MICROCHIP TECHNOLOGY INCMCHP
MICROCHIP TECHNOLOGY INC Debt Disclosure
Debt
Debt obligations included in the consolidated balance sheets consisted of the following (in millions)(1):
| Coupon Interest Rate | Effective Interest Rate | ||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Commercial Paper | $ | 349.0 | $ | 175.0 | |||||||||||||||||||
4.250% 2025 Notes(2) | 4.250% | 4.6% | — | 1,200.0 | |||||||||||||||||||
4.900% 2028 Notes(2) | 4.900% | 5.1% | 1,000.0 | 1,000.0 | |||||||||||||||||||
5.050% 2029 Notes(2) | 5.050% | 5.2% | 1,000.0 | 1,000.0 | |||||||||||||||||||
5.050% 2030 Notes(2) | 5.050% | 5.2% | 1,000.0 | 1,000.0 | |||||||||||||||||||
Total Senior Indebtedness(3) | 3,349.0 | 4,375.0 | |||||||||||||||||||||
| 2017 Senior Convertible Debt | 1.625% | 1.8% | 37.9 | 38.0 | |||||||||||||||||||
| 2024 Senior Convertible Debt | 0.750% | 1.0% | 1,250.0 | 1,250.0 | |||||||||||||||||||
| 2026 Senior Convertible Debt | 0.000% | 0.5% | 900.0 | — | |||||||||||||||||||
| Total Convertible Debt | 2,187.9 | 1,288.0 | |||||||||||||||||||||
| Gross long-term debt including current maturities | 5,536.9 | 5,663.0 | |||||||||||||||||||||
Less: Debt discount(4) | (9.3) | (13.1) | |||||||||||||||||||||
Less: Debt issuance costs(5) | (31.2) | (19.5) | |||||||||||||||||||||
| Net long-term debt including current maturities | 5,496.4 | 5,630.4 | |||||||||||||||||||||
Less: Current maturities(6) | — | — | |||||||||||||||||||||
| Net long-term debt | $ | 5,496.4 | $ | 5,630.4 | |||||||||||||||||||
(1) The Company had no outstanding borrowings under the Revolving Credit Facility at March 31, 2026 and at March 31, 2025.
(2) The 4.250% 2025 Notes matured on September 1, 2025 and prior to maturity interest accrued at a rate of 4.250% per annum, payable semi-annually in arrears on March 1 and September 1 of each year. The 4.900% 2028 Notes mature on March 15, 2028 and interest accrues at a rate of 4.900% per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The 5.050% 2029 Notes mature on March 15, 2029 and interest accrues at a rate of 5.050% per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The 5.050% 2030 Notes mature on February 15, 2030 and interest accrues at a rate of 5.050% per annum, payable semi-annually in arrears on February 15 and August 15 of each year.
(3) All outstanding Senior Notes and the Revolving Credit Facility are senior unsecured debt.
(4) The unamortized discount consists of the following (in millions):
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Commercial Paper | $ | (0.5) | $ | (0.1) | |||||||
| 4.250% 2025 Notes | — | (1.3) | |||||||||
| 4.900% 2028 Notes | (2.2) | (3.3) | |||||||||
| 5.050% 2029 Notes | (3.3) | (4.3) | |||||||||
| 5.050% 2030 Notes | (3.3) | (4.1) | |||||||||
| Total unamortized discount | $ | (9.3) | $ | (13.1) | |||||||
(5) Debt issuance costs consist of the following (in millions):
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| 4.250% 2025 Notes | $ | — | $ | (0.2) | |||||||
| 4.900% 2028 Notes | (1.1) | (1.7) | |||||||||
| 5.050% 2029 Notes | (1.2) | (1.8) | |||||||||
| 5.050% 2030 Notes | (1.4) | (1.7) | |||||||||
| 2017 Senior Convertible Debt | — | (0.1) | |||||||||
| 2024 Senior Convertible Debt | (11.4) | (14.0) | |||||||||
| 2026 Senior Convertible Debt | (16.1) | — | |||||||||
| Total debt issuance costs | $ | (31.2) | $ | (19.5) | |||||||
(6) As of March 31, 2026, the outstanding Commercial Paper which matures within the three months ending June 30, 2026, and the 2017 Senior Convertible Debt which is convertible and which matures on February 15, 2027, 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 and settle the principal portion of its Convertible Debt upon conversion on a long-term basis. As of March 31, 2025, the outstanding Commercial Paper which matured within the three months ending June 30, 2025, and the 4.250% 2025 Notes which matured on September 1, 2025, 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.
