Fairchild Semiconductor (NYSE: FCS), a leading global supplier
of high performance products that drive energy-efficiency, today
announced results for the first quarter ended March 29, 2009.
Fairchild reported first quarter sales of $223.3 million, down 30
percent from the prior quarter and 45 percent lower than the first
quarter of 2008.
Fairchild reported a first quarter net loss of $51.1 million or
$0.41 per share compared to a net loss of $218.1 million or $1.76
per share in the prior quarter and net income of $17.1 million or
$0.14 per diluted share in the first quarter of 2008. Included in
these results is a $6.7 million charge for restructuring and
impairments. Gross margin was 15.2 percent, down 11 percentage
points sequentially and 15 percentage points lower than in the
first quarter of 2008.
Fairchild reported a first quarter adjusted net loss of $40.1
million or $0.32 per share, compared to adjusted net income of $7.7
million or $0.06 per diluted share in the prior quarter and
adjusted net income of $23.2 million or $0.19 per diluted share in
the first quarter of 2008. Adjusted net income and loss excludes
amortization of acquisition-related intangibles, restructuring and
impairments, impairment of investments, goodwill impairment
charges, release of charges for potential litigation outcomes, and
associated net tax benefits of these items and other
acquisition-related intangibles.
�We significantly improved our inventory position while
recording solid growth in orders and backlog in the first quarter,�
said Mark Thompson, Fairchild�s president and CEO. �We aggressively
reduced inventory in our distribution channel which we believe will
enable us to increase sales closer to customer consumption levels
in Q2. We reduced costs across the company and expect the
structural changes made in the last two quarters to allow us to
maintain our current level of lower operating expenses going
forward. The manufacturing restructuring actions announced late
last month are also expected to drive solid gross margin
improvements over time. We believe our quick actions in this
business cycle to reduce costs and inventories will drive higher
cash flow and profits while positioning us well to capitalize on
future improvements in end market demand.�
End Markets and Channel Activity
�Our first quarter sales were well below customer consumption
levels as the industry worked through the current inventory
correction,� said Thompson. �The reduction in sales was broad-based
across all end markets. However, order rates improved during the
quarter and in the first weeks of Q2, enabling us to increase
backlog. Overall product pricing was down about 2 percent
sequentially which is slightly less favorable than prior quarters.
We maintained lead times within a stable range of 4 to 6 weeks
during the quarter.�
First Quarter Financials
�We aggressively managed costs, working capital and inventories
to increase our cash and securities from the prior quarter,� said
Mark Frey, Fairchild�s executive vice president and CFO. �As the
demand picture stabilized in Q1 we took decisive action to align
our cost structure to the current market. While some of these
additional cost reductions benefited the first quarter, most of the
favorable impact comes in Q2 and beyond. Gross margin decreased
from the prior quarter due primarily to lower factory loadings.
R&D and SG&A expenses were significantly lower than our
plan due to the additional structural changes announced in the
quarter. We reduced our internal inventory by nearly $25 million
and inventory in the distribution channel by approximately $50
million sequentially. We increased cash and securities from the
prior quarter to $387.3 million which reflected cash flow from
operations of $19.4 million and capital spending of $14.9
million.�
Current Status of Second Quarter Business
�Our scheduled backlog for the second quarter is approximately
$250 million which is about $45 million higher than this point a
quarter ago,� said Frey. �Included in this amount is more than $22
million of backlog that we booked in the first two and a half weeks
of this quarter. Similar to last quarter, given the still limited
demand visibility, we are not providing guidance comparable to what
we have historically given but we do want to share this backlog
data and our current view of the state of second quarter business.
Assuming we continue to record positive backlog fill consistent
with the current order patterns, we believe sales in the range of
$250 to $270 million are possible for the second quarter. For this
range of revenue, we anticipate gross margin to be between 21 and
24 percent. Our current cost reductions coupled with the latest
structural changes are expected to reset our R&D and SG&A
spending to a range of $67 to $69 million in Q2 and enable us to
maintain a level of less than $70 million per quarter in the second
half of 2009. Interest expense for the second quarter is expected
to be between $5.0 and $5.5 million while our tax expense is
anticipated to be around zero. We anticipate recording
approximately $15 million in charges in Q2 associated with
previously announced cost reduction actions of which about $3
million will be in cash. We expect to reach our target inventory
level in the distribution channel and continue to adjust internal
inventories lower in the second quarter, excluding strategic builds
required for previously announced fab closures. Capital spending is
expected to be approximately $60 million for all of 2009. As with
last quarter, we are not assuming any obligation to update this
information, although we may choose to do so before we announce
second quarter results.�
This press release includes references to adjusted net income
and loss (which excludes amortization of acquisition-related
intangibles, restructuring and impairments, impairments of
investments, goodwill impairment charges, release of charges for
potential litigation outcomes, associated net tax benefits of these
items and other acquisition-related intangibles), statements of
operations prepared in accordance with generally accepted
accounting principles (GAAP) (which include these items), and a
reconciliation from adjusted net income and loss to GAAP net income
and loss. GAAP and adjusted results both include equity based
compensation expense. Adjusted results are not meant as a
substitute for GAAP, but are included solely for informational and
comparative purposes. Fairchild presents adjusted results because
its management uses them as additional measures of the company�s
operating performance, and management believes adjusted financial
information is useful to investors because it illuminates
underlying operational trends by excluding significant
non-recurring, non-cash or otherwise unusual transactions.
