Fairchild Reports Results For Fourth Quarter & Full Year 2008
Fairchild Semiconductor announced results for the fourth quarter and full year ended December 28, 2008. Fairchild reported fourth quarter sales of $320.9 million, down 25.1% from the prior quarter and 25.7% lower than the fourth quarter of 2007. Gross margin was 26.5%, 340 basis points lower sequentially and 480 basis points less than in the fourth quarter of 2007.
Fourth quarter net loss was $218.1 million or $1.76 per share, compared to net income of $26.7 million or $0.21 per diluted share in the prior quarter and net income of $34.0 million or $0.27 per diluted share in the fourth quarter of 2007.
Included in this net loss are a $203.3 million non-cash goodwill impairment charge, a $19.0 million non-cash impairment of auction rate securities and a $15.9 million charge related to previously announced restructuring actions of which $4.5 million are non-cash asset impairments. In addition, we revised our estimates relating to potential litigation outcomes and released $3.3 million of reserves.
The company reported fourth quarter adjusted net income of $7.7 million or $0.06 per diluted share, compared to adjusted net income of $34.0 million or $0.27 per diluted share in the prior quarter and adjusted net income of $41.8 million or $0.33 per diluted share in the fourth quarter of 2007. Adjusted net income excludes amortization of acquisition-related intangibles, restructuring and asset impairment charges, impairment of investments, goodwill impairments, purchased in-process research and development, charges or releases for potential litigation outcomes, acquisition-related purchase accounting charges, net loss on the sale of product lines, costs associated with the redemption of debt, associated net tax effects of these items and other acquisition-related intangibles and effects of finalized tax filings and positions.
Full year revenues for 2008 were $1.574 billion, a decrease of 5.7% compared to $1.670 billion in 2007. Net loss for the year was $167.4 million or $1.35 per share, compared to net income of $64.0 million or $0.51 per diluted share in 2007. On an adjusted basis, the company reported 2008 net income of $86.4 million or $0.69 per diluted share, compared to $113.7 million or $0.90 per diluted share in 2007.
"We responded quickly to the broad-based reduction in orders during the fourth quarter to effectively manage our supply chain and to reduce costs," said Mark Thompson, President and CEO. "Total supply chain inventories were roughly flat in dollars to the prior quarter. We reduced internal inventory by about $2 million by lowering factory loadings through shutdowns of as much as two weeks during the quarter. Inventory of our products in the distribution channel increased less than $2 million from the prior quarter.
"We accelerated a number of streamlining actions that will significantly reduce our costs while preserving our ability to respond rapidly to future improvements in demand," said Thompson. "We are encouraged by the recent stabilization of order rates in January and we are now building backlog for Q1. Fairchild is committed to taking advantage of this market to speed improvements and to build a higher value business. We have a strong balance sheet today and expect to maintain this strength throughout 2009."