Fairchild Semiconductor announced results for the first quarter ended March 27, 2011. Fairchild reported first quarter sales of $413 million, up 4% from the prior quarter and 9% higher than the first quarter of 2010.
Fairchild reported first quarter net income of $43.5 million or $0.33 per diluted share compared to $51.0 million or $0.40 per diluted share in the prior quarter and $22.6 million or $0.18 per diluted share in the first quarter of 2010. Gross margin was 36.8% compared to 37.0% in the prior quarter and 32.2% in the year ago quarter.
Fairchild reported first quarter adjusted gross margin of 36.9%, down 20 basis points sequentially and 440 basis points higher than in the first quarter of 2010. Adjusted gross margin excludes accelerated depreciation and inventory reserve releases related to fab closures. Adjusted net income was $51.3 million or $0.39 per diluted share, compared to $57.3 million or $0.45 per diluted share in the prior quarter and $31.8 million or $0.25 per diluted share in the first quarter of 2010. Adjusted net income excludes amortization of acquisition-related intangibles, restructuring and impairments, accelerated depreciation and inventory reserve releases related to fab closures, and associated net tax impact of these items and other acquisition-related intangibles.
"We got off to great start for 2011 by delivering strong sales growth and gross margin at the high end of expectations," said Mark Thompson, Fairchild’s Chairman, CEO and president. "We grew PCIA sales 9% sequentially due to the capacity additions we made to support strong demand from industrial, automotive, appliance and alternative energy customers. We have excellent backlog visibility in this business and continue to add capacity to support our customers’ requirements. We posted 1% sequential sales growth in our MCCC business which is particularly notable given normal end market seasonality and the weakness seen in the computing and consumer segments. MCCC sales growth was driven by further share gains in smart phones, tablets and consumer applications. Our standard product sales were down sequentially as we continue to shift capacity to higher margin business. Our core businesses, which now drive 90% of our total sales, are growing well and we expect to continue this trend as we enter what is typically the highest demand quarters of the year."
"Gross margin came in at the high end of expectations due to further progress on improving product mix and higher factory utilization," said Mark Frey, Fairchild’s executive vice president and CFO. "R&D and SG&A expenses were $92 million which was favorable to our guidance range due to lower payroll and variable compensation expenses. Adjusted tax expense was $7.8 million or 13% of adjusted income before taxes. We generated $22.4 million of free cash flow during the quarter and paid $17 million to acquire a silicon carbide power transistor company. At the end of the quarter, total cash and securities exceeded our debt by a record $136.8 million. We increased internal inventory dollars by 4% to hold our days of inventory flat with the prior quarter."
