Fairchild Semiconductor Reports Results for the Second Quarter 2013

About Fairchild Semiconductor:

Fairchild Semiconductor (NYSE: FCS) – global presence, local support, smart ideas. Fairchild delivers energy-efficient, easy-to-use and value-added semiconductor solutions for power and  mobile designs. We help our customers differentiate their products and solve difficult technical challenges with our expertise in power and signal path products. Please contact us on the web at  www.fairchildsemi.com.

Fairchild Semiconductor International, Inc.
Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
                       
Three Months Ended Six Months Ended
June 30, March 31, July 1, June 30, July 1,

2013

2013

2012

2013

2012

 
Total revenue $ 356.5 $ 343.2 $ 361.5 $ 699.7 $ 713.7
Cost of sales (1)   252.8     250.8     243.8     503.6     491.1  
Gross margin   103.7     92.4     117.7     196.1     222.6  
Gross margin % 29.1 % 26.9 % 32.6 % 28.0 % 31.2 %
 
Operating expenses:
Research and development (2) 46.0 42.6 41.1 88.6 81.2
Selling, general and administrative (3) 52.2 51.6 55.1 103.8 109.8
Amortization of acquisition-related intangibles 3.9 3.8 4.4 7.7 9.2
Restructuring and impairments 3.4 1.2 0.5 4.6 2.9
Charge for (release of) litigation   -     (12.6 )   1.3     (12.6 )   1.3  
Total operating expenses   105.5     86.6     102.4     192.1     204.4  
 
Operating income (1.8 ) 5.8 15.3 4.0 18.2
Other expense, net   1.6     4.6   $ 1.5     6.2     3.0  
Income (loss) before income taxes (3.4 ) 1.2 13.8 (2.2 ) 15.2
 
Provision (benefit) for income taxes   4.1     1.7     1.9     5.8     1.7  
Net income (loss) $ (7.5 ) $ (0.5 ) $ 11.9   $ (8.0 ) $ 13.5  
 
Net income (loss) per common share:
Basic $ (0.06 ) $ (0.00 ) $ 0.09   $ (0.06 ) $ 0.11  
Diluted $ (0.06 ) $ (0.00 ) $ 0.09   $ (0.06 ) $ 0.10  
Weighted average common shares:
Basic   127.6     127.2     126.9     127.4     126.6  
Diluted   127.6     127.2   $ 128.7     129.0     129.1  
 
 
(1) Equity compensation expense included in cost of sales $ 1.3 $ 1.1 $ 1.5 $ 2.4 $ 2.7
(2) Equity compensation expense included in research and development $ 2.0 $ 1.7 $ 1.5 $ 3.7 $ 3.0
(3) Equity compensation expense included in selling, general and administrative $ 4.6 $ 3.5 $ 4.3 $ 8.1 $ 8.5
 
 
Fairchild Semiconductor International, Inc.
Reconciliation of Net Income To Adjusted Net Income
(In millions)
(Unaudited)
 
Three Months Ended Six Months Ended
June 30, March 31, July 1, June 30, July 1,

2013

2013

2012

2013

2012

 
 
Net income (loss) $ (7.5 ) $ (0.5 ) $ 11.9 $ (8.0 ) $ 13.5

Adjustments to reconcile net income (loss) to adjusted net income (loss):

Restructuring and impairments 3.4 1.2 0.5 4.6 2.9
Write off of equity investments - 3.0 - 3.0 -
Accelerated depreciation on assets related to line closure (1) 2.5 2.9 - 5.4 -
Charge for (release of) litigation - (12.6 ) 1.3 (12.6 ) 1.3
Amortization of acquisition-related intangibles 3.9 3.8 4.4 7.7 9.2
Associated net tax effects of the above and other acquisition-related intangibles   (0.6 )   0.2     (0.5 )   (0.4 )   (1.0 )
Adjusted net income (loss) $ 1.7   $ (2.0 ) $ 17.6   $ (0.3 ) $ 25.9  
 
Adjusted net income (loss) per common share:
Basic $ 0.01   $ (0.02 ) $ 0.14   $ (0.00 ) $ 0.20  
Diluted $ 0.01   $ (0.02 ) $ 0.14   $ (0.00 ) $ 0.20  
 
