In attendance with me today are Steve Sanghi, Microchip's President and CEO; Ganesh Moorthy, Microchip's COO; and Gordon Parnell, Vice President of Business Development and Investor Relations. I will comment on our first quarter of fiscal year 2013 financial performance, and Steve and Ganesh will then give their comments on the results, discuss the current business environments and discuss our guidance. We will then provide an update on our acquisition of SMSC and be available to respond to specific investor and analyst questions.Before I jump into the details, I want to remind you that we are including information in our press release and this conference call on various GAAP and non-GAAP measures. We have posted the full GAAP to non-GAAP reconciliation on the Investor Relations page of our website at www.microchip.com, which we believe you will find useful when comparing GAAP to non-GAAP results. I will now go through some of the operating results, including net sales, gross margin and operating expenses. I will be referring to these results on a non-GAAP basis, prior to the effects of our acquisition activities and share-based compensations. Non-GAAP net sales in the June quarter were $352.4 million and were up 4% from net sales of $338.9 million in the immediately preceding quarter. Non-GAAP net sales were about $250,000 higher than GAAP net sales as GAAP does not recognize revenue on the sell-through of products sitting in the distribution channel on the date of an acquisition. This $250K difference relates to our April acquisition of Roving Networks. We expect we will have larger differences in the coming quarters in our GAAP and non-GAAP net sales due to the acquisition of SMSC. On a non-GAAP basis, gross margins were 59% in the June quarter and non-GAAP operating expenses were 26.3% of sales. Operating income was 32.7% of sales and net income was $96.9 million. This resulted in earnings of $0.48 per diluted share, which was at the midpoint of our guidance.
On a full GAAP basis, net sales were $352.1 million and gross margins, including share-based compensations and acquisition-related expenses, were 57.7% in the June quarter. Total operating expenses were $106.7 million or 30.3% of sales and includes share-based compensations of $8.7 million and acquisition-related expenses of $5.5 million. GAAP net income was $78.7 million or $0.39 per diluted share.In the June quarter, the non-GAAP tax rate was 13.3% and the GAAP tax rate was 13.4%. The tax rate was impacted by the mix of geographical profits, withholding taxes associated with our licensing business and the tax effect of various non-recurring items. We expect our forward-looking effective tax rate with the combination of Microchip and SMSC on a non-GAAP basis to be about 13% to 14%. And I remind you that this is without any benefit from the R&D tax credit, which has currently expired and has not yet been reinstated. To summarize the after-tax impact the non-GAAP adjustments had on Microchip's earnings per share in the June quarter, share-based compensation was about $0.043. Acquisition-related items were about $0.04 and noncash interest expense was about $0.006. The dividend declared today of $0.3501 per share will be paid on September 5, 2012 to shareholders of record on August 22, 2012. The cash payment associated with this dividend will be approximately $68.2 million. Moving on to the balance sheet. Microchip's inventory at June 30, 2012, was $221.5 million or 136 days, down 1 day from the prior-quarter levels. Inventory at our distributors continue to be at historically low levels at 31 days, flat to the prior quarter. I want to remind you that our distribution revenues throughout the world is recognized on a sell-through basis. Read the rest of this transcript for free on seekingalpha.com