"In the December 2018 quarter, non-GAAP net sales for our FPGA product line achieved an all-time record of $99.2 million.  Microcontroller non-GAAP net sales were $748.4 million, up 13.2% from the December 2017 quarter and analog non-GAAP net sales were $411.8 million, up 77.9% from the December 2017 quarter," said Ganesh Moorthy, President and Chief Operating Officer.

Mr. Moorthy added, "The integration of Microsemi with Microchip continues to progress at a rapid pace.  We are achieving synergies in the business units, sales, operations and support functions, while we relentlessly march toward the synergy targets we have outlined for our stockholders."

Eric Bjornholt, Microchip's Chief Financial Officer, said, "We paid down $377.5 million of total debt during the December quarter as we tightly managed our working capital requirements for the business.  During the September and December 2018 quarters combined, we have paid down $878.5 million of total debt.  We will continue to use substantially all of our excess cash generation after dividends to reduce the amount of debt on our balance sheet as quickly as possible."

Mr. Sanghi concluded, "Microchip, the semiconductor industry and the global economy have experienced a soft business environment from a variety of factors including trade tensions between the U.S. and China.  We continue to be cautious about the outlook for the March quarter.  We expect net sales for our products based on sell-in revenue recognition under the new GAAP standard to be between $1.251 billion and $1.403 billion in the March 2019 quarter.  Compared to our December quarter sell-in based GAAP revenue recognition, our March net sales would be up 2% to down 9% sequentially."

Microchip's Highlights for the Quarter Ended December 31, 2018:

• In partnership with Google Cloud, unveiled the AVR-IoT WG Development Board that combines a powerful AVR^® MCU, a CryptoAuthentication™ secure element IC and a fully certified Wi-Fi^® network controller to provide a simple and effective way to connect embedded applications.
   
• Announced the industry’s lowest-power LoRa^® System-in-Package (SiP) family, the SAM R34/35, combining an ultra-low-power 32-bit MCU, sub-GHz RF LoRa transceiver and software stack.
   
• Announced Intelligent Network Interface Controller networking (INICnet™) technology, the industry’s most efficient automotive infotainment networking solution that supports all data types, including audio, video, control and Ethernet, over a single cable.
   
• Unveiled the industry’s first RISC-V SoC Field Programmable Gate Array (FPGA) architecture, combining the industry's lowest power mid-range PolarFire™ FPGA family with a complete microprocessor subsystem based on the open, royalty-free RISC-V instruction set architecture (ISA).
   
• Introduced the industry’s smallest multi-output MEMS clock generator, the DSC613, offering up to 80 percent board space savings on timing components.
   
• Expanded portfolio of maXTouch^® touchscreen controllers with the introduction of the single-chip MXT2912TD-A and MXT2113TD-A for screens up to 20 inches in size, supporting thick cover lenses with multi-finger touch and addressing automotive functional safety requirements.
   
• Introduced the EMC181x family of five new 1.8V temperature sensors, featuring the industry’s smallest five-channel temperature sensor with standard lead spacing and system temperature rate-of-change reporting.
   
• Announced the MCP1811 linear Low Dropout (LDO) regulator, which extends battery life in portable devices up to four times longer than traditional ultra-low quiescent (Iq) LDOs.
   
• Announced the PolarFire FPGA burst mode receiver (BMR) solution, the first and only FPGA for 10G passive optical network optical line terminal implementation in compact form factor.
   
• Announced that AVR microcontrollers (MCUs) are beta supported with the release of MPLAB^® X Integrated Development Environment (IDE) version 5.05.
   
• Microchip’s ATmegaS64M1 AVR MCU received a platinum award in Military & Aerospace Electronics’ 2018 Technology Innovation Awards.
   
• Microchip’s SAMA5D2 System-on-Module (SOM) was selected as Electronics Products’ 2018 Product of the Year in the digital IC category.
   
• Microchip’s SAM L11 MCU won ‘Best Contributor to IoT Security’ in the 2018 Arm TechCon Innovation Awards.
   
• Microchip’s SAM L11 MCU was selected as the winner of the embedded computing category in WTWH Media’s inaugural Leadership in Engineering Achievement Program (LEAP) Awards.
   
• Microchip was once again included in the Phoenix Business Journal's annual Best Places to Work list in the extra-large company category.

Fourth Quarter Fiscal Year 2019 Outlook:

Beginning with the fiscal quarter ending March 31, 2019, we will be changing the information included in our financial guidance in response to comments from and discussions with the Staff of the Securities and Exchange Commission.  We will provide net sales guidance based on sell-in revenue recognition under the new GAAP standard.  We will also provide guidance and report non-GAAP gross margin percentage, operating expense percentage, operating profit percentages and diluted earnings per share based on sell-in GAAP revenue.  When we report our actual results we will also provide information on end-market demand so that investors will have information on the consumption in the marketplace of our products by our customers or our distributors.  We will not use end-market demand for any of our non-GAAP income statement calculations.  Please see "Use of End-Market Demand Metric" below for information on how we calculate end-market demand.

The following statements are based on current expectations.  These statements are forward-looking, and actual results may differ materially.  We are not able to predict whether inventory at our distributors will increase or decrease and are therefore providing a relatively broad range of GAAP net sales guidance.  In recent years, we have seen net inventory at our distributors increase or decrease by a significant amount in a single quarter.