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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 29, 2009



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to
.

Commission File Number: 001-15181





FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.

(Exact name of registrant as
specified in its charter)







|                                                               |  |                                    
|-------------------------------------------------------------- |  | -----------------------------------
|Delaware                                                       |  | 04-3363001                         
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S.Employer Identification No.)

82 Running Hill Road

South Portland, Maine 04106

(Address of principal executive offices,
including zip code)

Registrants telephone number, including area code: (207) 775-8100





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in
Rule 12b-2 of the Exchange Act).



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large Accelerated filer |  | x |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The number of shares outstanding of each of the issuers classes of common stock as of the close of business on

March 29, 2009:



|                    |  |                 
|------------------- |  | ----------------
|Title of Each Class |  | Number of Shares
|Common Stock        |  | 123,834,529     









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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX



|                              |  |                                                                                                              |  |     
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|                              |  |                                                                                                              |  | Page
|PART I. FINANCIAL INFORMATION |  |                                                                                                             
|                              |  |                                                                                                             
|Item 1.                       |  | Financial Statements (Unaudited)                                                                             |  |     
|                              |  |                                                                                                             
|                              |  | Consolidated Balance Sheets as of March 29, 2009 and December 28, 2008                                       |  | 3   
|                              |  |                                                                                                             
|                              |  | Consolidated Statements of Operations for the Three Months Ended March 29, 2009 and March 30, 2008           |  | 4   
|                              |  |                                                                                                             
|                              |  | Consolidated Statements of Comprehensive Income for the Three Months Ended March 29, 2009 and March 30,
2008 |  | 5   
|                              |  |                                                                                                             
|                              |  | Consolidated Statements of Cash Flows for the Three Months Ended March 29, 2009 and March 30, 2008           |  | 6   
|                              |  |                                                                                                             
|                              |  | Notes to Consolidated Financial Statements (Unaudited)                                                       |  | 7   
|                              |  |                                                                                                             
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 18  
|                              |  |                                                                                                             
|Item 3.                       |  | Quantitative and Qualitative Disclosures about Market Risk                                                   |  | 25  
|                              |  |                                                                                                             
|Item 4.                       |  | Controls and Procedures                                                                                      |  | 25  
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                             
|                              |  |                                                                                                             
|Item 1.                       |  | Legal Proceedings                                                                                            |  | 26  
|                              |  |                                                                                                             
|Item 1A.                      |  | Risk Factors                                                                                                 |  | 27  
|                              |  |                                                                                                             
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                  |  | 37  
|                              |  |                                                                                                             
|Item 6.                       |  | Exhibits                                                                                                     |  | 37  
|                              | 
|Signature                     |  | 38                                                                                                          



2



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)



|                                                                                                                |  |               |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                |  | March 29,2009 |         |   | December 28,2008 |  
|                                                                                                                |  | (unaudited)   |         |   |                  |  
|ASSETS                                                                                                          |  |               |         |   |                  |   |         |  
|Current assets:                                                                                                 |  |               |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                       |  | $             | 352.8   |   |                  | $ | 351.5   |  
|Short-term marketable securities                                                                                |  |               | 0.7     |   |                  |   | 0.8     |  
|Accounts receivable, net of allowances of $31.0 and $36.1 at March 29, 2009 and December 28, 2008, respectively |  |               | 112.5   |   |                  |   | 155.6   |  
|Inventories                                                                                                     |  |               | 206.3   |   |                  |   | 231.0   |  
|Deferred income taxes, net of allowances                                                                        |  |               | 15.5    |   |                  |   | 11.7    |  
|Other current assets                                                                                            |  |               | 21.8    |   |                  |   | 28.3    |  
|                                                                                                                |  |               |         |   |                  |   |         |  
|Total current assets                                                                                            |  |               | 709.6   |   |                  |   | 778.9   |  
|Property, plant and equipment, net                                                                              |  |               | 707.2   |   |                  |   | 731.6   |  
|Deferred income taxes, net of allowances                                                                        |  |               | 7.7     |   |                  |   | 7.3     |  
|Intangible assets, net                                                                                          |  |               | 97.9    |   |                  |   | 102.1   |  
|Goodwill                                                                                                        |  |               | 161.7   |   |                  |   | 161.7   |  
|Long-term securities                                                                                            |  |               | 33.8    |   |                  |   | 34.6    |  
|Other assets                                                                                                    |  |               | 32.9    |   |                  |   | 33.6    |  
|                                                                                                                |  |               |         |   |                  |   |         |  
|Total assets                                                                                                    |  | $             | 1,750.8 |   |                  | $ | 1,849.8 |  
|                                                                                                                |  |               |         |   |                  |   |         |  
|LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS EQUITY                                                          |  |               |         |   |                  |   |         |  
|Current liabilities:                                                                                            |  |               |         |   |                  |   |         |  
|Current portion of long-term debt                                                                               |  | $             | 5.3     |   |                  | $ | 5.3     |  
|Accounts payable                                                                                                |  |               | 71.2    |   |                  |   | 94.4    |  
|Accrued expenses and other current liabilities                                                                  |  |               | 67.8    |   |                  |   | 94.4    |  
|                                                                                                                |  |               |         |   |                  |   |         |  
|Total current liabilities                                                                                       |  |               | 144.3   |   |                  |   | 194.1   |  
|Long-term debt, less current portion                                                                            |  |               | 528.6   |   |                  |   | 529.9   |  
|Deferred income taxes                                                                                           |  |               | 34.0    |   |                  |   | 33.0    |  
|Other liabilities                                                                                               |  |               | 31.6    |   |                  |   | 32.9    |  
|                                                                                                                |  |               |         |   |                  |   |         |  
|Total liabilities                                                                                               |  |               | 738.5   |   |                  |   | 789.9   |  
|Commitments and contingencies (Note 10)                                                                         |  |               |         |   |                  |   |         |  
|Temporary equitydeferred stock units                                                                           |  |               | 2.3     |   |                  |   | 2.8     |  
|Stockholders equity:                                                                                           |  |               |         |   |                  |   |         |  
|Common stock                                                                                                    |  |               | 1.3     |   |                  |   | 1.3     |  
|Additional paid-in capital                                                                                      |  |               | 1,392.1 |   |                  |   | 1,389.0 |  
|Accumulated deficit                                                                                             |  |               | (335.1  | ) |                  |   | (284.0  | )
|Accumulated other comprehensive loss                                                                            |  |               | (9.6    | ) |                  |   | (10.5   | )
|Less treasury stock (at cost)                                                                                   |  |               | (38.7   | ) |                  |   | (38.7   | )
|                                                                                                                |  |               |         |   |                  |   |         |  
|Total stockholders equity                                                                                      |  |               | 1,010.0 |   |                  |   | 1,057.1 |  
|                                                                                                                |  |               |         |   |                  |   |         |  
|Total liabilities, temporary equity and stockholders equity                                                    |  | $             | 1,750.8 |   |                  | $ | 1,849.8 |  
|                                                                                                                |  |               |         |   |                  |   |         |  

See accompanying notes to unaudited consolidated financial statements.



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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share and percent data)

(Unaudited)



|                                                |  |                    |       |   |               |   |       |  
|----------------------------------------------- |  | ------------------ | ----- | - | ------------- | - | ----- | -
|                                                |  | Three Months Ended |      
|                                                |  | March 29,2009      |       |   | March 30,2008 |  
|Total revenue                                   |  | $                  | 223.3 |   |               | $ | 406.3 |  
|Cost of sales                                   |  |                    | 189.3 |   |               |   | 283.8 |  
|                                                |  |                    |       |   |               |   |       |  
|Gross margin                                    |  |                    | 34.0  |   |               |   | 122.5 |  
|                                                |  |                    |       |   |               |   |       |  
|Gross margin %                                  |  |                    | 15.2  | % |               |   | 30.2  | %
|                                                |  |                   
|Operating expenses:                             |  |                    |       |   |               |   |       |  
|Research and development                        |  |                    | 23.8  |   |               |   | 29.8  |  
|Selling, general and administrative             |  |                    | 44.7  |   |               |   | 60.1  |  
|Amortization of acquisition-related intangibles |  |                    | 5.5   |   |               |   | 5.6   |  
|Restructuring and impairments                   |  |                    | 6.7   |   |               |   | 0.2   |  
|                                                |  |                    |       |   |               |   |       |  
|Total operating expenses                        |  |                    | 80.7  |   |               |   | 95.7  |  
|                                                |  |                    |       |   |               |   |       |  
|Operating income (loss)                         |  |                    | (46.7 | ) |               |   | 26.8  |  
|                                                |  |                   
|Other expense, net                              |  |                    | 5.3   |   |               |   | 5.2   |  
|                                                |  |                    |       |   |               |   |       |  
|Income (loss) before income taxes               |  |                    | (52.0 | ) |               |   | 21.6  |  
|                                                |  |                   
|Provision (benefit) for income taxes            |  |                    | (0.9  | ) |               |   | 4.5   |  
|                                                |  |                    |       |   |               |   |       |  
|Net income (loss)                               |  | $                  | (51.1 | ) |               | $ | 17.1  |  
|                                                |  |                    |       |   |               |   |       |  
|Net income (loss) per common share:             |  |                    |       |   |               |   |       |  
|Basic                                           |  | $                  | (0.41 | ) |               | $ | 0.14  |  
|                                                |  |                    |       |   |               |   |       |  
|Diluted                                         |  | $                  | (0.41 | ) |               | $ | 0.14  |  
|                                                |  |                    |       |   |               |   |       |  
|Weighted average common shares:                 |  |                    |       |   |               |   |       |  
|Basic                                           |  |                    | 123.6 |   |               |   | 124.4 |  
|                                                |  |                    |       |   |               |   |       |  
|Diluted                                         |  |                    | 123.6 |   |               |   | 125.1 |  
|                                                |  |                    |       |   |               |   |       |  

See accompanying notes to unaudited consolidated financial statements.



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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)



|                                                                                            |  |                    |       |   |               |   |      |  
|------------------------------------------------------------------------------------------- |  | ------------------ | ----- | - | ------------- | - | ---- | -
|                                                                                            |  | Three Months Ended |      
|                                                                                            |  | March 29,2009      |       |   | March 30,2008 |  
|Net income (loss)                                                                           |  | $                  | (51.1 | ) |               | $ | 17.1 |  
|Other comprehensive income (loss), net of tax:                                              |  |                    |       |   |               |   |      |  
|Net change associated with hedging transactions                                             |  |                    | 0.1   |   |               |   | (7.5 | )
|Net amount reclassified to earnings for hedging                                             |  |                    | 1.6   |   |               |   | 0.9  |  
|Net change associated with unrealized holding loss on marketable securities and investments |  |                    | (0.8  | ) |               |   | (3.6 | )
|Net change associated with pension transactions                                             |  |                    |      |   |               |   | (0.1 | )
|                                                                                            |  |                    |       |   |               |   |      |  
|Comprehensive income (loss)                                                                 |  | $                  | (50.2 | ) |               | $ | 6.8  |  
|                                                                                            |  |                    |       |   |               |   |      |  

See accompanying notes to unaudited consolidated financial statements.



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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



|                                                                                         |  |                    |       |   |               |   |       |  
|---------------------------------------------------------------------------------------- |  | ------------------ | ----- | - | ------------- | - | ----- | -
|                                                                                         |  | Three Months Ended |      
|                                                                                         |  | March 29,2009      |       |   | March 30,2008 |  
|Cash flows from operating activities:                                                    |  |                    |       |   |               |   |       |  
|Net income (loss)                                                                        |  | $                  | (51.1 | ) |               | $ | 17.1  |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                    |       |   |               |   |       |  
|Depreciation and amortization                                                            |  |                    | 37.6  |   |               |   | 33.1  |  
|Non-cash stock-based compensation expense                                                |  |                    | 2.6   |   |               |   | 6.9   |  
|Non-cash restructuring and impairment expense                                            |  |                    | 0.8   |   |               |   |      |  
|Non-cash interest income                                                                 |  |                    | (0.2  | ) |               |   |      |  
|Non-cash financing expense                                                               |  |                    | 0.4   |   |               |   | 0.4   |  
|Deferred income taxes, net                                                               |  |                    | (3.6  | ) |               |   | 1.4   |  
|Changes in operating assets and liabilities, net of acquisitions:                        |  |                    |       |   |               |   |       |  
|Accounts receivable, net                                                                 |  |                    | 43.1  |   |               |   | (11.8 | )
|Inventories                                                                              |  |                    | 24.7  |   |               |   | (5.6  | )
|Other current assets                                                                     |  |                    | 6.6   |   |               |   | 12.8  |  
|Current liabilities                                                                      |  |                    | (40.6 | ) |               |   | (15.7 | )
|Other assets and liabilities, net                                                        |  |                    | (0.9  | ) |               |   | (0.2  | )
|                                                                                         |  |                    |       |   |               |   |       |  
|Net cash provided by operating activities                                                |  |                    | 19.4  |   |               |   | 38.4  |  
|                                                                                         |  |                    |       |   |               |   |       |  
|Cash flows from investing activities:                                                    |  |                    |       |   |               |   |       |  
|Purchase of marketable securities                                                        |  |                    | (0.2  | ) |               |   | (3.5  | )
|Sale of marketable securities                                                            |  |                    | 0.3   |   |               |   | 5.0   |  
|Maturity of marketable securities                                                        |  |                    | 0.1   |   |               |   | 0.1   |  
|Capital expenditures                                                                     |  |                    | (14.9 | ) |               |   | (30.7 | )
|Proceeds from sale of property, plant and equipment                                      |  |                    |      |   |               |   | 0.1   |  
|Purchase of molds and tooling                                                            |  |                    | (0.6  | ) |               |   | (0.4  | )
|Acquisitions                                                                             |  |                    | (1.5  | ) |               |   |      |  
|                                                                                         |  |                    |       |   |               |   |       |  
|Net cash used in investing activities                                                    |  |                    | (16.8 | ) |               |   | (29.4 | )
|                                                                                         |  |                    |       |   |               |   |       |  
|Cash flows from financing activities:                                                    |  |                    |       |   |               |   |       |  
|Repayment of long-term debt                                                              |  |                    | (1.3  | ) |               |   | (0.9  | )
|Proceeds from issuance of common stock and from exercise of stock options, net           |  |                    |      |   |               |   | 1.9   |  
|Purchase of treasury stock                                                               |  |                    |      |   |               |   | (2.0  | )
|                                                                                         |  |                    |       |   |               |   |       |  
|Net cash used in financing activities                                                    |  |                    | (1.3  | ) |               |   | (1.0  | )
|                                                                                         |  |                    |       |   |               |   |       |  
|Net change in cash and cash equivalents                                                  |  |                    | 1.3   |   |               |   | 8.0   |  
|Cash and cash equivalents at beginning of period                                         |  |                    | 351.5 |   |               |   | 409.0 |  
|                                                                                         |  |                    |       |   |               |   |       |  
|Cash and cash equivalents at end of period                                               |  | $                  | 352.8 |   |               | $ | 417.0 |  
|                                                                                         |  |                    |       |   |               |   |       |  

See accompanying notes to unaudited consolidated financial statements.



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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1  Basis of Presentation

The accompanying interim consolidated financial statements of Fairchild Semiconductor International, Inc. (the company) have been prepared in conformity with accounting principles generally accepted in the United
States of America, consistent in all material respects with those applied in the companys Annual Report on Form 10-K for the year ended December 28, 2008. The interim financial information is unaudited, but reflects all normal
adjustments, which are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. During the first quarter of 2008, the company recorded approximately $1.9 million of adjustments to previously
recorded estimates which increased gross margin by approximately $0.8 million and reduced selling, general and administrative expense by approximately $1.1 million. The cumulative effect of these adjustments is deemed immaterial. The financial
statements should be read in conjunction with the financial statements in the companys Annual Report on Form 10-K for the year ended December 28, 2008. Certain amounts for prior periods have been reclassified to conform to the current
presentation. The results for the interim periods are not necessarily indicative of the results of operations that may be expected for the full year.

