01—Abstract
Summary
Summary of the 10-K filed November 22, 2010. Cited figures are marked; the original filing is the authoritative source.
Analog Devices, Inc. (ADI) reported strong financial performance in fiscal year 2010, marking a significant recovery from the prior year's economic downturn.
Revenue increased by 37% year-over-year, driven by a resurgence in demand across key end markets including industrial, automotive, consumer, and communications. The company's gross margin also saw a substantial improvement, rising from 55.5% in FY2009 to 65.2% in FY2010, reflecting increased sales volume, improved operating leverage, and cost-reduction initiatives. Net income from continuing operations more than doubled, reaching $711.2 milliona, with diluted EPS from continuing operations growing to $2.33.
ADI's robust cash flow from operations ($991.2 millionb) provided ample liquidity, supporting capital expenditures, dividend payments, and share repurchases. The company continued to invest heavily in R&D ($492.3 million) to maintain its technological leadership in analog, mixed-signal, and digital signal processing ICs.
The company's diversified end-market exposure proved beneficial, with industrial applications representing the largest segment at 46%c of revenue, followed by communications (22%) and consumer (19%). The company's strategic focus on high-performance products and markets that value innovation appears to be paying off, positioning it well for continued growth.
02—Key points
Key Highlights
- Revenue surged by 37% year-over-year to $2.76 billion, indicating a strong recovery from the 2009 downturn.
- Gross margin improved significantly to 65.2% from 55.5% in the prior year, driven by higher sales and cost efficiencies.
- Net income from continuing operations increased substantially to $711.2 million, with diluted EPS from continuing operations at $2.33.
- The industrial segment was the largest revenue contributor (46%), followed by communications (22%) and consumer (19%).
- The company generated robust operating cash flow of $991.2 million.
- Research and Development (R&D) spending increased to $492.3 million, reflecting continued investment in innovation.
- ADI continued its capital allocation strategy, paying dividends and repurchasing shares.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Analog Devices kept $0.26.
- Revenue$2.76B100.0%
- Cost of revenue−$962.1M34.8%
- Gross profit$1.80B65.2%
- Operating costs−$899.3M32.6%
- Operating income$900.1M32.6%
- Interest, other & tax−$188.0M6.8%
- Net income$712.1M25.8%
Where FY2010 revenue went
$2.76B- Cost of revenue: $962.1M, 35% of revenue
- Net income: $712.1M, 26% of revenue
- R&D: $492.3M, 18% of revenue
- SG&A: $390.6M, 14% of revenue
- Other operating costs: $16.5M, 0.6% of revenue
- Interest, other & tax: $188.0M, 6.8% of revenue
Kept 26% as net incomeOther operating costs $16.5M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed November 22, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $2.76B$2.01B | +37.1% |
| Cost of Revenue | $962.08M$896.27M | +7.3% |
| Gross Profit | $1.80B$1.12B | +60.9% |
| R&D Expenses | $492.31M$446.98M | +10.1% |
| SG&A Expenses | $390.56M$333.18M | +17.2% |
| Operating Expenses | $899.35M$833.82M | +7.9% |
| Operating Income | $900.07M$284.82M | +216.0% |
| Interest Expense | $10.43M$4.09M | +154.7% |
| Net Income | $712.08M$247.77M | +187.4% |
| EPS (Basic) | $2.39$0.85 | +181.2% |
| EPS (Diluted) | $2.33$0.85 | +174.1% |
| Shares Outstanding (Basic) | 297.39M291.38M | +2.1% |
| Shares Outstanding (Diluted) | 305.86M292.70M | +4.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of Analog Devices' revenue growth in fiscal year 2010?
The primary driver of Analog Devices' revenue growth in fiscal year 2010 was the broad-based resurgence in economic activity following the global credit and financial crisis. This led to increased demand across its key end markets, particularly industrial, automotive, consumer, and communications.
How did Analog Devices' profitability change from fiscal year 2009 to 2010?
Analog Devices saw a significant improvement in profitability. Gross margin increased from 55.5% to 65.2%, and net income from continuing operations more than doubled from $247.4 million in fiscal 2009 to $711.2 million in fiscal 2010. Diluted EPS from continuing operations grew from $0.85 to $2.33.
What is Analog Devices' strategy regarding research and development?
Analog Devices invests substantially in R&D, spending $492.3 million in fiscal 2010. The company's strategy focuses on building technical leadership in core technologies such as converters, amplifiers, RF, MEMS, power management, and DSP to drive innovation and maintain product leadership.
How does Analog Devices manage its sales through distributors?
Analog Devices sells a significant portion of its products through third-party distributors. The company defers revenue and cost of sales on these shipments until the distributors resell the products to their customers. Agreements with distributors allow for price adjustment credits and product returns to manage inventory.
06—Continue