Fairchild Reports Results For Third Quarter Of 2008
Fairchild Semiconductor announced results for the third quarter ended September 28, 2008. Fairchild reported third quarter sales of $428.3 million, up 2.3% from the prior quarter and 0.4% higher than the third quarter of 2007.
Fairchild reported third quarter net income of $26.7 million or $0.21 per diluted share compared to net income of $6.9 million or $0.05 per diluted share in the prior quarter and net income of $20.3 million or $0.16 per diluted share in the third quarter of 2007. Included in these results is a $1.8 million charge for restructuring and impairments primarily related to streamlining of warehouse operations. Gross margin was 29.9%, 130 basis points higher sequentially and 40 basis points lower than in the third quarter of 2007.
Fairchild reported third quarter adjusted net income of $34.0 million or $0.27 per diluted share, compared to adjusted net income of $21.5 million or $0.17 per diluted share in the prior quarter and adjusted net income of $34.1 million or $0.27 per diluted share in the third quarter of 2007. Adjusted net income excludes amortization of acquisition-related intangibles, loss on the sale of a product line, restructuring and impairments, purchased in-process research and development, charges for potential litigation outcomes, System General purchase accounting charges, costs associated with the redemption of convertible debt, associated net tax benefits of these items and other acquisition-related intangibles, and tax benefits from finalized tax filings and positions.
"We grew sales sequentially in the third quarter following a healthy increase in the second quarter," said Mark Thompson, Fairchild’s President and CEO. "We benefited from record sales of our high frequency voltage regulators, analog switches and IntelliMAX™ load switches for handset applications as well as analog video filters targeted to the consumer electronics market. Our new products continue to gain traction with leading customers and we expect to continue this momentum through 2009."
"We posted sales and margin growth even as we further reduced internal inventory," said Mark Frey, Fairchild’s Executive Vice President and CFO. "We reduced internal inventory more than $7 million sequentially giving us one of the leanest supply chains in the industry. Gross margin was 29.9%, up 130 basis points from the prior quarter due to higher factory loadings, cost decreases related to product insourcing, lower material costs, and favorable currency exchange rates in Asia. R&D and SG&A expenses were significantly better than our plan due to strong cost management. Cash and marketable securities decreased $17.0 million to $419.3 million in the third quarter which reflected cash flow from operations of $48.9 million, capital spending of $44.5 million and net stock purchases of $12 million."