The
preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts
of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, investments, intangible
assets, and other long-lived assets, legal contingencies, and assumptions used in the calculation of income taxes and customer incentives, among others. These estimates and assumptions are based on managements best estimates and judgment.
Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The company adjusts
such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity, foreign currency, and energy markets, and declines in consumer spending have combined to increase the uncertainty inherent in such
estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic
environment will be reflected in the financial statements in future periods.

Note 2  Financial Statement Details



|                 |  |               |       |                  |   |      
|---------------- |  | ------------- | ----- | ---------------- | - | -----
|                 |  | March 29,2009 |       | December 28,2008
|                 |  | (In millions)
|Inventories, net |  |               |       |                  |   |      
|Raw materials    |  | $             | 30.1  |                  | $ | 43.0 
|Work in process  |  |               | 110.1 |                  |   | 108.4
|Finished goods   |  |               | 66.1  |                  |   | 79.6 
|                 |  |               |       |                  |   |      
|                 |  | $             | 206.3 |                  | $ | 231.0
|                 |  |               |       |                  |   |      



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|                                    |  |               |         |                  |   |        
|----------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                    |  | March 29,2009 |         | December 28,2008
|                                    |  | (In millions)
|Property, plant and equipment       |  |               |         |                  |   |        
|Land and improvements               |  | $             | 24.1    |                  | $ | 24.1   
|Buildings and improvements          |  |               | 327.0   |                  |   | 325.7  
|Machinery and equipment             |  |               | 1,596.9 |                  |   | 1,591.6
|Construction in progress            |  |               | 64.2    |                  |   | 67.6   
|                                    |  |               |         |                  |   |        
|Total property, plant and equipment |  |               | 2,012.2 |                  |   | 2,009.0
|Less accumulated depreciation       |  |               | 1,305.0 |                  |   | 1,277.4
|                                    |  |               |         |                  |   |        
|                                    |  | $             | 707.2   |                  | $ | 731.6  
|                                    |  |               |         |                  |   |        



|                                               |  |               |      |                  |   |     
|---------------------------------------------- |  | ------------- | ---- | ---------------- | - | ----
|                                               |  | March 29,2009 |      | December 28,2008
|                                               |  | (In millions)
|Accrued expenses and other current liabilities |  |               |      |                  |   |     
|Payroll and employee related accruals          |  | $             | 26.0 |                  | $ | 35.9
|Accrued interest                               |  |               | 5.6  |                  |   | 7.9 
|Taxes payable                                  |  |               | 5.4  |                  |   | 8.5 
|Restructuring and impairments                  |  |               | 4.8  |                  |   | 13.2
|Other                                          |  |               | 26.0 |                  |   | 28.9
|                                               |  |               |      |                  |   |     
|                                               |  | $             | 67.8 |                  | $ | 94.4
|                                               |  |               |      |                  |   |     

Note 3  Computation of Net Income (loss) per Share

Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is
computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock options and other potentially dilutive securities. Potentially
dilutive common equivalent securities consist of stock options, performance units (PUs), deferred stock units (DSUs), and restricted stock units (RSUs). In calculating diluted earnings per share, the dilutive effect of stock options is computed
using the average market price for the respective period. Certain potential shares of the companys outstanding stock options were excluded because they were anti-dilutive, but could be dilutive in the future. The following table sets forth the
computation of basic and diluted earnings per share.



|                                                                              |  |                                     |       |   |               |   |      
|----------------------------------------------------------------------------- |  | ----------------------------------- | ----- | - | ------------- | - | -----
|                                                                              |  | Three Months Ended                 
|                                                                              |  | March 29,2009                       |       |   | March 30,2008
|                                                                              |  | (In millions, except pershare data)
|Basic:                                                                        |  |                                     |       |   |               |   |      
|Net income (loss)                                                             |  | $                                   | (51.1 | ) |               | $ | 17.1 
|                                                                              |  |                                     |       |   |               |   |      
|Weighted average shares outstanding                                           |  |                                     | 123.6 |   |               |   | 124.4
|                                                                              |  |                                     |       |   |               |   |      
|Net income (loss) per share                                                   |  | $                                   | (0.41 | ) |               | $ | 0.14 
|                                                                              |  |                                     |       |   |               |   |      
|Diluted:                                                                      |  |                                     |       |   |               |   |      
|Net income (loss)                                                             |  | $                                   | (51.1 | ) |               | $ | 17.1 
|                                                                              |  |                                     |       |   |               |   |      
|Basic weighted average shares outstanding                                     |  |                                     | 123.6 |   |               |   | 124.4
|Assumed exercise of common stock equivalents                                  |  |                                     |      |   |               |   | 0.7  
|                                                                              |  |                                     |       |   |               |   |      
|Diluted weighted average common and common equivalent shares                  |  |                                     | 123.6 |   |               |   | 125.1
|                                                                              |  |                                     |       |   |               |   |      
|Net income (loss) per share                                                   |  | $                                   | (0.41 | ) |               | $ | 0.14 
|                                                                              |  |                                     |       |   |               |   |      
|Anti-dilutive common stock equivalents, non-vested stock, DSUs, RSUs, and PUs |  |                                     | 21.3  |   |               |   | 19.7 
|                                                                              |  |                                     |       |   |               |   |      



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In addition, the computation of diluted earnings per share did not include the assumed conversion of the 5% Convertible
Senior Subordinated Notes (Notes) because the effect would have been anti-dilutive for the three months ended March 30, 2008. As a result, $2.8 million of interest expense was not added back to the numerator for that period. In addition,
potential common shares of 6.7 million were not included in the denominator. The Notes did not impact the three months ended March 29, 2009 as they were redeemed in the second quarter of 2008.

Note 4  Supplemental Cash Flow Information



|               |  |                    |     |               |   |    
|-------------- |  | ------------------ | --- | ------------- | - | ---
|               |  | Three Months Ended
|               |  | March 29,2009      |     | March 30,2008
|               |  | (In millions)     
|Cash paid for: |  |                    |     |               |   |    
|Income taxes   |  | $                  | 1.3 |               | $ | 4.0
|               |  |                    |     |               |   |    
|Interest       |  | $                  | 7.6 |               | $ | 6.8
|               |  |                    |     |               |   |    

Note 5  Financial Instruments

Fair Value of Financial Instruments.In accordance with Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements, the company groups its financial assets and liabilities measured
at fair value on a recurring basis in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:



| |  |  | Level 1  Valuation is based upon quoted market price for identical instruments traded in active markets.
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Level 2  Valuation is based on quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets
that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  Valuation is generated from model-based techniques that use significant assumptions not observable in the market. Valuation techniques include use of
discounted cash flow models and similar techniques.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In accordance with FAS 157, it is the companys policy to maximize the use of
observable inputs and minimize the use of unobservable inputs when developing fair value measurements. When available, the company uses quoted market prices to measure fair value. If market prices are not available, the fair value measurement is
based on models that use primarily market based parameters including interest rate yield curves, option volatilities and currency rates. In certain cases where market rate assumptions are not available, the company is required to make judgments
about assumptions market participants would use to estimate the fair value of a financial instrument. Changes in the underlying assumptions used, including discount rates and estimates of future cash flows could significantly affect the results of
current or future values. The results may not be realized in an actual sale or immediate settlement of an asset or liability. See below for further discussion of the fair value of the companys derivatives and Note 6 for further discussion of
the fair value of the companys securities.

Derivatives.The company uses derivative instruments to manage exposures to changes in foreign
currency exchange rates and interest rates. In accordance with SFAS 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities, the fair value of these hedges is recorded on the balance sheet. All of the companys
derivatives are traded in over-the-counter markets where quoted market prices are not readily available. For those derivatives, the company measures fair value using prices obtained from the counterparties with whom the company has traded. The
counterparties price the derivatives based on models that use primarily market observable inputs, such as yield curves and option volatilities. Accordingly, the company classifies these derivatives as Level 2.

The company is exposed to credit-related losses in the event of non-performance by counterparties to hedging instruments. The counterparties to all derivative
transactions are major financial institutions with investment grade credit ratings. However, this does not eliminate the companys exposure to credit risk with these institutions. This credit risk is generally limited to the unrealized gains in
such contracts should any of these counterparties fail to perform as contracted. The company considers the risk of counterparty default to be minimal.



9



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The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of
March 29, 2009.



|                             |  |                                                                |      |                                           |                         |   |                                        |  |   |      |   |  |   |  
|---------------------------- |  | -------------------------------------------------------------- | ---- | ----------------------------------------- | ----------------------- | - | -------------------------------------- |  | - | ---- | - |  | - | -
|                             |  | Total                                                          |      |                                           | Fair Value Measurements
|                             |  | Quoted Pricesin ActiveMarkets forIdenticalLiabilities(Level 1) |      | SignificantOtherObservableInputs(Level 2) |                         |   | SignificantUnobservableInputs(Level
3)
|                             |  | (In millions)                                                 
|Foreign Currency Derivatives |  |                                                                |      |                                           |                         |   |                                        |  |   |      |   |  |   |  
|Assets                       |  | $                                                              | 1.1  |                                           |                         | $ |                                       |  | $ | 1.1  |   |  | $ | 
|Liabilities                  |  |                                                                | (3.8 | )                                         |                         |   |                                       |  |   | (3.8 | ) |  |   | 
|Interest Rate Swap           |  |                                                                | (5.7 | )                                         |                         |   |                                       |  |   | (5.7 | ) |  |   | 
|                             |  |                                                                |      |                                           |                         |   |                                        |  |   |      |   |  |   |  
|                             |  | $                                                              | (8.4 | )                                         |                         | $ |                                       |  | $ | (8.4 | ) |  | $ | 
|                             |  |                                                                |      |                                           |                         |   |                                        |  |   |      |   |  |   |  

Foreign Currency Derivatives. The company uses currency forward and combination option contracts to hedge a
portion of its forecasted foreign exchange denominated revenues and expenses. The company monitors its foreign currency exposures to maximize the overall effectiveness of its foreign currency hedge positions. Currencies hedged include the euro,
Japanese yen, Philippine peso, Malaysian ringgit, Korean won and Chinese yuan. The companys objectives for holding derivatives are to minimize the risks using the most effective methods to eliminate or reduce the impacts of these exposures.

Changes in the fair value of derivative instruments related to time value are included in the assessment of hedge effectiveness. Hedge ineffectiveness,
determined in accordance with SFAS 133 and SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities  an amendment of FASB Statement 133, did not have a material impact on earnings for the three months ended
March 29, 2009 and March 30, 2008. No cash flow hedges were derecognized or discontinued during the three months ended March 29, 2009 and March 30, 2008.

Derivative gains and losses included in other comprehensive income (OCI) are reclassified into earnings at the time the forecasted transaction is recognized. The company estimates that the entire $2.6 million of net
unrealized derivative losses included in OCI will be reclassified into earnings within the next twelve months.

The company also uses currency forward and
combination option contracts to offset the foreign currency impact of balance sheet translation. These derivatives have one month terms and the initial fair value, if any, and the subsequent gains or losses on the change in fair value are reported
in earnings within the same incomes statement line as the impact of the foreign currency translation.

Interest Rate Derivatives.The companys
variable-rate debt exposes the company to variability in interest payments due to changes in interest rates. The company uses a forward interest rate swap to mitigate the interest rate risk on a portion of its variable-rate borrowings in order to
manage fluctuations in cash flows resulting from changes in interest rates on variable-rate debt.

Effectiveness of this hedge is calculated by comparing
the fair value of the derivative to a hypothetical derivative that would be a perfect hedge of floating rate debt. The value of the hedge at inception was zero and there was no ineffectiveness as of March 29, 2009.

Derivative gains and losses included in OCI are reclassified into earnings at the time the forecasted transaction is recognized. There are currently $5.7 million of
unrealized losses included in OCI. The amounts are subsequently reclassified into interest expense as a yield adjustment in the same period in which the related interest on the floating-rate debt obligations affect earnings.

The table below shows the notional principal and the location and amounts of the derivative fair values in the statement of operations and the consolidated balance sheet
as of March 29, 2009 and December 28, 2008. Pursuant to Financial Accounting Standards Board (FASB) Financial Interpretation (FIN) 39, Offsetting of Amounts Related to Certain Contracts  an Interpretation of APB 10 and FASB
Statement 105, the company nets the fair value of all derivative financial



10



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instruments with counterparties for which a master netting arrangement is utilized. The notional principal amounts for these instruments provide one measure
of the transaction volume outstanding as of year end and do not represent the amount of the companys exposure to credit or market loss. The estimates of fair value are based on applicable and commonly used pricing models using prevailing
financial market information as of March 29, 2009 and December 28, 2008. Although the following table reflects the notional principal and fair value of amounts of derivative financial instruments, it does not reflect the gains or losses
associated with the exposures and transactions that these financial instruments are intended to hedge. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures
will depend on actual market conditions during the remaining life of the instruments.

The following tables present derivatives designated as hedging
instruments under SFAS 133.



|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|------------------------------------------------ |  | ----------------------------------------- |  | -------------- | ----- | --------- | - | ---- | ------------------------------------------- |  | -------------------------------------- |  | - | ----------------------------------- | - |  | --------------------------------------------------------------- | ---- | ---------------------------------------- |  | ---------------- |  | - | ----- | -
|                                                 |  | For the Three Months Ended March 29, 2009 | 
|                                                 |  | Balance SheetClassification               |  | NotionalAmount |       | FairValue |   |      | IncomeStatementClassificationof Gain (Loss) |  | Amount ofGain(Loss)RecognizedIn Income |  |   | Amount ofGain(Loss)RecognizedIn OCI |   |  | IncomeStatementClassificationof Gain (Loss)Reclassifiedfrom OCI |      | Amount ofGain (Loss)Reclassifiedfrom OCI | 
|                                                 |  | (In millions)                             | 
|Derivatives in Cash Flow Hedges                  |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Related to Existing Assets and Liabilities       |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Interest rate contract                           |  | Current liabilities                       |  | $              | 150.0 |           | $ | (5.7 | )                                           |  | Interest expense                       |  | $ | 1.3                                 |   |  | $                                                               | (5.7 | )                                        |  | Interest expense |  | $ | 1.3   |  
|                                                 |  |                                           |  |                |       |           |   |     
|Derivatives in Cash Flow Hedges                  |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Related to Forecasted Transactions               |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Foreign exchange contracts                       |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Derivatives for forecasted revenues              |  | Current assets                            |  | $              | 30.3  |           | $ | 1.5  |                                             |  | Revenue                                |  | $ |                                    |   |  | $                                                               | 1.5  |                                          |  | Revenue          |  | $ |      |  
|Derivatives for forecasted revenues              |  | Current liabilities                       |  |                | 3.6   |           |   | (0.1 | )                                           |  | Revenue                                |  |   |                                    |   |  |                                                                 | (0.1 | )                                        |  | Revenue          |  |   |      |  
|Derivatives for forecasted expenses              |  | Current assets                            |  |                | 29.6  |           |   | (0.4 | )                                           |  | Expenses                               |  |   |                                    |   |  |                                                                 | (0.4 | )                                        |  | Expenses         |  |   |      |  
|Derivatives for forecasted expenses              |  | Current liabilities                       |  |                | 46.0  |           |   | (3.8 | )                                           |  | Expenses                               |  |   |                                    |   |  |                                                                 | (3.8 | )                                        |  | Expenses         |  |   |      |  
|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Total of derivatives in a net liability position |  |                                           |  | $              | 109.5 |           | $ | (2.8 | )                                           |  |                                        |  | $ |                                    |   |  | $                                                               | (2.8 | )                                        |  |                  |  | $ |      |  
|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Positions no longer open at quarter end          |  |                                           |  |                |       |           |   |      |                                             |  | Revenue                                |  | $ | 1.1                                 |   |  | $                                                               |     |                                          |  | Revenue          |  | $ | 1.1   |  
|Positions no longer open at quarter end          |  |                                           |  |                |       |           |   |      |                                             |  | Expenses                               |  |   | (3.6                                | ) |  |                                                                 |     |                                          |  | Expenses         |  |   | (3.6  | )
|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Total of positions no longer open at quarter end |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  | $ | (2.5                                | ) |  | $                                                               |     |                                          |  |                  |  | $ | (2.5  | )
|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|                                                 | 
|                                                 |  | For the Year Ended December 28, 2008      | 
|                                                 |  | Balance SheetClassification               |  | NotionalAmount |       | FairValue |   |      | IncomeStatementClassificationof Gain (Loss) |  | Amount ofGain(Loss)RecognizedIn Income |  |   | Amount ofGain(Loss)RecognizedIn OCI |   |  | IncomeStatementClassificationof Gain (Loss)Reclassifiedfrom OCI |      | Amount ofGain (Loss)Reclassifiedfrom OCI | 
|                                                 |  | (In millions)                             | 
|Derivatives in Cash Flow Hedges                  |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Related to Existing Assets and Liabilities       |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Interest rate contract                           |  | Current liabilities                       |  | $              | 150.0 |           | $ | (6.0 | )                                           |  | Interest expense                       |  | $ | (2.2                                | ) |  | $                                                               | (6.0 | )                                        |  | Interest expense |  | $ | (2.2  | )
|                                                 |  |                                           |  |                |       |           |   |     
|Derivatives in Cash Flow Hedges                  |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Related to Forecasted Transactions               |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Foreign exchange contracts                       |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Derivatives for forecasted revenues              |  | Current liabilities                       |  | $              | 40.0  |           | $ | 0.5  |                                             |  | Revenue                                |  | $ | (0.1                                | ) |  | $                                                               | 0.5  |                                          |  | Revenue          |  | $ |      |  
|Derivatives for forecasted expenses              |  | Current liabilities                       |  |                | 92.0  |           |   | (4.6 | )                                           |  | Expenses                               |  |   | (0.1                                | ) |  |                                                                 | (4.6 | )                                        |  | Expenses         |  |   |      |  
|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Total of derivatives in a net liability position |  |                                           |  | $              | 132.0 |           | $ | (4.1 | )                                           |  |                                        |  | $ | (0.2                                | ) |  | $                                                               | (4.1 | )                                        |  |                  |  | $ |      |  
|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Positions no longer open at quarter end          |  |                                           |  |                |       |           |   |      |                                             |  | Revenue                                |  | $ | (2.1                                | ) |  | $                                                               |     |                                          |  | Revenue          |  | $ | (2.1  | )
|Positions no longer open at quarter end          |  |                                           |  |                |       |           |   |      |                                             |  | Expenses                               |  |   | (8.6                                | ) |  |                                                                 |     |                                          |  | Expenses         |  |   | (8.6  | )
|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  
|Total of positions no longer open at quarter end |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  | $ | (10.7                               | ) |  | $                                                               |     |                                          |  |                  |  | $ | (10.7 | )
|                                                 |  |                                           |  |                |       |           |   |      |                                             |  |                                        |  |   |                                     |   |  |                                                                 |      |                                          |  |                  |  |   |       |  

