10-KPeriod: FY2009

MICROCHIP TECHNOLOGY INC Annual Report, Year Ended Mar 31, 2009

Filed May 29, 2009For Securities:MCHPMCHPP

Summary

Microchip Technology Inc. (MCHP) filed its 2009 Form 10-K highlighting its position as a leading developer and manufacturer of specialized semiconductor products for embedded control applications. The company's diverse product portfolio includes microcontrollers, digital signal controllers, analog and interface devices, and memory products, serving key markets such as automotive, communications, computing, consumer, and industrial control. Despite a challenging economic environment in fiscal year 2009, evidenced by a decline in net sales, Microchip demonstrated resilience. The company's strategy to focus on cost-effective, high-performance embedded control solutions, coupled with its integrated manufacturing capabilities, positioned it to navigate the downturn. The report also details the company's financial performance, operational strategies, and risk factors, including the impact of global economic conditions and competition within the semiconductor industry.

Financial Highlights

52 data points
Beta

Revenue

$903.30M

57.2% Gross Margin

Net Income

$245.59M

27.2% Net Margin

EPS (Diluted)

$0.66

Total Assets

$2.41B

Cash & Equivalents

$446.33M

Free Cash Flow

$308.65M

Financial Statements
Beta
Revenue$903.30M
Cost of Revenue$386.79M
Gross Profit$516.50M
R&D Expenses$115.52M
SG&A Expenses$161.22M
Operating Expenses$283.18M
Operating Income$233.33M
Interest Expense$29.44M
Net Income$245.59M
EPS (Basic)$0.67
EPS (Diluted)$0.66
Shares Outstanding (Basic)366.32M
Shares Outstanding (Diluted)373.58M

Key Highlights

  • 1Microchip Technology Inc. is a significant player in the embedded control semiconductor market, offering a broad range of microcontrollers and related products.
  • 2The company experienced a decline in net sales in fiscal year 2009, primarily attributed to adverse global economic conditions impacting its key end markets.
  • 3Microchip maintains a strong focus on proprietary design and manufacturing processes, which contribute to cost-effectiveness and rapid product development.
  • 4A substantial portion of Microchip's revenue (approximately 64%) is generated through distributors, underscoring the importance of this sales channel.
  • 5The company operates its own wafer fabrication and assembly/test facilities, providing significant manufacturing control and cost advantages.
  • 6R&D expenses remained substantial, reflecting a commitment to new product development and process technology enhancements.
  • 7The company has experienced increased interest expense due to the issuance of convertible debentures in December 2007.

Frequently Asked Questions

The primary challenge for Microchip in fiscal year 2009 was the adverse impact of deteriorating global economic conditions across its key end markets, which led to a decline in net sales and reduced manufacturing capacity utilization.

Microchip generates its sales through a combination of direct sales personnel and a network of distributors. In fiscal year 2009, approximately 64% of net sales were derived through distributors, with the remaining 36% from direct sales.

Microchip's strategy involves focusing on cost-effective embedded control solutions with high performance, leveraging proprietary design and manufacturing processes, investing in research and development for new products and technologies, and maintaining integrated manufacturing operations for cost control and rapid cycle times.

Microchip significantly increased its long-term debt with the issuance of $1.15 billion in 2.125% junior subordinated convertible debentures in December 2007. This increased interest expense in fiscal year 2009.