business profile
MEMC is a global leader in the manufacture and sale of wafers and related products to the semiconductor and solar industries. Wafers are literally the foundation upon which virtually all of the world’s semiconductors and solar cells are built. Those products, in turn, are the building blocks for the $1 trillion electronics market (cell phones, computers, PDAs, CD/DVD players, satellite and automotive electronics, etc.) and the $18 billion solar cell/module market (rooftop, solar farms, consumer lighting, etc.). MEMC has been a pioneer in the design and development of wafer technologies over the past 50 years, and operates facilities in the U.S., Europe and Asia Pacific. MEMC’s common stock is listed on the New York Stock Exchange under the symbol ‘WFR’ and is included in S&P 500 Index.
2008 Highlights
- Crossed the $2 billion mark in total revenue for the first time, and achieved the $1 billion milestone in sales to the solar market;
- Increased gross operating profit dollars while maintaining associated margin levels greater than 50% and 42%, respectively;
- Continued to generate strong cash flows with operating and free cash flow (operating cash flow minus capital expenditures) of 32% and 17% of sales, respectively;
- Increased polysilicon capacity to 8,000 metric tons per year and 300 millimeter wafer capacity to approximately 450,000 wafers per month; and
- Grew cash and investment balances1 to over $1.4 billion, while repurchasing $321 million worth of shares under our stock repurchase program and maintaining virtually no debt.
Financial highlights
(in millions, except per share amounts)
| Year ended December 31, | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | CAGR |
| Net Sales | $2,004.5 | $1,921.8 | $1,540.6 | $1,107.4 | $1,028.0 | $781.1 | 21% |
| Gross Margin | 1,004.8 | 1,000.5 | 689.0 | 366.5 | 369.4 | 232.8 | 34% |
| Operating Income | 853.2 | 849.9 | 558.3 | 257.0 | 260.5 | 142.6 | 43% |
| Net Income (GAAP)* | 387.4 | 826.2 | 369.3 | 249.4 | 226.2 | 116.6 | 27% |
| Net Income (non-GAAP, excluding warrants)* |
743.7 | 753.9 | 456.6 | 214.8 | 165.5 | 130.8 | 42% |
| EPS (GAAP) | 1.69 | 3.56 | 1.61 | 1.10 | 1.02 | 0.53 | 26% |
| EPS (non-GAAP, excluding warrants) | 3.25 | 3.25 | 1.99 | 0.95 | 0.74 | 0.63 | 39% |
| Cash Flows from Operating Activities | 640.5 | 917.2 | 527.8 | 321.0 | 258.0 | 98.7 | 45% |
| Free Cash Flow2 | 337.3 | 640.8 | 379.4 | 158.3 | 112.2 | 31.3 | 61% |
| Net Cash Per Share3 | 6.17 | 5.58 | 2.40 | 0.44 | (0.30) | 0.00 | |
| Return on Assets4 | 26% | 32% | 31% | 20% | 19% | 20% |
| 1. | Cash and investments in this annual report refers to cash, cash equivalents and short- and long-term investments. | ||||||
| 2. | Cash flows from operating activities minus capital expenditures. | ||||||
| 3. | Cash, cash equivalents and investments minus debt, per share. | ||||||
| 4. | Non-GAAP net income divided by average of beginning and ending total assets, excluding warrant benefit/impact. | ||||||
| * | Please see non-GAAP reconciliation table on page 56 of the 2008 Annual Report. Compound Annual Growth Rate (CAGR) calculated using 2003-2008 data shown. | ||||||
SEMICONDUCTOR
• ~$11B Wafer Market
• Steady Long-Term Growth
• CAGR > 10% Since ’77
Wafers are the foundation upon which semiconductors are built. These semiconductors, in turn, power the $1 trillion electronics market. Because of the advancements in technology and the worldwide proliferation of electronic devices over the last 30 years, the semiconductor wafer industry has shipped, on average, approximately 10% more units every year, growing in tandem with semiconductor device shipments. These wafers are adding increasing value to device makers and can help them reduce their costs while also allowing them to improve the devices they build by holding more memory, performing faster or having longer battery life. In order to enable these advancements, industry leaders need to have asset-efficient strategies to generate the cash to invest in next-generation technologies. On this score, in recent years, MEMC has been unmatched. Due to these industry dynamics, over the years, the number of suppliers in the industry has been reduced from dozens before 1990 to about six today.
SOLAR
• ~$8B Wafer Market
• Fast Growth
• CAGR > 40% Since ’99
Similar to semiconductor applications, silicon wafers are also the foundation for most solar cells. These solar cells are grouped together to form solar modules. According to the National Renewable Energy Laboratory, the amount of solar energy hitting the earth in less than one day is greater than the energy represented by all of the crude oil remaining in the ground. Yet, less than 1% of the energy we use comes from this clean, renewable energy source because the cost is not always competitive with the cost of buying from the local power utility. Enter MEMC. Our cost-efficient, vertically integrated position enables us to offer customers pricing road maps that could allow them to achieve grid parity without government subsidies. In 2008, which was only our second year selling solar wafers, our sales of wafers and related products to this industry exceeded $1 billion.
Click here for a PDF of the 2009 MEMC Corporate Fact Sheet.