The following tables present derivatives not designated as hedging instruments under SFAS 133.



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|                                                                          |  |                                           |  |                |      |            |   |                                              |  |                                          |  |   |      |  
|------------------------------------------------------------------------- |  | ----------------------------------------- |  | -------------- | ---- | ---------- | - | -------------------------------------------- |  | ---------------------------------------- |  | - | ---- | -
|                                                                          |  | For the Three Months Ended March 29,
2009 | 
|                                                                          |  | Balance SheetClassification               |  | NotionalAmount |      | Fair Value |   | Income StatementClassification ofGain (Loss) |  | Amount of Gain(Loss) RecognizedIn Income | 
|                                                                          |  | (In millions)                             | 
|Derivatives in Cash Flow Hedges Relatedto Existing Assets and Liabilities |  |                                           |  |                |      |            |   |                                              |  |                                          |  |   |      |  
|Foreign Exchange Contracts                                                |  |                                           |  |                |      |            |   |                                              |  |                                          |  |   |      |  
|Derivatives related to existing assets                                    |  | Current liabilities                       |  | $              | 7.1  |            | $ | 0.1                                          |  | Revenue                                  |  | $ | 0.1  |  
|Derivatives related to existing liabilities                               |  | Current liabilities                       |  |                | 6.2  |            |   |                                             |  | Expenses                                 |  |   |     |  
|                                                                          |  |                                           |  |                |      |            |   |                                              |  |                                          |  |   |      |  
|Total of derivatives in a net liability position                          |  |                                           |  | $              | 13.3 |            | $ | 0.1                                          |  |                                          |  | $ | 0.1  |  
|                                                                          |  |                                           |  |                |      |            |   |                                              |  |                                          |  |   |      |  
|Positions no longer open at quarter end                                   |  |                                           |  |                |      |            |   |                                              |  | Revenue                                  |  | $ | 0.7  |  
|Positions no longer open at quarter end                                   |  |                                           |  |                |      |            |   |                                              |  | Expenses                                 |  |   | (1.2 | )
|                                                                          |  |                                           |  |                |      |            |   |                                              |  |                                          |  |   |      |  
|Total of positions no longer open at quarter end                          |  |                                           |  |                |      |            |   |                                              |  |                                          |  | $ | (0.5 | )
|                                                                          |  |                                           |  |                |      |            |   |                                              |  |                                          |  |   |      |  



|                                                                          |  |                                      |  |                |      |            |   |      |                                              |  |                                          |  |   |      |  
|------------------------------------------------------------------------- |  | ------------------------------------ |  | -------------- | ---- | ---------- | - | ---- | -------------------------------------------- |  | ---------------------------------------- |  | - | ---- | -
|                                                                          |  | For the Year Ended December 28, 2008 | 
|                                                                          |  | Balance SheetClassification          |  | NotionalAmount |      | Fair Value |   |      | Income StatementClassification ofGain (Loss) |  | Amount of Gain(Loss) RecognizedIn Income | 
|                                                                          |  | (In millions)                        | 
|Derivatives in Cash Flow Hedges Relatedto Existing Assets and Liabilities |  |                                      |  |                |      |            |   |      |                                              |  |                                          |  |   |      |  
|Foreign Exchange Contracts                                                |  |                                      |  |                |      |            |   |      |                                              |  |                                          |  |   |      |  
|Derivatives related to existing assets                                    |  | Current liabilities                  |  | $              | 10.9 |            | $ | 0.3  |                                              |  | Revenue                                  |  | $ | 0.3  |  
|Derivatives related to existing liabilities                               |  | Current liabilities                  |  |                | 14.4 |            |   | (0.2 | )                                            |  | Expenses                                 |  |   | (0.2 | )
|                                                                          |  |                                      |  |                |      |            |   |      |                                              |  |                                          |  |   |      |  
|Total of derivatives in a net liability position                          |  |                                      |  | $              | 25.3 |            | $ | 0.1  |                                              |  |                                          |  | $ | 0.1  |  
|                                                                          |  |                                      |  |                |      |            |   |      |                                              |  |                                          |  |   |      |  
|Positions no longer open at year end                                      |  |                                      |  |                |      |            |   |      |                                              |  | Revenue                                  |  | $ | (1.5 | )
|Positions no longer open at year end                                      |  |                                      |  |                |      |            |   |      |                                              |  | Expenses                                 |  |   | (5.5 | )
|                                                                          |  |                                      |  |                |      |            |   |      |                                              |  |                                          |  |   |      |  
|Total of positions no longer open at year end                             |  |                                      |  |                |      |            |   |      |                                              |  |                                          |  | $ | (7.0 | )
|                                                                          |  |                                      |  |                |      |            |   |      |                                              |  |                                          |  |   |      |  

Note 6  Securities

The company invests excess cash in marketable securities consisting primarily of commercial paper, corporate notes and bonds, and U.S. government securities. While the company still holds auction rate securities, the
company no longer actively invests in them.

All of the companys securities are classified as available-for-sale. In accordance with SFAS 115,
Accounting for Certain Investments in Debt and Equity Securities, available-for-sale securities are carried at fair value with unrealized gains and losses included as a component of OCI within stockholders equity, net of any related tax
effect, if such gains and losses are considered temporary. Realized gains and losses on these investments are included in interest income and expense. Declines in value judged by management to be other-than-temporary are included in impairment of
investments in the statement of operations. For the purpose of computing realized gains and losses, cost is identified on a specific identification basis.

The following table presents the amortized cost and estimated fair market value of available-for-sale securities by contractual maturity as of March 29, 2009.



|                                        |  |               |      |             |   |     
|--------------------------------------- |  | ------------- | ---- | ----------- | - | ----
|                                        |  | AmortizedCost |      | MarketValue
|                                        |  | (In millions)
|Due in one year or less                 |  | $             | 0.7  |             | $ | 0.7 
|Due after one year through three years  |  |               | 0.2  |             |   | 0.2 
|Due after three years through ten years |  |               | 1.1  |             |   | 1.2 
|Due after ten years                     |  |               | 33.0 |             |   | 32.4
|                                        |  |               |      |             |   |     
|                                        |  | $             | 35.0 |             | $ | 34.5
|                                        |  |               |      |             |   |     



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As of March 29, 2009, auction rate securities with a market value of $31.7 million are included in the table above
in contractual maturities due after ten years. The companys auction rate securities are composed of approximately $23.0 million of securities that are structured obligations of special purpose reinsurance entities associated with life
insurance companies and $8.7 million of corporate debt securities issued by a special purpose financial services corporation that offers credit risk protection through writing credit derivatives. The company continues to accrue and receive interest
on these securities based on a contractual rate.

Under SFAS 157, the company groups securities measured at fair value on a recurring basis in three
levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. (See Note 5 for further discussion of the fair value hierarchy under SFAS 157.)

Level 1 securities include those traded on an active exchange as well as U.S. Treasury, and other U.S. government and agency-backed securities that are traded by dealers
or brokers in active over-the-counter markets. The company has no securities classified as Level 2. The securities classified as Level 3 are auction rate securities.

The fair value of securities is based on quoted market prices at the date of measurement, except for auction rate securities. The auction rate security market is no longer active and as a result there is no observable
market data for these assets. Fair value estimates are based on judgments regarding current economic conditions, liquidity discounts and interest rate risks. These estimates involve significant uncertainties and judgments and cannot be determined
with precision. As a result such calculated fair value estimates may not be realizable in a current sale or immediate settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value measurement technique,
including discount rates, liquidity risks, and estimates of future cash flows could significantly affect these fair value estimates.

The company performed
its own discounted cash flow (DCF) calculation to determine the estimated fair value of the auction rate securities. The assumptions used in preparing the DCF model included estimates for the amount and timing of future interest and principal
payments and the rate of return required by investors to own these securities in the current environment. In making these assumptions, relevant factors that were considered included: the formula applicable to each security which defines the interest
rate paid to investors in the event of a failed auction; forward projections of the interest rate benchmarks specified in such formulas; the likely timing of principal repayments; the probability of full repayment considering guarantees by third
parties and additional credit enhancements provided through other means. The estimate of the rate of return required by investors to own these securities also considers the current reduced liquidity for auction rate securities. The inputs for the
companys DCF were based upon publicly available data as well as the companys own estimates. The primary unobservable input to the valuation was the maturity assumption which ranged from six to twelve years depending on the individual
auction rate security. The maturity assumptions were based on the terms of the underlying instrument and the potential for restructuring the auction rate security. In the fourth quarter of 2008, the company concluded that the impairment of its
auction rate securities was other-than-temporary and recognized a loss of $19.0 million in the income statement.

The following table presents the balances
of securities measured at fair value on a recurring basis as of March 29, 2009.

|                        |  |               |      |                                                            |   |                                           |  |                                        |   |  |   |     
|----------------------- |  | ------------- | ---- | ---------------------------------------------------------- | - | ----------------------------------------- |  | -------------------------------------- | - |  | - | ----
|                        |  |               |      | Fair Value Measurements                                   
|                        |  | Total         |      | Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) |   | SignificantOtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|                        |  | (In millions)
|Marketable securities   |  | $             | 2.8  |                                                            | $ | 2.8                                       |  | $                                      |  |  | $ |    
|Auction rate securities |  |               | 31.7 |                                                            |   |                                          |  |                                        |  |  |   | 31.7
|                        |  |               |      |                                                            |   |                                           |  |                                        |   |  |   |     
|                        |  | $             | 34.5 |                                                            | $ | 2.8                                       |  | $                                      |  |  | $ | 31.7
|                        |  |               |      |                                                            |   |                                           |  |                                        |   |  |   |     

The following table summarizes the changes in level 3 securities measured at fair value on a recurring basis for
the three months ended March 29, 2009.



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|                                                                                      |  |                        |      |  
|------------------------------------------------------------------------------------- |  | ---------------------- | ---- | -
|                                                                                      |  | Auction RateSecurities |     
|                                                                                      |  | (In millions)          |     
|Balance at beginning of period                                                        |  | $                      | 32.3 |  
|Total realized and unrealized gains or (losses)Included in other comprehensive income |  |                        | (0.7 | )
|Accretion of impairments included in net loss                                         |  |                        | 0.1  |  
|Purchases, issuances and settlements                                                  |  |                        |     |  
|                                                                                      |  |                        |      |  
|Balance at end of period                                                              |  | $                      | 31.7 |  
|                                                                                      |  |                        |      |  

All investments in an unrealized loss position at March 29, 2009 have been in an unrealized loss position for
less than twelve months.

Note 7  Segment Information

Effective December 29, 2008 (first day of fiscal year 2009), the company realigned its operating segments and management structure and, accordingly, its segment reporting. Two product lines previously included in the Standard Products
Group were transferred into our Mobile, Computing, Consumer and Communications (MCCC) and Power Conversion, Industrial and Automotive (PCIA) groups. The realignment corresponds with the way the company manages the business and was designed to reduce
costs and facilitate greater customer intimacy by moving from a product oriented structure to an application based structure. The majority of the companys activities have now been realigned into two focus areas; MCCC, which focuses on handset
computing and multimedia applications, and PCIA, which focuses on power supply and motor control solutions. Each of these segments has a relatively small set of leading customers, common technology requirements and similar design cycles. The
Standard Discrete and Standard Linear (SDT) business will continue to be managed separately as a third segment. All segment reporting within managements discussion and analysis has been restated to reflect this change.

In addition, as a result of a company-wide simplification effort, the allocation of selling, general and administrative (SG&A) expenses to the reporting segments was
changed beginning in the first quarter of 2009. Starting in fiscal year 2009, only dedicated, direct SG&A spending by the segments will be included in their operating income. All other corporate level SG&A spending will be included in the
corporate category. Prior periods have been restated to reflect this change.

The following table presents selected operating segment financial information
for the three months ended March 29, 2009 and March 30, 2008. Historical amounts in the table below have been reclassified to align with these new operating segments.



