Fairchild Semiconductor Reports Results for the Third Quarter of 2009

Fairchild reported third quarter net income of $2.7 million or $0.02 per diluted share compared to a net loss of $24.9 million or $0.20 per share in the prior quarter and net income of $26.7 million or $0.21 per diluted share in the third quarter of 2008. Gross margin was 26.0 percent compared to 23.2 percent in the prior quarter and 29.9 percent in the year ago quarter. Included in these results is $3 million of accelerated depreciation and a favorable $0.1 million inventory reserve release related to previously announced fab closures.

Fairchild reported third quarter adjusted net income of $14.9 million or $0.12 per diluted share, compared to an adjusted net loss of $3.5 million or $0.03 per share in the prior quarter and adjusted net income of $34.0 million or $0.27 per diluted share in the third quarter of 2008. Adjusted gross margin was 26.9 percent, up 2 percentage points sequentially and 3 percentage points lower than in the third quarter of 2008. Adjusted gross margin excludes accelerated depreciation and inventory write-offs/reserve releases related to fab closures. Adjusted net income and loss excludes amortization of acquisition-related intangibles, restructuring and impairments, gain on sale of equity investment, impairment of equity investment, gain associated with debt buyback, accelerated depreciation and inventory write-offs/reserve releases related to fab closures, and associated net tax benefits of these items and other acquisition-related intangibles.

“We executed well in the third quarter to post strong sales and earnings gains while making further progress on inventories,” said Mark Thompson, Fairchild’s president and CEO. “Our channel inventories are at record low levels and we are committed to maintaining a very lean supply chain. We plan to ship much closer to actual end market consumption rates in the fourth quarter and will adjust our shipments as required to keep channel inventories roughly flat to our current levels as we exit the year. As a result of our disciplined cost control, lower capital spending and effective management of inventory and working capital, our free cash flow generation in the first three quarters of 2009 is greater than our free cash flow generation for any full year in our history. Our guidance for the fourth quarter reflects the significant leverage in our business model that enables us to deliver higher margins, earnings and cash flow at much lower revenue levels than in the past.”