Fairchild Semiconductor International In Reports Operating Results (10-Q)
Fairchild Semiconductor International In has a market cap of $1.27 billion; its shares were traded at around $10.17 with a P/E ratio of 17.8 and P/S ratio of 1.1. FCS is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC, Chuck Royce of Royce& Associates, Chris Davis of Davis Selected Advisers, Jeremy Grantham of GMO LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations: Restructuring and Impairment. During the three months ended March 28, 2010, we recorded restructuring and impairment charges, net of releases, of $2.4 million. The charges include $1.6 million of employee separation costs, $0.2 million in reserve releases, and $0.6 million of fab closure costs associated with the 2009 Infrastructure Realignment Program. The restructuring charges also include $0.4 million in employee separation costs associated with the 2010 Infrastructure Realignment Program.
During the three months ended March 29, 2009, we recorded restructuring and impairment charges, net of releases, of $6.7 million. The charges include $5.8 million of employee separation costs, $0.3 million in lease impairment costs and $0.2 million in releases associated with the 2008 Infrastructure Realignment Program. The charges also include $0.8 million in asset impairment costs associated with the 2009 Infrastructure Realignment Program.
The 2009 worldwide restructuring action, excluding facility closures, is substantially complete and impacted 270 employees. We achieved annual savings associated with these employee separation costs of $13.8 million by the end of 2009. Once the planned closure of the Mountaintop facility and the consolidation of South Korea fabrication process are complete we expect to achieve annualized cost savings ranging from $20 to $25 million.
Income Taxes. Income tax provision in the first quarter of 2010 was $7.9 million on income before taxes of $30.5 million as compared to income tax provision (benefit) of $(0.9) million on income (loss) before taxes of $(52.0) million for the same period of 2009. The effective tax rate for the first quarter of 2010 was 25.9% compared to (1.7)% for the comparable period of 2009. The change in effective tax rate is primarily due to shifts of income and loss among jurisdictions with differing tax rates, foreign currency revaluations of tax liabilities and discrete tax expenses as a result of finalization of certain tax filings. For the first quarter of 2010, we decreased unrecognized tax benefits by $10.4 million representing the settlement of a Korea income tax audit. The decrease was due to cash payments payable to the taxing authority along with the effective settlement of other unrecognized tax benefits. There was no net material impact to the effective tax rate as a result of the settlement of the Korea income tax audit. In the first three months of 2010, the valuation allowance on our deferred tax assets decreased by $2.8 million. The overall decrease did not impact our results of operations.
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