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|                                            |  |                    |       |   |               |   |       |  
|------------------------------------------- |  | ------------------ | ----- | - | ------------- | - | ----- | -
|                                            |  | Three Months Ended |      
|                                            |  | March 29,2009      |       |   | March 30,2008 |  
|                                            |  | (In millions)      |      
|Revenue and operating income (loss):        |  |                    |       |   |               |   |       |  
|MCCC                                        |  |                    |       |   |               |   |       |  
|Total revenue                               |  | $                  | 97.7  |   |               | $ | 197.2 |  
|Operating income (loss)                     |  |                    | (4.6  | ) |               |   | 45.8  |  
|                                            |  |                    |       |   |               |   |       |  
|PCIA                                        |  |                    |       |   |               |   |       |  
|Total revenue                               |  |                    | 101.5 |   |               |   | 166.8 |  
|Operating income                            |  |                    | 3.0   |   |               |   | 29.4  |  
|                                            |  |                    |       |   |               |   |       |  
|SDT                                         |  |                    |       |   |               |   |       |  
|Total revenue                               |  |                    | 24.1  |   |               |   | 42.3  |  
|Operating income (loss)                     |  |                    | (1.0  | ) |               |   | 2.7   |  
|                                            |  |                    |       |   |               |   |       |  
|Corporate                                   |  |                    |       |   |               |   |       |  
|Restructuring and impairments expense       |  |                    | (6.7  | ) |               |   | (0.2  | )
|Stock-based compensation expense            |  |                    | (2.6  | ) |               |   | (6.9  | )
|Selling, general and administrative expense |  |                    | (34.8 | ) |               |   | (44.0 | )
|                                            |  |                    |       |   |               |   |       |  
|Total consolidated                          |  |                    |       |   |               |   |       |  
|Total revenue                               |  | $                  | 223.3 |   |               | $ | 406.3 |  
|Operating income (loss)                     |  | $                  | (46.7 | ) |               | $ | 26.8  |  

Note 8  Goodwill and Intangible Assets

The following table presents a summary of acquired intangible assets.



|                                |  |                       |                     |                      |                         |  |                         |                     |   |                         |   |       |  |   |        |  
|------------------------------- |  | --------------------- | ------------------- | -------------------- | ----------------------- |  | ----------------------- | ------------------- | - | ----------------------- | - | ----- |  | - | ------ | -
|                                |  | Period ofAmortization |                     | As of March 29, 2009 |                         |  | As of December 28, 2008 |                    
|                                |  |                       | GrossCarryingAmount |                      | AccumulatedAmortization |  |                         | GrossCarryingAmount |   | AccumulatedAmortization |  
|                                |  |                       |                     | (In millions)        |                        
|Identifiable intangible assets: |  |                       |                     |                      |                         |  |                         |                     |   |                         |   |       |  |   |        |  
|Developed technology            |  | 2 - 15 years          |                     | $                    | 238.9                   |  | $                       | (166.3              | ) |                         | $ | 237.6 |  | $ | (161.7 | )
|Customer base                   |  | 8 - 10 years          |                     |                      | 81.6                    |  |                         | (61.3               | ) |                         |   | 81.6  |  |   | (60.7  | )
|Core technology                 |  | 10 years              |                     |                      | 3.9                     |  |                         | (0.8                | ) |                         |   | 3.9   |  |   | (0.7   | )
|Assembled workforce             |  | 5 years               |                     |                      | 1.0                     |  |                         | (0.6                | ) |                         |   | 1.0   |  |   | (0.5   | )
|Process technology              |  | 5 years               |                     |                      | 1.6                     |  |                         | (0.7                | ) |                         |   | 1.6   |  |   | (0.6   | )
|Patents                         |  | 4 years               |                     |                      | 5.9                     |  |                         | (5.3                | ) |                         |   | 5.9   |  |   | (5.3   | )
|                                |  |                       |                     |                      |                         |  |                         |                     |   |                         |   |       |  |   |        |  
|Subtotal                        |  |                       |                     |                      | 332.9                   |  |                         | (235.0              | ) |                         |   | 331.6 |  |   | (229.5 | )
|Goodwill (1)                    |  |                       |                     |                      | 161.7                   |  |                         |                    |   |                         |   | 161.7 |  |   |       |  
|                                |  |                       |                     |                      |                         |  |                         |                     |   |                         |   |       |  |   |        |  
|Total                           |  |                       |                     | $                    | 494.6                   |  | $                       | (235.0              | ) |                         | $ | 493.3 |  | $ | (229.5 | )
|                                |  |                       |                     |                      |                         |  |                         |                     |   |                         |   |       |  |   |        |  



|(1) | The entire balance of goodwill is assigned to the MCCC product group. The realignment of the companys SFAS 131, Disclosures about Segments of an Enterprise and Related
Information, segment reporting did not impact the carrying amount of goodwill by segment.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table presents the estimated
amortization expense for intangible assets for the remainder of 2009 and for each of the five succeeding fiscal years.



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|                                |  |               |     
|------------------------------- |  | ------------- | ----
|Estimated Amortization Expense: |  | (In millions)
|Remainder of 2009               |  | $             | 16.8
|2010                            |  |               | 22.3
|2011                            |  |               | 18.0
|2012                            |  |               | 15.8
|2013                            |  |               | 13.3
|2014                            |  |               | 5.4 

Note 9  Restructuring and Impairments

During the three months ended March 29, 2009, the company 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.

During the three months ended March 30, 2008, the company recorded restructuring and impairment charges, net of releases, of $0.2 million. The
charges included $0.3 million of employee separation costs and $0.1 million in reserve releases both associated with the 2007 Infrastructure Realignment Program.

The following table presents a summary of the activity in the companys accrual for restructuring and impairment costs for the three months ended March 29, 2009 (in millions).



|                                         |  |                             |      |            |   |          |  |   |                |   |  |               |      |   |                            |   |      |   |  |   |    
|---------------------------------------- |  | --------------------------- | ---- | ---------- | - | -------- |  | - | -------------- | - |  | ------------- | ---- | - | -------------------------- | - | ---- | - |  | - | ---
|                                         |  | AccrualBalance at12/28/2008 |      | NewCharges |   | CashPaid |  |   | ReserveRelease |   |  | Non-CashItems |      |   | AccrualBalance at3/29/2009
|2007 Infrastructure Realignment Program: |  |                             |      |            |   |          |  |   |                |   |  |               |      |   |                            |   |      |   |  |   |    
|Employee Separation Costs                |  | $                           | 0.4  |            | $ |         |  | $ | (0.1           | ) |  | $             |     |   |                            | $ |     |   |  | $ | 0.3
|                                         |  |                             |      |            |   |         
|2008 Infrastructure Realignment Program: |  |                             |      |            |   |          |  |   |                |   |  |               |      |   |                            |   |      |   |  |   |    
|Employee Separation Costs                |  |                             | 11.3 |            |   | 5.8      |  |   | (14.0          | ) |  |               | (0.2 | ) |                            |   |     |   |  |   | 2.9
|Lease Impairment Costs                   |  |                             | 1.5  |            |   | 0.3      |  |   | (0.2           | ) |  |               |     |   |                            |   |     |   |  |   | 1.6
|                                         |  |                             |      |            |   |         
|2009 Infrastructure Realignment Program: |  |                             |      |            |   |          |  |   |                |   |  |               |      |   |                            |   |      |   |  |   |    
|Asset Impairment                         |  |                             |     |            |   | 0.8      |  |   |               |   |  |               |     |   |                            |   | (0.8 | ) |  |   |   
|                                         |  |                             |      |            |   |          |  |   |                |   |  |               |      |   |                            |   |      |   |  |   |    
|                                         |  | $                           | 13.2 |            | $ | 6.9      |  | $ | (14.3          | ) |  | $             | (0.2 | ) |                            | $ | (0.8 | ) |  | $ | 4.8
|                                         |  |                             |      |            |   |          |  |   |                |   |  |               |      |   |                            |   |      |   |  |   |    

The company expects to substantially complete payment of the remaining employee severance related restructuring
accruals by the second quarter of 2009. In addition, payouts associated with the lease impairment will be made on a regular basis and will be complete by the fourth quarter of 2011.

At the end of the first quarter of 2009, the company announced plans to close the Mountaintop, Pennsylvania manufacturing facility as well as the four-inch manufacturing line in Bucheon, South Korea. The company
anticipates that the consolidation of the South Korea fabrication processes and the closure of the Mountaintop facility will be completed by June 2010. The company expects to incur restructuring charges for these closures beginning in the second
quarter of 2009.

Note 10  Contingencies

Patent Litigation with Power Integrations, Inc. On October 20, 2004, the company and its wholly owned subsidiary, Fairchild Semiconductor Corporation, were sued by Power Integrations, Inc. in the U.S. District Court for the
District of Delaware. Power Integrations alleges that certain of the companys pulse width modulation (PWM) integrated circuit products infringe four Power Integrations U.S. patents, and seeks a permanent injunction preventing the company from
manufacturing, selling or offering the products for sale in the U.S., or from importing the products into the U.S., as well as money damages for past infringement. The company has analyzed the Power Integrations patents in light of the
companys products and, based on that analysis, does not believe the companys products violate Power Integrations patents. Accordingly, the company is vigorously contesting this lawsuit.



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The company also petitioned the U.S. Patent and Trademark Office for reexamination of all unexpired patent claims
asserted in the case (those being all asserted claims from three of the four patents asserted in the case; the fourth patent has expired), and as a consequence the patent office initiated reexamination proceedings on all of those claims. In the
first half of 2008, in the patent offices first formal correspondence regarding the validity of the patents, all of those asserted claims were rejected by the patent office. In December 2008, the patent office issued final rejections of 12 of
14 patent claims from two of the three unexpired Power Integrations patents. The patent office has twice issued preliminary rejections of all claims asserted by Power Integrations in the third unexpired patent.

The trial in the case was divided into three phases. The first phase, held in October 2006, was on infringement, the willfulness of any infringement, and damages. On
October 10, 2006, a jury returned a verdict finding that thirty-three of the companys PWM products infringe one or more of seven claims of the four patents being asserted. The jury also found that the companys infringement was
willful, and assessed damages against the company of approximately $34 million. The second phase of the trial, held in September 2007 before a different jury, was on the validity of the Power Integrations patents being asserted. On
September 21, 2007 a jury returned a verdict in the second phase, finding that the four Power Integrations patents asserted in the lawsuit are valid. The third phase of the trial began on September 21, 2007, and covered the enforceability
of the patents. On September 24, 2008, the court ruled on the third phase, finding that the patents are enforceable.

On December 12, 2008, the
judge overseeing the case reduced the jurys October 10, 2006 damages award from approximately $34 million to approximately $6 million, and ordered a new trial on whether the company willfully infringed Power Integrations asserted
patents. The court also issued a permanent injunction on a limited number of Fairchilds products enjoining the company from making, selling or offering to sell the products in the U.S., or from importing the products into the U.S. The judge in
the case has stayed the injunction while the company seeks a longer stay from the U.S. Court of Appeals for the Federal Circuit. The company voluntarily stopped U.S. sales and importation of those products in 2007 and now offers replacement products
worldwide.

Final judgment in the case is not expected until after the new trial on willfulness, scheduled to begin in June 22, 2009. If the court in
the new willfulness trial finds that the companys infringement was willful, the judge will have discretion to increase the final approximately $6 million damages award by up to three times the amount of the award. The judge in the case has
also awarded Power Integrations pre-judgment interest. It is also possible that the company could be required to pay Power Integrations attorneys fees. The final damages award and injunction are subject to appeal and the company expects
to contest several aspects of the litigation and to appeal on several grounds at the appropriate time. If the company chooses to appeal, the company would likely be required to post a bond or provide other security for some or the entire amount of
the final damages award during the appeal process.

On May 23, 2008, Power Integrations filed another lawsuit against the company, Fairchild
Semiconductor Corporation and the companys wholly owned subsidiary System General Corporation in the U.S. District Court for the District of Delaware, alleging infringement of three patents. Of the three patents claimed in this lawsuit, two
are patents that were asserted against the company and Fairchild Semiconductor Corporation in the October 2004 lawsuit described above. As mentioned above, all claims asserted in the first lawsuit from these two patents have now received final
rejections from the patent office. On March 20, 2009, the patent office granted the companys request for ex parte reexamination of the claims from the third patent asserted in this lawsuit, having reached the conclusion that the prior art
presents a substantial new question as to the validity of the asserted claims. The company believes it has strong defenses against Power Integrations claims and intends to vigorously defend this second lawsuit.

On October 14, 2008, Fairchild Semiconductor Corporation and System General Corporation filed a patent infringement lawsuit against Power Integrations in the U.S.
District Court for the District of Delaware, alleging that certain PWM integrated circuit products infringe one or more claims of three U.S. patents owned by System General. The lawsuit seeks monetary damages and an injunction preventing the
manufacture, use, sale, offer for sale or importation of Power Integrations products found to infringe the asserted patents.

Patent Litigation with
Infineon.On November 25, 2008, the company was sued by Infineon Technologies AG, Infineon Technologies Austria AG, and Infineon Technologies North America Corporation in the U.S. District Court for the District of Delaware. Infineon
alleges that the company infringes five Infineon U.S. patents and seeks a declaratory judgment that Infineon does not infringe six Fairchild patents. On November 28, 2008, the company answered the Infineon complaint with denials of their claims
and the companys own counterclaims of infringement. In the companys counterclaim the company is asserting that certain Infineon products infringe one or more claims of six Fairchild patents.



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On November 28, 2008, Fairchild Semiconductor Corporation also filed a separate infringement action against Infineon
Technologies AG and Infineon Technologies North America Corporation in the U.S. District Court for the District of Maine, alleging that Infineon infringes two Fairchild patents that Infineon did not raise in the Delaware case.

Both Infineon and Fairchild are asking for unspecified money damages, including enhanced damages for willful infringement, and a permanent injunction.

Other Legal Claims. From time to time the company is involved in legal proceedings in the ordinary course of business. The company believes that there is no such
ordinary-course litigation pending that could have, individually or in the aggregate, a material adverse effect on the companys business, financial condition, results of operations or cash flows.

The company has analyzed the potential litigation outcomes from the companys current litigation in accordance with SFAS 5, Accounting for Contingencies.While the exact amount of these losses is not known, the company has recorded net reserves for potential litigation outcomes in the consolidated statement of operations, based upon the companys assessments of the potential liability using
an analysis of the claims and historical experience in defending and/or resolving these claims. As of March 29, 2009, the companys balance for potential litigation outcomes was $6.7 million.

Note 11  Long-Term Debt

Long-term debt consists of the
following at:



|                                     |  |               |       |                  |   |      
|------------------------------------ |  | ------------- | ----- | ---------------- | - | -----
|                                     |  | March 29,2009 |       | December 28,2008
|                                     |  | (In millions)
|Revolving Credit Facility borrowings |  | $             | 19.4  |                  | $ | 19.4 
|Term Loan                            |  |               | 514.5 |                  |   | 515.8
|                                     |  |               |       |                  |   |      
|Total debt                           |  |               | 533.9 |                  |   | 535.2
|Current portion of long-term debt    |  |               | 5.3   |                  |   | 5.3  
|                                     |  |               |       |                  |   |      
|Long-term debt, less current portion |  | $             | 528.6 |                  | $ | 529.9
|                                     |  |               |       |                  |   |      

Note 12  Acquisitions

On March 3, 2009, the company completed an acquisition for approximately $1.5 million in cash. The acquisition was made to augment the companys Analog Signal Path design resources and IP portfolio. The
transaction was accounted for as an asset purchase with the purchase price allocated mainly to developed technology, which is being amortized over the estimated useful life of 5 years.



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Except as otherwise indicated in this Quarterly Report on Form 10-Q, the terms we, our, the company, Fairchild and Fairchild International refer to Fairchild
Semiconductor International, Inc. and its consolidated subsidiaries, including Fairchild Semiconductor Corporation, our principal operating subsidiary. We refer to individual corporations where appropriate.

Overview

In 2008, we saw the onset of the first global recession in
70 years. While this deep recession presents great challenges, it also presents opportunity. We are determined to use this recession as a catalyst to accelerate our transition to a high-value company by focusing on making our customers successful,
making innovation a core strength and keeping our cost structure ahead of the environment.

Our current business forecasting is hampered by poor forward
visibility, as our original equipment manufacturers and distributor end customers become increasingly cautious in their booking activity. While we cannot predict how long this down cycle will last, we are proactively taking actions to manage our
business through it. We are doing this primarily through careful inventory and expense management.



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We continue to manage our production output to match end market demand and tightly control our inventory. We reduced
internal inventories by $24.7 million in the first quarter of 2009.

We have taken aggressive cost reduction actions in order to stay ahead of the economic
environment. Our structural improvements and fixed cost reductions will enable us to leverage future earnings increases as we emerge from the recession. These actions include plans to streamline and consolidate wafer manufacturing by closing our
wafer manufacturing facility in Pennsylvania and closing our four-inch manufacturing line in South Korea. Most of the products currently manufactured in Pennsylvania will be transferred to other internal sites. Manufacturing performed in the Korean
four-inch line will be transferred to five and six-inch wafer fabs in Korea. We expect that these changes will simplify operations, improve productivity and reduce costs.