Fairchild�s criteria for determining adjusted results may differ
from methods used by other companies, and should not be regarded as
a replacement for corresponding GAAP measures.
Special Note on Forward-Looking Statements:
Some of the paragraphs above, including the one headed �Current
Status of Second Quarter Business,� contain forward-looking
statements that are based on management�s assumptions and
expectations and involve risk and uncertainty. Other
forward-looking statements may also be found in this news release.
Forward-looking statements usually, but do not always contain
forward-looking terminology such as �we believe,� �we expect,� or
�we anticipate,� or refer to management�s expectations about
Fairchild�s future performance. Many factors could cause actual
results to differ materially from those expressed in
forward-looking statements. Among these factors are the following:
failure to maintain order rates at expected levels; failure to
achieve expected savings from cost reduction actions or other
adverse results from those actions; changes in demand for our
products; changes in inventories at our customers and distributors;
technological and product development risks, including the risks of
failing to maintain the right to use some technologies or failing
to adequately protect our own intellectual property against
misappropriation or infringement; availability of manufacturing
capacity; the risk of production delays; availability of raw
materials at competitive prices; competitors� actions; loss of key
customers, including but not limited to distributors; the inability
to attract and retain key management and other employees; order
cancellations or reduced bookings; changes in manufacturing yields
or output; risks related to warranty and product liability claims;
risks inherent in doing business internationally; changes in tax
regulations or the migration of profits from low tax jurisdictions
to higher tax jurisdictions; regulatory risks and significant
litigation. These and other risk factors are discussed in the
company�s quarterly and annual reports filed with the Securities
and Exchange Commission (SEC) and available at the Investor
Relations section of Fairchild Semiconductor�s web site at
investor.fairchildsemi.com or the SEC�s web site at
www.sec.gov.
About Fairchild Semiconductor:
Fairchild Semiconductor (NYSE: FCS) is a global leader
delivering energy-efficient power analog and power discrete
solutions. Fairchild is The Power Franchise�, providing
leading-edge silicon and packaging technologies, manufacturing
strength and system expertise for consumer, communications,
industrial, portable, computing and automotive systems. An
application-driven, solution-based semiconductor supplier,
Fairchild provides online design tools and design centers worldwide
as part of its comprehensive Global Power ResourceSM. Please
contact us on the web at www.fairchildsemi.com.
Fairchild Semiconductor International, Inc. Consolidated
Statements of Operations (In millions, except per share
amounts) (Unaudited) � � � � � Three Months Ended March
29, December 28, March 30,
2009 2008
2008 � Total revenue $ 223.3 $ 320.9 $ 406.3 Cost of
sales (1) �
189.3 � �
235.8 � �
283.8 � Gross margin �
34.0 � �
85.1 � �
122.5 � Gross margin % 15.2 %
26.5 % 30.2 % � Operating expenses: Research and development (2)
23.8 23.7 29.8 Selling, general and administrative (3) 44.7 44.3
60.1 Amortization of acquisition-related intangibles 5.5 5.5 5.6
Restructuring and impairments 6.7 15.9 0.2 Goodwill impairment
charge - 203.3 - Release for potential litigation outcomes, net �
- � �
(3.3 ) �
- � Total operating expenses �
80.7 � �
289.4 � �
95.7 � � Operating income
(loss) (46.7 ) (204.3 ) 26.8 Impairment of investments - 19.0 -
Other expense, net �
5.3 � �
6.2 � �
5.2 � Income (loss) before income taxes (52.0 ) (229.5
) 21.6 � Provision (benefit) for income taxes �
(0.9
) �
(11.4 ) �
4.5 � Net income (loss)
$
(51.1 ) $
(218.1 ) $ 17.1
� � Net income (loss) per common share: Basic
$
(0.41 ) $ (1.76
) $ 0.14 � Diluted
$ (0.41 ) $
(1.76 ) $ 0.14
� Weighted average common shares: Basic �
123.6 � �
123.6 � �
124.4 � Diluted �
123.6 � �
123.6 � �
125.1 �
� � (1) Equity compensation expense included in cost of sales $ 0.2
$ 0.9 $ 1.0 (2) Equity compensation expense included in research
and development $ 0.3 $ 0.9 $ 0.9 (3) Equity compensation expense
included in selling, general and administrative $ 2.1 $ 0.5 $ 5.0 �
� �
Fairchild Semiconductor International, Inc.