Expected maturities relating to the Company’s debt obligations based on the contractual maturity dates as of March 31, 2026, are as follows (in millions):
| Fiscal year ending March 31, | Amount | |||||||
| 2027 | $ | 386.9 | ||||||
| 2028 | 1,000.0 | |||||||
| 2029 | 1,000.0 | |||||||
| 2030 | 1,900.0 | |||||||
| 2031 | 1,250.0 | |||||||
| Thereafter | — | |||||||
| Total | $ | 5,536.9 | ||||||
Ranking of Convertible Debt - Each series of Convertible Debt is an unsecured obligation. The 2017 Senior Convertible Debt is subordinated in right of payment to the amounts outstanding under the Company's Senior Indebtedness, the 2024 Senior Convertible Debt and the 2026 Senior Convertible Debt. The 2024 Senior Convertible Debt and the 2026 Senior Convertible Debt 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 2024 Senior Convertible Debt and the 2026 Senior Convertible Debt; and the Convertible Debt ranks junior in right of payment to any of the Company's secured and 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 - Upon conversion, we are required to satisfy our conversion obligation with respect to such converted Convertible Debt by delivering cash equal to the principal amount of such converted Convertible Debt and
cash and shares of common stock or any combination, at our option, with respect to any conversion value in excess thereof. Each series of Convertible Debt is convertible 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 addition, if at the time of conversion our 2017 Senior Convertible Notes, the price of the Company's common stock exceeds the conversion price for such notes, the 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 2017 Senior Convertible Notes, and as adjusted for cash dividends paid since the issuance of such series. However, in no event will the conversion rate for the 2017 Senior Convertible Notes exceed the maximum conversion rate specified in the indenture (see table below).
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 March 31, 2026 | |||||||||||||||||||||||
| Conversion Rate | Approximate Conversion Price | Incremental Share Factor | Maximum Conversion Rate | ||||||||||||||||||||
2017 Senior Convertible Debt(1) | 23.5081 | $ | 42.54 | 11.7550 | 33.4991 | ||||||||||||||||||
2024 Senior Convertible Debt(1) | 8.2102 | $ | 121.80 | — | 10.4679 | ||||||||||||||||||
2026 Senior Convertible Debt(1) | 9.5993 | $ | 104.17 | — | 13.4390 | ||||||||||||||||||
(1) As of March 31, 2026, the 2024 Senior Convertible Debt and the 2026 Senior Convertible Debt were not convertible. As of March 31, 2026, the holders of the 2017 Senior Convertible Debt have the right to convert their notes between April 1, 2026 and June 30, 2026 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 March 31, 2026.
With the exception of the 2024 Senior Convertible Debt, which may be redeemed by the Company on or after June 5, 2027, and the 2026 Senior Convertible Debt, which may be redeemed by the Company on or after February 20, 2029, 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. 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.
Additionally, holders of the 2024 Senior Convertible Debt may require the Company to purchase all or a portion of their 2024 Senior Convertible Debt for cash at a price equal to 100% of the principal amount plus any accrued and unpaid interest if, prior to the close of business on the immediately preceding business day immediately preceding June 1, 2027, the last reported sale price of our common stock is less than the applicable conversion price of the 2024 Senior Convertible Debt. The holders of the 2026 Senior Convertible Debt may require the Company to purchase all or a portion of their 2026 Senior Convertible Debt for cash at a price equal to 100% of the principal amount plus any accrued and unpaid interest if, prior to the close of business on the immediately preceding business day immediately preceding February 15, 2029, the last reported sale price of our common stock is less than the applicable conversion price of the 2026 Senior Convertible Debt.
