BLOWOUT QUARTER-- .68 VERSUS .57
Tuesday July 25, 4:09 pm Eastern Time
Company Press Release
Fairchild Semiconductor Again Reports Record Revenues and Profits
Trade Revenues increase 11% sequentially; New Products drive higher Gross Margins; Communications Markets Exceed 30% of sales; Earnings increase 31% sequentially.
SOUTH PORTLAND, Maine--(BUSINESS WIRE)--July 25, 2000-- Fairchild Semiconductor International (NYSE:FCS - news) today reported record results for the second quarter ended July 2, 2000. Revenues were $436.7 million, a 53% increase over the $284.7 million reported in the second quarter of 1999.
For the first half of 2000, the company reported revenues of $838.4 million, an 81% increase over the $462.0 million reported in the first half of 1999, and a 40% increase over pro forma revenues of $599.8 million in the first half of 1999.
Second quarter adjusted net income was $69.0 million, or $0.68 per diluted share of common stock, up 31% sequentially from $52.6 million, or $0.53 per diluted share reported in the first quarter. Second quarter adjusted net income was 373% higher than the pro forma adjusted net income of $14.6 million, or $0.16 per diluted share in the second quarter of 1999. Adjusted net income is net income before amortization of acquisition-related intangibles and non-recurring charges. Operating income before non-recurring charges was $81.8 million, up 24% sequentially from $66.0 million reported in the first quarter of 2000.
Trade revenues, which do not include foundry, were up 11% sequentially and were 44% higher than those for pro forma second quarter 1999. Analog revenues were up 9% sequentially and were 28% higher than the year earlier pro forma quarter. Interface and Logic revenues were up 12% sequentially and 49% higher than second quarter 1999. Discrete revenues, led by power MOSFET sales, were up 5% sequentially and 42% higher than for pro forma second quarter 1999.
Pro forma information includes unaudited estimated results for power device products, for the period prior to its acquisition from Samsung Electronics in April 1999. This information is presented as if the power device acquisition and our August 1999 initial public offering had both been completed as of the beginning of calendar 1999.
Excluding the release of reserves associated with the Memory restructuring action in 1999, revenues were $434.6 million, which was up 8.2% sequentially from the first quarter of 2000 and up 38% over pro forma second quarter 1999 revenues. Excluding the reserve release, gross margins improved to 35.7% of revenues, up from 34.2% in the first quarter of 2000. Including the reserve release, gross margin was 36.8% for the quarter.
Including amortization of acquisition-related intangibles, and net non-recurring charges of $1.4 million, the company reported second quarter net income of $59.7 million, or $0.59 per diluted share of common stock, compared to a pro forma net loss of $21.0 million, or $0.24 per diluted share in the second quarter of 1999. Net non-recurring charges include a write-off of deferred financing fees associated with the refinancing of the company's long-term bank debt and a charge for in-process research and development associated with the acquisition of QT Optoelectronics, offset by the release of reserves associated with the Memory restructuring action undertaken in 1999.
For the first half of 2000, adjusted net income was $121.6 million or $1.21 per diluted share, compared to pro forma adjusted net income of $30.2 million, or $0.34 per diluted share in the first half of 1999. Including amortization of acquisition-related intangibles and non-recurring charges, net income was $109.7 million or $1.09 per diluted share in the first half of 2000, compared to a pro forma net loss of $16.4 million, or $0.18 per diluted share in the first half of 1999.
``We have continued to focus on winning new designs, and our new product sales have continued to fuel our growth,'' said Kirk Pond, chairman, president and CEO of Fairchild Semiconductor. ``During the quarter we achieved design wins in a wide variety of high growth applications, such as cellular phones and accessories, mobile PCs, Internet servers, flat panel displays, set top boxes, video games, and digital cameras. Fairchild's average content per system continues to climb, and we are supplying more of the power and interface silicon in each system. Importantly, new product sales represented more than 31% of total sales this quarter, fueled by power and interface products that now represent 49% of total sales.''
``We are also proud to report that in the past three years, we have more than quadrupled our sales into communications applications. Communications now represents more than 30% of our total mix,'' said Pond. ``Our focus on developing higher-margin power and interface products is accelerating Fairchild's penetration into wireless, wireline, and Internet infrastructure applications.''
``During the quarter, Fairchild booked orders at record levels, grew new product sales, raised gross margins, and continued to penetrate fast growing market segments,'' stated Joe Martin, executive vice president and chief financial officer. ``We completed our acquisition of QT Optoelectronics, and successfully entered the $6 billion optoelectronics market. Our backlog grew significantly, and we're adding production capacity every quarter. Based on our customer input, we anticipate continued strength across all of our market segments.
``We remain very optimistic about our revenue and margin growth.'' Martin said. ``We see our revenues in the third quarter growing about 5-6% over second quarter, and now anticipate 2000 revenues to be up 35-38% over our pro forma revenues of $1.3 billion in 1999. For 2001, we continue to expect revenue growth in the 20-25% range, which is at or above the market growth rates for our products. Additionally, we continue to expect the success of our new product sales to drive us to our long term gross margin target model of 40%, and intend to move toward this target by at least 50 basis points each quarter going forward.''
Fairchild Semiconductor International (www.fairchildsemi.com) is a global company solely focused on designing, manufacturing and marketing high performance semiconductors for multiple end market uses. Fairchild's multi-market components are used in computer, telecommunications, automotive, consumer and industrial applications. Supplying power, analog & mixed signal, interface, logic, and optoelectronics products, Fairchild is filling the gap in the global supply of building block semiconductors. The company is headquartered in South Portland, Maine, USA, with 10,000 employees worldwide. Additional manufacturing facilities are located in Utah, South Korea, China, Singapore, Malaysia and the Philippines, with regional sales offices throughout the world.
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