10-KPeriod: FY2008

MICROCHIP TECHNOLOGY INC Annual Report, Year Ended Mar 31, 2008

Filed May 28, 2008For Securities:MCHPMCHPP

Summary

Microchip Technology Inc. (MCHP) filed its 2008 Form 10-K, reporting net sales of $1,035.7 million for the fiscal year ended March 31, 2008. While sales saw a slight decrease of 0.4% compared to the previous year, this was largely attributed to adverse economic conditions impacting key markets. The company maintains a strong focus on embedded control solutions, with microcontrollers forming the largest segment of its business, representing 80.4% of net sales. Microchip's strategy emphasizes proprietary product development and cost-effective manufacturing through owned facilities. The company also highlights its commitment to research and development, investing $120.9 million in fiscal year 2008. Despite macroeconomic headwinds, Microchip demonstrated resilience with stable gross margins around 60% and continued dividend payments to shareholders, alongside significant share repurchase activity in fiscal year 2008.

Financial Highlights

31 data points
Beta

Revenue

$1.04B

60.3% Gross Margin

Net Income

$296.79M

28.7% Net Margin

EPS (Diluted)

$0.70

Cash & Equivalents

$487.74M

Free Cash Flow

$447.31M

Financial Statements
Beta
Revenue$1.04B
Cost of Revenue$410.80M
Gross Profit$624.94M
R&D Expenses$120.86M
SG&A Expenses$175.65M
Operating Expenses$323.27M
Operating Income$301.67M
Interest Expense$9.49M
Net Income$296.79M
EPS (Basic)$0.71
EPS (Diluted)$0.70
Shares Outstanding (Basic)414.44M
Shares Outstanding (Diluted)424.10M

Key Highlights

  • 1Net sales for fiscal year 2008 were $1,035.7 million, a slight decrease of 0.4% from fiscal year 2007, primarily due to adverse economic conditions.
  • 2Microcontrollers represented the largest portion of net sales at 80.4% ($832.9 million) in fiscal year 2008.
  • 3The company reported a gross profit of $624.9 million, with gross profit as a percentage of sales stable at 60.3%.
  • 4Research and Development (R&D) expenses increased to $120.9 million (11.7% of sales) in fiscal year 2008, reflecting continued investment in product development.
  • 5Microchip demonstrated a strong commitment to returning capital to shareholders, with total cash dividends paid of $252.0 million in fiscal year 2008 and significant share repurchases.
  • 6The company owns a significant portion of its manufacturing facilities, including wafer fabrication plants, which is a key element of its cost control strategy.
  • 7A substantial portion of net sales (75% in fiscal year 2008) are derived from foreign customers, primarily in Asia and Europe.

Frequently Asked Questions

Microcontrollers were the primary revenue driver, accounting for approximately 80.4% of total net sales in fiscal year 2008. Memory products and analog and interface products made up the remaining significant portions.

Adverse economic conditions, particularly in the housing and consumer markets, were cited as the primary reason for the slight decrease in net sales for fiscal year 2008 compared to the prior year. This also impacted sales to customers in these markets.

Microchip's strategy includes owning a significant portion of its manufacturing resources, such as wafer fabrication facilities and assembly/test operations. This allows for high manufacturing control, cost efficiency, and shorter design/production cycles.

Microchip focuses on proprietary product development, particularly in microcontrollers and analog/interface products, to maintain pricing stability. The company also invests significantly in R&D to introduce new products with enhanced features and aims for cost reductions through advanced manufacturing processes.