation costs, including higher share-based compensation. Selling, general and administrative expenses increased $34.4 million, or 7.4%, for the nine months ended December 31, 2025 over the same period last year primarily due to higher employee compensation costs, including higher share-based compensation partially offset by our restructuring efforts.
Selling, general and administrative expenses fluctuate over time, primarily due to revenue and operating expense investment levels.
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets for the three and nine months ended December 31, 2025 was $107.6 million and $323.3 million, respectively, compared to $122.6 million and $368.3 million for the three and nine months ended December 31, 2024, respectively. The primary reason for the decreases in acquired intangible asset amortization was due to the use of accelerated amortization methods for assets placed in service in previous fiscal years.
Special Charges and Other, Net
During the three and nine months ended December 31, 2025, we incurred special charges and other, net of $4.8 million and $33.3 million, respectively, primarily related to restructuring expenses, including contract exit costs, closure of our Tempe, Arizona wafer fabrication facility and employee separation costs. During the three and nine months ended December 31, 2024, we incurred special charges and other, net of $3.5 million and $7.6 million, respectively, primarily related to employee severance and the restructuring of existing wafer fabrication operations to increase operational efficiency.
Other Income (Expense)
Interest income in the three and nine months ended December 31, 2025 was $1.3 million and $9.8 million, respectively, compared to $1.7 million and $6.5 million, respectively, for the three and nine months ended December 31, 2024.
Interest expense in the three and nine months ended December 31, 2025 was $55.9 million and $169.6 million, respectively, compared to $68.7 million and $189.6 million, respectively, for the three and nine months ended December 31, 2024. The primary reason for the decreases in interest expense were lower debt balances in the three and nine months ended December 31, 2025.
Other loss, net was $3.5 million and $3.3 million for the three and nine months ended December 31, 2025, respectively, compared to $9.7 million and $6.0 million for the three and nine months ended December 31, 2024, respectively. The primary reason for the changes in other loss, net in these periods relates to foreign currency exchange rate fluctuations.
Provision for Income Taxes
Our provision for income taxes is attributable to U.S. federal, state, and foreign income taxes. A comparison of our effective tax rate for the nine months ended December 31, 2025 and December 31, 2024 is not meaningful due to changes in the amount of pre-tax income earned, changes in the mix of jurisdictions in which income is earned, and the impact of discrete items relative to the amount of income earned.
We are subject to taxation in many jurisdictions in which we have operations. The effective tax rates that we pay in these jurisdictions vary widely, but they are generally lower than our combined U.S. federal and state effective tax rate. Our domestic blended statutory tax rate in each of the nine months ended December 31, 2025 and December 31, 2024 was approximately 22%. The difference in rates applicable in foreign jurisdictions results from a number of factors, including lower statutory rates, tax holidays, financing arrangements and other factors. Our effective tax rate has been and will continue to be impacted by the geographical dispersion of our earnings and losses.
Our foreign tax rate differential primarily relates to our operations in Malta taxed at a 35.0% statutory tax rate and Ireland taxed at a 12.5% statutory tax rate. Additionally, our Thailand manufacturing operations are currently subject to numerous tax holidays granted to us based on our investment in property, plant, and equipment in Thailand. Our tax holiday periods in Thailand expire at various times in the future; however, we actively seek to obtain new tax holidays, otherwise we will be subject to tax at the statutory tax rate of 20.0%. We do not expect the future expiration of any of our tax holiday periods in Thailand to have a material impact on our effective tax rate.
In September 2021, we received a Statutory Notice of Deficiency (2007 to 2012 Notice) from the United States Internal Revenue Service (IRS) for fiscal 2007 through fiscal 2012. The disputed amounts largely relate to transfer pricing matters. In December 2021, we filed a petition in the U.S. Tax Court challenging the 2007 to 2012 Notice. In September 2023, we received a Revenue Agent Report (RAR) from the IRS for fiscal 2013 and fiscal 2016. In October 2023, we received a Statutory Notice of Deficiency (2014 to 2015 Notice) from the IRS for fiscal 2014 and fiscal 2015. The disputed amounts for fiscal 2013
to fiscal 2016 largely relate to transfer pricing matters. In December 2023, we filed a petition in the U.S. Tax Court challenging the 2014 to 2015 Notice. In September 2025, we reached a settlement with the IRS for fiscal 2007 through fiscal 2015.
