Product category:
Power Supply ICs and Controllers
News Release from: Fairchild Semiconductor
Edited by the Electronicstalk Editorial
Team on 20 January 2006
2006 holds great promise for Fairchild
Fairchild Semiconductor has reported results for the fourth quarter and full year ended 25th December 2005.
Fairchild Semiconductor has reported results for the fourth quarter and full year ended 25th December 2005 Fairchild reported fourth quarter sales of $370.8 million, a 7% increase from the prior quarter and 2% lower than the fourth quarter of 2004
This article was originally published on Electronicstalk on 28 Feb 2001 at 8.00am (UK)
Related stories
Dual-output buffer for DDR SDRAM modules
Fairchild Semiconductor has introduced a dual-output registered buffer for 184-pin, 2.5V PC200/PC266, 72bit-wide registered double data rate (DDR) SDRAM modules.
Bus hold makes logic more predictable
Fairchild Semiconductor has made a number of additions to its LCX family, the logic industry standard for 3.3V applications.
Fairchild reported a fourth quarter net loss of $4.7 million or $0.04 per share compared with a net loss of $20.8 million or $0.17 per share in the prior quarter and net income of $15.8 million or $0.13 per diluted share in the fourth quarter of 2004.
Gross margin was 24.2%, 340 basis points higher sequentially and 140 basis points lower than in the fourth quarter of 2004.
Included in the net loss for the quarter was $14.5 million of tax expense related to the repatriation of foreign earnings under the American Jobs Creation Act of 2004.
Further reading
Controller and switch combine to cut PSU chipcount
New from Fairchild Semiconductor, the FSDH0165 power switch combines a voltage-mode PWM controller and SenseFET power switching element in a single 8-lead package.
PLL clock drivers target high-speed clocking
Two low voltage PLL clock drivers designed for use in high-speed memory clocking applications are now available from Fairchild Semiconductor.
MOSFET is ready for high-voltage car batteries
The new FDB06AN08A1 UltraFET trench MOSFET from Fairchild Semiconductor is designed for 42V automotive battery applications requiring full device capability at low gate drive voltages.
The company recorded $3.4 million of impairments for certain manufacturing assets in its Mountain Top, Pennsylvania fab and $1.3 million in restructuring charges primarily for employee severance.
Finally, the company recorded $17.6 million of net proceeds from the previously announced settlement of its lawsuit against Sumitomo Bakelite, as well as an increase of $6.9 million in its reserve for related customer claims, resulting in a $10.7 million favourable net impact for the quarter.
Fairchild reported fourth quarter pro forma net income of $13.6 million or $0.11 per diluted share, significantly better than the pro forma net loss of $3.0 million or $0.03 per share in the prior quarter and lower than the pro forma net income of $24.8 million or $0.21 per diluted share in the fourth quarter of 2004.
Pro forma net income (loss) excludes amortisation of acquisition-related intangibles, restructuring and impairments, litigation settlement proceeds, charges for potential settlement losses, impact of tax repatriation and other items.
Full year revenues for 2005 were $1425.1 million, a decrease of 11% compared with $1,603.1 million in 2004.
Fairchild reported a net loss of $241.2 million or $2.01 per share in 2005, compared with net income of $59.2 million or $0.48 per diluted share in 2004.
On a pro forma basis, the company reported 2005 net income of $20.9 million or $0.17 per diluted share, compared with $109.9 million or $0.89 per diluted share in 2004.
"We had a strong finish to 2005, a year of major transition for Fairchild, by delivering solid fourth quarter sales and gross margin growth", said Mark Thompson, Fairchild's President and CEO.
"During 2005, we improved the management of our distribution supply chain by focusing primarily on channel sell-through, which has helped us to reduce internal inventories by more than 20% and channel inventories about 16% compared with 2004".
"Our tighter management of the channel has allowed us to increase sell-through approximately 4% sequentially in the fourth quarter, to the highest level in more than four years".
"Inventories entering 2006 are now at or below our targets with internal inventories at about 9 weeks of supply and channel inventories at approximately 11 weeks".
"We also significantly reduced our capital expenditures during 2005 to $97 million, or slightly less than 7% of sales, well below the $190 million or 12% of sales we spent in 2004".
"We enter 2006 with great momentum and a clear strategy to succeed", explained Thompson.
"We're focused on improving gross margins by increasing the mix of our leadership new products while we use our lean capital budget to drive a disciplined approach to reduce the mix of our lower margin products".
"The recently announced sale of our lower margin LED lamps and display product line is also indicative of our commitment to divest, harvest or exit businesses that are noncore, and we expect to continue this effort in 2006".
