10-KPeriod: FY2019

ANALOG DEVICES INC Annual Report, Year Ended Nov 2, 2019

Filed November 26, 2019For Securities:ADI

Summary

Analog Devices, Inc. (ADI) reported revenues of $5.99 billion for the fiscal year ended November 2, 2019, a decrease of 4% compared to the prior year. This revenue decline was primarily driven by weaker demand across most end markets, particularly consumer and automotive, and the impact of having one less operational week in fiscal 2019 compared to fiscal 2018. Net income also saw a decrease of 10% to $1.36 billion, resulting in diluted earnings per share of $3.65. Despite the revenue dip, ADI maintained a strong gross margin of 67.0%. The company continued to invest in research and development, with R&D expenses representing 18.9% of revenue, reflecting its commitment to innovation in high-performance analog and digital signal processing technologies. ADI's diversified end-market exposure, with Industrial accounting for 50% of revenue, continues to be a core strength, although all segments experienced some decline in fiscal 2019.

Financial Highlights

54 data points
Beta

Revenue

$5.99B

67.0% Gross Margin

Net Income

$1.36B

22.8% Net Margin

Total Assets

$21.39B

Cash & Equivalents

$648.32M

Free Cash Flow

$1.98B

Financial Statements
Beta
Revenue$5.99B
Cost of Revenue$1.98B
Gross Profit$4.01B
R&D Expenses$1.13B
SG&A Expenses$648.09M
Operating Expenses$2.30B
Operating Income$1.71B
Interest Expense$229.07M
Net Income$1.36B
Shares Outstanding (Basic)369.13M
Shares Outstanding (Diluted)372.87M

Key Highlights

  • 1Revenue decreased by 4% to $5.99 billion in fiscal 2019, primarily due to decreased demand in the consumer and automotive sectors and one less operational week compared to fiscal 2018.
  • 2Net income decreased by 10% to $1.36 billion, with diluted EPS falling to $3.65 from $4.00 in the prior year.
  • 3Gross margin remained strong at 67.0%, although slightly down from 68.3% in fiscal 2018, impacted by lower factory utilization and an inventory write-down.
  • 4The Industrial sector remained the largest revenue contributor at 50%, despite a 4% year-over-year decline.
  • 5The company continued significant investment in R&D, accounting for 18.9% of revenue, underscoring its focus on technological innovation.
  • 6Stock repurchases continued, with $1.56 billion worth of shares bought back in the last quarter of fiscal 2019.
  • 7The company reported $648.3 million in cash and cash equivalents at the end of fiscal 2019.

Frequently Asked Questions

The revenue decrease of 4% to $5.99 billion in fiscal 2019 was primarily attributed to a broad-based decline in demand across key end markets, particularly in the consumer and automotive sectors. Additionally, fiscal 2019 had one less operational week compared to fiscal 2018, which also impacted the overall revenue.

The acquisition of Linear Technology Corporation, completed in March 2017, continues to contribute to ADI's product portfolio and market presence. While the text does not isolate the specific impact of Linear in fiscal 2019, the acquisition significantly boosted revenue in fiscal 2018 compared to 2017. The integration of Linear's high-performance analog capabilities remains a strategic pillar for ADI.

As of November 2, 2019, Analog Devices had $648.3 million in cash and cash equivalents. The company also had $5.5 billion in outstanding debt. Management expressed confidence that existing liquidity and cash generated from operations would be sufficient to fund operations, capital expenditures, R&D, and dividends for at least the next twelve months.

Analog Devices views R&D as critical for future growth and maintaining product leadership. In fiscal 2019, R&D expenses were $1.13 billion, representing 18.9% of revenue. The company indicated it expects to continue making significant R&D investments to develop innovative technologies and processes for new products.