In May 2023, we received a proposed income adjustment from the Malaysian Inland Revenue Board (IRB) for fiscal 2020. In December 2023, we received a Notice of Assessment from the IRB asserting the same proposed income adjustment. In March 2025, we entered into a Consent Judgment before the High Court, agreeing that the dispute will be heard before the Special Commissioners of Income Tax (SCIT). It was also agreed that the payment on the taxes assessed is stayed and the IRB will pause all enforcement and proceedings against the collection of the taxes assessed until the appeal before the SCIT is concluded. If the adjustment is upheld by the highest court that has jurisdiction over this matter in Malaysia, it could result in income taxes and penalties up to $410.0 million. The disputed amounts largely relate to the characterization of certain assets. The timing of adjudicating this matter is uncertain but could occur in the next 12 months.
In January 2025, we received several assessments from the German Tax Authorities (GTA) regarding the German extraterritorial taxation of royalty payments between nonresidents (referred to as offshore receipts in respect of intangible property or ORIP) and intellectual property transfers by nonresidents (referred to as extraterritorial capital gains taxation or ETT). If the assessment is upheld, it could result in income taxes and penalties up to $92.0 million. The timing of adjudicating this matter is uncertain but could occur in the next 12 months.
We firmly believe that the IRB and GTA assessments are without merit and we plan to pursue all available administrative and judicial remedies necessary to resolve these matters. We intend to vigorously defend our position, and we are confident in our ability to prevail on the merits. We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves. The ultimate outcome of disputes of this nature is uncertain, and if the IRB or GTA were to prevail on their assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on our financial position, results of operations or cash flows.
Various taxing authorities in the U.S. and other countries in which we do business are increasing their scrutiny of the tax structures employed by businesses. Companies of our size and complexity are regularly audited by the taxing authorities in the jurisdictions in which they conduct significant operations. For U.S. federal, and in general for U.S. state tax returns, our fiscal 2007 and later tax returns remain effectively open for examination by the taxing authorities. We are currently being audited by the tax authorities in the U.S. and in various foreign jurisdictions. At this time, we do not know what the outcome of these audits will be. We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained based on their technical merits under currently enacted law. If this threshold is not met, no tax benefit of the uncertain tax position is recognized. If the threshold is met, we recognize the largest amount of the tax benefit that is more than 50% likely to be realized upon ultimate settlement.
In August 2022, the U.S. government enacted the Inflation Reduction Act into law. The Inflation Reduction Act includes a new corporate alternative minimum tax (Corporate AMT) of 15.0% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.00 billion over a three-year period, as well as a 1% excise tax on the net fair market value of stock repurchases made after December 31, 2022. The Corporate AMT was in effect beginning in fiscal 2024. The Inflation Reduction Act did not have a material impact on our tax expense or effective tax rate during the nine months ending December 31, 2025.
The Organisation for Economic Co-operation and Development has introduced a global minimum corporate tax framework (GMT), with phased implementation starting January 1, 2024. While the U.S. has not adopted GMT, several countries where we operate have enacted related legislation, and others are expected to follow. In June 2025, the Group of Seven, comprised of Canada, France, Germany, Italy, Japan, the U.K. and the U.S. (the G7), agreed to exclude U.S. Multi-National Entities from certain aspects of the GMT (the G7 Statement). We will continue to monitor developments around this agreement. The impact of the GMT for the nine months ending December 31, 2025 was not material to our financial results.
On July 4, 2025, the U.S. president signed into law H.R.1 - One Big Beautiful Bill Act (OBBBA), which includes permanent extensions of certain Tax Cuts and Jobs Act provisions and changes to the international tax framework. The effects of these changes have been recognized in the period ending December 31, 2025. The impact of OBBBA for the nine months ended December 31, 2025 was not material to our financial results. We will continue to evaluate the broader implications of OBBBA, including the effects of future regulatory guidance and interpretations.
Liquidity and Capital Resources
We had $250.7 million in cash and cash equivalents at December 31, 2025, a decrease of $521.0 million from the March 31, 2025 balance.
Operating Activities
Net cash provided by operating activities was $705.1 million in the nine months ended December 31, 2025 primarily due to net income of $85.8 million, adjusted for non-cash and non-operating charges of $707.2 million and net cash outflows of $87.9 million from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities in the nine months ended December 31, 2025 include a decrease in income tax payable due to tax payments and settlements, an increase in trade accounts receivable driven primarily by higher revenue including sale of certain of our intellectual property rights, and timing of shipments and collections, a decrease in accrued liabilities primarily due to cash refunded to our customers under certain LTSAs, offset by a decrease in inventories as a result of our efforts to balance manufacturing production, customer demand and inventory levels. Net cash provided by operating activities was $692.2 million in the nine months ended December 31, 2024 primarily due to net income of $154.1 million, adjusted for non-cash and non-operating charges of $589.5 million and net cash outflows of $51.4 million from changes in our operating assets and liabilities.
