MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(in thousands except per share amounts and percentages)

(Unaudited)

RECONCILIATION OF GAAP NET SALES TO NON-GAAP NET SALES

Three months ended

June 30,

2015

2014

Net sales, as reported

$

533,952

$

528,876

Distributor revenue recognition adjustment

—

2,469

Non-GAAP net sales

$

533,952

$

531,345

RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT

Three months ended

June 30,

2015

2014

Gross profit, as reported

$

309,017

$

306,519

Distributor revenue recognition adjustment, net of product cost

—

1,362

Share-based compensation expense

1,657

2,055

Acquisition-related restructuring and acquired inventory valuation costs

543

7,811

Non-GAAP gross profit

$

311,217

$

317,747

Non-GAAP gross profit percentage

58.3

%

59.8

%

RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES

Three months ended

June 30,

2015

2014

Research and development expenses, as reported

$

84,680

$

84,370

Share-based compensation expense

(7,098)

(6,309)

Non-GAAP research and development expenses

$

77,582

$

78,061

Non-GAAP research and development expenses as a percentage of net sales

14.5

%

14.7

%

RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Three months ended

June 30,

2015

2014

Selling, general and administrative expenses, as reported

$

66,849

$

69,255

Share-based compensation expense

(5,357)

(4,957)

Acquisition-related costs

(2,174)

(936)

Non-GAAP selling, general and administrative expenses

$

59,318

$

63,362

Non-GAAP selling, general and administrative expenses as a percentage of net sales

11.1

%

11.9

%

RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

Three months ended

June 30,

2015

2014

Operating expenses, as reported

$

187,698

$

190,573

Share-based compensation expense

(12,455)

(11,266)

Acquisition-related costs

(2,174)

(936)

Amortization of acquired intangible assets

(34,612)

(36,644)

Special charges, net

(1,557)

(304)

Non-GAAP operating expenses

$

136,900

$

141,423

Non-GAAP operating expenses as a percentage of net sales

25.6

%

26.6

%

RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME

Three months ended

June 30,

2015

2014

Operating income, as reported

$

121,319

$

115,946

Distributor revenue recognition adjustment

—

1,362

Share-based compensation expense

14,112

13,321

Acquisition-related restructuring, acquired inventory valuation and other costs

2,717

8,747

Amortization of acquired intangible assets

34,612

36,644

Special charges, net

1,557

304

Non-GAAP operating income

$

174,317

$

176,324

Non-GAAP operating income as a percentage of net sales

32.6

%

33.2

%

RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER EXPENSE, NET

Three months ended

June 30,

2015

2014

Other expense, net, as reported

$

(1,577)

$

(8,923)

Gain on equity securities and equity method investment

(16,064)

—

Non-cash other expense, net

11,812

2,365

Non-GAAP other expense, net

$

(5,829)

$

(6,558)

Non-GAAP other expense, net, as a percentage of net sales

(1.1)%

(1.2)%

RECONCILIATION OF GAAP INCOME TAX (BENEFIT) PROVISION TO NON-GAAP INCOME TAX PROVISION

Three months ended

June 30,

2015

2014

Income tax (benefit) provision, as reported

$

(10,895)

$

17,082

Income tax rate, as reported

(9.1)%

16.0

%

Distributor revenue recognition adjustment

—

375

Share-based compensation expense

3,532

1,420

Acquisition-related restructuring, acquired inventory valuation costs, intangible asset amortization and other costs

3,038

2,696

Special charges, net

415

113

Non-cash other expense, net

4,388

879

Non-recurring tax events

18,723

(4,465)

Non-GAAP income tax provision

$

19,201

$

18,100

Non-GAAP income tax rate

11.4

%

10.7

%

RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO MICROCHIP TECHNOLOGY AND GAAP DILUTED NET INCOME PER COMMON SHARE ATTRIBUTABLE TO MICROCHIP TECHNOLOGY STOCKHOLDERS TO NON-GAAP NET INCOME ATTRIBUTABLE TO MICROCHIP TECHNOLOGY AND NON-GAAP DILUTED NET INCOME PER COMMON SHARE ATTRIBUTABLE TO MICROCHIP TECHNOLOGY STOCKHOLDERS

Three months ended

June 30,

2015

2014

Net income attributable to Microchip Technology, as reported

$

130,667

$

89,909

Noncontrolling interests

(375)

—

Distributor revenue recognition adjustment, net of tax effect

—

987

Share-based compensation expense, net of tax effect

10,580

11,901

Acquisition-related restructuring, acquired inventory valuation costs, intangible asset amortization and other costs, net of tax effect

34,291

42,695

Special charges, net of tax effect

1,142

191

Gain on equity securities and equity method investment

(16,064)

—

Non-cash other expense, net of tax effect

7,424

1,486

Non-recurring tax events

(18,723)

4,465

Non-GAAP net income attributable to Microchip Technology

$

148,942

$

151,634

Non-GAAP net income attributable to Microchip Technology as a percentage of net sales

27.9

%

28.5

%

Diluted net income per common share attributable to Microchip Technology stockholders, as reported

$

0.60

$

0.40

Non-GAAP diluted net income per common share attributable to Microchip Technology stockholders

$

0.69

$

0.68

Diluted common shares outstanding, as reported

216,767

224,527

Diluted common shares outstanding Non-GAAP

216,253

223,889