Effective the first quarter of 2009, we have realigned our operating segments and management structure and, accordingly, our segment reporting. The realignment corresponds with the way we manage the business and was
designed to reduce costs and facilitate greater customer intimacy by moving from a product oriented structure to an application based structure. The majority of our activities have been realigned into two focus areas; Mobile, Computing, Consumer and
Communications (MCCC) which focuses on handset computing and multimedia applications, and Power Conversion, Industrial and Automotive (PCIA) which focuses on power supply and motor control solutions. Each of these segments has a relatively small set
of leading customers, common technology requirements, and similar design cycles. The Standard Discrete and Standard Linear (SDT) business will continue to be managed separately as a third segment. All segment reporting within managements
discussion and analysis has been restated to reflect this change.

In addition, as a result of a company-wide simplification effort, the allocation of
selling, general and administrative (SG&A) expenses to the reporting segments was changed beginning in the first quarter of 2009. Starting in fiscal year 2009, only dedicated, direct SG&A spending by the segments will be included in their
operating income. All other corporate level SG&A spending will be included in the corporate category. Prior periods have been restated to reflect this change.

MCCCs main focus is to supply the mobile, computing, consumer and communication end market segments with innovative power and signal path solutions including our low voltage MOSFETs, Power Management ICs, Mixed Signal Analog and
Logic products. We seek to deliver exceptional product performance by optimizing silicon processes and application specific design to satisfy specific requirements for our customers. This enables us to deliver solutions with greater energy
efficiency and smaller footprint than is commonly available. With an improvement in the economy, we expect a steady acceleration of new product sales especially for solutions targeted to the handset and ultraportable market.

PCIAs focus is to capitalize on the growing demand for greater energy efficiency in power supplies, battery chargers and automobiles. We are a leader in power
factor correction, low standby power consumption designs and innovative switching techniques that enable greater efficiency under load. Improving the efficiency of our customers products is vital to meeting new energy efficiency regulations.
Effectively managing the power conversion and initial voltage regulation in power supplies is one of the greatest opportunities we have to improve overall system efficiency. We believe the growing global focus on energy efficiency will continue to
drive growth in this product line.

SDT products are core building block components for many electronic applications. This segment is moving to a more
simplified and focused operating model to make the selling and support of these products easier and more profitable. The right operational structure and part portfolio will enable SDT to capture market share and increase profits.

Results of Operations

The following table summarizes certain
information relating to our operating results as derived from our unaudited consolidated financial statements.



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|                                                |  |                       |       |   |               |       |   |  |   |       |  |       |  
|----------------------------------------------- |  | --------------------- | ----- | - | ------------- | ----- | - |  | - | ----- |  | ----- | -
|                                                |  | Three Months Ended    |      
|                                                |  | March 29,2009         |       |   | March 30,2008 |      
|                                                |  | (Dollars in millions) |      
|Total revenue                                   |  | $                     | 223.3 |   |               | 100.0 | % |  | $ | 406.3 |  | 100.0 | %
|Gross margin                                    |  |                       | 34.0  |   |               | 15.2  | % |  |   | 122.5 |  | 30.2  | %
|                                                |  |                       |       |  
|Operating expenses:                             |  |                       |       |   |               |       |   |  |   |       |  |       |  
|Research and development                        |  |                       | 23.8  |   |               | 10.7  | % |  |   | 29.8  |  | 7.3   | %
|Selling, general and administrative             |  |                       | 44.7  |   |               | 20.0  | % |  |   | 60.1  |  | 14.8  | %
|Amortization of acquisition-related intangibles |  |                       | 5.5   |   |               | 2.5   | % |  |   | 5.6   |  | 1.4   | %
|Restructuring and impairments                   |  |                       | 6.7   |   |               | 3.0   | % |  |   | 0.2   |  | 0.0   | %
|                                                |  |                       |       |   |               |       |   |  |   |       |  |       |  
|Total operating expenses                        |  |                       | 80.7  |   |               | 36.1  | % |  |   | 95.7  |  | 23.6  | %
|                                                |  |                       |       |  
|Operating income (loss)                         |  |                       | (46.7 | ) |               | -20.9 | % |  |   | 26.8  |  | 6.6   | %
|                                                |  |                       |       |  
|Other expense, net                              |  |                       | 5.3   |   |               | 2.4   | % |  |   | 5.2   |  | 1.3   | %
|                                                |  |                       |       |   |               |       |   |  |   |       |  |       |  
|Income (loss) before income taxes               |  |                       | (52.0 | ) |               | -23.3 | % |  |   | 21.6  |  | 5.3   | %
|                                                |  |                       |       |  
|Provision (benefit) for income taxes            |  |                       | (0.9  | ) |               | -0.4  | % |  |   | 4.5   |  | 1.1   | %
|                                                |  |                       |       |   |               |       |   |  |   |       |  |       |  
|Net income (loss)                               |  | $                     | (51.1 | ) |               | -22.9 | % |  | $ | 17.1  |  | 4.2   | %
|                                                |  |                       |       |   |               |       |   |  |   |       |  |       |  

Total Revenue.Total revenue in the first quarter of 2009 decreased $183.0 million, or
approximately 45%, compared to the same period in 2008. The decline in revenue was driven by a decrease in unit volumes due to reduced demand as a result of the worldwide economic downturn.

Geographic revenue information is based on the customer location within the indicated geographic region. The following table presents, as a percentage of sales,
geographic sales for the U.S., Other Americas, Europe, China, Taiwan, Korea and Other Asia/Pacific (which for our geographic reporting purposes includes Japan and Singapore) for the three months ended March 29, 2009 and March 30, 2008. The
decrease in the percentage of revenue in Taiwan resulted from a reduction in demand for desktop and notebook computers. The percentage of revenue in China increased as a result of new design wins and stronger demand for our smart power module
products and high performance MOSFETS. This increase in demand was driven by a government sponsored household appliance subsidy program for the rural Chinese population.



|                   |  |                    |   |  |               |  
|------------------ |  | ------------------ | - |  | ------------- | -
|                   |  | Three Months Ended |  
|                   |  | March 29,2009      |   |  | March 30,2008 |  
|U.S.               |  | 10                 | % |  | 8             | %
|Other Americas     |  | 5                  |   |  | 3             |  
|Europe             |  | 15                 |   |  | 14            |  
|China              |  | 34                 |   |  | 27            |  
|Taiwan             |  | 12                 |   |  | 21            |  
|Korea              |  | 14                 |   |  | 14            |  
|Other Asia/Pacific |  | 10                 |   |  | 13            |  
|                   |  |                    |   |  |               |  
|Total              |  | 100                | % |  | 100           | %
|                   |  |                    |   |  |               |  

Gross Margin.In the first quarter of 2009 gross margin decreased approximately $88.5
million or approximately 72%, as compared to the same period in 2008. The decrease in gross margin is due to decreased revenue, lower unit volumes and higher manufacturing costs as a result of lower factory utilization due to lower demand and
efforts to reduce internal inventory.



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Operating Expenses. Research and development (R&D) and SG&A expenses decreased due to cost
reduction efforts implemented in 2008. Our employee base was reduced, discretionary spending was cut and a number of temporary benefit reductions were implemented. In addition, equity and variable compensation was reduced.

Restructuring and Impairments.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 for the streamlining of warehouse operations and $0.2 million in releases associated with the 2008 Infrastructure Realignment Program. The
charges also include $0.8 million for the impairment of software associated with the 2009 Infrastructure Realignment Program.

During the three months
ended March 30, 2008, we recorded restructuring and impairment charges, net of releases, of $0.2 million. The charges included $0.3 million of employee separation costs and $0.1 million in reserve releases both associated with the 2007
Infrastructure Realignment Program.

The remaining employee severance related accruals associated with the 2008 Infrastructure Realignment Program are
expected to be substantially complete by the end of the second quarter of 2009. This action impacts approximately 1,040 manufacturing and non-manufacturing personnel. We expect annualized cost savings associated with the employee separation costs of
approximately $30.0 million by the end of the second quarter of 2009. We achieved annualized cost savings associated with the lease impairment of approximately $0.7 million effective during the first quarter of 2009.

At the end of the first quarter of 2009, we announced plans to close the Mountaintop, Pennsylvania manufacturing facility as well as the four-inch manufacturing line in
Bucheon, South Korea. We anticipate that the consolidation of the South Korea fabrication processes and the closure of the Mountaintop facility will be completed by June 2010. We expect to incur restructuring charges for these closures beginning in
the second quarter of 2009.

Other Expense, net.

The following table presents a summary of other expense, net for the three months ended March 29, 2009 and March 30, 2008.



|                            |  |                    |      |   |               |   |      |  
|--------------------------- |  | ------------------ | ---- | - | ------------- | - | ---- | -
|                            |  | Three Months Ended |     
|                            |  | March 29,2009      |      |   | March 30,2008 |  
|                            |  | (In millions)      |     
|Interest expense            |  | $                  | 6.3  |   |               | $ | 9.3  |  
|Interest income             |  |                    | (1.1 | ) |               |   | (4.2 | )
|Other (income) expense, net |  |                    | 0.1  |   |               |   | 0.1  |  
|                            |  |                    |      |   |               |   |      |  
|Other expense, net          |  | $                  | 5.3  |   |               | $ | 5.2  |  
|                            |  |                    |      |   |               |   |      |  

Interest expense.Interest expense for the first quarter of 2009 decreased $3.0 million as
compared to the first quarter of 2008, primarily due to lower interest rates on outstanding debt and lower debt balances.

Interest income.Interest income in the first quarter of 2009 decreased $3.1 million as compared to the first quarter of 2008, as a result of lower invested balances in cash and cash equivalents and lower rates of return.

Income Taxes.Income tax benefit for the first three months of 2009 was $0.9 million on loss before taxes of $52.0 million as compared to income taxes of
$4.5 million on income before taxes of $21.6 million for the same period of 2008. The effective tax rate for the first quarter of 2009 was 1.7% compared to 20.8% for the comparable period of 2008. 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. In the first three months of 2009, the valuation
allowance on our deferred tax assets increased by $4.2 million. The overall increase did not impact our results of operations.

In accordance with
Accounting Principles Board (APB) Opinion 23, Accounting for Income Taxes  Special Areas, deferred taxes have not been provided on undistributed earnings of foreign subsidiaries which are reinvested indefinitely. Certain non-U.S.
earnings, which have been taxed in the U.S. but earned offshore, have and continue to be part of our repatriation plan. For the quarter ending March 29, 2009, we recorded a deferred tax liability of $0.4 million, with no impact to the
consolidated statement of operations as we have a full valuation allowance against our net U.S. deferred tax assets.



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##### Table of Contents

Reportable Segments.

The following tables present comparative disclosures of revenue and gross margin of our reportable segments.



|              |  |                       |       |            |                |   |              |      |   |                        |   |       |         |  |            |       |  |              |   |  |                        |   |  |   |       |  
|------------- |  | --------------------- | ----- | ---------- | -------------- | - | ------------ | ---- | - | ---------------------- | - | ----- | ------- |  | ---------- | ----- |  | ------------ | - |  | ---------------------- | - |  | - | ----- | -
|              |  | Three Months Ended    |      
|              |  | March 29, 2009        |       |            | March 30, 2008 |  
|              |  | Revenue               |       | % of total |                |   | GrossMargin% |      |   | OperatingIncome (loss) |   |       | Revenue |  | % of total |       |  | GrossMargin% |   |  | OperatingIncome (loss) |  
|              |  | (Dollars in millions) |      
|MCCC          |  | $                     | 97.7  |            | 43.7           | % |              | 14.9 | % |                        | $ | (4.6  | )       |  | $          | 197.2 |  | 48.5         | % |  | 34.2                   | % |  | $ | 45.8  |  
|PCIA          |  |                       | 101.5 |            | 45.5           | % |              | 19.0 | % |                        |   | 3.0   |         |  |            | 166.8 |  | 41.1         | % |  | 30.8                   | % |  |   | 29.4  |  
|SDT           |  |                       | 24.1  |            | 10.8           | % |              | 1.2  | % |                        |   | (1.0  | )       |  |            | 42.3  |  | 10.4         | % |  | 11.1                   | % |  |   | 2.7   |  
|Corporate (1) |  |                       |      |            |               |   |              |     |   |                        |   | (44.1 | )       |  |            |      |  |             |   |  |                       |   |  |   | (51.1 | )
|              |  |                       |       |            |                |   |              |      |   |                        |   |       |         |  |            |       |  |              |   |  |                        |   |  |   |       |  
|Total         |  | $                     | 223.3 |            | 100.0          | % |              | 15.2 | % |                        | $ | (46.7 | )       |  | $          | 406.3 |  | 100.0        | % |  | 30.2                   | % |  | $ | 26.8  |  
|              |  |                       |       |            |                |   |              |      |   |                        |   |       |         |  |            |       |  |              |   |  |                        |   |  |   |       |  



|(1) | The three months ended March 29, 2009 includes $2.6 million of stock-based compensation expense, $6.7 million of restructuring and impairments expense and $34.8 million of
SG&A expenses. The three months ended March 30, 2008 includes $6.9 million of stock-based compensation expense, $0.2 million of restructuring and impairments expense and $44.0 million of SG&A expenses.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

MCCC.MCCC revenue decreased approximately 50% in the first three months of 2009 as compared to the same period in 2008. The decrease in revenue was
primarily driven by decreases in unit volumes due to overall market decline for semiconductors, specifically in the computing and handset markets, and a reduction in distribution channel inventory. Gross margin declined due to decreased revenue as a
result of lower overall market demand as well as higher manufacturing costs due to lower factory utilization a result of the demand decrease and a reduction of internal inventory.

MCCC had operating loss of $4.6 million in the first three months of 2009, compared to operating income of $45.8 million for the comparable period in 2008. The decrease
in operating income was due to lower gross margin as discussed above. R&D and SG&A expenses decreased due to reductions in our employee base, discretionary spending and variable compensation. In addition, we implemented temporary benefit
reductions at the end of fiscal year 2008.

PCIA.PCIA revenue decreased approximately 39% in the first three
months of 2009 as compared to the same period in 2008. The decline in revenue was driven primarily by decreases in unit volumes as a result of weaker demand in the power supply markets supporting the computing and consumer end markets as well as a
reduction in distribution channel inventory. Gross margin declined due to lower revenue and unit volumes and higher manufacturing costs as the result of lower factory utilization.

PCIA had operating income of $3.0 million in the first three months of 2009 compared to $29.4 million for the comparable period in 2008. The decrease in operating income
was due to lower gross margin as discussed above. R&D and SG&A expenses decreased due to reductions in our employee base, discretionary spending and variable compensation. In addition, we implemented temporary benefit reductions at the end
of fiscal year 2008.

SDT.SDT revenue decreased approximately 43% in the first three months of 2009, as compared to the same period
in 2008. The decline in revenue was primarily driven by decreases in unit volumes due to reduced demand as a result of the worldwide economic downturn. Gross margin declined due to lower revenue and unit volumes and higher manufacturing costs as the
result of lower factory utilization.

SDT had operating loss of $1.0 million in the first three months of 2009 compared to operating income of $2.7 million
for the comparable period in 2008. The decrease in operating income was due to lower gross margin as discussed above. R&D and SG&A expenses decreased due to continued cost discipline and reduced variable compensation.



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Liquidity and Capital Resources

We have a borrowing capacity of $100.0 million on a revolving basis for working capital and general corporate purposes, including acquisitions, under our senior credit facility. At March 29, 2009, $19.4 million
was drawn on the revolver and after adjusting for outstanding letters of credit we had up to $78.9 million available under the senior credit facility. We had additional outstanding letters of credit of $1.1 million that do not fall under the senior
credit facility. We also had $5.7 million of undrawn credit facilities at certain of our foreign subsidiaries. These outstanding amounts do not impact available borrowings under the senior credit facility.