Investing Activities
Net cash used in investing activities was $143.4 million in the nine months ended December 31, 2025 compared to $231.8 million in the nine months ended December 31, 2024. During the nine months ended December 31, 2025, and the nine months ended December 31, 2024, net investing activities primarily related to capital purchases and investments in other assets.
Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions. Capital expenditures in the nine months ended December 31, 2025 were $76.9 million compared to $111.8 million in the nine months ended December 31, 2024. Capital expenditures were primarily for the selective expansion of production capacity and the addition of research and development equipment. We have paused most of our factory expansion actions and reduced our planned capital investments through fiscal 2026. Our investments in equipment and facilities during the next 12 months are expected to be at or below $100.0 million. We believe that the capital expenditures anticipated to be incurred over the next 12 months will provide sufficient manufacturing capacity to support the growth of our production capabilities for our new products and technologies and to bring in-house more of the assembly and test operations that are currently outsourced. We expect to finance our capital expenditures through our existing cash balances and cash flows from operations. Despite pausing our expansion activity, we believe that our current inventory and production capacity are adequate to fulfill the projected requirements of our customers. In August 2022, the U.S. government enacted the CHIPS Act to provide billions of dollars of cash incentives and a new investment tax credit to increase domestic manufacturing capacity in our industry. In December 2023, we reached a Preliminary Memorandum of Terms with the U.S. Department of Commerce for $162 million in CHIPS Act grants for two of our U.S. wafer fabrication facilities; however, we have not concluded negotiations with the U.S. Department of Commerce and there can be no assurance that the grants will receive final approval. If we do receive a CHIPS Act grant, the restrictions and operational requirements that are imposed on CHIPS Act grant recipients could add complexity to our operations and increase our costs. We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and may apply for other incentives provided by the legislation; however, there can be no assurance that we will receive any such other incentives, what the amount and timing of any incentive we receive will be, as to which other companies will receive incentives and whether the legislation will have a positive or negative impact on our competitive position.
Financing Activities
Net cash used in financing activities was $1.08 billion in the nine months ended December 31, 2025 compared to $194.1 million in the nine months ended December 31, 2024. Significant transactions affecting our net financing cash flows included:
•in the first nine months of fiscal 2026, $1.20 billion of net cash used to paydown our 4.25% 2025 Notes and $927.0 million of net proceeds generated from our Commercial Paper program, and
•in the first nine months of fiscal 2025, $654.9 million of net proceeds from the issuances of our 4.900% 2028 Senior Notes, our 5.050% 2030 Senior Notes, our 2024 Senior Convertible Debt and our Commercial Paper, offset by the settlement of our 2020 Convertible Debt and our 2025 Term Loan Facility, purchase of our capped call options, and the pay down of our 0.983% 2024 Notes, and
•in the first nine months of fiscal 2026 and fiscal 2025, we paid cash dividends to our common stockholders of $737.4 million and $730.9 million, respectively, and
•in the first nine months of fiscal 2026, we paid cash dividends to our preferred stockholders of $80.7 million, and
•in the first nine months of fiscal 2025, we repurchased shares of our common stock for $96.5 million.
In March 2025, we entered into a Second Amended and Restated Credit Agreement (the Second Amended and Restated Credit Agreement) pursuant to which the Credit Agreement, was amended and restated in its entirety. The Second Amended and Restated Credit Agreement provides for an unsecured revolving loan facility in an aggregate principal amount of up to $2.25 billion, with a $250.0 million foreign currency sublimit, a $25.0 million letter of credit sublimit and a $20.0 million swingline loan sublimit. The Second Amended and Restated Credit Agreement amended the maximum total leverage ratio financial covenant to the following: 5.50 to 1.00 for period ending March 31, 2025, 5.50 to 1.00 for period ending June 30, 2025, 6.25 to 1.00 for period ending September 30, 2025, 5.75 to 1.00 for period ending December 31, 2025, 4.75 to 1.00 for period ending March 31, 2026, 4.00 to 1.00 for period ending June 30, 2026, 3.75 to 1.00 for period ending September 30, 2026, and 3.50 to 1.00 for any such period ended after the Restatement Effective Date that is not a period ending during the Covenant Relief Period. The Covenant Relief Period means the period following the Restatement Effective Date to (but excluding) the earlier of (a) December 31, 2026 and (b) the date in which the Total Leverage Ratio for the most recently ended fiscal quarter shall not exceed 3.50 to 1.00 and certain other conditions are satisfied.
