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2014-04-17

Fairchild Semiconductor: Fairchild Semiconductor Reports Results for the First Quarter 2014

SAN JOSE, Calif., April 17, 2014 (GLOBE NEWSWIRE) -- Fairchild Semiconductor
(Nasdaq:FCS), a leading global supplier of power semiconductors, today
announced results for the first quarter ended March 30, 2014. Fairchild
reported first quarter sales of $344.1 million, up 1 percent from the prior
quarter and slightly higher than the first quarter of 2013.

Fairchild reported a first quarter net loss of $9.3 million or $0.07 per
diluted share compared to net income of $0.9 million or $0.01 per diluted
share in the prior quarter and a net loss of $0.5 million or $0.00 per
diluted share in the first quarter of 2013. Gross margin was 30.3 percent
compared to 30.9 percent in the prior quarter and 26.9 percent in the
year-ago quarter.

Fairchild reported first quarter adjusted gross margin of 30.3 percent, down
100 basis points from the prior quarter but 250 basis points higher than the
first quarter of 2013. Adjusted gross margin in past quarters excluded
accelerated depreciation related to a line closure. Adjusted net income was
$4.9 million or $0.04 per diluted share, compared to adjusted net income of
$13.5 million or $0.11 per diluted share in the prior quarter and an adjusted
net loss of $2.0 million or $0.02 per diluted share in the first quarter of
2013. See the Reconciliation of Net Income to Adjusted Net Income exhibit
included in this press release for more details on the other adjustment
items.

"Demand has been robust all year as Fairchild's focus on improving energy
efficiency in a wide range of industrial, appliance, automotive and mobile
applications accelerates our growth," said Mark Thompson, Fairchild's
chairman and CEO. "The strength in orders is broader based than a year ago,
especially in the mobile end market. Our current backlog is up 20% from a
quarter ago, which when coupled with our lean inventory position enables us
to guide for strong sales growth in the second quarter. Demand is very solid
for our products supporting the automotive, industrial and appliance end
markets. Sales of our products into the computing end market were also higher
sequentially as demand recovered from a weak fourth quarter. Mobile demand
was flat to the prior quarter which was better than expected. We benefited
from content gains on a major new phone platform as well as mid-tier Chinese
brands.

First Quarter Financials

"Adjusted gross margin decreased only one point sequentially which was better
than expected due to higher factory loadings in the first quarter and
improved product mix," said Mark Frey, Fairchild's executive vice president
and CFO. "R&D and SG&A expenses were $96.6 million which were higher than
forecast due to increased legal spending and additional costs associated with
our recent sensor business acquisition. Free cash flow was a negative $5
million for the first quarter. We ended the first quarter with total cash and
securities exceeding our debt by $118 million which is lower than a quarter
ago due to our recent all cash acquisition of a private sensor company, stock
repurchases and normal annual variable compensation expenses."

Forward Guidance

"We expect sales to be in the range of $355 to $375 million for the second
quarter," said Frey. "We expect adjusted gross margin to be 31.0 to 32.0
percent due primarily to higher sales and factory loadings as well as
improved product mix which all more than offsets the impact of our merit
increase. We anticipate R&D and SG&A spending to be $97 to $99 million due to
higher R&D and legal spending as well as the impact of the newly acquired
sensor business. The adjusted tax rate is forecast at 15 percent plus or
minus 3 percentage points for the quarter. Consistent with our usual
practices, we are not assuming any obligation to update this information,
although we may choose to do so before we announce second quarter results."

Adjusted gross margin, adjusted net income and free cash flow are non-GAAP
financial measures and should not be considered replacements for GAAP
results. See additional information on our non-GAAP financial measures and
reconciliations to the most comparable GAAP measures in the appropriate
reconciliation exhibit included in this press release as well as our SEC
filings related to this announcement.

Special Note on Forward-Looking Statements:

Some of the paragraphs above, including the one headed "Forward Guidance,"
contain forward-looking statements that are based on management's assumptions
and expectations and involve risk and uncertainty. Other forward-looking
statements may also be found in this news release. Forward-looking statements
usually, but do not always, contain forward-looking terminology such as "we
believe," "we expect," or "we anticipate," or refer to management's
expectations about Fairchild's future performance. Many factors could cause
actual results to differ materially from those expressed in forward-looking
statements. Among these factors are the following: failure to maintain order
rates at expected levels; failure to achieve expected savings from cost
reduction actions or other adverse results from those actions; changes in
demand for our products; changes in inventories at our customers and
distributors; technological and product development risks, including the
risks of failing to maintain the right to use some technologies or failing to
adequately protect our own intellectual property against misappropriation or
infringement; availability of manufacturing capacity; the risk of production
delays; availability of raw materials at competitive prices; competitors'
actions; loss of key customers, including but not limited to distributors;
the inability to attract and retain key management and other employees; order
cancellations or reduced bookings; changes in manufacturing yields or output;
risks related to warranty and product liability claims; risks inherent in
doing business internationally; changes in tax regulations or the migration
of profits from lower tax jurisdictions to higher tax jurisdictions;
regulatory risks and significant litigation. These and other risk factors are
discussed in the company's quarterly and annual reports filed with the
Securities and Exchange Commission (SEC) and available at the Investor
Relations section of Fairchild Semiconductor's web site at
investor.fairchildsemi.com or the SEC's web site at www.sec.gov.

About Fairchild Semiconductor:

Fairchild has a rich history as a pioneer in the semiconductor industry and
that pioneering spirit endures today. In an era where diversity can dilute
focus and hamper innovation, we specialize in the development and
manufacturing of a complete portfolio of low- to high-power solutions for the
mobile, industrial, cloud, automotive, lighting, and computing industries.
Fairchild is one of the most reliable partners in the industry, offering the
shortest time from concept to silicon, expert FAEs for customer support, and
a flexible, multi-source supply chain. Our vision is clear - anticipate the
power efficiencies demanded by tomorrow's electronic products and deliver an
amazing design experience. Please contact us on the web at
www.fairchildsemi.com

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| |
| |
|Fairchild Semiconductor International, Inc. |
|Consolidated Statements of Operations |
|(In millions, except per share amounts) |
|(Unaudited) |
| |
| Three Months Ended |
| March 30, December 29, March 31, |
| |
| 2014 2013 2013 |
| |
|Total revenue $ 344.1 $ 341.1 $ 343.2 |
|Cost of sales (1) 239.9 235.6 250.8 |
|Gross margin 104.2 105.5 92.4 |
|Gross margin % 30.3% 30.9% 26.9% |
| |
|Operating expenses: |
|Research and development (2) 41.1 40.2 42.6 |
|Selling, general and administrative (3) 55.5 49.9 51.6 |
|Amortization of acquisition-related intangibles 4.2 3.9 3.8 |
|Restructuring, impairments, and other costs 6.1 7.8 1.2 |
|Charge for (release of) litigation 4.4 -- (12.6) |
|Total operating expenses 111.3 101.8 86.6 |
| |
|Operating income (loss) (7.1) 3.7 5.8 |
|Other expense, net 1.1 1.6 4.6 |
|Income (loss) before income taxes (8.2) 2.1 1.2 |
| |
|Provision for income taxes 1.1 1.2 1.7 |
|Net income (loss) $ (9.3) $ 0.9 $ (0.5) |
| |
|Net income (loss) per common share: |
|Basic $ (0.07) $ 0.01 $ (0.00) |
|Diluted $ (0.07) $ 0.01 $ (0.00) |
|Weighted average common shares: |<...

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