Our senior credit facility, which includes $514.5 million in term loans and $100.0 million revolving line of credit, and other debt instruments we may enter into in the
future, impose various restrictions and contain various covenants that could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities. The restrictive
covenants include limitations on consolidations, mergers and acquisitions, creating liens, paying dividends or making other similar restricted payments, asset sales, capital expenditures and incurring indebtedness, among other restrictions. The
senior credit facility also limits our ability to modify our certificate of incorporation and bylaws, or enter into shareholder agreements, voting trusts or similar arrangements. In addition, the covenants in the senior credit facility also include
financial measures, as defined by the credit agreement, such as a minimum interest coverage ratio of 2.5 to 1.00, a maximum net leverage ratio of 4.0 to 1.00 and a minimum four quarter trailing EBITDA (earnings before interest, taxes, depreciation
and amortization) less capital expenditures measure of $30.0 million. The interest coverage ratio is the ratio of annualized interest expense to the cumulative four quarter trailing EBITDA. The maximum net leverage ratio is the ratio of debt, less
up to $100 million (to the extent our unrestricted cash on hand exceeds $200 million), to the cumulative four quarter trailing EBITDA. EBITDA, as defined by the credit agreement excludes restructuring, non-cash equity compensation and other
adjustments as defined by the credit agreement. At March 29, 2009, we were in compliance with these covenants. Based on our current models through 2009, we expect to remain in compliance with our credit facility covenants. This expectation is
subject to various risks and uncertainties, including, among others, the risk that our assumptions and expectations about business conditions, expenses and cash flows for the remainder of the year will be inaccurate.

Under our debt instruments, the subsidiaries of Fairchild Semiconductor Corporation cannot be restricted, except to a limited extent, from paying dividends or making
advances to Fairchild Semiconductor Corporation. We believe that funds to be generated from operations, together with existing cash and funds from our senior credit facility will be sufficient to meet our debt obligations, operating requirements,
capital expenditures and research and development funding needs over the next twelve months. We had capital expenditures of $14.9 million in the first three months of 2009.

We frequently evaluate opportunities to sell additional equity or debt securities, obtain credit facilities from lenders or restructure our long-term debt to further strengthen our financial position. Our debt rating
as of March 29, 2009 by Standard and Poors is BB-. The sale of additional equity securities could result in additional dilution to our stockholders. Additional borrowing or equity investment may be required to fund future acquisitions.

As of March 29, 2009, we had $9.5 million of unrecognized tax benefits, compared to approximately $9.7 million at December 28, 2008. The timing
of the expected cash outflow relating to the balance is not reliably determinable at this time.

During the first three months of 2009, our cash provided
by operating activities was $19.4 million compared to $38.4 million in the same period of 2008. The following table presents a summary of net cash provided by operating activities during the first three months of 2009 and 2008.



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|                                          |  |                    |       |   |               |   |       |  
|----------------------------------------- |  | ------------------ | ----- | - | ------------- | - | ----- | -
|                                          |  | Three Months Ended |      
|                                          |  | March 29,2009      |       |   | March 30,2008 |  
|                                          |  | (In millions)      |      
|Net income (loss)                         |  | $                  | (51.1 | ) |               | $ | 17.1  |  
|Depreciation and amortization             |  |                    | 37.6  |   |               |   | 33.1  |  
|Non-cash stock-based compensation         |  |                    | 2.6   |   |               |   | 6.9   |  
|Deferred income taxes, net                |  |                    | (3.6  | ) |               |   | 1.4   |  
|Other, net                                |  |                    | 1.0   |   |               |   | 0.4   |  
|Change in other working capital accounts  |  |                    | 32.9  |   |               |   | (20.5 | )
|                                          |  |                    |       |   |               |   |       |  
|Net cash provided by operating activities |  | $                  | 19.4  |   |               | $ | 38.4  |  
|                                          |  |                    |       |   |               |   |       |  

Cash provided by operating activities decreased $19.0 million during the first three months of 2009 as compared to
the same period of 2008. The decrease was mainly due to decreased net income in 2009, offset partially by positive increases in our working capital accounts.

Cash used in investing activities during the first three months of 2009 totaled $16.8 million compared to $29.4 million for the same period of 2008. The decrease in the use of cash is primarily the result of lower capital expenditures in
the first three months of 2009. Our capital expenditures during the first three months of 2009 were $14.9 million compared to $30.7 million in the same period in 2008.

Cash used in financing activities totaled $1.3 million in the first three months of 2009 compared to $1.0 million in the same period of 2008. The increase in the use of cash was primarily due to increased principal
payments of long-term debt. In addition, no cash was used for the purchase of treasury stock in the first quarter of 2009.

Liquidity and Capital
Resources of Fairchild International, Excluding Subsidiaries

Fairchild Semiconductor International, Inc. is a holding company, the principal asset of
which is the stock of its sole subsidiary, Fairchild Semiconductor Corporation. Fairchild Semiconductor International, Inc. on a stand-alone basis had no cash flow from operations and has no cash requirements for the next twelve months.

Forward Looking Statements

This quarterly report includes
forward-looking statements as that term is defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of forward-looking terminology such as we believe,
we expect, we intend, may, will, should, seeks, approximately, plans, estimates, anticipates, or hopeful, or the
negative of those terms or other comparable terms, or by discussions of our strategy, plans or future performance. All forward-looking statements in this report are made based on managements current expectations and estimates, which involve
risks and uncertainties, including those described below and more specifically in the Risk Factors section. Among these factors are the following: current economic uncertainty, including disruptions in the credit markets, as well as future economic
conditions; 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; changes in regional or global economic or political conditions (including as a result of terrorist attacks and responses to them); 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; the inability to attract and retain key management
and other employees; risks related to warranty and product liability claims; risks inherent in doing business internationally; changes in tax regulations or the migration of profits from low tax jurisdictions to higher tax jurisdictions;
availability and cost of raw materials; competitors actions; loss of key customers, including but not limited to distributors; order cancellations or reduced bookings; changes in manufacturing yields or output; and significant litigation.
Factors that may affect our operating results are described in the Risk Factors section in the quarterly and annual reports we file with the Securities and Exchange Commission. Such risks and uncertainties could cause actual results to be materially
different from those in the forward-looking statements. Readers are cautioned not to place undue reliance on the forward-looking statements.



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Recently Issued Financial Accounting Standards

On January 1, 2008, we partially adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) 157,Fair Value Measurements. In accordance with
FASB Staff Position (FSP) 157-2, Effective Date of FASB Statement 157, we deferred the adoption of SFAS 157 for nonfinancial assets and liabilities including intangible assets, reporting units measured at fair value in the first
step of a goodwill impairment test, and asset retirement obligations. We fully adopted SFAS 157 on the first day of fiscal year 2009. This adoption did not have an impact on our consolidated financial position and results of operations as of
March 29, 2009.

In April 2009, the FASB issued three related Staff Positions; FSP 157-4, Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions that Are Not Orderly,FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, and FSP FAS 107-1 and
APB 28-1, Interim Disclosures About Fair Value of Financial Instruments.These staff positions clarify the guidance in FAS 157 for fair value measurements in inactive markets, modify the recognition and measurement of
other-than-temporary impairments of debt securities and require the disclosure of the fair values of financial instruments in interim periods. These staff positions are effective for interim and annual reporting periods ending after June 15,
2009. We have yet to determine the impact, if any, that these staff positions will have on our consolidated financial position and results of operations.



|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosure about Market Risk, in Fairchild Semiconductor Internationals annual report on Form 10-K for the year ended December 28, 2008 and under the
subheading Quantitative and Qualitative Disclosures about Market Risk in Managements Discussion and Analysis of Financial Condition and Results of Operations on page 52 of the Form 10-K. There were no material changes
in the information we provided in our Form 10-K during the period covered by this Quarterly Report.



|Item 4. | Controls and Procedures
|------- | -----------------------

Evaluation of Disclosure Controls and
Procedures

We maintain disclosure controls and procedures designed to assure, as much as is reasonably possible, that information required to be
disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is communicated to management and recorded, processed, summarized and disclosed within the specified time periods. As of the end of the period covered by this report,
our chief executive officer (CEO) and chief financial officer (CFO) have evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures. Based on the evaluation, our CEO and CFO concluded that as of
March 29, 2009, our disclosure controls and procedures are effective.

Inherent Limitations on Effectiveness of Controls

The companys management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or
detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems objectives will be met. The design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of
controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of
a control effectiveness in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or a deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

There were no
changes in our internal control over financial reporting during the first three months of 2009 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Patent Litigation with Power Integrations,
Inc. On October 20, 2004, we and our wholly owned subsidiary, Fairchild Semiconductor Corporation, were sued by Power Integrations, Inc. in the U.S. District Court for the District of Delaware. Power Integrations alleges that certain of our
pulse width modulation (PWM) integrated circuit products infringe four Power Integrations U.S. patents, and seeks a permanent injunction preventing us from manufacturing, selling or offering the products for sale in the U.S., or from importing the
products into the U.S., as well as money damages for past infringement. We have analyzed the Power Integrations patents in light of our products and, based on that analysis, do not believe our products violate Power Integrations patents.
Accordingly, we are vigorously contesting this lawsuit.

We also petitioned the U.S. Patent and Trademark Office for reexamination of all unexpired patents
claims asserted in the case (those being all asserted claims from three of the four patents asserted in the case; the fourth patent has expired), and as a consequence the patent office initiated reexamination proceedings on all of those claims. In
the first half of 2008, in the patent offices first formal correspondence regarding the validity of the patents, all of those asserted claims were rejected by the patent office. In December 2008, the patent office issued final rejections of 12
of 14 patent claims from two of the three unexpired Power Integrations patents. The patent office has twice issued preliminary rejections of all claims asserted by Power Integrations in the third unexpired patent.

The trial in the case was divided into three phases. The first phase, held in October 2006, was on infringement, the willfulness of any infringement, and damages.
On October 10, 2006, a jury returned a verdict finding that thirty-three of our PWM products infringe one or more of seven claims of the four patents being asserted. The jury also found that our infringement was willful, and assessed damages
against us of approximately $34 million. The second phase of the trial, held in September 2007 before a different jury, was on the validity of the Power Integrations patents being asserted. On September 21, 2007 a jury returned a verdict in the
second phase, finding that the four Power Integrations patents asserted in the lawsuit are valid. The third phase of the trial began on September 21, 2007, and covered the enforceability of the patents. On September 24, 2008, the court
ruled on the third phase, finding that the patents are enforceable.

On December 12, 2008 the judge overseeing the case reduced the jurys
October 10, 2006 damages award from approximately $34 million to approximately $6 million, and ordered a new trial on whether we willfully infringed Power Integrations asserted patents. The court also issued a permanent injunction on a
limited number of our products enjoining us from making, selling or offering to sell the products in the U.S., or from importing the products into the U.S. The judge in the case has stayed the injunction while we seek a longer stay from the U.S.
Court of Appeals for the Federal Circuit. We voluntarily stopped U.S. sales and importation of those products in 2007 and now offer replacement products worldwide.

Final judgment in the case is not expected until after the new trial on willfulness, scheduled to begin June 22, 2009. If the court in the new willfulness trial finds that our infringement was willful, the judge will have discretion to
increase the final approximately $6 million damages award by up to three times the amount of the award. The judge in the case has also awarded Power Integrations pre-judgment interest. It is also possible that we could be required to pay Power
Integrations attorneys fees. The final damages award and injunction are subject to appeal and we expect to contest several aspects of the litigation and to appeal on several grounds at the appropriate time. If we choose to appeal, we
would likely be required to post a bond or provide other security for some or the entire amount of the final damages award during the appeal process.

On
May 23, 2008, Power Integrations filed another lawsuit against us, Fairchild Semiconductor Corporation and our wholly owned subsidiary System General Corporation in the U.S. District Court for the District of Delaware, alleging infringement of
three patents. Of the three patents claimed in this lawsuit, two are patents that were asserted against us and Fairchild Semiconductor Corporation in the October 2004 lawsuit described above. As mentioned above, the majority of the claims asserted
in the first lawsuit from these two patents have now received final rejections from the patent office. On March 20, 2009, the patent office granted our request for ex parte reexamination of the claims from the third patent that was asserted
against us, having reached the conclusion that the prior art presents a substantial new question as to the validity of the asserted claims. We believe we have strong defenses against Power Integrations claims and intend to
vigorously defend this second lawsuit.

On October 14, 2008, Fairchild Semiconductor Corporation and System General Corporation filed a patent
infringement lawsuit against Power Integrations in the U.S. District Court for the District of Delaware, alleging that certain PWM



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##### Table of Contents

integrated circuit products infringe one or more claims of three U.S. patents owned by System General. The lawsuit seeks monetary damages and an injunction
preventing the manufacture, use, sale, offer for sale or importation of Power Integrations products found to infringe the asserted patents.

Patent
Litigation with Infineon.On November 25, 2008, we and Fairchild Semiconductor Corporation were sued by Infineon Technologies AG, Infineon Technologies Austria AG, and Infineon Technologies North America Corporation in the U.S. District
Court for the District of Delaware. Infineon alleges that we infringe five Infineon U.S. patents and seeks a declaratory judgment that Infineon does not infringe six of our patents. On November 28, 2008, we answered the Infineon complaint with
denials of their claims and our own counterclaims of infringement. In our counterclaim we are asserting that certain Infineon products infringe one or more claims of six of our patents.

On November 28, 2008, Fairchild Semiconductor Corporation also filed a separate infringement action against Infineon Technologies AG and Infineon Technologies North America Corporation in the U.S. District Court
for the District of Maine, alleging that Infineon infringes two of our patents that Infineon did not raise in the Delaware case.

Both Infineon and we are
asking for unspecified money damages, including enhanced damages for willful infringement, and a permanent injunction.

Other Legal Claims. From
time to time we are involved in legal proceedings in the ordinary course of business. We believe that there is no such ordinary-course litigation pending that could have, individually or in the aggregate, a material adverse effect on our business,
financial condition, results of operations or cash flows.

We have analyzed the potential litigation outcomes from our current litigation in accordance
with SFAS 5, Accounting for Contingencies.While the exact amount of these losses is not known, we have recorded net reserves for potential litigation outcomes in the consolidated statement of operations, based upon our assessments of the
potential liability using an analysis of the claims and historical experience in defending and/or resolving these claims. As of March 29, 2009, our balance for potential litigation outcomes was $6.7 million.



|Item 1A. | Risk Factors
|-------- | ------------

A description of the risk factors associated with our
business is set forth below. We review and update our risk factors each quarter. The description set forth below includes any changes to and supersedes the description of the risk factors associated with our business previously disclosed in Part I,
Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2008. The risks described below are not the only ones facing us. Additional risks not currently known to us or that we currently believe are immaterial also
may impair our business operations and financial condition.

The price of our common stock has fluctuated widely in the past and may fluctuate widely in
the future.

Our common stock, which is traded on The New York Stock Exchange, has experienced and may continue to experience significant price and
volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in financial results, earnings below analysts
estimates and financial performance and other activities of other publicly traded companies in the semiconductor industry could cause the price of our common stock to fluctuate substantially. In addition, in recent periods, our common stock, the
stock market in general and the market for shares of semiconductor industry-related stocks in particular have experienced extreme price fluctuations which have often been unrelated to the operating performance of the affected companies. Any similar
fluctuations in the future could adversely affect the market price of our common stock.

We maintain a backlog of customer orders that is subject to
cancellation, reduction or delay in delivery schedules, which may result in lower than expected revenues.

We manufacture products primarily pursuant
to purchase orders for current delivery or to forecast, rather than pursuant to long-term supply contracts. The semiconductor industry is subject to rapid changes in customer outlooks or unexpected build ups of inventory in the supply channel as a
result of shifts in end market demand and macro economic conditions. Accordingly, many of these purchase orders or forecasts may be revised or canceled without penalty. As a result, we must commit resources to the production of products without any
advance purchase commitments from customers. Even in cases where our standard terms and conditions of sale or other contractual arrangements do not permit a customer to cancel an order without penalty, we may from time to time accept cancellations
because of industry practice or custom or



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other factors. Our inability to sell products after we devote significant resources to them could have a material adverse effect on both our levels of
inventory and revenues. While we currently believe our inventory levels are appropriate, the current global economic uncertainty has resulted in lower than expected demand, which has impacted our customers target inventory levels as they
manage their business through this period. Customer demand may also decrease further depending on global macro economic conditions in 2009. We continue to carefully manage our inventory and anticipate that demand may improve toward the second half
of 2009 as our customers place orders to replenish their inventories, however our current business forecasting is hampered by poor forward visibility and it is difficult to determine what demand will be for at least the first half of 2009.