 
(1) Recorded in cost of sales
 
 
Fairchild Semiconductor International, Inc.
Reconciliation of Gross Margin To Adjusted Gross Margin
(In millions)
(Unaudited)
 
Three Months Ended Six Months Ended
June 30, March 31, July 1, June 30, July 1,

2013

2013

2012

2013

2012

 
 
Gross margin $ 103.7 $ 92.4 $ 117.7 $ 196.1 $ 222.6

Adjustments to reconcile gross margin to adjusted gross margin:

Accelerated depreciation on assets related to line closure   2.5     2.9     -     5.4     -  
Adjusted gross margin $ 106.2   $ 95.3   $ 117.7   $ 201.5   $ 222.6  
 
Adjusted gross margin % 29.8 % 27.8 % 32.6 % 28.8 % 31.2 %
 
 
Fairchild Semiconductor International, Inc.
Consolidated Balance Sheets
(In millions)
(Unaudited)
             
June 30, March 31, December 30,

2013

2013

2012

 
ASSETS
Current assets:
Cash and cash equivalents $ 394.8 $ 371.0 $ 405.9
Short-term marketable securities 0.1 0.1 0.1
Receivables, net 153.9 164.9 136.7
Inventories 238.0 226.3 236.7
Other current assets   40.2   45.6   52.6
Total current assets 827.0 807.9 832.0
 
Property, plant and equipment, net 741.4 753.3 764.9
Intangible assets, net 39.5 43.5 47.3
Goodwill 169.3 169.3 169.3
Long-term securities 2.4 2.5 2.6
Other assets   61.2   63.9   67.8
Total assets $ 1,840.8 $ 1,840.4 $ 1,883.9
 
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 112.1 $ 108.9 $ 115.7
Accrued expenses and other current liabilities   79.3   75.4   89.2
Total current liabilities 191.4 184.3 204.9
 
Long-term debt, less current portion 250.1 250.1 250.1
Other liabilities   46.7   45.9   58.9
Total liabilities 488.2 480.3 513.9
 
Temporary equity - deferred stock units 3.0 3.2 2.9
Total stockholders' equity   1,349.6   1,356.9   1,367.1
Total liabilities, temporary equity and stockholders' equity $ 1,840.8 $ 1,840.4 $ 1,883.9
 
 
Fairchild Semiconductor International, Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
               
 
Three Months Ended Six Months Ended
June 30, June 30, July 1,

2013

2013

2012

Cash flows from operating activities:
Net income (loss) $ (7.5 ) $ (8.0 ) $ 13.5

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization 36.1 72.5 66.6
Non-cash stock-based compensation expense 7.9 14.2 14.2
Deferred income taxes, net 0.6 1.4 (3.9 )
Release of litigation charge (12.6 ) -
Other 1.0 4.3 0.9

Changes in operating assets and liabilities, net of acquisitions

  12.1     (25.6 )   (11.8 )
Cash provided by (used in) operating activities   50.2     46.2     79.5  
 
Cash flows from investing activities:
Capital expenditures (20.2 ) (40.1 ) (80.1 )
Purchase of marketable securities - - (0.5 )
Sale of marketable securities - - 0.3
Maturity of marketable securities - 0.1 0.2
Other   (0.7 )   (1.1 )   (0.9 )
Cash used in investing activities   (20.9 )   (41.1 )   (81.0 )
 
Cash flows from financing activities:

Proceeds from issuance of common stock and from exercise of stock options, net

0.1 0.5 0.6
Purchase of treasury stock (5.0 ) (8.7 ) (10.7 )
Shares withheld for employees taxes   (0.6 )   (8.0 )   (9.4 )
Cash used in financing activities   (5.5 )   (16.2 )   (19.5 )
 
Net change in cash and cash equivalents 23.8 (11.1 ) (21.0 )
Cash and cash equivalents at beginning of period   371.0     405.9     423.3  
Cash and cash equivalents at end of period $ 394.8   $ 394.8   $ 402.3  
 
 
 
Fairchild Semiconductor International, Inc.
Reconciliation of Cash Provided (Used in) by Operating Activities to Free Cash Flow
(In millions)
(Unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30, July 1,

2013

2013

2012

 
Cash provided by (used in) operating activities $ 50.2 $ 46.2 $ 79.5
Capital expenditures   (20.2 )   (40.1 )   (80.1 )
Free cash flow $ 30.0   $ 6.1   $ (0.6 )




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