Interest expense consists of the following (in millions):
| Fiscal Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Debt issuance cost amortization | $ | 2.5 | $ | 3.6 | $ | 4.5 | |||||||||||
| Debt discount amortization | 27.2 | 64.8 | 37.5 | ||||||||||||||
| Interest expense | 174.0 | 172.2 | 147.3 | ||||||||||||||
| Total interest expense on Senior Indebtedness | 203.7 | 240.6 | 189.3 | ||||||||||||||
| Debt issuance cost amortization | 3.4 | 4.2 | 2.8 | ||||||||||||||
| Coupon interest expense | 10.0 | 8.9 | 1.7 | ||||||||||||||
| Total interest expense on Convertible Debt | 13.4 | 13.1 | 4.5 | ||||||||||||||
| Other interest expense | 4.2 | 5.5 | 4.5 | ||||||||||||||
| Total interest expense | $ | 221.3 | $ | 259.2 | $ | 198.3 | |||||||||||
The Company's debt settlement transactions consist of the following (in millions):
| Principal Amount Settled | Total Cash Consideration | Net Loss on Inducements and Settlements | |||||||||||||||
September 2025(1) | |||||||||||||||||
| 4.250% 2025 Notes | $ | 1,200.0 | $ | 1,200.0 | $ | — | |||||||||||
March 2025(2) | |||||||||||||||||
| Revolving Credit Facility | $ | — | $ | — | $ | 1.4 | |||||||||||
February 2025(3) | |||||||||||||||||
| 2015 Senior Convertible Debt | $ | 0.4 | $ | 0.4 | $ | — | |||||||||||
December 2024(4) | |||||||||||||||||
| 2025 Term Loan Facility | $ | 750.0 | $ | 750.0 | $ | 0.3 | |||||||||||
November 2024(5) | |||||||||||||||||
| 2020 Senior Convertible Debt | $ | 665.5 | $ | 665.5 | $ | — | |||||||||||
September 2024(5) | |||||||||||||||||
| 0.983% 2024 Notes | $ | 1,000.0 | $ | 1,000.0 | $ | — | |||||||||||
February 2024(6) | |||||||||||||||||
| 0.972% 2024 Notes | $ | 1,400.0 | $ | 1,400.0 | $ | — | |||||||||||
September 2023(7) | |||||||||||||||||
| 2.670% 2023 Notes | $ | 1,000.0 | $ | 1,000.0 | $ | — | |||||||||||
August 2023(8) | |||||||||||||||||
| 2017 Senior Convertible Debt | $ | 18.2 | $ | 42.7 | $ | 3.1 | |||||||||||
June 2023(9) | |||||||||||||||||
| 4.333% 2023 Notes | $ | 1,000.0 | $ | 1,000.0 | $ | — | |||||||||||
May 2023(8) | |||||||||||||||||
| 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 proceeds from the issuance of Commercial Paper and cash generated from operations to finance such settlement.
(2) In connection with the amendment and restatement of its Credit Agreement, the Company recognized a loss on settlement of debt of $1.4 million.
(3) The Company used cash generated from operations to finance a portion of such settlement.
(4) The Company used proceeds from the issuance of 4.900% 2028 Notes and 5.050% 2030 Notes to finance such settlement.
(5) The Company used proceeds from the issuance of Commercial Paper to finance such settlement.
(6) The Company used proceeds from the issuance of Commercial Paper and borrowings under its Revolving Credit Facility to finance such settlement.
(7) The Company used borrowings under its 2025 Term Loan Facility and its Revolving Credit Facility to finance the settlement.
(8) The Company settled portions of its convertible debt in privately negotiated transactions that are accounted for as induced conversions.
(9) The Company used borrowings under its Revolving Credit Facility to finance a portion of such settlement.
Convertible Debt
In February 2026, the Company issued $900.0 million aggregate principal amount of 2026 Senior Convertible Debt and incurred issuance costs of $16.6 million. The 2026 Senior Convertible Debt will mature on February 15, 2030 unless redeemed, repurchased or converted.
In connection with the issuance of the 2026 Senior Convertible Debt, the Company entered into capped call option transactions with several financial institutions at a cost of $68.0 million. The capped call options cover, subject to anti-dilution adjustments, the number of shares of the Company's common stock initially underlying the 2026 Senior Convertible Debt. Upon conversion of the 2026 Senior Convertible Debt, the Company may exercise the capped call options subject to a cap price of $148.82 per share, subject to certain adjustments under the terms of the capped call options, which are generally expected to reduce the potential dilution to the Company's common stock upon conversion of the 2026 Senior Convertible Debt and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2026 Senior Convertible Debt. Upon conversion of the 2026 Senior Convertible Debt, there will be no economic dilution from the 2026 Senior Convertible Debt until the average market price of the Company's common stock exceeds the cap price of $148.82 per share as the exercise of the capped call options will offset any dilution from the 2026 Senior Convertible Debt from the conversion price up to the cap price. As these transactions meet certain accounting criteria, the capped call options are recorded as a reduction of stockholders' equity and are not accounted for as derivatives.
In May 2024, the Company issued $1.25 billion aggregate principal amount of 2024 Senior Convertible Debt and incurred issuance costs of $16.5 million. Interest on the 2024 Senior Convertible Debt is payable semi-annually in arrears on June 1 and December 1. The 2024 Senior Convertible Debt will mature on June 1, 2030 unless redeemed, repurchased or converted.
