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Fairchild Semiconductor Reports Results For The Third Quarter 2012

Stocks in this article: FCS

Fairchild Semiconductor (NYSE: FCS), the leading global supplier of power semiconductors, today announced results for the third quarter ended September 30, 2012. Fairchild reported third quarter sales of $358.8 million, down 1 percent from the prior quarter and 11 percent lower than the third quarter of 2011. Third quarter revenue includes approximately a $3 million insurance recovery related to the Thailand flooding which was included in the original assumptions for third quarter guidance.

Fairchild reported third quarter net income of $24.7 million or $0.19 per diluted share compared to $11.9 million or $0.09 per diluted share in the prior quarter and $35.8 million or $0.28 per diluted share in the third quarter of 2011. Gross margin was 33.5 percent compared to 32.6 percent in the prior quarter and 35.9 percent in the year-ago quarter.

Adjusted net income was $32.3 million or $0.25 per diluted share, compared to $17.6 million or $0.14 per diluted share in the prior quarter and $44.5 million or $0.34 per diluted share in the third quarter of 2011. Adjusted net income excludes amortization of acquisition-related intangibles, restructuring and impairments, accelerated depreciation related to fab closures, write off of deferred financing fees, charges for litigation and associated net tax effects of these items and other acquisition-related intangibles.

“As expected, we posted solid sequential sales growth for mobile products,” said Mark Thompson, Fairchild’s chairman and CEO. “Offsetting the mobile growth was incremental weakness in other end markets, especially computing, where we were also more selective in accepting commodity notebook-related business. We under-shipped consumption in the distribution channel by about $8 million as we continue to aggressively control inventories during this uncertain economic time. If we had shipped in line with distribution sell through, sales would have been up sequentially in the third quarter.”

Third Quarter Financials

“Gross margin increased 1 point sequentially due primarily to a richer product mix and lower variable compensation,” said Mark Frey, Fairchild’s executive vice president and CFO. “R&D and SG&A expenses were $85.8 million which was significantly better than guidance due to spending controls and the reversal of variable compensation expenses accrued in prior quarters. Free cash flow was a negative $17.5 million due to increases in accounts receivable and capital expenditures. We increased internal inventory dollars slightly to support higher mobile demand.”

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