In September 2023, we established a Commercial Paper program under which we may issue short-term unsecured promissory notes. Pursuant to the Credit Agreement, the maximum principal amount outstanding at any time under the Commercial Paper program is $2.25 billion with a maturity of up to 397 days from the date of issue. The Commercial Paper is sold from time to time at a discount from par or alternatively, sold at par and bears interest rates that will vary based on market conditions and the time of issuance. Our intent is to reduce the amounts that would otherwise be available to borrow under our Revolving Credit Facility by the outstanding amount of Commercial Paper. As of December 31, 2025, the principal amount of our outstanding indebtedness was $5.39 billion. We had no outstanding borrowings under the Revolving Credit Facility at December 31, 2025 and at March 31, 2025. At December 31, 2025, we had $1.11 billion outstanding principal amount of Commercial Paper compared to $175.0 million at March 31, 2025.
In March 2025, we issued 29.7 million Depositary Shares, representing approximately 1.5 million shares of our Series A Preferred Stock. The Series A Preferred Stock has a $1,000.00 per share liquidation preference and $0.001 per share par value. As a result of the transaction, we received cash proceeds of $1.45 billion, net of underwriting fees and other issuance costs.
Dividends and Share Repurchases
In November 2021, our Board of Directors authorized the repurchase of up to $4.00 billion of our common stock in the open market or in privately negotiated transactions. No shares were repurchased under this authorization in the first nine months of fiscal 2026. In the first nine months of fiscal 2025, we repurchased approximately 1.0 million shares of our common stock for $90.0 million under this authorization. As of December 31, 2025, approximately $1.56 billion remained available for repurchases under the program. As of December 31, 2025, we held approximately 37.3 million shares as treasury shares. Any future repurchases of shares of our common stock will be evaluated based on our cash generation, leverage metrics, and market conditions.
In October 2002, we announced that our Board of Directors had approved and instituted a quarterly cash dividend on our common stock. To date, our cumulative dividend payments on our common stock have totaled approximately $8.37 billion. A quarterly dividend of $0.455 per share of common stock was declared on February 5, 2026 and will be paid on March 10, 2026 to stockholders of record as of February 23, 2026. We expect the aggregate cash dividend on our common stock for the March 2026 quarter to be approximately $246.5 million. Our Board is free to change our dividend practices at any time and to increase or decrease the dividend paid, or not to pay a dividend on our common stock on the basis of our results of operations, financial condition, cash requirements and future prospects, and other factors deemed relevant by our Board. Our current intent is to maintain our level of quarterly cash dividends depending upon market conditions, our results of operations, and potential changes in tax laws.
With respect to shares of our Series A Preferred Stock, dividends are cumulative at an annual rate of 7.50% on the liquidation preference of $1,000.00 per share of Series A Preferred Stock. A quarterly cash dividend of $18.750 per share of Series A Preferred Stock was paid to the holders of Series A Preferred Stock on December 15, 2025 in the aggregate amount of $27.8 million. To date, our cumulative dividend payments on our Series A Preferred Stock have totaled approximately $80.7 million. A quarterly cash dividend of $18.750 per share of Series A Preferred Stock was declared on February 5, 2026 and will be paid on March 16, 2026 to the holders of Series A Preferred Stock of record as of March 1, 2026.