"It's an exciting time at Fairchild as we enter the new year with a very lean supply chain, better channel management, compelling new products and a disciplined approach to improving our product mix".
"Sales were solid across all the end markets with particular strength in products supporting computing, consumer and industrial applications", said Thompson.
"Bookings outpaced even our strong sales growth during the fourth quarter driven by a combination of broad end market demand and longer lead times".
"In addition to higher order rates for products supporting notebook and desktop applications, bookings for products serving the display end market increased significantly".
"Order rates were strong for our products across virtually all segments of the consumer and industrial end markets".
"Booking levels in the other end markets were generally higher than a quarter ago".
"We won a number of key designs in a variety of fast growing end markets during the fourth quarter", stated Thompson.
"We more than doubled the order rate of our analogue switches in 2005 which resulted in record sales as we gained important designs in a variety of handset and ultraportable applications".
"We booked record demand for our highly energy efficient FPS power switches during the fourth quarter, driven in part by new design wins in battery charger, LCD monitor and television applications".
"Our latest integrated DC/DC convertors and high speed USB switches also won a number of handset designs during the quarter".
"We shipped our first micro-serdes units in the fourth quarter and are ramping this line of proprietary interface products targeted to clamshell and slider handset applications in 2006".
"We have 43 design wins to date at 20 separate handset and consumer electronics customers and expect to significantly increase this design-in base throughout 2006".
"We're building a solid line-up of new products that we expect will drive higher margins in the future".
"We delivered improved financial results on the strength of higher sales and a better product mix in the fourth quarter", said Thompson.
"Analogue sales were up more than 12% sequentially which helped to improve our overall product mix".
"This better mix, combined with lower depreciation expenses and higher factory utilisation, helped us to increase overall gross margins 340 basis points from the prior quarter".
"In our focus business, analogue and power products, gross margins were up a very solid 430 basis points to nearly 26%".
"During the fourth quarter we increased our cash and marketable investments to $545.9 million and generated $65.6 million in cash flow from operations", stated Thompson.
"We reduced internal inventories another $15.8 million and enter the new year with a very lean supply chain".
"Our full year results reflect the inventory correction in the industry and the significant actions we initiated within Fairchild to reduce inventories and improve our product mix", said Thompson.
"Even with sales down 11% in 2005 compared with 2004, we were still able to generate $150.7 million in cash flow from operations and reduce our debt, net of cash and marketable investments, to a record low $100.7 million".
"We expect first quarter revenues to increase 5-7% sequentially due to our higher starting backlog position and our return to shipping at levels more in line with end market demand", said Thompson.
"We forecast gross margins to increase another 200-300 basis points sequentially, exclusive of stock based compensation expense, as we benefit from the full effect of lower depreciation expense, higher factory utilisation and better product mix".
"Our fiscal calendar has 53 weeks in 2006 with the extra week falling in the first quarter".
"Our first quarter guidance also does not include any revenue from our recently divested LED lamp and display business, which was more than 2% of our fourth quarter 2005 sales, or about $8.0 million".
"Beginning in the first quarter of 2006, we are required to expense stock based compensation in accordance with Statement of Financial Accounting Standards (SFAS) No 123R Share Based Payment".
"We forecast this expense to be approximately $4.0-4.5 million in the first quarter of 2006".
"For our general guidance for the full year of 2006, we expect sales to grow at or above the market rate for our analogue and power businesses while our standard products will be roughly flat to down a few percent compared with 2005", stated Thompson.
"We remain committed to our gross margin improvement goals that have us reaching 30% in 2006 and mid-30% in 2007".
"We expect R and D and SG and A expenses, exclusive of stock based compensation expense, to increase slightly from the 2005 average of mid-19% of sales to a range of 19.5-20.0% of sales in 2006 due primarily to higher bonus accruals".
"We forecast capital spending to be in the 6-8% of sales range again in 2006".
"We also plan on the effective tax rate remaining at 25% for 2006.
Finally, we expect our stock based compensation expense to remain at roughly the same quarterly run rate as the first quarter throughout all of 2006".
"We made excellent progress in 2005 by improving our management of the distribution channel, reducing inventories throughout the supply chain and reducing our capital spending and ultimately depreciation expense", said Thompson.
"Our focus in 2006 is on improving our product mix, delivering more new leadership analogue and integrated power products while reducing our exposure to lower margin standard products".
"2006 holds great promise for Fairchild as we execute our clear strategy to improve the quality of our business and improve financial results".
• Fairchild Semiconductor: contact details and other news
• Email this article to a colleague
• Register for the free Electronicstalk email newsletter
• Electronicstalk Home Page
Search the Pro-Talk network of sites