Reconciliation of Net Income (Loss) To Adjusted Net Income
(Loss) (In millions) (Unaudited) � Three Months
Ended March 29, December 28, March 30,
2009
2008 2008 � � Net income (loss) $ (51.1 )
$ (218.1 ) $ 17.1
Adjustments to reconcile net
income (loss) to adjusted net income (loss):
Restructuring and impairments 6.7 15.9 0.2 Impairment of
investments - 19.0 - Goodwill impairment charge - 203.3 - Release
for potential litigation outcomes, net - (3.3 ) - Amortization of
acquisition-related intangibles 5.5 5.5 5.6 Associated net tax
effects of the above and other acquisition-related intangibles �
(1.2 ) �
(14.6
) �
0.3 � Adjusted net income (loss)
$ (40.1 ) $
7.7 �
$ 23.2 � � Adjusted
net income (loss) per common share: Basic
$
(0.32 ) $ 0.06
�
$ 0.19 � Diluted
$
(0.32 ) $ 0.06
�
$ 0.19 � �
Adjusted net income (loss) and
adjusted net income (loss) per share should not be considered as
alternatives to net income (loss) and net income (loss) per share
or other measures of consolidated operations and cash flow data
prepared in accordance with accounting principles generally
accepted in the United States of America, as indicators of our
operating performance, or as alternatives to cash flow as a measure
of liquidity.
Fairchild Semiconductor International, Inc. Consolidated
Balance Sheets (In millions) (Unaudited) � � � �
� March 29, December 28,
2009 2008 �
ASSETS Current assets: Cash and cash equivalents $ 352.8 $
351.5 Short-term marketable securities 0.7 0.8 Receivables, net
112.5 155.6 Inventories 206.3 231.0 Other current assets �
37.3 �
40.0 Total current assets 709.6
778.9 � Property, plant and equipment, net 707.2 731.6 Intangible
assets, net 97.9 102.1 Goodwill 161.7 161.7 Long-term securities
33.8 34.6 Other assets �
40.6 �
40.9
Total assets
$ 1,750.8 $
1,849.8 �
LIABILITIES, TEMPORARY EQUITY AND
STOCKHOLDERS' EQUITY Current liabilities: Current portion of
long-term debt $ 5.3 $ 5.3 Accounts payable 71.2 94.4 Accrued
expenses and other current liabilities �
67.8 �
94.4 Total current liabilities 144.3 194.1 � Long-term
debt, less current portion 528.6 529.9 Other liabilities �
65.6 �
65.9 Total liabilities 738.5 789.9
� Temporary equity - deferred stock units 2.3 2.8 Total
stockholders' equity �
1,010.0 �
1,057.1
Total liabilities, temporary equity and stockholders' equity
$ 1,750.8 $
1,849.8 Fairchild Semiconductor International,
Inc. Condensed Consolidated Statements of Cash Flows
(In millions) (Unaudited) � � � � � � Three Months
Ended March 29, March 30,
2009 2008 Cash
flows from operating activities: Net income (loss) $ (51.1 ) $ 17.1
Adjustments to reconcile net
income (loss) to cash provided by operating activities:
Depreciation and amortization 37.6 33.1 Non-cash stock-based
compensation expense 2.6 6.9 Non-cash restructuring and impairments
expense 0.8 - Deferred income taxes, net (3.6 ) 1.4 Other 0.2 0.4
Changes in operating assets and
liabilities, net of acquisitions
�
32.9 � �
(20.5 ) Cash
provided by operating activities �
19.4 � �
38.4 � � Cash flows from investing activities: Capital
expenditures (14.9 ) (30.7 ) Purchase of marketable securities (0.2
) (3.5 ) Sale of marketable securities 0.3 5.0 Maturity of
marketable securities 0.1 0.1 Other (0.6 ) (0.3 )
Acquisitions
�
(1.5 ) �
- � Cash used in
investing activities �
(16.8 ) �
(29.4 ) � Cash flows from financing
activities: Repayment of long-term debt (1.3 ) (0.9 )
Proceeds from issuance of common
stock and from exercise of stock options, net
- 1.9 Purchase of treasury stock �
- � �
(2.0 ) Cash used in financing activities
�
(1.3 ) �
(1.0
) � Net change in cash and cash equivalents 1.3 8.0
Cash and cash equivalents at beginning of period �
351.5 � �
409.0 � Cash and cash
equivalents at end of period
$ 352.8 �
$ 417.0 �
Fairchild Semiconductor (NASDAQ:FCS)
Historical Stock Chart
From May 2024 to Jun 2024
Fairchild Semiconductor (NASDAQ:FCS)
Historical Stock Chart
From Jun 2023 to Jun 2024