Fairchild Semiconductor Reports Results for the Second Quarter 2006
Fairchild Semiconductor announced results for the second quarter ended July 2, 2006. Fairchild reported second quarter sales of $406.3 million, a 1% decrease from the prior quarter and 17% more than the second quarter of 2005. Fairchild's second quarter returned to the normal 13 week duration compared to the first quarter of 2006 that included 14 weeks.
Fairchild reported second quarter net income of $23.0 million or $0.18 per diluted share compared to a net income of $26.6 million or $0.21 per diluted share in the prior quarter and a net loss of $205.3 million or $1.71 per share in the second quarter of 2005. Gross margin was 30.8%, 90 basis points higher sequentially and 10.9 percentage points higher than in the second quarter of 2005. Included in the second quarter 2006 results is $7.6 million in total equity-based compensation in accordance with Statement of Financial Accounting Standards (SFAS) No. 123(R) Share Based Payment.
Fairchild reported second quarter adjusted net income of $28.8 million or $0.23 per diluted share compared to adjusted net income of $25.6 million or $0.21 per diluted share in the prior quarter and an adjusted net loss of $2.2 million or $0.02 per share in the second quarter of 2005. Adjusted net income (loss) excludes amortization of acquisition-related intangibles, restructuring and impairments, net gain on the sale of the LED lamps and displays product line, associated net tax benefits of these items and other acquisition-related intangibles, the impact of reserving the deferred tax asset and other items. Adjusted results include equity-based compensation expense in 2006.
"We continued our steady improvement in gross margins and delivered significant year over year earnings growth during the second quarter," said Mark Thompson, Fairchild's president and CEO. "We increased our average daily sales rate by more than 6% sequentially in the second quarter, keeping in mind that we returned to a normal 13 week fiscal second quarter from the 14 week first quarter. Our gross margin improvement was a result of this higher daily sales rate and a richer product mix partially offset by increases in certain raw material costs."