Fairchild Reports Results for the Fourth Quarter and Full Year 2010
Fairchild Semiconductor announced results for the fourth quarter and full year ended December 26, 2010. Fairchild reported fourth quarter sales of $397.7 million, down 4% from the prior quarter and 12% higher than the fourth quarter of 2009.
Fairchild reported fourth quarter net income of $51.0 million or $0.40 per diluted share compared to $35.8 million or $0.28 per diluted share in the prior quarter and $13.1 million or $0.10 per diluted share in the fourth quarter of 2009. Gross margin was 37.0% compared to 36.4% in the prior quarter and 29.7% in the year ago quarter.
Fairchild reported fourth quarter adjusted gross margin of 37.1%, up 60 basis points sequentially and 680 basis points higher than in the fourth quarter of 2009. Adjusted gross margin excludes accelerated depreciation and inventory reserve releases related to fab closures. Adjusted net income was $57.3 million or $0.45 per diluted share, compared to $52.8 million or $0.42 per diluted share in the prior quarter and $29.9 million or $0.23 per diluted share in the fourth quarter of 2009. Adjusted net income excludes amortization of acquisition-related intangibles, restructuring and impairments, gain associated with debt buyback, net impairment/gain on equity investments, accelerated depreciation and inventory reserve releases related to fab closures, write-off of deferred financing fees, charge for litigation, and associated net tax impact of these items and other acquisition-related intangibles.
Full year revenues for 2010 were $1.6 billion, an increase of 35% compared to 2009. Fairchild reported net income of $153 million or $1.20 per diluted share in 2010, compared to a net loss of $60 million or $0.49 per share in 2009. On an adjusted basis, the company reported 2010 net income of $193 million or $1.51 per diluted share, compared to $1 million or $0.01 per diluted share in 2009.
"We increased adjusted gross margin% to a record high in the fourth quarter as we continued our steady improvement in product mix," said Mark Thompson, Fairchild’s Chairman, CEO and President. "We grew sales in our higher margin mobile power, switch and high performance MOSFET businesses targeted to the handset and tablet market. Our high voltage product sales also remained strong. We tightly controlled shipments into the distribution channel during the quarter to hold inventory roughly flat at 8 weeks which is the lowest level we have ever achieved exiting a year.
"For the full year 2010, we grew sales by 35% and increased adjusted gross margin by more than 10%age points compared to 2009. We generated record free cash flow of $175 million and paid off $152 million of our term loan to reduce our debt level to a record low $321 million. Our net cash and securities position at the end of 2010 was also a record high at $114 million. 2010 was a break out year for Fairchild and as our first quarter guidance indicates, we expect to build on this momentum in 2011."