In connection with the issuance of the 2024 Senior Convertible Debt, the Company entered into capped call option transactions with several financial institutions at a cost of $105.0 million. The capped call options cover, subject to anti-dilution adjustments, the number of shares of the Company's common stock initially underlying the 2024 Senior Convertible Debt. Upon conversion of the 2024 Senior Convertible Debt, the Company may exercise the capped call options subject to a cap price of $167.23 per share, subject to certain adjustments under the terms of the capped call options, which are generally expected to reduce the potential dilution to the Company's common stock upon conversion of the 2024 Senior Convertible Debt and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2024 Senior Convertible Debt. Upon conversion of the 2024 Senior Convertible Debt, there will be no economic dilution from the 2024 Senior Convertible Debt until the average market price of the Company's common stock exceeds the cap price of $167.23 per share as the exercise of the capped call options will offset any dilution from the 2024 Senior Convertible Debt from the conversion price up to the cap price. As these transactions meet certain accounting criteria, the capped call options are recorded as a reduction of stockholders' equity and are not accounted for as derivatives.
Senior Credit Facilities
In March 2025, the Company entered into a Second Amended and Restated Credit Agreement pursuant to which the Amended and Restated Credit Agreement, dated as of December 16, 2021, 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 in addition to certain other sublimit loans that terminates on March 25, 2030. The Credit Agreement also permits the Company, subject to certain conditions, to add one or more incremental term loan facilities and/or increase the revolving loan commitments up to $1.00 billion subject, in each case, to the receipt of additional commitments from existing and/or new lenders and pro forma compliance with the financial covenants as set forth in the Second Amended and Restated Credit Agreement.
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.
The revolving loans bear interest, at the Company’s option, at the base rate plus a spread of 0.00% to 0.50%, an adjusted daily simple SOFR rate (or SONIA rate in the case of loans denominated in pounds sterling) plus a spread of 0.875% to 1.50%, or an adjusted term SOFR or adjusted EURIBOR rate (based on one, three or six-month interest periods) plus a spread of 0.875% to 1.50%, in each case, with such spread being determined based on the credit ratings for certain of the Company’s senior, unsecured debt. The base rate means the highest of the prime rate, the federal funds rate plus a margin equal to 0.50% and the adjusted term SOFR rate for a one-month interest period plus a margin equal to 1.00%. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three-month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted term SOFR or adjusted EURIBOR rates.
The Company's obligations under the Second Amended and Restated Credit Agreement are guaranteed by certain of its subsidiaries meeting materiality thresholds. The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries' ability to, among other things, incur subsidiary indebtedness, grant liens, merge or consolidate, dispose of substantially all assets of the Company and its subsidiaries, taken as a whole, make investments, make acquisitions, enter into certain transactions with affiliates, pay dividends or make distributions, repurchase stock and enter into restrictive agreements, in each case subject to customary exceptions for a credit facility of this size and type. Upon satisfaction of certain conditions specified in the Second Amended and Restated Credit Agreement and at the Company's election, certain of such negative covenants in the Second Amended and Restated Credit Agreement shall no longer apply. The Company is also required to maintain compliance with a total leverage ratio and an interest coverage ratio, all measured quarterly and calculated on a consolidated basis. As of March 31, 2026, the Company was in compliance with these financial covenants.
Commercial Paper
In September 2023, the Company established a Commercial Paper program under which the Company may issue short-term unsecured promissory notes 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. Pursuant to the Credit Agreement, the maximum principal amount outstanding at any time under the Commercial Paper program is $2.25 billion. The Company's intention is to reduce the amounts that would otherwise be available to borrow under the Company's Revolving Credit Facility by the outstanding amount of Commercial Paper. As of March 31, 2026, the Company had $349.0 million of Commercial Paper outstanding. The weighted-average interest rate of the Company's outstanding Commercial Paper was 4.01% as of March 31, 2026.
Senior Notes
The Company may, at its option, redeem some or all of the applicable series of Senior Notes in the manner set forth in the indenture governing the applicable series of Senior Notes. If the Company experiences a specific change of control triggering event set forth in the indenture governing the applicable series of Senior Notes, the Company must offer to repurchase each of the notes of such series at a price equal to 101% of the principal amount of each of the notes of such series repurchased, plus accrued and unpaid interest, if any, but excluding, the repurchase date.
Each indenture governing the applicable series of Senior Notes contain certain customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries' ability to, among other things, create or incur certain liens, and enter into sale and leaseback transactions, and consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets, to another person. These covenants are subject to a number of limitations and exceptions set forth in the indenture governing the applicable series of Senior Notes.
Each series of Senior Notes is guaranteed by certain of the Company's subsidiaries that have also guaranteed the obligation under the Second Amended and Restated Credit Agreement and the Company's existing Senior Indebtedness. In the future, each subsidiary of the Company that is a guarantor or other obligor of the Second Amended and Restated Credit Agreement is required to guarantee each series of Senior Notes.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 21, 2026 | Showing above |
| 2025 | May 23, 2025 | |
| 2018 | May 18, 2018 | |
| 2017 | May 30, 2017 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.