Fairchild Semiconductor announced results for the fourth quarter and full year 2015 ended December 27, 2015. Fairchild reported fourth quarter sales of $317.2 million, down 7 percent from the prior quarter and 6 percent from the fourth quarter of 2014. Fairchild reported a fourth quarter net loss of $7.1 million or $0.06 per diluted share compared to a net loss of $8.2 million or $0.07 per diluted share in the prior quarter and a net loss of $42.7 million or $0.36 per diluted share in the fourth quarter of 2014. Gross margin was 33.1 percent compared to 33.6 percent in the prior quarter and 31.0 percent in the year-ago quarter.
Fairchild reported fourth quarter adjusted gross margin of 33.0 percent, down 110 basis points from the prior quarter and 60 basis points higher than the fourth quarter of 2014. Adjusted gross margin excludes accelerated depreciation and inventory write-offs related to factory closures. Adjusted net income was $12.7 million or $0.11 per diluted share, compared to $23.3 million or $0.20 per diluted share in the prior quarter and $11.9 million or $0.10 per diluted share in the fourth quarter of 2014. See the Reconciliation of Net Income (Loss) to Adjusted Net Income exhibit included in this press release for more details on the other adjustment items.
Full year revenue for 2015 was $1.37 billion, 4% lower than 2014. Fairchild reported a net loss of $15.1 million or $0.13 per diluted share in 2015, compared to a net loss of $35.2 million or $0.29 per diluted share in 2014. Adjusted net income for 2015 was $63.2 million or $0.54 per diluted share, compared to $76.4 million or $0.62 per diluted share in 2014.
“While fourth quarter sales were lower than expected, distributors ordered less than they consumed resulting in a moderate sequential reduction in channel inventory,†said Mark Thompson, Fairchild’s chairman, president and CEO. “Our fourth quarter guidance assumed channel inventories would remain flat sequentially, so the total demand was in the middle of our original estimate range. This lower channel inventory level positions us very well as we enter 2016. Order rates were stable with book to bill near parity for the fourth quarter.
“Sales of our products serving the automotive end market were up strongly during the fourth quarter and grew 9 percent in 2015. Demand from the enterprise computing and telecom sector also remained solid during the quarter and finished the year with good momentum. The industrial, appliance and consumer end markets were weaker than expected, especially in Greater China. Mobile end market demand also was lower sequentially due to inventory reductions and normal product cycle dynamics. Mobile sales were lower for the full year as demand from a large mobile customer decreased significantly in the second half and was partially offset by rising sales and content at two other large mobile accounts. Looking forward, our order rates have improved in January and we are well positioned to deliver seasonal sales growth in the first quarter,†Thompson concluded.
“Adjusted gross margin decreased sequentially but was in the middle of our guidance range due primarily to lower factory loadings in the prior quarter,†said Mark Frey, Fairchild’s executive vice president and CFO. “R&D and SG&A expenses were down 3 percent sequentially to $86 million due to the impact of the cost reduction program announced in the third quarter of 2015. Free cash flow was $37 million for the fourth quarter. For the full year 2015, we repurchased 5.8 million shares of our stock for $96 million to end the year with total cash and securities exceeding our debt by $83 million.â€
