Fairchild Semiconductor Reports Results for the Second Quarter of 2007
Fairchild Semiconductor announced results for the second quarter ended July 1, 2007. Fairchild reported second quarter sales of $408.9 million, up 2% from the prior quarter and 1% higher than the second quarter of 2006.
Fairchild reported second quarter net income of $3.4 million or $0.03 per diluted share compared to net income of $6.3 million or $0.05 per diluted share in the prior quarter and a net income of $23.0 million or $0.18 per diluted share in the second quarter of 2006. Gross margin was 28.0%, 30 basis points higher sequentially and 280 basis points lower than in the second quarter of 2006.
Included in the second quarter results were $5.5 million of restructuring and impairment charges related to the consolidation of offices, closing a small facility in Asia as well as some asset impairments in our factories, $1.7 million for potential settlement losses, and $1.6 million of purchase accounting charges related to the acquisition of System General. Excluding this purchase accounting charge, gross margin was 28.4%.
Fairchild reported second quarter adjusted net income of $17.7 million or $0.14 per diluted share, compared to adjusted net income of $20.1 million or $0.16 per diluted share in the prior quarter and adjusted net income of $28.8 million or $0.23 per diluted share in the second quarter of 2006. Adjusted net income excludes amortization of acquisition-related intangibles, purchase accounting charges and in-process R&D related to the acquisition of System General, restructuring and impairments, reserves for potential settlement losses, 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, and certain discrete tax benefits and charges.
"Order rates for the second quarter were up over the prior quarter which helped us to increase sales sequentially and to build a higher starting backlog position for the third quarter," said Mark Thompson, Fairchild’s President and CEO. "We maintained internal and channel inventories within our target range and are managing our output to hold inventories in the third quarter at or below the current levels. We begin the third quarter with a healthy backlog position which reflects our customers’ expectations for higher sell-through and end-market demand in the second half of 2007. This seasonal demand strength and our corresponding higher factory loadings, coupled with our improving mix and new product design wins, should help us to deliver solid sequential sales and margin growth in the current cycle."