10-KPeriod: FY2009

ANALOG DEVICES INC Annual Report, Year Ended Oct 31, 2009

Filed November 24, 2009For Securities:ADI

Summary

Analog Devices Inc. (ADI) reported for the fiscal year ending October 30, 2009, a period significantly impacted by the global economic downturn. Revenue declined by 22% year-over-year to $2.01 billion, reflecting cautious customer spending across key markets like Industrial, Communications, and Consumer. Despite the revenue drop and a 52% decrease in diluted EPS from continuing operations to $0.85, the company maintained a solid gross margin of 55.5% and generated $432.1 million in cash flow from operations. ADI ended the fiscal year with a robust cash position of $1.816 billion, demonstrating resilience amidst challenging economic conditions. The company also continued its strategic focus on innovation, investing substantially in R&D, and initiated cost-reduction measures including facility consolidation.

Financial Highlights

33 data points
Beta

Revenue

$2.01B

55.5% Gross Margin

Net Income

$247.77M

12.3% Net Margin

EPS (Diluted)

$0.85

Free Cash Flow

$376.05M

Financial Statements
Beta
Revenue$2.01B
Cost of Revenue$896.27M
Gross Profit$1.12B
R&D Expenses$446.98M
SG&A Expenses$333.18M
Operating Expenses$833.82M
Operating Income$284.82M
Interest Expense$4.09M
Net Income$247.77M
EPS (Basic)$0.85
EPS (Diluted)$0.85
Shares Outstanding (Basic)291.38M
Shares Outstanding (Diluted)292.70M

Key Highlights

  • 1Revenue decreased by 22% to $2.01 billion in fiscal year 2009 compared to fiscal year 2008, primarily due to the global economic downturn impacting customer spending.
  • 2Diluted EPS from continuing operations fell by 52% to $0.85 in fiscal year 2009, reflecting the adverse economic conditions.
  • 3Gross margin remained strong at 55.5% in fiscal year 2009, though down from 61.1% in fiscal year 2008, impacted by lower sales and utilization variances.
  • 4Generated $432.1 million in cash flow from operations, indicating operational efficiency and strong cash generation capabilities.
  • 5Ended the fiscal year with $1.816 billion in cash, cash equivalents, and short-term investments, providing significant liquidity.
  • 6The Industrial segment remained the largest revenue contributor at 52% of total revenue, demonstrating its importance to ADI's business.
  • 7The company actively managed costs, including a decrease in R&D expenses by 16% and SMG&A expenses by 20% year-over-year, and initiated special charges related to facility consolidations and workforce reductions.

Frequently Asked Questions

The global economic crisis significantly impacted Analog Devices, leading to a 22% year-over-year decrease in revenue to $2.01 billion. This was driven by a broad-based decline in demand across all end markets, particularly Industrial and Consumer, as customers reduced spending. Consequently, the company saw a substantial drop in profitability, with diluted EPS from continuing operations falling by 52% to $0.85.

Analog Devices ended fiscal year 2009 with a strong liquidity position, reporting $1.816 billion in cash, cash equivalents, and short-term investments. This robust cash balance, supported by $432.1 million in cash flow from operations and net proceeds of $370.4 million from the issuance of senior unsecured notes, provided significant financial flexibility during the economic downturn.

The Industrial segment remained the largest contributor to revenue, accounting for 52% of the total in fiscal year 2009. The Communications segment represented 25% of revenue, and the Consumer segment accounted for 20%. The Computer segment contributed a smaller 3%. Despite the overall revenue decline, the Industrial segment's significant share highlights its continued importance to ADI's business.

In response to the challenging economic environment, Analog Devices implemented several cost management measures. These included a reduction in Research and Development expenses by 16% and Selling, Marketing, General, and Administrative (SMG&A) expenses by 20% year-over-year. The company also incurred special charges related to facility consolidations, including the closure of its Cambridge wafer fabrication facility, and workforce reductions aimed at optimizing its cost structure and improving operational leverage.