Fairchild Semiconductor International (FCS) saw its loss widen to $9.30 million, or $0.07 a share, for the quarter ended Mar. 30, 2014. In the last year period, the company recorded a loss of $0.50 million.

Revenue during the first-quarter went up marginally 0.26 percent to $344.10 million from $343.20 million in the last year period.

Gross margin expanded by 336 basis points over the last year period to 30.28 percent. Operating margin for the current period stood at negative 2.06 percent as compared to a positive 1.69 percent for the previous year period.

The company posted operating loss of $7.10 million, compared with an operating income of $5.80 million in the previous year period.

"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. 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," said Mark Frey, Fairchild's executive vice president and CFO.

"We expect sales to be in the range of $355 to $375 million for the second quarter. 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,'' said Frey. 

Cash flow

Fairchild Semiconductor International has generated cash of $8.60 million from operating activities during the quarter, as against cash outgo of $4 million in the last year period.

The company has spent $74 million in cash to meet investing activities during the quarter, as against cash outgo of $20.20 million in the year period. It has made net capital expenditure of $13.70 million during the quarter, which was lower by 31.16 percent or $6.20 million from a year ago.

The company has spent $36.60 million in cash to meet financing activities during the quarter, as against cash outgo of $10.70 million in the last year period. It has spent net of $30.40 million on common stock repurchases.

As on Mar. 30, 2014, Fairchild Semiconductor International's cash balance stood at $315.80 million, down 14.88 percent or $55.20 million from Mar. 31, 2013.

Working Capital

Fairchild Semiconductor International witnessed reduction in the working capital over the last year. It stood at $564.60 million as at Mar. 30, 2014, down $59 million or 9.46 percent from $623.60 million on Mar. 31, 2013. The company's current ratio decreased to 4.15 as at Mar. 30, 2014 from 4.38 on Mar. 31, 2013.

The company's cash conversion cycle (CCC) increased to 85 days for first-quarter from 83 days for the last year. CCC is a liquidity metric which expresses the length of time (in days) that a company uses to sell inventory, collect receivables and pay its accounts payable. Decreasing or steady CCCs are good for business.

Days' sales outstanding went down to 38 days for first-quarter compared with 40 days for the last year. This indicates the company has shortened credit period to clients for making payment.

Days' inventory outstanding increased to 85 days for first-quarter compared with 84 days for previous year. This suggests the company took more time to convert the inventory into sales.

While days' payable outstanding went down to 38 days for first-quarter from 41 days for the last year. This reflects that the company has made early payment to vendors compared to prior year period.

Debt Position

The company has witnessed a decrease in long-term debt over the last year. As at Mar. 30, 2014, the company's long-term debt stood at $200.10 million, down 19.99 percent or $50 million from Mar. 31, 2013.

The company's total debt accounts for 11.37 percent of total assets on Mar. 30, 2014, compared with 13.59 percent on Mar. 31, 2013.