We believe that our existing sources of liquidity combined with cash generated from operations, borrowings under our Revolving Credit Facility and proceeds from issuance of our Commercial Paper will be sufficient to meet our currently anticipated cash requirements for at least the next 12 months. Our long-term liquidity requirements primarily arise from
working capital requirements, interest and principal repayments related to our outstanding indebtedness, capital expenditures, cash dividends, share repurchases, and income tax payments. For additional information regarding our cash requirements see "Note 10. Commitments and Contingencies", "Note 6. Debt" and "Note 11. Income Taxes" to our condensed consolidated financial statements. The semiconductor industry is capital intensive and in order to remain competitive, we must constantly evaluate the need to make significant investments in capital equipment for both production and research and development and to expand our existing facilities or potentially construct new facilities. We may increase our borrowings under our Revolving Credit Facility or our Commercial Paper program or seek additional equity or debt financing from time to time to refinance our existing debt, maintain or expand our wafer fabrication and product assembly and test facilities, for cash dividends, for share repurchases or for acquisitions or other purposes. In addition, the holders of our 2024 Senior Convertible Debt can require us to repurchase such debt on June 1, 2027 if the price per share of our common stock is less than the conversion price of such debt on the applicable measurement date. Our intention is to finance any required repurchase of the 2024 Senior Convertible Debt by using availability under our Revolving Credit Facility, our Commercial Paper program or other debt or equity financing. The timing and amount of any such financing requirements will depend on a number of factors, including the maturity dates of our existing debt, our level of dividend payments on our common stock and Series A Preferred Stock, changes in tax laws and regulations regarding the repatriation of offshore cash, demand for our products, changes in industry conditions, product mix, competitive factors and our ability to identify suitable acquisition candidates. We plan to refinance our existing notes as they mature and we may from time to time seek to refinance certain of our other outstanding debt or Convertible Debt through issuances of new notes or convertible debt, term loans, Commercial Paper, tender offers, exchange transactions or open market repurchases. Such issuances, tender offers or exchanges or purchases, if any, will depend on prevailing market conditions, our ability to negotiate acceptable terms, our liquidity position and other factors. There can be no assurance that any financing will be available on acceptable terms due to uncertainties resulting from economic uncertainty, tariffs, high interest rates, high inflation, instability in the banking sector, public health concerns, or other factors, and any additional equity financing or convertible debt financing would result in incremental ownership dilution to our existing stockholders.
Summarized Financial Information
The tables below present the summarized financial information on a combined basis for Microchip Technology Incorporated and the following subsidiaries of Microchip Technology Incorporated that provide guarantees of our Senior Notes: Atmel Corporation, Microchip Holding Corporation, Microchip Technology LLC, Silicon Storage Technology, Inc., Microsemi Corporation, and Microchip Storage Solutions LLC (such subsidiaries collectively, the Subsidiary Obligors). The debt securities are fully and unconditionally guaranteed by the aforementioned subsidiaries and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under Regulation S-X and is not intended to present our financial position or results of operations in accordance with generally accepted accounting principles as such principles are in effect in the U.S.
We have presented summarized financial information below for Microchip Technology Incorporated and the Subsidiary Obligors after the elimination of intercompany transactions and balances among Microchip Technology Incorporated and the Subsidiary Obligors and investments in any subsidiaries (in millions). The Subsidiary Obligors regularly sell goods and services to non-guarantor subsidiaries (Non-Guarantors) and the Subsidiary Obligors regularly purchase goods and services from Non-Guarantor through intercompany arrangements. The summarized financial information does not eliminate the effects of
these intercompany arrangements and separately presents the net effect of all of the Subsidiary Obligors' transactions with Non-Guarantor for the financial measures presented below.
As of December 31, 2025 As of March 31, 2025
Current assets, excluding intercompany $ 220.6 $ 671.8
Intercompany receivables from Non-Guarantors 3,187.5 3,527.3
Goodwill and intangible assets 4,562.5 4,586.8
Non-current assets, excluding intercompany 1,152.8 1,213.6
Non-current intercompany receivables from Non-Guarantors 179.9 181.6
Total assets $ 9,303.3 $ 10,181.1
Current liabilities, excluding intercompany $ 248.0 $ 314.9
Intercompany payables due to Non-Guarantors 6,101.6 6,095.1
Long-term debt 5,366.0 5,630.4
Non-current liabilities, excluding intercompany 923.6 959.6
Non-current intercompany payables due to Non-Guarantors 2,120.6 2,116.2
Total liabilities $ 14,759.8 $ 15,116.2
Nine Months Ended December 31, 2025 For the Year Ended March 31, 2025
Revenue, excluding intercompany $ 1,041.0 $ 1,365.3
Revenue from Non-Guarantors 182.8 400.2
Total revenue $ 1,223.8 $ 1,765.5
Gross profit, excluding intercompany 746.2 971.0
Gross loss from Non-Guarantors (305.6) (378.9)
Total gross profit $ 440.6 $ 592.1
Operating income, excluding intercompany 368.1 483.0
Operating loss from Non-Guarantors (305.6) (378.9)
Total operating income $ 62.5 $ 104.1
Net income, excluding intercompany 187.6 210.8
Net loss from Non-Guarantors (316.2) (402.8)
Total net loss $ (128.6) $ (192.0)
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