Downturns in the highly cyclical semiconductor industry or changes in end user market demands could reduce the profitability and overall value of our
business, which could cause the trading price of our stock to decline or have other adverse effects on our financial position.

The semiconductor
industry is highly cyclical, and the value of our business may decline during the down portion of these cycles. As we have experienced in the past, the current uncertainty and downturn in global economic conditions could negatively
affect us and the rest of the semiconductor industry, by causing us to experience backlog cancellations and reduced demand for our products, resulting in significant revenue declines, due to excess inventories at our customers, especially in the
technology and automotive sectors. We may experience renewed, possibly more severe and prolonged, downturns in the future as a result of such cyclical changes. Even as demand increases following such downturns, our profitability may not increase
because of price competition that historically accompanies recoveries in demand. In addition, we may experience significant changes in our profitability as a result of variations in sales, changes in product mix, changes in end user markets and the
costs associated with the introduction of new products, and our efforts to reduce excess inventories that may have built up as a result of any of these factors. The markets for our products depend on continued demand for consumer electronics such as
personal computers, cellular telephones and digital cameras, and automotive, household and industrial goods. These end user markets may experience changes in demand, such as the recent decreases we have experienced as a result of deteriorating
global economic conditions, that could adversely affect our prospects.

Our failure to implement, and also the completion and impact of, our cost
reduction initiatives could adversely affect our business.

We have recently taken aggressive cost reduction actions in order to stay ahead of the
economic environment. These actions include plans to streamline and consolidate wafer manufacturing by closing our wafer manufacturing facility in Pennsylvania and closing our four-inch manufacturing line in South Korea, an insourcing program to
transition higher-cost outside subcontractors to internal manufacturing, lowering our materials costs, workforce reductions, and reductions in employee benefits. We expect these actions will simplify operations, improve productivity and reduce
costs.

We cannot guarantee that these actions will be successfully implemented, or will sufficiently help in returning to profitability. Because our
restructuring activities involve changes to many aspects of our business, the cost reductions could adversely impact productivity and sales to an extent we have not anticipated. Even if we fully execute and implement these activities and they
generate the anticipated cost savings, there may be other unforeseeable and unintended factors or consequences that could adversely impact our profitability and business.

We may not be able to develop new products to satisfy changing demands from customers.

Our failure to develop new
technologies, or react to changes in existing technologies, could materially delay development of new products, which could result in decreased revenues and a loss of market share to our competitors. The semiconductor industry is characterized by
rapidly changing technologies and industry standards, together with frequent new product introductions. Our financial performance depends on our ability to design, develop, manufacture, assemble, test, market and support new products and
enhancements on a timely and cost-effective basis. New products often command higher prices and, as a result, higher profit margins. We may not successfully identify new product opportunities and develop and bring new products to market or succeed
in selling them into new customer applications in a timely and cost-effective manner. Products or technologies developed by other companies may render our products or technologies obsolete or noncompetitive. Many of our competitors are larger, older
and well established international companies with greater engineering and research and development resources than us. A fundamental shift in technologies in our product markets that we fail to identify correctly or adequately, or that we fail to
capitalize on, in each case relative to our competitors, could have material adverse effects on our competitive position within the industry. In addition, to



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remain competitive, we must continue to reduce die sizes, develop new packages and improve manufacturing yields. We cannot assure you that we can accomplish
these goals.

If some original equipment manufacturers do not design our products into their equipment, our revenue may be adversely affected.

The success of our products often depends on whether OEMs, or their contract manufacturers, choose to incorporate or design in our
products, or identify our products, with those from a limited number of other vendors, as approved for use in particular OEM applications. Even receiving design wins from a customer does not guarantee future sales to that customer. We
may be unable to achieve these design wins due to competition over the subject products functionality, size, electrical characteristics or other aspect of its design, price, or due to our inability to service expected demand from
the customer or other factors. Without design wins, we would only be able to sell our products to customers as a second source, if at all. If an OEM designs another suppliers product into one of its applications, it is more difficult for us to
achieve future design wins with that application because, for the customer, changing suppliers involves significant cost, time, effort and risk. In addition, achieving a design win with a customer does not ensure that we will receive significant
revenue from that customer and we may be unable to convert design into actual sales.

We depend on demand from the consumer, original equipment
manufacturer, contract manufacturing, industrial, automotive and other markets we serve for the end market applications which incorporate our products. Reduced consumer or corporate spending due to increased energy prices or other economic factors
could affect our revenues.

Our revenue and gross margin guidance are based on certain levels of consumer and corporate spending. If our projections of
these expenditures fail to materialize, due to reduced consumer or corporate spending from increased energy prices or other economic factors, our revenues and gross margins could be adversely affected. For example, beginning in the third quarter of
2008 and continuing into the fourth quarter, we observed progressively weakening order rates which we attribute to the current uncertainty and deterioration in global economic conditions. While order rates improved in the first quarter of 2009, as
compared to the fourth quarter of 2008, our current business forecasting is hampered by poor forward visibility, as our OEM and distributor end customers are cautious in their booking activity. While we cannot predict how long this down cycle will
last, we are proactively taking actions to manage our business through it.

Our failure to protect our intellectual property rights could adversely
affect our future performance and growth.

Failure to protect our existing intellectual property rights may result in the loss of valuable
technologies. We rely on patent, trade secret, trademark and copyright law to protect such technologies. These laws are subject to change. For instance, there have been recent developments in the laws and regulations governing the issuance and
assertion of patents in the U.S., such as modifications to the rules governing patent prosecution and court rulings on the issues of willfulness, obviousness and injunctions, that may affect our ability to obtain patents and/or enforce our patents
against others. Some of our technologies are not covered by any patent or patent application, and we cannot assure you that:



| |  |  | the patents owned by us or numerous other patents which third parties license to us will not be invalidated, circumvented, challenged or licensed to other
companies; or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any of our pending or future patent applications will be issued within the scope of the claims sought by us, if at all.
| | - |  | -----------------------------------------------------------------------------------------------------------------------

In addition, effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not applied for in some countries.

We also seek to protect our proprietary technologies, including technologies that may not be patented or patentable, in part by confidentiality agreements and, if
applicable, inventors rights agreements with our collaborators, advisors, employees and consultants. We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach or that such persons or
institutions will not assert rights to intellectual property arising out of such research. Some of our technologies have been licensed on a non-exclusive basis from National Semiconductor, Samsung Electronics and other companies which may license
such technologies to others, including our competitors. In addition, under a technology licensing and transfer agreement, National Semiconductor has limited royalty-free, worldwide license rights (without right to sublicense) to some of our
technologies. If necessary or desirable, we may seek licenses under patents or intellectual property rights claimed by others. However, we cannot assure you that we will obtain such licenses or that the terms of any offered licenses will be
acceptable to us. The failure to obtain a license from a third party for technologies we



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use could cause us to incur substantial liabilities and to suspend the manufacture or shipment of products or our use of processes requiring the
technologies.

Our failure to obtain or maintain the right to use some technologies may negatively affect our financial results.

Our future success and competitive position depend in part upon our ability to obtain or maintain proprietary technologies used in our principal products, which is
achieved in part by defending claims by competitors and others of intellectual property infringement. The semiconductor industry is characterized by claims of intellectual property infringement and litigation regarding patent and other intellectual
property rights. From time to time, we may be notified of claims (often implicit in offers to sell us a license to another companys patents) that we may be infringing patents issued to other companies, and we may subsequently engage in license
negotiations regarding these claims. Such claims relate both to products and manufacturing processes. Even though we maintain procedures to avoid infringing others rights as part of our product and process development efforts, it is impossible
to be aware of every possible patent which our products may infringe, and we cannot assure you that we will be successful. Furthermore, even if we conclude our products do not infringe anothers patents, others may not agree. We have been and
are involved in lawsuits, and could become subject to other lawsuits, in which it is alleged that we have infringed upon the patent or other intellectual property rights of other companies. For example, since October 2004, we have been in litigation
with Power Integrations, Inc. See Item 1, Legal Proceedings. Our involvement in this litigation and future intellectual property litigation, or the costs of avoiding or settling litigation by purchasing licenses rights or by other means, could
result in significant expense to our company, adversely affecting sales of the challenged products or technologies and diverting the efforts and attention of our technical and management personnel, whether or not such litigation is resolved in our
favor. We may decide to settle patent infringement claims or litigation by purchasing license rights from the claimant, even if we believe we are not infringing, in order to reduce the expense of continuing the dispute or because we are not
sufficiently confident that we would eventually prevail. In the event of an adverse outcome as a defendant in any such litigation, we may be required to:



| |  |  | pay substantial damages;
| | - |  | ------------------------



| |  |  | indemnify our customers for damages they might suffer if the products they purchase from us violate the intellectual property rights of others;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | stop our manufacture, use, sale or importation of infringing products;
| | - |  | ----------------------------------------------------------------------



| |  |  | expend significant resources to develop or acquire non-infringing technologies;
| | - |  | -------------------------------------------------------------------------------



| |  |  | discontinue manufacturing processes; or
| | - |  | ---------------------------------------



| |  |  | obtain licenses to the intellectual property we are found to have infringed.
| | - |  | ----------------------------------------------------------------------------

We cannot assure you that we would be successful in such development or acquisition or that such licenses would be available under reasonable terms. Any such development, acquisition or license could require the
expenditure of substantial time and other resources.

We may not be able to consummate future acquisitions or successfully integrate acquisitions into
our business.

We have made fourteen acquisitions of various sizes since we became an independent company in 1997 and we plan to pursue additional
acquisitions of related businesses. The costs of acquiring and integrating related businesses, or our failure to integrate them successfully into our existing businesses, could result in our company incurring unanticipated expenses and losses. In
addition, we may not be able to identify or finance additional acquisitions or realize any anticipated benefits from acquisitions we do complete.

We are
constantly pursuing acquisition opportunities and consolidation possibilities and are frequently conducting due diligence or holding preliminary discussions with respect to possible acquisition transactions, some of which could be significant. No
material potential acquisition transactions are subject to a letter of intent or otherwise so far advanced as to make the transaction reasonably certain.

If we acquire another business, the process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available
for the ongoing development or expansion of existing operations. Some of the risks associated with acquisitions include:



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| |  |  | unexpected losses of key employees, customers or suppliers of the acquired company;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | conforming the acquired companys standards, processes, procedures and controls with our operations;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | coordinating new product and process development;
| | - |  | -------------------------------------------------



| |  |  | hiring additional management and other critical personnel;
| | - |  | ----------------------------------------------------------



| |  |  | negotiating with labor unions; and
| | - |  | ----------------------------------



| |  |  | increasing the scope, geographic diversity and complexity of our operations.
| | - |  | ----------------------------------------------------------------------------

In addition, we may encounter unforeseen obstacles or costs in the integration of other businesses we acquire.

Possible
future acquisitions could result in the incurrence of additional debt, contingent liabilities and amortization expenses related to intangible assets, all of which could have a material adverse effect on our financial condition and operating results.

We may face risks associated with dispositions of assets and businesses.

From time to time we may dispose of assets and businesses as part of our efforts to grow our most profitable product lines. When we do so, we face risks associated with those exit activities, including but not limited
to risks relating to service disruptions at our customers, risks of inadvertently losing other business not related to the exit activities, risks associated with our inability to effectively continue, terminate, modify and manage supplier and vendor
relationships or commitments that may be affected by those exit activities, and the risks of consequential claims from customers or vendors resulting from the elimination, or transfer of production of, affected products or the renegotiation of
commitments.

We depend on suppliers for timely deliveries of raw materials of acceptable quality. Production time and product costs could increase if
we were to lose a primary supplier or if we experience a significant increase in the prices of our raw materials. Product performance could be affected and quality issues could develop as a result of a significant degradation in the quality of raw
materials we use in our products.

Our manufacturing processes use many raw materials, including silicon wafers, gold, copper lead frames, mold
compound, ceramic packages and various chemicals and gases. Our manufacturing operations depend upon obtaining adequate supplies of raw materials on a timely basis. Our results of operations could be adversely affected if we were unable to obtain
adequate supplies of raw materials in a timely manner or if the costs of raw materials increased significantly. If the prices of these raw materials rise significantly we may be unable to pass on the increased cost to our customers, which would
result in decreased margins for the products in which they are used. Results could also be adversely affected if there is a significant degradation in the quality of raw materials used in our products, or if the raw materials give rise to
compatibility or performance issues in our products, any of which could lead to an increase in customer returns or product warranty claims. Although we maintain rigorous quality control systems, errors or defects may arise from a supplied raw
material and be beyond our detection or control. For example, some phosphorus-containing mold compound received from one supplier and incorporated into our products has resulted in a number of claims for damages from customers. We purchase some of
our raw materials such as silicon wafers, lead frames, mold compound, ceramic packages and chemicals and gases from a limited number of suppliers on a just-in-time basis. From time to time, suppliers may extend lead times, limit supplies or increase
prices due to capacity constraints or other factors. We subcontract a minority of our wafer fabrication needs, primarily to Advanced Semiconductor Manufacturing Corporation, Central Semiconductor Manufacturing Corporation, Jilin Magic Semiconductor,
Macronix International Co. Ltd., Phenitec Semiconductor and Taiwan Semiconductor Manufacturing Company. In order to maximize our production capacity, some of our back-end assembly and testing operations are also subcontracted. Primary back-end
subcontractors include Amkor, ASE, AUK, GEM Services, Hana Semiconductor, Liteon, Tak Cheong Electronics and UTAC Ltd. Our operations and ability to satisfy customer obligations could be adversely affected if our relationships with these
subcontractors were disrupted or terminated.

Delays in expanding capacity at existing facilities, implementing new production techniques, or incurring
problems associated with technical equipment malfunctions, all could adversely affect our manufacturing efficiencies.



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Our manufacturing efficiency is an important factor in our profitability, and we cannot assure you that we will be able
to maintain our manufacturing efficiency or increase manufacturing efficiency to the same extent as our competitors. Our manufacturing processes are highly complex, require advanced and costly equipment and are continuously being modified in an
effort to improve yields and product performance. Impurities or other difficulties in the manufacturing process can lower yields. We are currently engaged in an effort to expand capacity at some of our manufacturing facilities. As is common in the
semiconductor industry, we have from time to time experienced difficulty in completing transitions to new manufacturing processes at existing facilities. As a consequence, we have suffered delays in product deliveries or reduced yields.

We may experience delays or problems in bringing new manufacturing capacity to full production. Such delays, as well as possible problems in achieving acceptable
yields, or product delivery delays relating to existing or planned new capacity could result from, among other things, capacity constraints, construction delays, upgrading or expanding existing facilities or changing our process technologies, any of
which could result in a loss of future revenues. Our operating results could also be adversely affected by the increase in fixed costs and operating expenses related to increases in production capacity if revenues do not increase proportionately.

Slightly less than two-thirds of our sales are made to distributors who can terminate their relationships with us with little or no notice. The
termination of a distributor could reduce sales and result in inventory returns.

Distributors accounted for 61% of our net sales for the quarter ended
March 29, 2009. Our top five distributors worldwide accounted for 19% of our net sales for the quarter ended March 29, 2009. As a general rule, we do not have long-term agreements with our distributors, and they may terminate their
relationships with us with little or no advance notice. Distributors generally offer competing products. The loss of one or more of our distributors, or the decision by one or more of them to reduce the number of our products they offer or to carry
the product lines of our competitors, could have a material adverse effect on our business, financial condition and results of operations. The termination of a significant distributor, whether at our or the distributors initiative, or a
disruption in the operations of one or more of our distributors, could reduce our net sales in a given quarter and could result in an increase in inventory returns.

The semiconductor business is very competitive, especially in the markets we serve, and increased competition could reduce the value of an investment in our company.

