Product category:
Power Supply ICs and Controllers
News Release from: Fairchild Semiconductor
Edited by the Electronicstalk Editorial
Team on 24 July 2006
Fairchild reports steady progress
Fairchild Semiconductor has announced results for the second quarter ended 2nd July 2006.
Fairchild Semiconductor has announced results for the second quarter ended 2nd July 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
This article was originally published on Electronicstalk on 28 Feb 2001 at 8.00am (UK)
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Fairchild's second quarter returned to the normal 13 week duration compared with 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 with 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% higher than in the second quarter of 2005.
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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 Share Based Payment.
Fairchild reported second quarter adjusted net income of $28.8 million or $0.23 per diluted share compared with 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 amortisation 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".
"Sales and order rates were solid in most end markets with particular strength in products supporting industrial applications", said Thompson.
"Demand remains healthy and we enter the second half of 2006 with a strong backlog position".
"I'm particularly pleased with our growth in channel sell-through", stated Thompson.
"Channel resales were up more than 3% sequentially in the second quarter and 9% higher than a year ago".
"We tightly controlled our sales into the channel to track this increase in re-sales, which allowed us to hold channel inventory flat from the prior quarter at about 11 weeks of supply".
"Overall blended utilisation rates remained roughly at our target levels during the second quarter", stated Thompson.
"We continue to selectively add capacity to support growth and to maintain more stable lead times for higher margin analogue and functional power products".
"Lead times did increase a few weeks during the middle of the quarter, but we were able to manage them back down to the 10 to 12 week range by the end of the second quarter".
"Good gross margin performance and disciplined spending allowed us to expand operating margins and earnings during the second quarter", said Mark Frey, Fairchild's Executive Vice President and CFO.
"R and D and SG and A spending were roughly flat with the prior quarter as increased equity compensation and salary expense offset the impact of fewer days in the quarter".
"The combination of higher margins and controlled spending enabled us to deliver a very healthy 13% sequential increase in second quarter adjusted earnings".
"Turning to the balance sheet, internal inventories increased in line with our higher shipping rate, leaving weeks of supply roughly flat with the prior quarter at about 10 weeks", stated Frey.
"During the quarter we generated $62.9 million in cash from operations, paid off $50 million in debt and favourably refinanced our credit facility, leaving us with $522.9 million in cash and marketable securities at the end of the second quarter".
"We expect third quarter revenues to be roughly flat and gross margins to be flat to up 50 basis points sequentially", said Frey.
"We have more than 90% of our guided sales booked and scheduled to ship within the quarter so we're comfortable with our guidance for what is typically a seasonally slower quarter".
"We expect R and D and SG and A spending, including equity-based compensation, to remain at about 21.0% to 21.5% of sales for the third quarter".
"Equity-based compensation expense is expected to be between $6 million to $7 million and we expect the effective tax rate to be approximately 15% in the third quarter".
"The transition to higher value continues and Fairchild is committed to delivering financial results that reflect our leadership position in the fast-growing power management market", stated Frey.
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