The semiconductor industry is, and the standard component or multi-market semiconductor product markets in particular are, highly competitive. Competitors
offer equivalent or similar versions of many of our products, and customers may switch from our products to competitors products on the basis of price, delivery terms, product performance, quality, reliability and customer service or a
combination of any of these factors. Competition is especially intense in the multi-market semiconductor segment because it is relatively easier for customers to switch suppliers of more standardized, multi-market products like ours, compared to
switching suppliers of more highly integrated or customized semiconductor products such as processors or system-on-a-chip products, which we do not manufacture. In the past we have experienced decreases in prices during down cycles in
the semiconductor industry, and this may occur again as a result of the recent downturn in global economic conditions. Even in strong markets, price pressures may emerge as competitors attempt to gain a greater market share by lowering prices.
Competition in the various markets in which we participate comes from companies of various sizes, many of which are larger and have greater financial and other resources than we have and thus are better able to pursue acquisition candidates and can
better withstand adverse economic or market conditions. In addition, companies not currently in direct competition with us may introduce competing products in the future.

We may not be able to attract or retain the technical or management employees necessary to remain competitive in our industry.

Our continued success depends on the retention and recruitment of skilled personnel, including technical, marketing, management and staff personnel. In the semiconductor industry, the competition for qualified
personnel, particularly experienced design engineers and other technical employees, is intense, particularly in the up portions of our business cycle, when competitors may try to recruit our most valuable technical employees. There can
be no assurance that we will be able to retain our current personnel or recruit the key personnel we require.

If we must reduce our use of equity
awards to compensate our employees, our competitiveness in the employee marketplace could be adversely affected. Our results of operations could vary as a result of the methods, estimates and judgments we use to value our stock-based compensation.



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Like most technology companies, we have a history of using broad-based employee stock programs to recruit and retain our
workforce in a competitive employment marketplace. Our success will depend in part upon the continued use of stock options, restricted stock units, deferred stock units and performance-based equity awards as a compensation tool. We plan to seek
stockholder approval for increases in the number of shares available for grant under the Fairchild Semiconductor 2007 Stock Plan as well as other amendments that may be adopted from time to time which require stockholder approval. If these proposals
do not receive stockholder approval, we may not be able to grant stock options and other equity awards to employees at the same levels as in the past, which could adversely affect our ability to attract, retain and motivate qualified personnel, and
we may need to increase cash compensation in order to attract, retain and motivate employees, which could adversely affect our results of operations.

The
calculation of stock-based compensation expense under SFAS 123(R), Share-Based Payment, requires us to use valuation methodologies and a number of estimates, assumptions and conclusions regarding matters such as the expected volatility of our
share price, the expected life of our options, the expected dividend rate with respect to our common stock, expected forfeitures and the exercise behavior of our employees. There are no means, under applicable accounting principles, to compare and
adjust this expense if and when we learn of additional information that may affect the estimates that we previously made, with the exception of changes in expected forfeitures of stock-based awards. Certain factors may arise over time that lead us
to change our estimates and assumptions with respect to future stock-based compensation, resulting in variability in our stock-based compensation expense over time. Changes in forecasted stock-based compensation expense could impact our gross margin
percentage, research and development expenses, marketing, general and administrative expenses and our tax rate.

We may face product warranty or product
liability claims that are disproportionately higher than the value of the products involved.

Our products are typically sold at prices that are
significantly lower than the cost of the equipment or other goods in which they are incorporated. For example, our products that are incorporated into a personal computer may be sold for several dollars, whereas the personal computer might be sold
by the computer maker for several hundred dollars. Although we maintain rigorous quality control systems, we manufacture and sell approximately 18 billion individual semiconductor devices per year to customers around the world, and in the ordinary
course of our business we receive warranty claims for some of these products that are defective or that do not perform to published specifications. Since a defect or failure in our product could give rise to failures in the goods that incorporate
them (and consequential claims for damages against our customers from their customers), we may face claims for damages that are disproportionate to the revenues and profits we receive from the products involved. We attempt, through our standard
terms and conditions of sale and other customer contracts, to limit our liability by agreeing only to replace the defective goods or refund the purchase price. Nevertheless, we have received claims for other charges, such as for labor and other
costs of replacing defective parts or repairing the products into which the defective products are incorporated, lost profits and other damages. In addition, our ability to reduce such liabilities, whether by contracts or otherwise, may be limited
by the laws or the customary business practices of the countries where we do business. And, even in cases where we do not believe we have legal liability for such claims, we may choose to pay for them to retain a customers business or goodwill
or to settle claims to avoid protracted litigation. Our results of operations and business could be adversely affected as a result of a significant quality or performance issue in our products, if we are required or choose to pay for the damages
that result. For example, from 2001 to 2008 we received claims from a number of customers seeking damages resulting from certain products manufactured with a phosphorus-containing mold compound, and we were named in lawsuits relating to these mold
compound claims.

Our international operations subject our company to risks not faced by domestic competitors.

Through our subsidiaries we maintain significant operations and facilities in the Philippines, Malaysia, China, South Korea and Singapore. We have sales offices and
customers around the world. Approximately 70% of our revenues in first quarter of 2009 were from Asia. The following are some of the risks inherent in doing business on an international level:



| |  |  | economic and political instability;
| | - |  | -----------------------------------



| |  |  | foreign currency fluctuations;
| | - |  | ------------------------------



| |  |  | transportation delays;
| | - |  | ----------------------



| |  |  | trade restrictions;
| | - |  | -------------------



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| |  |  | changes in laws and regulations relating to, amongst other things, import and export tariffs, taxation, environmental regulations, land use rights and property,
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | work stoppages; and
| | - |  | -------------------



| |  |  | the laws of, including tax laws, and the policies of the U.S. toward, countries in which we manufacture our products.
| | - |  | ---------------------------------------------------------------------------------------------------------------------

We acquired significant operations and revenues when we acquired a business from Samsung Electronics and, as a result, are subject to risks inherent in doing business
in Korea, including political risk, labor risk and currency risk.

As a result of the acquisition of the power device business from Samsung Electronics
in 1999, we have significant operations and sales in South Korea and are subject to risks associated with doing business there. Korea accounted for 14% of our revenue for the quarter ended March 29, 2009.

Relations between South Korea and North Korea have been tense over most of South Koreas history, and more recent concerns over North Koreas nuclear
capability, and relations between the U.S. and North Korea, have created a global security issue that may adversely affect Korean business and economic conditions. We cannot assure you as to whether or when this situation will be resolved or change
abruptly as a result of current or future events. An adverse change in economic or political conditions in South Korea or in its relations with North Korea could have a material adverse effect on our Korean subsidiary and our company. In addition to
other risks disclosed relating to international operations, some businesses in South Korea are subject to labor unrest.

Our Korean sales are increasingly
denominated primarily in U.S. dollars while a significant portion of our Korean operations costs of goods sold and operating expenses are denominated in South Korean won. Although we have taken steps to fix the costs subject to currency
fluctuations and to balance won revenues and won costs as much as possible, a significant change in this balance, coupled with a significant change in the value of the won relative to the dollar, could have a material adverse effect on our financial
performance and results of operations (see Item 3, Quantitative and Qualitative Disclosures about Market Risk).

A change in foreign tax laws or a
difference in the construction of current foreign tax laws by relevant foreign authorities could result in us not recognizing any anticipated benefits.

Some of our foreign subsidiaries have been granted preferential income tax or other tax holidays as an incentive for locating in those jurisdictions. A change in the foreign tax laws or in the construction of the foreign tax laws governing
these tax holidays, or our failure to comply with the terms and conditions governing the tax holidays, could result in us not recognizing the anticipated benefits we derive from them, which would decrease our profitability in those jurisdictions. We
continue to monitor the tax holidays, the income tax laws governing the tax holidays, and our compliance with the terms and conditions of the tax holidays, to ensure that the current and future tax impacts on our subsidiaries in these countries are
anticipated and refined.

We have significantly expanded our manufacturing operations in China and, as a result, will be increasingly subject to risks
inherent in doing business in China, which may adversely affect our financial performance.

We expect a significant portion of our production from our
Suzhou, China facility will be exported out of China, however, we are hopeful that a significant portion of our future revenue will result from the Chinese markets in which our products are sold, and from demand in China for goods that include our
products. Our ability to operate in China may be adversely affected by changes in that countrys laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and
other matters. In addition, our results of operations in China are subject to the economic and political situation there. We believe that our operations in China are in compliance with all applicable legal and regulatory requirements. However, there
can be no assurance that Chinas central or local governments will not impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures. Changes in the political environment or government
policies could result in revisions to laws or regulations or their interpretation and enforcement, increased taxation, restrictions on imports, import duties or currency revaluations. In addition, a significant destabilization of relations between
China and the U.S. could result in restrictions or prohibitions on our operations or the sale of our products in China. The legal system of China relating to foreign trade is relatively new and continues to evolve. There can be no certainty as to
the application of its laws and regulations in particular instances. Enforcement of existing laws or agreements may be sporadic and implementation and interpretation



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of laws inconsistent. Moreover, there is a high degree of fragmentation among regulatory authorities resulting in uncertainties as to which authorities have
jurisdiction over particular parties or transactions.

We are subject to many environmental laws and regulations that could affect our operations or
result in significant expenses.

Increasingly stringent environmental regulations restrict the amount and types of pollutants that can be released from
our operations into the environment. While the cost of compliance with environmental laws has not had a material adverse effect on our results of operations historically, compliance with these and any future regulations could require significant
capital investments in pollution control equipment or changes in the way we make our products. In addition, because we use hazardous and other regulated materials in our manufacturing processes, we are subject to risks of liabilities and claims,
regardless of fault, resulting from our use, transportation, emission, discharge, storage, recycling or disposal of hazardous materials, including personal injury claims and civil and criminal fines, any of which could be material to our cash flow
or earnings. For example:



| |  |  | we currently are remediating contamination at some of our operating plant sites;
| | - |  | --------------------------------------------------------------------------------



| |  |  | we have been identified as a potentially responsible party at a number of Superfund sites where we (or our predecessors) disposed of wastes in the past; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | significant regulatory and public attention on the impact of semiconductor operations on the environment may result in more stringent regulations, further
increasing our costs.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Although most of our known environmental liabilities are covered by indemnification agreements with Raytheon
Company, National Semiconductor, Samsung Electronics and Intersil Corporation, these indemnities are limited to conditions that occurred prior to the consummation of the transactions through which we acquired facilities from those companies.
Moreover, we cannot assure you that their indemnity obligations to us for the covered liabilities will be available, or, if available, adequate to protect us.

We are a leveraged company with a ratio of debt to equity at March 29, 2009 of approximately 0.5 to 1, which could adversely affect our financial health and limit our ability to grow and compete.

At March 29, 2009, we had total debt of $533.9 million and the ratio of this debt to equity was approximately 0.5 to 1. As of March 29, 2009, our senior credit
facility includes $514.5 million in term loans and the $100 million revolving line of credit, of which $78.9 million remained undrawn. In addition, there is a $150 million uncommitted incremental term loan feature. Despite reducing some of our
long-term debt, we continue to carry substantial indebtedness which could have significant consequences. For example, it could:



| |  |  | require us to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund
working capital, capital expenditures, research and development efforts and other general corporate purposes;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increase the amount of our interest expense, because certain of our borrowings (namely borrowings under our senior credit facility) are at variable rates of
interest, which, if interest rates increase, could result in higher interest expense;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increase our vulnerability to general adverse economic and industry conditions;
| | - |  | -------------------------------------------------------------------------------



| |  |  | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | make it more difficult for us to satisfy our obligations with respect to the instruments governing our indebtedness;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | place us at a competitive disadvantage compared to our competitors that have less indebtedness; or
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | limit, along with the financial and other restrictive covenants in our debt instruments, among other things, our ability to borrow additional funds, dispose of
assets, repurchase stock or pay cash dividends. Failing to comply with those
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on our business, financial condition and
results of operations.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Despite current indebtedness levels, we may still be able to incur substantially more indebtedness. Incurring
more indebtedness could exacerbate the risks described above.

We may be able to incur substantial additional indebtedness in the future. Although the
terms of the credit agreement relating to the senior credit facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances,
additional indebtedness incurred in compliance with these restrictions or upon further amendment of the credit facility could be substantial. As of June 2008, the senior credit facility permits borrowings of up to $100 million in revolving loans
under the line of credit and up to $150 million under the uncommitted incremental term loan feature, in addition to the outstanding $514.5 million term loans that are currently outstanding under that facility. As of March 29, 2009, adjusted for
outstanding letters of credit, we had up to $78.9 million available under the revolving loan portion of the senior credit facility. If new debt is added to our subsidiaries current debt levels, the substantial risks described above would
intensify.

We may not be able to generate the necessary amount of cash to service our indebtedness, which may require us to refinance our indebtedness
or default on our scheduled debt payments. Our ability to generate cash depends on many factors beyond our control.

Our historical financial results
have been, and our future financial results are anticipated to be, subject to substantial fluctuations, including as a result of the recent downturn in global economic conditions. We cannot assure you that our business will generate sufficient cash
flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or at all, or that future borrowings will be available to us under our senior credit facility in an amount sufficient to enable us
to pay our indebtedness or to fund our other liquidity needs. In addition, because our senior credit facility has variable interest rates, the cost of those borrowings will increase if market interest rates increase. If we are unable to meet our
expenses and debt obligations, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets or raise equity. We cannot assure you that we would be able to refinance any of our indebtedness, sell assets or raise
equity on commercially reasonable terms or at all, which could cause us to default on our obligations and impair our liquidity. Restrictions imposed by the credit agreement relating to our senior credit facility restrict or prohibit our ability to
engage in or enter into some business operating and financing arrangements, which could adversely affect our ability to take advantage of potentially profitable business opportunities.

The operating and financial restrictions and covenants in the credit agreement relating to our senior credit facility may limit our ability to finance our future operations or capital needs or engage in other business
activities that may be in our interests. The credit agreement imposes significant operating and financial restrictions that affect our ability to incur additional indebtedness or create liens on our assets, pay dividends, sell assets, engage in
mergers or acquisitions, make investments or engage in other business activities. These restrictions could place us at a disadvantage relative to competitors not subject to such limitations.

In addition, the senior credit facility also requires us to maintain specified financial ratios. Our ability to meet those financial ratios can be affected by events
beyond our control, and we cannot assure you that we will meet those ratios. As of March 29, 2009, we were in compliance with these ratios. A breach of any of these covenants, ratios or restrictions could result in an event of default under the
senior credit facility. Upon the occurrence of an event of default under the senior credit facility, the lenders could elect to declare all amounts outstanding under the senior credit facility, together with accrued interest, to be immediately due
and payable. If we were unable to repay those amounts, the lenders could proceed against our assets, including any collateral granted to them to secure the indebtedness. If the lenders under the senior credit facility accelerate the payment of the
indebtedness, we cannot assure you that our assets would be sufficient to repay in full that indebtedness and our other indebtedness.

We have
investments in auction rate securities that subject us to market risk which could adversely affect our liquidity and financial results.

As of the end
of the first quarter of 2009, we owned auction rate securities with a par value of $51.3 million and market value of $31.7 million. We continue to accrue and receive interest on these securities based on a contractual rate. However, the auction rate
security market is no longer active and as a result these securities are no longer liquid. We do not believe the auction failures will materially impact our ability to fund our working capital needs, capital expenditures or other business
requirements.



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|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

The
company did not make any purchases of its own common stock during the first quarter of 2009.



|Item 6. | Exhibits
|------- | --------



|            |  |                                                                                                                                      
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                          
|31.01       |  | Section 302 Certification of the Chief Executive Officer.                                                                            
|            | 
|31.02       |  | Section 302 Certification of the Chief Financial Officer.                                                                            
|            | 
|32.01       |  | Certification, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Mark S. Thompson.
|            | 
|32.02       |  | Certification, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Mark S. Frey.    

Items 3, 4 and 5 are not applicable and have been omitted.



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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                  |  |  |  |                                            
|----------------- |  |  |  | -------------------------------------------
|                  |  |  |  | Fairchild Semiconductor International, Inc.
|                  |  | 
|Date: May 8, 2009 |  |  |  | /s/ Robin A. Sawyer                        
|                  |  |  |  | Robin A. Sawyer                            
|                  |  |  |  | Vice President, Corporate Controller       
|                  |  |  |  | (Principal Accounting Officer)             



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